Exhibit 10.12


 


[Freedom Group, Inc. Letterhead]


 


PERSONAL & CONFIDENTIAL


NOT VALID UNLESS EXECUTED BY BOTH PARTIES


 


August 31, 2009


 


Mr. Paul
A. Miller


13202 Stable Brook Way


Herndon, VA 20171


 


Re:                             Purchase
and Separation Agreement and General Release


 


Dear Paul:


 


This letter agreement (this “Agreement”) confirms your
resignation from your employment with Freedom Group, Inc. (the “Company”)
and the Company’s subsidiaries, affiliates and related entities, and your
resignation from the Boards of Directors of the Company and its subsidiaries,
affiliates and related entities, in each case, effective as of August 31,
2009 (the “Separation Date”).  By
signing this Agreement, you agree to the terms and conditions set forth below.


 


A.                                   Purchase and
Sale of Company Stock and Options.  Subject to your compliance with the
obligations set forth in this Agreement, the Company agrees to the following:


 


1.                                       Vesting of
Common Stock.  Pursuant to
the terms of that certain Restricted Stock Agreement, dated December 12,
2007, as amended (the “Restricted Stock Agreement”), upon your
resignation from the Company on the Separation Date, 57,510 shares of your
restricted common stock of the Company (the “Common Stock”) granted
pursuant to the Restricted Stock Agreement shall vest (the “Vested
Common Stock”).  The remaining 22,684
shares of your restricted Common Stock shall remain unvested and shall be
cancelled effective upon the Separation Date (the “Unvested Common
Stock”).


 


2.                                       Vesting of
Options.  Pursuant to the terms of that
certain Non-Qualified Stock Option Award Agreement dated [May 14, 2008]
(the “Option Award Agreement”), upon your resignation from the
Company on the Separation Date, options to purchase the Common Stock granted
pursuant to the Option Award Agreement (the “Options”) (i) to
purchase 127,392 shares of Common Stock shall vest (the “Vested Options”)
and (ii) to purchase 171,918 shares of Common Stock 


 


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shall remain unvested and shall be cancelled effective upon the Separation
Date (the “Unvested Options”).


 


3.                                       Purchase and
Sale.  On the terms and subject to
the conditions of this Agreement, the Company hereby agrees to purchase, and
you agree to sell to the Company, (i) all of the Vested Common Stock for
an aggregate price of $391,068.00 (the “Common Stock Purchase Price”)
and (ii) all of the Vested Options for an aggregate price of $541,416.00
(the “Option Purchase Price” and, collectively with the Common Stock
Purchase Price, the “Purchase Price”).


 


4.                                       Closing.  The closing of the purchase and sale of the
Vested Common Stock and Vested Options contemplated by this Agreement (the “Closing”)
shall take place on the Effective Date, as that term is defined in Section J(4) below.


 


5.                                       Delivery of and
Payment for the Company Stock.  At the Closing,


 


(a)                                  you will
deliver to the Company any certificates representing the Company Stock and/or
the Options; and


 


(b)                                 the Company
will pay you the Purchase Price by wire transfer of immediately available funds
to a bank account specified by you.


 


B.                                     Severance
Payment and Additional Payment.


 


1.                                       Severance
Payment. In accordance with Section 6(f) of the Employment
Agreement, the Company shall:


 


(a)                                  Continue to pay
to you your base salary of $350,000.00 per year from the Separation Date until
the one-year anniversary of the Separation Date in semi-monthly installments in
accordance with the Company’s standard payroll practices, and


 


(b)                                 Pay you at
Closing your accrued incentive compensation through August 31, 2009 in the
amount of $233,333.00.


 


2.                                       Additional
Payment. As a further inducement for you to enter into this Agreement, the
Company will pay to you, in addition to the Purchase Price and the Severance
Payment, the sum of $2,639,183.00, as follows:


 


(a)                                  At the
Closing:  $639,183.00;


 


(b)                                 On the first
anniversary of the Closing: 
$1,000,000.00;


 


(c)                                  On the second
anniversary of the Closing:  $500,000.00;
and


 


(d)                                 On the third
anniversary of the Closing:  $500,000.00


 


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In each case, such payment will be by wire transfer of immediately
available funds to a bank account specified by you.  In the event that any such day is not a
business day, such payment shall be made on the next succeeding business day.


