PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of May 31, 1995, made by Challenger
International, Ltd., a Bermuda corporation (the "Pledgor"), in favor of O. F.
Mossberg & Sons, Incorporated, a Connecticut corporation, and Maverick Arms,
Inc., a Texas corporation (collectively, the "Pledgee").
W I T N E S S E T H:
WHEREAS, the Pledgee has made a $9,000,000 loan (the "Loan") to the
Pledgor, Challenger Industries, Inc., Lakefield Arms Limited, Passive Bullet
Traps, Ltd., and Passive Bullet Traps, Inc., d/b/a/ Savage Range Systems
(collectively, the "Borrowers"), as evidenced by a Promissory Note, in such
amount, dated of even date herewith (the "Note"); and
WHEREAS, as an inducement to and in consideration of the Pledgee making
the Loan, the Pledgor has agreed to, among other things, execute and deliver
this Pledge Agreement to the Pledgee.
NOW, THEREFORE, in consideration of the premises and to induce the
Pledgee to make the Loan, the Pledgor hereby agrees with the Pledgee as follows:
(1) Defined Terms. Unless otherwise defined herein, terms defined in
the preamble hereof and the recitals hereto shall have their defined meanings
when used herein and the following terms shall have the following meanings:
"Code": the Uniform Commercial Code from time to time in effect in the
State of Connecticut.
"Collateral": the Pledged Stock and all Proceeds.
"Event of Default": shall mean any of the following:
(a) The failure of any Borrower to pay any principal or interest
of the Note in accordance with the terms thereof; or
(b) Any representation or warranty made or deemed made by the
Pledgor in this Pledge Agreement or by the Pledgor or any Borrower in
any certificate, document or financial or other statement furnished at
any time under or in connection with this Pledge Agreement or the Note
shall prove to have been incorrect in any material respect on or as of
the date made or deemed made; or
(c) The Pledgor shall default in the observance or performance of
any agreement or covenant contained in this Pledge Agreement; or
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(d) Any of the Borrowers or Savage Arms, Inc. ("Savage") shall (a)
default in any payment of principal of or interest on any Indebtedness
(other than the Note) which has an aggregate principal amount in excess
of $250,000 or in the payment of any Guarantee Obligation under which
the maximum liability of any Borrower exceeds $250,000; or (b) fail to
comply with any financial covenant made in connection with any such
Indebtedness or Guarantee Obligation applicable to any of the first
three fiscal quarters of each fiscal year for a period in excess of 60
days after the end of each such quarter, unless such failure to comply
is not otherwise waived in writing within such 60-day period; or (c)
fail to comply with any financial covenant made in connection with any
such Indebtedness or Guarantee Obligation applicable to any fiscal year
for a period in excess of 90 days after the end of such fiscal year,
unless such failure to so comply is not otherwise waived in writing
within such 90-day period; or (d) fail to cure, or obtain a waiver in
writing of, any default (other than a payment or financial covenant
default) with respect to any other covenant or agreement made in
connection with any such Indebtedness or Guaranty Obligation within 30
days after having knowledge of such default; or (e) default in the
observance or performance of any agreement or condition relating to any
such Indebtedness or Guarantee Obligation or contained in any
instrument or agreement evidencing, securing or relating thereto, or
any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, with the giving of
notice if required, such Indebtedness to become due prior to its stated
maturity or such Guarantee Obligation to become payable; or
(e) (i) Any of the Borrowers or Savage shall commence any case,
proceedings or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, or its debts, or (B) seeking
appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets, or any
Borrower or Savage or any of their subsidiaries shall make a general
assignment for the benefit of their creditors; or (ii) there shall be
commenced against any of the Borrowers or Savage any case, proceeding
or other action or a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such adjudication or
appointment or (B) remains undismissed, undischarged or unbonded for a
period of 60 days; or (iii) there shall be commenced against any of the
Borrowers or Savage any case, proceeding or other action seeking
issuance of a warrant of
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attachment, execution, distraint or similar process against all or any
substantial part of its asset which results in the entry of an order
for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof;
or (iv) any Borrower or Savage shall take any action in furtherance of,
or indicating its consent to, approval of, or acquiescence in any of
the acts set forth in clause (i), (ii) or (iii) above; or (v) any
Borrower or Savage shall generally not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become due; or
(f) One or more judgments or decrees shall be entered against any
of the Borrowers or Savage involving in the aggregate a liability (not
paid or fully covered by insurance) of $250,000 or more and all such
judgments or decrees shall not have been vacated, discharged, stayed or
bonded pending appeal within sixty (60) days from the entry thereof; or
(g) The occurrence of a Default Event under the Letter Agreement.
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases,
dividends or other obligations (the "primary obligations") of any other
third Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of the
guaranteeing person, whether or not contingent, (i) to purchase any
such primary obligation or any property constituting direct or indirect
security therefor, (ii) to advance or supply funds (A) for the purchase
or payment of any such primary obligation or (B) to maintain working
capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (iv)
otherwise to assure or hold harmless the owner of any such primary
obligation against loss in respect thereof; provided; however, that the
term Guarantee Obligation shall not include endorsements of instruments
for deposit or collection in the ordinary course of business. The
amount of any Guarantee Obligation of any guaranteeing person shall be
deemed to be the lower of (x) an amount equal to the stated or
determinable amount of the primary obligation in
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respect of which such Guarantee Obligation is made and (y) the maximum
amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless
such primary obligation and the maximum amount for which such
guaranteeing person may be liable are not stated or determinable, in
which case the amount of such Guarantee Obligation shall be such
guaranteeing persons maximum reasonably anticipated liability in
respect thereof as determined by such guaranteeing person in good
faith.
