EXHIBIT 10.56
MANAGEMENT STOCK SUBSCRIPTION AGREEMENT
MANAGEMENT STOCK SUBSCRIPTION AGREEMENT, dated as of __________ __, ____
between RACI Holding, Inc., a Delaware corporation ("Holding"), and the
Purchaser whose name appears on the signature page hereof (the "Purchaser").
W I T N E S S E T H:
WHEREAS, pursuant to the terms of the RACI Holding, Inc. 2003 Stock
Option Plan (the "Plan"), Holding and the Purchaser entered into a Management
Stock Option Agreement, dated as of _________ __, ____ (the "Option Agreement")
pursuant to which Holding granted to the Purchaser options (the "Options") to
purchase shares of Class A Common Stock, par value $.01 per share ("Common
Stock") of Holding at the exercise price per share set forth on the signature
page hereof (the "Exercise Price") pursuant to the terms thereof and the Plan;
WHEREAS, the Purchaser desires to exercise Options to purchase the
aggregate number of shares of Common Stock set forth on the signature page
hereof (each a "Share" and, collectively, the "Shares");
WHEREAS, the Shares will, as of the issuance thereof pursuant to this
Agreement, be subject to the terms and conditions of the Amended and Restated
Registration and Participation Agreement, dated as of February 12, 2003, among
Holding and each of the other persons party thereto (the "Registration and
Participation Agreement");
NOW, THEREFORE, to implement the foregoing and in consideration of the
agreements contained herein, the parties hereto hereby agree as follows:
1. Purchase and Sale of Common Stock.
(a) Purchase of Common Stock. Subject to all of the terms and
conditions of this Agreement, the Purchaser hereby subscribes for and shall
purchase and Holding shall sell to the Purchaser, the Shares, at the Exercise
Price per Share, at the Closing referred to in Section 2(a) hereof.
Notwithstanding anything in this Agreement to the contrary, Holding shall have
no obligation to sell any shares of Common Stock to any person who is a resident
of a jurisdiction in which the sale of Common Stock to such person would
constitute a violation of the securities, "blue sky" or other laws of such
jurisdiction.
(b) Consideration. Subject to all of the terms and conditions of
this Agreement, the Purchaser shall deliver to Holding at the Closing referred
to in Section
2(a) hereof, immediately available funds in the amount of the aggregate Exercise
Price set forth on the signature page hereof.
2. Closing.
(a) Time and Place. Except as otherwise mutually agreed by Holding
and the Purchaser, the closing (the "Closing") of the transaction contemplated
by this Agreement shall be held at the offices of Debevoise & ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 10:00 a.m. (New York time) on or about
___________ __, ____.
(b) Delivery by Holding. At the Closing, Holding shall deliver to
the Purchaser a stock certificate registered in such Purchaser's name and
representing the Shares, which certificate shall bear the legends set forth in
Section 3(b) hereof.
(c) Delivery by the Purchaser. At the Closing, the Purchaser shall
deliver to Holding the consideration referred to in Section 1(b) hereof.
3. Purchaser's Representations, Warranties and Covenants.
(a) Investment Intention. The Purchaser represents and warrants that
the Purchaser is acquiring the Shares solely for the Purchaser's own account for
investment and not with a view to or for sale in connection with any
distribution thereof, it being understood that the Purchaser may sell some or
all of the Shares to Holding. The Purchaser agrees that the Purchaser will not,
directly or indirectly, offer, transfer, sell, pledge, hypothecate or otherwise
dispose of any of the Shares (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of any Shares), except in compliance with the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
thereunder, and in compliance with applicable state and foreign securities or
"blue sky" laws. The Purchaser further understands, acknowledges and agrees that
none of the Shares may be transferred, sold, pledged, hypothecated or otherwise
disposed of (i) unless the provisions of Sections 4 through 8 hereof, inclusive,
shall have been complied with or have expired, (ii) unless (A) such disposition
is pursuant to an effective registration statement under the Securities Act, (B)
the Purchaser shall have delivered to Holding an opinion of counsel, which
opinion and counsel shall be reasonably satisfactory to Holding, to the effect
that such disposition is exempt from the provisions of Section 5 of the
Securities Act or (C) a no-action letter from the Commission, reasonably
satisfactory to Holding, shall have been obtained with respect to such
disposition and (iii) unless such disposition is pursuant to registration under
any applicable state or foreign securities laws or an exemption therefrom.
