ENVIRONMENTAL RESERVE ACCOUNT AGREEMENT
Exhibit 10.82
THIS ENVIRONMENTAL RESERVE ACCOUNT AGREEMENT (this “Agreement”), dated as of December
7, 2010, is made by and among XXXXX & WESSON HOLDING CORPORATION (the “Borrower
Representative”), a Nevada corporation, XXXXX & WESSON CORP., a Delaware corporation,
XXXXXXXX/CENTER ARMS COMPANY, INC., a New Hampshire corporation, XXXXXXXX CENTER HOLDING
CORPORATION, a Delaware corporation, UNIVERSAL SAFETY RESPONSE, INC., a Delaware corporation, FOX
RIDGE OUTFITTERS, INC., a New Hampshire corporation, X.X. XXXXXXXX TOOL COMPANY, INC., a New
Hampshire corporation, O.L. DEVELOPMENT, INC., a New Hampshire corporation, BEAR LAKE HOLDINGS,
INC., a Delaware corporation, and XXXXX & WESSON DISTRIBUTING, INC., a Delaware corporation
(collectively, the “Borrowers”) and TD BANK, N.A., in its capacity as administrative agent
for the Lenders referenced below (in such capacity, and together with any successor administrative
agent, the “Administrative Agent”). Any references herein to the “Parties” shall mean the
Borrowers and the Administrative Agent.
BACKGROUND
WHEREAS, the Borrowers are entering into an Amended and Restated Credit Agreement of even date
herewith (as the same may be amended, restated, supplemented or otherwise modified from time to
time, the “Credit Agreement”) with the Administrative Agent and the lenders from time to
time party thereto (“Lenders”), pursuant to which the Lenders have agreed, subject to the
terms and conditions set forth therein, to make certain loans and other financial accommodations
(collectively, the Loans”) to the Borrowers;
WHEREAS, certain of the Borrowers are the owners of the real properties described in
Exhibit A (collectively, the “Owned Properties”). Pursuant to the terms of the
Credit Agreement and the other Loan Documents, and in consideration of the Lenders making the Loans
to the Borrowers, each such Borrower has granted a first mortgage, collateral assignment of leases
and rents, security agreement and fixture filing in favor of the Administrative Agent which
encumber the Owned Properties;
WHEREAS, the Borrowers and the Administrative Agent have entered into an Amended and Restated
Hazardous Materials Indemnity Agreement of even date herewith (as the same may be amended,
restated, supplemented or otherwise modified from time to time, the “Hazardous Materials
Indemnity Agreement”), pursuant to which the Borrowers have jointly and severally agreed to,
among other things, provide certain indemnification to the Administrative Agent and the Secured
Parties (as defined in the Credit Agreement) and to perform, now and in the future, investigation,
assessment and remediation of environmental contamination on the Premises (as defined in the
Hazardous Materials Indemnity Agreement), including, without limitation, on the Owned Properties.
WHEREAS, Environmental Compliance Services, Inc. (“ECS”) prepared a Phase I
Environmental Site Assessment report dated October 15, 2010 for each Owned Property (collectively,
the “Existing Reports”), as described in Exhibit B and incorporated herein by reference,
which identified various areas of environmental contamination on or at each such Owned Property.
ECS sent the Administrative Agent an environmental review memorandum dated October 27, 2010 (the
“Existing Memorandum”), a copy of which is attached hereto as Exhibit C and incorporated
herein by reference, which detailed the required additional investigation and remediation
activities to be completed with respect to each such Owned Property to achieve appropriate
regulatory closure;
WHEREAS, the Administrative Agent and the Lenders will not make Loans to the Borrowers unless
the Borrowers agree to guarantee financially the cost and expense of completion of all
Environmental Efforts (as defined below); and
WHEREAS, as a material inducement to the Administrative Agent to make the Loans, the Borrowers
have agreed to enter into this Agreement.
