EXHIBIT 10.41
Execution Copy
AGREEMENT AND PLAN OF MERGER
DATED AS OF DECEMBER 15, 2006
AMONG
XXXXX & WESSON HOLDING CORPORATION;
SWAC-TC, INC.;
BEAR LAKE ACQUISITION CORP.;
AND
TGV PARTNERS-TCA INVESTORS, LLC;
E.G. XXXXXXXX, JR.;
AND
XXXXXXX X. XXXX
TABLE OF CONTENTS
SECTION 1. MERGER OF SWAC AND BEAR LAKE..................................... 1
1.1 Merger............................................................. 1
1.2 Effect of the Merger............................................... 1
1.3 Certificate of Incorporation and Bylaws............................ 1
1.4 Directors.......................................................... 2
1.5 Officers........................................................... 2
1.6 Status and Conversion of Securities................................ 2
1.7 Further Documents.................................................. 4
1.8 Effective Time..................................................... 4
1.9 Closing............................................................ 4
SECTION 2. STOCKHOLDER APPROVALS............................................ 4
SECTION 3. REPRESENTATIONS AND WARRANTIES................................... 5
3.1 Representations and Warranties of Bear Lake......................... 5
3.2 Representations and Warranties of Xxxxx & Wesson and SWAC........... 13
3.3 Representations and Warranties of Principal Stockholders............ 15
SECTION 4. COVENANTS........................................................ 15
4.1 Mutual Covenants of the Parties.................................... 15
4.2 Covenants of Bear Lake............................................. 16
4.3 Environmental Remediation Plan; Environmental Escrow............... 18
4.4 Filings Under the HSR Act and Other Antitrust Filings.............. 24
4.5 Other Acquisition Proposals........................................ 25
4.6 OSHA Compliance.................................................... 26
4.7 Press Releases and Announcements................................... 26
4.8 Advice of Changes.................................................. 26
SECTION 5. CONDITIONS PRECEDENT TO OBLIGATIONS.............................. 26
5.1 Conditions Precedent to the Obligations of Xxxxx
& Wesson and SWAC.................................................. 26
5.2 Conditions Precedent to the Obligations of Bear Lake............... 29
SECTION 6. WAIVER, MODIFICATION, ABANDONMENT................................ 30
6.1 Waivers............................................................ 30
6.2 Modification....................................................... 30
6.3 Abandonment........................................................ 30
6.4 Effect of Abandonment.............................................. 31
SECTION 7. INDEMNIFICATION.................................................. 31
7.1 Indemnification by the Principal Stockholders...................... 31
7.2 Notice and Right to Defend Third-Party Claims...................... 32
7.3 Limitations Related to Indemnity................................... 33
SECTION 8. APPOINTMENT OF STOCKHOLDERS' REPRESENTATIVE...................... 33
8.1 Appointment........................................................ 33
8.2 Reliance by Stockholders' Representative........................... 34
8.3 Expenses of Stockholders' Representative........................... 34
8.4 Indemnification.................................................... 34
TABLE OF CONTENTS
8.5 Contribution...................................................... 35
8.6 Approval.......................................................... 35
SECTION 9. GENERAL......................................................... 35
9.1 Indemnity Against Finders......................................... 35
9.2 Controlling Law................................................... 35
9.3 Notices........................................................... 35
9.4 Binding Nature of Agreement; No Assignment........................ 37
9.5 Entire Agreement.................................................. 37
9.6 Paragraph Headings................................................ 37
9.7 Gender............................................................ 37
9.8 Expenses.......................................................... 37
9.9 Validity.......................................................... 37
9.10 Counterparts...................................................... 37
9.11 Attorneys' Fees................................................... 37
EXHIBITS
A Certificate of Merger
B Voting Agreement
C Site Assessment Plan
D Form of Escrow Agreement
ii
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of December 15, 2006, among XXXXX &
WESSON HOLDING CORPORATION, a Nevada corporation ("Xxxxx & Wesson"); SWAC-TC,
INC., a Delaware corporation, which is a wholly owned subsidiary of Xxxxx &
Wesson ("SWAC"); BEAR LAKE ACQUISITION CORP., a Delaware corporation ("Bear
Lake"); and TGV PARTNERS-TCA INVESTORS, LLC, E.G. XXXXXXXX, JR., AND XXXXXXX X.
XXXX, (the "Principal Stockholders").
RECITALS
WHEREAS, the respective Boards of Directors of Xxxxx & Wesson, SWAC, and
Bear Lake have approved this Agreement providing for the merger of SWAC with and
into Bear Lake (the "Merger") as a result of which Bear Lake would become a
wholly owned subsidiary of Xxxxx & Wesson, upon the terms and subject to the
conditions set forth in this Agreement; and
WHEREAS, Xxxxx & Wesson, SWAC, and Bear Lake desire to make certain
representations, warranties, covenants, and agreements in connection with the
Merger and to prescribe various conditions to the Merger; and
WHEREAS, the Principal Stockholders will agree to vote their shares of
Common Stock and Preferred Stock of Bear Lake in favor of this Agreement and the
transactions provided for herein and to indemnify Xxxxx & Wesson pro rata
according to their respective stockholdings in Bear Lake as set forth herein.
AGREEMENT
NOW, THEREFORE, the parties hereto hereby approve and adopt this Agreement
and do mutually covenant and agree as follows:
SECTION 1.
MERGER OF SWAC AND BEAR LAKE
1.1 MERGER. At the Effective Time (as that term is hereinafter
defined), SWAC shall be merged with and into Bear Lake, which shall be the
surviving corporation, pursuant to the Certificate of Merger attached as Exhibit
A hereto (the "Certificate of Merger").
1.2 EFFECT OF THE MERGER. Upon the Merger becoming effective, the
separate existence of SWAC shall cease, and Bear Lake shall succeed to and
possess all the properties, rights, privileges, powers, franchises, and
immunities, of a public as well as of a private nature, and be subject to all
the debts, liabilities, obligations, restrictions, disabilities, and duties of
SWAC, all without further act or deed, as provided in Section 251 of the
Delaware General Corporation Law.
1.3 CERTIFICATE OF INCORPORATION AND BYLAWS. The Amended and
Restated Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), and the Bylaws of Bear Lake shall be amended and restated at
the Effective Time to read as did the certificate of incorporation and bylaws of
SWAC immediately prior to the Effective Time, except that an
amendment of the Certificate of Incorporation shall be effected by the Merger to
change the name of Bear Lake to "Xxxxxxxx Center Holding Corporation."
1.4 DIRECTORS. The directors of SWAC immediately prior to the
Effective Time shall be the directors of Bear Lake as of the Effective Time
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
1.5 OFFICERS. The officers of Bear Lake immediately prior to the
Effective Time, or such other persons as Xxxxx & Wesson shall designate, shall
be the officers of Bear Lake until the earlier of their resignation or removal
or until their respective successors are duly elected and qualified, as the case
may be.
1.6 STATUS AND CONVERSION OF SECURITIES.
(a) CONVERSION OF BEAR LAKE STOCK INTO RIGHT TO RECEIVE MERGER
CONSIDERATION. At the Effective Time, by virtue of the Merger and without any
action on the part of the holder of any shares of common stock, par value $.001
per share, of Bear Lake ("Bear Lake Common Stock"), all of the shares of Bear
Lake Common Stock issued and outstanding immediately prior to the Effective Time
(other than Bear Lake Common Stock owned by SWAC, Dissenting Shares (as that
term is hereinafter defined), and Bear Lake Common Stock held in the treasury of
Bear Lake), shall be converted into the right to receive in cash, without
interest thereon, from Xxxxx & Wesson an aggregate amount of $102,000,000 (the
"Merger Consideration") as follows: each holder shall be entitled to such amount
per share of Bear Lake Common Stock (the "Per Share Merger Consideration") that
is determined by dividing (i) the Merger Consideration less (A) the amount, if
any, of any Bear Lake Indebtedness, (B) the amount of any Option Payments (as
that term is hereinafter defined), and (C) the amount paid into the
Environmental Escrow pursuant to Section 4.3(j), by (ii) the number of shares of
Bear Lake Common Stock issued and outstanding immediately prior to the Effective
Time; except that any shares of Bear Lake Capital Stock held in the treasury of
Bear Lake shall be cancelled and all rights in respect thereof shall cease to
exist and no Merger Consideration or other property shall be issued with respect
thereto. As of the Effective Time, all shares of Bear Lake Capital Stock (as
that term is hereinafter defined) shall no longer be outstanding, shall be
automatically cancelled, and shall cease to exist, and each holder of any such
shares of Bear Lake Capital Stock shall cease to have any rights with respect
thereto, except the right of holders of Bear Lake Common Stock to receive the
Merger Consideration.
For purposes of this Agreement, "Bear Lake Indebtedness" means
(i)(A) all obligations and amounts payable by Bear Lake and its subsidiaries,
including Bear Lake Holdings, Inc., as borrowers to Citizens Bank of
Massachusetts and certain of its affiliates (collectively "Citizens Bank")
pursuant to the Amended and Restated Loan and Security Agreement entered into on
December 2, 2004, as amended to date, under which Citizens Bank extended to Bear
Lake a revolving line of credit and a term loan, and pursuant to the Master
Equipment Lease Agreement entered into on March 9, 2006 as a financing agreement
for certain capital expenditures and (B) all obligations and any amounts payable
by Bear Lake and its subsidiaries, including Bear Lake Holdings, Inc., as
borrowers to Xxxxxx Xxxxxxxxx and Xxxxxx Xxxxx, former stockholders of Bear Lake
Holdings, Inc., pursuant to promissory notes and loan
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agreements entered into on December 2, 2004, including, in each case, all
interest, charges, fees, or other amounts, including prepayment penalties, which
become due as a result of the consummation of the Merger; and (ii) all unpaid
management and similar fees payable to certain Principal Stockholders and their
affiliates, all unpaid costs and amounts payable pursuant to the termination of
the employment agreement with Xxxxx Xxxx, and any other obligation or amount
payable to any Principal Stockholder or its affiliates.
(b) EXCHANGE OF CERTIFICATES. At the Effective Time, each
holder of an outstanding certificate or certificates theretofore representing
Bear Lake Common Stock ("Bear Lake Stock Certificates"), upon surrender thereof
to Xxxxx & Wesson, shall be entitled to receive in exchange therefor the portion
of the Merger Consideration that the Bear Lake Common Stock theretofore
represented by such surrendered certificate or certificates shall have been
converted into the right to receive. Until so surrendered, each outstanding Bear
Lake Stock Certificate theretofore representing Bear Lake Common Stock shall be
deemed after the Effective Time for all purposes only to have the right to
receive the applicable portion of the Merger Consideration.
(c) CONVERSION OF SWAC CAPITAL STOCK. As of the Effective
Time, each issued and outstanding share of common stock of SWAC, par value
$.001, shall be converted into one newly issued share of Bear Lake Common Stock.
(d) OPTIONS TO PURCHASE BEAR LAKE COMMON STOCK. Each
outstanding option, right, award, or instrument to purchase or otherwise acquire
Bear Lake Common Stock ("Bear Lake Options"), whether or not vested,
exercisable, or convertible, shall be terminated, shall cease to exist, shall be
null and void, and shall have no right to receive any Merger Consideration. In
consideration for such termination, each holder of a Bear Lake Option shall be
entitled to receive in cash, in payment therefor, that amount equal to (i) the
total number of shares of Bear Lake Common Stock subject to the Bear Lake Option
multiplied by the Per Share Merger Consideration, less (ii) the total number of
shares of Bear Lake Common Stock subject to the Bear Lake Option multiplied by
the per share exercise price of such Bear Lake Option (the "Option Payments").
Prior to the Effective Time, Bear Lake shall enter into an agreement, in a form
reasonably satisfactory to Xxxxx & Wesson, with each holder of a Bear Lake
Option providing for the termination of such Bear Lake Option effective as of
the Effective Time, in exchange for the payment provided for in this Section
1.6(d). Bear Lake shall take such actions as are necessary or required,
including under the Bear Lake Acquisition Corp. 2005 Stock Incentive Plan, to
provide for the termination of the Bear Lake options in exchange for the cash
payment provided for in this Section 1.6(d) and shall provide evidence, in a
form reasonably satisfactory to Xxxxx & Wesson, of such actions.
(e) DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, shares of Bear Lake Common Stock issued and
outstanding immediately prior the Effective Time and held by any stockholder
that did not vote in favor of the Merger and that complies with Section 262 of
the Delaware General Corporation Law (the "Dissenting Shares") shall not be
converted into the right to receive any Merger Consideration, but instead shall
be converted into the right to receive such consideration as may be determined
to be due such holder pursuant to the Delaware General Corporation Law. If any
such holder shall have failed to perfect or shall have effectively withdrawn or
lost such holder's rights to appraisal under the
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Delaware General Corporation Law, that holder's Bear Lake Common Stock shall
thereupon be converted into the right to receive, as of the Effective Time, the
applicable portion of the Merger Consideration without any interest. Bear Lake
shall give Xxxxx & Wesson (i) prompt notice of any written demands for appraisal
of Bear Lake Common Stock, attempted withdrawals of such demands, and any other
instruments served pursuant to the Delaware General Corporation Law and received
by Bear Lake relating to stockholders' rights of appraisal and (ii) the
opportunity to participate in all negotiations and proceedings with respect to
demands for appraisal under the Delaware General Corporation Law. Bear Lake
shall not, except with the prior written consent of Xxxxx & Wesson, voluntarily
make any payment with respect to any demands for appraisal of Bear Lake Common
Stock, offer to settle or settle any demands, or approve any withdrawal of any
such demands.
1.7 FURTHER DOCUMENTS. From time to time, on and after the Effective
Time, as and when requested by Xxxxx & Wesson, the appropriate officers and
directors of Bear Lake as of the Effective Time shall, for and on behalf and in
the name of Bear Lake or otherwise, execute and deliver all such deeds, bills of
sale, assignments, and other instruments and shall take or cause to be taken
such further or other actions as Xxxxx & Wesson may deem reasonably necessary or
desirable in order to confirm of record or otherwise to Xxxxx & Wesson or Bear
Lake title to and possession of all of the properties, rights, privileges,
powers, franchises, and immunities of Bear Lake and otherwise to carry out fully
the provisions and purposes of this Agreement.
