EXHIBIT 10.14
EXECUTION COPY
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT, dated as of February 12, 2003, among RACI
Holding, Inc., a Delaware corporation ("Holding"), Remington Arms Company, Inc.,
a Delaware corporation (the "Company"), Bruckmann, Xxxxxx, Xxxxxxxx & Co.
L.L.C., a Delaware limited liability company ("BRS") and Bruckmann, Xxxxxx,
Xxxxxxxx & Co. II, L.P., a Delaware limited partnership ("BRS II") (together
with any other investment vehicle managed by BRS, the "BRS Fund").
W I T N E S S E T H :
WHEREAS, the BRS Fund is managed by BRS, and the general partner of the BRS
Fund is BRSE, L.L.C., a Delaware limited liability company (together with any
general partner of any other investment vehicle managed by BRS, "BRSE");
WHEREAS, pursuant to an Investment Agreement, dated as of December 19, 2002
(the "Investment Agreement"), by and among Holding, The Xxxxxxx & Dubilier
Private Equity Fund IV Limited Partnership (the "C&D Fund") and the BRS Fund,
pursuant to which, among other things, Holding issued to the BRS Fund 135,954
shares of Class A Common Stock, par value $0.01 per share of Holding ("Common
Stock") for a cash purchase price equal to $220.31 per share (the "Share
Purchase Price") for an aggregate purchase price of approximately $29,952,025
(the "Investment");
WHEREAS, in connection with the Investment, Holding repurchased (the
"Repurchase") 722,981 of its outstanding shares of Common Stock for a
combination of cash, senior notes of Holding with an interest rate of 12% (the
"RACI A Senior Notes") and senior notes of Holding with an interest rate of 15%
(the "RACI B Senior Notes", and together with the RACI A Senior Notes, the "RACI
Senior Notes");
WHEREAS, concurrent with the Investment, the Company offered, issued and
sold to certain institutional purchasers (the "Initial Purchasers") $200 million
aggregate principal amount of 10 1/2% Senior Notes due 2011, with respect to
which the Company will make an offer to exchange therefor $200 million aggregate
principal amount of 10 1/2% Senior Subordinated Notes due 2011 (such
transactions collectively, the "Note Offering");
WHEREAS, Holding and the Company from time to time in the future (a) may
offer and sell or cause to be offered and sold equity or debt securities (such
offerings and sales by Holding and the Company, together with the Investment and
the Note Offering, being hereinafter referred to as the "Securities Offerings"),
including without limitation (i) offerings of shares of capital stock of Holding
and/or options to purchase such shares to employees, directors, managers and
consultants of and to Holding and the Company (a "Management Offering"), and
(ii) one or more offerings of debt securities for the purpose
of refinancing indebtedness incurred pursuant to the Note Offering or for other
corporate purposes, and (b) may repurchase, redeem or otherwise acquire certain
securities of Holding or the Company (any such repurchase or redemption being
referred to herein as a "Redemption");
WHEREAS, the parties hereto recognize the possibility that claims might be
made against, and liabilities incurred by, BRS, the BRS Fund, BRSE or related
persons or affiliates under applicable securities laws or otherwise in
connection with the Securities Offerings, or relating to other actions or
omissions of or by Holding and the Company, or relating to the provision by BRS
of management consulting, monitoring and financial advisory services to Holding
and the Company, and the parties hereto accordingly wish to provide for BRS, the
BRS Fund, BRSE and related persons and affiliates to be indemnified in respect
of any such claims and liabilities;
WHEREAS, the parties hereto recognize that claims might be made against and
liabilities incurred by directors and officers of Holding and the Company in
connection with their acting in such capacity, and accordingly wish to provide
for such directors and officers to be indemnified to the fullest extent
permitted by law in respect of any such claims and liabilities; and
WHEREAS, it is a condition to the closing of the Investment that the
parties enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing premises, and the mutual
agreements and covenants and provisions herein set forth, the parties hereto
hereby agree as follows:
1. Definitions.
(a) "Claim" means, with respect to any Indemnitee, any claim against such
Indemnitee involving any Obligation with respect to which such Indemnitee may be
entitled to be defended and indemnified by Holding or the Company under this
Agreement.
