EXHIBIT 10.93
TERM LOAN SECURITY AGREEMENT
by and between
VILLAGE FARMS INTERNATIONAL FINANCE ASSOCIATION,
as Debtor
and
COBANK, ACB,
as Agent for the Term Lenders
TABLE OF CONTENTS
1. Definitions ..............................................................1
2. Collateral/Grant of Security Interest ....................................4
2.1 Grant of First Priority Interest ....................................4
2.2 Grant of Second Priority Security Interest ..........................5
2.3 Grant of First Priority Security Interest ...........................6
3. Secured Obligations ......................................................6
4. Representations and Warranties ...........................................6
4.1 Organization; Power and Authority, etc ..............................6
4.2 Due Authorization; Power ............................................7
4.3 Consents; Approvals .................................................7
4.4 Title to Collateral .................................................7
4.5 Underlying Term 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 ................8
5.3 Books and Records ...................................................8
5.4 Inspection of Collateral ............................................8
5.5 Transfers, Dispositions and Encumbrances ............................9
5.6 Maintenance and Repair; Taxes; Insurance ............................9
5.7 Compliance with Laws ................................................9
5.8 Change in Structure or Name .........................................9
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5.9 Underlying Term Loan Documents ......................................9
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 ......................................................10
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 .........................................................12
7.7 Collection of Underlying Term Loan Notes ...........................14
8. General Provisions ......................................................14
8.1 Appointment and Rights of Agent ....................................14
8.2 Amendment, Modification, and Waiver ................................15
8.3 Costs and Attorneys'Fees ...........................................15
8.4 Revival of Obligations .............................................15
8.5 Performance by Secured Party .......................................15
8.6 Power of Attorney ..................................................16
8.7 Protection of Collateral ...........................................16
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 .....................................................17
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8.13 Notices ...........................................................17
8.14 Financing Statement ...............................................17
8.15 Conflict with Term Loan Agreement .................................17
iii
EXHIBITS
Exhibit 4.6 Location of Principal Office and Collateral
TERM LOAN SECURITY AGREEMENT
THIS TERM LOAN 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 Term Lenders (as hereinafter
defined), whose address is 000 X. Xxxx Xxxxxx, Xxxxxxx, Xxxxxx 00000 (CoBank and
all Successor Agents appointed pursuant to the Term Loan Agreement are referred
to herein as "Secured Party").
R E C I T A L S
A. The Term Lenders have entered into a Credit Agreement (Term Loan
Funding) of even date herewith with Debtor (as amended from time to time, the
"Term Loan Agreement") pursuant to which the Term Lenders have agreed (i) to
loan up to $50,000,000 to Debtor ("Term Loan"), under the terms and conditions
set forth in the Term Loan Agreement, to be used by Debtor only to either (1)
make loans to third parties ("Underlying Term Loan Borrowers") for the purpose
of providing permanent take-out financing for Underlying Construction Loans (as
defined below), or (2) fund Debtor's purchase of existing loans made by third
parties for the construction or acquisition of facilities for the planting,
growing and harvesting of vegetables and/or fruits ("Greenhouse Facilities").
B. The provisions of the Term Loan 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 Term Loan Agreement and the
other Term 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 Term Loan 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 (as defined in the Line of Credit
Agreement).
"Line of Credit Agreement" means the Credit Agreement (Line of Credit
Facility) 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 Line of Credit
Lenders have agreed to make available to Debtor a line of credit facility in the
principal amount of up to $10,000,000 for the purpose of enabling Debtor to make
line of credit loans to eligible third parties to use
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for the purposes therein specified and to issue letters of credit for the
account of Debtor for the purposes therein specified.
"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 (as defined in the Line of Credit Agreement) in
the Line of Credit Loan.
"Line of Credit Loan" means the line of credit facility made available to
Debtor pursuant to the Line of Credit Agreement.
"Line of Credit Loan Documents" means the Line of Credit 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.
"Term Agent" means CoBank in its role as Agent under the Term Loan
Agreement and each Successor Agent.
"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 Documents" means the Term Loan Agreement, the Hedge 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 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.
"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.
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"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 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, 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 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 Term Loan
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 Term Loan Borrowers payable to
Debtor to evidence the obligations of such Underlying Term Loan Borrowers to
Debtor under their respective Underlying Term Loans (collectively, "Underlying
Term Loan Notes");
(b) all of Debtor's rights under (i) all loan agreements executed by and
between Debtor and an Underlying Term Loan Borrower in connection with an
Underlying Term Loan (collectively, "Underlying Term Loan 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 Term Loan Borrower to
Debtor (collectively, "Underlying Term Security Documents"), and (iii) any other
instruments, documents or agreements executed and delivered in connection with,
or to secure the obligations of an Underlying Term Loan Borrower under its
Underlying Term Loan Agreement (collectively, with its Underlying Term Loan
Note, Underlying Term Loan Agreement and Underlying Term Security Documents,
"Underlying Term Loan Documents");
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(c) all assets and properties acquired by Debtor through foreclosure, or
deed in lieu of foreclosure, on collateral for an Underlying Term Loan,
including without limitation the following:
(i) all of an Underlying Term Loan 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 Term Loan 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 Term Loan 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
Term Loan 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
(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 Term Loan 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
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of all or any part thereof, to be shared pari passu with the Line of Credit
Agent pursuant to the terms and provisions of the Intercreditor Agreement, and
(b) the Underlying Line of Credit 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 Line of Credit 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, 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 Term Lenders under the Term 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
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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 Term 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 Term 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 Term Loans, has full power and authority to pledge and grant
a security interest in the Underlying Term Loans and the Underlying Term Loan
Documents, and has not granted any right or interest in any existing or future
Underlying Term Loans or the Underlying Term Loan Documents to any person or
entity other than Secured Party, except for the second priority security
interest granted to the Construction Agent and the Line of Credit Agent under
the Construction Loan Documents and the Line of Credit Documents, respectively.
