Exhibit
10.14


 


	
  PRIVILEGED AND CONFIDENTIAL

  	
   

  	
   

  
	
  ATTORNEY WORK PRODUCT

  	
   

  	
  [EXECUTION COPY]

  



 


PRODUCT LIABILITY SERVICES


AND DEFENSE COORDINATION AGREEMENT


 


PRODUCT LIABILITY SERVICES AND DEFENSE COORDINATION AGREEMENT, dated as
of December 1, 1993, among Raci Acquisition Corporation, a
Delaware Corporation to be renamed Remington Arms Company, Inc. (the “Buyer”),
E.I. du Pont de Nemours and Company, a Delaware corporation (“DuPont”), and
Remington Arms Company, Inc., a Delaware corporation to be renamed Sporting
Goods Properties, Inc. (“RAC”).


 


W I T N E S S E T H
:


 


WHEREAS, the Buyer, DuPont and RAC have entered into an Asset Purchase
Agreement, dated as of November 24, 1993 (the “Asset Purchase Agreement”),
providing for the purchase by the Buyer of the RAC Business from RAC and the
Fishline Assets and the Related RAC Assets from DuPont;


 


WHEREAS, pursuant to Sections 8.2 (a)(vii), 8.2 (b)(iii) and 8.2 (b)(iv) of
the Asset Purchase Agreement, DuPont and RAC have indemnified the Buyer against
any and all Losses resulting from or arising out of, among other things,
certain Product Liabilities, and the Buyer has indemnified DuPont and RAC
against any and all Losses resulting from or arising out of, among other
things, certain other Product Liabilities; and


 


WHEREAS, the Buyer, DuPont and RAC desire to set forth certain of the
rights, duties and obligations of the parties hereto with respect to the
handling of the Claims underlying such indemnification obligations;


 


NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the Buyer, DuPont and RAC agree as follows:


 


SECTION I


 


Definitions


 


1.1.            Definitions.
All capitalized terms used but not defined herein shall have the meanings
assigned thereto in the Asset Purchase Agreement. In addition, the following


 

















 


terms,
as used herein, shall have the following respective meanings:


 


“Agreement”: this Product Liability Services
and Defense Coordination Agreement, as the same may be amended, supplemented,
waived or otherwise modified from time to time.


 


“Assumed Claims”: Product Liabilities
included in the Assumed
Liabilities described in Section 2.5 (a)(iv) of the Asset Purchase
Agreement.


 


“Claims”: any and all claims, demands,
proceedings, actions and causes of action, cross-actions, third-party actions,
suite, judgments, debts, dues, liens, actual or punitive damages, additional or
multiple damages, whether in contract, tort or otherwise, including, but not
limited to, claims of negligence, gross negligence, breach of warranty, strict
or absolute liability, violations of law or misfeasance or nonfeasance of any
sort.


 


“Covered Claims”: a collective reference to
all Assumed Claims, Discontinued Product Claims, Excess Claims, Post-Closing
Claims and Undisclosed Claims.


 


“Disclosure Schedule”: Schedule 2.5 (a)(iv) to
the Asset Purchase Agreement.


 


“Discontinued Product Claims”: Product
Liabilities relating to products formerly manufactured or offered for sale by
RAC or any of its subsidiaries, affiliates or licensees, or any predecessors
thereof, or with respect to which RAC is alleged to bear legal responsibility,
but which are not being manufactured or offered for sale by RAC or any of its
subsidiaries, affiliates or licensees on the Closing Date (without regard to
whether the Occurrence giving rise to any such Product Liability happened prior
to, on or after the Closing Date).


 


“Excess Claims”: Product Liabilities set
forth on the Disclosure Schedule and in an amount greater than the Product
Liability Threshold (as such threshold may be modified pursuant to Section 2.5
(a)(iv) of the Asset Purchase Agreement).


 


“Post-Closing Claims”: Product Liabilities
related to Occurrences happening after the Closing Date.


 


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“Product Liabilities”: all liabilities,
obligations and commitments of any nature, whether known or unknown, absolute,
accrued, contingent or otherwise, arising from or relating to Claims involving
the products of the Business, including Claims for personal injury, wrongful
death or economic or property loss, but not including the liabilities for
warranties of the type assumed by the Buyer under clause (vi) of Section 2.5(a) of
the Asset Purchase Agreement.


 


“SGP”: Sporting Goods Properties, Inc.


 


“Undisclosed Claims”: Product Liabilities,
other than Discontinued Product Claims, related to Occurrences happening prior
to the Closing and not set forth on the Disclosure Schedule.


