EXHIBIT 34
AGREEMENT CONCERNING LETTER OF CREDIT
This Agreement Concerning Letter of Credit (the "AGREEMENT") is dated as of
this ninth day of August, 2002, and is by and between Xxxxx Fargo Business
Credit, Inc. ("LENDER") and Xxxxxxxxxxx Xxxxxxxx ("XXXXXXXX").
RECITALS:
X. Xxxxxxxx is a principal owner of shares, an officer and an employee of
Royal Precision, Inc., a Delaware corporation ("RP"). RP owns all of the issued
and outstanding stock of FM Precision Golf Manufacturing Corp., a Delaware
corporation, and FM Precision Golf Sales Corp., a Delaware corporation
(collectively, jointly and severally, "BORROWER"). It is to the best economic
interest of Xxxxxxxx for Borrower to prosper economically.
E. Borrower is currently indebted to Lender and has requested additional
credit facilities from Lender. Xxxxxxxx has determined that the additional
credit facilities from Lender are essential for the continued economic
prosperity of Borrower. The current indebtedness and the additional credit
facilities are and shall be represented by promissory notes, amended and
restated credit and security agreements and various documents executed in
connection therewith, including this Agreement, all of which shall be herein
referred to as the "LOAN DOCUMENTS."
F. Lender is willing to extend additional credit to Borrower, but only if
it receives certain direct security from Xxxxxxxx as set forth in this
Agreement.
AGREEMENTS:
In consideration of the recitals and mutual agreements contained herein,
the parties agree:
13. Xxxxxxxx shall and does hereby agree to establish for the benefit of
Lender, pursuant to the terms and conditions contained herein, an irrevocable
letter of credit issued by The Xxxxxxx State Bank and Trust Company (the
"ISSUER") in the principal amount of $1,000,000 (the "LETTER OF CREDIT"). The
Letter of Credit must be approved in advance as to form and substance by Lender.
The Letter of Credit shall provide that it cannot be cancelled, terminated or
expire prior to August 12, 2003. Any attempt to terminate or cancel the Letter
of Credit prior to the complete payment by Borrower of all obligations to Lender
shall be a breach of this Agreement and shall constitute cause for Lender to
draw down the entire amount of the Letter of Credit and apply it to the
liabilities, as hereafter defined.
14. The Letter of Credit shall be additional security to Lender for
repayment by Borrower of the Letter of Credit Overadvance, as defined in the
Amended and Restated Credit and Security Agreement of even date herewith (all of
which shall be referred to herein as the "LIABILITIES"). The Letter of Credit
shall further secure all expenses (including reasonable attorneys' fees and
legal expenses) paid or incurred by Lender in endeavoring to collect the
Liabilities, or any part thereof, and in enforcing or defending this Agreement,
whether or not a lawsuit is commenced, but in no event for amounts in the
aggregate in excess of $1,000,000.00.
15. In the event that the Letter of Credit Overadvance becomes due and
payable or the maturity date has passed, Lender may draw against the Letter of
Credit up to the full amount of the Letter of Credit pursuant to its terms.
16. Xxxxxxxx agrees that the Letter of Credit shall continue to be
effective or shall be reinstated, as the case may be, if at any time payment of
the Liabilities, or any part thereof, to Lender is rescinded or must otherwise
be returned by Lender upon the insolvency, bankruptcy or reorganization of
Borrower or otherwise, all as though such payment to Lender had not been made.
17. The Lender may at any time and from time to time, without the consent
of, or notice to, Xxxxxxxx or the Issuer, and without affecting, impairing or
releasing the obligations of Xxxxxxxx or the Letter of Credit hereunder, do any
or all of the following: (a) retain or obtain a security interest in any
property to secure any of the Liabilities or any obligations hereunder, (b)
retain or obtain the primary or secondary liability of any party or parties with
respect to any of the Liabilities, (c) renew, extend (including extensions
beyond the original term), modify, alter, release or discharge any of the
Liabilities, (d) settle, release or compromise any liability of any guarantor of
any of the Liabilities or any liability of any nature of any other party or
parties with respect to the Liabilities or any security therefor, (e) accept
partial payments of the Liabilities, (f) settle, release (by operation of law or
otherwise), compound, compromise, collect or liquidate any of the Liabilities
and any property securing any of the Liabilities, (g) consent to the transfer of
any property securing any of the Liabilities, (h) resort to the Letter of Credit
for payment of any of the Liabilities, whether or not Lender shall have resorted
to any property securing any of the Liabilities or any obligation hereunder or
shall have proceeded against any other Xxxxxxxx or any other party primarily or
secondarily liable on any of the Liabilities, (i) make any other changes in its
agreements with Borrower, or (j) stop lending money or extending other credit to
Borrower pursuant to the terms of the Amended and Restated Credit and Security
Agreement.