"Indebtedness": of any Person at any date, (a) all indebtedness of such
Person for borrowed money or for the deferred purchase price of
property or services (other than current trade liabilities incurred in
the ordinary course of business and payable in accordance with
customary practices) or which is evidenced by a note, bond, debenture
or similar instrument, and (b) all liabilities secured by any Lien on
any property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment thereof.
"Issuers": Challenger Industries, Inc. and Passive Bullet Traps, Ltd.
(individually, an Issuer).
"Letter Agreement": means a Letter Agreement, dated the date hereof,
among the Borrowers, Savage and the Pledgee.
"Lien": Any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), or preference,
priority or other security agreement or preferential arrangement of any
kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement, and the filing of
any financing statement under the Code or comparable law of any
jurisdiction in respect of any of the foregoing).
"Obligations": the unpaid principal of and interest on (including
interest accruing on or after the filing of any petition in bankruptcy,
or the commencement of any insolvency, reorganization or like
proceeding, relating to the Pledgor, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding)
the Note and all other obligations and liabilities of the Pledgor to
the Pledgee, whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, which may arise
solely under, out of, or in connection with, the Note, this Pledge
Agreement, the Letter Agreement or the Pledge Agreement, dated the date
hereof, between the Pledgee and Challenger Industries, Inc. (the
"Challenger Industries Pledge Agreement"), whether on account of
principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses
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(including, without limitation, all fees and disbursements of counsel
to the Pledgee that are required to be paid by the Pledgor pursuant to
the terms of the Note, this Pledge Agreement, the Letter Agreement or
the Challenger Industries Pledge Agreement) or otherwise.
"Person": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
"Pledqe Agreement": this Pledge Agreement, as amended, supplemented or
otherwise modified from time to time.
"Pledqed Stock": the shares of capital stock of each Issuer listed on
Schedule I hereto, together with all stock certificates, options or
rights of any nature whatsoever that may be issued or granted by each
Issuer to the Pledgor while this Pledge Agreement is in effect.
"Proceeds": all "proceeds" as such term is defined in Section 9-306(1)
of the Code on the date hereof and, in any event, shall include,
without limitation, all dividends or other income from the Pledged
Stock, collections thereon or distributions with respect thereto.
(2) Pledge; Grant of Security Interest. The Pledgor hereby delivers to
the Pledgee, all the Pledged Stock issued and outstanding on the date hereof and
hereby grants to Pledgee, a first security interest in the Collateral, as
collateral security for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of the
Obligations.
(3) Delivery of Pledged Stock, Power of Attorney. Simultaneously
herewith, the Pledgor has delivered to the Pledgee all certificates evidencing
the Pledged Stock, accompanied by stock powers and other proper instruments of
assignment duly executed in blank, and the Pledgor agrees to deliver the
certificates evidencing all hereafter acquired Collateral, together with stock
powers and other proper instruments of assignment, duly executed in blank with
signatures properly executed thereon, for the use, benefit, security and
protection of the Pledgee as set forth herein, and upon and subject to the terms
and conditions hereof. The Pledgor hereby irrevocably grants the Pledgee a power
of attorney, coupled with an interest, with respect to the Collateral, with a
power, after an Event of Default, to transfer the Collateral, to execute in
Pledgor's name instruments of conveyance or transfer with respect to all or any
of the Collateral and to take such other action to enforce any of Pledgee's
rights hereunder or with respect to any of the Collateral. Pledgor hereby
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irrevocably grants the Pledgee a proxy with respect to the Collateral for all
purposes consistent with this Pledge Agreement.
(4) Representations and Warranties. The Pledgor represents and warrants
to the Pledgee that:
(a) the shares of Pledged Stock listed on Schedule I constitute
all the issued and outstanding shares of all classes of the capital stock of
each Issuer;
(b) all the shares of the Pledged Stock have been duly and
validly issued and are fully paid and nonassessable;
(c) the Pledgor is the record and beneficial owner of, and has
good and marketable title to, the Pledged Stock, free of any and all Liens or
options in favor of, or claims of, any other Person, except the Lien created by
this Pledge Agreement;
(d) the Pledgor has full power, authority and legal right to
execute, deliver and perform the obligations under this Pledge Agreement, and to
pledge, assign and grant a security interest in all of the Collateral pursuant
to this Pledge Agreement;
(e) no consent or approval or the taking of any other action in
respect of any party or of any public authority is required as a condition to
the validity or enforceability of this Pledge Agreement;
(f) there are no restrictions upon the voting rights or the
transfer of the Pledged Stock other than as required by law;
(g) the execution, delivery and performance hereof, and the
pledge and assignment of and granting of a security interest in the Collateral
hereunder, have been duly authorized by all necessary corporate or other action
of the Pledgor and do not contravene any law, rule or regulation or any
provision of the Pledgor's charter documents or by-laws or other governing
documents or of any judgment, decree or order of any tribunal or of any
agreement or instrument to which the Pledgor is a party or by which the Pledgor
or any of the Pledgor's property is bound or affected or constitute a default
thereunder; and
(h) upon delivery to the Pledgee of the Pledged Stock, the Lien
granted pursuant to this Pledge Agreement will constitute a valid, perfected
first priority Lien on the Collateral, enforceable as such against all creditors
of the Pledgor and any Person purporting to purchase any Collateral from the
Pledgor.