 


C.                                     Company
Representations and Warranties.  The Company hereby represents and warrants to
you that:


 


1.                                       Corporate
Organization; Authority to Conduct Business.  The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware.  The Company has all corporate
power and all material governmental licenses, authorizations, consents and
approvals required to carry on its business as now conducted and as proposed to
be conducted and to own, operate and lease its properties and assets.


 


2.                                       Authority.  The Company has the requisite corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder.


 


3.                                       Legal and
Binding Agreement.  This
Agreement has been duly executed and delivered by the Company and constitutes a
legal, valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms.


 


D.                                    Miller
Representations and Warranties.  You hereby represent and warrant to the
Company that:


 


1.                                       Legal and
Binding Agreement.  This
Agreement has been duly executed and delivered by you and constitutes a legal,
valid and binding agreement by you, enforceable against you in accordance with
its terms.


 


2.                                       Title.  The Vested Common Stock, Unvested Common
Stock, Vested Options and Unvested Options constitute all of the outstanding
equity interests of the Company beneficially owned by you.  You own the Vested Common Stock and Vested
Options beneficially and of record, free and clear of any encumbrances and upon
the Closing will transfer to the Company good and valid title to the Common
Stock free and clear of any encumbrances.


 


3.                                       No Other
Representations.  Except as
set forth herein, no representations or warranties have been made to you by the
Company or any officer, employee, agent or affiliate of the Company with
respect to this Agreement or the transactions contemplated hereby.


 


E.                                      Miller’s
Obligations.


 


1.                                       Except as may
be required by law, you will not disclose the contents or substance of this
Agreement to anyone except members of your immediate family and any tax or
legal counsel you may consult regarding the meaning or effect hereof, and you
will instruct each of the foregoing not to disclose the same.


 


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2.                                       You agree to
provide assistance to the Company and its subsidiaries, affiliates and related
entities by making yourself available on a reasonable basis to provide
information to, and to consult with, the Company and its subsidiaries,
affiliates and related entities on matters about which you have knowledge as a
result of your employment, including
but not limited to all matters (formal or informal) in connection with any
investigations, litigation (potential or ongoing) and administrative, regulatory or other proceedings which currently
exist, or which may have arisen prior to or which arise following the signing
of this Agreement.  Such cooperation will
include, but not be limited to, your willingness to be interviewed by
representatives of the Company and its subsidiaries, affiliates and
related entities and to participate in
any such proceedings by deposition or testimony.  Any reasonable expenses you incur as a result of such
assistance or cooperation will be borne by the Company.  In
the event that you are required to retain separate legal counsel with respect
to such deposition or testimony, the Company will reimburse you, or cause you
to be reimbursed, for such reasonable costs thereof.


 


3.                                       In the event
that you are subpoenaed or otherwise required by order of a court of competent
jurisdiction or other legal process to appear in connection with any matter or
proceeding involving the Company or its subsidiaries, affiliates and related
entities, you will notify the Company in accordance with the notice provisions
set forth in Section K(1) below at least fifteen (15) business
days in advance of such appearance, unless to do so would place you in
violation of the subpoena, court order or other legal process, in which case
you shall give as much notice as possible without placing yourself in violation
of the subpoena, court order or other legal process.


 


F.                                      Employment
Agreement; Management Board Member Agreement.


 


1.                                       Except as set
forth elsewhere in this Section F, the Executive Employment
Agreement entered into between you and Remington Arms Company, Inc. (“Remington”)
as of the 31st day of October, 2008 (the “Employment
Agreement”, capitalized terms used but not defined in this Section F
having the meanings set forth in the Employment Agreement) shall cease to have
any further force or effect as of the Separation Date, and by signing this
Agreement you are acknowledging that no further payments or other compensation
or benefits, other than as provided herein, are due to you thereunder or
hereunder.


