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0000913277
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2023-12-29
2023-12-29
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United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 29, 2023
CLARUS CORPORATION
(Exact name of registrant as specified in
its charter)
Delaware
(State or other jurisdiction
of incorporation) |
001-34767
(Commission File Number) |
58-1972600
(IRS Employer
Identification Number) |
2084 East 3900 South, Salt Lake City, Utah
(Address of principal executive offices) |
84124
(Zip Code) |
Registrant’s telephone number, including
area code: (801) 278-5552
N/A
(Former name or former address, if changed
since last report.)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging
growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this chapter).
|
¨ |
Emerging growth company |
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act. ¨
Securities registered pursuant to Section
12(b) of the Act:
Title of each class |
|
Trading Symbol |
|
Name of each exchange on which
registered |
Common Stock, par value $.0001 per share |
|
CLAR |
|
NASDAQ Global Select Market |
Item 1.01 Entry into a Material Definitive Agreement.
On December 29, 2023, Clarus Corporation (the
“Company”) and Everest/Sapphire Acquisition, LLC (the “Seller”), a wholly owned subsidiary of the Company, entered
into a Purchase and Sale Agreement (the “Purchase Agreement”) with Bullseye Acquisitions, LLC (the “Buyer”), an
affiliate of JDH Capital Company, pursuant to which the Company and Seller agreed to sell all of the equity associated with the Company’s
Precision Sport segment, which is comprised of the Company’s subsidiaries Sierra Bullets, L.L.C. (“Sierra”) and Barnes
Bullets – Mona, LLC (“Barnes”) to the Buyer. The Company, the Seller, Sierra and Barnes are collectively referred to
herein as the “Seller Parties”. The Precision Sport segment is engaged in the business of designing, developing, manufacturing,
and marketing bullets and ammunition to the military, law enforcement, and commercial/consumer markets (the “Business”). Under
the terms of the Purchase Agreement, the Buyer has agreed to pay $175 million in cash at closing for Sierra and Barnes (the “Purchase
Price”), which is subject to a customary working capital adjustment. Capitalized terms not otherwise defined herein shall have their
respective meanings as set forth in the Purchase Agreement. JDH Capital Company and the Buyer are not affiliated with any of the Seller
Parties or their respective officers or directors and/or managers.
The Purchase Agreement includes customary (a) representations and warranties
of the parties, (b) covenants, including covenants with respect to actions to be taken prior to the closing, including, among others,
that the Seller Parties conduct and operate the Business in the ordinary course consistent with past practice until the closing of the
transaction and not engage in certain kinds of activities or transactions during such period, as well as provisions regarding confidentiality,
non-competition and non-solicitation and (c) indemnities. The Buyer has obtained a conditionally bound representation and warranty insurance
policy that will provide coverage for certain losses incurred as a result of breaches of certain specified representations and warranties
of the Seller Parties contained in the Purchase Agreement, provided that the recovery under such policy is subject to certain exclusions,
policy limits and certain other terms and conditions, all as more fully described in the Purchase Agreement. The Seller Parties will not
be responsible for any breaches of the representations or warranties other than for breaches of Fundamental Representations or Actual
Fraud.
The
obligations of the parties to consummate the transaction are subject to the satisfaction or waiver of customary closing conditions, including
(a) the expiration or termination of all applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the “HSR Act”), (b) the absence of any Law enacted, enforced or promulgated, or any other action taken by any
Governmental Authority, if either of which would prohibit the consummation of the Transaction or which otherwise restrains or prohibits
the Purchase Agreement or the consummation of the underlying transactions, (c) the accuracy of the representations and warranties of the
parties to the Purchase Agreement (subject to customary materiality qualifications), (d) the absence of any Material Adverse Effect with
respect to the Business, and (e) other customary closing conditions.
Until
the closing of the transactions contemplated by the Purchase Agreement or its earlier termination, the Seller Parties agreed not to, directly
or indirectly, encourage, facilitate, solicit or initiate or continue any discussions or negotiations with, or provide any information
or documentation to, any Person (other than the Buyer and its Affiliates and Representatives) concerning Sierra, Barnes, or the Business
in furtherance of, or that would reasonably be expected to lead to, another Acquisition Proposal. The Purchase Agreement also contains
covenants relating to taxes, employee matters and other customary covenants.
The Purchase Agreement also includes customary termination provisions
including that, subject to the terms of the Purchase Agreement, either party may terminate the Purchase Agreement if the transaction has
not been consummated by March 31, 2024 (the “Closing Deadline”), subject to certain extensions of the Closing Deadline related
to obtaining HSR Act clearance, or if any Governmental Authority issues any final and nonappealable order prohibiting or enjoining the
Transaction. Furthermore, if the Purchase Agreement is terminated by any party for failure to obtain clearance under the HSR Act by the
Closing Deadline, as it may have been extended, the Buyer will pay a termination fee to Seller equal to the Parent Expenses.
Additionally, the parties may terminate the Purchase
Agreement if the other party has violated or breached any representation, warranty, covenant, obligation or agreement which causes any
of the conditions to closing to not be satisfied prior to the Closing Deadline, subject, in some cases, to the opportunity of the breaching
party to cure such breach or violation. If the Purchase Agreement is terminated on such grounds, any indemnifiable losses arising from
claims for breaches of representations and warranties (except in the case of Actual Fraud) are limited to actual Damages.
No assurances can be given that the transactions
contemplated by the Purchase Agreement will be consummated. The foregoing description of the Purchase Agreement does not purport to be
complete and is qualified in its entirety by reference to the Purchase Agreement, which is included as Exhibit 2.1 to this Current Report
on Form 8-K (the “Report”) and is incorporated herein by reference.
The Purchase Agreement included as an exhibit
to this Report is intended to provide investors with information regarding its terms. It is not intended to provide any other factual
information about the Seller Parties, the Buyer or any of their respective subsidiaries or affiliates and/or the Business. The representations,
warranties and covenants contained in the Purchase Agreement were made only for purposes of that agreement and as of specific dates; were
made solely for the benefit of the parties to that agreement; may be subject to limitations agreed upon by the contracting parties, including
being qualified by confidential disclosures; may not have been intended to be statements of fact, but rather, as a method of allocating
contractual risk and governing the contractual rights and relationships between the parties to that agreement; and may be subject to standards
of materiality applicable to contracting parties that differ from those applicable to investors. Investors should not rely on the representations,
warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Seller Parties,
the Buyer or any of their respective subsidiaries or affiliates and/or the Business. Moreover, information concerning the subject matter
of the representations, warranties and covenants may change after the date of the Purchase Agreement, which subsequent information may
or may not be fully reflected in the Company’s public disclosures.
Item 8.01 Other Events
On December 29, 2023, the Company issued a press
release announcing the signing of the Purchase Agreement. A copy of the press release is included as Exhibit 99.1 to this Report.
The information in Item 8.01
of this Report and the press release included as Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the
Securities Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933,
as amended, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits. The following exhibits are hereby filed as part of this
Report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: January 3, 2024
|
CLARUS CORPORATION |
|
|
|
By: |
/s/ Michael J. Yates |
|
Name: |
Michael J. Yates |
|
Title: |
Chief Financial Officer |
Exhibit 2.1
PURCHASE
AND SALE AGREEMENT
by and
among
BULLSEYE
ACQUISITIONS, LLC,
as Buyer,
EVEREST/SAPPHIRE
ACQUISITION, LLC,
as Seller,
AND
CLARUS
CORPORATION,
as Parent
Dated
as of December 29, 2023
TABLE
OF CONTENTS
|
Page |
|
|
Article 1
PURCHASE AND SALE OF Seller INTEREST; CLOSING |
1 |
|
1.1
|
Closing |
1 |
|
1.2 |
Purchase
and Sale of the Seller Interest |
2 |
|
1.3 |
Closing
Deliverables; Payments at Closing |
2 |
|
1.4
|
Working
Capital Adjustment |
3 |
|
1.5
|
Withholding |
6 |
Article 2
REPRESENTATIONS AND WARRANTIES RELATING TO PARENT AND SELLER |
6 |
|
2.1
|
Organization
and Good Standing |
6 |
|
2.2 |
Power
and Authorization; Enforceability |
6 |
|
2.3
|
No
Violation or Conflict |
7 |
|
2.4 |
Ownership
of Seller Interest |
7 |
|
2.5 |
Consents |
8 |
|
2.6 |
Litigation |
8 |
|
2.7
|
FIRPTA |
8 |
|
2.8
|
Brokers
and Finders |
8 |
Article 3
REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANIES |
8 |
|
3.1 |
Organization
and Good Standing |
8 |
|
3.2
|
No
Violation or Conflict |
8 |
|
3.3
|
Capitalization |
9 |
|
3.4
|
Subsidiaries |
9 |
|
3.5
|
Compliance
with Laws |
10 |
|
3.6
|
Litigation |
10 |
|
3.7 |
Financial
Statements; Undisclosed Liabilities; Books and Records |
10 |
|
3.8 |
Real
Property |
11 |
|
3.9 |
Material
Contracts |
13 |
|
3.10 |
Governmental
Authorizations |
16 |
|
3.11 |
Intellectual
Property |
16 |
|
3.12 |
Labor
and Employment Matters |
19 |
|
3.13 |
Benefit
Plans |
20 |
|
3.14 |
Tax
Matters |
21 |
|
3.15
|
Customers
and Suppliers |
23 |
|
3.16 |
Inventory;
Accounts Receivable |
23 |
|
3.17 |
Related
Party Arrangements |
24 |
|
3.18
|
Brokers
and Finders |
24 |
|
3.19
|
Propriety
of Past Payments |
25 |
|
3.20 |
Personal
Information Laws |
25 |
|
3.21
|
Tangible
Personal Property; Sufficiency of Assets |
25 |
|
3.22
|
Sanctions;
Trade Laws and Regulations |
26 |
|
3.23 |
Internal
Accounting Controls |
26 |
|
3.24
|
Environmental
Matters |
26 |
|
3.25
|
Absence
of Certain Changes and Events |
27 |
|
3.26 |
Products;
Product Liability |
28 |
|
3.27 |
Directors
and Officers of the Companies |
28 |
|
3.28
|
Banking
Relationships |
28 |
|
3.29 |
Insurance |
28 |
Article 4
REPRESENTATIONS AND WARRANTIES OF BUYER |
29 |
|
4.1 |
Organization
and Good Standing |
29 |
|
4.2 |
Power
and Authorization; Enforceability |
29 |
|
4.3 |
No
Violation or Conflict |
30 |
|
4.4 |
Compliance
with Laws |
30 |
|
4.5 |
Litigation |
30 |
|
4.6
|
Governmental
Consents and Approvals |
30 |
|
4.7
|
OFAC;
Ownership |
31 |
|
4.8 |
U.S.
Person; CFIUS |
31 |
|
4.9
|
Brokers
and Finders |
31 |
|
4.10 |
Investment |
31 |
|
4.11 |
Sufficient
Funds; Solvency |
32 |
|
4.12
|
Tax
and Legal Matters |
32 |
|
4.13 |
Governmental
Authorizations |
32 |
|
4.14 |
R&W
Policy |
32 |
Article 5
CERTAIN COVENANTS OF THE PARTIES |
33 |
|
5.1 |
Efforts;
Consents; Governmental Filings |
33 |
|
5.2
|
Conduct
of the Business |
35 |
|
5.3 |
Access
to Information |
37 |
|
5.4 |
Confidentiality;
Books and Records |
38 |
|
5.5
|
Restrictive
Covenants |
39 |
|
5.6 |
Tax
Matters |
40 |
|
5.7 |
Employee
Matters |
43 |
|
5.8
|
Directors’
and Officers’ Protection |
45 |
|
5.9
|
Insurance
Coverage |
45 |
|
5.10 |
Publicity |
46 |
|
5.11
|
Cooperation
in Litigation |
46 |
|
5.12
|
Exclusivity |
46 |
|
5.13
|
Directors
and Officers of the Companies |
47 |
|
5.14
|
Termination
of Related Party Arrangements |
47 |
|
5.15 |
Lender
Release Letters |
47 |
Article 6
INDEMNIFICATION |
47 |
|
6.1
|
Indemnification
by the Seller and the Parent |
47 |
|
6.2
|
Indemnification
by the Buyer |
48 |
|
6.3 |
[Reserved] |
48 |
|
6.4 |
Matters
Involving Third Parties, Etc. |
48 |
|
6.5
|
Limitations,
Etc. |
49 |
|
6.6
|
Exclusive
Remedy |
50 |
|
6.7 |
Survival
of Representations, Warranties and Covenants |
50 |
Article 7
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER |
51 |
|
7.1
|
Representations
and Warranties |
51 |
|
7.2 |
Performance
of Agreements, Covenants and Obligations |
52 |
|
7.3
|
Material
Adverse Effect |
52 |
|
7.4 |
Legal
Prohibition |
52 |
|
7.5 |
Antitrust
Laws |
52 |
|
7.6 |
Federal
Firearms or Explosive License |
52 |
|
7.7 |
Consents |
52 |
|
7.8 |
Frustration
of Closing Conditions |
52 |
Article 8
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER |
52 |
|
8.1
|
Representations
and Warranties |
52 |
|
8.2
|
Performance
of Agreements, Covenants and Obligations |
53 |
|
8.3 |
Legal
Prohibition |
53 |
|
8.4
|
Antitrust
Laws |
53 |
|
8.5 |
Frustration
of Closing Conditions |
53 |
|
8.6
|
R&W
Policy |
53 |
ARTICLE 9
TERMINATION |
53 |
|
9.1
|
Termination |
53 |
|
9.2 |
Obligations
Upon Termination |
55 |
Article 10
MISCELLANEOUS |
55 |
|
10.1 |
Fees
and Expenses |
55 |
|
10.2
|
Notices |
55 |
|
10.3 |
Releases |
56 |
|
10.4 |
Assignment
and Benefit |
58 |
|
10.5
|
Amendment,
Modification and Waiver |
58 |
|
10.6 |
Due
Diligence Review; No Additional Representations and Warranties |
58 |
|
10.7
|
Disclaimer
Regarding Projections |
59 |
|
10.8
|
Interpretation |
59 |
|
10.9
|
Governing
Law |
59 |
|
10.10 |
Jurisdiction |
60 |
|
10.11
|
Waiver
of Jury Trial |
60 |
|
10.12 |
Conflicts
and Privilege |
61 |
|
10.13 |
Section Headings |
61 |
|
10.14 |
Severability |
61 |
|
10.15 |
Counterparts;
Third Party Beneficiaries |
62 |
|
10.16
|
Entire
Agreement |
62 |
|
10.17
|
Attorneys’
Fees |
62 |
|
10.18 |
Specific
Performance |
62 |
|
10.19
|
Incorporation
of Schedules and Exhibits |
62 |
|
10.20 |
Non-Recourse |
62 |
|
10.21 |
Seller
Disclosure Schedule |
63 |
Exhibits
A –
Definitions
B –
Disclosure Schedule
C –
Example of Closing Statement Calculation
D –
R&W Policy
E –
Inventory Excluded from Net Working Capital
PURCHASE
AND SALE AGREEMENT
This
PURCHASE AND SALE AGREEMENT (this “Agreement”) dated as of December 29, 2023, by and among Bullseye Acquisitions,
LLC, a Delaware limited liability company (“Buyer”), Everest/Sapphire Acquisition, LLC, a Delaware limited liability
company (“Seller”), and Clarus Corporation, a Delaware corporation (“Parent”). Exhibit A
contains definitions, or references to the definitions, of the capitalized terms used in this Agreement. Buyer, Seller, and Parent
are each referred to herein individually as a “Party” and collectively as the “Parties.”
BACKGROUND
| A. | Parent
owns 100% of the limited liability company interests of Seller. |
| B. | Seller
owns 100% of the limited liability company interests of Sierra Bullets, L.L.C., a Delaware
limited liability company (such entity, “Sierra”, and such interest, the
“Seller Interest”). |
| C. | Sierra
owns 100% of the limited liability company interests of Barnes Bullets – Mona, LLC,
a Delaware limited liability company (such entity, “Barnes”, and such
interest, the “Barnes Interest”, and such entity together with Sierra
collectively hereinafter referred to as the “Companies”). |
| D. | On
the terms and subject to the conditions set forth in this Agreement and in exchange for the
consideration set forth in Section 1.3, Seller desires to sell assign, convey,
and deliver to Buyer, and Buyer desires to purchase from Seller, all of the Seller Interest
(the “Transaction”). |
| E. | Following
the Closing, Buyer will own all of the Seller Interest. |
AGREEMENT
In
consideration of the mutual covenants, conditions and agreements set forth in this Agreement, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, it is agreed as follows:
Article 1
PURCHASE AND SALE OF Seller INTEREST; CLOSING
| 1.1 | Closing.
Subject to the terms and conditions set forth herein, the closing of the Transaction and
the other transactions contemplated by this Agreement (the “Closing”)
will take place remotely via the exchange of documents and signatures at 10:00 a.m. Eastern
Time on the tenth (10th) Business Day after all of the conditions to the Closing
set forth in Article 7 and Article 8 are satisfied or waived to the
extent permitted by this Agreement (other than those conditions that, by their nature, are
to be satisfied at the Closing, but subject to the satisfaction, or waiver to the extent
permitted by this Agreement, of such conditions) (the “Closing Date”),
or at such other time, date and place as is mutually agreed to by the Parties; provided,
any original documents or signatures required or requested in connection with the Closing
will be delivered to the offices of Kane Kessler, P.C. (“KK”). All proceedings
to be taken and all documents to be executed at the Closing will be deemed to have been taken,
delivered and executed simultaneously, and no proceeding will be deemed taken nor documents
deemed executed or delivered until all have been taken, executed and delivered. |
| 1.2 | Purchase
and Sale of the Seller Interest. On the terms and subject to the conditions set forth
in this Agreement, at the Closing, Seller will sell, assign, convey, transfer, and deliver
to Buyer, and Buyer will purchase from Seller, the Seller Interest, free and clear of all
Liens, for the Purchase Price. |
| 1.3 | Closing
Deliverables; Payments at Closing. |
| (a) | Seller
Deliveries. At the Closing, the Seller will deliver or cause to be delivered to Buyer: |
| (i) | certificates,
dated the Closing Date, signed by the Secretary or any Assistant Secretary of the Seller,
attesting to: (A) the completion of all necessary limited liability company action by
Seller to execute and deliver this Agreement, the other Seller Transaction Documents and
to consummate the Transaction, and including copies of Seller’s Governing Documents
and all resolutions required in connection with this Agreement or any other Seller Transaction
Documents and (B) the good standing (or similar) certificates of Seller with respect
to such entity’s jurisdiction of organization; |
| (ii) | an
executed Lender Release Letter in form and substance reasonably satisfactory to Buyer, together
with UCC-3 termination statements and mortgage releases with respect to the financing statements
filed against the Seller Interest and assets of the Companies by the holders of such Liens,
in each case, in form and substance reasonably satisfactory to Buyer relating to all Estimated
Closing Indebtedness set forth in the Estimated Closing Statement; |
| (iii) | the
consents set forth on Section 1.3(a)(iii) of the Disclosure Schedule, in
each case, in form and substance reasonably satisfactory to Buyer and executed by the parties
thereto; |
| (iv) | a
properly completed and executed Internal Revenue Service Form W-9 of Seller certifying
no backup withholding is required; |
| (v) | executed
resignations, in form and substance reasonably satisfactory to Buyer, of each manager, director
and executive officer of each of the Companies, which will be effective subject to and upon
the Closing, except for such Persons as will have been designated in writing prior to the
Closing by Buyer to the Seller; |
| (vi) | a
DVD or other digital record containing a copy of the information and documents set forth
in the Data Room; |
| (vii) | an
executed certificate from an executive officer of Seller or Parent certifying that the conditions
to closing set forth in Section 7.1, Section 7.2 and Section 7.3
have been satisfied (the “Seller Officer Certificate”); |
| (viii) | a
counterpart of a transfer instrument, in form and substance reasonably satisfactory to the
Buyer, transferring the Seller Interest to Buyer (the “Transfer Instrument”),
duly executed by Seller; and |
| (ix) | a
counterpart of a transition services agreement in a reasonable and customary form to be agreed
upon by Parent and Buyer which will be an agreement among Parent, the Companies and Buyer
(the “TSA”), duly executed by Parent by which, among other things, entitles
the Companies to request, and obligates Parent to provide, or cause other Persons to provide,
to the Companies for up to 180 days after the Closing Date such services (including access
to and use of employees, assets, IT systems, back office support (including payables
processing, treasury functions and other back office support), books and records and outside
advisors, in each case, consistent with the support and services that have been provided
to the Companies during the 12-month period prior to the Closing Date at rates to be mutually
agreed upon but no greater than the rates charged or allocated to the Companies during the
12-month period prior to the Closing Date. |
| (b) | Buyer
Deliveries. At the Closing, Buyer will deliver, or cause to be delivered, and pay, or
cause to be paid, by wire transfer in immediately available funds (without any withholding
or deduction of any kind except as otherwise provided for in this Agreement or otherwise
required by Law), the following: |
| (i) | to
Seller, a certificate, dated the Closing Date, signed by the Secretary or any Assistant Secretary
of Buyer, attesting to: (A) the completion of all necessary limited liability company
action by Buyer to execute and deliver this Agreement and the other Buyer Transaction Documents
and to consummate the Transaction, and including copies of the Governing Documents of Buyer
and resolutions required in connection with this Agreement and any other Buyer Transaction
Documents and (B) the good standing (or similar) certificate of Buyer with respect to
Buyer’s jurisdiction of organization; |
| (ii) | the
Estimated Closing Transaction Expenses by wire transfer of immediately available funds in
U.S. dollars to the accounts and in the amounts set forth in the Estimated Closing Statement,
in each case, to the extent not paid by or on behalf of the Seller and/or its Affiliates
prior to the Closing; |
| (iii) | to
Seller, to an account specified in writing by the Seller, the Estimated Closing Date Purchase
Price by wire transfer of immediately available funds in U.S. dollars; |
| (iv) | a
certificate from an executive officer of Buyer certifying that the conditions to closing
set forth in Section 8.1 and Section 8.2 have been satisfied; |
| (v) | a
counterpart of the Transfer Instrument duly executed by Buyer; |
| (vi) | a
counterpart of the TSA, duly executed by Buyer; and |
| (vii) | the
fully bound R&W Policy, substantially in the form of Exhibit D. |
| 1.4 | Working
Capital Adjustment. |
| (a) | Estimated
Closing Statement. On or before the third Business Day preceding the Closing Date, the
Seller will prepare and deliver to the Buyer a written statement (the “Estimated
Closing Statement”) reflecting Seller’s good faith calculations, in accordance
with the Accounting Principles and the applicable defined terms in this Agreement as well
as calculated consistently with the methodology referenced in the “Notes” section
of the example calculation set forth on Exhibit C, of (A) (1) the Net
Working Capital as of 11:59 p.m. (Eastern time) on the Business Day immediately prior
to the Closing Date (the “Estimated Closing Working Capital”), (2) the
Cash of the Companies as of 11:59 p.m. (Eastern time) on the Business Day immediately
prior to the Closing Date (provided that any Cash used after 11:59 p.m. on the Business
Day immediately prior to the Closing Date and prior to the Closing to pay down any liability
or obligation that would otherwise be included in the calculation of Closing Transaction
Expenses or the calculation of Closing Indebtedness, in each case, if such payment had not
been made, will be excluded from the calculation of Estimated Closing Cash) (the “Estimated
Closing Cash”), (3) the Indebtedness of the Companies as of immediately prior
to the Closing (provided that any Taxes included in Indebtedness will be determined
as of the Closing) (the “Estimated Closing Indebtedness”), and (4) the
Transaction Expenses (the “Estimated Closing Transaction Expenses”) of
Parent, Seller, and the Companies (collectively, the “Seller Parties”),
and (B) Seller’s calculation of the Estimated Closing Date Purchase Price. The
Estimated Closing Statement will also be accompanied by reasonably detailed supporting calculations
and documentation with respect to the amounts reflected on the Estimated Closing Statement.
The Seller will consider in good faith the Buyer’s reasonable comments to the Estimated
Closing Statement. |
| (b) | Closing
Statement. As promptly as practicable, but no later than 90 days after the Closing Date,
Buyer will cause to be prepared and delivered to the Seller a written statement (the “Closing
Statement”) setting forth Buyer’s good faith calculations, in accordance
with the Accounting Principles and the applicable defined terms in this Agreement as well
as calculated consistently with the methodology referenced in the “Notes” section
of the example calculation set forth on Exhibit C, of (A) (1) the Net
Working Capital as of 11:59 p.m. (Eastern time) on the Business Day immediately prior
to the Closing Date (the “Closing Working Capital”), (2) the Cash
of the Companies as of 11:59 p.m. (Eastern time) on the Business Day immediately prior
to the Closing Date (provided that any Cash used after 11:59 p.m. (Eastern time) on
the Business Day immediately prior to the Closing Date and prior to the Closing to pay down
any liability or obligation that would otherwise be included in the calculation of Closing
Transaction Expenses or the calculation of Closing Indebtedness, in each case, if such payment
had not been made, will be excluded from the calculation of Closing Cash) (the “Closing
Cash”), (3) the Indebtedness of the Companies as of immediately prior to the
Closing (the “Closing Indebtedness”), and (4) the Transaction Expenses
of the Seller Parties (the “Closing Transaction Expenses”), and (B) Buyer’s
calculation of the Closing Date Purchase Price. The Closing Statement will also be accompanied
by reasonably detailed supporting calculations and documentation of the amounts reflected
on the Closing Statement. Following delivery of the Closing Statement, and upon reasonable
request of the Seller, Buyer and the Companies will, upon reasonable notice, provide the
Seller and its advisors with reasonable access to the financial officer of the Companies
as well as the books and records of the Companies during normal business hours to the extent
reasonably related to the Seller’s evaluation of the Closing Statement. If the Buyer
fails to deliver the Closing Statement within such 90-day period, then the Estimated Closing
Statement will be deemed to be the Closing Statement, and Seller will be entitled to provide
a Dispute Notice in accordance with Section 1.4(c). |
| (c) | Dispute
Notice. If the Seller disagrees with the calculations set forth in the Closing Statement
delivered by Buyer pursuant to Section 1.4(b), the Seller may, within sixty (60)
days after receipt of the Closing Statement (or within 60 days after the 90th
day after the Closing Date if Buyer fails to deliver the Closing Statement within the 90-day
period following the Closing Date), deliver a written notice to Buyer (a “Dispute
Notice”) specifying in reasonable detail each item or amount that the Seller disputes
(the “Disputed Items”), the amount in dispute for each Disputed Item and
the reasons supporting the Seller’s positions. The Seller will be deemed to have agreed
with all other items and amounts contained in the Closing Statement that are not Disputed
Items. If the Seller fails to deliver a Dispute Notice within such sixty (60)-day period,
Buyer’s calculation of the Closing Working Capital, the Closing Cash, the Closing Indebtedness,
the Closing Transaction Expenses and the Closing Date Purchase Price will be deemed accepted
by Seller and will be final, binding and conclusive on the Parties. |
| (d) | Resolution
Period. If a Dispute Notice is duly delivered pursuant to Section 1.4(c),
Buyer and Seller will, during the thirty (30) days following such delivery (the “Resolution
Period”), use commercially reasonable efforts to reach agreement on the Disputed
Items or amounts in order to determine the amount of the Closing Working Capital, the Closing
Cash, the Closing Indebtedness, the Closing Transaction Expenses, and/or the Closing Date
Purchase Price, as applicable. If Buyer and Seller are able to reach agreement with respect
to any Disputed Items, Buyer will promptly revise the Closing Statement to reflect such agreement. |
| (e) | Independent
Accounting Firm. If, upon the conclusion of the Resolution Period, or any mutually-agreed
upon extension thereof, Buyer and Seller are unable to reach agreement on all of the Disputed
Items, they will jointly engage and submit the unresolved Disputed Items (the “Unresolved
Items”) to the Independent Accounting Firm for resolution in accordance with the
terms of this Section 1.4(e). The Independent Accounting Firm (i) will act
as an arbitrator to determine, based solely on presentations by Buyer and Seller and not
by independent review, only the Unresolved Items, (ii) will make a determination with
respect to the Unresolved Items only and in a manner consistent with this Section 1.4(e),
(iii) will use the definitions set forth herein with no consideration given to any modification
of such definitions, (iv) will be limited to those adjustments, if any, required to
be made for the Closing Statement to comply with the provisions of this Agreement and (v) will
make a determination of the Unresolved Items in accordance with the Accounting Principles
and the applicable defined terms in this Agreement as well as calculated consistently with
the example calculation set forth on Exhibit C and in no event will the Independent
Accounting Firm’s determination of the Unresolved Items be for an amount that is outside
the range of Buyer’s and Seller’s disagreement. Each Party will use commercially
reasonable efforts to furnish to the Independent Accounting Firm such work papers and other
documents and information pertaining to the Unresolved Items as the Independent Accounting
Firm may reasonably request and will be afforded an opportunity to discuss the Unresolved
Items with the Independent Accounting Firm at such hearing as the Independent Accounting
Firm will request or permit; provided, that, (y) each Party will provide
the other Parties with a copy of all materials provided to, and communications with, the
Independent Accounting Firm and (z) no Party (or any of its Affiliates or Representatives)
will engage in any ex parte communication with the Independent Accounting Firm at
any time with respect to the Unresolved Items. The Independent Accounting Firm will deliver
to Buyer and Seller as promptly as practicable and will be instructed to deliver no later
than thirty (30) days after its engagement, a written report setting forth such calculation.
Such determination of the Independent Accounting Firm will be final, binding and conclusive
upon the Parties (absent Actual Fraud or manifest error) and Buyer will promptly revise the
Closing Statement to reflect such determination upon receipt of such report. The fees and
expenses of the Independent Accounting Firm will be borne by Buyer and Seller proportionately
based on the relative success of each of them in resolving the Unresolved Items, as determined
by the Independent Accounting Firm (i.e., so that the more successful of the two Parties
bears a lesser proportion of such fees and expenses). The date on which the Closing Working
Capital, the Closing Cash, the Closing Indebtedness, the Closing Transaction Expenses, and
Closing Date Purchase Price are finally determined in accordance with this Section 1.4
is referred to as the “Determination Date.” |
| (f) | Adjustment
to Purchase Price. The “Adjustment Amount” means the difference between
the Closing Date Purchase Price (as finally agreed upon or determined pursuant to this Section 1.4)
and the Estimated Closing Date Purchase Price. If the Adjustment Amount is a positive amount,
then promptly, and in any event within five (5) Business Days following the Determination
Date, Buyer will pay or cause to be paid to Seller, by wire transfer of immediately available
funds to the account or accounts designated in writing by Seller, the Adjustment Amount.
If the Adjustment Amount is a negative amount, then promptly, and in any event within five
(5) Business Days following the Determination Date, Seller will pay or cause to be paid
to Buyer, by wire transfer of immediately available funds to an account designated in writing
by Buyer, an amount equal to the Adjustment Amount. |
| (g) | No
Adverse Actions. Buyer and the Seller agree that, following the Closing and until the
Adjustment Amount becomes final and binding upon the Parties to this Agreement, no Party
will take any actions with respect to the accounting books and records of the Seller or the
Companies as of the Closing Date on which the Closing Statement is to be based that are not
consistent with the Accounting Principles. |
| 1.5 | Withholding.
