Exhibit 10.12
LETTER OF CREDIT AGREEMENT
Dated as of April 1, 1998
By and Between
FLANDERS CORPORATION
AND
SUNTRUST BANK, TAMPA BAY
_______________________________
relating to
Xxxxxxxx County Industrial Facilities and
Pollution Control Financing Authority
Industrial Development Revenue Bonds
(Flanders Corporation Project),
Series 1998
_______________________________
TABLE OF CONTENTS
(Not Part of Agreement)
Page
1. Definitions 1
1A. General Definitions 1
1B. Other Accounting Definitions 3
2. Issuance of Letter of Credit; Fees 3
2A. Amount and Terms of Letter of Credit 3
2B. Letter of Credit Fee 3
2C. Drawing Fees 4
2D. Transfer Fees 4
2E. Additional Payments 4
2F. Capital Adequacy 4
2G. Interest on Overdue Payments 5
3. Agreement to Repay Letter of Credit Drawings; Pledged Bonds 5
3A. Reimbursement 5
3B. Pledge of Bonds 5
3C. Reinstatement of Letter of Credit 8
3D. Credit for Amount Paid on Bonds 8
3E. Computation of Interest; Place of Payment 8
4. Conditions Precedent to Issuance of the Letter of Credit 9
4A. Delivery of the Bonds and Operative Documents 9
4B. No Default 9
4C. Representations and Warranties 9
4D. Opinions of Counsel 9
4E. Certificates of Compliance 9
4F. Opinion of Bond Counsel 9
4G Other Documents 10
4H. Documentation and Proceedings 10
5. Character of Obligations Hereunder 10
6. Representations and Warranties 10
7. Affirmative Covenants 12
8. Negative Covenants 13
9. Events of Xxxxxxx 00
00. Nature of Bank's Duties; Indemnification 16
11. Miscellaneous 17
11A. Amendments 17
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11B. Survival of Representations and Warranties 17
11C. Expenses 17
11D. Set-off 18
11E. Notices 18
11F. Satisfaction Requirement 18
11G. Binding Effect; Assignment 19
11H. Venue; Personal Jurisdiction 19
11I. Governing Law 19
11J. Counterparts 19
11K. Incorporation of Preambles and Annexes 19
11L. WAIVER OF TRIAL BY JURY 19
Annex I Irrevocable Letter of Credit
Annex II Pending Litigation
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LETTER OF CREDIT AGREEMENT
THIS LETTER OF CREDIT AGREEMENT (the "Agreement"), dated as of April 1, 1998, by
and between FLANDERS CORPORATION, a North Carolina corporation (the "Company")
and SUNTRUST BANK, TAMPA BAY, a state banking corporation (the "Bank");
W I T N E S S E T H:
WHEREAS, the Company has requested that the Xxxxxxxx County Industrial
Facilities and Pollution Control Financing Authority (the "Issuer") issue its
Industrial Development Revenue Bonds (Flanders Corporation Project), Series 1998
(the "Bonds"), which shall not in the aggregate be outstanding in a principal
amount in excess of $4,500,000 pursuant to an Indenture of Trust, dated as of
April 1, 1998 (the "Indenture"), by and between the Issuer and First-Citizens
Bank & Trust Company, as trustee (the "Trustee"), and to lend the proceeds of
the sale of the Bonds to the Company in order to enable the Company to finance
the acquisition, rehabilitation and equipping of manufacturing assets located in
Smithfield, North Carolina; and
WHEREAS, as security for the payment of the Bonds, the Company has requested
that the Bank issue its irrevocable direct pay letter of credit in the form of
Annex I attached hereto (the "Letter of Credit"); and
WHEREAS, it is a condition of the obligation of the Bank to execute and deliver
the Letter of Credit that this Agreement shall have been executed and delivered
by the Company;
NOW, THEREFORE, in consideration of the mutual promises contained herein and
other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Definitions.
1A. General Definitions. For the purpose of this Agreement, in addition to terms
defined elsewhere herein, including in the preamble hereto (capitalized terms
not otherwise defined below shall have the meanings provided in the Line of
Credit Agreement, as hereinafter defined, or in the Indenture) the following
terms shall have the following meanings:
"A Drawing" shall have the meaning specified in the Letters of Credit which
shall be a drawing in respect of the payment of the portion of the purchase
price of Bonds corresponding to principal of the respective series of Bonds.
"B Drawing" shall have the meaning specified in the Letter of Credit which shall
be a drawing in respect of the payment of principal of the Bonds.
"Business Day" shall mean a day on which commercial banks located in St.
Petersburg, Florida, Raleigh, North Carolina and Atlanta, Georgia are required
or permitted by law or executive order to be open for the purpose of conducting
a commercial banking business.
"C Drawing" shall have the meaning specified in the Letters of Credit which
shall be a drawing in respect of the payment of interest, or the portion of the
purchase price corresponding to interest, on the Bonds.
"Date of Issuance" shall mean the date of issuance and delivery of the Letter of
Credit.
"Default" shall mean any event which with notice or lapse of time, or both,
would become an Event of Default.
"Event of Default" shall have the meaning specified in Paragraph 9.
"Hazardous Materials" shall mean any hazardous substance or any pollutant or
contaminant, toxic or dangerous waste, substance or material, as defined in or
regulated by any applicable law, regulation or governmental authority from time
to time, including, without limitation, friable asbestos and polychlorinated
biphenyls.
