Exhibit 2.2

 

EXECUTION VERSION

 

TRANSITION SERVICES AGREEMENT

 

between

 

ALLIANT TECHSYSTEMS INC.

 

and

 

VISTA OUTDOOR INC.

 

Dated as of February 9, 2015

 

 

Table of Contents

 

		Page
ARTICLE I
Definitions
SECTION 1.01.	Definitions	1
ARTICLE II
Services
SECTION 2.01.	Services	3
SECTION 2.02.	Additional Services	3
SECTION 2.03.	Scope of Services	4
SECTION 2.04.	Disclaimer of Warranty	4
SECTION 2.05.	Personnel; Third-Party Service Providers	4
SECTION 2.06.	Standard of Performance; Standard of Care	5
SECTION 2.07.	Transitional Nature of Services; Changes	6
SECTION 2.08.	Consents	6
SECTION 2.09.	Intellectual Property	6
SECTION 2.10.	Cooperation	7
SECTION 2.11.	Policies and Procedures	8
SECTION 2.12.	Controls	9
ARTICLE III
Fees for Services
SECTION 3.01.	Fees	9
SECTION 3.02.	Billing Procedure	9
SECTION 3.03.	Late Payments	9
SECTION 3.04.	Taxes	10
SECTION 3.05.	Disagreements	10
ARTICLE IV
Term and Termination
SECTION 4.01.	Agreement Term	11
SECTION 4.02.	Service Periods	11
SECTION 4.03.	Early Termination	12
SECTION 4.04.	Termination Due to Nonpayment	12
SECTION 4.05.	Sums Due	12
SECTION 4.06.	Access	12
SECTION 4.07.	Survival	13

 

 

SECTION 4.08.	Vista Outdoor’s Operations	13
ARTICLE V
Force Majeure
SECTION 5.01.	Force Majeure	13
ARTICLE VI
Indemnification
SECTION 6.01.	Indemnification by Orbital ATK	13
SECTION 6.02.	Indemnification by Vista Outdoor	14
SECTION 6.03.	Procedures Relating to Indemnification	14
SECTION 6.04.	Liability	14
SECTION 6.05.	Claims against Third-Party Service Providers	14
SECTION 6.06.	Specific Performance	15
ARTICLE VII
Books and Records; Access
SECTION 7.01.	Separation of Books and Records	15
SECTION 7.02.	Audits by Vista Outdoor	15
SECTION 7.03.	Delivery of Books and Records	16
SECTION 7.04.	Regulatory Audit	16
ARTICLE VIII
Miscellaneous
SECTION 8.01.	Independent Contractors	17
SECTION 8.02.	Confidentiality	17
SECTION 8.03.	Assignment	17
SECTION 8.04.	No Third-Party Beneficiaries	17
SECTION 8.05.	Amendments	17
SECTION 8.06.	Waivers	17
SECTION 8.07.	Notices	18
SECTION 8.08.	Interpretation	18
SECTION 8.09.	Counterparts	18
SECTION 8.10.	Severability	18
SECTION 8.11.	Governing Law/Jurisdiction	18
SECTION 8.12.	WAIVER OF JURY TRIAL	19

 

 

SCHEDULES

 

Schedule 1	—	Information Technology
Schedule 2	—	Import and Export
Schedule 3	—	Procurement and Supply Chain Management
Schedule 4	—	Human Resources
Schedule 5	—	Payroll Services
Schedule 6	—	Legal and Compliance
Schedule 7	—	Tax Services
Schedule 8	—	Travel and Expense Reimbursement
Schedule 9	—	Investments
Schedule 10	—	Communications and Government Relations

 

---

 

TRANSITION SERVICES AGREEMENT dated as of February 9, 2015 between Alliant Techsystems Inc. (to be renamed “Orbital ATK, Inc.” substantially concurrently with the execution of this Agreement), a Delaware corporation (“ Orbital ATK ”), and Vista Outdoor Inc. (formerly known as “Vista SpinCo Inc.”), a Delaware corporation (“ Vista Outdoor ” and, together with Orbital ATK, the “ Parties ”).

 

WHEREAS, pursuant to the Transaction Agreement dated as of April 28, 2014 (the “Transaction Agreement”), among Alliant Techsystems Inc., Vista SpinCo Inc. (which has subsequently changed its name to Vista Outdoor Inc.), Vista Merger Sub Inc. and Orbital Sciences Corporation, on the terms and subject to the conditions set forth in the Transaction Agreement, Alliant Techsystems Inc. will, and will cause its applicable Subsidiaries to, consummate the Sporting Transfers;

 

WHEREAS, following the Sporting Transfers, on the terms and subject to the conditions set forth in the Transaction Agreement, the Distribution will occur;

 

WHEREAS, following the Distribution, on the terms and subject to the conditions set forth in the Transaction Agreement, the Merger will occur; and

 

WHEREAS, Vista Outdoor desires that Orbital ATK provide, or cause to be provided, certain transition services to Vista Outdoor and its Subsidiaries for a period following the Distribution Date, and Orbital ATK is willing to provide such transition services upon the terms and subject to the conditions set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained in this Agreement, the Parties hereby agree as follows:

 

ARTICLE I

 

Definitions

 

SECTION 1.01.                                    Definitions.   Capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Transaction Agreement.  As used in this Agreement, the following terms shall have the following meanings:

 

“ Additional Expenses ” shall mean, collectively, the Additional Orbital ATK Expenses and the Additional Out-of-Pocket Expenses.

 

“ Additional Orbital ATK Expenses ” shall mean costs and expenses other than Additional Out-of-Pocket Expenses incurred by Orbital ATK or any of its Affiliates in connection with the performance of Orbital ATK’s obligations under this Agreement.

 

“ Additional Out-of-Pocket Expenses ” shall have the meaning specified in Section 3.01.

 

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“ Additional Representative ” shall have the meaning specified in Section 2.10(b).

 

“ Agreement ” shall mean this Transition Services Agreement.

 

“ Books and Records ” shall mean the Records (as defined in the Transaction Agreement), including the Financial Books and Records, of Orbital ATK or any of its Affiliates related to the Sporting Business and created in connection with the performance of the Services.

 

“ Dispute Notice ” shall have the meaning specified in Section 3.05(a).

 

“ Disputed Item ” shall have the meaning specified in Section 3.05(a).

 

“ Fees ” shall have the meaning specified in Section 3.01.

 

“ Financial Books and Records ” shall mean the books of account, financial and accounting records, files and invoices of Orbital ATK or any of its Affiliates related to the Sporting Business and created in connection with the performance of the Services.

 

“ Force Majeure Event ” shall have the meaning specified in Section 5.01.

 

“ Independent Accountant ” shall have the meaning specified in Section 3.05(a).

 

“ Invoice ” shall have the meaning specified in Section 3.02.

 

“ Invoice Due Date ” shall have the meaning specified in Section 3.02.

 

“ Late Payment Rate ” shall have the meaning specified in Section 3.03.

 

“ Losses ” shall have the meaning specified in Section 6.01.

 

“ Orbital ATK ” shall have the meaning specified in the introductory paragraph of this Agreement.

 

“ Party ” shall have the meaning specified in the introductory paragraph of this Agreement.

 

“ Personnel ” means, with respect to any Party, the employees, officers, agents, subcontractors and consultants of (a) such Party, (b) the Affiliates of such Party and (c) with respect to Orbital ATK, any Third-Party Service Provider engaged by Orbital ATK to provide a Service.

 

“ Principal Representative ” shall have the meaning specified in Section 2.10(b).

 

“ Representatives ” shall have the meaning specified in Section 2.10(b).

 

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“ Review Meetings ” shall have the meaning specified in Section 2.10(b).

 

“ Review Period ” shall have the meaning specified in Section 3.05(a).

 

“ Schedules ” shall mean the Schedules to this Agreement, including any additional Schedules added to this Agreement in accordance with Section 2.02.

 

“ Service Period ” shall have the meaning specified in Section 4.02.

 

“ Services ” shall mean the services set forth on the Schedules hereto from time to time, including any additional services added to the Schedules hereto in accordance with Section 2.02.

 

“ Stated Termination Date ” shall have the meaning specified in Section 4.02.

 

“ Term ” shall have the meaning specified in Section 4.01.

 

“ Third-Party Service Provider ” shall mean any third-party that has been engaged by Orbital ATK or any of its Affiliates to assist in the performance of its obligations under this Agreement.

 

“ Transaction Agreement ” shall have the meaning specified in the introductory recitals of this Agreement.

 

“ Transition Team ” shall have the meaning specified in Section 2.05.

 

“ Vista Outdoor ” shall have the meaning specified in the introductory paragraph of this Agreement.

 

ARTICLE II

 

Services

 

SECTION 2.01.                                    Services.   Upon the terms and subject to the conditions set forth in this Agreement, Orbital ATK agrees to provide, or to cause one or more of its Affiliates to provide, to Vista Outdoor and its Subsidiaries the Services.

 

SECTION 2.02.                                    Additional Services.   Orbital ATK and Vista Outdoor agree that, if Vista Outdoor, in consultation with Orbital ATK, identifies within ninety (90) days after the date of this Agreement transition services that Vista Outdoor reasonably believes are necessary for the continued operation of the Sporting Business that are not identified on the Schedules, upon the reasonable request of Vista Outdoor, Orbital ATK and Vista Outdoor shall cooperate in good faith to modify the Schedules or enter into additional Schedules with respect to such transition services, upon terms (including fees) and subject to conditions to be agreed upon in good faith by the Parties.  Orbital ATK shall not be obligated to perform or cause to be performed any such additional transition services unless and until the Parties agree in writing as to the price,

 

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specifications and other terms and conditions under which Orbital ATK shall provide (or cause to be provided) such other transition services.

 

SECTION 2.03.                                    Scope of Services.   Notwithstanding anything to the contrary contained herein, Orbital ATK shall only be required to provide the Services for the benefit of Vista Outdoor and its Subsidiaries in conducting the Sporting Business (which, for the avoidance of doubt and unless otherwise agreed, excludes providing Services to businesses acquired by Vista Outdoor or its Subsidiaries after the date of this Agreement).

 

SECTION 2.04.                                    Disclaimer of Warranty .  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, THE SERVICES TO BE PROVIDED BY ORBITAL ATK, ANY OF ITS AFFILIATES OR ANY THIRD-PARTY SERVICE PROVIDER UNDER THIS AGREEMENT (FOR THE AVOIDANCE OF DOUBT, INCLUDING ANY LEGAL AND COMPLIANCE RELATED SERVICES SET FORTH ON SCHEDULE 6), AS WELL AS ANY RECORDS OR ASSISTANCE PROVIDED BY EITHER PARTY HEREUNDER, ARE FURNISHED IN AN “AS IS” CONDITION AND ON A “WHERE IS” BASIS, AND WITHOUT WARRANTY OR CONDITION OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OR CONDITION OF NONINFRINGEMENT, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR IN THE SCHEDULES HERETO, IN NO EVENT SHALL ORBITAL ATK BE CONSIDERED A FIDUCIARY OF ANY PARTY, FOR ERISA PURPOSES OR OTHERWISE.

 

SECTION 2.05.                                    Personnel; Third-Party Service Providers.   The Personnel (including Third-Party Service Providers) who will provide the Services for and on behalf of Orbital ATK shall initially be (a) the Persons so designated by the Parties and Orbital in writing on or prior to the date of this Agreement and (b) the Persons agreed by the Parties in writing after the date of this Agreement (the Persons described in clauses (a) and (b), the “ Transition Team ”). From time to time after the date of this Agreement Orbital ATK shall have the right to select additional Personnel for, or remove existing Personnel from, the Transition Team; provided , that Orbital ATK may remove existing Personnel from the Transition Team who are providing significant, non-clerical Services to Vista Outdoor or its Subsidiaries only with the prior written consent of Vista Outdoor or if such Personnel are no longer employed by Orbital ATK or its Affiliates (which, for the avoidance of doubt, does not include Orbital ATK terminating the engagement of a Third-Party Service Provider) or such Personnel become unable to perform the applicable Services for reasons outside the control of Orbital ATK and its Affiliates. To the extent that any Orbital ATK personnel who is performing Services hereunder leaves the employ of Orbital ATK, becomes disabled or otherwise becomes unavailable to perform the Services for reasons outside the control of Orbital ATK or its Affiliates, the Parties shall cooperate in good faith to determine how to provide replacement Services to Vista Outdoor.  In no event shall Orbital ATK or any of its Affiliates be required to hire additional Personnel or to retain any specific Personnel to provide the Services hereunder.  Vista Outdoor acknowledges that prior to the date of this

 

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Agreement, Orbital ATK or its Affiliates may have contracted with Third-Party Service Providers to provide services in connection with any portion of the Services to be provided hereunder.  Orbital ATK and its Affiliates reserve the right to continue, in accordance with past practice prior to the Distribution, to subcontract with Third-Party Service Providers to provide the Services as part of the Transition Team; provided that after the date of this Agreement Orbital ATK may engage a Third-Party Service Provider to provide Services only (i) to the extent that such Third-Party Service Provider will also provide comparable services to the ATK Business or (ii) with the prior written consent of Vista Outdoor.  Vista Outdoor acknowledges that any interruption or suspension in the provision of any services by a Third-Party Service Provider generally to Orbital ATK and its Affiliates shall likely cause the provision of such Services under this Agreement to be so interrupted or suspended, as the case may be.  In the event there is an interruption or suspension in the services being provided by any Third-Party Service Provider to Orbital ATK or its Affiliates (which such interruption or suspension adversely impacts the Services being provided by such Third-Party Service Provider to Vista Outdoor hereunder), Orbital ATK agrees that (x) with respect to any action taken by Orbital ATK in response to such interruption or suspension, it shall take such action on behalf of and for the benefit of Vista Outdoor as well as itself and (y) if any Contract with a Third-Party Service Provider expires or is otherwise terminated and such expiration or termination adversely impacts the Services being provided to Vista Outdoor, to the extent Orbital ATK arranges replacement services with respect thereto, such replacement services shall, unless otherwise requested by Vista Outdoor, also cover the Services that were being provided by such Third-Party Service Provider to Vista Outdoor hereunder; provided that Vista Outdoor shall be responsible for its pro rata share of any additional fees, expenses or other costs paid by Orbital ATK or any of its Affiliates to a third-party for such replacement services that are provided to Vista Outdoor, and such additional fees, expenses and other costs shall be deemed Additional Orbital ATK Expenses.

 

SECTION 2.06.                                    Standard of Performance; Standard of Care.   Orbital ATK shall perform, or cause its Affiliates to perform, as applicable, the Services at a level of quality and in a manner generally consistent with past practice over the 12 month period prior to the Distribution, but in no event at a quality level lower than that generally provided by Orbital ATK or its Affiliates to the ATK Business. In furtherance of the foregoing, Vista Outdoor acknowledges that, in connection with performing the Services hereunder, Orbital ATK shall have no obligation to change, or to cause any of its Affiliates to change, any practices or processes used by it prior to the Distribution in performing the Services prior to the Distribution.  Nothing in this Agreement shall require Orbital ATK to take or refrain from taking, or cause its Affiliates to take or refrain from taking, any action that, in Orbital ATK’s reasonable judgment, could reasonably be expected to result in any breach or violation of any Law, license or permit or, subject to Section 2.08, any Contract to which Orbital ATK or any of its Affiliates is a party.  Notwithstanding anything to the contrary contained herein or set forth on the Schedules hereto, with respect to any and all Services related to employee benefit plans, programs, and arrangements, whether or not subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), for the benefit of current or former employees (or their eligible dependents) or other service providers of Vista Outdoor and its Subsidiaries (the “Plans”), (i) the scope of Orbital ATK’s authority is limited to

 

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performing ministerial responsibilities for the Plans, including routine administrative and other non-discretionary services, and (ii) in no event shall Orbital ATK have responsibility for any fiduciary functions, exercise any fiduciary authority or control, or be required to take any action to cause it to be considered a fiduciary with respect to the Plans, for ERISA purposes or otherwise.  The Parties acknowledge that (i) Orbital ATK is not and shall not be a sponsor, fiduciary, or administrator (as defined in ERISA) of any of the Plans, (ii) Orbital ATK does not owe any fiduciary duties to Vista Outdoor or any of its Affiliates, or any other party, and (iii) Vista Outdoor and its Subsidiaries shall retain all fiduciary responsibility and authority, and shall be the sponsor and named fiduciary (as defined in ERISA), with respect to the Plans.

 

SECTION 2.07.                                    Transitional Nature of Services; Changes.   Orbital ATK and Vista Outdoor each acknowledge the transitional nature of the Services and Vista Outdoor agrees to use commercially reasonable efforts to make a transition of each Service to its own internal organization or to obtain alternate third-party sources to provide the Services as promptly as practicable following the date of this Agreement.  Orbital ATK or any of its Affiliates may make changes from time to time in the manner of performing the Services if it has made similar changes in performing similar services for itself or its Affiliates and such changes would not reasonably be expected to have a materially disproportionate adverse impact on Vista Outdoor and its Subsidiaries; provided that, notwithstanding the making of any such changes, Orbital ATK shall continue to remain responsible for the performance of the Services in accordance with this Agreement.

 

SECTION 2.08.                                    Consents.   Orbital ATK shall, and shall cause its Affiliates to, use commercially reasonable efforts to obtain as promptly as practicable the consents or approvals as may be necessary for the performance of its obligations pursuant to this Agreement, including obtaining from third-party vendors any consents necessary to grant sublicenses in connection with the performance of the Services hereunder; provided , however , that (a) Orbital ATK shall not be obligated to provide the relevant Services until such appropriate consents or approvals are obtained and (b) neither Orbital ATK nor Vista Outdoor shall be required to pay any amounts to third parties to obtain such consents or approvals.  In the event any such consent or approval is not obtained reasonably promptly after the Distribution, to the extent practicable, Orbital ATK, on the one hand, and Vista Outdoor, on the other, shall cooperate in good faith with one another in structuring and documenting any lawful and reasonable alternative arrangements (such as a license, sublease or operating agreement) by which Vista Outdoor and its Subsidiaries may obtain the Services affected by the failure to obtain such consent or approval until such time as such consent or approval has been obtained.  If the Parties arrange such alternative means, Orbital ATK shall provide the Services in accordance therewith and any expenses incurred by Orbital ATK in the provision of such Services through such alternative means shall be borne as mutually agreed by the Parties (considering the expenses otherwise included in the Fees).

 

SECTION 2.09.                                    Intellectual Property.   (a) Vista Outdoor hereby grants to Orbital ATK and its Affiliates a limited nontransferable, revocable license, without the right to sublicense (except to Third-Party Service Providers retained to provide Services

 

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as set forth in Section 2.05), for the Term to use the Sporting Intellectual Property Rights owned by Vista Outdoor and its Affiliates solely to the extent necessary for Orbital ATK and its Affiliates to perform their obligations hereunder.  All right, title and interest in and to the Sporting Intellectual Property Rights owned by Vista Outdoor and not expressly granted herein are reserved by Vista Outdoor.

 

(b)                                  As between the Parties, each Party shall retain ownership of all right, title and interest in and to the Intellectual Property Rights owned or controlled by it immediately after the Distribution as well as any derivative works of, or modifications or improvements to, such Intellectual Property Rights conceived or created as part of the provision of Services. Subject to clause (a) above, neither Party shall acquire any right, title or interest in or to such Intellectual Property Rights of the other Party pursuant to this Agreement.

 

(c)                                   All data created by Orbital ATK on behalf of Vista Outdoor in connection with the performance of the Services or delivered to Vista Outdoor in connection with the transition of a Service to Vista Outdoor shall be owned by Vista Outdoor.

 

SECTION 2.10.                                    Cooperation.   (a) Subject to applicable Law, each Party shall cooperate, and shall cause its respective Subsidiaries to cooperate, with reasonable requests for information from the other Party in matters relating to the corporate and administrative services and knowledge that (A) were historically provided by Alliant Techsystems Inc. and its Subsidiaries and (B) are reasonably necessary for a Party to operate on a stand-alone basis following the Distribution Date. Such cooperation shall include reasonable access to the Records and personnel of the other Party during normal business hours and the delivery of instruments or documents as may be reasonably requested by the other Party, provided that no Party shall be required to provide information if (x) such access would unreasonably disrupt the normal operations of the Party or (y) such information constitutes proprietary customer or supplier information or if the disclosure of such information is legally or contractually prohibited or would result in the loss of attorney client privilege; provided that, in the case of this clause (y), the withholding party first uses commercially reasonable efforts to provide such information in a manner that does not violate any such disclosure obligations or privilege. Such cooperation (including reasonable access to Records and personnel and delivery of instruments and documents) shall be provided at no cost; provided , however, that neither Party shall be required to pay any out-of-pocket amounts to third parties in connection with the foregoing.  For the avoidance of doubt, cooperation under this Section 2.10(c) shall not apply to requests from Vista Outdoor to the extent such requests would constitute Services as set forth in the attached Schedules.

 

(b)                                  Each of Vista Outdoor and Orbital ATK shall designate (i) a principal representative (each, a “ Principal Representative ”) to act as the principal contact person with respect to all issues relating to the provision of the Services pursuant to this Agreement and (ii) representatives (each, an “ Additional Representative ” and, together with the Principal Representatives, the “ Representatives ”) to act as additional contact persons with respect to issues relating to the provision of the Services, and the names of

 

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such Representatives shall be provided in writing to the other party promptly following the date hereof. The Representatives shall hold review meetings by telephone or in person, as mutually agreed upon, (A) during the first 60 days after the date of this Agreement, approximately once every two weeks, and (B), thereafter, approximately once per month, in each case, to discuss issues relating to the provision of the Services under this Agreement and to discuss the migration of the Services to Vista Outdoor’s own systems and technology (or those of any third-party service provider engaged by Vista Outdoor to assume the provision of one or more Services) as described in Section 2.07 (“ Review Meetings ”).  In the Review Meetings, the Representatives shall be responsible for discussing any problems identified with the provision of the Services and, to the extent any changes in the provision of the Services are agreed upon, the implementation of such changes.

 

(c)                                   In the event that (i) there is nonperformance of any Service as a result of a Force Majeure Event or (ii) the provision of a Service would violate any Law or any Contract, license or permit to which Orbital ATK or any of its Affiliates is a party, the Parties shall work together in good faith to arrange for an alternative means by which Vista Outdoor and its Subsidiaries may obtain the Services so affected. If the Parties arrange such alternative means, Orbital ATK shall provide the Services in accordance therewith and any expenses incurred by Orbital ATK in the provision of such Services through such alternative means shall be borne as mutually agreed by the Parties (considering the expenses otherwise included in the Fees).

 

(d)                                  Each of Vista Outdoor and Orbital ATK may, effective upon written notice to the other party, change its Principal Representative or any Additional Representative at any time.

 

(e)                                   Vista Outdoor acknowledges that the completion of Services by Orbital ATK may depend upon the provision of certain materials and information or the taking of certain actions by Vista Outdoor or one of its Subsidiaries, and Orbital ATK shall not be responsible for the failure to provide Services to the extent such failure results from the failure of Vista Outdoor to provide such materials or information or to take such actions.

 

SECTION 2.11.            Policies and Procedures.   (a) If, in connection with this Agreement, any Party’s Personnel are given access, whether on-site or through remote facilities, to any of the other Party’s computer or electronic data storage systems, such Party shall use commercially reasonable efforts to ensure that such Party’s Personnel shall limit such access and use solely to the extent related to the Services and will not attempt to access any computer system, electronic file, software or other electronic services other than those specifically related to the Services.  Each Party shall, and shall use commercially reasonable efforts to ensure that such Party’s Personnel shall, comply with all of the other Party’s policies and procedures for the use of the other Party’s electronic resources (to the extent made available to such Party).

 

(b)                                  While performing work on the other Party’s premises or when accessing the other Party’s information technology systems and networks, each Party

 

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shall, and shall use commercially reasonable efforts to ensure that such Party’s Personnel shall, comply with the other Party’s applicable premises, physical security, confidentiality, safety, health and network security policies that the other Party has made available to such Party.

