EXHIBIT 10.1
BB&T
LOAN AGREEMENT
Absorption Corp.
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9540018690
This Loan Agreement (the "Agreement") is made this 20th day of August, 2003 by
and between BRANCH BANKING AND TRUST COMPANY, a North Carolina banking
corporation ("Bank"), and:
Absorption Corp., a Nevada corporation ("Borrower"), having its chief executive
office at Bellingham, WA.
International Absorbents, Inc. ("Guarantor")
The Borrower has applied to Bank for and the Bank has agreed to make, subject to
the terms of this Agreement, the following loan(s) (hereinafter referred to,
singularly or collectively, if more than one, as "Loan"):
TERM LOANS ("Term Loans") in the principal amount of $4,691,500 for the purpose
of purchase of real estate, construction of new buildings or building additions
and the purchase of new and used machinery and equipment which shall be
evidenced by the Borrower's Promissory Notes dated of even date herewith payable
in consecutive monthly installments as provided therein and shall bear interest
at the rates described more particularly in such notes, the terms of which are
incorporated herein by reference. The Term Loans shall mature as provided in
said notes, when the entire unpaid principal balance then outstanding plus
accrued interest thereon shall be paid in full.
Prepayment Compensation: None
Additional terms, conditions, and covenants of this Agreement are described in
schedule CC (applicable only to the Term Loan for the purchase of real estate
and related property of $1,827,500 original principal amount as reflected in the
Promissory Note) and Addendum A, the terms of which are incorporated herein by
reference. The promissory notes evidencing the Term Loans are referred to herein
as the "Note(s)" and shall include all extensions, renewals, modifications and
substitutions thereof. The Term Loans shall be secured by the collateral
described in the security documents described below.
Section 1 CONDITIONS PRECEDENT
The Bank shall not be obligated to make any disbursement of loan proceeds until
all of the following conditions have been satisfied by proper evidence,
execution, and/or delivery to the Bank of the following items in addition to
this Agreement, all in form and substance satisfactory to the Bank and the
Bank's counsel in their sole discretion:
NOTE(S): The Note(s) evidencing the Loan(s) duly executed by the Borrower.
SECURITY DEED: The Security Deed in which Borrower or other owner thereof, if
applicable, shall grant to Bank a security title to the specified real property
and improvements thereon ("Mortgaged Property").
TITLE INSURANCE: A Standard ALTA mortgage policy from a company or companies
approved by the Bank providing coverage for the aggregate principal amount of
the Note(s) and insuring the appropriate priority of the Security Deed and which
shall not contain any title exceptions not approved by the Bank and Bank's
counsel.
SURVEY: A certified copy of a recent survey of the Mortgaged Property prepared
by a registered land surveyor or a civil engineer.
FLOOD HAZARD CERTIFICATION: Evidence satisfactory to Bank and Bank's counsel as
to whether the Mortgaged Property is located within an area identified as having
"special flood hazards" as such term is used in the Federal Flood Disaster
Protection Act of 1973.
ENVIRONMENTAL AUDIT REPORT: A favorable "Phase I" environmental audit covering
the Mortgaged Property from an independent environmental engineering firm
satisfactory to Bank which reflects that no hazardous waste, toxic substances,
or other hazardous materials have contaminated the Mortgaged Property or, if the
Mortgaged Property has been so contaminated that is has been satisfactorily
cleaned up in accordance with all Environmental Laws. The Bank shall be fully
authorized to discuss all aspects of the audit with the engineering firm.
SECURITY AGREEMENT(S): Security Agreement(s) in which Borrower and any other
owner, if applicable, (a "Debtor"), of personal property collateral shall grant
to Bank a first priority security interest in the personal property specified
therein. (If Bank has or will have a security interest in any collateral which
is inferior to the security interest of another creditor, Borrower must fully
disclose to Bank any and all prior security interests, and Bank must
specifically approve any such security interest which will continue during the
Loan.)
UCC FINANCING STATEMENTS: Acknowledged copies of UCC Financing Statements duly
filed in Borrower's or other owner's state of incorporation, organization or
residence, and in all jurisdictions necessary, or in the opinion of the Bank
desirable, to perfect the security interests granted in the Security
Agreement(s), and certified copies of Information requests identifying all
previous financing statements on record for the Borrower or other owner, as
appropriate from all jurisdictions indicating that no security interest has
previously been granted in any of the collateral described in the Security
Agreement(s), unless prior approval has been given by the Bank.
AUTHORIZATION AND CERTIFICATES: An Authorization and Certification executed by
each Debtor under which such Debtor authorizes Bank to file a UCC Financing
statement describing collateral owned by such Debtor.
COMMITMENT FEE: A commitment fee of 1/4% of the loan amount payable to the Bank
on the date of execution of the Loan Documents.
CORPORATE RESOLUTION: A Corporate Resolution duly adopted by the Board of
Directors of the Borrower authorizing the execution, delivery, and performance
of the Loan Documents on or in a form provided by or acceptable to Bank.
ARTICLES OF INCORPORATION: A copy of the Articles of Incorporation and all other
charter documents of the Borrower, all filed with and certified by the Secretary
of State of the Sate of the Borrower's incorporation.