"Hazardous Materials Laws" shall mean, collectively, all federal, state and
local laws, ordinances or regulations, now or hereafter in effect, relating to
environmental conditions or Hazardous Materials, including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. 9601, et seq., the Resource Conservation and
Recovery Act, 42 U.S.C. 6901, et seq., (the "RCRA"), the Clean Air Act, 42
U.S.C. 7401, et seq. (the "CAA"), the Toxic Substances Control Act, 15 U.S.C.
2601 through 2929 (the "TSCA"), and all similar federal, state and local laws
and ordinances, together with all regulations now or hereafter adopted,
published or promulgated pursuant thereto.
"Interest Component" shall mean that portion of the Stated Amount of the Letter
of Credit equal to the sum of 50 days' interest on the Bonds, computed at the
rate of 13% per annum, notwithstanding the actual rate of interest borne by the
Bonds.
"Line of Credit Agreement shall mean that certain Credit Agreement dated as of
November 10, 1997, between the Borrower and the Bank, as a Lender and
Administrative Lender, as the same may be
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supplemented and amended, and any successor document thereto or replacement
document thereof.
"Operative Documents" shall have the meaning specified in Paragraph 4A hereof.
"Person" or "person" shall mean any individual, corporation, company,
partnership, unincorporated association, trust, joint venture, estate or other
juridical entity or any governmental body or other entity of any kind.
"Principal Component" shall mean that portion of the Stated Amount of the Letter
of Credit equal to the principal amount outstanding of the Bonds secured by the
Letter of Credit.
"Project" shall mean the Project Site and the approximately 400,000-square foot
air conditioning filter manufacturing facility thereon.
"Project Site" shall mean the site of the Project located at 0000 Xxxxxx Xxxx,
Xxxxxxxxxx, Xxxxx Xxxxxxxx.
"Remarketing Agreement" shall mean the Remarketing Agreement dated as of the
date hereof between the Company and the Remarketing Agent, as defined in the
Indenture.
"Stated Amount" shall have the meaning specified in the Letter of Credit.
"Termination Date" shall mean the date the Letter of Credit expires in
accordance with its terms.
1B. Other Accounting Definitions. All accounting terms not specifically defined
in Paragraph 1A or in the Line of Credit Agreement shall have the meanings
normally given them by Generally Accepted Accounting Principles.
2. Issuance of Letter of Credit; Fees.
2A. Amount and Terms of Letter of Credit. The Bank agrees, on the terms and
subject to the conditions hereinafter set forth, to issue (i) the Letter of
Credit to the Trustee with a Principal Component equal to $4,500,000 initially
and with an initial Interest Component of $81,250. The Letter of Credit shall
expire on October 16, 1999, unless otherwise terminated or extended. Should the
Letter of Credit be extended, the expiration date hereof would be at least two
Business Days or five calendar days after an interest payment date on the Bonds.
2B. Letter of Credit Fee. The Company hereby agrees to pay to the Bank a
non-refundable letter of credit fee computed at the percentage rate equal to the
Applicable Margin multiplied times
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the Stated Amount of the Letter of Credit (as the same may be reduced from time
to time but including, in any event, the principal amount of any Pledged Bonds)
on the date of payment of such letter of credit fee, which letter of credit fee
shall be payable quarterly in advance in immediately available funds, with the
first payment due on the Date of Issuance, and additional payments due on the
first day of each July, October, January and April thereafter during the term of
the Letter of Credit.
2C. Drawing Fees. The Company hereby agrees to pay to the Bank, upon each
drawing for principal, interest or purchase price by the Trustee under the
Letter of Credit, the sum of $100.
2D. Transfer Fees. The Company agrees to pay to the Bank, upon each transfer of
the Letter of Credit in accordance with its terms, the sum of $1,500 or such
other amount as shall at the time of such transfer be the charge which the Bank
is making for transfers of similar letters of credit.
2E. Additional Payments. If any change in any law of regulation or in the
interpretation thereof by any court or administrative or governmental authority
charged with the administration thereof, or any change in Generally Accepted
Accounting Principles which shall be mandated and not optionally elected by the
Bank, shall either (i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against letters of credit issued by the Bank or
(ii) impose on the Bank any other condition relating, directly or indirectly, to
this Agreement or the Letter of Credit, and the result of any event referred to
in the preceding clause (i) or (ii) shall be to increase the cost to the Bank of
issuing or maintaining the Letter of Credit, then, upon demand by the Bank, the
Company hereby agrees to pay promptly to the Bank, from time to time as
specified by the Bank, such additional amounts as shall be sufficient to
compensate the Bank for such increased cost. A certificate of the Bank claiming
compensation under this subsection and setting forth the additional amount or
amounts to be paid to it hereunder and setting forth the basis upon which such
amounts were calculated shall be conclusive absent manifest error. In
determining any such amount, the Bank may use any reasonable averaging and
attribution methods.
2F. Capital Adequacy. If, after the date of this Agreement, the Bank shall have
determined that the adoption or implementation of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has the effect of reducing the
rate of return on the Bank's capital, on this credit facility or otherwise, as a
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consequence of its obligations hereunder and under the Letter of Credit, or
either of them, to a level below that which the Bank could have achieved but for
such adoption, change or compliance (taking into consideration the Bank's
policies with respect to capital adequacy) by an amount deemed by the Bank to be
material, then from time to time, promptly upon demand by the Bank, the Company
hereby agrees to pay the Bank such additional amount or amounts as will
compensate the Bank for such reduction A certificate of the Bank claiming
compensation under this subsection and setting forth the additional amount or
amounts to be paid to it hereunder and setting forth the basis upon which such
amounts were calculated shall be conclusive absent manifest error. In
determining any such amount, the Bank may use any reasonable averaging and
attribution methods.
