EXHIBIT 10.79
CREDIT AGREEMENT
(Line of Credit Facility)
by and between
COBANK, ACB,
as Agent and as a Syndication Party,
and
VILLAGE FARMS INTERNATIONAL FINANCE ASSOCIATION
dated as of June 24, 1997
TABLE OF CONTENTS
Article 1. DEFINED TERMS .................................................. 1
1.1 Additional Costs .................................................. 1
1.2 Administrative Agent Fee .......................................... 1
1.3 Advance ........................................................... 1
1.4 Advance Amount .................................................... 1
1.5 Advance Date ...................................................... 1
1.6 Advance Payment ................................................... 1
1.7 Advance Request ................................................... 1
1.8 Aggregate Commitment .............................................. 1
1.9 APD ............................................................... 2
1.10 APD Subsidiary ................................................... 2
1.11 Authorized Officer ............................................... 2
1.12 Bank Debt ........................................................ 2
1.13 Base Rate ........................................................ 2
1.14 Base Rate Margin ................................................. 2
1.15 BDGCFR ........................................................... 2
1.16 Borrower Benefit Plan ............................................ 2
1.17 Borrower Debt .................................................... 2
1.18 Borrower Pension Plan ............................................ 2
1.19 Business Day ..................................................... 2
1.20 Closing Date ..................................................... 3
1.21 CoBank Equity Interests .......................................... 3
1.22 Code ............................................................. 3
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1.23 Collateral ....................................................... 3
1.24 Compliance Certificate ........................................... 3
1.25 Construction Facility ............................................ 3
1.26 Contributing Syndication Parties ................................. 3
1.27 Credit Agreement (Construction Loan Funding) ..................... 3
1.28 Credit Agreement (Term Loan Funding) ............................. 3
1.29 Default Interest Rate ............................................ 3
1.30 Delinquency Interest ............................................. 3
1.31 Delinquent Amount ................................................ 4
1.32 Delinquent Syndication Party ..................................... 4
1.33 Environmental Laws ............................................... 4
1.34 Environmental Regulations ........................................ 4
1.35 Equity ........................................................... 4
1.36 Equity Margin .................................................... 4
1.37 Equity Margin Report ............................................. 4
1.38 Equity Margin Report Deadline .................................... 4
1.39 Equity to NFI .................................................... 4
1.40 ERISA ............................................................ 4
1.41 Event of Default ................................................. 4
1.42 Fair Market Value ................................................ 4
1.43 GAAP ............................................................. 4
1.44 Greenhouse Facility .............................................. 4
1.45 Guarantor ........................................................ 5
1.46 Guarantor Cash Flow .............................................. 5
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1.47 Guarantor Collateral ............................................. 5
1.48 Guarantor Security Documents ..................................... 5
1.49 Guaranty ......................................................... 5
1.50 Hazardous Substances ............................................. 5
1.51 Indemnified Agency Parties ....................................... 5
1.52 Indemnified Parties .............................................. 5
1.53 Intercreditor Agreement .......................................... 5
1.54 LC Collateral .................................................... 5
1.55 LC Commitment Amount ............................................. 5
1.56 LC Notice of Advance ............................................. 6
1.57 LC Request ....................................................... 6
1.58 Leasehold Assignment & Consent ................................... 6
1.59 Letter of Credit ................................................. 6
1.60 Letter of Credit Availability Period ............................. 6
1.61 Licensing Laws ................................................... 6
1.62 Line of Credit Availability Period ............................... 6
1.63 Loan ............................................................. 6
1.64 Loan Advance Amount .............................................. 6
1.65 Loan Documents ................................................... 6
1.66 Loan Proceeds .................................................... 6
1.67 Majority Lenders ................................................. 6
1.68 Material Adverse Effect .......................................... 6
1.69 Material Agreements .............................................. 7
1.70 Maturity Date .................................................... 7
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1.71 Maximum Syndication Amount ....................................... 7
1.72 Net Fixed Investments ............................................ 7
1.73 Note or Notes .................................................... 7
1.74 Notice of Advance ................................................ 7
1.75 Notice of Loan Advance ........................................... 7
1.76 Organization Documents ........................................... 7
1.77 Payment Account .................................................. 7
1.78 Payment Distribution ............................................. 7
1.79 Permitted Encumbrance ............................................ 7
1.80 Person ........................................................... 8
1.81 Potential Default ................................................ 8
1.82 Quarter .......................................................... 8
1.83 Reimbursement Agreement .......................................... 8
1.84 Required License ................................................. 8
1.85 Regulatory Change ................................................ 8
1.86 Security Documents ............................................... 8
1.87 Successor Agent .................................................. 8
1.88 Super Majority ................................................... 8
1.89 Syndication Acquisition Agreement ................................ 8
1.90 Syndication Interest ............................................. 8
1.91 Syndication Parties .............................................. 8
1.92 Syndication Party Advance Date ................................... 9
1.93 Syndication Party LC Payment Date ................................ 9
1.94 Syndication Party Payment Date ................................... 9
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Article 1. DEFINED TERMS ................................................. 1
1.95 Syndication Share ............................................... 9
1.96 Term Facility ................................................... 9
1.97 Title Commitments ............................................... 9
1.98 Title Insurers .................................................. 9
1.99 Title Policies .................................................. 9
1.100 Transfer ....................................................... 9
1.101 Underlying Borrowers ........................................... 9
1.102 Underlying Construction Loan Borrowers ......................... 9
1.103 Underlying Liens ............................................... 10
1.104 Underlying Loan ................................................ 10
1.105 Underlying Loan Documents ...................................... 10
1.106 Underlying LOC Borrowers ....................................... 10
1.107 Underlying Term Loan Borrowers ................................. 10
1.108 VF Lenders ..................................................... 10
1.109 VF Loan Agreement .............................................. 10
1.110 Village Farms Revolving Loan ................................... 10
1.111 Wire Instructions .............................................. 10
Article 2. CREDIT FACILITY ................................................ 10
2.1 Revolving Loan ................................................... 10
2.2 Letter of Credit ................................................. 10
Article 3. PURPOSES ....................................................... 11
3.1 Purpose - Line of Credit Loan .................................... 11
3.2 Purpose - Letter of Credit ....................................... 11
Article 4. AVAILABILITY ................................................... 12
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4.1 Availability - Line of Credit Loan ............................... 12
4.2 Availability - Letters of Credit ................................. 12
Article 5. INTEREST AND FEES .............................................. 12
5.1 Interest Calculation ............................................. 12
5.2 Equity Margin .................................................... 12
5.3 Default Interest Rate ............................................ 13
5.4 Fees ............................................................. 13
5.4.1 Facility Fee .................................... 13
5.4.2 LOC Commitment Fee .............................. 13
5.4.3 Letter of Credit Availability Fee ............... 14
5.4.4 Letter of Credit Issuance Fee ................... 14
Article 6. NOTES; PAYMENTS ................................................ 14
6.1 Promissory Notes ................................................. 14
6.2 Principal Payments ............................................... 14
6.3 Interest Payments ................................................ 14
6.4 Application of Regular Payments .................................. 14
6.5 Manner of Payment ................................................ 14
Article 7. PAYMENT APPLICATION/COMMITMENT REDUCTION ....................... 15
7.1 Application of Payments .......................................... 15
7.2 Reduction of Aggregate Commitment ................................ 15
Article 8. COBANK EQUITY .................................................. 15
Article 9. SECURITY ....................................................... 15
9.1 Borrower's Assets ................................................ 15
9.2 Guaranty ......................................................... 16
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Article 10. REPRESENTATIONS AND WARRANTIES ................................ 16
10.1 Organization, Good Standing, Etc ................................ 16
10.2 Corporate Authority, Due Authorization; Consents ................ 17
10.3 Title to Property ............................................... 17
10.4 Litigation ...................................................... 17
10.5 No Violations ................................................... 17
10.6 Binding Agreement ............................................... 17
10.7 Compliance with Laws ............................................ 18
10.8 Principal Place of Business ..................................... 18
10.9 Underlying Loans; Underlying Loan Documents ..................... 18
10.10 Payment of Taxes ............................................... 18
10.11 Licenses and Approvals ......................................... 18
10.12 Employee Benefit Plans ......................................... 19
10.13 Equity Investments ............................................. 19
10.14 Real Property .................................................. 19
10.15 Personal Property .............................................. 19
10.16 Borrower Membership ............................................ 20
10.17 Environmental Compliance ....................................... 20
10.18 Fiscal Year .................................................... 20
10.19 Material Agreements ............................................ 20
10.20 Regulations G, U and X ......................................... 20
10.22 Disclosure ..................................................... 20
Article 11. CONDITIONS TO ADVANCES ........................................ 20
11.1 Conditions to Closing ........................................... 20
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11.1.1 Loan Documents ........................................... 20
11.1.2 Searches; UCC Filings; Recordings; Title Insurance ....... 21
11.1.3 Approvals ................................................ 21
11.1.4 Organizational Documents ................................. 21
11.1.5 Evidence of Corporate Action ............................. 22
11.1.6 Legal Opinion for Borrower and Guarantor ................. 22
11.1.7 Evidence of Insurance .................................... 22
11.1.8 Phase I Environmental Studies ............................ 22
11.1.9 Survey ................................................... 22
11.1.10 Material Agreements ..................................... 22
11.1.11 Appointment of The Corporation Company .................. 22
11.1.12 No Material Change ...................................... 22
11.1.13 Fees and Expenses ....................................... 23
11.1.14 Application; CoBank Equity Interest Purchase Obligation . 23
11.1.15 Further Assurances ...................................... 23
11.2 Conditions to Initial Advance .............................. 23
11.2.1 Underlying Loan Documents; Possession of Documents ....... 23
11.2.2 Advance Request .......................................... 23
11.2.3 Default .................................................. 24
11.2.4 Representations and Warranties ........................... 24
11.3 Conditions to All Subsequent Advances ........................... 24
11.3.1 Representations and Warranties ........................... 24
11.3.2 No Event of Default ...................................... 24
11.3.3 No Material Adverse Change ............................... 24
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11.3.4 Advance Request .......................................... 24
