<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 6, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10/A
AMENDMENT NO. 2
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF
THE SECURITIES EXCHANGE ACT OF 1934
----------------
PRIMEX TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
VIRGINIA 06-1458069
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
10101 NINTH STREET NORTH ST. 33716-3807
PETERSBURG, FLORIDA (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
Registrant's telephone number, including area code:
(813) 578-8100
----------------
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be Registered Pursuant to Section 12(g) of the Act:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
------------------- ------------------------------
<S> <C>
Common Stock, The Nasdaq National Market System
par value $1 per share
Series A Participating Cumulative The Nasdaq National Market System
Preferred Stock Purchase Rights
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PRIMEX TECHNOLOGIES, INC.
INFORMATION INCLUDED IN INFORMATION STATEMENT
AND INCORPORATED IN FORM 10 BY REFERENCE
CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT
AND ITEMS OF FORM 10
<TABLE>
<CAPTION>
ITEM
NO. CAPTION LOCATION IN INFORMATION STATEMENT
---- ------- ---------------------------------
<C> <S> <C>
1. Business...................................... "Summary"; "The Distribution"; "Risk
Factors"; "Business"; and
"Management's Discussion and Analysis
of Financial Condition and Results of
Operations".
2. Financial Information......................... "Summary"; "The Distribution";
"Selected Financial and Operating
Data"; and "Management's Discussion
and Analysis of Financial Condition
and Results of Operations".
3. Properties.................................... "Properties".
4. Security Ownership of Certain Beneficial
Owners and Management........................ "The Distribution" and "Beneficial
Ownership".
5. Directors and Executive Officers.............. "Management and Executive
Compensation" and "Liability and
Indemnification of Officers and
Directors".
6. Executive Compensation........................ "Management and Executive
Compensation".
7. Certain Relationships and Related
Transactions................................. "Summary"; "The Distribution";
"Relationship between Olin and the
Company after the Distribution"; and
"Certain Relationships and Related
Transactions".
8. Legal Proceedings............................. "Legal Proceedings".
9. Market Price of and Dividends on the
Registrant's Common Equity and Related
Stockholder Matters.......................... "Summary"; "The Distribution"; "Risk
Factors"; and "Dividend Policy".
10. Recent Sales of Unregistered Securities....... Not Applicable.
11. Description of Registrant's Securities
to be Registered............................. "The Distribution"; "Dividend Policy";
"Description of Capital Stock"; and
"Rights Plan".
12. Indemnification of Directors and Officers..... "Liability and Indemnification of
Officers and Directors".
13. Financial Statements and Supplementary Data... "Summary"; "Selected Financial and
Operating Data"; and "Management's
Discussion and Analysis of Financial
Condition and Results of Operations".
14. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure....... Not Applicable.
15. Financial Statements and Exhibits............. "Selected Financial and Operating
Data"; "Index to Financial
Statements"; and "Index to Exhibits".
</TABLE>
1
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this amendment to the registrant's
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized.
PRIMEX TECHNOLOGIES, INC.
(Registrant)
/s/ Johnnie M. Jackson, Jr.
By:__________________________________
Name: Johnnie M. Jackson, Jr.
Title: Vice President and
Secretary
Date: December 6, 1996
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
EXHIBITS TO
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
UNDER
THE SECURITIES EXCHANGE ACT OF 1934
----------------
PRIMEX TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
2 Form of Distribution Agreement
3.1 Amended and Restated Articles of Incorporation of Primex Technologies,
Inc.
3.2 Amended and Restated By-laws of Primex Technologies, Inc.
4.1 Specimen Common Share certificate
4.2 Amended and Restated Articles of Incorporation of Primex Technologies,
Inc. (filed as Exhibit 3.1 hereto)
4.3 Amended and Restated By-laws of Primex Technologies, Inc. (filed as
Exhibit 3.2 hereto)
4.4 Form of Rights Agreement between Primex Technologies, Inc. and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent
4.5 Form of Articles of Amendment of the Articles of Incorporation of
Primex Technologies, Inc. (attached as Exhibit A to the Form of Rights
Agreement filed as Exhibit 4.4 hereto)
4.6 Form of Right Certificate (attached as Exhibit B to the Rights
Agreement filed as Exhibit 4.4 hereto)
10.1 Form of Distribution Agreement (filed as Exhibit 2 hereto)
10.2 Form of Technology Transfer and License Agreement
10.3 Form of Tax Sharing Agreement
10.4 Form of Powder Supply Requirements Agreement
10.5 Form of Assignment of Ball Powder (R) Trademark to Primex and Limited
License to Olin
10.6 Form of Assumption of Liabilities and Indemnity Agreement
10.7 Form of Covenant Not to Compete Agreement
10.8 Form of Assignment of Raufoss Agreements to Primex and Sublicense to
Olin for Small Caliber Ammunition
10.9 Form of Primex Technologies, Inc. Stock Plan for Non-employee
Directors
10.10 Form of 1996 Long Term Incentive Plan of Primex Technologies, Inc.
10.11 Form of Executive Agreement
10.12 Form of Credit Agreement*
10.13 Form of Trade Name License Agreement
10.14 Form of Transition Services Agreement
21 List of Subsidiaries of Primex Technologies, Inc.
27 Financial Data Schedule**
99.1 Primex Technologies, Inc., Information Statement dated December ,
1996
</TABLE>
- --------
* To be filed.
** Previously filed.
<PAGE>
Exhibit 2
DISTRIBUTION AGREEMENT dated as of December [ ], 1996,
among OLIN CORPORATION, a Virginia corporation ("Olin"), and
PRIMEX TECHNOLOGIES, INC., a Virginia corporation ("Primex").
The Board of Directors of Olin has determined to distribute to the
holders of shares of Common Stock, par value $1.00 per share, of Olin (the "Olin
Common Stock") all the outstanding shares of Common Stock, par value $1.00 per
share, of Primex (the "Primex Common Shares"). It is desirable to allocate and
assign responsibility for various matters affecting the activities of Primex and
to set forth the principal corporate transactions required to effect such
distribution and other agreements that will govern certain other matters
following the distribution.
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained in this Agreement, the parties hereby agree as follows:
ARTICLE I
Definitions
-----------
SECTION 1.01. General. As used in this Agreement, the following
--------
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Action" shall mean any claim, action, suit, arbitration, inquiry,
proceeding or investigation by or before any court, any governmental or other
regulatory or administrative official, agency, body or commission or any
arbitration tribunal, including any claims or contract disputes concerning any
governmental contract.
"Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the person
specified.
"Agent" shall mean ChaseMellon Shareholder Services LLC, as transfer
agent for Olin and Primex.
<PAGE>
2
"Ancillary Agreements" shall mean all of the written agreements,
instruments, understandings, assignments or other arrangements (other than this
Agreement) entered into in connection with the transactions contemplated hereby,
including, without limitation, (i) the Tax Sharing Agreement, (ii) the Powder
Supply Requirements Agreement, (iii) the Browning Exclusive Distributorship
Agreement, (iv) the Australia Agency Agreement, (v) the Covenant Not to Compete
Agreement, (vi) the Technology Transfer and License Agreement, (vii) the
Component Supply Agreement, (viii) the Indemnity Agreement, (ix) the Transition
Services Agreement, (x) the Raufoss Assignment, (xi) the Trade Name License
Agreement, (xii) the Ball Powder Assignment and (xiii) the Powder Supply Pricing
Agreement.
"Australia Agency Agreement" shall mean the Australia Agency Agreement
dated as of [ ], 1996, between Primex and Olin Australia Ltd.
"Ball Powder Assignment" shall mean the Assignment of Ball Powder
Trademark to Primex and Limited License to Olin Agreement dated as of [
], 1996, between Olin and Primex.
"Browning Exclusive Distributorship Agreement" shall mean the Browning
Exclusive Distributorship Agreement dated as of [ ], 1996, between
Olin and Primex.
"Claims Administration" shall mean (i) the processing of claims made
under Company Policies, including the reporting of claims and occurrences to the
appropriate insurance carriers and the collection of the proceeds of Company
Policies and (ii) in the case of the Primex Business, the reporting to Olin of
any losses or claims which may cause the per-occurrence deductible or self-
insured retention or limits of any Company Policy to be exceeded.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the Treasury regulations promulgated thereunder, including any successor
legislation.
"Commission" shall have the meaning set forth in Section 3.02(b).
"Company Policies" shall mean all Policies, current or past, under
which Olin or any subsidiary, affiliate or predecessor of Olin is a named
insured.
<PAGE>
3
"Component Supply Agreement" shall mean the Component Supply Agreement
dated as of [ ], 1996, between Olin and Primex.
"Conveyancing and Assumption Instruments" shall mean, collectively,
the various agreements, instruments and other documents to be entered into to
effect the transfer of assets and the assumption of Liabilities in the manner
contemplated by this Agreement.
"Covenant Not to Compete Agreement" shall mean the Covenant Not to
Compete Agreement dated as of [ ], 1996, between Olin and Primex.
"Credit Agreement" shall mean the Credit Agreement among Olin, Morgan
Guaranty Trust Company of New York, as Agent, and the several banks named
therein which will be assumed by Primex prior to the Distribution Date pursuant
to Section 2.02(a) hereof and which is intended to provide financing and working
capital for Primex after the Distribution.
"Distribution" shall mean the distribution to holders of record of
shares of Olin Common Stock as of the Distribution Record Date of the Primex
Common Shares owned by Olin on the basis of one Primex Common Share for every 10
shares of Olin Common Stock. The Distribution shall be deemed effective as of
the Effective Time.
"Distribution Date" shall mean January 6, 1997, or such other date as
may hereafter be determined by Olin's Board of Directors as the date on which
certificates representing the Common Shares shall be distributed by the Agent to
holders of record of shares of Olin Common Stock on the Distribution Record
Date.
"Distribution Record Date" shall mean December 19, 1996, or such other
date as may hereafter be determined by Olin's Board of Directors as the record
date for the Distribution.
"Effective Time" shall mean midnight on December 31, 1996, or such
other date as may hereafter be determined by Olin's Board of Directors as the
date on which the Distribution shall be deemed effective.
<PAGE>
4
"Indemnity Agreement" shall mean the Assumption of Liabilities and
Indemnity Agreement dated as of [ ], 1996, between Olin and Primex.
"Information Statement" shall mean the Information Statement sent to
the holders of shares of Olin Common Stock in connection with the Distribution,
including any amendment or supplement thereto.
"Insurance Proceeds" shall mean those monies (i) received by an
insured from an insurance carrier or (ii) paid by an insurance carrier on behalf
of an insured, in either case net of any applicable premium adjustment,
retrospectively-rated premium, deductible, retention, or cost of reserve paid or
held by or for the benefit of such insured.
"Insured Claims" shall mean those Liabilities that, individually or in
the aggregate, are covered within the terms and conditions of any Company
Policy, whether or not subject to deductibles, uncollectability or
retrospectively-rated premium adjustments, but only to the extent that such
Liabilities are within applicable Company Policy limits, including aggregates.
"Liabilities" shall mean any and all debts, liabilities and
obligations, absolute or contingent, matured or unmatured, liquidated or
unliquidated, accrued or unaccrued, known or unknown, whenever arising,
including, without limitation, those debts, liabilities and obligations arising
under any law, rule, regulation, Action, threatened Action, order or consent
decree of any court, any governmental or other regulatory or administrative
agency or commission or any award of any arbitration tribunal, and those arising
under any contract, guarantee, commitment or undertaking.
"Management Security Plan" shall mean the Management Security Plan of
Rockcor, Inc., as amended from time to time, and any agreement relating thereto
or any successor plan.
"Olin Business" shall mean the businesses of any division, Subsidiary
or investment of Olin (other than the Primex Business) managed or operated prior
to the Effective Time by any such business entity.
<PAGE>
5
"Olin CEOP Plan" shall mean the Olin Corporation Contributing Employee
Ownership Plan, as in effect at the Effective Time.
"Olin Liabilities" shall mean collectively, (i) all the Liabilities of
Olin and its Subsidiaries under this Agreement and any of the Ancillary
Agreements and (ii) all the Liabilities of the parties hereto or their
respective Subsidiaries (whenever arising whether prior to, at or following the
Effective Time) arising out of or in connection with or otherwise relating to
the management or conduct before or after the Effective Time of the Olin
Business.
"Olin Pension Plan" shall mean the Olin Corporation Employees Pension
Plan, as in effect at the Effective Time.
"Olin Supplemental Plans" shall mean, collectively, the Olin
Corporation Senior Executive Benefit Plan, the Olin Deferral Benefit Plan, the
Olin Supplementary Pension Plan and the Olin Supplemental Contributing Employee
Ownership Plan, each as in effect on the Distribution Date.
"person" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership or government, or any agency or
political subdivision thereof.
"Policies" shall mean insurance policies and insurance contracts of
any kind (other than life and benefits policies or contracts), including,
without limitation, primary, excess and umbrella policies, commercial general
liability policies, fiduciary liability, environmental impairment, director and
officer, health, automobile, aircraft, property and casualty, workers'
compensation and employee dishonesty insurance policies, bonds and self-
insurance and captive insurance company arrangements, together with the rights,
benefits and privileges thereunder.
"Powder Supply Pricing Agreement" shall mean the Powder Supply Pricing
Agreement dated as of [ ], 1996, between Olin and Primex.
"Powder Supply Requirements Agreement" shall mean the Powder Supply
Requirements Agreement dated as of [ ], 1996, between Olin and
Primex.
<PAGE>
6
"PRIME" shall mean the Primex Technologies, Inc. Retirement Investment
Management Experience Plan to be adopted by Primex effective as of the Effective
Time and referred to in the Information Statement.
"Primex Assets" shall mean, collectively, all the rights and assets of
Olin and its Subsidiaries relating to the Primex Business, including, without
limitation, all the outstanding capital stock or other interests of Primex in
Subsidiaries of Primex and the technology, patents, trademarks and other
intellectual property described in the Technology Transfer and License Agreement
and the Ball Powder Assignment.
"Primex Business" shall mean the ordnance and aerospace businesses
heretofore conducted by Olin, other than those businesses set forth on Exhibit
A, and business activities acquired, developed or established by or for Primex
or any of its Subsidiaries after the date of this Agreement.
"Primex Liabilities" shall mean, collectively, (i) all the Liabilities
of Primex and its Subsidiaries under this Agreement and any of the Ancillary
Agreements and (ii) all the Liabilities of the parties hereto or their
respective Subsidiaries (whenever arising whether prior to, at or following the
Effective Time) arising out of or in connection with or otherwise relating to
the management or conduct before or after the Effective Time of the Primex
Business.
"Primex Supplemental Plan" shall mean the nonqualified, unfunded
Supplemental Savings and Retirement Plan or supplemental compensation program to
be adopted by Primex effective as of the Effective Time and referred to in the
Information Statement.
"Raufoss Assignment" shall mean the Assignment of Raufoss Agreements
and Sublicense to Olin Agreement dated as of [ ], 1996, between Olin
and Primex.
"Subsidiary" shall mean any corporation, partnership or other entity
of which another entity (i) owns, directly or indirectly, ownership interests
sufficient to elect a majority of the Board of Directors (or persons performing
similar functions) (irrespective of whether at the time any other class or
classes of ownership interests of such corporation, partnership or other entity
shall or might
<PAGE>
7
have such voting power upon the occurrence of any contingency) or (ii) is a
general partner or an entity performing similar functions (e.g., a trustee).
----
"Tax" shall mean all Federal, state, local and foreign taxes and
assessments, including all interest, penalties and additions imposed with
respect to such amounts.
"Tax Sharing Agreement" shall mean the Tax Sharing Agreement dated as
of [ ], 1996, among Olin and Primex.
"Technology Transfer and License Agreement" shall mean the Technology
Transfer Agreement dated as of [ ], 1996, between Olin and Primex.
"Trade Name License Agreement" shall mean the Trade Name License
Agreement dated as of [ ], 1996, between Olin and Primex.
"Transition Services Agreement" shall mean the Transition Services
Agreement dated as of [ ], 1996, between Olin and Primex.
SECTION 1.02. References; Interpretation. References to an "Exhibit"
--------------------------
or to a "Schedule" are, unless otherwise specified, to one of the Exhibits or
Schedules attached to this Agreement, and references to a "Section" are, unless
otherwise specified, to one of the Sections of this Agreement.
ARTICLE II
Distribution and Other Transactions; Certain Covenants
------------------------------------------------------
SECTION 2.01. The Distribution and Other Transactions. (a) Certain
---------------------------------------- -------
Transactions. At or prior to the Effective Time:
- -------------
(i) Olin shall contribute to Primex the business entities that are to
comprise the Primex Business (to the extent they are not owned by Primex or
any of its Subsidiaries).
(ii) Olin shall, on behalf of itself and its Subsidiaries, transfer
to Primex effective as of the
<PAGE>
8
Effective Time all of Olin's and its Subsidiaries' right, title and
interest in the Primex Assets.
(b) Stock Dividend to Olin. At or prior to the Effective Time,
-----------------------
Primex shall issue to Olin as a stock dividend the number of Primex Common
Shares required to effect the Distribution. In connection therewith Olin shall
deliver to Primex for cancellation the share certificate (or certificates)
currently held by it representing Primex Common Shares and shall receive a new
certificate (or certificates) representing the total number of Primex Common
Shares to be owned by Olin after giving effect to such stock dividend.
(c) Charter; By-Laws. At or prior to the Effective Time, all
-----------------
necessary action shall have been taken to provide for the adoption of the form
of Articles of Incorporation and By-laws of Primex substantially in the forms
attached hereto as Exhibits B and C, respectively.
(d) Directors. At or prior to the Effective Time, Olin, as the sole
----------
shareholder of Primex, shall have taken all necessary action to elect, or cause
to be elected, to the Board of Directors of Primex the individuals identified in
the Information Statement as directors of Primex, such elections to be effective
on or prior to January 1, 1997.
(e) Certain Licenses and Permits. At or prior to the Effective Time
-----------------------------
or as soon as reasonably practicable thereafter, all transferrable licenses,
permits and authorizations issued by governmental or regulatory entities which
relate to the Primex Business but which are held in the name of Olin or any of
its Subsidiaries (other than any Subsidiary of Primex), or any of their
respective employees, officers, directors, stockholders, agents, or otherwise,
on behalf of Primex (or its Subsidiaries) shall be duly and validly transferred
by Olin to Primex (or its Subsidiaries).
(f) Lease Amendments. At or prior to the Effective Time, amendments
-----------------
shall be executed to each of the leases to which Olin is a party and which
provide for the lease of real or personal property representing Primex Assets or
relating to the Primex Business which amendments will provide for the
substitution of Primex for Olin as lessee or lessor, as the case may be, and
excuse Olin from any further liabilities or responsibilities with respect
thereto.
<PAGE>
9
(g) Transfer of Agreements. (i) Olin hereby agrees that at or prior
-----------------------
to the Effective Time or as soon as reasonably practicable thereafter, subject
to the limitations set forth in this Section 2.01(g) and the terms of the
Ancillary Agreements, it will, and it will cause its Subsidiaries (other than
Primex or any of its Subsidiaries) to, assign, transfer and convey to Primex all
of Olin's or such Subsidiaries' respective right, title and interest in and to
any and all agreements that, in Olin's sole judgment, relate exclusively to the
Primex Business. Primex hereby agrees that at or prior to the Effective Time or
as soon as reasonably practicable thereafter, subject to the limitations set
forth in this Section 2.01(g), it will, and it will cause its Subsidiaries to,
assign, transfer and convey to Olin all of Primex's or such Subsidiaries'
respective right, title and interest in and to any and all agreements that, in
Olin's sole judgment, relate exclusively to the Olin Business.
(ii) Subject to the provisions of this Section 2.01(g) and the terms
of the Ancillary Agreements, any agreement to which the parties hereto or any of
their Subsidiaries is a party that inures, in Olin's sole judgment, to the
benefit of both the Olin Business and the Primex Business shall be assigned in
part, on or prior to the Effective Time or as soon as reasonably practicable
thereafter, so that each party shall be entitled to the rights and benefits
inuring to its business under such agreement.
(iii) The assignee of any agreement assigned, in whole or in part,
hereunder (an "Assignee"), shall assume and agree to pay, perform, and fully
discharge all obligations of Olin under such agreement or, in the case of a
partial assignment under paragraph (g)(ii), Primex's related portion of such
obligations as determined in accordance with the terms of the relevant
agreement, where determinable on the face thereof, and otherwise as determined
in accordance with the practice of the parties prior to the Distribution.
(iv) Notwithstanding anything in this Agreement to the contrary, this
Agreement shall not constitute an agreement to assign any agreement, in whole or
in part, or any rights thereunder if the agreement to assign or attempt to
assign, without the consent of a third party, would constitute a breach thereof
or in any way adversely affect the rights of the Assignee thereof. Until such
consent is
<PAGE>
10
obtained, or if an attempted assignment thereof would be ineffective or would
adversely affect the rights of any party hereto so that the Assignee would not,
in fact, receive all such rights, the parties will cooperate with each other in
any arrangement designed to provide for the Assignee the benefits of, and to
permit the Assignee to assume liabilities under, any such agreement.
(h) Consents. The parties hereto shall use commercially reasonable
---------
efforts to obtain required consents to assignment of agreements hereunder.
(i) Delivery of Shares to Agent. At or prior to the Effective Time,
----------------------------
Olin shall deliver to the Agent the share certificate or certificates
representing the Primex Common Shares issued to Olin by Primex, pursuant to
Section 2.01(b) and shall instruct the Agent to distribute, on or as soon as
practicable following the Distribution Date, such Common Shares to holders of
record of shares of Olin Common Stock on the Distribution Record Date as further
contemplated by, and subject to the conditions contained in, the Information
Statement and this Agreement. Primex shall provide all share certificates that
the Agent shall require in order to effect the Distribution.
(j) Other Transactions. At or prior to the Effective Time, Olin and
-------------------
Primex shall have consummated those other transactions in connection with the
Distribution that are contemplated by the Information Statement and not
specifically referred to in subparagraphs (a)-(i) above.
SECTION 2.02. Financing. Each of the parties hereto shall take all
----------
actions necessary to cause Primex to assume Olin's rights and obligations under
the Credit Agreement as of the Effective Time, provided that Olin shall have no
obligation to guarantee or otherwise provide credit support or enhancement for
the obligations of Primex under such Credit Agreement.
SECTION 2.03. Operations in Ordinary Course. Each of Olin and Primex
------------------------------
agrees that, except as otherwise provided in any Ancillary Agreement or this
Agreement, during the period from the date of this Agreement through the
Effective Time, it will, and will cause their respective Subsidiaries during
such period to, conduct its business in a manner substantially consistent with
current and past operating practices and in the ordinary course, including,
without limitation, with respect to the payment and
<PAGE>
11
administration of accounts payable and the administration of accounts
receivable, the purchase of capital assets and equipment and the management of
inventories.
SECTION 2.04. Capital Structure. Each of Olin and Primex agrees to
------------------
use commercially reasonable efforts to achieve both an allocation of
consolidated indebtedness of Olin and a capital structure of Primex which
substantially reflects the capital structure after the Distribution of Primex
set forth in the Information Statement under the heading "Capitalization".
SECTION 2.05. Assumption and Satisfaction of Liabilities. Except as
-------------------------------------------
otherwise specifically set forth in any Ancillary Agreement, from and after the
Effective Time, (i) Olin shall, and shall cause its Subsidiaries to, assume,
pay, perform and discharge all Olin Liabilities, and (ii) Primex shall, and
shall cause its Subsidiaries to, assume, pay, perform and discharge all Primex
Liabilities.
SECTION 2.06. Resignations. Olin shall cause all its directors,
-------------
officers and employees to resign, effective as of December 31, 1996, from all
positions as officers of Primex or as officers or directors of any Subsidiary of
Primex in which they serve. Primex shall cause all its employees to resign,
effective as of December 31, 1996, from all positions as officers of Olin or as
officers or directors of any Subsidiary of Olin in which they serve.
SECTION 2.07. Further Assurances. In case at any time after the
-------------------
Effective Time any further action is reasonably necessary or desirable to carry
out the purposes of this Agreement and the Ancillary Agreements, the proper
officers of each party to this Agreement shall take all such necessary action.
Without limiting the foregoing, Olin and Primex shall use commercially
reasonable efforts to obtain all consents and approvals, to enter into all
amendatory agreements and to make all filings and applications that may be
required for the consummation of the transactions contemplated by this Agreement
and the Ancillary Agreements, including, without limitation, all applicable
governmental and regulatory filings and novations.
SECTION 2.08. No Representations or Warranties. Each of the parties
---------------------------------
hereto understands and agrees that, except as otherwise expressly provided, no
party hereto is, in this Agreement or in any other agreement or document
contemplated by this Agreement or otherwise, making any repre-
<PAGE>
12
sentation or warranty whatsoever, including, without limitation, as to title,
value or legal sufficiency. It is also agreed and understood that all assets
either transferred to or retained by the parties, as the case may be, shall be
"as is, where is" and that (subject to Section 2.07) the party to which such
assets are to be transferred hereunder shall bear the economic and legal risk
that any conveyances of such assets shall prove to be insufficient or that such
party's or any of the Subsidiaries' title to any such assets shall be other than
good and marketable and free from encumbrances. Similarly, each party hereto
understands and agrees that no party hereto is, in this Agreement or in any
other agreement or document contemplated by this Agreement or otherwise,
representing or warranting in any way that the obtaining of any consents or
approvals, the execution and delivery of any amendatory agreements and the
making of any filings or applications contemplated by this Agreement will
satisfy the provisions of any or all applicable agreements or the requirements
of any or all applicable laws or judgments, it being agreed and understood that
the party to which any assets are transferred shall bear the economic and legal
risk that any necessary consents or approvals are not obtained or that any
requirements of laws or judgments are not complied with.
SECTION 2.09. Elimination of Guarantees. Except as otherwise
--------------------------
specified in any Ancillary Agreement, Olin and Primex shall use their
commercially reasonable efforts to have, on or prior to the Effective Time, or
as soon as practicable thereafter, Olin and any of its Subsidiaries removed as
guarantor of or obligor for any Primex Liability or Liabilities[, including,
without limitation, in respect of those guarantees set forth on Schedule 2.09].
To the extent that Olin or any of its Subsidiaries cannot be removed as
guarantor of or obligor for any such Primex Liability or Liabilities, Primex
agrees that until such Primex Liability or Liabilities shall have been
discharged in full, Primex will take no action, and will not permit any of its
Subsidiaries to take any action, which will have the effect of increasing the
contingent liability or exposure of Olin or any of its Subsidiaries with respect
to such Primex Liability or Liabilities.
SECTION 2.10. Witness Services. At all times from and after the
-----------------
Effective Time, each of Olin and Primex shall use commercially reasonable
efforts to make available to each other, upon reasonable written request, its
and its Subsidiaries' officers, directors, employees and agents as
<PAGE>
13
witnesses to the extent that (i) such persons may reasonably be required in
connection with the prosecution or defense of any Action in which the requesting
party may from time to time be involved and (ii) there is no conflict in the
Action between the requesting party and itself. A party providing witness
services to the other party under this Section shall be entitled to receive from
the recipient of such services, upon the presentation of invoices therefor,
payments for such amounts, relating to supplies, disbursements and other out-of-
pocket expenses and direct and indirect costs of employees who are witnesses, as
may be reasonably incurred in providing such witness services.
SECTION 2.11. Certain Postdistribution Transactions. Each of Olin
--------------------------------------
and Primex agrees that (i) it shall comply with and otherwise not take action
inconsistent with each representation and statement made, or to be made, to
Cravath, Swaine & Moore in connection with such firm's rendering an opinion to
Olin and Primex as to certain tax aspects of the Distribution and (ii) until one
year after the Distribution Date, it will maintain its status as a company
engaged in the active conduct of a trade or business, as defined in Section
355(b) of the Code.
SECTION 2.12. Transfers Not Effected Prior to Effective Time;
-----------------------------------------------
Transfers Deemed Effective as of Effective Time. To the extent that any
- ------------------------------------------------
transfers contemplated by this Article II shall not have been consummated at or
prior to the Effective Time, the parties shall cooperate to effect such
transfers as promptly following the Effective Time as shall be practicable.
Nothing herein shall be deemed to require the transfer of any assets or the
assumption of any Liabilities which by their terms or operation of law cannot be
transferred; provided, however, that the parties hereto and their respective
-------- -------
Subsidiaries shall cooperate to seek to obtain any necessary consents or
approvals for the transfer of all assets and Liabilities contemplated to be
transferred pursuant to this Article II. In the event that any such transfer of
assets or Liabilities has not been consummated, from and after the Effective
Time the party retaining such asset or Liability shall hold such asset in trust
for the use and benefit of the party entitled thereto (at the expense of the
party entitled thereto) or retain such Liability for the account of the party by
whom such Liability is to be assumed pursuant hereto, as the case may be, and
take such other action as may be reasonably requested by the party to whom such
asset is to be transferred, or by whom such Liability is to be assumed, as the
<PAGE>
14
case may be, in order to place such party, insofar as is reasonably possible, in
the same position as would have existed had such asset or Liability been
transferred as contemplated hereby. As and when any such asset or Liability
becomes transferable, such transfer shall be effected forthwith. The parties
agree that, as of the Effective Time, each party hereto shall be deemed to have
acquired complete and sole beneficial ownership over all of the assets, together
with all rights, powers and privileges incident thereto, and shall be deemed to
have assumed in accordance with the terms of this Agreement all of the
Liabilities, and all duties, obligations and responsibilities incident thereto,
which such party is entitled to acquire or required to assume pursuant to the
terms of this Agreement.
SECTION 2.13. Ancillary Agreements. At or prior to the Effective
---------------------
Time, each of Olin and Primex shall enter into, and/or (where applicable) shall
cause their respective Subsidiaries to enter into, the Ancillary Agreements and
any other agreements in respect of the Distribution reasonably necessary or
appropriate in connection with the transactions contemplated hereby and thereby.
ARTICLE III
Access to Information
---------------------
SECTION 3.01. Provision of Corporate Records. (a) After the
-------------------------------
Effective Time, upon the prior written request by Primex for specific and
identified agreements, documents, books, records or files including, without
limitation, computer files, microfiche, tape recordings and photographs
(collectively, "Records"), relating to or affecting Primex, Olin shall arrange,
as soon as reasonably practicable following the receipt of such request, for the
provision of appropriate copies of such Records (or the originals thereof if the
party making the request has a reasonable need for such originals) in the
possession of Olin or any of its Subsidiaries, but only to the extent such items
are not already in the possession of the requesting party.
(b) After the Effective Time, upon the prior written request by Olin
for specific and identified Records relating to or affecting Olin, Primex shall
arrange, as soon as reasonably practicable following the receipt of such
<PAGE>
15
request, for the provision of appropriate copies of such Records (or the
originals thereof if the party making the request has a reasonable need for such
originals) in the possession of Primex or any of its Subsidiaries, but only to
the extent such items are not already in the possession of the requesting party.
SECTION 3.02. Access to Information. (a) From and after the
----------------------
Effective Time, Olin and Primex shall afford to the other and its authorized
accountants, counsel and other designated representatives (including
governmental representatives and auditors in connection with governmental claims
or audits) reasonable access during normal business hours, subject to
appropriate restrictions for classified, privileged or confidential information,
to the personnel, properties, books and records of such party and its
Subsidiaries insofar as such access is reasonably required by the other party.
(b) For a period of five years following the Effective Time, each of
Olin and Primex shall provide to the other, promptly following such time at
which such documents shall be filed with the Securities and Exchange Commission
(the "Commission"), all documents that shall be filed by it and by any of its
respective Subsidiaries with the Commission pursuant to the periodic and interim
reporting requirements of the Securities Exchange Act of 1934, and the rules and
regulations of the Commission promulgated thereunder.
SECTION 3.03. Reimbursement; Other Matters. (a) Except to the
-----------------------------
extent otherwise contemplated by any Ancillary Agreement, a party providing
Records or access to information to the other party under this Article III shall
be entitled to receive from the recipient, upon the presentation of invoices
therefor, payments for such amounts, relating to supplies, disbursements and
other out-of-pocket expenses, as may be reasonably incurred in providing such
Records or access to information.
(b) The parties hereto shall comply with those document retention
policies as shall be set forth in Schedule 3.03(b) hereto or established and
agreed to in writing by their respective authorized officers on or prior to the
Distribution Date in respect of Records and related matters.
<PAGE>
16
SECTION 3.04. Confidentiality. Each of Olin and its Subsidiaries and
----------------
Primex and its Subsidiaries shall not use or permit the use of (without the
prior written consent of the other) and shall hold, and shall cause its
consultants and advisors to hold, in strict confidence, all information
concerning the other parties in its possession, its custody or under its control
(except to the extent that (A) such information has been in the public domain or
becomes part of the public domain through no fault of such party, (B) such
information has been later lawfully acquired from other sources by such party
without an obligation of confidence, (C) this Agreement or any other Ancillary
Agreement or any other agreement entered into pursuant hereto permits the use or
disclosure of such information or (D) such information is independently
developed by such party without reference to such information) to the extent
such information (x) relates to the period up to the Effective Time, (y) relates
to any Ancillary Agreement or (z) is obtained in the course of performing
services for the other party pursuant to any Ancillary Agreement, and each party
shall not (without the prior written consent of the other) otherwise release or
disclose such information to any other person, except such party's auditors and
attorneys, unless compelled to disclose such information by judicial or
administrative process or unless such disclosure is required by law and such
party has used commercially reasonable efforts to consult with the other
affected party or parties prior to such disclosure. To the extent that a party
hereto is compelled by judicial or administrative process to disclose such
information under circumstances in which any evidentiary privilege would be
available, such party agrees to assert such privilege in good faith prior to
making such disclosure. Each of the parties hereto agrees to consult with each
relevant other party in connection with any such judicial or administrative
process, including, without limitation, in determining whether any privilege is
available, and further agrees to allow each such relevant party and its counsel
to participate in any hearing or other proceeding (including, without
limitation, any appeal of an initial order to disclose) in respect of such
disclosure and assertion of privilege.
<PAGE>
17
ARTICLE IV
Dispute Resolution
------------------
In the event of a controversy, dispute or claim arising out of, in
connection with, or in relation to the interpretation, performance,
nonperformance, validity or breach of this Agreement or otherwise arising out
of, or in any way related to this Agreement, including, without limitation, any
claim based on contract, tort, statute or constitution (collectively, "Agreement
Disputes"), the General Counsels (or their designees) of the relevant parties
shall negotiate in good faith for a reasonable period of time to settle such
Agreement Dispute.
If after such reasonable period such General Counsels (or their
designees) are unable to settle such Agreement Dispute (and in any event after
60 days have elapsed from the time the relevant parties began such
negotiations), such Agreement Dispute shall be determined, at the request of any
relevant party, by arbitration conducted in New York City, before and in
accordance with the then-existing Rules for Commercial Arbitration of the
American Arbitration Association (the "Rules"), and any judgment or award
rendered by the arbitrator shall be final, binding and nonappealable (except
upon grounds specified in 9 U.S.C. (S)10(a) as in effect on the date hereof),
and judgment may be entered by any state or Federal court having jurisdiction
thereof in accordance with Section 9.19 hereof. Unless the arbitrator otherwise
determines, the pre-trial discovery of the then-existing Federal Rules of Civil
Procedure and the then-existing Rules 46 and 47 of the Civil Rules for the
United States District Court for the Southern District of New York shall apply
to any arbitration hereunder. Any controversy concerning whether an Agreement
Dispute is an arbitrable Agreement Dispute, whether arbitration has been waived,
whether an assignee of this Agreement is bound to arbitrate, or as to the
interpretation of enforceability of this Article VI shall be determined by the
arbitrator. The arbitrator shall be a retired or former judge of any United
States District Court or Court of Appeals or such other qualified person as the
relevant parties may agree to designate, provided such individual has had
--------
substantial professional experience with regard to settling commercial disputes.
The parties intend that the provisions to arbitrate set forth herein be valid,
enforceable and irrevocable. The designation of a situs or a governing law for
this Agreement or the arbitration shall
<PAGE>
18
not be deemed an election to preclude application of the Federal Arbitration
Act, if it would be applicable. In his award the arbitrator shall allocate, in
his discretion, among the parties to the arbitration all costs of the
arbitration, including, without limitation, the fees and expenses of the
arbitrator and reasonable attorneys' fees, costs and expert witness expenses of
the parties. The undersigned agree to comply with any award made in any such
arbitration proceedings that has become final in accordance with the Rules and
agree to the entry of a judgment in any jurisdiction upon any award rendered in
such proceedings becoming final under the Rules. The arbitrator shall be
entitled, if appropriate, to award any remedy in such proceedings, including,
without limitation, monetary damages, specific performance and all other forms
of legal and equitable relief; provided, however, the arbitrator shall not be
-------- -------
entitled to award punitive damages.
ARTICLE V
Insurance
---------
SECTION 5.01. Coverage. As of the Effective Time, coverage of Primex
--------
and its Subsidiaries shall cease under current Company Policies, except as
provided in this Article V. From and after the Effective Time, Primex and its
Subsidiaries will be responsible for obtaining and maintaining insurance
coverages for their own account, and, with respect to policies of commercial
general liability insurance, shall name Olin as an additional insured with
respect to liabilities assumed by Primex under the Indemnity Agreement. To the
extent that liabilities arising from the activities of Olin prior to the
Effective Time are covered by Company Policies, and result in the assertion of
claims against Primex after the Effective Time, it is the intention of the
parties that, without increasing or expanding the risks assumed by the insurer,
Primex will have the benefit of such insurance coverage after the Effective
Time. No assignment pursuant to Section 5.02 is intended to increase the
liability of any insurer under a Company Policy. If and when such assignment
occurs, it is Olin's intention to assign only such coverage as would have been
available to Olin in respect of the Primex Business if the Distribution had not
occurred.
SECTION 5.02. Claims Following the Effective Time; Waiver. (a) If,
--------------------------------------------
subsequent to the Effective Time,
<PAGE>
19
any person shall assert a claim or institute a suit, action or proceeding
against Primex or any of its Subsidiaries (including, without limitation, where
Primex or its Subsidiaries are joint defendants with other persons) with respect
to any injury, loss, liability, damage or expense incurred or claimed to have
been incurred prior to the Effective Time in the course of or in connection with
the conduct of the Primex Business and which injury, loss, liability, damage or
expense may constitute an insured or insurable occurrence under one or more
Company Policies, Olin shall, at the time such claim is asserted, be deemed,
without need of further documentation, to assign to Primex or any of its
Subsidiaries an interest in the relevant Company Policies (unless such
assignment would render Olin's coverage for such occurrence thereunder void),
subject to any limitations or obligations of Primex contemplated by this Article
V, if necessary, and then only to the extent necessary, to convey to Primex or
any of its Subsidiaries rights of indemnity and the right to be defended by or
at the expense of the insurer, with respect to any such claim, suit, action,
proceeding, injury, loss, liability, damage or expense; provided, however, that,
-------- -------
with respect to Company Policies for which Primex has payment obligations
pursuant to Section 5.05 or otherwise, Primex and its Subsidiaries shall only
have the rights set forth under this Section 5.02(a) with respect to such
Company Policies if such payment obligations have been satisfied by Primex.
(b) Notwithstanding any contrary provision contained herein, Olin
shall at all times retain the Company Policies, together with the rights,
benefits and privileges thereunder, including without limitation the right to
invade or exhaust any Company Policy by submission of claims, settlement or
otherwise; provided, that the retention of the Company Policies by Olin is not
--------
intended to limit, inhibit or preclude any right granted pursuant to Section
5.02(a), and provided further that Section 5.02(a) is not intended to limit,
----------------
inhibit or preclude any rights, benefits or privileges Olin may have under
Company Policies. Primex hereby specifically agrees that Olin, in its sole
discretion, may at any time and without the consent of Primex or any of its
Subsidiaries, extinguish any rights Primex and its Subsidiaries may have under
Company Policies, including any rights granted pursuant to Section 5.02(a), and
grant a release to any insurance carrier absolving such carrier from further
liability pursuant to any Company Policy, including for claims asserted with
respect to Liabilities assumed by Primex under the Indemnity Agreement.
<PAGE>
20
Olin shall promptly notify Primex of the extinguishment of any such rights.
SECTION 5.03. Administration. Except as provided in the third
--------------
sentence of this Section 5.03, from and after the Effective Time, Olin shall be
responsible for Claims Administration with respect to Olin Liabilities and
Primex or a Primex Subsidiary, as appropriate, shall be responsible for Claims
Administration with respect to Primex Liabilities. Except as provided in the
third sentence of this Section 5.03, Olin hereby appoints Primex as its agent
and attorney in fact to assert claims against insurance carriers and to
otherwise perform Claims Administration with respect to Primex Liabilities.
Notwithstanding the foregoing, Olin shall be responsible for Claims
Administration with respect to Primex Liabilities with respect to which Olin is
engaged in coverage litigation as of the Effective Time ("Litigated Primex
Liabilities").
SECTION 5.04. Insurance Proceeds. Proceeds received with respect to
------------------
claims made under Company Policies shall be paid to Olin with respect to Olin
Liabilities and to Primex with respect to Primex Liabilities; provided, that
--------
proceeds received with respect to Litigated Primex Liabilities shall be
allocated between Olin and Primex pro rata based on the amounts actually
expended by the parties in connection therewith.
SECTION 5.05. Retrospectively Rated Policies. From and after the
------------------------------
Effective Time, any additional premiums payable or rebates of premiums
previously paid in respect of any retrospectively rated Company Policy shall be
paid or collected by Olin. Olin shall be reimbursed by Primex, or shall
distribute to Primex, amounts equal to the portion of any such additional
premium or rebate, as applicable, which relates to the Primex Business. From
and after the Effective Time, any additional premiums payable or rebates of
premiums previously paid in respect of any retrospectively rated Policy of
Primex or any of its Subsidiaries (including without limitation Policies
maintained by or for the benefit of General Defense Corporation) shall be paid
or collected by Primex or its Subsidiaries.
SECTION 5.06. Agreement for Waiver of Conflict and Shared Defense.
---------------------------------------------------
In the event that Insured Claims of more than one of the parties hereto exist
relating to the same occurrence, the parties shall jointly defend and waive
<PAGE>
21
any conflict of interest necessary to the conduct of the joint defense. Nothing
in this Section 5.06 shall be construed to limit or otherwise alter in any way
the obligations of the parties to this Agreement, including those created by
this Agreement, by operation of law or otherwise.
SECTION 5.07. Cooperation. The parties hereto agree to use their
-----------
commercially reasonable efforts to cooperate with respect to the various
insurance matters contemplated by this Agreement.
SECTION 5.08. Indemnity Agreement. The parties hereto agree that the
-------------------
amount which any indemnifying party is or may be required to pay to an
indemnified party pursuant to the Indemnity Agreement shall be reduced
(including, without limitation, retroactively) by any proceeds of insurance
policies or other amounts actually recovered by or on behalf of such indemnified
party in reduction of the related Liability (as defined in the Indemnity
Agreement). If an indemnified party shall have received the payment (an
"Indemnity Payment") required by the Indemnity Agreement from an indemnifying
party in respect of any Liability (as defined in the Indemnity Agreement) and
shall subsequently actually receive proceeds of insurance policies or other
amounts in respect of such Liability, then such indemnified party shall repay to
such indemnifying party a sum equal to the amount actually received (up to but
not in excess of the amount of any Indemnity Payment made thereunder). An
insurer who would otherwise be obligated to pay any claim shall not, solely by
virtue of the indemnification provisions contained in the Indemnity Agreement,
be relieved of its responsibility with respect thereto, or have any subrogation
rights with respect thereto, it being expressly understood and agreed that no
insurer or any other third party shall be entitled to a benefit they would not
otherwise be entitled to receive in the absence of the indemnification
provisions contained in the Indemnity Agreement by virtue thereof.
ARTICLE VI
Employee Obligations and Benefit Plans
--------------------------------------
SECTION 6.01. Retirement Plans. (a) Recognition of Service by Olin.
---------------- -------------------------------
Effective as of the Effective Time, Olin shall cause the Olin Pension Plan to be
amended to (i) recognize all Creditable Service (as defined in the Olin
<PAGE>
22
Pension Plan) by employees of Olin who have transferred from Olin or any of its
Subsidiaries directly to Primex on or within five years following the Effective
Time; (ii) include in such employees' Final Average Pay (as defined in the Olin
Pension Plan) compensation received from Primex or any of its Subsidiaries, as
determined at the time of retirement from Primex or any such Subsidiary; and
(iii) to recognize service with Primex or any of its Subsidiaries on and after
the Effective Time for the purpose of meeting all vesting and early retirement
requirements of the Olin Pension Plan (but not for the purpose of calculating
benefit service credit thereunder). Employees of Primex who are eligible to
receive benefits under the Olin Pension Plan, as amended as contemplated above,
will not be entitled to receive such benefits prior to retirement from Primex.
(b) Adoption of PRIME. Effective as of the Effective Time, Primex
------------------
shall adopt PRIME. PRIME shall recognize all prior service with Olin or any of
its Subsidiaries for the purpose of meeting all vesting requirements thereunder
(but not for the purpose of calculating benefit service credit thereunder) for
all individuals who become employees of Primex or any of its Subsidiaries within
five years following the Effective Time and who were employed by Olin or any of
its Subsidiaries immediately prior to becoming an employee of Primex. No Olin
Pension Plan assets will be transferred to Primex or any employee benefit trust
of Primex.
(c) Management Security Plan. Primex hereby agrees to assume, and
------------------------
shall indemnify and hold harmless Olin from and against, all claims brought
against Olin or any of its Subsidiaries under the Management Security Plan by
any employee of Primex or any of its Subsidiaries who retires after the
Effective Time.
SECTION 6.02. Investment and Savings Programs. (a) Olin CEOP Plan.
------------------------------- --------------
Employee contributions and employer matching contributions under the Olin CEOP
Plan will cease as of the Effective Time (or any subsequent date within five
years following the Effective Time on which an employee of Olin transfers
directly to Primex) in respect of all Primex employees. Participants under the
Olin CEOP Plan who are employees of Primex at the Effective Time will be 100%
vested in their account balances thereunder as of such date.
(b) Transfer of CEOP Account. Olin and Primex will cause the account
------------------------
balance of any participant under the
<PAGE>
23
Olin CEOP Plan who will be an employee of Primex at the Effective Time to be
transferred to PRIME unless instructed by a participant to the contrary prior to
the date determined by Olin for such purpose.
SECTION 6.03. Supplemental Plans. Effective as of the Effective
------------------
Time, Olin shall continue to sponsor the Olin Supplemental Plans, subject to the
terms thereof. Olin hereby assumes all liability for benefits (whether funded
or unfunded) that have accrued prior to the Effective Time under the Olin
Supplemental Plans with respect to persons who immediately after the
Distribution are employed on a salaried basis by Primex. Effective as of the
Effective Time, Primex shall adopt the Primex Supplemental Plan, which will be
designed to restore any benefits under PRIME that would otherwise be reduced as
a result of limitations contained in the Code for certain employees. Prior
service with Olin will be recognized under the Primex Supplemental Plan for the
purpose of meeting all vesting requirements thereunder.
SECTION 6.04. Retiree Welfare and Life Insurance Plans. Effective as
----------------------------------------
of the Effective Time, Olin shall continue to sponsor the retiree medical
benefit and life insurance plans of Olin. Olin hereby agrees that it will
retain all liability with respect to medical and life insurance benefits
provided to former employees of the Ordnance and Aerospace Divisions of Olin who
retire prior to the Effective Time. Effective as of the Effective Time, Primex
shall adopt a medical and life insurance benefits plan substantially similar to
Olin's retiree benefits program. Other than possible increases in employee
contributions, Primex hereby agrees that the benefits provided under its retiree
medical and life insurance benefits program shall not be reduced or terminated
prior to the fifth anniversary of the Effective Time. Primex hereby agrees to
assume, and shall indemnify and hold harmless Olin from and against, all claims
brought against Olin or any of its Subsidiaries under Olin's retiree medical and
life insurance benefit plans by any employee of Primex who retires after the
Effective Time.
SECTION 6.05. Other Benefits. Olin shall continue to be responsible
---------------
for health care and disability claims incurred by an employee of Olin or any of
its Subsidiaries prior to the Effective Time under existing Olin benefit plans.
Effective as of the Effective Time, Primex shall adopt health care and
disability benefits programs
<PAGE>
24
affording benefits substantially similar to those provided under Olin's benefit
plans covering claims incurred by all employees of Primex or any of its
Subsidiaries after the Distribution Date.
SECTION 6.06. Severance Claims. Primex shall assume, and shall
-----------------
indemnify and hold Olin harmless against, all claims and liabilities for
severance, change-in-control or termination benefits arising out of or resulting
from the transfer of employment of any employee of Olin or any of its
Subsidiaries to Primex or any of its Subsidiaries at the Effective Time.
SECTION 6.07. Bargaining Employees. Primex hereby acknowledges and
--------------------
agrees that it shall be the "successor employer" to Olin under the collective
bargaining agreements listed on Schedule 6.07 (the "Collective Bargaining
Agreements"). Effective as of the Effective Time, Primex shall adopt a pension
plan and establish a pension trust for the purpose of funding benefits which
accrue under the Collective Bargaining Agreements following the Effective Time.
Credited service accrued under the Olin Pension Plan prior to the Effective Time
with respect to the Collective Bargaining Agreements will be recognized under
such Primex pension plan for the purpose of meeting all vesting and early
retirement requirements thereunder (but not for the purpose of calculating
benefit service credit thereunder). No Olin pension assets for bargaining
employees will be transferred to Primex or to a Primex pension trust for
bargaining employees. The Olin Pension Plan shall be responsible for pension
benefits of Olin's bargaining employees which have accrued under the Collective
Bargaining Agreements prior to the Effective Time.
ARTICLE VII
Miscellaneous
-------------
SECTION 7.01. Complete Agreement; Construction. This Agreement,
---------------------------------
including the Exhibits and Schedules, and the Ancillary Agreements shall
constitute the entire agreement between the parties with respect to the subject
matter hereof and shall supersede all previous negotiations, commitments and
writings with respect to such subject matter. In the event of any inconsistency
between this Agreement and any Schedule hereto, the Schedule shall prevail.
Notwithstanding any other provisions in this Agreement to the con-
<PAGE>
25
trary, in the event and to the extent that there shall be a conflict between the
provisions of this Agreement and the provisions of any Ancillary Agreement, such
Ancillary Agreement shall control.
SECTION 7.02. Ancillary Agreements. This Agreement is not intended
---------------------
to address, and should not be interpreted to address, the matters specifically
and expressly covered by the Ancillary Agreements.
SECTION 7.03. Counterparts. This Agreement may be executed in one or
-------------
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been signed
by each of the parties and delivered to the other parties.
SECTION 7.04. Survival of Agreements. Except as otherwise
-----------------------
contemplated by this Agreement, all covenants and agreements of the parties
contained in this Agreement shall survive the Effective Time.
SECTION 7.05. Expenses. Except as otherwise set forth in this
---------
Agreement or any Ancillary Agreement, all costs and expenses incurred on or
prior to the Effective Time (whether or not paid on or prior to the Effective
Time) in connection with the preparation, execution, delivery and implementation
of this Agreement and any Ancillary Agreement, the Information Statement and the
Distribution and the consummation of the transactions contemplated thereby shall
be charged to and paid by Olin; provided that Olin shall not be responsible for
--------
those costs or expenses incurred by Primex (including, without limitation, any
attorney or financial advisor fees owing to attorneys or financial advisors
retained by Primex). Except as otherwise set forth in this Agreement or any
Ancillary Agreement, each party shall bear its own costs and expenses incurred
after the Effective Time.
SECTION 7.06. Notices. All notices and other communications
--------
hereunder shall be in writing and hand delivered or mailed by registered or
certified mail (return receipt requested) or sent by any means of electronic
message transmission with delivery confirmed (by voice or otherwise) to the
parties at the following addresses (or at such other addresses for a party as
shall be specified by
<PAGE>
26
like notice) and will be deemed given on the date on which such notice is
received:
To Olin Corporation:
501 Merritt 7
P.O. Box 4500
Norwalk, CT 06851
Attn: Corporate Secretary
To Primex:
10101 Ninth Street North
St. Petersburg, FL 33716-3807
Attn: Corporate Secretary
SECTION 7.07. Waivers. The failure of either party to require strict
--------
performance by the other party of any provision in this Agreement will not waive
or diminish that party's right to demand strict performance thereafter of that
or any other provision hereof.
SECTION 7.08. Amendments. Subject to the terms of Section 7.11
-----------
hereof, this Agreement may not be modified or amended except by an agreement in
writing signed by the parties.
SECTION 7.09. Assignment. This Agreement shall be assignable in
-----------
whole in connection with a merger or consolidation or the sale of all or
substantially all the assets of a party hereto so long as the resulting,
surviving or transferee entity assumes all the obligations of the relevant party
hereto by operation of law or pursuant to an agreement in form and substance
reasonably satisfactory to the other parties to this Agreement. Otherwise this
Agreement shall not be assignable, in whole or in part, directly or indirectly,
by any party hereto without the prior written consent of the others, and any
attempt to assign any rights or obligations arising under this Agreement without
such consent shall be void.
SECTION 7.10. Successors and Assigns. The provisions of this
-----------------------
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and permitted assigns.
<PAGE>
27
SECTION 7.11. Termination. This Agreement may be terminated and the
------------
Distribution may be amended, modified or abandoned at any time prior to the
Effective Time by and in the sole discretion of Olin without the approval of
Primex or the shareholders of Olin. In the event of such termination, no party
shall have any liability of any kind to any other party or any other person.
After the Effective Time, this Agreement may not be terminated except by an
agreement in writing signed by the parties.
SECTION 7.12. Subsidiaries. Each of the parties hereto shall cause
-------------
to be performed, and hereby guarantees the performance of, all actions,
agreements and obligations set forth herein to be performed by any Subsidiary of
such party or by any entity that is contemplated to be a Subsidiary of such
party on and after the Effective Time.
SECTION 7.13. Third Party Beneficiaries. This Agreement is solely
--------------------------
for the benefit of the parties hereto and their respective Subsidiaries and
Affiliates and should not be deemed to confer upon third parties any remedy,
claim, liability, reimbursement, claim of action or other right in excess of
those existing without reference to this Agreement.
SECTION 7.14. Attorney Fees. Except as contemplated by the third to
--------------
the last sentence of Article IV hereof, a party in breach of this Agreement
shall, on demand, indemnify and hold harmless the other parties hereto for and
against all out-of-pocket expenses, including, without limitation, legal fees,
incurred by such other party by reason of the enforcement and protection of its
rights under this Agreement. The payment of such expenses is in addition to any
other relief to which such other party may be entitled hereunder or otherwise.
SECTION 7.15. Title and Headings. Titles and headings to sections
-------------------
herein are inserted for the convenience of reference only and are not intended
to be a part of or to affect the meaning or interpretation of this Agreement.
SECTION 7.16. Exhibits and Schedules. The Exhibits and Schedules
-----------------------
shall be construed with and as an integral part of this Agreement to the same
extent as if the same had been set forth verbatim herein.
SECTION 7.17. Specific Performance. Each of the parties hereto
---------------------
acknowledges that there is no adequate remedy
<PAGE>
28
at law for failure by such parties to comply with the provisions of this
Agreement and that such failure would cause immediate harm that would not be
adequately compensable in damages, and therefore agree that their agreements
contained herein may be specifically enforced without the requirement of posting
a bond or other security, in addition to all other remedies available to the
parties hereto under this Agreement.
SECTION 7.18. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
--------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF VIRGINIA APPLICABLE
TO CONTRACTS EXECUTED THEREIN AND TO BE PERFORMED THEREIN.
SECTION 7.19. Consent to Jurisdiction. Without limiting the
------------------------
provisions of Article IV hereof, each of the parties irrevocably submits to the
exclusive personal jurisdiction and venue of (a) the Circuit Court of Henrico
County, Commonwealth of Virginia, and (b) the United States District Court for
the Eastern District of Virginia (Richmond Division), for the purposes of any
suit, action or other proceeding arising out of this Agreement or any
transaction contemplated hereby. Each of the parties agrees to commence any
action, suit or proceeding relating hereto either in the United States District
Court for the Eastern District of Virginia (Richmond Division) or if such suit,
action or other proceeding may not be brought in such court for jurisdictional
reasons, in the Circuit Court of the Henrico County, Commonwealth of Virginia.
Each of the parties further agrees that service of any process, summons, notice
or document by U.S. registered mail to such party's respective address set forth
above shall be effective service of process for any action, suit or proceeding
in Virginia with respect to any matters to which it has submitted to
jurisdiction in this Section 7.19. Each of the parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) the Circuit Court of Henrico County, Commonwealth of Virginia, or
(ii) the United States District Court for the Eastern District of Virginia, and
hereby further irrevocably and unconditionally waives and agrees not to plead or
claim in any such court that any such action, suit or proceeding brought in any
such court has been brought in an inconvenient forum.
SECTION 7.20. Severability. In the event any one or more of the
-------------
provisions contained in this Agreement should
<PAGE>
29
be held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions, the
<PAGE>
30
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
OLIN CORPORATION,
by
_____________________________
Name:
Title:
PRIMEX TECHNOLOGIES, INC.,
by
_____________________________
Name:
Title:
<PAGE>
31
Exhibit A
1. Government owned contractor operated facilities and assets
related thereto.
2. The name "Olin Corporation" and derivatives thereof.
3. Other assets as contemplated by the Ancillary Agreements.
<PAGE>
32
Schedule 2.09
Guaranties
----------
1. Agreement of Guaranty No. 1, dated December 29, 1986, between
Olin Corporation and The Connecticut National Bank, as Trustee.
2. Agreement of Guaranty No. 2, dated December 29, 1986, between
Olin Corporation and The Connecticut National Bank, as Trustee.
<PAGE>
33
Schedule 6.07
Collective Bargaining Agreements
--------------------------------
1. Agreement between Olin Corporation and United Steelworkers of
America AFL-CIO-CLC (Local 15009A) dated December 9, 1989.
2. Agreement between Olin Corporation and the International Union,
United Steelworkers of America (AFL-CIO-CLC) on behalf of Local
Number 8018 dated October 15, 1994.
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
PRIMEX TECHNOLOGIES, INC.
ARTICLE I
The name of the Corporation shall be Primex Technologies, Inc.
ARTICLE II
The purpose for which the Corporation is formed is to transact any or all
lawful business, not required to be specifically stated in these Articles, for
which corporations may be incorporated under the Virginia Stock Corporation Act,
as amended from time to time.
ARTICLE III
The aggregate number of shares that the Corporation shall have authority to
issue shall be 60,000,000 shares of Preferred Stock, par value $1 per share
(hereinafter called Preferred Stock), and 10,000,000 shares of Common Stock, par
value $1 per share (hereinafter called Common Stock).
The following is a description of each of said different classes of stock,
and a statement of the preferences, limitations, voting rights and relative
rights in respect of the shares of each such class:
1. The Board of Directors shall have authority, by resolution or
resolutions, at any time and from time to time to divide and establish any
or all of the unissued shares of Preferred Stock not then allocated to any
series of Preferred Stock into one or more series, and, without limiting
the generality of the foregoing, to fix and determine the designation of
each such series, the number of shares which shall constitute such series
and the following relative rights and preferences of the shares of each
series so established:
(a) The annual or other periodic dividend rate payable on shares
of such series, the time of payment thereof, whether such dividends
shall be
<PAGE>
cumulative or non-cumulative, and the date or dates from which any
cumulative dividends shall commence to accrue;
(b) the price or prices at which and the terms and conditions, if
any, on which shares of such series may be redeemed;
(c) the amounts payable upon shares of such series in the event
of the voluntary or involuntary dissolution, liquidation or winding-up
of the affairs of the Corporation;
(d) the sinking fund provisions, if any, for the redemption or
purchase of shares of such series;
(e) the extent of the voting powers, if any, of the shares of
such series;
(f) the terms and conditions, if any, on which shares of such
series may be converted into shares of stock of the Corporation of any
other class or classes or into shares of any other series of the same
or any other class or classes;
(g) whether, and if so the extent to which, shares of such series
may participate with the Common Stock in any dividends in excess of
the preferential dividend fixed for shares of such series or in any
distribution of the assets of the Corporation, upon a liquidation,
dissolution or winding-up thereof, in excess of the preferential
amount fixed for shares of such series; and
(h) any other preferences and relative, optional or other special
rights, and qualifications, limitations or restrictions of such
preferences or rights, of shares of such series not fixed and
determined by law or in this Article III.
2. Each series of Preferred Stock shall be so designated as to
distinguish the shares thereof from the shares of all other series.
Different series of Preferred Stock shall not be considered to constitute
different classes of shares for the purpose of voting by classes except as
otherwise fixed by the Board of Directors with respect to any series at the
time of the creation thereof.
3. So long as any shares of Preferred Stock are outstanding, the
Corporation shall not declare and pay or set apart for payment any
dividends (other than dividends payable in Common Stock or other stock of
the Corporation ranking junior to the Preferred Stock as to dividends) or
make any other distribution on such junior stock, if at the time of making
such declaration, payment or distribution the Corporation shall be in
default with respect to any dividend payable on, or any obligation to
retire, shares of Preferred Stock.
2
<PAGE>
4. Shares of any series of Preferred Stock that have been redeemed or
otherwise reacquired by the Corporation (whether through the operation of a
sinking fund, upon conversion or otherwise) shall have the status of
authorized and unissued shares of Preferred Stock and may be redesignated
and reissued as a part of such series (unless prohibited by the articles of
amendment creating such series) or of any other series of Preferred Stock.
Shares of Common Stock that have been reacquired by the Corporation shall
have the status of authorized and unissued shares of Common Stock and may
be reissued.
5. Subject to the provisions of any applicable law or of the By-laws
of the Corporation as from time to time amended with respect to the closing
of the transfer books or the fixing of a record date for the determination
of shareholders entitled to vote, and except as otherwise provided by law
or in resolutions of the Board of Directors establishing any series of
Preferred Stock pursuant to the provisions of paragraph 1 of this Article
III, the holders of outstanding shares of Common Stock of the Corporation
shall exclusively possess voting power for the election of directors and
for all other purposes, each holder of record of shares of Common Stock of
the Corporation being entitled to one vote for each share of such stock
standing in his name on the books of the Corporation.
6. No holder of shares of stock of any class of the Corporation
shall, as such holder, have any right to subscribe for or purchase (a) any
shares of stock of any class of the Corporation, or any warrants, options
or other instruments that shall confer upon the holder thereof the right to
subscribe for or purchase or receive from the Corporation any shares of
stock of any class, whether or not such shares of stock, warrants, options
or other instruments are issued for cash or services or property or by way
of dividend or otherwise, or (b) any other security of the Corporation that
shall be convertible into, or exchangeable for, any shares of stock of the
Corporation of any class or classes, or to which shall be attached or
appurtenant any warrant, option or other instrument that shall confer upon
the holder of such security the right to subscribe for or purchase or
receive from the Corporation any shares of its stock of any class or
classes, whether or not such securities are issued for cash or services or
property or by way of dividend or otherwise, other than such right, if any,
as the Board of Directors, in its sole discretion, may from time to time
determine. If the Board of Directors shall offer to the holders of shares
of stock of any class of the Corporation, or any of them, any such shares
of stock, options, warrants, instruments or other securities of the
Corporation, such offer shall not, in any way, constitute a waiver or
release of the right of the Board of Directors subsequently to dispose of
other securities of the Corporation without offering the same to said
holders.
7. Anything herein to the contrary notwithstanding, dividends upon
shares of any class of stock of the Corporation shall be payable only out
of assets legally available for the payment of such dividends, and the
rights of the holders of shares of stock of the Corporation in respect of
dividends shall at all times be subject to the
3
<PAGE>
power of the Board of Directors to determine what dividends, if any, shall
be declared and paid to the shareholders.
8. Subject to the provisions hereof and except as otherwise provided
by law, shares of stock of any class of the Corporation may be issued for
such consideration and for such corporate purposes as the Board of
Directors may from time to time determine.
ARTICLE IV
The period of the duration of the Corporation is unlimited and perpetual.
ARTICLE V
1. The number of directors shall be as specified in the By-laws of
the Corporation but such number may be increased or decreased from time to
time in such manner as may be prescribed in the By-laws. In the absence of
a By-law specifying the number of directors, the number shall be nine.
2. Subject to the rights of the holders of any Preferred Stock then
outstanding, directors may be removed only with cause.
3. Subject to the rights of the holders of any Preferred Stock then
outstanding, newly-created directorships resulting from any increase in the
number of directors and any vacancies in the Board of Directors resulting
from death, resignation, disqualification, removal or other cause shall be
filled solely by the Board of Directors or at an annual meeting of
shareholders by the shareholders entitled to vote on the election of
directors. If the directors remaining in office constitute fewer than a
quorum of the Board, they may fill the vacancy by the affirmative vote of a
majority of the directors remaining in office.
ARTICLE VI
Except as expressly otherwise required in these Articles of Incorporation,
an amendment or restatement of these Articles requiring shareholder approval
shall be approved by a majority of the votes entitled to be cast by each voting
group that is entitled to vote on the matter, unless in submitting an amendment
or restatement to the shareholders the Board of Directors shall require a
greater vote.
4
<PAGE>
ARTICLE VII
1. Every person who is or was a director, officer or employee of the
Corporation, or who, at the request of the Corporation, serves or has
served in any such capacity with another corporation, partnership, joint
venture, trust, employee benefit plan, or other enterprise shall be
indemnified by the Corporation against any and all liability and reasonable
expense that may be incurred by him in connection with or resulting from
any claim, action or proceeding (whether brought in the right of the
Corporation or any such other corporation, entity, plan or otherwise), in
which he may become involved, as a party or otherwise, by reason of his
being or having been a director, officer or employee of the Corporation, or
such other corporation, entity or plan while serving at the request of the
Corporation, whether or not he continues to be such at the time such
liability or expense is incurred, unless such person engaged in willful
misconduct or a knowing violation of the criminal law.
As used in this Article VII: (a) the terms "liability" and "expense"
shall include, but shall not be limited to, counsel fees and disbursements
and amounts of judgments, fines or penalties against, and amounts paid in
settlement by, a director, officer or employee; (b) the terms "director,"
"officer" and employee," unless the context otherwise requires, include the
estate or personal representative of any such person; (c) a person is
considered to be serving an employee benefit plan as a director, officer or
employee of the plan at the Corporation's request if his duties to the
Corporation also impose duties on, or otherwise involve services by, him to
the plan or, in connection with the plan, to participants in or
beneficiaries of the plan; (d) the term "occurrence" means any act or
failure to act, actual or alleged, giving rise to a claim, action or
proceeding; and (e) service as a trustee or as a member of a management or
similar committee of a partnership, joint venture or limited liability
company shall be considered service as a director, officer or employee of
the trust, partnership, joint venture or limited liability company.
The termination of any claim, action or proceeding, civil or criminal,
by judgment, settlement, conviction or upon a plea of nolo contendere, or
its equivalent, shall not create a presumption that a director, officer or
employee did not meet the standards of conduct set forth in this paragraph
1. The burden of proof shall be on the Corporation to establish, by a
preponderance of the evidence, that the relevant standards of conduct set
forth in this paragraph 1 have not been met.
2. Any indemnification under paragraph 1 of this Article VII shall be
made unless (a) the Board, acting by a majority vote of those directors who
were directors at the time of the occurrence giving rise to the claim,
action or proceeding involved and who are not at the time parties to such
claim, action or proceeding (provided there are at least five such
directors), finds that the director, officer or employee has not met the
relevant standards of conduct set forth in such paragraph 1, or (b) if
there are not at least five such directors, the Corporation's principal
Virginia legal counsel, as last
5
<PAGE>
designated by the Board as such prior to the time of the occurrence giving
rise to the claim, action or proceeding involved, or in the event for any
reason such Virginia counsel is unwilling to so serve, then Virginia legal
counsel mutually acceptable to the Corporation and the person seeking
indemnification, deliver to the Corporation their written advice that, in
their opinion, such standards have not been met.
3. Expenses incurred with respect to any claim, action or proceeding
of the character described in paragraph 1 shall, except as otherwise set
forth in this paragraph 3, be advanced by the Corporation prior to the
final disposition thereof upon receipt of an undertaking by or on behalf of
the recipient to repay such amount if it is ultimately determined that he
is not entitled to indemnification under this Article VII. No security
shall be required for such undertaking and such undertaking shall be
accepted without reference to the recipient's final ability to make
repayment. Notwithstanding the foregoing, the Corporation may refrain
from, or suspend, payment of expenses in advance if at any time before
delivery of the final finding described in paragraph 2, the Board or
Virginia legal counsel, as the case may be, acting in accordance with the
procedures set forth in paragraph 2, find by a preponderance of the
evidence then available that the officer, director or employee has not met
the relevant standards of conduct set forth in paragraph 1.
4. No amendment or repeal of this Article VII shall adversely affect
or deny to any director, officer or employee the rights of indemnification
provided in this Article VII with respect to any liability or expense
arising out of a claim, action or proceeding based in whole or substantial
part on an occurrence the inception of which takes place before or while
this Article VII, as set forth in these Amended and Restated Articles of
Incorporation, is in effect. The provisions of this paragraph 4 shall
apply to any such claim, action or proceeding whenever commenced, including
any such claim, action or proceeding commenced after any amendment or
repeal to this Article VII.
5. The rights of indemnification provided in this Article VII shall
be in addition to any rights to which any such director, officer or
employee may otherwise be entitled by contraction or as a matter of law.
6. In any proceeding brought by or in the right of the Corporation or
brought by or on behalf of shareholders of the Corporation, no director or
officer of the Corporation shall be liable to the Corporation or its
shareholders for monetary damages with respect to any transaction,
occurrence or course of conduct, whether prior or subsequent to the
effective date of this Article VII, except for liability resulting from
such person's having engaged in willful misconduct or a knowing violation
of the criminal law or any federal or state securities law.
6
<PAGE>
EXHIBIT 3.2
BY-LAWS
OF
PRIMEX TECHNOLOGIES, INC.
AS AMENDED NOVEMBER 27, 1996
----------------------------
ARTICLE I.
MEETINGS OF SHAREHOLDERS.
SECTION 1. PLACE OF MEETINGS. All meetings of the shareholders of Primex
-----------------
Technologies, Inc. (hereinafter called the "Corporation") shall be held at such
place, either within or without the Commonwealth of Virginia, as may from time
to time be fixed by the Board of Directors of the Corporation (hereinafter
called the "Board").
SECTION 2. ANNUAL MEETINGS. The annual meeting of the shareholders of the
---------------
Corporation for the election of directors and for the transaction of such other
business as may properly come before the meeting shall be held on the first
Tuesday in May in each year (or, if that day shall be a legal holiday, then on
the next succeeding business day), or on such other day and/or in such other
month as may be fixed by the Board, at such hour as may be specified in the
notice thereof.
SECTION 3. SPECIAL MEETINGS. A special meeting of the shareholders for
----------------
any purpose or purposes, unless otherwise provided by law or in the Articles of
Incorporation of the Corporation as from time to time amended (hereinafter
called the "Articles"), may be held at any time upon the call of the Board, the
Chairman of the Board or the President or the Chief Executive Officer.
SECTION 4. NOTICE OF MEETINGS. Except as otherwise provided by law or the
------------------
Articles, not less than ten nor more than sixty days' notice in writing of the
place, day, hour and purpose or purposes of each meeting of the shareholders,
whether annual or special, shall be given to each shareholder of record of the
Corporation entitled to vote at such meeting, either by the delivery thereof to
such shareholder personally or by the mailing thereof to such shareholder in a
postage prepaid envelope addressed to such shareholder at his address as it
appears on the stock transfer books of the Corporation; provided, however, that
in the case of a special meeting of shareholders called by the shareholders,
such notice shall be given at least fifty days before the date of the meeting.
Notice of any meeting of shareholders shall not be required to be given to any
shareholder who shall attend the meeting in person or by proxy, unless
attendance is for the express purpose of objecting to the transaction of any
business because the meeting was not lawfully called or convened, or who shall
waive notice thereof in writing signed by the shareholder before, at or after
such meeting. Notice of any adjourned meeting need not be given, except when
expressly required by law.
<PAGE>
SECTION 5. QUORUM. Shares representing a majority of the votes entitled
------
to be cast on a matter by all classes or series which are entitled to vote
thereon and be counted together collectively, represented in person or by proxy
at any meeting of the shareholders, shall constitute a quorum for the
transaction of business thereat with respect to such matter, unless otherwise
provided by law or the Articles. In the absence of a quorum at any such meeting
or any adjournment or adjournments thereof, shares representing a majority of
the votes cast on the matter of adjournment, either in person or by proxy, may
adjourn such meeting from time to time until a quorum is obtained. At any such
adjourned meeting at which a quorum has been obtained, any business may be
transacted which might have been transacted at the meeting as originally called.
SECTION 6. VOTING. Unless otherwise provided by law or the Articles, at
------
each meeting of the shareholders each shareholder entitled to vote at such
meeting shall be entitled to one vote for each share of stock standing in his
name on the books of the Corporation upon any date fixed as hereinafter
provided, and may vote either in person or by proxy in writing. Unless demanded
by a shareholder present in person or represented by proxy at any meeting of the
shareholders and entitled to vote thereon or so directed by the chairman of the
meeting, the vote on any matter need not be by ballot. On a vote by ballot,
each ballot shall be signed by the shareholder voting or his proxy, and it shall
show the number of shares voted.
SECTION 7. JUDGES. One or more judges or inspectors of election for any
------
meeting of shareholders may be appointed by the chairman of such meeting, for
the purpose of receiving and taking charge of proxies and ballots and deciding
all questions as to the qualification of voters, the validity of proxies and
ballots and the number of votes properly cast.
SECTION 8. CONDUCT OF MEETING. The chairman of the meeting at each
------------------
meeting of shareholders shall have all the powers and authority vested in
presiding officers by law or practice, without restriction, as well as the
authority to conduct an orderly meeting and to impose reasonable limits on the
amount of time taken up in remarks by any one shareholder.
SECTION 9. ANNUAL MEETING BUSINESS. To be properly brought before an
-----------------------
annual meeting, business must be (i) specified in the notice of the meeting (or
any supplement thereto) given by or at the direction of the Board, (ii)
otherwise properly brought before the meeting by or at the direction of the
Board or (iii) otherwise properly brought before the meeting by a shareholder.
For business to be properly brought before an annual meeting by a shareholder,
the shareholder must have given written notice thereof, either by personal
delivery or by United States mail, postage prepaid, to the Secretary of the
Corporation, not later than 90 days in advance of such meeting (providing that
if the annual meeting of shareholders is held earlier than the first Tuesday in
May, such notice must be given within 10 days after the first public disclosure,
which may include any public filing with the Securities and Exchange Commission,
of the date of the annual meeting). Any such notice shall set forth as to each
matter the shareholder proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting and in the event
- 2 -
<PAGE>
that such business includes a proposal to amend either the Articles of
Incorporation then in effect or By-laws of the Corporation, the language of the
proposed amendment, (ii) the name and address of the shareholder proposing such
business, (iii) a representation that the shareholder is a holder of record of
stock of the corporation entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to propose such business, (iv) any material
interest of the shareholder in such business and (v) a representation as to
whether or not the shareholder will solicit proxies in support of his proposal.
No business shall be conducted at an annual meeting of shareholders except in
accordance with this paragraph and the chairman of any annual meeting of
shareholders may refuse to permit any business to be brought before an annual
meeting which fails to comply with the foregoing procedures or, in the case of a
shareholder proposal, if the shareholder fails to comply with the
representations set forth in the notice.
ARTICLE II.
BOARD OF DIRECTORS.
SECTION 1. NUMBER, CLASSIFICATION, TERM, ELECTION. The property, business
--------------------------------------
and affairs of the Corporation shall be managed under the direction of the Board
as from time to time constituted. The number of directors which shall
constitute the whole board shall be fixed from time to time by resolution of the
Board at any number not greater than eighteen nor less than two. No director
need be a shareholder. The Board shall consist of one class, with the members
to serve until their respective successors shall have been duly elected or until
death or resignation or until removal in the manner hereinafter provided. In
case the number of directors shall be increased, the additional directors to
fill the vacancies caused by such increase shall be elected in accordance with
the provisions of Section 4 of Article V of these By-laws.
Subject to the rights of holders of any Preferred Stock outstanding,
nominations for the election of directors may be made by the Board or a
committee appointed by the Board or by any shareholder entitled to vote in the
election of directors generally. However, any shareholder entitled to vote in
the election of directors generally may nominate one or more persons for
election as directors at a meeting only if it is a meeting of shareholders for
the purposes of electing directors and written notice of such shareholder's
intent to make such nomination or nominations has been given, either by personal
delivery or by United States mail, postage prepaid, to the Secretary of the
Corporation not later than (i) with respect to an election to be held at an
annual meeting of shareholders, 90 days in advance of such meeting and (ii) with
respect to an election to be held at a special meeting of shareholders for the
election of directors, the close of business on the seventh day following the
date on which notice of such meeting is first given to shareholders. Each such
notice shall set forth: (a) the name and address of the shareholder who intends
to make the nomination and of the person or persons to be nominated; (b) a
representation that the shareholder is a holder of record of shares of the
Corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate the person or persons specified in the
notice; (c) a description
- 3 -
<PAGE>
of all arrangements or understandings between the shareholder and each nominee
and any other person or persons (naming such person or persons) pursuant to
which the nomination or nominations are to be made by the shareholder; (d) a
representation as to whether the shareholder intends to solicit by proxy other
shareholders in support of any nominee, (e) such other information regarding
each nominee proposed by such shareholder as would be required to be included in
a proxy statement filed pursuant to the proxy rules of the Securities and
Exchange Commission; and (f) the consent of each nominee to serve as a director
of the Corporation if so elected.
SECTION 2. COMPENSATION. Each director, in consideration of his serving
------------
as such, shall be entitled to receive from the Corporation such amount per annum
or such fees for attendance at Board and Committee meetings, or both, in cash or
other property, including securities of the Corporation, as the Board shall from
time to time determine, together with reimbursements for the reasonable expenses
incurred by him in connection with the performance of his duties. Nothing
contained herein shall preclude any director from serving the Corporation, or
any subsidiary or affiliated corporation, in any other capacity and receiving
proper compensation therefor. If the Board adopts a resolution to that effect,
any director may elect to defer all or any part of the annual and other fees
hereinabove referred to for such period and on such terms and conditions as
shall be permitted by such resolution.
SECTION 3. PLACE OF MEETINGS. The Board may hold its meetings at such
-----------------
place or places within or without the Commonwealth of Virginia as it may from
time to time by resolution determine or as shall be specified or fixed in the
respective notices or waivers of notice thereof.
SECTION 4. ORGANIZATION MEETING. After each annual election of directors,
--------------------
as soon as conveniently may be, the newly constituted Board shall meet for the
purposes of organization. At such organization meeting, the newly constituted
Board shall elect officers of the Corporation and transact such other business
as shall come before the meeting. Notice of organization meetings of the Board
need not be given. Any organization meeting may be held at any other time or
place which shall be specified in a notice given as hereinafter provided for
special meetings of the Board, or in a waiver of notice thereof signed by all
the directors.
SECTION 5. REGULAR MEETINGS. Regular meetings of the Board may be held at
----------------
such time and place as may from time to time be specified in a resolution
adopted by the Board then in effect; and, unless otherwise required by such
resolution, or by law, notice of any such regular meeting need not be given.
SECTION 6. SPECIAL MEETINGS. Special meetings of the Board shall be held
----------------
whenever called by the Chief Executive Officer, or by the Secretary at the
request of any three directors. Notice of a special meeting shall be mailed to
each director, addressed to him at his residence or usual place of business, not
later than the second day before the day on which such meeting is to be held, or
shall be sent addressed to him at such place by telegraph, cable or wireless, or
be delivered personally or by telephone, not later than the day before the day
on which such meeting is to be held. Neither the business to be
- 4 -
<PAGE>
transacted at, nor the purpose of, any regular or special meeting of the Board
need be specified in the notice of such meeting, unless required by the
Articles.
SECTION 7. QUORUM. At each meeting of the Board the presence of a
------
majority of the number of directors fixed by these By-laws shall be necessary to
constitute a quorum. The act of a majority of the directors present at a
meeting at which a quorum shall be present shall be the act of the Board, except
as may be otherwise provided by law or by these By-laws. Any meeting of the
Board may be adjourned by a majority vote of the directors present at such
meeting. Notice of any adjourned meeting need not be given.
SECTION 8. WAIVERS OF NOTICE OF MEETINGS. Anything in these By-laws or in
-----------------------------
any resolution adopted by the Board to the contrary notwithstanding, notice of
any meeting of the Board need not be given to any director if such notice shall
be waived in writing signed by such director before, at or after the meeting, or
if such director shall be present at the meeting. Any meeting of the Board shall
be a legal meeting without any notice having been given or regardless of the
giving of any notice or the adoption of any resolution in reference thereto, if
every member of the Board shall be present thereat. Except as otherwise
provided by law or these By-laws, waivers of notice of any meeting of the Board
need not contain any statement of the purpose of the meeting.
SECTION 9. TELEPHONE MEETINGS. Members of the Board or any committee may
------------------
participate in a meeting of the Board or such committee by means of a conference
telephone or other means of communications whereby all directors participating
may simultaneously hear each other during the meeting, and participation by such
means shall constitute presence in person at such meeting.
SECTION 10. ACTIONS WITHOUT MEETINGS. Any action that may be taken at a
------------------------
meeting of the Board or of a committee may be taken without a meeting if a
consent in writing, setting forth the action, shall be signed, either before or
after such action, by all of the directors or all of the members of the
committee, as the case may be. Such consent shall have the same force and
effect as a unanimous vote.
ARTICLE III.
COMMITTEES.
SECTION 1. EXECUTIVE AND FINANCE COMMITTEE. The Board may, by resolution
-------------------------------
or resolutions adopted by a majority of the number of directors fixed by these
By-laws, appoint two or more directors to constitute an Executive and Finance
Committee, each member of which shall serve as such during the pleasure of the
Board, and may designate for such Committee a Chairman, who shall continue as
such during the pleasure of the Board.
All completed action by the Executive and Finance Committee shall be
reported to the Board at its meeting next succeeding such action or at its
meeting held in the month following the taking of such action, and shall be
subject to revision or alteration by the
- 5 -
<PAGE>
Board; provided, that no acts or rights of third parties shall be affected by
any such revision or alteration.