BY-LAWS: A copy of the By-Laws of the Borrower, certified by the Secretary of
the Borrower as to their completeness and accuracy.
CERTIFICATE OF EXISTENCE: A certification of the Secretary of State (or other
government authority) of the State of the Borrower's Incorporation or
Organization as to the existence or good standing of the Borrower and its
charter documents on file.
OPINION OF COUNSEL: An opinion of counsel for the Borrower satisfactory to the
Bank and the Bank's counsel.
GUARANTY: Guaranty Agreement(s) duly executed by the Guarantor(s).
EQUITY REQUIREMENTS: Borrower shall inject a minimum of 15% cash equity at
Closing of the appraised value of the improved real property included in the
project relating to the Term Loans. Said equity injection shall be made prior to
any advances on the Term Loans.
APPRAISAL(S): Two (2) copies of an appraisal ordered by the Bank of the
estimated market value of the real and/or personal property offered as
collateral for the Loan(s) referenced herein. The appraisal(s) must be addressed
to the Bank and must conform to the Uniform Standards of Professional Appraisal
Practice ("USPAP") adopted by the Appraisal Standards Board of the Appraisal
Foundation. Any deviation from this USPAP must be explained in the appraisal(s).
The appraiser(s) must be licensed and/or certified if required by applicable
Federal Deposit Insurance Corporation regulations or state laws.
ADDITIONAL DOCUMENTS: Receipt by the Bank of other approvals, opinions, or
documents as the Bank my reasonably request.
Section 2 REPRESENTATIONS AND WARRANTIES
The Borrower and Guarantor(s) represent and warrant to Bank that:
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2.01. FINANCIAL STATEMENTS. The balance sheet of the Guarantor and its
subsidiaries, if any, and the related Statements of Income and Retained
Earnings of the Borrower and its subsidiaries, the accompanying
footnotes together with the accountant's opinion thereon, and all other
financial information previously furnished to the Bank, are true and
correct and fairly reflect the financial condition of the Borrower and
its subsidiaries as of the dates thereof, including all contingent
liabilities of every type, and the financial condition of the Borrower
and its subsidiaries as stated therein has not changed materially and
adversely since the date thereof. Each Guarantor further represents and
warrants that all financial statements provided by such Guarantor to
Bank concerning such Guarantor's financial condition are true and
correct and fairly represent such Guarantor's financial condition as of
the date thereof.
2.02. NAME CAPACITY AND STANDING. The Borrower's exact legal name is
correctly stated in the initial paragraph of the Agreement. If the
Borrower and/or any Guarantor is a corporation, general partnership,
limited partnership, limited liability partnership, or limited
liability company, each warrants and represents that it is duly
organized and validly existing under the laws of its respective state
of incorporation or organization; that it and/or its subsidiaries, if
any, are duly qualified and in good standing in every other state in
which the nature of their business shall require such qualification,
and are ach duly authorized by their board of directors, general
partners or member/manager(s), respectively, to enter into and perform
the obligations under the Loan Documents.
2.03. NO VIOLATION OF OTHER AGREEMENTS. The execution of the Loan Documents,
and the performance by the Borrower, by any and all pledgors (whether
the Borrower or other owners of collateral property securing payment of
the Loan (hereinafter sometimes referred to as the "Pledgor")) or by
the Guarantor(s) thereunder will not violate any provision, as
applicable, of its articles of incorporation, by-laws, articles of
organization, operating agreement, agreement of partnership, limited
partnership or limited liability partnership, or of any laws, other
agreement, indenture, note or other instrument binding upon the
Borrower, Pledgor or Guarantor(s), or give cause for the acceleration
of any of the respective obligations of the Borrower or Guarantor(s).
2.04. AUTHORITY. All authority from and approval by any federal, state, or
local governmental body, commission or agency necessary to the making,
validity, or enforceability of this Agreement and the other Loan
Documents has been obtained.
2.05. ASSET OWNERSHIP. The Borrower and each Guarantor have good and
marketable or insurable title to all of the properties and assets
reflected on the balance sheets and financial statements furnished to
the Bank, and all such properties and assets are free and clear of
mortgages, deeds of trust, pledges, liens, and all other encumbrances
except as related to the certain Taxable Rate Loan Agreement or Tax
Exempt Loan Agreement dated as of March 1, 2003 between GE Capital
Public Finance, Inc. as Lender and Absorption Corp as Borrower, as and
if amended (which Agreement covers only property in Washington State)
and except as otherwise disclosed by such financial statements. In
addition, each other owner of collateral has good and marketable title
to such collateral, free and clear of any liens, security interests and
encumbrances, except as otherwise disclosed to Bank.
2.06. DISCHARGE OF LIENS AND TAXES. The Borrower and its subsidiaries, if
any, and each Guarantor have filed, paid and/or discharged all taxes or
other claims which may become a lien on any of their respective
properties or assets, excepting to the extent that such items are being
appropriately contested in good faith and for which an adequate reserve
(in an amount acceptable to Bank) for the payment thereof is being
maintained.
2.07. REGULATION U. None of the Loan proceeds shall be used directly or
indirectly for the purpose of purchasing or carrying any margin stock
in violation of the provisions of Regulation U of the Board of
Governors of the Federal Reserve System.