11.3.5 Possession of Collateral ................................. 25
11.4 Conditions to Issuance of Letters of Credit ..................... 25
11.4.1 Representations and Warranties ........................... 25
11.4.2 No Event of Default ...................................... 25
11.4.3 No Material Adverse Change ............................... 25
11.4.4 Issuance Request ......................................... 25
11.4.5 Possession of Collateral ................................. 26
11.4.6 Reimbursement Agreement .................................. 26
11.5 Conditions to Advances to Fund Purchase of
Village Farms Revolving Loan ................................. 26
11.5.1 Representations and Warranties ........................... 26
11.5.2 No Event of Default ...................................... 26
11.5.3 No Material Adverse Change ............................... 26
11.5.4 Advance Request .......................................... 26
11.5.5 Possession of Collateral ................................. 27
11.6 Letter of Credit Conditions ..................................... 27
11.6.1 Aggregate Commitment Amount; LC Commitment Amount ........ 27
11.6.2 Form, Expiry Date, and Beneficiary ....................... 27
11.7 Additional Disbursement Conditions .............................. 27
11.7.1 Aggregate Commitment Amount .............................. 27
11.7.2 Disbursement Period ...................................... 27
11.7.3 Illegality of Loan ....................................... 28
Article 12. AFFIRMATIVE COVENANTS ......................................... 28
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12.1 Books and Records ............................................... 28
12.2 Reports and Notices ............................................. 28
12.2.1 Annual Financial Statements .............................. 28
12.2.2 Quarterly Financial Statements ........................... 28
12.2.3 Additional Information ................................... 28
12.2.4 Notice of Default ........................................ 29
12.2.5 Notice of Certain Changes ................................ 29
12.2.6 Notice of Litigation ..................................... 29
12.2.7 Notice of Material Adverse Effect ........................ 29
12.2.8 Notice of Environmental Litigation ....................... 29
12.2.9 Regulatory and Other Notices ............................. 29
12.2.10 Adverse Action Regarding Required Licenses .............. 30
12.2.11 Default of any Underlying Loan .......................... 30
12.2.12 Annual Attorney's Opinion Regarding Collateral .......... 30
12.3 Eligibility Certificate ......................................... 30
12.4 Maintenance of Existence and Qualification ...................... 30
12.5 Compliance with Legal Requirements and Agreements ............... 30
12.6 Compliance with Environmental Laws .............................. 31
12.7 Taxes ........................................................... 31
12.8 Insurance ....................................................... 31
12.9 Title to Assets and Maintenance ................................. 32
12.10 Payment of Liabilities ......................................... 32
12.11 Further Assurances; Real Property Security Interests ........... 32
12.12 Inspection ..................................................... 33
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12.13 Required Licenses; Permits; Etc ................................ 33
12.14 ERISA .......................................................... 33
12.15 Operations and Members ......................................... 34
Article 13. NEGATIVE COVENANTS ............................................ 34
13.1 Borrowing ....................................................... 34
13.2 No Other Businesses ............................................. 34
13.3 Liens ........................................................... 34
13.4 Sale of Assets .................................................. 35
13.5 Liabilities of Others ........................................... 35
13.6 Payments on Indebtedness ........................................ 36
13.7 Merger; Acquisitions; Etc ....................................... 36
13.8 Loans, Advances and Investments ................................. 36
13.9 Transactions With Related Parties ............................... 36
13.10 ERISA .......................................................... 36
13.11 Payment of Dividends ........................................... 37
13.12 Change in Fiscal Year .......................................... 37
13.13 Extension of Credit ............................................ 37
13.14 Amendment/Waiver of Provisions of Underlying Loan Documents .... 38
Article 14. INDEMNIFICATION ............................................... 38
14.1 General; Stamp Taxes; Intangibles Tax ........................... 38
14.2 Indemnification Relating to Hazardous Substances ................ 39
Article 15. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ........................ 40
15.1 Events of Default ............................................... 40
15.2 No Advances ..................................................... 41
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15.3 Rights and Remedies ............................................. 42
15.4 Limitation on Rights and Remedies ............................... 42
Article 16. AGENCY AGREEMENT .............................................. 42
16.1 Funding of Syndication Interest ................................. 42
16.2 Syndication Parties'Obligations to Remit Funds .................. 42
16.3 Notice and Timing of Each Advance Payment ....................... 43
16.4 LC Notice of Advance ............................................ 43
16.5 Syndication Party's Failure to Remit Funds ...................... 43
16.6 Agency Appointment .............................................. 44
16.7 Power and Authority of Agent .................................... 44
16.7.1 Advice ................................................... 44
16.7.2 Documents ................................................ 44
16.7.3 Proceedings .............................................. 45
16.7.4 Retain Professionals ..................................... 45
16.7.5 Incidental Powers ........................................ 45
16.7.6 Letter of Credit Purposes ................................ 45
16.8 Duties of Agent ................................................. 45
16.8.1 Possession of Documents .................................. 45
16.8.2 Distribute Payments ...................................... 45
16.8.3 Collections .............................................. 45
16.9 Agent's Resignation or Removal .................................. 45
16.10 Consent Required for Certain Actions ........................... 46
16.10.1 Unanimous ............................................... 46
16.10.2 Super Majority .......................................... 46
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16.11 Distribution of Principal and Interest ......................... 47
16.12 Distribution of Certain Fees and Amounts ....................... 47
16.12.1 LOC Commitment Fee ...................................... 47
16.12.2 Letter of Credit Availability Fee ....................... 47
16.12.3 Funding Losses .......................................... 47
16.13 Possession of Loan Documents ................................... 47
16.14 Collateral Application ......................................... 48
16.15 Amounts Required to be Returned ................................ 48
16.16 Reports and Information to Syndication Parties ................. 48
16.17 Standard of Care ............................................... 49
16.18 No Trust Relationship .......................................... 49
16.19 Sharing of Costs and Expenses .................................. 49
16.20 Syndication Parties'Indemnification of Agent ................... 50
16.21 Books and Records .............................................. 50
16.22 Administrative Agent Fee ....................................... 50
16.23 Representations and Warranties of All Parties .................. 50
16.24 Representations and Warranties of CoBank ....................... 51
16.25 Syndication Parties'Independent Credit Analysis ................ 51
16.26 No Joint Venture or Partnership ................................ 52
16.27 Purchase for Own Account/Restrictions on Transfer .............. 52
16.28 Certain Participants'Voting Rights ............................. 53
16.29 Method of Making Payments ...................................... 53
16.30 Events of Syndication Default/Remedies ......................... 53
16.30.1 Syndication Party Default ............................... 53
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16.30.2 Remedies ................................................ 53
16.31 Withholding Taxes .............................................. 54
16.32 Further Assurances ............................................. 54
Article 17. MISCELLANEOUS ................................................. 54
17.1 Costs and Expenses .............................................. 54
17.2 Service of Process and Consent to Jurisdiction .................. 55
17.3 Jury Waiver ..................................................... 55
17.4 Notices ......................................................... 55
17.4.1 Borrower ................................................. 56
17.4.2 CoBank ................................................... 56
17.5 Notice to Syndication Parties and Agent ......................... 56
17.6 Successors and Assigns .......................................... 56
17.7 Voting Rights Acknowledgment .................................... 57
17.8 Severability .................................................... 57
17.9 Entire Agreement ................................................ 57
17.10 Applicable Law ................................................. 57
17.11 Captions ....................................................... 57
17.12 Amendments ..................................................... 57
17.13 Additional Costs of Maintaining Loan ........................... 57
17.14 Capital Requirements ........................................... 58
17.15 Replacement Notes .............................................. 59
17.16 Patronage Payments ............................................. 59
17.17 Mutual Release ................................................. 59
17.18 Liberal Construction ........................................... 59
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EXHIBITS AND SCHEDULES
Exhibit 1.24 Compliance Certificate
Exhibit 6.1 Promissory Note Form
Exhibit 10.3 Permitted Encumbrances
Exhibit 10.4 Litigation
Exhibit 10.8 Borrower's Chief Executive Office and Place Where
Records Are Kept
Exhibit 10.11 Required Licenses and Consents
Exhibit 10.12 Borrower Benefit Plans
Exhibit 10.14 Interests in Real Property
Exhibit 10.19 Material Agreements
Exhibit 11.2.2 Advance Request Form
Exhibit 13.1 Existing Indebtedness
Exhibit 16.3 Notice of Loan Advance
Exhibit 16.4 LC Notice of Advance
Exhibit 16.27 Syndication Acquisition Agreement
Exhibit 16.29 Wire Instructions
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CREDIT AGREEMENT
(Line of Credit Facility)
Village Farms International Finance Association
Loan No. S-2489
THIS CREDIT AGREEMENT ("Agreement") is entered into as of the 24th day of
June 1997, by and between COBANK, ACB ("CoBank"), whose mailing address is ▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ for its own benefit as a lender
(in that capacity sometimes referred to as "CoBank") and, as Agent Bank for the
benefit of the present and future Syndication Parties (in that capacity
"Agent"), and VILLAGE FARMS INTERNATIONAL FINANCE ASSOCIATION, a Delaware
corporation, whose address is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ("Borrower").
Article 1. DEFINED TERMS
As used in this Agreement, the following terms shall have the meanings set
forth below (and such meaning shall be equally applicable to both the singular
and plural form of the terms defined, as the context may require):
1.1 Additional Costs: shall have the meaning set forth in Section 17.13.
1.2 Administrative Agent Fee: shall have the meaning set forth in
Subsection 5.4.2.
1.3 Advance: a disbursement of a portion of the Loan Proceeds.
1.4 Advance Amount: shall have the meaning set forth in Section 16.4.
1.5 Advance Date: a day (which shall be a Business Day) on which an advance
of Loan Proceeds is made.
1.6 Advance Payment: shall have the meaning set forth in Section 16.2.
1.7 Advance Request: shall have the meaning set forth in Subsection 11.2.2.
1.8 Aggregate Commitment: $10,000,000.00, subject to reduction as provided
in Section 7.2 hereof.
1.9 APD: Agro Power Development, Inc.
1.10 APD Subsidiary : (a) Village Farms of Delaware, LLC; (b) Village
Farms, LLC; (c) Keystone Village Farms, L.L.C; and (d) Village Farms of
Wheatfield, L.L.C.
1
1.11 Authorized Officer: shall have the meaning set forth in Subsection
11.1.5.
1.12 Bank Debt: all amounts owing under the Note, fees, Borrower's
obligations to purchase CoBank Equity Interests, Funding Losses and all
interest, expenses, charges and other amounts payable by Borrower pursuant to
the Loan Documents.
1.13 Base Rate: a rate of interest per annum equal to the "prime rate" as
published from time to time in the Eastern Edition of the Wall Street Journal as
the average prime lending rate for seventy-five percent (75%) of the United
States' thirty (30) largest commercial banks, or if the Wall Street Journal
shall cease publication or cease publishing the "prime rate" on a regular basis,
such other regularly published average prime rate applicable to such commercial
banks as is acceptable to Agent in its sole discretion, with such rate modified
by adding the Base Rate Margin and subtracting the Equity Margin.
1.14 Base Rate Margin: shall be the Base Rate Margin in effect under the
Credit Agreement (Term Loan Funding) from time to time, and, upon the
termination of the Credit Agreement (Term Loan Funding), 100 basis points.
1.15 BDGCFR: shall have the meaning set forth in Subsection 5.2.
1.16 Borrower Benefit Plan: shall have the meaning set forth in Subsection
10.12.
1.17 Borrower Debt: the sum of the principal balance owed by Borrower under
the Term Facility and the Construction Facility.
1.18 Borrower Pension Plan: a Borrower Benefit Plan that is an "employee
pension benefit plan" as defined in Section 3(2) of ERISA that is intended to
satisfy the requirements of Section 401(a) of the Code.