 


2.                                       Subject to your
completion and submission of the appropriate election forms, you will be
permitted to continue your health, dental and prescription drug coverage under
the Remington’s Group Benefits Plan (as such Plan may be amended from time to
time) pursuant to COBRA (see Section I(5) below) at your
expense until the earlier of (i) the second anniversary of the Separation
Date, and (ii) the date you first become eligible for substantially
equivalent insurance coverage provided by any other entity following
termination.


 


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3.                                       Each of the
following sections of the Employment Agreement will continue in full force and
effect according to their terms as if set forth in their entirety in this
Agreement:


 


(a)                                  your
obligations under Sections 7 (Unauthorized Disclosure),
8 (Non-Competition), 9 (Non-Solicitation of Employees),
10 (Non-Solicitation of Customers), 11 (Return of Property),
12 (Non-Disparagement), 13 (Failure to Comply with Covenants) and
14 (Intellectual Property); provided, however, that, the limitations set forth in the Employment
Agreement not withstanding, your obligations in respect of each such section
shall continue for a period of three years following the Separation Date;


 


(b)                                 your rights
under Section 17 (Indemnification); and


 


(c)                                  the mutual
obligations and understandings under Section 18 (Compliance with Section 409A),
Section 19(a) (Arbitration), (b) (Governing Law; Consent to
Jurisdiction) and (c) (Taxes).


 


4.                                       The Management
Board Member Agreement entered into between you and Bushmaster Holdings, LLC,
effective as of August 1, 2008, shall cease to have any further force or
effect as of the Separation Date, and by signing this Agreement you are
acknowledging that no further payments or other compensation or benefits, other
than as provided herein, are due to you thereunder or hereunder


 


G.                                     General Release
and Waiver.  You
acknowledge that the payments and benefits provided for in Sections B
and F above are conditioned upon your executing a General Release and
Waiver which is attached to this Agreement as “Exhibit A.”


 


H.                                    Mutual
Obligations and Understandings.


 


1.                                       Without
limiting the obligations set forth in Section F(3)(a) above,
you represent that you have not disparaged, and will not disparage, directly or
indirectly, the Company or any of the other Releasees (as defined in Exhibit A),
and you will not make any comments or statements, written or oral, that reflect
adversely on any of them, nor will you make any comments or statements, written
or oral, regarding the Company or any of the other Releasees in any public
forum, other than factual statements about your responsibilities and
information about the Company or any of the other Releasees that is in the
public domain, without the prior written approval of the undersigned or his
designee.  The Company agrees that the
Company’s controlling shareholders, directors and officers will not, directly
or indirectly, disparage you.


 


2.                                       By entering
into this Agreement, neither the Company nor any of the other Releasees admits,
and each specifically denies, any liability, wrongdoing or violation of any
law, statute, regulation or policy. 
Nothing herein shall be deemed to constitute an admission of wrongdoing
by the Company or any of the other 


 


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Releasees.  Neither this
Agreement nor any of its terms shall be used as an admission or introduced as
evidence as to any issue of law or fact in any proceeding, suit or action,
other than an action to enforce this Agreement.


 


3.                                       You agree that
if you materially breach any provision of this Agreement or the provisions of
the Employment Agreement that expressly survive, in addition to any other legal
or equitable remedy the Company or the other Releasees may have, you will
reimburse the Company and/or the other Releasees for all of its/their
reasonable attorneys’ fees and costs incurred to enforce this Agreement and/or
the surviving provisions of the Employment Agreement, to the fullest extent
permitted by applicable law.  In the
event that the Company materially breaches any provision of this Agreement, in
addition to any other legal or equitable remedy you may have, the Company will
reimburse you for all of your reasonable attorneys’ fees and costs incurred to
enforce this Agreement, to the fullest extent permitted by applicable law.


