EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (this "Agreement") dated as of January 2, 2000, is
made by and between COGENTRIX DELAWARE HOLDINGS, INC., a Delaware corporation,
having its principal place of business at 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxxx, XX 00000 ("CDH"), and ECOSCIENCE CORPORATION, a Delaware
corporation, having its principal place of business at 00 Xxxxx Xxxxx, Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000 (the "EcoScience").
WITNESSETH
WHEREAS, EcoScience issued in favor of CDH (i) the promissory note, dated
December 30, 1998 in the principal amount of $20,600,000 and (ii) the promissory
note, dated March 15, 1999 in the principal amount of $1,000,000 (collectively,
the "EcoScience Notes"); and
WHEREAS, Agro Power Development Inc., a wholly owned subsidiary of
EcoScience ("APD"), issued in favor of CDH the promissory note, dated March 10,
1997, in the principal amount of $893,750 (the "Agro Power Note" and, together
with the EcoScience Notes, the "Notes"); and
WHEREAS, EcoScience desires to exchange the Notes for the promissory note,
dated as of the date hereof, and attached as Exhibit A hereto (the "Exchange
Note") and CDH is willing to exchange the Notes for the Exchange Note on the
terms and subject to the conditions set forth herein and therein; and
WHEREAS, contemporaneous with the effectiveness of this Agreement (i) each
of Cogentrix of Buffalo, Inc., Cogentrix of Fort Xxxxx, Inc., Cogentrix of
Marfa, Inc. and Cogentrix of Pocono, Inc. (collectively, the "Merged
Corporations") is being merged with and into Village Farms of Delaware, LLC and
(ii) Cogentrix Greenhouse Investments, Inc. ("CGI") is being merged with and
into APD;and
WHEREAS, capitalized terms used herein and not otherwise defined herein
shall have the meanings set forth in the Stock Purchase Agreement (the "Stock
Purchase Agreement") dated as of December 7, 1998, between CDH and EcoScience.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, the parties agree as follows:
1. Exchange of Notes. The obligation of EcoScience and APD to pay the
outstanding principal together with all interest accrued on the Notes is
hereby excused by CDH and EcoScience shall hereinafter be obligated to pay
the principal of, and interest on, the indebtedness evidenced by the
Exchange Note in accordance with the terms and conditions contained herein
and therein. Such exchange is hereby evidenced by the cancellation and
return by CDH to EcoScience of the EcoScience Notes, the return by CDH to
APD of the Agro Power Note and the execution and delivery by EcoScience of
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the Exchange Note and receipt thereof by CDH taking place contemporaneously
with the execution of this Agreement.
2. Consideration for Exchange. In consideration for the exchange by CDH of the
Notes for the Exchange Note, EcoScience shall, concurrently herewith,
authorize and issue 333,333 shares of Series A Preferred Stock of
EcoScience (the "Series A Preferred Stock") containing the provisions set
forth on Exhibit B hereto and is delivering such shares to CDH.
3. Delivery of Certain Documents. Contemporaneous with the execution of this
Agreement, EcoScience is delivering to CDH (i) a certified
copy of all corporate resolutions authorizing the transactions contemplated
hereunder and an incumbency certificate; and (ii) an opinion of counsel to
EcoScience.
4. Pledge Arrangement.
(a) CDH hereby agrees that the shares of the Merged Corporations and CGI
are hereby released from the Stock Pledge and CDHI is delivering the
certificates representing such shares to EcoScience;
(b) Contemporaneously with the execution of this Agreement, EcoScience and
CDH are entering into a Pledge Agreement (the "New Pledge Agreement")
pursuant to which all of the outstanding shares of APD (the "APD
Shares") are being pledged to CDH;
(c) Subject to the terms of a Stock Custody Bailment Agreement among
CoBank, ACB, CDH and EcoScience (the "Stock Custody Bailment
Agreement") being executed contemporaneously with this Agreement, CDH
is subordinating the lien on the APD Shares created by the New Pledge
Agreement to the lien of CoBank, ACB and delivering to CoBank, ACB the
certificates representing the APD Shares.