2.08. ERISA. Each employee benefit plan, as defined by the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
maintained by the Borrower or by any subsidiary of the Borrower or
Guarantor(s) meets, as of the date hereof, the minimum funding
standards of Section 302 of ERISA, all applicable requirements of ERISA
and of the Internal Revenue Code of 1986,as amended, and no "Reportable
Event" nor "Prohibited Transaction" (as define by ERISA) has occurred
with respect to any such plan.
2.09. LITIGATION. There is no claim, action, suit or proceeding pending,
threatened or reasonably anticipated before any court, commission,
administrative agency, whether State or Federal, or arbitration which
will materially adversely affect the financial condition, operations,
properties, or business of the Borrower or its subsidiaries, if any ,
or the Guarantor(s), or the ability of the Borrower or the Guarantor(s)
to perform their obligations under the Loan Documents.
2.10. OTHER AGREEMENTS. The representations and warranties made by Borrower
to Bank in the other Loan Documents are true and correct in all
respects on the date hereof.
2.11. BINDING AND ENFORCEABLE. The Loan Documents, when executed, shall
constitute valid and blind obligations of the Borrower and Guarantors
respectively, the execution of such Loan Documents has been duly
authorized by the parties thereto, and they are enforceable in
accordance with their terms, except as may be limited by bankruptcy,
insolvency, moratorium, or similar laws affecting creditors' rights
generally.
2.12. COMMERCIAL PURPOSE. The Loan(s) are not "consumer transactions", as
defined in the Georgia Uniform Commercial Code, and none of the
collateral was or will be purchased or held primarily for personal,
family or household purposes.
Section 3 AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that from the date hereof and until payment in
full of all indebtedness and performance of all obligations owed under the Loan
Documents, Borrower shall:
3.01. MAINTAIN EXISTENCE AND CURRENT LEGAL FORM OF BUSINESS. (a) Maintain its
existence and good standing in the state of its incorporation or
organization, (b) maintain its current legal form of business indicated
above, and (c), as applicable, qualify and remain qualified as a
foreign corporation, general partnership, limited partnership, limited
liability partnership of limited liability company in each jurisdiction
in which such qualification is required.
3.02. MAINTAIN RECORDS. Keep adequate records and books of account, in which
complete entries will be made in accordance with GAAP consistently
applied, reflecting all financial transactions of the Borrower.
3.03. MAINTAIN PROPERTIES. Maintain, keep, and preserve all of its properties
(tangible and intangible) including the collateral necessary or useful
in the conduct of its business in good working order and condition,
ordinary wear and tear excepted.
3.04. CONDUCT OF BUSINESS. Continue to engage in an efficient, prudent, and
economical manner in a business of the same general type as now
conducted.
3.05. MAINTAIN INSURANCE. Maintain insurance with financially sound and
reputable insurance companies or associations in such amounts and
covering such risks as are usually carried by companies engaged in the
same or a similar business, and business interruption insurance if
required by Bank, which insurance may provide for reasonable
deductible(s). The Banks shall be named as loss payee (Long Form) on
all policies which apply to the Bank's collateral, and the Borrower
shall deliver certificates of insurance at closing evidencing same. All
such insurance policies shall provide, and the certificates shall
state, that no policy will be terminated without 30 days prior written
notice to Bank.
3.06. COMPLY WITH LAWS. Comply in all respects with all applicable laws,
rules, regulations, and orders including, without limitation, paying
before the delinquency (unless being contested, but without risking
forfeiture) of all taxes, assessments, and governmental charges imposed
upon it or upon its property, and all Environmental Laws.
3.07. RIGHT OF INSPECTION. Permit the officers and authorized agents of the
Bank, at any reasonable time or times in the Bank's sole discretion, to
examine and make copies of the records and books of account of, to
visit the properties of the Borrower, and to discuss such matters with
any officers, directors, managers, members or partners, limited or
general of the Borrower, and the Borrower's independent accountant as
the Bank deems necessary and proper.
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3.08. REPORTING REQUIREMENTS. Furnish to the Bank:
QUARTERLY FINANCIAL STATEMENTS. As soon as available and not more than
forty five (45) days after the end of each quarter, balance sheets,
statements of income, cash flow, and retained earnings for the period
ended and a statement of changes in the financial position, all in
reasonable detail, and all prepared in accordance with GAAP
consistently applied and certified as true and correct by an officer,
general partner or manager (or member(s)) of the Borrower, as
appropriate.
ANNUAL FINANCIAL STATEMENTS. For the Borrower and the Guarantor,
respectively, as soon as available and not more than ninety (90) days
after the end of each fiscal year, balance sheets, statement of income,
and retained earnings for the period ended and a statement of changes
in the financial position, all in reasonable detail, and all prepared
in accordance with GAAP consistently applied. The financial statements
for the Guarantor must be of the following quality or better: Audited
(consolidating Borrower).
NOTICE OF LITIGATION: Promptly after the receipt by the Borrower, or by
any Guarantor of which Borrower has knowledge, of notice or complaint
of any action, suit, and proceeding before any court or administrative
agency of any type which, if determined adversely, could have a
material adverse effect on the financial condition, properties, or
operations of the Borrower or Guarantor, as appropriate.
