EXHIBIT 10.7
COVENANT NOT TO COMPETE AGREEMENT
This Covenant Not to Compete Agreement ("Agreement") entered into as of
December 31, 1996 ("Effective Date"), by and between PRIMEX TECHNOLOGIES, INC.,
a Virginia corporation with its principal offices at 00000 Xxxxx Xxxxxx Xxxxx,
Xx. Xxxxxxxxxx, Xxxxxxx 00000-0000 ("Primex"); and XXXX CORPORATION, a Virginia
corporation with offices at 000 Xxxxx Xxxxxxxx, Xxxx Xxxxx, Xxxxxxxx 00000
("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 December 30, 1996 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, xxxxxx, 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 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 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 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 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. Section 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 or
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 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 Xxxx Corporation:
000 Xxxxxxx 0
X.X. Xxx 0000
Xxxxxxx, XX 00000
Attn: General Counsel
To Primex:
00000 Xxxxx Xxxxxx Xxxxx
Xx. Xxxxxxxxxx, XX 00000-0000
Attn: General Counsel
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
nconvenient forum.
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.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
and year first above written.
PRIMEX TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Pain
------------------------
Xxxxxx X. Pain
Vice President
XXXX CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
-------------------------
Xxxxxxx X. Xxxxxxx, Xx.
Vice President, General Counsel and Secretary
