1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
Commission File Number 1-12744
MARTIN MARIETTA MATERIALS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
North Carolina 56-1848578
- ---------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
2710 Wycliff Road, Raleigh, NC 27607-3033
- -------------------------------------- ------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 919-781-4550
------------------------
Former name: None
----------------------------------------------------------------
Former name, former address and former fiscal year,
if changes since last report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----------- -----------
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Class Outstanding as of October 31, 1996
- ------------------------------------ ----------------------------------
Common Stock, $.01 par value 46,079,300
Page 1
Exhibit Index is on Page 24
2
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1996
INDEX
Page
----
Part I. Financial Information:
Item 1. Financial Statements.
Condensed Consolidated Balance Sheets -
September 30, 1996 and December 31, 1995 3
Condensed Consolidated Statements of
Earnings Three Months and Nine Months
Ended September 30, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1996 and 1995 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 9
Part II. Other Information:
Item 1. Legal Proceedings. 16
Item 4. Submission of Matters to a Vote of Security Holders. 16
Item 5. Other Information. 18
Item 6. Exhibits and Reports on Form 8-K. 18
Signatures 23
Exhibit Index 24
Page 2
3
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1996 1995
---------------- -----------------
(Dollars in Thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 2,364 $ --
Accounts receivable, net 133,559 94,759
Affiliates receivable 6,080 89,712
Inventories, net 113,082 113,402
Deferred income tax benefit 12,567 12,622
Other current assets 1,489 3,860
-------- --------
Total Current Assets 269,141 314,355
-------- --------
Property, plant and equipment 957,856 919,862
Allowances for depreciation, depletion and
amortization (561,315) (527,639)
-------- --------
Net property, plant and equipment 396,541 392,223
Other noncurrent assets 22,926 18,248
Noncurrent affiliates receivable -- 3,333
Cost in excess of net assets acquired 38,192 37,245
Other intangibles 23,800 23,967
-------- --------
Total Assets $750,600 $789,371
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Book overdraft $ -- $ 2,927
Accounts payable 28,832 26,211
Affiliates payable 14,076 6,822
Accrued salaries, benefits and payroll taxes 15,857 15,426
Accrued insurance and other taxes 10,779 5,551
Income taxes 7,343 2,192
Current maturities of long-term debt 190 103,740
Other current liabilities 9,145 10,467
-------- --------
Total Current Liabilities 86,222 173,336
Long-term debt 124,807 124,986
Pension, postretirement, and postemployment benefits 52,064 47,483
Other noncurrent liabilities 8,308 9,415
Noncurrent deferred income taxes 12,687 10,606
-------- --------
Total Liabilities 284,088 365,826
-------- --------
Shareholders' equity:
Common stock, par value $.01 per share 461 461
Additional paid-in capital 331,303 331,303
Retained earnings 134,748 91,781
-------- --------
Total Shareholders' Equity 466,512 423,545
-------- --------
Total Liabilities and
Shareholders' Equity $750,600 $789,371
======== ========
See accompanying notes to condensed consolidated financial statements.
Page 3
4
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- -----------------------
1996 1995 1996 1995
---- ---- ---- ----
(Dollars in Thousands, Except Per Share Data)
Net sales $201,504 $191,094 $538,489 $496,950
Cost of sales 142,957 139,334 400,807 369,867
-------- --------- --------- ---------
Gross Profit 58,547 51,760 137,682 127,083
Selling, general & administrative expense 15,030 14,270 44,763 43,084
Research and development 466 465 1,418 1,358
-------- --------- --------- ---------
Earnings from Operations 43,051 37,025 91,501 82,641
Interest expense (2,268) (2,457) (7,964) (6,951)
Other income and expenses, net 806 1,775 5,168 4,350
-------- --------- --------- ---------
Earnings before Taxes on Income 41,589 36,343 88,705 80,040
Taxes on income 14,099 12,918 30,071 28,429
-------- --------- --------- ---------
Net earnings $ 27,490 $ 23,425 $ 58,634 $ 51,611
======== ========= ========= =========
Net Earnings per share $0.60 $0.51 $1.27 $1.12
===== ===== ===== =====
Average number of shares outstanding 46,079,300 46,079,300 46,079,300 46,079,300
========== ========== ========== ==========
See accompanying notes to condensed consolidated financial statements.
Page 4
5
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30,
-------------------------
1996 1995
-------- --------
(Dollars in Thousands)
Operating activities:
Net earnings $ 58,634 $ 51,611
Adjustments to reconcile earnings to cash
provided by operating activities:
Depreciation, depletion and amortization 45,346 41,286
Other items, net (1,266) (2,340)
Changes in operating assets and liabilities:
Accounts receivable (38,799) (28,315)
Affiliates receivable (418) 3,154
Inventories 352 (18,085)
Accounts payable (883) 3,633
Other assets and liabilities, net 8,888 34,594
--------- ---------
Net cash provided by operating activities 71,854 85,538
--------- ---------
Investing activities:
Additions to property, plant & equipment
and acquisitions, net (51,818) (196,128)
Transactions with Lockheed Martin Corporation 87,383 2,513
Note receivable from Lockheed Martin Corporation -- 53,000
Other investing activities, net 6,509 3,215
--------- ---------
Net cash provided by (used for) investing activities 42,074 (137,400)
--------- ---------
Financing activities:
Repayments and extinguishments of long-term debt, net (103,729) (3,120)
Dividends (15,667) (15,206)
Loan payable to Lockheed Martin Corporation 10,759 70,000
--------- ---------
Net cash (used for) provided by financing activities (108,637) 51,674
--------- ---------
Net increase (decrease) in cash and cash equivalents 5,291 (188)
Book overdraft, beginning of period (2,927) (2,218)
--------- ---------
Cash and cash equivalents/(book overdraft), end of period $ 2,364 $ (2,406)
========= =========
See accompanying notes to condensed consolidated financial statements.
Page 5
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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1996
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited condensed consolidated financial statements
of Martin Marietta Materials, Inc. (the "Corporation") have been
prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to the
Quarterly Report on Form 10-Q and to Article 10 of Regulation S-X.
The Corporation has continued to follow the accounting policies set
forth in the audited consolidated financial statements and related
notes thereto included in the Corporation's Annual Report on Form 10-K
for the year ended December 31, 1995, filed with the Securities and
Exchange Commission on March 27, 1996. In the opinion of management,
the interim financial information provided herein reflects all
adjustments (consisting of normal recurring accruals) necessary for a
fair presentation of the results of operations for the interim
periods. The results of operations for the nine months ended
September 30, 1996, are not necessarily indicative of the results to
be expected for the full year.
During 1993, the Board of Directors of Lockheed Martin Corporation
("Lockheed Martin") approved a plan to form a new subsidiary, Martin
Marietta Materials, Inc. Under the plan, Lockheed Martin transferred
to the Corporation its ownership interest in the construction
aggregates business along with its ownership of 100% of the common
stock of Martin Marietta Magnesia Specialties Inc. The Corporation,
which was incorporated on November 12, 1993, consummated an initial
public offering (an "IPO") of 8,797,500 shares (approximately 19%) of
its outstanding Common Stock in February 1994. Upon completion of the
IPO, Lockheed Martin's beneficial ownership of the Corporation's
outstanding Common Stock was reduced to approximately 81%. Lockheed
Martin disposed of its remaining ownership in October 1996 by means of
a split-off, an exchange offer whereby Lockheed Martin stockholders
were given the opportunity to exchange some or all of their shares of
Lockheed Martin common stock for a certain number of shares of the
Corporation's Common Stock held by Lockheed Martin. For a more
detailed discussion of this transaction, see the "Overview" section of
the "Management's Discussion and Analysis of Financial Condition and
Results of Operations" on page 9. For purposes of these financial
statements and the related notes thereto, all references to Lockheed
Martin, which was formed as a result of a business combination in
March 1995 between the Martin Marietta Corporation and the Lockheed
Corporation, are meant to include Martin Marietta Corporation and its
consolidated subsidiaries, except where otherwise specified.
Additionally, transactions with Lockheed Martin remain classified and
accounted for as related party transactions for financial reporting
purposes.
2. Inventories:
September 30, December 31,
1996 1995
------------- --------------
(Dollars in Thousands)
Finished products $ 86,290 $ 86,086
Product in process and raw materials 14,263 15,427
Supplies and expendable parts 19,312 19,259
-------- --------
119,865 120,772
Less allowances (6,783) (7,370)
--------- --------
Total $113,082 $113,402
======== ========
Page 6
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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1996
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
3. Long-Term Debt:
September 30, December 31,
1996 1995
------------- ------------
(Dollars in Thousands)
7% Debentures, due 2025 $124,183 $124,177
8-1/2% Notes, due 1996 -- 100,000
Acquisition notes, interest rates
ranging from 6% to 10% 88 3,675
Other notes 726 874
-------- --------
124,997 228,726
Less current maturities (190) (103,740)
-------- --------
Total $124,807 $124,986
======== ========
The 8-1/2% Notes were redeemed by the holders upon their maturity on
March 1, 1996. During the period these Notes were outstanding,
Lockheed Martin reimbursed the Corporation for the portion of the
interest in excess of 5% per annum.
In addition to the above stated long-term debt, as of September 30,
1996, the Corporation had borrowed, from a subsidiary of Lockheed
Martin, $10.8 million under the terms of its credit agreements. For
financial reporting purposes, this amount remains classified with
affiliates payable in the accompanying financial statements. These
borrowing proceeds were used primarily to help finance the repayment
of the 8-1/2% Notes and to assist funding the Corporation's working
capital requirements during the first nine months of 1996. As of
November 1, 1996, no amount was outstanding under the terms of this
agreement.
The Corporation's interest payments were approximately $7.6 million in
1996 and $8.3 million in 1995 for the nine months ended September 30.
4. Income Taxes
The Corporation's effective income tax rate for the first nine months
was 33.9% in 1996 and 35.5% in 1995. The effective rate for the first
three quarters of 1996 was lower than the current federal corporate
income tax rate of 35%, due to the effect of several partially
offsetting factors. The Corporation's year-to-date 1996 effective tax
rate reflects the effect of state income taxes which has been more
than offset by the favorable impact of differences in book and tax
accounting arising from the permanent benefits associated with the
depletion allowances for mineral reserves, foreign subsidiaries'
operating earnings, and equity earnings in nonconsolidated
investments.
Page 7
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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1996
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4. Income Taxes (continued)
The results of operations of the Corporation through the effective date of
the consummation of the split-off from Lockheed Martin are included in a
consolidated federal income tax return with Lockheed Martin. However,
following the effective date of the consummation of the split-off, as
discussed in Note 1 and in the "Overview" section of the "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
on page 9, the Corporation will file consolidated federal income tax
returns independently from Lockheed Martin. For years ended prior to
January 1, 1995, the Corporation's results of operations are included in
the consolidated federal income tax returns with Martin Marietta
Corporation. Income taxes allocable to the operations of the Corporation
are calculated as if it had filed separate income tax returns for the
periods presented herein. For all periods following the consummation of
the split-off from Lockheed Martin, recognition and measurement of the
Corporation's current and deferred income tax liabilities and assets will
be presented under the financial accounting and reporting standards for
the effects of income taxes that result from the Corporation's activities
on a stand-alone basis. The Corporation will file separate income tax
returns for all periods following the consummation date of the split-off.
The Corporation's income tax payments were approximately $22.9 million in
1996 and $9.8 million in 1995, for the nine months ended September 30.
5. Contingencies
In the opinion of management and counsel, it is unlikely that the outcome
of litigation and other proceedings, including those pertaining to
environmental matters, relating to the Corporation and its subsidiaries,
will have a material adverse effect on the results of the Corporation's
operations or its financial position.
6. Other Matters
In February 1994, the Corporation was authorized by its shareholders and
the Board of Directors to repurchase up to 2,000,000 shares of the
Corporation's Common Stock for issuance under the Corporation's Amended
Omnibus Securities Award Plan. On May 3, 1994, the Board of Directors
authorized the repurchase of an additional 500,000 shares for general
corporate purposes. As of November 1, 1996, there have been 68,200 shares
of Common Stock repurchased by the Corporation under these authorizations.
Page 8
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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Third Quarter and Nine Months Ended September 30, 1996 and 1995
OVERVIEW Martin Marietta Materials, Inc., (the "Corporation") was created
after the Board of Directors of Lockheed Martin Corporation ("Lockheed Martin")
approved a plan under which Lockheed Martin transferred to the Corporation its
ownership interest in the construction aggregates business along with its
ownership of 100% of the common stock of Martin Marietta Magnesia Specialties
Inc. The Corporation was incorporated on November 12, 1993, and consummated an
initial public offering of 8,797,500 shares of its Common Stock in February
1994. Upon completion of the initial public offering, Lockheed Martin's
beneficial ownership of the Corporation's Common Stock was reduced to
approximately 81% of the Corporation's outstanding Common Stock. Lockheed
Martin disposed of its remaining ownership interest in the Corporation in
October 1996, by means of a split-off, an exchange offer pursuant to which
Lockheed Martin stockholders were given the opportunity to exchange some or all
of their shares of Lockheed Martin common stock for a certain number of shares
of the Corporation's Common Stock (the "Exchange Offer") on a tax-free basis.
As a result of this transaction, all of Lockheed Martin's
approximately 81% interest in the Corporation's Common Stock was exchanged with
Lockheed Martin stockholders who participated in the Exchange Offer.
Consummation of the Exchange Offer did not impact the Corporation's financial
position or its results of operations as of the consummation date of the
transaction and for the period then ended. For additional discussion in
connection with the Exchange Offer, see "Other Matters" on page 15.
The Corporation reports operations in two industry reporting segments,
aggregates and magnesia-based products. The Corporation is the United States'
second largest producer of aggregates used for the construction of highways and
other infrastructure projects and for commercial and residential construction.
The Corporation's Aggregates division processes or ships aggregates, primarily
crushed stone, from a network of approximately 200 quarries and distribution
facilities in 19 states in the southeastern, midwestern and central regions of
the United States and in the Bahamas and Canada. The Corporation also
manufacturers and markets magnesia-based products, including heat-resistant
refractory products for the steel industry and magnesia-based chemical products
for industrial, agricultural and environmental uses, including wastewater
treatment and acid neutralization.
The Corporation continued in excellent overall financial condition
during the third quarter of 1996 and has adequate capital resources to operate,
compete and grow in an increasingly challenging and competitive environment.
Net earnings for the third quarter of 1996 were $27.5 million, or $0.60 per
share, an increase of 17% over 1995 third-quarter earnings of $23.4 million,
or $0.51 per share.
Page 9
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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Third Quarter and Nine Months Ended September 30, 1996 and 1995
At September 30, 1996, total shareholders' equity reached $466.5
million, and the Corporation's ratio of debt to total capitalization was 23%,
compared with a debt-to-capitalization ratio of 35% at year-end 1995. Total
debt at year-end reflected a temporary increase in long-term debt associated
with the December 1995 sale of the Corporation's $125 million 7% Debentures.
The proceeds from the sale of these Debentures were used ultimately to repay
the $100 million aggregate principal amount of the Corporation's 8-1/2% Notes
upon their maturity on March 1, 1996.
RESULTS OF OPERATIONS Net sales for the quarter were $201.5 million, a
5% increase over 1995 third quarter sales of $191.1 million. Net sales for the
first nine months of 1996 were $538.5 million, an increase of 8% over net sales
for the year-earlier period of $497.0 million. Earnings from operations were
up $6.0 million, or 16%, to $43.1 million for the third quarter of 1996 over
the same period in 1995, with earnings from operations up $8.9 million, to
$91.5 million for the first nine months of 1996, compared with the first nine
months of 1995. Consolidated net earnings for the quarter increased 17% to
$27.5 million, or $0.60 per share, from 1995 third quarter net earnings of
$23.4 million, or $0.51 per share. For the nine-month period ended September
30, 1996, consolidated net earnings were $58.6 million, or $1.27 per share.
This represents an increase of 14% over net earnings for the first nine months
of 1995 of $51.6 million, or $1.12 per share.
Sales for the Aggregates division increased 6% to $169.5 million for
the third quarter, compared with the year-earlier period. The division's
sales increased 9% to $440.8 million for the first nine months of 1996,
compared with the first nine months of 1995. This increase in sales reflects
record year-to-date aggregates shipments of 75.3 million tons and an increase
in the division's average net selling price, when compared to the same period
in 1995. The division's third quarter operating profits were $40.5 million, an
increase of 18% over operating profits for the year-earlier period of $34.4
million. The division's operating profits for the first nine months of 1996
increased 9% to $83.7 million from $76.8 million for the first nine months of
1995, despite the effect of Hurricane Fran and subsequent heavy rainfall during
September in the southeast and the effect of the adverse weather conditions
that existed within most of the markets served by the division during the first
quarter of 1996. The Corporation's aggregates business is highly seasonal, due
primarily to the effect of weather conditions on construction activity levels,
most of which occurs typically in the spring, summer, and early fall.
Production costs were negatively affected by the severe winter weather
conditions experienced during the first quarter, along with the hurricane and
related wet conditions that existed during the third quarter of this year.
Management continues to believe that the Corporation's annual production and
shipments, excluding any acquisition activities, will see some improvement for
the full year ending December 31, 1996, compared with the prior year.
The Magnesia Specialties division had third quarter 1996 sales of
$32.0 million, a slight increase over the third quarter sales of 1995, and had
nine month 1996 sales of $97.7 million, an increase of 4% in 1996 over 1995.
The division's operating earnings for the third quarter of $2.5 million were 3%
below the operating results for the prior-year period as a result of an
explosion and fire in an electrical substation, which occurred at the
Woodville, Ohio, lime plant during the latter part of the second quarter of
this year. For the nine-month period, the division's earnings from operations
increased substantially from $5.9 million in 1995 to $7.8 million in 1996.
This increase principally reflects the negative effect of the strike which
occurred during 1995 at a major operating location.
Page 10
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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Third Quarter and Nine Months Ended September 30, 1996 and 1995
The following tables present net sales, gross profit, selling, general
and administrative expense, and earnings from operations data for the
Corporation and each of its divisions for the three and nine months ended
September 30, 1996 and 1995. In each case, the data is stated as a percentage
of net sales, of the Corporation or the relevant division, as the case may be:
Three Months Ended
September 30,
--------------------------------------------------------------------
(Dollars in Thousands)
1996 1995
------------------------- -----------------------
% of % of
Amount Net Sales Amount Net Sales
---------- --------- ---------- ----------
Net sales:
Aggregates $169,485 100.0 $159,206 100.0
Magnesia Specialties 32,019 100.0 31,888 100.0
-------- ----- ------ -----
Total $201,504 100.0 $191,094 100.0
Gross profit:
Aggregates $ 51,381 30.3 $ 43,929 27.6
Magnesia Specialties 7,166 22.4 7,831 24.6
--------- ----- -------- -----
Total $ 58,547 29.1 $ 51,760 27.1
Selling, general & administrative
expense:
Aggregates $ 10,859 6.4 $ 9,518 6.0
Magnesia Specialties 4,171 13.0 4,752 14.9
-------- ----- -------- -----
Total $ 15,030 7.5 $ 14,270 7.5
Earnings from operations:
Aggregates $ 40,521 23.9 $ 34,410 21.6
Magnesia Specialties 2,530 7.9 2,615 8.2
-------- ----- -------- -----
Total $ 43,051 21.4 $ 37,025 19.4
Page 11
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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Third Quarter and Nine Months Ended September 30, 1996 and 1995
Three Months Ended
September 30,
--------------------------------------------------------------------
(Dollars in Thousands)
1996 1995
------------------------- -----------------------
% of % of
Amount Net Sales Amount Net Sales
---------- --------- ---------- ----------
Net sales:
Aggregates $440,787 100.0 $403,068 100.0
Magnesia Specialties 97,702 100.0 93,882 100.0
-------- ----- -------- -----
Total $538,489 100.0 $496,950 100.0
Gross profit:
Aggregates $115,780 26.3 $105,561 26.2
Magnesia Specialties 21,902 22.4 21,522 22.9
-------- ----- -------- -----
Total $137,682 25.6 $127,083 25.6
Selling, general & administrative
expense:
Aggregates $ 32,099 7.3 $ 28,777 7.1
Magnesia Specialties 12,664 13.0 14,307 15.2
-------- ----- -------- -----
Total $ 44,763 8.3 $ 43,084 8.7
Earnings from operations:
Aggregates $ 83,681 19.0 $ 76,784 19.0
Magnesia Specialties 7,820 8.0 5,857 6.2
-------- ----- -------- -----
Total $ 91,501 17.0 $ 82,641 16.6
Other income and expenses, net, for the nine months ended September 30, were
$5.2 million in income in 1996 and $4.4 million in income in 1995. In addition
to several offsetting amounts, the 1996 amount included nonrecurring pretax
gains of approximately $1.2 million associated with the selling of certain
assets and approximately $1.2 million of interest income from affiliates loans.
