Exhibit 10.40 - Guaranty Agreement
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GUARANTY AGREEMENT
Dated as of June 1, 1997
between
XXXXXX BUILDING PRODUCTS, INC.
and
BRANCH BANKING AND TRUST COMPANY
relating to
Letter of Credit and Reimbursement Agreement of
Xxxxxx-Xxxxx, Inc.
in connection with
The Xxxxxx County Industrial Facilities
and Pollution Control Financing Authority $7,000,000
Industrial Development Revenue Bonds
(Xxxxxx-Xxxxx, Inc. Project) Series 1997
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TABLE OF CONTENTS
Page
Parties.................................................................... 1
Preliminary Statements..................................................... 1
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms.........................................2
SECTION 1.02. Computation of Time Periods...................................3
SECTION 1.03. Accounting Terms..............................................3
SECTION 1.04. Other Capitalized Terms.......................................3
ARTICLE II
THE GUARANTY
SECTION 2.01. The Guaranty..................................................3
SECTION 2.02. Guaranty Unconditional........................................3
SECTION 2.03. Operation of Guaranty.........................................3
SECTION 2.04. Obligation of Guarantor Absolute..............................4
SECTION 2.05. Waiver of Notice..............................................4
SECTION 2.06. Subordination.................................................5
SECTION 2.07. White Metals Bankruptcy and Related Litigation................5
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Guarantor...............5
ARTICLE IV
COVENANTS OF THE GUARANTOR
SECTION 4.01. Affirmative Covenants.........................................8
SECTION 4.02. Negative Covenants...........................................12
ARTICLE V
EVENTS OF DEFAULT
SECTION 5.01. Events of Default............................................12
SECTION 5.02. Rights Upon an Event of Default..............................14
SECTION 5.03. No Remedy Exclusive..........................................14
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ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Amendments, Etc..............................................14
SECTION 6.02. Notices, Etc.................................................14
SECTION 6.03. No Waiver....................................................14
SECTION 6.04. Right of Set-off.............................................14
SECTION 6.05. Costs, Expenses and Taxes....................................15
SECTION 6.06. Binding Effect...............................................15
SECTION 6.07. Severability.................................................15
SECTION 6.08. Governing Law................................................15
SECTION 6.09. Headings.....................................................15
SECTION 6.10. Prior Agreements Superseded..................................15
SECTION 6.11. Counterparts.................................................16
SECTION 6.12. Consent to Jurisdiction......................................16
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THIS GUARANTY AGREEMENT, dated as of June 1, 1997, by and between XXXXXX
BUILDING PRODUCTS, INC., a Delaware corporation (the "Guarantor"), and BRANCH
BANKING AND TRUST COMPANY, a North Carolina banking corporation (the "Bank").
PRELIMINARY STATEMENTS:
(1) XXXXXX-XXXXX, INC. (the "Company") has requested THE XXXXXX COUNTY
INDUSTRIAL FACILITIES AND POLLUTION CONTROL FINANCING AUTHORITY (the "Issuer")
to issue, pursuant to an Indenture of Trust of even date herewith (said
Indenture of Trust and any amendments or supplements thereto being herein
referred to as the "Trust Indenture"), between Norwest Bank Minnesota, National
Association (the "Bond Trustee") and the Issuer, $7,000,000 aggregate principal
amount of the Issuer's Industrial Development Revenue Bonds (Xxxxxx-Xxxxx, Inc.
Project) (the "Bonds") to various purchasers.
(2) The Company and the Issuer have entered into a Loan Agreement of even
date herewith, under the terms of which the Issuer will loan the proceeds of the
sale of the Bonds to the Company for the purpose of financing the construction
of a 156,000 square-foot expansion to the Company's existing facility and the
acquisition and installation of equipment therein in Xxxxxx County, North
Carolina for the manufacture of building products (the "Project").
(3) In order to provide security for the payment when due of the principal
or premium, if any, and interest on the Bonds, the Company has requested the
Bank to issue in favor of the Bond Trustee an irrevocable direct-pay letter of
credit (such letter of credit and any successor letter of credit as provided for
or contemplated in such letter of credit or this Agreement being collectively
referred to herein as the "Letter of Credit") initially in the amount of
$7,466,666.
(4) It is a condition precedent to the issuance of the Letter of Credit by
the Bank under the Reimbursement Agreement (as defined in Section 1.01 hereof)
that the Guarantor shall have executed and delivered this Guaranty.
(5) The Guarantor owns 100% of the issued and outstanding stock of the
Company.
(6) The Guarantor will materially and directly benefit from the issuance
and sale by the Issuer of the Bonds and the loan of the proceeds thereof as
hereinabove described and, therefore, to provide an inducement to the Bank to
issue the Letter of Credit in the amount of $7,466,666 in connection with the
issuance of the Bonds, the Guarantor is willing to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, including the covenants, terms and conditions
hereinafter appearing and in order to induce the Bank to issue the Letter of
Credit, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Agreement" means this Guaranty Agreement and any amendments or
supplements hereto.