1.19 Business Day: any day other than a Saturday or Sunday and other than a
day which is a Federal legal holiday or a legal holiday for banks in the States
of Colorado, New York, or North Carolina.
1.20 Closing Date: that date on which Agent, Borrower and Guarantor have
executed all Loan Documents and on which the conditions set forth in Section
11.1 of this Agreement have been met.
1.21 CoBank Equity Interests: shall have the meaning set forth in Article
8.
1.22 Code: shall have the meaning set forth in Section 10.12.
1.23 Collateral: shall have the meaning set forth in Section 9.1.
2
1.24 Compliance Certificate: a certificate of the chief financial officer
of Borrower in the form attached hereto as Exhibit 1.24.
1.25 Construction Facility: means the credit facility made available to
Borrower pursuant to the Credit Agreement (Construction Loan Funding).
1.26 Contributing Syndication Parties: shall have the meaning set forth in
Section 16.5.
1.27 Credit Agreement (Construction Loan Funding): means that agreement so
titled dated June 24, 1997, by and between CoBank for its own benefit as a
lender and as agent bank for the benefit of the present and future syndication
parties as named or defined therein, and Borrower, wherein the lenders have
agreed to lend to Borrower a specified sum of money for the purpose of enabling
Borrower to make construction loans to eligible third parties to use for the
purposes therein specified.
1.28 Credit Agreement (Term Loan Funding): means that agreement so titled
dated June 24, 1997, by and between CoBank for its own benefit as a lender and
as agent bank for the benefit of the present and future syndication parties as
named or defined therein, and Borrower, wherein the lenders have agreed to lend
to Borrower a specified sum of money for the purpose of enabling Borrower to
make term loans to eligible third parties to use for the purposes therein
specified.
1.29 Default Interest Rate: a rate of interest equal to 400 basis points
plus the Base Rate.
1.30 Delinquency Interest: shall have the meaning set forth in Section
16.5.
1.31 Delinquent Amount: shall have the meaning set forth in Section 16.5.
1.32 Delinquent Syndication Party: shall have the meaning set forth in
Section 16.5.
1.33 Environmental Laws: the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 as amended, 42 U.S.C. 9601-9657
("CERCLA") and the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
6901-6987 ("RCRA").
1.34 Environmental Regulations: as defined in the definition of Hazardous
Substances.
1.35 Equity: as determined in accordance with GAAP, plus Minority Interests
(as defined in accordance with GAAP).
1.36 Equity Margin: shall have the meaning set forth in Section 5.2.
3
1.37 Equity Margin Report: shall have the meaning set forth in Section 5.2.
1.38 Equity Margin Report Deadline: shall have the meaning set forth in
Section 5.2.
1.39 Equity to NFI: the ratio, with respect to APD, of its Equity to its
Net Fixed Investments.
1.40 ERISA: shall have the meaning set forth in Subsection 10.12.
1.41 Event of Default: shall have the meaning set forth in Section 15.1.
1.42 Fair Market Value: a valuation as determined in a written appraisal
from an MAI certified appraiser.
1.43 GAAP: generally accepted accounting principles in the United States of
America, applied consistently, as in effect from time to time.
1.44 Greenhouse Facility: means a greenhouse used by an Underlying LOC
Borrower for the planting, growing and harvesting of vegetables and/or fruits.
1.45 Guarantor: APD.
1.46 Guarantor Cash Flow: Cash received by APD on account of its equity
interests in the Underlying Borrowers or from other investments and business
activities of such Guarantor.
1.47 Guarantor Collateral: shall have the meaning set forth in Section 9.2.
1.48 Guarantor Security Documents: the security agreement, pledge
agreement, and/or other security documents executed by Guarantor in favor of
Agent and the present and future Syndication Parties to secure Guarantor's
performance of its obligations under the Guaranty with a first lien on all of
Guarantor's assets.
1.49 Guaranty: the guaranty, in form and substance satisfactory to Agent,
to be executed by Guarantor in favor of Agent, as in effect on the date hereof
and as hereafter amended.
1.50 Hazardous Substances: dangerous, toxic or hazardous pollutants,
contaminants, chemicals, wastes, materials or substances, as defined in or
governed by the provisions of any Environmental Laws or any other federal, state
or local law, statute, code, ordinance, regulation, requirement or rule relating
thereto ("Environmental Regulations"), and also including urea formaldehyde,
polychlorinated biphenyls, asbestos, asbestos-containing materials, nuclear fuel
or waste, and petroleum products, or any other waste, material, substances,
pollutant or
4
contaminant which would subject an owner of property to any damages, penalties
or liabilities under any applicable Environmental Regulations.
1.51 Indemnified Agency Parties: shall have the meaning set forth in
Section 16.20.
1.52 Indemnified Parties: shall have the meaning set forth in Section 14.1.
1.53 Intercreditor Agreement: means that agreement so titled dated June 24,
1997, by and between CoBank for its own benefit as a lender and as agent bank
for the benefit of the present and future syndication parties as named or
defined therein, Borrower, and Guarantor.
1.54 LC Collateral: shall have the meaning set forth in Section 3.2.
1.55 LC Commitment Amount: $5,000,000.00.
1.56 LC Notice of Advance: shall have the meaning set forth in Section
16.4.
1.57 LC Request: shall have the meaning set forth in Subsection 11.4.4.
1.58 Leasehold Assignment & Consent: the Leasehold Assignment and Consent,
in form and substance satisfactory to Agent.
1.59 Letter of Credit: shall have the meaning set forth in Section 2.2.
1.60 Letter of Credit Availability Period: shall have the meaning set forth
in Section 4.2.
1.61 Licensing Laws: shall have the meaning set forth in Section 10.5.
1.62 Line of Credit Availability Period: shall have the meaning set forth
in Section 4.1.
1.63 Loan: shall have the meaning set forth in Section 2.1.
1.64 Loan Advance Amount: shall have the meaning set forth in Section 16.3.
1.65 Loan Documents: this Agreement, the Notes, the Security Documents, the
Guaranty, the Guarantor Security Documents, and other documents required to
grant to Agent, for the benefit of the Syndication Parties, a perfected security
interest in the Collateral and in the Guarantor Collateral.
1.66 Loan Proceeds: shall have the meaning set forth in Section 3.1.
1.67 Majority Lenders: shall have the meaning set forth in Section 16.9.
5
1.68 Material Adverse Effect: means: (a) a material adverse effect on the
financial condition, results of operation, business or property of Borrower; (b)
a material adverse effect on the ability of Borrower to perform its obligations
under this Agreement and the other Loan Documents; or (c) a material adverse
effect upon the ability of Agent to enforce its rights and remedies under the
Loan Documents.
1.69 Material Agreements: shall have the meaning set forth in Section
10.19.
1.70 Maturity Date: September 30, 1998, provided that such date shall be
automatically extended for successive twelve (12) month periods unless on or
before any July 31, either Agent provides to Borrower, or Borrower provides to
Agent, notice of termination effective as of the following September 30; and
provided further that, and notwithstanding any such notice, to the limited
extent that on any such date one or more Letters of Credit have not expired,
this Agreement and the other Loan Documents shall remain in full force and
effect for the sole purpose of providing finding for any draws under such
unexpired Letters of Credit.
1.71 Maximum Syndication Amount:
For CoBank - $ 10,000,000.00
1.72 Net Fixed Investments: Total Assets less Current Assets, as such
amounts are determined in accordance with GAAP.
1.73 Note or Notes: the promissory notes executed by Borrower pursuant to
Section 6.1 hereof, and all amendments, renewals, substitutions and extensions
thereof.
1.74 Notice of Advance: shall have the meaning set forth in Section 16.4.
1.75 Notice of Loan Advance: shall have the meaning set forth in Section
16.3.
1.76 Organization Documents: in the case of a corporation, its articles or
certificate of incorporation and bylaws; in the case of a partnership, its
partnership agreement and certificate of limited partnership, if applicable; in
the case of a limited liability company, its articles of organization and its
operating agreement.
1.77 Payment Account: shall have the meaning set forth in Section 16.11.
1.78 Payment Distribution: shall have the meaning set forth in Section
16.11.
1.79 Permitted Encumbrance: shall have the meaning set forth in Section
10.3.
6
1.80 Person : any individual, corporation, limited liability company,
association, partnership, trust, organization, government, governmental agency,
or other entity.
1.81 Potential Default: any event, other than an event described in Section
15.1(a) hereof, which with the giving of notice or lapse of time, or both, would
become an Event of Default.
1.82 Quarter: the quarters of the calendar year commencing as of January 1,
April 1, July 1 and October 1.
1.83 Reimbursement Agreement: shall have the meaning set forth in Section
3.2.
1.84 Required License: shall have the meaning set forth in Section 10.11.
1.85 Regulatory Change: shall have the meaning set forth in Section 17.13.
1.86 Security Documents: the security agreements, mortgages, deeds of
trust, financing statements, pledge agreements, leasehold assignment and
consents, assignments and/or other security documents executed by Borrower in
favor of Agent, for the benefit of the Syndication Parties, to secure Borrower's
performance of its obligations under the Notes and other Loan Documents with a
first lien on all assets, real and personal, of Borrower, in form and substance
acceptable to Agent.
1.87 Successor Agent: such Person as may be appointed as successor to the
rights and duties of Agent as provided in Section 16.9 of this Agreement.
1.88 Super Majority: Syndication Parties whose Syndication Shares aggregate
at least seventy-five percent (75%).
1.89 Syndication Acquisition Agreement: shall have the meaning set forth in
Section 16.27.
1.90 Syndication Interest: shall have the meaning set forth in Section
16.1.
1.91 Syndication Parties: shall mean:
CoBank in its role as such, but not in its role as Agent hereunder. and
such Persons as shall from time to time execute a Syndication Acquisition
Agreement substantially in the form of Exhibit 16.27 hereto signifying their
election to purchase all or a portion of the Syndication Interest of any
Syndication Party, in accordance with Section 16.27 hereof, and to become a
Syndication Party hereunder.
7
1.92 Syndication Party Advance Date: shall have the meaning set forth in
Section 16.3.
1.93 Syndication Party LC Payment Date: shall have the meaning set forth in
Section 16.4.
1.94 Syndication Party Payment Date: shall have the meaning set forth in
Section 16.4.
1.95 Syndication Share: shall mean:
For CoBank *100% ______________(subject to adjustment for sale of
further Syndication Interests)
subject, in each case, to adjustment as provided in Section 16.4
hereof.
1.96 Term Facility: means the credit facility made available to Borrower
pursuant to the Credit Agreement (Term Loan Funding).
1.97 Title Commitments: shall have the meaning set forth in Subsection
11.1.2.
1.98 Title Insurers: shall have the meaning set forth in Subsection 11.1.2.
1.99 Title Policies: shall have the meaning set forth in Subsection 11.1.2.
1.100 Transfer: shall have the meaning set forth in Section 16.27.
1.101 Underlying Borrowers: collectively, the Underlying Term Loan
Borrowers and the Underlying Construction Loan Borrowers.
