EXHIBIT 10.83
LINE OF CREDIT SECURITY AGREEMENT
by and between
VILLAGE FARMS INTERNATIONAL FINANCE ASSOCIATION,
as Debtor
and
COBANK, ACB,
as Agent for the Line of Credit Lenders
TABLE OF CONTENTS
1. Definitions ............................................................. 2
2. Collateral/Grant of Security Interest ................................... 4
2.1 Grant of First Priority Interest ................................... 4
2.2 Grant of Second Priority Security Interest ......................... 6
2.3 Grant of First Priority Security Interest .......................... 6
3. Secured Obligations ..................................................... 7
4. Representations and Warranties .......................................... 7
4.1 Organization; Power and Authority, etc ............................. 7
4.2 Due Authorization; Power ........................................... 7
4.3 Consents; Approvals ................................................ 7
4.4 Title to Collateral ................................................ 7
4.5 Underlying Line of Credit Loans .................................... 7
4.6 Principal Office; Collateral; Books and Records .................... 8
5. Covenants of Debtor ..................................................... 8
5.1 Title to Collateral ................................................ 8
5.2 Location of Debtor, Collateral and Books and Records ............... 9
5.3 Books and Records .................................................. 9
5.4 Inspection of Collateral ........................................... 9
5.5 Transfers, Dispositions and Encumbrances ........................... 9
5.6 Maintenance and Repair; Taxes; Insurance ........................... 9
5.7 Compliance with Laws ............................................... 10
5.8 Change in Structure or Name ........................................ 10
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5.9 Underlying Line of Credit Loan Documents ........................... 10
5.10 Possession of Collateral; Further Assurances ...................... 10
6. Events of Default ....................................................... 10
7. Rights Upon Default ..................................................... 10
7.1 General ............................................................ 10
7.2 Right of Secured Party to Take Possession and Dispose of Collateral 11
7.3 Notice of Disposition of Collateral ................................ 11
7.4 Right of Secured Party to Use and Operate Collateral ............... 11
7.5 Collection of Accounts ............................................. 12
7.6 Rights of Secured Party With Respect to the Securities Collateral .. 13
7.7 Collection of Underlying Line of Credit Loan Notes ................. 14
8. General Provisions ...................................................... 15
8.1 Appointment and Rights of Agent .................................... 15
8.2 Amendment, Modification, and Waiver ................................ 15
8.3 Costs and Attorneys'Fees ........................................... 15
8.4 Revival of Obligations ............................................. 16
8.5 Performance by Secured Party ....................................... 16
8.6 Power of Attorney .................................................. 16
8.7 Protection of Collateral ........................................... 17
8.8 Additional Rights of Secured Party ................................. 17
8.9 Successors and Assigns ............................................. 17
8.10 Advances .......................................................... 17
8.11 Severability ...................................................... 17
8.12 Governing Law ..................................................... 18
ii
8.13 Notices ........................................................... 18
8.14 Financing Statement ............................................... 18
8.15 Conflict with Line of Credit Loan Agreement ....................... 18
iii
EXHIBITS
Exhibit 4.6 Location of Principal Office and Collateral
iv
LINE OF CREDIT SECURITY AGREEMENT
THIS LINE OF CREDIT SECURITY AGREEMENT ("Security Agreement") is made as of
the 24th day of June, 1997, by and between VILLAGE FARMS INTERNATIONAL FINANCE
ASSOCIATION, a Delaware corporation ("Debtor") whose address is 0000 Xxxxxx Xxxx
Xxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000 and COBANK, ACB ("CoBank"), as
Agent on behalf of and for the benefit of the Line of Credit Lenders (as
hereinafter defined), whose address is 000 X. Xxxx Xxxxxx, Xxxxxxx, Xxxxxx 00000
(CoBank and all Successor Agents appointed pursuant to the Line of Credit
Agreement are referred to herein as "Secured Party").
R E C I T A L S
A. The Line of Credit Lenders have entered into a Credit Agreement (Line of
Credit Facility) of even date herewith with Debtor (as amended from time to
time, the "Line of Credit Agreement") pursuant to which the Line of Credit
Lenders have agreed to provide Debtor with a line of credit of $10,000,000
("Line of Credit Loan"), including a sublimit of $5,000,000 for the issuance of
letters of credit, under the terms and conditions set forth in the Line of
Credit Agreement to (i) fund Debtor's purchase of the LOC Loan (as defined
below), (ii) fund Debtor's loan to Agro Power Development, Inc. ("Guarantor") to
meet Guarantor's working capital needs, (iii) fund the extension by Debtor of
lines of credit (including provisions for the issuance of letters of credit) (1)
to Underlying Term Loan Borrowers (as defined below) to meet their needs during
the planting phase of each year's production cycle and to meet their payment
requirements under their Underlying Term Loans (as defined below) for a maximum
of 180 days in any three year period, and (2) to members of Debtor to meet their
needs during the planting phase of each year's production cycle, and (iv)
provide for the issuance of, and fund any draws made under, letters of credit
issued by the LC Issuing Bank (as defined in the Line of Credit Agreement) for
the account of Debtor to facilitate the purchase and sale by Guarantor and its
subsidiaries of vegetables and fruits.
B. The provisions of the Line of Credit Agreement require that Debtor
execute certain documents, including this Security Agreement, whereby Debtor
shall xxxxx x xxxx and security interest to Secured Party in all of its
property, both tangible and intangible, whether now owned or hereafter acquired,
as security for the performance of its obligations under the Line of Credit
Agreement and the other Line of Credit Loan Documents (as defined below).
A G R E E M E N T S
In consideration of the mutual covenants and agreements herein contained
and other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Debtor and Secured Party agree as follows:
1. Definitions. Capitalized terms used, but not defined, herein shall have
the meaning given to such terms in the Line of Credit Agreement, if defined
therein. In addition, unless otherwise defined herein, each term used herein and
defined in the Uniform Commercial Code as enacted in the State of Colorado
("UCC") shall have the meaning given to such term in the UCC. As used in this
Security Agreement, the following terms shall have the meanings set forth below:
"Collateral" means the First Priority Collateral, the Second Priority
Collateral and the Shared Collateral.