"Bond Trustee" has the meaning assigned to that term in paragraph
(1) of the Preliminary Statements hereof.
"Bonds" has the meaning assigned to that term in paragraph (1) of
the Preliminary Statements hereof.
"Company Documents" means, collectively, the Reimbursement
Agreement, the Deed of Trust (as defined in the Reimbursement Agreement)
and the Security Agreement (as defined in the Reimbursement Agreement).
"Default" means the occurrence of any event or condition which
constitutes, or with the giving of notice or lapse of time or both would
constitute, an Event of Default hereunder.
"Default Rate" means a fluctuating interest rate equal to two
percent (2%) per annum above the Base Rate (as defined in the
Reimbursement Agreement) in effect from time to time.
"Guarantor" means Xxxxxx Building Products, Inc., a Delaware
corporation.
"Guaranty" means this Guaranty Agreement and any amendments or
supplements hereto.
"Reimbursement Agreement" shall mean that Letter of Credit and
Reimbursement Agreement dated the date hereof by and between the Company
and the Bank, and any amendments or supplements thereto.
"Related Documents" has the meaning assigned to that term in Section
2.11 of the Reimbursement Agreement.
"Subsidiaries" means with respect to any Person, any corporation,
association, or other business entity more than 50% of the shares of
voting stock of which are at the time owned directly or indirectly by such
Person and/or any Subsidiary of such Person. When such term is used
without specifying the Person of which a Person is a Subsidiary, such
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reference is intended to be a Subsidiary of the Borrower. For purposes
hereof White Metal shall not be considered a Subsidiary.
"White Metal" means White Metal Rolling and Stamping Corp., a New
York corporation.
SECTION 1.02. Computation of Time Periods. In this Agreement, in the
computation of a period of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with Generally Accepted
Accounting Principles consistently applied, except as otherwise stated herein.
SECTION 1.04. Other Capitalized Terms. All capitalized terms used herein
and not defined elsewhere in this Agreement shall have the meaning assigned to
that term in the Reimbursement Agreement.
ARTICLE II
THE GUARANTY
SECTION 2.01. The Guaranty. The Guarantor hereby (i) unconditionally
guarantees to the Bank the full and prompt payment and performance by the
Company of all its obligations under the Reimbursement Agreement and the other
Company Documents, including without limitation its obligations to pay interest,
principal, fees, expenses and indemnification amounts when and as the same shall
become due whether at the stated maturity thereof, by acceleration or otherwise,
and (ii) agrees to pay any and all expenses (including reasonable attorneys'
fees) incurred by the Bank in enforcing its rights under this Agreement.
SECTION 2.02. Guaranty Unconditional. This Agreement shall be a
continuing, absolute and unconditional guaranty and shall remain in full force
and effect until all of the obligations of the Company under the Reimbursement
Agreement and the other Company Documents shall have been paid and satisfied in
full and the Letter of Credit shall have expired or been terminated, provided
that the guarantee hereunder of indemnification obligations of the Company shall
survive. The obligations of the Guarantor hereunder shall arise absolutely and
unconditionally when the Letter of Credit shall have been issued by the Bank.
SECTION 2.03. Operation of Guaranty. This is a guaranty of payment and not
of collection, and the Guarantor expressly waives any right to require that any
action be brought against the Company or to require that resort be had to any
security, whether held by or available to the Bank or to any other Person.
Without limiting the generality of the foregoing, the Guarantor hereby
specifically waives the benefits of N.C. General Statutes Section 26-7 through
26-9 inclusive. If the Company shall default in payment of principal, interest,
fees or any other amount payable under the Reimbursement Agreement or the other
Company Documents when and
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as the same shall become due, whether at stated maturity, by acceleration, upon
demand, or otherwise, or upon the occurrence of any other Event of Default
hereunder, the Guarantor, upon demand by the Bank or its successors or assigns,
shall promptly and fully make such payments. All payments by the Guarantor shall
be made in immediately available freely transferable coin or currency of the
United States of America which on the respective dates of payment thereof is
legal tender for the payment of public and private debts. Each default in
payment of any amount payable under the Reimbursement Agreement or any of the
other Company Documents, or the occurrence of any other Event of Default
hereunder, shall give rise to a separate cause of action hereunder, and separate
suits may be brought hereunder as each cause of action arises. The Bank or its
successors or assigns, in its sole discretion, shall have the right to proceed
first and directly against Guarantor and its successors and assigns. In the
event that any amount payable hereunder is not paid when due, then (without
limiting the rights of the Bank under Article V hereof), such amount shall bear
interest until paid in full at the lesser of the Default Rate or the maximum
rate permitted by applicable law.
