AMENDMENT TO ASSET PURCHASE AGREEMENT
AMENDMENT dated February 28, 1997 (this 'Amendment') to ASSET PURCHASE
AGREEMENT dated December 22, 1996 by and between HUGHES AIRCRAFT COMPANY, a
Delaware corporation ('Purchaser'), and ALLIANT TECHSYSTEMS INC., a Delaware
corporation ('Seller') (the 'Agreement').
WITNESSETH:
WHEREAS, Seller and Purchaser wish to amend the Agreement and certain
Affiliate Agreements as provided herein;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, and agreements hereinafter set forth,
the parties hereto hereby agree as follows:
1. Defined terms in this Amendment shall have the same meaning as
in the Agreement.
2. Section 7.24 shall be added to the Agreement as follows:
7.24. Armada de Chile Receivable. Purchaser shall provide reasonable
assistance to Seller in seeking collection of the $2.93 million account
receivable payable by Armada de Chile, Contract Number MK46-ILS 119 and shall
immediately pay any sums received in respect of that account receivable to
Seller.
3. Sections 11.3, 11.4, 11.5, 11.6 and 11.7 of the Agreement shall
be amended and restated as follows:
11.3 Employee Benefits. (a) Effective on the Closing Date, Purchaser
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shall provide the Transferred Employees with such pensions and other employee
benefits as set forth in Schedule 11.3. Purchaser reserves the right to modify
or terminate any such pension and other employee benefits, at any time or from
time to time. Except as set forth in Sections 11.5 and 11.7, Purchaser shall be
under no obligation to assume or replicate any of the Seller Employee Benefit
Plans or Seller Employee Pension Plans. Purchaser shall amend its Employee
Benefit Plans (as such term is defined in ERISA section 3(3)) and Employee
Pension Benefit Plans (as such term is defined in ERISA section 3(2)) and all
other employee benefit arrangements, plans, policies or practices, such that,
effective as of
the Closing Date, such plans recognize Transferred Employees' Credited Service
(as such term is defined in the Alliant Techsystems Inc. Retirement Plan) with
Seller for purposes of eligibility, vesting, early retirement incentives, pre
existing condition exclusions and waiting periods; provided, however, that such
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plans may contain, in the discretion of Purchaser, exclusions for pre existing
conditions as were applicable under the health and welfare benefits provided to
such Transferred Employees by Seller before the Closing Date and as allowed by
law. In no event will Purchaser provide or be under any obligation to provide
post retirement medical or life insurance benefits or medicare supplemental
benefits to Transferred Employees.
(b) Except as set forth in Section 11.5, from and after the Closing
Date, Seller shall remain solely responsible for all obligations, costs and
expenses under all Seller Employee Benefit Plans or Seller Employee Pension
Plans in respect of Employees' claims incurred or conditions existing prior to
the Closing Date, whether such claims are made or reported before or after the
Closing Date, provided, however, that in no event shall Seller be obligated to
pay claims made after nine (9) months following the Closing Date.
(c) Health Care Plan Deductibles. Any health care plan expenses
(excluding office visit copays) incurred by Transferred Employees on or after
January 1, 1997 and prior to the Closing Date will be recognized by Purchaser's
health care plan for purposes of plan year 1997 deductibles, copays, and out of
pocket maximums. Seller agrees to cooperate in the transmission of data to
Purchaser's claims administrator.
(d) Worker's Compensation. Responsibility for workers' compensation
claims in respect of the Business arising out of conditions having a date of
injury (or, in the case of a claim relating to occupational disease, the last,
significant exposure) prior to the Closing Date shall remain with Seller.
Purchaser shall have responsibility for workers' compensation claims in respect
of the Business arising out of conditions having a date of injury (or, in the
case of a claim relating to occupational disease, the last significant exposure)
on or after the Closing Date. Provided, however, that in no event shall Seller
pay claims made after nine (9) months following the Closing Date.