(b) "Indemnitee" means each of BRS, the BRS Fund, BRSE and their
respective directors, officers, principals, members, partners, employees,
agents, advisors, representatives, affiliates and controlling persons (within
the meaning of the Securities Act of 1933, as amended (the "Securities Act"))
and each other person who is or becomes a director or an officer of Holding or
the Company.
(c) "Obligations" means, collectively, any and all claims, obligations,
liabilities (joint or several), causes of actions, actions, suits, proceedings,
investigations, judgments, decrees, losses, damages, fees, costs and expenses
(including without
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limitation interest, penalties and fees and disbursements of attorneys,
accountants, investment bankers and other professional advisors).
(d) "Related Document" means any agreement, certificate, instrument or
other document to which Holding or the Company may be a party or by which it or
any of its properties or assets may be bound or affected from time to time
relating in any way to any Securities Offering or any of the transactions
contemplated thereby, including without limitation, in each case as the same may
be amended, modified, waived or supplemented from time to time, (A) any
registration statement filed by or on behalf of Holding or the Company with the
Securities and Exchange Commission (the "Commission") in connection with any
Securities Offering, including all exhibits, financial statements and schedules
appended thereto, and any submissions to the Commission in connection therewith,
(B) any prospectus, preliminary or otherwise, included in such registration
statements or otherwise filed by or on behalf of Holding or the Company in
connection with any Securities Offering or used to offer or confirm sales of
their respective securities in any Securities Offering, (C) any private
placement or offering memorandum or circular, or other information or materials
distributed by or on behalf of Holding, the Company or any placement agent or
underwriter (including without limitation any Initial Purchaser) in connection
with any Securities Offering, (D) any federal, state or foreign securities law
or other governmental filings or applications made in connection with any
Securities Offering, the Investment or any of the transactions contemplated
thereby, (E) any underwriting, subscription, purchase, option or registration
rights agreement or plan entered into or adopted by Holding or the Company in
connection with any Securities Offering or (F) any purchase, repurchase,
redemption or other agreement entered into by Holding or the Company in
connection with any Redemption.
2. Indemnification.
(a) Each of Holding and the Company agrees to indemnify, defend and hold
harmless each Indemnitee:
(i) from and against any and all Obligations, whether incurred with
respect to third parties or otherwise, in any way resulting from, arising
out of or in connection with, based upon or relating to (A) the Securities
Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or any other applicable securities or other laws, in connection with any
Securities Offering, any Related Document or any of the transactions
contemplated thereby, (B) any other action or failure to act of Holding,
the Company, or any of their predecessors, whether such action or failure
has occurred or is yet to occur or (C) except to the extent such
Obligation is determined by a court, in a final judgment from which no
further appeal may be taken, to have resulted solely from the gross
negligence or intentional misconduct by BRS, the engagement of, or
performance by, BRS of
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management consulting, monitoring, financial advisory or other services for
Holding or the Company; and
(ii) to the fullest extent permitted by Delaware law, from and
against any and all Obligations in any way resulting from, arising out of
or in connection with, based upon or relating to (A) the fact that such
Indemnitee is or was a director or an officer of Holding or the Company, as
the case may be, or is or was serving at the request of such corporation as
a director, officer, employee or agent of or advisor or consultant to
another corporation, partnership, joint venture, trust or other enterprise
or (B) any breach or alleged breach by such Indemnitee of his or her
fiduciary duty as a director or an officer of Holding or the Company, as
the case may be.
