CREDIT AGREEMENT
BETWEEN
FIRST SECURITY BANK, N.A.
AND
JORE CORPORATION
DATED
AUGUST 19, 1999
TABLE OF CONTENTS
ARTICLE 1 - DEFINITIONS...........................................................................................1
ARTICLE 2 - LOANS AND TERMS OF PAYMENT............................................................................9
2.1 REVOLVING LINE OF CREDIT........................................................................9
2.1.1 MANNER OF REQUESTING....................................................................9
2.2 INTEREST ON THE REVOLVING LINE OF CREDIT.......................................................10
2.3 REVOLVING NOTE.................................................................................11
2.4 REPAYMENT OF REVOLVING LINE OF CREDIT..........................................................11
2.4.1 METHOD OF PAYMENT......................................................................11
2.4.2 LATE CHARGES AND DEFAULT INTEREST......................................................12
2.4.3 PREPAYMENTS............................................................................12
2.5 COMMITMENT FEE.................................................................................12
2.6 DOCUMENTATION FEE..............................................................................12
2.7 USE OF PROCEEDS OF REVOLVING LINE OF CREDIT....................................................12
2.8 ADDITIONAL INTEREST RATE PROVISIONS............................................................13
2.9 LIBOR LOAN EXTENSIONS AND CONVERSIONS..........................................................14
2.10 FUNDING LOSS INDEMNIFICATION...................................................................14
2.11 TAXES ON PAYMENTS..............................................................................14
ARTICLE 3 - SECURITY INTEREST....................................................................................15
3.1 GRANT OF SECURITY INTEREST.....................................................................15
3.2 FINANCING STATEMENTS...........................................................................15
ARTICLE 4 - CONDITIONS PRECEDENT.................................................................................16
4.1 INITIAL ADVANCE................................................................................16
4.1.1 REVOLVING NOTE.........................................................................16
4.1.2 SECURITY AGREEMENTS....................................................................16
4.1.3 GUARANTY...............................................................................16
4.1.4 EVIDENCE OF INSURANCE..................................................................16
4.1.5 OPINION OF COUNSEL FOR BORROWER AND JB TOOL............................................16
4.1.6 EVIDENCE OF ALL CORPORATE ACTION BY BORROWER AND JB TOOL...............................16
4.1.7 CERTIFICATES OF EXISTENCE FOR BORROWER AND JB TOOL.....................................17
4.1.8 ARTICLES OF INCORPORATION AND BYLAWS OF BORROWER.......................................17
4.1.9 ARTICLES OF ORGANIZATION AND OPERATING AGREEMENT OF JB TOOL............................17
4.1.10 CERTIFICATES OF ASSUMED BUSINESS NAME..................................................17
4.1.11 LETTER TO ACCOUNTANTS..................................................................17
4.1.12 PUBLIC RECORD SEARCHES.................................................................17
4.1.13 EVIDENCE OF TERMINATION OF LIENS.......................................................18
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4.1.14 PAYMENT OF DOCUMENTATION FEE...........................................................18
4.1.15 ADDITIONAL DOCUMENTS...................................................................18
4.2 ALL ADVANCES...................................................................................18
4.3 MORTGAGEE CONDITIONS PRECEDENT. ...............................................................18
4.3.1 MORTGAGE...............................................................................19
4.3.2 TITLE INSURANCE POLICY.................................................................19
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES.......................................................................19
5.1 INCORPORATION, GOOD STANDING, AND DUE QUALIFICATION............................................19
5.2 CORPORATE POWER AND AUTHORITY..................................................................19
5.3 LEGALLY ENFORCEABLE AGREEMENT..................................................................20
5.4 OTHER AGREEMENTS...............................................................................20
5.5 NO LITIGATION..................................................................................20
5.6 NO DEFAULTS ON OUTSTANDING JUDGMENTS OR ORDERS.................................................20
5.7 FINANCIAL STATEMENTS...........................................................................20
5.8 EMPLOYEE BENEFITS..............................................................................21
5.9 LABOR DISPUTES AND CASUALTIES..................................................................21
5.10 OPERATION OF BUSINESS..........................................................................21
5.11 ENVIRONMENTAL MATTERS..........................................................................21
5.12 OWNERSHIP AND LIENS............................................................................22
5.13 TAXES..........................................................................................22
5.14 INVESTMENT COMPANY ACT.........................................................................22
5.15 ACCURACY OF REPRESENTATIONS....................................................................22
5.16 YEAR 2000 COMPLIANCE...........................................................................23
5.17 PERFECTION OF SECURITY INTEREST................................................................23
5.18 CONTINUING WARRANTIES, REPRESENTATIONS AND COVENANTS...........................................23
ARTICLE 6 - AFFIRMATIVE COVENANTS................................................................................23
6.1 MAINTENANCE OF EXISTENCE.......................................................................24
6.2 MAINTENANCE OF RECORDS.........................................................................24
6.3 MAINTENANCE OF PROPERTIES......................................................................24
6.4 CONDUCT OF BUSINESS............................................................................24
6.5 MAINTENANCE OF INSURANCE.......................................................................24
6.6 COMPLIANCE WITH LAWS...........................................................................25
6.7 RIGHT OF INSPECTION............................................................................25
6.8 ACCOUNTING.....................................................................................25
6.9 REIMBURSEMENT OF BANK EXPENSES.................................................................25
6.10 LOCATION OF CHIEF EXECUTIVE OFFICE.............................................................25
6.11 REPORTING REQUIREMENTS.........................................................................26
6.11.1 MONTHLY FINANCIAL STATEMENTS...........................................................26
6.11.2 ANNUAL FINANCIAL STATEMENTS............................................................26
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6.11.3 BORROWING BASE CERTIFICATE............................................................26
6.11.4 MANAGEMENT LETTERS....................................................................26
6.11.5 NOTICE OF LITIGATION..................................................................26
6.11.6 NOTICE OF DEFAULTS AND EVENTS OF DEFAULT..............................................26
6.11.7 ERISA REPORTS.........................................................................26
6.11.8 COMPLIANCE CERTIFICATE................................................................27
6.11.9 ANNUAL FORECASTS......................................................................27
6.11.10 GENERAL INFORMATION...................................................................27
6.12 ENVIRONMENT....................................................................................27
6.13 BANK ACCOUNTS..................................................................................28
6.14 YEAR 2000 COMPLIANCE...........................................................................28
ARTICLE 7 - NEGATIVE COVENANTS...................................................................................28
7.1 CHANGE OF NAME.................................................................................28
7.2 MERGERS........................................................................................28
7.3 DEBT...........................................................................................28
7.4 DIVIDENDS......................................................................................29
7.5 SALE OF ASSETS.................................................................................29
7.6 INVESTMENTS....................................................................................29
7.7 GUARANTIES.....................................................................................30
7.8 SUSPENSION OF BUSINESS.........................................................................30
7.9 LIENS..........................................................................................30
7.10 PENSION PLANS..................................................................................30
7.11 CHANGE IN MANAGEMENT...........................................................................30
ARTICLE 8 - FINANCIAL COVENANTS..................................................................................30
8.1 CAPITAL EXPENDITURE............................................................................31
8.2 CURRENT RATIO..................................................................................31
8.3 LEVERAGE RATIO.................................................................................31
8.4 EBITDA COVERAGE RATIO..........................................................................31
ARTICLE 9 - EVENTS OF DEFAULT....................................................................................32
ARTICLE 10 - BANK'S RIGHTS AND REMEDIES..........................................................................34
10.1 SPECIFIC REMEDIES..............................................................................34
10.2 SET OFF........................................................................................35
10.3 NO LIMITATION ON REMEDIES......................................................................35
10.4 BANK EXPENSES..................................................................................35
ARTICLE 11 - WAIVERS.............................................................................................35
11.1 APPLICATION OF PAYMENTS........................................................................35
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11.2 DEMAND AND NOTICES.............................................................................36
ARTICLE 12 - NOTICES.............................................................................................36
ARTICLE 13 - DESTRUCTION OF BORROWER'S DOCUMENTS.................................................................37
ARTICLE 14 - CHOICE OF LAW AND VENUE.............................................................................37
ARTICLE 15 - GENERAL PROVISIONS..................................................................................37
15.1 EFFECTIVE DATE.................................................................................37
15.2 AMENDMENTS.....................................................................................37
15.3 NO WAIVER......................................................................................38
15.4 SUCCESSORS AND ASSIGNS.........................................................................38
15.5 PARTICIPATIONS.................................................................................38
15.6 HEADINGS.......................................................................................39
15.7 CONSTRUCTION...................................................................................39
15.8 SEVERABILITY...................................................................................39
15.9 INTEGRATION....................................................................................39
15.10 INDEMNITY......................................................................................39
15.11 NONLIABILITY OF BANK...........................................................................40
15.12 COUNTERPARTS...................................................................................40
EXHIBITS TO LOAN AGREEMENT
EXHIBIT NO. EXHIBIT DESCRIPTION
----------- -------------------
1.9 FORM OF BORROWING BASE CERTIFICATE
1.26 FORM OF JB TOOL SECURITY AGREEMENT
1.37 PERMITTED LIENS
1.43 DESCRIPTION OF THE REAL PROPERTY
1.46 FORM OF REVOLVING NOTE
1.47 FORM OF SECURITY AGREEMENT
2.1.1 AUTHORIZED PERSONS
2.1.1.2 LIBOR LOAN REQUEST FORM
4.1.3 FORM OF GUARANTY
4.1.5 FORM OF OPINION OF COUNSEL FOR BORROWER AND GUARANTORS
4.1.11 FORM OF LETTER TO ACCOUNTANTS
5.5 LITIGATION
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7.10 EMPLOYEE BENEFIT PLANS
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT is entered into as of August 19,
1999, between FIRST SECURITY BANK, N.A. ("Bank") and JORE CORPORATION, a
Montana corporation ("Borrower").
The parties agree as follows:
AGREEMENT
ARTICLE 1 - DEFINITIONS
As used in this Agreement, the following terms shall have
the following definitions:
1.1 "ACCOUNT" means a trade account, account
receivable, or other right to payment for goods sold or leased or for
services rendered (whether or not it has been earned by performance) owing to
Borrower.
1.2 "ACCOUNT DEBTOR" means the person or entity
obligated on an Account.
1.3 "ADJUSTED LIBOR INTEREST RATE" means the rate per
annum equal to the quotient of (i) the London Interbank Offered Rate divided
by (ii) one (1) minus the Eurocurrency Reserve Requirement for the applicable
Interest Period, rounded upward, if necessary, to the nearest one-sixteenth
of one percent. "Eurocurrency Reserve Requirement" means, for any LIBOR Loan
for any Interest Period therefor, the daily average of the stated maximum
rate (expressed as a decimal) at which reserves (including any marginal,
supplemental, or emergency reserves) are required to be maintained by Bank
during such Interest Period under Regulation D of the Board of Governors of
the Federal Reserve System, as amended or supplemented from time to time,
against "Eurocurrency Liabilities" (as such term is used in Regulation D) but
without benefit or credit of proration, exemptions, or offsets that might
otherwise be available to Bank from time to time under Regulation D. Without
limiting the effect of the foregoing, the Eurocurrency Reserve Requirement
shall reflect any other reserves required to be maintained by Bank against
(1) any category of liabilities that includes deposits by reference to which
the Adjusted LIBOR Interest Rate for LIBOR Loans is to be determined; or
(2) any category of extension of credit or other assets that include LIBOR
Loans.
1.4 "AGREEMENT" means this Credit Agreement, as
amended, supplemented, or modified from time to time.
CREDIT AGREEMENT - 7
1.5 "BANK" means First Security Bank, N.A., its
successors and assigns.
1.6 "BANK EXPENSES" means all costs and expenses
incurred by Bank in connection with the preparation, negotiation, execution,
delivery, filing, and administration of the Loan Documents, and of any
amendment, modification, extension, renewal or supplement to the Loan
Documents, including, without limitation, the fees and out-of-pocket expenses
of counsel for Bank, incurred in connection with advising Bank as to its
rights and responsibilities hereunder and structuring, drafting, reviewing,
amending, or otherwise involving the Loan Documents (not to exceed $_________
through the initial closing of this Agreement), and all costs and expenses,
including court costs, incurred in connection with enforcement of the Loan
Documents, or any amendment, modification, or supplement thereto, whether by
negotiation, legal proceedings, or otherwise.
1.7 "BORROWER" means Jore Corporation, a Montana
corporation.
1.8 "BORROWING BASE" means the amount of the Standard
Borrowing Base, except that upon satisfaction of the Mortgagee Conditions
Precedent in Section 4.3, the amount of the Borrowing Base shall be
temporarily increased by Eight Million Eighty-one Thousand Six Hundred
Eighty-six Dollars ($8,081,686) until February 1, 2000, when the amount of
the Borrowing Base shall be the amount of the Standard Borrowing Base.
1.9 "BORROWING BASE CERTIFICATE" means the certificate
that Borrower is to deliver to Bank twice each month setting forth
information with respect to the Borrowing Base, executed and certified as
accurate by an authorized officer of Borrower. The certificate shall be in
substantially the form attached as EXHIBIT 1.9 or such other form as Borrower
and Bank may agree upon in writing.
1.10 "BUSINESS DAY" means a day other than Saturday or
Sunday and a day on which commercial banks are required to be open for
business in Boise, Idaho, under the laws of the state of Idaho, and, if the
applicable day relates to a LIBOR Loan, Interest Period, or notice with
respect to a LIBOR Loan, a day on which dealings in Dollar deposits are also
carried on in the London Interbank market and banks are open for business in
London.
1.11 "CODE" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations and published interpretations
thereof.
1.12 "COLLATERAL" means and includes, without
limitation, all property and assets granted as collateral security for an
Obligation, whether real or personal property, whether granted directly or
indirectly, whether granted now or in the future, and whether granted in the
form of a security interest, mortgage, deed of trust, assignment, pledge,
chattel mortgage, chattel
CREDIT AGREEMENT - 8
trust, factor's lien, equipment trust, conditional sale, trust receipt, lien,
charge, lien or title retention contract, lease or consignment intended as a
security device, or any other security or lien interest whatsoever, whether
created by law, contract, or otherwise. The Collateral includes, without
limitation, all of Borrower's now owned or hereafter acquired Accounts,
Inventory, chattel paper, equipment, patents, trademarks, and general
intangibles.
1.13 "COMMITMENT AMOUNT" means Twenty Five Million
Dollars ($25,000,000).
1.14 "COMMONLY CONTROLLED ENTITY" means an entity,
whether or not incorporated, that is under common control with a Borrower
within the meaning of Section 414(b) or 414(c) of the Code.
1.15 "DOLLAR" and the symbol "$" means lawful money of
the United States of America.
1.16 "ELIGIBLE ACCOUNT" means an Account, excluding the
following:
a. Accounts that remain uncollected more than ninety
(90) days from the invoice date ("Delinquent
Accounts");
b. Accounts due from an Account Debtor that has suffered
a business failure or the termination of its
existence, or as to which a dissolution, insolvency
or bankruptcy proceeding has been commenced, any
assignment for the benefit of creditors has been
made, or a trustee, receiver or conservator has been
appointed for all or any part of the property of such
Account Debtor;
c. Accounts due from an Account Debtor affiliated with
Borrower in any manner, including, without
limitation, as stockholder, owner, officer, director,
agent or employee;
d. Accounts with respect to which payment is or may be
conditional;
e. Accounts due from an Account Debtor who is not a
resident or citizen of, located in, or subject to
service of process in, the United States of America,
except to the extent such Accounts are supported by
insurance, bonds or other assurances satisfactory to
Bank or such Accounts are otherwise approved by Bank
in writing at Bank's sole discretion;
f. Accounts with respect to which goods are placed on
consignment, guaranteed sale, or other terms by
reason of which the payment by the Account Debtor may
be conditional;
g. Accounts due from an Account Debtor that is any
national, federal or state government, including,
without limitation, any instrumentality, division,
agency, body or department thereof, except where such
Account Debtor has agreed to make payment directly to
the Bank;
CREDIT AGREEMENT - 9
h. Accounts commonly known as "xxxx and hold" or similar
arrangement;
i. Accounts due from an Account Debtor as to which
twenty-five percent (25%) or more of the aggregate
dollar amount of all outstanding accounts owing from
such Account Debtor are Delinquent Accounts;
j. That portion of Accounts due from an Account Debtor
(other than Sears or Home Depot) that is in excess of
fifty percent of Borrower's aggregate dollar amount
of all outstanding accounts;
k. Accounts as to which Borrower is or may become liable
to the Account Debtor for any reason, except if the
amount of the Accounts exceeds the known amount of
Borrower's liability to the Account Debtor, then the
amount of the excess shall be an Eligible Account;
l. Accounts that are not free of all liens,
encumbrances, charges, rights and interest of any
kind, except in favor of Lender;
m. Accounts that are supported or represented by chattel
paper or an instrument, unless such instrument or
chattel paper is endorsed and actually delivered to
Bank and Bank shall have specifically agreed to
include the current payment due under the instrument
or chattel paper as an Eligible Account;
n. Accounts with respect to which the Account Debtor is
located in New Jersey, Minnesota, or any other state
denying creditors access to its courts in the absence
of a Notice of Business Activities Report or other
similar filing, unless Borrower has either qualified
as a foreign corporation authorized to transact
business in such state or has filed a Notice of
Business Activities Report or similar filing with the
applicable state agency for the then current year;
and
o. Accounts for which the Account Debtor is JB Tool.
1.17 "ELIGIBLE INVENTORY" means Inventory held by Borrower
or JB Tool for sale or lease in the ordinary course of Borrower's or JB
Tool's business that is:
a. new and unused finished goods ready for sale;
b. Inventory in which Bank has a first, perfected
security interest;
c. not subject to a security interest, lien, or other
encumbrance in favor of any other person;
d. of good and merchantable quality free from defects;
e. not owned by Borrower or JB Tool for more than 180
days;
f. acceptable to Bank in its reasonable sole discretion;
and
g. if stored with a bailee, warehouseman or similar
party, such party has issued and delivered to Bank,
in form and substance acceptable to Bank, warehouse
receipts therefor in Bank's name.
CREDIT AGREEMENT - 10
1.18 "ENVIRONMENTAL LAWS" shall include, but shall not
be limited to the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. Sections 9601, ET SEQ.; the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. Sections 6901, ET SEQ.; the
Hazardous Materials Transportation Authorization Act of 1994, 49 U.S.C.
Sections 5101, ET SEQ.; the Federal Water Pollution Control Act, 33 U.S.C.
Sections 1251, ET SEQ.; and all rules and regulations thereunder, and any
other local, state and/or federal laws, rules, regulations and ordinances,
whether currently in existence or hereafter enacted, that govern, to the
extent applicable to Borrower's businesses, properties and assets: (a) the
existence, cleanup and/or remedy of contamination on property; (b) the
protection of the environment from soil, air or water pollution, or from
spilled, deposited or otherwise emplaced contamination; (c) the emission or
discharge of Hazardous Substances into the environment; (d) the control of
Hazardous Substances; or (e) the use, generation, transport, treatment,
removal or recovery of Hazardous Substances.
1.19 "ERISA" means the Employment Retirement Income
Security Act of 1974, as the same may be amended or supplemented from time to
time, including any regulations issued in connection therewith.
1.20 "EVENT OF DEFAULT" means the occurrence of any of
the events set forth in Article 9 of this Agreement.
1.21 "GAAP" means the generally accepted accounting
principles set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants
and the statements and pronouncements of the Financial Accounting Standards
Board that are applicable to the circumstances as of the date of
determination consistently applied. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP and all financial
data submitted pursuant to this Agreement shall be prepared in accordance
with GAAP.
1.22 "HAZARDOUS SUBSTANCE" means (a) any oil, petroleum
products, flammable substance, explosives, radioactive materials, hazardous
wastes or substances, toxic wastes or substances or any other wastes,
materials or pollutants that (i) pose a hazard to Borrower's owned or leased
real property or to persons on or about such real property or (ii) cause
Borrower's owned or leased real property to be in violation of any
Environmental Laws; (b) asbestos in any form that is or could become friable,
urea formaldehyde foam insulation, transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated biphenyls, or
radon gas; (c) any chemical, material or substance defined as or included in
the definition of "waste," "hazardous substances," "hazardous wastes,"
"hazardous
CREDIT AGREEMENT - 11
materials," "extremely hazardous waste," "restricted hazardous waste," or
"toxic substances" or words of similar import under any Environmental Laws;
(d) any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority or agency or
may or could pose a hazard to the health and safety of the occupants of
Borrower's owned or leased real property or the owners and/or occupants of
property adjacent to or surrounding such real property or any other person
coming upon such real property or adjacent property; and (e) any other
chemical, materials or substance that may or could pose a hazard to the
environment and are or become subject to regulation by any Environmental Laws.
1.23 "INTEREST PERIOD" means with respect to any LIBOR
Loan, the period commencing on the date such loan is made and ending, as the
Borrower may select, pursuant to this Agreement, on the numerically
corresponding day in the first, second, or third, calendar month thereafter,
except that each such Interest Period that commences on the last Business Day
of a calendar month (or on any day for which there is no numerically
corresponding day in the appropriate subsequent calendar month) shall end on
the last Business Day of the appropriate subsequent calendar month; provided
that if an Interest Period would end on a day that is not a Business Day,
such Interest Period shall be extended to the next Business Day unless such
Business Day would fall in the next calendar month, in which event such
Interest Period shall end on the immediately preceding Business Day.
1.24 "INVENTORY" means all of Borrower's and JB Tool's
raw materials, work in process, packaging, finished goods, merchandise, parts
and supplies, of every kind and description, and goods held for sale or lease
or furnished under contracts of service in which Borrower or JB Tool now has
or hereafter acquires any right, whether held by Borrower or JB Tool or
others, and all documents of title, warehouse receipts, bills of lading, and
all other documents of every type covering all or any part of the foregoing.
Inventory includes Inventory temporarily out of Borrower's or JB Tool's
custody or possession and all returns on Accounts.
1.25 "JB TOOL" means JB Tool, LLC, a Montana limited
liability company.
1.26 "JB TOOL SECURITY AGREEMENT" means the security
agreement in the form attached as EXHIBIT 1.26 to be executed by JB Tool and
delivered to Bank by the Borrower under the terms of this Agreement.
1.27 "LIBOR LOAN" means any loan under this Agreement
bearing interest at a rate based upon Adjusted LIBOR Interest Rate.
1.28 "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
CREDIT AGREEMENT - 12
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).
1.29 "LOAN" means a loan under the Revolving Line of
Credit.
1.30 "LOAN DOCUMENTS" means collectively this
Agreement, any note executed by Borrower to the order of Bank and any other
agreements or documents, whether now or hereafter existing, executed or
delivered in connection with this Agreement or any amendment thereto, and any
amendments, supplements, modifications, renewals, extensions, or refundings
of any of the foregoing documents.
1.31 "LONDON INTERBANK OFFERED RATE" means for any
Interest Period for a LIBOR Loan the lowest rate per annum quoted by
Barclays, Tokyo/Mitsubishi, Banker's Trust, and National Westminster at
approximately 11:00 a.m. London time appearing on the Reuters LIBOR page
screen two Business Days prior to the first day of such Interest Period for
the offering to leading banks in the London interbank market of dollar
deposits for a period and an amount comparable to the Interest Period and
principal amount of the LIBOR Loan that shall be made by Bank and outstanding
during the Interest Period.
1.32 "MATURITY DATE" means July 31, 2001, or such other
date as Bank and Borrower may agree upon in writing from time to time.
1.33 "MORTGAGE" means the Mortgage to be delivered to
Bank by the Borrower under the terms of Section 4.3 of this Agreement.
1.34 "MULTIEMPLOYER PLAN" means a Plan described in
Section 4001(a)(3) of ERISA.