5. Representations and Warranties of EcoScience. EcoScience hereby represents
and warrants to CDH as follows:
(a) Organization and Authority of EcoScience. EcoScience is a corporation
duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all necessary corporate power and
authority to enter into this Agreement, the New Pledge Agreement and
the Stock Custody Bailment Agreement and to issue the Exchange Note
and the Series A Preferred Stock, to carry out its obligations
hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this
Agreement, the New Pledge Agreement and the Stock Custody and Bailment
Agreement and the issuance of the Exchange Note and the Series A
Preferred Stock by EcoScience, the performance by EcoScience of its
obligations hereunder and thereunder and the consummation by
EcoScience of the transactions
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contemplated hereby and thereby have been duly authorized by all requisite
action on the part of EcoScience. This Agreement, the New Pledge Agreement
and the Stock Custody Bailment Agreement, the Exchange Note and the Series
A Preferred Stock have been duly executed and delivered by EcoScience, and
(assuming due authorization, execution and delivery by CDH) each of this
Agreement, the New Pledge Agreement, the Stock Custody Bailment Agreement
and the Exchange Note constitutes a valid and binding obligation of
EcoScience enforceable against EcoScience in accordance with its terms.
(b) No Conflict. Except as may result from any facts or circumstances
relating solely to CDH, the execution, delivery and performance of
this Agreement, the New Pledge Agreement and the Stock Custody
Bailment Agreement and the issuance of the Exchange Note and the
Series A Preferred Stock by EcoScience do not and will not (i)
violate, conflict with or result in the breach of any provision of the
Certificate of Incorporation or By-laws of EcoScience, (ii) conflict
with or violate any law or governmental order applicable to EcoScience
or (iii) conflict with, or result in any breach of, constitute a
default (or event which with the giving of notice or lapse of time, or
both, would become a default) under, require any consent under, or
give to others any rights of termination, amendment, acceleration,
suspension, revocation, or cancellation of, or result in the creation
of any encumbrance on any of the assets or properties of EcoScience
pursuant to, any note, bond, mortgage or indenture, contract,
agreement, lease, sublease, license, permit, franchise or other
instrument or arrangement to which EcoScience is a party or by which
any of such assets or properties are bound or affected.
(c) Governmental Consents and Approvals. The execution, delivery and
performance of this Agreement, the New Pledge Agreement and the Stock
Custody Bailment Agreementand the issuance of the Exchange Note and
the Series A Preferred Stock by EcoScience do not and will not require
any consent, approval, authorization or other order of, action by,
filing with, or notification to, any governmental authority.
6. Miscellaneous.
(a) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same
agreement, it being understood that all parties need not sign the same
counterpart.
(b) Entire Agreement; No Third-Party Beneficiaries.. This Agreement and
the Pledge Amendment (including the documents and instruments referred
to herein and therein) (i) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and
oral, between CDH and EcoScience with respect to the subject matter
hereof and (ii) is not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder.
(c) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF
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NORTH CAROLINA.
7. Mandatory Payments and Prepayments.
(a) On December 1st of each year commencing on December 1, 2003, until and
including December 1, 2007, EcoScience shall pay the principal amount
then outstanding under the Exchange Note in the amount of
$3,180,000.00.
(b) EcoScience shall prepay the principal amount outstanding from time to
time under the Exchange Note at the following times and in the
following amounts:
(i) Annual Mandatory Prepayment. On each December 31st, commencing on
December 31, 2000, EcoScience shall prepay the then outstanding
principal of the Exchange Note in an amount equal to the excess
of (X) 0.70 times (EBITDA minus $15,000,000) over (Y) the actual
amount of principal and interest payments made by EcoScience to
CDH in respect of the Exchange Note in the fiscal year then
ending, if any). "EBITDA" shall mean, for any period, the sum of
(a) net income after taxes of the Corporation, determined in
accordance with generally accepted accounting principals in the
United States plus (b) an amount which, in the determination of
net income for such period, has been deducted for (i) interest
expense, (ii) total federal, state, local and foreign income,
value added and similar taxes and (iii) depreciation and
amortization expense, all as determined in accordance with GAAP.
