EXHIBIT 10.5
GUARANTY AGREEMENT
GUARANTY AGREEMENT
For and in consideration of the sum of TEN AND NO/100 DOLLARS ($10.00)
and other good and valuable considerations in hand paid to the undersigned,
Flanders Corporation ("Guarantor"), the receipt and sufficiency of which
considerations are hereby acknowledged, and for the purpose of enabling
Precisionaire, Inc. ("Debtor"), to borrow certain funds from The American
National Bank of Texas ("Holder"), and recognizing that Guarantor has
benefitted or shall benefit, directly or indirectly, from the making of such
loan from Holder to Debtor, that such loan is in the best interests of
Guarantor, and that but for this Guaranty such loan would not be made by
Holder to Debtor and the funds advanced thereunder, Guarantor hereby
irrevocably, absolutely and unconditionally guarantees to Holder the prompt
payment at maturity whether by acceleration or otherwise, and the prompt
performance when due of the following (collectively, the "Obligations"): (i)
all indebtedness and obligations of Debtor to Holder, incurred by Debtor or
otherwise under the promissory note dated January 18, 1996 assumed by Debtor,
payable to the order of Holder in the original principal amount of Two Million
Sixty Nine Thousand Six Hundred Fifty Three Dollars ($2,069,653.00) and the
promissory note dated June 14, 1996, assumed by Debtor, payable to the order
of Holder in the original principal amount of One Hundred Thirty Three
Thousand Twenty Five dollars ($133,025) (the "Note"), including all principal,
interest, charges and attorney's fees which may be or become due or owing on
or under or in connection with the Note, and all renewals, rearrangements,
extensions, modifications and consolidations thereof and of any part thereof
any sums due to or to become due pursuant to any instrument which secures the
payment of the Note (whether or not said obligations are discharged by
operation of law); (ii) all of the covenants, agreements, and other
obligations undertaken by Debtor in all instruments securing the payment of
the Obligations; and (iii) all costs, attorneys' fees and expenses incurred or
expended by Holder in collecting any of the Obligations or due to any default
in the performance of the Obligations or in enforcing any right granted
hereunder. Guarantor's obligations hereunder shall further be subject to the
terms and conditions hereinafter set forth.
1. Corporate Representation. In order to induce the Bank to accept
this Guaranty Agreement, the Guarantor represents and warrants to the Bank
that:
(a) Benefit to Guarantor. The Guarantor's guaranty pursuant to
this Guaranty Agreement reasonably may be expected to benefit,
directly or indirectly, the Guarantor.
(b) Corporate Existence. The Guarantor is a corporation duly
organized, legally existing and in good standing under the laws of
the State of North Carolina, and is duly qualified as a foreign
corporation in all jurisdictions wherein the property owned or the
business transacted by it makes such qualification necessary.
(c) Corporate Power of Authorization. The Guarantor is duly
authorized and empowered to execute, deliver and perform this
Guaranty Agreement and all corporate action on the Guarantor's part
requisite for the due execution, delivery and performance of this
Guaranty Agreement has been duly and effectively taken.
(d) Binding Obligations. This Guaranty Agreement constitutes
valid and binding obligations of the Guarantor, enforceable in
accordance with its terms.
(e) No Legal Bar. This Guaranty Agreement will not violate any
provisions of the Guarantor's articles or certificate of
incorporation, bylaws, or any contract, agreement, law, regulation,
order, injunction, judgment, decree or writ to which the Guarantor
is subject.
(f) No Consent. The Guarantor's execution, delivery and
performance of this Guaranty Agreement does not require the consent
or approval of any other person, including without limitation any
regulatory authority or governmental body of the United States or
any State thereof or any political subdivision of the United States
or any state thereof.
(g) Authorization. The undersigned, signing for and on behalf of
the Guarantor is duly authorized and empowered to execute this
Guaranty Agreement for and on behalf of the Guarantor.