2G. Interest on Overdue Payments. The Company hereby agrees to pay to the Bank
interest on any and all amounts required to be paid as provided in this Section
2 from and after the due date thereof until payment in full, payable on demand,
at the Prime Rate plus two percent (2%) per annum, but in no event in excess of
the highest lawful rate.
3. Agreement to Repay Letter of Credit Drawings; Pledged Bonds.
3A. Reimbursement. Each A Drawing, B Drawing and C Drawing on the Letter of
Credit the amount of which is not reimbursed by or on behalf of the Borrower to
the Bank prior to the close of business on the date of such drawing shall be
deemed a Base Advance under the Line of Credit Agreement advanced on the date of
such drawing and shall be payable and bear interest in accordance with the terms
of the Line of Credit Agreement. To the extent that the notices to the Bank
required by Section 2.2 of the Line of Credit Agreement can not be timely given
in connection with any such A Drawing or C Drawing related to payment of the
purchase price of Bonds, such notices are hereby waived by the Bank. Any Note
required by the terms of the Line of Credit Agreement in connection with any
Base Advance made pursuant to this paragraph shall be executed and delivered by
the Borrower as soon as possible, but shall be dated and shall be effective as
of the date of the drawing on the Letter of Credit. To the extent that the terms
of this paragraph are inconsistent with the terms of the Line of Credit
Agreement, the parties hereto agree that the Line of Credit Agreement shall be
deemed to be amended to conform hereto.
3B. Pledge of Bonds. (i) As security for the payment of the obligations of the
Company pursuant to Paragraph 3A above, the Company hereby pledges to the Bank,
and grants to the Bank a security interest in, its right, title and interest in
and to Bonds delivered to the Bank in connection with A Drawings (herein called
"Pledged Bonds"). Any amounts from time to time owing to the bank pursuant to
paragraph 3A above may be paid (a) at any time by the
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Company in accordance with the terms of the Line of Credit Agreement on one
Business Day's notice stating the amount to be paid (which shall be $5,000 or an
integral multiple thereof) and (b) at any time on behalf of the Company on one
Business Day's notice from the Company directing the Bank to deliver (or to
cause the Trustee to deliver) a specified principal amount of Pledged Bonds held
by or on behalf of the Bank for sale pursuant to the Indenture. Upon payment to
the Bank of the amount to be paid pursuant to clause (a) or (b) above, together
with accrued interest as provided in Paragraph 3A, to the date of such payment
on the amount to be paid, the outstanding obligations of the Company under
Paragraph 3A above shall be reduced by the amount of such payment, interest
shall cease to accrued on the amount paid and the Bank shall release (or shall
be deemed to have released) from the pledge and security interest created hereby
a principal amount of Pledged Bonds equal to the amount of such payment,
provided that prior to such release from the pledge and security interest
created hereby of Bonds delivered to or for the benefit of the Bank in
connection with an A Drawing, the Company shall have paid to the Bank the amount
owing in respect of the C Drawing, if any, made in conjunction with such A
Drawing. Such Bonds shall be delivered to the Company on payment to the Bank as
aforesaid or to the Trustee for sale pursuant to the Indenture. Notwithstanding
the foregoing, no payment of amounts owing to the Bank pursuant to Paragraph 3A
may be made, and no Pledged Bonds shall be released, during the period
commencing two Business Days prior to an Interest Payment Date with respect to
the Bonds and ending at the close of business on such Interest Payment Date.
(ii) The Company hereby pledges, assigns, hypothecates, transfers, and delivers
to the Bank all its right, title and interest to, and hereby grants to the Bank
a first lien on, and security interest in, all right, title and interest of the
Company in and to (a) all Pledged Bonds; (b) all income, earnings, profits,
interest, premium or other payments in whatever form in respect of the Pledged
Bonds; and (c) all proceeds (cash and non-cash) arising out of the sale,
exchange, collection, enforcement or other disposition of all or any portion of
the Pledged Bonds (collectively, the "Pledged Bond Collateral"). The Pledged
Bond Collateral shall serve as security for the payment and performance when due
of the obligations of the Company hereunder. The Company shall deliver, or cause
to be delivered, the Pledged Bonds to the Bank or to an agent designated by the
Bank immediately upon receipt thereof or, in the case of Pledged Bonds held
under a book-entry system administered by the Securities Depository, the Company
shall cause the Pledged Bonds to be reflect on the records of the Securities
Depository as a position held by the Bank (or an agent accepted to the Bank) as
a Participant and the Bank (or its agent) shall reflect on its records that the
Pledged Bonds are owned beneficially by the Company subject to the pledge in
favor of the Bank.
