Exhibit 10.31
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made and entered into as of the 27th day of
November, 1996, by and between Alliance Farms Cooperative Association, a
Colorado cooperative association ("Debtor"), whose mailing address is Alliance
Farms Cooperative Association, c/o Farmland Industries, Inc., Attention: Xxxx
Xxxxxx, Dept. 189, and Farmland Industries, Inc., a Kansas corporation ("Secured
Party"), whose mailing address is Farmland Industries, Inc., Attention: Xxxxx
Xxxxx, Xxxx. 000, Xxxxxx Xxxx, Xxxxxxxx 00000.
In consideration of the mutual covenants and obligations set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Debtor and Secured Party agree as
follows:
I. COLLATERAL; LIABILITIES AND OBLIGATIONS SECURED.
1. Debtor hereby grants to Secured Party a security interest in all
personal property, interests in property and fixtures of Debtor solely with
respect to the feeder pig production facility to be constructed in Xxxxx County,
Illinois by Debtor using the proceeds of advances made or to be made under the
Loan Agreement, dated as of November 27, 1996, between Debtor and Secured Party
(the ALoan Agreement@), and the proceeds of additional advances made or to be
made under the CoBank Loan Documentation (as defined in the Loan Agreement),
whether now owned or existing or hereafter acquired and wherever located
(collectively the "Collateral"), including, without limiting the generality of
the foregoing:
(a) all structures, buildings, improvements, facilities, additions,
fixtures, equipment, inventory, farm products, and breeding stock and the
offspring therefrom (except to the extent the breeding stock and offspring are
sold by the Debtor in the ordinary course of business), whether presently or
hereafter located on or used in connection with the property described in
Exhibit A attached hereto; and
(b) any and all additions, accessions, replacements and substitutions
to or for any of the foregoing and any and all proceeds and products of any of
the foregoing.
2. The security interest described herein is granted to Secured
Party to secure the performance and payment of any and all obligations and
liabilities of Debtor to Secured Party now existing or hereafter arising, direct
or indirect, absolute or contingent, joint or several, due or to become due,
including without limitation any renewa1s or extensions thereof and
substitutions therefor and any future advances (such obligations and liabilities
being referred to herein as the "Secured Obligations").
II. ADDITIONAL REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF DEBTOR.
Debtor represents, warrants, covenants and agrees as follows:
1. The Collateral will not be misused, abused, wasted or allowed to
deteriorate, except for the ordinary wear and tear of its primary use. Debtor
will notify Secured Party immediately, orally and in writing, of any event
causing material loss or depreciation in value of the Collateral and the amount
of such loss or depreciation and of any other event that materially affects the
Collateral.
2. The Collateral will be kept at the location described in Exhibit
A attached hereto or at such other location as may be consented to in writing by
Secured Party, except for temporary removal consistent with such Collateral's
ordinary primary use. Secured Party may examine and inspect the Collateral at
any reasonable time or times wherever it is located. Secured Party may also
examine and inspect Debtor's books and records during normal business hours.
3. No item of the Collateral is a part of or attached to any real
property or fixtures not subject to the Mortgage (as defined in the Loan
Agreement) or to any personal property not subject to this Security Agreement.
Debtor will not permit any item of the Collateral to otherwise become a part of
or attached to any real property or fixtures or to any personal property without
the prior written consent of Secured Party.
4. Debtor has a place of business only in Yuma County, Colorado and
Xxxxx County, Illinois. Debtor's chief executive office is at 000 Xxxxxxxx
Xxxxxx, Xxxx, Xxxxxxxx 00000. Debtor will notify Secured Party in writing prior
to any change or discontinuance of Debtor's place or places of business. The
Debtor=s taxpayer identification number is 00-0000000.
5. Debtor will maintain such property and casualty insurance
respecting the collateral with such insurance companies, in such amounts, and
covering such risks, as are usually carried by companies engaged in the same or
similar business and similarly situated and make such increases in the type or
amount of coverage as the Secured Party may reasonably request. Such insurance
shall be payable to Secured Party and Debtor as their respective interests may
appear. All such policies of insurance shall provide for at least 30 days'
prior written notice of cancellation or modification to Secured Party. Debtor
shall furnish Secured Party with certificates or other evidence satisfactory to
Secured Party of compliance with all of the foregoing insurance provisions.
Secured Party is hereby granted authority to act as attorney for Debtor in
obtaining, adjusting and settling any such insurance and endorsing any drafts
issued in connection therewith. Secured Party may apply the proceeds of any
such insurance toward payment of any of the Secured Obligations, whether or not
the same is due and in any order of priority.
