Exhibit 10.25
LOAN AGREEMENT
AGREEMENT made as of this ____ day of March 2002, by and between Xxxxx
& Wesson Holding Corporation, a Nevada corporation having a chief executive
principal place of business at 00000 Xxxxxxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx
(hereinafter referred to as the "Borrower"), and Banknorth, N.A., a national
banking association organized under the laws of the United States of America,
having a usual place of business at 0000 Xxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxxxxxx
(hereinafter referred to as the "Lender").
1.00 DEFINITIONS AND ACCOUNTING TERMS
As used in this Agreement, the following terms have the following
meanings (terms defined in the singular to have the same meaning when used in
the plural and vice versa):
"Advance" means an Advance by Lender to Borrower in accordance with the
terms and conditions of the Note, this Agreement, or any other Loan Documents.
"Affiliate" means any person controlling, controlled by, or under
common control with Borrower. For purposes of this definition "Control" means
the possession, directly or indirectly of the power to direct or cause direction
of the management and policies of the Borrower, whether through ownership of
common or preferred stock or other equity interests, by contract or otherwise.
Without limiting the generality of the forgoing, each of the following shall be
an Affiliate: Any officer, director, employee or other agent of Borrower, any
shareholder or subsidiary of Borrower and any other Person with whom Borrower
has common shareholders, officers and directors.
"Agreement" means this Loan Agreement as amended, supplemented, or
modified from time to time.
"Available Amount" means a Fifteen Million and 00/100 Dollar
($15,000,000.00) Term Loan.
"Business Day" means any day other than a Saturday, Sunday, or other
day on which commercial banks in Massachusetts are authorized or required to
close under the laws of the Commonwealth of Massachusetts.
"Cash Balance" means the sum of all cash, cash equivalents (as
determined by GAAP), the Securities and the Annuities.
"Code" means the Internal Revenue Code of 1986, as amended from
time-to-time and the regulations and published interpretations thereof.
"Debt" means, as applied to any Person, as of any date of determination
(without duplication):
(a) all obligations of such Person for borrowed money
(whether or not represented by bonds, debentures,
notes, drafts or other similar instruments) or
evidenced by bonds, debentures, notes, drafts or
similar instruments;
(b) all obligations of such Person for all, or any part
of, the deferred purchase price of property or
services, or for the cost of property constructed or
of improvements thereon, including trade accounts
payable incurred, in respect of property purchased,
in the ordinary course of business, which are not
overdue or which are being contested in good faith by
appropriate proceedings and are not required to be
classified on such Person's balance sheet, in
accordance with GAAP, as debt;
(c) all obligations secured by any Lien on or payable out
of the proceeds of production from property owned or
held by such Person even though such Person has not
assumed or become liable for the payment of such
obligation;
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(d) all capital lease obligations of such Person;
(e) all obligations of such Person, contingent or
otherwise, in respect of any letter of credit
facilities, bankers' acceptance facilities or other
similar credit facilities other than any such
obligation which relate to an underlying obligation
which otherwise constitutes Debt of such Person
hereunder or a current account payable of such Person
incurred in the ordinary course of business;
(f) all obligations of such Person upon which interest
payments are customarily made; and
(g) all guaranties by such Person of or with respect to
obligations of the character referred to in the
foregoing clauses (a) through (f) of another Person;
provided, however, that in determining the Debt of any Person, (i) all
liabilities for which such Person is jointly and severally liable with one or
more other Persons (including, without limitation, all liabilities of any
partnership or joint venture of which such Person is a general partner or
co-venturer) shall be included at the full amount thereof without regard to any
right such Person may have against any such other Persons for contribution or
indemnity, and (ii) no effect shall be given to deposits, trust arrangements or
similar arrangements which, in accordance with GAAP, extinguish Debt for which
such Person remains legally liable.
"Default" means any of the events specified in Section 9.00, whether or
not any requirement for the giving of notice, the lapse of time, or both, or any
other condition, has been satisfied.
"Environmental Law" means any past, present or future Federal, state,
local or foreign statutory or common law, or any regulation, ordinance, code,
plan, Order, permit, grant, franchise, concession, restriction or agreement
issued, entered, promulgated or approved thereunder, relating to (a) the
environment, human health or safety, including, without limitation, emissions,
discharges, releases or threatened releases of oil and/or Hazardous Substances
into the environment (including, without limitation, air, surface water,
groundwater or land), or (b) the manufacture, generation, refining, processing,
distribution, use, sale, treatment, receipt, storage, disposal, transport,
arranging for transport, or handling of Hazardous Substances.
"Environmental Permits" means collectively, any and all permits,
consents, licenses, approvals and registrations of any nature at any time
required pursuant to or in order to comply with any Environmental Law.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended from time-to-time, and the regulations and published interpretations
thereof.
"Event of Default" means any of the events specified in Section 9.00,
provided that any requirement (if any) for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"GAAP" means generally accepted accounting principles consistently
applied, in accordance with financial reporting standards from time-to-time in
effect among nationally recognized certified public accounting firms in the
United States.
"Governmental Body" means any Federal, state, municipal, local or other
governmental department, commission, board, bureau, agency, instrumentality,
political subdivision or taxing authority of any country.
"Guarantor" means Xxxxx & Wesson Corp., a Delaware corporation with a
usual place of business at 0000 Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxxxxxx.
"Hazardous Substances" means collectively, contaminants; pollutants;
toxic or hazardous chemicals, substances, materials, wastes and constituents;
petroleum products; polychlorinated biphenyls; medical wastes; infectious
wastes; oil; asbestos; paint containing lead; and urea formaldehyde.
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"Insolvency" of the Borrower or any other person means that there shall
have occurred with respect to that person one or more of the following events:
dissolution, termination of existence, insolvency, business failure, appointment
of a custodian, interim trustee, or trustee, of any part of the property of the
Borrower, assignment or trust mortgage for the benefit of creditors by, or the
voluntary or involuntary filing of a petition in bankruptcy or the commencement
of any proceedings under any bankruptcy or insolvency laws, or any laws relating
to the relief of debts, readjustment of indebtedness, reorganization,
composition or extension, by or against Borrower.
"Lender" as used in this Agreement shall include the stated Lender
herein and, except as the context may indicate a contrary intent, any successor
in interest of the Lender.
"Lending Office" means the Lender's office at 0000 Xxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxxxxxx.
"Liabilities" of any Person shall mean and include all obligations of
such Person which in accordance with GAAP shall be classified on a balance sheet
of such Person as liabilities of such Person, and in any event shall include all
(i) obligations of such Person for borrowed money or which has been incurred in
connection with the acquisition of property or assets, (ii) obligations secured
by any Lien or other charge upon property or assets owned by such Person, even
though such Person has not assumed or become liable for the payment of such
obligations, (iii) obligations created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such
Person, notwithstanding the fact that the rights and remedies of the seller,
lender, or lessor under such agreement in the event of default are limited to
repossession or sale of property, (iv) obligations under Guaranties, and (v)
obligations under any Capitalized Lease.
