Exhibit 10.1

EXECUTION VERSION

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STOCK PURCHASE AGREEMENT

by and among

THE MARLIN FIREARMS COMPANY,

REMINGTON ARMS COMPANY, INC., as Buyer

THE SHAREHOLDERS OF THE MARLIN FIREARMS COMPANY PARTY HERETO, as Sellers

and the

SHAREHOLDERS’ REPRESENTATIVE

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TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

Page

 

 

 

 

 

ARTICLE 1 SALE OF THE SHARES AND CLOSING

1

 

 

 

1.1

 

Sale and Purchase of the Shares

1

 

1.2

 

Closing

1

 

1.3

 

Subsequent Actions

2

 

1.4

 

Lost Certificates

3

 

 

 

 

 

ARTICLE 2 RETIREMENT UNDERFUNDING ADJUSTMENT

3

 

 

 

2.1

 

Closing Retirement Underfunding

3

 

2.2

 

Disagreement and Resolution

3

 

2.3

 

Adjustment to Retirement Underfunding

4

 

 

 

 

 

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SELLERS

5

 

 

 

3.1

 

Authority and Enforceability

5

 

3.2

 

Conflicts

5

 

3.3

 

Capitalization

6

 

3.4

 

Business Involvement

6

 

 

ARTICLE 4 REPRESENTATIONS AND WARRANTIES AS TO THE COMPANY AND THE
                        COMPANY SUBSIDIARY

6

 

 

 

4.1

 

Organization and Power

6

 

4.2

 

Authority and Enforceability

6

 

4.3

 

Conflicts

7

 

4.4

 

Capitalization

7

 

4.5

 

Financial Statements

8

 

4.6

 

No Undisclosed Liabilities

8

 

4.7

 

Operations Since the Most Recent Audited Balance Sheet Date

9

 

4.8

 

Taxes

11

 

4.9

 

Permits

13

 

4.10

 

Real Property

13

 

4.11

 

Intellectual Property

14

 

4.12

 

Compliance with Laws

15

 

4.13

 

Contracts

15

 

4.14

 

Status of Contracts

17

 

4.15

 

Employee Benefits

17

 

4.16

 

Environmental Compliance

19

 

4.17

 

Employee Relations and Agreements

21

 

4.18

 

Litigation

21

 

4.19

 

Insurance

22

 

4.20

 

Suppliers and Customers

22

 

4.21

 

Accounts Receivable

23

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4.22

 

Properties

23

 

4.23

 

Bank Accounts

23

 

4.24

 

Powers of Attorney; Guarantees

24

 

4.25

 

Transactions with Affiliates

24

 

4.26

 

Inventory

24

 

4.27

 

Corrupt Practices

24

 

4.28

 

Books and Records

25

 

4.29

 

Product Liabilities and Product Warranties

25

 

4.30

 

Waiver and Termination of the Stockholders Agreement

25

 

4.31

 

Vintage Firearms Value

25

 

4.32

 

No Brokers

25

 

 

 

 

 

ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF BUYER

25

 

 

 

5.1

 

Organization of Buyer

25

 

5.2

 

Authority of Buyer

26

 

5.3

 

No Violation of Law and Agreements

26

 

5.4

 

No Litigation or Regulatory Action

26

 

5.5

 

Financial Ability

26

 

5.6

 

Solvency

26

 

5.7

 

Independent Analysis

27

 

5.8

 

Investment Intention

27

 

5.9

 

No Brokers

27

 

 

 

 

 

ARTICLE 6 ACTIONS PRIOR TO THE CLOSING DATE

27

 

 

 

6.1

 

Consents of Third Parties; Governmental Approvals

27

 

6.2

 

Operations Prior to the Closing Date

28

 

6.3

 

Commercially Reasonable Efforts

30

 

6.4

 

Confidentiality; Access to Information

30

 

6.5

 

Notification of Certain Matters

31

 

6.6

 

No Solicitations

31

 

6.7

 

Financing Assistance

31

 

6.8

 

Indebtedness

32

 

6.9

 

International Boycott Report

32

 

6.10

 

Pension Plan

32

 

6.11

 

No Transfers

32

 

6.12

 

Information Return on Foreign Corporation Ownership

32

 

6.13

 

Distributions

32

 

 

ARTICLE 7 POST-CLOSING AGREEMENTS

33

 

 

 

7.1

 

Employees, Employee Benefits, Hiring of Employees

33

 

7.2

 

Indemnification and Insurance

34

 

7.3

 

Other Tax Matters

34

 

7.4

 

Management Amount and Expense Amount

35

 

7.5

 

Vintage Firearms

36

 

7.6

 

Environmental

36

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ARTICLE 8 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER

37

 

 

 

8.1

 

No Misrepresentation or Breach of Covenants and Warranties

37

 

8.2

 

No Injunction

37

 

8.3

 

Required Consents

37

 

8.4

 

Escrow Agreement

37

 

8.5

 

Trademark Agreement

37

 

8.6

 

Laws

37

 

8.7

 

Parachute Payments

37

 

8.8

 

Release of Liens

38

 

8.9

 

Resignation of Directors

38

 

8.10

 

Non-Competition Agreement

38

 

8.11

 

Waiver and Termination Agreement

38

 

8.12

 

Waiver

38

 

 

ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPANY

38

 

 

 

9.1

 

No Misrepresentation or Breach of Covenants and Warranties

38

 

9.2

 

Required Consents

39

 

9.3

 

No Injunction

39

 

9.4

 

Escrow Agreement

39

 

9.5

 

Trademark Agreement

39

 

9.6

 

Laws

39

 

 

ARTICLE 10 INDEMNIFICATION

39

 

 

 

10.1

 

Indemnification by the Sellers

39

 

10.2

 

Indemnification by Buyer

40

 

10.3

 

Tax Indemnification

40

 

10.4

 

Notice of Claims

41

 

10.5

 

Third Person Claims

41

 

10.6

 

Limitations

42

 

10.7

 

Mitigation

43

 

10.8

 

Subrogation

43

 

10.9

 

No Offset

43

 

 

ARTICLE 11 TERMINATION

43

 

 

 

11.1

 

Termination

43

 

 

ARTICLE 12 GENERAL PROVISIONS

45

 

 

 

12.1

 

Shareholders’ Representative

45

 

12.2

 

Survival of Covenants, Representations and Warranties

46

 

12.3

 

No Public Announcement

46

 

12.4

 

Notices

46

 

12.5

 

Successors and Assigns

48

 

12.6

 

Access to Records and Employees after Closing

48

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12.7

 

Entire Agreement

49

 

12.8

 

Interpretation

49

 

12.9

 

Amendments and Waivers

50

 

12.10

 

Expenses

50

 

12.11

 

Partial Invalidity

50

 

12.12

 

Execution in Counterparts; Facsimile

50

 

12.13

 

Governing Law

51

 

12.14

 

Consent to Jurisdiction; Waiver of Jury Trial

51

 

12.15

 

Disclaimer of Warranties

51

 

12.16

 

Time of Essence

51

 

12.17

 

References to U.S. Dollars

51

 

12.18

 

Further Assurances

51

 

12.19

 

Release

52

 

12.20

 

No Rescission

53

 

12.21

 

Conflict of Interest

53

 

 

ARTICLE 13 DEFINITIONS

53

 

 

 

13.1

 

Definitions

53

 

13.2

 

Index of Defined Terms

59

 

 

 

 

Annex A

 

Retirement Underfunding Methods and Assumptions

 

 

 

 

 

 

Exhibit A:

 

Escrow Agreement

 

Exhibit B:

 

Waiver and Termination Agreement

 

Exhibit C:

 

Trademark Coexistence Agreement

 

Exhibit D:

 

Non-Competition Agreement

 

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STOCK PURCHASE AGREEMENT

                    THIS STOCK PURCHASE AGREEMENT (this “Agreement”) is entered
into as of December 21, 2007, by and among The Marlin Firearms Company, a
Connecticut corporation (the “Company”), Remington Arms Company, Inc., a
Delaware corporation (“Buyer”), the shareholders of the Company, listed on the
signature pages hereto, whether such signature page is delivered on the date
hereof or at any time prior to the Closing (as defined below) (each, a “Seller”
and collectively, the “Sellers”) and Frank Kenna, III, solely in his capacity as
the Shareholders’ Representative (as described and defined in Section 12.1).
Buyer, the Company, the Sellers and the Shareholders’ Representative are
sometimes collectively referred to as the “Parties.”

RECITALS

                    A.          WHEREAS, the Sellers (assuming each shareholder
of the Company has executed this Agreement) own all of the issued and
outstanding shares of capital stock of the Company consisting of 86,773 shares
of Class A Common Stock and 760,936 shares of Class B Common Stock (the
“Shares”); and

                    B.          WHEREAS, the Sellers desire to sell, and Buyer
desires to purchase, the Shares on the terms and subject to the conditions set
forth in this Agreement.

AGREEMENT

                    NOW, THEREFORE, in consideration of the foregoing, the
representations, warranties and agreements herein contained and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, intending to be legally bound hereby, the Parties agree as follows
(Section 13.1 contains definitions of certain terms used in this Agreement, and
Section 13.2 contains an index of other terms defined elsewhere in this
Agreement):

ARTICLE 1
SALE OF THE SHARES AND CLOSING

                    1.1          Sale and Purchase of the Shares. Upon the terms
and subject to the conditions set forth in this Agreement, at the Closing, each
Seller will sell to Buyer, and Buyer will purchase from each Seller, all of the
right, title and interest of such Seller in and to the number of Shares set
forth opposite such Seller’s name on Schedule 1.1.

                    1.2          Closing.

                                   (a)          The closing of the sale and
purchase of the Shares (the “Closing”) shall be consummated on the third
(3rd) Business Day after the conditions set forth in Articles 8 and 9 (other
than actions to be taken or items to be delivered at the Closing) have been
satisfied or waived, at the offices of Wiggin and Dana LLP (“Wiggin and Dana”),
450 Lexington Avenue, New York, New York, or at such other place and time as
shall be agreed upon by Buyer and the Company; provided, that Buyer may extend
such date for up to ten (10) Business Days, in order to complete the Acquisition
Financing (such that the financing closing can occur

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simultaneously with the Closing). The time and date on which the Closing is
actually held is referred to herein as the “Closing Date.”

                                   (b)          At the Closing, each Seller will
deliver to Buyer, free and clear of all Encumbrances, certificates representing
all of the Shares set forth opposite such Seller’s name on Schedule 1.1, duly
endorsed in blank and bearing or accompanied by all requisite stock transfer
stamps.

                                   (c)          At the Closing, Buyer shall
deposit with the Escrow Agent cash in an amount equal to Five Million Two
Hundred Thousand Dollars ($5,200,000) (the “Escrow Amount”). The Escrow Amount
shall be held and released by the Escrow Agent in accordance with the Escrow
Agreement substantially in the form of Exhibit A hereto, to be executed at the
Closing by Buyer, the Shareholders’ Representative and the Escrow Agent (the
“Escrow Agreement”).

                                   (d)          At the Closing, Buyer shall
deliver to each Seller by wire transfer of immediately available funds to an
account designated by such Seller in writing to Buyer at least three (3)
Business Days prior to the Closing, an amount equal to such Seller’s portion of
the Base Amount, determined in accordance with the percentage of the Shares held
by such Seller, as set forth on Schedule 1.1, minus such Seller’s portion of (i)
the Escrow Amount and (ii) the Trust Amount, in each case determined in
accordance with the percentage of the Shares held by such Seller, as set forth
on Schedule 1.1.

                                   (e)          The Company shall deliver to
Buyer on the date that is three (3) Business Days prior to the Closing a
statement signed by an officer of the Company (such statement, the “Expense
Statement”) setting forth all costs, fees and expenses of the Company and the
Company Subsidiary paid, payable, or incurred since January 1, 2007 in
connection with the transactions contemplated hereby (including a reasonable
estimate of all costs, fees and expenses paid, payable, or incurred through the
Closing Date), including, without limitation, the costs, fees and expenses paid,
payable, or incurred in connection with (i) the sale process relating to the
Company, (ii) the drafting and negotiating of the letter of intent between
Cerberus Capital Management, LP and the Company, dated July 24, 2007 and this
Agreement, the Schedules and all other agreements contemplated hereby and the
consummation of the transactions contemplated hereby and (iii) accounting,
actuarial, legal and financial advisors with respect to the foregoing (the
aggregate of such costs, fees and expenses, the “Expense Amount”). The Expense
Statement shall also (A) describe any payments made to partially fund any
underfunding under Pension Plans from the date hereof until the Closing Date (B)
set forth a detailed calculation of the Management Amount and (C) set forth the
amount of the December Dividend, however it is acknowledged that neither of the
foregoing are to be included in the Expense Amount. The Expense Amount shall not
include any allocation for the time of employees of the Company.

                    1.3          Subsequent Actions. At any time or from time to
time after the Closing, the Sellers shall execute and deliver to Buyer such
other documents and instruments, provide such materials and information and take
such other actions as Buyer may reasonably request to more effectively vest
title to the Shares in Buyer and, to the full extent permitted by Law, to put
Buyer in actual possession and operating control of the Company and the Company
Subsidiary, and

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otherwise to cause Seller to fulfill its obligations under this Agreement and
the Escrow Agreement.

                    1.4          Lost Certificates. If any certificate
representing Shares shall have been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the Seller claiming such certificate to be lost,
stolen or destroyed, and an agreement by such Seller to indemnify against any
claim that shall be made against the Company or Buyer with respect to such
certificate, the Company shall deliver to such Seller a new certificate in
exchange for such lost, stolen or destroyed certificate so that such new
certificate can be delivered to Buyer at the Closing pursuant to Section 1.2(b).

ARTICLE 2
RETIREMENT UNDERFUNDING ADJUSTMENT

                    2.1          Closing Retirement Underfunding. Within the
sixty (60) day period following the Closing Date, Buyer shall prepare and
deliver to the Shareholders’ Representative a statement (the “Closing Retirement
Underfunding Statement”) setting forth the amount of any Retirement Underfunding
as of the close of business on the date immediately preceding the Closing Date
(the “Closing Retirement Underfunding”) which statement shall identify the
specific items involved and the dollar amount thereof and provide reasonable
supporting documentation therefore. The Closing Retirement Underfunding
Statement will be prepared by Buyer’s actuarial consultants using the methods
and assumptions set forth on Annex A hereto and such consultants shall keep
Sellers’ actuarial consultants reasonably informed as they prepare the Closing
Retirement Underfunding Statement. In connection with, and to facilitate their
preparation of, the Closing Retirement Underfunding Statement, the Company
shall, from and after the date hereof, provide to Buyer and Buyer’s actuarial
consultants reasonable access during normal business hours to all relevant books
and records and personnel of the Company and the Company Subsidiary, including
without limitation, to all census and other data in the format (paper or
electronic) requested. After the Closing, in connection with and to facilitate
their review of the Closing Retirement Underfunding Statement, Buyer shall
provide to the Shareholders’ Representative and its actuarial consultants
reasonable access during normal business hours to all relevant books and records
and personnel of the Company and the Company Subsidiary.

                    2.2          Disagreement and Resolution.

                                   (a)          If the Shareholders’
Representative disagrees with the Closing Retirement Underfunding as set forth
in the Closing Retirement Underfunding Statement delivered pursuant to
Section 2.1, the Shareholders’ Representative shall notify Buyer in writing of
such disagreement within thirty (30) days after delivery of the Closing
Retirement Underfunding Statement, which notice shall describe the nature of any
such disagreement in reasonable detail, identify the specific items involved and
the dollar amount of each such disagreement and provide reasonable supporting
documentation for each such disagreement. After the end of such thirty (30) day
period, neither Buyer nor the Shareholders’ Representative may introduce
additional disagreements with respect to any item in the Closing Retirement
Underfunding Statement or increase the amount of any disagreement, and any item
not so identified shall be deemed to be agreed to by the Shareholders’
Representative and will be final and binding. In the event that the Retirement
Underfunding is less than the Estimated Retirement Underfunding Amount, then
within five (5) Business Days of the expiration of such thirty (30) day period,
Buyer shall pay to each Seller an amount equal to such Seller’s portion,

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as set forth on Schedule 1.1, of any undisputed amounts of the excess, less a
reasonable estimate of such Seller’s share of the Actuarial Arbitrator (as
defined below) fees and expenses.

                                   (b)          If Buyer and the Shareholders’
Representative are unable to resolve all disagreements properly identified by
the Shareholders’ Representative pursuant to Section 2.2(a) within thirty
(30) days after delivery to Buyer of written notice of such disagreements, then
such disagreements shall be submitted for final and binding resolution to a
Neutral Actuary to resolve such disagreements (the “Actuarial Arbitrator”). The
Actuarial Arbitrator shall be a Neutral Actuary selected by mutual agreement of
Buyer and the Shareholders’ Representative; provided, that (i) if, within
fifteen (15) days after the Shareholders’ Representative has delivered its
notice of disagreement to Buyer pursuant to Section 2.2(a), the parties are
unable to agree on a Neutral Actuary to act as Actuarial Arbitrator, each party
shall select a Neutral Actuary and such firms together shall select the Neutral
Actuary to act as the Actuarial Arbitrator, and (ii) if any party does not
select a Neutral Actuary within ten (10) days of written demand therefor by the
other party, the Neutral Actuary selected by the other party shall act as the
Actuarial Arbitrator. The Actuarial Arbitrator will only consider those items
and amounts set forth in the Closing Retirement Underfunding Statement as to
which Buyer and the Shareholders’ Representative have disagreed within the time
periods and on the terms specified above and must resolve the matter in
accordance with the terms and provisions of this Agreement. The Actuarial
Arbitrator shall deliver to Buyer and the Shareholders’ Representative, as
promptly as practicable and in any event within ninety (90) days after its
appointment, a written report setting forth the resolution of any such
disagreement determined in accordance with the terms of this Agreement. The
Actuarial Arbitrator may select a position other than those selected by Buyer or
the Shareholders’ Representative as a resolution for each item of disagreement;
provided, that, the Actuarial Arbitrator shall not assign a value to any item
greater than the greatest value for such item claimed by either the
Shareholders’ Representative or Buyer or less than the smallest value for such
item claimed by either the Shareholders’ Representative or Buyer. The Actuarial
Arbitrator shall make its determination based solely on presentations and
supporting material provided by the parties and not pursuant to any independent
review. The determination of the Actuarial Arbitrator shall be final and
binding. Buyer, on the one hand, and the Sellers, on the other, will share
equally the fees and expenses of the Actuarial Arbitrator.

                    2.3          Adjustment to Retirement Underfunding. If the
Closing Retirement Underfunding as finally determined in accordance with this
Article 2 is less than the Estimated Retirement Underfunding Amount, Buyer shall
pay, by wire transfer within five (5) Business Days of such final determination,
to each Seller an amount equal to such Seller’s portion as set forth on
Schedule 1.1 of such excess, less such Seller’s share of the Actuarial
Arbitrator fees and expenses, which shall be paid by Buyer; provided, that such
excess payable by Buyer shall not exceed the Estimated Retirement Underfunding
Amount.

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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLERS

                    As an inducement to Buyer to enter into this Agreement and
to consummate the transactions contemplated hereby, each Seller, severally and
not jointly, represents and warrants to Buyer as set forth below.

                    3.1     Authority and Enforceability. Each Seller is either
an individual or a trust and has all requisite power and authority, and has
taken all action necessary, to execute and deliver this Agreement and to perform
such Seller’s obligations hereunder. In the case of a Seller that is a trust,
the execution and delivery by that Seller of this Agreement, and the performance
by that Seller of its obligations hereunder, has been duly and validly
authorized by or on behalf of such Seller and no other action on the part of
such Seller is necessary. This Agreement has been duly authorized, executed and
delivered by each Seller and constitutes the legal, valid and binding
obligations of such Seller, enforceable against such Seller in accordance with
its terms subject to bankruptcy, insolvency, reorganization, moratorium and
similar Laws of general application relating to or affecting creditors’ rights
and to general equity principles.

                    3.2     Conflicts. The execution and delivery of this
Agreement and the performance of a Seller’s obligations hereunder and the
consummation of the transactions contemplated hereby, does not and will not:

                              (a)          in the case of a Seller that is a
trust, conflict with or result in a violation or breach of any of the terms,
conditions or provisions of the trust documents applicable to such Seller;

                              (b)          in the case of each Seller, conflict
with or result in a violation or breach of any term or provision of applicable
Law; or

                              (c)          in the case of each Seller:

 

 

 

 

                              (i)         require such Seller to obtain any
consent, approval or action of, make any filing with or give any notice to any
Person as a result or under the terms of;

 

 

 

                              (ii)        conflict with or result in a violation
or breach of;

 

 

 

                              (iii)       constitute (with or without notice or
lapse of time or both) a default under;

 

 

 

                              (iv)       result in or give to any Person any
right of termination, cancellation, acceleration or modification in or with
respect to;

 

 

 

                              (v)        result in or give to any Person any
additional rights or entitlement to increased, additional, accelerated or
guaranteed payments under; or

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                              (vi)       result in the creation or imposition of
any Encumbrance upon such Seller or any of their respective assets or properties
under,

any Contract or Permit to which such Seller is a party or by which any of its
respective assets or properties is bound, other than, in the case of clauses
((iv),(v) and (vi)), as could not, individually or in the aggregate, be
reasonably likely to have a material adverse effect on such Seller’s ability to
consummate the transactions contemplated by this Agreement.

                    3.3     Capitalization. Each Seller represents (a) that such
Seller owns the number of Shares set forth next to such Seller’s name on
Schedule 1.1, (b) the transactions contemplated hereby will not give rise to any
preemptive rights or rights of first refusal with respect to the Shares and
(c) such Seller does not otherwise have any rights with respect to the capital
stock of the Company.

                    3.4     Business Involvement. Each Seller, other than the
individuals set forth on Schedule 3.4, represents that such Seller is not
actively involved in the management, business or operations of the Company or
the Company Subsidiary.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES AS TO THE COMPANY AND THE COMPANY
SUBSIDIARY

                    As an inducement to Buyer to enter into this Agreement and
to consummate the transactions contemplated hereby, the Company and each of the
Sellers, severally and not jointly, represent and warrant to Buyer as set forth
below.

                    4.1     Organization and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Connecticut. The Company Subsidiary is duly organized, validly existing
and in good standing under the laws of the State of Connecticut. Each of the
Company and the Company Subsidiary is licensed or qualified to conduct its
business and is in good standing in those jurisdictions specified on
Schedule 4.1, which jurisdictions are the only jurisdictions in which the nature
of its business or the properties owned, leased or operated by it make such
license or qualification necessary. Each of the Company and the Company
Subsidiary has the power and authority to own, lease and operate the assets it
purports to own, lease and operate and to carry on its business in the manner
and to the extent currently conducted.