"Construction Agent" means CoBank in its role as Agent under the
Construction Loan Agreement and each Successor Agent (as defined in the
Construction Loan Agreement).
"Construction Lenders" means CoBank, in its role as a lender under the
Construction Loan Agreement, and any other entity that purchases, now or in the
future, a Syndication Interest (as defined in the Construction Loan Agreement)
in the Construction Loan.
"Construction Loan" means the credit facility made available to Debtor
pursuant to the Construction Loan Agreement.
"Construction Loan Agreement" means the Credit Agreement (Construction Loan
Funding) of even date herewith by and between CoBank for its own benefit as a
lender and as Agent for the benefit of the present and future syndication
parties as named or defined therein, and Debtor, wherein the Construction
Lenders have agreed to lend to Debtor an aggregate principal amount up to
$30,000,000 for the purpose of enabling Debtor to make construction loans to
eligible third parties to use for the purposes therein specified.
"Construction Loan Documents" means the Construction Loan Agreement and any
and all other present and future agreements, documents and/or instruments
evidencing, documenting, securing or otherwise relating to the Construction
Loan, all as the same may from time to time be amended, modified, extended,
renewed or restated.
"Hedge Agreement" means the secured interest rate hedging agreement of even
date herewith executed by and between Debtor and CoBank.
"Intercreditor Agreement" means the Intercreditor Agreement of even date
herewith by and between the Construction Lenders, the Term Lenders, the Line of
Credit Lenders, the Construction Agent, the Term Agent, the Line of Credit Agent
and Debtor.
"Line of Credit Agent" means CoBank in its role as Agent under the Line of
Credit Agreement and each Successor Agent.
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"Line of Credit Lenders" means CoBank in its role as a lender under the
Line of Credit Agreement and any other entity that purchases, now or in the
future, a Syndication Interest in the Line of Credit Loan.
"Line of Credit Loan Documents" means the Line of Credit Agreement, this
Security Agreement and any and all other present and future agreements,
documents and/or instruments evidencing, documenting, securing or otherwise
relating to any or all of the Line of Credit Loan, all as the same may from time
to time be amended, modified, extended, renewed or restated.
"LOC Loan" shall have the meaning given to such term in the Loan Agreement
dated as of February 14, 1996 by and between Village Farms of Texas, L.P., as
borrower, Farm Credit Bank of Texas and Texas Production Credit Association, as
lenders, and CoBank, as Administrative Agent.
"Term Agent" means CoBank in its role as Agent under the Term Loan
Agreement and each Successor Agent (as defined in the Term Loan Agreement).
"Term Lenders" means CoBank, in its role as a lender under the Term Loan
Agreement, and any other entity that purchases, now or in the future, a
Syndication Interest (as defined in the Term Loan Agreement) in the Term Loan.
"Term Loan" means the credit facility made available to Debtor pursuant to
the Term Loan Agreement.
"Term Loan Agreement" means the Credit Agreement (Term Loan Funding) of
even date herewith by and between CoBank for its own benefit as a lender and as
Agent for the benefit of the present and future syndication parties as named or
defined therein, and Debtor, wherein the Term Lenders have agreed to lend to
Debtor an aggregate principal amount up to $50,000,000 for the purpose of
enabling Debtor to make term loans to eligible third parties to use for the
purposes therein specified.
"Term Loan Documents" means the Term Loan Agreement, the Hedge Agreement
and any and all other present and future agreements, documents and/or
instruments evidencing, documenting, securing or otherwise relating to any or
all of the Term Loan, all as the same may from time to time be amended,
modified, extended, renewed or restated.
"Underlying Construction Loans" shall have the meaning given to such term
in the Construction Loan Agreement.
"Underlying Construction Loan Collateral" means all of Debtor's assets
relating to the Underlying Construction Loans, including without limitation, all
promissory notes, loan agreements, security agreements, deeds of trust,
mortgages, guaranties, financing statements and other documents, agreements and
instruments executed in connection with the Underlying Construction Loans and
all collateral security therefor.
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"Underlying Line of Credit Borrower" means (a) the Underlying LOC Borrowers
(as defined in the Line of Credit Agreement), and (b) all subsidiaries of with
respect to which the LC Issuing Bank issues a letter of credit for the account
of Debtor in order to facilitate the purchase and sale by such subsidiaries of
vegetables and fruits.
"Underlying Line of Credit Collateral" means all of Debtor's assets
relating to the Underlying Line of Credit Loans, including without limitation,
all promissory notes, loan agreements, security agreements, reimbursement
agreements, deeds of trust, mortgages, guaranties, financing statements and
other documents, agreements and instruments executed in connection with the
Underlying Line of Credit Loans and all collateral security therefor.
"Underlying Line of Credit Loans" shall mean "Underlying Loans" as defined
in the Line of Credit Agreement and the reimbursement obligations owed to Debtor
in connection with the issuance of Letters of Credit (as defined in the Line of
Credit Agreement) pursuant to the Line of Credit Agreement.
"Underlying Term Loan Borrowers" shall have the meaning given to such term
in the Term Loan Agreement.
"Underlying Term Loans" shall have the meaning given to such term in the
Term Loan Agreement.
"Underlying Term Loan Collateral" means all of Debtor's assets relating to
the Underlying Term Loans, including without limitation, promissory notes, loan
agreements, security agreements, deeds of trust, mortgages, guaranties,
financing statements and other documents, agreements and instruments executed in
connection with the Underlying Term Loans and all collateral security therefor.