 

SECTION 2.12.                                    Controls.   If, in connection with Vista Outdoor’s evaluation of its internal controls over financial reporting or in connection with Vista Outdoor’s related disclosure to its internal or external auditors, Vista Outdoor reasonably believes it is necessary or appropriate to review the internal controls and procedures related to the performance of the Services hereunder, Orbital ATK shall, upon Vista Outdoor’s written request, provide Vista Outdoor with reasonable access to review any existing related documentation of Orbital ATK that demonstrates Orbital ATK’s compliance with the Sarbanes Oxley Act of 2002 solely in connection with the provision of Services; provided , that Vista Outdoor’s exercise of the foregoing right shall be subject to customary security and safety procedures, and classified or commercially sensitive information may be redacted by Orbital ATK.

 

ARTICLE III

 

Fees for Services

 

SECTION 3.01.                                    Fees.   For the Services provided hereunder, Vista Outdoor shall pay to Orbital ATK (a) an amount equal to the fully-burdened costs associated with the performance of the Services set forth in the Schedules, which costs shall to the extent practicable be calculated in a manner consistent with the current practice of Orbital ATK in allocating costs to its business units as agreed among the Parties prior to the date hereof (i.e., fully-burdened labor costs, which include employee benefit expenses and an allocation of overhead, plus direct expenses) (the “ Fees ”) and (b) any reasonable out-of-pocket expenses incurred by Orbital ATK or any of its Affiliates in connection with the provision of the Services hereunder, without duplication or expansion of expenses otherwise included in the Fees (the “ Additional Out-of-Pocket Expenses ”).  Orbital ATK shall notify Vista Outdoor in advance of any Additional Out-of-Pocket Expenses reasonably expected to exceed $50,000.

 

SECTION 3.02.                                    Billing Procedure.   The Fees and the Additional Expenses shall be invoiced (an “ Invoice ”) monthly by Orbital ATK or one of its Affiliates.  All Invoices shall be payable by Vista Outdoor promptly, and in any event, within 30 days after receipt of an Invoice from Orbital ATK or one of its Affiliates (the date on which a payment is due, the “ Invoice Due Date ”). Orbital ATK shall have the right to designate in an Invoice one or more Third-Party Service Providers to receive certain of the Fees or Additional Expenses that become payable to Orbital ATK hereunder.

 

SECTION 3.03.                                    Late Payments.   Any Fees or Additional Expenses not paid on or before the Invoice Due Date shall bear simple interest at a rate of 1.0% per month (12.0% per annum) (the “ Late Payment Rate ”) from the Invoice Due Date until the date payment is received in full by Orbital ATK, as applicable; provided that if Vista

 

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Outdoor has disputed in good faith any amount of any Fee or Additional Expense and either Orbital ATK agrees or it has been finally determined in accordance with the procedures set forth in Section 3.05 that Vista Outdoor is not obligated to pay such disputed amount, then Vista Outdoor shall not be obligated to pay interest at the Late Payment Rate on such disputed amount.

 

SECTION 3.04.                                    Taxes.   The amount of any actual and documented sales Tax, value added Tax, use Tax, rent Tax, goods and services Tax or similar Tax (excluding Taxes on Orbital ATK’s income or ownership of property) that is required to be paid by Orbital ATK or any of its Affiliates in connection with the Services provided hereunder shall be reimbursed by Vista Outdoor and be deemed Additional Orbital ATK Expenses.

 

SECTION 3.05.                                    Disagreements.   (a) Vista Outdoor shall have 15 days from the date of receipt to review an Invoice (the “ Review Period ”).  Vista Outdoor may, on or prior to the last day of the Review Period, provide Orbital ATK with written notice of dispute (a “ Dispute Notice ”), which shall specify in reasonable detail those items or amounts in Orbital ATK’s calculation as to which Vista Outdoor disagrees (the “ Disputed Items ”) and the basis for such disagreement and any such Dispute Notice shall be made in good faith.  Unless Vista Outdoor delivers a Dispute Notice to Orbital ATK prior to the expiration of the Review Period, Vista Outdoor will be deemed to have accepted and agreed to the items and amounts set forth in the Invoice, and such amounts shall become conclusive and binding on Vista Outdoor and Orbital ATK.  If Vista Outdoor delivers a Dispute Notice to Orbital ATK on or prior to the last day of the Review Period, Vista Outdoor and Orbital ATK shall use good faith efforts to reach agreement on the Disputed Items set forth in the Dispute Notice during the 30-day period commencing on the date Orbital ATK receives the applicable Dispute Notice from Vista Outdoor.  If during such 30-day period the Parties are unable to reach agreement, Orbital ATK and Vista Outdoor shall refer all unresolved Disputed Items to an independent accounting firm upon which Orbital ATK and Vista Outdoor shall mutually agree (the “ Independent Accountant ”).  Orbital ATK and Vista Outdoor shall instruct the Independent Accountant to make a determination, acting as an expert and not an arbitrator, with respect to each unresolved Disputed Item within 15 days after its engagement by Orbital ATK and Vista Outdoor to resolve such Disputed Items.  The scope of the disputes to be resolved by the Independent Accountant shall be limited to mathematical errors and whether the Disputed Items were determined in accordance with the provisions of this Agreement (including the applicable definitions set forth herein).  The Independent Accountant shall deliver to Orbital ATK and Vista Outdoor a written report setting forth its determination of the Disputed Items, the calculations supporting such determinations and the rationale therefor.  In resolving the Disputed Items, the Independent Accountant shall resolve each Disputed Item by selecting an amount which is either equal to or in between the amount for each Disputed Item set forth in the Invoice and the amount for each Disputed Item set forth in the Dispute Notice.  Such determination of the Independent Accountant shall be conclusive and binding upon the Parties absent fraud or manifest error. The Invoice shall be revised as appropriate to reflect the resolution of any objections thereto pursuant to this Section 3.05(a), and, as so revised, such Invoice shall be deemed to set forth the final Fees and Additional Expenses resulting therefrom for all purposes hereunder. The costs

 

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incurred in connection with the engagement of the Independent Accountant shall initially be borne 50% by Orbital ATK and 50% by Vista Outdoor; provided , that such fees shall ultimately be allocated between Vista Outdoor and Orbital ATK so that Vista Outdoor’s share of such fees shall be in the same proportion that the aggregate amount that is unsuccessfully disputed by Vista Outdoor bears to the total amount disputed by Vista Outdoor at the time the Disputed Items were first submitted to the Independent Accountant. Except as provided in the preceding sentence, all other costs and expenses incurred by the Parties in connection with resolving any dispute hereunder shall be borne by the Party incurring such cost and expense.

 

(b)                                  Each of Vista Outdoor and Orbital ATK shall, and shall cause each of their respective Subsidiaries to, make their respective financial Records and personnel, in each case, related to the provision of Services, available to the other Party and its accountants and other Representatives at reasonable times during the review by Vista Outdoor of an Invoice, as well as during the resolution of any Disputed Items, in each case to the extent such access is reasonably necessary in connection therewith.

 

(c)                                   Vista Outdoor and Orbital ATK agree that the procedures set forth in this Section 3.05 for resolving disputes with respect to an Invoice shall be the sole and exclusive method for resolving any Disputed Items and determining the Fees and Additional Expenses; provided , that this provision shall not prohibit either Party from instituting litigation to enforce any final determination of Fees or Additional Expenses by the Independent Accountant in any court of competent jurisdiction.  It is the intent of the Parties to have any final determination of the Fees and Additional Expenses by the Independent Accountant proceed in an expeditious manner; however , any deadline or time period contained herein may be extended or modified by the written agreement of the Parties and the Parties agree that the failure of the Independent Accountant to strictly conform to any deadline or time period contained herein shall not be a basis for seeking to overturn any determination rendered by the Independent Accountant which otherwise conforms to the terms of this Section 3.05.

 

ARTICLE IV

 

Term and Termination

 

SECTION 4.01.                                    Agreement Term.   The term of this Agreement shall commence on the Distribution Date and, subject to Sections 4.03 and 4.04, shall continue in effect until the termination of all Service Periods for the Services provided hereunder (the “ Term ”).

 

SECTION 4.02.                                    Service Periods.   The term for each Service (each, a “ Service Period ”) shall commence on the Distribution Date and, subject to Sections 4.03 and 4.04, shall end on the last day of the month in which the twelve month (or, in the case of the Tax-related Services set forth on Schedule 7, eighteen month) anniversary of the Distribution Date occurs (the “ Stated Termination Date ”); provided that if the Tax-related Services set forth on Schedule 7 have not been earlier terminated, Vista Outdoor shall have the right to extend the term for the Tax audit-related Service described therein until

 

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the last day of the month in which the 30-month anniversary of the Distribution Date occurs by providing written notice to Orbital ATK on or before the 12-month anniversary of the Distribution Date.

 

SECTION 4.03.                                    Early Termination.   (a) All of the Services set forth on a particular Schedule may be terminated by Vista Outdoor prior to the Stated Termination Date upon 30 days prior written notice to Orbital ATK unless another notice period is provided on such Schedule.  For the avoidance of doubt, unless otherwise agreed by the Parties, Vista Outdoor may not terminate any specific Service prior to the Stated Termination Date without terminating all other Services set forth on the same Schedule as such Service.

 

(b)                                  The effective date of any termination of the Services set forth on any Schedule prior to the Stated Termination Date shall be the last day of the month in which the Services would otherwise terminate in accordance with the early termination provisions included in such Schedule.

 

(c)                                   Vista Outdoor shall have the right to immediately terminate this Agreement or any Service hereunder in the event Orbital ATK is unable to meet its obligations due to a Force Majeure Event lasting longer than 60 days.

 

SECTION 4.04.                                    Termination Due to Nonpayment.   This Agreement, or the obligation to provide any Service hereunder, may be terminated at any time by Orbital ATK upon written notice to Vista Outdoor, if Vista Outdoor fails to pay any Fee or Additional Expense payable by Vista Outdoor hereunder as required under this Agreement and not disputed by Vista Outdoor in good faith, and such failure continues for a period of 60 days following the Invoice Due Date; provided that Orbital ATK has provided Vista Outdoor with written notice of its intent to terminate this Agreement, or any Service hereunder, at least 15 days prior to such termination.

 

SECTION 4.05.                                    Sums Due.   Upon the termination of this Agreement, or upon the termination of all Services provided hereunder, Orbital ATK shall be entitled to prompt payment or reimbursement of, and Vista Outdoor shall promptly pay and reimburse Orbital ATK, all amounts accrued (whether or not invoiced) or due, as of the date of such termination.

 

SECTION 4.06.                                    Access .  Vista Outdoor and its Affiliates shall make available on a timely basis to Orbital ATK and its Affiliates such information and materials reasonably requested by Orbital ATK or any of its Affiliates to enable Orbital ATK or any of its Affiliates to provide the Services. Vista Outdoor and its Affiliates shall provide to Orbital ATK and its Affiliates reasonable access to the premises of Vista Outdoor and its Affiliates (including the systems, software and networks located therein), to the extent necessary to permit Orbital ATK or any of its Affiliates to provide the Services. Orbital ATK’s exercise of the rights in this Section 4.06 shall be subject to customary security and safety procedures, and classified or commercially sensitive information may be redacted by Vista Outdoor.

 

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SECTION 4.07.                                    Survival.   The provisions of Articles IV, VI, and VIII shall survive any termination of this Agreement.

 

SECTION 4.08.                                    Vista Outdoor’s Operations.   If Vista Outdoor modifies the current operation of the Sporting Business, the facilities of the Sporting Business or conducts any other operations or activities or constructs any other facilities during the Term, and Orbital ATK reasonably determines that such modified operations or activities would materially affect or interfere with any Services provided hereunder, then, unless the Parties otherwise agree, Orbital ATK shall not be required or be liable for the failure to provide (or arrange for the provision of), and Vista Outdoor shall not be required to pay for, any such Services not provided.  If the Parties agree that Orbital ATK shall provide the relevant Services to such modified operations of the Sporting Business, Vista Outdoor shall pay Orbital ATK for any and all agreed upon fees of providing such Services as a result thereof.

 

ARTICLE V

 

Force Majeure

 

SECTION 5.01.                                    Force Majeure.   In the event that performance of any Service is interrupted, or performance of any terms or provisions of this Agreement (except for the payment of any Fees or Additional Expenses) is delayed or prevented, in whole or in part, because of or related to compliance with any Law, or because of riots, war, rationing, allocations or embargos, sovereign acts, public disturbance, strike or shortage of labor, labor dispute, fire, accident, explosion, storm, flood, earthquake, acts of God, acts of terrorism, unavailability of supplies or delays in delivery by suppliers, major breakdown or failure of transportation, manufacturing, distribution or storage facilities or for any other reason which is not within the control of the Party whose performance is interfered with and which by the exercise of reasonable care such Party is unable to prevent (each, a “ Force Majeure Event ”), then upon prompt written notice to the other Party providing reasonable detail as to the nature of such Force Majeure Event, the Party affected by such Force Majeure Event shall be excused from its obligations hereunder so long as such Force Majeure Event continues, and no liability shall attach against either Party on account thereof.  No Party shall be excused from performance if such Party fails to use commercially reasonable efforts to remedy the Force Majeure Event.

 

ARTICLE VI

 

Indemnification

 

SECTION 6.01.                                    Indemnification by Orbital ATK.   Orbital ATK shall indemnify Vista Outdoor and its Affiliates and each of their respective officers, directors and employees against and hold them harmless from any loss, liability, damage, cost or expense (including reasonable fees and expenses of counsel) (collectively, “ Losses ”) incurred by any such indemnified person in connection with the performance of Services by Orbital ATK or its Affiliates under this Agreement to the extent resulting from the gross negligence or wilful misconduct of, or violation of applicable Law by, Orbital ATK

 

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or its Affiliates (which, for the avoidance of doubt, excludes any action taken by Orbital ATK or its Affiliates at the direction of Vista Outdoor or its Affiliates), as determined by a court of competent jurisdiction in a final and nonappealable judgment.

 

SECTION 6.02.                                    Indemnification by Vista Outdoor.   Vista Outdoor shall indemnify Orbital ATK and its Affiliates and each of their respective officers, directors and employees against and hold them harmless from any Losses incurred by any such indemnified person in connection with the performance of Services by Orbital ATK or its Affiliates under this Agreement, other than any Losses resulting from the gross negligence or wilful misconduct of, or violation of applicable Law by, Orbital ATK or its Affiliates (which, for the avoidance of doubt, excludes any action taken by Orbital ATK or its Affiliates at the direction of Vista Outdoor or its Affiliates), as determined by a court of competent jurisdiction in a final and nonappealable judgment.

 

SECTION 6.03.                                    Procedures Relating to Indemnification.   All claims for indemnification under this Article VI shall be asserted and resolved pursuant to procedures equivalent to the indemnity procedures set forth in Section 11.04 of the Transaction Agreement.

 

SECTION 6.04.                                    Liability.   Except as otherwise specifically provided in this Agreement (and excluding the Fees and Additional Expenses payable by Vista Outdoor hereunder), Orbital ATK and Vista Outdoor each acknowledge that their sole and exclusive monetary remedy with respect to any claims relating to this Agreement shall be pursuant to the indemnification provisions set forth in this Article VI.  In furtherance of the foregoing, Orbital ATK and Vista Outdoor each hereby waives, and agrees to cause its Affiliates to waive, from and after the Distribution, any and all rights, claims and causes of action they may otherwise have against any other Party or any Affiliate thereof arising under or based upon any statutory or common law or otherwise (including any rights of contribution or recovery under the Comprehensive Environmental Response, Compensation, and Liability Act or similar Environmental Law) to the extent relating to this Agreement or the transactions contemplated hereby .  To the maximum extent permitted by applicable Law, except with respect to third party claims subject to indemnification hereunder, (i) in no event shall any Loss for which indemnification is provided under this Article VI include consequential, lost profits, special, punitive, incidental or indirect damages and (ii) in no event shall either Party’s aggregate liability under this Article VI exceed the aggregate amount of the Fees paid by Vista Outdoor to Orbital ATK under this Agreement (it being understood for the avoidance of doubt that this clause (ii) shall not limit Vista Outdoor’s obligation to pay the Fees or Additional Expenses in accordance with the terms of this Agreement).

 

SECTION 6.05.                                    Claims against Third-Party Service Providers.   In the event Orbital ATK receives any remedy (whether monetary or otherwise) from a Third-Party Service Provider resulting from a claim by Orbital ATK against such Third-Party Service Provider related to the Services being provided by such Third-Party Service Provider to Vista Outdoor hereunder, Orbital ATK agrees to pass through (or in the case of a non-monetary remedy, to use commercially reasonable efforts to pass through) the benefit of such remedy (or the applicable portion thereof) to Vista Outdoor.

 

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Orbital ATK further agrees to use commercially reasonable efforts to pursue, upon Vista Outdoor’s reasonable request, any claim that Vista Outdoor may have against a Third-Party Service Provider in connection with the Services being provided by such Third-Party Service Provider to Vista Outdoor hereunder; provided , that Vista Outdoor shall reimburse Orbital ATK for all costs and expenses incurred by Orbital ATK or any of its Affiliates in connection therewith that have been approved by Vista Outdoor in writing prior to being incurred (and Orbital ATK shall not be obligated to incur any such cost or expense unless and until so approved by Vista Outdoor), and such costs and expenses shall be deemed Additional Orbital ATK Expenses.

 

SECTION 6.06.                                    Specific Performance.   The Parties agree that irreparable damage for which monetary relief, even if available, would not be an adequate remedy, would occur in the event that any provision of this Agreement is not performed in accordance with its specific terms or is otherwise breached.  In furtherance of the foregoing, the Parties acknowledge and agree that (a) the Parties shall be entitled to an injunction or injunctions, specific performance or other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in the courts described in Section 8.11 without proof of damages or otherwise, this being in addition to any other remedy to which they are entitled under this Agreement and (b) the right of specific enforcement is an integral part of the transactions contemplated by this Agreement and without that right, neither Orbital ATK nor Vista Outdoor would have entered into this Agreement.  The Parties agree not to assert that a remedy of specific enforcement is unenforceable, invalid, contrary to Law or inequitable for any reason, and not to assert that a remedy of monetary damages would provide an adequate remedy or that the Parties otherwise have an adequate remedy at law.  The Parties acknowledge and agree that any Party seeking an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in accordance with this Section 6.06 shall not be required to provide any bond or other security in connection with any such order or injunction.

 

ARTICLE VII

 

Books and Records; Access

 

SECTION 7.01.                                    Separation of Books and Records.   Orbital ATK shall use its commercially reasonable efforts to cause the Financial Books and Records to be maintained separately from the Books and Records of any other business of Orbital ATK or its Affiliates as promptly as practicable following the Distribution Date (it being understood that the Financial Books and Records may be maintained on the same server that the Books and Records of any other business of Orbital ATK or its Affiliates are maintained on).

 

SECTION 7.02.                                    Audits by Vista Outdoor.   In order to confirm the accuracy of any financial information of Vista Outdoor and to perform testing to validate the transactions that will be recorded in Vista Outdoor’s consolidated financial statements, Vista Outdoor shall have the right once (and only once) every six months, at its own cost and expense, itself or through a designated third-party auditor, upon

 

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reasonable advance notice to Orbital ATK and during Orbital ATK’s regular business hours, to audit, copy and inspect the Books and Records and meet with management personnel of Orbital ATK; provided that Vista Outdoor’s exercise of the foregoing rights shall be conducted so as to minimize any interference with (i) any audit or review of the consolidated financial statements of Orbital ATK for any fiscal year or fiscal quarter of Orbital ATK or (ii) Orbital ATK’s ongoing operations; provided , further , that Vista Outdoor’s exercise of the foregoing rights shall be subject to attorney-client privilege, customary security and safety procedures, and classified or commercially sensitive information may be redacted by Orbital ATK.

 

SECTION 7.03.                                    Delivery of Books and Records.   Following the expiration of the Term, at Vista Outdoor’s expense, Orbital ATK shall transfer to Vista Outdoor control of all financial accounts maintained by Orbital ATK solely on Vista Outdoor’s behalf hereunder in connection with the Services, and shall deliver to Vista Outdoor (x) all Books and Records retained by Orbital ATK or any of its Affiliates hereunder to the extent such Books and Records relate solely to the Services or (y) to the extent not covered by clause (x) above, copies of the portions of all Books and Records that relate to, but do not solely relate to, the Services.  To the extent that any such Books and Records are stored electronically and Vista Outdoor requests that such Books and Records be converted to a format other than that maintained by Orbital ATK, then Orbital ATK shall either (A) convert such Books and Records to the format requested by Vista Outdoor or (B) in the event Orbital ATK determines, in its discretion, that it would be unable to convert such Books and Records to the format requested by Vista Outdoor without suffering undue inconvenience or hardship, notify Vista Outdoor of such determination and, upon Vista Outdoor’s written request, provide reasonable assistance to a third-party selected by Vista Outdoor in connection with such third-party’s conversion of the applicable Books and Records; provided that in any event Orbital ATK shall be reimbursed for all costs and other expenses incurred by Orbital ATK in connection with such conversion that have been approved by Vista Outdoor in writing prior to being incurred (it being understood that Orbital ATK shall be under no obligation to take any action described in this sentence unless and until Vista Outdoor so approves of any such costs and expenses), and such costs and expenses shall be deemed Additional Orbital ATK Expenses.

 

SECTION 7.04.                                    Regulatory Audit.   In the event that, in connection with any investigation or review of Vista Outdoor, any Governmental Entity shall request from Orbital ATK or any of its Affiliates any access, information or assistance, Orbital ATK and its Affiliates shall reasonably cooperate therewith at Vista Outdoor’s expense.  In the event that, in connection with any investigation or review of Orbital ATK, any Governmental Entity shall request from Vista Outdoor or any of its Affiliates any access, information or assistance, Vista Outdoor and its Affiliates shall reasonably cooperate therewith at Orbital ATK’s expense.

 

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ARTICLE VIII

 

Miscellaneous

 

SECTION 8.01.                                    Independent Contractors.   Orbital ATK and Vista Outdoor each acknowledge that they are separate entities, each of which has entered into this Agreement for independent business reasons.  The relationships of the Parties hereunder are those of independent contractors, and nothing contained herein shall be deemed to create a joint venture, partnership or any other relationship.

 

SECTION 8.02.                                    Confidentiality.   Orbital ATK and Vista Outdoor each acknowledge that confidential information of such Party or its Affiliates may be exchanged with employees and agents of the other Party or its Affiliates as a result of the transactions and activities contemplated by this Agreement.  Each Party agrees, on behalf of itself and its Affiliates, that such Party’s obligation to use and keep confidential such information of the other Party and its Affiliates shall be governed by Section 8.03(c) of the Transaction Agreement.

 

SECTION 8.03.                                    Assignment.   Neither this Agreement nor any rights or obligations hereunder may be assigned or otherwise transferred by any Party (including by operation of law) without the prior written consent of the other Party, and any assignment or transfer without such consent shall be null and void and of no effect; provided , that either Party may transfer or assign, in whole or in part, any or all of its rights hereunder to one or more of its Affiliates, it being understood that such Party will remain responsible for all of its obligations hereunder; provided , further , that either Party may assign its rights and obligations to any Person that acquires (including by operation of law) substantially all of such Party’s assets.

 

SECTION 8.04.                                    No Third-Party Beneficiaries.   Except as provided in Article VI, this Agreement is for the sole benefit of the Parties and their permitted assigns and nothing herein expressed or implied shall give or be construed to give to any person, other than the Parties and such permitted assigns, any legal or equitable rights hereunder, whether as third-party beneficiaries or otherwise.

 

SECTION 8.05.                                    Amendments.   No amendment to this Agreement shall be effective unless it shall be in writing and signed by each Party.

 

SECTION 8.06.                                    Waivers.   No failure or delay of any Party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Parties hereunder are cumulative and are not exclusive of any rights or remedies which they would otherwise have hereunder.  No provision or term of this Agreement may be waived except pursuant to a writing executed by the waiving Party.