                    4.2     Authority and Enforceability. The Company has all
requisite corporate power and authority, and has taken all corporate action
necessary, to execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery by the Company of this Agreement, and the
performance by the Company of its obligations hereunder, have been duly and
validly authorized by the board of directors of the Company and no other
corporate action on the part of the Company or the Sellers is necessary. This
Agreement has been duly authorized, executed and delivered by the Company and
(assuming the due authorization, execution and delivery by Buyer, the Sellers
and the Shareholders’ Representative) constitutes the legal, valid and binding
obligations of the Company, enforceable against it in accordance with its terms
subject to bankruptcy, insolvency,

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reorganization, moratorium and similar Laws of general application relating to
or affecting creditors’ rights and to general equity principles.

                    4.3     Conflicts. The execution and delivery by the Company
of this Agreement and the performance by it of its obligations hereunder and the
consummation of the transactions contemplated hereby, does not and will not:

                              (a)          conflict with or result in a
violation or breach of any of the terms, conditions or provisions of the
certificate of incorporation or by-laws of the Company or the organizational
documents of the Company Subsidiary;

                              (b)          (i) conflict with or result in a
violation or breach of any term or provision of applicable Law (other than as
would result from the identity or legal or regulatory status of Buyer), or
(ii) except for notice to be provided to the Bureau of Alcohol, Tobacco,
Firearms and Explosives, require a registration, filing, application, notice,
consent, approval, order, qualification, or waiver with, to or from any
Governmental Authority; or

                              (c)          except for the consent required from
Webster Bank, National Association (“Webster”) pursuant to the Amended and
Restated Commercial Revolving Line of Credit Agreement between Webster, the
Company and the Company Subsidiary, dated January 31, 2007 and modified on
September 26, 2007, and the other loan documents issued pursuant thereto (the
“Webster Credit Agreement”), (i) require the Company or the Company Subsidiary
to obtain any consent or approval of, or take any action as to, or make any
filing with or give any notice to, any Person as a result or under the terms of,
(ii) conflict with or result in a violation or breach of, (iii) constitute (with
or without notice or lapse of time or both) a default under, (iv) result in or
give to any Person any right of termination, cancellation, acceleration or
modification in or with respect to, (v) result in or give to any Person any
additional rights or entitlement to increased, additional, accelerated or
guaranteed payments under or (vi) result in the creation or imposition of any
Encumbrance upon the Company or the Company Subsidiary or any of their
respective assets or properties under any material Contract or Permit to which
the Company or the Company Subsidiary is a party or by which any of their
respective assets or properties are bound.

                    4.4     Capitalization.

                              (a)          The total authorized capital stock of
the Company consists of 120,000 shares of Class A common stock, (the “Class A
Common Stock”) of which 86,773 shares are issued and outstanding and 18,067
shares are held in treasury, and 1,080,000 shares of Class B common stock (the
“Class B Common Stock”), of which 760,936 are issued and outstanding and 179,915
are held in treasury. The Shares constitute all of the issued and outstanding
shares of capital stock of the Company and have been validly issued, are fully
paid and nonassessable. There are no outstanding (i) securities convertible into
or exchangeable for any capital stock of the Company; (ii) options, warrants or
other rights to purchase or subscribe to capital stock of the Company or
securities convertible into or exchangeable for capital stock of the Company; or
(iii) contracts, commitments, agreements, understandings, arrangements, calls or
claims of any kind relating to the issuance of any capital stock of the Company,
any such convertible or exchangeable securities or any such options, warrants or
rights. The Shares are held of record as set forth on Schedule 1.1.

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                              (b)          All of the issued and outstanding
equity interests of the Company Subsidiary have been duly authorized and validly
issued and the Company owns beneficially and holds of record all of such equity
interests in the Company Subsidiary free and clear of all Encumbrances. Except
for the Company’s interests in the Company Subsidiary, neither the Company nor
the Company Subsidiary owns, directly or indirectly, any interest or investment
(whether equity or debt) in any Person.

                    4.5     Financial Statements.

                              (a)          Prior to the execution of this
Agreement, the Company has made available to Buyer: (i) true and complete copies
of the unaudited consolidated balance sheet of the Company and the Company
Subsidiary as of June 30, 2007 and the related unaudited consolidated statements
of income and comprehensive income and cash flows (together, the “Most Recent
Financial Statements”) and (ii) true and complete copies of the audited
consolidated balance sheet of the Company and the Company Subsidiary as of, and
for the respective year then ended, December 31, 2006 (the “Most Recent Audited
Balance Sheet Date”) and December 31, 2005, including the notes thereto, and the
related statements of income and comprehensive income, cash flows and
shareholders’ equity for each of the fiscal years then ended (together, the
“Audited Financial Statements”, and together with the Most Recent Financial
Statements, the “Financial Statements”). The Financial Statements (including the
notes thereto) (i) have been prepared in conformity with GAAP, (ii) present
fairly, in all material respects, the financial position of the Company and the
Company Subsidiary as of such dates and the results of the operations and cash
flows of the Company and the Company Subsidiary for such periods and (iii) were
compiled from the books and records of the Company and the Company Subsidiary
regularly maintained by management and used to prepare the financial statements
of the Company and the Company Subsidiary in accordance with the principles
stated therein; provided, however, that the Most Recent Financial Statements are
subject to normal year-end adjustments consistent with past practice and lack
footnotes and other presentation items. The Company and the Company Subsidiary
have maintained their respective books and records in accordance with reasonable
business practices, including the maintenance of an adequate system of internal
controls, and in a manner sufficient to permit the preparation of financial
statements in accordance with GAAP.

                              (b)          Since the Most Recent Audited Balance
Sheet Date, there has been no material change in the Company’s accounting
methods or principles that would be required to be disclosed in the Company’s
financial statements, in accordance with GAAP, that has not been so disclosed.
Except as set forth on Schedule 4.5(b), as of the date hereof, the Company has
not identified any significant deficiencies or material weaknesses in the design
or operation of “internal control over financial reporting” (as defined in
Rule 13a-15(f) of the Exchange Act), and there has been no incidence of fraud in
the past five (5) years, whether or not material, that involves management or
other employees who have a significant role in the Company’s internal controls
over financial reporting.

                    4.6     No Undisclosed Liabilities. There are no liabilities
against, relating to or affecting the Company or the Company Subsidiary except
for (i) liabilities disclosed, recorded in or reserved against on the Audited
Financial Statements, (ii) liabilities incurred in the ordinary course of
business consistent with past practice and (iii) the liabilities set forth on
Schedule 4.6.

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                    4.7     Operations Since the Most Recent Audited Balance
Sheet Date. Since the Most Recent Audited Balance Sheet Date, there has not been
a Material Adverse Effect, or any event or development which, individually or
together with other such events, could reasonably be expected to result in a
Material Adverse Effect. Without limiting the foregoing, except as disclosed on
Schedule 4.7, there has not occurred between the Most Recent Audited Balance
Sheet Date and the date hereof:

                              (a)          any authorization, issuance, sale or
other disposition by the Company or the Company Subsidiary of any shares of
capital stock (or other comparable equity interest) of or option with respect to
the Company or the Company Subsidiary, or any modification or amendment of any
right of any holder of any outstanding shares of capital stock (or other
comparable equity interest) or option with respect to the Company or the Company
Subsidiary;

                              (b)          (i) any increase in the salary, wages
or other compensation of (A) any director, officer or employee of the Company or
the Company Subsidiary having a base salary in excess of $75,000 per year or any
business consultant of the Company or the Company Subsidiary or (B) any other
employee of the Company or the Company Subsidiary in an amount greater than five
percent (5%) per annum, (ii) any establishment or modification of (A) targets,
goals, pools or similar provisions in respect of any fiscal year under any
Benefit Plan, employment-related contract or other employee compensation
arrangement or (B) salary ranges, increase guidelines or similar provisions in
respect of any Benefit Plan, employment-related contract or other employee
compensation arrangement or (iii) any adoption, entering into or becoming bound
by any Benefit Plan, employment-related contract or collective bargaining
agreement, or amendment, modification or termination (partial or complete) of
any Benefit Plan or employment-related contract, except to the extent required
by applicable Law and, in the event compliance with legal requirements presented
options, only to the extent the option which the Company or the Company
Subsidiary reasonably believed to be the least costly was chosen;

                              (c)          (i) other than indebtedness incurred
in the ordinary course pursuant to the Webster Credit Agreement, incurrences by
the Company or the Company Subsidiary of any liability or indebtedness with
respect to which the obligations of the Company or the Company Subsidiary exceed
$225,000 or (ii) any voluntary purchase, cancellation, prepayment or complete or
partial discharge in advance of a scheduled payment date with respect to, or
waiver of any right of the Company or the Company Subsidiary under, any
indebtedness of or owing to the Company or the Company Subsidiary;

                              (d)          any physical damage, destruction or
other casualty loss (whether or not covered by insurance) affecting any of the
plant, real or personal property or equipment of the Company or the Company
Subsidiary in an aggregate amount exceeding $225,000;

                              (e)          other than in the ordinary course of
business, any granting of any discounts, rebates or similar incentives, either
on a one-time or contingent basis or selling or delivering of any product having
payment terms of one hundred and twenty (120) days or more; or any material
change in (i) any pricing, accounting, financial reporting, inventory, credit,
allowance or Tax practice or policy of the Company or the Company Subsidiary, or
(ii) any method of calculating any bad debt, contingency or other reserve of the
Company or the Company Subsidiary for accounting, financial

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reporting or Tax purposes, or any change in the fiscal year of the Company or
the Company Subsidiary;

                              (f)          any write-off or write-down of or any
determination to write off or write down any of the assets or properties of the
Company or the Company Subsidiary in an aggregate amount exceeding $100,000;

                              (g)          any acquisition or disposition of, or
incurrence of an Encumbrance on, any assets or properties of the Company or the
Company Subsidiary, other than in the ordinary course of business consistent
with past practice;

                              (h)          any (i) amendment of the certificate
or articles of incorporation or by-laws (or other comparable corporate charter
documents) of the Company or the Company Subsidiary, (ii) recapitalization,
reorganization, liquidation or dissolution of the Company or the Company
Subsidiary or (iii) merger or other business combination involving the Company
or the Company Subsidiary and any other Person;

                              (i)          any entering into, amendment,
modification, termination (partial or complete) or granting of a waiver under or
giving any consent with respect to (i) any Business Agreement (or agreement that
had it been in effect on the date hereof would have been a Business Agreement)
or (ii) any material Permit held by the Company or the Company Subsidiary;

                              (j)          capital expenditures or commitments
for additions to property, plant or equipment of the Company or the Company
Subsidiary constituting capital assets in an aggregate amount exceeding
$100,000;

                              (k)          any commencement or termination by
the Company or the Company Subsidiary of any line of business;

                              (l)          any transaction (including, without
limitation, the distribution of, or granting of any beneficial interest in, any
firearm, except those listed on Schedule 6.13) by the Company or the Company
Subsidiary with any of the Affiliates, officers, directors, or shareholders
thereof or any of such officer’s, director’s, or shareholder’s Affiliates
(i) outside the ordinary course of business consistent with past practice or
(ii) other than on an arm’s-length basis, other than, in each case, pursuant to
any Business Agreement in effect on the Most Recent Audited Balance Sheet Date
and disclosed pursuant to Schedule 4.13;

                              (m)          any disposition or lapse of any
rights the Company or the Company Subsidiary has under any Intellectual Property
or disposition of or disclosure to any Person (other than representatives of
Buyer) of any trade secret, formula, process, know-how, software, or other
Company Intellectual Property not theretofore a matter of public knowledge;

                              (n)          to the Company’s Knowledge, any other
adverse change in any rights the Company or the Company Subsidiary has under or
to Intellectual Property, other than the expiration thereof in accordance with
its terms as described in Schedule 4.11;

                              (o)          except for the December Dividend, any
declaration, reserve, payment or receipt of any dividend or other distribution
in respect of the capital stock of the Company or direct

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or indirect redemption, purchase or other acquisition or receipt of payment in
respect of a redemption, purchase or other acquisition of, any capital stock of
the Company;

                              (p)          any entering into of a Contract to do
or engage in any of the foregoing after the date hereof; or

                              (q)          any other transaction involving or
development affecting the Company or the Company Subsidiary outside the ordinary
course of business consistent with past practice.

                    4.8     Taxes.

                              (a)          Filing of Returns and Payment of
Taxes. The Company and the Company Subsidiary have filed all Tax Returns in
connection with any federal, state or local Tax required to be filed by it
(taking account of extensions to file that have been properly obtained), and the
Company and the Company Subsidiary have timely paid all such Taxes shown thereon
to be due except as contested in good faith. All Tax Returns were (and, as to
Tax Returns not filed as of the date hereof, will be) true, complete and correct
in all material respects and filed on a timely basis. To the Knowledge of the
Company, no unresolved issue has been raised in writing by any Governmental
Authority in the course of any audit with respect to Taxes for which the Company
or the Company Subsidiary would be held liable.

                              (b)          Tax Liens. To the Knowledge of the
Company, none of the assets of the Company or the Company Subsidiary are subject
to any lien in favor of the United States pursuant to Section 6321 of the Code
for nonpayment of federal Taxes, or any lien in favor of any country, state or
locality pursuant to any comparable provision of state or local Law, other than
Taxes not yet due and payable.

                              (c)          Audits and Extensions; etc. Except as
set forth in Schedule 4.8(c), no Tax Return of the Company and the Company
Subsidiary relating to property Taxes, transfer Taxes, sales or use Taxes or any
Tax is currently under audit or examination by any Governmental Authority of
which the Company or the Company Subsidiary has notice, and no written notice of
such an audit or examination has been received by the Company or the Company
Subsidiary. Each deficiency resulting from any audit or examination relating to
any such Taxes by any Governmental Authority has been paid, except for
deficiencies being contested in good faith by appropriate proceedings. Except as
set forth in Schedule 4.8(c), the Company and the Company Subsidiary have not
given nor is there a pending request to give waivers or extensions (or is or
would be subject to a waiver or extension given by any other Person) of any
statute of limitations relating to any such Taxes.

                              (d)          Tax Sharing Agreements. No agreement
as to indemnification for, contribution to, or payment of Taxes exists between
the Company or the Company Subsidiary and any other Person, including pursuant
to any Tax sharing agreement, lease agreement, purchase or sale agreement,
partnership agreement or any other agreement.

                              (e)          Other Jurisdictions. Except as set
forth in Schedule 4.8(e)(i), no jurisdiction (whether within or without the
United States) in which the Company or the Company Subsidiary has not filed a
specific Tax Return has asserted that the Company or the Company Subsidiary is
required to file such Tax Return in such jurisdiction. Schedule 4.8(e)(ii) lists
all states and all non-U.S. taxing jurisdictions in which the Company or the
Company Subsidiary files any Tax

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Returns and indicates in the case of income or franchise Tax filings whether
such filings are made on a consolidated, combined or unitary basis and the state
allocation factors for the most recent taxable year for which filings have been
made.

                              (f)          Withholding. The Company (and the
Company Subsidiary) has complied (and until the Closing Date will comply) with
all applicable Laws relating to the payment and withholding of Taxes (including
withholding and reporting requirements under Code §§1441 through 1464, 3401
through 3406, 6041 and 6049 and similar provisions under any other Laws) and
has, within the time and in the manner prescribed by Law, withheld from employee
wages and paid over to the proper Governmental Authorities all required amounts.

                              (g)          Tax Rulings, etc. Neither the Company
nor the Company Subsidiary has received any written ruling of a taxing authority
relating to Taxes, or any other written and legally binding agreement with a
taxing authority relating to Taxes.

                              (h)          Copies of Tax Returns. The Company
has made available (or, in the case of Tax Returns to be filed on or before the
Closing Date, will make available) to Buyer complete and accurate copies of Tax
Returns and associated work papers filed by or on behalf of the Company and the
Company Subsidiary for the taxable years ending December 31, 2004 through
December 31, 2006.

                              (i)          Excess Parachute Payments. Neither
the execution of this Agreement nor the consummation of the transactions
contemplated by this Agreement, either alone or in conjunction with or together
with all other payments under any Contract or arrangement or otherwise which
alone or together with all other payments could constitute a “parachute payment”
to any “disqualified individual” as those terms are defined in Code §280G
(whether or not such payment is considered to be reasonable compensation for
services rendered).

                              (j)          Tax-Exempt Use Property. No property
of the Company (or the Company Subsidiary) is property that the Company or any
party to this transaction is or will be required to treat as being owned by
another Person pursuant to the provisions of Code §168(f)(8) (as in effect prior
to its amendment by the Tax Reform Act of 1986) or is “tax-exempt use property”
or “tax-exempt bond financed property” within the meaning of Code §168.

                              (k)          Accounting Method, etc. Neither the
Company nor the Company Subsidiary is required to include in income any
adjustment pursuant to Code §481(a) by reason of a voluntary change in
accounting method initiated by the Company (or the Company Subsidiary), and the
Internal Revenue Service (the “IRS”) has not proposed an adjustment or change in
accounting method; except as set forth in Schedule 4.8(k), to the Knowledge of
the Company no Company or Company Subsidiary income economically accrued prior
to the Closing Date will be recognized as taxable income after the Closing Date
as a result of the Company or the Company Subsidiary having been a party to an
installment sale or an open transaction, other than any amounts that are
reflected in a reserve for Taxes on the balance sheet in the Most Recent
Financial Statements.

                              (l)          Acquisition Indebtedness. Neither the
Company nor the Company Subsidiary has issued or assumed any acquisition
indebtedness within the meaning of Code §279 or is a borrower under any loan to
which the limitations of Code §163(j) apply.

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                                     (m)          USRPHC. The Company is not a
United States real property holding corporation within the meaning of Code
§897(c)(2).

                                     (n)          Reportable Transactions. The
Company (and the Company Subsidiary) has disclosed on its federal income Tax
Return all positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Code §6662. Neither
the Company nor the Company Subsidiary has engaged in any reportable
transactions that were required to be disclosed pursuant to Treasury Regulation
§1.6011-4.

                                     (o)          Tax Returns. For all
applicable Tax Returns of the Company (or the Company Subsidiary) through
December 31, 2003 (taking into account of extensions to file that have been
properly obtained), to the Knowledge of the Company either (i) the statute of
limitations for the assessment of all Taxes has expired or (ii) all applicable
Tax Returns have been examined by the appropriate taxing authorities and no
deficiency for any Taxes has been suggested, proposed, asserted or assessed
against the Company (or the Company Subsidiary) that has not been resolved and
paid in full.

                                     (p)          Escheat and Unclaimed
Property. Except as set forth in Schedule 4.8(p), neither the Company nor the
Company Subsidiary is (or will be as of the Closing Date) subject to levies or
assessments for unclaimed property under applicable escheat or unclaimed
property Laws.

                    4.9          Permits. Schedule 4.9 contains a true and
complete list of all Permits used in and material, individually or in the
aggregate, to the business or operations of the Company or the Company
Subsidiary (and all pending applications for any such Permits), setting forth
the grantor, the grantee, the function and the expiration and renewal date of
each. Prior to the execution of this Agreement, the Company has delivered to
Buyer true and complete copies of all such Permits. Except as set forth on
Schedule 4.9, (a) the Company or the Company Subsidiary owns or validly holds
all Permits that are necessary to entitle it to own or lease, operate and use
its assets and to carry on and conduct its business substantially as currently
conducted, (b) each Permit listed on Schedule 4.9 is valid, binding and in full
force and effect and (c) neither the Company nor the Company Subsidiary is, or
has received any notice that it is in default (or with the giving of notice or
lapse of time or both, would be in default) under any material Permit.

                    4.10          Real Property.

                                     (a)          Schedule 4.10(a) sets forth
the address and description of each parcel of Owned Real Property. With respect
to each parcel of Owned Real Property, and except as set forth on Schedule
4.10(a):

                                     (i)          the Company or the Company
Subsidiary has good and marketable fee simple title, free and clear of all
Encumbrances;

                                      (ii)          except for the real property
lease agreement between the Company and The Marlin Company (the “TMC Lease”), a
true and complete copy of which has been provided to Buyer, neither of the
Company nor the Company Subsidiary has leased or otherwise granted to any Person
the right to use or occupy such Owned Real Property or any portion thereof and
the Company or the Company Subsidiary is in possession of each parcel of such
Owned Real Property;

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                                     (iii)          the Company or the Company
Subsidiary has adequate rights of ingress and egress;

                                     (iv)          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; and

                                     (v)          none of such Owned Real
Property, or the use thereof, contravenes or violates any building, zoning,
administrative or occupational safety and health or other applicable Law in any
material respect (whether or not permitted on the basis of prior nonconforming
use, waiver or variance).

                                     (b)          Schedule 4.10(b) contains a
list of all leases and subleases, if any, (the “Leases”) of real property
pursuant to which the Company or the Company Subsidiary is the lessee (the
“Leased Real Property”). The Company or the Company Subsidiary has a valid and
subsisting leasehold estate in and the right to quiet enjoyment of the real
properties leased by it for the full term of the lease thereof. Each Lease is a
legal, valid and binding agreement, enforceable in accordance with its terms, of
the Company or the Company Subsidiary and, to the Knowledge of the Company, of
each other Person that is a party thereto and there is no, and none of the
Company nor the Company Subsidiary has received notice of any, material default
by the Company or the Company Subsidiary (or any condition or event which, after
notice or lapse of time or both, would constitute a default) thereunder. Neither
the Company nor the Company Subsidiary has reason to believe that any lessor
under any Lease will not consent (where such consent is necessary) to the
consummation of the transactions contemplated by this Agreement without
requiring any modification of the rights or obligations of the lessee
thereunder. Neither the Company nor the Company Subsidiary owes any brokerage
commissions with respect to any such leased space.

                                     (c)          Prior to the execution of this
Agreement, the Company has delivered to Buyer true and complete copies of (i)
all deeds, leases, mortgages, deeds of trust, certificates of occupancy, title
insurance policies, title reports, surveys and similar documents, and all
amendments thereof, with respect to the Owned Real Property and (ii) all leases,
licenses, tenancies, subleases and other material occupancy agreements
(including any amendments and renewal letters) and, to the extent reasonably
available, all other documents referred to in clause (i) of this paragraph (c)
with respect to the real property leased by the Company and the Company
Subsidiary.

                                     (d)          Except as set forth on
Schedule 4.10(d), the improvements on the Owned Real Property are in good
operating condition and in a state of good maintenance and repair ordinary wear
and tear excepted, are adequate and suitable for the purposes for which they are
presently being used and, to the Knowledge of the Company, there are no
condemnation or appropriation proceedings pending or threatened against any of
such Owned Real Property.

