PROPOSED CHARGING LETTER

CERTIFIED MAIL - RETURN RECEIPT REQUESTED

Bass Pro, Inc. 2500 E. Keamy Springfield, Missouri 65898

Attention: . Jumes Hagale President &. Chief Operating Officer

Dear Mr. Hagale:

The Bureau of Industry and Security, United States Department of Commerce (“BIS”), has reason to believe that Bass Pro, Inc., and its American Rod & Gun division (collectively, “Bass”), of Springfield, Missouri, has committed 408 violations of the Export Administration Regulations (the regulation^"),^ which are issued under the authority of the Export Administration Act of 1979 (the “Act7’).* Specifically, BIS charges that Bass committed the following violations:

The Regulations are currently codified in the Code of Federal Regulations at 15 C.F.R. Parts 730-774 (2004). The violations charged occurred from 1999 through 2004. The Regulations governing the violations at issue are found in the 1999 - 2004 versions of the Code of Federal Regulations (1 S C.F.R. Parts 730-774 (1999-2004)). The 2004 Regulations govern the procedural aspects of this case.

SO U.S.C. app. $ 5 2401- 2420 (2000). From August 21, 1994 through November 12, 2000, the Act was in lapse. During that period, the President, through Executive Order 12924, which had been extended by successive Presidential Notices, the last of which was August 3, 2000 (3 C.F.R., 2000 Comp. 397 (2001)), continued the Regulations in effect under the International Emergency Economic Powers Act (SO U.S.C. $9 1701 - 1706 (2000)) (“IEEPA”). On November 13,2000, the Act was reauthorized by Pub. L. No. 106-SO8 and it remained in effect through August 20, 2001. Executive Order 13222 of August 17, 2001 (3 C.F.R., 2001 Comp., p. 783 (2002)), which has been extended by successive Presidential Notices, the most recent being that of August 6,2004 (69 Fed. Reg. 48763 (Aug. 10,2004)), continues the Regulations in effect under IEEPA.

Bass Pro, Inc. Proposed Charging Letter Page 2

Charges 1-407 (15 C.F.R. tj764.2(a) - Exporting Optical Sighting Devices Without the Required Licenses)

On 407 occasions, between on or about June 7, 1999 and on or about January 11,2004, Bass engaged in conduct prohibited by the Regulations by exporting or causing to be exported optical sighting devices or parts thereof, classified under Export Control Classification Number (“ECCN”) OA987, to various destinations without the Department of Commerce (the “Department”) license, as required by Section 742.7 or 742.17 or both of the Regulations. See Schedules A and B, which are enclosed herewith and incorporated herein by reference. In so doing, Bass committed 407 violations of Section 764.2(a) of the Regulations.

Charge 408 ( 1 5 C.F.R. tj 764.2(i) - Failure to Keep Required Records)

On one of the occasions described in charges 1-407, above, Bass failed to comply with the recordkeeping requirements of the Regulations. Specifically, Bass failed to keep air waybills, invoices, and other sales and shipping records of its export transactions required by Part 762 of the Regulations. See Schedule A, which is enclosed herewith and incorporated herein by reference. I n so doing, Bass committed one violation of Section 764.2(i) of the Regulations.

Accordingly, Bass is hereby notified that an administrative proceeding is instituted against it pursuant to Section 13(c) of the Act and Part 766 of the Regulations for the purpose of obtaining an order imposing administrative sanctions, including any or all of the following:

The maximum civil penalty allowed by law of up to $1 1,000 per v i ~ l a t i o n ; ~

Denial of export privileges; and/or

Exclirsion from practice before BIS.

If Bass fails to answer the charges contained in this letter within 30 days after being served with notice of issuance of this letter, that failure will be treated as a default. (Regulations, Sections 766.6 and 706.7). If Bass defaults, the Administrative Law Judge may find the charges alleged in this letter are true without a hearing or further notice to Bass. The Under Secretary of Commerce for Industry and Security may then impose up to the maximum penalty on each of the charges in this letter.

~~ ~ ~~~

Scc 15 C.F.R. 5 6.4(a)(2).

Bass Pro, Inc. Proposed Charging Letter Page 3

Bass is furthcr notified that i t is entitled to an agency hearing on the record if Bass files a written demand for one with its answer. (Regulations, Section 766.6). Bass is also entitled to be represented by counsel or other authorized representative who has power of attorney to represent it. (Regulations, Sections 766.3(a) and 766.4).

The Regulations provide for settlement without a hearing. (Regulations, Section 766.18). Should you have a proposal to settle this case, you or your representative should transmit it through the attorney representing BIS named below.