(5) Covenants. The Pledgor covenants and agrees with the Pledgee that,
from and after the date of this Pledge Agreement until the Obligations are paid
in full:
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(a) If the Pledgor shall, as a result of its ownership of the
Pledged Stock, become entitled to receive or shall receive any stock certificate
(including, without limitation, any certificate representing a stock dividend or
a distribution in connection with any reclassification, increase or reduction of
capital or any certificate issued in connection with any reorganization),
options or rights, whether in addition to, in substitution of, as a conversion
of, or in exchange for any of the Pledged Stock, or otherwise in respect
thereof, the Pledgor shall accept the same as agent of the Pledgee, hold the
same in trust for the Pledgee and deliver the same forthwith to the Pledgee in
the exact form received, duly endorsed by the Pledgor to the Pledgee, if
required, together with an undated stock power, proxy and power of attorney
covering such certificate duly executed in blank by the Pledgor to be held by
the Pledgee, subject to the terms hereof, as additional collateral security for
the Obligations. Any sums paid upon or in respect of the Pledged Stock upon the
liquidation or dissolution of any Issuer shall be paid over to the Pledgee to be
held by it hereunder as additional collateral security for the Obligations, and
in case any distribution of capital shall be made on or in respect of the
Collateral or any property shall be distributed upon or with respect to the
Collateral pursuant to the recapitalization or reclassification of the capital
of any Issuer or pursuant to the reorganization thereof, the property so
distributed shall be delivered to the Pledgee to be held by it hereunder as
additional collateral security for the Obligations. If any sums of money or
property so paid or distributed in respect of the Pledged Stock shall be
received by the Pledgor, the Pledgor shall, until such money or property is paid
or delivered to the Pledgee, hold such money or property in trust for the
Pledgee, segregated from other funds of the Pledgor, as additional collateral
security for the Obligations.
(b) Without the prior written consent of the Pledgee, the Pledgor
will not (a) vote to enable, or take any other action to permit, any Issuer to
issue any stock or other equity securities of any nature or to issue any other
securities or options convertible into or granting the right to purchase or
exchange for any stock or other equity securities of any nature of such Issuer,
(b) sell, assign, pledge, transfer, exchange, or otherwise dispose of, or grant
any option with respect to, the Collateral, or (c) create, incur or permit to
exist any Lien or option in favor of, or any claim of any Person with respect
to, any of the Collateral, or any interest therein, except for the Lien provided
for by this Pledge Agreement. The Pledgor will defend the right, title and
interest of the Pledgee in and to the Collateral against the claims and demands
of all Persons whomsoever.
(c) At any time and from time to time, upon the written request of
the Pledgee, and at the sole expense of the Pledgor, the Pledgor will promptly
and duly execute and deliver such further
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instruments and documents and take such further actions as the Pledgee may
reasonably request for the purposes of obtaining or preserving the full benefits
of this Pledge Agreement and of the rights and powers herein granted. If any
amount payable under or in connection with any of the Collateral shall be or
become evidenced by any promissory note, other instrument or chattel paper, such
note, instrument or chattel paper (in each case, as defined in the Code) shall
be immediately delivered to the Pledgee, duly endorsed in a manner satisfactory
to the Pledgee, to be held as Collateral pursuant to this Pledge Agreement.
(d) The Pledgor agrees to pay, and to save the Pledgee harmless
from, any and all liabilities with respect to, or resulting from any delay in
paying, any and all stamps, excise, sales or other taxes which may be payable or
determined to be payable with respect to any of the Collateral or in connection
with any of the transactions contemplated by this Pledge Agreement.
(e) The Pledgor shall promptly give notice to the Pledgee upon the
occurrence of an Event of Default.
(f) The Pledgor will not (i) move the location of its chief
executive office/chief place of business out of the islands of Bermuda, or (ii)
change its name, identity or corporate structure to such an extent that any
financing statement filed by the Pledgee in connection with this Agreement would
become seriously misleading, unless it shall have given the Pledgor at least 30
days prior written notice thereof.
(6) Cash Dividends; Voting Rights. The Pledgor shall not be permitted
to receive any dividends, cash or otherwise, paid by each Issuer; the Pledgee
shall have the right to receive any and all dividends paid in respect of the
Pledged Stock and make application thereof to the Obligations in such order as
the Pledgee may determine. Unless an Event of Default shall have occurred, the
Pledgor shall be permitted to exercise all voting and corporate rights with
respect to the Pledged Stock, provided, however, that no vote shall be cast or
corporate right exercised or other action taken which, in the Pledgee's
judgment, would impair the Collateral or which would be inconsistent with or
result in any violation of any provision of this Pledge Agreement or a Default
Event, as defined in the Letter Agreement.
