Exhibit 10.49
MORTGAGE AND SECURITY AGREEMENT
KNOW ALL MEN BY THESE PRESENTS,
that Smith & Wesson Corp., a Delaware corporation, having a
principal place of business at 2100 Roosevelt Avenue, Springfield,
Massachusetts (the “Grantor” or “Debtor”),
in consideration of various promissory notes by Grantor in favor of
Grantee of even date hereto in the amounts of Seventeen Million and
00/100 Dollars ($17,000,000.00), Twelve Million One Hundred Four
Thousand and 00/100 Dollars ($12,104,000.00), Five Million Eight
Hundred Ninety Six Thousand and 00/100 Dollars ($5,896,000.00) and
Five Million and 00/100 Dollars ($5,000,000.00) (collectively the
“Notes”) and other valuable consideration paid by
Banknorth, N.A., a national banking association, with a place of
business at 1441 Main Street, Springfield, Massachusetts (the
“Grantee” or “Secured Party”), the receipt
whereof is hereby acknowledged, does hereby give, grant, bargain,
sell, and convey (to the extent comprising personal property) unto
Grantee, and its successors and assigns forever, and grant Secured
Party, and its successors and assigns forever a security interest
in, to secure the Obligations as defined below, the
following:
Premises situated at or near 19
Aviation Drive, in the Town/City of Holten, County of Aroostook,
State of Maine, more particularly described in Schedule A
attached hereto with all buildings and improvements now or
hereafter situated thereon and all privileges, easements and rights
appurtenant thereto (the “Real Property”), and all
property described in Schedule B attached hereto (the
“Collateral”). Notwithstanding anything in this
Mortgage to the contrary, the Collateral shall not include:
(a) any intangible assets which constitutes intellectual
property of the Grantor (including, without limitation, the
“Smith & Wesson” trade name and any trade secrets,
know-how, licenses, trade names, logos, registrations, lists,
patents, patent applications, copyrights, copyright applications,
trademarks or trademark applications); or (b) any licenses,
leases or other contracts to the extent that the granting of a
security interest therein would constitute a breach thereof or is
prohibited thereby and such prohibition is not ineffective under
Sections 9-406(d), 9-407, 9-408 or 9-409 of the Uniform
Commercial Code; provided, further (x) all accounts arising
under such licenses, leases or other contracts shall be included in
the definition of Collateral and shall constitute Collateral and
(y) the Collateral shall include all payments and other
property received or receivable in connection with any sale or
other disposition of such licenses, leases or other
contracts.
The Real Property and such of the
Collateral as is tangible personal property constituting fixtures
are hereinafter referred to collectively as the
“Premises.” This Mortgage and Security Agreement as it
may be affected by any amendments, subordinations, partial releases
or supplemental mortgages hereafter executed by or accepted by
Grantee is hereinafter collectively referred to as the
“Mortgage.”
TO HAVE AND TO HOLD all the
aforegranted and bargained Premises and Collateral (hereinafter
sometimes referred to collectively as the “Security”),
to Grantee, its successors and assigns, to its and their use and
behoove forever: PROVIDED NEVERTHELESS, that if Grantor pays to
Grantee and fully performs all of the Obligations, in accordance
with all the terms and conditions of this Mortgage and the Loan
Documents, then this Mortgage, shall be void, but otherwise shall
remain in full force.
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The term
“Obligations” shall mean any and all liabilities,
obligations, and indebtedness of Grantor to Grantee presently
existing or hereafter arising, and whether evidenced by a writing
or not and including, without limitation, obligations to pay
principal, interest, costs, fees, or other charges, under the Notes
or otherwise; all obligations of Grantor to Grantee, if any, as
guarantor, endorser, accommodation party or surety for the
obligations of any Principal Debtor (described below), to Grantee,
and any and all other obligations of performance or forbearance,
all as required or regulated by applicable Loan Documents. The term
“Loan Documents” shall mean this Mortgage and any other
instrument, document or agreement evidencing, securing, or
governing the Obligations, whether now existing or hereafter
arising, including without limitation, the documents listed below,
as each such document may be amended, extended, renewed or replaced
by a written instrument executed by the applicable parties,
including without limitation:
The Obligations as defined in the
Loan and Security Agreement between Grantor, Smith & Wesson
Holdings Corporation, a Nevada corporation and Grantee, of even
date herewith (the “Loan Agreement”) and all Notes
referenced therein.