If Seller fails to deliver to the Buyer at the Closing the W-9 form contemplated in Section 1.3(a)(iv),
Buyer will be entitled to deduct and withhold from the consideration otherwise payable pursuant
to this Agreement to Seller such amounts as are required to be withheld and paid over to
the applicable Governmental Authority under the Code, or any applicable provision of Law;
provided, that (a) Buyer will use commercially reasonable efforts to provide to Seller
written notice of its intent to so deduct and withhold, along with a description of the legal
basis therefor, reasonably in advance of such deduction or withholding and (b) the Parties
will cooperate in good faith to minimize and eliminate, to the extent permissible under applicable
Law, the amount of any such deduction or withholding. To the extent that any amounts are
so withheld and paid over to the applicable Governmental Authority, such withheld amounts
will be treated for all purposes of this Agreement as having been paid to Seller in respect
of which such deduction or withholding was made. |
Article 2
REPRESENTATIONS AND WARRANTIES RELATING TO PARENT AND SELLER
Seller
represents and warrants to Buyer as set forth below as of the date hereof and as of the Closing:
| 2.1 | Organization
and Good Standing. Each of the Seller and the Parent have been duly formed and are
validly existing and in good standing under the Laws of its jurisdiction of organization
and have the requisite power and authority to own or lease their respective properties and
to conduct business as it is now being conducted. |
| 2.2 | Power
and Authorization; Enforceability. |
| (a) | Each
of Seller and Parent have all requisite rights, powers, authority and capacity to execute
and deliver this Agreement and the other Transaction Documents to which each is, or is specified
to be, a party (collectively, the “Seller Transaction Documents”), to
perform its obligations hereunder and thereunder and to carry out the Transaction. All necessary
action has been taken by Seller and Parent to authorize the execution, delivery and performance
by it of this Agreement and each other Seller Transaction Document, and no further action
on the part of Seller or Parent is necessary to authorize such execution, delivery and performance.
Each of Seller and Parent have duly executed and delivered this Agreement and, at or prior
to the Closing, will have duly executed and delivered each other Seller Transaction Document
to which they are a party. |
| (b) | Assuming
that this Agreement and each of the other Seller Transaction Documents are valid and binding
obligations of each of the other Parties hereto and thereto, this Agreement is, and each
other Seller Transaction Document, when duly executed and delivered at or prior to the Closing
by Seller and Parent will be, the legal, valid and binding obligation of Seller and Parent,
as applicable, enforceable against each of them in accordance with its respective terms,
except as enforceability thereof may be limited by the Remedies Exception. |
| 2.3 | No
Violation or Conflict. Except as set forth on Section 2.3 of the Disclosure
Schedule, neither the execution, delivery and performance by Seller and Parent of this
Agreement and the other Seller Transaction Documents nor the consummation of the Transaction
(with or without the passage of time or the giving of notice, or both) will (a) contravene,
conflict with or result in a material violation or breach of, constitute a material default
under, or give a right to terminate or cancel under, (i) the Governing Documents of
any of Seller or Parent or (ii) any (A) Judgments or (B) Laws, in each case,
binding upon or applicable to any of Seller or Parent or by which they or any of their respective
properties or assets are bound; (b) materially contravene or conflict with, result in
a material violation or breach of, constitute a material default under, or give a right to
terminate or cancel under, any of the terms or conditions of any Contract to which any of
Seller or Parent is a party or by which it or any of any of their respective properties or
assets are bound; (c) result in the creation or imposition of any Lien upon any of the
assets of any of Seller or Parent (including the Seller Interest); or (d) cause a loss
or adverse modification of any material Governmental Authorization used or held by Seller
or any of its respective Affiliates. |
| 2.4 | Ownership
of Seller Interest. Seller is the beneficial and record owner of the Seller Interest
set forth on Section 2.4 of the Disclosure Schedule and has the sole right
to vote or direct the voting of such Seller Interest, at its discretion, on any matter submitted
to a vote of the members of Sierra. The Seller Interest constitutes all of Equity Interests
of Sierra and are owned legally, beneficially and of record by Seller. Sierra has no membership
interests or other Equity Interests authorized and/or outstanding other than the Seller Interest.
Except as set forth on Section 2.4 of the Disclosure Schedule, the entirety of
the Seller Interest is owned directly by Seller free and clear of all Liens and other restrictions,
except for transfer restrictions imposed by applicable securities Laws, and Seller has good
and marketable title to the Seller Interest free and clear of all Liens. Seller has not granted
or acknowledged to any Person any rights with respect to any Seller Interest or any other
Equity Interests of Sierra and Seller has sole voting power and sole power to issue instructions
with respect to the matters set forth herein, sole power of disposition, sole power of conversion,
sole power to demand appraisal rights and sole power to agree to all of the matters set forth
in this Agreement, in each case with respect to the Seller Interest and other Equity Interests,
with no limitations, qualifications or restrictions on such rights. Seller does not have
any claim against Sierra or any of its officers, managers or any other Person with respect
to the issuance of any equity of Sierra. Seller has not commenced nor does Seller intend
to commence a voluntary case or other proceeding, and no involuntary case or other proceeding
has been commenced against Seller or Sierra seeking liquidation or other relief with respect
to its debts under any bankruptcy, insolvency or other similar Law. Upon the assignment of
the Seller Interest by Seller to the Buyer, and upon Seller’s receipt of the Closing
Date Purchase Price, good and marketable title to the Seller Interest will pass to the Buyer,
free and clear of any Liens. |
| 2.5 | Consents.
Except as set forth on Section 2.5 of the Disclosure Schedule, no Consent of
any Governmental Authority or any other Person is required to be obtained, made or effected
by Seller in connection with the execution and delivery of this Agreement and the other Seller
Transaction Documents or the performance of Seller’s obligations hereby or thereby. |
| 2.6 | Litigation.
There are no material Proceedings pending or to the Seller’s Knowledge threatened in
writing, before any Governmental Authority or arbitrator with respect to Seller that seek
to delay or prevent the consummation of the transactions contemplated by this Agreement by
Seller or would, if successful, reasonably be expected to have a material adverse effect
on the ability of Seller to perform its obligations under this Agreement. |
| 2.7 | FIRPTA.
Seller is not a “foreign person” within the meaning of Section 1445 of the
Code. |
| 2.8 | Brokers
and Finders. Except as set forth on Section 2.8 of the Disclosure Schedule,
no investment banker, broker, finder or other intermediary has acted on behalf of the Seller
Parties in connection with this Agreement or the Transaction, and there are no brokerage
commissions, finders’ fees or similar fees or commissions payable in connection therewith
based on any Contract with the Seller Parties or any action taken by any of the Seller Parties
or based upon arrangements or agreements made by or on behalf of the Seller Parties for which
either of the Companies is responsible. |
Article 3
REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANIES
Seller
represents and warrants to Buyer as set forth below as of the date hereof and as of the Closing:
| 3.1 | Organization
and Good Standing. Each of the Companies is a limited liability company duly organized,
validly existing and in good standing under the Laws of the State of Delaware and has full
limited liability company power to carry on its business as presently conducted, and to own
and lease the assets and properties which it owns and leases. Each of the Companies is duly
qualified or licensed to do business as a foreign company and is in good standing (if applicable)
in each jurisdiction in which its ownership or leasing of assets or properties or the nature
of its activities requires such qualification. |
| 3.2 | No
Violation or Conflict. Except as set forth on Section 3.2 of the Disclosure
Schedule, the consummation of the Transaction (with or without the passage of time or
the giving of notice, or both) will not: |
| (i) | conflict
with, or result in a breach of, the Governing Documents of either of the Companies; |
| (ii) | violate
or conflict with any Judgments or Laws, in each case, binding upon or applicable to the Companies
or by which the Companies or any of their properties or assets are bound or require the consent,
approval or action of, filing with or notice to any Governmental Authority or other Person; |
| (iii) | violate,
or be in conflict with, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in, or provide the basis for,
the termination of, or accelerate the performance required by, or excuse performance by any
Person of any of its obligations under, or cause the acceleration of the maturity of any
Indebtedness or obligation pursuant to, or result in the creation or imposition of any Lien
upon any property or assets of the Companies under, or any material Contract to which either
of the Companies is a party or by which they or any of their respective properties or assets
are bound, or result in the forfeiture of, impair or result in a breach of or default under,
or payment of any additional amount with respect to, or require the consent of any other
person in respect of, the right to own or use any Companies’ Intellectual Property,
in each case, in a manner that would, individually or in the aggregate, be expected to be
material to the Companies; |
| (iv) | result
in the creation or imposition of any Lien upon any part of the Seller Interest, the Barnes
Interest or any asset of the Companies; or |
| (v) | have
an adverse effect on any Governmental Authorization used or held by any of the Companies
or their Affiliates that would, individually or in the aggregate, be expected to be material
to the Companies. |
| 3.3 | Capitalization.
Section 3.3 of the Disclosure Schedule sets forth a complete and accurate
list of (a) the Seller Interest, which constitutes the only authorized, issued and outstanding
equity securities of Sierra, and (b) the record holders thereof, being the Seller. There
are no outstanding preemptive, conversion or other rights, options, warrants or agreements
granted or issued by or binding upon Sierra for the issuance, purchase or acquisition of
any Equity Interests of Sierra. No Person (i) other than Seller, has any interest or
claim to the Seller Interest, and (ii) other than Sierra, has any interest or claim
to any of the Equity Interests of Barnes. The entirety of the Seller Interest has been duly
authorized and is validly issued. Seller has no obligation to make further payments or contributions
to Sierra solely by reason of its ownership thereof. The entirety of the Seller Interest
has been offered, issued and transferred without violation of any preemptive right or other
right to purchase and were issued and/or transferred in compliance with all applicable securities
Laws, other Laws, the operating agreement of Sierra and the Contracts to which Sierra is
a party or otherwise bound. Upon the consummation of the transactions contemplated hereby,
Buyer will be the sole owner, beneficially and of record, of 100% of the issued and outstanding
membership interests of Sierra, free and clear of any Liens, and Sierra will remain the sole
owner, beneficially and of record, of 100% of the issued and outstanding Equity Interests
of Barnes. There are no voting trusts, proxies or other similar commitments, understandings,
restrictions or arrangements relating to the Equity Interests in or of each Company. The
limited liability company interests of the Companies (including the Seller Interest) are,
and have at all times been, uncertificated. |
| 3.4 | Subsidiaries.
Section 3.4 of the Disclosure Schedule sets forth each direct and indirect
Subsidiary of Sierra, showing the jurisdiction of its incorporation or organization and showing
the percentage of each person’s ownership of the outstanding Equity Interests of such
Subsidiary. All of the outstanding Equity Interests of each Subsidiary have been duly authorized
and validly issued, and are fully paid and nonassessable. Except as set forth on Section 3.4
of the Disclosure Schedule, there are no outstanding preemptive, conversion or other
rights, options, warrants or agreements granted or issued by or binding upon any such Subsidiary
for the issuance, purchase or acquisition of any Equity Interests of any Subsidiary. Neither
Seller (with respect to Sierra only) nor Sierra or Barnes is subject to any obligation (contingent
or otherwise) to repurchase or otherwise acquire or retire any Equity Interests of any Subsidiary
except as set forth on Section 3.4 of the Disclosure Schedule. Neither Seller
(with respect to Sierra only) nor Sierra or Barnes is party to, nor has any knowledge of,
any agreement restricting the voting or transfer of any Equity Interests of any Subsidiary. |
| 3.5 | Compliance
with Laws. Except as set forth on Section 3.5 of the Disclosure Schedule,
the Companies have, since the Lookback Date (and, with respect to Firearm and Explosive Laws,
since January 1, 2019), complied with in all material respects, are not in violation
of, and have not received any written notices of violation with respect to, any Law applicable
to them or their Business, properties or assets. The Companies have previously provided or
made available to the Buyer or its counsel true and correct copies of all reports of inspections
received by it with respect to the Business under applicable Laws which occurred in the past
five years, and resulted in or are reasonably likely to result in the imposition of a material
penalty or restriction. In the past five years, the Companies have not received any notice
alleging that any of the Companies is in violation of any Law and no investigation, inspection,
audit, or other proceeding by any Governmental Authority involving an allegation of violation
of any Law by any of the Companies is otherwise threatened or contemplated. The Companies
have not assumed by contract or operation of Law any liability for violations by any other
Person of any Law. |
| 3.6 | Litigation.
There are no Proceedings pending or, to the Seller’s Knowledge, threatened which involve
the Companies, their respective businesses or their respective assets that would, if determined
adversely to the interests of any one or more of the Companies, be expected to have a Material
Adverse Effect. There are no unsatisfied Judgments against the Companies or any of their
respective businesses, properties or assets. There is no Proceeding pending or, to Seller’s
Knowledge, threatened against the Companies that questions or challenges the validity of
this Agreement or any action taken or to be taken by the Companies pursuant to this Agreement
or in connection herewith or would adversely affect the ability of the Companies to consummate
the Transaction. There are no current, pending or, to the Seller’s Knowledge, threatened
claims against the Companies by the respective managers, officers, employees and agents of
the Companies. To Seller’s Knowledge, there exist no facts or circumstances creating
any reasonable basis for the institution of any material Proceedings. Section 3.6
of the Disclosure Schedule sets forth a complete and correct list and description
of all Proceedings since the Lookback Date to which either of the Companies is or has been
a party. |
| 3.7 | Financial
Statements; Undisclosed Liabilities; Books and Records. |
| (a) | Financial
Statements. Seller has provided Buyer with complete and accurate copies of the following
financial statements (collectively, the “Financial Statements”): (i) the
unaudited consolidated balance sheets of the Companies as of December 31, 2022 (the
“Most Recent Fiscal Year End”), December 31, 2021 and December 31,
2020 (including the notes thereto, if any), and the related unaudited consolidated statements
of income, shareholders’ equity and cash flows as of the fiscal years then ended; and
(ii) the unaudited balance sheet (the “Latest Balance Sheet”) of
the Companies as of September 30, 2023 (the “Latest Balance Sheet Date”)
(including the notes thereto, if any) and the related unaudited statements of income, shareholders’
equity and cash flows as of and for the period from the Most Recent Fiscal Year End through
such date. The Financial Statements (including the notes thereto, if any) are consistent
with the books and records of the Companies, fairly present in all material respects the
consolidated (as applicable) financial condition, cash flows and results of operations of
the Companies as at the dates thereof and for the periods therein referred to, have been
prepared in accordance with the Accounting Principles and GAAP, subject to the absence of
footnote disclosure and changes resulting from normal year-end adjustments (none of which
is material). |
| (b) | Undisclosed
Liabilities. The Companies do not have any direct or indirect Indebtedness, liability,
claim, loss, damage, deficiency, obligation or monetary responsibility, whether matured or
unmatured or fixed or contingent (“Liabilities”), other than: (i) Liabilities
which are adequately disclosed or reserved against on the Latest Balance Sheet; (ii) Liabilities
which have arisen since the Latest Balance Sheet Date in the Ordinary Course; and (iii) Liabilities
that, individually or in the aggregate, are not material in amount. |
| (c) | Governing Documents, Books and Records.
Copies of the Governing Documents, books of account, minute books, membership interest record
books and other records of the Companies that are true, correct, and complete in all material
respects have heretofore been delivered or made available to the Buyer or its counsel. The
books and records of the Companies accurately reflect the assets, liabilities, business,
financial condition and results of operations of the Companies and have been maintained in
accordance with good business and bookkeeping practices. On the Closing Date, such books
and records (including all ATF Records) will be in the possession of the Companies. |
| (d) | Capital Expenditures. Section 3.7(d) of
the Disclosure Schedule accurately describes in all material respects the capital projects
which the Companies plan to make or which have been approved during the 12-month period following
the date hereof and a reasonable estimate of the dollar amount of the unpaid and unaccrued
expenditures anticipated to be made with respect to such projects. |
| (e) | Indebtedness. A true and complete
list of Indebtedness of the Companies as of the date hereof is set forth on Section 3.7(e) of
the Disclosure Schedule. |
| 3.8 | Real
Property. Section 3.8 of the Disclosure Schedule sets forth the
address and description of each parcel of real property owned (in fee simple or pursuant
to an easement estate in perpetuity that runs with the land) (“Owned Real Property”)
by any one or more of the Companies. With respect to each parcel of Owned Real Property,
(a) each of the Companies has good, insurable and marketable fee simple title (or title
by way of an easement estate), free and clear of all Liens, except Permitted Liens, (b) except
as set forth on Section 3.8(b) of the Disclosure Schedule, neither of the
Companies has leased or otherwise granted to any Person the right to use or occupy such Owned
Real Property or any portion thereof, and (c) there are no outstanding options, rights
of first offer or rights of first refusal to purchase such Owned Real Property or any portion
thereof or interest therein. |
| (a) | Section 3.8(a) of the Disclosure
Schedule sets forth the address of each parcel of real property leased by the Companies
(the “Leased Real Property” and together with the Owned Real Property,
the “Real Property”), and a list of all leases for such Leased Real Property
(“Real Property Leases”). With respect to each of the Real Property Leases,
(i) such Real Property Lease is legal, valid, binding, enforceable and in full force
and effect and none of the Companies is in default thereunder, and no condition or circumstance
exists that, with the giving of notice or passage of time, would constitute a default thereunder,
(ii) the Companies’ possession and quiet enjoyment of the Leased Real Property
under such Real Property Lease has not been materially disturbed and there are no disputes
with respect to such Real Property Lease, (iii) except as otherwise set forth herein,
neither of the Companies has subleased, licensed or otherwise granted any Person the right
to use or occupy the Leased Real Property or any portion thereof, (iv) the Companies
have made available to Buyer true, correct and complete copies of all Real Property Leases,
and (v) the Companies have valid and enforceable leasehold interests in each Leased
Real Property free and clear of all Liens other than Permitted Liens. |
| (b) | Except as set forth on Section 3.8(b) of
the Disclosure Schedule, no Person other than Sierra or Barnes has any right to use or
occupy any part of the Real Property. |
| (c) | All buildings and all improvements located
on the Real Property are, in all material respects, in a state of good maintenance and repair
(normal wear and tear excepted) and in a condition adequate and reasonably suitable for the
conduct therein of the Business. The heating, ventilation, air conditioning, plumbing and
electrical systems at the Real Property are in good working order and repair (normal wear
and tear excepted). Neither of the Companies has experienced any interruption in such services
provided to any of the premises located on the Real Property since the Lookback Date. |
| (d) | To the extent required by Law, the Companies
have obtained all material permits, licenses, franchises, approvals and authorizations (collectively,
the “Real Property Permits”) of (i) all Governmental Authorities
having jurisdiction over any of the premises comprising the Real Property and (ii) all
insurance companies and fire rating and other similar boards and organizations having jurisdiction
over any of the premises comprising the Real Property (collectively, the “Insurance
Organizations”). All such Real Property Permits are set forth on Section 3.8(d) of
the Disclosure Schedule and have been issued to enable each of the premises comprising
the Real Property to be lawfully occupied and used by the Companies for all of the purposes
for which they are currently occupied and used and are in full force and effect. The Companies
have not received any written notice from any Governmental Authority having jurisdiction
over any premises comprising the Real Property, or from any Insurance Organization, threatening
a suspension, revocation, modification or cancellation of any Real Property Permit or of
any insurance policies, and there exists no material violation of a Real Property Permit.
Each Real Property Permit is in full force and effect. |
| (e) | There is no pending or, to the Seller’s
Knowledge, threatened condemnation or eminent domain proceeding with respect to or affecting
any of the premises comprising the Real Property or any part thereof. The Companies have
not received any written or, to the Seller’s Knowledge, oral notice of any pending
or threatened condemnation or eminent domain proceeding with respect to or affecting any
of the premises comprising the Real Property or any part thereof and, to the Seller’s
Knowledge, no such condemnations or proceedings have been proposed. |
| (f) | The Real Property comprises all of the
real property held for use, used or intended to be used in the Business, and, other than
the Real Property Leases or those matters set forth on Section 3.8(b) of the
Disclosure Schedule, neither of the Companies is a party to any other agreement which
includes any option to purchase or lease any real property or interest therein. |
| (g) | Except as may be set forth on any surveys
provided by Seller to the Buyer, the improvements on the Owned Real Property are located
within the boundary lines of such parcels and all utility service lines serving such Owned
Real Property are located either within the boundary lines of such property or within lands
dedicated to public use or within recorded easements for same. |
| (h) | No portion of the Owned Real Property
is subject to any material real property Tax increases or recapture of Taxes occasioned by
retroactive revaluation, special assessments, change in the land usage, or loss of any exemption
or benefit status. |
| (i) | Except as may be set forth on any surveys
provided by Seller to the Buyer, there are no material encroachments upon the Owned Real
Property from adjacent properties nor encroachments of any improvement located on the Owned
Real Property upon adjoining land or upon easements encumbering the Owned Real Property. |
| (j) | Neither of the Companies has received
any written notice of, and to the Seller’s Knowledge, no landlord of any Leased Real
Property has any plans to make, any alterations to any of the Leased Real Property that would,
individually or in the aggregate, be expected to be material to the Companies. |
| (k) | All sums owed by any landlord to the Companies
under any Real Property Lease have been paid, including, but not limited to, tenant improvement
allowances. |
| (l) | Use of the Real Property by the Companies
does not violate the permitted use of the easement set forth on Section 3.8(l) of
the Disclosure Schedule. |
| (a) | Section 3.9(a) of the Disclosure
Schedule lists the following Contracts to which either Company is a party, has any
rights or Liabilities or is otherwise bound or to which no Company is a party that are used
in connection with the Business (and in the case of oral Contracts, summaries thereof), and
pursuant to which either Company has obligations (collectively, the “Material Contracts”). |
| (i) | (A) each Contract that is executory
in whole or in part and involves performance of services by or for either Company of an amount
or value in excess of $150,000 per annum and (B) each Contract, that is executory in
whole or in part and involves the sale or purchase of goods or materials by the Companies
of an amount or value in excess of $150,000, except for sales of inventory in the Ordinary
Course pursuant to a customary purchase order covering less than $250,000 of goods ordered; |
| (ii) | each Contract (other than a Contract described
in clause (i) preceding) that is executory in whole or in part that involves expenditures
or receipts in excess of $150,000 in respect of an individual Contract or $350,000 in the
aggregate for any number of Contracts entered into for like services, goods or materials
or with an individual party; |
| (iii) | each Contract relating to (i) the
purchase by the Seller of the Seller Interest and (ii) the purchase by Sierra of Equity
Interests of Barnes or the material assets of Barnes Bullets, LLC (the “Target Agreements”); |
| (iv) | each Contract with a Top Customer or Top
Supplier, other than purchase orders not in excess of $200,000 entered into in the Ordinary
Course; |
| (v) | each Contract granting an option or preferential
rights to purchase, sell or license any assets of the Companies; |
| (vi) | each Contract that involves product development,
product enhancement or product customization obligations; |
| (vii) | each individual Contract that is for outstanding
capital expenditures by the Companies in excess of $100,000 or that, when combined with other
Contracts relating to the same capital project, exceed $250,000 in the aggregate; |
| (viii) | each Contract that relates to the acquisition
since January 1, 2018 of any business or Equity Interests or assets of any other Person
or any real property (whether by merger, sale of Equity Interests, sale of assets or otherwise
and whether or not completed), in each case, involving aggregate consideration in excess
of $100,000 (including any deferred purchase price, earnout or other consideration); |
| (ix) | each Contract between or among the Companies,
on the one hand, and the Seller, any Affiliate of the Companies or the Seller, or any manager
or officer of the Companies, the Seller or any Affiliate of the Companies or the Seller,
on the other hand; |
| (x) | each (A) Real Property Lease or sublease,
rental or occupancy Contract, license, installment and conditional sale Contract and (B) other
Contract affecting the ownership of, leasing of, title to, use of, or any leasehold or other
interest in, any real or personal property, other than (1) Contracts for services, repair,
construction or maintenance with payment obligations not exceeding $50,000 per Contract or
$50,000 in the aggregate for any number of Contracts entered into for like services, goods
or materials or with an individual party if such Contracts were entered into in the Ordinary
Course and (2) purchase orders entered into in the Ordinary Course; |
| (xi) | each collective bargaining Contract and
any other Contract with any labor union, trade union or other employee representative, body
or organization of a group of employees of the Companies; |
| (xii) | each joint venture, partnership, limited
partnership or similar Contract involving a sharing of profits, losses, costs or Liabilities
by the Companies with any other Person; |
| (xiii) | each Contract (A) containing outstanding
covenants or other obligations (other than customary confidentiality and non-disclosure obligations
entered into in the Ordinary Course) that restricts the business activity of the Companies
or limits the freedom of the Companies to engage in any line of business, to compete (geographically
or otherwise) with any Person or to solicit for hire or employ any Person, (B) granting
any exclusive rights to make, sell or distribute the Companies’ products, (C) granting
any “most favored nations” or similar rights or (D) otherwise prohibiting
or limiting the right of the Companies to make, sell or distribute any products or services; |
| (xiv) | each Contract that is a confidentiality
agreement or non-disclosure agreement, other than proprietary information and assignment
of inventions Contracts with current or former directors, officers, employee or consultants
or other services providers of the Companies in the Ordinary Course; |
| (xv) | each Contract relating to the Companies
providing for payments to or by any Person based on sales, purchases, or profits, other than
direct payments for goods or services; |
| (xvi) | (A) each written warranty, guaranty,
and/or other similar undertaking with respect to a contractual performance of another Person
extended by the Companies and (B) each Contract pursuant to which the Companies have
agreed to indemnify another Person or to share in or contribute to the Liability of any Person,
in each case other than Contracts in the Ordinary Course; |
| (xvii) | each Contract that is a settlement agreement
with respect to any pending or threatened Proceeding entered into since the Lookback Date; |
| (xviii) | each Contract with any current employee,
consultant, manager or officer of a Company, including any employment or compensation agreements,
except for employment or consulting agreements entered into in the Ordinary Course with a
base annual compensation amount that is less than $100,000 on an individual basis and offer
letters for at-will employment which do not provide for retention or severance payments or
any other similar benefit; |
| (xix) | each Contract that provides for retention,
severance, termination or similar pay to any current or former employee, consultant, manager
or officer of the Companies; |
| (xx) | each Contract with outstanding obligations
or liability, contingent or otherwise, to which the Companies are a party or is otherwise
bound relating to the purchase, sale or lease of real property; |
| (xxi) | each Contract imposing a Lien upon any
asset of the Companies, other than Permitted Liens; |
| (xxiii) | each Contract by which either Company
licenses any Person to manufacture or reproduce any of the Companies’ products, services
or technology or any Contract to sell or distribute any of the Companies’ products,
services or technology; |
| (xxiv) | each Contract providing for the payment
of cash or other compensation or benefits upon consummation of the transactions contemplated
hereby; |
| (xxv) | each sales distribution or franchise Contract
that is (i) not terminable without penalty on 90 days’ notice or less and (ii) provides
for compensation at an amount or rate which is higher than is customary or usual in the Business;
and |
| (xxvi) | each Contract entered into with any Governmental
Authority. |
| (b) | The Companies are in compliance in all
respects with each Material Contract. Neither the Companies nor, to the Seller’s Knowledge,
any other party to any Material Contract is in default in respect of such Material Contract.
Neither the Companies nor the Seller have received written notice or, to the Seller’s
Knowledge, oral notice of an uncured breach or default or a pending or threatened cancellation,
revocation or termination of any Material Contract and no event has occurred and no condition
or state of facts exists which, with the passage of time or the giving of notice or both,
would constitute such a default or breach by the Companies or by any such other party. |
| (c) | Each Material Contract is in full force
and effect and constitutes a valid and binding obligation of the Companies and the other
parties thereto, in accordance with its terms, except in each case as such enforcement may
be limited by the Remedies Exception, and is not subject to any claims, charges, set-offs
or defenses. |
| (d) | The Companies have delivered or otherwise
made available to Buyer or its counsel complete, true and correct copies of all of the written
Material Contracts (including all amendments, exhibits, attachments, extensions, renewals,
guaranties, modifications, waivers, supplements and other agreements, if any, related thereto),
or a written description of the material terms of any oral Material Contract. The Companies
are not renegotiating the existing primer supply Contract with Vista Outdoor other than terms
that are more favorable to the Companies. |
| (e) | No employee or consultant or other independent
contractor of the Companies is a party to, or is otherwise bound by, any Contract, including
any confidentiality, noncompetition or proprietary rights Contract, with any other Person
that materially and adversely affects or is reasonably likely to materially and adversely
affect (i) the performance of his or her duties for the Companies, (ii) his or
her ability to assign to the Companies rights to any invention, improvement, discovery or
information relating to the Business, or (iii) the ability of the Companies to conduct
the Business as currently conducted. |
| (f) | All purchase price adjustments under the
Target Agreements have been finally resolved and are conclusive and binding on all parties
thereto and each party to a Target Agreement is in compliance with all restrictive covenants
thereunder. |
| 3.10 | Governmental
Authorizations. The Companies have obtained all material Governmental Authorizations
(including any pending applications for such licenses, certificates, permits or Consents
and, for the avoidance of doubt, where applicable, Federal Firearms and Explosives Licenses,
proof of registration as a Special Occupational Taxpayer, active ATF marking variances, other
active ATF variances, AECA importer registration, and unexpired ATF Form 6 import permits)
necessary for them to own, lease and operate and to carry on the Business, except for those
the failure of which to obtain would not, individually or in the aggregate, be expected to
be material to the Companies. All such Governmental Authorizations are set forth on Section 3.10
of the Disclosure Schedule, are in full force and effect, and no written or, to the Seller’s
Knowledge, oral notice from any Governmental Authority of any pending violation, removal,
revocation or non-renewal has been received by any of the Companies in respect of any such
Governmental Authorizations that would, individually or in the aggregate, be expected to
be material to the Companies. The Companies do not have any Governmental Authorization that
will not be renewed in the Ordinary Course or will be revoked, terminated, suspended or impaired
nor to the Seller’s Knowledge are there any circumstances that would or may reasonably
be expected to result in the same. Except as set forth on Section 3.10 of the Disclosure
Schedule, the consummation of the Transaction and the operation of the Business of the
Companies by the Buyer in the manner in which they are currently operated will not require
the consent or approval of any Governmental Authority or other Person. |
| 3.11 | Intellectual
Property. |
| (a) | The Companies own or have the valid right
to use all Intellectual Property used in connection with or necessary to conduct the Business
of the Companies as presently conducted (such Intellectual Property, together with the Companies’
Owned Intellectual Property and the Companies’ Licensed Intellectual Property, the
“Companies’ Intellectual Property”). |
| (b) | Set forth on Section 3.11(b) of
the Disclosure Schedule is a complete and accurate list (showing in each case, the registered
owner, title, mark or name, applicable jurisdiction, application number or registration number
and date of application, if any) of all United States, foreign and state (i) Patents
and Patent applications, (ii) Trademark registrations and applications and all unregistered
Trademarks, (iii) internet domain names, and (iv) Copyright registrations and applications
owned by the Companies, in each case, that is owned by the Companies, but excluding any items
that have been abandoned, cancelled, expired, withdrawn, or finally refused without right
of appeal (together with all other Intellectual Property owned or purported to be owned by
the Companies, the “Companies’ Owned Intellectual Property”). |
| (c) | Set forth on Section 3.11(c) of
the Disclosure Schedule is a complete and accurate list of (i) each Contract that
is in effect pursuant to which any Company uses the Intellectual Property owned by another
Person in the conduct of the Business, but excluding, for listing purposes only, (A) software
shrink-wrap, open source, click-through or similar agreements, (B) non-disclosure agreements,
and (C) agreements with current and former employees, consultants, and independent contractors
of the Companies’ entered into on the Companies’ standard form(s) (or a
substantially similar form) (together with all other Intellectual Property owned by another
Person that is licensed to one or more of the Companies and used in the conduct of the Business,
the “Companies’ Licensed Intellectual Property”) and (ii) each
Contract that is in effect pursuant to which any Company grants to another Person rights
to any Companies’ Intellectual Property, but excluding agreements under which the only
right or license granted to another Person under Companies’ Owned Intellectual Property
is for the purpose of such Person performing services for the sole benefit of the Companies
(all Contracts required to be disclosed on Section 3.11(c) of the Disclosure
Schedule, the “IP Agreements”). |
| (d) | The Companies are the sole and exclusive
legal and beneficial owners of all rights, title and interests in and to the Companies’
Owned Intellectual Property. Each of the Companies’ Owned Intellectual Property (i) registrations
and applications, and (ii) material common law Trademarks set forth on Section 3.11(b) of
the Disclosure Schedule are valid, subsisting and enforceable in all material respects
and have not been cancelled, expired, or abandoned and all renewal fees and other steps required
for the maintenance or protection of such rights have been paid on time or taken. No facts
or circumstances exist that would reasonably be expected to render any of the Companies’
Owned Intellectual Property invalid or unenforceable. There are no pending or, to the Companies’
Knowledge, threatened oppositions, interferences, re-examinations or cancellations proceedings
or any similar proceedings before any court or registration authority or other Governmental
Authority in any jurisdiction against the Companies’ Owned Intellectual Property. No
Company has received any written notice or, to the Companies’ Knowledge, oral notice
of any pending or threatened opposition, interference, re-examination or cancellation proceedings
or any similar proceedings before any court or registration authority or other Governmental
Authority in any jurisdiction against the Companies’ Intellectual Property. There has
been and is no Proceeding or Law or settlement, covenant not to sue, or similar obligation
asserted, pending or, to Companies’ Knowledge, threatened that prohibits or restricts
any Company from any use or any other exploitation of the Companies’ Intellectual Property.
