UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT PURSUANT

TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (date of earliest event reported): February 9, 2015

 

ORBITAL ATK, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

1-10582

 

41-1672694

(State or other jurisdiction of

 

(Commission File Number)

 

(IRS Employer Identification

incorporation)

 

 

 

Number)

 

45101 Warp Drive, Dulles, Virginia 20166

(Address of principal executive offices) (Zip Code)

 

(703) 406-5000

(Registrant’s telephone number, including area code)

 

Alliant Techsystems Inc.
1300 Wilson Boulevard, Suite 400, Arlington, Virginia 22209-2307

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 



 

Introductory Note

 

This Current Report on Form 8-K is being filed in connection with the consummation on February 9, 2015 (the “Closing Date”) of the transactions contemplated by that certain Transaction Agreement (the “Transaction Agreement”), dated as of April 28, 2014, among Alliant Techsystems Inc., a Delaware corporation (“ATK”), Orbital Sciences Corporation, a Delaware corporation (“Orbital”), Vista Outdoor Inc. (formerly Vista SpinCo Inc.), a Delaware corporation (“Vista Outdoor”) and Vista Merger Sub Inc., a Delaware corporation (“Merger Sub”).  Pursuant to the Transaction Agreement, (i) at approximately 8:30 a.m., Eastern time on February 9, 2015 ATK spun-off Vista Outdoor to its stockholders (the “Distribution”), (ii)  at aproximately 2:00 p.m., Eastern time on February 9, 2015 (the “Effective Time”), Merger Sub merged with and into Orbital (the “Merger” and together with the Distribution, the “Transaction”), with Orbital continuing as the surviving corporation and a wholly-owned subsidiary of ATK and (iii) ATK amended its certificate of incorporation to change its name to Orbital ATK, Inc.  References to “ATK” in this Current Report on Form 8-K are to Alliant Techsystems Inc. prior to consummation of the Merger and references to “Orbital ATK” are to the combined company following consummation of the Merger.  The events described below took place in connection with the consummation of the Transaction.

 

Item 1.01.  Entry Into a Material Agreement.

 

The information provided in the Introductory Note and Item 2.01 of this Current Report on Form 8-K is incorporated herein by reference.

 

Tax Matters Agreement

 

On February 9, 2015, Orbital ATK and Vista Outdoor entered into a Tax Matters Agreement (the “Tax Matters Agreement”), which governs both Orbital ATK’s and Vista Outdoor’s rights and obligations with respect to taxes for both pre- and post-distribution periods.  Under the Tax Matters Agreement, each party is generally required to indemnify the other for audit adjustments to its own separate tax returns.  Additionally, Vista Outdoor is required to indemnify Orbital ATK for audit adjustments of Orbital ATK’s tax returns for tax items relating solely to the business of ATK’s sporting group, which is now contained in Vista Outdoor and was spun-off in the Distribution (the “ATK Sporting business”).

 

In addition, Orbital ATK and Vista Outdoor are obligated to make a series of tax-related true-up payments.  These payments will ensure that Vista Outdoor will generally bear all income tax liabilities for Orbital ATK’s unfiled consolidated tax returns for its 2014 fiscal year.  These payments will also ensure that Vista Outdoor will generally bear the income tax liabilities relating to the ATK Sporting business that arise during the pre-distribution portion of Orbital ATK’s 2015 fiscal year.

 

Pursuant to the terms of the Tax Matters Agreement, Vista Outdoor is generally required to indemnify Orbital ATK against any tax imposed on the Distribution if that tax results from any action or omission of Vista Outdoor or its subsidiaries, including (i) direct or indirect acquisitions of Vista Outdoor’s equity securities that result in a 50% or more change in ownership of Vista Outdoor as part of a plan or series of related transactions that include the distribution or (ii) other actions or omissions (such as those described in the following paragraph) by Vista Outdoor or its subsidiaries, or if the tax results from certain representations made by Orbital ATK and Vista Outdoor that form a basis for the tax opinion delivered in connection with the Transaction not being true when made.  If any tax, other than certain transfer taxes, is imposed on Orbital ATK with respect to the Distribution for reasons not related to any of the above actions by Vista Outdoor or its subsidiaries, Orbital ATK will be responsible for such tax and will not be entitled to indemnification by Vista Outdoor under the Tax Matters Agreement, and if such tax is imposed on Vista Outdoor, then Orbital ATK will generally be required to indemnify Vista Outdoor against that tax.

 

In addition, to preserve the intended tax-free treatment to Orbital ATK of the Distribution, pursuant to the Tax Matters Agreement, Orbital ATK and Vista Outdoor are each prohibited from taking actions or omissions that could reasonably be expected to cause the Distribution to be taxable or to jeopardize the conclusions of the opinions of tax counsel received by Orbital ATK or Orbital.  In particular, for a two-year period following the distribution, Orbital ATK and Vista Outdoor may not:

 

·                  enter into any agreement, understanding or arrangement with respect to any transaction or series of transactions involving the acquisition, issuance, repurchase or change of ownership of (i) in the case of Orbital ATK, any of Orbital ATK’s capital stock and (ii) in the case of Vista Outdoor, 30% or more of Vista Outdoor’s capital stock, in each case together with options or other rights in respect of such capital stock, subject to certain exceptions relating to employee compensation arrangements, and stockholder rights plans;

 

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·                  liquidate (or partially liquidate), whether by merger, consolidation or otherwise;

 

·                  cease to be engaged in the active conduct of, or sell or transfer more than 30% of the gross assets or gross consolidated assets of, certain businesses; or

 

·                  redeem or otherwise repurchase its capital stock, subject to certain exceptions.

 

Orbital ATK or Vista Outdoor will be permitted to take any of the restricted actions described above if it obtains an opinion of counsel or IRS private letter ruling that is reasonably acceptable to the other party to the effect that the action will not affect the tax-free status of the Distribution, the Merger or certain related transactions.  If either party intends to take any such restricted action, the other party will be required to cooperate in obtaining the tax opinion or IRS ruling.  The receipt of any such ruling or opinion in respect of an action Vista Outdoor or Orbital ATK proposes to take will not relieve Vista Outdoor or Orbital ATK of any obligation it has to indemnify the other party if that action causes the Distribution, Merger or certain related transactions to be taxable.

 

The foregoing description of the Tax Matters Agreement does not purport to be complete and is subject to, and qualified in its entirety by, reference to the full text of the Tax Matters Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.

 

Item 2.01.  Completion of Acquisition or Disposition of Assets.

 

The information provided in the Introductory Note of this Current Report on Form 8-K is incorporated herein by reference.

 

Distribution

 

On February 9, 2015, prior to the Merger with Orbital, ATK completed the previously announced distribution of 100% of the outstanding shares of common stock of Vista Outdoor to ATK’s stockholders.  ATK stockholders received two shares of Vista Outdoor common stock for each share of ATK common stock that they owned.  As a result of the Distribution, Vista Outdoor separated from Orbital ATK and its common stock began regular-way trading on the New York Stock Exchange (the “NYSE”) under the symbol “VSTO” on February 10, 2015.  ATK distributed a total of approximately 63.9 million shares of Vista Outdoor’s common stock to ATK’s stockholders of record as of the close of business on February 2, the record date for the Distribution.

 

Following the Distribution, Vista Outdoor is expected to be reported as discontinued operations by Orbital ATK in accordance with ASC Topic 205, "Presentation of Financial Statements," beginning with Orbital ATK's financial statements for the fiscal year ended March 31, 2015.

 

Merger

 

On February 9, 2015, following the Distribution, ATK completed the merger transaction contemplated by the Transaction Agreement, pursuant to which Merger Sub merged with and into Orbital, with Orbital continuing as the surviving corporation and a wholly-owned subsidiary of Orbital ATK.  Pursuant to the Transaction Agreement, at the Effective Time, each issued and outstanding share of common stock, par value $0.01 per share, of Orbital was converted into the right to receive 0.449 shares of ATK common stock, par value $0.01 per share (the “Merger Consideration”) (other than shares held by Orbital, ATK or any wholly-owned subsidiary of either one), with cash in lieu of fractional shares.  ATK issued approximately 27.4 million shares of ATK common stock as consideration in the Merger.  Based on the closing price of Orbital ATK common stock following the Distribution on February 9, 2015 as reported on the NYSE, the aggregate value of the consideration paid or payable to former holders of Orbital’s common stock is approximately $1.7 billion.  Following the Merger, ATK began trading as Orbital ATK under the symbol “OA” on the NYSE on February 10, 2015.

 

The foregoing description of the Transaction Agreement and the transactions contemplated by the Transaction Agreement does not purport to be complete and is subject to, and qualified in its entirety by, reference to the full text of the Transaction Agreement, which was previously filed as Exhibit 2.1 to ATK’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on May 2, 2014 and is incorporated by reference herein as Exhibit 2.1 to this Current Report on Form 8-K.

 

Item 5.02                                           Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

The information provided in the Introductory Note and Item 2.01 of this Current Report on Form 8-K is incorporated herein by reference.

 

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(b)                                 Resignation of Officers and Directors

 

In connection with the Transaction, Mark W. DeYoung (ATK President and Chief Executive Officer), Neal S. Cohen (ATK Executive Vice President and Chief Financial Officer), Jay W. Tibbets (Senior Vice President and President Sporting Group) and Scott D. Chaplin (ATK Senior Vice President, General Counsel and Secretary) voluntarily resigned from their positions at ATK, effective immediately prior to the Effective Time.  In addition, in connection with the Transaction, Michael Callahan and April H. Foley voluntarily resigned from the ATK Board of Directors effective immediately prior to the Effective Time.

 

(c)                                  Appointment of Officers

 

On February 9, 2015, effective as of the Effective Time, as approved by resolutions of Orbital ATK’s Board of Directors and pursuant to the terms of the Transaction Agreement, David W. Thompson was appointed President and Chief Executive Officer of Orbital ATK, Blake E. Larson was appointed Chief Operating Officer of Orbital ATK, Garrett E. Pierce was appointed Chief Financial Officer of Orbital ATK and Hollis M. Thompson was appointed Principal Accounting Officer of Orbital ATK.

 

David W. Thompson, 60, Orbital ATK's President and Chief Executive Officer, co-founded Orbital and previously served as chairman of the board and Chief Executive Officer of Orbital since 1982.  From 1982 until October 1999, he also served as President, a role he resumed in mid-2011.  Prior to founding Orbital, Mr. Thompson was employed by Hughes Electronics Corporation as special assistant to the President of its Missile Systems Group and by NASA at the Marshall Space Flight Center as a project manager and engineer, and also worked on the Space Shuttle’s autopilot design at the Charles Stark Draper Laboratory.  Mr. Thompson is an Honorary Fellow of the American Institute of Aeronautics and Astronautics, a Fellow of the American Astronautical Society and the Royal Aeronautical Society, and is a member of the U.S. National Academy of Engineering.  He also serves as a member of the Board of Trustees of the California Institute of Technology.

 

Blake Larson, 55, Orbital ATK's Chief Operating Officer, previously served as Senior Vice President and President of ATK Aerospace Group since 2010.  He previously served as Executive Vice President of ATK Space Systems and ATK Mission Systems; Senior Vice President and President of ATK Advanced Propulsion and Space Systems Group; and Vice President and General Manager of ATK Composites.  He also served in leadership positions with ATK Ordnance and Ground Systems, ATK Precision Fuze, and ATK Power Sources.  During his 23-year career, Mr. Larson has held various engineering management positions.  He has a bachelor’s degree from the University of Minnesota and a Master of Science in management of technology from the University of Minnesota.

 

Garrett Pierce, 70, Orbital ATK's Chief Financial Officer, previously served as Vice Chairman and Chief Financial Officer of Orbital since April 2002, and was Executive Vice President and Chief Financial Officer since August 2000.  From 1996 until August 2000he was Executive Vice President and Chief Financial Officer of Sensormatic Electronics Corp., a supplier of electronic security systems, where he was also named Chief Administrative Officer in July 1998.  Prior to joining Sensormatic, Mr. Pierce was the Executive Vice President and Chief Financial Officer of California Microwave, Inc., a supplier of microwave, radio frequency, and satellite systems and products for communications and wireless networks.  From 1980 to 1993, Mr. Pierce was employed by Materials Research Corporation, a provider of thin film equipment and high purity materials to the semiconductor, telecommunications and media storage industries, where he progressed from Chief Financial Officer to President and Chief Executive Officer.  Materials Research Corporation was acquired by Sony Corporation in 1989.  From 1972 to 1980, Mr. Pierce held various management positions with The Signal Companies.  Mr. Pierce is a director of Kulicke and Soffa Industries, Inc.

 

Hollis Thompson, 57, Orbital ATK's Vice President, Principal Accounting Officer, previously served as Senior Vice President, Controller and Principal Accounting Officer of Orbital since 2009, was Vice President, Controller and Principal Accounting Officer from 2003 to 2009 and was Vice President and Controller from 1999 to 2003.  Prior to joining Orbital in 1999, Mr. Thompson held various accounting and financial management positions at COMSAT Corporation, a global provider of satellite services and digital networking services and technology. Previously, Mr. Thompson was an audit manager at Arthur Andersen & Co., an international accounting, audit, tax and advisory services firm.  Mr. Thompson has a bachelor’s degree in accounting from Brigham Young University and he is a Certified Public Accountant.

 

Assumption of Executive Change in Control Severance Agreements

 

In connection with the Merger and pursuant to the terms of the executive change in control severance agreements with each of David Thompson, Garrett Pierce and Hollis Thompson (collectively, the “Severance Agreements”), at the Effective Time, Orbital ATK assumed Orbital’s obligations under each Severance Agreement.  Pursuant to the terms of each Severance Agreement, if the executive officer’s employment is terminated by Orbital ATK without “cause” (as defined below) or by such employee for “good reason” (as defined below) in anticipation of, upon the consummation of, or at any time after a “change in control” (as defined below), the executive officer would receive from Orbital ATK a lump sum cash payment equal to two times the sum of (1) the greater of his annual base salary in effect on the closing date of the Merger or the date of

 

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termination and (2) the greater of (a) his full target bonus for the year of termination or (b) the average of the two highest cash bonuses earned during two of the three immediately preceding years.  Also, the executive officer would receive a pro rata bonus in a lump sum cash payment equal to his target bonus through the date of termination.  In addition, all unvested amounts under Orbital’s retirement and deferred compensation plans would vest, all insurance benefits would continue for 24 months and all outstanding vested and unvested equity awards would be repurchased by Orbital ATK at the higher of (1) the highest price paid in the Merger or (2) the then current fair market value on the date of termination if the equity award has been assumed, less the exercise price for any such equity award, if applicable.  The officer would also be entitled to payment by Orbital ATK of all reasonable legal fees and expenses incurred by the officer as a result of the termination.  The officer must timely execute a written release of claims provided by Orbital ATK to be eligible to receive any of the foregoing payments.  In the event that it is determined that any of the payments and benefits described above or any other payments would subject the executive officer to excise taxes under Section 4999 of the Code because such payments and benefits due would constitute a “parachute payment” under Section 280G of the Code, payments to the officer under the Severance Agreement will be reduced to the extent doing so would result in the executive officer receiving a larger after-tax amount than if he received the entire payment.

 

For purposes of the foregoing, “cause” generally means (1) the officer’s willful and continual failure to substantially perform his duties in accordance with the instructions of the Orbital ATK Board of Directors or the persons to whom the officer reports, after a demand for substantial performance is delivered to the officer by the Orbital ATK Board of Directors specifically identifying the manner in which the Orbital ATK Board of Directors believes that the officer has not substantially performed his duties; (2) the officer’s willfully engaging in conduct that is materially injurious to Orbital ATK; (3) the officer’s embezzlement or misappropriation of Orbital ATK’s funds or property; (4) the officer’s conviction of a felony or plea of guilty or nolo contendere to a felony; or (5) the officer’s conviction of a crime involving fraud, dishonesty, moral turpitude or breach of trust or plea of guilty or nolo contendere to such a crime.

 

For purposes of the foregoing, “good reason” generally means the occurrence of any of the following events with respect to the officer: (1) without the officer’s written consent, the assignment of the executive officer to duties that are a material adverse change from the most significant position held by the officer during the 180-day period prior to the effective time of the Merger; (2) a material reduction in the officer’s base salary; (3) the relocation of the officer outside a 50-mile radius of the officer’s then-current office; (4) a material adverse change in (a) the value of any material compensation plan in which the officer participates or (b) the benefits under Orbital’s retirement, pension, 401(k), deferred compensation, life insurance, medical, health, accident, disability or other benefit plans in which the officer participated as of the effective time of the Merger; or (5) Orbital’s failure to obtain from any successor an assumption of the obligations under the Severance Agreement.

 

Under the Severance Agreements, following the Merger “change in control” is generally defined as (1) the acquisition by an individual, entity or group of 30% or more of Orbital ATK’s common stock or the combined voting power of Orbital ATK’s then outstanding voting securities entitled to vote for directors, (2) within any 24-month period, the persons who were Orbital ATK’s directors immediately prior to the transaction cease to constitute a majority of the Orbital board of directors or its successor, with certain exceptions, (3) the sale or disposition of all or substantially all of Orbital ATK’s assets, or (4) the consummation by Orbital ATK of a reorganization, merger, consolidation or similar business combination transaction, the result of which is either (a) Orbital ATK’s stockholders immediately prior to the transaction will not beneficially own more than 60% of the surviving entity, (b) a person becomes the owner of 30% or more of the outstanding common stock of the entity resulting from the transaction, or (c) at least a majority of the members of the board of directors of the entity resulting from the transaction were not members of the Orbital ATK board of directors at the time the transaction was approved. The Merger constituted a “change in control” of Orbital under the Severance Agreements pursuant to clause (4)(a) above.

 

The foregoing description of the Severance Agreements does not purport to be complete and is subject to, and qualified in its entirety by, reference to the full text of the Severance Agreements, which are filed as Exhibits 10.2, 10.3 and 10.4 to this Current Report on Form 8-K and incorporated herein by reference.

 

Assumption of Executive Severance Agreement

 

In connection with the Merger and pursuant to the terms of Mr. Pierce’s executive severance agreement (the “Pierce Severance Agreement”), at the Effective Time, Orbital ATK assumed Orbital’s obligations under the Pierce Severance Agreement.  Pursuant to the terms of the Pierce Severance Agreement, if Mr. Pierce’s employment is terminated by Orbital ATK for disability, his benefits will be determined in accordance with Orbital ATK’s insurance and benefits programs then in effect and his equity awards will continue to vest as scheduled for a 24-month period following such termination and

 

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any stock options held by Mr. Pierce will remain exercisable for the rest of the originally scheduled term.  If Mr. Pierce’s employment is terminated by Orbital ATK for “cause” (as defined below), Mr. Pierce would only be permitted to exercise any vested stock options for 60 days following the date of termination.  If Mr. Pierce’s employment is terminated by Orbital ATK without “cause” (as defined below) or by Mr. Pierce for “good reason” (as defined below), Mr. Pierce would receive from Orbital ATK a lump sum cash payment equal to two times the sum of (1) his annual base salary on the date of termination and (2) the greater of (a) the sum of any bonuses paid or payable to him for the 12-month period immediately preceding the month of termination, or (b) the target bonus for the year of termination based on 80% of his annual base salary.  He would also be reimbursed for all reasonable legal fees and expenses incurred as a result of such termination.  In addition, Mr. Pierce’s equity awards would continue to vest as scheduled for a 24-month period and all vested stock options held by Mr. Pierce will remain exercisable for the rest of the originally scheduled term and his insurance benefits would continue for a 24-month following termination.

 

For purposes of the foregoing, “cause” means (1) Mr. Pierce’s willful gross neglect of his duties with Orbital ATK as such duties are determined by the Orbital ATK Board of Directors or the executive officers to whom he reports, after a demand for substantial performance is delivered to him by the Orbital ATK Board of Directors specifically identifying the manner in which the Orbital ATK Board of Directors believes that he has substantially neglected his duties; or (2) his willfully engaging in gross misconduct that is demonstrably and materially injurious to Orbital ATK.

 

For purposes of the foregoing, “good reason” means the occurrence of any of the following events with respect to Mr. Pierce: (1) without his written consent, the assignment of him to any position, authorities, duties and responsibilities that are a material adverse change from the most significant of those held by Mr. Pierce during the previous 180-day period; (2) a material reduction in his base salary; (3) the relocation of Mr. Pierce outside a 50-mile radius of his office in the previous 180-day period; (4) a material adverse change in (a) the value of any material compensation plan in which Mr. Pierce participates or (b) the benefits under Orbital’s retirement, pension, 401(k), deferred compensation, life insurance, medical, health, accident, disability or other benefit plans in which he participated in the previous 180-day period; (5) the failure to nominate or renominate him to a position on the Orbital ATK Board of Directors; or (6) Orbital ATK’s failure to obtain from any successor an assumption of the obligations under the Pierce Severance Agreement.

 

Notwithstanding the foregoing, if Mr. Pierce’s employment is terminated in anticipation of or within two years following a “change in control” (as defined in his Severance Agreement), his Severance Agreement (as described above), and not the Pierce Severance Agreement, will apply.

 

The foregoing description of the Pierce Severance Agreements does not purport to be complete and is subject to, and qualified in its entirety by, reference to the full text of the Pierce Severance Agreement, which is filed as Exhibit 10.5 to this Current Report on Form 8-K and incorporated herein by reference.

 

(d)                                 Appointment of Directors

 

On February 9, 2015, effective as of the Effective Time, as approved by resolutions of ATK’s Board of Directors and pursuant to the terms of the Transaction Agreement, the number of directors on the Orbital ATK Board of Directors was increased to 16, and, in addition to Mr. David Thompson, the following former members of the Orbital board of directors were appointed to the Orbital ATK Board:

 

·                  General Kevin P. Chilton, USAF (Ret.).  General Chilton, 60, served on the Orbital board of directors since January 2012.  In February 2011, General Chilton retired as General from the U.S. Air Force after more than three decades of service.  General Chilton served as Commander, U.S. Strategic Command, from 2007 through 2011, overseeing operations for Department of Defense nuclear, space and cyberspace operations.  From 2006 to 2007, General Chilton served as Commander of Air Force Space Command, where he was responsible for all Air Force space operations.  He previously served in the Air Force in a variety of command positions and as a pilot.  General Chilton also served as a NASA astronaut from 1987 to 1996, including on three space shuttle flights.  General Chilton is a director of Anadarko Petroleum Corporation and Level 3 Communications, Inc.

 

·                  Lennard A. Fisk.  Dr. Fisk, 71, has been a Distinguished University Professor of Space Sciences at the University of Michigan since 1993, where he leads a research group conducting theoretical and experimental space science research.  From 1987 to 1993, Dr. Fisk was the NASA Associate Administrator for Space Science and Applications, where he was responsible for the planning and direction of all NASA programs concerned with space science and applications, and for the institutional management of the Goddard Space Flight Center and the Jet Propulsion Laboratory.  From 1977 to 1987, Dr. Fisk held various positions at the University of New Hampshire, including Professor of Physics and Vice President for Research and Financial Affairs.  Dr. Fisk has served on numerous advisory committees including the Space Studies Board of the U.S. National Academy of Sciences, which he chaired from 2003 to 2008.  He is a member of the U.S. National Academy of Sciences, the International Academy of Astronautics and Academia Europaea, and a Fellow of the American Geophysical Union.  He has received numerous awards including the NASA Distinguished Service Medal.

 

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·                  Robert M. Hanisee.  From 1990 until his retirement at the end of 2003, Mr. Hanisee, 76, held a series of positions with Trust Company of the West, an investment management services company.  He served as Managing Director and Chief Investment Officer for Asset Allocation in the Private Client Services Group from 1998 to 2003, managed the Convertible Securities Group from 1992 to 1998, and was Portfolio Manager for the Global Telecom Trust from September 1996 to October 1998.  Mr. Hanisee was a founding partner of Amdec Securities, and later was President of Seidler Amdec Securities.

 

·                  Lieutenant General Ronald T. Kadish, USAF (Ret.).  General Kadish, 66, has been with Booz Allen Hamilton, a global strategy and technology consulting firm, since February 2005 and currently serves as Executive Vice President.  In September 2004, General Kadish retired as Lieutenant General from the U.S. Air Force after serving for 34 years.  From 1999 until his retirement, General Kadish served as Director of the U.S. Missile Defense Agency (formerly Ballistic Missile Defense Organization).  From August 1996 to June 1999, General Kadish served as the Commander of the Electronic Systems Center at Hanscom Air Force Base.  Prior to that time, General Kadish served in numerous assignments with the U.S. Air Force, including Program Director for several military aircraft platforms.  During his career with the U.S. Air Force, General Kadish received a number of awards and decorations, including the Defense Distinguished Service Medal with oak leaf cluster, the Distinguished Service Medal, and the Legion of Merit.  General Kadish is a director of Spirit AeroSystems Holdings, Inc.

 

·                  Janice I. Obuchowski.  Ms. Obuchowski, 63, has been President of Freedom Technologies, Incorporated, a telecommunications research and consulting firm, since 1992.  In 2003, Ms. Obuchowski also served as Ambassador and U.S. Representative to the World Radiocommunication Conference 2003.  From 1989 to 1992, she served as Assistant Secretary for Communications and Information at the U.S. Department of Commerce and Administrator of the National Telecommunications and Information Agency.  From 1980 to 1987, Ms. Obuchowski served in a variety of positions at the U.S. Federal Communications Commission, including Senior Adviser to the Chairman.  Ms. Obuchowski is a director of CSG Systems International, Inc. and Inmarsat plc.