2. Collateral/Grant of Security Interest.
2.1. Grant of First Priority Interest. Debtor, for consideration and to
secure the Secured Obligations (as defined below), hereby grants a first
priority security interest to Secured Party in the Underlying Line of Credit
Collateral, tangible and intangible, wherever located and whether now owned or
hereafter acquired, together with all additions, substitutions, products thereof
and proceeds therefrom or arising out of the rights reflected therein, and all
renewals, amendments, substitutions, and replacements of all or any part
thereof, including without limitation the following property (collectively, the
"First Priority Collateral"):
(a) all promissory notes made by Underlying Line of Credit Borrowers
payable to Debtor to evidence the obligations of such Underlying Line of
Credit Borrowers to Debtor under their respective Underlying Line of Credit
Loans (collectively, "Underlying Line of Credit Notes");
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(b) all of Debtor's rights under (i) all loan agreements executed by
and between Debtor and an Underlying Line of Credit Borrower in connection
with an Underlying Line of Credit Loan (collectively, "Underlying Line of
Credit Agreements"), (ii) all mortgages, deeds of trust, security
agreements, financing statements, leasehold assignments and consents,
assignments and any other documents and agreements executed as security for
the obligations of an Underlying Line of Credit Borrower to Debtor
(collectively, "Underlying Line of Credit Security Documents"), and (iii)
any other instruments, documents or agreements executed and delivered in
connection with, or to secure the obligations of an Underlying Line of
Credit Borrower under its Underlying Line of Credit Agreement
(collectively, with its Underlying Line of Credit Note, Underlying Line of
Credit Agreement and Underlying Line of Credit Security Documents,
"Underlying Line of Credit Documents");
(c) all assets and properties acquired by Debtor through foreclosure,
or deed in lieu of foreclosure, on collateral for an Underlying Line of
Credit Loan, including without limitation the following:
(i) all of an Underlying Line of Credit Borrower's right, title
and interest in and to all permits, licenses, franchises,
certificates, plans and specifications, studies, contract rights (but
not obligations), claims against third parties, judgments, awards,
building materials, rights for utilities and other rights and
privileges obtained in connection with its Greenhouse Facility and the
real property on which its Greenhouse Facility is built ("Property"),
and all equipment, fixtures, and other personal property of any kind
or character, now or later located on or about its Property and its
Greenhouse Facility or used in connection with the construction or
operation thereof, or stored off its Property for future incorporation
on or about its Property and its Greenhouse Facility, together with
all accessories thereto, replacements thereof and substitutions
therefor;
(ii) all seed, fertilizer and other supplies, and all crops now
or in the future planted or growing on an Underlying Line of Credit
Borrower's Property, all crops harvested now or in the future on its
Property ("Produce") and all other farm products, and the products and
cash and non-cash proceeds of such crops, including general
intangibles, instruments, and Paid In Kind certificates and any
governmental subsidies, rebates or other payments with respect to
farming or related operations of such Underlying Line of Credit
Borrower on its Property or otherwise under any governmental programs;
(iii) all of the rents, bonuses, royalties, revenues, income,
proceeds, damages, profits and other benefits and income paid or
payable to an Underlying Line of Credit Borrower from its Property and
the improvements located thereon, the Leases (as defined below), or
from the use, possession, operation, or sale of its Property and the
improvements located thereon, including without limitation any
insurance or condemnation proceeds; and
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(iv) any and all leases, subleases, assignments, licenses,
concessions or other agreements (written or oral, now or later in
effect) which grant a possessory interest in and to, or the right to
use, all or any part of an Underlying Line of Credit Borrower's
Property and the improvements located thereon ("Leases"), and any and
all security and other deposits made in connection with the Leases and
all guaranties of those leases, including also any oil, gas and
mineral leases, and any bonuses, royalties, and other income from
Leases.
2.2. Grant of Second Priority Security Interest. Debtor, for consideration
and to secure the Secured Obligations, hereby grants a second priority security
interest to Secured Party in (a) the Underlying Construction Loan Collateral,
wherever located and whether now owned or hereafter acquired, together with all
additions, substitutions, products thereof and proceeds therefrom or arising out
of the rights reflected therein, and all renewals, amendments, substitutions,
and replacements of all or any part thereof, to be shared pari passu with the
Term Agent pursuant to the terms and provisions of the Intercreditor Agreement,
and (b) the Underlying Term Loan Collateral, wherever located and whether now
owned or hereafter acquired, together with all additions, substitutions,
products thereof and proceeds therefrom or arising out of the rights reflected
therein, and all renewals, amendments, substitutions, and replacements of all or
any part thereof, to be shared pari passu with the Construction Agent pursuant
to the terms and provisions of the Intercreditor Agreement (all of the foregoing
shall be collectively referred to herein as the "Second Priority Collateral").
2.3. Grant of First Priority Security Interest. Debtor, for consideration
and to secure the Secured Obligations, hereby grants a first priority security
interest to Secured Party to be shared pari passu with the Construction Agent
and the Term Agent pursuant to the terms and provisions of the Intercreditor
Agreement in all assets and properties of Debtor other than the First Priority
Collateral and the Second Priority Collateral, tangible and intangible, wherever
located and whether now owned or hereafter acquired, together with all
additions, substitutions, products thereof and proceeds therefrom or arising out
of the rights reflected therein, and all renewals, amendments, substitutions,
and replacements of all or any part thereof, including without limitation the
following property to the extent that it is not included in the First Priority
Collateral or the Second Priority Collateral (collectively, the "Shared
Collateral"):
all fixtures; furniture; furnishings, accounts; inventory
(including without limitation, returned or repossessed
goods); chattel paper; instruments, drafts; letters of
credit; money; utility and other deposits, documents;
equipment; tools; machinery; goods; motor vehicles;
investment property; general intangibles (including without
limitation, litigation rights and resulting judgments,
goodwill, patents, tradenames, trade secrets, trademarks and
other intellectual property, tax refunds, miscellaneous
rights to payment, entitlements, uncertificated securities,
margin accounts,
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computer programs, invoices, books, records and other
information relating to or arising out of Debtor's
business).