(b) Legends. The Purchaser acknowledges that the certificate or
certificates representing the Shares shall bear the following legends or other
appropriate legends:
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"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF A MANAGEMENT STOCK SUBSCRIPTION AGREEMENT, DATED
AS OF ________ __, ____, AND NEITHER THIS CERTIFICATE NOR THE
SHARES REPRESENTED BY IT ARE ASSIGNABLE OR OTHERWISE
TRANSFERABLE EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SUCH
MANAGEMENT STOCK SUBSCRIPTION AGREEMENT, AS THE SAME MAY BE
AMENDED FROM TIME TO TIME, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE ISSUER. THE SHARES REPRESENTED BY THIS
CERTIFICATE ARE BOUND BY THE OBLIGATIONS SET FORTH IN AND MAY BE
ENTITLED TO SOME OF THE BENEFITS OF AN AMENDED AND RESTATED
REGISTRATION AND PARTICIPATION AGREEMENT, DATED AS OF FEBRUARY
12, 2003, AMONG THE ISSUER AND CERTAIN STOCKHOLDERS OF THE
ISSUER, AS AMENDED AND AS THE SAME MAY BE AMENDED FROM TIME TO
TIME, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
ISSUER."
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY
STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE TRANSFERRED,
SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS (i)
(A) SUCH DISPOSITION IS PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (B) THE
HOLDER HEREOF SHALL HAVE DELIVERED TO HOLDING AN OPINION OF
COUNSEL, WHICH OPINION AND COUNSEL SHALL BE REASONABLY
SATISFACTORY TO THE ISSUER, TO THE EFFECT THAT SUCH DISPOSITION
IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF SUCH ACT OR (C) A
NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION,
REASONABLY SATISFACTORY TO THE ISSUER, SHALL HAVE BEEN OBTAINED
WITH RESPECT TO SUCH DISPOSITION AND (ii) SUCH DISPOSITION IS
PURSUANT TO REGISTRATION UNDER ANY APPLICABLE STATE
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AND FOREIGN SECURITIES LAWS OR AN EXEMPTION THEREFROM."
(c) Securities Law Matters. The Purchaser acknowledges receipt of
advice from Holding that (i) the Shares have not been registered under the
Securities Act based on an exemption provided under Rule 701 promulgated under
the Securities Act or qualified under any state or foreign securities or "blue
sky" laws, (ii) it is not anticipated that there will be any public market for
the Shares, (iii) the Shares must be held indefinitely and the Purchaser must
continue to bear the economic risk of the investment in the Shares unless the
Shares are subsequently registered under the Securities Act and such state laws
or an exemption from registration is available, (iv) Rule 144 promulgated under
the Securities Act ("Rule 144") is not presently available with respect to the
sales of the Shares, and Holding has made no covenant to make Rule 144
available, (v) when and if the Shares may be disposed of without registration in
reliance upon Rule 144, such disposition can be made only in accordance with the
terms and conditions of such Rule, (vi) Holding does not plan to file reports
with the Commission or make public information concerning Holding available
unless required to do so by law or by the terms of its Financing Agreements (as
hereinafter defined), (vii) if the exemption afforded by Rule 144 is not
available, sales of the Shares may be difficult to effect because of the absence
of public information concerning Holding, (viii) a restrictive legend in the
form heretofore set forth shall be placed on the certificates representing the
Shares and (ix) a notation shall be made in the appropriate records of Holding
indicating that the Shares are subject to restrictions on transfer set forth in
this Agreement and, if Holding should in the future engage the services of a
stock transfer agent, appropriate stop-transfer restrictions will be issued to
such transfer agent with respect to the Shares.
(d) Compliance with Rule 144. If any of the Shares are to be
disposed of in accordance with Rule 144, the Purchaser shall transmit to Holding
an executed copy of Form 144 (if required by Rule 144) no later than the time
such form is required to be transmitted to the Commission for filing and such
other documentation as Holding may reasonably require to assure compliance with
Rule 144 in connection with such disposition.
(e) Ability to Bear Risk. The Purchaser represents and warrants that
(i) the financial situation of the Purchaser is such that the Purchaser can
afford to bear the economic risk of holding the Shares for an indefinite period
and (ii) the Purchaser can afford to suffer the complete loss of the Purchaser's
investment in the Shares.
(f) Registration; Restrictions on Sale upon Public Offering. The
Purchaser shall be entitled to the rights and subject to the obligations created
under the Registration and Participation Agreement to the extent set forth
therein. The Purchaser agrees that, in the event that Holding files a
registration statement under the Securities Act with respect to an underwritten
public offering of any shares of its capital stock, the Purchaser will not
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effect any public sale or distribution of any shares of the Common Stock (other
than as part of such underwritten public offering) during the 20 days prior to
and the 180 days after the effective date of such registration statement.
(g) Access to Information. The Purchaser represents and warrants
that he has received and reviewed [insert disclosure materials]. The Purchaser
further represents and warrants that he was an employee of Holding, the Company
or a Subsidiary as of the date on which the Options were granted to him.