                    4.11          Intellectual Property.

                                     (a)          Each of the Company and the
Company Subsidiary owns legal title to, or pursuant to written agreement has
valid and enforceable rights to use, all Intellectual Property which is used in
or necessary for the operation of its respective business.

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                                     (b)          Schedule 4.11(b) contains a
complete and correct list of all Patents, Marks, and Copyrights owned by the
Company or the Company Subsidiary (“Company Intellectual Property”). Each of the
Company and the Company Subsidiary, as applicable, owns the entire right, title,
and interest in and to the Company Intellectual Property, free and clear of
Encumbrances. All of the Company Intellectual Property is valid and in full
force and effect. Except as set forth on Schedule 4.11(b), none of the Company
Intellectual Property has lapsed, expired, or been abandoned since December 31,
2004.

                                     (c)          Neither the Company nor the
Company Subsidiary has received any notice that there is any material violation
by any other Person of any right of the Company or the Company Subsidiary with
respect to any or all Company Intellectual Property. Neither the Company nor the
Company Subsidiary has entered into or consummated any material license or user
agreement with another Person in respect to any or all Company Intellectual
Property.

                                     (d)          To the Knowledge of the
Company, the Company Intellectual Property, for which the value is dependent
upon its confidentiality, has not been misappropriated nor has it been the
subject of an unauthorized disclosure.

                                     (e)           To the Knowledge of the
Company, during the previous three (3) years, no material Action has been taken
or threatened, (i) alleging that the conduct of the Company or the Company
Subsidiary or any Company Intellectual Property infringes on or misappropriates
the Intellectual Property of another Person or (ii) challenging the ownership,
right to use, or validity of Company Intellectual Property. To the Knowledge of
the Company, there is no valid basis for any Action described in this Section
4.11(e).

                                     (f)           The consummation of this
Agreement will not result in the loss or impairment of any rights to own, use,
or sell any or all Company Intellectual Property.

                    4.12          Compliance with Laws. Except as set forth in
Schedule 4.12, the Company and the Company Subsidiary are in material compliance
with all applicable Laws and have complied in a timely manner with all Laws that
materially affect the business or condition of the Company or the Company
Subsidiary, including without limitation, all Laws applicable to the import,
export, manufacture, use, transportation, possession, and transfer of firearms
and other defense articles, including without limitation, the Gun Control Act of
1968 (chapter 44 of title 18, United States Code), the National Firearms Act of
1934 (chapter 53 of title 26, United States Code), and the Arms Export Control
Act (22 U.S.C. § 2778), as well as all implementing regulations thereto
(collectively, “Firearms Regulations”). No notice, charge, claim or assertion to
the effect that the Company or the Company Subsidiary is not in material
compliance with any Law has been received by the Company or the Company
Subsidiary nor has any been filed, commenced or, to the Knowledge of the
Company, threatened against the Company or the Company Subsidiary. To the
Knowledge of the Company, there are no contemplated or pending enforcement or
regulatory actions by any Governmental Authority directed at the Company (as
opposed to the firearms industry as a whole) which could be reasonably expected
to adversely affect or impede the Company or the Company Subsidiary’s ability to
operate its business in accord with Firearms Regulations.

                    4.13          Contracts. Schedule 4.13 (with paragraph
references corresponding to those set forth below) sets forth a true and correct
list of each of the following:

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                                     (a)          Any Contract (other than
Benefit Plans listed on Schedule 4.15(a), the leases listed on Schedules 4.10(a)
and (b) and insurance policies listed on Schedule 4.19) that (i) involve the
payment or potential payment, pursuant to the terms of any such Contract, by or
to the Company or the Company Subsidiary of $100,000 or more and which is not
terminable on thirty (30) days’ or less notice and without liability, penalty or
premium;

                                     (b)          Any Contract (including
purchase orders) involving the obligation of the Company or the Company
Subsidiary to sell products or services pursuant to which the aggregate of
payments to become due to the Company or the Company Subsidiary is equal to or
exceeds $100,000, and which is not terminable on thirty (30) days’ or less
notice and without liability, penalty or premium;

                                     (c)          Any distributor, dealer,
sales, advertising, agency, consultant, lobbying, manufacturer’s representative,
franchise or similar Contract not cancelable by the Company or the Company
Subsidiary on notice of not more than thirty (30) days and without liability,
penalty or premium, and all Contracts (other than the Benefit Plans listed on
Schedule 4.15(a)) providing for the payment of any bonus or commission based on
sales or earnings;

                                     (d)          Any commitment of the Company
or the Company Subsidiary to make a capital expenditure or to purchase a capital
asset (in either case involving a cost in excess of $25,000 individually or
$100,000 in the aggregate) not contemplated by the capital expenditure budget of
the Company or the Company Subsidiary;

                                     (e)          Any Contract with any Person
containing any exclusivity or covenant prohibiting or limiting the ability of
the Company, the Company Subsidiary or, following the consummation of the
transactions contemplated by this Agreement, Buyer to engage in any business
activity or compete with any Person or, except as provided in the
Non-Competition Agreement and the Trademark Coexistence Agreement, prohibiting
or limiting the ability of any Person to compete with the Company or any
Subsidiary;

                                     (f)          Any lease or similar agreement
under which (i) the Company or the Company Subsidiary is the lessee of, or holds
or uses, any machinery, equipment, vehicle or other tangible personal property
owned by any third Person for an annual rent in excess of $25,000 or (ii) the
Company or the Company Subsidiary is the lessor of, or makes available for use
by any third Person, any tangible personal property owned by it for an annual
rent in excess of $25,000;

                                     (g)          All partnership, joint
venture, shareholders’ or similar Contracts, and any Contracts purporting to
effect a waiver or termination thereof, which the Company or the Company
Subsidiary is a party or by which any of their assets or properties are bound;

                                     (h)          All Contracts relating to
indebtedness of the Company or the Company Subsidiary in excess of $100,000;

                                     (i)          All Contracts relating to (i)
the future disposition or acquisition of any assets or properties, other than
dispositions or acquisitions in the ordinary course of business consistent with
past practice, and (ii) any merger or other business combination;

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                                     (j)          All Contracts between or among
the Company or the Company Subsidiary, on the one hand, and any of the
Affiliates, officers, directors, or shareholders thereof or any of such
officer’s, director’s, or shareholder’s Affiliates, on the other hand;

                                     (k)          All Contracts that (i) limit
or contain restrictions on the ability of the Company or the Company Subsidiary
to declare or pay dividends on, to make any other distribution in respect of or
to issue or purchase, redeem or otherwise acquire its capital stock, to incur
indebtedness, to incur or suffer to exist any Encumbrance, to purchase or sell
any assets or properties, to change the lines of business in which it
participates or engages or to engage in any merger, consolidation or other
business combination or (ii) require the Company or the Company Subsidiary to
maintain specified financial ratios or levels of net worth or other indicia of
financial condition; and

                                     (l)          All Contracts, including
licenses, sublicenses, agreements and permissions, by which the Company or the
Company Subsidiary uses the Intellectual Property owned by a third party (other
than ordinary course off-the-shelf software licenses) or a third party uses the
Company Intellectual Property.

                    4.14          Status of Contracts. Each of the Contracts set
forth on Schedules 4.10(b), 4.13, and 4.17(a) (collectively, the “Business
Agreements”) is in full force and effect and constitutes a legal, valid and
binding agreement, enforceable in accordance with its terms, of the Company or
the Company Subsidiary and, to the Knowledge of the Company, each party thereto.
Prior to the execution of this Agreement, the Company has either delivered to
Buyer or has given Buyer access to true and complete copies or, if none,
reasonably complete and accurate written descriptions, together with all
amendments and supplements thereto and all waivers of any terms thereof, of the
Business Agreements. Neither the Company, the Company Subsidiary nor, to the
Knowledge of the Company, any other party to such Business Agreement, is in, or,
to the Knowledge of the Company, alleged to be in, material violation or breach
of or default under any such Business Agreement (or with notice or lapse of time
or both, would be in violation or breach of or default under any such Business
Agreement) in any material respect. Except for warranty claims arising in the
ordinary course of business, there are no outstanding claims for indemnification
under any such Business Agreement.

                    4.15          Employee Benefits.

                                     (a)          Schedule 4.15(a) (i) contains
a true and complete list of each Benefit Plan, (ii) identifies each Benefit Plan
that is a Qualified Plan, (iii) identifies each Benefit Plan that is a Deferred
Compensation Plan, Pension Plan and SERP and (iv) identifies each Benefit Plan
that at any time during the five (5) year period preceding the date of this
Agreement was a Defined Benefit Plan. Neither the Company nor the Company
Subsidiary has scheduled or agreed (i) to establish any plan, program, policy or
arrangement that would be considered to be a Benefit Plan or (ii) to increase
benefit levels (or to create new benefits) with respect to any Benefit Plan.
Except as disclosed in Schedule 4.15(a), no loan is outstanding between the
Company or the Company Subsidiary and any current or former employee thereof.

                                     (b)          Complete and correct copies of
the following documents have been furnished to Buyer prior to the execution of
this Agreement: (i) the Benefit Plans, any related trust agreements, and service
provider agreements, insurance contracts or agreements with investment managers,
including without limitation, all amendments thereto, (ii) current summary plan
descriptions

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of each Benefit Plan subject to ERISA, and any similar descriptions of all other
Benefit Plans, (iii) the two most recent Form 5500’s and schedules thereto for
each Benefit Plan subject to ERISA reporting requirements; (iv) the most recent
determination of the IRS with respect to each Qualified Plan, (v) the most
recent financial statements prepared with respect to any Benefit Plan and (vi)
the most recent actuarial report of the qualified actuary of any Benefit Plan
with respect to which actuarial valuations are, or are required to be,
conducted.

                                     (c)          Each of the Benefit Plans is,
and its administration is and has been since inception, in all material respects
in compliance with, and neither the Company nor the Company Subsidiary has
received any claim or notice that any such Benefit Plan is not in compliance
with, all applicable Laws, including reporting obligations to the Department of
Labor, and prohibited transactions exemptions. Each Qualified Plan is qualified
under Section 401(a) of the Code and has received an IRS determination letter or
has adopted a prototype plan and the prototype sponsor has received an opinion
letter from the IRS as to the plan’s qualified status. Except as disclosed in
Schedule 4.15(c), each Benefit Plan intended to provide for the deferral of
income, the reduction of salary or other compensation or to afford other Tax
benefits complies with the requirements of the applicable provisions of the Code
or other Laws required in order to provide such Tax benefits.

                                     (d)          Neither Company nor the
Company Subsidiary is in default in performing any of its contractual
obligations under any of the Benefit Plans or any related trust agreement or
insurance contract. All contributions and other payments required to be made by
the Company or the Company Subsidiary to any Benefit Plan with respect to any
period ending before or at or including the Closing Date have been made or
reserves adequate for such contributions or other payments have been or will be
set aside therefore and have been or will be reflected in the Financial
Statements in accordance with GAAP. There are no material outstanding
liabilities of, or related to, any Benefit Plan, other than liabilities for
benefits to be paid in the ordinary course to participants in such Benefit Plan
and their beneficiaries in accordance with the terms of such Benefit Plan.

                                     (e)          No event has occurred, and
there exists no condition or set of circumstances in connection with any Benefit
Plan, under which the Company or the Company Subsidiary, directly or indirectly
(through any indemnification agreement or otherwise), could reasonably be
expected to be subject to any risk of material liability under ERISA, the Code,
or any other applicable Law other than liabilities for benefits or ancillary
administrative services incurred in the ordinary course.

                                     (f)          There are no pending or, to
the Knowledge of the Company, threatened claims or investigations related to any
Benefit Plan, nor is there any basis for such a claim or investigation.

                                     (g)          No transaction contemplated by
this Agreement will result in liability under Sections 4062, 4063, 4064 or 4069
of ERISA, or otherwise, with respect to the Company, the Company Subsidiary,
Buyer or any corporation or organization controlled by or under common control
with any of the foregoing within the meaning of Section 4001 of ERISA, and no
event or condition exists or has existed which could reasonably be expected to
result in any such liability with respect to Buyer, the Company, the Company
Subsidiary or any corporation or organization controlled by or under common
control with any of the foregoing within the meaning of Section 4001 of ERISA.
No “reportable event”, other than the transactions contemplated by this
Agreement, within the meaning of

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Section 4043 of ERISA has occurred or is expected to occur with respect to any
Defined Benefit Plan for which the reporting requirements have not been waived.
No termination, re-establishment or spin off transaction has occurred with
respect to any Defined Benefit Plan. No Defined Benefit Plan has incurred any
accumulated funding deficiency, whether or not waived. No filing has been made
and no proceeding has been commenced for the complete or partial termination of,
or withdrawal from, any Pension Plan, except as set forth in Schedule 4.15(g).

                                     (h)          Except as set forth in
Schedule 4.15(h), the fair market value of the assets of each Defined Benefit
Plan, as determined as of the last day of the plan year of such plan which
coincides with or first precedes the date of this Agreement, was not less than
the present value of the projected benefit obligations under such plan at such
date as established on the basis of the actuarial assumptions applicable under
such Defined Benefit Plan at said date and, to the Knowledge of the Company,
there have been no material changes in such values since said date.

                                     (i)          Except as disclosed in
Schedule 4.15(i), no benefit under any Benefit Plan, including, without
limitation, any severance or parachute payment plan or agreement, will be
established or become accelerated, vested, funded or payable by reason of any
transaction contemplated under this Agreement. No Benefit Plan provides for any
additional amounts to be paid with respect to any Tax imposed under Section 4999
of the Code.

                                     (j)          Except as set forth on
Schedule 4.15(j), no Benefit Plan provides welfare coverage that extends after
the termination of employment other than for continued coverage provided
pursuant to the requirements of Section 4980B of the Code or other similar
provision of state law and each Benefit Plan providing such coverage may be
amended, modified or terminated after the Closing Date without cost or liability
other than for claims for expenses actually incurred prior to the date of such
amendment, modification or termination. No Company Subsidiary employee is
eligible for benefits under any Benefit Plan set forth in Schedule 4.15(j).

                                     (k)          The Company has taken all
actions necessary to effectuate a complete cessation of all future benefit
accruals under any Pension Plan, including without limitation adopting all
necessary plan amendments and providing the notice to plan participants
satisfying all of the requirements of Section 204(h) of ERISA, with such
cessation to be effective as of a date no later than December 31, 2007.

                    4.16          Environmental Compliance.

                                     (a)          Each of the Company and the
Company Subsidiary is in compliance in all material respects with currently
applicable Environmental Laws and (except as noted in Schedule 4.16(a)) has at
all times complied in all material respects with all Environmental Laws.

                                     (b)           (i) Each of the Company and
the Company Subsidiary possesses all Permits required under Environmental Laws
for its operations as currently conducted, (ii) all such Permits are in full
force and effect, and (iii) no actions are pending, or to the Knowledge of the
Company, threatened, to amend, challenge, terminate, cancel, limit, restrict or
appeal any such Permits.

                                     (c)          Except as noted in Schedule
4.16(c), there has been no release of any Hazardous Substance by the Company or
the Company Subsidiary or any other party at the Owned Real Property or any of
the Leased Real Property that is in material violation of or could lead to any

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material liability or material investigative, corrective or remedial obligation
arising under any Environmental Law.

                                     (d)          Except as noted in Schedule
4.16(d) none of the Company, the Company Subsidiary or any of their respective
predecessors or Affiliates has (i) treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled, or released any Hazardous
Substance so as to give rise to any material liability or any material
investigative, corrective or remedial obligation under any Environmental Law, or
(ii) either expressly or by operation of law, assumed or undertaken any material
liability or any material obligation for corrective or remedial action of any
other Person under any Environmental Law.

                                     (e)          Except as noted in Schedule
4.16(e) with respect to those certain parcels of real property located at 85
Willow Street, New Haven, Connecticut (the “New Haven Property”), and 100 Kenna
Drive in North Haven, Connecticut (the “North Haven Property”) neither the
Company nor the Company Subsidiary has received since January 1, 2002 (or prior
to this date with respect to matters that are not fully resolved and corrected,
including the payment of fines and penalties with respect thereto) any written
or other notice of violation or liability, nor is any Action pending or, to the
Knowledge of the Company, threatened, asserting an actual or potential liability
or obligation under any Environmental Law in respect to the Company or the
Company Subsidiary or any of their current or former facilities or operations.
All agreements between the Company and the State of Connecticut with respect to
environmental matters related to the New Haven Property are listed on Schedule
4.16(e).

                                     (f)          Except as in the ordinary
course of business pursuant to Permits issued by the Connecticut Department of
Environmental Protection, the Massachusetts Department of Environmental
Protection and/or the U.S. Environmental Protection Agency for the facilities
and operations of the Company and the Company Subsidiary, neither the Company
nor the Company Subsidiary has transported or arranged for the treatment,
storage, handling, disposal or transportation of any Hazardous Substance to any
off-site location.

                                     (g)          All material environmental
studies and audits conducted in relation to the Owned Real Property or the
Leased Real Property by or on behalf of the Company or the Company Subsidiary in
the last five (5) years are listed on Schedule 4.16(g), copies of which have
been provided to Buyer.

                                     (h)          Except for obligations under
the Connecticut Transfer Act (Section 22a-134 et seq. of the Connecticut General
Statutes) (the “Transfer Act”) with respect to the North Haven Property, neither
this Agreement nor the consummation of the transaction that is the subject of
this Agreement will result in any obligations for site investigation or cleanup,
or notification to or consent of government agencies or third parties, pursuant
to any “transaction triggered” or “responsible property transfer” Environmental
Laws.

                                     (i)          Notwithstanding any other
provision of this Agreement, this Section 4.16 contains the sole and exclusive
representations and warranties of the Company and Sellers with respect to
environmental matters, including all matters arising under Environmental Laws.

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                                     (j)          For the avoidance of doubt,
the AOCs are exceptions to the representations and warranties in this Section
4.16 and the Sellers make no representation or warranty as to the noncompliance
with Environmental Laws or the release of Hazardous Substances to the extent
such noncompliance or release arises from one or more of the AOCs.

                    4.17          Employee Relations and Agreements.

                                     (a)          Schedule 4.17(a) contains a
list of (i) all employment, severance, consulting or similar agreements to which
the Company or the Company Subsidiary is a party as of the date of this
Agreement, other than employment agreements terminable by either party at-will
and without any severance obligation on the part of the Company or the Company
Subsidiary, (ii) all severance programs or policies of the Company or the
Company Subsidiary with or relating to its employees and (iii) all other
agreements that entitle any employee to compensation or other consideration as a
result of the acquisition by any Person of control of the Company or the Company
Subsidiary.

                                     (b)          Neither the Company nor the
Company Subsidiary is a party to any collective bargaining agreement or other
labor contract. Neither the Company nor the Company Subsidiary is subject to any
(i) unfair labor practice complaint pending before the National Labor Relations
Board or any other federal, state, local or foreign agency, (ii) pending or, to
the Knowledge of the Company, threatened labor strike, slowdown, work stoppage,
lockout, or other organized labor disturbance, (iii) pending grievance
proceeding, (iv) pending representation question, or (v) to the Knowledge of the
Company, attempt by any union to represent employees as a collective bargaining
agent.

                                     (c)          The Company and the Company
Subsidiary are in compliance in all material respects with all applicable Laws
respecting labor, employment, fair employment practices, terms and conditions of
employment, workers’ compensation, occupational safety, plant closings, and
wages and hours.

                                     (d)          To the Knowledge of the
Company, none of the employees of the Company or the Company Subsidiary is in
any material respect in violation of any term of any employment agreement,
nondisclosure agreement, common law nondisclosure obligation, fiduciary duty,
non-competition agreement, restrictive covenant or other obligation to a former
employer relating to the right of such employee to be employed by the Company or
the Company Subsidiary or the employee’s knowledge or use of trade secrets or
proprietary information.

                    4.18        Litigation. Except as disclosed on Schedule 4.18
(with paragraph references corresponding to those set forth below):

                                     (a)          there are no outstanding
injunctions, judgments, orders, decrees, rulings, or charges against the Company
or the Company Subsidiary;

                                     (b)          there are no Actions,
hearings, or investigations of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction
pending or, to the Knowledge of the Company threatened against, relating to or
affecting the Company or the Company Subsidiary which (i) could reasonably be
expected to result in the issuance of an order restraining, enjoining or
otherwise prohibiting or making illegal the consummation of any of the

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transactions contemplated by this Agreement or the Escrow Agreement or otherwise
result in a material diminution of the benefits contemplated by this Agreement
to Buyer, or (ii) if determined adversely to the Company or the Company
Subsidiary, could reasonably be expected to result in (A) any injunction or
other equitable relief against the Company or the Company Subsidiary that would
interfere in any material respect with its business or operations or (B) Losses
by the Company or the Company Subsidiary, individually or in the aggregate with
Losses in respect of other such Actions, that would be reasonably expected to
have a Material Adverse Effect; and

                                     (c)          there are no facts or
circumstances Known to the Company that could reasonably be expected to give
rise to any Action that would be required to be disclosed pursuant to clause (b)
above.

Schedule 4.18(d) sets forth all payments, listing the amounts and dates of each
such payment, made or accrued since the Most Recent Audited Balance Sheet Date
in connection with the law suits set forth thereon.

                    4.19          Insurance. All policies or binders of fire,
liability, product liability, worker’s compensation, vehicular and other
insurance held by or on behalf of the Company or the Company Subsidiary are
listed and described on Schedule 4.19. The insurance coverage provided by any of
the policies described on Schedule 4.19 will not terminate or lapse by reason of
the transactions contemplated by this Agreement. Each policy listed on Schedule
4.19 is valid and binding and in full force and effect, all premiums on all such
policies have been paid to date and each of the Company and the Company
Subsidiary has complied with all terms and conditions of such policies and
neither the Company, the Company Subsidiary nor the Person to whom such policy
has been issued has received any notice of cancellation or termination in
respect of any such policy or is in default thereunder. The insurance limits of
such policies listed on Schedule 4.19 have not been exhausted or materially
diminished. The insurance policies listed on Schedule 4.19, in light of the
respective business, operations and assets and properties of the Company and the
Company Subsidiary, are in amounts and have coverages that are reasonable and
customary for Persons engaged in such businesses and operations and having such
assets and properties and are placed with insurers that are reputable and, to
the Knowledge of the Company, financially sound. Neither the Company, the
Company Subsidiary nor the Person to whom such policy has been issued has
received notice that any insurer under any policy referred to in this Section
4.19 is denying liability with respect to a claim thereunder or defending under
a reservation of rights clause.