1.102 Underlying Construction Loan Borrowers: means each Person to whom
Borrower has, at any time, made available an Underlying Construction Loan as
defined in the Credit Agreement (Construction Loan Funding), which is then
outstanding.
1.103 Underlying Liens: shall have the meaning set forth in Subsection
12.2.11.
1.104 Underlying Loan: shall have the meaning set forth in Section 3.1.
1.105 Underlying Loan Documents: all of the documents, including, without
limitation, the loan agreement, promissory note(s), and security documents,
executed in connection with any Underlying Loan.
1.106 Underlying LOC Borrowers: means: (a) each Person to whom Borrower has
at any time outstanding an Underlying Loan; and (b) Village Farms of
8
Texas, L.P. at such time as an Advance is made to fund Borrower's purchase of
the Village Farms Revolving Loan.
1.107 Underlying Term Loan Borrowers: means each Person to whom Borrower
has, at any time, made available an Underlying Term Loan as defined in the
Credit Agreement (Term Loan Funding), which is then outstanding.
1.108 VF Lenders: Farm Credit Bank of Texas and Texas Production Credit
Association.
1.109 VF Loan Agreement: That Loan Agreement dated as of February 14, 1996
by and between Village Farms of Texas, L.P., as borrower, the VF Lenders, and
CoBank, as Administrative Agent.
1.110 Village Farms Revolving Loan: The LOC Loan (as defined in the VF Loan
Agreement) made to Village Farms of Texas, L.P. pursuant to the VF Loan
Agreement.
1.111 Wire Instructions: shall have the meaning set forth in Section 16.29.
Article 2. CREDIT FACILITY
2.1 Revolving Loan. On the terms and conditions set forth in this
Agreement, the Syndication Parties agree, each as to their Syndication Share and
to the extent of their Maximum Syndication Amount, to make a revolving loan to
Borrower (the "Loan") in an amount up to the Aggregate Commitment less the
undrawn face amount of any Letters of Credit then outstanding.
2.2 Letter of Credit. On the terms and conditions set forth in this
Agreement, the LC Issuing Bank agrees to issue letters of credit (each a "Letter
of Credit") any time during the Letter of Credit Availability Period up to an
aggregate undrawn face amount of all such Letters of Credit outstanding at any
one time equal to the lesser of: (a) the LC Commitment Amount; or (b) the
Aggregate Commitment less the principal amount committed under all Underlying
Loans then outstanding. Each Syndication Party is responsible for funding its
Syndication Share of all draws under the Letters of Credit, and such amounts
will be funded out of the Loan.
Article 3. PURPOSES
3.1 Purpose - Line of Credit Loan. The proceeds of the Loan ("Loan
Proceeds") may be used by Borrower only: (a) to fund Borrower's purchase of the
Village Farms Revolving Loan; (b) to fund Borrower's loan ("Underlying Loan"):
(i) to APD (upon its becoming a member of Borrower) to meet APD's working
capital needs; (ii) to Underlying Term Loan Borrowers (A) to meet their needs
during the planting phase of each year's production cycle as set forth in a
planting cycle budget to be provided by the Underlying Term Loan Borrower, and
(B) to enable such Underlying Term Loan Borrowers to meet their payment
requirements under their Underlying Term
9
Loan for a maximum of 180 days in any three year period; and (iii) to Members to
meet their needs during the planting phase of each year's production cycle as
set forth in a planting cycle budget to be provided by the Member; and (c) to
fund draws under the Letters of Credit. All such Underlying Loans must be
evidenced by Underlying Loan Documents satisfactory to Agent and loans made
under (i) must be secured by all of APD's inventory and accounts and loans made
under (ii) or (iii) must be secured by all the assets of such Underlying Term
Loan Borrower or such Member, as applicable.
3.2 Purpose - Letter of Credit. Letters of Credit may be requested by
Borrower to support commitments: (a) of Borrower to third parties incurred in
connection with the conduct of its regular business; (b) of APD to facilitate
the purchase and sale by APD of fruits and/or vegetables and for other purposes
approved by Borrower and Agent; (c) of (i) Members or (ii) Underlying Term Loan
Borrowers to third parties, in the case of (i) or (ii), supplying services
and/or materials to such Member's or such Underlying Term Loan Borrowers in
connection with the operation of their respective Greenhouse Facilities; and/or
(d) of an APD Subsidiary to facilitate the purchase and sale by such APD
Subsidiary of fruits and/or vegetables. The Person for whose benefit or account
Letters of Credit are issued under (b), (c), or (d) must have executed a
reimbursement agreement ("Reimbursement Agreement") in form and substance
satisfactory to Agent obligating such Person to reimburse Borrower and the LC
Issuing Bank for the amount of any draw under such Letter of Credit and
associated costs and liabilities, and such Person's obligations under such
reimbursement agreement must be secured by a first lien on all merchandise and
documents, and including any letter of credit or proceeds thereof, which come
into the possession or control of such Person, or in which such Person may
acquire an interest, or which shall come into the possession or control of
Borrower or the LC Issuing Bank or any correspondents of Borrower or the LC
Issuing Bank as the result of or in connection with any transactions under the
Letter of Credit ("LC Collateral").
ARTICLE 4. AVAILABILITY
4.1 Availability - Line of Credit Loan. The Loan Proceeds will be made
available to Borrower as soon as the applicable conditions set forth in Article
11 hereof have been satisfied and until the Maturity Date ("Line of Credit
Availability Period"). Unless otherwise agreed, the Loan Proceeds will be made
available on any Business Day during the Availability Period: (a) to fund draws
under Letters of Credit; and (b) by wire transfer of immediately available funds
in accordance with written wire transfer instructions to be furnished by
Borrower on a form supplied by Agent. Amounts borrowed under the Loan and repaid
may be reborrowed during the Line of Credit Availability Period.
4.2 Availability - Letters of Credit. The Letters of Credit will be made
available to Borrower as soon as the applicable conditions set forth in Article
11 hereof have been satisfied, provided however such conditions must be
satisfied no later than
10
December 31, 1997, and until a date sixty (60) days prior to the Maturity Date
("Letter of Credit Availability Period").
ARTICLE 5. INTEREST AND FEES
5.1 Interest Calculation. The outstanding principal balance under the Notes
shall bear interest at the Base Rate and shall be calculated on the actual
number of days each Advance is outstanding on the basis of a year consisting of
360 days. In calculating interest, the Advance Date shall be included and the
date each Advance is repaid shall be excluded.
5.2 Equity Margin. The "Equity Margin" shall be determined as of each June
30 and December 31 as provided in the table below (expressed in basis points)
based on: (a) the ratio of Equity to NFI of APD, on a consolidated basis; and
(b) the ratio of Borrower Debt to Guarantor Cash Flow ("BDGCFR"), as of such
date:
Equity to NFI
less than =>40<50 50 or more
40
BDGCFR
------
=>8.0 12.5 25.0 50.0
=>4.0< 8.0 25.0 50.0 62.5
< 4.0 50.0 62.5 75.0
provided that the Equity Margin may never exceed the Base Rate Margin.
On or before the last Business Day of each September and March ("Equity Margin
Report Deadline"), commencing September of 1997, Borrower shall provide to Agent
a statement, certified to by Borrower's chief financial officer, showing: (a)
the Equity to NFI ratio of APD as of the preceding June 30 or December 31, as
applicable, and showing the amounts of APD's Equity and APD's Net Fixed
Investments as of such date; and (b) the ratio of Borrower Debt to Guarantor
Cash Flow as of the preceding June 30 or December 31, as applicable, and showing
the amounts of Borrower Debt and amount of Guarantor Cash Flow as of such date
("Equity Margin Report"). The Equity Margin for the six month period commencing
as of the November 1 or May 1 next succeeding such Equity Margin Report Deadline
shall be based on the Equity to NFI ratio and BDGCFR shown in such Equity Margin
Report (unless, and except to the extent, that the contents of the annual or
quarterly financial statements received by Agent from Borrower pursuant to
Subsections 12.2.1 or 12.2.2 hereof or from APD pursuant to the Guaranty produce
different ratios). If the Equity Margin Report is not received by Agent by the
Equity Margin Report Deadline, the Equity Margin for the period commencing on
the following November 1 or May 1, as applicable, will be determined as though
the BDGCFR upon which such Equity Margin is based is equal to 8.0.
11
5.3 Default Interest Rate. All Bank Debt shall, at the sole option of
Agent, bear interest at the Default Interest Rate from and after the occurrence
and during the continuance of an Event of Default. Upon the occurrence and
during the continuance of an Event of Default or Potential Default, at the
option of Agent, interest shall be payable upon demand by Agent, and in no event
less frequently than monthly.
5.4 Fees. Borrower shall pay or cause to be paid the following fees:
5.4.1 Facility Fee. A non-refundable (except for the proviso below)
facility fee equal to 75 basis points multiplied by the Aggregate Commitment
payable to CoBank on the Closing Date; provided that the Facility Fee payable
with respect to the amount advanced under the Line of Credit Facility to fund
Borrower's purchase of the Village Farms Revolving Loan shall be refunded to
Borrower at the time of such advance so long as it occurs within 180 days of the
Closing Date.
5.4.2 LOC Commitment Fee. A fee equal to 50 basis points per annum
multiplied by the Unused Line of Credit Commitment, calculated daily commencing
on the Closing Date and payable to Agent, for the benefit of the Syndication
Parties, in arrears on the last day of each Quarter. The "Unused Line of Credit
Commitment" shall be determined as of any day by starting with the Aggregate
Commitment and subtracting therefrom (a) the undrawn face amount of all Letters
of Credit then outstanding and (b) the outstanding principal balance owing under
the Line of Credit Facility.
5.4.3 Letter of Credit Availability Fee. A fee, payable to Agent, for the
benefit of the Syndication Parties, at the time of issuance of each Letter of
Credit and at the time of each renewal of a Letter of Credit, in an amount to be
quoted by Agent, in its sole discretion, at the time of issuance.
5.4.4 Letter of Credit Issuance Fee. A fee, payable to the LC Issuing Bank
at the time of each such issuance or renewal of each Letter of Credit, equal to
the greater of (a) 3% of the face amount of such Letter of Credit; or (b)
$1,500.00.
ARTICLE 6. NOTES; PAYMENTS
6.1 Promissory Notes. Each Syndication Party's Syndication Interest in the
Loan shall be evidenced by a promissory note, payable to the order of such
Syndication Party in the face amount equal to such Syndication Party's Maximum
Syndication Amount, in the form attached hereto as Exhibit 6.1 (each a "Note"
and collectively, such promissory notes shall be referred to as the "Notes").
6.2 Principal Payments. Principal shall be payable in full on or before the
Maturity Date.
12
6.3 Interest Payments. Interest shall be payable the tenth day of each
month commencing on the tenth day of the month following the month in which the
Closing Date occurs, and on the Maturity Date.