 

·                  James G. Roche.  Dr. Roche, 75, served as the Secretary of the U.S. Air Force from 2001 to 2005.  From 1984 to 2001, Dr. Roche held several executive positions with Northrop Grumman Corporation, a global defense company, including Corporate Vice President and President of its Electronic Sensors and Systems Sector.  From 1983 to 1984, Dr. Roche was Democratic Staff Director of the U.S. Senate Committee on Armed Services.  Dr. Roche served in the U.S. Navy for 23 years and retired with the rank of captain in 1983.  As a naval officer, his assignments included Principal Deputy Director of the U.S. State Department’s Policy Planning Staff and Senior Professional Staff Member of the U.S. Senate Select Committee on Intelligence.  He commanded the USS Buchanan, a guided missile destroyer, and was awarded the Arleigh Burke Fleet Trophy in 1974 for the most improved combat unit in the Pacific Theater.  Between 2006 and 2009, Dr. Roche served as a director of TechTeam Global, Inc.

 

·                  Harrison H. Schmitt.  Dr. Schmitt, 79, has served in various capacities as a business and technical consultant since 1983. From 1977 through 1983, Dr. Schmitt was a U.S. Senator from New Mexico, during which time he chaired the Senate Science, Technology and Space Subcommittee, which oversaw all non-military space-related research and development programs of the U.S. Government. From 1974 to 1975, he was Assistant Administrator for Energy Programs for NASA. From 1965 to 1973, he was a NASA astronaut. As Lunar Module Pilot on Apollo 17 in 1972, he explored the Moon’s surface. Dr. Schmitt chaired the NASA Advisory Council from 2005 to 2008.

 

·                  Scott L. Webster.  Mr. Webster, 62, is a co-founder of Orbital and served on the Orbital board of directors since Orbital’s inception.  Mr. Webster served as Senior Vice President, Special Projects of Orbital from May 2001 until July 2002.  From 1998 until April 2001, Mr. Webster was Chairman of the Board and Chief Executive Officer of ORBCOMM Global, L.P., a satellite services company formerly affiliated with Orbital.  From 1993 to 1997, Mr. Webster served in various consulting capacities with Orbital.  He served as President of Orbital’s Space Data Division from 1990 until 1993 and Executive Vice President of that Division from 1989 to 1990.  Mr. Webster was Orbital’s Senior Vice President of Marketing and Vice President of Marketing from Orbital’s inception in 1982 until 1989.  Previously, he held technical and management positions at Advanced Technology Laboratories and Litton Industries, Inc.  Mr. Webster serves as Chairman of MBDA Incorporated, the U.S. subsidiary of MBDA, a multinational developer and manufacturer of missiles and missile systems, where he was also CEO from November 2013 to November 2014.

 

Pursuant to the terms of the Transaction Agreement, effective as of the Effective Time, the committees of the Orbital ATK Board of Directors were reconstituted as set forth below.

 

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·                  Audit Committee — Chairperson:  Douglas L. Maine; Members:  Douglas L. Maine, Martin C. Faga, Roman Martinez IV, General Chilton, Mr. Hanisee and General Kadish.

 

·                  Governance Committee — Chairperson:  Dr. Schmitt; Members:  Dr. Schmitt, Roxanne J. Decyk, Mr. Faga, General Ronald R. Fogleman, USAF (Ret.), Mr. Hanisee and Ms. Obuchowski.

 

·                  Compensation Committee — Chairperson:  Ms. Decyk; Members: Ms. Decyk, Tig H. Krekel, Mr. Maine, Dr. Fisk, Ms. Obuchowski and Mr. Webster.

 

·                  Markets & Technology Committee — Chairperson:  Dr. Roche; Members:  Dr. Roche, Mr. Faga, Mr. Krekel, General Chilton, Dr. Fisk and General Kadish.

 

The new directors will receive compensation consistent with that received by Orbital ATK’s other non-employee directors.

 

Other than Mr. Callahan and Ms. Foley, who resigned as directors of ATK in connection with the Transaction, ATK’s directors prior to the effectiveness of the transactions contemplated by the Transaction Agreement will continue as directors of Orbital ATK.

 

Item 5.03                                           Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

 

The information provided in the Introductory Note and Item 2.01 of this Current Report on Form 8-K is incorporated herein by reference.

 

At the Effective Time, ATK’s Restated Certificate of Incorporation was amended to change the name of the company to Orbital ATK, Inc.  The Certificate of Amendment of the Restated Certificate of Incorporation is attached hereto as Exhibit 3.1 and is incorporated herein by reference.

 

The Board of Directors of ATK approved, effective as of the Effective Time, the amendment and restatement of ATK’s bylaws to reflect the name change to Orbital ATK, Inc. and to provide for the following governance related changes:

 

·                  until at least the calendar year 2016 annual meeting of stockholder of Orbital ATK, (i) the Orbital ATK Board of Directors shall include seven ATK directors, eight Orbital directors and the Chief Executive Officer of Orbital ATK and (ii) a change in the size of the Orbital ATK Board of Directors shall require the affirmative vote of at least two-thirds of the entire Board of Directors;

 

·                  the nominees for election to the Orbital ATK Board of Directors at the 2015 annual meeting of Orbital ATK’s stockholders shall be comprised of (i) seven ATK directors (and in the event that an ATK directors is unable or unwilling to be such a nominee, a replacement approved by a majority of the ATK directors at the time), (ii) eight Orbital directors (and in the event that an Orbital director is unable or unwilling to be such a nominee, a replacement approved by a majority of the Orbital directors at the time) and (iii) the Chief Executive Officer of Orbital ATK;

 

·                  until at least the calendar year 2016 annual meeting of Orbital ATK stockholders, General Ronald R. Fogleman, USAF (Ret.) (or in the event that he is unable or unwilling to hold the position of Chairman of the Orbital ATK Board of Directors at any time during such term, a replacement nominated for election or elected to position of chairman of the Orbital ATK Board of Directors with the approval of a majority of the ATK directors who were members of the Board of Directors at the time of such nomination or election) shall serve as Chairman of the Orbital ATK Board of Directors;

 

·                  if at any time prior to the calendar year 2016 annual meeting of Orbital ATK stockholders, Mr. David Thompson ceases to be Chief Executive Officer, the Orbital ATK Board of Directors will select a replacement Chief Executive Officer. If the replacement Chief Executive Officer is selected prior to the calendar year 2016 annual meeting of stockholders, and the replacement Chief Executive Officer is one of the ATK directors or the Orbital directors, the Orbital ATK Board of Directors composition described above shall not change. If the replacement Chief Executive Officer is selected prior to the calendar year 2016 annual meeting of stockholders, and the

 

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replacement Chief Executive Officer is not one of the ATK directors or the Orbital directors, then the Orbital ATK Board of Directors shall include seven ATK directors, eight Orbital directors and the replacement Chief Executive Officer (or his or her successor) until the calendar year 2016 annual meeting. The Orbital directors shall determine which one of the Orbital directors shall resign to create the vacancy for the replacement Chief Executive Officer;

 

·                  until at least the calendar year 2016 annual meeting of stockholders, each committee of the Orbital ATK Board of Directors shall include three ATK directors and three Orbital directors, except for the Markets & Technology Committee, which shall include two ATK directors and four Orbital directors, unless in each case such modification is approved by the affirmative vote of at least two-thirds of the entire Orbital ATK Board of Directors;

 

·                  during the twelve months following the Effective Time, any replacement or fulfillment of a vacancy for the office of Chief Executive Officer, Chief Operating Officer or Chief Financial Officer shall require the affirmative vote of at least two-thirds of the entire Orbital ATK Board of Directors; and

 

·                  until the calendar year 2016 annual meeting of Orbital ATK stockholders, any alteration, amendment or repeal of any of the above provisions must be approved by the affirmative vote of at least two-thirds of the entire Orbital ATK Board of Directors.

 

For purposes of the amendments described above:

 

·                  “ATK director” means (i) at the Effective Time, each of Mark W. DeYoung, Roxanne J. Decyk, Martin C. Faga, General Ronald R. Fogleman, USAF (Ret.), Tig H. Krekel, Douglas L. Maine and Roman Martinez IV (or a replacement thereof that is approved by a majority of the other ATK directors), or (ii) an individual who was nominated for election or elected to the Orbital ATK Board of Directors with the approval of a majority of the ATK directors who were members of the Orbital ATK Board of Directors at the time of such nomination or election; and

 

·                  “Orbital director” means (i) at the Effective Time, each of David W. Thompson, General Kevin P. Chilton, USAF (Ret.), Lennard A. Fisk, Robert M. Hanisee, Lieutenant General Ronald T. Kadish, USAF (Ret.), Janice I. Obuchowski, James G. Roche, Harrison H. Schmitt and Scott L. Webster, or (ii) an individual who was nominated for election or elected to the Orbital ATK Board of Directors with the approval of a majority of the Orbital directors who were members of the Orbital ATK Board of Directors at the time of such nomination or election.

 

The foregoing description of the amended and restated bylaws of Orbital ATK does not purport to be complete and is subject to, and qualified in its entirety by, reference to the full text of the amended and restated bylaws, which is filed as Exhibit 3.2 to this Current Report on Form 8-K and incorporated herein by reference.

 

Item 8.01                                           Other Events.

 

On February 9, 2015, Orbital and ATK issued a joint press release announcing the consummation of the Transaction.  A copy of the joint press release is included herewith as Exhibit 99.1 and is incorporated herein by reference.

 

Item 9.01.                      Financial Statements and Exhibits.

 

(a)                                 Financial statements of businesses acquired

 

The financial statements of Orbital required to be filed pursuant to this item will be filed by amendment to this Current Report on Form 8-K no later than 71 calendar days after the date this Current Report on Form 8-K is required to be filed.

 

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(b)                                 Pro forma financial information

 

The unaudited pro forma condensed consolidated statements of income of Orbital ATK for the for the nine months ended December 28, 2014 and December 29, 2013 and for each of the three years ended March 31, 2014, 2013 and 2012 and the unaudited pro forma condensed consolidated balance sheet of Orbital ATK as of December 28, 2014, giving effect to the Distribution and the Merger, are filed herewith as Exhibit 99.2 and incorporated herein by reference.

 

(d)                                 Exhibits

 

Exhibit No.

 

Description

 

 

 

2.1

 

Transaction Agreement, dated as of April 28, 2014 among Orbital Sciences Corporation, Alliant Techsystems Inc., Vista Outdoor Inc. (formerly Vista SpinCo Inc.) and Vista Merger Sub (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on May 2, 2014).

 

 

 

3.1

 

Certificate of Amendment to Restated Certificate of Incorporation of Orbital ATK, Inc.

 

 

 

3.2

 

Amended and Restated Bylaws of Orbital ATK, Inc.

 

 

 

10.1

 

Tax Matters Agreement, dated as of February 9, 2015, between Orbital ATK, Inc. and Vista Outdoor Inc.

 

 

 

10.2

 

Executive Change in Control Severance Agreement, dated December 14, 2012, between Orbital Sciences Corporation and David W. Thompson.

 

 

 

10.3

 

Executive Change in Control Severance Agreement, dated December 14, 2012, between Orbital Sciences Corporation and Garrett E. Pierce.

 

 

 

10.4

 

Executive Change in Control Severance Agreement, dated December 14, 2012, between Orbital Sciences Corporation and Hollis M. Thompson.

 

 

 

10.5

 

Executive Severance Agreement, dated November 30, 2007, between Orbital Sciences Corporation and Garrett E. Pierce.

 

 

 

99.1

 

Joint Press Release, dated February 9, 2015.

 

 

 

99.2

 

Unaudited pro forma condensed consolidated statements of income of Orbital ATK, Inc. for the nine months ended December 28, 2014 and December 29, 2013 and for each of the three years ended March 31, 2014, 2013 and 2012 and the unaudited pro forma condensed consolidated balance sheet of Orbital ATK, Inc. as of December 28, 2014, giving effect to the Distribution and the Merger.

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

ORBITAL ATK, INC.

 

 

 

 

 

 

February 13, 2015

By:

/s/ Thomas E. McCabe

 

 

Thomas E. McCabe

 

 

Senior Vice President, General Counsel and Secretary

 

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EXHIBIT INDEX

 

Exhibit No.

 

Description

 

 

 

2.1

 

Transaction Agreement, dated as of April 28, 2014 among Orbital Sciences Corporation, Alliant Techsystems Inc., Vista Outdoor Inc. (formerly Vista SpinCo Inc.) and Vista Merger Sub (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on May 2, 2014).

 

 

 

3.1

 

Certificate of Amendment to Restated Certificate of Incorporation of Orbital ATK, Inc.

 

 

 

3.2

 

Amended and Restated Bylaws of Orbital ATK, Inc.

 

 

 

10.1

 

Tax Matters Agreement, dated as of February 9, 2015, between Orbital ATK, Inc. and Vista Outdoor Inc.

 

 

 

10.2

 

Executive Change in Control Severance Agreement, dated December 14, 2012, between Orbital Sciences Corporation and David W. Thompson.

 

 

 

10.3

 

Executive Change in Control Severance Agreement, dated December 14, 2012, between Orbital Sciences Corporation and Garrett E. Pierce.

 

 

 

10.4

 

Executive Change in Control Severance Agreement, dated December 14, 2012, between Orbital Sciences Corporation and Hollis M. Thompson.

 

 

 

10.5

 

Executive Severance Agreement, dated November 30, 2007, between Orbital Sciences Corporation and Garrett E. Pierce.

 

 

 

99.1

 

Joint Press Release, dated February 9, 2015.

 

 

 

99.2

 

Unaudited pro forma condensed consolidated statements of income of Orbital ATK, Inc. for the nine months ended December 28, 2014 and December 29, 2013 and for each of the three years ended March 31, 2014, 2013 and 2012 and the unaudited pro forma condensed consolidated balance sheet of Orbital ATK, Inc. as of December 28, 2014, giving effect to the Distribution and the Merger.

 

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Exhibit 3.1

 

CERTIFICATE OF AMENDMENT

 

OF

 

CERTIFICATE OF INCORPORATION

 

OF

 

ALLIANT TECHSYSTEMS INC.

 

Alliant Techsystems Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “Corporation”), hereby certifies that:

 

FIRST:  This Certificate of Amendment (this “Certificate of Amendment”) amends the provisions of the Restated Certificate of Incorporation of the Corporation, as amended, originally filed with the Secretary of State of the State of Delaware on May 2, 1990 (the “Certificate of Incorporation”).

 

SECOND:  Article FIRST of the Certificate of Incorporation is hereby amended and restated in its entirety to read as follows:

 

“FIRST:  The name of the Corporation is “Orbital ATK, Inc.”.

 

THIRD:  At a meeting of the Board of Directors of the Corporation (the “Board”) held on January 27, 2015, the Board duly adopted this Certificate of Amendment and declared this Certificate of Amendment advisable.

 

FOURTH:  In accordance with the provisions of Section 242(b)(1) of the General Corporation Law of the State of Delaware (the “DGCL”), no meeting or vote of stockholders of the Corporation is required to adopt the Certificate of Amendment.

 

FIFTH:  This Certificate of Amendment was duly adopted in accordance with the provisions of Section 242 of the DGCL.

 

SIXTH:  All other provisions of the Certificate of Incorporation shall remain in full force and effect.

 



 

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to be signed by Scott D. Chaplin, its Senior Vice President, General Counsel and Secretary, on this 9th day of February, 2015.

 

 

 

ALLIANT TECHSYSTEMS INC.,

 

 

 

By

 

 

/s/ Scott D. Chaplin

 

 

Name: Scott D. Chaplin

 

 

Title: Senior Vice President, General
Counsel and Secretary

 

[Alliant Techsystems Inc. Certificate of Amendment]

 




Exhibit 3.2

 

AMENDED AND RESTATED BYLAWS

 

OF

 

ORBITAL ATK, INC.

 

(hereinafter called the “Corporation”)

 

ARTICLE I
OFFICES

 

Section 1.  Registered Office.  The registered office of the Corporation shall be in the City of Wilmington, County of New Castle, State of Delaware until a different office is established by resolution of the Board of Directors and a certificate certifying the change is filed in the manner provided by the Delaware General Corporation Law (the “DGCL”).

 

Section 2.  Other Offices.  The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or as the business of the Corporation may require.

 

ARTICLE II
MEETINGS AND ACTIONS OF STOCKHOLDERS

 

Section 1.  Place of Meetings.  Meetings of the stockholders for the election of directors or for any other purpose shall be held at such place, if any, either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting.  In lieu of holding a meeting of stockholders at a designated place, the Board of Directors may, in its sole discretion, determine that any meeting of stockholders may be held solely by means of remote communication, subject to such guidelines and procedures as the Board of Directors may adopt from time to time.

 

Section 2.  Annual Meetings.  Annual meetings of stockholders shall be held on such date and at such time, as shall be designated from time to time by the Board of Directors, for the purpose of electing the directors of the Corporation and transacting business as may be properly brought before the meeting.  If any annual meeting for the election of directors shall not be held on the date designated therefor, the Board of Directors shall cause the meeting to be held as soon thereafter as is convenient.

 

Section 3.  Notice of Stockholder Proposals of Business.  (a)  No business may be transacted at an annual meeting of stockholders, other than business that is either (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (ii) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof), or (iii) otherwise properly brought before the annual meeting by any stockholder of the Corporation (A) who is a stockholder of record on the date of the giving of the notice provided for in this Bylaw and on the record date for the determination of stockholders entitled to vote at such annual meeting and (B) who complies with the notice procedures set forth

 

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in this Bylaw.  In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.  To be timely, a stockholder’s notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 60 nor more than 90 calendar days prior to the date on which the Corporation first mailed or otherwise delivered its proxy materials for the prior year’s annual meeting of stockholders.  However, in the event that the annual meeting is called for a date that is not within 30 calendar days before or after the anniversary of the prior year’s annual meeting, notice by the stockholder in order to be timely must be so received not later than the later of (I) the latest date specified in the preceding sentence or (II) the close of business on the tenth calendar day following the day on which public disclosure of the date of the annual meeting was made.  In no event will the public disclosure of an adjournment of an annual meeting commence a new time period for the giving of a stockholder’s notice as described above.  For purposes of the foregoing, the date on which the Corporation first mailed or otherwise delivered its proxy materials to stockholders will be the date so described in such proxy materials.

 

(b)  To be in proper written form, a stockholder’s notice to the Secretary must set forth as to each matter such stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of such stockholder, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iv) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business, and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.

 

(c)  If the chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the chairman will declare to the meeting that the business was not properly brought before the meeting and such business will not be transacted.  Notwithstanding the foregoing provisions of this Section 3 of Article II, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual meeting of stockholders of the Corporation to present proposed business, such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation.  For purposes of this Section 3 of Article II, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.

 

Section 4.  Special Meetings.  Unless otherwise provided by law or by the Certificate of Incorporation, a special meeting of stockholders, for any purpose or purposes, may be called at any time only by the Board of Directors or by the Chairman of the Board of

 

2



 

Directors or the President with the concurrence of a majority of the Board of Directors.  Such request shall state the purpose or purposes of the proposed meeting.

 

Section 5.  Notice of Meetings.  (a)  Except as provided by law or by the Certificate of Incorporation, written notice of each meeting of the stockholders, whether annual or special, shall be sent or otherwise given, not less than 10 nor more than 60 days before the date on which the meeting is to be held, to each stockholder of record of the Corporation entitled to vote at such meeting.  Except as provided by law, no publication of any notice of a meeting of stockholders shall be required.  Every notice of a meeting of stockholders shall state the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.  Except as otherwise required by law, notice of any adjourned meeting of stockholders shall not be required to be given if the time and place, if any, thereof, and the means of remote communications, if any, are announced at the meeting which is adjourned.

 

(b)  Whenever notice is required to be given under any provision of the DGCL or of the Certificate of Incorporation or these Bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person or persons entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice.  Attendance of a person at a meeting, present in person or represented by proxy, shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

 

Section 6.  Quorum.  At all meetings of the stockholders, except as otherwise provided by law or by the Certificate of Incorporation, stockholders present, in person or represented by proxy, holding of record a majority of the issued and outstanding shares of capital stock of the Corporation entitled to vote at the meeting shall constitute a quorum for the transaction of business.  In the absence of a quorum at any meeting or any adjournment thereof, a majority in voting interest of those present in person or by proxy and entitled to vote may adjourn such meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented.  At any such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally called.  The absence from any meeting of stockholders holding the number of shares of stock of the Corporation required by law or by the Certificate of Incorporation or by these Bylaws for action upon any given matter shall not prevent action at such meeting upon any other matter or matters which may properly come before the meeting if there shall be present at the meeting, in person or by proxy, stockholders holding the number of shares of stock of the Corporation required for action upon such other matter or matters.  If a quorum initially is present at any meeting of stockholders, the stockholders may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.

 

Section 7.  Voting.  Unless otherwise required by law, the Certificate of Incorporation or these Bylaws, any question brought before any meeting of stockholders shall be decided by the vote of the holders of a majority of the capital stock represented and entitled to

 

3



 

vote at the meeting.  Each stockholder represented at a meeting of stockholders shall be entitled to cast one vote for each share of capital stock entitled to vote at the meeting held by such stockholder.  Such votes may be cast in person or by proxy but no proxy shall be voted on or after three years from its date, unless such proxy provides for a longer period.  The Board of Directors, in its discretion, or the officer of the Corporation presiding at a meeting of stockholders, in his or her discretion, may require that any votes cast at such meeting shall be cast by written ballot.

 

Section 8.  List of Stockholders Entitled to Vote.  The Secretary or other officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare and make or cause to be prepared and made, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder.  The Corporation shall not be required to include electronic mail addresses or other electronic contact information on such list.  Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at least 10 days prior to the meeting:  (a) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (b) during ordinary business hours, at the Corporation’s principal place of business.  In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation.  If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present.  If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting.

 

Section 9.  Stock Ledger.  The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Section 8 of this Article II or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders.

 

Section 10.  Conduct of Meeting.  Unless otherwise provided by the Board of Directors, the Chief Executive Officer shall act as chairman; and the Secretary or, in his or her absence, an Assistant Secretary or, in the absence of the Secretary and Assistant Secretaries of the Corporation, any person whom the chairman of the meeting shall appoint shall act as secretary of the meeting.  The Board of Directors shall be entitled to make such rules or regulations for the conduct of meetings of stockholders as it shall deem necessary, appropriate or convenient.  Subject to such rules and regulations of the Board of Directors, if any, the chairman of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without limitation, establishing an agenda or order of business for the meeting, rules and procedures for maintaining order at the meeting and the safety of those present, limitations on participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies and such other persons as the chairman shall permit, restrictions on entry to the meeting after the time

 

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fixed for the commencement thereof, limitations on the time allotted to questions or comments by participants, and regulation of the opening and closing of the polls for balloting and matters which are to be voted on by ballot.

 

Section 11.  Inspectors of Election and Written Consents.  (a)  The Corporation, in advance of each meeting of stockholders, shall appoint one or more inspectors of election to act at the meeting and make a written report.  The Corporation may designate one or more persons as alternate inspectors to replace an inspector who fails to act and, if no inspector or alternate is able to act at a meeting of stockholders, the chairman of the meeting shall appoint one or more inspectors of election to act at the meeting.

 

(b)  The Corporation may appoint one or more inspectors of written consents to determine the validity of any action purportedly taken by written consent of the stockholders in accordance with such policies and procedures as the Board of Directors may establish from time to time.

 

ARTICLE III
DIRECTORS

 

Section 1.  Number.  The number and method of election of directors shall be determined in accordance with Article FIFTH of the Certificate of Incorporation.  Directors need not be stockholders.

 

Section 2.  Election of Directors.  At each meeting of stockholders for the election of directors at which a quorum is present, the persons receiving the largest number of votes (up to and including the number of directors to be elected) shall be directors.  If directors are to be elected by consent in writing of the stockholders without a meeting, those persons receiving the consent in writing of the largest number of shares in the aggregate and constituting not less than a majority of the total outstanding shares entitled to give consent in writing thereon (up to and including the number of directors to be elected) shall be directors.

 

Section 3.  Notice of Stockholder Nominations of Directors.  (a)  Only persons who are nominated in accordance with the following procedures will be eligible for election as directors of the Corporation.  Nominations of persons for election to the Board of Directors may be made at any annual meeting of stockholders (i) by or at the direction of the Board of Directors (or any duly authorized Committee thereof) or (ii) by any stockholder of the Corporation (A) who is a stockholder of record on the date of the giving of the notice provided for in this Bylaw and on the record date for the determination of stockholders entitled to vote at such annual meeting and (B) who complies with the notice procedures set forth in this Bylaw.  In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.  To be timely, a stockholder’s notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 60 nor more than 90 calendar days prior to the date on which the Corporation first mailed or otherwise delivered its proxy materials for the prior year’s annual meeting of stockholders.  However, in the event that the annual meeting is called for a date that is not within 30 calendar days before or after the anniversary of the prior year’s annual meeting, notice by the stockholder in order to be timely

 

5



 

must be so received not later than the later of (I) the latest date specified in the preceding sentence or (II) the close of business on the tenth calendar day following the day on which public disclosure of the date of the annual meeting was made.  In no event will the public disclosure of an adjournment of an annual meeting commence a new time period for the giving of a stockholder’s notice as described above.  For purposes of the foregoing, the date on which the Corporation first mailed or otherwise delivered its proxy materials to stockholders will be the date so described in such proxy materials.

 

(b)  To be in proper written form, a stockholder’s notice to the Secretary must set forth (i) as to each person whom the stockholder proposes to nominate for election as a director (A) the name, age, business address and residence address of the person, (B) the principal occupation or employment of the person, (C) the class or series and number of shares of capital stock of the Corporation that are owned beneficially or of record by the person, and (D) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (the “Exchange Act”), and (ii) as to the stockholder giving the notice (A) the name and record address of such stockholder, (B) the class or series and number of shares of capital stock of the Corporation that are owned beneficially or of record by such stockholder, (C) a description of all arrangements or understandings between or among such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (D) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice, and (E) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to the Exchange Act.  Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.

 

(c)  If the chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the chairman will declare to the meeting that the nomination was defective and such defective nomination will be disregarded.

