Exhibit 99.1
TWENTIETH AMENDMENT TO LOAN
AND SECURITY AGREEMENT
THIS TWENTIETH AMENDMENT TO LOAN AND
SECURITY AGREEMENT (this “Amendment”) is made and
entered into this 29th day of July, 2009, by and among FLANDERS
CORPORATION (“Flanders,” individually and, in its
capacity as the representative of the other Borrowers,
“Borrowers Agent”), a North Carolina corporation,
FLANDERS/PRECISIONAIRE CORPORATION , a North Carolina
corporation (“Flanders/Precisionaire”), FLANDERS
FILTERS, INC. , a North Carolina corporation
“Filters”); FLANDERS/CSC CORPORATION , a North
Carolina corporation (“CSC”), PRECISIONAIRE,
INC. , a Florida corporation (“Precisionaire”),
PRECISIONAIRE OF UTAH INC. , a Utah corporation
(“Utah”), ECO-AIR PRODUCTS, INC. , a California
corporation (“Eco-Air”), AIR SEAL FILTER HOUSINGS
INC. , a Texas corporation (“Air Seal”), and
FLANDERS REALTY CORPORATION , a North Carolina corporation
(“Flanders Realty”) (all of the foregoing collectively
referred to herein as “Borrowers” and individually as
“Borrower”), each with its chief executive office and
principal place of business at 531 Flanders Filters Road,
Washington, North Carolina 27889, and BANK OF AMERICA, N.A.
(together with its successors and assigns “Lender”), a
national banking association with an office at 300 Galleria
Parkway, N.W., Suite 800, Atlanta, Georgia 30339.
Recitals
:
Lender and Borrowers are parties to
a certain Loan and Security Agreement dated October 18, 2002,
as amended by that certain First Amendment to Loan and Security
Agreement dated October 18 2002, that certain Second Amendment
to Loan and Security Agreement dated November 19, 2002, that
certain Third Amendment to Loan and Security Agreement dated
September 6, 2003, that certain Fourth Amendment to Loan and
Security Agreement dated December 8, 2003, that certain Fifth
Amendment to Loan and Security Agreement dated September 13,
2004, that certain letter agreement dated October 7, 2004,
that certain letter agreement dated December 24, 2004, that
certain Eighth Amendment to Loan and Security Agreement dated
July 29, 2005, that certain Ninth Amendment to Loan and
Security Agreement dated January 18, 2006, that certain Tenth
Amendment to Loan and Security Agreement dated June 28, 2006,
that certain letter agreement dated January 23, 2007, that
certain letter agreement dated March 12, 2007, that certain
Eleventh Amendment to Loan and Security Agreement dated
September 20, 2007, that certain letter agreement dated
October 26, 2007, that certain Fifteenth Amendment dated
January 4, 2008, that certain letter agreement dated
May 9, 2008, that certain Seventeenth Amendment to Loan and
Security Agreement dated July 15, 2008, that certain
Eighteenth Amendment to Loan and Security Agreement dated
November 6, 2008, and that certain Nineteenth Amendment to
Loan and Security Agreement dated March 13, 2009 (as at any
other time amended restated, modified or supplemented, the
“Loan Agreement”), pursuant to which Lender has made
certain revolving credit and term loans to Borrowers.
Borrowers have advised Lenders of
Borrowers’ purchase of certain inventory and equipment (the
“Wildwood Assets”) from Alex D. Moglia, Chapter 11
Trustee for WILDWOOD INDUSTRIES INC. , an Illinois
corporation, for a cash purchase price of $3,600,000 pursuant to a
sale under Section 363 of the Bankruptcy Code (the
“Wildwood Acquisition”). Borrowers acquired the
Wildwood Assets free and clear of any liens, claims, and
encumbrances pursuant to the provisions of the Order authorizing
the Wildwood Acquisition, filed and entered May 27, 2009 with
the United States Bankruptcy Code for the Central District of
Illinois.