                    4.20          Suppliers and Customers. Schedule 4.20(a)
lists the ten (10) largest customers of the Company and the Company Subsidiary,
on the basis of revenues for goods sold or services provided for each of the
three (3) most recently-completed fiscal years. Schedule 4.20(b) lists the ten
(10) largest suppliers of the Company and the Subsidiary, on the basis of cost
of goods or services purchased for the most recently-completed fiscal year. No
such material supplier of the Company or the Company Subsidiary has canceled or
materially reduced any contract or order for provisions of, and, to the
Knowledge of the Company, there has been no threat by any material supplier not
to provide products, supplies, or services to the Company or the Company
Subsidiary at any time in the last two years. Except for Wal-Mart Stores, Inc.,
no such material customer of the Company or the Company Subsidiary has canceled
or materially reduced any contract or order for provisions of and, to the
Knowledge of the Company, there has been no threat by any material customer to
cancel or materially reduce any order for products, supplies or services from
the Company or the Company Subsidiary at

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any time in the last two years, other than order cancellations made in the
ordinary course of business consistent with the Company’s past experience.

                    4.21     Accounts Receivable. Except as set forth on
Schedule 4.21(i), all of the accounts receivable owing to the Company or the
Company Subsidiary, net of applicable reserves, (i) constitute legal, valid and
binding obligations of the respective debtors enforceable in accordance with
their terms, (ii) arose from bona fide transactions for goods sold or services
performed in the ordinary course of business and are payable on ordinary trade
terms, (iii) are not subject to any valid set-off or counterclaim, (iv) do not
represent obligations for goods sold on consignment, on approval or on a
sale-or-return basis or subject to any other repurchase or return arrangement,
(v) are believed in good faith by the Company to be genuine and collectible, in
the ordinary course of business consistent with past practice, in the aggregate
recorded amounts thereof net of any applicable reserves and (vi) are not the
subject of any Actions brought by or on behalf of the Company or the Company
Subsidiary. To the Knowledge of the Company and except as set forth on Schedule
4.21(i), no account debtor has refused or threatened to refuse to pay its
obligations for any reason and no account debtor is insolvent or bankrupt. There
are no security arrangements and collateral securing the repayment or other
satisfaction of receivables of the Company and the Company Subsidiary; provided,
that Schedule 4.21(ii) lists all letters of credit issued in favor of the
Company or the Company Subsidiary.

                    4.22     Properties.

                                (a)          Except for (i) the security
interest granted by the Company and the Company Subsidiary to Webster and
(ii) the financing statements filed by the State of Connecticut Department of
Economic and Community Development and set forth on Schedule 4.22, each of the
Company and the Company Subsidiary is in possession of and has good and
marketable title to, or has valid leasehold interests in or valid rights under
Contract to use, all personal property, whether tangible or intangible, used in
or reasonably necessary for the conduct of their business, including all
tangible personal property reflected on the balance sheet included in the Most
Recent Audited Balance Sheet Date and tangible personal property acquired since
the date of the Most Recent Audited Balance Sheet Date other than property
disposed of since such date in the ordinary course of business consistent with
past practice. Except for the security interest granted by the Company and the
Company Subsidiary to Webster, all such tangible personal property is free and
clear of all Encumbrances.

                                (b)          All material items of machinery,
equipment, and other tangible assets of each of the Company and the Company
Subsidiary are in operational condition, normal wear and tear excepted, have
been regularly and properly serviced and maintained in a manner that would not
void or limit the coverage of any warranty thereon, other than items currently
under, or scheduled for, repair or construction, in the ordinary course of
business consistent with past practice, and are adequate and fit to be used for
the purposes for which they are currently used in the manner they are currently
used.

                    4.23     Bank Accounts. Schedule 4.23 sets forth the names
and locations of all banks, trust companies, savings and loan associations and
other financial institutions at which the Company or the Company Subsidiary
maintains accounts of any nature, the account numbers of all such accounts and
the names of all Persons authorized to draw thereon or make withdrawals
therefrom.

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                    4.24     Powers of Attorney; Guarantees.

                                (a)          Neither the Company nor the Company
Subsidiary has an obligation to act under any outstanding power of attorney or
any obligation or liability, either accrued, accruing or contingent, as
guarantor, surety, co-signor, endorser (other than for purposes of collection in
the ordinary course of business of the Company and the Company Subsidiary),
co-maker or indemnitor in respect of the obligation of any Person.

                                (b)          Except as set forth on
Schedule 4.24, neither the Company nor the Company Subsidiary has any powers of
attorney or comparable delegations of authority outstanding.

                    4.25     Transactions with Affiliates. Except for the TMC
Lease and as set forth on Schedule 4.25, there are no liabilities or existing
business relationships between the Company and the Company Subsidiary and any of
the Affiliates, officers, directors, or shareholders thereof or any of such
officer’s, director’s, or shareholder’s Affiliates. No Affiliate, officer,
director, or shareholder of the Company or the Company Subsidiary, provides or
causes to be provided any assets, services or facilities used or held for use in
connection with the business of the Company or the Company Subsidiary. To the
Knowledge of the Company, no such Person is engaged in competition with the
Company or the Company Subsidiary with respect to any line of the products or
services of the Company or the Company Subsidiary in any market presently served
by the Company or the Company Subsidiary. Except as disclosed on Schedule 4.25,
since the Most Recent Audited Balance Sheet Date, all settlements of
intercompany liabilities between the Company or the Company Subsidiary, on the
one hand, and any of the Affiliates, officers, directors, or shareholders
thereof or any of such officer’s, director’s, or shareholder’s Affiliates, on
the other hand, have been made, and all allocations of intercompany expenses
have been applied, in the ordinary course of business consistent with past
practice.

                    4.26     Inventory. All inventory of the Company and the
Company Subsidiary reflected on the balance sheet included in the Most Recent
Financial Statements consisted, and all such inventory acquired since the date
of the Most Recent Financial Statements consists, of a quality and quantity
usable and salable in the ordinary course of business consistent with past
practice, subject to any applicable reserves and normal and customary allowances
in the industry for spoilage, damage and outdated items. Except for the security
interest granted by the Company and the Company Subsidiary to Webster and except
as disclosed in the notes to the Audited Financial Statements, all items
included in the inventory of the Company and the Company Subsidiary are the
property of the Company and the Company Subsidiary, free and clear of any
Encumbrance, have not been pledged as collateral, are not held by the Company or
the Company Subsidiary on consignment from others and conform in all material
respects to all standards applicable to such inventory or its use or sale
imposed by Governmental Authorities. The Company and the Company Subsidiary have
not sold any inventory that is subject to any repurchase or return arrangement
or obligation.

                    4.27     Corrupt Practices. Neither the Company nor the
Company Subsidiary, nor any director, officer, agent, employee (whether full
time or contract) or other Person acting on behalf of the Company or the Company
Subsidiary has, in the course of its actions for, or on behalf of, the Company
or the Company Subsidiary (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee (whether full time or

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contract) from corporate funds; or (iii) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee (whether full time or contract).

                    4.28     Books and Records. The minute books and other
similar records of the Company and the Company Subsidiary as made available to
Buyer prior to the execution of this Agreement contain a true and complete
record, in all material respects, of all action taken at all meetings and by all
written consents in lieu of meetings of the shareholders, the boards of
directors and committees of the boards of directors of the Company and the
Company Subsidiary for the periods covered by such minute books. The stock
transfer ledgers and other similar records of the Company and the Company
Subsidiary as made available to Buyer, prior to the execution of this Agreement,
accurately reflect all record transfers prior to the execution of this Agreement
in the capital stock of the Company and the Company Subsidiary during the
periods covered by such ledgers.

                    4.29     Product Liabilities and Product Warranties. Except
as disclosed on Schedule 4.29, there are no pending or, to the Knowledge of the
Company, threatened product liability claims against the Company or the Company
Subsidiary. Schedule 4.29 sets forth a summary of each product liability claim
in excess of $100,000 paid by the Company or the Company Subsidiary in the past
five (5) years. Standard form product warranties issued by the Company and the
Company Subsidiary are listed and described on Schedule 4.29. To the Knowledge
of the Company, the reserves set forth on the Most Recent Financial Statements
are adequate for all pending, threatened and reasonably anticipated product
warranty claims. There are no uninsured product liability claims that are
pending or, to the Knowledge of the Company, threatened.

                    4.30     Waiver and Termination of the Stockholders
Agreement. The stockholders executing the Waiver and Termination Agreement
attached hereto as Exhibit B (the “Waiver and Termination Agreement”), represent
all of the stockholders necessary to terminate the Stockholders Agreement, by
and among the Company and the stockholders listed therein, dated as of January
17, 1996, pursuant to its terms.

                    4.31     Vintage Firearms Value. The fair market value of
the Vintage Firearms, in the aggregate, does not exceed the total amount listed
on Schedule 6.13.

                    4.32     No Brokers. Except for Duff & Phelps Securities,
LLC, the fees of which shall be paid by the Company and included in the Expense
Amount, neither the Company nor any Seller has become obligated to pay any fee
or commission to any broker, finder or intermediary for or on account of the
transactions contemplated by this Agreement.

ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER

                    As an inducement to the Company and the Sellers to enter
into this Agreement and to consummate the transactions contemplated hereby,
Buyer hereby represents and warrants to the Company and the Sellers as follows:

                    5.1     Organization of Buyer. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. Buyer has the corporate power and corporate authority to own or
lease its assets and to carry on its businesses as currently conducted.

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                    5.2     Authority of Buyer. Buyer has the corporate power
and corporate authority to execute, deliver and perform this Agreement. The
execution, delivery and performance of this Agreement by Buyer has been duly
authorized and approved by its board of directors and does not require any
further authorization or consent of its stockholders. This Agreement has been
duly authorized, executed and delivered by Buyer and (assuming the valid
authorization, execution and delivery of this Agreement by the Company and the
Sellers) is the legal, valid and binding agreement of Buyer, enforceable in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar Laws of general application relating to or affecting
creditors’ rights and to general equity principles.

                    5.3     No Violation of Law and Agreements. The execution
and delivery by Buyer of this Agreement, and the performance by each of its
obligations hereunder, does not and will not:

                              (a)          Violate any provision of the
certificate of incorporation or by-laws of Buyer;

                              (b)          To the knowledge of Buyer, violate
any provision of applicable Law relating to Buyer;

                              (c)          Except as set forth on Schedule 5.3,
require a registration, filing, application, notice, consent, approval, order,
qualification, authorization, designation, declaration or waiver with, to or
from any Governmental Authority; or

                              (d)          To the knowledge of Buyer,
(i) require a consent, approval or waiver from, or notice to, any party to any
material contract to which Buyer is a party, or (ii) result in a breach of,
constitute a default under, or result in the acceleration of material
obligations, loss of material benefit or increase in any material liabilities or
fees under, or create in any party the right to terminate, cancel or modify, any
agreement to which Buyer is a party.

                    5.4     No Litigation or Regulatory Action. There is no
Action pending or, to the knowledge of Buyer, threatened, against Buyer or its
Affiliates which would reasonably be expected to prevent, hinder or delay the
consummation of any of the transactions contemplated hereby. There is no Action
pending or, to the knowledge of Buyer, threatened, that questions the legality
or propriety of the transactions contemplated by this Agreement.

                    5.5     Financial Ability. Buyer has, and will have on the
Closing Date, and thereafter as needed, sufficient cash on hand from Buyer’s
immediately available internal organization funds or available under a currently
established committed credit facility or unutilized lines of credit with
financial institutions, to consummate the transactions contemplated by this
Agreement and perform its obligations hereunder.

                    5.6     Solvency. On the Closing Date, after giving effect
to all indebtedness being incurred on such date in connection herewith, Buyer
will not (a) be insolvent (either because its financial condition is such that
the sum of its debts is greater than the fair value of its assets or because the
present fair salable value of its assets will be less than the amount required
to pay its probable liability on its debts as they become absolute and matured),
(b) have unreasonably small capital with which to engage in its business or
(c) have incurred or plan to incur debts beyond its ability to pay as they
become absolute and matured.

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                    5.7      Independent Analysis. Buyer acknowledges that it
has conducted an independent investigation of the financial condition, results
of operations, assets, liabilities, properties and projected operations of the
Company and, in making its determination to proceed with the transactions
contemplated by this Agreement, Buyer has relied solely on (a) the results of
such investigation and (b) the terms and conditions of this Agreement,
including, without limitation, the representations and warranties of the Company
and the Sellers set forth in this Agreement and in the officer’s certificate
referred to in Section 8.1 of this Agreement. Such representations and
warranties by the Company and the Sellers constitute the sole and exclusive
representations and warranties of the Company and the Sellers to Buyer in
connection with the transactions contemplated hereby, and Buyer acknowledges and
agrees that the Company and the Sellers are not making any representation or
warranty whatsoever, express or implied, beyond those expressly given in this
Agreement and in the officer’s certificate referred to in Section 8.1 of this
Agreement.

                     5.8     Investment Intention. Buyer is an “accredited
investor” as defined under Rule 501 promulgated under the Securities Act of
1933, as amended (the “Securities Act”). Buyer will acquire its interest in the
Company for investment only, and not with a view toward or for sale in
connection with any distribution thereof or with any present intention of
distributing or selling any interest therein, other than in compliance with the
Securities Act. Buyer understands that the transactions contemplated hereby have
not been, and will not be registered or qualified under the Securities Act nor
any state or any other applicable securities law, by reason of a specific
exemption from the registration or qualification provisions of those laws, based
in part upon Buyer’s representations in this Agreement. Buyer understands that
no part of the interest in the Company which Buyer acquires may be resold unless
such resale is in compliance with the Securities Act, and registered or
qualified under applicable state securities laws or an exemption from such
registration and qualification is available.

                    5.9     No Brokers. Neither Buyer nor any Person acting on
Buyer’s behalf has paid or become obligated to pay any fee or commission to any
broker, finder or intermediary for or on account of the transactions
contemplated by this Agreement that is payable by the Sellers.

ARTICLE 6
ACTIONS PRIOR TO THE CLOSING DATE

                    6.1     Consents of Third Parties; Governmental Approvals.

                              (a)          Buyer and the Company shall take, or
cause to be taken by others, all commercially reasonable steps to obtain and
satisfy, at the earliest practicable date, all Required Consents; provided,
however, that neither the Company nor Buyer shall be required to incur any
financial or other obligation in connection therewith, other than normal and
customary transaction costs and filing fees.

                              (b)          In addition to and without limiting
the foregoing, each of Buyer and the Company undertakes and agrees to file as
soon as practicable, and in any event prior to fifteen (15) Business Days after
the date hereof, any filings or submissions required under any applicable
foreign antitrust or trade regulation Law. Each of Buyer and the Company shall
use commercially reasonable efforts to obtain any clearance under any applicable
foreign antitrust or trade regulation Law or to resolve any objections that may
be asserted by the applicable Governmental Authority, in each

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case as promptly as practicable. Each of Buyer and the Company shall
(i) promptly notify the other party of any written communication to that party
or its Affiliates from any Governmental Authority and, subject to applicable
Law, permit the other party to review in advance any proposed written
communication to any of the foregoing, (ii) not agree to participate, or to
permit its Affiliates to participate, in any substantive meeting or discussion
with any Governmental Authority in respect of any filings, investigation or
inquiry concerning the transactions contemplated by this Agreement unless it
consults with the other party in advance and, to the extent permitted by such
Governmental Authority, gives the other party the opportunity to attend and
participate in such meeting or discussion, and (iii) to the extent permitted
under applicable Law, furnish the other party with copies of all correspondence,
filings, and written communications between such party and its Affiliates and
their respective representatives, on the one hand, and any Governmental
Authority, on the other hand, with respect to this Agreement and the
transactions contemplated hereby (unless the furnishing of such information
would (A) violate the provisions of any applicable Law or any confidentiality
agreement or (B) cause the loss of the attorney-client privilege with respect
thereto; provided that each such party shall use its reasonable commercial
efforts to promptly communicate to the other party the substance of any such
communication, whether by redacting parts of such material communication or
otherwise, so that such communication would not violate applicable Law or cause
the loss of the attorney-client privilege with respect thereto). Buyer shall be
responsible for paying all relevant filing fees due pursuant to applicable
foreign antitrust or trade regulation Law.

                              (c)          Except as otherwise provided herein,
the obligations of the parties under this Section 6.1 shall not include any
requirement of any Affiliate of either party to expend money (other than normal
legal and professional fees or filing fees), commence or participate in any
litigation or offer or grant any accommodation (financial or otherwise) to any
third Person.

                     6.2     Operations Prior to the Closing Date. Between the
date hereof and the Closing Date, but except as expressly contemplated herein,
the Company shall, and shall cause the Company Subsidiary (unless Buyer shall
otherwise consent in writing (which consent shall not be unreasonably withheld,
delayed or conditioned)), to use commercially reasonable efforts to: (i) conduct
its operations according to its ordinary and usual course of business consistent
with past practice, including, without limitation, to maintain in full force and
effect and to pay all premiums due under all life insurance policies under which
the Company is a beneficiary and, to the extent consistent therewith, with no
less diligence and effort than would be applied in the absence of this
Agreement, (ii) seek to preserve intact its current business organization,
(iii) keep available the services of its current officers and employees and
(iv) preserve its relationships with those customers, suppliers and others
having material business dealings with it to the end that goodwill and ongoing
businesses shall not be impaired in any material respect on the Closing Date.
Without limiting the generality of the foregoing, except as disclosed on
Schedule 6.2, the Company and the Company Subsidiary shall refrain from:

                              (a)          amending the certificates or articles
of incorporation or by-laws (or other comparable corporate charter documents) or
taking any action with respect to any such amendment or any recapitalization,
reorganization, liquidation or dissolution of any such corporation;

                              (b)          authorizing, issuing, selling or
otherwise disposing of any shares of capital stock (or other comparable equity
interest) of the Company or the Company Subsidiary, or modifying or amending any
right of any holder of outstanding shares of capital stock (or other comparable
equity interest) of the Company;

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                              (c)          except for the December Dividend,
declaring, setting aside, paying or receiving any dividend or other distribution
in respect of the capital stock of the Company or directly or indirectly
redeeming, purchasing, otherwise acquiring or receiving payment in respect of a
redemption or other acquisition of, any capital stock of the Company;

                              (d)          acquiring or disposing of, or
incurring any Encumbrance on, any assets or properties of the Company or the
Company Subsidiary, other than in the ordinary course of business consistent
with past practice;

                              (e)          (i) entering into, amending,
modifying, terminating (partially or completely), granting any waiver under or
giving any consent with respect to (A) any Contract that would, if in existence
on the date of this Agreement, be a Business Agreement (B) any material Permit
held or used by the Company or the Company Subsidiary or (ii) granting any
irrevocable powers of attorney;

                              (f)          (i) entering into, amending, or
modifying any Benefit Plan or any agreement with any current or former director,
officer or employee, except as required by Law or (ii) increasing the salary,
wages or other compensation of (A) any director, officer or employee of the
Company or the Company Subsidiary having a base salary in excess of $75,000 per
year or any business consultant of the Company or the Company Subsidiary or
(B) any other employee of the Company or the Company Subsidiary in an amount
greater than five percent (5%) per annum;

                              (g)          paying any benefit or grant or
amending any award (including in respect of stock options or other
equity-related award), except in the ordinary course of business consistent with
past practice or as expressly required under any Benefit Plan existing on the
date hereof and disclosed on Schedule 4.15(a);

                              (h)          violating, breaching or defaulting
under in any material respect, or taking or failing to take any action that
(with or without notice or lapse of time or both) would constitute a material
violation or breach of, or default under, any term or provision of any Permit
held or used by the Company or the Company Subsidiary or any Contract to which
the Company or the Company Subsidiary is a party or by which any of their
respective assets or properties is bound;

                              (i)          (i) incurring indebtedness, other
than Indebtedness incurred in the ordinary course consistent with past practice,
or (ii) voluntarily purchasing, canceling, prepaying or otherwise providing for
a complete or partial discharge in advance of a scheduled payment date with
respect to, or waiving any right of the Company or the Company Subsidiary under,
any indebtedness of or owing to the Company or the Company Subsidiary; provided,
that the Company and the Company Subsidiary may deal with their respective
accounts receivable in the ordinary course of business and in accordance with
past practice;

                              (j)          engaging with any Person in any
merger or other business combination;

                              (k)          making capital expenditures or
commitments for additions to property, plant or equipment constituting capital
assets in an aggregate amount exceeding $100,000;

                              (l)          making any change in the lines of
business in which the Company or the Company Subsidiary participate or are
engaged;

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                              (m)          writing off or writing down any of
the Company’s or the Company Subsidiary’s assets or properties outside the
ordinary course of business consistent with past practice;

                              (n)          making any change in any accounting
or Tax practice, policy or election of the Company or the Company Subsidiary;

                              (o)          making any payment to, distributing
(or granting any beneficial interest in) any asset of the Company or the Company
Subsidiary (other than distribution of the Vintage Firearms or the proceeds
thereof as permitted hereunder) to, or incurring any liability or expense on
behalf of any Affiliates, officers, directors, or shareholders of the Company or
the Company Subsidiary other than those arising in the ordinary course of
business from such Persons employment or duties as a director or as expressly
provided for in a Business Agreement disclosed on Schedule 4.13(j); or

                              (p)          entering into any Contract to do or
engage in any of the foregoing.

                    6.3     Commercially Reasonable Efforts. Subject to the
terms and conditions of this Agreement, each Party will use all commercially
reasonable efforts to cause the Closing to occur. Without limiting the
foregoing, the Company shall use all commercially reasonable efforts to obtain
the agreement of all shareholders of the Company to become Sellers under this
Agreement.

                    6.4     Confidentiality; Access to Information.

                    (a)     The terms of the Confidentiality Agreement dated May
14, 2007 between Cerberus Capital Management, L.P. and the Company (the
“Confidentiality Agreement”) are hereby incorporated herein by reference, shall
apply to Buyer’s Representatives and shall continue in full force and effect
until the Closing Date, at which time the Confidentiality Agreement and the
obligations of Buyer under this Section 6.4 shall terminate. If this Agreement
is, for any reason, terminated prior to the Closing Date, the Confidentiality
Agreement shall continue in full force and effect in accordance with its terms.