The 1995 amount also included a nonrecurring pretax gain of approximately $1.4
million related to certain
Page 12
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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Third Quarter and Nine Months Ended September 30, 1996 and 1995
asset dispositions in connection with one of the Corporation's equity
investments and $0.9 million of interest income from loans to affiliates. It
should be noted that interest income from loans to Lockheed Martin has remained
classified with transactions with affiliates for financial reporting purposes.
Interest expense was approximately $1.0 million, or 16%, higher in the
first nine months of 1996 over 1995. The increase in 1996 resulted from the
net effect of the additional long-term borrowings by the Corporation in
December 1995, when the Corporation publicly offered and sold its $125 million
7% Debentures, offset by the reduction of long-term debt during the period
caused by the repayment of the 8 1/2% Notes on March 1, 1996, and the reduced
amounts outstanding during the period that were due to Lockheed Martin under
the credit agreement.
The Corporation's estimated effective income tax rate for the first
nine months was 33.9% in 1996 and 35.5% in 1995. See Note 4 of the Notes to
Condensed Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES Net cash flow provided by operating
activities during the first nine months of 1996 was $71.9 million, compared
with $85.5 million in the comparable period of 1995. The cash flow from
operating activities for both 1995 and 1996 was principally from earnings,
before deducting depreciation, depletion and amortization, offset by increased
demand for working capital. Working capital increases during the first nine
months of 1996 were principally due to an increase in accounts receivable
balances as a result of growth in aggregates demand. The increased demand on
working capital during the first nine months of 1995 was primarily the result
of increases in inventory and accounts receivable balances, both of which were
offset somewhat by increased trade accounts payable and other liabilities
balances. The seasonal nature of the construction aggregates business impacts
quarterly net cash provided by operating activities when compared with the
year. Accordingly, full year 1995 net cash provided by operating activities
was $128.6 million, compared with the $85.5 million provided by operations in
the first nine months of 1995. Capital expenditures are expected to be
approximately $83 million for 1996, exclusive of acquisitions. Comparable
capital expenditures, were $71.6 million in 1995.
Page 13
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MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Third Quarter and Nine Months Ended September 30, 1996 and 1995
The Corporation relies, for its liquidity requirements, upon
internally generated funds, access to capital markets, and funds obtained under
its cash management agreement and credit agreement, each with its former
majority shareholder, Lockheed Martin. Prospectively, management may choose to
borrow from third-party lenders or through the Corporation's access to capital
markets. The above-referenced credit agreement with Lockheed Martin, which may
be extended by mutual consent of both parties, provides for borrowings of up to
$55 million. Loans outstanding under the credit agreement bear interest at a
published prime interest rate or at LIBOR plus a graduated rate.
During the fourth quarter of 1996, management expects to establish a
revolving credit facility with a syndicate of banks to replace the current
credit agreements with Lockheed Martin. It should be noted, however, that the
Corporation has not determined the specific timing when, or method by which, it
may establish and access such a banking credit facility. Further, while any
such borrowings may be used initially to provide necessary working capital
funds, it is anticipated that the Corporation will repay the funds borrowed
under its credit agreement with Lockheed Martin with such bank borrowings.
Additionally, management may choose at some future time to further access the
public debt markets through the issuance of commercial paper or other debt
securities. Again, it should be noted that the Corporation has not determined
the method or methods by which it may further access the public market.
With respect to the Corporation's ability to access the public market,
it has an effective shelf registration on file with the Securities and Exchange
Commissions for the offering of up to $175 million of debt securities, which
may be issued from time to time. The Corporation's ability to issue such debt
securities at any time is dependent, among other things, upon market
conditions.
Based on prior performance and current expectations, the Corporation's
management believes that cash flows from internally generated funds and its
access to capital markets are expected to continue to be sufficient to provide
the capital resources necessary to fund the operating needs of its existing
businesses, cover debt service requirements, and allow for payment of
dividends. The Corporation may be required to obtain additional levels of
financing in order to fund certain strategic acquisitions if any such
opportunities arise. Currently, the Corporation's senior unsecured debt is
rated "A" by Standard &
Page 14
15
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1996
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Continued)
Third Quarter and Nine Months Ended September 30, 1996 and 1995
Poor's and "A3" by Moody's. In an October 1996 press release, Standard &
Poor's affirmed the Corporation's "A" senior debt rating and removed it from
CreditWatch -- an action that was taken in March 1996 as a result of its then
81% ownership by Lockheed Martin. Standard & Poor's announced that the October
rating action reflects the completion of Lockheed Martin's split-off of its
ownership interest in the Corporation. While management believes its credit
ratings will remain at an investment-grade level, no assurance can be given
that these ratings will remain at the above-mentioned levels.
The Corporation may repurchase up to 2.5 million shares of its common
stock under authorizations from the Corporation's Board of Directors for use in
the Amended Omnibus Securities Award Plan and for general corporate purposes.
As of November 1, 1996, there have been 68,200 shares repurchased under these
authorizations.
OTHER MATTERS In connection with the Exchange Offer, the Corporation's Board
of Directors adopted a shareholder rights plan that became effective, and
certain terms of which were established, upon consummation of the split-off
from Lockheed Martin. The shareholder rights plan provides, among other
things, that if any person or group of persons becomes the beneficial owner of
15% or more of the Corporation's Common Stock, all holders of rights issued
pursuant to the plan (other than such person or group of persons and their
affiliates, associates and transferees) will have the right to acquire shares
of the Corporation's Common Stock at 50% of the then current market value.
Also in connection with the Exchange Offer, the Board of Directors
adopted, and recommended that the shareholders of the Corporation approve at a
special meeting called for such purpose, certain amendments to the
Corporation's Articles of Incorporation. The amendments reduce the
vulnerability of the Corporation to an unsolicited takeover proposal,
particularly one that is made at an inadequate price or does not contemplate
the acquisition of all of the Corporation's Common Stock. The special meeting
of the shareholders to approve such amendments was held on September 27, 1996,
and all amendments were approved as proposed.
This Quarterly Report on Form 10-Q contains statements which, to the
extent that they are not recitations of historical fact, constitute "forward
looking statements" within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934. All forward
looking statements involve risks and uncertainties. The forward looking
statements in this document are intended to be subject to the safe harbor
protection provided by Sections 27A and 21E. Political, climatic, currency,
regulatory, technological, competitive and other factors could cause actual
results to vary materially from those anticipated in the forward looking
statements. Additional information regarding these risk factors and
uncertainties is detailed from time to time in the Corporation's filings with
the Securities and Exchange Commission.
Page 15
16
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1996
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Reference is made to Part II Item 1. Legal Proceedings of the Martin Marietta
Materials, Inc. Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 1996.
Item 4. Submission of Matters to a Vote of Security Holders.
Reference is made to Part II. Item 4. Submission of Matters to a Vote of
Security Holders of the Martin Marietta Materials, Inc. Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1996.
At the Special Meeting of Shareholders held on September 27, 1996, the
shareholders of Martin Marietta Materials, Inc.:
1. Approved the following amendments to the Corporation's Articles of
Incorporation:
(a) Approved the establishment of a variable range for the size of the
Board of Directors (the "Board"). The amendment provides that the
Board be comprised of a minimum of nine members and a maximum of
eleven members, which number may be increased or decreased from
time to time within such range by vote of the Board or the
shareholders of the Corporation.
(b) Approved the Board being divided into three classes of directors
whereby approximately one-third of the Directors would be elected
at the annual meeting of shareholders each year to serve for a
term of three years.
(c) Approved that Directors may be removed only for cause by a
majority of the votes cast by shareholders of the Corporation, and
that directors may not be removed by the shareholders at a meeting
unless the notice of the meeting states that one of the purposes
of the meeting is the removal of Directors.
(d) Approved that special meetings of shareholders may be called only
by the Chairman of the Board or the President of the Corporation,
or by the affirmative vote of a majority of the members of the
Board or the Executive Committee of the Board.
(e) Approved that if a vacancy occurs on the Board, such vacancy may
be filled only by the affirmative vote of a majority of the
remaining Directors in office, even though less than a quorum.
Additionally, shareholders are not permitted to fill any vacancy
on the Board, other than vacancies that result from the removal of
a Director from office by the shareholders that is filled by the
shareholders at the same meeting at which such removal occurs.
Page 16
17
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1996
PART II - OTHER INFORMATION
(continued)
(f) Approved that for purposes of the "fair market value" exception to
the stock repurchase provision contained within Article 10(a) of
the Articles of Incorporation, that the market price be determined
as of the earlier of (i) the date of such stock repurchase, or
(ii) the date any agreement with respect to such transaction was
entered into.
(g) Approved that proposed business combinations between the
Corporation and an interested shareholder, as well as any
amendment of the business combination provisions of the Articles
of Incorporation, would require the approval of (i) 66-2/3% of the
voting stock of the Corporation not held by any interested
shareholder, voting together as a single class, and (ii) 80% of
all voting stock of the Corporation, voting together as a single
class.
(h) Approved the modification or deletion in their entirety of several
provisions of the Articles of Incorporation relating to the
relationship between Lockheed Martin and the Corporation.
(i) Approved the modification or deletion of several miscellaneous
provisions of the Articles of Incorporation to reflect the
amendments described above in (a) through (h).
The following table sets forth the voting results for each of the above actions
with respect to the amendments to the Corporation's Articles of Incorporation:
Action Cast For Cast Against Abstained
------ ------------ ------------ ---------
(a) 41,060,661 414,533 2,415
(b) 38,693,761 1,375,192 2,505
(c) 38,743,131 1,309,742 18,585
(d) 38,783,286 1,285,167 3,005
(e) 39,227,901 839,602 3,955
(f) 40,058,768 9,085 3,605
(g) 39,276,508 791,045 3,905
(h) 39,989,243 78,595 3,620
(i) 40,037,443 31,410 2,605
2. Approved the Martin Marietta Materials, Inc. Shareholder Value
Achievement Plan. The voting results for this approval were:
41,453,829 -- For; 20,265 -- Against; and 3,515 -- Abstained.
3. Approved the Martin Marietta Materials, Inc. Common Stock Purchase
Plan for Directors. The voting results for this approval were:
41,382,123 -- For; 58,996 -- Against; and 36,490 -- Abstained.
Page 17
18
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1996
PART II - OTHER INFORMATION
(Continued)
4. Approved the Martin Marietta Materials, Inc. Amended Omnibus
Securities Award Plan. The voting results for this approval were:
41,416,014 -- For; 57,255 -- Against; and 4,340 -- Abstained.
Item 5. Other Information.
On November 7, 1996, the Corporation's Board of Directors took action, pursuant
to the Corporation's Restated Articles of Incorporation, that divided the
members of its Board of Directors into the following three classes with terms
expiring as indicated:
Class Term Expiring
----- -------------
Class I: Frank H. Menaker, Jr. Annual Shareholders Meeting 1997
William E.McDonald
Richard A. Vinroot
Class II: Richard G. Adamson Annual Shareholders Meeting 1998
Marcus C. Bennett
Bobby F. Leonard
Class III: James M. Reed Annual Shareholders Meeting 1999
William B. Sansom
Stephen P. Zelnak, Jr.
On November 8, 1996, the Corporation announced that the Board of Directors had
declared a regular quarterly cash dividend on the Corporation's Common Stock of
$0.12 a share, payable December 31, 1996, to shareholders of record at the
close of business on November 29, 1996.
On November 11, 1996, the Corporation announced the election of two additional
members to its Board of Directors. The new Directors are William E. McDonald,
President and Chief Executive Officer of Sprint MidAtlantic Telecom, located in
Raleigh, North Carolina, and Richard A. Vinroot, a Partner in the law firm of
Robinson, Bradshaw and Hinson, located in Charlotte, North Carolina. The
addition of the two new Directors increases the size of the Board of Directors
to nine members.
Page 18
19
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1996
PART II - OTHER INFORMATION
(Continued)
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit
No. Document
- ------- --------
10.01 Restated Articles of Incorporation of the Corporation (incorporated by reference to Exhibit 3.1 to the
Martin Marietta Materials, Inc. current report on Form 8-K, filed with the Securities and Exchange
Commission on October 25, 1996).
10.02 Restated Bylaws of the Corporation (incorporated by reference to Exhibit 3.3 to the Martin Marietta
Materials, Inc. current report on Form 8-K, filed with the Securities and Exchange Commission on
October 25, 1996).
10.03 Rights Agreement, dated as of October 21, 1996, between Martin Marietta Materials, Inc., and First
Union National Bank of North Carolina, as Rights Agent, which includes the Form of Articles of
Amendment With Respect to the Junior Participating Class A Preferred Stock of Martin Marietta
Materials, Inc., as Exhibit A, the Form of Rights Certificate, as Exhibit B, and the Summary of Rights
to Purchase Preferred Stock, as Exhibit C (incorporated by reference to Exhibit 1 to the Martin
Marietta Materials, Inc. registration statement on Form 8-A, filed with the Securities and Exchange
Commission on October 21, 1996).
10.04 Articles of Amendment of the Corporation with respect to the Junior Participating Class A Preferred
Stock (incorporated by reference to Exhibit 3.2 to the Martin Marietta Materials, Inc. current report
on Form 8-K, filed with the Securities and Exchange Commission on October 25, 1996).
10.05 Martin Marietta Materials, Inc. Amended Omnibus Securities Award Plan.
10.06 Martin Marietta Materials, Inc. Shareholder Value Achievement Plan.
Page 19
20
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1996
PART II - OTHER INFORMATION
(Continued)
Item 6. Exhibits and Reports on Form 8-K (continued).
(a) Exhibits (continued)
Exhibit
No. Document
- ------- --------
10.07 Form of Martin Marietta Materials, Inc. Employment Protection Agreement.
10.08 Martin Marietta Materials, Inc. Common Stock Purchase Plan for Directors.
10.09 Supplemental Tax Sharing Agreement, dated as of September 13, 1996, between the Corporation and
Lockheed Martin Corporation.
10.10 Tax Assurance Agreement, dated as of September 13, 1996, between the Corporation and Lockheed Martin
Corporation.
11.01 Martin Marietta Materials, Inc. and Consolidated Subsidiaries Computation of Earnings Per Share for the
Quarter and Nine Months Ended September 30, 1996 and 1995
12.01 Martin Marietta Materials, Inc. and Consolidated Subsidiaries Computation of Ratio of Earnings to Fixed
Charges for the Nine Months ended September 30, 1996
27.01 Financial Data Schedule (for SEC use only)
Page 20
21
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1996
PART II - OTHER INFORMATION
(Continued)
Item 6. Exhibits and Reports on Form 8-K (continued).
(b) Reports on Form 8-K filed in the third quarter of 1996.
Current Report on Form 8-K, filed October 25, 1996.
Item 5. Other Events.
The Registrant filed information in connection with the
following events:
Adoption of a Shareholder Rights Plan
On October 15, 1996, the Corporation declared a dividend
distribution of one Right for each outstanding share of the
Corporation's Common Stock, payable to shareholders of record
at the close of business on October 21, 1996, and with respect
to the Common Stock issued thereafter until a distribution
date and, in certain circumstances, with respect to the Common
Stock issued after the distribution date. Each right, when it
becomes exercisable, generally entitles the registered holder
to purchase from the Corporation a unit consisting initially
of one one-thousandth of a share (a "Unit") of Junior
Participating Class A Preferred Stock, par value $0.01 per
share (the "Preferred Stock"), of the Corporation, at a
purchase price of $100 per Unit, subject to adjustment. The
description and terms of the rights are set forth on a Rights
Agreement, dated as of October 21, 1996, between the
Corporation and First Union National Bank of North Carolina,
as Rights Agent. On October 21, 1996, the Corporation filed a
registration statement (Form 8-A) in connection with the
registration of the Rights to Purchase Junior Participating
Class A Preferred Stock, a new class of securities of the
Corporation. A copy of the Rights Agreement is filed as an
Exhibit hereto. This summary description of the Rights does
not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement.
Completion of Split-Off of the Company by Lockheed Martin
Corporation
On October 21, 1996, Lockheed Martin Corporation and the
Corporation jointly announced the successful completion of the
split-off of the Corporation from Lockheed Martin Corporation.
Page 21
22
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1996
PART II - OTHER INFORMATION
(Continued)
Item 6. Exhibits and Reports on Form 8-K (continued).
(b) Reports on Form 8-K filed in the third quarter of 1996 (continued).
Current Report on Form 8-K, filed October 25, 1996 (continued).
Item 5. Other Events (continued).
Effectiveness of Anti-takeover Amendments to Charter and
Bylaws
Effective on October 21, 1996, various amendments to the
Articles of Incorporation and Bylaws of the Corporation that
were approved at the Special Meeting of Shareholders held on
September 27, 1996, became effective. The purposes and effects
of such amendments are described in Part II -- Other
Information, Item 4. Submission of Matters to a Vote of
Security Holders on page 16 of this filing and in the
Corporation's Proxy Statement dated August 28, 1996 (the
"Proxy Statement"), which information is incorporated herein
by this reference in its entirety. Copies of the Restated
Articles of Incorporation and Bylaws of the Corporation are
filed as Exhibits hereto. Copies of the Proxy Statement are
available free of charge from the Corporation.
Release of Third Quarter Earnings Results
On October 21, 1996, the Corporation issued a press release
announcing financial results for the third quarter and nine
months ended September 30, 1996.
Page 22
23
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1996
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MARTIN MARIETTA MATERIALS, INC.
(Registrant)
Date: November 14, 1996 By: /s/ JANICE K. HENRY
----------------------------------
Janice K. Henry
Vice President, Chief Financial
Officer and Treasurer
Page 23
24
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1996
EXHIBIT INDEX
Exhibit No. Document
- ----------- --------
10.01 Restated Articles of Incorporation of the Corporation (incorporated
by reference to Exhibit 3.1 to the Martin Marietta Materials, Inc. current report on
Form 8-K, filed with the Securities and Exchange Commission on October 25, 1996).
10.02 Restated Bylaws of the Corporation (incorporated by reference to
Exhibit 3.3 to the Martin Marietta Materials, Inc. current report on Form 8-K, filed
with the Securities and Exchange Commission on October 25, 1996).
10.03 Rights Agreement, dated as of October 21, 1996, between Martin
Marietta Materials, Inc., and First Union National Bank of North Carolina, as rights
Agent, which includes the Form of Articles of Amendment With Respect to the Junior
Participating Class A Preferred Stock of Martin Marietta Materials, Inc., as Exhibit
A, the Form of Rights Certificate, as Exhibit B, and the Summary of Rights to Purchase
Preferred Stock, as Exhibit C (incorporated by reference to Exhibit 1 to the Martin
Marietta Materials, Inc. registration statement on Form 8-A, filed with the Securities
and Exchange Commission on October 21, 1996).
10.04 Articles of Amendment of the Corporation with respect to the
Junior Participating Class A Preferred Stock (incorporated by reference to Exhibit 3.2
to the Martin Marietta Materials, Inc. current report on Form 8-K, filed with the
Securities and Exchange Commission on October 25, 1996).
10.05 Martin Marietta Materials, Inc. Amended Omnibus Securities
Award Plan.
10.06 Martin Marietta Materials, Inc. Shareholder Value Achievement
Plan.
10.07 Form of Martin Marietta Materials, Inc. Employment Protection Agreement.
(Continued)
Page 24
25
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
FORM 10-Q
For the Quarter Ended September 30, 1996
EXHIBIT INDEX
(continued)
Exhibit No. Document
- ----------- --------
10.08 Martin Marietta Materials, Inc. Common Stock Purchase Plan
for Directors.
10.09 Supplemental Tax Sharing Agreement, dated as of September 13,
1996, between the Corporation and Lockheed Martin Corporation.
