Promissory Note - TASER International Inc. and B&M Distributing Inc.
PROMISSORY NOTE
$189,980 Date: December 31, 1998
Tempe, Arizona
For value received, the undersigned TASER INTERNATIONAL, INC., an Arizona
corporation ("Promisor") promises to pay to the order of B&M DISTRIBUTING, INC.
or assigns ("Payee"), at 1912 W. 4th St., Tempe, Arizona 85281 (or at such
other place as Payee may designate), the sum of ONE HUNDRED EIGHTY-NINE
THOUSAND, NINE HUNDRED AND EIGHTY DOLLARS AND NO/100 DOLLARS ($189,980) plus
interest as defined below calculated on a daily basis (based on a 365-day year)
from the date hereof on the principal balance from time to time outstanding.
Principal, interest and all other sums payable hereunder shall be paid in
lawful money of the United States of America as follows:
A. Interest shall accrue on the principal at the base rate of ten percent
(10.0%) per annum. Interest shall be simple interest calculated on the
outstanding daily principal balance. Principal and interest shall be
completely due and payable as a balloon payment on March 31, 2000.
B. If a payment of principal or interest to be made pursuant to this Note
becomes past due for a period in excess of ten (10) business day
("Default"), Promisor shall pay to Payee default interest ("Default
Interest") that shall accrue, in addition to the stated rate of interest,
at the rate of five percent of the amount of such overdue payment until the
overdue payment is paid. Further, in event of Default, all remaining unpaid
principal and accrued interest, and all installments, shall become due and
payable immediately without demand or notice. All payments on this Note
shall be applied first in payment of any costs or charges, then to Default
Interest accrued, then to the base interest accrued, and then to reduce
principal.
Promisor may prepay this Note in whole or in part at any time without penalty.
Time is of the essence.
In any event of default under this Note occurs and remains in effect for ten
(10) business days, Promisor promises to pay all costs of collection, including
reasonable attorneys' fees, whether or not a lawsuit is commenced as part of
the collection process, and whether or not taxable as costs by a court.
Promisor waives trial by jury and consents to the personal jurisdiction of the
Arizona courts located in the State of Arizona, County of Maricopa.
If any event of default under this Note occurs and remains in effect for ten
(10) business days, or upon bankruptcy, insolvency, dissolution or fraudulent
conveyance of Promisor, or upon default under any other obligations of Promisor
to Payee or its affiliates, then this Note shall become due immediately, all
without presentment, demand, protest or notice, all of which hereby are waived.
This Note shall be subordinate to obligations due from Promisor to Silicon
Valley Bank or any such other institution that Payee agrees to in writing.
Promisor shall be in default immediately if there is a sale, transfer,
assignment or any other disposition not in the normal course of business of any
assets pledged as security for Silicon Valley Bank. Promisor warrants that any
obligations owed from it to either Patrick Smith or Thomas Smith are
subordinated to this Note with the exception of reasonable day to day operating
expenses including payroll. Promisor further assures that it will take all
steps requested by Payee to affirm such subordination, including causing said
parties to execute a subordination agreement.
If any one or more of the provisions of this Note are determined to be
unenforceable, in whole or in part, for any reason, the remaining provisions
shall remain fully operative.
Promisor waives presentment for payment, protest, and notice of protest and
nonpayment of this Note.
No renewal or extension of this Note, delay in enforcing any right of Payee
under this Note or assignment by Payee of this Note shall affect the liability
of Promisor. All rights of Payee under this Note are cumulative and may be
exercised concurrently or consecutively at Payee's option.
-1-
<PAGE> 2
This Note shall be construed in accordance with the laws of the State of
Arizona, irrespective of its choice of law principles.
Signed this 17th day of March, 1999.
PROMISOR
TASER INTERNATIONAL, INC.
an Arizona corporation
By: /s/ Patrick Smith
_________________
Patrick Smith
President
Attest: /s/ Thomas Smith
________________
Thomas Smith
-2-
<PAGE> 3
PERSONAL GUARANTY
THIS GUARANTY, dated as of March 17, 1999, is made and given by the
undersigned guarantors, jointly and severally, (collectively, "Guarantor"), in
favor of B&M Distributing, Inc. ("BMD").
A. BMD is prepared to extend additional credit to Taser International, Inc.,
an Arizona corporation ("Debtor") in the amount of $189,980 (the "Principal
Amount") pursuant to a separate agreement with Taser International, Inc. (the
"Credit Agreement").