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(iii) If any Event of Default shall have occurred and be continuing, the Bank,
without demand of performance or other demand, advertisement or notice of any
kind (except the notice specified below of time and place of public or private
sale) to or upon the Company or any other person (all and each of which demands,
advertisements and/or notices are hereby expressly waived) may forthwith
collect, receive, appropriate and realize upon the Pledged Bond Collateral, or
any part thereof, and/or may forthwith sell, assign, give option or options to
purchase, contract to sell or otherwise dispose of and deliver said Pledged Bond
Collateral, or any part thereof, in one or more parcels at public or private
sale or sales, at any exchange, broker's board or at any of the Bank's offices
or elsewhere 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, with the right to the Bank upon any such sale or
sales, public or private, to purchase the whole or any part of said Pledged Bond
Collateral so sold, free of any right or equity of redemption in the Company,
which right or equity is hereby expressly waived or released. The Bank shall
apply the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of every
kind incurred therein or incidental to the care, safekeeping or otherwise o any
and all of the Pledged Bond Collateral or in any way relating to the rights of
the Bank hereunder, including reasonable attorneys' fees and legal expenses, to
the payment in whole or in part of the obligations of the Company hereunder in
such order as the Bank may elect, the Company remaining liable for any
deficiency remaining unpaid after such application, and only after so applying
such net proceeds and after the payment by the Bank of any other amount required
by any provision of law, including, without limitation, Section 9-504(1)(c) of
the Uniform Commercial Code, need the Bank account for the surplus, if any, to
the Company. The Company agrees that the Bank need not give more than ten (10)
days written notice of the time and place of any public sale or of the time
after which a private sale or other intended disposition is to take place and
that such notice is reasonable notification of such matters. No notification
need be given to the Company if it has signed after Default a statement
renouncing or modifying any right to notification of sale or other intended
disposition. In addition to the rights and remedies granted to the Bank in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to any of the obligations of the Company hereunder, the Bank shall have
all the rights and remedies of a secured party under the Uniform Commercial Code
in effect in the State of Florida at that time.
(iv) The Company covenants that the pledge, assignment and delivery of the
Pledged Bond Collateral hereunder will create a valid, perfect, first priority
security interest in all right, title and interest of the Company in or to such
Pledged Bond
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Collateral, and the proceeds thereof, subject to no prior pledge, lien,
mortgage, hypothecation, security interest, charge, option or encumbrance or to
any agreement purporting to grant to any third party a security interest in the
property or assets of the Company which would include the Pledged Bond
Collateral. The Company covenants and agrees that it will defend the Bank's
right, title and security interest in and to the Pledged Bond Collateral and the
proceeds thereof against the claims and demands of all persons whomsoever.
(v) Pledged Bonds shall be released from the security interest created hereunder
upon satisfaction of the obligations of the Company with respect to such Pledged
Bonds as provided in Paragraph 3 hereof.
3C. Reinstatement of Letter of Credit. After any "C Drawing", the obligation of
the Bank to honor demands for payment under the Letter of Credit with respect to
payment of interest, or the portion of Purchase Price of the Bonds corresponding
to interest, on the Bonds will automatically be reinstated up to the total
amount specified therein, upon the terms and conditions set forth in the Letter
of Credit. Upon release by or on behalf of the Bank pursuant to Paragraph 3B
hereof of any Pledged Bonds, the obligation of the Bank to honor demands for
payment under the Letter of Credit with respect to payment of the principal, or
the portion of Purchase Price of the Bonds corresponding to principal, of such
bonds will be automatically reinstated up to the total amount specified therein
upon the terms and conditions set forth in the Letter of Credit.
3D. Credit for Amount Paid on Bonds. The Company shall (i) receive a credit
against the obligation to pay interest pursuant to Paragraph 3A above to the
extent of any amounts actually paid by or on behalf of the Company or the Issuer
to the Bank in respect of the interest due on any Pledged Bonds and (ii) receive
a credit against its reimbursement obligation pursuant to paragraph 3A above to
the extent of any amounts actually paid by or on behalf of the Company or the
Issuer to the Bank in respect of the principal due on any Pledged Bonds.
3E. Computation of Interest; Place of Payment. Interest payable hereunder shall
be computed, and all payments by the Company to the Bank hereunder shall be made
in awful currency of the United States and in immediately available funds at the
Bank's office, all as provided in the Line of Credit Agreement. In the event the
date specified for any payment hereunder is not a Business Day (as defined in
the Line of Credit Agreement), such payment shall be made on the next following
Business Day (as defined in the Line of Credit Agreement) and interest shall be
paid at the rate provided for herein on any such payment to the Business Day (as
defined in the Line of Credit Agreement) on which such payment is made.
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4. Conditions Precedent to Issuance of the Letter of Credit. This Agreement
shall become effective, and the Bank will issue the Letter of Credit, on the
date the Bonds are issued and sold to the purchaser(s) thereof, provided that
all of the following conditions are met:
4A. Delivery of the Bonds and Operative Documents. This Agreement, the Loan
Agreement, the Indenture, the Pledge Agreement, the Remarketing Agreement
(collectively, the "Operative Documents") and such other documents as the Bank
shall reasonable require, and the Bonds shall have been executed and delivered
by the parties thereto, each in form and substance satisfactory to the Bank. The
Bank shall have received an executed or conformed copy of each of the Operative
Documents.
4B. On the Date of Issuance and after giving effect to the issuance of the
Letter of Credit, there shall exist no Default or Event of Default.
4C. Representations and Warranties. On the Date of Issuance and after giving
effect to the issuance of the Letter of Credit, all representations and
warranties of the Company contained herein, in the other Operative Documents, in
the Line of Credit Agreement or otherwise made in writing in connection herewith
shall be true and correct with the same force and effect as though such
representations and warranties had been made on and as of such date.
4D. Opinions of Counsel. There shall have been delivered to the Bank opinions of
Xxxxx & Xxxxxx, in their capacity as counsel to the Company, dated the Date of
Issuance, which opinions shall be in form and substance satisfactory to the Bank
and shall cover such matters as the Bank may reasonable request.