TAX RETURNS. As soon as available each year, complete copies (including
all schedules) of all state and federal tax returns filed by Borrower.
NOTICE OF DEFAULT. Promptly upon discovery or knowledge thereof, notice
of the existence of any event of default under this Agreement or any
other Loan Documents.
OTHER INFORMATION. Such other information as the Bank may from time to
time reasonably request.
3.09. DEPOSIT ACCOUNTS. Maintain substantially all of its demand
depository/operating accounts with the Bank.
3.10. AFFIRMATIVE COVENANTS FROM OTHER LOSS DOCUMENTS. All affirmative
covenants contained in any Security Deed, Security Agreement, or other
security document executed by the Borrower which are described in
paragraph 2 hereof are hereby incorporated by reference herein.
3.11. Loans from stockholders, officers, directors and affiliates of Borrower
and Guarantor shall be subordinated to the Term Loans.
Section 4 GUARANTOR(S) COVENANTS
Each Guarantor covenants and agrees that from the date hereof and until payment
in full of all indebtedness and performance of all obligations owed under the
Loan Documents, Guarantor shall:
4.01. MAINTAIN EXISTENCE AND CURRENT LEGAL FORM OF BUSINESS. If Guarantor is
a corporation, partnership, limited partnership, limited liability
partnership or limited liability company, (a) maintain its existence
and good standing in the province of its incorporation or organization,
(b) maintain its current legal form of business as shown on the
guaranty agreement provided by Guarantor to Bank in connection with the
Loan, (c) without the Bank's prior written consent, change Guarantor's
name, or enter into any merger, consolidation, reorganization or
exchange of stock, ownership interests or assets, and (e) as
applicable, qualify and remain qualified as a foreign corporation,
general partnership, limited partnership, limited liability partnership
of limited liability company in each jurisdiction in which such
qualification is required.
4.02. MAINTAIN PROPERTIES. Not, without the prior written consent of Bank,
sell transfer or otherwise dispose of all or substantially all of
Guarantor's properties (tangible and intangible), except in the
ordinary course of business.
4.03. COMPLY WITH LAWS. Comply in all respects with all applicable laws,
rules regulations, and orders including, without limitation, paying
before the delinquency (unless being contested, but without risking
forfeiture) of all taxes, assessments, and governmental charges imposed
or assessed upon Guarantor or upon Guarantor's property, and all
Environmental Laws.
4.04. REPORTING REQUIREMENTS. Furnish to the Bank:
QUARTERLY FINANCIAL STATEMENTS. As soon as available and not more than
forty five (45) days after the end of each quarter, balance sheets,
statements of income, cash flow, and retained earnings for the period
ended and a statement of changes in the financial position, all in
reasonable detail, and all prepared in accordance with GAAP
consistently applied and certified as true and correct by an officer,
general partner or manager (or member(s)) of the Borrower, as
appropriate.
ANNUAL FINANCIAL STATEMENTS. If Guarantor is an individual, a personal
financial statement promptly after the anniversary date of the Loan, on
form provided by the Bank and in such reasonable detail as the Bank may
require; or, if Guarantor is a corporation, general partnership,
limited partnership, limited liability partnership or limited liability
company, as soon as available and no more than ninety (90) days after
the end of each fiscal year of Guarantor, balance sheets, statements of
income, and retained earnings for the period ended and a statement of
changes in the financial position, on form(s) to be provided by the
Bank, all in reasonable detail, and all prepared in accordance with
GAAP consistently applied and such financial statements must be of the
following quality or better: Audited.
NOTICE OF LITIGATION: Promptly after the receipt by Guarantor, or by
Borrower of which Guarantor has knowledge, of notice any action, suit,
and proceeding before any court or governmental agency of any type
which, if determined adversely, could have a material adverse effect on
the financial condition, properties, or operations of the Guarantor or
Borrower, as appropriate.
4.05. TRANSFER OF OWNERSHIP. Not, without the prior written consent of the
Bank: Transfer or sell more than 20% of its ownership interest in
Borrower.
4.06. TAX RETURNS. As soon as available each year, furnish complete copies
(including all schedules) of all British Columbia and Canadian tax
returns filed by Guarantor.
4.07. OTHER INFORMATION. Furnish such other information as the Bank may from
time to time reasonably request.
SECTION 5 FINANCIAL COVENANTS.
The Borrower and Guarantor covenant and agree that form the date hereof until
payment in full of all indebtedness and the performance of all obligations under
the Loan Documents, the Guarantor shall at all times maintain the following
financial covenants and ratios all in accordance with GAAP unless otherwise
specified:
TANGIBLE NET WORTH. A minimum tangible net worth of not less than
$8,700,000. Tangible Net Worth is defined as net worth, plus
obligations contractually subordinated to debts owed to Bank, minus
goodwill, contract rights, and assets representing claims on
stockholders or affiliated entities.
SENIOR DEBT TO TANGIBLE NET WORTH. Maximum of 1.50 times. Senior Debt
is defined as total liabilities minus all debts contractually
subordinated to debts owed to Bank.