4. Restrictions on Disposition of Shares. Neither the Purchaser nor
any of the Purchaser's heirs or representatives shall sell, assign, transfer,
pledge or otherwise directly or indirectly dispose of or encumber any of the
Shares to or with any other person, firm, trust, association, corporation or
entity (including, without limitation, transfers to any other holder of
Holding's capital stock, dispositions by gift, by will, by a corporation as a
distribution in liquidation and by operation of law other than a transfer of
Shares by operation of law to the estate of the Purchaser upon the death of the
Purchaser, provided that such estate shall be bound by all provisions of this
Agreement) except as provided in Sections 5 through 8 hereof, inclusive, or to
Holding. The restrictions contained in this Section 4 shall terminate in the
event that an underwritten public offering of the Common Stock led by one or
more underwriters at least one of which is an underwriter of nationally
recognized standing (a "Public Offering") has been consummated and shall not
apply to a sale to the underwriters as part of a Public Offering.
5. Options of Holding, BRS and the C&D Fund Upon Proposed
Disposition.
(a) Rights of First Refusal. If the Purchaser desires to accept an
offer (which must be in writing and for cash, be irrevocable by its terms for at
least 60 days and be a bona fide offer as determined in good faith by the Board)
from any prospective purchaser to purchase all or any part of the Shares at any
time owned by the Purchaser, the Purchaser shall give notice in writing to
Holding, Bruckmann, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Co. II, L.P. (together with any successor
or other investment fund managed by Bruckmann, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Co., Inc.,
"BRS") and The ▇▇▇▇▇▇▇ & Dubilier Private Equity Fund IV Limited Partnership, a
Connecticut limited partnership (together with any successor or other investment
vehicle managed by ▇▇▇▇▇▇▇, Dubilier & Rice, Inc., the "C&D Fund") (i)
designating the number of Shares proposed to be sold, (ii) naming the
prospective purchaser of such Shares and (iii) specifying the price (the "Offer
Price") at and terms (the "Offer Terms") upon which the Purchaser desires to
sell the same. During the 30-day period following receipt of such notice by
Holding, BRS and the C&D Fund (the "First Refusal Period"), Holding shall have
the right to purchase from the Purchaser the Shares specified in such notice, at
the Offer Price and on the Offer Terms. Holding hereby undertakes to use
reasonable efforts to act as promptly as practicable following such notice to
determine whether it shall elect to exercise such right. If Holding fails to
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exercise such rights within the First Refusal Period, BRS and the C&D Fund shall
have the right, pro-rated to reflect their respective ownership percentages of
Common Stock, to purchase the Shares specified in such notice, at the Offer
Price and on the Offer Terms, at any time during the period beginning at the
earlier of (x) the end of the First Refusal Period and (y) the date of receipt
by the BRS and the C&D Fund of written notice that Holding has elected not to
exercise its rights and ending 30 days thereafter (the "Second Refusal Period").
The rights provided hereunder shall be exercised by written notice to the
Purchaser given at any time during the applicable period. If such right is
exercised, Holding or BRS and/or the C&D Fund, as the case may be, shall deliver
to the Purchaser, within the applicable Refusal Period, a check for the Offer
Price, payable to the order of the Purchaser, against delivery of certificates
or other instruments representing the Shares so purchased, appropriately
endorsed by the Purchaser. If such right shall not have been exercised,
including the delivery to the Purchaser of a check for the Offer Price, prior to
the expiration of the Second Refusal Period, then at any time during the 30 days
following the expiration of the Second Refusal Period, the Purchaser may sell
such Shares to (but only to) the intended purchaser named in the Purchaser's
notice to Holding, BRS and the C&D Fund at the Offer Price and on the Offer
Terms specified in such notice, free of all restrictions or obligations imposed
by, and free of any rights or benefits set forth in, Sections 6 and 7 of this
Agreement, provided that such intended purchaser shall have agreed in writing,
pursuant to an instrument of assumption satisfactory in substance and form to
Holding, to make and be bound by (i) the representations, warranties and
covenants set forth in Section 3 hereof, other than those set forth in Section
3(g), and (ii) the agreements set forth in Sections 4, 5 and 8 of this
Agreement.
(b) Public Offering. In the event that a Public Offering has been
consummated, none of Holding, BRS or the C&D Fund shall have any rights to
purchase the Shares from the Purchaser pursuant to this Section 5 and this
Section 5 shall not apply to a sale to the underwriters as part of a Public
Offering.
6. Options Effective on Termination of Employment or Unforeseen
Personal Hardship of the Purchaser.
