Exhibit 10.6

SUPPLY AGREEMENT

This Supply Agreement (the “Agreement”) is dated as of August 24, 2020 (the
“Effective Date”) by and between Smith & Wesson Inc., a Delaware corporation
having its principal address at 2100 Roosevelt Avenue, Springfield, MA 01104
(hereinafter referred to as “S&W”), and Crimson Trace Corporation, a corporation
organized under the laws of the State of Oregon having its principal address at
1800 North Route Z Columbia, MO 65202 (hereinafter referred to as “Supplier”).

WITNESSETH:

WHEREAS, S&W wishes to purchase from Supplier and Supplier wishes to sell to S&W
certain Products (as defined below) in accordance with the terms and conditions
set forth in this Agreement.

NOW THEREFORE, in consideration of the premises, mutual promises, and the
representations, warranties and covenants herein contained, the sufficiency of
which is hereby mutually acknowledged, the parties agree as follows:

 

  1.

DEFINITION OF TERMS

As used in this Agreement, the following terms shall have the following
meanings, respectively:

1.1. “Confidential Information” shall mean all drawings, designs, sketches,
blueprints, technical specifications, engineering calculations, models,
formulas, data, reports, interpretations, forecasts, and records of a party, and
all other confidential information concerning such party’s business, whether in
written, oral, or any other form or medium, and whether or not labeled as
confidential by such party, but excluding the same which (a) is or becomes
generally available to and known by the public other than as a result of the
other party’s breach of Section 9.1, or (b) becomes available to the other party
on a non-confidential basis from a third-party source, provided that such third
party is not and was not prohibited from disclosing such Confidential
Information.

1.2. “Delivery Date(s)” shall mean the date or dates requested for delivery of
Products as set forth in any Order.

1.3. “Order” shall mean a written purchase order by S&W that may be transmitted
electronically to Supplier or otherwise sent to Supplier in any manner mutually
agreed to by the parties.

1.4. “Price” shall mean the prices for the Products set forth on Schedule B
hereto.

1.5. “Product(s)” shall mean the laser sighting devices as more particularly
described in Schedule A hereto and conforming to the specifications
(“Specifications”) set forth in Schedule A.

1.6. “Supplier MOQ” means a minimum purchase requirement imposed on Supplier
when procuring any Product to complete any Order.

 

  2.

TERM

2.1. Term. This Agreement shall become effective as of the Effective Date and
shall continue for a period of 24 months, unless earlier terminated in
accordance with its terms (the “Term”). Not later than six (6) months prior to
the expiration of this Agreement, the parties shall engage in good faith
discussions regarding any renewal or extension of this Agreement. The “Term” of
this Agreement shall include the Initial Term and any renewal or extension
terms.

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  3.

MANUFACTURE; SALE; LICENSE

3.1. Sale. Supplier agrees to sell and S&W agrees to purchase Products from
Supplier in accordance with the terms and conditions set forth in this
Agreement.

3.2. Orders. Unless otherwise agreed to by S&W in writing, no Products shall be
supplied hereunder without the issuance by S&W to Supplier of an Order for such
Products. Supplier’s acceptance of an Order shall be confirmed upon the earlier
of a written confirmation or delivery of the Products set forth in such Order.
Except as set forth in this Agreement, Supplier may not reject an Order. In
addition, except as set forth in this Agreement, Supplier may only cancel an
Order already accepted if S&W is in breach of this Agreement. The terms and
conditions of this Agreement shall be deemed incorporated into and made a part
of each Order, and shall supersede and control over any inconsistent or
contradictory provisions of any quote, acknowledgment of Order, invoice or any
other document of Supplier or S&W (including any Order issued by S&W).

3.3. Forecasts. Upon execution of this Agreement, S&W shall provide to Supplier
a forecast including a good faith estimate of S&W’s requirements for Products (a
“Forecast”) for the 6-month period beginning on the Effective Date. No later
than the sixty (60) days prior to the first day of each subsequent 6-month
period during the Term, S&W shall deliver to Supplier a Forecast for the period
beginning with the first day of such subsequent 6-month period. Forecast are for
informational purposes only and do not create any binding obligations on behalf
of either party; provided, however, that Supplier shall not be required to sell
to S&W, and may in its sole discretion reject (without penalty or liability) any
Order for, any quantity of Products that is not set forth in any Forecast for
the period covered by such Forecast.

3.4. Minimum Orders; Exclusivity. In the event Supplier is subject to a Supplier
MOQ when sourcing Product to complete any Order submitted by S&W hereunder and
the quantity of Product originally set forth in the Order is less than the
Supplier MOQ, the Parties agree to either reissue the Order to equal the
Supplier MOQ, allow S&W to cancel its Order, or otherwise revise the Order to
avoid the Supplier MOQ either by modifying the Product design or by changing to
a different Product. During the Term of this Agreement, except as otherwise
provided in this Agreement, S&W shall purchase Products exclusively from
Supplier. During the Term, S&W will not, directly or indirectly, interfere with
Supplier’s relationships with its suppliers or except as otherwise provided in
this Agreement, otherwise contract with any such suppliers for the purchase,
manufacturing, or license of any Products. Except for laser Products,
notwithstanding anything in this Agreement to the contrary, S&W may, enter into
arrangements pursuant to which S&W may purchase nationally recognized third
party branded products (“Co-Branded Products”), which may be the same as or
similar to Products sold by Supplier, in order to integrate, or co-brand with
S&W products, or otherwise promote S&W products in conjunction with the products
of a third party. Notwithstanding anything in this Agreement to the contrary,
S&W may manufacture, directly or through an Affiliate, or purchase from a third
party, any “Promotional Products” (as herein defined). “Promotional Products”
shall mean any products that will be used by S&W or any Affiliate for
promotional purposes or giveaway purposes, and not directly tied to a revenue
generating transaction. The exclusivity provisions of Section 3.4, Right of
First Proposal provisions of Section 3.5 and any other restrictions in this
Agreement shall not apply to Promotional Products.