4E. Certificates of Compliance. There shall have been delivered to the Bank
certificates of duly authorized officers of the Company, dated the Date of
Issuance, to the effect that all of the conditions specified in Paragraphs 4B
and 4C have been satisfied as of such date and covering such additional matters
as the Bank may reasonably request.
4F. Opinion of Bond Counsel. There shall have been delivered to the Bank an
opinion (or a signed copy of such opinion together with a satisfactory reliance
letter) of Hunton & Xxxxxxxx in its capacity as Bond Counsel, dated the Date of
Issuance and in form and substance satisfactory to the Bank, to the effect that
the Bonds are legal, valid and binding obligations of the Issuer and that as of
the Date of Issuance interest on the Bonds issued on such date is not includable
in gross income for federal income tax purposes under existing statutes,
regulations and rulings, and covering such other matters as the Bank may
reasonably request.
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4G. Other Documents. There shall have been delivered to the Bank such other
information, documents, instruments, approvals (and if requested by the Bank,
certified duplicates of executed copies thereof) or opinions as the Bank or its
counsel may reasonably request.
4H. Documentation and Proceedings. All corporate and legal proceedings and all
instruments in connection with the transactions contemplated by this Agreement
and the other Operative Documents shall be satisfactory in form and substance to
the Bank and its counsel and the Bank shall have received all information and
copies of all documents, including records of corporate proceedings,
governmental approvals and incumbency certificates which it may have reasonably
requested in connection with the transactions contemplated by this Agreement and
the other Operative Documents, such documents where appropriate to be certified
by proper officers.
5. Character of Obligations Hereunder. The obligations of the Company under this
Agreement are primary, absolute, independent, irrevocable and unconditional. The
Company understands and agrees that no payment by it under any other agreement
(whether voluntary or involuntary or pursuant to court order or otherwise) shall
constitute a defense to the several obligations hereunder except to the extent
that the Bank has been indefeasibly paid in full.
6. Representations and Warranties. All representations and warranties of the
Company made in Section 4 of the Line of Credit Agreement are deemed hereby
repeated as of the date hereof and incorporated herein by reference to the same
extent as if fully repeated herein. Any amendment or modification of Section 4
of the Line of Credit Agreement shall be deemed an amendment or modification
hereof. All representations and warranties hereby incorporated shall continue
herein for the entire term of this Agreement despite the termination or
expiration of the Line of Credit Agreement.
In addition, the Company hereby represents and warrants as follows:
(a) Authorization; no Conflict.
The execution, delivery and performance by the Company of this Agreement and
each other Operative Document and the consummation of the transactions
contemplated hereby and thereby are within the Company's corporate powers, have
been duly authorized by all necessary corporate action, and do not and will not
(i) conflict with, contravene or violate any provision of any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
presently in effect having applicability to the Company or of the Articles of
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Incorporation or bylaws of the Company, including all amendments thereto, which
violation could have a material adverse effect on the Company, including,
without limitation, on the financial condition thereof, (ii) result in a breach
of or constitute a default under any material indenture or loan or credit
agreement or any other agreement, lease or instrument to which the Company is a
party or by which it or its properties may be bound or affected, or (iii) except
as provided in or contemplated by the Operative Documents, result in or require
the creation of any material lien, security interest or other charge or
encumbrance upon or with respect to any of the Company's properties.
(b) Approvals. No consent of any person and no authorization or approval or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the valid or due execution, delivery and
performance by the Company of any Operative Document, other than such consents,
authorizations, approvals or actions as have already been obtained or which
cannot be obtained on the date hereof and are not required to be obtained on the
date hereof. The Company is in compliance with all of the terms and conditions
of each such consent, authorization, approval or action already obtained, has
applied for each such consent, authorization, approval or action that may be
applied for at this time and has met or has made provisions adequate for meeting
all requirements for each such consent, authorization, approval or action not
yet obtained.
(c) Binding Obligations. Each of the Operative Documents is a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws or equitable principles
relating to or limiting creditors' rights generally.
(d) Information. No certificate, report or other paper furnished by the Company
to the Bank or any other Person in connection with the Operative Documents
contains as of its effective date any material misstatement of fact or fails to
state a material fact or any fact necessary to make the statements contained
therein not misleading in any material respect as of such date, and all of the
information contained therein is true, accurate and complete in all material
respects as of such date.
(e) Environmental Matters. Except with respect to matters that have been
previously disclosed to the Bank in writing, the Company is in compliance in all
material respects with all federal, state and local environmental laws, rules,
regulations, ordinances and other requirements including, without limitation,
all Hazardous Materials Laws.
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(f) Line of Credit Agreement. The Line of Credit Agreement has been duly
authorized, executed and delivered by the Company and is and continues to be on
the date hereof a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
7. Affirmative Covenants. All affirmative covenants of the Company set forth in
Section 6 of the Line of Credit Agreement are deemed hereby repeated and
incorporated herein by reference to the same extent as if fully repeated herein.