6. No financing statements covering any of the Collateral are on
file in any public office except as may show Secured Party or CoBank, ACB as
secured party. Upon the oral or written request of Secured Party, Debtor will
execute in form satisfactory to Secured Party one or more financing statements
pursuant to the applicable Uniform Commercial Code and such other documents as
Secured Party may from time to time reasonably request. Debtor hereby
authorizes Secured Party to file or record one or more financing statements
signed only by Secured Party in any location in any jurisdiction where such
authorization is permitted by law. If applicable law requires Debtor to sign
any financing statement for filing or recording purposes, Debtor hereby appoints
Secured Party or any representative of Secured Party as Debtor's attorney and
agent, with full power of substitution, to sign or endorse Debtor's name on any
such financing statement, and Debtor authorizes Secured Party to file or record
the same. Debtor will pay the cost of filing or recording the financing
statements and other documents referred to above in this paragraph and this
Security Agreement in all public offices where filing or recording is deemed by
Secured Party to be necessary or desirable. A photographic or other
reproduction of this Security Agreement or any financing statement related
hereto shall be sufficient as a financing statement in any jurisdiction where
filing or recording of such a reproduction is permitted by law.
7. Debtor has the power and authority to own and possess the
Collateral, subject to the interest of Secured Party and CoBank, ACB therein.
Debtor has, on the date hereof, or, as to Collateral acquired by Debtor after
the date hereof will have, as soon as Debtor has rights therein, good and
marketable title to the Collateral. Except for the security interest granted
hereby and any security interest of CoBank, ACB granted in connection with the
CoBank Loan Documentation (the ACoBank Security Interest@), Debtor owns the
Collateral free from any prior or adverse lien, charge, security interest or
encumbrance, and Debtor will defend the Collateral against all claims and
demands of all persons at any time claiming the same or any interest therein.
8. Debtor will keep the Collateral free from all unpaid charges,
liens, encumbrances and security interests, other than the security interest
granted hereby and the CoBank Security Interest, will pay promptly all taxes and
assessments with respect to the Collateral or its use or operation, will not use
the Collateral in violation of any ordinance or state or federal statute or any
administrative rule or regulation or any other law or any policy of insurance
thereon and will not sell, transfer, lease, assign or otherwise dispose or
alienate the ownership of the Collateral or any portion thereof or interest
therein in any manner whatsoever except to the extent the breeding stock and
offspring are sold by Debtor in the ordinary course of business. Secured Party
is hereby authorized at its option and in its sole discretion to discharge any
taxes, assessments, liens, security interests, charges or encumbrances at any
time levied or placed on the Collateral, to pay for insurance on the Collateral,
and to pay any costs or expenses incurred in the custody, maintenance or
preservation of the Collateral. Debtor agrees to reimburse Secured Party on
demand for any payment made or any expense incurred by Secured Party pursuant to
the foregoing authorization, and the amount of any such payments or expenses
shall be part of the Secured Obligations and secured by and under this Security
Agreement.
9. All financial information with respect to Debtor that has been or
is hereafter furnished by or on behalf of Debtor to Secured Party is or will be,
as of the date furnished to Secured Party, accurate, correct and complete in all
material respects.
10. Debtor shall from time to time, at its expense, promptly execute
and deliver all further instruments and documents (including without limitation
financing or continuation statements and amendments thereto) and take all
further action that may be necessary or desirable or that Secured Party may
reasonably request in order to evidence, establish, protect or perfect any
security interest granted or purported to be granted hereby or to enable Secured
Party to exercise and enforce its rights and remedies hereunder.
III. EVENTS OF DEFAULT.
The term "Event of Default" as used herein shall mean any one or more
of the following events:
1. The occurrence of an Event of Default (as such term is defined in
the Loan Agreement).
2. Default in the performance of or compliance with any covenant or
agreement of Debtor contained herein.
3. Any representation or warranty made by the Debtor herein shall
be false or misleading in any material respect.
4. Loss, theft, damage, destruction, danger of confiscation or
danger of misuse, abuse, waste or deterioration (except for the ordinary wear
and tear of its primary use) of any material part of the Collateral; the making
of any levy, seizure or attachment of or on the Collateral or any portion
thereof; or the issuance of any injunction with respect to the use or sale of
the Collateral or any portion thereof.