(7) Riqhts of the Pledgee. (a) If an Event of Default shall occur, all
shares of the Pledged Stock may, at Pledgee's sole option, be registered in the
name of the Pledgee or its nominee, and the Pledgee or its nominee may, at its
sole option, exercise (A) all voting, corporate and other rights pertaining to
such shares of the Pledged Stock at any meeting of shareholders of each Issuer
or otherwise and/or (B) any and all rights of conversion, exchange, subscription
and any other rights, privileges or options
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pertaining to such shares of the Pledged Stock as if it were the absolute owner
thereof (including, without limitation, the right to exchange at its discretion
any and all of the Pledged Stock upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of such
Issuer, or upon the exercise by the Pledgor or the Pledgee of any right,
privilege or option pertaining to such shares of the Pledged Stock, and in
connection therewith, the right to deposit and deliver any and all of the
Pledged Stock with any committee, depositary, transfer agent, registrar or other
designated agency upon such terms and conditions as it may determine), all
without liability except to account for property actually received by it, but
the Pledgee shall have no duty to the Pledgor to exercise any such right,
privilege or option and shall not be responsible for any failure to do so or
delay in so doing.
(b) The rights of the Pledgee hereunder shall not be conditioned
or contingent upon the pursuit by the Pledgee of any right or remedy against the
Pledgor or against any other Person which may be or become liable in respect of
all or any part of the Obligations or against any collateral security therefor,
guarantee thereof or right of offset with respect thereto. The Pledgee shall not
be liable for any failure to demand, collect or realize upon all or any part of
the Collateral or for any delay in doing so, nor shall the Pledgee be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
the Pledgor or any other Person or to take any other action whatsoever with
regard to the Collateral or any part thereof.
(8) Remedies. If an Event of Default shall occur, the Pledgee may
exercise, in addition to all other rights and remedies granted in this Pledge
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party under
the Code. Without limiting the generality of the foregoing, the Pledgee, without
demand of performance or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law referred to below) to or
upon the Pledgor, each Issuer or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby waived) may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, assign, give option
or options to purchase or otherwise dispose of and deliver the Collateral or any
part thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk. The Pledgee shall have
the right upon any such public sale or sales, and, to the extent permitted by
law, upon any such private sale or sales, to purchase the whole or any part of
the Collateral so sold, free of any right or equity of
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redemption in the Pledgor, which right or equity is hereby waived or released.
The Pledgee shall apply any Proceeds from time to time held by it and the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale, after deducting all reasonable costs and expenses of every kind
incurred in respect thereof or incidental to the care or safekeeping of any of
the Collateral or in any way relating to the Collateral or the rights of the
Pledgee hereunder, including, without limitation, reasonable attorneys' fees and
disbursements of counsel to the Pledgee, to the payment in whole or in part of
the Obligations, in such order as the Pledgee may elect, and only after such
application and after the payment by the Pledgee of any other amount required by
any provision of law, including, without limitation, Section 9-504(1)(c) of the
Code, need the Pledgee account for the surplus, if any, to the Pledgor. To the
extent permitted by applicable law, the Pledgor waives all claims, damages and
demands it may acquire against the Pledgee arising out of the exercise by them
of any rights hereunder. If any notice of a proposed sale or other disposition
of Collateral shall be required by law, such notice shall be deemed reasonable
and proper if given at least ten (10) days before such sale or other
disposition. The Pledgor shall remain liable for any deficiency if the proceeds
of any sale or other disposition of Collateral are insufficient to pay the
Obligations and the fees and disbursements of any attorneys employed by the
Pledgee to collect such deficiency.
(9) Private Sales. The Pledgor recognizes that the Pledgee may be
unable to effect a public sale of any or all the Pledged Stock, by reason of
certain prohibitions contained in the Securities Act of 1933, as amended (the
"Securities Act") and applicable state securities laws or otherwise, and may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers which will be obliged to agree, among other things, to acquire
such securities for their own account for investment and not with a view to the
distribution or resale thereof. The Pledgor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner. The Pledgee shall be under no obligation to delay a sale of
any of the Pledged Stock for the period of time necessary to permit any Issuer
to register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if such Issuer would agree to do so. The
Pledgor further agrees to use its best efforts to do or cause to be done all
such other acts as may be necessary to make such sale or sales of all or any
portion of the Pledged Stock pursuant to this paragraph 9 valid and binding and
in compliance with any and all other applicable requirements of law.
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(10) Term. This Agreement, including the pledges granted hereunder,
shall terminate upon the final payment in full of the Obligations, provided that
the Pledgee shall not thereafter be required to remit to the Pledgor or any of
its assignees or successors any portion of the Note proceeds. Upon termination
of this Agreement, any Collateral still pledged hereunder (and not yet disposed
of) shall be promptly delivered to the Pledgor together with all stock powers,
powers of attorney and proxies.
(11) Amendments. etc. with respect to the Obligations. The Pledgor
shall remain obligated hereunder, and the Collateral shall remain subject to the
Lien granted hereby, notwithstanding that, without any reservation of rights
against the Pledgor, and without notice to or further assent by the Pledgor, any
demand for payment of any of the Obligations made by the Pledgee may be
rescinded by the Pledgee, and any of the Obligations continued, and the
Obligations, or the liability of any Issuer or any other Person upon or for any
part thereof, or any collateral security or guarantee therefor or right of
offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered, or released by the Pledgee, and the Note and any other documents
executed and delivered in connection therewith may be amended, modified,
supplemented or terminated, in whole or part, as the Pledgee may deem advisable
from time to time, and any guarantee, right of offset or other collateral
security at any time held by the Pledgee for the payment of the Obligations may
be sold, exchanged, waived, surrendered or released. The Pledgee shall not have
any obligation to protect, secure, perfect or insure any other Lien at any time
held by it as security for the Obligations or any property subject thereto. The
Pledgor waives any and all notice of the creation, renewal, extension or accrual
of any of the Obligations and notice of or proof of reliance by the Pledgee upon
this Pledge Agreement; the Obligations, and any of them, shall conclusively be
deemed to have been created, contracted or incurred in reliance upon this Pledge
Agreement; and all dealings between any Issuer and the Pledgor, on the one hand,
and the Pledgee, on the other, shall likewise be conclusively presumed to have
been had or consummated in reliance upon this Pledge Agreement. The Pledgor
waives diligence, presentment, protest, demand for payment and notice of default
or nonpayment to or upon any Issuer or the Pledgor with respect to the
Obligations.