"Lien" means any mortgage, deed of trust, pledge, security interest,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), or preference, priority, or other security agreement or preferential
arrangement, charge, or encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of the
foregoing, and the filing of any financing statement under the Uniform
Commercial Code or comparable law of any jurisdiction to evidence any of the
foregoing).
"Loan" means the Term Loan.
"Loan Documents" means this Agreement, any Note or other documents
related to the transactions discussed in this Agreement.
"Long Term Lease" means any lease of property (real, personal or
mixed), other than a Capital Lease, having a term (including terms of renewal or
extension at the option of the lessee, whether or not such option has been
exercised) expiring more than one year after the commencement of the initial
term.
"Maturity Date" means twelve (12) years from the date hereof.
"Maximum Amount" means Fifteen Million and 00/100 Dollars
($15,000,000.00).
"Multiemployer Plan" means a Plan described in Section 4001(a)(3) of
ERISA.
"Note" means the Fifteen Million and 00/100 Dollar ($15,000,000.00)
Term Note.
"Obligation" and "Obligations" shall mean any and all liabilities and
obligations of the Borrower to the Lender of every kind and description, direct
or indirect, absolute or contingent, primary or secondary, due or to become due,
now existing or hereafter arising, regardless of how they arise or by what
agreement or instrument they may be evidenced or whether evidenced by any
agreement or instrument, and includes (i) the Term Note, (ii) any Letter or
Letters of Credit (including Letter of Credit Notes), (iii) obligations to
perform acts and refrain from taking action, as well as obligations to pay
money, (iv) reimbursement obligations of the Borrower, pursuant to any
documentation executed in conjunction with or related to the issuance by the
Lender of any Letters of Credit, and/or (v) Guaranty Obligations of Borrower in
favor of Xxxxx & Wesson Corp.
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"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, liability
company, business trust, joint stock company, trust, unincorporated association,
joint venture, governmental authority, or other entity of whatever nature.
"Principal Office" means the Lender's office at 0000 Xxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxxxxxx.
"Prohibited Transaction" means any transaction set forth in Section 406
of ERISA or Section 4975 of the Code.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as amended or supplemented from time-to-time.
"Reportable Event" means any of the events set forth in Section 4043 of
ERISA.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
"Term Note" shall have the meaning assigned to such term in Section
2.03.
1.01 ACCOUNTING TERMS
All accounting terms not specifically defined herein shall be construed
in accordance with GAAP consistent with those applied in the preparation of the
financial statements, and all financial data submitted pursuant to this
Agreement shall be prepared in accordance with such principles.
2.00 THE TERM LOAN FACILITY
2.01 THE TERM LOAN
A Fifteen Million and 00/100 Dollar ($15,000,000.00) Term Loan (the
"Term Loan") will be made available to the Borrower. The Term Loan shall be
repaid over a twelve (12) year term in accordance with the terms of the Term
Note.
2.02 CALCULATION AND PAYMENT OF INTEREST
Interest on the Term Loan shall be calculated on the basis of a year of
360 days for the actual number of days elapsed for any payment period. Interest
on the Loans shall be paid in immediately available funds at either the
Principal Office of the Lender or any branch thereof. Any principal amount not
paid when due (at maturity, by acceleration or otherwise) shall bear interest
thereafter until paid in full, payable on demand, at a rate per annum equal to
the aggregate of the interest rate currently in effect on such Loan, as
determined herein, plus five percent (5.00%).
2.03 THE TERM LOAN PROMISSORY NOTE
The Term Loan made by the Lender under this Agreement shall be
evidenced by, and repaid with interest in accordance with a term promissory note
substantially in the form of Exhibit "A" (the "Term Note").
2.04 USE OF PROCEEDS
The Term Loan shall be used only to pay off an existing promissory note
to Xxxxxx Xxxxx in the amount of Five Million and 00/100 Dollars ($5,000,000.00)
and to pay off an existing promissory note to Xxxxxxx Corporation in the amount
of Ten Million and 00/100 Dollars ($10,000,000,00).
3.00 THE GUARANTOR
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3.01 GUARANTOR'S AGREEMENT
Payment and performance of Borrower's Obligations shall be
unconditionally guaranteed by the Guarantor, all as more fully described in
Exhibit "B" attached hereto and incorporated by reference.
3.02 The Guaranty made by Guarantor shall be secured by a first
security interest in the Guarantor's brokerage account held at Bancnorth
Investment Planning Group, Account No. 00000000 (the "Securities") and annuities
with various insurance companies (the "Annuities") having a minimum aggregate
market equal to the sum of any applicable surrender charges, prepayment fees,
early withdrawal fees and/or similar charges required in connection with any of
the Annuities and/or Securities, and the Obligations. The Securities are valued
on a discounted basis as follows:
Type of Security Discount Factor
---------------- ---------------
Money Market Account 0%
Annuities 0%
United States Government Securities 10%
Corporate Securities and Commercial Paper 30%
Corporate and Municipal Bonds 20%
Guarantor, for valuable consideration received, hereby pledges,
assigns, transfers and grants to Lender as security for the Obligations, a
continuing lien and security interest in all of Guarantor's right, title and
interest in and to, the following investment property and general intangibles
consisting of annuity contracts, Securities, stocks, bonds, United States
government securities, commercial paper and all income therefrom, increases
therein and proceeds thereof maintained at and/or by: (1) PRIME VEST FINANCIAL
SERVICES, INC., ACCOUNT NO. 00000000,(the "Account"); (2) Pacific Life Insurance
Company Annuity - $1,000,000 - Contract No. SP01001834; (3) Pacific Life
Insurance Company Annuity - $500,000 - Contract No. VR01050237; (4) Pacific Life
Insurance Company Annuity - $9,000,000 - Contract No. SP01001732; (5) Keyport
Insurance Trust I Annuity - $950,000 - Contract No. 0212493926-01; and (6) MFS
Regatta Insurance Trust Annuity - $2,000,000 - Contract No. 00-0000-000000,
together with products and proceeds thereof and all accessions and additions
thereto and all replacements and substitutions therefore (hereinafter called the
"Collateral"). The term "proceeds" shall include, without limitation, all types
of classifications of non-cash proceeds acquired with cash proceeds.
The Guarantor shall at all times maintain Collateral having an
aggregate market value (on a discounted basis subject to the Discount Factors
set forth in the definition of Available Amount) of not less than the sum of any
applicable surrender charges, prepayment fees, early withdrawal fees and/or
similar charges required in connection with any of the Annuities and/or
Securities, and the Obligations of the Guarantor to the Lender hereunder.