6.4 Application of Regular Payments. Upon the occurrence and during the
continuance of an Event of Default or Potential Default, all payments and other
amounts received by Agent shall be applied, as Agent in its sole discretion
shall determine, to fees, the purchase of CoBank Equity Interests, interest or
principal indebtedness under the Notes, or to any other Bank Debt. The amount of
Loan Proceeds advanced and other Bank Debt, and all payments by or on behalf of
Borrower, of such amounts, shall be entered on the books of the Agent and/or the
Syndication Parties and such entries shall be presumptive evidence of the unpaid
amounts outstanding from time to time under the Notes and other Loan Documents.
6.5 Manner of Payment. All payments, including prepayments, that Borrower
is required or permitted to make under the terms of this Agreement shall be made
to Agent (a) in immediately available federal funds, to be received no later
than 12:00 noon Central Time of the Business Day on which such payment is due by
wire transfer through Federal Reserve Bank, Kansas City, Routing Number:
▇▇▇▇▇▇▇▇▇, COBANK ENGWD (or to such other account as Agent may designate by
notice); and (b) without setoff or counterclaim and free and clear of and
without deduction for any taxes, levies, impost, duties, charges, fees,
deductions, withholding, compulsory loans, restrictions or conditions of any
nature now or hereafter imposed or levied by any jurisdiction or any political
subdivision thereof or taxing or other authority therein unless Borrower is
compelled by law to make such deduction or withholding.
ARTICLE 7. PAYMENT APPLICATION/COMMITMENT REDUCTION
7.1 Application of Payments. Upon the occurrence and during the continuance of
an Event of Default or Potential Default, Borrower hereby agrees that all
amounts paid to Agent shall be applied, as Agent in its sole discretion shall
determine, to fees, the purchase of CoBank Equity Interests, interest or
principal indebtedness under the Notes (in such order of maturity as Agent shall
select), or to any other Bank Debt.
7.2 Reduction of Aggregate Commitment. Borrower shall have the right, from time
to time, to reduce the Aggregate Commitment in multiples of $100,000.00 upon two
(2) Business Days prior written notice to Agent provided that the requested
reduction shall not cause the Aggregate Commitment to be less than the aggregate
amount of (a) the outstanding principal balance owing under the Loan and the
Notes, plus (b) the undrawn face amount of all outstanding Letters of Credit.
Any reduction of the Aggregate Commitment pursuant to this Section shall be
irrevocable.
13
ARTICLE 8. COBANK EQUITY
Borrower agrees to purchase such equity interests in CoBank ("CoBank Equity
Interests") as CoBank may from time to time require in accordance with its
bylaws and capital plan as applicable to cooperative borrowers generally. In
connection with the foregoing, Borrower hereby acknowledges receipt, prior to
the execution of this Agreement, of CoBank's bylaws, a written description of
the terms and conditions under which the CoBank Equity Interests are issued,
CoBank's Loan-Based Capital Plan, CoBank's most recent annual report, and if
more recent than CoBank's latest annual report, its latest quarterly report.
ARTICLE 9. SECURITY
9.1 Borrower's Assets. As security for the payment and performance of all
obligations of Borrower to Agent, CoBank, and the Syndication Parties, including
but not limited to principal and interest under the Notes, purchases of CoBank
Equity Interests, fees, Funding Losses, reimbursements, and all other Bank Debt
or obligations under any of the Loan Documents, Borrower shall grant to, and
maintain for, Agent, for the benefit of all present and future Syndication
Parties, a first lien and security interest, subject only to Permitted
Encumbrances and to the provisions of the Intercreditor Agreement, in all of its
assets, both real and personal, tangible and intangible, whether now owned or
hereafter acquired, including, without limitation, the Underlying Loans and the
Underlying Loan Documents and its interest in the collateral securing the
Underlying Loans ("Collateral"), pursuant to the Security Documents. Borrower
shall execute and deliver to Agent, for the benefit of the Syndication Parties,
the Security Documents to evidence the security interest of Agent, for the
benefit of the Syndication Parties, in the Collateral, together with such
financing statements or other documents as Agent shall request. Borrower shall
deliver the originals of the Underlying Loan Documents to Agent, for the benefit
of all present and future Syndication Parties. Borrower shall also execute such
further security agreements, mortgages, deeds of trust, financing statements,
assignments or other documents as Agent shall reasonably request, in form and
substance as Agent shall specify, to establish, confirm, perfect or provide
notice of Agent's security interest (for the benefit of all Syndication Parties)
in the Collateral. If requested by Agent: (a) Borrower and Agent shall place a
legend on any chattel paper included in the Collateral showing Agent's security
interest therein; and (b) Borrower shall deliver to Agent possession of any
instruments and securities included in the Collateral (duly endorsed to Agent's
reasonable satisfaction).
9.2 Guaranty. Borrower's obligations under this Agreement and all other
Loan Documents shall be guaranteed by APD pursuant to the APD Guaranty and the
APD Guaranty shall be secured by a first lien and security interest, subject to
the provisions of the Intercreditor Agreement, in all of its assets, both real
and personal, tangible and intangible, whether now owned or hereafter acquired
("Guarantor Collateral") pursuant to the Guarantor Security Documents.
14
ARTICLE 10. REPRESENTATIONS AND WARRANTIES
To induce the Syndication Parties to make the Loan, and recognizing that
the Syndication Parties are relying thereon, Borrower represents and warrants as
follows:
10.1 Organization, Good Standing, Etc. Borrower (a) is duly organized,
validly existing, and in good standing under the laws of its state of
incorporation; (b) qualifies as a cooperative association under the laws of its
state of incorporation; (c) is duly qualified to do business and is in good
standing in each jurisdiction in which the transaction of its business makes
such qualification necessary; and (d) has all requisite corporate and legal
power (i) to own and operate its assets and to carry on its business, (ii) to
enter into and perform the Loan Documents to which it is a party, and (iii) to
make the Underlying Loans.
10.2 Corporate Authority, Due Authorization; Consents. Borrower has full
power and authority to conduct its business as contemplated to be operated from
and after the Closing Date; to execute, deliver and perform under the Loan
Documents and all other documents and agreements as contemplated by this
Agreement; and to make the Underlying Loans, all of which have been duly
authorized. All consents or approvals of any Person which are necessary for, or
are required as a condition of, the execution, delivery and performance of the
Loan Documents and/or making of the Underlying Loans have been obtained.
10.3 Title to Property. Borrower holds good and marketable title to all of
its real property (other than rights of way, easements and similar interests in
real property which in the aggregate are not material), owns all of its personal
property, and holds all of its leases, free and clear of any lien, pledge,
restriction, or encumbrance, except as specifically identified in Exhibit 10.3
attached hereto or as permitted by Section 13.3 hereof ("Permitted
Encumbrances") and subject to the Intercreditor Agreement. All of Borrower's
leases which constitute Material Agreements are in full force and effect and
afford Borrower peaceful and undisturbed possession of the subject matter
thereof.
10.4 Litigation. Except as described on Exhibit 10.4 hereto, there are, no
pending legal or governmental actions, proceedings or investigations to which
Borrower is a party or to which any property of Borrower is subject which might
result in any Material Adverse Effect and, to Borrower's knowledge, no such
actions or proceedings are threatened or contemplated by any federal, state,
county, city (or similar unit) governmental agency or any other Person.
10.5 No Violations. The execution, delivery and performance of the Loan
Documents and the making of the Underlying Loans will not: (a) violate any
provision of Borrower's articles of incorporation or bylaws, or any law, rule,
regulation, judgment, order or ruling of any court or governmental agency; (b)
violate, conflict with, result in a breach of, constitute a default under, or
with the giving of notice or the expiration of time or both, constitute a
default under, any existing real estate mortgage, indenture, lease, security
agreement, contract, note, instrument or any other agreements
15
or documents binding on Borrower or affecting its property; or (c) violate,
conflict with, result in a breach of, constitute a default under, or result in
the loss of, or restriction of rights under, any Required License or any order,
law, rule, or regulation under or pursuant to which any Required License was
issued or is maintained ("Licensing Laws").
10.6 Binding Agreement. Each of the Loan Documents to which Borrower is a
party is, or when executed and delivered, will be, the legal, valid and binding
obligation of Borrower, enforceable in accordance with its terms, subject only
to limitations on enforceability imposed by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting creditors' rights
generally and by general principles of equity.
10.7 Compliance with Laws. Borrower is in compliance with all federal,
state, and local laws, rules, regulations, ordinances, codes and orders,
including without limitation all Environmental Laws and all Licensing Laws, with
respect to which noncompliance would result in a Material Adverse Effect.
10.8 Principal Place of Business. Borrower's place of business, or chief
executive office if it has more than one place of business, and the place where
the records required by Section 12.1 hereof are kept, is located at the place(s)
shown on Exhibit 10.8 hereto.
10.9 Underlying Loans; Underlying Loan Documents. As of the time of any
Advance: (a) the Underlying Loan Documents will have been duly authorized,
executed, and delivered by all parties thereto and will constitute the legal,
valid, and binding obligation of all parties thereto, enforceable in accordance
with their terms, subject only to the effects of bankruptcy, insolvency, and
similar laws generally affecting the rights of creditors or the availability of
equitable remedies; (b) any Underlying Loan will be free from any right of
set-off, counterclaim or other claim, or defense and no event of default
thereunder shall have occurred and be continuing; (c) any Underlying LOC
Borrower's obligations pursuant to its Underlying Loan will, except where the
Underlying Loan Documents specifically state otherwise, be secured by a first
and prior lien in favor of Borrower in all assets of such Underlying LOC
Borrower; (d) all closing and pre-closing requirements, if any, set forth in the
Underlying Loan Documents, will have been satisfied in full; (e) the Underlying
Loan Documents will have been approved by Agent and shall not have been amended
subsequent to such approval; (f) the Underlying Loans will not be in violation
of any applicable usury statutes; and (g) to Borrower's knowledge and belief,
the Underlying Loan Documents, projections, budgets, financial statements, or
other information furnished by or on behalf of any Underlying LOC Borrower will
not contain any misstatement of a material fact, nor omit to state a material
fact.
10.10 Payment of Taxes. Borrower has filed all required federal, state and
local tax returns and has paid all taxes as shown on such returns as they have
become
16
due. Borrower has paid when due all other taxes, assessments or impositions
levied or assessed against Borrower or its business or properties.