FIXED CHARGE COVERAGE. 1.40 times Fixed Charges. Minimum fixed charge
coverage of 1.40x (defined as Net Income, plus depreciation and
amortization, plus interest, plus rent/lease payments divided by
interest, plus current portion long term debt/leases/bond payments,
plus rent/lease payments plus cash taxes plus dividends/distribution
payments.)
Section 6 NEGATIVE COVENANTS
The Borrower covenants and agrees that from the date hereof and until payment is
full of all indebtedness and performance of all obligations under the Loan
Documents, the Borrower shall not, without the prior written consent of the
Bank:
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6.01. LIENS. N/A.
6.02. DEBT. N/A
6.03. CAPITAL EXPENDITURES. N/A
6.04. CHANGE OF LEGAL FORM OF BUSINESS; PURCHASE OF ASSETS. Change Borrower's
name of the legal form of Borrower's business as shown above, whether
by merger, consolidation, conversion or otherwise, and Borrower shall
not purchase all or substantially all of the assets or business of any
Person.
6.05. LEASES. N/A
6.06. DIVIDENDS OR DISTRIBUTIONS; ACQUISITION OF CAPITAL STOCK OR OTHER
OWNERSHIP INTERESTS. N/A.
6.07. SALARIES. N/A
6.08. GUARANTIES. N/A
6.09. LOANS. Loans to directors, officers, partners, members, shareholders,
subsidiaries and affiliates shall be limited as follows: None.
6.10. DISPOSITION OF ASSETS. Sell, lease, or otherwise dispose of any of its
assets or properties except in the ordinary and usual course of its
business or for less than fair market value.
6.11. TRANSFER OF OWNERSHIP. If Borrower is a corporation, (a) issue,
transfer or sell any new class of stock, or (b) issue, transfer or
sell, in the aggregate, from its treasury stock and/or currently
authorized but unissued shares of any class of stock, more than 10% of
the total number of all such issued and outstanding shares as of the
date of this Agreement. If Borrower is a general partnership, limited
partnership, limited liability partnership or limited liability
company, issue, transfer or sell any interest in borrower.
6.12. NEGATIVE COVENANTS FROM OTHER LOAN DOCUMENTS. All negative covenants
contained in any Security Deed, Security Agreement, or other security
document executed by the Borrower which are described in paragraph 2
hereof are hereby incorporated by reference herein.
Section 7 HAZARDOUS MATERIALS AND COMPLIANCE WITH ENVIRONMENTAL LAWS.
7.01 INVESTIGATION. Borrower hereby certifies that is has exercised due
diligence to ascertain whether its real property, including without
limitation the Mortgaged Property, is or has been affected by the
presence of asbestos, oil, petroleum or other hydrocarbons, urea
formaldehyde, PCBs, hazardous or nuclear waste, toxic chemicals and
substances, or other hazardous materials (collectively, "Hazardous
Materials"), as defined in applicable Environmental Laws. Borrower
represents and warrants that except as previously disclosed to Bank in
writing there are no such Hazardous Materials contaminating its real
property, nor have any such materials been released on or stored on or
improperly disposed of on its real property during its ownership,
occupancy or operation thereof. Borrower hereby agrees that, except in
strict compliance with applicable Environmental Laws, it shall not
knowingly permit any release, storage or contamination as long as any
indebtedness or obligations to Bank under the Loan Documents remains
unpaid or unfulfilled. Borrower does not warrant against and is not
prevented from using materials which would constitute Hazardous
materials in commercially reasonable quantities in the course of its
normal operations on the Mortgaged Property in accordance with law any
provision hereof to the contrary notwithstanding. In addition, Borrower
does not have or use any underground storage tanks on any of its real
property, including the Mortgaged Property which are not registered
with the appropriate Federal and/or State agencies and which are not
properly equipped and maintained in accordance with all Environmental
Laws. If requested by Bank, Borrower shall provide Bank with all
necessary and reasonable assistance required for purposes of
determining the existence of Hazardous Material on the Mortgage
Property, including allowing the Bank access to the Mortgaged Property,
and access to Borrower's employees having knowledge of, and to files
and records within Borrower's control relating to the existence,
storage, or release of Hazardous Materials on the Mortgaged Property.
7.02 COMPLIANCE. Borrower agrees to comply with all applicable Environmental
Laws, including, without limitation, all those relating to Hazardous
Materials. Borrower further agrees to provide Bank, and all appropriate
Federal and State authorities, with immediate notice in writing of any
release of Hazardous Materials on the Mortgaged Property and to pursue
diligently to completion all appropriate and/or required remedial
action in the event of such release.
7.03 REMEDIAL ACTION. Bank shall have the right, but not the obligation, to
undertake all or any part of such remedial action in the event of a
release of Hazardous Materials on the Mortgaged Property and to add any
expenditures so made to the principal indebtedness secured by the
Security Deed. Borrower agrees to indemnify and hold Bank harmless from
any and all loss or liability arising out of any violation of the
representations, covenants, and obligations contained in the Section 7,
or resulting from the recording of the Security Deed.