Additional units or shares of investment securities (or other unrestricted,
registered securities publicly traded on a nationally recognized stock exchange,
or other additional collateral acceptable to the Lender) may from time to time
be required by the Lender to be transferred to the Account, and the Guarantor
agrees to do so within three (3) business days of notice and request from the
Lender stating that the then aggregate market value of Collateral is less than
the sum of any applicable surrender charges, prepayment fees, early withdrawal
fees and/or similar charges required in connection with any of the Annuities
and/or Securities, and the Obligations of the Guarantor to the Lender hereunder.
Failure by the Guarantor to provide additional collateral having an aggregate
market value (on a discounted basis subject to the Discount Factors set forth in
the definition of Available Amount) equal to the difference between (i) the sum
of any applicable surrender charges, prepayment fees, early withdrawal fees
and/or similar charges required in connection with any of the Annuities and/or
Securities, and (ii) the Obligations and the then aggregate market value of the
Collateral shall constitute an Event of Default, and the Lender shall be
entitled to liquidate the Collateral for application to the Obligations without
further notice to the Guarantor.
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Provided that no Default or Event of Default has occurred and is
continuing hereunder, the Lender, upon request of the Borrower or its authorized
representatives, shall promptly make or cause to be made trades of investment
securities held in the Account as Collateral for the Obligations. In addition,
so long as no Default or Event of Default has occurred and is continuing
hereunder, the Lender, upon request of the Borrower or its authorized
representatives, shall promptly transfer or withdraw or cause to be transferred
or withdrawn from the Account and placed in an alternative account designated by
the Borrower or delivered to the Borrower, as the case may be, cash or
securities in such amounts up to that amount by which the then current aggregate
market value of the Collateral (on a discounted basis subject to the Discount
Factors set forth in the definition of Available Amount) exceeds the sum any
applicable surrender charges, prepayment fees, early withdrawal fees and/or
similar charges required in connection with any of the Annuities and/or
Securities, and the Obligations.
4.00 GENERALLY
As to all Loans made pursuant to this Agreement:
4.01 CROSS DEFAULT
A default of any of the terms and conditions of:
(i) any Obligation, of the Borrower and/or Guarantor to
the Lender (including, without limitation any
reimbursement obligations arising out of any Letters
of Credit which the Lender may later issue on behalf
of the Borrower and/or Guarantor) or any document or
instrument evidencing such an Obligation, or
(ii) the obligations of the Borrower and/or Guarantor
under any Debt to any other lender or creditor
resulting in default and/or acceleration of such Debt
in excess of Five Hundred Thousand and 00/100 Dollars
($500,000.00),
shall constitute a default of the Note, this Agreement, and any other
obligations of the Borrower and Guarantor to the Lender whether evidenced by
notes or otherwise.
4.02 METHOD OF PAYMENT
All payments and prepayments of principal and all payments of interest,
fees and other amounts payable hereunder shall be made by the Borrower to the
Lender at its principal office OR SUCH OTHER PLACE AS THE LENDER MAY FROM
TIME-TO-TIME SPECIFY IN WRITING in immediately available UNITED STATES DOLLARS
LAWFUL CURRENCY OF THE UNITED STATES OF AMERICA, on or before 11:00 a.m.
(Boston, Massachusetts time) on the due date thereof, WITHOUT COUNTERCLAIM OR
SETOFF AND FREE AND CLEAR OF, AND WITHOUT ANY DEDUCTION OR WITHHOLDING FOR, ANY
TAXES OR OTHER PAYMENTS. The Borrower hereby authorizes the Lender, if and to
the extent payment is not made when due under this Agreement or under any Note,
to charge from time-to-time against any account of the Borrower with the Lender
any amount so due. Whenever any payment to be made under this Agreement or under
any Note shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of the payment of
interest.
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4.03 PREPAYMENT
The Borrower may prepay the Note in whole or in part, provided that it
pays Lender a prepayment fee in accordance with the following schedule:
Year of Loan when
Prepayment Occurs Amount of Prepayment Fee
----------------- ------------------------
1 3% of amount prepaid
2 2% of amount prepaid
3 1% of amount prepaid
4 1% of amount prepaid
5 1% of amount prepaid
Notwithstanding the foregoing, no prepayment premium shall be charged
from prepayments made from internally generated cash flow.
4.04 LATE PAYMENT
Any payment on the Loans received more than ten (10) days after its due
date shall be subject to an additional charge of six percent (6.00%) of the
amount due.
4.05 ADDITIONAL PAYMENTS
If after the date of this Agreement the Lender determines that (i) the
adoption of or change in any law, rule, regulation or guideline regarding
capital requirements for banks or bank holding companies, or any change in the
interpretation or application thereof by any governmental authority charged with
the administration thereof, or (ii) compliance by the Lender or any parent bank
holding company with any guideline, request or directive of any such
governmental entity regarding capital adequacy (whether or not having the force
of law), has the effect of reducing the return on the Lender's or such holding
company's capital as a consequence of the Lender's agreement to make Loans
hereunder to a level below that which the Lender or such holding company could
have achieved but for such adoption, change or compliance (taking into
consideration the Lender's or such holding company's then existing policies with
respect to capital adequacy and assuming the full utilization of such entity's
capital) by any amount deemed by the Lender to be material, or (iii) as a result
from any change after the date of this Agreement in United States, Federal,
State, Municipal or Foreign Laws or Regulations (including Regulation D), or the
adoption or making after the date hereof of any interpretations, directives or
requirements applying to a class of banks, including the Lender of or under any
United States, Federal, State, Municipal or Foreign Laws or Regulations (whether
or not having the force of law) by any court or governmental or monetary
authority charged with the interpretation or administration thereof which
changes the basis of taxation of any amounts payable to the Lender under this
Agreement, including, without limitation, the Term Loan (other than taxes
imposed on the overall net income of the Lender by the jurisdiction where the
principal office of the Lender is located), then the Lender shall notify the
Borrower thereof. The Borrower agrees to pay to the Lender the amount of such
reduction in the return on capital as and when such reduction is determined,
upon presentation by the Lender of a statement in the amount and setting forth
in reasonable detail, the Lender's calculation thereof, which statement shall be
deemed true and correct absent manifest error. In determining such amount, the
Lender may use reasonable averaging and attribution methods.
4.06 TENURE OF THE LOAN AGREEMENT
This Agreement shall become effective upon the execution by the parties
hereto. When so executed, this Agreement shall be binding on, and inure to the
benefit of, the respective successors and permitted assigns of the Borrower (if
authorized by the Lender, in writing, in the Lender's sole and exclusive
discretion), and of the Lender,
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and shall continue in full force and effect and unchanged except by agreement in
writing between the Borrower and the Lender until terminated as hereinafter
provided.
4.07 CONDITIONS PRECEDENT
The obligation of the Lender to make the Term Loan shall be subject to
the condition precedent that the Lender shall have received on or before the day
of such transaction each of the following, in form and substance satisfactory to
the Lender and its counsel in their sole discretion:
4.07.1 EXECUTION OF NOTE
The applicable Term Note duly executed by the Borrower.