Except as otherwise permitted hereunder or under the Term Loan 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 Term Loans. With respect to the Underlying Term Loans:
(a) no default or event which with notice and/or the passage of time would
become a default under any of the Underlying Term Loan Documents for any
Underlying Term Loan has occurred and is continuing;
(b) the proceeds of each existing Underlying Term Loan have been, and the
proceeds of each future Underlying Term Loan will be, used for the purposes
permitted under Section 3.1 of the Term Loan Agreement;
(c) with respect to all existing Underlying Term Loans, the Underlying Term
Loan 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;
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(d) each existing Underlying Term Loan is, and all future Underlying Term
Loans will be, secured by a first lien and security interest in favor of Debtor
in all assets of the Underlying Term Loan Borrower, free and clear of all other
liens, security interests, restrictions, adverse claims or defenses, except
where the Underlying Term Loan 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 Term Loan 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 Term Loan 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 Term Loan 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 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 Term 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
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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 Term Loan 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 Term Loan 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 Term
Loan Agreement. Secured Party or the Term 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 Term Loan
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 Term Lenders on
demand for any payment or expenses incurred by any of them pursuant to the
foregoing authorization and any unreimbursed amounts shall constitute 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 Term Loan Documents. Debtor shall take all such actions as
are necessary to maintain the Underlying Term Loan 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 Term Loan Document. Each Underlying Term Loan shall
be secured by a first lien on all the assets of the Underlying Term Loan
Borrower, except where the Underlying Term Loan Documents for such Underlying
Term Loan approved by Secured Party specifically state otherwise.
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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 Term Loan
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
Term Loan Agreement, or in any other instruments and documents executed and
delivered in connection with, or to secure the obligations of Debtor under, the
Term Loan 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;
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(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 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
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(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 Term 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 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:
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(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, 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,
13
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 Term Loan 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 Term Loan Borrower to make all
payments owing on the Underlying Term Loan Notes directly to Secured Party, (b)
endorse all items of payment, with respect to amounts owing under Underlying
Term Loan Notes, made payable to Debtor which may come into the possession of
Secured Party; (c) collect amounts owing under the Underlying Term Loan Notes in
Secured Party's name or Debtor's name; (d) compromise, extend or renew the
amount owing on any Underlying Term Loan or deal with any Underlying Term Loan
as Secured Party may deem advisable; (e) make exchanges, substitutions or
surrenders of collateral for any Underlying Term Loan, and (f) declare the
Underlying Term Loans immediately due and payable, exercise all rights of Debtor
under the Underlying Term Loan Documents and foreclose on all collateral for the
Underlying Term Loans in accordance with the rights of Debtor under the
Underlying Term Loan Documents. Once any or all Underlying Term Loan 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 Term 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
commercially reasonable manner and that such action by Secured Party will not be
deemed to constitute retention of the Underlying Term Loan 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 Term Lenders of CoBank as Agent under the
Term Loan Agreement ("Agent") for the purposes of administering certain aspects
of the Term Loan, (b) that CoBank as Agent is acting for the benefit of the Term
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
Term Loan Agreement and written notification thereof is provided to Debtor by
CoBank, any Term Lender or such Successor Agent, such Successor Agent shall be
entitled to exercise all the rights
14
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 Term Lenders the amount of any and all expenses, including the
reasonable attorneys' fees and expenses of counsel for Secured Party and the
Term Lenders and of any experts and agent, which Secured Party and the Term
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 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
15
Party in connection therewith, together with interest thereon at the Default
Interest Rate set forth in the Term Loan 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 Term Loan
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
(e) to collect the Underlying Term Loans and Underlying Term Loan Notes and
to enforce all rights and remedies available to Debtor under the Underlying Term
Loan Documents and to endorse all items of payment on the Underlying Term 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
16
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
Term 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.
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 Term Loan 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 Term Loan Agreement. In the event of a conflict between
the terms of this Security Agreement and those of the Term Loan Agreement, the
provisions of the Term Loan Agreement shall control.
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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 Term Lenders
By:________________________________
Name: Xxxx Xxxxxxxxxxx
Title: Vice President
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