                    (b)     Following execution of this Agreement, upon
reasonable notice, the Company and the Company Subsidiary shall afford to
officers, employees, counsel, accountants, prospective financing sources, and
other authorized representatives of Buyer (“Representatives”), full, open,
continuing and reasonable access, upon reasonable notice throughout the period
prior to the Closing Date, to its (i) equipment, personal and intangible
properties, facilities and real properties, (ii) accounting files, financial and
operating data, budgets, projections and plans, (iii) regulatory and other
government filings, (iv) employment records, policies and files, (v) material
contracts, agreements and undertakings, (vi) environmental filings and tax
returns, (vii) reports, schedules, books and records, and (viii) other
information relevant to the Company’s and the Company Subsidiary’s business,
including without limitation any Actions against the Company or the Company
Subsidiary, (collectively, the “Information”); and, during such period, the
Company and the Company Subsidiary shall furnish or make available reasonably
promptly to such Representatives copies of all such Information (in addition to
the information and materials which Buyer has previously received) as may
reasonably be requested, including but not limited to a copy of each report,
schedule or other document filed with or received by the Company or the Company
Subsidiary from any Governmental Authority at any time prior to the Closing. The
Company and the Company Subsidiary shall make reasonably available all of its
officers, employees, agents or advisors to Buyer’s Representatives for purposes
of reviewing, providing,

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discussing, or describing any of the Information or otherwise keeping Buyer and
its Representatives apprised with respect to, and responding to Buyer’s
inquiries regarding, the Company’s and the Company Subsidiary’s business. Buyer
agrees that it will not, and will cause its Representatives not to, use any
information obtained pursuant to this Section for any purpose unrelated to the
consummation of the transactions contemplated by this Agreement. No information
or knowledge obtained in any investigation pursuant to this Section 6.4 shall
affect or be deemed to modify any representation or warranty contained in this
Agreement or the conditions to the obligations of the parties to consummate the
transactions contemplated thereby.

                    6.5     Notification of Certain Matters. In the event that
Buyer becomes aware on or prior to the Closing Date (whether by notification by
the Company, updating of Schedules or otherwise) of any inaccuracy in any
representation or breach of any warranty, covenant or agreement of the Company,
Buyer shall promptly notify the Company in writing, and, to the extent such
inaccuracy or breach is not cured in accordance with Section 11.1, Buyer may
terminate this Agreement to the extent Buyer is entitled to do so pursuant to
Section 11.1. No notice given pursuant to this Section 6.5 shall have any effect
on the representations, warranties, covenants or agreements contained in this
Agreement for purposes of determining satisfaction of any condition contained
herein or shall in any way limit Buyer’s right to seek indemnity under this
Agreement, including, without limitation, under Article 10; provided, however,
that if the inaccuracy or breach is of a nature that would entitle Buyer to
terminate this Agreement pursuant to Section 11.1, then, notwithstanding
anything in this Agreement to the contrary, if Buyer proceeds to consummate the
Closing, Buyer shall be deemed to have waived any and all rights, remedies or
other recourse against the Company to which Buyer might otherwise be entitled in
respect of such inaccuracy or breach, including any rights or remedies under
Article 10.

                    6.6     No Solicitations. The Sellers will not take, nor
will they permit the Company, the Company Subsidiary or any Affiliate of any
Seller or the Company (or authorize or permit any investment banker, financial
advisor, attorney, accountant or other Person retained by or acting for or on
behalf of any Seller, the Company, the Company Subsidiary or any such Affiliate)
to take, directly or indirectly, any action to solicit, encourage, receive,
negotiate, assist or otherwise facilitate (including by furnishing confidential
information with respect to the Company or the Company Subsidiary or permitting
access to the assets and properties and books and records of the Company or the
Company Subsidiary) any offer or inquiry from any Person concerning an
Acquisition Proposal. If, after the date hereof, any Seller, the Company, the
Company Subsidiary or any such Affiliate (or any such Person acting for or on
their behalf) receives from any Person any offer, inquiry or informational
request referred to above, a Seller or the Company will promptly advise such
Person, by written notice, of the terms of this Section 6.6 and will promptly,
orally and in writing, advise Buyer of such offer, inquiry or request and
deliver a copy of such notice to Buyer.

                    6.7     Financing Assistance. The Company shall provide
cooperation reasonably necessary in connection with (i) Buyer’s arrangement of
financing to consummate the transactions contemplated in this Agreement and (ii)
at Buyer’s option, the repayment of all borrowings under the Webster Credit
Agreement as of the Closing (the “Acquisition Financing”), including (a) to
cause the appropriate officers of the Company and the Company Subsidiary to
participate in reasonable meetings, drafting sessions, due diligence sessions,
management presentation sessions, road shows and sessions with rating agencies,
in each case which are customary for financings similar to the Acquisition
Financing, (b) to cause the appropriate officers of the Company and the Company
Subsidiary to assist Buyer in the preparation of business projections with
respect to the business that are

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customary for financings similar to the Acquisition Financing, (c) to cause the
appropriate officers of the Company and the Company Subsidiary to execute and
deliver any underwriting or placement agreements, pledge and security documents,
lien release or termination documents in connection with the repayment of all
borrowings under the Webster Credit Agreement, other definitive financing
documents, indemnity agreements, or documents or other requested certificates
(including officers’ certificates), in each case which are customary for
financings similar to the Acquisition Financing and (d) to use commercially
reasonable efforts to cause the Company’s independent accountants to reasonably
cooperate with Buyer in its efforts to arrange the Acquisition Financing
(provided no fees or expenses of such accountants incurred for the purpose will
be included in the Expense Amount), including to provide any customary comfort
letter and consent with respect to the financial statements in connection with
the Acquisition Financing as reasonably requested by Buyer.

                    6.8     Indebtedness. Consistent with past practice, the
Company may use available cash to pay down Indebtedness until the Closing Date,
to make the payments (if any) required by applicable Law to partially fund any
underfunding under Pension Plans. The Company shall not increase Indebtedness
unless the proceeds thereof are used prior to the Closing Date in the ordinary
course business operations of the Company or the Company Subsidiary and such
increase shall not have the effect of directly increasing Closing Cash.

                    6.9     International Boycott Report. Prior to the Closing
Date, the Company shall have filed with the IRS a Form 5713, International
Boycott Report, for each taxable year in which the Company or the Company
Subsidiary had operations related to a “boycotting country” as listed by the
Secretary of the U.S. Treasury under Code section 999(a)(3), and shall have
provided Buyer with proof of such filing and a copy of such completed Form 5713.

                    6.10     Pension Plan. Prior to the Closing, the Company
shall take all such actions as are necessary to properly effectuate a complete
cessation of all future benefit accruals under the Marlin Firearms Co.
Employees’ Pension Plan, including without limitation adopting all necessary
plan amendments and providing the required notice to plan participants under
Section 204(h) of ERISA, with such cessation to be effective as of a date no
later than December 31, 2007.

                    6.11     No Transfers. Other than in connection with the
Closing, no Seller will transfer any Shares.

                    6.12     Information Return on Foreign Corporation
Ownership. Prior to the Closing Date, the Company shall have filed with the IRS
a Form 5471, Information Return of U.S. Persons with Respect to Certain Foreign
Corporations, for each taxable year in which the Company or the Company
Subsidiary holds ten percent (10%) or more equity interest in any foreign
corporation, and, if any such filing is required, shall have provided Buyer with
proof of such filing and a copy of such completed Form 5471.

                    6.13     Distributions. The Company may distribute to the
Sellers the vintage firearms listed on Schedule 6.13 (the “Vintage Firearms”),
along with all documentation and accessories related thereto, and the proceeds
of the sale of those Vintage Firearms noted on Schedule 6.13 as having been sold
at auction, net of any applicable Taxes to be paid by the Company or the Company
Subsidiary and any expenses related to such sale or sales. Any such distribution
shall be subject to Section 7.5.

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ARTICLE 7
POST-CLOSING AGREEMENTS

                    7.1     Employees, Employee Benefits, Hiring of Employees.

                              (a)          Continuation of Employment. On the
Closing Date, Buyer shall cause each of the Company and the Company Subsidiary
to employ all employees of the Company and the Company Subsidiary, whether or
not actively employed on the Closing Date (all such employees, the “Business
Employees”) at the same location where such employee was employed immediately
prior to the Closing Date on terms and conditions (including premium pay, shift
differentials, and Benefit Plan coverages) that are not less favorable than
those in effect immediately prior to the Closing Date. Buyer and its Affiliates
shall, for the benefit of the Business Employees, provide credit for all years
of service provided prior to the Closing Date for all purposes under all
compensation and benefit plans, programs and policies maintained by Buyer and/or
its Affiliates for the benefit of such employees after the Closing Date to the
extent such credit was given under corresponding Benefit Plans as in existence
immediately prior to the Closing Date.

                              (b)          Health Coverages. Without limiting
the scope of Section 7.1(a), Buyer and its Affiliates shall cause each of the
Company and the Company Subsidiary to provide each Business Employee (and his or
her “eligible dependents”, as defined in the Benefit Plans) to be covered
immediately following the Closing Date by a group health plan that provides
health benefits (within the meaning of Section 5000(b)(1) of the Code) that
(i) complies with the provisions of Section 7.1(a), (ii) does not limit or
exclude coverage on the basis of any pre-existing condition of such Business
Employee or dependent (other than any limitation already in effect under the
Benefit Plan that is a group health plan), and (iii) provides each Business
Employee full credit, for the year during which the Closing occurs, for any
deductible already incurred by the Business Employee under any group health plan
in which the Business Employees become eligible to participate after the Closing
Date and for any other out-of-pocket expenses already incurred by the Business
Employee under the applicable Benefit Plan that count against any maximum or
minimum out-of-pocket expense provision of any group health plan maintained by
Buyer and/or its Affiliates.

                              (c)          Accrued Paid Time Off. With respect
to any accrued but unused paid time off to which any Business Employee is
eligible to take pursuant to the paid time off policy maintained by the Company
or the Company Subsidiary for the benefit of the Business Employees applicable
to such Business Employee immediately prior to the Closing Date, Buyer shall
cause the Company or the Company Subsidiary to allow such Business Employee to
use such accrued and unused paid time off during that individual’s employment
following the Closing Date (notwithstanding any contrary program or policy of
Buyer), and if such employment is terminated prior to a Business Employee’s use
of all such accrued and unused paid time off, Buyer shall provide such
individual with equivalent compensation in lieu of such paid time off.

                              (d)          No Third Party Beneficiaries. Nothing
herein is intended to, and shall not be construed to, create any third party
beneficiary rights of any kind or nature, including, without limitation, the
right of any Business Employee or other individual to seek to enforce any right
to compensation, benefits, or any other right or privilege of employment with
Company, the Company Subsidiary or Buyer.

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                    7.2     Indemnification and Insurance.

                              (a)          Buyer agrees that all rights to
indemnification and exculpation from liability for acts and omissions occurring
at or prior to the Closing and rights to advancements of expenses relating
thereto now existing in favor of the current or former directors, officers,
employees, shareholders and agents of the Company or the Company Subsidiary (the
“Company Agents”) as provided in the certificate of incorporation and by-laws of
the Company or comparable documents of the Company Subsidiary shall survive the
transactions contemplated hereby and shall not be amended, repealed or otherwise
modified in any manner that would adversely affect the rights thereunder of any
such Company Agent, unless an alteration or modification of such document is
required by applicable Law or the Company Agent affected thereby otherwise
consents in writing thereto.

                              (b)          Prior to the Closing, the Company
shall obtain the Extended Coverage Policy and the premium therefore shall be
included in the Expense Amount.

                    7.3     Other Tax Matters.

                              (a)          At the Company’s sole expense, the
Buyer shall cause to be prepared and filed all federal and state income Tax
Returns required to be filed by the Company or the Company Subsidiary for
taxable periods ending prior to or on the Closing Date which are to be filed
after the Closing Date.

                              (b)          Buyer shall promptly notify the
Shareholders’ Representative following receipt of any notice of audit or other
proceeding relating to any federal or state Tax Return for any Tax period ending
on or before December 31, 2006, and with respect to any Taxes for which the
Sellers may be liable pursuant to Section 7.3(c) (the “Prior Period Returns”).
The Shareholders’ Representative shall have the right to control any and all
audits or other proceedings relating to any Prior Period Return, including the
filing of an amended return; provided, however, that the Shareholders’
Representative (i) shall have given written acknowledgement and acceptance of
the liability of the Sellers to Buyer under this Agreement for the Tax liability
being contested and (ii) shall not agree to the resolution of any audit or other
proceeding relating to a Prior Period Return or file an amended Prior Period
Return that would have a material adverse effect on the Company without Buyer’s
consent, which consent shall not be unreasonably withheld. Buyer shall make
available or shall cause the Company to make available to the Shareholders’
Representative any and all books and records of the Company and other documents
requested by the Shareholders’ Representative and shall make available employees
of the Company to enable the Shareholders’ Representative to defend any audit or
other proceeding with respect to any Prior Period Return and shall cooperate
with the Shareholders’ Representative in defense of such audit.

                              (c)          The Parties agree that there should
be no Tax Return required to be filed for a Straddle Period for Taxes based on
income or receipts of the Company or the Company Subsidiary. However, in the
event that any Tax Return is required to be filed for a Straddle Period for
Taxes based on income or receipts of the Company or the Company Subsidiary, such
Taxes for the portion of the Straddle Period that ends on the Closing Date (the
“Pre-Closing Straddle Period”) shall be computed as if such Straddle Period
ended as of the close of business on the Closing Date. In the case of any
Straddle Period, the periodic Taxes of the Company or the Company Subsidiary
that are not based on income or receipts (e.g., property

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Taxes) for the Pre-Closing Straddle Period shall be computed based upon the
ratio of the number of days in the Pre-Closing Straddle Period and the number of
days in such Straddle Period. The Sellers shall only be liable for and shall
only pay any Taxes to the extent that such Taxes are (i) attributable to the
Pre-Closing Straddle Period and (ii) are imposed by a state in which the Company
and the Company Subsidiary have never filed and do not now file a Tax Return for
the type of Tax for which a subsequent claim is made. In the event that the
Closing occurs after December 31, 2007, the Buyer shall be liable for all Taxes
for 2007 and the Pre-Closing Straddle Period, except to the extent that such
Taxes are imposed by a state in which the Company and the Company Subsidiary
have never filed and do not now file a Tax Return for the type of Tax for which
a subsequent claim is made. With respect to any Tax Return required to be filed
for a Straddle Period (and for 2007 in the event that the Closing occurs after
December 31, 2007) and for which the Sellers are liable for Taxes shown thereon
pursuant to this Section 7.3, such Tax Return shall be prepared on a basis
consistent with past practice unless otherwise required by Law and Buyer shall
deliver, at least thirty (30) days prior to the due date for the filing of such
Tax Return (taking into account extensions), to the Shareholders’
Representative, a statement setting forth the amount of Tax for which the
Sellers are responsible pursuant to this Section 7.3, and a copy of such Tax
Return; provided, that Buyer will not be required to show any such Tax Return to
the Shareholders’ Representative where the filing date for such Tax Return has
passed when it is determined by the relevant taxing authority that such Tax
Return must be filed. The Shareholders’ Representative, on the one hand, and
Buyer, on the other hand, agree to consult and resolve in good faith any issue
arising as a result of the Shareholders’ Representative’s review of such Tax
Return and mutually to consent to the filing of such Tax Return as promptly as
possible; however, even in the case of continuing disagreement as to the amount
of Tax, in all cases, the Shareholders’ Representative, on behalf of the
Sellers, must timely pay to Buyer the amount of Tax Buyer has determined the
Sellers are liable for on such Tax Return so that Buyer can timely file such Tax
Return.

                              (d)          Transfer Taxes. As required by state
law, the Sellers shall be liable for all transfer Taxes (including, without
limitation, any transfer gains Taxes) arising from the transactions contemplated
by this Agreement. The Shareholders’ Representative shall file all Tax Returns
relating to such transfer Taxes and shall provide evidence of payment thereof at
Closing.

                              (e)          Tax Treatment of Indemnity Payments.
It is the intention of the Parties to treat any indemnity payment made under
this Agreement as an adjustment to the Total Consideration for all federal,
state, local and foreign Tax purposes, and the Parties agree to file their Tax
Returns accordingly.

                              (f)          Tax Cooperation. After the Closing
Date, the Shareholders’ Representative will cooperate with Buyer in the
preparation of all Tax Returns and will provide (or cause to be provided) any
records and other information Buyer requests, and will provide access to, and
the cooperation of its auditors. The Shareholders’ Representative will cooperate
with Buyer in connection with any Tax investigation, audit or other proceeding.

                    7.4     Management Amount and Expense Amount. The Company
shall take all actions reasonably necessary to pay, and shall at the Closing
cause to be paid, the Management Amount to the Persons and in the amounts listed
on Schedule 7.4, subject to all applicable Employment and Withholding Taxes and
the unpaid portion of the Expense Amount.

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                    7.5     Vintage Firearms. If any of the Vintage Firearms
have not been distributed to the Sellers prior to the Closing, Buyer agrees that
such Vintage Firearms are beneficially owned by the Sellers. From the Closing
Date until sixty (60) days thereafter, Buyer shall cause the Company to
distribute such Vintage Firearms to certain individuals designated by the
Shareholders’ Representative. The Sellers, and as applicable the distributee of
any Vintage Firearms, shall indemnify and hold harmless Buyer, the Company and
the Company Subsidiary from and against any and all Losses incurred by Buyer,
the Company or the Company Subsidiary in connection with or arising from the
Vintage Firearms or distribution thereof.

                    7.6     Environmental.

                              (a)          Buyer shall cause the Company to (i)
sign and submit the documents required by the Transfer Act as a “Certifying
Party,” (ii) develop, implement and complete, in accordance with all applicable
statutory and regulatory requirements, a plan and a course of action to
investigate and, if necessary, monitor and remediate the North Haven AOCs at the
North Haven Property listed on the table attached to Schedule 4.16(c) to the
extent required by the Transfer Act or other applicable laws and regulations,
and to the extent necessary to achieve either certification of the Connecticut
Department of Environmental Protection or a licensed environmental professional
(to the extent such certifications are available under applicable Environmental
Laws) that those activities required under the Transfer Act have been completed
in accordance with the Remediation Standard Regulations (Section 22a-133k-1 et
seq. of the Regulations of Connecticut State Agencies) given the then current
use of the North Haven Property, (iii) pay all legal, consulting and other fees
and expenses in connection with the foregoing, and (iv) pay all remediation and
other costs and expenses arising out of the activities contemplated by this
Section 7.6 or otherwise arising in connection with the North Haven AOCs.

                              (b)          None of the provisions of this
Section 7.6 shall limit the indemnification obligations of the Sellers under
Section 10.1 of this Agreement; provided, however, that the Sellers shall have
no indemnification obligation with respect to the existence of any Hazardous
Substances or noncompliance with Environmental Laws to the extent such existence
or noncompliance arises from one or more of the AOCs, whether or not
investigation, monitoring or remediation is required in connection with any AOC.

                              (c)          Prior to commencing any
investigation, monitoring, remediation or other environmental work at or in
connection with the AOCs, Buyer shall, so long as the Sellers have an obligation
under this Agreement to indemnify Buyer, the Company or the Company Subsidiary
for environmental matters, provide the Shareholder Representative with a
description of the scope of such work and a schedule of such work, and
thereafter will keep the Shareholder Representative and its consultants and
advisers reasonably informed as to any changes in such scope or schedule. The
Shareholder Representative shall have the right, at the Shareholder
Representative’s expense, to have the Shareholder Representative’s environmental
consultants present during the conduct of such work, and Buyer’s environmental
consultants and legal counsel shall keep the Shareholder Representative and his
environmental consultants and counsel reasonably informed as to such work
(including the results of any investigation or testing) and all material
discussions with the relevant governmental agencies relating to such work. The
Shareholder’s Representative shall indemnify, defend and hold harmless Buyer,
the Company and the Company Subsidiary from any liability or damage caused by
the negligence or willful

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misconduct of the Shareholder Representative or any of its employees, agents or
contractors in the course of its participation pursuant to this Section 7.6(c).

ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER

                    The obligations of Buyer under this Agreement shall, at the
option of Buyer, be subject to the satisfaction or waiver, on or prior to the
Closing Date, of the following conditions:

                    8.1     No Misrepresentation or Breach of Covenants and
Warranties. The representations and warranties of the Company and the Sellers
made in this Agreement (reading such representation and warranty without regard
to any Material Adverse Effect or materiality qualification) shall be true and
correct in all respects: (a) as of the date hereof; and (b) on and as of the
Closing Date, as though made on such date, except (in the case of both clauses
(a) and (b) above) (i) for those representations and warranties that are made as
of a specific date (which shall be true and correct as of such respective date)
and (ii) to the extent any breaches of such representations and warranties would
not individually or in the aggregate be reasonably likely to have a Material
Adverse Effect. The Company and the Sellers shall have performed or complied in
all material respects with all obligations and covenants required by this
Agreement to be performed or complied with by the Company on or before the
Closing Date, and the Company shall have delivered to Buyer a certificate dated
the Closing Date and signed by an authorized officer of the Company confirming
the foregoing. Each Seller shall have delivered to Buyer certificates
representing all of the Shares set forth opposite such Seller’s name on Schedule
1.1 duly endorsed in blank and bearing or accompanied by all requisite stock
transfer stamps.

                    8.2     No Injunction. There shall not be in effect on the
Closing Date any Court Order restraining or enjoining the carrying out of this
Agreement or the consummation of the transactions contemplated by this
Agreement.

                    8.3     Required Consents. The consents, approvals, waivers
and notices set forth on Schedule 8.3 shall have been obtained (the “Required
Consents”).

                    8.4     Escrow Agreement. The Shareholders’ Representative
(on behalf of the Shareholders) and the Escrow Agent shall have executed and
delivered the Escrow Agreement.

                    8.5     Trademark Agreement. The Marlin Company shall have
executed and delivered the Trademark Coexistence Agreement attached hereto as
Exhibit C (the “Trademark Coexistence Agreement”).

                    8.6     Laws. There shall not be in effect on the Closing
Date any Law that became effective after the date of this Agreement prohibiting
or making illegal the consummation of any of the transactions contemplated by
this Agreement.

                    8.7     Parachute Payments. Buyer shall have received
evidence, in form and substance reasonably satisfactory to Buyer, that the
Company shall have taken all actions necessary to satisfy the “shareholder
approval requirements” of Section 280G(b)(5)(B) of the Code and the regulations
thereunder with respect to any payment that, as a result of the execution of
this Agreement or the consummation of the transactions contemplated by this
Agreement, either alone or in

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conjunction with any other event, could be required to be made under
any Contract or arrangement or otherwise which alone or together with all other
payments could constitute a “parachute payment” to any “disqualified individual”
as those terms are defined in Section 280G of the Code (whether or not such
payment is considered to be reasonable compensation for services rendered).

                    8.8     Release of Liens. If Buyer elects to proceed
pursuant to Section 6.7(ii), all Encumbrances under the Webster Credit Agreement
and any related security documents shall be released and discharged upon such
repayment.

