Exhibit 6.24
SECURITY AGREEMENT
This Security Agreement ("Security Agreement") is dated as of March 19,
1997 among Food Extrusion, Inc., a Nevada corporation (the "Company"), Food
Extrusion Montana, Inc., a Montana corporation and a wholly-owned subsidiary of
the Company ("Purchaser") and CF Corporation, an Idaho corporation (the "Secured
Party").
RECITALS:
A. The defined terms used in this Security Agreement shall have the
respective meanings indicated in Section 1 unless elsewhere defined or unless
the context shall otherwise require.
B. The Company, Purchaser, and the Secured Party have entered into that
certain Asset Purchase Agreement (the "Purchase Agreement") whereby Purchaser
will purchase the assets and assume certain liabilities of the Secured Party in
consideration of the Company issuing 310,000 shares of the Company's Common
Stock, par value $.001 (the "Shares") to the Secured Party.
C. The Company and the Secured Party have entered into that certain
Shareholder's Agreement of even date herewith whereby the Company has granted
the Secured Party the right to put the Shares owned by the Secured Party to the
Company pursuant to the terms and conditions set forth in the Shareholders'
Agreement (the "Put").
D. All of the requirements of law have been fully complied with and all
other acts and things necessary to make this Security Agreement a valid, binding
and legal instrument have been done and performed.
AGREEMENT
NOW THEREFORE, the parties, intending to be legally bound and for good
and valuable consideration hereby agree as follows:
SECTION 1. DEFINITIONS
The following terms shall have the following meanings for all purposes
of this Security Agreement:
"Assumed Liabilities" shall have the meaning set forth in the Purchase
Agreement.
"Collateral" shall have the meaning set forth in Section 2 hereof.
The "Company" shall mean Food Extrusion, Inc., a Nevada corporation.
"Purchaser" shall mean Food Extrusion Montana, Inc., a Montana
corporation.
"Put" shall mean the Put granted the Secured Party pursuant to the
terms of the Shareholder's Agreement.
"Secured Obligations" shall mean the obligations of the Company and
Purchaser to (i) purchase the Shares from the Secured Party upon exercise of the
Put and (ii) pay the Assumed Liabilities.
"Secured Party" shall mean Centennial Foods, Inc., an Idaho
corporation, and any person, firm or corporation which succeeds to the right,
title and interest thereto in and to such security interest.
SECTION 2. GRANT OF SECURITY
Purchaser, in consideration of the premises and of the sum of One
Dollar received by Purchaser from the Secured Party and other good and valuable
consideration, receipt whereof is hereby acknowledged, and in order to secure
the Secured Obligations and the performance and observance of all of the
covenants and conditions of the Company and Purchaser in this Security Agreement
contained, does hereby grant to the Secured Party a security interest in, and
hypothecate unto the Secured Party, its successors and permitted assigns, all
and singular of Purchaser's right, title and interest in and to the properties,
rights, interests and privileges described in Section 2.1 hereof, whether now
owned by Purchaser or hereafter acquired and whether now existing or hereafter
coming into existence, and wherever located (all being collectively referred to
herein as the "Collateral").
2.1 Collateral.
Collateral consists of all of Purchaser's now owned and
hereafter existing or acquired accounts, general intangibles, inventory,
equipment and fixtures purchased by Purchaser from the Secured Party, pursuant
to the Purchase Agreement, and located at 0000 Xxxxxxx Xxxx, Xxxxxx, Xxxxxxx
listed on Schedule 1 attached hereto, and any and all property of Purchaser now
or hereafter in the possession of, or pledged or assigned to the Secured Party,
and all products, replacements and proceeds of, rents, issues, income, profits,
products of, and accessions and additions to, any of the foregoing property and
interests in property, together with all of Purchaser's books and records
relating to any of the foregoing property located in Dillon, Montana, as set
forth on Schedule 1 attached hereto.
2.2 Duration of Security Interest.
The Secured Party, its successors and assigns shall have and
hold the Collateral forever; provided, always, however, that such security
interest is granted upon the express condition that if the Company or Purchaser
shall pay or cause to be paid the Secured Obligations, then these presents and
the estate hereby granted and conveyed shall cease and this Security Agreement
shall become null and void and the Secured Party will take such actions to
release the lien hereof as are set forth in Section 6.4 hereof; otherwise to
remain in full force and effect.
SECTION 3. COVENANTS AND WARRANTIES OF THE COMPANY
The Company and Purchaser covenant, warrant and agree for the benefit
of the Secured Party as follows:
(a) The Collateral is in Purchaser's possession at the
Company's office at 0000 Xxxxxxx Xxxx, Xxxxxx, Xxxxxxx.
