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Exhibit 10.2
MANAGEMENT STOCK SUBSCRIPTION AGREEMENT
MANAGEMENT STOCK SUBSCRIPTION AGREEMENT, dated as of March 27,
2001 between RACI Holding, Inc., a Delaware corporation ("Holding"), and the
Purchaser whose name appears on the signature page hereof (the "Purchaser").
W I T N E S S E T H:
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WHEREAS, pursuant to the terms of the RACI Holding, Inc. 1999 Stock
Incentive Plan (the "Plan"), the Board of Directors of Holding (the "Board") has
granted to the Purchaser Stock Purchase Rights to purchase the aggregate number
of shares of Class A Common Stock, par value $.01 per share ("Common Stock"), of
Holding set forth on the signature page hereof (each a "Share" and,
collectively, the "Shares") at the purchase price provided for herein; and
WHEREAS, the terms of the offering of the Shares and certain other
shares of Common Stock being made as of the date hereof ("the Offering") are set
forth in a Confidential Offering Memorandum dated March 14, 2001 (the "Offering
Memorandum"), which has been furnished to the Purchaser by Holding;
NOW, THEREFORE, to implement the foregoing and in consideration of the
mutual agreements contained herein, the parties hereto hereby agree as follows:
1. Purchase and Sale of Common Stock.
(a) Purchase of Common Stock. Subject to all of the terms and
conditions of this Agreement and the Plan, the Purchaser hereby subscribes for
and shall purchase, and Holding shall sell to the Purchaser, the Shares at a
purchase price of $180.00 per Share at the Closing provided for in Section 2(a)
hereof. Notwithstanding anything in this Agreement to the contrary, Holding
shall have no obligation to sell any Common Stock to (i) any person who will not
be an employee of Holding or a direct or indirect subsidiary of Holding
immediately following the Closing at which such Common Stock is to be sold or
(ii) any person who is a resident of a jurisdiction in which the sale of Common
Stock to such person would constitute a violation of the securities, "blue sky"
or other laws of such jurisdiction.
(b) Consideration. Subject to all of the terms and conditions of this
Agreement and the Plan, the Purchaser shall deliver to Holding at the Closing
(as defined in Section 2(a) hereof) immediately available funds in the amount of
the aggregate purchase price set forth on the signature page hereof.
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2. Closing.
(a) Time and Place. Except as otherwise mutually agreed by Holding and
the Purchaser, the closing (the "Closing") of the transaction contemplated by
this Agreement shall be held at the offices of Debevoise & Xxxxxxxx, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx at 10:00 a.m. (New York time) on March 27, 2001.
(b) Delivery by Holding. At the Closing, Holding shall deliver to the
Purchaser a stock certificate registered in such Purchaser's name and
representing the Shares, which certificate shall bear the legends set forth in
Section 3(b).
(c) Delivery by the Purchaser. At the Closing, the Purchaser shall
deliver to Holding the consideration referred to in Section 1(b) hereof.
3. Purchaser's Representations, Warranties and Covenants.
(a) Investment Intention. The Purchaser represents and warrants that
the Purchaser is acquiring the Shares solely for the Purchaser's own account for
investment and not with a view to or for sale in connection with any
distribution thereof. The Purchaser agrees that the Purchaser will not, directly
or indirectly, offer, transfer, sell, pledge, hypothecate or otherwise dispose
of any of the Shares (or solicit any offers to buy, purchase or otherwise
acquire or take a pledge of any Shares), except in compliance with the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
thereunder, and in compliance with applicable state and foreign securities or
"blue sky" laws. The Purchaser further understands, acknowledges and agrees that
none of the Shares may be transferred, sold, pledged, hypothecated or otherwise
disposed of (i) unless the provisions of Sections 4 through 8 hereof, inclusive,
shall have been complied with or have expired, (ii) unless (A) such disposition
is pursuant to an effective registration statement under the Securities Act, (B)
the Purchaser shall have delivered to Holding an opinion of counsel, which
opinion and counsel shall be reasonably satisfactory to Holding, to the effect
that such disposition is exempt from the provisions of Section 5 of the
Securities Act or (C) a no-action letter from the Commission, reasonably
satisfactory to Holding, shall have been obtained with respect to such
disposition and (iii) unless such disposition is pursuant to registration under
any applicable state or foreign securities laws or an exemption therefrom.
(b) Legends. The Purchaser acknowledges that the certificate or
certificates representing the Shares shall bear the following legends or other
appropriate legends:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF A MANAGEMENT STOCK SUBSCRIPTION AGREEMENT, DATED
AS OF MARCH 27, 2001, AND NEITHER THIS CERTIFICATE NOR THE
SHARES REPRESENTED BY IT ARE ASSIGNABLE OR OTHERWISE
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TRANSFERABLE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH
MANAGEMENT STOCK SUBSCRIPTION AGREEMENT, AS THE SAME MAY BE
AMENDED FROM TIME TO TIME, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE ISSUER. THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE BOUND BY THE OBLIGATIONS SET FORTH IN AND MAY
BE ENTITLED TO SOME OF THE BENEFITS OF A REGISTRATION AND
PARTICIPATION AGREEMENT, DATED AS OF NOVEMBER 30, 1993, AMONG
THE ISSUER AND CERTAIN STOCKHOLDERS OF THE ISSUER, AS AMENDED
AND AS THE SAME MAY BE AMENDED FROM TIME TO TIME, A COPY OF
WHICH IS ON FILE WITH THE SECRETARY OF THE ISSUER."