1.35 "OBLIGATIONS" means any and all loans, lines of
credit, advances, debts, overdrafts, liabilities, indebtedness, lease
payments, guaranties, covenants, and duties owing by Borrower to Bank of any
kind and description (whether advanced pursuant to or evidenced by the Loan
Documents or any other instrument or agreement between Bank and Borrower),
any debt, liability, or obligation owing by Borrower to others that Bank may
have obtained by assignment or otherwise, any interest not paid when due, all
Bank Expenses, and all renewals, extensions, and modifications of the
foregoing, or any part thereof, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising.
1.36 "PBGC" means the Pension Benefit Guaranty
Corporation or any entity succeeding to any or all of its functions under
ERISA.
CREDIT AGREEMENT - 13
1.37 "PERMITTED LIENS" means: (i) Liens (if any)
granted to Bank to secure the Obligations, (ii) Liens described on
EXHIBIT 1.37 attached hereto, (iii) pledges or deposits made to secure
payment of worker's compensation insurance (or to participate in any fund in
connection with worker's compensation insurance), unemployment insurance,
pensions, or social security programs, (iv) Liens imposed by mandatory
provisions of law such as for materialmen, mechanics, warehousemen, and other
like Liens arising in the ordinary course of business, securing indebtedness
whose payment is not yet due, or that is being contested by Borrower in good
faith and for which adequate reserves have been provided, (v) Liens for
taxes, assessments, and governmental charges or levies imposed upon a person
or upon such person's income or profits or property, if the same are not yet
due and payable or if the same are being contested in good faith and as to
which adequate cash reserves have been provided, (vi) Liens arising from good
faith deposits in connection with tenders, leases, real estate bids, or
contracts (other than contracts involving the borrowing of money), pledges or
deposits to secure public or statutory obligations and deposits to secure (or
in lieu of) surety, stay, appeal, or customs bonds and deposits to secure the
payment of taxes, assessments, customs duties, or other similar charges,
(vii) encumbrances consisting of zoning restrictions, easements, or other
restrictions on the use of real property, provided that such items do not
impair the use of such property for the purposes intended, and none of which
is violated by existing or proposed structures or land use, or
(viii) purchase-money Liens on any property hereafter acquired or the
assumption of any Lien on property existing at the time of such acquisition
(and not created in contemplation of such acquisition), or a Lien incurred in
connection with any conditional sale or other title retention agreement or a
capital lease, provided that (a) any property subject to any of the foregoing
is acquired by the Borrower in the ordinary course of its business and the
Lien on any such property attaches to such asset concurrently or within
ninety (90) days after the acquisition thereof; (b) the obligation secured by
any Lien so created, assumed, or existing shall not exceed the lesser of the
cost or the fair market value as of the time of acquisition of the property
covered thereby to the Borrower, (c) each such Lien shall attach only to the
property so acquired, (d) the debt secured by all such Liens shall not exceed
One Hundred Thousand Dollars ($100,000) at any time outstanding in the
aggregate, and (e) the debt secured by such Lien is permitted by the
provisions of Section 7.3, and the related expenditure is permitted under
Section 8.1.
1.38 "PERSON" means an individual, partnership,
corporation, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority, or other entity of
whatever nature.
1.39 "PLAN" means any pension plan that is covered by
Title IV of ERISA and in respect of which any Borrower or a Commonly
Controlled Entity is an "employer" as defined in Section 3(5) of ERISA.
CREDIT AGREEMENT - 14
1.40 "PRIME LOAN" means any loan under this Agreement
bearing interest at a rate based upon the Prime Rate.
1.41 "PRIME RATE" means the Bank's announced rate of
interest referred to as its prime rate used as a reference point from which
the cost of credit to customers may be calculated. The Prime Rate is subject
to change from time to time. The Prime Rate is not intended to be the lowest
rate of interest charge by the Bank to its borrowers, and Bank may make loans
to other Persons bearing interest at, above, or below the Prime Rate.
1.42 "PROHIBITED TRANSACTION" means any transaction set
forth in Section 406 of ERISA or Section 4975 of the Code.
1.43 "REAL PROPERTY" means the real property in Lake
County, Montana, more particularly described in the attached EXHIBIT 1.43.
1.44 "REPORTABLE EVENT" means any of the events set
forth in Section 4043 of ERISA.
1.45 "REVOLVING LINE OF CREDIT" means Bank's commitment
to make loans to Borrower from time to time in accordance with Section 2.1 of
this Agreement.
1.46 "REVOLVING NOTE" means the promissory note
evidencing the Revolving Line of Credit in the stated principal amount of the
Commitment Amount executed by Borrower substantially in the form attached as
EXHIBIT 1.46.
1.47 "SECURITY AGREEMENT" means the Security Agreement
in the form attached as EXHIBIT 1.47 to be delivered to Bank by the Borrower
under the terms of this Agreement.
1.48 "STANDARD BORROWING BASE" means the sum of
eighty-five percent (85%) of the aggregate amount of Eligible Accounts plus
the lesser of (i) sixty-five percent (65%) of the aggregate amount of
Eligible Inventory, or (ii) the amount of Eligible Inventory equal to
sixty-five percent (65%) of the total Borrowing Base.
1.49 "SUBORDINATED DEBT" means indebtedness and
liabilities of Borrower that have been subordinated to the Obligations by
written agreement in form and substance acceptable to Bank.
ARTICLE 2 - LOANS AND TERMS OF PAYMENT
CREDIT AGREEMENT - 15
2.1 REVOLVING LINE OF CREDIT.
Upon the request of Borrower, made at any time and from
time to time from the date hereof until the Maturity Date, and so long as no
Event of Default has occurred, Bank shall make loans to Borrower in an
aggregate principal amount not to exceed at any time outstanding the lesser
of (i) the Borrowing Base and (ii) the Commitment Amount. Subject to the
terms of this Agreement, loans made by Bank may be repaid and reborrowed, up
to and including the Maturity Date. If at any time and for any reason the
amount of advances made pursuant to this Section exceed the above dollar
limitation, then Borrower, upon Bank's election and demand, shall immediately
pay to Bank in cash the amount of such excess.
2.1.1 MANNER OF REQUESTING.
2.1.1.1 PRIME LOANS.
Bank is authorized to make Revolving Line
of Credit Prime Loans upon written or, at the discretion of Bank, telephonic
instructions received from any person purporting to be a person identified on
EXHIBIT 2.1.1.1 attached hereto or such other persons as Borrower may from
time to time designate in writing to Bank. If no Event of Default has
occurred and is continuing, Bank shall make the Prime Loans to Borrower by
crediting the amount thereof to the Borrower's account with Bank. Bank, at
its sole and absolute discretion, and subject to the terms hereof, may make
Prime Loans to Borrower in an amount equal to the amount of any overdraft
that may from time to time exist with respect to any bank account that
Borrower may now or hereafter have with Bank. The existence of such overdraft
shall be deemed to be a request by Borrower for any such Prime Loan.
2.1.1.2 LIBOR LOANS.
For any Revolving Line of Credit Loan
that is to be a LIBOR Loan, the Borrower shall request such a Loan by
delivering a LIBOR Loan Request to Bank no later than 11:00 a.m. (Boise,
Idaho time) at least two (2) Business days prior to the requested date of the
Loan. A LIBOR Loan Request shall specify (a) the date of the requested Loan,
(b) the amount of such Loan, and (c) the requested duration of the Interest
Period for the Loan, and shall be in substantially the form of the attached
EXHIBIT 2.1.1.2 executed by any person purporting to be a person identified
in Exhibit 2.1.1.1 or such other persons as Borrower may from time to time
designate in writing to Bank. If Bank determines that the requested Loan is
available and will comply with this Agreement, and if no Event of Default has
occurred and is continuing, Bank shall make the LIBOR Loan to Borrower by
crediting the amount thereof to the Borrower's account with Bank.
CREDIT AGREEMENT - 16
2.1.1.3 MINIMUM LIBOR LOAN REQUIREMENTS.
Each LIBOR Loan shall be in a minimum
amount of One Million Dollars ($1,000,000). No part of the Revolving Line of
Credit shall be made as, extended as, or converted into, a LIBOR Loan with an
Interest Period that ends after the Maturity Date. No more than six (6) LIBOR
Loans shall be outstanding at one time.
2.2 INTEREST ON THE REVOLVING LINE OF CREDIT.
Each Loan shall be a Prime Loan or a LIBOR Loan, as
selected by Borrower in accordance with the terms of this Agreement.
2.2.1 That portion of the Revolving Line of
Credit that is a Prime Loan shall bear interest at a fluctuating per annum
rate equal to the Prime Rate increased by the applicable Prime Margin set
forth below. Agent's Prime Rate may change from time to time, and the
interest payable will continue to fluctuate at the rate as stated herein. Any
changes to the Prime Rate shall become effective without prior notice to
Borrower on the date on which the Prime Rate changes.
2.2.2 That portion of the Revolving Line of
Credit that is a LIBOR Loan shall bear interest at a fluctuating per annum
rate equal to the Adjusted LIBOR Interest Rate for the applicable Interest
Period, as quotes are available, increased by the applicable LIBOR Margin set
forth below. Any changes to the LIBOR Margin shall not apply to LIBOR Loans
outstanding or requested on the date the LIBOR Margin is adjusted.
2.2.3 The actual interest to be charged on the
Revolving Line of Credit shall be calculated daily on the outstanding balance
for the actual number of days elapsed on the basis of a year consisting of
360 days for LIBOR Loans and 365/366 days for Prime Loans. Should the rate of
interest exceed that allowed by law, the applicable rate of interest will be
the maximum rate of interest lawfully allowed. The principal amount
outstanding on which the interest rate(s) shall be charged shall be
determined from the Bank's records, which shall at all times be conclusive,
absent manifest error.
2.2.4 The Prime Margin shall be one percent
(1%) per annum and the LIBOR Margin shall be three percent (3%) per annum
until Borrower closes an initial public offering of its stock with net
proceeds of at least Twenty Five Million Dollars ($25,000,000) received by
Borrower in immediately available funds. After close of such initial public
offering, the Prime Margin shall be reduced to one-half percent (0.5%) per
annum and the LIBOR Margin shall be reduced to two and one-half percent
(2.5%) per annum. Notwithstanding the preceding provisions of this
subsection, that portion of the outstanding principle balance of the
Revolving
CREDIT AGREEMENT - 17
Line of Credit that exceeds the amount of the Standard Borrowing Base shall
bear interest at a fluctuating per annum rate that is one percent (1%) per
annum greater than the otherwise applicable rate.
2.3 REVOLVING NOTE.
The Borrower's obligation to repay the Revolving Line of
Credit shall be evidenced by the Revolving Note executed by the Borrower and
dated the date of this Agreement.
2.4 REPAYMENT OF REVOLVING LINE OF CREDIT.
Interest accrued on that portion of the outstanding
principal balance of the Revolving Line of Credit that is a Prime Loan shall
be paid on or before the tenth day of each month in an amount equal to the
interest accrued as of the last day of the immediately preceding month.
Interest accrued on that portion of the outstanding principal balance of the
Revolving Line of Credit that is a LIBOR Loan shall be paid on the last day
of the Interest Period with respect thereto. All outstanding principal and
accrued interest of the Revolving Line of Credit shall be paid in full on the
Maturity Date.
2.4.1 METHOD OF PAYMENT.
All payments on the Revolving Line of
Credit shall be made to Bank at its Corporate Banking Division office in
Boise, Idaho in Dollars and in immediately available funds. No checks,
drafts, or other instruments received by Bank purportedly in satisfaction of
any of the Obligations shall constitute payment thereof unless and until such
instruments have actually been collected. All payments received after
11:00 a.m. Boise, Idaho time shall be considered to have been received the
next Business Day. In case the due date of any payment falls on a day that is
not a Business Day, such payment shall instead be due the next succeeding
Business Day, and interest shall continue to accrue. Borrower requests and
authorizes Bank to pay all amounts due to Bank under the Loan Documents by
debiting deposit amounts maintained by Borrower with Bank. Borrower shall
maintain sufficient collected balances in its demand deposit account with
Bank in order that each payment will be available when due under the Loan
Documents. Bank may note the date, amount and interest rate (and Interest
Period with respect to LIBOR Loans) of each Loan and each payment of
principal and interest with respect hereto in Bank's books and records
(either manually or by electronic entry), which notation shall be conclusive
evidence of the information noted, absent manifest error. Borrower shall hold
all proceeds of collections on Borrower's Accounts and of any other
Collateral in trust for Bank and such proceeds shall be deposited into a
depository account with Bank, either through a lockbox or electronically
(ACH/wire transfer), and all such collected
CREDIT AGREEMENT - 18
funds from such proceeds in the account shall be applied to the outstanding
principal balance of the Revolving Line of Credit on a daily basis, subject
to the prepayment restriction on LIBOR Loans.
2.4.2 LATE CHARGES AND DEFAULT INTEREST.
If Bank has not received the full amount
of any payment by the end of fifteen (15) calender days after the date due,
including the balance due at maturity, Borrower shall pay a late charge to
Bank in the amount of five percent (5%) of the overdue payment of principal
and interest. Borrower shall pay the late charge promptly, but only once on
each late payment. In addition to any late charges that may be assessed as
herein provided, the outstanding balance of the Revolving Line of Credit
after the occurrence of an Event of Default shall accrue interest from the
date of the Event of Default at the rate equal to four (4) percentage points
per annum in excess of the interest rate that would otherwise be charged if
no Event of Default existed. If Bank shall waive in writing or Borrower shall
cure such Event of Default, the interest rate shall revert to the non-default
rate from and after such waiver or completion of such cure, until another
such Event of Default.
2.4.3 PREPAYMENTS.
The Borrower may prepay any or all of the
Revolving Line of Credit that is a Prime Loan without penalty or premium. A
LIBOR Loan may be prepaid in whole or in part only on the last day of the
Interest Period for such Loan, unless Borrower pays to Bank the prepayment
funding loss indemnification pursuant to subsection 2.8.
2.5 COMMITMENT FEE.
The Borrower shall pay to the Bank a commitment fee on the
average daily unused portion of the Commitment Amount from the date of this
Agreement until the Maturity Date at the per annum rate of one quarter
percent (0.25%), payable in arrears on the first Business Day of each fiscal
quarter during the term of such Bank's Commitment and on the Maturity Date,
commencing October 1, 1999, and ending on the Maturity Date. The commitment
fee shall be calculated for the actual number of days elapsed on the basis of
a year consisting of 365 days.
2.6 DOCUMENTATION FEE.
Borrower shall pay Bank a documentation fee for the
Revolving Line of Credit in the amount of Five Hundred Dollars ($500). The
documentation fee shall be paid on the date of this Agreement and shall
represent an unconditional payment to Bank in consideration of Bank's
CREDIT AGREEMENT - 19
agreement to extend financial accommodations to Borrower pursuant to this
Agreement.
2.7 USE OF PROCEEDS OF REVOLVING LINE OF CREDIT.
The proceeds of the Revolving Line of Credit shall be used
by the Borrower for working capital. The Borrower shall not, directly or
indirectly, use any part of such proceeds for the purpose of purchasing or
carrying any margin stock within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System or to extend credit to any person for
the purpose of purchasing or carrying any such margin stock, or for any
purpose that violates, or is inconsistent with, Regulation X of such Board of
Governors.
2.8 ADDITIONAL INTEREST RATE PROVISIONS.
2.8.1 If Bank shall have determined (which
determination shall be conclusive and binding) that for any reason adequate
and reasonable means do not exist for ascertaining the Adjusted LIBOR
Interest Rate for any or all Interest Periods, Bank shall give notice of such
determination to the Borrower. If such notice is given, and until such notice
has been withdrawn by Bank, no additional LIBOR Loans for such Interest
Periods shall be made and no additional conversions of Loans to LIBOR Loans
for such Interest Periods shall be permitted, and at the end of the Interest
Period relating to any outstanding LIBOR Loans such Loans shall become Prime
Loans.
2.8.2 Notwithstanding any other provisions
herein, if any law, treaty, rule or regulation, or determination of a court
or other governmental authority, or any change therein or in the
interpretation or application thereof, shall make it unlawful for Bank to
make or maintain LIBOR Loans as contemplated by this Agreement, the
obligation of Bank hereunder to make LIBOR Loans shall forthwith be canceled,
and, if required, each LIBOR Loan then outstanding shall immediately become a
Prime Loan.
2.8.3 In the event that any adoption or
modification of any law, treaty, rule, or regulation, or determination of a
court or other governmental authority, or that any change in the
interpretation or application thereof, which adoption, modification or change
becomes effective after the date hereof, or in the event that compliance by
Bank with and request or directive issued after the date hereof (whether or
not having the force of law) from any governmental authority:
(A) does or shall subject Bank or
any of its foreign offices to any tax of any kind whatsoever with respect to
the Loan Documents, or changes the basis of taxation of payments to Bank of
principal, interest, fees, or any other amount payable hereunder (except for
changes in the rate of tax on the overall net income of Bank); or
CREDIT AGREEMENT - 20
(B) does or shall impose, modify, or
hold applicable any reserve, special deposit, compulsory loan, FDIC
insurance, or similar requirement against assets held by, deposits or other
liabilities in or for the account of, advances or loans by, other credit
extended by or any other acquisition of funds by any office of Bank (other
than to the extent previously taken into account in determining the Prime
Rate or statutory reserves); or
(C) does or shall impose on Bank any
other condition; and the result of any of the foregoing is to increase the
cost to Bank of making, renewing, or maintaining the loans hereunder, or to
reduce any amount receivable thereunder or under any of the Loan Documents;
then, in any such case, the Borrower shall promptly pay to Bank, upon demand,
such amount or amounts as may be necessary to compensate Bank for any
additional cost or reduced amount received. Bank shall deliver to the
Borrower a written statement of the losses or expenses sustained or incurred,
and any reasonable allocation made by Bank of such losses and expenses shall
be conclusive, absent manifest error. Bank shall promptly notify the Borrower
of any event of which it has knowledge, occurring after the Closing Date,
which event will entitle Bank to compensation under this Section.
2.9 LIBOR LOAN EXTENSIONS AND CONVERSIONS.
So long as no Event of Default has occurred and is
continuing and subject to the terms and conditions hereof, the Borrower may
extend a LIBOR Loan beyond its current Interest Period by giving Bank a LIBOR
Loan Request for the extension. The Borrower may also convert any Prime Loan
into a LIBOR Loan by giving Bank a LIBOR Loan Request for the conversion.
Unless Bank receives notice of a proposed extension or conversion as and when
required hereunder, then at the end of an Interest Period for a LIBOR Loan
such Loan shall automatically convert to a Prime Loan.
2.10 FUNDING LOSS INDEMNIFICATION.
The Borrower shall indemnify and hold Bank free and
harmless from any loss or expense (including without limitation any loss or
expense incurred by reason of the liquidation or redeployment of deposits or
other funds acquired by Bank to fund or maintain any LIBOR Loan) that Bank
may incur as a result of (i) the Borrower's failure to make a borrowing,
conversion, or extension with respect to a LIBOR Loan after making a request
therefor; (ii) a prepayment (whether optional or mandatory) of a LIBOR Loan
prior to the expiration of a related Interest Period, and (iii) the
conversion of a LIBOR Loan as a result of any of the events indicated in
paragraph 2.7.2. At the election of Bank such losses shall be conclusively
deemed to consist of an amount equal to:
CREDIT AGREEMENT - 21
(i) The interest that would have been
received from the Borrower on the amounts during the Interest Period (or
remaining portion thereof in question) had the Borrower not prepaid, repaid,
or failed to borrow, convert, or extend, such funds, as the case may be, minus
(ii) The return that Bank could have obtained
had it placed such funds on deposit in the interbank dollar market selected
by Bank in its sole discretion on the date of such prepayment, repayment or
failure to borrow, convert, or extend as the case may be, and such funds had
remained on deposit until the end of the applicable Interest period.
2.11 TAXES ON PAYMENTS.
All payments made by Borrower under this Agreement and the
other Loan Documents shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future income, stamp or
other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Taxes"), now or hereafter imposed, levied, collected, withheld
or assessed by any governmental authority (except net income taxes and
franchise taxes in lieu of net income taxes imposed on Agent or Bank as a
result of a present or former connection between the jurisdiction of the
governmental authority imposing such tax on Agent or such Bank, excluding a
connection arising solely from Agent or such Bank having executed, delivered,
or performed its obligations or received a payment under, or enforced, this
Agreement or the other Loan Documents). If any Taxes are required to be
withheld from any amounts payable to Agent or any Bank or Issuing Bank under
any Loan Document, the amounts so payable to Agent or such Bank shall be
increased to the extent necessary to yield to Agent or such Bank (after
payment of all Taxes) interest or any such other amounts payable hereunder at
the rates or in the amounts specified in this Agreement and the other Loan
Documents.
ARTICLE 3 - SECURITY INTEREST
3.1 GRANT OF SECURITY INTEREST.
Borrower grants to Bank a continuing security interest in
the Collateral, including all proceeds and products thereof, in order to
secure prompt repayment of the Obligations and prompt performance by Borrower
of each and all of its covenants and obligations under this Agreement and the
other Loan Documents. Bank's security interest in the Collateral shall be
further evidenced by the Security Agreement and such other security documents
as Bank may at any time require.
3.2 FINANCING STATEMENTS.
CREDIT AGREEMENT - 22
The Borrower shall from time to time, at the expense of
Borrower, promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or that Bank
may reasonably request, in order to perfect and protect any pledge, assignment
or security interest granted or purported to be granted by any Loan Document or
to enable Bank to exercise and enforce its rights and remedies under any Loan
Document with respect to any Collateral. Without limiting the generality of the
foregoing, the Borrower shall execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices, as may
be necessary or desirable, or as Bank may request, in order to perfect and
preserve the pledge assignment, and security interest granted or purported to be
granted by any Loan Document. Borrower irrevocably makes, constitutes, and
appoints Bank (and any of Bank's officers, employees, or agents designated by
Bank) as Borrower's true and lawful attorney with power, upon Borrower's failure
or refusal to comply with their undertakings contained in this paragraph, to
sign the name of Borrower on any of the above-described documents or on any
other similar documents that need to be executed, recorded, and/or filed in
order to perfect or continue Bank's perfected security interest in the
Collateral.
ARTICLE 4 - CONDITIONS PRECEDENT
4.1 INITIAL ADVANCE.
The obligation of Bank to make the initial Loan to the
Borrower under this Agreement is subject to the conditions precedent that Bank
shall have received on or before the day of such loan each of the following, in
form and substance satisfactory to Bank and its legal counsel:
4.1.1 REVOLVING NOTE.
The Revolving Note executed by the Borrower.
4.1.2 SECURITY AGREEMENTS.
The Security Agreement executed by Borrower and the
JB Tool Security Agreement executed by JB Tool, together with all UCC-1
financing statements desirable in the opinion of Bank to perfect the security
interest created by these security agreements.
4.1.3 GUARANTY.
A guaranty of the Obligations in substantially the
form of EXHIBIT 4.1.3 executed by Guarantor and secured by the JB Tool Security
Agreement.
CREDIT AGREEMENT - 23
4.1.4 EVIDENCE OF INSURANCE.
Evidence of the insurance Borrower and JB Tool must
maintain in accordance with the Loan Documents.
4.1.5 OPINION OF COUNSEL FOR BORROWER AND JB TOOL.
A favorable opinion of counsel for Borrower and JB
Tool, in substantially the form of EXHIBIT 4.1.5 and as to such other matters as
Bank may reasonably request.
4.1.6 EVIDENCE OF ALL CORPORATE ACTION BY BORROWER
AND JB TOOL.
Certified copies of all corporate action taken by
each of Borrower and JB Tool authorizing its execution and delivery of the Loan
Documents and each other document to be delivered pursuant to this Agreement and
its performance of its agreements thereunder.
4.1.7 CERTIFICATES OF EXISTENCE FOR BORROWER AND
JB TOOL.
Certificates of existence or good standing dated a
reasonable date before the effective date of this Agreement showing that each of
the Borrower and JB Tool is in good standing under the laws of the state of its
incorporation and all other states in which it is doing business.