1.8 EFFECTIVE TIME. The Merger shall become effective on such date
(the "Effective Time") as of which all applicable legal requirements have been
fulfilled to consummate the Merger. The parties shall use their best efforts to
consummate the Merger within five business days following the satisfaction of
all conditions precedent that shall not have been waived.
1.9 CLOSING. Subject to the fulfillment or waiver of the conditions
set forth in Section 5, the closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxxxxx Xxxxxxx
LLP, 2375 East Camelback Road, Phoenix, Arizona at 9:00 a.m., local time, on the
date on which the Effective Time is expected to occur or other date or time as
may be determined by the parties.
SECTION 2.
STOCKHOLDER APPROVALS
Meetings or written consents of the stockholders of SWAC and Bear
Lake shall be held or obtained in accordance with the applicable provisions of
the Delaware General Corporation Law, on or before December 22, 2006, in each
case, among other things, to consider and act upon the adoption of this
Agreement (except, in the case of SWAC, the adoption of this Agreement may be
consented to in writing by Xxxxx & Wesson, as the sole stockholder of SWAC, on
or before that date). As a further inducement to the parties to enter into this
Agreement, the Principal Stockholders are separately agreeing to vote the Bear
Lake Capital Stock owned by them in favor of this Agreement and the transactions
contemplated hereby pursuant to the Voting Agreement constituting Exhibit B
hereto.
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SECTION 3.
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF BEAR LAKE. Except as otherwise
set forth in the Bear Lake Disclosure Schedule heretofore delivered by Bear Lake
to Xxxxx & Wesson, Bear Lake represents and warrants to Xxxxx & Wesson and SWAC
as follows:
(a) DUE INCORPORATION, GOOD STANDING, AND QUALIFICATION. Each
of Bear Lake and its subsidiaries is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation with the requisite corporate power and authority to own, operate,
and lease its properties and to carry on its business as now being conducted. As
used in this Agreement with reference to Bear Lake, the term "subsidiaries"
shall include all direct or indirect subsidiaries of Bear Lake, including its
wholly owned subsidiary, Xxxxxxxx/Center Arms Company, Inc. Neither Bear Lake
nor any subsidiary of Bear Lake is subject to any material liability by reason
of the failure to be duly qualified as a foreign corporation for the transaction
of business or to be in good standing under the laws of any jurisdiction.
Schedule 3.1(a) hereto sets forth, as of the date of this Agreement, each
jurisdiction in which Bear Lake or any subsidiary of Bear Lake is qualified to
do business.
(b) CORPORATE AUTHORITY. Bear Lake has the corporate power and
authority to enter into this Agreement and, subject to the requisite approval of
the Bear Lake stockholders, to carry out the transactions contemplated hereby.
The Board of Directors of Bear Lake has duly authorized the execution, delivery,
and performance of this Agreement. Other than stockholder approvals, no other
corporate proceedings on the part of Bear Lake or its subsidiaries are necessary
to authorize the execution and delivery by Bear Lake of this Agreement or the
consummation by Bear Lake of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Bear Lake and, assuming due
authorization, execution, and delivery hereof by each of the other parties
hereto, constitutes a legal, valid, and binding agreement of Bear Lake,
enforceable against Bear Lake in accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium, or other similar laws now or hereafter in effect relating to
creditors' rights, and (ii) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefore may be
brought.
(c) CAPITAL STOCK. As of the date hereof, Bear Lake has
authorized capital stock consisting of 5,455 shares of preferred stock, $.001
par value (the "Bear Lake Preferred Stock," and collectively with the Bear Lake
Common Stock referred to as the "Bear Lake Capital Stock"), of which 5,445
shares are issued and outstanding, and 10,000 shares of Bear Lake Common Stock,
$.001 par value, none of which are issued and outstanding. As of such date,
830.363 shares of Bear Lake Common Stock are reserved for issuance upon the
terms of outstanding Bear Lake Options. All of the issued and outstanding shares
of capital stock of Bear Lake and of each of its subsidiaries have been duly
authorized and validly issued and are fully paid and nonassessable and free of
preemptive rights. As of the date of this Agreement, the Principal Stockholders
own all of the outstanding shares of Bear Lake Capital Stock.
5
(d) OPTIONS, WARRANTS, AND RIGHTS. Neither Bear Lake nor any
subsidiary of Bear Lake has outstanding any options, rights, awards, or
instruments to purchase or otherwise acquire any shares of its capital stock,
other than as set forth in Schedule 3.1(d) hereto.
(e) SUBSIDIARIES. Schedule 3.1(e) hereto sets forth, as of the
date of this Agreement, (i) the name, jurisdiction of incorporation, and list of
stockholders of each subsidiary of Bear Lake, and (ii) the name and a
description of every other person, corporation, partnership, joint venture, or
other business association in which Bear Lake directly or indirectly owns a
material interest. The outstanding shares of capital stock of the subsidiaries
of Bear Lake are owned by Bear Lake free and clear of all claims, liens,
charges, and encumbrances. Bear Lake does not own, directly or indirectly, any
capital stock or other equity securities of any corporation or have any direct
or indirect equity or ownership interest in any corporation or other business.
(f) FINANCIAL STATEMENTS. The Consolidated Balance Sheet of
Bear Lake Holdings, Inc. and its subsidiaries as of December 31, 2003 and the
related Consolidated Statements of Income and Retained Earnings and Cash Flows,
and all related schedules and notes to the foregoing, have been audited by
Xxxxxx Xxxxxxxx & Company Professional Association; the Consolidated Balance
Sheet of Bear Lake Holdings, Inc. and its subsidiaries as of December 5, 2004
and the related Consolidated Statements of Income and Retained Earnings and Cash
Flows, and all related schedules and notes to the foregoing, have been audited
by Xxxxx Xxxxxxxx LLP, registered independent public accountants; and the
Consolidated Balance Sheets of Bear Lake and its subsidiaries for the period
December 5, 2004 to December 31, 2004 and as of December 31, 2005, and the
related Consolidated Statements of Operations, Consolidated Statements of
Changes in Stockholders' Equity, and Consolidated Statements of Cash Flows for
such periods and all related schedules and notes to the foregoing, have been
audited by Xxxxx Xxxxxxxx LLP, registered independent public accountants; and
the Consolidated Balance Sheet of Bear Lake and subsidiaries as of September 30,
2006, and the Consolidated Statements of Operations, Changes in Stockholders'
Equity, and Cash Flows of Bear Lake and its subsidiaries for the nine months
ended September 30, 2006, and all related schedules and notes to the foregoing,
have been prepared by Bear Lake without audit. All of the foregoing financial
statements have been prepared in accordance with generally accepted accounting
principles, applied on a consistent basis (except as may be indicated in the
notes thereto or, in the case of interim consolidated financial statements,
where information and footnotes contained in such financial statements are not
required to be in compliance with generally accepted accounting principles), and
fairly present, in all material respects, the financial position, results of
operations, and changes in financial position of Bear Lake and its subsidiaries
as of their respective dates and for the periods indicated.
(g) NO MATERIAL CHANGE. Since December 31, 2005, there has not
been and, to the knowledge of Bear Lake, there is not threatened (i) any
Material Adverse Effect (as that term is hereinafter defined); (ii) any loss or
damage (whether or not covered by insurance) to any of the assets or properties
of Bear Lake or any subsidiary of Bear Lake that materially affects or impairs
the ability of Bear Lake and its subsidiaries to conduct their business as a
whole; or (iii) any mortgage or pledge of any material amount of the assets or
properties of Bear Lake or any subsidiary of Bear Lake, or any indebtedness
incurred by Bear
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Lake or any subsidiary of Bear Lake, other than indebtedness, not material in
the aggregate, incurred in the ordinary course of business. For purposes of this
Agreement, "Material Adverse Effect" means any material adverse effect on the
business, assets, properties, or operations, or on the condition, financial or
otherwise, of Bear Lake and its subsidiaries, taken as a whole; provided,
however, that in no event shall any of the following be taken into account in
determining whether there has been or will be a Material Adverse Effect:
changes, events, circumstances, or effects caused by (A) changes in general
economic or market conditions (except to the extent those changes have a
materially disproportionate effect on Bear Lake and its subsidiaries relative to
other similarly situated persons in the industries in which they operate), (B)
compliance with the terms and conditions of this Agreement, (C) the public
announcement of the transactions contemplated by this Agreement, or (D) any
outbreak of major hostilities in which the United States is involved or any act
of terrorism within the United States or directed against its facilities or
citizens wherever located.
(h) TITLE TO PROPERTIES. Each of Bear Lake and its
subsidiaries has good and marketable title to all of its real and personal
assets and properties, including all assets and properties reflected in the
Consolidated Balance Sheet of Bear Lake and its subsidiaries as of December 31,
2005 (the "Bear Lake Base Balance Sheet"), or acquired subsequent to the date of
the Bear Lake Base Balance Sheet, except assets or properties disposed of
subsequent to that date in the ordinary course of business or as contemplated by
this Agreement. Such assets and properties are not subject to any mortgage,
pledge, lien, claim, encumbrance, charge, security interest, title retention, or
other security arrangement (each a "Lien" and collectively, the "Liens"), except
for (i) statutory liens not yet delinquent that are being contested in good
faith by appropriate proceedings, and liens for taxes not yet due, (ii) defects
and irregularities of title and encumbrances that do not materially impair the
use thereof for the purposes for which they are held, (iii) mechanics',
materialmen's, workmen's, repairmen's, warehousemen's, carriers', and other
similar liens arising in the ordinary course of business, (iv) any Liens that do
not materially adversely affect the use of any property or asset for its
intended purposes, and (v) properties and assets the loss of which would not,
individually or in the aggregate, have a Material Adverse Effect (collectively,
the "Permitted Liens"). All leases pursuant to which Bear Lake or any subsidiary
of Bear Lake leases any substantial amount of real or personal property are
valid and effective in accordance with their respective terms. Schedule 3.1(h)
hereto sets forth, as of the date hereof, the location, physical description,
basis of occupancy, ownership, and terms of any mortgages or leases with respect
to the properties used in the conduct of the business of Bear Lake or any of its
subsidiaries.
(i) CONDITION OF ASSETS AND PROPERTIES. Except as would not
have a Material Adverse Effect, the buildings, equipment, machinery, fixtures,
furniture, furnishings, office equipment, and all other tangible personal assets
and properties presently used in, or necessary for the operation of, the
business of Bear Lake or its subsidiaries, do not require any repairs other than
normal maintenance and are in good operating condition and in a state of
reasonable maintenance and repair.
(j) LITIGATION. There are no actions, suits, proceedings, or
other litigation pending or, to the knowledge of Bear Lake, threatened against
Bear Lake or any of its subsidiaries, at law or in equity, or before or by any
federal, state, municipal, or other governmental department, commission, board,
bureau, agency, or instrumentality that, if
7
determined adversely to Bear Lake or its subsidiaries, would individually or in
the aggregate have a Material Adverse Effect. Neither Bear Lake nor any
subsidiary of Bear Lake is a party to any decree, order, or arbitration award
(or agreement entered into in any administrative, judicial, or arbitration
proceeding with any governmental authority) with respect to or affecting any of
its assets or properties or the use thereof or the conduct of its business.
Neither Bear Lake nor any subsidiary of Bear Lake has admitted to any liability
or any set of facts, conditions, or circumstances that establishes any product
defect or other malfunction, condition, circumstance, or set of facts determined
under any law or contractual, equitable, or other legal theory to cause, result
in, or contribute to injury, death, or other damages (a "Product Defect"), and
there has not been any adverse judgment against Bear Lake or any subsidiary of
Bear Lake that establishes any such liability or facts, conditions, or
circumstances. There are no material claims pending, anticipated or, to the
knowledge of Bear Lake, threatened against Bear Lake or any subsidiary of Bear
Lake with respect to a Product Defect.
(k) LICENSES AND PERMITS. Neither Bear Lake nor any subsidiary
of Bear Lake is subject to any material disability or liability by reason of its
failure to possess any license, permit, franchise, certificate, consent,
approval, or authorization. Each of Bear Lake and its subsidiaries has all
licenses, permits, franchises, certificates, consents, approvals, and
authorizations of whatever kind and type, governmental or private, necessary for
the business conducted by it and the ownership or use of all assets and
properties and the premises occupied by it. Schedule 3.1(k) hereto sets forth,
as of the date hereof, a true, correct, and complete list of all licenses,
permits, franchises, certificates, consents, approvals, and authorizations
necessary for the conduct of the business of Bear Lake and its subsidiaries.
(l) INTELLECTUAL PROPERTY. Each of Bear Lake and its
subsidiaries owns or holds all of the rights to use all patents, trademarks,
copyrights, trade names, trade secrets, logos, fictitious names, service marks,
and slogans that are used in or necessary to the operation of its business,
except where such failure to own or have the right to use such intellectual
property would not, individually or in the aggregate, have a Material Adverse
Effect. Schedule 3.1(l) hereto constitutes, as of the date hereof, a true,
complete, and correct list of all of the intellectual property owned or used by
Bear Lake or any subsidiary of Bear Lake. To the knowledge of Bear Lake, none of
the matters covered by the intellectual property, nor any of the products or
services sold or provided by Bear Lake or any subsidiary of Bear Lake, nor any
of the processes used or the business practices followed by Bear Lake or any
subsidiary of Bear Lake, infringes, or has infringed within the past seven
years, upon any patent, trademark, trademark right, trade name, trade name
right, trade secret, logo, fictitious name, service xxxx, slogan, or copyright
owned by any person or entity (or any application with respect thereto), or
constitutes unfair competition. Neither Bear Lake nor any subsidiary of Bear
Lake is, and following the Effective Time Xxxxx & Wesson will not be, obligated
to pay any royalty or other payment with respect to any intellectual property.
To the knowledge of Bear Lake, no person or entity is producing, providing,
selling, or using products or services that would constitute an infringement of
any intellectual property of Bear Lake or any of its subsidiaries.