 

(d)  Notwithstanding the foregoing provisions of this Section 3 of Article III, unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual meeting of stockholders of the Corporation to present a nomination for election as a director, such nomination shall be disregarded, notwithstanding that proxies in respect of such vote may have been received by the Corporation.  For purposes of this Section 3 of Article III, to be considered a qualified representative of the stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.

 

(e)  Notwithstanding anything in this Bylaw to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased and there is no public

 

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disclosure by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least 70 calendar days prior to the date on which the Corporation first mailed or otherwise delivered its proxy materials for the preceding year’s annual meeting of stockholders, a stockholder’s notice required by this Bylaw will also be considered timely, but only with respect to nominees for any new positions created by such increase, if it is delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the tenth day following the day on which such public disclosure is first made by the Corporation.

 

Section 4.  Vacancies.  Except as otherwise provided by law, any vacancy in the Board of Directors (whether because of death, resignation, removal, an increase in the number of directors or any other cause) may be filled by a majority of the directors then in office, though less than a quorum; and each director so chosen shall hold office until the next annual election and until his or her successor shall be duly elected and qualified, unless sooner displaced.

 

Section 5.  Meetings.  The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Delaware.  Regular meetings of the Board of Directors may be held without notice at such time and at such place as may from time to time be determined by the Board of Directors.  Special meetings of the Board of Directors may be called at any time by the Chairman of the Board of Directors, the President, or any two directors.  Notice thereof stating the place, date and hour of the meeting shall be given to each director as provided in Section 6 of this Article III.  Any meeting of the Board of Directors shall be a legal meeting without any notice thereof having been given if all the directors shall be present at the meeting or if notice thereof shall be waived either before or after such meeting in writing by all absentees therefrom provided a quorum be present.  Notice of any adjourned meeting need not be given.

 

Section 6.  Manner of Giving Notice.  Notice of the time and place of meetings of the Board of Directors of the Corporation, if required, shall be:

 

(a)  delivered personally by hand, by courier or by telephone;

 

(b)  sent by United States first-class mail, postage prepaid; or

 

(c)  sent by facsimile, electronic mail or other electronic transmission,

 

directed to each director at that director’s address, telephone number, facsimile number or electronic mail address, as the case may be, as shown on the Corporation’s records.

 

If the notice is (i) delivered personally by hand, by courier or by telephone or (ii) sent by facsimile, electronic mail or other electronic transmission, it shall be delivered or sent at least 24 hours before the time of the holding of the meeting.  If the notice is sent by United States mail, it shall be deposited in the United States mail at least four days before the time of the holding of the meeting.  Any oral notice may be communicated either to the director or to a person at the office of the director who the person giving notice has reason to believe will promptly communicate such notice to the director.  The notice need not specify the place of the meeting if the meeting is to be held at the Corporation’s principal executive office.

 

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Section 7.  Quorum; Action.  Unless otherwise required by law, the Certificate of Incorporation or these Bylaws, at all meetings of the Board of Directors, one-third of the entire Board of Directors shall constitute a quorum for the transaction of business and, except as specified in Sections 4 and 11 of this Article III, Section 4 of Article II, and Section 3 of Article VIII of these Bylaws and, except as otherwise provided by law, the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors.  If a quorum shall not be present at any meeting of the Board of Directors, the directors present at the meeting may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

 

Section 8.  Organization.  At each meeting of the Board of Directors, the Chairman of the Board of Directors or, in his or her absence, the President of the Corporation or, in his or her absence, a Vice Chair or, in the absence of all of such officers, a chairman chosen by a majority of the directors present shall preside.  The Secretary of the Corporation or, in his or her absence, any Assistant Secretary or, in the absence of both the Secretary and any Assistant Secretary, any person whom the Chairman of the Board shall appoint shall act as secretary of the meeting.

 

Section 9.  Action Without Meeting.  Unless otherwise provided by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all the members of the Board of Directors or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or such committee.

 

Section 10.  Meetings by Means of Conference Telephone or Similar Communications.  Unless otherwise provided by the Certificate of Incorporation or these Bylaws, members of the Board of Directors, or any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 10 shall constitute presence in person at such meeting.

 

Section 11.  Committees.  (a)    The Board of Directors, by resolution passed by a majority of the entire Board of Directors, may designate one or more committees, each committee to consist of one or more directors.  The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee.  In the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members present at any meeting and not disqualified from voting, whether or not the member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.  A majority of those entitled to vote at any meeting of any committee shall constitute a quorum for the transaction of business at that meeting.  Any committee, to the extent allowed by law and provided in the resolution establishing such committee, shall have and may exercise all the powers and authority

 

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of the Board of Directors in the management of the business and affairs of the Corporation.  Each committee shall keep regular minutes and report to the Board of Directors when required.

 

(b)  Until at least the calendar year 2016 annual meeting of stockholders, each committee of the Board of Directors shall include three ATK Directors and three Orbital Directors (each as defined in Article IX of these Bylaws), except for the Markets & Technology Committee, which shall include two ATK Directors and four Orbital Directors, unless in each case such modification is approved by the affirmative vote of at least two-thirds of the entire Board of Directors.

 

Section 12.  Compensation.  The Board of Directors shall have the authority to fix the compensation of directors.

 

Section 13.  Composition of the Board of Directors.  Notwithstanding anything in these Bylaws to the contrary, and in addition to and without limiting the provisions of Article FIFTH of the Certificate of Incorporation:

 

(a)  Until at least the calendar year 2016 annual meeting of stockholders, (i) the Board of Directors shall include seven ATK Directors, eight Orbital Directors and the Chief Executive Officer and (ii) a change in the size of the Board of Directors shall require the affirmative vote of at least two-thirds of the entire Board of Directors.

 

(b)  The nominees for election to the Board of Directors at the calendar year 2015 annual meeting of stockholders shall be comprised of (a) seven ATK Directors (and in the event that an ATK Director is unable or unwilling to be such a nominee, a replacement approved by a majority of the ATK Directors at the time), (b) eight Orbital Directors (and in the event that an Orbital Director is unable or unwilling to be such a nominee, a replacement approved by a majority of the Orbital Directors at the time) and (c) the Chief Executive Officer.

 

(c)  Until at least the calendar year 2016 annual meeting of stockholders, General Ronald R. Fogleman, USAF (Ret.) (or in the event that he is unable or unwilling to hold the position of Chairman of the Board of Directors at any time during such term, a replacement nominated for election or elected to position of Chairman of the Board of Directors with the approval of a majority of the ATK Directors who were members of the Board of Directors at the time of such nomination or election) shall serve as Chairman of the Board of Directors.

 

(d)  If at any time prior to the calendar year 2016 annual meeting of stockholders, David W. Thompson ceases to be Chief Executive Officer for any reason, the Board of Directors will select a replacement Chief Executive Officer.   If the replacement Chief Executive Officer is selected prior to the calendar year 2016 annual meeting of stockholders, and the replacement Chief Executive Officer is one of the ATK Directors or the Orbital Directors, the Board of Directors composition described in this Section 13 of Article III shall not change.   If the replacement Chief Executive Officer is selected prior to the calendar year 2016 annual meeting of stockholders, and the replacement Chief Executive Officer is not one of the ATK Directors or the Orbital Directors, then the Board of Directors shall include seven ATK Directors, eight Orbital Directors and the replacement Chief Executive Officer (or his or her successor) until the

 

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calendar year 2016 annual meeting.  The Orbital Directors shall determine which one of the Orbital Directors shall resign to create the vacancy for the replacement Chief Executive Officer.

 

ARTICLE IV
OFFICERS

 

Section 1.  General.  The officers of the Corporation shall be chosen by the Board of Directors and shall include a President and a Secretary.  The Board of Directors, in its discretion, may also choose a Chairman of the Board of Directors and one or more Vice Chairs of the Board of Directors from among their members, and a Treasurer and one or more Executive Vice Presidents, Senior Vice Presidents, Vice Presidents, Assistant Secretaries, Assistant Treasurers and other officers, including a Chief Operating Officer and Chief Financial Officer.  Any number of offices may be held by the same person, unless otherwise prohibited by law, the Certificate of Incorporation or these Bylaws.  The officers of the Corporation need not be stockholders of the Corporation.

 

Section 2.  Election.  (a)    The Board of Directors at its meeting held in conjunction with each annual meeting of stockholders shall elect the officers of the Corporation who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors; and all officers shall hold office until their successors are chosen and qualified, or until their earlier death, resignation, disqualification or removal.  Any officer elected by the Board of Directors may be removed, with or without cause, at any time by the affirmative vote of a majority of the Board of Directors or by any committee or superior officer upon whom such power of removal may be conferred by the Board of Directors.

 

(b)  Any vacancy occurring in any office shall be filled by the Board of Directors; provided, however, that during the twelve months following the Effective Time, any replacement or fulfillment of a vacancy for the office of Chief Executive Officer, Chief Operating Officer or Chief Financial Officer shall require the affirmative vote of at least two-thirds of the entire Board of Directors.

 

Section 3.  Chairman of the Board of Directors.  The Chairman of the Board of Directors shall preside, if present, at all meetings of the Board of Directors.  Except where by law the signature of the President is required, the Chairman of the Board of Directors shall possess the same power as the President to sign all documents of the Corporation which the President may be authorized to sign by these Bylaws or by the Board of Directors.  The Chairman of the Board of Directors shall see that all orders and resolutions of the Board of Directors are carried into effect and shall from time to time report to the Board of Directors all matters within his or her knowledge which the interests of the Corporation may require to be brought to their notice.  During the absence or disability of the President, the Chairman of the Board of Directors shall exercise all the powers and discharge all the duties of the President unless the Board of Directors shall designate another officer to exercise such powers and discharge such duties.  The Chairman of the Board of Directors shall also perform such other duties and may exercise such other powers as from time to time may be prescribed by these Bylaws or by the Board of Directors.

 

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Section 4.  Vice Chairs of the Board of Directors.  The Vice Chairs of the Board of Directors, if any, shall perform such duties and may exercise such powers as from time to time may be prescribed by the Board of Directors.

 

Section 5.  President.  The President shall be the Chief Executive Officer of the Corporation unless the Board of Directors shall designate another officer as Chief Executive Officer, and shall have general supervision over the business and affairs of the Corporation and over its several officers and employees, subject to the control of the Board of Directors.  The President shall also perform such other duties and may exercise such other powers as from time to time may be prescribed by these Bylaws or by the Board of Directors.

 

Section 6.  Vice Presidents.  Each Vice President shall perform such duties and have such powers as the Board of Directors or the Chief Executive Officer from time to time may prescribe.  At the request of the Board of Directors, the Vice President or the Vice Presidents if there is more than one (in the order designated by the Board of Directors) shall perform the duties of the President and, when so acting, shall have all the powers of and be subject to all the restrictions upon the President.

 

Section 7.  Secretary.  The Secretary shall:

 

(a)  Attend all meetings of the Board of Directors and all meetings of stockholders and record all the proceedings at the meetings in a book or books to be kept for that purpose and, at the request of the Board of Directors, perform like duties for the standing committees of the Board;

 

(b)  Give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors in accordance with the provisions of these Bylaws or as required by law;

 

(c)  Be custodian of the corporate seal of the Corporation;

 

(d)  Keep or cause to be kept a register of the mailing address of each stockholder furnished by such stockholder;

 

(e)  Have general charge of the stock certificate books and related books and records of the Corporation and see that the books, reports, statements, certificates and all other documents and records incident to the office of Secretary and required by law are properly kept and filed; and

 

(f)  In general, perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned by the Chief Executive Officer or the Board of Directors.

 

Section 8.  Treasurer.  The Treasurer (or if there is none, the Chief Financial Officer) shall:

 

(a)  Have charge and custody of, and be responsible for, all funds and securities of the Corporation, receive and give receipts for moneys due and payable to the Corporation

 

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from any sources whatsoever, and deposit all such moneys in the name of the Corporation in such banks, trust companies or other depositories as shall be selected by the Board of Directors or in accordance with corporate policy approved by the Board of Directors; and

 

(b)  In general, perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned by the Chief Executive Officer or the Board of Directors.

 

Section 9.  Subordinate Officers.  The Board of Directors may appoint, and the Chief Executive Officer is also empowered to appoint, such other subordinate officers (including, without limitation, one or more Assistant Secretaries and one or more Assistant Treasurers) as the business of the Corporation may require, each of whom shall hold their offices for such terms and shall exercise such powers and perform such duties as are provided in these Bylaws or as shall be determined from time to time by the Board of Directors or the Chief Executive Officer.

 

Section 10.  Other Positions.  The Chief Executive Officer may authorize the use of titles, including the titles of Chairman, President and Vice President, by individuals who hold management positions with the business groups, divisions or other operational units of the Corporation, but who are not and shall not be deemed officers of the Corporation.  Individuals in such positions shall hold such titles at the discretion of the appointing officer, who shall be the Chief Executive Officer or any officer to whom the Chief Executive Officer delegates such appointing authority, and shall have such powers and perform such duties as such appointing officer may from time to time determine.

 

ARTICLE V
STOCK

 

Section 1.  Form of Certificates.  The shares of the Corporation shall be represented by certificates or shall be uncertificated shares, as provided by the DGCL.

 

Section 2.  Signatures.  Where a certificate is signed by a manual or facsimile signature of (a) a transfer agent other than the Corporation or its employee or (b) a registrar other than the Corporation or its employee, any other signature and the seal on the certificate may be a facsimile.  In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

 

Section 3.  Records of Certificates.  A record shall be kept of the name of the person, firm, corporation or other entity of record holding the stock represented by such certificates, respectively, and the respective dates thereof, and in case of cancellation, the respective dates of cancellation.  Every certificate surrendered to the Corporation for exchange or transfer shall be canceled and no new certificate or certificates shall be issued in exchange for any existing certificate until such existing certificate shall have been so canceled, except in cases provided for in Section 4 of this Article V.

 

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Section 4.  Lost, Stolen or Destroyed Certificates; Issuance of New Certificates or Uncertificated Shares.  The Corporation may issue a new stock certificate or uncertificated shares in place of any certificate previously issued by it that is alleged to have been lost, stolen or destroyed, and the Corporation or its transfer agent and registrar may require the owner of the lost, stolen or destroyed certificate, or his or her legal representative, to give it or them a bond sufficient to indemnify the Corporation and any transfer agent and registrar against any claim made against it or them on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

 

Section 5.  Transfers.  Stock of the Corporation shall be transferable in the manner prescribed by law and in these Bylaws.  Transfers of stock shall be made on the books of the Corporation (a) upon presentation of the certificate by the registered holder or by a duly authorized attorney, or upon presentation of proper evidence of authority to transfer the stock, and upon surrender of the appropriate certificate or (b) in the case of uncertificated shares, upon receipt of proper transfer instructions from the registered owner of such uncertificated shares, or from a duly authorized attorney or a person presenting proper evidence of authority to transfer the stock.  The person in whose name shares of stock stand on the books of the Corporation shall be deemed the owner thereof for all purposes as regards the Corporation.

 

Section 6.  Transfer Agent and Registrar.  The Board of Directors may appoint one or more transfer agents and one or more registrars and, from time to time, define the duties of such transfer agents and registrars and make such rules and regulations as it may deem expedient, not inconsistent with these Bylaws, concerning the issue, transfer and registration of certificates for shares of the capital stock of the Corporation.

 

Section 7.  Beneficial Owners.  The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares of capital stock to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares of capital stock, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares of capital stock on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law.

 

ARTICLE VI
DOCUMENTS

 

Section 1.  Execution of Documents.  The Chief Executive Officer, or any other officer, employee or agent of the Corporation designated by the Board of Directors or designated in accordance with corporate policy approved by the Board of Directors, shall have power to execute and deliver proxies, stock powers, deeds, leases, contracts, mortgages, bonds, debentures, notes, checks, drafts and other orders for the payment of money and other documents for and in the name of the Corporation, and such power may be delegated (including power to redelegate) by the Chief Executive Officer or to the extent provided in such corporate policy by written instrument to other officers, employees or agents of the Corporation.

 

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ARTICLE VII
GENERAL PROVISIONS

 

Section 1.  Dividends.  Dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation, if any, and the DGCL, may be declared by the Board of Directors at any regular or special meeting, and may be paid in cash, in property or in shares of stock.  Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property or business of the Corporation, or for any proper purpose, and the Board of Directors may modify or abolish any such reserve.

 

Section 2.  Fiscal Year.  The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

 

Section 3.  Corporate Seal.  The corporate seal shall have inscribed thereon the name of the Corporation, the year of its incorporation and the words “Corporate Seal Delaware.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

 

Section 4.  Definition; Exchange Act Compliance.  (a)  For purposes of Article II, Section 3 and Article III, Section 3 of these Bylaws, “public disclosure” means disclosure in (i) a news release disseminated through a national news service or another method, or combination of methods, that is reasonably designed to provide broad, non-exclusionary distribution to the public or (ii) in a document filed by the Corporation with the Securities and Exchange Commission pursuant to the Exchange Act.

 

(b)  Notwithstanding the provisions of Article II, Section 3 and Article III, Section 3 of these Bylaws, a stockholder must comply with all applicable requirements of the Exchange Act with respect to the matters set forth in those provisions.

 

(c)  Nothing in Article II, Section 3 and Article III, Section 3 of these Bylaws will be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy materials in accordance with Rule 14a-8 under the Exchange Act.

 

Section 5.  Reliance on Books, Reports and Records.  Each director, each member of any committee designated by the Board of Directors, and each officer of the Corporation shall, in the performance of his or her duties, be fully protected in relying in good faith upon the books of account or other records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of the Corporation’s officers or employees, or committees of the Board of Directors, or by any other person as to matters which such director, committee member or officer reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

 

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ARTICLE VIII
INDEMNIFICATION

 

Section 1.  Power to Indemnify in Actions, Suits or Proceedings other Than Those by or in the Right of the Corporation.  Subject to Section 3 of this Article VIII, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, against expenses (including attorneys’ fees), judgments, fines, excise taxes assessed on a person with respect to an employee benefit plan, and amounts paid in settlement actually and reasonably incurred by him or her in connection with such action, suit or proceeding if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.  The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.

 

Section 2.  Power to Indemnify in Actions, Suits or Proceedings by or in the Right of the Corporation.  Subject to Section 3 of this Article VIII, the Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he or she is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection with the defense or settlement of such action or suit if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

 

Section 3.  Authorization of Indemnification.  Any indemnification under this Article VIII (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the present or former director, officer, employee or agent is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Section 1 or Section 2 of this Article VIII, as the case may be.  Such determination shall be made, with respect to a person who is a director or officer

 

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at the time of such determination, (i) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders.  To the extent, however, that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding described above, or in defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection therewith, without the necessity of authorization in the specific case.

 

Section 4.  Expenses Payable in Advance.  (a)  Expenses (including attorneys’ fees) incurred by a director or officer in defending or investigating a threatened or pending action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation as authorized in this Article VIII.

 

(b)  Expenses of the character described in (a) above incurred by other employees or agents may be so paid upon such terms and conditions, if any, as the Corporation shall determine to be appropriate.

 

Section 5.  Nonexclusivity of Indemnification and Advancement of Expenses.  The indemnification and advancement of expenses provided by or granted pursuant to this Article VIII shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, contract, vote of stockholders or disinterested directors or pursuant to the direction (howsoever embodied) of any court of competent jurisdiction or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office, it being the policy of the Corporation that indemnification of the persons specified in Sections 1 and 2 of this Article VIII shall be made to the fullest extent permitted by law.  The provisions of this Article VIII shall not be deemed to preclude the indemnification of any person who is not specified in Sections 1 or 2 of this Article VIII but whom the Corporation has the power or obligation to indemnify under the provisions of the DGCL, or otherwise.

 

Section 6.  Insurance.  The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power or the obligation to indemnify him or her against such liability under the provisions of this Article VIII.

 

Section 7.  Definition.  For purposes of this Article VIII, references to “the Corporation” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors,

 

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officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was a director or officer of such constituent corporation serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, shall stand in the same position under the provisions of this Article VIII with respect to the resulting or surviving corporation as he or she would have with respect to such constituent corporation if its separate existence had continued.

 

Section 8.  Survival of Indemnification and Advancement of Expenses.  The indemnification and advancement of expenses provided by, or granted pursuant to, this Article VIII, shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

 

Section 9.  Limitation on Indemnification.  Notwithstanding anything contained in this Article VIII to the contrary, (except for proceedings to enforce rights to indemnification to the extent that the director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in the defense of such proceeding), the Corporation shall not be obligated to indemnify any director, officer, employee or agent in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors.

 

ARTICLE IX
MISCELLANEOUS

 

Section 1.  Amendments; Generally.  These Bylaws may be altered, amended or repealed, in whole or in part, or new Bylaws may be adopted by the stockholders or by the Board of Directors; provided, however, that notice of such alteration, amendment, repeal or adoption of new Bylaws be contained in the notice of such meeting of stockholders or Board of Directors, as the case may be.  All such amendments must be approved by either (a) the holders of a majority of the outstanding capital stock entitled to vote thereon or (b) by a majority of the entire Board of Directors then in office.  In the case of amendment to be adopted pursuant to clause (b) of the immediately preceding sentence, until the calendar year 2016 annual meeting of stockholders, any alteration, amendment or repeal of Section 11(b) of Article III, Section 13 of Article 3, Section 2(b) of Article IV and this Article IX must also be approved by an affirmative vote of at least two-thirds of the entire Board of Directors.

 

Section 2.  Certain Definitions.  As used in these Bylaws, unless the context requires otherwise, the following terms shall have the following meanings:

 

(a)  “ATK Designee” means each of Mark W. DeYoung, Roxanne J. Decyk, Martin C. Faga, General Ronald R. Fogleman, USAF (Ret.), Tig H. Krekel, Douglas L. Maine and Roman Martinez IV.

 

(b)  “ATK Director” means an individual who (i) was an ATK Designee at the Effective Time (or a replacement thereof that is approved by a majority of the other ATK Directors) or (ii) was nominated for election or elected to the Board of Directors with the

 

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approval of a majority of the ATK Directors who were members of the Board of Directors at the time of such nomination or election.

 

(c)  “Effective Time” means February 9, 2015.

 

(d)  “entire Board of Directors” means the total number of directors (as determined in accordance with Article III) which the Corporation would have if there were no vacancies.

 

(e)  “Orbital Designee” means each of David W. Thompson, General Kevin P. Chilton, USAF (Ret.), Lennard A. Fisk, Robert M. Hanisee, Lieutenant General Ronald T. Kadish, USAF (Ret.), Janice I. Obuchowski, James G. Roche, Harrison H. Schmitt and Scott L. Webster.

 

(f)  “Orbital Director” means an individual who (i) was an Orbital Designee at the Effective Time (or a replacement thereof that is approved by a majority of the other Orbital Directors) or (ii) was nominated for election or elected to the Board of Directors with the approval of a majority of the Orbital Directors who were members of the Board at the time of such nomination or election.

 

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Exhibit 10.1

 

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)                                  The 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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on such Tax Return, without prejudice to such Party’s right to be indemnified hereunder with respect to Transfer Taxes.

 

SECTION 4.03.                 Amendments and Carrybacks.  (a) Subject to Section 4.03(b), each Party shall not (and shall cause its Subsidiaries not to) file, amend, withdraw, revoke or otherwise alter any Tax Return if doing so would reasonably be expected to (i) obligate the other Party to make an Indemnity Payment (determined without regard to the parenthetical in Section 3.02(c)) or (ii) cause such other Party or any of its Subsidiaries to incur any Taxes for which it is not indemnified under this Agreement, in each case without the prior written consent of such other Party (which consent shall not be unreasonably withheld or delayed).

 

(b)                                 Sporting shall, and shall cause its Subsidiaries to, waive, to the extent permissible under applicable Law, the right to carry back any Tax Attribute to any ATK Consolidated Tax Return.  To the extent such a waiver is not permitted under applicable Law, however, Sporting shall be permitted to, and shall be permitted to cause its Subsidiaries to, carry back any Tax Attribute to any ATK Consolidated Tax Return.

 

(c)                                  In the case of any carryback (or portion thereof) not permitted under Section 4.03(b), (i) no payment with respect to such carryback (or portion thereof) shall be due from any member of the ATK Separate Group to any member of the Sporting Separate Group and (ii) if any member of the Sporting Separate Group receives any refund, credit or offset of any Taxes in connection with such carryback (or portion thereof), Sporting shall promptly pay to ATK the full amount of such refund or the economic benefit of such credit or offset (but net of any Taxes imposed with respect to such refund, credit or offset).

 

SECTION 4.04.                 Information and Assistance.  Each Party shall provide to the other Party all information and assistance reasonably requested by the other Party as reasonably necessary to prepare any Tax Return on a timely basis consistent with the current practices.

 

SECTION 4.05.                 Tax Contests.  (a) An Indemnified Party shall promptly notify the Indemnifying Party of the commencement of any Tax Contest that could reasonably be expected to (i) obligate the Indemnifying Party to make an Indemnity Payment or (ii) cause the Indemnifying Party or any of its Subsidiaries to incur any Taxes for which it is not indemnified under this Agreement.  A failure by an Indemnified Party to give notice under this Section 4.05(a) shall not relieve the Indemnifying Party’s indemnification obligations under this Agreement, except to the extent that the Indemnifying Party shall have been actually prejudiced by such failure.

 

(b)                                 Except as provided in Section 4.05(c), Sporting shall have the exclusive right to control the conduct and settlement of any Tax Contest relating to any Sporting Separate Tax Return not set forth on Schedule 4.01(a), and ATK shall have the exclusive right to control the conduct and settlement of all other Tax Contests.  Notwithstanding the foregoing, if the conduct or settlement of any portion or aspect of any such Tax Contest could reasonably be expected to obligate any Party to make an

 

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Indemnity Payment, then (i) the Indemnifying Party shall have the right to share joint control over the conduct and settlement of that portion or aspect and (ii) whether or not the Indemnifying Party exercises that right, the Indemnified Party shall not accept or enter into any settlement that would obligate the Indemnifying Party to make an Indemnity Payment without the consent of the Indemnifying Party, which consent shall not be unreasonably withheld or delayed.