3. Secured Obligations. The security interests granted to Secured Party
under this Security Agreement shall secure the payment and performance of the
obligations to, and covenants and agreements of Debtor made for the benefit of,
the Line of Credit Lenders under the Line of Credit Loan Documents ("Secured
Obligations").
4. Representations and Warranties. Debtor represents and warrants to
Secured Party as follows:
4.1. Organization; Power and Authority, etc. Debtor is duly organized and
validly existing under the laws of the State of Delaware. Debtor has all
necessary power and authority to own its property, to carry on its business as
now owned and operated by it, and to make the Underlying Line of Credit Loans.
Debtor is duly qualified to do business and is in good standing in all
jurisdictions in which the failure to be so qualified would have a Material
Adverse Effect.
4.2. Due Authorization; Power. The execution, delivery and performance by
Debtor of this Security Agreement and the other Line of Credit Loan Documents
are within the powers of Debtor and have been duly authorized by all necessary
action on the part of Debtor.
4.3. Consents; Approvals. Debtor has obtained all consents or approvals of
any Person which are necessary for, or are required as a condition of, the
execution, delivery and performance of, and the enforcement of Secured Party's
rights and remedies under, this Security Agreement.
4.4. Title to Collateral. Debtor is the true and lawful owner of all
existing Underlying Line of Credit Loans, has full power and authority to pledge
and grant a security interest in the Underlying Line of Credit Loans and the
Underlying Line of Credit Documents, and has not granted any right or interest
in any existing or future Underlying Line of Credit Loans or the Underlying Line
of Credit Documents to any person or entity other than Secured Party, except for
the second priority security interest granted to the Construction Agent and the
Term Agent under the Construction Loan Documents and the Term Loan Documents,
respectively. Except as otherwise permitted hereunder or under the Line of
Credit Agreement and subject to the terms of the Intercreditor Agreement, Debtor
has good title to the Collateral free of all adverse claims, interests, liens,
or encumbrances and has full power and authority to sell, transfer, pledge, and
grant to Secured Party a security interest in, the Collateral.
4.5. Underlying Line of Credit Loans. With respect to the Underlying Line
of Credit Loans:
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(a) no default or event which with notice and/or the passage of time
would become a default under any of the Underlying Line of Credit Documents
for any Underlying Line of Credit Loan has occurred and is continuing;
(b) the proceeds of each existing Underlying Line of Credit Loan have
been, and the proceeds of each future Underlying Line of Credit Loan will
be, used for the purposes permitted under Sections 3.1 and 3.2 of the Line
of Credit Agreement;
(c) with respect to all existing Underlying Line of Credit Loans, the
Underlying Line of Credit Documents have been duly executed by the all
parties thereto and constitute the legal, valid and binding obligation of
all parties thereto, enforceable in accordance with their terms, subject to
the effects of bankruptcy, insolvency, and similar laws affecting the
rights of creditors generally or the availability of equitable remedies,
and are free from any right of set-off, counterclaim or other claim or
defense;
(d) each existing Underlying Line of Credit Loan is, and all future
Underlying Line of Credit Loans will be, secured by a first lien and
security interest in favor of Debtor in all assets of the Underlying Line
of Credit Borrower, free and clear of all other liens, security interests,
restrictions, adverse claims or defenses, except where the Underlying Line
of Credit Documents approved by Secured Party specifically state otherwise;
(e) to Debtor's knowledge and belief, there is no misstatement of a
material fact, nor an omission to state a material fact, in any of the
financial statements, projections, budgets or other information furnished
by or on behalf of any existing Underlying Line of Credit Borrower, nor,
has anything occurred subsequent to the furnishing of such information
which would have a material adverse effect on the results of operation,
business, property, or prospects of any existing Underlying Line of Credit
Borrower.
4.6. Principal Office; Collateral; Books and Records. The principal place
of business and, if Debtor has more than one place of business, the chief
executive office ("Principal Office") of Debtor and the locations of all
Collateral, other than Collateral in the possession of the Construction Agent,
the Term Agent or the Line of Credit Agent, and Debtor's books and records are
listed on Exhibit 4.6 attached hereto.
5. Covenants of Debtor. Debtor covenants to Secured Party that:
5.1. Title to Collateral. Except as otherwise permitted hereunder or under
the Line of Credit Agreement, Debtor shall not create or permit the existence of
any adverse claims, interests, liens, or other encumbrances against any of the
Collateral. Debtor shall (a) provide prompt written notice to Secured Party of
any future adverse claims, interests, liens, or encumbrances against any
Collateral, (b) promptly obtain a
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release or discharge of any such claims, interests, liens, or other encumbrances
and (c) diligently defend Debtor's and Secured Party's interests in the
Collateral.
5.2. Location of Debtor, Collateral and Books and Records. Debtor will not
change any place of business, its chief executive office, the location of any
Collateral or the location of its books and records without giving at least
thirty (30) days' prior written notice to Secured Party and furnishing Secured
Party with such documents as Secured Party may reasonably request pursuant to
Section 5.10 hereof prior to taking any such action.
5.3. Books and Records. Debtor shall keep proper books of record and
account in which complete and correct entries will be made of all of Debtor's
dealings in accordance with GAAP.
5.4. Inspection of Collateral. Upon Secured Party's request, Debtor shall
allow Secured Party, the Line of Credit Lenders or persons designated by any of
them, during normal business hours or at such other times as the parties may
agree, to: (a) examine the Collateral, wherever located, (b) examine and make
extracts or copies from Debtor's books and records; and (c) discuss Debtor's
affairs, finances, operations, and accounts with its respective officers,
directors, employees, and independent certified public accountants.
5.5. Transfers, Dispositions and Encumbrances. Except as otherwise
permitted hereunder or under the Line of Credit Agreement, (a) Debtor will not
offer to sell, sell, transfer or otherwise dispose of any of the Collateral or
any interest therein, and (b) Debtor will not create, incur, or permit to exist
any mortgage, lien, charge, encumbrance, or security interest whatsoever with
respect to the Collateral.