NOW THEREFORE, for and in consideration of the Administrative Agent’s and the Lenders’
extension of the Loans and the representations, warranties and covenants contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereby agree as follows:
1. Definitions.
(a) Except as otherwise expressly defined herein or in the exhibits attached hereto, all
capitalized terms shall have the meanings ascribed to them in the Credit Agreement.
(b) “Environmental Contamination” shall hereinafter be defined as the discharge,
dispersal, release or escape of any solid, liquid, gaseous or thermal irritant or contamination,
including smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, radon and waste materials
into or upon land, or any structure on land, the atmosphere or any watercourse or body of water,
including groundwater, in concentrations or amounts exceeding maximum levels allowed by applicable
Environmental Laws, or by governmental or court order or directive, acting under the authority
granted by Environmental Laws, provided such conditions are not naturally present in the
environment in the concentration or amounts discovered.
(c) “Environmental Efforts” shall hereinafter be defined as all investigation and
remediation activities to be completed in accordance with the Existing Memorandum or to address
additional Environmental Contamination (“Additional Environmental Contamination”)
subsequently discovered by the Borrowers or the Administrative Agent during the performance of this
remedial work or identified in any environmental report and review memorandum subsequently received
by the Administrative Agent, including without any limitation, any environmental report referenced
in Paragraph 4 below.
2. Environmental Investigation and Remediation. The Borrowers shall, at its own cost
and expense, and within a reasonable timeframe after the Effective Date, undertake all
Environmental Efforts in accordance with applicable Environmental Laws and the Hazardous Materials
Indemnity Agreement.
3. Establishment and Operation of Environmental Reserve Account.
(a) Reserve Funds. The Borrowers have caused the sum of $812,000 to be delivered to
the Administrative Agent, which amount, combined with funds that are currently available to the
Borrowers in existing escrow arrangements or otherwise, is agreed by the Parties to be a reasonable
estimate of the cost of the Environmental Efforts recommended in the Existing Memorandum. The
Borrowers agree (i) that the amount may be increased at the Administrative Agent’s reasonable
discretion if Additional Environmental Contamination is identified during the undertaking of the
Environmental Efforts or otherwise and (ii) upon notice from the Administrative Agent requesting
such increased amount, the Borrowers, jointly and severally, will deposit with the Administrative
Agent, in accordance with this Section 3(a), such increased amount. The funds held by the
Administrative Agent pursuant to this Section 3(a) are herein collectively referred to as the
“Reserve Funds.” The Administrative Agent
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shall hold the Reserve Funds in an interest-bearing account (the “Environmental Reserve
Account”) and shall provide disbursements in accordance with Paragraph 3(b) below. The
Borrowers hereby pledge to the Administrative Agent for the benefit of the Lenders, and grant to
the Administrative Agent for the benefit of the Lenders, a security interest in and to, the
Environmental Reserve Account, as security for the performance of the Borrowers’ obligations
described in this Agreement and the Obligations.
(b) Environmental Reserve Account Disbursements. The Borrowers and the Administrative
Agent intend that the Reserve Funds shall not be used by the Borrowers to pay contractors in the
performance of the Environmental Efforts. Rather, the Reserve Funds shall be held in the
Environmental Reserve Account until the Borrowers provide the Administrative Agent appropriate
comprehensive written documentation and/or reports evidencing the completion of required
Environmental Efforts, as well as any required documentation evidencing that one or more Owned
Properties (each, a “Remedied Property”) have achieved final regulatory closure under
applicable Environmental Laws. Only after receipt and review of such documentation and reports,
shall the Administrative Agent release to the Borrowers the Reserve Funds, but only to the extent
such funds are attributable to a Remedied Property in the Administrative Agent’s reasonable
discretion. The appropriateness of such documentation and any decision to release Reserve Funds
pursuant to Paragraph 3(b) shall be determined at the Administrative Agent’s reasonable discretion.
The Borrowers agree that any Reserve Funds required to be disbursed to the Borrowers hereunder
shall be disbursed to the Borrower Representative.