(ii) Prepayment Events: The following shall constitute "Prepayment
Events", if they occur, after such time as the indebtedness owing
pursuant to the CoBank Credit Agreement is paid in full: (a)
EcoScience or any of its Subsidiaries shall incur any
indebtedness for borrowed money, other than the indebtedness
evidenced by the CoBank Credit Agreement (as hereinafter defined)
and refinancings or replacements thereof (to the extent of the
aggregate principal amount actually refinanced or replaced), and
intercompany indebtedness between EcoScience and any of its
Subsidiaries or between any of such Subsidiaries (a "Debt Event")
(b) EcoScience or any of its Subsidiaries shall issue any capital
stock for cash (a "Stock Event") other than the issuance of
Capital Stock by a newly formed 51% owned subsidiary to Grodania
A/S or its designee (the "Grodan Transaction"), or (c) EcoScience
or any of its Subsidiaries shall sell any asset, other than in
the ordinary course of business other than the transfer of assets
to a newly formed 51% owned Subsidiary in connection with the
Grodan Transaction (an "Asset Sale"). "Net Proceeds" shall mean
(x) in the case of a Debt Event, all cash loan proceeds, less
reasonable transactions expenses, (y) in the case of a Stock
Event, all cash proceeds, less reasonable transaction expenses
and (z) in the case of an Asset Sale, all net cash proceeds,
after payment of reasonable transactions expenses and
indebtedness required to be repaid by any lien attached to the
related asset.
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Except as specifically set forth in Section 8(b) below, on the day that a
Prepayment Event occurs, EcoScience shall pay over to CDH as a prepayment
on the Exchange Note, the lesser of (i) 50% of the Net Proceeds related to
such Prepayment Event or (ii) the principal and interest then outstanding
on the Exchange Note. . If any such payment shall be sufficient to pay the
Exchange Note in full, CDH shall on receipt of such payment, xxxx the
Exchange Note as cancelled and return the same to EcoScience. If such
payment is not sufficient to pay the Exchange Note in full, CDH shall
record such partial prepayment amount on Schedule I to the Exchange Note.
Each such payment made pursuant to this Section 7(b) shall be applied first
to the payment of accrued interest, and the balance to the outstanding
principal amount of the Exchange Note in inverse order of maturity thereof.
8. Certain Additional Provisions.
(a) Credit Agreement Provisions. For such time as any portion of the
indebtedness evidenced by the Consolidated, Amended and Restated Loan
Agreement, dated as of January 2, 2000, by and between CoBank, ACB and
Village Farms, L.P. (the "CoBank Credit Agreement") shall remain
outstanding and the Exchange Note shall not have been paid in full,
the Corporation shall observe and perform all of its covenants set
forth in Sections 8 and 9 of the Guaranty of EcoScience Corporation to
CoBank, ACB delivered pursuant to the CoBank Credit Agreement, and all
such covenants are incorporated by reference herein as if set forth
fully herein.
(b) Other Covenants. The Corporation covenants and agrees that, from the
date on which the indebtedness evidenced by the CoBank Credit
Agreement shall have been paid in full, it shall observe and perform,
until the Exchange Note shall have been paid in full, the following
covenants
(i) Maintenance of Existence. EcoScience shall maintain its
corporate existence in good standing under the laws of the
State of Delaware. EcoScience will qualify and remain
qualified as a foreign corporation in each jurisdiction in
which such qualification is necessary or desirable in view
of its business, operations and properties and the failure
to be so qualified would have a material adverse effect on
EcoScience.
(ii) Compliance with Law. EcoScience shall comply with: (a) all
rules, regulations and orders applicable to EcoScience or
its business; and (b) all agreements, indentures, mortgages,
and other instruments to which it is a party or by whicih it
or any of its property is bound, where the failure to so
comply could have a material adverse effect on EcoScience.
(iii) Payment of Taxes. EcoScience shall cause to be paid when
due all taxes, assessments, and other governmental charges
and levies upon it, its sales, its properties, and federal
and state taxes withheld from its employees' earnings,
unless (a) such taxes, assessments, or other governmental
charges or levies shall be contested in good faith by
appropriate actions or
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legal proceedings, (b) adequate reserves therefor shall be
established by EcoScience in accordance with GAAP during the
period of such contest, (c) the enforcement of any contested
items, and any lien or encumbrance relating thereto, is
effectively, stayed, and (d) the failure to pay or comply
with the contested item could not reasonably be expected to
result in a material adverse effect on EcoScience.