 


I.                                         Obligations
Unrelated to this Agreement.  Regardless of whether you sign this
Agreement, the following shall apply:


 


1.                                       You will be
paid for all earned but unused vacation days as of the Separation Date; provided; however, that such payment is deemed part of the
payments to be paid pursuant to Section B.


 


2.                                       You are deemed
to have resigned from all officer and director positions at the Company and its
subsidiaries, affiliates and related entities, effective as of the Separation
Date.  Should your signature be required
on any other document to effect the foregoing, you will provide it immediately
upon request.


 


3.                                       You are
required to return to the undersigned all records, materials and other property
you have in your possession or control that are the property of the Company and
its subsidiaries, affiliates and related entities as soon as possible.


 


4.                                       You will comply
with the surviving obligations set forth in the Employment Agreement as if set
forth in their entirety in this Agreement. 
(See Section F(3) above.)


 


5.                                       Your coverage
under the Remington Group Benefits Plan will continue until August 31,
2009.  You will be given separate
information regarding your right to continue your coverage, as required by the
Consolidated Omnibus Budget Reconciliation Act of 1986 (“COBRA”).  If you decline to enter into this Agreement,
the premiums will be your sole responsibility. 
In such instance, you may be eligible for a COBRA subsidy in accordance
with the American Recovery and Reinvestment Act of 2009 (the “Stimulus Act”),
which was signed into law on February 17, 2009, and which permits eligible
employees to pay only thirty-five percent (35%) of their COBRA premiums for up
to nine (9) months.  Separate
information will be provided to you about this benefit as well.


 


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6.                                       You are fully
vested in your account balances under the Remington Arms Company 401(k) Plan.


 


7.                                       Your
participation in all other benefit plans will cease as of the Separation Date.


 


J.                                        Consideration
Period.  By signing this Agreement in
the space provided below and returning it to the undersigned, you are
confirming your acceptance of the terms and conditions set forth herein, and
you are acknowledging the following:


 


1.                                       Because the
obligations as set out in this Agreement (including Exhibit A)
represent a complete waiver and release of all claims that you have against the
Company and the other Releasees based on your employment and the cessation
thereof, you should review it carefully before signing.  You can take up to twenty-one (21) days from
your receipt of this Agreement to consider its meaning and effect and to
determine whether or not you wish to enter into it.  During that time, you are advised to consult
with an attorney.  If you desire to
accept this offer then you must sign and return this Agreement no later than
the 21st day of September, 2009.


 


2.                                       If you sign
this Agreement before the end of the twenty-one (21) day consideration period,
you are doing so voluntarily.


 


3.                                       In addition,
you may take up to seven (7) days after signing this Agreement to revoke
your signature.  Any revocation shall be
made in writing to the undersigned.


 


4.                                       This Agreement
will not become effective, and your rights to payments under Sections B
and F(2) will not accrue, until after the seven (7) day period
expires without revocation.  Provided
that you sign this Agreement within the consideration period and do not revoke
your signature, the eighth (8th) day following the end of the revocation period will be the “Effective
Date”.


 


5.                                       If you elect
not to sign this Agreement, or if you revoke your signature, you will not
receive the payments or benefits described in Sections B and F(2).


 


K.                                    Miscellaneous.


 


1.                                       All notices,
requests and other communications to any party hereunder shall be in writing
(including facsimile transmission) and shall be given,


 


if to the Company, to:


 


Freedom Group, Inc.


870 Remington Drive


P.O. Box 700


Madison, NC  27025-0700


Attention:  General Counsel


 


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With a copy to (which shall not constitute notice):


 


Cerberus Capital Management, L.P.


299 Park Avenue


New York, NY  10171


Facsimile No.:  (212) 891-1540


Attn:  George Kollitides


 


With an additional copy to (which shall not constitute notice):


 


Milbank, Tweed, Hadley & McCloy LLP


One Chase Manhattan Plaza


New York, NY  10005


Facsimile No.:  (212) 822-5735


Attn:  Roland Hlawaty, Esq.