(a) Termination of Employment. If the Purchaser's Active Employment
with Holding, the Company and the Subsidiaries is terminated for any reason
whatsoever (whether before or after the date of this Agreement), Holding shall
have an option to purchase all or any portion of the Shares then held by the
Purchaser (or, if the Purchaser's Active Employment was terminated by the
Purchaser's death, his or her estate) and shall have 60 days from the later of
(i) the date of termination and (ii) six months and one day from the date of the
Purchaser's acquisition of the Shares pursuant to this Agreement (such date, the
"Option Start Date" and, such 60-day period, the "First Option Period") during
which to give notice in writing to the Purchaser (or his or her estate) of its
election to exercise or not to exercise such option, in whole or in part,
provided that, such 60-day
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period may be extended by mutual agreement between the Purchaser and Holding,
and provided, further, that, if the Purchaser is terminated for Cause, the
Option Start Date shall be the date of termination of such Purchaser's
employment. Holding hereby undertakes to use reasonable efforts to act as
promptly as practicable following such termination to make such election. If
Holding (i) fails to give notice that it intends to exercise such option within
the First Option Period or (ii) chooses to repurchase none or only a portion of
the Shares then held by the Purchaser (or his or her estate), by giving such
notice, BRS and the C&D Fund shall have the right, pro-rated to reflect their
respective ownership percentages of Common Stock, to purchase all or any portion
of the Shares not repurchased by Holding, and shall have until the expiration of
the earlier of (x) 60 days following the end of the First Option Period, or (y)
60 days from the date of receipt by BRS and the C&D Fund of written notice from
Holding indicating it does not intend to exercise its option with respect to all
of the Purchaser's Shares (such 60-day period being hereinafter referred to as
the "Second Option Period"), to give notice in writing to the Purchaser (or his
or her estate) of BRS and/or the C&D Fund's exercise of its option, in whole or
in part. If the options of Holding and BRS and the C&D Fund to purchase all of
the Shares granted in this subsection are not fully exercised as provided herein
(other than as a result of Section 11 hereof), the Purchaser (or his or her
estate) shall be entitled to retain any Shares which could have been acquired on
exercise thereof, subject to all of the provisions of this Agreement (including
without limitation Section 5(a)). If Holding and BRS and the C&D Fund have
failed to exercise their respective options pursuant to this Section 6(a) or
have exercised such options with respect to less than all of the Shares held by
the Purchaser (or his or her estate) within the time periods specified herein,
and if the Purchaser's Active Employment is terminated (A) by the Purchaser by
Retirement or (B) by reason of the death or Permanent Disability of the
Purchaser, then on notice from the Purchaser (or his or her estate) in writing
and delivered to Holding within 30 days following the end of the Second Option
Period, Holding shall be required to purchase all (but not less than all) of the
Shares then held by the Purchaser (or his or her estate). All purchases pursuant
to this Section 6(a) by Holding or BRS and/or the C&D Fund shall be for a
purchase price and in the manner prescribed by Section 7 hereof.
(b) Unforeseen Personal Hardship. In the event that the Purchaser,
while in the employment of Holding or any direct or indirect subsidiary of
Holding, experiences Unforeseen Personal Hardship, the Board will carefully
consider any request by the Purchaser that Holding repurchase the Purchaser's
Shares at a price determined in accordance with Section 7 hereof, but Holding
shall have no obligation to repurchase such Shares. The Board shall consider
such request with respect to Unforeseen Personal Hardship as soon as practicable
after receipt by Holding of a written request by the Purchaser, such request to
include sufficient details of the Purchaser's Unforeseen Personal Hardship to
permit the Board to review the request and the circumstances in an informed
manner.
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(c) Certain Definitions. Capitalized terms used in this Agreement
without definition shall have the respective meanings set forth in the Plan. As
used in this Agreement, the following terms shall have the following meanings:
(i) "Active Employment" shall mean active employment with
Holding or any direct or indirect subsidiary of Holding.
(ii) "Cause" shall mean (A) the willful failure by the
Purchaser to perform substantially his duties as an employee of Holding,
the Company or any Subsidiary (other than any such failure due to
physical or mental illness) after a demand for substantial performance
is delivered to the Purchaser by the executive to whom the Purchaser
reports or by the Board, which notice identifies the manner in which
such executive or the Board, as the case may be, believes that the
Purchaser has not substantially performed his duties, (B) the
Purchaser's engaging in willful and serious misconduct that is injurious
to Holding, the Company or any Subsidiary, (C) the Purchaser's having
been convicted of, or entered a plea of guilty or nolo contendere to, a
crime that constitutes a felony, (D) the willful and material breach by
the Purchaser of any written covenant or agreement with Holding, the
Company or any Subsidiary not to disclose any information pertaining to
Holding, the Company or any Subsidiary or not to compete or interfere
with Holding, the Company or any Subsidiary or code of conduct or ethics
maintained by Holding, the Company or any Subsidiary or (E) the breach
by the Purchaser of the Purchaser's obligations pursuant to Section 8
hereof.
(iii) "Company" shall mean the Remington Arms Company, Inc., a
Delaware corporation, and any successor thereto.
(iv) "Permanent Disability" shall mean a physical or mental
disability or infirmity that prevents the performance of Purchaser's
employment-related duties for a continuous period of six months or
longer. The Board's reasoned and good faith judgment of Permanent
Disability shall be final, binding and conclusive on all parties hereto
and shall be based on such competent medical evidence as shall be
presented to it by the Purchaser or by any physician or group of
physicians or other competent medical expert employed by the Purchaser
or Holding to advise the Board.