SECTION 2.04. Obligation of Guarantor Absolute. The obligations of the
Guarantor hereunder shall not be impaired, modified, released or limited by any
occurrence or condition whatsoever, including without limitation (a) the release
of any co-guarantor or any compromise, settlement, release, waiver, renewal,
extension, indulgence or modification of or change in any of the obligations and
liabilities of the Company contained in the Reimbursement Agreement or the other
Company Documents, (b) any impairment, modification, release or limitation of
the liability of the Company or its estate in bankruptcy, or any other security
for the Reimbursement Agreement, or any remedy for the enforcement thereof,
resulting from the operation of any present or future provision of the
Bankruptcy Code, or other statute or from the decision of any court, (c) the
assertion or exercise by the Issuer or its successors or assigns, or the Bond
Trustee or its successors or assigns, of any rights or remedies under any of the
Related Documents or its delay in or failure to assert or exercise any such
rights or remedies, (d) any lack of validity or enforceability of the
Reimbursement Agreement, any of the other Company Documents or any other
agreement or instrument relating thereto; (e) any change in the time, manner or
place of payment of, or in any other term of, all or any of the obligations, or
any other amendment or waiver of or any consent to departure from the
Reimbursement Agreement or any of the other Company Documents; (f) any exchange,
release or non-perfection of any collateral, or any release or amendment or
waiver of or consent to departure from any other guaranty; or (g) any other
circumstance which might otherwise constitute a defense available to, or a
discharge of, the Company or a guarantor except, subject to the following
sentence of this paragraph, final and irrevocable payment in full of the
Company's obligations to the Bank under the Reimbursement Agreement and the
other Company Documents. This Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
obligations of Company is rescinded or is otherwise returned by the Bank upon
the insolvency, bankruptcy or reorganization of the Company, or otherwise, all
as though such payment had not been made.
SECTION 2.05. Waiver of Notice. The Guarantor unconditionally waives (a)
notice of any of the matters referred to in Section 2.04 hereof and (b) any
demand (except as specified in Section 2.03 hereof), proof or notice of
nonpayment under the Reimbursement Agreement or the
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other Company Documents, or of default by the Company, in performing and keeping
any other covenant, condition or agreement required of it under the
Reimbursement Agreement or any of the Company Documents.
SECTION 2.06. Subordination. Upon payment by the Guarantor of any of the
Company's obligations under the Reimbursement Agreement or the other Company
Documents, all rights of the Guarantor against the Company arising as a result
therefrom by way of right of subrogation or contribution or otherwise (the
"Subordinate Claims") shall in all respects be subordinated and junior in right
of the Bank for payment to the prior indefeasible right of the Bank to payment
in full of all obligations under the Reimbursement Agreement and the other
Company Documents as follows:
(a) All of the Company's obligations under the Reimbursement Agreement and
the other Company Documents shall finally and irrevocably be paid in full
(including interest thereon) before any direct or indirect payment or
distribution (whether in cash, property or securities, or by setoff,
counterclaim or otherwise) shall be made on Subordinate Claims;
(b) In the event that any payment or distribution of assets of the Company
of any kind or character (whether in cash, property or securities, or by set
off, counterclaim or otherwise) shall be received by the Guarantor or on its
behalf at any time when the making of such payment or distribution shall have
been in violation of this Section 2.06, then such payment, distribution or
amount shall be held in trust for the benefit of, and shall be paid or delivered
to, the Bank for application to the payment of all obligations under the
Reimbursement Agreement, and the other Company Documents; and
(c) The holders of Subordinate Claims shall have no right to initiate any
legal proceedings against the Company with respect to any of the Subordinate
Claims while any obligations under the Reimbursement Agreement or the other
Company Documents shall remain outstanding.
SECTION 2.07. White Metals Bankruptcy and Related Litigation. The Bank
acknowledges that the Guarantor has informed it of the filing by White Metal of
a voluntary petition in bankruptcy under Chapter 7 of the federal bankruptcy
laws and other litigation relating thereto, and the Bank acknowledges that such
filing shall not constitute an Event of Default hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Representations and Warranties of the Guarantor. The
Guarantor represents and warrants as follows (which representations and
warranties shall survive the issuance of the Letter of Credit):
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(a) The Guarantor is a corporation duly formed, validly existing and in
good standing under the laws of the state of its incorporation and has all
requisite power and authority to conduct its business, to own its properties,
and to execute and deliver and perform all of its obligations under this
Agreement. The Guarantor is duly qualified as a foreign corporation to do
business in every jurisdiction in which the nature of its business makes such
qualification necessary and is in good standing in such jurisdictions, except
where the failure to qualify would not have an materially adverse effect on its
business. The Guarantor owns all of the outstanding capital stock of the
Company.