(e) Vacation. Purchaser shall, effective as of the Closing, (i)
recognize Transferred Employees' service with Seller for purposes of future
Personal Time Off ('PTO') accruals; and (ii) recognize Transferred Employees
accrued and unused vacation with Seller as of the Closing; provided, however,
that such recognition shall not exceed one week less than the Purchaser's PTO
accrual maximums as applied to each Transferred
Employee who, as of the Closing Date, has less than 20 years of service and
shall not exceed two weeks less than the Purchaser's PTO accrual maximums as
applied to each Transferred Employee who, as of the Closing Date, has 20 or more
years of service. Seller shall, within two weeks following the Closing Date, pay
to each Transferred Employee, the amount of vacation accrual in excess of the
amount to be recognized under the Purchaser's PTO plan each such Transferred
Employee has, if any, as of the Closing Date. Such amounts shall be treated as
income for tax and benefits purposes.
(f) Relocation Agreements. With respect to costs associated with
any relocation agreements between Seller and an Employee, Seller shall remain
liable for all costs incurred prior to the Closing Date and Purchaser shall be
liable for any and all costs incurred on or after the Closing Date, subject to
Section 2.3(b) hereof and Schedule 2.3(b).
(g) Retiree Medical and Life Insurance. Solely for purposes of
participation in the retiree medical portion (including medicare supplement) of
the Alliant Techsystems Inc. Health Plan for Non Union Employees ('Alliant
Retiree Medical Plan') and the retiree life portion of the Alliant Techsystems
Inc. Death Benefit Plan for Non Union Employees ('Alliant Retiree Life Plan'),
Transferred Employees who are eligible to retire under the provisions of the
Alliant Techsystems Inc. Retirement Plan as of the Closing Date, shall be
considered as having retired as of the Closing Date and shall be eligible to
elect to begin coverage under such Alliant Retiree Medical Plan and such Alliant
Retiree Life Plan at any time on or after the Closing Date on the same terms and
conditions as any other participant in the Alliant Retiree Medical Plan or
Alliant Retiree Life Plan who retired on the Closing Date and elected to begin
coverage on the same date as such Transferred Employee.
11.4 401(k) Plan. Transferred Employees shall be entitled to
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rollover their accrued entitlements under the Alliant Techsystems Inc. 401(k)
Plan to Purchaser's 401(k) Plan at any time after the Closing Date (subject to
any applicable time limits imposed by the Code or ERISA), and Purchaser and
Seller shall cooperate fully in that regard.
11.5 Retirement Plan.
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(a) On or before the Closing Date, Purchaser shall, or shall cause
a Subsidiary to, effective as of the Closing Date, establish a defined benefit
plan ('Purchaser
New Retirement Plan') and trust ('Purchaser Qualified Trust') intended to
qualify under Sections 401(a) and 501(a) of the Code and the Treasury
Regulations issued pursuant thereto. Such Purchaser New Retirement Plan shall be
substantially identical in all material respects to the Alliant Techsystems Inc.
Retirement Plan ('Alliant Retirement Plan'), including, without limitation, the
preservation of all protected rights, benefits and features within the meaning
of Code Section 411(d)(6).
Seller and Purchaser or Purchaser's Subsidiary shall each provide to
the other on the Closing Date a certified copy of a resolution of its Board of
Directors or its authorized delegates (with a certified copy of the delegation
of authority) evidencing the transfer from the Alliant Retirement Plan and the
assumption by the Purchaser New Retirement Plan of the assets and accrued
benefit liabilities as of (and including) the Closing Date under the Alliant
Retirement Plan for all Transferred Employees, and, in Purchaser's case, further
evidencing adoption of the Purchaser New Retirement Plan and the Purchaser
Qualified Trust. Seller shall direct the trustee of the Alliant Retirement Plan
to transfer to the Purchaser Qualified Tnist, assets of the Alliant Retirement
Plan in the amounts and in the manner described in Section 11.5(b) hereof.