The term Loan Documents shall
also include, without limitation, any promissory note, line of
credit agreement, guaranty, letter of credit reimbursement
agreement or other document, executed by Grantor either on or about
the date hereof or in the future which states that it is or is
intended to be secured by this Mortgage, including those to be
secured as a future obligation pursuant to this Mortgage and
Security Agreement.
Grantor covenants and agrees with
Grantee as follows:
l. Estate of Grantor; Warranty
Covenant . Grantor is lawfully seized of an indefeasible estate
in fee simple in the Security, free from encumbrances, except as
may specifically be noted herein, or in Schedule A or B
attached hereto, or otherwise permitted by the Loan Agreement and
Grantor has good right and power, and is duty authorized, to convey
the Security to Grantee (and grant Grantee a security interest
therein) to hold as aforesaid. Grantor shall and will warrant and
defend the Security to Grantee forever against the claims and
demands of all persons, except as aforesaid.
2. Payment of Secured
Amounts . Grantor shall pay all sums secured hereby when due
and shall perform all Obligations as required by the applicable
Loan Documents.
3. Payment of Encumbrances on
the Security . Grantor shall pay, when due, all taxes and
assessments of every type or nature, and any claim, lien or
encumbrance which may be or may become prior to this Mortgage,
made, placed, levied or assessed against the Security, or any
portion thereof, except to the extent such matters are being
contested as permitted by the Loan Agreement.
4. Special Representations,
Warranties and Covenants of Grantor . Grantor hereby warrants
and covenants to the Grantee that:
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(a) Grantor’s full legal name is
Smith & Wesson Corp. and Grantor’s principal place of
business is at 2100 Roosevelt Avenue, Springfield, Massachusetts.
Grantor will not change Grantor’s name, the State of
Grantor’s principal residence, nor Grantor’s chief
executive office nor any other place of business, nor the location
of any Collateral, without at least 30 days’ prior
written notice to the Grantee.
5. Insurance . Grantor
shall keep the Premises insured against loss or damage by fire, the
perils against which insurance is afforded by the Extended Coverage
Endorsement, and such other risks and perils as Grantee in its
discretion may require from time to time, including, without
limitation, insurance against flood damage and business
interruption. The policy or policies of such insurance shall be in
such form, shall contain such terms and provisions, and shall be in
such amounts as Grantee may require, shall be issued by a company
or companies approved by Grantee, and shall name Grantee as
mortgagee with loss payable to Grantee, and shall, at the request
of Grantee, provide for payment of the full replacement value of
the Premises in lieu of a specified sum, which replacement value
insurance shall be in an amount at all times sufficient to keep
Grantor from becoming a co-insurer, which may be evidenced by any
agreed amount or similar affirmative statement from any insurer.
Such policy or policies of insurance shall be delivered to Grantee
by Grantor. Grantor shall also maintain comprehensive general
public liability insurance for personal injury and property damage,
with contractual liability endorsement, in such amounts as Grantee
may reasonably require from time to time; Grantor shall deliver the
policies providing such public liability insurance for personal
injury and property damage to the Grantee to be held by the
Grantee, except that certificates of insurance addressed to the
Grantee, satisfactory in form and content to Grantee, evidencing
such public liability insurance for personal injury and property
damage may be delivered to the Grantee in lieu of the policies
therefor, provided that a copy of the underlying policy is also
delivered to the Grantee; the policies for such public liability,
personal injury and property damage insurance shall name Grantee as
an additional insured and shall be carried with such companies and
shall contain such other terms and conditions as shall be
satisfactory to Grantee, including an obligation upon any such
insurer to notify Grantee of any cancellation of any such insurance
coverage in advance thereof. Any and all amounts received by
Grantee as payee under any of such policies may be applied by
Grantee to the indebtedness secured hereby in such manner as
Grantee may, in its sole discretion, elect, or, at the option of
Grantee, the entire amount so received or any part thereof may be
released to Grantor. Upon foreclosure of this Mortgage or other
acquisition of the Premises or any part thereof by Grantee, such
policies naming Grantee as payee shall become the absolute property
of Grantee, but receipt of any insurance proceeds and any
disposition of the same by Grantee shall not constitute a waiver of
any rights of Grantee, statutory or otherwise, and specifically
shall not constitute a waiver of the right of foreclosure by
Grantee in the event of default or failure of performance by
Grantor of any covenant or agreement contained herein or in any
note secured hereby.