 

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SECTION 8.07.                                    Notices.   All notices, requests, permissions, waivers or other communications required or permitted to be given under this Agreement shall be in writing and shall be delivered in the manner and to the address of the applicable Party as set forth in Section 12.02 of the Transaction Agreement.

 

SECTION 8.08.                                    Interpretation.   The rules of interpretation set forth in Section 12.04 of the Transaction Agreement shall be incorporated by reference to this Agreement, mutatis mutandis .

 

SECTION 8.09.                                    Counterparts.   This Agreement may be executed in one or more counterparts (including by facsimile or electronic mail), each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement, and shall become effective when one or more counterparts have been signed by each Party and delivered to the other Party.

 

SECTION 8.10.                                    Severability.   If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule or Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either Party.  Upon any such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible to the end that the transactions contemplated hereby are fulfilled to the extent possible.

 

SECTION 8.11.                                    Governing Law/Jurisdiction.   (a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts executed in and to be performed entirely within that State, regardless of the Laws that might otherwise govern under any applicable conflict of Laws principles.

 

(b)                                  All actions and proceedings arising out of or relating to this Agreement shall be heard and determined in any Federal or state court in the Borough of Manhattan, New York, New York, and the Parties hereby irrevocably submit to the exclusive jurisdiction and venue of such courts in any such action or proceeding and irrevocably waive the defense of an inconvenient forum or lack of jurisdiction to the maintenance of any such action or proceeding.  The consents to jurisdiction and venue set forth in this Section 8.11(b) shall not constitute general consents to service of process in the State of New York and shall have no effect for any purpose except as provided in this paragraph and shall not be deemed to confer rights on any person other than the Parties.  Each Party agrees that service of process upon such Party in any action or proceeding arising out of or relating to this Agreement shall be effective if notice is given in accordance with Section 8.07 of this Agreement.  The Parties agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law; provided, however, that nothing in the foregoing shall restrict either Party’s rights to seek any post-judgment relief regarding, or any appeal from, a final trial court judgment. This

 

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Section 8.11(b) shall not apply to any dispute under Section 3.05 that is required to be decided by the Independent Accountant.

 

SECTION 8.12.                                    WAIVER OF JURY TRIAL.   EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.  EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (C) IT MAKES SUCH WAIVER VOLUNTARILY AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 8.12.

 

[ Remainder of page intentionally left blank ]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first above written.

 

 

	ALLIANT TECHSYSTEMS INC.,
	by	/s/ Scott D. Chaplin
	Name:	Scott D. Chaplin
	Title:	Senior Vice President and General Counsel

 

 

	VISTA OUTDOOR INC.,
	by	/s/ Scott D. Chaplin
	Name:	Scott D. Chaplin
	Title:	Senior Vice President and General Counsel

 

Exhibit 2.3

 

EXECUTION VERSION

 

AMMUNITION PRODUCTS SUPPLY AGREEMENT

 

THIS AMMUNITION PRODUCTS SUPPLY AGREEMENT (this “ Agreement ”) dated as of February 9, 2015 is between Federal Cartridge Company, a Minnesota corporation (“ FCC ”), and Alliant Techsystems Operations LLC, a Delaware limited liability company (“ LLC ”) (each, a “ Party ” and together, the “ Parties ”).

 

RECITALS

 

WHEREAS, pursuant to the Transaction Agreement dated as of April 28, 2014 (the “ Transaction Agreement ”), among Alliant Techsystems Inc. (to be renamed “Orbital ATK, Inc.” substantially concurrently with the execution of this Agreement) (“ Orbital ATK ”), Vista SpinCo Inc. (which has subsequently changed its name to Vista Outdoor Inc.) (“ Vista Outdoor ”), Vista Merger Sub Inc. and Orbital Sciences Corporation, on the terms and subject to the conditions set forth in the Transaction Agreement, Alliant Techsystems Inc. will, and will cause its applicable Subsidiaries to, consummate the Sporting Transfers;

 

WHEREAS, following the Sporting Transfers, on the terms and subject to the conditions set forth in the Transaction Agreement, the Distribution will occur;

 

WHEREAS, following the Distribution, on the terms and subject to the conditions set forth in the Transaction Agreement, the Merger will occur; and

 

WHEREAS, following the Merger, Orbital ATK and its Subsidiaries (including LLC) (collectively, the “ Orbital ATK Group ”) will continue to be engaged in manufacturing Ammunition Products, and Vista Outdoor and its Subsidiaries (including FCC) (collectively, the “ Vista Outdoor Group ”) desire to purchase Ammunition Products from the Orbital ATK Group following the Merger on the terms and subject to the conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained in this Agreement, the Parties hereby agree as follows:

 

1.        DEFINITIONS

 

Capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Transaction Agreement.  As used in this Agreement, the following terms shall have the following meanings:

 

(a)               “ Ammunition Products ” means the following small-caliber ammunition products and accessories:  5.56mm (including .223 caliber) cartridges and any and all current or standard configurations (including linked, clipped, bulk, carton, tracer(4:1), ball, tracer, blank, HPT and combinations thereof but excluding any frangible ammunition products and accessories); 7.62mm (including .308 caliber) cartridges and any and all current or standard configurations (including current or substituted projectiles, bulk, carton,

 

 

blank, ball, tracer, HPT, M118, dim trace, .30 caliber and combinations thereof but excluding any frangible ammunition products and accessories); and .50 caliber cartridges and any and all current or standard configurations (including ball, blank, tracer, AP, API, APIT, HPT and combinations thereof, in bulk, linked or otherwise but excluding any frangible ammunition products and accessories).

 

(b)               “ De-Mil Products ” means ammunition component products that are created by de-militarizing full-up rounds of ammunition.

 

(c)                “ Different Caliber Products ” means small-caliber ammunition products and accessories that involve any caliber that is not described in the definition of Ammunition Products; the Parties acknowledge and agree that “Different Caliber Products” include 9mm cartridges.

 

(d)               “ DOD ” means the U.S. Army and any other U.S. Federal Governmental agency that may in the future replace the U.S. Army as the procurer of Ammunition Products for and on behalf of the U.S. Department of Defense.

 

(e)                “ Fiscal Year ” means a fiscal year beginning on April 1 and ending on March 31.

 

(f)                 “ Lake City Army Ammunition Plant ” means the U.S. Army ammunition plant located in Independence, MO, currently operated by the Orbital ATK Group.

 

(g)                “ Lake City Government Contract ” means the contract between Alliant Techsystems Operations LLC and Rock Island Contracting Center, dated September 28, 2012, as the same may be amended from time to time.

 

(h)               “ Non-Standard Ammunition ” means munitions that have not been safety tested and type classified for U.S. Army use, are munitions and explosives that are not managed by National Inventory Control Points, do not have a national stock number (NSN) and cannot be procured or requisitioned through the U.S. Army supply system.

 

(i)                   “ Purchase Order ” means a standard form purchase order used to order Ammunition Products pursuant to this Agreement, which purchase order shall be governed by the terms and conditions of this Agreement (except to the extent otherwise agreed by the Parties).

 

(j)                  “ Special Products ” means small-caliber ammunition products and accessories (including Ammunition Products but excluding Different Caliber Products) that involve (A) special requirements or specifications other than those used in the military and/or commercial products produced (either historically or as of the date hereof) by the Orbital ATK Group (or its predecessor entities) at the Lake City Army Ammunition Plant, (B) deviations from standard packaging options, (C) special testing by the Orbital ATK Group in addition

 

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to the standard testing performed by the Orbital ATK Group in connection with its manufacture of the Ammunition Products, (D) special head stamps, (E) foreign offset obligations or (F) other special product characteristics or special contract terms.

 

(k)               “ Specifications ” means the physical and operational Ammunition Product specifications previously exchanged among the Parties, and such other specifications as may be agreed between the Parties in writing.

 

(l)                   “ Vista Accessory ” means a small caliber ammunition accessory that the Orbital ATK Group has regularly purchased from the Vista Outdoor Group in the twelve months preceding the date hereof, including bandoleers and plastic components.

 

Glossary of other Defined Terms

 

Term		Defined in Section
Acceptance		Section 7(c)(i)
Accessories Inflation Factor		Exhibit A
Additional Order		Section 3(c)
Agreement		Preamble
Binding FY Order		Section 3(b)
BDSC		Section 11
Cumulative Shortfall		Exhibit A
CUP Recoupment		Exhibit A
Dispute Notice		Section 6(c)
Disputed Items		Section 6(c)
EAR		Section 18
Excusable Delay		Section 8(b)
Existing FY2015 Order		Section 3(g)
Export Controlled Item		Section 18
FCC		Preamble
Force Majeure Event		Section 8(d)
Invoice		Section 6(a)
Invoice Due Date		Section 6(a)
ITAR		Section 18
Items		Section 18
LLC		Preamble
Losses		Section 17(a)
Minimum Buy		Exhibit A
Non-Excusable Delay		Section 8(c)
Orbital ATK		Recitals
Orbital ATK Group		Recitals
Party		Preamble
Principal Representative		Section 12
Review Period		Section 6(c)
Term		Section 16(a)

 

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Transaction Agreement		Recitals
Vista Outdoor		Recitals
Vista Outdoor Group		Recitals
Warranty Period		Section 15(a)

 

2.        MANUFACTURE AND SUPPLY OF AMMUNITION PRODUCTS

 

(a)               Manufacture and Supply of the Vista Outdoor Group’s Ammunition Product Requirements.   On the terms and subject to the conditions of this Agreement, during the Term, (i) the Orbital ATK Group shall manufacture to applicable Specifications and supply to the Vista Outdoor Group all the Ammunition Products ordered by the Vista Outdoor Group pursuant to this Agreement and (ii) the Vista Outdoor Group shall purchase and take delivery of all the Ammunition Products so ordered from the Orbital ATK Group.

 

(b)               Limitations on Supplying the Vista Outdoor Group’s Ammunition Product Requirements.   The Parties acknowledge that (i) (A) delivery of Ammunition Products to the Vista Outdoor Group will be based upon a “non-interference” use of the Lake City Army Ammunition Plant and (B) the Orbital ATK Group’s delivery of Ammunition Products to the DOD will be on a priority basis and therefore will take priority over the manufacture and supply of Ammunition Products to the Vista Outdoor Group, (ii) for any reason or no reason, the DOD could modify or close the Lake City Army Ammunition Plant or modify or terminate the Lake City Government Contract, and any such modification, closure or termination could result in the Orbital ATK Group being unable to fulfill any or all of the Vista Outdoor Group’s orders for Ammunition Products, and (iii) the Lake City Army Ammunition Plant’s maximum annual production capacity of ammunition-related products (including production for the DOD) as of the date hereof is set forth on Exhibit A and the Orbital ATK Group shall be under no obligation to expand such capacity in order to fulfill any order placed by the Vista Outdoor Group.

 

(c)                New Materials.   All materials used by the Orbital ATK Group to manufacture Ammunition Products, Different Caliber Products and Special Products to be delivered to the Vista Outdoor Group shall be new materials ( i.e. , no recycled components) unless otherwise approved in advance by FCC in writing.  The Orbital ATK Group shall be responsible, at its own expense, for purchasing all raw materials, packaging, gauges, special testing equipment, die sets, packaging set up and any other materials and equipment that may be necessary to produce the Ammunition Products, Different Caliber Products and Special Products to be delivered to the Vista Outdoor Group.

 

(d)               Vista Outdoor Group Packing and Labeling Equipment.  LLC acknowledges that the Vista Outdoor Group owns certain 5.56/223 packing and labeling equipment currently installed at the Lake City Army Ammunition Plant.  During the Term, the Orbital ATK Group shall perform, at its own expense not to exceed an aggregate of $10,000 in any Fiscal Year, all regular

 

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maintenance on such packing and labeling equipment and shall use commercially reasonable efforts to ensure such equipment remains in good working order, absent normal wear and tear.  Any such maintenance expenses in excess of $10,000 in aggregate in any Fiscal Year shall be borne by the Vista Outdoor Group.  Unless otherwise agreed in advance by FCC in writing, the Orbital ATK Group shall not modify the 5.56/223 packing and labeling equipment supplied by the Vista Outdoor Group, nor shall the same be used by the Orbital ATK Group to fulfill the order of any customer other than the Vista Outdoor Group. At the end of the Term, the Parties shall cooperate in good faith to transport and return to the Vista Outdoor Group, to the extent commercially practicable and at the expense of the Vista Outdoor Group, the 5.56/223 packing and labeling equipment supplied by the Vista Outdoor Group.  From time to time the Vista Outdoor Group may request that it, although it will be under no obligation to, supply additional equipment or materials to the Orbital ATK Group ( e.g. , yellow drums, pallets or tooling), which request shall be considered in good faith by the Orbital ATK Group in light of all the circumstances (including which Party will bear any associated maintenance expenses).

 

3.        FORECASTS AND ORDERS

 

(a)               Non-Binding Forecast.   No later than January 2nd of each calendar year (or if January 2nd is not a Business Day, no later than the first Business Day thereafter), FCC shall deliver to LLC a good faith, non-binding forecast of the Vista Outdoor Group’s Ammunition Product needs (including the Specifications thereof) for the upcoming Fiscal Year, along with a proposed monthly delivery schedule by SKU number.  The forecast and proposed delivery schedule shall identify the volume of each Ammunition Product (by SKU number) included therein intended to be resold to international customers. The forecast and proposed delivery schedule shall be solely for planning purposes and shall not be a guaranteed purchase commitment or otherwise represent a binding obligation of the Vista Outdoor Group.

 

(b)               Binding Fiscal Year Order.   No later than February 15th of each calendar year (or if February 15th is not a Business Day, no later than the first Business Day thereafter), FCC shall deliver to LLC a binding order for Ammunition Products (including the Specifications thereof) for the upcoming Fiscal Year (the “ Binding FY Order ”), along with a monthly delivery schedule by SKU number.  Each Binding FY Order shall identify the volume of each Ammunition Product (by SKU number) included therein intended to be resold to international customers.

 

(c)                Additional Orders.   In addition to Binding FY Orders, the Vista Outdoor Group may, from time to time, place additional binding Ammunition Product orders (including the Specifications thereof) (each, an “ Additional Order ”), which shall include a delivery schedule by SKU number.  Each Additional Order shall identify the volume of each Ammunition Product (by SKU

 

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number) included therein intended to be resold to international customers.  No Additional Order shall affect the Vista Outdoor Group’s obligations pursuant to any previously delivered Binding FY Order that has been accepted by the Orbital ATK Group in accordance with paragraph (d) below.

 

(d)               Order Acceptance.   The Orbital ATK Group shall accept all Binding FY Orders and Additional Orders placed by the Vista Outdoor Group in accordance with paragraph (b) or (c) above, respectively, unless, (i) such order includes terms inconsistent with this Agreement, or (ii) at the time of receiving such an order, the Orbital ATK Group reasonably believes it will be unable to fulfill such order or satisfy the associated delivery schedule because of one or more of the circumstances described in Section 2(b) of this Agreement or because of a Force Majeure Event.  Within six Business Days of receiving a Binding FY Order or an Additional Order placed by the Vista Outdoor Group in accordance with paragraph (b) or (c) above, respectively, LLC shall acknowledge receipt of such order and either confirm in writing to FCC that it will be able to supply the Ammunition Products in accordance with the included delivery schedule or, alternatively, notify FCC of any portion of the order that it will be unable to fulfill and the specific cause of such inability (which, for the avoidance of doubt, shall only be because of one or more of the circumstances described in Section 2(b) of this Agreement or because of a Force Majeure Event).  Any Binding FY Order or Additional Order shall automatically be deemed modified to remove any Ammunition Products that the Orbital ATK Group has notified that it will be unable to fulfill, and, effective upon receipt by FCC of the applicable confirmation or notification, the resulting order shall constitute a binding commitment by the Vista Outdoor Group to purchase the Ammunition Products identified therein.  Notwithstanding the Vista Outdoor Group’s exclusivity obligation set forth in Section 10(a) of this Agreement, to the extent that LLC has notified FCC that it will be unable to fulfill the entirety of any Binding FY Order or any Additional Order, the Vista Outdoor Group may, at its own cost, “cover” and procure the unfulfilled portion of such Binding FY Order or Additional Order, as applicable, from alternative suppliers (or manufacture such Ammunition Products itself).

 

(e)                Production Readiness.   Subject to the circumstances described in Section 2(b) of this Agreement or the occurrence of a Force Majeure Event, the Orbital ATK Group shall maintain production readiness and the capacity necessary to fulfill any Binding FY Order or Additional Order accepted by LLC pursuant to paragraph (d) above.

 

(f)                 Purchase Orders.   The purchase of Ammunition Products, whether pursuant to a Binding FY Order or an Additional Order, shall be implemented through the issuance by the Vista Outdoor Group of one or more Purchase Orders, which may include a blanket Purchase Order.  To the extent there is any conflict between any terms and conditions appended to or otherwise contained in a Purchase Order and this Agreement, the terms of this

 

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Agreement shall control (except to the extent otherwise agreed by the Parties).

 

(g)                Existing Ammunition Product Orders.   The Parties acknowledge that, prior to the date hereof, the Vista Outdoor Group delivered to the Orbital ATK Group an order for Ammunition Products to be delivered through the Fiscal Year ending March 31, 2015 (the “ Existing FY2015 Order ”).  Exhibit B hereto sets forth the terms of the Existing FY2015 Order and all other existing Ammunition Product orders between such parties that have not been fully fulfilled as of the date hereof.  All such existing orders shall be fulfilled in accordance with the terms of this Agreement (including pricing), except as otherwise agreed by the Parties in writing.

 

4.        DIFFERENT CALIBER PRODUCTS AND SPECIAL PRODUCTS

 

(a)               Different Caliber Product Right of First Offer.   If, during the Term, the Vista Outdoor Group desires to purchase or manufacture Different Caliber Products, the Vista Outdoor Group shall, before seeking a pricing quote or ordering such Different Caliber Products from another party, or manufacturing such Different Caliber Products itself, present its proposed order for such Different Caliber Products to LLC for its consideration. Within 10 days of receiving a proposed order for Different Caliber Products, LLC shall provide a pricing quote, and thereafter the Parties shall negotiate in good faith to identify mutually acceptable delivery and other terms.  With the exception of the foregoing obligation of the Vista Outdoor Group to present its proposed order to LLC, of LLC to provide a quote, and of the Parties to negotiate in good faith, unless otherwise agreed by the Parties pursuant to a purchase order or other contract, (i) the Orbital ATK Group shall be under no obligation to manufacture and supply to the Vista Outdoor Group any Different Caliber Products and (ii) the Vista Outdoor Group may procure Different Caliber Products from alternative suppliers (or manufacture Different Caliber Products itself).

 

(b)               Special Product Right of First of Offer and Right of First Refusal.   If, during the Term, the Vista Outdoor Group desires to purchase or manufacture Special Products, the Vista Outdoor Group shall, before seeking a pricing quote or ordering such Special Products from another party, or manufacturing such Special Products itself, present its proposed order for such Special Products to LLC for its consideration. Within 10 days of receiving a proposed order for Special Products, LLC shall notify the Vista Outdoor Group whether, notwithstanding the special requirements or attributes that may be associated with the proposed order, the Orbital ATK Group is willing to sell such Special Products to the Vista Outdoor Group at the per-unit prices that would have applied under this Agreement had the Vista Outdoor Group placed an order for the most directly comparable Ammunition Products. If the Orbital ATK Group notifies the Vista Outdoor Group that it is willing to sell such Special Products to the Vista Outdoor Group at such per-unit prices,

 

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then (1) for purposes of this Agreement, the Vista Outdoor Group’s proposed order for Special Products shall be treated as if it were an Additional Order for the most directly comparable Ammunition Products accepted by the Orbital ATK Group in accordance with Section 3(d) and (2) the Vista Outdoor Group shall be subject to the obligations set forth in Section 10 (subject to the exceptions described therein) with respect to such Special Products. If the Orbital ATK Group notifies the Vista Outdoor Group that it is unwilling to sell such Special Products to the Vista Outdoor Group at such per-unit prices, then, unless otherwise agreed by the Parties pursuant to a purchase order or other contract, (A) the Orbital ATK Group shall be under no obligation to manufacture and supply to the Vista Outdoor Group any such Special Products, (B) in the case of small-caliber ammunition products and accessories described in clauses (A), (C), (E) or (F) of the definition of “Special Products” where such special attributes are not required by a customer of the Vista Outdoor Group, the Vista Outdoor Group shall be subject to the obligations set forth in Section 10 (subject to the exceptions described therein) with respect to such Special Products, and (C) in the case of small-caliber ammunition products and accessories (I) described in clauses (B) or (D) of the definition of “Special Products” or (II) described in clauses (A), (C), (E) or (F) of the definition of “Special Products” where such special attributes are required by a customer of the Vista Outdoor Group, the Vista Outdoor Group may manufacture such Special Products itself or, subject to the following two sentences, procure such Special Products from alternative suppliers. Before placing an order with an alternative supplier for the Special Products described in clause (C) of the immediately preceding sentence, the Vista Outdoor Group shall give the Orbital ATK Group at least five business days’ prior written notice of its intention to take such action (which notice shall specify the identity of the alternative supplier and shall attach the purchase order or other documentation for the Vista Outdoor Group’s proposed order with such alternative supplier), during which time the Orbital ATK Group shall have the right to match the per-unit prices and other terms contained therein. If the Orbital ATK Group notifies the Vista Outdoor Group that it will match the prices and other terms, then (x) for purposes of this Agreement, the Vista Outdoor Group’s order for such Special Products (as modified to reflect the agreed prices and other terms) shall be treated as if it were an Additional Order accepted by the Orbital ATK Group in accordance with Section 3(d) and (y) the Vista Outdoor Group shall be subject to the obligations set forth in Section 10 (subject to the exceptions described therein) with respect to such Special Products.

 

(c)                Existing Orders for Different Caliber Products and Special Products.   Exhibit C sets forth the terms of all existing Special Products Orders between the Vista Outdoor Group and the Orbital ATK Group that have not been fully fulfilled as of the date hereof.  All such existing orders shall be fulfilled in accordance with the terms of this Agreement (including pricing), except as otherwise agreed by the Parties in writing.

 

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(d)               Terms and Conditions for Future Orders of Different Caliber Products and Special Products.   Subject to paragraphs (a) and (b) above, and except as otherwise agreed by the Parties in writing, the terms and conditions of this Agreement shall apply to orders for Different Caliber Products and Special Products placed after the date hereof, mutatis mutandis .

 

5.        PRICING

 

(a)               Baseline Pricing.   Subject to the pricing adjustments set forth in this Section 5 and Exhibit D, Exhibit D hereto sets forth the firm, fixed per-unit prices that shall apply to each Ammunition Product (other than 7.62mm and 50 caliber rounds)  purchased by the Vista Outdoor Group pursuant to this Agreement.  Prices are for “full pack” quantities, and Ammunition Products shall be ordered in “full pack” quantities. The Parties shall negotiate in good faith the prices for 7.62mm and 50 caliber rounds pursuant to the BDSC (or such other process as the Parties may mutually agree).

 

(b)               Annual Price Adjustments for Changes in Materials Costs.

 

(i)                            The pricing set forth in Exhibit D applies to Ammunition Products to be delivered in the Fiscal Years ending March 31, 2015, March 31, 2016, March 31, 2017 and March 31, 2018; provided , however , that beginning with the Fiscal Year ending March 31, 2016, prices shall be adjusted each Fiscal Year to reflect changes in copper, zinc, lead and steel material prices in accordance with the methodology set forth in Exhibit E-1 and E-2.

 

(ii)                         On or before January 31 of each calendar year (or if January 31st is not a Business Day, no later than the first Business Day thereafter), LLC shall provide FCC with the adjusted per-unit prices that shall apply to the Ammunition Products to be delivered in the upcoming Fiscal Year, and shall include reasonably detailed supporting calculations of such adjusted per-unit prices.  Unless otherwise agreed, prices are effective beginning April 1 of each Fiscal Year (beginning on April 1, 2015 for Ammunition Products to be delivered during the Fiscal Year ending March 31, 2016) and shall apply to both the Vista Outdoor Group’s Binding FY Order and any Additional Orders for delivery during such Fiscal Year.