 


if to you, to:


 


Paul
A. Miller


13202 Stable Brook Way


Herndon, VA 20171


 


2.                                       This Agreement
(including Exhibit A) constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior
negotiations, representations or agreements relating thereto, whether written
or oral, with the exception of any agreements expressly described herein as
having created continuing rights and obligations.  You represent that in executing this
Agreement, you have not relied on any promise, representation, inducement,
agreement or statement not set forth herein. 
No amendment or modification of this Agreement shall be valid or binding
upon the parties unless in writing and signed by both parties.


 


3.                                       No failure by
any party to insist upon strict compliance with any term of this Agreement,
enforce any right, or seek any remedy upon any default of the other will
affect, or constitute a waiver of, the first party’s right to insist upon such
strict compliance, enforce that right, or seek that remedy with respect to that
default or any prior, contemporaneous, or subsequent default.  No custom or practice of the parties at
variance with any provision of this Agreement will affect or constitute a
waiver of any party’s right to demand strict compliance with all provisions of
this Agreement.


 


4.                                       In the event
that any one or more of the provisions of this Agreement is held to be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions will not in any way be affected or impaired thereby.  Moreover, if any one or more of the provisions
contained in this Agreement is held to be excessively broad as to duration,
scope, activity or subject, such 


 


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provisions will be construed by limiting and reducing them so as to be
enforceable to the maximum extent compatible with applicable law.


 


5.                                       This Agreement
will be binding upon, inure to the benefit of, and be enforceable by and
against the respective heirs, legal representatives, successors and assigns of
the parties to this Agreement.


 


6.                                       This Agreement
may be executed in counterparts (which may be exchanged by facsimile or email),
each of which shall be deemed an original and both of which when taken together
shall constitute one and the same instrument.


 


7.                                       This Agreement
will be governed by and construed in accordance with the laws of the State of
Delaware without regard to the conflict of law principles thereof.  Any dispute arising under this Agreement will
be resolved in accordance with Section 19(a) of the Employment
Agreement, as if set forth in its entirety in this Agreement, and any such
action or proceeding shall be heard in the State of Delaware.


 


8.                                       Nothing in this
Agreement shall restrict you from providing consultation services to the
Company after the Separation Date, for no additional remuneration, upon the
mutual agreement of you and the Company.


 


	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  FREEDOM
  GROUP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Theodore H.
  Torbeck

  
	
   

  	
  Name:
  Theodore H. Torbeck

  
	
   

  	
  Title: Chief Executive
  Officer

  



 


 


I am signing this Agreement knowingly, voluntarily and with full
understanding of its terms and effects. 
I have not relied on any representations or statements not set forth
herein.


 


 


	
  /s/
  Paul A. Miller

  	
   

  
	
  Paul A. Miller

  	
   

  
	
   

  	
   

  
	
  Date:

  	
  9/9/2009

  	
   

  
			



 


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EXHIBIT A


 


GENERAL RELEASE AND WAIVER OF CLAIMS


 


In consideration of the payment by Remington Arms Company, Inc. (“Remington”)
of the severance and other benefits to me as set forth in Sections B
and F of the Agreement to which this GENERAL RELEASE AND WAIVER OF CLAIMS
(this “Release”) is attached as Exhibit A, I, PAUL A.
MILLER, agree to and do finally and completely release and forever discharge
Remington, and its direct and indirect parents (including Freedom Group, Inc.
and Cerberus Capital Management, L.P.) and its/their subsidiaries and its/their
affiliates, and its/their respective officers, members, managers, directors,
partners, shareholders, investors, principals, executives, consultants,
employees and agents, and any of their respective predecessors and successors
in interest and assigns (collectively, the “Releasees”) from any and all
liabilities, claims, obligations, demands, and causes of action of any and
every kind or nature whatsoever, in law, equity or otherwise, known or unknown,
suspected or unsuspected, disclosed and undisclosed, which I now have, own or
hold or claim to have, own or hold, against each or any of the Releasees or
arising from and/or relating to my employment with Remington and any of the
other Releasees and termination of that employment.