(v) "Retirement" shall mean retirement at age 65 or later.
(vi) "Subsidiary" shall mean any corporation, a majority of
whose outstanding voting securities is owned, directly or indirectly, by
the Company or Holding.
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(vii) "Unforeseen Personal Hardship" shall mean financial
hardship arising from (x) extraordinary medical expenses or other
expenses directly related to illness or disability of the Purchaser, a
member of the Purchaser's immediate family or one of the Purchaser's
parents or (y) payments necessary or required to prevent the eviction of
Purchaser from Purchaser's principal residence or foreclosure on the
mortgage on that residence. The Board's reasoned and good faith
determination of Unforeseen Personal Hardship shall be binding on
Holding and the Purchaser.
(d) Notice of Termination. Holding shall give written notice of any
termination of the Purchaser's Active Employment to BRS and the C&D Fund, except
that if such termination (if other than as a result of death) is by the
Purchaser, the Purchaser shall give written notice of such termination to
Holding and Holding shall give written notice of such termination to BRS and the
C&D Fund.
(e) Public Offering. In the event that a Public Offering has been
consummated, none of Holding, BRS, the C&D Fund or the Purchaser shall have any
rights to purchase or sell the Shares, as the case may be, pursuant to this
Section 6 and this Section 6 shall not apply to a sale as part of a Public
Offering.
7. Determination of the Purchase Price; Manner of Payment.
(a) Purchase Price. For the purposes of any purchase of the Shares
pursuant to Section 6, and subject to Section 11(c), the purchase price per
Share to be paid to the Purchaser (or his or her estate) for each Share (the
"Purchase Price") shall be the fair market value (the "Fair Market Value") of
such Share as of the later of (i) six months and one day after the date of
Purchaser's acquisition of such Shares (the "Anniversary") and (ii) the
effective date of the termination of employment that gives rise to the right or
obligation to repurchase or, in the case of a repurchase as a result of
Unforeseen Personal Hardship, as of the date such Shares are repurchased (such
date of termination or Anniversary or repurchase, as applicable, the
"Determination Date"); provided that if the Purchaser's employment is terminated
by Holding or any of its direct or indirect subsidiaries for Cause, the Purchase
Price for such Share shall be the lesser of (i) the Fair Market Value of such
Share as of the effective date of the termination of employment that gives rise
to the right or obligation to repurchase and (ii) the price at which the
Purchaser purchased such Share from Holding pursuant to this Agreement. Whenever
determination of the Fair Market Value of such Shares is required by this
Agreement, such Fair Market Value shall be such amount as is determined in good
faith by the Board. In making a determination of Fair Market Value, the Board
shall give due consideration to such factors as it deems appropriate, including,
without limitation, the earnings and certain other financial and operating
information of the Company in recent periods, the potential value of the Company
as a whole, the future prospects of the Company and the industries in which it
competes, the history and management of the Company, the general
9
condition of the securities markets, the fair market value of securities of
companies engaged in businesses similar to those of the Company and the
Applicable Share Valuation (as defined below). The determination of Fair Market
Value will not give effect to any restrictions on transfer of the Shares or the
fact that such Shares would represent a minority interest in Holding. For
purposes of this Agreement, the term "Applicable Share Valuation" shall mean the
annual valuation of the Common Stock performed as of the last day of the last
fiscal year of Holding ending prior to the Determination Date by an independent
valuation firm chosen by the Board, except that, in the case of a Determination
Date occurring during the period beginning on September 1 of any fiscal year of
Holding and ending on December 31 of that fiscal year, the term "Applicable
Share Valuation" shall mean the annual valuation of the Common Stock performed
as of the last day of such fiscal year by an independent valuation firm chosen
by the Board. Such annual valuations shall be performed as promptly as
practicable following the end of each fiscal year of Holding. The Fair Market
Value as determined in good faith by the Board and in the absence of fraud shall
be binding and conclusive upon all parties hereto, BRS and the C&D Fund. If
Holding subdivides (by any stock split, stock dividend or otherwise) the Common
Stock into a greater number of shares, or combines (by reverse stock split or
otherwise) the Common Stock into a smaller number of shares after the Board
shall have determined the Purchase Price for the Shares (without taking into
consideration such subdivision or combination) and prior to the consummation of
the purchase, the Purchase Price (including any minimum or maximum Purchase
Price specified herein or in effect as a result of a prior adjustment) shall be
appropriately adjusted to reflect such subdivision or combination and the
Board's determination as to any such judgment in good faith shall be binding and
conclusive on all parties hereto, BRS and the C&D Fund.