(12) Limitation on Duties Regarding Collateral. The Pledgee's sole duty
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the Code or otherwise,shall
be to deal with it in the same manner as the Pledgee deals with similar
securities and property for its own account. The Pledgee and its directors,
officers, employees or agents shall not be liable for failure to demand, collect
or realize upon any of the Collateral or for any delay in
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doing so or shall be under any obligations to sell or otherwise dispose of any
Collateral upon the request of the Pledgor or otherwise.
(13) Severability. Any provisions of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(14) Paragraph Headings. The paragraph headings used in this Pledge
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
(15) No Waiver; Cumulative Remedies. The Pledgee shall not by any act
(except by a written instrument pursuant to paragraph 15 hereof) be deemed to
have waived any right or remedy hereunder or to have acquiesced in any Event of
Default or in any breach of any of the terms and conditions hereof. No failure
to exercise, nor any delay in exercising, on the part of the Pledgee, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Pledgee of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the
Pledgee would otherwise have on any future occasion. The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any other rights or remedies provided by law.
(16) Waivers and Amendments. Successors and Assigns. None of the terms
or provisions of this Pledge Agreement may be amended, supplemented or otherwise
modified except by a written instrument executed by the Pledgor and the Pledgee.
This Pledge Agreement shall be binding upon the successors and assigns of the
Pledgor and shall inure to the benefit of the Pledgee and its successors and
assigns, including, without limitation, Bank of Boston Connecticut and any
subsequent senior lenders of the Pledgee.
(17) Marshalling. Pledgee shall not be required to marshal any present
or future collateral security for (including, but not limited to, this Pledge
Agreement and the Collateral), or other assurances of payment of, the
Obligations, the Loan or any of them, or to resort to such collateral security
or other assurances of payment in any particular order. To the extent that the
Pledgor lawfully may, the Pledgor hereby agrees that the Pledgor will not invoke
any law relating to the marshalling of collateral that might
-13-
cause delay in or impede the enforcement of Pledgee's rights under this Pledge
Agreement or under any other instrument evidencing any of the Obligations or
under which any of the Obligations is outstanding or by which any of the
Obligations is secured or payment thereof is otherwise assured, and to the
extent that it lawfully may, the Pledgor hereby irrevocably waives the benefits
of all such laws.
(18) Notices. Notices by the Pledgee to the Pledgor or any Issuer may
be given by hand, by mail, by telex or by facsimile transmission, addressed or
transmitted to the Pledgor, or in the case of any Issuer, in care of the
Pledgor, at the Pledgor's address or transmission number set forth below and
shall be effective (a) when delivered by hand, (b) in the case of mail, three
days after deposit in the postal system, first class postage pre-paid and (c) in
the case of telecopy notice, when sent. The Pledgor or any Issuer may change
their respective addresses and transmission numbers by written notice to the
Pledgee.
The Pledgor: Challenger International, Ltd.
Reid House
31 Church Street
P.O. Box HM 1437
Hamilton HM FX
BERMUDA
Attention: President and Managing Director
Telecopy: (809) 292-5560
With a copy to: Philip P. Rossetti, Esquire
Hale and Dorr
60 State Street
Boston, MA 02109
Telecopy: (617) 526-5000
The Pledgee: O. F. Mossberg & Sons, Incorporated
Maverick Arms, Inc.
7 Grasso Avenue
North Haven, CT 06473
Attention: Vice President and General
Counsel
Telecopy: (203) 230-5423
With a copy to: Stanford N. Goldman, Jr., Esquire
Schatz & Schatz, Ribicoff & Kotkin
90 State House Square
Hartford, CT 06103
Telecopy: (203) 246-1225
(19) Expenses. The Pledgor will upon demand pay to the Pledgee the
amount of any and all expenses, including the reasonable fees and expenses of
counsel and of any experts and agents, which the
-14-
Pledgee may incur in connection with (a) the custody, preservation or sale of,
collection from or other realization upon any of the Collateral, (b) the
exercise or enforcement of any of the rights of the Pledgee hereunder, or (c)
the failure by the Pledgor to perform or observe any of the provisions hereof.
(20) Irrevocable Authorization and Instruction to Issuers. The Pledgor
hereby authorizes and instructs each Issuer to comply with any instruction
received by such Issuer from the Pledgee in writing that (a) states that an
Event of Default has occurred and (b) is otherwise in accordance with the terms
of this Pledge Agreement, without any other or further instructions from the
Pledgor, and the Pledgor agrees that each Issuer shall be fully protected in so
complying.
(21) Integration. This Pledge Agreement represents the agreement of the
Pledgor with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Pledgee relative to subject
matter hereof not expressly set forth or referred to herein, in the Note or in
the Letter Agreement.