(b) The amount of assets to be transferred from the Alliant
Techsystems Inc. Defined Benefit Master Trust ('Alliant Master Trust') under the
Alliant Retirement Plan to the Purchaser Qualified Trust shall be in the form of
cash. The amount of assets allocable to Transferred Employees under the Alliant
Retirement Plan that will be transferred to the Purchaser New Retirement Plan
shall be the amount which would be allocated to Transferred Employees if the
Alliant Retirement Plan were terminated as of the Closing Date and assets were
allocated to participants in accordance with Section 4044 of ERISA using the
assumptions and methodology of the PBGC for plan terminations as of Closing Date
and such other assumptions not specified by the PBGC and agreed to by Seller's
actuary and Purchaser's actuary ('Appropriate Transfer Amount'). Schedule
11.5(b) sets forth the actuarial assumptions agreed to by Seller's actuary and
Purchaser's actuary. The calculation of the Appropriate Transfer Amount shall be
made by the Seller's Actuary and shall be subject to approval by the Purchaser's
actuary, which shall not be unreasonably withheld. Notwithstanding the above,
the transfer of assets and liabilities from the Alliant Retirement Plan to the
Purchaser New Retirement Plan shall satisfy the requirements of Code Section
414(l). Purchaser and Seller shall cooperate and each use reasonable efforts to
effect the asset and accrued benefit liability transfers contemplated in this
Section as soon as practicable after the Closing Date and in a cost-efficient
manner. This includes the provision by Seller's actuary to Purchaser's actuary
of detailed workpapers and other pertinent information to enable Purchaser's
actuary to
adequately review the asset allocation procedures.
Seller shall cause the Alliant Master Trust to transfer, and Purchaser
shall cause the Purchaser Qualified Trust to accept, an amount of cash equal to
$24 million ('Initial Transfer Amount') (which represents the good faith
estimate by the Seller's Actuary of the Appropriate Transfer Amount on Monday,
March 1, 1997, plus interest thereon from the Closing Date at the applicable
short term investment fund rate. Purchaser shall reimburse Seller for up to $750
of late filing penalties associated with Form 5310A, if any.
In the event that the Initial Transfer Amount exceeds the Appropriate
Transfer Amount, as defined below, Purchaser New Retirement Plan shall promptly
reimburse (and in any event within 30 days) the Alliant Retirement Plan any
excess assets plus interest thereon at 8.5% per year from the date of transfer
of the Initial Transfer Amount. In the event the Initial Transfer Amount is less
than the Appropriate Transfer Amount, then the Alliant Retirement Plan shall
promptly (and in any event within 30 days) transfer to the Purchaser New
Retirement Plan an amount equal to such difference, plus interest thereon at
8.5% per year from the Closing Date to the date of transfer of such amount.
In the event any Prospective Employee becomes a Transferred Employee
after and within six months following the Closing Date, the Alliant Actuary
shall determine the amount equal to the amount of assets required to be
transferred under Code Section 414(l), as of the end of the month in which each
Prospective Employee becomes a Transferred Employee based on the provisions of
the Alliant Retirement Plan in effect on the Closing Date, and such
determination shall be subject to approval of the Purchaser's actuary, which
shall not be unreasonably withheld. As soon as administratively feasible after
appropriate governmental notices have been filed, the Seller shall cause the
trustee of the Alliant Master Trust to transfer such present value, in cash, to
the Purchaser Qualified Trust and the Purchaser New Retirement Plan shall accept
liability therefor.
(c) Seller shall amend the Alliant Retirement Plan, such that
effective as of the Closing Date, Transferred Employees shall receive no further
accruals under the Alliant Retirement Plan.
(d) As soon as administratively feasible after the Closing Date,
Purchaser or a Subsidiary of the Purchaser shall submit such Purchaser New
Retirement Plan and Purchaser Qualified Tnist to the Internal Revenue Service
for determination of
their qualified status under Sections 401(a) and 501(a) of the Code. Purchaser
shall use Best Efforts to obtain a favorable determination on such qualified
status.