4.07.2 EVIDENCE OF BORROWER'S AUTHORITY AND INCUMBENCY OF
REPRESENTATIVES.
Certified (as of the date of this Agreement) copies of all
corporate action taken by the Borrower, including resolutions of its Board of
Directors, authorizing the execution, delivery, and performance of the Loan
Documents to which it is a party and each other document to be delivered
pursuant to this Agreement together with a certificate (dated as of the date of
this Agreement) of the Secretary of the Borrower certifying the names and true
signatures of the officers of the Borrower authorized to sign the Loan Documents
to which it is a party and the other documents to be delivered by the Borrower
under this Agreement.
4.07.3 OPINION
A favorable opinion of counsel for the Borrower, dated the
date of the Loan, in such form as is acceptable to the Lender and as to such
other matters as the Lender may request.
4.07.4 OFFICER'S CERTIFICATE, ETC.
The following statements shall be true and the Lender shall
have received a certificate signed by a duly authorized officer of the Borrower
dated the date of the Loan stating that:
a) The representations and warranties
contained in Section 5.00 of this Agreement are
correct on and as of the date of the Loan as though
made on and as of such date; and
b) No Default or Event of Default has
occurred and is continuing, or would result from the
making of the Loan.
4.07.5 LITIGATION SUMMARY
Evidence that the Borrower maintains product liability insurance in
excess of Fifty Thousand and 00/100 Dollars ($50,000.00), as well as evidence
that Xxxxxxx Corporation is responsible for all product liability claims which
predate May 11, 2001, with insurance coverage limits of not less than Three
Hundred Million and 00/100 Dollars ($300,000,000.00). See Exhibit `D"
4.07.6 [INTENTIONALLY DELETED]
4.07.7 SOLVENCY CERTIFICATE
Lender shall have received an executed Solvency Certificate as more
fully described in Exhibit "C".
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4.07.8 HAZARD INSURANCE
Evidence of Hazard Insurance acceptable to Lender.
4.07.9 UCC AND TAX LIEN SEARCHES
Uniform Commercial Code and tax lien searches made in the
Commonwealth of Massachusetts, the State of Delaware and the State of Maine,
showing no filings relative to any Collateral other than those made pursuant to
this Agreement, and no federal or state tax liens against Borrower or any
Guarantor.
4.07.10 CORPORATE DOCUMENTATION
Certified copies of the Borrower's Articles of Incorporation,
By-Laws, Certificates of Good Standing from the Secretary of State's Office and
Department of Revenue Office and original Corporate Resolutions, Certificates of
Incumbency with specimen signatures.
4.07.11 OTHER ITEMS
Such other approvals, opinions, certificates, documents and/or
instruments as Lender may require in its reasonable discretion.
4.08 POWER OF ATTORNEY
Borrower appoints Lender and its designees as Borrower's attorney, with
the power to endorse Borrower's name on any checks, notes, acceptances, money
orders or other forms of payment or security that come into Lender's possession
following the occurrence of an Event of Default and while such Event of Default
is continuing. Neither Lender nor any of its designees will be liable for any
acts or omissions nor for any error of judgment or mistake of fact or law
undertaken in good faith acting as Borrower's attorney. This power, being
coupled with an interest, is irrevocable until the Obligations have been fully
satisfied and Lender's obligation to provide Loans hereunder has terminated.
4.09 FEDERAL RESERVE BANK
Notwithstanding anything to the contrary contained herein, Lender may
at any time pledge or assign all or any portion of Lender's rights under this
Agreement and the other Loan Documents to a Federal Reserve Bank; provided,
however, that no such pledge or assignment shall release the Lender from
Lender's obligations hereunder or under any other Loan Documents.
5.00 REPRESENTATIONS AND WARRANTIES, GENERALLY
Borrower also represents, warrants and agrees that:
5.01 CHIEF EXECUTIVE OFFICE
It has no chief executive office, or principal place of business, or
principal mailing address, other than that shown above. Borrower will
immediately notify Lender in writing of any change in the location of any place
of business or intention to change the location of any Collateral or the
establishment of any new chief executive office, principal place of business, or
location of inventory, or office where its aforesaid records are kept.
5.02 GOOD STANDING
Borrower is duly organized and existing in good standing under the laws
of the State of Nevada and is duly qualified to do business under the laws of
each state where the nature of the business done or property owned requires such
qualification.
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5.03 CORPORATE AUTHORITY
Borrower's delivery and performance hereof are within Borrower's
corporate powers, have been duly authorized by vote of the Board of Directors,
and are not in contravention of the terms of, and will not result in any event
of default under Borrower's Articles of Organization, by-laws, or other
incorporation papers, or of any indenture, promissory note, agreement or
undertaking to which Borrower is a party or by which it is bound or affected.
All of Borrower's issued and outstanding capital stock has been properly issued
and all Borrower's books and records, in particular its minute books, by-laws,
and books of account, are accurate and up-to-date and will be so maintained.
5.04 BORROWER NOT IN DEFAULT
All material leases, contracts, and other commitments to which Borrower
is a party are in good standing, and Borrower has complied with all material
provisions of such leases, contracts and other commitments; Borrower is not in
default under any provision thereof; and no event has occurred which, but for
the giving of notice or the passage of time, or both, could constitute a default
thereunder.
5.05 LEGALLY ENFORCEABLE AGREEMENT
This Agreement is, and each of the other Loan Documents when delivered
under this Agreement will be, legal, valid, and binding obligations of the
Borrower, enforceable in accordance with their respective terms, except to the
extent that such enforcement may be limited by applicable bankruptcy,
insolvency, and other similar laws affecting creditors' rights generally.
5.06 FINANCIAL STATEMENTS
The balance sheet of the Borrower and the related statements of income
and retained earnings and cash flow of the Borrower for the fiscal year then
ended, and the accompanying footnotes, together with any interim financial
statements of the Borrower, copies of which have been furnished to the Lender,
are complete and correct and fairly present the financial condition of the
Borrower as at such dates and the results of the operations of the Borrower for
the periods covered by such statements, all in accordance with GAAP consistently
applied (subject to year-end adjustments in the case of the interim financial
statements), and there has been no material adverse change in the condition
(financial or otherwise), business, or operations of the Borrower since the
presentation to the Lender of the most recently dated financial statements, nor
are there any liabilities of the Borrower, fixed or contingent, which are
material but are not reflected in such financial statements or in the notes
thereto, other than liabilities arising in the ordinary course of business. No
information, exhibit or report furnished by the Borrower to the Lender in
connection with the negotiation of this Agreement contained any material
misstatement of fact or omitted to state a material fact or any fact necessary
to make the statement contained therein not materially misleading.