5.6. Maintenance and Repair; Taxes; Insurance. Debtor will keep the
Collateral in good order and repair and adequately insured at all times in
accordance with the provisions of the Line of Credit Agreement. Debtor will pay
promptly all taxes and other governmental charges with respect to the Collateral
when due and payable except as otherwise permitted hereunder or under the Line
of Credit Agreement. Secured Party or the Line of Credit Lenders, at their
option, may (a) discharge (i) any taxes or other governmental charges that
Debtor is required to pay but fails to pay, unless such taxes or governmental
charges are being contested in good faith by appropriate actions or proceedings;
provided that such reserves or other appropriate provisions, if any, as shall be
required by GAAP, shall have been made for such taxes or other governmental
charges, and (ii) liens, security interests, or other encumbrances to which any
Collateral is at any time subject that are not permitted hereunder or under the
Line of Credit Agreement, and (b) upon the failure of Debtor to do so, purchase
insurance on any insurable Collateral and pay for the repair, maintenance, or
preservation thereof, and Debtor agrees to reimburse Secured Party and the Line
of Credit Lenders on demand for any payment or expenses incurred by any of them
pursuant to the foregoing authorization and any unreimbursed amounts shall
constitute
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amounts owing under the Secured Obligations for all purposes under this Security
Agreement.
5.7. Compliance with Laws. Debtor shall not use the Collateral in violation
of any applicable statutes, regulations or ordinances where such violation would
have a Material Adverse Effect.
5.8. Change in Structure or Name. Debtor shall not, without the prior
written consent of Secured Party, change its name or business structure.
5.9. Underlying Line of Credit Documents. Debtor shall take all such
actions as are necessary to maintain the Underlying Line of Credit Documents in
full force and effect. Without the consent of Secured Party, Debtor shall not
amend, supplement, grant consents, or otherwise modify or waive compliance with
any provision of any Underlying Line of Credit Document. Each Underlying Line of
Credit Loan shall be secured by a first lien on all the assets of the Underlying
Line of Credit Borrower, except where the Underlying Line of Credit Documents
for such Underlying Line of Credit Loan approved by Secured Party specifically
state otherwise.
5.10. Possession of Collateral; Further Assurances. Debtor shall (a)
deliver promptly to Secured Party, with such endorsement as Secured Party shall
require, all instruments and documents comprising part of the First Priority
Collateral or the Shared Collateral, now owned or hereafter acquired, of which
possession is required in order to perfect the security interests of Secured
Party granted herein, (b) upon demand, execute, assign and endorse all proxies,
applications, acceptances, stock powers, chattel paper, documents, instruments
and other evidences of payment or writings constituting or relating to any of
the Collateral, and (c) execute from time to time financing statements and any
other documents in form and content satisfactory to Secured Party and perform
such other acts, including without limitation the notation of Secured Party's
interest on the face of all chattel paper, as Secured Party may reasonably
request to perfect, maintain and continue a valid security interest in the
Collateral, and Debtor will pay all costs associated with the filing or
recordation of any such documents.
6. Events of Default. Debtor shall be in default under this Security
Agreement upon the occurrence of an Event of Default under the Line of Credit
Agreement ("Event of Default").
7.Rights Upon Default.
7.1. General. Upon the occurrence of an Event of Default and at any time
thereafter (unless such Event of Default has been waived in writing by Secured
Party), Secured Party may declare the Secured Obligations immediately due and
payable, and Secured Party shall, subject to the provisions of the Intercreditor
Agreement, have all the rights and remedies of a secured party under Article 9
of the UCC or other applicable law and all the rights provided herein, in the
Line of Credit
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Agreement, or in any other instruments and documents executed and delivered in
connection with, or to secure the obligations of Debtor under, the Line of
Credit Agreement, all of which rights and remedies shall, to the full extent
permitted by law, be cumulative.
7.2. Right of Secured Party to Take Possession and Dispose of Collateral.
Upon the occurrence of an Event of Default, subject to and to the extent
permitted by the provisions of the UCC or other applicable law and the
Intercreditor Agreement, unless such Event of Default has been waived in writing
by Secured Party, Secured Party shall have the right to:
(a) take possession of the Collateral and enter upon the premises on
which the Collateral or any part thereof may be situated and remove the
Collateral from those premises and thereafter to hold, store, and/or use,
operate, manage, and control the Collateral;
(b) require Debtor to deliver the Collateral to Secured Party at a
place to be designated by Secured Party which is reasonably convenient to
both parties; and
(c) sell, lease or otherwise dispose of any or all of the Collateral
in its then present condition or following any commercially reasonable
preparation or processing thereof, whether by public or private sale, for
cash, on credit or otherwise, with or without representations or
warranties, and upon such terms as may be acceptable to Secured Party, and
Secured Party may purchase the Collateral at any public sale.
7.3. Notice of Disposition of Collateral. Unless the Collateral is
perishable or threatens to decline speedily in value or is of a type customarily
sold on a recognized market, Secured Party will give notice to Debtor of any
sale or other disposition by Secured Party with respect to any Collateral which
is subject to Article 9 of the UCC at the address for Debtor specified above, or
such other address as may from time to time be shown on Secured Party's records,
at least five (5) Business Days prior to such action. Any such notice shall be
deemed to meet any requirement hereunder or under an applicable law (including
without limitation the UCC) that reasonable notification be given of the time
and place of such sale or other disposition. Debtor consents and agrees that, in
addition to the other rights and remedies provided to Secured Party in this
Article 7, Secured Party may, in lieu of, or prior to, selling the Collateral at
public or private sale, retain any payments received on account of any of the
Collateral and apply the same to amounts owing under the Secured Obligations
until such time as the Secured Obligations have been paid in full.