(b) The execution, delivery and performance by the Guarantor of this
Agreement are within the Guarantor's corporate powers, have been duly authorized
by all necessary corporate action, and do not contravene (i) any provision of
the Certificate of Incorporation or Bylaws of the Guarantor, (ii) any law, rule
or regulation applicable to the Guarantor or its properties or (iii) any
agreement or contractual restriction binding on or affecting the Guarantor or
any of its properties, and do not result in or require of cause the creation of
any lien, security interest or other charge or encumbrance upon or with respect
to any of its properties.
(c) 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
due execution, delivery and performance by the Guarantor of this Agreement,
except as have been duly obtained or made and are in full force and effect.
(d) This Agreement is the legal, valid and binding obligation of the
Guarantor enforceable against the Guarantor in accordance with its terms, except
as enforceability may be affected by bankruptcy, insolvency or other similar
matter involving the Guarantor or the application of equitable principles.
(e) Except as set forth on Exhibit 3.01(e) hereof, there is no pending or,
to the Guarantor's knowledge, threatened action, investigation or proceeding
before any court, governmental agency or arbitrator against or affecting the
Guarantor which may materially adversely affect the financial condition of the
Guarantor or operations of the Guarantor or the ability of the Guarantor to
perform its obligations hereunder or which purports to affect the legality,
validity or enforceability of this Agreement.
(f) The consolidated balance sheet of the Guarantor and its Subsidiaries
as at December 31, 1996 audited by KPMG Peat Marwick, certified public
accountants, and the related consolidated statements of income, retained
earnings and cash flow of the Guarantor and its Subsidiaries for the fiscal
period then ended, copies of which have been furnished to the Bank, present
fairly the financial condition of the Guarantor and its Subsidiaries as of the
date thereof and the results of its operations for the period covered therein.
The consolidated balance sheet of the Guarantor and its Subsidiaries as at March
31, 1997, and the related consolidated statements of income, retained earnings
and cash flow for the three-month period then ended on such date, as delivered
to the Bank, present fairly, subject to normal recurring year-end adjustments,
the financial condition of the Guarantor and its Subsidiaries as at such date
and the results of their
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operation for such period. Neither the Guarantor nor any Subsidiary has any
material liability, contingent or otherwise, as of the date of this Agreement,
including material liabilities for taxes, not disclosed by, or reserved against
in the financial statements referred to above or in the notes thereto, and at
the present time, there are no material unrealized or anticipated losses from
any commitments of the Guarantor or its Subsidiaries except as have been
disclosed to the Bank in writing. Such financial statements have been prepared
in accordance with Generally Accepted Accounting Principles, as defined in the
Reimbursement Agreement. Since December 31, 1996, there has been no material
adverse change in the financial condition, properties or operations of the
Guarantor or any Subsidiary.
(g) The Guarantor has filed all tax returns which are required to be filed
by it and has paid all taxes due pursuant to such returns or pursuant to any
assessments received by the Guarantor the failure to pay would have a material
adverse effect on the financial condition, business or operations of the
Guarantor. The charges, accruals and reserves on the books of the Guarantor in
resect of taxes or other governmental charges are adequate. No controversy in
respect of additional taxes, state, Federal or foreign, of the Guarantor is
pending, or, to the knowledge of the Guarantor, threatened, except such
controversies which are being contested by the Guarantor in good faith and by
proper proceedings which, if determined adversely to the Guarantor, would not
have a material adverse effect on the business, financial condition or
operations of the Company.
(h) The Guarantor has no Indebtedness, except as shown in the financial
statements referred to in Section 3.01(f) hereof and except for Indebtedness not
exceeding, in the aggregate, $50,000.
(i) The Guarantor has good and marketable title to, or a valid leasehold
interest in, its respective properties and assets, including the properties and
assets reflected in the financial statements and notes thereto described in
Section 3.01(f) hereof, except for such assets as have been disposed of since
the date of said financial statements in the ordinary course of business or as
are no longer useful in the conduct of business, and all such properties and
assets are free and clear of all liens, mortgages, pledges, encumbrances or
charges of any kind except as described in such financial statements.
(j) The Guarantor has not guaranteed any obligations of others and is not,
to the best of the Guarantor's knowledge, contingently liable in any manner,
direct or indirect, except as disclosed in the financial statements and notes
thereto described in Section 3.01(f) hereof, on Exhibit 3.01(j) hereof and in
the other Company Documents and except for the existing guaranty agreement in
favor of the Bank.
(k) The Guarantor is not a party to nor is it bound by any contract,
agreement or other restrictions which materially and adversely affect the
ability of the Guarantor to perform its obligations hereunder, except as
disclosed in writing to the Bank.