 

(c)                                  ATK and Sporting shall have the right to control jointly the conduct and settlement of any Tax Contest insofar as it relates to Transaction Taxes.  Notwithstanding the foregoing, ATK shall be entitled to control exclusively the conduct and settlement of any Tax Contest insofar as it relates to Transaction Taxes if ATK notifies Sporting that (notwithstanding the rights and obligations of the Parties set forth elsewhere in this Agreement) ATK agrees to (i) waive its rights to indemnification for Transaction Taxes under Article III and (ii) pay, and indemnify all of the members of the Sporting Separate Group from and against, any Transaction Taxes resulting from such Tax Contest insofar as it relates to Transaction Taxes.

 

(d)                                 Each Party shall bear its own expenses in the course of any Tax Contest, other than expenses included in the definition of Transaction Taxes, which shall be governed by Article III.

 

ARTICLE V

 

Tax Matters Relating to the Transactions

 

SECTION 5.01.                 Mutual Covenants.  Neither Party shall take or fail to take, or cause or permit its respective Subsidiaries to take or fail to take, any action, if (i) such Party knows or reasonably should know that such action or omission would be inconsistent with the qualification of any of the Sporting Transfers, Distribution or Merger for its respective Intended Tax Treatment or (ii) such action or omission would be inconsistent with the Tax Opinion Representations of such Party, except, in each case, as otherwise expressly required or permitted by the Transaction Agreement, this Agreement or any other Ancillary Agreement.

 

SECTION 5.02.                 Restricted Actions.  (a) Subject to Section 5.02(b), on or before the second anniversary of the Distribution Date each Party shall not (and shall cause its Subsidiaries not to), in a single transaction or a series of transactions:

 

(i)                                     enter into or permit any Proposed Acquisition Transaction;

 

(ii)                                  liquidate (or partially liquidate), whether by merger, consolidation or otherwise;

 

(iii)                               cease to be engaged in the active conduct (within the meaning of Section 355(b)(1)(A) of the Code) of any of the trades or businesses forming the basis of the opinions of counsel obtained pursuant to Section 8.16(b) of the Transaction Agreement (an “Active Trade or Business”);

 

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(iv)                              sell or transfer 30% or more of the gross assets of the Active Trade or Business of such Party or 30% or more of the consolidated gross assets that such Party held immediately before the Distribution; or

 

(v)                                 redeem or otherwise repurchase (directly or indirectly) any Equity of such Party, except to the extent such redemptions or repurchases satisfy Section 4.05(1)(b) of Revenue Procedure 96-30 (as in effect prior to its amendment by Revenue Procedure 2003-48).

 

(b)                                 A Party may take or permit, or may cause or permit its Subsidiaries to take, an action that would otherwise violate Section 5.02(a) if such Party provides the other Party with Legal Comfort with respect to such action.

 

(c)                                  The provisions of this Section 5.02 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 Section 5.02 and its interpretation to the extent such clarification or change applies to the actions or permissions addressed in this Section 5.02, provided that no such clarification or change shall have the effect of permitting any action otherwise prohibited under this Section 5.02.

 

SECTION 5.03.                 Procedures Regarding Legal Comfort.  If either Party seeks to obtain Legal Comfort for purposes of Section 5.02(b), the other Party, at the request of the seeking Party, shall use commercially reasonable efforts to expeditiously obtain, or assist the seeking Party in obtaining, such Legal Comfort (including by executing and delivering to counsel or the IRS customary letters of representation).  Neither Party shall be required to take any action pursuant to this Section 5.03 if, upon request, the other Party fails to certify that all information and representations relating to such other Party (or any Subsidiary thereof) in the relevant documents are true, correct and complete or fails to obtain certification from any counterparty to any Proposed Acquisition Transaction of such other Party that all information and representations relating to such counterparty in the relevant documents are true, correct and complete.  The seeking Party shall reimburse the other Party for all reasonable out-of-pocket costs and expenses incurred by such other Party (or any Subsidiary thereof) in obtaining Legal Comfort.

 

SECTION 5.04.                 Notification and Certification Regarding Certain Acquisition Transactions.  If Sporting proposes to enter into any 25% Acquisition Transaction or permit any 25% Acquisition Transaction to occur at any time during the 30-month period following the Distribution Date, Sporting shall undertake in good faith to provide ATK, no later than 10 Business Days following the signing of any written agreement with respect to such 25% Acquisition Transaction or obtaining knowledge of the occurrence of any such 25% Acquisition Transaction that takes place without written agreement, with a written description of such transaction (including the type and amount of Equity of Sporting to be acquired) and additional information as ATK may reasonably request; provided, that in no case shall Sporting be required to provide ATK with any material non-public information.

 

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SECTION 5.05.                 Reporting.  ATK and Sporting shall (i) timely file any appropriate information and statements (including as required by Section 6045B of the Code and Section 1.355-5 and, to the extent applicable, Section 1.368-3 of the Regulations) to report each of the Sporting Transfers, Distribution and Merger as qualifying for its respective Intended Tax Treatment and (ii) absent a change of Law or an applicable Determination otherwise, not take any position on any Tax Return (or otherwise with a Taxing Authority) that is inconsistent with such qualification.

 

SECTION 5.06.                 Protective Section 336(e) Election.  With respect to each of the entities listed in Schedule 5.06, the Parties agree that (a) this Agreement constitutes a written, binding agreement to make a Protective Section 336(e) Election for such entity (it being understood, for the avoidance of doubt, that such Protective Section 336(e) Election shall have a Tax effect on the Parties only if (x) Section 355(d) or 355(e) of the Code applies to the Distribution or (y) the Distribution otherwise fails to qualify for nonrecognition treatment under Section 355(c) of the Code) and (b) ATK shall timely make such Protective Section 336(e) Election and timely file such forms as may be contemplated by applicable Tax law or administrative practice to effect each such Protective Section 336(e) Election, except that Sporting shall have the exclusive right to prepare and file (i) the relevant purchase price allocation and any corresponding IRS Form 8883 (or any successor thereto) and (ii) any similar forms required or permitted to be filed under U.S. state or local Law in connection with such Protective Section 336(e) Election.  To the extent the Distribution constitutes a “qualified stock disposition” (as defined in Section 1.336-1(b)(6) of the Regulations) pursuant to a Determination, the Parties shall not and shall not permit any of their respective Subsidiaries to, take any position for Tax purposes inconsistent with any of the Protective Section 336(e) Elections, except as may be required pursuant to a Determination.

 

ARTICLE VI

 

Procedural Matters

 

SECTION 6.01.                 Cooperation.  Each Party shall cooperate, and shall cause its respective Subsidiaries to cooperate, with reasonable requests from the other Party in matters covered by this Agreement, including in connection with the preparation and filing of Tax Returns, the calculation of Taxes, the determination of the proper financial accounting treatment of Tax items and the conduct and settlement of Tax Contests.  Such cooperation shall include:

 

(a)                                 retaining until the expiration of the relevant statute of limitations (including extensions) all Tax Records;

 

(b)                                 providing the other Party reasonable access to Tax Records and to its personnel (ensuring their cooperation) and premises to the extent relevant to an obligation, right or liability of the other Party under this Agreement or otherwise reasonably required by the other Party to complete Tax Returns or to compute the amount of any payment contemplated by this Agreement;

 

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(c)                                  providing the other Party with all executed powers of attorney reasonably necessary to enable the other Party to comply with the requirements of this Agreement;

 

(d)                                 applying for and otherwise seeking all reasonably available Tax refunds, credits and offsets to which the other Party would be entitled (whether in whole or in part) pursuant to Section 3.04; and

 

(e)                                  notifying the other Party prior to disposing of any relevant Tax Records and affording the other Party the opportunity to take possession or make copies of such Tax Records at its discretion.

 

SECTION 6.02.                 Amount and Treatment of Indemnity Payments.  (a) The amount of any Indemnity Payment and any payment contemplated by Article II shall be (i) reduced to take into account any Tax benefit actually realized by the Indemnified Party and its Subsidiaries resulting from the incurrence of the liability in respect of which the Indemnity Payment is made and (ii) increased to take into account any Tax cost actually realized by the Indemnified Party and its Subsidiaries resulting from the receipt of the Indemnity Payment.

 

(b)                                 For all Tax purposes, each Party shall treat any payment made between the Parties under this Agreement (i) if made by Sporting to ATK, as a distribution, immediately before the Distribution, from Sporting to ATK that reduces ATK’s adjusted tax basis in the Sporting Common Stock or (ii) if made by ATK to Sporting, as a contribution, immediately before the Distribution, from ATK to Sporting that increases ATK’s adjusted tax basis in the Sporting Common Stock, in each case except as otherwise required by applicable Law or a Determination.

 

ARTICLE VII

 

Miscellaneous

 

SECTION 7.01.                 Survival.  Except as expressly set forth in this Agreement, the covenants and indemnification obligations in this Agreement shall survive the Distribution and shall remain in full force and effect.

 

SECTION 7.02.                                   Transaction Agreement.  The Parties agree that, in the event of a conflict between the terms of this Agreement and the Transaction Agreement with respect to the subject matter hereof, the terms of this Agreement shall govern.

 

SECTION 7.03.                                   Confidentiality.  Each Party hereby acknowledges 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 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 Confidential Information of the other Party and its Affiliates shall be governed by Section 8.03(c) of the Transaction Agreement.

 

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SECTION 7.04.                                   Counterparts; Effective Time; Entire Agreement.  (a) This Agreement may be executed in one or more counterparts, all of which counterparts shall be considered one and the same agreement, and shall become effective on the later of (i) the consummation of the Distribution and (ii) the time when one or more counterparts have been signed by each Party and delivered to the other Party.  This Agreement may be executed by facsimile signature and a facsimile signature shall constitute an original for all purposes.

 

(b)                                 This Agreement and the other Transaction Documents, taken together with the Orbital Disclosure Letter and the ATK Disclosure Letter, and the Appendices, Exhibits and Schedules hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof and supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter, and there are no agreements or understandings between the Parties with respect to the subject matter hereof other than those set forth or referred to herein or therein.

 

SECTION 7.05.                                   Governing Law; Jurisdiction.  This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware, regardless of the Laws that might otherwise govern under applicable principles of conflicts of laws thereof.  Each of the parties hereto (a) consents to submit itself to the personal jurisdiction of the Chancery Court of the State of Delaware or, if the Chancery Court declines to accept jurisdiction over a particular matter, of any state or U.S. Federal court within the State of Delaware in the event any dispute arises out of this Agreement, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (c) agrees that it will not bring any action relating to this Agreement in any court other than the Chancery Court of the State of Delaware or, if the Chancery Court declines to accept jurisdiction over a particular matter, any state or U.S. Federal court within the State of Delaware and (d) waives any right to trial by jury with respect to any action related to or arising out of this Agreement.

 

SECTION 7.06.                                   Assignability.  Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by either Party without the prior written consent of the other Party.  Any purported assignment without such consent shall be void.  Subject to the preceding sentences, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and assigns.  Notwithstanding the foregoing, either Party may assign this Agreement without consent in connection with (a) a merger transaction in which such Party is not the surviving entity and the surviving entity acquires or assumes all or substantially all of such Party’s assets, or (b) upon the sale of all or substantially all of such Party’s assets; provided, however, that the assignee expressly assumes in writing all of the obligations of the assigning Party under this Agreement, and the assigning Party provides written notice and evidence of such assignment and assumption to the non-assigning Party.  No assignment permitted by this Section 7.06 shall release the assigning Party from liability for the full performance of its obligations under this Agreement.

 

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SECTION 7.07.                                   Third-Party Beneficiaries.  (a)  The provisions of this Agreement are solely for the benefit of the Parties hereto and are not intended to confer upon any Person except the Parties hereto any rights or remedies hereunder and (b) there are no third-party beneficiaries of this Agreement and this Agreement shall not provide any third Person with any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to this Agreement.

 

SECTION 7.08.                                   Notices.  All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be provided in the manner set forth in the Transaction Agreement.  In addition, copies of all documents mentioned in the preceding sentence shall also be sent to the address set forth below:

 

If to ATK, to:

 

 

 

 

 

Orbital ATK, Inc.

 

 

45101 Warp Drive

 

 

Dulles, VA 20166

 

 

Attn: David W. Thompson, Chief Executive Officer

 

 

Facsimile: (703) 406-3509

 

 

Email: dwt@orbital.com

 

 

 

with a copy to:

 

 

 

 

 

Hogan Lovells US LLP

 

 

Columbia Square

 

 

555 Thirteenth Street, NW

 

 

Washington, DC 20004

 

 

Attn:

H. Todd Miller

 

 

 

John C. Montague

 

 

 

 

 

Facsimile: (202) 637-5910

 

 

Email: todd.miller@hoganlovells.com and john.montague@hoganlovells.com

 

 

 

If to Sporting, to:

 

 

 

 

 

Vista Outdoor Inc.

 

 

938 University Park Boulevard, Suite 200

 

 

Clearfield, UT 84015

 

 

Attn: Scott D. Chaplin, Senior Vice President, General Counsel and Corporate Secretary

 

 

Facsimile: (801) 779-4620

 

 

Email: Scott.Chaplin@vistaoutdoor.com

 

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with a copy to:

 

 

 

 

 

Cravath, Swaine & Moore LLP

 

 

Worldwide Plaza

 

 

825 Eighth Avenue

 

 

New York, NY 10019

 

 

Attn:

Stephen L. Gordon

 

 

 

J. Leonard Teti II

 

 

 

 

 

Facsimile: (212) 474-3700

 

 

Email: gordon@cravath.com and lteti@cravath.com

 

Either Party may, by notice to the other Party, change the address to which such copies of documents are to be given.

 

SECTION 7.09.                                   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 7.10.                                   Headings.  The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

SECTION 7.11.                                   Waivers of Default.  No failure or delay of either Party (or its Subsidiaries) in exercising any right or remedy under this Agreement 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 right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power.  Waiver by either Party hereto of any default by the other Party hereto of any provision of this Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default.

 

SECTION 7.12.                                   Specific Performance.  The Parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached.  It is accordingly agreed that the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in the Chancery Court of the State of Delaware or, if the Chancery Court declines to accept jurisdiction over a particular matter, in any state or U.S. Federal court within the State of Delaware, this being in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.

 

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SECTION 7.13.           Amendments.   No provisions of this Agreement shall be deemed waived, amended, supplemented or modified by either Party hereto, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of each Party.

 

SECTION 7.14.           Interpretation.   The rules of interpretation set forth in Section 12.04 of the Transaction Agreement shall be incorporated by reference to this Agreement, mutatis mutandisNOTWITHSTANDING THE FOREGOING, THE PURPOSE OF ARTICLE V IS TO ENSURE THAT EACH OF THE SPORTING TRANSFERS, DISTRIBUTION AND MERGER QUALIFY FOR ITS RESPECTIVE INTENDED TAX TREATMENT AND, ACCORDINGLY, THE PARTIES AGREE THAT THE LANGUAGE THEREOF SHALL BE INTERPRETED IN A MANNER THAT SERVES THIS PURPOSE TO THE GREATEST EXTENT POSSIBLE.

 

SECTION 7.15.           Compliance by Subsidiaries.  The Parties shall cause their respective Affiliates to comply with this Agreement.

 

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

 

 

Alliant Techsystems Inc.,

 

 

 

by

 

 

 

/s/ Scott Chaplin

 

 

Name:

 

 

Title:

 

 

 

Vista Outdoor Inc.,

 

 

 

by

 

 

 

/s/ Scott Chaplin

 

 

Name:

 

 

Title:

 



 

Schedule 1.01

 

Designated Sporting Representations

 

The following Tax Opinion Representations of ATK will constitute Designated Sporting Representations:

 

4 and 5 to the extent they apply to representations, warranties, covenants, agreements, and statements of intent made regarding (i) the Active Trade or Business of Sporting or (ii) Sporting’s knowledge of any plan or intention for the Distribution to be used principally as a device for the distribution of the earnings and profits of ATK or Sporting

 

18

 

19, 25, 28, and 29 insofar as they apply to Sporting

 



 

Schedule 2.02

 

Hypothetical Sporting Tax Return Preparation Principles

 

The Hypothetical Sporting Tax Return shall be prepared on a basis consistent with past practice, except that the Hypothetical Sporting Tax Return shall be prepared in a manner consistent with the following principles:

 

1.              the taxable period began on April 1, 2014 and ended at the end of the Distribution Date;

 

2.              all items of income, gain, loss, deduction and credit of the Sporting Business during the taxable period, but only such items, shall be included;

 

3.              for purposes of paragraph 2 above, an item shall be considered an item of the Sporting Business during the taxable period to the extent such item is (i) allocated to the taxable period and (ii) not allocated to the Acadia Business, in each case pursuant to this Schedule 2.02;

 

4.              except as otherwise provided in this Schedule 2.02, (i) the extent to which each item of income, gain, loss, deduction or credit is allocated to the taxable period and to the Acadia Business shall be determined in a manner consistent in all material respects with the manner in which such item (or a similar item) was allocated to the taxable period and to the Acadia Business for purposes of preparing the Reference Balance Sheets, Interim Period Cash Flow Statement or Adjusted Cash Flow Amount or (ii) if such item (or a similar item) was not taken into account in preparing the Reference Balance Sheets, Interim Period Cash Flow Statement or Adjusted Cash Flow Amount, then reasonable allocation methods shall be used to allocate all or a portion of such item (A) to the taxable period and (B) to the Acadia Business;

 

5.              all deductions for out-of-pocket costs and expenses (including change-of-control payments and breakage fees) incurred in connection with the Transactions by any member of the Combined Group shall be allocated in their entirety to the Sporting Business (and not to the Acadia Business) and shall be treated as having accrued in their entirety on or before the Distribution Date;

 

6.              in the case of any deferred intercompany transaction taken into account as a result of the Transactions, each item of income, gain, loss, deduction or credit arising out of such deferred intercompany transaction shall be allocated to the Sporting Business (and not to the Acadia Business);

 

7.              in the case of any item of income, gain, loss, deduction or credit arising as a result of the allocation, transfer or exchange of a Taxable Rabbi Trust Asset pursuant to and in accordance with Section 8.07(h)(ii) of the Transaction Agreement, the amount of such item that shall be allocated to the taxable period and to the Sporting Business shall equal the product of (i) the amount of such item and (ii) a fraction, (A) the numerator of which is the total value of all Taxable Rabbi Trust Assets (or the cash and marketable securities for which Taxable Rabbi Trust

 



 

Assets are exchanged) allocated and transferred to Sporting Rabbi Trusts pursuant to and in accordance with Section 8.07(h)(ii) of the Transaction Agreement and (B) the denominator of which is the total value of all Taxable Rabbi Trust Assets, in each case valued as of the applicable Nonqualified Plan Transfer Date;

 

8.              the taxable period for any flow-through entity or “controlled foreign corporation” (within the meaning of Section 957(a) of the Code or any comparable U.S. state or local or foreign Law) in which any member of the Combined Group directly or indirectly owns or has owned Equity ended at the end of the Distribution Date;

 

9.              each of the Sporting Transfers, Distribution and Merger qualified for its respective Intended Tax Treatment;

 

10.       notwithstanding paragraphs 2, 3 and 4 above, the Payments and Credits with respect to the Hypothetical Sporting Tax Return shall include the amount of all estimated income Tax payments made in respect of all consolidated, combined, unitary or similar groups that include Acadia or any Acadia Subsidiary, on the one hand, and Sporting or any Sporting Subsidiary, on the other hand; and

 

11.       for purposes of calculating the Total Tax with respect to the Hypothetical Sporting Tax Return, three percent (3%) shall be added to each U.S. Federal corporate income Tax rate that would otherwise apply.

 

For purposes of paragraph 7 of this Schedule 2.02, “Taxable Rabbi Trust Asset” means any non-marketable asset (including any corporate-owned life insurance policy) that is (i) held in an Acadia Rabbi Trust immediately prior to the applicable Nonqualified Plan Transfer Date and (ii) allocated and transferred, or exchanged for cash or marketable securities all or a portion of which is allocated and transferred, to a Sporting Rabbi Trust pursuant to and in accordance with Section 8.07(h)(ii) of the Transaction Agreement, but only if that such allocation, transfer or exchange gives rise to any item of income, gain, loss, deduction or credit.

 



 

Schedule 4.01(a)

 

ATK Prepared Tax Returns

 

All Sporting Separate Tax Returns for (a) income Taxes for any taxable period that includes the Distribution and (b) non-income Taxes, other than the Federal Firearms and Ammunition Excise Tax, that are due prior to the termination of Tax services pursuant to the Transition Services Agreement.

 



 

Schedule 5.06

 

Protective Section 336(e) Elections

 

1.              Sporting

 

2.              ATK Commercial Ammunition Holdings Company, Inc.

 

3.              ATK Commercial Ammunition Company Inc.

 

4.              Federal Cartridge Company

 

5.              Eagle Industries Unlimited, Inc.

 

6.              Eagle New Bedford, Inc.

 




Exhibit 10.2

 

Amended and Restated

Executive Change in Control Severance Agreement

 

December 14, 2012

 

Mr. David W. Thompson
11217 Bright Pond Land

Reston, Virginia 20194

 

Dear Dave:

 

Orbital Sciences Corporation and its subsidiaries (together, the “Company”) consider the maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company and its stockholders.  In this connection, the Company recognizes that the possibility of a change in control may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders.  Accordingly, the Company’s Board of Directors (the “Board”) has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s management, including yourself, to their assigned duties without distraction in the face of the potentially disturbing circumstances arising from the possibility of a change in control of the Company.

 

This letter agreement (the “Agreement”) sets forth the severance benefits that the Company agrees will be provided to you in the event your employment with the Company terminates following a “Change in Control” (as defined in Section 2 hereof) under the circumstances described below.  This Agreement is not an employment contract nor does it alter your status as an at-will employee of the Company.  No benefit shall be payable under this Agreement except on Termination of your Employment (as defined below) with the Company as a result of a Change in Control (as defined below).

 

1.                                      Term.  This Agreement commences as of the date written above, and shall remain in effect so long as you are employed as an executive officer of the Company, provided, however, that in the event of a Change in Control, this Agreement shall remain in full force and effect for a 24-month period commencing on the date of the Change in Control regardless of whether you remain an executive officer of the Company during such 24-month period.

 

2.                                      Change in Control.  For purposes of this Agreement, a Change in Control shall mean:

 

(a)                                 The acquisition by any individual, entity or group (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of 30% or more of either (i) the then outstanding shares of common stock of the Company or (ii) the combined

 



 

voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors;

 

(b)                                 Within any 24-month period, the persons who were directors of the Company immediately prior thereto (the “Incumbent Board”) shall cease to constitute a majority of the Board of Directors of the Company or of its successor by merger, consolidation or sale of assets.  For this purpose, the Incumbent Board includes any new director whose (i) election to the Board resulted from a vacancy caused by the retirement, death or disability of a director and was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period, or (ii) nomination to the Board was approved by a committee of the Board whose majority consisted of directors who were directors in office at the beginning of the period; or

 

(c)                                  The consummation by the Company of (i) a reorganization, merger, consolidation or similar extraordinary event (each, a “Business Combination”), the result of which is that (A) the stockholders of the Company immediately prior to the execution of the agreement to effect the Business Combination will not beneficially own, immediately after the reorganization, merger, consolidation or other similar extraordinary event, securities entitling such stockholders to vote more than 60% of the total equity of the surviving or resulting entity entitled to vote generally in the election of directors, (B) a Person (excluding any corporation resulting from the Business Combination) becomes the beneficial owner of 30% or more of the then outstanding shares of common stock of the corporation resulting from such Business Combination or (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were not members of the Board of Directors of the Company at the time of execution of the initial agreement or other action of the Board that provided for such Business Combination, or (ii) a sale or disposition of all or substantially all of the assets of the Company..

 

Notwithstanding the above, a Change in Control shall not be deemed to occur as a result of a transaction where either you, individually or as an officer, director or 5% stockholder or partner of any entity, or any employee benefit plan (or related trust) of the Company (a) becomes the beneficial owner of securities representing 30% or more of the combined voting power of the Company’s then outstanding securities, or (b) enters into an agreement with the Company providing for the merger, consolidation, or sale or transfer of all or substantially all the assets of the Company.  In addition, a Change in Control shall not be deemed to occur where you enter into an employment agreement with the Company, any Person whose acquisition of the Company’s securities resulted in the Change in Control or any entity resulting from a Business Combination.

 

3.                                      Termination; Notice Requirements

 

(i)                                     Disability.  If, as a result of your incapacity due to physical or mental illness, you shall have been absent from your duties with the Company on a full-time basis for nine (9) consecutive months, and within 30 days after written notice of termination is given you shall not have returned to the full-time performance of your duties, the Company may terminate your employment for “Disability.”

 

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(ii)                                  Cause.  Termination by the Company of your employment for “Cause” shall mean termination on (A) the willful and continued failure by you to substantially perform your duties with the Company in accordance with the instructions of the Board or the executive officers to whom you report (other than any such failure resulting from your incapacity due to physical or mental illness), after a demand for substantial performance is delivered to you by the Board which specifically identifies the manner in which the Board believes that you have not substantially performed your duties, (B) the willful engaging by you in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise, (C) your embezzlement or misappropriation of funds or property of the Company, (D) your conviction of a felony or the entrance of a plea of guilty or nolo contendere to a felony, or (E) your conviction of any crime involving fraud, dishonesty, moral turpitude or breach of trust or your entrance of a plea of guilty or nolo contendere to such a crime.  For purposes of this Subsection, no act, or failure to act, on your part shall be considered “willful” unless done, or omitted to be done, by you not in good faith and without reasonable belief that your action or omission was in the best interest of the Company.  Notwithstanding the foregoing, you shall not be deemed to have been terminated for Cause pursuant to clause (A), (B) or (C) of the first sentence of this Subsection unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than two-thirds of the entire membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board you were guilty of conduct set forth above in clause (A), (B)  or (C) of the first sentence of this Subsection and specifying the particulars thereof in detail.