(m) NO VIOLATION. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will not violate or
result in a breach by Bear Lake or any subsidiary of Bear Lake of, or constitute
a default under, or conflict with, or cause any acceleration of any obligation
with respect to (i) any provision or restriction of any
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charter or bylaw of Bear Lake or any subsidiary of Bear Lake; (ii) any
stockholders' agreement, voting trust, proxy, or other similar agreement of Bear
Lake; (iii) any loan agreement, indenture, lease, or mortgage of Bear Lake or
any subsidiary of Bear Lake; (iv) any provision or restriction of any lien,
lease agreement, contract, or instrument to which Bear Lake or any subsidiary of
Bear Lake is a party or by which any of them is bound; or (v) any order,
judgment, award, decree, law, rule, ordinance, or regulation or any other
restriction of any kind or character to which any assets or properties of Bear
Lake or any subsidiary of Bear Lake is subject or by which Bear Lake or any
subsidiary of Bear Lake is bound, except, with respect to clauses (iii) through
(v), for any such violations, breaches, defaults or conflicts, acceleration, or
other occurrences, which would not, individually or in the aggregate, have a
Material Adverse Effect. Neither the execution and delivery by Bear Lake of this
Agreement or any of the other agreements contemplated hereby, nor the
consummation of the transactions contemplated hereby or thereby, will result in
the creation of any Lien with respect to any of the stock or assets or
properties of any of Bear Lake or any subsidiary of Bear Lake.
(n) TAXES. Bear Lake has duly filed in correct form all Tax
Returns (as defined below) relating to the activities of Bear Lake and its
subsidiaries required or due to be filed (with regard to applicable extensions)
on or prior to the date hereof. All such Tax Returns are complete and accurate
in all material respects, and Bear Lake has paid or made provision for the
payment of all Taxes (as defined below) that have been incurred or are due or
claimed to be due from Bear Lake or any of its subsidiaries by foreign, federal,
state, or local taxing authorities for all periods ending on or before the date
hereof, other than Taxes or other charges that are not delinquent or are being
contested in good faith and have not been finally determined and have been
disclosed to Xxxxx & Wesson. The amounts set up as reserves for Taxes on the
books of Bear Lake and its subsidiaries are sufficient in the aggregate for the
payment of all unpaid Taxes (including any interest or penalties thereon),
whether or not disputed, accrued, or applicable. No claims for Taxes or
assessments are being asserted or, to the knowledge of Bear Lake, threatened
against Bear Lake or any of its subsidiaries. Bear Lake has furnished to Xxxxx &
Wesson a copy of all Tax Returns filed for it or its subsidiaries within the
five-year period prior to the date of the Agreement. For purposes of this
Agreement, the term "Taxes" shall mean all taxes, charges, fees, levies, or
other assessments, including, without limitation, income, gross receipts,
excise, property, sales, transfer, license, payroll, and franchise taxes,
imposed by the United States or any state, local, or foreign government or
subdivision or agency thereof, and such term shall include any interest,
penalties, or additions to tax attributable to such assessments or to the
failure to file any Tax Return; and the term "Tax Return" shall mean any report,
return, or other information required to be supplied to a taxing authority or
required by a taxing authority to be supplied to any other person.
(o) ACCOUNTS RECEIVABLE. Each account receivable of Bear Lake
or any subsidiary of Bear Lake has been acquired in the ordinary course of
business, is valid and enforceable, and is fully collectible, subject to no
known defenses, setoffs, or counterclaims, except to the extent of the reserve
reflected in the books of Bear Lake and its subsidiaries or in such other amount
that is not material in the aggregate.
(p) CONTRACTS. Neither Bear Lake nor any subsidiary of Bear
Lake is a party to (i) any plan or contract providing for bonuses, incentives,
pensions, stock options, stock purchases, deferred compensation, retirement
payments, pension, profit sharing, or welfare
9
benefits; (ii) any plan or agreement providing for fringe benefits to present or
former employees, including sick leave, severance pay, medical, hospitalization,
life insurance, or related benefits; (iii) any lease, installment purchase
agreement, or other contract with respect to any real or personal property used
or proposed to be used in its operations, excepting, in each case, items
included within aggregate amounts disclosed or reflected in the Bear Lake Base
Balance Sheet; (iv) any employment, consulting, or other similar arrangement not
terminable by it upon 30 days or less notice without penalty to it or that
provides for payments upon or after termination; (v) any contract or agreement,
including any purchase commitment with a supplier, creating an obligation of
$50,000 or more; (vi) any mortgage, deed of trust, pledge agreement, security
agreement, lease, or other contract or agreement, which by its terms does not
terminate or is not terminable by it without penalty to it; (vii) any loan
agreement, letter of credit, financing agreement, indenture, promissory note, or
other similar type of arrangement; or (viii) any contract (other than those
described in clauses (i) through (vii)) that by its operation or termination
would have a Material Adverse Effect (all of the foregoing, collectively, the
"Contracts"). All Contracts to which Bear Lake or any subsidiary of Bear Lake is
a party are valid and enforceable in accordance with their terms, except that
the enforcement thereof may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium, or other similar laws now or hereafter in effect
relating to creditors' rights generally, and (B) general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law); and Bear Lake, its subsidiaries, and all other parties to each of the
foregoing have performed all obligations required to be performed to date and
have waived no rights thereunder. Neither Bear Lake nor any subsidiary of Bear
Lake has received any written notice of any default under (or any condition
which with the passage of time or the giving of notice would cause such a
default under) any Contract. Neither Bear Lake nor any subsidiary of Bear Lake
is bound by any agreement or arrangement to sell or provide goods or services at
prices below the prevailing market prices therefor or to purchase goods or
services at prices above the then prevailing market prices therefor. To the
knowledge of Bear Lake, no manufacturer for or supplier to Bear Lake or any of
its subsidiaries has threatened to terminate their business relationship with
Bear Lake or any of its subsidiaries which termination would not result in a
Material Adverse Effect.
(q) COMPLIANCE WITH LAW AND OTHER REGULATIONS.
(i) GENERAL. Each of Bear Lake and its subsidiaries is
in compliance in all material respects with all requirements of foreign,
federal, state, and local law and all requirements of all governmental bodies
and agencies having jurisdiction over it, the conduct of its business, the use
of its assets and properties, and all premises occupied by it, including without
limitation under any Occupational Safety and Health Administration ("OSHA")
requirements, but excluding Environmental Laws (as defined in Section
4.3(m)(iv)). Without limiting the foregoing, each of Bear Lake and its
subsidiaries has properly filed all reports, paid all monies, and obtained all
licenses, permits, certificates, and authorizations needed or required for the
conduct of its business and the use of its assets and properties and the
premises occupied by it in connection therewith except where the failure to
obtain such licenses, permits, certificates, and authorizations would not,
individually or in the aggregate, have a Material Adverse Effect, and is in
compliance in all material respects with all conditions, restrictions, and
provisions of all of the foregoing. Neither Bear Lake nor any subsidiary of Bear
Lake has received any notice from any foreign, federal, state, or local
authority or any insurance or inspection body that any of its assets,
properties, facilities, equipment, or business procedures
10
or practices fails to comply with any applicable law, ordinance, regulation,
building, or zoning law, or requirement of any public authority or body. Bear
Lake makes no representation or warranty regarding compliance with any
Environmental Laws.
(r) EMPLOYEE BENEFIT AND EMPLOYMENT MATTERS.
(i) ERISA MATTERS. For purposes of this Agreement,
"Company Benefit Plan" means any plan, program, policy, practice, contract,
agreement, or other arrangement providing for compensation, severance,
termination pay, deferred compensation, performance awards, stock or
stock-related awards, fringe benefits, or other employee benefits or
remuneration of any kind, whether written, unwritten, or otherwise, funded or
unfunded, including, without limitation, each "employee benefit plan," within
the meaning of Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") (whether or not ERISA is applicable to such plan),
that is or has been maintained, contributed to, or required to be contributed
to, by Bear Lake, any subsidiary or affiliate of Bear Lake, or any predecessor
of Bear Lake or any subsidiary of Bear Lake for the benefit of any employee of
Bear Lake or any subsidiary of Bear Lake, or with respect to which Bear Lake,
any subsidiary of Bear Lake, or any affiliate of Bear Lake has or may have any
liability or obligation. To Bear Lake's knowledge, each of Bear Lake, its
subsidiaries, and its affiliates have substantially performed all material
obligations required to be performed by them under, are not in default or
violation of, and have no knowledge of any default or violation by, any other
party to, the material terms of any Company Benefit Plan. Each Company Benefit
Plan has been established and maintained substantially in accordance with its
terms and in substantial compliance with applicable laws, including ERISA and
the Internal Revenue Code of 1986, as amended (the "Code"). Any Company Benefit
Plan intended to be qualified under section 401(a) of the Code has obtained a
favorable determination letter (or opinion letter, if applicable) as to its
qualified status under the Code. Neither Bear Lake nor any subsidiary or
affiliate of Bear Lake has maintains, sponsors, participates in, or contributes
to, or has maintained, sponsored, or contributed to (or is in the process of
establishing), and has no liability under any (i) Company Benefit Plan subject
to Title IV of ERISA, (ii) "multiemployer plan" within the meaning of Section
(3)(37) of ERISA, (iii) any Company Benefit Plan in which stock of Bear Lake,
its subsidiaries, or its affiliates is or was held as a plan asset, (iv) plan or
arrangement subject to the laws of a country other than the United States, or
(v) any plan or arrangement that provides for any payments or benefits after
termination of employment (except as required by applicable law). Schedule
3.1(r)(i) hereto contains a list as of the date hereof, complete and accurate in
all material respects, of each Company Benefit Plan and Bear Lake has furnished
to Xxxxx & Wesson true and complete copies of each such Company Benefit Plan. To
Bear Lake's knowledge, no "prohibited transaction," within the meaning of
Section 4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise
exempt under Section 408 of ERISA, has occurred with respect to any Company
Benefit Plan. There are no claims or legal actions pending, or to Bear Lake's
knowledge, threatened (other than routine claims for benefits), against any
Company Benefit Plan or against the assets of any Company Benefit Plan. There
are no audits, inquiries, or proceedings pending or threatened by the Internal
Revenue Service, the Department of Labor, or any other governmental authority
with respect to any Company Benefit Plan. Bear Lake, Company, its subsidiaries,
and its affiliates have made all contributions and other payments required by
and due under the terms of each Company Benefit Plan.
11
(ii) LABOR MATTERS. Each of Bear Lake and its
subsidiaries has complied in all material respects with all other applicable
foreign, federal, state, and local laws, rules, regulations, and ordinances,
relating to the employment of labor, including, without limitation, the
provisions thereof relative to wages, hours, collective bargaining, working
conditions, and payment of taxes of any kind, and neither Bear Lake nor any
subsidiary of Bear Lake is liable for any arrears of wages or any taxes or
penalties for failure to comply with any of the foregoing or has any obligations
for any vacation, sick leave, or other compensatory time. Neither Bear Lake nor
any subsidiary of Bear Lake is a party to any collective bargaining or other
contract or agreement with any labor union, and there is no request for union
representation pending or, to the knowledge of Bear Lake, threatened against
Bear Lake or any subsidiary of Bear Lake. There is not pending or, to the
knowledge of Bear Lake, threatened any (A) labor dispute, grievance, strike, or
work stoppage involving any of the employees of Bear Lake or any subsidiary of
Bear Lake, (B) charge or complaint against or involving any employees of Bear
Lake or any subsidiary of Bear Lake by the National Labor Relations Board, the
Department of Labor, OSHA, or any similar foreign, federal, state, or local
board or agency, or (C) unfair employment or labor practice charges by or on
behalf of any employee of Bear Lake or any subsidiary of Bear Lake.
(iii) ARRANGEMENTS WITH EMPLOYEES. The employment of
each employee of Bear Lake or any subsidiary of Bear Lake is terminable at will
without cost to Bear Lake or any subsidiary of Bear Lake. Bear Lake has
delivered to Xxxxx & Wesson a true and complete schedule of the salaries or
other compensation and personal benefits paid to or accrued for all officers of
Bear Lake and its subsidiaries as of the date of this Agreement.
(s) NO PAYMENTS TO DIRECTORS, OFFICERS, STOCKHOLDERS, OR
OTHERS. Since the date of the Bear Lake Base Balance Sheet, there has not been
any purchase or redemption of any shares of capital stock of Bear Lake or any
subsidiary of Bear Lake or any transfer, distribution, or payment by Bear Lake
or its subsidiaries, directly or indirectly, of any assets or properties to any
director, officer, stockholder, or other person, other than the payment of
compensation for services actually rendered at rates not in excess of the rates
prevailing on the date of the Bear Lake Base Balance Sheet.
(t) NO PROHIBITED PAYMENTS. Neither Bear Lake, nor any
subsidiary of Bear Lake, nor, to the knowledge of Bear Lake, any officer,
director, employee, independent contractor, or agent, acting on behalf of Bear
Lake or any subsidiary of Bear Lake, has at any time (i) made any contributions
to any candidate for political office in violation of law or failed to disclose
fully any contributions to any candidate for political office in accordance with
any applicable statute, rule, regulation, or ordinance requiring such
disclosure; (ii) made any payment to any local, state, federal, or foreign
governmental officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or allowed by applicable law;
(iii) made any payment outside the ordinary course of business to any purchasing
or selling agent or person charged with similar duties of any entity to which
Bear Lake or any subsidiary of Bear Lake sells products or renders services or
from which Bear Lake or any subsidiary of Bear Lake buys products or services
for the purpose of influencing such agent or person to buy products or services
from or sell products or services to Bear Lake or any subsidiary of Bear Lake;
or (iv) engaged in any transaction, maintained any bank account, or used any
corporate
12
funds, except for transactions, bank accounts, and funds that have been and are
reflected in the normally maintained books and records of Bear Lake or any
subsidiary of Bear Lake.
(u) GOVERNING DOCUMENTS AND MINUTE BOOKS. Bear Lake has
previously delivered to Xxxxx & Wesson true and complete copies of the
certificate of incorporation and bylaws of Bear Lake and its subsidiaries as
currently in effect. The minute book of Bear Lake contains complete and accurate
records of all meetings and other corporate actions held or taken by its Boards
of Directors (or committees of the Boards of Directors) and stockholders of Bear
Lake since its incorporation.