4.1.8 ARTICLES OF INCORPORATION AND BYLAWS OF
BORROWER.
Copies of the articles of incorporation and bylaws of
Borrower certified by an officer of Borrower to be true and correct.
4.1.9 ARTICLES OF ORGANIZATION AND OPERATING
AGREEMENT OF JB TOOL.
Copies of the articles of Organization and operating
agreement of JB Tool certified by a member of JB Tool to be true and correct.
4.1.10 CERTIFICATES OF ASSUMED BUSINESS NAME.
Copies of all certificates of assumed business name,
if any, filed by Borrower.
4.1.11 LETTER TO ACCOUNTANTS.
CREDIT AGREEMENT - 24
A letter in the form of EXHIBIT 4.1.11 to Borrower's
outside auditors (which letter Borrower shall also deliver to any subsequent
outside auditors hired by Borrower, all of which shall be independent certified
public accountants acceptable to Bank): (1) instructing such auditors to send to
Bank copies of all financial statements (whether preliminary or final) and
reports that are prepared as a result of any audit or other review of Borrower's
operations, finances, or internal controls, including any reports dealing with
improper accounting practices, defalcations, financial reporting errors, or
misstatements or fraud; (2) instructing such auditors to, upon Bank's request,
meet with Bank to discuss said financial statements and any questions regarding
same; and (3) advising such auditors that one of the principal purposes of the
audited financial statements which they may be asked to prepare is to provide
Bank with information regarding Borrower's financial condition.
4.1.12 PUBLIC RECORD SEARCHES.
Uniform Commercial Code financing statement searches,
federal and state income tax lien searches, judgment searches, or other similar
searches on Borrower and JB Tool and any other Persons that Bank may require and
in such form as Bank may require.
4.1.13 EVIDENCE OF TERMINATION OF LIENS.
Evidence that all Liens against the Collateral other
than Permitted Liens have been satisfied or otherwise terminated.
4.1.14 PAYMENT OF DOCUMENTATION FEE.
Payment of the documentation fee as required by
Section 2.6 of this Agreement.
4.1.15 ADDITIONAL DOCUMENTS.
Such additional approvals, opinions, or documents as
Bank may reasonably request.
4.2 ALL ADVANCES.
The obligation of Bank to make each Loan under this Agreement
shall be subject to the following conditions precedent:
4.2.1 The following statements shall be true on
the date of each loan,
CREDIT AGREEMENT - 25
and, if requested by Bank, Borrower shall have delivered to Bank a
certificate signed by a duly authorized officer of the Borrower, certifying
to Bank the truth of the following statements:
(a) The representations and warranties
contained in this Agreement and in the Loan Documents are correct on and as of
the date of such loan as though made on and as of such date.
(b) No Event of Default has occurred
and is continuing, or would result from such loan.
4.2.2 Bank shall have received such other
approvals, opinions, or documents as Bank may reasonably request.
4.3 MORTGAGEE CONDITIONS PRECEDENT.
The Borrowing Base shall not be temporarily increased in
accordance with section 1.8 until Bank shall have received each of the
following, in form and substance satisfactory to Bank and its legal counsel:
4.3.1 MORTGAGE.
A mortgage executed by Borrower and recorded in the
official records of Lake County, Montana, granting Bank a first priority lien
against the Real Property.
4.3.2 TITLE INSURANCE POLICY.
A loan policy of title insurance in the amount of
Eleven Million Five Hundred Forty-five Thousand Two Hundred Sixty-six Dollars
($11,545,266), insuring the validity and first priority lien of the mortgage
against the Real Property, subject only to such exceptions as are acceptable to
Bank and including such endorsements as required by Bank.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement and
to make the loans as provided in this Agreement, the Borrower makes the
following representations and warranties to the Bank, which shall survive
execution of this Agreement:
5.1 INCORPORATION, GOOD STANDING, AND DUE QUALIFICATION.
Borrower was incorporated under the Montana Business
Corporation Act and
CREDIT AGREEMENT - 26
exists in good standing under the laws of the jurisdiction of its
incorporation with power under the Montana Business Corporation Act to own or
lease its assets and to transact the business in which it is now engaged or
proposed to be engaged. Borrower is qualified to transact business as a
foreign corporation in good standing under the laws of each other
jurisdiction in which such qualification is required.
5.2 CORPORATE POWER AND AUTHORITY.
Borrower has authorized the execution and delivery of the Loan
Documents and the performance of its agreements thereunder by all necessary
corporate action under the Montana Business Corporation Act. The execution and
delivery of the Loan Documents by Borrower and the performance of its
obligations thereunder will not (1) require any consent or approval of the
shareholders of Borrower that has not been obtained; (2) contravene Borrower's
articles of incorporation or bylaws; (3) violate any provision of any law, rule,
regulation, order, writ, judgment, injunction, decree, determination, or award
presently in effect having applicability to Borrower; (4) result in a breach of
or constitute a default under any indenture or loan or credit agreement or any
other agreement, lease, or instrument to which Borrower is a party or by which
it or its properties may be bound or affected; or (5) cause Borrower to violate
any such law, rule, regulation, order, writ, judgment, injunction, decree,
determination, or award or be in default under any such indenture, agreement,
lease, or instrument.
5.3 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 against the Borrower, 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.
5.4 OTHER AGREEMENTS.
No event has occurred and is continuing that constitutes or
that, with the giving of notice or the lapse of time or both, could constitute,
an event of default or a default under any agreement or guaranty to which the
Borrower is a party, and no such event will occur upon the making of the loans
hereunder.
5.5 NO LITIGATION.
Except as described in the attached Exhibit 5.5, there is no
pending or threatened action or proceeding against or affecting Borrower before
any court, governmental agency, or
CREDIT AGREEMENT - 27
arbitrator, that 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.
5.6 NO DEFAULTS ON OUTSTANDING JUDGMENTS OR ORDERS.
The Borrower has satisfied all judgments against it, and the
Borrower is not in violation of 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.
5.7 FINANCIAL STATEMENTS.
All financial statements and information relating to Borrower
that have been delivered by Borrower to Bank are complete and correct and fairly
present the financial condition of the Borrower as of the date of such
statements and information 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). There has been no material adverse change in the financial
condition of Borrower since the date of the most recent of such financial
statements submitted to Bank. There are no liabilities of Borrower, fixed or
contingent, that are material but are not reflected in the financial statements
or in the notes thereto, other than liabilities arising in the ordinary course
of business since the date of the most recent of such financial statements
submitted to Bank.
5.8 EMPLOYEE BENEFITS.
The Borrower is 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 that 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 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.
CREDIT AGREEMENT - 28
5.9 LABOR DISPUTES AND CASUALTIES.
Neither the businesses 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 other
casualty (whether or not covered by insurance), materially and adversely
affecting such businesses or properties or the operation of the Borrower.
5.10 OPERATION OF BUSINESS.
Borrower possesses all material licenses, permits, franchises,
patents, copyrights, trademarks, and trade names, or rights thereto, to conduct
its businesses 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. Borrower has filed, and will file in the
future, with the appropriate governmental entities all assumed business name
certificates necessary or required to conduct its businesses.
5.11 ENVIRONMENTAL MATTERS.
To the best of its knowledge, the Borrower has complied
with, and its businesses, operations, assets, equipment, property, leaseholds
or other facilities are in compliance with, the provisions of the
Environmental Laws and all other federal, state, and local environmental,
health and safety laws, codes and ordinances, and all rules and regulations
promulgated thereunder. 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 Hazardous
Substances; or (6) other environmental, health, or safety matters. Borrower
has not received notice of, nor knows of, or suspects facts that might
constitute any violations of an Environmental Law or any other federal,
state, or local environmental, health, or safety laws, codes, or ordinances
and any rules or regulations promulgated thereunder with respect to its
businesses, operations, assets, equipment, property, leaseholds, or other
facilities. To the best of Borrower's knowledge, except in accordance with a
valid governmental permit, license, certificate, or approval, 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 Hazardous Substances or from the premises; and
accordingly, except for inventory of raw materials, supplies, work in
progress, and finished goods that are to be used or sold in the ordinary
course of business, the premises of Borrower is free of all such Hazardous
Substances. To the best of Borrower's knowledge, 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
CREDIT AGREEMENT - 29
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 Hazardous
Substances; or (6) other environmental, health, or safety matters affecting
the Borrower or its businesses, operations, assets, equipment, property,
leaseholds, or other facilities. 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 Hazardous Substances.
5.12 OWNERSHIP AND LIENS.
The Borrower has title to, or valid leasehold interests in,
all of its properties and assets, real and personal, including, without
limitation, the Collateral, and none of such properties and assets owned by the
Borrower and none of its leasehold interests are subject to any Lien, except
Permitted Liens.
5.13 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, except those presently being or to be contested by Borrower in good
faith in the ordinary course of business and for which adequate reserves have
been provided.
5.14 INVESTMENT COMPANY ACT.
Borrower is not an "investment company" or a company
"controlled" by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended.
5.15 ACCURACY OF REPRESENTATIONS.
No information, document, exhibit, or report furnished by
Borrower to Bank in connection with the negotiation and execution of this
Agreement contains any material misstatement of fact, or fails to state a
material fact or any fact necessary to make the statement contained therein
not materially misleading.
5.16 YEAR 2000 COMPLIANCE.
Borrower has developed a detailed plan to ensure that
Borrower, its affiliates, and all customers, suppliers and vendors that are
material to the Borrower's business, become Year 2000 Compliant on or before
October 1, 1999. The plan (a) effectively prioritizes
CREDIT AGREEMENT - 30
mission-critical systems, (b) has the involvement of executive management,
(c) includes assessment of key customer, supplier, and vendor Year 2000
compliance, (d) includes contingency planning to mitigate risk from Year 2000
business interruptions affecting key vendors, suppliers, or customers, and
(e) has been allocated adequate resources within Borrower's abilities. As
used in this Agreement, "Year 2000 Compliant" shall mean, in regard to any
entity, that all software, hardware, firmware, equipment, goods or systems
used by or material to the business operations or financial condition of such
entity, will properly perform date sensitive functions before, during and
after January 1, 2000. Such date sensitive functions shall include, without
limitation, (a) interpretation of years greater than 1999, (b) process date
data from, into, and between dates before January 1, 2000, and dates on or
after January 1, 2000, (c) recognizing numbers such as "99" as an actual date
rather than indefinite or unknown information, (d) recognizing that the year
2000 is a leap year, and (e) transferring data between systems that used
different methods to make the system Year 2000 Compliant.
5.17 PERFECTION OF SECURITY INTEREST.
The Security Agreement and the pledge of the Collateral
pursuant thereto creates a valid and perfected first priority security interest
in the Collateral (except for Permitted Liens), securing the payment of the
obligations, and all filings and other actions necessary or desirable to perfect
and protect such security interest have been taken.
5.18 CONTINUING WARRANTIES, REPRESENTATIONS AND COVENANTS.
Each warranty, representation, and covenant contained in this
Agreement shall continue until the Agreement is terminated and all Obligations
have been paid or satisfied in full and shall be conclusively presumed to have
been relied upon by Bank regardless of any investigation made or information
possessed by Bank. The warranties, representations, and covenants set forth
herein shall be cumulative and in addition to any and all other warranties,
representations, and covenants that Borrower shall give or cause to be given to
Bank, either now or hereafter.
ARTICLE 6 - AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that so long as any
Obligation is outstanding it will comply with the following provisions:
6.1 MAINTENANCE OF EXISTENCE.
Borrower shall preserve and maintain its corporate existence
and good standing in the jurisdiction of its incorporation, and qualify and
remain qualified, as a foreign corporation in
CREDIT AGREEMENT - 31
each jurisdiction in which such qualification is required.
6.2 MAINTENANCE OF RECORDS.
Borrower shall 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.
6.3 MAINTENANCE OF PROPERTIES.
Borrower shall maintain, keep, and preserve all of its
properties (tangible and intangible) necessary or useful in the proper conduct
of its business in good working order and condition, ordinary wear and tear
excepted.
6.4 CONDUCT OF BUSINESS.
Borrower shall continue to engage in an efficient and
economical manner in businesses of the same general type as conducted by it on
the date of this Agreement.
6.5 MAINTENANCE OF INSURANCE.
Borrower shall, at its expense, maintain insurance with
financially sound and reputable insurance companies or associations in such
amounts, covering such risks, and in such form as shall be consistent with the
industry practices and satisfactory to Bank. Without limiting the forgoing
sentence, Borrower shall procure and maintain all risks insurance, including
without limitation fire, theft, and liability coverage together with such other
insurance as Bank may require with respect to the Collateral, in form, amounts
coverages and basis consistent with industry practices and reasonably acceptable
to Bank and issued by a company or companies reasonably acceptable to Bank.
Borrower, upon request of Bank, shall deliver to Bank from time to time the
policies or certificates of insurance in form satisfactory to Bank, including
stipulations that coverages will not be canceled or diminished without at least
thirty (30) days' prior written notice to Bank and not including any disclaimer
of the insurer's liability for failure to give such a notice. In connection with
all policies covering the Collateral, Borrower shall provide Bank with such
lender loss payable or other endorsements as Bank may require. If Borrower at
any time fails to obtain or maintain any insurance required under the Loan
Documents, Bank may, but shall not be obligated to, obtain such insurance as
Bank deems appropriate, including if it so chooses, "single interest insurance"
that will cover only Bank's interest in the Collateral.
6.6 COMPLIANCE WITH LAWS.
CREDIT AGREEMENT - 32
Borrower shall comply in all material respects with all
applicable laws, rules, regulations, and orders, such compliance to include,
without limitation, paying before the same become delinquent all taxes,
assessments, and governmental charges imposed upon it or upon its property,
except for such taxes, assessments or charges that are contested by Borrower in
good faith in the ordinary course of business and for which adequate reserves
have been provided.
6.7 RIGHT OF INSPECTION.
Borrower shall, at any reasonable time and from time to time,
permit the Bank or any agent or representative thereof to inspect the
Collateral, examine and make copies of and abstracts from the records and books
of account of, and visit the properties of, the Borrower, and to discuss the
affairs, finances, and accounts of the Borrower with any of its employees,
officers, and directors and the Borrower's independent accountants. Without
limiting the foregoing, at least once every year, and more often if Bank
reasonably deems it necessary, Bank's auditors may audit and examine Borrower's
books and records. Borrower shall reimburse Bank for no more than two auditors
at the rate of Three Hundred Fifty Dollars ($350) per day for each auditor plus
travel expenses.
6.8 ACCOUNTING.
Borrower at all times hereafter shall maintain a standard and
modern system of accounting in accordance with GAAP. Borrower shall not (i)
modify or change its method of accounting without advising Bank of such change,
or (ii) enter into, modify, or terminate any agreement presently existing or at
any time hereafter entered into with any third party accounting firm and/or
service bureau for the preparation and/or storage of Borrower's accounting
records without Borrower instructing said accounting firm and/or service bureau
to provide to Bank information regarding the Collateral and Borrower's financial
condition.
6.9 REIMBURSEMENT OF BANK EXPENSES.
Borrower shall promptly on demand reimburse Bank for sums
expended by Bank that constitute Bank Expenses, and Borrower authorizes and
approves all advances and payments by Bank for items constituting Bank Expenses.
This provision shall survive termination of this Agreement.
6.10 LOCATION OF CHIEF EXECUTIVE OFFICE.
The chief executive office of Borrower is located at Ronan,
Montana, and Borrower shall not relocate such chief executive office without
thirty (30) days prior written
CREDIT AGREEMENT - 33
notice to Bank.
6.11 REPORTING REQUIREMENTS.
6.11.1 MONTHLY FINANCIAL STATEMENTS. Borrower shall
furnish to Bank as soon as available and in any event within thirty (30) days
after the end of each month, balance sheets of the Borrower as of the end of
such month, statements of income and retained earnings of the Borrower for the
period commencing at the end of the previous fiscal year and ending with the end
of such month, statements of cash flows of the Borrower for the portion of the
fiscal year ended with the last day of such month, and statements of inventory
summary and accounts receivable aging, all in reasonable detail and stating in
comparative form the respective figures for the corresponding date and period in
the previous fiscal year and all prepared in accordance with GAAP consistently
applied and certified by the Borrower's chief financial officer (subject to
year-end adjustments).
6.11.2 ANNUAL FINANCIAL STATEMENTS. Borrower shall
furnish to Bank within one hundred twenty (120) days after the end of each
fiscal year of the Borrower, balance sheets of the Borrower as of the end of
such fiscal year, and statements of income and retained earnings of the Borrower
for such fiscal year, and statements of cash flows of the Borrower for such
fiscal year, all in reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in the prior fiscal
year and all prepared in accordance with GAAP consistently applied and audited
by independent certified public accountants selected by the Borrower and
acceptable to the Bank.
6.11.3 BORROWING BASE CERTIFICATE. Borrower shall
furnish to Bank a Borrowing Base Certificate within five (5) days of the first
and fifteenth day of each month reporting as of the first and fifteenth day of
each month, respectively.
6.11.4 MANAGEMENT LETTERS. Borrower shall furnish
to Bank promptly upon receipt thereof, copies of any reports submitted to the
Borrower by independent certified public accountants in connection with
examination of the financial statements of the Borrower made by such
accountants.
6.11.5 NOTICE OF LITIGATION. Borrower shall furnish
to Bank promptly after the commencement thereof, notice of all actions, suits,
and proceedings before any court or governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign, affecting the Borrower
that, if determined adversely to the Borrower, could have a material adverse
effect on the financial condition, properties, or operations of the Borrower.
6.11.6 NOTICE OF DEFAULTS AND EVENTS OF DEFAULT.
Borrower shall furnish
CREDIT AGREEMENT - 34
to Bank as soon as possible and in any event within five (5) Business Days
after the occurrence of each Event of Default, a written notice setting forth
the details of such Event of Default and the action that is proposed to be
taken by the Borrower with respect thereto.
6.11.7 ERISA REPORTS. Borrower shall furnish to
Bank as soon as possible, and in any event within thirty (30) days after the
Borrower knows or has reason to know that any circumstances exist that
constitute grounds entitling the PBGC to institute proceedings to terminate a
Plan subject to ERISA with respect to the Borrower or any Commonly Controlled
Entity, and promptly but in any event within ten (10) Business Days of
receipt by the Borrower or any Commonly Controlled Entity of notice that the
PBGC intends to terminate a Plan or appoint a trustee to administer the same,
and promptly but in any event within ten (10) Business Days of the receipt of
notice concerning the imposition of withdrawal liability with respect to the
Borrower or any Commonly Controlled Entity, a certificate of an authorized
officer of the Borrower setting forth all relevant details and the action
that the Borrower proposes to take with respect thereto.
6.11.8 COMPLIANCE CERTIFICATE. Borrower shall
furnish Bank with each monthly and year-end financial report a certificate of
the chief executive officer or the chief financial officer or other officer
approved by Bank in writing stating that he or she has individually reviewed the
provisions of this Agreement and that review of the activities of Borrower
during such monthly and yearly period, as the case may be, has been made by him
or her or under his or her supervision, with a view to determining whether
Borrower had fulfilled all its obligations under this Agreement, and that
Borrower has observed and performed each undertaking contained in the loan
documents and is not in default in the observance or performance of any of the
provisions of the loan documents or, if Borrower shall be so in default,
specifying all such defaults and events of which he or she may have knowledge.
6.11.9 ANNUAL FORECASTS. No later than fifteen (15)
days before the beginning of each fiscal year, Borrower shall furnish to Bank
financial forecasts for the next three (3) fiscal years prepared by Borrower's
management in form and substance acceptable to Bank.
6.11.10 GENERAL INFORMATION. Borrower shall furnish
to Bank such other information respecting the condition or operations, financial
or otherwise, of the Borrower and JB Tool as the Bank may from time to time
reasonably request.
6.12 ENVIRONMENT.
Borrower shall (i) be and remain in compliance with
Environmental Laws and with the provisions of all other federal, state, and
local environmental, health, and safety laws,
CREDIT AGREEMENT - 35
codes, and ordinances, and all rules and regulations issued thereunder;
(ii) notify the Bank immediately of any notice of a hazardous discharge or
environmental complaint received from any governmental agency or other party;
(iii) notify the Bank immediately of any hazardous discharge from or
affecting its premises; (iv) immediately contain and remove the same, in
compliance with all applicable laws; (v) promptly pay any fine or penalty
assessed in connection therewith; (vi) permit the Bank to inspect the
premises, to conduct tests thereon, and to inspect all books, correspondence,
and records pertaining thereto; and (vii) at the Bank's request, and at the
Borrower's expense, provide a report of a qualified environmental engineer,
satisfactory in scope, form, and content to the Bank, and such other and
further assurances reasonably satisfactory to the Bank that the condition has
been corrected.
6.13 BANK ACCOUNTS.
Borrower shall use Bank as Borrower's primary depository and
transaction bank.
6.14 YEAR 2000 COMPLIANCE.
Borrower shall take all action that may be necessary or
desirable, or that Bank may reasonably request, in order to ensure that the
Borrower, its affiliates, and all customers, suppliers and vendors that are
material to the Borrower's business, become Year 2000 Compliant on or before
October 1, 1999. Such acts shall include, without limitation, (i) performing a
comprehensive inventory, review and assessment of all of the Borrower's systems
and adopting a detailed plan, with itemized budget and timetable, for the
remediation, monitoring and testing of such systems, and (ii) making a detailed
inquiry of all material customers, suppliers and vendors to ascertain whether
such entities are aware of the need to be Year 2000 Compliant and are taking all
appropriate steps to become Year 2000 Compliant on a timely basis. Borrower
shall, promptly upon request, provide to Bank such certifications or other
evidence of Borrower's compliance with the terms of this section as Bank may
from time to time reasonably require.
ARTICLE 7 - NEGATIVE COVENANTS
The Borrower covenants and agrees that so long as any
Obligation is outstanding it will comply with the following provisions:
7.1 CHANGE OF NAME.
Borrower shall not, without Bank's prior written consent,
change the Borrower's name, business structure, or identity, or add any new
assumed business name.
7.2 MERGERS.
CREDIT AGREEMENT - 36
Borrower shall not, without Bank's prior written consent,
which consent shall not be unreasonably withheld, wind up, liquidate or dissolve
itself, reorganize, merge or consolidate with or into, or convey, sell, assign,
transfer, lease, or otherwise dispose of (whether in one transactions or in a
series of transactions) all or substantially all of its assets (whether now
owned or hereafter acquired) to any Person, or acquire all or substantially all
of the assets or the business of any Person.
7.3 DEBT.
Without Bank's prior written consent, Borrower shall not
incur, assume, or suffer to exist, any debt other than (i) the Obligations;
(ii) indebtedness and liabilities of Borrower that have been subordinated to
the Obligations by written agreement in form and substance acceptable to
Bank; (iii) accounts payable to trade creditors for goods or services that
are not aged more than ninety (90) days from the billing date and current
operating liabilities (other than for borrowed money) that are not more than
ninety (90) days past due, in each case incurred in the ordinary course of
business, as presently conducted, and paid within the specified time, unless
contested in good faith and by appropriate proceedings; and (iv) debt of the
Borrower secured by purchase-money liens that are Permitted Liens.
7.4 DIVIDENDS.
Without Bank's Prior written consent, Borrower shall not
declare or pay any dividends; or purchase, redeem, retire, or otherwise acquire
for value any of its capital stock now or hereafter outstanding; or make any
distribution of assets to its shareholders as such whether in cash, assets, or
in obligations of the Borrower; or allocate or otherwise set apart any sum for
the payment of any dividend or distribution on, or for the purchase, redemption,
or retirement of any shares of its capital stock; or make any other distribution
by reduction of capital or otherwise in respect of any shares of its capital
stock, except that the Borrower (1) may declare and deliver dividends and make
distributions payable solely in common stock of the Borrower; (2) may purchase
or otherwise acquire shares of its capital stock by exchange for or out of the
proceeds received from a substantially concurrent issue of new shares of its
capital stock; (3) may declare and deliver dividends or make distributions to
Borrower's shareholders to permit the shareholders to pay federal and, as
applicable, state and local income taxes then due and owing to the extent
attributable to the shareholders' ownership of Borrower's stock.; and (4) may
distribute up to $5,000,000 representing the cumulative Adjustment Accounts as
defined by the Internal Revenue Service upon the closing of Borrower's initial
public offering.