2. Payment. In each event whenever any of the Obligations shall become
due and remain unpaid (howsoever the maturity thereof may have occurred),
Guarantor will, on demand, pay the amount due thereon to Holder. All amounts
becoming payable by Guarantor to Holder under this Guaranty shall be payable
at Holder's offices in Terrell, Xxxxxxx County, Texas or such other place as
Holder may from time to time designate. The payment by Guarantor of any
amount pursuant to this Guaranty shall not in anywise entitle Guarantor to any
right, title or interest (whether by way of subrogation or otherwise) in and
to any of the obligations or any proceeds thereof, or any security or
collateral therefor, unless and until the full amount owing to Holder on the
Obligations has been fully paid, but when the same has been fully paid,
Guarantor shall be subrogated as to any payments made by it to the rights of
Holder as against debtor and/or any endorsers, sureties or other guarantors of
the Obligations.
3. Waiver of Notice. Guarantor specifically waives any notices of
acceptance of this Guaranty by Holder and of the creation, advancement,
existence, extension, renewal, modification, consolidation, or rearrangement
from time to time of the obligations, or increase from time to time in the
principal amount thereof, or increase or reduction from time to time of the
rate of interest thereon, or any indulgence from time to time with respect to
the Obligations, or any part thereof. Guarantor additionally waives, demand,
protest, presentment and notice of demand, protest, presentment and dishonor
with respect to the Obligations, notice of intent to accelerate, notice of
acceleration and notice of disposition of collateral and waives notice of the
amount of the Obligations outstanding at any time, and agrees that the
maturity of the Obligations, or any part thereof, may be accelerated,
extended, modified, amended or renewed from time to time, or any other
indulgence may be granted with respect thereto by Holder at its will or as may
be agreed by Debtor without notice to or further consent by Guarantor, at any
time or times. The last preceding sentence shall not be construed to affect
or impair any of Debtor's defenses hereunder.
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4. Rights of Holder.
(a) Guarantor agrees that no release of Debtor, or discharge of
Debtor or any of Debtor's Obligations by operation of law, or release or
discharge by operation of law of any co-guarantor, or of any other person
primarily or secondarily liable on the Obligations, or any part thereof shall
in any manner impair, diminish or affect the liability of Guarantor or the
rights of Holder hereunder.
(b) Guarantor specifically agrees that it shall not be necessary or
required, and that Guarantor shall not be entitled to require, that Holder
mitigate damages, or file suit or proceed to obtain or assert a claim for
personal judgment against Debtor for the Obligations, or make any effort at
collection of the Obligations from Debtor, or foreclose against or seek to
realize upon any security or collateral now or hereafter existing for the
Obligations, or file suit or proceed to obtain or assert a claim for personal
judgment against any other party (whether maker, guarantor, endorser or
surety) liable for the Obligations, or make any effort at collection of the
Obligations from any such other party, or exercise or assert any other right
or remedy to which Holder is or may be entitled in connection with the
Obligations or any security or collateral or other guaranty therefor, or
assert or file any claim against the assets or estate of Debtor or any other
Guarantor of other person liable for the Obligations, or any part thereof,
before or as a condition of enforcing the liability of Guarantor under this
Guaranty or requiring payment of the Obligations by Guarantor hereunder, or at
any time thereafter.
(c) If any or all of the Obligations are now or hereafter secured in
whole or in part, Guarantor agrees that Holder may, from time to time, at its
discretion, and with or without valuable consideration, allow substitution,
withdrawal, release, surrender, exchange, subordination, deterioration, waste,
loss or other impairment of all or any part of such security or collateral,
without notice to or consent by Guarantor, and without in anywise impairing,
diminishing or releasing the liability of Guarantor hereunder.