7.4. Right of Secured Party to Use and Operate Collateral. Upon taking
possession of the Collateral, Secured Party may, from time to time, make all
repairs, replacements, alterations, additions, and improvements to and of the
Collateral that Secured Party deems proper. Debtor agrees to reimburse Secured
Party on demand for any expenses incurred by Secured Party pursuant to the
foregoing authorization and
11
any unreimbursed amounts shall constitute amounts owing under the Secured
Obligations for all purposes under this Security Agreement. In any such case,
subject to and to the extent permitted by the provisions of the Intercreditor
Agreement, the UCC, or other applicable law, Secured Party shall have the right
to operate, manage and control the Collateral and to carry on Debtor's business
and to exercise all rights and powers of Debtor in respect to the Collateral as
Secured Party shall deem best, including the right to enter into any agreements
with respect to the Collateral or any part thereof, that Secured Party sees fit;
and Secured Party shall be entitled to collect and receive all rents, issues,
profits, fees, revenues, and other income of the Collateral and every part
thereof. Such rents, issues, profits, fees, revenues, and other income shall be
applied to pay the expenses of holding and operating the Collateral and of
conducting the business thereof and of all maintenance, repairs, replacements,
alterations, additions, and improvements, and to make all payments which Secured
Party may be required or may elect to make, if any, for taxes, assessments,
insurance, and other charges upon the Collateral or any part thereof, and all
other payments which Secured Party may be required or authorized to make under
any provision of this Security Agreement (including reasonable attorneys' fees
and expenses). The remainder of such rents, issues, profits, fees, revenues, and
other income shall be applied to the payment of the Secured Obligations in such
order of priority as Secured Party shall determine in accordance with the
provisions of the Intercreditor Agreement and, unless otherwise provided by law
or by a court of competent jurisdiction, any surplus from the sale of the
Collateral shall be returned to Debtor. Without limiting the generality of the
foregoing, but subject to the provisions of the Intercreditor Agreement, Secured
Party shall have the right to apply for and have a receiver appointed ex-parte
by a court of competent jurisdiction in any action taken by Secured Party to
enforce its rights and remedies hereunder in order to manage, protect, and
preserve the Collateral and continue the operation of the business of Debtor and
to collect all revenues and profits thereof and apply them to the payment of all
expenses and other charges of such receivership, including the compensation of
the receiver, and to the payment of the Secured Obligations as described above
until a sale or other disposition of the Collateral shall be finally made and
consummated.
7.5. Collection of Accounts. Upon the occurrence of any Event of Default,
unless such Event of Default has been waived in writing by Secured Party,
Secured Party shall, subject to the provisions of the Intercreditor Agreement,
have the right at any time and from time to time, without notice, to (a) notify
account debtors that accounts have been assigned to Secured Party; (b) advise
account debtors of Secured Party's security interest and/or instruct account
debtors to make payments directly to Secured Party; (c) charge to any escrow or
other account of Debtor with Secured Party or any Line of Credit Lender or
controlled by any of them, any item of payment received by Secured Party which
is dishonored by the drawee or maker thereof; (d) endorse all items of payment
made payable to Debtor which may come into the possession of Secured Party; (e)
collect all accounts in Secured Party's name or Debtor's name and take control
of any cash or non-cash proceeds of accounts and of any returned or repossessed
goods; (f) compromise, extend or renew the amount owing on any account
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or deal with any account as Secured Party may deem advisable; and (g) make
exchanges, substitutions or surrenders of collateral for any account. Once any
or all account debtors have been notified, whether by Debtor or Secured Party,
to make payment directly to Secured Party, all amounts and proceeds received by
Debtor in respect of such accounts shall be received in trust for the benefit of
Secured Party, shall be segregated from other funds of Debtor, and shall be
immediately paid over to Secured Party in the same form as so received. Such
actions and the application of any such amounts to the Secured Obligations shall
not be deemed to constitute retention in satisfaction of the Secured Obligations
under Section 4-9-505 of the UCC and any comparable provision of the Uniform
Commercial Code as enacted in any other state where the Collateral is located.
7.6. Rights of Secured Party With Respect to the Securities Collateral.
Upon the occurrence of any Event of Default, unless such Event of Default has
been waived in writing by Secured Party:
(a) Secured Party, in its discretion, and without notice to Debtor,
may, subject to the provisions of the Intercreditor Agreement, take any one
or more of the following actions without liability except to account for
property actually received by it: (i) transfer to or register in its name
or the name of its nominee any stock certificates or evidence of other
equity interests included in the Collateral ("Securities Collateral"), with
or without indication of the security interest herein created, and whether
or not so transferred or registered, receive the income, dividends and
other distributions thereon and hold them as additional Collateral or apply
them to the Secured Obligations in any order of priority; (ii) exercise or
cause to be exercised all voting and corporate powers with respect to any
of the Securities Collateral so registered or transferred, including (1)
all rights to call or require shareholders meetings and to remove or elect
directors, and (2) all rights of proxy appointments, conversion, exchange,
subscription or any other rights, privileges or options pertaining to such
Securities Collateral, as if the absolute owner thereof; (iii) exchange any
of the Securities Collateral for other property upon a reorganization,
recapitalization, reclassification or other readjustment and, in connection
therewith, deposit any of the Securities Collateral with any depository
upon such terms as Secured Party may determine; and (iv) in its name or in
the name of Debtor, demand, xxx for, collect or receive any money or
property at any time payable or receivable on account of or in exchange for
any of the Securities Collateral, and Secured Party further shall have the
right at any time to sign and endorse the name of Debtor upon any stock
certificate, stock power, check, draft, money order, or any other documents
of title or evidences of payment with respect to the Securities Collateral,
in the name of Debtor, it being the intention of Debtor to grant to Secured
Party the right to sell any portion or all of the Securities Collateral and
the proceeds therefrom, upon the occurrence of an Event of Default
hereunder.