5. Service of any warrant of attachment or garnishment or the making
or issuance of any lien, levy or similar process on or with respect to Debtor.
UPON THE OCCURRENCE OF ANY OF THE FOREGOING DEFAULTS OR EVENTS OF
DEFAULT, DEBTOR SHALL IMMEDIATELY NOTIFY SECURED PARTY OF THE SAME.
IV. SECURED PARTY'S RIGHTS AND REMEDIES.
1. Secured Party may assign this Security Agreement without the
consent of Debtor. In the event of such assignment, the assignee shall be
entitled, upon notifying Debtor, to the performance of all obligations of Debtor
hereunder and to all rights and remedies of Secured Party hereunder. Debtor
will assert no claims or defenses that Debtor may have against Secured Party
against any assignee hereof.
2. Upon the occurrence of an Event of Default and at any time
thereafter, Secured Party may, without notice or demand, declare any or all of
the Secured Obligations immediately due and payable, notwithstanding any
provision to the contrary contained in any agreement or instrument evidencing or
relating to any of the Secured Obligations, and may exercise any and all rights
and remedies of the Secured Party in the enforcement of its security interest
granted or purported to be granted hereby under this Security Agreement, under
the Uniform Commercial Code of the State of Illinois, or under any other
applicable law or in equity, including, without limitation, any or all of the
following remedies:
(a) Secured Party may notify the obligors on any or all Collateral
consisting of accounts, chattel paper, general intangibles, contract rights,
instruments, insurance policies, things in action or the like to make payment
thereon directly to Secured Party, and Secured Party may demand, collect,
receipt for, settle, compromise, adjust, xxx for, foreclose or realize upon or
with respect to such Collateral. Until Secured Party elects to exercise any
such right, Debtor is authorized, as agent of Secured Party, to collect and
enforce all such obligations.
(b) Secured Party may receive, open and dispose of mail addressed to
Debtor and endorse notes, checks, drafts, money orders, documents of title or
other evidences of payment, shipment or storage or any other item constituting
or relating to the Collateral on behalf of and in the name of Debtor.
(c) Secured Party may take control of any or all proceeds
constituting a part of the Collateral.
(d) Secured Party may set off any deposits or other moneys due from
Secured Party to Debtor against any of the Secured Obligations, whether or not
the same is due and in any order of priority.
(e) Secured Party shall have all of the rights and be entitled to all
of the remedies of a secured party under the Uniform Commercial Code in effect
in the State of Illinois, including without limitation the right to take
possession of, and to use, occupy and control, the Collateral or any portion
thereof and the premises wherever the foregoing may be, the right to sell, lease
or otherwise dispose of the Collateral or any portion thereof (including the
right to purchase at any public sale) and the right to recover reasonable
expenses of retaking, holding, preparing for sale or lease, selling, leasing and
the like and, to the extent not prohibited by law, reasonable attorneys' fees
and legal expenses incurred by Secured Party.
(f) Secured Party may require Debtor to assemble the Collateral and
make it available to Secured Party at a place to be designated by Secured Party
which is reasonably convenient to both parties, or, if Debtor fails or refuses
to so assemble the Collateral, Secured Party may, and Debtor hereby authorizes
and empowers Secured Party to, enter upon the premises wherever the Collateral
may be in order to remove the same.
3. Secured Party's costs of collection, enforcement and prosecution
of its rights and remedies hereunder or otherwise arising, whether or not
involving a case, action or other proceeding before any state or federal court
or other body, including without limitation attorneys' fees and expenses, shall
be borne solely by Debtor.
4. No delay or omission by Secured Party to exercise any of its
rights or remedies hereunder or otherwise arising shall impair any of such
rights or remedies, nor shall any such delay or omission be construed as a
waiver of any default or Event of Default hereunder, and Secured Party may
exercise every such right and remedy from time to time as often as Secured Party
may deem expedient. All rights and remedies of Secured Party whether or not
granted hereunder shall be cumulative and may be exercised singularly or
concurrently, and no such right or remedy is intended to be exclusive of any
other right or remedy of Secured Party.
5. No waiver by Secured Party of any default or Event of Default
hereunder shall be effective unless in writing and signed and delivered by
Secured Party, and no such waiver of any default or Event of Default shall
extend to or affect any subsequent or other default or Event of Default or shall
impair any rights or remedies consequent thereon.