Events of Default have occurred and
currently exist under the Loan Agreement by reason of
Borrowers’ failure to maintain a Consolidated Fixed Charge
Coverage Ratio of 1.0 to 1.0 for the period ending on
April 30, 2009, and a Consolidated Fixed Charge Coverage Ratio
of 1.2 to 1.0 for the period ending on May 31, 2009, in
violation of Section 9.3.1 of the Loan Agreement (the
foregoing Events of Default are collectively referred to herein as
the “Designated Defaults”).
In consideration for Lender’s
agreement to enter into this Amendment and waive the Designated
Defaults on the terms and subject to the conditions contained
herein, Lender and Borrowers desire to amend the Loan Agreement as
hereinafter set forth.
NOW, THEREFORE, for TEN DOLLARS
($10.00) in hand paid and other good and valuable consideration,
the receipt and sufficiency of which are hereby severally
acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Definitions
. All capitalized terms
used in this Amendment, unless otherwise defined herein, shall have
the meaning ascribed to such terms in the Loan
Agreement.
2. Amendments to Loan
Agreement . Effective
as of the date hereof, the Loan Agreement is hereby amended as
follows:
(a) By deleting
Section 9.3.1 of the Loan Agreement in its entirety,
and by substituting the following new Section 9.3.1 in
lieu thereof:
9.3.1 Consolidated Fixed Charge
Coverage Ratio . Maintain a Consolidated Fixed Charge Coverage
Ratio of not less than (a) 1.0 to 1.0 for the period from
June 1, 2009 through June 30, 2009, as of the last day of
such period, and (b) 1.2 to 1.0 to be tested monthly
(i) for the period from July 1, 2009 through
June 30, 2010, as of the last day of each month during such
period on a cumulative basis for the period-to-date since
July 1, 2009, and (ii) for the month ending July 31,
2010 and each month thereafter, as of the last day of each month
for the immediately preceding twelve-month period.
(b) By deleting the definition of
“Consolidated Fixed Charge Coverage Ratio” contained in
Appendix A to the Loan Agreement and by substituting the
following new definition in lieu thereof, in proper alphabetical
sequence:
Consolidated Fixed Charge
Coverage Ratio - for any
period of a Person, on a Consolidated basis, the ratio of such
Person’s (i) Consolidated EBITDA minus income
taxes paid in cash minus Capital Expenditures minus
cash Distributions whether declared or paid (other than the
Flanders Stock Repurchase, but only to the extent of the amount
actually repurchased), to (ii) Consolidated Fixed Charges for
such period. For the purposes of determining the Consolidated Fixed
Charge Coverage Ratio, the amount of Capital Expenditures for any
period shall be reduced by the amount of casualty insurance
proceeds received during such period, provided that ,
(i) the amount of Capital Expenditures shall not be reduced
below zero ($0.00) for any period, and (ii) the amount of
insurance proceeds applied to reduce Capital Expenditures shall not
include proceeds of business interruption insurance.
3. Limited Waiver of
Designated Defaults . Each Borrower represents and warrants that the
Designated Defaults are the only Defaults or Events of Default that
exist under the Loan Agreement
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and the other Loan Documents as of the date
hereof. Lender hereby waives the Designated Defaults in existence
on the date hereof. In no event shall such waiver be deemed to
constitute a waiver of (a) any Default or Event of Default
other than the Designated Defaults in existence on the date of this
Amendment or (b) any Borrower’s obligation to comply
with all of the terms and conditions of the Loan Agreement and the
other Loan Documents from and after the date hereof.
Notwithstanding any prior, temporary mutual disregard of the terms
of any contracts between the parties, each Borrower hereby agrees
that it shall be required strictly to comply with all of the terms
of the Loan Documents on and after the date hereof.
4. Eligibility of Wildwood
Assets . The parties
hereto acknowledge and agree, that pursuant to the terms of the
Loan Agreement, none of the Wildwood Assets acquired by Borrowers
pursuant to the Wildwood Acquisition shall be included in the
Borrowing Base, and such Wildwood Assets shall be ineligible for
borrowing purposes, unless and until Lender’s examiners shall
have completed a field