(b) If Secured Party in good faith believes that the Securities Act of
1933 ("Act") or any other state or federal law prohibits or restricts the
customary manner of sale or distribution of any of the Securities
Collateral, Secured Party may,
13
subject to the provisions of the Intercreditor Agreement, sell such
Securities Collateral privately or in any other manner deemed advisable by
Secured Party at such price or prices as Secured Party determines in its
sole discretion. Debtor recognizes that such prohibition or restriction may
cause the Securities Collateral to have less value than it otherwise would
have and that, consequently, such sale or disposition by Secured Party may
result in a lower sales price than if the sale were otherwise held. Secured
Party may sell the Securities Collateral in one or more sales or parcels,
for cash, credit or future delivery, and with or without the use of a
stockbroker, as Secured Party may deem advisable. Secured Party may be the
purchaser of any or all of the Securities Collateral. In the event that
Secured Party elects to sell all or any part of the Securities Collateral
in a public sale, Debtor shall use its best efforts to register and qualify
the Securities Collateral, or the applicable part thereof, under the Act
and all state securities laws, and all expenses thereof shall be payable by
Debtor, including, but not limited to, all costs of registration or
qualification of any Securities Collateral under the Act and any state
securities laws, and the sale of such Securities Collateral, including, but
not limited to, brokers' or underwriters' commissions, fees or discounts,
accounting and legal fees and disbursements, and expenses of transfer and
sale.
(c) Notwithstanding any provision herein to the contrary, CoBank may
transfer, dispose or liquidate Debtor's CoBank Equity Interests in
accordance with its usual procedures and in accordance with its bylaws and
capital plan as applicable to cooperative borrowers generally.
7.7. Collection of Underlying Line of Credit Notes. Upon the occurrence of
any Event of Default, unless such Event of Default has been waived in writing by
Secured Party, Secured Party may, subject to the provisions of the Intercreditor
Agreement, (a) notify and require each Underlying Line of Credit Borrower to
make all payments owing on the Underlying Line of Credit Notes directly to
Secured Party, (b) endorse all items of payment, with respect to amounts owing
under Underlying Line of Credit Notes, made payable to Debtor which may come
into the possession of Secured Party; (c) collect amounts owing under the
Underlying Line of Credit Notes in Secured Party's name or Debtor's name; (d)
compromise, extend or renew the amount owing on any Underlying Line of Credit
Loan or deal with any Underlying Line of Credit Loan as Secured Party may deem
advisable; (e) make exchanges, substitutions or surrenders of collateral for any
Underlying Line of Credit Loan, and (f) declare the Underlying Line of Credit
Loans immediately due and payable, exercise all rights of Debtor under the
Underlying Line of Credit Documents and foreclose on all collateral for the
Underlying Line of Credit Loans in accordance with the rights of Debtor under
the Underlying Line of Credit Documents. Once any or all Underlying Line of
Credit Borrowers have been notified, whether by Debtor or Secured Party, to make
payment directly to Secured Party, all amounts and proceeds received by Debtor
in respect of such Underlying Line of Credit Loans shall be received in trust
for the benefit of Secured Party, shall be segregated from other funds of
Debtor, and shall be immediately paid over to Secured Party in the same form as
so received. Debtor agrees that by taking such action Secured Party will be
deemed to have acted in a
14
commercially reasonable manner and that such action by Secured Party will not be
deemed to constitute retention of the Underlying Line of Credit Notes in
satisfaction of the Secured Obligations under Section 4-9-505 of the UCC and any
comparable provision of the Uniform Commercial Code as enacted in the state
where Debtor is located or otherwise.
8. General Provisions.
8.1. Appointment and Rights of Agent. Debtor acknowledges, agrees, and
consents (a) to the appointment by the Line of Credit Lenders of CoBank as Agent
under the Line of Credit Agreement ("Agent") for the purposes of administering
certain aspects of the Line of Credit Loan, (b) that CoBank as Agent is acting
for the benefit of the Line of Credit Lenders hereunder, and (c) that in the
event that a Successor Agent is appointed for CoBank in its capacity as Agent in
accordance with the provisions of the Line of Credit Agreement and written
notification thereof is provided to Debtor by CoBank, any Line of Credit Lender
or such Successor Agent, such Successor Agent shall be entitled to exercise all
the rights of Secured Party hereunder, and that Debtor will perform all its
obligations hereunder with respect to such rights as it may be directed by such
Successor Agent.
8.2. Amendment, Modification, and Waiver. Without the prior written consent
of Secured Party and Debtor, no amendment, modification, or waiver of, or
consent to any departure by Debtor from, any provision hereunder shall be
effective. Any such amendment, modification, waiver, or consent shall be
effective only in the specific instance and for the specific purpose for which
given. No waiver by Secured Party of any default shall be effective unless in
writing, and any such waiver shall not operate as a waiver of any other default
or the same default on a future occasion. The taking of the security interest
created by this Security Agreement shall not be deemed to waive or impair any
other security interest Secured Party may have or hereafter acquire for the
payment of the Secured Obligations, nor shall the taking of any such additional
security interest waive or impair this Security Agreement; but Secured Party may
resort to any security it may have in the order it may deem proper, and
notwithstanding any collateral security, Secured Party shall retain its rights
of setoff against Debtor. No delay or omission on the part of Secured Party in
exercising any right hereunder shall operate as a waiver of such right or of any
other right hereunder.
8.3. Costs and Attorneys' Fees. Debtor will, upon demand, pay to Secured
Party and the Line of Credit Lenders the amount of any and all expenses,
including the reasonable attorneys' fees and expenses of counsel for Secured
Party and the Line of Credit Lenders and of any experts and agent, which Secured
Party and the Line of Credit Lenders may incur in connection with (a) the
administration of this Security Agreement upon the occurrence of an Event of
Default, unless and until such Event of Default has been waived in writing by
Secured Party; (b) the collection, retaking, storage, custody, preservation, use
or operation of, preparing for sale, selling or other disposition and delivery,
collection from, or other realization upon, any of the Collateral; (c) the
exercise or enforcement of any of the rights of Secured Party
15
hereunder; or (d) the failure by Debtor to perform or observe any of the
provisions hereof.
