EXHIBIT 10.16
BB&T SECURITY AGREEMENT
THIS SECURITY AGREEMENT ("Security Agreement") is made as of the
September 1, 2004, by and between ABSORPTION CORP., a Nevada corporation (the
"Borrower" or the "Debtor"), and BRANCH BANKING AND TRUST COMPANY, a North
Carolina banking corporation (the "Secured Party").
WHEREAS, arrangements have been made pursuant to a Letter of Credit and
Reimbursement Agreement of even date herewith between the Borrower and the
Secured Party (the "Reimbursement Agreement") for the issue by the Secured Party
of its irrevocable letter of credit in the aggregate amount of $4,956,384.00
(the "Letter of Credit") to Branch Banking and Trust Company, as trustee (the
"Trustee") to secure those $4,900,000 Tax-Exempt Industrial Development Revenue
Bonds (Absorption Corp. Project), Series 2004 (the "Bonds") issued by the Xxxxx
County Industrial Development Authority (the "Authority") under an Indenture of
Trust dated as of September 1, 2004 between the Authority and the Trustee (the
"Indenture"); and
WHEREAS, capitalized terms appearing within but not otherwise defined
shall have the meanings ascribed to them in the Reimbursement Agreement; and
WHEREAS, the Secured Party is unwilling to extend credit to and to
otherwise deal with the Borrower unless the Borrower grants to the Secured Party
a security interest in certain personal property of the Borrower; and
WHEREAS, the Borrower is desirous of further securing to the Secured
Party the payment of all obligations which are payable under the Reimbursement
Agreement, including, but without limitation any Swap Agreement and the
performance of the covenants and agreements contained herein and in the
Reimbursement Agreement, the other Related Documents and all other documents
related thereto, as each of the foregoing may from time to time be amended;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and promises herein contained, the parties hereto agree as follows:
I. DEFINITIONS.
1.1 COLLATERAL. Unless specific items of personal property are
described below, the Collateral shall consist of all now owned
and hereafter acquired and wherever located personal property of
Debtor identified below, each capitalized term as defined in
Article 9 of the Georgia Uniform Commercial Code ("UCC") (check
applicable items):
[ ] (i) Accounts, including all contract rights and
health-care-insurance receivables;
[ ] (i-a) The Account(s), contract right(s) and/or
Health-Care-Insurance Receivables specifically described
as follows:
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[ ] (ii) Inventory, including all returned inventory;
[ ] (ii-a) The Inventory specifically described as follows:
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[X] (iii) Equipment, including all Accessions thereto, and all
manufacturer's warranties, parts and tools therefor;
[ ] (iii-a) The Equipment, including all Accessions thereto, all
manufacturer's warranties therefor, and all parts and
tools therefor, specifically described as follows:
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[ ] (iv) Investment Property, including the following
certificated securities and/or securities account(s)
specifically described as follows:
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[ ] (v) Instruments, including all promissory notes and
certificated certificates of deposit specifically
described as follows:
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[ ] (vi) Deposit Accounts with Secured Party specifically
described below (list account number(s)):
[ ] (vi-a) The Deposit Accounts with other financial institutions
specifically described as follows (list financial
institution and account numbers):
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[ ] (vii) Chattel Paper (whether tangible or electronic);
[ ] (vii-a) The Chattel Paper specifically described as follows:
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[ ] (viii) Goods, including all Fixtures and timber to be cut,
located or situated on the real property specifically
described as follows (list legal description as shown on
deed including county and state):
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[ ] (ix) Farm Products, including all crops grown, growing or to
be grown, livestock (born and unborn), supplies used or
produced in a farming operation, and products of crops
and livestock;
[ ] (ix-a) The Farm Products specifically described as follows:
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[ ] (x) As-Extracted Collateral from the following location(s)
(list legal description including county and state):
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[ ] (xi) The Letter-of-Credit Rights under the following letter(s)
of credit (list issuer, number and amount):
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[ ] (xii) Documents of Title, including all warehouse receipts and
bills of lading specifically described as follows:
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[ ] (xiii) Commercial Tort Claim(s) more specifically described as
follows:
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[ ] (xiv) Money, including currency and/or rare coins delivered to
and in possession of the Secured Party specifically
described as follows:
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[ ] (xv) Software specifically described as follows:
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[ ] (xvi) Manufactured Home(s):
Doublewide
Model Year Serial Number 1 Serial Number 2
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1.