(b) Purchaser is the lawful owner of the Collateral and has
the sole right and lawful authority to deliver this instrument;
(c) The Collateral and every part thereof is free and clear of
all security interests, liens, attachments, levies, and encumbrances of every
kind, nature and description and Purchaser will warrant and defend the
Collateral against any claims and demands of all persons at any time claiming
the same or any interest therein adverse to the Secured Party, except any
security interests, liens, attachments, levies and encumbrances incurred in
connection with the Assumed Liabilities;
(d) Purchaser will insure the Collateral which is insurable
with financially sound and reputable insurers and in such forms and amounts and
against such risks as are customary for corporations of established reputation
engaged in the same or similar business and owning or operating similar
properties under policies (containing loss payable clauses to the Secured Party
as its interest may appear or, if the Secured Party requests, naming the Secured
Party as an additional insured therein) and all premiums thereon shall be paid
by Company and the policies delivered to the Secured Party;
(e) Purchaser may not remove the Collateral from its present
location without the Secured Party's prior written consent;
(f) The Secured Party may, at its option, discharge any past
due taxes, liens, security interests or other encumbrances at any time levied or
placed on the Collateral and may pay for the maintenance and preservation of the
Collateral, including the purchasing of insurance therefor, and Purchaser will
upon written notice reimburse the Secured Party for any payment made or any
expense incurred by the Secured Party pursuant to the foregoing authority. All
such expenses and payments shall have the benefit of and be secured by the
security interest herein granted;
(g) Purchaser agrees to execute and deliver to the Secured
Party such further agreements and assignments or other instruments and to do all
such other things as the Secured Party may reasonably deem necessary or
appropriate to assure the Secured Party its security interest hereunder,
including such financing statement or statements or amendments thereof or
supplements thereto or other instruments as the Secured Party may from time to
time require in order to comply with the Uniform Commercial Code in any
applicable jurisdiction;
(h) Any and all property specifically described or referred to
in the granting clauses hereof which is hereafter acquired shall ipso facto, and
without any further conveyance, assignment or act on the part of Purchaser or
the Secured Party, become and be subject to the lien of this Security Agreement
as fully and completely as though specifically described herein;
(i) Purchaser shall not directly or indirectly create, incur,
assume or suffer to exist any lien on or with respect to the Collateral, title
thereto or any interest therein, except any lien on with respect to the
collateral, title thereto or any interest therein incurred in connection with
the Assumed Liabilities;
(j) Purchaser shall use its reasonable efforts to maintain the
Collateral in substantially the same physical condition as that which existed on
the date hereof, subject to normal wear and tear; and
(k) Purchaser does hereby irrevocably constitute and appoint
the Secured Party its true and lawful attorney with full power of substitution,
for it and in its name, place and stead, to file any claim or take any action or
proceedings, either in its own name or in the name of Purchaser or otherwise,
which the Secured Party reasonably may deem necessary or appropriate to protect
and preserve the right, title and interest of the Secured Party in and to the
Collateral and the security intended to be afforded hereby.
SECTION 4. POSSESSION OF COLLATERAL; INVENTORY
4.1 Possession of the Collateral.
So long as no Event of Default shall have occurred and be
continuing, Purchaser shall be permitted to remain in full possession, enjoyment
and control of the Collateral and to manage, operate and use the same and each
part thereof with the rights and franchises appertaining thereto; provided
always, that the possession, enjoyment, control and use of the Collateral shall
at all times be subject to the observance and performance of the terms of this
Security Agreement.
4.2 Inventory.
Purchaser may, until otherwise notified, without further
consent or approval of the Secured Party use, consume and sell the Inventory in
the ordinary course of its business, but a sale in the ordinary course of
business shall not include any transfer or sale in satisfaction, partial or
complete, of a debt owing by Purchaser (other than obligations to customers
arising from the return of goods or otherwise in the ordinary course of
business).
SECTION 5. DEFAULTS AND REMEDIES
5.1 Events of Defaults.
Upon the happening, at any time, of any of the following
events:
(a) Any failure to pay when due the full amount of any Secured
Obligations and such failure to pay shall have continued beyond the period of
grace, if any, provided in the instrument or agreement under which such
obligation was created and shall not have been waived; or
(b) Default in the performance of any other obligation,
representation, or warranty set forth in or secured by this Security Agreement
and such default shall continue unremedied for a period of thirty (30) days
after notice thereof to the Company and Purchaser by the Secured Party; or
(c) Liquidation, termination, or dissolution of the Company or
Purchaser;
(d) The bankruptcy or insolvency of, assignment for the
benefit of creditors by, or the institution of proceedings under the Bankruptcy
Act by Company or Purchaser and filing of any involuntary petition in bankruptcy
against the Company or Purchaser which is not dismissed within thirty (30) days;
or
(e) The levy of any writ of attachment or execution against
any property owned by the Company or Purchaser, which levy is not removed within
thirty (30) days; or
(f) The appointment of any receiver with respect to any
property by the Company or Purchaser, which receiver is not removed within
thirty (30) days; or
(g) Loss, substantial damage to, or destruction of any
material portion of the Collateral; or
(h) Entry of any final judgment for the payment of money shall
be entered by a court against the Company or Purchaser and there shall have been
a period of thirty (30) days during which a stay of enforcement thereof shall
not be in effect or during which the same shall not have been paid, vacated,
discharged or bonded; then, and in any of such Events of Default, the Secured
Party shall have an immediate right to pursue the remedies set forth in this
Security Agreement.