3.5. Right of First Proposal. Supplier shall have, and S&W hereby grants to
Supplier, a right of first proposal to supply (i) any aiming assistance devices
to be used on S&W products and (ii) any products that are similar to the
Products but are materially different in a manner that justifies a change in
pricing as reasonably determined by the Parties (examples of such material
differences are significant size differences, co-branding, material construction
or quality differences; whereas non-material differences would be minor cosmetic
changes such as colors, patterns, cosmetic finishing (and all of such products
with non-material differences shall continue to be “Products” hereunder)) ((i)
and (ii), collectively, “Proposed Products”) to

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S&W and its affiliates (the “Right of First Proposal”); provided, however, such
Right of First Proposal shall not apply to any product that is being
manufactured for S&W by a third party as of the Effective Date. S&W shall
provide written notice specifically referencing this Section 3.5 to Supplier of
any Proposed Products S&W proposes to purchase prior to purchasing, or entering
into any contract to purchase, such Proposed Products. Supplier shall have
thirty (30) days from the receipt of such notice to provide a pricing proposal
(which shall include terms regarding delivery, lead times and product
performance) to S&W to supply such Proposed Products to S&W under this
Agreement. If S&W accepts such pricing proposal, such Proposed Products shall
become “Products” hereunder, and S&W and Supplier shall update the Schedules to
this Agreement to incorporate the information applicable to such Proposed
Products.

3.6. Access to S&W’s Facilities. If in providing Products or related services
under this Agreement, Supplier shall require access to S&W’s facilities: (i) any
such access by Supplier and its personnel shall be subject to the U.S.
International Traffic in Arms Regulations and S&W’s security policies from time
to time in effect, which limit those individuals who may access S&W’s
facilities; and (ii) Supplier shall satisfy any requirements of S&W to provide
insurance, which may be in addition to the insurance otherwise required under
this Agreement, on account of Supplier’s activities on S&W’s site.

3.7. Manufacturing Facility. In manufacturing any Products, Supplier shall
maintain an organization and facilities, including, without limitation, suitable
equipment and tools, in accordance with standards generally accepted in the
industry, and employ adequately trained and competent personnel in all
functions. Supplier will keep complete and accurate records in all material
respects with respect to Products it manufactures pursuant to this Agreement.
Supplier shall, upon S&W’s request from time to time by providing at least 7
days prior notice, allow S&W or its representatives access to Supplier’s
facilities to inspect the manufacture and assembly of the Products during
reasonable hours, and provide S&W with such records in the possession of
Supplier, as S&W may reasonably request, relating to the manufacture of Products
and the source of any raw materials and components used in the Products;
provided, however, in no event shall such inspection interfere with the business
of Supplier.

3.8. License to Products and Patents in Products. During the term of this
Agreement, Supplier hereby grants S&W a royalty-free, nontransferable,
nonsublicenseable, worldwide, non-exclusive license to offer to sell and sell
firearms that incorporate the Products. The grant of such license shall be
effective upon the signing of this Agreement.

3.9. License to Supplier Trade and Service Marks and Trade Dress. During the
term of this Agreement, Supplier hereby grants S&W a royalty-free,
nontransferable, nonsublicenseable, worldwide, non-exclusive license to use
Supplier trademarks, service marks, and trade dress (“Supplier Marks”) in
connection with the Products. This license is subject to the following
restrictions: S&W will use the Supplier Marks only in ways that reflect
favorably on Supplier and its products, and shall not use the Supplier Marks in
any way that is immoral, illegal, or scandalous or in any way that could impair
the reputation of Supplier or the Supplier Marks, and S&W will not obscure,
deface or remove the Supplier Marks on the Products. In any promotional or
advertising material in any media, S&W will identify the Supplier Marks as
belonging to Supplier, using words to the effect that “Crimson Trace trademarks
are property of Crimson Trace Corporation, Portland, Oregon, and are used by
permission.”

 

  4.

ORDERING; DELIVERY

4.1. Deliveries. Unless otherwise specified in an Order (and agreed to by
Supplier) or as set forth below, all deliveries shall be FOB Origin, Supplier’s
plant in Wilsonville, Oregon. Title to Products shall pass to S&W at such point
and S&W shall assume all risk of loss of any Products after such point,
including while any Products are in the possession, custody or control of a
carrier. All deliveries from outside of the United States shall be FOB
Destination. Title to such Products shall pass to S&W at such

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destination point and S&W shall assume all risk of loss of any such Products
after such destination point. Supplier shall (i) pack the Products in such a
manner as to insure against damage from weather or transportation costs, and
(ii) label such Products and provide instructions and other information,
including, without limitation, Material Safety Data Sheets, as required by any
applicable law or regulations or for proper use of the Products.

4.2. Shipping. For Products that shall have a delivery point of FOB Origin, S&W
shall pay the costs of shipping such Products from such point to S&W in
accordance with its Orders (but, for the avoidance of doubt, S&W shall pay for
the cost of any insurance on such Products after transfer of risk of loss and
title of such Products as set forth in Section 4.1). In preparing its shipment
of Products, Supplier shall comply with S&W’s shipping guidelines in effect as
of the Effective Date. If, in order to comply with S&W’s required Delivery Date,
Supplier must ship by a more expensive way than specified in this Agreement or
in an Order, any resulting increased transportation costs shall be paid for by
Supplier unless the necessity for such rerouting or expedited handling has been
caused by S&W.