 

(c)                Taxes, Duties and Other Charges.   The prices payable by the Vista Outdoor Group under this Agreement (and any related Purchase Orders) are exclusive of any value-added taxes, firearms excise taxes, sales and use taxes or other indirect taxes that may be imposed by Law on the relevant supply of goods or services.  Such taxes, if any, shall be separately stated in the relevant Invoices and shall be paid by the Vista Outdoor Group to the Orbital ATK Group unless the Vista Outdoor Group provides an exemption to the Orbital ATK Group.  The Vista Outdoor Group shall be responsible for the payment of all

 

9

 

duties, tariffs, taxes and other charges payable on the exportation of any Ammunition Product.  Prices also exclude any amounts due for import or export licenses or permits, custom charges and duties, penalties, freight, insurance or other shipping expenses.  Any and all such costs, taxes, assessment, or duties that may be imposed upon the production, shipment, installation, or sale of Ammunition Products under this Agreement (and any related Purchase Orders) shall be the sole responsibility of, and shall be paid by, the Vista Outdoor Group.  All prices and payments shall be in U.S. dollars.

 

(d)               CUP Recoupment.   During the Term, the Vista Outdoor Group shall pay to LLC the CUP Recoupment, commencing with the Fiscal Year beginning April 1, 2015, which reflects the customer utilization processing fee payable by the Orbital ATK Group to the DOD under the Lake City Government Contract.  The Vista Outdoor Group shall pay the full amount of the CUP Recoupment in advance of the due date for the same under the Lake City Government Contract (and LLC shall notify FCC in writing of such due date at least 45 days in advance) or, if LLC agrees in writing, the Vista Outdoor Group may pay the CUP Recoupment with respect to any Fiscal Year in 12 monthly installments.

 

6.        PAYMENT

 

(a)               Invoices.   The Orbital ATK Group shall provide an invoice (an “ Invoice ”) to FCC at the time of each product delivery (including, for the avoidance of doubt, at the time of any “staged” delivery).  All Invoices shall be payable by the Vista Outdoor Group promptly, and in any event, within 30 days after receipt of such Invoice (the date on which a payment is due, the “ Invoice Due Date ”), subject to the Vista Outdoor Group’s right to dispute an Invoice pursuant to paragraph (c) below.

 

(b)               Late Payments.   Any amounts due under an Invoice that have not been paid on or before the Invoice Due Date (and are not being disputed in good faith pursuant to paragraph (c) below) shall bear simple interest at a rate of 1.0% per month ( i.e. , 12.0% per year) until the date payment is received in full by the Orbital ATK Group.

 

(c)                Review of Invoices.   FCC shall have 15 days from the date of receipt to review an Invoice (the “ Review Period ”).  FCC may, on or prior to the last day of the Review Period, provide LLC with a written notice of dispute (a “ Dispute Notice ”), which shall specify in reasonable detail those items or amounts in the Invoice as to which FCC disagrees in good faith (the “ Disputed Items ”) and the basis for such disagreement.  Unless FCC delivers a Dispute Notice to LLC prior to the expiration of the Review Period, the Vista Outdoor Group shall be deemed to have accepted and agreed to the items and amounts set forth in the applicable Invoice, and such amounts shall become conclusive and binding on the Parties.  If FCC delivers a Dispute

 

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Notice to LLC on or prior to the last day of the Review Period, the Parties shall refer the matter to their respective Principal Representatives in accordance with the procedures set forth in Section 12 of this Agreement.  Each of the Parties shall, and shall cause each of their respective Subsidiaries to, make their respective financial Records and personnel available to the other Party and its accountants and other Representatives at reasonable times and upon reasonable notice at any time during the review by FCC of an Invoice, as well as during the resolution of any Disputed Items, in each case to the extent such access is reasonably necessary in connection therewith.

 

7.               DELIVERY

 

(a)              Delivery Terms.   Delivery shall be FOB Origin - Orbital ATK Group’s dock.  Title, as well as risk of loss and damage, to Ammunition Products shall transfer to the Vista Outdoor Group upon delivery to Orbital ATK Group’s dock.  If the Vista Outdoor Group fails to take delivery within 60 days of delivery to Orbital ATK Group’s dock in accordance with the delivery schedule, the Vista Outdoor Group shall pay a warehousing charge calculated in accordance with the methodology set forth in Exhibit A.

 

(b)              No Liens.   The Orbital ATK Group shall deliver the Ammunition Products free and clear of all liens and property rights.  In the event that there are liens or property rights on any Ammunition Products at the time of delivery, the Vista Outdoor Group shall have the right to discharge them by paying the amount of any related claims, and in such event, LLC shall promptly reimburse the Vista Outdoor Group for any amounts paid in connection therewith and any losses, damages or other expenses incurred in connection therewith.

 

(c)               Inspection and Acceptance.

 

(i)                         The Vista Outdoor Group shall have the right to inspect Ammunition Products that have been delivered to it for conformance with the applicable Specifications, and it shall report in writing any claims of non-conformance within 30 days after delivery, after which time the Ammunition Products shall be deemed irrevocably accepted (“ Acceptance ”). Any claims by the Vista Outdoor Group that an Ammunition Product fails to conform to the applicable Specifications or has a defect shall be governed by Section 15 of this Agreement.

 

(ii)                      No inspection, Acceptance, testing or payment for Ammunition Products shall relieve LLC from responsibility for defects or for otherwise failing to satisfy its obligations (including the limited warranty) under this Agreement.

 

(d)              Delivery Schedule by SKU Number. Notwithstanding the applicable delivery schedule included with a Binding FY Order or Additional Order, the Vista

 

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Outdoor Group may (i) modify, without penalty, the timing for delivery of any Ammunition Products if it provides the Orbital ATK Group with at least three full calendar months notice and the new delivery date(s) will occur in the same Fiscal Year and (ii) modify, without penalty, the quantity and SKUs ordered thereby if (x) the Vista Outdoor Group provides the Orbital ATK Group with at least three full calendar months notice and the new delivery date(s) will occur in the same Fiscal Year and (y) as modified, the aggregate purchase price for all Ammunition Products included in the order is equal to or exceeds the aggregate purchase price for Ammunition Products prior to the modification. The Vista Outdoor Group may not otherwise modify the terms of a delivery schedule without the prior written consent of the Orbital ATK Group. The Orbital ATK Group shall deliver Ammunition Products to the Vista Outdoor Group in accordance with the delivery schedule, and the Orbital ATK Group shall not build ahead of such schedule except at its own risk and warehousing cost.

 

8.            FAILURE TO SUPPLY

 

(a)              Notifications.   If, for any reason, the Orbital ATK Group does not have sufficient quantities to fulfill a Binding FY Order or any Additional Order or becomes aware that for any reason there is a reasonable likelihood that it will not be able to fulfill such an order, LLC shall promptly, and in any event, within 10 days notify FCC of such fact, and the Parties shall cooperate in good faith to resolve and mitigate the issue.  In the event that the Orbital ATK Group is unable to fulfill the entirety of a Binding FY Order or any Additional Order, the Orbital ATK Group shall (i) fill the portion of such order that it is able to fill and (ii) use its commercially reasonable efforts to fill the remainder of such order through its own manufacturing efforts or, with the prior written consent of the Vista Outdoor Group, through purchases from a third party, as soon as reasonably practicable (in light of all the circumstances).

 

(b)              Excusable Delays.   If the Orbital ATK Group fails to timely deliver all or any portion of a Binding FY Order or any Additional Order due in whole or in part to the circumstances described in Section 2(b) of this Agreement or due to a Force Majeure Event (such delay, an “ Excusable Delay ”):

 

(i)                         the Orbital ATK Group shall have no liability to the Vista Outdoor Group with respect to such unfulfilled orders for Ammunition Products; and

 

(ii)                      the Vista Outdoor Group shall be entitled to, in its discretion and at its own cost, upon written notice to the Orbital ATK Group, “cover” and procure such unfulfilled orders for Ammunition Products from alternative suppliers (or manufacture such Ammunition Products itself) (and the applicable Binding FY Order or Additional Order shall automatically be deemed modified to remove any Ammunition

 

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Products that the Vista Outdoor Group has notified that it will cover, effective upon receipt by the Orbital ATK Group of the applicable notification).

 

(c)               Non-Excusable Delays. If the Orbital ATK Group fails to timely deliver all or any portion of an order in any circumstance other than would constitute an Excusable Delay (such delay, a “ Non-Excusable Delay ”), then the Orbital ATK Group shall pay reasonable costs associated with expedited delivery of such Ammunition Products once they become available.  In addition, if the Orbital ATK Group’s delivery is, or would reasonably be expected to be, delayed by more than 30 days, then the Vista Outdoor Group may send a notice of default to LLC, demanding that the Orbital ATK Group either cure or provide a plan to cure.  If the Orbital ATK Group neither cures nor provides a plan to cure that is reasonably acceptable to the Vista Outdoor Group within 45 days of the original Ammunition Product delivery date, then the Vista Outdoor Group may, upon written notice to the Orbital ATK Group, “cover” and procure such unfulfilled order for Ammunition Products from alternative suppliers (or manufacture such Ammunition Products itself) (and the applicable Binding FY Order or Additional Order shall automatically be deemed modified to remove any Ammunition Products that the Vista Outdoor Group has notified that it will cover, effective upon receipt by the Orbital ATK Group of the applicable notification), and the Orbital ATK Group shall reimburse the Vista Outdoor Group for the reasonable difference between the price of such Ammunition Products under this Agreement and the “cover” price, which may include reasonable expedited shipping and freight costs.

 

(d)              Force Majeure.   In the event that the delivery of any Ammunition Product is interrupted, or performance of any terms or provisions of this Agreement (except for the payment of amounts due under an Invoice or any reimbursement obligation) is delayed or prevented, in whole or in part, because of or related to compliance with any Law, or because of riots, war, rationing, allocations or embargos, sovereign acts, public disturbance, strike or shortage of labor, labor dispute, fire, accident, explosion, storm, flood, earthquake, acts of God, acts of terrorism, unavailability of supplies or delays in delivery by suppliers, major breakdown or failure of transportation, manufacturing, distribution or storage facilities or for any other reason which is not within the control of the Party whose performance is interfered with and which by the exercise of reasonable care such Party is unable to prevent (each, a “ Force Majeure Event ”), then upon prompt written notice to the other Party providing reasonable detail as to the nature of such Force Majeure Event, the Party affected by such Force Majeure Event shall be excused from its obligations hereunder so long as such Force Majeure Event continues, and no liability shall attach against either Party on account thereof.  No Party shall be excused from performance if such Party fails to use commercially reasonable efforts to remedy the Force Majeure Event.

 

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9.            REQUIREMENTS; ORBITAL ATK GROUP EXCLUSIVITY

 

(a)              Sales of Ammunition Products by the Orbital ATK Group.   If, in respect of an upcoming Fiscal Year, the Vista Outdoor Group (i) places a Binding FY Order that is for an amount not less than the sum of the Minimum Buy and the Cumulative Shortfall (calculated in accordance with the methodology set forth in Exhibit A) and (ii) timely pays the CUP Recoupment due in such Fiscal Year in accordance with the terms of this Agreement, then, during such Fiscal Year, subject to the following sentence, the Orbital ATK Group shall make sales of small-caliber ammunition products (including the Ammunition Products and Special Products) manufactured at the Lake City Army Ammunition Plant exclusively to the Vista Outdoor Group and the DOD.  Notwithstanding the foregoing, the Orbital ATK Group may (1) to a foreign government with whom the Orbital ATK Group has a small-caliber ammunition/services co-production contract, sell, for such government’s use, full-up rounds of ammunition or component products, in each case manufactured at the Lake City Army Ammunition Plant (and, for the avoidance of doubt, the Orbital ATK Group may provide small caliber engineering services to such government, such services not being restricted under this Agreement), (2) sell to any third party Non-Standard Ammunition manufactured at the Lake City Army Ammunition Plant, (3) sell to any third party De-Mil Products manufactured at the Lake City Army Ammunition Plant or (4) sell small-caliber ammunition products to a foreign government customer in the circumstances described in the third-to-last sentence of Section 11; provided , however , that solely with respect to clause (1), unless the Vista Outdoor Group otherwise agrees in writing, the Orbital ATK Group may not sell full-up rounds of ammunition products to such foreign government to the extent the applicable foreign government commences a bona fide competitive bidding process for the procurement of such products open to non-OEM offerors (it being understood that a “sole source” contract shall be deemed not to be a bona fide competitive bidding process and shall be permitted by clause (1) to the extent the other conditions described therein are satisfied); provided , further , that solely in the case of clause (3), (A) the Orbital ATK Group shall procure the full-up rounds of ammunition to be de-militarized only from the DOD or another U.S. Federal Government department or agency and (B) the manufacture and sale of any such De-Mil Products shall not exceed 50.0 million round equivalents per Fiscal Year.  If, in respect of any upcoming Fiscal Year, the Vista Outdoor Group places a Binding FY Order that is for an amount that is less than the sum of the Minimum Buy and the Cumulative Shortfall, or if the Vista Outdoor Group fails to timely pay the CUP Recoupment in accordance with the terms of this Agreement, then LLC may choose to terminate the foregoing exclusivity obligation for such upcoming Fiscal Year, effective on the first day of such upcoming Fiscal Year (and in such case, the Orbital ATK Group may, in its sole discretion and without terminating this Agreement, make sales during such Fiscal Year of small-caliber ammunition products (including the Ammunition Products) manufactured at the Lake City Army Ammunition

 

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Plant to any third party, including competitors of the Vista Outdoor Group). In determining whether the Vista Outdoor Group has reached the Minimum Buy and the Cumulative Shortfall, all Ammunition Products included in a Binding FY Order shall be included in the order total even if a portion of such order has been rejected by LLC pursuant to Section 3(d)(ii) of this Agreement, provided , however , that orders rejected by LLC because they are inconsistent with the terms of this Agreement pursuant to Section 3(d)(i) shall not be considered in determining whether the Vista Outdoor Group has reached the Minimum Buy and the Cumulative Shortfall.   For the avoidance of doubt, notwithstanding any termination of the exclusivity obligation that may occur in any prior Fiscal Year, the exclusivity obligation shall be reinstated on the first day of the upcoming Fiscal Year if the Vista Outdoor Group satisfies the criteria set forth in the first sentence of this paragraph (a); provided , however , that such reinstatement shall not prevent the Orbital ATK Group from continuing to make sales of Ammunition Products to a third party at the volumes prescribed in a contract or purchase order with such third party that was executed after the date of the termination of the exclusivity obligation but prior to the date that the Vista Outdoor Group satisfied the criteria set forth in the first sentence of this paragraph (a).  The Parties acknowledge that the Existing FY2015 Order satisfies the Minimum Buy (and that no CUP Recoupment is payable by the Vista Outdoor Group in respect of the Fiscal Year ending March 31, 2015) and therefore agree that the foregoing exclusivity obligation shall be in effect on the date hereof and shall remain in effect at least through the Fiscal Year ending March 31, 2015.

 

(b)              Purchase of Accessories from the Vista Outdoor Group.   During the Term and subject to the right to “cover” when the Vista Outdoor Group is unable or unwilling to deliver such accessories in a reasonably timely manner, the Orbital ATK Group shall purchase all its requirements for the Vista Accessories exclusively from the Vista Outdoor Group and may not otherwise procure from a third party or manufacture Vista Accessories; provided , however , that the foregoing exclusivity obligation shall cease to apply in respect of a given Vista Accessory if the Vista Outdoor Group increases the price of such Vista Accessory by more than the Accessories Inflation Factor from the price in effect in the prior Fiscal Year (beginning with the Fiscal Year ending March 31, 2016, which shall be compared to the initial prices in effect as of the date hereof).  For the avoidance of doubt, the Orbital ATK Group is not required to order any minimum quantity of Vista Accessories.

 

10.     REQUIREMENTS; VISTA OUTDOOR GROUP EXCLUSIVITY

 

(a)              Vista Outdoor Group Purchase Requirements.   During the Term and subject to the right to “cover” pursuant to Section 3(d), Section 8(b)(ii) and Section 8(c) of this Agreement, the Vista Outdoor Group shall purchase all its requirements for Ammunition Products (and, in the circumstances described in Section 4(b), Special Products) exclusively from the Orbital ATK Group

 

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and may not otherwise procure from a third party or manufacture Ammunition Products (and, in the circumstances described in Section 4(b), Special Products); provided , however , that notwithstanding the foregoing, the Vista Outdoor Group shall be entitled to continue to manufacture the ammunition products that it has manufactured in the twelve months preceding the date hereof at the same annual volumes and under the same brands.  For the avoidance of doubt, (i) the Vista Outdoor Group is not required to order any minimum quantity of ammunition products, but once an order is placed and accepted by the Orbital ATK Group in accordance with the terms of this Agreement, it is binding in accordance with the terms of this Agreement and may not be withdrawn by the Vista Outdoor Group (except pursuant to the Vista Outdoor Group’s right to “cover” under this Agreement or to terminate this Agreement in accordance with its terms) and (ii) the foregoing exclusivity obligation does not apply to any Different Caliber Products or, subject to Section 4(b), any Special Products.

 

(b)              Vista Outdoor Group Sales Restrictions.   During the Term, the Vista Outdoor Group may not sell Ammunition Products to the DOD; provided , however , that notwithstanding the foregoing, the Vista Outdoor Group shall be entitled to continue to sell to the DOD at the same annual volumes the Ammunition Products manufactured by the Vista Outdoor Group that it has sold to the DOD in the twelve months preceding the date hereof.

 

11.                                BUSINESS DEVELOPMENT STEERING COMMITTEE

 

Each Party shall designate three executives to serve on a Business Development Steering Committee (the “ BDSC ”) in respect of this Agreement, and the names of such BDSC members shall be provided in writing to the other Party promptly following the date hereof.  Either Party may, effective upon written notice to the other Party, change one or more of its BDSC members at any time. The Parties shall use commercially reasonable efforts to cause the BDSC to meet (which may be by telephone) no less than quarterly (or more promptly as warranted) to discuss the domestic and international small-caliber ammunition markets (including opportunities for the Parties to sell small-caliber ammunition products in such markets at higher volumes and higher margins); business pursuit strategies; price- and cost-related initiatives; production and delivery schedules; such other topics as may be submitted by one Party to the other Party with at least 10 days notice; and such other topics as the Parties may mutually agree. The Vista Outdoor Group shall also inform the Orbital ATK Group, through the BDSC, in the event that the Vista Outdoor Group notifies its major customers of a price change for Ammunition Products. If the Parties identify (whether through the BDSC or the Parties’ standard “bid” or “request for proposal” processes) significant changes in the domestic or international small-caliber ammunition markets including the profitability of selling Ammunition Products in such markets, then the BDSC shall evaluate in good faith whether, under the circumstances and in light of the principles set forth on Exhibit F, an equitable adjustment to pricing of the related Ammunition Products is warranted. If, in the preceding quarter, the Vista Outdoor

 

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Group has identified an opportunity to sell small-caliber ammunition products to a foreign government customer and has determined that it will not pursue such opportunity, the Vista Outdoor Group shall, in a timely fashion, raise the opportunity to the attention of the Orbital ATK Group at a BDSC meeting. Notwithstanding the Orbital ATK Group’s exclusivity obligations set forth in Section 9(a), the Orbital ATK Group may pursue such opportunity and may make sales of small-caliber ammunition products to such customer; provided, that , the prices offered by the Orbital ATK Group to such customer may be no more favorable than those offered to the Vista Outdoor Group under this Agreement and the Orbital ATK Group shall confirm the same in writing to the Vista Outdoor Group prior to making such sales. The BDSC shall not have the authority to modify any of the terms of this Agreement except pursuant to a written agreement signed by each Party in accordance with Section 21(f). For the avoidance of doubt, any disputes related to this Agreement shall be subject to the dispute resolution procedures described in Section 12 and not the BDSC or this Section 11.

 

12.                                DISPUTE RESOLUTION

 

Each Party shall designate a senior executive with authority to resolve disputes related to this Agreement (a “ Principal Representative ”), and the name of such Principal Representative shall be provided in writing to the other Party promptly following the date hereof. Either Party may, effective upon written notice to the other Party, change its Principal Representative at any time. In the event of a dispute related to this Agreement, the Principal Representatives shall meet and seek in good faith to resolve such dispute.  If the Principal Representatives are able to resolve the dispute in writing, their resolution shall be conclusive and binding upon the Parties (and in the case of Disputed Items, the applicable Invoice shall be revised to reflect such resolution, and, as so revised, such Invoice shall be deemed to set forth the final amount due thereunder for all purposes).  If the Principal Representatives are unable in good faith to resolve a dispute within 30 days, either Party may pursue a claim in connection with the matter in dispute in federal or state court in accordance with the requirements set forth in Section 21(l) of this Agreement.  All costs and expenses incurred by the Parties in connection with resolving any dispute related to this Agreement shall be borne by the Party incurring such cost or expense.  In the event of a dispute, both parties must continue to comply with the terms of this Agreement while the dispute is being resolved.

 

13.                                INSURANCE

 

During the Term, each Party agrees to procure and maintain in full force and effect valid and collectible insurance policies in connection with its activities hereunder, which policies shall provide for customary levels of coverage, taking into account the scope of this Agreement and industry practice.  Upon request, a Party shall provide to the other Party a certificate of coverage or other written evidence of such insurance coverage.

 

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14.                              INTELLECTUAL PROPERTY

 

(a)              Limited License.   Each Party hereby grants to the other Party and its Affiliates for the Term a limited, non-transferable (with the right to sublicense), non-exclusive, royalty-free license to use the Intellectual Property Rights owned by it and its Affiliates to the extent necessary for the other Party and its Affiliates to perform their obligations hereunder.  All right, title and interest in and to the Intellectual Property Rights owned by a Party and not expressly granted herein are reserved by such Party.

 

(b)              Ownership.   As between the Parties, each Party shall retain ownership of all right, title and interest in and to the Intellectual Property Rights owned or controlled by it immediately after the Distribution; provided that any derivative works of, or modifications or improvements to, such Intellectual Property Rights (collectively, “ Derivative Works ”) conceived or created as part of performance hereunder shall be owned by the Party creating such Derivative Works, subject to the other Party’s rights in its underlying Intellectual Property.  Subject to paragraph (a) above, neither Party shall acquire any right, title or interest in or to such Intellectual Property Rights of the other Party pursuant to this Agreement.

 

(c)               Design Responsibility and Labeling.   The Orbital ATK Group shall retain design responsibility for all Ammunition Products.  The Vista Outdoor Group shall have the right to determine the appearance and text of any labeling and packaging used in connection with Ammunition Products it has ordered, including any finished product containing the Ammunition Product.

 

15.                              LIMITED WARRANTY

 

(a)              Limited Warranty.   LLC expressly warrants that the Ammunition Products sold to the Vista Outdoor Group pursuant to this Agreement shall be free from defects in material and workmanship and shall be manufactured to the applicable Specifications upon delivery and for a period of one year after Acceptance (the “ Warranty Period ”).  Other than pursuant to any rights to indemnification under this Agreement or any rights with respect to third party claims, including product liability claims, subject to the following sentence, FCC’s exclusive remedy and LLC’s sole liability for any breach of the foregoing warranty shall be for LLC to promptly, and in any event, within 30 days replace the defective or nonconforming Ammunition Product with a new Ammunition Product.  Notwithstanding the foregoing, if a customer of the Vista Outdoor Group cancels part or all of its order for such defective or nonconforming Ammunition Product prior to the Orbital ATK Group’s delivery of the replacement Ammunition Product, FCC shall have the right to elect to receive a refund of the purchase price plus handling and transportation for the defective or nonconforming Ammunition Product in lieu of a replacement.  This “replace or refund” remedy shall be applied to the

 

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minimum quantity that is reasonably demonstrated by the Vista Outdoor Group to be in breach of the limited warranty.