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED
UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE
TRANSFERRED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED
OF UNLESS (i) (A) SUCH DISPOSITION IS PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, (B) THE HOLDER HEREOF SHALL HAVE DELIVERED TO HOLDING
AN OPINION OF COUNSEL, WHICH OPINION AND COUNSEL SHALL BE
REASONABLY SATISFACTORY TO THE ISSUER, TO THE EFFECT THAT SUCH
DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF SUCH
ACT OR (C) A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE
COMMISSION, REASONABLY SATISFACTORY TO THE ISSUER, SHALL HAVE
BEEN OBTAINED WITH RESPECT TO SUCH DISPOSITION AND (ii) SUCH
DISPOSITION IS PURSUANT TO REGISTRATION UNDER ANY APPLICABLE
STATE AND FOREIGN SECURITIES LAWS OR AN EXEMPTION THEREFROM."
(c) Securities Law Matters. The Purchaser acknowledges receipt of
advice from Holding that (i) the Shares have not been registered under the
Securities Act based on an exemption provided under Rule 701 promulgated under
the Securities Act or qualified under any state or foreign securities or "blue
sky" laws, (ii) it is not anticipated that there will be any public market for
the Shares, (iii) the Shares must be held indefinitely and the Purchaser must
continue to bear the economic risk of the investment in the Shares unless the
Shares are subsequently registered under the Securities Act and such state laws
or an exemption from registration is available, (iv) Rule 144 promulgated under
the Securities Act ("Rule 144") is not presently available with respect to the
sales of the Shares, and Holding has made no covenant to make Rule 144
available, (v) when and if the Shares
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may be disposed of without registration in reliance upon Rule 144, such
disposition can be made only in accordance with the terms and conditions of such
Rule, (vi) Holding does not plan to file reports with the Commission or make
public information concerning Holding available unless required to do so by law
or by the terms of its Financing Agreements (as hereinafter defined), (vii) if
the exemption afforded by Rule 144 is not available, sales of the Shares may be
difficult to effect because of the absence of public information concerning
Holding, (viii) a restrictive legend in the form heretofore set forth shall be
placed on the certificates representing the Shares and (ix) a notation shall be
made in the appropriate records of Holding indicating that the Shares are
subject to restrictions on transfer set forth in this Agreement and, if Holding
should in the future engage the services of a stock transfer agent, appropriate
stop-transfer restrictions will be issued to such transfer agent with respect to
the Shares.
(d) Compliance with Rule 144. If any of the Shares are to be disposed
of in accordance with Rule 144, the Purchaser shall transmit to Holding an
executed copy of Form 144 (if required by Rule 144) no later than the time such
form is required to be transmitted to the Commission for filing and such other
documentation as Holding may reasonably require to assure compliance with Rule
144 in connection with such disposition.
(e) Ability to Bear Risk. The Purchaser represents and warrants that
(i) the financial situation of the Purchaser is such that the Purchaser can
afford to bear the economic risk of holding the Shares for an indefinite period
and (ii) the Purchaser can afford to suffer the complete loss of the Purchaser's
investment in the Shares.
(f) Access to Information. The Purchaser represents and warrants that
the Purchaser has received the Offering Memorandum and has carefully reviewed
the Offering Memorandum (together with the Annexes thereto) and the other
materials furnished to the Purchaser in connection with the transaction
contemplated hereby.
(g) Registration; Restrictions on Sale upon Public Offering. The
Purchaser shall be entitled to the rights and subject to the obligations created
under the Registration and Participation Agreement, dated as of November 30,
1993, among Holding and certain stockholders of Holding (the "Registration and
Participation Agreement"), to the extent set forth therein. The Purchaser agrees
that, in the event that Holding files a registration statement under the
Securities Act with respect to an underwritten public offering of any shares of
its capital stock, the Purchaser will not effect any public sale or distribution
of any shares of the Common Stock (other than as part of such underwritten
public offering) during the 20 days prior to and the 180 days after the
effective date of such registration statement.
(h) Section 83(b) Election. The Purchaser agrees that, within 20 days
of the Closing, the Purchaser shall give notice to Holding as to whether or not
the Purchaser has made an election pursuant to Section 83(b) of the Internal
Revenue Code of 1986, as amended, with respect to the Shares purchased at such
Closing, and acknowledges that
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the Purchaser will be solely responsible for any and all tax liabilities payable
by the Purchaser in connection with the Purchaser's receipt of the Shares or
attributable to the Purchaser's making or failing to make such an election.
4. Restrictions on Disposition of Shares. Neither the
Purchaser nor any of the Purchaser's heirs or representatives shall sell,
assign, transfer, pledge or otherwise directly or indirectly dispose of or
encumber any of the Shares to or with any other person, firm, trust,
association, corporation or entity (including, without limitation, transfers to
any other holder of Holding's capital stock, dispositions by gift, by will, by a
corporation as a distribution in liquidation and by operation of law other than
a transfer of Shares by operation of law to the estate of the Purchaser upon the
death of the Purchaser, provided that such estate shall be bound by all
provisions of this Agreement) except as provided in Sections 5 through 8 hereof,
inclusive. The restrictions contained in this Section 4 shall terminate in the
event that an underwritten public offering of the Common Stock led by one or
more underwriters at least one of which is an underwriter of nationally
recognized standing (a "Public Offering") has been consummated and shall not
apply to a sale to the underwriters as part of a Public Offering.