4.3. Lead Times. Lead times for delivery of the Products are set forth in
Schedule C to this Agreement (the “Lead Times”). Supplier shall deliver Products
ordered by S&W by the applicable Delivery Date set forth in S&W’s Order, so long
as the Delivery Date is consistent with the Lead Times. If applicable Lead Times
are not set forth in Schedule C, the Delivery Date shall be such date as
reasonably agreed to by the parties.

4.4. Production Capacity. Supplier shall maintain sufficient production capacity
as to be able to supply Products in accordance with any reasonable S&W forecasts
and the Lead Times. Supplier shall notify S&W as soon as is reasonably possible
of any inability by Supplier to produce and deliver Products in such quantities
as are necessary to meet S&W’s anticipated volume requirements.

4.5. Remedies for Late Delivery. Supplier shall use commercially reasonable
efforts to deliver all Products on or before the Delivery Date as set forth in
Section 4.3 above. If Supplier fails to deliver Products within 14 days of the
Delivery Date and if such delay is not due to any action or inaction of S&W or
otherwise excused in accordance with this Agreement, S&W shall receive a 10%
discount on such Order or S&W may, at its sole discretion, cancel its Order for
such Products by giving Supplier written notice of such cancelation prior to
shipment of the Products for such Order and procure similar products from
another source. Subject to S&W’s rights under this Section 4.5, no delay in the
shipment or delivery of any Products relieves S&W of its obligations under this
Agreement, including accepting delivery of any remaining installment or other
Orders of Products.

4.6. Changes. S&W may, at any time, make changes in quantities, packaging, time
and place of delivery, and method of transportation. If any such changes cause
an increase or decrease in the cost, or the time required for performance or
delivery, an equitable adjustment shall be made, provided that Supplier notifies
S&W, within seven days after S&W notifies Supplier of any such change, of any
proposed increase in price or delay in delivery resulting from such change, and
if the parties are then unable to agree on an adjustment, S&W may cancel all or
any part of its Order subject to Section 4.7 below.

4.7. Cancellation. S&W may cancel all or any part of any unshipped portion of
its Order without obligation hereunder except to make payment for the Products
actually shipped prior to such cancellation and, with respect to any cancelled
Non-Stock Items, to pay Supplier for direct costs incurred by Supplier in
connection with such cancelled Non-Stock Products, including without limitation
production and facility costs and Supplier’s costs for cancelling any orders
with its suppliers. In no event shall S&W be liable under this Section 4.7 with
respect to a cancellation for more than the price of the applicable Products.
Title to any unfinished work-in-process paid for by S&W shall vest in S&W. For
purposes hereof, “Non-Stock Items” are Products manufactured exclusively for S&W
(or its affiliates).

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  5.

TERMS AND CONDITIONS OF PURCHASE

5.1. Prices. Prices for the Products shall be those prices set forth in Schedule
B attached hereto. The Product prices include all charges for Supplier’s boxing,
packaging, packing, crating, storage and handling, to the F.O.B. point, freight
costs to ship pursuant to the Order and duties (but excluding any insurance on
the Products during shipment of the Products after transfer of risk and title as
set forth in Section 4.1). In addition, Supplier shall be liable for any
applicable sales, use or similar taxes, excises, and similar charges, which
shall be separately invoiced to S&W. The pricing formulas set forth in Schedule
B shall remain firm for the Term.

5.2. Payment. S&W shall pay the price of Products ordered by S&W after receipt
by S&W of such Products and of an invoice from Supplier for such Products.
Supplier’s invoice shall specify the Order number, Order date, a general
description of the Products supplied, the date of supply, and the sum due.
Unless otherwise stated, S&W’s payment shall be due 30 days after S&W’s receipt
of Supplier’s invoice in accordance with this Agreement. S&W shall be entitled
to any cash discount period available to Supplier’s customers. Supplier shall be
solely responsible for filing all appropriate tax forms and paying all
applicable sales, use and similar taxes, duties, export preparation charges and
export documentation charges resulting from the sale of the Products under this
Agreement. Any payment by S&W under this Agreement shall not relieve Supplier
from any obligations hereunder with respect to defective Products.

5.3. Late Payments. S&W shall pay interest on all late payments (whether during
the Term or after the expiration or earlier termination of the Term), calculated
daily and compounded monthly, at the lesser of 10% per year or the highest rate
permissible under applicable law. S&W shall also reimburse Supplier for all
costs incurred by Supplier in collecting any late payments, including reasonable
attorneys’ fees and court costs. In addition to all other remedies available
under this Agreement or at law, if S&W fails to pay any amounts when due under
this Agreement, other than amounts disputed by S&W in good faith, Supplier may
(a) suspend the delivery of any Products, and (b) reject S&W’s Orders or cancel
accepted Orders.