                    8.9     Resignation of Directors. All directors of the board
of directors of the Company whose resignation shall have been requested in
writing by Buyer not less than five (5) days prior to the Closing Date shall
have submitted their resignations or been removed from office effective as of
the Closing Date.

                    8.10   Non-Competition Agreement. Frank Kenna, III, shall
have executed and delivered the non-competition agreement attached hereto as
Exhibit D (the “Non-Competition Agreement”).

                    8.11   Waiver and Termination Agreement. The Waiver and
Termination Agreement shall be in full force and effect in accordance with its
terms.

                    8.12   Required Sellers. Shareholders of the Company holding
at least ninety-nine percent (99%) of the issued and outstanding Shares shall
have become bound as Sellers hereunder.

                    8.13   Waiver. Notwithstanding the failure of any one or
more of the foregoing conditions in this Article 8, Buyer may proceed with the
Closing without satisfaction, in whole or in part, of any one or more of such
conditions and without written waiver. To the extent that, at the Closing, the
Company delivers to Buyer a written notice specifying in reasonable detail the
failure of any such conditions, and Buyer nevertheless proceeds with the
Closing, Buyer shall be deemed to have waived for all purposes any rights or
remedies it may have against the Sellers (including any rights or remedies under
Article 10) by reason of the failure of any such conditions to the extent
described in such notice; provided, however, for the avoidance of doubt, no such
waiver shall in any way limit Buyer’s right to seek indemnity under this
Agreement, including, without limitation, under Article 10 for breaches of any
representation, warranty, covenant or agreement contained in this Agreement to
the extent such breach does not represent a failure of a condition.

ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF COMPANY

                    The obligations of the Company under this Agreement shall,
at the option of the Company, be subject to the satisfaction or waiver, on or
prior to the Closing Date, of the following conditions:

                    9.1     No Misrepresentation or Breach of Covenants and
Warranties. The representations and warranties of Buyer made in this Agreement
shall be true and correct in all material respects: (a) as of the date hereof;
and (b) on and as of the Closing Date, as though made on such date, except to
the extent any breaches of such representations and warranties would not
individually or in

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the aggregate be reasonably likely to have a material adverse effect. Buyer
shall have performed or complied in all material respects with all obligations
and covenants required by this Agreement to be performed or complied with by
Buyer on or before the Closing Date, and Buyer shall have delivered to the
Company a certificate dated the Closing Date and signed by an authorized officer
of Buyer confirming the foregoing.

                    9.2     Required Consents. The Required Consents shall have
been obtained.

                    9.3     No Injunction. There shall not be in effect on the
Closing Date any Court Order restraining or enjoining the carrying out of this
Agreement or the consummation of the transactions contemplated by this
Agreement.

                    9.4     Escrow Agreement. Buyer and the Escrow Agent shall
have executed and delivered the Escrow Agreement.

                    9.5     Trademark Agreement. The Company shall have executed
and delivered the Trademark Coexistence Agreement.

                    9.6     Laws. There shall not be in effect on the Closing
Date any Law that became effective after the date of this Agreement prohibiting
or making illegal the consummation of any of the transactions contemplated by
this Agreement.

ARTICLE 10
INDEMNIFICATION

                    10.1     Indemnification by the Sellers.

                    (a)     After the Closing Date and subject to the
limitations set forth herein, (i) the Sellers shall indemnify and hold harmless
Buyer, the Company and the Company Subsidiary from and against any and all
Losses incurred by Buyer, the Company or the Company Subsidiary in connection
with or arising from: (x) any breach of any warranty or the inaccuracy of any
representation of the Company or the Sellers contained in this Agreement,
(y) any breach by the Company or the Sellers of, or failure by the Company or
the Sellers to perform, any of its covenants or obligations contained in this
Agreement (determined in all cases under clauses (x) and (y) as if the
limitations by the terms “material” or “materially”, or any derivation thereof,
were not included therein or in the Schedules related thereto), and (z) actions
taken within eighteen (18) months of the Closing Date to ensure that the
Company’s and the Company Subsidiary’s operations are conducted in substantial
compliance with Firearms Regulations; provided, however, that:

                              (i)          The Sellers shall be required to
indemnify and hold harmless under clauses (x) and (z) of this Section 10.1(a),
with respect to Losses only to the extent that: (A) the amount of the Losses
related to each individual claim or series of related claims arising out of the
same facts, events or circumstances exceeds Twenty-Five Thousand Dollars
($25,000) which shall not be applied against the Threshold Amount; and (b) the
aggregate amount of such Losses exceed Five Hundred and Twenty Thousand Dollars
($520,000) (the “Threshold Amount”), in which event Buyer shall be entitled to
claim indemnity for the full extent of such Losses related to individual claims
or series of related claims arising out of the same facts, events or
circumstances exceeding $25,000;

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                              (ii)          (A) The aggregate amount required to
be paid by the Sellers under clause (z) of this Section 10.1(a) shall not exceed
an amount equal to Two Hundred Thousand Dollars ($200,000) and (B) the aggregate
amount required to be paid by the Sellers collectively under clauses (x) and (z)
of this Section 10.1(a) shall not exceed an amount equal to Five Million Two
Hundred Thousand Dollars ($5,200,000); provided, however, that the limitations
set forth in this clause (ii) and in clause (i) above shall not apply to a claim
pursuant to Section 10.1 relating to (A) any breach of any warranty or the
inaccuracy of any representation set forth in Section 3.1 (Sellers Authority and
Enforceability), Section 4.2 (Authority and Enforceability), Section 4.4
(Capitalization) or Section 4.8 (Taxes) or (B) any breach of any warranty or the
inaccuracy of any representation that constitutes fraud; and

                              (iii)          Each Seller shall be severally
liable in accordance with their pro rata share of the Escrow Amount, until the
release of the escrow funds, if any remaining, in accordance with the terms and
provisions of the Escrow Agreement. After such release of any escrow funds, each
Seller shall be severally liable for all Losses, as determined based on the
percentage of the total number of Shares held by such Seller as set forth on
Schedule 1.1, for all Losses subject to the limitations set forth in clauses (i)
and (ii) above.

                              (b)          After the Closing Date, the Sellers
will indemnify and hold harmless Buyer, the Company and the Company Subsidiary,
from and against any Expense Amount or Management Amount not set forth in the
Expense Statement.

                              (c)          For purposes of Section 10.1(a)(z),
Losses shall include any expenses incurred or paid by the Company (which shall
not include any allocation for time spent by the Company’s or the Company
Subsidiary’s employees) in connection with any actions taken since July 1, 2007
to ensure that the Company’s and the Company Subsidiary’s operations are
conducted in substantial compliance with Firearms Regulations.

                    10.2     Indemnification by Buyer. After the Closing Date
and subject to the limitations set forth herein, Buyer agrees to indemnify and
hold harmless each Seller from and against any and all Losses incurred by such
Seller in connection with or arising from: (a) any breach of any warranty or the
inaccuracy of any representation of Buyer contained in this Agreement, and
(b) any breach by Buyer of, or failure by Buyer to perform, any of its covenants
or obligations contained in this Agreement.

                    10.3     Tax Indemnification. After the Closing Date, the
Sellers shall indemnify and hold harmless Buyer, the Company and the Company
Subsidiary, from and against any and all Losses and reasonable out-of-pocket
expenses and costs resulting from, arising out of or relating to (a) any Taxes
of the Company relating to (i) any Tax periods ending on or before December 31,
2006 and (ii) the Pre-Closing Straddle Period pursuant to Section 7.3(c) and
(b) without duplication of amounts included in clause (a) any Taxes resulting
from a breach of the representations in Section 4.8. The indemnity provided in
the foregoing sentence shall include, without limitation, any Tax liability
arising (A) by reason of the Company being severally liable for any Taxes of
another Person pursuant to Treasury Regulation §1.1502-6 or any analogous state,
local or foreign Tax provision, (B) by Contract as a transferee or otherwise and
(C) in connection with the transactions contemplated by this Agreement, but
shall exclude any Taxes attributable to transactions not in the ordinary course
of business occurring after the closing which are effectuated or initiated by
Buyer after the Closing.

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                    10.4     Notice of Claims.

                              (a)          Any party seeking indemnification
hereunder (the “Indemnified Party”) shall give promptly to the party obligated
to provide indemnification to such Indemnified Party (the “Indemnitor”) (it
being understood, however, that where the Sellers would otherwise be the
Indemnified Parties or Indemnitors, all references to such term as used in the
procedural provisions of this Section 10.4 and in Section 10.5 shall instead
refer to the Shareholders’ Representative) a written notice (a “Claim Notice”)
describing in reasonable detail the facts giving rise to the claim for
indemnification hereunder and shall include in such Claim Notice (if then known)
the amount or the method of computation of the amount of such claim, and a
reference to the provision of this Agreement or any other agreement, document or
instrument executed hereunder or in connection herewith upon which such claim is
based; provided, however, that the failure of any Indemnified Party to give the
Claim Notice promptly as required by this Section 10.4(a) shall not affect such
Indemnified Party’s rights under this Article 10 except if, and only to the
extent that, the Indemnitor’s ability to defend has been materially prejudiced
by such failure of the Indemnified Party.

                              (b)          After the giving of any Claim Notice
pursuant hereto, the amount of indemnification to which an Indemnified Party
shall be entitled under this Article 10 shall be determined: (i) by written
agreement between the Indemnified Party and the Indemnitor; (ii) by a final
judgment or decree of any court of competent jurisdiction; or (iii) by any other
means to which the Indemnified Party and the Indemnitor shall mutually agree in
writing. The judgment or decree of a court shall be deemed final when the time
for appeal, if any, shall have expired and no appeal shall have been taken or
when all appeals taken shall have been finally determined. The Indemnified Party
shall have the burden of proof in establishing the amount of Losses suffered by
it. All amounts due to the Indemnified Party as so finally determined shall be
paid by wire transfer within five (5) days after such final determination.

                    10.5     Third Person Claims.

                              (a)          In order for a Person to be entitled
to any indemnification provided for under this Agreement in respect of, arising
out of or involving a claim or demand made by any third Person against the
Indemnified Party, such Indemnified Party must notify the Indemnitor in writing,
and in reasonable detail, of the third Person claim with reasonable promptness
after receipt by such Indemnified Party of written notice of the third Person
claim. Thereafter, the Indemnified Party shall deliver to the Indemnitor, with
reasonable promptness after the Indemnified Party’s receipt thereof, copies of
all notices and documents (including court papers) received by the Indemnified
Party relating to the third Person claim (or in the case of court papers, within
such time as may be necessary to enable the Indemnitor to respond to court
proceedings on a timely basis); provided, however, that the failure of any
Indemnified Party to give prompt notice of a claim or to promptly deliver copies
of all notices and documents as required by this Section 10.5(a) shall not
affect such Indemnified Party’s rights under this Article 10 except if, and only
to the extent that, the Indemnitor’s ability to defend has been materially
prejudiced by such failure of the Indemnified Party.

                              (b)          In the event of the initiation of any
legal proceeding against the Indemnified Party by a third Person, the Indemnitor
shall have the sole and absolute right after the receipt of notice, at its
option and at its own expense, to be represented by counsel of its choice (which
shall be a firm experienced in the type of matter giving rise to the legal
proceeding and which counsel

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shall be reasonably satisfactory to the Indemnitor) and to control, defend
against, negotiate and otherwise deal with any proceeding, claim, or demand
which relates to any loss, liability or damage indemnified against hereunder;
provided, however, (i) the Indemnitor will be deemed to have waived its right to
dispute its liability to the Indemnified Party with respect to any third party
claim as to which it elects to control the defense, (ii) that all such
proceedings, claims or demands to which the Indemnitor elects to control the
defense of shall be vigorously and diligently prosecuted by the Indemnitor and
(iii) that the Indemnified Party may participate in any such proceeding with
counsel of its choice and at its expense. If the Indemnitor does not assume
control of the defense of a third Person claim, or abandons or fails to
diligently pursue the defense of a third Person claim, the Indemnified Party
shall have the right to control such defense. The party controlling the defense
of such third Person claim (the “Controlling Party”) shall keep the
non-Controlling Party advised of the status of such third Person claim and the
defense thereof and shall consider in good faith the recommendations made by the
non-Controlling Party with respect thereto. To the extent the Indemnitor elects
not to defend such proceeding, claim or demand, and the Indemnified Party
defends against or otherwise deals with any such proceeding, claim or demand,
the Indemnified Party may retain counsel, at the expense of the Indemnitor, and
control the defense of such proceeding. If the Indemnitor elects to assume
control of the defense of a third Person claim, any fees and expenses of legal
counsel employed by the Indemnified Party with respect to such third Person
claim shall be considered Losses for which the Indemnified Party may be entitled
to indemnification under this Article 10 only if the named parties in such third
Person claim include both the Indemnitor and the Indemnified Party and the
Indemnified Party has been advised by legal counsel that there may be one or
more legal defenses available to it which are different from or additional to
those available to the Indemnitor or the Indemnified Party has been advised in
writing by legal counsel that they should be represented by separate counsel
because a conflict exists between the Indemnitor and the Indemnified Party.
Neither the Indemnitor nor the Indemnified Party may settle or compromise any
such proceeding, which settlement or compromise obligates the other party to pay
money, to perform obligations or to admit liability without the written consent
of the other party, such consent not to be unreasonably withheld or delayed.

                              (c)          The parties agree to cooperate fully
with each other in connection with the defense, negotiation or settlement of any
such legal proceeding, claim or demand. Such cooperation shall include the
retention and the provision of records and information which is reasonably
relevant to such third Person claim, and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder.

                              (d)          After any final Court Order shall
have been rendered and the time in which to appeal therefrom has expired, or a
settlement shall have been consummated, or the Indemnified Party and the
Indemnitor shall arrive at a mutually binding agreement with respect to each
separate matter alleged to be indemnifiable by the Indemnitor hereunder, the
Indemnified Party shall forward to the Indemnitor notice of any sums due and
owing by it with respect to such matter and the Indemnitor shall pay all of the
sums so owing to the Indemnified Party by wire transfer within five (5) days
after the date of such notice.

                    10.6     Limitations.

                              (a)          For purposes of determining the
amount of any Losses, such amount shall be reduced by the amount of any
insurance benefits and proceeds actually paid to Buyer, Company or the Company
Subsidiary in respect of the Losses (net of any deductible amounts).

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                              (b)          In calculating any Losses there shall
be deducted (i) any indemnification, contribution or other similar payment
actually recovered by the Indemnified Party or any Affiliate thereof from any
third Person with respect thereto, (ii) any Tax benefit or refund actually
received by the applicable Indemnified Party or any Affiliate thereof as a
result of such Losses in the Tax year any such Loss is suffered, which Tax
benefit shall be calculated based on the actual reduction in the Tax liability
of the Indemnified Party or any Affiliate thereof as shown on its Tax returns as
filed for that Tax year, and (iii) the fair market value of any asset, right or
other benefit of the Company or the Company Subsidiary which is discovered after
the Closing Date to the extent that such asset or right was not reflected on the
Most Recent Financial Statements. Any such amounts or benefits received by an
Indemnified Party or any Affiliate thereof with respect to any indemnity claim
after it has received an indemnity payment hereunder shall be promptly paid over
to the Indemnitor; provided that the Indemnified Party shall not be obligated to
pay over any such amount or benefit in excess of the amount paid by the
Indemnitor to the Indemnified Party with respect to such claim.

                              (c)          Except for remedies that cannot be
waived as a matter of Law and injunctive and provisional relief, if the Closing
occurs, this Article 10 shall be the sole and exclusive remedy for breach of, or
inaccuracy in, any representation, warranty, covenant or agreement contained
herein or in the officer’s certificate referred to in Section 8.1, or otherwise
in respect of the transactions contemplated hereby.

                              (d)          No party shall have any liability for
any special, exemplary, punitive or consequential damages (including loss of
profit or revenue) suffered or incurred by any other party.

                    10.7     Mitigation. Each of the Parties agrees to take all
reasonable steps to mitigate their respective Losses upon and after becoming
aware of any event or condition which could reasonably be expected to give rise
to any Losses that are indemnifiable hereunder.

                    10.8     Subrogation. Upon making any payment to the
Indemnified Party for any indemnification claim pursuant to this Article 10, the
Indemnitor shall be subrogated, to the extent of such payment, to any rights
which the Indemnified Party may have against any third parties with respect to
the subject matter underlying such indemnification claim and the Indemnified
Party shall assign any such rights to the Indemnitor.

                    10.9     No Offset. The rights of each Seller under this
Agreement shall not be subject to offset, counterclaim or deduction.

ARTICLE 11
TERMINATION

                    11.1     Termination.

                              (a)          Notwithstanding anything contained in
this Agreement to the contrary, this Agreement may be terminated at any time
prior to the Closing Date:

                              (i)          by the Company by giving written
notice to Buyer on or after sixty (60) days after the date of this Agreement, if
any of the conditions set forth in Article 9 is not satisfied or waived by such
date or has become incapable of fulfillment, unless such satisfaction has been
frustrated or made impossible by any act or failure to act by the Company;
provided, however, in the

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event that the waiting period under any applicable foreign antitrust or trade
regulation Law shall not have expired or terminated on or before sixty (60) days
after the date of this Agreement, such date shall be extended for an additional
fifteen (15) days;

                              (ii)          by Buyer, by giving written notice
to the Company on or after sixty (60) days after the date of this Agreement, if
any of the conditions set forth in Article 8 is not satisfied or waived by such
date or has become incapable of fulfillment, unless such satisfaction has been
frustrated or made impossible by any act or failure to act by Buyer; provided,
however, in the event that the waiting period under any applicable foreign
antitrust or trade regulation Law shall not have expired or terminated on or
before sixty (60) days after the date of this Agreement, such date shall be
extended for an additional fifteen (15) days;

                              (iii)          by the Company, by giving written
notice to Buyer at any time, if Buyer has materially breached any
representation, warranty, covenant or agreement contained in this Agreement and
such breach has not been cured within thirty (30) days after the Company’s
notice to Buyer of such breach or, if cure is not possible within thirty
(30) days, if cure has not been commenced and is not being diligently pursued
within thirty (30) days after such notice;

                              (iv)          by Buyer, by giving notice to the
Company at any time, if the Company or a Seller has breached any representation,
warranty, covenant or agreement contained in this Agreement that results in a
Material Adverse Effect (it being understood that any materiality or Material
Adverse Effect qualification in any representation and warranty shall be
disregarded in determining whether any such breach would have a Material Adverse
Effect for purposes of this Section 11.1(a)(iv)) and such breach has not been
cured within thirty (30) calendar days after Buyer’s notice to the Company of
such breach (“Buyer’s Breach Notice”) or, if cure is not possible within thirty
(30) calendar days, if cure has not been commenced and is not being diligently
pursued within thirty (30) calendar days after Buyer’s Breach Notice; or

                              (v)          by mutual written agreement of the
Company and Buyer.

                              (b)          In the event of termination of this
Agreement pursuant to Section 11.1(a), no party shall have any liability or
further obligation to any other party, and no party shall be entitled to any
monetary damages or injunctive relief (including specific performance) as a
result of such termination, or any indemnification under Article 10; provided,
however, that (i) upon termination of this Agreement pursuant to Section
11.1(a)(iii) as a result of a breach by Buyer, Buyer will remain liable to the
Company for any willful breach of this Agreement by Buyer existing at the time
of such termination for the Company’s actual out-of-pocket expenses up to
$500,000 incurred in connection with the Confidentiality Agreement, this
Agreement and the transactions contemplated hereby, (ii) upon termination of
this Agreement pursuant to Section 11.1(a)(iv) as a result of a breach by the
Company or a Seller, the Company will remain liable to Buyer for any willful
breach of this Agreement by the Company or a Seller existing at the time of such
termination for Buyer’s actual out-of-pocket expenses up to $1,000,000 incurred
in connection with the Confidentiality Agreement, this Agreement and the
transactions contemplated hereby and (iii) in no event shall any termination of
this Agreement limit or restrict the rights and remedies of any party against
any other party which has willfully breached any of the agreements or other
provisions of this Agreement prior to the termination hereof; and provided
further, that the provisions of Section 6.4 (Confidentiality; Access to
Information) and Article 12 (General Provisions) shall remain in full force and
effect.

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ARTICLE 12
GENERAL PROVISIONS

                    12.1           Shareholders’ Representative.

                                     (a)          For purposes of this Agreement
and the Escrow Agreement, the Sellers hereby designate Frank Kenna, III, to
serve as the sole and exclusive representative of the Sellers (the
“Shareholders’ Representative”) from and after the Closing Date with respect to
the matters set forth in this Agreement, such service to be without compensation
except for the reimbursement by the Sellers of out-of-pocket expenses and
indemnification specifically provided herein. The Sellers shall be bound by any
and all actions taken by the Shareholders’ Representative on their behalf,
including without limitation payments made pursuant to Article 10 hereof.
Notwithstanding anything to the contrary contained in this Agreement, the
Shareholders’ Representative shall have no duties or responsibilities except
those expressly set forth herein, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities on behalf of the Company or
any Seller shall otherwise exist against the Shareholders’ Representative.
Except as expressly provided in this Agreement, the Shareholders’ Representative
shall have no duties or responsibilities to Buyer or its Affiliates.

                                     (b)          The Shareholders’
Representative shall promptly deliver to each Seller any notice received by the
Shareholders’ Representative concerning this Agreement or the Escrow Agreement.

                                     (c)          Neither the Shareholders’
Representative nor any agent employed by the Shareholders’ Representative shall
be liable to any Seller relating to the performance of such Shareholders’
Representative’s duties under this Agreement or the Escrow Agreement or for any
errors in judgment, negligence, oversight, breach of duty or otherwise except to
the extent it is finally determined in a court of competent jurisdiction by
clear and convincing evidence that the actions taken or not taken by the
Shareholders’ Representative constituted fraud or were taken or not taken in bad
faith. The Shareholders’ Representative shall be indemnified and held harmless
by the Sellers against all losses, including costs of defense, paid or incurred
in connection with any action, suit, proceeding or claim to which the
Shareholders’ Representative is made a party by reason of the fact that the
Shareholders’ Representative was acting as the Shareholders’ Representative
pursuant to this Agreement; provided, however, that the Shareholders’
Representative shall not be entitled to indemnification hereunder to the extent
it is finally determined in a court of competent jurisdiction by clear and
convincing evidence that the actions taken or not taken by the Shareholders’
Representative constituted fraud or were taken or not taken in bad faith. The
Shareholders’ Representative shall be protected in acting upon any notice,
statement or certificate believed by the Shareholders’ Representative to be
genuine and to have been furnished by the appropriate Person and in acting or
refusing to act in good faith on any matter. Neither the Shareholders’
Representative nor any agent employed by the Shareholders’ Representative shall
be liable to Buyer or any Affiliate of Buyer by reason of this Agreement or the
performance of the Shareholders’ Representative’s duties hereunder or otherwise.

