Exhibit 10.1 

EXECUTION VERSION  



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










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





i







	
 

	
 

	
 

	
 

	
 


	
 

	
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





ii







	
 

	
 

	
 

	
 

	
 


	
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





iii







	
 

	
 

	
 

	
 

	
 


	
 

	
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

	
 





iv







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 


1







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  


2







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,


3







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. 


4







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






5







	
 

	
 


	
 

	
                              (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, 


6







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.


7







                              (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.


8







                    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 


9







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 


10







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 


11







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.


12







                                     (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; 


13







                                     (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. 


14







                                     (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: 


15







                                     (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; 


16







                                     (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 


17







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 


18







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 


19







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. 


20







                                     (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 


21







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 


22







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.


23







                    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 


24







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.


25







                    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.


26







                    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 


27







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;


28







                              (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;


29







                              (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, 


30







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 


31







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.


32









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.


33







                    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 


34







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.


35







                    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 


36







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 


37







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 


38







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;


39







                              (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. 


40







                    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 


41







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).


42







                              (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 


43







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. 


44







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 


45







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:


46







	
 

	
 

	
 


	
 

	
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





47







	
 

	
 

	
 


	
 

	
 

	
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 


48







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 


49







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.


50







                    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.


51







                     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.


52







                    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







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







                    “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







                    “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







                    “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







                    “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







	
 

	
 

	
 


	
 

	
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)


	
 

	
 

	
 





60







                    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




 

 




 

 


	
      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




 

 

2