5. Options of Holding and the C&D Fund Upon Proposed
Disposition.
(a) Rights of First Refusal. If the Purchaser desires to accept an
offer (which must be in writing and for cash, be irrevocable by its terms for at
least 60 days and be a bona fide offer as determined in good faith by the Board)
from any prospective purchaser to purchase all or any part of the Shares at any
time owned by the Purchaser, the Purchaser shall give notice in writing to
Holding and The Xxxxxxx Xxxxxxxx Private Equity Fund IV Limited Partnership, a
Connecticut limited partnership (together with any successor investment vehicle
managed by Xxxxxxx, Dubilier & Rice, Inc., the "C&D Fund") (i) designating the
number of Shares proposed to be sold, (ii) naming the prospective purchaser of
such Shares and (iii) specifying the price (the "Offer Price") at and terms (the
"Offer Terms") upon which the Purchaser desires to sell the same. During the
30-day period following receipt of such notice by Holding and the C&D Fund (the
"First Refusal Period"), Holding shall have the right to purchase from the
Purchaser the Shares specified in such notice, at the Offer Price and on the
Offer Terms. Holding hereby undertakes to use reasonable efforts to act as
promptly as practicable following such notice to determine whether it shall
elect to exercise such right. If Holding fails to exercise such rights within
the First Refusal Period, the C&D Fund shall have the right to purchase the
Shares specified in such notice, at the Offer Price and on the Offer Terms, at
any time during the period beginning at the earlier of (x) the end of the First
Refusal Period and (y) the date of receipt by the C&D Fund of written notice
that Holding has elected not to exercise its rights and ending 30 days
thereafter (the "Second Refusal Period"). The rights provided hereunder shall be
exercised by written notice to the Purchaser given at any time during the
applicable period. If such right is exercised, Holding or the C&D Fund, as the
case may be, shall deliver to the Purchaser a certified or bank check for the
Offer Price, payable to the order of the Purchaser, against delivery of
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certificates or other instruments representing the Shares so purchased,
appropriately endorsed by the Purchaser. If such right shall not have been
exercised prior to the expiration of the Second Refusal Period, then at any time
during the 30 days following the expiration of the Second Refusal Period, the
Purchaser may sell such Shares to (but only to) the intended purchaser named in
the Purchaser's notice to Holding and the C&D Fund at the Offer Price and on the
Offer Terms specified in such notice, free of all restrictions or obligations
imposed by, and free of any rights or benefits set forth in, Sections 6 and 7 of
this Agreement, provided that such intended purchaser shall have agreed in
writing, pursuant to an instrument of assumption satisfactory in substance and
form to Holding, to make and be bound by (i) the representations, warranties and
covenants set forth in Section 3 hereof, other than those set forth in Sections
3(f) and 3(h) and (ii) the agreements set forth in Sections 4, 5 and 8 of this
Agreement. The right of the Purchaser to sell Shares set forth in this Section
5(a), subject to the rights of first refusal set forth in this Section 5(a),
shall be suspended during the Option Periods referred to in Section 6 hereof,
but the provisions of Section 6 shall not otherwise restrict the ability of the
Purchaser to sell the Shares, whether before or after such Option Periods,
pursuant to the terms and subject to the restrictions set forth in this Section
5(a).
(b) Public Offering. In the event that a Public Offering has been
consummated, neither Holding nor the C&D Fund shall have any rights to purchase
the Shares from the Purchaser pursuant to this Section 5 and this Section 5
shall not apply to a sale to the underwriters as part of a Public Offering.
6. Options Effective on Termination of Employment or Unforeseen
Personal Hardship of the Purchaser.
(a) Termination of Employment. If the Purchaser's Active Employment
with Holding is terminated for any reason whatsoever (whether before or after
the date of this Agreement), Holding shall have an option to purchase all or any
portion of the Shares then held by the Purchaser (or, if the Purchaser's Active
Employment was terminated by the Purchaser's death, his or her estate) and shall
have 60 days from the later of the date of the Purchaser's termination, or six
months and one day from the date of the Purchaser's acquisition of the Shares
pursuant to this Agreement (such date, the "Option Start Date" and, such 60-day
period, being hereinafter referred to as the "First Option Period") during which
to give notice in writing to the Purchaser (or his or her estate) of its
election to exercise or not to exercise such option, in whole or in part,
provided that, such 60-day period may be extended by mutual agreement between
the Purchaser and Holding. Holding hereby undertakes to use reasonable efforts
to act as promptly as practicable following such termination to make such
election. If Holding (i) fails to give notice that it intends to exercise such
option within the First Option Period or (ii) chooses to repurchase none or only
a portion of the Shares then held by the Purchaser (or his or her estate), by
giving such notice, the C&D Fund shall have the right to purchase all or any
portion of the Shares not repurchased by Holding, and shall have until the
expiration of the earlier of (x) 60 days following the end of the First Option
Period, or (y) 60 days
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from the date of receipt by the C&D Fund of written notice from Holding
indicating it does not intend to exercise its option with respect to all of the
Purchaser's Shares (such 60-day period being hereinafter referred to as the
"Second Option Period"), to give notice in writing to the Purchaser (or his or
her estate) of the C&D Fund's exercise of its option, in whole or in part. If
the options of Holding and the C&D Fund to purchase all of the Shares granted in
this subsection are not fully exercised as provided herein (other than as a
result of Section 11 hereof), the Purchaser (or his or her estate) shall be
entitled to retain any Shares which could have been acquired on exercise
thereof, subject to all of the provisions of this Agreement (including without
limitation Section 5(a)). If Holding and the C&D Fund have failed to exercise
their respective options pursuant to this Section 6(a) or have exercised such
options with respect to less than all of the Shares held by the Purchaser (or
his or her estate) within the time periods specified herein, and if the
Purchaser's Active Employment is terminated (A) by the Purchaser by Retirement
or (B) by reason of the death or Permanent Disability of the Purchaser, then on
notice from the Purchaser (or his or her estate) in writing and delivered to
Holding within 30 days following the end of the Second Option Period, Holding
shall be required to purchase all (but not less than all) of the Shares then
held by the Purchaser (or his or her estate). All purchases pursuant to this
Section 6(a) by Holding or the C&D Fund shall be for a purchase price and in the
manner prescribed by Section 7 hereof.