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2.
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[ ] (xvii) Vehicles, including recreational vehicles and watercraft
described below:
VIN Number/
New/Used Year/Make Model/Body Type Serial Number
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1.
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2.
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3.
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4.
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5.
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[ ] (xviii) General intangibles, including all Payment Intangibles,
copyrights, trademarks, patents, tradenames, tax refunds,
company records (paper and electronic), rights under
equipment leases, warranties, software licenses, and the
following, if any:
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[ ] (xix) Supporting Obligations;
[X] (xx) to the extent not listed above as original collateral,
all proceeds (cash, insurance and non-cash) and products
of the foregoing.
1.2 OBLIGATIONS. This
Security Agreement secures the following
(collectively, the "Obligations"):
(i) the payment of all obligations which are payable under
the Reimbursement Agreement, including, but without
limitation any Swap Agreement and the performance of the
covenants and agreements contained herein and in the
Reimbursement Agreement and the Related Documents, and
all other documents related thereto, as each of the
foregoing may from time to time be amended (collectively,
the "Loan Documents");
(ii) all of Debtor's or Borrower's present and future
indebtedness and obligations to Secured Party;
(iii) the repayment of (a) any amounts that Secured Party may
advance or spend for the maintenance or preservation of
the Collateral, and (b) any other expenditures that
Secured Party may make under the provisions of this
Security Agreement or for the benefit of Debtor or
Borrower;
(iv) all amounts owed under any modifications, renewals,
extensions or substitutions of any of the foregoing
obligations;
(v) all Default Costs, as defined in Paragraph VIII of this
Security Agreement; and
(vi) any of the foregoing that may arise after the filing of a
petition by or against Debtor or Borrower under the
Bankruptcy Code, even if the obligations do not accrue
because of the automatic stay under Bankruptcy Code
Section 362 or otherwise.
1.3 UCC DEFINITIONS. Any term used in the UCC and not otherwise
defined in this
Security Agreement has the meaning given to the
term in the UCC.
II. GRANT OF SECURITY INTEREST.
Debtor grants a security interest in the Collateral to Secured Party to
secure the payment and performance of the Obligations.
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III. PERFECTION OF SECURITY INTERESTS.
3.1 FILING OF SECURITY INTERESTS.
(i) Debtor authorizes Secured Party to file any financing
statement (the "Financing Statement") describing the
Collateral in any location deemed necessary and
appropriate by Secured Party.
(ii) Debtor authorizes Secured Party to file a Financing
Statement describing any agricultural liens or other
statutory liens held by Secured Party.
(iii) Secured Party shall receive prior to the closing an
official report from the Secretary of State of each Place
of Business and the Debtor State, each as defined below,
collectively (the "Filing Reports") indicating that
Secured Party's security interest is prior to all other
security interests or other interests reflected in the
report.
3.2 POSSESSION.
(i) Debtor shall have possession of the Collateral, except
where expressly otherwise provided in this
Security
Agreement or where Secured Party chooses to perfect its
security interest by possession in addition to the filing
of a Financing Statement.
(ii) Where Collateral is in the possession of a third party,
Debtor will join with Secured Party in notifying the
third party of Secured Party's security interest and
obtaining an acknowledgment from the third party that it
is holding the Collateral for the benefit of Secured
Party.
3.3 CONTROL AGREEMENTS. Debtor will cooperate with Secured Party in
obtaining a control agreement in form and substance satisfactory
to Secured Party with respect to Collateral consisting of (check
appropriate items):
[ ] Deposit Accounts (for deposit accounts at other
financial institutions);
[ ] Investment Property (for securities accounts, mutual
funds and other uncertificated securities;
[ ] Letter-of-credit rights; and/or
[ ] Electronic chattel paper.
3.4 MARKING OF CHATTEL PAPER. If Chattel Paper is part of the
Collateral, Debtor will not create any Chattel Paper without
placing a legend on the Chattel Paper acceptable to Secured Party
indicating that Secured Party has a security interest in the
Chattel Paper.
IV. POST-CLOSING COVENANTS AND RIGHTS CONCERNING THE COLLATERAL.
4.1 INSPECTION. The Secured Party may inspect any Collateral in the
Debtor's possession, at any time upon reasonable notice.