(d) No delay or omission or lack of diligence or care in exercising
any right or power with respect to the Obligations or any security or
collateral therefor (including without limitation the failure of Holder to
perfect a security interest therein) or guaranty thereof or under this
Guaranty shall in any manner impair, diminish or affect the liability of
Guarantor or the rights of Holder hereunder. Guarantor expressly waives any
right to the benefit of or to require or control application of any security
or collateral or the proceeds of any security or collateral now existing or
hereafter obtained by Holder as security for the obligations, or any part
thereof, and agrees that Holder shall have no duty insofar as Guarantor is
concerned to apply upon any of the Obligations any monies, payments or other
property at any time received by or paid to or in the possession of Holder,
except as provided in the Note.
(e) Guarantor's liability hereunder shall in no manner be affected,
reduced, impaired or released by reason of any renewal, extension,
modification, consolidation, or rearrangement of or any other indulgence,
forbearance or compromise with respect to the Obligations, or any part
thereof; or increase in the principal amount thereof; or increase or reduction
of the rate of interest thereon.
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(f) Guarantor waives all defenses given to sureties or guarantors at
law or in equity other than actual payment of the indebtedness, and
performance of the actions, constituting the Obligations.
(g) Guarantor agrees, to the full extent he may legally do so, that
suit may be brought against Guarantor with or without making Debtor a party to
such suit (as Holder may elect).
5. Change in Composition. Should the status, composition, structure or
name of Debtor change, including, but not limited to by reason of a merger,
dissolution, consolidation or reorganization, this guaranty shall continue and
also cover the indebtedness and Obligations of Debtor under the new status,
composition, structure or name according to the terms hereof. If Debtor is a
general or limited partnership, no termination of said partnership, nor
withdrawal therefrom by, or termination of any ownership interest therein
owned by, any general or limited partner of such partnership shall alter,
limit or modify Guarantor's Obligations set forth in this Guaranty or
otherwise affect this Guaranty in any manner whatsoever, all of which
obligations of Guarantor shall remain in effect as herein written.
6. Liability in the Event of Preference. In the event any payment of
Debtor to Holder is held to constitute a preference under the bankruptcy laws,
such payment by Debtor to Holder shall not constitute a release of Guarantor
from any liability hereunder, but Guarantor agrees to pay such amount to
Holder upon demand and this Guaranty shall continue to be effective or shall
be reinstated, as the case may be, to the extent of any such payment or
payments.
7. Joint and Several Liability. Unless the context clearly indicates
otherwise, AGuarantor@ shall mean the guarantor hereunder, or any of them, if
more than one. The obligations of said Guarantors hereunder if more than one,
shall be joint and several.
Suit may be brought against said Guarantors, jointly and severally, and
against any one or more of them, or less than all, without impairing the
rights of Holder against the others of said Guarantors; and Holder may
compromise with any one of said Guarantors for such sums or sum as it may see
fit and release such of said Guarantors from all further liability to Holder
for such indebtedness without impairing the right of Holder to demand and
collect the balance of such indebtedness from others of said Guarantors not so
released; but it is agreed among said guarantors themselves, however, that
such compromising and release shall not impair the rights and obligations of
said guarantors as among themselves.
8. Rights of Subrogation and Contribution. Notwithstanding anything
contained in this Guaranty to the apparent contrary, Guarantor does not herein
waive or release (whether expressly or impliedly) any rights of subrogation
that Guarantor may have against Debtor (except as same are expressly
subordinated in Paragraph 1, above), rights of contribution that Guarantor may
have against any other guarantor of, or other person secondarily liable for
the payment or performance of, any of the obligations, or rights of
reimbursement that Guarantor may have as against Debtor (except as same may be
limited by the provisions of Paragraph 1, above).
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9. Assignment. This Guaranty is intended for and shall inure to the
benefit of Holder and each and every other person who shall from time to time
be the owner or Holder of any of the Obligations, and each and every reference
herein to AHolder@ shall also include and refer to each and every successor or
assignee of Holder at any time holding or owning any part of or interest in
any part of the obligations. This Guaranty shall be transferable by Holder,
it being understood and stipulated that upon the assignment or transfer by
Holder of any of the Obligations (or any part thereof or interest therein thus
transferred or assigned by Holder), such transferee shall also, unless
provided otherwise by Holder in its assignment, have and may exercise all the
rights granted to Holder under this Guaranty to the extent of the part of or
interest in the Obligations thus assigned or transferred to said person.