Section 8 EVENTS OF DEFAULT
The following shall be "Events of Default" by Borrower or any Guarantor:
8.01 The failure to make prompt payment of any installment of principal or
interest on any of the Note(s) when due or payable.
8.02 Should any representation or warranty made in the Loan Documents prove
to be false or misleading in any material respect.
8.03 Should any report, certificate, financial statement, or other document
furnished prior to the execution of or pursuant to the terms of this
Agreement prove to be false or misleading in any material respect.
8.04 Should the Borrower or any Guarantor default on the performance of any
other obligation or indebtedness to a third party when due or in the
performance of any obligation incurred in connection with money
borrowed, exceeding $50,000 in the case of any default and continuing
beyond any grace period.
8.05 Should the Borrower, any Guarantor or any Pledgor breach any covenant,
condition, or agreement made under any of the Loan Documents.
8.06 Should a custodian be appointed for or take possession of any or all of
the assets of the Borrower or any Guarantor, or should the Borrower or
any Guarantor either voluntarily or involuntarily become subject to any
insolvency proceeding, including becoming a debtor under the United
States Bankruptcy Code, any proceeding to dissolve the Borrower or any
Guarantor, any proceeding to have a receiver appointed, or should the
Borrower or any Guarantor make an assignment for the benefit of
creditors, or should there by an attachment, execution, or other
judicial seizure of all or any portion of the Borrower's or any
Guarantor's assets, including an action of proceeding to seize any
funds on deposit with the Bank, and such seizure of involuntary
proceeding is not discharged or dismissed within 30 days.
8.07 Should final judgment for the payment of money be rendered against the
Borrower or any Guarantor which is not covered by insurance and shall
remain undischarged for a period of 30 days unless such judgment or
execution thereon be effectively stayed.
8.08 Upon the death of, or termination of existence of, or dissolution of,
any Borrower, Pledgor or Guarantor.
8.09 Should the Bank in good faith for objective reasons deem itself, its
liens and security interest, if any, or any debt thereunder unsafe or
insecure, or should the Bank believe in good faith for objective
reasons that the prospect of payment of any debt or other performance
by the Borrower or any Guarantor is impaired.
8.10 Should any lien or security interest granted to Bank to secure payment
of the Note(s) terminate, fail for any reason (other than an act or
omission of the Bank including without limitation the failure to file
continuation statements) to have the priority agreed to by Bank on the
date granted, or become unperfected or invalid for any reason. Borrower
agrees to execute from time to time any documents requested by Bank to
perfect or continue its security interests.
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Section 9 REMEDIES UPON DEFAULT
Upon the occurrence of any of the above listed Events of Default, the Bank may
at any time thereafter, at its option, take any or all of the following actions,
at the same or at different times:
9.01. Declare the Balance(s) of the Note(s) to be immediately due and
payable, both as to principal and interest, without presentment,
demand, protest, or notice of any kind, all of which are hereby
expressly waived by Borrower and, each Guarantor, and such balance(s)
shall accrue interest at the Default Rate as provided herein until paid
in full;
9.02. Require the Borrower or Guarantor(s) to pledge additional collateral to
the Bank from the Borrower's or any Guarantor's assets and properties,
the acceptability and sufficiency of such collateral to be determined
in the Bank's reasonable discretion;
9.03. Take immediate possession of and foreclose upon any or all collateral
which may be granted to the Bank as security for the indebtedness and
obligations of Borrower or any Guarantor under the Loan Documents;
9.04. Exercise any and all other rights and remedies available to the Bank
under the terms of the Loan Documents and applicable law, including the
Georgia Uniform Commercial Code;
9.05. Any obligation of the Bank to advance funds to the Borrower or any
other Person under the terms of under the Note(s) and all other
obligations, if any, of the Bank under the Loan Documents shall
immediately cease and terminate unless and until Bank shall reinstate
such obligation in writing.
Section 10 MISCELLANEOUS PROVISIONS
10.01. Definitions.
"DEFAULT RATE" shall mean a rate of interest equal to Bank's Prime Rate
plus five percent (5%) per annum (not to exceeds the legal maximum rate) from
and after the date of an Event of Default hereunder which shall apply, in the
Bank's sole discretion, to all sums owing, including principal and interest, on
such date.
"ENVIRONMENTAL LAWS" shall mean all federal and state laws and
regulations which affect or may affect the Mortgaged Property, including without
limitation the Comprehensive Environmental Response, Compensation, and Liability
Act (42 U.S.C.ss.9601 et seq.), the Resource Conservation and Recovery Act (42
U.S.C.ss.6901 et seq.), the Federal Water Pollution Control Act (33
U.S.C.ss.1251 et seq.), the Clean Air Act (42 ▇.▇.▇.▇▇. 7401 et seq.), the Toxic
Substances Control Act (15 U.S.C.ss.2601 et seq.), Shore Protection Act
(O.C.G.A. ss. ▇▇-▇-▇▇▇ ▇▇ ▇▇▇.), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Protection Act of 1970
(▇.▇.▇.▇.▇▇. q2-5-280 et seq.), Georgia Costal management Act (O.C.G.A.ss.12-7
et seq.), Georgia Response Act (ss.12-8-0- et seq.), Georgia Hazardous Site
Rescue and Redevelopment Act (O.C.G.A.ss.12-8-200 et seq.), Georgia Asbestos
Safety Act (▇.▇.▇.▇.▇▇. 12-12-1 et seq.), Georgia Underground Storage Tank Act
(O.C.G.A.ss.12-13-1 et seq.), Public Employee Hazardous Chemical Protection and
Right to Know Act of 1988 (▇.▇.▇.▇.▇▇. 45-22-1 et. Seq.), Transportation of
Hazardous Materials Act (O.C.G.A.ss.45-11-1 et seq.), as such laws or
regulations have been amended or may be amended.