(iv) Payment of Liabilities. EcoScience shall pay all liabilities
as they become due unless they are contested in good faith
by appropriate actions or legal proceedings, EcoScience
establishes adequate reserves therefor in accordance with
GAAP, the enforcement of such liability, and any lien or
encumbrance relating thereto, is effectively stayed, and
such contest will not result in a material adverse effect on
EcoScience.
(v) Prohibition on Sale of Assets. EcoScience shall not sell,
convey, assign or otherwise transfer or dispose of,
voluntarily, by operation of law or otherwise, any of its
assets except in the ordinary course of business.
(vi) Prohibition on Change in Business Structure. Without giving
at least thirty (30) days' prior written notice to CDH, and
furnishing CoBank with such documents as CoBank may
reasonably request prior to taking any such action,
EcoScience shall not change its name, identity or corporate
structure, or the location of its place of business (or
chief executive office if more than one place of business).
(vii) Prohibition in Dissolution and Liquidation. EcoScience
shall not dissolve or liquidate, or enter into any merger,
consolidation, or other combination unless the surviving
entity of such merger, consolidation or other combination
shall have a net worth (after giving effect to the
transaction) that is greater than or equal to that of
EcoScience immediately prior to such transaction.
(viii) Payment of CoBank. In the event that a Stock Event shall
occur while the indebtedness owing pursuant to the CoBank
Credit Agreement ("Outstanding Senior Debt") shall remain
outstanding and the Exchange Note shall not have been paid
in full, EcoScience (or the relevant Subsidiary) shall pay
over to CoBank as a prepayment of the Outstanding Senior
Debt the lesser of (i) 50% of the Net Proceeds related to
such Stock Event and (ii) the principal and interest of the
Outstanding Senior Debt then outstanding.
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IN WITNESS WHEREOF, CDH and EcoScience have each caused this Agreement to
be duly executed as of the date first written above.
ECOSCIENCE
ECOSCIENCE CORPORATION
By:
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
CDH:
COGENTRIX DELAWARE HOLDINGS INC.
By:
-------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President-Finance and
Treasurer
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EXHIBIT A
TO
EXCHANGE AGREEMENT
FORM OF
PROMISSORY NOTE
$15,900,000.00 January 2, 2000
FOR VALUE RECEIVED, the undersigned, ECOSCIENCE CORPORATION, a Delaware
corporation, having its principal place of business at 00 Xxxxx Xxxxx, Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000 (collectively, the "Maker"), hereby promises to pay
to the order of COGENTRIX DELAWARE HOLDINGS, INC., a Delaware corporation,
having its principal place of business at 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxxxxx, XX 00000 (together with its successors and assigns, the "Holder"),
the principal sum of FIFTEEN MILLION, NINE HUNDRED THOUSAND AND NO/100 DOLLARS
($15,900,000.00), together with interest at five percent (5.00%) per annum, in
five (5) installments of $3,180,000.00, payable on each December 1st, commencing
on December 1, 2003 until and including December 1, 2007.
If (i) there should be a default in the payment of interest or principal
due hereunder or (ii) the Maker or any other person liable hereon should make an
assignment for the benefit of creditors or (iii) attachment or garnishment
proceedings are commenced against the Maker or any other person liable hereon,
or (iv) a receiver, trustee or liquidator is appointed over or execution levied
upon any property of the Maker or (v) proceedings are instituted by or against
the Maker or any other person liable hereon under any bankruptcy, insolvency,
reorganization or other law relating to the relief of debtors, including without
limitation the United States Bankruptcy Code, as amended, or (vii) there shall
occur any liquidation, dissolution or winding up of the Maker, (viii) the Maker
makes any misrepresentation or breaches any warranties made to the Holder in
connection with any loans extended by the Holder to the Maker, then, and in each
such event, the Holder may, at its option, without notice or demand, declare the
remaining unpaid principal balance of this Promissory Note and all accrued
interest thereon immediately due and payable in full.
Any amount hereunder which is not paid when due, whether at stated
maturity, by acceleration or otherwise, shall bear interest from the date when
due until paid at the lesser of (a) the foregoing rate per annum plus four
percentage points or (b) the maximum rate permitted by law, said interest to be
compounded annually and computed on the basis of a 360-day year consisting of
twelve 30 day months.