Any amendment or modification of Section 6 of the Line of Credit Agreement shall
be deemed an amendment or modification hereof. All covenants hereby incorporated
shall continue herein for the entire term of this Agreement despite the
termination or expiration of the Line of Credit Agreement. In addition to the
foregoing, the Company shall, unless the Bank shall otherwise consent in
writing, observe and perform the following covenants and agreements:
(a) duly and punctually pay all amounts payable hereunder at the times and
places and in the manner required by the terms thereof;
(b) at the time of delivery of the certificate required by Section 6.1(c) of the
Line of Credit Agreement, deliver to the Bank a certificate executed by the
chief financial officer of the Company indicating compliance with Paragraphs 7
and 8 hereof and stating that to the best of such officer's knowledge, (i) the
Company has kept, performed and fulfilled each and every agreement binding on it
contained in the Operative Documents and is not at this time in default of the
keeping, observance, performance or fulfillment of any of the terms, provisions
and conditions thereof, and (ii) no Events of Default or Defaults have occurred
(or specifying all Events of Default or Defaults of which such officer has
knowledge and what actions the Company is taking or proposes to take with
respect thereto);
(c) immediately notify the Bank of any Event of Default of which it becomes
aware, using reasonable diligence, and provide the Bank at the time of
notification with a certificate of an officer of the Company setting out the
action or proposed action to be taken by the Company with respect thereto to
cure such Event of Default;
(d) immediately notify the Bank (including in the notification the intended
action to be taken by the Company), upon (i) learning of any environmental
claim, complaint, notice or order affecting it or any of its Subsidiaries, (ii)
learning of the existence of Hazardous Materials located on, above or below the
surface of any land which it or any of its Subsidiaries occupies or controls
(except those being stored, used or otherwise handled in compliance with
applicable Requirements of Law), or contained in the soil or water constituting
such land and (iii) the occurrence
12
of any reportable release, spill, leak, emission, discharge, leaching, dumping
or disposal of Hazardous Materials that has occurred on or from such land which,
as to either (i), (ii) or (iii), could have a material and adverse effect on the
financial condition of the Company and its Subsidiaries, considered as a whole,
or the ability of any of the Company or its Subsidiaries to perform its
obligations under this Agreement, or the Operative Documents to which it is a
party from time to time;
(e) upon the request of the Bank, use reasonable efforts to provide the Bank
with such other documents, opinions, consents, acknowledgments and agreements as
are reasonably necessary to implement, and monitor compliance with, this
Agreement from time to time;
8. Negative Covenants. All negative covenants of the Company set forth in
Section 7 of the Line of Credit Agreement are deemed hereby repeated and
incorporated herein by reference to the same extent as if fully repeated herein.
Any amendment or modification of Section 7 of the Line of Credit Agreement shall
be deemed an amendment or modification hereof. All covenants hereby incorporated
shall continue herein for the entire term of this Agreement despite the
termination or expiration of the Line of Credit Agreement.
In addition, the Company covenants and agrees that it shall not create, incur,
assume or suffer to exist any mortgage or lien upon or security interest in any
property, real or personal, including without limitation, the Project and the
Project Site, financed with the proceeds of the Bonds, whether now owned or
hereafter acquired, except:
i. Liens existing on the date hereof and identified in writing to the Bank;
ii. Liens for taxes not yet due or which are being contested in good faith and
by appropriate proceedings and for which adequate reserves in accordance with
generally accepted accounting principles have been established on the books of
the Company;
iii. Easements, reservations, exceptions, rights-of-way, covenants, conditions,
restrictions and other similar encumbrances incurred in the ordinary course of
business which, in the aggregate, are not substantial in amount, and which do
not in any case materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of its business.
9. Events of Default. Upon the occurrence of any of the following events (herein
referred to as an "Event of Default"), unless waived by the Bank:
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(i) the occurrence of a "Default" or an "Event of Default" as described and
defined in any of the Operative Documents or the occurrence of an "Event of
Default" as described and defined in the Line of Credit Agreement or the
expiration or termination or the Line of Credit Agreement;
(ii) failure of the Company to pay any amount when due under the terms of this
Agreement;
(iii) failure on the part of the Company to perform or observe any term,
covenant or agreement contained or incorporated in this Agreement, in any of the
Operative Documents or in the Line of Credit Agreement to which it is a party on
its part to be performed or observed, other than payment obligations, and (a)
with respect to any such term, covenant or agreement contained or incorporated
herein, any such failure remains unremedied for 30 days after the earlier of its
discovery by the Company or written notice thereof to the Company by the Bank;
and (b) with respect to any such term, covenant or agreement contained in any of
the other Operative Documents to which the Company is a party or in the Line of
Credit Agreement, any such failure remains unremedied after any applicable grace
period specified in such Operative Documents;
(iv) a default or event of default shall occur under any loan agreement, line of
credit or other loan document or contract between the Company and the Bank and
the Company shall not cure the same within any cure period provided therein;
(v) any warranty, representation or other written statement made by or on behalf
of the Company contained or incorporated herein, in any of the other Operative
Documents to which it is a party or in any instrument furnished in compliance
with or in reference to this Agreement is false or misleading in any material
respect on the date as of which made;
(vi) the Company shall fail to pay its debts generally as they come due, or
shall file any petition or action for relief under any bankruptcy,
reorganization, insolvency or moratorium law, or any other law or laws for the
relief of, or relating to, debtors;
(vii) an involuntary petition shall be filed under any bankruptcy statute
against the Company, or a custodian, receiver, trustee, assignee for the benefit
of creditors (or other similar official) shall be appointed to take possession,
custody, or control of the properties of the Company, unless such petition or
appointment is set aside or withdrawn or
14
ceases to be in effect within sixty (60) days from the date of said filing or
appointment;
(viii) any default shall occur under any other agreement involving the material
borrowing of money or the material extension of credit under which the Company
may be obligated as borrower or guarantor, (I) if such default consists of the
failure to pay indebtedness when due or (II) if such default causes the
acceleration of any indebtedness or the termination of any commitment to lend,
or (III) if such default permits, or would permit with notice and/or the passage
of time, the holder of any such obligation to accelerate any indebtedness or to
terminate any commitment to lend, unless the Company is, in good faith,
contesting such default and such contest will toll or stay the acceleration of
such indebtedness or termination of such commitment;
then, and in any such event, the Bank may, in its sole discretion, but shall not
be obligated to, (1) by notice to the Company, declare all amounts payable by
the Company hereunder (including, without limitation, amounts payable pursuant
to Paragraph 3A hereof) to be forthwith due and payable, and the same shall
thereupon become due and payable without demand, presentment, protest or further
notice of any kind, all of which are hereby expressly waived, and/or (2)
exercise all of its rights and remedies under the Operative Documents and/or (3)
by notice to the Trustee, require the Trustee to accelerate payment of all Bonds
and interest accrued thereon as provided in Section 9.02 of the Indenture.