(v) INSURANCE. Each of Bear Lake and its subsidiaries
maintains in full force and effect insurance coverage on its assets, properties,
premises, operations, and personnel in such amounts and against such risks and
losses as are adequate, in the reasonable judgment of Bear Lake management, for
the businesses engaged in by it. Schedule 3.1(v) hereto sets forth, as of the
date hereof, a complete and accurate list of each insurance policy maintained by
Bear Lake or any of its subsidiaries, copies of which have been furnished to
Xxxxx & Wesson.
(w) LIST OF ACCOUNTS. Schedule 3.1(w) hereto contains a list
of all bank and securities accounts and all safe deposit boxes, maintained by
Bear Lake or any of its subsidiaries, and a listing of all authorized
signatories to such accounts or safe deposit boxes.
(x) ACCURACY OF STATEMENTS. Neither this Agreement nor any
other agreement, instrument, certificate, or other document to be entered into
in connection with this Agreement contains or will contain an untrue statement
of a material fact or omits or will omit to state a material fact necessary to
make the statements contained herein or therein, in light of circumstances in
which they are made, not misleading. Notwithstanding the foregoing or any other
provision of this Agreement, Bear Lake does not make any representation or
warranty regarding any forward-looking information regarding Bear Lake,
including any such information contained in any strategic plans, operating
budgets, financial projections, or other document that may have been disclosed
to Xxxxx & Wesson by Bear Lake.
3.2 REPRESENTATIONS AND WARRANTIES OF XXXXX & WESSON AND SWAC.
Except as otherwise set forth in the Xxxxx & Wesson Disclosure Schedule
heretofore delivered by Xxxxx & Wesson to Bear Lake, Xxxxx & Wesson and SWAC
jointly and severally represent and warrant to Bear Lake as follows:
(a) DUE INCORPORATION, GOOD STANDING AND QUALIFICATION. Each
of Xxxxx & Wesson and its subsidiaries (including SWAC) is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation with the requisite corporate power and
authority to own, operate, and lease its properties and to carry on its business
as now being conducted. SWAC is a wholly owned subsidiary of Xxxxx & Wesson and,
apart from matters arising under this Agreement, has no significant assets,
liabilities, or business. As used in this Agreement with reference to Xxxxx &
Wesson, the term "subsidiaries" shall include SWAC and all other direct or
indirect subsidiaries of Xxxxx & Wesson as of the date of this Agreement.
13
(b) CORPORATE AUTHORITY. Each of Xxxxx & Wesson and SWAC has the
corporate power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby. Except for the approval by Xxxxx & Wesson as
the sole stockholder of SWAC, the Boards of Directors of each of Xxxxx & Wesson
and SWAC has duly authorized the execution, delivery, and performance of this
Agreement. No other corporate proceedings on the part of Xxxxx & Wesson or SWAC
are necessary to authorize the execution and delivery by Xxxxx & Wesson and SWAC
of this Agreement or the consummation by Xxxxx & Wesson or SWAC of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of Xxxxx & Wesson and SWAC and, assuming the due
authorization, execution, and delivery hereof by each of the other parties
hereto, constitutes a legal, valid, and binding agreement of Xxxxx & Wesson and
SWAC, enforceable against them in accordance with its terms, except that (i)
such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium, or other similar laws now or hereafter in effect relating to
creditors' rights, and (ii) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any proceeding therefor may be brought.
(c) NO VIOLATION. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby will not violate or
result in a breach by Xxxxx & Wesson or SWAC of, or constitute a default under,
or conflict with, or cause any acceleration of any obligation with respect to
(i) any provision or restriction of any charter or bylaw of Xxxxx & Wesson or
SWAC; (ii) any stockholders' agreement, voting trust, proxy, or other similar
agreement; (iii) any loan agreement, indenture, lease, or mortgage of Xxxxx &
Wesson or SWAC; (iv) any provision or restriction of any lien, lease agreement,
contract, or instrument to which Xxxxx & Wesson or SWAC is a party or by which
either of them is bound; or (v) any order, judgment, award, decree, law, rule,
ordinance, or regulation or any other restriction of any kind or character to
which any assets or properties of Xxxxx & Wesson or SWAC are subject or by which
Xxxxx & Wesson or SWAC is bound, except, with respect to clauses (iii) through
(v), for any such violations, breaches, defaults or conflicts, acceleration, or
other occurrences, which would not, individually or in the aggregate, have a
material adverse effect on the business, assets, properties, or operations, or
on the condition, financial or otherwise, of Xxxxx & Wesson and its
subsidiaries, taken as a whole, provided, however, that in no event shall any
shall any of the following be taken into account in determining whether there
has been or will be a material adverse effect on Xxxxx & Wesson and its
subsidiaries: changes, events, circumstances, or effects caused by (A) changes
in general economic or market conditions (except to the extent those changes
have a materially disproportionate effect on Xxxxx & Wesson and its subsidiaries
relative to other similarly situated persons in the industries in which they
operate), (B) compliance with the terms and conditions of this Agreement, (C)
the public announcement of the transactions contemplated by this Agreement or
(D) any outbreak of major hostilities in which the United States is involved or
any act of terrorism within the United States or directed against its facilities
or citizens wherever located.
(d) ACCURACY OF STATEMENTS. Neither this Agreement nor any other
agreement, instrument, certificate, or other document to be entered into in
connection with this Agreement contains or will contain an untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statements contained herein or therein, in light of the circumstances in
which they are made, not misleading.
14
(e) AVAILABLE FUNDS. Xxxxx & Wesson has, or will have immediately
prior to Closing, sufficient funds available to it to pay the Merger
Consideration in accordance with this Agreement.
3.3 REPRESENTATIONS AND WARRANTIES OF PRINCIPAL STOCKHOLDERS. Each
Principal Stockholder severally as to such Principal Stockholder and not jointly
with any other Principal Stockholder represents and warrants to Xxxxx & Wesson
and SWAC as follows:
(a) AUTHORITY. Such Principal Stockholder has all requisite power
and authority to enter into this Agreement and to fulfill such Principal
Stockholder's obligations under this Agreement. This Agreement has been duly
executed and delivered by and constitutes a legal, valid, and binding agreement
of such Principal Stockholder enforceable against such Principal stockholder in
accordance with its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium, or other similar laws nor or
hereafter in effect relating to creditors' rights, and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defines and to the discretion of the court before which nay
proceeding therefor may be brought.
(b) NO VIOLATION. The execution, delivery, and performance by such
Principal Stockholder will not violate or result in a breach by such Principal
Stockholder of, a constitute a default under, or conflict with, or cause any
acceleration of any obligation with respect to (i) any provision or restriction
of any governing instrument or document of such Principal Stockholder; (ii) any
stockholders' agreement, voting trust, proxy, or other similar agreement; (iii)
any loan agreement, indenture, lease, or mortgage to which such Principal
Stockholder is a party or by which such Principal Stockholder is bound; or (iv)
any order, judgment, award, decree, law, rule, ordinance, regulation, or other
restriction of any kind or character to which any assets or properties of such
Principal Stockholder is subject or by which such Principal stockholder is
bound, except with respect to clauses (iii) through (iv), for any such
violations, breaches, defaults or conflicts, acceleration, or other occurrences,
which would not, individually or in the aggregate, have a material adverse
effect on the business, assets, properties, or operations, or on the condition,
financial or otherwise, of such Principal Stockholder.
SECTION 4.
COVENANTS
4.1 MUTUAL COVENANTS OF THE PARTIES.
(a) BEST EFFORTS. Subject to the terms and conditions of this
Agreement, each of the parties to this Agreement agrees to use its best efforts
in good faith to take, or cause to be taken, all actions, and to do, or cause to
be done, all things necessary, proper, desirable, or advisable under applicable
laws, so as to enable the parties to consummate, as soon as practicable, the
Merger and the other transactions contemplated hereby that are required to be
performed prior to or at the Effective Time, including the satisfaction of the
conditions set forth in this Agreement, and the parties shall cooperate fully
with each other to that end.
(b) APPROPRIATE ACTIONS; CONSENTS; FILINGS. Each of the parties to
this Agreement shall use their best efforts to (i) obtain from any domestic or
foreign governmental, administrative, judicial or regulatory authority, agency,
15
governmental, administrative, judicial or regulatory authority, agency,
commission, body, court, or other legislative, executive, or judicial
governmental entity (each a "Governmental Entity" and collectively, the
"Governmental Entities") any consents, approvals, authorizations, permits, or
orders of Governmental Entities that are required by applicable law to be
obtained to permit the parties to consummate the Merger (collectively, the
"Government Approvals") required to be obtained or made by parties, or to avoid
or cause to be withdrawn or terminated, without prejudice to the parties, any
action or proceeding by any Governmental Entity, in connection with the
authorization, execution, and delivery of this Agreement and the consummation of
the Merger; and (ii) make all necessary filings, and thereafter make any other
required submissions, with respect to this Agreement and the Merger under any
applicable laws; provided, that the parties to this Agreement shall cooperate
with each other in connection with the preparation and making of all such
filings, including, if requested and subject to applicable laws regarding the
exchange of information by providing copies of all such documents to the
non-filing party and its advisors prior to filing and, if requested, to accept
all reasonable changes suggested in connection therewith provided that the
reviewing party agrees to act reasonably and as promptly as practicable. As
promptly as practicable after the date of this Agreement, Bear Lake shall
provide to Xxxxx & Wesson the audited consolidated financial statements of Bear
Lake and its subsidiaries as of and for the nine months ended September 30,
2006, which financial statements will comply as to form in all material respects
with the published rules and regulations of the Securities and Exchange
Commission with respect thereto. Xxxxx & Wesson shall, within five (5) days
after receipt of each invoice submitted by Bear Lake to Xxxxx & Wesson, pay the
fees of Xxxxx Xxxxxxxx, LLP ("Xxxxx Xxxxxxxx"), the independent registered
public accounting firm of Bear Lake, for the review and audit of the foregoing
financial statements of Bear Lake.
4.2 COVENANTS OF BEAR LAKE. Bear Lake agrees that, unless permitted
by this Agreement, required by applicable law, or Xxxxx & Wesson otherwise
agrees in writing, prior to the Effective Time, it will use its best efforts to
comply and cause its subsidiaries to comply with the following:
(a) PRESERVATION OF BUSINESS. Bear Lake shall use its best
efforts to (i) preserve intact the present business organization of Bear Lake
and its subsidiaries; (ii) preserve the present goodwill and advantageous
relationships of Bear Lake and its subsidiaries with all persons having business
dealings with Bear Lake or its subsidiaries; and (iii) preserve and maintain in
full force and effect all licenses, registrations, franchises, patents,
trademarks, copyrights, and other similar rights of Bear Lake and its
subsidiaries. Bear Lake and its subsidiaries shall maintain in full force and
effect all forms of insurance that they are presently carrying.
(b) ORDINARY COURSE. Bear Lake and its subsidiaries shall
operate their businesses only in the usual, regular, and ordinary course and
manner. Without limiting the foregoing, neither Bear Lake nor any subsidiary of
Bear Lake shall (i) encumber or mortgage any of its material assets or
properties; (ii) incur any obligation (contingent or otherwise) or purchase or
acquire, or transfer or convey, any material assets or properties or enter into
any transaction or make or enter into any contract or commitment, except in the
ordinary course of business; (iii) acquire any stock or other equity interest in
any corporation, trust, or other entity; (iv) create, incur, or assume any
indebtedness for borrowed money, except in the ordinary course of business, or
incur, assume, or become subject, whether directly or indirectly, by way of
guaranty
16
or otherwise, to any obligation or liability (whether absolute, accrued,
contingent, or otherwise and whether due or to become due) other than
obligations or liabilities incurred in the ordinary course of business; (v) fail
to discharge or to satisfy any lien, claim, or encumbrance or fail to pay or
satisfy any claim, obligation, or liability (whether absolute, accrued,
contingent, or otherwise) when the same shall become due and payable; (vi) sell,
lease, assign, transfer, or otherwise dispose of any asset or property having a
book value in excess of $50,000 individually or $100,000 in the aggregate,
except for sales of inventory in the ordinary course of business; (vii)
knowingly permit or allow any material asset or property to be subjected to any
Lien (other than Permitted Liens) or enter into any conditional sale or other
title retention agreement with respect to any material asset or property; (viii)
change in any material respect the accounting methods or practices followed by
Bear Lake or any subsidiary of Bear Lake, except as required by generally
accepted accounting principles or by a Governmental Entity; (ix) enter into any
agreement with any labor union or association representing any employee of Bear
Lake or any subsidiary of Bear Lake; (x) enter into, amend, terminate or fail to
renew any material contract, except in the ordinary course of business; (xi)
make any capital expenditures, capital additions, or capital improvements in
excess of $50,000 individually or $100,000 in the aggregate, other than capital
expenditures, capital additions, or capital improvements contemplated in Bear
Lake's 2006 operating budget, a copy of which has been furnished to Xxxxx &
Wesson; (xii) make or revoke any material tax election, other than consistent
with past practice, unless required by applicable law, or resolve any tax audit
or other similar proceeding in respect of material taxes paid by Bear Lake or
any subsidiary of Bear Lake; (xiii) waive or settle any material claims or
rights relating to the business of Bear Lake or of any subsidiary of Bear Lake;
(xiv) transfer to or license any person or otherwise extend, modify, or amend in
any material respect, any rights to intellectual property, other than in the
ordinary course of business; or (xv) take any actions outside the ordinary
course of business designed to increase Bear Lake's cash position prior to the
Effective Time. Notwithstanding anything in this Agreement to the contrary, Bear
Lake (or any of its subsidiaries) shall be entitled to effect a distribution
prior to the Effective Time of those certain real properties located at Xxxxx
00, Xxxxxxxxxx, Xxx Xxxxxxxxx and consisting of an aggregate of 94.6 acres, and
Xxxxxx Drive, Gonic, New Hampshire and consisting of 17.5 acres, each currently
held in the name of O.L. Development, Inc. (the "Permitted Distribution").
(c) BOOKS AND RECORDS. Bear Lake and its subsidiaries shall
maintain their books, accounts, and records in the usual, regular, and ordinary
manner and on a basis consistent with prior years.