(b) Without in any way limiting the foregoing Section 2(a), each of
Holding and the Company agrees to indemnify, defend and hold harmless each
Indemnitee from and against any and all Obligations resulting from, arising out
of or in connection with, based upon or relating to liabilities under the
Securities Act, the Exchange Act or any other applicable securities or other
laws, rules or regulations in connection with (i) the inaccuracy or breach of or
default under any representation, warranty, covenant or agreement in any Related
Document, (ii) any untrue statement or alleged untrue statement of a material
fact contained in any Related Document or (iii) any omission or alleged omission
to state in any Related Document a material fact required to be stated therein
or necessary to make the statements therein not misleading. Notwithstanding the
foregoing, neither Holding nor the Company shall be obligated to indemnify such
Indemnitee from and against any such Obligation to the extent that such
Obligation arises out of or is based upon an untrue statement or omission made
in such Related Document in reliance upon and in conformity with written
information furnished to Holding or the Company, as the case may be, in an
instrument duly executed by such Indemnitee and specifically stating that it is
for use in the preparation of such Related Document.
3. Contribution.
(a) Except to the extent that Section 3(b) is applicable, if for any
reason the indemnity provided for in Section 2(a) is unavailable or is
insufficient to hold harmless any Indemnitee from any of the Obligations covered
by such indemnity, then Holding and the Company shall contribute to the amount
paid or payable by such Indemnitee as a result of such Obligation in such
proportion as is appropriate to reflect (i) the relative fault of each of
Holding and the Company, on the one hand, and such Indemnitee, on the other, in
connection with the state of facts giving rise to such Obligation, (ii) if such
Obligation results from, arises out of, is based upon or relates to any
Securities Offering, the relative benefits received by each of Holding and the
Company, on the one hand, and such Indemnitee, on the other, from such
Securities Offering and (iii) if required by applicable law, any other relevant
equitable considerations.
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(b) If for any reason the indemnity specifically provided for in Section
2(b) is unavailable or is insufficient to hold harmless any Indemnitee from any
of the Obligations covered by such indemnity, then Holding and the Company shall
contribute to the amount paid or payable by such Indemnitee as a result of such
Obligation in such proportion as is appropriate to reflect (i) the relative
fault of each of Holding and the Company, on the one hand, and such Indemnitee,
on the other, in connection with the information contained in or omitted from
any Related Document, which inclusion or omission resulted in the inaccuracy or
breach of or default under any representation, warranty, covenant or agreement
therein, or which information is or is alleged to be untrue, required to be
stated therein or necessary to make the statements therein not misleading, (ii)
the relative benefits received by Holding and the Company, on the one hand, and
such Indemnitee, on the other, from such Securities Offering and (iii) if
required by applicable law, any other relevant equitable considerations.
(c) For purposes of Section 3(a), the relative fault of each of Holding
and the Company, on the one hand, and of the Indemnitee, on the other, shall be
determined by reference to, among other things, their respective relative
intent, knowledge, access to information and opportunity to correct the state of
facts giving rise to such Obligation. For purposes of Section 3(b), the relative
fault of each of Holding and the Company, on the one hand, and of the
Indemnitee, on the other, shall be determined by reference to, among other
things, (i) whether the included or omitted information relates to information
supplied by Holding or the Company, on the one hand, or by such Indemnitee, on
the other, and (ii) their respective relative intent, knowledge, access to
information and opportunity to correct such inaccuracy, breach, default, untrue
or alleged untrue statement, or omission or alleged omission. For purposes of
Section 3(a) or 3(b), the relative benefits received by each of Holding and the
Company, on the one hand, and the Indemnitee, on the other, shall be determined
by weighing the direct monetary proceeds to Holding and the Company, on the one
hand, and such Indemnitee, on the other, from such Securities Offering.
(d) The parties hereto acknowledge and agree that it would not be just and
equitable if contributions pursuant to Section 3(a) or 3(b) were determined by
pro rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in such respective Section.