4. Reporting. The Borrowers agree to furnish to the Administrative Agent a report, in
a form satisfactory to the Administrative Agent, detailing the status of all Environmental Efforts
required in the Existing Memorandum and then being undertaken. Such report shall be furnished
concurrently with the delivery of any annual financial statements pursuant to Section 6.01(a) of
the Credit Agreement, commencing with fiscal year ended April 30, 2011.
5. Miscellaneous Provisions.
(a) No failure or delay on the part of a party to this Agreement in exercising any power or
right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power preclude any other or further exercise thereof or the exercise of any other
right or power hereunder. No modification or waiver of any provision of this Agreement and no
consent to any departure by any party to this Agreement there from shall be effective unless the
same shall be in writing and signed by the party against whom such modification, waiver, or consent
is being sought to be enforced against, and then such waiver, modification, or consent shall be
effective only in the specific instance and for the purpose for which given. No notice to or
demand on any party to this Agreement in any case shall, of itself, entitle such party to any other
or further notice or demand in similar or other circumstances.
(b) Any notice, request, direction or demand given or made under this Agreement shall be in
writing and (whether or not the other provisions of this Agreement expressly so provide) and shall
be deemed to have been duly given if delivered to the Administrative Agent and the Borrowers in
accordance with the terms of the Credit Agreement.
(c) If any term, covenant, or provision of this Agreement shall be held to be invalid, illegal
or unenforceable in any respect, this Agreement shall be construed without such term, covenant, or
provision.
(d) This Agreement shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns.
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(e) This Agreement sets forth the entire agreement and understanding of the parties hereto
with respect to the specific matters agreed to herein and the parties hereto acknowledge that no
oral or other agreements, understandings, representations, or warranties exist with respect to this
Agreement or with respect to the obligations of the parties hereto under this Agreement, except
those specifically set forth in this Agreement.
(f) This Agreement is, and shall be deemed to be, a contract entered into under and pursuant
to the laws of the State of New York and shall be in all respects governed, construed, applied and
enforced in accordance with the laws of the State of New York. No defense given or allowed by the
laws of any other state or country shall be interposed in any action or proceeding hereon unless
such defense is also given or allowed by the laws of the State of New York.
(g) The Parties hereto waive all rights to trial by jury as further set forth in the Credit
Agreement and further agree to submit to personal jurisdiction in the State of New York in any
action or proceeding arising out of this Agreement and, in furtherance of such agreement, the
Parties hereto agree that, without limiting other methods of obtaining jurisdiction, personal
jurisdiction over any of the Parties hereto in any such action or proceeding may be obtained within
or without the jurisdiction of any court located in the State of New York and that any process or
notice of motion or other application to any such court in connection with any such action or
proceeding may be served upon the parties hereto by registered or certified mail or by personal
service at the last known address of the parties hereto, whether such parties be within or without
the jurisdiction of any such court.
(h) This Agreement may be executed in one or more counterparts by some or all of the parties
hereto, each of which counterparts shall be an original and all of which together shall constitute
a single agreement. This Agreement shall be a “Loan Document” as defined in the Credit Agreement.
(i) The Borrowers and the Administrative Agent hereby unconditionally and irrevocably waive
any and all rights to trial by jury in any action, suit or proceeding arising out of or related to
this Agreement, or any transaction arising there from or related thereto.
[Signature Pages to Follow]
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IN WITNESS WHEREOF, the Parties have duly executed this Agreement under seal as of the day and
year first above written.