B. It is a condition precedent, among others, to BMD's inducement to extend
credit accommodations to Debtor that this Guaranty be executed and delivered by
Guarantor.
C. Guarantor expects to derive benefits from the extension of credit
accommodations to Debtor by BMD and finds it advantageous, desirable and in
Guarantor's best interest to execute and deliver this Guaranty to BMD.
Guarantor is providing this Guaranty at the request of Debtor to induce BMD to
extend or continue financial accommodations to Debtor.
NOW, THEREFORE, in consideration of the foregoing and credit
accommodations to be extended to Debtor and for other good and valuable
consideration, Guarantor covenants and agrees with BMD as follows:
Section a. The Guaranty. Undersigned Guarantor (if more than one, jointly
and severally), absolutely, irrevocably and unconditionally guarantees and
promises to pay to BMD, upon demand: (i) the Principal Amount and for all sums
payable or to become payable in the Credit Agreement, or at the election of BMD
any one or more installments thereof, if Debtor fails to pay punctually any one
or more amounts when due under the Credit Agreement (principal, interest and/or
other charges) at the time and in the manner provided therein; and (ii) all
other obligations of Debtor to BMD arising under or in connection with the
purchase or distribution of goods or services, any agreement between Debtor and
BMD executed and delivered in connection with the purchase or distribution of
goods or services, and all other documents and instruments evidencing, securing,
or executed or delivered in connection with the Credit Agreement and all other
agreements between Debtor and BMD.
The word "obligations" is used in its most comprehensive sense and includes any
and all advances, debts, charges, obligations and liabilities of Debtor
previously, now or hereafter made, incurred or created, with or without notice
to Guarantor, whether voluntary or involuntary, and however arising, whether
due or not due, absolute or contingent, liquidated or unliquidated, determined
or undetermined, and whether recovery upon such indebtedness may be or
hereafter become barred by any statute of limitations, and whether such
indebtedness may be or hereafter become otherwise unenforceable (collectively,
the Principal Amount together with all other obligations specified above, the
"Obligations").
Section b. Continuing Guaranty. The liability and obligation of Guarantor
hereunder shall survive and absolutely, unconditionally and completely continue
in full force and effect until
Page 1 of 4
<PAGE> 4
indefeasible payment and performance in full of the Obligations, notwithstanding
any termination of Debtor's liability by operation of law, and notwithstanding
that the Obligations or any part thereof is deemed to have been paid or
discharged by operation of law or by some act or agreement of BMD. For purposes
of this Guaranty, the Obligations shall be deemed to be paid only to the extent
that BMD actually receives immediately available funds. Guarantor shall remain
liable for any deficiency remaining if BMD elects to enforce the Credit
Agreement or foreclose any security agreement securing all or any part of the
Obligations, whether or not the liability of Debtor for such deficiency is
discharged pursuant to statute, judicial decision or otherwise; and agrees not
to assert the benefits of any statutory provision limiting the right of BMD to
recover a deficiency judgment, or to proceed otherwise against any person or
entity obligated for payment of the Obligations, after any foreclosure or sale
of any security for the Obligations.
Section c. Actions Not Required. Guarantor waives any and all right to cause a
marshalling of the assets of Debtor or any other action by any court or other
government body with respect thereto or to cause BMD to proceed against any
security for the Obligations or any other recourse which BMD may have with
respect thereto and further waives and agrees not to assert: (1) any right to
require BMD to pursue any other remedy available to BMD, or to pursue any remedy
in any particular order or manner; (ii) the benefit of any statute of
limitations affecting Guarantor's liability hereunder or the enforcement hereof;
(iii) demand, diligence, presentment for payment, protest and demand, and notice
of extension, dishonor, protest, demand, nonpayment and acceptance of this
Guaranty; (iv) notice of the existence, creation or incurring of new or
additional indebtedness of Debtor to BMD; (v) the benefits of any statutory
provision limiting the liability of a surety, including without limitation the
provisions of A.R.S. Sections 12-1641 et seq.; and (vi) any defense arising by
reason of any disability or other defense of Debtor or by reason of he cessation
from any cause whatsoever (other than payment in full) of the liability of
Debtor for the Obligations. Guarantor further acknowledges that time is of the
essence with respect to its obligations under this Guaranty.