7.5 SALE OF ASSETS.
CREDIT AGREEMENT - 37
Without Bank's prior written consent, Borrower shall not sell,
lease, assign, transfer, or otherwise dispose of any of its now owned or
hereafter acquired assets (including, without limitation, receivables and
leasehold interests), except: (1) inventory disposed of in the ordinary course
of business; (2) the sale or other disposition of assets no longer used or
useful in the conduct of its business; and (3) assets with an aggregate value
not in excess of $500,000 during any fiscal year.
7.6 INVESTMENTS.
Borrower shall not make any loan or advance to any Person,
or purchase or otherwise acquire any capital stock, assets, obligations, or
other securities of, make any capital contribution to, or otherwise invest in
or acquire any interest in any Person, or participate as a partner or joint
venturer with any other Person, except: (1) direct obligations of the United
States or any agency thereof with maturities of one year or less from the
date of acquisition; (2) commercial paper of a domestic issuer rated at least
"A-1" by Standard & Poor's Corporation or "P-1" by Xxxxx'x Investors Service,
Inc.; (3) certificates of deposit with maturities of one year or less from
the date of acquisition; (4) stock, obligations, or securities received in
settlement of debts (created in the ordinary course of business) owing to the
Borrower; (5) investments made through Bank or one of its affiliates; and
(6) investments of a strategic nature with an aggregate investment value not
in excess of $500,000 at any time.
7.7 GUARANTIES.
Without Bank's prior written consent, Borrower shall not
assume, guarantee, endorse, or otherwise be or become directly or contingently
responsible or liable (including, but not limited to, an agreement to purchase
any obligation, stock, assets, goods, or services, or to supply or advance any
funds, assets, goods, or services, or an agreement to maintain or cause such
Person to maintain a minimum working capital or net worth, or to otherwise
assure the creditors of any Person against loss) for obligations of any Person,
except guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business.
7.8 SUSPENSION OF BUSINESS.
Borrower shall not, without Bank's prior written consent,
suspend or go out of business.
7.9 LIENS.
Without Bank's prior written consent, Borrower shall not
create, incur, assume, or
CREDIT AGREEMENT - 38
suffer to exist any Lien upon any of its property or assets, now owned or
hereafter acquired, except for Permitted Liens.
7.10 PENSION PLANS.
Borrower shall not, without the Bank's prior written consent,
enter into, contribute to, or become a party to any Plan, other than those Plans
listed in EXHIBIT 7.10.
7.11 CHANGE IN MANAGEMENT.
Borrower shall not materially and adversely alter its senior
management without giving Bank written notice of such alteration at least sixty
(60) days prior to the date of such alteration in management.
ARTICLE 8 - FINANCIAL COVENANTS
So long as any Obligation is outstanding or the Bank shall
have any commitment under this Agreement, Borrower shall maintain the following
financial covenants:
8.1 CAPITAL EXPENDITURES.
Borrower shall not make any expenditures for fixed or capital
assets if, after giving effect thereto, the aggregate of all such expenditures
made by Borrower would exceed Twenty-three Million Dollars ($23,000,000) during
the fiscal year of Borrower ending December 31, 1999, and Fifteen Million
Dollars ($15,000,000) during any fiscal year of Borrower thereafter.
8.2 CURRENT RATIO.
Borrower shall maintain a ratio of current assets to current
liabilities of not less than 0.40 to 1.00 until Borrower closes an initial
public offering of its stock with net proceeds of at least Twenty Five Million
Dollars ($25,000,000) received by Borrower, and not less than 1.00 to 1.00 at
all times thereafter, except that the ratio shall be not less than 0.95 to 1.00
during the period from the later of the closing of the initial public offering
or February 29, 2000, through August 31, 2000.
8.3 LEVERAGE RATIO.
Borrower shall maintain a ratio of Borrower's total
liabilities to Borrower's total stockholder equity of not greater than 13.0 to
1.0 at all times until Borrower closes an initial
CREDIT AGREEMENT - 39
public offering of its stock with net proceeds of at least Twenty Five
Million Dollars ($25,000,000) received by Borrower, and 2.5 to 1.00 at all
times thereafter.
8.4 EBITDA COVERAGE RATIO.
Borrower shall maintain, on a rolling four-quarters basis as
measured at the end of each fiscal quarter of Borrower, a ratio of EBITDA to
Debt Service of not less than 1.00 to 1.00 until Borrower closes an initial
public offering of its stock with net proceeds of at least Twenty Five Million
Dollars ($25,000,000) received by Borrower, and not less than 1.25 to 1.00
thereafter, except for the fiscal quarter ending September 30 of each year when
the ratio shall be not less than 1.00 to 1.00.
8.4.1 "EBITDA" shall mean, for any period, as
applied to Borrower, the sum of Borrower's net income plus, to the extent
deducted in computing net income, (a) interest expense, consisting of (i) the
aggregate amount of all interest accrued during such period on Borrower's debt,
(ii) amortization of debt discount and expense during such period, and (iii) all
fees and commissions payable with respect to any letters of credit during such
period, (b) taxes, (c) depreciation, (d) amortization, and (e) other non-cash
charges.
8.4.2 "Debt Service" shall mean, for any period,
as applied to Borrower, the sum of Borrower's scheduled and other payments of
principal and interest on any Funded Debt and any payments with respect to any
stock of Borrower and any taxes.
8.4.3 "Funded Debt" shall mean, as of the date of
determination as applied to Borrower, the sum of (i) all indebtedness of
Borrower owing to third parties for money borrowed, including capitalized leases
of Borrower having a final maturity of one (1) year or more from the date of
creation (including that portion of the principal of such indebtedness due
within one (1) year from the date of such determination), (ii) any indebtedness
of the Borrower having a final maturity within one (1) year from such date which
may be renewed or extended at the option of the Borrower for more than one (1)
year from such date, and (iii) the outstanding balance of the Revolving Line of
Credit, less the amount of Borrower's cash as of the date of determination.
ARTICLE 9 - EVENTS OF DEFAULT
If any of the following events shall occur (each an "Event of
Default"), Bank may exercise any of its rights and remedies under Article 10:
9.1 The Borrower shall fail to pay the principal of, or
interest on, the Revolving Note, or any Obligation within fifteen (15) days of
when due and payable.
CREDIT AGREEMENT - 40
9.2 Any representation or warranty made or deemed made by
Borrower in this Agreement, the Security Agreements, or other Loan Document or
that is contained in any certificate, document, opinion, or financial or other
statement furnished at any time under or in connection with any Loan Document
shall prove to have been incorrect, incomplete, or misleading in any material
respect on or as of the date made or deemed made.
9.3 Borrower shall fail to perform or observe any term,
covenant, or agreement contained in this Agreement or other Loan Document, or
Borrower shall be in default under any other agreement with Bank.
9.4 Borrower shall (a) fail to pay any indebtedness for
borrowed money (other than the Revolving Note) of the Borrower, or any interest
or premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise); or (b) fail to perform or
observe any term, covenant, or condition on its part to be performed or observed
under any agreement or instrument relating to any such indebtedness, when
required to be performed or observed, if the effect of such failure to perform
or observe is to accelerate, or to permit the acceleration of after the giving
of notice or passage of time, or both, the maturity of such indebtedness,
whether or not such failure to perform or observe shall be waived by the holder
of such indebtedness, or any such indebtedness shall be declared to be due and
payable, or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof.
9.5 Borrower (a) shall generally not pay, or shall be
unable to pay, or shall admit in writing its inability to pay its debts as
such debts become due; or (b) shall make an assignment for the benefit of
creditors, or petition or apply to any tribunal for the appointment of a
custodian, receiver, or trustee for it or a substantial part of its assets;
or (c) shall commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution, or liquidation law or statute
of any jurisdiction, whether now or hereafter in effect; or (d) shall have
had any such petition or application filed or any such proceeding commenced
against it in which an order for relief is entered or an adjudication or
appointment is made, and that remains undismissed for a period of sixty (60)
days or more; or (e) shall take any corporate action indicating its consent
to, approval of, or acquiescence in any such petition, application,
proceeding, or order for relief or the appointment of a custodian, receiver,
or trustee for all or any substantial part of its properties; or (f) shall
suffer any such custodianship, receivership, or trusteeship to continue
undischarged for a period of sixty (60) days or more.
9.6 One or more judgments, decrees, or orders for the
payment of money in excess of One Hundred Thousand Dollars ($100,000) in the
aggregate shall be rendered against the Borrower, and such judgments, decrees,
or orders shall continue unsatisfied and in effect for
CREDIT AGREEMENT - 41
a period of sixty (60) consecutive days without being vacated, discharged,
satisfied, or stayed or bonded pending appeal.
9.7 The Security Agreement shall at any time after its
execution and delivery and for any reason cease (a) to create a valid and
perfected first priority security interest in and to the property purported to
be subject to such Security Agreement; or (b) to be in full force and effect or
shall be declared null and void, or the validity or enforceability thereof shall
be contested by the Borrower, or the Borrower shall deny it has any further
liability or obligation under the Security Agreement, or the Borrower shall fail
to perform any of its obligations under the Security Agreement.
9.8 Any guaranty of the Obligations executed by JB Tool
shall at any time after its execution and delivery and for any reason cease to
be in full force and effect or shall be declared null and void, or the validity
or enforceability thereof shall be contested by JB Tool, or JB Tool shall deny
it has any further liability under, or shall fail to perform its obligations
under, the Guaranty, or the Guarantor, if a natural person, shall die.
9.9 Any of the following events shall occur or exist with
respect to Borrower and any Commonly Controlled Entity under ERISA: any
Reportable Event shall occur; complete or partial withdrawal from any
Multiemployer Plan shall take place; any Prohibited transaction shall occur; a
notice of intent to terminate a Plan shall be filed, or a Plan shall be
terminated; or circumstances shall exist that constitute grounds entitling the
PBGC to institute proceedings to terminate a Plan, or the PBGC shall institute
such proceedings; and in each case above, such event or condition, together with
all other events or conditions, if any, could subject the Borrower to any tax,
penalty, or other liability that in the aggregate may exceed One Hundred
Thousand Dollars.
9.10 If any federal, state, or local agency asserts or
creates a Lien upon any or all of the assets, equipment, property,
leaseholds, or other facilities of Borrower by reason of the occurrence of a
hazardous discharge or an environmental complaint; or if any federal, state,
or local agency asserts a claim against the Borrower and/or its assets,
equipment, property, leaseholds or other facilities for damages or cleanup
costs relating to a hazardous discharge or an environmental complaint;
provided, however, that such claim shall not constitute a default if, within
ten (10) Business Days of the occurrence giving rise to the claim, (a) the
Borrower can prove to the Bank's satisfaction that the Borrower has commenced
and is diligently pursuing an investigation of the claim to be followed
promptly by either: (i) a cure or correction of the event that constitutes
the basis for the claim, and continues diligently to pursue such cure or
correction to completion, or (ii) proceedings for an injunction, a
restraining order, or other appropriate emergent relief preventing such
agency or agencies from asserting such claim, that relief is granted within
ten (10) Business Days of the occurrence giving rise to the claim and the
CREDIT AGREEMENT - 42
injunction, order, or emergent relief is not thereafter resolved or reversed
on appeal; and (b) in either of the foregoing events, the Borrower has posted
a bond, letter of credit, or other security satisfactory in form, substance
and amount to both the Bank and the agency or entity asserting the claim to
secure the proper and complete cure or correction of the event that
constitutes the basis for the claim.
9.11 Any material misrepresentation exists now or
hereafter in any warranty or representation made to Bank by any officer or
director of Borrower, or if any such warranty or representation is withdrawn by
any officer or director.
9.12 This Agreement shall at any time after its execution
and delivery and for any reason cease to be in full force and effect or shall be
declared null and void, or the validity or enforceability thereof shall be
contested by Borrower, or Borrower shall deny it has any further liability or
obligation under this Agreement.
If any default, other than a payment default, is curable and if Borrower has not
been given a notice of a similar default within the preceding twelve (12)
months, it may be cured (and no Event of Default will have occurred) if
Borrower, after receiving written notice from Bank demanding cure of such
default: (a) cures the default within fifteen (15) days; or (b) if the cure
requires more than fifteen (15) days, immediately initiates steps that Bank
deems in Bank's sole discretion to be sufficient to cure the default and
thereafter continues and completes all reasonable and necessary steps sufficient
to produce compliance as soon as reasonably practical.
ARTICLE 10 - BANK'S RIGHTS AND REMEDIES
10.1 SPECIFIC REMEDIES.
Upon the occurrence of an Event of Default by Borrower under
this Agreement, Bank may, at its election and without notice of its election and
without demand, do any one or more of the following, all of which are authorized
by Borrower:
10.1.1 Declare all Obligations, whether evidenced
by this Agreement or the Loan Documents, due and payable immediately.
10.1.2 Terminate this Agreement and any of the
other Loan Documents as to any future liability or obligation of Bank, but
without affecting Bank's rights and security interest in the Collateral and
without affecting the Obligations.
10.2 SET OFF.
CREDIT AGREEMENT - 43
Upon the occurrence and during the continuance of any Event of
Default the Bank is hereby authorized at any time and from time to time, without
notice to the Borrower (any such notice being expressly waived by the Borrower),
to set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by the Bank to or for the credit or the account of Borrower against any and all
of the obligations of the Borrower now or hereafter existing under this
Agreement or the Revolving Note or any other Loan Document, irrespective of
whether or not the Bank shall have made any demand under this Agreement or the
Revolving Note or such other Loan Document and although such obligations may be
unmatured. The Bank agrees promptly to notify the Borrower after any such setoff
and application, provided that the failure to give such notice shall not affect
the validity of such setoff and application. The rights of the Bank under this
Section are in addition to other rights and remedies (including, without
limitation, other rights of setoff) that the Bank may have.
10.3 NO LIMITATION ON REMEDIES.
Bank's rights and remedies under this Agreement and the Loan
Documents shall be cumulative. Bank shall have all other rights and remedies not
inconsistent herewith as provided by law or in equity. No exercise by Bank of
one right or remedy shall be deemed an election, and no waiver by Bank of any
default on Borrower's part shall be deemed a continuing waiver. No delay by Bank
shall constitute a waiver, election, or acquiescence by it.
10.4 BANK EXPENSES.
Borrower shall pay all Bank Expenses incurred in connection
with Bank's enforcement and exercise of any of its rights and remedies as herein
provided, whether or not suit is commenced by Bank, together with interest on
such Bank Expenses at the rate on the Revolving Line of Credit from the date of
expenditure until repaid.
ARTICLE 11 - WAIVERS
11.1 APPLICATION OF PAYMENTS.
Borrower waives the right to direct the application of any and
all payments at any time or times hereafter received by Bank on account of the
Obligations, and Borrower agrees that Bank shall have the continuing exclusive
right to apply and reapply such payments in any manner as Bank may deem
advisable, notwithstanding any entry by Bank upon its books.
11.2 DEMAND AND NOTICES.
CREDIT AGREEMENT - 44
Borrower waives demand, protest, notice of protest, notice of
default or dishonor, notice of payment and nonpayment, notice of any default,
nonpayment at maturity, release, compromise, settlement, extension or renewal of
any or all commercial paper, accounts, documents, instruments, chattel paper,
and guarantees at any time held by Bank for which Borrower may in any way be
liable.
ARTICLE 12 - NOTICES
Unless otherwise provided in this Agreement, all notices or
demands by either party relating to the Loan Documents shall be in writing and
either personally served or sent by facsimile transmission, overnight delivery
service, or regular United States mail, postage prepaid, to Borrower or to Bank
as the case may be at the addresses set forth below:
If to Borrower: Jore Corporation
00000 Xxxxxxx 00 Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxx, President
Fax: 406/000-0000
With a copy to: Xxxxx X. Xxxxxxxx
Chief Financial Officer/General Counsel
Jore Corporation
00000 Xxxxxxx 00 Xxxxx
Xxxxx, Xxxxxxx 00000
Fax: 406/000-0000
If to Bank: First Security Bank, N.A.
Xxxx Xxxxxx Xxx 0000
Xxxxx, Xxxxx 00000
Attention: Corporate Banking
Fax: 208/000-0000
With a copy to: Xxxxxxx, Xxxxxx, Xxxxxxx, Rock &
Fields, Chartered
000 X. Xxxxxxx Xxxx., 00xx Xxxxx
X.X. Xxx 000
Xxxxx, Xxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
Fax: 208/000-0000
CREDIT AGREEMENT - 45
The parties may change the address at which they are to receive notices
hereunder by notice in writing in the foregoing manner given to the other. All
notices or demands sent in accordance with this Section shall be deemed received
on the earlier of the date of confirmed actual receipt or three (3) Business
Days after the deposit thereof in the mail.
ARTICLE 13 - DESTRUCTION OF BORROWER'S DOCUMENTS
After notice to Borrower, any documents, schedules, invoices,
or other papers delivered to Bank may be destroyed or otherwise disposed of by
Bank at any time six (6) months after they are delivered to or received by Bank,
unless Borrower requests in writing the return of the said documents, schedules,
invoices, or other papers and makes arrangements at Borrower's expense for their
return.
ARTICLE 14 - CHOICE OF LAW AND VENUE
This Agreement is made in the state of Idaho, which state the
parties agree has a substantial relationship to the parties and to the
underlying transaction embodied hereby. Accordingly, in all respects, this
Agreement and the Loan Documents and the obligations arising hereunder and
thereunder shall be governed by, and construed in accordance with, the laws of
the state of Idaho applicable to contracts made and performed in such state and
any applicable law of the United States of America. Each party hereby
unconditionally and irrevocably waives, to the fullest extent permitted by law,
any claim to assert that the law of any jurisdiction other than the state of
Idaho governs this Agreement. All disputes, controversies, or claims arising out
of, or in connection with, this Agreement or any Loan Document shall be
litigated in any court of competent jurisdiction within the state of Idaho. Each
party hereby accepts jurisdiction of such state and agrees to accept service of
process as if it were personally served within such state. Each party
irrevocably waives, to the fullest extent permitted by law, any objection that
the party may now or hereafter have to the jurisdiction of the courts of such
state and any claim that any such litigation brought in any such court has been
brought in an inconvenient forum.
ARTICLE 15 - GENERAL PROVISIONS
15.1 EFFECTIVE DATE.
This Agreement shall be binding and deemed effective as of the
date first written above when executed by Borrower and accepted and executed by
Bank.
15.2 AMENDMENTS.
No amendment, modification, termination, or waiver of any
provision of any
CREDIT AGREEMENT - 46
Loan Document, nor consent to any departure by the Borrower from any Loan
Document, shall in any event be effective unless the same shall be in writing
and signed by Bank, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
15.3 NO WAIVER.
No failure or delay on the part of the Bank in exercising any
right, power, or remedy hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any such right, power, or remedy preclude any
other or further exercise thereof or the exercise of any other right, power, or
remedy hereunder. The rights and remedies provided herein are cumulative and are
not exclusive of any other rights, powers, privileges or remedies, now or
hereafter existing, at law or in equity or otherwise.
15.4 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit
of the Borrower and Bank and their respective successors and assigns, except
that the Borrower may not assign or transfer any of their rights under any Loan
Document to which Borrower is a party without the prior written consent of Bank.
15.5 PARTICIPATIONS.
Bank may, at any time, sell to one or more banks, financial
institutions or other Persons (each a "Participant") participating interests in
the Loans or any other interest of Bank under the Loan Documents. In the event
of any such sale by Bank, Bank's obligations to Borrower under this Agreement
shall remain unchanged, Bank shall remain solely responsible for the performance
thereof, Bank shall remain the holder of the Loans for all purposes under the
Loan Documents, and Borrower shall continue to deal solely and directly with
Bank in connection with the Bank's rights and obligations under the Loan
Documents. If Obligations are due or unpaid, or shall have been declared or
shall have become due or unpaid, upon the occurrence of an Event of Default,
each Participant shall, to the maximum extent permitted by applicable law, be
deemed to have the right of setoff in respect of its participating interest in
amounts owing under the Loan Documents to the same extent as if the amount of
its participating interest were owing directly to it as Bank under this
Agreement.
15.5.1 The consent of Borrower shall not be
required for any sole of a participating interest in the Loan or any other
interest of Bank under the Loan Documents.
15.5.2 Borrower authorizes Bank to disclose to any
actual or prospective Participant and/or assignee, any and all financial
information in Bank's possession or known to
CREDIT AGREEMENT - 47
Bank concerning Borrower, its affiliates, and the Collateral that has been
delivered to Bank by or on behalf of Borrower pursuant to the Loan Documents
or in connection with Bank's credit evaluation of Borrower.
15.5.3 Notwithstanding any contrary provision of
this Section 15.5, Bank shall at all times be the lead lender (i.e., the sole
party with whom Borrower needs to communicate) with respect to the Loans, and
Borrower shall only be required to communicate with Bank. Each Participant
that receives confidential information regarding Borrower or the Collateral
must agree to use reasonable efforts to keep all information acquired by it
in connection with the Loans or Loan Documents and relating to Borrower
and/or the collateral confidential; provided, however, that such information
may be distributed by any Participant (i) pursuant to a court order or a
demand made by any governmental agency or authority, or otherwise in
connection with litigation or as otherwise required by law, (ii) after the
occurrence of an Event of Default, but only with respect to the Collateral,
(iii) to such person's consultants or professionals, as necessary, (iv) in
connection with a sale or participation of such person's interest in the
Loans, and (v) to regulators in connection with audits.
15.6 HEADINGS.
Article and Section headings in the Loan Documents are
included in such Loan Documents for the convenience of reference only and shall
not constitute a part of the applicable Loan Documents for any other purpose.
15.7 CONSTRUCTION.
Neither this Agreement nor any uncertainty or ambiguity herein
shall be construed or resolved against Bank or Borrower, whether under any rule
of construction or otherwise. On the contrary, this Agreement has been reviewed
by all parties and shall be construed and interpreted according to the ordinary
meaning of the words used so as to fairly accomplish the purposes and intentions
of all parties hereto.
15.8 SEVERABILITY.
Any provisions of any Loan Document that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition of unenforceability without invalidating the
remaining provisions of such Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
15.9 INTEGRATION.
CREDIT AGREEMENT - 48
This Agreement and the other Loan Documents contain the entire
agreement between the parties relating to the subject matter hereof and
supersede all oral statements and prior writings with respect thereto.
15.10 INDEMNITY.
Borrower shall defend, indemnify, and hold Bank harmless
from and against any and all claims, damages, judgments, penalties, costs and
expenses (including attorney fees and court costs now or hereafter arising
from the enforcement of this provision) arising directly or indirectly from
the activities of the Borrower, their predecessors in interest, or third
parties with whom they have a contractual relationship, or arising directly
or indirectly from the violation of any Environmental Law, whether such
claims are asserted by any governmental agency or any other Person. This
indemnity shall survive termination of this Agreement.
15.11 NONLIABILITY OF BANK.
Bank shall not be liable for any claims, demands, losses or
damages made, claimed or suffered by Borrower, except such as may arise through
or could be caused by Bank's gross negligence or willful misconduct. Bank shall
not be responsible for any lost profits of Borrower arising from any breach of
contract, tort (excluding the Bank's gross negligence or willful misconduct), or
any other wrong arising from the establishment, administration or collection of
the Obligations.
15.12 COUNTERPARTS.
This Agreement may be executed in any number of counterparts
and delivered by facsimile transmission. Each counterpart when so executed shall
be deemed to be an original and all of which taken together shall constitute one
and the same Agreement.
IN WITNESS WHEREOF, Borrower has executed this Agreement.