 

(iii)                               Good Reason.  You shall be entitled to terminate your employment for Good Reason in connection with a Change in Control.  For purposes of this Agreement, “Good Reason” shall mean:

 

(A)                               without your written consent, the assignment to you of any position (including status, offices, titles and reporting requirements), authorities, duties and responsibilities, that are a material adverse change from the most significant of those held or exercised by you or assigned to you at any time during the 180-day period immediately preceding a Change in Control, or any other action by the Company that results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and that is remedied by the Company promptly after receipt of notice thereof given by you;

 

(B)                               a material reduction by the Company in your annual base salary, which for the purposes of this Subsection shall mean an amount at least equal to 12 times the highest monthly base salary paid or payable, including any base salary that has been earned but deferred, to you by the Company in respect of the 12-month period immediately preceding the month in which the Change in Control occurs;

 

(C)                               the Company’s requiring you to be based anywhere other than the office of the Company in which you are based prior to the Change in Control or any office or location within a 50 mile radius of such office, except for required travel on the Company’s business to an extent substantially consistent with your present business travel obligations;

 

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(D)                               a material adverse change in the value of any material compensation plan or plans in which you participate, including any compensation plans after the date of this Agreement; including but not limited to any stock purchase plan, stock option plan, stock incentive plan, incentive compensation, bonus, and other plan in which you were participating at the time of the Change in Control, or the failure by the Company to continue your participation therein;

 

(E)                                a material adverse change in the benefits enjoyed by you under any of the Company’s retirement, pension, 401(k), deferred compensation, life insurance, medical, health, accident, disability or other material benefit plans in which you were participating at the time of a Change in Control, the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits enjoyed by you at the time of the Change in Control, or with a material reduction in the number of paid vacation days to which you are entitled in accordance with the Company’s normal vacation policy in effect at the time of the Change in Control; or

 

(F)                                 the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement as contemplated in Section 5 hereof.

 

In order to constitute Good Reason, (i) you must provide notice to the Company of the existence of the condition within ninety (90) days of the initial existence, (ii) the Company must fail to remedy the condition within thirty (30) days of such notice, and (iii) you must actually terminate your employment within 90 days of the expiration of the Company’s thirty (30) days cure period if the Company has not cured the condition constituting Good Reason.

 

(iv)                              Notice of Termination.  Any termination by the Company or by you shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 6 hereof, and if by the Company for Cause, shall not be effective unless such notice includes the information set forth in Section 3(ii) hereof.

 

(v)                                 Date of Termination.  “Date of Termination” shall mean (A) if your employment is terminated by reason of death or Disability, the date of your death or 30 days after Notice of Termination is given (provided that you shall not have returned to the performance of your duties on a full-time basis during such 30 day period), as the case may be, (B) if your employment is terminated by the Company for Cause, immediately upon delivery of the Notice of Termination that complies with the requirements of Section 3(ii), (C) if your employment is terminated by the Company for any other reason, the date specified in the Notice of Termination which shall not be less than 30 days from the date such Notice of Termination is given, and (D) if you terminate your employment for “Good Reason,” the date such Notice of Termination is given or any later date specified therein.

 

(vi)                              Termination of Employment.  “Termination of Employment” shall mean that you and the Company anticipate that no further services would be performed after a certain date (as an employee) or that the level of bona fide services that you would perform after such date (as an employee) would permanently decrease to no more than 20 percent of the level of bona fide service performed over the immediately preceding 36-month period of employment (or such lesser time as you have been employed.)

 

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4.                                      Benefits Upon Termination or During Disability.  If a Change in Control is contemplated or has occurred and your employment is terminated, you shall be entitled to the benefits provided in this Section 4 as described below:

 

(i)                                     During any period that you fail to perform your duties as a result of incapacity due to physical or mental illness, and in the event your employment is terminated pursuant to Section 3(i) hereof, your benefits shall be determined in accordance with the Company’s insurance and benefit programs then in effect.

 

(ii)                                  If your employment shall be terminated for Cause, the Company shall pay you your full base salary and accrued leave through the Date of Termination at the rate in effect at the time Notice of Termination is given, and the Company shall have no further obligations to you under this Agreement.

 

(iii)                               If your employment shall be terminated in contemplation of, or any time after, a Change in Control (a) by the Company for any reason other than for Cause or Disability or (b) by you for Good Reason, then you shall be entitled to all the benefits provided below:

 

(A)                               The Company shall pay you on the Date of Termination your full base salary and accrued leave through the Date of Termination at the rate in effect at the time Notice of Termination is given.

 

(B)                               The Company will pay you a pro rata bonus equal to your target bonus for the year of your Termination of Employment multiplied by a fraction the numerator of which is the number of days you were employed in the year of termination and the denominator of which is 365.

 

(C)                               In lieu of any further salary payments to you for periods subsequent to the Date of Termination, the Company shall pay to you, provided you comply with the terms of Section 4(v) below, a lump sum payment equal to two times the sum of (a) the greater of (1) your annual base salary in effect on the Date of Termination, or (2) your annual base salary in effect on the date of the Change in Control and (b) the greater of (1) your target bonus for the year of the Termination of Employment or (2) the average of the two highest actual cash bonuses earned by you for two of the three years immediately prior to the year of your Date of Termination.

 

(D)                               The Company shall also immediately fully vest you in all your account balances under the Company’s retirement, deferred compensation and pension plans (the “Plans”); provided, however, that should the Company be unable to provide for such vesting under the terms of any such Plans, the Company shall pay to you in the manner and as directed by you, an amount that equals on an after-tax basis the value of any amounts that were not vested or would otherwise be forfeited by you under the Plans upon your Termination of Employment with the Company.

 

(E)                                The Company shall also allow you the opportunity to surrender to the Company any then outstanding vested and unvested equity awards in respect of Common Stock of the Company and any of its subsidiaries and affiliates that you own (whether exercisable or not) and

 

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that you did not previously surrender or convert in the transaction that resulted in the Change in Control, and the Company shall promptly pay to you in consideration therefor a cash payment equal to the higher of (a) the highest price paid in connection with the transaction that resulted in the Change in Control or (b) the then current fair-market value on the Date of Termination if the equity award has been assumed, less, in each case if applicable, the exercise price for any such equity award.

 

(F)                                 The Company shall also pay to you all reasonable legal fees and expenses incurred by you as a result of such termination (including all such fees and expenses, if any, incurred in contesting or disputing any such termination or in seeking to obtain or enforce any right or benefit provided by this Agreement) upon presentation to the Company of a reasonably detailed invoice for such expenses, whether or not you have already made payment for such expenses.

 

(G)                               For a 24-month period after such termination, the Company shall arrange to provide you with life, disability, accident and health insurance substantially similar to those you were receiving immediately prior to the Notice of Termination, provided, however, that should the Company be unable to provide for any such benefits under the terms of the benefit plans, or by law, the Company shall pay you an amount equal to the premiums the Company would have paid for such benefits under such plans.  The coverage period for purposes of the group health continuation requirements of Section 4980B of the Code shall commence at Termination of Employment.

 

(H)                              You shall not be required to mitigate the amount of any payment provided for in this Section 4 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Section 4 be reduced by any compensation earned by you as the result of employment by another employer or by retirement benefits after the Date of Termination, or otherwise.

 

(I)                                   In addition to all other amounts payable to you under this Section 4, you shall be entitled to receive all benefits payable to you under any of the Company’s plans or agreements relating to retirement benefits.

 

(iv)                              If you become entitled to receive compensation or benefits under the terms of Section 4(iii), such compensation or benefits will be reduced by other severance benefits payable to you under any other plan, program, policy or practice of or agreement or other arrangement of the Company.

 

(v)                                 You will be provided a written release of claims at the time of, or within 10 days following, your Date of Termination.  You will not be eligible to receive any payments provided for in Section 4(iii) (other than payments under Section 4(iii)(A)) unless you first execute the written release of claims within 45 days following the Date of Termination or Change in Control, if later, and you do not revoke such release within the time permitted therein for such revocation. As to payments and benefits which are subject to Section 409A of the Code if the end of the forty-five (45) day review period plus revocation period occurs in a year subsequent to the year in which the Termination of Employment occurs, the payments will be made in the subsequent

 

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year.  Any payments delayed pursuant to this Section 4(v) shall be paid to you in a lump sum, and all remaining payments due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

 

(vi)                              Anything in this Agreement to the contrary notwithstanding, if (A) on the date of Termination of Employment with the Company or a subsidiary, any of the Company’s stock is publicly traded on an established securities market or otherwise (within the meaning of Section 409A(a)(2)(B)(i) of the Code), (B) if you are determined to be a “specified employee” within the meaning of Section 409A(a)(2)(B) of the Code, (C) the payments exceed the amounts permitted to be paid pursuant to Treasury Regulations Section 1.409A-1(b)(9)(iii) and (D) such delay is required to avoid the imposition of the tax set forth in Section 409A(a)(1) of the Code, as a result of such termination, you would receive any payment that, absent the application of this section, would be subject to interest and additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(2)(B)(i) of the Code, then no such payment shall be payable prior to the date that is the earliest of (1) six months after your termination date, (2) your death or (3) such other date as will cause such payment not to be subject to such interest and additional tax (with a catch-up payment equal to the sum of all amounts that have been delayed to be made as of the date of the initial payment).

 

It is the intention of the parties that payments or benefits payable under this Agreement not be subject to the additional tax imposed pursuant to Section 409A of the Code.  To the extent such potential payments or benefits could become subject to such Section, the parties shall cooperate to amend this Agreement with the goal of giving you the economic benefits described herein in a manner that does not result in such tax being imposed.

 

(vii)                           All payments required to be made by the Company hereunder to you shall be subject to the withholding of such amounts relating to Federal, state, local or foreign taxes as the Company reasonably may determine it should withhold pursuant to any applicable law or regulation.

 

(viii)                        Notwithstanding any other provision of this Agreement or of any other agreement, contract, or understanding entered into by you with the Company, except an agreement, contract, or understanding hereafter entered into that expressly addresses Section 280G or Section 4999 of the Code (an “Other Agreement”), and notwithstanding any formal or informal employment agreement or other arrangement for the direct or indirect provision of compensation to you (including groups or classes of participants or beneficiaries of which you are a member), whether or not such compensation is deferred, is in cash, or is in the form of a benefit to or for you (a “Benefit Arrangement”), if you are a “disqualified individual,” as defined in Section 280G(c) of the Code (or any successor provision thereto), any right to receive any payment or other benefit under this Agreement shall not become exercisable or vested (A) to the extent that such right to exercise, vesting, payment, or benefit, taking into account all other rights, payments, or benefits to or for you under this Agreement, all Other Agreements, and all Benefit Arrangements, would cause any payment or benefit to you under this Agreement to be considered a “parachute payment” within the meaning of Code Section 280G(b)(2) as then in effect (a “Parachute Payment”) and (B) if, as a result of receiving a Parachute Payment, the aggregate after-tax amounts received by you from the Company under this Agreement, all Other Agreements, and

 

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all Benefit Arrangements would be less than the maximum after-tax amount that could be received by you without causing any such payment or benefit to be considered a Parachute Payment.  In the event that the receipt of any such right to exercise, vesting, payment, or benefit under this Agreement, in conjunction with all other rights, payments, or benefits to or for you under any Other Agreement or any Benefit Arrangement would cause you to be considered to have received a Parachute Payment under this Agreement that would have the effect of decreasing the after-tax amount received by you as described in clause (B) of the preceding sentence, then you shall have the right, in your sole discretion, to designate those rights, payments, or benefits under this Agreement, any Other Agreements, and any Benefit Arrangements that should be reduced or eliminated so as to avoid having the payment or benefit to you under this Agreement be deemed to be a Parachute Payment; provided, however, that to the extent any payment or benefit constitutes deferred compensation under Section 409A, in order to comply with Section 409A, the reduction or elimination will be performed in the following order: (A) reduction of cash payments, (B) reduction of benefits and (C) reduction of payments for equity awards.

 

5.                                      Successors; Binding Agreement.

 

(i)                                     The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all its business and/or assets to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement no later than ten days prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle you to compensation from the Company in the same amount and on the same terms as you would be entitled under Section 4(iii), except that for purposes of implementing the foregoing, a date ten days prior to the date on which any such succession becomes effective shall be deemed the Date of Termination.  As used in this Agreement, “the Company” shall mean the Company, as hereinbefore defined and any successor to its business and/or assets that assumes and agrees to perform this Agreement by executing and delivering the agreement provided for in this paragraph 5, by operation of law, or otherwise.

 

(ii)                                  This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If you should die while any amount would still be payable to you hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or if there is no such designee, to your estate.

 

6.                                      Notice.  For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by registered mail, return receipt requested, postage prepaid, addressed (i) if to the Company, to Orbital Sciences Corporation, 45101 Warp Drive, Dulles, Virginia 20166, Attn: Secretary of the Company, and (ii) if to you, to the address set forth on the first page of this Agreement, or to such other address as either party may have furnished to the other

 

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in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

 

7.                                      Miscellaneous.  No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by you and such officer as may be specifically designated by the Board.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement, and this Agreement supersedes all prior agreements between the Company and you with respect to the subject matter herein.  The validity, interpretation, construction and performance of this Agreement shall be governed by the local laws of the Commonwealth of Virginia (regardless of the laws that might otherwise govern under principles of conflicts of law).

 

8.                                      Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

9.                                      Arbitration.  Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Washington, D.C. in accordance with the domestic rules of the American Arbitration Association then in effect.  Pending the resolution of such dispute or controversy, the Company will continue to pay you your full base salary in effect when the notice giving rise to the dispute was given and you will continue as a participant in all incentive compensation, stock option, retirement, deferred compensation, pension, life, disability, health and accident plans in which you were participating when the notice giving rise to dispute was given, unless you have already received all benefits payable under Section 4(iii) of this Agreement.  Judgment may be entered on the arbitrator’s award in any court having jurisdiction; provided, however, that you shall be entitled to seek specific performance of your right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

 

10.                               Severability.  If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and this Agreement shall be construed and enforced as if such provisions had not been included.

 

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This Agreement is intended to supersede and replace your Executive Employment Agreement dated November 30, 2007.  Upon execution of this Agreement by both parties hereto, the Executive Employment Agreement shall be terminated and shall cease to be in effect in all respects.

 

If this Agreement correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company.

 

Sincerely,

 

ORBITAL SCIENCES CORPORATION

 

 

 

 

 

/s/ Susan Herlick

 

By:

Susan Herlick

 

 

Senior Vice President and General Counsel

 

 

 

Agreed to:

 

 

 

/s/ David W. Thompson

 

Name: David W. Thompson

 

 

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Exhibit 10.3

 

Amended and Restated

Executive Change in Control Severance Agreement

 

December 14, 2012

 

Mr. Garrett E. Pierce
43468 Castle Harbour Terrace

Leesburg, Virginia 20176

 

Dear Garrett:

 

Orbital Sciences Corporation and its subsidiaries (together, the “Company”) consider the maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company and its stockholders.  In this connection, the Company recognizes that the possibility of a change in control may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders.  Accordingly, the Company’s Board of Directors (the “Board”) has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s management, including yourself, to their assigned duties without distraction in the face of the potentially disturbing circumstances arising from the possibility of a change in control of the Company.

 

This letter agreement (the “Agreement”) sets forth the severance benefits that the Company agrees will be provided to you in the event your employment with the Company terminates following a “Change in Control” (as defined in Section 2 hereof) under the circumstances described below.  This Agreement is not an employment contract nor does it alter your status as an at-will employee of the Company.  No benefit shall be payable under this Agreement except on Termination of your Employment (as defined below) with the Company as a result of a Change in Control (as defined below).

 

1.                                      Term.  This Agreement commences as of the date written above, and shall remain in effect so long as you are employed as an executive officer of the Company, provided, however, that in the event of a Change in Control, this Agreement shall remain in full force and effect for a 24-month period commencing on the date of the Change in Control regardless of whether you remain an executive officer of the Company during such 24-month period.

 

2.                                      Change in Control.  For purposes of this Agreement, a Change in Control shall mean:

 

(a)                                 The acquisition by any individual, entity or group (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of 30% or more of either (i) the then outstanding shares of common stock of the Company or (ii) the combined

 



 

voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors;

 

(b)                                 Within any 24-month period, the persons who were directors of the Company immediately prior thereto (the “Incumbent Board”) shall cease to constitute a majority of the Board of Directors of the Company or of its successor by merger, consolidation or sale of assets.  For this purpose, the Incumbent Board includes any new director whose (i) election to the Board resulted from a vacancy caused by the retirement, death or disability of a director and was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period, or (ii) nomination to the Board was approved by a committee of the Board whose majority consisted of directors who were directors in office at the beginning of the period; or

 

(c)                                  The consummation by the Company of (i) a reorganization, merger, consolidation or similar extraordinary event (each, a “Business Combination”), the result of which is that (A) the stockholders of the Company immediately prior to the execution of the agreement to effect the Business Combination will not beneficially own, immediately after the reorganization, merger, consolidation or other similar extraordinary event, securities entitling such stockholders to vote more than 60% of the total equity of the surviving or resulting entity entitled to vote generally in the election of directors, (B) a Person (excluding any corporation resulting from the Business Combination) becomes the beneficial owner of 30% or more of the then outstanding shares of common stock of the corporation resulting from such Business Combination or (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were not members of the Board of Directors of the Company at the time of execution of the initial agreement or other action of the Board that provided for such Business Combination, or (ii) a sale or disposition of all or substantially all of the assets of the Company..

 

Notwithstanding the above, a Change in Control shall not be deemed to occur as a result of a transaction where either you, individually or as an officer, director or 5% stockholder or partner of any entity, or any employee benefit plan (or related trust) of the Company (a) becomes the beneficial owner of securities representing 30% or more of the combined voting power of the Company’s then outstanding securities, or (b) enters into an agreement with the Company providing for the merger, consolidation, or sale or transfer of all or substantially all the assets of the Company.  In addition, a Change in Control shall not be deemed to occur where you enter into an employment agreement with the Company, any Person whose acquisition of the Company’s securities resulted in the Change in Control or any entity resulting from a Business Combination.

 

3.                                      Termination; Notice Requirements

 

(i)                                     Disability.  If, as a result of your incapacity due to physical or mental illness, you shall have been absent from your duties with the Company on a full-time basis for nine (9) consecutive months, and within 30 days after written notice of termination is given you shall not have returned to the full-time performance of your duties, the Company may terminate your employment for “Disability.”

 

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(ii)                                  Cause.  Termination by the Company of your employment for “Cause” shall mean termination on (A) the willful and continued failure by you to substantially perform your duties with the Company in accordance with the instructions of the Board or the executive officers to whom you report (other than any such failure resulting from your incapacity due to physical or mental illness), after a demand for substantial performance is delivered to you by the Board which specifically identifies the manner in which the Board believes that you have not substantially performed your duties, (B) the willful engaging by you in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise, (C) your embezzlement or misappropriation of funds or property of the Company, (D) your conviction of a felony or the entrance of a plea of guilty or nolo contendere to a felony, or (E) your conviction of any crime involving fraud, dishonesty, moral turpitude or breach of trust or your entrance of a plea of guilty or nolo contendere to such a crime.  For purposes of this Subsection, no act, or failure to act, on your part shall be considered “willful” unless done, or omitted to be done, by you not in good faith and without reasonable belief that your action or omission was in the best interest of the Company.  Notwithstanding the foregoing, you shall not be deemed to have been terminated for Cause pursuant to clause (A), (B) or (C) of the first sentence of this Subsection unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than two-thirds of the entire membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board you were guilty of conduct set forth above in clause (A), (B)  or (C) of the first sentence of this Subsection and specifying the particulars thereof in detail.

 

(iii)                               Good Reason.  You shall be entitled to terminate your employment for Good Reason in connection with a Change in Control.  For purposes of this Agreement, “Good Reason” shall mean:

 

(A)                               without your written consent, the assignment to you of any position (including status, offices, titles and reporting requirements), authorities, duties and responsibilities, that are a material adverse change from the most significant of those held or exercised by you or assigned to you at any time during the 180-day period immediately preceding a Change in Control, or any other action by the Company that results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and that is remedied by the Company promptly after receipt of notice thereof given by you;

 

(B)                               a material reduction by the Company in your annual base salary, which for the purposes of this Subsection shall mean an amount at least equal to 12 times the highest monthly base salary paid or payable, including any base salary that has been earned but deferred, to you by the Company in respect of the 12-month period immediately preceding the month in which the Change in Control occurs;

 

(C)                               the Company’s requiring you to be based anywhere other than the office of the Company in which you are based prior to the Change in Control or any office or location within a 50 mile radius of such office, except for required travel on the Company’s business to an extent substantially consistent with your present business travel obligations;

 

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(D)                               a material adverse change in the value of any material compensation plan or plans in which you participate, including any compensation plans after the date of this Agreement; including but not limited to any stock purchase plan, stock option plan, stock incentive plan, incentive compensation, bonus, and other plan in which you were participating at the time of the Change in Control, or the failure by the Company to continue your participation therein;

 

(E)                                a material adverse change in the benefits enjoyed by you under any of the Company’s retirement, pension, 401(k), deferred compensation, life insurance, medical, health, accident, disability or other material benefit plans in which you were participating at the time of a Change in Control, the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits enjoyed by you at the time of the Change in Control, or with a material reduction in the number of paid vacation days to which you are entitled in accordance with the Company’s normal vacation policy in effect at the time of the Change in Control; or

 

(F)                                 the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement as contemplated in Section 5 hereof.

 

In order to constitute Good Reason, (i) you must provide notice to the Company of the existence of the condition within ninety (90) days of the initial existence, (ii) the Company must fail to remedy the condition within thirty (30) days of such notice, and (iii) you must actually terminate your employment within 90 days of the expiration of the Company’s thirty (30) days cure period if the Company has not cured the condition constituting Good Reason.

 

(iv)                              Notice of Termination.  Any termination by the Company or by you shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 6 hereof, and if by the Company for Cause, shall not be effective unless such notice includes the information set forth in Section 3(ii) hereof.

 

(v)                                 Date of Termination.  “Date of Termination” shall mean (A) if your employment is terminated by reason of death or Disability, the date of your death or 30 days after Notice of Termination is given (provided that you shall not have returned to the performance of your duties on a full-time basis during such 30 day period), as the case may be, (B) if your employment is terminated by the Company for Cause, immediately upon delivery of the Notice of Termination that complies with the requirements of Section 3(ii), (C) if your employment is terminated by the Company for any other reason, the date specified in the Notice of Termination which shall not be less than 30 days from the date such Notice of Termination is given, and (D) if you terminate your employment for “Good Reason,” the date such Notice of Termination is given or any later date specified therein.

 

(vi)                              Termination of Employment.  “Termination of Employment” shall mean that you and the Company anticipate that no further services would be performed after a certain date (as an employee) or that the level of bona fide services that you would perform after such date (as an employee) would permanently decrease to no more than 20 percent of the level of bona fide service performed over the immediately preceding 36-month period of employment (or such lesser time as you have been employed.)

 

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4.                                      Benefits Upon Termination or During Disability.  If a Change in Control is contemplated or has occurred and your employment is terminated, you shall be entitled to the benefits provided in this Section 4 as described below:

 

(i)                                     During any period that you fail to perform your duties as a result of incapacity due to physical or mental illness, and in the event your employment is terminated pursuant to Section 3(i) hereof, your benefits shall be determined in accordance with the Company’s insurance and benefit programs then in effect.

 

(ii)                                  If your employment shall be terminated for Cause, the Company shall pay you your full base salary and accrued leave through the Date of Termination at the rate in effect at the time Notice of Termination is given, and the Company shall have no further obligations to you under this Agreement.

 

(iii)                               If your employment shall be terminated in contemplation of, or any time after, a Change in Control (a) by the Company for any reason other than for Cause or Disability or (b) by you for Good Reason, then you shall be entitled to all the benefits provided below:

 

(A)                               The Company shall pay you on the Date of Termination your full base salary and accrued leave through the Date of Termination at the rate in effect at the time Notice of Termination is given.

 

(B)                               The Company will pay you a pro rata bonus equal to your target bonus for the year of your Termination of Employment multiplied by a fraction the numerator of which is the number of days you were employed in the year of termination and the denominator of which is 365.

 

(C)                               In lieu of any further salary payments to you for periods subsequent to the Date of Termination, the Company shall pay to you, provided you comply with the terms of Section 4(v) below, a lump sum payment equal to two times the sum of (a) the greater of (1) your annual base salary in effect on the Date of Termination, or (2) your annual base salary in effect on the date of the Change in Control and (b) the greater of (1) your target bonus for the year of the Termination of Employment or (2) the average of the two highest actual cash bonuses earned by you for two of the three years immediately prior to the year of your Date of Termination.

 

(D)                               The Company shall also immediately fully vest you in all your account balances under the Company’s retirement, deferred compensation and pension plans (the “Plans”); provided, however, that should the Company be unable to provide for such vesting under the terms of any such Plans, the Company shall pay to you in the manner and as directed by you, an amount that equals on an after-tax basis the value of any amounts that were not vested or would otherwise be forfeited by you under the Plans upon your Termination of Employment with the Company.

 

(E)                                The Company shall also allow you the opportunity to surrender to the Company any then outstanding vested and unvested equity awards in respect of Common Stock of the Company and any of its subsidiaries and affiliates that you own (whether exercisable or not) and

 

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that you did not previously surrender or convert in the transaction that resulted in the Change in Control, and the Company shall promptly pay to you in consideration therefor a cash payment equal to the higher of (a) the highest price paid in connection with the transaction that resulted in the Change in Control or (b) the then current fair-market value on the Date of Termination if the equity award has been assumed, less, in each case if applicable, the exercise price for any such equity award.