(d) COMPLIANCE WITH LAW. Bear Lake and its subsidiaries shall
comply in all material respects with all laws, regulations, and rules applicable
by them, the conduct of their business, and the ownership or use of their assets
and properties.
(e) NO ORGANIC CHANGE. Neither Bear Lake nor any subsidiary of
Bear Lake shall (i) amend its certificate of incorporation or bylaws; (ii) make
any change in its capital stock by reclassification, subdivision,
reorganization, or otherwise; or (iii) merge or consolidate with any other
corporation, trust, or other entity or change the character of its business.
(f) NO ISSUANCE BY BEAR LAKE OF SHARES, OPTIONS, OR OTHER
RIGHTS. Neither Bear Lake nor any subsidiary of Bear Lake shall (i) issue any
shares of capital stock
17
except pursuant to the terms of Bear Lake Options; or (ii) grant any option,
warrant, instrument, or other right to purchase or acquire shares of capital
stock of Bear Lake or any of its subsidiaries.
(g) COMPENSATION. Neither Bear Lake nor any subsidiary of Bear
Lake shall (i) increase the compensation payable to any officer or to other
senior management personnel, except in accordance with normal and customary
practice; or (ii) establish or change any Company Benefit Plan, except for
insubstantial changes necessary to comply with the minimum requirements of the
Code or ERISA, or except as disclosed in the Bear Lake Disclosure Schedule. Bear
Lake and its subsidiaries shall not enter into any employment agreements with
any of their officers or management personnel that may not be cancelled without
penalty upon notice not exceeding 90 days.
(h) DIVIDENDS. Neither Bear Lake nor any subsidiary of Bear
Lake shall (i) declare or pay any dividends on or make other distributions in
respect of any of its capital stock, except for dividends by a direct or
indirect wholly owned subsidiary of Bear Lake to its parent or the Permitted
Distribution; (ii) split, combine, or reclassify any of its capital stock or
issue or authorize or propose the issuance of any other securities in respect
of, in lieu of, or in substitution for shares of its capital stock; or (iii)
repurchase, redeem, or otherwise acquire any shares of capital stock or Bear
Lake or its subsidiaries or any other securities thereof.
(i) PREFERRED STOCK, BEAR LAKE OPTIONS, AND BEAR LAKE
INDEBTEDNESS. Bear Lake shall take all actions as may be necessary to assure
that only Bear Lake Common Stock shall be outstanding at the Effective Time,
that the Bear Lake Stock Options will be exercised or terminated as of the
Effective Time, and that the Bear Lake Indebtedness will be repaid at the
Effective Time, upon receipt of the Merger Consideration.
4.3 ENVIRONMENTAL REMEDIATION PLAN; ENVIRONMENTAL ESCROW.
(a) The Principal Stockholders severally and not jointly agree
to investigate and assess Environmental Conditions (as defined in Section
4.3(m)(ii)) existing as of the Effective Time on the real property located at
000 Xxxxx Xxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxxxxx (the "Site"), and, to the extent
necessary, Remediate (as defined in Section 4.3(m)(vii)) the Site to the
satisfaction of the New Hampshire Department of Environmental Services ("DES"),
including, as applicable, the delivery of completion and no further action
certificates (the "DES Closure").
(b) The Principal Stockholders' environmental consultant shall
implement the site assessment plan mutually agreed upon by the parties
respective environmental consulting firms and attached hereto as Exhibit C (the
"SAP") and shall immediately provide Xxxxx & Wesson with copies of all sample
analytical results and boring logs upon receipt, and all draft and final copies
of the SAP report for Xxxxx & Wesson's review and comment. The Principal
Stockholders' environmental consultant shall use its best efforts to complete
the work contemplated by the SAP within 60 days of the date of this Agreement;
provided, however, that in no event will such work be completed any later than
120 days of the date of this Agreement. In addition, upon mutual agreement of
the Principal Stockholders' environmental consultant and Xxxxx & Wesson, or its
designee, within five business days following the date of this Agreement,
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the Principal Stockholders' environmental consultant shall submit a letter to
the DES notifying DES that the Principal Stockholders will be submitting an
environmental site assessment report for review in accordance with the
procedures provided in guidance document WMD-REM-10, and shall also identify the
Site and provide a designated contact (the "DES Letter"). The DES letter shall
be sent to the DES by certified mail, return receipt requested, with a copy to
Xxxxx & Wesson and to Xxxxx & Wesson's environmental consulting firm. In the
event the Principal Stockholders' environmental consultant and Xxxxx & Wesson
are unable to agree on the advisability of submitting the DES Letter, the
parties shall submit the matter in accordance with the dispute resolution
described in Section 4.3(c)(ii) below.
(c) If the results of the SAP indicate that Hazardous
Materials (as defined in Section 4.3(m)(v)) exist in the soil or groundwater at
levels above DES groundwater quality standards, then:
(i) The Principal Stockholders' environmental consultant
shall notify the DES in accordance with applicable DES policies and procedures
of the Environmental Conditions on the Site and complete in a commercially
reasonable time any response or other action required by the DES; and
(ii) The Principal Stockholders' environmental
consultant shall promptly meet and confer with the DES for the purpose of
developing a proposed remedial action plan ("RAP") for the Site and any impaired
down gradient properties that will be sufficient to obtain DES Closure if
implemented. The Principal Stockholders' environmental consultant shall also
promptly meet and confer with Xxxxx & Wesson, or its designee, to develop an
agreed RAP. If the parties are unable to agree on a proposed RAP, the parties
shall promptly retain Xxxxxxx Head & Associates or, if Xxxxxxx Head & Associates
is unavailable, another mutually acceptable independent environmental consultant
(collectively, the "IEC"), to resolve the dispute. The parties shall exchange
all communications with the IEC regarding the dispute, the IEC's resolution of
the dispute shall be binding and final. The parties shall each pay fifty percent
of the IEC's fees for providing such dispute resolution services.
(d) The RAP shall be developed and proposed in accordance with
applicable DES policies and procedures to achieve DES Closure, be commercially
reasonable for the Site and formulated so as not to unreasonably interrupt,
interfere, impair, or limit Xxxxx & Wesson's commercially reasonable use of the
Site in substantially the same manner as it is being used at the Effective Time.
(e) Upon the DES' approval of the RAP, the Principal
Stockholders' environmental consulting firm will implement the RAP in a
commercially reasonable time, and will serve as the primary point of contact
with the DES regarding RAP implementation.
(f) Xxxxx & Wesson agrees, warrants, and covenants that the
Principal Stockholders, their consultants, agents, contractors and
representatives, shall have the right to enter upon the Site, take samples from
the Site, erect structures and equipment upon the Site, and make such
installations and take such remediation and other actions upon the Site as may
be required to complete the SAP and the RAP, and to obtain DES Closure
(collectively, the "Work"), subject to the following terms and conditions:
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(i) Xxxxx & Wesson hereby grants each Principal
Stockholder (each a "Licensee") a limited license (the "License"), with the
right to sublicense to the Licensee Parties (as defined below) to enter upon the
Site for the sole purpose of completing the Work. Each Licensee severally agrees
that (1) this License does not convey an easement or other legal interest in the
Site; (2) Xxxxx & Wesson makes no representations or warranties regarding either
the Site's physical condition or the presence or absence of conditions that
might pose a danger to persons entering thereon; and (3) each Licensee knowingly
and intentionally assumes for itself and for its contractors, subcontractors,
employees, agents, representatives, consultants, and all other persons
associated with or involved in the Work ("Licensee Parties"), all risk of
economic loss or personal injury that might occur during the Work due to all
pre-existing Site conditions, all Licensee Parties' acts or omissions, or
otherwise. This License terminates without notice upon the DES Closure.
(ii) Xxxxx & Wesson or its designee may accompany and
observe all Licensee Parties who enter the Site at all times, and shall be
entitled to take split samples at Xxxxx & Wesson's sole cost and expense;
provided, however, that Xxxxx & Wesson and its designee shall comply with the
requirements of the health and safety plan prepared by the Licensee Parties
pursuant to Section 4.3(f)(v)(3) while present within active Work areas.
(iii) The Licensee Parties shall give Xxxxx & Wesson
reasonable notice of the time and place that Work is to occur. All Work shall be
performed at the Licensees' sole cost and expense and in a good and xxxxxxx-like
manner by contractors reasonably acceptable to Xxxxx & Wesson, which acceptance
shall not be unreasonably withheld or delayed. Each Licensee is severally
responsible for keeping the Site free of judgments and liens by any person who
performs any Work, and each Licensee agrees to promptly bond or cause such
judgments or liens to be discharged upon demand by Xxxxx & Wesson.
(iv) The Licensees shall cause each Licensee Party to
obtain all necessary governmental and utility permits and approvals for any
Work, and to provide copies and certification thereof to Xxxxx & Wesson not less
than three business days prior to commencement thereof.
(v) Each Licensee severally warrants and agrees that:
(1) all Work shall be performed in compliance with Environmental Laws; (2) all
the Licensee Parties' workers shall be appropriately trained and licensed; (3)
an OSHA site-specific health and safety plan that complies with 29 CFR Section
1910.120 and all other applicable law shall be prepared and furnished to Xxxxx &
Wesson prior to any Licensee Party's entry onto the Site; (4) the Licensees
shall be solely responsible for the appropriate handling, storage,
transportation, and disposal of all waste generated during the Work, including
but not limited to soil borings, cuttings, and groundwater samples, and be
listed as the waste "generator" on all manifests and filings; and (5) the
Licensees shall immediately notify Xxxxx & Wesson of any Site condition that may
threaten or impair the health or safety of persons on, entering, or adjacent to
the Site.
(vi) The Licensee Parties shall not unreasonably
interfere with the ingress or egress of Xxxxx & Wesson employees, contractors,
invitees, or other persons permitted or having a lawful right to be on the Site.
All Licensee Party workers shall carry and display identification cards
substantially in the same form and manner as Xxxxx & Wesson's own
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employees. Except as otherwise expressly authorized by Xxxxx & Wesson in
writing, the Licensee Parties shall perform Work on the Site only between the
hours of 8:00 a.m. and 5:00 p.m., Monday through Friday, excluding legal
holidays. The Licensees shall cause the Licensee Parties to use best efforts to
limit noise, dust, debris, odors, and all other adverse effects and disruption
due to the Work.
(vii) The Licensee Parties shall stage and/or store all
equipment or material for the Work in a commercially reasonable manner, with the
understanding that Xxxxx & Wesson is not responsible for any loss of or damage
thereto. The Licensees shall cause the Licensee Parties to ensure all areas of
the Site on which Work is being performed shall be supervised, secured, and/or
protected in a commercially reasonable manner and in accordance with applicable
law.
(viii) Unless otherwise agreed in writing by Xxxxx &
Wesson, the Licensees shall cause the Licensee Parties to promptly: (1) restore
all Site areas disturbed or affected by Work; (2) remove all equipment,
materials and waste used or generated during the Work; (3) fill excavated areas
with clean fill compacted to 95% Standard Xxxxxxx density; (4) seal all bore
holes; (5) cap and lock monitoring xxxxx; (6) promptly repair or replace in a
commercially reasonable manner all sidewalks, pavement, foundations and
improvements damaged or impaired by the Work; and (7) leave the Site in a safe
condition.
(ix) The Licensees shall cause the Licensee Parties to
maintain insurance to cover any litigation, claims, demands, damages, liability,
losses, costs and expenses arising out of or due to the Work. Before the Work
commences and the Licensee Parties enter the Site, the Licensees shall cause
each Licensee Party performing any work to provide Xxxxx & Wesson with
Certificates of Insurance from their insurers with an AM Best's rating of B++ or
better that provides the following coverage and limits: (1) $5 million per
occurrence and annual aggregate for commercial general liability including
contractor's pollution liability coverage; (2) $2 million per occurrence for
auto liability; and (3) $1 million per occurrence and annual aggregate for
employer's liability coverage. Xxxxx & Wesson shall be an additional insured on
all such Licensee Parties' policies.
(x) Notwithstanding any other provision of this
Agreement, the Licensees shall severally indemnify, defend (using counsel
approved by Xxxxx & Wesson), and hold harmless Xxxxx & Wesson, its directors,
officers, employees, agents, and representatives (collectively the
"Indemnitees") from and against any and all causes of action, damages, claims,
demands, judgments, liens, litigation, liability, penalties, orders, loss, cost
and/or expense, including attorneys' fees, which may at any time be asserted
against or incurred by any one or more of the Indemnitees due to acts or
omissions of a Licensee Party performing the Work or the off-site disposal of
waste or Hazardous Materials generated by the Work.
(xi) The Licensees do not have an express or implied
right by reason of this Agreement or otherwise to make any commitments or
agreements that will cause the imposition of land use or "deed restrictions" or
long term engineering controls on the Site without the consent of Xxxxx &
Wesson, which consent shall not be unreasonably withheld or delayed.
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(g) Each of Xxxxx & Wesson and the Licensees acknowledges that
it desires to complete the Work and obtain DES Closure as soon as practicable.
Accordingly, Xxxxx & Wesson shall cooperate in a commercially reasonable manner
with the Principal Stockholders and the Licensee Parties to complete the Work
and obtain DES Closure, including by promptly providing approval as may be
required from time to time pursuant to applicable provisions under this Section
4.3. The Principal Stockholders shall, and shall use their best efforts to cause
the Licensee Parties to, complete the Work and obtain DES Closure within a
commercially reasonable time.
(h) Xxxxx & Wesson shall receive notice of and/or copies of
all communications (including but not limited to, letters and emails) between
either the Principal Stockholders, their environmental consulting firm, and/or
any other person acting by or on the Principal Stockholders' behalf, and the
DES. Xxxxx & Wesson shall receive reasonable prior notice of and have the right
to participate in any meetings or calls between the DES and the Principal
Stockholders, their environmental consulting firm, and/or any other person
acting by or on the Principal Stockholders' behalf. Unless otherwise required by
law, and provided that the Principal Stockholders are otherwise in compliance
with this Agreement, Xxxxx & Wesson agrees that neither it nor any of its agents
or representatives, including its environmental consulting firm, will initiate
communications with the DES regarding the SAP or RAP without first communicating
with the Principal Stockholders and upon the Principal Stockholders' prior
approval, which shall not be unreasonably be withheld.