(22) GOVERNING LAW. THIS PLEDGE AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PLEDGOR UNDER THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
CONNECTICUT (BUT NOT ITS CONFLICTS OF LAW PROVISIONS). The Pledgor hereby
consents to service of process, and to be sued, in the State of Connecticut and
consents to the jurisdiction of the courts of the State of Connecticut and the
United States District Court for the District of Connecticut, as well as to the
jurisdiction of all courts from which an appeal may be taken from such courts,
for the purpose of any suit, action or other proceeding arising hereunder or out
of any of the Obligations or with respect to the transactions contemplated
hereby, and expressly waives any and all objections Pledgor may have to venue in
any such courts.
-15-
IN WITNESS WHEREOF, the undersigned has caused this Pledge Agreement
to be duly executed and delivered as of the date first above written.
CHALLENGER INTERNATIONAL, LTD.
[SEAL]
By /s/ Peter G. Leighton
---------------------------
Its President and Director
By /s/ Simon Scupham
---------------------------
Its Director
O. F. MOSSBERG & SONS, INCORPORATED
By: /s/ William H. Schoner
-----------------------------
Its Vice President
MAVERICK ARMS, INC.
By: /s/ William H. Schoner
-----------------------------
Its Vice President
-16-
STATE OF )
) ss.
COUNTY OF )
Before me, the undersigned, this____ day of May, 1995, personally
appeared ___________________ and __________________, known to me to be
the_____________and _______________ of Challenger International, Ltd., and that
they as such officers, signers and sealers of the foregoing instrument,
acknowledged the execution of the same to be their free act and deed
individually and as such officers, and the free act and deed of said
corporation.
In Witness Whereof, I hereunto set my hand.
---------------------------- [SEAL]
Notary Public
My Commission Expires:
STATE OF )
) ss.
COUNTY OF )
Before me, the undersigned, this____ day of May, 1995, personally
appeared ___________________, known to me to be the_____________ of O. F.
Mossberg & Sons, Incorporated, and that he as such officer, signer and sealer of
the foregoing instrument, acknowledged the execution of the same to be his free
act and deed individually and as such officer, and the free act and deed of said
corporation.
In Witness Whereof, I hereunto set my hand.
----------------------------
Notary Public
My Commission Expires:
Commissioner of the Superior Court
-17-
STATE OF CONNECTICUT)
)ss. Hartford
COUNTY OF HARTFORD )
Before me, the undersigned, this 31st day of May, 1995, personally
appeared William H. Schoner, known to me to be the Vice President of Maverick
Arms, Inc., and that he as such officer, signer and sealer of the foregoing
instrument, acknowledged the execution of the same to be his free act and deed
individually and as such officer, and the free act and deed of said corporation.
In Witness Whereof, I hereunto set my hand.
-------------------------------------
Commissioner of the Superior Court
SCHEDULE I
Corporation Shares Certificate Number
- ----------- ------ ------------------
Challenger Industries, Inc. 2,999 1
Challenger Industries, Inc. 1,000 2
Passive Bullet Traps, Ltd. -- --
Passive Bullet Traps, Ltd. -- --
Passive Bullet Traps, Ltd. -- --
.
STOCK TRANSFER POWER
KNOW ALL MEN BY THESE PRESENTS, FOR VALUE RECEIVED, Challenger
International, Ltd., hereby sells, assigns and transfers unto___________________
(____) shares of the common stock of Challenger Industries, Inc. (the
"Corporation") standing in __________________________ name on the books of the
Corporation represented by Certificate No.________ herewith, and does hereby
irrevocably constitute and appoint _____________ attorney to transfer said
stock, or any part thereof, on the books of the Corporation with full power of
substitution.
IN WITNESS WHEREOF, Challenger International, Ltd., has executed this
Stock Transfer Power this ____ day of ________________.
CHALLENGER INTERNATIONAL, LTD.
By /s/ Peter G. Leighton
---------------------------
Peter G. Leighton
Its President and Managing
Director
STOCK TRANSFER POWER
KNOW ALL MEN BY THESE PRESENTS, FOR VALUE RECEIVED, Challenger
International, Ltd., hereby sells, assigns and transfers unto___________________
(____) shares of the preferred stock of Challenger Industries, Inc. (the
"Corporation") standing in __________________________ name on the books of the
Corporation represented by Certificate No.________ herewith, and does hereby
irrevocably constitute and appoint _____________ attorney to transfer said
stock, or any part thereof, on the books of the Corporation with full power of
substitution.
IN WITNESS WHEREOF, Challenger International, Ltd., has executed this
Stock Transfer Power this ____ day of ________________.
CHALLENGER INTERNATIONAL, LTD.
By /s/ Peter G. Leighton
---------------------------
Peter G. Leighton
Its President and Managing
Director
STOCK TRANSFER POWER
KNOW ALL MEN BY THESE PRESENTS, FOR VALUE RECEIVED, Challenger
International, Ltd., hereby sells, assigns and transfers unto___________________
(____) shares of the capital stock of Passive Bullet Traps, Inc. (the
"Corporation") standing in __________________________ name on the books of the
Corporation represented by Certificate No.________ herewith, and does hereby
irrevocably constitute and appoint _____________ attorney to transfer said
stock, or any part thereof, on the books of the Corporation with full power of
substitution.
IN WITNESS WHEREOF, Challenger International, Ltd., has executed this
Stock Transfer Power this ____ day of ________________.
CHALLENGER INTERNATIONAL, LTD.