Borrower: JORE CORPORATION
By
Its
ACCEPTED AND EFFECTIVE as of the 19th day of August, 1999,
in the state of Idaho.
CREDIT AGREEMENT - 49
Bank: FIRST SECURITY BANK, N.A.
By
Xxxx X. Xxxxxx, Vice President
CREDIT AGREEMENT - 50
EXHIBIT 1.9
FORM OF BORROWING BASE CERTIFICATE
See attached.
EXHIBIT 1.9
BORROWING BASE CERTIFICATE
JORE CORPORATION
I. CALCULATION OF ELIGIBLE ACCOUNTS AS OF _______________.
Open Accounts: _______
Less Ineligible Accounts Reported in Schedule 1: _______
Total Eligible Accounts: _______
85 Percent of Eligible Accounts: _______
II. CALCULATION OF ELIGIBLE INVENTORY AS OF _____________
Total Inventory: _______
Less Ineligible Inventory: _______
Total Eligible Inventory: _______
65 Percent of Eligible Inventory: _______
III. BORROWING BASE TEMPORARY INCREASE UNTIL FEBRUARY 1, 2000: $8,081,686
IV. TOTAL BORROWING BASE (I + II + III): ______
V. LESS OUTSTANDING PRINCIPAL BALANCE UNDER REVOLVING LINE OF CREDIT: ______
VI. TOTAL AVAILABILITY: ______
CERTIFICATION
Pursuant to the Credit Agreement dated as of August 19, 1999,
between Jore Corporation ("Borrower") and First Security Bank, N.A. ("Bank"),
Borrower certifies to Bank that the information in this Borrowing Base
Certificate is correct and accurate in all material respects, and that the
principal amount outstanding under the Revolving Line of Credit under the Credit
Agreement is not in excess of the Commitment Amount (as defined in the Credit
BORROWING BASE CERTIFICATE - 52
Agreement). Borrower represents and warrants to Bank that Bank has been
granted a security interest in the above accounts and inventory and the
Eligible Accounts and Eligible Inventory conform to the requirements therefor
under the Credit Agreement. Borrower further represents and warrants to Bank,
to the best of Borrower's knowledge, that Borrower is in compliance with the
Credit Agreement and no Event of Default has occurred and is continuing
thereunder.
Dated:
------------------
Jore Corporation
By
-----------------------------------------
Name
----------------------------------
Title
--------------------------------
BORROWING BASE CERTIFICATE - 53
SCHEDULE 1 TO BORROWING BASE CERTIFICATE
Ineligible Accounts:
90 days past due:
Bankruptcy/Collection:
Affiliated Parties:
Conditional Payment:
Foreign Accounts:
Consignments:
Government Accounts:
Xxxx and Hold Arrangements:
Account Debtors with over 25% Delinquent Accounts:
Over 50% of Total Accounts:
Accounts for which Borrower liable to Account Debtor:
Encumbered Accounts:
Chattel Paper or Instrument Accounts:
Account Debtors in Unqualified States:
Total Exclusions:
BORROWING BASE CERTIFICATE - 54
EXHIBIT 1.26
FORM OF JB TOOL SECURITY AGREEMENT
See attached.
EXHIBIT 1.26
SECURITY AGREEMENT
This SECURITY AGREEMENT is made as of August 19, 1999, by JB
TOOL, LLC, a Montana limited liability company (the "Grantor"), to FIRST
SECURITY BANK, N.A., (the "Bank").
R E C I T A L S :
X. Xxxx Corporation, a Montana limited liability company (the
"Borrower") and the Bank have entered into a Credit Agreement dated as of August
19, 1999 (the "Credit Agreement").
B. Pursuant to a Continuing and Unconditional Guaranty (the
"Guaranty"), Grantor has guaranteed the payment to Bank of Borrower's
obligations under the Credit Agreement.
C. It is a condition precedent to the making of financial
accommodations to Borrower by the Bank under the Credit Agreement that Grantor
shall have granted the security interest contemplated by this Agreement.
NOW, THEREFORE, in order to induce the Bank to make the loans
under the Credit Agreement, the Grantor agrees with the Bank as follows:
1. ASSIGNMENT AND GRANT OF SECURITY INTEREST. The
Grantor hereby assigns and grants to the Bank a security interest in all of the
Grantor's right, title and interest in and to the following, whether now owned
or hereafter acquired (the "Collateral"):
1.1 All inventory in all of its forms, wherever
located, now or hereafter existing, including, but not limited to, (a) all raw
materials and work in process therefor, finished goods thereof, and materials
used or consumed in the manufacture or production thereof; (b) goods in which
the Grantor has an interest in mass or a joint or other interest or right of any
kind (including, without limitation, goods in which the Grantor has an interest
or right as consignee); and (c) goods which are returned to or repossessed by
the Grantor, and all accessions thereto and products thereof and documents
therefor (any and all such inventory, accessions, products, and documents being
the "Inventory").
SECURITY AGREEMENT - 56
1.2 All accounts, contract rights, chattel
paper, instruments, deposit accounts, general intangibles, and other
obligations of any kind, now or hereafter existing, whether or not arising
out of or in connection with the sale or lease of goods or the rendering of
services, and all rights, now or hereafter existing in and to all security
agreements, leases, and other contracts securing or otherwise relating to any
such accounts, contract rights, chattel paper, instruments, deposit accounts,
general intangibles, and obligations (any and all such accounts, contract
rights, chattel paper, instruments, deposit accounts, general intangibles,
and obligations being the "Receivables," and any and all such leases,
security agreements, and other contracts being the "Related Contracts").
1.3 All proceeds of any and all of the foregoing
Collateral (including, without limitation, proceeds that constitute property of
the types described in clauses 1.1-1.2 of this Section 1), and, to the extent
not otherwise included, all (a) payments under insurance (whether or not the
Bank is the loss payee thereof), or any indemnity, warranty, or guaranty,
payable by reason of loss or damage to or otherwise with respect to any of the
foregoing Collateral, and (b) cash.
1.8 All records and data relating to any of the
foregoing Collateral, whether in the form of a writing, photograph, microfilm,
microfiche, or electronic media together with all of Grantor's right, title, and
interest in and to all computer software required to use, create, maintain, and
process any such records or data on electronic media.
2. SECURITY FOR OBLIGATIONS. The assignment and security
interest granted by this Agreement is granted to secure the payment of all
obligations of the Grantor now or hereafter existing under the Guaranty whether
for principal, interest, fees, expenses, or otherwise, and all obligations of
the Grantor now or hereafter existing under this Agreement (all such obligations
of the Grantor being the "Obligations"). In addition, the "Obligations" includes
all other obligations, debts and liabilities, plus interest thereon, of Grantor,
or any one or more of them, to Bank, as well as all claims by Bank against
Grantor, or any one or more of them, whether existing now or later; whether they
are voluntary or involuntary, due or not due, direct or indirect, absolute or
contingent, liquidated or unliquidated; whether Grantor may be liable
individually or jointly with others; whether Grantor may be obligated as
guarantor, surety, accommodation party or otherwise. Without limiting the
generality of the foregoing, this Agreement secures the payment of all amounts
that constitute part of the Obligations and would be owed by the Grantor to the
Bank under the Credit Agreement but for the fact that they are unenforceable or
not allowable owing to the existence of bankruptcy, reorganization, or similar
proceedings involving the Grantor.
SECURITY AGREEMENT - 57
3. GRANTOR REMAINS LIABLE. Anything herein to the
contrary notwithstanding, (1) the Grantor shall remain liable under the
contracts and agreements included in the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed; (2) the exercise by the Bank
of any rights hereunder shall not release the Grantor from any of its duties or
obligations under the contracts and agreements included in the Collateral; and
(3) the Bank shall not have any obligation or liability under the contracts and
agreements included in the Collateral by reason of this Agreement, nor shall the
Bank be obligated to perform any of the obligations or duties of the Grantor
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.
4. REPRESENTATIONS AND WARRANTIES. The Grantor
represents and warrants to Bank as follows:
4.1 All of the Inventory is located at the
places specified in SCHEDULE 1 hereto. The chief place of business and chief
executive office of the Grantor and the office where the Grantor keeps its
records concerning the Receivables and other Collateral, and the originals of
all chattel paper that evidence Receivables, are located at its address
specified in Section 16. None of the Receivables is evidenced by a promissory
note or other instrument.
4.2 The Grantor is the legal and beneficial
owner of the Collateral free and clear of any lien except for the security
interest created by this Agreement. No effective financing statement or other
document similar in effect covering all or any part of the Collateral is on file
in any recording office, except such as may have been filed in favor of the
Bank. The Grantor has no assumed business names.
4.3 The Grantor has exclusive possession and
control of the Equipment and Inventory.
4.4 This Agreement creates a valid security
interest in the Collateral, securing the payment of the Obligations, and all
filings and other actions necessary or desirable to perfect and protect such
security interest in a first priority position have been taken.
4.5 No consent of any other person or entity and
no authorization, approval, or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required (a) for the grant by
the Grantor of the assignment and security interest granted hereby or for the
execution and delivery of this Agreement and the performance by the Grantor of
its obligations thereunder; (b) for
SECURITY AGREEMENT - 58
the perfection or maintenance of the assignment and security interest created
hereby (including the first priority nature of such assignment and security
interest); or (c) for the exercise by the Bank of the voting or other rights
provided for in this Agreement or the remedies in respect of the Collateral
pursuant to this Agreement (except as may be required in connection with the
disposition of any portion of the Security Collateral by laws affecting the
offering and sale of securities generally).
4.6 The Inventory produced by Grantor has been
produced by the Grantor in compliance with all requirements of the Fair Labor
Standards Act.
4.7 All of the Accounts are and will be bona
fide existing obligations created by the sale and actual delivery of Inventory
or other property, the rendition of services, or the furnishing of other good
and sufficient consideration to Account Debtors in the regular course of
business.
5. FURTHER ASSURANCES.
5.1 The Grantor shall from time to time, at the
expense of the Grantor, promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or desirable, or
that the Bank may reasonably request, in order to perfect and protect any
assignment or security interest granted or purported to be granted hereby or to
enable the Bank to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the foregoing, the
Grantor will: (a) xxxx conspicuously each document included in the Inventory and
each chattel paper included in the Receivables, each Related Contract, and, at
the request of the Bank, each of its records pertaining to the Collateral with a
legend, in form and substance satisfactory to the Bank, indicating that such
document, chattel paper, Related Contract, or Collateral is subject to the
assignment, and security interest granted hereby; (b) if any Collateral shall be
evidenced by a promissory note or other instrument or chattel paper, deliver and
pledge to the Bank hereunder such note or instrument or chattel paper duly
endorsed and accompanied by duly executed instruments of transfer or assignment,
all in form and substance satisfactory to the Bank; (c) execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as the Bank may
request, in order to perfect and preserve the pledge, assignment, and security
interest granted or purported to be granted hereby; and (d) deliver to Bank any
certificate of title now or hereafter existing on any of the Collateral and take
all steps necessary for the title to recite the interest of Bank.
5.2 The Grantor authorizes the Bank to file one
or more financing or continuation statements, and amendments thereto, relating
to all or any part
SECURITY AGREEMENT - 59
of the Collateral without the signature of the Grantor where permitted by
law. A photocopy or other reproduction of this Agreement or any financing
statement covering the Collateral or any part thereof shall be sufficient as
a financing statement where permitted by law.
5.3 The Grantor will furnish to the Bank from
time to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the Bank
may reasonably request, all in reasonable detail.
6. EQUIPMENT AND INVENTORY COVENANTS.
6.1 The Grantor shall keep the Inventory (other
than Inventory sold in the ordinary course of business) at the places therefor
specified in SCHEDULE 1 or, upon 30 days' prior written notice to the Bank, at
such other places in a jurisdiction where all action required by Section 5.l
shall have been taken with respect to the Equipment and Inventory.
6.2 The Grantor shall pay promptly when due all
property and other taxes, assessments, and governmental charges or levies
imposed upon, and all claims (including claims for labor, materials, and
supplies) against, the Inventory. In producing the Inventory, the Grantor shall
comply with all requirements of the Fair Labor Standards Act.
7. INSURANCE.
7.1 The Grantor shall, at its own expense,
maintain insurance with respect to the Collateral in such amounts, against such
risks, in such form and with such insurers, as shall be satisfactory to the Bank
from time to time. Each policy for liability insurance shall provide for all
losses to be paid on behalf of the Bank and the Grantor as their respective
interests may appear and each policy for property damage insurance shall provide
for all losses (except for losses of less than $50,000 per occurrence) to be
paid directly to the Bank. Each such policy shall in addition (a) name the
Grantor and the Bank as insured parties thereunder (without any representation
or warranty by or obligation upon the Bank) as their interests may appear; (b)
contain the agreement by the insurer that any loss thereunder shall be payable
to the Bank notwithstanding any action, inaction, or breach of representation or
warranty by the Grantor; (c) provide that there shall be no recourse against the
Bank for payment of premiums or other amounts with respect thereto; and (d)
provide that at least thirty days' prior written notice of cancellation or of
lapse shall be given to the Bank by the insurer.
SECURITY AGREEMENT - 60
The Grantor shall, if so requested by the Bank, deliver to the Bank original
or duplicate policies of such insurance and, as often as the Bank may
reasonably request, a report of a reputable insurance broker with respect to
such insurance. Further, the Grantor shall, at the request of the Bank, duly
execute and deliver instruments of assignment of such insurance policies to
comply with the requirements of Section 5.1 and cause the insurers to
acknowledge notice of such assignment.
7.2 Grantor shall promptly notify Bank of any
loss or damage to the Collateral. Bank may make proof of loss if Grantor fails
to do so within fifteen (15) days of the casualty. All proceeds of any insurance
on the Collateral, including accrued proceeds thereon, shall be held by Bank as
part of the Collateral. If Bank consents to repair or replacement of the damaged
or destroyed Collateral, Bank shall, upon satisfactory proof of expenditure, pay
or reimburse Grantor from the proceeds for the reasonable cost of repair or
restoration. If Bank does not consent to repair or replacement of the
Collateral, Bank shall retain a sufficient amount of the proceeds to pay all of
the Obligations, and shall pay the balance to Grantor. Any proceeds that have
not been disbursed within six (6) months after their receipt and that Grantor
has not committed to the repair or restoration of the Collateral shall be used
to prepay the Obligations.
8. PLACE OF PERFECTION; RECORDS; COLLECTION OF
RECEIVABLES.
8.1 The Grantor shall keep its chief place of
business and chief executive office and the office where it keeps its records
concerning the Receivables, and the originals of all chattel paper that
evidence Receivables, at the location therefor specified in Section 4.1 or,
upon 30 days' prior written notice to the Bank, at any other locations in a
jurisdiction where all actions required by Section 5 shall have been taken
with respect to the Receivables. The Grantor will hold and preserve such
records and chattel paper and will permit representatives of the Bank at any
time during normal business hours to inspect and make abstracts from such
records and chattel paper.
8.2 Except as otherwise provided in this
subsection, the Grantor shall continue to collect, at its own expense, all
amounts due or to become due the Grantor under the Receivables. In connection
with such collections, the Grantor may take (and, at the Bank's direction, shall
take) such action as the Grantor or the Bank may deem necessary or advisable to
enforce collection of the Receivables; provided, however, that the Bank shall
have the right upon the occurrence and during the continuance of an Event of
Default or an event that, with the giving of notice or the lapse of time, or
both, would become an Event of Default and upon written notice to the Grantor of
its intention to do so, to notify the account debtors or obligors under any
Receivables of the
SECURITY AGREEMENT - 61
assignment of such Receivables to the Bank and to direct such account debtors
or obligors to make payment of all amounts due or to become due to the
Grantor thereunder directly to the Bank and, upon such notification and at
the expense of the Grantor, to enforce collection of any such Receivables,
and to adjust, settle, or compromise the amount or payment thereof, in the
same manner and to the same extent as the Grantor might have done. After
receipt by the Grantor of the notice from the Bank referred to in the proviso
to the preceding sentence, (a) all amounts and proceeds (including
instruments) received by the Grantor in respect of the Receivables shall be
received in trust for the benefit of the Bank hereunder, shall be segregated
from other funds of the Grantor, and shall be forthwith paid over to the Bank
in the same form as so received (with any necessary endorsement) to be held
as cash collateral and either (i) released to the Grantor so long as no Event
of Default shall have occurred and be continuing or (ii) if any Event of
Default shall have occurred and be continuing, applied as provided by Section
13.2, and (b) the Grantor shall not adjust, settle, or compromise the amount
or payment of any Receivable, release wholly or partly any account debtor or
obligor thereof, or allow any credit or discount thereon.
9. TRANSFERS AND OTHER LIENS. The Grantor shall not (a)
sell, assign (by operation of law or otherwise), or otherwise dispose of, or
grant any option with respect to, any of the Collateral, except Inventory in the
ordinary course of business, or (b) create or permit to exist any lien upon or
with respect to any of the Collateral, except for the security interest under
this Agreement.
10. BANK APPOINTED ATTORNEY-IN-FACT. The Grantor
irrevocably appoints the Bank the Grantor's attorney-in-fact, with full
authority in the place and stead of the Grantor and in the name of the
Grantor or otherwise, from time to time in the Bank's discretion, to take any
action and to execute any instrument that the Bank may deem necessary or
advisable to accomplish the purposes of this Agreement (subject to the rights
of the Grantor under Section 8), including, without limitation:
10.1 To obtain and adjust insurance required to
be paid to the Bank pursuant to the Section captioned "Insurance;"
10.2 To ask, demand, collect, xxx for, recover,
compromise, receive and give acquittance and receipts for moneys due and to
become due under or in connection with the Collateral;
10.3 To receive, endorse, and collect any drafts
or other instruments, documents, and chattel paper, in connection therewith; and
SECURITY AGREEMENT - 62
10.4 To file any claims or take any action or
institute any proceedings that the Bank may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of the
Bank with respect to any of the Collateral.
11. BANK MAY PERFORM. If the Grantor fails to perform any
agreement contained herein, the Bank may itself perform, or cause performance
of, such agreement, and the expenses of the Bank incurred in connection
therewith shall be payable by the Grantor under Subsection 14.2.
12. THE BANK'S DUTIES. The powers conferred on the Bank
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe custody
of any Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Bank shall have no duty as to any Collateral, or
as to the taking of any necessary steps to preserve rights against prior parties
or any other rights pertaining to any Collateral. The Bank shall be deemed to
have exercised reasonable care in the custody and preservation of any Collateral
in its possession if such Collateral is accorded treatment substantially equal
to that which it accords its own property.
13. REMEDIES. If any Event of Default shall have occurred
and be continuing:
13.1 The Bank may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the Uniform Commercial Code in effect in the State of Idaho at
that time (whether or not such code applies to the affected Collateral), and
also may (a) require the Grantor to, and the Grantor agrees that it will at
its expense and upon request of the Bank forthwith, assemble all or part of
the Collateral as directed by the Bank and make it available to the Bank at a
place to be designated by the Bank that is reasonably convenient to both
parties and (b) without notice except as specified below, sell the Collateral
or any part thereof in one or more parcels at public or private sale, at any
of the Bank's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Bank may deem commercially
reasonable. The Grantor agrees that, to the extent notice of sale shall be
required by law, at least ten days' notice to the Grantor of the time and
place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Bank shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Bank may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and
SECURITY AGREEMENT - 63
such sale may, without further notice, be made at the time and place to which
it was so adjourned.
13.2 Any cash held by the Bank as Collateral and
all cash proceeds received by the Bank in respect of any sale of, collection
from, or other realization upon all or any part of the Collateral may, in the
discretion of the Bank, be held by the Bank as Collateral for, and/or then or
any time thereafter be applied (after payment of any amounts payable to the Bank
pursuant to Section 14) in whole or in part by the Bank against, all or any part
of the Obligations in such order as the Bank shall elect. Any surplus of such
cash or cash proceeds held by the Bank and remaining after payment in full of
all the Obligations shall be paid over to the Grantor or to whomsoever may be
lawfully entitled to receive such surplus.
14. INDEMNITY AND EXPENSES.
14.1 The Grantor shall indemnify the Bank from
and against any and all claims, losses, and liabilities (including reasonable
attorney fees) growing out of or resulting from this Agreement (including,
without limitation, enforcement of this Agreement), except claims, losses, or
liabilities resulting from the Bank's gross negligence or willful misconduct.
14.2 The Grantor shall upon demand pay to the
Bank the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, that the Bank
may incur in connection with (a) the administration of this Agreement; (b) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any of the Collateral; (c) the exercise or enforcement
of any of the rights of the Bank hereunder; or (d) the failure by the Grantor to
perform or observe any of the provisions hereof.
15. AMENDMENTS. No amendment, modification, termination,
or waiver of any provision of this Agreement, and no consent to any departure by
the Grantor herefrom, shall in any event be effective unless the same shall be
in writing and signed by the Bank, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
16. NOTICES. Unless otherwise provided in this Agreement,
all notices or demands by either party relating to this Agreement shall be in
writing and either personally served or sent by facsimile transmission,
overnight delivery service, or regular United States mail, postage prepaid, to
Grantor or to Bank as the case may be at the addresses set forth below:
SECURITY AGREEMENT - 64
If to Grantor: JB Tool, LLC
00000 Xxxxxxx 00 Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxx
Fax: 406/000-0000
With a copy to: Xxxxx X. Xxxxxxxx
Chief Financial Officer/General Counsel
Jore Corporation
00000 Xxxxxxx 00 Xxxxx
Fax: 406/000-0000
If to Bank: First Security Bank
X.X. Xxx 0000
Xxxxx, Xxxxx 00000
Attention: Corporate Banking
Fax: 208/000-0000
With a copy to: Xxxxxxx, Xxxxxx, Xxxxxxx, Rock &
Fields, Chartered
000 X. Xxxxxxx Xxxx., 00xx Xxxxx (83702)
X.X. Xxx 000
Xxxxx, Xxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
Fax: 208/000-0000
The parties may change the address at which they are to receive notices
hereunder by notice in writing in the foregoing manner given to the other. All
notices or demands sent in accordance with this Section shall be deemed received
on the earlier of the date of confirmed actual receipt or two (2) business days
after the deposit thereof in the mail.
17. CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER
GUARANTY. This Agreement shall create a continuing security interest in the
Collateral and shall (1) remain in full force and effect until the later of
the payment in full of the Obligations and all other amounts payable under
this Agreement; (2) be binding upon the Grantor, its successors and assigns;
and (3) inure to the benefit of, and be enforceable by, the Bank and its
successors, transferees, and assigns. Without limiting the generality of the
foregoing clause (3), the Bank may assign or otherwise transfer all or any
portion of its rights and obligations under the Guaranty to any other person
or entity, and such other
SECURITY AGREEMENT - 65
person or entity shall thereupon become vested with all the benefits in
respect thereof granted to the Bank herein or otherwise. Upon the later of
the payment in full of the Obligations and all other amounts payable under
this Agreement, the security interest granted hereby shall terminate and all
rights to the Collateral shall revert to the Grantor. Upon any such
termination, the Bank will, at the Grantor's expense, execute and deliver to
the Grantor such documents as the Grantor shall reasonably request to
evidence such termination.
18. GOVERNING LAW. This Agreement is made in the state of
Idaho, which state the parties agree has a substantial relationship to the
parties and to the underlying transaction embodied hereby. Accordingly, in all
respects, including, without limiting the generality of the foregoing, matters
of construction, validity, enforceability and performance, this Agreement and
the obligations arising hereunder and thereunder shall be governed by, and
construed in accordance with, the laws of the state of Idaho applicable to
contracts made and performed in such state and any applicable law of the United
States of America. Each party hereby unconditionally and irrevocably waives, to
the fullest extent permitted by law, any claim to assert that the law of any
jurisdiction other than the state of Idaho governs this Agreement. All disputes,
controversies, or claims arising out of, or in connection with, this Agreement
shall be litigated in any court of competent jurisdiction within the state of
Idaho. Each party hereby accepts jurisdiction of such state and agrees to accept
service of process as if it were personally served within such state. Each party
irrevocably waives, to the fullest extent permitted by law, any objection that
the party may now or hereafter have to the jurisdiction of the courts of such
state and any claim that any such litigation brought in any such court has been
brought in an inconvenient forum.