4.2 PERSONAL PROPERTY. Except for items specifically identified by
Debtor and Secured Party as Fixtures, the Collateral shall remain
personal property at all times, and Debtor shall not affix any of
the Collateral to any real property in any manner which would
change its nature from that of personal property to real property
or to a fixture.
4.3 SECURED PARTY'S COLLECTION RIGHTS. Secured Party shall have the
right at any time to enforce Debtor's rights against any account
debtors and obligors.
4.4 LIMITATIONS ON OBLIGATIONS CONCERNING MAINTENANCE OF COLLATERAL.
(i) RISK OF LOSS. Debtor has the risk of loss of the
Collateral.
(ii) NO COLLECTION OBLIGATION. Secured Party has no duty to
collect any income accruing on the Collateral or to
preserve any rights relating to the Collateral.
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4.5 NO DISPOSITION OF COLLATERAL. Secured Party does not authorize,
and Debtor agrees not to:
(i) make any sales or leases of any of the Collateral, except
for sales of inventory in the ordinary course of
business;
(ii) license any of the Collateral; or
(iii) grant any other security interest in any of the
Collateral, except for purchase money security interests
permitted by the Reimbursement Agreement.
4.6 PURCHASE MONEY SECURITY INTERESTS. To the extent Debtor uses the
Bonds to purchase Collateral, Debtor's repayment of the
Obligations shall apply on a "first-in-first-out" basis so that
the portion of the Bonds used to purchase a particular item of
Collateral shall be paid in the chronological order the Debtor
purchased the Collateral.
4.7 INSURANCE. Debtor shall obtain and keep in force such insurance
on the Collateral as is normal and customary in the Debtor's
business or as the Secured Party may require, all in such
amounts, under such forms of policies, upon such terms, for such
periods and written by such insurance companies as the Secured
Party may approve. All policies of insurance will contain the
long-form Lender's Loss Payable clause in favor of the Secured
Party, and the Debtor shall deliver the policies or complete
copies thereof to the Secured Party. Such policies shall be
noncancellable except upon thirty (30) days' prior written notice
to the Secured Party. The proceeds of all such insurance, if any
loss should occur, may be applied by the Secured Party to the
payment of the Obligations or to the replacement of any of the
Collateral damaged or destroyed, as the Secured Party may elect
or direct in its sole discretion, except as provided in the Deed
of Trust. The Debtor hereby appoints (which appointment
constitutes a power coupled with an interest and is irrevocable
as long as any of the Obligations remain outstanding) Secured
Party as its lawful attorney-in-fact with full authority to make,
adjust, settle claims under and/or cancel such insurance and to
endorse the Debtor's name on any instruments or drafts issued by
or upon any insurance companies.
V. DEBTOR'S REPRESENTATIONS AND WARRANTIES.
Debtor represents and warrants to Secured Party:
5.1 TITLE TO AND TRANSFER OF COLLATERAL. It has rights in or the
power to transfer the Collateral and its title to the Collateral
is free of all adverse claims, liens, security interests and
restrictions on transfer or pledge except as created by this
Security Agreement.
5.2 LOCATION OF COLLATERAL. All collateral consisting of goods
(equipment, inventory, fixtures, crops, unborn young of animals,
timber to be cut, manufactured homes; and other tangible, movable
personal property) is located solely in the following States (the
"Collateral States"):
Georgia
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5.3 LOCATION, STATE OF INCORPORATION AND NAME OF EACH DEBTOR.
Debtor's:
(i) chief executive office (if Debtor has more than one place
of business), place of business (if Debtor has one place
of business), or principal residence (if Debtor is an
individual), is located in the following State and
address (with regard to each Debtor, the "Place of
Business"):
Absorption Corp.
0000 Xxxxxxxx Xxxxxxx
Xxxxxxxx, XX 00000
(ii) state of incorporation or organization for Debtor is
Nevada (as applicable to each Debtor, the "Debtor
State");
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(iii) exact legal name is as set forth in the first paragraph
of this
Security Agreement.
5.4 BUSINESS PURPOSE. None of the Obligations is a Consumer
Transaction, as defined in the UCC and none of the Collateral has
been or will be purchased or held primarily for personal, family
or household purposes.