10.10 Tax Assurance Agreement, dated as of September 13, 1996,
between the Corporation and Lockheed Martin Corporation.
11.01 Martin Marietta Materials, Inc. and Consolidated Subsidiaries
Computation of Earnings Per Share for the Quarter and Nine Months Ended September 30,
1996 and 1995
12.01 Martin Marietta Materials, Inc. and Consolidated Subsidiaries
Computation of Ratio of Earnings to Fixed Charges for the Nine Months ended
September 30, 1996
27.01 Financial Data Schedule (for SEC use only)
Page 25
1
EXHIBIT 10.05
MARTIN MARIETTA MATERIALS, INC.
AMENDED OMNIBUS SECURITIES AWARD PLAN
ADOPTED: FEBRUARY 1994
AS AMENDED SEPTEMBER 1996
2
SECTION 1. ESTABLISHMENT AND PURPOSE
The Martin Marietta Materials, Inc. Amended Omnibus Securities Plan (the
"Plan") is an amendment and restatement of the Martin Marietta Materials, Inc.
Omnibus Securities Award Plan (the "1994 Plan"), which effectiveness is subject
to the adoption of the Plan by the shareholders of the Corporation in a manner
that complies with Section 162(m).
The purpose of this Plan is to benefit the Corporation's shareholders by
encouraging high levels of performance by individuals who are key to the
success of the Corporation and to enable the Corporation to attract, motivate,
and retain talented and experienced individuals essential to its continued
success. This is to be accomplished by providing such employees an opportunity
to obtain or increase their proprietary interest in the Corporation's
performance and by providing such employees with additional incentives to
remain with the Corporation.
SECTION 2. DEFINITIONS
The following terms, as used herein, shall have the meaning specified:
"Affiliate" of a person means any entity directly or indirectly
controlling, controlled by or under direct or indirect common control
with such person.
"Award" means an award granted pursuant to Section 4 hereof.
"Award Agreement" means an agreement described in Section 6 hereof
entered into between the Corporation and a Participant, setting forth the
terms and conditions applicable to the Award granted to the Participant.
"Board of Directors" means the Board of Directors of the Corporation as
it may be comprised from time to time.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" means a committee composed of members of, and designated by,
the Board of Directors and consisting solely of persons who are both (i)
"non-employee directors" within the meaning of Rule 16b-3, and (ii)
"outside directors" within the meaning of Section 162(m), as Rule 16b-3
and Section 162(m) may be amended from time to time, which committee
shall at all times comprise at least the minimum number of such persons
necessary to comply with both Rule 16b-3 and Section 162.
"Corporation" means Martin Marietta Materials, Inc.
2
3
"Covered Employee" means a covered employee within the meaning of Section
162(m) or the Treasury Regulations promulgated thereunder.
"Employee" means officers and other key employees of the Corporation but
excludes directors who are not also officers or employees of the
Corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.
"Fair Market Value" means the closing price of the relevant security as
reported on the composite tape of New York Stock Exchange issues (or such
other reporting system as shall be selected by the Committee) on the
relevant date, or if no sale of the security is reported for such date,
the next following day for which there is a reported sale. The Committee
shall determine the Fair Market Value of any security that is not
publicly traded, using such criteria as it shall determine, in its sole
direction, to be appropriate for such valuation.
"Insider" means any person who is subject to Section 16 of the Exchange
Act.
"Participant" means an Employee who has been granted and holds an
unexercised or unpaid Award pursuant to this Plan.
"Rule 16b-3" means Rule 16b-3 promulgated by the Securities and
Exchange Commission under Section 16 or any successor rule or
regulation as amended from time to time.
"Section 16" means Section 16 of the Exchange Act or any successor
statute and the rules promulgated thereunder by the Securities and
Exchange Commission, as they may be amended from time to time.
"Section 162(m)" means Section 162(m) of the Code or any successor
statute and the Treasury Regulations promulgated thereunder, as
they may be amended from time to time.
"Stock" means shares of Common Stock of the Corporation, par value $.01
per share.
"Subsidiary" means any entity directly or indirectly controlled by
the Corporation.
3
4
SECTION 3. ELIGIBILITY
Awards may be granted only to exempt salaried Employees of the Corporation
or any Subsidiary who are designated from time to time by the Committee.
No individual who beneficially owns Stock possessing five percent (5%) or
more of the combined voting power of all classes of stock of the Corporation
shall be eligible to participate in the Plan.
SECTION 4. AWARDS
The Committee may grant any of the following types of Awards, either
singly, in tandem or in combination with other Awards, as the Committee may in
its sole discretion determine:
(a) Non-qualified Stock Options. A Non-qualified Stock Option is
a right to purchase a specified number of shares of Stock during
such specified time as the Committee may determine at a price not
less than 100% of the Fair Market Value of the Stock on the date the
option is granted.
(i) The purchase price of the Stock subject to the
option may be paid in cash. At the discretion of the
Committee, the purchase price may also be paid by the tender
of Stock, or through a combination of Stock and cash, or
through such other means as the Committee determines are
consistent with the Plan's purpose and applicable law. No
fractional shares of Stock will be issued or accepted.
(ii) Without limiting the foregoing, to the extent
permitted by law (including relevant state law), the Committee
may agree to accept, as full or partial payment of the
purchase price of Stock issued upon exercise of options, (A) a
promissory note of the optionee evidencing the optionee's
obligation to make future cash payments to the Corporation, or
(B) any other form of payment deemed acceptable to the
Committee. Promissory notes referred to in clause (A) above
shall be payable as determined by the Committee (but in no
event later than five years after the date thereof), shall be
secured by a pledge of shares of Stock purchased, and shall
bear interest at a rate established by the Committee.
(b) Incentive Stock Options. An Incentive Stock Option is an
Award in the form of an option to purchase Stock that complies with
the requirements of Code Section 422 or any successor section.
4
5
(i) To the extent that the aggregate Fair Market
Value (determined at the time of the grant of the Award) of
the shares subject to Incentive Stock Options which are
exercisable by one person for the first time during a
particular calendar year exceeds $100,000, such excess shall
be treated as Non-qualified Stock Options. For purposes of
the preceding sentence, the term "Incentive Stock Option"
shall mean an option to purchase Stock that is granted
pursuant to this Section 4(b) or pursuant to any other plan of
the Corporation, which option is intended to comply with
Section 422(b) of the Code.
(ii) No Incentive Stock Option may be granted under this
Plan after the tenth anniversary of the date this Plan is
adopted, or the date this Plan is approved by the shareholders,
whichever is earlier, or be exercisable more than ten years
after the date the Award is made.
(iii)The exercise price of any Incentive Stock Option
shall be no less than Fair Market Value of the Stock subject
to the option on the date the Award is made.
(iv) The Committee may provide that the option price
under an Incentive Stock Option may be paid by one or more of
the methods available for paying the option price of a
Non-qualified Stock Option.
(c) Stock Appreciation Rights. A Stock Appreciation Right
("SAR") is a right to receive, upon exercise of the right, but
without payment by the Participant, an amount payable in cash. The
amount payable with respect to each right shall be equal in value to
a percent of the excess, if any, of the Fair Market Value of a share
of Stock on the exercise date over the Fair Market Value of a share
of Stock on the date the Award was made (or, in the case of a right
granted with respect to a previously granted Award, the Fair Market
Value of the shares that are the subject of the previously granted
Award on the date such previous Award was granted). The applicable
percent shall be established by the Committee.
(d) Restricted Stock. Restricted Stock is Stock of the
Corporation that is issued to a Participant and is subject to
restrictions on transfer and/or such other restrictions or incidents
of ownership as the Committee may determine.
(e) Other Stock-based Incentive Awards. The Committee may from
time to time grant Awards under this Plan that provide the
Participant with the right to purchase Stock of the Corporation or
provide incentive Awards that are valued by reference to the Fair
Market Value of Stock of the Corporation (including, but not limited
to phantom securities or dividend equivalents). Such Awards shall
be in a form determined by the Committee (and may include terms
contingent upon a
5
6
change of control of the Corporation), provided that such Awards
shall not be inconsistent with the terms and purposes of the Plan.
SECTION 5. SHARES OF STOCK AND OTHER STOCK-BASED AWARDS AVAILABLE UNDER PLAN
(a) Subject to the adjustment provisions of Section 9 hereof, the
aggregate number of shares with respect to which Awards payable in
securities may be granted under the Plan shall be no more than
2,000,000 and the aggregate number of shares with respect to which
Non-qualified Stock Options, Incentive Stock Options or SARs may be
granted to any individual Participant shall be no more than 200,000
in any one year. Awards that are cancelled or repriced shall be
counted against the 200,000 share per year limit to the extent
required by Section 162(m) of the Code.
(b) Any unexercised or undistributed portion of any terminated or
forfeited Award (other than an Award terminated or forfeited by
reason of the exercise of any Award granted in tandem therewith)
shall be available for further Awards in addition to those available
under Section 5(a) hereof.
(c) For the purposes of computing the aggregate number of shares
with respect to which awards payable in securities may be granted
under the Plan, the following rules shall apply:
(i) except as provided in (v) of this Section, each
option shall be deemed to be the equivalent of the maximum
number of shares that may be issued upon exercise of the
particular option;
(ii) except as provided in (v) of this Section, each
other stock-based Award shall be deemed to be equal to the
number of shares to which it relates;
(iii) except as provided in (v) of this Section, where the
number of shares available under the Award is variable on the
date it is granted, the number of shares shall be deemed to be
the maximum number of shares that could be received under that
particular Award.
(iv) where one or more types of Awards (both of which
are payable in Stock or another security) are granted in
tandem with each other, such that the exercise of one type of
Award with respect to a number of shares cancels an equal
number of shares of the other, each joint Award shall be
deemed to be the equivalent of the number of shares under the
other; and
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(v) each share awarded or deemed to be awarded under
the preceding subsections shall be treated as shares of Stock,
even if the Award is for a security other than Stock.
Additional rules for determining the aggregate number of shares
with respect to which awards payable in securities may be granted
under the Plan may be made by the Committee, as it deems necessary
or appropriate.
(d) No Stock may be issued pursuant to an Award under the Plan
except to the extent that, prior to such issuance, the Corporation
shall have acquired shares from its shareholders sufficient to
fulfill the requirements of the Plan with respect to such issuance.
SECTION 6. AWARD AGREEMENTS
Each Award under this Plan shall be evidenced by an Award Agreement
setting forth the number of shares of Stock, SARs, or units subject to the
Award and such other terms and conditions applicable to the Award as determined
by the Committee.
(a) Award Agreements shall include the following terms:
(i) Non-assignability: A provision that no Award
shall be assignable or transferable except by will or by the
laws of descent and distribution and that during the lifetime
of a Participant, the Award shall be exercised only by such
Participant or by his or her guardian or legal representative.
(ii) Termination of Employment: A provision
describing the treatment of an Award in the event of the
retirement, disability, death or other termination of a
Participant's employment with the Corporation or Subsidiary,
including but not limited to terms relating to the vesting,
time for exercise, forfeiture or cancellation of an Award in
such circumstances.
(iii)Rights as Shareholder: A provision that a
Participant shall have no rights as a shareholder with respect
to any securities covered by an Award until the date the
Participant becomes the holder of record. Except as provided
in Section 9 hereof, no adjustment shall be made for dividends
or other rights, unless the Award Agreement specifically
requires such adjustment, in which case, grants of dividend
equivalents or similar rights shall not be considered to be a
grant of any other shareholder right.
(iv) Withholding: A provision requiring the withholding of
applicable taxes required by law from all amounts paid in
satisfaction of an Award. In the case of an Award paid in
cash, the withholding obligation shall be satisfied
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by withholding the applicable amount and paying the net
amount in cash to the Participant. In the case of Awards
paid in shares of Stock or other securities of the
Corporation, a Participant may satisfy the withholding
obligation by paying the amount of any taxes in cash or, with
the approval of the Committee, shares of Stock or other
securities may be deducted from the payment to satisfy the
obligation in full or in part. The number of shares to be
deducted shall be determined by reference to the Fair Market
Value of such shares on the date the Award is exercised.
(v) Execution: A provision stating that no Award is
enforceable until the Award Agreement or a receipt has been
signed by the Participant and the Chairman or the Chief
Executive Officer of the Corporation (or his delegate). By
executing the Award Agreement or receipt, a Participant shall
be deemed to have accepted and consented to any action taken
under the Plan by the Committee, the Board of Directors or
their delegates.
(vi) Holding Period: In the case of an Award to an
Insider, (A) of an equity security, a provision stating (or
the effect of which is to require) that such security must be
held for at least six months (or such longer period as the
Committee in its discretion specifies) from the date of
acquisition; or (B) of a derivative security with a fixed
exercise price within the meaning of Section 16, a provision
stating (or the effect of which is to require) that at least
six months (or such longer period as the Committee in its
discretion specifies) must elapse from the date of acquisition
of the derivative security to the date of disposition of the
derivative security (other than upon exercise or conversion)
or its underlying equity security; or (C) of a derivative
security without a fixed exercise price within the meaning of
Section 16, a provision stating (or the effect of which is to
require) that at least six months (or such longer period as
the Committee in its discretion specifies) must elapse from
the date upon which such price is fixed to the date of
disposition of the derivative security (other than by exercise
or conversion) or its underlying equity security; provided,
however, that this clause (vi) shall not apply to any Award
granted on or after August 15, 1996.
(vii) Exercise and Payment: The permitted methods of
exercising and paying the exercise price with respect to the
Award.
(b) Award Agreements may include the following terms:
(i) Replacement, Substitution and Reloading: Any
provisions (A) permitting the surrender of outstanding Awards
or securities held by the Participant in order to exercise or
realize rights under other Awards, or in exchange
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for the grant of new Awards under similar or different terms
(including the grant of reload options), or, (B) requiring
holders of Awards to surrender outstanding Awards as a
condition precedent to the grant of new Awards under the
Plan.
(ii) Other Terms: Such other terms as are necessary and
appropriate to effect an Award to the Participant including
but not limited to the term of the Award, vesting provisions,
any requirements for continued employment with the Corporation
or any Subsidiary, any other restrictions or conditions
(including performance requirements) on the Award and the
method by which restrictions or conditions lapse, the effect
on the Award of a change in control, the price and the amount
or value of Awards.
SECTION 7. AMENDMENT AND TERMINATION
The Board of Directors may at any time amend, suspend or discontinue the
Plan. The Committee may at any time alter or amend any or all Award Agreements
under the Plan to the extent permitted by law. However, no such action may,
without approval of the shareholders of the Corporation, be effective if
shareholder approval would be required to keep the Plan and the Awards made
thereunder in compliance with Rule 16b-3 and Section 162(m).
SECTION 8. ADMINISTRATION
(a) The Plan and all Awards granted pursuant thereto shall be
administered by the Committee. The members of the Committee shall
be designated by the Board of Directors. A majority of the members
of the Committee shall constitute a quorum. The vote of a majority
of a quorum shall constitute action by the Committee.
(b) The Committee shall periodically determine the Participants
in the Plan and the nature, amount, pricing, timing, and other
terms of Awards to be made to such individuals.
(c) The Committee shall have the power to interpret and administer the
Plan. All questions of interpretation with respect to the Plan,
the number of shares of Stock, SARs, or units granted, and the
terms of any Award Agreements shall be determined by the
Committee and its determination shall be final and conclusive upon
all parties in interest. In the event of any conflict between an
Award Agreement and this Plan, the terms of this Plan shall govern.
(d) It is the intent of the Corporation that this Plan and Awards
hereunder satisfy and be interpreted in a manner, that, in the case
of Participants who are or may be Insiders, satisfies the applicable
requirements of Rule 16b-3, so that such persons
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will be entitled to the benefits of Rule 16b-3 or other exemptive
rules under Section 16 and will not be subjected to avoidable
liability thereunder. If any provision of this Plan or of any
Award would otherwise frustrate or conflict with the intent
expressed in this Section 8(d), that provision to the extent
possible shall be interpreted and deemed amended so as to avoid
such conflict. To the extent of any remaining irreconcilable
conflict with such intent, the provision shall be deemed void as
applicable to Insiders to the extent permitted by law and deemed
advisable by the Committee.
(e) It is the intent of the Corporation that this Plan and Awards
hereunder satisfy and be interpreted in a manner, that, in the case
of Participants who are or may be Covered Employees, satisfies the
applicable requirements of Section 162(m), so that the Corporation
will be entitled, to the extent possible, to deduct compensation
paid under the Plan and otherwise to such Covered Employees and will
not be subjected to avoidable loss of deductions thereunder. If any
provision of this Plan or of any Award would otherwise frustrate or
conflict with the intent expressed in this Section 8(e), that
provision to the extent possible shall be interpreted and deemed
amended so as to avoid such conflict. To the extent of any
remaining irreconcilable conflict with such intent, the provision
shall be deemed void as applicable to Covered Employees to the
extent permitted by law and deemed advisable by the Committee.
(f) The Committee may delegate to the officers or employees of
the Corporation the authority to execute and deliver such
instruments and documents, to do all such acts and things, and to
take all such other steps deemed necessary, advisable or convenient
for the effective administration of the Plan in accordance with its
terms and purpose, except that the Committee may not delegate any
discretionary authority with respect to substantive decisions or
functions regarding the Plan or Awards thereunder as these relate to
Insiders or Covered Employees, including but not limited to
decisions regarding the timing, eligibility, pricing, amount or
other material term of such Awards.
SECTION 9. ADJUSTMENT PROVISIONS
(a) In the event of any change in the outstanding shares of Stock
by reason of a stock dividend or split, recapitalization, merger or
consolidation, reorganization, combination or exchange of shares or
other similar corporate change, the number of shares of Stock (or
other securities) then remaining subject to this Plan, and the
maximum number of shares that may be issued to anyone pursuant to
this Plan, including those that are then covered by outstanding
Awards, shall (i) in the event of an increase in the number of
outstanding shares, be proportionately increased and the price for
each share then covered by an outstanding Award shall be
proportionately reduced, and (ii) in the event of a reduction in the
number of
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outstanding shares, be proportionately reduced and the price for
each share then covered by an outstanding Award, shall be
proportionately increased.
(b) The Committee shall make any further adjustments as it deems
necessary to ensure equitable treatment of any holder of an Award as
the result of any transaction affecting the securities subject to
the Plan not described in (a), or as is required or authorized under
the terms of any applicable Award Agreement.
SECTION 10. CHANGE IN CONTROL
(a) In addition to its authority under, and subject to, Section
5, 7 and 9, in the event of a change in control of the Corporation,
in addition to any action required or authorized by the terms of any
Award Agreement, the Committee may, in its discretion, take any of
the following actions as a result of, or in anticipation of, any
such event to assure fair and equitable treatment of Participants:
(i) accelerate time periods for purposes of vesting
in, or realizing gain from, any outstanding Award made
pursuant to this Plan;
(ii) cancel any outstanding Award made pursuant to this Plan and
pay to the holder thereof its equivalent cash value, as
determined by the Committee based upon the highest price per
share of Stock received or to be received by other
shareholders of the Corporation in the Change in Control, as
of the date of the Change in Control; or
(iii) make other adjustments or modifications to outstanding Awards
as the Committee deems appropriate to maintain and protect the
rights and interests of Participants following such Change
in Control.
Any such action approved by the Committee shall be conclusive and
binding on the Corporation and all Participants.