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(l) The Guarantor owns, possesses, or has the right to use all necessary
patents, licenses, franchises, trademarks, trademark rights, trade names, trade
name rights, copyrights, trade secrets, know how and confidential commercial and
proprietary information to conduct its business as now conducted, without known
conflict with any patent, license, franchise, trademark, trade name, copyright
or other proprietary right of any other Person.
(m) The Guarantor is not in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement or instrument to which it is a party or by which it may be bound
material to its business, the effect of which default would allow any Person to
cause such obligation under the agreement or instrument to become due prior to
its stated maturity.
(n) The Guarantor has received the written approval of all Federal, state,
local and foreign governmental authorities, if any, necessary to carry out the
terms of this Agreement and known to the Guarantor to be necessary and, to the
best of the Guarantor's knowledge, no further governmental consents or approvals
are required for the making or performance of this Agreement.
(o) Neither this Agreement nor any of the Company Documents nor any
reports, schedules, certificates, agreements or instruments heretofore or
simultaneously with the execution of this Agreement delivered to the Bank by or
on behalf of the Guarantor or the Company in connection with the issuance of the
Letter of Credit, contains any misrepresentation or untrue statement of fact or,
to the best of the Guarantor's knowledge, omits to state any material fact
necessary to make this Agreement or any such other document, agreement, report,
schedule, certificate or instrument not misleading.
(p) The Guarantor has not incurred any material accumulated funding
deficiency within the meaning of ERISA, as defined in the Reimbursement
Agreement, or incurred any material liability to the Pension Benefit Guaranty
Corporation ("PBGC") established under ERISA (or any successor thereto under
ERISA) in connection with any employee benefit plan established or maintained by
the Guarantor and no Reportable Event (as defined in ERISA) has occurred or is
occurring.
(q) The Guarantor does not own or lease any real property.
(r) The Guarantor is now, and after giving effect to this Agreement, will
be, solvent.
ARTICLE IV
COVENANTS OF THE GUARANTOR
SECTION 4.01. Affirmative Covenants. So long as a drawing is available
under the Letter of Credit, the Company shall have any obligation to pay any
amount to the Bank under the Reimbursement Agreement or the other Company
Documents, or the Guarantor shall have any
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obligation to the Bank hereunder, the Guarantor shall, unless the Bank shall
otherwise consent in writing:
(a) Preservation of Corporate Existence, Etc. (i) Preserve and maintain
its existence as a corporation and all rights, privileges and franchises
necessary and desirable in the normal conduct of its business, in the operation
and ownership of its properties and assets, and in the performance of its
obligations hereunder and not dissolve or otherwise discontinue its existence or
operations, except where any such action would not have a mutually adverse
affect on its business, properties or condition, financial or otherwise and (ii)
take no action or suffer any actions to be taken by others which will alter,
change or destroy its status as a corporation.
(b) Compliance with Laws, Etc. Comply with the requirements of all
applicable laws, rules, regulations and orders of any governmental or regulatory
authority, non-compliance with which would materially adversely affect its
business, properties or condition, financial or otherwise.
(c) Payment of Taxes, Etc. Pay and discharge, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges or levies
imposed upon it or upon its property the failure to pay and discharge might have
a material adverse affect on the financial condition, business or operations of
the Guarantor, and (ii) all lawful claims which, if unpaid, might by law become
a lien upon the property of the Guarantor and result in a material adverse
affect on financial condition, business or operations of the Guarantor;
provided, however, that the Guarantor shall not be required to pay or discharge
any such tax, assessment, charge or claim that is being contested in good faith
and by proper proceedings, and, if requested by Bank, reserves with respect
thereto acceptable to the Bank shall be maintained; provided further that any
such tax, assessment, charge, levy or claim shall be paid forthwith upon the
commencement of proceedings to foreclose any lien securing the same.
(d) Inspection Rights. At any reasonable time and from time to time
following at least three days' notice from the Bank, permit the Bank or any
agents or representatives thereof, to examine and make copies of and abstracts
from the records and books of account of, and visit the properties of, the
Guarantor and discuss the affairs, finances and accounts of the Guarantor with
any of its officers and accountants.
(e) Keeping of Books. Keep proper books of record and account, in which
full and correct entries shall be made of all financial transactions and the
assets, liabilities and business of the Guarantor, and set up on its books such
reserves as may be required by Generally Accepted Accounting Principles, and
include such reserves in interim as well as year end financial statements.
(f) Maintenance of Properties, Etc. Maintain and preserve all of its
properties which are used or useful in the conduct of its business in good
working order and condition, ordinary wear and tear expected.
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(g) Maintenance of Insurance. Maintain insurance with responsible and
reputable insurance companies or associations in such amounts and covering such
risks as is usually carried by companies engaged in similar businesses and
owning similar properties in the same general areas in which it operates, and
upon request of the Bank deliver to the Bank certificates of insurance or copies
of policies of insurance required to be carried by or on behalf of the Guarantor
pursuant hereto.