By /s/ Peter G. Leighton
---------------------------
Peter G. Leighton
Its President and Managing
Director
STOCK TRANSFER POWER
KNOW ALL MEN BY THESE PRESENTS, FOR VALUE RECEIVED, Challenger
International, Ltd., hereby sells, assigns and transfers unto___________________
(____) shares of the capital stock of Passive Bullet Traps, Inc. (the
"Corporation") standing in __________________________ name on the books of the
Corporation represented by Certificate No.________ herewith, and does hereby
irrevocably constitute and appoint _____________ attorney to transfer said
stock, or any part thereof, on the books of the Corporation with full power of
substitution.
IN WITNESS WHEREOF, Challenger International, Ltd., has executed this
Stock Transfer Power this ____ day of ________________.
CHALLENGER INTERNATIONAL, LTD.
By /s/ Peter G. Leighton
---------------------------
Peter G. Leighton
Its President and Managing
Director
STOCK TRANSFER POWER
KNOW ALL MEN BY THESE PRESENTS, FOR VALUE RECEIVED, Challenger
International, Ltd., hereby sells, assigns and transfers unto___________________
(____) shares of the capital stock of Passive Bullet Traps, Inc. (the
"Corporation") standing in __________________________ name on the books of the
Corporation represented by Certificate No.________ herewith, and does hereby
irrevocably constitute and appoint _____________ attorney to transfer said
stock, or any part thereof, on the books of the Corporation with full power of
substitution.
IN WITNESS WHEREOF, Challenger International, Ltd., has executed this
Stock Transfer Power this ____ day of ________________.
CHALLENGER INTERNATIONAL, LTD.
By /s/ Peter G. Leighton
---------------------------
Peter G. Leighton
Its President and Managing
Director
PROXY
The undersigned hereby appoints _________________ as the proxy of the
undersigned, with full power of substitution, to vote all of the shares of
common stock of Challenger Industries, Inc. which the undersigned is entitled to
vote at any meeting, or in any consent, of the stockholders of Challenger
International, Ltd. which may be held or sought at any time after the date
hereof and prior to _____________________. This proxy is coupled with an
interest and is irrevocable and confers upon the proxy all of the powers that
the undersigned would possess if personally present.
This proxy shall take effect and be effective at such time or times as
are set forth or provided for in the Pledge Agreement of even date herewith
between the undersigned and the Proxy.
Dated this _____ day of_________________.
CHALLENGER INTERNATIONAL, LTD.
By /s/ Peter G. Leighton
---------------------------
Peter G. Leighton
Its President and Managing
Director
PROXY
The undersigned hereby appoints ____________ as the proxy of the
undersigned, with full power of substitution, to vote all of the shares of
preferred stock of Challenger Industries, Inc. which the undersigned is entitled
to vote at any meeting, or in any consent, of the stockholders of Challenger
International, Ltd. which may be held or sought at any time after the date
hereof and prior to_________________. This proxy is coupled with an interest and
is irrevocable and confers upon the proxy all of the powers that the undersigned
would possess if personally present.
This proxy shall take effect and be effective at such time or times as
are set forth or provided for in the Pledge Agreement of even date herewith
between the undersigned and the Proxy.
Dated this _____ day of_________________.
CHALLENGER INTERNATIONAL, LTD.
By /s/ Peter G. Leighton
---------------------------
Peter G. Leighton
Its President and Managing
Director
PROXY
The undersigned hereby appoints_________________ as the proxy of the
undersigned, with full power of substitution, to vote all of the shares of
capital stock of Passive Bullet Traps, Ltd. which the undersigned is entitled to
vote at any meeting, or in any consent, of the stockholders of Challenger
International, Ltd. which may be held or sought at any time after the date
hereof and prior to _______________. This proxy is coupled with an interest and
is irrevocable and confers upon the proxy all of the powers that the undersigned
would possess if personally present.
This proxy shall take effect and be effective at such time or times as
are set forth or provided for in the Pledge Agreement of even date herewith
between the undersigned and the Proxy.
Dated this _____ day of_________________.
CHALLENGER INTERNATIONAL, LTD.
By /s/ Peter G. Leighton
---------------------------
Peter G. Leighton
Its President and Managing
Director
PROXY
The undersigned hereby appoints _______________ , as the proxy of the
undersigned, with full power of substitution, to vote all of the shares of
capital stock of Passive Bullet Traps, Ltd. which the undersigned is entitled to
vote at any meeting, or in any consent, of the stockholders of Challenger
International, Ltd. which may be held or sought at any time after the date
hereof and prior to ___________________. This proxy is coupled with an interest
and is irrevocable and confers upon the proxy all of the powers that the
undersigned would possess if personally present.
This proxy shall take effect and be effective at such time or times as
are set forth or provided for in the Pledge Agreement of even date herewith
between the undersigned and the Proxy.
Dated this _____ day of_________________.
CHALLENGER INTERNATIONAL, LTD.
By /s/ Peter G. Leighton
---------------------------
Peter G. Leighton
Its President and Managing
Director
PROXY
The undersigned hereby appoints _______________ as the proxy of the
undersigned, with full power of substitution, to vote all of the shares of
capital stock of Passive Bullet Traps, Ltd. which the undersigned is entitled to
vote at any meeting, or in any consent, of the stockholders of Challenger
International, Ltd. which may be held or sought at any time after the date
hereof and prior to _________________. This proxy is coupled with an interest
and is irrevocable and confers upon the proxy all of the powers that the
undersigned would possess if personally present.