The U.S. Coast Guard is providing administrative law judge services in connection with the matters set forth in this letter. Accordingly, Bass’s answer must be filed in accordance with the instructions in Section 766.5(a) of the Regulations with:

U.S. Coast Guard ALJ Docketing Center 40 S. Gay Street Baltimore, Maryland 2 1202-4022

In addition, a copy of Bass’s answer must be served on BIS at the following address:

Chief Counsel for Industry and Security Attention: Peter R. Klason Room H-38.30 United States Department of Commerce 14th Street atid Constitution Avenue, N.W Was hi 11 g t o 11, I). C . 2 02 3 0

Bass Pro, Inc. Proposed Charging Letter Page 4

Peter R. Klason is the attorney representing BIS in this case; any communications that you may wish to have concerning this matter should occur through him. He may be contacted by telephone at (202) 482-5301.

Sincerely,

Acting Director Office of Export Enforcement

Enclosure

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UNITED STATES DEPARTMENT OF COMMERCE BUREAU OF INDUSTRY AND SECURITY

WASHINGTON, D.C. 20230

I n the Matter of )

Bass Pro , Inc. 1 2500 E. Kearny 1

) Respondent. )

1

Springfield, Missouri 65898

- _ _ - ~ _ _ _ _

SETTLEMENT AGREEMENT

This Settlement Agreement (“Agreement”) is made by and between Respondent, Bass

Pro, Inc. (“Bass Pro”), and the Bureau of Industry and Security, U.S. Department of Commerce

(“DIS”) (collectively referred to as “Parties”), pursuant to Section 766.18(a) of the Export

Administration Rcgulations (currcntly codified at 15 C.F.R. Parts 730-774 (2004))

(“Regulations”),’ issued pursuant to the Export Administration Act of 1979, as ainended (50

CJ.S.(’. npp. $ $ 240 1-2420 (2000)) (“Act”),’

‘I’he violations charged occurred between 1999 and 2004 The Regulations governing the I

violations at tswc are found i n the 1999 through 2004 versions of the Code of Federal Regulations ( I5 (’ F R I’aits 730-774 ( 1 999-2003)) The 2004 Regulations set forth the piocetlure\ t h a t ‘ipply to this matte1

’ troin August 2 1, I994 through Noveniber 12, 2000, the Act was in lapse. During that period, the President, through Executive Order 12924, which had been extended by successive Presidential Notices, the last of which was August 3, 2000 (3 C.F.R., 2000 Conip. 397 (2001)), continued the Rcgulations in effect under the liiternational Emergency Economic Powers Act (50 U.S.C‘. $ 4 I70 1 - 1706 (2000)) (“IEEPA”). On November 13, 2000, the Act was reauthorized and it remained in cffect through August 20, 2001. Since August 2 1, 2001, the Act has been in lapse and the l’resident, through Executile Order 13222 ofAugust 17, 2001 (3 C.F.R., 2001 Comp. 783 (2002)), as extended by the Notice of August 6, 2004 (69 Fed. Reg 48763, August 10, 2004), has coiitiniicd the Regulations in effect under the IEEPA.

WHEREAS, BIS has notiiied Bass Pro of its intention to initiate an administrative

proceeding against Bass Pro, pursuant to the Act and the Regulations;

WkiLREAS, BlS has issued a proposed charging letter to Bass Pro that alleged that

Bass f’ro committed 408 violations of the Regulations, specifically:

1 . 407 Violations of1.5 C.F.R. $764.2(a) - Exports ojOptica1 Sighting Devices

Without the Required Licenses: On 407 occasions, between on or about June 7,

1999 and on or about January 1 1,2004, Bass Pro engaged in conduct prohibited by

the Regulations by exporting or causing to be exported optical sighting devices or

parts thereof, classified under Export Control Classification Number (“ECCN”)

OA987, to various destinations without the Department of Commerce (the

“Department”) license, as required by Section 742.7 or 742.17 or both of the

Regulations.

2. One Violiltioti ~ f l j C.F.R. f 764.2(i) - Failure to Keep Required Records: On or

about JLIIX 7, 1999 and in connection with the export described in charge 1, above,

Bass Pro failed to comply with the recordkeeping requirements of the Regulations.