(h) Reporting Requirements. Furnish to the Bank the following:
(1) as soon as practicable and in any event within 15 days after the
occurrence of each Default or Event of Default, a statement of an
executive officer of the Guarantor setting forth details of such Default
or Event of Default and the action which the Guarantor proposes to take
with respect thereto;
(2) as soon as practicable and in any event within 45 days after the
end of the Guarantor's first three quarterly accounting periods of each
fiscal year a consolidated balance sheet of the Guarantor and its
Subsidiaries as at the last day of the last monthly accounting period of
such quarter and related consolidated statement of income and cash flow
for the period from the beginning of the current fiscal year to such day,
setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year, all in reasonable
detail and certified by the chief financial officer or the treasurer of
Guarantor to have been prepared on a basis consistent with prior interim
financial statements;
(3) as soon as practicable and in any event within 90 days after the
end of each fiscal year, consolidated balance sheets of the Guarantor and
its Subsidiaries as at the end of such fiscal year, and related
consolidated statements of income, and consolidated statements or retained
earnings and cash flow for such fiscal year, setting forth in each case in
comparative form figures from the annual audit for the preceding year, all
in reasonable detail and satisfactory in scope to the Bank and audited by
and containing an unqualified opinion satisfactory to the Bank of
independent certified public accountants of recognized national standing
selected by the Guarantor;
(4) simultaneously with filing with the Securities and Exchange
Commission, copies of Form 10-K, Form 10-Q, Proxy Statements and other
filings made with such agency.
(5) together with each delivery of those items required by clause
(2) and (3) above, the Guarantor shall deliver to the Bank a certificate
of the chief financial officer or the treasurer of the Guarantor setting
forth (i) that to the best of its knowledge, the Guarantor has kept,
observed, performed and fulfilled each and every agreement binding on it
contained in this Agreement, and is not at the time in default of the
keeping, observance, performance or fulfillment or any of the terms,
provisions and conditions hereof, and (ii) that no Default or Event of
Default has occurred, or specifying all such Defaults and
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Events of Default of which they may have knowledge and the action which
the Guarantor proposes to take with respect thereto;
(6) immediately upon any change of the Guarantor's independent
public accountants, notification thereof and such further information as
the Bank may reasonably request concerning the resignation, refusal to
stand for reappointment after completion of the current audit or dismissal
of such accountants;
(7) promptly upon becoming aware thereof, written notice of any
material adverse change in the business or operations of the Guarantor or
any Subsidiary;
(8) promptly upon becoming aware thereof, written notice of the
commencement or existence of any proceeding against the Guarantor or any
Subsidiary by or before any court or governmental agency that might, in
the reasonable judgment of the Guarantor or any Subsidiary, result in a
material adverse effect on the business, operations or financial condition
of the Guarantor or any Subsidiary or the ability of the Guarantor or the
Company to perform its obligations under this Agreement or any of the
Company Documents and, if requested by the Bank, establish and maintain
reserves with respect thereto acceptable to the Bank; and
(9) such other information respecting the business, properties,
condition or operations, financial or otherwise, of the Guarantor as the
Bank may from time to time reasonably request.
(i) ERISA. Comply with all requirements of ERISA applicable to it and
furnish to the Bank as soon as possible and in any event within 30 days after
the Guarantor or duly appointed administrator of a plan knows or has reason to
know that any Reportable Event (as defined in ERISA) with respect to any Plan
has occurred, a statement of the chief financial officer of the Guarantor
describing in reasonable detail such Reportable Event and any action which the
Guarantor proposes to take with respect thereto, together with a copy of the
notice of such Reportable Event given to the PBGC or a statement that said
notice will be filed with the annual report to the Untied States Department of
Labor with respect to such Plan if such filing has been authorized.
(j) Payment of Obligations. Pay when due all of its obligations and
liabilities, except where the same (other than Indebtedness and judgments) are
being contested in good faith by appropriate proceedings diligently prosecuted
and appropriate reserves for the accrual of same satisfactory to the Bank are
maintained or the failure of which to pay would not have a material adverse
effect on the financial condition, business or operation of the Guarantor.
(k) Further Assurances. Upon request of the Bank, duly execute and deliver
or cause to be duly executed and delivered to the Bank such further instruments
and do and cause to be
11
done such further acts that may be reasonably necessary or proper in the opinion
of the Bank to carry out more effectively the provisions and purposes of this
Agreement.