 

(b)              Warranty Claims.   If FCC believes that any Ammunition Product is defective or otherwise fails to conform to the applicable Specifications, FCC shall be entitled to, prior to the expiration of the Warranty Period and within 30 days of becoming aware of such defect or nonconformance, notify LLC in writing of the existence and nature of any defect or nonconformance and the Orbital ATK Group shall have a reasonable opportunity, not to exceed 15 days from receipt of notification, to inspect such Ammunition Product.  All warranty claims shall identify the defective or nonconforming Ammunition Product, provide the Purchase Order number and describe the nature of the defect or nonconformance.  At LLC’s election, the Vista Outdoor Group shall return defective Ammunition Products to the Orbital ATK Group at LLC’s expense within 30 days (or in the case of Ammunition Products located outside the United States, 90 days) of notifying LLC of the warranty claim; if LLC does not request the return of a rejected Ammunition Product, the Vista Outdoor Group may dispose of such Ammunition Product in any manner in its discretion at the Vista Outdoor Group’s expense.  If the Parties disagree as to whether a rejected Ammunition Product has a defect or conforms to the applicable Specifications or as to whether FCC timely delivered its warranty claim, the Parties shall refer the matter to their respective Principal Representatives in accordance with the procedures set forth in Section 12 of this Agreement.  If the Principal Representatives or a competent court, as applicable, determines that a rejected Ammunition Product has no defects and conforms to the applicable Specifications, or that FCC has failed to properly deliver the applicable warranty claim within the applicable Warranty Period and within 30 days of becoming aware of such defect or nonconformance, then the Vista Outdoor Group shall reimburse the Orbital ATK Group all costs of handling, transportation and repairs/modifications to such rejected Ammunition Product based on LLC’s regular repair charges.

 

(c)               Disclaimer of All Other Warranties.   LLC’s warranty in paragraph (a) above is in lieu of all other warranties, and the Orbital ATK Group expressly disclaims all other warranties, express or implied, statutory or otherwise, including without limitation, the implied warranties of merchantability and fitness for a particular purpose.  The Orbital ATK Group’s warranty does not extend to (i) Ammunition Products damaged in any way after delivery to Orbital ATK Group’s dock, including by improper handling, use or storage or as a result of a Force Majeure Event or (ii) components provided by the Vista Outdoor Group or Ammunition Products damaged as a result of any defects in such components. Any repair or attempt to repair Ammunition Products, or modification of Ammunition Products, by anyone other than the Orbital ATK Group (or a Person acting for or on behalf of the Orbital ATK Group) shall void the warranty provided under this Agreement.

 

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16.                              TERM AND TERMINATION

 

(a)              Term.   Unless terminated earlier in accordance with the provisions of this Agreement, this Agreement shall remain in effect for a period of three years from the date hereof (as may be extended pursuant to the terms of this Agreement, the “ Term ”).  This Agreement shall automatically renew for an additional three-year term after the expiration of the preceding term (and thereafter, shall automatically renew for a third term ending on September 30, 2023) unless either Party provides the other Party with a binding, irrevocable written notification of its declaration not to renew this Agreement in the first two months of the third year ( i.e. , in month 25 or 26) of the term then in effect.

 

(b)              Termination for Plant Closure or Contract Termination.   Either Party may, upon 10 days written notice, terminate this Agreement prior to the expiration of the Term if the DOD (or anyone acting on behalf of the DOD) (i) closes the Lake City Army Ammunition Plant or (ii) terminates the Lake City Government Contract with the Orbital ATK Group.

 

(c)               Termination for Prolonged Delays.   FCC may, upon 10 days written notice, terminate this Agreement prior to the expiration of the Term if the DOD (or anyone acting on behalf of the DOD) (i) modifies the Lake City Army Ammunition Plant, (ii) modifies the Lake City Government Contract or (iii) otherwise exercises its priority rights to receive Ammunition Products from the Orbital ATK Group, in each case in a manner that would reasonably be expected to result in the Vista Outdoor Group being unable to receive timely deliveries of the Ammunition Products it has ordered from the Orbital ATK Group (in an aggregate quantity equal to the number of Ammunition Products included in the Binding FY Order and any Additional Orders for delivery in the then-current Fiscal Year) for a period of at least 12 consecutive months beginning on the date on which such delivery interruption first occurs.

 

(d)              Termination for Breach of this Agreement.

 

(i)                         Either Party may, upon written notice, terminate this Agreement prior to the expiration of the Term if the other Party materially breaches this Agreement; provided , that the Party receiving the notice of termination shall have 60 days from the date of receipt thereof to cure the material breach or failure and, in the event such breach or failure is cured, the notice shall be of no effect.

 

(ii)                      FCC may, upon 10 days written notice, terminate this Agreement prior to the expiration of the Term if a Non-Excusable Delay has occurred and is continuing uncured for the later of (A) a period of 60 days following the original Ammunition Product delivery date and (B) 10 days from receipt of the termination notice.

 

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(iii)                      LLC may, upon 10 days written notice, terminate this Agreement prior to the expiration of the Term if the Vista Outdoor Group has failed to pay an amount due under an Invoice that is not being disputed by FCC in good faith, and such failure continues for the later of (A) a period of 60 days following the Invoice Due Date and (B) 10 days from receipt of the termination notice.

 

(e)                Termination for Bankruptcy.   Either Party may, immediately upon written notice, terminate this Agreement if the other Party files a petition in bankruptcy, has filed against it an involuntary petition in bankruptcy, makes an assignment for the benefit of creditors, has a trustee or receiver appointed for any or all of its assets, is insolvent or fails or is unable to pay its debts when due.

 

(f)                 Survival.   The expiration or termination of this Agreement for any reason shall not release either Party hereto from any liability that at such time has already accrued.  The provisions of Sections 15, 16, 17, 19 and 21 of this Agreement shall survive any termination.

 

17.                                INDEMNIFICATION AND LIMITATION OF LIABILITY

 

(a)               Indemnification by LLC.   LLC shall indemnify FCC and its Affiliates and each of their respective officers, directors, employees and agents against, and defend and hold them harmless from, any third-party claim, loss, liability, damage, cost or expense (including reasonable fees and expenses of counsel) (collectively, “ Losses ”) incurred by any such indemnified person arising out of any alleged or actual: (i) personal injury to employees or agents of FCC or its Affiliates caused solely by LLC or its Affiliates (or by their respective agents or employees) ( i.e. , there is no contributory negligence by a third party) while in, upon, or about the premises of LLC or its Affiliates, or suffered solely as a result of the acts of any of LLC or its Affiliates (or of their respective agents or employees); (ii) (A) infringement by LLC or its Affiliates of any third party Intellectual Property Rights (including to the extent that the grant of a license to FCC and its Affiliates pursuant to Section 14(a) of this Agreement infringes any third party Intellectual Property Rights) or (B) infringement of any third party Intellectual Property Rights by the Ammunition Products (except to the extent such infringement arises from Intellectual Property Rights provided by the Vista Outdoor Group and required by the Vista Outdoor Group to be incorporated into the Ammunition Products), except, with respect to both sub-clauses (A) and (B), LLC will have no obligation for any infringement claim based on: (x) the use of an Ammunition Product as modified by someone other than the Orbital ATK Group; or (y) the use or combination of an Ammunition Product with any products manufactured by a party other than the Orbital ATK Group,  (iii) violation of applicable Law (including import/export Laws) by LLC or its Affiliates (or of their respective agents or employees) or (iv) third party product liability claims for manufacturing or design defects (whether for

 

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property damage or personal injury, including death) relating to the Ammunition Products (except to the extent such liability is attributable to a Vista Outdoor Group design), in each case in connection with the performance by FCC and its Affiliates under this Agreement and, in the case of clauses (i), (iii) and (iv), except to the extent that such claims arise out of or are caused by the wilful misconduct or negligence of FCC or its Affiliates, as determined by a court of competent jurisdiction in a final and nonappealable judgment.

 

(b)               Indemnification by FCC.   FCC shall indemnify LLC and its Affiliates and each of their respective officers, directors, employees and agents against, and defend and hold them harmless from, any Losses incurred by any such indemnified person arising out of any alleged or actual: (i) personal injury to employees or agents of LLC or its Affiliates caused solely by FCC or its Affiliates (or by their respective agents or employees) ( i.e. , there  is no contributory negligence by a third party) while in, upon, or about the premises of FCC or its Affiliates, or suffered solely as a result of the acts of any of FCC or its Affiliates (or of their respective agents or employees); (ii) (A) infringement by FCC or its Affiliates of any third party Intellectual Property Rights (including to the extent that the grant of a license to LLC and its Affiliates pursuant to Section 14(a) of this Agreement infringes any third party Intellectual Property Rights) or (B) infringement of any third party Intellectual Property Rights by the Ammunition Products solely to the extent such infringement arises from Intellectual Property Rights provided by the Vista Outdoor Group and required by the Vista Outdoor Group to be incorporated into the Ammunition Products, except, with respect to both (A) and (B), FCC will have no obligation for any infringement claim based on: (x) the use of an Ammunition Product as modified by someone other than the Vista Outdoor Group; or (y) the use or combination of an Ammunition Product with any products manufactured by a party other than the Vista Outdoor Group; (iii) violation of applicable Law (including import/export Laws) by FCC or its Affiliates (or of their respective agents or employees); or (iv) breach by FCC of its representations in Section 18 of this Agreement, in each case in connection with the performance by LLC and its Affiliates under this Agreement and, in the case of clauses (i) and (iii), except to the extent that such claims arise out of or are caused by the wilful misconduct or negligence of LLC or its Affiliates, as determined by a court of competent jurisdiction in a final and nonappealable judgment.

 

(c)                Indemnification Claims.   All claims for indemnification under this Section 17 shall be asserted and resolved pursuant to procedures equivalent to the indemnity procedures set forth in Section 11.04 of the Transaction Agreement. For the avoidance of doubt, the Indemnifying Party shall have the right, by giving written notice to the Indemnified Party, to assume the defense of the Indemnified Party against any Third Party Claim. Other than timely responding to a court-imposed or other legally required notice, the Indemnified Party shall not unilaterally and without input from the

 

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Indemnifying Party, take any action to settle a matter for which the Indemnified Party seeks indemnification.

 

(d)               LIMITATION OF LIABILITY.   UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INDIRECT, COLLATERAL, SPECIAL, PUNITIVE, TREBLE, EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS OR GOODWILL), REGARDLESS IF SUCH CLAIM IS BASED ON CONTRACT, NEGLIGENCE, TORT, WARRANTY OR ANY OTHER BASIS UNDER, AS A RESULT OF, OR ASSOCIATED WITH THIS AGREEMENT OR EITHER PARTY’S PERFORMANCE UNDER THIS AGREEMENT.  EACH PARTY’S RESPECTIVE TOTAL LIABILITY FOR ANY CLAIMS ALLEGED IN ANY FISCAL YEAR (IN AGGREGATE) ARISING UNDER OR RELATED TO THIS AGREEMENT IS LIMITED TO AND SHALL NOT EXCEED THE TOTAL AMOUNT ACTUALLY PAID, PAYABLE OR SET FORTH IN A BINDING ORDER FOR THAT FISCAL YEAR BY THE VISTA OUTDOOR GROUP FOR THE PRODUCTS PURCHASED OR ORDERED PURSUANT TO THIS SUPPLY AGREEMENT.

 

THE FOREGOING DISCLAIMERS OF LIABILITY AND LIMITATIONS ON LIABILITY WILL NOT APPLY TO ANY INDEMNIFICATION OBLIGATIONS IN THIS AGREEMENT OR ANY OBLIGATION WITH RESPECT TO THIRD PARTY CLAIMS, INCLUDING PRODUCT LIABILITY CLAIMS FOR MANUFACTURING OR DESIGN DEFECTS.

 

18.                                EXPORT CONTROLS

 

Technical data (including software), hardware or defense services (collectively, “ Items ”) disclosed, provided or transferred pursuant to this Agreement, or any derivative of such Items, may be subject to U.S. export control laws and regulations, including the International Traffic in Arms Regulation (22 CFR Parts 120 - 130 et. seq., “ ITAR ”) or Export Administration Regulations (15 CFR Parts 730 - 744 et. seq., “ EAR ”).  The Parties acknowledge that Items subject to ITAR or EAR (“ Export Controlled Items ”) may be provided by the Orbital ATK Group to the Vista Outdoor Group pursuant to this Agreement.  FCC hereby represents and warrants to LLC that (i) the Vista Outdoor Group will comply with all applicable export control laws and regulations; (ii) Export Controlled Items furnished to the Vista Outdoor Group by the Orbital ATK Group will not be transferred to any foreign person or otherwise exported unless authorized in advance by the U.S. Federal Government; (iii) the Vista Outdoor Group will not take any action with respect to Export Controlled Items furnished to the Vista Outdoor Group by the Orbital ATK Group that is regulated by U.S. export control laws and regulations, without specific written authorization from the Orbital ATK Group and pursuant to an appropriate U.S. Federal Government agency license or exemption; and (iv) the Vista Outdoor Group  will maintain current U.S. Federal

 

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Government registrations, licenses or approvals required to conduct activities under this Agreement, including with the U.S. State Department’s Directorate of Defense Trade Controls under the ITAR.

 

19.                                GOVERNMENTAL REVIEWS; PRODUCT RECALLS

 

(a)               Governmental Reviews.   In the event that, in connection with any investigation or review of the Vista Outdoor Group, any Governmental Entity shall request from LLC or any of its Affiliates any access, information or assistance, LLC and its Affiliates shall reasonably cooperate therewith at FCC’s expense.  In the event that, in connection with any investigation or review of the Orbital ATK Group, any Governmental Entity shall request from FCC or any of its Affiliates any access, information or assistance, FCC and its Affiliates shall reasonably cooperate therewith at LLC’s expense.

 

(b)               Product Recalls.   Without limiting any other rights or obligations of either Party under applicable Law, in the event any Governmental Entity having jurisdiction shall request or order the Vista Outdoor Group or the Orbital ATK Group, or if the Orbital ATK Group shall determine to undertake, any corrective action with respect to any Ammunition Product, including any recall or market action, and the cause or basis of such recall or market action is attributable to a breach by LLC of its limited warranty contained herein, then LLC shall reimburse the Vista Outdoor Group for the reasonable expenses of such corrective action, including the cost of replacing any Ammunition Product that is affected thereby whether or not such particular Ammunition Product has been established to be defective or otherwise constitute a breach of warranty by LLC hereunder.

 

(c)                Books and Records.   The Orbital ATK Group shall maintain detailed records with respect to the provision of Ammunition Products, including batch records and other manufacturing and analytical records, records of shipments of Ammunition Products, validation records and other applicable records for the greater of (i) the time period required by applicable Laws and (ii) if applicable, the time period set forth in any ISO or other quality standards relating to Ammunition Products sold pursuant to this Agreement.  The Orbital ATK Group shall make such records available to the Vista Outdoor Group upon reasonable request at the expense of FCC.

 

20.                                CHANGE IN FISCAL YEAR

 

In the event that Orbital ATK or Vista Outdoor intends to change its fiscal year from the period beginning on April 1 and ending on March 31 to any other period, upon written notification to the other Party of such intent, the Parties shall negotiate in good faith to modify the terms of this Agreement, including the timing for delivery of a Binding FY Order, the timing for pricing adjustments and the amount of the Minimum Buy and the Cumulative Shortfall, in each case to equitably reflect the change in fiscal year to the end that the transactions

 

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contemplated hereby are fulfilled to the extent possible; provided , however , that if the Parties are unable to reach agreement (including pursuant to the dispute resolution provisions of Section 12), then this Agreement shall remain in effect without any such modifications.

 

21.                                MISCELLANEOUS

 

(a)               Independent Contractors.   LLC and FCC each acknowledge that they are separate entities, each of which has entered into this Agreement for independent business reasons.  The relationships of the Parties hereunder are those of independent contractors, and nothing contained herein shall be deemed to create a joint venture, partnership or any other relationship.

 

(b)               No Set-Off.   Unless otherwise agreed in advance in writing, neither Party shall have the right to set-off any amount due under this Agreement for any amounts that may be due from the other Party under this Agreement or any other agreement.

 

(c)                Confidentiality.   LLC and FCC each acknowledge that Confidential Information of such Party or its Affiliates may be exchanged with employees and agents of the other Party or its Affiliates as a result of the transactions and activities contemplated by this Agreement.  Each Party agrees, on behalf of itself and its Affiliates, that such Party’s obligation to use and keep confidential such information of the other Party and its Affiliates shall be governed by Section 8.03(c) of the Transaction Agreement.

 

(d)               Assignment.   Neither this Agreement nor any rights or obligations hereunder may be assigned or otherwise transferred by any Party (including by operation of law) without the prior written consent of the other Party, and any assignment or transfer without such consent shall be null and void and of no effect; provided , that either Party may transfer or assign, in whole or in part, any or all of its rights hereunder to one or more of its Affiliates, it being understood that such Party will remain responsible for all of its obligations hereunder; provided further that either Party may assign its rights and obligations to any Person that acquires (including by operation of law) all or substantially all of such Party’s assets or equity interests.

 

(e)                No Third-Party Beneficiaries.   Except as provided in Section 17 of this Agreement, this Agreement is for the sole benefit of the Parties and their permitted assigns and nothing herein expressed or implied shall give or be construed to give to any person, other than the Parties and such permitted assigns, any legal or equitable rights hereunder, whether as third party beneficiaries or otherwise.

 

(f)                 Amendments; Entire Agreement.   No amendment to this Agreement shall be effective unless it shall be in writing and signed by each Party. In the event of a conflict between the provisions of this Agreement and any order placed by

 

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the Vista Outdoor Group or any other agreement that does not affirmatively state that it is amending this Agreement, this Agreement shall control.

 

(g)                Waivers.   No failure or delay of any Party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Parties hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have hereunder.  No provision or term of this Agreement may be waived except pursuant to a writing executed by the waiving Party.

 

(h)               Notices.   All notices, requests, permissions, waivers or other communications required or permitted to be given under this Agreement shall be in writing and shall be delivered in the manner and to the address of the applicable Party as set forth in Section 12.02 of the Transaction Agreement.

 

(i)                   Interpretation.   The rules of interpretation set forth in Section 12.04 of the Transaction Agreement shall be incorporated by reference to this Agreement, mutatis mutandis .

 

(j)                  Counterparts.   This Agreement may be executed in one or more counterparts (including by facsimile or electronic mail), each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement, and shall become effective when one or more counterparts have been signed by each Party and delivered to the other Party.

 

(k)               Severability.   If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule or Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either Party.  Upon any such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible to the end that the transactions contemplated hereby are fulfilled to the extent possible.

 

(l)                   Governing Law/Jurisdiction.

 

(i)                            This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts executed in and to be performed entirely within that State, regardless of the Laws that might otherwise govern under any applicable conflict of Laws principles.

 

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(ii)                         All actions and proceedings arising out of or relating to this Agreement shall be heard and determined in any Federal or state court in the Borough of Manhattan, New York, New York, and the Parties hereby irrevocably submit to the exclusive jurisdiction and venue of such courts in any such action or proceeding and irrevocably waive the defense of an inconvenient forum or lack of jurisdiction to the maintenance of any such action or proceeding.  The consents to jurisdiction and venue set forth in this Section 21(l)(ii) shall not constitute general consents to service of process in the State of New York and shall have no effect for any purpose except as provided in this paragraph and shall not be deemed to confer rights on any person other than the Parties.  Each Party agrees that service of process upon such Party in any action or proceeding arising out of or relating to this Agreement shall be effective if notice is given in accordance with Section 21(h) of this Agreement.  The Parties agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law; provided , however , that nothing in the foregoing shall restrict either Party’s rights to seek any post-judgment relief regarding, or any appeal from, a final trial court judgment.

 

(m)           WAIVER OF JURY TRIAL .  EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.  EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (C) IT MAKES SUCH WAIVER VOLUNTARILY AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 21(m).

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first above written.

 

 

	ALLIANT TECHSYSTEMS OPERATIONS LLC
		by
			/s/ Joshua Izenberg
			Name: Joshua Izenberg
			Title:   Assistant Secretary

 

 

	FEDERAL CARTRIDGE COMPANY
		by
			/s/ Scott Chaplin
			Name: Scott Chaplin
			Title:   Senior Vice President and General Counsel

 

 

EXHIBIT INDEX

 

EXHIBIT A : Maximum Capacity; Minimum Buy and Cumulative Shortfall; CUP Recoupment; Vista Accessories; Warehousing Charge

 

EXHIBIT B : Existing Ammunition Product Orders

 

EXHIBIT C : Existing Orders for Different Caliber Products and Special Products

 

EXHIBIT D : Ammunition Products Pricing

 

EXHIBIT E-1 : Price Adjustments — Methodology

 

EXHIBIT E-2: Price Adjustments — Metal Content

 

EXHIBIT F: BDSC

 

Exhibit 2.4

 

EXECUTION VERSION

 

POWDER PRODUCTS SUPPLY AGREEMENT

 

THIS POWDER PRODUCTS SUPPLY AGREEMENT (this “ Agreement ”) dated as of February 9, 2015 is between Federal Cartridge Company, a Minnesota corporation (“ FCC ”), and Alliant Techsystems Operations LLC, a Delaware limited liability company (“ LLC ”) (each, a “ Party ” and together, the “ Parties ”).

 

RECITALS

 

WHEREAS, pursuant to the Transaction Agreement dated as of April 28, 2014 (the “ Transaction Agreement ”), among Alliant Techsystems Inc. (to be renamed “Orbital ATK, Inc.” substantially concurrently with the execution of this Agreement) (“ Orbital ATK ”), Vista SpinCo Inc. (which has subsequently changed its name to Vista Outdoor Inc.) (“ Vista Outdoor ”), Vista Merger Sub Inc. and Orbital Sciences Corporation, on the terms and subject to the conditions set forth in the Transaction Agreement, Alliant Techsystems Inc. will, and will cause its applicable Subsidiaries to, consummate the Sporting Transfers;

 

WHEREAS, following the Sporting Transfers, on the terms and subject to the conditions set forth in the Transaction Agreement, the Distribution will occur;

 

WHEREAS, following the Distribution, on the terms and subject to the conditions set forth in the Transaction Agreement, the Merger will occur; and

 

WHEREAS, following the Merger, Orbital ATK and its Subsidiaries (including LLC) (collectively, the “ Orbital ATK Group ”) will continue to be engaged in manufacturing Powder Products, and Vista Outdoor and its Subsidiaries (including FCC) (collectively, the “ Vista Outdoor Group ”) desire to purchase Powder Products from the Orbital ATK Group following the Merger on the terms and subject to the conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the representations, warranties, covenants and agreements contained in this Agreement, the Parties hereby agree as follows:

 

1.                                       DEFINITIONS

 

Capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Transaction Agreement.  As used in this Agreement, the following terms shall have the following meanings:

 

(a)               “ Bulk Powder Products ” means the bulk/OEM propellant products identified on Exhibit A-1.

 

(b)               “ Canister Powder Products ” means the Alliant Powder canister propellant products to be resold to consumers identified on Exhibit A-2.

 

 

(c)                “ Fiscal Year ” means a fiscal year beginning on April 1 and ending on March 31.

 

(d)               “ NRE Powder Plant ” means the New River Energetics manufacturing facility located in Radford, VA, currently operated by the Orbital ATK Group.

 

(e)                “ Order ” means a Bulk Order or a Canister Order, as the context may require.

 

(f)                 “ Powder Products ” means Bulk Powder Products and Canister Powder Products.

 

(g)                “ Purchase Order ” means a standard form purchase order used to order Powder Products pursuant to this Agreement, which purchase order shall be governed by the terms and conditions of this Agreement (except to the extent otherwise agreed by the Parties).

 

(h)               “ Specifications ” means the physical and operational Powder Product specifications previously exchanged among the Parties, and such other specifications as may be agreed between the Parties in writing.