(b) Unforeseen Personal Hardship. In the event that the Purchaser,
while in the employment of Holding or any direct or indirect subsidiary of
Holding, experiences Unforeseen Personal Hardship, the Board will carefully
consider any request by the Purchaser that Holding repurchase the Purchaser's
Shares at a price determined in accordance with Section 7 hereof, but Holding
shall have no obligation to repurchase such Shares. The Board shall consider
such request with respect to Unforeseen Personal Hardship as soon as practicable
after receipt by Holding of a written request by the Purchaser, such request to
include sufficient details of the Purchaser's Unforeseen Personal Hardship to
permit the Board to review the request and the circumstances in an informed
manner.
(c) Certain Definitions. Capitalized terms used in this Agreement
without definition shall have the respective meanings set forth in the Plan. As
used in this Agreement, the following terms shall have the following meanings:
(i) "Active Employment" shall mean active employment with
Holding or any direct or indirect subsidiary of Holding.
(ii) "Cause" shall mean (A) the willful failure by the
Purchaser to perform substantially his duties as an employee of
Holding, the Company or any Subsidiary (other than any such failure due
to physical or mental illness) after a demand for substantial
performance is delivered to the Purchaser by the executive to whom the
Purchaser reports or by the Board, which notice identifies the manner
in which such executive or the Board, as the case may be, believes that
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the Purchaser has not substantially performed his duties, (B) the
Purchaser's engaging in willful and serious misconduct that is
injurious to Holding, the Company or any Subsidiary, (C) the
Purchaser's having been convicted of, or entered a plea of guilty or
nolo contendere to, a crime that constitutes a felony, (D) the willful
and material breach by the Purchaser of any written covenant or
agreement with Holding, the Company or any Subsidiary not to disclose
any information pertaining to Holding, the Company or any Subsidiary or
not to compete or interfere with Holding, the Company or any Subsidiary
or (E) the breach by the Purchaser of the Purchaser's obligations
pursuant to Section 8 hereof.
(iii) "Company" shall mean the Remington Arms Company, Inc., a
Delaware corporation formerly named RACI Acquisition Corporation, and
any successor thereto.
(iv) "Permanent Disability" shall mean a physical or mental
disability or infirmity that prevents the performance of Purchaser's
employment-related duties for a continuous period of six months or
longer. The Board's reasoned and good faith judgment of Permanent
Disability shall be final, binding and conclusive on all parties hereto
and shall be based on such competent medical evidence as shall be
presented to it by the Purchaser or by any physician or group of
physicians or other competent medical expert employed by the Purchaser
or Holding to advise the Board.
(v) "Retirement" shall mean retirement at age 65 or later.
(vi) "Subsidiary" shall mean any corporation, a majority of
whose outstanding voting securities is owned, directly or indirectly,
by the Company or Holding.
(vii) "Unforeseen Personal Hardship" shall mean financial
hardship arising from (x) extraordinary medical expenses or other
expenses directly related to illness or disability of the Purchaser, a
member of the Purchaser's immediate family or one of the Purchaser's
parents or (y) payments necessary or required to prevent the eviction
of Purchaser from Purchaser's principal residence or foreclosure on the
mortgage on that residence. The Board's reasoned and good faith
determination of Unforeseen Personal Hardship shall be binding on
Holding and the Purchaser.
(d) Notice of Termination. Holding shall give written notice of any
termination of the Purchaser's Active Employment to the C&D Fund, except that if
such termination (if other than as a result of death) is by the Purchaser, the
Purchaser shall give written notice of such termination to Holding and Holding
shall give written notice of such termination to the C&D Fund.
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(e) Public Offering. In the event that a Public Offering has been
consummated, none of Holding, the C&D Fund or the Purchaser shall have any
rights to purchase or sell the Shares, as the case may be, pursuant to this
Section 6 and this Section 6 shall not apply to a sale as part of a Public
Offering.