21. DEFINITIONS. Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings provided therefor in
the Credit Agreement.
22. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which when executed and delivered shall be
deemed an original and all of which taken together shall be deemed to be one and
the same Agreement.
IN WITNESS WHEREOF, the Grantor has caused this Agreement to
be executed as of the date first written above.
JB TOOL, LLC
By
SECURITY AGREEMENT - 66
Xxxxxxx X. Xxxxxx, Managing Member
By
Xxxxxxx Xxxxxxxxx, Managing Member
SECURITY AGREEMENT - 67
SCHEDULE 1
LOCATION OF EQUIPMENT AND INVENTORY
1. 00000 Xxxxxxx 00 Xxxxx
Xxxxx, Xxxxxxx 00000
2. 000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxx 00000
SECURITY AGREEMENT - 68
EXHIBIT 1.37
PERMITTED LIENS
SECURED PARTY MONTANA FINANCING STATEMENT NO.
Hoogovens Aluminum Corp. USA 517171
Charter Financial, Inc./Wentworth Capital 542862
International Software Finance Corp. 544162
The CIT Group/Equipment Financing, 545818
Inc.
NBD Equipment Finance, Inc. 548102
NBD Equipment Finance, Inc. 548103
KeyCorp Leasing 548891
KeyCorp Leasing 551169
KeyCorp Leasing 551175
KeyCorp Leasing 559959
KeyCorp Leasing 560504
KeyCorp Leasing 562689
KeyCorp Leasing 562690
KeyCorp Leasing 562691
KeyCorp Leasing 563296
Milacron Marketing Company 563488
KeyCorp Leasing 565776
Big Sky Lift Truck, Inc. 518910
Big Sky Lift Truck, Inc. 537121
Big Sky Lift Truck, Inc. 552351
Charter Financial, Inc./Wentworth Capital 537013
Charter Financial, Inc./Wentworth Capital 537014
Charter Financial, Inc./Wentworth Capital 537015
Charter Financial, Inc./Wentworth Capital 537016
Phoenixcor, Inc. 550894
International Software Finance Corp. 554699
The CIT Group/Equipment Financing Inc. 437927
Phoenixcor, Inc. 484156
Phoenixcor, Inc. 484157
Xxxxxx Machinery Co. 488035
Phoenixcor, Inc. 535085
EXHIBIT 1.37 - 69
EXHIBIT 1.43
DESCRIPTION OF THE REAL PROPERTY
Parcel 1:
The SE1/4SW1/4 of Xxxxxxx 00, Xxxxxxxx 00 Xxxxx, Xxxxx 20 West, P.M.M., Lake
County, Montana.
Parcel 2:
A tract of land located in the NW1/4NW1/4 of Xxxxxxx 00, Xxxxxxxx 00 Xxxxx,
Xxxxx 20 West, P.M.M., Lake County, Montana, further shown and described as
being Tract A on Certificate of Survey No. 5509, on file in the office of the
Clerk and Recorder of Lake County, Montana.
Parcel 3:
A tract of land located in the NE1/4NW1/4 of Xxxxxxx 00, Xxxxxxxx 00 Xxxxx,
Xxxxx 20 West, P.M.M., Lake County, Montana, further shown and described as
being Tract 1 on Certificate of Survey No. 5564, on file in the office of the
Clerk and Recorder of Lake County, Montana.
EXHIBIT 1.43
EXHIBIT 1.46
FORM OF REVOLVING NOTE
See attached.
EXHIBIT 1.46
REVOLVING NOTE
BORROWER: JORE CORPORATION AUGUST 19, 1999
BOISE, IDAHO
ADDRESS: 00000 XXXXXXX 00 XXXXX
XXXXX, XXXXXXX 00000
PRINCIPAL AMOUNT: TWENTY FIVE MILLION DOLLARS ($25,000,000)
FOR VALUE RECEIVED, JORE CORPORATION, a Montana corporation
("Borrower"), promises to pay to the order of FIRST SECURITY BANK, N.A. ("Bank")
the total principal amount outstanding on this note (the "Note") together with
interest thereon as stated below, in lawful money of the United States of
America.
This Note is executed pursuant to and is the Revolving Note
referred to in that certain Credit Agreement, dated August 19, 1999, between
Borrower and Bank (as amended, modified, or supplemented from time to time, the
"Credit Agreement"). Capitalized terms used but not defined in this Note shall
have the same definitions as are ascribed to such terms in the Credit Agreement.
This Note is governed by the provisions of the Credit Agreement.
This Note is a revolving promissory note and evidences a revolving line
of credit not to exceed the maximum principal amount stated above at any one
time. The amount outstanding on this Note at any specific time shall be the
total amount advanced by Bank less the amount of principal payments made from
time to time, plus any interest due and payable.
Borrower agrees that any and all advances made hereunder shall be for
Borrower's benefit, whether or not said advances are deposited to Borrower's
account. Advances may be made at the request of those persons so identified in
the Credit Agreement and such persons are hereby authorized to request advances
and to direct the disposition of any such advances in the manner provided in the
Credit Agreement until written notice of revocation of this authority is
received by Bank from Borrower.
The outstanding unpaid balance of this Note shall bear interest at a
fluctuating per annum rate as set forth in the Credit Agreement. This Note shall
be repaid in the manner set forth in the Credit Agreement.
This Note is secured by a Mortgage and by a Security Agreement covering
REVOLVING NOTE - 72
equipment, inventory, accounts, general intangibles and other collateral as
provided therein and in the Credit Agreement.
This Note is made in the state of Idaho, which state the parties agree
has a substantial relationship to the parties and to the underlying transaction
embodied hereby. Accordingly, in all respects, this Note and the obligations
arising hereunder shall be governed by, and construed in accordance with, the
laws of the state of Idaho applicable to contracts made and performed in such
state and any applicable law of the United States of America. Each party hereby
unconditionally and irrevocably waives, to the fullest extent permitted by law,
any claim to assert that the law of any jurisdiction other than the state of
Idaho governs this Note. All disputes, controversies, or claims arising out of,
or in connection with, this Note shall be litigated in any court of competent
jurisdiction within the state of Idaho. Each party hereby accepts jurisdiction
of such state and agrees to accept service of process as if it were personally
served within such state. Each party irrevocably waives, to the fullest extent
permitted by law, any objection that the party may now or hereafter have to the
jurisdiction of the courts of such state and any claim that any such litigation
brought in any such court has been brought in an inconvenient forum.
Except as expressly provided in the Credit Agreement, the makers,
sureties, guarantors and endorsers of this Note jointly and severally waive
presentment for payment, protest, notice of protest and notice of nonpayment of
this Note, and consent that this Note or any payment due under this Note may be
extended or renewed without demand or notice, and further consent to the release
of any collateral or part thereof, with or without substitution.
JORE CORPORATION
By
Xxxxxxx Xxxx, President
REVOLVING NOTE - 73
EXHIBIT 1.47
FORM OF SECURITY AGREEMENT
See attached.
EXHIBIT 1.47
SECURITY AGREEMENT
This SECURITY AGREEMENT is made as of August 19, 1999, by JORE
CORPORATION, a Montana corporation (the "Borrower"), to FIRST SECURITY BANK,
N.A., (the "Bank").
R E C I T A L S :
A. The Borrower and the Bank have entered into a Credit Agreement
dated as of August 19, 1999 (the "Credit Agreement").
B. It is a condition precedent to the making of financial
accommodations to Borrower by the Bank under the Credit Agreement that the
Borrower shall have granted the security interest contemplated by this
Agreement.
NOW, THEREFORE, in order to induce the Bank to make the loans
under the Credit Agreement, the Borrower agrees with the Bank as follows:
1. ASSIGNMENT AND GRANT OF SECURITY INTEREST. The
Borrower hereby assigns and grants to the Bank a security interest in all of the
Borrower's right, title and interest in and to the following, whether now owned
or hereafter acquired (the "Collateral"):
1.1 All equipment in all of its forms, wherever
located, now or hereafter existing, all fixtures, and all parts thereof and all
accessions thereto (any and all such equipment, fixtures, parts, and accessions
being the "Equipment"). The fixtures are and will be located on the real
property described in the attached EXHIBIT A, and the Borrower is the record
owner of such real property.
1.2 All inventory in all of its forms, wherever
located, now or hereafter existing, including, but not limited to, (a) all raw
materials and work in process therefor, finished goods thereof, and materials
used or consumed in the manufacture or production thereof; (b) goods in which
the Borrower has an interest in mass or a joint or other interest or right of
any kind (including, without limitation, goods in which the Borrower has an
interest or right as consignee); and (c) goods which are returned to or
repossessed by the Borrower, and all accessions thereto and products thereof and
documents therefor (any and all such inventory, accessions, products, and
documents being the "Inventory").
SECURITY AGREEMENT - 75
1.3 All accounts, contract rights, chattel
paper, instruments, deposit accounts, general intangibles, and other
obligations of any kind, now or hereafter existing, whether or not arising
out of or in connection with the sale or lease of goods or the rendering of
services, and all rights, now or hereafter existing in and to all security
agreements, leases, and other contracts securing or otherwise relating to any
such accounts, contract rights, chattel paper, instruments, deposit accounts,
general intangibles, and obligations (any and all such accounts, contract
rights, chattel paper, instruments, deposit accounts, general intangibles,
and obligations being the "Receivables," and any and all such leases,
security agreements, and other contracts being the "Related Contracts").
1.4 All of the following (the "Agreement
Collateral"): Each of the agreements related to the operation of Borrower's
Business and all of Borrower's right, title, and interest thereto as such
agreements may be amended or otherwise modified from time to time (collectively,
the "Assigned Agreements"), including, without limitation, (a) all rights of the
Borrower to receive moneys due and to become due under or pursuant to the
Assigned Agreements; (b) all rights of the Borrower to receive proceeds of any
insurance, indemnity, warranty, or guaranty with respect to the Assigned
Agreements; (c) claims of the Borrower for damages arising out of or for breach
of or default under the Assigned Agreements; and (d) the right of the Borrower
to terminate the Assigned Agreements, to perform thereunder and to compel
performance and otherwise exercise all remedies thereunder.
1.5 All of Borrower's membership interest in JB
Tool, LLC, a Montana limited liability company, and all cash, instruments, and
other property from time to time received, receivable, or otherwise distributed
in respect of or in exchange for any or all of the membership interest (the
"Membership Interest").
1.6 All trademarks, service marks, trademark and
service xxxx registrations, trademark and service xxxx registration
applications, copyrights, patents, patent applications, and inventions, now or
hereafter existing.
1.7 All proceeds of any and all of the foregoing
Collateral (including, without limitation, proceeds that constitute property of
the types described in clauses l.1-1.6 of this Section 1), and, to the extent
not otherwise included, all (a) payments under insurance (whether or not the
Bank is the loss payee thereof), or any indemnity, warranty, or guaranty,
payable by reason of loss or damage to or otherwise with respect to any of the
foregoing Collateral, and (b) cash.
1.8 All records and data relating to any of the
foregoing
SECURITY AGREEMENT - 76
Collateral, whether in the form of a writing, photograph, microfilm,
microfiche, or electronic media together with all of Borrower's right, title,
and interest in and to all computer software required to use, create,
maintain, and process any such records or data on electronic media.
2. SECURITY FOR OBLIGATIONS. The assignment and
security interest granted by this Agreement is granted to secure the payment
of all obligations of the Borrower now or hereafter existing under the Credit
Agreement, whether for principal, interest, fees, expenses, or otherwise, and
all obligations of the Borrower now or hereafter existing under this
Agreement (all such obligations of the Borrower being the "Obligations"). In
addition, the "Obligations" includes all other obligations, debts and
liabilities, plus interest thereon, of Borrower, or any one or more of them,
to Bank, as well as all claims by Bank against Borrower, or any one or more
of them, whether existing now or later; whether they are voluntary or
involuntary, due or not due, direct or indirect, absolute or contingent,
liquidated or unliquidated; whether Borrower may be liable individually or
jointly with others; whether Borrower may be obligated as guarantor, surety,
accommodation party or otherwise. Without limiting the generality of the
foregoing, this Agreement secures the payment of all amounts that constitute
part of the Obligations and would be owed by the Borrower to the Bank under
the Credit Agreement but for the fact that they are unenforceable or not
allowable owing to the existence of bankruptcy, reorganization, or similar
proceedings involving the Borrower.
3. BORROWER REMAINS LIABLE. Anything herein to the
contrary notwithstanding, (1) the Borrower shall remain liable under the
contracts and agreements included in the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed; (2) the exercise by the Bank
of any rights hereunder shall not release the Borrower from any of its duties or
obligations under the contracts and agreements included in the Collateral; and
(3) the Bank shall not have any obligation or liability under the contracts and
agreements included in the Collateral by reason of this Agreement, nor shall the
Bank be obligated to perform any of the obligations or duties of the Borrower
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.
4. REPRESENTATIONS AND WARRANTIES. The Borrower
represents and warrants to Bank as follows:
4.1 All of the Equipment and Inventory are
located at the places specified in SCHEDULE62 hereto. The chief place of
business and chief executive office of the Borrower and the office where the
Borrower keeps its records concerning the Receivables and other Collateral, and
the originals of all chattel paper that evidence
SECURITY AGREEMENT - 77
Receivables, and the original copies of the Assigned Agreements, are located
at its address specified in Section 18. None of the Receivables is evidenced
by a promissory note or other instrument.
4.2 The Borrower is the legal and beneficial
owner of the Collateral free and clear of any lien except for the security
interest created by this Agreement. No effective financing statement or other
document similar in effect covering all or any part of the Collateral is on file
in any recording office, except such as may have been filed in favor of the
Bank. The Borrower has no assumed business names.
4.3 The Borrower has exclusive possession and
control of the Equipment and Inventory.
4.4 The Assigned Agreements, have been
authorized, executed, and delivered by all parties thereto, have not been
amended or otherwise modified except as permitted by Section 9, are in full
force and effect and are binding upon and enforceable against all parties
thereto in accordance with their respective terms. There exists no default under
any Assigned Agreement by any party thereto. Upon reasonable request of Bank
from time to time, Borrower shall in good faith try to obtain a consent to the
assignment of an Assigned Agreement to the Bank pursuant to this Agreement,
executed and delivered by each party to the Assigned Agreement.
4.5 This Agreement creates a valid security
interest in the Collateral, securing the payment of the Obligations, and all
filings and other actions necessary or desirable to perfect and protect such
security interest in a first priority position have been taken.
4.6 No consent of any other person or entity and
no authorization, approval, or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required (a) for the grant by
the Borrower of the assignment and security interest granted hereby or for the
execution and delivery of this Agreement and the performance by the Borrower of
its obligations thereunder; (b) for the perfection or maintenance of the
assignment and security interest created hereby (including the first priority
nature of such assignment and security interest); or (c) for the exercise by the
Bank of the voting or other rights provided for in this Agreement or the
remedies in respect of the Collateral pursuant to this Agreement (except as may
be required in connection with the disposition of any portion of the Security
Collateral by laws affecting the offering and sale of securities generally).
4.7 The Inventory produced by Borrower has been
produced by
SECURITY AGREEMENT - 78
the Borrower in compliance with all requirements of the Fair Labor Standards
Act.
4.8 All of the Accounts are and will be bona
fide existing obligations created by the sale and actual delivery of Inventory
or other property, the rendition of services, or the furnishing of other good
and sufficient consideration to Account Debtors in the regular course of
business.
5. FURTHER ASSURANCES.
5.1 The Borrower shall from time to time, at
the expense of the Borrower, promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary
or desirable, or that the Bank may reasonably request, in order to perfect
and protect any assignment or security interest granted or purported to be
granted hereby or to enable the Bank to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, the Borrower will: (a) xxxx conspicuously each
document included in the Inventory and each chattel paper included in the
Receivables, each Related Contract, each Assigned Agreement and, at the
request of the Bank, each of its records pertaining to the Collateral with a
legend, in form and substance satisfactory to the Bank, indicating that such
document, chattel paper, Related Contract, Assigned Agreement, or Collateral
is subject to the assignment, and security interest granted hereby; (b) if
any Collateral shall be evidenced by a promissory note or other instrument or
chattel paper, deliver and pledge to the Bank hereunder such note or
instrument or chattel paper duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory
to the Bank; (c) execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices, as may be
necessary or desirable, or as the Bank may request, in order to perfect and
preserve the pledge, assignment, and security interest granted or purported
to be granted hereby; and (d) deliver to Bank any certificate of title now or
hereafter existing on any of the Collateral and take all steps necessary for
the title to recite the interest of Bank.
5.2 The Borrower authorizes the Bank to file one
or more financing or continuation statements, and amendments thereto, relating
to all or any part of the Collateral without the signature of the Borrower where
permitted by law. A photocopy or other reproduction of this Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
5.3 The Borrower will furnish to the Bank from
time to time statements and schedules further identifying and describing the
Collateral and such other
SECURITY AGREEMENT - 79
reports in connection with the Collateral as the Bank may reasonably request,
all in reasonable detail.
5.4 All certificates or instruments representing
or evidencing the Membership Interest, if any, shall be delivered to and held by
or on behalf of the Bank and shall be suitable in form for transfer by delivery,
or shall be accompanied by duly executed instruments of transfer or assignment
in blank, all in form and substance satisfactory to the Bank. The Bank shall
have the right, at any time in its discretion and without notice to the
Borrower, to transfer to the Bank or any of its nominees any or all of the
Membership Interest.
6. EQUIPMENT AND INVENTORY COVENANTS.
6.1 The Borrower shall keep the Equipment and
Inventory (other than Inventory sold in the ordinary course of business) at the
places therefor specified in SCHEDULE 1 or, upon 30 days' prior written notice
to the Bank, at such other places in a jurisdiction where all action required by
Section 5.l shall have been taken with respect to the Equipment and Inventory.
6.2 The Borrower shall cause the Equipment to
be maintained and preserved in good condition, repair, and working order as
when new, ordinary wear and tear excepted, and in accordance with any
manufacturer's manual, and shall forthwith, or in the case of any loss or
damage to any of the Equipment as quickly as practicable after the occurrence
thereof, make or cause to be made all repairs, replacements, and other
improvements in connection therewith that are necessary or desirable to such
end. The Borrower shall promptly notify the Bank about any loss or damage to
any of the Equipment.
6.3 The Borrower shall pay promptly when due all
property and other taxes, assessments, and governmental charges or levies
imposed upon, and all claims (including claims for labor, materials, and
supplies) against, the Equipment and Inventory. In producing the Inventory, the
Borrower shall comply with all requirements of the Fair Labor Standards Act.
7. INSURANCE.
7.1 The Borrower shall, at its own expense,
maintain insurance with respect to the Collateral in such amounts, against such
risks, in such form and with such insurers, as shall be satisfactory to the Bank
from time to time. Each policy for liability insurance shall provide for all
losses to be paid on behalf of the Bank and the
SECURITY AGREEMENT - 80
Borrower as their respective interests may appear and each policy for
property damage insurance shall provide for all losses (except for losses of
less than $50,000 per occurrence) to be paid directly to the Bank. Each such
policy shall in addition (a) name the Borrower and the Bank as insured
parties thereunder (without any representation or warranty by or obligation
upon the Bank) as their interests may appear; (b) contain the agreement by
the insurer that any loss thereunder shall be payable to the Bank
notwithstanding any action, inaction, or breach of representation or warranty
by the Borrower; (c) provide that there shall be no recourse against the Bank
for payment of premiums or other amounts with respect thereto; and (d)
provide that at least thirty days' prior written notice of cancellation or of
lapse shall be given to the Bank by the insurer. The Borrower shall, if so
requested by the Bank, deliver to the Bank original or duplicate policies of
such insurance and, as often as the Bank may reasonably request, a report of
a reputable insurance broker with respect to such insurance. Further, the
Borrower shall, at the request of the Bank, duly execute and deliver
instruments of assignment of such insurance policies to comply with the
requirements of Section 5.1 and cause the insurers to acknowledge notice of
such assignment.
7.2 Borrower shall promptly notify Bank of
any loss or damage to the Collateral. Bank may make proof of loss if Borrower
fails to do so within fifteen (15) days of the casualty. All proceeds of any
insurance on the Collateral, including accrued proceeds thereon, shall be
held by Bank as part of the Collateral. If Bank consents to repair or
replacement of the damaged or destroyed Collateral, Bank shall, upon
satisfactory proof of expenditure, pay or reimburse Borrower from the
proceeds for the reasonable cost of repair or restoration. If Bank does not
consent to repair or replacement of the Collateral, Bank shall retain a
sufficient amount of the proceeds to pay all of the Obligations, and shall
pay the balance to Borrower. Any proceeds that have not been disbursed within
six (6) months after their receipt and that Borrower has not committed to the
repair or restoration of the Collateral shall be used to prepay the
Obligations.
8. PLACE OF PERFECTION; RECORDS; COLLECTION OF
RECEIVABLES.
8.1 The Borrower shall keep its chief place of
business and chief executive office and the office where it keeps its records
concerning the Receivables, and the original copies of the Assigned Agreements
and the originals of all chattel paper that evidence Receivables, at the
location therefor specified in Section 4.1 or, upon 30 days' prior written
notice to the Bank, at any other locations in a jurisdiction where all actions
required by Section 5 shall have been taken with respect to the Receivables. The
Borrower will hold and preserve such records, Assigned Agreements, and chattel
paper and will permit representatives of the Bank at any time during normal
SECURITY AGREEMENT - 81
business hours to inspect and make abstracts from such records and chattel
paper.
8.2 Except as otherwise provided in this
subsection, the Borrower shall continue to collect, at its own expense, all
amounts due or to become due the Borrower under the Receivables. In connection
with such collections, the Borrower may take (and, at the Bank's direction,
shall take) such action as the Borrower or the Bank may deem necessary or
advisable to enforce collection of the Receivables; provided, however, that the
Bank shall have the right upon the occurrence and during the continuance of an
Event of Default or an event that, with the giving of notice or the lapse of
time, or both, would become an Event of Default and upon written notice to the
Borrower of its intention to do so, to notify the account debtors or obligors
under any Receivables of the assignment of such Receivables to the Bank and to
direct such account debtors or obligors to make payment of all amounts due or to
become due to the Borrower thereunder directly to the Bank and, upon such
notification and at the expense of the Borrower, to enforce collection of any
such Receivables, and to adjust, settle, or compromise the amount or payment
thereof, in the same manner and to the same extent as the Borrower might have
done. After receipt by the Borrower of the notice from the Bank referred to in
the proviso to the preceding sentence, (a) all amounts and proceeds (including
instruments) received by the Borrower in respect of the Receivables shall be
received in trust for the benefit of the Bank hereunder, shall be segregated
from other funds of the Borrower, and shall be forthwith paid over to the Bank
in the same form as so received (with any necessary endorsement) to be held as
cash collateral and either (i) released to the Borrower so long as no Event of
Default shall have occurred and be continuing or (ii) if any Event of Default
shall have occurred and be continuing, applied as provided by Section 15.2, and
(b) the Borrower shall not adjust, settle, or compromise the amount or payment
of any Receivable, release wholly or partly any account debtor or obligor
thereof, or allow any credit or discount thereon.
9. AGREEMENT COLLATERAL COVENANTS.
9.1 The Borrower shall at its expense:
(a) Perform and observe all the terms
and provisions of the Assigned Agreements to be performed or observed by it,
maintain the Assigned Agreements in full force and effect, enforce the Assigned
Agreements in accordance with their respective terms, and take all such action
to such end as may be from time to time reasonably requested by the Bank.