(b) Payment. Subject to Section 11 hereof, the completion of a
purchase pursuant to Section 6 hereof shall take place at the principal office
of Holding on the tenth business day following (i) the receipt by the Purchaser
(or his or her estate) of the notice of the C&D Fund or Holding, as the case may
be, of its exercise of its option to purchase pursuant to Section 6(a) or (ii)
Holding's receipt of notice by the Purchaser (or his or her estate) of the
election to sell Shares pursuant to Section 6(a) or (iii) the Board's
determination (which shall be delivered to the Purchaser) that it is willing and
able to purchase Shares as a result of Unforeseen Personal Hardship pursuant to
Section 6(b). The Purchase Price shall be paid by delivery to the Purchaser (or
his or her estate) of a certified or bank check for the Purchase Price payable
to the order of the Purchaser (or his or her estate), against delivery of
certificates or other instruments representing the Shares so purchased,
appropriately endorsed by the Purchaser (or his or her estate), free and clear
of all security interests, liens, claims, encumbrances, charges, options,
restrictions on transfer, proxies and voting and other agreements of whatever
nature; provided, however, that if the Determination Date occurs during the
period between September 1 and December 31 of any fiscal year of Holding or
during the first fiscal quarter of any fiscal year of Holding, Holding or BRS
and/or the C&D Fund, as the case
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may be, may elect to pay the Purchase Price in two installments. In any such
event, (i) at the closing of the purchase of the Shares, Holding or BRS and/or
the C&D Fund, as the case may be, shall pay to the Purchaser (or his or her
estate) an amount (the "First Installment Amount") equal to 80% of the Fair
Market Value of the Shares, determined pursuant to Section 7(a) hereof on the
basis of the most recent available valuation of the Shares, and (ii) no later
than the tenth business day following receipt by Holding of the Applicable Share
Valuation, Holding or BRS and/or the C&D Fund, as the case may be, shall pay an
additional amount to the Purchaser (or his or her estate) equal to the sum of
(1) the excess (the "Excess Payment"), if any, of (A) the Purchase Price for the
Shares, over (B) the First Installment Amount and (2) an amount calculated by
multiplying the Excess Payment by a percentage equal to the average annual prime
rate charged during such period by The Chase Manhattan Bank or such other
nationally recognized bank as may be designated by Holding.
(c) Application of the Purchase Price to Certain Loans. The
Purchaser agrees that Holding, BRS and the C&D Fund shall be entitled to apply
any amounts to be paid by Holding, BRS or the C&D Fund, as the case may be, to
repurchase Shares pursuant to Section 5 or 6 hereof to discharge any
indebtedness of the Purchaser to Holding or any of its direct or indirect
subsidiaries, including, without limitation, indebtedness of the Purchaser
incurred to purchase the Shares or indebtedness that is guaranteed by Holding or
any of its direct or indirect subsidiaries.
8. Take-Along Rights.
The Purchaser acknowledges and agrees that the Take-Along Rights
provided to BRS pursuant to Section 5.1 of the Registration and Participation
Agreement shall apply to the Shares.
9. Representations and Warranties of Holding. Holding represents
and warrants to the Purchaser that (a) Holding has been duly incorporated and is
an existing corporation in good standing under the laws of the State of
Delaware, (b) this Agreement has been duly authorized, executed and delivered by
Holding and constitutes a valid and legally binding obligation of Holding
enforceable against Holding in accordance with its terms, (c) the Shares, when
issued, delivered and paid for in accordance with the terms hereof, will be duly
and validly issued, fully paid and nonassessable, and free and clear of any
liens or encumbrances other than those created pursuant to this Agreement, or
otherwise in connection with the transactions contemplated hereby, and (d) the
Shares, when issued and held by the Purchaser, by the Purchaser's estate upon
transfer by operation of law on the Purchaser's death or by BRS or the C&D Fund,
shall be "Registrable Securities" as provided in the Registration and
Participation Agreement.
11
10. Covenants of Holding.
(a) Rule 144. Holding agrees that at all times after it has filed a
registration statement after the date hereof pursuant to the requirements of the
Securities Act or Section 12 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), relating to any class of equity securities of Holding
(other than (i) the registration of equity securities of Holding and/or options
or interests in respect thereof to be offered primarily to directors and/or
members of management or employees of Holding or its direct or indirect
subsidiaries, and senior executives of corporations in which entities managed or
sponsored by Bruckmann, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Co. Inc. or ▇▇▇▇▇▇▇, Dubilier & Rice,
Inc. have made equity investments and/or other persons with whom Bruckmann,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Co. Inc. or ▇▇▇▇▇▇▇, Dubilier & Rice, Inc. has consulting or
other advisory relationships, or (ii) the registration of equity securities
and/or options or other interests in respect thereof solely on Form S-4 or S-8
or any successor form), it will file the reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
adopted by the Commission thereunder (or, if Holding is not required to file
such reports, it will, upon the request of the Purchaser, make publicly
available such information as necessary to permit sales pursuant to Rule 144
under the Securities Act), and will take such further action as the Purchaser
may reasonably request, all to the extent required from time to time to enable
the Purchaser to sell Shares without registration under the Securities Act
within the limitation of the exemptions provided by (i) Rule 144, as such Rule
may be amended from time to time, or (ii) any successor rule or regulation
hereafter adopted by the Commission.