All payments made hereunder shall be made in lawful currency of the United
States of America to Wilmington Trust Company, Wilmington, Delaware, ABA Routing
Number 000-000-000, Account of Cogentrix Delaware Holdings, Inc., Account Number
32561-4, Attn: Xxxxxxxxxxx Xxxxxxx, or at such other place as the Holder may
designate in writing. All payments made hereunder, whether a scheduled payment,
prepayment, or payments as a result of acceleration, shall be allocated first to
accrued but unpaid interest, and then to payments of principal remaining
outstanding hereunder.
Maker agrees to pay all reasonable costs of collection, including
attorneys' fees paid or incurred by the Holder in enforcing this Promissory Note
on default or the rights and remedies herein provided.
This Promissory Note is made pursuant to the provisions of the Exchange
Agreement (the "Exchange Agreement") dated as of January 2, 12000, between the
Maker and the Holder. This Promissory Note is subject to mandatory prepayment,
in whole or in part, as provided in the Exchange Agreement. The Maker may prepay
this Promissory Note in whole or in part without premium or penalty.
The Maker, for itself and for any guarantors, sureties, endorsers and/or
any other person or persons now or hereafter liable hereon, if any, hereby
waives demand of payment, presentment for payment, protest, notice of nonpayment
or dishonor and any and all other notices and demands whatsoever, and any and
all delays or lack of diligence in the collection hereof, and expressly consents
and agrees to any and all extensions or postponements of the time of payment
hereof from time to time at or after maturity and any other indulgence and
waives all notice thereof.
This Promissory Note shall be governed by and construed and enforced in
accordance with the laws of the State of North Carolina.
Holder acknowledges and agrees that all Maker's obligations arising under
this Promissory Note (the "Subordinated Debt"), including without limitation the
payment of any principal of (and premium, if any) and interest, are hereby
expressly subordinated, to the extent and in the manner hereinafter provided, in
right of payment to the prior indefeasible payment in full of all Senior Debt
(as defined below), and that all liens in favor of Holder under the Subordinated
Debt are hereby expressly subordinated, to the extent and in the manner
hereinafter provided, in right of priority and enforcement to the liens of the
holders of the Senior Debt. The following subordination is for the benefit of
each present or future holder of Senior Debt (collectively "Senior Creditors"),
and Holder and each future holder of any Subordinated Debt (collectively "Junior
Creditors") agrees that, notwithstanding any provisions to the contrary
contained in this Promissory Note:
1. Payments or Distributions. Until such time as all amounts owing under the
Senior Debt are indefesibly paid in full, Maker shall not be required to
make, and the Junior Creditors shall not be entitled to require or receive,
any payments of principal or interest (including regularly scheduled
payments, Annual Mandatory Prepayments (as defined in the Exchange
Agreement), payments on account of Prepayment Events (as defined in the
Exchange Agreement), or payments due on account of acceleration), including
payments in cash, securities, or other property:
(a) From the time Maker has received written notice from CoBank, ACB or
other Senior Creditor of the occurrence of an Event of Default or a
Potential Default under the Senior Debt until the time Maker receives
written notice from CoBank or other Senior Creditor that such Event of
Default or Potential Default has been cured or waived; or
(b) During any Fiscal Year of Maker in an amount greater than the sum of
(A) (i) 70% of the amount by which Maker's EBITDA during such Fiscal
Year exceeds $15,000,000.00, less (ii) the actual amount of principal
and interest payments made by Maker to Junior Creditors in respect of
the Subordinated Debt during such Fiscal Year plus (B) commencing on
December 1, 2003, the amount of the installment amount required to be
paid in such Fiscal Year pursuant to the first paragraph of this Note.
The term "EBITDA" shall mean for any Fiscal Year, the sum of (y) net
income after taxes, determined in accordance with generally accepted
accounting principals in the United States ("GAAP") plus (z) an amount
which, in the determination of net income for such period, has been
deducted for (i) interest expense, (ii) total federal, state, local
and foreign income, value added and similar taxes, and (iii)
depreciation and amortization expense, all as determined in accordance
with GAAP; or
(c) Until such time Maker's final annual audited financial statements are
available and the calculations required in subparagraph 1(b) above
have been made.