5.4. Rejection. Payment for Products delivered hereunder shall not constitute
S&W’s acceptance thereof. S&W shall have the right within 14 days of receipt
(the “Inspection Period”) to inspect any Products and to reject the same to the
extent (i) the amount of Product is more than the amount requested in the Order
(but such rejection right shall only be with respect to the excess amount), (ii)
the Product is materially damaged or (iii) for obvious and apparent deviations
from the Specifications for such Product, which are obvious without opening the
packaging for each Product (“Nonconforming Products”). S&W will be deemed to
have accepted Products unless it provides Supplier with written notice of any
Nonconforming Products within the Inspection Period, stating with specificity
all defects and nonconformities, and furnishing such other written evidence or
other documentation as may be reasonably required by Supplier. If S&W timely
notifies Supplier of any Nonconforming Products and Supplier agrees that such
Products are Nonconforming Products, Supplier shall either, at S&W’s election:
(a) replace such Nonconforming Products with conforming Products; or (b) refund
to S&W such amount paid by S&W to Supplier for such Nonconforming Products
returned by S&W to Supplier and cancel the Order for such returned Nonconforming
Products. If S&W elects to replace Nonconforming Products, Supplier shall ship,
at Supplier’s expense and risk of loss, the replacement Products.

 

  6.

WARRANTY; SUPPORT

6.1. Supplier’s Warranty. For a 12 month period from the expiration of the
Inspection Period for such Products, Supplier warrants that the Products
furnished under this Agreement shall (i) conform in every respect to any
specifications provided by Supplier to S&W; (ii) be new and free from material
defects in material or workmanship; (iii) be adequately contained, packaged,
marked, and labeled; (iv) conform to

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any and all applicable technical and safety provisions and comply in all
respects with any and all applicable federal, state and local laws, regulations,
directives and standards including, without limitation, those concerning safety,
labor, health and the environment; and (v) be appropriate for the purpose for
which the Product is intended to be used. Inspection, testing, acceptance or use
of the Products shall not affect Supplier’s obligation under this warranty, and
such warranty shall survive inspection, testing, acceptance and use. The
foregoing shall not limit, however, Supplier’s standard warranty for a Product
provided to the end-user (consumer purchaser) of such Product as set forth on
the packaging of such Product (“End-User Warranty”), and S&W may sell the
Products to end-users subject to Supplier’s End-User Warranty.

6.2. Warranty Limitations. The warranty set forth in Section 6.1 does not apply
to any Product that: (i) has been subjected to abuse, misuse, neglect,
negligence, accident, improper testing, improper installation, improper storage,
improper handling, abnormal physical stress, abnormal environmental conditions
or use contrary to any instructions issued by Supplier; (ii) has been
reconstructed, repaired or altered by persons other than Supplier or its
authorized representatives; or (iii) has been used with any third-party
products, hardware or product that has not been previously approved in writing
by Supplier, provided that any Product may be used with any other product
offered by S&W or any affiliate of S&W (“S&W Products”) to the extent S&W
provided prior written notice to Supplier that such Product would be used with
such specific S&W Product. In addition, in no event shall Supplier be liable or
responsible for any warranty provided to end-users of the Product greater than
Supplier’s End-User Warranty.

6.3. DISCLAIMER. EXCEPT FOR THE END-USER WARRANTY, EXCEPT TO THE EXTENT
LIMITATIONS ON PRODUCT WARRANTIES TO CONSUMERS ARE NOT PERMITTED BY APPLICABLE
LAW, AND EXCEPT FOR THE PRODUCT WARRANTY SET FORTH IN SECTION 6.1 AND THE OTHER
EXPRESS REPRESENTATIONS AND WARRANTIES OF SUPPLIER SET FORTH IN THIS AGREEMENT,
(A) NEITHER SUPPLIER NOR ANY PERSON ON SUPPLIER’S BEHALF HAS MADE OR MAKES ANY
EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WHATSOEVER, EITHER ORAL OR
WRITTEN, INCLUDING ANY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, OR TITLE, WHETHER ARISING BY LAW, COURSE OF DEALING, COURSE OF
PERFORMANCE, USAGE OF TRADE OR OTHERWISE, ALL OF WHICH ARE EXPRESSLY DISCLAIMED,
AND (B) S&W ACKNOWLEDGES THAT IT HAS NOT RELIED UPON ANY REPRESENTATION OR
WARRANTY MADE BY SUPPLIER, OR ANY OTHER PERSON ON SUPPLIER’S BEHALF, EXCEPT AS
SPECIFICALLY PROVIDED IN THIS AGREEMENT.

 

  7.

PRODUCT CAMPAIGNS; INDEMNIFICATION

7.1. Product Recalls. If any Products have been manufactured by or for Supplier
in a manner that is inconsistent with Product Specifications or if any Products
otherwise do not comply with Supplier’s warranty, and S&W requests Supplier to
recall such Products for safety reasons, then Supplier shall determine, under
its recall standards, whether a recall of any Products should be made. If
Supplier determines that for any reason a recall of such Products should be
made, then Supplier shall recall such Products at its own expense. In such case,
S&W shall take all reasonable actions requested by Supplier to assist in such a
recall. S&W shall not modify or retrofit any Product as part of any recall or
retrofit campaign by S&W without Supplier’s prior written consent, which shall
not be unreasonably withheld.

7.2. Indemnification Generally. Without limiting any other remedies available to
the parties, each party shall indemnify, defend and hold the other party and its
respective officers, directors, employees, agents, customers, subsidiaries,
parents and affiliates (each a “Protected Party”) harmless from and against any
and all claims (including, without limitation, third party claims for personal
injury or real or personal property damage), actions, suits, damages, losses,
deficiencies, liabilities, obligations, commitments, costs or expenses of any
kind or nature (including reasonable legal and other expenses) incurred by such
Protected

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Party (altogether “Losses”) resulting from: (i) any breach of the
representations, warranties, covenants, agreements and obligations of such party
hereunder (including, with respect to Supplier, a breach of its End-User
Warranty); or (ii) any negligent or willful acts or omissions of such party, its
directors, officers, employees, agent, contractors, subsidiaries, parents,
affiliates or those acting for any of them, except to the extent any damages or
liabilities are directly caused by the willful misconduct of the Protected
Party. Without limiting any other remedies available to the parties, Supplier
shall indemnify, defend and hold S&W and its officers, directors, employees,
agents, customers, subsidiaries, parents and affiliates (each a “S&W Protected
Party”) harmless from and against (iii) any and all Losses resulting from any
failure of any Product to comply with applicable law, or (iv) S&W’s direct costs
under any Product recall under Section 7.1. This Section will survive the
termination or expiration of this Agreement.