(b) State Securities Laws. Holding agrees to use efforts to comply
with all state and foreign securities or "blue sky" laws applicable to the sale
of the Shares to the Purchaser, provided that Holding shall not be obligated to
qualify or register the Shares under any such law or to qualify as a foreign
corporation or file any consent to service of process under the laws of any
jurisdiction or subject itself to taxation as doing business in any such
jurisdiction.
11. Certain Restrictions on Repurchases.
(a) Financing Agreements, etc. Notwithstanding any other provision
of this Agreement, Holding shall not be permitted or obligated to repurchase any
Shares from the Purchaser if (i) such repurchase (or the payment by the Company
of a dividend to Holding to fund such repurchase) would result in a violation of
the terms or provisions of, or result in a default or an event of default under,
(A) the Credit Agreement, dated as of January 24, 2003 (the "Credit Agreement"),
among the Company, RA Factors, Inc., Wachovia Bank, National Association, as
administrative and collateral agent, Fleet Capital Corporation, as syndication
agent, National City Commercial Finance, Inc., as documentation agent and the
other banks and financial institutions party thereto from time to time; (B) the
Indenture, dated as of January 24, 2003, (the "Indenture") among
12
the Company and RBC Holding, Inc., RA Brands, L.L.C. and RA Factors, Inc. as
guarantors, and U.S. Bank National Association, as Trustee, as the same may be
amended, modified or supplemented from time to time or (C) any other guarantee,
financing or security agreement or document entered into to refinance the
indebtedness under the Credit Agreement or the Indenture, in connection with the
financing by Holding or any of its subsidiaries of any transaction, or in
connection with the operations of Holding or its subsidiaries from time to time
(the Credit Agreement, any Indenture, and such other agreements and documents,
as each may be amended, modified or supplemented from time to time, are
hereinafter referred to as the "Financing Agreements"), in each case as the same
may be amended, modified or supplemented from time to time, (ii) such repurchase
would violate any of the terms or provisions of the Certificate of Incorporation
of Holding or (iii) Holding has no funds legally available therefor under the
General Corporation Law of the State of Delaware.
(b) Delay of Repurchase. In the event that a repurchase by Holding,
otherwise permitted or required under Section 6(a) is prevented solely by the
terms of Section 11(a), (i) such repurchase will be postponed and will take
place without the application of further conditions or impediments (other than
as set forth in Section 7 hereof or in this Section 11) at the first opportunity
thereafter when Holding has funds legally available therefor and when such
repurchase will not result in any default, event of default or violation under
any of the Financing Agreements or in a violation of any term or provision of
the Certificate of Incorporation of Holding and (ii) such repurchase obligation
shall rank against other similar repurchase obligations with respect to Shares
or options in respect thereof according to priority in time of (A) the effective
date of the termination of employment in connection with any repurchase
obligation arising pursuant to an exercise of the option of Holding under
Section 6(a), or (B) as to any repurchase obligation arising pursuant to an
exercise of any Purchaser's right to require a repurchase under Section 6(a),
the date upon which Holding receives written notice of such exercise, provided
that any such repurchase obligations as to which a common date determines
priority under clause (A) or (B) above shall be of equal priority and shall
share pro rata in any repurchase payments made pursuant to clause (i) above and
provided, further, that any repurchase commitment arising from Permanent
Disability, death or Retirement or any repurchase commitment made by the Board
pursuant to Section 6(b) shall have priority over any other repurchase
obligation.
(c) Purchase Price Adjustment. In the event that a repurchase of
Shares from the Purchaser is delayed pursuant to this Section 11, the purchase
price per Share when the repurchase of such Shares eventually takes place as
contemplated by Section 11(b) shall be the sum of (a) the Purchase Price
determined in accordance with Section 7 hereof at the time that the repurchase
of such Shares would have occurred but for the operation of this Section 11,
plus (b) an amount equal to interest on such Purchase Price for the period from
the date on which the completion of the repurchase would have taken place but
for the operation of this Section 11 to the date on which such repurchase
actually
13
takes place (the "Delay Period") at a rate equal to the average prime rate
charged during such period by The Chase Manhattan Bank or such other nationally
recognized bank as may be designated by Holding.
12. Miscellaneous.
(a) Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given if delivered personally or sent by certified or
express mail, return receipt requested, postage prepaid, or by any recognized
international equivalent of such mail delivery, to Holding, the C&D Fund, or the
Purchaser, as the case may be, at the following addresses or to such other
address as Holding, BRS, the C&D Fund, or the Purchaser, as the case may be,
shall specify by notice to the others:
(i) if to Holding, to it at:
RACI Holding, Inc.
c/o Remington Arms Company, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(ii) if to the Purchaser, to the Purchaser at the address set
forth on the signature page hereof.