"LOAN DOCUMENTS" shall mean this Agreement including any schedule
attached hereto, the Note(s), the Security Deed(s), the Security Agreement(s),
all UCC Financing Statements, the Guaranty Agreement(s),and all other documents,
certificates, and instruments executed in connection therewith, and all
renewals, extensions, modifications, substitutions and replacements thereto and
therefore. Any provision hereof to the contrary notwithstanding, the security
interest and security titles to be granted pursuant to the Loan Documents are
limited to those to the contrary notwithstanding, the security interest and
security titles to be granted pursuant to the Loan Documents are limited to
those affecting the Mortgaged Property and Borrower's furniture, fixtures and
equipment, now owned or hereafter acquired, and located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.,
Jesup, Georgia, and affecting any other property in which security interests or
security titles are granted by the Security Deed.
"PERSON" shall mean an individual, partnership, corporation, trust,
unincorporated organization, limited liability company, limited liability
partnership, association, joint venture, or a government agency or political
subdivision thereof.
"GAAP" shall mean generally accepted accounting principles as
established by the Financial Accounting Standards Board of the American
Institute of Certified Public Accountants, as amended and supplemented from time
to time or in the case of Guarantor, as defined in the Handbook of the Canadian
Institute of Chartered Accountants.
"PRIME RATE" shall mean the rate of interest per annum announced by the
Bank from time to time and adopted as its Prime Rate, which is one of several
rate indexes employed by the Bank when extending credit, and may not necessarily
be the Bank's lowest lending rate.
10.02. NON-IMPAIRMENT. If any one or more provisions contained in the Loan
Documents shall be held invalid, illegal, or unenforceable in any
respect, the validity, legality, and enforceability of the remaining
provisions contained therein shall not in any way be affected or
impaired thereby and shall otherwise remain in full force and effect.
10.03. APPLICABLE LAW. The Loan Document shall be construed in accordance with
and governed by the laws of the State of Georgia.
10.04. WAIVER. Neither the failure or any delay on the part of the Bank in
exercising any right, power or privilege granted in the Loan Documents
shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise of any other
right, power or privilege which may be provided by law.
10.05. MODIFICATION. No modification, amendment, or waiver of any provision of
any of the Loan Documents shall be effective unless in writing and
signed by the Borrower and Bank.
10.06. PAYMENT AMOUNT ADJUSTMENT. In the event that any Loan(s) referenced
herein has a variable (floating) interest rate and the interest rate
increases, Bank at its sole discretion, may at any time adjust the
Borrower's payment amount(s) to prevent the amount of interest accrued
in a given period to exceed the periodic payment amount or to cause the
Loan(s) to be repaid within the same period of time as originally
agreed upon.
10.07. STAMPS AND FEES. The borrower shall pay all federal or state stamps,
taxes, or other fees or charges, if any are payable or are determined
to be payable by reason of the execution, delivery, or issuance of the
Loan Documents or any security granted to the Bank; and the Borrower
and Guarantor agree to indemnify and hold harmless the Bank against any
and all liability in respect thereof.
10.08. ATTORNEYS' FEES. In the event the Borrower or any Pledgor or Guarantor
shall default in any of its obligations hereunder and the Bank believes
it necessary to employ an attorney to assist in the enforcement of
collection of the indebtedness of the Borrower to the Bank, to enforce
the terms and provision of the Loan Documents, to modify the Loan
Documents, or in the event the Bank voluntarily or otherwise should
become a party to any suit or legal proceeding (including a proceeding
conducted under the Bankruptcy Code involving any Loans with Bank), the
Borrower and Guarantors agree to pay the reasonable and actual
attorneys' fees of the Bank and all related costs of collection or
enforcement that my be incurred by the Bank. The Borrower and Guarantor
shall be liable for such attorneys' fees and costs whether or not any
suit or proceeding is actually commenced.
10.09. BANK MAKING REQUIRED PAYMENTS. In the event Borrower shall fail to
maintain insurance, pay taxes or assessments, costs and expenses which
borrower is, under any of the terms hereof or of any Loan Documents,
required to pay, or fail to keep any of the Properties and assets
constituting collateral free from new security interests, liens, or
encumbrances, except as permitted herein, Bank may at its election make
expenditures for any or all such purposes and the amounts expended
together with interest thereon at the Default Rate, shall become
immediately due and payable to Bank, and shall have benefit of and be
secured by the collateral; provided, however, the Bank shall be under
no duty or obligation to make any such payments or expenditures.