(b) Furnish to the Bank promptly upon
receipt thereof copies of all notices, requests, and other documents received by
the Borrower under or
SECURITY AGREEMENT - 82
pursuant to the Assigned Agreements, and from time to time (i) furnish to the
Bank such information and reports regarding the Assigned Agreements as the
Bank may reasonably request and (ii) upon request of the Bank make to any
other party to any Assigned Agreement such demands and requests for
information and reports or for action as the Borrower is entitled to make
thereunder.
9.2 The Borrower shall not, without the Bank's
written consent,
(a) Cancel or terminate any Assigned
Agreement or consent to or accept any cancellation or termination thereof;
(b) Amend or otherwise modify any
Assigned Agreement or give any consent, waiver, or approval thereunder;
(c) Waive any default under or breach
of any Assigned Agreement; or
(d) Take any other action in connection
with any Assigned Agreement that would impair the value of the interest or
rights of the Borrower thereunder or that would impair the interest or rights of
the Bank.
10. PAYMENTS UNDER THE ASSIGNED AGREEMENTS. The Borrower
shall, upon Bank's written request from time to time, instruct each other party
to each Assigned Agreement, that all payments due or to become due under or in
connection with such Assigned Agreement shall be made directly to the Bank at
its address set forth in the Section captioned "Notices."
11. TRANSFERS AND OTHER LIENS. The Borrower shall not
(a) sell, assign (by operation of law or otherwise), or otherwise dispose of,
or grant any option with respect to, any of the Collateral, except Inventory
in the ordinary course of business, or (b) create or permit to exist any lien
upon or with respect to any of the Collateral, except for the security
interest under this Agreement.
12. BANK APPOINTED ATTORNEY-IN-FACT. The Borrower
irrevocably appoints the Bank the Borrower's attorney-in-fact, with full
authority in the place and stead of the Borrower and in the name of the Borrower
or otherwise, from time to time in the Bank's discretion, to take any action and
to execute any instrument that the Bank may deem necessary or advisable to
accomplish the purposes of this Agreement (subject to the rights of the Borrower
under Section 8), including, without limitation:
SECURITY AGREEMENT - 83
12.1 To obtain and adjust insurance required to
be paid to the Bank pursuant to the Section captioned "Insurance;"
12.2 To ask, demand, collect, xxx for, recover,
compromise, receive and give acquittance and receipts for moneys due and to
become due under or in connection with the Collateral;
12.3 To receive, endorse, and collect any drafts
or other instruments, documents, and chattel paper, in connection therewith; and
12.4 To file any claims or take any action or
institute any proceedings that the Bank may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce compliance with the
terms and conditions of any Assigned Agreement or the rights of the Bank with
respect to any of the Collateral.
13. BANK MAY PERFORM. If the Borrower fails to perform
any agreement contained herein, the Bank may itself perform, or cause
performance of, such agreement, and the expenses of the Bank incurred in
connection therewith shall be payable by the Borrower under Subsection 16.2.
14. THE BANK'S DUTIES. The powers conferred on the Bank
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the safe custody
of any Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Bank shall have no duty as to any Collateral, or
as to the taking of any necessary steps to preserve rights against prior parties
or any other rights pertaining to any Collateral. The Bank shall be deemed to
have exercised reasonable care in the custody and preservation of any Collateral
in its possession if such Collateral is accorded treatment substantially equal
to that which it accords its own property.
15. REMEDIES. If any Event of Default shall have occurred
and be continuing:
15.1 The Bank may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the Uniform Commercial Code in effect in the State of Idaho at
that time (whether or not such code applies to the affected Collateral), and
also may (a) require the Borrower to, and the Borrower agrees that it will at
its expense and upon request of the Bank forthwith, assemble all or part of
SECURITY AGREEMENT - 84
the Collateral as directed by the Bank and make it available to the Bank at a
place to be designated by the Bank that is reasonably convenient to both
parties and (b) without notice except as specified below, sell the Collateral
or any part thereof in one or more parcels at public or private sale, at any
of the Bank's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Bank may deem commercially
reasonable. The Borrower agrees that, to the extent notice of sale shall be
required by law, at least ten days' notice to the Borrower of the time and
place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Bank shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Bank may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.
15.2 Any cash held by the Bank as Collateral and
all cash proceeds received by the Bank in respect of any sale of, collection
from, or other realization upon all or any part of the Collateral may, in the
discretion of the Bank, be held by the Bank as Collateral for, and/or then or
any time thereafter be applied (after payment of any amounts payable to the Bank
pursuant to Section 16) in whole or in part by the Bank against, all or any part
of the Obligations in such order as the Bank shall elect. Any surplus of such
cash or cash proceeds held by the Bank and remaining after payment in full of
all the Obligations shall be paid over to the Borrower or to whomsoever may be
lawfully entitled to receive such surplus.
15.3 The Bank may exercise any and all rights and
remedies of the Borrower under or in connection with the Assigned Agreements or
otherwise in respect of the Collateral, including, without limitation, any and
all rights of the Borrower to demand or otherwise require payment of any amount
under, or performance of any provision of, any Assigned Agreement.
15.4 All payments received by the Borrower under
or in connection with any Assigned Agreement or otherwise in respect of the
Collateral shall be received in trust for the benefit of the Bank, shall be
segregated from other funds of the Borrower and shall be forthwith paid over to
the Bank in the same form as so received (with any necessary endorsement).
16. INDEMNITY AND EXPENSES.
16.1 The Borrower shall indemnify the Bank from
and against any and all claims, losses, and liabilities (including reasonable
attorney fees) growing out
SECURITY AGREEMENT - 85
of or resulting from this Agreement (including, without limitation,
enforcement of this Agreement), except claims, losses, or liabilities
resulting from the Bank's gross negligence or willful misconduct.
16.2 The Borrower shall upon demand pay to the
Bank the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents, that the Bank
may incur in connection with (a) the administration of this Agreement; (b) the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any of the Collateral; (c) the exercise or enforcement
of any of the rights of the Bank hereunder; or (d) the failure by the Borrower
to perform or observe any of the provisions hereof.
17. AMENDMENTS. No amendment, modification, termination,
or waiver of any provision of this Agreement, and no consent to any departure by
the Borrower herefrom, shall in any event be effective unless the same shall be
in writing and signed by the Bank, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
18. NOTICES. Unless otherwise provided in this Agreement,
all notices or demands by either party relating to this Agreement shall be in
writing and either personally served or sent by facsimile transmission,
overnight delivery service, or regular United States mail, postage prepaid, to
Borrower or to Bank as the case may be at the addresses set forth below:
If to Borrower: Jore Corporation
00000 Xxxxxxx 00 Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxx, President
Fax: 406/000-0000
With a copy to: Xxxxx X. Xxxxxxxx
Chief Financial Officer/General Counsel
Jore Corporation
00000 Xxxxxxx 00 Xxxxx
Fax: 406/000-0000
If to Bank: First Security Bank
X.X. Xxx 0000
Xxxxx, Xxxxx 00000
Attention: Corporate Banking
SECURITY AGREEMENT - 86
Fax: 208/000-0000
With a copy to: Xxxxxxx, Xxxxxx, Xxxxxxx, Rock &
Fields, Chartered
000 X. Xxxxxxx Xxxx., 00xx Xxxxx (83702)
X.X. Xxx 000
Xxxxx, Xxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
Fax: 208/000-0000
The parties may change the address at which they are to receive notices
hereunder by notice in writing in the foregoing manner given to the other. All
notices or demands sent in accordance with this Section shall be deemed received
on the earlier of the date of confirmed actual receipt or two (2) business days
after the deposit thereof in the mail.
19. CONTINUING SECURITY INTEREST; ASSIGNMENTS UNDER
CREDIT AGREEMENT. This Agreement shall create a continuing security interest in
the Collateral and shall (1) remain in full force and effect until the later of
the payment in full of the Obligations and all other amounts payable under this
Agreement; (2) be binding upon the Borrower, its successors and assigns; and (3)
inure to the benefit of, and be enforceable by, the Bank and its successors,
transferees, and assigns. Without limiting the generality of the foregoing
clause (3), the Bank may assign or otherwise transfer all or any portion of its
rights and obligations under the Credit Agreement to any other person or entity,
and such other person or entity shall thereupon become vested with all the
benefits in respect thereof granted to the Bank herein or otherwise. Upon the
later of the payment in full of the Obligations and all other amounts payable
under this Agreement, the security interest granted hereby shall terminate and
all rights to the Collateral shall revert to the Borrower. Upon any such
termination, the Bank will, at the Borrower's expense, execute and deliver to
the Borrower such documents as the Borrower shall reasonably request to evidence
such termination.
20. GOVERNING LAW. This Agreement is made in the state
of Idaho, which state the parties agree has a substantial relationship to the
parties and to the underlying transaction embodied hereby. Accordingly, in
all respects, including, without limiting the generality of the foregoing,
matters of construction, validity, enforceability and performance, this
Agreement and the obligations arising hereunder and thereunder shall be
governed by, and construed in accordance with, the laws of the state of Idaho
applicable to contracts made and performed in such state and any applicable
law of the United States of America. Each party hereby unconditionally and
irrevocably waives, to the fullest extent permitted by law, any claim to
assert that the law of any jurisdiction
SECURITY AGREEMENT - 87
other than the state of Idaho governs this Agreement. All disputes,
controversies, or claims arising out of, or in connection with, this
Agreement shall be litigated in any court of competent jurisdiction within
the state of Idaho. Each party hereby accepts jurisdiction of such state and
agrees to accept service of process as if it were personally served within
such state. Each party irrevocably waives, to the fullest extent permitted by
law, any objection that the party may now or hereafter have to the
jurisdiction of the courts of such state and any claim that any such
litigation brought in any such court has been brought in an inconvenient
forum.
21. DEFINITIONS. Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings provided therefor in
the Credit Agreement.
22. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which when executed and delivered shall be
deemed an original and all of which taken together shall be deemed to be one and
the same Agreement.
IN WITNESS WHEREOF, the Borrower has caused this Agreement to
be executed as of the date first written above.
JORE CORPORATION
By
Its
SECURITY AGREEMENT - 88
SCHEDULE 1
LOCATION OF EQUIPMENT AND INVENTORY
1. 00000 Xxxxxxx 00 Xxxxx
Xxxxx, Xxxxxxx 00000
2. 000 Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxx 00000
3. 0000 X. Xxxxx Xxx.
Xxxx Xxxxx, XX 00000-0000
4. 000-X Xxxxx Xxx.
XxXxxx, Xxxxxxxx 00000
SECURITY AGREEMENT - 89
EXHIBIT A
DESCRIPTION OF THE REAL PROPERTY ON WHICH THE FIXTURES ARE LOCATED
Parcel 1:
The SE1/4SW1/4 of Xxxxxxx 00, Xxxxxxxx 00 Xxxxx, Xxxxx 20 West, P.M.M., Lake
CounTY, Montana.
Parcel 2:
A tract of land located in the NW1/4NW1/4 of Xxxxxxx 00, Xxxxxxxx 00 Xxxxx,
Xxxxx 20 West, P.M.M., Lake County, Montana, further shown and described as
being Tract A on Certificate of Survey No. 5509, on file in the office of the
Clerk and Recorder of Lake County, Montana.
Parcel 3:
A tract of land located in the NE1/4NW1/4 of Xxxxxxx 00, Xxxxxxxx 00 Xxxxx,
Xxxxx 20 West, P.M.M., Lake County, Montana, further shown and described as
being Tract 1 on Certificate of Survey No. 5564, on file in the office of the
Clerk and Recorder of Lake County, Montana.
SECURITY AGREEMENT - 90
EXHIBIT 2.1.1
AUTHORIZED PERSONS
Bank shall make the Loans under the Revolving Line of Credit upon written or, at
the discretion of Bank, telephonic instructions received from the following:
Xxxxxxx Xxxx
Xxxxxxx Xxxx
Xxxxx Xxxxxxxx
Xxxxx Xxxxx
EXHIBIT 2.1.1
EXHIBIT 2.1.1.2
LIBOR LOAN REQUEST FORM
[DATE]
First Security Bank, N.A.
X.X. Xxx 0000
Xxxxx, XX 00000
Attention: Commercial Banking Division
Ladies & Gentlemen:
We refer to the Credit Agreement (the "Agreement"), dated August 19, 1999,
between First Security Bank, N.A. ("Bank") and Jore Corporation ("Borrower").
Borrower requests that Bank make a LIBOR Loan pursuant to the Agreement and
specifies as follows:
1. The date of the requested Loan is to be __________________________.
2. The amount of the requested Loan is to be $______________________.
3. The requested Interest Period for the Loan is ___________________.
Borrower certifies to Bank, as of the date of this letter, that the warranties
and representations set forth in the Agreement and the other Loan Documents are
true and correct, and that no Event of Default, as defined in the Agreement, has
occurred and is continuing or would result from the requested Loan.
Very truly yours,
JORE CORPORATION
By
Title
EXHIBIT 2.1.1.2
EXHIBIT 4.1.3
FORM OF CONTINUING AND UNCONDITIONAL GUARANTY
See attached.
EXHIBIT 4.1.3
CONTINUING AND UNCONDITIONAL GUARANTY - 94
CONTINUING AND UNCONDITIONAL GUARANTY
For good and valuable consideration, JB TOOL, LLC, a Montana
limited liability company ("Guarantor") absolutely and unconditionally
guarantees and promises to pay to FIRST SECURITY BANK, N.A. ("Bank") or its
order, in legal tender of the United States of America, the Indebtedness (as
that term is defined below) of JORE CORPORATION, a Montana corporation (the
"Borrower") to Bank on the terms and conditions set forth in this Guaranty.
Under this Guaranty, the liability of Guarantor is unlimited and the obligations
of Guarantor are continuing.
1. AMOUNT OF GUARANTY. The amount of this Guaranty
is Unlimited.
2. DEFINITIONS. The following words shall have the
following meanings when used in this Guaranty:
BANK. The word "Bank" means First Security Bank, N.A.,
its successors and assigns.
BORROWER. The word "Borrower" means Jore Corporation, a
Montana corporation.
GUARANTOR. The word "Guarantor" means JB Tool, LLC, a
Montana limited liability company.
GUARANTY. The word "Guaranty" means this Guaranty made by
Guarantor for the benefit of Bank.
INDEBTEDNESS. The word "Indebtedness" is used in its most
comprehensive sense and means and includes any and all of Borrower's
liabilities, obligations, debts, and indebtedness to Bank, now existing or
hereinafter incurred or created, including, without limitation, all loans,
advances, interest, costs, debts, overdraft indebtedness, credit card
indebtedness, lease obligations, other obligations, and liabilities of
Borrower, or any of them, and any present or future judgments against
Borrower, or any of them; and whether any such Indebtedness is voluntarily or
involuntarily incurred, due or not due, absolute or contingent, liquidated or
unliquidated, determined or undetermined; whether Borrower may be liable
individually or jointly with others, or primarily or secondarily, or as
guarantor or surety; whether recovery on the Indebtedness may be or may
become barred or unenforceable against Borrower for any reason
CONTINUING AND UNCONDITIONAL GUARANTY - 95
whatsoever; and whether the Indebtedness arises from transactions which may
be voidable on account of infancy, insanity, ultra xxxxx, or otherwise.
RELATED DOCUMENTS. The words "Related Documents" mean and
include without limitation all promissory notes, credit agreements, loan
agreements, environmental agreements, guaranties, security agreements,
mortgages, deeds of trust, and all other instruments, agreements and documents,
whether now or hereafter existing, executed in connection with the Indebtedness.
3. NATURE OF GUARANTY. Guarantor's liability under this
Guaranty shall be open and continuous for so long as this Guaranty remains in
force. Guarantor intends to guarantee at all times the performance and prompt
payment when due, whether at maturity or earlier by reason of acceleration or
otherwise, of all Indebtedness. Accordingly, no payments made upon the
Indebtedness will discharge or diminish the continuing liability of Guarantor in
connection with any remaining portions of the Indebtedness or any of the
Indebtedness which subsequently arises or is thereafter incurred or contracted.
4. DURATION OF GUARANTY. This Guaranty will take effect
when received by Bank without the necessity of any acceptance by Bank, or any
notice to Guarantor or to Borrower, and will continue in full force until all
Indebtedness incurred or contracted before receipt by Bank of any notice of
revocation shall have been fully and finally paid and satisfied and all other
obligations of Guarantor under this Guaranty shall have been performed in full.
If Guarantor elects to revoke this Guaranty, Guarantor may only do so in
writing. Written revocation of this Guaranty will apply only to advances or new
Indebtedness created after actual receipt by Bank of Guarantor's written
revocation. For this purpose and without limitation, the term "new Indebtedness"
does not include Indebtedness which at the time of notice of revocation is
contingent, unliquidated, undetermined or not due and which later becomes
absolute, liquidated, determined or due. This Guaranty will continue to bind
Guarantor for all Indebtedness incurred by Borrower or committed by Bank prior
to receipt of Guarantor's written notice of revocation, including any
extensions, renewals, substitutions or modifications of the Indebtedness. All
renewals, extensions, substitutions, and modifications of the Indebtedness
granted after Guarantor's revocation, are contemplated under this Guaranty and,
specifically will not be considered to be new Indebtedness. Release of any other
guarantor or termination of any other guaranty of the Indebtedness shall not
affect the liability of Guarantor under this Guaranty. A revocation received by
Bank from any one or more Guarantors shall not affect the liability of any
remaining Guarantors under this Guaranty. It is anticipated that fluctuations
may occur in the aggregate amount of Indebtedness covered by this Guaranty, and
it is specifically acknowledged and agreed by
CONTINUING AND UNCONDITIONAL GUARANTY - 96
Guarantor that reductions in the amount of Indebtedness, even to zero dollars
($0.00), prior to written revocation of this Guaranty by Guarantor shall not
constitute a termination of this Guaranty. This Guaranty is binding upon
Guarantor and Guarantor's heirs, successors and assigns so long as any of the
guaranteed Indebtedness remains unpaid and even though the Indebtedness
guaranteed may from time to time be zero dollars ($0.00).
5. GUARANTOR'S AUTHORIZATION TO BANK. Guarantor
authorizes Bank, either before or after any revocation hereof, without notice or
demand and without lessening Guarantor's liability under this Guaranty, from
time to time: (a) prior to revocation as set forth above, to make one or more
additional secured or unsecured loans to Borrower, to lease equipment or other
goods to Borrower, or otherwise to extend additional credit to Borrower; (b) to
alter, compromise, renew, extend, accelerate, or otherwise change one or more
times the time for payment or other terms of the Indebtedness or any part of the
Indebtedness, including increases and decreases of the rate of interest on the
Indebtedness; extensions may be repeated and may be for longer than the original
loan term; (c) to take and hold security for the payment of this Guaranty or the
Indebtedness, and exchange, enforce, waive, subordinate, fail or decide not to
perfect, and release any such security, with or without the substitution of new
collateral; (d) to release, substitute, agree not to xxx, or deal with any one
or more of Borrower's sureties, endorsers, or other guarantors on any terms or
in any manner Bank may choose; (e) to determine how, when and what application
of payments and credits shall be made on the Indebtedness; (f) to apply such
security and direct the order or manner of sale thereof, including without
limitation, any nonjudicial sale permitted by the terms of the controlling
security agreement or deed of trust, as Bank in its discretion may determine;
(g) to sell, transfer, assign, or grant participations in all or any part of the
Indebtedness; and (h) to assign or transfer this Guaranty in whole or in part.
6. GUARANTY ABSOLUTE. Guarantor guarantees that the
payment of Indebtedness shall be paid strictly in accordance with the terms of
the Related Documents regardless of any law, regulation, or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Bank with respect thereto. The liability of the Guarantor under
this Guaranty is absolute and unconditional irrespective of: (a) any release or
amendment or waiver of, or consent to departure from, any other guaranty or
support document, or any exchange, release or nonperfection of any collateral,
for all or any of the Related Documents or Indebtedness; (b) any present or
future law, regulation or order of any jurisdiction (whether of right or in
fact) or of any agency thereof purporting to reduce, amend, restructure or
otherwise affect any term of any Related Document or Indebtedness; (c) without
being limited by the foregoing, any lack of validity or enforceability of any
Related Document or Indebtedness or any failure
CONTINUING AND UNCONDITIONAL GUARANTY - 97
to receive any governmental approval relating thereto; or (d) any other
defense whatsoever that might constitute a defense available to, or discharge
of, the Guarantor (including without limitation, the bankruptcy or
reorganization of the Guarantor).
7. GUARANTOR'S REPRESENTATIONS AND WARRANTIES.
Guarantor represents and warrants to Bank that (a) no representations or
agreements of any kind have been made to Guarantor which would limit or
qualify in any way the terms of this Guaranty; (b) this Guaranty is executed
at Borrower's request and not at the request of Bank; (c) Guarantor has full
power, right and authority to enter into this Guaranty; (d) the provisions of
this Guaranty do not conflict with or result in a default under any agreement
or other instrument binding upon Guarantor and do not result in a violation
of any law, regulation, court decree or order applicable to Guarantor;
(e) Guarantor has not and will not, without the prior written consent of
Bank, sell, lease, assign, encumber, hypothecate, transfer, or otherwise
dispose of all or substantially all of Guarantor's assets, or any interest
therein; (f) upon Bank's request, Guarantor will provide to Bank financial
and credit information in form acceptable to Bank, and all such financial
information which currently has been, and all future financial information
which will be provided to Bank is and will be true and correct in all
material respects and fairly present the financial condition of Guarantor as
of the dates the financial information is provided; (g) no material adverse
change has occurred in Guarantor's financial condition since the date of the
most recent financial statements provided to Bank and no event has occurred
which may materially adversely affect Guarantor's financial condition; (h) no
litigation, claim, investigation, administrative proceeding or similar action
(including those for unpaid taxes) against Guarantor is pending or
threatened; (i) Bank has made no representation to Guarantor as to the
creditworthiness of Borrower; and (j) Guarantor has established adequate
means of obtaining from Borrower on a continuing basis information regarding
Borrower's financial condition. Guarantor agrees to keep adequately informed
from such means of any facts, events, or circumstances which might in any way
affect Guarantor's risks under this Guaranty, and Guarantor further agrees
that, absent a request for information, Bank shall have no obligation to
disclose to Guarantor any information or documents acquired by Bank in the
course of its relationship with Borrower.
8. GUARANTOR'S WAIVERS.
8.1 Except as prohibited by applicable law,
Guarantor waives any right to require Bank (a) to continue lending money or to
extend other credit to Borrower; (b) to make any presentment, protest, demand,
or notice of any kind, including notice of any nonpayment of the Indebtedness or
of any nonpayment related to any collateral, or notice of any action or
nonaction on the part of Borrower, Bank, any surety,
CONTINUING AND UNCONDITIONAL GUARANTY - 98
endorser, or other guarantor in connection with the Indebtedness or in
connection with the creation of new or additional loans or obligations;
(c) to resort for payment or to proceed directly or at once against any
person, including Borrower or any other guarantor; (d) to proceed directly
against or exhaust any collateral held by Bank from Borrower, any other
guarantor, or any other person; (e) to give notice of the terms, time, and
place of any public or private sale of personal property security held by
Bank from Borrower or to comply with any other applicable provisions of the
Uniform Commercial Code; (f) to pursue any other remedy within Bank's power;
or (g) to commit any act or omission of any kind, or at any time, with
respect to any matter whatsoever.