(b) For the purposes of this Section, a "Change in Control" shall
mean on or after the effective date of the Plan,
(i) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
40% or more of either (A) the fully diluted shares of Stock,
as reflected on the Corporation's financial statements (the
"Outstanding Corporation Common Stock"), or (B) the combined
voting power of the then outstanding voting securities of the
Corporation entitled to vote generally
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in the election of directors (the "Outstanding Corporation
Voting Securities"); provided, however, that for purposes of
this subsection (i), the following acquisitions shall not
constitute a Change of Control: (1) any acquisition by the
Corporation or any "affiliate" of the Corporation, within the
meaning of 17 C.F.R. Section 230.405 (an "Affiliate"), (2)
any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Corporation or any
Affiliate of the Corporation, or (3) any acquisition by any
entity pursuant to a transaction which complies with clauses
(A), (B) and (C) of subsection (iii) of this definition; or
(ii) Individuals who constitute the Board on the effective date of
the Plan (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to such
effective date whose election, or nomination for election by
the Corporation's shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs
as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual
or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or
(iii) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the
assets of the Corporation (a "Business Combination"), in each
case, unless, following such Business Combination, (A) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting Securities
immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of, respectively,
the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled
to vote generally in the election of directors, as the case may
be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result
of such transaction owns the Corporation or all or
substantially all of the Corporation's assets either directly
or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such
Business Combination, of the Outstanding Corporation Common
Stock and Outstanding Corporation Voting Securities, as the
case may be, (B) no Person (excluding any employee benefit plan
(or related trust) sponsored or maintained by the Corporation
or any Affiliate of the Corporation, or such corporation
resulting from such Business
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Combination or any Affiliate of such corporation)
beneficially owns, directly or indirectly, 40% or more of,
respectively, the fully diluted shares of common stock of the
corporation resulting from such Business Combination, as
reflected on such corporation's financial statements, or the
combined voting power of the then outstanding voting
securities of such corporation except to the extent that such
ownership existed prior to the Business Combination, and (C)
at least a majority of the members of the board of directors
of the corporation resulting from such Business Combination
were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(iv) Approval by the shareholders of the Corporation
of a complete liquidation or dissolution of the Corporation.
SECTION 11. UNFUNDED PLAN
The Plan shall be unfunded. Neither the Corporation nor the Board of
Directors shall be required to segregate any assets that may at any time be
represented by Awards made pursuant to the Plan. Neither the Corporation, the
Committee, nor the Board of Directors shall be deemed to be a trustee of any
amounts to be paid under the Plan.
SECTION 12. LIMITS OF LIABILITY
(a) Any liability of the Corporation to any Participant with
respect to an Award shall be based solely upon contractual
obligations created by the Plan and the Award Agreement.
(b) Neither the Corporation nor any member of the Board of
Directors or of the Committee, nor any other person participating in
any determination of any question under the Plan, or in the
interpretation, administration or application of the Plan, shall
have any liability to any party for any action taken or not taken,
in good faith under the Plan.
SECTION 13. RIGHTS OF EMPLOYEES
(a) Status as an eligible Employee shall not be construed as a
commitment that any Award will be made under this Plan to such
eligible Employee or to eligible Employees generally.
(b) Nothing contained in this Plan (or in any other documents
related to this Plan or to any Award) shall confer upon any Employee
or Participant any right to continue in the employ or other service
of the Corporation or constitute any
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contract or limit in any way the right of the Corporation to change
such person's compensation or other benefits or to terminate the
employment of such person with or without cause.
SECTION 14. DURATION
The Plan shall remain in effect until all Awards under the Plan have been
exercised or terminated under the terms of the Plan and applicable Award
Agreement, provided that Awards under the Plan may only be granted until
December 31, 2003.
SECTION 15. GOVERNING LAW
The Plan shall be governed by the laws of the State of North Carolina.
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EXHIBIT 10.06
THE MARTIN MARIETTA MATERIALS, INC.
SHAREHOLDER VALUE ACHIEVEMENT PLAN
INTRODUCTION
The Martin Marietta Materials, Inc. Shareholder Value Achievement Plan
(the "Plan") is designed to foster and promote the long-term growth and
performance of the Company by enhancing the Company's ability to attract and
retain qualified key employees and motivating key employees through stock
ownership and performance-based incentives, and to more closely align the goals
of such employees with that of the Company's shareholders. To achieve this
purpose, this Plan provides authority for the grant of performance-based stock
awards.
ARTICLE 1 - DEFINITIONS
1.1 "Award" shall mean a performance-based stock award granted to a
Participant pursuant to Article 5.
1.2 "Award Agreement" shall mean the agreement between the Company and a
Participant that sets forth terms, conditions, and restrictions applicable to
an Award.
1.3 "Board of Directors" shall mean the Board of Directors of the Company.
1.4 "Cause" shall mean (a) the engaging by the Participant in willful
misconduct that is materially injurious to the Company, (b) the continued use
of drugs (including alcohol) by the Participant in violation of the Company's
then current Substance Abuse Policy, (c) the commission by the Participant of
an act of fraud or embezzlement against the Company or (d) the Participant's
having been convicted of, or pleaded guilty or no contest to, a felony. For
this purpose, no act, or failure to act, on the Participant's part shall be
considered "willful" unless done, or omitted to be done, by him not in good
faith and without reasonable belief that his action or omission was in the best
interest of the Company.
1.5 "Change of Control" shall mean, on or after the effective date of the
Plan, (a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as
2
amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 40% or more of
either (i) the fully diluted shares of common stock of the Company, as
reflected on the Company's financial statements (the "Outstanding Company
Common Stock"), or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting Securities"); provided, however,
that for purposes of this subsection (a), the following acquisitions shall not
constitute a Change of Control: (A) any acquisition by the Company or any
"affiliate" of the Company, within the meaning of 17 C.F.R. Section 230.405
(an "Affiliate"), (B) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any Affiliate of the Company
or (C) any acquisition by any entity pursuant to a transaction which complies
with clauses (i), (ii) and (iii) of subsection (c) of this definition; or
(b) Individuals who constitute the Board on the effective date of the
Plan (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to such effective date whose election, or nomination for
election by the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or
(c) Consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Company (a
"Business Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 50%
of, respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the
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case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to such Business
Combination, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, and (ii) no Person (excluding any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any Affiliate of the Company, or such corporation resulting from such
Business Combination or any Affiliate of such corporation) beneficially owns,
directly or indirectly, 40% or more of, respectively, the fully diluted shares
of common stock of the corporation resulting from such Business Combination, as
reflected on such corporation's financial statements, or the combined voting
power of the then outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business Combination and
(iii) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of
the action of the Board, providing for such Business Combination; or
(d) Approval by the shareholders of the Company of a complete liquidation
or dissolution of the Company.
1.6 "Code" shall mean the Internal Revenue Code of 1986, or any law that
supersedes or replaces it, as amended from time to time.
1.7 "Committee" shall mean the Compensation Committee of the Board of
Directors, or any other committee of the Board of Directors that the Board of
Directors authorizes to administer this Plan. The Committee will be
constituted in a manner intended to cause Awards to be exempt from the
application of Section 16(b) of the Exchange Act pursuant to Rule 16b-3, and to
be qualified as "qualified performance-based compensation" for purposes of
Section 162(m).
1.8 "Common Stock " shall mean the common stock of the Company, $0.01 par
value per share, including authorized and unissued shares.
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1.9 "Company" shall mean Martin Marietta Materials, Inc., a North Carolina
corporation.
1.10 "Disability" shall mean a medically determined physical or mental
impairment which qualifies the Participant for benefits under the Company's
long-term disability program. A Participant shall not be deemed to have
incurred a Disability until such benefits actually become payable (i.e., after
any applicable waiting period). If the Company does not maintain a long-term
disability program, or if a Participant does not elect coverage under such
program, Disability shall mean the incapacity of the Participant such that he
is unable to perform his duties to the Company for a period of 150 out of 180
consecutive days, as determined in the reasonable judgment of the Committee.
1.11 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any law that supersedes or replaces it, as the same may be amended
from time to time.
1.12 "Fair Market Value" shall mean the closing price of a share of Common
Stock on the relevant date or, if no sale was made on such date, then on the
next preceding day on which such a sale was made (a) if the Common Stock is
listed on the New York Stock Exchange ("NYSE"), as reported in the Wall Street
Journal or (b) if the Common Stock is not listed on the NYSE but is listed on
the NASDAQ National Market System, then as reported on such system, or (c) if
the Common Stock not listed on either the NYSE or the NASDAQ National Market
System, as determined by the Board of Directors or Committee.
1.13 "Fiscal Year" shall mean the fiscal year of the Company.
1.14 "Measurement Period" shall mean a period of three consecutive Fiscal
Years or any other period selected and established by the Committee at the time
the corresponding Awards are granted.
1.15 "Participant" shall mean any employee of the Company who has received
an Award in accordance with Article 2 which Award has neither been fully paid
out nor expired.
1.16 "Retirement" shall mean Participant's termination of employment with
the Company (a) at a time at which the Participant is entitled to immediately
commence receipt of
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benefits from the Company's qualified defined benefit retirement plan or (b) if
the Company does not maintain such a plan at the time, either (i) at or after
age 55 if employed by the Company or an "Affiliate" (as defined in Section
1.5(a)) for at least five years or (ii) at or after age 65.
1.17 "Rule 16b-3" shall mean Rule 16b-3 promulgated under the Exchange Act
as the same may be amended, modified superseded or replaced from time to time.
1.18 "Section 162(m)" shall mean Section 162(m) of the Code, together with
any and all regulations promulgated by the Internal Revenue Service thereunder,
as the same may be amended, modified, superseded or replaced from time to time.
ARTICLE 2 - ELIGIBILITY
All key employees of the Company and any of its direct or indirect
subsidiaries, including officers whether or not members of the Board of
Directors, are eligible for the grant of Awards. The selection of key employees
to receive Awards will be within the discretion of the Committee.
ARTICLE 3 - COMMON STOCK AVAILABLE FOR AWARDS; ADJUSTMENT
3.1 Number of Shares of Common Stock. Subject to adjustment as provided
for in Section 3.3, the aggregate number of shares of Common Stock that may be
subject to Awards granted under this Plan shall be 250,000 shares of Common
Stock. The assumption of awards granted by an organization acquired by the
Company, or the grant of Awards under this Plan in substitution of any such
awards, will not reduce the number of shares of Common Stock available for the
grant of Awards under this Plan.
Common Stock subject to an Award that expires or is forfeited, terminated,
or canceled will again be available for grant under this Plan, without reducing
the number of shares of Common Stock available for grant of Awards under this
Plan.
3.2 No Fractional Shares. No fractional shares of Common Stock will be
issued under the Plan, and the Committee will round the number of shares to
which a Participant is entitled down to the nearest whole share.
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3.3 Adjustment. The aggregate number of shares of Common Stock which may
be issued pursuant to Awards granted hereunder, the number of shares of Common
Stock covered by each outstanding Award and the price per share thereof shall
be appropriately adjusted for any increase or decrease in the number of
outstanding shares of Common Stock resulting from a stock split or other
subdivision or consolidation of shares of Common Stock or for other capital
adjustments or payments of stock dividends or distributions or other increases
or decreases in the outstanding shares of Common Stock without receipt of
consideration by the Company.
In the event of any change in the outstanding shares of Common Stock by
reason of any recapitalization, merger, consolidation, spin-off, combination or
exchange of shares or other corporate change, or any distributions to common
shareholders other than cash dividends, the Committee shall make such
substitution or adjustment, if any, as it deems to be equitable, as to the
number or kind of shares of Common Stock or other securities issued or reserved
for issuance pursuant to the Plan, and the number or kind of shares of Common
Stock or other securities covered by outstanding Awards, and the price thereof.
In instances where another corporation or other business entity is being
acquired by the Company, and the Company has assumed outstanding employee award
grants and/or the obligation to make future or potential grants under a prior
existing plan of the acquired entity, similar adjustments are permitted at the
discretion of the Committee. The adjustments provided for in this Section 3.3,
and the manner of their application, shall be determined by the Committee in
its sole discretion.
ARTICLE 4 - ADMINISTRATION
4.1 Committee. This Plan will be administered by the Committee. The
Committee will, subject to the terms of this Plan, have the authority to (a)
select the eligible employees who will receive Awards, (b) grant Awards, (c)
determine the number of Awards to be granted to Participants, (d) determine the
terms, conditions, and restrictions applicable to Awards (including the
establishment of Performance Goals pursuant to Section 5.3), (e) adopt, alter,
and repeal administrative rules and practices governing this Plan, (f)
interpret the terms and provisions of this Plan and any Awards granted under
this Plan, (g) prescribe the forms of any Award Agreement, or other instruments
relating to Awards, and (h) otherwise supervise the administration of this
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Plan and exercise such rights and responsibilities as are delegated to it
thereunder. All decisions by the Committee will be made with the approval of
not less than a majority of its members.
4.2 Delegation. The Committee may delegate any of its authority to any
other person or persons that it deems appropriate, provided the delegation does
not cause this Plan or any Awards granted under this Plan to fail to qualify
for the exemption provided by Rule 16b-3 or Section 162(m).
4.3 Decisions Final. All decisions by the Committee, and by any other
person or persons to whom the Committee has delegated authority, will be final
and binding on all persons.
ARTICLE 5 - AWARDS
5.1 General. The Committee may, in its discretion, grant to Participants
Awards valued by reference to shares of Common Stock that are wholly contingent
on the attainment of performance goals established by the Committee in
accordance with the terms of this Plan.
5.2 Grant of Awards. (a) Awards shall be granted to Participants as of
the beginning of a Measurement Period. The payment with respect to the Awards
shall be conditioned on the satisfaction of the performance goals described in
Section 5.3 at the end of the applicable Measurement Period. Once established,
the Committee shall not have discretion to modify the terms of the Awards
except with respect to any discretion specifically granted to the Committee
under this Plan. It is intended that all payments hereunder to Participants
will satisfy the requirements for the exemption under Section 162(m) and
related regulations for "qualified performance-based compensation."
(b) Not later than 90 days after the beginning of the Measurement Period
(or, if earlier, the date on which 25% of the Measurement Period has elapsed),
the Committee shall grant a specified number of Awards to each Participant with
respect to that Measurement Period. No Participant may be granted Awards with
respect to a Measurement Period having as a target amount in excess of the
lesser of (i) an aggregate of 20,000 shares of Common Stock or (ii) a dollar
value of $500,000 based on the Fair Market Value of the target number of shares
of Common Stock
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subject thereto on the first day of the applicable Measurement Period.
(c) At the end of the Measurement Period, the Committee shall determine
the percentage, if any, of the Awards granted to the Participant for that
Measurement Period that are earned by the Participant. That percentage shall
be based on the degree to which the performance goals for that Measurement
Period are satisfied. The formula for determining the correlation between the
percentage of the Awards earned and the level of performance for a Measurement
Period shall be established in writing by the Committee at the time the
performance goals are determined. Prior to the payment of any Awards, the
Committee must certify in writing the degree of attainment of the applicable
performance goals.
5.3 Performance Goals. Performance goals used to compute Awards shall be
adopted by the Committee in writing prior to the grant of any Awards to which
such performance goals apply. The performance goals shall be based on one or
more of the following performance measures: (a) total return to shareholders,
(b) cash flow, (c) return on equity, (d) return on assets, (e) stock price, and
(f) earnings per share. Any such performance goals and the applicable
performance measures will be reflected in each Award Agreement to which such
goals and measures relate. The number of Awards that will be paid out to any
Participant at the end of the applicable Measurement Period will depend on the
extent to which the Company attains the established performance goals, as
established pursuant to Section 5.2(c).
5.4 Nonforfeitability of the Award. (a) General. Except as provided in
Section 5.4(b) and (c) and Article 6, a Participant must remain employed by the
Company until the end of a Measurement Period to receive payment with respect
to any Award.
(b) Death or Disability. Subject to Section 5.4(d), if during a
Measurement Period a Participant terminates employment on account of death or
Disability, (together, a "Qualifying Termination"), such Participant (or in the
case of death, his estate) shall be entitled to a prorated payment with respect
to Awards held by the Participant with respect to that Measurement Period, as
described in the next sentence. The Participant shall be entitled to payment
with respect to a percentage of such
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Awards as set forth below based on the Fiscal Year during the Measurement
Period in which his Qualifying Termination occurs:
FISCAL YEAR PERCENTAGE
----------- ----------
1st 0%
2nd 33-1/3%
3rd 66-2/3%
For purposes of determining the payment with respect to a Participant's Awards
under this Section 5.4(b), it shall be assumed that the Company has achieved
the target level of performance it established for the Measurement Period. If
the Measurement Period is other than three Fiscal Years, then the Committee
shall make appropriate adjustments to the above schedule in its sole
discretion.
Payment with respect to Awards under this Section 5.4(b), if any, will be made
as soon as practicable after the Participant's Qualifying Termination occurs.
(c) Retirement and Certain Terminations. Subject to Section 5.4(d), if a
Participant holding Awards terminates employment on account of Retirement, or
is involuntarily terminated by the Company without Cause before the end of the
applicable Measurement Period, the Participant shall be entitled to payment
with respect to such Awards at the end of such Measurement Period as if he had
remained employed until that time.
(d) Committee Negative Discretion. The Committee may, in its sole
discretion, decide to reduce or eliminate any amount otherwise payable with
respect to an Award under Section 5.4(b) or (c).
5.5 Payment of the Award. A Participant's Award shall be paid as soon as
practicable after the end of the Measurement Period (or, in the case of a
Participant who dies or incurs a Disability and becomes entitled to payment
with respect to an Award pursuant to Section 5.4(b), as soon as practicable
following death or the determination of Disability). Payment shall be made in
shares of Common Stock or, in the discretion of the Committee, all or in part
cash, based on the Fair Market Value of the applicable number of shares of
Common Stock on the payment date.
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ARTICLE 6 - CHANGE OF CONTROL
6.1 Effect of Change of Control. Notwithstanding any provision of this
Plan to the contrary, in the event that a Change of Control occurs, all
conditions applicable to outstanding Awards will be deemed to have been
satisfied at the target level as of the date of the Change of Control. Payment
with respect to such Awards shall be made as soon as practicable after the
Change of Control in accordance with the last sentence of Section 5.5.
ARTICLE 7 - GENERAL
7.1 Nonassignability of Awards. No right or interest of a Participant
under the Plan shall be subject in any manner to anticipation, alienation,
sale, assignment, transfer, encumbrance, pledge, attachment, garnishment by
creditors of the Participant or his successors, or shall be transferable by a
Participant otherwise than by will or the laws of intestate succession. Any
attempt to take an action with respect to an Award which is prohibited by the
preceding sentence shall render such Award null and void.
7.2 No Right or Obligation of Continued Employment. Nothing contained in
this Plan shall require the Company or a related company to continue to employ
a Participant, nor shall the Participant be required to remain in the
employment of the Company or a related company.
7.3 Withholding. The Company shall withhold all required local, state and
federal taxes from any amount payable in respect of an Award, including
withholding of shares of Common Stock otherwise payable pursuant to the Plan.
7.4 Effective Date. This Plan shall be effective as of the latest to
occur of (a) approval by the Company's shareholders and (b) the distribution by
Lockheed Martin Corporation of such number of shares of Common Stock which
results in Lockheed Martin Corporation no longer owning, directly or
indirectly, more than fifteen percent (15%) of the outstanding Common Stock
(the "Split-Off"). If both of the above conditions do not occur by December
31, 1997, all Awards previously granted shall become null and void. Moreover,
no payment shall be made to a Participant pursuant to an Award prior to such
shareholder
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approval being obtained and the Split-Off having occurred. This Section 7.4
shall supersede any other provision of the Plan.
7.5 Amendment and Termination of the Plan. The Plan may be amended or
terminated at any time by the Board of Directors or by the Committee as
delegated by the Board of Directors, provided that such termination or
amendment shall not, without the consent of the Participant, adversely affect
such Participant's rights with respect to Awards previously awarded to him.
Shareholder approval for any amendment is required to the extent necessary to
preserve the exemption for "qualified performance-based compensation" under
Section 162(m). With the consent of the Participant affected, the Board of
Directors, or by delegation of authority by the Board of Directors, the
Committee, may amend outstanding Award Agreements in a manner not inconsistent
with the Plan.
7.6 Binding on Successors. The obligations of the Company under the Plan
shall be binding upon any organization which shall succeed to all or
substantially all of the assets of the Company, or into which the Company may
merge, and the term "Company," whenever used in the Plan, shall mean and
include any such organization after the succession.
7.7 References. Any masculine personal pronoun shall be considered to
mean also the corresponding feminine or neuter personal pronoun, as the context
requires.
7.8 Applicable Law. The Plan shall be governed by and construed in
accordance with the laws of the State of North Carolina.
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IN WITNESS WHEREOF, the Martin Marietta Materials, Inc. Performance Share
Plan is, by the authority of the Board of Directors of the Corporation,
executed as of the 21st day of October, 1996.
MARTIN MARIETTA MATERIALS, INC.
By: /s/ Stephen P. Zelnak, Jr.