No Person has any exclusive license under any of the Companies’ Intellectual Property. |
| (e) | Neither the conduct of the Business nor
any Company’s creation, use, license or other transfer of the Companies’ Intellectual
Property or the Companies’ Products, or to the Companies’ Knowledge, any Company
customer’s use of the Companies’ Products as authorized by any Company, has infringed,
misappropriated or otherwise violated or infringes, misappropriates or otherwise violates
the Intellectual Property of any Person. No Company has received written notice, or, to the
Companies’ Knowledge, oral notification that the conduct of the Business, the creation,
use, license or other transfer of the Companies’ Intellectual Property or any Company’s
or, to the Companies’ Knowledge, any Company customer’s use of the Companies’
Products has infringed, misappropriated or otherwise violated, or infringes, misappropriates
or otherwise violates, any Intellectual Property owned or controlled by any Person (either
directly or indirectly such as through contributory infringement or inducement to infringe)
or is defamatory or violative in any way of any publicity, privacy, or other rights. No Company
has received any notice of any pending or any written or, to the Companies’ Knowledge,
oral notification of any pending or threatened claims or suits (i) alleging that the
activities of any Company or the conduct of its Business or the creation, use, license or
other transfer of the Companies’ Intellectual Property or any Company’s use of
the Companies’ Products infringes upon or constitutes the unauthorized use of or otherwise
violates the Intellectual Property of any Person, nor alleging libel, slander, defamation,
or other violation of a personal right, or (ii) challenging the ownership, use, registration,
validity or enforceability of any Companies’ Intellectual Property. With respect to
any material third-party Software used by the Companies, the Companies have, in accordance
with each applicable third party’s Software licensing requirements, complied in all
material respects with the seat-numbering license requirements applicable thereto. |
| (f) | No third party has disclosed in violation
of any confidentiality obligation, misappropriated, infringed, diluted, or otherwise violated,
or is currently using, disclosing in violation of any confidentiality obligation, misappropriating,
infringing, diluting, or otherwise violating, any Companies’ Owned Intellectual Property.
There is no claim pending against any Person by any Company with respect to matters described
in the preceding sentence. No Company has commenced or threatened in writing any Litigation,
or asserted any allegation or claim, against any Person for infringement or misappropriation
of the Companies’ Owned Intellectual Property or breach of any Contract involving the
Companies’ Intellectual Property. |
| (g) | No Proceedings are currently pending or,
to the Companies’ Knowledge, threatened that any Company is infringing, violating,
or misappropriating any third-party Intellectual Property. |
| (h) | Each Company takes commercially reasonable
actions to protect, preserve and maintain all Trade Secrets and other confidential information
included in the Companies’ Intellectual Property. Each Company has taken commercially
reasonable steps necessary to comply with all duties of such Company to protect the confidentiality
of confidential information provided to such Company by any other Person. To the Companies’
Knowledge, none of the current or former employees, consultants or other independent contractors
of any Company has violated any agreements under which a Company has agreed to keep confidential
any information of another Person. |
| (i) | Each Person who is or was involved in
the creation or development of any material Companies’ Owned Intellectual Property
has executed a valid and enforceable written agreement with the applicable Company that assigns
to the Company all right, title and interest in and to such Intellectual Property, or all
such rights have vested with the applicable Company automatically by operation of law. |
| (j) | The Companies have not incorporated, embedded,
linked, distributed with or otherwise used any material Open Source Software in or with any
Products or any of the Companies’ material Intellectual Property. |
| (k) | No (i) government funding or (ii) facilities
of a university, college, other educational institution or research center were used in the
development of any Companies’ Owned Intellectual Property. |
| (l) | Except as set forth in Section 3.11(l) of
the Disclosure Schedule, the computers, Software, servers, workstations, routers, hubs,
switches, circuits, networks, data communications lines and all other information technology
equipment of the Companies (collectively, the “IT Assets”) (i) operate
and perform in all material respects in accordance with their respective documentation and
functional specifications and otherwise as required by the Companies and have not materially
malfunctioned or failed within the past three (3) years, (ii) are adequate and
sufficient for the operations of the Companies; and (iii) to the Companies’ Knowledge,
do not contain any Malicious Code. The Companies have in place commercially reasonable measures,
consistent with current industry standards, to protect the confidentiality, integrity and
security of the IT Assets (and all information and transactions stored or contained therein
or transmitted thereby) against unauthorized use or access and against the introduction of
Malicious Code, and, to the Companies’ Knowledge, the Companies have not experienced
any unauthorized use or disclosure of, or access to, the IT Assets or any information or
data of the Companies. The Companies have implemented commercially reasonable data backup,
data storage, system redundancy and disaster recovery procedures, as well as a commercially
reasonable business continuity plan. |
| 3.12 | Labor
and Employment Matters. |
| (a) | Prior to the date hereof, the Companies
have, to the extent permitted under applicable Laws, including applicable privacy Laws, made
available to the Buyer a schedule setting forth each employee’s respective job title,
current annual salary or hourly rate of pay, annual target incentive compensation opportunity,
work location and years of service and each individual or sole proprietor independent contractor’s
or other service provider’s respective services, date of engagement, principal work
location, compensation terms (including option or other equity incentive awards granted by
Parent or any Subsidiary thereof to any employee of either Company), and full or part-time
status. |
| (b) | Neither of the Companies has received
written notice of any current unfair labor practice charges against such Person that are
pending before the National Labor Relations Board or any similar state, local or foreign
Governmental Authority. Since the Lookback Date, the Companies have not received written
notice of any currently pending or in progress and, to the Seller’s Knowledge, there
are no threatened in writing, labor or employment-related Actions before any Governmental
Authority. |
| (c) | (i) No employees of the Companies
are represented by any union, employee association or other labor organization with respect
to their employment with the Companies; (ii) no union, employee association, labor organization
or group of employees has filed any representation petition or made any written demand for
recognition since the Lookback Date; (iii) no union organizing or decertification activities
are underway or threatened, and no such activities have occurred since the Lookback Date;
and (iv) there are no and since the Lookback Date there have not been any pending or
threatened strikes, work stoppages, slowdowns, lockouts, or other material work actions or
labor disputes or disruptions. |
| (d) | Since the Lookback Date, none of the Companies
has engaged in or implemented any “plant closing” or “mass layoff”
of employees (in each case as defined in the WARN Act) or other actions that triggered notice
obligations under the WARN Act. The Companies do not have any plans to undertake any “mass
layoff” or “plant closing” that would reasonably be expected to trigger
notice obligations under the WARN Act. |
| (e) | Section 3.12(e) of the Disclosure
Schedule sets forth a complete and accurate list of each Person that provides services
to the Companies that is employed by the Parent, the Seller or any of their respective Affiliates
(other than the Companies). |
| (a) | With respect to any Employee Benefit Plan,
Seller has made available to the Buyer true and complete copies, as applicable, of (i) of
each Employee Benefit Plan (or, to the extent no such copy exists, an accurate description
of all material terms) and any related trust agreement or other funding instrument, (ii) the
most recently received IRS determination or opinion letter, (iii) the current summary
plan description and summaries of material modifications thereto, (iv) the three most
recent financial statements and annual reports on Form 5500 (including attached schedules),
(v) any material non-ordinary course written communications since the Lookback Date
to or from any Governmental Authority relating to any such Employee Benefit Plan, and (vi) the
results of non-discrimination testing for the three most recently completed years. |
| (b) | Except to the extent that any noncompliance
could not reasonably be expected to result in material Liability to the Companies or Buyer
or any of its Affiliates, each Employee Benefit Plan, each of which is listed on Section 3.13(b) of
the Disclosure Schedule and which schedule separately identifies each Employee Benefit
Plan that is an Assumed Plan, complies in all material respects with its terms and all applicable
Laws, including the Code and ERISA. |
| (c) | No Employee Benefit Plan is subject to
Title IV of ERISA and none of the Companies or any of their respective ERISA Affiliates sponsor,
maintain, contribute to, have any obligation to contribute to (or, within the six year period
immediately prior to the Closing Date, have sponsored, maintained, contributed to, or had
any obligation to contribute to) or otherwise have or, within the six year period immediately
prior to the Closing Date, have had any Liability (contingent or otherwise) with respect
to (i) any “multiemployer plan”, as that term is defined in Section 4001
of ERISA; (ii) any “employee benefit plan” subject to Title IV of ERISA
or Section 412 of the Code; or (iii) any multiple employer welfare arrangement,
as that term is defined in Section 3(40) of ERISA. |
| (d) | No Employee Benefit Plan provides life,
medical or health or other welfare benefits to retirees or other former employees of the
Companies following a termination of employment, other than benefit continuation rights under
COBRA. |
| (e) | The execution of this Agreement and consummation
of the Transaction (whether alone or together with any other event or circumstance on or
following the Closing, including termination of employment) will not (i) entitle any
current or former manager, officer, employee, consultant or other service provider of the
Companies to severance pay, or any payment of other compensation or benefits from the Companies,
Buyer or otherwise; (ii) result in any payment, acceleration of payment, funding, vesting
or increase in the amount of compensation or benefits with respect to any current or former
manager, officer, employee, consultant or other service provider of the Companies; (iii) result
in any modification, amendment or otherwise affect the rights of the Companies or Buyer or
its Affiliates (including, without limitation, the right to modify or terminate) under any
Assumed Plan or (iv) result in any payment under an Employee Benefit Plan, alone or
together with any other payments or benefits (whether occurring prior to, on or following
the Closing, including in connection with termination of employment), being an “excess
parachute payment” within the meaning of Section 280G of the Code. |
| (f) | No compensation has been or would reasonably
be expected to be includable in the gross income of any employee or other service provider
of the Companies as a result of the operation of Section 409A of the Code and the Companies
have no indemnity, gross-up or similar obligation for any Taxes imposed under Section 4999
or 409A of the Code. |
| (a) | The Companies have timely filed, or have
caused to be timely filed on their behalf, all income and other material Tax Returns required
to be filed by it, and all such Tax Returns are true, complete and accurate in all material
respects. The Companies have paid, or caused to be paid, all material amounts of Taxes required
to have been paid by or with respect to the Companies under applicable Law. |
| (b) | The Latest Balance Sheet contains an accurate
accrual in accordance with GAAP for all unpaid Taxes as of the Latest Balance Sheet Date.
The Companies have not incurred any liability for Taxes subsequent to the Latest Balance
Sheet Date except in the Ordinary Course. |
| (c) | No written claim has ever been made by
any Governmental Authority in a jurisdiction where the Companies do not file Tax Returns
that any one or both of them are or may be subject to taxation or to a requirement to file
Tax Returns in such jurisdiction, which claim has not been resolved. |
| (d) | The Companies have deducted, withheld
and timely paid to the appropriate Governmental Authority all Taxes required to be deducted,
withheld or paid in connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party, and the Companies have complied with all applicable
reporting and recordkeeping requirements. |
| (e) | There are no Liens for Taxes (other than
for current Taxes not yet due and payable), whether imposed by a federal, state, county,
or local Taxing Authority, outstanding against the assets, properties or business of the
Companies (other than Permitted Liens) on the assets and/or Equity Interests of the Companies. |
| (f) | The Companies (i) are not a party
to or bound by any Tax Agreement and (ii) have not received or requested any private
letter ruling (or similar ruling from a Taxing Authority) or entered into any closing agreement
with a Taxing Authority. |
| (g) | The Companies are, and have always been,
taxable corporations for U.S. federal and applicable state and local income Tax purposes. |
| (h) | The Companies have never been a member
of any affiliated, consolidated, combined or unitary group of companies for any Tax purposes
(other than such a group the common parent of which is Parent or the Companies). The Companies
do not have any liability for the Taxes of any other Person under operation of Law, including
Section 1.1502-6 of the Treasury Regulations (or any similar provision of state, local
or foreign Law), by Contract (other than in connection with any Contract entered into in
the Ordinary Course, a principal purpose of which is not Taxes) or as a transferee or successor. |
| (i) | No claim, deficiency, assessment for any
Taxes has been asserted against the Companies which has not been fully resolved and/or paid
in full. |
| (j) | There are no pending or ongoing Proceedings
with respect to Taxes or any Tax Returns of or with respect to the Companies, and the Companies
have not received any written notice threatening any Proceeding. The Companies have not waived
any statute of limitations with respect to Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency, which waiver is still outstanding. |
| (k) | The Companies have never engaged or participated
in a “reportable transaction,” as set forth in Treasury Regulation Section 1.6011-4(b). |
| (l) | The Companies will not be required to
include any material item of income in, or exclude any material item of deduction from, taxable
income for any taxable period (or any portion thereof) ending after the Closing Date (i) under
Section 481 of the Code (or any similar adjustments under any provision of the Code
or the corresponding foreign, state or local Tax Laws) by reason of a change in method of
accounting in any taxable period ending on or before the Closing Date, (ii) pursuant
to the provisions of any closing agreement as described in Section 7121 of the Code
(or any corresponding or similar provision of state, local or foreign Tax Laws) executed
on or prior to the Closing Date, (iii) as a result of an installment sale or open transaction
entered into prior to the Closing, (iv) as a result of any prepaid amount or deferred
revenue accrued or received on or prior to the Closing Date or (v) any intercompany
transaction or excess loss account described in Section 1502 of the Code (or any corresponding
provision of state, local or foreign Tax law). |
| (m) | The transactions contemplated herein will
not cause an adjustment to the basis of any asset of the Companies under Treasury Regulations
Section 1.1502-36(d) (or any corresponding provision of state law). |
| (n) | The Companies have not constituted either
a “distributing corporation” or a “controlled corporation” in a distribution
of stock intended to qualify for tax-free treatment under Section 355 of the Code in
the two years prior to the date of this Agreement or in a distribution which could otherwise
constitute part of a “plan” or a “series of related transactions”
(within the meaning of Section 355(e) of the Code) in conjunction with the transactions
contemplated by this Agreement. |
| (o) | Neither of the Companies has been a United
States real property holding corporation within the meaning of Section 897(c)(2) of
the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of
the Code. |
| (p) | The Companies are not subject to Tax in
any jurisdiction, other than the country in which each is organized, by virtue of having,
or being deemed to have, a permanent establishment, fixed place of business or similar presence. |
| (q) | The Companies do not have any liability
for any escheat or unclaimed property obligations. |
| 3.15 | Customers
and Suppliers. |
| (a) | Section 3.15(a) of the Disclosure
Schedule sets forth the ten (10) largest customers (as measured by dollar volume
of sales) of the Companies (the “Top Customers”) for both of the years
ended December 31, 2022 and December 31, 2021 and includes the actual amount for
which each such Top Customer was invoiced during such periods. No Top Customer has canceled,
terminated or otherwise materially altered (including any material reduction in the rate
or amount of purchases or material decrease in the prices paid) or notified the Seller, the
Companies or their respective Affiliates of any intention to do any of the foregoing or otherwise
threatened to cancel, terminate or adversely alter (including any material reduction in the
rate or amount of purchases or material decrease in the prices paid) its relationship with
the Companies or the Business. There are no pending disputes or controversies between any
of the Companies and any of the Top Customers. There is no fact, condition or event which
would be expected to have a material adverse effect on the relationship of the Companies
with any of the Top Customers. |
| (b) | Section 3.15(b) of the Disclosure
Schedule sets forth the ten (10) largest suppliers (as measured by dollar volume
of purchases) of the Companies (the “Top Suppliers”), for both of the
years ended December 31, 2022 and December 31, 2021 and includes the actual amount
the Companies purchased from each such supplier during such period (treating affiliated suppliers,
to the extent known, as a single supplier). No Top Supplier has canceled, terminated or otherwise
materially altered (including any material reduction in the rate or amount of sales or material
increase in the prices charged) or notified the Seller, the Companies or their respective
Affiliates of any intention to do any of the foregoing or otherwise threatened to cancel,
terminate or adversely alter (including any material reduction in the rate or amount of sales
or material increase in the prices charged) its relationship with the Companies or the Business.
There are no pending disputes or controversies between any of the Companies. There is no
fact, condition or event that would be expected to have a material adverse effect on the
relationship of the Companies with any of its Top Suppliers. |
| 3.16 | Inventory;
Accounts Receivable. |
| (a) | All of the inventories of stock in trade,
work in progress and finished goods of the Companies consist of a quality and quantity usable
and salable in the Ordinary Course, except for obsolete, damaged or defective inventory and
materials of below-standard quality, all of which items have been written off or written
down on the books and records of the Companies to fair market value or for which adequate
reserves have been provided therein. All inventories not written off have been priced at
the lower of cost or realizable market value. All inventories disposed of subsequent to the
Most Recent Fiscal Year End have been disposed of only in the Ordinary Course. The quantities
of each type of inventory (whether raw materials, work-in-process, or finished goods) are
not excessive, but are reasonable and warranted according to the normal purchasing and sales
patterns of the Companies and are adequate for the purposes of fulfilling the Companies’
current business and order requirements, in each case in all material respects. All work
in process and finished goods inventory held by the Companies is free of any Defect or other
material deficiency. |
| (b) | Section 3.16(b) of the Disclosure
Schedule contains a list of the aged trade accounts receivable of the Companies
over the previous ninety (90) days as of September 30, 2023 (“Receivables”).
Such Receivables arose in the Ordinary Course for goods sold and delivered or services provided
by the Companies as to which full performance by the Companies has been fully rendered, constitute
valid obligations owed to the Companies and are collectible in the Ordinary Course, subject
to customary reserves. The Companies have not received any written notice from or on behalf
of any account debtor asserting any defense to payment, counterclaim or right of setoff with
respect to any Receivable of the Companies in excess of amounts reserved on the Financial
Statements in respect of the applicable period(s). All Receivables are recorded and booked
on the books and records of the Companies in accordance with GAAP. Except as disclosed on
Section 3.16(b) of the Disclosure Schedule, no Receivables are subject to
prior assignment or Lien (other than Permitted Liens). Except as set forth in the Financial
Statements, the Companies do not have any liability for any refunds, liability allowances
or returns in respect of products developed, manufactured, processed, distributed or sold
by or for the account of the Companies on or prior to the Closing Date in excess of the amounts
specifically reserved against in calculating the Estimated Closing Working Capital. Where
Receivables arose out of secured transactions, all financing statements and other instruments
required to be filed or recorded to perfect the title or security interest of the Companies
have been properly filed or recorded by the Companies in all material respects. |
| 3.17 | Related
Party Arrangements. Section 3.17 of the Disclosure Schedule sets forth
a correct and complete list of each arrangement (including Contractual, landlord-tenant,
lender-borrower, supplier, customer, service provider, license, advisory or other financial
arrangement and arrangements with respect to the use of any of the assets or employees of
the Companies) by a Related Person thereof or with respect to the use of any asset or employee
of a Related Person thereof by any Company (a “Related Party Arrangement”).
Except as set forth on Section 3.17 of the Disclosure Schedule and intercompany
transactions between the Companies and made in the Ordinary Course, none of the Seller, Parent
or any Related Person of any Company, the Seller or Parent owns or has any interest in any
asset used or held for use by any Company, between a Related Person of any Company, on the
one hand, and either Company, on the other hand. Except in the case of intercompany transactions
between the Companies, no Related Person of the Seller, Parent or any Company: (a) is,
or owns, directly or indirectly, any interest in any Person which is, (i) a competitor
of the Companies, (ii) a supplier of the Companies, or (iii) a customer of the
Companies or a distributor of the Products (except as an owner of five percent (5%) or less
of the stock of any Person listed on a national securities exchange or traded in the over-the-counter
market); (b) owns, directly or indirectly, in whole or in part, any property, asset
or right, real, personal or mixed, tangible or intangible (including, but not limited to,
any of the intangible property), of the Companies, which is utilized in the operation of
the Business; (c) has any Proceeding against, or owes any amount to, the Companies or
(d) provides any services to the Companies. |
| 3.18 | Brokers
and Finders. Neither Company has engaged any investment banker, broker, finder or
other intermediary in connection with this Agreement or the Transaction. Neither Company
has any obligation or liability for the payment or reimbursement of (or any other financial
responsibility for) any brokerage commission, investment banking fee, finders’ fee
or similar fees payable by reason of this Agreement or the consummation of the Transaction
nor does either Company have any indemnification or similar protection obligations under
any investment banking, brokerage or similar arrangement with respect to this Agreement or
the consummation of the Transaction. |
|
3.19
|
Propriety of Past Payments. Since January 1, 2019, neither the Companies nor any
manager, officer, employee or agent of the Companies or any other Person associated with or acting for or on behalf of the Companies
has, offered, given, authorized, or promised, anything of value, directly or indirectly, to any Person, including to any Public Official,
for the purpose of (i) improperly influencing any official act or decision of such Person; (ii) inducing such person to do
or omit to do any act in violation of a lawful duty; or (iii) securing any improper benefit or favor for either Company or in connection
with this Agreement. In the past five years, no written notice has been received alleging that the Companies or any owner, officer, manager,
employee, agent or other Person (in connection with actions on behalf or for the benefit of the Companies), has made, given or offered,
directly or indirectly, any unlawful financial or other advantage, contribution, gift, bribe, payoff, kickback or unlawful payment to
any employee or official of any Governmental Authority in any jurisdiction, or taken any other action, in violation of the United States
Foreign Corrupt Practices Act of 1977, the U.K. Bribery Act 2010, the OECD Convention on Combating Bribery of Foreign Public Officials
in Business Transactions of 1997 (the “OECD Convention”) and any law implementing the OECD Convention, or any other
applicable anti-bribery or anti-corruption law. None of the owners, officers, managers, employees, or agents of the Companies are agents,
employees, officers or representatives of, or are otherwise affiliated with, any Government Authority or agency or other instrumentality
of any Governmental Authority, or a Public Official. The Companies’ books and records accurately reflect the nature of all expenditures
related to anything of value provided to a Governmental Authority or Public Official. |
| 3.20 | Personal
Information Laws. The Companies, and all third parties processing Personal Information
on behalf of any Company (collectively, “Data Processors”), are and since
the Lookback Date have been in material compliance with the requirements of all applicable
Laws, contractual obligations, binding guidelines and industry standards and the Companies’
written policies and practices, in each case, relating to the collection, access, use, disclosure,
storage, disposal, and other processing of Personal Information, including the Health Insurance
Portability and Accountability Act, the California Consumer Privacy Act, the EU/UK General
Data Protection Regulation, and the Payment Card Industry Data Security Standard. No unresolved
complaint, investigation or other proceeding relating to any alleged non-compliance is now
pending, nor since the Lookback Date has been pending, by or before any Governmental Authority,
and the Companies have otherwise never received any complaints, claims, notices, inquiries
or requests related to data protection or the handling of Personal Information. The Companies
have taken commercially reasonable steps to ensure that Personal Information is protected
against unauthorized, unlawful, or accidental access, use, loss, transfer, modification,
disclosure or other misuse (each, a “Security Incident”), including by
implementing, maintaining, and complying with technical, physical, and operational security
measures and an ongoing process to monitor compliance. No Company nor any Data Processor
has experienced any Security Incident or been required to notify any Person regarding any
Security Incident. |
| 3.21 | Tangible
Personal Property; Sufficiency of Assets. |
| (a) | The Companies have good and valid title
to, or a valid leasehold interest in, the tangible personal property used in the conduct
of the Business, reflected on the Latest Balance Sheet or acquired since the date thereof,
free and clear of all Liens (except Permitted Liens), except assets disposed of in the Ordinary
Course since the Latest Balance Sheet Date. The tangible personal property owned or used
by the Companies is in good operating condition and repair, ordinary wear and tear excepted. |
| (b) | The assets held, owned, licensed or leased
by each Company and any assets listed in Section 3.17 of the Disclosure Schedule
(i) constitute all of the material assets (including Intellectual Property) used
or held for use by the applicable Company in the Business in the Ordinary Course, fixed or
unfixed, real, personal or mixed, tangible or intangible, accrued, absolute, contingent or
otherwise and (ii) are adequate and sufficient to conduct the Business in the Ordinary
Course. |
| 3.22 | Sanctions;
Trade Laws and Regulations. Since January 1, 2019, except as set forth in Section 3.22
of the Disclosure Schedule: (a) the Seller and the Companies, in each case in respect
of the Business, have been in material compliance with all applicable Sanctions and Trade
Laws and Regulations; (b) neither the Companies, nor, in respect of the Business, Seller
has engaged in a transaction or dealing, direct or indirect, with or involving a Sanctioned
Country or Sanctioned Person; (c) the Seller and the Companies, in each case in respect
of the Busine, have maintained in place and implemented controls and systems to comply with
applicable Sanctions and Trade Laws and Regulations; and (d) neither the Companies,
nor, in respect of the Business, Seller has made a voluntary disclosure to any government
or Government Authority with respect to any alleged act or omission arising under the applicable
Sanctions or Trade Laws and Regulations. No government or Government Authority has initiated
or given written notice threatening to initiate any investigation, audit, review or prosecution
of the Companies, or, in each case in respect of the Business, Seller with respect to non-compliance
with applicable Sanctions or Trade Laws and Regulations. Neither the Companies nor any director,
officer or, to the knowledge of the Companies, employee or agent of the Companies is: (x) a
Sanctioned Person; (y) subject to debarment or any list-based designations under any
Trade Laws and Regulations; or (z) engaged in transactions, dealings, or activities
that might reasonably be expected to cause such Person to become a Sanctioned Person. |
|
3.23
|
Internal Accounting Controls. The Companies maintain a system of internal accounting
controls sufficient to provide reasonable assurance in accordance with customary business practices for non-public companies that
(a) transactions are executed in accordance with management’s general or specific authorizations, (b) transactions
are recorded as necessary to permit preparation of financial statements in conformity with GAAP, (c) access to assets is
permitted only in accordance with management’s general or specific authorization and (d) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any
differences. |
| 3.24 | Environmental
Matters. |
| (a) | Each Company holds and is in material
compliance with all material Environmental Permits required to conduct the Business. |
| (b) | Neither Company nor any Affiliate thereof
and, to Seller’s Knowledge, no other Person has placed, stored, transported or Released
any Hazardous Materials at or from any Real Property owned or operated by the Companies or
any predecessor owner of the Business or any material portion thereof in connection with
the Business as currently operated or operated in the past, except where any such placement,
storage, transport or Release would not result in material Liability to either Company. |
| (c) | Neither Company is subject to any pending
claim and has not received any threat in writing alleging that a Company is in violation
of any Environmental Law or any Environmental Permit or has any liability under any Environmental
Law. |
| (d) | There are no Proceedings pursuant to Environmental
Laws pending or, to the Companies’ Knowledge, threatened in writing against either
Company before any Governmental Authority, and neither Company is subject under any Environmental
Law to any Judgment. |
| (e) | The Companies have provided to Buyer copies
of all material environmental reports and assessments in the possession or reasonable control
of the Companies, Seller or Parent commissioned since the Lookback Date and relating to the
Business or the assets of either Company including Real Property currently used or previously
used in the Business. |
| 3.25 | Absence
of Certain Changes and Events. Since the Latest Balance Sheet Date, except as set
forth on Section 3.25 of the Disclosure Schedule, the Companies have conducted
the Business in the Ordinary Course and, except as expressly contemplated by this Agreement
or any other Seller Transaction Document, there has not occurred any event or group of related
events, condition, occurrence, contingency or development that has had, or would reasonably
be expected to have, a Material Adverse Effect. Without limiting the generality of the foregoing,
since the Latest Balance Sheet Date, there has not been any, and/or the Seller and the Companies
have not: (a) change in the independent accountants of the Companies or any change in
the accounting methods, principles or practices followed by the Companies (except for any
such change required by reason of a concurrent change in GAAP or applicable Law); (b) with
respect to any executive, manager, officer, employee, consultant or contractor of the Companies,
(i) adoption or termination in any respect, amendment or increase of the payments or
benefits of any Employee Benefit Plan, (ii) grant of severance or termination pay, (iii) increase
in the compensation or payment of any bonus or (iv) change with respect to compensation
or other benefits payable, except, in each of clauses (i) through (iv), in the Ordinary
Course, as required by Law or as required by any existing Contract; (c) sale, assignment,
transfer, hypothecation, conveyance, lease, license or other disposition of any asset or
property of the Companies, except in the Ordinary Course, or mortgage, pledge, or imposition
of any Lien on any asset or property of the Companies, except for Permitted Liens and except
in the Ordinary Course; (d) split, combined, classified, re-classified, varied the rights
attaching to, or taken similar action with respect to any of Equity Interests or proposed
the issuance of any other securities in respect of, in lieu of or in substitution for its
authorized or issued equity or other Equity Interests; granted any rights to purchase its
Equity Interests; issued any Equity Interests; granted any registration rights; purchased,
redeemed, retired, or otherwise acquired any of its Equity Interests; or adopted a plan of
complete or partial liquidation or passed any resolutions providing for or authorizing such
liquidation or a dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Companies or declared or paid any dividend or other distribution or
payment in respect of its Equity Interests; (e) amended its Governing Documents; (f) damaged,
destroyed or lost any material portion of the tangible assets or properties of the Companies,
whether or not covered by insurance, in an amount in excess of $5,000; (g) except in
the Ordinary Course, amended, renewed, failed to renew, terminated (other than due to any
scheduled expiration) or received written notice of termination (other than due to any scheduled
expiration) with respect to any Material Contract or entered into any new Material Contract
or taken any action that would reasonably be expected to jeopardize the continuance of any
of its relationships with any of its Top Customers and/or Top Suppliers; (h) (i) incurred
or assumed any Indebtedness in excess of $50,000 in the aggregate, (ii) assumed, guaranteed,
endorsed or otherwise became liable or responsible (whether directly, contingently or otherwise)
for the Liabilities of any other Person (other than the endorsements of checks in the Ordinary
Course) in excess of $50,000 in the aggregate, or (iii) made any loans, advances or
capital contributions to, or investment in, any Person, in excess of $50,000 in the aggregate,
other than employee travel and expense advances in the Ordinary Course; (i) paid, discharged
or satisfied any Liabilities, other than the payment, discharge or satisfaction in the Ordinary
Course Liabilities reflected or reserved against in the Latest Balance Sheet or incurred
in the Ordinary Course since the Latest Balance Sheet Date; (j) sold, disposed of or
surrendered or disaggregated any material license or any portion thereof; (k) accelerated
or delayed collection of notes or accounts receivable in advance of or beyond their regular
due dates or the dates when the same would have been collected in the Ordinary Course; (l) delayed
or accelerated payments of any accounts payable or other liability beyond or in advance of
its due date or the date when such liability would have been paid in the Ordinary Course;
(m) failed to replenish inventories and supplies of the Companies in the Ordinary Course
or entered into any purchase commitment not in the Ordinary Course; (n) made any acquisition
of all or any significant part of the assets, capital stock, other Equity Interests, properties,
securities or business of any other Person; (o) made any revaluation of any assets of
the Business of the Companies or write down or write off of the value of any assets of the
Business of the Companies, except in the Ordinary Course; (p) entered into any collective
bargaining Contract or any other Contract with any labor union or association representing
any group of employees, or been subject to any strike, picket, work stoppage, work slowdown
or labor dispute or been subject to any application for certification or union organizing
drive; (q) made any capital expenditure or any other investment (or series of related
investments), or entered into any Contract or commitment therefor, excluding any purchase
of inventory in the Ordinary Course, in excess of $50,000 in respect of any such individual
investment or Contract or $75,000 in the aggregate; (r) written down the value of any
inventory (including write downs by reason of shrinkage or mark down) or written off as uncollectible
any notes or accounts receivable, except in the Ordinary Course; (s) allowed any insurance
policy naming the Companies as beneficiaries or loss payee to be cancelled or terminated,
or instructed any of the Companies’ insurance carriers to decrease any current policy
coverage limits or materially change the terms of such coverage; or (t) agreement by
the Companies to do any of the foregoing. |
| 3.26 | Products;
Product Liability. Except as may be set forth in the Material Contracts, the Companies
have not extended to any of its customers any written, non-uniform product warranties, indemnifications
or guarantees. There are no Defects in the designs, specifications, or processes as currently
in effect with respect to any Product sold or otherwise distributed by the Companies that
would reasonably be expected to result in a material liability to the Companies. The Companies
are not currently investigating or considering, and since January 1, 2020 the Companies
have not investigated or considered, a recall, withdrawal or suspension from the market of
any Product that resulted in, or is reasonably expected to result in, aggregate Liabilities
in excess of $25,000. |
| 3.27 | Directors
and Officers of the Companies. Section 3.27 of the Disclosure Schedules
sets for a complete and accurate list of the directors, managers and officers of each Company
as of the date of this Agreement. |
| 3.28 | Banking
Relationships. Section 3.28 of the Disclosure Schedule sets forth (a) the
names and locations of all banking and lock box accounts of each Company and any safe deposit
boxes of each Company and (b) the credit card issuers with whom each Company has an
account and, in each case, the names of all Persons authorized to use such accounts or who
have access thereto. There are no automatic, periodic or scheduled withdrawals or debits
with respect to any of the bank accounts required to be set forth on Section 3.28
of the Disclosure Schedule. |
| 3.29 | Insurance.