5.07 PRO FORMAS The consolidated pro forma financial statements of the
Borrower and Guarantor as furnished to the Lender are (and all financial
statements hereafter delivered pursuant to this Agreement) will be complete and
accurate, fairly presenting the financial condition of the Borrower as of the
date thereof and for the periods covered thereby, all being prepared in
accordance with generally accepted accounting principles consistently applied
throughout the relevant periods. Borrower has no liability, contingent or
otherwise, not disclosed in the aforesaid financial statements or in any notes
thereto that could materially adversely affect the financial condition of the
Borrower. The Borrower has delivered to the Lender projected balance sheets and
statements of income for each of the fiscal years ending April 30, through 2006.
The projected financial statements referred to in the preceding sentence
(including the material assumptions and adjustments made in their preparation)
were reasonable when made and continue to be reasonable, subject to the
uncertainty and approximation inherent in any projections. The following
representations are true at the date hereof; in each case since the date of the
most recently delivered financial statements: (i) there has been no material
adverse change in the business, assets or condition, financial or otherwise of
the Borrower; (ii) neither the business, condition or operations of the Borrower
nor any of its respective properties or assets had materially adversely affected
as the result of any legislative or regulatory change, any revocation or change
in any franchise, license or right to do business, or any other event or
occurrence, whether or
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not insured against; (iii) Borrower has experienced no material controversy or
problem with its employees or with any labor organizations; and (iv) Borrower
has not entered into any material transaction other than in the ordinary course
of business.
5.08 LABOR DISPUTES AND ACTS OF GOD
Neither the business nor the properties of the Borrower are affected by
any fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy, or other
casualty (whether or not covered by insurance), materially and adversely
affecting such business or properties or the operation of the Borrower.
5.09 OTHER AGREEMENTS
The Borrower is not a party to any indenture, loan or credit agreement,
or to any lease or other agreement or instrument, or subject to any charter or
corporate restriction which could have a material adverse effect on the
business, properties, assets, operations, or conditions, financial or otherwise,
of the Borrower, or the ability of the Borrower to carry out its obligations
under the Loan Documents to which it is a party. The Borrower is not in default
in any material respect in the performance, observance, or fulfillment of any of
the obligations, covenants, or conditions contained in any agreement or
instrument material to its business to which it is a party.
5.10 LITIGATION
Except as set forth on Schedule 5.10, there is no pending or threatened
action or proceeding against or affecting the Borrower before any court,
governmental agency, or arbitrator, which may, in any one case or in the
aggregate, materially adversely affect the financial condition, operations,
properties, or business of the Borrower or the ability of the Borrower to
perform its obligations under the Loan Documents to which it is a party.
5.11 NO JUDGMENTS
The Borrower has satisfied all judgments, and the Borrower is not in
default with respect to any judgment, writ, injunction, decree, rule or
regulation of any court, arbitrator, or Federal, state, municipal, or other
governmental authority, commission, board, bureau, agency, or instrumentality,
domestic or foreign.
5.12 ERISA
The Borrower is to the best of its knowledge in compliance in all
material respects with all applicable provisions of ERISA. Neither a Reportable
Event nor a Prohibited Transaction has occurred and is continuing with respect
to any Plan; no notice of intent to terminate a Plan has been filed, nor has any
Plan been terminated; no circumstances exist which constitute grounds entitling
the PBGC to institute proceedings to terminate, or appoint a trustee to
administer, a Plan, nor has the PBGC instituted any such proceedings; neither
the Borrower nor any Commonly Controlled Entity has completely or partially
withdrawn from a Multiemployer Plan; the Borrower and each Commonly Controlled
Entity have met their minimum funding requirements under ERISA with respect to
all of their Plans and the present value of all vested benefits under each Plan
does not exceed the fair market value of all Plan assets allocable to such
benefits, as determined on the most recent valuation date of the Plan and in
accordance with the provisions of ERISA; and neither the Borrower nor any
Commonly Controlled Entity has incurred any liability to the PBGC under ERISA.
5.13 OPERATION OF BUSINESS
The Borrower possesses all Licenses, permits (including Environmental
Permits), franchises, patents, copyrights, trademarks, and trade names, or
rights thereto, to conduct its business substantially as now conducted and as
presently proposed to be conducted, and the Borrower is not in violation of any
valid rights of others with respect to any of the foregoing.
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5.14 TAXES
The Borrower has filed all tax returns (Federal, state, and local)
required to be filed and has paid all taxes, assessments, and governmental
charges and levies thereon to be due, including interest and penalties unless
such taxes are being contested in good faith by appropriate action with adequate
reserves established on Borrower's financial statements.
5.15 DEBT
Set forth in the financial statements referred to in this Agreement, to
the extent required by GAAP, is a complete and correct list of all credit
agreements, indentures, purchase agreements, Guaranties, Capital Leases, and
other Investments, agreements, and arrangements presently in effect providing
for or relating to extensions of credit (including agreements and arrangements
for the issuance of letters of credit or for acceptance financing) in respect of
which the Borrower is in any manner directly or contingently obligated; and the
maximum principal or face amounts of the credit in question, which are
outstanding and which can be outstanding, are correctly stated, and all Liens of
any nature given or agreed to be given as security therefor are correctly
described or indicated in such financial statements. Exhibit "E" correctly lists
all secured and unsecured Debt (excluding trade payables) of the Borrower
outstanding as of the date of this Agreement, and shows, as to each item of Debt
listed thereon, the obligor and obligee, the aggregate principal amount
outstanding on the date hereof.
5.16 ENVIRONMENT
The Borrower has duly complied with, and their businesses, operations,
assets, equipment, property, leaseholds, or other facilities are in compliance
with, the provisions of all Environmental Laws. The Borrower has been issued and
will maintain all required Federal, state, and local permits, Licenses,
certificates, and approvals relating to (1) air emissions; (2) discharges to
surface water or groundwater; (3) noise emissions; (4) solid or liquid waste
disposal; (5) the use, generation, storage, transportation, or disposal of toxic
or hazardous substances or wastes (intended hereby and hereafter to include any
and all such materials listed in any Federal, state, or local law, code or
ordinance, and all rules and regulations promulgated thereunder as hazardous or
potentially hazardous); or (6) other environmental, health, or safety matters.
The Borrower has not received notice of, nor knows of, or suspects, facts which
might constitute any violations of any Environmental Laws with respect to its
businesses, operations, assets, equipment, property, leaseholds, or other
facilities. Except in accordance with a valid governmental permit, license,
certificate, or approval, to the best of Borrower's knowledge there has been no
emission, spill, release, or discharge into or upon (1) the air; (2) soils, or
any improvements located thereon; (3) surface water or groundwater; or (4) the
sewer, septic system or waste treatment, storage or disposal system servicing
the premises, of any toxic or hazardous substances or wastes at or from the
premises; and accordingly the premises of the Borrower is to the best of
Borrower's knowledge free of all such toxic or hazardous substances or wastes.