 

Glossary of other Defined Terms

 

Term		Defined in Section
Acceptance		Section 6(c)(i)
Agreement		Preamble
BDSC		Section 10
Bulk Order		Section 3(a)
Canister Order		Section 3(a)
Dispute Notice		Section 5(c)
Disputed Items		Section 5(c)
EAR		Section 17
Excusable Delay		Section 7(b)
Existing FY2015 Order		Section 3(e)
Export Controlled Item		Section 17
FCC		Preamble
Force Majeure Event		Section 7(d)
Invoice		Section 5(a)
Invoice Due Date		Section 5(a)
ITAR		Section 17
Items		Section 17
LLC		Preamble
Losses		Section 16(a)
Non-Excusable Delay		Section 7(c)
Orbital ATK		Recitals
Orbital ATK Group		Recitals
Party		Preamble
Principal Representative		Section 11

 

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Review Period		Section 5(c)
Term		Section 15(a)
Transaction Agreement		Recitals
Vista Outdoor		Recitals
Vista Outdoor Group		Recitals
Warranty Period		Section 14(a)

 

2.                                       MANUFACTURE AND SUPPLY OF POWDER PRODUCTS

 

(a)               Manufacture and Supply of Powder Products.   On the terms and subject to the conditions of this Agreement, during the Term, (i) the Orbital ATK Group shall manufacture to applicable Specifications and supply to the Vista Outdoor Group all the Powder Products ordered by the Vista Outdoor Group pursuant to this Agreement and (ii) the Vista Outdoor Group shall purchase and take delivery of all the Powder Products so ordered from the Orbital ATK Group.

 

(b)               Limitations on Supplying Powder Products.   The Parties acknowledge that the NRE Powder Plant’s maximum annual production capacity allocated to the Vista Outdoor Group of propellant-related products as of the date hereof is set forth on Exhibit B and the Orbital ATK Group shall be under no obligation to expand such capacity in order to fulfill any order placed by the Vista Outdoor Group.

 

(c)                New Materials.   All materials used by the Orbital ATK Group to manufacture Powder Products to be delivered to the Vista Outdoor Group shall be new materials (i.e., no recycled components) unless otherwise included in product Specifications or approved in advance by FCC in writing.  The Orbital ATK Group shall be responsible, at its own expense, for purchasing all raw materials, packaging, gauges, special testing equipment, die sets, packaging set up and any other materials and equipment that may be necessary to produce the Powder Products to be delivered to the Vista Outdoor Group.

 

(d)               Vista Outdoor Group Equipment.   From time to time the Vista Outdoor Group may request that it, although it will be under no obligation to, supply equipment or materials to the Orbital ATK Group for use in the manufacturing process ( e.g. , packaging equipment), which request shall be considered in good faith by the Orbital ATK Group in light of all the circumstances (including which Party will bear any associated maintenance expenses).

 

3.                                       POWDER PRODUCT ORDERS

 

(a)               Order Placement.   The Vista Outdoor Group may, from time to time, place Canister Powder Product orders (including the Specifications thereof) (each, a “ Canister Order ”) or Bulk Powder Product orders (including the Specifications thereof) (each, a “ Bulk Order ”), any of which shall include a

 

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delivery schedule by SKU number.  No Order shall affect the Vista Outdoor Group’s obligations pursuant to any previously delivered Order that has been accepted by the Orbital ATK Group in accordance with paragraph (b) below.

 

(b)               Order Acceptance.   The Orbital ATK Group shall accept all Orders placed by the Vista Outdoor Group in accordance with paragraph (a) above, unless, at the time of receiving such Order, the Orbital ATK Group reasonably believes it will be unable to fulfill such Order or satisfy the associated delivery schedule because of the circumstances described in Section 2(b) of this Agreement or because of a Force Majeure Event.  Within 10 Business Days of receiving an Order placed by the Vista Outdoor Group in accordance with paragraph (a) above, LLC shall acknowledge receipt and either confirm in writing to FCC that it will be able to supply the Powder Products in accordance with the included delivery schedule or, alternatively, notify FCC of any portion of the order that it will be unable to fulfill and the specific cause of such inability (which, for the avoidance of doubt, shall only be because of the circumstances described in Section 2(b) of this Agreement or because of a Force Majeure Event).  If the Orbital ATK Group cannot reasonably satisfy the proposed delivery schedule, it may propose an alternative delivery schedule and the Parties shall cooperate in good faith to develop a mutually acceptable delivery schedule. Any Order shall automatically be deemed modified to remove any Powder Products that the Orbital ATK Group has notified that it will be unable to fulfill or for which the Parties are unable to agree on a delivery schedule, and, effective upon receipt by FCC of the applicable confirmation or notification (and, where applicable, after good faith negotiations to develop a mutually acceptable delivery schedule), the resulting order shall constitute a binding commitment by the Vista Outdoor Group to purchase the Powder Products identified therein.  Notwithstanding the Vista Outdoor Group’s exclusivity obligation set forth in Section 9 of this Agreement, to the extent that LLC has notified FCC that it will be unable to fulfill the entirety of any Order or where the Parties are unable to agree on a delivery schedule, the Vista Outdoor Group may, at its own cost, “cover” and procure the unfulfilled portion of such Order from alternative suppliers (or manufacture such Powder Products itself).

 

(c)                Production Readiness.   Subject to the circumstances described in Section 2(b) of this Agreement or the occurrence of a Force Majeure Event, the Orbital ATK Group shall maintain production readiness and the capacity necessary to fulfill any Order accepted by LLC pursuant to paragraph (b) above.

 

(d)               Purchase Orders.   The purchase of Powder Products shall be implemented through the issuance by the Vista Outdoor Group of one or more Purchase Orders, which may include a blanket Purchase Order.  To the extent there is any conflict between any terms and conditions appended to or otherwise contained in a Purchase Order and this Agreement, the terms of this

 

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Agreement shall control (except to the extent otherwise agreed by the Parties).

 

(e)                Existing Powder Product Orders.   The Parties acknowledge that, prior to the date hereof, the Vista Outdoor Group delivered to the Orbital ATK Group an order for Canister Powder Products and Bulk Powder Products to be delivered through the Fiscal Year ending March 31, 2015 (the “ Existing FY2015 Order ”).  Exhibit C hereto sets forth the terms of the Existing FY2015 Order and all other existing Powder Product orders between such parties that have not been fully fulfilled as of the date hereof.  All such existing orders shall be fulfilled in accordance with the terms of this Agreement (including pricing), except as otherwise agreed by the Parties in writing.

 

4.                                       PRICING

 

(a)               Pricing.   Subject to the pricing adjustments set forth in this Section 4, Exhibit A-1 and A-2 hereto sets forth the firm, fixed per-unit prices that shall apply to each Bulk Powder Product and Canister Powder Product, respectively, purchased by the Vista Outdoor Group pursuant to this Agreement.

 

(b)               Annual Price Adjustments for Powder Products. The pricing set forth in Exhibit A-1 and A-2 applies to Bulk Powder Products and Canister Powder Products, respectively, to be delivered in the Fiscal Years ending March 31, 2015 and March 31, 2016.  Thereafter, such prices shall be adjusted each Fiscal Year in accordance with the methodology set forth in Exhibit B. Unless otherwise agreed, adjusted prices are effective beginning April 1 of each Fiscal Year (beginning on April 1, 2016 for Powder Products to be delivered during the Fiscal Year ending March 31, 2017).

 

(c)                Taxes, Duties and Other Charges.   The prices payable by the Vista Outdoor Group under this Agreement (and any related Purchase Orders) are exclusive of any value-added taxes, excise taxes, sales and use taxes or other indirect taxes that may be imposed by Law on the relevant supply of goods or services.  Such taxes, if any, shall be separately stated in the relevant Invoices and shall be paid by the Vista Outdoor Group to the Orbital ATK Group unless the Vista Outdoor Group provides an exemption to the Orbital ATK Group.  The Vista Outdoor Group shall be responsible for the payment of all duties, tariffs, taxes and other charges payable on the exportation of any Powder Product.  Subject to the following sentence, prices also exclude any amounts due for import or export licenses or permits, custom charges and duties, penalties, freight, insurance or other shipping expenses. Freight will be paid by the Orbital ATK Group for Bulk Powder Product shipments at least equal to 20,000 pounds and by the Vista Outdoor Group for Bulk Powder Product shipments less than 20,000 pounds and all Canister Powder Product shipments. Any and all such costs, taxes, assessment, or duties that may be imposed upon the production, shipment, installation, or sale of

 

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Powder Products under this Agreement (and any related Purchase Orders) shall be the sole responsibility of, and shall be paid by, the Vista Outdoor Group.  All prices and payments shall be in U.S. dollars.

 

5.                                       PAYMENT

 

(a)               Invoices.   The Orbital ATK Group shall provide an invoice (an “ Invoice ”) to FCC at the time of each product delivery (including, for the avoidance of doubt, at the time of any “staged” delivery).  All Invoices shall be payable by the Vista Outdoor Group promptly, and in any event, within 30 days after receipt of such Invoice (the date on which a payment is due, the “ Invoice Due Date ”), subject to the Vista Outdoor Group’s right to dispute an Invoice pursuant to paragraph (c) below.

 

(b)               Late Payments.   Any amounts due under an Invoice that have not been paid on or before the Invoice Due Date (and are not being disputed in good faith pursuant to paragraph (c) below) shall bear simple interest at a rate of 1.0% per month ( i.e. , 12.0% per year) until the date payment is received in full by the Orbital ATK Group.

 

(c)                Review of Invoices.   FCC shall have 15 days from the date of receipt to review an Invoice (the “ Review Period ”).  FCC may, on or prior to the last day of the Review Period, provide LLC with a written notice of dispute (a “ Dispute Notice ”), which shall specify in reasonable detail those items or amounts in the Invoice as to which FCC disagrees in good faith (the “ Disputed Items ”) and the basis for such disagreement.  Unless FCC delivers a Dispute Notice to LLC prior to the expiration of the Review Period, the Vista Outdoor Group shall be deemed to have accepted and agreed to the items and amounts set forth in the applicable Invoice, and such amounts shall become conclusive and binding on the Parties.  If FCC delivers a Dispute Notice to LLC on or prior to the last day of the Review Period, the Parties shall refer the matter to their respective Principal Representatives in accordance with the procedures set forth in Section 11 of this Agreement.  Each of the Parties shall, and shall cause each of their respective Subsidiaries to, make their respective financial Records and personnel available to the other Party and its accountants and other Representatives at reasonable times and upon reasonable notice at any time during the review by FCC of an Invoice, as well as during the resolution of any Disputed Items, in each case to the extent such access is reasonably necessary in connection therewith.

 

6.                                       DELIVERY

 

(a)               Delivery Terms.   Delivery shall be FOB Origin - Orbital ATK Group’s dock. Title, as well as risk of loss and damage, to Powder Products shall transfer to the Vista Outdoor Group upon delivery to Orbital ATK Group’s dock.  Bulk Powder Product deliveries of no less than 20,000 pounds shall be FOB Destination - Vista Outdoor Group’s dock; title, as well as risk of loss and

 

6

 

damage, to such Powder Products shall transfer to the Vista Outdoor Group upon delivery to the Vista Outdoor Group’s dock.   Warehousing and logistics for Powder Products shall be provided in accordance with Exhibit B.

 

(b)               No Liens.   The Orbital ATK Group shall deliver the Powder Products free and clear of all liens and property rights.  In the event that there are liens or property rights on any Powder Products at the time of delivery, the Vista Outdoor Group shall have the right to discharge them by paying the amount of any related claims, and in such event, LLC shall promptly reimburse the Vista Outdoor Group for any amounts paid in connection therewith and any losses, damages or other expenses incurred in connection therewith.

 

(c)                Inspection and Acceptance.

 

(i)                            The Vista Outdoor Group shall have the right to inspect Powder Products that have been delivered to it for conformance with the applicable Specifications, and it shall report in writing any claims of non-conformance within 30 days after delivery, after which time the Powder Products shall be deemed irrevocably accepted (“ Acceptance ”). Any claims by the Vista Outdoor Group that a Powder Product fails to conform to the applicable Specifications or has a defect shall be governed by Section 14 of this Agreement.

 

(ii)                         No inspection, Acceptance, testing or payment for Powder Products shall relieve LLC from responsibility for defects or for otherwise failing to satisfy its obligations (including the limited warranty) under this Agreement.

 

(d)               Delivery Schedule by SKU Number. Notwithstanding the applicable delivery schedule included with an Order, the Vista Outdoor Group may modify, without penalty, the timing for delivery of any Powder Products if it provides the Orbital ATK Group with at least three full calendar months notice and the new delivery date(s) will occur in the same Fiscal Year. The Vista Outdoor Group may not otherwise modify the terms of a delivery schedule without the prior written consent of the Orbital ATK Group. The Orbital ATK Group shall deliver Powder Products to the Vista Outdoor Group in accordance with the delivery schedule, and the Orbital ATK Group shall not manufacture ahead of such schedule except at its own risk and warehousing cost.

 

7.                                       FAILURE TO SUPPLY

 

(a)               Notifications.   If, for any reason, the Orbital ATK Group does not have sufficient quantities to fulfill an Order or becomes aware that for any reason there is a reasonable likelihood that it will not be able to fulfill such an order, LLC shall promptly, and in any event, within 10 days notify FCC of such fact, and the Parties shall cooperate in good faith to resolve and mitigate the issue.  In the event that the Orbital ATK Group is unable to fulfill the entirety

 

7

 

of an Order, the Orbital ATK Group shall (i) fill the portion of such order that it is able to fill and (ii) use its commercially reasonable efforts to fill the remainder of such order through its own manufacturing efforts or, with the prior written consent of the Vista Outdoor Group, through purchases from a third party, as soon as reasonably practicable (in light of all the circumstances).

 

(b)               Excusable Delays.   If the Orbital ATK Group fails to timely deliver all or any portion of any Order due in whole or in part to the circumstances described in Section 2(b) of this Agreement or due to a Force Majeure Event (such delay, an “ Excusable Delay ”):

 

(i)                            the Orbital ATK Group shall have no liability to the Vista Outdoor Group with respect to such unfulfilled orders for Powder Products; and

 

(ii)                         the Vista Outdoor Group shall be entitled to, in its discretion and at its own cost, upon written notice to the Orbital ATK Group, “cover” and procure such unfulfilled orders for Powder Products from alternative suppliers (or manufacture such Powder Products itself) (and the applicable Order shall automatically be deemed modified to remove any Powder Products that the Vista Outdoor Group has notified that it will cover, effective upon receipt by the Orbital ATK Group of the applicable notification).

 

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(c)                Non-Excusable Delays. If the Orbital ATK Group fails to timely deliver all or any portion of an order in any circumstance other than would constitute an Excusable Delay (such delay, a “ Non-Excusable Delay ”), then the Orbital ATK Group shall pay reasonable costs associated with expedited delivery of such Powder Products once they become available.  In addition, if the Orbital ATK Group’s delivery is, or would reasonably be expected to be, delayed by more than 30 days, then the Vista Outdoor Group may send a notice of default to LLC, demanding that the Orbital ATK Group either cure or provide a plan to cure.  If the Orbital ATK Group neither cures nor provides a plan to cure that is reasonably acceptable to the Vista Outdoor Group within 45 days of the original Powder Product delivery date, then the Vista Outdoor Group may, upon written notice to the Orbital ATK Group, “cover” and procure such unfulfilled order for Powder Products from alternative suppliers (or manufacture such Powder Products itself) (and the applicable Order shall automatically be deemed modified to remove any Powder Products that the Vista Outdoor Group has notified that it will cover, effective upon receipt by the Orbital ATK Group of the applicable notification), and the Orbital ATK Group shall reimburse the Vista Outdoor Group for the reasonable difference between the price of such Powder Products under this Agreement and the “cover” price, which may include reasonable expedited shipping and freight costs.

 

(d)               Force Majeure.   In the event that the delivery of any Powder Product is interrupted, or performance of any terms or provisions of this Agreement (except for the payment of amounts due under an Invoice or any reimbursement obligation) is delayed or prevented, in whole or in part, because of or related to compliance with any Law, or because of riots, war, rationing, allocations or embargos, sovereign acts, public disturbance, strike or shortage of labor, labor dispute, fire, accident, explosion, storm, flood, earthquake, acts of God, acts of terrorism, unavailability of supplies or delays in delivery by suppliers, major breakdown or failure of transportation, manufacturing, distribution or storage facilities or for any other reason which is not within the control of the Party whose performance is interfered with and which by the exercise of reasonable care such Party is unable to prevent (each, a “ Force Majeure Event ”), then upon prompt written notice to the other Party providing reasonable detail as to the nature of such Force Majeure Event, the Party affected by such Force Majeure Event shall be excused from its obligations hereunder so long as such Force Majeure Event continues, and no liability shall attach against either Party on account thereof.  No Party shall be excused from performance if such Party fails to use commercially reasonable efforts to remedy the Force Majeure Event.

 

8.                                      ORBITAL ATK GROUP EXCLUSIVITY

 

During the Term, the Orbital ATK Group shall make sales of Canister Powder Products in 1#, 4#, 5# and 8# containers exclusively to the Vista

 

9

 

Outdoor Group. For the avoidance of doubt, the foregoing exclusivity obligation does not apply to any Bulk Powder Products.

 

9.                                       REQUIREMENTS; VISTA OUTDOOR GROUP EXCLUSIVITY

 

During the Term and subject to the right to “cover” pursuant to Section 3(b), Section 7(b)(ii) and Section 7(c) of this Agreement, the Vista Outdoor Group shall purchase all its requirements for Canister Powder Products exclusively from the Orbital ATK Group and may not otherwise procure from a third party or manufacture Canister Powder Products. In addition, from April 1, 2015 through the remainder of the Term and subject to the right to “cover” pursuant to Section 3(b), Section 7(b)(ii) and Section 7(c) of this Agreement, the Vista Outdoor Group shall purchase 40.0% of its annual requirements for bulk/OEM propellant (measured by pounds of powder ordered in a given Fiscal Year) from the Orbital ATK Group.  For purposes of measuring the 40.0% minimum, the Vista Outdoor Group shall use commercially reasonable efforts to place orders with the Orbital ATK Group with a reasonable amount of lead-time prior to the end of a given Fiscal Year so as to allow deliveries to occur within the same Fiscal Year.  For the avoidance of doubt, the Vista Outdoor Group is not required to order any minimum quantity of Powder Products, but once an order is placed and accepted by the Orbital ATK Group in accordance with the terms of this Agreement, it is binding in accordance with the terms of this Agreement and may not be withdrawn by the Vista Outdoor Group (except pursuant to the Vista Outdoor Group’s right to “cover” under this Agreement or to terminate this Agreement in accordance with its terms). In determining whether the Vista Outdoor Group has purchased 40.0% of its annual requirements for Bulk Powder Products, all Bulk Powder Products included in a Bulk Order shall be included in the order total even if a portion of such Bulk Order has been rejected by LLC pursuant to Section 3(b) of this Agreement.

 

10.                                BUSINESS DEVELOPMENT STEERING COMMITTEE

 

Each Party shall designate two executives to serve on a Business Development Steering Committee (the “ BDSC ”) in respect of this Agreement, and the names of such BDSC members shall be provided in writing to the other Party promptly following the date hereof.  Either Party may, effective upon written notice to the other Party, change one or more of its BDSC members at any time. The Parties shall use commercially reasonable efforts to cause the BDSC to meet (which may be by telephone) no less than quarterly (or more promptly as warranted) to discuss the domestic and international Powder Products markets (including opportunities for the Parties to sell Powder Products in such markets at higher volumes and higher margins); business pursuit strategies; price- and cost-related initiatives; production and delivery schedules; such other topics as may be submitted by one Party to the other Party with at least 10 days notice; and such other topics as the Parties may mutually agree. The Vista Outdoor Group shall also inform the Orbital ATK Group, through the BDSC, in the event that the Vista Outdoor

 

10

 

Group notifies its major customers of a price change for Canister Powder Products. If the Parties identify (whether through the BDSC or the Parties’ standard “bid” or “request for proposal” processes) significant changes in the domestic or international Powder Products markets including the profitability of selling Canister Powder Products in such markets, then the BDSC shall evaluate in good faith whether, under the circumstances, an equitable adjustment to pricing of the related Powder Products is warranted. The BDSC shall not have the authority to modify any of the terms of this Agreement except pursuant to a written agreement signed by each Party in accordance with Section 20(f). For the avoidance of doubt, any disputes related to this Agreement shall be subject to the dispute resolution procedures described in Section 11 and not the BDSC or this Section 10.

 

11.                                DISPUTE RESOLUTION

 

Each Party shall designate a senior executive with authority to resolve disputes related to this Agreement (a “ Principal Representative ”), and the name of such Principal Representative shall be provided in writing to the other Party promptly following the date hereof. Either Party may, effective upon written notice to the other Party, change its Principal Representative at any time. In the event of a dispute related to this Agreement, the Principal Representatives shall meet and seek in good faith to resolve such dispute.  If the Principal Representatives are able to resolve the dispute in writing, their resolution shall be conclusive and binding upon the Parties (and in the case of Disputed Items, the applicable Invoice shall be revised to reflect such resolution, and, as so revised, such Invoice shall be deemed to set forth the final amount due thereunder for all purposes).  If the Principal Representatives are unable in good faith to resolve a dispute within 30 days, either Party may pursue a claim in connection with the matter in dispute in federal or state court in accordance with the requirements set forth in Section 20(l) of this Agreement.  All costs and expenses incurred by the Parties in connection with resolving any dispute related to this Agreement shall be borne by the Party incurring such cost or expense.  In the event of a dispute, both parties must continue to comply with the terms of this Agreement while the dispute is being resolved.

 

12.                                INSURANCE

 

During the Term, each Party agrees to procure and maintain in full force and effect valid and collectible insurance policies in connection with its activities hereunder, which policies shall provide for customary levels of coverage, taking into account the scope of this Agreement and industry practice.  Upon request, a Party shall provide to the other Party a certificate of coverage or other written evidence of such insurance coverage.

 

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13.                                INTELLECTUAL PROPERTY

 

(a)               Limited License.   Each Party hereby grants to the other Party and its Affiliates for the Term a limited, non-transferable (with the right to sublicense), non-exclusive, royalty-free license to use the Intellectual Property Rights owned by it and its Affiliates to the extent necessary for the other Party and its Affiliates to perform their obligations hereunder.  All right, title and interest in and to the Intellectual Property Rights owned by a Party and not expressly granted herein are reserved by such Party.

 

(b)               Ownership.   As between the Parties, each Party shall retain ownership of all right, title and interest in and to the Intellectual Property Rights owned or controlled by it immediately after the Distribution; provided that any derivative works of, or modifications or improvements to, such Intellectual Property Rights (collectively, “ Derivative Works ”) conceived or created as part of performance hereunder shall be owned by the Party creating such Derivative Works, subject to the other Party’s rights in its underlying Intellectual Property.  Subject to paragraph (a) above, neither Party shall acquire any right, title or interest in or to such Intellectual Property Rights of the other Party pursuant to this Agreement.

 

(c)                Design Responsibility and Labeling.   The Orbital ATK Group shall retain design responsibility for all Powder Products.  The Vista Outdoor Group shall have the right to determine the appearance and text of any labeling and packaging used in connection with Powder Products it has ordered, including any finished product containing the Powder Product. Additional costs associated with any packaging changes requested by the Vista Outdoor Group will be the responsibility of the Vista Outdoor Group.

 

14.                                LIMITED WARRANTY

 

(a)               Limited Warranty.   LLC expressly warrants that the Powder Products sold to the Vista Outdoor Group pursuant to this Agreement shall be free from defects in material and workmanship and shall be manufactured to the applicable Specifications upon delivery and for a period of one year after Acceptance (the “ Warranty Period ”).  Other than pursuant to any rights to indemnification under this Agreement or any rights with respect to third party claims, including product liability claims, subject to the following sentence, FCC’s exclusive remedy and LLC’s sole liability for any breach of the foregoing warranty shall be for LLC to promptly, and in any event, within 30 days replace the defective or nonconforming Powder Product with a new Powder Product.  Notwithstanding the foregoing, if a customer of the Vista Outdoor Group cancels part or all of its order for such defective or nonconforming Powder Product prior to the Orbital ATK Group’s delivery of the replacement Powder Product, FCC shall have the right to elect to receive a refund of the purchase price plus handling and transportation for the defective or nonconforming Powder Product in lieu of a replacement.  This

 

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“replace or refund” remedy shall be applied to the minimum quantity that is reasonably demonstrated by the Vista Outdoor Group to be in breach of the limited warranty.