6. To the extent permitted by law, Debtor hereby waives all benefits
and advantages otherwise afforded Debtor under any laws now or hereafter in
force providing for any stay or extension that would affect the terms of
performance of Debtor under this Security Agreement or providing for the
valuation or appraisal of the Collateral or any portion thereof or for any
rights of redemption thereof, and Debtor will not in any other way hinder, delay
or impede the execution of any right or remedy of Secured Party.
7. Unless the Collateral threatens to decline speedily in value or
is of a type customarily sold on a recognized market, Secured Party will give
Debtor reasonable notice of the time and place of any public sale of the
Collateral or any portion thereof or of the time after which any private sale or
other intended disposition thereof is to be made. The requirements of
reasonable notice shall be met if such notice is mailed, postage prepaid, to
Debtor at least 10 days prior to the date of such sale or disposition.
V. GENERAL.
1. Secured Party shall have no duty as to collection or protection
of the Collateral or any income thereon, nor as to the preservation of rights
against prior parties, nor as to the preservation of any rights pertaining
thereto beyond any duty imposed by law to use reasonable care in the custody and
preservation of Collateral in Secured Party's possession.
2. With respect to any situation in which Secured Party has been
authorized to act for or on behalf of or in the name of Debtor, Debtor hereby
grants to Secured Party and any officer or representative of Secured Party, and
each of them, jointly and severally, with full power of substitution, Debtor's
power of attorney, coupled with an interest and irrevocable so long as any of
the Secured Obligations are outstanding. Debtor hereby ratifies and confirms
any and all such actions taken by Secured Party or any such officer or
representative and will hold Secured Party and any such officer or
representative harmless against any claim made by any person or entity by reason
of such actions.
3. This Security Agreement shall inure to the benefit of and shall
be binding upon Debtor and Secured Party and their respective successors and
assigns.
4. Any demand upon or notice or other communication to Debtor shall
be effective if delivered by hand delivery or deposited in the mails, postage
prepaid, addressed to Debtor at the address of Debtor set forth at the beginning
of this Security Agreement, or, if Debtor has notified Secured Party in writing
of a change of address, to the last address of which Secured Party has been so
notified.
5. This Security Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois.
6. If any provision of this Security Agreement is contrary to,
prohibited by or deemed invalid under applicable laws or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible. If any provision of this Security
Agreement is contrary to, prohibited by or deemed invalid under the applicable
laws or regulations of any jurisdiction, such provision shall not thereby be
rendered invalid in any other jurisdiction.
7. This Security Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
shall constitute but one and the same instrument.
8. The headings used in this Security Agreement are for convenience
of reference only and shall in no way define, limit or describe the scope or
intent of any provision of this Security Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement on the day and year first above written.
FARMLAND INDUSTRIES, INC.
By:
Name:
Title:
ALLIANCE FARMS COOPERATIVE
ASSOCIATION
By:
Name:
Title:
EXHIBIT A
A tract of land located in Xxxxxxx 0, Xxxxxxxx 0 Xxxxx, Xxxxx 0 Xxxx of the
Third Principal Meridian located in Xxxxx County, Illinois and more
particularly described as follows:
A part of Section 1, Township 1 North, Range 8 East, 3rd PM, Xxxxx
County, Illinois and being further described as follows: Commencing
at the southeast corner of the North Half of the North Half of the
Southeast Quarter of said Section 1; thence West, along the south line
of the North Half of the North Half of the Southeast Quarter of
Section 1, a distance of 972.5 feet to the point of beginning; thence
continuing along the south line of the North Half of the North Half of
the Southeast Quarter of Section 1, a distance of 972.5 feet; thence
North, parallel with the east line of Section 1, a distance of 2080
feet; thence East, parallel with the south line of the North Half of
the North Half of the Southeast Quarter of Section 1, a distance of
972.5 feet; thence South, parallel with the east line of Section 1, a
distance of 2080 feet to the point of beginning; containing 46.44
acres, more or less.
AND
A part of Section 1, Township 1 North, Range 8 East, 3rd PM, Xxxxx
County, Illinois and being further described as follows: Beginning at
the southeast corner of the North Half of the North Half of the
Southeast Quarter of said Section 1; thence West, along the south line
of the North Half of the North Half of the Southeast Quarter of
Section 1, a distance of 972.5 feet; thence North, parallel with the
east line of Section 1, a distance of 2080 feet; thence East, parallel
with the south line of the North Half of the North Half of the
Southeast Quarter of Section 1, a distance of 972.5 feet to a point on
the east line of Section 1; thence South, along the east line of
Section 1, a distance of 2080 feet to the point of beginning;
containing 46.44 acres, more or less.