10.11 Licenses and Approvals. Borrower has ownership of, or license to use,
or has been issued, all trademarks, patents, copyrights, franchises,
certificates, approvals, permits, authorities, agreements, and licenses which
are used or necessary to permit it to own its properties and to conduct its
business as presently being conducted, and to make the Underlying Loans
("Required Licenses"). Exhibit 10.11 lists all Required Licenses presently in
existence with respect to Borrower. Each Required License is in full force and
effect, and there is no outstanding notice of cancellation or termination or, to
Borrower's knowledge, any threatened cancellation or termination in connection
therewith, nor has an event occurred with respect to any Required License which,
with the giving of notice or passage of time or both, could result in the
revocation or termination thereof or otherwise in any impairment of Borrower's
rights with respect thereto, which impairment could reasonably be expected to
have a Material Adverse Effect. No consent, permission, authorization, order, or
license of any governmental authority, is necessary in connection with the: (a)
execution, delivery, performance, or enforcement of the Loan Documents to which
Borrower is a party; and (b) the making of the Underlying Loans, except such as
have been obtained and are in full force and effect and as are described on
Exhibit 10.11.
10.12 Employee Benefit Plans. Borrower does not presently maintain or
participate in, and has not in the past maintained or participated in, and is
not obligated to contribute to, any of the following (each a "Borrower Benefit
Plan" and collectively "Borrower Benefit Plans"): (a) any funded "employee
welfare benefit plan," as that term is defined in Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended, and the regulations
thereunder ("ERISA"); (b) any "multiemployer plans," as defined in Section 3(37)
of ERISA; (c) any "employee pension benefit plan" as defined in Section 3(2) of
ERISA; (d) any "employee benefit plan", as such term is defined in Section 3(3)
of ERISA; (e) any "multiple employer plan" within the meaning of Section 413 of
the Internal Revenue Code of 1986, as amended from time to time ("Code"); (f)
any "multiple employer welfare arrangement" within the meaning of Section 3(40)
of ERISA; (g) a "voluntary employees' beneficiary association" within the
meaning of Section 501(a)(9) of the Code; (h) a "welfare benefit fund" within
the meaning of Section 419 of the Code; or (i) any employee welfare benefit plan
within the meaning of Section 3(1) of ERISA for the benefit of retired or former
employees.
10.13 Equity Investments. Borrower does not now own any stock or other
voting or equity interest, directly or indirectly, in any Person other than the
CoBank Equity Interests.
10.14 Real Property. Borrower: (a) has all real property interests,
including without limitations fee interests, leasehold interests, easements,
licenses and rights of way which are necessary for the conduct of Borrower's
business; and (b) does not own any fee interest or leasehold interest, or any
other interest, including without limitation
17
any easements, rights of way or licenses, in real property, other than as set
forth on Exhibit 10.14 hereto.
10.15 Personal Property. Borrower has all tangible personal property
necessary for the conduct of Borrower's business as it is contemplated to be
conducted; and all such property is in good operating condition and repair,
reasonable wear and tear excepted, and suitable in all material respects for the
uses for which it is being utilized.
10.16 Borrower Membership. Village Farms of Texas, L.P. is a member of
Borrower.
10.17 Environmental Compliance. Without limiting the provisions of Section
10.7 above, all property owned or leased by Borrower and all operations
conducted by it are in compliance in all material respects with all Laws
relating to environmental protection, with respect to which the failure to
comply would have a Material Adverse Effect.
10.18 Fiscal Year. Each fiscal year of Borrower begins on January 1 of each
calendar year and ends on December 31 of each calendar year.
10.19 Material Agreements. That Exhibit 10.19 attached hereto sets forth
all agreements of Borrower, the termination or breach of which, based upon
Borrower's knowledge as of the date of making any representation with respect
thereto, would have a Material Adverse Effect ("Material Agreements"). Neither
Borrower nor, to Borrower's knowledge, any other party to any Material
Agreement, is in default thereunder, and no facts exist which with the giving of
notice or the passage of time, or both, would constitute such a default.
10.20 Regulations G, U and X. No portion of any Advance will be used for
the purpose of purchasing, carrying, or making loans to finance the purchase of,
any "margin security" or "margin stock" as such terms are used in Regulations G,
U or X of the Board of Governors of the Federal Reserve System, 12 C.F.R. Parts
207, 221 and 224.
10.21 Disclosure. The representations and warranties contained in this
Article 10 and in the other Loan Documents do not contain any untrue statement
of a material fact or omit to state a material fact necessary to make such
representations not misleading.
ARTICLE 11. CONDITIONS TO ADVANCES
11.1 Conditions to Closing. . The obligation (a) of the Syndication Parties
to make the Loan and to make any Advance thereunder; and (b) of the LC Issuing
Bank to issue the first Letter of Credit, are each subject to satisfaction, in
Agent's sole discretion, of each of the following conditions precedent:
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11.1.1 Loan Documents. Agent shall have received duly executed originals of
the Loan Documents.
11.1.2 Searches; UCC Filings; Recordings; Title Insurance. Agent shall have
received: (a) searches of appropriate filing offices showing that (i) no state
or federal tax liens have been filed which remain in effect against Borrower,
(ii) except with respect to Permitted Encumbrances no financing statements have
been filed by any Person except to perfect the security interests required by
this Agreement, which remain in effect against Borrower or any of its assets,
(iii) all financing statements necessary to perfect the security interests
granted to Agent (for the benefit of the Syndication Parties) under the Loan
Documents have been filed or recorded, to the extent such security interests are
capable of being perfected by such filing, and (iv) all of the Loan Documents
required to be recorded or filed to perfect the security interests and liens
granted therein shall be so recorded and filed; (b) mortgagees' title insurance
commitments ("Title Commitments") acceptable to Agent from one or more insurers
acceptable to Agent (the "Title Insurers") committing to issue one or more title
policies (ALTA Loan Policy Form) (the "Title Policies") insuring the lien in
favor of Agent (on behalf of the Syndication Parties) on each parcel of real
property owned in fee by Borrower having an estimated Fair Market Value of
$25,000.00 or more as a first priority lien on such real property, subject only
to Permitted Encumbrances, and (i) deleting the standard printed exceptions and
the gap exception, (ii) containing only such exceptions to title as are
reasonably acceptable to Agent, and (iii) containing such other endorsements as
Agent may reasonably require; and (c) either a Title Commitment or, at
Borrower's option, a written ownership and encumbrance report of current date
indicating that there are no prior liens on each parcel of such real property
having an estimated Fair Market Value of less than $25,000.00. In addition, in
the case of the parcels of real property covered by a Title Commitment, as of
the Closing Date Agent shall have received from the Title Insurers a written
confirmation acceptable to Agent confirming that the Title Insurers are
irrevocably committed to issue the Title Policies.
11.1.3 Approvals. Agent shall have received evidence satisfactory to it
that all consents and approvals of governmental authorities and third parties
which are with respect to Borrower and Guarantor, necessary for, or required as
a condition of: (a) the validity and enforceability of the Loan Documents; (b)
creation of and realization on, Agent's lien (for the benefit of the Syndication
Parties) on the Collateral; and (c) the making of the Underlying Loans, have
been obtained and are in full force and effect.
11.1.4 Organizational Documents. Agent shall have received: (a) good
standing certificates, dated no more than thirty (30) days prior to the Closing
Date, for Borrower and Guarantor for their respective states of incorporation
and for each state where their operations require qualification or authorization
to transact business; (b) a copy of the articles of incorporation of Borrower
and Guarantor certified by the Secretary of State of their state of
organization; and (c) a copy of the bylaws of Borrower and Guarantor, certified
as true and complete by the Secretary or Assistant Secretary of Borrower and
Guarantor, respectively.
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11.1.5 Evidence of Corporate Action. Agent shall have received in form and
substance satisfactory to Agent: documents evidencing all corporate action taken
by each of Borrower and Guarantor to authorize (including the specific names and
titles of the persons authorized to so act ("Authorized Officers")) the
execution, delivery and performance of the Loan Documents to which it is a
party, and with respect to Borrower, the making of the Underlying Loans,
certified to be true and correct by the Secretary or Assistant Secretary of
Borrower and Guarantor, respectively.
11.1.6 Legal Opinion for Borrower and Guarantor. Agent shall have received
opinions of counsel for Borrower and for Guarantor (who shall be acceptable to
Agent), in form and content acceptable to Agent and addressed to Agent and to
each Syndication Party (and expressly permitting reliance thereon by each future
Syndication Party).
11.1.7 Evidence of Insurance. Borrower and Guarantor shall have provided
Agent with insurance certificates and such other evidence, in form and substance
satisfactory to Agent, of all insurance required to be maintained by it under
the Loan Documents.
11.1.8 Phase I Environmental Studies. Borrower and Guarantor shall have
submitted to Agent such studies, investigations and reports with respect to
environmental matters for real property owned by Borrower or Guarantor,
respectively, from consultants acceptable to Agent as may be reasonably
requested by Agent and content and results of those studies, investigations and
reports shall be reasonably acceptable to Agent.
11.1.9 Survey. Borrower and Guarantor shall have provided Agent with ALTA
improvement surveys of all real property owned by Borrower or Guarantor,
respectively, and having a Fair Market Value of $25,000.00 or more, which
surveys, the certifications thereon, and all information contained therein,
shall be acceptable to Agent.
11.1.10 Material Agreements. Agent shall have received copies of those
Material Agreements as Agent may request in its sole discretion.
11.1.11 Appointment of The Corporation Company. Agent shall have received
evidence satisfactory to Agent that The Corporation Company, ▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ has accepted appointment by Borrower and Guarantor to
serve as their agent for service of process in accordance with Section 17.2 of
this Agreement and Section 11.7 of the Guaranty.
11.1.12 No Material Change. No change shall have occurred in the condition
or operations of Borrower since May 1, 1997 or Guarantor since March 31,
1997,which, in either case, could result in a Material Adverse Effect.
11.1.13 Fees and Expenses. Borrower shall have paid Agent, by wire transfer
of immediately available federal funds all fees set forth in Section 5.3 of this
20
Agreement which are due on the Closing Date, and all expenses owing pursuant to
Section 17.1 hereof.
11.1.14 Application; CoBank Equity Interest Purchase Obligation. Borrower
shall have: (a) completed the loan application form provided by CoBank; and (b)
purchased such CoBank Equity Interests as CoBank may require pursuant to Article
8 hereof.
11.1.15 Further Assurances. Borrower and Guarantor shall have provided
and/or executed and delivered to Agent such further assignments, documents or
financing statements, in form and substance satisfactory to Agent, that Borrower
and Guarantor are to execute and deliver pursuant to the terms of the Loan
Documents or as Agent may reasonably request.
11.2 Conditions to Initial Advance. The Syndication Parties' obligation to
make the initial Advance to fund any particular Underlying Loan is subject to
the satisfaction, in Agent's sole discretion, of each of the following
conditions precedent:
11.2.1 Underlying Loan Documents; Possession of Documents. Agent shall have
received: (a) such information regarding the proposed Underlying LOC Borrower,
including credit information, as Agent may request; (b) evidence, in form and
substance satisfactory to Agent that the Underlying Loan Documents evidencing
the Underlying Loan are on forms, and contain terms and conditions, satisfactory
to Agent in its sole discretion, and in compliance with all applicable laws and
regulations; (c) proof satisfactory to Agent that the Underlying Loan has been
closed and that all conditions to closing thereof and to an advance of funds as
set forth in the Underlying Loan Documents have been satisfactorily met; (d)
possession of executed originals of the Underlying Loan Documents, properly
endorsed; and (e) such other instruments and documents in which Agent has been
granted a security interest (for the benefit of the Syndication Parties) and of
which Agent is to have possession under the terms of the Loan Documents.