7. Determination of the Purchase Price; Manner of Payment.
(a) Purchase Price. For the purposes of any purchase of the Shares
pursuant to Section 6, and subject to Section 11(c), the purchase price per
Share to be paid to the Purchaser (or his or her estate) for each Share (the
"Purchase Price") shall be the fair market value (the "Fair Market Value") of
such Share as of the later of six months and one day after the date of
Purchaser's acquisition of such Shares or effective date of the termination of
employment that gives rise to the right or obligation to repurchase or, in the
case of a repurchase as a result of Unforeseen Personal Hardship, as of the date
such Shares are repurchased (such date of termination or repurchase, as
applicable, the "Determination Date"); provided that if the Purchaser's
employment is terminated by Holding or any of its direct or indirect
subsidiaries for Cause, the Purchase Price for such Share shall be the lesser of
(i) the Fair Market Value of such Share as of the effective date of the
termination of employment that gives rise to the right or obligation to
repurchase and (ii) the price at which the Purchaser purchased such Share from
Holding pursuant to this Agreement. Whenever determination of the Fair Market
Value of such Shares is required by this Agreement, such Fair Market Value shall
be such amount as is determined in good faith by the Board. In making a
determination of Fair Market Value, the Board shall give due consideration to
such factors as it deems appropriate, including, without limitation, the
earnings and certain other financial and operating information of the Company in
recent periods, the potential value of the Company as a whole, the future
prospects of the Company and the industries in which it competes, the history
and management of the Company, the general condition of the securities markets,
the fair market value of securities of companies engaged in businesses similar
to those of the Company and the Applicable Share Valuation (as defined below).
The determination of Fair Market Value will not give effect to any restrictions
on transfer of the Shares or the fact that such Shares would represent a
minority interest in Holding. For purposes of this Agreement, the term
"Applicable Share Valuation" shall mean the annual valuation of the Common Stock
performed as of the last day of the last fiscal year of Holding ending prior to
the Determination Date by an independent valuation firm chosen by the Board,
except that, in the case of a Determination Date occurring during the period
beginning on September 1 of any fiscal year of Holding and ending on December 31
of that fiscal year beginning with the period beginning on September 1, 2000 and
ending on December 31, 2000, the term "Applicable Share Valuation" shall mean
the annual valuation of the Common Stock performed as of the last day of such
fiscal year by an independent valuation firm chosen by the Board. Such annual
valuations shall be performed as promptly as practicable following the end of
each fiscal year of Holding, beginning with the 2000 fiscal year of Holding. The
Fair Market Value as determined in good faith by the Board and in the absence of
fraud shall be binding and conclusive upon all parties
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hereto and the C&D Fund. If Holding subdivides (by any stock split, stock
dividend or otherwise) the Common Stock into a greater number of shares, or
combines (by reverse stock split or otherwise) the Common Stock into a smaller
number of shares after the Board shall have determined the Purchase Price for
the Shares (without taking into consideration such subdivision or combination)
and prior to the consummation of the purchase, the Purchase Price (including any
minimum or maximum Purchase Price specified herein or in effect as a result of a
prior adjustment) shall be appropriately adjusted to reflect such subdivision or
combination and the Board's determination as to any such judgment in good faith
shall be binding and conclusive on all parties hereto and the C&D Fund.
(b) Payment. Subject to Section 11 hereof, the completion of a
purchase pursuant to Section 6 hereof shall take place at the principal office
of Holding on the tenth business day following (i) the receipt by the Purchaser
(or his or her estate) of the notice of the C&D Fund or Holding, as the case may
be, of its exercise of its option to purchase pursuant to Section 6(a) or (ii)
Holding's receipt of notice by the Purchaser (or his or her estate) of the
election to sell Shares pursuant to Section 6(a) or (iii) the Board's
determination (which shall be delivered to the Purchaser) that it is willing and
able to purchase Shares as a result of Unforeseen Personal Hardship pursuant to
Section 6(b). The Purchase Price shall be paid by delivery to the Purchaser (or
his or her estate) of a certified or bank check for the Purchase Price payable
to the order of the Purchaser (or his or her estate), against delivery of
certificates or other instruments representing the Shares so purchased,
appropriately endorsed by the Purchaser (or his or her estate), free and clear
of all security interests, liens, claims, encumbrances, charges, options,
restrictions on transfer, proxies and voting and other agreements of whatever
nature; provided, however, that if the Determination Date occurs during the
period between September 1 and December 31 of any fiscal year of Holding or
during the first fiscal quarter of any fiscal year of Holding, Holding or the
C&D Fund, as the case may be, may elect to pay the Purchase Price in two
installments. In any such event, (i) at the closing of the purchase of the
Shares, Holding or the C&D Fund, as the case may be, shall pay to the Purchaser
(or his or her estate) an amount (the "First Installment Amount") equal to 80%
of the Fair Market Value of the Shares, determined pursuant to Section 7(a)
hereof on the basis of the most recent available valuation of the Shares, and
(ii) no later than the tenth business day following receipt by Holding of the
Applicable Share Valuation, Holding or the C&D Fund, as the case may be, shall
pay an additional amount to the Purchaser (or his or her estate) equal to the
sum of (1) the excess (the "Excess Payment"), if any, of (A) the Purchase Price
for the Shares, over (B) the First Installment Amount and (2) an amount
calculated by multiplying the Excess Payment by a percentage equal to the
average annual prime rate charged during such period by The Chase Manhattan Bank
or such other nationally recognized bank as may be designated by Holding.
(c) Application of the Purchase Price to Certain Loans. The Purchaser
agrees that Holding and the C&D Fund shall be entitled to apply any amounts to
be paid by
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Holding or the C&D Fund, as the case may be, to repurchase Shares pursuant to
Section 5 or 6 hereof to discharge any indebtedness of the Purchaser to Holding
or any of its direct or indirect subsidiaries, including, without limitation,
indebtedness of the Purchaser incurred to purchase the Shares or indebtedness
that is guaranteed by Holding or any of its direct or indirect subsidiaries.