Section d. Remedies. All remedies afforded to BMD by this Guaranty are separate
and cumulative remedies and Guarantor agrees that no one of such remedies,
whether or not exercised by BMD, shall be deemed to be in exclusion of any of
the other remedies available to BMD and shall in no way limit or prejudice any
other legal or equitable remedy which BMD may have hereunder and with respect to
the Obligations. Mere delay or failure to act shall not preclude the exercise or
enforcement of any rights and remedies available to BMD. The obligations of
Guarantor hereunder are separate and independent of the Obligations of Debtor
and of any other guarantor, and a separate action or actions may be brought and
prosecuted against Guarantor whether action is brought against any other
guarantor, or whether any other guarantor is joined in any action or actions.
Section e. Authorizations. Guarantor authorizes BMD, without notice or demand
and without affecting Guarantor's liability hereunder, from time to time, to:
(1) renew, modify, compromise, extend, accelerate or otherwise change the time
for payment of, or otherwise change the terms of the Obligations or any part
thereof; and (ii) apply any and all payments from Debtor, Guarantor or any other
guarantor, in such order or manner as BMD in its discretion may determine.
Section f. Costs and Expenses. Guarantor agrees to pay or reimburse BMD on
demand for all out-of-pocket expenses (including reasonable attorneys' fees)
incurred by BMD in enforcing this
Page 2 of 4
<PAGE> 5
Guaranty against Guarantor, or arising out of or in connection with any failure
of Guarantor to fully and timely perform the obligations of Guarantor
hereunder, whether or not a suit is filed.
Section h. Governing Law. This Guaranty shall be governed by and construed
according to the laws of the State of Arizona, irrespective of its choice of
law principles.
Section i. Consent to Jurisdiction. BMD may bring any action or proceeding to
enforce or arising out of this Guaranty in any court of competent jurisdiction.
ANY ACTION OR PROCEEDING BROUGHT BY GUARANTOR ARISING OUT OF THIS GUARANTY
SHALL BE BROUGHT SOLELY IN A COURT OF COMPETENT JURISDICTION LOCATED IN THE
COUNTY OF MARICOPA, STATE OF ARIZONA, OR IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA.
Section j. Waivers and Amendments. This Guaranty sets forth the entire
agreement of Guarantor and BMD with respect to the subject matter hereof and
supersedes all prior oral and written agreements and representations by BMD to
Guarantor. No modification or waiver of any provision of this Guaranty or any
right of BMD hereunder and no release of Guarantor from any obligation
hereunder shall be effective unless in a writing executed by an authorized
officer of BMD. A waiver so signed shall be effective only in the specific
instance and for the specific purpose given.
Section k. Representations. Guarantor represents and warrants to BMD as
follows: (i) Guarantor is and will continue to be fully informed about all
aspects of the financial condition and business affairs of Debtor that Guarantor
deems relevant to the obligations of Guarantor hereunder, and waives and fully
discharges BMD from any and all obligations to communicate to Guarantor any
information whatsoever regarding Debtor or Debtor's financial condition or
business affairs, including without limitation any notice of any default by
Debtor; (ii) Guarantor has all requisite power to enter into this Guaranty, to
execute, to carry out and perform its obligations under the terms of this
Guaranty; (iii) this Guaranty is a valid and binding legal obligation of
Guarantor, and is enforceable in accordance with its terms; and (iv) all action
on the part of Guarantor necessary for or appropriate to or in connection with
the execution, delivery and performance by Guarantor of this Guaranty has been
taken.
Section l. Reliance. If Debtor is a corporation, limited liability company or
partnership, it is not necessary for BMD to inquire into the powers of Debtor
or the officers, directors, partners or agents acting or purporting to act on
its behalf, and any of the Obligations made or created in reliance upon the
professed exercise of such powers shall be guaranteed hereunder.
Section m. Successors and Assigns. This Guaranty shall inure to the
benefit of BMD and its successors and assigns and shall be binding upon
Guarantor and its successors and assigns. BMD may assign this Guaranty in
whole or in part without notice.
Section n. Guarantor Acknowledgements. Guarantor acknowledges that (i) it has
been advised by counsel in the negotiation, execution and delivery of this
Guaranty, (ii) BMD has no fiduciary relationship to Guarantor, the relationship
being solely that of debtor and creditor, and (iii) no joint venture exists
between Guarantor and BMD.
Page 3 of 4
<PAGE> 6
IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the date
first above written.
UNDERSIGNED:
Signature: /s/ Thomas Smith
----------------------------
Name: Thomas Smith
Signature: /s/ Patrick Smith
----------------------------
Name: Patrick Smith
Page 4 of 4