Ammunition Supply Agreement, dated as of May 5, 2017, among Federal Cartridge Company and Alliant Techsystems Operations LLC

This Ammunition Supply Agreement (“Agreement”) effective as of February 10, 2018 (“Effective Date”) is between Federal Cartridge Company (“Federal”) and Alliant Techsystems Operations LLC (“Orbital ATK”) (each, a “Party” and together, the “Parties”).

WHEREAS, the Parties are parties to that certain Ammunition Products Supply Agreement dated February 9, 2015 (“APSA”);

WHEREAS, the Parties wish to amend the APSA as set forth in a separate addendum (“Addendum 6”), and contemporaneously extend the duration of their supply relationship as set forth in more detail below;

NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the Parties agree as follows:

(“Binding Order”). Subject to the Scheduling provisions (below) and the Limitations, within ten business days of receipt, Orbital ATK shall accept the Binding Order, provided that it complies with applicable provisions of this Agreement. To the extent the Binding Order specifies a total quantity commitment during the Period of less than the Capacity, Orbital ATK shall hold in reserve the difference between the Binding Order total quantity and the Capacity (“Reserve Amount”) until March 30 of the upcoming Period. Federal may place an order for the Reserve Amount, or any portion thereof, at any time on or before March 30 of each Period. To the extent that Federal fails to order the Reserve Amount on or before March 30, Orbital ATK may sell the Reserve Amount, subject to the Guarantee, to any other customer (including the Secondary Tier I Customer). Beginning March 30, 2018, and on or before the last business day of each Quarter thereafter, Federal shall update its Binding Order and Additional Orders with the information in this paragraph for the upcoming two Quarters or the end of the then-current Period, whichever is sooner.

    

the manufacture of the goods supplied hereunder, acts of God, failure of suppliers or subcontractors to satisfactorily meet scheduled deliveries, and acts or regulations or priorities of the Federal, State or local government or branches or agents thereof. A Force Majeure Event shall also include any action by the Government which results in the modification or closure of the Lake City Army Ammunition Plant or modification or termination of the Lake City Government Contract, and Orbital ATK reasonably determines that such modification, closure or termination will cause Orbital ATK to be unable to fulfill any or all of Federal orders for Products. A Force Majeure Event shall also mean a material change in Federal law outlawing or substantially limiting the possession or ownership of Products or firearms compatible with the Products, which change causes a material decline in the commercial market for Products. For the avoidance of doubt, a drop in market demand or price that is not a direct result of the aforementioned change in Federal law, shall not constitute a Force Majeure Event. The party experiencing the Force Majeure Event shall promptly notify the other party in writing providing reasonable detail of the Force Majeure Event and anticipated impact upon the Party’s ability to perform its obligations under this agreement, use its best efforts to resume satisfactory performance as quickly as possible, and shall suspend performance only for such period of time as is necessary. In the event a Force Majeure Event continues for more than seven business days after the initial delaying event, the Parties shall meet to discuss any appropriate extension in the delivery schedule. If the Parties are unable to reach agreement on the impact of the Force Majeure Event upon the Agreement, the matter shall be determined in accordance with the "Dispute Resolution” clause of the Agreement.

This Agreement shall terminate and all rights and duties hereunder, except those in Paragraphs 8 and 11-16, shall cease upon the first to occur of the following:

Federal shall defend, indemnify and hold harmless Orbital ATK (including its parents, subsidiaries and affiliates and the officers, directors and employees of each) against all claims, demands, judgments, damages, costs and other losses (including without limitation reasonable attorneys’ fees) to the extent arising out of or relating to actual or alleged: (i) third party claims alleging Intellectual Property owned by Federal and authorized by Federal for Orbital ATK’s use infringes on a third party’s Intellectual property; and (ii) third party claims related to the negligence of Federal or its employees or agents in the performance of this Agreement, all except to the extent caused by the negligent or otherwise wrongful act or omission of Orbital ATK.