VI. DEBTOR'S COVENANTS.
Until the Obligations are paid in full, Debtor agrees that it will:
6.1 preserve its legal existence and not, in one transaction or a
series of related transactions, merge into or consolidate with
any other entity, or sell all or substantially all of its assets;
6.2 not change the Debtor's State of its registered organization;
6.3 not change its registered name without providing Secured Party
with 30 days' prior written notice; and
6.4 not change the state of its Place of Business or, if Debtor is an
individual, change his state of residence without providing
Secured Party with 30 days' prior written notice.
VII. EVENTS OF DEFAULT.
The occurrence of any of the following shall, at the option of Secured
Party, be an Event of Default:
7.1 Any Event of Default by Borrower or Debtor under the Loan
Documents or any of the other Obligations;
7.2 Debtor's failure to comply with any of the provisions of, or the
incorrectness of any representation or warranty contained in,
this Security Agreement or in any other document relating to the
Obligations which is not cured within 30 days following written
notice from Bank to Debtor of such failure;
7.3 Transfer or disposition of any of the Collateral, except as
expressly permitted by this Security Agreement;
7.4 Attachment, execution or levy on any of the Collateral;
7.5 Debtor voluntarily or involuntarily becoming subject to any
proceeding under (a) the Bankruptcy Code or (b) any similar
remedy under state statutory or common law;
7.6 Debtor shall fail to comply with, or become subject to any
administrative or judicial proceeding under any federal, state or
local (a) hazardous waste or environmental law, (b) asset
forfeiture or similar law which can result in the forfeiture of
property, or (c) other law, where noncompliance may have any
significant effect on the Collateral; or
7.7 Secured Party shall receive at any time following the closing a
UCC filing report indicating that Secured Party's security
interest is not prior to all other security interests or other
interests reflected in the report.
VIII. DEFAULT COSTS.
8.1 Should an Event of Default occur, Debtor will pay to Secured
Party all costs incurred by the Secured Party for the purpose of
enforcing its rights hereunder, including:
(i) costs of foreclosure;
(ii) costs of obtaining money damages; and
(iii) a reasonable fee for the service of attorneys employed by
Secured Party for any purpose related to this Security
Agreement or the Obligations, including without
limitation consultation, drafting documents, sending
notices or instituting, prosecuting or defending
litigation or arbitration.
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IX. REMEDIES UPON DEFAULT.
9.1 GENERAL. Upon any Event of Default, Secured Party may pursue any
remedy available at law (including those available under the
provisions of the UCC), or in equity to collect, enforce or
satisfy any Obligations then owing, whether by acceleration or
otherwise.
9.2 CONCURRENT REMEDIES. Upon any Event of Default, Secured Party
shall have the right to pursue any of the following remedies
separately, successively or concurrently:
(i) File suit and obtain judgment and, in conjunction with
any action, Secured Party may seek any ancillary remedies
provided by law or at equity, including levy of
attachment and garnishment.
(ii) Take possession of any Collateral if not already in its
possession without demand and without legal process. Upon
Secured Party's demand, Debtor will assemble and make the
Collateral available to Secured Party as it directs.
Debtor grants to Secured Party the right, for this
purpose, to enter into or on any premises where
Collateral may be located.
(iii) Without taking possession, sell, lease or otherwise
dispose of the Collateral at public or private sale in
accordance with the UCC.
X. FORECLOSURE PROCEDURES.
10.1 NO WAIVER. No delay or omission by Secured Party to exercise any
right or remedy accruing upon any Event of Default shall (a)
impair any right or remedy, (b) waive any default or operate as
an acquiescence to the Event of Default, or (c) affect any
subsequent default of the same or of a different nature.
10.2 NOTICES. Secured Party shall give Debtor such notice of any
private or public sale as may be required by the UCC.
10.3 CONDITION OF COLLATERAL. Secured Party has no obligation to
repair, clean-up or otherwise prepare the Collateral for sale.
10.4 NO OBLIGATION TO PURSUE OTHERS. Secured Party has no obligation
to attempt to satisfy the Obligations by collecting them from any
other person liable for them and Secured Party may release,
modify or waive any collateral provided by any other person to
secure any of the Obligations, all without affecting Secured
Party's rights against Debtor. Debtor waives any right it may
have to require Secured Party to pursue any third person for any
of the Obligations.