11.6 Unless set forth in this Agreement, Seller retains the right to
change, amend or terminate any Seller Employee Pension Plans, Seller Employee
Benefit Plans, or any employee benefit arrangement, plan, practice or policy at
any time prior to or following the Closing, provided, however, that any such
change, amendment or termination will not result in any benefits for Transferred
Employees who were eligible for retirement at the Closing Date less than those
they would have received had they retired immediately prior to Closing.
11.7 Non-Qualified Supplemental Employee Retirement Benefits.
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Effective as of the Closing Date, Purchaser shall assume all accrued benefit
liabilities associated with non-qualified supplemental employee retirement
benefits for those Transferred Employees set forth in Schedule 11.10(ii).
4(a). A new Section 11.10(A) is added to the Agreement to read as
follows:
11.10(A) Within 30 days following the completion of the Section 4044
allocation of assets and liabilities of the Alliant Retirement Plan,
(i) if the Total Pension Costs (as defined below) exceeds $3.6
million, then Seller shall pay in cash to Purchaser such excess amount, plus
interest thereon from the Closing Date to the date of payment at the annual rate
of 8.5 %; or
(ii) if the Total Pension Costs (as defined below) is less than $3.6
million, then Purchaser shall pay to Seller such deficit, plus interest thereon
from the Closing Date to the date of payment at the annual rate of 8.5 %.
For purposes of this Section 11.10, 'Total Pension Costs' means the
amount by which the actuarial accrued liabilities of Transferred Employees on a
termination basis as of the Closing Date (as determined using cost accounting
standards and other actuarial methods and assumptions set forth in
Schedule 11.10(i)) ('Actuarial Accrued Liabilities') exceeds the Appropriate
Transfer Amount.
The actuarial valuation of the Alliant Retirement Plan shall be subject to
approval of Purchaser's actuary, which shall not be unreasonably withheld.
An illustration of the intended operation of this Section 11.10(A) is
set forth in several examples described in Schedule 11.10(iii).
4(b). A new Section 11.10(B) is added to the Agreement to read as
follows:
11.10(B) Within 30 days following the completion of the Section 4044
allocation of assets and liabilities of the Alliant Retirement Plan,
(i) if one-half of the Incremental Pension Costs (as defined below)
exceed $200,000, then Seller shall pay in cash to Purchaser such excess amount,
plus interest thereon from the Closing Date to the date of payment at the annual
rate of 8.5 %; or
(ii) if one-half of the Incremental Pension Costs (as defined below)
is less than $200,000, then Purchaser shall pay to Seller such deficit, plus
interest thereon from the Closing Date to the date of payment at the annual rate
of 8.5 %.
For purposes of this Section 11.10, 'Incremental Pension Costs' means
the sum of: (i) the reasonable costs of the Seller's actuary for preparing an
actuarial valuation of the Actuarial Accrued Liabilities performing an ERISA
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Section 4044 allocation of the assets of the Alliant Retirement Plan as of the
Closing Date and determining the amount of assets allocable to Transferred
Employees as of the Closing Date, and (ii) the total Projected Benefit
Obligation as of the Closing Date of Transferred Employees under Seller's non
qualified supplemental employee retirement benefits (as determined using the
actuarial methods and assumptions set forth in Schedule 11.10(ii)).
Purchaser shall pay the invoiced. cost of Seller's acturary fees for preparing
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the calculations described in this section 11.10.
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The actuarial valuation of the Seller's non-qualified supplemental employee
retirement benefits shall be subject to approval of Purchaser's actuary, which
shall not be unreasonably withheld.
5. The definition of 'Closing' in Article I shall be amended in its
entirety as follows:
'Closing' shall refer to the consummation of the several transactions
provided for in Article 11, all upon the terms and subject to the conditions set
forth in this Agreement, which closing shall commence at 9:00 A.M., at the
location specified in Section 9.1 below, provided, however, that for purposes of
preparing the Closing Date
Balance Sheet and for all related calculations under the provisions of Article
IV, Closing shall be deemed to occur as of 11:59 PM Pacific Standard Time on the
day of closing.
6. A new section 2.1(p) shall be added as follows:
(p) all petty cash and cash in assumed bank accounts of the Business
wherever contained as described on Schedule 2.1(p).