 

(b)               Warranty Claims.   If FCC believes that any Powder Product is defective or otherwise fails to conform to the applicable Specifications, FCC shall be entitled to, prior to the expiration of the Warranty Period and within 30 days of becoming aware of such defect or nonconformance, notify LLC in writing of the existence and nature of any defect or nonconformance and the Orbital ATK Group shall have a reasonable opportunity, not to exceed 15 days from receipt of notification, to inspect such Powder Product.  All warranty claims shall identify the defective or nonconforming Powder Product, provide the Purchase Order number and describe the nature of the defect or nonconformance.  At LLC’s election, the Vista Outdoor Group shall return defective Powder Products to the Orbital ATK Group at LLC’s expense within 30 days (or in the case of Powder Products located outside the United States, 90 days) of notifying LLC of the warranty claim; if LLC does not request the return of a rejected Powder Product, the Vista Outdoor Group may dispose of such Powder Product in any manner in its discretion at the Vista Outdoor Group’s expense.  If the Parties disagree as to whether a rejected Powder Product has a defect or conforms to the applicable Specifications or as to whether FCC timely delivered its warranty claim, the Parties shall refer the matter to their respective Principal Representatives in accordance with the procedures set forth in Section 11 of this Agreement.  If the Principal Representatives or a competent court, as applicable, determines that a rejected Powder Product has no defects and conforms to the applicable Specifications, or that FCC has failed to properly deliver the applicable warranty claim within the applicable Warranty Period and within 30 days of becoming aware of such defect or nonconformance, then the Vista Outdoor Group shall reimburse the Orbital ATK Group all costs of handling, transportation and repairs/modifications to such rejected Powder Product based on LLC’s regular repair charges.

 

(c)                Disclaimer of All Other Warranties.   LLC’s warranty in paragraph (a) above is in lieu of all other warranties, and the Orbital ATK Group expressly disclaims all other warranties, express or implied, statutory or otherwise, including without limitation, the implied warranties of merchantability and fitness for a particular purpose.  The Orbital ATK Group’s warranty does not extend to (i) Powder Products damaged in any way after delivery to Orbital ATK Group’s dock, including by improper handling, use or storage or as a result of a Force Majeure Event or (ii) third party propellant components required to fulfill a Canister Order or Powder Products damaged as a result of any defects in such propellant components. Any repair or attempt to repair Powder Products, or modification of Powder Products, by anyone other than the Orbital ATK Group (or a Person acting for or on behalf of the Orbital ATK Group) shall void the warranty provided under this Agreement.

 

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15.                                TERM AND TERMINATION

 

(a)               Term.   Unless terminated earlier in accordance with the provisions of this Agreement, this Agreement shall remain in effect through and until March 31, 2017 (as may be extended pursuant to the terms of this Agreement, the “ Term ”).  This Agreement shall automatically renew for additional one-year terms after the expiration of the preceding term unless either Party provides the other Party with a binding, irrevocable written notification of its declaration not to renew this Agreement no later than five months prior to the end of the term then in effect.

 

(b)               Termination for Plant Closure.   LLC shall provide FCC with at least 120 days written notice prior to closing the NRE Powder Plant. Upon receipt of such notice, FCC may, upon 10 days written notice, terminate this Agreement.

 

(c)                Termination for Breach of this Agreement.

 

(i)                          Either Party may, upon written notice, terminate this Agreement prior to the expiration of the Term if the other Party materially breaches this Agreement; provided , that the Party receiving the notice of termination shall have 60 days from the date of receipt thereof to cure the material breach or failure and, in the event such breach or failure is cured, the notice shall be of no effect.

 

(ii)                       FCC may, upon 10 days written notice, terminate this Agreement prior to the expiration of the Term if a Non-Excusable Delay has occurred and is continuing uncured for the later of (A) a period of 60 days following the original Powder Product delivery date and (B) 10 days from receipt of the termination notice.

 

(iii)                    LLC may, upon 10 days written notice, terminate this Agreement prior to the expiration of the Term if the Vista Outdoor Group has failed to pay an amount due under an Invoice that is not being disputed by FCC in good faith, and such failure continues for the later of (A) a period of 60 days following the Invoice Due Date and (B) 10 days from receipt of the termination notice.

 

(d)               Termination for Bankruptcy.   Either Party may, immediately upon written notice, terminate this Agreement if the other Party files a petition in bankruptcy, has filed against it an involuntary petition in bankruptcy, makes an assignment for the benefit of creditors, has a trustee or receiver appointed for any or all of its assets, is insolvent or fails or is unable to pay its debts when due.

 

(e)                Survival.   The expiration or termination of this Agreement for any reason shall not release either Party hereto from any liability that at such time has already accrued.  The provisions of Sections 14, 15, 16, 18 and 20 of this Agreement shall survive any termination.

 

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16.                                INDEMNIFICATION AND LIMITATION OF LIABILITY

 

(a)               Indemnification by LLC.   LLC shall indemnify FCC and its Affiliates and each of their respective officers, directors, employees and agents against, and defend and hold them harmless from, any third-party claim, loss, liability, damage, cost or expense (including reasonable fees and expenses of counsel) (collectively, “ Losses ”) incurred by any such indemnified person arising out of any alleged or actual: (i) personal injury to employees or agents of FCC or its Affiliates caused solely by LLC or its Affiliates (or by their respective agents or employees) ( i.e. , there is no contributory negligence by a third party) while in, upon, or about the premises of LLC or its Affiliates, or suffered solely as a result of the acts of any of LLC or its Affiliates (or of their respective agents or employees); (ii) (A) infringement by LLC or its Affiliates of any third party Intellectual Property Rights (including to the extent that the grant of a license to FCC and its Affiliates pursuant to Section 13(a) of this Agreement infringes any third party Intellectual Property Rights) or (B) infringement of any third party Intellectual Property Rights by the Powder Products (except to the extent such infringement arises from Intellectual Property Rights provided by the Vista Outdoor Group and required by the Vista Outdoor Group to be incorporated into the Powder Products), except, with respect to both sub-clauses (A) and (B), LLC will have no obligation for any infringement claim based on: (x) the use of a Powder Product as modified by someone other than the Orbital ATK Group; or (y) the use or combination of a Powder Product with any products manufactured by a party other than the Orbital ATK Group,  (iii) violation of applicable Law (including import/export Laws) by LLC or its Affiliates (or of their respective agents or employees) or (iv) third party product liability claims for manufacturing or design defects (whether for property damage or personal injury, including death) relating to the Powder Products (except to the extent such liability is attributable to a Vista Outdoor Group design), in each case in connection with the performance by FCC and its Affiliates under this Agreement and, in the case of clauses (i), (iii) and (iv), except to the extent that such claims arise out of or are caused by the wilful misconduct or negligence of FCC or its Affiliates, as determined by a court of competent jurisdiction in a final and nonappealable judgment.

 

(b)               Indemnification by FCC.   FCC shall indemnify LLC and its Affiliates and each of their respective officers, directors, employees and agents against, and defend and hold them harmless from, any Losses incurred by any such indemnified person arising out of any alleged or actual: (i) personal injury to employees or agents of LLC or its Affiliates caused solely by FCC or its Affiliates (or by their respective agents or employees) ( i.e. , there  is no contributory negligence by a third party) while in, upon, or about the premises of FCC or its Affiliates, or suffered solely as a result of the acts of any of FCC or its Affiliates (or of their respective agents or employees); (ii) (A) infringement by FCC or its Affiliates of any third party Intellectual Property Rights (including to the extent that the grant of a license to LLC and

 

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its Affiliates pursuant to Section 13(a) of this Agreement infringes any third party Intellectual Property Rights) or (B) infringement of any third party Intellectual Property Rights by the Powder Products solely to the extent such infringement arises from Intellectual Property Rights provided by the Vista Outdoor Group and required by the Vista Outdoor Group to be incorporated into the Powder Products, except, with respect to both (A) and (B), FCC will have no obligation for any infringement claim based on: (x) the use of a Powder Product as modified by someone other than the Vista Outdoor Group; or (y) the use or combination of a Powder Product with any products manufactured by a party other than the Vista Outdoor Group; (iii) violation of applicable Law (including import/export Laws) by FCC or its Affiliates (or of their respective agents or employees); or (iv) breach by FCC of its representations in Section 17 of this Agreement, in each case in connection with the performance by LLC and its Affiliates under this Agreement and, in the case of clauses (i) and (iii), except to the extent that such claims arise out of or are caused by the wilful misconduct or negligence of LLC or its Affiliates, as determined by a court of competent jurisdiction in a final and nonappealable judgment.

 

(c)                Indemnification Claims.   All claims for indemnification under this Section 16 shall be asserted and resolved pursuant to procedures equivalent to the indemnity procedures set forth in Section 11.04 of the Transaction Agreement. For the avoidance of doubt, the Indemnifying Party shall have the right, by giving written notice to the Indemnified Party, to assume the defense of the Indemnified Party against any Third Party Claim. Other than timely responding to a court-imposed or other legally required notice, the Indemnified Party shall not unilaterally and without input from the Indemnifying Party, take any action to settle a matter for which the Indemnified Party seeks indemnification.

 

(d)               LIMITATION OF LIABILITY.   UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INDIRECT, COLLATERAL, SPECIAL, PUNITIVE, TREBLE, EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS OR GOODWILL), REGARDLESS IF SUCH CLAIM IS BASED ON CONTRACT, NEGLIGENCE, TORT, WARRANTY OR ANY OTHER BASIS UNDER, AS A RESULT OF, OR ASSOCIATED WITH THIS AGREEMENT OR EITHER PARTY’S PERFORMANCE UNDER THIS AGREEMENT.  EACH PARTY’S RESPECTIVE TOTAL LIABILITY FOR ANY CLAIMS ALLEGED IN ANY FISCAL YEAR (IN AGGREGATE) ARISING UNDER OR RELATED TO THIS AGREEMENT IS LIMITED TO AND SHALL NOT EXCEED THE TOTAL AMOUNT ACTUALLY PAID, PAYABLE OR SET FORTH IN A BINDING ORDER FOR THAT FISCAL YEAR BY THE VISTA OUTDOOR GROUP FOR THE PRODUCTS PURCHASED OR ORDERED PURSUANT TO THIS SUPPLY AGREEMENT.

 

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THE FOREGOING DISCLAIMERS OF LIABILITY AND LIMITATIONS ON LIABILITY WILL NOT APPLY TO ANY INDEMNIFICATION OBLIGATIONS IN THIS AGREEMENT OR ANY OBLIGATION WITH RESPECT TO THIRD PARTY CLAIMS, INCLUDING PRODUCT LIABILITY CLAIMS FOR MANUFACTURING OR DESIGN DEFECTS.

 

17.                                EXPORT CONTROLS

 

Technical data (including software), hardware or defense services (collectively, “ Items ”) disclosed, provided or transferred pursuant to this Agreement, or any derivative of such Items, may be subject to U.S. export control laws and regulations, including the International Traffic in Arms Regulation (22 CFR Parts 120 - 130 et. seq., “ ITAR ”) or Export Administration Regulations (15 CFR Parts 730 - 744 et. seq., “ EAR ”).  The Parties acknowledge that Items subject to ITAR or EAR (“ Export Controlled Items ”) may be provided by the Orbital ATK Group to the Vista Outdoor Group pursuant to this Agreement.  FCC hereby represents and warrants to LLC that (i) the Vista Outdoor Group will comply with all applicable export control laws and regulations; (ii) Export Controlled Items furnished to the Vista Outdoor Group by the Orbital ATK Group will not be transferred to any foreign person or otherwise exported unless authorized in advance by the U.S. Federal Government; (iii) the Vista Outdoor Group will not take any action with respect to Export Controlled Items furnished to the Vista Outdoor Group by the Orbital ATK Group that is regulated by U.S. export control laws and regulations, without specific written authorization from the Orbital ATK Group and pursuant to an appropriate U.S. Federal Government agency license or exemption; and (iv) the Vista Outdoor Group  will maintain current U.S. Federal Government registrations, licenses or approvals required to conduct activities under this Agreement, including with the U.S. State Department’s Directorate of Defense Trade Controls under the ITAR.

 

18.                                GOVERNMENTAL REVIEWS; PRODUCT RECALLS

 

(a)               Governmental Reviews.   In the event that, in connection with any investigation or review of the Vista Outdoor Group, any Governmental Entity shall request from LLC or any of its Affiliates any access, information or assistance, LLC and its Affiliates shall reasonably cooperate therewith at FCC’s expense.  In the event that, in connection with any investigation or review of the Orbital ATK Group, any Governmental Entity shall request from FCC or any of its Affiliates any access, information or assistance, FCC and its Affiliates shall reasonably cooperate therewith at LLC’s expense.

 

(b)               Product Recalls.   Without limiting any other rights or obligations of either Party under applicable Law, in the event any Governmental Entity having jurisdiction shall request or order the Vista Outdoor Group or the Orbital ATK Group, or if the Orbital ATK Group shall determine to undertake, any corrective action with respect to any Powder Product, including any recall or market action, and the cause or basis of such recall or market action is

 

17

 

attributable to a breach by LLC of its limited warranty contained herein, then LLC shall reimburse the Vista Outdoor Group for the reasonable expenses of such corrective action, including the cost of replacing any Powder Product that is affected thereby whether or not such particular Powder Product has been established to be defective or otherwise constitute a breach of warranty by LLC hereunder.

 

(c)                Books and Records.   The Orbital ATK Group shall maintain detailed records with respect to the provision of Powder Products, including batch records and other manufacturing and analytical records, records of shipments of Powder Products, validation records and other applicable records for the greater of (i) the time period required by applicable Laws and (ii) if applicable, the time period set forth in any ISO or other quality standards relating to Powder Products sold pursuant to this Agreement.  The Orbital ATK Group shall make such records available to the Vista Outdoor Group upon reasonable request at the expense of FCC.

 

19.                                CHANGE IN FISCAL YEAR

 

In the event that Orbital ATK or Vista Outdoor intends to change its fiscal year from the period beginning on April 1 and ending on March 31 to any other period, upon written notification to the other Party of such intent, the Parties shall negotiate in good faith to modify the terms of this Agreement, including the timing for pricing adjustments, to equitably reflect the change in fiscal year to the end that the transactions contemplated hereby are fulfilled to the extent possible; provided , however , that if the Parties are unable to reach agreement (including pursuant to the dispute resolution provisions of Section 11), then this Agreement shall remain in effect without any such modifications.

 

20.                                MISCELLANEOUS

 

(a)               Independent Contractors.   LLC and FCC each acknowledge that they are separate entities, each of which has entered into this Agreement for independent business reasons.  The relationships of the Parties hereunder are those of independent contractors, and nothing contained herein shall be deemed to create a joint venture, partnership or any other relationship.

 

(b)               No Set-Off.   Unless otherwise agreed in advance in writing, neither Party shall have the right to set-off any amount due under this Agreement for any amounts that may be due from the other Party under this Agreement or any other agreement.

 

(c)                Confidentiality.   LLC and FCC each acknowledge that Confidential Information of such Party or its Affiliates may be exchanged with employees and agents of the other Party or its Affiliates as a result of the transactions and activities contemplated by this Agreement.  Each Party agrees, on behalf of itself and its Affiliates, that such Party’s obligation to use and keep

 

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confidential such information of the other Party and its Affiliates shall be governed by Section 8.03(c) of the Transaction Agreement.

 

(d)               Assignment.   Neither this Agreement nor any rights or obligations hereunder may be assigned or otherwise transferred by any Party (including by operation of law) without the prior written consent of the other Party, and any assignment or transfer without such consent shall be null and void and of no effect; provided , that either Party may transfer or assign, in whole or in part, any or all of its rights hereunder to one or more of its Affiliates, it being understood that such Party will remain responsible for all of its obligations hereunder; provided further that either Party may assign its rights and obligations to any Person that acquires (including by operation of law) all or substantially all of such Party’s assets or equity interests.

 

(e)                No Third-Party Beneficiaries.   Except as provided in Section 16 of this Agreement, this Agreement is for the sole benefit of the Parties and their permitted assigns and nothing herein expressed or implied shall give or be construed to give to any person, other than the Parties and such permitted assigns, any legal or equitable rights hereunder, whether as third party beneficiaries or otherwise.

 

(f)                 Amendments; Entire Agreement.   No amendment to this Agreement shall be effective unless it shall be in writing and signed by each Party. In the event of a conflict between the provisions of this Agreement and any order placed by the Vista Outdoor Group or any other agreement that does not affirmatively state that it is amending this Agreement, this Agreement shall control.

 

(g)                Waivers.   No failure or delay of any Party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Parties hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have hereunder.  No provision or term of this Agreement may be waived except pursuant to a writing executed by the waiving Party.

 

(h)               Notices.   All notices, requests, permissions, waivers or other communications required or permitted to be given under this Agreement shall be in writing and shall be delivered in the manner and to the address of the applicable Party as set forth in Section 12.02 of the Transaction Agreement.

 

(i)                   Interpretation.   The rules of interpretation set forth in Section 12.04 of the Transaction Agreement shall be incorporated by reference to this Agreement, mutatis mutandis .

 

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(j)                  Counterparts.  This Agreement may be executed in one or more counterparts (including by facsimile or electronic mail), each of which shall be deemed to be an original but all of which taken together shall constitute one and the same agreement, and shall become effective when one or more counterparts have been signed by each Party and delivered to the other Party.

 

(k)               Severability.   If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule or Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either Party.  Upon any such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible to the end that the transactions contemplated hereby are fulfilled to the extent possible.

 

(l)                   Governing Law/Jurisdiction.

 

(i)                            This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to contracts executed in and to be performed entirely within that State, regardless of the Laws that might otherwise govern under any applicable conflict of Laws principles.

 

(ii)                         All actions and proceedings arising out of or relating to this Agreement shall be heard and determined in any Federal or state court in the Borough of Manhattan, New York, New York, and the Parties hereby irrevocably submit to the exclusive jurisdiction and venue of such courts in any such action or proceeding and irrevocably waive the defense of an inconvenient forum or lack of jurisdiction to the maintenance of any such action or proceeding.  The consents to jurisdiction and venue set forth in this Section 20(l)(ii) shall not constitute general consents to service of process in the State of New York and shall have no effect for any purpose except as provided in this paragraph and shall not be deemed to confer rights on any person other than the Parties.  Each Party agrees that service of process upon such Party in any action or proceeding arising out of or relating to this Agreement shall be effective if notice is given in accordance with Section 20(h) of this Agreement.  The Parties agree that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law; provided , however , that nothing in the foregoing shall restrict either Party’s rights to seek any post-judgment relief regarding, or any appeal from, a final trial court judgment.

 

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(m)           WAIVER OF JURY TRIAL .  EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.  EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (C) IT MAKES SUCH WAIVER VOLUNTARILY AND (D) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 20(m).

 

[ Remainder of page intentionally left blank ]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed as of the date first above written.

 

 

	ALLIANT TECHSYSTEMS OPERATIONS LLC
	by
		/s/ Joshua Izenberg
		Name:	Joshua Izenberg
		Title:	Assistant Secretary

 

 

	FEDERAL CARTRIDGE COMPANY
	by
		/s/ Scott Chaplin
		Name: Scott Chaplin
		Title:    Senior Vice President and General Counsel

 

 

EXHIBIT INDEX

 

EXHIBIT A-1 : Bulk Powder Products and Pricing

 

EXHIBIT A-2 : Canister Powder Products and Pricing

 

EXHIBIT B : Maximum Capacity; Warehousing and Logistics; Price Adjustments - Methodology

 

EXHIBIT C : Existing Orders for Powder Products

 

 

Exhibit 2.5

 

EXECUTION COPY

 

TAX MATTERS AGREEMENT, dated this 9th day of February, 2015 (this “ Agreement ”), between Alliant Techsystems Inc., a Delaware corporation (“ ATK ”), and Vista Outdoor Inc., a Delaware corporation (“ Sporting ”) and currently a wholly owned subsidiary of ATK.

 

WHEREAS ATK, through its Subsidiaries, is engaged in the Sporting Business;

 

WHEREAS ATK is the common parent corporation of an affiliated group (within the meaning of Section 1504(a) of the Code) that includes Sporting;

 

WHEREAS, on the terms and subject to conditions set forth in the Transaction Agreement, ATK will, and will cause its applicable Subsidiaries to, consummate the Sporting Transfers;

 

WHEREAS, following the Sporting Transfers, on the terms and subject to conditions set forth in the Transaction Agreement, the Distribution will occur;

 

WHEREAS, following the Distribution, on the terms and subject to conditions set forth in the Transaction Agreement, the Merger will occur; and

 

WHEREAS the Parties intend each of the Sporting Transfers, Distribution and Merger to qualify for its respective Intended Tax Treatment;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the Parties hereby agree as follows:

 

ARTICLE I

 

Definitions

 

SECTION 1.01.                  Definition of Terms.   The following terms shall have the following meanings.  Capitalized terms used but not defined in this Agreement shall have the meanings ascribed to them in the Transaction Agreement.

 

“ 25% Sporting Transaction ” means any Proposed Acquisition Transaction of Sporting, determined by substituting “25%” for “30%” in the definition of Proposed Acquisition Transaction.

 

“ Accounting Firm ” has the meaning set forth in Section 2.03.

 

“ Active Trade or Business ” has the meaning set forth in Section 5.02(a)(iii).

 

“ Agreement ” has the meaning set forth in the preamble.

 

 

“ ATK ” has the meaning set forth in the preamble.

 

“ ATK Consolidated Tax Return ” means any Tax Return for any consolidated, combined, unitary or similar group that includes both (i) any member of the ATK Separate Group and (ii) any member of the Sporting Separate Group.

 

“ ATK Separate Group ” means the group comprised of ATK and the ATK Subsidiaries, except the members of the Sporting Separate Group.

 

“ ATK Separate Tax Return ” means any Tax Return that (i) includes any member of the ATK Separate Group and (ii) does not include any member of the Sporting Separate Group.

 

“ Code ” means the Internal Revenue Code of 1986, as amended.

 

“ Combined Group ” means the ATK Separate Group and the Sporting Separate Group, taken together.

 

“ Complete Period Tax Return ” has the meaning set forth in Section 2.01(a).

 

“ Complete Period True-Up Amount ” has the meaning set forth in Section 2.01(a).

 

“ Designated Sporting Representations ” means the Tax Opinion Representations set forth on Schedule 1.01 .

 

“ Equity ” means, with respect to a Party, (i) all classes or series of capital stock of such Party, (ii) all options, warrants and other rights to acquire interests described in clause (i) and (iii) all other instruments properly treated as equity of such Party for U.S. Federal income Tax purposes.

 

“ Hypothetical Sporting Tax Return ” has the meaning set forth in Section 2.02.

 

“ Indemnifying Party ” means a Party that has an obligation to make an Indemnity Payment.

 

“ Indemnified Party ” means a Party that is entitled to receive, or whose Subsidiary is entitled to receive, an Indemnity Payment.

 

“ Indemnity Payment ” means any indemnity payment arising out of Section 3.01 or 3.02 of this Agreement.

 

“ IRS ” means the U.S. Internal Revenue Service.

 

“ Legal Comfort ” means, with respect to any actual or proposed act or omission of a Party or any of its Subsidiaries that would otherwise violate

 

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Section 5.02(a), either (i) a private letter ruling issued by the IRS or (ii) an Unqualified Tax Opinion, in each case at the election of such Party, in either case reasonably satisfactory to the other Party in both form and substance, including with respect to any underlying assumptions or representations and any legal analysis contained therein, and concluding that such act or omission will not cause any of the Sporting Transfers, Distribution or Merger to fail to qualify for its respective Intended Tax Treatment.