2. Taking of Enforcement Action. Until such time as all amounts owing under
the Senior Debt are indefesibly paid in full, and notwithstanding any right
or remedy available to Junior Creditors under any of the agreements with
respect to the Subordinated Debt ("Junior Creditor Agreements"), applicable
law or otherwise, Junior Creditors shall not, directly or indirectly take
any of the following actions:
(a) accelerate this Note or any of the Subordinated Debt unless and until
the Senior Debt shall have been accelerated;
(b) seek to collect from Maker (including, without limitation, from or
against any property which is part of Maker's assets securing the
Subordinated Debt or the Senior Debt ("Collateral")) any of the
subordinated Debt; or exercise any of its rights or remedies upon a
default by Maker under the Junior Creditor Agreements or otherwise;
(c) seek to assert any claim or interest in any Collateral;
(d) commence, prosecute or participate in any administrative, legal or
equitable action or proceeding against Maker or its properties seeking
any reorganization, arrangement, composition, readjustment,
liquidation, bankruptcy or any other action involving the readjustment
of all or any part of Maker's obligations, or other similar relief
under the U.S. Bankruptcy Code or any present or future statute, law
or regulation relative to either Maker or its properties or any
proceedings for voluntary liquidation, dissolution or other winding up
of Maker's businesses or the appointment of any trustee, receiver or
liquidator for Maker or any part of its properties or any assignment
for the benefit of creditors or any marshalling of assets of Maker; or
(e) take any other action against Maker or the Collateral, or otherwise
directly or
indirectly interfere with any Collateral or Senior Creditor's rights
and interest therein and thereto.
3. Liquidation; Dissolution; Bankruptcy. Upon any distribution to creditors of
Maker in a liquidation, dissolution, winding up or reorganization, or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to Maker or its property:
(a) Holders of the Senior Debt shall be entitled to receive indefeasible
payment in full in cash of the principal of, and interest (including,
without limitation, interest accruing after the commencement of any
such proceeding) and other amounts payable through the date of payment
on, the Senior Debt before any Junior Creditors shall be entitled to
receive any payment of indebtedness evidenced by the Subordinated Debt
and any payment of principal of (and premium, if any) and interest on
any Subordinated Debt (whether or not there has been at that time a
default in the Senior Debt); and
(b) Until the Senior Debt is indefeasibly paid in full in cash, any
distribution to which any Junior Creditors would be entitled but for
these subordination provisions, shall be made to the Senior Creditors
(whether or not there has been at that time a default in the Senior
Debt).
4. Payment Over of Payments or Distributions. In the event any payments of
principal or interest is made to any Junior Creditors that because of these
subordination provisions should not have been made to them, or in the event
of any distribution, division, or application, partial or complete,
voluntary or involuntary, by operation of law or otherwise, of all or any
part of the assets of Maker or the proceeds thereof to the creditors of
Maker or readjustment of the obligations and indebtedness of Maker, whether
by reason of liquidation, bankruptcy, arrangement, receivership, assignment
for the benefit of creditors, marshalling of assets of Maker or any other
action or proceeding involving the readjustment of all or any part of the
Subordinated Debt or the application of the assets of Maker to the payment
or liquidation thereof, or upon the dissolution or other winding up of
Maker's business, or upon the sale of all or substantially all of Maker's
assets, then, and in any such event, Junior Creditors agree that:
(a) Senior Creditor shall first receive indefeasible payment in full in
cash of all of the Senior Debt (including, without limitation,
interest after the commencement of any such liquidation, dissolution
or bankruptcy at the rate specified in the applicable Senior Debt,
whether or not such interest is an allowable claim in any such
proceeding), and
(b) Senior Creditor shall be entitled to receive any payment or
distribution of any kind or character, whether in cash, securities or
other property, (including, without limitation, interest after the
commencement of any such liquidation, dissolution or bankruptcy at the
rate specified in the applicable Subordinated Debt, whether or not
such interest is an allowable claim in any such proceeding) which
would be payable or deliverable in respect of any or all of the
Subordinated Debt.