7. Section 2.2(a) shall be restated and amended as follows:
(a) cash and cash equivalents, or cash on hand or in bank accounts,
certificates of deposit, commercial paper and other similar securities
related to the Business, except for cash and petty cash as set forth on
Schedule 2.1 (p).
8. A new Section 4.1(a)(6) shall be added as follows:
(6) The third column of the Closing Date Schedule of Net Assets shall
make any adjustments necessary to ensure that all petty cash and cash in bank
accounts of the Business wherever contained as described on Schedule 2.1(p) and
assumed by Purchaser at Closing be reflected at full value in the fourth column
of the Closing Date Schedule of Net Assets.
9. A new section 4.1(a)(7) shall be added as follows:
(7) The second column of the Closing Date Schedule of Net Assets
shall reflect the elimination of certain corporate accounts for employee
benefits (item labeled Corporate Accruals on Schedule 5.5(a)(2)) by an
amount such that the numerical result of adding the amounts in Column 1,
Column 2 and Column 3 equals $1.5 million (i.e., the amount to be reflected
in Column 4 of the Closing Date Net Assets will equal $1.5 million) for the
benefit plan accrual, representing an agreed upon adjustment between the
Purchaser and Seller for certain employee benefit matters.
10. Governing Law. This Amendment and the legal relations between
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the parties shall be governed by and construed in accordance with the laws of
the State of New York without regard to the principles regarding the choice of
law.
11. Notices. Any notice or other communications required or
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permitted hereunder shall be in writing and shall be deemed to have been duly
given when delivered
personally or transmitted by telex or telecopier, receipt acknowledged, or in
the case of documented overnight delivery service or registered or certified
mail, return receipt requested, postage prepaid, on the date shown on the
receipt therefor,
if to Purchaser, to:
Hughes Aircraft Company
7200 Hughes Terrace
Los Angeles, California 90080-0028
Attention: Secretary
Telecopy: (310) 649-1983
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Jeffrey J. Weinberg, Esq.
Telecopy: (212) 310-8007
if to Seller, to:
Alliant Techsystems Inc.
600 Second Street Northeast
Hopkins, Minnesota 55343-8343
Attention: Daryl L. Zimmer, Esq.
Vice President and General Counsel
Telecopy: (612) 931-5920
with a copy to:
Malkerson Gilliland Martin LLP
901 Marquette Avenue, Suite 1500
Minneapolis, Minnesota 55402
Attention: Michael S. Gilliland, Esq.
Telecopy: (612) 334-1414
or to such other address(es) as shall be furnished in writing by any such party
to each of the other parties hereto in accordance with the provisions of this
Section 13.4.
12. Headings. The descriptive headings of the several Articles and
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Sections of this Amendment are inserted for convenience only and do not
constitute a part of this Amendment.
13. Counterparts. This Amendment may be executed in one or more
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counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties hereto and delivered, in person or by telecopier, receipt
acknowledged, to the other party hereto.
14. Exhibits/Schedules. The exhibits and schedules to this Amendment
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are hereby incorporated and made a part hereof and are an integral part of this
Amendment.
15. Amended Schedules. Seller and Purchaser acknowledge and agree
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that the schedules attached as Exhibit 1 shall augment, modify, amend and
replace, as applicable those schedules originally attached to the Agreement, and
the Agreement shall be deemed amended thereby.
16. Conflicting Provisions. In the event of any conflict between the
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provisions of this Amendment and the provisions of the Agreement or any
Ancillary Agreement, the provisions of this Amendment shall control.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf by its officers or representatives
thereunto duly authorized, all as of the date first written above.
HUGHES AIRCRAFT COMPANY
By: /s/ Charles S. Ream
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Name: C. Ream
Title: V.P., CFO
ALLIANT TECHSYSTEMS INC.
By: /s/ Daryl L. Zimmer
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Name: Daryl L. Zimmer
Title: Vice President and
General Counsel
Asset Purchase Agreement - Hughes Aircraft Co. and Alliant Techsystems Inc.
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