Section 3.29 of the Disclosure Schedule is a true and complete list of (a) all
insurance policies and similar arrangements under which the Companies or their current or
former directors, officers or other governing persons are loss payees, named insureds or
additional insureds (or terms of similar import) including all title, liability (including
product liability, directors and officers liability and employment practices liability, property
and casualty, worker’s compensation, errors and omissions, cybersecurity and other
forms of insurance (including related bonds)) (collectively, the “Scheduled Insurance
Policies”), (b) the remaining policy limits under each such policy and (c) each
pending claim under each policy and each claim that is no longer pending but had been pending
at any time since the Lookback Date. Except as set forth on Section 3.29 of the Disclosure
Schedule, no Person other than the Companies is a “named insured” or “additional
insured” under any Scheduled Insurance Policy. Such policies cover the assets and risks
of the Companies and the Business in a manner consistent with customary practices of companies
engaged in businesses and operations similar to those of the Companies. All insurance coverage
maintained with respect to each Company is occurrence-based except as otherwise noted on
Section 3.29 of the Disclosure Schedule. All Scheduled Insurance Policies are
in full force and effect, none of the Companies or any of their Affiliates is in breach or
default (including with respect to giving of notices) and all premiums, deductibles and self-insured
amounts that have become due and payable have been paid in full. Except as set forth on Section 3.29
of the Disclosure Schedule, none of the Companies or any of their Affiliates has cancelled
or received notice of any material increase of the premiums with respect to, cancellation
of, non-renewal or threatened cancellation or non-renewal of any Scheduled Insurance Policies
without replacement thereof. To the Knowledge of the Seller, all occurrences that could result
in coverage under any of the Scheduled Insurance Policies in an amount in excess of $25,000
per claim or $100,000 in the aggregate for multiple claims arising from related occurrences
are the subject of claims listed in Section 3.29 of the Disclosure Schedule.
None of the pending claims for the benefit of the Companies has been denied by the applicable
insurance carrier or is the subject of a reservation of rights letter or similar insurer
notification. All of the Occurrence-Based Policies are fully paid-up and not subject to retroactive
premiums regardless of claims or loss history. Each Company will be entitled to make claims
under the Occurrence-Based Policies to the same extent as if the Transaction and Closing
had not occurred. |
Article 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and
warrants to the Seller and Parent as set forth below as of the date hereof and as of the Closing:
| 4.1 | Organization
and Good Standing. Buyer is a limited liability company duly organized, validly existing
and in good standing under the Laws of the State of Delaware, and has full limited liability
company power and authority to carry on its business as presently conducted, and to own and
lease the assets and properties which it owns and leases. |
| 4.2 | Power
and Authorization; Enforceability. |
| (a) | Buyer has all requisite right, power,
authority and capacity to execute and deliver this Agreement and the other Buyer Transaction
Documents, to perform its obligations hereunder and thereunder and to consummate the Transaction.
All necessary limited liability company action has been taken by Buyer to authorize the execution,
delivery and performance by Buyer of this Agreement and each other Buyer Transaction Document.
Buyer has duly executed and delivered this Agreement and, at or prior to the Closing, will
have duly executed and delivered each other Buyer Transaction Document. |
| (b) | Assuming that this Agreement and each
of the Transaction Documents are valid and binding obligations of each of the other parties
hereto and thereto, this Agreement is, and each other Buyer Transaction Document, when duly
executed and delivered at or prior to the Closing by Buyer, will be, the legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its respective
terms, except as enforceability of such obligations may be limited by the Remedies Exception. |
| 4.3 | No
Violation or Conflict. |
| (a) | Neither the execution, delivery and performance
by Buyer of this Agreement or each of the other Buyer Transaction Documents nor the consummation
of the Transaction (with or without the passage of time or the giving of notice, or both)
will: |
| (i) | conflict with, or result in a breach of,
the Governing Documents of Buyer; |
| (ii) | violate or conflict with any Judgments
or Laws, in each case, binding upon or applicable to Buyer or by which it or any of its properties
or assets are bound or require the consent, approval or action of, filing with or notice
to any Governmental Authority or other Person; or |
| (iii) | violate, or be in conflict with, or constitute
a default (or an event which, with notice or lapse of time or both, would constitute a default)
under, or result in, or provide the basis for, the termination of, or accelerate the performance
required by, or excuse performance by any Person of any of its obligations under, or cause
the acceleration of the maturity of any Indebtedness or obligation pursuant to, or result
in the creation or imposition of any Lien upon any property or assets of Buyer under, any
material Contract to which Buyer is a party or by which it or any of its properties or assets
are bound; |
except, in each case of clauses (i) through
(iii), where the failure of any of the above to be true would not reasonably be expected to impair, prevent or delay the consummation
of the transactions contemplated by this Agreement.
| 4.4 | Compliance
with Laws. Buyer is in material compliance with all applicable Laws and Governmental
Authorizations, except where the failure to comply would not reasonably be expected to impair,
prevent or delay the consummation of the transactions contemplated by this Agreement. |
| 4.5 | Litigation.
There are no material unsatisfied Judgments against Buyer or any of its business properties
or assets that would reasonably be expected to affect the ability of Buyer to perform its
obligations under this Agreement. There is no Proceeding pending or threatened in writing
against Buyer which seeks to delay or prevent the consummation of the transactions contemplated
by this Agreement by Buyer or would, if successful, be reasonably expected to adversely affect
the ability of Buyer to perform its obligations under this Agreement. |
| 4.6 | Governmental
Consents and Approvals. The execution, delivery and performance by the Buyer of this
Agreement and the other Buyer Transaction Documents, and the consummation by the Buyer of
the Transaction require no action by or in respect of, or filing with or other Consent of,
any Governmental Authority, other than (a) compliance with any applicable requirements
of any applicable Antitrust Laws, (b) compliance with any applicable requirements of
the Securities Act, the Exchange Act and any other applicable securities Laws, (c) Consents
to assignment of certain Contracts by a Governmental Authority, and (d) any action by
or in respect of, or filing with or other Consent of, any Governmental Authority the absence
of which would not reasonably be expected to prevent, materially impair or materially delay
the Buyer’s ability to consummate the Transaction or comply with its obligations under
this Agreement and the other Buyer Transaction Documents. |
| (a) | The Buyer is not named on any list of
Persons issued by the Office of Foreign Assets Control (“OFAC”) pursuant
to Executive Order 13224 or any other OFAC Lists. The Buyer is not owned by, controlled by,
acting for or on behalf of, or providing assistance, support, sponsorship or services of
any kind to, or otherwise associated with any of the Persons referred to or described in
the OFAC Lists. The Buyer has not conducted business with, or engaged in any transaction
with, any Person named on any of the OFAC Lists or any Person included in, owned by, controlled
by, acting for or on behalf of, providing assistance, support, sponsorship or services of
any kind to, or otherwise associated with any of the Persons referred to or described in
the OFAC Lists. |
| (b) | No foreign Governmental Authority, agency
of a foreign Governmental Authority, or representative of a foreign Governmental Authority,
no business enterprise or other Person organized, chartered or incorporated under the laws
of any country other than the United States or its territories, nor any Person who is not
a citizen or national of the United States: (i) owns a voting interest in Buyer sufficient
to elect, or is otherwise entitled to representation on, Buyer’s governing board; (ii) has
or will have the ability to access classified information in the possession of any cleared
facility of any Subsidiary of the Buyer; or (iii) has the power, direct or indirect
(whether or not exercised, and whether or not exercisable through the ownership of Buyer’s
securities, by contractual arrangements or other means), to direct or decide matters affecting
the management or operations of Buyer (the affiliations described in clauses (i), (ii) or
(iii), “Foreign Interests”), in a manner that may result in unauthorized
access to classified information or may adversely affect the performance of classified contracts.
No fact or circumstance related to the Buyer or its ownership would preclude or delay national
security classification clearance approval sufficient to perform its obligations under this
Agreement. The Buyer (and each Affiliate thereof that will employ employees who work for
one or more of the Companies as of the date hereof) holds (or as of Closing will hold) a
facility security clearance as necessary to sponsor each employee. |
| (c) | Except as otherwise listed on Section 4.7(c) of
the Disclosure Schedule, neither the Buyer nor any of its Affiliates has any direct or
indirect Foreign Interests. |
| 4.8 | U.S.
Person; CFIUS. Buyer is a “U.S. Person” within the meaning of 22 C.F.R.
§ 120.16. There are no facts pertaining to Buyer or its Affiliates that would reasonably
be expected to require delivery by Buyer of a notice or declaration to the Committee on Foreign
Investment in the United States in connection with the Transaction. |
| 4.9 | Brokers
and Finders. No broker, investment banker, financial advisor, finder, agent or other
intermediary has acted on Buyer’s behalf in connection with this Agreement or any of
the transactions contemplated hereby, and there are no brokerage commissions, finders’
fees or similar fees or commissions payable in connection therewith based on any Contract
with Buyer or any action taken by Buyer. |
| 4.10 | Investment.
Buyer is acquiring the Seller Interest for its own account, for investment only, and not
with a view to any resale or public distribution thereof. Buyer has sufficient knowledge
and experience in financial and business matters so as to be capable of evaluating the merits
and risks of its investment in the Seller Interest and is capable of bearing the economic
and other risks of such investment. Buyer acknowledges that (a) such Seller Interest
has not been registered under the Securities Act of 1933, as amended, or any state securities
laws, (b) there is no public market for such Seller Interest and there can be no assurance
that a public market will develop, and (c) it must bear the economic risk of its investment
in such Seller Interest for an indefinite period of time. As of the Closing, Buyer will be
an “Accredited Investor” within the meaning of the Securities and Exchange Commission
Rule 501 of Regulation D of the Securities Act of 1933, as presently in effect. Buyer
is not acting as agent or representative of another party and has no current plan or intention
to resell any of the Seller Interest or the assets or business of the Companies to another
Person. |
| 4.11 | Sufficient
Funds; Solvency. The Buyer will have at the Closing, sufficient funds to consummate
the Transaction, including payment by Buyer of the Estimated Cash Purchase Price at the Closing
and any fees and expenses of or payable by the Buyer (or, following the Closing, the Companies),
and to pay all other amounts payable by the Buyer at the Closing and to perform its obligations
hereunder following the Closing. Immediately after giving effect to the Transaction, the
Buyer will be solvent and will (a) be able to pay its debts as they become due, (b) own
property that has a fair saleable value greater than the amounts required to pay its debts
(including a reasonable estimate of the amount of all contingent liabilities), and (c) have
adequate capital to carry on its business. No transfer of property is being made and no obligation
is being incurred in connection with the Transaction with the intent to hinder, delay or
defraud either present or future creditors of the Buyer. |
| 4.12 | Tax
and Legal Matters. Buyer has reviewed with Buyer’s own tax advisors and legal
counsel the tax and other consequences of the Transaction and the legal effects thereof before
Buyer’s execution and delivery of this Agreement and each other Buyer Transaction Document.
Buyer has relied solely on its own advisors and not on any statements or representations
by any one or more of the Seller Parties or any of their respective Representatives, except
for the representations and warranties of Seller in Article 2 and Article 3.
Buyer agrees that it has been advised to consult with its own tax and legal counsel in connection
with the foregoing. |
| 4.13 | Governmental
Authorizations. Assuming the accuracy of the Seller’s representations in Article 2
and Article 3, the Buyer will have obtained on or before the Closing all
Consents from Governmental Authorities necessary for it to own, lease and operate and to
carry on the Business. |
| 4.14 | R&W
Policy. On or prior to the date of this Agreement, the Buyer (or one or more of its
Affiliates) will have obtained or will obtain a “conditionally bound” representation
and warranty insurance policy substantially in the form attached hereto as Exhibit D
and having the coverage, retention and premium amounts set forth therein (the “R&W
Policy”) with respect to the representations and warranties of Seller contained
in Article 2 and Article 3 of this Agreement, and such R&W Policy
will be fully bound and in effect in all respects in accordance with its terms as of the
Closing. On or prior to the Closing Date, or as otherwise provided in the corresponding binder
to the R&W Policy, the Buyer will pay, or will cause to be paid, the full amount of all
premium and other costs, fees or expenses (including all underwriting fees and such insurer’s
due diligence and other legal fees) set forth in the R&W Policy. The R&W Policy will
include a full and complete waiver of all rights of subrogation and any form of recourse
or right of action against the Seller and/or the Parent, except to the extent arising from
Actual Fraud by the Seller. From and after the Closing Date and until the expiration of the
R&W Policy, the Buyer and its Affiliates will not amend, waive, or otherwise modify the
foregoing subrogation waiver contained in the R&W Policy in any manner that adversely
affects the Seller and/or the Parent or their respective Affiliates, without the Parent’s
prior written consent. |
Article 5
CERTAIN COVENANTS OF THE PARTIES
| 5.1 | Efforts;
Consents; Governmental Filings. |
| (a) | Subject to Section 5.1(e) and
the terms and conditions of this Agreement, each of the Seller Parties and the Buyer will
use its reasonable best efforts (unless, with respect to any action, another standard of
performance is expressly provided for herein) to take, or cause to be taken, all actions
and to do, or cause to be done, and assist and cooperate with the other in doing, all things
necessary, proper or advisable to cause the conditions to Closing to be satisfied and to
consummate and make effective the Transaction, including using reasonable best efforts in
(i) preparing and filing as promptly as reasonably practicable with any Governmental
Authority or other third party all documentation to effect all necessary, proper or advisable
filings, notices, petitions, statements, registrations, submissions of information, applications
and other documents, (ii) obtaining and maintaining all Consents and other confirmations
required to be obtained from any Governmental Authority or other third party that are necessary,
proper or advisable to consummate and make effective the Transaction (whether or not such
Consents and other confirmations are conditions to the consummation of the Transaction pursuant
to Article 7 and Article 8), preparing and submitting any required
notices related to registrations and/or Permits of the Companies that may be necessary as
a consequence of the Transaction, and any other necessary or advisable Consents of a Governmental
Authority under applicable Laws, including any requirements under the HSR Act for the Transaction
or the approval of the Buyer as the purchaser of the Business or the Sierra Interest (such
Consents, the “Governmental Consents”), and (iii) executing and delivering
any additional instruments necessary or advisable to promptly obtain the Governmental Consents
and/or to consummate the Transaction; provided, (A) neither the Seller, the Seller
Parties, nor the Buyer will be required to pay any fees or other payments to any such Governmental
Authority or other third party in order to obtain any such Consent (other than filing fees
that are imposed by Law), (B) this Section 5.1(a) is not intended to,
and will not, increase or expand the obligations of any Party that are more specifically
covered in other Sections of this Agreement and (C) neither the Seller, the Seller Parties
nor the Buyer will be required to commence, threaten to commence or defend any litigation
against a third-party or Governmental Authority in connection with its obligations under
this Section 5.1. Subject to Section 5.1(e), the Buyer will not enter
into any acquisition or other agreement, make any announcement with respect to any transaction
(except as required pursuant to applicable Law or the rules of any applicable stock
exchange) or take any other action that could reasonably be expected to have the effect of
preventing, materially impairing, materially delaying or impeding the receipt of any Consents. |
| (b) | The Seller Parties and the Buyer agree
(i) to make or cause to be made all filings required of each of them or any of their
respective Subsidiaries or Affiliates with the applicable Governmental Authority with respect
to the Governmental Consents as promptly as practicable and, in any event, within 10 Business
Days after the date hereof in the case of all filings required under the HSR Act and (ii) to
supply promptly any additional information and documentary material that may be requested
in connection with the Governmental Consents (including, in the case of the Buyer, to promptly
make available to the Antitrust Division of the U.S. Department of Justice, the U.S. Federal
Trade Commission, and any other applicable Governmental Authority information and appropriate
personnel in response to any queries made by them that are raised in connection with the
Governmental Consents, which may include information regarding this Agreement, the Buyer’s
capabilities as the potential purchaser of the Business, or other matters). None of the Seller
Parties or the Buyer will, nor will the Seller Parties or the Buyer permit any of their respective
Affiliates to, without the other Party’s prior written consent, enter into any timing,
settlement or similar agreement, or otherwise agree or commit to any arrangement, that would
have the effect of extending, suspending, lengthening or otherwise tolling the expiration
or termination of any waiting period applicable to the Transaction under the HSR Act or any
other applicable Antitrust Law. In the event that the Parties receive a request for additional
information or documentary material pursuant to the HSR Act (a “Second Request”),
the Parties will use their respective reasonable best efforts to submit an appropriate response
to, and to certify substantial compliance with, such Second Request as promptly as practical
after the date of receipt of such Second Request, and counsel for both Buyer and the Seller
Parties will closely cooperate during the entirety of any such Second Request review process. |
| (c) | If any objections are asserted with respect
to the Transaction under any Antitrust Law or if any Action is instituted or threatened by
any Governmental Authority or any private party challenging the Transaction as violative
of any Antitrust Law, each of the Seller Parties and the Buyer will use its reasonable best
efforts to promptly resolve such objections. In this case, the Seller Parties and the Buyer
agree that “reasonable best efforts” will not include an obligation of any Party
or its Affiliates to sell, lease, license or otherwise dispose of any assets or businesses. |
| (d) | Subject to applicable Law or order, each
of the Buyer and the Seller Parties will, to the extent permitted by the relevant Governmental
Authority, promptly disclose to the other Party, and provide copies to the other Party of,
all correspondence, filings or communications between such Party or any of its representatives,
on the one hand, and any Governmental Authority or members of its staff, on the other hand,
relating to the matters that are the subject of this Agreement and the Transaction. The Buyer
and the Seller Parties will, to the extent permitted by the relevant Governmental Authority,
permit the other Party to review in advance any proposed correspondence, filings or communication
by the Buyer to any Governmental Authority relating to the matters that are the subject of
this Agreement; provided, however, that materials may be redacted (i) to
remove references concerning the valuation, projections, business plans or prospects of the
Business, (ii) as necessary to address reasonable attorney-client or other privilege
concerns; provided, that the Buyer and the Seller Parties will use their reasonable
best efforts to enter into such joint defense agreements or other arrangements with the other
Party, as appropriate, so as to allow for such disclosure in a manner that does not result
in the loss of attorney-client or other privilege, and (iii) as necessary to otherwise
comply with contractual arrangements or applicable Law. The Buyer and the Seller Parties
will (A) not agree to participate in any meeting with any Governmental Authority in
respect of any filings, investigation (including any settlement of the investigation), litigation
or other inquiry related to the Transaction unless it, to the extent permitted by such Governmental
Authority, gives the other Party the opportunity to attend and participate at such meeting
and (B) consult with the other Party’s counsel with respect to, or give the other
Party’s counsel the opportunity to attend, that portion of any meeting with any Governmental
Authority in which the valuation, projections, business plans or prospects of the Business
are discussed. Subject to the Confidentiality Agreement, each of the Seller Parties and the
Buyer will coordinate and cooperate fully with each other in exchanging such information
and providing such assistance as the other Party may reasonably request in connection with
the foregoing and in seeking the Governmental Consents. |
| (e) | Notwithstanding anything in this Agreement
to the contrary, (i) the Seller Parties will have no obligation to alter or in any way
change the composition of the Business, or otherwise agree to any modification to this Agreement
or any other Transaction Documents, and (ii) the Seller Parties will not be required
to request a Consent from any third party if such Consent is not material to the Business,
taken as a whole, and the Seller reasonably believes that such request would materially adversely
affect the Seller’s or any Seller Parties’ relationships with such third party
with respect to any of Seller’s or any of the other Seller Parties’ businesses
other than the Business. |
| (f) | Promptly after the date hereof, Parent
or the Seller will file, after consultation with and approval from Buyer, which approval
shall not be unreasonably withheld, one or more additional federal trademark applications
for the “X BULLET” Trademark (currently federal Reg. No. 1632289) with the
United States Patent and Trademark Office to take reasonable steps to ensure uninterrupted
registration for that Trademark. Parent or the Seller will also take all reasonable actions
and execute all documents reasonably required, after consultation with and approval from
Buyer, which approval shall not be unreasonably withheld whether before or after the Closing,
that may be reasonably necessary to confirm Barnes’ exclusive ownership of the Trademarks
“MATCHKING” (currently federal Reg. No. 1741187) and “SPORTS MASTER”
(currently federal Reg. No. 1741188) and to reasonably ensure uninterrupted federal
registration of such Trademarks. Parent will promptly, whether before or after the Closing,
provide Buyer with all filings and material correspondence with the United States Patent
and Trademark Office. In addition, neither Parent nor Seller will abandon, cancel, fail to
maintain or otherwise dispose of, any of the Companies’ Owned Intellectual Property
set forth on Schedule 3.11(b) of the Disclosure Schedules. |
| 5.2 | Conduct
of the Business. |
| (a) | From the date hereof until the Closing
Date, the Seller Parties will, and will cause the Companies to: |
| (i) | use commercially reasonable efforts to carry
on the Business of the Companies in the Ordinary Course and substantially in the same manner
as previously conducted, including its cash management practices; |
| (ii) | maintain, carry on and preserve intact
their current business organization and operations and maintain and preserve its assets,
relationships and goodwill with clients, employees vendors, and other key Persons with whom
the Companies have contractual or existing commercial relations in substantially the same
manner as such relationships existed immediately prior to the date of this Agreement, including
enforcing and not waiving any rights or wasting any assets; |
| (iii) | perform obligations under any Material
Contract to which any of them is a party or by which it is bound, including making all payment
obligations and commitments in the Ordinary Course, consistent with past practice; |
| (iv) | comply with applicable Laws; |
| (v) | notify the Buyer of any material changes
or developments in the Business of the Companies; |
| (viii) | not issue, sell, assign or pledge, or
authorize or propose the issuance, sale, assignment or pledge of (A) additional equity
interests of the Companies, or securities convertible into or exchangeable for any such Equity
Interests, or any rights, warrants or options to acquire any such equity interests or securities
convertible into or exchangeable for such equity interests or (B) any other securities
in respect of, in lieu of, or in substitution for equity interests of the Companies outstanding
on the date hereof; |
| (ix) | not adjust, reclassify, combine, split,
subdivide, redeem, purchase or otherwise acquire, directly or indirectly, any outstanding
equity interests of the Companies or make any other change with respect to its capital structure; |
| (x) | not declare, set aside or pay any non-cash
dividend or other non-cash distribution in respect of Equity Interests of the Companies; |
| (xi) | not adopt any amendment to, or otherwise
modify or amend, the organizational documents of the Companies or amend the terms of any
equity interests of the Companies; |
| (xii) | not incur, create, assume, guarantee or
otherwise become obligated with respect to any Indebtedness or incur, create or assume, or
permit the incurrence, creation or assumption of, any Lien on the assets or properties of
the Companies (including any material Companies’ Owned Intellectual Property), except
for Permitted Liens; |
| (xiii) | except as required by Law or the terms
of an Employee Benefit Plan in effect as of the date hereof, not (A) grant any increase
in or acceleration of the salaries or wages payable, or in the compensation or benefits provided
under any Employee Benefit Plan or otherwise, to any current or former employees or individual
service providers of the Companies, except for increases in the Ordinary Course for employees
or individual service providers of the Companies with annual base compensation of less than
$100,000, (B) amend, adopt, establish, agree to establish, enter into or terminate any
Employee Benefit Plan, (C) hire, promote, or engage any new employee or individual service
provider of the Companies with annual base compensation in excess of $100,000, or (D) terminate
the employment or engagement of any employee or individual service provider of the Companies
with annual base compensation in excess of $100,000 other than for “cause”; |
| (xiv) | not enter into any collective bargaining,
work council, or similar labor agreements; |
| (xv) | except in the Ordinary Course, not sell,
lease, license, transfer or otherwise dispose of, any of the property or assets of the Companies,
including any Companies’ Owned Intellectual Property; |
| (xvi) | not acquire, lease or license any Owned
Real Property; |
| (xvii) | not (A) make any loans, advances
or capital contributions, except advances for travel and other normal business expenses to
officers and employees in the Ordinary Course, or (B) waive, release or forgive any
loan or amount otherwise owed to the Companies; |
| (xviii) | not enter into, or become subject to,
any Contract that if entered into before the Effective Date would be a Material Contract
or materially amend, waive any material right under or voluntarily terminate any Material
Contract (in each case, other than (A) terminations of Contracts as a result of the
expiration of the term of such Contracts or the default or breach of any counterparty thereto,
(B) renewals of Contracts in the Ordinary Course and (C) purchase orders for the
sales of inventory and purchase of supplies in the Ordinary Course); |
| (xix) | not acquire any business or material asset
of any other Person, by merger or consolidation, purchase of substantial assets or equity
interests, or by any other manner, in a single transaction or a series of related transactions; |
| (xx) | not adopt a plan of complete or partial
liquidation, dissolution, restructuring or recapitalization; |
| (xxi) | not merge, combine or consolidate with
any Person; |
| (xxii) | not (i) make, change, revoke or
rescind any material election relating to Taxes, including any entity classification election
for U.S. federal income tax purposes, (ii) make any material amendment with respect
to any material Tax Return, (iii) agree to an extension or waiver of the statute of
limitations with respect to the assessment of any material Tax, (iv) settle or compromise
any material Tax liability, (v) execute any closing agreement relating to a material
amount of Tax with any Governmental Authority or (vi) surrender any right to claim a
material Tax refund, except, in each case, for actions required by Law; |
| (xxiii) | not cancel, modify or reduce any insurance
coverage other than with respect to any Employee Benefit Plan in the Ordinary Course; and |
| (xxiv) | not settle, compromise, waive or release
any Proceeding. |
| (b) | Notwithstanding anything to the contrary
contained herein, nothing contained in this Agreement will give the Buyer, directly or indirectly,
rights to control or direct the business or operations of Seller prior to the Closing. Prior
to the Closing, Seller will exercise, consistent with the terms and conditions of this Agreement,
control of its businesses and operations. |
| 5.3 | Access
to Information. |
| (a) | From the date of this Agreement, each
of Parent and Seller will provide the Buyer and its Representatives reasonable access to
the properties, books and records and management of the Companies with respect to the transactions
contemplated by this Agreement. Each of Parent and Seller agrees to furnish, or cause the
Companies to furnish, the Buyer with such financial and operational data and other information
with respect to the Business and the assets of the Companies as the Buyer may from time to
time reasonably request. Any information made available to the Buyer or its Representatives
in accordance with this Section 5.3(a) will be subject to the terms of the
Confidentiality Agreement, and such information will be held by the Buyer and its Representatives
in accordance with the terms of the Confidentiality Agreement. For the seven-year period
from and after the Closing Date, subject to Section 5.4(c), Buyer will, and will
cause its Affiliates to, upon reasonable notice by Seller or its Affiliates to Buyer, (i) provide
to Seller and its Affiliates and their respective Representatives reasonable access during
reasonable working hours to properties, information, data, books, records, employees and
auditors of the Companies with respect to matters that occurred before Closing for purposes
of preparing tax returns, handling tax audits, financial reporting and compliance with laws
or regulators, (ii) permit Seller and its Affiliates and their respective Representatives
to make such copies and inspections of any such information, data, books, and records as
any of them may reasonably request during reasonable hours to the extent reasonably required
by Seller, and at Seller’s expense, (iii) make reasonably available to Seller
and its Affiliates and their respective Representatives, the officers, employees and other
Representatives of the Companies and to provide reasonable assistance and cooperation in
the review of information described in this Section 5.3(a), and (iv) cooperate
with Seller and its respective Affiliate and its respective Representatives to the extent
reasonably necessary or appropriate in connection with any Proceeding arising out of the
Business, in each case other than with respect to any Proceeding involving disputes (y) between
Buyer or any other Indemnified Party, on the one hand, and Seller or Parent, on the other
hand or (z) for which Buyer or any other Indemnified Party seeks indemnification hereunder. |
| (b) | Notwithstanding anything to the contrary
in Section 5.3(a), (i) access and inspection rights pursuant to Section 5.3(a) will
be exercised in such manner as not to interfere unreasonably with the conduct of the Business
or any other business of the Party granting such access, (ii) the Party granting access
may withhold any document (or portions thereof) or information (A) that is subject to
the terms of a non-disclosure agreement with a third party, (B) that may constitute
privileged attorney-client communications or attorney work product and the transfer of which,
or the provision of access to which, as reasonably determined in writing by such Party’s
counsel, constitutes a waiver of any such privilege or (C) if the provision of access
to such document (or portion thereof) or information, as reasonably determined in writing
by such Party’s counsel, would reasonably be expected to conflict with applicable Laws
or agreements with Governmental Authorities, (iii) no Party or any of its Affiliates
or their respective Representatives will have any obligation to provide the other Party,
its Affiliates or their respective Representatives access to any personnel records of such
Party relating to individual performance or evaluation records, medical histories, or other
information in personnel records to the extent that providing such access would constitute
a breach of Law and (iv) the Party requesting access or cooperation pursuant to Section 5.3(a) will
reimburse the other Party promptly for all reasonable and documented out-of-pocket costs
and expenses incurred by the other Party in connection with any such request made after the
Closing. |
| 5.4 | Confidentiality;
Books and Records. |
| (a) | The Confidentiality Agreement will automatically
terminate as of the Closing. |
| (b) | From and after the Closing, (i) the
Seller Parties will, and will cause their respective Affiliates and Representatives to, maintain
in confidence (and therefore not disclose or use) any written, oral or other information
belonging or relating to either Company obtained prior to the Closing or after Closing pursuant
to the access, inspection and cooperation provisions in Section 5.3(a) and
(ii) Buyer will, and will cause its Affiliates and Representatives to, maintain in confidence
any non-public written, oral or other information of or relating to Seller or its Affiliates
(other than the Companies) obtained by Buyer from Sellers or its Affiliates prior to Closing,
except, in each case, to the extent that the applicable Party is required to disclose such
information by judicial or administrative process or pursuant to applicable Law or such information
is in the public domain through no fault or breach of the applicable Party or its Affiliates
or Representatives. |
| (c) | Subject to Section 5.4(a) and
Section 5.4(b), for the seven-year period beginning on the Closing Date, Buyer
agrees to apply preservation and retention policies with respect to the Companies’
pre-Closing tax-related books and records that are no less stringent in the aggregate than
those generally applied by Buyer to its own books and records, provided the same shall be
no less than a reasonable degree of care, and provide access to such books and records as
provided in Section 5.4(b). |
| (d) | Prior to the Closing, the Buyer will not
communicate with the employees, suppliers and customers of Seller, Parent, the Companies,
or the Business with respect to this Agreement and the Transaction without first obtaining
the prior consent of the Seller, which consent may require that the communication be undertaken
jointly with the Seller. |
| 5.5 | Restrictive
Covenants. The Parties agree that Buyer is relying on the covenants and agreements
set forth in this Section 5.5, that without such covenants Buyer would not enter
into this Agreement or consummate the Transaction and that the purchase price is sufficient
consideration to make the covenants and agreements set forth herein enforceable. |
| (a) | Non-Competition by Parent. During
the Restriction Period, Parent will not, directly or indirectly, and will cause its Subsidiaries
not to, directly or indirectly, as an employee, employer, consultant, agent, principal, partner,
stockholder, officer, director, investor, lender, financier or broker, or in any other individual
or representative capacity, engage or participate or plan or prepare to engage or participate
in the Business or assist any Person in engaging or participating or planning or preparing
to engage or participate in the Business, in each case in the United States of America, Europe,
Mexico, Canada or any other geographic area where the Companies (directly or through OEMs)
are engaging in the Business immediately prior to the Closing or in which the Products are
marketed immediately prior to the Closing or through the investment of capital, lending of
money or property, rendering of services or capital, or otherwise, in any enterprise engaging
in a business competitive with the Business or otherwise compete with the Companies; provided,
however, that nothing in this Section 5.5(a) will prohibit
Parent and/or its Subsidiaries from owning five percent (5%) or less of the stock of any
Person listed on a national securities exchange or traded in the over-the-counter market. |
| (b) | Non-Solicitation by Parent. During the Restriction Period, Parent will not, directly or
indirectly, and will cause its Subsidiaries not to, directly or indirectly, (i) hire, recruit or solicit any officers,
directors, senior executives or other employees of the Companies to become employed or engaged by any other Person or to terminate
any such Person’s employment or consulting relationship with Buyer or, after the Closing, the Companies; provided, however, that
the foregoing will not prohibit (x) any general advertisements or solicitations of employment by Parent or its Subsidiaries not
specifically directed to officers, managers, employees or contractors of the Companies, Buyer or their respective Affiliates or
(y) recruiting, soliciting or hiring any such Person that is no longer employed by the Buyer, the Companies or their respective
Affiliates and has not been so employed for at least twelve (12) months, or (ii) (a) solicit any existing customers of the
Companies for purchases of products, information, or services that are within the scope of the Business, (b) divert or attempt
to divert any business, supplier, account or customer of the Companies (or otherwise cause such business, supplier, account or
customer to curtail, reduce or terminate their business relationship with the Companies) or (c) take any other action that is
reasonable likely to cause injury to the relationship between the Companies and their respective employees, customers, accounts,
suppliers or other business associates. |
| (c) | Blue-Pencil. If any court of competent
jurisdiction will, at any time, deem the term of any particular restrictive covenant contained
in this Section 5.5 too lengthy or the scope too broad, the other provisions
of this Section 5.5 will nevertheless stand, and the covenant, as determined
by a court of competent jurisdiction, will be deemed reformed such that the term will be
deemed to be the longest period permissible by Law under the circumstances and the scope
will be as broad as permissible by Law under the circumstances. The court of competent jurisdiction
in each case will reduce the term and/or scope covered to permissible duration or breadth. |
| (d) | Remedies. Parent represents that
it is familiar with the covenants not to compete or solicit contained herein and is fully
aware of its obligations hereunder. Parent further agrees that the length of time and scope
are reasonable given the benefits it has received hereunder. Parent further acknowledges
and agrees that the covenants set forth in this Section 5.5 are necessary for
the protection of Buyer’s business interests, including the goodwill and confidential
information being transferred by reason of the Transaction, that irreparable injury may result
to Buyer if Parent breaches any of the terms of this Section 5.5, and that in
the event of an actual or threatened breach by Parent of any of the provisions contained
in this Section 5.5, Buyer will have no adequate remedy at Law. Parent accordingly
agrees that in the event of any actual or threatened breach by Parent of any of the provisions
contained in this Section 5.5, Buyer will be entitled to seek injunctive and
other equitable relief, and Parent further agrees to waive any requirement for the posting
of any bond or other security in connection with such remedy. Such remedy will not be deemed
to be the exclusive remedy for breach of the provisions contained in this Section 5.5
but will be in addition to all other remedies available at law or in equity to Buyer.