The Executive and Finance Committee shall fix its own rules of procedure
and shall meet where and as provided by such rules or by resolution of the
Board. At all meetings of the Executive and Finance Committee, a majority of
the full number of members of such Committee shall constitute a quorum, and in
every case the affirmative vote of a majority of members present at any meeting
of the Executive and Finance Committee at which a quorum is present shall be
necessary for the adoption of any resolution.
During the intervals between the meetings of the Board, the Executive and
Finance Committee shall possess and may exercise all the power and authority of
the Board (including, without limitation, all the power and authority of the
Board in the management, control and direction of the financial affairs of the
Corporation) except with respect to those matters reserved to the Board by
Virginia law, in such manner as the Executive and Finance Committee shall deem
best for the interests of the Corporation, in all cases in which specific
directions shall not have been given by the Board.
SECTION 2. OTHER COMMITTEES. To the extent permitted by law, the Board
----------------
may from time to time by resolution adopted by a majority of the number of
directors fixed by these By-laws create such other committees of directors,
officers, employees or other persons designated by it as the Board shall deem
advisable and with such limited authority, functions and duties as the Board
shall by resolution prescribe. The Board shall have the power to change the
members of any such committee at any time, to fill vacancies, and to discharge
any such committee, either with or without cause, at any time.
ARTICLE IV.
OFFICERS.
SECTION 1. NUMBER, TERM, ELECTION. The officers of the Corporation shall
----------------------
be a Chief Executive Officer, a Chairman of the Board, a President, one or more
Vice Presidents, a Treasurer, a Controller and a Secretary. The Board may
appoint such other officers and such assistant officers and agents with such
powers and duties as the Board may find necessary or convenient to carry on the
business of the Corporation. Such officers and assistant officers shall serve
until their successors shall be chosen, or as otherwise provided in these By-
laws. Any two or more offices may be held by the same person.
SECTION 2. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer shall,
-----------------------
subject to the control of the Board and the Executive and Finance Committee,
have full authority and responsibility for directing the conduct of the
business, affairs and operations of the Corporation. In addition to acting as
Chief Executive Officer of the Corporation, he shall perform such other duties
and exercise such other powers as may from time to time be prescribed by the
Board and shall see that all orders and resolutions of the Board and the
Executive and Finance Committee are carried into effect. In the event of the
inability of
- 6 -
<PAGE>
the Chief Executive Officer to act, the Board will designate an officer of the
Corporation to perform the duties of that office.
SECTION 3. CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside
---------------------
at all meetings of the Board and of the shareholders and, in the absence of the
Chairman of the Executive and Finance Committee, at all meetings of the
Executive and Finance Committee. He shall perform such other duties and
exercise such other powers as may from time to time be prescribed by the Board
or, if he shall not be the Chief Executive Officer, by the Chief Executive
Officer.
SECTION 4. PRESIDENT. The President shall have such powers and perform
---------
such duties as may from time to time be prescribed by the Board or, if he shall
not be the Chief Executive Officer, by the Chief Executive Officer.
SECTION 5. VICE PRESIDENTS. Each Vice President shall have such powers
---------------
and perform such duties as may from time to time be prescribed by the Board, the
Chief Executive Officer or any officer to whom the Chief Executive Officer may
have delegated such authority.
SECTION 6. TREASURER. The Treasurer shall have the general care and
---------
custody of the funds and securities of the Corporation. He shall perform such
other duties and exercise such other powers as may from time to time be
prescribed by the Board, the Chief Executive Officer or any officer to whom the
Chief Executive Officer may have delegated such authority. If the Board shall
so determine, he shall give a bond for the faithful performance of his duties,
in such sum as the Board may determine to be proper, the expense of which shall
be borne by the Corporation. To such extent as the Board shall deem proper, the
duties of the Treasurer may be performed by one or more assistants, to be
appointed by the Board.
SECTION 7. CONTROLLER. The Controller shall be the accounting officer of
----------
the Corporation. He shall keep full and accurate accounts of all assets,
liabilities, receipts and disbursements and other transactions of the
Corporation and cause regular audits of the books and records of the Corporation
to be made. He shall also perform such other duties and exercise such other
powers as may from time to time be prescribed by the Board, the Chief Executive
Officer or any officer to whom the Chief Executive Officer may have delegated
such authority. If the Board shall so determine, he shall give a bond for the
faithful performance of his duties, in such sum as the Board may determine to be
proper, the expense of which shall be borne by the Corporation. To such extent
as the Board shall deem proper, the duties of the Controller may be performed by
one or more assistants, to be appointed by the Board.
SECTION 8. SECRETARY. The Secretary shall keep the minutes of meetings of
---------
shareholders, of the Board, and, when requested, of Committees of the Board; and
he shall attend to the giving and serving of notices of all meetings thereof.
He shall keep or cause to be kept such stock and other books, showing the names
of the shareholders of the Corporation, and all other particulars regarding
them, as may be required by law. He shall also perform such other duties and
exercise such other powers as may from time to
- 7 -
<PAGE>
time be prescribed by the Board, the Chief Executive Officer or any officer to
whom the Chief Executive Officer may have delegated such authority. To such
extent as the Board shall deem proper, the duties of the Secretary may be
performed by one or more assistants, to be appointed by the Board.
ARTICLE V.
REMOVALS, RESIGNATIONS AND VACANCIES.
SECTION 1. REMOVAL OF DIRECTORS. Any director may be removed at any time
--------------------
but only with cause, by the affirmative vote of the holders of record of a
majority of the shares of the Corporation entitled to vote on the election of
directors, given at a special meeting of the shareholders called expressly for
the purpose.
SECTION 2. REMOVAL OF OFFICERS. Any officer, assistant officer or agent
-------------------
of the Corporation may be removed at any time, either with or without cause, by
the Board in its absolute discretion. Any such removal shall be without
prejudice to the recovery of damages for breach of the contract rights, if any,
of the officer, assistant officer or agent removed. Election or appointment of
an officer, assistant officer or agent shall not of itself create contract
rights.
SECTION 3. RESIGNATION. Any director, officer or assistant officer of the
-----------
Corporation may resign as such at any time by giving written notice of his
resignation to the Board, the Chief Executive Officer or the Secretary of the
Corporation. Such resignation shall take effect at the time specified therein
or, if no time is specified therein, at the time of delivery thereof, and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
SECTION 4. VACANCIES. Any vacancy in the Board caused by death,
---------
resignation, disqualification, removal, an increase in the number of directors,
or any other cause, may be filled by the affirmative vote of a majority of the
remaining directors though less than a quorum of the Board at any regular or
special meeting thereof. Each director so elected by the Board shall hold
office until the next annual election of directors, and each director so elected
by the shareholders shall hold office for a term expiring at the annual meeting
of shareholders at which the term of the class to which he has been elected
expires, and, in each case, until his successor shall be elected, or until his
death, or until he shall resign, or until he shall have been removed in the
manner hereinabove provided. Any vacancy in the office of any officer or
assistant officer caused by death, resignation, removal or any other cause, may
be filled by the Board for the unexpired portion of the term.
- 8 -
<PAGE>
ARTICLE VI.
CONTRACTS, LOANS, CHECKS, DRAFTS, DEPOSITS, ETC.
SECTION 1. EXECUTION OF CONTRACTS. Except as otherwise provided by law or
----------------------
by these By-laws, the Board (i) may authorize any officer, employee or agent of
the Corporation to execute and deliver any contract, agreement or other
instrument in writing in the name and on behalf of the Corporation, and (ii) may
authorize any officer, employee or agent of the Corporation so authorized by the
Board to delegate such authority by written instrument to other officers,
employees or agents of the Corporation. Any such authorization by the Board may
be general or specific and shall be subject to such limitations and restrictions
as may be imposed by the Board. Any such delegation of authority by an officer,
employee or agent may be general or specific, may authorize re-delegation, and
shall be subject to such limitations and restrictions as may be imposed in the
written instrument of delegation by the person making such delegation.
SECTION 2. LOANS. No loans shall be contracted on behalf of the
-----
Corporation and no negotiable paper shall be issued in its name unless
authorized by the Board. When authorized by the Board, any officer, employee or
agent of the Corporation may effect loans and advances at any time for the
Corporation from any bank, trust company or other institution, or from any firm,
corporation or individual, and for such loans and advances may make, execute and
deliver promissory notes, bonds or other certificates or evidences of
indebtedness of the Corporation and when so authorized may pledge, hypothecate
or transfer any securities or other property of the Corporation as security for
any such loans or advances. Such authority may be general or confined to
specific instances.
SECTION 3. CHECKS, DRAFTS, ETC. All checks, drafts and other orders for
-------------------
the payment of money out of the funds of the Corporation and all notes or other
evidences of indebtedness of the Corporation shall be signed on behalf of the
Corporation in such manner as shall from time to time be determined by the
Board.
SECTION 4. DEPOSITS. All funds of the Corporation not otherwise employed
--------
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as the Board may select or as may
be selected by the Treasurer or any other officer, employee or agent of the
Corporation to whom such power may from time to time be delegated by the Board.
SECTION 5. VOTING OF SECURITIES. Unless otherwise provided by the Board,
--------------------
the Chief Executive Officer may from time to time appoint an attorney or
attorneys, or agent or agents of the Corporation, in the name and on behalf of
the Corporation, to cast the votes which the Corporation may be entitled to cast
as the holder of stock or other securities in any other corporation, any of
whose stock or other securities may be held by the Corporation, at meetings of
the holders of the stock or other securities of such other corporation, or to
consent in writing, in the name of the Corporation as such holder, to any action
by such other corporation, and may instruct the person or persons so appointed
as to the manner of casting such votes or giving such consent, and may execute
or cause to
- 9 -
<PAGE>
be executed in the name and on behalf of the Corporation and under its corporate
seal, or otherwise, all such written proxies or other instruments as such
officer may deem necessary or proper in the premises.
ARTICLE VII.
CAPITAL STOCK.
SECTION 1. CERTIFICATES. Every shareholder shall be entitled to a
------------
certificate, or certificates, in such form as shall be approved by the Board,
signed by the Chairman of the Board, the President or a Vice President and the
Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer
or any other officer authorized by these By-laws or a resolution of the Board,
certifying the number of shares owned by him in the Corporation. Any such
certificate may, but need not, bear the seal of the Corporation or a facsimile
thereof. If any such certificate is countersigned by a transfer agent or
registered by a registrar other than the Corporation or an employee of the
Corporation, the signatures of any of the officers above specified upon such
certificate may be facsimiles. In case any such officer who shall have signed
or whose facsimile signature shall have been placed upon such certificate shall
have ceased to be such before such certificate is issued, it may be issued by
the Corporation with the same effect as if such officer had not ceased to be
such at the date of its issue.
SECTION 2. TRANSFERS. Shares of stock of the Corporation shall be
---------
transferable on the stock books of the Corporation by the holder in person or by
his attorney thereunto authorized by power of attorney duly executed and filed
with the Secretary or the transfer agent, but, except as hereinafter provided in
the case of loss, destruction or mutilation of certificates, no transfer of
stock shall be entered until the previous certificate, if any, given for the
same shall have been surrendered and canceled. Except as otherwise provided by
law, no transfer of shares shall be valid as against the Corporation, its
shareholders or creditors, for any purpose, until it shall have been entered in
the stock records of the Corporation by an entry showing from and to whom
transferred. The Board may also make such additional rules and regulations as
it may deem expedient concerning the issue and transfer of certificates
representing shares of the capital stock of the Corporation.
SECTION 3. RECORD DATE. For the purpose of determining shareholders
-----------
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in order
to make a determination of shareholders for any other proper purpose, the Board
may fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than seventy days prior to
the date on which the particular action, requiring such determination of
shareholders, is to be taken. When a determination of shareholders entitled to
vote at any meeting of shareholders has been made as provided in this section,
such determination shall apply to any adjournment thereof unless the Board fixes
a new record date, which it shall do if the meeting is adjourned to a date more
than 120 days after the date fixed for the original meeting.
- 10 -
<PAGE>
SECTION 4. LOST, DESTROYED OR MUTILATED CERTIFICATES. In case of loss,
-----------------------------------------
destruction or mutilation of any certificate of stock, another may be issued in
its place upon proof of such loss, destruction or mutilation and upon the giving
of a bond of indemnity to the Corporation in such form and in such sum as the
Board may direct; provided that a new certificate may be issued without
requiring any bond when, in the judgment of the Board, it is proper so to do.
SECTION 5. CONTROL SHARE ACQUISITIONS. Article 14.1 of Chapter 9 of Title
--------------------------
13.1 of the Code of Virginia shall not apply to acquisitions of shares of the
Corporation.
ARTICLE VIII.
INSPECTION OF RECORDS.
The Board from time to time shall determine whether, to what extent, at
what times and places, and under what conditions and regulations the accounts
and books and papers of the Corporation, or any of them, shall be open for the
inspection of the shareholders, and no shareholder shall have any right to
inspect any account or book or paper of the Corporation except as expressly
conferred by statute or by these By-laws or authorized by the Board.
ARTICLE IX.
AUDITOR.
The Board shall annually appoint an independent accountant who shall
carefully examine the books of the Corporation. One such examination shall be
made immediately after the close of the fiscal year and be ready for
presentation at the annual meeting of shareholders of the Corporation, and such
other examinations shall be made as the Board may direct.
ARTICLE X.
SEAL.
The seal of the Corporation shall be circular in form and shall bear the
name of the Corporation and the year "1996."
- 11 -
<PAGE>
ARTICLE XI.
FISCAL YEAR.
The fiscal year of the Corporation shall end on the 31st day of December in
each year.
ARTICLE XII.
AMENDMENTS.
The By-laws of the Corporation may be altered, amended or repealed and new
By-laws may be adopted by the Board (except as Section 1 of Article II may
otherwise require), or by the holders of the outstanding shares of the
Corporation entitled to vote generally at any annual or special meeting of the
shareholders when notice thereof shall have been given in the notice of the
meeting of shareholders.
EMERGENCY BY-LAWS.
SECTION 1. DEFINITIONS. As used in these Emergency By-laws,
-----------
(a) the term "period of emergency" shall mean any period during which a
quorum of the Board cannot readily be assembled because of some catastrophic
event.
(b) the term "incapacitated" shall mean that the individual to whom such
term is applied shall not have been determined to be dead but shall be missing
or unable to discharge the responsibilities of his office; and
(c) the term "senior officer" shall mean the Chairman of the Board, the
President, any corporate Vice President, the Treasurer, the Controller and the
Secretary, and any other person who may have been so designated by the Board
before the emergency.
SECTION 2. APPLICABILITY. These Emergency By-laws, as from time to time
-------------
amended, shall be operative only during any period of emergency. To the extent
not inconsistent with these Emergency By-laws, all provisions of the regular By-
laws of the Corporation shall remain in effect during any period of emergency.
No officer, director or employee shall be liable for actions taken in good
faith in accordance with these Emergency By-laws.
SECTION 3. BOARD OF DIRECTORS. (a) A meeting of the Board may be called
------------------
by any director or senior officer of the Corporation. Notice of any meeting of
the Board need be given only to such of the directors as it may be feasible to
reach at the time and by such means as may be feasible at the time, including
publication or radio, and at a time
- 12 -
<PAGE>
less than twenty-four hours before the meeting if deemed necessary by the person
giving notice.
(b) At any meeting of the Board, three directors in attendance shall
constitute a quorum. Any act of a majority of the directors present at a
meeting at which a quorum shall be present shall be the act of the Board. If
fewer than three directors should be present at a meeting of the Board, any
senior officer of the Corporation in attendance at such meeting shall serve as a
director for such meeting, selected in order of rank and within the same rank in
order of seniority.
(c) In addition to the Board's powers under the regular By-laws of the
Corporation to fill vacancies on the Board, the Board may elect any individual
as a director to replace any director who may be incapacitated and to serve
until the latter ceases to be incapacitated or until the termination of the
period of emergency, whichever first occurs. In considering officers of the
Corporation for election to the Board, the rank and seniority of individual
officers shall not be pertinent.
(d) The Board, during as well as before any such emergency, may change the
principal office or designate several alternative offices or authorize the
officers to do so.
SECTION 4. APPOINTMENT OF OFFICERS. In addition to the Board's powers
-----------------------
under the regular By-laws of the Corporation with respect to the election of
officers, the Board may elect any individual as an officer to replace any
officer who may be incapacitated and to serve until the latter ceases to be
incapacitated.
SECTION 5. AMENDMENTS. These Emergency By-laws shall be subject to repeal
----------
or change by further action of the Board of Directors or by action of the
shareholders, except that no such repeal or change shall modify the provisions
of the second paragraph of Section 2 with regard to action or inaction prior to
the time of such repeal or change. Any such amendment of these Emergency By-
laws may make any further or different provision that may be practical and
necessary for the circumstances of the emergency.
- 13 -
<PAGE>
EXHIBIT 4.1
NUMBER
PT
[LOGO]
[CORPORATE SEAL]
[ART APPEARS HERE] COMMON
STOCK
PAR VALUE ONE DOLLAR
($1) PER SHARE
PRIMEX
TECHNOLOGIES, INC.
SHARES
INCORPORATED UNDER THE LAWS OF THE COMMONWEALTH
OF VIRGINIA
THIS CERTIFICATE IS TRANSFERABLE IN NEW YORK
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP 000000 00 0
THIS
CERTIFIES
THAT
IS THE OWNER OF
FULLY PAID AND NONASSESSABLE SHARES OF COMMON STOCK OF
PRIMEX TECHNOLOGIES, INC., transferable on the books of the Corporation by the
holder hereof in person or by duly authorized attorney upon surrender of this
certificate properly endorsed. This Certificate and the shares represented
hereby are issued and shall be held subject to all the provisions of the
Corporation's Certificate of Incorporation and By-laws, both as amended, to all
of which each holder by acceptance hereof assents. This Certificate is not valid
unless countersigned by a Transfer Agent and registered by a Registrar.
Witness the facsimile signatures of the Corporation's proper officers and a
facsimile of its corporate seal.
Dated
COUNTERSIGNED AND REGISTERED
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
TRANSFER AGENT
AND REGISTRAR
Sig to come Sig to come BY
SECRETARY CHAIRMAN OF THE BOARD AUTHORIZED SIGNATURE
<PAGE>
EXPLANATION OF ABBREVIATIONS
The following abbreviations when used in the form of ownership on the face of
this certificate shall be construed as though they were written out in full
according to applicable laws or regulations. Abbreviations in addition to
those appearing below, may be used.
<TABLE>
<CAPTION>
Phrase Abbreviation Equivalent Phrase Abbreviation Equivalent
- ------------------- ---------- ------------------- ----------
<S> <C> <C> <C>
JT TEN As joint tenants, with right of survivorship TEN BY ENT As tenants by the entireties
and not as tenants in common
TEN IN COM As tenants in common UNIF GIFT MIN ACT Uniform Gifts to Minors Act
</TABLE>
<TABLE>
<CAPTION>
Word Word Word
Abbreviation Equivalent Abbreviation Equivalent Abbreviation Equivalent
- ------------ ---------- ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
ADM Administrator(s) EST Estate, Of estate of PAR Paragraph
Administratrix EX Executor(s), Executrix PL Public Law
AGMT Agreement FBO For the benefit of TR (As) trustee(s) for, of
ART Article FDN Foundation U Under
CH Chapter GDN Guardian(s) UA Under agreement
CUST Custodian for GDNSHP Guardianship UW Under will of, Of will of.
DEC Declaration MIN Minor(s) Under last will & testament
</TABLE>
PRIMEX TECHNOLOGIES, INC.
A copy of the Articles of Incorporation, as amended, of the Corporation
containing a full statement of the designations, preferences, limitations and
relative rights of the shares of Common Stock and Preferred Stock, and the
variations in the relative rights, preferences and limitations between the
shares of each series of Preferred Stock so far as the same have been fixed and
determined, and of the authority of the Board of Directors to fix and determine
the relative rights, preferences and limitations of subsequent series, may be
obtained, without charge, from the Transfer Agent or the office of the
Secretary of the Corporation, upon written request by a Shareholder.
- --------------------------------------------------------------------------------
ASSIGNMENT FORM
For value received ________ hereby sell, assign and transfer _____ shares of the
(I or we) (amount)
capital stock represented by this certificate to _______________________________
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFIYING NUMBER OF ASSIGNEE ------------------------------------------
[ ] (Print full name and address of Assignee)
------------------------------------------
[ ][ ][ ][ ][ ]
- ------------------------------------------------------ Assignee,
zip code
and do irrevocably constitute and appoint as Attorney
-------------------------
(Leave blank or fill in as explained in Notice below)
to transfer the said Stock on the books of the Corporation with full power of
substitution.
Dated
----------------------
---------------------------------------------
(Sign here exactly as name(s) is shown on the
face of this certificate without any change or
alteration whatever.)
IMPORTANT NOTICE: When you sign your name to this Assignment Form without
filling in the name of your "Assignee" or "Attorney", this stock certificate
becomes fully negotiable, similar to a check endorsed in blank. Therefore, to
safeguard a signed certificate, it is recommended that you either (i) fill in
the name of the new owner in the "Assignee" blank, or (ii) if you are sending
the signed certificate to your bank or broker, fill in the name of the bank or
broker in the "Attorney" blank. Alternatively, instead of using this
Assignment Form, you may sign a separate "stock power" form and then mail the
unsigned stock certificate and the signed "stock power" in separate envelopes.
For added protection, use certified or registered mail for a stock certificate.
Keep this certificate in a safe place. If it is lost, stolen or destroyed,
the Company will require a bond of indemnity as a condition to the issuance of a
replacement certificate.
This certificate also evidences and entities the holder hereof to certain
Rights as set forth in a Rights Agreement dated as of ____________, 1996, as it
may be amended from time to time (the "Rights Agreement"), between Primex
Technologies, Inc. (the "Company") and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent (the "Rights Agent"), the terms of which are hereby
incorporated herein by reference and a copy of which is on file at the
principal executive offices of the Company. Under certain circumstances, as
set forth in the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. The Rights
Agent will mail to the holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written request therefor. Rights
beneficially owned by Acquiring Persons or their Affiliates or Associates (as
such terms are defined in the Rights Agreement) and by any subsequent holder of
such Rights are null and void and nontransferable.
Signature(s) Guaranteed:
__________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCK-
BROKERS, SAVINGS AND LOAN ASSOCIATIONS AND
CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED
SIGNATURE GUARANTEE MEDALLION PROGRAM),
PURSUANT TO SEC RULE 17Ad 15.
<PAGE>
EXHIBIT 4.4
RIGHTS AGREEMENT dated as of December 19, 1996, between
PRIMEX TECHNOLOGIES, INC., a Virginia corporation (the
"Company"), and CHASEMELLON SHAREHOLDER SERVICES, L.L.C., a New
Jersey limited liability company, as Rights Agent (the "Rights
Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one Right (as hereinafter defined) for each share of Common Stock,
par value $1 per share, of the Company (the "Common Stock") outstanding at the
Close of Business (as hereinafter defined) on December 31, 1996 (the "Record
Date"), and has authorized the issuance of one Right (as such number may
hereafter be adjusted pursuant to the provisions of this Rights Agreement) with
respect to each share of Common Stock that shall become outstanding between the
Record Date and the earliest of the Distribution Date, the Redemption Date or
the Expiration Date (as such terms are hereinafter defined); provided, however,
-------- -------
that Rights may be issued with respect to shares of Common Stock that shall
become outstanding after the Distribution Date and prior to the earlier of the
Redemption Date or the Expiration Date in accordance with the provisions of
Section 23. Each Right shall initially represent the right to purchase one-
thousandth (1/1,000) of a share of Series A Participating Cumulative Preferred
Stock, par value $1 per share, of the Company (the "Preferred Shares"), having
the powers, rights and preferences set forth in the Articles of Amendment
attached as Exhibit A.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
SECTION 1. Certain Definitions. For purposes of this Rights
--------------------
Agreement, the following terms have the meanings indicated:
"Acquiring Person" shall mean any Person who or which, alone or
----------------
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of more than 15% of the Common Shares then outstanding but
shall not include (a) the Company, any Subsidiary of the Company, Olin
Corporation (prior to Janaury 15, 1997), any employee benefit plan of the
Company or of any of its Subsidiaries or
<PAGE>
2
of Olin Corporation, or any Person holding Common Shares for or pursuant to the
terms of any such employee benefit plan or (b) any such Person who has become
and is such a Beneficial Owner solely because (i) of a change in the aggregate
number of Common Shares outstanding since the last date on which such Person
acquired Beneficial Ownership of any Common Shares or (ii) it acquired such
Beneficial Ownership in the good faith belief that such acquisition would not
(A) cause such Beneficial Ownership to exceed 15% of the Common Shares then
outstanding and such Person relied in good faith in computing the percentage of
its Beneficial Ownership on publicly filed reports or documents of the Company
which are inaccurate or out-of-date or (B) otherwise cause a Distribution Date
or the adjustment provided for in Section 11(a) to occur. Notwithstanding
clause (b)(ii) of the prior sentence, if any Person that is not an Acquiring
Person due to such clause (b)(ii) does not reduce its percentage of Beneficial
Ownership of Common Shares to 15% or less by the Close of Business on the fifth
Business Day after notice from the Company (the date of notice being the first
day) that such Person's Beneficial Ownership of Common Shares so exceeds 15%,
such Person shall, at the end of such five Business Day period, become an
Acquiring Person (and such clause (b)(ii) shall no longer apply to such Person).
For purposes of this definition, the determination whether any Person acted in
"good faith" shall be conclusively determined by the Board of Directors of the
Company, acting by a vote of those directors of the Company whose approval would
be required to redeem the Rights under Section 24.
"Affiliate" and "Associate", when used with reference to any Person,
--------- ---------
shall have the respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as in effect on the date
of this Rights Agreement.
A Person shall be deemed the "Beneficial Owner" of, and shall be
----------------
deemed to "beneficially own", and shall be deemed to have "Beneficial Ownership"
---------------- --------------------
of, any securities:
(a) which such Person or any of such Person's Affiliates or Associates
is deemed to "beneficially own" within the meaning of Rule 13d-3 of the
General Rules and Regulations under the Exchange Act, as in effect on the
date of this Rights Agreement;
(b) which such Person or any of such Person's Affiliates or Associates
has (i) the right to acquire
<PAGE>
3
(whether such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (written or
oral), or upon the exercise of conversion rights, exchange rights, rights
(other than the Rights), warrants or options, or otherwise; provided,
--------
however, that a Person shall not be deemed the Beneficial Owner of, or to
-------
beneficially own, or to have Beneficial Ownership of, securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person
or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange thereunder, or (ii) the
right to vote pursuant to any agreement, arrangement or understanding
(written or oral); provided, however, that a Person shall not be deemed the
--------- -------
Beneficial Owner of, or to beneficially own, any security if (A) the
agreement, arrangement or understanding (written or oral) to vote such
security arises solely from a revocable proxy or consent given to such
Person in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable rules and regulations under the
Exchange Act and (B) the beneficial ownership of such security is not also
then reportable on Schedule 13D under the Exchange Act (or any comparable
or successor report); or
(c) which are beneficially owned, directly or indirectly, by any other
Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (written or
oral) for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in clause (b)(ii) of this definition) or
disposing of any securities of the Company.
Notwithstanding the foregoing, nothing contained in this definition shall cause
a Person ordinarily engaged in business as an underwriter of securities to be
the "Beneficial Owner" of, or to "beneficially own", any securities acquired in
a bona fide firm commitment underwriting pursuant to an underwriting agreement
with the Company.
"Articles of Amendment" shall mean the Articles of Amendment of the
---------------------
Articles of Incorporation of the Company designating and establishing the Series
A Participating Cumulative Preferred Stock and setting forth the
<PAGE>
4
preferences, limitations and relative rights of such series of Preferred Stock
of the Company, a copy of which is attached as Exhibit A.
"Book Value", when used with reference to Common Shares issued by any
----------
Person, shall mean the amount of equity of such Person applicable to each Common
Share, determined (a) in accordance with generally accepted accounting
principles in effect on the date as of which such Book Value is to be
determined, (b) using all the consolidated assets and all the consolidated
liabilities of such Person on the date as of which such Book Value is to be
determined, except that no value shall be included in such assets for goodwill
arising from consummation of a business combination, and (c) after giving effect
to (i) the exercise of all rights, options and warrants to purchase such Common
Shares (other than the Rights), and the conversion of all securities convertible
into such Common Shares, at an exercise or conversion price, per Common Share,
which is less than such Book Value before giving effect to such exercise or
conversion (whether or not exercisability or convertibility is conditioned upon
occurrence of a future event), (ii) all dividends and other distributions on the
capital stock of such Person declared prior to the date as of which such Book
Value is to be determined and to be paid or made after such date, and (iii) any
other agreement, arrangement or understanding (written or oral), or transaction
or other action prior to the date as of which such Book Value is to be
determined which would have the effect of thereafter reducing such Book Value.
"Business Combination" shall have the meaning set forth in Section
--------------------
11(c)(i).
"Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday
------------
and Friday which is not a day on which banking institutions in the Borough of
Manhattan, the City of New York, are authorized or obligated by law or executive
order to close.
"Close of Business" on any given date shall mean 5:00 p.m., New York
-----------------
City time, on such date; provided, however, that, if such date is not a Business
-------- --------
Day, "Close of Business" shall mean 5:00 p.m., New York City time, on the next
succeeding Business Day.
"Common Shares", when used with reference to the Company prior to a
-------------
Business Combination, shall mean the
<PAGE>
5
shares of Common Stock of the Company or any other shares of capital stock of
the Company into which the Common Stock shall be reclassified or changed.
"Common Shares", when used with reference to any Person (other than the Company
prior to a Business Combination), shall mean shares of capital stock of such
Person (if such Person is a corporation) of any class or series, or units of
equity interests in such Person (if such Person is not a corporation) of any
class or series, the terms of which do not limit (as a maximum amount and not
merely in proportional terms) the amount of dividends or income payable or
distributable on such class or series or the amount of assets distributable on
such class or series upon any voluntary or involuntary liquidation, dissolution
or winding up of such Person and do not provide that such class or series is
subject to redemption at the option of such Person, or any shares of capital
stock or units of equity interests into which the foregoing shall be
reclassified or changed; provided, however, that, if at any time there shall be
-------- -------
more than one such class or series of capital stock or equity interests of such
Person, "Common Shares" of such Person shall include all such classes and series
substantially in the proportion of the total number of shares or other units of
each such class or series outstanding at such time.
"Common Stock" shall have the meaning set forth in the introductory
------------
paragraph of this Rights Agreement.
"Company" shall have the meaning set forth in the heading of this
-------
Rights Agreement; provided, however, that if there is a Business Combination,
-------- -------
"Company" shall have the meaning set forth in Section 11(c)(iii).
The term "control" with respect to any Person shall mean the power to
-------
direct the management and policies of such Person, directly or indirectly, by or
through stock ownership, agency or otherwise, or pursuant to or in connection
with an agreement, arrangement or understanding (written or oral) with one or
more other Persons by or through stock ownership, agency or otherwise; and the
terms "controlling" and "controlled" shall have meanings correlative to the
foregoing.
"Distribution Date" shall have the meaning set forth in Section 3(b).
-----------------
<PAGE>
6
"Exchange Act" shall mean the Securities Exchange Act of 1934, as in
------------
effect on the date in question, unless otherwise specifically provided.
"Exchange Consideration" shall have the meaning set forth in Section
----------------------
11(b)(i).
"Expiration Date" shall have the meaning set forth in Section 7(a).
---------------
"Major Part", when used with reference to the assets of the Company
----------
and its Subsidiaries as of any date, shall mean assets (a) having a fair market
value aggregating 50% or more of the total fair market value of all the assets
of the Company and its Subsidiaries (taken as a whole) as of the date in
question, (b) accounting for 50% or more of the total value (net of depreciation
and amortization) of all the assets of the Company and its Subsidiaries (taken
as a whole) as would be shown on a consolidated or combined balance sheet of the
Company and its Subsidiaries as of the date in question, prepared in accordance
with generally accepted accounting principles then in effect, or (c) accounting
for 50% or more of the total amount of earnings before interest, taxes,
depreciation and amortization or of the revenues of the Company and its
Subsidiaries (taken as a whole) as would be shown on, or derived from, a
consolidated or combined statement of income or operations of the Company and
its Subsidiaries for the period of 12 months ending on the last day of the
Company's monthly accounting period next preceding the date in question,
prepared in accordance with generally accepted accounting principles then in
effect.
"Market Value", when used with reference to Common Shares on any date,
------------
shall be deemed to be the average of the daily closing prices, per share, of
such Common Shares for the period which is the shorter of (a) 30 consecutive
Trading Days immediately prior to the date in question or (b) the number of
consecutive Trading Days beginning on the Trading Day immediately after the date
of the first public announcement of the event requiring a determination of the
Market Value and ending on the Trading Day immediately prior to the record date
of such event; provided, however, that, in the event that the Market Value of
-------- -------
such Common Shares is to be determined in whole or in part during a period
following the announcement by the issuer of such Common Shares of any action of
the type described in Section 12(a) that would require an adjustment thereunder,
then, and in
<PAGE>
7
each such case, the Market Value of such Common Shares shall be appropriately
adjusted to reflect the effect of such action on the market price of such Common
Shares. The closing price for each Trading Day shall be the closing price
quoted on the principal United States securities exchange registered under the
Exchange Act (or any recognized foreign stock exchange) on which such securities
are listed, or, if such securities are not listed on any such exchange, the
average of the closing bid and asked quotations with respect to a share of such
securities on any National Association of Securities Dealers, Inc. quotations
system, or if no such quotations are available, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
such securities selected by the Board of Directors of the Company. If on any
such Trading Day no market maker is making a market in such securities, the
closing price of such securities on such Trading Day shall be deemed to be the
fair value of such securities as determined in good faith by the Board of
Directors of the Company (whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent, the
holders of Rights and all other Persons); provided, however, that for the
-------- -------
purpose of determining the closing price of the Preferred Shares for any Trading
Day on which there is no such market maker for the Preferred Shares the closing
price on such Trading Day shall be deemed to be the Formula Number (as defined
in the Articles of Incorporation) times the closing price of the Common Shares
of the Company on such Trading Day.
"Person" shall mean an individual, corporation, partnership, joint
------
venture, association, trust, unincorporated organization or other entity.
"Preferred Shares" shall have the meaning set forth in the
----------------
introductory paragraph of this Rights Agreement. Any reference in this Rights
Agreement to Preferred Shares shall be deemed to include any authorized fraction
of a Preferred Share, unless the context otherwise requires.
"Principal Party" shall mean the Surviving Person in a Business
---------------
Combination; provided, however, that, if such Surviving Person is a direct or
-------- -------
indirect Subsidiary of any other Person, "Principal Party" shall mean the Person
which is the ultimate parent of such Surviving Person and which is not itself a
Subsidiary of another Person. In the event
<PAGE>
8
ultimate control of such Surviving Person is shared by two or more Persons,
"Principal Party" shall mean that Person that is immediately controlled by such
two or more Persons.
"Purchase Price" with respect to each Right shall mean $ , as such
--------------
amount may from time to time be adjusted as provided herein. All references
herein to the Purchase Price shall mean the Purchase Price as in effect at the
time in question.
"Record Date" shall have the meaning set forth in the introductory
-----------
paragraph of this Rights Agreement.
"Redemption Date" shall have the meaning set forth in Section 24(a).
---------------
"Redemption Price" with respect to each Right shall mean $.01, as such
----------------
amount may from time to time be adjusted in accordance with Section 12. All
references herein to the Redemption Price shall mean the Redemption Price as in
effect at the time in question.
"Registered Common Shares" shall mean Common Shares which are, as of
------------------------
the date of consummation of a Business Combination, and have continuously been
for the 12 months immediately preceding such date, registered under Section 12
of the Exchange Act.
"Right Certificate" shall mean a certificate evidencing a Right in
-----------------
substantially the form attached as Exhibit B.
"Rights" shall mean the rights to purchase Preferred Shares (or other
------
securities) as provided in this Rights Agreement.
"Securities Act" shall mean the Securities Act of 1933, as in effect
--------------
on the date in question, unless otherwise specifically provided.
"Subsidiary" shall mean a Person, at least a majority of the total
----------
outstanding voting power (being the power under ordinary circumstances (and not
merely upon the happening of a contingency) to vote in the election of directors
of such Person (if such Person is a corporation) or to participate in the
management and control of such Person (if such Person is not a corporation)) of
which is owned, directly or indirectly, by another Person or by one
<PAGE>
9
or more other Subsidiaries of such other Person or by such other Person and one
or more other Subsidiaries of such other Person.
"Surviving Person" shall mean (a) the Person which is the continuing
----------------
or surviving Person in a consolidation or merger specified in Section
11(c)(i)(A) or 11(c)(i)(B) or (b) the Person to which the Major Part of the
assets of the Company and its Subsidiaries is sold, leased, exchanged or
otherwise transferred or disposed of in a transaction specified in Section
11(c)(i)(C); provided, however, that, if the Major Part of the assets of the
-------- -------
Company and its Subsidiaries is sold, leased, exchanged or otherwise transferred
or disposed of in one or more related transactions specified in Section
11(c)(i)(C) to more than one Person, the "Surviving Person" in such case shall
mean the Person that acquired assets of the Company and/or its Subsidiaries with
the greatest fair market value in such transaction or transactions.
"Trading Day" shall mean a day on which the principal securities
-----------
trading facility (or principal recognized foreign stock exchange, as the case
may be) on which any securities or Rights, as the case may be, are listed or
admitted to trading is open for the transaction of business or, if the
securities or Rights in question are not listed or admitted to trading on any
national securities exchange (or recognized foreign stock exchange, as the case
may be), a Business Day.
SECTION 2. Appointment of Rights Agent. The Company hereby appoints
----------------------------
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint one or more co-Rights Agents as it may
deem necessary or desirable upon notice to the Rights Agent (the term "Rights
Agent" being used herein to refer, collectively, to the Rights Agent together
with any such co-Rights Agents). In the event the Company appoints one or more
co-Rights Agents, the respective duties of the Rights Agent and any co-Rights
Agents shall be as the Company shall determine.
SECTION 3. Issue of Rights and Right Certificates. (a) One Right
---------------------------------------
shall be associated with each Common Share outstanding on the Record Date, each
additional Common Share that shall become outstanding between the Record Date
and the earliest of the Distribution Date, the
<PAGE>
10
Redemption Date or the Expiration Date and each additional Common Share with
which Rights are issued after the Distribution Date but prior to the earlier of
the Redemption Date or the Expiration Date as provided in Section 23; provided,
---------
however, that, if the number of outstanding Rights are combined into a smaller
- -------
number of outstanding Rights pursuant to Section 12(a), the appropriate
fractional Right determined pursuant to such Section shall thereafter be
associated with each such Common Share.
(b) Until the earlier of (i) such time as the Company learns that a
Person has become an Acquiring Person or (ii) the Close of Business on such
date, if any, as may be designated by the Board of Directors of the Company
following the commencement of, or first public disclosure of an intent to
commence, a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any of
its Subsidiaries, or any Person holding Common Shares for or pursuant to the
terms of any such employee benefit plan) for outstanding Common Shares, if upon
consummation of such tender or exchange offer such Person could be the
Beneficial Owner of more than 15% of the outstanding Common Shares (the Close of
Business on the earlier of such dates being the "Distribution Date"), (x) the
Rights will be evidenced by the certificates for Common Shares registered in the
names of the holders thereof and not by separate Right Certificates and (y) the
Rights, including the right to receive Right Certificates, will be transferable
only in connection with the transfer of Common Shares. As soon as practicable
after the Distribution Date, the Rights Agent will send, by first-class,
postage-prepaid mail, to each record holder of Common Shares as of the
Distribution Date, at the address of such holder shown on the records of the
Company, a Right Certificate evidencing one whole Right for each Common Share
(or for the number of Common Shares with which one whole Right is then
associated if the number of Rights per Common Share held by such record holder
has been adjusted in accordance with the proviso in Section 3(a)). If the
number of Rights associated with each Common Share has been adjusted in
accordance with the proviso in Section 3(a), at the time of distribution of the
Right Certificates the Company may make any necessary and appropriate rounding
adjustments so that Right Certificates representing only whole numbers of Rights
are distributed and cash is paid in lieu of any fractional Right in accordance
with Section 15(a). As of and after the
<PAGE>
11
Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(c) With respect to any certificate for Common Shares, until the
earliest of the Distribution Date, the Redemption Date or the Expiration Date,
the Rights associated with the Common Shares represented by any such certificate
shall be evidenced by such certificate alone, the registered holders of the
Common Shares shall also be the registered holders of the associated Rights and
the surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby.
(d) Certificates issued for Common Shares after the Record Date
(including, without limitation, upon transfer or exchange of outstanding Common
Shares), but prior to the earliest of the Distribution Date, the Redemption Date
or the Expiration Date, shall have printed on, written on or otherwise affixed
to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement dated as of December 19,
1996, as it may be amended from time to time (the "Rights Agreement"),
between Primex Technologies, Inc. (the "Company") and Chase Mellon
Shareholder Services, L.L.C., as Rights Agent (the "Rights Agent"), the
terms of which are hereby incorporated herein by reference and a copy of
which is on file at the principal executive offices of the Company. Under
certain circumstances, as set forth in the Rights Agreement, such Rights
will be evidenced by separate certificates and will no longer be evidenced
by this certificate. The Rights Agent will mail to the holder of this
certificate a copy of the Rights Agreement without charge after receipt of
a written request therefor. Rights beneficially owned by Acquiring Persons
or their Affiliates or Associates (as such terms are defined in the Rights
Agreement) and by any subsequent holder of such Rights are null and void
and nontransferable.
Notwithstanding this paragraph (d), the omission of a legend shall not
affect the enforceability of any part of this Rights Agreement or the rights of
any holder of Rights.
<PAGE>
12
SECTION 4. Form of Right Certificates. The Right Certificates (and
---------------------------
the form of election to purchase and form of assignment to be printed on the
reverse side thereof) shall be in substantially the form set forth as Exhibit B
and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Rights Agreement, or as
may be required to comply with any applicable law or with any rule or regulation
made pursuant thereto or with any rule or regulation of any stock exchange on
which the Rights may from time to time be listed, or to conform to usage.
Subject to the provisions of Sections 7, 11 and 23, the Right Certificates,
whenever issued, shall be dated as of the Distribution Date, and on their face
shall entitle the holders thereof to purchase such number of Preferred Shares as
shall be set forth therein for the Purchase Price set forth therein, subject to
adjustment from time to time as herein provided.
SECTION 5. Execution, Countersignature and Registration. (a) The
---------------------------------------------
Right Certificates shall be executed on behalf of the Company by the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Treasurer or a Vice President (whether preceded by any additional
title) of the Company, either manually or by facsimile signature, and have
affixed thereto the Company's seal or a facsimile thereof which shall be
attested by the Secretary, an Assistant Secretary or a Vice President (whether
preceded by any additional title, provided that such Vice President shall not
have also executed the Right Certificates) of the Company, either manually or by
facsimile signature. The Right Certificates shall be manually countersigned by
the Rights Agent and shall not be valid or obligatory for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of
the Right Certificates shall cease to be such an officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Right Certificates may nevertheless be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right Certificates had not ceased to be such an
officer of the Company; and any Right Certificate may be signed on behalf of the
Company by any person who, at the actual date of execution of such Right
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of execution of this
<PAGE>
13
Rights Agreement any such person was not such an officer of the Company.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office in New York, New York, books for
registration and transfer of the Right Certificates issued hereunder. Such
books shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced by each of the Right Certificates,
the certificate number of each of the Right Certificates and the date of each of
the Right Certificates.
SECTION 6. Transfer, Split-Up, Combination and Exchange of Right
-----------------------------------------------------
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates;
- ----------------------------------------------------------------------
Uncertificated Rights. (a) Subject to the provisions of Sections 7(e) and 15,
- ----------------------
at any time after the Distribution Date, and at or prior to the Close of
Business on the earlier of the Redemption Date or the Expiration Date, any Right
Certificate or Right Certificates may be transferred, split-up, combined or
exchanged for another Right Certificate or Right Certificates representing, in
the aggregate, the same number of Rights as the Right Certificate or Right
Certificates surrendered then represented. Any registered holder desiring to
transfer, split-up, combine or exchange any Right Certificate shall make such
request in writing delivered to the Rights Agent and shall surrender the Right
Certificate or Right Certificates to be transferred, split-up, combined or
exchanged at the principal office of the Rights Agent; provided, however, that
-------- -------
neither the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any Right Certificate surrendered for
transfer until the registered holder shall have completed and signed the
certification contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the
Rights Agent shall, subject to Sections 7(e) and 15, countersign and deliver to
the Person entitled thereto a Right Certificate or Right Certificates, as the
case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split-up, combination or exchange of Right
Certificates.
<PAGE>
14
(b) Upon receipt by the Company or the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a valid Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancelation of the Right Certificate if mutilated, the Company will make a new
Right Certificate of like tenor and deliver such new Right Certificate to the
Rights Agent for delivery to the registered owner in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
(c) Notwithstanding any other provision hereof, the Company and the
Rights Agent may amend this Rights Agreement to provide for uncertificated
Rights in addition to or in place of Rights evidenced by Right Certificates.
SECTION 7. Exercise of Rights; Expiration Date of Rights. (a)
----------------------------------------------
Subject to Section 7(e) and except as otherwise provided herein (including
Section 11), each Right shall entitle the registered holder thereof, upon
exercise thereof as provided herein, to purchase for the Purchase Price, at any
time after the Distribution Date and at or prior to the earlier of (i) the Close
of Business on the 10th anniversary of the date of this Rights Agreement (the
Close of Business on such date being the "Expiration Date") or (ii) the
Redemption Date, one-thousandth (1/1,000) of a Preferred Share, subject to
adjustment from time to time as provided in Sections 11 and 12.
(b) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided herein) in whole or in
part at any time after the Distribution Date, upon surrender of the Right
Certificate, with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent at the principal office of the Rights Agent
in Richfield Park, New Jersey, together with payment of the Purchase Price for
each one-thousandth (1/1,000) of a Preferred Share as to which the Rights are
exercised, at or prior to the earlier of (i) the Expiration Date or (ii) the
Redemption Date.
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the
<PAGE>
15
Purchase Price for the Preferred Shares to be purchased together with an amount
equal to any applicable transfer tax, in lawful money of the United States of
America, in cash or by certified check or money order payable to the order of
the Company, the Rights Agent shall thereupon (i) either (A) promptly
requisition from any transfer agent of the Preferred Shares (or make available,
if the Rights Agent is the transfer agent) certificates for the number of
Preferred Shares to be purchased and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests or (B) if the Company shall
have elected to deposit the Preferred Shares with a depositary agent under a
depositary arrangement, promptly requisition from the depositary agent
depositary receipts representing the number of thousandths (1/1,000s) of a
Preferred Share to be purchased (in which case certificates for the Preferred
Shares to be represented by such receipts shall be deposited by the transfer
agent with the depositary agent) and the Company will direct the depositary
agent to comply with all such requests, (ii) when appropriate, promptly
requisition from the Company the amount of cash to be paid in lieu of issuance
of fractional shares in accordance with Section 15, (iii) promptly after receipt
of such certificates or depositary receipts, cause the same to be delivered to
or upon the order of the registered holder of such Right Certificate, registered
in such name or names as may be designated by such holder and (iv) when
appropriate, after receipt promptly deliver such cash to or upon the order of
the registered holder of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall
exercise fewer than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 15.
(e) Notwithstanding anything in this Rights Agreement to the
contrary, any Rights that are at any time beneficially owned by (i) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person, (ii) a transferee of
an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to
<PAGE>
16
either (A) a transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to any Person
with whom the Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the Board
of Directors of the Company has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
Section 7(e), shall become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Rights Agreement or otherwise. The
Company shall use all reasonable efforts to ensure that the provisions of this
Section 7(e) are complied with, but shall have no liability to any holder of any
Right Certificate or any other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliate or
Associate, or any transferee thereof, hereunder.
(f) Notwithstanding anything in this Rights Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder of any Right
Certificates upon the occurrence of any purported exercise as set forth in this
Section 7 unless such registered holder shall have (i) completed and signed the
certificate contained in the form of election to purchase set forth on the
reverse side of the Right Certificate surrendered for such exercise and (ii)
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request.
(g) The Company may temporarily suspend, for a period of time not to
exceed 90 calendar days after the Distribution Date, the exercisability of the
Rights in order to prepare and file a registration statement under the
Securities Act, on an appropriate form, with respect to the Preferred Shares
purchasable upon exercise of the Rights and permit such registration statement
to become effective; provided, however, that no such suspension shall remain
-------- -------
effective after, and the Rights shall without any further action by the Company
or any other Person become exercisable immediately upon, the effectiveness of
such registration statement. Upon any such suspension, the Company shall issue
a public announcement stating that the exercisability of the Rights has been
temporarily suspended and shall issue
<PAGE>
17
a further public announcement at such time as the suspension is no longer in
effect. Notwithstanding any provision herein to the contrary, the Rights shall
not be exercisable in any jurisdiction if the requisite qualification under the
blue sky or securities laws of such jurisdiction shall not have been obtained or
the exercise of the Rights shall not be permitted under applicable law.
SECTION 8. Cancelation and Destruction of Right Certificates. All
--------------------------------------------------
Right Certificates surrendered or presented for the purpose of exercise,
transfer, split-up, combination or exchange shall, and any Right Certificate
representing Rights that have become null and void and nontransferable pursuant
to Section 7(e) surrendered or presented for any purpose shall, if surrendered
or presented to the Company or to any of its agents, be delivered to the Rights
Agent for cancelation or in canceled form, or, if surrendered or presented to
the Rights Agent, shall be canceled by it, and no Right Certificates shall be
issued in lieu thereof except as expressly permitted by this Rights Agreement.
The Company shall deliver to the Rights Agent for cancelation and retirement,
and the Rights Agent shall so cancel and retire, any Right Certificate purchased
or acquired by the Company. The Rights Agent shall deliver all canceled Right
Certificates to the Company pursuant to a written agreement that the Company
maintain such certificates for such period of time as required by law, or shall,
at the written request of the Company, destroy such canceled Right Certificates,
and in such case shall deliver a certificate of destruction thereof to the
Company.
SECTION 9. Reservation and Availability of Preferred Shares. (a)
-------------------------------------------------
The Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued Preferred Shares or any authorized
and issued Preferred Shares held in its treasury, free from preemptive rights or
any right of first refusal, a number of Preferred Shares sufficient to permit
the exercise in full of all outstanding Rights.
(b) In the event that there shall not be sufficient Preferred Shares
issued but not outstanding or authorized but unissued to permit the exercise or
exchange of Rights in accordance with Section 11, the Company covenants and
agrees that it will take all such action as may be necessary to authorize
additional Preferred Shares for issuance upon the exercise or exchange of Rights
pursuant to Section 11; provided, however, that if the
-------- -------
<PAGE>
18
Company is unable to cause the authorization of additional Preferred Shares,
then the Company shall, or in lieu of seeking any such authorization, the
Company may, to the extent necessary and permitted by applicable law and any
agreements or instruments in effect prior to the Distribution Date to which it
is a party, (i) upon surrender of a Right, pay cash equal to the Purchase Price
in lieu of issuing Preferred Shares and requiring payment therefor, (ii) upon
due exercise of a Right and payment of the Purchase Price for each Preferred
Share as to which such Right is exercised, issue equity securities having a
value equal to the value of the Preferred Shares which otherwise would have been
issuable pursuant to Section 11, which value shall be determined by a nationally
recognized investment banking firm selected by the Board of Directors of the
Company or (iii) upon due exercise of a Right and payment of the Purchase Price
for each Preferred Share as to which such Right is exercised, distribute a
combination of Preferred Shares, cash and/or other equity and/or debt securities
having an aggregate value equal to the value of the Preferred Shares which
otherwise would have been issuable pursuant to Section 11, which value shall be
determined by a nationally recognized investment banking firm selected by the
Board of Directors of the Company. To the extent that any legal or contractual
restrictions (pursuant to agreements or instruments in effect prior to the
Distribution Date to which it is party) prevent the Company from paying the full
amount payable in accordance with the foregoing sentence, the Company shall pay
to holders of the Rights as to which such payments are being made all amounts
which are not then restricted on a pro rata basis as such payments become
permissible under such legal or contractual restrictions until such payments
have been paid in full.
(c) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares delivered upon
exercise or exchange of Rights shall, at the time of delivery of the
certificates for such Preferred Shares (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.
(d) So long as the Preferred Shares issuable upon the exercise or
exchange of Rights are to be listed on any national securities exchange, the
Company covenants and agrees to use its best efforts to cause, from and after
such time as the Rights become exercisable or exchangeable, all Preferred Shares
reserved for such issuance to be listed on
<PAGE>
19
such securities exchange upon official notice of issuance upon such exercise or
exchange.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all Federal and state transfer taxes and charges which
may be payable in respect of the issuance or delivery of Right Certificates or
of any Preferred Shares or Common Shares or other securities upon the exercise
or exchange of the Rights. The Company shall not, however, be required to pay
any transfer tax which may be payable in respect of any transfer or delivery of
Right Certificates to a Person other than, or in respect of the issuance or
delivery of certificates for the Preferred Shares or Common Shares or other
securities, as the case may be, in a name other than that of, the registered
holder of the Right Certificate evidencing Rights surrendered for exercise or
exchange or to issue or deliver any certificates for Preferred Shares or Common
Shares or other securities, as the case may be, upon the exercise or exchange of
any Rights until any such tax shall have been paid (any such tax being payable
by the holder of such Right Certificate at the time of surrender) or until it
has been established to the Company's satisfaction that no such tax is due.
SECTION 10. Preferred Shares Record Date. Each Person in whose name
-----------------------------
any certificate for Preferred Shares or Common Shares or other securities is
issued upon the exercise or exchange of Rights shall for all purposes be deemed
to have become the holder of record of the Preferred Shares or Common Shares or
other securities, as the case may be, represented thereby on, and such
certificate shall be dated, the date upon which the Right Certificate evidencing
such Rights was duly surrendered and payment of any Purchase Price (and any
applicable transfer taxes) was made; provided, however, that, if the date of
-------- -------
such surrender and payment is a date upon which the transfer books of the
Company for the Preferred Shares or Common Shares or other securities, as the
case may be, are closed, such Person shall be deemed to have become the record
holder of such Preferred Shares or Common Shares or other securities, as the
case may be, on, and such certificate shall be dated as of, the next succeeding
Business Day on which the transfer books of the Company for the Preferred Shares
or Common Shares or other securities, as the case may be, are open.
<PAGE>
20
SECTION 11. Adjustments in Rights After There Is an Acquiring Person;
---------------------------------------------------------
Exchange of Rights for Shares; Business Combinations. (a) Upon a Person
- -----------------------------------------------------
becoming an Acquiring Person, proper provision shall be made so that each holder
of a Right, except as provided in Section 7(e), shall thereafter have a right to
receive, upon exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement, such number of thousandths (1/1,000s) of a
Preferred Share as shall equal the result obtained by multiplying the Purchase
Price by a fraction, the numerator of which is the number of thousandths
(1/1,000s) of a Preferred Share for which a Right is then exercisable and the
denominator of which is 50% of the Market Value of the Common Shares on the date
on which a Person becomes an Acquiring Person. As soon as practicable after a
Person becomes an Acquiring Person (provided the Company shall not have elected
to make the exchange permitted by Section 11(b)(i) for all outstanding Rights),
the Company covenants and agrees to use its best efforts to:
(i) prepare and file a registration statement under the Securities
Act, on an appropriate form, with respect to the Preferred Shares
purchasable upon exercise of the Rights;
(ii) cause such registration statement to become effective as soon as
practicable after such filing;
(iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act)
until the Expiration Date; and
(iv) qualify or register the Preferred Shares purchasable upon
exercise of the Rights under the blue sky or securities laws of such
jurisdictions as may be necessary or appropriate.
(b)(i) The Board of Directors of the Company may, at its option, at
any time after a Person becomes an Acquiring Person, mandatorily exchange all or
part of the then outstanding and exercisable Rights (which shall not include
Rights that shall have become null and void and nontransferable pursuant to the
provisions of Section 7(e)) for consideration per Right consisting of either
one-half of the securities that would be issuable at such time upon the exercise
of one Right in accordance with Section 11(a) or, if applicable, Section
9(b)(ii) or (iii) or, if applicable
<PAGE>
21
the cash consideration specified in Section 9(b)(i) (the consideration issuable
per Right pursuant to this Section 11(b)(i) being the "Exchange Consideration").
The Board of Directors of the Company may, at its option, issue, in substitution
for Preferred Shares, Common Shares in an amount per Preferred Share equal to
the Formula Number (as defined in the Articles of Amendment) if there are
sufficient Common Shares issued but not outstanding or authorized but unissued.
If the Board of Directors of the Company elects to exchange all the Rights for
Exchange Consideration pursuant to this Section 11(b)(i) prior to the physical
distribution of the Rights Certificates, the Corporation may distribute the
Exchange Consideration in lieu of distributing Right Certificates, in which case
for purposes of this Rights Agreement holders of Rights shall be deemed to have
simultaneously received and surrendered for exchange Right Certificates on the
date of such distribution.
(ii) Any action of the Board of Directors of the Company ordering the
exchange of any Rights pursuant to Section 11(b)(i) shall be irrevocable and,
immediately upon the taking of such action and without any further action and
without any notice, the right to exercise any such Right pursuant to Section
11(a) shall terminate and the only right thereafter of a holder of such Right
shall be to receive the Exchange Consideration in exchange for each such Right
held by such holder or, if the Exchange Consideration shall not have been paid
or issued, to exercise any such Right pursuant to Section 11(c)(i). The Company
shall promptly give public notice of any such exchange; provided, however, that
-------- -------
the failure to give, or any defect in, such notice shall not affect the validity
of such exchange. The Company promptly shall mail a notice of any such exchange
to all holders of such Rights at their last addresses as they appear upon the
registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the
exchange of the Rights for the Exchange Consideration will be effected and, in
the event of any partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected pro rata based on the number of Rights
(other than Rights which shall have become null and void and nontransferable
pursuant to the provisions of Section 7(e)) held by each holder of Rights.
<PAGE>
22
(c)(i) In the event that, following a Distribution Date, directly or
indirectly, any transactions specified in the following clause (A), (B) or (C)
of this Section 11(c) (each such transaction being a "Business Combination")
shall be consummated:
(A) the Company shall consolidate with, or merge with and into, any
Acquiring Person or any Affiliate or Associate of an Acquiring Person;
(B) any Acquiring Person or any Affiliate or Associate of an Acquiring
Person shall merge with and into the Company and, in connection with such
merger, all or part of the Common Shares shall be changed into or exchanged
for capital stock or other securities of the Company or of any Acquiring
Person or Affiliate or Associate of an Acquiring Person or cash or any
other property; or
(C) the Company shall sell, lease, exchange or otherwise transfer or
dispose of (or one or more of its Subsidiaries shall sell, lease, exchange
or otherwise transfer or dispose of), in one or more transactions, the
Major Part of the assets of the Company and its Subsidiaries (taken as a
whole) to any Acquiring Person or any Affiliate or Associate of an
Acquiring Person;
then, in each such case, proper provision shall be made so that each holder of a
Right, except as provided in Section 7(e), shall thereafter have the right to
receive, upon the exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement, the securities specified below (or, at such
holder's option, the securities specified in Section 11(a)):
(x) if the Principal Party in such Business Combination has Registered
Common Shares outstanding, each Right shall thereafter represent the right
to receive, upon the exercise thereof for the Purchase Price in accordance
with the terms of this Rights Agreement, such number of Registered Common
Shares of such Principal Party, free and clear of all liens, encumbrances
or other adverse claims, as shall have an aggregate Market Value equal to
the result obtained by multiplying the Purchase Price by two; or
(y) if the Principal Party involved in such Business Combination does not
have Registered Common Shares
<PAGE>
23
outstanding, each Right shall thereafter represent the right to receive,
upon the exercise thereof for the Purchase Price in accordance with the
terms of this Rights Agreement, at the election of the holder of such Right
at the time of the exercise thereof, any of:
(1) such number of Common Shares of the Surviving Person in such
Business Combination as shall have an aggregate Book Value immediately
after giving effect to such Business Combination equal to the result
obtained by multiplying the Purchase Price by two;
(2) such number of Common Shares of the Principal Party in such
Business Combination (if the Principal Party is not also the Surviving
Person in such Business Combination) as shall have an aggregate Book Value
immediately after giving effect to such Business Combination equal to the
result obtained by multiplying the Purchase Price by two; or
(3) if the Principal Party in such Business Combination is an
Affiliate of one or more Persons which has Registered Common Shares
outstanding, such number of Registered Common Shares of whichever of such
Affiliates of the Principal Party has Registered Common Shares with the
greatest aggregate Market Value on the date of consummation of such
Business Combination as shall have an aggregate Market Value on the date of
such Business Combination equal to the result obtained by multiplying the
Purchase Price by two.
(ii) The Company shall not consummate any Business Combination unless
each issuer of Common Shares for which Rights may be exercised, as set forth in
this Section 11(c), shall have sufficient authorized Common Shares that have not
been issued or reserved for issuance (and which shall, when issued upon exercise
thereof in accordance with this Rights Agreement, be validly issued, fully paid
and nonassessable and free of preemptive rights, rights of first refusal or any
other restrictions or limitations on the transfer or ownership thereof) to
permit the exercise in full of the Rights in accordance with this Section 11(c)
and unless prior thereto:
(A) a registration statement under the Securities Act on an
appropriate form, with respect to the Rights and the Common Shares of such
issuer purchasable upon
<PAGE>
24
exercise of the Rights, shall be effective under the Securities Act; and
(B) the Company and each such issuer shall have:
(1) executed and delivered to the Rights Agent a supplemental
agreement providing for the assumption by such issuer of the
obligations set forth in this Section 11(c) (including the obligation
of such issuer to issue Common Shares upon the exercise of Rights in
accordance with the terms set forth in Sections 11(c)(i) and
11(c)(iii)) and further providing that such issuer, at its own
expense, will use its best efforts to:
(x) cause a registration statement under the Securities Act
on an appropriate form, with respect to the Rights and the Common
Shares of such issuer purchasable upon exercise of the Rights, to
remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date;
(y) qualify or register the Rights and the Common Shares of
such issuer purchasable upon exercise of the Rights under the
blue sky or securities laws of such jurisdictions as may be
necessary or appropriate; and
(z) list the Rights and the Common Shares of such issuer
purchasable upon exercise of the Rights on each national
securities exchange on which the Common Shares were listed prior
to the consummation of the Business Combination or, if the Common
Shares were not listed on a national securities exchange prior to
the consummation of the Business Combination, on a national
securities exchange;
(2) furnished to the Rights Agent a written opinion of
independent counsel stating that such supplemental agreement is a
valid, binding and enforceable agreement of such issuer; and
<PAGE>
25
(3) filed with the Rights Agent a certificate of a nationally
recognized firm of independent accountants setting forth the number of
Common Shares of such issuer which may be purchased upon the exercise
of each Right after the consummation of such Business Combination.
(iii) After consummation of any Business Combination and subject to
the provisions of Section 11(c)(ii), (A) each issuer of Common Shares for which
Rights may be exercised as set forth in this Section 11(c) shall be liable for,
and shall assume, by virtue of such Business Combination, all the obligations
and duties of the Company pursuant to this Rights Agreement, (B) the term
"Company" shall thereafter be deemed to refer to such issuer, (C) each such
issuer shall take such steps in connection with such consummation as may be
necessary to assure that the provisions hereof (including the provisions of
Sections 11(a) and 11(c)) shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter deliverable upon
the exercise of the Rights and (D) the number of Common Shares of each such
issuer thereafter receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of Sections 11 and 12 and the provisions of
Section 7, 9 and 10 with respect to the Preferred Shares shall apply, as nearly
as reasonably may be, on like terms to any such Common Shares.
SECTION 12. Certain Adjustments. (a) To preserve the actual or
--------------------
potential economic value of the Rights, if at any time after the date of this
Rights Agreement there shall be any change in the Common Shares or the Preferred
Shares, whether by reason of stock dividends, stock splits, recapitalizations,
mergers, consolidations, combinations or exchanges of securities, split-ups,
split-offs, spin-offs, liquidations, other similar changes in capitalization,
any distribution or issuance of cash, assets, evidences of indebtedness or
subscription rights, options or warrants to holders of Common Shares or
Preferred Shares, as the case may be (other than distribution of the Rights or
regular quarterly cash dividends) or otherwise, then, in each such event the
Board of Directors of the Company shall make such appropriate adjustments in the
number of Preferred Shares (or the number and kind of other securities) issuable
upon exercise of each Right, the Purchase Price and Redemption Price in effect
at such time
<PAGE>
26
and the number of Rights outstanding at such time (including the number of
Rights or fractional Rights associated with each Common Share) such that
following such adjustment such event shall not have had the effect of reducing
or limiting the benefits the holders of the Rights would have had absent such
event.
(b) If, as a result of an adjustment made pursuant to Section 12(a),
the holder of any Right thereafter exercised shall become entitled to receive
any securities other than Preferred Shares, thereafter the number of such
securities so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of Sections 11 and 12 and the provisions of
Sections 7, 9 and 10 with respect to the Preferred Shares shall apply, as nearly
as reasonably may be, on like terms to any such other securities.
(c) All Rights originally issued by the Company subsequent to any
adjustment made to the amount of Preferred Shares or other securities relating
to a Right shall evidence the right to purchase, for the Purchase Price, the
adjusted number and kind of securities purchasable from time to time hereunder
upon exercise of the Rights, all subject to further adjustment as provided
herein.
(d) Irrespective of any adjustment or change in the Purchase Price or
the number of Preferred Shares or number or kind of other securities issuable
upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the terms which were expressed in the
initial Right Certificates issued hereunder.
(e) In any case in which action taken pursuant to Section 12(a)
requires that an adjustment be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date
the Preferred Shares and/or other securities, if any, issuable upon such
exercise over and above the Preferred Shares and/or other securities, if any,
issuable before giving effect to such adjustment; provided, however, that the
-------- -------
Company shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional securities upon the
occurrence of the event requiring such adjustment.
<PAGE>
27
SECTION 13. Certificate of Adjustment. Whenever an adjustment is
--------------------------
made as provided in Section 11 or 12, the Company shall (a) promptly prepare a
certificate setting forth such adjustment and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Rights Agent and with
each transfer agent for the Preferred Shares a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Right Certificate (or, prior to
the Distribution Date, of the Common Shares) in accordance with Section 25. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained.
SECTION 14. Additional Covenants. (a) Notwithstanding any other
---------------------
provision of this Rights Agreement, no adjustment to the number of Preferred
Shares (or fractions of a share) or other securities for which a Right is
exercisable or the number of Rights outstanding or associated with each Common
Share or any similar or other adjustment shall be made or be effective if such
adjustment would have the effect of reducing or limiting the benefits the
holders of the Rights would have had absent such adjustment, including, without
limitation, the benefits under Sections 11 and 12, unless the terms of this
Rights Agreement are amended so as to preserve such benefits.
(b) The Company covenants and agrees that, after the Distribution
Date, except as permitted by Section 26, it will not take (or permit any
Subsidiary of the Company to take) any action if at the time such action is
taken it is intended or reasonably foreseeable that such action will reduce or
otherwise limit the benefits the holders of the Rights would have had absent
such action, including, without limitation, the benefits under Sections 11 and
12. Any action taken by the Company during any period after any Person becomes
an Acquiring Person but prior to the Distribution Date shall be null and void
unless such action could be taken under this Section 14(b) from and after the
Distribution Date. The Company shall not consummate any Business Combination if
any issuer of Common Shares for which Rights may be exercised after such
Business Combination in accordance with Section 11(c) shall have taken any
action that reduces or otherwise limits the benefits the holders of the Rights
would have had absent such action, including, without limitation, the benefits
under Sections 11 and 12.
<PAGE>
28
SECTION 15. Fractional Rights and Fractional Shares. (a) The
----------------------------------------
Company may, but shall not be required to, issue fractions of Rights or
distribute Right Certificates which evidence fractional Rights. In lieu of such
fractional Rights, the Company may pay to the registered holders of the Right
Certificates with regard to which such fractional Rights would otherwise be
issuable an amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this Section 15(a), the current market
value of a whole Right shall be the closing price of the Rights (as determined
pursuant to the second and third sentences of the definition of Market Value
contained in Section 1) for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable.
(b) The Company may, but shall not be required to, issue fractions of
Preferred Shares upon exercise of the Rights or distribute certificates which
evidence fractional Preferred Shares. In lieu of fractional Preferred Shares,
the Company may elect to (i) utilize a depository arrangement as provided by the
terms of the Preferred Shares or (ii) in the case of a fraction of a Preferred
Share (other than one-thousandth (1/1,000) of a Preferred Share or any integral
multiple thereof), pay to the registered holders of Right Certificates at the
time such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one Preferred Share, if any are
outstanding and publicly traded (or the Formula Number times the current market
value of one Common Share if the Preferred Shares are not outstanding and
publicly traded). For purposes of this Section 15(b), the current market value
of a Preferred Share (or Common Share) shall be the closing price of a Preferred
Share (or Common Share) (as determined pursuant to the second and third
sentences of the definition of Market Value contained in Section 1) for the
Trading Day immediately prior to the date of such exercise. If, as a result of
an adjustment made pursuant to Section 12(a), the holder of any Right thereafter
exercised shall become entitled to receive any securities other than Preferred
Shares, the provisions of this Section 15(b) shall apply, as nearly as
reasonably may be, on like terms to such other securities.
(c) The Company may, but shall not be required to, issue fractions of
Common Shares upon exchange of Rights pursuant to Section 11(b), or to
distribute certificates which evidence fractional Common Shares. In lieu of
such
<PAGE>
29
fractional Common Shares, the Company may pay to the registered holders of the
Right Certificates with regard to which such fractional Common Shares would
otherwise be issuable an amount in cash equal to the same fraction of the
current Market Value of one Common Share as of the date on which a Person became
an Acquiring Person.
(d) The holder of Rights by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right except as provided in this Section 15.
SECTION 16. Rights of Action. (a) All rights of action in respect
-----------------
of this Rights Agreement are vested in the respective registered holders of the
Right Certificates (and, prior to the Distribution Date, the registered holders
of the Common Shares); and any registered holder of any Right Certificate (or,
prior to the Distribution Date, of the Common Shares), without the consent of
the Rights Agent or of the holder of any other Right Certificate (or, prior to
the Distribution Date, of the Common Shares) may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Right Certificate in the manner
provided in such Right Certificate and in this Rights Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Rights Agreement and shall be entitled to
specific performance of the obligations of any Person under, and injunctive
relief against actual or threatened violations of the obligations of any Person
subject to, this Rights Agreement.
(b) Any holder of Rights who prevails in an action to enforce the
provisions of this Rights Agreement shall be entitled to recover the reasonable
costs and expenses, including attorneys' fees, incurred in such action.
SECTION 17. Transfer and Ownership of Rights and Right Certificates.
--------------------------------------------------------
(a) Prior to the Distribution Date, the Rights will be transferable only in
connection with the transfer of the Common Shares and the Rights associated with
the Common Shares shall be automatically transferred upon the transfer of the
Common Shares.
<PAGE>
30
(b) After the Distribution Date, the Right Certificates will be
transferable, subject to Section 7(e), only on the registry books of the Rights
Agent if surrendered at the principal office of the Rights Agent, duly endorsed
or accompanied by a proper instrument of transfer.
(c) The Company and the Rights Agent may deem and treat the Person in
whose name a Right Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Right Certificates or the associated certificate for
Common Shares made by anyone other than the Company or the Rights Agent) for all
purposes whatsoever, and neither the Company nor the Rights Agent shall be
affected by any notice to the contrary.
SECTION 18. Right Certificate Holder Not Deemed a Shareholder. No
--------------------------------------------------
holder, as such, of any Right Certificate shall be entitled to vote or receive
dividends or be deemed, for any purpose, the holder of the Preferred Shares or
of any other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company,
including, without limitation, any right to vote for the election of directors
or upon any matter submitted to shareholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting shareholders, or to receive dividends or other
distributions or subscription rights, or otherwise, until the Right or Rights
evidenced by such Right Certificate shall have been exercised in accordance with
the provisions hereof.
SECTION 19. Concerning the Rights Agent. (a) The Company agrees to
----------------------------
pay to the Rights Agent reasonable compensation for all services rendered by it
hereunder from time to time and its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this Rights
Agreement and the exercise and performance of its duties hereunder.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Rights Agreement in reliance upon any Right
<PAGE>
31
Certificate or certificate for the Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons.
SECTION 20. Merger or Consolidation or Change of Rights Agent. (a)
--------------------------------------------------
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer or
corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Rights Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto; provided that such corporation would be eligible for
--------
appointment as a successor Rights Agent under the provisions of Section 22. In
case, at the time such successor Rights Agent shall succeed to the agency
created by this Rights Agreement, any of the Right Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Right
Certificates so countersigned; and, in case at that time any of the Right
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such cases such
Right Certificates shall have the full force provided in the Right Certificates
and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be changed
and at such time any of the Right Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Right Certificates so countersigned; and, in case at that time
any of the Right Certificates shall not have been countersigned, the Rights
Agent may countersign such Right Certificates either in its prior name or in its
changed name; and in all such cases such Right Certificates shall have the full
force provided in the Right Certificates and in this Rights Agreement.
<PAGE>
32
SECTION 21. Duties of Rights Agent. The Rights Agent undertakes the
-----------------------
duties and obligations imposed by this Rights Agreement upon the following terms
and conditions, by all of which the Company and the holders of Right
Certificates (or, prior to the Distribution Date, of the Common Shares), by
their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel satisfactory to
it (who may be legal counsel for the Company), and the opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent as
to any action taken, suffered or omitted by it in good faith and in accordance
with such opinion.
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person) be
proved or established by the Company prior to taking, refraining from taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of the
Chairman of the Board, the Chief Executive Officer, the President, the Chief
Operating Officer, the Chief Financial Officer, a Vice President (whether
preceded by any additional title), the Treasurer or the Secretary of the Company
and delivered to the Rights Agent; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Rights Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or wilful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Rights Agreement or in the
Right Certificates (except as to its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Rights Agreement or the execution and delivery hereof
(except the due execution hereof by the Rights Agent) or in respect of
<PAGE>
33
the validity or execution of any Right Certificate (except its countersignature
thereof); nor shall it be responsible for any breach by the Company of any
covenant or condition contained in this Rights Agreement or in any Right
Certificate; nor shall it be responsible for any adjustment required under the
provisions of Section 11 or 12 or responsible for the manner, method or amount
of any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after actual notice of any such adjustment); nor
shall it by any act hereunder be deemed to make any representation or warranty
as to the authorization or reservation of any Preferred Shares or Common Shares
to be issued pursuant to this Rights Agreement or any Right Certificate or as to
whether any Preferred Shares or Common Shares will, when so issued, be validly
authorized and issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Rights Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the Chief Executive Officer, the President,
the Chief Operating Officer, a Vice President (whether preceded by any
additional title), the Secretary or the Treasurer of the Company, and to apply
to such officers for advice and instructions in connection with its duties and
it shall not be liable for any action taken or suffered to be taken by it in
good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer, employee
or affiliate of the Rights Agent may buy, sell or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
the Rights Agent under this Rights Agreement. Nothing herein shall preclude
<PAGE>
34
the Rights Agent from acting in any other capacity for the Company or for any
other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct provided reasonable care was exercised in the selection
and continued employment thereof.
(j) The Company agrees to indemnify and to hold the Rights Agent
harmless against any loss, liability, damage or expense (including reasonable
fees and expenses of legal counsel) which the Rights Agent may incur resulting
from its actions as Rights Agent pursuant to this Rights Agreement; provided,
--------
however, that the Rights Agent shall not be indemnified or held harmless with
- -------
respect to any such loss, liability, damage or expense incurred by the Rights
Agent as a result of, or arising out of, its own negligence, bad faith or wilful
misconduct. In no case shall the Company be liable with respect to any action,
proceeding, suit or claim against the Rights Agent unless the Rights Agent shall
have notified the Company, by letter or by facsimile confirmed by letter, of the
assertion of any action, proceeding, suit or claim against the Rights Agent,
promptly after the Rights Agent shall have notice of any such assertion of an
action, proceeding, suit or claim or have been served with the summons or other
first legal process giving information as to the nature and basis of the action,
proceeding, suit or claim. The Company shall at its own expense assume the
defense of any such action, proceeding, suit or claim. In the event that the
Company assumes such defense, the Company shall not thereafter be liable for the
fees and expenses of any additional counsel retained by the Rights Agent, so
long as the Company shall retain counsel satisfactory to the Rights Agent, in
the exercise of its reasonable judgment, to defend such action, proceeding, suit
or claim. In the event the Company fails so to defend, the Rights Agent agrees
not to settle any litigation in connection with any action, proceeding, suit or
claim with respect to which it may seek indemnification from the Company without
the prior written consent of the Company.
<PAGE>
35
(k) The Rights Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expense unless the Company or one or more registered holders of Right
Certificates shall furnish the Rights Agent with security and indemnity to its
satisfaction for any costs and expenses which may be incurred.
(l) The Rights Agent shall not be liable for failure to perform any
duties except as specifically set forth herein and no implied covenants or
obligations shall be read into this Agreement against the Rights Agent, whose
duties and obligations are ministerial and shall be determined solely by the
express provisions hereof.
SECTION 22. Change of Rights Agent. The Rights Agent or any
-----------------------
successor Rights Agent may resign and be discharged from its duties under this
Rights Agreement upon 30 days' notice in writing mailed to the Company and to
each transfer agent of the Common Shares and the Preferred Shares by registered
or certified mail, and to the holders of the Right Certificates (or, prior to
the Distribution Date, of the Common Shares) by first-class mail. The Company
may remove the Rights Agent or any successor Rights Agent upon 30 days' notice
in writing, mailed to the Rights Agent or successor Rights Agent, as the case
may be, and to each transfer agent of the Common Shares and the Preferred Shares
by registered or certified mail, and to the holders of the Right Certificates
(or, prior to the Distribution Date, of the Common Shares) by first-class mail.
If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of 30 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent or
by the holder of a Right Certificate (or, prior to the Distribution Date, of the
Common Shares) who shall, with such notice, submit his Right Certificate (or,
prior to the Distribution Date, the certificate representing his Common Shares)
for inspection by the Company, then the registered holder of any Right
Certificate (or, prior to the Distribution Date, of the Common Shares) may apply
to any court of competent jurisdiction for the appointment of a new Rights
Agent. Any successor Rights Agent, whether appointed by the Company or by such
a court, shall be a corporation organized and doing business under the laws of
the United States or of any state of the United
<PAGE>
36
States, in good standing, having a principal office in the United States, which
is authorized under such laws to exercise stock, transfer or corporate trust
powers and is subject to supervision or examination by Federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $25,000,000; provided that the
--------
principal transfer agent for the Common Shares shall in any event be qualified
to be the Rights Agent. After appointment, the successor Rights Agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Shares and the Preferred Shares, and mail a notice thereof in writing
to the registered holders of the Right Certificates (or, prior to the
Distribution Date, of the Common Shares). Failure to give any notice provided
for in this Section 22, however, or any defect therein shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, as the case may be.
SECTION 23. Issuance of Additional Rights and Right Certificates.
-----------------------------------------------------
Notwithstanding any of the provisions of this Rights Agreement or of the Rights
to the contrary, the Company may, at its option, issue new Right Certificates
evidencing Rights in such form as may be approved by its Board of Directors to
reflect any adjustment or change made in accordance with the provisions of this
Rights Agreement. In addition, in connection with the issuance or sale of Common
Shares following the Distribution Date and prior to the earlier of the
Redemption Date and the Expiration Date, the Company (a) shall, with respect to
Common Shares so issued or sold pursuant to the exercise of stock options or
under any employee plan or arrangement, or upon the exercise, conversion or
exchange of securities, notes or debentures issued by the Company, and (b) may,
in any other case, if deemed necessary or appropriate by the Board of Directors
of the Company, issue Right Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (x) no
-------- -------
such Right Certificate shall be issued if, and to the extent
<PAGE>
37
that, the Company shall be advised by counsel that such issuance would create a
significant risk of material adverse tax consequences to the Company or the
Person to whom such Right Certificate would be issued, and (y) no such Right
Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.
SECTION 24. Redemption and Termination. (a) The Board of Directors
---------------------------
of the Company may, at its option, at any time prior to the earlier of (i) such
time as a Person becomes an Acquiring Person and (ii) the Expiration Date, order
the redemption of all, but not fewer than all, the then outstanding Rights at
the Redemption Price (the date of such redemption being the "Redemption Date"),
and the Company, at its option, may pay the Redemption Price either in cash or
Common Shares or other securities of the Company deemed by the Board of
Directors of the Company, in the exercise of its sole discretion, to be at least
equivalent in value to the Redemption Price.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, and without any further action
and without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Within 10 Business Days after the action of the Board of
Directors of the Company ordering the redemption of the Rights, the Company
shall give notice of such redemption to the holders of the then outstanding
Rights by mailing such notice to all such holders at their last addresses as
they appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Shares. Each such notice of redemption will state the method by which payment
of the Redemption Price will be made. The notice, if mailed in the manner
herein provided, shall be conclusively presumed to have been duly given, whether
or not the holder of Rights receives such notice. In any case, failure to give
such notice by mail, or any defect in the notice, to any particular holder of
Rights shall not affect the sufficiency of the notice to other holders of
Rights.
SECTION 25. Notices. Notices or demands authorized by this Agreement
--------
to be given or made by the Rights Agent or by the holder of a Right Certificate
(or, prior to the Distribution Date, of the Common Shares) to or on the
<PAGE>
38
Company shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
Primex Technologies, Inc.
10101 9th Street
St. Petersburg, FL 33716-3807
Attention of General Counsel
Subject to the provisions of Section 22, any notice or demand authorized by this
Rights Agreement to be given or made by the Company or by the holder of a Right
Certificate (or, prior to the Distribution Date, of the Common Shares) to or on
the Rights Agent shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
450 West 33rd Street
New York, NY 10001
Attention: Vice President of Administration
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to any holder of a Right Certificate (or, prior
to the Distribution Date, of the Common Shares) shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed to such holder at
the address of such holder as shown on the registry books of the Rights Agent
or, prior to the Distribution Date, on the registry books of the transfer agent
for the Common Shares.