---------------------------
Chief Executive Officer
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EXHIBIT 10.07
EMPLOYMENT PROTECTION AGREEMENT
THIS AGREEMENT, between Martin Marietta Materials, Inc., a North Carolina
corporation (the "Company"), and _____________ (the "Employee"), dated as of
this ____ day of October, 1996 (the "Effective Date")
W I T N E S S E T H :
WHEREAS, Employee is a valuable member of management of the Company and
the Company desires to ensure the continuity of its senior management; and
WHEREAS, it is the determination of the Company that management continuity
is most likely to occur if senior management is financially protected against
involuntary termination following a "Change of Control" (as defined below) of
the Company; and
WHEREAS, the Company and the Employee have agreed to enter into this
Agreement to provide the Employee with payments and benefits upon certain
terminations of the Employee's employment with the Company in connection with a
Change of Control, in consideration of the Employee's continued service to the
Company (which the parties hereto agree constitutes adequate consideration to
support to the Company's obligations under this Agreement);
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is hereby agreed by and between the Company and the
Employee as follows:
1. Definitions. For purposes of this Agreement,
(a) "Annual Bonus" shall mean the Employee's highest annual bonus paid
during the period beginning five years prior to a Change of Control and ending
on the date of termination of employment.
(b) "Base Salary" shall mean the highest annual rate of base salary that
Employee receives from the Company or its
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affiliates within the twelve-month period ending on the date of a Change of
Control.
(c) "Board" shall mean the Board of Directors of the Company.
(d) "Cause" shall mean (i) the engaging by the Employee in willful
misconduct that is materially injurious to the Company, (ii) the continued use
of drugs (including alcohol) by the Employee in violation of the Company's then
current Substance Abuse Policy, (iii) the commission by the Employee of an act
of fraud or embezzlement against the Company or (iv)
the Employee's having been convicted of, or pleaded guilty or no contest to, a
felony. For this purpose, no act, or failure to act, on the Employee's part
shall be considered "willful" unless done, or omitted to be done, by him not in
good faith and without reasonable belief that his action or omission was in the
best interest of the Company. The Employee shall not be deemed to have been
terminated for Cause, unless the Company shall have given the Employee (A)
notice setting forth, in reasonable detail, the facts and circumstances claimed
to provide a basis for termination for Cause, (B) a reasonable opportunity for
the Employee, together with his counsel, to be heard before the Board and (C) a
notice of termination stating that, in the reasonable judgment of the Board,
the Employee was guilty of conduct set forth in clauses (i), (ii), (iii) or
(iv) above, and specifying the particulars thereof in reasonable detail.
(e) "Change of Control" shall mean:
(i) The acquisition on or after October 18, 1996 by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person")
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 50% or more of either (A) the fully diluted shares of common
stock of the Company, as reflected on the Company's financial statements (the
"Outstanding Company Common Stock"), or (B) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (i), the following
acquisitions shall not constitute a Change of Control: (X) any acquisition by
the Company or any "affiliate" of the Company, within the meaning of 17 C.F.R.
Section
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230.405 (an "Affiliate"), (Y) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any Affiliate
of the Company or (Z) any acquisition by any entity pursuant to a transaction
which complies with clauses (A), (B) and (C) of subsection (iii) of this
definition; or
(ii) Individuals who constitute the Board as of October 18, 1996
"Incumbent Board") cease for any reason to constitute at least a majority of
the Board; provided, however, that any individual becoming a director
subsequent to October 18, 1996 whose election, or nomination for election by
the Company's shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board; or
(iii) Consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless, following such
Business Combination, (A) all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such Business Combination beneficially own, directly or indirectly,
more than 50% of, respectively, the then outstanding shares of common stock and
the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination (including, without
limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Company's assets either directly or
through one or more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business Combination, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities, as
the case may be, and (B) no Person (excluding any employee benefit plan (or
related trust) sponsored or maintained by the Company or any Affiliate of the
Company, or such corporation resulting from such Business Combination or any
Affiliate of such corporation) beneficially owns, directly or
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indirectly, 50% or more of, respectively, the fully diluted shares of common
stock of the corporation resulting from such Business Combination, as reflected
on such corporation's financial statements, or the combined voting power of the
then outstanding voting securities of such corporation except to the extent
that such ownership existed prior to the Business Combination and (C) at least
a majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(iv) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
(f) "COBRA" shall mean 29 U.S.C. Sections 1161-1168, as amended
from time to time.
(g) "Disability" shall mean a medically determined physical or mental
impairment which qualifies the Employee for benefits under the Company's
long-term disability program. An Employee shall not be deemed to have incurred
a Disability until such benefits actually become payable (i.e., after any
applicable waiting period). If the Company does not maintain a long-term
disability program, or if the Employee does not elect coverage under such
program, Disability shall mean the incapacity of the Employee such that he is
unable to perform his duties to the Company for a period of 150 out of 180
consecutive days, as determined in the reasonable judgment of the Committee.
(h) "Good Reason" shall mean (i) a good faith determination by the
Employee that the Company or any of its officers has (A) taken any action which
materially and adversely changes the Employee's position (including titles),
authority or responsibilities with the Company or reduces the Employee's
ability to carry out his duties and responsibilities with the Company or (B)
has failed to take any action where such failure results in material and
adverse changes in the Employee's position (including titles), authority or
responsibilities with the Company or reduces the Employee's ability to carry
out his duties and responsibilities with the Company; (ii) a reduction in the
Employee's Base Salary or a restriction on the eligibility requirements for
other forms of monetary compensation that is inconsistent with the eligibility
requirements used prior to a
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Change of Control; or (iii) requiring the Employee to be employed at any
location more than 35 miles further from his principal residence than the
location at which the Employee was employed immediately preceding the Change of
Control, in any case of (i), (ii) or (iii) without the Employee's prior written
consent.
(i) "IRS" shall mean the United States Internal Revenue Service.
(j) "Term" shall mean the term of this Agreement as set forth in Section
(k) "Welfare Benefits" shall mean all benefits provided by the Company to
its employees pursuant to an "employee welfare benefit plan" as defined in
Section 3(1) of the Employee Retirement Income Security Act of 1974, as
amended.
2. Effective Date; Term. This Agreement shall be effective as of the
Effective Date, and shall remain in effect for three (3) years following the
Effective Date, after which time this Agreement shall expire; provided,
however, that on the third anniversary of the Effective Date, and on each
subsequent anniversary thereof (each an "Anniversary Date"), the Term of
this Agreement shall automatically be extended for one additional year, unless
at least sixty (60) days prior to such Anniversary Date, either party to this
Agreement gives written notice to the other party of an intent to cancel such
automatic extension, in which case this Agreement shall expire upon the
expiration of the then existing Term; further provided, however, that,
notwithstanding the above, (a) if a Change of Control occurs prior to the
termination of this Agreement, or (b) if prior to the termination of this
Agreement the Board becomes aware of any circumstances which in the ordinary
course result in a Change of Control (whether or not with respect to the party
first coming to the Board's attention), then under no circumstances will this
Agreement terminate prior to the date that is 31 days following the second
anniversary of the Change of Control. Notwithstanding this Section 2, the
Company's obligations under this Agreement shall survive the termination of
this Agreement if all events giving rise to such obligations occurred prior to
such termination.
3. Obligations of the Company upon Termination. If, during the two year
period following the effective date of a Change of Control, the Company
terminates the Employee's
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employment other than for Cause or Disability, or the Employee terminates his
employment for Good Reason or if, during the thirty day period following the
two year anniversary of the effective date of a Change of Control, the Employee
terminates his employment for any reason:
(a) the Company shall pay to the Employee in a lump sum within 15 days
following Employee's termination of employment:
(i) if not theretofore paid, an amount equal to any portion
of the Employee's earned but unpaid Base Salary (including
unused but accrued vacation time) through the date of
termination of employment; and
(ii) a cash amount equal to twice the sum of:
(A) the Employee's annual Base Salary and
(B) the Employee's Annual Bonus.
(b) the Company shall provide, for the period of two years following the
date of Employee's termination of employment, all Welfare Benefits for the
Employee and his dependents and beneficiaries that are at least as favorable in
all material respects as the benefits provided to such person immediately
preceding the Change of Control and to employees employed by the Company or its
successor in positions following the Change of Control that are similar to the
position the Employee held immediately prior to the Change of Control
("Similarly Situated Active Employees"); provided, however, that, with respect
to this Section 3(b), the Employee shall be required to pay the same share of
the cost of such Welfare Benefits as Similarly Situated Active Employees.
4. Certain Additional Payments by the Company
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by the Company to
or for the benefit of the Employee, or any benefit provided by the Company to
the Employee (whether paid or payable or distributed or distributable provided
pursuant to the terms of this Agreement or otherwise, but determined without
regard to any additional payments required
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under this Section 4) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Code (or any successor provision) or any interest or
penalties are incurred by the Employee with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Employee shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Employee of all taxes with respect to the
Gross-Up Payment (including any interest or penalties imposed with respect to
such taxes), including, without limitation, any income taxes (and any interest
and penalties imposed with respect thereto) and Excise Tax imposed upon the
Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payment.
(b) Subject to the provisions of Section 4(c), all determinations required
to be made under this Section 4, including whether and when a Gross-Up Payment
is required and the amount of such Gross-Up Payment and the assumptions to be
utilized in arriving at such determination, shall be made by Ernst & Young or
such other nationally recognized accounting firm then auditing the accounts of
the Company (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Employee within 15 business days of
the receipt of notice from the Employee that there has been a Payment, or such
earlier time as is requested by the Company. In the event that the Accounting
Firm is serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, or is unwilling or unable to perform its
obligations pursuant to this Section 4, the Employee shall appoint another
nationally recognized accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accounting
Firm hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, determined pursuant to this
Section 4, shall be paid by the Company to the Employee within five days of the
receipt of the Accounting Firm's determination. Any determination by the
Accounting Firm shall be binding upon the Company and the Employee. As a
result of the potential uncertainty in the application of Section 4999 of the
Code (or any successor provision) at the time of the initial determination by
the Accounting Firm hereunder, it is possible that Gross-Up Payments which will
not have been made by the Company should have been made ("Underpayment"),
consistent with the calculations required
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to be made hereunder. In the event that the Company exhausts its remedies
pursuant to Section 4(c) and the Employee thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of
the Underpayment that has occurred and any such Underpayment shall be promptly
paid by the Company to or for the benefit of the Employee.
(c) The Employee shall notify the Company in writing of any claim by the
IRS that, if successful, would require the payment by the Company of the
Gross-Up Payment. Such notification shall be given as soon as practicable but
no later than 20 business days after the Employee is informed in writing of
such claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid. The Employee shall not pay
such claim prior to the expiration of the 30-day period following the date on
which he gives such notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is due). If the
Company notifies the Employee in writing prior to the expiration of such period
that it desires to contest such claim, the Employee shall:
(i) give the Company any information
reasonably requested by the Company relating to such
claim,
(ii) take such action in connection with
contesting such claim as the Company shall reasonably
request in writing from time to time, including, without
limitation, accepting legal representation with respect
to such claim by an attorney reasonably selected by the
Company,
(iii) cooperate with the Company in good
faith in order effectively to contest such claim, and
(iv) permit the Company to participate in
any proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Employee harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
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penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of
this Section 4(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Employee to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Employee agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Employee to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Employee, on an interest-free basis, and shall indemnify and
hold the Employee harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect to
such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Employee
with respect to which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Employee shall be entitled to settle or
contest, as the case may be, any other issue raised by the IRS or any other
taxing authority.
(d) If, after the receipt by the Employee of an amount advanced by the
Company pursuant to Section 4(c), the Employee becomes entitled to receive any
refund with respect to such claim, the Employee shall (subject to the Company's
complying with the requirements of Section 4(c)) promptly pay to the Company
the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by the Employee of an
amount advanced by the Company pursuant to Section 4(c), a determination is
made that the Employee shall not be entitled to any refund with respect to such
claim and the Company does not notify the Employee in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid
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and the amount of such advance shall offset, to the extent thereof, the amount
of Gross-Up Payment required to be paid.
5. Other Compensation and Benefits. The amount payable under this
Agreement in accordance with Section 3(a) shall not be reduced on account of
any compensation received by the Employee from other employment. From and
after the date the Employee is employed by a third party which provides any of
the benefits described in Section 3(b), the Company shall not be obligated to
provide the benefits to the extent provided by such third party.
6. Legal Fees and Expenses. The Company shall promptly reimburse the
Employee for the reasonable legal fees and expenses incurred by the Employee in
connection with enforcing any right of the Employee pursuant to and afforded by
this Agreement; provided, however, that the Company only will reimburse the
Employee for such legal fees and expenses if, in connection with enforcing any
right of the Employee pursuant to and afforded by this Agreement, either (a) a
judgment has been rendered in favor of the Employee by a duly authorized court
of law, (b) a duly authorized court of law determines that the Employee's claim
was not frivolous, or (c) the Company and the Employee have entered into a
settlement agreement providing for the payment to the Employee of any or all
amounts due hereunder.
7. Confidential Information. The Employee shall not disclose any secret
or confidential information, knowledge or data relating to the Company or any
of its affiliated companies, and their respective businesses, obtained by the
Employee during his employment by the Company or any of its affiliated
companies and which is not otherwise public knowledge. In no event shall an
asserted violation of the provisions of this Section 7 constitute a basis for
deferring or withholding any amounts or benefits otherwise payable to the
Employee under this Agreement.
8. Release from Other Severance Benefits; COBRA. The Employee hereby
waives and releases the Company from the obligation to pay any severance
benefits to the Employee on account of a termination of employment on or after
a Change of Control, under any termination or severance policy of the Company
other than this Agreement, so long as all payments are made, and benefits
provided, to the Employee pursuant to Sections 3(a) and (b) herein. To the
extent that the obligation of the Company to provide medical benefits pursuant
to Section 3(b) is fulfilled,
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the period in which such medical benefits are provided shall be credited
towards the continued health care coverage required to be offered to the
Employee by COBRA, to the extent allowable under COBRA and the regulations
promulgated thereunder. In the event that no payment or benefits are required
pursuant to Sections 3(a) and (b), the Employee rescinds any such waiver and
release.
9. Successors. (a) This Agreement is personal to the Employee and,
without the prior written consent of the Company, shall not be assignable by
the Employee otherwise than by will or the laws of descent and distribution.
This Agreement shall inure to the benefit of and be enforceable by the
Employee's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors. The Company shall cause any successor to its
business, in any transaction in which this Agreement would not be assumed by
such successor by operation of law, to assume this Agreement by contract.
10. Miscellaneous. (a) Applicable Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of North Carolina,
applied without reference to principles of conflict of laws.
(b) Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Employee:
If to the Company: Martin Marietta Materials, Inc.
2710 Wycliff Road
Raleigh, North Carolina 27607
Attention: [General Counsel]
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notices and communications shall be effective
when actually received by the addressee.
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(c) Tax Withholding. The Company may withhold from any amounts payable
under this Agreement such Federal, state or local taxes as shall be required to
be withheld pursuant to any applicable law or regulation.
IN WITNESS WHEREOF, the Employee has hereunto set his hand and the Company
has caused this Agreement to be executed in its name on its behalf, as of the
day and year first above written.
MARTIN MARIETTA MATERIALS, INC.
By:
--------------------------------
EMPLOYEE
-----------------------------------
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EXHIBIT 10.08
MARTIN MARIETTA MATERIALS, INC.
COMMON STOCK PURCHASE PLAN
FOR DIRECTORS
SECTION 1. PURPOSE. The purpose of the Martin Marietta Materials, Inc.
Common Stock Purchase Plan for Directors (the "Plan") is to provide to
non-employee directors of Martin Marietta Materials, Inc. (the "Company") the
opportunity to elect to receive all or a portion of their retainer fees in the
form of common stock of the Company and to elect to defer payment of all or a
portion of such retainer fees. The Plan shall be first effective upon its
adoption by the Board of Directors and approval by the Company's shareholders,
subject to the distribution by Lockheed Martin Corporation of such number of
shares of "Stock" (as defined in Section 2(n)), which results in Lockheed
Martin Corporation no longer owning, directly or indirectly, more than fifteen
percent (15%) of the outstanding Stock (the "Effective Date").
SECTION 2. DEFINITIONS. As used in the Plan, the following terms shall
have the meanings set forth below:
(a) "Annual Fees" means the amount paid by the Company to a Non-Employee
Director as annual fees for services to be rendered as a member of the Board of
Directors during any Plan Year, including annual retainer, meeting attendance
fees and fees otherwise payable for acting on or as a member of the Board of
Directors or any committee thereof, but not including reimbursements of
expenses.
(b) "Beneficiary" means a person designated by a Participant in accordance
with Section 9 to receive the benefits specified hereunder in the event of the
Participant's death or, if there is no surviving designated Beneficiary, the
Participant's estate.
(c) "Board of Directors" means the Board of Directors of the Company.
(d) "Cash Deferral Account" means the account established and maintained
by the Company for each Participant, which is to be credited, as set forth in
Section 7, with the portion of a Participant's Annual Fees which is payable in
cash and deferred pursuant to the Plan. Amounts credited to a Participant's
Cash Deferral Account will be expressed as a dollar amount. Cash Deferral
Accounts will be maintained by the Company solely as bookkeeping entries.
(e) "Committee" means the Compensation Committee of the Board of
Directors.
(f) "Director Purchase Price" means, with respect to each Fee Payment
Date, the Fair Market Value of one share of Stock on such Fee Payment Date;
provided, however, that the Board of Directors, in its sole discretion, may
provide that the Director Purchase Price includes a percentage discount from
the Fair Market Value of one share of Stock on any specific Fee Payment Date.
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(g) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
(h) "Fair Market Value" means the closing price of a share of Stock on the
relevant date or, if no sale was made on such date, then on the next preceding
day on which such a sale was made (a) if the Stock is listed on the New York
Stock Exchange ("NYSE"), as reported in the Wall Street Journal, or (b) if the
Stock is not listed on the NYSE but is listed on the NASDAQ National Market
System, then as reported on such system, or (c) if not listed on either the
NYSE or the NASDAQ National Market System, as determined by the Board of
Directors or Committee.
(i) "Fee Payment Date" means each date on which all or any portion of the
Annual Fees is scheduled to be paid.
(j) "Financial Hardship" means severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of the
Participant or a dependent, loss of the Participant's property due to casualty,
or other similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Participant. The circumstances that
will constitute a Financial Hardship will depend upon the facts of each case
and will be determined by the Committee in its sole discretion, but
distributions may not be made to the extent that such hardship is or may be
relieved (i) through reimbursement or compensation by insurance or otherwise or
(ii) by liquidation of the Participant's assets, to the extent the liquidation
of such assets would not itself cause severe financial hardship.
(k) "Non-Employee Director" means a member of the Board of Directors who,
on the first day of any Plan Year (or such later date as he is first elected or
appointed to the Board of Directors), is not an employee of the Company or any
affiliate thereof.
(l) "Participant" means any Non-Employee Director who elects under the
Plan to receive payment of all or a portion of his Annual Fees in the form of
Stock or to defer payment of all or a portion of his Annual Fees.
(m) "Plan Year" means each year beginning on the first day of January and
ending on the 31st day of December; provided that the first Plan Year means the
period beginning on the Effective Date and ending on December 31, 1996.
(n) "Stock" means the common stock of the Company, $.01 par value per
share.
(o) "Stock Deferral Account" means the account established and maintained
by the Company for each Participant, which is to be credited, as set forth in
Section 6, with the portion of a Participant's Annual Fees which is payable in
Stock and deferred pursuant to the Plan. Amounts credited to a Participant's
Stock Deferral Account will be expressed as a number of Stock Equivalents and
cash, if any. Stock Deferral Accounts will be maintained by the Company solely
as bookkeeping entries.
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(p) "Stock Equivalent" means a unit of measurement which, when credited to
the Stock Deferral Account of a Participant, shall represent the right to
receive one share of Stock upon payment of amounts credited to such Stock
Deferral Account.
SECTION 3. PARTICIPATION.
(a) Only Non-Employee Directors may participate in the Plan.
Participation in the Plan is voluntary, except as may be determined in
accordance with Section 5(b).