There has been no complaint, order, directive, claim, citation, or notice by any
governmental authority or any person or entity with respect to (1) air
emissions; (2) spills releases or discharges to soils or improvements located
thereon, surface water, groundwater or the sewer, septic system or waste
treatment, storage or disposal systems servicing the premises; (3) noise
emissions; (4) solid or liquid waste disposal; (5) the use, generation, storage,
transportation, or disposal of toxic or hazardous substances or waste; or (6)
other environmental, health, or safety matters affecting the Borrower or its
business, operations, assets, equipment, property, leaseholds, or other
facilities. The Borrower has no indebtedness, obligation, or liability, absolute
or contingent, matured or not matured, with respect to the storage, treatment,
cleanup, or disposal of any solid wastes, hazardous wastes, or other toxic or
hazardous substances (including without limitation any such indebtedness,
obligation, or liability with respect to any current regulation, law, or statute
regarding such storage, treatment, cleanup, or disposal).
5.17 TITLE TO PROPERTY; LEASES
The Borrower has good and marketable title in fee simple (or
its equivalent under applicable law) to its respective properties and good title
to the other properties and assets it purports to own, including those reflected
in the most recent audited balance sheet provided to the Lender (other than
properties and assets disposed of in the ordinary course of business). The
Borrower enjoys peaceful and undisturbed possession under all leases of all
personal and all real property under which they operate, and all such leases are
valid and subsisting and in full force and effect and the Borrower is not in
default in any material respect in the performance or observance of its
12
obligations under any provisions thereof. Exhibit "F" includes a general
description of all presently existing Long Term Leases and Capital Leases under
which the Borrower is a lessee.
5.18 INTELLECTUAL PROPERTY
Borrower owns or has a valid right to use all patents, copyrights,
trademarks, licenses, trade names or franchises now being used or necessary to
conduct its business, all of which are listed on Exhibit "G", hereto and the
conduct of its business as now operated does not conflict with valid patents,
copyrights, trademarks, licenses, trade names or franchises of others in any
manner that could materially adversely affect in any manner the business or
assets or condition, financial or otherwise, of Borrower.
5.19 EXECUTIVE AGREEMENTS
None of the executive officers of the Borrower is subject to any
agreement in favor of anyone, other than Borrower, which limits or restricts
that person's right to engage in the type of business activity conducted or
proposed to be conducted by such Borrower or to use therein any property or
confidential information or which grants to anyone other than the Borrower any
rights in any inventions or other ideas susceptible to legal protection
developed or conceived by any such officer.
5.20 FOREIGN ASSET CONTROL REGULATIONS
Neither the execution of this Agreement nor the use of the proceeds
thereof violates the Trading With the Enemy Act of 1917, as amended, nor any of
the Foreign Assets Control Regulations promulgated thereunder or under the
International Emergency Economic Powers Act or the U.N. Participation Act of
1945.
5.21 INVESTMENT COMPANY ACT OF 1940
It is not an "investment company" within the meaning of, or is exempt
from, the provisions of the Investment Company Act of 1940, as amended.
6.00 FURTHER AGREEMENTS OF BORROWER
6.01 INSURANCE
Borrower agrees at all times to keep all of its property insured by
financially sound and reputable insurers satisfactory to the Lender, against
loss or damage by fire, water, theft, explosion or other hazards insured against
by extended coverage.
6.02 INSPECTION
The Borrower shall at all reasonable times and with reasonable notice
(unless an Event of Default has occurred hereunder and is continuing, after
which no prior notice must be provided), and from time-to-time, allow the
Lender, by or through any of its officers, agents, attorneys, or accountants, to
physically inspect, copy or make extracts from Borrower's books and records; all
at Borrower's expense following the occurrence of an Event of Default.
6.03 GOOD STANDING
Borrower will remain in good standing and comply with all laws and
regulations of the United States or of any state or states thereof or of any
political subdivision thereof, or of any governmental authority which may be
applicable to it or to its business.
6.04 NOTICE OF MERGER OR ACQUISITION
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Borrower and/or Guarantor will not wind up, liquidate, or dissolve
itself and/or the Guarantor, reorganize, merge or consolidate with, or into, or
convey, sell, assign, transfer, lease, or otherwise dispose of (whether in one
transaction or a series of transactions) all or substantially all of its assets
and/or the Guarantor's (whether now owned or hereafter acquired) to any Person
or acquire all or substantially all of the assets or the business of any Person
or permit any subsidiary to do so without providing notice of such event to
Lender within thirty (30) days of such occurrence, together with financial
information necessary for the Lender to evaluate the capital structure and debt
service ability of the Borrower after giving effect to such occurrence; provided
that such notice and information shall be solely for informational purposes and
Lender shall have no right to approve or disapprove such transaction.
6.05 COMPLIANCE WITH ERISA
The Borrower will not:
(A) engage in any prohibited transaction (within the meaning
of Section 406 of ERISA or Section 4975 of the Code), or
commit any other breach of its fiduciary responsibility under
Part 4 of Title I of ERISA, which could subject the Borrower
or any Borrower Group Member to any material liability under
Section 406, 409, 502(i) or 502(d) of ERISA or Section 4975 of
the Code, or under any agreement or other instrument pursuant
to which the Borrower or such Borrower Group Member could be
required to indemnify any Person against any such liability or
which could otherwise have a Material Adverse Effect on the
Borrower or any Plan; or
(B) fail to make any contribution required to be made by it to
any Plan or Multiemployer Plan or permit to exist with respect
to any Plan any "accumulated funding deficiency" (as such term
is defined in Section 412 of the Code or Section 302 of
ERISA), whether or not waived; or
(C) (i) commence proceedings to terminate any Plan, other than
in a "standard termination" within the meaning of Section 4041
of ERISA, or (ii) permit to exist any proceedings instituted
by the PBGC to terminate or to have a trustee appointed to
administer any Plan, or (iii) withdraw from any Multiemployer
Plan in a manner which could result in the imposition of a
withdrawal liability under Part 1 of Subtitle E of Title IV of
ERISA.
6.06 FINANCIAL STATEMENTS
The Borrower will deliver, at its sole expense, to the Lender, the
following:
A. Within one hundred twenty (120) days after the close of each fiscal
year, its consolidated financial statements, including the Guarantor,
audited by certified public accountants servicing the corporations,
along with the accountant's management letter and an accounts
receivable aging as of the end of each fiscal year.
B. Within forty-five (45) days after the close of each of the first
three (3) fiscal quarters, Borrower will provide to Lender, its
internally prepared financial statements, including the Guarantor,
including, without limitation, consolidated income statement and
balance sheet, accounts receivable aging, and consolidated statement of
cash flow prepared according to GAAP consistently applied.
C. The Borrower shall provide Lender with a true and correct copy of
all filings made with the Securities Exchange Commission as and when
filed.
D. The Borrower and Guarantor shall deliver to the Lender by March 31st
of each fiscal year, a true and correct copy of their consolidated
projections for that fiscal year to include a income statement balance
sheet and cash flow statement.