8. Take-Along Rights.
(a) Take-Along Notice. So long as the C&D Fund holds a number of shares
of Common Stock equal to at least one-third of the Common Stock originally
purchased by the C&D Fund at the closing of the Acquisition of the Company, if
the C&D Fund intends to effect a sale of all of its shares of Common Stock to a
third party (a "100% Buyer") and elects to exercise its rights under this
Section 8, the C&D Fund shall deliver written notice (a "Take-Along Notice") to
the Purchaser, which notice shall (a) state (i) that the C&D Fund wishes to
exercise its rights under this Section 8 with respect to such transfer, (ii) the
name and address of the 100% Buyer, (iii) the per share amount and form of
consideration the C&D Fund proposes to receive for its shares of Common Stock
and (iv) the terms and conditions of payment of such consideration and all other
material terms and conditions of such transfer, (b) contain an offer (the
"Take-Along Offer") by the 100% Buyer to purchase from the Purchaser all of its
Shares on and subject to the same terms and conditions offered to the C&D Fund
and (c) state the anticipated time and place of the closing of the purchase and
sale of the shares (a "Section 8 Closing"), which (subject to such terms and
conditions) shall occur not fewer than five (5) days nor more than ninety (90)
days after the date such Take-Along Notice is delivered, provided that if such
Section 8 Closing shall not occur prior to the expiration of such 90-day period,
the C&D Fund shall be entitled to deliver another Take-Along Notice with respect
to such Take-Along Offer.
(b) Conditions to Take-Along. Upon delivery of a Take-Along Notice, the
Purchaser shall have the obligation to transfer all of its Shares pursuant to
the Take-Along Offer, as the same may be modified from time to time, provided
that the C&D Fund transfers all of its Shares to the 100% Buyer at the Section 8
Closing. Within 10 days of receipt of the Take-Along Notice, the Purchaser shall
(i) execute and deliver to the C&D Fund a power of attorney and a letter of
transmittal and custody agreement in favor of, and in form and substance
satisfactory to, the C&D Fund constituting the C&D Fund, Xxxxxxx, Dubilier &
Rice, Inc. or one or more of their respective affiliates designated by the C&D
Fund (the "Custodian"), the true and lawful attorney-in-fact and custodian for
the Purchaser, with full power of substitution, and authorizing the Custodian to
take such actions as the Custodian may deem necessary or appropriate to effect
the sale and transfer of the Shares to the 100% Buyer, upon receipt of the
purchase price therefor at the Section 8 Closing, free and clear of all security
interests, liens, claims, encumbrances, charges, options, restrictions on
transfer, proxies and voting and other agreements of whatever nature, and to
take such other action as may be necessary or appropriate in connection with
such sale, including consenting to any amendments,
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waivers, modifications or supplements to the terms of the sale (provided that
the C&D Fund also so consents, and sells and transfers its Shares on the same
terms as so amended, waived, modified or supplemented) and (ii) deliver to the
C&D Fund certificates representing the Shares, together with all necessary duly
executed stock powers.
(c) Remedies. The Purchaser acknowledges that the C&D Fund would be
irreparably damaged in the event of a breach or a threatened breach by the
Purchaser of any of its obligations under this Section 8 and the Purchaser
agrees that, in the event of a breach or a threatened breach by the Purchaser of
any such obligation, the C&D Fund shall, in addition to any other rights and
remedies available to it, in respect of such breach, be entitled to an
injunction from a court of competent jurisdiction granting it specific
performance by the Purchaser of its obligations under this Section 8. In the
event that the C&D Fund shall file suit to enforce the covenants contained in
this Section 8 (or obtain any other remedy in respect of any breach thereof),
the prevailing party in the suit shall be entitled to recover, in addition to
all other damages to which it may be entitled, the costs incurred by such party
in conducting the suit, including reasonable attorney's fees and expenses. In
the event that, following a breach or a threatened breach by the Purchaser of
the provisions of this Section 8, the C&D Fund does not obtain an injunction
granting it specific performance of the Purchaser's obligations under this
Section 8 in connection with such proposed sale prior to the time the C&D Fund
completes the sale of its shares or, in its sole discretion, abandons such sale,
then Holding shall have the option to purchase the Shares from the Purchaser at
a purchase price per Share equal to the lesser of (i) the Fair Market Value of
such Shares as of the date of the breach or threatened breach that gives rise to
the right to repurchase and (ii) the price at which the Purchaser purchased such
Shares from Holding.
(d) Public Offering. In the event that a Public Offering has been
consummated, the provisions of this Section 8 shall terminate and cease to have
further effect.
9. Representations and Warranties of Holding. Holding represents and
warrants to the Purchaser that (a) Holding has been duly incorporated and is an
existing corporation in good standing under the laws of the State of Delaware,
(b) this Agreement has been duly authorized, executed and delivered by Holding
and constitutes a valid and legally binding obligation of Holding enforceable
against Holding in accordance with its terms, (c) the Shares, when issued,
delivered and paid for in accordance with the terms hereof, will be duly and
validly issued, fully paid and nonassessable, and free and clear of any liens or
encumbrances other than those created pursuant to this Agreement, or otherwise
in connection with the transactions contemplated hereby, and (d) the Shares,
when issued and held by the Purchaser, by the Purchaser's estate upon transfer
by operation of law on the Purchaser's death or by the C&D Fund, shall be
"Registrable Securities" as provided in the Registration and Participation
Agreement.