(b) Prior to the December 15 preceding a Plan Year, or such other date(s)
as determined by the Committee, each Non-Employee Director may irrevocably
elect to participate in the Plan for the Plan Year by a written notice to the
Committee described in Section 5; provided, however, that the Committee may
establish procedures and forms which are applicable to all Non-Employee
Directors under which Non-Employee Directors may elect to participate in the
Plan on a prospective basis as of some other date(s) specified in such
procedures; further, provided, however, that a Participant's election to
participate in the Plan for any Plan Year shall remain in effect for subsequent
Plan Years unless revoked or changed by the Participant prior to the December
15 preceding the Plan Year with respect to which such revocation or change is
effective.
(c) Notwithstanding paragraph (b) of this Section, (i) a Non-Employee
Director will have 30 days following the Effective Date to irrevocably elect to
participate for the first Plan Year by a written notice to the Committee
described in Section 5 and (ii) a Non-Employee Director who first becomes a
Non-Employee Director during any Plan Year will have 30 days following the date
he first becomes a Non-Employee Director to elect to participate in the Plan
for such Plan Year by a written notice to the Committee described in Section 5;
provided, however, that in either case such election shall apply only to the
portion of the Annual Fees earned following the date on which the Committee
receives such written notice.
(d) Each election made pursuant to this Section 3 is subject to the
approval of the Committee unless the Committee determines that such approval is
not necessary to enable transactions in Stock pursuant to the Plan to qualify
for the exemption provided by Rule 16b-3 promulgated under the Securities
Exchange Act of 1934.
(e) A Participant ceases to be a Participant on the date of he ceases to
be a Non-Employee Director.
SECTION 4. ADMINISTRATION. The Committee shall serve as the
administrator of the Plan. The Committee shall administer and enforce the Plan
in accordance with its terms, and shall have all powers necessary to accomplish
those purposes, including but not limited to the following:
(a) To compute and certify the amounts payable to Participants
and their Beneficiaries;
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(b) To maintain or to designate any person or entity to maintain
all records necessary for the administration of the Plan;
(c) To make and publish such rules for the Plan as are not
inconsistent with the terms hereof; and
(d) To provide for disclosure of such information, including
reports and statements to Participants or Beneficiaries, and to
provide for the making of applications and elections by Participants
under the Plan as may be required by the Plan or otherwise deemed
appropriate by the Committee.
Notwithstanding the above, no person who serves on the Committee shall
participate in any matter which involves solely a determination of the benefits
payable to him under the Plan. Any action of the Committee with respect to the
Plan shall be conclusive and binding upon all Participants and Beneficiaries
except to the extent otherwise specifically indicated herein. The Committee
may appoint agents and delegate thereto such powers and duties in connection
with the administration of the Plan as the Committee may from time to time
prescribe.
(b) Annual Statements. As soon as practicable following the end of each
Plan Year, the Committee shall furnish to each Participant a statement
indicating the number of Stock Equivalents and the amount of cash credited to
his Stock Deferral Account and his Cash Deferral Account as of the end of such
Plan Year.
SECTION 5. ELECTIONS BY PARTICIPANTS.
(a) Each Participant must irrevocably elect, in accordance with the
procedure set forth in Section 3, the following:
(1) The percentages (up to 100% and in 10% increments) of his
Annual Fees to be received in the form of Stock and in the form of
cash;
(2) A percentage (up to 100% and in 10% increments) of his Annual
Fees to be received in the form of Stock to be deferred under the
Plan and credited as Stock Equivalents to his Stock Deferral Account
and a percentage (up to 100% and in 10% increments) of his Annual
Fees to be received in the form of cash to be deferred under the
Plan and credited to his Cash Deferral Account; and
(3) The date on which such Participant's Stock Deferral Account
and Cash Deferral Account shall be paid or commence to be paid and
the form in which such payments shall be made, subject to the
limitations described in Section 8.
In the event the Annual Fees of a Participant is increased during any Plan
Year, his elections in effect shall apply to the amount of such increase.
(b) Notwithstanding the Participant's elections made in accordance with
paragraph (a) of this Section, prior to the December 15 preceding a Plan Year,
the Board of Directors may, in
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its sole discretion, determine the proportion of each Non-Employee Director's
Annual Fees which must be paid in Stock for the next following Plan Year. If
it does so, the Participant's election under Section 5(a)(1) above with respect
to such Plan Year shall apply to any excess amount of the Annual Fees remaining
after payment is made in accordance with the Board of Directors' determination,
and the Participant's elections under Section 5(a)(2) and (3) above shall
remain in effect and apply to the amount of Annual Fees payable in cash and
Stock after application of the previous sentence.
SECTION 6. STOCK DEFERRAL ACCOUNTS.
(a) Crediting of Annual Fees. The percentage of each Participant's Annual
Fees which he elects to receive in the form of Stock and defer with respect to
a Plan Year in accordance with Section 5 shall be credited to the Participant's
Stock Deferral Account on each Fee Payment Date during the Plan Year, and shall
be converted into that number of Stock Equivalents (rounded down to the nearest
whole share) equal to the amount so credited divided by the Director Purchase
Price.
(b) Crediting of Dividend Equivalents. In the event a dividend is paid in
respect of the Stock, an amount equal to such dividend multiplied by the number
of Stock Equivalents credited to a Participant's Stock Deferral Account as of
the record date for such dividend shall be credited to the Participant's Cash
Deferral Account, effective as of the date such dividend is actually paid on
the Stock.
(c) Adjustments to Deferral Accounts. The number of Stock Equivalents
credited to each Participant's Stock Deferral Account shall be appropriately
and equitably adjusted to reflect the occurrence of any merger, consolidation,
recapitalization, stock split, reverse stock split, stock dividend or other
non-cash distribution affecting the outstanding Stock. Such adjustment shall
be made by the Committee.
(d) Effect of Payments. The number of Stock Equivalents and the amount of
cash, if any, credited to a Participant's Stock Deferral Account shall be
reduced by the number of shares of Stock and the amount of cash actually paid
to such Participant or his Beneficiary under the Plan.
(e) Vesting. The interest of a Participant in any amounts payable with
respect to a Stock Deferral Account shall be at all times fully vested and
non-forfeitable.
SECTION 7. CASH DEFERRAL ACCOUNTS.
(a) Crediting of Annual Fees and Dividend Equivalents. The percentage of
each Participant's Annual Fees which he elects to receive in the form of cash
and defer with respect to a Plan Year in accordance with Section 5 shall be
credited to the Participant's Cash Deferral Account on each Fee Payment Date
during the Plan Year. Dividend Equivalents will be credited to a
Participant's Cash Deferral Account in accordance with Section 6(b).
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(b) Crediting of Interest. Interest shall be credited on and posted to
each Cash Deferral Account as of the last day of each calendar month beginning
the first calendar month following the effective date of the first deferral and
ending the last calendar month immediately preceding the date on which such
amounts are distributed to the Participant, at an annual rate as determined by
the Committee.
(c) Effect of Payments. The amount of cash credited to a Participant's
Cash Deferral Account shall be reduced by the amount of cash paid to such
Participant or his Beneficiary under the Plan.
(d) Vesting. The interest of a Participant in any amounts payable with
respect to a Cash Deferral Account shall be at all times fully vested and
non-forfeitable.
SECTION 8. PAYMENTS.
(a) General. At each time payment of all or a portion of a Participant's
Stock Deferral Account and/or Cash Deferral Account is due pursuant to an
election made in accordance with Section 5 (or pursuant to the death of a
Participant in accordance with Section 8(d)), the Company shall pay Stock and
cash directly to such Participant or his Beneficiary in an amount equal to the
portion of his Stock Deferral Account and/or Cash Deferral Account which is so
payable. Payable amounts expressed in the form of Stock Equivalents shall be
paid in Stock, and payable amounts expressed in the form of cash shall be paid
in cash. The Company shall make such payment directly to the Participant from
its general assets and authorized but unissued Stock; provided, however, that
in the event no authorized but unissued Stock is available, payable amounts
from a Participant's Stock Deferral Account expressed in the form of Stock
Equivalents may be deferred for up to six months at the discretion of the
Committee pending the availability of such Stock, and if payment has not been
made at the end of such six-month period, payment shall be promptly made by the
Company in the form of cash, in an amount equal to the Fair Market Value of the
Stock represented by such Stock Equivalents as of the date of payment.
(b) Date of Commencement. The payment of a Participant's Stock Deferral
Account and Cash Deferral Account shall commence on the date selected by the
Participant in the irrevocable election described in Section 5; provided,
however, that in no event shall such payment commence later than the date which
is two years following the date on which the Participant ceases to be a
Non-Employee Director for any reason.
(c) Form of Payment. A Participant may elect to receive the payment of
his Stock Deferral Account and Cash Deferral Account in the form of (i) a
single lump sum, or (ii) substantially equal annual installments for a period
of up to five years.
(d) Payment Upon Death. If a Participant dies before payment of his Stock
Deferral Account and Cash Deferral Account is completed, the balance remaining
in such accounts shall be paid to the Participant's Beneficiary in one lump sum
as soon as practicable following the Participant's death.
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(e) Dividends. Stock Equivalents credited to a Participant's Stock
Deferral Account shall continue to be credited with dividends as described in
Section 6(b) notwithstanding that such Participant has ceased to be a
Non-Employee Director.
(f) Interest. Cash credited to a Participant's Cash Deferral Account
shall continue to be credited with interest as described in Section 7(b)
notwithstanding that such Participant has ceased to be a Non-Employee Director.
(g) Financial Hardship. Notwithstanding anything herein to the contrary,
a Participant may request and receive a hardship distribution, provided the
Participant is able to demonstrate, to the satisfaction of the Committee, that
he has suffered a Financial Hardship. A hardship distribution request must be
made on the form provided by the Committee and is subject to the discretion of
the Committee. The amount distributed cannot exceed the lesser of (a) the
aggregate of the Participant's Cash Deferral Account and Stock Deferral
Account, or (b) the amount necessary to satisfy the Participant's Financial
Hardship. No distribution may be made prior to the time the Committee approves
the distribution.
SECTION 9. DESIGNATION OF BENEFICIARIES. A Participant may designate one
or more Beneficiaries to receive the amounts payable from the Participant's
Stock Deferral Account and Cash Deferral Account under the Plan in the event of
such Participant's death. Such designations shall be made on forms provided by
the Committee. A Participant may from time to time change his designated
Beneficiaries, without the consent of such Beneficiaries, by filing a new
designation in writing with the Committee. The Company and Committee may rely
conclusively upon the Beneficiary designation last filed in accordance with the
terms of the Plan.
SECTION 10. AMENDMENTS TO THE PLAN; TERMINATION OF THE PLAN. The Board
of Directors of the Company may amend, alter, suspend, discontinue or terminate
the Plan without the consent of any Participant; provided, however, that no
such amendment, alteration, suspension, discontinuation, or termination of the
Plan shall materially and adversely affect the rights of such Participant with
respect to payment of amounts previously credited to such Participant's Stock
Deferral Account and Cash Deferral Account. The Plan has no fixed termination
date.
SECTION 11. GENERAL PROVISIONS.
(a) Limits on Transfer of Rights; Beneficiaries. No right or interest of
a Participant under the Plan shall be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, attachment or
garnishment by creditors of the Participant or his Beneficiary, or shall be
transferable by a Participant otherwise than by will or the laws of descent and
distribution; provided, however, that a Participant may designate a Beneficiary
in accordance with Section 9 to receive any payment under the Plan in the event
of death of the Participant. A Beneficiary, guardian, legal representative or
other person claiming any rights under the Plan from or through any Participant
shall be subject to all terms and conditions of the Plan applicable to such
Participant.
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(b) Status of the Plan. The Plan is intended to be "unfunded" for Federal
income tax purposes. The Plan shall not cover any employee of the Company and
is not intended to be subject to ERISA. With respect to any payment not yet
made to a Participant under the Plan, nothing contained in the Plan shall give
a Participant any rights that are greater than those of a general creditor of
the Company.
(c) No Rights of a Shareholder. No Participant shall have any of the
rights or privileges of a shareholder of the Company as a result of the making
of an election under Section 5 of the Plan, or as a result of the establishing
of or crediting of any amounts to a Stock Deferral Account under the Plan,
until Stock is actually distributed to the Participant pursuant to Section 8 of
the Plan.
(d) No Right to Continued Election as a Director. Nothing contained in
the Plan shall confer, and no establishment of or crediting of any amounts to a
Stock Deferral Account or Cash Deferral Account shall be construed as
conferring, upon any Participant, any right to continue as a member of the
Board of Directors, or to interfere in any way with the right of the Company to
increase or decrease the amount of the Annual Fees, or any other compensation
payable to Non-Employee Directors.
(e) Plan Expenses. All expenses and costs incurred in connection with the
operation of the Plan shall be borne by the Company.
(f) 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 North Carolina, without giving effect to principles
of conflicts of laws.
(g) Interpretation. Whenever necessary or appropriate in the Plan, where
the context admits, the singular term and the related pronouns shall include
the plural and the masculine gender shall include the feminine gender.
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EXHIBIT 10.09
SUPPLEMENTAL TAX SHARING AGREEMENT
This SUPPLEMENTAL TAX SHARING AGREEMENT (this "Agreement"), dated as
of September 13, 1996, is made and entered into by and between LOCKHEED MARTIN
CORPORATION, a Maryland corporation ("Lockheed Martin"), and MARTIN MARIETTA
MATERIALS, INC., a North Carolina corporation ("Materials").
RECITALS
1. Materials is a New York Stock Exchange listed corporation.
Lockheed Martin owns, directly or indirectly through its wholly owned
subsidiary, Martin Marietta Investments, Inc., 37,350,000 shares (approximately
81% of the outstanding shares) of Materials Common Stock (as defined in Section
1.1).
2. Lockheed Martin has determined to distribute all of the shares
it owns in Materials to Lockheed Martin stockholders by means of a transaction
(the "Transaction") intended to qualify as a Tax-Free Distribution (as defined
in Section 1.1).
3. Due to compelling strategic business considerations, Lockheed
Martin's and Materials' Boards of Directors have determined that it is in the
best interests of the corporations and their stockholders and shareholders to
effect the Transaction.
4. The Board of Directors of Materials has determined that
Materials will realize significant independent benefits as a result of the
Transaction, which benefits will include, among other things: (a) facilitating
the future issuance by Materials of its stock to finance strategic acquisitions
in pursuit of its growth strategy; (b) permitting Materials to implement more
effective management stock incentive programs and employee stock compensation
programs; (c) permitting Materials to have direct control over its
administrative costs; and (d) allowing Materials' credit rating to be evaluated
independently of Lockheed Martin's credit rating.
4. Lockheed Martin and Materials desire to provide for the
allocation of the tax liabilities that would result in the event of a Failure
(as defined in Section 1.1).
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each of Lockheed
Martin and Materials, intending to be legally bound, hereby agrees as follows:
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ARTICLE I.
DEFINITIONS AND CONSTRUCTION
Section 1.1 Certain Definitions. As used in this Agreement, the
following terms shall have the meanings specified below:
"Code" shall mean the Internal Revenue Code of 1986, as amended, or
any successor thereto, as in effect for the taxable period in question.
"Distribution Tax" shall mean any federal or state tax imposed on a
Person as a result of a Failure, together with any related interest, penalties
or additions to tax.
"Failure" shall mean the failure of the Transaction for any reason
whatsoever to constitute a Tax-Free Distribution under Section 355 of the
Code.
"Fault" shall mean, with respect to each party, and except as
otherwise provided by Section 2.3 of the Tax Assurance Agreement,
responsibility for a Failure where (a) such party engaged in the conduct
described in, or otherwise breached, any of the following sections of the Tax
Assurance Agreement: (i) in the case of Materials, Section 2.1, 2.2, 2.4 or
2.5 of the Tax Assurance Agreement or (ii) in the case of Lockheed Martin,
Section 2.5 of the Tax Assurance Agreement and (b) but for such conduct or
breach the Transaction would have been a Tax-Free Distribution; provided,
however, that any misrepresentation by either party made in connection with the
King & Spalding Opinion shall not constitute Fault. For purposes of clause (b)
of the preceding sentence, in making the determination of whether conduct that
is the subject of this Agreement is the "but for" cause of the Failure, the
only conduct or action that could constitute the "but for" cause of the Failure
is (y) if the government has determined a deficiency and issued a statutory
notice of deficiency, any conduct or action identified in either the statutory
notice of deficiency or the answer to Lockheed Martin's Tax Court petition, or
in the answer to a suit for refund if the issue arises in that posture, as
forming the basis for the government's position that there has been a Failure
and, if a court of competent jurisdiction makes a final determination which is
not subject to appeal that there has been a Failure, any conduct or action
identified in the written decision of that court as a cause of the Failure and
(z) in all other instances, any conduct or action so identified by the
government in writing in connection with its examination of the Lockheed Martin
tax return or any resulting administrative appeal (collectively, the
"Identified Conduct"). For purposes of this Agreement, (a) no conduct or
action other than Identified Conduct may be deemed to have caused the Failure,
(b) the fact that Identified Conduct could constitute the "but for" cause of
the Failure for purposes of this Agreement is not dispositive as to whether any
particular Identified Conduct is in fact the "but for" cause of the Failure and
such determination will be resolved between the parties by agreement or through
litigation, and (c) the Transaction otherwise shall be deemed to have been a
Tax-Free Distribution.
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"King & Spalding Opinion" shall mean the opinions of King & Spalding
which will be delivered in connection with the closing of the Transaction
stating that the Transaction will qualify as a Tax-Free Distribution.
"Materials Common Stock" shall mean the shares of common stock of
Materials, par value $.01 per share.
"Opinion of Counsel" shall mean a written opinion of counsel, other
than the King & Spalding Opinion, delivered to Materials relating to the
taxability of the Transaction, which opinion is of a strength and character
appropriate to the issues at stake and which opinion and counsel are reasonably
satisfactory to Lockheed Martin. For this purpose, the parties agree that
Sutherland, Asbill & Brennan will be deemed satisfactory counsel. Such Opinion
of Counsel shall be (a) obtained from approved counsel that (i) is engaged by
Materials for the purpose of providing such Opinion of Counsel prior to
Materials' taking substantial steps toward consummating the action that is to
be the subject of the Opinion of Counsel and (ii) is, from the time of its
engagement, actively involved by Materials in Materials' consideration, review
or evaluation of the proposed action or conduct, (b) delivered, together with
copies of supporting documentation relied upon in such Opinion of Counsel, to
Lockheed Martin in sufficient time prior to Materials' consummation of the
action that is the subject of such Opinion of Counsel to allow Lockheed Martin
a reasonable opportunity to review the Opinion of Counsel prior to Materials'
consummation of the action that is the subject of the Opinion of Counsel, and
(c) brought current, with no changes except as expressly agreed by Lockheed
Martin in writing as of the date that Materials consummates the action. In
addition, such Opinion of Counsel shall expressly provide that Lockheed Martin
is entitled to rely thereon. Such Opinion of Counsel must state that the
proposed action or conduct, or in the case of a request under Section 2.5(a) of
the Tax Assurance Agreement, the failure to satisfy such request, will neither
cause the Transaction to fail to qualify under Section 355 of the Code nor
cause the distribution to be a disqualified distribution under Section 355(d)
of the Code, without any qualification other than those in the King & Spalding
Opinion or those which are otherwise acceptable to the parties. Such Opinion
of Counsel (a) may assume the accuracy of the facts and assumptions relied upon
in the King & Spalding Opinion, but only as of the date of the King & Spalding
Opinion, (b) may rely upon written representations, appropriate to the issues
at stake, of parties to the action or conduct which representations have been
subject to due diligence by the approved counsel which due diligence shall be
described in the Opinion of Counsel in reasonable detail, and (c) may assume
that the Transaction would qualify as a Tax-Free Distribution except that such
assumption shall not extend to (i) the action or conduct which is the subject
of the Opinion of Counsel and (ii) other action or conduct of Materials that is
described in Section 2.1, 2.2, 2.4 or 2.5 of the Tax Assurance Agreement and
for which an Opinion of Counsel has not been obtained. Such Opinion of Counsel
shall be deemed satisfactory to Lockheed Martin unless written notice that it
is unsatisfactory with specifications as to the reasons is given to Materials
as soon as practicable, but no later than 30 days after delivery to Lockheed
Martin pursuant to the notice provisions of Section 3.4 of both such Opinion of
Counsel and the supporting documentation identified in such Opinion of Counsel
as being relied upon.