Orbital ATK shall defend, indemnify and hold harmless Federal (including its parents, subsidiaries and affiliates and the officers, directors and employees of each) against all claims, demands, judgments, damages, costs and other losses (including without limitation reasonable attorneys’ fees) to the extent arising out of or relating to actual or alleged: (i) third party claims alleging Intellectual property owned by Orbital ATK and authorized by Orbital ATK for Federal’s use infringes on a third party’s Intellectual property; (ii) third party claims related to the negligence of Orbital ATK or its employees or agents in the performance of this Agreement; and (iii) a third party claim or product recall arising out of a defect in a Product or Pack Configuration, all except to the extent caused by the negligent or otherwise wrongful act or omission of Federal.

The defense, indemnification and hold harmless obligations herein (“Obligations”) are expressly conditioned on the following: (a) that the Indemnifying Party shall be notified in writing promptly of the circumstances giving rise to the Obligations, provided that any delay in notification shall not affect the Obligations unless the delay prejudices the indemnifying party, (b) that the indemnifying party shall have sole control of the defense of any action or claim and of all negotiations for its settlement or compromise to the extent permitted by law; and (c) that the indemnified party shall cooperate with the indemnifying party in a reasonable way to facilitate the settlement or defense of the claim.

UNDER NO CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INDIRECT, COLLATERAL, SPECIAL, PUNITIVE, TREBLE, EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING, BUT NOT LIMITED TO, LOSS OF PROFITS OR GOODWILL), REGARDLESS IF SUCH CLAIM IS BASED ON CONTRACT, NEGLIGENCE, TORT, WARRANTY OR ANY OTHER BASIS UNDER, AS A RESULT OF, OR ASSOCIATED WITH THIS AGREEMENT OR EITHER PARTY’S PERFORMANCE UNDER THIS AGREEMENT. EACH PARTY’S RESPECTIVE TOTAL LIABILITY FOR ANY CLAIMS ALLEGED IN ANY PERIOD (IN AGGREGATE) ARISING UNDER OR RELATED TO THIS AGREEMENT IS LIMITED TO AND SHALL NOT EXCEED THE TOTAL AMOUNT ACTUALLY PAID OR PAYABLE (A) AS SET FORTH IN A BINDING ORDER FOR THAT PERIOD BY FEDERAL FOR THE PRODUCTS PURCHASED OR ORDERED PURSUANT TO THIS AGREEMENT, OR (B) OR SHOULD BE PAYABLE HAD A MINIMUM ORDER COMMITMENT BEEN SATISFIED, WHICHEVER IS GREATER. THE FOREGOING DISCLAIMERS OF LIABILITY AND LIMITATIONS ON LIABILITY WILL NOT APPLY TO ANY INDEMNIFICATION OBLIGATIONS IN THIS AGREEMENT OR DAMAGES ASSOCIATED WITH A BREACH OF INTELLECTUAL PROPERTY RIGHTS.

Confidential or proprietary information shall be governed by, and subject to, the Non-Disclosure Agreement between the Parties dated February 09, 2015 (“NDA”) which is attached as Exhibit D and hereby incorporated by reference. The Parties agree to comply with the terms of that NDA, and that the term (period of information exchange) of the NDA is hereby extended to be co-terminus with the Term of this Agreement if the term of the NDA is shorter than the Term of this Agreement. The Parties obligations to protect proprietary information as applied to proprietary information exchanged pursuant to this Agreement shall extend through two years following the termination or expiration of this Agreement.

to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any litigation directly or indirectly arising out of or relating to this agreement or the transactions contemplated hereby or thereby. Each party certifies and acknowledges that (a) no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver, (b) it understands and has considered the implications of such waiver, (c) it makes such waiver voluntarily and (d) it has been induced to enter into this agreement by, among other things, the mutual waiver and certifications in this paragraph.