This proxy shall take effect and be effective at such time or times as
are set forth or provided for in the Pledge Agreement of even date herewith
between the undersigned and the Proxy.
Dated this _____ day of_________________.
CHALLENGER INTERNATIONAL, LTD.
By /s/ Peter G. Leighton
---------------------------
Peter G. Leighton
Its President and Managing
Director
POWER OF ATTORNEY
The undersigned, Challenger International, Ltd., does hereby appoint
_______________ , of ______________ as the attorney-in-fact of the undersigned
to act in its name, place and stead in any way which it itself could do, of it
were personally present, with respect to any and all shares of capital stock of
Passive Bullet Traps, Ltd. now or hereafter owned by the undersigned and with
respect to any dividends and distributions thereof, including without
limitation, all right and power to vote, encumber, transfer or assign all or any
part of such stock. This power of attorney is coupled with an interest and shall
be irrevocable.
Dated this _____ day of_________________.
CHALLENGER INTERNATIONAL, LTD.
By /s/ Peter G. Leighton
---------------------------
Peter G. Leighton
Its President and Managing
Director
STATE OF CONNECTICUT)
)ss. Hartford
COUNTY OF HARTFORD )
Before me, the undersigned, this 31st day of May, 1995, personally
appeared Peter Leighton, known to me to be the President and Managing Director
of Challenger International, Ltd., and that he as such officer, signer and
sealer of the foregoing instrument, acknowledged the execution of the same to be
his free act and deed individually and as such officer, and the free act and
deed of said corporation.
In Witness Whereof, I hereunto set my hand.
----------------------------------
Commissioner of the Superior Court
POWER OF ATTORNEY
The undersigned, Challenger International, Ltd., does hereby appoint
_______________ , of ______________ as the attorney-in-fact of the undersigned
to act in its name, place and stead in any way which it itself could do, of it
were personally present, with respect to any and all shares of capital stock of
Passive Bullet Traps, Ltd. now or hereafter owned by the undersigned and with
respect to any dividends and distributions thereof, including without
limitation, all right and power to vote, encumber, transfer or assign all or any
part of such stock. This power of attorney is coupled with an interest and shall
be irrevocable.
Dated this _____ day of_________________.
CHALLENGER INTERNATIONAL, LTD.
By /s/ Peter G. Leighton
---------------------------
Peter G. Leighton
Its President and Managing
Director
STATE OF CONNECTICUT)
)ss. Hartford
COUNTY OF HARTFORD )
Before me, the undersigned, this 31st day of May, 1995, personally
appeared Peter Leighton, known to me to be the President and Managing Director
of Challenger International, Ltd., and that he as such officer, signer and
sealer of the foregoing instrument, acknowledged the execution of the same to be
his free act and deed individually and as such officer, and the free act and
deed of said corporation.
In Witness Whereof, I hereunto set my hand.
----------------------------------
Commissioner of the Superior Court
POWER OF ATTORNEY
The undersigned, Challenger International, Ltd., does hereby appoint
_______________ , of ______________ as the attorney-in-fact of the undersigned
to act in its name, place and stead in any way which it itself could do, of it
were personally present, with respect to any and all shares of common stock of
____________________ now or hereafter owned by the undersigned and with
respect to any dividends and distributions thereof, including without
limitation, all right and power to vote, encumber, transfer or assign all or any
part of such stock. This power of attorney is coupled with an interest and shall
be irrevocable.
Dated this _____ day of May, 1995
CHALLENGER INTERNATIONAL, LTD.
By /s/ Peter G. Leighton
---------------------------
Its President and Managing
Director
ISLANDS OF BERMUDA)
)ss.
CITY OF HAMILTON )
Before me, the undersigned, this 3Oth day of May, 1995, personally appeared
Peter G. Leighton, known to me to be the President of Challenger International,
Ltd., and that he as such officer, signer and sealer of the foregoing
instrument, acknowledged the execution of the same to be his free act and deed
individually and as such officer, and the free act and deed of said corporation.
In Witness Whereof, I hereunto set my hand.
By /s/ Peter Smith
----------------------------
Notary Public
My Commission Expires: on my death
Commissioner of the Superior Court
[SEAL]
POWER OF ATTORNEY
The undersigned, Challenger International, Ltd., does hereby appoint
_______________ , of ______________ as the attorney-in-fact of the undersigned
to act in its name, place and stead in any way which it itself could do, of it
were personally present, with respect to any and all shares of common stock of
____________________ now or hereafter owned by the undersigned and with
respect to any dividends and distributions thereof, including without
limitation, all right and power to vote, encumber, transfer or assign all or any
part of such stock. This power of attorney is coupled with an interest and shall
be irrevocable.
Dated this _____ day of May, 1995
CHALLENGER INTERNATIONAL, LTD.
By /s/ Peter G. Leighton
---------------------------
Its President and Managing
Director
ISLANDS OF BERMUDA)
)ss.
CITY OF HAMILTON )
Before me, the undersigned, this 3Oth day of May, 1995, personally appeared
Peter G. Leighton, known to me to be the President of Challenger International,
Ltd., and that he as such officer, signer and sealer of the foregoing
instrument, acknowledged the execution of the same to be his free act and deed
individually and as such officer, and the free act and deed of said corporation.
In Witness Whereof, I hereunto set my hand.
By /s/ Peter Smith
----------------------------
Notary Public
My Commission Expires: on my death
Commissioner of the Superior Court
[SEAL]