SECTION 26. Supplements and Amendments. At any time prior to the
---------------------------
Distribution Date and subject to the last sentence of this Section 26, the
Company may, and the Rights Agent shall if the Company so directs, supplement or
amend any provision of this Rights Agreement (including, without limitation, the
date on which the Distribution Date shall occur, the time during which the
Rights may be redeemed pursuant to Section 24 or any provision of the Articles
of Amendment) without the approval of any holder of the Rights. From and after
the Distribution Date and subject to applicable law, the Company may, and the
Rights Agent shall if the Company so directs, amend this Rights Agreement
without the approval of any holders of Right Certificates
<PAGE>
39
(a) to cure any ambiguity or to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provision of this
Rights Agreement or (b) to make any other provisions in regard to matters or
questions arising hereunder which the Company may deem necessary or desirable
and which shall not adversely affect the interests of the holders of Right
Certificates (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person). Any supplement or amendment adopted during any period after
any Person has become an Acquiring Person but prior to the Distribution Date
shall be null and void unless such supplement or amendment could have been
adopted under the prior sentence from and after the Distribution Date. Any
supplement or amendment to this Rights Agreement duly approved by the Company
that does not amend Sections 19, 20, 21 or 22 in a manner adverse to the Rights
Agent shall become effective immediately upon execution by the Company, whether
or not also executed by the Rights Agent. In addition, notwithstanding anything
to the contrary contained in this Rights Agreement, no supplement or amendment
to this Rights Agreement shall be made which (x) reduces the Redemption Price
(except as required by Section 12(a)) or (y) provides for an earlier Expiration
Date.
SECTION 27. Successors. All the covenants and provisions of this
-----------
Rights Agreement by or for the benefit of the Company or the Rights Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
SECTION 28. Benefits of Rights Agreement; Determinations and Actions
--------------------------------------------------------
by the Board of Directors, etc. (a) Nothing in this Rights Agreement shall be
- -------------------------------
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution
Date, of the Common Shares) any legal or equitable right, remedy or claim under
this Rights Agreement; but this Rights Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, of the Common
Shares).
(b) Except as explicitly otherwise provided in this Rights Agreement,
the Board of Directors of the Company shall have the exclusive power and
authority to administer this Rights Agreement and to exercise all rights and
powers specifically granted to the Board of Directors of the
<PAGE>
40
Company or to the Company, or as may be necessary or advisable in the
administration of this Rights Agreement, including, without limitation, the
right and power to (i) interpret the provisions of this Rights Agreement and
(ii) make all determinations deemed necessary or advisable for the
administration of this Rights Agreement (including, without limitation, a
determination to redeem or not redeem the Rights or to amend this Rights
Agreement and whether there is an Acquiring Person).
(c) Nothing contained in this Rights Agreement shall be deemed to be
in derogation of the obligation of the Board of Directors of the Company to
exercise its fiduciary duty. Without limiting the foregoing, nothing contained
herein shall be construed to suggest or imply that the Board of Directors shall
not be entitled to reject any tender offer, or to recommend that holders of
Common Shares reject any tender offer, or to take any other action (including,
without limitation, the commencement, prosecution, defense or settlement of any
litigation and the submission of additional or alternative offers or other
proposals) with respect to any tender offer that the Board of Directors believes
is necessary or appropriate in the exercise of such fiduciary duty.
SECTION 29. Severability. If any term, provision, covenant or
-------------
restriction of this Rights Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Rights
Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated.
SECTION 30. Governing Law. This Rights Agreement and each Right
--------------
Certificate issued hereunder shall be deemed to be a contract made under the law
of the Commonwealth of Virginia and for all purposes shall be governed by and
construed in accordance with the law of such Commonwealth applicable to
contracts to be made and performed entirely within such Commonwealth except that
the duties and rights of the Rights Agent shall be governed by the law of the
State of New York without reference to the choice of law doctrine of such State.
SECTION 31. Counterparts; Effectiveness. This Rights Agreement may
----------------------------
be executed in any number of counterparts and each of such counterparts shall
for all purposes be deemed to be an original, and all such
<PAGE>
41
counterparts shall together constitute but one and the same instrument. This
Rights Agreement shall be effective as of the Close of Business on the date
hereof.
SECTION 32. Descriptive Headings. Descriptive headings of the
---------------------
several Sections of this Rights Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
of this Rights Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed as of the day and year first above written.
PRIMEX TECHNOLOGIES, INC.,
by
------------------------------
Name:
Title:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C., as
Rights Agent,
by
------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
ARTICLES OF AMENDMENT
OF
THE ARTICLES OF INCORPORATION
OF
PRIMEX TECHNOLOGIES, INC.
under Section 13.1-639 of the Virginia Stock Corporation Act
FIRST: The name of the Corporation is Primex Technologies, Inc.
SECOND: The amendment adopted is to add a new Paragraph 10 to Article
Fourth, to read as follows:
"10: Series A Participating Cumulative Preferred Stock. There is
hereby established a series of the Corporation's authorized Preferred Stock, to
be designated as the "Series A Participating Cumulative Preferred Stock, par
value $1 per share." The designation and number, and relative rights,
preferences and limitations of the Series A Participating Cumulative Preferred
Stock, insofar as not already fixed by any other provision of these Articles of
Incorporation, shall be as follows:
SECTION 1. Designation and Number of Shares. The shares of such
---------------------------------
series shall be designated as "Series A Participating Cumulative Preferred
Stock" (the "Series A Preferred Stock"), par value $1 per share. The number of
shares initially constituting the Series A Preferred Stock shall be 250,000;
provided, however, that, if more than a total of 250,000 shares of Series A
- -------- -------
Preferred Stock shall be issuable upon the exercise of Rights (the "Rights")
issued pursuant to the Rights Agreement dated as of December 19, 1996, between
the Corporation and Chase Mellon Shareholder Services, L.L.C., as Rights Agent
(the "Rights Agreement"), the Board of Directors of the Corporation, pursuant to
Section 13.1-639 of the Virginia Stock Corporation Act, shall direct by
resolution or resolutions that articles of amendment of the Articles of
Incorporation of the Corporation be properly executed and filed with the State
Corporation Commission of Virginia providing for the total number of shares of
Series A Preferred Stock authorized to be issued to be increased (to the extent
that the Articles of Incorporation then permit) to the largest number of whole
shares (rounded up to the nearest whole number) issuable upon exercise of such
Rights.
<PAGE>
2
SECTION 2. Dividends or Distributions. (a) Subject to the prior and
---------------------------
superior rights of the holders of shares of any other series of Preferred Stock
or other class of capital stock of the Corporation ranking prior and superior to
the shares of Series A Preferred Stock with respect to dividends, the holders of
shares of the Series A Preferred Stock shall be entitled to receive, when, as
and if declared by the Board of Directors, out of the assets of the Corporation
legally available therefor, (i) quarterly dividends payable in cash on the last
day of each fiscal quarter in each year, or such other dates as the Board of
Directors of the Corporation shall approve (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or a
fraction of a share of Series A Preferred Stock, in the amount of $.01 per whole
share (rounded to the nearest cent), less the amount of all cash dividends
declared on the Series A Preferred Stock pursuant to the following clause (ii)
since the immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock (the total of which
shall not, in any event, be less than zero) and (ii) dividends payable in cash
on the payment date for each cash dividend declared on the Common Stock in an
amount per whole share (rounded to the nearest cent) equal to the Formula Number
(as hereinafter defined) then in effect times the cash dividends then to be paid
on each share of Common Stock. In addition, if the Corporation shall pay any
dividend or make any distribution on the Common Stock payable in assets,
securities or other forms of non-cash consideration (other than dividends or
distributions solely in shares of Common Stock), then, in each such case, the
Corporation shall simultaneously pay or make on each outstanding whole share of
Series A Preferred Stock a dividend or distribution in like kind equal to the
Formula Number then in effect times such dividend or distribution on each share
of the Common Stock. As used herein, the "Formula Number" shall be 1,000;
provided, however, that, if at any time after December 31, 1996, the Corporation
- -------- -------
shall (x) declare or pay any dividend on the Common Stock payable in shares of
Common Stock or make any distribution on the Common Stock in shares of Common
Stock, (y) subdivide (by a stock split or otherwise) the outstanding shares of
Common Stock into a larger number of shares of Common Stock or (z) combine (by a
reverse stock split or
<PAGE>
3
otherwise) the outstanding shares of Common Stock into a smaller number of
shares of Common Stock, then, in each such event, the Formula Number shall be
adjusted to a number determined by multiplying the Formula Number in effect
immediately prior to such event by a fraction, the numerator of which is the
number of shares of Common Stock that are outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
are outstanding immediately prior to such event (and rounding the result to the
nearest whole number); and provided further, that, if at any time after December
----------------
31, 1996, the Corporation shall issue any shares of its capital stock in a
merger, reclassification, or change of the outstanding shares of Common Stock,
then, in each such event, the Formula Number shall be appropriately adjusted to
reflect such merger, reclassification or change so that each share of Preferred
Stock continues to be the economic equivalent of a Formula Number of shares of
Common Stock prior to such merger, reclassification or change.
(b) The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in Section 2(a) immediately prior to or at
the same time it declares a dividend or distribution on the Common Stock (other
than a dividend or distribution solely in shares of Common Stock); provided,
--------
however, that, in the event no dividend or distribution (other than a dividend
- -------
or distribution in shares of Common Stock) shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date, a dividend of $.01 per
share on the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date. The Board of Directors may fix a
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a dividend or distribution declared thereon, which
record date shall be the same as the record date for any corresponding dividend
or distribution on the Common Stock.
(c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from and after the Quarterly Dividend Payment
Date next preceding the date of original issue of such shares of Series A
Preferred Stock; provided, however, that dividends on such shares that are
-------- -------
originally issued after the record date for the determination of holders of
shares of Series A Preferred Stock entitled to receive a quarterly dividend and
on or prior to the next succeeding Quarterly Dividend Payment Date shall begin
to accrue and be cumulative from and after such
<PAGE>
4
Quarterly Dividend Payment Date. Notwithstanding the foregoing, dividends on
shares of Series A Preferred Stock that are originally issued prior to the
record date for the determination of holders of shares of Series A Preferred
Stock entitled to receive a quarterly dividend on the first Quarterly Dividend
Payment Date shall be calculated as if cumulative from and after the last day of
the fiscal quarter next preceding the date of original issuance of such shares.
Accrued but unpaid dividends shall not bear interest. Dividends paid on the
shares of Series A Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the time
outstanding.
(d) So long as any shares of the Series A Preferred Stock are
outstanding, no dividends or other distributions shall be declared, paid or
distributed, or set aside for payment or distribution, on the Common Stock,
unless, in each case, the dividend required by this Section 2 to be declared on
the Series A Preferred Stock shall have been declared.
(e) The holders of the shares of Series A Preferred Stock shall not
be entitled to receive any dividends or other distributions, except as provided
herein.
SECTION 3. Voting Rights. The holders of shares of Series A
--------------
Preferred Stock shall have the following voting rights:
(a) Each holder of Series A Preferred Stock shall be entitled to a
number of votes equal to the Formula Number then in effect, for each share of
Series A Preferred Stock held of record on each matter on which holders of the
Common Stock or shareholders generally are entitled to vote, multiplied by the
maximum number of votes per share which any holder of the Common Stock or
shareholders generally then have with respect to such matter (assuming any
holding period or other requirement to vote a greater number of shares is
satisfied).
(b) Except as otherwise provided herein or by applicable law, the
holders of shares of Series A Preferred Stock and the holders of shares of
Common Stock shall vote together as one class for the election of directors of
the Corporation and on all other matters submitted to a vote of shareholders of
the Corporation.
<PAGE>
5
(c) If, at the time of any annual meeting of shareholders for the
election of directors, the equivalent of six quarterly dividends (whether or not
consecutive) payable on any share or shares of Series A Preferred Stock are in
default, the number of directors constituting the Board of Directors of the
Corporation shall be increased by two. In addition to voting together with the
holders of Common Stock for the election of other directors of the Corporation,
the holders of record of the Series A Preferred Stock, voting separately as a
class to the exclusion of the holders of Common Stock, shall be entitled at said
meeting of shareholders (and at each subsequent annual meeting of shareholders),
unless all dividends in arrears have been paid or declared and set apart for
payment prior thereto, to vote for the election of two directors of the
Corporation, the holders of any Series A Preferred Stock being entitled to cast
a number of votes per share of Series A Preferred Stock equal to the Formula
Number. Until the default in payments of all dividends that permitted the
election of said directors shall cease to exist, any director who shall have
been so elected pursuant to the next preceding sentence may be removed at any
time, either with or without cause, only by the affirmative vote of the holders
of the shares of Series A Preferred Stock at the time entitled to cast a
majority of the votes entitled to be cast for the election of any such director
at a special meeting of such holders called for that purpose, and any vacancy
thereby created may be filled by the vote of such holders. If and when such
default shall cease to exist, the holders of the Series A Preferred Stock shall
be divested of the foregoing special voting rights, subject to revesting in the
event of each and every subsequent like default in payments of dividends. Upon
the termination of the foregoing special voting rights, the terms of office of
all persons who may have been elected directors pursuant to said special voting
rights shall forthwith terminate, and the number of directors constituting the
Board of Directors shall be reduced by two. The voting rights granted by this
Section 3(c) shall be in addition to any other voting rights granted to the
holders of the Series A Preferred Stock in this Section 3.
(d) Except as provided herein, in Section 11 or by applicable law,
holders of Series A Preferred Stock shall have no special voting rights and
their consent shall not be required (except to the extent they are entitled to
vote with holders of Common Stock as set forth herein) for authorizing or taking
any corporate action.
<PAGE>
6
SECTION 4. Certain Restrictions. (a) Whenever quarterly dividends
---------------------
or other dividends or distributions payable on the Series A Preferred Stock as
provided in Section 2 are in arrears, thereafter and until all accrued and
unpaid dividends and distributions, whether or not declared, on shares of Series
A Preferred Stock outstanding shall have been paid in full, the Corporation
shall not
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except dividends paid ratably on the Series A Preferred Stock and all such
parity stock on which dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such shares are then
entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock;
provided that the Corporation may at any time redeem, purchase or otherwise
--------
acquire shares of any such parity stock in exchange for shares of any stock
of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Preferred Stock, or any shares of stock ranking on a parity with
the Series A Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors)
to all holders of such shares upon such terms as the Board of Directors,
after consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes, shall
determine in good faith will result in fair and equitable treatment among
the respective series or classes.
<PAGE>
7
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (a) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
SECTION 5. Liquidation Rights. Upon the liquidation, dissolution or
-------------------
winding up of the Corporation, whether voluntary or involuntary, no distribution
shall be made (a) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock, unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received an amount equal to the accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment, plus an amount equal to the greater of (i) $.01 per whole share or
(ii) an aggregate amount per share equal to the Formula Number then in effect
times the aggregate amount to be distributed per share to holders of Common
Stock or (b) to the holders of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series A Preferred
Stock, except distributions made ratably on the Series A Preferred Stock and all
other such parity stock in proportion to the total amounts to which the holders
of all such shares are entitled upon such liquidation, dissolution or winding
up.
SECTION 6. Consolidation, Merger, etc. In case the Corporation shall
---------------------------
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash or any other property, then, in any such case, the then
outstanding shares of Series A Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share equal to the Formula
Number then in effect times the aggregate amount of stock, securities, cash or
any other property (payable in kind), as the case may be, into which or for
which each share of Common Stock is exchanged or changed. In the event both
this Section 6 and Section 2 appear to apply to a transaction, this Section 6
will control.
SECTION 7. No Redemption; No Sinking Fund. (a) The shares of Series
-------------------------------
A Preferred Stock shall not be subject to redemption by the Corporation or at
the option of any holder of Series A Preferred Stock; provided, however, that
-------- -------
the Corporation may purchase or otherwise acquire outstanding shares of Series A
Preferred Stock in the open
<PAGE>
8
market or by offer to any holder or holders of shares of Series A Preferred
Stock.
(b) The shares of Series A Preferred Stock shall not be subject to or
entitled to the operation of a retirement or sinking fund.
SECTION 8. Ranking. The Series A Preferred Stock shall rank junior
--------
to all other series of Preferred Stock of the Corporation, unless the Board of
Directors shall specifically determine otherwise in fixing the powers,
preferences and relative, participating, optional and other special rights of
the shares of such series and the qualifications, limitations and restrictions
thereof.
SECTION 9. Fractional Shares. The Series A Preferred Stock shall be
------------------
issuable upon exercise of the Rights issued pursuant to the Rights Agreement in
whole shares or in any fraction of a share that is one-thousandth (1/1,000) of a
share or any integral multiple of such fraction which shall entitle the holder,
in proportion to such holder's fractional shares, to receive dividends, exercise
voting rights, participate in distributions and have the benefit of all other
rights of holders of Series A Preferred Stock. In lieu of fractional shares,
the Corporation, prior to the first issuance of a share or a fraction of a share
of Series A Preferred Stock, may elect (a) to make a cash payment as provided in
the Rights Agreement for fractions of a share other than one-thousandth
(1/1,000) of a share or any integral multiple thereof or (b) to issue depository
receipts evidencing such authorized fraction of a share of Series A Preferred
Stock pursuant to an appropriate agreement between the Corporation and a
depository selected by the Corporation; provided that such agreement shall
--------
provide that the holders of such depository receipts shall have all the rights,
privileges and preferences to which they are entitled as holders of the Series A
Preferred Stock.
SECTION 10. Reacquired Shares. Any shares of Series A Preferred
------------------
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock, par value $1 per share, of the Corporation,
undesignated as to series, and may thereafter be reissued as part of a new
series of such Preferred Shares as permitted by law.
<PAGE>
9
SECTION 11. Amendment. None of the powers, preferences and relative,
----------
participating, optional and other special rights of the Series A Preferred Stock
as provided herein or in the Articles of Incorporation shall be amended in any
manner that would alter or change the powers, preferences, rights or privileges
of the holders of Series A Preferred Stock so as to affect such holders
adversely without the affirmative vote of the holders of at least 66-2/3% of the
outstanding shares of Series A Preferred Stock, voting as a separate class;
provided, however, that no such amendment approved by the holders of at least
- -------- -------
66-2/3% of the outstanding shares of Series A Preferred Stock shall be deemed to
apply to the powers, preferences, rights or privileges of any holder of shares
of Series A Preferred Stock originally issued upon exercise of a Right after the
time of such approval without the approval of such holder.
THIRD: This amendment of the Articles of Incorporation was duly
adopted by the Board of Directors of the Corporation on December 9, 1996,
without shareholder action, which shareholder action was not required.
FOURTH: All shares of the Corporation's Series A Conversion
Preferred Stock previously outstanding have been converted and are no longer
outstanding.
FIFTH: This amendment of the Articles of Incorporation shall become
effective on January 1, 1997.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Amendment as of this 9th day of December, 1996.
PRIMEX TECHNOLOGIES, INC.
by
--------------------------
Name:
Title:
<PAGE>
EXHIBIT B
[Form of Right Certificate]
Certificate No. [R]-
___________ Rights
NOT EXERCISABLE AFTER DECEMBER 19, 2006, OR EARLIER, IF REDEEMED BY
THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF
THE COMPANY, AT $.01 PER RIGHT, ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) AND BY ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS ARE NULL AND VOID AND NONTRANSFERABLE.
Right Certificate
PRIMEX TECHNOLOGIES, INC.
This certifies that , or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement dated as of December 19, 1996 (the "Rights Agreement"),
between Primex Technologies, Inc., a Virginia corporation (the "Company"), and
Chase Mellon Shareholder Services, L.L.C., a New Jersey limited liability
company, as Rights Agent (the "Rights Agent"), unless the Rights evidenced
hereby shall have been previously redeemed by the Company, to purchase from the
Company at any time after the Distribution Date (as defined in the Rights
Agreement) and prior to 5:00 p.m., New York City time, on the 10th anniversary
of the date of the Rights Agreement (the "Expiration Date"), at the principal
office of the Rights Agent, or its successors as Rights Agent, in New York, New
York, one-thousandth (1/1,000) of a fully paid, nonassessable share of Series A
Participating Cumulative Preferred Stock, without par value, of the Company (the
"Preferred Shares"), at a purchase price per one-thousandth (1/1,000) of a share
equal to $ (the "Purchase Price"), payable in cash, upon presentation and
surrender of this Right Certificate with the Form of Election to Purchase duly
executed.
<PAGE>
2
The Purchase Price and the number and kind of shares which may be
purchased upon exercise of each Right evidenced by this Right Certificate, as
set forth above, are the Purchase Price and the number and kind of shares which
may be so purchased as of January 1, 1997. As provided in the Rights Agreement,
the Purchase Price and the number and kind of shares which may be purchased upon
the exercise of each Right evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
If the Rights evidenced by this Right Certificate are at any time
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement), such
Rights shall be null and void and nontransferable and the holder of any such
Right (including any purported transferee or subsequent holder) shall not have
any right to exercise or transfer any such Right.
This Right Certificate is subject to all the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof, and reference to
the Rights Agreement is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the above-mentioned office of the Rights
Agent and are also available from the Company upon written request.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal stock transfer or corporate trust office of the
Rights Agent, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number and kind of shares as the Rights evidenced by
the Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Right Certificate may be redeemed by the Company at its option
at a redemption price (in cash or shares of Common Stock or other securities of
the Company
<PAGE>
3
deemed by the Board of Directors to be at least equivalent in value) of $.01 per
Right (which amount shall be subject to adjustment as provided in the Rights
Agreement) at any time prior to the earlier of (a) such time as a Person becomes
an Acquiring Person and (b) the Expiration Date.
The Company may, but shall not be required to, issue fractions of
Preferred Shares or distribute certificates which evidence fractions of
Preferred Shares upon the exercise of any Right or Rights evidenced hereby. In
lieu of issuing fractional shares, the Company may elect to make a cash payment
as provided in the Rights Agreement for fractions of a share other than one-
thousandth (1/1,000) of a share or any integral multiple thereof or to issue
certificates or to utilize a depositary arrangement as provided in the terms of
the Rights Agreement and the Preferred Shares.
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything contained in the Rights
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a shareholder of the Company, including, without limitation,
any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in the Rights Agreement), or to receive
dividends or other distributions or subscription rights, or otherwise, until the
Right or Rights evidenced by this Right Certificate shall have been exercised as
provided in accordance with the provisions of the Rights Agreement.
<PAGE>
4
This Right Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of: , ____
PRIMEX TECHNOLOGIES, INC.,
by
-------------------------
Name:
Title:
Attest:
_________________________
Name:
Title:
Countersigned:
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C, as Rights Agent,
by
_____________________
Authorized Officer
<PAGE>
5
[On Reverse Side of Right Certificate]
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed by the registered holder if
such holder desires to exercise the Rights
represented by this Right Certificate.)
To the Rights Agent:
The undersigned hereby irrevocably elects to exercise __________
Rights represented by this Right Certificate to purchase the Preferred Shares
(or other shares) issuable upon the exercise of such Rights and requests that
certificates for such shares be issued in the name of:
Please insert social security
or other identifying number
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
If such number of Rights shall not be all the Rights evidenced by this
Right Certificate, a new Right Certificate for the balance remaining of such
Rights shall be registered in the name of and delivered to:
<PAGE>
6
Please insert social security
or other identifying number
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
Dated: ___________, ____
------------------------------
Signature
Signature Guaranteed:
FORM OF ASSIGNMENT
------------------
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED _______________________________ hereby sells,
assigns and transfers unto _______________________________________________
__________________________________________________________________________
(Please print name and address of transferee)
__________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ______________ Attorney, to
transfer the within Right Certificate on the books of the within-named
Corporation, with full power of substitution.
Dated: ____________, ____
------------------------------
Signature
Signature Guaranteed:
The undersigned hereby certifies that (a) the Rights evidenced by this
Right Certificate are not being sold, assigned or transferred by or on behalf of
a Person who is or was an Acquiring Person or an Affiliate or Associate thereof
(as such terms are defined in the Rights
<PAGE>
7
Agreement), (b) this Rights Certificate is not being sold, assigned or
transferred to or on behalf of any such Acquiring Person, Affiliate or
Associate, and (c) after inquiry and to the best knowledge of the undersigned,
the undersigned did not acquire the Rights evidenced by this Right Certificate
from any Person who is or was an Acquiring Person or an Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement).
------------------------------
Signature
NOTICE
------
The signature on the foregoing Form of Election to Purchase or Form of
Assignment must correspond to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any change
whatsoever.
<PAGE>
Exhibit 10.2
TECHNOLOGY TRANSFER AND LICENSE AGREEMENT
by and between
OLIN CORPORATION
and
PRIMEX TECHNOLOGIES, INC.
<PAGE>
TABLE OF CONTENTS
-----------------
1. DEFINITIONS...............................................................3
2. ASSIGNMENT OF INTELLECTUAL PROPERTY.......................................7
3. LICENSES..................................................................7
4. SECRECY..................................................................10
5. DURATION AND TERMINATION.................................................11
6. RIGHTS UPON TERMINATION OTHER THAN UNDER SECTION 6.1.....................12
6. FORCE MAJEURE............................................................12
7. GUARANTEES, LIABILITIES AND INDEMNITIES..................................13
8. NOTICES..................................................................13
9. EXPORTATION CONTROL......................................................14
10. ASSIGNMENT..............................................................14
11. MISCELLANEOUS...........................................................15
12. SETTLEMENT OF DISPUTES..................................................16
EXHIBIT A .................................................................18
EXHIBIT B .................................................................19
Page 2
<PAGE>
TECHNOLOGY TRANSFER AND LICENSE AGREEMENT
THIS AGREEMENT is made and entered into as of this 1st___ day of January,
__________ 1996 by and between:
OLIN CORPORATION, having a place of business at [427 North Shamrock Street, East
Alton, Illinois 62024], (hereinafter referred to as "OLIN")
AND
PRIMEX TECHNOLOGIES, INC., having a place of business at 10101 Ninth Street
North, St. Petersburg, Florida 33716-3807 (hereinafter referred to as "PRIMEX")
(hereinafter collectively the "PARTIES " and each individually a "PARTY").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, OLIN and PRIMEX are contemplating entering into a Distribution
Agreement concerning the spin-off of PRIMEX from OLIN (the "Distribution
Agreement");
WHEREAS, prior to entering into the Distribution Agreement, OLIN possesses
certain INTELLECTUAL PROPERTY and TECHNOLOGY primarily used in the PRIMEX
business, as that business was part of a single corporate entity and parent-
subsidiary corporate structure;
WHEREAS, PRIMEX desires to own or have the right to use such certain
INTELLECTUAL PROPERTY and TECHNOLOGY used its business;
WHEREAS, to allow each of OLIN and PRIMEX (and their respective shareholders) to
obtain the full value of its respective rights under the Distribution Agreement,
PRIMEX and OLIN desire to enter into and execute this AGREEMENT concerning the
assignment and licensing of certain INTELLECTUAL PROPERTY and TECHNOLOGY;
NOW, THEREFORE, in consideration of the above, and the mutual promises set forth
below, OLIN and PRIMEX agree as follows:
1. DEFINITIONS
- -- -----------
Whenever used in this agreement, the following terms shall have the following
meanings, on the understanding that words in the singular include the plural and
vice-versa. Headings and subheadings are used for convenience only and are not
intended as limitations in the AGREEMENT or for use in interpreting the
AGREEMENT.
1.1 AFFILIATE
- --- ---------
"AFFILIATE" shall mean, when used with respect to a specified PERSON, another
PERSON that directly, or indirectly through one or more intermediaries, CONTROLS
or is CONTROLLED by or is under common CONTROL with the PERSON specified.
Page 3
<PAGE>
1.2 AGREEMENT
- --- ---------
"AGREEMENT" shall mean this agreement as amended and/or supplemented from time
to time, including all the EXHIBITS attached hereto.
1.3 AMMUNITION
- --- ----------
"AMMUNITION" shall mean cartridges, shotshells, projectiles, and blanks, capable
of being fired from a firearm, artillery piece, cannon, industrial gun or other
gun (collectively "Gun") by a propellant charge in such Gun or cartridge
(including but not limited to armor-piercing rounds, trace rounds, incendiary
rounds and/or explosive rounds), but shall not include (i) unpropelled bombs,
and (ii) rockets, mortars and other projectiles substantially propelled by
propellant contained within the projectile.
1.4 CONFIDENTIAL INFORMATION
- --- ------------------------
"CONFIDENTIAL INFORMATION" shall mean any and all information disclosed to the
receiving PARTY by the disclosing PARTY pursuant to the AGREEMENT, in any form
such as, but not limited to, visual, oral, written, graphic, electronic or model
form, including but not limited to know-how and trade secrets, whether patented
or not and whether in the laboratory, pilot plant or commercial plant stage
(including drawings, operating conditions, specifications, safety instructions,
recommendations for effluent disposal, emergency instructions, etc.) owned or
controlled by a PARTY.
1.5 CONTROL
- --- -------
"CONTROL" shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise, and the
terms "CONTROLLING" and "CONTROLLED" shall have meanings correlative thereto.
1.6 EFFECTIVE DATE
- --- --------------
"EFFECTIVE DATE" shall mean the Effective Time specified in the Distribution
Agreement.
1.7 GOCO OPERATION
- --- --------------
"GOCO OPERATION" shall mean any activity conducted by a Party hereto pursuant to
an agreement existing on or prior to the date first above written (or an
extension, renewal or other continuation of such an agreement concerning the
same facility as the prior agreement) with the federal government of the United
States of America by which such party operates or maintains an AMMUNITION or
AMMUNITION components (including powder) production facility for and on behalf
of such government; provided, however, that such term shall not include any
activity conducted at such facility that is not conducted by the respective
party on behalf of such government pursuant to such agreement (such as, but not
limited to, activity conducted by a respective party for its own account at such
facility, whether pursuant to a facilities use agreement with the government or
otherwise).
1.8 INTELLECTUAL PROPERTY
- --- ---------------------
"INTELLECTUAL PROPERTY" shall mean all classes or types of patents, utility
models, design patents, copyrights and applications for the aforementioned, of
all countries of the world, owned by a PARTY and in existence on or before the
EFFECTIVE DATE.
Page 4
<PAGE>
1.9 JOINT TECHNOLOGY
- --- ----------------
"JOINT TECHNOLOGY" shall mean TECHNOLOGY in existence on or before the EFFECTIVE
DATE which (i) was derived from the joint efforts or used (a) by or on behalf of
OLIN's Ordnance and/or Aerospace divisions on the one hand and (b) by or on
behalf of OLIN's Brass and/or Chemicals and/or Chlor-Alkali Products and/or
Winchester and/or Olin Microelectronic Materials, Divisions on the other hand or
(ii) is neither OLIN TECHNOLOGY nor PRIMEX TECHNOLOGY.
1.10 MEDIUM & LARGE CALIBER AMMUNITION & COMPONENTS
- ---- ----------------------------------------------
"MEDIUM & LARGE CALIBER AMMUNITION & COMPONENTS" shall mean (i) fully-loaded
rounds of Ammunition having a diameter of 20 millimeters or larger, other than
shotshells and (ii) components of such fully-loaded rounds.
1.11 NONLETHAL AMMUNITION
- ---- --------------------
"NONLETHAL AMMUNITION" shall mean AMMUNITION that is designed and intended to
minimize or avoid any injury, damage or death resulting from its use or
otherwise intended to be less-than-lethal, including but not limited to having
the effect of slowing or temporarily incapacitating an aggressor through means
intended to minimize or avoid permanent physical damage to the aggressor. The
term "NONLETHAL AMMUNITION" does not include: (i) blanks, and (ii) any
AMMUNITION produced on or before the EFFECTIVE DATE by the parties hereto, nor
any developments therefrom based on techniques historically used in the
AMMUNITION industry for delivering lethal or injurious force to an aggressor
through the use of a metal projectile.
1.12 OCSW & OICW AMMUNITION
- ---- ----------------------
"OCSW AND OICW AMMUNITION" shall mean AMMUNITION used in objective crew served
weapon (OCSW) and OICW objective individual combat weapon (OICW), respectively,
being developed by PRIMEX for the U.S. Army.
1.13 OLIN BUSINESSES
- ---- ---------------
"OLIN BUSINESSES" shall mean the businesses of the Brass, Chlor Alkali Products,
Chemicals, Winchester and Microelectronic Materials, Divisions of OLIN as they
were carried out on or before the EFFECTIVE DATE but excluding Ball Powder(R).
1.14 OLIN TECHNOLOGY
- ---- ---------------
"OLIN TECHNOLOGY" shall mean all the TECHNOLOGY, other than JOINT TECHNOLOGY,
which was used by or derived from efforts by or on behalf of the Brass, Chlor
Alkali Products, Chemicals, Winchester and Microelectronic Materials, divisions
of Olin Corporation on or before the EFFECTIVE DATE.
1.15 OLIN INTELLECTUAL PROPERTY
- ---- --------------------------
"OLIN INTELLECTUAL PROPERTY" shall mean the INTELLECTUAL PROPERTY owned by OLIN
on or before the EFFECTIVE DATE other than the PRIMEX INTELLECTUAL PROPERTY.
Page 5
<PAGE>
1.16 OLIN PRODUCTS
- ---- -------------
"OLIN PRODUCTS" shall mean those products which were made by the Brass, Chlor
Alkali Products, Chemicals, Winchester and Microelectronic Materials, divisions
of OLIN on or before the EFFECTIVE DATE and products acquired, developed or
established by or for OLIN or any of its AFFILIATEs after the EFFECTIVE DATE.
Notwithstanding the foregoing, OLIN PRODUCTS shall, without limitation, not
include MEDIUM & LARGE CALIBER AMMUNITION & COMPONENTS and Ball Powderr except
for: (i) individual component primers, fuses, cups, propellants containing or
derived from HAN (hydroxyamoniumnitrate), shellcases, and cones for shaped
charges prior to their assembly into AMMUNITION, and/or oil well penetrator
cones; and/or (ii) engaging in research and development of propellant powder as
part of the development, testing, trial production, prototype construction, and
similar activities in the business relating to SMALL CALIBER AMMUNITION &
COMPONENTS; and/or (iii) engaging In any of its GOCO OPERATIONS, including the
Lake City Army Ammunition Plant located in Independence, Missouri and the
Ravenna Army Arsenal Plant located in Ravenna, Ohio; and/or (iv) engaging In the
business relating to NONLETHAL AMMUNITION; and/or (v) engaging In the business
relating to high explosives and other primer material.
1.17 PERSON
- ---- ------
"PERSON" shall mean any natural person, corporation, business trust, joint
venture, association, company, partnership or government, or any agency or
political sub-division thereof.
1.18 PRIMEX BUSINESSES
- ---- -----------------
"PRIMEX BUSINESSES" shall mean the businesses of the Ordnance and Aerospace
Divisions of OLIN as they were carried out on or before the EFFECTIVE DATE.
1.19 PRIMEX PRODUCTS
- ---- ---------------
"PRIMEX PRODUCTS" shall mean those products which were made by the Ordnance and
Aerospace divisions of OLIN or their constituent companies and their predecessor
companies on or before the EFFECTIVE DATE and products acquired, developed or
established by or for PRIMEX or any of its AFFILIATES after the EFFECTIVE DATE.
Notwithstanding the forgoing, PRIMEX PRODUCTS shall, without limitation, not
include, SMALL CALIBER AMMUNITION & COMPONENTS except for: (i) engaging in the
development, testing, trial production, prototype construction and similar
activities associated with, but for the first five years after the EFFECTIVE
DATE not the selling of, OCSW AND OICW AMMUNITION; and/or (ii) engaging In the
business relating to NONLETHAL AMMUNITION.
1.20 PRIMEX TECHNOLOGY
- ---- -----------------
"PRIMEX TECHNOLOGY" shall mean all the TECHNOLOGY, other than JOINT TECHNOLOGY,
which was used by or derived from efforts by or on behalf of the Ordnance and
Aerospace Divisions of OLIN or their constituent companies and their
predecessors on or before the EFFECTIVE DATE .
1.21 PRIMEX INTELLECTUAL PROPERTY
- ---- ----------------------------
"PRIMEX INTELLECTUAL PROPERTY" shall mean the INTELLECTUAL PROPERTY set forth in
EXHIBIT A.
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1.22 PRODUCTS
- ---- --------
"PRODUCTS" shall mean the OLIN PRODUCTS and the PRIMEX PRODUCTS.
1.23 SMALL CALIBER AMMUNITION & COMPONENTS
- ---- -------------------------------------
"SMALL CALIBER AMMUNITION & COMPONENTS" shall mean (i) shotshells of any gauge,
(ii) fully-loaded rounds of AMMUNITION, other than MEDIUM & LARGE CALIBER
AMMUNITION & COMPONENTS, (iii) components of such shotshells and fully-loaded
rounds, other than propellant powder; and (iv) ejection cartridges (also known
as "ARDs") for aircraft stores ejection.
1.24 TECHNOLOGY
- ---- ----------
"TECHNOLOGY" shall mean the body of knowledge owned by a PARTY and in existence
as of the EFFECTIVE DATE including: (i) information such as technical,
engineering, maintenance, environmental and safety information with respect to
the design, equipment selection, construction, installation, staffing and
operation of facilities and equipment for the manufacture of PRODUCTS; (ii)
formulae, process drawings and descriptions, chemical recipes, know-how, and
technological and processing information, for the manufacture of PRODUCTS; and
(iii) specifications and properties of the PRODUCTS.
1.25 TERM
- ---- ----
"TERM" shall mean the period of time during which the AGREEMENT shall be in full
force and effect pursuant to ARTICLE 6.
2. ASSIGNMENT OF INTELLECTUAL PROPERTY
- -- -----------------------------------
2.1 Assignment
- --- ----------
OLIN agrees to assign and transfer to PRIMEX as of the EFFECTIVE DATE all of its
right, title and interest, together with all rights of priority, in and to the
PRIMEX INTELLECTUAL PROPERTY and to the PRIMEX TECHNOLOGY, which were owned by
OLIN as of December 31, 1996, pursuant to assignment documents in the form as
set forth in EXHIBIT B.
2.2 Disclaimer
- --- ----------
OLIN CORPORATION MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH
RESPECT TO THE INTELLECTUAL PROPERTY OR TECHNOLOGY ASSIGNED HEREBY, INCLUDING
WITHOUT LIMITATION AS TO THEIR VALIDITY, ENFORCEABILITY OR FITNESS FOR ANY
PARTICULAR USE OR PURPOSE.
3. LICENSES
- -- --------
3.1 GENERAL LICENSE TO PRIMEX
- --- -------------------------
OLIN and its AFFILIATES hereby grants to PRIMEX an irrevocable, royalty free,
worldwide, nonexclusive license, with the right to sublicense, to use the OLIN
TECHNOLOGY AND OLIN INTELLECTUAL PROPERTY, which have been used by or on behalf
of the PRIMEX BUSINESSES on or before the EFFECTIVE DATE, solely for the making,
having made, use, offering for sale, selling and import of PRIMEX PRODUCTS,
provided that no rights or licenses are granted with respect to PRODUCTS other
than PRIMEX PRODUCTS. OLIN and its
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<PAGE>
AFFILIATES hereby further grants to PRIMEX an irrevocable, royalty free,
worldwide, nonexclusive license, with the right to sublicense, to use the OLIN
INTELLECTUAL PROPERTY and the OLIN TECHNOLOGY, which has been used by PRIMEX in
the PRIMEX BUSINESSES on or before the EFFECTIVE DATE solely for engaging in any
GOCO OPERATIONS.
3.2 JOINT PROPERTY LICENSE TO PRIMEX
- --- --------------------------------
OLIN and its AFFILIATES hereby grants to PRIMEX an irrevocable, royalty free,
worldwide, nonexclusive license, with the right to sublicense, to use the JOINT
INTELLECTUAL PROPERTY and JOINT TECHNOLOGY solely for the making, having made,
use, offering for sale, selling and import of PRIMEX PRODUCTS. No rights or
licenses are granted with respect to PRODUCTS other than PRIMEX PRODUCTS.
3.3 PRIMEX OPTION FOR FUTURE LICENSE
- --- --------------------------------
OLIN and its AFFILIATES hereby grants to PRIMEX an option to nonexclusively
license, upon reasonable terms and conditions to be agreed upon, the use of the
OLIN TECHNOLOGY AND OLIN INTELLECTUAL PROPERTY known to PRIMEX on or before the
EFFECTIVE DATE but which have not been used by or on behalf of the PRIMEX
BUSINESSES on or before the EFFECTIVE DATE, solely for the making, having made,
use, offering for sale, selling and import of PRIMEX PRODUCTS, provided that no
rights or licenses will be granted with respect to PRODUCTS other than PRIMEX
PRODUCTS.
3.4 GENERAL LICENSE TO OLIN
- --- -----------------------
PRIMEX and its AFFILIATES hereby grants to OLIN an irrevocable, royalty free,
worldwide, nonexclusive license, with the right to sublicense, to use the PRIMEX
INTELLECTUAL PROPERTY and the PRIMEX TECHNOLOGY, which have been used by or on
behalf of OLIN in the OLIN BUSINESSES on or before the EFFECTIVE DATE, solely
for the making, having made, use, offering for sale, selling and import of OLIN
PRODUCTS, provided that no rights or licenses are granted with respect to
PRODUCTS other than OLIN PRODUCTS. PRIMEX and its AFFILIATES hereby further
grants to OLIN an irrevocable, royalty free, worldwide, nonexclusive license,
with the right to sublicense, to use the PRIMEX INTELLECTUAL PROPERTY and the
PRIMEX TECHNOLOGY, which has been used by OLIN in the OLIN BUSINESSES on or
before the EFFECTIVE DATE solely for engaging in any GOCO OPERATIONS.
3.5 JOINT PROPERTY LICENSE TO OLIN
- --- ------------------------------
PRIMEX and its AFFILIATES hereby grants OLIN an irrevocable, royalty free,
worldwide, nonexclusive license, with the right to sublicense, to use the JOINT
INTELLECTUAL PROPERTY and JOINT TECHNOLOGY solely for the making, having made,
use, offering for sale, selling and import of OLIN PRODUCTS. No rights or
licenses are granted with respect to PRODUCTS other than OLIN PRODUCTS.
3.6 OLIN OPTION FOR FUTURE LICENSE
- --- ------------------------------
PRIMEX and its AFFILIATES hereby grants to OLIN an option to nonexclusively
license, upon reasonable terms and conditions to be agreed upon, the use of the
PRIMEX TECHNOLOGY AND PRIMEX INTELLECTUAL PROPERTY known to OLIN on or before
the EFFECTIVE DATE but which have not been used by or on behalf of the OLIN
BUSINESSES on or before the EFFECTIVE DATE, solely for the making, having made,
use, offering for sale, selling and import
Page 8
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of OLIN PRODUCTS, provided that no rights or licenses will be granted with
respect to PRODUCTS other than OLIN PRODUCTS.
3.7 CONTINGENT LICENSE TO OLIN
- --- --------------------------
The PARTIES acknowledge that OLIN has guaranteed the performance of PRIMEX with
respect to certain contracts with the government of the United States of America
(hereinafter referred to as the "Government Contracts"). In the event of a
default by PRIMEX under such Government Contracts and the exercise by the
government of its rights under the OLIN guarantee, PRIMEX and its AFFILIATES
hereby grants to OLIN a royalty free, worldwide, nonexclusive license, with the
right to sublicense, to use the PRIMEX TECHNOLOGY and PRIMEX INTELLECTUAL
PROPERTY and any OLIN TECHNOLOGY or OLIN INTELLECTUAL PROPERTY subject to the
licenses of Section 3.1 for the sole purpose of enabling OLIN to fulfill
PRIMEX's obligations under such Government Contracts defaulted by PRIMEX. In
such event PRIMEX and its AFFILIATES agrees to cooperate with OLIN and take all
reasonable actions which are deemed necessary by OLIN to enable OLIN to fulfill
PRIMEX's or its AFFILIATE's obligations under such Government Contracts,
including without limitation, disclosing to OLIN any PRIMEX TECHNOLOGY
reasonably requested by OLIN in order to fulfill such obligations.
3.8 SUBLICENSE TERMS
- --- ----------------
Any sublicense granted pursuant to this ARTICLE 3 shall be consistent with and
subject to the terms and conditions of this AGREEMENT.
3.9 LIMITATIONS
- --- -----------
Notwithstanding any other provision of this AGREEMENT, no PARTY or its
AFFILIATES shall be obligated to: (i) grant any license, or make any disclosure,
to the other PARTY, with respect to INTELLECTUAL PROPERTY, owned or controlled
by such PARTY or its AFFILIATES, if to do so would violate an agreement with an
unrelated third party or (ii) grant any license, to the other PARTY, with
respect to INTELLECTUAL PROPERTY, which are owned or controlled by such PARTY or
its AFFILIATES, if to do so would be in violation of law. If the violation can
be avoided by a lesser license, then the PARTIES or their AFFILIATES agree to
grant same to the extent possible. The PARTIES or their AFFILIATES shall use
reasonable commercial efforts to avoid such restrictions in agreements entered
into following the EFFECTIVE DATE. PRIMEX hereby acknowledges, without
limitation, that OLIN has granted an exclusive license to a third party with
respect to shaped charge liners for oil field applications which are covered by
a certain OLIN patent. Notwithstanding any other provision of this AGREEMENT,
following the EFFECTIVE DATE, neither PARTY or their AFFILIATES shall be
obligated to make any further disclosure to the other PARTY with respect to any
TECHNOLOGY or INTELLECTUAL PROPERTY licensed hereunder.
3.10 THIRD PARTY ROYALTIES
- ---- ---------------------
If a licensor under this ARTICLE 3 is obligated to pay royalties to a third
party with respect to a license or right granted herein, then notwithstanding
the above, the licensee shall be obligated to pay such royalties as a condition
of its license.
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<PAGE>
3.11 WARRANTY
- ---- --------
The PARTIES warrant that, except as set forth in this Agreement, they have not
granted and will not grant any licenses which will conflict with the rights and
licenses set forth in this AGREEMENT. The PARTIES also warrant that they have
the right to grant the rights and licenses set forth in this Agreement. NO
OTHER WARRANTY, OF ANY KIND, WHETHER EXPRESS OR IMPLIED, IS GIVEN BY ONE PARTY
TO THE OTHER PARTY AND IN PARTICULAR THE PARTIES DISCLAIM ANY WARRANTY THAT
THEIR RESPECTIVE INTELLECTUAL PROPERTY ARE VALID OR ENFORCEABLE OR USEFUL FOR
ANY PURPOSE.
3.12 EXPRESS LICENSES ONLY
- ---- ---------------------
Except for licenses expressly granted pursuant to ARTICLE 3, no licenses are
granted hereby, and nothing in the AGREEMENT shall be construed as, or result
in, conveying by implication, waiver or estoppel any right or license to either
PARTY or to any third party.
3.13 ABANDONING INTELLECTUAL PROPERTY
- ---- --------------------------------
If either PARTY wishes to abandon in any country any INTELLECTUAL PROPERTY right
or application therefor licensed hereunder, it shall not do so without first
notifying the other PARTY and giving it a reasonable opportunity to take over
the prosecution or maintenance of such INTELLECTUAL PROPERTY right at its own
expense. If the other PARTY agrees to take over the prosecution and maintenance
of such INTELLECTUAL PROPERTY the abandoning PARTY shall transfer its interest
therein to such other PARTY.
4. SECRECY
- -- -------
4.1 SECRECY OBLIGATION
- --- ------------------
Each of the PARTIES agrees to keep confidential and neither disclose to others
nor use except as permitted herein any CONFIDENTIAL INFORMATION received from
the other PARTY or its AFFILIATES pursuant to the AGREEMENT.
4.2 LIMITS ON DISCLOSURE
- --- --------------------
The receiving PARTY shall treat such CONFIDENTIAL INFORMATION in the same manner
and with the same degree of care as it uses with respect to its own CONFIDENTIAL
INFORMATION of like nature and shall disclose CONFIDENTIAL INFORMATION of the
other PARTY only to its employees who have a need to know it, provided that such
employees are bound to respect all secrecy obligations provided for in the
AGREEMENT.
4.3 EXCEPTIONS
- --- ----------
The obligation set forth in Section 4.1 shall not apply with respect to any
CONFIDENTIAL INFORMATION which:
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<PAGE>
4.3.1 PUBLIC KNOWLEDGE
- ----- ----------------
Is generally available to the public or subsequently becomes generally available
to the public through no breach by the receiving PARTY of secrecy obligations
under this Agreement or prior agreements between the PARTIES concerning the
CONFIDENTIAL INFORMATION; or
4.3.2 RECEIVED FROM THIRD PARTY
- ----- -------------------------
Is received from a third party who is legally free to disclose such CONFIDENTIAL
INFORMATION and who did not receive such CONFIDENTIAL INFORMATION in confidence
from the disclosing PARTY; or
4.3.3 APPROVED FOR DISCLOSURE
- ----- -----------------------
Is approved in writing for release by the disclosing PARTY or its AFFILIATES; or
4.3.4 SUCCESSOR IN INTEREST
- ----- ---------------------
Is disclosed to any permitted assignee of the AGREEMENT, provided that such
assignee agrees to be bound by the provisions of the AGREEMENT; or
4.3.5 INDEPENDENTLY DEVELOPED
- ----- -----------------------
Is independently developed by the receiving PARTY without reference to the
CONFIDENTIAL INFORMATION received from the disclosing PARTY or its AFFILIATES.
4.4 PERMITTED DISCLOSURES
- --- ---------------------
The provisions of Section 4.1 notwithstanding, in exercising the rights granted
under the AGREEMENT, any PARTY may disclose CONFIDENTIAL INFORMATION to others
for purpose of licensing (as permitted hereunder), design, engineering,
construction or operation of permitted facilities using the disclosing PARTY's
or its AFFILIATES licensed TECHNOLOGY; or obtaining or giving consulting
services under a license agreement permitted hereunder, provided that any third
party, to which such CONFIDENTIAL INFORMATION is disclosed shall have first
entered into a written secrecy and non-use obligation at least as stringent as
that imposed on the PARTIES pursuant to the AGREEMENT.
4.5 SUBPOENA OR DEMAND
- --- ------------------
The provisions of Section 4.1 notwithstanding, a PARTY may disclose CONFIDENTIAL
INFORMATION pursuant to a subpoena or demand for production of documents in
connection with any suit or arbitration proceeding, any administrative procedure
or before a governmental or administrative agency or instrumentality thereof or
any legislative hearing or other similar proceeding, provided that the receiving
PARTY shall promptly notify the disclosing PARTY or its AFFILIATES of the
subpoena or demand and provided further that in such instances, the PARTIES use
their best efforts to maintain the confidential nature of the CONFIDENTIAL
INFORMATION by protective order or other means.
5. DURATION AND TERMINATION
- -- ------------------------
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<PAGE>
5.1 TERM OF AGREEMENT
- --- -----------------
This AGREEMENT shall become effective on the EFFECTIVE DATE, and shall continue
in full force and effect until the expiration of the last to expire of the
INTELLECTUAL PROPERTY licensed hereunder or ten (10) years from the EFFECTIVE
DATE, which ever is greater, at which time it shall terminate unless renewed by
agreement of the PARTIES. After expiration of the AGREEMENT pursuant to this
Section 5.1 the rights and obligations set forth in ARTICLES 3, 4, and 10 shall
survive.
5.2 TERMINATION FOR MATERIAL BREACH
- --- -------------------------------
If either PARTY commits a material breach with respect to any of their
obligations hereunder, the other PARTY may give written notice to the allegedly
breaching PARTY specifying the alleged material breach and an intention to
terminate the AGREEMENT. The PARTY charged with the alleged material breach
shall have sixty (60) days from the date of receipt of such written notice to
cure the alleged material breach. If the alleged material breach is not cured
within said sixty (60)-day period, the other PARTY may terminate the AGREEMENT
by sending a written notice of termination to the breaching PARTY and in this
event, neither PARTY waives any legal rights to recover damages resulting from
the termination of the AGREEMENT.
5.3 INSOLVENCY
- --- ----------
In the event that either PARTY shall: (i) become insolvent or go into
liquidation or receivership or be admitted to the benefits of any procedure for
the settlement or postponement of debts or be declared bankrupt; or (ii) become
party to dissolution proceedings; then the AGREEMENT and any and all obligations
assumed hereby (except as otherwise expressly provided for herein) may be
terminated by the other PARTY, if permitted by law, by giving written notice of
such termination on a date specified therein.
6. RIGHTS UPON TERMINATION OTHER THAN UNDER SECTION 6.1
- -- ----------------------------------------------------
6.1 TERMINATION OF LICENSES
- --- -----------------------
Notwithstanding the foregoing, the licenses granted under ARTICLE 3 to the PARTY
committing the material breach under Section 5.2, may be canceled immediately by
the PARTY terminating the AGREEMENT and such breaching PARTY shall promptly
forward to the other PARTY all copies of CONFIDENTIAL INFORMATION, blue prints,
drawings and data which it may have in written or graphic or machine readable
form and which have been proposed or reproduced by it from the CONFIDENTIAL
INFORMATION received from the other PARTY. The termination of this AGREEMENT
pursuant to Section 5.2 shall not affect the rights and licenses previously
granted to the non-breaching PARTY, which shall continue in full force and
effect.
6.2 OBLIGATIONS SURVIVING TERMINATION
- --- ---------------------------------
Upon termination pursuant to Sections 5.2 or 5.3, the obligations of each PARTY
to the other shall cease except, subject to Section 6.1, the obligations set
forth in ARTICLES 3,4 and 10 shall continue in full force and effect until
completely discharged.
7. FORCE MAJEURE
- -- -------------
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<PAGE>
7.1 ACTS CONSTITUTING FORCE MAJEURE
- --- -------------------------------
Neither PARTY shall be liable to the other arising out of a delay in its
performance of this Agreement arising from causes beyond its reasonable control.
Without limiting the generality of the foregoing, such events include any act of
God; accident; explosion; fire; earthquake; flood; strikes; labor disputes;
riots; sabotage; embargo; equipment failure; federal, state, or local legal
restriction or limitation; failure or delay of transportation; shortage of, or
inability to obtain, raw materials, supplies, equipment, fuel, electricity, or
labor. Neither PARTY shall be required to resolve labor disputes or disputes
with suppliers of raw material, supplies, equipment, fuel, or electricity, but
shall use commercially reasonable efforts to seek alternative sources to the
extent practicable.
7.2 NOTICE REQUIREMENT
- --- ------------------
When circumstances occur which delay the performance of either PARTY under this
Agreement, whether or not such circumstances are excused pursuant to Section 7.1
above, said PARTY shall, when it first becomes aware of such circumstances,
promptly notify (or, if the circumstances occur on a holiday or weekend, on the
first succeeding business day) the other PARTY, by facsimile or by telephone
confirmed in writing within two (2) business days in the case of oral notice.
Within ten (10) business days of the date when either PARTY first becomes aware
of the event which it contends is responsible for the delay, it shall supply to
the other PARTY in writing the reason(s) for and anticipated duration of such
delay, the measures taken and to be taken to prevent or minimize the delay, and
the timetable for the implementation of such measures.
8. GUARANTEES, LIABILITIES AND INDEMNITIES
- -- ---------------------------------------
8.1 LAWFUL POSSESSION
- --- -----------------
Each PARTY represents that to the best of its knowledge and belief, it will be
in the lawful possession of any CONFIDENTIAL INFORMATION when disclosed by it
pursuant to the AGREEMENT and that the disclosure of said CONFIDENTIAL
INFORMATION shall not in any way violate any agreement to hold such CONFIDENTIAL
INFORMATION in confidence.
8.2 DISCLAIMER
- --- ----------
Neither PARTY shall be liable to the other for indirect, special or
consequential damages arising out of any use of CONFIDENTIAL INFORMATION or
INTELLECTUAL PROPERTY rights obtained by it from the other PARTY hereunder.
9. NOTICES
- -- -------
Notices or requests to be given or made hereunder shall be delivered in person
or sent by registered mail or telefax or telex acknowledged by the operator of
the addressee at the following addresses or other addresses that each PARTY may
from time to time designate
(a) for PRIMEX:
PRIMEX TECHNOLOGIES, INC.
10101 Ninth Street North
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<PAGE>
St. Petersburg, Florida 33716-3807
ATTENTION: General Counsel
Tel: (813)578-1116
Fax: (813)578-8795
(b) for OLIN:
OLIN CORPORATION
501 Merritt Seven
Norwalk, Connecticut 06856-4500
Attention: Corporate Secretary
Tel: (203) 356-3126
Fax: (203) 356-2011
10. EXPORTATION CONTROL
- --- -------------------
Each PARTY agrees not to export or reexport, or cause to be exported, any
CONFIDENTIAL INFORMATION furnished hereunder by the other PARTY or the equipment
constructed on the basis of such CONFIDENTIAL INFORMATION, or the products
manufactured with such CONFIDENTIAL INFORMATION to any country to which, under
the laws of the country of origin of the CONFIDENTIAL INFORMATION, it is or may
be prohibited from exporting such CONFIDENTIAL INFORMATION or the direct product
thereof.
11. ASSIGNMENT
- --- ----------
11.1 LIMITATIONS ON ASSIGNMENT
- ---- -------------------------
The AGREEMENT shall not be assigned by either PARTY to a third party without the
prior written consent of the other PARTY, except to: an AFFILIATE of a PARTY, or
a successor in the business to which the AGREEMENT relates, or a successor in
all or substantially all of the assets of either PARTY, provided that the
successor agrees in writing to accept the rights and to be bound by the
obligations of the assigning PARTY, any other assignment being void. The
PARTIES agree to guarantee the performance of their AFFILIATEs under this
AGREEMENT.
11.2 CHANGE OF CONTROL
- ---- -----------------
For purposes of Section 11.1. the following shall be deemed an assignment
by a PARTY of this AGREEMENT:
11.2.1: a PERSON (or two or more PERSONS acting as a "person" within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "1934 Act")), other than such PARTY, or an employee benefit
plan (or related trust) of such PARTY, becomes the "beneficial owner" (as
defined in Rule 13d-3 under the 1934 Act) of 15% or more of the then
outstanding voting stock of such PARTY, or during any period of two
consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of such PARTY (together with any new
director whose election by the Board or whose nomination for election by
such PARTY'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 new directors then in office, and/or
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11.2.2: any consolidation or merger of such PARTY in which such PARTY is
not the continuing or surviving corporation or pursuant to which shares
of such PARTY's common stock would be converted into cash, securities or
other property other than a merger in which holders of such PARTY's
common stock immediately prior to the merger will have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger, and/or
11.2.3: any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all or substantially all the
assets of such PARTY, and/or
11.2.4: adoption of any plan or proposal for the liquidation or
dissolution of such PARTY.
11.3 VIOLATION
- ---- ---------
Any assignment in violation of this ARTICLE 115 shall be considered void.
12. MISCELLANEOUS
- --- -------------
12.1 ENTIRE AGREEMENT
- ---- ----------------
The AGREEMENT embodies the entire understanding of the PARTIES. No amendment or
modification of the AGREEMENT shall be valid or binding upon the PARTIES unless
it is in writing and signed by the respective duly authorized officers of the
PARTIES.
12.2 PARTIES ARE INDEPENDENT
- ---- -----------------------
The AGREEMENT does not and shall not be deemed to make either PARTY the agent,
legal representative or partner of the other PARTY for any purpose whatsoever,
and neither PARTY shall have the right or authority to assume or create any
obligation or responsibility whatsoever, expressed or implied, on behalf of or
in the name of the other PARTY or to bind the other PARTY in any respect
whatsoever.
12.3 WAIVER
- ---- ------
The failure of either PARTY at any time to require performance by the other
PARTY of any provision hereof shall in no way affect the full right to require
such performance within a reasonable time or thereafter the performance of that
and all other provisions, nor shall the waiver of any succeeding breach of such
provision or any other provision operate as a waiver of the provision itself.
12.4 SEVERABILITY
- ---- ------------
The invalidity or unenforceability of any one or more of the provisions of the
AGREEMENT shall not affect the validity or enforceability of the remaining
provisions.
Page 15
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12.5 GOVERNING LAW
- ---- -------------
This Agreement shall be construed and governed, in all respects, by the
law of the State of [Illinois ] applicable to contracts made and to be
performed in that state without reference to any provisions relating to
conflicts of law.
12.6 JURISDICTION
- ---- ------------
Each PARTY hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any [Illinois] State court or
Federal court of the United States of America sitting anywhere within a radius
of 50 miles from East Alton, [Illinois], and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
PARTIES hereby irrevocably and unconditionally agrees that all claims in respect
of any such action or proceeding may be heard and determined in such [Illinois]
State or, to the extent permitted by law, in such Federal court. Each of the
PARTIES hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
12.7 VENUE
- ---- -----
Each PARTY hereby irrevocably and unconditionally waives, to the fullest extent
it may legally and effectively do so, any objection that it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement in any [Illinois] State court or such Federal court
located in the State of [Illinois]. Each of the PARTIES hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
12.8 SERVICE OF PROCESS
- ---- ------------------
Each Party to this Agreement irrevocably consents to service of process in the
manner provided for notices in ARTICLE 910 hereof. Nothing in this Agreement
will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.
13. SETTLEMENT OF DISPUTES
- --- ----------------------
In the event of any disputes arising out of or in connection with the execution,
interpretation, performance or nonperformance of this AGREEMENT, except for
disputes relating to infringement, validity or enforceability of INTELLECTUAL
PROPERTY, PRIMEX and OLIN shall use the following procedure prior to either
PARTY pursuing other available legal remedies:
13.1 ALTERNATIVE DISPUTE RESOLUTION
- ---- ------------------------------
Upon signing of this Agreement each PARTY will designate one representative
("Representative") for the purpose of resolving disputes which may arise from
time to time. Upon a dispute arising, either or both Representatives may
request in writing a conference with the other. If so requested, the conference
shall occur within ten (10) days of the initial written request and shall be
held via telephone or at East Alton, Illinois, or elsewhere, at the option of
the Representatives. The purpose and scope of the conference shall be limited
to issues related to resolving the dispute. At the conference, each
Representative, or his or her designee, shall use best efforts to attempt to
resolve the dispute. If the dispute has not been settled within thirty (30)
days of the first meeting of the Representatives, the parties shall establish a
Management Appeal Board ("MAB") within ten (10) days of receipt of a request by
either PARTY to set up an MAB. The MAB shall
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consist of two (2) members of each respective PARTY's management. The President
of OLIN shall appoint two members to represent OLIN and the President of PRIMEX
shall appoint two members to represent PRIMEX. The sole purpose of MAB shall be
to resolve any dispute over which the Representatives failed to resolve. The MAB
members shall be persons other than the Representatives. The MAB shall meet at
East Alton, Illinois or otherwise confer to resolve the dispute by good faith
negotiations, which may include presentations by the Representatives or others.
13.2 ARBITRATION
- ---- -----------
In the event the parties are unable to resolve their disputes after availing
themselves of the processes set forth in Section 13.1 above for a period of
ninety (90) days, such disputes, shall be solely and finally settled by three
arbitrators in accordance with the Commercial Arbitration Rules of the AAA (the
"Arbitration Rules"). The PARTY electing arbitration shall so notify the other
PARTY in writing in accordance with the Arbitration Rules, and such notice shall
be accompanied by the name of the arbitrator selected by the PARTY serving the
notice. The second arbitrator shall be chosen by the other PARTY, and a neutral
arbitrator shall be chosen by the two arbitrators so selected. If a PARTY fails
to select an arbitrator or to advise the other PARTY of its selection within
thirty (30) days after receipt by such a PARTY of the notice of the intent to
arbitrate, the second arbitrator shall be selected by the AAA. If the third
arbitrator shall not have been selected within thirty (30) days after the
selection of the second arbitrator, the appointment shall be made by the AAA.
All such proceedings shall be conducted in New York, New York. The arbitrator
shall make detailed findings of fact and law in writing in support of the
decision of the arbitrator panel, and is empowered to award reimbursement of
attorneys' fees and other costs of arbitration to the prevailing PARTY, in such
manner as the arbitrator panel shall deem appropriate. The provisions of this
Section 13.2 shall not be deemed to preclude any PARTY hereto from seeking
preliminary injunctive relief to protect or enforce its rights hereunder, or to
prohibit any court from making preliminary findings of fact in connection with
granting or denying such preliminary injunctive relief, or to preclude any PARTY
hereto from seeking permanent injunctive or other equitable relief after and in
accordance with the decision of the arbitrator panel. Whether any claim or
controversy is arbitrable or litigable shall be determined solely by the
arbitrator panel pursuant to the provisions of this Section 13.2. Any monetary
award of the arbitrators panel shall include interest from the date of any
breach or any violation of this Agreement. The arbitrators shall fix an
appropriate rate of interest from the date of the breach or other violation to
the date when the award is paid in full. The parties agree that judgment on the
arbitration award may be entered in any court having jurisdiction over the
parties or their assets.
13.3 CONTINUING OBLIGATIONS
- ---- ----------------------
It is expressly agreed that the failure of the parties to resolve a dispute on
any issue to be resolved hereunder shall not relieve either PARTY from any
obligation set forth in this Agreement. In addition, notwithstanding the
pendency of any such dispute, neither PARTY will be excused of its obligations
hereunder to cooperate with the other to effectuate the purposes of this
Agreement.
13.4 COUNTERPARTS
- ---- ------------
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of this shall constitute one and
the same instrument.
Page 17
<PAGE>
IN WITNESS WHEREOF the PARTIES hereto have caused this AGREEMENT to be executed
in duplicate as of the date first written above.
OLIN CORPORATION PRIMEX TECHNOLOGIES, INC.
Name________________________ Name ________________________
Title_______________________ Title________________________
Date________________________ Date_________________________
Page 18
<PAGE>
EXHIBIT 10.3
TAX SHARING AGREEMENT
---------------------
BY AND BETWEEN
--------------
OLIN CORPORATION AND PRIMEX TECHNOLOGIES, INC.
----------------------------------------------
This Tax Sharing Agreement (the "Agreement") dated as of _____________,
between Olin Corporation, a Virginia Corporation ("Olin") and Primex
Technologies, Inc., a Virginia Corporation ("Primex "), is entered into in
connection with a Distribution Agreement (the "Distribution Agreement") dated
____________, by and between Olin and Primex.
WHEREAS, until the end of the date (the "Distribution Date") on which Olin
will distribute to its stockholders all the issued and outstanding common stock
of Primex (the "Distribution"), Primex and its direct and indirect subsidiaries
and Olin will be members for Federal income tax purposes of an Affiliated Group
of corporations for which Olin, the common parent corporation, will file a
consolidated Federal income tax return.
WHEREAS, on the beginning of the first day after the Distribution Date, the
Primex Affiliated Group will cease to be members of the Olin Affiliated Group;
WHEREAS, the Distribution is intended to be a tax-free spin-off within the
meaning of Section 355 of the Code;
WHEREAS, Olin and Primex are entering into this Agreement to provide for
the allocation between Olin and Primex of all responsibilities, liabilities and
benefits relating to all foreign, federal, state and local taxes paid or payable
by either Olin or Primex for all taxable periods, whether beginning before, on,
or after the Distribution Date and to provide for certain other matters.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows.
<PAGE>
2
ARTICLE I
---------
DEFINITIONS
-----------
This Agreement is the "Tax Sharing Agreement" referred to in Section 1.01
of the Distribution Agreement. As used in this Agreement, terms defined in the
Distribution Agreement but not defined herein shall have the meanings set forth
in the Distribution Agreement, and the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and the
plural forms of the terms defined):
"Affiliated Group" means an affiliated group of corporations within the
-----------------
meaning of Section 1504(a) of the Code for the taxable period in question.
"Code" means the Internal Revenue Code of 1986, as amended, or any
------
successor thereto, as in effect for the taxable period in question.
"Distribution Agreement" means the agreement dated as of the ____day of
----------------------
_______, 1996 by and between Olin and Primex providing for the Distribution. For
purposes of this Agreement, the Distribution shall be effective as of the close
of the Distribution Date.
"Indemnitee" is defined in Section 4.01 (a) herein.
----------
"Indemnitor" is defined in Section 4.01 (a) herein.
----------
"Indemnity Issue" is defined in Section 4.01 (a) herein.
---------------
"IRS" means the United States Internal Revenue Service or any successor
---
thereto, including, but not limited to its agents, representatives, and
attorneys.
"Olin Affiliated Group" means, for each taxable period, the Affiliated
---------------------
Group of which Olin or any successor of Olin is the common parent.
"Personal and Real Property Taxes" is defined in Section 3.01 (c) herein.
--------------------------------
"Post-Distribution Period" means any period beginning after the
------------------------
Distribution Date.
"Pre-Distribution Period" means any period ending on or before the
-----------------------
Distribution Date.
"Primex Affiliated Group" means, for each taxable period, the Affiliated
-----------------------
Group of which Primex or any successor of Primex is the common parent.
<PAGE>
3
"Straddle Period" is defined in Section 3.01(b)(iv).
---------------
"Taxes" means all forms of taxation, whenever created or imposed, and
-----
whenever imposed by a local, municipal, federal, state, foreign or other body (a
"Taxing Authority"), and without limiting the generality of the foregoing, shall
include net income, alternative minimum tax, gross income, sales, use, ad
valorem, gross receipts, value added, franchise, license, transfer, withholding,
payroll, employment, excise, severance, stamp, property, custom duty or other
tax, or governmental charge of any kind whatsoever, together with any related
interest, penalties or other additions to tax, or additional amount imposed by
such Taxing Authority.
"Taxing Authority" is defined under the term "Taxes".
----------------
"Tax Return" means any return, filing, questionnaire, information statement
----------
or other document required to be filed, including amended returns that may be
filed, for any period with any Taxing Authority, whether foreign or domestic
(including Federal, state and local), in connection with any Tax (whether or not
a payment is required to be made with respect to such filing).
<PAGE>
4
ARTICLE II
----------
FILING OF TAX RETURNS AND PROVISION OF TAX INFORMATION
------------------------------------------------------
SECTION 2.01. Manner of Filing. All Tax Returns filed by Olin and by
----------------
Primex after the Distribution Date shall be prepared on a basis that is
consistent with a tax-free spin-off within the meaning of Section 355 of the
Code, and shall be filed on a timely basis by the party responsible for such
filing under this Agreement.
SECTION 2.02. Pre-Distribution Tax Returns. All Tax Returns required to
----------------------------
be filed for periods ending on or before the Distribution Date shall be filed by
Olin.
SECTION 2.03. Post-Distribution Tax Returns. All Tax Returns of the
-----------------------------
Primex Affiliated Group or any member thereof for periods beginning after the
Distribution Date shall be filed by Primex and all Tax Returns of the Olin
Affiliated Group or any member thereof for periods beginning after the
Distribution Date shall be filed by Olin.
SECTION 2.04. Tax Bases of Assets Transferred. Within ninety (90) days
-------------------------------
following the Distribution Date, Olin shall notify Primex of the tax attributes
associated with the companies, and the tax bases of the assets and liabilities
transferred to Primex in connection with the Distribution. Within sixty (60)
days after filing the consolidated Federal income tax return for the Olin
Affiliated Group for 1996, Olin shall notify Primex of any adjustments to the
tax attributes and the bases of such assets and liabilities and shall provide
Primex with supporting documentation which details the calculation of such
adjustments.
<PAGE>
5
ARTICLE III
-----------
PAYMENT OF TAXES
----------------
SECTION 3.01. Allocation of Tax Liabilities. (a) Consolidated
-----------------------------
Federal Income Tax - (i) Olin shall indemnify and hold harmless Primex and all
members of the Primex Affiliated Group from any Federal income tax liability
imposed on the Olin Affiliated Group for any period ending on or prior to the
Distribution Date.
(ii) Primex shall indemnify and hold harmless Olin and all members of the
Olin Affiliated Group from and against any Federal income tax liability imposed
on the Primex Affiliated Group with respect to any period ending after the
Distribution Date.
(b) State, Local and Foreign Income and Franchise Taxes (i) Olin shall
indemnify and hold harmless Primex and all members of the Primex Affiliated
Group from any state, local and foreign income and franchise Tax imposed on
Olin, the Olin Affiliated Group or any member of the Olin Affiliated Group for
any period ending on or prior to the Distribution Date.
(ii) Primex shall indemnify and hold harmless Olin and all members of the
Olin Affiliated Group from any state, local and foreign income and franchise Tax
imposed on Primex, the Primex Affiliated Group or any member of the Primex
Affiliated Group for any period beginning after the Distribution Date.
(iii) To the extent permitted by any applicable state, local or foreign
law, Olin, the Olin Affiliated Group and all members of the Olin Affiliated
Group shall treat the Distribution Date as the last day of the taxable period.
Olin shall file all state, local and foreign income and franchise Tax Returns
for such period and pay all applicable Tax liabilities.
(iv) (a) To the extent any state, local or foreign law requires Primex,
the Primex Affiliated Group or any member of the Primex Affiliated Group to file
state, local or foreign income or franchise Tax Returns for a tax period
beginning before and ending after the Distribution Date ("Straddle Period"),
Primex shall be responsible for any such filings. Primex shall timely file and
pay all income or franchise Tax applicable to returns
<PAGE>
6
filed under this Section 3.01 (b) (iv) (a). Tax paid by Primex attributable to
the period ending on the Distribution Date shall be the responsibility of Olin
and shall be computed by applying to the Tax paid a ratio (not to exceed 100%)
of taxable income computed as though the taxable year ended on the Distribution
Date to total taxable income reflected on the Tax Return. In the event there is
a loss for the pre-distribution period, such ratio shall be zero. In the event
the Tax liability on the Tax Return for the Straddle Period is computed on a
basis other than taxable income, (e.g. franchise tax liability), pre-
distribution Taxes shall be determined as if the taxable year of Primex ended on
the Distribution Date. Any amount owed by Olin to Primex pursuant to this
Section 3.01 (b) (iv) shall be decreased by estimated taxes paid by Olin. If the
estimated taxes paid by Olin with respect to the Straddle Period Tax Return
exceed the Tax owed by Olin to Primex under this paragraph, such excess shall be
paid by Primex to Olin.
(b) Primex shall provide Olin for review, comment and approval copies of
such Straddle Period Tax Returns, together with a calculation of pre-
distribution taxes payable by Olin to Primex, or by Primex to Olin, within 20
working days of the due date of such Tax Return. Upon review and acceptance of
the Tax Return and pre-distribution tax calculation, Olin shall pay the amount
of such Tax due to Primex by the later of the due date of the return or ten (10)
days after receipt of the copies of such returns and Tax calculations from
Primex for review, comment and approval. Primex shall pay Olin any amount due by
the due date of the Straddle Period Tax Return. The party not preparing the Tax
Return shall have a right to object to such Tax Return (or calculation of pre-
distribution tax) on the grounds that it is inaccurate. In the event of a
dispute, the parties shall use their best efforts to resolve the dispute as
expeditiously as possible. If the dispute is not resolved prior to the filing of
the Tax Return, the parties agree to file an amended return, if necessary, upon
resolution of the dispute in accordance with Section 6.02 of Article VI.
(c) Personal and Real Property Taxes. (i) The liability for all Taxes
--------------------------------
for any tax period that includes the Distribution Date which are assessed upon
the value of real or personal property owned, leased, rented or used by the Olin
Affiliated Group, including, but not limited to, real and personal property
taxes, use taxes, value added taxes or other
<PAGE>
7
ad valorem taxes ("Personal and Real Property Taxes), shall be apportioned
between and among Olin and Primex as follows:
(1) the Personal and Real Property Taxes allocable to that portion of the
Tax period ending on the Distribution Date shall be the liability of Olin; and
(2) the Personal and Real Property Taxes allocable to that portion of the
tax period which begins after the Distribution Date shall be the liability of
Primex, but only to the extent such taxes are attributable to the assets of the
Primex Businesses; otherwise, such taxes shall be the liability of Olin.
(ii) The party receiving the bill from the Taxing Authority shall timely
pay the liability, and request payment from the other party of the apportioned
amount under this Section 3.01(c), and shall cause the records of the Tax
Authority assessing such Taxes to properly reflect the change in ownership
affecting the assessed property.
(iii) Primex shall pay, on a timely basis, all Personal and Real Property
Taxes of the Primex Affiliated Group for all tax periods beginning after the
Distribution Date.
(d) Refunds. Each party shall be entitled to retain or be paid all
-------
refunds of tax received, whether in the form of payment, credit or otherwise,
from any Taxing Authority with respect to any Tax Return filed or to be filed by
such party in accordance with Sections 2.02 and 2.03 hereof.
SECTION 3.02. Section 355 Tax. If there is a determination (within
---------------
the meaning of Section 1313 of the Code) that the Distribution fails to qualify
as a tax-free spin-off under Section 355 of the Code, Primex shall be
responsible for 20 percent, and Olin shall be responsible for 80 percent, of
Taxes (including any interest or penalties with respect thereto) imposed on Olin
as a result of such determination unless such failure shall arise as a result of
an action, other than any action taken consistent with the opinion of counsel
obtained by Olin in connection with the distribution contemplated by the
Distribution Agreement, taken after the Distribution Date by Olin (or any member
of the Olin Affiliated Group) or by Primex (or any member of the Primex
Affiliated Group), in which case Olin or Primex, as the case may be, shall be
responsible for the full amount of such Taxes regardless of whether an opinion
of counsel that such action would not cause such failure to qualify was
obtained. Primex's obligation under this Section 3.02 shall be
<PAGE>
8
effected by its payment of the appropriate amounts to Olin no later than the due
date for payment of such Taxes to the relevant Taxing Authority.
SECTION 3.03 - Time and Form of Payment. (a) Payments under this
------------------------
Agreement shall be due on the date provided for in this Agreement without any
additional notification by the party to whom such payments are due. If a due
date is not provided in this Agreement, payments under this Agreement shall be
made no later than thirty (30) days after the date written demand therefor (with
a reasonably detailed explanation for the basis of the claim) is received by the
party obligated to make such payment.
(b) If either Primex or Olin shall default on its payment obligations under
this Agreement (including as a result of a voluntary bankruptcy), upon 90 days'
notice (except that in the case of bankruptcy no such notice shall be required)
the party not in default shall have the right to offset its payment obligations
under this Agreement against the defaulting party's payment obligations to it.
The failure or refusal to pay an amount when due under this Agreement shall not
constitute a default if the amount of, or liability for, such payment is being
disputed pursuant to Section 6.02 of Article VI.
(c) Any portion of a payment not in dispute shall be paid notwithstanding
the dispute with respect to the remaining portion of such payment. Acceptance of
such partial payment (or any other partial payment) will not constitute a waiver
of the right to dispute resolution under Section 6.02 of Article VI.
SECTION 3.04. Interest on Unpaid Amounts. In the event that any party
--------------------------
fails to pay any amount owed pursuant to this Agreement within ten (10) days
after the date when due, interest shall accrue at the rate applicable to
underpayments of the tax as provided for in the Code from the due date until
such amounts are fully paid (regardless of the existence of any dispute with
respect to the amount of, or liability for, such payment).
SECTION 3.05. Treatment of Payments. The parties agree that for all tax
---------------------
and financial accounting purposes any payments made pursuant to this Agreement
to one party by another party shall be treated as nontaxable adjustments to the
capital contribution of cash made by Olin to Primex in connection with the
Distribution (including treating such payments as distributions from Primex to
Olin immediately prior to the Distribution), unless otherwise required by law.
<PAGE>
9
ARTICLE IV
----------
INDEMNITY: COOPERATION AND EXCHANGE OF INFORMATION
--------------------------------------------------
SECTION 4.01 Indemnity. (a) Whenever a party hereto (an "Indemnitee")
----------
becomes aware of the existence of an issue which relates to any Tax or liability
of the other party or any member of its Affiliated Group that may arise under
this Agreement (an "Indemnity Issue"), the Indemnitee shall promptly notify the
other party (the "Indemnitor") of the Indemnity Issue.
(b) Olin and Primex will indemnify each other for any liabilities resulting
from any breach of their respective representation made to Cravath, Swaine &
Moore in connection with its opinion. Neither Olin nor Primex will indemnify any
holder of Olin Common Stock who receives shares in the Distribution for any Tax
liabilities.
(c) Olin shall have full responsibility and discretion in handling,
settling or contesting any Tax controversy, involving a Tax Return for which it
has filing responsibility pursuant to Sections 2.02 and 2.03 hereof. Primex
shall have full responsibility and discretion in handling, settling or
contesting any Tax controversy involving a Tax Return for which it has filing
responsibility pursuant to Section 2.03 hereof. Any costs incurred in handling,
settling or contesting any Tax controversy shall be borne by the party having
full responsibility and discretion thereof.
(d) In the event that a notice of deficiency is received by Olin from the
IRS or any Taxing Authority and such notice relates in whole or in part to a Tax
for which Primex could be liable to Olin pursuant to Section 3.02 hereof then:
(i) Olin shall notify Primex of the notice of deficiency and the potential
Primex Tax exposure. Olin shall determine in its sole discretion the nature of
all action, if any, to be taken to contest such notice of deficiency including
(a) whether any action to contest such notice of deficiency shall initially be
by way of judicial or administrative proceedings, or both, (b) whether any such
proposed adjustment shall be contested by resisting payment thereof or by paying
the same and seeking a refund thereof, and (c) if Olin shall undertake judicial
action with respect to such notice of deficiency, the court or other judicial
body before which such action shall be commenced.
<PAGE>
10
(ii) Olin shall provide Primex copies of written correspondence from the
IRS or any Taxing Authority regarding any notice of deficiency which relates to
such Tax and shall keep Primex informed of the progress of the contest as it
relates to Primex's Tax exposure. Olin shall determine, if Primex and its
representatives, at Primex expense, shall be entitled to participate in (1) all
conferences, meetings, or proceedings with any Taxing Authority, the subject
matter of which is or includes such Tax and (2) all appearances before any
court, the subject matter of which includes such Tax. The right to participate
referred to in this Section 4.01 (c) (ii) shall include the submission and
content of documentation, protest, memoranda of fact and law and briefs and the
selection of witnesses.
SECTION 4.02. Cooperation and Exchange of Information. (a) Primex
---------------------------------------
and Olin shall each cooperate (and shall cause each member of the Olin
Affiliated Group and the Primex Affiliated Group to cooperate) fully at such
time and to the extent reasonably requested by the other party in connection
with the preparation and filing of any Tax Return or claim for refund, or the
conduct of any audit, dispute, proceeding, suit or action concerning any issues
or other matters considered in this Agreement. Such cooperation shall include,
without limitation, the following: (i) forwarding promptly copies of appropriate
notices and forms or other communications received from any Taxing Authority
(including any IRS revenue agent's report or similar report, notice of proposed
adjustment, or notice of deficiency) or sent to any Taxing Authority or any
other administrative, judicial or other governmental authority that relate to an
Indemnity Issue, (ii) the retention and provision on demand of Tax Returns,
books, records (including those concerning ownership and tax basis of property
which either party may possess), documentation or other information relating to
the Tax Returns, including accompanying schedules, related workpapers, and
documents relating to rulings or other determinations by Taxing Authorities,
until the expiration of the applicable statute of limitations (giving effect to
any extension, waiver or mitigation thereof) subject to the provisions of
Section 4.02 (e) hereof; (iii) the provision of additional information and an
explanation of material provided under clause (i) of Section 4.02 (a), provided
such information or explanation is necessary or reasonably helpful with the
foregoing; (iv) the execution of any document
<PAGE>
11
that may be necessary or reasonably helpful in connection with the filing of a
Tax Return by Olin or Primex or any member of their respective Affiliated
Groups, or in connection with any audit, dispute proceeding, suit or action; and
(v) the use of the parties' best efforts to obtain any documentation from a
governmental authority or a third party that may be necessary or reasonably
helpful in connection with any of the foregoing.