Guarantor expressly waives notice of transfer or assignment of the
Obligations, or any part thereof, or of the rights of Holder hereunder.
10. Notice. Any notices, requests or consents hereunder shall be deemed
given, and any instrument delivered, two days after they have been mailed by
first class mail, postage prepaid, or twelve hours after such notice has been
sent by telecopier or straight telegram, telegraphic charges prepaid, or upon
receipt if delivered personally, as follows:
To Holder: The American National Bank of Texas
000 Xxxx Xxxxx Xxx.
X.X. Xxx 00
Xxxxxxx, XX 00000
To Guarantor: Flanders Corporation
000 Xxxxxxxx Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Chief Financial Officer
Telecopier: (000) 000-0000
With Simultaneous copy to:
Xxxxx & Xxxxxx
000 X. Xxxxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
except that any of the foregoing may from time to time by written notice to
the others designate another address which shall thereupon become its
effective address for the purposes of this Section.
11. Rights of Holder Cumulative. The rights of Holder hereunder are
cumulative and shall not be exhausted by its exercise of any of its rights
hereunder, under any prior guaranty or otherwise against Guarantor or by any
number of successive actions until and unless all indebtedness constituting
the Obligations has been paid, all other obligations have been performed. The
existence of this Guaranty shall not in any way diminish or discharge the
rights of Holder under any prior
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guaranty agreement executed by Guarantor.
12. Solvency of Guarantor. Guarantor hereby represents and warrants to
Holder that as of the date hereof, and after giving effect to this Guaranty
and the obligation evidenced hereby, Guarantor is, and will be, solvent, and
has and will have property and assets which, fairly valued, exceed its
obligations, liabilities and debts, and has and will have property and assets
in the State of Texas sufficient to satisfy and repay its obligations,
liabilities and debts.
13. Governing Laws; County of Performance and Jurisdiction. This Guaranty
shall be deemed to have been made under and shall be governed by the laws of
the State of Texas in all respects. This Guaranty is performable solely in
Xxxxxxx County, Texas.
14. Entire Agreement. Guarantor acknowledges and agrees that this
Guaranty accurately represents and contains the entire agreement between
Guarantor and Holder with respect to the subject matter hereof, that Guarantor
is not relying, in the execution of this Guaranty, on any representations
(whether written or oral) made by or on behalf of Holder except as expressly
set forth in this Guaranty, and that any and all prior statements and/or
representations made by or on behalf of Holder to Guarantor (whether written
or oral) in connection with the subject matter hereof are merged herein. This
Guaranty shall not be waived, altered, modified or amended as to any of its
terms or provisions except in writing duly signed by Holder and Guarantor.
15. Successors or Assigns. This Guaranty shall bind the heirs, personal
representatives, successors, and assigns of Guarantor and shall inure to the
benefit of all transferees, credit participants, assignees, and/or endorsees
of Holder, notwithstanding that some or all of the monies owed by Guarantor
pursuant to this Guaranty may be actually advanced after any bankruptcy,
receivership, reorganization or death of Guarantor.
16. Interpretation. Headings are provided as a matter of convenience only
and are not to be considered in interpreting the meaning of any provision
hereunder. The use of any gender herein shall include the other gender.
17. Severability. A determination that any provision of this Guaranty is
unenforceable or invalid shall not affect the enforceability or validity of
any other provision.
18. Advice of Counsel. Guarantor acknowledges that Guarantor has had the
benefit of the advice of legal counsel of its own choice in connection with
the preparation and negotiation of this Guaranty, and has been afforded an
opportunity to review this Guaranty with such legal counsel, and that
Guarantor fully understands the implications and ramifications of the
agreements herein made by Guarantor.
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EXECUTED as of the 12th day of November, 1996.
FLANDERS CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: President
ADDRESS:
000 Xxxxxxxx Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
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