7.3. IP Indemnification. Supplier shall indemnify, defend and hold harmless S&W
and its Protected Parties from and against all claims by a third party alleging
that any of the Products infringe any Intellectual Property Right of a third
party, except to the extent the same relates to or results from (i) use of S&W’s
trademarks, or (ii) Supplier’s compliance with any Specifications or design
supplied by S&W. If the Products, or any part of the Products, becomes, or in
Supplier’s reasonable opinion is likely to become, subject to a Third Party
Claim that qualifies for intellectual property indemnification coverage under
this Section 7.3, Supplier shall notify S&W in writing to cease using all or a
part of the Products, in which case S&W shall immediately cease all such use of
such Products and Supplier shall use its best efforts to provide Products or
similar substitute Products that are non-infringing to S&W.

7.4. Defense of Third Party Indemnifiable Claims. If a Protected Party seeks
indemnification or damages (the “Indemnified Party”) under this Agreement from
the other party (the “Indemnifying Party”) for any claim asserted, against such
Indemnified Party by a third party (a “Third Party Claim”), the Indemnified
Party shall, promptly upon gaining knowledge of such Third Party Claim, deliver
to the Indemnifying Party notice of such Third Party Claim with sufficient
detail as to why the Indemnifying Party is responsible for such Third Party
Claim; provided, that a failure by the Indemnified Party to give such notice in
the manner required pursuant to this Section 7.4 shall not limit or otherwise
affect the obligations of the Indemnifying Party under this Agreement, except to
the extent that Indemnifying Party is actually prejudiced with respect to the
rights available to the Indemnifying Party with respect to such Third Party
Claim, and then only to the extent of any such actual prejudice. The
Indemnifying Party shall have the right, at its sole option and expense, to
appoint counsel of its choice, which must be reasonably satisfactory to the
Indemnified Party, and to defend against, negotiate, settle or otherwise deal
with such Third Party Claim in lieu of the Indemnified Party defending or
settling such claim; provided, the Indemnifying Party shall not have the right
to defend such Third Party Claim if such Third Party Claim seeks relief other
than the payment of monetary damages.

7.5. Exclusion from Indemnification. Notwithstanding anything in this Agreement
to the contrary, in no event shall Supplier be liable for, or be required to
indemnify S&W or its Protected Parties for, Losses arising from (i) the use of
the Products in any manner not otherwise authorized under this Agreement or that
does not materially conform with any usage instructions provided by Supplier,
(ii) S&W’s marketing, advertising, promotion or sale of any product containing
the Products, except to the extent such marketing or promotion is consistent
with materials provided by Supplier; (iii) Supplier’s compliance with any
Specifications or design supplied by S&W; or (iii) any modifications or changes
made to the Products by or on behalf of any person other than Supplier.

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  8.

INSURANCE

8.1. Insurance. Supplier shall, at its expense, obtain and maintain in full
force and effect insurance policies with minimum limits of coverage as follows:

(i) Commercial General Liability Insurance including Contractual Liability,
Products and Completed Operations Liability, Broad Form Property Damage
Liability including coverage for contractual liability. Limits of liability will
not be less than $1,000,000 USD each occurrence and $2,000,000 USD aggregate.
Commercial General Liability insurance will be written on an occurrence basis.

(ii) Excess (Umbrella) Liability underlying the insurances described in
subsections (i) and (ii), in an amount of not less than $1,000,000 USD per
occurrence. Excess (Umbrella) Insurance will be written on an occurrence basis.

8.2. Additional Insured. The Supplier will cause “Smith & Wesson Inc. “ to be
named as an additional insured on the Commercial General Liability, and Excess
(Umbrella) Liability policies. The Supplier will deliver annually a certificate
of insurance evidencing the coverage’s required by this Agreement. The
certificates of insurance will clearly state: “This is primary insurance without
recourse to similar insurance maintained by the additional insured or its
subsidiaries and affiliates, if any.”

8.3. Notice of Cancellation. The Supplier will be required to provide not less
than thirty (30) days’ prior notice of cancellation, intention not to renew, or
material change in coverage; provided, however, that no reduction, cancellation
or material changes in any policy will relieve the Supplier of Supplier’s
obligation to maintain coverages in accordance with this Agreement.

8.4. Subrogation. The Supplier, on behalf of the Supplier and Supplier’s
insurers, hereby waives subrogation against S&W and its Affiliates under the
insurance coverages maintained by the Supplier pursuant to this Agreement for
losses or claims arising out of the insured party’s acts or omissions. Evidence
of such waiver reasonably satisfactory in form and substance to S&W will be
exhibited on the Certificates of Insurance required by this Agreement.

8.5. Limits. The limits of liability set forth above may be afforded by any
combination of primary and excess liability insurance as long as the insurance
coverage provided by the excess liability insurance is as broad as that provided
by the primary insurance.

 

  9.