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10. Covenants of Holding.
(a) Rule 144. Holding agrees that at all times after it has filed a
registration statement after the date hereof pursuant to the requirements of the
Securities Act or Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), relating to any class of equity securities of Holding
(other than (i) the registration of equity securities of Holding and/or options
or interests in respect thereof to be offered primarily to directors and/or
members of management or employees of Holding or its direct or indirect
subsidiaries, and senior executives of corporations in which entities managed or
sponsored by Xxxxxxx, Dubilier & Rice, Inc. have made equity investments and/or
other persons with whom Xxxxxxx, Dubilier & Rice, Inc. has consulting or other
advisory relationships, or (ii) the registration of equity securities and/or
options or other interests in respect thereof solely on Form S-4 or S-8 or any
successor form), it will file the reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations adopted by the
Commission thereunder (or, if Holding is not required to file such reports, it
will, upon the request of the Purchaser, make publicly available such
information as necessary to permit sales pursuant to Rule 144 under the
Securities Act), and will take such further action as the Purchaser may
reasonably request, all to the extent required from time to time to enable the
Purchaser to sell Shares without registration under the Securities Act within
the limitation of the exemptions provided by (i) Rule 144, as such Rule may be
amended from time to time, or (ii) any successor rule or regulation hereafter
adopted by the Commission.
(b) State Securities Laws. Holding agrees to use efforts to
comply with all state and foreign securities or "blue sky" laws applicable to
the sale of the Shares to the Purchaser, provided that Holding shall not be
obligated to qualify or register the Shares under any such law or to qualify as
a foreign corporation or file any consent to service of process under the laws
of any jurisdiction or subject itself to taxation as doing business in any such
jurisdiction.
11. Certain Restrictions on Repurchases.
(a) Financing Agreements, etc. Notwithstanding any other provision of
this Agreement, Holding shall not be permitted or obligated to repurchase any
Shares from the Purchaser if (i) such repurchase (or the payment by the Company
of a dividend to Holding to fund such repurchase) would result in a violation of
the terms or provisions of, or result in a default or an event of default under,
(A) the Amended and Restated Credit Agreement, dated as of April 28, 2000 (the
"Credit Agreement"), among the Company, The Chase Manhattan Bank ("Chase"), as
administrative agent, Bank of America, N.A., as syndication agent, Xxxxxxx Xxxxx
Credit Partners, L.P., as documentation agent, and the other banks and financial
institutions party thereto from time to time, (B) the Guarantee, dated as of
April 28, 200 (the "Guarantee"), made by Holding, as Guarantor, in favor of
Chase as administrative agent for the several banks and other financial
institutions named thereunder, (C) the Indenture, dated as of November 30, 1993,
(the
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"Indenture") among the Company, Holding, as guarantor, and First Trust National
Association, as Trustee, or (D) any other financing or security agreement or
document entered into in connection with the acquisition by Holding of
substantially all the assets of the corporation then named Sporting Goods
Properties, Inc. ("Sporting Goods") and certain related assets of Sporting
Goods' parent E.I. du Pont de Nemours and Company ("DuPont"), a Delaware
corporation, from Sporting Goods and DuPont, on December 1, 1993 (the
"Acquisition"), or the financing of the Acquisition, or the Credit Agreement, or
in connection with the operations of Holding or its subsidiaries from time to
time (the Credit Agreement, the Guarantee, any Indenture, and such other
agreements and documents, as each may be amended, modified or supplemented from
time to time, are hereinafter referred to as the "Financing Agreements"), in
each case as the same may be amended, modified or supplemented from time to
time, (ii) such repurchase would violate any of the terms or provisions of the
Certificate of Incorporation of Holding or (iii) Holding has no funds legally
available therefor under the General Corporation Law of the State of Delaware.
(b) Delay of Repurchase. In the event that a repurchase by Holding,
otherwise permitted or required under Section 6(a) is prevented solely by the
terms of Section 11(a), (i) such repurchase will be postponed and will take
place without the application of further conditions or impediments (other than
as set forth in Section 7 hereof or in this Section 11) at the first opportunity
thereafter when Holding has funds legally available therefor and when such
repurchase will not result in any default, event of default or violation under
any of the Financing Agreements or in a violation of any term or provision of
the Certificate of Incorporation of Holding and (ii) such repurchase obligation
shall rank against other similar repurchase obligations with respect to Shares
or options in respect thereof according to priority in time of (A) the effective
date of the termination of employment in connection with any repurchase
obligation arising pursuant to an exercise of the option of Holding under
Section 6(a), or (B) as to any repurchase obligation arising pursuant to an
exercise of any Purchaser's right to require a repurchase under Section 6(a),
the date upon which Holding receives written notice of such exercise, provided
that any such repurchase obligations as to which a common date determines
priority under clause (A) or (B) above shall be of equal priority and shall
share pro rata in any repurchase payments made pursuant to clause (i) above and
provided, further, that any repurchase commitment arising from Permanent
Disability, death or Retirement or any repurchase commitment made by the Board
pursuant to Section 6(b) shall have priority over any other repurchase
obligation.