(b) Both parties and the members of their respective Affiliated Groups
shall use reasonable efforts to keep each other advised as to the status of Tax
audits or litigation involving an Indemnity Issue and cooperate in a defense
with respect to a Indemnity Issue in any Tax controversy.
(c) Each party shall make its employees and facilities available on a
reasonable and mutually convenient basis in connection with any of the foregoing
matters.
(d) If either party fails to provide any information requested pursuant to
Section 4.02 hereof within a reasonable period, as determined in good faith by
the party requesting the information, then the requesting party shall have the
right to engage a public accounting firm to gather such information, provided
that thirty (30) days prior written notice is given to the unresponsive party.
If the unresponsive party fails to provide the requested information within
thirty (30) days of receipt of such notice, then such unresponsive party shall
permit the requesting party's public accounting firm full access to all
appropriate records or other information as reasonably necessary, and shall
reimburse the requesting party or pay directly all cost connected with the
requesting party's engagement of the public accounting firm.
(e) Upon the expiration of any statute of limitations, the documentation
of Olin or Primex or any member of their respective Affiliated Groups, including
without limitation, books, records, Tax Returns and all supporting schedules and
information relating thereto, shall not be destroyed or disposed of unless (i)
the party proposing such destruction or disposal provides sixty (60) days prior
written notice to the other party describing in reasonable detail the
documentation to be destroyed or disposed of, and (ii) the recipient of such
notice agrees in writing to such destruction or disposal. If the recipient of
such notice objects, then the party proposing the destruction or disposal shall
<PAGE>
12
promptly deliver such materials to the objecting party at the expense of the
objecting party.
SECTION 4.03. If either Olin or Primex, or a member of their respective
Affiliated Groups, supplies information to another party upon such party's
request, and an officer of the requesting party intends to sign a statement or
other document under penalties of perjury in reliance upon the accuracy of such
information, then at the request of the party that received the information, a
duly authorized officer of the party supplying such information shall certify,
to the best of such party's knowledge, the accuracy and completeness of the
information so supplied.
SECTION 4.04. Indemnification for Tax Attributes. Nothing in this
-----------------------------------
Agreement shall be construed as a guarantee of the existence or amount of any
loss, credit, carryforward, basis or other tax attribute, whether past, present
or future, of Olin or Primex and any member of their respective Affiliated
Groups, or an indemnity against the reduction or elimination of any such
attribute by any Taxing Authority.
<PAGE>
13
ARTICLE V
---------
WARRANTIES AND REPRESENTATIONS
------------------------------
SECTION 5.01. Warranties and Representations Relating to Actions of Olin
----------------------------------------------------------
and Primex. As an inducement to enter into this Agreement, Olin and any member
- -----------
of the Olin Affiliated Group and Primex and any member of the Primex Affiliated
Group warrant and represent to the other party that they shall comply with and
not take any action that is inconsistent with the representations and statements
made to Cravath, Swaine & Moore in connection with such firm's rendering an
opinion to Olin and Primex as to certain tax aspects of the Distribution.
SECTION 5.02. Warranties and Representations Relating to Actions of
-----------------------------------------------------
Primex. Primex, its successors, and each member of the Primex Affiliated
- ------
Group, hereby warrants and represents to Olin that it has no present plan or
intention,
(i) to liquidate or merge into any corporation; and
(ii) to sell, exchange, distribute or otherwise dispose of Primex assets
or assets of any member of the Primex Affiliated Group other than in the
ordinary course of business.
<PAGE>
14
ARTICLE VI
----------
MISCELLANEOUS PROVISIONS
------------------------
SECTION 6.01. Notice. Any payment, notice or communication required or
------
permitted to be given under this Agreement shall be in writing (including
facsimile) and mailed, faxed or delivered to the parties at the following
addresses (or at such other address as one party may specify by notice to the
other party):
If to Olin to:
Olin Corporation
501 Merritt 7
PO Box 4500
Norwalk, Ct. 06856-4500
Attention: Vice President Taxes and Risk Management
If to Primex:
Primex Technologies, Inc.
10101 Ninth Street North
St. Petersburg, Florida 33716-3807
Attention: Chief Financial Officer
Notification of a change of address shall be given by either party to the other
as provided in Section 6.01 hereof. All such notices and communications shall be
effective (i) when received, if mailed or delivered, or (ii) when faxed
confirmed by fax answerback.
SECTION 6.02. Resolution of Disputes. The calculation and determination
-----------------------
of the payment of Tax and the allocation thereof under Section 3.01 (Allocation
of Tax Liabilities) and Section 3.02 (Section 355 Tax), shall be made or
verified by the party required to make such payment (the "Payor"). If the party
to receive such payment (the "Payee") shall have any dispute concerning such
Tax, it may request in writing that the Payor cause a "Big Six" certified public
accounting firm (the "Accounting Firm") to review such Tax to determine and
confirm in writing that such Tax is more likely than not
<PAGE>
15
correct (a "Confirmation"). The Accounting Firm shall be mutually acceptable to
Olin and Primex and may not be the auditor of, or primary tax advisor for,
either Olin or Primex in the year in which such confirmation is to be made or
with respect to the taxable period subject to such confirmation. If a
confirmation is issued by the Accounting Firm, such Tax shall be binding upon
the parties. If the Accounting Firm is unable to issue a Confirmation, the Payor
shall amend such Tax such that the Accounting Firm can issue a Confirmation in
respect of the amended Tax Allocation Obligation. The Payee shall be responsible
for the fees and disbursements of the Accounting Firm, unless the amounts of the
payments excluding interest as recalculated differs from the amount originally
calculated by the Payor excluding interest, if any, by more than 10% of such
originally calculated amount, in which case the Payor shall be responsible for
such fees and disbursements.
The Accounting Firm shall treat all Tax Returns as confidential, and shall
not reveal any information contained in, or any part of, the tax returns of one
party to the other without the consent of the party to whom the Tax Returns
belong.
SECTION 6.03. Governing Law. This Agreement shall be governed by the
-------------
laws applicable to contracts entered into and to be fully performed within the
State of Connecticut by residents thereof.
SECTION 6.04 Binding Effect; Successors This Agreement shall be binding
--------------------------
upon the parties hereto and shall inure to the benefit of and be binding upon
any of their successors or assigns.
SECTION 6.05 Entire Agreement; Assignment This Agreement embodies the
----------------------------
entire understanding between the parties relating to its subject matter and
supersedes and terminates all prior agreements and understanding among the
parties with respect to such matter. Any and all prior correspondence,
conversations and memoranda with respect to such subject matter are merged
herein and shall effect hereon. No promises, covenants or representations of any
kind, other than those expressly stated herein, have been made to induce any
party to enter into this Agreement. This Agreement shall not be modified or
terminated except by writing duly signed by each of the parties hereto, and no
waiver of any provisions of this Agreement shall be effective unless in a
writing duly signed by the party sought to be bound.
<PAGE>
16
SECTION 6.06 Counterparts This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same.
SECTION 6.07 Severability If any provision of this Agreement or the
------------
application of any such provision to any person or circumstances shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof.
SECTION 6.08 Headings Headings of sections in this Agreement are
--------
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed by its respective duly authorized officer as of the date first set
forth above.
Olin Corporation
by
--------------------
Title:
Primex Technologies Inc.
by
--------------------
Title
<PAGE>
EXHIBIT 10.4
POWDER SUPPLY REQUIREMENTS AGREEMENT
------------------------------------
THIS AGREEMENT ("Agreement") is made and entered into as of this first day
of January, 1997, by and between PRIMEX TECHNOLOGIES, INC., a corporation duly
organized and existing under the laws of Virginia, and having its principal
office at 10101 Ninth Street North, St. Petersburg, Florida 33716-3807
("Primex") and OLIN CORPORATION, a corporation duly organized and existing
under the laws of Virginia, and having an office at 427 North Shamrock Street,
East Alton, Illinois 62024 ("Olin"). (Olin and Primex each being referred to as
a "Party" individually and collectively as the "Parties".)
WITNESSETH:
WHEREAS, Olin has transferred to Primex all or substantially all of the
assets related to Olin's Ordnance Division, including its St. Marks, Florida
powder manufacturing plant ("St. Marks Plant") in anticipation of the spin-off
of Primex to the shareholders of Olin; and,
WHEREAS, Olin desires to purchase Product(s), as defined below, from Primex
to support the business and manufacturing activities of its Winchester Division
("Winchester"); and,
WHEREAS, Primex desires to sell Winchester such Products; and,
WHEREAS, the Parties desire to enter into this Agreement for the purchase
and sale of Products.
NOW, THEREFORE, in consideration of the above and the mutual undertakings
set forth below, the Parties intending to be legally bound, covenant and agree
as follows:
1. Definitions:
-----------
For purposes of this Agreement, the following terms shall have the
following meanings:
(a) "Confidential Information" shall mean any and all information
disclosed to the receiving Party by a disclosing Party pursuant to this
Agreement, in any form such as, but not limited to, visual, oral, written,
graphic, electronic or model form, including but not limited to know-how and
trade secrets, whether of a business or a technical nature, whether patented or
not and whether in the laboratory, pilot plant or commercial plant stage
(including drawings, operating conditions, specifications, safety instructions,
environmental recommendations, emergency instructions, etc.) owned or controlled
by a Party.
<PAGE>
POWDER SUPPLY REQUIREMENTS AGREEMENT Page 2
(b) "Effective Time" shall mean such date as may hereafter be
determined by Olin's Board of Directors as the date as of which the
spin-off of Primex shall be effected.
(c) "Ineligible Offers" shall mean an offer by a third party to sell
powder during a period in which a petition has been filed and is pending
claiming that (i) said third party has received a "subsidy" as that term is
defined in Article 1 of the Agreement on Subsidies and Countervailing Measures
of the General Agreement on Tariffs and Trade 1994, with respect to such powder
and/or (ii) such powder sold by said third party is being "dumped" as that term
is defined in Article 2 of the General Agreement on Tariffs and Trade 1994.
(d) "Product(s)" shall mean propellant powder manufactured and/or sold by
Primex, including but not limited to St. Marks Powders and Synthesia Powders.
(e) "Requirements" shall mean the total amount of propellant powder used
by Winchester in any calendar year in loading ammunition (excluding ammunition
loaded by Winchester as the operator of any government owned, contractor
operated (GOCO) facility including the Lake City Army Ammunition Plant in
Independence, Missouri), excluding all such propellant powder that Winchester
purchases from a third party because:
(i) Primex is unable or unwilling to manufacture propellant powder at
its St. Marks, Florida facility and supply such powder within a commercially
reasonable time after a request therefor by Olin; or
(ii) Primex is unable to produce or supply propellant powder because
of an occurrence of force majeure, as defined in Section 18 below.
For the purposes of this subsection 1(e), Primex may supply St. Marks
Powder that has safety, handling and performance characteristics substantially
equivalent to the powder then offered by a third party to Olin. Primex and Olin
shall expeditiously and in good faith resolve differences in opinion on which
powders are substantially equivalent and, failing resolution, shall employ the
dispute resolution provisions set forth in this Agreement. As a clarification of
subparagraph (i) of subsection 1(e) of this Agreement: (1) only those powders
which are actually requested by Olin to be made by Primex may be excluded from
the Requirements pursuant to this Agreement; (2) specific powders that are
specified by the government to be used to manufacture particular rounds of
ammunition and which Primex cannot make are excluded from the Requirements
pursuant to this Agreement; and (3) powders that are used by any third party in
manufacturing ammunition for sale to Winchester
<PAGE>
POWDER SUPPLY REQUIREMENTS AGREEMENT Page 3
are excluded from the Requirements pursuant to this Agreement, unless Winchester
supplies any components to such third party for inclusion in such ammunition.
Primex shall advise Olin of its willingness and ability to produce and supply
any powder within fifteen (15) working days of a request by Olin.
(f) "Similar Product" shall mean any propellant powder, sold by Primex (or
its agent) to any third party commercial customer anywhere in the world, that is
substantially similar or identical to Product offered or sold by Primex to Olin
hereunder. (Exhibit A provides guidelines to establish which powders are
"substantially similar or identical to".)
(g) "St. Marks Powder(s)" shall mean propellant powder manufactured by
Primex at its St. Marks, Florida powder manufacturing plant, excluding Synthesia
Powders.
(h) "Synthesia Powder" shall mean propellant powder purchased by Primex
from Synthesia a.s., including but not limited to propellant powder distributed
by Primex pursuant to that certain "Distribution Agreement, U.S.A., Canada, And
Mexico" executed by Synthesia a.s. as of "14 III 96" which was assigned by Olin
to Primex.
2. Term:
-----
This Agreement shall become effective upon the Effective Time and shall
continue to, and including, December 31, 2002 unless it is sooner terminated as
provided herein.
3. Pricing:
--------
Price: The prices for Products purchased by Olin from Primex during the
------
Term of this Agreement shall be established at competitive levels by mutual
written agreement by Olin and Primex from time-to-time.
4. Quantity:
---------
(a) Percentage of Requirements: During the term of this Agreement, Olin
shall purchase from Primex, and Primex shall sell to Olin at least the percent
of Olin's Requirements during each calendar year as set forth below, excluding
therefrom propellant powder that Olin purchases from a third party because
Primex declines to meet the price and other material terms (including
commercially
<PAGE>
POWDER SUPPLY REQUIREMENTS AGREEMENT Page 4
reasonable delivery dates) offered by a third party (excluding Ineligible
Offers) within five (5) business days after Olin provides Primex with
satisfactory evidence of said offer:
Calendar Year Percent of Requirements
------------- -----------------------
1997 100%
1998 90%
1999 85%
2000 80%
2001 75%
2002 70%
For purposes of Section 4, the price at which Primex is deemed to meet
the price offered by a third party shall take into account any relevant
differences in burning efficiencies between Primex's powder and the powder
offered by the third party.
(b) Synthesia Powder. No Synthesia Powder requested by Olin to be
-----------------
supplied by Primex shall count towards satisfying Olin's obligation to purchase
its Requirements from Primex; provided, however, Primex may waive this
restriction upon request by Olin on a case-by-case basis. Notwithstanding any
other provision of this Agreement, Olin shall have no obligation to purchase
Synthesia Powder hereunder.
(c) Preferred Customer. Olin shall be Primex's preferred customer of
-------------------
Products. However, nothing in this Agreement is intended to require Primex to
sell Products exclusively to Olin, except as may be specifically provided by the
Parties following the date first above written with respect to specific New
Products, as defined below.
(d) Supply Schedules. Olin will prepare supply schedules in accordance
-----------------
with Exhibit B, attached hereto.
5. Product Specifications:
-----------------------
Product specifications are identified on Exhibit A, attached hereto and
made a part hereof by this reference. Specifications for New Products, as
defined below, shall be added to Exhibit A from time-to-time by mutual agreement
between the Parties.
<PAGE>
POWDER SUPPLY REQUIREMENTS AGREEMENT Page 5
6. New Product Development:
------------------------
The Parties recognize that from time-to-time powders or powder-related
products may be developed ("New Products"). Primex agrees to make New Products
available to Olin, except to the extent Primex is restricted from doing so by
development agreements entered into with unaffiliated third parties. Prior to
the initiation of a New Product development effort to be assisted by Olin, the
Parties shall agree on each Party's role in the New Product development effort,
including, but not limited to, such items as cost sharing, engineering support,
product test and the introduction and availability of the New Product to Olin on
an exclusive basis, and other customers generally. Pricing for New Products
shall be in accordance with Section 3, above.
7. Storage and Inventory:
----------------------
Primex shall maintain, at all times during the Term of this Agreement, a
sixty (60) calendar day supply ("Safety Stock") of each Product required by
Winchester as identified on the Firm Supply Schedule as defined in Exhibit B.
The sixty (60) calendar day Safety Stock shall consist of a thirty (30) calendar
day inventory of finished Product and the work-in-process to support the Firm
Supply Schedule. The sixty (60) calendar day Safety Stock shall be maintained
by Primex to insure the continued immediate availability of Product to support
Olin's requirements for each Product identified on the Firm Supply Schedule.
Olin shall be obligated to take delivery of all Products comprising the Safety
Stock in accordance with the Firm Supply Schedule, unless Primex relieves Olin,
in writing, of such obligation. During the Term of this Agreement, the Parties
may agree to increase or decrease the Safety Stock requirements. The sixty (60)
calendar day Safety Stock shall be maintained at Primex's sole cost and expense.
Any increases in the Safety Stock requested by Olin, and agreed to by Primex,
shall be at Olin's expense.
8. Acceptance:
-----------
(a) Acceptance shall occur upon delivery of Product. Primex shall provide
Olin with certified test results verifying Product compliance with Product
specifications upon delivery. All Products shall be subject to the warranty
provisions contained herein.
<PAGE>
POWDER SUPPLY REQUIREMENTS AGREEMENT Page 6
(b) Each delivery shall constitute a separate contract and payment
therefore shall be made without regard to any other shipments.
9. Payment:
--------
Olin shall make full payment to Primex for all shipments within thirty (30)
calendar days after delivery of Product to Olin. If a good faith dispute
concerning a particular shipment of Product arises, Olin shall promptly notify
Primex, in writing, of the dispute and the Parties shall, in good faith, meet to
resolve the dispute. Unless otherwise agreed in the context of resolving a
dispute, all amounts unpaid by Olin after the thirty (30) day period referenced
above shall bear interest at the prime rate beginning on the thirty-first day
(31st) until paid. The prime rate shall be established on such thirty-first
(31st) day by the published prime rate charged by the Chase Manhattan Bank, New
York, New York, or any successor thereto.
10. Changes of Product Availability:
--------------------------------
(a) Primex shall promptly notify Olin, in writing, in advance of the
planned discontinuance or change in any Product or Product line that Olin
purchases.
(b) Olin shall promptly notify Primex of its planned discontinuance or
change of any ammunition loaded with the Product, including its intention to
load such ammunition with a new or different propellant powder, provided it does
not breach an obligation of confidentiality with a third party.
(c) Upon receipt of another party's notice of planned Product or
ammunition discontinuance or change, the Parties shall enter into immediate
discussions to mutually agree on a scheduled "phase-out" plan of that particular
Product or ammunition. The "phase-out" plan shall take into consideration the
minimum disruption to Olin's and Primex's business activities, minimum lot sizes
and support of the WINCHESTERr brand product lines. In the event the Parties
cannot agree on a Product "phase-out" plan, then Primex shall continue to
manufacture, make available and sell the Product in minimum lot sizes, to Olin
for twenty-four (24) consecutive months after the date of the notice of Product
discontinuance or change.
<PAGE>
POWDER SUPPLY REQUIREMENTS AGREEMENT Page 7
11. Packaging:
----------
(a) All Products will be packed with care by Primex and delivered in an
undamaged condition to the point of delivery.
(b) Primex may package Products in new or used fibre-pak containers
("Fibre-paks"). Olin agrees to return the Fibre-paks to Primex in full
truckload quantities in accordance with the "Conditions for Used Pack Acceptance
at St. Marks" set forth in Exhibit C, attached hereto. Primex shall be
responsible for Olin's reasonable return freight costs. In consideration of
each Fibre-pak returned to Primex in accordance with Exhibit C Primex agrees to
pay Olin the greater of: (1) any amount paid by Primex to any third party at any
time in the then-current calendar year for the respective size of Fibre-pak, or
(2) the following:
(i) Thirty cents ($0.30) for each six and one-half (6.5) gallon
Fibre-pak; and
(ii) one dollar ($1.00) for each fourteen and one-half (14.5) gallon
Fibre-pak.
12. Delivery:
---------
Title and risk of loss of all Products sold hereunder shall pass to Olin
upon delivery to Olin f.o.b., St. Marks, Florida, freight prepaid.
13. Quality Review:
---------------
Olin shall have the right, upon reasonable prior notice to Primex and at
reasonable times, to send its employees, agents and representatives to visit
Primex production facilities and review Primex production and quality-control
techniques, for the sole purpose of assuring Olin of the consistent quality of
the Product(s) supplied hereunder; provided, however, that nothing in this
-------- -------
Section 13 shall entitle any such employee, agent or representative of Olin to
review any confidential or proprietary information of Primex.
14. Warranty:
---------
(a) Primex warrants to Olin that: (i) for a period of twelve (12)
consecutive months after delivery, the Products sold hereunder shall conform to
the specifications identified in Exhibit C and be free from defects in material
and workmanship, and (ii) Olin will receive good title to all Products sold
hereunder, free and clear of
<PAGE>
POWDER SUPPLY REQUIREMENTS AGREEMENT Page 8
any security interest, lien or encumbrance. THE ABOVE WARRANTIES ARE EXCLUSIVE
AND IN LIEU OF ANY OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING THE
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
(b) If Products are defective in material or workmanship or fail to meet
applicable specification(s), then Primex shall accept return of the defective
Products and promptly replace the defective Products with conforming Products at
its own cost, including transportation and delivery costs. Primex's obligations
hereunder are contingent upon the Product not being subject to misuse or abuse
by Olin and Primex's right to reasonable access to Olin's facilities to verify
the non-conforming Product.
(c) Without limiting the obligations identified in Section 15, the Parties
agree that Olin's sole and exclusive remedy and Primex's sole and exclusive
liability for the delivery of defective Product shall be as identified in this
Section 14 and in Section 19 hereof.
15. Indemnification:
----------------
(a) Primex shall defend, indemnify and hold Olin, its directors, officers,
agents, servants and employees harmless from and against any and all
liabilities, claims, damages, costs, expenses and judgments (including but not
limited to reasonable attorneys' fees and disbursements) which are caused by or
alleged to be caused by manufacturing and/or design defects (including strict
liability) in the Product(s) purchased hereunder.
(b) Olin shall defend, indemnify and hold Primex, its directors, officers,
agents, servants and employees harmless from and against any and all
liabilities, claims, damages, costs, expenses and judgments (including but not
limited to reasonable attorneys' fees and disbursements) which (i) are caused by
Olin's negligent misuse or improper handling of Product(s), or (ii) result from
Olin's manufacturing and/or design defects (including strict liability) in
ammunition loaded with non-defective Product purchased hereunder.
(c) In cases where a third-party lawsuit has been filed alleging, among
other things, that the Products purchased by Olin hereunder or ammunition made
therefrom failed to meet Product specifications or were defective in material or
in some manner contributed to an occurrence giving rise to a claim of personal
injury, death or
<PAGE>
POWDER SUPPLY REQUIREMENTS AGREEMENT Page 9
property damage, the Parties agree to cooperate in the defense of the lawsuit.
All costs, expenses, attorneys' fees, settlements and/or judgments and other
amounts expended in the defense of the lawsuit shall be allocated between the
Parties in an equitable manner as determined by the Parties on a case-by-case
basis.
16. Limitation of Liability:
------------------------
Except as provided in Section 15 above, in no event shall either Party be
liable for special, consequential or incidental damages under this Agreement.
17. Secrecy:
--------
(a) Secrecy Obligation: Each of the Parties agrees: (i) to keep
-------------------
confidential the terms of this Agreement, except to the extent required by law;
and (ii) to keep confidential and neither disclose to others nor use except as
permitted herein any Confidential Information received from the other Party
pursuant to the Agreement.
(b) Limits On Disclosure: The receiving Party shall treat such
---------------------
Confidential Information in the same manner and with the same degree of care as
it uses with respect to its own Confidential Information of like nature and
shall disclose Confidential Information of the other Party only to its
employees who have a need to know it, provided that such employees are bound to
respect all secrecy obligations provided for in this Agreement.
(c) Exceptions: The obligation set forth in this Section 17(a) above
-----------
shall not apply with respect to any Confidential Information which:
(i) Public Knowledge: Is generally available to the public or
-----------------
subsequently becomes generally available to the public through no breach by the
receiving Party of secrecy obligations under this Agreement or prior agreements
between the Parties concerning the Confidential Information; or
(ii) Prior Possession: The receiving Party can establish by competent
-----------------
evidence was in its possession at the time of disclosure and was not acquired in
confidence directly or indirectly, from the disclosing Party; or
<PAGE>
POWDER SUPPLY REQUIREMENTS AGREEMENT Page 10
(iii) Received From Third Party: Is received from a third party
--------------------------
who is legally free to disclose such Confidential Information and who did not
receive such Confidential Information in confidence from the disclosing Party;
or
(iv) Approved For Disclosure: Is approved in writing for release by
------------------------
the disclosing Party; or
(v) Successor In Interest: Is disclosed to any permitted assignee of
----------------------
the Agreement, provided that such assignee agrees to be bound by the provisions
of the Agreement; or
(vi) Independently Developed: Is independently developed by the
------------------------
receiving Party without reference to the Confidential Information received from
the disclosing Party.
(d) Permitted Disclosures: The provisions of Section 17(a)
----------------------
notwithstanding, in exercising the rights granted under this Agreement, either
Party may disclose Confidential Information to others for purpose of
sublicensing (as permitted hereunder), design, engineering, construction or
operation of facilities permitted hereunder using Confidential Information; or
obtaining or giving consulting services under a license agreement permitted
hereunder, provided that any third party, to which such Confidential Information
is disclosed shall have first entered into a written secrecy and non-use
obligation at least as stringent as that imposed on the Parties pursuant to this
Agreement.
(e) Subpoena Or Demand: The provisions of Section 17(a) notwithstanding,
-------------------
a Party may disclose Confidential Information pursuant to a subpoena or demand
for production of documents in connection with any suit or arbitration
proceeding, any administrative procedure or before a governmental or
administrative agency or instrumentality thereof or any legislative hearing or
other similar proceeding, provided that the receiving Party shall promptly
notify the disclosing Party of the subpoena or demand and provided further that
in such instances, the Parties use their reasonable best efforts to maintain the
confidential nature of the Confidential Information by protective order or other
means.
18. Force Majeure:
--------------
<PAGE>
POWDER SUPPLY REQUIREMENTS AGREEMENT Page 11
(a) Neither Party shall be liable to the other for its failure to perform
any or all of its obligations hereunder if such failure is caused by strikes,
labor troubles, fire, flood, accidents, wars (domestic or foreign), riots, civil
commotions, sabotage, acts of God, explosion, embargo, or due to orders or
directives of any governmental authority having jurisdiction over the Parties,
or for any acts beyond the reasonable control of the affected Party.
(b) In the event Primex experiences an occurrence of force majeure,
impacting its ability to manufacture and/or deliver Products to Olin to meet
Winchester's needs, Primex shall immediately notify Olin, in writing, of the
event and the anticipated date of the resumption of Product manufacturing and/or
delivery activities.
(c) If Primex is delayed in the resumption of Product manufacturing and/or
delivery activities (for any reason other than any official act of the United
States Government asserting procurement priority over all or any part of
Primex's production facility located in St. Marks, Florida) beyond six (6)
months after the initiation of the force majeure event, or if Primex decides for
any reason to exit the business of manufacturing, producing and/or delivering
St. Marks Powder, Primex shall, at its sole option: (i) grant Olin a limited,
royalty-free license to use and sublicense the most current technology and know-
how necessary to manufacture St. Marks Powders for delivery solely to Winchester
and its distributors and dealers, or (ii) grant a third party a limited,
royalty-free license to use the most current technology and know-how necessary
to manufacture St. Marks Powders for delivery solely to Winchester and its
distributors and dealers.
19. Termination:
------------
Either Party shall have the right to terminate this Agreement upon
twenty-five (25) calendar days advance written notice to the other
Party in the event the other Party breaches a material provision of
this Agreement and the breaching Party fails to substantially cure the
material breach within a period of time equal to: (i) said 25-day
period, plus (ii) the number of calendar days, not to exceed 14, of
any shut-down of Primex's St. Marks Powder production facility
commencing or ending within said 25-day period. If either Party elects
to exercise its right to assign this Agreement pursuant to Section 26
(c) hereto in connection with its merger or consolidation or the sale
of all or substantially all its assets related to, in the case of
Olin, its business of manufacturing and selling ammunition having a
caliber less than 20mm or, in the case of Primex, its business of
<PAGE>
POWDER SUPPLY REQUIREMENTS AGREEMENT Page 12
manufacturing and selling propellant powder and if the resulting,
surviving or transferee entity is engaged in or controlled, directly
or indirectly, by any person who is engaged in, in the case of an
assignment by Primex, the manufacture or sale of ammunition having a
caliber less than 20mm or shotshells, and, in the case of an
assignment by Olin, the manufacture or sale of propellant powder for
ammunition, the assigning Party shall notify the other Party of its
election to assign this agreement and the other Party for a period of
thirty (30) days after receipt of said notice shall have the right to
terminate this Agreement upon providing written notice to the
assigning Party and the resulting, surviving or transferee entity.
20. Independent Pricing and Quantity Audits:
----------------------------------------
During the Term of this Agreement, and any renewal Terms thereof, each
Party (the "Auditing Party") shall have the right to appoint an independent
third party acceptable to the other Party (the "Audited Party"), to conduct an
audit of the relevant records of the Audited Party (including but not limited
to: (i) if Primex is the Audited Party, Primex's accounting and sales records,
and (ii) if Olin is the Audited Party, Olin's accounting and purchase records)
to determine compliance with the agreed to pricing and quantity requirement
procedures. The Audited Party agrees to make its records and employees
reasonably available to the auditors to promote the efficient and accurate
completion of the audit. Any discrepancies discovered by the audit shall be
resolved by mutual agreement between the Parties. The Auditing Party shall pay
the third party auditor for the audit. The Parties agree that the auditor shall
be instructed to keep the Audited Party's information confidential. The auditor
shall only report to the Auditing Party: (i) whether or not the Audited Party is
in compliance with the agreed to pricing and quantity requirement provisions
and, (ii) if the auditor reports that Audited Party is not in compliance with
any aspect of the pricing provisions the auditor shall only reveal to the
Auditing Party that portion of the Audited Party's information necessary to
identify the non-compliance. Under no circumstances shall the auditor disclose:
(i) to Olin the identity of Primex's customers, or (ii) to Primex the identity
of Olin's suppliers.
21. Notices:
--------
All notices and other communications hereunder shall be in writing and
hand delivered or mailed by registered or certified mail (return receipt
requested) or sent by any means of electronic message transmission (excluding
voice mail) with delivery confirmed (by voice or otherwise) to
<PAGE>
POWDER SUPPLY REQUIREMENTS AGREEMENT Page 13
the parties at the following addresses (or at such other addresses for a Party
as shall be specified by like notice) and will be deemed given on the date on
which such notice is received:
If to Olin: Olin Corporation
Winchester Division
427 North Shamrock Street
East Alton, IL 62024
Attention: Vice President,
Manufacturing
Fax no.: (618) 258-2919
If to Primex: Primex Technologies, Inc.
P.O. Box 222
St. Marks, Florida 32355-0222
Attention: Director, St. Marks
Operation
Fax no.:
and
10101 Ninth Street North
St. Petersburg, FL 33716-3807
Attention: General Counsel
Fax no.: (813) 578-8795
Either Party may change their address by a notice given to the other
Party in the manner set forth above.
22. Choice of Law:
--------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of Illinois, excluding its choice of law rules.
<PAGE>
POWDER SUPPLY REQUIREMENTS AGREEMENT Page 14
23. Dispute Resolution:
-------------------
In the event of a controversy, dispute or claim arising out of, in
connection with, or in relation to the interpretation, performance,
nonperformance, validity or breach of this Agreement or otherwise arising out
of, or in any way related to this Agreement, including, without limitation, any
claim based on contract, tort, statute or constitution (collectively, "Agreement
Disputes"), the General Counsels of the relevant Parties or their designees
shall negotiate in good faith for a reasonable period of time to settle such
Agreement Dispute. If after such reasonable period such General Counsels or
their designees are unable to settle such Agreement Dispute (and in any event
after 60 days have elapsed from the time the relevant parties began such
negotiations), such Agreement Dispute shall be determined, at the request of any
relevant party, by arbitration conducted in St. Louis, Missouri before and in
accordance with the then-existing Rules for Commercial Arbitration of the
American Arbitration Association (the "Rules"), and any judgment or award
rendered by the arbitrator shall be final, binding and nonappealable (except
upon grounds specified in 9 U.S.C. 10(a) as in effect on the date hereof), and
judgment may be entered by any state or Federal court having jurisdiction
thereof in accordance with Section 9.19 hereof. Unless the arbitrator otherwise
determines, the pre-trial discovery of the then-existing Federal Rules of Civil
Procedure and the then-existing Rules 12, 13, and 13.1 of the Rules of the
United States District Court for the Southern District of Illinois shall apply
to any arbitration hereunder. Any controversy concerning whether an Agreement
Dispute is an arbitrable Agreement Dispute, whether arbitration has been waived,
whether an assignee of this Agreement is bound to arbitrate, or as to the
interpretation of enforceability of this Section 23, shall be determined by the
arbitrator. The arbitrator shall be a retired or former judge of any United
States District Court or Court of Appeals or such other qualified person as the
relevant parties may agree to designate, provided such individual has had
--------
substantial professional experience with regard to settling commercial disputes.
The parties intend that the provisions to arbitrate set forth herein be valid,
enforceable and irrevocable. The designation of a situs or a governing law for
this Agreement or the arbitration shall not be deemed an election to preclude
application of the Federal Arbitration Act, if it would be applicable. In his
award the arbitrator shall allocate, in his discretion, among the parties to the
arbitration all costs of the arbitration, including, without limitation, the
fees and expenses of the arbitrator and reasonable attorneys' fees, costs and
expert witness expenses of the parties. The undersigned agree to comply with
any award made in any such arbitration proceedings that has become final in
accordance with the Rules and agree to the entry of a judgment in any
jurisdiction upon any award rendered in such proceedings becoming final under
the Rules. The arbitrator shall be entitled, if
<PAGE>
POWDER SUPPLY REQUIREMENTS AGREEMENT Page 15
appropriate, to award any remedy in such proceedings, including, without
limitation, monetary damages, specific performance and all other forms of legal
and equitable relief; provided, however, the arbitrator shall not be entitled to
-------- -------
award punitive damages.
24. Consent to Jurisdiction:
------------------------
Without limiting the provisions of Section 23 hereof, each of the parties
irrevocably submits to the exclusive personal jurisdiction and venue of (a) the
Circuit Court of the Third Judicial Circuit, Madison County, Illinois, and (b)
the United States District Court for the Southern District of Illinois for the
purposes of any suit, action or other proceeding arising out of this Agreement
or any transaction contemplated hereby. Each of the parties agrees to commence
any action, suit or proceeding relating hereto either in the United States
District Court for the Southern District of Illinois or if such suit, action or
other proceeding may not be brought in such court for jurisdictional reasons, in
the Circuit Court of the Third Judicial Circuit, Madison County, Illinois. Each
of the parties further agrees that service of any process, summons, notice or
document by U.S. registered mail to such Party's respective address set forth
above shall be effective service of process for any action, suit or proceeding
in Illinois with respect to any matters to which it has submitted to
jurisdiction in this Section 24. Each of the parties irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit
or proceeding arising out of this Agreement or the transactions contemplated
hereby in (i) the Circuit Court of the Third Judicial Circuit, Madison County,
Illinois, or (ii) the United States District Court for the Southern District of
Illinois, and hereby further irrevocably and unconditionally waives and agrees
not to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
25. Government Requirements:
------------------------
The Products are on the U.S. Munitions list, and may not be exported from
the U.S. without a license from the U.S. Department of State, which license
shall indicate the country of ultimate destination of such Products. In
addition, U.S. law prohibits the sale, transfer, or other disposition of
Products of U.S. origin to certain countries without authorization. Olin shall
not resell, divert, transfer, transship, reship or re-export, or use Products on
the U.S. Munitions list in or to any country other than that described on the
U.S. export license for the Products as the country of ultimate destination,
without the prior written approval of the U.S. Department of State.
<PAGE>
POWDER SUPPLY REQUIREMENTS AGREEMENT Page 16
26. Miscellaneous:
--------------
(a) Amendments. The Parties hereto acknowledge and agree that in the
-----------
interest of time, certain matters of a practical business nature such as minor
changes in delivery dates, shipment instructions, small variances in orders and
the like may be orally agreed to by the Parties provided that any disputes that
arise from such oral agreements shall not constitute breaches of this Agreement.
(b) Successors and Assigns. The provisions of this Agreement shall be
-----------------------
binding upon, inure to the benefit of and be enforceable by the Parties and
their respective successors and permitted assigns.
(c) Assignability. This Agreement shall be assignable in whole in
--------------
connection with a merger or consolidation of a Party hereto or the sale of all
or substantially all the assets related to Olin's business of manufacturing and
selling ammunition having a caliber less than 20mm and shotshells or Primex's
business of manufacturing and selling propellant powder so long as the
resulting, surviving or transferee entity assumes all the obligations of the
relevant Party hereto by operation of law or pursuant to an agreement in form
and substance reasonably satisfactory to the other Party to this Agreement.
Otherwise this Agreement shall not be assignable, in whole or in part, directly
or indirectly, by any Party hereto without the prior written consent of the
other, and any attempt to assign any rights or obligations arising under this
Agreement without such consent shall be void. Prior to any assignment, Olin and
Primex shall meet to review the Agreement and make changes and adjustments to
the Agreement as both Parties, in good faith, agree are mutually beneficial.
(d) Waivers. The failure of either Party to require strict performance by
--------
the other Party of any provision in this Agreement will not waive or diminish
that Party's right to demand strict performance thereafter of that or any other
provision hereof.
(e) Severability. In the event any one or more of the provisions
-------------
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein and
<PAGE>
POWDER SUPPLY REQUIREMENTS AGREEMENT Page 17
therein shall not in any way be affected or impaired thereby. The Parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions, the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
(f) Title and Headings. Titles and headings to sections herein are
-------------------
inserted for the convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
(g) Complete Agreement; Construction. This Agreement, including the
---------------------------------
Exhibits and the pricing agreements referenced in Section 3 above, shall
constitute the entire agreement between the parties with respect to the subject
matter hereof and shall supersede all previous negotiations, commitments and
writings with respect to such subject matter. In the event of any inconsistency
between this Agreement and any Exhibit hereto and said pricing agreement, the
Exhibit and pricing agreement shall prevail. The terms and conditions of this
Agreement shall prevail over any terms or conditions contained on purchase
orders, sales acknowledgments, or the like for Products under this Agreement.
(h) Sections 9, 14, 15, 16, 17, 22, 23, 24 and 25 shall survive the
termination of this Agreement.
(i) Exhibits. The Exhibits shall be construed with and as an integral
---------
part of this Agreement to the same extent as if the same had been set forth
verbatim herein.
(j) Third Party Beneficiaries. This Agreement is solely for the benefit
--------------------------
of the Parties hereto and their respective subsidiaries and affiliates and
should not be deemed to confer upon third parties any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement.
(k) Attorney Fees. A Party in breach of this Agreement shall, on demand,
--------------
indemnify and hold harmless the other Party hereto for and against all out-of-
pocket expenses, including, without limitation, legal fees, incurred by such
other Party by reason of the enforcement and protection of its rights under this
Agreement. The payment of such expenses is in addition to any other relief to
which such other Party may be entitled hereunder or otherwise.
<PAGE>
POWDER SUPPLY REQUIREMENTS AGREEMENT Page 18
IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized
representatives of each Party as of the day and year first above written.
OLIN CORPORATION
By:
------------------------
Title:
------------------------
PRIMEX TECHNOLOGIES, INC.
By:
------------------------
Title:
------------------------
<PAGE>
EXHIBIT 10.5
ASSIGNMENT OF BALL POWDER TRADEMARK TO PRIMEX
---------------------------------------------
AND LIMITED LICENSE TO OLIN
---------------------------
THIS AGREEMENT is made and entered into as of this 1st day of January, 1997
by and between:
OLIN CORPORATION, having a place of business at 427 North Shamrock Street,
East Alton, Illinois 62024, (hereinafter referred to as "OLIN")
AND
PRIMEX TECHNOLOGIES, INC., having a place of business at 10101 Ninth Street
North, St. Petersburg, Florida 33716-3807 (hereinafter referred to as
"PRIMEX") (hereinafter collectively the "PARTIES " and each individually a
"PARTY").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, OLIN and PRIMEX have entered into that certain Distribution
Agreement dated as of January 1, 1997 ____________________ concerning the
spin-off of PRIMEX from OLIN (the "Distribution Agreement");
WHEREAS, pursuant to the Distribution Agreement, the operations of OLIN's
Ordnance Division relating to the manufacture and distribution of Ball
Powder(R) propellant will be transferred to PRIMEX;
WHEREAS, OLIN has prior to the EFFECTIVE DATE entered into the BROWNING
AGREEMENT which provides Browning S.A. with certain exclusive rights and
licenses to use the Ball Powder(R) trademark in a certain territory as
defined in that agreement;
WHEREAS, to allow each of OLIN and PRIMEX (and their respective
shareholders) to obtain the full value of its respective rights under the
Distribution Agreement, PRIMEX and OLIN desire to enter into and execute
this AGREEMENT concerning the assignment of the Ball Powder(R) trademark to
PRIMEX along with the good will of the business relating thereto and the
licensing of OLIN thereunder so as to enable OLIN to fulfill its
obligations to Browning S.A. under the BROWNING AGREEMENT;
NOW, THEREFORE, in consideration of the above, and the mutual promises set
forth below, OLIN and PRIMEX agree as follows:
<PAGE>
1. DEFINITIONS
- ----------------
Whenever used in this agreement, the following terms shall have the
following meanings, on the understanding that words in the singular include
the plural and vice-versa. Headings and subheadings are used for
convenience only and are not intended as limitations in the AGREEMENT or
for use in interpreting the AGREEMENT.
1.1 AFFILIATE
- --------------
"AFFILIATE" shall have the meaning ascribed thereto in the BROWNING
AGREEMENT.
1.2 AGREEMENT
- --------------
"AGREEMENT" shall mean this agreement as amended and/or supplemented from
time to time, including all the EXHIBITS attached hereto.
1.3 BROWNING AGREEMENT
- -----------------------
"BROWNING AGREEMENT" shall mean the Winchester License Agreement For
Shotshell & Hunting And Shooting Accessories For Europe between BROWNING
S.A. and OLIN, dated December 30, 1991 as set forth in EXHIBIT A as well as
any amendments thereto.
1.4 BROWNING S.A.
- -----------------
"BROWNING S.A." shall mean Browning S.A., a company organized under the
laws of the Kingdom of Belgium and having a principal office at Parc
Industriel des Hauts-Sarts, 3rd, Avenue, B-4040 Herstal, Belgium, or its
successors.
1.5 EFFECTIVE DATE
- -------------------
"EFFECTIVE DATE" shall mean the Effective Time specified in the
Distribution Agreement.
1.6 HUNTING AND SHOOTING ACCESSORY PRODUCTS
- --------------------------------------------
"HUNTING AND SHOOTING ACCESSORY PRODUCTS" shall have the meaning ascribed
thereto in the BROWNING AGREEMENT.
-2-
<PAGE>
1.7 SHOTSHELL PRODUCTS
- -----------------------
"SHOTSHELL PRODUCTS" shall have the meaning ascribed thereto in the
BROWNING AGREEMENT.
1.8 TERRITORY
- --------------
"TERRITORY" shall have the meaning ascribed thereto in the BROWNING
AGREEMENT.
1.9 TERM
- ---------
"TERM" shall have the meaning ascribed thereto in the BROWNING AGREEMENT.
1.10 TRADEMARKS
- ---------------
"TRADEMARKS" shall have the meaning ascribed thereto in the BROWNING
AGREEMENT but only as it relates to the Ball Powder(R) trademark.
2. ASSIGNMENT OF THE TRADEMARKS
- ---------------------------------
2.1 ASSIGNMENT
- ---------------
OLIN agrees to assign and transfer to PRIMEX upon the EFFECTIVE DATE all of
its right, title and interest in and to the BALL POWDER trademarks set
forth in EXHIBIT B together with the good will of the business relating
thereto, pursuant to an assignment document in the form as set forth in
EXHIBIT C.
2.2 ACCEPTANCE OF ASSIGNMENT
- -----------------------------
PRIMEX agrees to accept the assignment pursuant to Section 2.1.
2.3 DISCLAIMER
- ---------------
OLIN CORPORATION MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
WITH RESPECT TO THE TRADEMARKS ASSIGNED HEREBY, INCLUDING WITHOUT
LIMITATION AS TO VALIDITY, ENFORCEABILITY OR FITNESS FOR ANY PARTICULAR USE
OR PURPOSE.
3. LICENSES
- -------------
-3-
<PAGE>
3.1 LICENSE TO OLIN
- --------------------
Subject to the assignment of the BALL POWDER(R) trademarks to PRIMEX
pursuant to Section 2.1, PRIMEX grants to OLIN all such rights and licenses
as may be necessary to fulfill its obligations under the BROWNING
AGREEMENT, including without limitation, the right to grant BROWNING S.A.
the following licenses:
a) the exclusive right and license to use the TRADEMARKS in connection with
the manufacture, distribution, sale, and advertising of SHOTSHELL PRODUCTS in
the TERRITORY; and
b) the exclusive right and license to use the TRADEMARKS for HUNTING AND
SHOOTING ACCESSORY PRODUCTS in the TERRITORY.
3.2 OLIN OBLIGATION
- --------------------
Upon the license of Section 3.1 becoming effective, OLIN shall for the
benefit of PRIMEX abide by the terms of the BROWNING AGREEMENT as they
relate to the TRADEMARKS.
3.3 PRIMEX COOPERATION
- -----------------------
Upon the license of Section 3.1 becoming effective, PRIMEX shall cooperate
with OLIN and provide such assistance to OLIN as shall be reasonably
necessary to enable OLIN to effectuate the terms of the BROWNING AGREEMENT.
4. TERM OF AGREEMENT
- ----------------------
This AGREEMENT shall become effective on the EFFECTIVE DATE, and shall
continue in full force and effect until the expiration of the BROWNING
AGREEMENT.
5. GUARANTEES, LIABILITIES AND INDEMNITIES
- --------------------------------------------
5.1 DISCLAIMER
- ---------------
Neither PARTY shall be liable to the other for indirect, special or
consequential damages arising out of this AGREEMENT.
-4-
<PAGE>
6. NOTICES
- ------------
Notices or requests to be given or made hereunder shall be delivered in
person or sent by registered mail or telefax or telex acknowledged by the
operator of the addressee at the following addresses or other addresses
that each PARTY may from time to time designate
(a) for PRIMEX:
PRIMEX TECHNOLOGIES, INC.
10101 Ninth Street North
St. Petersburg, Florida 33716-3807
ATTENTION: Corporate Secretary
Tel: (813)578-1116
Fax: (813)578-8795
(b) for OLIN:
OLIN CORPORATION
501 Merritt Seven
Norwalk, Connecticut 06856-4500
Attention: Corporate Secretary
Tel: (203) 356-3126
Fax: (203) 356-2011
7. ASSIGNMENT
- ---------------
The AGREEMENT shall not be assigned by either PARTY except as permitted by
the BROWNING AGREEMENT.
8. MISCELLANEOUS
- ------------------
8.1 ENTIRE AGREEMENT
- ---------------------
The AGREEMENT embodies the entire understanding of the PARTIES. No
amendment or modification of the AGREEMENT shall be valid or binding upon
the PARTIES unless it is in writing and signed by the respective duly
authorized officers of the PARTIES.
-5-
<PAGE>
8.2 PARTIES ARE INDEPENDENT
- ----------------------------
The AGREEMENT does not and shall not be deemed to make either PARTY the
agent, legal representative or partner of the other PARTY for any purpose
whatsoever, and neither PARTY shall have the right or authority to assume
or create any obligation or responsibility whatsoever, expressed or
implied, on behalf of or in the name of the other PARTY or to bind the
other PARTY in any respect whatsoever.
8.3 WAIVER
- -----------
The failure of either PARTY at any time to require performance by the other
PARTY of any provision hereof shall in no way affect the full right to
require such performance within a reasonable time or thereafter the
performance of that and all other provisions, nor shall the waiver of any
succeeding breach of such provision or any other provision operate as a
waiver of the provision itself.
8.4 SEVERABILITY
- -----------------
The invalidity or unenforceability of any one or more of the provisions of
the AGREEMENT shall not affect the validity or enforceability of the
remaining provisions.
8.5 GOVERNING LAW
- ------------------
This Agreement shall be construed and governed, in all respects, by
the law of the State of [Illinois] applicable to contracts made and to be
performed in that state without reference to any provisions relating to
conflicts of law.
8.6 JURISDICTION
- -----------------
Each PARTY hereby irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of any [Illinois] State
court or Federal court of the United States of America sitting anywhere
within a radius of 50 miles from East Alton, [Illinois], and any appellate
court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any
judgment, and each of the PARTIES hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be
heard and determined in such [Illinois] State or, to the extent permitted
by law, in such Federal court. Each of the PARTIES hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may
be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law.
-6-
<PAGE>
8.7 VENUE
- ----------
Each PARTY hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection that it may now
or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any [Illinois] State court
or such Federal court located in the State of [Illinois]. Each of the
PARTIES hereto hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such
action or proceeding in any such court.
8.8 SERVICE OF PROCESS
- -----------------------
Each Party to this Agreement irrevocably consents to service of process in
the manner provided for notices in ARTICLE 7 hereof. Nothing in this
Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
9. SETTLEMENT OF DISPUTES
- ---------------------------
In the event of any disputes arising out of or in connection with the
execution, interpretation, performance or nonperformance of this AGREEMENT,
except for disputes relating to infringement, validity or enforceability of
INTELLECTUAL PROPERTY, PRIMEX and OLIN shall use the following procedure
prior to either PARTY pursuing other available legal remedies:
9.1 ALTERNATIVE DISPUTE RESOLUTION
- -----------------------------------
Upon signing of this Agreement each PARTY will designate one representative
("Representative") for the purpose of resolving disputes which may arise
from time to time. Upon a dispute arising, either or both Representatives
may request in writing a conference with the other. If so requested, the
conference shall occur within ten (10) days of the initial written request
and shall be held via telephone or at East Alton, Illinois, or elsewhere,
at the option of the Representatives. The purpose and scope of the
conference shall be limited to issues related to resolving the dispute. At
the conference, each Representative, or his or her designee, shall use best
efforts to attempt to resolve the dispute. If the dispute has not been
settled within thirty (30) days of the first meeting of the
Representatives, the parties shall establish a Management Appeal Board
("MAB") within ten (10) days of receipt of a request by either PARTY to set
up an MAB. The MAB shall consist of two (2) members of each respective
PARTY's management. The President of OLIN shall appoint two members to
represent OLIN and the President of PRIMEX shall appoint two members to
represent PRIMEX. The sole purpose of MAB shall be to resolve any dispute
over which the Representatives failed to resolve. The MAB members shall be
persons other
-7-
<PAGE>
than the Representatives. The MAB shall meet at East Alton,
Illinois or otherwise confer to resolve the dispute by good faith
negotiations, which may include presentations by the Representatives or
others.
9.2 ARBITRATION
- ----------------
In the event the parties are unable to resolve their disputes after
availing themselves of the processes set forth in Section 13.1 above for a
period of ninety (90) days, such disputes, shall be solely and finally
settled by three arbitrators in accordance with the Commercial Arbitration
Rules of the AAA (the "Arbitration Rules"). The PARTY electing arbitration
shall so notify the other PARTY in writing in accordance with the
Arbitration Rules, and such notice shall be accompanied by the name of the
arbitrator selected by the PARTY serving the notice. The second arbitrator
shall be chosen by the other PARTY, and a neutral arbitrator shall be
chosen by the two arbitrators so selected. If a PARTY fails to select an
arbitrator or to advise the other PARTY of its selection within thirty (30)
days after receipt by such a PARTY of the notice of the intent to
arbitrate, the second arbitrator shall be selected by the AAA. If the
third arbitrator shall not have been selected within thirty (30) days after
the selection of the second arbitrator, the appointment shall be made by
the AAA. All such proceedings shall be conducted in New York, New York.
The arbitrator shall make detailed findings of fact and law in writing in
support of the decision of the arbitrator panel, and is empowered to award
reimbursement of attorneys' fees and other costs of arbitration to the
prevailing PARTY, in such manner as the arbitrator panel shall deem
appropriate. The provisions of this Section 13.2 shall not be deemed to
preclude any PARTY hereto from seeking preliminary injunctive relief to
protect or enforce its rights hereunder, or to prohibit any court from
making preliminary findings of fact in connection with granting or denying
such preliminary injunctive relief, or to preclude any PARTY hereto from
seeking permanent injunctive or other equitable relief after and in
accordance with the decision of the arbitrator panel. Whether any claim or
controversy is arbitrable or litigable shall be determined solely by the
arbitrator panel pursuant to the provisions of this Section 13.2. Any
monetary award of the arbitrators panel shall include interest from the
date of any breach or any violation of this Agreement. The arbitrators
shall fix an appropriate rate of interest from the date of the breach or
other violation to the date when the award is paid in full. The parties
agree that judgment on the arbitration award may be entered in any court
having jurisdiction over the parties or their assets.
9.3 CONTINUING OBLIGATIONS
- ---------------------------
It is expressly agreed that the failure of the parties to resolve a dispute
on any issue to be resolved hereunder shall not relieve either PARTY from
any obligation set forth in this Agreement. In addition, notwithstanding
the pendency
-8-
<PAGE>
of any such dispute, neither PARTY will be excused of its obligations hereunder
to cooperate with the other to effectuate the purposes of this Agreement.
9.4 COUNTERPARTS
- -----------------
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of this shall constitute one and
the same instrument
IN WITNESS WHEREOF the PARTIES hereto have caused this AGREEMENT to be
executed in duplicate as of the date first written above.
OLIN CORPORATION PRIMEX TECHNOLOGIES, INC.
Name___________________ Name ____________________
Title__________________ Title______________________
Date__________________ Date___________________
-9-
<PAGE>
ASSUMPTION OF LIABILITIES
AND
INDEMNITY AGREEMENT
This Assumption of Liabilities and Indemnity Agreement (this "Agreement")
is entered into as of the first day of January, 1997 by and between PRIMEX
TECHNOLOGIES, INC., a Virginia corporation, having its executive offices at
10101 Ninth Street North, St. Petersburg, Florida 33716-3807 ("Primex"), and
OLIN CORPORATION, a Virginia corporation, having its executive offices at 501
Merritt 7, Norwalk, Connecticut 06851 ("Olin") (Primex and Olin each being
referred to as a "Party" and collectively as the "Parties").
WITNESSETH:
WHEREAS, Olin and Primex have entered into that certain Distribution Agreement
dated as of _________________ concerning the spin-off of Primex from Olin (the
"Distribution Agreement"); and
WHEREAS, Olin and Primex desire to allocate certain liabilities and obligations
associated with their respective businesses;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
hereinafter set forth, the Parties hereby agree as follows:
I. Primex Assumption and Indemnity. Primex shall solely assume, and shall
indemnify and hold harmless Olin from and against:
A. All claims, damages, losses, liabilities, fines, penalties, costs and
expenses (including reasonable attorneys' fees and disbursements)
(collectively, "Liabilities") arising out of, associated with, or resulting
from the activities, business, operations, assets, properties, conduct or status
of Primex on or after the Effective Time (as defined in the Distribution
Agreement) except for the matter described in Article II.B below;
B. All Liabilities associated with the matters, current sites and
businesses described in Exhibit I, including, without limitation, those
Liabilities in connection with the removal, remediation or control of
environmental conditions at or associated with any of the sites identified
therein.
C. All Liabilities arising out of, associated with, or resulting from the
activities, business, operations, assets, properties, conduct or status of
Olin's Aerospace and Ordnance Divisions (including their respective constituent
Olin subsidiaries) prior to the Effective Time that are continued by Primex
following the Distribution (as defined in the Distribution Agreement) except
for the matter described in Article II.B below.
D. All Liabilities arising out of, associated with, or resulting from the
activities, business, operations, assets, properties, conduct or status of the
discontinued businesses and former sites related to Olin's Aerospace and
Ordnance Divisions (including their respective constituent Olin subsidiaries)
identified in Exhibit II, including, without limitation, Liabilities in
connection with the removal, remediation or control of environmental conditions
at any of the sites identified thereby and except for those matters described in
Article II.B and E below.
E. All Liabilities arising out of or resulting from or any of the
agreements and guarantees identified in Exhibit III.
F. All Liabilities for employee benefits for which Primex is responsible
pursuant to Article VI of the Distribution Agreement.
G. All Liabilities arising out of, in connection with, or related to any
of the contracts with the U.S. Government, or any instruments or agreements
related thereto, that Olin was obligated to guarantee pursuant to the novation
of such contracts to Primex or its subsidiaries.
II. Olin Assumption and Indemnity. Olin shall solely assume, and shall
indemnify and hold harmless Primex from and against:
A. All Liabilities arising out of, associated with, or resulting from the
activities, business, operations, assets, properties, conduct or status of Olin
on or after the Effective Time;
B. Civil settlements, monetary judgments and legal fees and costs
(excluding without limitation obligations to fulfill the offset requirement), in
each case incurred and paid after the Effective Time, all in connection with the
Belgium Legal Matter described in Exhibit IV.
C. All other Liabilities arising out of, associated with, or resulting
from the activities, business, operations, assets, properties, conduct or status
of Olin prior to the Effective Time except for those described in Article I
above.
D. All claims and Liabilities for employee benefits for which Olin is
responsible pursuant to Article VI of the Distribution Agreement.
<PAGE>
E. All Liabilities arising out of, associated with, or resulting from the
activities, business, operations, assets, properties, conduct or status of
Ravenna Army Ammunition Plant in Ravenna, Ohio and the Badger Army Ammunition
Plant in Baraboo, Wisconsin, including without limitation close-out costs,
unfunded pension costs, and unfunded retiree benefit cost.
III. Insurance Matters. The amount which any indemnifying Party is or may be
required to pay to any indemnified Party hereunder shall be reduced (including,
without limitation, retroactively) by any proceeds of insurance policies or
other amounts actually recovered by or on behalf of such indemnified Party in
reduction of the related Liability. If an indemnified Party shall have received
the payment (an "Indemnity Payment") required by this Agreement from an
indemnifying Party in respect of any Liability and shall subsequently actually
receive proceeds of insurance policies or other amounts in respect of such
Liability, then such indemnified Party shall pay to such indemnifying Party a
sum equal to the amount actually received (up to but not in excess of the amount
of any Indemnity Payment made hereunder). An insurer who would otherwise be
obligated to pay any claim shall not be relieved of the responsibility with
respect thereto, or, solely by virtue of the indemnification provisions hereof,
have any subrogation rights with respect thereto, it being expressly understood
and agreed that no insurer or any other third party shall be entitled to a
benefit they would not otherwise be entitled to receive in the absence of the
indemnification provisions hereof by virtue of the indemnification provisions
hereof.
IV. Procedures for Indemnification.
A. Third Party Claims. If a claim or demand is made against an
indemnified Party by any person who is not a party to this Agreement (a "Third
Party Claim") as to which such indemnified Party is entitled to indemnification
pursuant to this Agreement, such indemnified Party shall notify the indemnifying
Party in writing, and in reasonable detail, of the Third Party Claim promptly
(and in any event within 15 business days) after receipt by such indemnified
Party of written notice of the Third Party Claim; provided, however, that
failure to give such notification shall not affect the indemnification provided
hereunder except to the extent the indemnifying Party shall have been actually
prejudiced as a result of such failure (except that the indemnifying Party shall
not be liable for any expenses incurred during the period in which the
indemnified Party failed to give such notice). Thereafter, the indemnified
Party shall deliver to the indemnifying Party, promptly (and in any event within
15 business days) after the indemnified Party's receipt thereof, copies of all
notices and documents (including court papers) received by the indemnified Party
relating to the Third Party Claim.
If a Third Party Claim is made against an indemnified Party, the
indemnifying Party shall be entitled to participate in the defense thereof and,
if it so chooses and acknowledges in writing its obligation to indemnify the
indemnified Party therefor, to assume the defense thereof with counsel selected
by the indemnifying Party; provided, however, that such counsel is not
reasonably objected to by the indemnified Party. Should the indemnifying Party
so elect to assume the defense of a Third Party Claim, the indemnifying Party
shall not be liable to the indemnified Party for legal or other expenses
subsequently incurred by the indemnified Party in connection with the defense
thereof. If the indemnifying Party assumes such defense, the indemnified Party
shall have the right to participate in the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by the
indemnifying Party, it being understood that the indemnifying Party shall
control such defense. The indemnifying Party shall be liable for the fees and
expenses of counsel employed by the indemnified Party for any period during
which the indemnifying Party has failed to assume the defense thereof (other
than during the period prior to the time the indemnified Party shall have given
notice of the Third Party Claim as provided above). If the indemnifying Party
so elects to assume the defense of any Third Party Claim, the indemnified Party
shall cooperate with the indemnifying Party in the defense or prosecution
thereof.
If the indemnifying Party acknowledges in writing its obligation to
indemnify the indemnified Party for a Third Party Claim, then in no event will
the indemnified Party admit any liability with respect to, or settle, compromise
or discharge, any Third Party Claim without the indemnifying Party's prior
written consent; provided, however, that the indemnified Party shall have the
right to settle, compromise or discharge such Third Party Claim without the
consent of the indemnifying Party if the indemnified Party releases the
indemnifying Party from its indemnification obligation hereunder with respect to
such Third Party Claim and such settlement, compromise or discharge would not
otherwise adversely affect the indemnifying Party. If the indemnifying Party
acknowledges in writing its obligation to indemnify the indemnified Party for a
Third Party Claim, the indemnified Party will agree to any settlement,
compromise or discharge of a Third Party Claim that the indemnifying Party may
recommend and that by its terms obligates the indemnifying Party to pay the full
amount of the liability in connection with such Third Party Claim and releases
the indemnified Party completely in connection with such Third Party Claim and
that would not otherwise adversely affect the indemnified Party; provided,
however, that the indemnified Party may refuse to agree to any such settlement,
compromise or discharge if the indemnified Party agrees that the indemnifying
Party's indemnification obligation with respect to such Third Party Claim shall
not exceed the amount that would be required to be paid by or on behalf of the
indemnifying Party in connection with such settlement, compromise or discharge.
<PAGE>
Notwithstanding the foregoing, the indemnifying Party shall not be entitled
to assume the defense of any Third Party Claim (and shall be liable for the fees
and expenses of counsel incurred by the indemnified Party in defending such
Third Party Claim) if the Third Party Claim seeks an order, injunction or other
equitable relief or relief for other than money damages against the indemnified
Party which the indemnified Party reasonable determines, after conferring with
its counsel, cannot be separated from any related claim for money damages. If
such equitable relief or other relief portion of the Third Party Claim can be so
separated from that for money damages, the indemnifying Party shall be entitled
to assume the defense of the portion relating to money damages.
B. Indemnification Payments. Indemnification required by this Agreement,
shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or loss, liability,
claim, damages or expense is incurred.
C. Other Adjustments.
(1) The amount of any indemnification obligation with respect to any
Third Party Claim ("Indemnity Obligation") shall be (x) increased to take into
account any net tax cost actually incurred by the indemnified Party arising from
any payments received from the indemnifying Party (grossed up for such increase)
and (y) reduced to take into account any net tax benefit actually realized by
the indemnified Party arising from the incurrence or payment of any such
Indemnity Obligation. In computing the amount of such tax cost or tax benefit,
the indemnified Party shall be deemed to recognize all other items of income,
gain, loss, deduction or credit before recognizing any item arising from the
receipt of any payment with respect to an Indemnity Obligation or the incurrence
or payment of any Indemnity Obligation.
(2) In addition to any adjustments required pursuant to Article III
hereof or clause (1) of this paragraph C., if the amount of any Indemnity
Obligation shall, at any time subsequent to the payment required by this
Agreement, be reduced by recovery, settlement or otherwise, the amount of such
reduction, less any expenses incurred in connection therewith, shall promptly be
repaid by the indemnified Party to the indemnifying Party up to the aggregate
amount of any payments received from such Indemnifying Party pursuant to this
Agreement in respect of such Indemnity Obligation.
V. Consolidation, Merger, Transfer, or Lease. Neither Party shall consolidate
with or merge into any other person, or convey, transfer or lease its properties
and assets substantially as an entirety to any other person, and neither Party
shall permit any person to consolidate with or merge into it or convey, transfer
or lease its properties and assets substantially as an entirety to said Party
unless:
A. In any case in which either Party shall consolidate with or merge into
another person or convey, transfer or lease its properties and assets
substantially as an entirety to any person, the person formed by such
consolidation or into which said Party is merged or the person which acquires by
conveyance or transfer, or which leases the properties and assets of said Party
substantially as an entirety shall (i) be a corporation, (ii) be organized and
validly existing under the laws of the United States of America, any State
thereof or the District of Columbia and (iii) expressly assume, by an instrument
satisfactory to the other Party, each and every obligation of said Party to be
performed or observed hereunder;
B. In the case Primex is the Party involved, after giving effect to such
transaction, the person formed by such consolidation or into which Primex is
merged or the person which acquires by conveyance, transfer or lease the
properties and assets of Primex substantially as an entirety must have
consolidated stockholders' equity, as determined in accordance with generally
accepted accounting principles, at least equal to the consolidated stockholders'
equity of Primex immediately prior to the consummation of such transaction; and
C. Said Party shall have delivered to the other Party a Certificate
executed by its Chief Executive Officer and Chief Financial Officer stating that
such consolidation, merger, conveyance, transfer or lease comply with this
Article V and that all conditions precedent herein relating to such transaction
have been complied with.
VI. Notices. All notices and other communications hereunder shall be in
writing and hand delivered or mailed by registered or certified mail (return
receipt requested) or sent by any means of electronic message transmission with
delivery confirmed (by voice or otherwise) to the Parties at the following
addresses (or at such other addresses for a Party as shall be specified by like
notice) and will be deemed given on the date on which such notice is received:
To Olin Corporation:
501 Merritt 7
P.O. Box 4500
Norwalk, CT 06851
Attn: General Counsel
To Primex:
10101 Ninth Street North
St. Petersburg, FL 33716-3807
Attn: General Counsel
<PAGE>
VII. Dispute Resolution. In the event of a controversy, dispute or claim
arising out of, in connection with, or in relation to the interpretation,
performance, nonperformance, validity or breach of this Agreement or otherwise
arising out of, or in any way related to this Agreement, including, without
limitation, any claim based on contract, tort, statute or constitution
(collectively, "Agreement Disputes"), the General Counsels of the relevant
Parties or their designees shall negotiate in good faith for a reasonable period
of time to settle such Agreement Dispute. If after such reasonable period such
General Counsels or their designees are unable to settle such Agreement Dispute
(and in any event after 60 days have elapsed from the time the relevant Parties
began such negotiations), such Agreement Dispute shall be determined, at the
request of any relevant party, by arbitration conducted in St. Louis, Missouri
before and in accordance with the then-existing Rules for Commercial Arbitration
of the American Arbitration Association (the "Rules"), and any judgment or award
rendered by the arbitrator shall be final, binding and nonappealable (except
upon grounds specified in 9 U.S.C. 10(a) as in effect on the date hereof), and
judgment may be entered by any state or Federal court having jurisdiction
thereof in accordance with Section 9.19 hereof. Unless the arbitrator otherwise
determines, the pre-trial discovery of the then-existing Federal Rules of Civil
Procedure and the then-existing Rules 12, 13, and 13.1 of the Rules of the
United States District Court for the Southern District of Illinois shall apply
to any arbitration hereunder. Any controversy concerning whether an Agreement
Dispute is an arbitrable Agreement Dispute, whether arbitration has been waived,
whether an assignee of this Agreement is bound to arbitrate, or as to the
interpretation of enforceability of this Section VII shall be determined by the
arbitrator. The arbitrator shall be a retired or former judge of any United
States District Court or Court of Appeals or such other qualified person as the
relevant Parties may agree to designate, provided such individual has had
substantial professional experience with regard to settling commercial disputes.
The Parties intend that the provisions to arbitrate set forth herein be valid,
enforceable and irrevocable. The designation of a situs or a governing law for
this Agreement or the arbitration shall not be deemed an election to preclude
application of the Federal Arbitration Act, if it would be applicable. In his
award the arbitrator shall allocate, in his discretion, among the Parties to the
arbitration all costs of the arbitration, including, without limitation, the
fees and expenses of the arbitrator and reasonable attorneys' fees, costs and
expert witness expenses of the Parties. The undersigned agree to comply with
any award made in any such arbitration proceedings that has become final in
accordance with the Rules and agree to the entry of a judgment in any
jurisdiction upon any award rendered in such proceedings becoming final under
the Rules. The arbitrator shall be entitled, if appropriate, to award any
remedy in such proceedings, including, without limitation, monetary damages,
specific performance and all other forms of legal and equitable relief;
provided, however, the arbitrator shall not be entitled to award punitive
damages.
VIII. Consent to Jurisdiction. Without limiting the provisions of Section VII
hereof, each of the Parties irrevocably submits to the exclusive personal
jurisdiction and venue of (a) the Circuit Court of the Third Judicial Circuit,
Madison County, Illinois, and (b) the United States District Court for the
Southern District of Illinois for the purposes of any suit, action or other pro
ceeding arising out of this Agreement or any transaction contemplated hereby.
Each of the Parties agrees to commence any action, suit or proceeding relating
hereto either in the United States District Court for the Southern District of
Illinois or if such suit, action or other proceeding may not be brought in such
court for jurisdictional reasons, in the Circuit Court of the Third Judicial
Circuit, Madison County, Illinois. Each of the Parties further agrees that
service of any process, summons, notice or document by U.S. registered mail to
such Party's respective address set forth above shall be effective service of
process for any action, suit or proceeding in Illinois with respect to any
matters to which it has submitted to jurisdiction in this Section VIII. Each of
the Parties irrevocably and unconditionally waives any objection to the laying
of venue of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby in (i) the Circuit Court of the Third Judicial
Circuit, Madison County, Illinois, or (ii) the United States District Court for
the Southern District of Illinois, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
IX. Survival. All the indemnity obligations under this Agreement shall survive
indefinitely.
X. General.
A. Complete Agreement; Construction. This Agreement, including the
Exhibits, shall constitute the entire agreement between the Parties with respect
to the subject matter hereof and shall supersede all previous negotiations,
commitments and writings with respect to such subject matter. In the event of
any inconsistency between this Agreement and any Schedule hereto, the Schedule
shall prevail.
B. Amendments. This Agreement may not be modified or amended except by an
agreement in writing signed by the Parties.
C. Waiver. The failure of either Party to require strict performance by
the other Party of any provision in this Agreement will not waive or diminish
that Party's right to demand strict performance thereafter of that or any other
provision hereof.
<PAGE>
D. Severability. In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired thereby. The Parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions,
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
E. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Illinois, excluding its choice of law
provisions.
F. Successors and Assigns. The provisions of this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the Parties and
their respective successors and permitted assigns.
G. Attorney Fees. A Party in breach of this Agreement shall, on demand,
indemnify and hold harmless the other Parties hereto for and against all out-of-
pocket expenses, including, without limitation, legal fees, incurred by such
other Party by reason of the enforcement and protection of its rights under this
Agreement. The payment of such expenses is in addition to any other relief to
which such other Party may be entitled hereunder or otherwise.
H. Title and Headings. Titles and headings to sections herein are
inserted for the convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement.
I. Exhibits. The Exhibits shall be construed with and as an integral
part of this Agreement to the same extent as if the same had been set forth
verbatim herein.
IN WITNESS WHEREOF, this Agreement has been executed by the duly authorized
representatives of Olin and Primex as of the date first above written.
PRIMEX TECHNOLOGIES, INC. OLIN CORPORATION
By: ______________________ By: ________________________
Name: ____________________ Name: _______________________
Title: ______________________ Title: ________________________
Date: ______________________ Date: ________________________
EXHIBIT I
A. GENERAL LITIGATION AND CLAIMS
1. Weiser Security Services, Inc. vs. Olin Corporation (Pinellas County,
District Court), Case No. 94-6662-CO-41. This is a breach of contract action
brought by former contractor Weiser against Olin for the hiring of security
guards previously employed by Weiser in violation of non-compete covenants in
the contract.
2. Conco Claim. Conco, Inc. has submitted a claim against Olin in excess of
$400,000 for expenses incurred in producing subcontract metal ammunition cans to
defective government specifications.
3. Wharton Realty Associates, L.L.C. v. Biltmore Realty Co., Inc., Valentec
International, Inc. General Defense Corporation d/b/a Flinghbaugh Operations,
Olin Corporation, et. al. (Pending in Superior Court of New Jersey, Morris
County, Law Division) Docket No. L-3505-94. This is a suit by a former landlord
of GDC at Rockaway Industrial Complex in Wharton, New Jersey, where GDC leased a
building from 1979 to 1984, to recover the expense of remediating hydrocarbon
contamination around a heating oil tank near the building. Olin recently settled
this matter.
4. Iran BALL POWDER[R] Plant. (Potential Litigation) The Ministry of
Defense, Tehran, Iran, has requested arbitration of a dispute over U.S.
Government cancellation of a 1974 contract between MOD and Olin to construct a
BALL POWDER[R] plant in Iran. U.S. State Department regulations prohibit
performance of the contract by Olin.
5. Pease vs. OAC (Wrongful Termination, Age Discrimination & Damages).
Superior Court State of Washington, County of King. Damages not specified.
Plaintiff's counsel has notified OAC of his intent to voluntarily dismiss the
case "without prejudice". Plaintiff could refile anytime prior to May 1997.
6. Multi-year II Contract Defective Pricing Claim. Administrative Contracting
Officer. The claim amount is $600,000.00 which is to be negotiated. OAC has
agreed to adjust the contract price. The amount has not been negotiated.
Currently there is no outside counsel representing Olin.
7. Threatened Litigation (McCann). McCann was a short service employee hired
in 1992 as the Environmental Health and Safety Coordinator. In late 1994 his
performance deteriorated, and the company decided to terminate him. After the
decision but before the implementation, McCann came into the office and
<PAGE>
announced that he had cancer which required treatment, for which he needed to be
on disability leave. Upon his return to work in January, 1995, he was
terminated. He was offered additional severance and other benefits, in return
for which he signed a release. His attorney now claims that he was terminated
for his involvement in a co-worker's worker's compensation claim for $60,000.
9. Eddie Hill vs. KASL Enterprises et al. Plaintiff alleges he lost his hand
in a trash compactor made by General Defense (Autopak). Autopak was sold by
General Defense before it was acquired by Olin. The case is pending in Wayne
County (Detroit), Michigan.
10. Stewart vs. Olin. The Illinois Department of Human Rights has filed a
Complaint with the Illinois Human Rights Commission on behalf of Donald Stewart,
a current employee at Marion, alleging discrimination with respect to terms and
conditions of employment by Stewart's foreman.
11. Benedicta Lusk vs. Olin Corporation. Lusk is a female management-level
employee at Downey (former 30mm Program Manager) who has filed a charge with
EEO.
12. George Alcantara v. Olin Corporation. Alcantara a former hourly
maintenance employee, has filed a charge with the California Department of Fair
Employment and Housing, alleging national origin discrimination in connection
with his recent layoff from the Downey facility. Alcantara is Mexican-American.
13. Western Processing Site, Washington. Olin Aerospace has obligations to
make payments toward remediation pursuant to a 1986 Consent Decree.
14. Aqua-Tech Environmental, Inc. Hamilton Technology, Inc., a former
subsidiary of General Defense Corporation, is a PRP at this site in South
Carolina.
15. Maxey Flats. Hamilton Watch Company (HWC) is a PRP at the Maxey Flats
Nuclear Disposal Site in Flemming County, Kentucky. Hamilton Watch Company was
sold to SSIH of Bienne, Switzerland by General Defense Corporation (GDC) in 1973
prior to Olin's acquisition of GDC in 1988. SSIH is believed to have assumed
all of HWC's liabilities.
B. CURRENT SITES AND BUSINESSES
1. St. Petersburg, Florida. (Corporate headquarters and systems management
operation for large caliber ammunition.)
2. Red Lion, Pennsylvania. (Manufacturing and research and development
facility for large caliber ammunition metal and composite parts.)
3. Redmond, Washington. (Design, manufacturing and test facility for space,
solid propellant and electronic products, office facilities and research and
development laboratory.)
4. St. Marks, Florida. (Manufacturing facility for Ball Powder propellant and
Research and development laboratory.)
5. Marion, Illinois. (Loading, assembly and packing of medium caliber
ammunition, Manufacturing and test facility for solid propellant products, and
demilitarization services Research and development laboratory.)
6. San Leandro, California. (Pulsed power research and development laboratory,
and test facilities; pulsed power and advanced warhead engineering and
management.)
7. Downey, California. (Manufacturing facility for medium caliber ammunition
components and air dispensed munitions components. System management and
research and development.)
8. Moses Lake, Washington. (Manufacturing and test facility for solid
propellant products.)
9. Camden, Arkansas, (Test range, support for the ammunition business.)
10. Tracy California. (Manufacturing and test facility for advanced anti-armor
warhead systems.)
11. Lucerne, Switzerland (Design, development and testing of anti-armor warhead
systems for the Swiss Government.)
EXHIBIT II
Ordnance-Related
Identified Discontinued Businesses And Former Plant Sites
East Petersburg, PA (former Hamilton Technologies, Inc. (HTI) plant site) [a/k/a
"East Petersburg - GDC"]
Lancaster, PA (former HTI plant site) [a/k/a "Stoney Battery Road - HTI"]
Lancaster, PA (former HTI plant site) [a/k/a "Clock Towers"]
Largo, FL (former GDC plant site) [a/k/a "Largo - GDC"]
<PAGE>
Socorro, NM (testing of DU projectiles)
Wharton, NJ (research and development facility) [a/k/a "Valentec Site"]
Aerospace-Related
Discontinued Businesses And Former Plant Sites
Bellevue, WA (construction and management of energy conservation systems)
[Trans Energy Systems, Inc.]
Bellevue, WA (former offices) [Pacific Electro Dynamics, Inc.]
Manhattan Beach, CA (offices for classified project) [Martin & Stern, Inc.]
Netherlands (offices)
Palo Alto, CA (offices and light manufacturing) [Larse Corporation]
Preston, WA (explosives manufacturing and test site) [Explosives Corporation of
America]
Reston (and surrounding area), VA (offices) [Martin & Stern, Inc.]
Santa Clara, CA (offices and light manufacturing) [Larse Corporation]
Seattle, WA (former offices) [Rocket Research Company]
Various gas well leases in West Virginia and Ohio (servicing at gas well sites)
[Petroleum Technology Corporation]
Wadsworth, OH (metal parts manufacturing)
Any sites or businesses discovered by Primex or Olin after the Effective Time
that are related solely to the businesses comprising Primex on the Effective
Time.
EXHIBIT III
1. Facility Lease, dated December 29, 1986, between The Connecticut National
Bank, as Trustee, and Physics International Company, as previously amended
and otherwise amended from time to time.
2. Ground Sublease, dated December 29, 1986, between The Connecticut National
Bank, as Trustee, and Physics International Company, as amended from time to
time.
3. Agreement of Guaranty No. 1, dated December 29, 1986, between Olin
Corporation and The Connecticut National Bank, as Trustee, as amended from
time to time.
4. Agreement of Guaranty No. 2, dated December 29, 1986, between Olin
Corporation and The Connecticut National Bank, as Trustee, as previously
amended and otherwise amended from time to time.
EXHIBIT IV
Belgium Legal Matter. The Company is involved in a contract dispute with
the Belgium Ministry of Defense related to a 1985 sale of tank ammunition. The
Belgium Ministry of Defense has alleged improprieties committed by the Belgium
national who represented Olin in the transaction. Based on these allegations,
the Belgium Ministry of Defense withheld final payment on the contract and the
Company agreed to extend a letter of credit related to the contract guarantee
pending a decision by the Belgium courts of the underlying contract dispute.
The trial court ruled against the Company. The decision has been appealed. In
the event that the trial court's decision is sustained, the resultant liability
is estimated at approximately $4.5 million.
<PAGE>
EXHIBIT 10.7
COVENANT NOT TO COMPETE AGREEMENT
---------------------------------
This Covenant Not to Compete Agreement ("Agreement") entered into as of the
first day of January, 1997 ("Effective Date"), by and between PRIMEX
TECHNOLOGIES, INC., a Virginia corporation with its principal offices at 10101
Ninth Street North, St. Petersburg, Florida 33716-3807 ("Primex"); and OLIN
CORPORATION, a Virginia corporation with offices at 427 North Shamrock, East
Alton, Illinois 62024 ("Olin") (Primex and Olin each being referred to as a
"Party" and collectively referred to as the "Parties").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Olin and Primex have entered into that certain Distribution Agreement
dated as of concerning the spin-off of Primex from Olin
-------------------
(the "Distribution Agreement");
WHEREAS, prior to entering into the Distribution Agreement, the Parties and
their predecessor businesses freely shared information concerning their
respective businesses, including but not limited to the research and development
of ammunition products and components, as these businesses were part of a single
corporate entity and parent-subsidiary corporate structure;
WHEREAS, Olin and Primex each have a substantial amount of know-how and other
knowledge concerning the operations of the business of the other entity;
WHEREAS, to allow each of Olin and Primex (and their respective shareholders) to
obtain the full value of its respective rights under the Distribution Agreement,
Primex and Olin desire to enter into and execute this Agreement concerning
Medium & Large Caliber Ammunition, Medium & Large Caliber Components, and Small
Caliber Ammunition & Components, as such terms are defined below, and not
concerning the many other products the Parties may make or have made.
NOW, THEREFORE, in consideration of the above, and the mutual promises set forth
below, Olin and Primex agree as follows:
1. DEFINITIONS.
-----------
(a) "Ammunition" is defined as cartridges, shotshells, projectiles, and
blanks, capable of being fired from a firearm, artillery piece, cannon,
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<PAGE>
industrial gun or other gun (collectively "Gun") by a propellant charge in
such Gun or cartridge (including but not limited to armor-piercing rounds,
trace rounds, incendiary rounds and/or explosive rounds), but shall not
include (i) unpropelled bombs, and (ii) rockets, mortars and other
projectiles substantially propelled by propellant contained within the
projectile.