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E. From time-to-time, such additional information regarding the
financial condition or business of the Borrower and Guarantor as the
Lender may reasonably request.
6.07 MAINTENANCE OF RECORDS
Keep adequate records and books of account, in which complete entries
will be made in accordance with GAAP consistently applied, reflecting all
financial transactions of the Borrower.
6.08 CONDUCT OF BUSINESS
Except as otherwise permitted herein, the Guarantor shall continue to
engage in business in an efficient and economical manner.
6.09 COMPLIANCE WITH LAWS
Promptly pay and discharge all lawful taxes, assessments and
governmental charges or levies imposed upon the Borrower, or upon, or in respect
of, all or any part of the property or business of the Borrower, all trade
accounts payable in accordance with usual and customary business terms, and all
claims for work, labor or materials, which if unpaid might become a lien or
charge upon any property of the Borrower; provided the Borrower shall not be
required to pay any such tax, assessment, charge, levy, account payable or claim
if (i) the validity, applicability or amount thereof is being contested in good
faith by appropriate actions or proceedings which will prevent the forfeiture or
sale of any property of the Borrower or any material interference with the use
thereof by the Borrower, and (ii) the Borrower shall set aside on its books,
reserves deemed by it to be adequate with respect thereto. The Borrower will
promptly comply with all laws, ordinances or governmental rules and regulations
to which it is subject, including without limitation, the Occupational Safety
and Heath Act of 1970, ERISA, the Americans with Disabilities Act and all
Environmental Laws in all applicable jurisdictions, the violation of which would
materially and adversely affect the properties, business, prospects, profits or
condition of the Borrower or would result in any lien or charge upon any
property of the Borrower.
6.10 ENVIRONMENT
Notify the Lender immediately of any notice of a hazardous discharge or
environmental complaint received from any governmental agency or any other
party; notify the Lender immediately of any hazardous discharge from or
affecting its premises; immediately contain and remove the same, in compliance
with all applicable laws; promptly pay any fine or penalty assessed in
connection therewith, except such assessments as are being contested in good
faith, against which adequate reserves have been established; upon receipt of
such notification, permit the Lender to inspect the premises, and to inspect all
books, correspondence, and records pertaining thereto; and at the Lender's
request, and at the Borrower's expense, provide a report of a qualified
environmental engineer, satisfactory in scope, form, and content to the Lender,
and such other and further assurances reasonably satisfactory to the Lender that
the condition has been corrected.
6.11 PAYMENT OF LOANS
The Borrower will duly and punctually pay the principal of, and
interest on the Loan in accordance with the terms of the Loan and this
Agreement.
6.12 PRINCIPAL DEPOSITORY
The Guarantor further agrees that it shall conduct its primary banking
business with the Lender, including, without limitation, retaining the Lender as
its principal depository for savings accounts, checking accounts, general demand
depository accounts, and such other accounts as are utilized by the Guarantor
from time-to-time.
15
6.13 CHANGE IN MANAGEMENT
The Borrower represents and warrants that it will notify the Lender in
writing of any change in its present senior management until all Obligations are
fully paid.
6.14 ADVERSE TRANSACTIONS
The Borrower shall not enter into any transaction which materially and
adversely affects its ability to repay the Obligations in full as and when due.
6.15 LENDER'S EXPENSES
Borrower shall pay, on demand by Lender, all reasonable expenses,
charges, costs and fees in connection with the negotiation, documentation and
closing of the Loan, including all registration and recording fees, and the fees
and disbursements of all counsel to Lender, which in the aggregate shall not
exceed Fifteen Thousand and 00/100 Dollars ($15,000.00).
7.00 REPRESENTATIONS REMADE
Borrower warrants and covenants that the foregoing representations and
warranties will be true and shall be deemed remade as of the date of the
closing. All representations and warranties made herein or in any other Loan
Documents or in any certificate or other document delivered to Lender by or on
behalf of Borrower pursuant to or in connection with this Agreement or any other
Loan Document shall be deemed to have been relied upon by Lender,
notwithstanding any investigation heretofore or hereafter made by, or on behalf
of Lender. All such representations and warranties shall survive the making of
the Loan and Advance contemplated hereby and shall continue in full force and
effect until such time as the Loan has been paid in full.
8.00 [INTENTIONALLY DELETED]
9.00 DEFAULT
Borrower shall be in default under this Agreement upon the happening of
any of the following events or conditions (which shall individually and/or
collectively be referenced as an "Event of Default") without notice or demand
(except to the extent of notice or demand required pursuant to this Agreement
and any other Loan Documents or bylaw):
9.01 Failure to observe or perform any of its agreements, warranties or
representations in this Agreement, including, without limitation, financial
covenants, or in any other agreement with Lender, following notice thereof from
the Lender with respect to a non-monetary Event of Default. No notice shall be
sent with respect to a monetary default.
9.02 Failure of Borrower and/or Guarantor to pay within ten (10) days
of when due whether upon demand, at maturity, by acceleration or otherwise, any
amount payable by either of them to the Lender under any of their respective
Obligations.
9.03 Insolvency of Borrower as defined in this Agreement, or the
recording or existence of any lien for unpaid taxes against Borrower in excess
of One Hundred Thousand and 00/100 Dollars ($100,000.00); provided, however,
with respect to an involuntary bankruptcy, it shall not be an Event of Default
hereunder if the same is dismissed within sixty (60) days of the commencement
date.
9.04 Default in, and acceleration of any agreement or undertaking to
which the Borrower is a party or by which Borrower is bound or affected
following notice thereof from the Lender with respect to non-monetary Events of
Default. No notice shall be sent with respect to a monetary default.
16
9.05 The making by the Borrower of any misrepresentation to the Lender
for the purpose of obtaining credit or an extension of credit following notice
thereof from the Lender with respect to non-monetary Events of Default.
9.06 Failure of Borrower and Guarantor to maintain in the aggregate, at
all times, a Cash Balance equal to, or greater than, the sum of Two Million Five
Hundred Thousand and 00/100 Dollars ($2,500,000.00), plus the Obligations.
9.07 Any default arising pursuant to Section 4.01 of this Agreement.
Unless expressly agreed to by Lender, in writing, the Borrower has no right to
cure a monetary Event of Default.
10.00 LENDER'S RIGHTS
Upon the occurrence of an Event of Default and while such Event of
Default is continuing, Lender may:
10.01 Make all Obligations of Borrower and/or Guarantor immediately due
and payable, without presentment, demand, protest, hearing or notice of any kind
and exercise the remedies of a Lender afforded by the Uniform Commercial Code
and other applicable law or by the terms of any agreement between Borrower and
Lender.