SECTION 4.02. Negative Covenants. So long as a drawing is available under
the Letter of Credit, the Company shall have any obligation to pay any amount to
the Bank under the Reimbursement Agreement or the other Company Documents, or
the Guarantor shall have any obligation to the Bank hereunder, the Guarantor
shall not, unless the Bank shall otherwise consent in writing:
(A) Consolidation, Merger, Dissolution, Liquidation or Sale. Enter into
any transaction of merger or consolidation, any transaction of dissolution or
liquidation or sale of all or substantially all of its properties or assets,
except that (i) any Person may consolidate with or merge into the Guarantor,
provided that the guarantor shall be the surviving entity and after giving
effect to such consolidation or merger no Event of Default shall exist hereunder
or (ii) the Guarantor may consolidate with or merge into another Person (the
"Survivor"), provided, after giving effect to such merger or consolidation (x)
the Survivor has a consolidated tangible net worth not less than the
consolidated tangible net worth of the Guarantor immediately prior to the
transaction, (y) no Event of Default shall exist hereunder and (z)
simultaneously with such transaction the Survivor shall enter into an agreement
with Bank acceptable to the Bank assuming this Agreement.
ARTICLE V
EVENTS OF DEFAULT
SECTION 5.01. Events of Default. The occurrence of any of the following
events shall be an "Event of Default" hereunder:
(a) The Guarantor shall fail to pay any amount payable under this
Agreement on the date when due; or
(b) Any representation, warranty, certification or statement made by the
Guarantor herein or in connection with this Agreement or in any writing
furnished by or on behalf of the Guarantor shall be false, misleading or
incomplete in any material respect on the date as of which made the effect of
which may, in the reasonable opinion of the Bank, have a material adverse affect
on the financial condition, business or operations of the Guarantor; or
(c) The Guarantor shall fail to perform or observe any of the provisions
of Section 4.01(d), (h)(6) through (h)(9) or (k) or Section 4.02 of this
Agreement; or
(d) The Guarantor shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be performed or
observed and any such failure shall remain unremedied for a period of 30 days
after the date upon which written notice of such failure, requiring the same to
be remedied, shall have been given to the Guarantor by the Bank; provided that
if such default cannot reasonably be cured within such 30 day period, the
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period for such cure shall be extended for an additional period of up to 60 days
as long as the Guarantor has commenced action to cure such default within the
initial 30 day period and diligently pursues such action; or
(e) The Guarantor shall fail to pay any Indebtedness of, in the aggregate,
$150,000 or more (excluding Indebtedness under this Agreement) or any interest
or premium thereon, when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such failure shall continue
after the applicable grace period, if any, specified in the agreement or
instrument relating to such Indebtedness; or any other default under any
agreement or instrument relating to any such Indebtedness, or any other event,
shall occur and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such default or
event is to accelerate, or to permit the acceleration, of the maturity of such
Indebtedness; or any such Indebtedness shall be declared to be due and payable,
or required to be prepaid (other than by a regularly scheduled required
prepayment), prior to the stated maturity thereof; or
(f) Liquidation or dissolution of the Guarantor or any Subsidiary or
filing by the Guarantor of a voluntary petition in bankruptcy or a voluntary
petition or an answer seeking reorganization, arrangement, readjustment of its
debts or for any other relief under the Bankruptcy Code, as amended, or under
any other insolvency act or law, state or Federal, now or hereafter existing, or
any other action of the Guarantor or any Subsidiary indicating its consent to,
approval of, or acquiescence in any such petition or proceeding; the application
by the Guarantor for, or the appointment by or with the consent or acquiescence
of the Guarantor or any Subsidiary of, a receiver, a trustee or a custodian
therefor; the application by the Guarantor or any Subsidiary for, or the consent
to or acquiescence of the Guarantor or any Subsidiary in, an assignment for the
benefit of creditors; or the inability of the Guarantor or any Subsidiary or the
admission by the Guarantor or any Subsidiary in writing of its inability to pay
its debts as they mature; or
(g) Filing of an involuntary petition against the Guarantor or any
Subsidiary in bankruptcy or seeking reorganization, arrangement, readjustment of
its debts or for any other relief under the Bankruptcy Code, as amended, or
under any other insolvency act or law, state or Federal, now or hereafter
existing; or the involuntary appointment of a receiver, a trustee or a custodian
of the Guarantor or any Subsidiary or for all or a substantial part of her
property; the issuance of a warrant of attachment, execution or similar process
against any substantial part of the property of the Guarantor or any Subsidiary
and the continuance of any of such events for 60 days undismissed, undischarged
or unstayed; or
(h) One or more judgments, decrees or orders for the payment of money in
excess of $150,000 in the aggregate shall be rendered against the Guarantor or
any Subsidiary and either (i) enforcement proceedings shall have been commenced
by any creditor upon any such judgment, decree or order, or (ii) there shall be
any period of 30 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
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(i) Any provision of this Agreement shall at any time for any reason cease
to be valid and binding on the Guarantor in any material respect, or shall be
declared to be null and void, or the validity or enforceability thereof shall be
contested by the Guarantor, or a proceeding shall be commenced by any
governmental agency or authority having jurisdiction over the Guarantor seeking
to establish the invalidity or unenforceability thereof, or the Guarantor shall
deny that it has any liability or obligation under this Agreement; or
(j) Any "Event of Default" under or as defined in the Reimbursement
Agreement or any of the other Company Documents shall have occurred and not been
waived; or
(k) The Guarantor ceases to own all of the outstanding capital stock of
the Company.