Notwithstanding
any contrary provision contained in this section, if an insured
loss or casualty to the Collateral shall occur, the Grantee, unless
an Event of Default shall have occurred and is continuing and/or
the cost of repair or restoration of the Collateral is in excess of
fifty percent (50%) of the then outstanding principal balance of
the Note, shall
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advance the proceeds of insurance
(in installments upon application for the restoration of the
Premises provided, however, the Grantee shall have no such
obligation unless (a) the proceeds of insurance which are in
the possession of the Grantee are adequate to complete such
restoration or if not, then the Grantor has deposited with the
Grantee sufficient cash with which to complete such restoration;
(b) to the extent of any loss or casualty in excess of Fifty
Thousand and 00/100 Dollars ($50,000.00), the Grantee has been
furnished with a certificate of an architect acceptable to the
Grantee certifying that such restoration can be completed with the
funds (including insurance proceeds and/or cash of the Grantor) and
can be completed in accordance with zoning and building code
requirements; (c) such restoration can be completed within the
lesser of (i) eight (8) months of the receipt of the
initial insurance proceeds or (ii) a period of time that ends
not later than one hundred (120) days before the maturity date
of the Note; and (d) a copy of a building permit, if required,
has been furnished to Grantee.
6. Condition and Use of
Premises . Grantor (i) shall neither remove, demolish nor
alter the design or structural character of any building or
structure now or hereafter erected upon the Premises, other than
such construction approved by Grantee, unless the Grantee shall
first consent thereto in writing; (ii) shall maintain the
Premises in good condition and repair, ordinary wear and tear
excepted; (iii) shall not commit or suffer waste of any
Security; (iv) shall comply with all laws, ordinances,
regulations, covenants, conditions and restrictions affecting the
ownership, use and operation of the Security and shall not commit,
suffer, or permit any violation thereof. Nothing contained herein
shall obligate Grantee to perform any obligations of Grantor under
any such contracts, leases, agreements, permits, licenses, orders
or approvals described in Schedule B hereto, all of which the
Grantor hereby agrees to perform well and punctually. Grantor
agrees to execute and deliver to Grantee specific separate
assignments of any property described in Schedule B hereto to
Grantee upon terms satisfactory to Grantee, when requested by
Grantee. Grantee may demand, sue for and recover payments due to
Grantor pursuant to property described in Schedule B hereto,
but shall not be required to do so; provided, however, that so long
as Grantor is not in default hereunder, the right to receive and
retain such rents, issues and profits is reserved to Grantor. To
carry out the foregoing, Grantor agrees (1) to execute and
deliver to Grantee such conditional assignments of leases and rents
applicable to the mortgaged Premises as the Grantee may from time
to time request, while this Mortgage and the debt secured hereby
are outstanding, which assignments shall be upon terms satisfactory
to Grantee, and further (2) not to anticipate or collect any
of the rentals or income under any such leases or tenancies more
than thirty (30) days in advance of the time the same shall
become due, and not to cancel, accept a surrender of, reduce any
rentals under, or modify any such leases or tenancies, or consent
to an assignment or subletting thereof, in whole or in part,
without Grantee’s prior written consent, which consent shall
not be unreasonably withheld or delayed. Nothing herein shall
obligate the Grantee to perform the duties of the Grantor as
landlord or lessor under any such leases or tenancies, which duties
Grantor hereby covenants and agrees to perform well and punctually.