10.02 The Lender shall hereby also be granted a security interest in,
and right of set off against any balance on any deposit, deposit account,
agency, reserve, holdback, or other account maintained by, or on behalf of, the
Borrower with the Lender, and the Lender shall have the right to apply the
proceeds of such foreclosure or set off against such items of Borrower's
Obligations as Lender may select.
10.03 All rights and remedies of Lender whether provided for herein or
in other agreements, instruments, or documents, or conferred by law, are
cumulative and not alternative and may be enforced successively.
11.00 BORROWER'S ACKNOWLEDGMENTS
11.01 Borrower acknowledges that Lender has not, by the terms hereof,
acted to intrude into any of its management decisions, or prerogatives, nor has
it entered into control or management of Borrower's affairs. Any reference
herein to limitation on of action(s) or conduct on the part of the Borrower
represents only undertakings, or forbearance(s) necessary to preserve the
management, cash flow, and asset and financial status quo promised by the
Borrower upon which the loan(s) were originally contemplated, and on which the
Lender relied as a condition-precedent thereto, and which are necessary to the
protection of Lender, in its sole status as secured lender, and not otherwise.
11.02 The Borrower acknowledges and represents that it is a
sophisticated borrower and has experience in financial matters generally and in
Borrower obligations, specifically. Borrower acknowledges that it has been
represented by counsel, and that a draft of this Agreement has been available
for review and negotiation. Therefore, Borrower hereby agrees that all Lender's
rights were the result of negotiations between the Lender and the Borrower and
were induced in a material respect by the benefits granted to the Borrower
hereunder.
12.00 BORROWER'S OBLIGATION TO PAY EXPENSES OF LENDER
Excluding expenses in connection with the preparation of this
Agreement, related loan documents and the closing, the Borrower agrees to pay
all reasonable expenses, including counsel fees and other expenses which may be
paid or incurred by Lender for itself or as agent for any other lender, in
connection with the subject matter of this Agreement, the Obligations, the
Collateral or any rights or interest therein in the event of a Default
hereunder, including without limiting the generality of the foregoing, the
enforcement of any security interest granted hereby and representation in any
litigation including any bankruptcy or insolvency proceedings. All such expenses
may be added to the principal amount of any indebtedness owed by the Borrower to
Lender and shall constitute part of the Obligations secured hereby.
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13.00 NO WAIVERS BY THE LENDER
No delay or omission on the part of Lender in exercising any rights
shall operate as a waiver of such right or any other right. Waiver on any one
occasion shall not be construed as a bar to or waiver of any right or remedy on
any future occasion. All of Lender's rights and remedies, whether evidenced
hereby or by any other agreement, instrument, or paper, shall be cumulative and
may be exercised singularly or concurrently.
14.00 AMENDMENT
This Agreement constitutes the entire Agreement between the parties.
This Agreement or any part thereof cannot be changed, waived, or amended, except
by an instrument in writing, signed by both the Lender and Borrower herein.
15.00 RIGHTS AND LIABILITIES OF ASSIGNS
Borrower shall not be permitted to assign this Agreement, unless
expressly authorized by the Lender, in writing. Lender may assign its interests
under this Agreement. The assignment of this Agreement shall bind all persons to
become bound as a borrower to this Agreement. In the event Lender assigns its
rights and interests under this Agreement, the Borrower shall render performance
under this Agreement to the assignee.
16.00 CONSTRUCTION
This Agreement shall be deemed to have been entered into in the
Commonwealth of Massachusetts, and the laws of the Commonwealth of Massachusetts
shall govern the construction of this Agreement and the rights and duties of the
parties hereto. It is agreed and understood that, as this form of agreement may
be used by persons of either sex, and for one or more corporations, and also
where there are several parties, in such cases, the masculine and plural, as
herein used, shall be instead of and shall stand for, the feminine or neuter
gender or the single number, as the context may require. Any ambiguity,
contradiction, or inconsistency between this Agreement and any other documents
relied upon by Lender shall, at all times, be resolved in favor of this
Agreement.
17.00 NOTICE
Any notice required or permitted hereunder shall be in writing, and
shall be duly given to any party or if mailed first class, postage prepaid or
certified mail, return receipt requested, to the Borrower at the address set
forth on page 1 hereof, to the Lender at its principal banking house, or to such
other address as may be specified by notice in writing to the other parties by
the party changing such address.
18.00 CONSENT TO JURISDICTION
THE BORROWER AND GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY (A)
SUBMIT TO PERSONAL JURISDICTION IN THE COMMONWEALTH OF MASSACHUSETTS OVER ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS, AND (B) WAIVE ANY AND ALL PERSONAL RIGHTS UNDER THE
LAWS OF ANY STATE (I) TO THE RIGHT, IF ANY, TO TRIAL BY JURY, AND (II) TO OBJECT
TO JURISDICTION WITHIN THE COMMONWEALTH OF MASSACHUSETTS OR VENUE IN ANY
PARTICULAR FORUM WITHIN THE COMMONWEALTH OF MASSACHUSETTS. THE BORROWER AGREES
THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR UNDER
APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY SUCH SUIT, ACTION OR PROCEEDING
MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED DIRECTED
TO THE BORROWER AT THE BUSINESS ADDRESS SET FORTH ON PAGE 1 ABOVE, AND SERVICE S
SO MADE SHALL BE DEEMED COMPLETE THE EARLIER OF DATE OF ACTUAL RECEIPT OR DATE
OF REFUSAL TO ACCEPT DELIVERY, BUT IN NO EVENT, LATER THAN TEN (10) BUSINESS
DAYS AFTER MAILING. NOTHING CONTAINED HEREIN, HOWEVER, SHALL PREVENT THE LENDER
FROM BRINGING ANY SUIT, ACTION OR PROCEEDING OR EXERCISING ANY RIGHTS AGAINST
ANY
18
COLLATERAL AND AGAINST THE BORROWER, AND AGAINST ANY PROPERTY OF THE BORROWER,
IN ANY OTHER STATE. INITIATING SUCH SUIT, ACTION OR PROCEEDING OR TAKING SUCH
ACTION IN ANY STATE SHALL IN NO EVENT CONSTITUTE A WAIVER OF THE AGREEMENT
CONTAINED HEREIN THAT THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS SHALL GOVERN
THE RIGHTS AND OBLIGATIONS OF THE BORROWER AND THE LENDER HEREUNDER OR THE
SUBMISSION HEREIN BY THE BORROWER TO PERSONAL JURISDICTION WITHIN THE
COMMONWEALTH OF MASSACHUSETTS.
EXECUTED UNDER SEAL this day of March 2002, by the parties set forth
below, or by their duly authorized officers.
BORROWER: XXXXX & WESSON HOLDING CORPORATION
BY:
----------------------
Witness Its duly authorized (seal)
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GUARANTOR: XXXXX & WESSON CORP.
BY:
------------------------
Witness Its duly authorized (seal)
LENDER: BANKNORTH, N.A.
BY:
------------------------
Witness Its duly authorized (seal)
20