 


For purposes of the definitions of
“Post-Closing Claims” and “Undisclosed Claims,” DuPont, RAC and the Buyer agree
that “Product Liabilities” will include claims related to firearms that are
manufactured by third parties as “replicas” or otherwise and sold or advertised
using the Remington name.


 


SECTION II


 


General
Provisions


 


2.1.            Conduct of the Defense by the
Buyer. Except as otherwise provided herein, the defense of all Covered Claims
shall be managed at the direction of the Buyer, and, accordingly, all decisions
with respect to any action to be taken, or not to be taken, in connection with
any Covered Claim, including but not limited to the selection of outside counsel
and the retention of consultants and expert witnesses, shall be in the
discretion of the Buyer.


 


2.2.            Expenses. The Buyer shall
provide DuPont with monthly statements setting forth the costs and expenses,
including but not limited to costs and expenses with respect to attorneys,
accountants, consultants and expert witnesses (including consultants and expert
witnesses who are employees of the Buyer) and expenses attributable to travel,
accommodations and the time spent by employees of the Buyer on Discontinued
Product Claims, Excess Claims and Undisclosed Claims (all such time to be
billed in accordance with a schedule of hourly rates to be mutually agreed
upon),


 


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incurred by the Buyer in defending Discontinued Product Claims, Excess
Claims and Undisclosed Claims, and DuPont and RAC shall reimburse the Buyer for
such amounts within 30 days of the receipt of each such monthly statement. The
Buyer shall use its reasonable efforts to ensure that the costs and expenses incurred in defending Discontinued Product
Claims, Excess Claims and Undisclosed Claims shall be reasonable.


 


SECTION III


 


Provisions
with Respect to


Discontinued Product Claims


 


3.1.            Conduct
of the Defense. All Discontinued Product Claims shall be handled in
accordance with a general litigation strategy mutually acceptable to the Buyer
and DuPont, which shall include, among other things, a budget for defense
costs. The Buyer shall conduct the defense, on behalf of DuPont and RAC and at
their expense, of all Discontinued Product Claims; provided,  that
DuPont may elect to assume the defense of any such Claim by delivering to the
Buyer, no later than a period of time (as mutually agreed between the parties)
after the initiation of any lawsuit or administrative proceeding in respect of
such Claim, notice of such election. Such election shall become effective
fifteen days after the delivery to the Buyer of notice thereof. In the event of
such election, except as otherwise provided in Section 3.3 below, the
defense of all such Discontinued Product Claims shall be managed at the
direction of DuPont, and, accordingly, all decisions with respect to any action
to be taken, or not to be taken, in connection with any such Discontinued
Product Claim shall be in the discretion of DuPont.


 


3.2.            General
Conditions—Discontinued Product Claims Defended by the Buyer. The Buyer shall
consult with DuPont from time to time concerning the progress of the Buyer’s
defense of Discontinued Product Claims and the status of the budget for defense
costs, shall notify DuPont of all
major developments in such Discontinued Product Claims and, to the extent
reasonably possible, shall consult with DuPont with respect to any action that
the Buyer proposes to take or not to take that will depart in any material
respect from the general litigation strategy agreed upon by the parties hereto.
All outside counsel and expert witnesses shall be retained by the Buyer on behalf
of DuPont


 


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and RAC, subject to DuPont’s approval (not to be unreasonably withheld),
and the Buyer shall not resolve or make any decision whether to pursue an
appeal of any judgment in respect of any such Discontinued Product Claim
without the consent of DuPont (such consent not to be unreasonably withheld), provided
that the Buyer may take any steps necessary to preserve any rights of appeal.


 


3.3.            General
Conditions—Discontinued Product Claims Defended by DuPont. DuPont shall
consult with the Buyer from time to time concerning the progress of all
Discontinued Product Claims being defended by DuPont, shall notify the Buyer of
all major developments in any such Discontinued Product Claim and, to the
extent reasonably possible, shall consult with the Buyer with respect to any
action or inaction that DuPont proposes to take or refrain from taking that
will depart in any material respect from the general litigation strategy agreed
upon by the parties hereto. Prior to the resolution of any Discontinued Product
Claim being defended by DuPont, DuPont shall consult with the Buyer with
respect to such resolution.


 


SECTION IV


 


Provisions with Respect to


Excess Claims and
Undisclosed Claims


 


4.1.            Notice.
If any party hereto shall become aware of the existence of any Undisclosed
Claim, such party shall give prompt notice to the other parties hereto of such Claim.