 

(F)           The Company shall also pay to you all reasonable legal fees and expenses incurred by you as a result of such termination (including all such fees and expenses, if any, incurred in contesting or disputing any such termination or in seeking to obtain or enforce any right or benefit provided by this Agreement) upon presentation to the Company of a reasonably detailed invoice for such expenses, whether or not you have already made payment for such expenses.

 

(G)          For a 24-month period after such termination, the Company shall arrange to provide you with life, disability, accident and health insurance substantially similar to those you were receiving immediately prior to the Notice of Termination, provided, however, that should the Company be unable to provide for any such benefits under the terms of the benefit plans, or by law, the Company shall pay you an amount equal to the premiums the Company would have paid for such benefits under such plans.  The coverage period for purposes of the group health continuation requirements of Section 4980B of the Code shall commence at Termination of Employment.

 

(H)          You shall not be required to mitigate the amount of any payment provided for in this Section 4 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Section 4 be reduced by any compensation earned by you as the result of employment by another employer or by retirement benefits after the Date of Termination, or otherwise.

 

(I)            In addition to all other amounts payable to you under this Section 4, you shall be entitled to receive all benefits payable to you under any of the Company’s plans or agreements relating to retirement benefits.

 

(iv)          If you become entitled to receive compensation or benefits under the terms of Section 4(iii), such compensation or benefits will be reduced by other severance benefits payable to you under any other plan, program, policy or practice of or agreement or other arrangement of the Company.

 

(v)           You will be provided a written release of claims at the time of, or within 10 days following, your Date of Termination.  You will not be eligible to receive any payments provided for in Section 4(iii) (other than payments under Section 4(iii)(A)) unless you first execute the written release of claims within 45 days following the Date of Termination or Change in Control, if later, and you do not revoke such release within the time permitted therein for such revocation. As to payments and benefits which are subject to Section 409A of the Code if the end of the forty-five (45) day review period plus revocation period occurs in a year subsequent to the year in which the Termination of Employment occurs, the payments will be made in the subsequent

 

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year.  Any payments delayed pursuant to this Section 4(v) shall be paid to you in a lump sum, and all remaining payments due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

 

(vi)          Anything in this Agreement to the contrary notwithstanding, if (A) on the date of Termination of Employment with the Company or a subsidiary, any of the Company’s stock is publicly traded on an established securities market or otherwise (within the meaning of Section 409A(a)(2)(B)(i) of the Code), (B) if you are determined to be a “specified employee” within the meaning of Section 409A(a)(2)(B) of the Code, (C) the payments exceed the amounts permitted to be paid pursuant to Treasury Regulations Section 1.409A-1(b)(9)(iii) and (D) such delay is required to avoid the imposition of the tax set forth in Section 409A(a)(1) of the Code, as a result of such termination, you would receive any payment that, absent the application of this section, would be subject to interest and additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(2)(B)(i) of the Code, then no such payment shall be payable prior to the date that is the earliest of (1) six months after your termination date, (2) your death or (3) such other date as will cause such payment not to be subject to such interest and additional tax (with a catch-up payment equal to the sum of all amounts that have been delayed to be made as of the date of the initial payment).

 

It is the intention of the parties that payments or benefits payable under this Agreement not be subject to the additional tax imposed pursuant to Section 409A of the Code.  To the extent such potential payments or benefits could become subject to such Section, the parties shall cooperate to amend this Agreement with the goal of giving you the economic benefits described herein in a manner that does not result in such tax being imposed.

 

(vii)         All payments required to be made by the Company hereunder to you shall be subject to the withholding of such amounts relating to Federal, state, local or foreign taxes as the Company reasonably may determine it should withhold pursuant to any applicable law or regulation.

 

(viii)        Notwithstanding any other provision of this Agreement or of any other agreement, contract, or understanding entered into by you with the Company, except an agreement, contract, or understanding hereafter entered into that expressly addresses Section 280G or Section 4999 of the Code (an “Other Agreement”), and notwithstanding any formal or informal employment agreement or other arrangement for the direct or indirect provision of compensation to you (including groups or classes of participants or beneficiaries of which you are a member), whether or not such compensation is deferred, is in cash, or is in the form of a benefit to or for you (a “Benefit Arrangement”), if you are a “disqualified individual,” as defined in Section 280G(c) of the Code (or any successor provision thereto), any right to receive any payment or other benefit under this Agreement shall not become exercisable or vested (A) to the extent that such right to exercise, vesting, payment, or benefit, taking into account all other rights, payments, or benefits to or for you under this Agreement, all Other Agreements, and all Benefit Arrangements, would cause any payment or benefit to you under this Agreement to be considered a “parachute payment” within the meaning of Code Section 280G(b)(2) as then in effect (a “Parachute Payment”) and (B) if, as a result of receiving a Parachute Payment, the aggregate after-tax amounts received by you from the Company under this Agreement, all Other Agreements, and

 

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all Benefit Arrangements would be less than the maximum after-tax amount that could be received by you without causing any such payment or benefit to be considered a Parachute Payment.  In the event that the receipt of any such right to exercise, vesting, payment, or benefit under this Agreement, in conjunction with all other rights, payments, or benefits to or for you under any Other Agreement or any Benefit Arrangement would cause you to be considered to have received a Parachute Payment under this Agreement that would have the effect of decreasing the after-tax amount received by you as described in clause (B) of the preceding sentence, then you shall have the right, in your sole discretion, to designate those rights, payments, or benefits under this Agreement, any Other Agreements, and any Benefit Arrangements that should be reduced or eliminated so as to avoid having the payment or benefit to you under this Agreement be deemed to be a Parachute Payment; provided, however, that to the extent any payment or benefit constitutes deferred compensation under Section 409A, in order to comply with Section 409A, the reduction or elimination will be performed in the following order: (A) reduction of cash payments, (B) reduction of benefits and (C) reduction of payments for equity awards.

 

5.             Successors; Binding Agreement.

 

(i)            The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all its business and/or assets to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement no later than ten days prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle you to compensation from the Company in the same amount and on the same terms as you would be entitled under Section 4(iii), except that for purposes of implementing the foregoing, a date ten days prior to the date on which any such succession becomes effective shall be deemed the Date of Termination.  As used in this Agreement, “the Company” shall mean the Company, as hereinbefore defined and any successor to its business and/or assets that assumes and agrees to perform this Agreement by executing and delivering the agreement provided for in this paragraph 5, by operation of law, or otherwise.

 

(ii)           This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If you should die while any amount would still be payable to you hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or if there is no such designee, to your estate.

 

6.             Notice.  For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by registered mail, return receipt requested, postage prepaid, addressed (i) if to the Company, to Orbital Sciences Corporation, 45101 Warp Drive, Dulles, Virginia 20166, Attn: Secretary of the Company, and (ii) if to you, to the address set forth on the first page of this Agreement, or to such other address as either party may have furnished to the other

 

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in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

 

7.             Miscellaneous.  No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by you and such officer as may be specifically designated by the Board.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement, and this Agreement supersedes all prior agreements between the Company and you with respect to the subject matter herein.  The validity, interpretation, construction and performance of this Agreement shall be governed by the local laws of the Commonwealth of Virginia (regardless of the laws that might otherwise govern under principles of conflicts of law).

 

8.             Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

9.             Arbitration.  Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Washington, D.C. in accordance with the domestic rules of the American Arbitration Association then in effect.  Pending the resolution of such dispute or controversy, the Company will continue to pay you your full base salary in effect when the notice giving rise to the dispute was given and you will continue as a participant in all incentive compensation, stock option, retirement, deferred compensation, pension, life, disability, health and accident plans in which you were participating when the notice giving rise to dispute was given, unless you have already received all benefits payable under Section 4(iii) of this Agreement.  Judgment may be entered on the arbitrator’s award in any court having jurisdiction; provided, however, that you shall be entitled to seek specific performance of your right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

 

10.          Severability.  If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and this Agreement shall be construed and enforced as if such provisions had not been included.

 

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This Agreement is intended to supersede and replace your Amended and Restated Executive Employment Agreement dated November 30, 2007.  Upon execution of this Agreement by both parties hereto, the Executive Employment Agreement shall be terminated and shall cease to be in effect in all respects.

 

If this Agreement correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company.

 

Sincerely,

 

ORBITAL SCIENCES CORPORATION

 

 

/s/ David W. Thompson

 

By:

David W. Thompson

 

 

Chairman, President and Chief Executive Officer

 

 

 

 

 

Agreed to:

 

 

 

 

 

/s/ Garrett E. Pierce

 

Name:

Garrett E. Pierce

 

 

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Exhibit 10.4

 

Amended and Restated

Executive Change in Control Severance Agreement

 

December 14, 2012

 

Mr. Hollis M. Thompson
1233 Tottenham Court

Reston, Virginia 20194

 

Dear Hollis:

 

Orbital Sciences Corporation and its subsidiaries (together, the “Company”) consider the maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company and its stockholders.  In this connection, the Company recognizes that the possibility of a change in control may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders.  Accordingly, the Company’s Board of Directors (the “Board”) has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s management, including yourself, to their assigned duties without distraction in the face of the potentially disturbing circumstances arising from the possibility of a change in control of the Company.

 

This letter agreement (the “Agreement”) sets forth the severance benefits that the Company agrees will be provided to you in the event your employment with the Company terminates following a “Change in Control” (as defined in Section 2 hereof) under the circumstances described below.  This Agreement is not an employment contract nor does it alter your status as an at-will employee of the Company.  No benefit shall be payable under this Agreement except on Termination of your Employment (as defined below) with the Company as a result of a Change in Control (as defined below).

 

1.                                      Term.  This Agreement commences as of the date written above, and shall remain in effect so long as you are employed as an executive officer of the Company, provided, however, that in the event of a Change in Control, this Agreement shall remain in full force and effect for a 24-month period commencing on the date of the Change in Control regardless of whether you remain an executive officer of the Company during such 24-month period.

 

2.                                      Change in Control.  For purposes of this Agreement, a Change in Control shall mean:

 

(a)                                 The acquisition by any individual, entity or group (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of 30% or more of either (i) the then outstanding shares of common stock of the Company or (ii) the combined

 



 

voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors;

 

(b)                                 Within any 24-month period, the persons who were directors of the Company immediately prior thereto (the “Incumbent Board”) shall cease to constitute a majority of the Board of Directors of the Company or of its successor by merger, consolidation or sale of assets.  For this purpose, the Incumbent Board includes any new director whose (i) election to the Board resulted from a vacancy caused by the retirement, death or disability of a director and was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period, or (ii) nomination to the Board was approved by a committee of the Board whose majority consisted of directors who were directors in office at the beginning of the period; or

 

(c)                                  The consummation by the Company of (i) a reorganization, merger, consolidation or similar extraordinary event (each, a “Business Combination”), the result of which is that (A) the stockholders of the Company immediately prior to the execution of the agreement to effect the Business Combination will not beneficially own, immediately after the reorganization, merger, consolidation or other similar extraordinary event, securities entitling such stockholders to vote more than 60% of the total equity of the surviving or resulting entity entitled to vote generally in the election of directors, (B) a Person (excluding any corporation resulting from the Business Combination) becomes the beneficial owner of 30% or more of the then outstanding shares of common stock of the corporation resulting from such Business Combination or (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were not members of the Board of Directors of the Company at the time of execution of the initial agreement or other action of the Board that provided for such Business Combination, or (ii) a sale or disposition of all or substantially all of the assets of the Company..

 

Notwithstanding the above, a Change in Control shall not be deemed to occur as a result of a transaction where either you, individually or as an officer, director or 5% stockholder or partner of any entity, or any employee benefit plan (or related trust) of the Company (a) becomes the beneficial owner of securities representing 30% or more of the combined voting power of the Company’s then outstanding securities, or (b) enters into an agreement with the Company providing for the merger, consolidation, or sale or transfer of all or substantially all the assets of the Company.  In addition, a Change in Control shall not be deemed to occur where you enter into an employment agreement with the Company, any Person whose acquisition of the Company’s securities resulted in the Change in Control or any entity resulting from a Business Combination.

 

3.                                      Termination; Notice Requirements

 

(i)                                     Disability.  If, as a result of your incapacity due to physical or mental illness, you shall have been absent from your duties with the Company on a full-time basis for nine (9) consecutive months, and within 30 days after written notice of termination is given you shall not have returned to the full-time performance of your duties, the Company may terminate your employment for “Disability.”

 

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(ii)                                  Cause.  Termination by the Company of your employment for “Cause” shall mean termination on (A) the willful and continued failure by you to substantially perform your duties with the Company in accordance with the instructions of the Board or the executive officers to whom you report (other than any such failure resulting from your incapacity due to physical or mental illness), after a demand for substantial performance is delivered to you by the Board which specifically identifies the manner in which the Board believes that you have not substantially performed your duties, (B) the willful engaging by you in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise, (C) your embezzlement or misappropriation of funds or property of the Company, (D) your conviction of a felony or the entrance of a plea of guilty or nolo contendere to a felony, or (E) your conviction of any crime involving fraud, dishonesty, moral turpitude or breach of trust or your entrance of a plea of guilty or nolo contendere to such a crime.  For purposes of this Subsection, no act, or failure to act, on your part shall be considered “willful” unless done, or omitted to be done, by you not in good faith and without reasonable belief that your action or omission was in the best interest of the Company.  Notwithstanding the foregoing, you shall not be deemed to have been terminated for Cause pursuant to clause (A), (B) or (C) of the first sentence of this Subsection unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than two-thirds of the entire membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board you were guilty of conduct set forth above in clause (A), (B)  or (C) of the first sentence of this Subsection and specifying the particulars thereof in detail.

 

(iii)                               Good Reason.  You shall be entitled to terminate your employment for Good Reason in connection with a Change in Control.  For purposes of this Agreement, “Good Reason” shall mean:

 

(A)                               without your written consent, the assignment to you of any position (including status, offices, titles and reporting requirements), authorities, duties and responsibilities, that are a material adverse change from the most significant of those held or exercised by you or assigned to you at any time during the 180-day period immediately preceding a Change in Control, or any other action by the Company that results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and that is remedied by the Company promptly after receipt of notice thereof given by you;

 

(B)                               a material reduction by the Company in your annual base salary, which for the purposes of this Subsection shall mean an amount at least equal to 12 times the highest monthly base salary paid or payable, including any base salary that has been earned but deferred, to you by the Company in respect of the 12-month period immediately preceding the month in which the Change in Control occurs;

 

(C)                               the Company’s requiring you to be based anywhere other than the office of the Company in which you are based prior to the Change in Control or any office or location within a 50 mile radius of such office, except for required travel on the Company’s business to an extent substantially consistent with your present business travel obligations;

 

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(D)                               a material adverse change in the value of any material compensation plan or plans in which you participate, including any compensation plans after the date of this Agreement; including but not limited to any stock purchase plan, stock option plan, stock incentive plan, incentive compensation, bonus, and other plan in which you were participating at the time of the Change in Control, or the failure by the Company to continue your participation therein;

 

(E)                                a material adverse change in the benefits enjoyed by you under any of the Company’s retirement, pension, 401(k), deferred compensation, life insurance, medical, health, accident, disability or other material benefit plans in which you were participating at the time of a Change in Control, the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits enjoyed by you at the time of the Change in Control, or with a material reduction in the number of paid vacation days to which you are entitled in accordance with the Company’s normal vacation policy in effect at the time of the Change in Control; or

 

(F)                                 the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement as contemplated in Section 5 hereof.

 

In order to constitute Good Reason, (i) you must provide notice to the Company of the existence of the condition within ninety (90) days of the initial existence, (ii) the Company must fail to remedy the condition within thirty (30) days of such notice, and (iii) you must actually terminate your employment within 90 days of the expiration of the Company’s thirty (30) days cure period if the Company has not cured the condition constituting Good Reason.

 

(iv)                              Notice of Termination.  Any termination by the Company or by you shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 6 hereof, and if by the Company for Cause, shall not be effective unless such notice includes the information set forth in Section 3(ii) hereof.

 

(v)                                 Date of Termination.  “Date of Termination” shall mean (A) if your employment is terminated by reason of death or Disability, the date of your death or 30 days after Notice of Termination is given (provided that you shall not have returned to the performance of your duties on a full-time basis during such 30 day period), as the case may be, (B) if your employment is terminated by the Company for Cause, immediately upon delivery of the Notice of Termination that complies with the requirements of Section 3(ii), (C) if your employment is terminated by the Company for any other reason, the date specified in the Notice of Termination which shall not be less than 30 days from the date such Notice of Termination is given, and (D) if you terminate your employment for “Good Reason,” the date such Notice of Termination is given or any later date specified therein.

 

(vi)                              Termination of Employment.  “Termination of Employment” shall mean that you and the Company anticipate that no further services would be performed after a certain date (as an employee) or that the level of bona fide services that you would perform after such date (as an employee) would permanently decrease to no more than 20 percent of the level of bona fide service performed over the immediately preceding 36-month period of employment (or such lesser time as you have been employed.)

 

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4.                                      Benefits Upon Termination or During Disability.  If a Change in Control is contemplated or has occurred and your employment is terminated, you shall be entitled to the benefits provided in this Section 4 as described below:

 

(i)                                     During any period that you fail to perform your duties as a result of incapacity due to physical or mental illness, and in the event your employment is terminated pursuant to Section 3(i) hereof, your benefits shall be determined in accordance with the Company’s insurance and benefit programs then in effect.

 

(ii)                                  If your employment shall be terminated for Cause, the Company shall pay you your full base salary and accrued leave through the Date of Termination at the rate in effect at the time Notice of Termination is given, and the Company shall have no further obligations to you under this Agreement.

 

(iii)                               If your employment shall be terminated in contemplation of, or any time after, a Change in Control (a) by the Company for any reason other than for Cause or Disability or (b) by you for Good Reason, then you shall be entitled to all the benefits provided below:

 

(A)                               The Company shall pay you on the Date of Termination your full base salary and accrued leave through the Date of Termination at the rate in effect at the time Notice of Termination is given.

 

(B)                               The Company will pay you a pro rata bonus equal to your target bonus for the year of your Termination of Employment multiplied by a fraction the numerator of which is the number of days you were employed in the year of termination and the denominator of which is 365.

 

(C)                               In lieu of any further salary payments to you for periods subsequent to the Date of Termination, the Company shall pay to you, provided you comply with the terms of Section 4(v) below, a lump sum payment equal to two times the sum of (a) the greater of (1) your annual base salary in effect on the Date of Termination, or (2) your annual base salary in effect on the date of the Change in Control and (b) the greater of (1) your target bonus for the year of the Termination of Employment or (2) the average of the two highest actual cash bonuses earned by you for two of the three years immediately prior to the year of your Date of Termination.

 

(D)                               The Company shall also immediately fully vest you in all your account balances under the Company’s retirement, deferred compensation and pension plans (the “Plans”); provided, however, that should the Company be unable to provide for such vesting under the terms of any such Plans, the Company shall pay to you in the manner and as directed by you, an amount that equals on an after-tax basis the value of any amounts that were not vested or would otherwise be forfeited by you under the Plans upon your Termination of Employment with the Company.

 

(E)                                The Company shall also allow you the opportunity to surrender to the Company any then outstanding vested and unvested equity awards in respect of Common Stock of the Company and any of its subsidiaries and affiliates that you own (whether exercisable or not) and

 

5



 

that you did not previously surrender or convert in the transaction that resulted in the Change in Control, and the Company shall promptly pay to you in consideration therefor a cash payment equal to the higher of (a) the highest price paid in connection with the transaction that resulted in the Change in Control or (b) the then current fair-market value on the Date of Termination if the equity award has been assumed, less, in each case if applicable, the exercise price for any such equity award.

 

(F)                                 The Company shall also pay to you all reasonable legal fees and expenses incurred by you as a result of such termination (including all such fees and expenses, if any, incurred in contesting or disputing any such termination or in seeking to obtain or enforce any right or benefit provided by this Agreement) upon presentation to the Company of a reasonably detailed invoice for such expenses, whether or not you have already made payment for such expenses.

 

(G)                               For a 24-month period after such termination, the Company shall arrange to provide you with life, disability, accident and health insurance substantially similar to those you were receiving immediately prior to the Notice of Termination, provided, however, that should the Company be unable to provide for any such benefits under the terms of the benefit plans, or by law, the Company shall pay you an amount equal to the premiums the Company would have paid for such benefits under such plans.  The coverage period for purposes of the group health continuation requirements of Section 4980B of the Code shall commence at Termination of Employment.

 

(H)                              You shall not be required to mitigate the amount of any payment provided for in this Section 4 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Section 4 be reduced by any compensation earned by you as the result of employment by another employer or by retirement benefits after the Date of Termination, or otherwise.

 

(I)                                   In addition to all other amounts payable to you under this Section 4, you shall be entitled to receive all benefits payable to you under any of the Company’s plans or agreements relating to retirement benefits.

 

(iv)                              If you become entitled to receive compensation or benefits under the terms of Section 4(iii), such compensation or benefits will be reduced by other severance benefits payable to you under any other plan, program, policy or practice of or agreement or other arrangement of the Company.

 

(v)                                 You will be provided a written release of claims at the time of, or within 10 days following, your Date of Termination.  You will not be eligible to receive any payments provided for in Section 4(iii) (other than payments under Section 4(iii)(A)) unless you first execute the written release of claims within 45 days following the Date of Termination or Change in Control, if later, and you do not revoke such release within the time permitted therein for such revocation. As to payments and benefits which are subject to Section 409A of the Code if the end of the forty-five (45) day review period plus revocation period occurs in a year subsequent to the year in which the Termination of Employment occurs, the payments will be made in the subsequent

 

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year.  Any payments delayed pursuant to this Section 4(v) shall be paid to you in a lump sum, and all remaining payments due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

 

(vi)                              Anything in this Agreement to the contrary notwithstanding, if (A) on the date of Termination of Employment with the Company or a subsidiary, any of the Company’s stock is publicly traded on an established securities market or otherwise (within the meaning of Section 409A(a)(2)(B)(i) of the Code), (B) if you are determined to be a “specified employee” within the meaning of Section 409A(a)(2)(B) of the Code, (C) the payments exceed the amounts permitted to be paid pursuant to Treasury Regulations Section 1.409A-1(b)(9)(iii) and (D) such delay is required to avoid the imposition of the tax set forth in Section 409A(a)(1) of the Code, as a result of such termination, you would receive any payment that, absent the application of this section, would be subject to interest and additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(2)(B)(i) of the Code, then no such payment shall be payable prior to the date that is the earliest of (1) six months after your termination date, (2) your death or (3) such other date as will cause such payment not to be subject to such interest and additional tax (with a catch-up payment equal to the sum of all amounts that have been delayed to be made as of the date of the initial payment).

 

It is the intention of the parties that payments or benefits payable under this Agreement not be subject to the additional tax imposed pursuant to Section 409A of the Code.  To the extent such potential payments or benefits could become subject to such Section, the parties shall cooperate to amend this Agreement with the goal of giving you the economic benefits described herein in a manner that does not result in such tax being imposed.

 

(vii)                           All payments required to be made by the Company hereunder to you shall be subject to the withholding of such amounts relating to Federal, state, local or foreign taxes as the Company reasonably may determine it should withhold pursuant to any applicable law or regulation.

 

(viii)                        Notwithstanding any other provision of this Agreement or of any other agreement, contract, or understanding entered into by you with the Company, except an agreement, contract, or understanding hereafter entered into that expressly addresses Section 280G or Section 4999 of the Code (an “Other Agreement”), and notwithstanding any formal or informal employment agreement or other arrangement for the direct or indirect provision of compensation to you (including groups or classes of participants or beneficiaries of which you are a member), whether or not such compensation is deferred, is in cash, or is in the form of a benefit to or for you (a “Benefit Arrangement”), if you are a “disqualified individual,” as defined in Section 280G(c) of the Code (or any successor provision thereto), any right to receive any payment or other benefit under this Agreement shall not become exercisable or vested (A) to the extent that such right to exercise, vesting, payment, or benefit, taking into account all other rights, payments, or benefits to or for you under this Agreement, all Other Agreements, and all Benefit Arrangements, would cause any payment or benefit to you under this Agreement to be considered a “parachute payment” within the meaning of Code Section 280G(b)(2) as then in effect (a “Parachute Payment”) and (B) if, as a result of receiving a Parachute Payment, the aggregate after-tax amounts received by you from the Company under this Agreement, all Other Agreements, and

 

7



 

all Benefit Arrangements would be less than the maximum after-tax amount that could be received by you without causing any such payment or benefit to be considered a Parachute Payment.  In the event that the receipt of any such right to exercise, vesting, payment, or benefit under this Agreement, in conjunction with all other rights, payments, or benefits to or for you under any Other Agreement or any Benefit Arrangement would cause you to be considered to have received a Parachute Payment under this Agreement that would have the effect of decreasing the after-tax amount received by you as described in clause (B) of the preceding sentence, then you shall have the right, in your sole discretion, to designate those rights, payments, or benefits under this Agreement, any Other Agreements, and any Benefit Arrangements that should be reduced or eliminated so as to avoid having the payment or benefit to you under this Agreement be deemed to be a Parachute Payment; provided, however, that to the extent any payment or benefit constitutes deferred compensation under Section 409A, in order to comply with Section 409A, the reduction or elimination will be performed in the following order: (A) reduction of cash payments, (B) reduction of benefits and (C) reduction of payments for equity awards.

 

5.                                      Successors; Binding Agreement.

 

(i)                                     The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all its business and/or assets to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement no later than ten days prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle you to compensation from the Company in the same amount and on the same terms as you would be entitled under Section 4(iii), except that for purposes of implementing the foregoing, a date ten days prior to the date on which any such succession becomes effective shall be deemed the Date of Termination.  As used in this Agreement, “the Company” shall mean the Company, as hereinbefore defined and any successor to its business and/or assets that assumes and agrees to perform this Agreement by executing and delivering the agreement provided for in this paragraph 5, by operation of law, or otherwise.