10.5 COMPLIANCE WITH OTHER LAWS. Secured Party may comply with any
applicable state or federal law requirements in connection with a
disposition of the Collateral and compliance will not be
considered adversely to affect the commercial reasonableness of
any sale of the Collateral.
10.6 WARRANTIES. Secured Party may sell the Collateral without giving
any warranties as to the Collateral and may specifically disclaim
any warranties of title or the like. This procedure will not be
considered adversely to affect the commercial reasonableness of
any sale of the Collateral.
10.7 SALES ON CREDIT. If Secured Party sells any of the Collateral
upon credit, Debtor will be credited only with payments actually
made by the purchaser, received by Secured Party and applied to
the indebtedness of the purchaser. In the event the purchaser
fails to pay for the Collateral, Secured Party may resell the
Collateral and Debtor shall be credited with the proceeds of the
sale as and when received, less expenses.
10.8 PURCHASES BY SECURED PARTY. In the event Secured Party purchases
any of the Collateral being sold, Secured Party may pay for the
Collateral by crediting some or all of the Obligations of the
Debtor.
10.9 NO MARSHALLING. Secured Party has no obligation to marshal any
assets in favor of Debtor, or against or in payment of:
(i) this Security Agreement,
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(ii) any of the other Obligations, or
(iii) any other obligation owed to Secured Party, Debtor or any
other person.
XI. MISCELLANEOUS.
11.1 ASSIGNMENT.
(i) BINDS ASSIGNEES. This Security Agreement shall bind and
shall inure to the benefit of the successors and assigns
of Secured Party, and shall bind all heirs, personal
representatives, executors, administrators, successors
and permitted assigns of Debtor.
(ii) NO ASSIGNMENTS BY DEBTOR. Secured Party does not consent
to any assignment by Debtor except as expressly provided
in this Security Agreement.
(iii) SECURED PARTY ASSIGNMENTS. Secured Party may assign its
rights and interests under this Security Agreement. If an
assignment is made, Debtor shall render performance under
this Security Agreement to the assignee. Debtor waives
and will not assert against any assignee any claims,
defenses or set-offs which Debtor could assert against
Secured Party except defenses which cannot be waived.
11.2 SEVERABILITY. Should any provision of this Security Agreement be
found to be void, invalid or unenforceable by a court or panel of
arbitrators of competent jurisdiction, that finding shall only
affect the provisions found to be void, invalid or unenforceable
and shall not affect the remaining provisions of this Security
Agreement.
11.3 NOTICES. Any notices required by this Security Agreement shall be
delivered in accordance with the Reimbursement Agreement.
11.4 HEADINGS. Section headings used in this Security Agreement are
for convenience only. They are not a part of this Security
Agreement and shall not be used in construing it.
11.5 GOVERNING LAW. This Security Agreement is being executed and
delivered and is intended to be performed in the State of
Georgia
and shall be construed and enforced in accordance with the laws
of the State of
Georgia, except to the extent that the UCC
provides for the application of the law of the Debtor State.
11.6 RULES OF CONSTRUCTION.
(i) No reference to "proceeds" in this Security Agreement
authorizes any sale, transfer, or other disposition of
the Collateral by the Debtor except in the ordinary
course of business.
(ii) "Includes" and "including" are not limiting.
(iii) "Or" is not exclusive.
(iv) "All" includes "any" and "any" includes "all."
11.7 INTEGRATION AND MODIFICATIONS.
(i) This Security Agreement is the entire agreement of the
Debtor and Secured Party concerning its subject matter.
(ii) Any modification to this Security Agreement must be made
in writing and signed by the party adversely affected.
11.8 WAIVER. Any party to this Security Agreement may waive the
enforcement of any provision to the extent the provision is for
its benefit.
11.9 FURTHER ASSURANCES. Debtor agrees to execute any further
documents, and to take any further actions, reasonably requested
by Secured Party to evidence or perfect the security interest
granted herein or to effectuate the rights granted to Secured
Party herein.
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The parties have signed this Security Agreement under seal as of the
day and year first above written.
ABSORPTION CORP.
By: /s/ Xxxx Xxxxx
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Xxxxxxx X. Xxxxx
President
BRANCH BANKING AND TRUST COMPANY
By: Xxxxxx Xxxxx
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Xxxxxx X. Xxxxx
Senior Vice President
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