CONFIDENTIALITY

9.1. Non-Use and Non-Disclosure. Neither party shall use the other party’s
Confidential Information except for the purpose of performing its obligations
under this Agreement (“Purpose”). Each party shall protect the Confidential
Information of the other party from disclosure and unauthorized use in the same
manner that it protects its own proprietary and confidential information of like
nature, but in no event shall such standard of care be less than reasonable
care. Supplier may disclose the Confidential Information of the other party only
to those of its employees, subcontractors, contractors, directors, advisors,
auditors, attorneys and consultants who require such information for the Purpose
and who are subject to confidentiality obligations at least as protective as
those set forth herein. Each party shall immediately notify the other party in
the event of any unauthorized use or disclosure of the other party’s
Confidential Information. In the event that a party’s Confidential Information
is required to be disclosed by the other party pursuant to law, regulation or
valid court order, the other party shall be permitted to make such disclosure;
provided, however, that (i) it shall promptly notify the party of the fact in
writing to permit the party the reasonable opportunity to appear in any judicial
proceeding involved or otherwise to act to preserve its rights; and (ii) such
disclosure is no greater than what was required to be compliant with such law,
regulation or order.

9.2. Survival of Non-Use and Non-Disclosure Obligations. All non-use and
non-disclosure obligations concerning Confidential Information shall survive for
a period of five (5) years (except for trade secrets, which shall continue in
full force and effect indefinitely) from the date of expiration or termination
of this Agreement.

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9.3. Injunctive Relief. Both parties acknowledge that disclosure or unauthorized
use of the other’s Confidential Information will cause irreparable harm to the
party, inadequately compensable in damages, and that the party may obtain
injunctive relief to prevent any disclosure or unauthorized use of its
Confidential Information. If a party is successful in any action to enforce the
other’s obligations under this Section, that party shall be entitled to recover
reasonable attorneys’ fees and court costs.

9.4. Return of Property. Upon the termination or expiration of this Agreement,
each party agrees to end all further use of and to delete or destroy all copies
of (and upon request, provide a written certification of such deletion or
destruction), any and all such other party’s Confidential Information, in
whatever form, which are in possession of or under the control of such party.

 

  10.

OTHER COVENANTS.

10.1. Compliance with Laws by Supplier. Supplier, and any Products or related
services supplied by Supplier, shall comply with all applicable Federal, state
and local laws, rules, regulations, orders, conventions, ordinances or
standards, including, without limitation, those that relate to the manufacture,
labeling, transportation, importation, exportation, use, operation, licensing,
approval or certification of the Products or related services, and including,
without limitation, the U.S. Foreign Corrupt Practices Act, the U.S.
International Traffic in Arms Regulations and the U.S. Export Administration
Regulations. Supplier shall comply with Executive Order No. 11246, as amended,
The Rehabilitation Act of 1973, The Vietnam Era Veterans Readjustment Assistance
Act of 1974, and any related rules and regulations, and any other law, order or
regulation required to be included herein, as a result of S&W’s use of Products
or related services ordered in or for S&W’s performance of contracts with any
governmental authority. This shall include, without limitation, an obligation by
Supplier to take affirmative action to employ and advance in employment
qualified individuals with disabilities, and qualified special disabled
veterans, veterans of the Vietnam era and any other veterans who served on
active duty during a war or in a campaign or expedition for which a campaign
badge has been procured. Supplier further represents that neither it nor any of
its subcontractors will utilize slave, prisoner or any other form of forced or
involuntary labor in the supply of the Products or any services under this
Agreement. Supplier shall furnish S&W, upon request from time to time, in such
form as S&W may designate, certificates of Supplier’s compliance with any such
laws, orders and regulations. At S&W’s request, Supplier shall certify in
writing its compliance with the foregoing.

10.2. Compliance with Laws by S&W. S&W shall comply with all applicable Federal,
state and local laws, rules, regulations, orders, conventions, and ordinances,
including, without limitation, those that relate to the purchase, resale,
exportation, use, operation, licensing, approval of such Products, as
applicable, and including, without limitation, the U.S. Foreign Corrupt
Practices Act, the U.S. International Traffic in Arms Regulations and the U.S.
Export Administration Regulations.

 

  11.

TERMINATION

11.1. Termination for Bankruptcy or Insolvency. Unless expressly prohibited by
applicable law, either party may terminate this Agreement immediately for cause
by providing notice to the other party if the other party: (a) commences or
becomes the subject of any case or proceeding under the bankruptcy, insolvency
or equivalent laws of the United States; (b) has appointed for it or for any
substantial part of its property a court appointed receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official; (c) makes
an assignment for the benefit of its creditors; (d) admits in writing its
inability to generally to pay its debts as they become due; or (e) takes
corporate action in furtherance of any of the foregoing (collectively, herein
referred to as “Events of Insolvency”). Each party shall immediately give the
other party written notice of any Event of Insolvency with respect to such
party.

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11.2. Termination for Breach. Either party may terminate this Agreement 30 days
after giving notice of the other party’s material breach or default of this
Agreement, including any four late deliveries by Supplier in a six-month period
that would permit S&W to cancel its order pursuant to Section 4.5, provided that
such breach shall continue and not be cured within 30 days after such notice
(or, if not able to be cured within 30 days, within a commercially reasonable
time period for such cure).

11.3. No Liability. Except as provided in Section 11.4, neither party shall be
liable for any damage of any kind (whether direct or indirect) incurred by the
other party by reason of the expiration or earlier termination of this
Agreement. Termination of this Agreement will not constitute a waiver of either
Party’s rights, remedies or defenses under this Agreement, at law, in equity or
otherwise.