BORROWERS: XXXXX & WESSON HOLDING CORPORATION |
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By: | /s/ Xxxx X. Xxxxxx | |||
Name: | Xxxx X. Xxxxxx | |||
Title: | Interim Chief Financial Officer | |||
XXXXX & WESSON CORP. |
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By: | /s/ Xxxx X. Xxxxxx | |||
Name: | Xxxx X. Xxxxxx | |||
Title: | Interim Chief Financial Officer | |||
XXXXXXXX/CENTER ARMS COMPANY, INC. |
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By: | /s/ Xxxx X. Xxxxxx | |||
Name: | Xxxx X. Xxxxxx | |||
Title: | Interim Chief Financial Officer | |||
UNIVERSAL SAFETY RESPONSE, INC. |
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By: | /s/ Xxxx X. Xxxxxx | |||
Name: | Xxxx X. Xxxxxx | |||
Title: | Interim Chief Financial Officer | |||
FOX RIDGE OUTFITTERS, INC. |
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By: | /s/ Xxxx X. Xxxxxx | |||
Name: | Xxxx X. Xxxxxx | |||
Title: | Interim Chief Financial Officer |
*Signatures Continued on Next Page*
[Signature Page to Environmental Reserve Account Agreement]
BEAR LAKE HOLDINGS, INC. |
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By: | /s/ Xxxx X. Xxxxxx | |||
Name: | Xxxx X. Xxxxxx | |||
Title: | Interim Chief Financial Officer | |||
X.X. XXXXXXXX TOOL COMPANY, INC. |
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By: | /s/ Xxxx X. Xxxxxx | |||
Name: | Xxxx X. Xxxxxx | |||
Title: | Interim Chief Financial Officer | |||
O.L. DEVELOPMENT, INC. |
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By: | /s/ Xxxx X. Xxxxxx | |||
Name: | Xxxx X. Xxxxxx | |||
Title: | Interim Chief Financial Officer | |||
XXXXXXXX CENTER HOLDING COMPANY |
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By: | /s/ Xxxx X. Xxxxxx | |||
Name: | Xxxx X. Xxxxxx | |||
Title: | Interim Chief Financial Officer | |||
XXXXX & WESSON DISTRIBUTING, INC. |
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By: | /s/ Xxxx X. Xxxxxx | |||
Name: | Xxxx X. Xxxxxx | |||
Title: | Interim Chief Financial Officer |
*Signatures Continued on Next Page*
[Signature Page to Environmental Reserve Account Agreement]
Administrative Agent: TD BANK, N.A., as Administrative Agent |
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By: | /s/ Xxxxx X. Xxxxxxxxx | |||
Name: | Xxxxx X. Xxxxxxxxx | |||
Title: | Regional Vice President |
[Signature Page to Environmental Reserve Account Agreement]
EXHIBIT A
Owned Properties
1. | 0000 Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxxxxxx, owned by Xxxxx & Wesson Corp. | |
2. | 000 Xxxx Xxxxxxxxx, Xxxxxxxxxxx, Xxxxxxxxxxxxx, owned by Xxxxx & Wesson Corp. | |
3. | 00 Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxx, owned by Xxxxx & Wesson Corp. | |
4. | 000 Xxxxx Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxxxxx, owned by O.L. Development, Inc. |
EXHIBIT B
Existing Reports
1. | Phase I Environmental Site Assessment (ESA) report dated October 15, 2010 prepared by Environmental Compliance Services, Inc. for Xxxxx & Wesson Corp., relating to the real property located at 00 Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxx. | |
2. | Phase I Environmental Site Assessment (ESA) report dated October 15, 2010 prepared by Environmental Compliance Services, Inc. for Xxxxx & Wesson Corp., relating to the real property located at 0000 Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxxxxxx. | |
3. | Phase I Environmental Site Assessment (ESA) report dated October 15, 2010 prepared by Environmental Compliance Services, Inc. for Xxxxx & Wesson Corp., relating to the real property located at 000 Xxxx Xxxxxxxxx, Xxxxxxxxxxx, Xxxxxxxxxxxxx. | |
4. | Phase I Environmental Site Assessment (ESA) report dated October 15, 2010 prepared by Environmental Compliance Services, Inc. for O.L. Development, Inc., relating to the real property located at 000 Xxxxx Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxxxxx. |
EXHIBIT C
Existing Memorandum
[See attached]