 

(ii)                                  This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If you should die while any amount would still be payable to you hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or if there is no such designee, to your estate.

 

6.                                      Notice.  For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by registered mail, return receipt requested, postage prepaid, addressed (i) if to the Company, to Orbital Sciences Corporation, 45101 Warp Drive, Dulles, Virginia 20166, Attn: Secretary of the Company, and (ii) if to you, to the address set forth on the first page of this Agreement, or to such other address as either party may have furnished to the other

 

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in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

 

7.                                      Miscellaneous.  No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by you and such officer as may be specifically designated by the Board.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement, and this Agreement supersedes all prior agreements between the Company and you with respect to the subject matter herein.  The validity, interpretation, construction and performance of this Agreement shall be governed by the local laws of the Commonwealth of Virginia (regardless of the laws that might otherwise govern under principles of conflicts of law).

 

8.                                      Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

9.                                      Arbitration.  Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Washington, D.C. in accordance with the domestic rules of the American Arbitration Association then in effect.  Pending the resolution of such dispute or controversy, the Company will continue to pay you your full base salary in effect when the notice giving rise to the dispute was given and you will continue as a participant in all incentive compensation, stock option, retirement, deferred compensation, pension, life, disability, health and accident plans in which you were participating when the notice giving rise to dispute was given, unless you have already received all benefits payable under Section 4(iii) of this Agreement.  Judgment may be entered on the arbitrator’s award in any court having jurisdiction; provided, however, that you shall be entitled to seek specific performance of your right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

 

10.                               Severability.  If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and this Agreement shall be construed and enforced as if such provisions had not been included.

 

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This Agreement is intended to supersede and replace your Executive Employment Agreement dated November 30, 2007.  Upon execution of this Agreement by both parties hereto, the Executive Employment Agreement shall be terminated and shall cease to be in effect in all respects.

 

If this Agreement correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company.

 

Sincerely,

 

ORBITAL SCIENCES CORPORATION

 

 

 

 

 

/s/ David W. Thompson

 

By:

David W. Thompson

 

 

Chairman, President and Chief Executive Officer

 

 

 

Agreed to:

 

 

 

/s/ Hollis M. Thompson

 

Name: Hollis M. Thompson

 

 

10




Exhibit 10.5

 

EXECUTIVE SEVERANCE AGREEMENT

 

November 30, 2007

 

Mr. Garrett E. Pierce
43468 Castle Harbour Terrace
Leesburg, Virginia 20176

 

Dear Garrett:

 

On August 9, 2000, you and Orbital Sciences Corporation and its subsidiaries (together, the “Company”) entered into an executive employment agreement (the “Original Severance Agreement”) that outlined your rights and the Company’s obligations regarding severance in the event your employment is terminated in a situation that was not related to a change in control. On July 19, 2002, you and the Company entered into a Supplemental Employment Agreement that set forth certain compensation terms.

 

This letter agreement (the “Agreement”) amends and restates your Original Severance Agreement to, among other things, consolidate provisions of the July 19, 2002 agreement, to the extent still applicable. This Agreement sets forth the severance benefits that the Company agrees will be provided to you in the event your employment with the Company terminates under the circumstances described below. This Agreement is not an employment contract nor does it alter your status as an at-will employee of the Company.

 

1.                                      Term. The Agreement commenced as of August 9, 2000, and shall remain in effect so long as you are employed as an executive officer of the Company.

 

2.                                      Title. Your title shall be Vice Chairman and Chief Financial Officer, reporting to the Chief Executive Officer.

 

3.                                      Relationship to Executive Employment Change in Control Agreement. This Agreement shall govern the severance benefits you shall receive from the Company in the event your employment is terminated, except in the event your employment is terminated in anticipation of or within two years following a “Change in Control” as that term is defined in your Executive Change in Control Severance Agreement, in which case your Executive Change in Control Severance Agreement shall govern.

 

4.                                      Termination. You shall be entitled to the benefits provided in Section 5 of this Agreement if your employment is terminated by the Company for Disability or Cause, as described below, or by the Company for any reasons other than Cause or Disability, or by you for Good Reason, as described below.

 

(i)                                     Disability. If, as a result of your incapacity due to physical or mental illness, you shall have been absent from your duties with the Company on a full-time basis for nine (9) consecutive months, and within 30 days after written notice of termination is given you

 



 

shall not have returned to the full-time performance of your duties, the Company may terminate your employment for “Disability.”

 

(ii)                                  Cause. Termination by the Company of your employment for “Cause” shall mean termination on (A) the willful gross neglect of your duties with the Company as such duties are determined by the Board or the executive officers to whom you report (other than any such failure resulting from your incapacity due to physical or mental illness), after a demand for substantial performance is delivered to you by the Board which specifically identifies the manner in which the Board believes that you have substantially neglected your duties, or (B) the willful engaging by you in gross misconduct which is demonstrably and materially injurious to the Company, monetarily or otherwise. For purposes of this Subsection, no act, or failure to act, on your part shall be considered “willful” unless done, or omitted to be done, by you not in good faith and without reasonable belief that your action or omission was in the best interest of the Company. Notwithstanding the foregoing, you shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than two-thirds of the entire membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board you were guilty of conduct set forth above in clause (A) or (B) of the first sentence of this Subsection and specifying the particulars thereof in detail.

 

(iii)                               Good Reason. You shall be entitled to terminate your employment for Good Reason. For purposes of this Agreement, “Good Reason” shall mean:

 

(A)                               without your written consent, the assignment to you of any position (including status, offices, titles and reporting requirements), authorities, duties and responsibilities, that are a material adverse change from the most significant of those held or exercised by you or assigned to you at any time during the previous 180-day period, or any other action by the Company that results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and that is remedied by the Company promptly after receipt of notice thereof given by you;

 

(B)                               a failure to nominate, or renominate you to a position on the Board of Directors of the Company;

 

(C)                               a material reduction by the Company in your annual base salary (“Annual Base Salary”), which for the purposes of this Agreement shall mean an amount at least equal to 12 times the highest monthly base salary paid or payable, including any base salary that has been earned but deferred, to you by the Company in respect of the previous 12-month period;

 

(D)                               the Company’s requiring you to be based anywhere other than the office of the Company in which you are based in the previous 180-day period or any office or location within a 50 mile radius of such office, except for required travel on the Company’s business to an extent substantially consistent with your business travel obligations within the previous 180-day period;

 



 

(E)                                a material adverse change in the value of any material compensation plan or plans in which you participate, or to provide you with plans substantially similar, including but not limited to any stock purchase plan, stock option plan, stock incentive plan, incentive compensation, bonus, and other plan in which you were participating in the previous 180-day period, or the failure by the Company to continue your participation therein;

 

(F)                                 a material adverse change in the benefits enjoyed by you under any of the Company’s retirement, pension, 401(k), deferred compensation, life insurance, medical, health, accident, disability or other material benefit plans in which you were participating in the previous 180-day period, the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits enjoyed by you in the previous 180-day period, or a material reduction in the number of paid vacation days to which you are entitled in accordance with the Company’s normal vacation policy in effect in the previous 180-day period;

 

(G)                               the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement, as contemplated in Section 6 hereof.

 

In order to constitute Good Reason, you must provide notice to the Company of the existence of the condition within ninety (90) days of the initial existence and the Company must fail to remedy the condition within thirty (30) days of such notice.

 

(iv)                              Notice of Termination. Any termination by the Company or by you shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 7 hereof, and if by the Company for Cause, shall not be effective unless such notice includes the information set forth in Section 4(ii) hereof.

 

(v)                                 Date of Termination, etc. “Date of Termination” shall mean (A) if your employment is terminated by reason of death or Disability, the date of your death or 30 days after Notice of Termination is given (provided that you shall not have returned to the performance of your duties on a full-time basis during such 30 day period), as the case may be, (B) if your employment is terminated by the Company for Cause, immediately upon delivery of the notice of Termination that complies with the requirements of Section 4(ii), (C) if your employment is terminated by the Company for any other reason, the date specified in the Notice of Termination which shall not be less than 30 days from the date such Notice of Termination is given, and (D) if you terminate your employment for “Good Reason,” the date such Notice of Termination is given or any later date specified therein.

 

5.                                      Benefits Upon Termination or During Disability.

 

(i)                                     During any period that you fail to perform your duties hereunder as a result of incapacity due to physical or mental illness, and in the event your employment is terminated pursuant to Section 4(i) hereof, your benefits shall be determined in accordance with the Company’s insurance and benefit programs then in effect. Your equity grants shall continue to vest as scheduled for a 24-month period following your termination, and your stock options shall remain exercisable for the rest of the originally scheduled term.

 

(ii)                                  If your employment shall be terminated for Cause or by you without Good Reason, the Company shall pay you your full base salary through the Date of Termination at the rate in effect at the time Notice of Termination is given, as well as any accrued but unpaid

 



 

amounts. You shall have 60 days to exercise your vested options and your unvested equity grants shall be forfeited. The Company shall have no further obligations to you under this Agreement.

 

(iii)                               If your employment shall be terminated (a) by the Company for any reason other than for Cause or Disability or (b) by you for Good Reason, then you shall be entitled to all the benefits provided below:

 

(A)                               The Company shall pay you on the Date of Termination your full base salary and accrued leave through the Date of Termination at the rate in effect at the time Notice of Termination is given.

 

(B)                               In lieu of any further salary payments to you for periods subsequent to the Date of Termination, the Company shall pay to you, not later than 15 days following the Date of Termination, a lump sum payment equal to two times the sum of (i) your Annual Base Salary and (ii) the higher of (x) the sum of any incentive, annual and other cash bonuses, paid or payable to you for the 12-month period immediately preceding the month of your termination or (y) the target bonus for the year of termination, based on 80% of your Annual Base Salary.

 

(C)                               The Company shall also pay to you all reasonable legal fees and expenses incurred by you as a result of such termination (including all such fees and expenses, if any, incurred in contesting or disputing any such termination or in seeking to obtain or enforce any right or benefit provided by this Agreement) upon presentation to the Company of a reasonably detailed invoice for such expenses, whether or not you have already made payment for such expenses.

 

(D)                               For a 24-month period after such termination, the Company shall arrange to provide you with life, disability, accident and health insurance benefits substantially similar to those you were receiving immediately prior to the Notice of Termination, provided, however, that should the Company be unable to provide for any such benefits under the terms of the benefit plans, or by law, the Company shall pay you an amount equal to the premiums the Company would have paid for such benefits under such plans. The coverage period for purposes of the group health continuation requirements of Section 4980B of the Internal Revenue Code (the “Code”) shall commence at Termination of Employment.

 

(E)                                Your outstanding equity grants shall continue to vest as scheduled for a 24-month period following your termination and all vested stock options shall remain exercisable for the rest of their originally scheduled terms.

 

(F)                                 You shall not be required to mitigate the amount of any payment provided for in this Section 5 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Section 5 be reduced by any compensation earned by you as the result of employment by another employer or by retirement benefits after the Date of Termination, or otherwise.

 

(G)                               In addition to all other amounts payable to you under this Section 5, you shall be entitled to receive all benefits payable to you under any of the Company’s plans or agreements relating to retirement benefits.

 



 

(iv)                              Anything in this Agreement to the contrary notwithstanding, if (A) on the Date of Termination of Employment with the Company or a subsidiary, any of the Company’s stock is publicly traded on an established securities market or otherwise (within the meaning of Section 409A(a)(2)(B)(i) of the Code), (B) if you are determined to be a “specified employee” within the meaning of Section 409A(a)(2)(B) of the Code, (C) the payments exceed the amounts permitted to be paid pursuant to Treasury Regulations Section 1.409A-1(b)(9)(iii) and (D) such delay is required to avoid the imposition of the tax set forth in Section 409A(a)(1) of the Code, as a result of such termination, you would receive any payment that, absent the application of this section, would be subject to interest and additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(2)(B)(i) of the Code, then no such payment shall be payable prior to the date that is the earliest of (1) six months after your Date of Termination, (2) your death or (3) such other date as will cause such payment not to be subject to such interest and additional tax (with a catch-up payment equal to the sum of all amounts that have been delayed to be made as of the date of the initial payment).

 

It is the intention of the parties that payments or benefits payable under this Agreement not be subject to the additional tax imposed pursuant to Section 409A of the Code. To the extent such potential payments or benefits could become subject to such Section, the parties shall cooperate to amend this Agreement with the goal of giving you the economic benefits described herein in a manner that does not result in such tax being imposed.

 

(v)                                 All payments required to be made by the Company hereunder to you shall be subject to the withholding of such amounts relating to Federal, state, local or foreign taxes as the Company reasonably may determine it should withhold pursuant to any applicable law or regulation.

 

6.                                      Successors; Binding Agreement.

 

(i)                                     The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all its business and/or assets to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. Failure of the Company to obtain such assumption and agreement no later than ten days prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle you to compensation from the Company in the same amount and on the same terms as you would be entitled under section 5(iii), except that for purposes of implementing the foregoing, a date ten days prior to the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, “the Company” shall mean the Company, as hereinbefore defined and any successor to its business and/or assets that assumes and agrees to perform this Agreement by executing and delivering the agreement provided for in this paragraph 6, by operation of law, or otherwise.

 

(ii)                                  This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If you should die while any amount would still be payable to you hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or if there is no such designee, to your estate.

 



 

7.                                      Notice. For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by registered mail, return receipt requested, postage prepaid, addressed (i) if to the Company, to Orbital Sciences Corporation, 21839 Atlantic Boulevard, Dulles, Virginia 20166, Attn: Secretary of the Company, and (ii) if to you, to the address set forth on the first page of this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

 

8.                                      Miscellaneous.

 

(i)                                     No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by you and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time or any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement, and this Agreement supersedes all prior agreements between the Company and you with respect to the subject matter herein. The validity, interpretation, construction and performance of this Agreement shall be governed by the local laws of the Commonwealth of Virginia (regardless of the laws that might otherwise govern under principles of conflicts of law).

 

(ii)                                  To the extent any presently existing or future equity grant agreement contains vesting or expiration terms inconsistent with this Agreement, this Agreement shall govern.

 

9.                                      Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

10.                               Arbitration. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Washington, D.C. in accordance with the domestic rules of the American Arbitration Association then in effect. Pending the resolution of such dispute or controversy, the Company will continue to pay you your full base salary in effect when the notice giving rise to the dispute was given and you will continue as a participant in all incentive compensation, stock option, retirement, deferred compensation, pension, life, disability, health and accident plans in which you were participating when the notice giving rise to dispute was given, unless you have already received all benefits payable under Section 5(iii) of this Agreement. Judgment may be entered on the arbitrator’s award in any court having jurisdiction; provided, however, that you shall be entitled to seek specific performance of your right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

 

11.                               Severability. If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and this Agreement shall be construed and enforced as if such provisions had not been included.

 



 

12.                               Termination of Supplemental Employment Agreement. The parties hereto agree that the July 19, 2002 Supplemental Employment Agreement is terminated and no longer in effect.

 

If this Agreement correctly sets forth our agreement on the subject matter hereof, kindly sign and return the Agreement to the Company.

 

Sincerely,

 

ORBITAL SCIENCES CORPORATION

 

 

 

 

 

/s/ David W. Thompson

 

By:

David W. Thompson

 

 

Chairman and Chief Executive Officer

 

 

 

 

 

Agreed to:

 

 

 

 

 

/s/ Garrett E. Pierce

 

Name: Garrett E. Pierce

 

 




Exhibit 99.1

 

GRAPHIC

 

 

News Release

For Immediate Release

 

Contact:

 

Contact:

 

 

 

Media

 

Media/Investors

Amanda Covington

 

Barron Beneski

Phone: 801-779-4625

 

Phone: 703-406-5528

Email: amanda.covington@atk.com

 

Email: beneski.barron@orbital.com

 

 

 

Investors

 

 

Michael Pici

 

 

Phone: 801-779-4614

 

 

Email: michael.pici@atk.com

 

 

 

ATK Completes Tax-Free Spin-Off of Vista Outdoor Inc.

 

ATK and Orbital Sciences Corporation Complete Tax-Free, All-Stock Merger

 

Transactions Create Two Independent, Publicly Traded Companies Committed to Leadership in Outdoor Sports & Recreation and in Aerospace & Defense

 

Arlington, Va. and Dulles, Va., Feb. 9, 2015 — Alliant Techsystems Inc. (“ATK”) (NYSE: ATK) today announced that it has completed the previously announced tax-free spin-off of its Sporting Group business to ATK stockholders as a newly formed company named Vista Outdoor Inc. (“Vista Outdoor”).  Following the spin-off, ATK and Orbital Sciences Corporation (“Orbital” ) (NYSE: ORB) successfully completed the tax-free, all-stock merger of ATK’s Aerospace and Defense Groups with Orbital. Upon consummation of the merger, the combined company’s name was changed to “Orbital ATK, Inc.” (“Orbital ATK”). Today, ATK stockholders received two shares of Vista Outdoor common stock for every share of ATK common stock held on the record date, February 2, 2015. Orbital stockholders received 0.449 shares of Orbital ATK common stock for every one share of Orbital common stock.

 

Vista Outdoor will begin “regular-way” trading under the symbol “VSTO” on the New York Stock Exchange (“NYSE”) on February 10, when markets open. ATK stock will no longer include the value of Vista Outdoor and will begin trading as Orbital ATK under the symbol “OA” on the NYSE at the same time.  Orbital will no longer trade as an independent company after market close today.

 



 

Morgan Stanley and BofA Merrill Lynch served as financial advisors and Cravath, Swaine & Moore LLP acted as legal advisor to ATK and Vista Outdoor in connection with these transactions. Citigroup served as financial advisor and Hogan Lovells US LLP acted as legal advisor to Orbital.

 

Cautionary Statement Regarding Forward-Looking Statements

 

Certain statements in this communication regarding the spin-off and any other statements regarding Orbital ATK’s  and Vista Outdoor’s future expectations, beliefs, plans, objectives, financial conditions, assumptions or future events or performance that are not historical facts are “forward-looking” statements made within the meaning of Section 21E of the Securities Exchange Act of 1934. These statements are often, but not always, made through the use of words or phrases such as “may,” “will,” “expected,” “intend,” “estimate,” “anticipate,” “believe,” “project” or “continue” and similar expressions. All such forward-looking statements involve estimates and assumptions that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results expressed in the statements.

 

Additional information concerning these and other factors can be found in Orbital ATK’s and Vista Outdoor’s filings with the SEC, including ATK’s most recent Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and Vista Outdoor’s registration statement on Form 10 and Current Reports on Form 8-K. Orbital ATK and Vista Outdoor assume no obligation to update or revise publicly the information in this communication, whether as a result of new information, future events or otherwise, except as otherwise required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.

 

About Vista Outdoor

 

Vista Outdoor is a leading global designer, manufacturer and marketer in the growing outdoor sports and recreation markets. The company operates in two segments, Outdoor Products and Shooting Sports, and has more than 30 well-recognized brands that provide consumers with a range of performance-driven, high-quality and innovative products in the ammunition, firearms and outdoor accessories categories. Vista Outdoor products are sold at leading retailers and distributors across North America and worldwide. Vista Outdoor is headquartered in Utah and has manufacturing operations and facilities in 10 U.S. States, Puerto Rico, Mexico and Canada along with international sales and sourcing operations in Mexico, Canada, Europe, Australia, New Zealand and Asia. For news and information visit www.vistaoutdoor.com or follow us on Twitter @VistaOutdoorInc and Facebook www.facebook.com/vistaoutdoor.

 



 

About Orbital ATK

 

Orbital ATK is a global leader in aerospace and defense technologies.  The company designs, builds and delivers space, defense and aviation-related systems for customers around the world, both as a prime contractor and merchant supplier.  Its main products include launch vehicles and related propulsion systems; tactical missiles, subsystems and defense electronics; precision weapons, armament systems and ammunition; satellites and associated space components and services; and composite aerospace structures.  Headquartered in Dulles, Virginia, Orbital ATK employs more than 12,500 people in 20 states across the U.S. and in several international locations.

 

#        #       #

 




Exhibit 99.2

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

On February 9, 2015, Alliant Techsystems Inc. (“ATK”) completed the previously announced spin-off and distribution of its Sporting business (“Sporting”) to Vista Outdoor Inc. (“Vista Outdoor”) and its merger with Orbital Sciences Corporation (“Orbital”) pursuant to its transaction agreement, dated April 28, 2014 (the “closing” or February 9, 2015 as the “closing date”). The combined entity, Orbital ATK, Inc., is referred to herein as “Orbital ATK”.

 

Following the spin-off, Sporting is expected to be reported as discontinued operations by Orbital ATK in accordance with ASC Topic 205, “Presentation of Financial Statements,” beginning with Orbital ATK’s financial statements for the fiscal year ended March 31, 2015.

 

The following unaudited pro forma condensed consolidated financial information (referred to as the “pro forma financial information”) presents the combination of the historical financial statements of ATK and of Orbital, adjusted in each case based on the assumptions and adjustments described in the accompanying notes hereto, to give effect to the transactions, specifically the:

 

Distribution of Sporting:

 

i.                     Sporting spin-off and distribution to Vista Outdoor

 

Merger with Orbital:

 

i.                     Vista Outdoor dividend of $214.4 million paid to ATK immediately following the distribution

ii.                  Redemption of ATK’s outstanding 6.875% Senior Subordinated Notes due 2020, including the make-whole premium totaling $385.1 million, and

iii.               Merger with Orbital

 

The historical financial information was adjusted to give effect to events that are directly attributable to the transactions and factually supportable and, in the case of the statement of income information that are expected to have a continuing impact. The pro forma financial information does not reflect any cost savings or associated costs to achieve such savings from operating efficiencies, synergies or other restructuring that may result from the merger besides those made for the compensation of individuals who will not be employed at Orbital ATK.  In addition, the pro forma financial information does not purport to be indicative of the financial position or operating results of the combined company that would have occurred if the transactions were complete as of the beginning of the periods presented, nor does it purport to project the future financial position or operating results of the combined company.

 

The merger will be accounted for using the acquisition method of accounting, with ATK treated as the accounting acquirer. Under the acquisition method, the total consideration paid by the acquirer is allocated to the underlying tangible and intangible assets acquired and liabilities assumed based on their fair values, with any excess purchase price allocated to goodwill. As of the date hereof, the purchase price allocation is preliminary. The final purchase price allocation may be different than that reflected in the pro forma purchase price allocation, and any differences may be material.

 

The unaudited pro forma condensed consolidated financial information should be read in conjunction with the following:

 

·                  separate historical audited financial statements of ATK as of and for the fiscal year ended March 31, 2014 and the related notes included in ATK’s Annual Report on Form 10-K for such period;

·                  separate historical unaudited financial statements of ATK as of and for the nine month period ended December 28, 2014 and the related notes included in ATK’s Quarterly Report on Form 10-Q for such period;

 



 

·                  separate historical audited financial statements of Orbital as of and for the year ended December 31, 2013 and the related notes thereto, included in Orbital’s Annual Report on Form 10-K for such period; and

·                  separate historical unaudited financial statements of Orbital as of and for the nine month period ended September 30, 2014 and the related notes included in Orbital’s Quarterly Report on Form 10-Q for such period.