(c) Purchase Price Adjustment. In the event that a repurchase of Shares
from the Purchaser is delayed pursuant to this Section 11, the purchase price
per Share when the repurchase of such Shares eventually takes place as
contemplated by Section 11(b) shall be the sum of (a) the Purchase Price
determined in accordance with Section 7 hereof at the time that the repurchase
of such Shares would have occurred but for the operation of this Section 11,
plus (b) an amount equal to interest on such Purchase Price for the period from
the date on which the completion of the repurchase would have taken place but
for
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the operation of this Section 11 to the date on which such repurchase actually
takes place (the "Delay Period") at a rate equal to the average prime rate
charged during such period by The Chase Manhattan Bank or such other nationally
recognized bank as may be designated by Holding.
12. Miscellaneous.
(a) Notices. All notices and other communications required or permitted
to be given under this Agreement shall be in writing and shall be deemed to have
been given if delivered personally or sent by certified or express mail, return
receipt requested, postage prepaid, or by any recognized international
equivalent of such mail delivery, to Holding, the C&D Fund or the Purchaser, as
the case may be, at the following addresses or to such other address as Holding,
the C&D Fund or the Purchaser, as the case may be, shall specify by notice to
the others:
(i) if to Holding, to it at:
RACI Holding, Inc.
c/o Remington Arms Company, Inc.
000 Xxxxxxxxx Xxxxx
X.X. Xxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000-0000
(ii) if to the Purchaser, to the Purchaser at the address set
forth on the signature page hereof.
(iii) if to the C&D Fund, to:
The Xxxxxxx & Dubilier Private Equity
Fund IV Limited Partnership
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxxxx & Dubilier Associates
IV Limited Partnership,
Xxxxxx X. Xxxx, III
All such notices and communications shall be deemed to have been received on the
date of delivery if delivered personally or on the third business day after the
mailing thereof. Copies of any notice or other communication given under this
Agreement shall also be given to:
Xxxxxxx, Dubilier & Rice, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxx, III
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and
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
The C&D Fund also shall be given a copy of any notice or other communication
between the Purchaser and Holding under this Agreement at its address as set
forth above.
(b) Binding Effect; Benefits. This Agreement shall be binding upon the
parties to this Agreement and their respective successors and assigns and shall
inure to the benefit of the parties to the Agreement, the C&D Fund and their
respective successors and assigns. Except as provided in Sections 4 through 8,
inclusive, nothing in this Agreement, express or implied, is intended or shall
be construed to give any person other than the parties to this Agreement, the
C&D Fund or their respective successors or assigns any legal or equitable right,
remedy or claim under or in respect of any agreement or any provision contained
herein.
(c) Waiver; Amendment.
(i) Waiver. Any party hereto or beneficiary hereof may by
written notice to the other parties (A) extend the time for the
performance of any of the obligations or other actions of the other
parties under this Agreement, (B) waive compliance with any of the
conditions or covenants of the other parties contained in this
Agreement and (C) waive or modify performance of any of the obligations
of the other parties under this Agreement, provided that any waiver of
the provisions of Sections 4 through 8, inclusive, must be consented to
in writing by the C&D Fund. Except as provided in the preceding
sentence, no action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any party or
beneficiary shall be deemed to constitute a waiver by the party or
beneficiary taking such action of compliance with any representations,
warranties, covenants or agreements contained herein. The waiver by any
party hereto or beneficiary hereof of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any
preceding or succeeding breach and no failure by a party to exercise
any right or privilege hereunder shall be deemed a waiver of such
party's or beneficiary's rights or privileges hereunder or shall be
deemed a waiver of such party's or beneficiary's rights to exercise the
same at any subsequent time or times hereunder.
(ii) Amendment. This Agreement may not be amended, modified or
supplemented orally, but only by a written instrument executed by the
Purchaser and Holding, and (in the case of any amendment modification
or supplement to or affecting Section 8 hereof, or that adversely
affects the rights of the C&D Fund hereunder) consented to by the C&D
Fund in writing. The parties hereto
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acknowledge that Holding's consent to an amendment or modification of
this Agreement may be subject to the terms and provisions of the
Financing Agreements.
(d) This Agreement, together with the Management Deferred Share Award
Agreement and election form entered into between the Purchaser and Holding on or
prior to the date hereof, is the entire agreement of the parties with respect to
the subject matter hereof and supersedes all other prior agreements,
understandings, documents, statements, representations and warranties, oral or
written, express or implied, between the parties hereto and their respective
affiliates, representatives and agents in respect of the subject matter hereof.
(e) Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by Holding or the Purchaser without the prior written consent of the
other parties and the C&D Fund. The C&D Fund may assign from time to time all or
any portion of its rights under Sections 4 through 8 hereof to one or more
persons or other entities designated by it.
(f) Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT
THE CORPORATE LAW OF THE STATE OF DELAWARE SPECIFICALLY AND MANDATORILY APPLIES.
(g) Section and Other Headings, etc. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
(h) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
(i) Delegation by the Board. All of the powers, duties and
responsibilities of the Board specified in this Agreement may, to the full
extent permitted by applicable law, be exercised and performed by any duly
constituted committee thereof to the extent authorized by the Board to exercise
and perform such powers, duties and responsibilities.
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IN WITNESS WHEREOF, Holding and the Purchaser have executed
this Agreement as of the date first above written.
RACI HOLDING, INC.
By:___________________________________
Name:
Title:
THE PURCHASER:
--Name--
By:___________________________________
Name:
Attorney-in-Fact:
Address of the Purchaser:
--Address--
Total Number of Shares
of Common Stock to be
Purchased: --Shares--
Cash Purchase
Price: $--Share Amount--
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