(b) "Business Of" shall mean the manufacture, fabrication, marketing,
sale or distribution of.
(c) "Canister Powder" shall mean propellant powder, packaged for ultimate
sale to consumers in containers of twenty pounds of less.
(d) "Engaging In" shall mean directly or indirectly to engage in, own,
manage, participate in, or otherwise obtain an interest in (as owner,
stockholder, agent, partner, representative, director, consultant, or
otherwise).
(e) "GOCO Operation" shall mean any activity conducted by a Party hereto
pursuant to an agreement existing on or prior to the date first above
written (or an extension, renewal or other continuation of such an
agreement concerning the same facility as the prior agreement) with the
federal government of the United States of America by which such party
operates or maintains an Ammunition or Ammunition components (including
powder) production facility for and on behalf of such government; provided,
however, that such term shall not include any activity conducted at such
facility that is not conducted by the respective party on behalf of such
government pursuant to such agreement (such as, but not limited to,
activity conducted by a respective party for its own account at such
facility, whether pursuant to a facilities use agreement with the
government or otherwise).
(f) "Medium & Large Caliber Ammunition & Components" shall mean (i) fully-
loaded rounds of Ammunition having a diameter of 20 millimeters or larger,
other than shotshells and (ii) components of such fully-loaded rounds.
(g) "Nonlethal Ammunition" shall mean Ammunition that is designed and
intended to minimize or avoid any injury, damage or death resulting from
its use or otherwise intended to be less-than-lethal, including but not
limited to having the effect of slowing or temporarily incapacitating an
aggressor through means intended to minimize or avoid permanent physical
damage to the aggressor. The term "Nonlethal Ammunition" does not include:
(i) blanks, and (ii) any Ammunition currently produced by the parties
hereto, nor any developments therefrom
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<PAGE>
based on techniques historically used in the Ammunition industry for
delivering lethal or injurious force to an aggressor through the use of a
metal projectile.
(h) "OCSW and OICW" shall mean the objective crew served weapon and the
objective individual combat weapon, respectively, being developed by Primex
for the U.S. Army.
(i) "OCSW and OICW Ammunition" shall mean Ammunition used in OCSW and OICW
objective individual combat weapon, respectively, being developed by Primex
for the U.S. Army.
(j) "Pension Plan" shall mean, with respect to a Party and its affiliates,
any "employee pension benefit plan" or "pension plan", in each case as
defined in Title 1, subtitle A, Sec. 3(2) of the Employee Retirement Income
Security Act of 1974, as amended, of such Party and its affiliates.
(k) "Small Caliber Ammunition & Components" shall mean (i) shotshells of
any gauge, (ii) fully-loaded rounds of Ammunition, other than Medium &
Large Caliber Ammunition, (iii) components of such shotshells and fully-
loaded rounds, other than propellant powder; and (iv) ejection cartridges
(also known as "ARDs") for aircraft stores ejection.
(l) "Territory" shall mean the entire world.
2. AGREEMENT NOT TO COMPETE.
------------------------
During the term of this Agreement:
(a) Olin shall not Engage In, without the prior written consent of
Primex, anywhere within the Territory, the Business Of Medium &
Large Caliber Ammunition & Components or propellant powder;
provided, however, that nothing herein shall prevent Olin from (i)
Engaging In the Business Of individual component primers, fuses,
cups, propellants containing or derived from HAN, shellcases, and
cones for shaped charges prior to their assembly into Ammunition,
including Medium & Large Caliber Ammunition, and/or oil well
penetrator cones; and/or (ii) Engaging In the marketing, selling,
and distributing of Canister Powder; and/or (iii) Engaging In
research and development of propellant powder as part
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<PAGE>
of the development, testing, trial production, prototype
construction, and similar activities associated with the Business
Of Small Caliber Ammunition & Components; and/or (iv) Engaging In
any of its GOCO Operations, including the Lake City Army
Ammunition Plant located in Independence, Missouri, the Badger
Army Ammunition Plant located in Baraboo, Wisconsin and the
Ravenna Army Arsenal Plant located in Ravenna, Ohio; and/or (v)
Engaging In the Business Of Nonlethal Ammunition; and/or (vi)
Engaging In the Business Of high explosives and other primer
material, and/or (vi) making an investment through a Pension Plan
of Olin or any of its subsidiaries.
(b) Primex shall not directly or indirectly Engage In, without the
prior written consent of Olin, anywhere within the Territory, the
Business Of Small Caliber Ammunition & Components; provided,
--------
however, that nothing herein shall prevent Primex from (i)
Engaging In the development, testing, trial production, prototype
construction and similar activities associated with, but not the
selling of, OCSW and OICW Ammunition; and/or (ii) Engaging In the
Business Of Nonlethal Ammunition; and/or (iii) making an
investment through a Pension Plan of Primex or any of its
subsidiaries.
(c) Nothing herein shall prevent Olin and Primex from mutually
agreeing to develop or manufacture Ammunition or components
cooperatively, whether through subcontracting, work share
arrangements, or joint development projects.
3. TERM.
----
The term of this Agreement shall be for a five (5) year period commencing
on the Effective Date.
4. REASONABLENESS.
--------------
The parties hereto agree that the terms contained in this Agreement are
reasonable in all respects. In the event that a court determines that any
of the terms or provisions of this Agreement are unreasonable, the court
may limit the application of any
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<PAGE>
provision or term, or modify any provision or term, and proceed to enforce
the Agreement as so limited or modified.
5. SEVERABILITY.
------------
The parties hereto agree that each and every paragraph, sentence, term and
provision of this Agreement shall be considered severable in that, in the
event that a court finds any paragraph, sentence, term or provision to be
invalid or unenforceable, the validity and enforceability, operation or
effect of the remaining paragraphs, sentences, terms or provisions shall
not be affected, and this Agreement shall be construed in all respects as
if the invalid or unenforceable matter had been omitted. The parties shall
endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions, the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions. The parties intend the covenants of Section 2 to
be a series of separate covenants, one for each county of each and every
state, province, territory or political jurisdiction of the Territory and
one for each month of the period specified above. If, in any arbitration or
judicial proceeding, an arbitrator or a court shall refuse to enforce any
one or more of such separate covenants because the total time and/or the
geographic boundaries thereof are deemed to be excessive or unreasonable,
then it is the intent of the parties hereto that such covenants, which
would otherwise be unenforceable due to such excessive or unreasonable
period of time and/or geography, be enforced for such lesser period of time
and/or for such more limited geographic area as shall be deemed reasonable
and not excessive by such arbitrator or court.
6. SPECIFIC PERFORMANCE.
--------------------
Each of the parties hereto acknowledges that there is no adequate remedy at
law for failure by such parties to comply with the provisions of this
Agreement and that such failure would cause immediate harm that would not
be adequately compensable in damages, and therefore agree that their
agreements contained herein may be specifically enforced without the
requirement of posting a bond or other security, in addition to all other
remedies available to the parties hereto under this Agreement.
7. DISPUTE RESOLUTION. In the event of a controversy, dispute or claim
------------------
arising out of, in connection with, or in relation to the
-5-
<PAGE>
interpretation, performance, nonperformance, validity or breach of this
Agreement or otherwise arising out of, or in any way related to this
Agreement, including, without limitation, any claim based on contract,
tort, statute or constitution (collectively, "Agreement Disputes"), the
General Counsels of the relevant Parties or their designees shall negotiate
in good faith for a reasonable period of time to settle such Agreement
Dispute. If after such reasonable period such General Counsels or their
designees are unable to settle such Agreement Dispute (and in any event
after 60 days have elapsed from the time the relevant parties began such
negotiations), such Agreement Dispute shall be determined, at the request
of any relevant party, by arbitration conducted in St. Louis, Missouri
before and in accordance with the then-existing Rules for Commercial
Arbitration of the American Arbitration Association (the "Rules"), and any
judgment or award rendered by the arbitrator shall be final, binding and
nonappealable (except upon grounds specified in 9 U.S.C. 10(a) as in effect
on the date hereof), and judgment may be entered by any state or Federal
court having jurisdiction thereof in accordance with Section 9.19 hereof.
Unless the arbitrator otherwise determines, the pre-trial discovery of the
then-existing Federal Rules of Civil Procedure and the then-existing Rules
12, 13, and 13.1 of the Rules of the United States District Court for the
Southern District of Illinois shall apply to any arbitration hereunder. Any
controversy concerning whether an Agreement Dispute is an arbitrable
Agreement Dispute, whether arbitration has been waived, whether an assignee
of this Agreement is bound to arbitrate, or as to the interpretation of
enforceability of this Section 7 shall be determined by the arbitrator. The
arbitrator shall be a retired or former judge of any United States District
Court or Court of Appeals or such other qualified person as the relevant
parties may agree to designate, provided such individual has had
substantial professional experience with regard to settling commercial
disputes. The parties intend that the provisions to arbitrate set forth
herein be valid, enforceable and irrevocable. The designation of a situs or
a governing law for this Agreement or the arbitration shall not be deemed
an election to preclude application of the Federal Arbitration Act, if it
would be applicable. In his award the arbitrator shall allocate, in his
discretion, among the parties to the arbitration all costs of the
arbitration, including, without limitation, the fees and expenses of the
arbitrator and reasonable attorneys' fees, costs and expert witness
expenses of the parties. The undersigned agree to comply with any award
made in any such arbitration proceedings that has become final in
accordance with the Rules and agree to the entry of a judgment in any
jurisdiction upon any award rendered in such
-6-
<PAGE>
proceedings becoming final under the Rules. The arbitrator shall be
entitled, if appropriate, to award any remedy in such proceedings,
including, without limitation, monetary damages, specific performance and
all other forms of legal and equitable relief; provided, however, the
-------- -------
arbitrator shall not be entitled to award punitive damages.
8. Attorney Fees. A Party in breach of this Agreement shall, on demand,
-------------
indemnify and hold harmless the other parties hereto for and against all
out-of-pocket expenses, including, without limitation, legal fees, incurred
by such other Party by reason of the enforcement and protection of its
rights under this Agreement. The payment of such expenses is in addition to
any other relief to which such other Party may be entitled hereunder or
otherwise.
9. NOTICES.
-------
All notices and other communications hereunder shall be in writing and hand
delivered or mailed by registered or certified mail (return receipt
requested) or sent by any means of electronic message transmission with
delivery confirmed (by voice or otherwise) to the Parties at the following
addresses (or at such other addresses for a Party as shall be specified by
like notice) and will be deemed given on the date on which such notice is
received:
To Olin Corporation:
501 Merritt 7
P.O. Box 4500
Norwalk, CT 06851
Attn: General Counsel
To Primex:
10101 Ninth Street North
St. Petersburg, FL 33716-3807
Attn: General Counsel
-7-
<PAGE>
10. SUCCESSORS.
----------
This Agreement shall be binding upon and shall inure to the benefit of and
be enforceable by the Parties and their respective successors and permitted
assigns.
11. APPLICABLE LAW.
--------------
This Agreement shall be governed by and construed in accordance with the
laws of the State of Illinois, without giving effect to its conflict of
laws provisions.
12. CONSENT TO JURISDICTION.
-----------------------
Without limiting the provisions of Section 7 hereof, each of the parties
irrevocably submits to the exclusive personal jurisdiction and venue of (a)
the Circuit Court of the Third Judicial Circuit, Madison County, Illinois,
and (b) the United States District Court for the Southern District of
Illinois for the purposes of any suit, action or other proceeding arising
out of this Agreement or any transaction contemplated hereby. Each of the
parties agrees to commence any action, suit or proceeding relating hereto
either in the United States District Court for the Southern District of
Illinois or if such suit, action or other proceeding may not be brought in
such court for jurisdictional reasons, in the Circuit Court of the Third
Judicial Circuit, Madison County, Illinois. Each of the parties further
agrees that service of any process, summons, notice or document by U.S.
registered mail to such party's respective address set forth above shall be
effective service of process for any action, suit or proceeding in Illinois
with respect to any matters to which it has submitted to jurisdiction in
this Section 12. Each of the parties irrevocably and unconditionally waives
any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or the transactions contemplated hereby in
(i) the Circuit Court of the Third Judicial Circuit, Madison County,
Illinois, or (ii) the United States District Court for the Southern
District of Illinois, and hereby further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such
action, suit or proceeding brought in any such court has been brought in an
inconvenient forum.
-8-
<PAGE>
13. MISCELLANEOUS.
(a) AMENDMENTS. This Agreement may not be modified or amended except by an
----------
agreement in writing signed by the Parties.
(b) WAIVERS. The failure of either Party to require strict performance by
-------
the other party of any provision in this Agreement will not waive or
diminish that Party's right to demand strict performance thereafter of
that or any other provision hereof.
(c) TITLE AND HEADINGS. Titles and headings to sections herein are
------------------
inserted for the convenience of reference only and are not intended to
be a part of or to affect the meaning or interpretation of this
Agreement.
(d) THIRD PARTY BENEFICIARIES. This Agreement is solely for the benefit of
-------------------------
the parties hereto and their respective Subsidiaries and Affiliates
and should not be deemed to confer upon third parties any remedy,
claim, liability, reimbursement, claim of action or other right in
excess of those existing without reference to this Agreement.
(e) COMPLETE AGREEMENT; CONSTRUCTION. This Agreement shall constitute the
--------------------------------
entire agreement between the Parties with respect to the subject
matter hereof and shall supersede all previous negotiations,
commitments and writings with respect to such subject matter.
-9-
<PAGE>
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
and year first above written.
PRIMEX TECHNOLOGIES, INC.
By:
---------------------------
Title:
-------------------------
OLIN CORPORATION
By:
---------------------------
Title:
-------------------------
-10-
<PAGE>
EXHIBIT 10.8
ASSIGNMENT OF RAUFOSS AGREEMENTS TO PRIMEX AND
----------------------------------------------
SUBLICENSE TO OLIN FOR SMALL CALIBER AMMUNITION
-----------------------------------------------
THIS AGREEMENT is made and entered into as of this 1st day of January, 1997 by
and between:
OLIN CORPORATION, having a place of business at 427 North Shamrock Street, East
Alton, Illinois 62024, (hereinafter referred to as "OLIN")
AND
PRIMEX TECHNOLOGIES, INC., having a place of business at 10101 Ninth Street
North, St. Petersburg, Florida 33716-3807 (hereinafter referred to as "PRIMEX")
(hereinafter collectively the "PARTIES " and each individually a "PARTY").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, OLIN and PRIMEX have entered into that certain Distribution Agreement
dated as of January 1, 1996 __________________ concerning the spin-off of PRIMEX
from OLIN (the "Distribution Agreement");
WHEREAS, prior to entering into the Distribution Agreement, OLIN and Raufoss
A/S, a corporation organized under the laws of Norway, (formerly A/S Raufoss
Ammunisjonsfabrikker) entered into a number of agreements relating to
multipurpose ammunition, which prior to the spin-off of PRIMEX have been
exploited by PRIMEX and OLIN's Winchester Division as those businesses were part
of a single corporate entity and parent-subsidiary corporate structure;
WHEREAS, Raufoss A/S and Olin Corporation entered into a technology and patent
license agreement effective as of May 1, 1984 (hereinafter defined as the
"RAUFOSS LICENSE") enabling Olin to manufacture and sell ammunition in a
licensed territory employing Raufoss' Multipurpose Concept ("MPC") technology
and patents;
WHEREAS, the RAUFOSS LICENSE has been amended pursuant to Amendments No. 1 and
No. 2 and by an Addendum No. 1 to Amendment No. 2;
WHEREAS, on December 15, 1992 Olin Corporation, acting through its Ordnance
Division, and Raufoss A/S entered into a TEAMING AGREEMENT (hereinafter defined
as the "TEAMING AGREEMENT") providing for cooperation in the manufacture and
sale of certain multipurpose ammunition under the RAUFOSS LICENSE and/or a
license granted by Raufoss A/S to the U. S. Government relating to such
multipurpose ammunition;
<PAGE>
WHEREAS, the TEAMING AGREEMENT has been amended through the addition of Annex II
entered into on June 16, 1993 and Annex III fully signed as of Oct. 3, 1994;
WHEREAS, PRIMEX desires OLIN to assign to PRIMEX the RAUFOSS LICENSE as amended
and the TEAMING AGREEMENT as amended, (hereinafter defined as the "RAUFOSS
AGREEMENTS") subject to the grant by PRIMEX to OLIN of an exclusive sublicense
under the RAUFOSS AGREEMENTS for small caliber ammunition of less than 20
millimeters in diameter and subject to the consent of Raufoss A/S to such
assignment and sublicense;
WHEREAS, to allow each of OLIN and PRIMEX (and their respective shareholders) to
obtain the full value of its respective rights under the Distribution Agreement,
PRIMEX and OLIN desire to enter into and execute this AGREEMENT concerning the
assignment of the RAUFOSS AGREEMENTS and the sublicensing of OLIN thereunder;
NOW, THEREFORE, in consideration of the above, and the mutual promises set forth
below, OLIN and PRIMEX agree as follows:
1. DEFINITIONS
- -- -----------
Whenever used in this AGREEMENT, the following terms shall have the following
meanings, on the understanding that words in the singular include the plural and
vice-versa. Headings and subheadings are used for convenience only and are not
intended as limitations in the AGREEMENT or for use in interpreting the
AGREEMENT.
1.1 AFFILIATE
- --- ---------
"AFFILIATE" shall mean, when used with respect to a specified PERSON, another
PERSON that directly, or indirectly through one or more intermediaries, CONTROLS
or is CONTROLLED by or is under common CONTROL with the PERSON specified.
1.2 AGREEMENT
- --- ---------
"AGREEMENT" shall mean this agreement as amended and/or supplemented from time
to time, including all the EXHIBITS attached hereto.
1.3 CONFIDENTIAL INFORMATION
- --- ------------------------
"CONFIDENTIAL INFORMATION" shall mean any and all information disclosed to the
receiving PARTY by the disclosing PARTY pursuant to the AGREEMENT, in any form
such as, but not limited to, visual, oral, written, graphic, electronic or model
form, including but not limited to know-how and trade secrets relating to the
LICENSED
- 2 -
<PAGE>
TECHNOLOGY, whether patented or not and whether in the laboratory, pilot plant
or commercial plant stage (including drawings, operating conditions,
specifications, safety instructions, recommendations for effluent disposal,
emergency instructions, etc.) owned or controlled by a PARTY.
1.4 CONTROL
- --- -------
"CONTROL' shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise, and the
terms "CONTROLLING" and "CONTROLLED" shall have meanings correlative thereto.
1.5 EFFECTIVE DATE
- --- --------------
"EFFECTIVE DATE" shall mean the Effective Time specified in the Distribution
Agreement or the date Raufoss A/S executes the Consent Agreement set forth in
Exhibit A, whichever is later.
1.6 IMPROVEMENTS
- --- ------------
"IMPROVEMENTS" shall have the meaning ascribed thereto in the RAUFOSS LICENSE as
amended.
1.7 INTELLECTUAL PROPERTY
- --- ---------------------
"INTELLECTUAL PROPERTY" shall mean all CONFIDENTIAL INFORMATION and all classes
or types of patents, utility models, design patents, copyrights and applications
for the aforementioned, of all countries of the world.
1.8 LICENSED PRODUCTS
- --- -----------------
"LICENSED PRODUCTS" shall have the meaning as set forth in the RAUFOSS
AGREEMENTS.
1.9 LICENSED TECHNOLOGY
- --- -------------------
"LICENSED TECHNOLOGY" shall have the meaning ascribed thereto in the RAUFOSS
LICENSE as amended.
1.10 MEDIUM & LARGE CALIBER PRODUCTS
- ---- -------------------------------
"MEDIUM & LARGE CALIBER PRODUCTS" shall mean LICENSED PRODUCTS having a diameter
of 20 millimeters or more.
- 3 -
<PAGE>
1.11 OCSW & OICW AMMUNITION
- ---- ----------------------
"OCSW AND OICW AMMUNITION" shall mean AMMUNITION used in objective crew served
weapon (OCSW) and objective individual combat weapon (OICW), respectively, being
developed by PRIMEX for the U.S. Army.
1.12 PERSON
- ---- ------
"PERSON" shall mean any natural person, corporation, business trust, joint
venture, association, company, partnership or government, or any agency or
political sub-division thereof.
1.13 RAUFOSS AGREEMENTS
- ---- ------------------
"RAUFOSS AGREEMENTS" shall mean the RAUFOSS LICENSE and the TEAMING AGREEMENT,
including without limitation, those agreements and amendments thereto as set
forth in Exhibit B and any future agreements or amendments relating to Licensed
Products entered into by Raufoss A/S and PRIMEX and/or OLIN during the Term.
The RAUFOSS AGREEMENTS are specifically incorporated by reference herein and
made a part of this AGREEMENT.
1.14 RAUFOSS LICENSE
- ---- ---------------
"RAUFOSS LICENSE" shall mean the Licensing Agreement between A/S Raufoss
Ammunisjonsfabrikker (now Raufoss A/S) and Olin Corporation, Winchester Group
(now Olin Corporation, Winchester Division) effective as of May 1, 1984, as well
as any amendments thereto during the Term. Copies of the RAUFOSS LICENSE and
any amendments thereto as of the Effective Date are attached hereto as Exhibit
C.
1.15 SMALL CALIBER PRODUCTS
- ---- ----------------------
"SMALL CALIBER PRODUCTS" shall mean LICENSED PRODUCTS having a diameter of less
than 20 millimeters.
1.16 TEAMING AGREEMENT
- ---- -----------------
"TEAMING AGREEMENT" shall mean the TEAMING AGREEMENT between Raufoss A/S and
Olin Corporation acting through its Defense Products Division ( now Ordnance
Division) entered into on December 15, 1992, as well as any amendments or
annexes thereto during the Term. Copies of the TEAMING AGREEMENT and any
amendments or annexes thereto as of the Effective Date are attached hereto as
Exhibit D.
- 4 -
<PAGE>
1.17 TERM
- ---- ----
"TERM" shall mean the period of time during which the AGREEMENT shall be in full
force and effect pursuant to ARTICLE 6.
2. ASSIGNMENT OF INTELLECTUAL PROPERTY
- -- -----------------------------------
2.1 ASSIGNMENT
- --- ----------
Subject to the execution by Raufoss A/S of the Consent Agreement set forth in
Exhibit A, effective as of the EFFECTIVE DATE, OLIN assigns and transfers to
PRIMEX all of its right, title and interest in and to the RAUFOSS AGREEMENTS in
force as of the EFFECTIVE DATE.
2.2 ACCEPTANCE OF ASSIGNMENT
- --- ------------------------
PRIMEX agrees to accept the assignment pursuant to Section 2.1 and to be bound
on or after the EFFECTIVE DATE to all the terms and conditions of the assigned
RAUFOSS AGREEMENTS in the place of OLIN.
2.3 DISCLAIMER
- --- ----------
OLIN CORPORATION MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH
RESPECT TO THE RAUFOSS AGREEMENTS ASSIGNED HEREBY, INCLUDING WITHOUT LIMITATION
AS TO VALIDITY, ENFORCEABILITY OR FITNESS FOR ANY PARTICULAR USE OR PURPOSE.
3. LICENSES
- -- --------
3.1 LICENSE TO OLIN
- --- ---------------
Subject to the execution by Raufoss A/S of the Consent Agreement set forth in
Exhibit A, upon the EFFECTIVE DATE, PRIMEX and its AFFILIATES hereby grant and
agree to grant to OLIN an irrevocable, worldwide, sole and exclusive sublicense,
with the right to further sublicense subject to the terms of the RAUFOSS
AGREEMENTS, to utilize all of PRIMEX's rights and licenses under the RAUFOSS
AGREEMENTS with respect to the LICENSED TECHNOLOGY, for the making, having made,
use, offering for sale, selling and import of SMALL CALIBER PRODUCTS. Pursuant
to the license provided pursuant to this Section 3.1 OLIN shall have the
exclusive right for a period of five (5) years from the EFFECTIVE DATEas between
OLIN and PRIMEX to make SMALL CALIBER PRODUCTS, except for engaging In the
development, testing, trial production, prototype construction and similar
activities associated with OCSE & OICW
- 5 -
<PAGE>
AMMUNITION, under the RAUFOSS AGREEMENTS, but solely to the extent of PRIMEX's
or its AFFILIATES' rights and licenses under the RAUFOSS AGREEMENTS.
3.2 LICENSE TO PRIMEX
- --- -----------------
Upon the EFFECTIVE DATE, OLIN and its AFFILIATES hereby grant and agree to grant
to PRIMEX an irrevocable, worldwide, sole and exclusive sublicense, with the
right to sublicense subject to the terms of the RAUFOSS AGREEMENTS, to utilize
all of OLIN's rights and licenses under RAUFOSS AGREEMENTS with respect to the
LICENSED TECHNOLOGY entered into by OLIN or its AFFILIATES after the EFFECTIVE
DATE, for the making, having made, use, offering for sale, selling and import of
MEDIUM & LARGE CALIBER PRODUCTS. Pursuant to the license of this Section 3.2
PRIMEX shall have the exclusive right as between OLIN and PRIMEX to make MEDIUM
& LARGE CALIBER PRODUCTS under such RAUFOSS AGREEMENTS, but solely to the extent
of OLIN's or its AFFILIATES', rights and licenses under such RAUFOSS AGREEMENTS.
Upon the EFFECTIVE DATE, OLIN and its AFFILIATES hereby grant and agree to grant
to PRIMEX an irrevocable, worldwide, non-exclusive sublicense, with the right to
sublicense subject to the terms of the RAUFOSS AGREEMENTS, to utilize all of
OLIN's rights and licenses under RAUFOSS AGREEMENTS with respect to the LICENSED
TECHNOLOGY entered into by OLIN or its AFFILIATES after the EFFECTIVE DATE, for
engaging In the development, testing, trial production, prototype construction
and similar activities associated with, but for a period of five (5) years from
the EFFECTIVE DATE not the selling of, OCSW AND OICW AMMUNITION.
3.3 LICENSE OF IMPROVEMENTS
- --- -----------------------
Each PARTY agrees to grant to Raufoss A/S a license relating to such PARTY's
IMPROVEMENTS to the extent required by the RAUFOSS AGREEMENTS.
3.4 SUBLICENSE TERMS
- --- ----------------
Any sublicense granted by a sublicensee pursuant to this ARTICLE 3 shall be
consistent with and subject to the terms and conditions of this AGREEMENT and
the RAUFOSS AGREEMENTS applicable thereto.
3.5 ROYALTIES
- --- ---------
If a licensor under this ARTICLE 3 is obligated to pay royalties pursuant to a
RAUFOSS AGREEMENT with respect to a license or right granted herein, then the
licensee shall be obligated to pay such royalties to its licensor as a condition
of its license.
- 6 -
<PAGE>
3.6 COMPLIANCE WITH RAUFOSS AGREEMENTS
- --- ----------------------------------
A licensee under this ARTICLE 3 in addition to being bound by and abiding by all
the terms and conditions of this AGREEMENT agrees to be bound by and abide by
all the terms and conditions of the RAUFOSS AGREEMENTS applicable to such
licensee's activities pursuant to this AGREEMENT. In the event that a
licensee's obligation to its licensor under this AGREEMENT conflicts with such
licensee's obligation under a RAUFOSS AGREEMENT, the obligations of the RAUFOSS
AGREEMENT shall control. Without limitation, a licensee under this ARTICLE 3
shall provide to its licensor such reports and payments as required by the
RAUFOSS AGREEMENTS applicable to such licensee's activities pursuant to this
AGREEMENT, in a timely manner, which will reasonably permit its licensor to
comply with the applicable RAUFOSS AGREEMENTS.
3.7 WARRANTY
- --- --------
The PARTIES warrant that as of the EFFECTIVE DATE they have not granted and will
not grant any rights or licenses which will conflict with the rights and
licenses set forth in this AGREEMENT. The PARTIES also warrant that as of the
EFFECTIVE DATE they have the right to grant the rights and licenses set forth in
this Agreement. NO OTHER WARRANTY, OF ANY KIND, WHETHER EXPRESS OR IMPLIED, IS
GIVEN BY ONE PARTY TO THE OTHER PARTY AND IN PARTICULAR THE PARTIES DISCLAIM ANY
WARRANTY THAT THEIR RESPECTIVE INTELLECTUAL PROPERTY ARE VALID OR ENFORCEABLE OR
USEFUL FOR ANY PURPOSE.
3.8 EXPRESS LICENSES ONLY
- --- ---------------------
Except for licenses expressly granted pursuant to ARTICLE 3, no licenses are
granted hereby, and nothing in the AGREEMENT shall be construed as, or result
in, conveying by implication, waiver or estoppel any right or license to either
PARTY or to any third party except Raufoss A/S pursuant to the RAUFOSS
AGREEMENTS.
3.9 FUTURE AGREEMENTS
- --- -----------------
Each PARTY agrees not to enter into future agreements which will conflict with
the rights of the other PARTY hereunder without the consent of the other PARTY,
which consent shall not be unreasonably withheld.
4. INTELLECTUAL PROPERTY
- -- ---------------------
4.1 OWNERSHIP
- --- ---------
INTELLECTUAL PROPERTY arising out of this AGREEMENT shall be owned as follows:
(I) INTELLECTUAL PROPERTY developed solely by OLIN employees shall be owned by
OLIN; (ii) INTELLECTUAL PROPERTY developed solely by employees of
- 7 -
<PAGE>
PRIMEX shall be owned by PRIMEX; and (iii) INTELLECTUAL PROPERTY developed
jointly by employees of PRIMEX and OLIN shall be jointly owned by OLIN and
PRIMEX.
4.2 APPLICATION FOR PATENT RIGHTS
- --- -----------------------------
The right to apply for and obtain INTELLECTUAL PROPERTY arising out of this
AGREEMENT with respect to a solely owned invention under Section 4.1 shall
belong to and be vested in the PARTY entitled to ownership of such invention.
Any and all costs and expenses incurred for applying for, obtaining and
maintaining such patent rights shall be borne by the owner thereof. Each PARTY
shall, at its own expense, secure the execution by its employees of any
documents and any necessary government licenses required to obtain such
INTELLECTUAL PROPERTY and the appropriate assignment thereof. The PARTIES shall
mutually agree upon which PARTY shall have the right to apply, in the names of
both OLIN and PRIMEX, for INTELLECTUAL PROPERTY developed jointly by employees
of both OLIN and PRIMEX. The PARTIES shall equally share the cost of making
such joint application and maintaining such joint INTELLECTUAL PROPERTY rights.
Should either PARTY decline to join in such joint application or to bear its
equal share of such costs, either for preparation, fees or maintenance, in the
United States of America or in any other country, the PARTY declining to join in
such joint application or to bear its share of the costs shall be deemed to have
abandoned its rights to such INTELLECTUAL PROPERTY and shall transfer its
interest therein to the other PARTY.
4.3 ABANDONING JOINTLY OWNED INTELLECTUAL PROPERTY
- --- ----------------------------------------------
If either PARTY wishes to abandon in any country any jointly owned INTELLECTUAL
PROPERTY right or application therefor arising out of this AGREEMENT, it shall
not do so without first notifying the other PARTY and giving it a reasonable
opportunity to take over the prosecution or maintenance of such INTELLECTUAL
PROPERTY right at its own expense. If the other PARTY agrees to take over the
prosecution and maintenance of such INTELLECTUAL PROPERTY the abandoning PARTY
shall transfer its interest therein to such other PARTY.
5. SECRECY
- -- -------
5.1 SECRECY OBLIGATION
- --- ------------------
In addition to their obligations under the RAUFOSS AGREEMENTS each of the
PARTIES agrees to keep confidential and neither disclose to others nor use
except as permitted herein any CONFIDENTIAL INFORMATION received from the other
PARTY pursuant to the AGREEMENT.
- 8 -
<PAGE>
5.2 LIMITS ON DISCLOSURE
- --- --------------------
The receiving PARTY shall treat such CONFIDENTIAL INFORMATION in the same manner
and with the same degree of care as it uses with respect to its own CONFIDENTIAL
INFORMATION of like nature and shall disclose CONFIDENTIAL INFORMATION of the
other PARTY only to its employees who have a need to know it, provided that such
employees are bound to respect all secrecy obligations provided for in the
AGREEMENT.
5.3 EXCEPTIONS
- --- ----------
The obligation set forth in Section 5.1 shall not apply with respect to any
CONFIDENTIAL INFORMATION which:
5.3.1 PUBLIC KNOWLEDGE
Is generally available to the public or subsequently becomes generally available
to the public through no breach by the receiving PARTY of secrecy obligations
under this Agreement or prior agreements between the PARTIES concerning the
CONFIDENTIAL INFORMATION; or
5.3.2 PRIOR POSSESSION
The receiving PARTY can establish by competent evidence was in its possession at
the time of disclosure and was not acquired in confidence directly or
indirectly, from the disclosing PARTY; or
5.3.3 RECEIVED FROM THIRD PARTY
Is received from a third party who is legally free to disclose such CONFIDENTIAL
INFORMATION and who did not receive such CONFIDENTIAL INFORMATION in confidence
from the disclosing PARTY; or
5.3.4 APPROVED FOR DISCLOSURE
Is approved in writing for release by the disclosing PARTY; or
5.3.5 SUCCESSOR IN INTEREST
Is disclosed to any permitted assignee of the AGREEMENT, provided that such
assignee agrees to be bound by the provisions of the AGREEMENT; or
- 9 -
<PAGE>
5.3.6 INDEPENDENTLY DEVELOPED
Is independently developed by the receiving PARTY without reference to the
CONFIDENTIAL INFORMATION received from the disclosing PARTY.
5.4 PERMITTED DISCLOSURES
- --- ---------------------
The provisions of Section 5.1 notwithstanding, in exercising the rights granted
under the AGREEMENT, any PARTY may disclose CONFIDENTIAL INFORMATION to others
for purpose of licensing (as permitted hereunder), design, engineering,
construction or operation of facilities permitted using the disclosing PARTY's
licensed TECHNOLOGY; or obtaining or giving consulting services under a license
agreement permitted hereunder, provided that any third party to which such
CONFIDENTIAL INFORMATION is disclosed shall have first entered into a written
secrecy and non-use obligation at least as stringent as that imposed on the
PARTIES pursuant to the AGREEMENT.
5.5 SUBPOENA OR DEMAND
- --- ------------------
The provisions of Section 5.1 notwithstanding, a PARTY may disclose CONFIDENTIAL
INFORMATION pursuant to a subpoena or demand for production of documents in
connection with any suit or arbitration proceeding, any administrative procedure
or before a governmental or administrative agency or instrumentality thereof or
any legislative hearing or other similar proceeding, provided that the receiving
PARTY shall promptly notify the disclosing PARTY of the subpoena or demand and
provided further that in such instances, the PARTIES use their best efforts to
maintain the confidential nature of the CONFIDENTIAL INFORMATION by protective
order or other means.
6. DURATION AND TERMINATION
- -- ------------------------
6.1 TERM OF AGREEMENT
- --- -----------------
This AGREEMENT shall become effective on the EFFECTIVE DATE, and shall continue
in full force and effect until the expiration of the last to expire of the
RAUFOSS AGREEMENTS. After expiration of the AGREEMENT pursuant to this Section
6.1 the rights and obligations set forth in Section 3.6 and ARTICLES 4, 5 and 10
shall continue in full force and effect until fully discharged. Except as
otherwise required by the RAUFOSS AGREEMENTS upon expiration pursuant to this
Section 6.1 both PARTIES shall have the right to use and license, subject to the
surviving obligations, but without accounting to the other, the LICENSED
TECHNOLOGY and IMPROVEMENTS licensed hereunder, whether owned exclusively or
jointly by either PARTY.
- 10 -
<PAGE>
6.2 TERMINATION FOR MATERIAL BREACH
- --- -------------------------------
If either PARTY commits a material breach with respect to any of their
obligations hereunder, the other PARTY may give written notice to the allegedly
breaching PARTY specifying the alleged material breach and an intention to
terminate the AGREEMENT. The PARTY charged with the alleged material breach
shall have sixty (60) days from the date of receipt of such written notice to
cure the alleged material breach. If the alleged material breach is not cured
within said sixty (60)-day period, the other PARTY may terminate the AGREEMENT
by sending a written notice of termination to the breaching PARTY and in this
event, neither PARTY waives any legal rights to recover damages resulting from
the termination of the AGREEMENT.
6.3 INSOLVENCY
- --- ----------
In the event that either PARTY shall: (I) become insolvent or go into
liquidation or receivership or be admitted to the benefits of any procedure for
the settlement or postponement of debts or be declared bankrupt; or (ii) becomes
party to dissolution proceedings; then the AGREEMENT and any and all obligations
assumed hereby (except as otherwise expressly provided for herein) may be
terminated by the other PARTY, if permitted by law, by giving written notice of
such termination on a date specified therein.
6.4 OBLIGATIONS SURVIVING TERMINATION FOR FAULT
- --- -------------------------------------------
Upon termination pursuant to Sections 6.2 or 6.3, the obligations of each PARTY
to the other shall cease except, the obligations set forth in Section 3.6 and
ARTICLES 4, 5 and 10 shall continue in full force and effect until completely
discharged.
7. FORCE MAJEURE
- -- -------------
7.1 ACTS CONSTITUTING FORCE MAJEURE
- --- -------------------------------
Neither PARTY shall be liable to the other arising out of a delay in its
performance of this Agreement arising from causes beyond its reasonable control.
Without limiting the generality of the foregoing, such events include any act of
God; accident; explosion; fire; earthquake; flood; strikes; labor disputes;
riots; sabotage; embargo; equipment failure; federal, state, or local legal
restriction or limitation; failure or delay of transportation; shortage of, or
inability to obtain, raw materials, supplies, equipment, fuel, electricity, or
labor. Neither PARTY shall be required to resolve labor disputes or disputes
with suppliers of raw material, supplies, equipment, fuel, or electricity, but
shall use commercially reasonable efforts to seek alternative sources to the
extent practicable.
- 11 -
<PAGE>
7.2 NOTICE REQUIREMENT
- --- ------------------
When circumstances occur which delay the performance of either PARTY under this
Agreement, whether or not such circumstances are excused pursuant to Section 8.1
above, said PARTY shall, when it first becomes aware of such circumstances,
promptly notify (or, if the circumstances occur on a holiday or weekend, on the
first succeeding business day) the other PARTY, by facsimile or by telephone
confirmed in writing within two (2) business days in the case of oral notice.
Within ten (10) business days of the date when either PARTY first becomes aware
of the event which it contends is responsible for the delay, it shall supply to
the other PARTY in writing the reason(s) for and anticipated duration of such
delay, the measures taken and to be taken to prevent or minimize the delay, and
the timetable for the implementation of such measures.
8. GUARANTEES, LIABILITIES AND INDEMNITIES
- -- ---------------------------------------
8.1 LAWFUL POSSESSION
- --- -----------------
Each PARTY represents that to the best of its knowledge and belief, it will be
in the lawful possession of any CONFIDENTIAL INFORMATION when disclosed by it
pursuant to the AGREEMENT and that the disclosure of said CONFIDENTIAL
INFORMATION shall not in any way violate any agreement to hold such CONFIDENTIAL
INFORMATION in confidence.
8.2 DISCLAIMER
- --- ----------
Neither PARTY shall be liable to the other for indirect, special or
consequential damages arising out of this AGREEMENT or any use of CONFIDENTIAL
INFORMATION or INTELLECTUAL PROPERTY rights obtained by it from the other PARTY
hereunder.
9. NOTICES
- -- -------
Notices or requests to be given or made hereunder shall be delivered in person
or sent by registered mail or telefax or telex acknowledged by the operator of
the addressee at the following addresses or other addresses that each PARTY may
from time to time designate
(a) for PRIMEX:
PRIMEX TECHNOLOGIES, INC.
10101 Ninth Street North
St. Petersburg, Florida 33716-3807
- 12 -
<PAGE>
ATTENTION:Corporate Secretary
Tel: (813)578-1116
Fax: (813)578-8795
(b) for OLIN:
OLIN CORPORATION
501 Merritt Seven
Norwalk, Connecticut 06856-4500
Attention: Corporate Secretary
Tel: (203) 356-3126
Fax: (203) 356-2011
10. EXPORTATION CONTROL
- --- -------------------
Each PARTY agrees not to export or reexport, or cause to be exported, any
CONFIDENTIAL INFORMATION or LICENSED TECHNOLOGY furnished hereunder by the other
PARTY or the equipment constructed on the basis of such CONFIDENTIAL
INFORMATION, or the products manufactured with such CONFIDENTIAL INFORMATION or
LICENSED TECHNOLOGY to any country to which, under the laws of the country of
origin of the CONFIDENTIAL INFORMATION or LICENSED TECHNOLOGY, it is or may be
prohibited from exporting such CONFIDENTIAL INFORMATION or LICENSED TECHNOLOGY
or the direct product thereof.
11. ASSIGNMENT
- --- ----------
The AGREEMENT shall not be assigned by either PARTY except as permitted by the
RAUFOSS AGREEMENTS.
12. MISCELLANEOUS
- --- -------------
12.1 ENTIRE AGREEMENT
- ---- ----------------
The AGREEMENT embodies the entire understanding of the PARTIES. No amendment or
modification of the AGREEMENT shall be valid or binding upon the PARTIES unless
it is in writing and signed by the respective duly authorized officers of the
PARTIES.
12.2 PARTIES ARE INDEPENDENT
- ---- -----------------------
The AGREEMENT does not and shall not be deemed to make either PARTY the agent,
legal representative or partner of the other PARTY for any purpose whatsoever,
and
- 13 -
<PAGE>
neither PARTY shall have the right or authority to assume or create any
obligation or responsibility whatsoever, expressed or implied, on behalf of or
in the name of the other PARTY or to bind the other PARTY in any respect
whatsoever.
12.3 WAIVER
- ---- ------
The failure of either PARTY at any time to require performance by the other
PARTY of any provision hereof shall in no way affect the full right to require
such performance within a reasonable time or thereafter the performance of that
and all other provisions, nor shall the waiver of any succeeding breach of such
provision or any other provision operate as a waiver of the provision itself.
12.4 SEVERABILITY
- ---- ------------
The invalidity or unenforceability of any one or more of the provisions of the
AGREEMENT shall not affect the validity or enforceability of the remaining
provisions.
12.5 GOVERNING LAW
- ---- -------------
This Agreement shall be construed and governed, in all respects, by the
law of the State of [Illinois] applicable to contracts made and to be
performed in that state without reference to any provisions relating to
conflicts of law.
12.6 JURISDICTION
- ---- ------------
Each PARTY hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any [Illinois] State court or
Federal court of the United States of America sitting anywhere within a radius
of 50 miles from East Alton, [Illinois], and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
PARTIES hereby irrevocably and unconditionally agrees that all claims in respect
of any such action or proceeding may be heard and determined in such [Illinois]
State or, to the extent permitted by law, in such Federal court. Each of the
PARTIES hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
12.7 VENUE
- ---- -----
Each PARTY hereby irrevocably and unconditionally waives, to the fullest extent
it may legally and effectively do so, any objection that it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement in any [Illinois] State court or such Federal court
located in the State of [Illinois]. Each of the PARTIES hereto hereby
irrevocably waives, to the fullest extent
- 14 -
<PAGE>
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.
12.8 SERVICE OF PROCESS
- ---- ------------------
Each Party to this Agreement irrevocably consents to service of process in the
manner provided for notices in ARTICLE 9 hereof. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.
13. SETTLEMENT OF DISPUTES
- --- ----------------------
In the event of any disputes arising out of or in connection with the execution,
interpretation, performance or nonperformance of this AGREEMENT, except for
disputes relating to infringement, validity or enforceability of INTELLECTUAL
PROPERTY, PRIMEX and OLIN shall use the following procedure prior to either
PARTY pursuing other available legal remedies:
13.1 ALTERNATIVE DISPUTE RESOLUTION
- ---- ------------------------------
Upon signing of this Agreement each PARTY will designate one representative
("Representative") for the purpose of resolving disputes which may arise from
time to time. Upon a dispute arising, either or both Representatives may
request in writing a conference with the other. If so requested, the conference
shall occur within ten (10) days of the initial written request and shall be
held via telephone or at East Alton, Illinois, or elsewhere, at the option of
the Representatives. The purpose and scope of the conference shall be limited
to issues related to resolving the dispute. At the conference, each
Representative, or his or her designee, shall use best efforts to attempt to
resolve the dispute. If the dispute has not been settled within thirty (30)
days of the first meeting of the Representatives, the parties shall establish a
Management Appeal Board ("MAB") within ten (10) days of receipt of a request by
either PARTY to set up an MAB. The MAB shall consist of two (2) members of
each respective PARTY's management. The President of OLIN shall appoint two
members to represent OLIN and the President of PRIMEX shall appoint two members
to represent PRIMEX. The sole purpose of MAB shall be to resolve any dispute
over which the Representatives failed to resolve. The MAB members shall be
persons other than the Representatives. The MAB shall meet at East Alton,
Illinois or otherwise confer to resolve the dispute by good faith negotiations,
which may include presentations by the Representatives or others.
13.2 ARBITRATION
- ---- -----------
In the event the parties are unable to resolve their disputes after availing
themselves of the processes set forth in Section 13.1 above for a period of
ninety (90) days, such disputes, shall be solely and finally settled by three
arbitrators in accordance with the
- 15 -
<PAGE>
Commercial Arbitration Rules of the AAA (the "Arbitration Rules"). The PARTY
electing arbitration shall so notify the other PARTY in writing in accordance
with the Arbitration Rules, and such notice shall be accompanied by the name of
the arbitrator selected by the PARTY serving the notice. The second arbitrator
shall be chosen by the other PARTY, and a neutral arbitrator shall be chosen by
the two arbitrators so selected. If a PARTY fails to select an arbitrator or to
advise the other PARTY of its selection within thirty (30) days after receipt by
such a PARTY of the notice of the intent to arbitrate, the second arbitrator
shall be selected by the AAA. If the third arbitrator shall not have been
selected within thirty (30) days after the selection of the second arbitrator,
the appointment shall be made by the AAA. All such proceedings shall be
conducted in New York, New York. The arbitrator shall make detailed findings of
fact and law in writing in support of the decision of the arbitrator panel, and
is empowered to award reimbursement of attorneys' fees and other costs of
arbitration to the prevailing PARTY, in such manner as the arbitrator panel
shall deem appropriate. The provisions of this Section 13.2 shall not be deemed
to preclude any PARTY hereto from seeking preliminary injunctive relief to
protect or enforce its rights hereunder, or to prohibit any court from making
preliminary findings of fact in connection with granting or denying such
preliminary injunctive relief, or to preclude any PARTY hereto from seeking
permanent injunctive or other equitable relief after and in accordance with the
decision of the arbitrator panel. Whether any claim or controversy is arbitrable
or litigable shall be determined solely by the arbitrator panel pursuant to the
provisions of this Section 13.2. Any monetary award of the arbitrators panel
shall include interest from the date of any breach or any violation of this
Agreement. The arbitrators shall fix an appropriate rate of interest from the
date of the breach or other violation to the date when the award is paid in
full. The parties agree that judgment on the arbitration award may be entered in
any court having jurisdiction over the parties or their assets.
13.3 CONTINUING OBLIGATIONS
- ---- ----------------------
It is expressly agreed that the failure of the parties to resolve a dispute on
any issue to be resolved hereunder shall not relieve either PARTY from any
obligation set forth in this Agreement. In addition, notwithstanding the
pendency of any such dispute, neither PARTY will be excused of its obligations
hereunder to cooperate with the other to effectuate the purposes of this
Agreement.
13.4 COUNTERPARTS
- ---- ------------
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but all of this shall constitute one and
the same instrument.
- 16 -
<PAGE>
IN WITNESS WHEREOF the PARTIES hereto have caused this AGREEMENT to be executed
in duplicate as of the date first written above.
OLIN CORPORATION PRIMEX TECHNOLOGIES, INC.
Name___________________ Name ___________________
Title__________________ Title___________________
Date__________________ Date___________________
- 17 -
<PAGE>
PRIMEX TECHNOLOGIES, INC.
STOCK PLAN FOR NONEMPLOYEE DIRECTORS
1. Purpose. The purpose of the Primex Technologies, Inc. Stock Plan for
Nonemployee Directors is to promote the long-term growth and financial success
of Primex Technologies, Inc. by attracting and retaining Nonemployee Directors
of outstanding ability and by promoting a greater identity of interest between
its Nonemployee Directors and its shareholders.
2. Definitions. The following capitalized terms utilized herein have the
following meanings:
"Annual Retainer" means the annual retainer as determined by the Board
from time to time to be paid to Nonemployee Directors for services as a member
thereof.
"Board" means the Board of Directors of the Company.
"Cash Account" means an account established under the Plan for a
Nonemployee Director to which cash meeting fees and retainers have been or are
to be credited in the form of cash.
"Change in Control" means any of the following: (i) the Company ceases
to be, directly or indirectly, owned by at least 1,000 shareholders after
December 31, 1996; (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 1934 Act, other than the Company, Olin, a
majority-owned subsidiary of the Company, or an employee benefit plan (or
related trust) of the Company, Olin or such subsidiary, become(s) the
"beneficial owner" (as defined in Rule 13d-3 under the 1934 Act) of 15% or more
of the then outstanding voting stock of the Company; or (iii) during any period
of two consecutive years after 1996, individuals who at the beginning of such
period constitute the Board (together with any new director whose election by
the Board or whose nomination for election by the Company'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.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Committee" means Compensation and Nominating Committee (or its
successor) of the Board.
"Common Stock" means the Company's Common Stock, $1.00 par value per
share.
"Company" means Primex Technologies, Inc., a Virginia corporation, and
any successor.
"Credit Date" means the first day of each calendar quarter, beginning
with January 1, 1997.
"Excess Retainer" means fifty percent (50%) of the Annual Retainer;
provided that in the event the Annual Retainer is prorated to reflect that such
Nonemployee Director did not serve as such for the full calendar year, the
Excess Retainer shall be similarly prorated.
"Fair Market Value" means, with respect to a date, on a per share
basis, the average closing bid and asked "regular way" prices of a share of
Common Stock reported on the NASDAQ National Market System on such date or if
the NASDAQ National Market System is closed on such date, the next preceding
date on which it is open; provided if in 1997 the Common Stock is not trading
"regular way," on the next day following that it does trade "regular way."
"l934 Act" means the Securities Exchange Act of 1934, as amended from
time to time.
"Nonemployee Director" means a member of the Board who is not an
employee of the Company or any subsidiary thereof.
"Olin" means Olin Corporation, a Virginia corporation, and its
successors.
<PAGE>
"Plan" means the Primex Technologies, Inc. Stock Plan for Nonemployee
Directors.
"Retirement Date" means the date the Nonemployee Director ceases to be
a member of the Board.
"Stock Account" means an account established under the Plan for a
Nonemployee Director to which shares of Common Stock have been or are to be
credited in the form of stock.
3. Term. The Plan shall become effective January 1, 1997 provided the
shareholder of the Company approves the Plan prior to such date. Once
effective, the Plan shall operate and shall remain in effect until terminated by
action of the Board as provided in Section 9 hereof.
4. Administration. Full power and authority to construe, interpret and
administer the Plan shall be vested in the Committee. Decisions of the
Committee shall be final, conclusive and binding upon all parties. The Board
has all the power and authority of the Committee and may act in lieu of the
Committee at any time.
5. Participation. All Nonemployee Directors shall participate in the
Plan.
6. Grants and Deferrals.
(a) Annual Stock Grant. Subject to the terms and conditions of the
Plan, on each January 1 of each year beginning with 1997, each Nonemployee
Director who is such on such date shall receive that number of shares (rounded
up to the next whole share in the event of a fractional share) of Common Stock
having an aggregate Fair Market Value on such date of the sum of (1) $5,000 and
(2) 50% of the Annual Retainer. (Such $5,000 plus 50% of the Annual Retainer
being the "Annual Stock Amount".) In the event a person becomes a Nonemployee
Director subsequent to January 1 of a calendar year and has not received the
Annual Stock Amount for such calendar year, such Nonemployee Director, on the
first day of the calendar month following his or her becoming such, shall
receive that number of shares (rounded up to the next whole share in the event
of a fractional share) of Common Stock having an aggregate Fair Market Value on
such first day of an amount equal to one-twelfth of the Annual Stock Amount for
such year times the number of whole calendar months remaining in such calendar
year following the date he or she becomes a Nonemployee Director. The portion
of the Annual Stock Amount that represents one-half of the Annual Retainer shall
be in lieu of the cash payment of one-half of the Annual Retainer and not in
addition to the Annual Retainer (or in the case of a Nonemployee Director who
become such during a calendar year such similar proportion). A Nonemployee
Director may elect to defer receipt of all or any portion of such shares in
accordance with Section 6(d). Except with respect to any shares the director
has so elected to defer, certificates representing such shares shall be
delivered to such Nonemployee Director as soon as practicable.
(b) Election to Receive Meeting Fees and Excess Retainer in Stock in
Lieu of Cash. Subject to the terms and conditions of the Plan, a Nonemployee
Director may elect to receive all or a portion of the director meeting fees
established by the Board and the Excess Retainer his or her service as a
director for the calendar year in the form of shares of Common Stock. Such
election shall be made in accordance with Section 6(d). The number of shares
(rounded up to the next whole share in the event of a fractional share) payable
to a Nonemployee Director who so elects to receive all or a portion of the
Excess Retainer in the form of shares for such year shall be based upon the
aggregate Fair Market Value of the Common Stock on January 1 of such calendar
year (or in the case of a Nonemployee Director who becomes such after January 1,
on the first day of the calendar month following the day such new Nonemployee
Director became such) of the amount of Excess Retainer which has been elected to
be paid in shares. The number of shares (rounded up to the next whole share in
the event of a fractional share) payable to a Nonemployee Director who so elects
to receive meeting fees for a calendar quarter in the form of shares shall be
based upon the aggregate Fair Market Value of the Common Stock on the Credit
Date following such quarter of the director meeting fees which have been earned
in such quarter and which are elected to be paid in shares. Except with respect
to any shares the director has elected to defer, certificates representing such
shares shall be delivered to the Nonemployee Director as soon as practicable.
(c) Deferrals of Meeting Fees and Cash Retainer. Subject to the
terms and conditions of the Plan, a Nonemployee Director may elect to defer all
or a portion of the shares payable under Section 6(b) and all or a portion of
the director meeting fees and Excess Retainer payable in cash by the Company for
<PAGE>
his or her service as a director for the calendar year. Such election shall be
made in accordance with Section 6(d). A Nonemployee Director who elects to so
defer shall have any deferred shares deferred in the form of shares of Common
Stock and any deferred cash fees and retainer deferred in the form of cash.
(d) Elections.
(1) Deferrals. All elections under Sections 6(a), 6(b) and 6(c)
shall (A) be made in writing and delivered to the Secretary of the Company and
(B) be irrevocable. All elections for payments or deferrals shall be made on or
before December 31 of the year prior to the year in which the director's fees
or Annual Retainer, as the case may be, are to be earned (or, in the case of an
individual who becomes a Nonemployee Director during a calendar year, no later
than 30 days after the individual becomes a Nonemployee Director). Deferral
elections shall also (A) specify the portions (in 25% increments) to be deferred
and (B) specify the future date or dates on which deferred amounts are to be
paid or the future event or events upon the occurrence of which the deferred
amounts are to be paid and the method of payment (lump sum or annual
installments of approximately equal amounts (up to 10)). In the event of an
election under Section 6(b) for director meeting fees or Excess Retainer to be
paid in shares of Common Stock, the election shall specify the portion (in 25%
increments) to be so paid. Any change with respect to the terms of his or her
election for (A) the payment or investment of director meeting fees or Excess
Retainer under Section 6(b) from shares to cash or vice versa and (B) the amount
of any deferral in the form of Common Stock shall be effective upon receipt by
the Secretary of the Company. Any such change shall be effective only with
respect to future earnings.
(2) Stock Account. On the Credit Date, a Nonemployee Director
who has elected to defer shares under Sections 6(a) or 6(c) shall receive a
credit to his or her Stock Account. The amount of such credit shall be the
number of shares so deferred (rounded to the next whole share in the event of a
fractional share).
(3) Cash Account. On the Credit Date or in the case of the
Excess Retainer, on the day on which the Nonemployee Director is entitled to
receive such Excess Retainer, a Nonemployee Director who has elected to defer
cash fees and/or the Excess Retainer under Section 6(c) in the form of cash
shall receive a credit to his or her Cash Account. The amount of the credit
shall be the dollar amount of such Director's meeting fees earned during the
immediately preceding quarterly period or the amount of the Excess Retainer to
be paid for the calendar year, as the case may be, and in each case, specified
for deferral in cash.
(4) Dividends and Interest. Each time a cash dividend is paid
on the Common Stock, a Nonemployee Director who has shares credited to his or
her Stock Account shall receive a credit for such dividends on the dividend
payment date to his or her Stock Account. The amount of the dividend credit
shall be the number of shares (rounded to the nearest one-hundredth of a share)
determined by multiplying the dividend amount per share by the number of shares
credited to such director's Stock Account as of the record date for the dividend
and dividing the product by the Fair Market Value per share on the dividend
payment date. The Cash Account of a Nonemployee Director shall be credited on
each Credit Date with interest on such account's balance at the end of the
preceding quarter, payable at a rate equal to the pre-tax cost of borrowing of
the Company on such date as determined from time to time by the Chief Financial
Officer, Controller or Treasurer of the Company.
(5) Payouts. Cash Accounts will be paid out in cash and Stock
Accounts shall be paid out in shares of Common Stock. Cash amounts credited to
a Cash Account and certificates representing shares credited to a Stock Account
shall be delivered to the Nonemployee Director as soon as practicable following
the termination of the deferral and consistent therewith.
(e) No Stock Rights. The deferral of shares of Common Stock into a
Stock Account shall confer no rights upon such Nonemployee Director, as a
shareholder of the Company or otherwise, with respect to the shares held in such
Stock Account, but shall confer only the right to receive such shares credited
as and when provided herein.
(f) Change in Control. Notwithstanding anything to the contrary in
this Plan or any election, in the event a Change in Control occurs, amounts and
shares credited to Cash Accounts and Stock Accounts shall be promptly
distributed to Nonemployee Directors.
(g) Beneficiaries. A Nonemployee Director may designate at any time
<PAGE>
and from time to time a beneficiary for his or her Stock and Cash Accounts in
the event his or her Stock or Cash Account may be paid out following his or her
death. Such designation shall be in writing and received by the Company prior
to the death to be effective.
(7) Limitations and Conditions.
(a) Total Number of Shares. The total number of shares of Common
Stock that may be issued to Nonemployee Directors under the Plan is 50,000.
Such total number of shares may consist, in whole or in part, of authorized but
unissued shares. The foregoing number may be increased or decreased by the
events set forth in Section 8 below. No fractional shares shall be issued
hereunder. In the event a Nonemployee Director is entitled to a fractional
share, such share amount shall be rounded upward to the next whole share amount.
(b) No Additional Rights. Nothing contained herein shall be deemed
to create a right in any Nonemployee Director to remain a member of the Board,
to be nominated for reelection or to be reelected as such or, after ceasing to
be such a member, to receive any cash or shares of Common Stock under the Plan
which are not already credited to his or her accounts.
8. Stock Adjustments. In the event of any merger, consolidation, stock or
other non-cash dividend, extraordinary cash dividend, split-up, spin-off,
combination or exchange of shares or recapitalization or change in
capitalization, or any other similar corporate event, the Committee may make
such adjustments in (i) the aggregate number of shares of Common Stock that may
be issued under the Plan as set forth in Section 7(a) and the number of shares
that may be issued to a Nonemployee Director with respect to any year as set
forth in Section 6(a), (ii) the class of shares that may be issued under the
Plan, (iii) the number of shares credited to a Stock Account and (iv) the amount
and type of payment that may be made in respect of unpaid dividends on shares of
Common Stock whose receipt has been deferred pursuant to Section 6(d), as the
Committee shall deem appropriate in the circumstances. The determination by the
Committee as to the terms of any of the foregoing adjustments shall be final,
conclusive and binding for all purposes of the Plan.
9. Amendment and Termination. This Plan may be amended, suspended or
terminated by action of the Board; provided, however, no termination or
modification of the Plan shall adversely affect the rights of any Nonemployee
Director with respect to any amounts otherwise payable or credited to his or her
Cash Account or Stock Account.
10. Nonassignability. No right to receive any payments under the Plan or
any amounts credited to a Nonemployee Director's Cash or Stock Account shall be
assignable or transferable by such Nonemployee Director other than by will or
the laws of descent and distribution or pursuant to a domestic relations order.
The designation of a beneficiary under Section 6(,h) by a Nonemployee Director
does not constitute a transfer.
11. Unsecured Obligation. Benefits payable under this Plan shall be an
unsecured obligation of the Company.
<PAGE>
EXHIBIT 10.10
1996 LONG TERM INCENTIVE PLAN OF PRIMEX TECHNOLOGIES, INC.
Section 1. Purpose
-------
The purposes of the 1996 Long Term Incentive Plan of Primex Technologies, Inc.
(the "Plan") are to encourage selected salaried employees of Primex
Technologies, Inc. (together with any successor thereto, "Primex") and its
Affiliates (as defined below) to acquire a proprietary interest in Primex's
growth and performance, to generate an increased incentive to contribute to
Primex's future success and to enhance the ability of Primex and its Affiliates
to attract and retain qualified individuals.
Section 2. Definitions
-----------
As used in the Plan:
(a) "Affiliate" means (i) any entity that, directly or through one or more
intermediaries, is controlled by Primex and (ii) any entity in which Primex
has a significant equity interest as determined by the Committee.
(b) "Award" means any Option, Stock Appreciation Right, Restricted Stock,
Restricted Stock Unit, Performance Award, Dividend Equivalent or Other
Stock-Based Award granted under the Plan.
(c) "Award Agreement" means any written agreement or other instrument or
document evidencing an Award granted under the Plan. The terms of any plan
or guideline adopted by the Board or the Committee and applicable to an
Award shall be deemed incorporated in and a part of the related Award
Agreement.
(d) "Board" means the Board of Directors of Primex.
(e) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(f) "Committee" means a committee of the Board designated by the Board to
administer the Plan and composed of not fewer than two directors each of
whom shall be a Non-Employee Director as defined by Rule 16b-3 .
(g) "Dividend Equivalent" means any right granted under Section 6(f)(iv) of the
Plan.
(h) "Fair Market Value" means, with respect to any property (including, without
limitation, Shares or other securities), the fair market value of such
property determined by such methods or procedures as shall be established
from time to time by the Committee.
(i) "Incentive Stock Option" means an option to purchase Shares granted under
Section 6(a) of the Plan that is intended to meet the requirements of
Section 422 of the Code or a successor provision thereto.
<PAGE>
-2-
(j) "Non-Qualified Stock Option" means an option to purchase Shares granted
under Section 6(a) of the Plan that is not intended to be an Incentive Stock
Option.
(k) "Olin" means Olin Corporation, a Virginia corporation, and its successors.
(l) "Option" means an Incentive Stock Option or a Non-Qualified Stock Option.
(m) "Other Stock-Based Award" means any right granted under Section 6(e) of the
Plan.
(n) "Participant" means a Salaried Employee granted an Award under the Plan.
(o) "Performance Award" means any right granted under Section 6(d) of the Plan.
(p) "Person" means any individual, corporation, partnership, association, joint-
stock company, trust, unincorporated organization, or government or
political subdivision thereof.
(q) "Released Securities" means securities that were Restricted Securities with
respect to which all applicable restrictions imposed under the terms of the
relevant Award have expired, lapsed or been waived or satisfied.
(r) "Restricted Securities" means Awards of Restricted Stock or other Awards
under which outstanding Shares are held subject to certain restrictions.
(s) "Restricted Stock" means any Share granted under Section 6(c) of the Plan.
(t) "Restricted Stock Unit" means any right granted under Section 6(c) of the
Plan that is denominated in Shares.
(u) "Rule 16b-3" means Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended, or any
successor rule.
(v) "Salaried Employee" means any salaried employee of Primex or of an
Affiliate.
(w) "Shares" means the Common Stock of Primex and such other securities or
property as may become the subject of Awards pursuant to an adjustment made
under Section 4(b) of the Plan.
(x) "Stock Appreciation Right" means any right granted under Section 6(b) of the
Plan.
<PAGE>
-3-
Section 3. Administration
--------------
The Plan shall be administered by the Committee which shall have full power and
authority to: (i) designate Participants; (ii) determine the Awards to be
granted to Participants; (iii) determine the number of Shares (or securities
convertible into Shares) to be covered by Awards; (iv) determine the terms and
conditions of any Award; (v) determine whether, to what extent, and under what
circumstances Awards may be settled or exercised in cash, Shares, other
securities, other Awards, or other property, or canceled, substituted, forfeited
or suspended, and the method or methods by which Awards may be settled,
exercised, canceled, substituted, forfeited or suspended; (vi) determine
whether, to what extent, and under what circumstances cash, Shares, other
securities, other Awards, other property and other amounts payable with respect
to an Award under the Plan shall be deferred either automatically or at the
election of the Participant or of the Committee; (vii) interpret and administer
the Plan and any instrument or agreement relating to, or Award made under, the
Plan; (viii) establish, amend, suspend or waive such rules and guidelines and
appoint such agents as it shall deem appropriate for the administration of the
Plan; and (ix) make any other determination and take any other action that it
deems necessary or desirable for such administration. All designations,
determinations, interpretations and other decisions with respect to the Plan or
any Award shall be within the sole discretion of the Committee and shall be
final, conclusive and binding upon all Persons, including Primex, any Affiliate,
any Participants, any holder or beneficiary of any Award, any shareholder and
any employee of Primex or of any Affiliate. All powers and responsibilities of
the Committee provided in the Plan may also be exercised by the Board at any
time.
Section 4. Shares Available for Awards
---------------------------
(a) Shares Available. Subject to adjustment as provided in Section 4(b) of the
----------------
Plan:
(i) The aggregate number of Shares available for granting Awards
under the Plan shall be 350,000 If an Award is denominated in
or relates to a security of Primex convertible into its Common
Stock, the number of shares of Common Stock into which such
security shall be convertible (calculated as of the date of
grant of the Award, subject to adjustment as provided in
Section 4(b) hereof or under the terms of such security) shall
be deemed denominated in Shares and counted against the
aggregate number of Shares available for the granting of Awards
under the Plan. If, after the effective date of the Plan,
Shares subject to an Award granted under the Plan (other than
Restricted Securities) are forfeited, or the Award otherwise
terminates without the delivery of Shares or of other
consideration, then the Shares subject to such Award or the
number of Shares otherwise counted against the aggregate number
of Shares available under the Plan with respect to such Award,
to the extent of such forfeiture or termination, shall again be
available for granting Awards under the Plan." Any Award (other
than a Dividend Equivalent) denominated in Shares shall be
counted against the aggregate number of Shares available for
<PAGE>
-4-
granting Awards under the Plan even though the Award is
ultimately paid in cash, provided that, notwithstanding the
foregoing, an Award shall not be deemed denominated in Shares
if the dollar amount of the Award is fixed at the time of grant
by reference to the market value of Shares or otherwise.
(ii) For purposes of this Section 4:
(A) If an Award (other than a Dividend Equivalent) is
denominated in Shares, the number of Shares covered by
such Award, or to which such Award relates, shall be
counted on the date of grant of such Award against the
aggregate number of Shares available for granting
Awards under the Plan; and
(B) Dividend Equivalents paid in Shares and Awards not
denominated in Shares but paid in Shares shall be
counted against the aggregate number of Shares
available for granting Awards under the Plan in such
amount and at such time as the Committee shall
determine under procedures adopted by the Committee
consistent with the purposes of the Plan;
provided, however, that Awards that operate in tandem with, or that
-------- -------
are substituted for, other Awards may be counted or not counted under
procedures adopted by the Committee in order to avoid double counting. Any
Shares that are delivered by Primex, and any Awards that are granted by, or
become obligations of, Primex, through the assumption by Primex or an
Affiliate of, or in substitution for, outstanding awards previously granted
by an acquired company shall not, except in the case of Awards granted to
Salaried Employees who are officers or directors of Primex for purposes of
Section 16 of the Securities Exchange Act of 1934, as amended, be counted
against the Shares available for granting Awards under the Plan.
(b) Adjustments. In the event that the Committee determines that any
-----------
dividend or other distribution, recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of Shares or other securities of
Primex, issuance of warrants or other rights to purchase Shares or other
securities of Primex, or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee
to be appropriate in order to prevent dilution or enlargement of the
benefits intended to be made available under the Plan, then the Committee
shall, in such manner as it may deem equitable, adjust any or all of (i)
the number and type of Shares (or other securities or property) which
thereafter may be made the subject of Awards, including the limitation
contained in Section 4(c), (ii) the number and type of Shares (or other
securities or property) subject to outstanding Awards, and (iii) the grant,
purchase or exercise price with respect to any Award, or, if the Committee
deems it appropriate, make provision for a cash payment to the holder of an
outstanding Award; provided, however, that with respect to Awards of
-------- -------
Incentive Stock Options, no such adjustment
<PAGE>
-5-
shall be authorized to the extent that such authority would cause the Plan
to violate Section 422 of the Code or any successor provision thereto.
Notwithstanding the foregoing, a Participant to whom Dividend Equivalents
or dividend units have been awarded shall not be entitled to receive a
special or extraordinary dividend or distribution unless the Committee
shall have expressly authorized such receipt.
(c) Notwithstanding anything contained in this Plan to the contrary, grants
to any one Participant of Awards which represent or are designated in
Shares shall not exceed 70,000 Shares in any calendar year.
Section 5. Eligibility
-----------
Any Salaried Employee, including any officer or employee-director of Primex or
an Affiliate, who is not a member of the Committee shall be eligible to be
designated a Participant.
Section 6. Awards
------
(a) Options. The Committee is authorized to grant Options to Participants
-------
with the following terms and conditions and with such additional terms
and conditions, not inconsistent with the provisions of the Plan, as
the Committee shall determine:
(i) Exercise Price. The purchase price per Share purchasable under
an Option shall be determined by the Committee; provided,
--------
however, that such purchase price shall not be less than the
-------
Fair Market Value of a Share on the date of grant of such
Option.
(ii) Option Term. The term of each Option shall be fixed by the
Committee, provided that in no event shall the term of an Option
exceed a period of ten years from the date of its grant.
(iii) Exercise. The Committee shall determine the time or times at
which an Option may be exercised in whole or in part (but in no
event shall an Option be exercisable before the expiration of
six months from the date of its grant, subject to Section 9
thereof, or after the expiration of ten years from the date of
its grant), and the method or methods by which, and the form or
forms (including, without limitation, cash, Shares, other Awards
or other property, or any combination thereof, having a Fair
Market Value on the exercise date equal to the relevant exercise
price) in which, payment of the exercise price with respect
thereto may be made.
(iv) Incentive Stock Options. The terms of any Incentive Stock Option
granted under the Plan shall comply in all respects with the
provisions of Section 422 of the Code, or any successor
provision thereto, and any regulations promulgated thereunder.
Without limiting the preceding sentence, the aggregate Fair
Market Value (determined at the time an option is granted) of
<PAGE>
-6-
Shares with respect to which Incentive Stock Options are
exercisable for the first time by a Participant during any
calendar year (under the Plan and any other plan of the
Participant's employer corporation and its parent and subsidiary
corporations providing for Options) shall not exceed such dollar
limitation as shall be applicable to Incentive Stock Options
under Section 422 of the Code or a successor provision.
(b) Stock Appreciation Rights. The Committee is authorized to grant Stock
-------------------------
Appreciation Rights to Participants which may but need not relate to a
specific Option granted under Section 6(a). Subject to the terms of the
Plan and any applicable Award Agreement, each Stock Appreciation Right
granted under the Plan shall confer on the holder thereof a right to
receive, upon exercise thereof, up to the excess of (i) the Fair Market
Value of one Share on the date of exercise over (ii) the exercise price
of the right as specified by the Committee, which shall not be less
than the Fair Market Value of one Share on the date of grant of the
Stock Appreciation Right. Subject to the terms of the Plan and any
applicable Award Agreement, the exercise price, term, methods of
exercise, methods of payment or settlement and any other terms and
conditions of any Stock Appreciation Right shall be as determined by
the Committee, except that Stock Appreciation Rights related to
Incentive Stock Options shall have the same terms and conditions as
such Options, and in no event shall the term of a Stock Appreciation
Right exceed a period of ten years from the date of its grant. In the
case of any Stock Appreciation Right related to an Option, the Stock
Appreciation Right or applicable portion thereof shall terminate and no
longer be exercisable upon the termination or exercise of the related
Option, except that a Stock Appreciation Right granted with respect to
less than the full number of Shares covered by a related Option shall
not be reduced until the exercise or termination of the related Option
exceeds the number of shares not covered by the Stock Appreciation
Right and then only to the extent of the excess. Any Option related to
a Stock Appreciation Right shall no longer be exercisable to the extent
the related Stock Appreciation Right has been exercised.
(c) Restricted Stock and Restricted Stock Units.
-------------------------------------------
(i) Issuance. The Committee is authorized to grant Awards of
Restricted Stock and Restricted Stock Units to Participants.
(ii) Restrictions. Shares of Restricted Stock and Restricted Stock
Units shall be subject to such restrictions as the Committee may
impose (including, without limitation, any limitation on the
right to vote a Share of Restricted Stock or the right to
receive any dividend or other right or property), which
restrictions may lapse separately or in combination at such time
or times, in such installments or otherwise, as the Committee
may deem appropriate, provided that in order for a participant
to vest in Awards of Restricted Stock or Restricted Stock Units,
the participant must remain in the employ of Primex or an
Affiliate for a period of not less than six months
<PAGE>
-7-
commencing on the date of grant of the Award, subject to Section
9 hereof and subject to relief for specified reasons as may be
approved by the Committee.
(iii) Registration. Any Restricted Stock granted under the Plan may be
evidenced in such manner as the Committee may deem appropriate,
including, without limitation, book-entry registration or
issuance of a stock certificate or certificates. In the event
any stock certificate is issued in respect of Shares of
Restricted Stock granted under the Plan, such certificate shall
be registered in the name of the Participant and when delivered
to the Participant shall bear an appropriate legend referring to
the terms, conditions and restrictions applicable to such
Restricted Stock.
(iv) Forfeiture. Except as otherwise determined by the Committee,
upon termination of employment for any reason during the
applicable restriction period, all Shares of Restricted Stock
and all Restricted Stock Units still subject to restriction
shall be forfeited and reacquired by Primex; provided, however,
that the Committee may, in its sole discretion, waive in whole
or in part any or all remaining restrictions with respect to
Shares of Restricted Stock or Restricted Stock Units.
Unrestricted Shares, evidenced in such manner as the Committee
shall deem appropriate, shall be delivered to the holder of
Restricted Stock promptly after such Restricted Stock shall
become Released Securities.
(d) Performance Awards. The Committee is authorized to grant Performance
------------------
Awards to Participants. Subject to the terms of the Plan and any
applicable Award Agreement, a Performance Award granted under the Plan (i)
may be denominated or payable in cash, Shares (including, without
limitation, Restricted Stock), other securities, other Awards or other
property and (ii) shall confer on the holder thereof rights valued as
determined by the Committee and payable to, or exercisable by, the holder
of the Performance Award, in whole or in part, upon the achievement of such
performance goals during such performance periods as the Committee shall
establish. Subject to the terms of the Plan and any applicable Award
Agreement, the performance goals to be achieved during any performance
period, the length of any performance period, the amount of any Performance
Award granted, and the amount of any payment or transfer to be made
pursuant to any Performance Award shall be determined by the Committee,
provided that a performance period shall be at least six months, subject to
Section 9 thereof.
(e) Other Stock-Based Awards. The Committee is authorized to grant to
------------------------
Participants such other awards denominated or payable in, valued in whole
or in part by reference to, or otherwise based on or related to, Shares
(including, without limitation, phantom Shares, securities convertible into
Shares and dividend units), as are deemed by the Committee to be consistent
with the purposes of the Plan, provided that such grants shall comply with
Rule 16b-3 to the extent applicable and applicable law. Subject to the
terms of the Plan and
<PAGE>
-8-
any applicable Award Agreement, the Committee shall determine the terms and
conditions of such Awards. Shares or other securities delivered pursuant to
a purchase, exchange or conversion right granted under this Section 6(e)
shall be issued for such consideration, which may be paid by such method or
methods and in such form or forms, including, without limitation, cash,
Shares, other securities, other Awards, or other property, or any
combination thereof, as the Committee shall determine, the value of which
consideration, as established by the Committee, shall not be less than the
Fair Market Value of such Shares or other securities as of the date such
purchase, exchange or conversion right is granted.
Other Stock-based Award Agreements shall contain provisions dealing with
the disposition of such Award in the event of termination of the
Participant's employment prior to exercise, realization or payment of the
Award.
(f) General.
-------
(i) No Cash Consideration for Awards. Participants shall not be
required to make any cash payment for the granting of an Award except
for such minimum consideration as may be required by applicable law.
(ii) Awards May Be Granted Separately or Together. Awards may be
granted either alone or in addition to, in tandem with, or in
substitution for any other Award or any award or benefit granted under
any other plan or arrangement of Primex or any Affiliate, or as
payment for or to assure payment of an award or benefit granted under
any such other such plan or arrangement, provided that the purchase or
exercise price under an Award encompassing the right to purchase
Shares shall not be reduced by the cancellation of such Award and the
substitution of another Award. Awards so granted may be granted
either at the same time as or at a different time from the grant of
such other Awards or awards or benefits.
(iii) Forms of Payment Under Awards. Subject to the terms of the Plan and of
any applicable Award Agreement, payments to be made by Primex or an
Affiliate upon the grant, exercise, or payment of an Award may be made
in such form or forms as the Committee shall determine, including,
without limitation, cash, Shares, other securities, other Awards, or
other property or any combination thereof, and may be made in a single
payment or transfer, in installments, or on a deferred basis, in each
case in accordance with rules and procedures established by the
Committee.
(iv) Dividend Equivalents or Interest. Subject to the terms of the Plan and
any applicable Award Agreement, a Participant, including the recipient
of a deferred Award, shall, if so determined by the Committee, be
entitled to receive, currently or on a deferred basis, interest or
dividends or interest or dividend equivalents, with respect to the
Shares covered by the
<PAGE>
-9-
Award. The Committee may provide that any such amounts shall be deemed
to have been reinvested in additional Shares or otherwise reinvested.
Notwithstanding the award of Dividend Equivalents or dividend units, a
Participant shall not be entitled to receive a special or
extraordinary dividend or distribution unless the Committee shall have
expressly authorized such receipt.
(v) Limits on Transfer of Awards. No Award (other than Released
Securities) or right thereunder shall be assignable or transferable by
a Participant, other than (unless limited in the Award Agreement) by
will or the laws of descent and distribution (or, in the case of an
Award of Restricted Securities, to Primex), except that an Option may
be transferred by gift to any member of the holder's immediate family
or to a trust for the benefit of one or more of such immediate family
members, if expressly permitted in the applicable Award Agreement;
provided, however, that, if so determined by the Committee, a
Participant may, in the manner established by the Committee, designate
a beneficiary or beneficiaries with respect to any Award to exercise
the rights of the Participant, and to receive any property
distributable, upon the death of the Participant. Each Award, and
each right under any Award, shall be exercisable, during the
Participant's lifetime, only by the Participant or, if permissible
under applicable law by the Participant's guardian or legal
representative unless it is an Option and has been transferred as
permitted hereby to a member of the Participant's immediate family or
to a trust for the benefit of one or more of such immediate family
members, in which case it shall be exercisable only by such
transferee. For the purposes of this provision, a Participant's
"immediate family" shall mean the Participant's spouse, children and
grandchildren. No Award (other than Released Securities), and no
right under any such Award, may be pledged, attached or otherwise
encumbered other than in favor of Primex, and any purported pledge,
attachment, or encumbrance thereof other than in favor of Primex shall
be void and unenforceable against Primex or any Affiliate.
(vi) Term of Awards. Except as otherwise expressly provided in the Plan,
the term of each Award shall be for such period as may be determined
by the Committee.
(vii) No Rights to Awards. No Salaried Employee, Participant or other Person
shall have any claim to be granted an Award, and there is no
obligation for uniformity of treatment of Salaried Employees,
Participants or holders or beneficiaries of Awards under the Plan. The
terms and conditions of Awards need not be the same with respect to
each recipient. The prospective recipient of any Award under the Plan
shall not, with respect to such Award, be deemed to have become a
Participant, or to have any rights with respect to such Award, until
and unless
<PAGE>
-10-
such recipient shall have executed an agreement or other instrument
accepting the Award and delivered a fully executed copy thereof to the
Company, and otherwise complied with the then applicable terms and
conditions.
(viii) Delegation. Notwithstanding any provision of the Plan to the contrary,
the Committee may delegate to one or more officers or managers of
Primex or any Affiliate, or a committee of such officers or managers,
the authority, subject to such terms and limitations as the Committee
shall determine, to grant Awards to, or to cancel, modify, waive
rights or conditions with respect to, alter, discontinue, suspend, or
terminate Awards held by, Salaried Employees who are not officers or
directors of Primex for purposes of Section 16 of the Securities
Exchange Act of 1934, as amended.
(ix) Withholding. Primex or any Affiliate may withhold from any Award
granted or any payment due or transfer made under any Award or under
the Plan the amount (in cash, Shares, other securities, other Awards,
or other property) of withholding taxes due in respect of an Award,
its exercise or any payment under such Award or under the Plan, and
take such other action as may be necessary in the opinion of Primex or
Affiliate to satisfy all obligations for the payment of such taxes.
(x) Other Compensation Arrangements. Nothing contained in the Plan shall
prevent Primex or any Affiliate from adopting or continuing in effect
other or additional compensation arrangements, and such arrangements
may be either generally applicable or applicable only in specific
cases.
(xi) No Right to Employment. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ of
Primex or any Affiliate. Nothing in the Plan or any Award Agreement
shall limit the right of Primex or an Affiliate at any time to dismiss
a Participant from employment, free from any liability or any claim
under the Plan or the Award Agreement.
(xii) Governing Law. The validity, construction and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Florida and applicable
Federal law.
(xiii) Severability. If any provision of the Plan or any Award is determined
to be invalid, illegal or unenforceable in any jurisdiction, or as to
any Person or Award, or would disqualify the Plan or any Award under
any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to applicable laws, or, if it
cannot be so construed or deemed amended without, in the determination
of the Committee, materially altering the intent of the Plan or the
Award, such provision shall be stricken as to such
<PAGE>
-11-
jurisdiction, Person or Award, and the remainder of the Plan and any
such Award shall remain in full force and effect.