 


4.2.            Consultation
with DuPont. All Excess Claims and Undisclosed Claims shall be handled in
accordance with a general litigation strategy mutually acceptable to the Buyer
and DuPont, which shall include, among other things, a budget for defense
costs. The Buyer shall consult with DuPont from time to time concerning the
progress of the Buyer’s defense of Excess Claims and Undisclosed Claims and the
status of the budget for defense costs.


 


4.3.            Resolution
of Claims. The Buyer may resolve any Excess Claim or Undisclosed Claim,
without the consent of DuPont and RAC, for an amount that does not exceed an
amount as mutually agreed between the parties. The Buyer may resolve any Excess
Claim or Undisclosed Claim for an amount in excess of such mutually agreed
amount with the


 


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consent of DuPont (such consent not to be
unreasonably withheld). The Buyer shall not make any decision whether to pursue
an appeal of any judgment in respect of any Excess Claim or Undisclosed Claim
without the consent of DuPont (such consent not to be unreasonably withheld), provided
that the Buyer may take any steps necessary to preserve any rights of appeal.


 


SECTION V


 


Provisions
With


Respect
to Assumed Claims


 


5.1.            Consultation with DuPont. The
Buyer shall review with DuPont no less frequently than once each quarter the
progress of the Assumed Claims, and shall consult with DuPont with respect to
the general litigation strategy to be followed by the Buyer in defending such
Claims.


 


5.2.            Resolution of Claims. The
Buyer may resolve any Assumed Claim for an amount not to exceed an amount as
mutually agreed between the parties without the consent of DuPont or RAC. The
Buyer may resolve any Assumed Claim for an amount in excess of such mutually
agreed amount with the consent of DuPont (such consent not to be unreasonably
withheld).


 


5.3.            Expense Statements. Promptly
following the end of each fiscal quarter of the Buyer, the Buyer shall provide
DuPont with statements setting forth the costs and expenses incurred by the
Buyer during such quarter in respect of the Assumed Claims. The Buyer shall
provide DuPont with reasonable documentation of such costs and expenses at
DuPont’s request.


 


SECTION VI


 


Provisions With


Respect
to Post-Closing Claims


 


6.1.            Notice. If DuPont or RAC
shall become aware of the existence of any Post-Closing Claim, DuPont or RAC,
as the case may be, shall promptly notify the Buyer of such Claim. If the Buyer
shall become aware of the existence of any lawsuit or administrative proceeding
in respect of a Post-Closing Claim to which DuPont or, following RAC’s


 


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change of name to SGP, SGP is a named party,
the Buyer shall promptly notify DuPont or RAC, as applicable, of such Claim.
Each party to the Agreement shall provide or shall cause to be provided to the
other parties hereto from time to time copies of all complaints and responses
thereto, and any other filings reasonably requested by any party to the
Agreement, received by it concerning any Post-Closing Claim with respect to
which such other parties are named parties.


 


6.2.            Resolution of Claims. If
DuPont or SGP is a named party in any Post-Closing Claim, the Buyer shall not
consent to the entry of any judgment or enter into any settlement that provides
for injunctive or other non-monetary relief affecting DuPont or RAC or that
does not include as an unconditional term thereof the giving by each claimant or
plaintiff to DuPont or RAC, as applicable, of a release from liability with
respect to such Post-Closing Claim at least as extensive as the release from
liability to be given to the Buyer in respect thereof unless, in each case, the
consent of DuPont or RAC, as applicable, shall have been obtained. The Buyer
shall promptly notify DuPont and RAC of the disposition of any Post-Closing
Claim with respect to which DuPont or SGP was a named party.


 


SECTION VII


 


Services
to be Provided by the Buyer


 


7.1.            Description of Services. In
connection with the Discontinued Product Claims for which DuPont has assumed
the defense in accordance with Section 3.1 hereof, at DuPont’s request,
the Buyer, on behalf of DuPont, shall provide the following services (provided,
that such services shall only be required to be provided in such manner and at
such times as may be mutually acceptable to the Buyer and DuPont, taking into
consideration the Buyer’s requirements with respect to the conduct of other
litigation):


 


(a)                        review claims, obtain information with respect to factual issues, prepare
exhibits, perform tests, conduct research, and provide advice regarding the
recommended disposition of such Discontinued Product Claims;


 


(b)                       arrange for expert testimony and advice concerning such Discontinued
Product Claims, and do preparatory work in respect of the same;


 


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(c)                        assist in matters of discovery, including interrogatories and requests
for the production of documents;


 


(d)                       provide documentary evidence, to the extent available, to support the
positions of DuPont with respect to such Discontinued Product Claims;


 


(e)                        attend and participate in trials, depositions and other proceedings on
behalf of DuPont;


 


(f)                          assist DuPont in engaging outside counsel to represent DuPont in
connection with such Discontinued Product Claims; and


 


(g)                       make
recommendations to DuPont regarding the handling of such Discontinued Product Claims.