 

“ Legal Comfort Representation Breach ” means, with respect to a Party, the failure to be true when made of any representation of (i) any member of (A) in the case of Sporting, the Sporting Separate Group or (B) in the case of ATK, the ATK Separate Group or (ii) any counterparty to any Proposed Acquisition Transaction of such Party (or any Affiliate of such counterparty), in each case for purposes of providing Legal Comfort to the other Party under Section 5.02(b).

 

“ Objections ” has the meaning set forth in Section 2.03(a).

 

“ Orbital Group ” means the group comprised of Orbital and the Subsidiaries of Orbital.

 

“ Ordinary Taxes ” means all Taxes other than (i) Transaction Taxes and (ii) Transfer Taxes.

 

“ Parties ” means ATK and Sporting.

 

“ Partial Period Loss Amount ” has the meaning set forth in Section 2.02(d).

 

“ Partial Period True-Up Amount ” has the meaning set forth in Section 2.02(c).

 

“ Payments and Credits ” means, with respect to any Tax Return, the aggregate amount of payments made and refundable credits applied that, in each case, reduce any Taxes payable (or increase any amounts creditable or refundable) in respect of such Tax Return, including (A) if such Tax Return includes IRS Form 1120 (or any successor thereto), payments and credits set forth on line 32 of the 2013 version of such form (or the relevant predecessor or successor to such line) and (B) if such Tax Return is not described in clause (A), any similar payments or credits set forth on comparable lines of other applicable forms for such Tax Return, but, in each case, only to the extent such payments or credits were made (or, in the case of such credits, resulted from any such payments made) before the Distribution.

 

“ Proposed Acquisition Transaction ” means, with respect to a Party, any transaction or series of transactions (or any agreement, understanding or arrangement to enter into a transaction or series of transactions) as determined for purposes of Section 355(e) of the Code, in connection with which one or more Persons would directly or indirectly acquire, or have the right to acquire, from any other Person(s) (i) in the case of Sporting, Equity of Sporting that, when combined with all other such transactions that occur after the Distribution, comprises 30% or more of the value or the total combined

 

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voting power of all Equity of Sporting immediately after such transaction or, in the case of a series of related transactions, immediately after any transaction in such series or (ii) in the case of ATK, Equity of ATK.  For purposes of the preceding sentence, any recapitalization, repurchase or redemption of Equity of a Party, and any amendment to the certificate of incorporation or other organizational documents of a Party, shall be treated as an indirect acquisition of Equity of such Party by any shareholder of such Party to the extent such shareholder’s percentage interest in the Equity of such Party increases by vote or value. Notwithstanding the foregoing, a “Proposed Acquisition Transaction” shall not include any of the following acts: (w) the adoption by a Party of a shareholder rights plan that meets the requirements of IRS Revenue Ruling 90-11; (x) the transfer of Equity of a Party that satisfies Safe Harbor VII (relating to transfers on established markets) of Section 1.355-7(d)(7) of the Regulations; (y) the issuance of Equity of a Party that satisfies Safe Harbor VIII (relating to acquisitions in connection with a Person’s performance of services) of Section 1.355-7(d)(8) of the Regulations; or (z) the issuance of Equity of a Party that satisfies Safe Harbor IX (relating to acquisitions by a retirement plan of an employer) of Section 1.355-7(d)(9) of the Regulations.  The provisions of this definition are intended to monitor compliance with Section 355 of the Code and shall be interpreted accordingly.  Any clarification of, or change in, Section 355 of the Code or the Regulations thereunder shall be incorporated into this definition and its interpretation, provided that no such clarification or change shall have the effect of narrowing the acts that fall within this definition.

 

“ Protective Section 336(e) Election ” means, with respect to an entity, a protective election under Section 336(e) of the Code (and any similar provision of any U.S. state or local jurisdiction) and Section 1.336-2(j) of the Regulations to treat the disposition of the stock of such entity (pursuant to the Distribution) as a deemed sale of the assets of such entity in accordance with Section 1.336-2(h) of the Regulations.

 

“ Refund Recipient ” has the meaning set forth in Section 3.04.

 

“ Regulations ” means the U.S. Treasury regulations promulgated under the Code.

 

“ Sporting ” has the meaning set forth in the preamble.

 

“ Sporting Audit Amount ” means, in the case of any ATK Consolidated Tax Return adjusted by a Taxing Authority or amended (or otherwise altered) by any member of the ATK Separate Group, in each case after the Distribution, the result (which may be negative) of subtracting:

 

(i)                                      the aggregate amount of Ordinary Taxes that would have been paid with respect to such Tax Return by the members of the ATK Separate Group, calculated by taking into account (A) all adjustments made to such Tax Return that arise from a Determination made after the Distribution and (B) all amendments (and other alterations) made to such Tax Return by any member of the ATK Separate Group after the Distribution, but, in each case, excluding all such adjustments, amendments and alterations of Sporting Business Items; from

 

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(ii)                                   the aggregate amount of Ordinary Taxes actually paid with respect to such Tax Return by the members of the ATK Separate Group, calculated by taking into account (A) all adjustments made to such Tax Return that arise from a Determination made after the Distribution and (B) all amendments (and other alterations) made to such Tax Return by any member of the ATK Separate Group after the Distribution (in each case, whether of Sporting Business Items or otherwise).

 

“ Sporting Business Item ” means any item of income, gain, loss or deduction, or any Tax Attribute, in each case only if such item or Tax Attribute is allocable solely to the Sporting Business.  The determination of whether an item or Tax Attribute is allocable solely to the Sporting Business shall be made in a manner consistent with the principles used by ATK to allocate such item or Tax Attribute, or customarily used by ATK to allocate similar items or Tax Attributes, among its business segments for purposes of financial reporting, including GAAP.

 

“ Sporting Section 355(e) Event ” means the application of Section 355(e) of the Code to the Distribution by reason of the direct or indirect acquisition by one or more persons of stock representing a 50-percent or greater interest (within the meaning of Section 355(e)(2)(A)(ii) of the Code) in any member of the Sporting Separate Group.

 

“ Sporting Separate Group ” means the group comprised of Sporting and the Sporting Subsidiaries.

 

“ Sporting Separate Tax Return ” means any Tax Return that (i) includes any member of the Sporting Separate Group and (ii) does not include any member of the ATK Separate Group.

 

“ Tax Attribute ” means any Tax attribute, including any net operating loss, net capital loss or Tax credit.

 

“ Tax Contest ” means an audit, review, examination or other administrative or judicial proceeding, by any Taxing Authority, relating to any ATK Consolidated Tax Return, ATK Separate Tax Return or Sporting Separate Tax Return.

 

“ Tax Opinion Representations ” means the representations made by ATK and Sporting pursuant to Section 8.16(b) of the Transaction Agreement.

 

“ Tax Return Preparer ” has the meaning set forth in Section 4.01(c).

 

“ Total Tax ” means, with respect to any Tax Return, the aggregate amount of Taxes paid or payable in respect of such Tax Return (determined before applying any Payments and Credits with respect to such Tax Return), including (A) if such Tax Return includes IRS Form 1120 (or any successor thereto), the sum of the total Tax and estimated Tax penalty set forth on lines 31 and 33 of the 2013 version of such form (or the relevant predecessors or successors to such lines) and (B) if such Tax Return is not described in clause (A), any Taxes set forth on comparable lines of other applicable forms for such Tax Return.

 

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“ Transaction Agreement ” means the Transaction Agreement dated as of April 28, 2014, by and among ATK, Sporting, Merger Sub and Orbital.

 

“ Transaction Taxes ” means all (i) Taxes imposed on ATK, Sporting or any of their respective Subsidiaries resulting from the failure of any of the Sporting Transfers, Distribution or Merger to qualify for its respective Intended Tax Treatment and (ii) reasonable out-of-pocket legal, accounting and other advisory or court fees incurred in connection with liability for Taxes described in clause (i) of this definition.

 

“ Transfer Tax Return ” means a Tax Return required to be filed in connection with the assessment of Transfer Taxes.

 

“ True-Up Amount ” means any Complete Period True-Up Amount, Partial Period True-Up Amount or Partial Period Loss Amount.

 

“ Unqualified Tax Opinion ” means, with respect to any act or omission of a Party or any of its Subsidiaries that would otherwise violate Section 5.02(a), an unqualified “will” opinion of a U.S. Tax counsel of recognized national standing reasonably acceptable to the other Party, issued after the Distribution, that permits reasonable reliance by the other Party, it being understood that such counsel, in issuing its opinion, shall (i) assume that each of the Sporting Transfers, Distribution and Merger would have qualified for its respective Intended Tax Treatment if the act or omission in question did not occur and (ii) be permitted to rely on the validity and correctness, as of the date given, of (A) any previously issued opinion of a U.S. Tax counsel of recognized national standing or (B) any private letter ruling issued by the IRS, in each case to the extent relating to the Sporting Distribution, Distribution or Merger, unless such reliance would be unreasonable under the circumstances.

 

“ Unresolved Objections ” has the meaning set forth in Section 2.03(d).

 

ARTICLE II

 

SECTION 2.01.                  Complete Period True-Up Amount .  (a) As promptly as practicable after the Distribution Date, ATK shall prepare on a basis consistent with past practice and deliver to Sporting a draft version of (i) each ATK Consolidated Tax Return for income Taxes, which ATK Consolidated Tax Return has not been filed as of the Distribution Date and is for a taxable period that, as to each member of the Combined Group included in such Tax Return, ends on or before the Distribution Date (“ Complete Period Tax Return ”), and (ii) a computation of the Complete Period True-Up Amount with respect to such Complete Period Tax Return.

 

(b)                                  No later than the tenth Business Day after any Complete Period Tax Return and the Complete Period True-Up Amount with respect to such Tax Return become final pursuant to Section 2.03, (i) if the final Complete Period True-Up Amount for such Tax Return is positive, Sporting shall pay to ATK such amount and (ii) if the

 

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final Complete Period True-Up Amount for such Tax Return is negative, ATK shall pay to Sporting the absolute value of such amount.

 

(c)                                   The “Complete Period True-Up Amount” for any Complete Period Tax Return shall equal the result (which may be negative) of subtracting:

 

(i)                                      the Payments and Credits with respect to such Tax Return; from

 

(ii)                                   the Total Tax with respect to such Tax Return.

 

(d)                                  Notwithstanding anything to the contrary in this Section 2.01 or Section 2.03, in the case of any Tax Return to which Section 8.16(c) of the ATK Disclosure Letter applies, if, before the Distribution Date, ATK delivered notice to Orbital pursuant to Section 8.16(c) of the ATK Disclosure Letter with respect to such Tax Return, then (i) the Parties shall continue to apply the procedures set forth in Section 8.16(c) of the ATK Disclosure Letter with respect to such Tax Return and (ii) when the Parties agree upon the final form of such Tax Return pursuant to such procedures, such Tax Return shall become final and binding for all purposes of this Agreement and the Complete Period True-Up Amount with respect to such Tax Return shall be completed on the basis thereof.

 

SECTION 2.02.                  Partial Period True-Up Amount and Partial Period Loss Amount .  (a) As promptly as practicable after the Distribution Date, ATK shall prepare in accordance with the principles set forth on Schedule 2.02 and deliver to Sporting a draft version of (i) a hypothetical ATK Consolidated Tax Return for U.S. Federal income Taxes relating to the Sporting Business (the “ Hypothetical Sporting Tax Return ”) and (ii) a computation of the Partial Period True-Up Amount (and Partial Period Loss Amount, if applicable).  For the avoidance of doubt, the Hypothetical Sporting Tax Return shall be treated as a “Tax Return” for all purposes under this Agreement, unless the context requires otherwise.

 

(b)                                  No later than the tenth Business Day after the Hypothetical Sporting Tax Return and Partial Period True-Up Amount (and Partial Period Loss Amount, if applicable) become final pursuant to Section 2.03:

 

(i)                                      if the final Partial Period True-Up Amount is positive, Sporting shall pay to ATK such amount;

 

(ii)                                   if the final Partial Period True-Up Amount is negative, ATK shall pay to Sporting the absolute value of such amount; and

 

(iii)                                if the final Partial Period Loss Amount is positive, ATK shall pay to Sporting such amount (in addition to any payment required to be made pursuant to clause (ii) above).

 

(c)                                   The “Partial Period True-Up Amount” shall be calculated as follows:

 

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(i)                                      the Total Tax with respect to the Hypothetical Sporting Tax Return; minus

 

(ii)                                   the Payments and Credits with respect to the Hypothetical Sporting Tax Return (determined, for the avoidance of doubt, in accordance with paragraph  10 of Schedule 2.02 ) other than any such Payments and Credits that both (a) were credits carried forward from a final Complete Period Tax Return and (b) formed the basis for a payment made previously by ATK to Sporting pursuant to Section 2.01(b); plus

 

(iii)                                the ATK Estimated Tax Payment.

 

(d)                                  If the Hypothetical Sporting Tax Return reflects a net operating loss, the “Partial Period Loss Amount” for such Tax Return shall equal thirty-eight percent (38%) of such net operating loss (which amount shall, for the avoidance of doubt, be positive).

 

SECTION 2.03.                  Finalization of Tax Returns and True-Up Amounts .  (a) No later than five Business Days after Sporting’s receipt of a draft version of a Complete Period Tax Return and related computation of a Complete Period True-Up Amount (pursuant to Section 2.01(a)) or the Hypothetical Sporting Tax Return and related computation of the Partial Period True-Up Amount (and Partial Period Loss Amount, if applicable) (pursuant to 2.02(a)), Sporting shall deliver to ATK, in writing and specified in reasonable detail, any objections (“ Objections ”) to such draft Tax Return and True-Up Amounts (it being understood that Objections may not relate to any other disagreements).

 

(b)                                  If Sporting does not timely deliver Objections to ATK in accordance with Section 2.03(a), then the applicable draft Tax Return and True-Up Amounts shall become final.

 

(c)                                   If Sporting timely delivers Objections to ATK in accordance with Section 2.03(a), then the Parties shall negotiate in good faith to resolve their disagreement, and if the Parties succeed in resolving all their disagreements, then the applicable Tax Return and True-Up Amounts shall become final in the form agreed upon by the Parties.

 

(d)                                  If, after the fifth Business Day following the delivery to ATK of Objections in accordance with Section 2.03(a), the Parties have not resolved all their disagreements pursuant to Section 2.03(c), the Parties shall submit to an to an independent accounting firm (the “ Accounting Firm ”) mutually agreed upon by the Parties (such agreement not to be unreasonably withheld) for resolution, any and all Objections that remain in dispute (“ Unresolved Objections ”).  The Parties agree that the determination made by the Accounting Firm of such Unresolved Objections shall be made in a manner consistent with Sections 2.01 and 2.02 and shall be final, binding and conclusive.  Following such determination, the Parties shall cooperate to jointly prepare the relevant Tax Return and compute the relevant True-Up Amounts in a manner

 

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consistent with the Accounting Firm’s determination, and such Tax Return and True-Up Amounts shall become final in the form so prepared by the Parties.

 

(e)                                   If the Parties engage the Accounting Firm pursuant to Section 2.03(d):

 

(i)                                      each Party shall use commercially reasonable efforts to keep the other Party reasonably informed, including by (1) responding promptly to requests from the other Party for regular updates, (2) inviting the other Party to participate in material conversations with the Accounting Firm and (3) including the other Party in material written communications with the Accounting Firm, in each case relating to the Accounting Firm’s progress in preparing its determination;

 

(ii)                                   each Party shall cooperate with the other Party and the Accounting Firm and shall use commercially reasonable efforts to provide in a timely manner any information, data and assistance required or requested by the Accounting Firm to prepare its determination properly;

 

(iii)                                fees and expenses of the Accounting Firm pursuant to this Section 2.03 shall be borne one-half each by ATK and Sporting;

 

(iv)                               the scope of the disagreements to be resolved by the Accounting Firm shall be limited to the Unresolved Objections submitted to the Accounting Firm pursuant to Section 2.03(d), and any disagreement (or portion thereof) not within such scope shall be resolved in accordance with Section 7.05; and

 

(v)                                  the resolution of each disagreement relating to the Unresolved Objections by the Accounting Firm under this Section 2.03 shall constitute an arbitration under the Federal Arbitration Act, and the Accounting Firm shall be an arbitrator.  The arbitration shall have its seat in New York and, without affecting the legal seat of the arbitration, hearings shall take place in Washington, D.C.  The arbitration shall be conducted in the English language and shall be governed by the rules of the American Arbitration Association to the extent not inconsistent with this Section 2.03.

 

(f)                                    For purposes of applying the procedures set forth in this Section 2.03 to the Hypothetical Sporting Tax Return, Partial Period True-Up Amount and Partial Period Loss Amount (if applicable), Section 2.03(a) shall be applied by substituting “30 Business Days” for “five Business Days” and Section 2.03(d) shall be applied by substituting “20th Business Day” for “fifth Business Day”.

 

SECTION 2.04.                  Non-Indemnity Treatment .  The Parties hereby acknowledge and agree that the payments contemplated by this Article II are affirmative contractual rights and obligations of the Parties and not indemnities for Losses suffered by any Party.  Without limiting the generality of the foregoing, the Parties’ rights and obligations under this Article II are independent from the Parties’ rights and obligations relating to indemnification pursuant to Article III and shall not be

 

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subject to adjustment as a result of any Determination.  Article III shall be the Parties’ sole and exclusive remedy for indemnification under this Agreement.

 

ARTICLE III

 

Indemnification of Tax Liabilities and Tax Benefits

 

SECTION 3.01.  ATK Indemnification of Sporting.   ATK shall be liable for, and shall indemnify and hold all of the members of the Sporting Separate Group harmless from:

 

(a)           For all taxable periods (i) Ordinary Taxes, except for Sporting Audit Amounts that are positive, with respect to all ATK Consolidated Tax Returns and (ii) Ordinary Taxes with respect to all ATK Separate Tax Returns;

 

(b)           Transaction Taxes allocated to ATK pursuant to Section 3.03; and

 

(c)           Transfer Taxes incurred as a result of the Transactions, except Transfer Taxes arising out of the Transition Services Agreement or the Supply Agreement.

 

SECTION 3.02.  Sporting Indemnification of ATK.   Sporting shall be liable for, and shall indemnify and hold all of the members of the ATK Separate Group harmless from:

 

(a)           Ordinary Taxes with respect to all Sporting Separate Tax Returns for all taxable periods;

 

(b)           Transaction Taxes allocated to Sporting pursuant to Section 3.03; and

 

(c)           Sporting Audit Amounts that are positive (other than any such amounts resulting from any breach by ATK of its obligations under Section 4.03).

 

SECTION 3.03.  Allocation of Transaction Taxes .  (a) All Transaction Taxes, other than Transaction Taxes described in Section 3.03(b), shall be allocated to ATK.

 

(b)           Subject to Section 3.03(c), Transaction Taxes shall be allocated to Sporting if such Transaction Taxes would not have been imposed but for:

 

(i)            a Sporting Section 355(e) Event;

 

(ii)           the failure to be true when made of any Designated Sporting Representation; or

 

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(iii)          any act or omission described in Section 5.01 or Section 5.02 (without regard to whether Legal Comfort was obtained) taken or omitted after the Distribution by any member of:

 

(A)          the Sporting Separate Group, unless such Transaction Taxes are attributable to a Legal Comfort Representation Breach of ATK; or

 

(B)          the ATK Separate Group, but only if such Transaction Taxes are attributable to a Legal Comfort Representation Breach of Sporting.

 

(c)           If any Transaction Taxes are described in Section 3.03(b) but also would not have been imposed but for an act or omission taken or omitted after the Distribution Date by any member of the ATK Separate Group or before the Effective Time by any member of the Orbital Group, such Transaction Taxes shall be allocated between Sporting and ATK in proportion to the relative degrees of fault of the members of the Sporting Separate Group (and such members’ Affiliates and counterparties to any consummated Proposed Acquisition Transactions of Sporting) and the members of the ATK Separate Group or Orbital Group (and such members’ Affiliates and counterparties to any consummated Proposed Acquisition Transactions of ATK).

 

SECTION 3.04.  Refunds after Indemnity Payments or Audits.   If (a)  ATK, Sporting or any of their respective Subsidiaries receives any refund of any amounts for which the other Party has previously made an Indemnity Payment or (b)  ATK or any of its Subsidiaries receives any refund attributable to (i) any carryback (or portion thereof) permitted by Section 4.03(b) or (ii) any Sporting Audit Amount that is negative (the Party receiving, or whose Subsidiary receives, such refund, a “ Refund Recipient ”), the Refund Recipient shall pay to the other Party the entire amount of the refund (net of any Taxes imposed with respect to such refund) within 20 Business Days of receipt; provided , however , that the other Party, upon the request of the Refund Recipient, shall repay the amount paid to the other Party (plus any penalties, interest or other charges imposed by the relevant Taxing Authority) in the event the Refund Recipient or any of its Subsidiaries is required to repay such refund.  Any Tax credit, Tax reduction or Tax offset shall be treated as a refund for purposes of this Section 3.04 and shall be treated as received by the Refund Recipient (or one of its Subsidiaries) as and when applied to reduce the cash Tax liability of such Refund Recipient (or one of its Subsidiaries).

 

ARTICLE IV

 

Tax Returns, Tax Contests and Other Administrative Matters

 

SECTION 4.01.  Filing of Tax Returns and Payment of Taxes.   (a) Except as described in Section 4.01(b), ATK shall timely prepare and file (or cause to be prepared and filed) for all taxable periods (i) all ATK Consolidated Tax Returns,

 

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(ii) all ATK Separate Returns and (iii) the Sporting Separate Returns set forth on Schedule 4.01(a) .

 

(b)           Sporting shall timely prepare and file (or cause to be prepared and filed) all Sporting Separate Tax Returns for all taxable periods, except those set forth on Schedule 4.01(a) .

 

(c)           T he Party required to prepare (or cause to be prepared) a Tax Return pursuant to this Section  4.01 (the “ Tax Return Preparer ”) shall (or shall cause its Subsidiaries to):

 

(i)            on or before the due date (including extensions) of such Tax Return, (A) notify the other Party of any amount (or any portion thereof) shown as due on such Tax Return for which such other Party could reasonably be expected to be required to make an Indemnity Payment, (B) provide the other Party a reasonable opportunity to review all such relevant portions, (C) consider in good faith any reasonable comments made by the other Party in respect of all such relevant portions and (D) prepare such relevant portions on a basis consistent with past practice except as required by applicable Law or to correct any clear error; and

 

(ii)           execute and timely file such Tax Return and timely pay to the relevant Taxing Authority any amount shown as due on such Tax Return, without prejudice to such Party’s right to be indemnified hereunder with respect to such Taxes;

 

provided that, with respect to all Sporting Business Items, the following Tax Returns shall be prepared and filed in a manner consistent with, to the maximum extent possible under applicable Law, the final Hypothetical Sporting Tax Return:  (x) each ATK Consolidated Tax Return for a taxable period that for at least one member of the Combined Group included in such Tax Return includes, but does not end on, the Distribution Date; and (y) for a taxable period that (for all members of the Combined Group included in the relevant Tax Return) includes, or begins after, the Distribution Date, each ATK Separate Tax Return and each Sporting Separate Tax Return .

 

(d)           Notwithstanding the foregoing, this Section 4.01 shall not apply to (i) Complete Period Tax Returns (and the Taxes payable with respect thereto) and (ii) Transfer Tax Returns (and Transfer Taxes).

 

SECTION 4.02.  Transfer Tax Returns .  Each Transfer Tax Return shall be prepared and filed, or caused to be prepared and filed, in a timely manner with the appropriate Taxing Authority by the Party responsible, or whose Subsidiary is responsible, for filing such Tax Return under applicable Law; provided that such filing Party shall (x) use commercially reasonable efforts to provide the other Party with a draft copy of such Tax Return before the due date for filing such Tax Return (including extensions) and (y) consider in good faith any comments provided by such other Party.  Such filing Party shall timely pay to such Taxing Authority the amount shown as due

 

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