8.2 Guarantor also waives any and all rights
or defenses arising by reason of (a) any "one action" or "anti-deficiency"
law or any other law which may prevent Bank from bringing any action,
including a claim for deficiency, against Guarantor, before or after Bank's
commencement or completion of any foreclosure action, either judicially or by
exercise of a power of sale; (b) any election of remedies by Bank which
destroys or otherwise adversely affects Guarantor's subrogation rights or
Guarantor's rights to proceed against Borrower for reimbursement, including
without limitation, any loss of rights Guarantor may suffer by reason of any
law limiting, qualifying, or discharging the Indebtedness; (c) any disability
or other defense of Borrower, of any other guarantor, or of any other person,
or by reason of the cessation of Borrower's liability from any cause
whatsoever, other than payment in full in legal tender, of the Indebtedness;
(d) any right to claim discharge of the Indebtedness on the basis of
unjustified impairment of any collateral for the Indebtedness; (e) any
statute of limitations, if at any time any action or suit brought by Bank
against Guarantor is commenced there is outstanding Indebtedness of Borrower
to Bank which is not barred by any applicable statute of limitations; or
(f) any defenses given to guarantors at law or in equity other than actual
payment and performance of the Indebtedness. If payment is made by Borrower,
whether voluntarily or otherwise, or by any third party, on the Indebtedness
and thereafter Bank is forced to remit the amount of that payment to
Borrower's trustee in bankruptcy or to any similar person under any federal
or state bankruptcy law or law for the relief of debtors, the Indebtedness
shall be considered unpaid for the purpose of enforcement of this Guaranty.
8.3 Guarantor further waives and agrees not to
assert or claim at any time any deductions to the amount guaranteed under this
Guaranty for any claim of setoff, counterclaim, counter demand, recoupment or
similar right, whether such claim, demand or right may be asserted by the
Borrower, the Guarantor, or both.
9. GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS.
Guarantor warrants and agrees that each of the waivers set forth above is
CONTINUING AND UNCONDITIONAL GUARANTY - 99
made with Guarantor's full knowledge of its significance and consequences and
that, under the circumstances, the waivers are reasonable and not contrary to
public policy or law. If any such waiver is determined to be contrary to any
applicable law or public policy, such waiver shall be effective only to the
extent permitted by law or public policy.
10. BANK'S RIGHT OF SETOFF. In addition to all liens
upon and rights of setoff against the moneys, securities or other property of
Guarantor given to Bank by law, Bank shall have, with respect to Guarantor's
obligations to Bank under this Guaranty and to the extent permitted by law, a
contractual security interest in and a right of setoff against, and Guarantor
hereby assigns, conveys, delivers, pledges, and transfers to Bank all of
Guarantor's right, title and interest in and to, all deposits, moneys,
securities and other property of Guarantor now or hereafter in the possession
of or on deposit with Bank, whether held in a general or special account or
deposit, whether held jointly with someone else, or whether held for
safekeeping or otherwise, excluding however all XXX, Xxxxx, and trust
accounts. Every such security interest and right of setoff may be exercised
without demand upon or notice to Guarantor. No security interest or right of
setoff shall be deemed to have been waived by any act or conduct on the part
of Bank or by any neglect to exercise such right of setoff or to enforce such
security interest or by any delay in so doing. Every right of setoff and
security interest shall continue in full force and effect until such right of
setoff or security interest is specifically waived or released by an
instrument in writing executed by Bank.
11. SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR.
Guarantor agrees that the Indebtedness of Borrower to Bank, whether now existing
or hereafter created, shall be prior to any claim that Guarantor may now have or
hereafter acquire against Borrower, whether or not Borrower becomes insolvent.
Guarantor hereby expressly subordinates any claim Guarantor may have against
Borrower, upon any account whatsoever, to any claim that Bank may now or
hereafter have against Borrower. In the event of insolvency and consequent
liquidation of the assets of Borrower, through bankruptcy, by an assignment for
the benefit of creditors, by voluntary liquidation, or otherwise, the assets of
Borrower applicable to the payment of the claims of both Bank and Guarantor
shall be paid to Bank and shall be first applied by Bank to the Indebtedness of
Borrower to Bank. Guarantor does hereby assign to Bank all claims which it may
have or acquire against Borrower or against any assignee or trustee in
bankruptcy of Borrower; provided however, that such assignment shall be
effective only for the purpose of assuring to Bank full payment in legal tender
of the Indebtedness. If Bank so requests, any notes or credit agreements now or
hereafter evidencing any debts or obligations of Borrower to Guarantor shall be
marked with a legend that the same are subject to this Guaranty and shall be
delivered to Bank. Guarantor agrees, and Bank hereby is authorized, in the name
of Guarantor, from time to time to execute and file
CONTINUING AND UNCONDITIONAL GUARANTY - 100
financing statements and continuation statements and to execute such other
documents and to take such other actions as Bank deems necessary or
appropriate to perfect, preserve and enforce its rights under this Guaranty.
12. REINSTATEMENT. This Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Indebtedness is rescinded or must otherwise be returned by the Bank
on the insolvency, bankruptcy or reorganization of the Borrower, all as though
the payment had not been made.
13. SECURITY INTEREST.
13.1 GRANT OF SECURITY INTEREST. In order to
secure prompt repayment of the Indebtedness and prompt performance by Guarantor
of each and all of its covenants and obligations under this Agreement and the
Related Documents, Guarantor grants to Bank a continuing security interest in
property and assets of Guarantor as further evidenced by a Security Agreement of
even date and such other security documents as Bank may at any time require.
13.2 FINANCING STATEMENTS. The Guarantor shall
from time to time, at the expense of Guarantor, promptly execute and deliver
all further instruments and documents, and take all further action, that may
be necessary or desirable, or that Bank may reasonably request, in order to
perfect and protect any pledge, assignment or security interest granted or
purported to be granted by the Security Agreement or other document or to
enable Bank to exercise and enforce its rights and remedies with respect to
any Collateral (as defined in the Security Agreement). Without limiting the
generality of the foregoing, the Guarantor shall execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as Bank may
request, in order to perfect and preserve the pledge assignment, and security
interest granted or purported to be granted by the Security Agreement or
other document. Guarantor hereby irrevocably makes, constitutes, and appoints
Bank (and any of Bank's officers, employees, or agents designated by Bank) as
Guarantor's true and lawful attorney with power, upon Guarantor's failure or
refusal to comply with their undertakings contained in this paragraph, to
sign the name of Borrower on any of the above-described documents or on any
other similar documents that need to be executed, recorded, and/or filed in
order to perfect or continue Bank's perfected security interest in the
Collateral.
14. MISCELLANEOUS PROVISIONS.
CONTINUING AND UNCONDITIONAL GUARANTY - 101
14.1 AMENDMENTS. This Guaranty, together with any
Related Documents, constitutes the entire understanding and agreement of the
parties as to the matters set forth in this Guaranty. No alteration of or
amendment to this Guaranty shall be effective unless given in writing and signed
by the party or parties sought to be charged or bound by the alteration or
amendment.
14.2 APPLICABLE LAW. This Guaranty is made in the
state of Idaho, which state the parties agree has a substantial relationship to
the parties and to the underlying transaction embodied hereby. Accordingly, in
all respects, including, without limiting the generality of the foregoing,
matters of construction, validity, enforceability and performance, this Guaranty
and the obligations arising hereunder and thereunder shall be governed by, and
construed in accordance with, the laws of the state of Idaho applicable to
contracts made and performed in such state and any applicable law of the United
States of America. Each party hereby unconditionally and irrevocably waives, to
the fullest extent permitted by law, any claim to assert that the law of any
jurisdiction other than the state of Idaho governs this Guaranty. All disputes,
controversies, or claims arising out of, or in connection with this Guaranty
shall be litigated in any court of competent jurisdiction within the state of
Idaho. Each party hereby accepts jurisdiction of such state and agrees to accept
service of process as if it were personally served within such state. Each party
irrevocably waives, to the fullest extent permitted by law, any objection that
the party may now or hereafter have to the jurisdiction of the courts of such
state and any claim that any such litigation brought in any such court has been
brought in an inconvenient forum.
14.3 ATTORNEYS' FEES; EXPENSES. Guarantor
agrees to pay upon demand all of Bank's costs and expenses, including
reasonable attorneys' fees and Bank's legal expenses, incurred in connection
with the enforcement of this Guaranty. Bank may pay someone else to help
enforce this Guaranty, and Guarantor shall pay the costs and expenses of such
enforcement. Costs and expenses include Bank's reasonable attorneys' fees and
legal expenses whether or not there is a lawsuit, including reasonable
attorneys' fees and legal expenses for bankruptcy proceedings (and including
efforts to modify or vacate any automatic stay or injunction), appeals, and
any anticipated post-judgment collection services. Guarantor also shall pay
all court costs and such additional fees as may be directed by the court.
14.4 NOTICES. Unless otherwise provided in this
Guaranty, all notices or demands by either party relating to this Guaranty shall
be in writing and either personally served or sent by facsimile transmission,
recognized overnight delivery service, or regular United States mail, postage
prepaid, to Borrower or to Bank as the case may be at the addresses set forth
below:
CONTINUING AND UNCONDITIONAL GUARANTY - 102
If to Guarantor: JB Tool, LLC
00000 Xxxxxxx 00 Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxx
Fax: 406/000-0000
With a copy to: Xxxxx X. Xxxxxxxx
Jore Corporation
00000 Xxxxxxx 00 Xxxxx
Xxxxx, Xxxxxxx 00000
Fax: 406/000-0000
If to Bank: First Security Bank, N.A.
Xxxx Xxxxxx Xxx 0000
Xxxxx, XX 00000
Attention: Corporate Banking
Fax: 208/000-0000
With a copy to: Xxxxxxx, Xxxxxx, Xxxxxxx, Rock &
Fields, Chartered
000 X. Xxxxxxx Xxxx., 00xx Xxxxx
Xxxx Xxxxxx Xxx 000
Xxxxx, Xxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx
Fax: 208/000-0000
The parties may change the address at which they are to receive notices
hereunder by notice in writing in the foregoing manner given to the other.
All notices or demands sent in accordance with this Section shall be deemed
given on the earlier of the date of confirmed actual receipt or if sent by
personal delivery, on delivery, if sent by facsimile, on transmission, if
sent by overnight delivery service, on the next business day, otherwise three
(3) business days after the deposit thereof in the mail. All revocation
notices by Guarantor shall be in writing and shall be effective only upon
delivery to Bank as provided above in the section titled "Duration of
Guaranty."
14.5 INTERPRETATION. In all cases where there is
more than one Borrower or Guarantor, then all words used in this Guaranty in the
singular shall be deemed to have been used in the plural where the context and
construction so require; and where there is more than one Borrower named in this
Guaranty or when this Guaranty is executed by more than one Guarantor, the words
"Borrower" and "Guarantor"
CONTINUING AND UNCONDITIONAL GUARANTY - 103
respectively shall mean all and any one or more of them. The words
"Guarantor," "Borrower," and "Bank" include the heirs, successors, assigns,
and transferees of each of them. Caption headings in this Guaranty are for
convenience purposes only and are not to be used to interpret or define the
provisions of this Guaranty. If a court of competent jurisdiction finds any
provision of this Guaranty to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances, and all provisions of
this Guaranty in all other respects shall remain valid and enforceable. If
any one or more of Borrower or Guarantor are corporations or partnerships, it
is not necessary for Bank to inquire into the powers of Borrower or Guarantor
or of the officers, directors, partners, or agents acting or purporting to
act on their behalf, and any Indebtedness made or created in reliance upon
the professed exercise of such powers shall be guaranteed under this Guaranty.
14.6 WAIVER. Bank shall not be deemed to have
waived any rights under this Guaranty unless such waiver is given in writing and
signed by Bank. No delay or omission on the part of Bank in exercising any right
shall operate as a waiver of such right or any other right. A waiver by Bank of
a provision of this Guaranty shall not prejudice or constitute a waiver of
Bank's right otherwise to demand strict compliance with that provision or any
other provision of this Guaranty. No prior waiver by Bank, nor any course of
dealing between Bank and Guarantor, shall constitute a waiver of any of Bank's
rights or of any of Guarantor's obligations as to any future transactions.
Whenever the consent of Bank is required under this Guaranty, the granting of
such consent by Bank in any instance shall not constitute continuing consent to
subsequent instances where such consent is required and in all cases such
consent may be granted or withheld in the sole discretion of Bank.
EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE
PROVISIONS OF THIS GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH
GUARANTOR UNDERSTANDS THAT THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S
EXECUTION AND DELIVERY OF THIS GUARANTY TO BANK AND THAT THE GUARANTY WILL
CONTINUE UNTIL TERMINATED IN THE MANNER SET FORTH IN THE SECTION TITLED
"DURATION OF GUARANTY." NO FORMAL ACCEPTANCE BY BANK IS NECESSARY TO MAKE
THIS GUARANTY EFFECTIVE.
THIS GUARANTY IS DATED as of August 19, 1999.
GUARANTOR:
CONTINUING AND UNCONDITIONAL GUARANTY - 104
JB TOOL, LLC
By
Xxxxxxx X. Xxxxxx, Managing Member
By
Xxxxxxx Xxxxxxxxx, Managing Member
CONTINUING AND UNCONDITIONAL GUARANTY - 105
EXHIBIT 4.1.5
FORM OF OPINION OF COUNSEL FOR BORROWER AND GUARANTORS
August ___, 1999
First Security Bank, X.X.
Xxxx Xxxxxx Xxx 0000
Xxxxx, Xxxxx 00000
RE: LOAN BY FIRST SECURITY BANK, N.A. TO JORE CORPORATION
Ladies and Gentlemen:
We are counsel to Jore Corporation, a Montana corporation, (the "Borrower") and
__________________, a ___________________ ("JB Tool"). The opinion expressed
below is furnished to you in connection with the Credit Agreement (the "Credit
Agreement") dated as of August ____, 1999, between the Borrower and First
Security Bank, N.A. ("Bank"). This opinion is being delivered pursuant to
Section 4.1.4 of the Credit Agreement. Unless otherwise defined herein,
capitalized terms used herein shall have the respective meanings set forth in
the Credit Agreement.
In rendering the opinions set forth below, we have examined and relied upon such
documents and instruments as we have deemed appropriate, including the following
documents and instruments (the "Loan Documents"):
1. The Credit Agreement;
2. The Revolving Note;
3. The Security Agreement;
4. The JB Tool Security Agreement; and
5. The Mortgage (the "Mortgage") made by Borrower for the benefit
of Bank as security for the Revolving Note and describing
therein certain real property located at Ronan, Montana (the
"Real Property").
We have also reviewed the UCC-1 Financing Statement by the Borrower in favor
of the
EXHIBIT 4.1.5
Bank for filing with the Montana Secretary of State (the "Montana Financing
Statement"), the UCC-1 Financing Statement by the Borrower in favor of the
Bank for recording in the official records of Lake County, Montana (the
"Fixture Financing Statement"); the UCC-1 Financing Statement by the JB Tool
in favor of the Bank for filing with the Wisconsin Secretary of State (the
"Wisconsin Financing Statement"), and the UCC-1 Financing Statement by the
Borrower in favor of the Bank for filing with the __________ Secretary of
State (the " ______________ Financing Statement" and together with the
Montana and Wisconsin Financing Statements and the Fixture Financing
Statement, the "Financing Statements").
Based on the foregoing, I am of the opinion that:
1. The Borrower was incorporated under the Montana Business
Corporation Act and exists in good standing under the laws of the State of
Montana.
2. The Borrower is authorized or qualified to do business in
Montana, __________, and all other jurisdictions in which the nature of the
business conducted by it makes such qualification necessary.
3. The Borrower has power and authority under the Montana
Business Corporation Act and all necessary material licenses, permits, and
authorizations to own its properties and to conduct its business in the manner
and at the locations as represented to Bank by Borrower.
4. The Borrower has power and authority under the Montana
Business Corporation Act to execute and deliver the Loan Documents and the
Financing Statements and perform its obligations thereunder.
5. The Borrower has authorized the execution and delivery of the
Loan Documents and the Financing Statements and the performance of its
obligations thereunder by all requisite action under the Montana Business
Corporation Act.
6. Each Loan Document constitutes a valid and legally binding
obligation of the Borrower enforceable against Borrower in accordance with its
terms.
7. Neither the execution and delivery of the Loan Documents by
the Borrower nor the performance of its obligations thereunder (i) violates the
Borrower's articles of incorporation or bylaws or any applicable provisions of
statutory law or regulation, or (ii) results in the material breach of or
constitutes a material default under any existing indenture or loan, credit, or
other agreement or instrument to which the
EXHIBIT 4.1.5
Borrower is a party or by which it or its property is bound or affected.
8. The Security Agreement is in a form sufficient to create a
valid security interest under Article 9 of the Uniform Commercial Code as
adopted in the state of Montana (the "Montana UCC") in those items and types
of Collateral (as such term is defined in the Security Agreement) that are
subject to the provisions of Article 9 of the __________ UCC and under
Article 9 of the Uniform Commercial Code as adopted in the state of
__________ (the "__________ UCC") in those items and types of Collateral that
are subject to the provisions of Article 9 of the __________ UCC (the "UCC
Collateral") as security for the payment of the Obligations.
9. The Montana Financing Statement is in proper form for filing
in the state of Montana. The __________ Financing Statement and the Fixture
Financing Statement are in proper form for filing in the state of __________.
The due filing and indexing of the Financing Statements among the financing
statements records of the office of the Secretary of State of Montana, the
Office of the __________________ of Lake County, Montana, and the Secretary of
State of the State of __________ (the "Filing Offices") will be sufficient to
perfect the security interest created by the Security Agreement in those items
and types of the UCC Collateral in which a security interest may be perfected by
the filing of a financing statement in the state of Montana under the Montana
UCC or the state of __________ under the __________ UCC. No further filing or
refiling or any other action is necessary under the UCC to perfect or maintain
such perfection, except that a continuation statement must be filed within the
period of six months prior to the expiration of five years from the date of each
original filing and within the period of six months prior to the expiration of
each succeeding period of five years from the date of such original filing to
maintain the effectiveness of the filings referred to in this paragraph.
10. The Mortgage is in a form sufficient to create a valid
Mortgage lien on the Real Property under Montana law. The recording of the
Mortgage in the official records of Lake County, Montana, is the only filing or
recording necessary to give constructive notice of the lien created by the
Mortgage to subsequent purchasers and mortgagees of the Real Property. No other
recordation, filing, re-recording or refiling is necessary in order to maintain
the validity or priority of the lien created by the Mortgage.
11. JB Tool was incorporated under the Wisconsin Business
Corporation Act and exists in good standing under the laws of the State of
Wisconsin.
12. JB Tool is authorized or qualified to do business in
Wisconsin, __________, and all other jurisdictions in which the nature of the
business conducted by
EXHIBIT 4.1.5
it makes such qualification necessary.
13. JB Tool has power and authority under the Wisconsin Business
Corporation Act and all necessary material licenses, permits, and authorizations
to own its properties and to conduct its business in the manner and at the
locations as represented to Bank by JB Tool.
14. JB Tool has power and authority under the Wisconsin Business
Corporation Act to execute and deliver the Loan Documents and the Financing
Statements and perform its obligations thereunder.
15. JB Tool has authorized the execution and delivery of the Loan
Documents and the Financing Statements and the performance of its obligations
thereunder by all requisite action under the Wisconsin Business Corporation Act.
16. The JB Tool Security Agreement constitutes a valid and legally
binding obligation of JB Tool enforceable against JB Tool in accordance with its
terms.
17. Neither the execution and delivery of the JB Tool Security
Agreement by JB Tool nor the performance of its obligations thereunder (i)
violates JB Tool's articles of incorporation or bylaws or any applicable
provisions of statutory law or regulation, or (ii) results in the material
breach of or constitutes a material default under any existing indenture or
loan, credit, or other agreement or instrument to which JB Tool is a party or by
which it or its property is bound or affected.
18. The JB Tool Security Agreement is in a form sufficient to
create a valid security interest under Article 9 of the Uniform Commercial Code
as adopted in the state of Wisconsin (the "Wisconsin UCC") in those items and
types of Collateral (as such term is defined in the Security Agreement) that are
subject to the provisions of Article 9 of the Wisconsin UCC and under Article 9
of the Uniform Commercial Code as adopted in the state of __________ (the
"__________ UCC") in those items and types of Collateral that are subject to the
provisions of Article 9 of the __________ UCC (the "UCC Collateral") as security
for the payment of the Obligations.
19. The Wisconsin Financing Statement is in proper form for filing
in the state of Wisconsin. The due filing and indexing of the Wisconsin
Financing Statement among the financing statements records of the office of the
Secretary of State of Wisconsin, the Office of the __________________ of
__________ County, Wisconsin, and the Secretary of State of the State of
__________ (the "Filing Offices") will be sufficient to perfect the security
interest created by the JB Tool Security Agreement in those items and
EXHIBIT 4.1.5
types of the UCC Collateral in which a security interest may be perfected by
the filing of a financing statement in the state of Wisconsin under the
Wisconsin UCC or the state of __________ under the __________ UCC. No further
filing or refiling or any other action is necessary under the UCC to perfect
or maintain such perfection, except that a continuation statement must be
filed within the period of six months prior to the expiration of five years
from the date of each original filing and within the period of six months
prior to the expiration of each succeeding period of five years from the date
of such original filing to maintain the effectiveness of the filings referred
to in this paragraph.
I confirm that there are no legal or arbitral proceedings or any proceedings by
or before any governmental or regulatory authority or agency, now pending or
threatened against the Borrower or against any of its properties or revenues
that, if adversely determined, could be reasonably expected to have a material
adverse effect on the business operations, property, or financial condition of
the Borrower taken as a whole.
EXHIBIT 4.1.5
EXHIBIT 4.1.11
FORM OF LETTER TO ACCOUNTANTS
[LETTERHEAD OF BORROWER]
[name and address of accountants]
Ladies and Gentlemen:
We instruct you to send to First Security Bank, N.A. ("Bank") all
financial statements (whether preliminary or final), and all reports that are
prepared as a result of any audit or other review of our operations, finances or
internal controls, specifically including any reports dealing with improper
accounting practices, defalcations, financial reporting errors or misstatements
or fraud perpetrated on us or by any of our employees or agents. We further
instruct you to meet with Bank, upon Bank's request, to discuss such financial
statements and any questions regarding the same.
All of the foregoing must be sent to Bank prior to or contemporaneously
with such reports being sent to us.
One of the principal purposes of the audited financial statements that
you may be asked to prepare is to provide Bank with information regarding our
financial condition.
These instructions may only be revoked by a writing signed by an
officer of Bank.
Thank you.
JORE CORPORATION
By
Its
EXHIBIT 4.1.11
EXHIBIT 5.5
LITIGATION
1. THE XXXXXXX WORKS AND JORE CORPORATION V. BLACK & XXXXXX -- please see
a complete description of this litigation in the Amended Form S-1.
2. XXXXXXXX, ET AL. X. XXXX CORPORATION -- Xxxx Xxxxxxxx and various of
his business entities have brought an action against Jore Corporation
for the payment of certain fees due under a settlement agreement in
substance relating to printing services performed by Xx. Xxxxxxxx and
his affiliated companies. Jore Corporation terminated the settlement
agreement, asserting a breach by Xx. Xxxxxxxx in several regards, the
most important of which was the poor quality of the printing products
produced by Xx. Xxxxxxxx. Jore Corporation takes quality very seriously
and its customers insist on the best quality for its packaging. Xx.
Xxxxxxxx did not maintain equipment of sufficient technological
advancement or quality to produce the type of quality required. Jore
Corporation believes that it will ultimately prevail completely in this
litigation and, accordingly, the litigation is not disclosed in
financial statements of the Company or in the Form S-1. Xx. Xxxxxxxx'x
claims approximate $200,000 to $300,000, although he has been quoted by
third parties as claiming to have a $15 million to $18 million dollar
claim. Although this litigation does not satisfy the standard of
section 5.5 of the Credit Agreement, in that neither the Company nor
its counsel believes that such litigation will "materially adversely
affect the financial condition, operations, properties, or business of
the [company] or the ability of the [company] to perform its
obligations under the Loan Documents," the Company wishes to disclose
the litigation to First Security Bank in connection with the closing of
the new loan facility. There is no other current litigation.
EXHIBIT 7.10
EMPLOYEE BENEFIT PLANS
Jore Corporation 401K Plan
Jore Corporation Flexible Benefits
Plan Jore Corporation Cafeteria Plan that includes:
Health Insurance
Dental Insurance
Voluntary Life Insurance
Short-Term and Long-Term Disability Insurance
EXHIBIT 7.10