11.4. Effects of Expiration or Termination. Upon the expiration or earlier
termination of this Agreement, all indebtedness of S&W to Supplier under this
Agreement, of any kind, shall become immediately due and payable to Supplier,
without further notice to S&W. Expiration or termination of this Agreement will
not affect any rights or obligations of the parties that (i) come into effect
upon or after termination or expiration of this Agreement; or (ii) otherwise
survive the expiration or earlier termination of this Agreement pursuant to
Section 12.10 and were incurred by the parties prior to such expiration or
earlier termination. Except as otherwise agreed to by Supplier, any notice of
termination under this Agreement automatically operates as a cancellation of any
deliveries of Products to S&W that are scheduled to be made subsequent to the
effective date of termination, whether or not any orders for such Products had
been accepted by Supplier.

 

  12.

MISCELLANEOUS

12.1. Notices. All notices in connection with this Agreement shall be in
writing, and deemed given when personally delivered, or one business day after
being dispatched by nationally recognized overnight courier, or five business
days after being mailed, postage prepaid, by certified or registered mail,
return receipt requested, addressed to the other party hereto at the following
address:

 

TO S&W:    Smith & Wesson Brands, Inc.
2100 Roosevelt Ave.
Springfield, MA 01104
Attn: General Counsel TO SUPPLIER:    Crimson Trace Corporation
1800 North Route Z
Columbia, MO 65202
Attn: General Counsel With a copy to:   

TD Bank, N.A.

2 West Main St., 2nd Floor

Waterbury, CT 06702

Attention: AOB Products Acct Manager

 

Either party may change its address for notices by notice to the other party.

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12.2. Right to Audit.

a. Supplier Audit Right. S&W hereby grants Supplier access to all pertinent
records, correspondence, writings, and receipts related to this Agreement, but
excluding any of the same subject to the attorney-client privilege or
constituting attorney work-product, for the purpose of ensuring S&W’s compliance
with the terms of the Agreement.

b. S&W Audit Right. Supplier hereby grants S&W access to all pertinent records,
correspondence, writings, and receipts related to this Agreement, but excluding
any of the same subject to the attorney-client privilege or constituting
attorney work-product, for the purpose of ensuring Supplier’s compliance with
the terms of the Agreement.

c. Maintenance of Records. The parties to this Agreement shall maintain such
records and documents for a period of six (6) years after the termination or
expiration of this Agreement. Each party shall cooperate fully with the other
party on all reasonable requests to audit such records.

12.3. Choice of Law, Venue. This Agreement, and all matters arising out of or
relating this to this Agreement, shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to the conflict
of laws provisions thereof. The Parties agree that the United Nations Convention
on Contracts for the International Sale of Goods does not apply to this
Agreement. The parties hereby consent to the exclusive jurisdiction of the
courts of the State of Missouri and of the United States District Court for the
Eastern District of Missouri for resolution of all claims, differences and
disputes which the parties may have regarding, or which arise under, this
Agreement, so long as such courts have jurisdiction. Any judgment or other
decision of any such court shall be enforceable, without further proceedings,
against the named party anywhere in the world where such party is located, does
business or has assets.

12.4. Limitation of Liability.

a. NO LIABILITY FOR CONSEQUENTIAL OR INDIRECT DAMAGES. IN NO EVENT SHALL EITHER
PARTY OR THEIR REPRESENTATIVES BE LIABLE FOR CONSEQUENTIAL, INDIRECT,
INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE OR ENHANCED DAMAGES, LOST PROFITS OR
REVENUES OR DIMINUTION IN VALUE, ARISING OUT OF OR RELATING TO ANY BREACH OF
THIS AGREEMENT, REGARDLESS OF (A) WHETHER SUCH DAMAGES WERE FORESEEABLE,
(B) WHETHER OR NOT THE OTHER PARTY WAS ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES AND (C) THE LEGAL OR EQUITABLE THEORY (CONTRACT, TORT OR OTHERWISE) UPON
WHICH THE CLAIM IS BASED, AND NOTWITHSTANDING THE FAILURE OF ANY AGREED OR OTHER
REMEDY OF ITS ESSENTIAL PURPOSE.

b. MAXIMUM LIABILITY FOR DAMAGES. IN NO EVENT SHALL SUPPLIER’S AGGREGATE
LIABILITY ARISING OUT OF OR RELATED TO THIS AGREEMENT, WHETHER ARISING OUT OF OR
RELATED TO BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, EXCEED
THE TOTAL OF THE AMOUNTS PAID TO SUPPLIER PURSUANT TO THIS AGREEMENT IN THE YEAR
PRECEDING THE EVENT GIVING RISE TO THE CLAIM.

Notwithstanding anything in this Agreement to the contrary, (a) the limits in
this Section 12.4 and the limit on the term of Supplier’s warranty under
Section 6.1 of this Agreement shall not apply to any Losses resulting from third
party claims arising from Supplier’s breach of its representations, warranties,
or covenants in this Agreement, including Sections 6.1 (Supplier’s Warranty),
7.1 (Product Recalls), 7.2

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(Indemnification Generally), 7.3 (IP Indemnification), and 10.1 (Compliance with
Laws by Supplier), in each case so long as S&W complies with Section 7.4; (b)
the limits in this Section 12.4 shall not apply to any Losses arising from a
party’s fraud; (c) the limit in Section 12.4(b) and the limit on the term of
Supplier’s warranty under Section 6.1 of this Agreement shall not apply to S&W’s
damages arising out of a Product recall under Section 7.1; and (d) the limits in
this Section 12.4 shall not apply to any Losses arising from S&W’s breach of
Section 3.4 (Exclusivity).