(xiv) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between Primex or any Affiliate and a
Participant or any other Person. To the extent that any Person
acquires a right to receive payments from Primex or any Affiliate
pursuant to an Award, such right shall be no greater than the right of
any unsecured general creditor of Primex or any Affiliate.
(xv) No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall
determine whether cash, other securities or other property shall be
paid or transferred in lieu of any fractional Shares, or whether such
fractional Shares or any rights thereto shall be canceled, terminated
or otherwise eliminated.
(xvi) Share Certificates. All certificates for Shares or other securities
delivered under the Plan pursuant to any Award or the exercise thereof
shall be subject to such stop transfer orders and other restrictions
as the Committee may deem advisable under the Plan or the rules,
regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which such Shares or other
securities are then listed, and any applicable Federal or state
securities laws, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions.
(xvii) Conflict with Plan. In the event of any inconsistency or conflict
between the terms of the Plan and an Award Agreement, the terms of the
Plan shall govern.
(xviii) Notwithstanding any provision in this Plan to the contrary, Awards
granted under Sections 6(c), 6(d) or 6(e) and designated by the
Committee as being performance-based shall have as performance
measures any one of or any combination of any of the following
measures: Economic Value Added, Return on Equity and Total Return to
Shareholders. For purposes of the Plan, "Economic Value Added" shall
mean Primex's consolidated sales less its operating costs (including
tax) less a capital charge based on Primex's cost of capital assets
employed in its business, "Return on Equity" shall mean consolidated
income of Primex after taxes and before the after-tax effect of any
special charge or gain and any cumulative effect of any change in
accounting, divided by average shareholders equity and "Total Return
to Shareholders" shall mean for the performance period total return to
shareholders of $100 worth of Shares for such period assuming
reinvestment of dividends on a quarterly basis. The Committee shall
determine the performance goals for each such performance measure with
respect to each such Award.
<PAGE>
-12-
Section 7. Amendment and Termination
-------------------------
(a) Amendments to the Plan. The Board may amend, suspend, discontinue or
----------------------
terminate the Plan, including, without limitation, any amendment,
suspension, discontinuation or termination that would impair the rights of
any Participant, or any other holder or beneficiary of any Award
theretofore granted, without the consent of any shareholder, Participant,
other holder or beneficiary of an Award, or other Person; provided,
--------
however, that, notwithstanding any other provision of the Plan or any Award
-------
Agreement, without the approval of the shareholders of Primex, no such
amendment, suspension, discontinuation or termination shall be made that
would permit any Award encompassing rights to purchase Shares to be granted
with per Share purchase or exercise prices of less than the Fair Market
Value of a Share on the date of grant thereof (except for any adjustment
permitted by Section 4(b)); provided further that no amendment, suspension,
-------- -------
discontinuation or termination (i) that would impair the rights of such
Participant, holder or beneficiary shall be made with respect to Section 9
of the Plan after a Change in Control, as defined therein and (ii) may
increase the amount of payment of any Award to any Participant.
(b) Amendments to Awards. The Committee may waive any conditions or rights
--------------------
with respect to, or amend, alter, suspend, discontinue, or terminate, any
unexercised Award theretofore granted, prospectively or retroactively,
without the consent of any relevant Participant or holder or beneficiary of
an Award, provided that no amendment, alteration, suspension,
--------
discontinuation or termination of an Award that would impair the rights of
such Participant, holder or beneficiary shall be made after a Change in
Control, as defined in Section 9; provided further that the Committee may
not increase the payment of any Award granted any Participant.
(c) Adjustments of Awards Upon Certain Acquisitions. In the event Primex
-----------------------------------------------
or any Affiliate shall assume outstanding employee awards or the right or
obligation to make future such awards in connection with the acquisition of
another business or another company, the Committee may make such
adjustments, not inconsistent with the terms of the Plan, in the terms of
Awards as it shall deem appropriate.
(d) Adjustments of Awards Upon the Occurrence of Certain Unusual or
---------------------------------------------------------------
Nonrecurring Events. The Committee may make adjustments in the terms and
-------------------
conditions of Awards in recognition of unusual or nonrecurring events
(including, without limitation, the events described in Section 4(b)
hereof) affecting Primex, any Affiliate, or the financial statements of
Primex or any Affiliate, or of changes in applicable laws, regulations, or
accounting principles, whenever the Committee determines that statements of
Primex or any Affiliate, or of changes in applicable laws, regulations, or
accounting principles, whenever the Committee determines that such
adjustments are appropriate in order to prevent dilution or enlargement of
the benefits to be made available under the Plan.
<PAGE>
-13-
Section 8. Additional Conditions to Enjoyment of Awards.
--------------------------------------------
(a) The Committee may cancel any unexpired, unpaid or deferred Awards if at any
time the Participant is not in compliance with all applicable provisions of
the Award Agreement, the Plan and the following conditions:
(i) A Participant shall not render services for any organization or
engage, directly or indirectly, in any business which, in the judgment
of the Committee or, if delegated by the Committee to the Chief
Executive Officer, in the judgment of such Officer, is or becomes
competitive with Primex or any Affiliate, or which is or becomes
otherwise prejudicial to or in conflict with the interests of Primex
or any Affiliate. Such judgment shall be based on the Participant's
positions and responsibilities while employed by Primex or an
Affiliate, the Participant's post-employment responsibilities and
position with the other organization or business, the extent of past,
current and potential competition or conflict between Primex or an
Affiliate and the other organization or business, the effect on
customers, suppliers and competitors of the Participant's assuming the
post-employment position, the guidelines established in the then
current edition of Primex's Code of Business Conduct, and such other
considerations as are deemed relevant given the applicable facts and
circumstances. The Participant shall be free, however, to purchase as
an investment or otherwise, stock or other securities of such
organization or business so long as they are listed upon a recognized
securities exchange or traded over the counter, and such investment
does not represent a substantial investment to the Participant or a
greater than 1% equity interest in the organization or business.
(ii) Participant shall not, without prior written authorization from
Primex, disclose to anyone outside Primex, or use in other than
Primex's business, any secret or confidential information, knowledge
or data, relating to the business of Primex or an Affiliate in
violation of his or her agreement with Primex or the Affiliate.
(iii) A Participant, pursuant to his or her agreement with Primex or an
Affiliate, shall disclose promptly and assign to Primex or the
Affiliate all right, title and interest in any invention or idea,
patentable or not, made or conceived by the Participant during
employment by Primex or the Affiliate, relating in any manner to the
actual or anticipated business, research or development work of Primex
or the Affiliate and shall do anything reasonably necessary to enable
Primex or the Affiliate to secure a patent where appropriate in the
United States and in foreign countries.
(b) Notwithstanding any other provision of the Plan, the Committee in its sole
discretion may cancel any Award at any time prior to the exercise thereof,
if the employment of the Participant shall be terminated,
<PAGE>
-14-
other than by reason of death, unless the conditions in this Section 8 are
met.
(c) Failure to comply with the conditions of this Section 8 prior to, or during
the six months after, any exercise, payment or delivery pursuant to an Award
shall cause the exercise, payment or delivery to be rescinded. Primex shall
notify the Participant in writing of any such rescission within two years
after such exercise payment or delivery and within 10 days after receiving
such notice, the Participant shall pay to Primex the amount of any gain
realized or payment received as a result of the exercise, payment or
delivery rescinded. Such payment shall be made either in cash or by
returning to Primex the number of Shares that the Participant received in
connection with the rescinded exercise, payment or delivery.
(d) Upon exercise, payment or delivery pursuant to an Award, the Committee may
require the Participant to certify on a form acceptable to the Committee,
that he or she is in compliance with the terms and conditions of the Plan.
(e) Nothing herein shall be interpreted to limit the obligations of a
Participant under his or her employee agreement or any other agreement with
Primex.
Section 9. Change in Control
-----------------
(a) Except as the Board or the Committee may expressly provide otherwise prior
to a Change in Control of Primex (as defined below) and subject to the
provisions of Section 6(f)(vii) hereof, in the event of a Change in Control
of Primex:
(i) all Options and Stock Appreciation Rights then outstanding shall
become immediately and fully exercisable, notwithstanding any
provision therein for the exercise in installments;
(ii) unless a Stock Appreciation Right shall have already been granted with
respect to an outstanding Option, the Participant holding such Option
shall be deemed also to hold a Stock Appreciation Right related to
such Option, exercisable in accordance with and subject to the terms
and conditions of Section 6(b) for the number of Shares exercisable
under such Option after giving effect to such acceleration, which
Stock Appreciation Right may, but need not be, evidenced by separate
written agreement;
(iii) all restrictions and conditions of all Restricted Stock and Restricted
Stock Units then outstanding shall be deemed satisfied as of the date
of the Change in Control; and
(iv) all Performance Awards shall become vested, deemed earned in full and
promptly paid to the Participants, cash units in cash and phantom
stock units in the Shares represented thereby or such other
securities, property or cash as may be deliverable in respect of
Shares as a result of a Change in Control,
<PAGE>
-15-
without regard to payment schedules and notwithstanding that the
applicable performance cycle or retention cycle shall not have been
completed.
(b) A Change in Control of Primex shall have occurred in the event that:
(i) Primex ceases to be directly or indirectly owned by at least 1,000
stockholders after December 31, 1996;
(ii) a person, partnership, joint venture, corporation or other entity, or
two or more of any of the foregoing acting as "person" within the
meaning of Sections 13(d)(3) of the Securities Exchange Act of 1934,
as amended (the "Act"), other than Primex, Olin, a majority-owned
subsidiary of Primex, or an employee benefit plan (or related trust)
of Primex, Olin or such subsidiary, become(s) the "beneficial owner"
(as defined in Rule 13d-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; or
(iv) 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.
Section 10. Effective Date of the Plan
--------------------------
The Plan shall be effective as of the date of its approval by the shareholder of
Primex.
Section 11. Term of the Plan
----------------
No Award shall be granted under the Plan after December 1, 2006, but unless
otherwise expressly provided in the Plan or in an applicable Award Agreement,
any Award theretofore granted may extend beyond such date.
<PAGE>
EXHIBIT 10.11
12/4/96
[PRIMEX TIER I AGREEMENT]
EXECUTIVE AGREEMENT
-------------------
Agreement between Primex Technologies, Inc., a Virginia corporation
("Primex"), and _______________ (the "Executive"), dated as of ______________,
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 of Primex or such subsidiary, 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 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
<PAGE>
2
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;
(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 an employee benefit
plan of Primex or a subsidiary of Primex) 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
<PAGE>
3
(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;
(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.
<PAGE>
4
2. Term/Executive's Duties.
(a) This Agreement expires at the close of business on December 31, 2001,
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, 2001
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.
(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.
(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 [one]/1/ 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,
- ----------
/1/ Two times in case of Chairman and CEO and Vice Chairman.
<PAGE>
5
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 doubled. 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 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 24-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.
(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
<PAGE>
6
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 12-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 Corporation's qualified pension plan as
of the date of Termination and (iii) at age 55, would not qualify for subsidized
---
early retirement from Olin Corporation ("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
-----
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 percentage
------
then applicable in the calculation of benefits paid to employees retiring from
active service 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 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 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.
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
<PAGE>
7
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.
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:
<PAGE>
8
If to the Company: Primex Technologies, Inc.
10101 9th Street North
St. Petersburg, FL 33716-3807
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.
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
<PAGE>
9
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.
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: ____________________________
Title:
_________________________
Executive
<PAGE>
Exhibit 10.13
TRADE NAME LICENSE AGREEMENT
----------------------------
Agreement made as of January 1, 1997, by and between OLIN CORPORATION, a
Virginia corporation with offices at 501 Merritt Seven, Norwalk, Connecticut
06856-4500 ("Olin") and PRIMEX TECHNOLOGIES, INC., a Virginia corporation with
offices at 10101 9th Street North, St. Petersburg, Florida 33716-3807
("Primex").
In consideration of the mutual covenants and obligations hereunder, the
parties agree as follows:
WHEREAS, Olin has transferred to Primex all or substantially all of the
assets related to Olin's Ordnance and Aerospace divisions (collectively the
"Primex Business") in anticipation of the spin-off of Primex to the shareholders
of Olin; and
WHEREAS, Primex wishes to use, and Olin is willing to authorize Primex to
use, certain trade names associated with the Primex Business for the limited
purposes provided herein.
NOW, THEREFORE, Olin and Primex agree as follows:
1 DEFINITIONS.
------------
1.1 AFFILIATE. "Affiliate" shall mean, when used with respect to a
----------
specified Person, another Person that directly, or indirectly through one or
more intermediaries, Controls or is Controlled by or is under common Control
with the Person specified.
1.2 CONTROL. "Control" shall mean the possession, directly or indirectly,
--------
of the power to direct or cause the direction of the management or policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise, and the terms "Controlling" and "Controlled" shall have meanings
correlative thereto.
1.3 EFFECTIVE TIME. "Effective Time" shall mean the Effective Time
--------------
specified in that certain Distribution Agreement made between Olin and Primex
dated as of January 1, 1997.
1.4 PERSON. "Person" shall mean any natural person, corporation,
-------
business trust, joint venture, association, company, partnership or government,
or any agency or political sub-division thereof.
1.5 PRIMEX BUSINESSES. "Primex Businesses" shall mean the businesses of
------------------
the Ordnance and Aerospace Divisions of Olin or their constituent companies and
their predecessor companies as they were carried out on or before the Effective
Time.
<PAGE>
1.6 TRADE NAMES. "Trade Names" shall mean all of, and "Trade Name" shall
------------
mean any of, the following: OLIN, OLIN CORPORATION, OLIN AEROSPACE, OAC, and
OLIN ORDNANCE.
2. LICENSE. Olin hereby grants to Primex and Primex's subsidiary companies a
--------
worldwide, nonexclusive, royalty-free license to use the Trade Names in
accordance with the terms of this Agreement.
3. LIMITED USE.
------------
3.1 Primex shall use the Trade Names only to the extent reasonably
necessary:
(i) To inform its customers and the public that Primex includes the
businesses formerly conducted by Olin under the Trade Names. In all uses of
the Trade Names, Primex shall ensure that the Trade Name appears in a less
prominent position than its current business name, and appears only to
inform the public (e.g., "Primex Technologies, formerly Olin Ordnance "or"
Primex Aerospace Company, formerly Olin Aerospace Company").
(ii) For purposes of operating under permits, licenses, and other
governmental authorizations granted to Olin and assigned to Primex
(collectively "Permits"), and to provide Primex the time necessary to amend
the existing Permits or file applications for new Permits in Primex's own
name, and to continue required reporting or product delivery under the
Trade Name(s) until the earlier of the effective date of the amended or new
Permits or the expiration of this Agreement.
(iii) For completion of contracts and other agreements entered into by
Olin under the Trade Names.
(iv) To use up stocks of packaging and forms purchased by Olin and any of
its subsidiaries prior to the date hereof and transferred to Primex and any
of its subsidiaries.
3.2 Primex shall not use any of the Trade Names in any manner that
suggests an agency, partnership, or joint venture relationship with Olin.
3.3 Olin reserves all rights in the Trade Names not expressly granted to
Primex herein.
4. REASONABLE EXTENSION. Olin shall not withhold its approval of any
---------------------
extension of time that Primex Technologies may reasonably request to continue to
use any of the Trade Names, so long as (i) in Olin's judgment, Primex
Technologies is
<PAGE>
diligently proceeding in good faith to eliminate its use of any of the Trade
Names, and (ii) in no event shall any such extension exceed 18 months following
the Effective Time.
5. QUALITY CONTROL. Upon Olin's request, Primex will provide Olin with
----------------
samples of each use of a Trade Name for Olin's review and approval. Primex
shall immediately correct any deficiencies noted by Olin for failure to comply
with this Agreement.
6. NO WARRANTY. Olin is licensing the Trade Names to Primex "AS IS." Olin
------------
makes no representations or warranties as to the Trade Names, and hereby
excludes all warranties, express or implied.
7. OWNERSHIP. Primex acknowledges that Olin is the owner of the Trade Names
----------
and owns all rights in the Trade Names. Primex shall take no action during or
following the term of this Agreement contrary to, or in conflict with, Olin's
rights in the Trade Names.
8. INDEMNIFICATION. Primex agrees to defend, indemnify, and hold Olin
----------------
harmless from and against all losses, expenses (including reasonable legal fees
and costs), damages, injuries, liabilities, and claims arising out of or
relating to Primex's use of any of the Trade Names.
9. TERM AND TERMINATION.
---------------------
9.1 This Agreement shall be effective for one (1) year beginning on the
date first set forth above, unless sooner terminated as provided herein.
9.2 Either party may terminate this Agreement effective upon thirty (30)
days' notice to the other in the event of a material breach of this
Agreement by the other party that the breaching party fails to correct
during such period.
9.3 Immediately upon expiration or termination of this Agreement, Primex
will cease and desist from all uses of any of the Trade Names.
9.4 Each party's obligations under Articles 6, 7, 8 and 9 shall survive
expiration and termination of this Agreement.
10. FURTHER ASSURANCES. Each party will execute all documents reasonably
-------------------
requested by the other to effect any of the provisions of this Agreement.
11. NOTICES. Notices or requests to be given or made hereunder shall be
--------
delivered in person or sent by registered mail or telefax or telex acknowledged
by the operator of the addressee at the following addresses or other addresses
that each Party may from time to time designate.
(a) for PRIMEX:
<PAGE>
PRIMEX TECHNOLOGIES, INC.
10101 Ninth Street North
St. Petersburg, Florida 33716-3807
ATTENTION: General Counsel
Tel: (813)578-1116
Fax: (813)578-8795
(b) for OLIN:
OLIN CORPORATION
501 Merritt Seven
Norwalk, Connecticut 06856-4500
Attention: Corporate Secretary
Tel: (203) 356-3126
Fax: (203) 356-2011
12. ASSIGNMENT
----------
12.1 LIMITATIONS ON ASSIGNMENT. This Agreement shall not be assigned by
-------------------------
either Party to a third party without the prior written consent of the
other Party, except to: an Affiliate of a Party, or a successor in the
business to which this Agreement relates, or a successor in all or
substantially all of the assets of either Party, provided that the
successor agrees in writing to accept the rights and to be bound by the
obligations of the assigning Party, any other assignment being void. The
Parties agree to guarantee the performance of their Affiliates under this
Agreement.
12.2 CHANGE OF CONTROL. For purposes of Section 11.1. the following
-----------------
shall be deemed an assignment by a Party of this Agreement:
12.2.1: a Person (or two or more Persons acting as a "person" within
the meaning of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "1934 Act")), other than such Party, or an
employee benefit plan (or related trust) of such Party, becomes the
"beneficial owner" (as defined in Rule 13d-3 under the 1934 Act) of
15% or more of the then outstanding voting stock of such Party, or
during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of such
Party (together with any new director whose election by the Board or
whose nomination for election by such Party'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 new directors
then in office, and/or
<PAGE>
12.2.2: any consolidation or merger of such Party in which such Party
is not the continuing or surviving corporation or pursuant to which
shares of such Party's common stock would be converted into cash,
securities or other property other than a merger in which holders of
such Party's common stock immediately prior to the merger will have
the same proportionate ownership of common stock of the surviving
corporation immediately after the merger, and/or
12.2.3: any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all the assets of such Party, and/or
12.2.4: adoption of any plan or proposal for the liquidation or
dissolution of such Party.
12.3 VIOLATION. Any assignment in violation of this Article 12 shall be
---------
considered void.
13. GENERAL PROVISIONS.
------------------
13.1 ENTIRE AGREEMENT. This Agreement embodies the entire
----------------
understanding of the Parties. No amendment or modification of the Agreement
shall be valid or binding upon the Parties unless it is in writing and signed by
the respective duly authorized officers of the Parties.
13.2 Parties ARE INDEPENDENT. This Agreement does not and shall not be
-----------------------
deemed to make either Party the agent, legal representative or partner of the
other Party for any purpose whatsoever, and neither Party shall have the right
or authority to assume or create any obligation or responsibility whatsoever,
expressed or implied, on behalf of or in the name of the other Party or to bind
the other Party in any respect whatsoever.
13.3 WAIVER. The failure of either Party at any time to require
------
performance by the other Party of any provision hereof shall in no way affect
the full right to require such performance within a reasonable time or
thereafter the performance of that and all other provisions, nor shall the
waiver of any succeeding breach of such provision or any other provision operate
as a waiver of the provision itself.
13.4 SEVERABILITY. The invalidity or unenforceability of any one or more
------------
of the provisions of This Agreement shall not affect the validity or
enforceability of the remaining provisions.
13.5 GOVERNING LAW. This Agreement shall be construed and governed, in
-------------
all respects, by the law of the State of Illinois applicable to contracts
<PAGE>
made and to be performed in that state without reference to any provisions
relating to conflicts of law.
13.6 JURISDICTION. Each Party hereby irrevocably and unconditionally
------------
submits, for itself and its property, to the nonexclusive jurisdiction of any
Illinois State court or Federal court of the United States of America sitting
anywhere within a radius of 50 miles from East Alton, Illinois, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the Parties hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such Illinois State or, to the extent permitted by law, in such Federal
court. Each of the Parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
13.7 VENUE. Each Party hereby irrevocably and unconditionally waives, to
-----
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any Illinois State
court or such Federal court located in the State of Illinois. Each of the
Parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
13.8 SERVICE OF PROCESS. Each Party to this Agreement irrevocably consents
------------------
to service of process in the manner provided for notices in Article 11 hereof.
Nothing in this Agreement will affect the right of any party to this Agreement
to serve process in any other manner permitted by law.
13.9 COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, but all of this
shall constitute one and the same instrument.
14. SETTLEMENT OF DISPUTES
----------------------
In the event of any disputes arising out of or in connection with the execution,
interpretation, performance or nonperformance of this Agreement, Primex and Olin
shall use the following procedure prior to either Party pursuing other available
legal remedies:
14.1 ALTERNATIVE DISPUTE RESOLUTION. Upon signing of this Agreement each
------------------------------
Party will designate one representative ("Representative") for the purpose of
resolving disputes which may arise from time to time. Upon a dispute arising,
either or both Representatives may request in writing a conference with the
other. If so requested, the conference shall occur within ten (10) days of the
initial written request and shall be held via telephone or at East Alton,
Illinois, or elsewhere, at the option of the Representatives. The purpose and
scope of the conference shall be
<PAGE>
limited to issues related to resolving the dispute. At the conference, each
Representative, or his or her designee, shall use best efforts to attempt to
resolve the dispute. If the dispute has not been settled within thirty (30) days
of the first meeting of the Representatives, the parties shall establish a
Management Appeal Board ("MAB") within ten (10) days of receipt of a request by
either Party to set up an MAB. The MAB shall consist of two (2) members of each
respective Party's management. The President of OLIN shall appoint two members
to represent OLIN and the President of PRIMEX shall appoint two members to
represent PRIMEX. The sole purpose of MAB shall be to resolve any dispute over
which the Representatives failed to resolve. The MAB members shall be persons
other than the Representatives. The MAB shall meet at East Alton, Illinois or
otherwise confer to resolve the dispute by good faith negotiations, which may
include presentations by the Representatives or others.
14.2 ARBITRATION. In the event the parties are unable to resolve their
-----------
disputes after availing themselves of the processes set forth in Section 14.1
above for a period of ninety (90) days, such disputes, shall be solely and
finally settled by three arbitrators in accordance with the Commercial
Arbitration Rules of the AAA (the "Arbitration Rules"). The Party electing
arbitration shall so notify the other Party in writing in accordance with the
Arbitration Rules, and such notice shall be accompanied by the name of the
arbitrator selected by the Party serving the notice. The second arbitrator
shall be chosen by the other Party, and a neutral arbitrator shall be chosen by
the two arbitrators so selected. If a Party fails to select an arbitrator or to
advise the other Party of its selection within thirty (30) days after receipt by
such a Party of the notice of the intent to arbitrate, the second arbitrator
shall be selected by the AAA. If the third arbitrator shall not have been
selected within thirty (30) days after the selection of the second arbitrator,
the appointment shall be made by the AAA. All such proceedings shall be
conducted in New York, New York. The arbitrator shall make detailed findings of
fact and law in writing in support of the decision of the arbitrator panel, and
is empowered to award reimbursement of attorneys' fees and other costs of
arbitration to the prevailing Party, in such manner as the arbitrator panel
shall deem appropriate. The provisions of this Section 14.2 shall not be deemed
to preclude any Party hereto from seeking preliminary injunctive relief to
protect or enforce its rights hereunder, or to prohibit any court from making
preliminary findings of fact in connection with granting or denying such
preliminary injunctive relief, or to preclude any Party hereto from seeking
permanent injunctive or other equitable relief after and in accordance with the
decision of the arbitrator panel. Whether any claim or controversy is arbitrable
or litigable shall be determined solely by the arbitrator panel pursuant to the
provisions of this Section 14.2. Any monetary award of the arbitrators panel
shall include interest from the date of any breach or any violation of this
Agreement. The arbitrators shall fix an appropriate rate of interest from the
date of the breach or other violation to the date when the award is paid in
full. The parties agree that judgment on the arbitration award may be entered
in any court having jurisdiction over the parties or their assets.
14.3 CONTINUING OBLIGATIONS. It is expressly agreed that the failure of
----------------------
the parties to resolve a dispute on any issue to be resolved hereunder shall not
relieve
<PAGE>
either Party from any obligation set forth in this Agreement. In addition,
notwithstanding the pendency of any such dispute, neither Party will be excused
of its obligations hereunder to cooperate with the other to effectuate the
purposes of this Agreement.
IN WITNESS WHEREOF, each party has caused its duly authorized
representative to execute this Agreement as of the date set forth above.
OLIN CORPORATION PRIMEX TECHNOLOGIES, INC.
By By
-------------------------- --------------------------
Name: Name:
Title: Title:
<PAGE>
EXHIBIT 10.14
TRANSITION SERVICES AGREEMENT
-----------------------------
This Transition Services Agreement dated as of the first day of January,
1997 (collectively with the Exhibits hereto, the "Agreement") between PRIMEX
TECHNOLOGIES, INC., a Virginia corporation ("Primex"), and OLIN CORPORATION, a
Virginia corporation ("Olin").
W I T N E S S E T H
-------------------
WHEREAS, Olin and Primex have entered into a Distribution Agreement dated
as of _________________, 1996 ("Distribution Agreement");
WHEREAS, pursuant to the Distribution Agreement, Olin has agreed to
transfer certain assets and business entities constituting the Primex Business
(as defined in the Distribution Agreement) as provided in the Distribution
Agreement;
WHEREAS, prior to the Effective Time (as defined in the Distribution
Agreement), the Primex Business has received various support services from, and
provided various support services to, Olin and its subsidiaries; and
WHEREAS, following Distribution contemplated by the Distribution Agreement,
Olin and Primex desire that for a period of transition and for purposes of
continuity Olin continue to provide certain services to Primex and that Primex
continue to provide certain services to Olin and its subsidiaries, all in a
manner and amount historically provided prior to the Effective Time (as
defined in the Distribution Agreement) and on terms and conditions as set forth
in this Agreement.
<PAGE>
NOW THEREFORE, in consideration of the mutual covenants and premises
contained herein, Olin and Primex agree as follows:
1. Definitions. (a) The following terms have the meanings hereinafter
-----------
assigned to them:
"Arbitration Rules" - See Section 9.
"Confidential Information" - See Section 3.
"Customer" means (i) with respect to Olin Services, Primex and (ii) with
respect to Primex Services, Olin and its subsidiaries.
"Employee Benefits Information" - See Section 3.
"MAB" - See Section 9.
"Olin Services" means each service listed on Exhibit A hereto.
"Primex Services" means each service listed on Exhibit B hereto.
"Provider" means (i) with respect to Olin Services, Olin and (ii) with
respect to Primex Services, Primex.
"Representative" - See Section 9.
"Services" means the Olin Services and Primex Services, as the case may be.
"Service Charge" - See Section 4 hereof.
"Service Description" means the description of each individual Service
respectively provided in Exhibits A and B.
"Standard of Care" - See Section 2(a) hereof.
(b) Any capitalized term utilized but not defined herein shall have the
meaning assigned to it in the Distribution Agreement.
-2-
<PAGE>
2. Services. (a) Subject to the terms of this Agreement, (1) Olin will
--------
provide to Primex the Olin Services in the manner, to the same location and to
the extent provided by Olin (and not by an outside contractor) to the Primex
Business during the one-year period immediately preceding the date of this
Agreement and (2) Primex shall provide to Olin and its subsidiaries the Primex
Services in the manner and to the extent that provided by the Primex Business
(and not by an outside contractor) during the one-year period immediately
preceding the date of this Agreement. In providing the Services, the Provider
shall employ the same standards of care and diligence employed in providing
services of the same type for itself and its affiliates ("Standard of Care").
Exhibits A and B made an integral part of this Agreement will identify the
Services to be provided by the parties hereto and subject to the mutual
agreement of the parties, will be subject to amendment as the parties identify
after the Effective Time any additional Services omitted from the Exhibits.
(b) No Provider employee shall be considered a Customer employee for any
purpose, and the Provider shall provide the Services as an independent
contractor.
(c) The Customer shall, in a timely manner, take all such actions as may
be reasonably necessary or desirable in order to enable or assist the Provider
to provide the Services, including, but not limited to, providing necessary
information and specific written authorizations and consents, and the Provider
shall be relieved of its obligations hereunder to the extent that the Customer's
failure to take any such action renders performance by the Provider unlawful or
impracticable.
-3-
<PAGE>
3. Confidentiality.
---------------
(a) Confidentiality Obligation: Each of the Parties agrees to keep
---------------------------
confidential and neither disclose to others nor use except as permitted herein
any "Confidential Information" or any "Employee Benefits Information" received
from the other Party pursuant to this Agreement.
(b) Definitions: For purposes of this Agreement, "Confidential
------------
Information" shall mean any and all information disclosed to the receiving Party
by a disclosing Party pursuant to this Agreement, in any form such as, but not
limited to, visual, oral, written, graphic, electronic or model form, including
but not limited to know-how and trade secrets, whether of a business or a
technical nature, whether patented or not and whether in the laboratory, pilot
plant or commercial plant stage (including drawings, operating conditions,
specifications, safety instructions, environmental recommendations, emergency
instructions, etc.) owned or controlled by a Party. "Employee Benefits
Information" shall mean information relating to the administration of Primex's
and Olin's employee benefit programs as provided in Exhibits attached hereto,
including but not limited to information and/or data submitted for reimbursement
of, or in support of, any benefits claim (including but not limited to health,
counseling, medical, dental, or disability claims).
(c) Limits On Disclosure: The receiving Party shall treat all
---------------------
Confidential Information in the same manner and with the same degree of care as
it uses with respect to its own Confidential Information of like nature and
shall disclose Confidential Information of the other Party only to its employees
who have a need to know it, provided that such employees are bound to respect
all secrecy obligations provided for in
-4-
<PAGE>
this Agreement. The receiving Party shall treat all Employee Benefits
Information with highest standard of care reasonable for such information, and
shall disclose Employee Benefit Information of the other Party only to its
employees who have a strict need to know it, provided that such employees are
bound to respect all secrecy obligations provided for in this Agreement.
(d) Exceptions: The obligation set forth in Section 3(a) above shall not
----------
apply with respect to any Confidential Information which:
(i) Public Knowledge: Is generally available to the public or
----------------
subsequently becomes generally available to the public through no
breach by the receiving Party of secrecy obligations under this
Agreement or prior agreements between the Parties concerning the
Confidential Information; or
(ii) Prior Possession: The receiving Party can establish by competent
----------------
evidence was in its possession at the time of disclosure and was
not acquired in confidence directly or indirectly, from the
disclosing Party; or
(iii) Received From Third Party: Is received from a third party who is
-------------------------
legally free to disclose such Confidential Information and who did
not receive such Confidential Information in confidence from the
disclosing Party; or
-5-
<PAGE>
(iv) Approved For Disclosure: Is approved in writing for release by
-----------------------
the disclosing Party; or
(v) Successor In Interest: Is disclosed to any permitted assignee
---------------------
of the Agreement, provided that such assignee agrees to be bound
by the provisions of the Agreement; or
(vi) Independently Developed: Is independently developed by the
-----------------------
receiving Party without reference to the Confidential Information
received from the disclosing Party.
(e) Permitted Disclosures: The provisions of Section 3(a)
---------------------
notwithstanding, in exercising the rights granted under this Agreement, either
Party may disclose Confidential Information to others for purpose of
sublicensing (as permitted hereunder), design, engineering, construction or
operation of facilities permitted hereunder using Confidential Information; or
obtaining or giving consulting services under a license agreement permitted
hereunder, provided that any third party, to which such Confidential Information
is disclosed shall have first entered into a written secrecy and non-use
obligation at least as stringent as that imposed on the Parties pursuant to this
Agreement.
(f) Subpoena Or Demand: The provisions of Section 3(a) notwithstanding, a
------------------
Party may disclose Confidential Information and/or Employee Benefits Information
pursuant to a subpoena or demand for production of documents in connection with
any suit or arbitration proceeding, any administrative procedure or before a
governmental or administrative agency or instrumentality thereof or any
legislative hearing or other similar proceeding, provided that the receiving
Party shall promptly notify the disclosing Party of the subpoena or demand and
provided further that in such instances, the Parties
-6-
<PAGE>
use their reasonable best efforts to maintain the confidential nature of the
Confidential Information by protective order or other means.
(g) Government Audit: The provisions of Section 3(a) notwithstanding, a
-----------------
Party may disclose Confidential Information (other than information which is not
required by U.S. Government regulation to be made available to U.S. Government
auditors (e.g., internal audit reports)) to U.S. Government auditors upon
request during the performance of a governmental audit or review of any U.S.
Government contract of such other party in the normal course of the audit
function and according to standard practices; provided prompt notice of the
disclosure of such information shall be given to the party from which the
information was obtained.
4. Compensation. In consideration of the provision of the Services, the
-------------
Customer shall, for each Service performed, pay Provider the monthly base fee
plus additional charges set forth in Exhibit A or B (such monthly fee and
additional charges being collectively, the "Service Charge" for such Service)[,
provided that the monthly base fee which is part of the Service Charge will be
prorated for the number of days remaining in the calendar month in which the
Effective Time occurs]. The monthly base fee of the Service Charge for any
month will be paid in advance on the last business day of the preceding month
except that the first monthly fee paid hereunder shall be paid immediately
following the Effective Time. Except as otherwise set forth herein, the
Provider will invoice the Customer for any additional costs incurred by the
Provider for the benefit of the Customer which are to be paid pursuant to
Exhibit A or B hereto, and such invoices will be payable within 30 days of
receipt.
-7-
<PAGE>
5. Government Contracts. In the event that the Services to be performed
--------------------
involve contracts the Customer may have as a Government prime contractor or
subcontractor, the provisions of such contracts required by any applicable
federal acquisition regulation, including but not limited to, the Walsh-Healey
Public Contracts Act, Fair Labor Standards Act, Officials Not to Benefit,
Covenant Against Contingent Fees, Nondiscrimination in Employment, Military
Security Requirements, Office of Federal Procurement Policy Act and Examination
of Records, shall be binding on Provider to the extent necessary to enable the
Customer to meet its legal and contractual commitments.
If the Services to be performed by Provider include the receiving,
handling, or developing of any Government classified material or data, Provider
agrees that it and any and all persons or entities in its employ or control
shall comply with all applicable security regulations and requirements. Each
Provider agrees to immediately submit a confidential report to Customer
whenever, for any cause, it has reason to believe that there is an active danger
of espionage or sabotage affecting any work under such Government contracts.
Each Provider represents and warrants that it is familiar with the laws,
rules, orders, and regulations applicable to the performance of government
procurement contracts with federal agencies including, but not limited to, the
Department of Defense, the Department of Energy, and the National Aeronautics
and Space Administration; that each will abide by all such laws, rules, orders
and regulations; that it, and each of its employees performing Services
hereunder, is eligible to act as a consultant to a U.S. Government defense
contractor under all applicable federal laws and regulations
-8-
<PAGE>
regarding post-government employment; and that it will provide any and all
certifications, representations, reports, records or any other document required
to be submitted by suppliers under federal contracts.
6. Limitation of Liability: Indemnity. (a) A Provider shall have no
_______________________
liability to the Customer or any third party in connection with the provision of
the Services except to the extent such Services were provided in breach of the
Provider's Standard of Care and, in such a case, only to the extent of the
following:
(i) a dollar amount limited to the amount of insurance proceeds paid to
Provider therefor from a third party insurance company, and
(ii) at the option of the Customer, Provider shall either:
(x) perform again the particular Service performed in breach of the
Standard of Care at no cost to Customer, or
(y) give the Customer a refund of the portion of the monthly base fee
attributable to the cost of performance of the Service provided
in breach of the Standard of Care.
In no event shall the Provider be liable in connection with its provision of the
Services for any indirect, special or consequential damages, including any fines
or penalties payable by the Customer to any government agency, or for any loss
of profits or other economic damages.
(b) The Customer hereby agrees to indemnify and hold the Provider and its
officers, directors, agents and employees harmless from and against any and all
liabilities, losses,
-9-
<PAGE>
damages, expenses, fines and penalties of any kind, including reasonable
attorneys' fees and disbursements incurred by the Provider either:
(i) as the result of any claim made against the Provider by any third
party arising out of the Provider's provision of the Services (except
to the extent, and only to the extent, of Provider's liability to
Customer for the respective Service as provided in Paragraph 6(a),
above); and/or
(ii) arising out of the Customer's negligence or malfeasance in
connection with its use of the Services.
7. Insurance. The Provider shall procure and maintain fire, public
---------
liability, fidelity, property and other types of insurance, which are reasonably
necessary to protect itself and the Customer and consistent with past practice
(which may include self-insurance). All such policies of insurance with third
party insurers shall name Customer as an additional insured party to the extent
possible.
8. Force Majeure. Neither the Customer nor the Provider shall be liable
-------------
for any delays in its performance hereunder caused by events beyond its
reasonable control including, without limitation: acts of God, acts of
government, fire, equipment breakdown, strikes or other similar labor disputes
(settlement of which shall be in the sole discretion of the employer), or the
inability to acquire materials or third-party services. Upon the occurrence of
any event which is expected to or does cause a delay in performance hereunder,
the person or party whose performance is or may be delayed shall give prompt
written notice thereof to the Customer or Provider, as the case may be.
9. Disputes. In the event of any disputes arising out of or in
--------
connection with the execution, interpretation, performance or nonperformance of
this Agreement,
-10-
<PAGE>
Provider and Customer shall use the following procedure prior to
either party pursuant other available legal remedies:
Upon signing of this Agreement, each party will designate one
representative ("Representative") for the purpose of resolving disputes which
may arise from time to time. A party may change its Representative to act
hereunder at any time upon notice to the other. Upon a dispute arising, either
or both Representatives may request in writing a conference with the other. If
so requested, the conference shall occur within ten (10) days of the initial
written request and shall be held via telephone or at a mutually agreed upon
location, at the option of the Representatives. The purpose and scope of the
conference shall be limited to issues related to resolving the dispute. At the
conference, each Representative shall use their reasonable best efforts to
attempt to resolve the dispute. If the dispute has not been settled within
thirty (30) days of the first meeting of the Representatives, the parties shall
establish a Management Appeal Board ("MAB") within ten (10) days of receipt of a
request by either party to set up a MAB. The MAB shall consist of two (2)
members of each respective party's management. Olin shall appoint two members
to represent Olin, and Primex shall appoint two members to represent Primex.
The sole purpose of MAB shall be to resolve any dispute over which the
Representatives failed to resolve. The MAB members shall be persons other than
the Representatives. The MAB shall meet at Olin's headquarters or other place
mutually agreed upon and confer to resolve the dispute by good faith
negotiations, which may include presentations by the Representative or others.
In the event the parties are unable to resolve their disputes after
availing themselves of the processes set forth above for a period of ninety (90)
days, such disputes
-11-
<PAGE>
shall be solely and finally settled by a board of three (3) arbitrators in
accordance with the Commercial Arbitration Rules (the "Arbitration Rules") of
the American Arbitration Association ("AAA"). The party electing arbitration
shall notify the other party in writing in accordance with the Arbitration
Rules, and such notice shall be accompanied by the name of the arbitrator
selected by the party serving the notice. The second arbitrator shall be chosen
by the other party, and a neutral arbitrator shall be chosen by the two
arbitrators so selected. If a party fails to select an arbitrator or to advise
the other party of its selection within thirty (30) days after receipt by such a
party of the notice of the intent to arbitrate, the second arbitrator shall be
selected by the AAA. If the third arbitrator shall not have been selected within
thirty (30) days after the selection of the second arbitrator, the appointment
shall be made by the AAA. All such proceedings shall be conducted in East Alton,
Illinois or another mutually agreed upon location. The arbitrator shall make
detailed findings of fact and law in writing in support of the decision of the
arbitrator panel, but shall not be empowered to award reimbursement of
attorneys' fees and other costs of arbitration to the prevailing party. The
provisions of this Section 9 shall not be deemed to preclude any party hereto
from seeking preliminary injunctive relief to protect or enforce its rights
hereunder, or to prohibit any court from making preliminary findings of fact in
connection with granting or denying such preliminary injunctive relief, or to
preclude any party hereto from seeking permanent injunctive or other equitable
relief after and in accordance with the decision of the arbitrator panel.
Whether any claim or controversy is arbitrable or litigable shall be determined
solely by the arbitrator panel pursuant to the provisions of this Section 9. Any
monetary award of
-12-
<PAGE>
the arbitrators panel shall include interest from the date of any breach or any
violation of this Agreement. The arbitrators shall fix an appropriate rate of
interest from the date of the breach or other violation to the date when the
award is paid in full. The parties agree that the decision of the arbitrators
shall be final and conclusive and that judgment on the arbitration award may be
entered in any court having jurisdiction over the parties or their assets.
It is expressly agreed that the failure of the parties to resolve a dispute
on any issue to be resolved hereunder shall not relieve either party from any
obligation set forth in this Agreement. In addition, the parties expressly
state their mutual determination that the failure to resolve any such disputes
shall not hinder or delay the providing of the Services, and that,
notwithstanding the pendency of any such dispute, neither party will be excused
of its obligations hereunder to cooperate with the other to effectuate the
purposes of this Agreement.
10. Books and Records. The Provider shall, upon reasonable notice and
_________________
during normal business hours, allow the Customer's financial personnel
reasonable access to its books, records and other information necessary to
confirm the calculation of the compensation and reimbursement due the Provider
hereunder.
11. Term and Termination. The term of this Agreement shall commence as of
____________________
the date hereof and shall continue until Services are no longer provided
hereunder. Each Service shall terminate on the earliest of (i) the last day of
the third full calendar month following receipt by the Provider of written
notice from the Customer to terminate the Service, or (ii) the last day of the
term for such Service as specified in the respective Service Description.
-13-
<PAGE>
12. Non-Waiver. The Customer's or the Provider's waiver of any breach or
__________
failure to enforce any of the terms or conditions of this Agreement at any time
shall not in any way affect, limit or waive such person's right thereafter to
enforce strict compliance with every term and condition hereof.
13. Assignment. Neither this Agreement nor any right or obligation
__________
hereunder is assignable or transferable by either party (in whole or part)
without the prior written consent of the other party and any such purported
assignment without such consent shall be void, except that either party shall
have the right to assign this Agreement and its rights and obligations
hereunder, without obtaining the prior written consent of the other party, to
any entity with which the assigning party merges or transfers a substantial part
of its assets or businesses to which this Agreement relates provided that such
assignee or transferee accepts such assignment or transfer and the rights and
obligations hereunder in writing. Nothing in this Agreement, express or
implied, is intended to confer any rights or remedies under this Agreement on
any person or entity other than Primex or Olin and their respective successors
and permitted assigns.
14. Applicable Law. This Agreement shall be governed by and construed in
--------------
accordance with the laws of the State of Illinois, without giving effect to its
conflict of laws provisions.
15. Captions. The titles contained in this Agreement are for reference
________
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
16. Amendment. This Agreement may be modified or amended only pursuant to
_________
a written agreement executed on behalf of each of Olin and Primex. No
modification
-14-
<PAGE>
or addition to this Agreement shall be effected by the
acknowledgment or acceptance by either party of any purchase order, invoice,
acknowledgment, release or other forms submitted by the other party containing
other or different terms or conditions.
17. Notices. All notices, consents, termination notices, and other
_______
communications to be given hereunder, other than routine immaterial
communications, shall be by telex or electronic facsimile, confirmed in writing
as hereinafter provided, or in writing which shall be valid and sufficient only
if delivered by hand or dispatched by registered or certified mail, return
receipt requested, postage prepaid, addressed to the other party at its address
as set forth below, or to such other address as has theretofore been designated
by the other party by notice given in accordance with this Section.
If to Olin
OLIN CORPORATION
501 Merritt Seven
P.O. Box 4500
Norwalk, CT 06856-4500
Attention: Corporation Secretary
Telecopier: (203) 750-3018
If to Primex
PRIMEX TECHNOLOGIES, INC.
10101 Ninth Street North
St. Petersburg, FL 33716-3807
Attention: Corporate Secretary
Telecopier: (813) 578- 8795
18. Entire Agreement. This Agreement (including the exhibits and
________________
schedules referred to herein) constitutes the entire agreement with respect to
the subject matter hereof between the parties hereto and supersedes all prior
agreements and understandings, oral and written, between the parties hereto,
with respect to the subject matter hereof.
-15-
<PAGE>
19. Counterparts. This Agreement may be executed in one or more
____________
counterparts, each of which shall for all purposes be deemed to be an original
and all of which together shall constitute one and the same instrument.
20. Severability. If any provision of this Agreement or the application
____________
of any such provision to any person or circumstances shall be held invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof.
21. Exclusive Benefit. This Agreement is made for the exclusive benefit
_________________
of Olin and Primex, and not for the benefit of any third party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
OLIN CORPORATION
By________________________________
Title:
PRIMEX TECHNOLOGIES, INC.
By_________________________________
Title:
-16-
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF PRIMEX TECHNOLOGIES, INC.
-----------------------------------------
(as of December 31, 1996)
<TABLE>
<CAPTION>
JURISDICTION PERCENTAGE OF DIRECT/
------------ ---------------------
WHERE INDIRECT OWNERSHIP BY
----- ---------------------
SUBSIDIARY ORGANIZED PRIMEX OF VOTING SECURITIES
- ---------- --------- ---------------------------
<S> <C> <C>
General Defense Corporation/1/ Pennsylvania 100%
Olin Aerospace Company/2/ Washington 100%
Physics International Company/3/ California 100%
U.S. Ordnance Company/4/ Delaware 100%
</TABLE>
There are omitted from the foregoing list the names of certain
subsidiaries which, if considered in the aggregate as a single subsidiary, would
not constitute a significant subsidiary.
- ----------
/1/ Doing business as "Olin Ordnance" in States of Florida and Pennsylvania.
/2/ To be renamed Primex Aerospace Company.
/3/ To be renamed Primex Physics International Company.
/4/ Doing business as "Olin Ordnance" in Los Angeles County, California.
<PAGE>
EXHIBIT 99.1
OLIN CORPORATION
501 MERRITT 7
P.O. BOX 4500
NORWALK, CT 06856-4500
December 9, 1996
Dear Shareholder:
I am pleased to report that the previously announced spin-off of our
ordnance and aerospace businesses is expected to become effective on December
31, 1996. Primex Technologies, Inc., a recently-formed Virginia corporation
which now owns all of Olin's former ordnance and aerospace businesses
("Primex"), will commence operations on the following day as an independent
public company whose shares will be included in the Nasdaq National Market
System under the symbol PRMX.
Holders of Olin Common Stock of record as of the close of business on
December 19, 1996, will receive one Primex common share for every ten shares
of Olin Common Stock held.
Mailing of the Primex stock certificates will begin on January 6, 1997; no
action is required on your part to receive your Primex shares. You will not be
required either to pay anything for the new shares or to surrender any Olin
shares. No fractional shares of Primex stock will be issued. If you otherwise
would be entitled to a fractional share you will receive a check for the cash
value thereof, which may be taxable to you. In due course you will be provided
with information to enable you to compute your tax basis in both Olin and
Primex stock. For U.S. federal income tax purposes, Olin has received an
opinion of counsel that the distribution of the new Primex shares is tax-free
to Olin and to you to the extent that you receive Primex shares.
The enclosed Information Statement describes the distribution in detail and
contains important information about Primex, including financial statements. I
suggest that you read it carefully. If you have questions regarding the
distribution, please contact Richard Koch, Vice President-Investor Relations
at the following telephone number: (203) 750-3254.
I believe the distribution of Primex shares will serve the business
interests of both Olin and Primex. This action is demonstrative of and in
keeping with Olin's goal of further increasing shareholder value.
Sincerely,
Donald W. Griffin
Chairman of the Board, President &
Chief Executive Officer
<PAGE>
SUBJECT TO COMPLETION OR AMENDMENT, DATED DECEMBER 6, 1996
INFORMATION STATEMENT
PRIMEX TECHNOLOGIES, INC.
DISTRIBUTION OF APPROXIMATELY 4,996,372 SHARES OF COMMON STOCK
This Information Statement is being furnished in connection with the
distribution (the "Distribution") by Olin Corporation ("Olin") to holders of
its common stock, par value $1 per share ("Olin Common Stock"), of all the
outstanding shares of common stock, par value $1 per share ("Company Common
Stock") of Primex Technologies, Inc. (the "Company"). Olin has transferred or
will transfer to the Company all of the ordnance and aerospace businesses
formerly conducted by Olin. See "Business".
Shares of Company Common Stock will be distributed to holders of Olin Common
Stock of record as of the close of business on December 19, 1996 (the "Record
Date"). Each such holder will receive one share of Company Common Stock for
every ten shares of Olin Common Stock held on the Record Date. The
Distribution will be effective at 12:00 midnight on December 31, 1996, with
the distribution of Company stock certificates commencing January 6, 1997. No
consideration will be paid by Olin's shareholders for shares of Company Common
Stock. There is no current trading market for Company Common Stock. However,
the Company Common Stock has been approved for quotation on the Nasdaq
National Market System, subject to official notice of issuance.
In reviewing this Information Statement, you should carefully consider the
matters described under the caption "Risk Factors" on pages 10-11.
----------------
NO SHAREHOLDER APPROVAL OF THE DISTRIBUTION IS REQUIRED OR SOUGHT.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
INFORMATION STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
----------------
Shareholders of Olin with inquiries related to the Distribution should
contact Investor Relations, Olin Corporation, 501 Merritt 7, P.O. Box 4500,
Norwalk, Connecticut 06856-4500, telephone (203) 750-3254, or Olin's stock
transfer agent, ChaseMellon Shareholder Services, L.L.C., 85 Challenger Road,
Ridgefield Park, New Jersey, 07660, telephone (800) 306-8594.
The date of this Information Statement is December , 1996.
<PAGE>
INFORMATION STATEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY............................................................... 1
THE DISTRIBUTION...................................................... 6
General............................................................. 6
Manner of Effecting the Distribution................................ 6
Reasons for the Distribution........................................ 6
Results of the Distribution......................................... 7
Federal Income Tax Consequences of the Distribution................. 7
Listing and Trading of Company Common Stock......................... 9
Third Party Consents; Regulatory Approvals.......................... 9
Reasons for Furnishing the Information Statement.................... 9
RISK FACTORS.......................................................... 10
Current Operating Losses............................................ 10
Dependence on Sales to the U.S. Government.......................... 10
Risks Inherent in U.S. Government Contracting....................... 10
Company Dividend Policy............................................. 11
Absence of Trading Market for Company Stock......................... 11
Changes in Trading Prices of Olin Common Stock...................... 11
Competition......................................................... 11
DIVIDEND POLICY....................................................... 11
CAPITALIZATION........................................................ 12
SELECTED FINANCIAL AND OPERATING DATA................................. 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.................................. 14
BUSINESS.............................................................. 21
General............................................................. 21
Products and Services............................................... 22
Customers........................................................... 25
Raw Materials and Supplies.......................................... 25
U.S. Government Contracts and Regulations........................... 25
Novation of U.S. Government Contracts............................... 27
Competition......................................................... 28
Research and Development; Patents................................... 28
Backlog............................................................. 28
Export Sales........................................................ 29
Seasonality......................................................... 29
Employees........................................................... 29
Environmental Matters............................................... 29
Credit Facility..................................................... 29
PROPERTIES............................................................ 30
Principal Manufacturing Facilities.................................. 30
LEGAL PROCEEDINGS..................................................... 32
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RELATIONSHIP BETWEEN OLIN AND THE COMPANY AFTER THE
DISTRIBUTION........................................................ 33
Distribution Agreement............................................. 33
Technology Transfer and License Agreement.......................... 34
Tax Sharing Agreement.............................................. 34
Powder Supply Requirements Agreement; Component Supply Agreement... 34
Ball Powder(R) Assignment Agreement................................ 35
Browning Distribution Agreement.................................... 35
Assumption of Liabilities and Indemnity Agreement.................. 35
Transition Services Agreement...................................... 35
Covenant Not To Compete Agreement.................................. 35
Raufoss Technology Agreement....................................... 35
Australia Agency Agreement......................................... 36
Trade Name License Agreement....................................... 36
Primex Directors................................................... 36
MANAGEMENT AND EXECUTIVE COMPENSATION................................ 37
Board of Directors................................................. 37
Committees of the Board of Directors............................... 38
Compensation of Directors.......................................... 38
Executive Officers of the Company.................................. 39
Compensation of Executive Officers................................. 40
Adjustment to Prior Olin Equity-Based Benefits for Company Employ-
ees............................................................... 43
Stock Plan for Non-employee Directors.............................. 43
Pension and Savings Plan........................................... 43
Primex 1996 Long Term Incentive Plan............................... 45
Supplemental Plans................................................. 46
Retiree Medical and Life Insurance Benefits........................ 46
Other Benefits..................................................... 47
Executive Agreements............................................... 47
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION....................................................... 47
BENEFICIAL OWNERSHIP................................................. 48
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS....................... 49
DESCRIPTION OF CAPITAL STOCK......................................... 49
Authorized Capital Stock........................................... 49
Common Stock....................................................... 49
Preferred Stock.................................................... 49
Authorized But Unissued Capital Stock.............................. 50
Rights............................................................. 50
No Preemptive Rights............................................... 50
Certain Provisions of the Articles of By-laws...................... 50
RIGHTS PLAN.......................................................... 51
LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS.............. 52
AVAILABLE INFORMATION................................................ 53
INDEX TO COMBINED FINANCIAL STATEMENTS............................... F-1
</TABLE>
iii
<PAGE>
SUMMARY
The following is a summary of certain information contained in this
Information Statement. This summary is included for convenience only and should
not be considered complete. This Summary is qualified in its entirety by the
more detailed information contained elsewhere in this Information Statement
which should be read in its entirety. Certain capitalized terms used in this
Summary are defined elsewhere in this Information Statement.
THE DISTRIBUTION
DISTRIBUTING COMPANY........ Olin Corporation ("Olin"). References to Olin
include its consolidated subsidiaries except
where the context otherwise requires.
DISTRIBUTED COMPANY......... Primex Technologies, Inc., a Virginia corporation
(the "Company"), which will own all of the
ordnance and aerospace businesses formerly
operated by Olin (the "Ordnance/Aerospace
Business"). References herein to the Company
prior to the Distribution means the Ordnance
Division and the Aerospace Division of Olin
conducting the Ordnance/Aerospace Business. See
"Business".
DISTRIBUTION RATIO.......... Each holder of Olin Common Stock will receive a
dividend of one share of Company Common Stock for
every ten shares of Olin Common Stock held on the
Record Date (the "Distribution Ratio").
SECURITIES TO BE
DISTRIBUTED................ Based on 49,963,728 shares of Olin Common Stock
outstanding on October 31, 1996, as adjusted to
reflect a two-for-one stock split effective
October 31, 1996, approximately 4,996,372 shares
of Company Common Stock (plus associated rights
pursuant to a Shareholders Rights Plan) (the
"Rights" and, collectively with the Company
Common Stock, the "Shares") will be distributed.
The Shares to be distributed will constitute all
of the outstanding Shares of the Company
immediately after the Distribution. No action is
required by an Olin shareholder to receive the
Company Common Stock to which an Olin shareholder
is entitled.
FRACTIONAL SHARES........... Fractional Shares will not be distributed.
Fractional Shares will be aggregated and sold in
the public market by the Distribution Agent and
the aggregate net cash proceeds will be
distributed ratably to those shareholders
entitled to fractional interests. See "The
Distribution--Manner of Effecting the
Distribution".
RECORD DATE................. December 19, 1996 (close of business).
DISTRIBUTION DATE...........
January 6, 1997.
DISTRIBUTION AGENT,
TRANSFER AGENT AND
REGISTRAR FOR THE SHARES... ChaseMellon Shareholder Services, L.L.C. (the
"Distribution Agent") will be the Distribution
Agent, Transfer Agent and Registrar for the
Shares.
FEDERAL INCOME TAX
CONSEQUENCES OF THE Olin and the Company have received an opinion of
DISTRIBUTION............... counsel that for Federal income tax purposes the
receipt of Shares by Olin
1
<PAGE>
shareholders will be tax-free. No gain or loss
will be recognized by Olin on the Distribution.
Such opinion is subject to certain factual
representations and assumptions. No ruling has
been or will be sought from the Internal Revenue
Service with respect to the Federal income tax
consequences of the Distribution. See "The
Distribution--Federal Income Tax Consequences of
the Distribution".
STOCK EXCHANGE LISTING...... There is not currently a public market for the
Company Common Stock. However, the Company Common
Stock has been approved for inclusion in the
Nasdaq National Market System ("Nasdaq"), subject
to official notice of issuance, under the symbol
PRMX. It is possible that trading may commence on
a "when-issued" basis prior to the Distribution.
On the first Nasdaq trading day following the
Distribution Date, "when-issued" trading in
respect of Company Common Stock will end and
"regular-way" trading will begin. See "The
Distribution--Listing and Trading of Company
Common Stock".
COMPANY INDEBTEDNESS........
Prior to the Distribution, the Company will
assume a $160 million credit facility established
by Olin, under which Olin will borrow $125
million. Amounts to be borrowed by Olin will be
used to reduce its own borrowings. The credit
facility will have a five-year term and permits
borrowings thereunder with up to $30 million
available for letters of credit. The facility is
intended to provide sufficient liquidity for the
Company's current funding needs. The facility
will permit various borrowing options and
contains customary commercial bank covenants,
including restrictions on the payment of
dividends by the Company and the acquisition by
the Company of its capital stock. See "Business--
Credit Facility".
RELATIONSHIP WITH OLIN
AFTER THE DISTRIBUTION..... Following the Distribution, the Company will be
an independent public company and Olin will have
no continuing stock ownership interest in the
Company. The current chief financial officer of
Olin will serve as one of the Directors of the
Company following the Distribution. No officer of
Olin or the Company will be an officer of the
other following the Distribution. The Company and
Olin will enter into various agreements for the
purpose of accomplishing the Distribution,
governing their relationship subsequent to the
Distribution and providing for the allocation of
tax and certain other liabilities and obligations
attributable to periods prior to the
Distribution. These include agreements providing
for the transfer of assets and the assumption of
certain liabilities of Olin prior to the
Distribution by the Company, the transfer of
certain technologies to the Company by Olin, the
transfer of Olin's Ball Powder(R) trademark to
the Company, the supply of propellant powder to
Olin by the Company following the Distribution,
the agreements by Olin and the Company not to
compete with each other in certain businesses
following the Distribution and agreements
providing for the novation of certain contracts
with the U.S. Government to which
2
<PAGE>
Olin is a party. The Company and Olin will also
enter into an indemnification agreement whereby
the Company generally has indemnified Olin
against liabilities, litigation and claims
arising out of the Ordnance/Aerospace Business,
as well as costs associated with the removal,
remediation or control of environmental
conditions relating to certain of the Company's
existing and former plant sites, and Olin
generally will indemnify the Company against
liabilities, litigation and claims arising out of
Olin's other businesses following the
Distribution. See "Relationship Between Olin and
the Company After the Distribution";
"Management's Discussion and Analysis of
Financial Condition and Results of Operations--
Environmental Matters"; "Business--Environmental
Matters".
DIVIDEND POLICY............. The payment and level of cash dividends by the
Company after the Distribution will be subject to
the discretion of the Board of Directors of the
Company (the "Board"). Olin currently anticipates
that the Company will initially pay quarterly
cash dividends which, on an annual basis, will
aggregate $0.60 per Share. However, future
dividend decisions will be based on, and affected
by, a number of factors, including the operating
results and financial requirements of the Company
on an independent basis. See "The Distribution--
Dividend Policy".
CERTAIN PROVISIONS OF THE
COMPANY'S ARTICLES AND BY-
LAWS; RIGHTS AGREEMENT.....
Certain provisions of the Company's Amended and
Restated Articles of Incorporation (the
"Articles") and Amended and Restated By-laws (the
"By-laws"), as each will be in effect following
the Distribution, may have the effect of making
more difficult an acquisition of control of the
Company in a transaction not approved by the
Board. The Articles authorize the Board to issue
up to 10,000,000 shares of preferred stock in one
or more series and to fix the relative rights and
preferences and the voting powers of the shares
of any such series. See "Description of Capital
Stock--Preferred Stock". The Board consists of
three classes of directors, each of which serves
for three years. The Company's By-laws require
that shareholders give the Secretary of the
Company notice of shareholder nominees for
election as a director no later than 90 days
before an annual meeting of shareholders or seven
days following notice of a special meeting of
shareholders for election of directors. Special
meetings of shareholders may be called only by
the Board or designated officers of the Company.
Directors may be removed only with cause and
vacancies on the Board may be filled only by the
Board unless the vacancy is to be filled at an
annual meeting of shareholders. See "Description
of Capital Stock--Certain Provisions of Articles
and By-laws". The Rights Agreement described
elsewhere herein will also make more difficult an
acquisition of control of the Company in a
transaction not approved by the Board. See
"Rights Plan". The Company has elected to "opt
out" of coverage under Article 14.1 of the
Virginia Stock
3
<PAGE>
Corporation Act, which imposes restrictions on
the voting rights of certain significant
shareholders. See "Description of Capital Stock--
Certain Provisions of the Articles and By-laws".
RISK FACTORS................
Stockholders should consider certain factors
including recent operating losses, the importance
to the Company of its defense contracting
business and possible changes in national defense
policies, and risks associated with Government
contracting as discussed under "Risk Factors".
PRINCIPAL OFFICE OF THE 10101 Ninth Street North St. Petersburg, Florida
COMPANY.................... 33716-3807
4
<PAGE>
PRIMEX TECHNOLOGIES, INC.
SUMMARY FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
The historical financial information presented below summarizes certain
financial information of the Company and is derived from the Combined Financial
Statements of the Company. Such historical financial data may not be indicative
of the Company's future performance as an independent company. The summary data
presented below should be read in conjunction with the Combined Financial
Statements and Notes thereto and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in this
Information Statement.
<TABLE>
<CAPTION>
UNAUDITED
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------- ----------------------------
1996(/1/) 1995 1995(/1/) 1994 1993(/2/)
--------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Sales......................... $328,775 $359,582 $508,113 $416,148 $376,332
Operating Income (Loss)....... (555) 17,402 21,093 28,723 9,317
Net Income (Loss)............. (7,749) 5,046 5,661 12,023 1,022
</TABLE>
<TABLE>
<CAPTION>
UNAUDITED
SEPTEMBER 30, DECEMBER 31,
--------------- -----------------------
1996 1995 1995 1994 1993
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total Assets.......................... 351,812 371,554 380,979 364,175 294,077
Short-term Borrowings due Olin........ 125,000 125,000 125,000 125,000 125,000
Total Liabilities..................... 194,055 210,247 222,444 233,062 202,790
Equity................................ 157,757 161,307 158,535 131,113 91,287
</TABLE>
- --------
(1) Earnings include a pre-tax charge for the settlement of claims relating to
a government investigation of certain testing irregularities at the Company's
Marion, Illinois facility ($6,000 in 1996 and $2,000 in the year ended 1995)
and a $4,500 pre-tax charge in 1996 related to a trial court ruling involving
a contract dispute with the Belgium Ministry of Defense related to a 1985
sale of tank ammunition.
(2) 1993 results include a pre-tax charge for a strategic action plan of
$12,600.
5
<PAGE>
THE DISTRIBUTION
GENERAL
The Board of Directors of Olin has approved the distribution of all of the
outstanding shares of Company Common Stock to all holders of Olin Common
Stock. In the Distribution, each holder of Olin Common Stock will receive as a
dividend one share of Company Common Stock for every ten shares of Olin Common
Stock held on the Record Date.
MANNER OF EFFECTING THE DISTRIBUTION
The general terms and conditions relating to the Distribution are set forth
in the Distribution Agreement between the Company and Olin (the "Distribution
Agreement"). See "Relationship Between Olin and the Company After the
Distribution--Distribution Agreement".
Pursuant to the terms and conditions of the Distribution Agreement, the
Distribution will be effective December 31, 1996 with Company stock
certificates being distributed on January 6, 1997 (the "Distribution Date") to
shareholders of record of Olin at the close of business on the Record Date.
Prior to the Distribution Date, Olin will deliver all outstanding Shares to
the Distribution Agent for distribution. The Distribution Agent will mail,
beginning on or about the Distribution Date, certificates representing the
Shares to Olin shareholders of record on the Record Date. Each Olin
shareholder will receive one Share for every ten shares of Olin Common Stock
held on the Record Date. Olin shareholders will not be required to pay for
Shares received in the Distribution, or to surrender or exchange Olin shares
in order to receive Shares of the Company. No vote of Olin shareholders is
required or sought in connection with the Distribution, and Olin shareholders
have no appraisal rights in connection with the Distribution.
No certificates or scrip representing fractional Shares will be issued to
Olin shareholders as part of the Distribution. In lieu of receiving fractional
Shares, each holder of Olin Common Stock who would otherwise be entitled to
receive a fractional Share will receive cash for such fractional interest. The
Distribution Agent will, as soon as practicable after the Distribution Date,
aggregate fractional Shares into whole Shares and sell them in the open market
at then prevailing market prices and distribute the aggregate proceeds (net of
brokerage fees) ratably to Olin shareholders entitled to fractional interests.
The amount of such payment will depend on the prices at which the aggregated
fractional Shares are sold by the Distribution Agent in the open market
shortly after the Distribution Date.
In order to be entitled to receive Shares of the Company in the
Distribution, Olin shareholders must be shareholders at the close of business
on the Record Date, December 19, 1996.
REASONS FOR THE DISTRIBUTION
ACCESS TO CAPITAL. It is important to Olin that it maintain an investment
grade rating for its debt in order to ensure continued access to capital
markets at attractive rates, and it has been advised by Moody's Investors
Service that maintaining a target range of debt to total capital of 35-40% is
critical to Olin's rating level. Olin has effected two equity offerings in
recent years. Based upon the capital spending requests of the various Olin
businesses for fiscal year 1996, Olin will be required to limit its capital
spending in order to maintain a 35-40% ratio of debt to total capital. As part
of Olin, the Company has had to compete with Olin's other businesses for
capital. Olin has decided not to give its Ordnance and Aerospace Divisions
priority for growth capital and reinvestment, but rather to allocate its
capital resources primarily to other businesses which historically have been
its core businesses. Olin foresees that these capital priorities will continue
indefinitely. Because the Distribution will give the Company direct access to
capital markets, it is expected that the Company will be better able to grow
its business as an independent company, free of Olin's capital constraints. In
addition, Olin desires to focus its management resources on its historic
chemicals, metals and small caliber ammunition core businesses.
6
<PAGE>
CONSOLIDATION IN THE DEFENSE INDUSTRY. Olin and the Company have determined
that, as part of Olin, the Company will not be able to participate in as
meaningful a way in the consolidation currently occurring in the defense
industry or otherwise pursue appropriate strategies in the industry. However,
Olin and the Company believe that the Company can do so as a separate and
independent company. Following the Distribution, the Company will be in a
position to utilize its own cash flow (a portion of which has been used by
Olin in its other businesses in recent years) and to raise cash in the capital
markets (free of Olin's capital constraints and based on its own financial
performance) in order to modernize facilities, to make acquisitions and/or to
enter into joint ventures or other combinations. In addition, the Company
believes that it will be in a position to issue its own capital stock to make
acquisitions should an attractive opportunity present itself. The Company
intends to evaluate and, where appropriate, pursue potential acquisitions and
combinations following the Distribution.
EXPANSION OF CUSTOMER BASE. The Company produces a propellant used in small
and medium caliber military ammunition and marketed under the trade name Ball
Powder(R)*. This propellant is also used in commercial sporting ammunition,
including Olin's Winchester brand of sporting ammunition. The Company believes
that there has been some historical reluctance on the part of competitors of
Olin's Winchester Division ("Winchester") to buy large quantities of Ball
Powder(R) propellant from the Company because of the common ownership of
Winchester and the Company. The Company believes that, as a separate and
independent company, it will be able to gain more of these companies as
customers and to increase existing sales to such companies. In addition, the
Company believes that it will be able to increase sales to the so-called
"reloader" market (individuals who buy ammunition components and load their
own rounds with powder), a substantial market which has not been fully
exploited by Olin.
MORE FOCUSED INCENTIVE PROGRAMS. The Company believes that long-term
incentive programs keyed to its stock and its earnings can be an important
factor contributing to its operational and financial performance. At present,
the effect of any individual manager's performance on Olin's stock price or
earnings, and consequently on the manager's long-term compensation, is diluted
by the multiplicity and relative size of the businesses in which Olin is
engaged. By enabling the Company to provide incentive compensation in the form
of direct and indirect equity ownership in the Company, the Distribution will
permit the Company to design incentive compensation programs that relate
directly to its own business characteristics and performance. See "Management
and Executive Compensation" elsewhere herein.
For information concerning certain relationships between the Company and
Olin following the Distribution, see "Relationship Between Olin and the
Company After the Distribution" elsewhere herein.
RESULTS OF THE DISTRIBUTION
After the Distribution, the Company will be an independent public company
owning and operating the Ordnance/Aerospace Business. The number and identity
of shareholders of the Company immediately after the Distribution will be the
same as the number and identity of the shareholders of Olin on the Record
Date. Immediately after the Distribution, the Company expects to have
approximately 11,308 holders of record of Shares and approximately 4,996,372
Shares outstanding, based on the number of record shareholders and outstanding
shares of common stock of Olin on October 31, 1996, as adjusted to reflect a
two-for-one stock split effective as of October 31, 1996, and the Distribution
Ratio of one Share for every ten shares of Olin Common Stock. The actual
number of Shares to be distributed will be determined as of the Record Date.
The Distribution will not affect the number of outstanding shares of Olin
Common Stock or any rights of Olin shareholders.
FEDERAL INCOME TAX CONSEQUENCES OF THE DISTRIBUTION
Olin and the Company have received an opinion of Cravath, Swaine & Moore,
counsel to Olin, that for Federal income tax purposes:
1. The Distribution will qualify as a tax-free spin-off under Section 355
of the Internal Revenue Code of 1986, as amended (the "Code").
- --------
* Ball Powder(R) is a registered trademark of Olin.
7
<PAGE>
2. No gain or loss will be recognized by Olin on the Distribution.
3. No gain or loss will be recognized by the holders of Olin Common Stock
solely as a result of their receipt of Shares in the Distribution.
4. The tax basis of the Olin Common Stock and the Company Common Stock
held immediately after the Distribution by any holder will equal such
holder's tax basis in its Olin Common Stock immediately before the
Distribution, allocated in proportion to the relative fair market values of
the Olin Common Stock and the Company Common Stock at the time of the
Distribution.
5. The holding period of the Company Common Stock received in the
Distribution will include the holding period of the Olin Common Stock with
respect to which the Company Common Stock was distributed, provided that
such Olin Common Stock was held as a capital asset on the Distribution
Date.
This opinion of counsel is subject to certain assumptions and the accuracy
of certain factual representations made by Olin and the Company. Olin is not
aware of any present facts or circumstances that would cause such assumptions
or representations to be untrue. Olin and the Company also will agree to
certain restrictions on their future actions to provide further assurances
that the Distribution will qualify as a tax-free spin-off. See "Relationship
Between Olin and the Company after the Distribution--Tax Sharing Agreement".
No ruling has been or will be sought from the Internal Revenue Service with
respect to the Federal income tax consequences of the Distribution, and there
can be no assurance that the Internal Revenue Service will not take a position
contrary to that expressed in Cravath, Swaine & Moore's opinion.
If the Distribution were not to qualify under Section 355 of the Code, then
(i) Olin would not recognize any loss realized on the Distribution, but would
recognize capital gain equal to the excess, if any, of (x) the fair market
value of the Company Common Stock on the Distribution Date over (y) its
adjusted tax basis in the Company Common Stock, and (ii) each holder of Olin
Common Stock who receives shares of Company Common Stock in the Distribution
would be treated as receiving a taxable distribution in an amount equal to the
fair market value of such shares of Company Common Stock on the Distribution
Date, taxed first as a dividend to the extent of such holder's pro rata share
of Olin's current and accumulated earnings and profits, and then as a
nontaxable return of capital to the extent of such holder's basis in the Olin
Common Stock (with any remaining amount being taxed as capital gain). Olin and
the Company will each be severally liable to the Internal Revenue Service for
the full amount of the Federal capital gains tax described in (i) above that
is not paid by the other. Pursuant to the Tax Sharing Agreement, Olin and the
Company will indemnify each other for any liabilities resulting from any
breach of their respective representations made to Cravath, Swaine & Moore in
connection with its opinion. If the Distribution fails to qualify as a tax-
free spin-off as a result of action taken after the Distribution by Olin or
the Company, the party that took such action will be responsible for the full
amount of any resulting corporate tax liability. Neither Olin nor the Company
will indemnify any holder of Olin Common Stock who receives Shares in the
Distribution for any tax liabilities.
In any case, cash received by a holder of Olin Common Stock in lieu of a
fractional share of Company Common Stock will be treated as received in
exchange for such fractional share and the holder will recognize gain or loss
for Federal income tax purposes measured by the difference between the amount
of cash received and the holder's tax basis in the fractional share. Such gain
or loss will be capital gain or loss to the holder if the Olin Common Stock
has been held as a capital asset, and will be long-term capital gain or loss
if such Olin Common Stock has been held for more than one year.
The discussion in the preceding two paragraphs of the anticipated Federal
income tax consequences of the Distribution is for general information only.
Olin stockholders should consult their own advisers as to the specific tax
consequences of the Distribution, including the effects of foreign, state and
local tax laws and the effect of possible changes in tax laws.
8
<PAGE>
LISTING AND TRADING OF COMPANY COMMON STOCK
There is not currently a public market for the Shares. However, the Company
Common Stock has been approved for inclusion in the NASDAQ National Market
System ("Nasdaq"), subject to official notice of issuance, under the symbol
PRMX. It is possible that trading may commence on a "when-issued" basis prior
to the Distribution. On the first Nasdaq trading day following the
Distribution Date, "when-issued" trading in respect of Company Common Stock
will end and "regular-way" trading will begin. Nasdaq will not approve any
trading in respect of Company Common Stock until the Securities and Exchange
Commission has declared effective the Registration Statement of the Company on
Form 10 in respect of the Company Common Stock.
There can be no assurance as to the price at which the Company Common Stock
will trade before, on or after the Distribution Date. Until the Company Common
Stock is fully distributed and an orderly market develops in the Company
Common Stock, the price at which such stock trades may fluctuate significantly
and may be lower than the price that would be expected for a fully distributed
issue. The price of the Company Common Stock will be determined in the
marketplace and may be influenced by many factors, including (i) the depth and
liquidity of the market for the Company Common Stock, (ii) developments
affecting the business of the Company generally, (iii) the Company's dividend
policy, (iv) investor perception of the Company and the industries in which
the Company participates and (v) general economic and market conditions.
The Shares distributed to Olin shareholders will be freely transferable,
except for Shares received by persons who may be deemed to be "affiliates" of
the Company under the Securities Act of 1933, as amended (the "Securities
Act"). Persons who may be deemed affiliates of the Company after the
Distribution generally include individuals or entities that control, are
controlled by, or are under common control with the Company and may include
certain officers and directors of the Company. Persons who are affiliates of
the Company will be permitted to sell their Shares only pursuant to an
effective registration statement under the Securities Act or an exemption from
the registration requirements of the Securities Act, such as exemptions
afforded by Section 4(2) of the Securities Act or Rule 144 thereunder.
THIRD PARTY CONSENTS; REGULATORY APPROVALS
Federal procurement regulations may require Olin to enter into novation
agreements with the Company and the U.S. Government relating to U.S.
Government contracts to which Olin is a party, pursuant to which Olin will
guarantee or otherwise become liable for the Company's obligations under such
contracts which are being transferred to the Company in connection with the
Distribution. See "Business--Novation of U.S. Government Contracts". Certain
consents or approvals may be required pursuant to (i) the Arms Export Control
Act, or the rules and regulations promulgated thereunder, (ii) rules and
regulations of the Bureau of Alcohol, Tobacco and Firearms and (iii) pursuant
to the Department of Defense Industrial Security Manual. In addition, the
Company may be required to obtain the consent of certain commercial customers
pursuant to contractual obligations.
REASONS FOR FURNISHING THE INFORMATION STATEMENT
This Information Statement is being furnished by Olin solely to provide
information to shareholders of Olin who will receive Shares in the
Distribution. It is not, and is not to be construed as, an inducement or
encouragement to buy or sell any securities of Olin or the Company. The
information contained in this Information Statement is believed by Olin and
the Company to be accurate as of the date set forth on its cover. Changes may
occur after that date, and neither Olin nor the Company will update the
information except in the normal course of their respective public disclosure
practices.
9
<PAGE>
RISK FACTORS
Certain factors, including those described below, should be considered
carefully in evaluating the Company, its Common Stock and its business.
Neither Olin nor the Company makes, nor is any other person authorized to
make, any representation as to the future market value of the Company Common
Stock.
CURRENT OPERATING LOSSES
The Company reported a net loss of approximately $7.7 million for the nine
months ended September 30, 1996, compared to net income of $5.0 million for
the comparable period of 1995. Lower sales of Ball Powder(R) propellant
combined with a pretax charge of $10.5 million to provide for claims and legal
matters, were primarily responsible for the decrease in net income. Sales of
commercial Ball Powder(R) propellant declined in 1996 due to sporting
ammunition customers drastically reducing their purchases. The components of
the charge consist of the final settlement of an investigation of certain
testing irregularities at the Company's Marion, Illinois facility ($6 million)
and a contract dispute with the Belgium Ministry of Defense ($4.5 million net
of a $1.1 million receivable). Olin has agreed to assume responsibility for
certain post-Distribution legal costs, judgments and civil settlements
relating to the Belgium contract dispute. See "Legal Proceedings". For
information as to the pro forma effect on operating results of the higher
administrative costs anticipated as an independent public company, see
"Management's Discussion and Analysis--Future Service Costs".
DEPENDENCE ON SALES TO THE U.S. GOVERNMENT
The Company's sales to the U.S. Government and its agencies (primarily the
Department of Defense) amounted to $391 million in 1995, $319 million in 1994
and $302 million in 1993 and in 1995 such sales represented approximately 80%
of the Company's revenue. Over the past several years, the U.S. defense
budget, and in particular the ammunition budget, has declined. This reduction
has had an adverse effect upon the Company's sales and profitability and has
resulted in industry consolidations. While the Company believes that U.S.
defense spending has stabilized, future levels of defense spending cannot be
predicted with certainty. The impact of possible further reductions in the
level of defense procurement on the Company's income, liquidity, capital
resources and financial condition will depend on the timing and size of the
changes and the Company's ability to mitigate their impact with new business,
business consolidations or cost reductions. Licenses are also required from
U.S. Government agencies for export of many of the Company's products,
including munitions and spacecraft and military aircraft components and
subsystems. In view of the uncertainty regarding the size, content and
priorities of the annual Department of Defense procurement schedule, the
historical financial information of the Company may not be indicative of
future performance. See "Business--U.S. Government Contracts and Regulations".
RISKS INHERENT IN U.S. GOVERNMENT CONTRACTING
A significant portion of the Company's sales is associated with long-term
contracts and programs for the U.S. Government in which there are significant
inherent risks. A significant percentage of the Company's sales is pursuant to
firm fixed-price contracts which present the inherent risk of unreimbursed
cost overruns. U.S. Government contracts entered into by the Company are, by
their terms, subject to termination by the Government either for the
Government's convenience or default by the Company. Because the U.S.
Government currently provides, directly and indirectly, approximately 80% of
the Company's revenue, the loss of a significant portion of such business
would have a material adverse effect on the Company's operations. Government
contracts also are dependent upon the levels and continuing availability of
Congressional appropriations. Congress usually appropriates funds for a given
program on a fiscal-year basis even though contract performance may take more
than one year. Consequently, for such multiyear programs, the contract is
usually partially funded, and additional monies are normally committed to the
contract by the procuring agency only as appropriations are made by Congress
for future fiscal years. Most U.S. Government contracts are also subject to
modification in the event of changes in funding, and the Company's cost
recovery and revenue are subject to adjustment as a result of audits by the
Defense Contract Audit Agency and other U.S. Government auditors. The award of
U.S. Government contracts also may be subject to protest or challenge by
unsuccessful bidders.
10
<PAGE>
In addition, the Company is subject to extensive and complex U.S. Government
procurement laws and regulations. These laws and regulations provide for
ongoing Government audits and reviews of contract procurement, performance and
administration. Failure to comply, even inadvertently, with these laws and
regulations and with laws governing the export of munitions and other
controlled products and commodities, and any significant violations of any
other federal law, could subject the Company or one or more of its businesses
to potential contract termination, civil and criminal penalties, and under
certain circumstances, suspension and debarment from future Government
contracts for a specified period of time. See "Business--U.S. Government
Contracts and Regulations"; "Legal Proceedings".
COMPANY DIVIDEND POLICY
The payment and level of cash dividends by the Company after the
Distribution will be subject to the discretion of the Board of Directors of
the Company (the "Board"). Olin initially expects the Company to declare
quarterly dividends of $0.15 per share. However, future dividend decisions
will be based on a number of factors, including the operating results and
financial requirements of the Company on an independent basis. As a result,
there can be no assurance that the dividend will remain at its initial level.