(i) Upon the DES' approval of the RAP and before its
implementation, the Principal Stockholders' environmental consulting firm shall
make a reasonable estimate of the costs to implement the RAP, including a
reasonable and appropriate contingency (the "Estimated Environmental Costs").
The Principal Stockholders shall provide the estimate to Xxxxx & Wesson for
review and comment. If Xxxxx & Wesson objects to the estimate, Xxxxx & Wesson
shall promptly identify its objections in writing to the Principal Stockholders,
who shall promptly review the objections and make reasonable efforts to meet and
confer with Xxxxx & Wesson to reach agreement regarding the estimate. If the
parties are unable to agree on a mutually acceptable estimate, then the parties
shall promptly refer their dispute to the IEC for resolution. The IEC's
determination shall be binding and final.
(j) At the Closing, Xxxxx & Wesson shall deposit $8,000,000 of
the Merger Consideration, less any amounts paid by Bear Lake and/or the
Principal Stockholders prior to Closing in connection with the activities
described in this Section 4.3 and Section 4.6, into an escrow account (the
"Environmental Escrow") upon the terms and conditions of an escrow agreement
substantially in the form attached hereto as Exhibit D (the "Escrow Agreement").
The Environmental Escrow shall serve (i) to pay for the Environmental Costs (as
defined in Section 4.3(m)(iii)), up to $5,500,000 and (ii) as security for the
Principal Stockholders' indemnification obligations under Section 7.1(b), up to
$2,500,000 (the "Environmental Indemnity Escrow"). The Principal Stockholders
may, in their sole discretion, either submit Environmental Costs directly to the
escrow agent for payment or may seek reimbursement for Environmental Costs paid
by the Principal Stockholders from the escrow agent, which shall be paid in
accordance with the Escrow Agreement. The escrow agent shall provide an
accounting to the parties of Environmental Costs submitted and paid at the end
of
22
each calendar quarter. The Principal Stockholders, as a group, and Xxxxx &
Wesson shall bear the costs of the escrow agent fees equally.
(k) Upon the earlier of (i) eighteen months after the
Effective Time and (ii) a final determination of the Estimated Environmental
Costs, an amount equal to the difference between (I)(A) the amount in the
Environmental Escrow at the Effective Time less (B) $2,500,000 and (II) the
Environmental Costs shall be distributed to the Principal Stockholders on a pro
rata basis. In the event the Environmental Costs exceed $5,500,000, Xxxxx &
Wesson shall pay all costs in excess of such amount.
(l) Upon the eighteenth month anniversary of the Effective
Time, any remaining amounts in the Environmental Escrow shall be distributed to
the Principal Stockholders on a pro rata basis, provided, however, that if there
are any known actual or reasonably ascertainable Indemnified Environmental
Losses (as defined in Section 7.1(b)), then any amount distributable under this
Section 4.3(l) shall first be applied to such Indemnified Environmental Losses
in accordance with the procedures and limitations set forth in Section 7 before
any distribution to the Principal Stockholders; provided, further that the
aggregate amount of the Environmental Indemnity Escrow distributed in respect of
such Indemnified Environmental Losses shall not exceed $2,500,000.
(m) For purposes of this Agreement, the following terms shall
have the meanings set forth below:
(i) "Environment" means all surface water, ground water,
drinking water supply, land surface or subsurface strata, or ambient air, and
includes, but is not limited to, all "facilities" as defined at 42 U.S.C.
Section 9601(9).
(ii) "Environmental Condition" means the actual or
threatened Release of Hazardous Materials into the Environment in, on, or from
the Site or by Bear Lake or its subsidiaries.
(iii) "Environmental Costs" means all costs and expenses
associated with the development and implementation of the SAP and RAP, to obtain
DES Closure, and to complete the OSHA Compliance Tasks (as defined in Section
4.6).
(iv) "Environmental Laws" means all federal, state, and
local statutes, ordinances, orders (including orders on consent), permits,
judgments, agreements, rules, regulations, guidance, and common law duties
relating to or concerning human health or the Environment. "Environmental Law"
includes, but is not limited to, statutes, permits, rules, and common law duties
regulating or relating to human exposure to or the discharge, Release, removal,
generation, storage, transportation, or disposal of Hazardous Materials into the
Environment.
(v) "Hazardous Materials" means any and all substances
(whether solid, liquid or gas): (A) that are "pollutants," as defined at 33
U.S.C. Section 1362(6), "solid waste," as defined at 42 U.S.C. Section 6903(27),
"hazardous waste," as defined at 42 U.S.C. Section 6903(5), or "hazardous
substances," as defined at 42 U.S.C. Section 9601(14); or (B) that may harm or
impair human health or the Environment, including, but not limited to, petroleum
and petroleum
23
products and constituents, asbestos and asbestos-containing materials,
polychlorinated biphenyls, lead, radon, chlorinated solvents, radioactive
materials, flammables, explosives, and biological contaminants such as mold or
microbial matter, or (C) that are regulated by Environmental Laws.
(vi) "Release" means any "release" as defined at 42
U.S.C. Section 9601(22), "disposal," as defined at 42 U.S.C. Section 6903(3),
spill, migration, or other movement of, or human exposure to, Hazardous
Materials.
(vii) "Remediate" or "Remediation" means the
implementation and completion of the RAP and such other measures as required by
the DES to achieve DES Closure.
4.4 FILINGS UNDER THE HSR ACT AND OTHER ANTITRUST FILINGS.
(a) GENERAL. The parties acknowledge that the Merger may
require filings with the United States Federal Trade Commission ("FTC") and the
Antitrust Division of the United States Department of Justice (the "Antitrust
Division") under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder (the "HSR Act")
and with certain foreign jurisdictions under applicable foreign competition or
merger Laws (each an "Antitrust Law" and collectively, the "Antitrust Laws").
(b) CONSENTS; APPROVALS.
(i) The parties shall use their best efforts to as
promptly as practicable obtain, and cooperate with each other in order to
obtain, all consents, waivers, approvals, authorizations, or orders and to make
all filings (including, without limitation, the filings under the HSR Act and
other Antitrust Laws and all other filings with Governmental Entities) lawfully
required to be obtained from or filed with all applicable Governmental Entities
in connection with the authorization, execution, and delivery of this Agreement
and the consummation of the transactions contemplated hereby.
(ii) Each party shall (A) file or cause to be filed with
the FTC and the Antitrust Division, and with any other Governmental Entities, if
applicable, as promptly as practicable but in no event later than the tenth
business day after the execution and delivery of this Agreement, all reports and
other documents required to be filed by such party under the HSR Act or other
applicable Antitrust Laws concerning the transactions contemplated hereby and
(B) promptly comply with or cause to be complied with any requests by any
Governmental Entity for additional information concerning such transactions, in
each case so that the waiting period applicable to this Agreement shall expire
as soon as practicable after the execution and delivery of this Agreement.
(iii) The parties shall furnish to the other parties'
outside counsel all information about such party or its affiliates, if any,
required to be included in any application or other filing to be made by such
other party pursuant to the rules and regulations of any Governmental Entity in
connection with the Merger, subject to applicable law and privileges, including
the attorney-client privilege.
24
(iv) In furtherance and not in limitation of the
agreements of the parties contained in this Section 4.4, each party shall use
its reasonable efforts to resolve such objections, if any, as may be asserted by
a Governmental Entity or other person with respect to the transactions
contemplated hereby under any applicable law. Xxxxx & Wesson shall pay the
applicable HSR Act filing fee and all other antitrust notification filing fees
required in any other applicable jurisdiction.
4.5 OTHER ACQUISITION PROPOSALS.
(a) NO SOLICITATION. Bear Lake shall not, nor shall it permit
any of its affiliates or subsidiaries, or any of their respective officers,
directors, or employees or any agent, representative, investment banker,
financial advisor, attorney, accountant, or other person or firm engaged by it
or any of it subsidiaries, to directly or indirectly, (i) solicit, initiate, or
encourage the submission of proposals or offers from any third party relating to
any Acquisition Proposal (as defined below) relating to Bear Lake or any of its
affiliates or subsidiaries; (ii) cooperate with or furnish or cause to be
furnished any Evaluation Material (as defined in the Confidentiality Agreement
between Xxxxx & Wesson and Bear Lake) concerning Bear Lake to any third party in
connection with any Acquisition Proposal relating to Bear Lake or any of its
affiliates or subsidiaries; (iii) participate in any negotiations regarding, or
take any other action to facilitate any inquiries or the making of any proposal
that constitutes, or may reasonably be expected to lead to, any Acquisition
Proposal relating to Bear Lake or any of its affiliates or subsidiaries; or (iv)
enter into any agreement or understanding with any other person or entity with
the intent to effect any Acquisition Proposal relating to Bear Lake or any of
its affiliates or subsidiaries. As used in this Agreement, "Acquisition
Proposal" means any of the following transactions involving Bear Lake or any of
its subsidiaries, other than negotiating a mutually acceptable business
combination as contemplated by this Agreement, (i) any merger, consolidation,
share exchange or purchase, reorganization, recapitalization, business
combination, or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer, or other disposition (whether in a single
transaction or series of transactions), of assets either constituting 5% or more
of Bear Lake's consolidated assets or which generate 5% or more of Bear Lake's
consolidated revenue; (iii) any tender offer or exchange offer for 5% or more of
the outstanding shares of Bear Lake's capital stock, including tender offers;
(iv) any person acquiring beneficial ownership or the right to acquire
beneficial ownership of, or any "group" (as such term is defined under Section
13(d) of the Securities Exchange Act of 1934, as amended, being formed, which
beneficially owns or has the right to acquire beneficial ownership of, 5% or
more of the then outstanding shares of Bear Lake's capital stock (other than
persons or "groups" that beneficially own or have the right to acquire
beneficial ownership of 5% of more of the outstanding shares of Bear Lake's
capital stock as of the date hereof); or (v) any public announcement of a
proposal, plan, or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
(b) CHANGE IN RECOMMENDATION. Neither the Board of Directors
of Bear Lake nor any committee thereof shall (i) withdraw or modify, or propose
to withdraw or modify, in a manner adverse to Xxxxx & Wesson, the approval or
recommendation of this Agreement or the Merger by the Board of Directors or such
committee; (ii) approve or recommend, or propose to approve or recommend, any
Acquisition Proposal; or (iii) cause Bear Lake to enter into any agreement with
respect to any Acquisition Proposal.
25
4.6 OSHA COMPLIANCE. The Principal Stockholders severally and not
jointly warrant and agree that the OSHA compliance tasks set forth on Schedule
4.6 (the "OSHA Compliance Tasks") shall be completed at the Principal
Stockholders' sole cost and expense, subject to reimbursement from the
Environmental Escrow pursuant to Section 4.3(j). The Principal Stockholders
shall cause Bear Lake to use its best efforts to complete the OSHA Compliance
Tasks prior to the Effective Time.
4.7 PRESS RELEASES AND ANNOUNCEMENTS. Before the Effective Time, no
press releases related to this Agreement and the transactions contemplated
herein or other announcements to the employees, customers, or suppliers of Bear
Lake shall be issued by any party without the mutual approval of the parties,
except for any public disclosure which any party in good faith believes is
required by law or regulation (in which case the disclosure shall be prepared
jointly by Bear Lake and Xxxxx & Wesson). After the Effective Time, no press
releases related to this Agreement and the transactions contemplated herein, or
other announcements to the employees, customers, or suppliers of Xxxxx & Wesson
or any of its subsidiaries shall be issued by Bear Lake without the prior
approval of Xxxxx & Wesson, except for any public disclosure which is required
by law or regulation (in which case the disclosure shall be prepared jointly by
Bear Lake and Xxxxx & Wesson).
4.8 ADVICE OF CHANGES. The parties shall promptly advise each other
orally and in writing of (a) any representation or warranty made by it contained
in this Agreement becoming untrue or inaccurate in any material respect, (b) the
failure by it to comply with or satisfy in any material respect any covenant,
condition, or agreement to be complied with or satisfied by it under this
Agreement or (c) any change or event which has resulted, or which, insofar as
can reasonably be foreseen, would result, in any of the conditions set forth in
Section 5 not being satisfied; provided, however, that no such notification
shall affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement.
SECTION 5.
CONDITIONS PRECEDENT TO OBLIGATIONS
5.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF XXXXX & WESSON AND
SWAC. The obligations of Xxxxx & Wesson and SWAC under this Agreement are, at
the option of Xxxxx & Wesson and SWAC, subject to the satisfaction or waiver of
the following conditions on or before the Effective Time:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Bear Lake herein contained shall have been
true and correct in all material respects when made, and, in addition, shall be
true and correct in all material respects on and as of the Effective Time with
the same force and effect as though made on and as of the Effective Time, except
as affected by transactions contemplated hereby.
(b) PERFORMANCE OF AGREEMENTS. Bear Lake shall have, in all
material respects, performed all obligations and agreements and complied with
all covenants and conditions contained in this Agreement to be performed and
complied with by it on or prior to the Effective Time.
26
(c) CORPORATE APPROVALS. All necessary corporate action on the
part of the directors and stockholders of Bear Lake adopting this Agreement and
approving the transactions contemplated hereby shall have been taken by December
22, 2006. Without limiting the foregoing, the Principal Stockholders shall have
executed and delivered to Xxxxx & Wesson the Voting Agreement forming Exhibit B
hereto.