 


7.2.            Payment for
Services. DuPont shall reimburse the Buyer
for all costs and expenses incurred by it in connection with the provision of
the services described in Section 7.1 above, including expenses
attributable to travel, accommodations and the time spent by employees of the
Buyer on such matters (all such time to be billed in accordance with a schedule
of hourly rates to be mutually agreed upon). The Buyer shall use its reasonable
efforts to ensure that the costs and expenses incurred in connection with the
provision of the services described in Section 7.1 shall be reasonable.


 


SECTION VIII


 


Miscellaneous


 


8.1.            Term of the Agreement. This
Agreement shall remain in full force and effect so long as any party hereto
shall have any indemnification obligations pursuant to Sections 8.2(a)(vii),
8.2(b)(iii) (with respect to the Assumed Liabilities described in Section 2.5(a)(iv)
of the Asset Purchase Agreement) or 8.2(b)(iv) of the Asset Purchase
Agreement.


 


8.2.            Standard of Care. In
conducting the defense of Covered Claims, the Buyer shall not differentiate
among such Claims on the basis of the identity of the party having the
indemnification obligation with respect to any Claim. The Buyer shall use
reasonable, good faith efforts, 


 


8

















 


diligence and care in the management of the defense
of the Covered Claims and in the provision of the services described in Section 7.1
above. In the absence of gross negligence, recklessness or willful misconduct
by it, the Buyer shall have no liability to DuPont or RAC for any injury, loss
or damage of any nature whatsoever arising out of or relating to such
management or provision of services.


 


8.3.            Reservation of Rights. Any party’s
waiver of any of its rights or remedies afforded hereunder or by law is without
prejudice and shall not operate to waive any other rights or remedies which
that party shall have available to it, nor shall such waiver operate to waive
such party’s rights to any remedies due to a future breach, whether of a like
or different character.


 


8.4.            Designation of Contact Person.
The Buyer and DuPont shall each designate an individual to act as the primary
contact person  with respect to
the consultations and other communications to be engaged in hereunder (each, a
“Contact Person”). The Contact Person designated by DuPont shall act on behalf
of DuPont and RAC. All communications between the parties hereto relating to
the matters described herein shall be addressed to the applicable Contact
Person.


 


8.5.            Notices. All notices,
approvals and elections provided for herein to be effective shall be in writing
(other than approvals in respect of the resolution of any Covered Claim, which
approvals may be given orally) and shall be deemed to have been duly given or
made when delivered personally, or, in the case of telecopy notice or delivery
by a nationally recognized overnight courier, when received, or three days
after being sent by registered or certified mail (return receipt requested),
postage prepaid, as follows:


 


(i)      if
to the Buyer,


 


	
  RACI Acquisition Corporation

  
	
  c/o The Clayton & Dubilier Private

  
	
  Equity Fund IV Limited Partnership

  
	
  270 Greenwich Avenue

  
	
  Greenwich, Connecticut 06830

  
	
  Telecopy:

  	
   

  	
  (203) 661-0544

  
	
  Telephone:

  	
   

  	
  (203) 661-0544

  
	
  Attention:

  	
   

  	
  Clayton & Dubilier Associates IV

  
	
   

  	
   

  	
  Limited Partnership,

  
	
   

  	
   

  	
  attention:  
  Joseph L. Rice III, a general partner

  



 


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With a copy to:


 


Clayton, Dubilier & Rice, Inc.


126 East 56th Street


New York, New York 10022


Telecopy: (212) 355-7629


Telephone: (212) 355-0740


Attention: Richard C. Dresdale


 


and
to:


 


Debevoise & Plimpton


875 Third Avenue


New York, New York 10022


Telecopy: (212) 909-6836


Telephone: (212) 909-6000


Attention: Franci J. Blessberg, Esq.