12.5. Assignment. Except as otherwise set forth in this Section 12.5, neither
party shall assign or subcontract any portion of this Agreement without the
prior written consent of the other party, which shall not be unreasonably
withheld. Any assignment without such consent shall be void.

Notwithstanding the foregoing, either party may assign this Agreement to any of
its affiliates. This Agreement shall be binding upon and inure to the benefit of
the successors and permitted assigns of the parties. Any change of control of
Supplier shall be deemed an assignment of this Agreement, for which S&W’s
consent shall be required.

12.6. No Set-off Right. S&W shall not, and acknowledges that it will have no
right, under this Agreement, any Order, any other agreement, document or law to,
withhold, offset, recoup or debit any amounts owed (or to become due and owing)
to Supplier or its affiliates, whether under this Agreement or otherwise,
against any other amount owed (or to become due and owing) to it by Supplier or
its affiliates, whether relating to Supplier’s breach or non-performance of this
Agreement, any Order, any other agreement between S&W or its affiliates and
Supplier or its affiliates, or otherwise

12.7. Force Majeure. Neither party hereto shall be liable to the other party
hereto for nonperformance or delay in performance of any of its obligations
under this Agreement due to the causes beyond its reasonable control including,
without limitation, fires, floods, labor troubles or other industrial
disturbances, governmental acts or regulations, pandemics, riots, insurrections,
lightning, storm, war, and act of the public enemy (herein referred to as “Force
Majeure”); provided, however, in no event shall the inability to make payments
be an event of “Force Majeure”. Upon the occurrence of any such event of Force
Majeure, the affected party shall promptly notify the other party of such event
and the details surrounding the same and shall keep the other party informed of
any further developments of such event. After such event ceases or is removed,
the affected party shall perform all its obligations still pending with
reasonable promptness, unless this Agreement has been terminated in accordance
with its terms. If an event of Force Majeure prevents performance by a party for
more than 21 consecutive days (“Prolonged Force Majeure”), either party may,
with notice to the other, cancel any Order affected by such Prolonged Force
Majeure (an “Affected Order”) without any further liability thereunder. In
addition, to the extent such Affected Order has been cancelled in accordance
with this Section 12.7, S&W may purchase the Product under such Affected Order
(up to the amount set forth in such Order) from a third-party. In no event shall
S&W purchase more than customarily purchased hereunder during an event of Force
Majeure to circumvent the exclusivity provisions of this Agreement.

12.8. Use of Name. S&W shall have a non-exclusive license to use any
Supplier-owned trademarks used on or in packaging for Products in connection
with S&W’s sales and marketing of the Products. Except as expressly permitted by
this Agreement, without the prior written consent of the other party, neither
party shall use the other party’s name or any of its trademarks or logos,
including in any advertising or marketing materials.

12.9. Prohibition Against Insider Trading. Supplier hereby acknowledges that
United States securities laws, as well as other applicable securities laws and
regulations, prohibit any person who has material, non-public information about
a company from purchasing or selling the securities of such company or from
communicating such information to any other person under circumstances in which
it is reasonably foreseeable that such person is likely to purchase or sell such
securities. Supplier shall inform each of its employees and subcontractors
providing any services in connection with this Agreement of this restriction.

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12.10. Survival. Subject to the limitations and other provisions of this
Agreement: (a) the representations and warranties of the Parties contained
herein will survive the expiration or earlier termination of this Agreement; and
(b) Sections 7, 9, 11.3, 11.4, 12.1, 12.2., 12.3, 12.4, 12.5, 12.6, 12.7, 12.8,
12.9, 12.10, 12.11, 12.12, and 12.13 of this Agreement, as well as any other
provision that, in order to give proper effect to its intent, should survive
such expiration or termination, will survive the expiration or earlier
termination of this Agreement for the period specified therein, or if nothing is
specified for the applicable statute of limitations. All other provisions of
this Agreement will not survive the expiration or earlier termination of this
Agreement. Notwithstanding any right under any applicable statute of limitations
to bring a claim, no action based upon or arising in any way out of this
Agreement may be brought by either party after the expiration of the applicable
survival or other period set forth in this Section and the parties waive the
right to file any such action after the expiration of the applicable survival or
other period; provided, however, that the foregoing waiver and limitation do not
apply to the collection of any amounts due to Supplier under this Agreement.

12.11. Severability; Waiver. If any portion of this Agreement shall be invalid
or unenforceable or shall violate any applicable law, then such provisions shall
be enforced to the maximum extent permitted by law, and such invalidity or
unenforceability shall neither invalidate their effect elsewhere nor affect the
validity or enforceability of the other provisions of this Agreement. Any
failure or delay of either party in exercising any right hereunder (including
without limitation, to the right to require performance of any provision of this
Agreement) shall not be deemed to be a waiver or relinquishment of such right.
Any express waiver or relinquishment of a term or condition of this Agreement
shall not be binding or effective unless made in writing signed by the party
waiving or relinquishing its rights.

12.12. Entire Agreement. This Agreement, together with any schedules and
attachments hereto, constitutes the entire and only agreement between the
parties regarding its subject. No modification, change or amendment of this
Agreement shall be binding upon the parties except by mutual express consent in
writing executed by a duly authorized officer or representative of each of the
parties.

12.13. Captions. Captions and headings used in this Agreement are for
convenience only, and shall not be of any force and effect in construing this
Agreement.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their duly authorized officers as of the day and year first
hereinabove written.

 

SUPPLIER: Crimson Trace Corporation By:  

/s/ Brian D. Murphy

Name:   Brian D. Murphy Title:   President S&W: Smith & Wesson Inc. By:  

/s/ Mark P. Smith

Name:   Mark P. Smith Title:   President