ABSENCE OF TRADING MARKET FOR COMPANY STOCK
There has not been any established public trading market for the Company
Common Stock. The Company Common Stock will be quoted on Nasdaq under the
symbol "PRMX". Trading in the Company Common Stock to be distributed may
commence on a "when issued" basis prior to the Distribution Date. There can be
no assurance as to the prices at which the Company Common Stock will trade
before, on, or after the Distribution Date. Until the Company Common Stock is
fully distributed and an orderly market develops, the prices at which such
stock trades may fluctuate significantly and may be lower than prices that
would be expected for a fully distributed issue. Prices for the Company Common
Stock will be determined in the marketplace and may be influenced by many
factors, including the depth and liquidity of the market for the Company
Common Stock, developments affecting the defense industry generally, investor
perception of the Company and general economic and market conditions.
CHANGES IN TRADING PRICES OF OLIN COMMON STOCK
After the Distribution, Olin Common Stock will continue to be listed for
trading on the New York Stock Exchange, Inc. and the Pacific and Chicago Stock
Exchanges under the symbol "OLN". As a result of the Distribution, the trading
prices of Olin Common Stock may be lower immediately following the
Distribution as compared to the trading prices of Olin Common Stock
immediately prior to the Distribution. The aggregate market values of Olin
Common Stock and Company Common Stock after the Distribution may be less than,
equal to, or greater than, the market value of Olin Common Stock prior to the
Distribution.
COMPETITION
The Company encounters strong competition in each of its product lines.
Certain of the Company's competitors are larger and have greater financial
resources than the Company. The degree to which the Company participates in
future U.S. Government business will depend to a large extent on its ability
to offer better program performance than its competitors at a lower price to
the Government. See "Business--Competition".
DIVIDEND POLICY
The payment and level of cash dividends by the Company after the
Distribution will be subject to the discretion of the Board of Directors of
the Company. Although it is anticipated that following the Distribution the
Company initially will declare quarterly cash dividends, which on an annual
basis will aggregate $0.60 per Share, future dividend decisions will be based
on, and affected by, a number of factors, including the operating results and
financial requirements of the Company on an independent basis. As a result,
there can be no assurance that the dividend will remain at its initial level.
The Company's credit facility will limit the payment or declaration of
dividends by the Company on any class of its stock, as well as any other
distribution, liquidation, purchase or other acquisition of the Company's
stock by it or any subsidiary. At January 1, 1997, the credit agreement will
permit approximately $17 million to be paid in dividends.
11
<PAGE>
CAPITALIZATION
(DOLLARS IN THOUSANDS)
The following table sets forth the combined capitalization of the Company as
of September 30, 1996 on a historical basis and as adjusted to reflect (i) the
Distribution and (ii) the assumption by the Company of $125,000 of
indebtedness incurred by Olin prior to the Distribution Date, as if they
occurred as of that date. This data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the historical Combined Financial Statements and Notes thereto
of the Company included elsewhere herein.
<TABLE>
<CAPTION>
SEPTEMBER 30,
-----------------------------
PRO FORMA AS
ACTUAL ADJUSTMENTS ADJUSTED
-------- ----------- --------
<S> <C> <C> <C>
Short-Term Borrowings due Olin................... $125,000 $(125,000) $ --
Long-Term Debt................................... -- 125,000 125,000
-------- --------- --------
Total Debt..................................... $125,000 $ -- $125,000
-------- --------- --------
Preferred Stock.................................. -- -- --
Common Stock..................................... -- 4,990 4,990
Additional Paid-In Capital....................... -- 152,767 152,767
Equity........................................... 157,757 (157,757) --
-------- --------- --------
Total Shareholders' Equity..................... 157,757 -- 157,757
-------- --------- --------
Total Capitalization............................. $282,757 $ -- $282,757
======== ========= ========
</TABLE>
Based on each holder of Olin Common Stock receiving a dividend of one share
of Company Common Stock for every ten shares of Olin Common Stock. The number
of shares of Olin Common Stock outstanding as of the Distribution Date is
anticipated to be 49.9 million.
It is anticipated that the Company will assume a $160,000 credit facility
executed by Olin prior to the Distribution. Olin intends to borrow an amount
under that facility prior to the Distribution, currently estimated to be
$125,000, which assumes a certain level of the Company's working capital
anticipated at the time of the Distribution. Amounts to be borrowed by Olin
will be used to reduce its own borrowings. Amounts remaining under the credit
facility are expected to provide sufficient liquidity for the Company's
current funding needs. The credit facility will permit borrowing on a
revolving basis over a five-year term. The facility will contain restrictive
covenants limiting the ratio of earnings before interest and taxes to interest
expense, the ratio of total debt to earnings before interest, taxes,
depreciation and amortization, and will contain minimum tangible net worth
requirements. No principal repayments are expected to be made on the revolving
debt until the end of the five-year term. Because this agreement has not been
finalized, the debt due Olin has been classified as short-term in the
Company's Combined Balance Sheets. When the credit agreement is signed and
assumed by the Company in connection with the Distribution, the debt will be
reclassified to long-term debt.
12
<PAGE>
PRIMEX TECHNOLOGIES, INC.
SELECTED FINANCIAL AND OPERATING DATA
(DOLLARS IN THOUSANDS)
The following table summarizes certain selected historical financial and
operating information with respect to the Company and is derived from the
Combined Financial Statements of the Company. The financial statements for the
three years ended December 31, 1995 were derived from the audited financial
statements included elsewhere herein. The financial statements for the nine
months ended September 30, 1996 and 1995 were derived from the unaudited
financial statements included elsewhere herein. Such historical financial data
may not be indicative of the Company's future performance as an independent
company. The information set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the historical Combined Financial Statements and Notes thereto
included elsewhere in this Information Statement. The following information is
qualified in its entirety by the information and financial statements
appearing elsewhere in this Information Statement.
<TABLE>
<CAPTION>
UNAUDITED
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------ ------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS
Sales................... $328,775 $359,582 $508,113 $416,148 $376,332 $430,120 $467,189
Cost of Goods Sold...... 277,016 299,916 428,707 335,303 304,717 350,942 376,377
Selling and 37,888 39,138 51,297 46,758 43,643 47,991 48,489
Administration..........
Research and 3,926 3,126 5,016 5,364 6,055 6,308 8,249
Development.............
Other charges(/1/)...... 10,500 -- 2,000 -- 12,600 -- --
-------- -------- -------- -------- -------- -------- --------
Operating Income (Loss). (555) 17,402 21,093 28,723 9,317 24,879 34,074
Interest Expense........ 6,943 6,958 9,276 8,638 7,880 8,490 9,533
Interest and Other 657 808 807 1,743 2,307 2,075 1,306
Income..................
-------- -------- -------- -------- -------- -------- --------
Income (Loss) Before (6,841) 11,252 12,624 21,828 3,744 18,464 25,847
Taxes...................
Income Tax Provision.... 908 6,206 6,963 9,805 2,722 8,001 13,624
-------- -------- -------- -------- -------- -------- --------
Income (Loss) Before
Cumulative Effect of
Accounting Changes..... (7,749) 5,046 5,661 12,023 1,022 10,463 12,223
Accounting Changes...... -- -- -- -- -- (6,159) --
-------- -------- -------- -------- -------- -------- --------
Net Income (Loss)....... $ (7,749) $ 5,046 $ 5,661 $ 12,023 $ 1,022 $ 4,304 $ 12,223
======== ======== ======== ======== ======== ======== ========
<CAPTION>
UNAUDITED
SEPTEMBER 30, DECEMBER 31,
------------------ ------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL POSITION
Property Plant and $103,293 $107,096 $114,473 $114,113 $ 98,771 $107,836 $108,670
Equipment, Net..........
Total Assets............ 351,812 371,554 380,979 364,175 294,077 330,551 397,619
Capitalization:
Short-Term Borrowings
due Olin.............. 125,000 125,000 125,000 125,000 125,000 125,000 125,191
Long-Term Debt......... -- -- -- -- -- -- 91
Shareholders' Equity... 157,757 161,307 158,535 131,113 91,287 114,775 158,464
Total Capitalization.... 282,757 286,307 283,535 256,113 216,287 239,775 283,746
OTHER
Capital Expenditures.... 6,891 9,646 19,191 17,821 12,682 14,082 12,331
Depreciation............ 12,627 11,982 16,633 16,955 14,323 14,220 14,133
Total Debt to Total 44.2% 43.7% 44.1% 48.8% 57.8% 52.1% 44.2%
Capitalization..........
Effective Tax Rate...... -- % 55.2% 55.2% 44.9% 72.7% 43.3% 52.7%
</TABLE>
- --------
(1) Other charges include a charge for the settlement of claims relating to a
government investigation of certain testing irregularities at the
Company's Marion, Illinois facility ($6,000 in 1996 and $2,000 in the year
ended 1995) and a $4,500 charge in 1996 related to a trial court ruling
involving a contract dispute with the Belgium Ministry of Defense related
to a 1985 sale of tank ammunition. Also, 1993 other charges include a
charge for a strategic action plan of $12,600.
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS)
This Management's Discussion and Analysis of Financial Condition and Results
of Operations covers periods when the Company operated as the Ordnance and
Aerospace Divisions of Olin. However, this discussion and analysis of
financial condition and results of operations has been prepared as if the
Company were a separate entity for all periods discussed. It should be read in
conjunction with the Company's historical Combined Financial Statements and
Notes thereto included elsewhere herein.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------ --------------------------
1996 1995 1995 1994 1993
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Sales............................. $328,775 $359,582 $508,113 $416,148 $376,332
Gross margin...................... 51,759 59,666 79,406 80,845 71,615
Selling and administration........ 37,888 39,138 51,297 46,758 43,643
Other charges..................... 10,500 -- 2,000 -- 12,600
Net income (loss)................. (7,749) 5,046 5,661 12,023 1,022
</TABLE>
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO 1995
Sales declined 9%, principally attributable to lower shipments of combined
effects munitions, Ball Powder(R) propellant, and electromagnetic systems,
which more than offset higher tank ammunition sales to international
customers. The lower sales levels of combined effects munitions and
electromagnetic systems reflect the completion of major programs during 1996.
The U.S. Government contract for combined effects munitions is not expected to
be renewed. Sales of commercial Ball Powder(R) propellant declined 18% in the
1996 period as sporting ammunition customers drastically reduced their
purchases. In 1995, heavy consumer buying patterns for sporting ammunition
were driven by a concern over the threat of restrictive legislation and
taxation, which increased the demand for Ball Powder(R) propellant.
Restrictive legislation in the form of the Brady bill and the assault weapons
ban was passed in 1993 and 1994, respectively, while a proposed prohibitive
tax on ammunition was not adopted.
Gross margin percentage decreased to 16% from 17% due to the decline in
sales of Ball Powder(R) propellant.
Selling and administration expenses as a percentage of sales increased to
12% from 11% due to lower sales. Selling and administration expenses decreased
in amount due to lower legal and consulting fees associated with the
government investigation of certain testing irregularities at the Company's
Marion, Illinois facility which were approximately $1,200 and $2,700 in 1996
and 1995, respectively.
Other charges shown in Results of Operations above represents the provision
for the settlement of claims relating to a government investigation of certain
testing irregularities at the Company's Marion, Illinois facility ($6,000) and
the charge for the Belgian contract dispute ($4,500).
Customer-sponsored research of $28,574 decreased $6,561 due to the
completion of an international contract for electromagnetic systems in 1995.
Income tax expense of $908 and $6,206 was recorded in 1996 and 1995 on
pretax losses of $6,841 and pretax income of $11,252 in 1996 and 1995,
respectively. The impact of the Marion legal settlement which is non-
deductible and other higher non-deductible expenses on a lower level of
profits in 1996 was the main contributor to the change.
14
<PAGE>
YEAR ENDED DECEMBER 31, 1995 COMPARED TO 1994
Sales increased 22% primarily due to additional shipments of medium caliber
ammunition, strong demand for electronic and solid propellant products and
sales under a combined effects munition contract. The inclusion of a full year
of sales from the Company's acquisition of certain assets of the medium
caliber ammunition business of GenCorp's Aerojet Ordnance Division in April
1994, and sales under a combined effects munition contract awarded in 1994
accounted for a 15% increase in sales. Sales of large caliber ammunition
declined due to the completion of a contract to supply tank ammunition
components to the U.S. Army during 1994. Tank ammunition cartridge sales and
profits in 1995 were consistent with 1994 levels. Ball Powder(R) propellant
sales increased slightly as higher selling prices due to a more favorable
product mix more than offset a decline in volumes. Increased volumes in the
electronics business, specifically the in-flight entertainment product line,
and strong demand for the solid propellant systems product lines contributed
6% to the sales increase.
The gross margin percentage decreased to 16% from 19%. Cost overruns on
certain production and development programs and additional costs associated
with certain discontinued programs more than offset the increased margins from
large caliber ammunition due to a favorable contract settlement and the profit
impact from the additional medium caliber ammunition volumes.
Selling and administration expenses as a percentage of sales decreased to
10% from 11% due primarily to the additional sales from the medium caliber
ammunition acquisition. Selling and administration expenses increased in
amount due to the inclusion of the operating expenses of the medium caliber
ammunition acquisition for a full year and its related relocation and
consolidation costs, and additional legal and consulting fees. Legal and
consulting fees associated with the government investigation of certain
testing irregularities at the Company's Marion, Illinois facility increased to
$3,500 in 1995 from $500 in 1994.
Other charges shown in Results of Operations above represents a provision
for the settlement of claims relating to a government investigation of certain
testing irregularities at the Company's Marion, Illinois facility.
Customer-sponsored research of $47,748 decreased $33,271 due to the overall
reduction in government-funded ammunition programs and the advancement of a
major ammunition development program into the production stage.
The effective tax rate was 55% in 1995, compared to 45% in 1994. The impact
of the charge related to the Marion legal settlement which is non-deductible
and other non-deductible expenses on a lower level of profits in 1995 were the
main contributors to the effective tax rate increase.
YEAR ENDED DECEMBER 31, 1994 COMPARED TO 1993
Sales increased 11% primarily from the inclusion of sales of the medium
caliber ammunition acquisition and increased volumes of Ball Powder(R)
propellant. The integration of the medium caliber acquisition was implemented
and expanded the Company's medium caliber ammunition line of products. This
acquisition accounted for a 16% increase in sales and more than offset the
volume declines in other medium caliber ammunition and large caliber
ammunition. Additional Ball Powder(R) propellant sales, which contributed 1%
of the total sales increase were attributable to heavy consumer buying due in
part to a fear of restrictive taxation and legislation affecting commercial
ammunition. Electronic products sales increased due to the sale of in-flight
entertainment seat telephony boxes and aircraft telephones used in commercial
aircraft, but were offset in total by decreases in the propulsion products
business and the tactical systems product lines.
The gross margin percentage was 19% in 1995 and 1994. The impact of the
increase in sales volumes was offset by corresponding increases in production
costs.
Selling and administration expenses as a percentage of sales decreased to
11% from 12% due primarily to the additional sales from the medium caliber
ammunition acquisition. Selling and administration expenses increased in
amount as the inclusion of the operating expenses of the acquisition more than
offset the impact from certain workforce reductions which occurred during
1993.
15
<PAGE>
In 1993, the Company recorded a pretax charge of $12,600 for a series of
strategic actions consisting of personnel reductions ($4,100), business
restructurings involving the shutdown of a manufacturing facility and the
discontinuance of artillery metal parts manufacturing ($7,000), and other
charges including asset write-downs ($1,500). As of December 31, 1995, all of
the actions within the strategic action plan had been completed. The savings
resulting from the workforce reduction and the business restructurings were
approximately $1,900 in 1995 ($2,700 in 1994).
Customer-sponsored research of $81,019 decreased $3,563 due to the overall
reduction in government-funded ammunition programs and in response to the
overall Department of Defense ("DoD") budget reduction.
The effective tax rate for 1994 was 45%, compared to 46% in 1993, excluding
the effect of the charge (pretax-$12,600; after tax-$7,800). The impact of
slightly higher non-deductible expenses on a higher level of profits in 1994
was the main contributor to the effective tax rate decrease.
U.S. GOVERNMENT SALES
U.S. Government sales amounted to $391,099 in 1995, $318,898 in 1994 and
$302,022 in 1993. Sales under the combined effects munition contract was the
main contributor to the increase in 1995 government sales. Approximately 80%
of 1995 sales were to the DoD or agencies thereof. Changes in the strategic
direction of defense spending, the timing of defense procurements and specific
defense program appropriation decisions may adversely affect the performance
of the Company in future years, including its income, liquidity, capital
resources, and financial condition. The precise impact of these decisions will
depend upon their timing and the size of changes and the Company's ability to
mitigate their impact with new business, business consolidations or cost
reductions. In view of the continuing uncertainty regarding the size, content
and priorities of the annual DoD budget, the historical financial information
of the Company may not be indicative of future performance and the viability
of certain facilities and equipment may also be impacted. The results of
operations for the nine months ended September 30, 1996 and 1995, should not
be regarded as indicative of the results that may be expected for the entire
year. DoD sales activities are historically stronger in the latter part of the
year because the timing of the recognition of the DoD ammunition sales tends
to reflect the procurement cycle utilized by the U.S. Army. Certain commercial
sales, such as Ball Powder(R) propellant volumes, tend to be stronger in the
first half of the year because the buying patterns of sporting ammunition
manufacturers are primarily driven by the fall hunting season.
Since the U.S. Government usually awards and funds ordnance contracts on a
year-by-year basis and the Company's business is dependent upon periodic
awards of new contracts and the exercise of options contained in existing
contracts, there can be no assurance that the U.S. Government will continue to
purchase the Company's products and services over the long-term. The
termination of any of the Company's significant contracts or the failure to
obtain either renewals of certain existing contracts or additional contracts
with the U.S. Government would have a material adverse effect on its results
of future operations and financial condition.
ENVIRONMENTAL
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1995 1994 1993
-------- -------- --------
($ IN THOUSANDS)
<S> <C> <C> <C>
Cash Outlays:
Remedial and Investigatory Spending............... $ 291 $ 407 $ 224
Capital Spending.................................. 500 500 700
Plant Operations.................................. 2,100 2,200 1,700
-------- -------- --------
Total Cash Outlays.................................. $ 2,891 $ 3,107 $ 2,624
======== ======== ========
</TABLE>
The Company is party to various governmental and private environmental
actions associated with former manufacturing and test facilities. Associated
costs of investigatory and remedial activities are provided for in accordance
with generally accepted accounting principles governing probability and the
ability to reasonably
16
<PAGE>
estimate future costs. Charges to income for investigatory and remedial
efforts were not material to operating results in 1995, 1994 and 1993
(excluding the special charge) and are not expected to be material to net
income in future years. The Company's estimated environmental liability at the
end of 1995 was attributable to five sites.
Cash outlays for remedial and investigatory activities associated with
former manufacturing and test facilities and past operations were not charged
to income but instead were charged to reserves established for such costs
identified and expensed to income in prior years; such charges to income were
$795, $120 and $1,101 in 1995, 1994 and 1993, respectively. Cash outlays for
normal plant operations for the disposal of waste and the operation and
maintenance of pollution control equipment and facilities to ensure compliance
with mandated and voluntarily imposed environmental quality standards were
charged to income. Historically, the Company has funded its environmental
capital expenditures through cash flow from operations and expects to do so in
the future.
The Company's combined balance sheets included liabilities for future
environmental expenditures to investigate and remediate known sites amounting
to $2,574 at December 31, 1995 and $2,070 at December 31, 1994, of which
$1,774 and $1,770 were classified as other noncurrent liabilities. Those
amounts did not take into account any discounting of future expenditures or
any consideration of insurance recoveries or advances in technology. Those
liabilities are reassessed periodically to determine if environmental
circumstances have changed and/or remediation efforts and their costs can be
better estimated. As a result of these reassessments, future charges to income
may be made for additional liabilities.
Total environmental-related cash outlays for 1996 are estimated to be
$3,400, of which $800 is expected to be spent on investigatory and remedial
efforts, $800 on capital projects and $1,800 on normal plant operations.
Environmental-related cash outlays for site investigation and remediation,
capital projects and normal plant operations are expected to range between
$2,000--$5,000 annually over the next several years. While the Company does
not anticipate a material increase in the projected annual level of its
environmental-related costs, there is always the possibility that such
increases may occur in the future in view of the uncertainties associated with
environmental exposures. Environmental exposures are difficult to assess for
numerous reasons, including the identification of new sites, developments at
sites resulting from investigatory studies, advances in technology, changes in
environmental laws and regulations and their application, the scarcity of
reliable data pertaining to identified sites, the difficulty in assessing the
involvement and financial capability of other potentially responsible parties
and the Company's ability to obtain contributions from other parties and the
time periods (sometimes lengthy) over which site remediation occurs. It is
possible that some of these matters (the outcomes of which are subject to
various uncertainties) may be resolved unfavorably against the Company.
LITIGATION
There are a variety of legal proceedings pending or threatened against the
Company. It is possible that some of these matters (the outcomes of which are
subject to various uncertainties) may be decided unfavorably against the
Company. The Company has provided for those matters which it believes are both
probable of occurring and for which the liability can be estimated.
In May 1994, the Company discovered that an employee may have modified
inspection and testing software used on certain medium caliber ammunition
production lines at its Marion, Illinois testing facility to permit
inspections to be performed at tolerances which may not have been fully
compliant with applicable contract specifications. Upon discovering the issue,
the Company promptly notified U.S. Government contract representatives,
voluntarily disclosed the circumstances then known to the Department of
Defense's Office of the Inspector General and expressed its intent to
investigate fully the matter and take all necessary corrective actions. In
September 1994, a Federal grand jury in the United States District Court for
the Southern District of Illinois issued two subpoenas to the Company
requesting production of documents relating generally to certain medium
caliber ammunition programs and specifically to the software modification
described above. Subsequently, the Company received additional subpoenas and
several Marion employees have received
17
<PAGE>
subpoenas to testify before the grand jury. The Company has complied with the
subpoenas and cooperated with Government officials to resolve the matter.
After discussion with the U.S. Attorney's Office regarding the investigation
of the performance of the contracts in question, Olin and the U.S. Attorney
entered into an agreement to settle this matter on September 11, 1996. Under
the agreement, the U.S. Government agreed not to pursue any criminal or civil
claims against Olin or its subsidiaries in connection with these government
contracts. Olin has paid to the U.S. Government $8,000 in connection with the
settlement and without admitting to any wrongdoing or liability. The Company's
financial statements reflect the expenses associated with this matter,
including the $8,000 settlement.
The Company is involved in a contract dispute with the Belgium Ministry of
Defense related to a 1985 sale of tank ammunition. The Belgium Ministry of
Defense has alleged improprieties committed by the Belgium national who
represented Olin in the transaction. Based on these allegations, the Belgium
Ministry of Defense withheld final payment on the contract. The Company agreed
to extend the letter of credit related to the contract guarantee pending
resolution of the underlying contract dispute. In March 1996, the trial court
ruled against the Company. The decision has been appealed. In the event that
the trial court's decision is sustained, the resultant liability is estimated
at approximately $4,500 at current exchange rates. The Company's financial
statements reflect the expenses associated with this matter. However, since
the liability for this matter has been assumed by Olin in accordance with the
Assumption of Liabilities and Indemnity Agreement between Olin and the
Company, the balance sheet does not include any reserves related to this
matter.
INCOME TAXES
Prior to January 1, 1997, the Company's operations will be included in the
U.S. federal consolidated tax returns of Olin. The provision for income taxes
includes the Company's allocated share of Olin's consolidated income tax
provision and is calculated on a separate Company basis pursuant to the
requirements of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." Allocated income taxes are settled with Olin on a current basis.
Deferred taxes are provided for differences between the financial statement
and the tax bases of assets and liabilities using enacted tax rates in effect
for the year in which the differences are expected to reverse.
FUTURE SERVICE COSTS
From the time of the Distribution to December 31, 1997, Olin and the Company
will share certain services, such as payroll and benefits administration,
mainframe computing services, and telecommunications support. Olin will be
reimbursed by the Company at rates comparable to current inter-company
accounting charges. By December 31, 1997, the Company will develop and
establish these services on its own, at costs that may be more or less than
the rates charged by Olin. Costs for such services were $2,957 and $1,628 for
the nine months ended September 30, 1996 and 1995, respectively, and $2,170 in
1995, $2,528 in 1994 and $3,103 in 1993. It is anticipated that when the
Company becomes a separate public company costs of other types of services, in
addition to these previously mentioned, will increase by approximately $4,000
per year as a result of additional financial reporting requirements, stock
transfer fees, directors' fees, insurance, and executive compensation and
benefits. Pro forma net loss for the nine months ended September 30, 1996,
would have been $9,699 compared to the reported net loss of $7,749, and pro
forma net income for the year ended December 31, 1995, would have been $3,061
compared to the reported net income of $5,661 after giving effect to the
additional $4,000 of annual pretax costs expected to be incurred in the future
as a separate public company.
NEW ACCOUNTING STANDARDS
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 121, "Accounting for Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of". The adoption of this
standard did not have a material impact on the Company's financial position
and its operating results.
18
<PAGE>
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation." As allowable by SFAS No. 123,
the Company will not recognize compensation cost for stock-based compensation
arrangements, but rather will disclose in the notes to the financial
statements the impact on net income and earnings per share as if the fair
value based compensation cost had been recognized commencing in 1996.
LIQUIDITY AND INVESTMENT ACTIVITY
Cash flow from operations supplemented by credit provided by Olin and
proceeds from sales of property, plant and equipment were used to finance the
Company's funding needs of capital spending and the 1994 acquisition of the
medium caliber ammunition business of GenCorp's Aerojet Ordnance Division. In
the past and until the Distribution, the Company's financing requirements have
been provided by Olin. The Company is in the process of negotiating a new loan
agreement with various banks to provide financing for the Company's working
capital requirements, capital expenditures and general corporate purposes
subsequent to the Distribution. It is anticipated that the Company will assume
a $160,000 credit facility which is intended to provide sufficient liquidity
for the Company's current funding needs. Prior to the Distribution, it is
anticipated that Olin will borrow $125,000 under the credit facility based on
reductions in the Company's working capital estimated to occur by the
Distribution. A final determination of the amount of the Olin borrowing will
be made prior to the Distribution. The Company expects the credit facility to
permit borrowings on a revolving basis over a five-year term. It will contain
restrictive covenants limiting the ratio of earnings before interest and taxes
to interest expense, the ratio of total debt to earnings before interest,
taxes, depreciation and amortization, and will contain minimum tangible net
worth requirements. No principal repayments are expected to be made on the
revolving debt until the end of the five-year term. Because this has not been
finalized, the debt due Olin has been classified as short-term in the
Company's Combined Balance Sheet. When the credit agreement is signed and
assumed by the Company in connection with the Distribution, the debt will be
reclassified to long-term debt.
CASH FLOW DATA
Provided by (used for)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------- ----------------------------
1996 1995 1995 1994 1993
-------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net operating activities..... $ (4,577) $ (20,184) $ (7,824) $ 15,720 $ 42,363
Capital expenditures......... (6,891) (9,646) (19,191) (17,821) (12,682)
Net investing activities..... (2,394) (6,078) (15,332) (43,523) (11,181)
</TABLE>
For the nine months ended September 30, 1996, cash used for operations
totaled $4,577 compared to $20,184 for the comparable 1995 period. During
1996, the reduction in accounts receivable and inventories due to the near-
completion of the combined effects munition contract and a cash settlement
resulting from an in-flight entertainment contract cancellation that occurred
in 1995 was offset in part by lower current liabilities, primarily accounts
payable. Also, cash used for operating activities increased as $9,200 of loans
taken against the cash surrender value of key employees life insurance
policies were repaid. During the first nine months of 1995, investments in
working capital were made to support a $95 million combined effects munition
contract and increased volumes associated with in-flight entertainment
products.
The utilization of cash by operating activities for the year ended 1995 was
due to an increase in working capital required to support the higher sales
from the combined effects munition contract and because of shipment delays on
certain medium caliber and tank ammunition contracts. Cash provided by
operating activities increased due to loans taken against the cash surrender
value of key employees life insurance policies. Operating cash flow in 1994
decreased significantly from the prior year as additional funds were spent for
working capital. Increase in inventories was due to shipment delays on certain
medium caliber ammunition and additional funds to support both the combined
effects munition contract and the commercial in-flight entertainment product
line, and was
19
<PAGE>
offset in part by higher current liabilities. Also, funds were spent for the
expansion of the Company's complete line of medium caliber ammunition
products. Operating cash flow in 1993 included working capital reductions
caused by lower sales levels in the large and medium caliber ammunition
product lines, which experienced a 14% decline in sales from 1992 levels. Cash
flow was negatively impacted by the low level of earnings caused by reduced
sales.
Capital spending for the nine months ended September 30, 1996 decreased 29%
from the comparable period in 1995 due to a planned reduction to control
capital costs and the completion of the medium caliber ammunition
consolidation and the ammunition de-mil facility.
Capital spending in 1995 increased 8% from the prior year, mainly to
complete the consolidation of some medium caliber ammunition assembly
operations into the Company's Marion operations and the facilities to
demilitarize obsolete ammunition stocks (ammunition de-mil). Capital spending
in 1994 increased 40% from the prior year mainly to consolidate the acquired
medium caliber ammunition operations with the Company's
existing medium caliber ammunition facilities and to construct a facility to
perform ammunition de-mil. In 1993, the lower level of sales and the uncertain
business climate contributed to a 10% decrease in capital spending.
During 1994, the Company purchased certain medium caliber ammunition and air
dispensed munitions assets of GenCorp's Aerojet Ordnance Division for
approximately $25,400. This acquisition provided the Company with a complete
line of medium caliber ammunition as well as air dispensed munitions products.
20
<PAGE>
BUSINESS
GENERAL
The Company was organized under the laws of the Commonwealth of Virginia on
May 10, 1996, for the purpose of effecting the distribution of Olin's ordnance
and aerospace businesses to its shareholders. The Company is an ordnance and
aerospace contractor with strong systems management and manufacturing
capability. Although the Company provides a variety of products and services,
it draws upon a common set of capabilities in bringing these products and
services to market. The Company's systems management and manufacturing
capabilities, combined with its technology base, represent the common skills
on which the Company relies in serving its markets and customers. The
Company's principal executive offices are located at 10101 Ninth Street North,
St. Petersburg, Florida 33716-3807, telephone (813) 578-8100.
SYSTEMS MANAGEMENT. Systems management in the defense/aerospace industry
means total management responsibility for the completion of a system which can
vary from a large weapons platform to the smaller systems and subsystems
managed by the Company, such as complete rounds of sophisticated tank
ammunition and small space subsystems incorporated in commercial satellites.
Systems management incorporates the management of materials acquisition,
configuration data management, selection and auditing of subcontractors,
manufacturing, quality assurance, testing, and product delivery, as well as
administrative support to ensure that all documentation reflects compliance
with contract terms.
MANUFACTURING. The Company's success in servicing its customers and markets
is largely the result of strict product quality and reliability standards. The
nature of the products offered by the Company require strict compliance with
detailed specifications. Even a small deviation from specifications in the
manufacture of tank or medium caliber ammunition often will cause the customer
to reject the final product. The Company's space and electronics products,
intended for use in satellites and aircraft, must be of the highest
reliability. Ball Powder(R) propellant must meet strict quality standards to
assure that the ammunition in which it is incorporated is safe and effective.
See "Properties" for a more complete description of the Company's properties
and manufacturing capabilities.
TECHNOLOGY. The Company's technology base positions it as a leader in a
number of product offerings and provides the key to its future growth and
success. The Company's composite materials technology has helped forge its
leadership position in tank ammunition. The Company is applying its composite
expertise and its knowledge of propellants and physics in developing the next
generation of tank ammunition which will provide improved performance.
The Company's propellant research and development laboratory is equipped to
perform a wide range of chemical and thermal analyses and propellant syntheses
which enable the Company to tailor its Ball Powder(R) propellant to a wide
variety of ammunition applications.
In its space products business, the Company's research and development
capabilities enable it to improve existing products by lowering product weight
and cost. These capabilities also have led to the development of new
propulsion products, including those incorporating electric propulsion to
reduce the fuel requirements for performing a given mission.
21
<PAGE>
PRODUCTS AND SERVICES
The following table sets forth the principal products and services offered
by the Company and identifies the percentage of sales represented by each
category for the years shown.
<TABLE>
<CAPTION>
PERCENTAGE OF
SALES(2)
------------------------
PRODUCTS AND SERVICES 1995 1994 1993
--------------------- ---- ---- ----
<S> <C> <C> <C>
Tank and other Large Caliber Ammunition................. 28% 37% 44%
Medium Caliber Ammunition............................... 14 14 9
Ball Powder(R) Propellant............................... 11 13 14
Electronic Products..................................... 8 5 5
Space Products.......................................... 4 6 8
Other Products and Services............................. 35(/1/) 25(/1/) 20
</TABLE>
- --------
(1) Approximately 15% of 1995 sales and 2% of 1994 sales resulted from a U.S.
Government contract for combined effects munitions. Sales under this
contract will be completed in 1996 and this contract is not expected to be
renewed.
(2) The Company currently has two multi-year contracts for the supply of 120mm
tactical and training ammunition that represent approximately 15% and 10%,
respectively, of 1995 sales. These multi-year contracts provide for
deliveries through mid-1999. The Company currently has numerous other
contracts, none of which accounts for more than 6% of 1995 sales.
TANK AND OTHER LARGE CALIBER AMMUNITION. The Company develops and produces a
family of tactical and training ammunition used primarily in the M1A1 and M1A2
Abrams class tanks of the U.S. Army and Marine Corps and U.S. allies. The
Company is currently the sole source producer of the 120mm M829A-2 round,
which is an armor piercing, fin stabilized, discarding sabot round with a
depleted uranium penetrator that utilizes kinetic energy to penetrate heavily
armored targets and is used primarily in tank-to-tank warfare. This round is
the successor round to the 120mm M829A-1 round that was used successfully
during Operation Desert Storm. The Company is also one of two suppliers of
120mm M865 and M831A-1 training rounds to the U.S. Government. The M865 is the
training round for the M829A-2 round and the M831A-1 is the training round for
the M830A-1 tactical multipurpose round which is produced by the Company's
U.S. tank ammunition competitor.
During 1995, the Company entered into two contracts with four-year terms to
produce training and kinetic energy tactical ammunition for the U.S.
Government.
A number of foreign countries will not buy ammunition containing depleted
uranium and the U.S. Government limits the export of depleted uranium
ammunition to NATO and certain other friendly foreign governments. To improve
its opportunities to sell tank ammunition to foreign buyers, the Company, in
association with the foreign company that is the original developer of 120mm
tank ammunition, has developed an advanced 120mm kinetic energy round with a
tungsten alloy penetrator. During 1995, the Company signed a $20 million
contract with the U.S. Army for the sale of 120mm tungsten penetrator
ammunition to a foreign customer. Delivery is expected in 1997. The Company is
actively pursuing additional international tank ammunition sales involving
both training ammunition and the advanced kinetic energy tungsten round.
Because the Company believes that a key element of its long-term
profitability is its continued participation as a major producer of tank
ammunition for the U.S. Government, the Company continually invests in
research and development in this area, focusing on improving the effectiveness
of kinetic energy tactical ammunition and reducing the cost of training
ammunition.
The majority of the Company's large caliber ammunition production contracts
are for tank ammunition. However, the Company believes that artillery
ammunition presents an opportunity for growth because of an extended past
period of minimal investment by the United States in this arena. This problem
was highlighted during Operation Desert Storm, when United States artillery
systems were outranged by enemy guns. The Company believes that the U.S.
Government has recognized the need to match and surpass the capability of
other countries and is investing in the development of new artillery platforms
and ammunition.
MEDIUM CALIBER AMMUNITION. The Company develops and produces medium caliber
ammunition. The medium caliber product line includes 20mm, 25mm, and 30mm
ammunition, and is utilized on a variety of
22
<PAGE>
platforms, including ships, airplanes, helicopters, and fighting vehicles. The
family of medium caliber ammunition includes armor piercing, high explosive,
incendiary and training rounds. In addition, through a license with Raufoss
A/S, the Company is a leading developer of multi-purpose medium caliber
ammunition that combines armor-piercing, high explosive and incendiary
features in one round.
The Company has recently commenced production of the 25mm M919 round, a U.S.
produced medium caliber armor-piercing, fin stabilized, discarding sabot
round, utilizing a depleted-uranium penetrator that offers increased range and
lethality. This round will be the primary anti-armor round of the Bushmaster
cannon used on the Bradley Fighting Vehicle. In addition, the Company has
several contracts with the U.S. Government for the production of multi-purpose
rounds. The Company believes that the U.S. Government will continue to buy
both the M919 and multi-purpose rounds for the next several years, but does
not know whether the Government will purchase material quantities of any other
medium caliber ammunition. During 1995 and 1996, the Company experienced
difficulties in producing the M919 round within its specifications for
accuracy and gun pressure. These difficulties have increased the Company's
costs and lowered its margins on this round in 1995 and 1996 and delayed
recognition of revenue from this contract to 1997. The Company has performed
extensive testing and made improvements to its production processes in an
effort to correct these issues. Medium caliber ammunition historically has
been used in aircraft as well as in land vehicles and ships. However, because
of the development of other aircraft weapon platforms that do not require
close strikes to be effective, the Company believes that medium caliber
ammunition will be used to a much lesser extent in future aircraft.
NEW WEAPONS AND AMMUNITION. The U.S. Army is developing a series of small-
arms weapons to increase the firepower of 21st century soldiers. The Company
has been selected as the systems developer of the objective crew served weapon
("OCSW"). This two-person weapon system is slated to replace the machine gun
for use against lightly-armored vehicles, fortified positions, infantry and
low-flying aircraft. As systems developer, the Company is responsible for the
development of the entire OCSW including both the gun and ammunition.
Complementing the OCSW is the objective individual combat weapon ("OICW"), the
future individual weapon for the dismounted soldier. Two teams of companies
are developing the OICW. The Company is the ammunition developer on one of the
teams. The OCSW and OICW are both expected to be introduced to the field in
approximately ten years.
BALL POWDER(R) PROPELLANT. The Company manufactures and sells Ball Powder(R)
propellant, a smokeless gun powder with a spherical grain shape. The Company
manufactures more than one hundred different varieties of propellant in the
Ball Powder(R) product line. Significant amounts of all U.S. military small
caliber ammunition are loaded with the Company's Ball Powder(R) propellant. In
response to the decline in military procurements over recent years, the
Company has focused on increasing its sales to the commercial ammunition
market. In 1995, approximately 65% of Ball Powder(R) propellant sales was to
manufacturers of commercial ammunition and to the "reloader" market
("reloaders" are individuals who buy ammunition components and load their own
rounds).
Olin's Winchester division, a leading manufacturer of sporting ammunition,
was the Company's largest Ball Powder(R) propellant customer in 1995 and 1996,
accounting for approximately 42% of the Company's $55 million of Ball
Powder(R) propellant sales in 1995 and approximately 34% of the Company's $39
million of such sales through September 30, 1996 (see "Relationship Between
Olin and the Company after the Distribution--Powder Supply Requirements
Agreement" for a description of the long-term supply contract entered into
between the Company and Olin with respect to future Ball Powder(R) propellant
sales to Winchester). The Company believes that historically there has been
some reluctance on the part of competitors of Winchester to buy large
quantities of Ball Powder(R) propellant from the Company because of the common
ownership of Winchester and the Company. The Company believes that, as a
separate and independent company, it may be able to gain more of these
companies as customers and to increase its existing sales to those companies
which are already customers.
Over the years, the Company has attempted to increase the use of Ball
Powder(R) propellant in medium and large caliber military ammunition.
Virtually all of the medium caliber ammunition manufactured by the Company
except the 25mm M919 round is now loaded with Ball Powder(R) propellant. Ball
Powder(R) propellant has achieved only limited use in U.S. Government large
caliber ammunition. The Company continues to pursue the use of Ball Powder
propellant in additional types of large caliber ammunition.
23
<PAGE>
ELECTRONIC PRODUCTS. The Company manufactures a variety of electronic
products for aerospace applications. The Company in recent years has entered
the field of in-flight communications and entertainment ("IFE") through design
and production of a variety of IFE components and products. In 1995, the
Company's most significant IFE contract was for the production of in-flight
telephone devices. Although 1996 sales of IFE products are not expected to be
material to the Company, one of the Company's long-term objectives is to grow
in the IFE product area. The Company's line of airborne electronic products
also includes controls for lighting, temperature, audio, power and flight
systems.
In 1996, the Company introduced its first EmPower(TM) product, an in-seat
power supply system for airplane passengers' laptop computers. A universal
power socket is provided in the passenger's seat, to which the passenger's
laptop may be connected in order to operate and recharge the computer. The
Company has contracted to provide EmPower(TM) products to three major airline
companies, and is negotiating with several prospective domestic and
international customers.
The Company produces ground support equipment for military purposes,
including stores management and weapons systems test sets for F-16 and other
aircraft. The Company also produces a variety of power conditioning units
("PCUs") for military, commercial and space applications. PCUs convert one
form of electric power into another. The Company's space electronics
capability includes spacecraft PCUs, which convert a satellite's electric
power to power used in electric propulsion systems.
SPACE PRODUCTS. The Company is the world's leading supplier of
monopropellant hydrazine products and electric propulsion ("EP") products. The
Company's hydrazine propulsion products include individual rocket engines or
thrusters, rocket engine modules, gas generators, propellant pressurization
systems and complete integrated propulsion systems. Ranging in size from 0.1
to several hundred pounds of thrust, these products are integral to the
growing commercial launch vehicle and satellite markets. The Company has
delivered over 10,000 rocket engines for spacecraft applications including
orbit insertion, maneuvering, and attitude control as well as launch vehicle
and upper-stage attitude and velocity control.
EP devices represent an advance over standard chemical rocket engines. The
current generation of these products uses satellite electrical power to heat
propellant gases to provide additional energy and velocity in the process of
producing thrust. There are significant gains in fuel efficiency using the
Company's EP products over conventional hydrazine thrusters. This fuel
efficiency translates into economic benefit for satellite manufacturers and
service providers by reducing spacecraft weight, increasing in-orbit life
and/or allowing for the use of lower cost launch vehicles.
The Company is the only U.S. source of EP products which are currently
operating on orbiting satellites within product life expectancies and has four
models in production. The first EP product, a resistojet, was first launched
in 1983 and is now flying on a number of satellites. The latest EP device, the
arcjet, was first flown in 1993 on the Telstar-4 satellite.
The Company is developing advanced EP products which it anticipates will
provide greatly improved performance compared to conventional hydrazine
thrusters with commensurate economic benefits to users. These advanced EP
products are expected to be flight-tested on experimental flights in 1997-98.
A number of domestic and foreign companies are developing EP products and
the Company expects increased competition in this area.
OTHER PRODUCTS AND SERVICES. The Company manufactures a range of solid
propellant products. The Company's products are primarily used in military
applications, although the Company is continuously examining potential
commercial applications. Although the products are diverse, they are based on
a common technology, namely, controlled burning of a solid propellant whose
exhaust products are used for a variety of functions.
The Company provides small gas generators and devices incorporating gas
generators used in a variety of military and commercial applications,
including tactical missiles, jet engine starter cartridges, inflatables,
including buoyance devices and specialized structures, and ammunition
initiating devices. The Company also is developing a family of fire
suppression systems offering a low-cost, low-volume, alternative to halon
compounds in situations, such as fighter aircraft "dry bay" areas, where size
and weight are significant considerations.
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As part of the 1994 acquisition of certain assets of GenCorp's Aerojet
Ordnance Division, the Company acquired systems capability to manufacture
combined effects munition ("CEM"), an air-dispensed munition with anti-armor,
anti-personnel and anti-materiel capability. The Company has recently
completed what it believes will be the last U.S. Government purchase of CEM.
The Company is a supplier of extremely high-power pulsed energy devices
("pulsed power"). Such devices are used in a wide variety of defense
applications including test and evaluation of electronics, materials testing,
nuclear weapons effects simulation, advanced electric weapon technology (such
as electric guns envisioned for 21st century warfare), high-power microwaves,
and electromagnetic pulse simulation.
The Company is also a developer of precision anti-tank warheads and ordnance
systems for smart weapons for United States, Swiss and other Governmental
agencies. This development activity includes applied research, advanced
development, engineering and development manufacturing and low-rate initial
production programs.
The U.S. Government has decided that it needs to demilitarize or disassemble
large stocks of obsolete conventional ammunition. The Company has bid on a
number of these contracts, and in 1995 was awarded two small contracts for
demilitarization services.
In addition, in 1995 the Company made its first commercial sales of forged
petroleum pipeline components and other heavy industrial cylindrical steel
products. These sales were generated by the Company's Red Lion, Pennsylvania
operation, which principally produces components for large caliber ammunition
and successfully utilized this manufacturing expertise for a commercial
application.
CUSTOMERS
The Company's largest customers are the U.S. Department of Defense, NASA and
the U.S. Department of Energy. Other customers of the Company include
additional U.S. Government agencies/laboratories, allied governments, major
ordnance and aerospace contractors and a variety of commercial customers. With
the exception of the U.S. Government and its agencies, no other single
customer accounted for more than 10% of the Company's total annual sales
during any of the Company's last three fiscal years. See "Risk Factors" and
"Business--U.S. Government Contracts and Regulations".
RAW MATERIALS AND SUPPLIES
The raw materials used in the manufacturing of ammunition and ammunition
components include metals, composite materials, chemicals and nitrocellulose.
In addition, the manufacture of ammunition requires components, including
propellants, cartridge cases and primers, all of which may be provided by
subcontractors or supplied directly by the Government. Various electronic
piece parts, printed wire boards, hydrazine liquid propellants, solid
propellant ingredients and subcontracted components, including capacitors,
various metals and explosives, are also used by the Company. The Company has
not experienced difficulty in recent years in obtaining an adequate supply of
any raw materials, components or other supplies needed in its manufacturing
processes, although continued downsizing in the defense industry may create
difficulties in procuring certain medium caliber ammunition components in the
future. Government contractors such as the Company are frequently directed to
procure materials and components from sources of supply approved by the U.S.
Department of Defense.
U.S. GOVERNMENT CONTRACTS AND REGULATIONS
The Company is highly dependent on Government sales, which during 1995,
accounted for approximately 80% of the Company's sales. The Company's U.S.
Government business is performed under fixed-price contracts (firm fixed-price
and fixed-price incentive) and, to a lesser extent, under cost-plus contracts
(cost-plus-fixed-fee or cost-plus-incentive-fee).
Under firm fixed-price contracts, the Company agrees to perform certain work
for a fixed price and, accordingly, realizes all the benefit or detriment
resulting from decreases or increases in the costs of performing
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the contract. Fixed-price incentive contracts are fixed-price contracts
providing for adjustment of profit and establishment of final contract prices
by a formula based on the relationship which final total costs bear to total
target cost. In 1995, approximately 75% of the Government sales of the Company
derived from firm fixed-price contracts and approximately 12% from fixed-price
incentive contracts.
Cost-plus-fixed-fee contracts provide for reimbursement of costs, to the
extent that such costs are allowable, and the payment of a fixed fee. Cost-
plus-incentive-fee contracts provide for increases or decreases in the
contract fee, within specific limits, based upon actual results as compared to
contractual targets for cost. In 1995, approximately 12% of the Government
sales of the Company derived from cost-plus-fixed-fee contracts and
approximately 1% from cost-plus-incentive fee contracts.
Under U.S. Government regulations, certain costs, including certain
organization and financing costs, portions of research and development costs,
and certain marketing expenses related to the preparation of competitive bids
and proposals, lobbying costs, and international sales, are not reimbursable.
In addition, the accuracy and appropriateness of certain direct and indirect
costs of the Company under both fixed-price and cost-plus contracts are
subject to extensive regulation and audit by the Defense Contract Audit Agency
("DCAA"), an arm of the United States Department of Defense. The DCAA has the
right to challenge the Company's cost estimates or allocations with respect to
any such contract. If a DCAA audit establishes overcharges or other
discrepancies in costs or accounting, it can seek the repayment of such
overcharges or seek other reconciliations.
U.S. Government contracts are, by their terms, subject to termination by the
U.S. Government either for its convenience or due to default by the
contractor. Cost-plus contracts provide that, upon termination, the contractor
is entitled to reimbursement of its allowable costs; and if the termination is
for convenience, a total fee proportionate to the percentage of the work
completed under the contract. Fixed-priced contracts provide for payment upon
termination for items delivered to and accepted by the Government, and, if the
termination is for convenience, for payment of cost incurred, plus profit, for
work performed, plus the costs of settling and paying claims by terminated
subcontractors and other settlement expenses. If a contract termination is for
default, however, (i) the contractor is paid an amount agreed upon for
completed and partially completed products and services accepted by the
Government, (ii) the Government is not liable for the contractor's costs with
respect to unaccepted items, and is entitled to repayment of advance payments
and progress payments, if any, related to the terminated portions of the
contracts, and (iii) the contractor may be liable for excess costs incurred by
the Government in procuring undelivered items from another source.
Because the Company engages in Government contracting activities and sells
to the U.S. Government and prime Government contractors, it is subject to
extensive and complex U.S. Government procurement laws and regulations. These
laws and regulations provide for Government audits and reviews of contractor
quality, procurement, performance and administration. Failure to comply, even
inadvertently, with these laws and regulations and with laws governing the
export of munitions and other controlled products and commodities, could
subject the Company or one or more of its businesses to price adjustments,
including adjustments of fixed prices, and to civil and criminal penalties,
and under certain circumstances, suspension and debarment from future
Government contracts for a specified period of time. See "Legal Proceedings".
In connection with the resolution of the investigation of certain testing
irregularities at the Company's Marion, Illinois facility, Olin entered into
an Administrative Agreement with the United States Department of the Air Force
(the "Air Force"). That Agreement, among other things, requires a similar
agreement to be executed by the Company with the Air Force. The Agreement
executed by the Company is expected to obligate the Company to implement and
maintain an ethics actions plan designed to ensure the present responsibility
of the Company and its employees that is required of a U.S. Government
contractor. The Agreement is expected to be substantially similar to the
Administrative Agreement entered into by Olin and is expected to require,
among other things, a communication and training program for all employees,
the operation of a toll-free, dedicated telephone number for confidential
calls to report suspected misconduct and a self-governance program that
includes the periodic submission of written reports to the Air Force
describing the measures taken by the Company to implement the Agreement.
In addition to the right of the U.S. Government to terminate, Government
contracts are dependent upon the levels and continuing availability of
Congressional appropriations. Congress usually appropriates funds for a
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<PAGE>
given program on a fiscal-year basis even though contract performance may
require more than one year. Consequently, for multiyear programs, the contract
is usually partially funded, and additional monies are normally committed to
the contract by the procuring agency only as appropriations are made by
Congress for future fiscal years.
U.S. Government contract awards may also be subject to protest or challenge
by unsuccessful bidders.
Licenses are required from U.S. Government agencies for export of many of
the Company's products, including munitions and spacecraft and military
aircraft components and subsystems. These licenses are administered by the
U.S. Department of State under the Arms Export Control Act, which restricts
exports of certain products and technologies. Failure to comply with these
laws and regulations could subject the Company or one or more of its
businesses to penalties, including, under certain circumstances, the
suspension or debarment from future export licenses for a specified period of
time. In addition, the U.S. Bureau of Alcohol, Tobacco and Firearms ("BATF")
licenses the Company for the handling of explosives. Failure to comply with
BATF regulations could subject the Company to the revocation of these required
licenses. The Company believes that to the best of its knowledge it is
currently in compliance in all material respects with all such material
licenses and regulations.
In common with other companies which derive a substantial portion of their
revenues from contracts with the U.S. Government for defense-related products,
the Company is subject to business risks, including changes in Governmental
appropriations and changes in national defense policies. Future reductions in
the level of defense procurement or changes in the strategic direction of
defense spending could adversely affect the Company's financial performance in
future years, including its income, liquidity, capital resources and financial
condition. The impact of any of these changes will depend on the timing and
magnitude thereof and the Company's ability to mitigate their impact with new
business, business consolidations or cost reductions. In view of the
uncertainty regarding the priorities of the Department of Defense, the
historical financial information of the Company's businesses may not be
indicative of future performance.
Since the U.S. Government usually awards and funds ordnance contracts on a
year-by-year basis and the Company's business is dependent upon periodic
awards of new contracts and the exercise of options contained in existing
contracts, there can be no assurance that the U.S. Government will continue to
purchase the Company's products or services over the long-term. The
termination of any of the Company's significant contracts or the failure to
obtain either renewals of certain existing contracts or additional contracts
with the U.S. Government could have a material adverse effect on its results
of future operations and financial condition.
NOVATION OF U.S. GOVERNMENT CONTRACTS
As required by Federal procurement regulations providing for the U.S.
Government to recognize the Company as the successor in interest to Olin on
contracts between Olin and the U.S. Government, Olin will be required to enter
into novation agreements with the Company and the U.S. Government which will
provide, among other things, for Olin to directly or indirectly guarantee or
otherwise become liable for the performance of the Company's obligations under
such contracts which are being transferred to the Company in connection with
the Distribution (the "Guaranteed Contracts"), including post-novation
modifications to the Guaranteed Contracts. Such novation agreements also
provide that the Company assumes all obligations under the Guaranteed
Contracts and that the U.S. Government recognizes the transfer of such
Guaranteed Contracts and related assets. While these Guaranteed Contracts are
scheduled to be performed over a period of time, it is not expected that they
will be fully and finally discharged for a number of years.
The Company has agreed in the Assumption of Liabilities and Indemnity
Agreement to perform all of its obligations under each Guaranteed Contract and
to indemnify Olin against any liability Olin may incur under the novation
agreements by reason of any failure by the Company to perform such
obligations.
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<PAGE>
COMPETITION
The Company encounters strong competition in each of its product lines. The
degree to which the Company participates in future U.S. Government business
will depend to a large extent on its ability to offer better program
performance than its competitors at a lower price to the Government.
The Company competes with Alliant Techsystems Inc. ("Alliant") for the
supply of large and medium caliber ammunition to the U.S. Government and
foreign Governments. The Company also faces competition for international
sales of tank and medium caliber ammunition from foreign suppliers.
The Company's St. Marks, Florida facility is currently the only supplier of
Ball Powder(R) propellant to the U.S. Government for use in small caliber
ammunition. The Company competes with Alliant and Expro Chemical Products
("Expro"), a Canadian company, in North America for the supply of gunpowder
for medium caliber ammunition and other military applications. In many cases,
the gunpowder available varies from one supplier to another and, as a result,
competition is based on both price and performance characteristics. In the
commercial gunpowder market, the Company competes with Alliant, Expro and a
variety of foreign suppliers.
In other product lines, the Company's principal competitors are: Kaiser
Marquardt Company in the area of monopropellant hydrazine propulsion, Hughes
Aircraft Company and International Space Technology, Inc. with regard to
electric propulsion, and Talley Industries in specialty solid propellant
products. The Company's electronic products compete with a variety of other
companies' technology and hardware. Other than work done by the Government's
National Laboratory System, competition in the field of high-voltage pulsed
power systems is provided principally by Maxwell Laboratories, Inc., and in
the case of high-performance, precision warheads, the competition is comprised
of Alliant, Aerojet-General Corporation and CMS Defense Systems.
RESEARCH AND DEVELOPMENT; PATENTS
The Company's research activities are conducted at a number of facilities.
Company-sponsored research expenditures were approximately $5 million, $5
million and $6 million for 1995, 1994 and 1993, respectively. Customer-
sponsored research expenditures of the Company (primarily U.S. Government)
were approximately $48 million, $81 million, and $85 million, respectively,
for such years. Customer-sponsored research declined in 1995 primarily as a
result of the reduction in Government-funded ammunition programs and the
advancement of a major ammunition development program into the production
stage.
The Company owns, or is the licensee under, a number of technologies and/or
patents relating to various products and processes. The Company believes that,
in the aggregate, the rights under its technological assets and licenses are
important to the Company but, except as discussed herein, the Company does not
consider any one technology, patent or license or group thereof related to a
specific process or product to be of material importance to the Company as a
whole. The Ball Powder(R) propellant technology is material to the Company's
St. Marks, Florida operation. This is proprietary manufacturing know-how and
trade secret information which is critical in the manufacture of propellants.
A patent covers an important aspect of that know-how, namely, a process for
the production of spherical, single-base, low-density propellant grains. The
patent was issued in 1987 and will expire on September 22, 2004.
BACKLOG
The aggregate amount of contracted backlog orders for the Company on
September 30, 1996 and 1995 was $389 million and $400 million, respectively.
It is expected that approximately $126 million of sales during the remainder
of 1996 will fill orders that were in backlog as of September 30, 1996. The
backlog represents the value of contracts for which goods and services are yet
to be provided. Under multiyear contracts, a portion of the backlog is subject
to approval of Government appropriations. The backlog consists of firm
contracts, and although they can be and sometimes are changed or cancelled,
the amount of changes and cancellations historically has been insignificant.
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<PAGE>
EXPORT SALES
The Company's export sales from the United States to unaffiliated customers
were $24 million, $16 million and $21 million in 1995, 1994 and 1993,
respectively.
SEASONALITY
Although the business of the Company is not seasonal in nature, sales to the
Department of Defense are historically stronger in the latter part of the year
reflecting the procurement cycle utilized by the U.S. Army. Certain commercial
sales, such as Ball Powder(R) propellant volumes, tend to be stronger in the
first half of the year.
EMPLOYEES
As of December 31, 1995, the Company had approximately 2,640 employees,
approximately six of whom were working in foreign countries. Approximately 500
of the hourly paid employees of the Company located at its St. Marks, Florida
and Marion, Illinois facilities are represented, for purposes of collective
bargaining, by local unions affiliated with the United Steelworkers of
America, and the Company is party to two labor contracts relating to such
employees. These labor contracts extend for three year terms, with one
expiring in December 1996 and the other expiring in October 1997. The Company
has commenced contract negotiations with respect to the contract expiring in
1996. No major work stoppages have occurred in the last three years. While
relations between the Company and its employees and their various
representatives are generally considered satisfactory, there can be no
assurance that new labor contracts can be concluded without stoppages.
ENVIRONMENTAL MATTERS
The establishment and implementation of Federal, state and local standards
to regulate air, water and land quality has affected, and will continue to
affect, substantially all of the Company's plants. Federal legislation
providing for regulation of the manufacture, transportation, use and disposal
of hazardous and toxic substances has imposed additional regulatory
requirements on industry. In addition, implementation of environmental laws,
such as the Resource Conservation and Recovery Act and the Clean Air Act, has
required and will continue to require new capital expenditures and will
increase operating costs. In order to help finance the cleanup of waste
disposal sites, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("Superfund"), imposes a tax on the disposal of
certain hazardous wastes. The Company employs waste minimization programs at
most of its manufacturing sites. See the discussion of environmental matters
contained in "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Environmental".
The Company and Olin have agreed pursuant to the Assumption of Liabilities
and Indemnity Agreement that the Company will assume, and indemnify and hold
Olin harmless against, all liabilities associated with the removal,
remediation and control of environmental conditions at several of the
Company's existing and former plant sites. Such liabilities are not expected
to have a material adverse effect upon the Company's financial condition or
results of operations. See "Relationship Between Olin and the Company after
the Distribution--Assumption of Liabilities and Indemnity Agreement".
CREDIT FACILITY
Prior to the Distribution Date, the Company will assume a $160 million
credit facility established by Olin, under which Olin will borrow $125
million. The credit facility has a five-year term and permits borrowings
thereunder with up to $30 million available for letters of credit. The
facility is intended to provide sufficient liquidity for the Company's current
funding needs. The facility permits various borrowing options and contains
customary commercial bank covenants, including restrictions on the payment of
dividends by the Company and the acquisition by the Company of its capital
stock.
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<PAGE>
PROPERTIES
The table below sets forth the locations where the Company conducts its
business and a brief description of the activities conducted at each
identified location. A more detailed description of the Company's principal
manufacturing facilities follows the table. The Company believes that its
facilities are sufficiently maintained and suitable and adequate for its
immediate needs and that additional space is available to accommodate
expansion. Unless otherwise noted below, the identified location is owned by
the Company.
<TABLE>
<CAPTION>
LOCATION PRIMARY ACTIVITIES
-------- ------------------
<C> <S>
St. Petersburg, Flori-
da(1)..................... Corporate headquarters
Systems management operation for large caliber
ammunition
Red Lion, Pennsylvania..... Manufacturing and research and development
facility for large caliber ammunition metal and
composite parts
Redmond, Washington........ Design, manufacturing and test facility for space,
solid propellant and electronic products
Office facilities
Research and development laboratory
St. Marks, Florida......... Manufacturing facility for Ball Powder (R)
propellant
Research and development laboratory
Marion, Illinois(1)........ Loading, assembly and packing of medium caliber
ammunition
Manufacturing and test facility for solid
propellant products
Demilitarization services
Research and development laboratory
San Leandro, California(1). Pulsed power research and development laboratory
and test facilities; pulsed power and advanced
warhead engineering and management
Downey, California(1)...... Manufacturing facility for medium caliber
ammunition components and air dispensed munitions
components
System management and research and development
Moses Lake, Washington(1).. Manufacturing and test facility for solid
propellant products
Camden, Arkansas(2)........ Test range
Support for the ammunition business
Tracy, California.......... Manufacturing and test facility for advanced anti-
armor warhead systems
Lucerne, Switzerland(1).... Design, development and testing of anti-armor
warhead systems for the Swiss Government
</TABLE>
- --------
(1) Leased.
(2) Leased in part and occupied in part under a subcontract.
PRINCIPAL MANUFACTURING FACILITIES
The principal manufacturing properties of the Company described below are
all owned by the Company, except for the Marion, Illinois manufacturing
facility which is leased from the U.S. Government.
RED LION, PENNSYLVANIA. The Company's facility located in Red Lion,
Pennsylvania designs, develops and manufactures large caliber ammunition
components, primarily 120mm tank ammunition, training and tactical
projectiles and case bases. Thick cross section composite structures are
produced at this location from carbon fiber and are incorporated into the
Company's tactical tank ammunition.
The plant is vertically integrated for the manufacture and assembly of
metal parts. Equipment and processes exist on site to forge, heat treat,
turn, mill, anodize and paint metal parts. The plant applies the same
manufacturing processes utilized in the production of large caliber
ammunition components to the production of large cylindrical commercial
items. The vertical integration of the plant combined with its large
machining capabilities provide the Company with the opportunity to produce
products with military and commercial applications.
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<PAGE>
REDMOND, WASHINGTON. The Company's space products and electronic products
and certain propellant products are designed, manufactured and tested at
this facility, utilizing integrated product development techniques. State-
of-the-art equipment and processes at the Redmond location facilitate the
Company's ability to produce high technology products. The Redmond
engineering staff, supported by the latest CAD/CAE/CAM programs, is capable
of simulating conditions within an aircraft cabin and rigorous launch and
space environments, which enables the Company to meet the exacting
specifications of products having commercial, Department of Defense and
NASA applications.
ST. MARKS, FLORIDA. Ball Powder(R) propellant is developed and produced
for commercial and military ammunition at the Company's highly automated
propellant plant located in St. Marks, Florida. The research and
development laboratory located at the St. Marks plant site is equipped to
perform chemical and thermal analyses and propellant syntheses. The
Company's ability to conduct research and development activities on-site
facilitates the creation of propellants with a variety of ballistic
performance characteristics. These capabilities enable the Company to meet
a wide range of product specifications as evidenced by more than one
hundred different varieties of propellant in the Ball Powder(R) product
line.
MARION, ILLINOIS. The Company develops and loads, assembles and packs
medium caliber ammunition and manufactures solid propellant products at its
Marion, Illinois manufacturing facility. The Company conducts
demilitarization activities at this facility which involve the disassembly
of obsolete ammunition. Artillery propulsion charges are also loaded,
assembled and packed in Marion. In addition to the manufacturing facility,
the Company has extensive testing capabilities at the plant site. This
includes a Company-owned 290-acre test facility which utilizes three
enclosed, fully instrumented test tunnels, with multiple test set-ups and
remote firing bays.
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LEGAL PROCEEDINGS
The Company is primarily engaged in providing products and services under
contracts with the U.S. Government and, to a lesser degree, under foreign
Government contracts, some of which are funded by the U.S. Government. All
such contracts are subject to extensive legal and regulatory requirements and,
from time to time, agencies of the U.S. Government investigate whether the
Company's operations are being conducted in accordance with these
requirements. Such investigations could result in administrative, civil or
criminal liabilities including repayments, fines or penalties being imposed
upon the Company or could lead to suspension or debarment from future
Government contracting by the Company. See "Risk Factors--Risks Inherent in
Government Contracting" and "Business--U.S. Government Contracts and
Regulations ".
The Company has strict policies requiring its employees to comply with all
applicable legal standards relating to contract procurement and
administration. In addition, the Company requires adherence to high ethical
standards by its employees. The Company also has Government Contract
Compliance Officers who are responsible for assuring that adequate policies
and procedures exist and for monitoring compliance with these procedures. It
is the policy of the Company and its subsidiaries to cooperate fully with all
Governmental investigations of their affairs.
The Company is a party to a number of pending or threatened investigations,
claims and proceedings.
In May 1994, the Company discovered that an employee may have modified
inspection and testing software used on certain medium caliber ammunition
production lines at its Marion, Illinois testing facility to permit
inspections to be performed at tolerances which may not have been fully
compliant with applicable contract specifications. Upon discovering the issue,
the Company promptly notified U.S. Government contract representatives,
voluntarily disclosed the circumstances then known to the Department of
Defense's Office of the Inspector General and expressed its intent to
investigate fully the matter and take all necessary corrective actions. In
September 1994, a Federal grand jury in the United States District Court for
the Southern District of Illinois issued two subpoenas to the Company
requesting production of documents relating generally to certain medium
caliber ammunition programs and specifically to the software modification
described above. Subsequently, the Company received additional subpoenas and
several Marion employees received subpoenas to testify before the grand jury.
The Company has fully complied with the subpoenas and cooperated with
Government officials to resolve the matter. After discussions with the U.S.
Attorney's Office regarding the investigation of the performance of the
contracts in question, Olin and the U.S. Attorney entered into an agreement to
settle this matter on September 11, 1996. Under the agreement, the U.S.
Government agreed not to pursue any criminal or civil claims against Olin or
its subsidiaries in connection with these government contracts. Olin has paid
to the U.S. Government $8 million in connection with the settlement and
without admitting to any wrongdoing or liability. For information concerning
an Administrative Agreement between the Company and the United States
Department of the Air Force to be entered into as a result of the settlement
of this matter, see "Business--U.S. Government Contracts and Regulations"
elsewhere herein.
The Company is involved in a contract dispute with the Belgium Ministry of
Defense related to a 1985 sale of tank ammunition. The Belgium Ministry of
Defense has alleged improprieties committed by the Belgium national who
represented Olin in the transaction. Based on these allegations, the Belgium
Ministry of Defense withheld final payment on the contract. On July 2, 1990,
the Company's wholly-owned subsidiary General Defense International ("GDI")
instituted an action in the Court of First Instance of Brussels (the "Court")
seeking that the Court declare that because the Ministry of Defense withheld
the final payment, the contract had been terminated and GDI's obligations
thereunder extinguished. The Company agreed to extend a letter of credit
related to the contract guarantee pending resolution of the underlying
contract dispute. In March, 1996, the trial court ruled against the Company.
The decision has been appealed. In the event that the trial court's decision
is sustained, the resultant liability is estimated at approximately $4.5
million, net of a $1.1 million receivable, at current exchange rates.
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<PAGE>
While the Company cannot predict the ultimate outcome of the Belgian
contract dispute summarized above, as well as other pending or threatened
proceedings, including matters arising under provisions relating to the
protection of the environment, it does not believe that the consequences will
be materially adverse to its results of operations or financial position or
that the Company's liability with respect thereto will exceed the amounts
which have previously been charged to its income. Olin has agreed to assume
responsibility for certain post-Distribution legal costs, judgments and civil
settlements associated with the Belgium contract dispute.
RELATIONSHIP BETWEEN OLIN AND THE COMPANY AFTER THE DISTRIBUTION
The Company was organized by Olin as a wholly owned subsidiary in
anticipation of the Distribution. After the Distribution, Olin will not have
any ownership interest in the Company, and the Company will be an independent
public company.
Prior to the Distribution, the Company and Olin will enter into certain
agreements, described below, for the purpose of giving effect to the
Distribution, governing their relationship subsequent to the Distribution and
providing for the allocation of tax and certain other liabilities and
obligations arising from periods prior to the Distribution. While the
agreements contain terms which generally are comparable to those which would
have been reached in arms-length negotiations with unaffiliated parties, these
agreements were reached while the Company was wholly owned by Olin and
therefore are not the result of arm's-length negotiations between independent
parties.
Following the Distribution, additional or modified agreements, arrangements
and transactions may be entered into by the Company, Olin and their respective
subsidiaries. Any such future agreements, arrangements and transactions will
be determined through arm's-length negotiation between the parties in the
ordinary course.
Copies of the forms of the principal agreements between the Company and Olin
are filed as exhibits to the Company's Registration Statement on Form 10
registering the Company Common Stock under the Exchange Act. The following
description summarizes certain terms of such agreements, but the following
descriptions do not purport to be complete and are qualified in their entirety
by reference to such exhibits.
DISTRIBUTION AGREEMENT
Olin and the Company have entered into a Distribution Agreement providing
for, among other things, certain corporate transactions required to effect the
Distribution and other arrangements between Olin and the Company subsequent to
the Distribution.
The Distribution Agreement provides for the transfer by Olin to the Company
of the assets and business entities comprising the Ordnance/Aerospace
Business. The assets of the Ordnance/Aerospace Business will be transferred to
the Company on an "as is, where is" basis and no representations will be made
by Olin with respect thereto. The Distribution Agreement also provides that
prior to the Distribution the Company will assume approximately $125 million
of indebtedness incurred by Olin. The Distribution Agreement also provides for
the treatment of employee obligations and benefit plans of certain employees
of the Company in the manner described under "Employee Benefits and
Compensation Matters". The Distribution Agreement also provides for the
allocation of benefits between the Company and Olin under existing insurance
policies after the Distribution Date and sets forth procedures for the
administration of insured claims.
The Distribution Agreement provides that each of Olin and the Company will
be granted access to certain records and information in the possession of the
other and requires each of Olin and the Company to provide to the other copies
of all documents filed with the Securities and Exchange Commission pursuant to
the periodic and interim reporting requirements of the Exchange Act. The
Distribution Agreement provides that on or prior to the Distribution the
Articles of Incorporation and By-laws of the Company will have been adopted in
the forms attached thereto and that the individuals identified therein as
directors of the Company shall have been elected.
33
<PAGE>
The Distribution Agreement provides that, in general, except as otherwise
set forth therein or in any related agreement, all costs and expenses incurred
in connection with the Distribution will be paid by Olin, other than costs and
expenses expressly incurred by the Company (including fees of attorneys or
financial advisors retained by the Company, if any).
TECHNOLOGY TRANSFER AND LICENSE AGREEMENT
The Company and Olin have entered into a technology transfer and license
agreement (the "Technology Transfer and License Agreement"), which provides
for the transfer by Olin to the Company of certain intellectual property and
proprietary technology relating to the Company's businesses. The Technology
Transfer and License Agreement provides for the grant of licenses by the
Company to Olin to use such transferred intellectual property and technology
in certain of Olin's retained businesses following the Distribution and for
the granting of licenses between Olin and the Company relating to the use of
certain jointly-developed intellectual property and technology.
TAX SHARING AGREEMENT
The Company and Olin have entered into a Tax Sharing Agreement effectively
providing that Olin will be responsible for the tax liability of the Company
for the years that the Company was included in Olin's consolidated Federal
income tax return. The Tax Sharing Agreement also provides that state, local
and foreign taxes attributable to periods prior to the Distribution will be
the responsibility of Olin and that if the Distribution fails to qualify as a
tax-free spin-off as a result of action taken after the distribution by Olin
or the Company, the party that took such action will be responsible for the
full amount of any resulting corporate tax liability. Neither Olin nor the
Company will indemnify any shareholder for any tax liability.
POWDER SUPPLY REQUIREMENTS AGREEMENT; COMPONENT SUPPLY AGREEMENT
The Company and Olin have entered into a powder supply requirements
agreement (the "Powder Supply Requirements Agreement") and a component supply
agreement (the "Component Supply Agreement") which set forth the terms on
which Olin will purchase propellant powder from the Company and the Company
will purchase certain ammunition components from Olin following the
Distribution.
The Powder Supply Requirements Agreement generally provides that Olin will
purchase, at prices to be agreed upon from time to time, a certain percentage
of the propellant powder required in any calendar year by its Winchester
Division from the Company, starting at 100% of such requirements for 1997 for
Ball Powder(R) propellant and decreasing annually to 70% for 2002. The prices
are expected to be at a range of discounts from competitive prices depending
on requirements purchased. In 1995, Olin's purchases of propellant powder
accounted for approximately 42% of the Company's annual production. The Powder
Supply Requirements Agreement provides for reductions in the amounts of
propellant powder that Olin is required to purchase to the extent that the
Company is unable or unwilling to meet a request by Olin to produce a type of
propellant powder or to match pricing and other terms offered by third
parties. The arrangement provides that Olin will reimburse the Company for any
lost profits resulting from Olin's failure to purchase the required amount of
propellant powder from the Company in any year. The Powder Supply Requirements
Agreement also provides for the purchase by Olin from the Company of certain
powders manufactured by Synthesia a.s., a Czech manufacturer for whom the
Company acts as North American distributor. Any purchases by Olin of such
Synthesia powders are in addition to Olin's required purchase obligations
described above. The term of the Powder Supply Requirements Agreement expires
on December 31, 2002, unless earlier terminated in accordance with its terms.
Pursuant to the Powder Supply Requirements Agreement, the Company shall
indemnify Olin against all losses arising from actual or alleged manufacturing
or design defects in the products delivered pursuant thereto and Olin shall
indemnify the Company against all losses arising from Olin's negligent misuse
or improper handling thereof or defects in the ammunition (other than powder
defects).
The Component Supply Agreement provides that the Company will purchase
certain ammunition components (the "Components") from Olin at agreed-upon
prices until December 31, 1999, unless the
34
<PAGE>
Component Supply Agreement is earlier terminated in accordance with its terms.
Pursuant to the Component Supply Agreement, Olin will indemnify the Company
against all losses arising in connection with actual or alleged manufacturing
and design defects in the Components delivered pursuant thereto and the
Company will indemnify Olin against all losses arising in connection with the
Company's negligent misuse or improper handling of the Components delivered
pursuant thereto.
BALL POWDER(R) ASSIGNMENT AGREEMENT
The Company and Olin have entered into an assignment agreement (the "Ball
Powder(R) Assignment Agreement") providing for the assignment by Olin to the
Company of Olin's Ball Powder(R) trademarks. Pursuant to the Ball Powder(R)
Assignment Agreement, the Company has agreed to grant to Olin such rights and
licenses as may be necessary for Olin to fulfill certain existing contractual
obligations to Browning S.A. relating to the manufacture and sale of certain
products in Europe.
BROWNING DISTRIBUTION AGREEMENT
The Company and Olin have entered into a powder distribution agreement (the
"Browning Distribution Agreement") pursuant to which the Company has appointed
Olin its exclusive distributor of canister powder to Browning, S.A., and
certain of its subsidiaries throughout Europe.
ASSUMPTION OF LIABILITIES AND INDEMNITY AGREEMENT
The Company and Olin have entered into an assumption of liabilities and
indemnity agreement (the "Assumption of Liabilities and Indemnity Agreement")
which generally provides for the assumption of liabilities and cross
indemnities designed to place with the Company responsibility for liabilities
of the Ordnance/Aerospace Business and with Olin responsibility for
liabilities of the businesses to be retained by Olin after the Distribution.
Specifically, the Company has agreed, subject to certain exceptions, to
assume, and indemnify and hold Olin harmless from and against, all damages,
losses, liabilities, fines, penalties, costs and expenses arising out of or
associated with the business, conduct, operations, assets, properties or
status of the Company prior to, on or after the Distribution.
The Assumption of Liabilities and Indemnity Agreement also provides that the
Company will assume, and indemnify and hold Olin harmless from, all
liabilities in connection with the removal, remediation or control of
environmental conditions at certain of the Company's facilities (see
"Business--Environmental Matters") and that the Company will indemnify Olin
for any liabilities arising out of Olin's existing guarantee of certain lease
obligations of the Company. The Assumption of Liabilities and Indemnity
Agreement also provides for cross indemnities relating to certain employee
benefit claims.
TRANSITION SERVICES AGREEMENT
The Company and Olin have entered into a transition services agreement (the
"Transition Services Agreement") pursuant to which Olin and the Company will
provide each other with certain services which have been provided by Olin and
the Company prior to the Distribution. The length of time for which any such
service shall be provided, and the compensation therefor, vary based upon the
mutual agreement of the Company and Olin. Pursuant to Olin's management of the
receipts and disbursements of the Company for an interim period which is not
expected to exceed six months, periodic intercompany indebtedness may arise in
an amount which will not exceed $5 million.
COVENANT NOT TO COMPETE AGREEMENT
The Company and Olin have entered into a covenant not to compete agreement
(the "Covenant Not To Compete Agreement") which generally provides that, for a
period of five years, Olin shall not, subject to certain exceptions, directly
or indirectly manufacture, sell or distribute medium or large caliber
ammunition or components and that the Company shall not, subject to certain
exceptions, directly or indirectly manufacture, sell or distribute small
caliber ammunition or components, ejection cartridges or shotshells.
35
<PAGE>
RAUFOSS TECHNOLOGY AGREEMENT
The Company and Olin have entered into an assignment agreement (the "Raufoss
Technology Agreement") pursuant to which Olin has assigned to the Company all
of Olin's rights under and interests in a license agreement with Raufoss A/S
("Raufoss") relating to the use of certain proprietary technology of Raufoss
in the manufacture and sale of ammunition. Pursuant to the Raufoss Technology
Agreement, Olin has also assigned to the Company all of Olin's rights under
and interests in a teaming agreement with Raufoss providing for cooperation in
the manufacture and sale of multipurpose ammunition. The Raufoss Technology
Agreement also provides for the grant by the Company to Olin of an exclusive
sublicense to utilize the Company's rights and licenses with respect to
proprietary technology of Raufoss in the manufacture and sale of small caliber
ammunition.
AUSTRALIA AGENCY AGREEMENT
The Company and Olin Australia Ltd., a subsidiary of Olin ("Olin
Australia"), have entered into an agency agreement (the "Australia Agency
Agreement") pursuant to which the Company has appointed Olin Australia as its
non-exclusive agent for the sale of certain medium and large caliber
ammunition to government agencies in Australia, New Zealand, Papua New Guinea
and Oceania. Under the Australia Agency Agreement, Olin Australia will be paid
individually agreed-upon commissions by the Company at the time of order
acceptance by the Company. The Australia Agency Agreement will continue in
effect until such time as either party thereto provides the other with 30-
days' notice of termination.
TRADE NAME LICENSE AGREEMENT
Olin and the Company have entered into an agreement to permit the Company
and its subsidiaries to use the "Olin" name and its derivatives in certain
limited circumstances for a certain limited period of time.
PRIMEX DIRECTORS
Following the Distribution Date, Anthony W. Ruggiero, Olin's Senior Vice
President and Chief Financial Officer, will serve on the Board of Directors of
the Company. See "Management--Board of Directors".
36
<PAGE>
MANAGEMENT AND EXECUTIVE COMPENSATION
BOARD OF DIRECTORS
The following table sets forth information as to persons who serve or who
are expected to serve as directors of the Company immediately following the
Distribution. The Company's Board of Directors will be comprised of nine
directors, only two of whom are officers of the Company and one of whom, Mr.
Ruggiero, is an officer of Olin. The following table contains information
concerning directors selected as of the date hereof.
<TABLE>
<CAPTION>
NAME AND AGE YEAR TERM EXPIRES
------------ -----------------
<S> <C>
Angelo A. Catani, 64.................................... 1998
Edwin M. Glasscock, 68.................................. 1997
James G. Hascall, 57.................................... 1999
David Lasky, 64......................................... 1999
Bob Martinez, 62........................................ 1998
William B. Mitchell, 60................................. 1999
Robert H. Rau, 60....................................... 1997
Anthony W. Ruggiero, 55................................. 1998
Leon E. Salomon, 60..................................... 1997
</TABLE>
Mr. Catani is Vice Chairman of the Company. Mr. Catani was elected a
Corporate Vice President of Olin in April 1993 and has served as President of
Olin's Ordnance Division since 1988. Mr. Catani also served as Vice President
and General Manager of Defense Products for Olin from 1985 to 1987.
Mr. Hascall is Chairman and Chief Executive Officer of the Company. Mr.
Hascall has served as Executive Vice President of Olin since January 1, 1996,
having operating responsibility for Olin's Brass, Winchester, Ordnance and
Aerospace Divisions. From October 1985 through December 1995, Mr. Hascall
served as President of Olin's Brass Division and as a Corporate Senior Vice
President of Olin.
Mr. Glasscock is President of Edwin M. Glasscock Associates, Inc., a
management consulting firm founded by him in 1966.
Mr. Lasky has served as Chairman of the Board of Directors of Curtiss-Wright
Corporation since May 1995 and as Director, President and Chief Executive
Officer of Curtiss-Wright since May 1993. Mr. Lasky previously served as
Senior Vice President and General Counsel of Curtiss-Wright.
Governor Martinez is a principal of Bob Martinez & Company, a domestic and
international business development consulting firm, founded by him in 1993.
From 1991-1993, Governor Martinez served as the nation's Drug Czar and from
1987 to 1991 as the Governor of the State of Florida. Prior to that time, he
served in a variety of governmental positions, including Mayor of the City of
Tampa, Florida.
Mr. Mitchell has served as Vice Chairman of Texas Instruments Incorporated
since 1993. Mr. Mitchell previously served as Executive Vice President of
Texas Instruments. He is currently a director of Curtiss-Wright Corporation.
Mr. Rau has served as President and Chief Executive Officer of Rohr, Inc.
since April 1993. Mr. Rau previously served as Executive Vice President of
Parker Hannifin Corporation and as President of the Parker Bertea Aerospace
Group of Parker Hannifin. He is also a member of the Board of Directors of
Rohr.
Mr. Ruggiero has served as Senior Vice President and Chief Financial Officer
of Olin since September 1995. Prior to joining Olin, Mr. Ruggiero was Senior
Vice President and Chief Financial Officer of Reader's Digest Association.