11.2.2 Advance Request. Agent shall have received from Borrower (including
by facsimile transmission): (a) a duly completed request in the form attached
hereto as Exhibit 11.2.2 ("Advance Request") which has been signed by an
Authorized Officer; and (b) such other information or documentation as Agent may
request. The Advance Request shall be deemed to have been received on the
Business Day received if actually received by Agent before 12:00 noon, Central
Time, and as of the next Business Day if received by Agent after such time or on
other than a Business Day; provided that an Advance Request shall not be deemed
to have been received by Agent until it is satisfactory to Agent and includes
all information and documentation that Agent may request. Within one (1)
Business Day of the date an Advance Request is deemed to have been received,
Agent shall either fund the Advance or advise Borrower to the contrary; provided
that if Agent does not advise Borrower or does not fund within such
21
time, the Advance Request shall be deemed to have been declined for funding. The
Advance Request shall be irrevocable.
11.2.3 Default. As of the Advance Date no Event of Default or Potential
Default shall have occurred and be continuing, and the disbursing of the amount
of the Loan Proceeds requested in the Advance Request shall not result in an
Event of Default or Potential Default.
11.2.4 Representations and Warranties. The representations and warranties
of Borrower and of Guarantor contained in each of the Loan Documents to which it
is a party, shall be true and correct in all material respects on and as of the
date on which the Advance is to be made as though made on . Borrower shall have
paid Agent, by wire transfer of immediately available federal funds all fees set
forth in Section 5.4 of this Agreement which are then due and payable and all
expenses owing pursuant to Section 17.1 hereof.
11.3 Conditions to All Subsequent Advances. The obligation of the
Syndication Parties to make Advances to fund any particular Underlying Loan
after the Initial Advance is subject to the satisfaction, in Agent's sole
discretion, of each of the following conditions precedent:
11.3.1 Representations and Warranties. The representations and warranties
of Borrower contained in this Agreement shall be true and correct in all
material respects on and as of the date of such Advance as though made on and as
of such date.
11.3.2 No Event of Default. No Event of Default and no Potential Default
shall have occurred and be continuing, and no Event of Default or Potential
Default would result from the making of the Advance.
11.3.3 No Material Adverse Change. No material adverse change shall have
occurred in the condition, operations, or prospects of Borrower.
11.3.4 Advance Request. Agent shall have received (including by facsimile
transmission) a duly completed Advance Request signed by an Authorized
Representative. The Advance Request shall be effective on the Business Day
received if actually received by Agent before 12:00 noon Central time, and as of
the next Business Day if received by Agent after such time or on other than a
Business Day; provided that an Advance Request shall not be deemed to have been
received by Agent until it is satisfactory to Agent and includes all information
and documentation that Agent may request. Within one (1) Business Day of the
date an Advance Request is deemed to have been received, Agent shall either fund
the Advance or advise Borrower to the contrary; provided that if Agent does not
advise Borrower or does not fund within such time, the Advance Request shall be
deemed to have been declined for funding.. Advance Requests submitted by
Borrower shall be irrevocable.
22
11.3.5 Possession of Collateral. Agent shall have received possession of
the Collateral with respect to which perfection is accomplished by possession,
including all Collateral which constitutes Underlying Loan Documents, properly
endorsed.
11.4 Conditions to Issuance of Letters of Credit. The obligation of the LC
Issuing Bank to issue Letters of Credit, is subject to satisfaction, in Agent's
sole discretion, of each of the following conditions precedent:
11.4.1 Representations and Warranties. The representations and warranties
of Borrower contained in this Agreement shall be true and correct in all
material respects on and as of the date of such issuance as though made on and
as of such date.
11.4.2 No Event of Default. No Event of Default and no Potential Default
shall have occurred and be continuing, and no Event of Default or Potential
Default would result from the issuance of the Letter of Credit.
11.4.3 No Material Adverse Change. No material adverse change shall have
occurred in the condition, operations, or prospects of Borrower.
11.4.4 Issuance Request. Agent shall have received (including by facsimile
transmission) (a) a duly completed request for issuance of a Letter of Credit in
form and substance, and accompanied by such information and documentation, as
shall be satisfactory to Agent and the LC Issuing Bank in their sole discretion
("LC Request") signed by an Authorized Representative. The LC Request shall be
effective on the Business Day received if actually received by Agent before
12:00 noon Central time, and as of the next Business Day if received by Agent
after such time or on other than a Business Day; provided that an LC Request
shall not be deemed to have been received by Agent until it is satisfactory to
Agent and the LC Issuing Bank and includes all information and documentation
that Agent and the LC Issuing Bank may request. Within five (5) Business Days of
the date an LC Request is deemed to have been received, Agent shall either cause
the LC Issuing Bank to issue the Letter of Credit or advise Borrower to the
contrary. LC Requests submitted by Borrower shall be irrevocable.
11.4.5 Possession of Collateral. Agent shall have received possession of
the Collateral with respect to which perfection is accomplished by possession,
including all Collateral which constitutes Underlying Loan Documents and/or APD
Loan Documents, in each case properly endorsed.
11.4.6 Reimbursement Agreement. Agent shall have received, in form and
substance satisfactory to Agent, a copy of a Reimbursement Agreement and proof
of the granting and perfection of a security interest in the LC Collateral, all
as required in Section 3.2 hereof.
23
11.5 Conditions to Advances to Fund Purchase of Village Farms Revolving
Loan. The obligation of the Syndication Parties to make an Advance to fund
Borrower's purchase of the Village Farms Revolving Loan from the VF Lenders is
subject to the satisfaction, in Agent's sole discretion, of each of the
following conditions precedent:
11.5.1 Representations and Warranties. The representations and warranties
of Borrower contained in this Agreement shall be true and correct in all
material respects on and as of the date of such Advance as though made on and as
of such date.
11.5.2 No Event of Default. No Event of Default and no Potential Default
shall have occurred and be continuing, and no Event of Default or Potential
Default would result from the making of the Advance.
11.5.3 No Material Adverse Change. No material adverse change shall have
occurred in the condition, operations, or prospects of Borrower.
11.5.4 Advance Request. Agent shall have received (including by facsimile
transmission) in form and substance satisfactory to Agent in its sole
discretion: (a) a duly completed Advance Request signed by an Authorized
Representative; and (b) the original of the LOC Note (as defined in the VF Loan
Agreement) properly endorsed from the VF Lenders to Borrower and from Borrower
to Agent; and (c) proof of (including copies of all necessary documentation) the
assignment from the VF Lenders to Borrower of all security for the LOC Note. The
Advance Request shall be effective on the Business Day received if actually
received by Agent before 12:00 noon Central time, and as of the next Business
Day if received by Agent after such time or on other than a Business Day;
provided that an Advance Request shall not be deemed to have been received by
Agent until it is satisfactory to Agent and includes all information and
documentation that Agent may request. Within five (5) Business Days of the date
an Advance Request is deemed to have been received, Agent shall either fund the
Advance or advise Borrower to the contrary. Advance Requests submitted by
Borrower shall be irrevocable.
11.5.5 Possession of Collateral. Agent shall have received possession of
the Collateral with respect to which perfection is accomplished by possession,
including all Collateral which constitutes Underlying Loan Documents, properly
endorsed.
11.6 Letter of Credit Conditions. At no time and in no event shall Borrower
be entitled to the issuance of a Letter of Credit except in strict compliance
with the following conditions:
11.6.1 Aggregate Commitment Amount; LC Commitment Amount. The face amount
thereof: (a) when added to (i) the outstanding principal amount owed under the
Loan and (ii) the undrawn face amount of all other outstanding Letters of
24
Credit, must not exceed the Aggregate Commitment; and (b) when added to the
undrawn face amount of all other outstanding Letters of Credit, must not exceed
the LC Commitment Amount.
11.6.2 Form, Expiry Date, and Beneficiary. Each such Letter of Credit: (a)
must be in form and substance satisfactory to Agent and the LC Issuing Bank in
their sole discretion; (b) must, unless a later expiry date is agreed upon in
writing at the time of issuance (or renewal) by all of the Line of Credit
Lenders, expire by its terms no later than the earlier of (i) one (1) year from
the date of issuance, or (ii) thirty (30) Business Days prior to the Line of
Credit Maturity Date as in effect on the date of issuance; and (c) must be for
the benefit of Borrower, an Underlying Term Loan Borrower, or a Member.
11.7 Additional Disbursement Conditions. At no time and in no event shall
the Syndication Parties be obligated to make Advances under the Loan:
11.7.1 Aggregate Commitment Amount. In excess of an amount, which, when
added to: (a) all prior Advances and (b) the undrawn face amount of all
outstanding Letters of Credit, would exceed the Aggregate Commitment Amount.
11.7.2 Disbursement Period. If the Advance would be made other than during
the Availability Period.
11.7.3 Illegality of Loan. After the enactment of any law by any
governmental authority having jurisdiction over any Syndication Party which
would make it unlawful in any respect for such Syndication Party to make the
Advance.
ARTICLE 12. AFFIRMATIVE COVENANTS
From and after the date of this Agreement and until the Bank Debt is
indefeasibly paid in full and the Syndication Parties have no obligation to make
any advances hereunder, Borrower agrees that it will observe and comply with,
the following covenants for the benefit of Agent and the Syndication Parties:
12.1 Books and Records. Borrower shall at all times keep proper books of
record and account, in which correct and complete entries shall be made of all
its dealings, in accordance with GAAP.
12.2 Reports and Notices. Borrower shall provide to Agent the following
reports, information and notices:
12.2.1 Annual Financial Statements. As soon as available, but in no event
later than one hundred and twenty (120) days after the end of any fiscal year of
Borrower occurring during the term hereof annual financial statements of
Borrower, prepared in accordance with GAAP consistently applied which shall: (a)
be audited by independent certified public accountants selected by Borrower
which are reasonably acceptable to Agent; (b) be accompanied by a report of such
accountants containing an
25
opinion reasonably acceptable to Agent; (c) be accompanied by a Compliance
Certificate; (d) be prepared in reasonable detail and in comparative form; and
(e) include a balance sheet, an income statement, a statement of cash flows, a
statement of stockholders' equity, and all notes and schedules relating thereto.
12.2.2 Quarterly Financial Statements. As soon as available but in no event
more than sixty (60) days after the end of each Quarter in Borrower's fiscal
year the following financial statements concerning Borrower's operations,
prepared in accordance with GAAP consistently applied: (a) a balance sheet, (b)
an income statement, (c) a statement of cash flows, (d) a statement of
stockholders' equity, for such Quarter and for the year to date, and (e) such
other quarterly statements as Agent may reasonably request, which quarterly
statements requested under this clause (e) shall include any and all notes and
schedules thereto. Such quarterly financial statements required pursuant to this
Subsection shall be accompanied by a Compliance Certificate.