No remedy herein conferred or reserved is intended to be exclusive of any other
available remedy or remedies, but each and every such remedy shall be cumulative
and shall be in addition to every other remedy given under this Agreement or any
other Operative Document or now or hereafter existing at law or in equity or by
statute. No delay or omission to exercise any right or power accruing upon any
default, omission or failure of performance hereunder shall impair any such
right or power or shall be construed to be a waiver thereof, but any such right
or power may be exercised from time to time and as often as may be deemed
expedient. In order to exercise any remedy reserved to the Bank in this
Agreement, it shall not be necessary to give any notice, other than such notice
as may be herein expressly required. In the event any provision contained in
this Agreement should be breached by any party and thereafter duly waived by the
other party so empowered to act, such waiver shall be limited to the particular
breach so waived and shall not be deemed to waive any other breach hereunder. No
waiver, amendment, release or modification of this Agreement shall be
established by conduct, custom or course of dealing, but solely by an instrument
in writing duly executed by the parties thereunto duly authorized by this
Agreement.
15
10. Nature of Bank's Duties; Indemnification. As between the Company and the
Bank, the Company shall assume all risks of the acts, omissions or misuse of the
Letter of Credit by the Trustee. The Bank shall not be responsible: (i) for the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any party in connection with the application for and
issuance of the Letter of Credit even if it should in fact prove to be in any or
all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for
the validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign the Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) for failure of the Trustee to
comply fully with conditions required in order to draw upon the Letter of
Credit; (iv) for errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (v) for errors in interpretation of technical terms;
(vi) for any loss or delay in the transmission or otherwise of any document or
draft required in order to make a draw under the Letter of Credit or of proceeds
thereof; and (vii) for any consequences arising from causes beyond the control
of the Bank. None of the above shall affect, impair, or prevent the vesting of
any of the Bank's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific provisions
hereinabove set forth, any action taken or omitted by the Bank, under or in
connection with the Letter of Credit or the related drafts of document(s), if
taken or omitted in good faith, shall be binding upon the Company and shall not
put the Bank under any resulting liability to the Company.
The Company hereby agrees at all times to protect, indemnify and save harmless
the Bank from and against any and all claims, actions, suits and other legal
proceedings, and from and against any and all losses, claims, demands,
liabilities, damages, costs, charges, counsel fees and other expenses which the
Bank may, at any time, sustain or incur by reason of or in consequences of or
arising out of (i) the issuance of the Letter of Credit, (ii) any breach by any
party (other than the Bank or an affiliate of the Bank) of any warranty,
covenant, term or condition in, or the occurrence of any default under, this
Agreement, any other Operative Document or the Bonds, together with all
reasonable expenses resulting from the compromise or defense of any claims or
liabilities arising as a result of any such breach or default, and (iii) defense
against any legal action commenced to challenge the validity of any of the above
referred to instruments, it being the intention of the parties that this
Agreement shall be construed and applied to protect and indemnify the Bank
against any and all risks involved in the issuance of the Letter of Credit, all
of which risks are hereby assumed by the Company, including, without limitation,
any and all risks of the acts or omissions, whether
16
rightful or wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts and omissions, herein called "Government
Acts"). The Bank shall not, in any way, be liable for any failure by the Bank or
anyone else to pay any draft under the Letter of Credit as a result of any
Government Acts or any other cause beyond the control of the Bank. The
obligations of the Company under this Paragraph 10 shall survive the payment of
the Bonds and the termination of this Agreement.
Notwithstanding anything to the contrary contained in this Paragraph 10, the
Company shall not have any obligation to indemnify the Bank in respect of any
liability incurred by the Bank arising solely out of the gross negligence or
willful misconduct of the Bank or out of the wrongful dishonor by the Bank of a
proper demand for payment made under the Letter of Credit.
11. Miscellaneous.
11A. Amendments. This Agreement may be amended, and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, if the Company shall obtain the written consent of the Bank. No
course of dealing between the Company and the Bank, nor any delay in exercising
any rights hereunder shall operate as a waiver of any rights of the Bank
hereunder.
11B. Survival of Representations and Warranties. All representations and
warranties contained herein or made in writing by the Company in connection
herewith shall survive the execution and delivery of this Agreement, regardless
of any investigation made by the Bank or on its behalf.