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"Person" shall mean an individual, a general partnership, a limited
partnership, a limited liability company, an association, a joint venture, a
corporation, a business, a trust, any entity organized under applicable law, an
unincorporated organization or any governmental authority.
"Tax Assurance Agreement" shall mean the Tax Assurance Agreement, by
and between Lockheed Martin and Materials, entered into in connection with the
Transaction.
"Tax-Free Distribution" shall mean a distribution qualifying under
Section 355 of the Code that is free from federal income taxes except for taxes
resulting from the recognition of gain or income under the consolidated return
regulations (i.e., taking into account gain from intercompany transactions or
income attributable to excess loss accounts) and gain recognized on the receipt
of cash paid in lieu of fractional shares. Thus, for example, a distribution
for which gain is recognized as the result of a disqualified distribution
within the meaning of Section 355(d) of the Code is not a Tax-Free
Distribution.
Section 1.2 Interpretation and Construction of this Agreement.
The definitions in Section 1.1 shall apply equally to both the singular and
plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine or neuter form.
The words "include," "includes" and "including" shall be deemed to be followed
by the phrase "without limitation." The headings contained in this Agreement
are inserted for convenience only and shall not constitute a part hereof. All
references herein to Articles and Sections (other than references to Sections
of the Code) shall be deemed to be references to Articles and Sections of this
Agreement unless the context shall otherwise require. Unless the context shall
otherwise require or provide, any reference to any agreement or other
instrument or statute or regulation is to such agreement, instrument, statute
or regulation as amended and supplemented from time to time (and, in the case
of a statute or regulation, to any successor provision), provided, however,
that no covenant herein shall be deemed to have been breached because of a
change in law or regulation which is enacted or issued subsequent to the
completion of the action or conduct which is the subject of the covenant. This
Agreement shall be construed in accordance with its fair meaning and shall not
be construed strictly against the drafter.
ARTICLE II.
INDEMNIFICATION
Section 2.1 Indemnification for a Failure for Any Reason Other
Than Fault. Lockheed Martin and Materials agree that any liability of Lockheed
Martin or Materials for Distribution Taxes to any Person resulting from a
Failure, other than liability arising under Section 2.2 or 2.3, shall be
allocated 81 percent to Lockheed Martin and 19 percent to Materials, provided,
however, that the aggregate liability of Materials under this Section 2.1
(including the sum of the costs, if any, incurred and borne by Materials
pursuant to Section 2.5(a) of the Tax Assurance Agreement), whether such
liability is the result of one or a number of disputes, shall in no event
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exceed $25 million. Lockheed Martin agrees to indemnify and hold harmless
Materials for any liability for Distribution Taxes resulting from a Failure,
other than liability arising under Section 2.2 or 2.3, imposed upon Materials
in excess of the liability allocated to Materials under this Section 2.1.
Section 2.2 Indemnification for a Failure Because of Fault.
Lockheed Martin and Materials each agrees to indemnify and hold harmless the
other for any liability for Distribution Taxes to any Person resulting from a
Failure as a result of the Fault of the indemnifying party.
Section 2.3 Indemnification for Liability Arising From a Hostile
Takeover. Excluding any acquisition of Materials with respect to which it
obtains an Opinion of Counsel, if either Lockheed Martin or Materials is
acquired in a manner that causes a Failure, and the Failure did not result from
the Fault of either party, the liability of Lockheed Martin and Materials for
Distribution Taxes to any Person resulting from such Failure shall be allocated
solely to the party so acquired. To the extent that this Section 2.3 is
applicable, it shall apply with respect to any liability arising from the
Failure, and Sections 2.1 and 2.2 shall not apply to such extent.
Section 2.4 Exclusive Remedy. The remedies provided in this
Article II constitute the sole and exclusive remedies for recoveries by each of
the parties against the other arising out of, based upon, or in connection with
a Failure. Neither Lockheed Martin nor Materials shall assert any right or
make any claim to recover or seek relief for a Failure on any basis other than
as provided in this Agreement, including, but not limited to, rights or claims
in contract or tort (including fraud and fraudulent misrepresentation), at law
or in equity, under common law or statute, or otherwise. Each of Lockheed
Martin and Materials waives any and all such rights or claims except for rights
or claims arising pursuant to the express terms of this Agreement and the Tax
Assurance Agreement.
Section 2.5 Notice of Investigation. If either Lockheed Martin
or Materials receives any written notice that a taxing authority is considering
treating the Transaction as not qualifying under Section 355 of the Code or as
constituting a disqualified distribution within the meaning of Section 355(d)
of the Code, the party receiving such notice shall promptly give written notice
thereof to the other party. Each party agrees that from and after such time as
it obtains knowledge that any representative of a taxing authority has formally
begun to investigate or inquire as to the tax-free status of the Transaction,
it will notify the other, consult with the other from time to time as to the
conduct of such investigation or inquiry, and provide the other with copies of
all correspondence between it or its representatives and such taxing authority
pertaining to such investigation or inquiry. Each party agrees that, from such
time as the taxing authorities have proposed an adjustment based upon the
Transaction not constituting a Tax-Free Distribution, it shall, to the extent
possible, arrange for a representative of the other to be present at all
meetings with such taxing authority or any representative thereof pertaining to
such investigation or inquiry, permit the other to consult with respect to such
disputes, and, if the other party may be liable under Section 2.2 or 2.3,
permit the other to participate in the resolution of any such disputes.
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6
Section 2.6 Tax Benefit. In determining any liability for
indemnification under this Article II, the parties shall take into account the
extent of any tax benefit realized by the indemnitee with respect to the
obligation for which there is an indemnification obligation under this
Agreement.
ARTICLE III.
PROCEDURAL AND OTHER MATTERS
Section 3.1 Forms 1099. Lockheed Martin shall file on behalf of
and at the expense of Materials all Forms 1099 due with respect to the receipt
by Materials' shareholders of any cash paid in lieu of fractional shares in the
Transaction.
Section 3.2 Form of Payment. Whenever payment is required under
this Agreement, payment shall be made in cash by wire transfer of immediately
available funds.
Section 3.3 Character of Payments; Gross-Up. All payments made
by any party pursuant to this Agreement or Section 2.5(a) of the Tax Assurance
Agreement shall be treated as the discharge of liabilities incurred by such
party in connection with the Transaction. If, notwithstanding such treatment
by the parties, payment by any party is finally determined to be taxable to the
other party by any taxing authority, there shall be a gross-up with respect to
such payment to such other party to the extent necessary to fully indemnify the
indemnitee on an after-tax basis. The amount of such gross-up shall be
determined consistent with all of the principles contained in this Agreement
and the Tax Assurance Agreement. Thus, for example, the gross-up payment, as
well as the amount of the indemnified liability, shall take into account the
extent of the tax benefits, if any, realized by the indemnitee with respect to
the obligation for which there is an indemnification obligation under this
Agreement or the Tax Assurance Agreement, and if the indemnification arises
under Section 2.1 of this Agreement (or Section 2.5(a) of the Tax Assurance
Agreement), all costs and the amount of the gross-up shall be apportioned 81%
to Lockheed Martin and 19% to Materials, subject to any applicable limitations
on the aggregate liability of Materials. Any such gross-up with respect to the
liabilities that may arise under Section 2.1 or the Tax Assurance Agreement
shall be treated as a liability of Materials for the purpose of determining its
aggregate liability under Section 2.1 such that, notwithstanding such gross-up,
Materials' aggregate liability shall be limited to $25 million.
Section 3.4 Notices. Any notice, demand, claim or other
communication under this Agreement shall be in writing and shall be deemed to
have been given on the earliest of the following:
(a) upon the delivery thereof if delivered personally;
(b) on the date on which delivery thereof is guaranteed
by the carrier if delivered by a national courier
guaranteeing delivery within a fixed number of days
of sending; or
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7
(c) on the date on which facsimile transmission thereof is
confirmed "OK" by the receiving machine if transmitted by
facsimile machine and confirmed by delivery by one of the
prior methods;
but, in each case, only if addressed to the parties in the following manner at
the following addresses or facsimile numbers ("Fax") (or at such other address
or other facsimile number as a party may specify by written notice to the
other):
Lockheed Martin: Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: Senior Vice President and General Counsel
URGENT: NOTICE UNDER LOCKHEED
MARTIN/MATERIALS TAX
AGREEMENT
Tel: (301) 897-6125
Fax: (301) 897-6791
With a copy to: Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: Vice President and General Tax Counsel
URGENT: NOTICE UNDER LOCKHEED
MARTIN/MATERIALS TAX
AGREEMENT
Tel: (301) 897-6063
Fax: (301) 897-6880
Materials: Martin Marietta Materials, Inc.
2710 Wycliff Road
Raleigh, North Carolina 27607
Attention: Vice President and Chief Financial Officer
URGENT: NOTICE UNDER LOCKHEED
MARTIN/MATERIALS TAX
AGREEMENT
Tel: (919) 783-4658
Fax: (919) 510-4700
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8
With a copy to: Martin Marietta Materials, Inc.
2710 Wycliff Road
Raleigh, North Carolina 27607
Attention: Vice President and General Counsel
URGENT: NOTICE UNDER LOCKHEED
MARTIN/MATERIALS TAX
AGREEMENT
Tel: (919) 783-4506
Fax: (919) 783-4535
ARTICLE IV.
MISCELLANEOUS PROVISIONS
Section 4.1 Tax Sharing Agreement. The Tax Sharing Agreement,
dated as of February 18, 1994, by and between Martin Marietta Corporation, a
Maryland corporation and a predecessor-in-interest to Lockheed Martin, and
Materials (the "Tax Sharing Agreement"), shall remain in full force and effect
in accordance with its terms and is not amended or otherwise modified by this
Agreement.
Section 4.2 Entire Agreement. This Agreement, together with the
Tax Sharing Agreement and the Tax Assurance Agreement, embodies the entire
agreement and understanding of the parties in respect of the subject matter
contained herein and in those documents. This provision shall not abrogate any
other agreement or understanding between the parties dealing with a different
subject matter that was executed contemporaneously with this Agreement. Except
with respect to any subsequent written modifications of this Agreement, this
Agreement, the Tax Sharing Agreement and the Tax Assurance Agreement supersede
any prior agreements or understandings and abrogate any inconsistent provisions
of any contemporaneous agreements or understandings between the parties with
respect to the subject matter contained in this Agreement, the Tax Sharing
Agreement and the Tax Assurance Agreement.
Section 4.3 Waiver, Amendment, etc. This Agreement may not be
amended or supplemented, and no waivers of or consents to departures from the
provisions hereof shall be effective, unless set forth in a writing signed by,
and delivered to, each party. No failure or delay of any party in exercising
any power or right under this Agreement will operate as a waiver thereof, nor
will any single or partial exercise of any right or power, or any abandonment
or discontinuance of steps to enforce such right or power, preclude any other
or further exercise thereof or the exercise of any other right or power.
Section 4.4 Survival. The covenants and agreements contained
herein shall survive until 30 days after the expiration of all applicable
statutes of limitations under the Code with respect to the Transaction, except
as otherwise provided herein. No investigation or other
- 8 -
9
examination by Lockheed Martin or Materials, or their respective
representatives, shall affect the term of survival of the covenants and
agreements set forth in this Agreement.
Section 4.5 Governing Law. THIS AGREEMENT SHALL BE INTERPRETED,
AND THE RIGHTS, OBLIGATIONS AND LIABILITIES OF THE PARTIES HERETO DETERMINED,
IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW
PROVISIONS) OF THE STATE OF MARYLAND.
Section 4.6. Consent to Jurisdiction. LOCKHEED MARTIN AGREES THAT
IT WILL BRING ANY ACTION OR PROCEEDING FOR THE ENFORCEMENT OF ANY RIGHT,
REMEDY, OBLIGATION OR LIABILITY ARISING UNDER OR IN CONNECTION WITH THIS
AGREEMENT SOLELY IN THE STATE OR FEDERAL COURTS LOCATED IN NORTH CAROLINA.
MATERIALS AGREES THAT IT WILL BRING ANY ACTION OR PROCEEDING FOR THE
ENFORCEMENT OF ANY RIGHT, REMEDY, OBLIGATION OR LIABILITY ARISING UNDER OR IN
CONNECTION WITH THIS AGREEMENT SOLELY IN THE STATE OR FEDERAL COURTS LOCATED IN
MARYLAND. EACH PARTY HEREBY IRREVOCABLY WAIVES ITS RIGHT TO BRING ANY ACTION
OR PROCEEDING AGAINST THE OTHER EXCEPT IN ACCORDANCE WITH THE PRECEDING
SENTENCES. EACH PARTY CONSENTS THAT ALL SERVICE OF PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL DIRECTED TO THE PARTY AT THE ADDRESS STATED IN
SECTION 3.4.
Section 4.7 Severability. The invalidity or unenforceability of
any provision hereof in any jurisdiction will not affect the validity or
enforceability of the remainder hereof in that jurisdiction or the validity or
enforceability of this Agreement, including that provision, in any other
jurisdiction. To the extent permitted by applicable law, each party waives any
provision of applicable law that renders any provision hereof prohibited or
unenforceable in any respect. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the extent possible.
Section 4.8 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 shall constitute one and the same instrument.
Section 4.9 Binding Agreement. This Agreement shall be binding
upon and shall inure only to the benefit of the parties hereto and their
respective successors and assigns (by merger, acquisition of assets, or
otherwise) to the same extent as if the successor or assign had been an
original party to this Agreement.
Section 4.10 No Third Party Beneficiaries. This Agreement is not
intended to benefit any person other than the parties hereto and their
respective successors and assigns, and no such person (including stockholders
of Lockheed Martin or shareholders of Materials) shall be a third party
beneficiary hereof.
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10
Section 4.11 Assignment. Neither Lockheed Martin nor Materials
shall assign this Agreement or any rights, interests or obligations thereunder,
or delegate any of its obligations hereunder, without the prior written consent
of the other.
Section 4.12 Termination. The rights and obligations of the
parties to this Agreement shall terminate, and neither party shall have any
liability under this Agreement, if the Transaction is not consummated.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their authorized representatives.
[signatures follow on separate pages]
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11
LOCKHEED MARTIN CORPORATION
By: /s/ Marcus C. Bennett
------------------------------------
Name: Marcus C. Bennett
Title: Executive Vice President
and Chief Financial Officer
THIS IS A SIGNATURE PAGE TO
THE SUPPLEMENTAL TAX SHARING AGREEMENT
AND IS EXECUTED BY THE PARTY NAMED ABOVE.
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12
MARTIN MARIETTA MATERIALS, INC.
By: /s/ Stephen P. Zelnak, Jr.
--------------------------------------------
Name: Stephen P. Zelnak, Jr.
Title: President and Chief Executive Officer
THIS IS A SIGNATURE PAGE TO
THE SUPPLEMENTAL TAX SHARING AGREEMENT
AND IS EXECUTED BY THE PARTY NAMED ABOVE.
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EXHIBIT 10.10
TAX ASSURANCE AGREEMENT
This TAX ASSURANCE AGREEMENT (this "Agreement"), dated as of September
13, 1996, is made and entered into by and between LOCKHEED MARTIN CORPORATION,
a Maryland corporation ("Lockheed Martin"), and MARTIN MARIETTA MATERIALS,
INC., a North Carolina corporation ("Materials").
RECITALS
1. Materials is a New York Stock Exchange listed corporation.
Lockheed Martin owns, directly or indirectly through its wholly owned
subsidiary, Martin Marietta Investments, Inc., 37,350,000 shares (approximately
81% of the outstanding shares) of Materials Common Stock.
2. Lockheed Martin has determined to distribute all of the shares
it owns in Materials to Lockheed Martin stockholders by means of a transaction
(the "Transaction") intended to qualify as a Tax-Free Distribution.
3. Due to compelling strategic business considerations, Lockheed
Martin's and Materials' Boards of Directors have determined that it is in the
best interests of the corporations and their stockholders and shareholders to
effect the Transaction.
4. The Board of Directors of Materials has determined that
Materials will realize significant independent benefits as a result of the
Transaction, which benefits will include, among other things: (a) facilitating
the future issuance by Materials of its stock to finance strategic acquisitions
in pursuit of its growth strategy; (b) permitting Materials to implement more
effective management stock incentive programs and employee stock compensation
programs; (c) permitting Materials to have direct control over its
administrative costs; and (d) allowing Materials' credit rating to be evaluated
independently of Lockheed Martin's credit rating.
5. It is fundamental to achieving the strategic benefits of the
Transaction that it qualify as a Tax-Free Distribution.
6. Lockheed Martin and Materials have mutually agreed to enter
into this Agreement in order to give assurances to each other that the
Transaction will constitute a Tax-Free Distribution.
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each of Lockheed
Martin and Materials, intending to be legally bound, hereby agrees as follows:
2
ARTICLE I.
DEFINITIONS AND CONSTRUCTION
Section 1.1 Certain Definitions. As used in this Agreement, the
following terms shall have the meanings specified below:
"Affiliate" shall mean, with respect to any Person, any other Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by, or is under common Control with, such Person.
"Associate" shall have the meaning ascribed to such term in Rule 12b-2
under the Exchange Act.
"Beneficial Owner" (including, with its correlative meanings,
"Beneficially Own" and "Beneficial Ownership"), with respect to any securities,
shall mean any Person which:
(a) has, or any of whose Affiliates or Associates has,
directly or indirectly, the right to acquire (whether such right is exercisable
immediately or only after the passage of time) such securities pursuant to any
agreement, arrangement or understanding (whether or not in writing), or upon
the exercise of conversion rights, exchange rights, warrants or options, or
otherwise;
(b) has, or any of whose Affiliates or Associates has,
directly or indirectly, the right to vote or dispose of such securities
(whether such right is exercisable immediately or only after the passage of
time) or "beneficial ownership" of such securities (as determined pursuant to
Rule 13d-3 under the Exchange Act as in effect on the date hereof but including
all such securities which a Person has the right to acquire beneficial
ownership of, whether or not such right is exercisable within the 60-day period
specified therein), including pursuant to any agreement, arrangement or
understanding (whether or not in writing); or
(c) has, or any of whose Affiliates or Associates has,
any agreement, arrangement or understanding (whether or not in writing) for the
purpose of acquiring, holding, voting or disposing of any securities which are
Beneficially Owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof).
"Contract" shall mean any agreement, arrangement or understanding,
whether written or oral.
"Control" (including, with its correlative meanings, "Controlled by"
and "under common Control with") shall mean, with respect to a Person or Group,
possession by such Person or Group of the power, directly or indirectly, (a) to
elect a majority of the board of directors (or equivalent governing body) of
the entity in question or (b) to direct or cause the direction of the
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3
management and policies of or with respect to the entity in question, whether
through ownership of securities, by contract or otherwise.
"Exchange Act" shall mean the Securities Exchange Act of 1934 and the
rules and regulations promulgated thereunder.
"Group" shall mean any group within the meaning of Section 13(d)(3) of
the Exchange Act.
"Lockheed Martin Common Stock" shall mean the shares of common stock
of Lockheed Martin, par value $1.
"Materials Rights Plan" shall mean the Rights Plan as described in the
Form S-4 Registration Statement filed with the Securities and Exchange
Commission by Materials (including the Offering Circular-Prospectus).
"Other Materials Stock" shall mean any class or series of capital
stock or any other instrument that would constitute "equity" of Materials for
federal income tax purposes other than Materials Common Stock.
"Restricted Period" shall mean the period beginning on the date of
this Agreement and ending on the second anniversary of the Transaction Date.
"Subsidiary" shall mean, with respect to any Person (the "Parent"),
any other Person in which the Parent, one or more Subsidiaries of the Parent,
or the Parent and one or more of its Subsidiaries (a) have the ability, through
ownership of securities individually or as a group, ordinarily, in the absence
of contingencies, to elect a majority of the directors (or individuals
performing similar functions) of such other Person or (b) own more than 50% of
the equity interests.
"Supplemental Tax Sharing Agreement" shall mean the Supplemental Tax
Sharing Agreement by and between Lockheed Martin and Materials, entered into in
connection with the Transaction.
"Transaction Date" shall mean the date that the Transaction is
completed.