(d) OPINION OF COUNSEL FOR BEAR LAKE. Xxxxx & Wesson shall
have received an opinion of Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx, counsel for Bear
Lake and the Principal Stockholders, dated the Effective Time, in form and
substance reasonably satisfactory to Xxxxx & Wesson and its counsel, to the
effect that:
(i) Bear Lake is a corporation duly organized, validly
existing, and in good standing under the laws of the state of Delaware and has
the corporate power and authority under the laws of such state to own, lease,
and operate its properties, to carry on its business as being conducted, and to
consummate the Merger;
(ii) Each subsidiary of Bear Lake (including Xxxxxxxx
Center Arms, Inc.) is a corporation duly organized, validly existing, and in
good standing under the laws of the state of its incorporation and has the
corporate power and authority under the laws of such state to own, lease, and
operate its assets and properties, to carry on its business as being conducted,
and to consummate the transactions contemplated hereby;
(iii) All necessary corporate proceedings of the board
of directors and the stockholders of Bear Lake to approve and adopt this
Agreement and to authorize the execution and delivery of this Agreement and the
consummation of the Merger contemplated hereby have been duly and validly taken;
(iv) Bear Lake has the corporate power and authority to
execute and deliver this Agreement, and this Agreement has been duly authorized,
executed, and delivered by it and constitutes its legal, valid, and binding
obligation except that the enforceability thereof may be subject to (A)
bankruptcy, insolvency, reorganization, moratorium, or other similar laws now or
hereafter in effect relating to creditors' rights generally, and (B) general
principles of equity (regardless of whether such enforcement is sought in a
proceeding in equity or at law);
(v) Such counsel knows of no actions, suits, or
proceedings pending or threatened against or affecting Bear Lake of any of its
subsidiaries at law or in equity, or before or by any foreign, federal, state,
municipal, or other governmental department, commission, board, bureau, agency,
or instrumentality that would result in a breach of the representation and
warranty set forth in Section 3.1(j) of this Agreement;
(vi) The consummation of the Merger will not violate or
result in a breach of or constitute a default by Bear Lake or any subsidiary of
Bear Lake under any provision of any Contract, order, judgment, decree, award,
ordinance, regulation, or any other restriction set forth on Schedule 3.1(p) of
the Bear Lake Disclosure Schedule, to which Bear Lake or any subsidiary of Bear
Lake is a party or by which it is bound; and
27
(vii) Each Principal Stockholder has the power and
authority to execute, deliver, and perform this Agreement and the Voting
Agreement and to consummate the transactions contemplated hereby and thereby.
The execution, delivery, and performance of this Agreement and the Voting
Agreement and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary action on the part of each
Principal Stockholder. This Agreement and the Voting Agreement have been duly
executed by or on behalf of each Principal Stockholder and constitute legal,
valid, and binding obligations of the Principal Stockholders, enforceable
against such Principal Stockholders in accordance with their terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium, or other
similar laws and except that the availability of equitable remedies, including
specific performance, is subject to the direction of the court before which any
proceeding for such remedy may be brought.
(e) NO MATERIAL ADVERSE EFFECT. There shall be no Material
Adverse Effect since the date of this Agreement.
(f) LITIGATION. No action or proceeding by any governmental
agency shall have been instituted or threatened that would enjoin, restrain, or
prohibit, or might result in substantial damages in respect of this Agreement or
the consummation of the transactions contemplated by this Agreement, and would,
in the reasonable judgment of Xxxxx & Wesson and SWAC, make it inadvisable to
consummate such transaction, and no court order shall have been entered in any
action or proceeding instituted by any other party that enjoins, restrains, or
prohibits this Agreement or consummation of the transactions contemplated by
this Agreement.
(g) DISSENTERS' RIGHTS. Dissenters' rights of appraisal under
the Delaware General Corporation Law shall not have been effectively preserved
as of the Effective Time by owners of more than 5% of the outstanding shares of
Bear Lake Capital Stock.
(h) OFFICERS' CERTIFICATE. Bear Lake shall deliver to Xxxxx &
Wesson a certificate in form and substance reasonably satisfactory to Xxxxx &
Wesson and its counsel, executed by the Chief Executive Officer and Chief
Financial Officer of Bear Lake, certifying that the conditions specified in
Sections 5.1(a) and 5.1(b) have been fulfilled.
(i) TERMINATION OF HSR ACT WAITING PERIOD. Any and all
applicable waiting periods under the HSR Act and other applicable Antitrust Laws
with respect to the transactions contemplated by this Agreement shall have
expired or shall have been terminated.
(j) RETIREMENT OF OBLIGATIONS. Upon the receipt of the Merger
Consideration, there shall be no outstanding shares of Bear Lake Preferred
Stock, Bear Lake Options, or Bear Lake Indebtedness.
(k) ESCROW AGREEMENT. The Principal Stockholders and Xxxxx &
Wesson shall have entered into the Escrow Agreement.
(l) OSHA MATTERS. The OSHA Compliance Tasks shall either have
been completed by Bear Lake or its subsidiaries or the Principal Stockholders
shall have made
28
provision, including through deposit of cash or other resources, which to the
reasonable satisfaction of Xxxxx & Wesson shall be sufficient to obtain
completion.
5.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BEAR LAKE. The
obligations of Bear Lake under this Agreement are, at the option of Bear Lake,
subject to the satisfaction or waiver of the following conditions on or before
the Effective Time:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Xxxxx & Wesson and SWAC herein contained shall
have been true and correct in all material respects when made and, in addition,
shall be true and correct in all material respects on and as of the Effective
Time with the same force and effect as though made on and as of the Effective
Time, except as affected by transactions contemplated hereby.
(b) PERFORMANCE OF AGREEMENTS. Xxxxx & Wesson and SWAC shall
have, in all material respects, performed all obligations and agreements and
complied with all covenants and conditions contained in this Agreement to be
performed and complied with by them on or prior to the Effective Time.
(c) CORPORATE APPROVAL. All necessary corporate action on the
part of the directors of Xxxxx & Wesson and the directors and stockholders of
SWAC approving and adopting this Agreement and approving the transactions
contemplated hereby shall have been taken by December 22, 2006.
(d) OPINION OF COUNSEL FOR XXXXX & WESSON AND SWAC. Bear Lake
shall have received an opinion of Xxxxxxxxx Xxxxxxx, LLP, counsel for Xxxxx &
Wesson and SWAC, dated the Effective Time, in form and substance reasonably
satisfactory to Bear Lake and its counsel, to the effect that:
(i) Each of Xxxxx & Wesson and SWAC is a corporation
duly organized, validly existing, and in good standing under the laws of the
state of its incorporation and has the corporate power and authority under the
laws of such state to own, lease, and operate its properties, to carry on its
business as being conducted, and to consummate the Merger contemplated hereby;
(ii) All necessary corporate proceedings of the Board of
Directors of Xxxxx & Wesson and the Board of Directors and stockholders of SWAC
to approve and adopt this Agreement and to authorize the execution and delivery
of this Agreement and the consummation of the Merger have been duly and validly
taken; and
(iii) Each of Xxxxx & Wesson and SWAC has the corporate
power and authority to execute and deliver this Agreement, and this Agreement
has been duly authorized, executed and delivered by it and constitutes its
legal, valid, and binding obligation except that the enforceability thereof may
be subject to (A) bankruptcy, insolvency, reorganization, moratorium, or other
similar laws now or hereafter in effect relating to creditors' rights generally,
and (B) general principles of equity (regardless of whether such enforcement is
sought in a proceeding in equity or at law).
29
(e) LITIGATION. No action or proceeding by any governmental
agency shall have been instituted or threatened that would enjoin, restrain, or
prohibit, or might result in substantial damages in respect of this Agreement or
the consummation of the transactions contemplated by this Agreement, and would,
in the reasonable judgment of Bear Lake, make it inadvisable to consummate such
transaction, and no court order shall have been entered in any action or
proceeding instituted by any other party that enjoins, restrains, or prohibits
this Agreement or consummation of the transactions contemplated by this
Agreement.
(f) OFFICERS' CERTIFICATE. Xxxxx & Wesson shall deliver to
Bear Lake a certificate in form and substance reasonably satisfactory to Bear
Lake and its counsel, executed by the Chief Executive Officers and Chief
Financial Officers of Xxxxx & Wesson and SWAC, certifying that the conditions
specified in Sections 5.2(a) and 5.2(b) have been fulfilled.
(g) TERMINATION OF HSR ACT WAITING PERIOD. Any and all
applicable waiting periods under the HSR Act and other applicable Antitrust Laws
with respect to the transactions contemplated by this Agreement shall have
expired or shall have been terminated.
(h) ESCROW AGREEMENT. The Principal Stockholders and Xxxxx &
Wesson shall have entered into the Escrow Agreement.
(i) OSHA MATTERS. The OSHA Compliance Tasks shall have been
completed by Bear Lake or its subsidiaries.
SECTION 6.
WAIVER, MODIFICATION, ABANDONMENT
6.1 WAIVERS. The failure of Bear Lake to comply with any of its
obligations, agreements, or conditions as set forth herein may be waived
expressly in writing by Xxxxx & Wesson and SWAC, by action of their respective
Boards of Directors without the requirement for a vote of stockholders. The
failure of Xxxxx & Wesson and SWAC to comply with any of their obligations,
agreements, or conditions as set forth herein may be waived expressly in writing
by Bear Lake by action of its Board of Directors without the vote of
stockholders.
6.2 MODIFICATION. This Agreement may be modified at any time in any
respect by the written mutual consent of all of the parties, notwithstanding
prior approval by stockholders. Any such modification may be approved for any
party by its Board of Directors, without further stockholder approval, except
that the Merger Consideration to be issued in exchange for the shares of Bear
Lake Capital Stock may not be decreased without the consent of Bear Lake
stockholders given by the same vote as is required under applicable state law
for approval of this Agreement.
6.3 ABANDONMENT. The Merger may be abandoned on or before the
Effective Time notwithstanding adoption of this Agreement by the parties hereto:
(a) By the mutual agreement of the Boards of Directors of
Xxxxx & Wesson, SWAC, and Bear Lake;
30
(b) By the Boards of Directors of Xxxxx & Wesson and SWAC, if
any of the conditions provided in Section 5.1 shall not have been satisfied,
complied with, or performed in any material respect, and Xxxxx & Wesson and SWAC
shall not have waived in writing such failure of satisfaction, noncompliance, or
nonperformance;
(c) By the Board of Directors of Bear Lake, if any of the
conditions provided in Section 5.2 shall not have been satisfied, complied with,
or performed in any material respect, and Bear Lake shall not have waived in
writing such failure of satisfaction, noncompliance, or nonperformance; or
(d) At the option of Xxxxx & Wesson, SWAC, and Bear Lake, if
there shall have been instituted and be pending or threatened any legal
proceeding before any court or governmental agency seeking to restrain or
prohibit or to obtain damages in respect of this Agreement or the consummation
of the Merger contemplated by this Agreement, or if any order restraining or
prohibiting the Merger shall have been issued by any court or governmental
agency and shall be in effect.
In the event of any termination pursuant to this Section 6.3 (other than
pursuant to Section 6.3(a) hereof) written notice setting forth the reasons
thereof shall forthwith be given by Bear Lake if it is the terminating party, to
Xxxxx & Wesson and SWAC, or by Xxxxx & Wesson and SWAC, if they are the
terminating parties, to Bear Lake. This Agreement shall terminate automatically
if the Effective Time shall not have occurred on or before January 31, 2007, or
such later date as shall have been agreed to by the parties hereto under Section
6.2.
6.4 EFFECT OF ABANDONMENT. If the Merger is abandoned as provided
for in this Section 6, (a) this Agreement shall forthwith become wholly void and
of no effect without liability to any party to this Agreement or to the
directors, officers, representatives, and agents of any such party; provided,
however, that each party shall remain liable for any liabilities resulting from
(i) any breach of any covenant contained herein occurring prior to such
termination, or (ii) any breach of or inaccuracy in any representation or
warranty occurring prior to such termination, and (b) each of Xxxxx & Wesson,
SWAC, Bear Lake, and the Principal Stockholders shall each pay its own fees and
expenses incident to the negotiation, preparation, and execution of this
Agreement and the obtaining of the necessary approvals thereof, including fees
and expenses of its counsel, accountants, investment bankers, and other experts.
This Section 6.4, Section 6.5, and Section 9 shall remain in full force and
effect following such termination in accordance with their respective terms.
SECTION 7.
INDEMNIFICATION
7.1 INDEMNIFICATION BY THE PRINCIPAL STOCKHOLDERS.
(a) The Principal Stockholders covenant and agree, severally and not
jointly, to defend, indemnify, and hold harmless for, from, and against, and
will pay to Xxxxx & Wesson, the amount of any and all damages, losses,
liabilities (absolute and contingent), fines, penalties, costs, and expenses,
including, without limitation, reasonable counsel and accountants fees, costs,
and expenses, (collectively "Losses") (including those incurred in the
investigation,
31
defense, or settlement with respect to or arising out of any demand, claim,
inquiry, investigation, proceeding, action, or cause of action), whether or not
involving a third-party claim, that Xxxxx & Wesson may suffer or incur by reason
of (a) the inaccuracy of any of the representations or warranties of Bear Lake
contained in this Agreement, or any of the agreements, certificates, documents,
exhibits, or schedules delivered in connection with this Agreement; or (b) the
failure of Bear Lake to comply with, or the breach, or the default by Bear Lake
of, any of the covenants or agreements made by Bear Lake contained in this
Agreement, or any of the agreements, certificates, documents, exhibits, or
schedules delivered in connection with this Agreement.
(b) In addition, the Principal Stockholders covenant and agree,
severally and not jointly, to defend, indemnify, and hold harmless for, from,
and against, and will pay to Xxxxx & Wesson the amount of any and all Losses
resulting from any third party claims, demands, suits, orders (including orders
on consent), or judgments (including judgments on consent) (i) alleging a
violation of Environmental Laws by Bear Lake or any of its subsidiaries prior to
the Effective Time, including Losses incurred due to third party claims,
demands, suits, orders (including orders on consent), or judgments (including
judgments on consent) that are for or in the nature of statutory response,
removal, remediation, or cleanup of real property, soil, surface water, or
groundwater; penalties or fines; natural resource damages; equitable remedies;
contribution; common law nuisance; or personal injury or property damage torts
or (ii) that arise from, relate to, or are allegedly a result of: (A) any
Environmental Conditions existing as of or prior to the Effective Time; (B) the
Release into the Environment of Hazardous Materials generated, transported or
disposed by Bear Lake and/or its subsidiaries (including but not limited to
Hazardous Materials disposed off-Site) prior to the Effective Time; or (C) human
exposure to Hazardous Materials Released, generated, transported, or disposed by
Bear Lake and/or its subsidiaries prior to the Effective Time, including
employee exposure to Hazardous Materials during Bear Lake and/or its
subsidiaries' manufacturing activities prior to the Effective Time (clauses (i)
and (ii) collectively "Indemnified Environmental Losses").