8.4. Revival of Obligations. To the extent Debtor or any third party makes
a payment or payments to Secured Party or Secured Party enforces its security
interest or exercises any right of setoff, and such payment or payments or the
proceeds thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside, and/or required to be repaid to a trustee, receiver, or
any other party under any bankruptcy, insolvency or other law or in equity,
then, to the extent of such recovery, the Secured Obligations or any part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment or payments had not been made, or such
enforcement or setoff had not occurred.
8.5. Performance by Secured Party. In the event Debtor shall at any time
fail to pay or perform punctually any of its obligations hereunder, Secured
Party may, at its option and without notice to or demand upon Debtor, without
obligation and without waiving or diminishing any of its other rights or
remedies hereunder, fully perform or discharge any of such duties. All costs and
expenses incurred by Secured Party in connection therewith, together with
interest thereon at the Default Interest Rate set forth in the Line of Credit
Agreement, shall become part of the Secured Obligations and be paid by Debtor
upon demand.
8.6. Power of Attorney. Secured Party is hereby appointed Debtor's
attorney-in-fact, with full power of substitution, at Secured Party's option and
Debtor's expense, to do all acts and things which Secured Party may reasonably
deem necessary to perfect and continue to perfect the security interest created
by this Security Agreement, to protect its interest in the Collateral, and, upon
the occurrence of an Event of Default hereunder (unless and until such Event of
Default has been waived in writing by Secured Party), to protect or enforce and
collect on the Collateral subject to the provisions of the Intercreditor
Agreement, including without limitation:
(a) to obtain and adjust the insurance required to be maintained
hereunder;
(b) to ask, demand, collect, xxx for, recover, compromise, receive and
give receipts for moneys due and to become due under the Underlying Line of
Credit Documents;
(c) to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with (a) above;
(d) to file any claims or take any action or institute any proceedings
which Secured Party may deem necessary or desirable for the collection of
any of the Collateral or otherwise to enforce the rights of the Secured
Party with respect to any of the Collateral; and
16
(e) to collect the Underlying Line of Credit Loans and Underlying Line
of Credit Notes and to enforce all rights and remedies available to Debtor
under the Underlying Line of Credit Documents and to endorse all items of
payment on the Underlying Line of Credit Loans made payable to Debtor which
may come into the possession of Secured Party.
The power vested in Secured Party as Debtor's attorney-in-fact is, and shall be
deemed to be, coupled with an interest and cannot be revoked.
8.7. Protection of Collateral. Secured Party shall not be required to take
any steps necessary to preserve any rights in the Collateral. Secured Party
shall further be under no duty to exercise or to withhold the exercise of any of
the rights, powers, privileges and options expressly or implicitly granted to
Secured Party in this Security Agreement, and Secured Party shall not be
responsible for any failure to exercise such rights nor for its delay in so
doing. Secured Party shall be deemed to have exercised reasonable care as
custodian of the Collateral if it takes such action to protect and preserve the
Collateral as Debtor shall request, but failure to honor any such request shall
not be deemed to be a failure by Secured Party to exercise reasonable care. The
care which Secured Party gives to the safekeeping of its property of like kind
shall constitute reasonable care of the Collateral when in Secured Party's
possession.
8.8. Additional Rights of Secured Party. Secured Party, in its discretion,
and without notice to Debtor, may take any one or more of the following actions
without liability except to account for property actually received by it: (a)
after the occurrence of an Event of Default, unless such Event of Default has
been waived in writing by Secured Party, renew, extend, or otherwise change the
terms and conditions of any of the Collateral; (b) take or release any other
collateral as security for any of the Collateral or the Secured Obligations; and
(c) add or release any guarantor, endorser, surety or other party to any of the
Collateral or Secured Obligations.
8.9. Successors and Assigns. This Security Agreement shall be binding upon
and inure to the benefit of Debtor and Secured Party and their respective
successors and assigns, except that Debtor may not assign or transfer its rights
or obligations hereunder without the prior written consent of Secured Party.
8.10. Advances. Nothing herein contained shall be construed to obligate the
Line of Credit Lenders to make any loans or advances to Debtor and the sole
purpose of this Security Agreement is to provide collateral security for the
Secured Obligations.
8.11. Severability. Should any provision of this Security Agreement be
deemed unlawful or unenforceable, said provision shall be deemed several and
apart from all other provisions of this Security Agreement and all remaining
provisions of this Security Agreement shall be fully enforceable.
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8.12. Governing Law. This Security Agreement shall be governed by and
interpreted in accordance with the laws of the State of Colorado except to the
extent that the validity or perfection of the security interest hereunder, or
remedies hereunder in respect of any particular collateral, are governed by the
laws of a jurisdiction other than the State of Colorado.
8.13. Notices. Notices by any party hereto to any other party hereto shall
be given as provided in the Line of Credit Agreement.
8.14. Financing Statement. A copy, including a photocopy, of this Security
Agreement may be filed as a financing statement. Debtor authorizes Secured Party
to file financing statements without Debtor's signature where permitted by law.
8.15. Conflict with Line of Credit Agreement. In the event of a conflict
between the terms of this Security Agreement and those of the Line of Credit
Agreement, the provisions of the Line of Credit Agreement shall control.
This Security Agreement is executed as of the date first above written.
DEBTOR:
VILLAGE FARMS INTERNATIONAL
FINANCE ASSOCIATION, a cooperative
corporation formed under the laws of the
state of Delaware
By:
---------------------------------------
Name: J. Xxxxx Xxxx
Title: Vice President
SECURED PARTY:
COBANK, ACB, as Agent on behalf of and for
the benefit of the Line of Credit Lenders
By:
---------------------------------------
Name: Xxxx Xxxxxxxxxxx
Title: Vice President
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