Nothing contained herein will be construed as prohibiting Buyer from pursuing any other remedies
available to it for such breach or threatened breach, including the recovery of any damages
that it is able to prove. Parent will be liable for any breach by its Subsidiaries of this
Section 5.5. |
| (a) | Books and Records; Cooperation.
Buyer and Seller will, and will cause their respective Representatives to, (i) provide
the other Party and its Representatives with such assistance as may be reasonably requested
in connection with the preparation of any Tax Return or any audit or other examination by
any Taxing Authority or Proceeding relating to Taxes with respect to the Companies and (ii) retain
(until the expiration of the statute of limitations of the taxable periods to which the Tax
Returns relate), and provide the other Party and its Representatives with reasonable access
to, all records or information that may be relevant to such Tax Return (including analysis
regarding any Tax refunds or Tax benefits), audit, examination or proceeding, provided,
that, the foregoing will be done at the expense of the Party making such request and
in a manner so as not to interfere unreasonably with the conduct of the business of the Parties. |
| (b) | Tax Returns. Seller will prepare,
or cause to be prepared, all Tax Returns for any affiliated, consolidated, combined or unitary
groups of which any of the Companies are members along with Seller or any of its Affiliates
(other than the Companies) (the “Affiliated Group Tax Returns”). With
regard to Tax Returns for the Companies other than the Affiliated Group Tax Returns, (i) Seller
will prepare, or cause to be prepared, all Tax Returns for any Pre-Closing Tax Period (the
“Pre-Closing Tax Returns”) and (ii) Buyer will prepare, or cause
to be prepared, all Tax Returns for any Straddle Period (the “Straddle Period Tax
Returns”). Except as required by applicable Law and except for changes required
due to the Section 336(e) Election, any such Pre-Closing Tax Returns or Straddle
Period Tax Returns will be prepared consistent with the past practices of the Companies.
Not less than twenty (20) days prior to the due date of any Pre-Closing Tax Return due after
the Closing Date or any Straddle Period Tax Return that is prepared pursuant to this Section 5.6(b),
a copy of the Pre-Closing Tax Return or Straddle Period Tax Return proposed to be filed will
be delivered to Buyer or Seller, as applicable, for its review, comment and approval (which
approval will not be unreasonably withheld, conditioned or delayed). Seller shall pay, or
cause to be paid, to Buyer within five (5) days after the date on which Taxes are paid
with respect to a Straddle Period an amount equal to the portion of such Taxes, if any, which
relates to the portion of such Tax period ending on the Closing Date, after taking into account,
and without duplication of, any Taxes that were included in Closing Indebtedness or Closing
Working Capital. |
| (c) | Straddle Period. For all purposes
of this Agreement, in the case of any Straddle Period, the amount of any Taxes of any of
the Companies not based upon or measured by income or gain, proceeds, receipts, activities,
or transactions for the Pre-Closing Tax Period portion of such Straddle Period, will be deemed
to be the amount of such Tax for the entire taxable period multiplied by a fraction, the
numerator of which is the number of days in the taxable period ending on the Closing Date
and the denominator of which is the number of days in such Straddle Period. The amount of
any other Taxes for a Straddle Period that relate to the Pre-Closing Tax Period will be determined
based on an interim closing of the books as of the end of the Closing Date; provided,
however, that any item determined on an annual or periodic basis (such as deductions
for depreciation or real estate Taxes, other than with respect to depreciation or amortization
deductions attributable to property placed in service following the Closing Date or arising
in connection with the transactions contemplated by this Agreement) will be apportioned on
a daily basis. For the avoidance of doubt, all Taxes that would not have been imposed but
for the Section 336(e) Election will be allocated to the Pre-Closing Tax Period. |
| (d) | Transfer Taxes. All transfer, documentary,
sales, use, stamp, registration, value added and other similar Taxes (including any penalties
and interest) imposed in connection with the Transaction (excluding any income Taxes, however
denominated) (“Transfer Taxes”) will be borne and paid equally by the Buyer,
on the one hand, and the Seller, on the other hand, including, without limitation, any Transfer
Taxes attributable to the deemed sale or transfer of the Real Property, if any. |
| (e) | Tax Reporting. Seller will not
report on any Tax Return a deemed payment to the Buyer or deduction in connection with the
transactions contemplated by this Agreement, including under James M. Pierce Corp. v.
Comm., 326 F.2d 67 (8th Cir. 1964), Rev. Rul. 68-112, 1968-1 CB 62, or any similar authority,
with respect to any prepaid amount received by the Companies, the Seller or its Affiliates
on or prior to the Closing Date with respect to the Business or any assets of the Companies
that has been deferred pursuant to Section 451 of the Code or the Treasury Regulations
promulgated thereunder. |
| (f) | Tax Refunds. Seller will be entitled
to all Tax refunds and credits in lieu of a Tax refund (and any interest thereon but net
of any cost to Buyer and its Affiliates attributable to the obtaining and receipt of such
refund) of the Companies relating to any Pre-Closing Tax Period, including the portion of
a Straddle Period ending on and including the Closing Date, which refund is actually received
by Buyer after the Closing Date, except to the extent, if any, that such refund or credit
is included in the Closing Statement. Any such Tax refunds or credits received after the
Closing by Buyer or any of its Affiliates (including the Companies) will be remitted by Buyer
to Seller within five (5) Business Days of the receipt of such refund or credit. |
| (g) | Post-Closing Actions. Except as
required by applicable law, after the Closing, without the prior written consent of Seller,
which consent will not be unreasonably withheld, conditioned or delayed, Buyer will not,
and will not permit any of its Affiliates (including the Companies) to, (i) re-file,
amend or otherwise modify any Tax Return of the Companies for any Pre-Closing Tax Period
or (ii) voluntarily approach any Taxing Authority regarding any Taxes or Tax Returns
of any of the Companies for any Pre-Closing Tax Period. |
| (h) | Tax Contests. After the Closing, Buyer will promptly notify Seller in writing upon the
commencement of any Tax audit, suit, action or proceeding (each, a “Tax Contest”) involving one or more of the
Companies, with respect to a tax period closing on or before the Closing Date or a Straddle Period. Seller will have the right to
control the defense of a Tax Contest for a tax period closing on or before the Closing Date, which control will include, subject to
the immediately following sentence, the right to settle, compromise or concede such Tax Contest and the right to employ counsel of
its choice at its expense, provided, however, that Seller will keep Buyer apprised of developments relating to
such Tax Contest, will provide Buyer with copies of all correspondence from any Taxing Authority relating to such Tax Contest, and
will conduct the defense of such Tax Contest diligently and in good faith. Seller will not settle, compromise or concede a Tax
Contest to the extent it would adversely affect the Tax liability of Buyer or any of the Companies for any tax period beginning
after the Closing Date without the prior consent of Buyer, which consent will not be unreasonably withheld, conditioned or delayed.
Buyer will have the right to control the defense of a Tax Contest for a Straddle Period, which control will include, subject to the
immediately following sentence, the right to settle, compromise or concede such Tax Contest and the right to employ counsel of its
choice at its expense, provided, however, that Buyer will keep Seller apprised of developments relating to such
Tax Contest, will provide Seller with copies of all correspondence from any Taxing Authority relating to such Tax Contest, and will
conduct the defense of such Tax Contest diligently and in good faith. Buyer will not settle, compromise or concede such a Tax
Contest without the prior consent of Seller, which consent will not be unreasonably withheld, conditioned or delayed. Seller will
have the right to participate in the defense of any such Tax Contest and to employ counsel of its choice at its expense. |
| (i) | The consideration paid for the Sierra Interest
(including the amount of any assumed liabilities of the Companies for U.S. federal income
tax purposes and any other amounts treated as consideration in the transactions contemplated
herein for U.S. federal income Tax purposes) will be allocated among the assets of the Companies
in accordance with the principles of Sections 336 and 1060 of the Code and the Treasury Regulations
promulgated thereunder and based on fair market value unless another allocation methodology
is required by the Code. |
| (ii) | Within 30 days after the Determination
Date, Buyer shall prepare and deliver to Seller a statement (the “Final Allocation
Statement”) reflecting the allocation of the Closing Date Purchase Price, based
on the Initial Allocation Statement and adjusted to reflect assumed liabilities and other
amounts deemed paid by Buyer for federal income Tax purposes, among the assets of the Companies.
Within 30 days following the receipt by Seller of the Final Allocation Statement, Seller
shall review and submit to Buyer in writing any objections or proposed changes to the Final
Allocation Statement (an “Objections Notice”). Unless Seller submits an
Objections Notice on or before the expiration of such 30 day period, the Final Allocation
Statement prepared and delivered to Seller pursuant to this Section 5.6(i) shall
be deemed agreed upon by the Parties and shall be deemed conclusive. In the event that Seller
submits an Objection Notice, the dispute resolution provisions of Section 1.4
shall apply. |
| (j) | Election Under Section 336(e).
Seller and Buyer hereby agree to make, or cause to be made, a timely and effective joint
election under Section 336(e) of the Code and under any applicable similar provisions
of state or local law for each of Sierra and Barnes in connection with the purchase of the
Sierra Interest (all such elections being referred to collectively as the “Section 336(e) Election”).
To facilitate such Section 336(e) Election, Buyer shall prepare Internal Revenue
Service Form 8883, required schedules thereto, a Section 336(e) Election statement
that includes all the information set forth in Treasury Regulations Section 1.336-2(h) and
any similar forms necessary to effectuate the Section 336(e) Election under applicable
state and local laws (collectively, the “Section 336(e) Election Forms”).
Parent and Seller shall cooperate with Buyer in the preparation of the Section 336(e) Election
Forms and shall deliver duly completed, executed copies thereof on the Closing Date. Buyer
and Seller shall cooperate with each other and take all actions necessary and appropriate
(including filing such additional forms, Tax Returns, elections, schedules, and other documents
as may be required) to effect and preserve the Section 336(e) Election in accordance
with Section 336 of the Code and the Treasury Regulations thereunder and comparable
provisions of applicable state and local Tax laws and shall take no action inconsistent therewith
except to the extent required pursuant to a “determination” as defined in Section 1313(a) of
the Code or any similar provision of any state, foreign or local law. |
| (a) | Employment Terms and Benefits.
With respect to the employees who are employed by the Companies as of the Closing Date (the
“Continuing Employees”), for a period extending until the earlier of the
termination of a Continuing Employee’s employment by the Buyer or its Affiliates or
one (1) year following the Closing Date (or, with respect to continuation of bonus or
commission opportunity, until the end of calendar 2023), Buyer agrees that each Continuing
Employee will be provided with compensation and benefits that are substantially comparable
in the aggregate to the compensation and benefits provided to each such Continuing Employee
immediately prior to the Closing Date (assuming the Companies do not have, and therefore
excluding, defined benefit pension, retiree medical, deferred compensation, severance, and
equity or equity-based compensation benefits); provided, that Buyer will only
be obligated to provide such compensation and benefits to the extent Buyer has received copies
of the Employee Benefit Plans pursuant to which such compensation and benefits are provided
in accordance with Section 3.13(a). Nothing in this Agreement will change the
“at-will” status of any at-will employee or otherwise require Buyer or the Companies
to continue to employ any particular employee of the Companies following the Closing Date. |
| (b) | Service Credit. Buyer will take
commercially reasonable efforts to ensure that, as of the Closing Date, each Continuing Employee
receives full credit (for all purposes, including eligibility to participate, vesting, vacation
entitlement and severance benefits, but excluding benefit accrual under any defined-benefit
pension plan), for service with Seller, the Companies or any Affiliates (or predecessor employers
to the extent such past service credit is provided under the applicable Employee Benefit
Plans) under each of the comparable employee benefit plans of the Companies, Buyer or its
Affiliates in which such Continuing Employee becomes a participant; provided, however,
that no such service recognition will result in any duplication of benefits. As of
the Closing Date, Buyer or its Affiliates will assume the amount of vacation time that each
Continuing Employee had accrued under any applicable employee benefit plan as of the Closing
Date. With respect to each health or welfare benefit plan maintained by Buyer or its Affiliates
for the benefit of any Continuing Employee, Buyer will use commercially reasonable efforts
to (i) cause to be waived any eligibility waiting periods, any evidence of insurability
requirements and the application of any pre-existing condition limitations under such plan
and (ii) cause each Continuing Employee to be given credit under such plan for all amounts
paid by such Continuing Employee under any similar employee benefit plan for the plan year
that includes the Closing Date for purposes of applying deductibles, co-payments and out-of-pocket
maximums as though such amounts had been paid in accordance with the terms and conditions
of the applicable plan maintained by the Companies, Buyer or its Affiliates for the plan
year in which the Closing Date occurs. |
| (c) | COBRA. Buyer or its Affiliates
will bear and be responsible for all liabilities and obligations to provide any former employees
of the Companies or any Continuing Employees who terminate employment after the Closing Date
with COBRA continuation coverage in accordance with the requirements of Section 4980B
of the Code and any applicable state Law. |
| (d) | Sick Pay and Disability. The Buyer
shall be solely responsible for sick pay and disability (whether long-term or short-term)
coverage of all Continuing Employees on and after the Closing, even if the incident or circumstance
giving rise to such coverage occurred prior to the Closing, provided the employee is not
demonstrated to be in the short-term disability elimination period on the Closing. |
| (e) | Seller Plans. Except for the Assumed
Plans listed in Section 5.7(e) of the Disclosure Schedule, effective as
of the Closing Date, the Companies will cease to be participating employers in any Employee
Benefit Plans sponsored by Seller, and the Continuing Employees will have no further rights
to participate in such Employee Benefit Plans as active employees after the Closing Date.
Buyer and its Affiliates will have no liability under any such Employee Benefit Plans sponsored
by Seller, are not adopting, assuming or maintaining any Employee Benefit Plan sponsored
by Seller and will be indemnified and held harmless by Seller against and in respect of any
and all Losses arising out of the Employee Benefit Plans sponsored by Seller. |
| (f) | WARN Act. The Buyer will be responsible
for all Liabilities under the WARN Act resulting from or arising after the Closing. The Buyer
agrees that it will be solely responsible for any Liabilities created if either the Buyer
or its Affiliates take any action that will cause the notice provision of any such Law to
become applicable. |
| (g) | Third Party Beneficiaries. Without limiting the generality of Section 10.15, the
undersigned acknowledge and agree that all provisions contained in this Section 5.7, are included for the sole benefit
of the Seller Parties, the Buyer and their respective Affiliates, and that nothing in this Section 5.7, whether express
or implied, will create any third party beneficiary or other rights in any other Person, including any Continuing Employee or any
other employee, former employee, or participant in any employee benefit plan or compensation arrangement (or any spouse, dependent
or other beneficiary thereof), of the Seller Parties, the Buyer or their respective Affiliates, except as otherwise provided in Section 5.8
or Section 10.15. |
| (h) | Miscellaneous. Nothing contained
in this Agreement, whether express or implied, will (i) be treated as an amendment of
any Employee Benefit Plan or other benefit plan maintained by Seller, Buyer or any of their
respective Affiliates, or will be construed to prohibit Seller, Buyer or any of their respective
Affiliates from amending or terminating any such Employee Benefit Plan or other benefit plan,
(ii) except as expressly provided herein or under applicable Law, limit the right of
Seller, Buyer or any of their respective Affiliates to terminate, or cause to terminate,
the employment of any Person, (iii) except as expressly provided herein or under applicable
Law, obligate the Buyer or any of its Affiliates to (a) maintain any particular benefit
plan or compensation arrangement or (b) retain the employment, or terms of employment,
of any particular employee, after the Closing. |
| 5.8 | Directors’
and Officers’ Protection. |
| (a) | Buyer will cause the Companies to assume,
and the Companies hereby assume the obligations with respect to all rights to indemnification
and exculpation from liabilities for acts or omissions occurring at or prior to the Closing
Date in favor of the members of Sierra and the current or former directors, managers, officers
or other employees or agents of the Companies currently indemnified by any one or both of
the Companies (collectively, the “Covered Persons”) as provided in the
Governing Documents of the Companies as in effect immediately prior to the Closing, and such
obligations will survive the consummation of the Transaction and will continue in full force
and effect in accordance with their terms for not less than six (6) years from the Closing
Date. Notwithstanding anything to the contrary otherwise herein provided, for a period of
six (6) years after the Closing Date, Buyer and its Affiliates will not, and will not
permit any one or both of the Companies, to make any amendments, modifications, or terminations
to the Governing Documents of Sierra and/or Barnes, in each case related to matters associated
with indemnification or the limited liability of directors and officers whatsoever. This
Section 5.8 is (i) intended to be for the benefit of, and will be enforceable
by, each Covered Person and such Covered Person’s heirs, legatees, representatives,
successors and assigns, it being expressly agreed that such Covered Persons will be third
party beneficiaries of this Section 5.8, and (ii) in addition to, and not
in substitution for, any other rights to indemnification or contribution that any such Covered
Person may have by contract or otherwise as set forth on Section 5.8 of the Disclosure
Schedule. |
| (b) | If all or substantially all of the business
or assets of the Companies are sold, whether by merger, consolidation, sale of assets or
securities or otherwise, in one transaction or a series of transactions, then Buyer and the
Companies will, and in each such case, cause their respective successors and assigns to assume
the obligations set forth in this Section 5.8. This Section 5.8 will
apply to all such successors and assigns. |
| 5.9 | Insurance
Coverage. The Buyer is aware that the Business is covered by group insurance policies
and that following the Closing the Buyer will put in place certain new policies. The Parties
will reasonably cooperate, at Buyer’s sole cost, to facilitate Buyer’s efforts
to put such new policies in place as of the Closing. In addition to new policies that the
Buyer will put in place at or following closing, the Companies are named insured or additional
insured under all of the Schedule Insurance Policies that are occurrence-based (the “Occurrence-Based
Policies”) and have the right to make claims thereunder after the Closing to the
same extent as before the Closing. Accordingly, at all times after Closing, Parent and the
Seller will, and Parent and the Seller will cause their Affiliates (other than the Companies
which will not be Affiliates thereof after Closing) and successors to: (a) not terminate
or amend the terms of any such policy in a manner that is adverse to the Companies’
coverage thereunder or take any other action (other than filing claims) that would adversely
affect the Companies’ coverage thereunder and (b) take such action as is necessary
or reasonably requested by the Companies, if any, to enable the Companies to make claims
under such policies to the same extent as they could have before the Closing. |
| 5.10 | Publicity.
The initial press release with respect to the execution of this Agreement will be a joint
press release to be reasonably agreed upon by the Parties. Except for such initial press
release, from the date hereof and through the Closing Date, neither the Parent, Seller, nor
the Buyer will release, generate or permit any publicity concerning this Agreement or the
Transaction or otherwise announce or disclose to a third party any matter relating to this
Agreement or the Transaction (except in connection with obtaining requisite consents) without
the prior express written consent of the other Parties, which consent will not be unreasonably
withheld, delayed or conditioned. The restrictions in the immediately preceding sentence
will not restrict disclosures to the extent (i) necessary for a Party to perform this
Agreement (including disclosures to Governmental Authorities or third parties holding preferential
rights, rights of consent or other rights that may be applicable to the transactions contemplated
by this Agreement, in each case on the reasonable advice of counsel, and as reasonably necessary
to provide notices, seek waivers, amendments or termination of such rights, or seek such
consents), (ii) required (upon advice of counsel) by applicable securities or other
Laws or regulations having jurisdiction over the Parties or their respective Affiliates,
or (iii) consistent with prior press releases or other public announcements made in
compliance with this Section 5.10; provided, in each case, that such Party uses
reasonable best efforts to afford the other Parties an opportunity to first review the content
of the proposed disclosure and provide comments thereon, which such Party will consider in
good faith. |
| 5.11 | Cooperation
in Litigation. For a period of one (1) year after the Closing, each Party will
reasonably cooperate with the other in the defense or prosecution of any Action which has
been or may be instituted hereafter against or by such Party relating to or arising out of
the conduct of the Business prior to the Closing (other than litigation arising out of the
Transaction), and the Party requesting such cooperation will pay the reasonable expenses
(including reasonable legal fees and disbursements) of the Party providing such cooperation
and of its officers, directors, employees and agents reasonably incurred in connection with
providing such cooperation. |
| (a) | From the date of this Agreement until
the earlier of the Closing or the termination of this Agreement, (i) the Seller Parties
will not (and will cause their respective Affiliates and Representatives not to), directly
or indirectly, take any action to consummate or pursue or to knowingly encourage, facilitate,
solicit or initiate or continue any discussions or negotiations with, or provide any information
or documentation to, any Person (other than the Buyer and its Affiliates and Representatives)
concerning the Companies or the Business in furtherance of, or that would reasonably be expected
to lead to, an Acquisition Proposal, or approve, endorse, recommend, execute or enter into
a confidentiality agreement, letter of intent, memorandum of understanding, agreement in
principle, purchase agreement, merger agreement, joint venture agreement or other similar
agreement with respect to any Acquisition Proposal with any Person, firm or corporation other
than the Buyer and (ii) the Seller Parties will notify the Buyer in writing of the existence
of any proposal, discussion, negotiation or inquiry received after the date of this Agreement
by the Seller Parties with respect to any Acquisition Proposal, including the terms of such
proposal, discussion, negotiation of inquiry (and a copy thereof, if written) and the identity
of the Person making such proposal or inquiry or engaging in such discussions or negotiations. |
| (b) | The
Seller Parties shall, and will cause their respective Affiliates and Representatives to,
(i) cease and cause to be terminated any existing discussions, communications or negotiations
with any Person (other than the Buyer and its Affiliates and Representatives) conducted heretofore
with respect to any Acquisition Proposal, (ii) terminate any access for any such Persons
to any data room established by the Seller or its Representatives in connection with the
process for the transactions contemplated by this Agreement or any other proposed strategic
transaction involving the Companies and (iii) request that any such Persons destroy
or return any confidential information regarding the Companies or the Business in accordance
with the terms of any applicable confidentiality agreements between the Seller and/or a Company,
on the one hand, and any such Persons, on the other hand. |
| 5.13 | Directors
and Officers of the Companies. From the date hereof until the Closing, the Seller
will promptly (and in any event, within two (2) Business Days of such change) notify
the Buyer upon any change to the membership of the directors, officers and plant managers
of the Companies (including, for the avoidance of doubt, the resignation, death, removal,
appointment or election of any director, manager or officer of a Company). |
| 5.14 | Termination
of Related Party Arrangements. Except for any Related Party Arrangement set forth
on Section 5.14 of the Disclosure Schedule, on or before the Closing Date, the
Seller will terminate each Related Party Arrangement in a manner that results in no further
liability or obligation to the Buyer or the Companies, in each case, pursuant to a termination
agreement (or similar agreement) in form and substance reasonably satisfactory to the Buyer. |
| 5.15 | Lender
Release Letters. The Seller will, at least three Business Days prior to the Closing
Date, deliver to the Buyer a letter, agreement or other documentation, in form and substance
reasonably satisfactory to the Buyer (collectively, the “Lender Release Letters”),
together with other releases, instruments of discharge (including, without limitation, mortgage
releases, UCC-3 termination statements, intellectual property security agreement releases,
collateral access agreement terminations and deposit account control agreement terminations),
that (a) fully releases as of the Closing the Companies from any obligation or liability
with respect to any Indebtedness of a Company, Parent, Seller or their respective Affiliates
and (b) as of the Closing, releases all Liens against the Seller Interest and all assets
of each Company (including the Barnes Interest). |
Article 6
INDEMNIFICATION
| 6.1 | Indemnification
by the Seller and the Parent. Subject to the terms and conditions set forth in this
Article 6, following the Closing the Seller and Parent will jointly and severally
indemnify, defend and hold harmless the Buyer and its Affiliates and their respective officers,
directors and employees (collectively, the “Buyer Indemnified Persons”)
from and against, and will reimburse the Buyer Indemnified Persons for, all Damages actually
sustained, incurred or suffered by any Buyer Indemnified Person to the extent resulting from,
arising out of, or relating to: (a) any breach of any representation or warranty of
Parent and Seller contained in Article 2 and Article 3; (b) any
breach or failure by Seller to perform any of its covenants or obligations contained in this
Agreement; and (c) any Pre-Closing Taxes. |
| 6.2 | Indemnification
by the Buyer. Subject to the terms and conditions set forth in this Article 6,
following the Closing the Buyer will indemnify, defend and hold harmless Parent, Seller,
and their respective Affiliates and their respective officers, directors and employees (collectively,
the “Seller Indemnified Persons”) from and against, and will reimburse
the Seller Indemnified Persons for, all Damages actually sustained, incurred or suffered
by any Seller Indemnified Person to the extent resulting from, arising out of, or relating
to: (a) any breach of any representation or warranty of the Buyer contained in Article 4;
(b) any breach or failure by the Buyer to perform any of its covenants or obligations
contained in this Agreement; and (c) the Business after the Closing, including the possession,
use, operation and management of the Companies after the Closing; provided, this clause
(c) will not apply to any matter described in Section 6.1. |
| 6.4 | Matters
Involving Third Parties, Etc. Except with respect to claims for indemnification for
breach of a representation or warranty by Seller that is not a Seller Parties’ Fundamental
Representation: |
| (a) | If
any legal proceeding is instituted or any claim or demand is made by a third-party that is
not an Affiliate of any Party (a “Third Party Claim”) against an Indemnified
Party that (if prosecuted successfully) would be a matter for which such Indemnified Party
is entitled to indemnification under this Article 6, and a claim for indemnification
under this Article 6 (an “Indemnification Claim”) is to be
made against the Party from which indemnification is sought, such Indemnified Party will
give prompt written notice to such Indemnitor (but in no event more than 30 days following
the determination that any matter has or could reasonably be expected to give rise to a right
of indemnification under this Agreement) requesting such indemnification and specifying in
reasonable detail, to the extent then known, the basis on which indemnification is sought.