 

2



 

ORBITAL ATK, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

December 28, 2014

(dollars in thousands)

 

 

 

ATK
(As
Reported)

 

Distribution
of Sporting
Group

 

Distribution
Pro Forma
Adjustments

 

ATK
Pro Forma

 

Orbital
September
30, 2014
(As Reported)

 

Merger
Pro Forma
Adjustments

 

Orbital ATK
Pro Forma
Consolidated

 

 

 

A

 

B

 

C

 

D=A+B+C

 

E

 

F

 

G=D+E+F

 

 

 

 

 

(a)

 

(b)

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

112,920

 

$

(65,766

)

$

 

$

47,154

 

$

427,498

 

$

(301,132

)(c)

$

173,520

 

Net receivables

 

1,711,654

 

(359,592

)

 

1,352,062

 

486,812

 

 

1,838,874

 

Net inventories

 

552,390

 

(418,149

)

 

134,241

 

60,328

 

 

194,569

 

Income taxes

 

33,233

 

 

4,155

 

37,388

 

453

 

 

37,841

 

Deferred income taxes

 

97,855

 

(48,856

)

 

48,999

 

34,391

 

 

83,390

 

Other current assets

 

81,400

 

(9,869

)

 

71,531

 

23,244

 

 

94,775

 

Total current assets

 

2,589,452

 

(902,232

)

4,155

 

1,691,375

 

1,032,726

 

(301,132

)

2,422,969

 

Net property, plant, and equipment

 

692,992

 

(184,409

)

 

508,583

 

231,921

 

 

740,504

 

Goodwill

 

1,883,711

 

(840,248

)

 

1,043,463

 

71,260

 

600,785

(d)

1,715,508

 

Net intangibles

 

537,168

 

(529,020

)

 

8,148

 

3,905

 

396,095

(e)

408,148

 

Deferred income taxes

 

 

 

70,611

 

70,611

 

 

(70,611

)(h)

 

Deferred charges and other noncurrent assets

 

116,396

 

(8,246

)

 

108,150

 

9,896

 

(2,155

)(f)

115,891

 

Total assets

 

$

5,819,719

 

$

(2,464,155

)

$

74,766

 

$

3,430,330

 

$

1,349,708

 

$

622,982

 

$

5,403,020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

159,997

 

 

 

$

159,997

 

$

7,500

 

$

14,000

(g)

$

181,497

 

Accounts payable

 

341,697

 

(123,376

)

 

218,321

 

28,474

 

 

246,795

 

Contract advances

 

142,742

 

 

 

142,742

 

55,290

 

 

198,032

 

Compensation

 

100,317

 

(21,352

)

 

78,965

 

45,861

 

 

124,826

 

Income taxes

 

 

(4,155

)

4,155

 

 

 

 

 

Other accrued liabilities

 

315,129

 

(133,105

)

(144

)

181,880

 

172,789

 

 

354,669

 

Total current liabilities

 

1,059,882

 

(281,988

)

4,011

 

781,905

 

309,914

 

14,000

 

1,105,819

 

Long-term debt

 

1,908,503

 

 

 

1,908,503

 

129,375

 

(479,375

)(g)

1,558,503

 

Noncurrent deferred income taxes

 

141,358

 

(211,969

)

70,611

 

 

26,431

 

75,944

(h)

102,375

 

Postretirement and postemployment benefits

 

67,253

 

 

(2,596

)

64,657

 

 

 

64,657

 

Pension

 

464,869

 

 

(25,400

)

439,469

 

 

 

439,469

 

Other long-term liabilities

 

128,707

 

(26,696

)

 

102,011

 

32,158

 

 

134,169

 

Total liabilities

 

3,770,572

 

(520,653

)

46,626

 

3,296,545

 

497,878

 

(389,431

)

3,404,992

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated other comprehensive loss

 

(652,900

)

16,416

 

 

(636,484

)

(1,388

)

1,388

(i)

(636,484

)

Other stockholders’ equity

 

2,691,193

 

(1,959,918

)

28,140

 

759,415

 

853,218

 

1,011,025

(j)

2,623,658

 

Total stockholders’ equity

 

2,038,293

 

(1,943,502

)

28,140

 

122,931

 

851,830

 

1,012,413

 

1,987,174

 

Noncontrolling interest

 

10,854

 

 

 

 

10,854

 

 

 

 

10,854

 

Total equity

 

2,049,147

 

(1,943,502

)

28,140

 

133,785

 

851,830

 

1,012,413

 

1,998,028

 

Total liabilities and equity

 

$

5,819,719

 

$

(2,464,155

)

$

74,766

 

$

3,430,330

 

$

1,349,708

 

$

622,982

 

$

5,403,020

 

 

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

 

3



 

ORBITAL ATK, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

Nine Months Ended December 28, 2014

(dollars and shares in thousands, except per share amounts)

 

 

 

ATK
(As
Reported)

 

Distribution
of Sporting
Group

 

Distribution
Pro Forma
Adjustments

 

ATK
Pro Forma

 

Orbital
Nine Months
Ended
September
30, 2014
(As Reported)

 

Merger
Pro Forma
Adjustments

 

Orbital ATK
Pro Forma
Consolidated

 

 

 

A

 

B

 

C

 

D=A+B+C

 

E

 

F

 

G=D+E+F

 

 

 

 

 

(a)

 

(b)

 

 

 

 

 

 

 

 

 

Sales

 

$

3,800,017

 

$

(1,602,995

)

$

 

$

2,197,022

 

$

979,616

 

$

66,598

(k)

$

3,243,236

 

Cost of sales

 

2,885,513

 

(1,180,052

)

 

1,705,461

 

794,504

 

57,527

(k)

2,557,492

 

Gross profit

 

914,504

 

(422,943

)

 

491,561

 

185,112

 

9,071

 

685,744

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

31,024

 

(7,043

)

 

23,981

 

21,773

 

 

45,754

 

Selling

 

185,366

 

(116,333

)

 

69,033

 

23,624

 

 

92,657

 

General and administrative

 

224,891

 

(75,351

)

15,962

 

165,502

 

68,213

 

6,791

(l)

240,506

 

Goodwill and tradename impairment

 

52,220

 

(52,220

)

 

 

 

 

 

Income before interest, income taxes, and noncontrolling interest

 

421,003

 

(171,996

)

(15,962

)

233,045

 

71,502

 

2,280

 

306,827

 

Interest income (expense), net

 

(68,097

)

 

 

(68,097

)

9,173

 

27,012

(m)

(31,912

)

Income before income taxes and noncontrolling interest

 

352,906

 

(171,996

)

(15,962

)

164,948

 

80,675

 

29,292

 

274,915

 

Income taxes

 

126,262

 

(73,842

)

(5,906

)

46,514

 

29,131

 

10,838

(n)

86,483

 

Net income before noncontrolling interest

 

226,644

 

(98,154

)

(10,056

)

118,434

 

51,544

 

18,454

 

188,432

 

Less net income attributable to noncontrolling interest

 

291

 

 

 

291

 

 

 

291

 

Net income

 

$

226,353

 

$

(98,154

)

$

(10,056

)

$

118,143

 

$

51,544

 

$

18,454

 

$

188,141

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

7.15

 

 

 

 

 

$

3.73

 

$

0.85

 

 

 

$

3.19

 

Diluted

 

$

6.98

 

 

 

 

 

$

3.65

 

$

0.85

 

 

 

$

3.15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

31,676

 

 

 

 

 

31,676

 

60,626

 

 

(o)

58,897

 

Diluted

 

32,410

 

 

 

 

 

32,410

 

60,998

 

 

(o)

59,798

 

 

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

 

4



 

ORBITAL ATK, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

Year Ended March 31, 2014

(dollars and shares in thousands, except per share amounts)

 

 

 

 

ATK
(As
Reported)

 

Distribution
of Sporting
Group

 

Distribution
Pro Forma
Adjustments

 

ATK
Pro Forma

 

Orbital
Year Ended
December 31,
2013
(As Reported)

 

Merger
Pro Forma
Adjustments

 

Orbital ATK
Pro Forma
Consolidated

 

 

 

A

 

B

 

C

 

D=A+B+C

 

E

 

F

 

G=D+E+F

 

 

 

 

 

(a)

 

(b)

 

 

 

 

 

 

 

 

 

Sales

 

$

4,775,128

 

$

(1,862,333

)

$

 

$

2,912,795

 

$

1,365,271

 

$

183,678

(k)

$

4,461,744

 

Cost of sales

 

3,635,486

 

(1,369,989

)

 

2,265,497

 

1,062,466

 

168,920

(k)

3,496,883

 

Gross profit

 

1,139,642

 

(492,344

)

 

647,298

 

302,805

 

14,758

 

964,861

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

62,520

 

(13,984

)

 

48,536

 

89,233

 

 

137,769

 

Selling

 

203,976

 

(116,422

)

 

87,554

 

28,707

 

 

116,261

 

General and administrative

 

282,840

 

(91,238

)

17,649

 

209,251

 

71,320

 

29,151

(l)

309,722

 

Income before interest, income taxes, and noncontrolling interest

 

590,306

 

(270,700

)

(17,649

)

301,957

 

113,545

 

(14,393

)

401,109

 

Interest income (expense), net

 

(79,792

)

 

 

(79,792

)

(9,924

)

28,134

(m)

(61,582

)

Income before income taxes and noncontrolling interest

 

510,514

 

(270,700

)

(17,649

)

222,165

 

103,621

 

13,741

 

339,527

 

Income taxes

 

169,428

 

(100,356

)

(6,530

)

62,542

 

35,255

 

5,084

(n)

102,881

 

Net income before noncontrolling interest

 

341,086

 

(170,344

)

(11,119

)

159,623

 

68,366

 

8,657

 

236,646

 

Less net income attributable to noncontrolling interest

 

171

 

 

 

171

 

 

 

171

 

Net income

 

$

340,915

 

$

(170,344

)

$

(11,119

)

$

159,452

 

$

68,366

 

$

8,657

 

$

236,475

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

10.76

 

 

 

 

 

$

5.03

 

$

1.13

 

 

 

$

4.02

 

Diluted

 

$

10.42

 

 

 

 

 

$

4.87

 

$

1.13

 

 

 

$

3.95

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

31,671

 

 

 

 

 

31,671

 

60,161

 

 

(o)

58,866

 

Diluted

 

32,723

 

 

 

 

 

32,723

 

60,444

 

 

(o)

59,918

 

 

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

 

5



 

ORBITAL ATK, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

Nine Months Ended December 29, 2013

(dollars and shares in thousands, except per share amounts)

 

 

 

ATK
(As Reported)

 

Distribution of
Sporting Group

 

Distribution
Pro Forma
Adjustments

 

ATK
Pro Forma

 

 

 

A

 

B

 

C

 

D=A+B+C

 

 

 

 

 

(a)

 

(b)

 

 

 

Sales

 

$

3,429,526

 

$

(1,303,894

)

$

 

$

2,125,632

 

Cost of sales

 

2,630,919

 

(974,771

)

 

1,656,148

 

Gross profit

 

798,607

 

(329,123

)

 

469,484

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

34,126

 

(6,274

)

 

27,852

 

Selling

 

146,617

 

(78,634

)

 

67,983

 

General and administrative

 

198,003

 

(60,913

)

12,722

 

149,812

 

Income before interest, income taxes, and noncontrolling interest

 

419,861

 

(183,302

)

(12,722

)

223,837

 

Interest income (expense), net

 

(55,750

)

 

 

(55,750

)

Income before income taxes and noncontrolling interest

 

364,111

 

(183,302

)

(12,722

)

168,087

 

Income taxes

 

118,991

 

(67,029

)

(4,707

)

47,255

 

Net income before noncontrolling interest

 

245,120

 

(116,273

)

(8,015

)

120,832

 

Less net income attributable to noncontrolling interest

 

210

 

 

 

210

 

Net income

 

$

244,910

 

$

(116,273

)

$

(8,015

)

$

120,622

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

7.73

 

 

 

 

 

$

3.80

 

Diluted

 

$

7.55

 

 

 

 

 

$

3.72

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

31,701

 

 

 

 

 

31,701

 

Diluted

 

32,418

 

 

 

 

 

32,418

 

 

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

 

6



 

ORBITAL ATK, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

Year Ended March 31, 2013

(Dollars and shares in thousands, except per share amounts)

 

 

 

ATK
(As Reported)

 

Distribution of
Sporting Group

 

Distribution
Pro Forma
Adjustments

 

ATK
Pro Forma

 

 

 

A

 

B

 

C

 

D=A+B+C

 

 

 

 

 

(a)

 

(b)

 

 

 

Sales

 

$

4,362,145

 

$

(1,183,265

)

$

 

$

3,178,880

 

Cost of sales

 

3,421,276

 

(927,215

)

 

2,494,061

 

Gross profit

 

940,869

 

(256,050

)

 

684,819

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

64,678

 

(8,720

)

 

55,958

 

Selling

 

162,359

 

(72,140

)

 

90,219

 

General and administrative

 

244,189

 

(59,546

)

15,925

 

200,568

 

Income before interest, income taxes, and noncontrolling interest

 

469,643

 

(115,644

)

(15,925

)

338,074

 

Interest income (expense), net

 

(65,386

)

 

 

(65,386

)

Loss on extinguishment of debt

 

(11,773

)

 

 

(11,773

)

Income before income taxes and noncontrolling interest

 

392,484

 

(115,644

)

(15,925

)

260,915

 

Income taxes

 

120,243

 

(40,605

)

(5,892

)

73,746

 

Net income before noncontrolling interest

 

272,241

 

(75,039

)

(10,033

)

187,169

 

Less net income attributable to noncontrolling interest

 

436

 

 

 

436

 

Net income

 

$

271,805

 

$

(75,039

)

$

(10,033

)

$

186,733

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

8.38

 

 

 

 

 

$

5.76

 

Diluted

 

$

8.34

 

 

 

 

 

$

5.73

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

32,447

 

 

 

 

 

32,447

 

Diluted

 

32,608

 

 

 

 

 

32,608

 

 

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

 

7



 

ORBITAL ATK, INC.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

Year Ended March 31, 2012

(Dollars and shares in thousands, except per share amounts)

 

 

 

ATK
(As Reported)

 

Distribution of
Sporting Group

 

Distribution
Pro Forma
Adjustments

 

ATK
Pro Forma

 

 

 

A

 

B

 

C

 

D=A+B+C

 

 

 

 

 

(a)

 

(b)

 

 

 

Sales

 

$

4,613,399

 

$

(1,023,849

)

$

 

$

3,589,550

 

Cost of sales

 

3,618,503

 

(819,040

)

 

2,799,463

 

Gross profit

 

994,896

 

(204,809

)

 

790,087

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

66,403

 

(7,497

)

 

58,906

 

Selling

 

169,984

 

(63,919

)

 

106,065

 

General and administrative

 

262,923

 

(42,949

)

14,948

 

234,922

 

Income before interest, income taxes, and noncontrolling interest

 

495,586

 

(90,444

)

(14,948

)

390,194

 

Interest income (expense), net

 

(88,620

)

 

 

(88,620

)

Income before income taxes and noncontrolling interest

 

406,966

 

(90,444

)

(14,948

)

301,574

 

Income taxes

 

143,762

 

(30,910

)

(5,531

)

107,321

 

Net income before noncontrolling interest

 

263,204

 

(59,534

)

(9,417

)

194,253

 

Less net income attributable to noncontrolling interest

 

592

 

 

 

592

 

Net income

 

$

262,612

 

$

(59,534

)

$

(9,417

)

$

193,661

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

7.99

 

 

 

 

 

$

5.89

 

Diluted

 

$

7.93

 

 

 

 

 

$

5.85

 

 

 

 

 

 

 

 

 

 

 

Weighted-average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

32,874

 

 

 

 

 

32,874

 

Diluted

 

33,112

 

 

 

 

 

33,112

 

 

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

 

8



 

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Basis of Presentation

 

On April 28, 2014, ATK entered into the transaction agreement with Orbital, Vista Outdoor and Merger Sub. The transaction agreement provides for, among other things, the distribution, immediately followed by the Vista Outdoor dividend to ATK, and the merger of Merger Sub with and into Orbital, with Orbital surviving the merger as a wholly owned subsidiary of ATK. On January 27, 2015, the transaction was approved by ATK stockholders and Orbital stockholders and on February 9, 2015, the spin-off and merger transactions were consummated at which time Sporting ceased to be part of ATK’s continuing operations.

 

The pro forma financial information presents the combination of the historical financial statements of ATK and of Orbital, adjusted in each case based on the assumptions and adjustments described in the accompanying notes hereto, to give effect to the transactions, specifically the:

 

Distribution of Sporting:

 

i.                  Sporting spin-off and distribution to Vista Outdoor

 

Merger with Orbital:

 

i.                  Vista Outdoor dividend of $214.4 million paid to ATK immediately following the distribution

ii.               Redemption of ATK’s outstanding 6.875% Senior Subordinated Notes due 2020, including the make-whole premium totaling $385.1 million, and

iii.            Merger with Orbital

 

ATK and Orbital have different fiscal years. The pro forma balance sheet information as of December 28, 2014 gives effect to the transactions as if they had occurred on that date for ATK and as of September 30, 2014 for Orbital.

 

The pro forma income statement information, for the years ended March 31, 2014, 2013 and 2012 and for the nine months ended December 28, 2014 and December 29, 2013, gives effect to the transactions as if they had occurred on April 1, 2011 for ATK and are presented to reflect the spin-off and distribution of Sporting.

 

Additionally, the pro forma income statement information, for the year ended March 31, 2014 and the nine months ended December 28, 2014, gives effect to the transactions as if they had occurred on April 1, 2013 for ATK and January 1, 2013 for Orbital and reflect the merger of ATK and Orbital. Certain line items in Orbital’s historical financial statements were changed to conform with ATK’s presentation.

 

The merger will be accounted for using the acquisition method of accounting, with ATK treated as the accounting acquirer. Under the acquisition method, the total consideration paid by the acquirer is allocated to the underlying tangible and intangible assets acquired and liabilities assumed based on their fair market value, with any excess purchase price allocated to goodwill. Orbital ATK’s pro forma purchase price allocation is based on estimates of the fair market value of Orbital’s tangible and intangible assets and liabilities as described more fully in the “Pro Forma Allocation of Purchase Price” note below. As of the date hereof, the valuation studies necessary to determine the fair market value of the assets acquired and liabilities assumed, and the related allocations of purchase price have not been completed. A final determination of fair market values will be based on the actual net tangible and intangible assets and liabilities that existed on the closing date. The final purchase price allocation may be different than that reflected in the pro forma purchase price allocation, and any differences may be material.

 

9



 

Pro Forma Allocation of Purchase Price

 

The consideration paid by ATK for Orbital’s identifiable assets and liabilities for the purpose of preparing the pro forma financial information was determined using approximate enterprise value of Orbital at closing, net of cash acquired, and such determination is subject to change upon final analysis. All asset and liabilities are based on Orbital balances as of September 30, 2014 plus estimated intangible assets and related deferred income taxes. The following table shows the pro forma allocation of the consideration paid for Orbital’s identifiable assets and liabilities assumed and the pro forma goodwill generated from the transaction:

 

(dollars in thousands)

 

Purchase Price:

 

 

 

 

 

Consideration paid, net of cash acquired of $290,623

 

 

 

$

1,409,377

 

Total pro forma purchase price

 

 

 

1,409,377

 

Fair value of assets acquired:

 

 

 

 

 

Net receivables

 

$

486,812

 

 

 

Net inventories

 

60,328

 

 

 

Deferred tax assets

 

34,391

 

 

 

Tradename, technology, and customer relationship intangibles

 

400,000

 

 

 

Property, plant, and equipment

 

231,921

 

 

 

Other assets

 

31,438

 

 

 

Total assets

 

1,244,890

 

 

 

Fair value of liabilities assumed:

 

 

 

 

 

Accounts payable

 

28,474

 

 

 

Deferred tax liabilities

 

172,986

 

 

 

Other liabilities

 

306,098

 

 

 

Total liabilities

 

507,558

 

 

 

Net assets acquired

 

 

 

737,332

 

Preliminary pro forma goodwill

 

 

 

$

672,045

 

 

Orbital ATK will engage an independent third party valuation firm to assist management in determining the fair value of Orbital’s assets and liabilities at the time of closing, which could materially change the amount of the estimated fair values used in the pro forma financial information presented. The actual calculation of goodwill will be determined based on facts in existence at the time of the closing and may be materially different than the estimates provided herein.

 

Pro Forma Adjustments and Reclassifications

 

The following pro forma adjustments are reflected in the pro forma financial information. All adjustments are based on current valuations, estimates and assumptions.

 

Distribution of Sporting:

 

(a)         Distribution of Sporting: Eliminates amounts representing the revenues, expenses, assets, liabilities and equity attributable to Sporting, included in ATK’s historical financial statements.

 

(b)         Distribution Pro Forma Adjustments: Eliminates certain general corporate overhead expenses that are not specifically related to the Sporting business and do not meet the requirements to be presented as a

 

10



 

component of discontinued operations. Records pension and other postretirement and postemployment liabilities which transfer with the distribution of Sporting and also reflects reclassifications of ATK income tax balances.

 

Merger with Orbital:

 

(c)          Cash: Records the (1) Vista Outdoor dividend paid to ATK at closing of $214.4 million (2) elimination of Orbital cash equal to its eliminated debt of $136.9 million (3) redemption of ATK 6.875% Senior Subordinated Notes due 2020, including the make-whole premium totaling $385.1 million (4) borrowing on the Revolving Credit Facility of $144.5 million, (5) close-related transaction costs of $15.0 million and (6) the “ATK retained cash amount” (as defined in the transaction agreement), which amount was determined based on the adjusted cash flows from operating and investing activities of the ATK A&D business between April 1, 2014 and the closing date, subject to certain adjustments. The actual “ATK retained cash amount” at closing was a negative $123.0 million.

 

(d)         Goodwill: Existing goodwill of Orbital of $71.3 million was eliminated. As described further in the “Pro Forma Allocation of Purchase Price” note hereto, goodwill of $672.0 million was calculated as the difference between the estimated fair value of the consideration transferred and the values assigned to the identifiable Orbital assets and liabilities, in each case, as of September 28, 2014.

 

(e)          Intangible assets: Existing net identifiable intangible assets of Orbital of $3.9 million were eliminated. As of the date hereof, identifiable intangible assets were measured based on benchmarking total intangible assets of similar transactions. The final identifiable intangible assets will be measured at fair value determined primarily using the “income approach,” which requires a forecast of all expected future cash flows either through the use of the relief-from-royalty method, with or without method, or the multi-period excess earnings method. The estimated fair value of the identifiable intangible assets is approximately $400.0 million and includes tradenames, technologies and contracts with useful lives ranging from 3-20 years and an average useful life of 8 years.

 

(f)           Other assets: Existing deferred financing costs of Orbital of $2.2 million were eliminated in conjunction with the settlement of the outstanding credit facility.

 

(g)          Debt: Existing debt of Orbital was eliminated and the ATK 6.875% Senior Subordinated Notes due 2020 were redeemed.

 

The proceeds of the Vista Outdoor dividend, together with cash on hand, including borrowing under the revolving credit facility were used by ATK to redeem its $350.0 million 6.875% Senior Subordinated Notes due 2020 plus the make-whole premium of $35.1 million.

 

The following table illustrates the portion of the existing debt of ATK repaid at closing, as well as the elimination of all the existing debt of Orbital, also repaid at closing.

 

11



 

(dollars in thousands)

 

Maturity

 

Rate

 

Actual Debt
December 28,
2014

 

Pro Forma
Adjustments

 

Pro Forma
Debt
December 28,
2014

 

Senior Credit Facility:

 

 

 

 

 

 

 

 

 

 

 

Term A Loan

 

5 years

 

LIBOR + 200 bps

 

$

972,125

 

$

 

$

972,125

 

Term A Loan

 

6 years

 

LIBOR + 200 bps

 

148,125

 

 

148,125

 

Term B Loan

 

7 years

 

LIBOR + 300 bps

 

198,250

 

 

198,250

 

Revolving Credit Facility

 

5 years

 

LIBOR + 200 bps

 

100,000

 

21,500

 

121,500

 

6.875% Senior Subordinated Notes

 

7 years

 

6.88%

 

350,000

 

(350,000

)

 

5.25% Senior Unsecured Notes

 

8 years

 

5.25%

 

300,000

 

 

300,000

 

Total ATK debt

 

 

 

 

 

2,068,500

 

(328,500

)

1,740,000

 

Orbital debt

 

 

 

 

 

136,875

 

(136,875

)

 

Total debt

 

 

 

 

 

$

2,205,375

 

$

(465,375

)

$

1,740,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

 

 

 

 

$

167,497

 

$

14,000

 

$

181,497

 

Long-term debt

 

 

 

 

 

2,037,878

 

(479,375

)

1,558,503

 

Total debt

 

 

 

 

 

$

2,205,375

 

$

(465,375

)

$

1,740,000

 

 

(h)         Taxes: Deferred income tax liabilities were recorded as a result of the increase in identified intangible assets described in (e). The increase was based on an assumed federal tax rate of 35% plus a 2% state tax rate resulting in a net increase of $146.6 million, which is netted with a reclassification of ATK noncurrent deferred income tax asset.

 

(i)             AOCI: Existing accumulated other comprehensive income (“AOCI”) of Orbital was eliminated, resulting from the application of accounting standards for business combinations.

 

(j)            Equity: Existing equity of Orbital was eliminated. Pro forma share consideration issued as a result of the purchase, and pro forma cash and debt transactions were recorded. The total adjustments to equity are set forth below:

 

(dollars in thousands)

 

December 28, 2014

 

Orbital equity elimination

 

$

(853,218

)

Orbital acquisition consideration

 

1,409,377

 

Orbital net cash acquired

 

290,623

 

ATK close-related transaction costs

 

(15,000

)

ATK make-whole premium paid

 

(35,140

)

Sporting dividend

 

214,383

 

Pro forma adjustment

 

$

1,011,025

 

 

12



 

(k)         Sales and Cost of Sales: Existing sales and related cost of sales between ATK and Orbital were eliminated.  Sales and related cost of sales from transactions between ATK and Vista Outdoor which were previously eliminated as intercompany sales were recorded, as a result of two supply agreements which pursuant to the terms of the transaction agreement and substantially concurrent with the distribution, were entered into by Orbital ATK and Vista Outdoor.

 

Orbital ATK and Vista Outdoor also entered into the transition services agreement, pursuant to which, Orbital ATK will provide to Vista Outdoor certain services necessary for Vista Outdoor to be able to conduct business as an independent, publicly traded company in exchange for reimbursement of Orbital ATK’s fully burdened costs related thereto. Orbital ATK has not adjusted the pro forma financial information for any of these reimbursements of corporate costs as amounts have not been determined.

 

(l)           Operating expenses: Existing amortization expense of Orbital was eliminated and Orbital ATK amortization expense was recorded, based on the fair value and useful lives of identifiable intangible assets described in (e).  Additionally, costs related to the transactions and compensation costs of certain ATK employees who will not be retained by Orbital ATK were eliminated, as follows:

 

(dollars in thousands)

 

Year Ended
March 31, 2014

 

Nine Months Ended
December 28, 2014

 

Orbital amortization expense elimination

 

$

(700

)

$

(513

)

Orbital ATK amortization expense

 

50,000

 

37,500

 

Orbital and ATK transaction costs elimination

 

(1,111

)

(15,918

)

ATK compensation costs elimination

 

(19,038

)

(14,278

)

Pro forma adjustment

 

$

29,151

 

$

6,791

 

 

(m)     Interest expense: Existing Orbital and ATK interest expense was eliminated in conjunction with the related changes in debt as noted in (g) as follows:

 

(dollars in thousands)

 

Year Ended
March 31, 2014

 

Nine Months Ended
December 28, 2014

 

Orbital interest expense elimination

 

$

(4,556

)

$

(3,292

)

ATK interest expense elimination (1)

 

(23,578

)

(23,720

)

Pro forma adjustment

 

$

(28,134

)

$

(27,012

)

 


(1)         A rate of change of 12.5 basis points on the refinanced variable debt would change annual interest expense by $1,800.

 

(n)         Income taxes: Records the effect of the applicable tax rate on the pro forma adjustments presented in the pro forma income statements. The pro forma adjustments pertain primarily to the U.S. tax jurisdiction, where there is a 35% federal income tax rate, plus a 2% state income tax rate.

 

(o)         Shares issued: Reflects additional shares issued at a rate of 0.449 shares of ATK stock for each weighted-average share of Orbital stock outstanding as of the date of the income statement.

 

13