5.2 The Secured Party's Rights.
Purchaser agrees that, except as otherwise required by mandatory
provisions of law and except to the extent that the validity or perfection of
the security interests or rights or remedies under the Security Agreement are
governed by the laws of a jurisdiction other than the State of California, when
any Event of Default has occurred and is continuing the Secured Party shall,
without limitation of all other rights and remedies available at law or in
equity, have the rights, options, duties and remedies of a secured party, and
the Company shall have the rights and duties of a debtor, under the Uniform
Commercial Code of California (regardless of whether such Code or a law similar
thereto has been enacted in a jurisdiction wherein the rights or remedies are
asserted).
5.3 Cumulative Remedies.
No delay or omission of the Secured Party to exercise any right or
power arising from any default shall exhaust or impair at such right or power or
prevent its exercise during the continuance of such default. No waiver by the
Secured Party of any such default, whether such waiver be full or partial, shall
extend to or be taken to affect any subsequent default, or to impair the rights
resulting therefrom except as may be otherwise provided therein. No remedy
hereunder is intended to be exclusive of any other remedy but each and every
remedy shall be cumulative and in addition to any and every other remedy given
hereunder or otherwise existing; nor shall the giving, taking or enforcement of
any other or additional security, collateral or guaranty for the Secured
Obligations operate to prejudice, waive or affect the security of this Security
Agreement or any rights, powers or remedies hereunder, nor shall the Secured
Party be required to first look to, enforce or exhaust such other or addition
security, collateral or guaranties.
SECTION 6. MISCELLANEOUS
6.1 Successors and Assigns.
Whenever any of the parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such party; and all the
covenants, promises and agreements in this Security Agreement contained by or on
behalf of the Company or by or on behalf of the Secured Party shall bind and
inure to the benefit of the respective successors and assigns of such parties
whether so expressed or not.
6.2 Partial Invalidity.
The unenforceability or invalidity of any provision or provisions of
this Security Agreement shall not render any other provision or provisions
herein contained unenforceable or invalid.
6.3 Communications.
All communications provided for herein shall be in writing.
Communications to the Company, Purchaser or the Secured Party shall be deemed to
have been given (unless otherwise required by the specific provisions hereof in
respect of any matter) when addressed and delivered to the Secured Party, the
Company or Purchaser at the address for such party set forth on the signature
page of this Agreement or at such other address as the Company, Purchaser or the
Secured Party may designate by notice duly given in accordance with this Section
to the other party.
6.4 Release and Transfer.
The Secured Party shall release this Security Agreement and the
security interest granted hereby by proper instrument or instruments upon
presentation of satisfactory evidence that the Secured Obligations have been
fully paid or discharged and shall assign, transfer and deliver its rights in
any remaining Collateral and money received in respect thereof, to or on the
order of Purchaser. The Secured Party shall also execute and deliver to
Purchaser upon such termination such Uniform Commercial Code termination
statements and such other documentation as shall reasonably be requested by
Purchaser to effect the termination and release of the Secured Party's lien on
the Collateral.
6.5 Counterparts.
This Security Agreement may be executed, acknowledged and delivered in
any number of counterparts, each of such counterparts constituting an original
but all together only one Security Agreement.
6.6 Governing Law.
This Security Agreement shall be construed in accordance with and
governed by the laws of the State of California except as required by mandatory
provisions of law and except to the extent that the validity or perfection of
the security interests or the rights or remedies under this Security Agreement
are governed by the laws of a jurisdiction other than the State of California.
6.7 Headings.
Any headings or captions preceding the text of the several sections
hereof are intended solely for convenience of reference and shall not constitute
a part of this Security Agreement nor shall they affect its meaning,
construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be executed all as of the day and year first above written.
THE "COMPANY"
FOOD EXTRUSION, INC.
By: /s/ X.X. XxXxxx
-------------------
Name: Xxxxxx X. XxXxxx
Title: Chief Executive Officer
Address: 0000 Xxxx'x Xxxxxx Xxxxx
Xx Xxxxxx Xxxxx, XX 00000
"PURCHASER"
FOOD EXTRUSION MONTANA, INC.
By: /s/ Xxxx Xxxx
Name: Xxxx Xxxx
Title: Chief Financial Officer
Address: 0000 Xxxx'x Xxxxxx Xxxxx
Xx Xxxxxx Xxxxx, XX 00000
CF CORPORATION
By: /s/ Xxx Xxxxx
Name: Xxx Xxxxx
Title: President and
Chief Executive Officer
Address: 0000 Xxxxxxx Xxxx
Xxxxxx, Xxxxxxx 00000
SCHEDULE 1
Collateral