Such notice will contain or be accompanied by such other material information as such Indemnified
Party will have concerning the Third Party Claim. The failure or delay in notifying the Indemnitor
will not affect the indemnification obligations hereunder unless (and only to the extent
that) such failure or delay in notifying materially prejudices the Indemnitor as a result
thereof. The Indemnified Party will promptly deliver to the Indemnitor copies of all material
notices and documents (including court papers) received by such Indemnified Party relating
to any such Third Party Claim. |
| (b) | If
a Third Party Claim is made or commenced and an Indemnification Claim is made with respect
thereto, the Indemnitor will have the right, upon giving written notice to the Indemnified
Party, to participate in the defense of such claim (to the extent permissible under Law)
or to assume the defense of such Third Party Claim through an attorney selected by the Indemnitor;
provided that, if the Indemnitor elects to assume the defense of a Third Party Claim,
the Indemnitor will not be liable to the Indemnified Party for any legal or other expenses
subsequently incurred by such Indemnified Party in connection with such defense (other than
reasonable out-of-pocket costs of investigation) so long as such defense is diligently prosecuted.
Election of the Indemnitor to defend a Third Party Claim will not be construed to be an admission
as to liability for indemnification hereunder; provided, however, that
the Indemnitor will not have the right to assume or continue the defense of such Third Party
Claim if such Third Party Claim: (i) involves a material customer, supplier, vendor
or other commercial relation and, in the reasonable opinion of the Indemnified Party, the
Third Party Claim is reasonably likely to have a material adverse effect on its business
relationship with such third party, (ii) principally seeks an injunction or other equitable
relief against the Indemnified Party, (iii) relates to a criminal or quasi-criminal
Action, indictment, allegation or investigation against an Indemnified Party, (iv) the
Indemnified Party has been advised by counsel that (A) a reasonable likelihood exists
of a conflict of interest between the Indemnitor and the Indemnified Party or (B) there
are legal defenses available to the Indemnified Party that are different from or additional
to those available to the Indemnitor or (v) the Indemnitor has failed or is failing
to diligently prosecute or defend such Third Party Claim; provided that
the Indemnitor will have the right to participate in the defense of the Third Party Claim
at its sole cost and expense. |
| (c) | If
the Indemnitor elects to assume the defense of a Third Party Claim, (i) the Indemnified
Party will cooperate and make available to the Indemnitor (and its representatives) all employees
and furnish (without expense to such Indemnitor) such information, books and records in its
possession or under its control as may be reasonably necessary or useful in connection with
such defense, (ii) the Indemnified Party will not file any papers or consent to the
entry of any judgment or enter into any settlement with respect to such Third Party Claim
without the prior written consent of the Indemnitor and (iii) the Indemnitor will have
the right to consent to the entry of any judgment or enter into any settlement with respect
to such Third Party Claim without the prior written consent of the Indemnified Party if the
judgment or settlement (A) involves only money damages which the Indemnitor is fully
responsible for and does not seek an injunction or other equitable relief (other than customary
confidentiality obligations), and (B) contains an unconditional release of the Indemnified
Party with respect to such Third Party Claim. If such conditions are not satisfied and such
unconditional release not obtained, then the Indemnitor will not compromise or settle such
claim without the prior written consent of the Indemnified Party, which consent will not
be unreasonably withheld, delayed or conditioned. If the Indemnitor conducts the defense
of a claim, the Indemnified Party may retain separate co-counsel at its own cost and expense
and participate in such defense, which, for the avoidance of doubt, will not constitute Damages
for purposes of this Article 6 so long as such claim is diligently prosecuted
by the Indemnitor. |
| (d) | If
the Indemnitor does not elect to assume the defense of a Third Party Claim, (i) the
Indemnified Party will have the right to conduct such defense, (ii) the Indemnified
Party may only consent to entry of any judgment upon, or compromise and settle in good faith
any such Third Party Claim, with the prior written consent of the Indemnitor (such consent
not to be unreasonably withheld, delayed or conditioned) and (iii) if it is ultimately
determined that the claim of loss which will form the basis of such judgment or settlement
is one that is validly an obligation of the Indemnitor that elected not to assume the defense,
then such Indemnitor will be bound by any ultimate judgment or settlement as to the existence
and the amount of the claim and the amount of said judgment or settlement (including the
costs and expenses of defending such claims such as attorneys’ fees and court costs)
will be conclusively deemed for all purposes of this Agreement to be a liability on account
of which the Indemnified Party is entitled to be indemnified hereunder, subject to any limits
on the right to be so indemnified hereunder. Upon the determination of liability under and
subject to Section 6.1 and Section 6.2 hereof, the appropriate Party
will within thirty (30) days of such determination, pay the amount of such claim. |
| (a) | It is understood and agreed that the sole recourse of a Buyer
Indemnified Person for Damages suffered under Section 6.1(a), other than for a breach of a Seller Parties’
Fundamental Representation and/or Actual Fraud, will be recovery from the R&W Policy. Subject to the limitations set forth in
this Article 6, the order of recourse with respect to indemnification for Damages suffered by a Buyer Indemnified
Person under Section 6.1(a) for a breach of a Seller Parties’ Fundamental Representation will, solely to the
extent such Damages are actually covered and collectible under the R&W Policy, be: first, from the R&W Policy, up to the
R&W Policy Limit, to the extent that such Damages are covered and actually collected under the R&W Policy after using
reasonable efforts to collect (which will not require litigation or threatened litigation); and second, directly from Parent and the
Seller to the extent not covered by the R&W Policy or not actually recovered under the R&W Policy after using reasonable
efforts to collect (which will not require litigation or threatened litigation); provided, neither Parent’s and Seller’s
liability under this sentence will not exceed in the aggregate the Base Purchase Price (the “Cap”). Nothing in
this Article 6 will be deemed to limit or prohibit any rights of the Buyer Indemnified Persons as against any insurer
under the R&W Policy. Notwithstanding the limitations in this Section 6.5(a), if coverage under the R&W Policy
is used to cover losses arising from breaches of Seller Parties’ Fundamental Representations (“Fundamental
Representation Losses”) and, as a result of such coverage, the full limits of the R&W Policy are not available to
cover losses arising from breaches of the Seller’s representations and warranties that are not Seller Parties’
Fundamental Representations (“Ordinary Representation Losses”), then Seller and Parent will be directly
responsible for Ordinary Representation Losses arising from claims made during the applicable claims period under the R&W
Policy, but such responsibility will be capped at the dollar amount of the R&W Policy used to cover Fundamental Representation
Losses. Notwithstanding anything to the contrary in this Agreement, recovery under the R&W Policy will not be limited by the
survival periods or other limitations in this Agreement. Rather, recovery under the R&W Policy will be in accordance with the
terms of such policy. |
| (b) | UNDER
NO CIRCUMSTANCES WILL ANY INDEMNITOR HAVE ANY LIABILITY TO AN INDEMNIFIED PARTY UNDER THIS
Article 6 OR OTHERWISE,
FOR ANY EXEMPLARY OR PUNITIVE DAMAGES (UNLESS, IN EACH CASE, PAID TO A THIRD PARTY). |
| (c) | If
an Indemnified Party, after having received any indemnification payment with respect to any
Damages pursuant to this Agreement from an Indemnifying Party, subsequently receives any
insurance proceeds (other than under the R&W Policy) or other payment from a third party
in respect of compensation for such Damages, such Indemnified Party shall promptly reimburse
the Indemnifying Party an amount equal to such insurance proceeds or third party payment
(after deducting therefrom the amount of any costs incurred in seeking and obtaining such
recovery (including premium increases), to the extent such Indemnified Party did not already
receive payment for such costs from the Indemnifying Party), but not in excess of the amount
of indemnification previously paid by or on behalf of the Indemnifying Party to or on behalf
of the Indemnified Party in respect of such Damages. |
| 6.6 | Exclusive
Remedy. Notwithstanding any other provision of this Agreement, following the Closing,
except in the case of Actual Fraud, the remedies provided for in this Article 6,
Section 1.4 and Section 10.18 and the remedies provided in the other
Transaction Documents will constitute the Buyer Indemnified Persons’ sole and exclusive
remedies for any claims made in connection with this Agreement and the transactions contemplated
hereby. |
| 6.7 | Survival of Representations, Warranties and
Covenants. None of the representations and warranties contained in this Agreement (other than the Seller Parties’
Fundamental Representations) will survive the Closing unless necessary to obtain coverage during the applicable claims periods under
the R&W Policy or to obtain recovery from Parent and the Seller in accordance with Section 6.5(a); provided, the
Seller Parties’ Fundamental Representations will survive 60 days following the expiration of the applicable statute of
limitations. Any obligation to indemnify under this Section 6.7 with respect to representations and warranties will
terminate and be of no further force and effect after the applicable foregoing survival period, except as to any alleged inaccuracy
or breach thereof of which a Party prior to the expiration of such period will have advised the other Party in writing, specifying
in reasonable detail the representation or warranty that is alleged to be inaccurate or breached. The right of a Party to seek
indemnification hereunder with respect to any representation or warranty of the other Party will remain in effect for the period
specified in this Section 6.7 with respect to such representation or warranty. The covenants of the Buyer and the Seller
that contemplate performance prior to the Closing will survive until the occurrence of the Closing, after which all causes of action
and liability with respect to such covenants will terminate and be of no further force and effect, except as to any alleged
inaccuracy or breach thereof of which a Party prior to the expiration of such period will have advised the other Party in writing,
specifying in reasonable detail the covenant that is alleged to be breached; provided, the covenants in the following sections will
survive the Closing in accordance with their terms: Section 5.1(f) and Section 5.14. The covenants of the Buyer and
the Seller which contemplate performance in whole or in part following the Closing Date will survive in accordance with their terms,
after which all causes of action and liability with respect to such covenants will terminate and be of no further force and effect,
except as to any alleged inaccuracy or breach thereof of which a Party prior to the expiration of such period will have advised the
other Party in writing, specifying in reasonable detail the covenant that is alleged to be breached. Nothing in this Article 6
will limit or prohibit the rights of Buyer to pursue recoveries under the R&W Policy or Actual Fraud. |
Article 7
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
Each
and every obligation of the Buyer to enter into and complete the Transaction is conditioned upon the satisfaction (or waiver by the Buyer)
of the following conditions, in each case, on or before the Closing Date:
| 7.1 | Representations
and Warranties. |
| (a) | The
representations and warranties set forth in Sections 2.1 and 3.1 (Organization and Good Standing), Section 2.2
(Power and Authorization; Enforceability), Section 2.4 (Ownership of Seller Interest), Section 2.8
(Brokers and Finders), Section 3.2(i) (Conflicts with Governing Documents) and Section 3.3 (Capitalization)
(collectively, the “Seller Parties’ Fundamental Representations”) will be true and correct in all respects at
and as of the Closing Date, as though made on and as of such date (except to the extent that any such representation and warranty expressly
speaks as of an earlier date, in which case such representation and warranty will be true and correct as of such earlier date). |
| (b) | The
representation and warranty set forth in Section 3.17 (Related Party Arrangements)
will be true and correct in all material respects, without regard to any “materiality”
qualifications contained therein, at and as of the Closing Date, as though made on and as
of such date (except to the extent that any such representation and warranty expressly speaks
as of an earlier date, in which case such representation and warranty will be true and correct
as of such earlier date). |
| (c) | The
representations and warranties set forth in Article 2 and Article 3
(other than the Seller Parties’ Fundamental Representations) will be true and correct
in all respects, without regard to any “materiality” qualifications contained
therein, at and as of the Closing Date, as though made on and as of such date (except to
the extent that any such representation and warranty expressly speaks as of an earlier date,
in which case such representation and warranty will be true and correct as of such earlier
date), except where the failure of any such representations and warranties to be so true
and correct would not reasonably be expected to have a Material Adverse Effect. |
| 7.2 | Performance
of Agreements, Covenants and Obligations. Neither the Companies nor the Seller will
have failed to perform or comply in any material respect with any agreement, covenant or
obligation of the Companies or Seller to be performed or complied with by any of them under
this Agreement. |
| 7.3 | Material
Adverse Effect. Since the date of this Agreement, no event will have occurred which
has or would reasonably be expected to result in a Material Adverse Effect on the Business. |
| 7.4 | Legal
Prohibition. There will not be any Law or order enacted, entered, enforced or promulgated,
or any other action taken by any Governmental Authority, either of which would prohibit the
consummation of the Transaction, or which would restrain or prohibit this Agreement or the
consummation of the transactions contemplated hereby. |
| 7.5 | Antitrust
Laws. The waiting period (and any extension thereof) applicable to the consummation
of the transactions contemplated by this Agreement under the HSR Act (including any timing
agreement with any Governmental Authority entered into in connection therewith to delay or
not to consummate the transactions contemplated hereby) will have expired or been terminated. |
| 7.6 | Federal
Firearms or Explosive License. The Seller Parties and the Companies will not have
received any Notice of Revocation of a Federal Firearms or Explosive License from the ATF
with respect to the Companies. |
| 7.7 | Consents.
The Seller will have obtained and provided to the Buyer duly executed copies of the consents
set forth on Section 1.3(a)(iii) of the Disclosure Schedule, in each case,
in form and substance reasonably satisfactory to Buyer. |
| 7.8 | Frustration
of Closing Conditions. The Buyer may not claim, as a basis for not consummating the
Transaction, that any of the foregoing conditions has not been satisfied if such failure
to satisfy was materially contributed to by the Buyer’s breach of any provision of
this Agreement. |
Article 8
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
The
obligations of the Seller to enter into and complete the transactions contemplated by this Agreement are conditioned upon the satisfaction
(or waiver by the Seller) of the following conditions, in each case on or before the Closing Date.
| 8.1 | Representations
and Warranties. |
| (a) | The
representations and warranties set forth in (i) Section 4.1 (Organization
and Good Standing), Section 4.2 (Power and Authorization; Enforceability),
Section 4.7 (OFAC; Ownership) and Section 4.8 (Brokers
and Finders) will be true and correct in all material respects at and as of the Closing
Date, as though made on and as of such date (except to the extent that any such representation
and warranty expressly speaks as of an earlier date, in which case such representation and
warranty will be true and correct in all material respects as of such earlier date) and (ii) Section 4.11 (Sufficient
Funds; Solvency) (together with the representations and warranties referenced in clause
(i), the “Buyer Fundamental Representations”) will be true and correct
in all material respects at and as of the Closing Date, as though made on and as of such
date (except to the extent that any such representation and warranty expressly speaks as
of an earlier date, in which case such representation and warranty will be true and correct
as of such earlier date), except where the failure of any such representations and warranties
to be so true and correct does not prevent or delay the Buyer’s ability to consummate
the Transaction or comply with its obligations hereunder. |
| (b) | The
representations and warranties set forth in Article 4 (other than the Buyer Fundamental
Representations) will be true and correct in all respects, without regard to any “materiality”
qualifications contained therein, at and as of the Closing Date, as though made on and as
of such date (except to the extent that any such representation and warranty expressly speaks
as of an earlier date, in which case such representation and warranty will be true and correct
as of such earlier date), except where the failure of any such representations and warranties
to be so true and correct would not reasonably be expected to prevent, materially impair
or materially delay the Buyer’s ability to consummate the Transaction or comply with
its obligations hereunder. |
| 8.2 | Performance
of Agreements, Covenants and Obligations. The Buyer will not have failed to perform
or comply in any material respect with any agreement, covenant or obligation to be performed
or complied with by it under this Agreement. |
| 8.3 | Legal
Prohibition. There will not be any Law enacted, enforced or promulgated, or any other
action taken by any Governmental Authority, in either of which would prohibit the consummation
of the Transaction or which otherwise restrains or prohibits this Agreement or the consummation
of the transactions contemplated thereby. |
| 8.4 | Antitrust
Laws. The waiting period (and any extension thereof) applicable to the consummation
of the transactions contemplated by this Agreement under the HSR Act (including any timing
agreement with any Governmental Authority entered into in connection therewith to delay or
not to consummate the transactions contemplated hereby) will have expired or been terminated. |
| 8.5 | Frustration
of Closing Conditions. The Seller may not claim, as a basis for not consummating
the Transaction, that any of the foregoing conditions has not been satisfied if such failure
to satisfy was materially contributed to by the Seller’s or Parent’s breach of
any provision of this Agreement. |
| 8.6 | R&W
Policy. The Buyer will have delivered the fully bound R&W Policy, substantially
in the form of Exhibit D. |
Article 9
TERMINATION
| 9.1 | Termination.
This Agreement and the Transaction may be terminated or abandoned at any time before the
Closing Date: |
| (a) | by
the mutual written consent of the Seller and the Buyer; |
| (b) | by
the Buyer, by giving written notice to the Seller: |
| (i) | if
the Seller breaches any of its representations, warranties, covenants or agreements contained
in this Agreement, which breach (A) would give rise to the failure of a Closing condition
set forth in Article 7 and (B) has not been cured by the Seller within twenty
(20) Business Days of the Seller’s receipt of written notice of such breach from Buyer,
but only so long as Buyer is not then in breach of its respective representations, warranties,
covenants or agreements contained in this Agreement, which breach would give rise to the
failure of a Closing Condition set forth in Article 8; or |
| (ii) | if
any Governmental Authority of competent jurisdiction in the U.S. will have issued any final
and nonappealable order prohibiting or enjoining the Transaction; provided that
the right to terminate this Agreement under this Section will not be available to
the Buyer if the breach of any covenant or agreement of this Agreement by the Buyer has resulted
in the imposition of such order; or |
| (c) | by
the Seller, by giving written notice to the Buyer: |
| (i) | if
the Buyer breaches any of its representations, warranties, covenants or agreements contained
in this Agreement, which breach (A) would give rise to the failure of a Closing condition
set forth in Article 8 and (B) has not been cured by the Buyer within twenty
(20) Business Days of the Buyer’s receipt of written notice of such breach from the
Seller, but only so long as the Seller is not then in breach of its respective representations,
warranties, covenants or agreements contained in this Agreement, which breach would give
rise to the failure of a closing Condition set forth in Article 7; or |
| (ii) | if
any Governmental Authority of competent jurisdiction in the U.S. will have issued any final
and nonappealable order prohibiting or enjoining the Transaction; provided that
the right to terminate this Agreement under this Section will not be available to
the Seller if the breach of any covenant or agreement of this Agreement by the Seller has
resulted in the imposition of such order. |
| (d) | by
the Seller or the Buyer, if the Closing will not have occurred on or before March 31,
2024 (such time and date, the “Initial Termination Date”, and the Initial
Termination Date, as it may be extended pursuant to this Section 9.1(d), the
“Termination Date”), by reason of the failure of any condition precedent
under Article 7 or Article 8 hereof; provided, however,
that (i) if on such date all of the conditions under Article 7 or
Article 8 hereof (other than Section 7.4, Section 7.5,
Section 8.3 or Section 8.4) (solely to the extent related to the
HSR Act) will have been satisfied or waived (other than those conditions that by their terms
are to be satisfied at the Closing, each of which is capable of being satisfied if the Closing
were to occur on such date), then the Initial Termination Date will automatically be extended
until 11:59 p.m. (New York City time) on the date that is six (6) months following
the Initial Termination Date, and (ii) if the date on which the Termination Date, as
extended under clause (i) hereof, would occur is not a Business Day, then the Termination
Date will be further extended to the next following Business Day; provided further that
the right to terminate this Agreement under this Section 9.1(d) will
not be available to any Party to this Agreement whose breach of any covenant or agreement
of this Agreement has resulted in the failure to consummate the Transaction by such date. |
| 9.2 | Obligations
Upon Termination. |
| (a) | If
this Agreement will be terminated pursuant to Section 9.1, none of the Parties
will have any further liability or obligation to the others except as set forth in this Section 9.2. |
| (b) | In
the event that this Agreement is terminated by any of the Parties because of the failure
of the condition in Section 7.5 or Section 8.4 to be satisfied by
the Termination Date for reasons other than Parent’s or the Seller’s failure
to comply with its obligations under this Agreement including those in Section 5.1,
the Buyer shall pay or cause to be paid a termination fee to Seller equal to the Parent Expenses.
The Parent Expenses will be paid by wire transfer of immediately available funds to the account
or accounts designated by the recipient. Any payment required to be made pursuant to this
Section 9.2(b) shall be paid within five days after such termination. If
paid, receipt of the applicable Parent Expenses is the sole and exclusive remedy of the Seller
and its Affiliates in respect of this Agreement. |
| (c) | If
the Buyer or the Seller terminates this Agreement pursuant to Section 9.1(b)(i) or
Section 9.1(c)(i), then it is expressly understood and agreed that the terminating
Party’s right to pursue all legal remedies for breach of contract and Damages will
survive; provided that losses arising from claims for breaches of representations
and warranties (other than Actual Fraud) will be limited to actual Damages. If the Agreement
is terminated, the Seller, on the one hand, and the Buyer, on the other hand, will return
to the other all documents and other materials received from the other Parties, their Affiliates
or their respective representatives (including all copies or reproductions thereof in whatever
form or medium, including electronic copies, or materials developed from any such documents
or other materials) relating to the Transaction, whether obtained before or after the date
hereof. Notwithstanding the foregoing, the obligations of the Parties under the Confidentiality
Agreement and under Section 5.10 and this Section 9.2 and Article 10
(including any related defined terms) will survive such termination. |
Article 10
MISCELLANEOUS
| 10.1 | Fees
and Expenses. Except as expressly set forth in this Agreement, each Party will pay
all fees and expenses incurred by it incident to preparing for, entering into and performing
its obligations under this Agreement and the consummation of the Transaction, whether or
not the Transaction is consummated. |
| 10.2 | Notices.
All notices or other communications permitted or required under this Agreement will be in
writing and will be sufficiently given if and when hand delivered to the Persons set forth
below or if sent by documented overnight delivery service or registered or certified mail,
postage prepaid, return receipt requested, or by facsimile or email, receipt acknowledged,
addressed as set forth below or to such other Person or Persons and/or at such other address
or addresses as will be furnished in writing by any Party to the other Parties. Any such
notice or communication will be deemed to have been given as of the date received, in the
case of personal delivery, or on the date shown on the receipt or confirmation therefor in
all other cases. |
If
to Buyer or, following the Closing, the Companies:
Bullseye
Acquisitions, LLC
c/o
JDH Capital Company
1111
Travis Street
Houston,
Texas 77002
Attn:
Michael D. Fertitta; Ryan Connelly
Email:
mfertitta@jdhcap.com; rconnelly@jdhcap.com
With
a copy (which will not constitute notice) to:
Latham &
Watkins LLP
811
Main Street, Suite 3700
Houston,
Texas 77002
Attn:
Bruce C. Herzog; James M. Garrett
Email: bruce.herzog@lw.com;
james.garrett@lw.com
If
to Seller, Parent, or, prior to the Closing, the Companies:
c/o
Clarus Corporation
2084
East 3900 South
Salt
Lake City, Utah 84124
Attn:
Michael J. Yates, Chief Financial Officer
Email:
mike.yates@claruscorp.com
With
a copy (which will not constitute notice) to:
Kane
Kessler, P.C.
600 Third Avenue
New York, New York 10016
Attn.: Robert L. Lawrence, Esq.
Email: rlawrence@kanekessler.com
Any
Party may at any time change the address to which notices may be sent under this Section 10.2 by the giving of notice
of the change to the other Parties in the manner set forth in this Section 10.2.
| (a) | Except
for the limited liability company operating agreements of each of the Companies in effect
as of the date hereof, Seller will cause all Contracts between and among any of the Companies,
on the one hand, and Seller or any of its Affiliates (other than one of the Companies), on
the other hand (the “Intercompany Accounts”), to be settled or otherwise
eliminated in their entirety prior to the Closing by the parties thereto in such a manner
as Seller will reasonably determine in consultation with Buyer, in each case without any
further liability to the Companies upon or following the Closing. Seller will cause all Intercompany
Accounts to be cancelled, repaid or otherwise eliminated in full prior to or at the Closing,
without any further liability to the Seller or Parent upon or following the Closing. |
| (b) | Effective
as of the Closing, Parent and Seller, on behalf of itself and each of its Affiliates, the
officers, directors, employees, investors, shareholders, members or partners of Parent or
Seller, agents in their capacity as an agent of Parent or Seller, successors, permitted assigns,
the executors or administrators of Parent or Seller (each, a “Seller Releasing Party”
and, collectively, the “Seller Releasing Parties”), hereby releases, acquits
and forever discharges the Companies their respective Subsidiaries, predecessors, successors
and permitted assigns (including Buyer and its Affiliates), and their respective former,
present and future officers, directors, employees, shareholders, members, managers, partners
and agents (collectively, the “Buyer Released Parties”) of and from any
and all manner of action or inaction, cause or causes of action, Proceedings, debts, Liens,
Contracts, Taxes, promises, liabilities, claims, demands, damages (whether for compensatory,
special, incidental or punitive damages, equitable relief or otherwise), Losses, fees, costs
or expenses, of any kind or nature whatsoever, past, present, or future, at law, in equity
or otherwise (including with respect to conduct which is negligent, grossly negligent, willful,
intentional, with or without malice, or a breach of any duty, Law or rule), existing or occurring
prior to the Closing, whether known or unknown, whether fixed or contingent, whether concealed
or hidden, whether disclosed or undisclosed, whether liquidated or unliquidated, whether
foreseeable or unforeseeable, whether anticipated or unanticipated, whether suspected or
unsuspected, which the Seller Releasing Parties, or any of them, ever have had or ever in
the future may have against the Buyer Released Parties, or any of them, arising by virtue
of or in connection with any actions or inactions with respect to the Companies or their
affairs at or before the Closing; provided, however, that the foregoing release
will not release, impair or diminish, and will not include, in any respect any rights under
this Agreement, any other Transaction Document or any other Contract entered into pursuant
to this Agreement or in connection with the transactions contemplated hereby and will not
release any rights of employees of the Companies in their capacity as employees of the Companies. |
| (c) | Effective
as of the Closing, Buyer, on behalf of itself and each of its Affiliates (including the Companies)
and, in their capacities as such, their respective shareholders, members and other owners
(each, a “Buyer Releasing Party” and, collectively, the “Buyer
Releasing Parties” and, together with the Seller Releasing Parties, the “Releasing
Parties”), hereby releases, acquits and forever discharges Parent, Seller, each
of Parent’s other subsidiaries and, in their capacities as such, their respective former,
present and future directors and shareholders (collectively, the “Seller Released
Parties” and, together with the Buyer Released Parties, the “Released
Parties”) of and from any and all manner of action or inaction, cause or causes
of action, Proceedings, debts, Liens, Contracts, Taxes, promises, liabilities, claims, demands,
damages (whether for compensatory, special, incidental or punitive damages, equitable relief
or otherwise), Losses, fees, costs or expenses, of any kind or nature whatsoever, past, present,
or future, at law, in equity or otherwise (including with respect to conduct which is negligent,
grossly negligent, willful, intentional, with or without malice, or a breach of any duty,
Law or rule), existing or occurring prior to the Closing, whether known or unknown, whether
fixed or contingent, whether concealed or hidden, whether disclosed or undisclosed, whether
liquidated or unliquidated, whether foreseeable or unforeseeable, whether anticipated or
unanticipated, whether suspected or unsuspected, which the Buyer Releasing Parties, or any
of them, ever have had or ever in the future may have against the Seller Released Parties,
or any of them, (a) arising from the Transaction or (b) by virtue of or in connection
with any actions or inactions with respect to the Companies or their affairs at or before
the Closing (other than violations of law or breaches of confidentiality, non-compete, non-solicitation
or, with respect to any former, current or future director, obligations under any contract
binding on such director); provided, however, that the foregoing releases will
not release, impair or diminish, and will not include, in any respect any rights under this
Agreement, any other Transaction Document or any other Contract entered into pursuant to
this Agreement or in connection with the transactions contemplated hereby. |
| (d) | Each
Releasing Party hereby irrevocably covenants to refrain from, directly or indirectly, asserting
any claim or commencing, instituting or causing to be commenced any Proceeding of any kind
against any Released Party based upon any matter purported to be released hereby. |
| 10.4 | Assignment
and Benefit. Neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned, by operation of Law or otherwise, by any Party to any other Person
without the prior written consent of the other Parties, and any such attempted assignment
will be null and void; provided, however, that Buyer may collaterally
assign its rights and obligations under this Agreement to any financing sources without the
prior written consent of Seller (provided, that Buyer will remain primarily
liable hereunder following any such assignment and will be deemed to have unconditionally
guaranteed the performance of its obligations hereunder by any such assignee). The assigning
Party will provide the other Parties written notice of any such assignment within ten (10) Business
Days following the date of the assignment. Subject to the foregoing, this Agreement and the
rights and obligations in this Agreement will inure to the benefit of, and be binding upon,
the Parties and each of their respective successors and permitted assigns. |
| 10.5 | Amendment,
Modification and Waiver. Any provision of this Agreement may be amended, modified,
extended or waived, but only by a written instrument signed by Buyer and Seller. The waiver
by a Party of any breach of any provision of this Agreement will not constitute or operate
as a waiver of any other breach of such provision or of any other provision hereof, nor will
any failure to enforce any provision hereof operate as a waiver of such provision or of any
other provision hereof. |
| 10.6 | Due
Diligence Review; No Additional Representations and Warranties. Buyer is an informed
and sophisticated purchaser, and, together with Buyer’s Representatives, is experienced
in the evaluation and purchase of businesses such as the Companies. Buyer acknowledges and
agrees, on behalf of itself and its Affiliates, that (a) Buyer has completed to its
satisfaction its own due diligence investigation, and based thereon, formed its own independent
judgment, with respect to the execution, delivery, and performance of this Agreement and
the Transaction Documents, (b) Buyer has been furnished with, or given full access to,
such documents and information about the Companies and the Business as Buyer and its Representatives
have deemed necessary to enable Buyer to make an informed decision with respect to the execution,
delivery, and performance of this Agreement and the Transaction Documents, (c) in entering
into this Agreement, Buyer has relied solely upon its own investigation and analysis and
the representations and warranties by Seller expressly set forth in Article 2
and Article 3, (d) except as expressly set forth in Article 2
and Article 3 or in the Seller Officer Certificate, no representation or warranty
has been or is being made by any Person as to the accuracy or completeness of any information
provided or made available to Buyer or its Representatives, Buyer is not relying on, and
acknowledges that no current or former shareholder, director, officer, employee, Affiliate,
advisor or other representative of Seller or any other Person has made or is making, any
representations, warranties or commitments whatsoever regarding the subject matter of this
Agreement, express or implied, and (e) none of Parent, Seller, the Companies or any
other Person will have or be subject to any liability to Buyer or any other Person resulting
from the distribution to Buyer and its Representatives and Affiliates, or Buyer’s or
any of its Representatives’ or Affiliates’ use, of any written or oral information,
and any information, documents or material made available to Buyer and its Representatives
in any form (including any Projections (as defined below)), other than, in each case, the
Transaction Documents. Buyer acknowledges that it and its Representatives have been provided
access to the Data Room and have reviewed the materials contained therein. Notwithstanding
anything to the contrary in this Section 10.6 or Section 10.7, nothing
in this Agreement will impair Buyer’s right to rely on the representations and warranties
in Article 2 and Article 3 or in the Seller Officer Certificate,
and the Seller Parties acknowledge that Buyer is relying on such representations and warranties
as written notwithstanding Buyer’s knowledge or diligence. |
| 10.7 | Disclaimer
Regarding Projections. In connection with Buyer’s investigation of the Companies,
Buyer and its Representatives have received from Seller (directly or through its Representatives)
certain projections, estimates and other forecasts and certain business plan information
(collectively, the “Projections”). Buyer acknowledges that there are uncertainties
inherent in attempting to make the Projections, that it is familiar with such uncertainties,
that it is making its own evaluation of the adequacy and accuracy of all the Projections
so furnished to it and any use of, or reliance by, it on the Projections will be at its sole
risk, and without limiting any other provisions of this Agreement, that it will have no claim
against anyone with respect to the Projections; provided, however, that
the foregoing will not be interpreted to waive any rights that Buyer has with respect
to recovery for breaches of representations and warranties made by Seller in Article 2
or Article 3. |
| (a) | Except
as otherwise provided or unless the context otherwise requires, whenever used in this Agreement,
(a) any noun or pronoun will be deemed to include the plural and the singular, (b) the
use of masculine pronouns will include the feminine and neuter, (c) the terms “include”
and “including” will be deemed to be followed by the phrase “without limitation,”
(d) the word “or” will be inclusive and not exclusive, (e) all references
to Sections or Articles refer to the Sections or Articles of this Agreement, all
references to Schedules refer to the Schedules attached to or delivered with this Agreement,
as appropriate, and all references to Exhibits refer to the Exhibits attached to
this Agreement, each of which is made a part of this Agreement for all purposes, (f) each
reference to “herein” means a reference to “in this Agreement,” (g) each
reference to “$” or “dollars” will be to United States dollars, (h) each
reference to “days” will be to calendar days, and (i) unless otherwise specified,
each reference to any Contract or Law will be to such Contract or Law as amended, supplemented,
waived (in the case of Contracts) or otherwise modified from time to time. |
| (b) | The
provisions of this Agreement will be construed according to their fair meaning and neither
for nor against any Party irrespective of which Party caused such provisions to be drafted.