 


This Release includes, without limiting the generality of the
foregoing, (a) claims arising under any provision of federal, state, or
local law, any federal, state or local anti-discrimination statute, ordinance
or regulation, the Age Discrimination in Employment Act of 1967 (“ADEA”),
the Americans with Disabilities Act, Title VII of the Civil Rights Act of 1964,
the Civil Rights Act of 1991 and the Civil Rights Act of 1866, the Employee
Retirement Income Security Act of 1974, the New York State Human Rights Law,
and the New York Labor Laws, and the North Carolina Equal Employment Practices
Act and the North Carolina Labor Laws, the Virginia Human Rights Act and the
Virginia Labor Laws, and any other similar state or local employment law (if
and to the extent applicable and as any of the foregoing may be amended from
time to time), and any similar federal, state, or local statutes, ordinances or
regulations, or claims in the nature of a breach of contract, claims for
wrongful discharge, emotional distress, defamation, fraud or breach of the
covenant of good faith and fair dealing, tort and wage or benefit claims (other
than the payments to which I am entitled under the Employment Agreement); (b) my
waiver of all rights to post-termination benefits, and (c) my waiver of
any claims to other severance or termination payments or benefits.


 


Notwithstanding the foregoing, this Release does not include actions
brought by me (or my personal representative) to enforce any rights I have (a) under
the Agreement, (b) to secure vested benefits under any other employee
benefit plan of Remington of which I am a participant except as otherwise
released in accordance with the preceding paragraph, (c) to seek
indemnification under the Remington’s bylaws or other corporate governance
documents, or (d) to seek worker’s compensation or unemployment
compensation benefits.  This Release also
does not apply to any rights or claims that I might have which arise as a
result of any conduct that occurs after the date this Release is signed by
me.  If I violate the terms of this
Release, I agree to pay the Releasees’ costs and reasonable attorneys’ fees to
the fullest extent permitted by applicable law.


 


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I acknowledge that, among other rights subject to this Release, I am
hereby waiving and releasing any rights I may have under the ADEA, that this
Release is knowing and voluntary, and that the consideration given for this
Release is in addition to anything of value to which I was already entitled as
an employee of Remington.


 


I acknowledge that I  may hereafter
discover claims or facts in addition to or different from those which I now
know or believe to exist with respect to the subject matter of this Release and
which, if known or suspected at the time of executing this Release, may have
materially affected this Release or my decision to execute this Release.  Nevertheless, I hereby waive any right, claim
or cause of action that might arise as a result of such different or additional
claims or facts.


 


I agree that if any court or governmental agency assumes jurisdiction
over any claim, demand, charge, complaint, lawsuit or other legal action that,
in whole or in part, pertains to my employment or the cessation thereof, I
shall not be entitled to any monetary or other benefit that results from such
claim, demand, charge, complaint or lawsuit, except as otherwise expressly
required by applicable law.


 


By signing the Agreement and this Release, I am acknowledging that no
further payments or other compensation or benefits, other than as provided in
the Agreement, are due to me thereunder or hereunder.


 


As provided by law, I have been advised in the Agreement to carefully
consider the matters outlined in the Agreement and this Release and to consult
with such professional advisors as I deem appropriate, including a lawyer of my
own choice.  I acknowledge that I have
had at least twenty-one (21) days from receipt of this Release to consider the
terms and conditions set forth herein, and I understand that I have a period of
seven (7) days following my execution of this Release to revoke my
signature, in which event this Release shall not be effective or binding on the
parties, and I will not receive the payments or benefits described in Sections B
and F of the Agreement.  I
understand fully and acknowledge the terms and consequences of this Release,
and I voluntarily accept them.


 


 


ACKNOWLEDGED AND AGREED TO,


INTENDING TO BE LEGALLY BOUND
HEREBY:


 


 


	
  Dated:

  	
  9/9/2009

  	
   

  	
  /s/ Paul A. Miller

  
	
   

  	
  Paul
  A. Miller

  



 


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