"Transfer" shall mean any act pursuant to which, directly or
indirectly, the ownership of the assets or securities in question is sold,
transferred, conveyed, delivered or otherwise disposed of.
Section 1.2 Other Definitions. Each term appearing in this
Agreement with initial capitalization and not defined herein shall have the
meaning ascribed to it in the Supplemental Tax Sharing Agreement.
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Section 1.3 Interpretation and Construction of this Agreement.
The definitions in Section 1.1 and those incorporated by Section 1.2 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine or neuter form. The words "include," "includes" and
"including" shall be deemed to be followed by the phrase "without limitation."
The headings contained in this Agreement are inserted for convenience only and
shall not constitute a part hereof. All references herein to Articles and
Sections (other than references to Sections of the Code) shall be deemed to be
references to Articles and Sections of this Agreement unless the context shall
otherwise require. Unless the context shall otherwise require or provide, any
reference to any agreement or other instrument or statute or regulation is to
such agreement, instrument, statute or regulation as amended and supplemented
from time to time (and, in the case of a statute or regulation, to any
successor provision), provided, however, that no covenant herein shall be
deemed to have been breached because of a change in law or regulation which is
enacted or issued subsequent to the completion of the action or conduct which
is the subject of the covenant. This Agreement shall be construed in
accordance with its fair meaning and shall not be construed strictly against
the drafter.
ARTICLE II.
COVENANTS
Section 2.1 Conduct with Respect to Materials Common Stock and
Other Materials Stock. Materials covenants and agrees with Lockheed Martin
that it will not knowingly or willfully cause a Failure by undertaking,
authorizing, approving, recommending to Materials' shareholders, or entering
into any Contract or consummating any transaction during the Restricted Period
with respect to:
(a) the acquisition or proposed acquisition by any Person
other than Materials of Beneficial Ownership of any Materials Common Stock or
Other Materials Stock (whether from Materials or from one or more shareholders
of Materials), but excluding any conduct undertaken to permit, facilitate or
maintain the listing and general trading (as opposed to any specific
transaction) of Materials Common Stock on any public stock exchange (including
the New York Stock Exchange) and excluding any conduct undertaken to permit or
facilitate the issuance of securities, including, but not limited to, stock or
rights in connection with providing compensation to Materials' employees and
directors;
(b) the waiver, amendment, or termination of any
provision of the Materials Rights Plan in connection with, or in order to
permit or facilitate, any such acquisition or proposed acquisition of
Beneficial Ownership of Materials Common Stock or Other Materials Stock as
described in paragraph (a) of this Section 2.1;
(c) excluding stock, rights or other securities under the
Materials Rights Plan, (i) the issuance of any Other Materials Stock or (ii)
the issuance of any options, rights, warrants
- 4 -
5
or securities exercisable for, or convertible into, any Other Materials Stock
or the entering into of any other similar arrangements with respect to the
issuance of any Other Materials Stock;
(d) the issuance of Materials Common Stock (including any
options, rights, warrants or securities exercisable for, or convertible into,
Materials Common Stock or any similar arrangements), except in connection with
providing compensation to Materials' employees and directors;
(e) any redemptions, repurchases or other acquisitions of
Materials Common Stock in a single transaction or in a series of related or
unrelated transactions, unless (i) such redemptions, repurchases or other
acquisitions are made (w) pursuant to a negotiated or private transaction with
respect to which discussions or negotiations commence no earlier than the end
of the 60-day period beginning on the Transaction Date and only if such
redemptions, repurchases or other acquisitions in a single transaction or a
series of related transactions will not exceed 250,000 shares of Materials
Common Stock or (x) in the open market, (ii) Materials does not have any reason
to believe that such redemptions, repurchases or other acquisitions are made
from (y) any shareholder owning one percent or more of the outstanding voting
power or equity interests of Materials or (z) any director or officer of
Materials, excluding redemptions, repurchases or other acquisitions from a
director who is ceasing to serve or an officer who is ceasing to be employed by
Materials, (iii) such redemptions, repurchases or other acquisitions of
Materials Common Stock, individually or in the aggregate during the Restricted
Period, do not result in the acquisition of more than 2.5 million shares of
Materials Common Stock, and (iv) such redemptions, repurchases or other
acquisitions will not exceed, in the aggregate, 250,000 shares of Materials
Common Stock during the 60 day period beginning on the Transaction Date; or
(f) the dissolution or complete or partial liquidation
(within the meaning of such term as defined in Section 302(e) of the Code) of
Materials or any announcement of any intention to dissolve or effect a complete
or partial liquidation of Materials.
Section 2.2 Conduct with Respect to the Business and Assets of
Materials. Materials covenants and agrees with Lockheed Martin that it will
not knowingly or willfully cause a Failure by undertaking, authorizing,
approving, recommending to Materials' shareholders, or entering into any
Contract or consummating any transaction during the Restricted Period with
respect to:
(a) the termination or discontinuance of a significant
portion of Materials' business operations as they existed prior to the
Transaction; or
(b) the Transfer, in a single transaction or in the
aggregate, other than in the ordinary course of business, of an amount of
assets owned by Materials (directly or indirectly through one or more entities)
immediately after the Transaction that would exceed 40% by fair market value of
the assets which it owned (directly or indirectly through one or more entities)
immediately after the Transaction.
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6
Section 2.3. Exception to Fault. Notwithstanding anything to the
contrary in this Agreement:
(a) if Materials obtains an Opinion of Counsel with
respect to any conduct, action or inaction that might otherwise constitute
Fault, excluding conduct, action or inaction under Section 2.5(b), Materials
shall not be at Fault with respect to any Failure resulting from the conduct or
action that is the subject of the Opinion of Counsel and Materials' only
indemnification obligation shall be determined pursuant to Sections 2.1 and 2.3
of the Supplemental Tax Sharing Agreement; and
(b) any conduct or action either party is required to
take (or refrain from taking) as a matter of law shall not form a basis for
Fault.
Section 2.4 Additional Covenant by Materials. With respect to
any written representation Materials delivers to the approved counsel in
connection with any Opinion of Counsel, and to the extent such representation
pertains to future actions or conduct by Materials (or any Affiliate, agent or
representative of Materials) and is expressly referred to in such Opinion of
Counsel, neither Materials nor any of its Affiliates nor any of their
respective officers, directors, employees, agents or representatives will take
any action (unless Materials receives an Opinion of Counsel with respect to
such action based on principles substantially identical to those set forth in
this Agreement) during the two-year period following the making of such
representation (the "Effective Period") that would have caused such
representation to be untrue if Materials or any such other Person had planned
or intended to take such action at the time Materials made the representation.
Materials' covenants and agreements contained in this Section 2.4 shall survive
until the later to occur of (a) the expiration of the Restricted Period and (b)
the expiration of all outstanding Effective Periods.
Section 2.5 Mutual Covenants by Lockheed Martin and Materials.
(a) In addition to the other covenants and agreements set
forth in this Agreement, each party and its Affiliates, officers, directors,
employees, agents and representatives will take, or refrain from taking, as the
case may be, such actions as the other party may reasonably request as
necessary to ensure that the Transaction is a Tax-Free Distribution, including
such actions as may be necessary to obtain or to prevent the withdrawal of the
King & Spalding Opinion.
(i) For purposes of this Section 2.5(a), in
determining what constitutes a reasonable request, all facts and circumstances
shall be considered including, without limitation, (y) the nature of risk to
the status of the Transaction as a Tax-Free Distribution if the request were
not satisfied and (z) the burden, if any, associated with satisfying the
request; in no event shall a request to Materials to take or refrain from
taking certain actions constitute a reasonable request if Materials obtains an
Opinion of Counsel stating that failing to comply with the request
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7
will neither cause the Transaction to fail to qualify under Section 355 of the
Code nor cause the distribution to be a disqualified distribution under Section
355(d) of the Code.
(ii) Without limiting the generality of the
foregoing, each party shall cooperate with the other if either party determines
to obtain any additional Opinion of Counsel pertaining to whether any actual or
proposed change in facts and circumstances affects the tax status of the
Transaction.
(iii) The incremental costs arising from any action
taken by a party pursuant to one or more requests by the other party under this
Section 2.5(a) shall be borne as follows: regardless of whether such costs
arise from one or more requests, the first $1 million of such costs (determined
on a cumulative basis) shall be borne entirely by the party of whom such
requests are made and any excess of such costs shall be borne 81% by Lockheed
Martin and 19% by Materials; provided, however, that the incremental costs
incurred and to be borne by Materials pursuant to this Section 2.5(a) shall in
no event exceed $25 million and shall be treated as a liability for purposes of
determining the aggregate liability of Materials under Section 2.1 of the
Supplemental Tax Sharing Agreement. In determining the incremental costs for
purposes of this Section 2.5(a)(iii), only the actual out-of-pocket costs,
reduced by the incremental actual cash receipts and taking into account all
income tax benefits or costs associated with such costs or receipts, shall be
taken into account.
(iv) To be effective, any request pursuant to this
Section 2.5(a) must be made in accordance with notice provisions of Section 3.2
and must conspicuously bear the following language: "THIS IS A REQUEST
PURSUANT TO SECTION 2.5(a) OF THE TAX ASSURANCE AGREEMENT RELATING TO ENSURING
THAT THE DISTRIBUTION OF MARTIN MARIETTA MATERIALS IS A TAX-FREE DISTRIBUTION."
(v) The covenants and agreements contained in
this Section 2.5(a) shall survive until the expiration of Materials' covenants
and agreements under Section 2.4.
(b) The parties to this Agreement expressly agree to
characterize the Transaction as a Tax-Free Distribution in any tax return,
report or document filed with the Securities Exchange Commission or any
national securities exchange (including the New York Stock Exchange), any
report or document filed with any other governmental agency, and any
announcement or writing disseminated to the public, if such tax return, report,
document, announcement or writing discusses or describes the tax aspects or
consequences of the Transaction. The requirement of this Section 2.5(b) will
be deemed satisfied by the inclusion of, and the absence of any statement
explicitly inconsistently with, the following sentence in such report,
document, announcement or writing: "The distribution by Lockheed Martin
Corporation of the shares of common stock of Martin Marietta Materials, Inc.
qualified as a tax-free distribution pursuant to Section 355 of the Internal
Revenue Code."
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(c) Each party agrees that from and after the date of
this Agreement, it shall not knowingly or willfully act (or knowingly or
willfully refrain from acting), except where required by law to do so, in a
manner which it believes would materially increase the likelihood of a Failure.
If either party is aware of action (or inaction) that the other party is
contemplating which such party believes would materially increase the
likelihood of a Failure and such party fails to promptly notify the other party
of such belief in accordance with the notice provisions of Section 3.2, such
action (or inaction) taken by the other party shall not constitute Fault.
ARTICLE III.
MISCELLANEOUS
Section 3.1 Survival. The covenants and agreements contained
herein shall survive until 30 days after the expiration of all applicable
statutes of limitations under the Code with respect to the Transaction, except
as otherwise provided herein. No investigation or other examination by
Lockheed Martin or Materials, or their respective representatives, shall affect
the term of survival of the covenants and agreements set forth in this
Agreement.
Section 3.2 Notices. Any notice, demand, request, claim or other
communication under this Agreement shall be in writing and shall be deemed to
have been given on the earliest of the following:
(a) upon the delivery thereof if delivered personally;
(b) on the date on which delivery thereof is guaranteed by the
carrier if delivered by a national courier guaranteeing
delivery within a fixed number of days of sending; or
(c) on the date on which facsimile transmission thereof is
confirmed "OK" by the receiving machine if transmitted by
facsimile machine and confirmed by delivery by one of the
prior methods;
but, in each case, only if addressed to the parties in the following manner at
the following addresses or facsimile numbers ("Fax") (or at such other address
or other facsimile number as a party may specify by written notice to the
other):
- 8 -
9
Lockheed Martin: Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: Senior Vice President and General Counsel
URGENT: NOTICE UNDER LOCKHEED
MARTIN/MATERIALS TAX
AGREEMENT
Tel: (301) 897-6125
Fax: (301) 897-6791
With a copy to: Lockheed Martin Corporation
6801 Rockledge Drive
Bethesda, Maryland 20817
Attention: Vice President and General Tax Counsel
URGENT: NOTICE UNDER LOCKHEED
MARTIN/MATERIALS TAX
AGREEMENT
Tel: (301) 897-6063
Fax: (301) 897-6880
Materials: Martin Marietta Materials, Inc.
2710 Wycliff Road
Raleigh, North Carolina 27607
Attention: Vice President and Chief Financial Officer
URGENT: NOTICE UNDER LOCKHEED
MARTIN/MATERIALS TAX
AGREEMENT
Tel: (919) 783-4658
Fax: (919) 510-4700
With a copy to: Martin Marietta Materials, Inc.
2710 Wycliff Road
Raleigh, North Carolina 27607
Attention: Vice President and General Counsel
URGENT: NOTICE UNDER LOCKHEED
MARTIN/MATERIALS TAX
AGREEMENT
Tel: (919) 783-4506
Fax: (919) 783-4535
Section 3.3 Entire Agreement. This Agreement, together with the
Tax Sharing Agreement and the Supplemental Tax Sharing Agreement, embodies the
entire agreement and
- 9 -
10
understanding of the parties in respect of the subject matter contained herein
and in those documents. This provision shall not abrogate any other agreement
or understanding between the parties dealing with a different subject matter
that was executed contemporaneously with this Agreement. Except with respect to
any subsequent written modifications of this Agreement, this Agreement, the Tax
Sharing Agreement and the Supplemental Tax Sharing Agreement supersede any prior
agreements or understandings and abrogate any inconsistent provisions of any
contemporaneous agreements or understandings between the parties with respect to
the subject matter contained in this Agreement, the Tax Sharing Agreement and
the Supplemental Tax Sharing Agreement.
Section 3.4 Waiver, Amendment, etc. This Agreement may not be
amended or supplemented, and no waivers of or consents to departures from the
provisions hereof shall be effective, unless set forth in a writing signed by,
and delivered to, each party. No failure or delay of any party in exercising
any power or right under this Agreement will operate as a waiver thereof, nor
will any single or partial exercise of any right or power, or any abandonment or
discontinuance of steps to enforce such right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.
Section 3.5 Governing Law. THIS AGREEMENT SHALL BE INTERPRETED,
AND THE RIGHTS, OBLIGATIONS AND LIABILITIES OF THE PARTIES HERETO DETERMINED,
IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW
PROVISIONS) OF THE STATE OF MARYLAND.
Section 3.6. Consent to Jurisdiction. LOCKHEED MARTIN AGREES THAT
IT WILL BRING ANY ACTION OR PROCEEDING FOR THE ENFORCEMENT OF ANY RIGHT,
REMEDY, OBLIGATION OR LIABILITY ARISING UNDER OR IN CONNECTION WITH THIS
AGREEMENT SOLELY IN THE STATE OR FEDERAL COURTS LOCATED IN NORTH CAROLINA.
MATERIALS AGREES THAT IT WILL BRING ANY ACTION OR PROCEEDING FOR THE
ENFORCEMENT OF ANY RIGHT, REMEDY, OBLIGATION OR LIABILITY ARISING UNDER OR IN
CONNECTION WITH THIS AGREEMENT SOLELY IN THE STATE OR FEDERAL COURTS LOCATED IN
MARYLAND. EACH PARTY HEREBY IRREVOCABLY WAIVES ITS RIGHT TO BRING ANY ACTION
OR PROCEEDING AGAINST THE OTHER EXCEPT IN ACCORDANCE WITH THE PRECEDING
SENTENCES. EACH PARTY CONSENTS THAT ALL SERVICE OF PROCESS MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL DIRECTED TO THE PARTY AT THE ADDRESS STATED IN
SECTION 3.2.
Section 3.7 Severability. The invalidity or unenforceability of
any provision hereof in any jurisdiction will not affect the validity or
enforceability of the remainder hereof in that jurisdiction or the validity or
enforceability of this Agreement, including that provision, in any other
jurisdiction. To the extent permitted by applicable law, each party waives any
provision of applicable law that renders any provision hereof prohibited or
unenforceable in any respect. If any
- 10 -
11
provision of this Agreement is held to be unenforceable for any reason, it shall
be adjusted rather than voided, if possible, in order to achieve the intent of
the parties to the extent possible.
Section 3.8 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 shall constitute one and the same instrument.
Section 3.9 Binding Agreement. This Agreement shall be binding
upon and inure only to the benefit of the parties hereto and their respective
successors and permitted assigns (by merger, acquisition of assets, or
otherwise) to the same extent as if the successor or assign had been an
original party to this Agreement.
Section 3.10 No Third Party Beneficiaries. This Agreement is not
intended to benefit any Person other than the parties hereto and their
respective successors and permitted assigns, and no such Person shall be a
third party beneficiary hereof.
Section 3.11 Assignment. Neither Lockheed Martin nor Materials
shall assign this Agreement or any rights, interests or obligations hereunder,
or delegate performance of any of its obligations hereunder, without the prior
written consent of the other party.
Section 3.12 Costs and Expenses. All costs and expenses incurred
by Materials or Lockheed Martin relating to any Opinion of Counsel shall be
paid by the party seeking such Opinion of Counsel, and each party agrees to
indemnify the other against any and all such costs and expenses.
Section 3.13 Books, Records and Documentation. Each party shall
keep, maintain and preserve books, records and documentation necessary in or
applicable to the determination of liabilities pursuant to the Supplemental Tax
Sharing Agreement or this Agreement and the establishment of the Transaction as
a Tax-Free Distribution until the expiration of all applicable statutes of
limitations.
Section 3.14 Termination. The rights and obligations of the
parties to this Agreement shall terminate, and neither party shall have any
liability under this Agreement, if the Transaction is not consummated.
IN WITNESS WHEREOF, Lockheed Martin and Materials have caused their
respective duly authorized officers to execute this Agreement as of the day and
year first above written.
[signatures follow on separate pages]
- 11 -
12
LOCKHEED MARTIN CORPORATION
By: /s/ Marcus C. Bennett
----------------------------------
Name: Marcus C. Bennett
Title: Executive Vice President
and Chief Financial Officer
THIS IS A SIGNATURE PAGE TO THE TAX ASSURANCE AGREEMENT
AND IS EXECUTED BY THE PARTY NAMED ABOVE.
- 12 -
13
MARTIN MARIETTA MATERIALS, INC.
By: /s/ Stephen P. Zelnak, Jr.
--------------------------------------------
Name: Stephen P. Zelnak, Jr.
Title: President and Chief Executive Officer
THIS IS A SIGNATURE PAGE TO THE TAX ASSURANCE AGREEMENT
AND IS EXECUTED BY THE PARTY NAMED ABOVE.
- 13 -
1
Exhibit 11.01
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
For the Quarter and Nine Months Ended September 30
(Dollars in Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- -------------------------
1996 1995 1996 1995
---- ---- ---- ----
Net earnings $27,490 $23,425 $58,634 $51,611
======= ======= ======= =======
Weighted average number of
common shares outstanding 46,079,300 46,079,300 46,079,300 46,079,300
========== ========== ========== ==========
Net earnings per common share $0.60 $0.51 $1.27 $1.12
===== ===== ===== =====
Note: The sum of per-share earnings by quarter may not equal earnings per
share for the year-to-date period due to the effect of rounding.
1
Exhibit 12.01
MARTIN MARIETTA MATERIALS, INC. AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
For the Nine Months Ended September 30, 1996
(Dollars in Thousands)
EARNINGS:
Earnings before income taxes $88,705
(Earnings) losses of less than 50% owned associated companies, net (834)
Interest expense 7,964
Portions of rents representative of an interest factor 878
-------
Adjusted Earnings and Fixed Charges $96,713
=======
FIXED CHARGES:
Interest expense $ 7,964
Capitalized Interest 196
Portion of rents representative of an interest factor 878
-------
Total Fixed Charges $ 9,038
=======
Ratio of Earnings to Fixed Charges 10.70
=====
5
1,000
9-MOS
DEC-31-1996
JAN-01-1996
SEP-30-1996
2,364
0
138,059
4,500
113,082
269,141
957,856
561,315
750,600
86,222
124,807
0
0
461
466,051
750,600
538,489
538,489
400,807
446,988
(5,218)
50
7,964
88,705
30,071
58,634
0
0
0
58,634
1.27
1.27