11C. Expenses. The Company hereby agrees to pay promptly all reasonable costs
and expenses in connection with the preparation, issuance, delivery, filing,
recording and administration of the Letter of Credit, this Agreement, the other
Operative Documents, the Bonds and any other documents which may be delivered in
connection with this Agreement, including, without limitation, the fees and
expenses of Holland & Knight LLP (not to exceed $22,500), and all costs and
expenses (including reasonable counsel fees and expenses) in connection with (i)
the transfer, drawing upon, change in terms, maintenance, renewal or
cancellation of the Letter of Credit, (ii) any and all amounts which the Bank
has paid relative to the Bank's curing of any Event of Default resulting from
the acts or omissions of the Company under this Agreement, any other Operative
Document or the Bonds, (iii) the enforcement of this Agreement or any other
Operative Document, or (iv) any action or proceeding relating to a court order,
injunction or other process or decree restraining or seeking to restrain the
Bank from paying any amount under the Letter of Credit. In addition, the Company
hereby agrees to pay any and all stamp and other taxes and fees payable or
determined to be payable in
17
connection with the execution, delivery, filing and recording of the Letter of
Credit, this Agreement, any other Operative Document or the Bonds, or any other
documents which may be delivered in connection with this Agreement, and agrees
to save the Bank harmless from and against any and all liabilities with respect
to or resulting from any delay in paying or omission to pay such taxes and fees.
Notwithstanding the foregoing, not payment shall be required under this
Paragraph 11C in respect of any cost or expense the Bank has incurred because of
its gross negligence or willful misconduct.
11D. Set-off. In addition to any rights now or hereafter granted under
applicable law and not by way of limitation of any such rights, during the
continuance of any Event of Default hereunder the Bank is hereby authorized at
any time and from time to time, without notice to the Company or to any other
person or entity, any such notice being hereby expressly waived, to set-off and
to appropriate and apply any and all deposits (general or special) and any other
indebtedness at any time held or owing by the Bank to or for the credit or the
account of the Company against and on account of the obligations and liabilities
of the Company to the Bank under this Agreement, irrespective of whether or not
the Bank shall have made any demand hereunder and although said obligations,
liabilities or claims, or any of them, shall be contingent or unmatured.
11E. Notices. Except as otherwise specified herein, all notices hereunder shall
be given by United States certified or registered mail, by overnight courier or
delivery service for which a receipt must be sighed by the recipient, or by
telecommunication device capable of creating written record of such notice and
its receipt. Notices hereunder shall be effective when received and shall be
addresses as follows:
If to the Bank, to: SunTrust Bank, Tampa Bay
000 0xx Xxxxxx Xxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attn: Corporate Banking Division
If to the Company, to: Flanders Corporation
c/o Precisionaire, Inc.
0000 00xx Xxxxxx Xxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
11F. Satisfaction Requirement. If any agreement, certificate or other writing,
or any action taken or to be taken, is by the terms of this Agreement required
to be satisfactory to the Bank, the determination of such satisfaction shall be
made by the Bank in its sole and exclusive judgment exercised in good faith.
18
11G. Bind Effect; Assignment. This Agreement is a continuing obligations and
shall (i) be biding upon the Company and its successors, transferees and assigns
and (ii) inure to the benefit of and be enforceable by the Bank and its
successors, transferees and assigns; provided, however, that the Company may not
assign all or any part of this Agreement without the prior written consent of
the Bank. The Bank may assign, negotiate, pledge or otherwise hypothecate all of
any portion of this Agreement, or grant participations herein, in the Letter of
Credit or in any of its rights or security hereunder, including, without
limitation, the instruments securing the Company's obligations hereunder. No
such assignment or participation by the Bank, however, will relieve the Bank of
its obligation under the Letter of Credit. In connection with any assignment or
participation, the Bank may disclose to the proposed assignee or participant any
information that the Company is required to deliver to the Bank pursuant to this
Agreement.
11H. Venue; Personal Jurisdiction. In any litigation in connection with or to
enforce the provisions hereof or of the Line of Credit Agreement, the Company
irrevocably consents to and confers personal jurisdiction on the courts of the
State of Florida or the United States courts within the State of Florida,
expressly waives any objections as to venue in any of such courts, and agrees
that service of process may be made on the Company by mailing a copy of the
summons and complaint by registered or certified mail, return receipt requested,
to the address set forth herein (or otherwise expressly provided in writing).
Nothing contained herein shall, however, prevent the Bank from bringing any
action or exercising any rights within any other state or jurisdiction or from
obtaining personal jurisdiction by any other means available by applicable law.
11I. Governing Law. This Agreement is being delivered and is intended to be
performed in the State of Florida, and shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
such State.
11J. Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
11K. Incorporation of Preambles and Annexes. The preambles appearing at the
beginning of this Agreement and all annexes to this agreement are hereby
incorporated into this Agreement by reference.
11L. WAIVER OF TRIAL BY JURY. THE COMPANY AND THE BANK HEREBY KNOWINGLY,
IRREVOCABLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RGHT TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION BASED ON
19
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH THIS AGREEMENT, OR ANY OTHER DOCUMENT EXECUTED IN CONJUNCTION
WITH THE TRANSACTIONS CONTEMPLATED THEREUNDER, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENT (WHETHER ORAL OR WRITTEN), OR ACTION OF ANY PARTY. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK TO ENTER INTO THE TRANSACTIONS
EVIDENCED HEREBY.
[Signature page follows]
20
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective duly authorized officers as of the
day and year first above written.
ATTEST: FLANDERS CORPORATION
By: _______________________________
Title: ____________________________ By: /s/ Xxxxxx X. Xxxxx
Title: Vice President
SUNTRUST BANK, TAMPA BAY
By: /s/ Xxxxx X. Xxx
Title: Vice President
[CORPORATE SEAL]
CONSENTED TO:
ZIONS FIRST NATIONAL BANK
By: /s/ Xxxxx Xxxxxxx
Title: Vice President
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