Grantee may apply all such sums or any part of any judgments,
awards of damages and settlements described in Schedule B
hereto so received on the indebtedness secured hereby in such
manner as it elects or, at its option, the entire amount or any
part thereof so received may be released. Grantor hereby
irrevocably authorizes and appoints Grantee its attorney-in-fact to
collect and receive any such judgments, awards and
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settlements from the authorities
or entities making the same, to appear in any proceeding therefor,
to give receipts and acquittances therefor, and to apply the same
to payment on account of the Obligations secured hereby, whether
then matured or not; such appointment being irrevocable and coupled
with an interest, and the Grantor will execute and deliver to the
Grantee on demand such assignments and other instruments as the
Grantee may require for said purposes and will reimburse the
Grantee for its reasonable cost (including reasonable attorneys and
paralegal fees and disbursements, including, without limitation,
those arising in bankruptcy proceedings (“Legal
Expenses”)) in the collection of such judgments and
settlements.
7. Grantee’s Right to
Pay Certain Expenses . If Grantor fails to defend diligently
against, or pay, any claim, lien or encumbrance which is alleged to
be prior to this Mortgage, or to defend diligently against, or pay,
any tax or assessment or insurance premium when due, or to keep the
Premises in repair, or if the Grantor commits or permits waste of
any Security, or if there be commenced any action or proceeding
affecting this Mortgage or the debt secured hereby, the Security of
the title thereto, or pertaining to any other mortgage or lien on
the Security or any indebtedness secured thereby, then Grantee, at
its option, may pay said claim, lien, encumbrance, tax, assessment
or premium, with right of subrogation thereunder, may make such
repairs and take such steps as it deems advisable to prevent or
cure such waste, and with respect to any such action or proceeding,
Grantee may appear in the action or proceeding retain counsel
therein at the expense of Grantor, and take such action therein as
Grantee deems reasonably advisable, and for any one or more of the
above purposes Grantee may advance such sums of money as it deems
necessary. Grantee shall have no responsibility with respect to the
legality, validity or priority of any such claim, lien,
encumbrance, tax, assessment, premium, action or proceeding, or
with respect to the amount it deems necessary to be paid in
satisfaction thereof, so long as it acts reasonably. Grantor shall
pay to Grantee, immediately upon demand therefor, all sums of money
advanced or expended by Grantee pursuant to this paragraph, and all
reasonable fees and charges (including Legal Expenses) incurred by
the Grantee incident to the loan(s) secured by this Mortgage,
incident to the continued assurance of the security represented by
this Mortgage, or incident to the enforcement of the obligations of
the Grantor under this Mortgage, including without limitation all
reasonable costs and expenses incurred by Grantee in foreclosure
proceedings hereunder in the event that the Grantor obtains
redemption after such proceedings have been initiated, together
with interest on all such advancements, fees and charges, at the
highest rate of interest per annum (including any default interest
rate) required by any of the Loan Documents secured hereby; and all
such sums advanced, and the interest thereon, shall be secured
hereby.
8. Default, Possession,
Appointment of a Receiver, and Certain Other Default Remedies .
The occurrence of any one or more of the following events shall
constitute an “Event of Default” hereunder:
(a) the insolvency of the Grantor; or (b) the making of
any assignment for the benefit of creditors of the Grantor; or
(c) the issuance or filing of any attachment, levy, or other
judicial process on or against any of the material assets; or
(d) subject to Section 13 below, the appointment of a
receiver, trustee or custodian for all or any portion of the
property of the Grantor; or (e) subject to Section 13
below, the commencement of any proceedings under any state or
federal bankruptcy or insolvency law or under laws for
relief
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of debtors, by or against the
Grantor; or (f) the dissolution, business failure (which term
includes, without limitation, the cessation of normal business
operations) or termination of existence of the Grantor; or
(g) the failure of the Grantor to pay its debts as they
mature; or (h) any representation or statement made or
furnished to Grantee by or on behalf of Grantor is false or
misleading in any material respect; or (i) any default in the
payment of any sums due under said Obligations when due, or default
by the Grantor in performance of any other Obligations under this
Mortgage, and such default has not been cured within any applicable
notice, grace or cure period; or (j) default beyond any
applicable cure period in the payment, satisfaction or performance
by the Grantor of any condition or obligation under any of the Loan
Documents or under any documents executed in connection with any
other material obligations or liabilities of Grantor to Grantee,
and such default has not been cured within any applicable notice,
grace or cure period. At any time after an Event of Default has
occurred:
a.