18. Xxxxxxxx is now adequately informed of Borrower's financial condition,
and Xxxxxxxx agrees to keep so informed. Lender is not required to provide
Xxxxxxxx with any present or future information concerning the financial
condition of Borrower. Xxxxxxxx has not relied on financial information
furnished by Lender.
19. Xxxxxxxx hereby expressly waives: (a) notice of the acceptance of this
Agreement, (b) notice of the existence or creation of all or any of the
Liabilities, (c) presentment, demand, notice of dishonor, protest, and all other
notices whatsoever, (d) all diligence in collection or protection of or
realization upon the Liabilities or any part thereof, any obligation hereunder,
or any security for any of the foregoing, (e) all events and circumstances which
might otherwise constitute a defense or discharge of the obligations of Borrower
or Xxxxxxxx (f) the benefits of the provisions of Arizona Revised Statutes
Sections 12-1641 ET. SEQ., 33-814 and 12-1566. The rights of Lender to draw
against the Letter of Credit shall not be released or discharged, either in
whole or in part, by Lender's failure or delay to perfect or continue the
perfection of any security interest in any property that secures any of the
Liabilities or any obligation of Xxxxxxxx hereunder, or to protect the property
covered by any such security interest.
20. The Lender may, without notice of any kind, sell, assign, or transfer
all or any of the Liabilities and its rights under the Letter of Credit, and in
such event each and every immediate and successive assignee, transferee, or
holder of all or any of the Liabilities, shall have the right to enforce this
Agreement and the Letter of Credit, by suit or otherwise, for the benefit of
such assignee, transferee, or holder, as fully as if such assignee, transferee
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or holder were herein by name specifically given such rights, powers and
benefits. Lender shall have an unimpaired right, prior and superior to that of
any such assignee, transferee or holder, to enforce this Agreement and the
Letter of Credit for the benefit of Lender, as to so much of the Liabilities as
it has not sold, assigned, or transferred.
21. No delay on the part of Lender in the exercise of any right or remedy
shall operate as a waiver thereof, and no single or partial exercise by Lender
of any right or remedy shall preclude other or further exercise thereof or the
exercise of any other right or remedy.
22. No action of Lender permitted hereunder shall in any way impair or
affect this Agreement or the rights of Lender under the Letter of Credit.
23. All notices pursuant to this agreement shall be in writing and shall be
directed to the addressees set forth herein or such other address as may be
specified in writing, by certified or registered mail, return receipt requested,
by the party to which or whom notices are to be given. Except as otherwise
specifically provided herein, notices shall be deemed to be given three (3) days
after mailing by depositing same in any United States post office station or
letter box in a post-paid envelope.
24. This agreement is governed by Arizona law. Xxxxxxxx consents to the
personal jurisdiction of the Courts of the State of Arizona and the federal
courts located in Arizona so that Lender may xxx Xxxxxxxx in Arizona to enforce
this agreement. Xxxxxxxx agrees not to claim that Arizona is an inconvenient
place for trial. At lender's option, the venue (location) of any suit to enforce
this agreement may be in Maricopa County, Arizona.
DATED as of the date first above written.
XXXXX FARGO BUSINESS CREDIT, INC.
By /s/ Xxxxx Xxxxxx
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Name Xxxxx Xxxxxx
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Title Officer
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000 Xxxx Xxxxxxxxxx Xxxxxx, Mail Stop S410-076
Xxxxxxx, Xxxxxxx 00000
/s/ Xxxxxxxxxxx Xxxxxxxx
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Xxxxxxxxxxx Xxxxxxxx
Address:
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