EXHIBIT 10.39
XXXXX & WESSON HOLDING CORPORATION
LOCK-UP AGREEMENT
December 15, 2006
Xxxxx & Wesson Holding Corporation
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000
Re: Xxxxx & Wesson Holding Corporation - Lock-Up Agreement
Dear Sirs:
In connection with (i) the issuance by Xxxxx & Wesson Holding Corporation
(the "COMPANY") of up to $80,000,000 principal amount of its 4% Convertible
Senior Notes due 2026 (the "NOTES") pursuant to the Indenture to be dated
December 15, 2006 (the "INDENTURE") by and between the Company and The Bank of
New York, as trustee, which Notes will among other things be convertible into
shares of common stock, par value $.001 per share (the "COMMON STOCK"), of the
Company (as converted the "CONVERSION SHARES," and together with the Notes,
each, a "SECURITY" and collectively, the "SECURITIES"), and (ii) the sale of the
Notes pursuant to the Securities Purchase Agreement entered into by and among
the Company and the investors named on the Schedule of Buyers attached thereto
(the "BUYERS"), on the date hereof (the "SECURITIES PURCHASE AGREEMENT"), the
undersigned agrees that, commencing on the date hereof and ending on the earlier
to occur of (1) the date the Closing Sale Price (as defined in the Indenture) of
the Common Stock has exceeded 150% of the Conversion Price (as defined in the
Indenture) for five (5) consecutive Trading Days (as defined in the Indenture)
and (2) 90 days from the Closing Date (as defined in the Securities Purchase
Agreement) (the "LOCK-UP PERIOD"), the undersigned will not, without the written
consent of Buyers' that purchased a majority of the Notes on the Closing Date
(the "MAJORITY BUYERS"), (A) sell, offer to sell, contract or agree to sell,
hypothecate, hedge, pledge, grant any option to purchase, make any short sale or
otherwise dispose of or agree to dispose of, directly or indirectly, any shares
of Common Stock, owned directly by the undersigned (including holding as a
custodian) or with respect to which the undersigned has beneficial ownership (as
determined pursuant to Section 13(d) of the Securities Exchange Act of 1934, as
amended, and the rules promulgated thereunder), or (B) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of any shares of Common Stock, owned directly
by the undersigned (including holding as a custodian) or with respect to which
the undersigned has beneficial ownership within the rules and regulations of the
Securities and Exchange Commission, whether any such transaction is to be
settled by delivery of such securities, in cash or otherwise, (collectively, the
"UNDERSIGNED'S SHARES").
This Lock-Up Agreement shall not apply to (i) any shares of Common Stock
acquired by the undersigned on the open market or otherwise after the Closing
Date, (ii) any shares of Common Stock traded pursuant to a Rule 10b5-1 trading
plan that are put into effect at least 30 days prior to the Closing Date, or
(iii) the pledge of shares of Common Stock in ordinary borrowing transactions
involving less than 10% of the net value of the borrowing, provided that the
pledgee agrees to be bound in writing by the restrictions set forth herein.
The foregoing restriction is expressly agreed to preclude the undersigned
or any affiliate of the undersigned from engaging in, without the written
consent of the Majority Buyers, any hedging or other transaction which is
designed to or which reasonably could be expected to lead to or result in a sale
or disposition of the Undersigned's Shares even if the Undersigned's Shares
would be disposed of by someone other than the undersigned. Such prohibited
hedging or other transactions would include, without limitation, any short sale
or any purchase, sale or grant of any right (including, without limitation, any
put or call option) with respect to any of the Undersigned's Shares or with
respect to any security that includes, relates to, or derives any significant
part of its value from the Undersigned's Shares.
Notwithstanding the foregoing, the undersigned may transfer the
Undersigned's Shares (i) as a bona fide gift or gifts, provided that the donee
or donees thereof agree to be bound in writing by the restrictions set forth
herein or (ii) to any trust for the direct or indirect benefit of the
undersigned or the immediate family of the undersigned, provided that the
trustee of the trust agrees to be bound in writing by the restrictions set forth
herein, and provided further that any such transfer shall not involve a
disposition for value. For purposes of this Lock-Up Agreement, "immediate
family" shall mean any relationship by blood, marriage or adoption, not more
remote than first cousin. The undersigned now has, and, except as contemplated
by clauses (i) and (ii) above, for the duration of this Lock-Up Agreement will
have, good and marketable title to the Undersigned's Shares, free and clear of
all liens, encumbrances, and claims whatsoever. The undersigned also agrees and
consents to the entry of stop transfer instructions with the Company's transfer
agent and registrar against the transfer of the Undersigned's Shares except in
compliance with the foregoing restrictions.
The undersigned understands and agrees that this Lock-Up Agreement is
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors, and assigns.
This Lock-Up Agreement may be executed in two counterparts, each of which
shall be deemed an original but both of which shall be considered one and the
same instrument.
This Lock-Up Agreement will be governed by and construed in accordance with
the laws of the State of New York, without giving effect to any choice of law or
conflicting provision or rule (whether of the State of New York, or any other
jurisdiction) that would cause the laws of any jurisdiction other than the State
of New York to be applied. In furtherance of the foregoing, the internal laws of
the State of New York will control the interpretation and construction of this
Lock-Up Agreement, even if under such jurisdiction's choice of law or conflict
of law analysis, the substantive law of some other jurisdiction would ordinarily
apply.
The Buyers shall be intended third party beneficiaries of this Agreement to
the same extent as if they were parties hereto, and shall be entitled to enforce
the provisions hereof. No provision of this Agreement may be amended without the
written consent of the Majority Buyers.
Very truly yours,
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Exact Name of Stockholder
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Authorized Signature
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Title
Agreed to and Acknowledged:
XXXXX & WESSON HOLDING CORPORATION
By:
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Name:
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Title:
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