Grantee is authorized at any time, without notice, in its sole
discretion, to enter upon and take possession of the Premises or
any part thereof, and to perform any acts Grantee deems necessary
or proper to conserve the Security, and whether or not entry is
made and possession is taken as aforesaid, to demand, collect and
receive all rents, issues and profits thereof, including past due
amounts as well as those presently or thereafter accruing. Grantee
shall (after payment of all costs and expenses incurred in
connection therewith) have the right, to the fullest extent
permitted by law, but shall not be obliged, to apply such rents,
issues and profits received by it to any amounts secured hereby, in
such order as Grantee determines. Grantee shall be liable to
account only for such rents, issues and profits actually received
by Grantee; and
b.
Grantee shall be entitled to have a receiver appointed to enter and
take possession of the Premises, collect the rents and profits
therefrom and apply the same as the court may direct;
and
c.
Grantee or the receiver may also take possession of, and for these
purposes use, any and all personal property contained in the
Premises and used by Grantor in the rental or leasing thereof or
any part thereof.
d.
Grantee may cure any default for the account of Grantor, and, to
the fullest extent permissible under law, Grantee may apply any
funds credited by or due from Grantee to Grantor against the same
(without any obligation first to enforce any other rights of the
Grantee, including, without limitation, any rights under said
Obligations or Loan Documents secured hereby or this Mortgage, or
any guarantee thereof, and without prejudice to any such rights).
Without limiting the generality of the foregoing, Grantor hereby
authorizes Grantee to pay all taxes, sewer use fees, water rates
and assessments, with interest, costs and charges accrued thereon,
which may at any time be a lien upon the Security, or any part
thereof; to pay the premiums for any insurance required hereunder;
to incur and pay reasonable expenses in protecting its rights
hereunder and the security hereby granted; to pay any balance
due
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under
any security agreement on any fixtures and equipment included as a
part of the collateral; and the payment of all amounts so incurred
shall be secured hereby as fully and effectually as any other
Obligation secured hereby and shall bear interest until paid at the
highest applicable rate of interest then payable under the terms of
any of the Loan Documents secured hereby. To the fullest extent
permissible under law, Grantee may apply to any of these purposes
or to the repayment of any amounts so paid by Grantee any sums paid
on any of the Obligations or this Mortgage by Grantor as interest
or otherwise.
e.
Grantee shall also have such rights and remedies as may be given to
Grantee in said Loan Documents, including but not limited to, the
right to enter the mortgaged premises before and after any default
by Grantor, make inspections, complete or cause to be completed
construction thereon and to make the same tenantable or habitable
for human occupancy under requirements of all laws and ordinances
and the right to expend the balance of loan proceeds and additional
sums, necessary in the judgment of Grantee, in order to complete
such construction and make the same tenantable or habitable as
aforesaid; all such additional sums so expended, with interest
thereon at the highest rate of interest per annum that is required
by any of the Loan Documents, shall be fully secured hereby as
necessary to protect the security of this Mortgage.
f.
Receipt of rents, awards, and any other moneys or evidences
thereof, pursuant to any of the other terms or provisions of this
Mortgage, and any disposition of the same by Grantee shall not
constitute a waiver of the right of foreclosure by Grantee in the
event of default or failure of performance by Grantor hereunder,
whether such receipt or disposition shall occur before or after the
commencement of such foreclosure.
All reasonable expenses
(including without limitation receiver’s fees, Legal
Expenses, costs and agent’s compensation) incurred pursuant
to the powers contained in this paragraph 8 shall be secured
hereby. Grantor agrees that exercise of such powers and disposition
of funds pursuant to this paragraph 8 shall not constitute a waiver
of any foreclosure once commenced nor preclude the later
commencement of foreclosure for breach hereof The right to enter
and take possession of said property, to manage and operate the
same, and to collect the rents, issues and profits thereof, whether
by a receiver or otherwise, shall be cumulative to any other right
or remedy hereunder or afforded by law, and may be exercised
concurrently therewith or independent thereof Grantor agrees that
any proceeds of the Security received by Grantee, including but not
limited to foreclosure sale proceeds, insurance proceeds and
condemnation proceeds may be applied by Grantee, whether or not
there is a default hereunder, to any one or more of the Obligations
secured hereby, regardless of whether any of such Obligations are
matured or unmatured, as the Grantee may, in its sole discretion,
determine.
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