Holding and the Company shall not be liable under Section 3(a) or 3(b), as
applicable, for contribution to the amount paid or payable by any Indemnitee
except to the extent and under such circumstances as Holding or the Company
would have been liable to indemnify, defend and hold harmless such Indemnitee
under the corresponding Section 2(a) or 2(b), as applicable, if such indemnity
were enforceable under applicable law. No Indemnitee shall be entitled to
contribution from Holding or the Company with respect to any Obligation covered
by the indemnity specifically provided for in Section 2(b) in the event that
such Indemnitee is finally determined to be guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) in
connection with such
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Obligation and Holding and the Company are not guilty of such fraudulent
misrepresentation.
4. Indemnification Procedures.
(a) Whenever any Indemnitee shall have actual knowledge of the reasonable
likelihood of the assertion of a Claim, BRS (acting on its own behalf or, if
requested by any such Indemnitee other than itself, on behalf of such
Indemnitee) or such Indemnitee shall notify Holding, the Company or the
appropriate Subsidiary, as the case may be, in writing of the Claim (the "Notice
of Claim") with reasonable promptness after such Indemnitee has such knowledge
relating to such Claim and has notified BRS thereof. The Notice of Claim shall
specify all facts known to BRS that may give rise to such Claim and the monetary
amount or an estimate of the monetary amount of the Obligation involved if BRS
has knowledge of such amount or a reasonable basis for making such an estimate.
The failure of BRS to give such Notice of Claim shall not relieve Holding and
the Company of their respective indemnification obligations under this Agreement
except to the extent that such omission results in a failure of actual notice to
them and they are materially injured as a result of the failure to give such
Notice of Claim. Holding and the Company shall, at their expense, undertake the
defense of such Claim with attorneys of their own choosing satisfactory in all
respects to BRS. BRS may participate in such defense with counsel of BRS's
choosing at the expense of Holding and the Company. In the event that none of
Holding and the Company undertakes the defense of the Claim within a reasonable
time after BRS has given the Notice of Claim, BRS may, at the expense of Holding
and the Company and after giving notice to Holding and the Company of such
action, undertake the defense of the Claim and compromise or settle the Claim,
all for the account of and at the risk of Holding and the Company. In the
defense of any Claim, Holding and the Company shall not, except with the consent
of BRS, consent to entry of any judgment or enter into any settlement that
includes any injunctive or other non-monetary relief, or that does not include
as an unconditional term thereof the giving by the person or persons asserting
such Claim to such Indemnitee of a release from all liability with respect to
such Claim. In each case, BRS and each other Indemnitee seeking indemnification
hereunder will cooperate with Holding and the Company, so long as Holding and
the Company are conducting the defense of the Claim, in the preparation for and
the prosecution of the defense of such Claim, including making available
evidence within the control of BRS or such Indemnitee, as the case may be, and
persons needed as witnesses who are employed by BRS or such Indemnitee, as the
case may be, in each case as reasonably needed for such defense and at cost,
which cost, to the extent reasonably incurred, shall be paid by Holding and the
Company.
(b) Holding and the Company hereby agree to advance costs and expenses,
including attorney's fees, incurred by BRS (acting on its own behalf or, if
requested by any such Indemnitee other than itself, on behalf of such
Indemnitee) or any Indemnitee in defending any Claim in advance of the final
disposition of such Claim upon receipt of an
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undertaking by or on behalf of BRS or such Indemnitee to repay amounts so
advanced if it shall ultimately be determined that BRS or such Indemnitee is not
entitled to be indemnified by Holding and the Company as authorized by this
Agreement.
(c) BRS shall notify Holding and the Company in writing of the amount of
any Claim actually paid by BRS (the "Notice of Payment"). The amount of any
Claim actually paid by BRS shall bear simple interest at the rate equal to the
prime rate most recently set forth in The Wall Street Journal as of the date of
such payment plus 2% per annum, from the date Holding or the Company receives
the Notice of Payment to the date on which Holding or the Company shall repay
the amount of such Claim plus interest thereon to BRS.