7.2 NOTICE AND RIGHT TO DEFEND THIRD-PARTY CLAIMS. Promptly upon
receipt of notice of any claim, demand, or assessment or the commencement of any
suit, action, or proceeding with respect to which indemnity may be sought
pursuant to Sections 7.1(a) or (b), Xxxxx & Wesson shall notify in writing, if
possible, within sufficient time to respond to such claim or answer or otherwise
plead in such action, the Principal Stockholders. In case any claim, demand, or
assessment shall be asserted, or suit, action, or proceeding commenced against
Xxxxx & Wesson or Bear Lake, the Principal Stockholders shall be entitled, at
the Principal Stockholders' expense, to participate therein, and, to the extent
that such stockholders may wish, to assume the defense, conduct, or settlement
thereof, at their own expense, with counsel satisfactory to Xxxxx & Wesson,
whose consent to the selection of counsel shall not be unreasonably withheld or
delayed, provided that the Principal Stockholders confirm to Xxxxx & Wesson that
it is a claim to which its rights of full indemnification apply without the
effect of Section 7.3(b). Subject to the foregoing, the Principal Stockholders
shall have the right to settle or compromise monetary claims without the consent
of Xxxxx & Wesson; however, as to any other claim, the Principal Stockholders
shall first obtain the prior written consent from Xxxxx & Wesson, which consent
shall be exercised in the sole discretion of Xxxxx & Wesson. After notice from
the Principal Stockholders to Xxxxx & Wesson of the Principal Stockholders'
intent so to assume the defense, conduct, settlement, or compromise of such
action, the Principal Stockholders shall not be liable to the Xxxxx & Wesson for
any legal or other expenses
32
(including, without limitation, settlement costs) subsequently incurred by Xxxxx
& Wesson in connection with the defense, conduct, or settlement of such action
while the Principal Stockholders are diligently defending, conducting, settling,
or compromising such action. The Principal Stockholders shall keep Xxxxx &
Wesson apprised of the status of the suit, action, or proceeding and shall make
the Principal Stockholders' counsel available to Xxxxx & Wesson, at the
Principal Stockholders' expense, upon the request of Xxxxx & Wesson. Xxxxx &
Wesson shall cooperate with the Principal Stockholders in connection with any
such claim and shall make personnel, books, records, and other information
relevant to the claim available to the Principal Stockholders to the extent that
such personnel, books, and records and other information are in the possession
and/or control of Xxxxx & Wesson. If the Principal Stockholders decide not to
participate, Xxxxx & Wesson shall be entitled, at the Principal Stockholders'
expense, to defend, conduct, settle, or compromise such matter with counsel
satisfactory to the Principal Stockholders, whose consent to the selection of
counsel shall not be unreasonably withheld or delayed.
7.3 LIMITATIONS RELATED TO INDEMNITY.
(a) DEDUCTIBLE. Notwithstanding the foregoing, and except as
provided below, Xxxxx & Wesson shall not be entitled to indemnification under
Section 7.1(a) until the total amount of the damages actually incurred by Xxxxx
& Wesson for which it shall be entitled to indemnification exceeds $1,020,000
(the "Deductible Amount"), and then only the excess amounts above the Deductible
Amount shall be payable.
(b) CAP. Xxxxx & Wesson may recover for the indemnification provided
under Section 7.1(a) only up to a maximum aggregate amount of $4,000,000 and may
recover for the indemnification provided under Section 7.1(b) only up to a
maximum aggregate amount of $4,000,000 (the "Environmental Indemnity Cap
Amount"), it being understood by the parties that the Environmental Indemnity
Cap Amount includes any amounts paid from the Environmental Indemnity Escrow and
in no event shall such amounts be aggregated for purpose of determining the
maximum liability pursuant to Section 7.1(b).
(c) PROPORTIONATE RESPONSIBILITY. Each Principal Stockholder shall
be responsible only for a portion of any indemnification payment proportionate
to such stockholder's ownership of Bear Lake Capital Stock.
(d) SURVIVAL OF INDEMNITY. Any claims for indemnification under
Section 7.1(a) other than for Indemnified Environmental Losses must be made
within 18 months after the Effective Time. Any claims for indemnification under
Section 7.1(b) for Indemnified Environmental Losses must be made within 42
months after the Effective Time.
SECTION 8.
APPOINTMENT OF STOCKHOLDERS' REPRESENTATIVE
8.1 APPOINTMENT. Each Principal Stockholder does hereby irrevocably
appoint TGV Capital Partners as such stockholder's true and lawful
attorney-in-fact and agent, with full power of substitution or resubstitution,
to act solely and exclusively on behalf such stockholder with respect to any
matters relating to this Agreement (the Stockholders'
33
Representative"). All action required to be taken by any or all of the Principal
Stockholders in connection with this Agreement, (including, without limitation,
the giving and receiving of all notices, consents, and waivers and the execution
and delivery of any documents, including the execution and delivery of any
agreement) shall be taken by the Stockholders' Representative, and Xxxxx &
Wesson and Bear Lake shall be entitled to rely on all actions taken or
authorized by the Stockholders' Representative as being the binding acts of the
Principal Stockholders and any of them. With respect to all such actions, the
Stockholders' Representative shall only take or authorize such actions approved
orally or in writing by the Principal Stockholders holding a majority of the
outstanding Bear Lake Capital Stock immediately prior to the Effective Time. The
Stockholders' Representative shall not have any duties or responsibilities
except those expressly set forth in this Agreement, and no implied covenants,
functions, responsibilities, duties, obligations, or liabilities shall be read
into this Agreement or shall otherwise exist against the Stockholders'
Representative.
8.2 RELIANCE BY STOCKHOLDERS' REPRESENTATIVE. The Stockholders'
Representative shall be entitled to rely, and shall be fully protected in
relying, upon any statements furnished to it by any Principal Stockholder or
Bear Lake, or any other evidence deemed by the Stockholders' Representative to
be reliable, and the Stockholders' Representative shall be entitled to act on
the advice of counsel selected by it. The Stockholders' Representative shall be
fully justified in failing or refusing to take any action under this Agreement
unless the Stockholders' Representative shall have received such advice or
concurrence of the Principal Stockholders as the Stockholders' Representative
deems appropriate or shall have been expressly indemnified to its satisfaction
by the Principal Stockholders against any and all liability and expense that the
Stockholders' Representative may incur by reason of taking or continuing to take
any such action. The Stockholders' Representative shall in all cases be fully
protected in acting, or refraining from acting, under this Agreement in
accordance with a request of Principal Stockholders owning a majority of the
outstanding Bear Lake Capital Stock immediately prior to the Effective Time, and
such request, and any action taken or failure to act pursuant thereto, shall be
binding upon all of the Principal Stockholders.
8.3 EXPENSES OF STOCKHOLDERS' REPRESENTATIVE. The Stockholders'
Representative shall be entitled to retain counsel and to incur such expenses
(including court costs and reasonable attorneys' fees and expenses) as the
Stockholders' Representative deems to be necessary or appropriate in connection
with the Stockholders' Representative performance of the Stockholders'
Representative's obligations under this Agreement, and all such fees and
expenses incurred by the Stockholders' Representative shall be borne by the
Principal Stockholders severally in accordance with each Principal Stockholders'
percentage ownership in Bear Lake Capital Stock.
8.4 INDEMNIFICATION. The Principal Stockholders hereby agree severally to
indemnify the Stockholders' Representative (in its capacity as such) ratably
according to their respective ownership of Bear Lake Capital Stock against, and
to hold the Stockholders' Representative (in the Stockholders' Representative
capacity as such) harmless from, any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, or disbursements
of whatever kind that may at any time be imposed upon, incurred by, or asserted
against the Stockholders' Representative in such capacity in any way relating to
or arising out of the Stockholders' Representative actions or failures to take
action pursuant to this Agreement or
34
in connection herewith in such capacity; provided, that no Principal Stockholder
shall be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements resulting solely from the gross negligence or willful misconduct
of the Stockholders' Representative. The agreements in this Section 8 shall
survive termination of this Agreement.
8.5 CONTRIBUTION. To the extent this Agreement provides that the Principal
Stockholders shall be liable to personally pay any cost, expense, or other
liability, the Principal Stockholders shall share such payment in accordance
with their respective percentage ownership of Bear Lake Capital Stock, and shall
reimburse each other as necessary to give effect to the intent of this
provision.
8.6 APPROVAL. The adoption of this Agreement and the approval of the
Merger by the Bear Lake's stockholders in accordance with the Delaware General
Corporation Law shall also constitute approval of all of the arrangements
relating hereto, including, without limitation, the appointment of the
Stockholders' Representative.
SECTION 9.
GENERAL
9.1 INDEMNITY AGAINST FINDERS. Each party hereto shall indemnify and hold
the other parties harmless against any claim for finders' fees based on alleged
retention of a finder by it.
9.2 CONTROLLING LAW. This Agreement, and all questions relating to its
validity, interpretation, performance, and enforcement, shall be governed by and
construed in accordance with the laws of the state of Delaware, notwithstanding
any Delaware or other conflict-of-law provisions to the contrary. Each of the
parties hereto irrevocably submits to the exclusive jurisdiction of the courts
of the state of Delaware located in New Castle County and the United States
District Court for the District of Delaware for the purpose of any suit, action,
proceeding or judgment relating to or arising out of this Agreement and the
transactions contemplated hereby. Service of process in connection with any such
suit, action, or proceeding may be served on each party hereto anywhere in the
world by the same methods as are specified for the giving of notices under this
Agreement. Each of the parties hereto irrevocably consents to the jurisdiction
of any such court in any such suit, action, or proceeding and to the laying of
venue in such court. Each party hereto irrevocably waives any objection to the
laying of venue of any such suit, action or proceeding brought in such courts
and irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. EACH OF THE
PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION
WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED
SPECIFICALLY AS TO THIS WAIVER.
9.3 NOTICES. All notices, requests, consents, demands, and other
communications under this Agreement shall be in writing and shall be deemed to
have been duly given and received (a) if mailed by registered or certified mail,
three business days after deposit in the United States mail, postage prepaid,
return receipt requested; (b) upon confirmation of
35
a receipt of a facsimile or e-mail transmission; (c) if hand delivered, upon
delivery against receipt or upon refusal to accept the notice; or (d) if
delivered by a standard overnight courier, one business day after deposit with
such courier, postage prepaid, in each case, addressed to such party at the
address set forth below:
If to Xxxxx & Wesson or SWAC:
Xxxxx & Wesson Holding Corporation
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxxxx@xxxxx-xxxxxx.xxx
with a copy given in the manner
prescribed above, to:
Xxxxxxxxx Xxxxxxx, LLP
0000 X. Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxx@xxxxx.xxx
If to Bear Lake or Principal Stockholders:
c/o TGV Capital Partners
00 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxx and Xxxxxxxx Xxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxxx@xxxxxxxxxx.xxx
xxxxxx@xxxxxxxxxx.xxx
with a copy given in the manner
prescribed above, to:
Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
E-mail: xxxxxx@xxxx.xxx
36
Any party may alter the address to which communications or copies are to
be sent by giving notice to such of change of address in conformity with the
provisions of this paragraph for the giving of notice.
9.4 BINDING NATURE OF AGREEMENT; NO ASSIGNMENT. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that no party may assign or transfer its rights
or obligations under this Agreement without the prior written consent of the
other parties hereto.
9.5 ENTIRE AGREEMENT. This Agreement and the Confidentiality Agreement,
dated August 3, 2006, by and between Bear Lake and Xxxxx & Wesson, contain the
entire understanding among the parties hereto with respect to the subject matter
hereof, and supersede all prior and contemporaneous agreements and
understandings, inducements, or conditions, express or implied, oral or written,
except as herein or therein contained. The express terms hereof control and
supersede any course of performance or usage of the trade inconsistent with any
of the terms hereof. This Agreement may not be modified or amended other than by
an agreement in writing.
9.6 PARAGRAPH HEADINGS. The paragraph headings in this Agreement are for
convenience only; they form no part of this Agreement and shall not affect its
interpretation.
9.7 GENDER. Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine, or neuter, as the
context requires.
9.8 EXPENSES. Whether or not the Merger shall be consummated and except as
otherwise provided in this Agreement, each party will pay all costs and expenses
incident to its negotiation and preparation of this Agreement and to its
performance and compliance with all the agreements and conditions contained
herein on its part to be performed or complied with, including the fees,
expenses, and disbursements of its counsel, investment bankers, and independent
public accountants.
9.9 VALIDITY. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, each of which shall remain in full force and
effect.
9.10 COUNTERPARTS. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
9.11 ATTORNEYS' FEES. If any action, suit, or other proceeding is
instituted to remedy, prevent, or obtain relief from a default in the
performance by either party of any of its obligations under this Agreement, the
prevailing party shall recover all of such party's attorneys' fees incurred in
each and every such action, suit, or other proceeding, including any and all
appeals or petitions therefrom. As used in this Section 9.11, attorneys' fees
shall be deemed to mean the full and actual costs of any legal services actually
performed in connection with the matters involved calculated on the basis of the
usual fee charged by the attorney performing such
37
services and shall not be limited to "reasonable attorneys' fees" as defined in
any statute or rule of court.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
38
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
15th day of December, 2006, as of the day and year first above written.
XXXXX & WESSON HOLDING CORPORATION
/s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
By: Xxxxxxx X. Xxxxxx
Its: President and Chief Executive Officer
SWAC-TC, INC.
/s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
By: Xxxxxxx X. Xxxxxx
Its: President
BEAR LAKE ACQUISITION CORP.
/s/ Xxxxxxxx Xxxxx
--------------------------------------------
By: Xxxxxxxx Xxxxx
Its: Executive Vice President
TGV PARTNERS - TCA INVESTORS, LLC
/s/ Xxxxxxxx Xxxxx
--------------------------------------------
By: Xxxxxxxx Xxxxx
Its: Managing Member
/s/ E.G. Xxxxxxxx, Jr.
--------------------------------------------
E.G. Xxxxxxxx, Jr.
/s/ Xxxxxxx X. Xxxx
--------------------------------------------
Xxxxxxx X. Xxxx