All notices, demands, or other communications required or permitted hereunder shall be given in writing by actual delivery or, by mail, postage prepaid, or by electronic communication to a verified email address. Notice shall be deemed given upon actual delivery, or, if sent by mail and properly addressed, three (3) business days after being mailed. Notices shall be delivered or mailed to the other Party at the addresses set forth below or at such other place as the Party shall designate in writing:

Administration Act, 28 USC § 2278 et seq., and DoD Directive 5230.25, “Withholding of Unclassified Technical Data from Public Disclosure,” 32 CFR § 250, including the requirement for obtaining an export license, if applicable.

Neither Party may assign or otherwise transfer this Agreement to any other person, whether by operation of law or otherwise, without the other Party’s prior written approval. Any attempted assignment or delegation without such consent shall be void. Notwithstanding the above, either Party may, upon written notice to other, assign this Agreement to any entity with which the assigning Party may merge or consolidate or to which that Party may convey substantially all of its assets.

This Agreement is contingent upon, and not effective until, both Parties agree upon and execute Addendum 6 to the APSA covering the period April 1, 2017 through February 9, 2018 (“Addendum 6”). This Agreement, and any nondisclosure agreements executed in connection herewith, constitute the entire understanding and agreement between the Parties with respect to the subject matter hereof, and supersedes all prior or contemporaneous discussions, agreements and understandings, both written and oral, among the Parties with respect thereto, specifically including without limitation any memoranda of understanding,, “MOU,” “agreements in principle” and like documents. The terms and conditions included herein shall take precedent over any other provisions set forth elsewhere in an order or other document exchanged between the parties. Headings of paragraphs are for organizational purposes only and do not limit the meaning of the paragraphs. If any provision of the Agreement is determined to be unenforceable or invalid by court decision, the Agreement will not be rendered unenforceable or invalid as a whole, and the provision will be changed and interpreted so as to best accomplish the objectives of the original provision within the limits of applicable law. The failure of either party to assert any of its rights under the Agreement, including, but not limited to, the right to terminate the Agreement in the event of breach or default by the other party, will not be deemed to constitute a waiver by that party of its right to enforce each and every provision of the Agreement in accordance with their terms. All notices under the Agreement must be in writing. Unless provided otherwise within the Agreement, any modifications or amendments to the Agreement shall not be valid or binding with respect to any party unless signed by both parties. The parties have caused the Agreement to be executed by their duly authorized representatives with the intent to be legally bound, for good and valuable consideration, the receipt and adequacy of which is hereby acknowledged.

The Base Product Price for Products shall be the following per-Round prices, provided that $*** shall be added to the Base Product Price for any Product ordered for delivery during a single Period in excess of *** Rounds:

Guarantee

***

The “Commercial Fee” shall be *** per period for Periods 1 and 2, and *** for Period 3, provided that at the completion of the Term Orbital ATK shall reimburse Federal $*** for every Round ordered but which Orbital ATK failed to deliver during the Term below *** Rounds due to Unfilled Quantities.

Federal shall pay to Orbital ATK a warehousing charge equal to ***% of the price of the stored Products every *** or segment thereof, commencing with the *** of storage by Orbital ATK.

The Minimum Order Commitment shall mean orders totaling a minimum of *** Rounds ordered for delivery during the Term (“Aggregate Commitment”), provided that, unless the Aggregate Commitment is first reached, Federal shall place orders at minimum quantities of *** Rounds in Period 1, *** Rounds in Period 2, and *** Rounds in Period 3.

The Metals Adjustment shall be calculated as follows:

The difference (+) or (-) between the COMEX/LME/Chicago Market price in Column (5) and the Base Product Price in Column (4) will be entered in Column (6).

The difference, whether (+) or (-), in Column (6) shall be divided by the applicable Base Product Price in Column (4). The resulting rate of change shall be entered in Column (7).

The metal content factor in Column (3) shall be multiplied by the metal price difference (+) or (-) in Column (6), with the resulting amount entered in Column (8).

The adjustment amount in Column (8) shall be the basis for adjusting the unit price in column (2).

The unit price adjustment shall be computed for each Product Type.