                                     (d)          Buyer shall be entitled to
rely upon any action taken by the Shareholders’ Representative as the duly
authorized action of the Shareholders’ Representative on behalf of each Seller
with respect to any matter set forth in this Agreement or the Escrow Agreement.
All notices to be sent to the Sellers pursuant to this Agreement and the Escrow
Agreement may be

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addressed to the Shareholders’ Representative only, and any notice so sent shall
be deemed notice to all of the Sellers hereunder. The Sellers hereby consent and
agree that the Shareholders’ Representative is authorized to accept notice on
behalf of all of the Sellers pursuant hereto.

                                     (e)          The Shareholders’
Representative is hereby appointed and constituted the true and lawful
attorney-in-fact of each Seller, with full power in its name and on its behalf
to act according to the terms of this Agreement in the absolute discretion of
the Shareholders’ Representative, and in general to do all things and to perform
all acts including, without limitation, executing and delivering all agreements,
waivers, amendments, certificates, receipts, instructions and other instruments
contemplated by or deemed advisable in connection with this Agreement. This
power of attorney and all authority hereby conferred is granted in consideration
of the mutual covenants and agreements made herein, and shall be irrevocable and
shall not be terminated by any act of any Seller or by operation of Law, whether
by death or any other event.

                    12.2          Survival of Covenants, Representations and
Warranties. No covenant or agreement contained herein to be performed prior to
the Closing Date shall survive the Closing Date and any covenant and agreement
to be performed after the Closing Date shall survive the Closing indefinitely,
except as otherwise provided herein. Except as expressly provided otherwise
herein, each representation and warranty contained herein shall survive the
Closing until, and will expire and be of no force and effect on the date that is
eighteen (18) months after the Closing Date, with the exception of (i) each
representation and warranty contained in Sections 4.8 (Taxes), which shall
survive the Closing until thirty (30) days after the date at which the relevant
Tax notice has become unappealable and binding under the relevant jurisdiction,
whichever period is shorter, without giving effect to any waiver, mitigation or
extension thereof, and (ii) each representation and warranty contained in
Section 4.15 (Employee Benefits), which shall survive the Closing until the
fourth (4th) anniversary of the Closing Date.

                    12.3          No Public Announcement. From the date of this
Agreement, neither Buyer (and after the Closing, the Company), on the one hand,
nor any Seller (and prior to the Closing, the Company), on the other hand,
shall, without the written approval of the other (it being agreed that the
Shareholders’ Representative shall have the right to grant consents on behalf of
the Sellers), make any press release or other public announcement concerning the
transactions contemplated by this Agreement, except as and to the extent that
any such party shall be so obligated by applicable Law, in which case such party
shall allow the other party reasonable time to comment on such release or
announcement and the Parties shall use their reasonable efforts to cause a
mutually agreeable release or announcement to be issued; provided, however, that
the foregoing shall not preclude communications or disclosures necessary to
implement the provisions of this Agreement or to comply with any Law, accounting
or Securities and Exchange Commission disclosure obligations or the rules of any
stock exchange or national market system.

                    12.4          Notices. All notices or other communications
required or permitted hereunder shall be in writing and shall be deemed given or
delivered (a) when delivered personally, against written receipt, (b) if sent by
registered or certified mail, return receipt requested, postage prepaid, when
received, (c) when received by facsimile transmission, if confirmed by the other
means described in clause (a) or (b), and (c) when delivered by a nationally
recognized overnight courier service, prepaid, and shall be addressed as
follows:

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If to the Company, to:

 

 

 

 

 

The Marlin Firearms Company

 

 

P.O. Box 248

 

 

North Haven, CT 06473-0905

 

 

Attention: Robert Behn

 

 

Facsimile: (203) 234-7991

 

 

 

 

with a copy to:

 

 

 

 

 

Wiggin and Dana LLP

 

 

One Century Tower

 

 

265 Church Street

 

 

New Haven, CT 06508-1832

 

 

Attention: D. Terence Jones, Esq.

 

 

Facsimile: (203) 782-2889

 

 

 

 

If to a Seller, to the Shareholders’ Representative:

 

 

 

 

 

The Marlin Company

 

 

P.O. Box 248

 

 

North Haven, CT 06473-0905

 

 

Attention: Frank Kenna, III

 

 

Facsimile: (203) 234-7991

 

 

 

 

with a copy to:

 

 

 

 

 

Wiggin and Dana LLP

 

 

One Century Tower

 

 

265 Church Street

 

 

New Haven, CT 06508-1832

 

 

Attention: D. Terence Jones, Esq.

 

 

Facsimile: (203) 782-2889

 

 

 

 

If to Buyer, to:

 

 

 

 

 

Remington Arms Company, Inc.

 

 

870 Remington Drive

 

 

Post Office Box 700

 

 

Madison, North Carolina 27025

 

 

Attention: Steve Jackson

 

 

Facsimile: (336) 548-7833

 

 

 

 

with a copy to:

 

 

 

 

 

Cerberus Capital Management, L.P.

 

 

299 Park Avenue

 

 

New York, New York 10171

 

 

Attention: George K. Kollitides, Managing Director

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Facsimile: (212) 284-7916

 

 

 

 

 

and

 

 

 

 

 

Milbank, Tweed, Hadley & McCloy LLP

 

 

1 Chase Manhattan Plaza

 

 

New York, New York 10005

 

 

Attention: Roland Hlawaty, Esq.

 

 

Facsimile: (212) 822-5735

or to such other address as such party may indicate by a written notice
delivered to the other Parties.

                    12.5          Successors and Assigns. The rights of a party
under this Agreement shall not be assignable by such party without the written
consent of the other Parties (it being agreed that the Shareholders’
Representative shall have the right to grant consents on behalf of the Sellers);
provided, however, that Buyer may assign this Agreement and its rights and
obligations hereunder to an Affiliate of Buyer, but no such assignment shall
relieve Buyer of its obligations hereunder. This Agreement shall be binding upon
and inure to the benefit of the Parties and their respective successors and
permitted assigns. Nothing in this Agreement, expressed or implied, is intended
or shall be construed to confer upon any Person other than the Parties any
right, remedy or claim under or by reason of this Agreement.

                    12.6          Access to Records and Employees after Closing.

                                     (a)          For a period of ten (10) years
after the Closing Date, the Sellers shall have reasonable access to all of the
books and records of the Company (including any books and records relating to
Taxes and Tax Returns of the Company and the Company Subsidiary), to the extent
that such access may reasonably be required by a Seller in connection with
matters relating to or affected by the operations of each of the Company and the
Company Subsidiary prior to the Closing Date, including the preparation of the
Seller’s financial reports or Tax Returns, any Tax audits, the defense or
prosecution of litigation (including arbitration or mediation), and any other
reasonable need of the Sellers to consult such books and records. Such access
shall be afforded by Buyer upon receipt of reasonable advance notice and during
normal business hours. The Seller seeking access shall be solely responsible for
any costs or expenses incurred by it pursuant to this Section 12.6(a). If any
such books or records, or any other documents which the Sellers have the right
to have access to pursuant to this Section 12.6(a) are produced by Buyer, the
Company or the Company Subsidiary to an actual or potentially adverse party
(e.g., in litigation or in connection with a government investigation), Buyer
shall endeavor to immediately make all such books, records and/or documents
produced available for inspection and copying by the Sellers concurrently with
the production of such books, records and/or documents. In addition, if Buyer,
the Company or the Company Subsidiary shall desire to dispose of any of such
books or records prior to the expiration of such ten (10) year period, Buyer
shall, prior to such disposition, give the Sellers a reasonable opportunity, at
the Company’s expense, to segregate and remove such books and records as the
Sellers may select.

                                     (b)          Buyer shall provide to any
Seller so requesting, reasonable assistance, at the Seller’s actual expense, by
providing employees of the Company or the Company Subsidiary to

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act as witnesses and preparing documents, reports and other information
requested by the Seller in support of the activities described in
Section 12.6(a).

                                     (c)          Any Seller may retain copies
of any Contracts, documents or records: (i) which relate to properties or
activities of such Seller other than the Company or the Company Subsidiary, or
(ii) which are required to be retained pursuant to any legal requirement or are
subject to the attorney-client privilege, or for financial reporting purposes,
for Tax purposes or for legal defense or prosecution purposes.

                    12.7          Entire Agreement. This Agreement, the
Schedules and the exhibits referred to herein, and the documents and
certificates delivered pursuant hereto and the Confidentiality Agreement contain
(except for Section 7 of the Confidentiality Agreement, which is hereby modified
to omit the words “except in the case of fraud...”) the entire understanding of
the Parties with regard to the subject matter contained herein or therein, and
supersede all other prior agreements, understandings, term sheets, or letters of
intent between or among any of the Parties.

                    12.8          Interpretation.

                                     (a)          Titles and headings to
articles, sections and subsections herein are inserted for convenience of
reference only and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.

                                     (b)          The Schedules referred to
herein shall be construed with and as an integral part of this Agreement to the
same extent as if they were set forth verbatim herein. Disclosure of any fact or
item in any particular Section in this Agreement or in any Schedule hereto
referenced by a particular Section in this Agreement shall be deemed to have
been disclosed with respect to every other Section in this Agreement to which
such matter is reasonably apparent on its face. Neither the specification of any
dollar amount in any representation or warranty contained in this Agreement nor
the inclusion of any specific item in any Schedule hereto is intended to vary
the definition of “Material Adverse Effect” or to imply that such amount, or
higher or lower amounts, or the item so included or other items, are or are not
material, and no party shall use the fact of the setting forth of any such
amount or the inclusion of any such item in any dispute or controversy between
the parties as to whether any obligation, item or matter not described herein or
included in any Schedule is or is not material for purposes of this Agreement.
Unless this Agreement specifically provides otherwise, neither the specification
of any item or matter in any representation or warranty contained in this
Agreement nor the inclusion of any specific item in any Schedule hereto is
intended to imply that such item or matter, or other items or matters, are or
are not in the ordinary course of business, and no party shall use the fact of
the setting forth or the inclusion of any such item or matter in any dispute or
controversy between the parties as to whether any obligation, item or matter not
described herein or included in any Schedule is or is not in the ordinary course
of business for purposes of this Agreement.

                                     (c)          The Company and the Seller
shall, from time to time prior to or at the Closing, by notice to Buyer,
supplement, amend or create any Schedule, in order to add information or correct
previously supplied information. No such supplement, amendment or addition shall
be evidence, in and of itself, that the representations and warranties in the
corresponding Section are no longer true and correct in all material respects.
It is specifically agreed that such Schedules may be supplemented, amended
and/or added to, to add immaterial, as well as material, items thereto. No such

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supplemental, amended or additional Schedule shall have any effect on the
representations, warranties, covenants or agreements contained in this Agreement
for purposes of determining satisfaction of any condition contained herein or
shall in any way limit Buyer’s right to seek indemnity under Article 10.

                                     (d)          Whenever the context requires
in this Agreement, the masculine pronoun shall include the feminine and the
neuter, and the singular shall include the plural, and vice versa.

                                     (e)          Whenever the words “include”,
“includes” or “including” are used in this Agreement, they shall be deemed to be
followed by the words “without limitation,” whether or not they are in fact
following by those words or words of like import.

                                     (f)          This Agreement shall be
construed without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing any instrument to be
drafted.

                    12.9          Amendments and Waivers. Any term or provision
of this Agreement may be amended or waived, or the time for its performance may
be extended, by the party or parties entitled to the benefit thereof. Any such
amendment or waiver, including any such amendment to or waiver of this
Section 12.9, shall be validly and sufficiently authorized for the purposes of
this Agreement if, as to any party, it is authorized in writing by an authorized
representative of such Party. The failure of any Party to enforce at any time
any provision of this Agreement shall not be construed to be a waiver of such
provision, nor in any way to affect the validity of this Agreement or any part
hereof or the right of any Party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be held to constitute
a waiver of any other or subsequent breach.

                    12.10          Expenses. Except as otherwise provided
herein, each Party will pay all costs and expenses incident to its negotiation
and preparation of this Agreement and to its performance and compliance with all
agreements and conditions contained herein on its part to be performed or
complied with, including the fees, expenses and disbursements of its counsel,
accountants, advisors and consultants.

                    12.11          Partial Invalidity. Wherever possible, each
provision hereof shall be interpreted in such a manner as to be effective and
valid under applicable Law. In case any one or more of the provisions contained
herein shall, for any reason, be held to be invalid, illegal or unenforceable in
any respect, such provision or provisions shall be ineffective to the extent,
but only to the extent, of such invalidity, illegality or unenforceability,
without invalidating the remainder of such invalid, illegal or unenforceable
provision or provisions or any other provisions hereof, unless such a
construction would be unreasonable.

                    12.12          Execution in Counterparts; Facsimile. This
Agreement may be executed and delivered in counterpart signature pages executed
and delivered via facsimile transmission, and any such counterpart executed and
delivered via facsimile transmission will be deemed an original for all intents
and purposes. Any shareholder of the Company who is not a Seller on the date
hereof, may become a Seller hereunder by the execution and delivery of a
signature page hereto. Upon such execution and delivery such shareholder shall
be a Seller hereunder and shall be subject to the obligations of a Seller
hereunder.

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                    12.13          Governing Law. This Agreement and any
disputes hereunder shall be governed by and construed in accordance with the
internal laws of the State of New York without giving effect to any choice or
conflict of law provision or rule (whether of the State of New York or any other
jurisdiction) that would cause the application of Laws of any jurisdiction other
than those of the State of New York.

                    12.14          Consent to Jurisdiction; Waiver of Jury
Trial.

                    (a)              Each Party hereby irrevocably and
unconditionally submits, for itself and its property, to the exclusive
jurisdiction of the United States District Court for the Southern District of
New York or any court of the State of New York located in the Borough of
Manhattan in the City of New York in any such action, suit or proceeding arising
out of or relating to this Agreement or any of the transactions contemplated
hereby, and agrees that any such action, suit or proceeding shall be brought
only in such court; provided, however, that such consent to jurisdiction is
solely for the purpose referred to in this Section 12.14 and shall not be deemed
to be a general submission to the jurisdiction of said courts or in the State of
New York other than for such purpose. Each Party hereby irrevocably waives, to
the fullest extent permitted by Law, any objection that it may now or hereafter
have to the laying of the venue of any such action, suit or proceeding brought
in such a court and any claim that any such action, suit or proceeding brought
in such a court has been brought in an inconvenient forum.

                    (b)              Each Party acknowledges and agrees that any
controversy which may arise under this agreement is likely to involve
complicated and difficult issues, and therefore it hereby irrevocably and
unconditionally waives any right it may have to a trial by jury in respect of
any litigation directly or indirectly arising out of or relating to this
Agreement or the transactions contemplated hereby.

                    12.15          Disclaimer of Warranties. The Company and the
Sellers make no representations or warranties with respect to any projections,
forecasts or forward-looking information provided to Buyer. There is no
assurance that any projected or forecasted results will be achieved. EXCEPT AS
TO THOSE MATTERS EXPRESSLY COVERED BY THE REPRESENTATIONS AND WARRANTIES IN THIS
AGREEMENT AND THE OFFICER’S CERTIFICATE REFERRED TO IN SECTION 8.1 HEREOF, THE
COMPANY AND THE SELLERS DISCLAIM ALL OTHER WARRANTIES, REPRESENTATIONS AND
GUARANTIES WHETHER EXPRESS OR IMPLIED.

                    12.16          Time of Essence. Time is of the essence for
each and every provision of this Agreement.

                    12.17          References to U.S. Dollars. All references in
this Agreement to amounts of money expressed in dollars are references to United
States dollars, unless otherwise indicated.

                    12.18          Further Assurances. Each Party shall execute
such documents and other papers and take such further actions as may be
reasonably required or desirable to carry out the provisions hereof and the
transactions contemplated hereby.

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                     12.19          Release.

                                        (a)          Buyer agrees that,
effective as of the Closing, each of the Company and the Company Subsidiary
shall be deemed to have released and discharged each Seller (whether in such
Party’s capacity as a shareholder, director, officer, employee or otherwise)
from any and all claims, demands and causes of action, whether known or unknown,
liquidated or contingent, relating to, arising out of or in any way connected
with the dealings of the Company or the Company Subsidiary and such Party from
the beginning of time through the Closing, it being understood, however, that
such release shall not operate to release such Party from any indemnity
obligations, if any, under this Agreement, including without limitation, under
Article 10. Buyer acknowledges that the Laws of many states provide
substantially the following: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.” Buyer acknowledges that such provisions are
designed to protect a party from waiving claims which it does not know exist or
may exist. Nonetheless, Buyer agrees that, effective as of the Closing, the
Company and Buyer shall be deemed to waive any such provision. Buyer further
agrees that neither Buyer nor the Company, nor any Affiliate of either, shall
(i) institute a lawsuit or other legal proceeding based upon, arising out of, or
relating to any of the released claims, (ii) participate, assist, or cooperate
in any such proceeding, or (iii) encourage, assist and/or solicit any third
party to institute any such proceeding.

                                       (b)          Each Seller agrees that,
effective as of the Closing, each Seller shall be deemed to have released and
discharged each of the Company and the Company Subsidiary (whether in such
Party’s capacity as a shareholder, director, officer, employee or otherwise)
from any and all claims, demands and causes of action, whether known or unknown,
liquidated or contingent, relating to, arising out of or in any way connected
with the dealings of the Company or the Company Subsidiary and such Party from
the beginning of time through the Closing, it being understood, however, that
such release shall not operate to release such Party from any indemnity
obligations, if any, under this Agreement, including without limitation, under
Article 10 and claims for salary and benefits payable in the ordinary course of
business by the Company to any Seller who is an employee of the Company. Each
Seller acknowledges that the Laws of many states provide substantially the
following: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.” Each Seller acknowledges that such provisions are designed to protect a
party from waiving claims which it does not know exist or may exist.
Nonetheless, each Seller agrees that, effective as of the Closing, each Seller
shall be deemed to waive any such provision. Each Seller further agrees that it
shall not (i) institute a lawsuit or other legal proceeding based upon, arising
out of, or relating to any of the released claims, (ii) participate, assist, or
cooperate in any such proceeding, or (iii) encourage, assist and/or solicit any
third party to institute any such proceeding.

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                    12.20          No Rescission. No Party shall be entitled to
rescind the transactions contemplated hereby by virtue of any failure of any
Party’s representations and warranties herein to have been true or any failure
by any Party to perform its obligations hereunder.

                    12.21          Conflict of Interest. If the Sellers or the
Shareholders’ Representative so desire, and without the need for any consent or
waiver by the Company, the Company Subsidiary or Buyer, Wiggin and Dana shall be
permitted to represent the Sellers and/or the Shareholders’ Representative after
the Closing in connection with any matter, including without limitation anything
related to the transactions contemplated by this Agreement or any disagreement
or dispute relating thereto. Without limiting the generality of the foregoing,
after the Closing, Wiggin and Dana shall be permitted to represent the Sellers,
the Shareholders’ Representative, any of their agents and affiliates, or any one
or more of them, in connection with any negotiation, transaction or dispute
(“dispute” includes litigation, arbitration or other adversary proceeding) with
Buyer, the Company, the Company Subsidiary or any of their agents or affiliates
under or relating to this Agreement, any transaction contemplated by this
Agreement, and any related matter, such as claims for indemnification and
disputes involving employment or noncompetition or other agreements entered into
in connection with this Agreement. Upon and after the Closing, each of the
Company and the Company Subsidiary shall cease to have any attorney-client
relationship with Wiggin and Dana, unless Wiggin and Dana is specifically
engaged in writing by the Company or the Company Subsidiary to represent such
entity after Closing and either such engagement involves no conflict of interest
with respect to Sellers or the Shareholders’ Representative or the Sellers or
the Shareholders’ Representative (as applicable) consent in writing at the time
to such engagement. Any such representation of the Company or the Company
Subsidiary by Wiggin and Dana after Closing shall not affect the foregoing
provisions hereof. For example, and not by way of limitation, even if Wiggin and
Dana is representing the Company or the Company Subsidiary after the Closing,
Wiggin and Dana shall be permitted simultaneously to represent the Sellers
and/or the Shareholders’ Representative in any matter, including any
disagreement or dispute relating thereto. Furthermore, Wiggin and Dana shall be
permitted to withdraw from any representation of the Company or the Company
Subsidiary in order to be able to represent or continue so representing the
Sellers or the Shareholders’ Representative, even if such withdrawal causes the
Company, the Company Subsidiary or Buyer additional legal expense, delay or
other prejudice.

ARTICLE 13
DEFINITIONS

                    13.1          Definitions. In this Agreement, the following
terms have the meanings specified in this Section 13.1.

                    “Acquisition Proposal” means any proposal for a merger or
other business combination to which a Seller, the Company or the Company
Subsidiary is a party or the direct or indirect acquisition of any equity
interest in, or a substantial portion of the assets of, the Company or the
Company Subsidiary, other than the transactions contemplated by this Agreement.

                    “Action” means any lawsuit, legal proceeding, litigation,
arbitration or Governmental Authority investigations or audit.

                    “Affiliate” means, with respect to any Person, any other
Person, which directly or indirectly controls, is controlled by or is under
common control with such Person. For purposes of this

53

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definition, control of a Person means the power, direct or indirect, to direct
or cause the direction of the management and policies of such Person whether by
Contract or otherwise and, in any event and without limitation of the previous
sentence, any Person owning ten percent (10%) or more of the voting securities
of another Person shall be deemed to control that Person.

                    “AOCs” means the North Haven AOCs and the Gardner AOCs.

                    “Base Amount” means Forty-One Million Seven Hundred Thousand
Dollars ($41,700,000), minus (i) the amount, if any, by which Closing Cash is
less than Four Hundred Seventy-Five Thousand Dollars ($475,000), (ii) the
Management Amount, (iii) the Expense Amount (iv) the Estimated Retirement
Underfunding Amount and (v) the December Dividend Amount.

                    “Benefit Plan” means each written compensation or benefits
plan, program or arrangement (including, without limitation, plans within the
meaning of Section 3(3) of ERISA (regardless of whether such plan is subject to
ERISA), employment agreements, profit-sharing, defined contribution, deferred
compensation, insurance, pension, retirement, medical, hospital, disability,
change of control, termination, welfare or fringe benefit plans, programs,
agreements or arrangements, cash or equity-based bonus or incentive
arrangements, severance arrangements and vacation policies) contributed to or
sponsored or maintained by the Company, any ERISA Affiliate or Company
Subsidiary for the benefit of any current or former employees.