Accordingly, any rule of law or legal decision that would require interpretation of
any ambiguities in this Agreement against the Party that drafted it is of no application
and is hereby expressly waived. Each Party acknowledges that it has been represented by an
attorney in connection with the preparation and execution of the Transaction Documents. |
| (c) | For
the avoidance of doubt, each covenant, representation and warranty, and other disclosure
contained in the applicable sections of the Transaction Documents shall have independent
significance. If a breach of an applicable covenant, representation or warranty, or disclosure
contained in the Transaction Documents has occurred, the fact that there exists another covenant,
representation or warranty, or other disclosure in the Transaction Documents relating to
the same subject matter (regardless of the relative levels of specificity) for which a breach
has not occurred, shall not detract from or mitigate the breach that did occur. |
| 10.9 | Governing
Law. This Agreement is made pursuant to, and will be construed and enforced in accordance
with, the laws of the State of Delaware, irrespective of the principal place of business,
residence or domicile of the Parties, and without giving effect to otherwise applicable principles
of conflicts of Law that would give effect to the Laws of another jurisdiction. |
| 10.10 | Jurisdiction.
Each Party to this Agreement, by its execution hereof, hereby (a) irrevocably submits,
and agrees to cause each of its Affiliates to submit, to the exclusive jurisdiction of the
Court of Chancery of the State of Delaware or, to the extent the Court of Chancery of the
State of Delaware does not have subject matter jurisdiction, any federal court within the
State of Delaware for the purpose of any action, claim, cause of action or suit (in contract,
tort or otherwise) arising out of or based upon this Agreement, any Transaction Document
(unless otherwise set forth therein) or relating to the subject matter hereof or thereof,
(b) waives, and agrees to cause each of its Affiliates to waive, to the extent not prohibited
by applicable Law, and agrees not to assert, and agrees not to allow any of its Affiliates
to assert, by way of motion, as a defense or otherwise, in any such action, any claim that
it is not subject personally to the jurisdiction of the above-named courts, that its property
is exempt or immune from attachment or execution, that any such proceeding brought in one
of the above-named courts is improper, or that this Agreement, any Transaction Document (unless
otherwise set forth therein) or the subject matter hereof or thereof may not be enforced
in or by such court and (c) agrees not to commence or to permit any of its Affiliates
to commence any action, claim, cause of action or suit (in contract, tort or otherwise) arising
out of or based upon this Agreement or relating to the subject matter hereof other than before
one of the above-named courts nor to make any motion or take any other action seeking or
intending to cause the transfer or removal of any such action, claim, cause of action or
suit (in contract, tort or otherwise) to any court other than one of the above-named courts
whether on the grounds of inconvenient forum or otherwise. NOTWITHSTANDING THE FOREGOING,
(I) THE SEEKING OF INJUNCTIVE RELIEF (INCLUDING, WITHOUT LIMITATION, FOR SPECIFIC PERFORMANCE)
WILL BE SUBJECT TO THE PROVISIONS OF SECTION 10.18 HEREOF AND (II) THE EXCLUSIVE
CHOICE OF FORUM SET FORTH ABOVE WILL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT OF ANY JUDGMENT
OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE THE SAME
IN ANY APPROPRIATE JURISDICTION. |
| 10.11 | Waiver
of Jury Trial. EACH PARTY HEREBY WAIVES AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER
AS PLAINTIFF, DEFENDANT OR OTHERWISE), TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS
OR ANY TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY WHETHER NOW EXISTING OR HEREAFTER ARISING,
AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. EACH PARTY (A) CERTIFIES THAT NO
REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF ANY PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER
AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.11.
EACH OF THE PARTIES MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE
OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG THE PARTIES TO IRREVOCABLY WAIVE
THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IN ANY PROCEEDING WHATSOEVER BETWEEN THEM RELATING
OT THIS AGREEMENT OR ANY OTHER TRANSACTION AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. |
| 10.12 | Conflicts
and Privilege. The undersigned agree that, notwithstanding any current or prior representation
of any one or more of the Seller Parties by KK, KK will be allowed to represent Seller or
any of its Affiliates (which will no longer include the Companies after the Closing) in any
matters and disputes, including in any matter or dispute adverse to Buyer and its Affiliates
(including, after the Closing, the Companies) that either is existing on the date hereof
or that arise in the future (provided that this waiver will not extend to any such
future matter or dispute to the extent such future matter or dispute is unrelated to this
Agreement and the Transaction), and Buyer does hereby, and agrees to cause its Affiliates
(including, after the Closing, the Companies) to, (a) waive any claim they have or may
have that KK has a conflict of interest or is otherwise prohibited from engaging in such
representation and (b) agree that, in the event of such a matter or dispute, KK may
represent Seller or such Affiliate in such dispute even though the interests of Seller or
such Affiliate may be directly adverse to Buyer or its Affiliates (including the Companies)
and even though KK may have represented the Companies in a matter substantially related to
such dispute, or may be handling ongoing matters for Buyer or the Companies. Buyer further
agrees, and agrees to cause its Affiliates (including, after the Closing, the Companies)
to agree, that, as to all communications among KK and Seller and their respective Affiliates
(including, prior to the Closing, the Companies) and any files of KK to the extent related
to the Transaction contemplated by this Agreement, the attorney-client privilege, the expectation
of client confidence and any attorney work product belongs to, and may be controlled by,
Parent or Seller and will not pass to or be claimed by Buyer or its Affiliates (including,
after the Closing, the Companies). Accordingly, none of Buyer or its Affiliates (including
the Companies) will have access to such communications or to the files of KK relating to
the Transaction from and after the Closing. Notwithstanding the foregoing, if a dispute arises
between Buyer or its Affiliates (including the Companies) and a third party other than a
Party to this Agreement after the Closing, Buyer or its Affiliates (including the Companies)
may assert, and Parent, Seller and their Affiliates may not waive, the attorney-client privilege
to prevent disclosure of confidential communications by KK and any files of KK to such third
party, and in such case, Buyer and its Affiliates (including the Companies) will have access
to such communications or files, provided they arise from KK’s representation of the
Companies (and, for the avoidance of doubt, do not exclusively arise from KK’s representation
of parties other than the Companies); provided, however, that the Companies
may not waive such privilege or other protection, and Buyer and its Affiliates (including
the Companies) will not have such access, without the prior written consent of Seller, which
consent will not be unreasonably withheld, delayed or conditioned. Seller agrees that, as
to all communications between KK and the Companies prior to the Closing that do not relate
in any way to the Transaction contemplated by this Agreement, the attorney-client privilege,
the expectation of client confidence and any attorney work product belongs to, and may be
controlled by, Buyer and the Companies and will pass to Buyer and the Companies from and
after the Closing. Accordingly, from and after the Closing, Buyer (and, after the Closing,
the Companies) will have access to such communications and to the files of KK relating to
KK’s representation of the Companies other than with respect to the Transaction. Nothing
herein is intended to waive KK’s rights to protect its own work product. |
| 10.13 | Section Headings.
The section headings of this Agreement are for reference purposes only and will not
in any way affect the meaning or interpretation of this Agreement. |
| 10.14 | Severability.
If any provision of this Agreement (or portion thereof) or the application of any such provision
(or portion thereof) to any Person or circumstance is determined by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced pursuant to any applicable
Law or public policy, all other provisions of this Agreement (or remaining portion of such
provision) will nevertheless remain in full force and effect. Upon such determination by
a court of competent jurisdiction that any provision (or portion thereof) of this Agreement
is invalid, illegal or incapable of being enforced, the Parties will negotiate in good faith
to modify this Agreement so as to effect the original intent of the Parties as closely as
possible in an acceptable manner, to the end that the Transaction as originally contemplated
are fulfilled to the extent possible. |
| 10.15 | Counterparts;
Third Party Beneficiaries. This Agreement may be executed in one or more counterparts,
including by facsimile or PDF transmission, each of which will be deemed an original, but
all of such counterparts together will be deemed to be one and the same agreement. This Agreement
will be binding upon and inure solely to the benefit of each Party, and, except as set forth
in Section 5.8 and Section 10.4, nothing in this Agreement, express
or implied, is intended to or will confer upon any other Person (other than KK) any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement. |
| 10.16 | Entire
Agreement. This Agreement, together with the Disclosure Schedule and the other
Transaction Documents, constitute the entire agreement among the Parties with respect to
the Transaction and supersede all prior and contemporaneous agreements and understandings,
both written and oral, with respect to the subject matter hereof. There are no warranties,
representations, or other agreements between the Parties hereto, or on which any of them
has relied in connection with the subject matter hereof, except as specifically set forth
in this Agreement or in the other Transaction Documents. |
| 10.17 | Attorneys’
Fees. Subject to the limitations set forth in this Agreement, in the event of any
dispute related to or based upon this Agreement, the prevailing Party will be entitled to
recover from the other Party its reasonable attorneys’ fees and costs. |
| 10.18 | Specific
Performance. Each Party acknowledges and agrees that the Parties would be damaged
irreparably if any of the provisions of this Agreement were not performed in accordance with
their specific terms or otherwise were breached or violated. Accordingly, each Party agrees
that, without posting bond or other undertaking, each of the Parties will be entitled to
seek an injunction or injunctions to prevent breaches or violations of this Agreement and
to enforce specifically this Agreement in any claim, action, cause of action or suit (whether
in Contract or tort or otherwise), litigation (whether at law or in equity, whether civil
or criminal), controversy, assessment, arbitration, investigation, hearing, charge, complaint,
demand, notice or proceeding to, from, by or before any Governmental Authority having jurisdiction
over the Parties and the matter in addition to any other remedy to which it may be entitled,
at law or in equity. |
| 10.19 | Incorporation
of Schedules and Exhibits. The Schedules and Exhibits identified in this Agreement
are incorporated herein by reference and made a part of this Agreement. |
| 10.20 | Non-Recourse.
Notwithstanding anything that may be expressed or implied in this Agreement, any other Transaction
Document or any document, certificate or instrument delivered in connection herewith or therewith
or otherwise, each Party hereby acknowledges and agrees, on behalf of itself and its respective
Affiliates, that all actions, suits, claims, investigations or proceedings that may be based
upon, in respect of, arise under, out of, by reason of, be connected with, or relate in any
manner to (a) this Agreement or any other Transaction Document or the transactions contemplated
hereunder or thereunder, (b) the negotiation, execution or performance of this Agreement
or any other Transaction Document (including any representation or warranty made in, in connection
with, or as an inducement to, any of the foregoing documents), (c) any breach or violation
of this Agreement or any other Transaction Document and (d) the failure of the transactions
contemplated hereunder or by any other Transaction Document, to be consummated, in each case
may be made only against (and are those solely of) the Persons that are expressly identified
as Parties hereto or thereto, as applicable, except as contemplated by Section 5.8.
In furtherance and not in limitation of the foregoing, each Party hereby acknowledges and
agrees, on behalf of itself and its respective Affiliates, that no recourse under this Agreement
or any other Transaction Document or in connection with any transactions contemplated hereby
or thereby will be sought or had against any other such Person and no other such Person will
have any liabilities or obligations (whether in contract or in tort, in Law or in equity
or otherwise, or granted by statute or otherwise, whether by or through attempted piercing
of the corporate, partnership, limited partnership or limited liability company veil or any
other theory or doctrine) for any Losses, Damages, claims, causes of action, Actions, obligations
or Liabilities of any nature whatsoever arising under, out of, in connection with or related
in any manner to the items in the immediately preceding clauses (a) through (d), it
being expressly agreed and acknowledged that no personal Liability or Losses, Damages, claims,
causes of action, Actions, obligations or Liabilities whatsoever will attach to, be imposed
on or otherwise be incurred by any past, present or future shareholder, member, partner,
manager, director, officer, employee, Affiliate, agent or representative of any Party to
this Agreement, through Buyer, Parent, Seller or otherwise, whether by or through attempted
piercing of the corporate, partnership, limited partnership or limited liability company
veil, by or through a claim by or on behalf of any Party hereto, as applicable, by the enforcement
of any assessment or by any legal or equitable actions, suits, claims, investigations or
proceedings, by virtue of any law, or otherwise, except for (i) claims of Actual Fraud,
(ii) claims under and to the extent provided for in Article 5 of this Agreement
and (iii) claims against any Person that is party to, and solely pursuant to the terms
and conditions of, the Confidentiality Agreement. |
| 10.21 | Seller
Disclosure Schedule. The undersigned acknowledge and agree that (a) matters
reflected on the Disclosure Schedule are not necessarily limited to matters required
to be reflected therein, and the Disclosure Schedule may contain information that is
not specifically required by this Agreement, which information is provided solely for Buyer’s
general information and is not separately represented or warranted, (b) the disclosure
or inclusion by the Seller of any matter in the Disclosure Schedule will not be deemed
to constitute an acknowledgement or admission by the Seller that the matter is required to
be disclosed by the terms of this Agreement or that the matter is material, (c) headings
have been inserted in the Disclosure Schedule, and the Disclosure Schedule has been
arranged in separately numbered sections corresponding to the sections of this
Agreement, for convenience of reference only, (d) the Disclosure Schedule is qualified
in its entirety by reference to specific provisions of this Agreement, and where the terms
of a Contract or other disclosure item have been summarized or described in the Disclosure
Schedule, such summary or description does not purport to be a complete statement of the
material terms of such Contract or other item, (e) the Disclosure Schedule and
the information and statements contained therein are not intended to constitute, and will
not be construed as constituting, representations or warranties of the Seller except as and
to the extent provided in this Agreement, and (f) any item of information, matter, or
document disclosed or referenced in, or attached to, the Disclosure Schedule will not
(i) be used as a basis for interpreting the terms “material” or other similar
terms in this Agreement or to establish a standard of materiality, (ii) be deemed or
interpreted to expand the scope of any representation or warranty, obligation, covenant,
condition or agreement contained in this Agreement, (iii) constitute, or be deemed to
constitute, an admission of liability or obligation to any third party regarding such matter,
(iv) represent an admission to any third party that the consummation of the transactions
contemplated by this Agreement requires the consent of any third party, or (v) otherwise
constitute, or be deemed to otherwise constitute, an admission to any third party concerning
such item or matter. Without limiting the generality of the foregoing, all references in
the Disclosure Schedule to the enforceability of agreements with third parties, the
existence or non-existence of third-party rights, the absence or existence of breaches or
defaults by the Seller, any of its Affiliates or third parties, or similar matters or statements,
are not intended to be admissions against interests, give rise to any inference or proof
of accuracy or be admissible against any party by or in favor of any Person who is not a
party to this Agreement. |
[Remainder
of Page Intentionally Left Blank]
IN
WITNESS WHEREOF, each Party has duly executed this Agreement, or has caused this Agreement to be duly executed on its behalf by a
duly authorized Representative, all as of the date first set forth above.
|
|
|
“SELLER” |
|
|
|
Everest/Sapphire
Acquisition, LLC, |
|
a Delaware
limited liability company |
|
|
|
By: |
/s/
Michael J. Yates |
|
|
Name: Michael J. Yates |
|
|
Title: Secretary and Treasurer |
|
|
|
“PARENT” |
|
|
|
Clarus Corporation, |
|
a Delaware
corporation |
|
|
|
By: |
/s/
Michael J. Yates |
|
|
Name: Michael J. Yates |
|
|
Title: Chief Financial
Officer, Secretary and Treasurer |
|
|
|
“BUYER” |
|
|
|
BULLSEYE
ACQUISITIONS, LLC, |
|
a Delaware
limited liability company |
|
|
|
By: |
JDH Capital I, L.P., its
Sole Member |
|
|
|
By: |
JDH Capital Company, its
General Partner |
|
|
|
By: |
/s/
Jason C. Rebrook |
|
|
Name: Jason C. Rebrook |
|
|
Title: Chief Executive
Officer |
Signature
Page to Purchase and Sale Agreement
EXHIBIT A
DEFINITIONS
“Accounting
Principles” means GAAP, as applied using the same accounting methods, policies, principles, practices and procedures (including
classifications, judgments and estimation methodologies) as were used consistently in the preparation of the most recent audited Financial
Statements, in each case subject to the specific methods, policies, principles, practices and procedures used in the preparation of the
Estimated Closing Statement pursuant to Section 1.4(a).
“Accrued
Income Taxes” means an amount equal to the sum of the accrued and unpaid Income Tax liabilities of the Companies and their
Subsidiaries with respect to any Pre-Closing Tax Period, separately calculated for each applicable taxing jurisdiction; for each applicable
taxable year (or portion thereof) and each applicable type of Income Tax (with the amount of each specific kind of such Income Tax liabilities
with respect to each applicable taxing jurisdiction for each applicable Tax period (or portion thereof) not being less than zero); provided
that such Income Tax liabilities will be calculated (a) in accordance with the past practice of the Seller, unless otherwise
required by applicable Law and (b) by excluding any deferred Income Tax liabilities or Income Tax assets (other than estimated (or
other prepaid) Tax payments available to reduce such Income Tax liabilities under applicable Law).
“Acquisition
Proposal” will mean any inquiries, proposals or offers from any Person other than Buyer, its Affiliates or representatives
relating in any way to (i) any investment in the Companies, (ii) any acquisition of direct or indirect control of the Companies,
(iii) the purchase of Sierra’s securities or those of any of its Subsidiaries, (iv) the purchase of any significant amount
of the assets or business of the Companies, or any lease, exchange, mortgage, pledge, transfer or other disposition thereof (other than
assets leased, exchanged, mortgaged, pledged, transferred or otherwise disposed of in the Ordinary Course and not in connection with
the sale or transfer of a business), or (v) any business combination or other transaction relating to the sale or transfer of any
business or business line of the Companies, including, without limitation, any merger, consolidation, acquisition, tender or exchange
offer, recapitalization, reorganization, dissolution, liquidation, issuance, disposition, or other similar transaction of any nature
that would have a similar financial result as the Transaction.
“Action”
means any legal action, binding arbitration, litigation, suit or other civil or criminal proceeding.
“Actual
Fraud” means an intentional or willful misrepresentation of material facts which constitutes common law fraud under the laws
of the State of Delaware.
“Affiliate”
means, with respect to any Person, any other Person controlling, controlled by, or under common control with such other Person. For purposes
of this definition, “control,” when used with respect to any Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership of voting securities, by Contract or otherwise, and the
terms “controlling” and “controlled” have correlative meanings. Notwithstanding the foregoing,
for purposes of this Agreement, the Companies will not be considered Affiliates of Seller.
“Antitrust
Laws” means the HSR Act, the Sherman Antitrust Act, as amended, the Clayton Act, as amended, the Federal Trade Commission Act,
as amended, and any other U.S. or other Law designed to prohibit, restrict or regulate actions for the purpose or effect of monopolization
or restraint of trade.
“Assumed
Plans” means, collectively, the Employee Benefit Plans and other arrangements (i) that will be transferred to the Buyer
or any of its Affiliates by operation of Law or pursuant to and (ii) that are set forth on Section 5.7(e) of the Disclosure
Schedule.
“ATF”
means the Bureau of Alcohol, Tobacco, Firearms and Explosives.
“ATF
Records” means the documentation evidencing regulatory transactions of the business as required by the ATF, associated ATF
forms and ATF issued variances.
“Base
Purchase Price” means an amount in cash equal to $175,000,000.
“Business”
means the business of designing, developing, manufacturing, and marketing bullets and ammunition to the military, law enforcement, and
commercial/consumer markets.
“Business
Day” means a day, other than Saturday, Sunday or other day on which commercial banks in the State of Delaware, Texas or New
York are authorized or required by law to close.
“Buyer
Transaction Documents” means those Transaction Documents to which Buyer is, or as of the Closing Date will be, a party.
“Cash”
means the aggregate cash and cash equivalents (including bank account balances and deposits in transit or not yet recorded), including
any evidences of short-term, highly liquid investments with original maturities of ninety (90) days or less, calculated in accordance
GAAP.
“CERCLA”
means the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. §§ 9601 et seq.), as amended.
“Closing
Date Purchase Price” means an amount equal to the sum of the following amounts, without duplication:
(A) the
Base Purchase Price; plus
(B) the
Closing Cash; plus
(C) the
Closing Working Capital; less
(D) the
Target Working Capital; less
(E) the
Closing Indebtedness; less
(F) the
Closing Transaction Expenses.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Companies’
Knowledge” means the actual knowledge of the Key Employees, assuming reasonable inquiry of each.
“Confidentiality
Agreement” means that certain Confidentiality Agreement, dated May 31, 2023, between Parent and JDH Capital Company.
“Consent”
means any consent, approval, authorization, consultation, waiver, novation, permit, grant, agreement, certificate, exemption, order,
registration, declaration, filing, notice of, with or to any Person or under any Law, or the expiration or termination of a waiting period
under any Antitrust Law, in each case required to permit the consummation of the Transaction.
“Contract”
means any legally binding contract, license, lease or other property agreement, license, indenture, note, bond, agreement, undertaking,
arrangement, indemnity, lease, permit, concession, franchise, commitment, purchase order, mortgage, partnership or joint venture agreement,
instrument or other legally binding agreement whether in writing or not.
“Copyrights”
means all copyrightable works of authorship (whether published or unpublished), all registered or unregistered copyrights, all copyright
registrations, applications for registration and renewals, extensions, and all rights corresponding to the foregoing throughout the world,
including rights to prepare, reproduce, perform, display, and distribute copyrighted works and copies, unregistered copyrightable works
and works of authorship, compilations and derivative works thereof.
“Damages”
means any and all damages, losses, liabilities, claims, debts, obligations, penalties, fines, fees, costs, expenses, amounts paid in
connection with any assessments, awards, judgments or settlements, charges, interest obligations, deficiencies and reasonable out-of-pocket
costs and expenses (including court costs, costs of investigators, and reasonable fees and expenses of attorneys, accountants, financial
advisors and other experts).
“Data
Room” means the electronic data room as of the Closing Date with Firmex entitled “Project Sparks”.
“Defect”
means a defect or impurity, whether in design, manufacture, processing, or otherwise, including any dangerous propensity associated with
any reasonably foreseeable use of a Product, or the failure to warn of the existence of any defect, impurity, or dangerous propensity.
“Disclosure
Schedule” means the schedules attached hereto as Exhibit B.
“Effect”
means any fact, occurrence, event, change, circumstance, condition, development or effect.
“Employee
Benefit Plans” means “employee benefit plans” within the meaning of Section 3(3) of ERISA, whether or
not subject to ERISA, and all material employment, bonus, pension, profit sharing, deferred compensation, incentive compensation, stock
option, equity incentive, phantom stock, retirement, vacation, severance, disability, death benefit, hospitalization, medical or other
compensatory plan, program or arrangement maintained by, or contributed to by, the Companies, or with respect to which the any of the
Companies has any liability.
“Environmental
Laws” means all applicable Laws relating to pollution or protection of the environment or human health and safety (to the extent
relating to exposure to Hazardous Materials), including Laws relating to Releases or threatened Releases of Hazardous Materials or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage, transport or handling of, or exposure to, Hazardous Materials.
“Equity
Interests” means, with respect to any Person, (a) the capital stock, partnership interests, membership interests, beneficial
interests or any other equity or ownership interests in such Person or (b) any instruments convertible into or exchangeable for,
or whose value is determined by reference to, any such interests.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA
Affiliate” means any Person that, together with the Seller and/or the Companies, would be deemed a “single employer”
within the meaning of Sections 414(b), (c), (m) or (o) of the Code.
“Estimated
Closing Date Purchase Price” means an amount equal to
(i) the
sum of the following amounts, without duplication:
(A) the
Base Purchase Price; plus
(B) the
Estimated Closing Cash; plus
(C) the
Estimated Closing Working Capital; less
(D) the
Target Working Capital; less
(E) the
Estimated Closing Indebtedness; less
(F) the
Estimated Closing Transaction Expenses.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“Excluded
Taxes” means any and all Income Taxes on any of the Companies or any of their Subsidiaries attributable to any transaction
occurring after the Closing on the Closing Date and that is not in the Ordinary Course of any of the Companies or any of their Subsidiaries
(other than any transaction contemplated by this Agreement).
“Federal
Firearms and Explosives Licenses” means (i) licenses issued under the provisions of Chapter 44 of Title 18, United States
Code, to engage in the business as that term is defined in Chapter 44 and (ii) licenses issued under the provisions of Chapter 40
of Title 18, United States Code, to import, manufacture or deal in explosive materials.
“Firearms
and Explosives Laws” means all foreign, federal, state and local laws governing or otherwise regulating the manufacture, marketing,
distribution, registration, use, importation, transportation, purchase or other acquisition, possession or sale or other transfer of
firearms, ammunition, or explosives, including the federal explosives laws (27 C.F.R. Part 555), the Gun Control Act of 1968, as
amended (Chapter 44 of Title 18, United States Code), the National Firearms Act of 1934, as amended (Chapter 53 of Title 26, United States
Code), the Arms Export Control Act (22 U.S.C. § 2778) and the International Traffic in Arms Regulations (22 C.F.R. § 120-130),
the export laws administered by the U.S. department of Commerce and other Laws (including public nuisance or similar Laws) relating to
firearms, ammunition or explosives.
“GAAP”
means United States generally accepted accounting principles as in effect on the Closing Date.
“Governing
Documents” means, with respect to any Person, (a) the articles of incorporation, certificate of incorporation, certificate
of formation or memorandum or articles of association (or the equivalent organizational documents) of such Person, (b) the bylaws
or operating agreement (or the equivalent governing documents) of such Person and (c) any document setting forth the designation,
amount or relative rights, limitations and preferences of any class or series of such Person’s authorized stock or other Equity
Interests.
“Governmental
Authority” means any federal, state, provincial, municipal, local or foreign government, governmental authority, regulatory
or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, court or tribunal.
“Governmental
Authorization” means any approval, consent, license, permit or other authorization issued, granted, given or otherwise made
available by or under the authority of any Governmental Authority or pursuant to any Laws, including those given by the ATF.
“Hazardous
Materials” means any chemical, material, waste or substance defined or regulated, as of the date hereof and the Closing Date,
under applicable Environmental Law as a hazardous waste, hazardous material, hazardous substance, extremely hazardous waste, restricted
hazardous waste, pollutant, contaminant, toxic substance or toxic waste, and regardless of its classification, lead, petroleum, petroleum
by-products, asbestos and asbestos-containing materials, per- and polyfluoroalkyl substances and polychlorinated biphenyls.
“HSR
Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended and the rules and regulations promulgated
thereunder, and any successor to such statute, rules or regulations.
“Income
Tax” means any Tax measured by, imposed on or calculated by reference to gross or net income, receipts or profits, including
any franchise, margin or similar Tax (however denominated), and any withholding Tax with respect thereto.
“Indebtedness”
means, with respect to any Person, at a particular time, the sum of all of the following, without duplication, whether or not included
as indebtedness in accordance with the Accounting Principles: (a) all obligations of such Person for borrowed money, whether secured
or unsecured, and all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or similar debt instruments;
(b) all obligations (contingent or otherwise) of such Person to pay the deferred purchase price of any property or services (including
the maximum potential amount payable with respect to earn-outs, purchase price adjustments or other payments related to acquisitions)
(other than accrued expenses and accounts payable in the Ordinary Course and reflected as a current liability in the calculation of Closing
Working Capital); (c) all obligations of such Person in respect of any lease of (or other arrangements conveying the right to use)
real or personal property, or a combination thereof, which obligations are required to be classified and accounted for under the Accounting
Principles as a capital lease; (d) all liabilities under any swap, future or option agreement or other similar Contracts, instruments
or derivatives designed to protect the Companies against fluctuations in interest rates, foreign exchange or other capital market risks;
(e) obligations in respect of any “earn out”, deferred purchase price, conditional sale, title retention agreement or
other similar obligations; (f) all accrued but unpaid bonuses, accrued but unpaid vacation and other paid time off, deferred compensation,
commissions, referral fees, severance, pay in lieu of notice or similar payments due to any current or former employee, consultant, or
other individual service provider of the Companies, together with the employer portion of any payroll, social security, unemployment
or similar Tax payable by the Companies as a result of the payment thereof (assuming all such payments are made at Closing); (g) any
unpaid contributions due from the Companies to, or unsatisfied liabilities and obligations of the Companies for “withdrawal liability”
to any “multiemployer plan” as such terms are defined in Title IV of ERISA; (h) any unfunded obligations of the Companies
under any defined benefit pension plan or any unfunded retiree welfare obligations of the Companies; (i) obligations for any deferred
payroll Taxes; (j) accrued interest, prepayment premiums or penalties or other costs, fees or expenses related to any of the foregoing;
(k) any unpaid bonuses, commissions, paid time off and other compensation payable to directors, managers, officers and employees
of the Companies for any period prior to the Closing (together with the employer portion of any withholding, payroll, employment or similar
Taxes associated therewith); (l) all indebtedness referred to in the foregoing clauses (a) through (k) that is directly
or indirectly guaranteed by such Person or secured by any Lien on any property or asset of such Person (but only to the extent of the
value of the assets and properties that is subject to such Lien); and (m) the amount of Accrued Income Taxes. Notwithstanding the
foregoing, to the extent an item is included in Net Working Capital or Transaction Expenses, then the dollar amount included in Net Working
Capital or Transaction Expenses will not be included in Indebtedness.