This Nondisclosure Agreement (“Agreement”) is made and entered into by and between Federal Cartridge Company and its affiliates, having a place of business at 900 Ehlen Drive, Anoka, MN 55303 (“Federal”), and Alliant Techsystems Operations LLC, having a place of business at LAACP, Highway 7 & 78, Independence, MO 64056 (“Company”) (collectively, the “Parties”) and is effective as of February 9, 2015 (“Effective Date”). The Parties for their mutual benefit are desirous of exchanging and disclosing certain information and ideas relative to the sale of products between the parties as specified in the Ammunition Products Supply Agreement dated February 9, 2015 (“Program”), and thus agree that any information disclosed by one party (“Disclosing Party”) and received by the other (“Receiving Party”) shall be governed by the following:

1.Proprietary Information. “Proprietary Information” shall mean information applicable to the Program which the Disclosing Party discloses to the Receiving Party: (1) in writing, provided the writing is stamped, labeled or clearly designated as “Confidential” or “Proprietary”; or (2) orally, provided the oral information is reduced to writing within thirty (30) days and designated in writing as “Proprietary” or “Confidential.” However, without further designating such information in writing, the existence and nature of the Program, this Agreement and the Parties’ relationship in connection with the Program shall be considered Proprietary Information.

2.Exclusions. Notwithstanding the foregoing, Proprietary Information shall not include information which: (a) Was not specifically designated in writing as Proprietary or Confidential if required above; (b) Was in the Receiving Party’s possession or was known to the Party receiving it prior to its receipt from the Disclosing Party (c) Was independently developed by the Receiving Party without using the Disclosing Party’s Proprietary Information, as supported by documentary evidence; (d) Is or becomes public knowledge without the fault of the Receiving Party; (e) Is or becomes available to the Receiving Party from a lawful source other than the Disclosing Party; (f) Is approved in writing for release on a non-confidential basis by the Disclosing Party; or (g) Is or becomes available on an unrestricted basis to a third party by authorization of the Disclosing Party.

3.Treatment of Proprietary Information. For a period of five (5) years from the date the Proprietary Information is received, the Receiving Party shall: (a) handle and protect from disclosure Proprietary Information using the same degree of care it uses to handle its own proprietary information, but no less than reasonable care; (b) not duplicate or use Proprietary Information for any purpose other than internal purposes related to the Program; (c) not disclose Proprietary Information to anyone except internal employees having a “need to know” relating to the Program and who are bound by confidentiality obligations at least as stringent as those set forth herein; and (d) not make any commercial use of the Proprietary Information. If requested by the Disclosing Party, the Receiving Party shall return, permanently delete, and/or destroy, as instructed by the Disclosing Party, all Proprietary Information and copies thereof, and if requested by the Disclosing Party, provide Disclosing Party a written certificate of destruction. The Receiving Party will immediately notify the Disclosing Party upon discovery of any disclosure, use or treatment of Proprietary Information inconsistent with the provisions of this Paragraph.

4.Limitations on Treatment. Notwithstanding the foregoing, Proprietary Information may be disclosed if and only as required by court order, provided that the Receiving Party: (a) promptly notifies the Disclosing Party of any request for, or the existence of, such order; (b) provides the Disclosing Party with the opportunity to oppose such disclosure (at Disclosing Party’s expense); and (c) reasonably cooperates with the Disclosing Party in opposing such disclosure.

5.Term. This Agreement shall expire five (5) year from the Effective Date unless extended or modified in writing signed by the Parties. Either Party may terminate this Agreement, with or without cause, at any time with written notice to the other Party. For the avoidance of doubt, the expiration or termination of this Agreement shall not affect the use, handling or disclosure of Proprietary Information received before such termination or expiration.

6.Relationship of the Parties. Nothing in this Agreement shall grant to either Party the right to make commitments of any kind for or on behalf of the other Party. This Agreement shall not constitute a joint venture or partnership as between the Parties. Each Party shall perform its respective obligations hereunder without charge to the other.