                    “Business Day” means a day other than Saturday, Sunday or
any day on which banks located in the State of Connecticut are authorized or
obligated to close.

                    “Closing Cash” means, as of the close of business on the
Business Day immediately proceeding the Closing Date, the aggregate cash balance
of the Company and the Company Subsidiary as of such time (whether positive or
negative), including all cash, commercial paper, certificates of deposit and
other bank deposits, treasury bills, and all other cash equivalents in all
accounts of each of the Company and the Company Subsidiary, and third Person
checks deposited or held in any Company or Company Subsidiary accounts that have
not yet cleared; provided that Closing Cash shall be reduced by (a) to the
extent included as “cash” in the aggregate cash balance, security and similar
deposits and amounts held in escrow at such time to secure the performance of
trade contracts, leases, letters of credit or similar obligations and (b) the
amount of all outstanding checks on draft of the Company or the Company
Subsidiary issued or outstanding at such time.

                    “Code” means the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder.

                    “Company Subsidiary” means H&R 1871, LLC, a Connecticut
limited liability company.

                    “Contract” means any contract, agreement, license, lease,
guaranty, indenture, sales or purchase order or other legally binding commitment
in the nature of a contract (whether written or oral).

                    “Copyrights” means all registered U.S. and foreign works of
authorship and all applications to register and renewals of any of the
foregoing.

54

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                    “Court Order” means any judgment, order, writ, decision,
injunction, award or decree of any foreign, federal, state, local or other court
or tribunal, or of any Governmental Authority and any ruling or award in any
binding arbitration proceeding in each case, whether preliminary or final.

                    “December Dividend” means the cash dividend declared by the
Board of Directors of the Company on December 19, 2007 to be paid prior to the
Closing Date.

                    “December Dividend Amount” means the aggregate amount of up
to $254,313, constituting the December Dividend.

                    “Deferred Compensation Plan” means a Benefit Plan that is an
agreement that the Company has entered into with any current or former employee
that is characterized by the Company as a deferred compensation agreement and
any amendment thereto.

                    “Defined Benefit Plan” means each Benefit Plan which is
subject to Part 3 of Title I of ERISA, Section 412 of the Code or Title IV of
ERISA.

                    “Employment and Withholding Taxes” means any federal, state,
provincial, local, foreign or other employment, unemployment insurance, social
security, disability, workers’ compensation, payroll, health care or other
similar tax, duty or other governmental charge or assessment or deficiencies
thereof and all Taxes required to be withheld by or on behalf of each of the
Company and the Company Subsidiary in connection with amounts paid or owing to
any employee, independent contractor, creditor or other party, in each case, on
or in respect of the business or assets thereof. Any Employment and Withholding
Tax is also included in the definition of Tax wherever the term Tax is used.

                    “Encumbrance” means any lien, encumbrance, claim, charge,
security interest, mortgage, deed of trust, pledge, easement, defect in title or
other restriction of a similar kind, conditional sale contract or other title
retention Contract or other Contract to give any of the foregoing, other than
Permitted Encumbrances.

                    “Environmental Laws” means all federal, state, local or
foreign laws, statutes, ordinances, regulations, rules, judgments, orders,
notice requirements, court decisions, agency guidelines or principles of law,
restrictions and licenses, which (a) regulate or relate to the protection or
clean-up of the environment; the use, treatment, storage, transportation,
handling, disposal or release of Hazardous Substances or the preservation or
protection of waterways, groundwater, drinking water, air, wildlife, plants or
other natural resources; or (b) impose liability with respect to any of the
foregoing.

                    “ERISA” means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.

                    “ERISA Affiliate” means any Person who, together with the
Company or the Company Subsidiary, is treated as a single employer under
Section 414 of the Code.

                    “Escrow Agent” means an institutional escrow agent mutually
agreed to by the Parties.

55

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                    “Estimated Retirement Underfunding Amount” means $2,811,000
plus any payments made to partially fund any underfunding under Pension Plans
from the date hereof until the Closing Date.

                    “Exchange Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

                    “Extended Coverage Policy” means a three (3)-year run-off
directors and officers liability policy, for the benefit of the Persons who
served as directors and officers of each of the Company and the Company
Subsidiary prior to the Closing, providing coverage at least equivalent to the
Company’s existing levels of coverage and otherwise in a form approved by the
Shareholders’ Representative, which approval shall not be unreasonably withheld.

                    “GAAP” means United States generally accepted accounting
principles as in effect from time to time, consistently applied throughout the
specific period and in the immediately prior comparable period.

                    “Gardner AOCs” means those areas of concern identified at
the Gardner Facility, as set forth on Table 2 to Schedule 4.16(c) to the
Agreement.

                    “Governmental Authority” means any foreign, domestic,
federal, territorial, state or local governmental authority, quasi-governmental
authority, court, commission, board, bureau, agency or instrumentality, or any
regulatory, administrative or other department, agency, or any political or
other subdivision, department or branch of any of the foregoing.

                    “Hazardous Substances” shall mean any quantity of asbestos
in any form, urea formaldehyde, PCBs, radon gas, crude oil or any fraction
thereof, all forms of natural gas, petroleum products or by-products, any
radioactive substance, any toxic, infectious, reactive, corrosive, ignitable or
flammable chemical or chemical compound and any other hazardous substance,
material or waste (as defined in, or for purposes of, any Environmental Law),
whether solid, liquid or gas.

                    “Indebtedness” means the amount due and owing by the Company
and the Company Subsidiary under the line of credit pursuant to the Webster
Credit Agreement.

                    “Intellectual Property” means all intellectual property
rights of any nature or form of protection or similar nature or having
equivalent or similar effect to any of the foregoing, including, without
limitation, Patents, Marks and Copyrights.

                    “Knowledge of the Company,” or any variant thereof, means as
to a particular matter, the actual knowledge of the following persons: Robert W.
Behn, Robert Belcourt, Jr., Robert Bourke, Wendy Duby, Pamela Griffin,
Christopher Heyl, Michael Jensen, Frank Kenna, III, Timothy Looney and Kevin
O’Brien, including, without limitation, any knowledge obtained in connection
with the preparation and negotiation of this Agreement.

                    “Law” means any law, statute, rule, regulation, ordinance,
order, decree, consent decree or similar instrument or determination or award of
a court or any other Governmental Authority.

56

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                    “Losses” means any and all losses, claims, damages,
liabilities, expenses (including reasonable attorneys’ and accountants’ fees),
assessments and Taxes.

                    “Management Amount” means the aggregate amount payable
pursuant to the Company’s Executive Incentive and Company Acquisition Policies
to the individuals listed in Sections 1 through 3 of Schedule 4.15(i).

                    “Marks” means all registered and unregistered U.S. and
foreign trade names, trademarks, trade dress and service marks, together with
any applications related thereto.

                    “Material Adverse Effect” means any change, circumstance or
effect that has a material adverse effect on the assets, properties,
liabilities, business, prospects or financial condition or results of operations
of the Company and the Company Subsidiary as a whole; provided, however, that
Material Adverse Effect shall exclude any adverse changes or conditions as and
to the extent such changes or conditions relate to or result from (i) general
business, economic, political, regulatory conditions, including such conditions
generally affecting the industry in which the Company or the Company Subsidiary
competes, (ii) national or international political or social conditions,
including the engagement by the United States in hostilities, whether or not
pursuant to the declaration of a national emergency or war, or the occurrence of
any military or terrorist attack upon the United States, or any of its
territories, possessions, or diplomatic or consular offices or upon any military
installation, equipment or personnel of the United States, (iii) changes in Law
or GAAP, (iv) the taking of any action required by this Agreement, or (v) the
taking of any action by the Company with the prior consent of Buyer; provided,
further, that in the case of clauses (i)-(iii), only to the extent such changes
and conditions have had a disproportionate effect on the Company and the Company
Subsidiary taken as a whole, as compared to other participants in the industry
in which the Company and the Company Subsidiary operate.

                    “Neutral Actuary” means an independent actuary of nationally
recognized standing that is not at the time it is being engaged hereunder
rendering services to any Party and has not done so within the two year period
prior thereto.

                    “North Haven AOCs” means those areas of concern identified
at the North Haven Facility, as set forth on Table 1 to Schedule 4.16(c) to the
Agreement.

                    “Owned Real Property” means all land, together with all
buildings, structures, improvements, and fixtures located thereon, and all
easements and other rights and interests appurtenant thereto, owned by the
Company or the Company Subsidiary.

                    “Patents” means all issued U.S. and foreign patents and
pending patent applications.

                    “Pension Plan” means any Benefit Plan that is a pension
benefit plan within the meaning of Section 3(2) of ERISA.

                    “Permits” means all licenses, permits, franchises,
approvals, authorizations, consents or orders of, or filings with, any
Governmental Authority or any other Person.

                    “Permitted Encumbrances” means (a) liens for Taxes and other
governmental charges and assessments which are not yet due and payable or which
are being contested in good faith by

57

--------------------------------------------------------------------------------

appropriate proceedings for which adequate reserves have been established in
accordance with GAAP, (b) any statutory liens arising in the ordinary course of
business by operation of Law, (c) other minor imperfections of title, or similar
Encumbrance, which individually or in the aggregate with other such Encumbrances
do not materially impair the value of the property subject to such Encumbrance
or the use of such property in the conduct of the business of the Company or the
Company Subsidiary, (d) liens specifically identified in the Financial
Statements and (e) the Encumbrances set forth on Schedule 13.1.

                    “Person” means an individual, partnership, corporation,
limited liability company, joint stock company, trust, association, joint
venture, Governmental Authority or other entity of whatever nature.

                    “Qualified Plan” means each Benefit Plan which is intended
to qualify under Section 401 of the Code.

                    “Retirement Underfunding” means the amount by which the
Company’s liabilities with respect to any Pension Plans, if any, exceed assets
associated with such Pension Plans, calculating such liabilities and assets as
of the Closing Date as set forth in Article 2.

                    “Schedules” means the record delivered to Buyer by the
Company and the Sellers or the Company and the Sellers to Buyer, as applicable,
herewith and dated as of the date hereof, containing all lists, descriptions,
exceptions and other information and materials as are required to be included
therein by the Company and the Sellers or Buyer, as applicable, pursuant to this
Agreement.

                    “SERP” means any Benefit Plan that is an agreement that the
Company has entered into with any current or former employee that is
characterized by the Company as a supplemental retirement plan and any amendment
thereto.

                    “Straddle Period” means any Tax period that begins before
the Closing Date and ends after the Closing Date.

                    “Tax” (and, with correlative meaning, “Taxes”) means any
federal, state, local or foreign income, gross receipts, property, sales, use,
license, franchise, employment, payroll, withholding, alternative or add-on
minimum, ad valorem, transfer or excise tax, or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest, penalty, or addition thereto imposed by any
Governmental Authority, whether disputed or not, and any expenses incurred in
connection with the determination, settlement or litigation of any Tax
liability.

                    “Tax Return” means any return, report or similar statement
required to be filed with respect to any Tax (including any attached schedules),
including, without limitation, any information return, claim for refund, amended
return or declaration of estimated Tax and any affiliated, consolidated,
combined, unitary or similar return.

                    “Total Consideration” means the Base Amount plus the amount,
if any, payable to the Sellers pursuant to Section 2.3.

58

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                    “Trust Amount” means Two Million Dollars ($2,000,000) to be
disbursed to an account designated by the Shareholders’ Representative.

                    13.2          Index of Defined Terms. Solely for convenience
purposes, the following is a list of terms that are defined in this Agreement
and the Section number where such definition is contained:

 

 

 

 

TERM:

SECTION:

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

 

 

 

Actuarial Arbitrator

Section 2.2(b)

 

Acquisition Financing

Section 6.7

 

Agreement

Preface

 

Audited Financial Statements

Section 4.5(a)

 

Business Agreements

Section 4.14

 

Business Employees

Section 7.1(a)

 

Buyer

Preface

 

Buyer’s Breach Notice

Section 11.1(a)(iv)

 

Claim Notice

Section 10.4(a)

 

Class A Common Stock

Section 4.4(a)

 

Class B Common Stock

Section 4.4(a)

 

Closing

Section 1.2(a)

 

Closing Date

Section 1.2(a)

 

Closing Retirement Underfunding

Section 2.1

 

Closing Retirement Underfunding Statement

Section 2.1

 

Company

Preface

 

Company Agent

Section 7.2(a)

 

Company Intellectual Property

Section 4.11(b)

 

Confidentiality Agreement

Section 6.4(a)

 

Controlling Party

Section 10.5(b)

 

Escrow Agreement

Section 1.2(c)

 

Escrow Amount

Section 1.2(c)

 

Expense Amount

Section 1.2(e)

 

Expense Statement

Section 1.2(e)

 

Financial Statements

Section 4.5(a)

 

Firearms Regulations

Section 4.12

 

Indemnified Party

Section 10.4(a)

 

Indemnitor

Section 10.4(a)

 

Information

Section 6.4(b)

 

IRS

Section 4.8(k)

 

Leases

Section 4.10(b)

 

Leased Real Property

Section 4.10(b)

 

Most Recent Audited Balance Sheet Date

Section 4.5(a)

 

Most Recent Financial Statements

Section 4.5(a)

 

New Haven Property

Section 4.16(e)

 

Non-Competition Agreement

Section 8.10

59

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TERM:

SECTION:

 

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

 

 

 

North Haven AOCs

Section 7.6

 

North Haven Property

Section 4.16(e)

 

Parties

Preface

 

Pre-Closing Straddle Period

Section 7.3(c)

 

Prior Period Returns

Section 7.3(b)

 

Representatives

Section 6.4(b)

 

Required Consents

Section 8.3

 

Securities Act

Section 5.8

 

Seller(s)

Preface

 

Share(s)

Recitals

 

Shareholders’ Representative

Section 12.1(a)

 

The Marlin Company

Section 7.4

 

Threshold Amount

Section 10.1(a)(i)

 

TMC Lease

Section 4.10(a)(ii)

 

Trademark Coexistence Agreement

Section 8.5

 

Transfer Act

Section 4.16(h)

 

Vintage Firearms

Section 6.13

 

Waiver and Termination Agreement

Section 4.30

 

Webster

Section 4.3(c)

 

Webster Credit Agreement

Section 4.3(c)

 

Wiggin and Dana

Section 1.2(a)

 

 

 

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                    IN WITNESS WHEREOF, the Parties have executed or caused this
Agreement to be executed and delivered as of the day and year first above
written.

 

 

 

 

“Company”

 

 

 

THE MARLIN FIREARMS COMPANY

 

 

 

 

By:

/s/ Frank Kenna, III

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Name: Frank Kenna, III

 

 

Title: Chairman of the Board

 

 

 

“Buyer”

 

 

 

REMINGTON ARMS COMPANY, INC.

 

 

 

 

By:

/s/ Stephen P. Jackson, Jr.

 

 

 

 

--------------------------------------------------------------------------------

 

 

Name: Stephen P. Jackson, Jr.

 

 

Title: Chief Financial Officer,
Treasurer and Corporate Secretary

 

 

 

“Shareholders’ Representative”

 

 

 

/s/ Frank Kenna, III

 

 

 

--------------------------------------------------------------------------------

 

Frank Kenna, III

--------------------------------------------------------------------------------

 

 

 

 

 

“Sellers”

 

 

 

 

 

/s/ Ward J. Doonan

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Ward J. Doonan,

 

 

Custodian for Cecily J. Doonan

 

 

 

 

 

“Sellers”

 

 

 

 

 

/s/ Ward J. Doonan

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

 

 

 

Ward J. Doonan

 

 

 

 

 

“Sellers”

 

 

 

 

 

/s/ Ward J. Doonan

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

 

 

 

Ward J. Doonan,

 

 

Custodian for Brett E. Doonan

 

 

 

 

 

“Sellers”

 

 

 

 

 

/s/ Ward J. Doonan

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Ward J. Doonan, Trustee

 

 

Doonan Family Trust

 

 

 

 

 

“Sellers”

 

 

 

/s/ Ward J. Doonan

 

/s/ Cynthia Doonan

 

 

 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

Ward J. Doonan, Co-Trustee

 

Cynthia Doonan, Co-Trustee

W. Doonan Trust u/w Edward Doonan

 

 

 

 

 

“Sellers”

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Melva Jean Foster

--------------------------------------------------------------------------------

 

 

 

 

 

“Sellers”

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Jeff Herr

 

 

 

 

 

“Sellers”

 

 

 

 

 

/s/ Cynthia Kenna Mullins

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Cynthia Kenna Mullins

 

 

 

 

 

“Sellers”

 

 

 

 

 

/s/ Frank Kenna, Jr.

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Frank Kenna, Jr.

 

 

 

 

 

“Sellers”

 

 

 

 

 

/s/ Gilbert Kenna

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Gilbert Kenna

 

 

 

 

 

“Sellers”

 

 

 

 

 

/s/ Frank Kenna, III

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Frank Kenna, III

 

 

 

 

 

“Sellers”

 

 

 

 

 

/s/ Herman Robert Kenna

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Herman Robert Kenna

 

 

 

 

 

“Sellers”

 

 

 

 

 

/s/ Joan G. Kenna

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Joan G. Kenna

--------------------------------------------------------------------------------

 

 

 

 

 

“Sellers”

 

 

 

/s/ Joanna N. Kenna

 

/s/ Alex Kenna

 

 

 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

Joanna N. Kenna, Co-Executor

 

Alex Kenna, Co-Executor

Estate of J. Stephen Kenna

 

 

 

 

 

“Sellers”

 

 

 

 

 

/s/ Caleb Kenna

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Caleb Kenna

 

 

 

 

 

“Sellers”

 

 

 

 

 

/s/ Margaret Alene Kenna

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Margaret Alene Kenna

 

 

 

 

 

“Sellers”

 

 

 

 

 

/s/ Christine Kenna Moore

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Christine Kenna Moore

 

 

 

 

 

“Sellers”

 

 

 

 

 

/s/ Matthew Gilbert Kenna

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Matthew Gilbert Kenna

 

 

 

 

 

“Sellers”

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Nicholas Kenna

 

 

 

 

 

“Sellers”

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Greg Kenna

--------------------------------------------------------------------------------

 

 

 

 

 

“Sellers”

 

 

 

 

 

/s/ Greenberg & Company

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Greenberg & Company,Trustee for

 

 

Theodore Lynch Sub S Trust

 

 

 

 

 

“Sellers”

 

 

 

 

 

/s/ Theodore B. Lynch

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Theodore B. Lynch

 

 

 

 

 

“Sellers”

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Roger Kenna, III

 

 

 

 

 

“Sellers”

 

 

 

 

 

/s/ Betsy L. Strom

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Betsy L. Strom

 

 

 

 

 

“Sellers”

 

 

 

/s/ Betsy L. Strom

 

/s/ Ernest D. Strom

 

 

 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

Betsy L. Strom, Co-Trustee

 

Ernest D. Strom, Co-Trustee

u/t/o Betsy L. Strom

 

 

 

 

 

“Sellers”

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

EGAP Co., Trustee

 

 

Kenna Marital Trust f/b/o Constance Kenna

 

 

 

 

 

“Sellers”

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

EGAP Co., Trustee

 

 

Kenna Nonmarital Trust f/b/o et al.

--------------------------------------------------------------------------------

 

 

 

 

 

“Sellers”

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

Herbert Weaver, Jr.

--------------------------------------------------------------------------------

List of Omitted Schedules and Exhibits

to that certain

Stock Purchase Agreement, dated as of December 21, 2007,

by and among

The Marlin Firearms Company, Remington Arms Company, Inc., the Shareholders of
The Marlin Firearms Company listed on the signature pages thereto, and Frank
Kenna, III, solely in his capacity as the Shareholders Representative
______________________________________________________________________________

Pursuant to Item 601(b)(2) of Regulation S-K, Remington Arms Company, Inc.
hereby agrees to furnish supplementally a copy of any omitted schedule, annex,
appendix or exhibit identified below to the Securities and Exchange Commission
upon request.

OMITTED SCHEDULES

Schedule 1.1:

Sellers

Schedule 3.4:

Business Involvement

Schedule 4.1:

Organization and Power

Schedule 4.5(b):

Financial Statements

Schedule 4.6:

No Undisclosed Liabilities

Schedule 4.7:

Operations Since the Most Recent Audited Balance Sheet Date (including
Appendices)

Schedule 4.8(c):

Audits and Extensions; etc.

Schedule 4.8(e):

Other Jurisdictions

Schedule 4.8(k):

Accounting Method, etc.

Schedule 4.8(p):

Escheat and Unclaimed Property

Schedule 4.9:

Permits (including Appendices)

Schedule 4.10(a):

Owned Real Property

Schedule 4.10(b):

Leased Real Property

Schedule 4.10(d):

Condition of Improvements

Schedule 4.11(b):

Intellectual Property

Schedule 4.12:

Compliance with Laws

Schedule 4.13:

Contracts (including Appendix)

Schedule 4.15(a):

Employee Benefit Plans

Schedule 4.15(c):

Deferred Compensation

Schedule 4.15(g):

Pension Plan Transactions

Schedule 4.15(h):

Defined Benefit Plans

Schedule 4.15(i):

Transaction Payments

Schedule 4.15(j):

Post-Employment Welfare Coverage

Schedule 4.16(a):

Compliance with Environmental Laws

Schedule 4.16(c):

Release of Hazardous Substances (including Tables)

Schedule 4.16(d):

Handling of Hazardous Substances

 

 

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Schedule 4.16(e):

Environmental Notices

Schedule 4.16(g):

Environmental Notices

Schedule 4.17(a):

Employee Relations and Agreements

Schedule 4.18:

Litigation

Schedule 4.18(d):

The Settled Cases

Schedule 4.19:

Insurance

Schedule 4.20(a):

Customers

Schedule 4.20(b):

Suppliers

Schedule 4.21:

Accounts Receivable

Schedule 4.22:

Properties

Schedule 4.23:

Bank Accounts

Schedule 4.24:

Powers of Attorney; Guarantees

Schedule 4.25:

Transactions with Affiliates

Schedule 4.29:

Product Liabilities and Product Warranties (including Appendices)

Schedule 5.3:

Governmental Authority

Schedule 6.2:

Operations Prior to the Closing Date

Schedule 6.13:

Distributions

Schedule 7.4:

Management Amount

Schedule 8.3:

Required Consents

Schedule 13.1:

Permitted Encumbrances

 

 

OMITTED ANNEX AND EXHIBITS

 

Annex A:

Retirement Underfunding Methods and Assumptions

Exhibit A:

Escrow Agreement

Exhibit B:

Waiver and Termination Agreement

Exhibit C:

Trademark Coexistence Agreement

Exhibit D:

Non-Competition Agreement

 

 

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