SECTION 5.02. Rights Upon an Event of Default. If any Event of Default
shall have occurred and not been waived, the Bank may proceed hereunder and
shall have the right to proceed first directly against the Guarantor, and the
Bank shall have no obligation to proceed against or exhaust any other remedy or
remedies which it may have without resorting to any other security or guaranty,
whether held by or available to the Bank.
SECTION 5.03. No Remedy Exclusive. No remedy herein conferred upon or
reserved to the Bank 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 hereunder or now or hereafter existing at
law or in equity or by statute.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Amendments, Etc. No amendment or waiver of any provision of
this Agreement, nor consent to any departure by the Guarantor in any event shall
be effective unless the same shall be in writing and signed by the Bank and then
such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 6.02. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including required copies) and sent by
receipted hand delivery (including Federal Express or other receipted courier
service), telefacsimile or regular mail, if to the Guarantor, at the Guarantor's
address at: 000 Xxxxxxxxxx Xxxxxx, Xxxxx Xxxxxx, Xxx Xxxx 00000, Attention:
President; and if to the Bank, at its address at: P. O. Xxx 0000, Xxxxxxxxxx,
Xxxxx Xxxxxxxx 00000-0000, or, as to each party, at such other address as shall
be designated by such party in a written notice to other party. All such notices
and communications shall, when hand-delivered or telecopied, be effective when
deposited with the courier or transmitted, respectively, addressed as aforesaid.
SECTION 6.03. No Waiver. No failure on the part of the Bank to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial
14
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right.
SECTION 6.04. Right of Set-off. (a) Upon the occurrence of any Event of
Default, the Bank is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand) at any time held and other Indebtedness at
any time owing by the Bank to or for the credit or the account of the Guarantor
against any and all of the obligations of the Guarantor now and hereafter
existing under this Agreement, irrespective of whether or not the Bank shall
have made any demand hereunder and although such obligations may be contingent
or unmatured.
(b) The Bank agrees promptly to notify the Guarantor after any such
set-off and application referred to in subsection (a) above, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of the Bank under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
which the Bank may have.
SECTION 6.05. Costs, Expenses and Taxes. If any Event of Default shall
have occurred, the Guarantor agrees to pay immediately when due all costs and
expenses in connection with the preparation, negotiation, delivery and
enforcement of this Agreement and the preservation of any rights under this
Agreement, including, without limitation, the reasonable fees and out-of-pocket
expenses of the Bank and of counsel for the Bank (not in excess of those
permitted by law).
SECTION 6.06. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Guarantor and the Bank and their respective
successors and assigns, except that the Guarantor shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Bank. The Bank may assign or sell a participation in all or any
part of, or any interest (undivided or divided) in, the Bank's rights and
benefits under this Agreement to any financial institution. To the extent of any
assignment by the Bank, the assignee shall have the same rights and benefits
against the Guarantor hereunder as it would have had if such assignee were the
Bank issuing or paying under the Letter of Credit.
SECTION 6.07. Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
SECTION 6.08. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal substantive laws of the State of
North Carolina.
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SECTION 6.09. Headings. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
SECTION 6.10. Prior Agreements Superseded. This Agreement shall completely
and fully supersede all prior undertakings or agreements, both written and oral,
between the Guarantor and the Bank relating to the issuance of the Letter of
Credit, including those contained in any commitment letter between the Bank and
the Guarantor executed in anticipation of the issuance of the Letter of Credit.
SECTION 6.11. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
SECTION 6.12. Consent to Jurisdiction. The Guarantor hereby irrevocably
agrees that any legal action or proceeding arising out of or relating to this
Agreement may be instituted in the Superior Court in Wake County, North
Carolina, or the United States District Court for the Eastern District of North
Carolina or in such other appropriate court and venue as the Bank may choose at
its sole discretion. The Guarantor consents to the jurisdiction of such courts
and waives any objection relating to the basis for personal or in rem
jurisdiction or to venue which the Guarantor may now or hereafter have in any
such legal action or proceedings.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
XXXXXX BUILDING PRODUCTS, INC.
ATTEST:
By: By:
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Title: Title:
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[CORPORATE SEAL]
BRANCH BANKING AND TRUST COMPANY
By:
---------------------------
Title:
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EXHIBIT 3.01(e)
17
EXHIBIT 3.01(j)
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