10.10. RIGHT OF OFFSET. Any indebtedness owing from Bank to Borrower may be
set off and applied by Bank on any indebtedness or liability of
Borrower to Bank, at any time and from time to time after maturity,
whether by acceleration or otherwise, and without
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demand or notice to Borrower. Bank may sell participations in or make
assignments of any Loan made under this Agreement and Borrower agrees
that any such participant or assignee shall have the same right of
setoff as is granted to the Bank herein.
10.11. UCC AUTHORIZATION. Borrower authorizes Bank to file such UCC Financing
Statements describing the collateral in any location deemed necessary
and appropriate by Bank.
10.12. MODIFICATION AND RENEWAL FEES. Bank may at its option, charge any fees
for modification, additional advance, renewal, extension, or amendment
of any terms of the Note(s) as permitted by law.
10.13. CONFLICTING PROVISIONS. If provisions of this Agreement shall conflict
with any terms or provisions of any of the Note(s) or Security
Agreement(s), the provisions of such Note(s) or Security Agreement(s),
as appropriate, shall take priority over any provision in this
Agreement.
10.14. NOTICES. All notices, requests, demands, waivers, and other
communications given as provided in this Agreement will be in writing,
and unless otherwise specifically provided in this Agreement, will be
deemed to have been given: (i) if delivered in person, upon delivery,
or (ii) if mailed by certified or registered mail, postage prepaid,
return receipt requested, and addressed to either Borrower or Bank at
the addresses provided below on the third business day after deposit in
the United States Mail if addressed to an address located in the same
State in which the Notice is being mailed or on the seventh business
day after deposit in the United States Mail if addressed to an address
located within a State other than the State in which the notice is
being mailed, or (iii) if sent by overnight express delivery services,
enclosed in a prepaid envelope and addressed to Bank or Borrower at the
address provided below, on the first business day after deposit with
the service, or (iv) if sent by tested telex, telegram, telecopy,
facsimile, or other form of rapid transmission confirmed by mailing (as
provided in this section), at substantially the same time as the rapid
transmission. Either Borrower or Bank may change its respective address
as provided in this section by giving written notice of the change as
provided in this section. The addresses for notice are:
NOTICE TO BORROWER: Absorption Corp.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
NOTICE TO BANK: Branch Banking and Trust Company
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
10.15. CONSENT TO JURISDICTION. Borrower hereby irrevocably agrees that any
legal action or proceeding arising out of or relating to this Agreement
may in instituted in the Superior Court of any Country in the State of
Georgia in which Bank maintains an office, or in any United States
District Court in Georgia, or in such other appropriate court and venue
as Bank may choose in its sole discretion. Borrower 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 Borrower
may now or hereafter have in any such legal action or proceedings.
10.16. COUNTERPARTS. This Agreement may be executed by one or more parties on
any number of separate counterparts and all of such counterparts taken
together shall be deemed to constitute one and the same instrument.
10.17. ENTIRE AGREEMENT. The Loan Documents embody the entire agreement
between Borrower and Bank with respect to the Loans, and there are no
oral or parol agreements existing between Bank and Borrower with
respect to the Loans which are not expressly set forth in the Loan
Documents.
10.18. ASSIGNMENT BY BORROWER. Borrower may not assign this Agreement or any
of its rights or obligations hereunder without the prior written
consent of Bank, which consent may be withheld by the Bank in its sole
and absolute discretion.
10.19. SUCCESSOR AND ASSIGNED INCLUDED PARTIES. Whenever in this Agreement a
party hereto is named or referred to, the heirs, legal representatives,
successors and assigns of such parties shall be included, and all
covenants and agreements contained in this Agreement by or on behalf of
Borrower or by or on behalf of Bank shall bind and adhere to the
benefit of their respective heirs, legal representatives, successors
and assigns whether so expressed or not.
10.20. NO PARTNERSHIP OR JOINT VENTURE. Borrower and Bank acknowledge and
agree that nothing contained in this Agreement or in the other Loan
Documents, and that nothing contained in any other instrument or
document between Borrower and Bank relating to the Loan or Mortgaged
Property, shall be construed to establish Borrower and Bank as joint
venture s or partners.
10.21. NO AGENCY. Bank is not the agent or representative of Borrower, and
Borrower is not the agent or representative of Bank, and nothing in
this agreement shall be construed to make Bank liable to anyone for
goods delivered to or labor or services performed upon the Mortgaged
Property or for debts or claims accruing against Borrower or Bank.
Nothing herein shall be construed to create a relationship of any kind
between Bank and anyone supplying labor or materials or services for or
to the Mortgaged Property.
10.22. ADDENDA AND EXHIBITS. Any addenda, schedules, riders or exhibits to
this agreement shall be deemed incorporated herein by reference
thereto. See addendum A.
IN WITNESS WHEREOF, the Bank, Borrower and Guarantor(s) have caused this
Agreement to be duly executed under seal all as of the date first above written.
Borrower:
Absorption Corp.
(Corporate Seal)
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Title: Chief Financial Officer
------------------------------------
Guarantor:
International Absorbents, Inc.
(Corporate Seal)
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------
Title: Chief Financial Officer
------------------------------------
BRANCH BANKING AND TRUST COMPANY
(Corporate Seal)
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Title Senior Vice President
------------------------------------
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