 


(ii)      if to DuPont,


 


Vice President and Treasurer


E.I. du Pont de Nemours and Company


1007 Market Street


Wilmington, Delaware 19898


Telephone: (302) 773-3995


Telecopy: (302) 773-1536


 


(iii)     if to RAC,


 


Remington Arms Company, Inc.


c/o Administrator,


DuPont Chemical & Energy Operations


Room 8045


DuPont Building


1007 Market Street


Wilmington, Delaware 19898


Telephone: (302) 773-3407


Telecopy: (302) 773-1536


 


With a copy to:


 


General Counsel


E.I. du Pont de Nemours and Company


Legal Department


1007 Market Street


Wilmington, Delaware 19898


 


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Telephone: (302) 774-7202 


Telecopy: (302) 773-4679


 


or to such other address as any party shall have
specified by notice in writing to the other parties hereto.


 


8.6.            Binding Effect/Assignment. This
Agreement shall be binding upon and shall inure to the benefit of each of the
Buyer, DuPont, RAC and their respective successors and permitted assigns.
Nothing in this Agreement shall modify in any way the parties’ indemnification
obligations under the Asset Purchase Agreement. The Agreement may not be
amended, supplemented or otherwise modified except by written agreement of the
parties hereto. Neither this Agreement nor any of the rights or obligations hereunder
of any party hereto may be assigned without the prior written consent of the
other parties hereto, provided that the Buyer may assign this Agreement
to any subsidiary of the Buyer or to any lender to the Buyer or any subsidiary
or affiliate thereof as security for obligations to such lender in respect of
the financing arrangements entered into in connection with the transactions
contemplated by the Asset Purchase Agreement and any refinancings, extensions,
refundings or renewals thereof.


 


8.7.            Reports, Books, Records and Other
Documents: Cooperation. With respect to Covered Claims, each of the parties
hereto shall maintain and retain, for a reasonable period, appropriate reports,
books, records and other documents pertaining to complaints concerning products
that are or may reasonably be expected to be the subject of Covered Claims and
the processing and disposition thereof and litigation files pertaining to
Covered Claims, including but not limited to records of summonses, complaints,
subpoenas and responses thereof, interrogatories and answers to
interrogatories, requests for the production of documents and documents
produced in response thereto, depositions and other forms of testimony,
transcripts of trials and hearings and summaries thereof, briefs, motions,
judgments, orders and opinions of court.


 


DuPont and RAC shall cooperate with the Buyer
in the defense of all Covered Claims, and (i) the reports, books, records
and other documents of DuPont and RAC, if any, with respect to such covered Claims,
including any reports, books, records and other documents pertaining to the
design, test, manufacture, production, packaging, advertising, sale and recall
of products that are or may


 


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reasonably be expected to be the subject of Covered
Claims, and (ii) the personnel of DuPont and RAC (whether in respect of
technical, legal or other matters) shall be made available to the Buyer upon
request in connection with such defense.


 


8.8.            Confidentiality. Each of the
parties hereto shall not disclose, and shall keep confidential, all information
provided to it under this Agreement except for such information as may already
be publicly available (other than as  a
result of any breach by it of this provision) or as may be required by law. In
addition, if it is determined by the parties hereto that it may be necessary or
desirable to enter into a formal joint defense agreement memorializing their
understandings and agreements with respect to the matters covered herein, the
Buyer, DuPont and RAC shall enter into such an agreement.


 


8.9.            Counterparts. This Agreement
may be executed in several counterparts, each of which shall be deemed an
original and all of which shall together constitute one and the same
instrument.


 


8.10.          Governing Law. THIS AGREEMENT SHALL
BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO CONFLICT OF LAWS THEREOF.


 


8.11.          Severability. In the event that
any provision of this Agreement shall be found to be void or unenforceable,
such finding shall not be construed to render any other provision of this Agreement
either void or unenforceable, and all other provisions shall remain in full
force and effect unless the provisions which are invalid or unenforceable shall
substantially affect the rights or obligations granted to or undertaken by
either party.


 


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IN WITNESS WHEREOF, the
undersigned have duly executed this Agreement as of the day and year first above
written.


 


	
   

  	
  RACI ACQUISITION
  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael G
  Babiarz

  
	
   

  	
   

  	
  Name: Michael G Babiarz

  
	
   

  	
   

  	
  Title: Vice President
  and Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  E.I. DU PONT DE NEMOURS
  AND COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard H.
  Heath

  
	
   

  	
   

  	
  Name: Richard H. Heath

  
	
   

  	
   

  	
  Title: Attorney-in-Fact

  
	
   

  	
   

  
	
   

  	
  REMINGTON ARMS COMPANY,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ronald A
  Partnoy

  
	
   

  	
   

  	
  Name: Ronald A Partnoy

  
	
   

  	
   

  	
  Title: Secretary

  



 


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