Spcciiiically, Bass Pro failed to keep air waybills, invoices, and other sales and

shipping records of its export transactions as required by Part 762 of the

Rcgu la t ions

WI IEREAS, Bass Pro has reviewed the proposed charging letter and is aware of the

allegations niacic against it and the administrative sanctions which could be imposed against it if

the allegations are found to be true;

Set t le i n ent A grec t i 1 c ti t Bass Pro, Inc. Page 2 o f 6

WHEREAS, Bass Pro fully understands the terms of this Agreement and the Order

(“Order”) that the Assistant Secretary of Commerce for Export Enforcement will issue if she

approves h i s Agreement as the final resolution of this matter;

WHEREAS, Bass Pro enters into this Agreement voluntarily and with fill1 knowledge of

its rights;

WHEREAS, Bass Pro states that no promises or representations have been made to it other

than the agreements and considerations herein expressed;

WHEREAS, Bass Pro neither admits nor denies the allegations contained in the proposed

charging letter;

WIIEREAS, Bass Pro wishes to settle and dispose of all matters alleged in the proposed

charging letter by entering into this Agreement; and

WHIREAS, Bass Pro agrees to be bound by the Order, if entered;

NOW rT’HEREFORE, the Parties hereby agree as follows:

1 . BIS has jurisdiction over Bass Pro, under the Regulations, in connection with the

matters alleged i n the proposed charging letter.

2. The following sanction shall be imposed against Bass Pro in complete settlement of the

violations of the I<egulations relating to the transactions detailed in the proposed charging letter:

a . Ilass I’ro shall be assessed a civil penalty in the amount of $5 10,000, of which

$127,500 shall be paid to the U.S. Department of Commerce within 30 days from

the date of entry of the Order; $127,500 shall be paid to the U S . Dcpartment of

Commerce not later than April 29, 2005; $127,500 shall be paid to the U S .

Set t I e i n e 11 t A g r eein en I Bass P r n , I n c

Pagc 1 0 f (1

Department of Commerce not later than July 29, 2005; and $127,500 shall be paid

to the U.S. Department of Commerce not later than October 3 1, 2005. Payment

shall be made in the manner specified in the attached instructions.

The timely payment of the civil penalty agreed to in paragraph 2.a. is hereby made b.

a condition to the granting, restoration, or continuing validity of any export license,

License Exception, permission, or privilege granted, or to be granted, to Bass Pro.

Failure to make timely payment of the civil penalty set forth above may result in

the denial of all of Bass Pro’s export privileges for a period of one year from the

date of imposition of the penalty.

3. Subject to the approval of this Agreement pursuant to paragraph 8 hereof, Bass Pro

hereby waives all rights to further procedural steps in this matter (except with respect to any

alleged violations of this Agreement or the Order, if entered), including, without limitation, any

right to: (a) an adniinistrative hearing regarding the allegations in the proposed charging letter; (b)

request a rcfund of any civil penalty paid pursuant to this Agreement and the Order, if entered; (c)

requcst any relief from the Order, if entered, including without limitation relief from the terms of

a denial order under 15 C.F.R. tj 764.3(a)(2); and (d) seek judicial review or otherwise contest the

validity of this Agreement or the Order, if entered.

4. Upon entry of the Order and timely payments of the civil penalty as set forth in

paragraph 2.a above, BIS will not initiate any further administrative proceeding against Bass Pro

in conncction with any violation of tlic Act or the Regulations arising out of the transactions

detailed in the proposcd charging letter

Set t I em e n t A gr cc in en t Bass Pro, Inc . Pagc 4 o f 6

5 . RIS will make the proposed charging letter, this Agreement, and the Order, if entered,

available to the public.

6. This Agreement is for settlement purposes only. Therefore, if this Agreement is not

accepted and the Order is not issued by the Assistant Secretary of Commerce for Export

Enforcement pursuant to Section 766.18(a) of the Regulations, no Party may use this Agreement

in any administrative or judicial proceeding and the Parties shall not be bound by the terms

contained in this Agreement in any subsequent administrative or judicial proceeding.

7. No agreement, understanding, representation or interpretation not contained in this

Agreement may be used to vary or otherwise affect the terms of this Agreement or the Order, if

entered, nor shall this Agreement serve to bind, constrain, or otherwise limit any action by any

other agency or department of the U.S. Government with respect to the facts and circumstances

addressed herein.

8. ‘l’his Agreement shall become binding on the Parties only if the Assistant Secretary of

C:omnnercc for Lxport Enforcement approves i t by entering the Order, which will have the same

force and effect as ;I decision and order issued after a full administrative hearing on the record.

9. Each signatory affirms that he has authority to enter into this Settlement Agreement and

to bind his respective party to the terms and conditions set forth herein.