“Indemnified
Party” means either a Buyer Indemnified Person or Seller Indemnified Person, as applicable.
“Indemnitor”
means a Party that has an indemnity obligation to an Indemnified Party in accordance with the terms of this Agreement.
“Independent
Accounting Firm” means Ernst & Young LLP or, if Ernst & Young LLP is unavailable or unwilling to serve, a
mutually acceptable nationally recognized firm of independent certified public accountants that has not provided services to either Seller
or Buyer and its Subsidiaries in the preceding two (2) years; provided, that if Buyer and Seller are unable to select
such firm or expert within sixty (60) days after delivery of written notice of a disagreement, either Buyer or Seller may request the
American Arbitration Association to appoint, within twenty (20) Business Days from the date of such request, an independent accounting
firm meeting the requirements set forth above or a neutral and impartial certified public accountant with significant arbitration experience
related to purchase price adjustment disputes relating to transactions of a similar nature.
“Intellectual
Property” means all intellectual property, intellectual property rights and related priority rights protected, created or arising
under the Laws of the United States and the Laws of all foreign, international, state or other jurisdictions or international conventions,
including all: (i) Patents, (ii) Trademarks, (iii) internet domain names, (iv) Copyrights, including all rights in
and to Software and databases, (v) registrations and applications for any of the foregoing (i) through (iv), (vi) Trade
Secrets; (vii) uniform resource locators and Internet domain names and related registrations and applications and any and all renewals
or extensions, social media accounts and handles; (viii) moral rights associated with any of the foregoing; (ix) rights of
privacy and publicity, including the names, likenesses, voices and biographical information of real persons; (x) other intellectual
property rights, in each case whether registered or unregistered and including any and all applications (or rights to apply) for, and
renewals or extensions of, such rights and all similar or equivalent rights or forms of protection which subsist or will subsist now
or in the future or in any part of the world; (xi) all other intellectual property and proprietary rights and (xii) all tangible
embodiments of the foregoing and tangible embodiments of the foregoing.
“Judgment”
means any judgment, decision, order, decree, writ, injunction or ruling entered or issued by any Governmental Authority.
“Key
Employees” means, in each case, Michael J. Yates, Mike Painter, Matt Ohlson, John O’Brien and Greg Christensen.
“Laws”
means any federal, national, provincial, state, local, United States, foreign or other law (both common and statutory law and civil and
criminal law), statute, rule, regulation, treaty, ordinance, convention, rule, code, decree, Judgment, writ, regulatory code (including
statutory instruments, guidance notes, circulars, directives, decisions, rules, regulations or restrictions) or other order, or other
requirement or rule of law of any Governmental Authority, including, for the avoidance of doubt, all Firearms and Explosives Laws.
“Lien”
means any mortgage, deed of trust, hypothecation, pledge, lien (statutory or otherwise), security interest, charge or encumbrance of
any kind, whether voluntary or involuntary (including any conditional sale or other title retention agreement, any lease in the nature
thereof and any agreement to give any security interest) and, with respect to capital stock, any option or other right to purchase or
any restriction on voting or other rights.
“Lookback
Date” means January 1, 2021.
“Losses”
means any and all direct and actual losses, damages, penalties, fines, amounts paid in settlement, costs, Taxes and expenses (including
settlement and court costs and reasonable attorneys’ fees and expenses) net of any corresponding insurance proceeds of any of the
foregoing, but excluding any punitive damages.
“Malicious
Code” means any “virus”, “worm”, “time bomb”, “key-lock”, “back door”,
“drop dead device”, “Trojan horse”, “spyware”, or “adware” (as such terms are commonly
understood in the Software industry) or any other code designed or intended to have any of the following functions: (i) disrupting,
disabling, harming, or otherwise impeding in any manner the operation of, or providing unauthorized access to, a computer system or network
or other device on which such code is stored or installed, or (ii) compromising the privacy or data security of a user or damaging
or destroying any data or file without the user’s consent.
“Material
Adverse Effect” means any Effect that has caused a material adverse effect on (i) either of the Companies or the assets,
results of operations or financial condition thereof, taken as a whole, or (ii) the ability of the Seller Parties to consummate
the Transactions; provided, in determining whether the closing conditions have been satisfied, any such change or effect resulting
from any of the following, individually or in the aggregate, will not be considered when determining whether a Material Adverse Effect
has occurred: (A) any change in economic conditions generally or the United States’ capital and financial markets generally,
including changes in interest or exchange rates, (B) any change in the industry in which the Companies operate, (C) any change
in Laws or accounting standards, or the enforcement or interpretation thereof, applicable to the Companies, (D) conditions caused
by acts of war, sabotage, terrorism or military actions, or any escalation or worsening of any of the foregoing, (E) any hurricane,
flood, tornado, earthquake or other natural disaster or (F) the failure in and of itself of the Companies to achieve any financial
projections or forecasts (but not the underlying cause of such failure); provided, that any adverse effects resulting from matters
described in any of the foregoing clauses (A), (B), (C), (D) or (E) may be taken into account in determining whether there
is or has been a Material Adverse Effect to the extent, and only to the extent, that they have a disproportionate effect on the Companies
relative to other participants in the industries in which the Companies operate.
“Material
Interest” means direct ownership of voting securities or other voting interests representing at least 5% of the outstanding
voting power of a Person, equity securities or other equity interests representing at least 5% of the outstanding equity securities or
equity interests in a Person or, if a Person is a trust, beneficial interests in such Person.
“Net
Working Capital” means (without duplication), with respect to the Companies at any given time, the current assets of the Companies
less the current liabilities of the Companies, in each case, as calculated in accordance with the Accounting Principles as well as calculated
consistently with the example calculation set forth on Exhibit C and on a consolidated basis; provided, that,
the calculation of Net Working Capital will exclude (a) all Income Tax assets and Income Tax liabilities and all deferred Tax assets
and deferred Tax liabilities and (b) inventory of the type described on Exhibit E that is produced or manufactured after
the date of this Agreement.
“OFAC
Lists” means the Specially Designated Nationals and Blocked Persons list and all other sanctions lists administered by the
U.S. Treasury Department, Office of Foreign Assets Control.
“Open
Source Software” means any Software that contains or is derived in any manner (in whole or in part) from any software, code
or libraries that are distributed as free software or as open source software or under any licensing or distribution models similar to
open source or which may impose any other obligation or restriction with respect to a Person’s Intellectual Property, including,
without limitation, any software licensed under or subject to the Artistic License, the Mozilla Public License, the GNU Affero GPL, the
GNU GPL, the GNU LGPL, any other license that is defined as an Open Source License by the Open Source Initiative, and any similar license
or distribution model.
“Ordinary
Course” means in the ordinary course of the Business, consistent with past practices.
“Parent
Expenses” will be an amount, not to exceed $2,500,000, equal to the sum of all reasonable and properly documented, fees, costs
and expenses incurred or payable by any one or more of the Seller Parties to Persons unaffiliated with Parent or the Seller in connection
with the Transaction contemplated hereby in connection with the drafting, negotiation, execution and delivery of this Agreement and the
Transaction Documents (including, without limitation, all reasonable outside attorneys’, accountants’, consultants’,
investment bankers’, and other advisors’ fees and expenses).
“Patents”
means all patents and patent applications, patentable inventions and improvements, and provisionals, non-provisionals, continuations,
continuations in part, reissues, reexaminations, divisions, renewals, extensions, or disclosures relating to any of the foregoing, industrial
designs, industrial design registrations and applications for industrial design registrations, certificates of invention, utility models
and any and all other rights to inventions.
“Permitted
Liens” means (i) Liens for Taxes and other governmental charges and assessments that are not yet due and payable, and
Liens for Taxes that are being contested in good faith by appropriate proceedings, in each case, as set forth on Section A-1
of the Disclosure Schedule and for which adequate reserves are being maintained in accordance with the Accounting Principles,
(ii) Liens of landlords, lessors, carriers, warehousemen, employees, mechanics and materialmen and other like Liens arising in the
Ordinary Course for amounts that are not yet due and payable, (iii) with respect to Real Property, all minor non-monetary encumbrances
of record that do not, individually or in the aggregate, affect the use or value of any Real Property as it is currently being used by
one or both of the Companies, (iv) all non-exclusive licenses to Companies’ Owned Intellectual Property granted to customers
in the ordinary course of business on the Companies’ standard unmodified form of customer agreement, (v) with respect to Real
Property, all local and other Laws, including building and zoning Laws, now or hereafter in effect relating to or affecting any real
property, that do not, individually or in the aggregate, impair the use and operation of such real property for the Business conducted
thereon and (vi) covenants, conditions, restrictions, easements, survey, exceptions, imperfections of title, Liens or other title
matters affecting any tangible asset (including the Real Property) owned by the Companies that do not secure Indebtedness and that do
not materially impair the ownership, use or value of such asset.
“Person”
means any individual, corporation (including any non-profit corporation), company, general or limited partnership, limited liability
company, joint venture, estate, trust, unincorporated organization, association, organization or other entity or form of business enterprise
or Governmental Authority.
“Personal
Information” means any information that relates to, or alone or in combination with other information held by the Companies
can be used, directly or indirectly, to identify, an individual, and/or is considered “personally identifiable information,”
“personal information,” “personal data,” or any similar term by any applicable Laws.
“Pre-Closing
Straddle Period” means the portion of the Straddle Period that begins on or before the Closing Date and ends on the Closing
Date.
“Pre-Closing
Taxes” means (a) all Taxes imposed on any of the Companies or their Subsidiaries attributable to any Pre-Closing Tax
Period or any Pre-Closing Straddle Period (such Taxes for a Straddle Period to be apportioned in accordance with Section 5.6(c)),
(b) Taxes of or imposed on Seller and its Affiliates (other than the Companies), (c) Income Taxes imposed on any one of
the Companies or their Subsidiaries as a result of having been a member or any U.S. federal “affiliated group” (as
defined in Section 1504 of the Code) or similar state, local or foreign combined, unitary or analogous group, in each case, of
which any of the Companies or their Subsidiaries is or was a member on or prior to the Closing Date, pursuant to Treasury
Regulations Section 1.1502-6 or analogous state, local or foreign Law, (d) all Taxes arising from the settlement,
repayment, retirement, cancellation or elimination of any intercompany balances between the Companies or between one or more of the
Companies and Seller or one or more of its Affiliates and (e) Taxes arising from the breach by Seller of any covenant set forth
in this Agreement; provided, however, that Pre-Closing Taxes will not include any Excluded Taxes.
“Pre-Closing
Tax Period” means any tax period ending on or prior to the Closing Date.
“Proceeding”
means any action, arbitration, audit, hearing, investigation, litigation or suit (whether civil, criminal, administrative, investigative
or informal) commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental Authority or arbitrator.
“Product”
means any product or service developed, designed, manufactured, marketed, sold, distributed, performed, produced, serviced and/or otherwise
introduced into the stream of commerce or made available, by or on behalf of the Companies, including any product or service sold by
the Companies as distributor, agent, or pursuant to any other contractual relationship with a manufacturer and any product or service
currently under development by the Companies.
“Public
Official” means (a) any elected or appointed government official, officer, employee or Person acting in an official or
public capacity on behalf of a Governmental Authority, (b) any official or employee of a quasi-public or non-governmental international
organization, (c) any employee or other Person acting for or on behalf of any entity that is wholly or partially government owned
or controlled by a Governmental Authority, (d) any Person exercising legislative, administrative, judicial, executive, or regulatory
functions for or pertaining to a Governmental Authority (including any independent regulator), (e) any political party official,
officer, employee, or other Person acting for or on behalf of a political party and (f) any candidate for public office.
“Purchase
Price” means an amount equal to the Estimated Closing Date Purchase Price, as adjusted after the Closing by: (a) payments
made under Section 1.4 and (b) any post-Closing indemnification payment paid by Seller or the Parent to any Buyer Indemnified
Party that, in each case pursuant to this Agreement, is to be treated as an adjustment to the consideration payable to purchase the Seller
Interest.
“R&W
Policy Limit” means an amount equal to $17,000,000.
“Related
Person” means (a) with respect to an individual (i) each member of such individual’s immediate family, (ii) any
Person directly or indirectly controlled by such individual or one or more members of such individual’s immediate family, and (iii) any
Person with respect to which such individual or one or more members of such individual’s immediate family serves as a director,
officer, manager, partner, executor, or trustee (or similar capacity), and (b) with respect to a Person other than an individual,
(i) any Affiliate of such Person, (ii) any Person that holds a Material Interest in such Person, (iii) each Person that
serves as a director, officer, manager, partner, executor, or trustee of such Person (or in a similar capacity), (iv) any Person
in which such Person holds a Material Interest, and (v) any Person with respect to which such Person serves as a general partner
or a trustee (or in a similar capacity). Notwithstanding anything to the contrary herein, the Seller and Parent are each a Related Person
of the Companies.
“Release”
means any release, spill, emission, discharge, leak, pumping, injection, deposit, disposal, dispersal, leaching or migration into or
upon the environment (including ambient air, surface water, groundwater and surface or subsurface strata) or into or out of any property.
“Remedies
Exception” means applicable bankruptcy, insolvency, reorganization, moratorium and other similar existing or future Laws relating
to or limiting creditors’ rights generally, and general principles of equity relating to the availability of specific performance
and injunctive and other forms of equitable relief.
“Representative”
or “Representatives” means, with respect to a particular Person, any director, manager, member, limited or general
partner, officer, employee, agent, consultant, advisor or other representative of such Person, including outside legal counsel, accountants
and financial advisors.
“Restriction
Period” means the period beginning on the Closing Date and ending upon the fifth (5th) anniversary of the Closing
Date.
“Rights”
means any subscriptions, options, warrants, rights (including phantom equity or equity appreciation rights), preemptive rights, voting,
approval or proxy rights, or right of registration, conversion or exchange with respect to any of the Equity Interests of the Companies,
or any Contract obligating the Companies, or any Affiliate of the Companies, to issue, sell, purchase or register any Equity Interests
of the Companies or to grant, extend or enter into any Contract with respect to the Equity Interests of the Companies.
“Sanctioned
Country” means, at any time, a country or territory that is itself the target of comprehensive Sanctions (as of the date of
this Agreement, Cuba, Iran, North Korea, Syria, the Crimea region of Ukraine, the so-called Donetsk People’s Republic, and
the so-called Luhansk People’s Republic).
“Sanctioned
Person” means any Person that is the target of Sanctions, including (a) any Person listed in any Sanctions-related list
of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department
of State, the United Nations Security Council, the European Union, any Member State of the European Union, or the United Kingdom; (b) any
Person operating, organized, or resident in a Sanctioned Country; (c) the government of a Sanctioned Country or the Government of
Venezuela; or (d) any Person 50% or more owned or controlled by any such Person or Persons or acting for or on behalf of such Person
or Persons.
“Sanctions”
means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government,
including those administered by OFAC or the U.S. Department of State, or (b) the United Nations Security Council, the European Union,
any European Union Member State or the United Kingdom.
“Seller’s
Knowledge” means the actual knowledge of the Key Employees, assuming reasonable inquiry of each.
“Software”
means all (i) computer programs and other software, including any and all software implementations of algorithms, models and methodologies,
whether in source code or object code or other form, (ii) databases and other computerized compilations, including any and all data
and collections of data, whether machine readable or otherwise, and all data and information included therein, (iii) descriptions,
flowcharts and other work product used to design, plan, organize and develop any of the foregoing, screens, user interfaces, report formats,
firmware, development tools, templates, menus, buttons and icons and (iv) all documentation including user manuals and other training
documentation related to any of the foregoing.
“Straddle
Period” means any tax period including, but not ending on, the Closing Date.
“Subsidiary”
means, with respect to any specified Person, any corporation, partnership, limited liability company, or other entity of which more than
fifty percent (50%) of the outstanding capital stock or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other managers of such corporation, partnership, limited liability company, or other entity is at the time
directly or indirectly owned by, or the management is otherwise controlled by, such Person (irrespective of whether, at the time, capital
stock or other ownership interests of any other class or classes of such corporation, partnership, limited liability company, or other
entity have or might have voting power by reason of the happening of any contingency).
“Target
Agreements” means, collectively, the Contracts relating to (a) the purchase by Seller of the Seller Interest and (b) the
purchase by Sierra of the assets of the portion of the Business now comprising Barnes.
“Target
Working Capital” means $53,000,000.
“Tax”
or “Taxes” means any federal, state, local or foreign taxes, duties or levies, charged by any Governmental Authority
in the nature of a tax, including in respect of income, alternative minimum or add-on tax, estimated, gross or net income, gross or net
receipts, sales, use, transfer, gains, intangibles, ad valorem, value-added, franchise, registration, title, license, capital, paid-up
capital, profits, withholding, payroll, employment, excise, severance, stamp, occupation, premium, recording, real property, personal
property, federal highway use, commercial rent, environmental or windfall profit, unemployment, social security tax (or similar tax,
including the Federal Insurance Contributions Act), custom, duty or other tax, or charges and fees of any kind whatsoever, together with
any interest, penalties, or additions to tax, and any interest or penalties imposed with respect to the filing, obligation to file or
failure to file any Tax Return, in each case, whether disputed or not.
“Tax
Agreement” means an agreement that includes the sharing or allocation of, or indemnification for, Taxes, but excluding customary
Tax indemnification provisions in commercial contracts not primarily relating to Taxes.
“Tax
Return” means all federal, state, local, provincial and foreign return, declaration, report, or information return or statement
relating to Taxes, including any schedules and amendments thereto.
“Taxing
Authority” means any Governmental Authority responsible for the assessment, imposition or collection of any Tax.
“Trade
Laws and Regulations” means (a) all applicable trade, export control, import, and antiboycott laws and regulations imposed,
administered, or enforced by the U.S. government, including the Arms Export Control Act (22 U.S.C. § 1778), the International Emergency
Economic Powers Act (50 U.S.C. §§ 1701–1706), Section 999 of the Internal Revenue Code, the U.S. customs laws at
Title 19 of the U.S. Code, the Export Control Reform Act of 2018 (50 U.S.C. §§ 4801-4861), the International Traffic in Arms
Regulations (22 C.F.R. Parts 120–130), the Export Administration Regulations (15 C.F.R. Parts 730-774), the U.S. customs regulations
at 19 C.F.R. Chapter 1, and the Foreign Trade Regulations (15 C.F.R. Part 30); and (b) all applicable trade, export control,
import, and antiboycott laws and regulations imposed, administered or enforced by any other country, except to the extent inconsistent
with U.S. law.
“Trade
Secrets” means all non-public technology, inventions (whether patentable or not and whether reduced to practice or not), invention
disclosures, improvements, trade secrets and know-how and other proprietary information, including proprietary processes, formulae, algorithms,
models, procedures, techniques, ideas, research and development, data, specifications, processes, and methodologies.
“Trademarks”
means all trademarks, service marks, certification marks, corporate names, trade names, trade dress, fictitious names, assumed names,
logos, slogans, other indicia of commercial source or origin, general intangibles of like nature, and any and all registrations and applications
for any of the foregoing, together with all goodwill related to the foregoing.
“Transaction
Documents” means this Agreement, the Disclosure Schedule, the TSA and the other agreements, certificates, schedules and other
documents contemplated by or delivered or executed by the Parties in connection with this Agreement, including but not limited to, the
Buyer Transaction Documents, and the Seller Transaction Documents.
“Transaction
Expenses” means, without duplication, solely to the extent not paid and/or otherwise satisfied prior to the Closing, the sum
of any fees, costs and expenses incurred or payable by any one or more of the Seller Parties in connection with (a) the drafting,
negotiation, execution and delivery of this Agreement and the other Transaction Documents, (b) preparing for (including sell-side
diligence), evaluating proposals with respect to or consummating the Transaction, including, without limitation, fees and expenses owing
to KK, Deloitte, KPMG, Houlihan Lokey Capital, Inc. or (c) any sale bonus, success, retention, change of control or similar
payment, severance or other payment incurred or payable by any one or more of the Seller Parties as a result of the consummation of the
Transaction (including any such payments under any Employee Benefit Plan), together with all payroll, employment or similar Taxes imposed
with respect to any such payment. Notwithstanding the foregoing, to the extent an item is included in Net Working Capital or Indebtedness,
then the dollar amount included in Net Working Capital or Indebtedness will not be included in Transaction Expenses.
“WARN
Act” means the Worker Adjustment and Retraining Notification Act of 1988, its regulations, or any similar applicable foreign,
state, or local Law.
Other
capitalized terms defined elsewhere in the Agreement and not defined in this Exhibit A will have the meanings assigned to
such terms in this Agreement in the sections referenced below.
Term |
Section |
Adjustment
Amount |
Section 1.4(f) |
Affiliated
Group Tax Returns |
Section 5.6(b) |
Agreement |
Introduction |
Barnes |
Background
Paragraph C |
Barnes
Interest |
Background
Paragraph C |
Buyer |
Introduction |
Buyer
Fundamental Representations |
Section 8.1(a) |
Buyer
Indemnified Persons |
Section 6.1 |
Buyer
Released Parties |
Section 10.3(b) |
Buyer
Releasing Parties |
Section 10.3(d) |
Term |
Section |
Buyer
Releasing Party |
Section 10.3(d) |
Cap |
Section 6.5(a) |
Closing |
Section 1.1 |
Closing
Cash |
Section 1.4(b) |
Closing
Date |
Section 1.1 |
Closing
Indebtedness |
Section 1.4(b) |
Closing
Statement |
Section 1.4(b) |
Closing
Transaction Expenses |
Section 1.4(b) |
Closing
Working Capital |
Section 1.4(b) |
Companies |
Background
Paragraph C |
Companies’
Intellectual Property |
Section 3.11(a) |
Companies’
Licensed Intellectual Property |
Section 3.11(c) |
Companies’
Owned Intellectual Property |
Section 3.11(b) |
Continuing
Employees |
Section 5.7(a) |
Covered
Persons |
Section 5.8(a) |
Data
Processors |
Section 3.19 |
Dispute
Notice |
Section 1.4(c) |
Disputed
Items |
Section 1.4(c) |
Estimated
Closing Cash |
Section 1.4(a) |
Estimated
Closing Indebtedness |
Section 1.4(a) |
Estimated
Closing Statement |
Section 1.4(a) |
Estimated
Closing Transaction Expenses |
Section 1.4(a) |
Estimated
Closing Working Capital |
Section 1.4(a) |
Financial
Statements |
Section 3.7(a) |
Foreign
Interests |
Section 4.7(b) |
Fundamental
Representation Losses |
Section 6.5(a) |
Governmental
Consents |
Section 5.1(a) |
IP
Agreements |
Section 3.11(c) |
Indemnification
Claim |
Section 6.4(a) |
Initial
Termination Date |
Section 9.1(d) |
Insurance
Organizations |
Section 3.8(d) |
Intercompany
Accounts |
Section 10.3(a) |
IT
Assets |
Section 3.11(k) |
KK |
Section 1.1 |
Latest
Balance Sheet |
Section 3.7(a) |
Latest
Balance Sheet Date |
Section 3.7(a) |
Leased
Real Property |
Section 3.8(a) |
Lender
Release Letters |
Section 5.5 |
Liabilities |
Section 3.7(b) |
Material
Contracts |
Section 3.9(a) |
Most
Recent Fiscal Year End |
Section 3.7(a) |
Occurrence-Based
Policies |
Section 5.9 |
OECD
Convention |
Section 3.19 |
OFAC |
Section 4.7 |
Ordinary
Representation Losses |
Section 6.5(a) |
Owned
Real Property |
Section 3.8 |
Parent |
Introduction |
Parties |
Introduction |
Party |
Introduction |
Pre-Closing
Tax Returns |
Section 5.6(b) |
Term |
Section |
Projections |
Section 10.7 |
R&W
Policy |
Section 4.14 |
Real
Property |
Section 3.8(a) |
Real
Property Leases |
Section 3.8(a) |
Real
Property Permits |
Section 3.8(d) |
Receivables |
Section 3.16(b) |
Released
Parties |
Section 10.3(d) |
Releasing
Parties |
Section 10.3(d) |
Resolution
Period |
Section 1.4(d) |
Scheduled
Insurance Policies |
Section 3.29 |
Second
Request |
Section 5.1(b) |
Security
Incident |
Section 3.20 |
Seller |
Introduction |
Seller
Indemnified Persons |
Section 6.2 |
Seller
Interest |
Background
Paragraph B |
Seller
Officer Certificate |
Section 1.3(a)(vii) |
Seller
Parties |
Section 1.4(a) |
Seller
Parties’ Fundamental Representations |
Section 7.1(a) |
Seller
Released Parties |
Section 10.3(d) |
Seller
Releasing Parties |
Section 10.3(b) |
Seller
Releasing Party |
Section 10.3(b) |
Seller
Transaction Documents |
Section 2.2(a) |
Sierra |
Background
Paragraph B |
Straddle
Period Tax Returns |
Section 5.6(b) |
Target
Agreements |
Section 3.9(a)(iii) |
Termination
Date |
Section 9.1(d) |
Third
Party Claim |
Section 6.4(a) |
Top
Customers |
Section 3.15(a) |
Top
Suppliers |
Section 3.15(b) |
Transaction |
Background
Paragraph D |
Transfer
Instrument |
Section 1.3(a)(viii) |
Transfer
Taxes |
Section 5.6(d) |
Unresolved
Items |
Section 1.4(e) |
Exhibit 99.1
Clarus Enters into Definitive Agreement to Sell Precision
Sport Segment
SALT LAKE CITY, Utah – December 29,
2023 – Clarus Corporation (NASDAQ: CLAR) (“Clarus” and/or the “Company”), a global company focused
on the outdoor and consumer enthusiast markets, today announced that it has entered into a definitive purchase and sale agreement (the
“Agreement”) to sell its Precision Sport segment, which is comprised of the Company’s Sierra Bullets, L.L.C. and Barnes
Bullets – Mona, LLC subsidiaries, to a U.S.-based non-strategic buyer that is not affiliated with the Company or any of its officers
or members of its board of directors, in an all-cash transaction for $175 million at closing, subject to a customary working capital adjustment.
The transaction is expected to close in the first quarter of 2024, subject to customary closing conditions, including the receipt of regulatory
approvals.
The entry into the Agreement is the conclusion of the Company’s
previously announced process for the review and evaluation of the potential sale of the Precision Sport segment conducted by a special
committee of independent directors of the Company (the “Special Committee”) created in response to the receipt by the Company
of a non-binding indication of interest from Warren B. Kanders, to acquire the Company’s Precision Sport segment, through an affiliated
entity. Mr. Kanders is the Company’s Executive Chairman of the Board of Directors.
“After a comprehensive strategic review process, we are pleased
to have agreed on a transaction to sell the Precision Sport segment at an attractive price,” said Nicholas Sokolow, lead independent
director of the Board and Chairman of the Special Committee. He continued, “After the Company received multiple offers for the sale
of the Precision Sport segment, the Special Committee has unanimously concluded after careful deliberation that this transaction is in
the best interest of the Company’s stockholders.”
The Company intends to use the proceeds from the sale to pay down its
debt and the remaining funds will be available for general corporate purposes.
Kane Kessler, P.C. is acting as legal advisor to the Company in
the transaction, Richards, Layton & Finger, P.A. is acting as legal advisor to the Special Committee and Houlihan
Lokey Capital, Inc. is acting as financial advisor to the Special Committee.
About Clarus Corporation
Headquartered in Salt Lake City, Utah,
Clarus Corporation is a global leading designer, developer, manufacturer and distributor of best-in-class outdoor equipment and lifestyle
products focused on the outdoor and consumer enthusiast markets. Our mission is to identify, acquire and grow outdoor “super fan”
brands through our unique “innovate and accelerate” strategy. We define a “super fan” brand as a brand that creates
the world’s pre-eminent, performance-defining product that the best-in-class user cannot live without. Each of our brands has a
long history of continuous product innovation for core and everyday users alike. The Company’s products are principally sold globally
under the Black Diamond®, Rhino-Rack®, MAXTRAX®, TRED Outdoors®, Sierra®,
and Barnes® brand names through outdoor specialty and online retailers, our own websites, distributors, and original equipment
manufacturers. Our portfolio of iconic brands is well-positioned for sustainable, long-term growth underpinned by powerful industry trends
across the outdoor and adventure sport end markets. For additional information, please visit www.claruscorp.com or the brand websites
at www.blackdiamondequipment.com, www.rhinorack.com, www.maxtrax.com.au, www.tredoutdoors.com, www.sierrabullets.com,
www.barnesbullets.com, or www.pieps.com.
Forward-Looking Statements
Please note that in this press release we may use words such as
“appears,” “anticipates,” “believes,” “plans,” “expects,” “intends,”
“future,” and similar expressions which constitute forward-looking statements within the meaning of the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are made based on our expectations and beliefs concerning
future events impacting the Company and therefore involve a number of risks and uncertainties. We caution that forward-looking statements
are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements.
Potential risks and uncertainties that could cause the actual results of operations or financial condition of the Company to differ materially
from those expressed or implied by forward-looking statements in this release, include, but are not limited to, the possibility that the
transaction contemplated by the Agreement will not be completed on the terms and conditions, or on the timing, currently contemplated,
and that it may not be completed at all, due to a failure to obtain or satisfy, in a timely manner or otherwise, required regulatory approvals
and other conditions to the closing of the transaction or for other reasons, and the failure to complete the transaction which could negatively
impact the price of the Company’s shares of commons stock or the business, results of operations, and financial condition of the
Company, as well as those risks and uncertainties more fully described from time to time in the Company's public reports filed with the
Securities and Exchange Commission, including under the section titled “Risk Factors” in the Company's Annual Report on Form 10-K,
and/or Quarterly Reports on Form 10-Q, as well as in the Company’s Current Reports on Form 8-K. All forward-looking statements
included in this press release are based upon information available to the Company as of the date of this press release and speak only
as of the date hereof. We assume no obligation to update any forward-looking statements to reflect events or circumstances after the date
of this press release.
Company Contacts:
Michael J. Yates
Chief Financial Officer
Tel 1-801-993-1304
mike.yates@claruscorp.com
Investor Relations Contact:
Gateway Group, Inc.
Cody Slach
Tel 1-949-574-3860
CLAR@gateway-grp.com
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