5. Certain Covenants. Holding agrees to cause the Company to perform its
obligations under this Agreement. The rights of each Indemnitee to be
indemnified under any other agreement, document, certificate or instrument or
applicable law are independent of and in addition to any rights of such
Indemnitee to be indemnified under this Agreement. The rights of each Indemnitee
and the obligations of Holding and the Company hereunder shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnitee. Each of Holding and the Company shall maintain the State of Delaware
as its state of incorporation and shall implement and maintain in full force and
effect any and all corporate charter and by-law provisions that may be necessary
or appropriate to enable it to carry out its obligations hereunder to the
fullest extent permitted by Delaware corporate law, including without limitation
a provision of its certificate of incorporation eliminating liability of a
director for breach of fiduciary duty to the fullest extent permitted by Section
102(b)(7) (or any successor section thereto) of the General Corporation Law of
the State of Delaware, as it may be amended from time to time.
6. Notices. All notices and other communications hereunder shall be in
writing and shall be delivered by certified or registered mail (first class
postage prepaid and return receipt requested), telecopier, overnight courier or
hand delivery, as follows:
(a) if to the Company, to:
Remington Arms Company, Inc.
000 Xxxxxxxxx Xxxxx
X.X. Xxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Fax Number: (000) 000-0000
Attention: Secretary
(b) if to Holding, to it care of the Company at the address set
forth above
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(c) if to BRS, to:
x/x Xxxxxxxxx, Xxxxxx, Xxxxxxxx & Co., L.L.C.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax Number: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx
(d) if to the BRS Fund, to:
x/x Xxxxxxxxx, Xxxxxx, Xxxxxxxx & Co., L.L.C.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax Number: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx
or to such other address or such other person as Holding, the Company, BRS or
the BRS Fund, as the case may be, shall have designated by notice to the other
parties hereto. All communications hereunder shall be effective upon receipt by
the party to which they are addressed. A copy of any notice or other
communication given under this Agreement shall also be given to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax Number: (000) 000-0000
Attention: Xxxx X. Xxxx, Esq.
And
Xxxxxxxx & Xxxxx
Citigroup Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Fax Number: (000) 000-0000
Attention: Xxx Xxxxxx, Esq.
7. Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the law of the State of New
York, regardless of the law that might be applied under principles of conflict
of laws, except to the extent that the corporate law of the State of Delaware
specifically and mandatorily applies, in which case such law shall apply.
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8. Severability. If any provision or provisions of this Agreement shall
be held to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby.
9. Miscellaneous. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. This Agreement shall be binding upon and inure
to the benefit of each party hereto and its successors and permitted assigns,
and each other Indemnitee, but neither this Agreement nor any right, interest or
obligation hereunder shall be assigned, whether by operation of law or
otherwise, by Holding or the Company without the prior written consent of BRS
and the BRS Fund. This Agreement is not intended to confer any right or remedy
hereunder upon any person other than each of the parties hereto and their
respective successors and permitted assigns and each other Indemnitee. This
Agreement may be amended, modified or supplemented only by a written instrument
executed by all of the parties hereto. Any waiver of any term or provision
hereof must be in writing and signed by the party entitled to the benefits of
such term or provision, and no waiver of a failure to observe any term or
provision hereof shall operate as a waiver of any subsequent failure to observe
any term or provision hereof unless such waiver expressly so provides. This
Agreement may be executed in several counterparts, each of which shall be deemed
an original, and all of which together shall constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement by
their authorized representatives as of the date first above written.
RACI HOLDING, INC.
By: /s/ Xxxx X. Little
------------------------------------
Name: Xxxx X. Little
Title: Chief Financial Officer
REMINGTON ARMS COMPANY, INC.
By: /s/ Xxxx X. Little
------------------------------------
Name: Xxxx X. Little
Title: Executive Vice President
BRUCKMANN, XXXXXX, XXXXXXXX & CO., L.L.C.
By: /s/ Xxxxxxx Xxxxxxxx
------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Managing Director
BRUCKMANN, XXXXXX, XXXXXXXX & CO. II, L.P.
By: BRSE, L.L.C.,
its general partner
By: /s/ Xxxxxxx Xxxxxxxx
----------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Managing Director
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