Y AND SECURITY, BASS PRO, INC. U.S. DEPART COMMERCE

Ja&s Q.4 A. Hagale I L Ofiice of Export Enforcement President and Chief

JAN 2 8 2005 Date:

S e 11 I elm en 1 A gr c c 111 err t Bass P r o , Inc. Pagc 6 o f h

UNITED STATES DEPARTMENT OF COMMERCE BUREAU OF INDUSTRY AND SECURITY

WASHINGTON, D.C. 20230

In the Matter of: 1 1

Bass Pro, Inc. 1 2500 E. Kearny 1 Springfield, Missouri 65898 )

1 Respondent. 1

ORDER

The Bureau of Industry and Security, U.S. Department of Commerce (“BIS”) has notified

Bass Pro, Inc. (“Bass Pro”) of its intention to initiate an administrative proceeding against Bass

Pro pursuant to Section 766.3 of the Export Administration Regulations (currently codified at 15

C.F.R. Parts 730-774 (2004)) (“Regulations”)’ and Section 13(c) of the Export Administration

Act of 1979, as amended (50 U.S.C. app. $3 2401-2420 (2000)) (“Act”),’ by issuing a proposed

charging letter issued to Bass Pro that alleged that Bass Pro committed 408 violations of the

Regulations. Specifically, the charges are:

’ The violations charged occurred from 1999 through 2004. The Regulations governing the violations at issue are found in the 1999 - 2004 versions of the Code of Federal Regulations ( I 5 C.F.R. Parts 730-774 (1999-2004)). The 2004 Regulations govern the procedural aspects of this case.

* From August 21, 1994 through November 12,2000, the Act was in lapse. During that period, the President, through Executive Order 12924, which had been extended by successive Presidential Notices, the last of which was August 3,2000 (3 C.F.R., 2000 Comp. 397 (2001)), continued the Regulations in effect under the International Emergency Economic Powers Act (50 U.S.C. $4 1701 - 1706 (2000)) (“IEEPA”). On November 13,2000, the Act was reauthorized and it remained in effect through August 20,2001. Since August 21, 2001, the Act has been in lapse and the President, through Executive Order 13222 of August 17,2001 (3 C.F.R., 2001 Comp. 783 (2002)), as extended by the Notice of August 6,2004 (69 Fed. Reg. 48763 (August 10,2004)), has continued the Regulations in effect under the IEEPA.

1. 407 Violations of 15 C.F.R. §764.2(a) -Exports of Optical Sighting Devices

Without the Required Licenses: On 407 occasions, between on or about June 7,

1999 and on or about January 1 1,2004, Bass Pro engaged in conduct prohibited

by the Regulations by exporting or causing to be exported optical sighting devices

or parts thereof, classified under Export Control Classification Number (“ECCN’)

019987, to various destinations without the Department of Commerce (the

“Department”) license, as required by Section 742.7 or 742.17 or both of the

Regulations.

One Violation of 15 C.F.R. $ 764.2(i) - Failure to Keep Required Records: On or 2.

about June 7, 1999 and in connection with the export described in charge 1,

above, Bass Pro failed to comply with the recordkeeping requirements of the

Regulations. Specifically, Bass Pro failed to keep air waybills, invoices, and other

sales and shipping records of its export transactions required by Part 762 of the

Regulations.

WHEREAS, BIS and Bass Pro having entered into a Settlement Agreement pursuant to

Section 766.18(a) of the Regulations whereby they agreed to settle this matter in accordance with

the terms and conditions set forth therein, and

WHEREAS, I have approved the terms of the Settlement Agreement;

IT IS THEREFORE ORDERED:

FIRST, that a civil penalty of $510,000 is assessed against Bass Pro, of which $127,500

shall be paid to the U.S. Department of Commerce within 30 days from the date of entry of the

Order; $127,500 shall be paid to the U.S. Department of Commerce not later than April 29,

2005; $127,500 shall be paid to the US. Department of Commerce not later than July 29,2005;

Order Bass Pro, Inc. Page 2 of 3

and $127,500 shall be paid to the U.S. Department of Commerce not later than October 3 1,2005.

Payment shall be made in the manner specified in the attached instructions.

SECOND, that, pursuant to the Debt Collection Act of 1982, as amended (31 U.S.C.

$9 3701-3720E (2000)), the civil penalty owed under this Order accrues interest as more fully

described in the attached Notice, and, if payment is not made by the due date specified herein,

Bass Pro will be assessed, in addition to the full amount of the civil penalty and interest, a

penalty charge and an administrative charge, as more h l l y described in the attached Notice.

THIRD, that the timely payment of the civil penalty set forth above is hereby made a

condition to the granting, restoration, or continuing validity of any export license, License

Exception, permission, or privilege granted, or to be granted, to Bass Pro. Accordingly, if Bass

Pro should fail to pay the civil penalty in a timely manner, the undersigned may enter an Order

denying all of Bass Pro’s export privileges for a period of one year from the date of entry of this

Order.

FOURTH, that the proposed charging letter, the Settlement Agreement, and this Order

shall be made available to the public.

This Order, which constitutes the final agency action in this matter, is effective

immediately.

Acting A s s i h n t Secretary of Commerce for Export Enforcement

Entered this k k day of 2005.

Order Bass Pro, Inc. Page 3 of 3 4 0 5 5 ~ 1