General Salomon is presently the Corporate Vice President of Purchasing and
Logistics for Rubbermaid Incorporated. General Salomon retired from active
duty in the U.S. Army in April 1996. Prior to his retirement, General Salomon
commanded the U.S. Army Material Command from February 11, 1994. From 1992-
1994, General Salomon was the Deputy Chief of Staff for Logistics, Department
of the Army. Prior to that assignment, he was the Deputy Commanding General
for Combined Arms Support, U.S. Army Training and Doctrine Command, and
Commanding General, U.S. Army Combined Arms Support Command and Fort Lee,
Virginia from 1989 to 1992.
37
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Company will be managed under the direction of its Board of Directors.
The Company's By-laws also provide for an Audit Committee and a Compensation
and Nominating Committee of the Board of Directors.
The Audit Committee will be composed solely of directors who are not
employees of the Company or any of its subsidiaries. The Audit Committee will
advise the Board on audit matters affecting the Company, including
recommendation of the appointment of independent auditors of the Company;
review with such auditors the scope and results of their examination of the
financial statements of the Company and any investigations and surveys by such
auditors; and review the presentation of the Company's financial results. The
committee will also advise the Board on government and other compliance
programs, on corporate and governmental security matters, and monitor major
litigation with a particular interest in the event there are claims that the
Company has acted unethically or unlawfully. The members of the Audit
Committee are expected to be Messrs. Rau, Ruggiero and Salomon.
The Compensation and Nominating Committee will set policy, develop and
monitor strategies for and administer the programs which compensate the Chief
Executive Officer (the "CEO") and other senior executives of the Company. The
committee will approve the salary plans for the CEO and other senior
executives including total direct compensation opportunity and the mix of base
salary and long term incentive awards. The committee will administer the
Primex 1996 Long Term Incentive Plan described herein, the Primex Savings and
Retirement Plan described herein and the Primex Technologies, Inc. Stock Plan
for Non-employee Directors described herein, and review plans for management
development and succession. The committee also will advise the Board on such
matters as the composition and remuneration of the Board and committees
thereof, including the nomination of directors, protection against liability
and indemnification. The committee will consider candidates recommended by
shareholders for election as directors at annual meetings. The members of the
Compensation and Nominating Committee are expected to be Messrs. Lasky,
Mitchell and Martinez.
COMPENSATION OF DIRECTORS
Each director who is not an employee of the Company will receive a fixed
annual retainer of $20,000 and a fee of $1,000 for each meeting of the Board
and for each meeting of a committee of the Board attended, together with
expenses incurred in the performance of their duties as directors. Each
Director who serves as the chair of a Board committee also will receive an
additional annual meeting fee of $3,000. Half of the $20,000 annual retainer
will be paid in Company Common Stock, and each director may elect to receive
the balance thereof in cash or Company Common Stock. All meeting fees may be
payable in cash or Company Common Stock, at the election of the director.
Directors may defer the cash portions of their annual retainer and meetings
fees into cash accounts which will bear interest and/or into stock accounts
which will be credited with dividend equivalents. The Company's Stock Plan for
Non-employee Directors described elsewhere herein provides that each non-
employee director serving in such capacity on January 1 of each year will be
credited with a number of shares of Company Common Stock having a fair market
value equal to $5,000. See "Management and Executive Compensation--Stock Plan
for Non-employee Directors".
38
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is certain information as to the Company's executive
officers who will serve as such after the Distribution. On the Distribution
Date, all executive officers will resign from any positions then held with
Olin.
<TABLE>
<CAPTION>
NAME AND AGE POSITION
------------ --------
<C> <S>
James G. Hascall, 57................ Chairman and Chief Executive Officer
Angelo A. Catani, 64................ Vice Chairman
J. Douglas DeMaire, 50.............. Executive Vice President
William W. Smith, 61................ Executive Vice President and President, Aerospace and Electronics Division
Stephen C. Curley, 44............... Vice President and Treasurer
John E. Fischer, 41................. Vice President and Chief Financial Officer
George H. Pain, 46.................. Vice President, General Counsel and Secretary
Jackson C. Picker, 47............... Vice President, Human Resources
Michael S. Wilson, 50............... Vice President and President, Ordnance and Tactical Systems Division
</TABLE>
Mr. Hascall has served as Executive Vice President of Olin since January 1,
1996, having operating responsibility for Olin's Brass, Winchester, Ordnance
and Aerospace Divisions. From October 1985 through December 1995, Mr. Hascall
served as President of Olin's Brass Division and as a Corporate Senior Vice
President of Olin.
Mr. Catani was elected a Corporate Vice President of Olin in April 1993 and
has served as President of Olin's Ordnance Division since 1988. Mr. Catani
also served as Vice President and General Manager of Defense Products for Olin
from 1985 to 1987.
Mr. DeMaire has served as Corporate Vice President, Corporate Planning for
Olin since January 1996. Previously, Mr. DeMaire served as Vice President,
Planning for Olin's Brass and Winchester Divisions from 1986 and 1991,
respectively.
Mr. Smith was elected a Corporate Vice President of Olin in April 1993,
having served as President of Olin's Aerospace Division since 1988.
Mr. Curley has served as Assistant Treasurer of Olin since September 1990.
Previously, Mr. Curley served as a Senior Tax Counsel in Olin's Tax
Department.
Mr. Fischer has served as Vice President and Financial Officer of Olin's
Ordnance Division since January 1995. Mr. Fischer previously served in a
number of financial and contract management positions with Olin's subsidiary
General Defense Corporation ("GDC"), and was corporate controller of GDC when
it was acquired by Olin in 1988.
Mr. Pain has served as Vice President Legal, of Olin's Brass and Winchester
Divisions, and as Deputy General Counsel of Olin, since 1995. Mr. Pain has
served in Olin's legal department since at least 1986.
Mr. Picker has served as Vice President, Human Resources of Olin's Ordnance
Division since 1989, and has served in various other human resource positions
with Olin since 1975.
Mr. Wilson has served as Vice President of Tank Ammunition for Olin since
1991. Mr. Wilson served from 1990 to 1991 as Vice President of Marketing, and
from 1988 to 1991 as Vice President of Programs, for Olin's Ordnance Division.
Mr. Wilson joined Olin's Ordnance Division in 1985 as Director of Business
Development and Planning.
39
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The Company was formed on May 10, 1996. The following table discloses
compensation received by the Company's Chief Executive Officer and the four
other most highly compensated executive officers of the Company (the "Named
Executive Officers") for services rendered to Olin for the fiscal year ended
December 31, 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
---------------------
1995 ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------- ------------- -------
SECURITIES
NAME AND PRINCIPAL POSITION OTHER ANNUAL UNDERLYING LTIP ALL OTHER
AS OF DECEMBER 31, 1995 SALARY BONUS COMPENSATION(B) OPTIONS(#)(C) PAYOUTS COMPENSATION(D)
- --------------------------- -------- -------- --------------- ------------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
James G. Hascall........ $312,500 $260,000 $31,293 5,439 $ 0 $17,081
Senior Vice
President(a)
Angelo A. Catani........ 239,626 150,000 14,180 3,626 0 14,007
Vice President
William W. Smith........ 239,242 125,000 12,930 3,626 0 14,125
Vice President
J. Douglas DeMaire...... 180,546 88,000 5,994 1,073 0 7,220
Vice President,
Business Planning,
Brass & Winchester
Divisions
Michael S. Wilson....... 158,877 52,000 4,408 820 0 7,921
Vice President 120MM
Tank-Ordnance Division
</TABLE>
- --------
(a) Effective January 1, 1996, the Board of Directors of Olin elected Mr.
Hascall Executive Vice President.
(b) Includes dividend equivalents on outstanding performance share units paid
at the same rate as dividends paid on Olin Common Stock. Also includes tax
gross-ups paid for imputed income on use of company-provided automobiles.
(c) The stock options reported are for Olin Common Stock and do not represent
options to acquire Company Common Stock. In the event options are
exercised and shares of Olin Common Stock are issued prior to the Record
Date, the option holder will receive Company Common Stock in the
Distribution on the same basis as all other shareholders of record of Olin
Common Stock on the Record Date. Figures do not reflect a two-for-one
stock split effective October 31, 1996.
(d) Amounts reported in this column for 1995 are comprised of the following
items:
<TABLE>
<CAPTION>
OLIN CONTRIBUTING
EMPLOYEE OLIN SUPPLEMENTAL
OWNERSHIP PLAN CONTRIBUTING EMPLOYEE OLIN TERM LIFE
COMPANY MATCH OWNERSHIP PLAN(1) INSURANCE(2)
----------------- --------------------- --------------
<S> <C> <C> <C>
J.G. Hascall...... $6,111 $6,338 $4,632
A. A. Catani...... 5,956 3,515 4,536
W. W. Smith....... 6,111 3,479 4,535
J. D. DeMaire..... 6,175 1,045 0
M. S. Wilson...... 5,801 385 3,068
</TABLE>
- --------
(1) The Olin Supplemental CEOP permits participants in the CEOP to make
contributions, and Olin to match the same, in amounts permitted by the
CEOP but which would otherwise be in excess of those permitted by certain
Internal Revenue Service limitations.
(2) Under Olin's key executive insurance program, additional life insurance is
provided and monthly payments are made to the spouse and dependent
children of deceased participants.
40
<PAGE>
OPTION GRANTS OF OLIN COMMON STOCK TO COMPANY EXECUTIVES IN LAST FISCAL YEAR
The following table sets forth as to the Named Executive Officers
information relating to options granted by Olin from January 1, 1995 through
December 31, 1995. In connection with the Distribution, options to purchase
Olin Common Stock granted in January 1996 to persons who become Company
employees, and which have not been exercised (other than those options vesting
on January 24, 1997, which will be accelerated to vest immediately prior to
the termination of employment with Olin) will be surrendered and cancelled. In
their stead, the affected optionees will receive grants of restricted stock
units pursuant to the Primex 1996 Long Term Incentive Plan described elsewhere
herein. In addition, options to purchase Olin Common Stock outstanding under
the 1980 Stock Option Plan of Olin for such persons will be extended to
terminate upon the earlier of (i) the end of their term or (ii) two years
following the Distribution. Options to purchase Olin Common Stock granted
under Olin's 1988 Stock Option Plan (the "1988 Plan") will not terminate for
such persons when the optionee ceases to be employed by Olin but will be
extended to their original terms. No options to acquire Company Common Stock
have been granted or are outstanding. See "Management and Executive
Compensation--Adjustment to Prior Olin Equity-Based Benefits for Primex
Employees".
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS POTENTIAL REALIZABLE VALUE AT
UNDERLYING GRANTED ASSUMED RATES OF STOCK PRICE
OPTIONS TO ALL APPRECIATION FOR OPTION TERM (d)
GRANTED EMPLOYEES EXERCISE EXPIRATION ----------------------------------
NAME (a,b) IN FISCAL YEAR PRICE (c) DATE 0% 5% 10%
- ---- ---------- -------------- --------- ---------- ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
J. G. Hascall........... 5,439 4.1% $55.63 4/26/05 0 $ 190,281 $ 482,221
A. A. Catani............ 3,626 2.8% $55.63 4/26/05 0 $ 126,854 $ 321,481
W. W. Smith............. 3,626 2.8% $55.63 4/26/05 0 $ 126,854 $ 321,481
J. D. DeMaire........... 1,073 0.8% $55.63 4/26/05 0 $ 37,538 $ 95,132
M. S. Wilson............ 820 0.6% $55.63 4/26/05 0 $ 28,687 $ 72,701
All Olin Shareholders... n/a n/a n/a n/a 0 $ 851,015,735 $ 2,156,696,863
All Olin Optionees...... 131,254 100.0% $55.63 4/26/05 0 $ 4,591,856 $ 11,636,965
</TABLE>
- --------
(a) Options were awarded on April 27, 1995 and became exercisable on April 27,
1996. Figures do not reflect an option adjustment resulting from a two-
for-one stock split effective October 31, 1996.
(b) Under the 1988 Plan, the Compensation and Nominating Committee of Olin's
Board of Directors, in its discretion, may grant stock appreciation rights
("SARs") to optionees. To date, no such SARs have been granted. Each such
right will relate to and have the same terms and conditions, including
restrictions, as a specific option granted under the 1988 Plan, together
with such additional terms and conditions as Olin's Compensation Committee
may prescribe.
(c) The exercise price of the options reflects the fair market value of Common
Stock on the date of grant and does not reflect an adjustment resulting
from a two-for-one stock split effective October 31, 1996.
(d) No gain to the optionees is possible without appreciation in the stock
price which will benefit all shareholders commensurately. The dollar
amounts under these columns are the result of calculations at the 5% and
10% assumption rates set by the SEC and therefore are not intended to
forecast possible future appreciation of Olin's stock price or to
establish any present value of the options.
41
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth as to the Named Executive Officers
information regarding options to purchase Olin Common Stock exercised during
1995 and the value of in-the-money outstanding options to purchase Olin Common
Stock at the end of 1995. For information relating to the termination of
options granted in January, 1996, see "Management and Executive Compensation--
Option Grants of Olin Common Stock to Company Executives in Last Fiscal Year."
<TABLE>
<CAPTION>
NUMBER OF AGGREGATE
SECURITIES UNDERLYING VALUE OF UNEXERCISED,
UNEXERCISED OPTIONS IN-THE-MONEY
SHARES AT 12/31/95(a) OPTIONS AT 12/31/95(a)(b)
ACQUIRED VALUE ------------------------- -------------------------
ON EXERCISE(a) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. G. Hascall........... 4,828 93,195 30,559 5,439 743,147 101,274
A. A. Catani............ 8,880 135,976 8,208 3,626 177,024 67,516
W. W. Smith............. -- -- 13,148 3,626 330,651 67,516
J. D. DeMaire........... 950 17,927 3,525 1,073 79,102 19,979
M. S. Wilson............ 300 5,979 4,219 820 108,948 15,268
</TABLE>
- --------
(a) Figures do not reflect an option adjustment resulting from a two-for-one
stock split effective October 31, 1996.
(b) Value was computed as the difference between the exercise price and the
$74.25 per share closing price of Olin Common Stock on December 29, 1995,
as reported on the consolidated transaction reporting system of the New
York Stock Exchange.
LONG TERM INCENTIVE PLAN-AWARDS IN LAST FISCAL YEAR(A)
The following table sets forth long-term incentive awards to the Named
Executive Officers under the Olin 1991 Long Term Incentive Plan made during
1995.
<TABLE>
<CAPTION>
NUMBER OF PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
PERFORMANCE OR OTHER PERIOD NON-STOCK PRICE BASED PLAN(b)
SHARE UNITS UNTIL MATURATION --------------------------------
NAME (a) OR PAYOUT THRESHOLD TARGET MAXIMUM
- ---- ----------- ---------------- --------------------- ----------
<S> <C> <C> <C> <C> <C>
J. G. Hascall.... 2,931 5 yrs. $2221,763 $11119,695 $22217,627
A. A. Catani..... 1,954 5 yrs. 14,508 79,796 145,085
W. W. Smith...... 1,954 5 yrs. 14,508 79,796 145,085
J. D. DeMaire.... 578 5 yrs. 4,292 23,604 42,917
M. S. Wilson..... 442 5 yrs. 3,282 18,050 32,819
</TABLE>
- --------
(a) Each performance share unit consists of a phantom share of Olin Common
Stock. Performance share units have a five-year performance cycle. Olin's
Compensation Committee has established a payment schedule which sets forth
the portion of each performance share unit to be paid at the end of the
performance cycle if Olin achieves a certain return on shareholders'
equity and a certain measure of total return to shareholders compared to a
special twenty-four company peer group. Payout may occur early at the end
of the third or fourth year of the performance cycle in the event the
five-year performance targets are achieved by those dates. At the end of
the five-year performance cycle, or earlier if the performance targets are
achieved sooner in year three or four, each participant will receive the
portion of each performance share unit earned in accordance with the
payment schedule. The portion of the performance share unit not earned by
the end of the five-year performance cycle will be forfeited. Figures do
not reflect adjustment of units resulting from a two-for-one stock split
effective October 31, 1996.
(b) The payment schedule provides for payouts ranging from 10% to 100% of the
performance units. If the minimum threshold is not reached, no payouts
will occur during the performance cycle. The threshold amount shown in the
table assumes the minimum is achieved. The target amount shown in the
table represents a 55% payout at the end of the performance cycle, which
is the midpoint of the 10% to 100% range of payouts in the payment
schedule. The maximum amount shown in the table reflects a 100% payout.
42
<PAGE>
The value of performance share units on payout is dependent upon the fair
market value of Olin Common Stock at the time of payout. For purposes of
calculating the dollar value of the performance share units in the table,
the $74.25 per share closing price of Olin Common Stock on December 29,
1995 as reported on the consolidated transaction reporting system of the
New York Stock Exchange was utilized.
ADJUSTMENT TO PRIOR OLIN EQUITY-BASED BENEFITS FOR COMPANY EMPLOYEES
Officers of Olin who become employees of the Company and who were
participating in Olin's EVA Incentive Plan (Management Incentive Compensation
Plan) will, assuming performance objectives are satisfied, receive annual
incentive bonus awards in respect of 1996 performance prorated for the period
prior to the Distribution Date. Olin Performance Unit Plan retention units
consisting of phantom shares of Olin Common Stock will be prorated based on
the number of months such individuals were employed with Olin during the
applicable 10 year retention cycle. Olin shares distributed (assuming
achievement of performance targets) to employees of the Company holding 1994
and 1995 performance share awards granted under the Olin 1991 Long Term
Incentive Plan will be prorated based upon an assumed termination of
employment at December 31, 1996. Restricted stock unit awards which have not
yet vested will be accelerated to vest in their entirety and be paid out in
cash effective upon termination of employment with Olin. The exercise price
and number of shares subject to options to purchase Olin Common Stock
outstanding under the Olin 1980 Stock Option Plan (the "1980 Plan"), the Olin
1988 Stock Option Plan (the "1988 Plan") and the Olin 1996 Stock Option Plan
(the "1996 Plan") will be adjusted to assure that the pre-distribution spread
is maintained after the Distribution Date. Options granted under the 1980 Plan
will be extended to terminate upon the earlier of (i) the end of their term or
(ii) two years following termination of employment with Olin. Options granted
under the 1988 Plan will be extended to the original term of the option.
Options granted under the 1996 Plan on January 24, 1996, which vest on January
24, 1997 (and in the case of Mr. Hascall, which vest on January 24, 1998),
will be accelerated to become exercisable immediately prior to termination of
employment with Olin, with the remaining options granted on January 24, 1996,
being surrendered and cancelled with affected optionees receiving grants of
restricted stock units pursuant to the Primex 1996 Long Term Incentive Plan.
The 1996 Plan options which are accelerated will be extended to the original
term of the option. Any options which are incentive stock options and are
exercised more than three months after termination of employment with Olin
will be converted to non-qualified stock options.
STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
The Company has adopted the Primex Technologies, Inc. Stock Plan for Non-
employee Directors (the "Directors Plan"), which will become effective
following the Distribution. Generally speaking, the Directors Plan (i)
provides for the granting annually, beginning in 1997, of shares of Company
Common Stock having a fair market value equal to $5,000 to each non-employee
director of the Company, (ii) provides that 50% of a director's annual
retainer will be paid in shares of Company Common Stock, (iii) permits each
such director to elect to receive his or her quarterly meeting fees and the
balance of his or her annual cash retainer in the form of shares of Company
Common Stock in lieu of cash and (iv) permits each such director to elect to
defer the payment of cash meeting fees and any shares of Company Common Stock
to be delivered under the Directors Plan. Deferred cash will be credited with
interest quarterly and deferred shares will be credited with dividend
equivalents. In the event of a Change in Control (as defined in the Directors
Plan) all deferred cash and deferred shares of Company Common Stock will be
distributed.
PENSION AND SAVINGS PLAN
Following the Distribution, Olin will remain liable for the payment of
benefits accrued as of the date of termination of employment with Olin by
employees of the Company under Olin's pension plans. Employees of the Company
will be credited with service to the Company for the purpose of meeting
vesting and early retirement requirements under Olin pension plans but not for
purposes of calculating accrued benefits or for purposes of qualifying for
disability retirement benefits. With respect to salaried and hourly
nonbargaining
43
<PAGE>
employees of the Company, compensation received from the Company will be
credited toward Final Average Pay under Olin pension plans, which will be
determined at the time the employee retires from the Company. No Olin pension
assets will be transferred to the Company in connection with the Distribution.
Employees of the Company will not be eligible to receive payments under Olin
qualified pension plans prior to retirement from the Company.
In connection with the Distribution, employee contributions and employer
matching contributions in respect of employees of the Company under the Olin
Corporation Contributing Employee Ownership Plan (the "Olin CEOP") will cease
as of the date of termination of employment with Olin. Those employees who are
Olin CEOP participants may transfer their existing account balances from the
Olin CEOP to the Primex Technologies, Inc. Retirement Investment Management
Experience Plan described below. Company employees who are participants in the
Olin CEOP will be 100% vested in their account balances as of the date their
employment terminates in connection with the Distribution.
The Company has adopted the Primex Technologies, Inc. Retirement Investment
Management Experience Plan ("PRIME") pursuant to which both retirement
benefits and compensation deferral, or savings, opportunities will be
available to employees of the Company following the Distribution.
Substantially all of the domestic non-bargaining employees of the Company will
be eligible for coverage under the retirement feature of PRIME. Under the
retirement feature of PRIME, the Company will make periodic contributions to a
special account (a "Special Account") established for each covered employee.
Such contribution will be a percentage of pay that will vary by age in
accordance with a formula. The contribution will be invested in one or more of
PRIME's investment funds described below, as selected by the employee.
Employees will be 100% vested in Special Accounts following the completion of
two years' participation in PRIME including prior participation under the Olin
CEOP. Balances in Special Accounts may only be withdrawn upon retirement,
death, permanent disability or termination of employment.
The savings feature of PRIME consists of a defined contribution plan
available to substantially all domestic employees of the Company, pursuant to
which employees may defer on a pre-tax or post-tax basis a portion of their
compensation. Employees may elect to invest their contribution in Company
Common Stock or in one or more of several investment funds. Employee
contributions will be based on total compensation, including base pay,
overtime, shift differential and bonus (other than long-term bonus). The
Company will make a matching contribution equal to 50% of the amount
contributed by a participant (up to 6% of the participant's compensation) in
Company Common Stock for the account of such participant. Participants will be
100% vested in such matching contributions following completion of two years'
participation in the PRIME including prior service rendered to Olin CEOP.
Participants will be eligible for a Performance Matching Contribution for 1996
only based on their contributions to the Olin CEOP through December 31, 1996,
and on Olin's Return on Equity (as defined in the Olin CEOP) for 1996. Olin
Common Stock transferred to an employee's PRIME account that is attributable
to Olin contributions may be retained in Olin Common Stock or reinvested only
in Company Common Stock. Dividends on Olin Common Stock transferred to an
employee's PRIME account will be reinvested in Company Common Stock and
contributions made to or held under the PRIME may not be invested in Olin
Common Stock.
The Company will be the "successor employer" under the union contracts
covering employees at its Marion, Illinois and St. Marks, Florida sites. These
contracts require the Company essentially to replicate the benefits provided
to covered employees by Olin prior to the Distribution. The Company has
adopted a defined benefit pension plan and related pension trust (the "Company
Bargaining Pension Plan") for the purpose of providing benefits accrued after
the effective date of the Distribution under these union contracts. No Olin
pension assets will be transferred to the Company's pension trust. Service
credited under Olin's pension plan for these unionized employees will be
recognized for the purpose of qualifying for vesting and early retirement
benefits under the terms of the Company Bargaining Pension Plan. Olin will
remain liable for the payment of benefits accrued as of the effective date of
the Distribution by employees in connection with such contracts.
44
<PAGE>
PRIMEX 1996 LONG TERM INCENTIVE PLAN
The Company has adopted the Primex 1996 Long Term Incentive Plan (the
"Incentive Plan"), which is designed to help the Company attract and retain
key employees by providing an incentive to increase their proprietary interest
in the Company. Awards under the 1996 Plan may be in the form of stock options
(including incentive stock options meeting the requirements of Section 422 of
the Code ("ISOs")), stock appreciation rights ("SARs"), restricted stock and
restricted stock units, performance awards, dividend equivalents and in any
other form (including convertible securities) that the committee administering
the Incentive Plan (the "Committee") approves valued in whole or in part by
reference to, or otherwise based on or related to, shares of Company Common
Stock. Three hundred fifty thousand shares of Company Common Stock (subject to
adjustment as provided below and for dividends, stock splits, mergers, spin-
offs, split-ups, recapitalizations and the like) will be available for awards
under the Incentive Plan.
Awards may be granted under the Incentive Plan to salaried employees,
including officers, of the Company and any of its controlled subsidiaries who
are not members of the Committee. Awards may also be granted to salaried
employees of any other entity in which the Company has a significant equity
interest as determined by the Committee. Awards will be granted for no cash
consideration or for such minimal cash consideration as may be required by
applicable law. However, the exercise price per share of stock purchasable
under any stock option, the exercise price of any SAR and the purchase price
of stock which may be purchased under any other award providing rights to
purchase Company Common Stock will not be less than the fair market value of
such stock on the date of grant of the option, SAR or other right.
Administration of the Incentive Plan is the responsibility of a committee of
the Board consisting of at least two non-employee Directors. The Committee
will have the authority to designate participants, determine the nature and
size of, and terms and conditions applicable to, awards, permit deferral of
award payments; permit the settlement or exercise of awards, and make all
other determinations and interpretations relating to the Plan. Committee
determinations and interpretations will be binding on all interested parties.
Under the Incentive Plan, the Company's Board of Directors may act at any time
in lieu of the Committee.
STOCK OPTIONS. The term of options granted under the Incentive Plan will be
fixed by the Committee; however, such term may not exceed ten years from the
date of grant. The purchase price per share of stock purchasable under any
option will be determined by the Committee but will not be less than the fair
market value of the stock on the date of grant of the option. The Committee
will determine the time or times at which an option may be exercised in whole
or in part, provided that no option may be exercised before the expiration of
at least six months from its date of grant, subject to the provisions of the
Incentive Plan relating to changes in control of the Company. Options may be
exercised by payment in full of the purchase price, either in cash or, at the
discretion of the Committee, in whole or in part in Company Common Stock or
other consideration having a fair market value on the date the option is
exercised equal to the option price.
STOCK APPRECIATION RIGHTS. Upon exercise of an SAR, the holder will be
entitled to receive the excess of the fair market value (calculated as of the
exercise date) of a specified number of Shares over the exercise price of the
SAR. The exercise price (which may not be less than the fair market value of
the shares on the date of grant), method of payment by the Company upon
exercise and other terms of the SAR will be determined by the Committee.
However, the term of an SAR may not exceed ten years from the date of its
grant. Any related stock option will no longer be exercisable to the extent
that an SAR has been exercised, and the exercise or termination of an option
will cancel the related SAR (in the case of exercise, to the extent thereof).
RESTRICTED STOCK. Restricted stock or restricted stock units may not be
disposed of by the recipient until certain restrictions established by the
Committee lapse. These restrictions will require recipients to remain in the
employ of the Company (or an affiliate participating in the Incentive Plan)
for at least six months in order to vest, except in the event of a Change in
Control (as defined in the Incentive Plan) or for such specified reasons as
the Committee may approve. Recipients will have with respect to restricted
stock all of the rights of a shareholder of the Company, including the right
to vote the shares and the right to receive any cash dividends,
45
<PAGE>
unless the Committee otherwise determines. Upon termination of employment
during the restriction period, the restricted stock and/or restricted stock
units will be forfeited, subject to such exceptions, if any, as may be
authorized by the Committee.
PERFORMANCE AWARDS. From time to time, the Committee may select a period
during which performance criteria approved by the Committee will be measured
for the purpose of determining the extent to which a performance award has
been earned. Such period will not be less than six months, subject to the
Change in Control provisions of the Incentive Plan. Performance awards may be
denominated or payable in cash, shares of Common Stock, others securities,
other awards or other property.
AWARDS AS OF THE DISTRIBUTION DATE. On or following the Distribution Date,
the Company will grant restricted stock units valued in the aggregate at
$4,530,000 to an aggregate of 25 employees of the Company. Each restricted
stock unit represents one phantom share of Company Common Stock and generally
vests and is payable in one share of Company Common Stock to the employee upon
the fifth anniversary of the grant provided the employee remains employed by
the Company during the five-year period; however, if certain performance
targets are met, the units may vest after three years. Each restricted stock
unit will accrue amounts equivalent to the cash dividends payable on the
Company's Common Stock ("dividend equivalents"). Such dividend equivalents
will be deferred in the form of cash and will be payable only when and if the
restricted stock unit on which such dividend equivalents were accrued become
vested. Dividend equivalents will accrue interest at an annual rate equal to
the Company's before tax cost of borrowing compounded quarterly. To the extent
a restricted stock unit does not vest or is otherwise forfeited, the accrued
and unpaid dividend equivalents thereon and any interest thereon shall not
vest and be forfeited. In the event an employee's employment is terminated for
cause or without the Company's written consent, the restricted stock units are
forfeited. If employment is terminated without cause and with written consent
or by virtue of death or total disability or retirement under a Company
benefit plan, the Compensation Committee shall decide in its sole discretion
which outstanding restricted stock units not yet vested shall not be
forfeited, provided that in the case of employees who are not officers or
employees of the Company when their employment terminates and have not been
such during the preceding six month period, the Chief Executive Officer of the
Company is authorized to make such determination. Upon a "Change in Control"
of the Company, restricted stock units not yet vested will automatically vest
and be paid out in the form of cash. There is mandatory tax withholding on all
payouts of restricted stock units. The value of such awards to the named
executive officers of the Company are as follows: J.G. Hascall ($840,000);
A.A. Catani ($600,000); W.W. Smith ($330,000); M.S. Wilson ($330,000) and J.D.
DeMaire ($330,000). All executive officers as a group received units
aggregating $3,255,000 in value.
SUPPLEMENTAL PLANS
Following the Distribution, Olin will remain liable for payment of benefits
accrued for employees of the Company under any Olin non-qualified benefit
plans as of the Distribution. Such benefits will not be paid until the
participant retires from the Company. The Company may establish a non-
qualified, unfunded Supplemental Savings and Retirement Plan (the
"Supplemental Plan") that is intended to restore any benefit under the Primex
Savings Plan that would otherwise be reduced as a consequence of certain
restrictions required by the Code. In addition, employees who are covered by
the Supplemental Plan may be able to defer before-tax contributions above the
annual limitations imposed on qualified contribution plans such as PRIME.
RETIREE MEDICAL AND LIFE INSURANCE BENEFITS
Following the Distribution, Olin will remain liable for medical and death
benefits provided to former employees of the Company who retire prior to the
Distribution. The Company has adopted a medical and retiree death benefits
plan which largely replicates the Olin retiree benefit program, under which
employees of the Company will be covered (with appropriate credit for service
with Olin) as of the effective date of the Distribution. Other than possible
increases in employee contributions and other than for retirees under the age
of 65 who have coverage under the active employee medical benefit program, the
Company has agreed that it will not reduce or terminate the benefits provided
by this program for a period of five years. The Company also has agreed to
indemnify Olin from and against any claims brought against it by employees of
the Company who retire after the effective date of the Distribution.
46
<PAGE>
OTHER BENEFITS
Following the Distribution, Olin will be responsible for health care and
disability claims incurred by an employee of the Company prior to the
Distribution under Olin benefit plans. The Company has adopted health care and
disability benefits programs covering employees of the Company following the
Distribution which will provide benefits substantially similar to those
currently provided by Olin.
EXECUTIVE AGREEMENTS
Each of the executive officers named in the table on page 40 and four other
employees have agreements with the Company which provide, among other things,
that in the event of a covered termination of employment (which could include,
among other things, termination of employment other than for cause and
termination at the election of the individual under certain circumstances),
the individual will receive a lump sum severance payment from the Company
equal to 12 months' salary plus the greater of (a) the average incentive
compensation award from the Company during the three years preceding the
termination or (b) the then standard annual incentive compensation award, less
any amounts payable under existing severance or disability plans of the
Company. In the event that a "Change in Control" of the Company occurs, and
there is a covered termination, the individual will receive twice the
severance payment or in the case of the Chairman of the Board and Chief
Executive Officer and the Vice Chairman three times. Insurance coverage would
be afforded for either a one- or two-year period. The agreements also provide
for certain outplacement services. In addition, employees will receive a
payment representing an amount equal to one or two years of the Company's
contributions to the retirement feature of PRIME plus, in the case of
employees who have an accrued benefit under Olin pension plans and are under
age 55, an amount equal to the difference between (x) the amount that the
employee would have received at age 55 upon early retirement under the Olin
pension plan had the employee remained employed with the Company and (y) the
pension amount actually received from such Olin pension plans. The agreements
will expire on January 31, 2002 (except in the case of Mr. Hascall on December
31, 2000, and in the case of Mr. Catani on December 31, 1999), unless prior to
that date there is a "Change in Control" of the Company, in which event they
will expire on the later of January 31, 2002 (except in the case of Mr.
Hascall on December 31, 2000, and in the case of Mr. Catani on December 31,
1999) or three years following the date of the "Change in Control". For
purposes of the agreements, "Change in Control" would occur if the Company
ceases to be publicly owned; 15% or more of its voting stock is acquired by
others (other than an employee benefit plan of the Company); the incumbent
Directors and their designated successors cease over a two-year period to
constitute a majority of the Board; or all or substantially all of the
Company's business is disposed of in a transaction in which the Company is not
the surviving corporation or the Company combines with another company and is
the surviving corporation (unless shareholders of the Company following the
transaction own more than 50% of the voting stock or other ownership interest
of the surviving entity or combined company). Each agreement provides that the
individual agrees to remain in the Company's employ for six months after a
"Potential Change in Control" of the Company has occurred. The agreements
provide that payments made thereunder or under any change in control provision
of a compensation or benefit plan of the Company which are subject to "excess
parachute payment" tax will be increased so that the individual will receive a
net payment equal to that which would have been received if such tax did not
apply. Certain of the Company's benefit and compensation plans also contain
"change-in-control" provisions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are not expected to be any compensation committee interlocks. The
members of the Company's Compensation and Nominating Committee are expected to
be Messrs. Lasky, Mitchell and Martinez.
47
<PAGE>
BENEFICIAL OWNERSHIP
All of the outstanding shares of Company Common Stock are, and will be prior
to the Distribution, held beneficially and of record by Olin. The following
table sets forth information concerning shares of Company Common Stock
projected to be beneficially owned after the Distribution Date by (i) each
person or entity known by the Company to own more than five percent of the
outstanding Company Common Stock, (ii) each person who will be a director of
the Company at the time of the Distribution, (iii) each of the named executive
officers of the Company and (iv) all persons who will be directors and
executive officers of the Company at the time of the Distribution as a group.
The projections are based on the number of shares of Olin Common Stock owned
by such person or entity at October 14, 1996, and with respect to Travellers
Group Inc., December 31, 1995, in each case adjusted to reflect the two-for-
one split of Olin Common Stock effective October 31, 1996, and reflect the
Distribution Ratio of one share of Company Common Stock for every ten shares
of Olin Common Stock. The percentage ownership of Company Common Stock of each
person or entity named below immediately following the Distribution will be
the same as the percentage ownership of such person or entity immediately
prior to the Distribution. Unless otherwise indicated in the footnotes below,
each person or entity has sole voting and investment power with respect to the
shares set forth opposite such person's or entity's name. Also included in the
figures are shares of Company Common Stock which may be acquired within 60
days through the exercise of options, if any.
<TABLE>
<CAPTION>
NO. OF SHARES
BENEFICIALLY PERCENT OF
NAME OF BENEFICIAL OWNER OWNED CLASS (a)
------------------------ ------------- ----------
<S> <C> <C>
Travelers Group Inc. ........................... 287,501(b) 5.8%
388 Greenwich Street
New York, NY 10013
A. A. Catani.................................... 771 --
J. D. DeMaire................................... 461 --
Edwin M. Glasscock.............................. 0 --
J. G. Hascall................................... 1,864 --
D. Lasky........................................ 0 --
B. Martinez..................................... 0 --
W. B. Mitchell.................................. 0 --
R. H. Rau....................................... 0 --
A. W. Ruggiero.................................. 1,044 --
L. E. Salomon................................... 0 --
W. W. Smith..................................... 703 --
M. S. Wilson.................................... 454 --
Directors and executive officers as a group, in-
cluding those named above (16 persons)......... 20,971 --
</TABLE>
--------
(a) Unless otherwise indicated, beneficial ownership of any
named individual does not exceed 1% of the outstanding
shares of Company Common Stock.
(b) Travelers Group Inc. has advised Olin in a Schedule 13G
filing that it and its wholly owned subsidiary, Smith
Barney Holdings Inc., have shared voting and shared
dispositive power with respect to 287,501 shares. They
disclaim beneficial ownership of all such securities.
48
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the Distribution, the Company will assume approximately
$125 million of indebtedness of Olin. In addition, there will be certain
ongoing relationships between Olin and the Company. See "Relationship Between
Olin and the Company After the Distribution."
DESCRIPTION OF CAPITAL STOCK
AUTHORIZED CAPITAL STOCK
Under the Amended and Restated Articles of Incorporation of the Company (the
"Articles"), the Company has authority to issue 10 million shares of preferred
stock, par value $1.00 per share ("Preferred Stock"), and 60 million shares of
Company Common Stock, par value $1.00 per share. As of the date hereof, 100
shares of Company Common Stock were issued and outstanding.
Based on the number of shares of Olin Common Stock outstanding at October
31, 1996, as adjusted to reflect the two-for-one stock split effective October
31, 1996, and the Distribution ratio of one share of the Company for every ten
shares of Olin Common Stock, it is expected that approximately 4,996,372
shares will be issued to shareholders of Olin in the Distribution. The Company
Common Stock to be distributed will constitute all of the outstanding Company
Common Stock immediately after the Distribution. All of the shares of Company
Common Stock to be distributed to Olin shareholders in the Distribution will
be fully paid and non-assessable.
The following statements with respect to the capital stock of the Company
are subject to the detailed provisions of the Company's Articles and By-laws
as currently in effect. These statements do not purport to be complete, or to
give full effect to the provisions of statutory or common law, and are subject
to, and are qualified in their entirety by reference to, the terms of the
Articles, By-laws and the Rights Agreement, dated as of December 19, 1996
between the Company and ChaseMellon Shareholder Services, L.L.C. (the "Rights
Agreement").
COMMON STOCK
Holders of Company Common Stock are entitled to dividends as declared by the
Board from time to time after payment of, or provision for, full cumulative
dividends on and any required redemptions of shares of Preferred Stock then
outstanding. Holders of Company Common Stock are entitled to one vote per
share on all matters submitted to a vote of such holders and may not cumulate
votes for the election of directors. Holders of Company Common Stock have no
preemptive or subscription rights and have no liability for further calls or
assessments. In the event of the liquidation, dissolution or winding up of the
Company, holders of Company Common Stock are entitled to receive pro rata all
the remaining assets of the Company available for distribution, after
satisfaction of the prior preferential rights of the Preferred Stock and the
satisfaction of all debts and liabilities of the Company.
The Transfer Agent and Registrar for the Company Common Stock is ChaseMellon
Shareholder Services L.L.C.
PREFERRED STOCK
The Articles authorize the Board, without any vote or action by the holders
of Company Common Stock, to issue up to 10 million shares of Preferred Stock
from time to time in one or more series. The Board is authorized to determine
the number of shares and designation of any series of Preferred Stock and the
dividend rights, dividend rate, conversion rights and terms, voting rights
(full or limited, if any), redemption rights and terms, liquidation
preferences and sinking fund and other terms of any series of Preferred Stock.
Issuances of Preferred Stock would be subject to the applicable rules of
Nasdaq or other organizations on whose systems the stock of the Company may
then be quoted or listed. Depending upon the terms of the Preferred Stock
established by the
49
<PAGE>
Board, any or all series of Preferred Stock could have preference over the
Company Common Stock with respect to dividends and other distributions and
upon liquidation of the Company. Issuance of any such shares with voting
powers, or issuance of additional shares of Company Common Stock, would dilute
the voting power of the outstanding Company Common Stock. The Company has no
present plans to issue any Preferred Stock, except that the Rights Agreement
provides for the issuance of shares of Preferred Stock, under the
circumstances specified in the Rights Agreement, upon the exercise or exchange
of rights issued thereunder. See "Rights Plan".
AUTHORIZED BUT UNISSUED CAPITAL STOCK
Virginia law does not require shareholder approval for any issuance of
authorized shares other than in connection with certain mergers to which the
Company may be a party. However, the criteria for designation as a Nasdaq
National Market System security, which would apply so long as Company Common
Stock remains so designated, require shareholder approval of certain issuances
equal to or exceeding 20% of the then outstanding voting power or then
outstanding number of shares of Company Common Stock. These additional shares
may be used for a variety of corporate purposes, including future public
offerings to raise additional capital or to facilitate corporate acquisitions.
RIGHTS
On December 9, 1996, the Company declared a dividend of one right (a
"Right") for each outstanding share of Company Common Stock to the
shareholders of record on December 31, 1996. Rights also will be issued with
respect to Company Common Stock issued thereafter, prior to the occurrence of
certain change-in-control events. The Rights become exercisable upon certain
potential change-in-control events. When exercisable and upon the occurrence
of certain events, the Rights entitle holders (other than any person who
beneficially owns more than 15% of the outstanding Company Common Stock (an
"Acquiring Person")) to purchase shares of Preferred Stock, other securities
of the Company or shares of the Acquiring Person's common stock (or stock of
one of its affiliates or associates) at a substantial discount. Exercise of
the Rights will cause substantial dilution to a person or group attempting to
acquire control of the Company without the approval of the Board. Except under
certain circumstances, the Board may cause the Company to redeem the Rights in
whole, but not in part, at a price of $0.01 per Right. The Rights will not
interfere with any merger or other business combination approved by the Board.
The Rights expire on December 19, 2006, if not redeemed earlier. The Rights
have no voting or dividend privileges. Until such time as the Rights become
exercisable, they are attached to and will not trade separately from the
Company Common Stock. For a more complete description of the Rights, see
"Rights Plan".
NO PREEMPTIVE RIGHTS
No holder of any class of stock of the Company authorized at the time of the
Distribution will have any preemptive right to subscribe to any securities of
the Company of any kind or class.
CERTAIN PROVISIONS OF THE ARTICLES AND BY-LAWS
The Board's membership is divided into three classes as nearly equal in
number as possible, each of which serves for three years with one class being
elected each year. The total number of Directors is currently fixed at eight.
Special meetings of shareholders may be called only by the Board or certain
designated officers. Directors may be removed only with cause, and vacancies
on the Board, including any vacancy created by an increase in the number of
Directors, may be filled only by the Board unless the vacancy is required to
be filled at an annual meeting of shareholders. The By-laws require that
advance notice of nominees for election as Directors to be made by a
shareholder and proposals to be submitted by a shareholder be given to the
Secretary of the Company, together with certain specified information, no
later than 90 days before an annual meeting of shareholders or seven days
following notice of a special meeting of shareholders for the election of
Directors. The provisions of the Articles and By-laws described above may, in
certain circumstances, make more difficult or discourage a takeover of the
50
<PAGE>
Company. The Company has elected to "opt out" of coverage under Article 14.1
of the Virginia Stock Corporation Act, which prohibits significant
shareholders who acquire specific amounts of Company Common Stock from voting
certain shares of Common Stock so acquired without obtaining the affirmative
vote of a majority of the shares of Company Common Stock held by persons other
than such a shareholder or officers and certain directors of the Company. As a
result of this election, a purchaser of Company shares in a "control share
acquisition" will not have the right to cause a special meeting of
shareholders to be convened for the purpose of considering whether to grant
voting rights otherwise prohibited by the Virginia Stock Corporation Act to
such an acquiring shareholder.
RIGHTS PLAN
The Company declared a dividend of one Right for each share of Common Stock
to the holders of record at the close of business on December 31, 1996, and
has approved the issuance of additional Rights with respect to Company Common
Stock issued thereafter and before the occurrence of certain change-of-control
events. Each Right, when it becomes exercisable as described below, will
entitle the registered holder to purchase from the Company one one-thousandth
(1/1000) of a share of Series A Participating Cumulative Preferred Stock, par
value $1 per share, of the Company (the "Preferred Shares") or, under certain
circumstances, Company Common Stock or other securities of the Company at a
price of $55 (the "Purchase Price"). The description and terms of the Rights
are set forth in a Rights Agreement dated as of December 19, 1996 (the "Rights
Agreement"), between the Company and ChaseMellon Shareholder Services, L.L.C.,
as Rights Agent.
Until the earlier of (a) such time as the Company learns that a person or
group (including any affiliate or associate of such person or group) has
acquired, or has obtained the right to acquire, beneficial ownership of 15% or
more of the outstanding Company Common Stock (an "Acquiring Person"), unless
provisions preventing accidental triggering of the Rights apply, and (b) the
close of business on such date, if any, as may be designated by the Board
following the commencement of, or first public disclosure of an intent to
commence, a tender or exchange offer by any person (other than the Company,
its subsidiaries or benefit plans) for 15% of the outstanding Company Common
Stock, if upon consummation of such tender or exchange offer such person could
be the beneficial owner of more than 15% of the outstanding Company Common
Stock, the Rights will be evidenced by the certificates for Company Common
Stock registered in the names of the holders thereof and will be transferred
only with the Company Common Stock.
The Rights will expire on December 19, 2006 (the "Expiration Date"), unless
earlier redeemed by the Company as described below.
In the event the Company is acquired in a merger or other business
combination by an Acquiring Person or an associate or affiliate of an
Acquiring Person that is a publicly traded corporation or 50% or more of the
Company's assets or assets representing 50% or more of the Company's revenues
or cash flow are sold, leased, exchanged or otherwise transferred (in one or
more transactions) to an Acquiring Person or an associate or affiliate of an
Acquiring Person that is a publicly traded corporation, each Right (other than
Rights that are beneficially owned by an Acquiring Person or any affiliate or
associate of an Acquiring Person) will entitle its holder to purchase, for the
Purchase Price, that number of common shares of such corporation which at the
time of the transaction would have a market value of twice the Purchase Price.
In the event the Company is acquired in a merger or other business combination
by an Acquiring Person or an associate or affiliate of an Acquiring Person
that is not a publicly traded entity or 50% or more of the Company's assets or
assets representing 50% or more of the Company's revenues or cash flow are
sold, leased, exchanged or otherwise transferred (in one or more transactions)
to an Acquiring Person or an associate or affiliate of an Acquiring Person
that is not a publicly traded entity, each Right (other than Rights that are
beneficially owned by an Acquiring Person or any affiliate or associate of an
Acquiring Person) will entitle its holder to purchase, for the Purchase Price,
at such holder's option, (a) that number of shares of the surviving
corporation in the transaction with such entity (which surviving corporation
could be the Company) which at the time of the transaction would have a book
value of twice the Purchase Price, (b) that number of shares of such entity
which at the time of the transaction would have a book value of twice the
Purchase Price or (c) if such entity has an affiliate which has publicly
traded common shares, that number of common shares of such affiliate which at
the time of the transaction would have a market value
51
<PAGE>
of twice the Purchase Price. In addition, upon a person becoming an Acquiring
Person, the Rights Agreement provides that proper provision will be made so
that each Right (other than Rights that are beneficially owned by an Acquiring
Person or an affiliate or associate of an Acquiring Person) will entitle its
holder to purchase, for the Purchase Price, a number of shares of Preferred
Stock having a market value at the time of the transaction equal to two times
the Purchase Price. The number of Preferred Shares or other securities
issuable upon exercise of the Rights is subject to adjustment from time to
time in the event of any change in the Company Common Stock or the Preferred
Shares.
At any time prior to the earlier of (a) such time as a person or group
becomes an Acquiring Person and (b) the Expiration Date, the Board may redeem
the Rights in whole, but not in part, at a price of $0.01 per Right (subject
to adjustment as provided in the Rights Agreement).
Until a Right is exercised, the holder thereof, as such, will have no rights
as a shareholder of the Company, including, without limitation, the right to
vote or to receive dividends.
LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Virginia Stock Corporation Act permits, and the Company's Articles
require, indemnification of the Company's directors, officers, and employees
in a variety of circumstances. Under Section 13.1-697 and 13.1-704 of the
Virginia Stock Corporation Act, a Virginia corporation generally is authorized
to indemnify its directors, officers, and employees in civil or criminal
actions if such persons acted in good faith and believed their conduct to be
in the best interests of the corporation and, in the case of criminal actions,
had no reasonable cause to believe that their conduct was unlawful. The
Company's Articles require indemnification of directors, officers and
employees with respect to certain liabilities, expenses, and other amounts
imposed upon such persons by reason of having been directors, officers or
employees if such persons acted in good faith and believed that their conduct
was in the best interests of the Company or related entity. Also, Section
13.1-692.1 of the Virginia Stock Corporation Act permits a Virginia
corporation to limit or totally eliminate the liability of a director or
officer in a shareholder or derivative proceeding and the Company's Articles
contains a provision intended to eliminate such liability.
Directors and officers of the Company are insured, subject to policy limits
and certain exclusions and limitations and to the extent not otherwise
indemnified by the Company, against loss (including expenses incurred in the
defense of actions, suits and proceedings in connection therewith) arising
from any error, misstatement, misleading statement, omission or other act made
or performed in their capacity as directors and officers. The policies also
reimburse the Company for liability incurred in the indemnification of its
directors and officers under common or statutory laws or the Company's
Articles of Incorporation, subject to the terms, conditions and exclusions of
the policy. In addition, directors and officers and other employees of the
Company who may be "fiduciaries" as that term is used in the Employee
Retirement Income Security Act of 1974, are insured with respect to
liabilities under such Act.
52
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form 10 under the Exchange Act with
respect to the Shares being issued in the Distribution (the "Registration
Statement"). This Information Statement does not contain all of the
information set forth in the Registration Statement and the exhibits thereto,
to which reference is hereby made. Statements made in this Information
Statement as to the contents of any contract, agreement or other document
referred to herein are summaries only and are not necessarily complete. With
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to such exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference. The Registration Statement
and the exhibits thereto filed by the Company with the Commission may be
inspected at the public reference facilities of the Commission listed below.
After the Distribution, the Company will be subject to the informational
requirements of the Exchange Act, and in accordance therewith will file
reports, proxy statements and other information with the Commission. Such
reports, proxy statements and other information can be inspected and copied at
the public reference facilities maintained by the Commission at its principal
offices at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the Regional Offices of the Commission at Seven World Trade Center, Suite
1300, New York, New York 10048 and in the Citicorp Center, Suite 1400, 500
West Madison Street, Chicago, Illinois 60661. Copies of such information may
be obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission also
maintains a World Wide Web site (http: //www.sec.gov) that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. In addition, it is expected that
reports, proxy statements and other information concerning the Company will be
available for inspection at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
The Company intends to furnish holders of the Company's shares with annual
reports containing consolidated financial statements (beginning with the year
ending December 31, 1996) audited by independent accountants.
----------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS INFORMATION STATEMENT, AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED. NEITHER THE DELIVERY OF THIS INFORMATION STATEMENT
NOR ANY DISTRIBUTION OF SECURITIES MADE HEREUNDER SHALL IMPLY THAT THERE HAS
BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF.
53
<PAGE>
INDEX TO
COMBINED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report.............................................. F-2
Combined Balance Sheets as of September 30, 1996 (unaudited) and as of De-
cember 31, 1995 and 1994................................................. F-3
Combined Statements of Income for the Nine Months ended September 30, 1996
and 1995 (unaudited) and for the Years Ended December 31, 1995, 1994 and
1993..................................................................... F-4
Combined Statements of Cash Flow for the Nine Months ended September 30,
1996 and 1995 (unaudited) and for the Years Ended December 31, 1995, 1994
and 1993................................................................. F-5
Notes to Combined Financial Statements.................................... F-6
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors of Olin Corporation:
We have audited the accompanying combined balance sheets of Primex
Technologies, Inc. as of December 31, 1995 and 1994, and the related combined
statements of income and cash flow for each of the years in the three-year
period ended December 31, 1995. These combined financial statements are the
responsibility of the company's management. Our responsibility is to express
an opinion on these combined financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the combined financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the combined
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Primex
Technologies, Inc. as of December 31, 1995 and 1994, and the results of their
operations and their cash flow for each of the years in the three-year period
ended December 31, 1995, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Stamford, Connecticut
January 25, 1996
F-2
<PAGE>
PRIMEX TECHNOLOGIES, INC.
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>
UNAUDITED
SEPTEMBER 30, DECEMBER 31,
------------- -----------------
1996 1995 1994
------------- -------- --------
($ IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Current Assets:
Receivables................................... $126,504 $153,076 $104,894
Inventories, Net.............................. 49,122 49,763 66,708
Other Current Assets.......................... 10,086 6,587 7,856
-------- -------- --------
Total Current Assets........................ 185,712 209,426 179,458
Property, Plant and Equipment, Net.............. 103,293 114,473 114,113
Goodwill........................................ 48,026 49,831 52,357
Other Assets.................................... 14,781 7,249 18,247
-------- -------- --------
Total Assets.................................... $351,812 $380,979 $364,175
======== ======== ========
LIABILITIES AND EQUITY
Current Liabilities:
Short-Term Borrowings due Olin................ $125,000 $125,000 $125,000
Accounts Payable.............................. 16,450 42,781 51,706
Income Taxes Payable.......................... -- 625 276
Accrued Liabilities........................... 24,252 23,087 29,060
-------- -------- --------
Total Current Liabilities................... 165,702 191,493 206,042
Other Liabilities............................... 28,353 30,951 27,020
-------- -------- --------
Total Liabilities............................. 194,055 222,444 233,062
Commitments and Contingencies
Equity.......................................... 157,757 158,535 131,113
-------- -------- --------
Total Liabilities and Equity.................... $351,812 $380,979 $364,175
======== ======== ========
</TABLE>
See accompanying notes to combined financial statements
F-3
<PAGE>
PRIMEX TECHNOLOGIES, INC.
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
UNAUDITED
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------ --------------------------
1996 1995 1995 1994 1993
-------- -------- -------- -------- --------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Sales............................. $328,775 $359,582 $508,113 $416,148 $376,332
Operating Expenses:
Cost of Goods Sold.............. 277,016 299,916 428,707 335,303 304,717
Selling and Administration...... 37,888 39,138 51,297 46,758 43,643
Research and Development........ 3,926 3,126 5,016 5,364 6,055
Other charges................... 10,500 -- 2,000 -- 12,600
-------- -------- -------- -------- --------
Operating Income (Loss)........... (555) 17,402 21,093 28,723 9,317
Interest Expense.................. 6,943 6,958 9,276 8,638 7,880
Interest and Other Income......... 657 808 807 1,743 2,307
-------- -------- -------- -------- --------
Income (Loss) Before Taxes........ (6,841) 11,252 12,624 21,828 3,744
Income Tax Provision.............. 908 6,206 6,963 9,805 2,722
-------- -------- -------- -------- --------
Net Income (Loss)................. $ (7,749) $ 5,046 $ 5,661 $ 12,023 $ 1,022
======== ======== ======== ======== ========
</TABLE>
See accompanying notes to combined financial statements
F-4
<PAGE>
PRIMEX TECHNOLOGIES, INC.
COMBINED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
UNAUDITED
NINE MONTHS ENDED
SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------ ----------------------------
1996 1995 1995 1994 1993
-------- -------- -------- -------- --------
($ IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Income (Loss)........... $ (7,749) $ 5,046 $ 5,661 $ 12,023 $ 1,022
Adjustments to Reconcile Net
Income (Loss) to Net Cash
Provided (Used) by
Operating Activities:
Depreciation................ 12,627 11,982 16,633 16,955 14,323
Amortization of Intangibles. 2,212 2,098 3,042 2,669 2,630
Deferred Taxes.............. (3,415) -- 2,502 (2,007) (1,993)
Charge for 1993 Strategic
Action Plan................ -- -- -- -- 12,600
Change in Assets and
Liabilities Net of Purchase
of Business:
Receivables............. 26,572 (26,959) (48,182) (93) 14,916
Inventories............. 641 14,119 16,038 (31,149) 8,639
Other Current Assets.... (2,418) 1,258 481 (213) (4)
Current Liabilities..... (25,791) (24,584) (16,899) 23,624 (4,139)
Other Liabilities....... (264) 1,769 2,217 (2,945) (2,028)
Other Assets............ (7,939) (4,912) 10,482 (3,280) (3,488)
Other Operating Activities.. 947 (1) 201 136 (115)
-------- -------- -------- -------- --------
Net Operating Activities.. (4,577) (20,184) (7,824) 15,720 42,363
-------- -------- -------- -------- --------
INVESTING ACTIVITIES
Capital Expenditures........ (6,891) (9,646) (19,191) (17,821) (12,682)
Acquisition................. -- -- -- (25,400) --
Disposition of Property
Plant and Equipment........ 4,497 3,568 3,859 -- 1,600
Other Investing Activities.. -- -- -- (302) (99)
-------- -------- -------- -------- --------
Net Investing Activities.. (2,394) (6,078) (15,332) (43,523) (11,181)
-------- -------- -------- -------- --------
FINANCING ACTIVITIES
Net Intercompany Activity... 6,971 26,262 23,156 27,803 (31,182)
-------- -------- -------- -------- --------
Net Increase in Cash........ -- -- -- -- --
Cash, Beginning of Period... -- -- -- -- --
-------- -------- -------- -------- --------
Cash, End of Period......... $ -- $ -- $ -- $ -- $ --
======== ======== ======== ======== ========
</TABLE>
See accompanying notes to combined financial statements
F-5
<PAGE>
PRIMEX TECHNOLOGIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
($ IN THOUSANDS)
OLIN CORPORATION'S PROPOSED DISTRIBUTION OF PRIMEX TECHNOLOGIES, INC.
On October 9, 1996 the Board of Directors of Olin Corporation ("Olin")
approved a plan to distribute all of the outstanding shares of Primex
Technologies, Inc. (the "Company") to shareholders on a date to be determined
(the "Distribution"). The Company will own the assets and liabilities of
Olin's former Ordnance Division ("Ordnance") and Aerospace Division
("Aerospace"). The anticipated distribution will result in the Company
operating as a free standing corporation whose common shares will be publicly
traded. Olin expects the distribution to be completed by the end of 1996,
after the appropriate approvals of third parties including the U.S. Government
and the receipt of an acceptable opinion of counsel that the transaction will
be tax-free.
Prior to the Distribution, it is anticipated that the Company will assume a
$160,000 credit facility which is intended to provide sufficient liquidity for
the Company's current funding needs. Olin will borrow $125,000 under the
credit facility. The Company expects that the credit facility will have a five
year term.
Olin and the Company have entered into a Tax Sharing Agreement effectively
providing that Olin is responsible for taxes attributable to periods prior to
the Distribution.
Olin and the Company have entered into a Powder Supply Requirements
Agreement providing for the supply by the Company of Ball Powder(R) propellant
to Olin subsequent to the Distribution.
ACCOUNTING POLICIES
The preparation of the combined financial statements requires estimates and
assumptions that affect amounts reported and disclosed in the financial
statements and related notes. Actual results could differ from those
estimates.
BASIS OF PRESENTATION
The Company is a business unit of Olin consisting of the Ordnance and
Aerospace divisions.
Ordnance produces large and medium caliber ammunition for aircraft,
artillery, tanks, warships; air dispensed munitions; Ball Powder(R) propellant
for sporting, military and commercial applications; and propulsion systems for
large caliber gun systems. Ordnance's primary customers are the U.S.
Department of Defense and other government R&D agencies/laboratories, allied
governments and sporting ammunition manufacturers.
Aerospace products include rocket engines, advanced electric propulsion
systems, aerospace electronic products, pulsed power systems and solid
propellant products, including munitions dispensing systems. Aerospace's
primary customers are satellite, aircraft and missile contractors; other
defense/aerospace subsystems and systems contractors; NASA and other
government R&D agencies/laboratories.
The accompanying combined financial statements, which have been prepared as
if the Company had operated as a separate stand-alone entity for all periods
presented, include only those assets and liabilities to be transferred to the
Company, and revenues and expenses attributable to the Company's operations.
The combined financial statements include the accounts of the Company and
certain majority-owned subsidiaries of Olin which will become subsidiaries of
the Company prior to the Distribution. Inter-company balances and transactions
between entities included in these financial statements have been eliminated.
These financial statements include the assets, liabilities, revenues and
expenses of the following Olin subsidiaries:
F-6
<PAGE>
PRIMEX TECHNOLOGIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
($ IN THOUSANDS)
Olin Aerospace Company.
Physics International Company.
U.S. Ordnance Company.
General Defense Corporation (GDC).
GD International, LTD, a wholly-owned subsidiary of GDC.
Olin Services, Inc., a wholly-owned subsidiary of GDC.
PI Physics International (Schweiz) A.G., a wholly-owned subsidiary of
Physics International Company.
The combined financial statements include an allocation of Olin's
consolidated debt and interest expense related to the assigned portion of
Olin's debt. The amount of debt allocated was based on providing a debt to
equity ratio similar to that of Olin as well as a level of debt the Company
could maintain on an independent basis in the future. Management believes the
method used to allocate the debt is reasonable and also reflects reductions in
the Company's working capital estimated to occur prior to the Distribution. An
assessment of corporate overhead is included in selling and administration
expenses with the allocation based on either effort committed or number of
employees. Management believes that the allocation method used to allocate the
costs and expenses is reasonable, however, such allocated amounts may or may
not necessarily be indicative of what selling and administration expenses
would have been if the Company operated independently of Olin. It is
anticipated that when the Company becomes a separate public company
administration expenses will increase by approximately $4,000 per year as a
result of additional financial reporting requirements, stock transfer fees,
directors' fees, insurance, and executive compensation and benefits.
LONG-TERM CONTRACTS
Sales and cost of sales related to government contracts that extend beyond
one year are primarily recognized under the percentage-of-completion method of
accounting as costs are incurred. Profits expected to be realized on contracts
are based on the Company's estimates of costs at completion compared to total
contract sales value; profits for interim reporting periods are based on costs
incurred relative to total estimated costs at completion. When the Company
believes the cost of completing a contract will exceed contract-related
revenues, the full amount of the anticipated contract loss is recognized.
For contracts or commercial orders with performance periods of under one
year, sales are recognized on the units shipped method of accounting.
Sales directly to the U.S. government and its agencies amounted to $391,099
in 1995, $318,898 in 1994, and $302,022 in 1993. No other single customer
accounted for more than 10% of the Company's total annual sales during the
three-year period ended December 31, 1995. Export sales from the United States
to unaffiliated customers were $24,285, $16,428 and $21,140 in 1995, 1994 and
1993, respectively.
INVENTORIES
Inventories are stated at the lower of cost or net realizable value. Certain
inventories are included in a larger pool of Olin inventories valued by the
dollar value last-in, first-out (LIFO) method of inventory accounting.
The allocation of LIFO reserves is determined by the Company's percentage
share of the related inventory pool (based on first-in, first-out).
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost. Depreciation is computed
on a straight-line basis over the following estimated useful lives:
<TABLE>
<S> <C>
Improvements to land.......................................... 10 to 20 years
Building and building equipment............................... 5 to 45 years
Machinery and equipment....................................... 3 to 12 years
</TABLE>
F-7
<PAGE>
PRIMEX TECHNOLOGIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
($ IN THOUSANDS)
Leasehold improvements are amortized over the term of the lease or the
estimated useful life of the improvement, whichever is less. Start-up costs
are expensed as incurred.
GOODWILL
Goodwill, the excess of the purchase price of the acquired businesses over
the fair value of the respective net assets, is amortized principally over 30
years on a straight-line basis. Accumulated amortization was $19,790, $17,869,
and $15,344 at September 30, 1996, December 31, 1995 and 1994, respectively.
The Company periodically reviews the value of its goodwill to determine if an
impairment has occurred. The Company measures the potential impairment of
recorded goodwill by the undiscounted value of expected future operating cash
flows in relation to its net capital investment in the subsidiary. An
impairment would be recorded based on the estimated fair value.
ENVIRONMENTAL LIABILITIES AND EXPENDITURES
Accruals for environmental matters are recorded when it is probable that a
liability has been incurred and the amount of the liability can be reasonably
estimated, based upon current law and existing technologies. These amounts,
which are not discounted and exclusive of claims against third parties, are
adjusted periodically as assessment and remediation efforts progress or
additional technical or legal information becomes available. Environmental
remediation costs are charged to expense. Environmental costs are capitalized
if the costs increase the value of the property and /or mitigate or prevent
contamination from future operations.
INCOME TAXES
Prior to the distribution, the Company's operations are included in the U.S.
federal consolidated tax returns of Olin. The provision for income taxes
includes the Company's allocated share of Olin's consolidated income tax
provision and is calculated on a separate Company basis pursuant to the
requirements of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes". Allocated income taxes are settled with Olin on
a current basis. Deferred taxes are provided for differences between the
financial statement and tax bases of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to reverse.
ACCOUNTING STANDARDS
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of". The adoption of this
standard did not have a material impact on the Company's financial position
and its operating results.
Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation". As
allowable by SFAS No. 123, the Company will not recognize compensation cost
for stock-based compensation arrangements, but rather will disclose in the
notes to the financial statements the impact on net income and earnings per
share as if the fair value based compensation cost had been recognized.
INTERIM FINANCIAL STATEMENTS (UNAUDITED)
In the opinion of management, the information furnished in the unaudited
interim combined financial statements reflects all adjustments necessary for a
fair statement of the results of operations as of and for the nine month
periods ended September 30, 1996 and 1995. The unaudited interim combined
financial statements have been prepared in accordance with the instructions to
Form 10-Q and therefore do not include some information and notes necessary to
conform with the annual reporting requirements.
F-8
<PAGE>
PRIMEX TECHNOLOGIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
($ IN THOUSANDS)
RECEIVABLES
Receivables, including amounts due under long-term contracts (contract
receivables), are summarized as follows:
<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
Contract receivables:
Billed receivables...................................... $ 18,851 $ 14,259
Unbilled receivables.................................... 92,113 70,804
Trade receivables......................................... 40,621 19,321
-------- --------
Total accounts receivable trade........................... 151,585 104,384
Other receivables......................................... 1,491 510
-------- --------
Total..................................................... $153,076 $104,894
======== ========
</TABLE>
Unbilled receivables represent the balance of recoverable costs and accrued
profit comprised principally of revenue recognized on contracts for which
billings have not been presented to the customer because the amounts were
earned but not billable as of the balance sheet date under the contractual
terms. Billed and unbilled contract receivables include amounts related to
Government contracts of $12,061 and $79,473 in 1995 and $10,381 and $57,620 in
1994. Also included in contract receivables are claims in the amount of $445
and $127 at December 31, 1995 and 1994, respectively.
INVENTORIES
Inventories are presented below:
<TABLE>
<CAPTION>
UNAUDITED
SEPTEMBER
1996 1995 1994
--------- ------- -------
<S> <C> <C> <C>
Raw materials and work-in-progress................. $40,320 $50,690 $68,458
Finished goods..................................... 17,478 7,749 6,489
------- ------- -------
57,798 58,439 74,947
Less revaluation to LIFO........................... 8,676 8,676 8,239
------- ------- -------
Total inventories.................................. $49,122 $49,763 $66,708
======= ======= =======
</TABLE>
Inventory valued at LIFO represented approximately 22% of total inventory at
September 30, 1996 and December 31, 1995 and 17% of total inventory at
December 31, 1994.
PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
UNAUDITED
SEPTEMBER
1996 1995 1994
--------- -------- --------
<S> <C> <C> <C>
Land and improvements to land................... $ 14,378 $ 17,497 $ 18,977
Building and building equipment................. 38,375 37,942 39,840
Machinery and equipment......................... 156,689 158,771 154,802
Leasehold improvements.......................... 17,686 17,961 18,092
Construction-in-progress........................ 21,930 23,927 14,827
-------- -------- --------
Property, plant and equipment................... 249,058 256,098 246,538
Less accumulated depreciation................... 145,765 141,625 132,425
-------- -------- --------
$103,293 $114,473 $114,113
======== ======== ========
</TABLE>
F-9
<PAGE>
PRIMEX TECHNOLOGIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
($ IN THOUSANDS)
Leased assets capitalized and included above are not significant.
Maintenance and repairs charged to operations amounted to $9,846, $8,568 and
$7,788 in 1995, 1994 and 1993, respectively.
SHORT-TERM BORROWINGS
The financial statements include $125,000 of debt in 1995, 1994 and 1993
which represents the expected amount of debt at the time of the Distribution.
Associated interest expense amounted to $9,250, $8,625, and $7,875 in 1995,
1994 and 1993, respectively, and was determined using Olin's annual average
borrowing rates for those periods. Prior to the distribution, it is
anticipated that the Company will assume a $160,000 credit facility which is
intended to provide sufficient liquidity for the Company's current funding
needs. Olin will borrow $125,000 under the credit facility. Amounts to be
borrowed by Olin will be used to reduce its own borrowings. The Company
expects the credit agreement to permit borrowings on a revolving basis over a
five-year term. The facility will contain restrictive covenants limiting the
ratio of earnings before interest and taxes to interest expense, the ratio of
total debt to earnings before interest, taxes, depreciation and amortization,
and will contain minimum tangible net worth requirements. No principal
repayments are expected to be made on the revolving debt until the end of the
five-year term. Because this agreement has not been finalized, the debt due
Olin has been classified as short-term in the Company's Combined Balance
Sheets. When the credit agreement is signed and assumed by the Company in
connection with the Distribution, the debt will be reclassified to long-term
debt.
OTHER CHARGES
Other charges include a provision for the settlement of claims relating to a
government investigation of certain testing irregularities at the Company's
Marion, Illinois facility of $6,000 in the nine months ended September 30,
1996 and $2,000 in the year ended December 31, 1995. Also included in other
charges in the nine months ended September 30, 1996 is a $4,500 provision
relating to the Belgian contract dispute. See footnote titled "Legal
Proceedings" included herein.
Included in other charges for 1993 is a charge of $12,600 associated with a
strategic action plan formulated during the fourth quarter of 1993. The plan
included costs of business restructurings involving the shutdown of a
manufacturing facility and the discontinuance of artillery metal parts
manufacturing ($7,000), other charges including asset write-downs ($1,500),
and a reduction in the salaried workforce ($4,100). All actions related to the
1993 charge had been completed as of December 31, 1995.
ACCRUED LIABILITIES
Included in accrued liabilities at the end of the year are the following
items:
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Accrued payroll and employee benefits......................... $10,802 $11,543
Contract Liabilities.......................................... 6,495 10,093
Other......................................................... 5,790 7,424
------- -------
Total accrued liabilities..................................... $23,087 $29,060
======= =======
</TABLE>
Contract liabilities represent principally reserves for anticipated losses
on certain incomplete contracts as well as estimated costs to perform
contractual activities associated with completed contracts.
F-10
<PAGE>
PRIMEX TECHNOLOGIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
($ IN THOUSANDS)
INCOME TAXES
COMPONENTS OF INCOME TAX EXPENSE:
<TABLE>
<CAPTION>
1995 1994 1993
------ ------- -------
<S> <C> <C> <C>
Currently payable:
Federal........................................... $3,774 $ 9,976 $ 3,987
State............................................. 687 1,836 728
Deferred............................................ 2,502 (2,007) (1,993)
------ ------- -------
Income tax expense.................................. $6,963 $ 9,805 $ 2,722
====== ======= =======
</TABLE>
The following table accounts for the difference between the actual tax
provision and the amounts obtained by applying the statutory U.S. federal
income tax to the income before taxes.
EFFECTIVE TAX RATE RECONCILIATION (PERCENT):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Statutory federal tax rate.................................... 35.0 35.0 34.0
State income taxes, net....................................... 5.5 4.5 7.4
Goodwill...................................................... 7.0 4.1 23.6
Fines and penalties........................................... 5.5 -- --
Supplemental pension.......................................... 0.8 1.0 5.4
Other, net.................................................... 1.4 0.3 2.3
---- ---- ----
Effective tax rate............................................ 55.2 44.9 72.7
==== ==== ====
</TABLE>
COMPONENTS OF DEFERRED TAX ASSETS AND LIABILITIES:
<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Deferred tax assets:
Postretirement benefits................................... $ 3,653 $ 3,609
Non-deductible reserves................................... 9,900 10,038
Other miscellaneous items................................. 3,390 3,253
------- -------
Total deferred tax assets................................... $16,943 $16,900
======= =======
Deferred tax liabilities:
Property, plant and equipment............................. $13,895 $14,984
Deferred contract income.................................. 6,061 2,427
------- -------
Total deferred tax liabilities.............................. $19,956 $17,411
======= =======
</TABLE>
Income from foreign subsidiaries is not significant and represented less
than $70 in each of the years presented. Included in other current assets at
December 31, 1995 and 1994, respectively, are $4,802 and $5,590 of net current
deferred assets.
ACQUISITIONS
In 1994, the Company acquired certain assets of the medium caliber
ammunition business of GenCorp's Aerojet Ordnance Division for approximately
$25,400. The fair value of assets acquired included working capital of $11,170
and property, plant and equipment of $14,230. This acquisition was accounted
for as a purchase and
F-11
<PAGE>
PRIMEX TECHNOLOGIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
($ IN THOUSANDS)
accordingly, its results of operations, which were not material, are included
in the combined financial statements from the date of acquisition.
PENSION PLANS
Virtually all U.S. employees of the Company are participants in one of
several Olin pension benefit plans covering employees of other Olin
businesses. It is impracticable to segregate the vested benefits attributable
to employees of the Company. Costs and expenses include accruals for pensions
at rates determined by Olin corporate personnel and which amounted to $4,622,
$4,427 and $4,401 in 1995, 1994, and 1993, respectively. It is anticipated
that the Company will adopt a defined contribution savings plan to provide
pension benefits to its employees. The Company estimates that the costs of
such plans will approximate the costs under the Olin plans. The pension
liability for active and retired employees participating in the Olin plans
prior to the Distribution will remain with Olin.
Certain Company employees participated in Olin supplemental non-qualified
pension plans. Costs and expenses associated with the non-qualified plans were
$566, $688, and $761 in 1995, 1994, and 1993, respectively. Included in other
assets in 1995 and 1994 is the cash surrender value of the related life
insurance policies of $1,991 and $9,938, respectively, which is net of loans
against those policies of $9,200 in 1995. The loans were repaid in 1996. Olin
will remain liable for payment of benefits accrued for employees of the
Company under any Olin non-qualified benefit plan as of the Distribution Date.
It is anticipated that the Company will establish a non-qualified plan after
the Distribution.
The Company's employees also participate in Olin-provided postretirement
health care and life insurance benefits for eligible active and retired
domestic employees. The following table reflects the components of post
retirement liability for active employees of the Company. Costs and expenses
include accruals for post retirement benefits for both active and retired
employees at rates determined by Olin corporate personnel and which amounted
to $1,100, $550 and $306 in 1995, 1994 and 1993, respectively. The liability
for retired employees prior to the Distribution will remain with Olin. It is
anticipated that the Company will adopt a plan similar to the Olin plan to
provide postretirement benefits for its active employees.
UNFUNDED LIABILITY FOR POSTRETIREMENT BENEFITS
<TABLE>
<CAPTION>
1995 1994
------ ------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Fully eligible active plan participants.................... $3,473 $3,337
Other active participants.................................. 5,666 5,445
------ ------
Cumulative accumulated postretirement benefit obligation..... 9,139 8,782
Unrecognized loss............................................ (912) (769)
Unrecognized prior service cost.............................. 1,165 1,264
------ ------
Net postretirement benefit liability......................... $9,392 $9,277
====== ======
</TABLE>
The accumulated postretirement benefit obligation was determined using the
projected unit credit method and an assumed discount rate of 7.5% in 1995,
8.5% in 1994 and 7.5% in 1993. The assumed health care cost trend rate used
for pre-65 retirees was 12.5% in 1995 and 13% in 1994 and 13.5% in 1993,
declining one-half percent per annum to 6%. A one percent increase each year
in the health care cost trend rate used would have resulted in a $160 increase
in aggregate service and interest components of expense for the year 1995, and
a $925 increase in the accumulated postretirement benefit obligation at
December 31, 1995.
F-12
<PAGE>
PRIMEX TECHNOLOGIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
($ IN THOUSANDS)
CONTRIBUTING EMPLOYEE OWNERSHIP PLAN
Prior to the distribution, the Company employees participated in the Olin
Corporation Contributing Employee Ownership Plan, which is a defined
contribution plan available to essentially all domestic Olin employees and
provides a match of employee contributions. The matching contribution
allocable to the Company employees has been included in cost and expenses in
the accompanying financial statements and was $2,274, $1,958, and $1,261 in
1995, 1994 and 1993, respectively.
LONG-TERM INCENTIVE PLAN
It is anticipated that the Company will adopt a long-term incentive plan to
encourage selected salaried employees to acquire a proprietary interest in the
Company's growth and performance and to attract and retain qualified
individuals. The plan will provide for the ability to issue stock options,
stock appreciation rights, restricted stock and restricted stock units,
performance awards, and other stock-based awards. Shortly after the date of
the distribution it is anticipated that the Company will issue restricted
stock units to certain officers of the Company. The estimated value of the
restricted stock units is $3,500 which will be charged to income over the
vesting period of 5 years.
SHAREHOLDER RIGHTS PLAN
It is anticipated that the Company will adopt a Shareholder Rights Plan
which is designed to prevent an acquiror from gaining control of the Company
without offering a fair price to all shareholders. Each right entitles a
shareholder (other than the acquiror) to buy one one-thousandth of a share of
Series A Participating Cumulative Preferred Stock at an exercise price of $55.
The rights are exercisable only if a person acquires more than 15% of the
Company's common stock or if the Board of Directors so determines following
the commencement of a tender or exchange offer to acquire more than 15% of the
Company's common stock. If any person acquirers more than 15% of the Company's
common stock and in the event of a subsequent merger or combination, each
right will entitle the holder (other than the acquiror) to purchase stock or
other property of the acquiror having a value of twice the exercise price. The
Company can redeem the rights at $.01 for a certain period of time. The rights
will expire on December 19, 2006, unless earlier redeemed by the Company.
EQUITY
Equity represents Olin's ownership interest in the recorded net assets of
the Company. All cash and inter-company transactions flow through the equity
account. A summary of the activity for the periods ended December 31 follows:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Balance, beginning of period...................... $131,113 $ 91,287 $114,775
Net income........................................ 5,661 12,023 1,022
Net inter-company activity........................ 21,761 27,803 (24,510)
-------- -------- --------
Balance, end of period............................ $158,535 $131,113 $ 91,287
======== ======== ========
</TABLE>
COMMITMENTS AND CONTINGENCIES
The Company leases certain properties, such as manufacturing, warehousing
and office space, data processing and office equipment. Leases covering these
properties generally contain escalation clauses based on increased costs of
the lessor, primarily property taxes, maintenance and insurance and have
renewal or purchase
F-13
<PAGE>
PRIMEX TECHNOLOGIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
($ IN THOUSANDS)
options. Total rent expense charged to operations amounted to $4,684 in 1995,
$4,876 in 1994 and $3,694 in 1993 (sublease income is not significant). Future
minimum rent payments under operating leases having initial or remaining
noncancelable lease terms in excess of one year at December 31, 1995 are as
follows: $3,850 in 1996; $3,237 in 1997; $2,810 in 1998; $2,528 in 1999;
$2,151 in 2000; and $9,906 thereafter.
At December 31, 1995, the Company had approximately $8,050 in stand by
letters of credit primarily representing performance guarantees under certain
supply agreements.
ENVIRONMENTAL
The Company is party to various governmental and private environmental
actions associated with waste disposal sites and manufacturing facilities.
Environmental provisions charged to income amounted to $795 in 1995, $120 in
1994 and $1,101 in 1993. The combined balance sheets include reserves for
future environmental expenditures to investigate and remediate known sites
amounting to $2,574 in 1995 and $2,070 in 1994 and are classified as other
noncurrent liabilities, respectively.
Environmental exposures are difficult to assess for numerous reasons,
including the identification of new sites, developments at sites resulting
from investigator studies, advances in technology, changes in environmental
laws and regulations and their application, the scarcity of reliable data
pertaining to identified sites, the difficulty in assessing the involvement
and financial capability of other potentially responsible parties and the time
periods (sometimes lengthy) over which site remediation occurs. It is possible
that some of these matters (the outcomes of which are subject to various
uncertainties) may be resolved unfavorably against the Company.
LEGAL PROCEEDINGS
In May 1994, the Company discovered that an employee may have modified
inspection and testing software used on certain medium caliber ammunition
production lines at its Marion, Illinois testing facility to permit
inspections to be performed at tolerances which may not have been fully
compliant with applicable contract specifications. Upon discovering the issue,
the Company promptly notified U.S. Government contracting representatives,
voluntarily disclosed the circumstances then known to the Department of
Defense's Office of the Inspector General and expressed its intent to fully
investigate the matter and take all necessary corrective actions. In September
of 1996 this matter was settled with the U.S. Government for $8,000. The
settlement charges are included in "Other charges" in the accompanying
combined statements of income.
The Company is involved in a contract dispute with the Belgium Ministry of
Defense related to the 1985 sale of tank ammunition. The Belgium Ministry of
Defense has alleged improprieties committed by the Belgium national who
represented Olin in the transaction. Based on these allegations, the Belgium
Ministry of Defense withheld final payment on the contract and the Company
agreed to extend the letter of credit related to the contract guarantee
pending a decision by the Belgium courts on the underlying contract dispute.
The trial court ruled against the Company. The decision has been appealed. In
the event that the trial court's decision is sustained, the resultant
liability is estimated at approximately $4,500, net of a $1,100 receivable, at
current exchange rates. The provision for the estimated settlement is included
in "Other charges" in the accompanying combined statements of income. However,
since the liability for this matter has been assumed by Olin in accordance
with the Assumption of Liabilities and Indemnity Agreement between Olin and
the Company the balance sheet does not include any reserves related to this
matter.
RELATED PARTY TRANSACTIONS
The Company sells propellant to Olin's Winchester Division which is used in
the manufacturing of sporting ammunition. These product sales aggregated
$23,272 in 1995, $25,706 in 1994, and $21,702 in 1993 and are reflected in
sales on the statement of income for the respective periods. Payment of these
inter-company sales occurred at the time of shipments by way of the inter-
company account.
F-14
<PAGE>
PRIMEX TECHNOLOGIES, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
($ IN THOUSANDS)
The Company is charged by Olin for the Company's share of expenses of
certain centralized activities using various allocation bases. These
activities include, but are not limited to, administration of employee benefit
programs, tax compliance, management information systems, treasury, legal and
general corporate functions. Charges to the Company for centralized corporate
services were $2,170 in 1995, $2,528 in 1994 and $3,103 in 1993.
F-15