(c) In order to enable Senior Creditor to enforce its rights hereunder,
Senior Creditor is hereby irrevocably authorized and empowered (in its
own name or in the name of Junior Creditors or otherwise), but shall
have no obligation to:
(i) enforce claims comprising any of the Subordinated Debt by proof
of debt, proof of claim, suit or otherwise;
(ii) demand, xxx for, collect and receive any assets of Maker
distributed, divided or applied by way of payment, or any other
property or interest issued, on account of any of the
Subordinated Debt and apply the same, or the proceeds of any
realization upon the same, to any of the Senior Debt;
(iii) vote any claims comprising any of the Subordinated Debt to
accept or reject any plan of partial or complete liquidation,
reorganization, arrangement, composition or extension; and/or
(iv) take generally any action which Junior Creditors might otherwise
be entitled to take, as Senior Creditor may deem necessary or
advisable for the enforcement of its rights or interests
hereunder.
(d) To the extent necessary for Senior Creditor to realize the benefits of
the subordination of the Subordinated Debt provided for herein
(including the right to receive any and all payments and distributions
which might otherwise be payable or deliverable with respect to the
Subordinated Debt in any proceeding described in this Section 4 or
otherwise), Junior Creditors will execute and deliver to Senior
Creditor such instruments or documents (together with such assignments
or endorsements as Senior Creditor shall deem necessary), as may be
reasonably requested by Senior Creditor.
(e) Any such payments or distributions or security or instruments or the
proceeds thereof shall be received and held by the Junior Creditors in
trust, as trustee, for the benefit of the Senior Creditor, segregated
from other funds and property of the Junior Creditors and the Junior
Creditors shall forthwith deliver the same to the Senior Creditor
(together with any endorsement or assignment of Junior Creditors where
necessary), for application to any of the Senior Debt. In the event of
the failure of the Junior Creditors to make any such endorsement or
assignment to the Senior Creditor, the Senior Creditor, or any of its
officers or employees, are hereby irrevocably authorized on behalf of
Junior Creditors to make such endorsement.
5. No Contest of Senior Creditor Liens/Priority. Junior Creditors agree that
they shall not contest the validity, perfection priority or enforceability
of the liens granted to or held by the Senior Creditor upon the Collateral
and that, as between the Senior Creditor and the Junior Creditors, the
terms of these Subordination Provisions shall govern even if part or all of
the Senior Debt or the liens securing payment and performance thereof are
avoided, disallowed, set aside or otherwise invalidated in any judicial
proceeding or otherwise.
Notwithstanding the time, order, or method of attachment or perfection of
the pledges, liens or security interests granted thereby or the time or
order of filing or recording of financing statements or other evidence of
pledges, liens or security interests, and notwithstanding anything
contained in any such filing or agreement to which the Senior Creditor
and/or the Junior Creditors may now or hereafter be a party, the pledges
of, security interests in, and other liens upon the Collateral granted to
or held by the Senior Creditor have and shall have priority over the
pledges of, security interests in, and other liens upon the Collateral
granted to, or held by, the Junior Creditors, and the liens of the Senior
Creditor therein shall have such priorities to the full extent of the
Senior Debt secured thereby at any time and from time to time outstanding.
6. Defined Terms:
"Senior Debt" means (a) all principal, interest, loan fees, Certificate
purchase obligations of Village Farms, L.P., Funding Losses, Additional
Costs, indemnification obligations, attorneys' fee payment obligations, and
all expenses, charges and other amounts payable by Maker pursuant to the
Guaranty to CoBank ACB of the obligations of Village Farms, L.P. under the
Consolidated, Amended and Restated Loan Agreement ("CoBank Loan Agreement")
dated as of January 2, 2000, by and between CoBank, ACB and Village Farms,
L.P., and any related notes, any related security agreements and any other
related documents, all as now in effect or as amended from time to time;
and (b) any and all renewals, extensions, refundings, amendments and
modifications of any of the foregoing.
7. CoBank, ACB shall be deemed to be a third party beneficiary of the
foregoing subordination provisions.
IN WITNESS WHEREOF, the undersigned has duly caused this Promissory
Note to be executed and delivered as of the date first written above.
ECOSCIENCE CORPORATION
By:
-------------------------------------
Name:
Title:
Promissory Note
Schedule I
LOANS AND PAYMENTS
Unpaid
Principal Interest Principal Notations
Date Payments Payment Balance Made by
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