7.Mutual Acknowledgements. This Agreement constitutes the entire agreement, and supersedes all prior written or verbal agreements, with respect to the subject matter herein, and may not be amended, modified or waived except by mutual written consent signed by both Parties. All Proprietary Information will remain the exclusive property of the Disclosing Party, and no rights or obligations other than those expressly recited herein are to be implied from this Agreement including, without limitation, licenses or rights under any patent, trademark, copyright, trade secret or know-how that is now or that may be held or which is or may be licensable by either Party. Further, nothing in this agreement shall be understood as requiring the Parties to enter into any subsequent agreements or to require either Party to purchase or supply information, goods, materials, products or services. The Party disclosing Proprietary Information hereunder makes no representation, express or implied, as to adequacy, sufficiency or freedom from fault of the same, and incurs no responsibility or obligation by reason thereof. Neither Party shall be liable to the other for any cost, expense, or risk of liability arising out of efforts of the other Party in connection with performance of this Agreement.

8.Disputes. This Agreement and any dispute arising out of or relating to this Agreement or the relationship between the Parties (“Dispute”) shall be: (a) governed by and construed in accordance with the laws of the State of Minnesota, without regard to conflicts of laws rules; (b) brought only in a court of competent jurisdiction in Minnesota; and (c) resolved only by a judge, both Parties having voluntarily waived any right to a trial by jury. Both Parties consent to the jurisdiction and venue of Minnesota courts for purposes of any Dispute, and waive any right to challenge this venue as being improper

or inconvenient. The prevailing Party in any Dispute shall be entitled to recover its attorneys’ fees and costs incurred in connection with the Dispute. Each Party acknowledges that the use, reproduction or disclosure of Proprietary Information of the Disclosing Party by the Receiving Party in a manner inconsistent with this Agreement will cause the Disclosing Party irreparable damage and the Disclosing Party shall be entitled to equitable and injunctive relief to prevent the unauthorized use, reproduction or disclosure of the Proprietary Information, and to such actual damages as may be occasioned by violation of this Agreement.

9.     Assignment. Neither this Agreement, nor any interest herein, may be assigned, in whole or in part, by either Party without the prior written consent of the other Party hereto, except that without securing prior consent either Party shall have the right to assign this Agreement to any successor which results from a merger, reorganization, consolidation, spin-off or acquisition, provided that such successor (a) acquires substantially all of the entire business and assets of that party relating to the subject matter of this Agreement, (b) shall have expressly assumed all of the obligations and liability of such party under this Agreement, and (c) is not a competitor to the other Party on the Program.

10.     Export Control. Technical data as defined in the International Traffic in Arms Regulation (22 CFR Parts 120 - 130 et. seq.) or technology as defined in the Export Administration Regulations (15 CFR Parts 730- 774 et. seq.) of the United States may be provided to the Receiving Party under this Agreement. Such technical data or technology may not be exported (including by disclosing to a foreign person), sold, diverted, transferred, transshipped on a non-continuous voyage or otherwise be disposed of in any other country, either in its original form or after being incorporated into other end items, without the prior written approval of the Disclosing Party and the U.S. Department of State or the U.S. Department of Commerce as applicable. Each Party agrees to indemnify the other for all claims, demands, damages, costs, fines, penalties and other expenses arising from that Party’s failure to comply with this clause and applicable statutes and regulations.

11.    U.S. Government Disclosure. The Receiving Party may incorporate Proprietary Information in proposals or contract documentation to or with the United States Government provided that the Proprietary Information is submitted and marked in accordance with the provisions of Federal Acquisition Regulation (FAR) 52.215- 1 or DFAR ###-###-####.

12.    Supply Agreement. Pursuant to Section 21(f) of the Ammunition Products Supply Agreement dated February 9, 2015, the Parties specifically agree that the confidentiality obligations set forth in this Mutual Nondisclosure Agreement shall amend and replace the confidentiality provisions set forth in Section 21(c).

The Parties have caused this Agreement to be executed and effective on the Effective Date specified above.