(iii) if to BRS, to:
Bruckmann, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Co., II, L.P.
c/o Bruckmann, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Co., Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
(iv) if to the C&D Fund, to:
The ▇▇▇▇▇▇▇ & Dubilier Private Equity
Fund IV Limited Partnership
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ & Dubilier Associates
IV Limited Partnership,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
14
All such notices and communications shall be deemed to have been received on the
date of delivery if delivered personally or on the third business day after the
mailing thereof. Copies of any notice or other communication given under this
Agreement shall also be given to:
▇▇▇▇▇▇▇, Dubilier & Rice, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and
Debevoise & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
BRS and the C&D Fund also shall be given a copy of any notice or other
communication between the Purchaser and Holding under this Agreement at their
respective addresses as set forth above.
(b) Binding Effect; Benefits. This Agreement shall be binding upon
the parties to this Agreement and their respective successors and assigns and
shall inure to the benefit of the parties to the Agreement, BRS, the C&D Fund
and their respective successors and assigns. Except as provided in Sections 4
through 8, inclusive, nothing in this Agreement, express or implied, is intended
or shall be construed to give any person other than the parties to this
Agreement, BRS, the C&D Fund or their respective successors or assigns any legal
or equitable right, remedy or claim under or in respect of any agreement or any
provision contained herein.
(c) Waiver; Amendment.
(i) Waiver. Any party hereto or beneficiary hereof may by
written notice to the other parties (A) extend the time for the
performance of any of the obligations or other actions of the other
parties under this Agreement, (B) waive compliance with any of the
conditions or covenants of the other parties contained in this Agreement
and (C) waive or modify performance of any of the obligations of the
other parties under this Agreement, provided that any waiver of the
provisions of Sections 4 through 8, inclusive, must be consented to in
writing by the C&D Fund and BRS. Except as provided in the preceding
sentence, no action taken pursuant to this Agreement, including, without
limitation, any investigation by or on behalf of any party or
beneficiary shall be deemed to constitute a waiver by the party or
beneficiary taking such action of compliance with any
15
representations, warranties, covenants or agreements contained herein.
The waiver by any party hereto or beneficiary hereof of a breach of any
provision of this Agreement shall not operate or be construed as a
waiver of any preceding or succeeding breach and no failure by a party
to exercise any right or privilege hereunder shall be deemed a waiver of
such party's or beneficiary's rights or privileges hereunder or shall be
deemed a waiver of such party's or beneficiary's rights to exercise the
same at any subsequent time or times hereunder.
(ii) Amendment. This Agreement may not be amended, modified
or supplemented orally, but only by a written instrument executed by the
Purchaser and Holding, and (in the case of any amendment, modification
or supplement to or affecting Section 8 hereof, or that adversely
affects the rights of BRS and/or the C&D Fund or BRS hereunder)
consented to by BRS and/or the C&D Fund, as applicable, in writing. The
parties hereto acknowledge that Holding's consent to an amendment or
modification of this Agreement may be subject to the terms and
provisions of the Financing Agreements.
(d) This Agreement is the entire agreement of the parties with
respect to the subject matter hereof and supersedes all other prior agreements,
understandings, documents, statements, representations and warranties, oral or
written, express or implied, between the parties hereto and their respective
affiliates, representatives and agents in respect of the subject matter hereof.
(e) Assignability. Neither this Agreement nor any right, remedy,
obligation or liability arising hereunder or by reason hereof shall be
assignable by Holding or the Purchaser without the prior written consent of the
other parties and BRS and the C&D. Each of BRS and the C&D Fund may assign from
time to time all or any portion of their respective rights under Sections 4
through 8 hereof to one or more persons or other entities designated by BRS or
the C&D Fund, as the case may be.
(f) Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, EXCEPT TO THE
EXTENT THAT THE CORPORATE LAW OF THE STATE OF DELAWARE SPECIFICALLY AND
MANDATORILY APPLIES.
(g) Section and Other Headings, etc. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
(h) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
16
(i) Delegation by the Board. All of the powers, duties and
responsibilities of the Board specified in this Agreement may, to the full
extent permitted by applicable law, be exercised and performed by any duly
constituted committee thereof to the extent authorized by the Board to exercise
and perform such powers, duties and responsibilities.
17
IN WITNESS WHEREOF, Holding and the Purchaser have executed this
Agreement as of the date first above written.
RACI HOLDING, INC.
By:
-------------------------------------
Name:
Title:
THE PURCHASER:
[Name]
By:
-------------------------------------
Name:
Address of the Purchaser:
[Address]
Total Number of Shares
of Common Stock to be Purchased: [Shares]
Exercise Price: $ _______
Aggregate Exercise Price: $ _______
18