12.2.3 Additional Information. With reasonable promptness: (a) copies of
all communications which Borrower receives or initiates from or to an Underlying
LOC Borrower and all reports, certificates, and other written materials,
including, without limitation, all financial statements, which Borrower receives
from or on account of an Underlying LOC Borrower; and (b) such additional
financial information or documentation as Agent may reasonably request.
12.2.4 Notice of Default. As soon as the existence of any Event of Default
or Potential Default becomes known to any officer of Borrower, Borrower shall
promptly give Agent written notice of such Event of Default or Potential
Default, the nature and status thereof, and the action being taken or proposed
to be taken with respect thereto.
12.2.5 Notice of Certain Changes. Borrower shall: (a) notify Agent at least
ten (10) Business Days prior to the occurrence of any change in the name or
business form of Borrower; and (b) take all actions necessary or reasonably
requested by Agent in order to maintain the perfected status of Agent's first
lien and security interest (subject only to Permitted Encumbrances and to the
Intercreditor Agreement) in the Collateral.
12.2.6 Notice of Litigation. Borrower shall promptly notify Agent in
writing of all litigation in which Borrower or, to Borrower's knowledge,
Guarantor is a party, and which either: (a) involves an amount of $100,000 or
more, singly or in the aggregate at any time; or (b) could reasonably be
expected to result in a Material Adverse Effect with respect to Borrower or
Guarantor.
12.2.7 Notice of Material Adverse Effect. Promptly after Borrower obtains
knowledge thereof, notice of any matter which has resulted or would result in a
Material Adverse Effect on Borrower or Guarantor.
26
12.2.8 Notice of Environmental Litigation. Without limiting the provisions
of Subsection 12.2.6 of this Agreement, promptly after Borrower's receipt
thereof, notice of the receipt of all pleadings, orders, complaints,
indictments, or other communication alleging a condition that may require
Borrower to undertake or to contribute to a cleanup or other response under
Environmental Regulations, or which seeks penalties, damages, injunctive relief,
or criminal sanctions related to alleged violations of such laws, or which
claims personal injury or property damage to any person as a result of
environmental factors or conditions or which, if adversely determined, could
have a Material Adverse Effect on Borrower.
12.2.9 Regulatory and Other Notices. Promptly after Borrower's receipt
thereof, copies of any notices or other communications received from: (a) any
governmental authority with respect to any matter or proceeding the effect of
which could reasonably be expected to have a Material Adverse Effect on
Borrower; or (b) from APD.
12.2.10 Adverse Action Regarding Required Licenses. In the event Borrower
learns that any petition, action, investigation, notice of violation or apparent
liability, notice of forfeiture, order to show cause, complaint or proceeding is
pending, or, to the best of Borrower's knowledge, threatened, to seek to revoke,
cancel, suspend, modify, or limit any of the Required Licenses, Borrower shall
provide Agent with prompt written notice thereof and shall take, or cause to be
taken, all reasonable measures to contest such action in good faith.
12.2.11 Default of any Underlying Loan. As soon as the existence of any
event of default or potential default under any Underlying Loan becomes known to
Borrower, Borrower shall promptly give Agent written notice of such event of
default or potential default, the nature and status thereof, and the action
being taken or proposed to be taken with respect thereto.
12.2.12 Annual Attorney's Opinion Regarding Collateral. No later than the
last Business Day of February of each year, an opinion of legal counsel
acceptable to Agent as to the status of (a) Borrower's liens on the assets of
the Underlying LOC Borrowers to secure the Underlying Loans ("Underlying
Liens"); and (b) CoBank's liens on the assets of Borrower to secure the Loan
(and including the collateral assignment to CoBank of the Underlying Loans and
Underlying Liens).
12.3 Eligibility Certificate. Borrower shall maintain its membership base
so that not less than fifty percent (50%) of its equity interest is owned by
Persons engaged in the business of producing vegetables, fruits, or other
agricultural products. Within thirty (30) days of the beginning of each calendar
year, Borrower shall provide Agent with a written certification signed by an
officer thereof stating that Borrower is in compliance with this Section.
12.4 Maintenance of Existence and Qualification. Borrower shall maintain
its corporate existence in good standing under the laws of Delaware. Borrower
will
27
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.
12.5 Compliance with Legal Requirements and Agreements. Borrower shall: (a)
comply with all laws, rules, regulations and orders applicable to Borrower or
its business; and (b) all agreements, indentures, mortgages, and other
instruments to which it is a party or by which it or any of its property is
bound; provided, however, that the failure of Borrower to comply with this
sentence in any instance not directly involving Agent or a Syndication Party
shall not constitute an Event of Default unless such failure would have a
Material Adverse Effect.
12.6 Compliance with Environmental Laws. Without limiting the provisions of
Section 12.5 of this Agreement, Borrower shall comply in all material respects
with, and take all reasonable steps necessary to cause all persons occupying or
present on any properties owned or leased by Borrower to comply with, all
Environmental Regulations, the failure to comply with which would have a
Material Adverse Effect.
12.7 Taxes. Borrower shall cause to be paid when due all taxes,
assessments, and other governmental charges upon it, its income, its sales, its
properties, and federal and state taxes withheld from its employees' earnings,
unless such taxes, assessments, or other governmental charges shall be contested
in good faith by appropriate actions or legal proceedings and Borrower shall
establish adequate reserves therefor in accordance with GAAP.
12.8 Insurance. Borrower shall keep the Collateral insured at all times by
an insurance carrier or carriers approved by Agent which have an A rating by the
current BEST Key Rating Guide (provided that Florists Mutual Group will be
deemed an approved insurance carrier so long as its BEST Key Rating does not
fall below its rating as of the Closing Date), against all risks covered by a
special form policy (and including flood, earthquake and windstorm coverage) in
the amount of the full replacement cost (other than with respect to motor
vehicles) of the Collateral as well as liability, worker's compensation,
business interruption, boiler and machinery and such other insurance as Agent
may reasonably require, in amounts and with deductibles or maximum payouts
customarily carried by entities in similar lines of business. Borrower shall
also maintain fidelity coverage (including employee dishonesty) on such officers
and employees and in such amounts as Agent shall specify, or in the absence of
any such specification, as customarily carried by corporations engaged in
comparable businesses and comparably situated. Such insurance policies shall
contain such reasonable endorsements as Agent shall from time to time require
and all liability policies shall name Agent as an additional insured as its
interests may appear (and for the benefit of the Syndication Parties). All such
insurance policies shall be endorsed with a mortgagee's or loss payable clause,
as appropriate, in favor of Agent (and for the benefit of the Syndication
Parties). The policy or policies evidencing all insurance referred to in this
Section and receipts for the payment of premiums thereon or certificates of such
insurance satisfactory to Agent shall be delivered to and held by Agent. All
such insurance policies shall contain a provision requiring at least ten (10)
days' notice to Agent prior
28
to any cancellation for non-payment of premiums and at least forty-five (45)
days' notice to Agent of cancellation for any other reason or of modification or
non-renewal. No later than forty (40) days prior to expiration, Borrower shall
give Agent (a) satisfactory written evidence of renewal of all such policies
with premiums paid, or (b) a written report as to the steps being taken by
Borrower to renew or replace all such policies, provided that notwithstanding
the receipt of such written report, Agent may at any time thereafter give
Borrower written notice to provide Agent with such evidence as described in
clause (a), in which case Borrower must do so within ten (10) days of such
notice. Borrower agrees to pay all premiums on such insurance as they become
due, and will not permit any condition to exist on or with respect to the
Collateral which would wholly or partially invalidate any insurance thereon.
Effective upon the occurrence of an Event of Default, all of Borrower's right,
title and interest in and to all such policies and any unearned premiums paid
thereon are hereby assigned to Agent (for the benefit of the Syndication
Parties) who shall have the right, but not the obligation, to assign the same to
any purchaser of the Collateral at any foreclosure sale. Borrower shall give
immediate written notice to the insurance carrier and Agent of any loss.
Borrower hereby authorizes and empowers Agent upon the occurrence and during the
continuation of an Event of Default, at Agent's option and in Agent's sole
discretion, to act as attorney-in-fact for Borrower to make proof of loss, to
adjust and compromise any claim under insurance policies, to collect and receive
insurance proceeds, and to deduct therefrom Agent's expenses incurred in the
collection of such proceeds, and all insurance policies of Borrower shall
provide that Agent may act as Borrower's attorney-in-fact for such purposes.
12.9 Title to Assets and Maintenance. Borrower shall defend and maintain
title to all its material properties and assets, including the Collateral.
Borrower shall keep its assets, both real and personal, including the
Collateral, in good order and condition consistent with industry practice and
shall make all necessary repairs, replacements and improvements so that its
business may be properly and advantageously conducted.
12.10 Payment of Liabilities. Borrower shall pay all liabilities
(including, without limitation: (a) any indebtedness for borrowed money or for
the deferred purchase price of property or services; (b) any obligations under
leases which have or should have been characterized as capitalized leases, as
determined in accordance with GAAP; and (c) any contingent liabilities, such as
guaranties, for the obligations of others relating to indebtedness for borrowed
money or for the deferred purchase price of property or services or relating to
obligations under leases which have or should have been characterized as
capitalized leases, as determined in accordance with GAAP) as they become due
beyond any period of grace under the instrument creating such liabilities,
unless (with the exception of the Bank Debt) they are contested in good faith by
appropriate actions or legal proceedings, Borrower establishes adequate reserves
therefor in accordance with GAAP, and such contesting will not result in a
Material Adverse Effect.
29
12.11 Further Assurances; Real Property Security Interests. Borrower shall,
as may be required from time to time by Agent, provide such documents as may be
necessary or desirable in the judgment of Agent to confirm the security interest
in the Collateral granted to Agent for the benefit of the Syndication Parties.
Promptly after the purchase or other acquisition of any fee interest in real
estate having a cost or Fair Market Value of $25,000.00 or more, Borrower shall
provide Agent with written notice of such acquisition and shall grant to Agent
(for the benefit of the Syndication Parties) a first deed of trust or mortgage
on such real estate (subject to liens permitted by Section 13.3 hereof and to
the Intercreditor Agreement), such deed of trust or mortgage to be in form and
substance as reasonably specified by Agent. In connection with the delivery of
any mortgage or deed of trust, Borrower shall, where required under the
guidelines set forth in Subsection 12.1.2 of this Agreement, deliver to Agent a
mortgagee's title policy satisfactory to Agent in such amount as Agent shall
specify, but in no event greater than the value of the real estate, to be
obtained at Borrower's sole cost. In connection with entering into, as lessee,
any lease of an interest in real property which lease calls for a rental payment
equal to or in excess of $25,000.00 per annum, Borrower shall deliver to Agent a
Leasehold Assignment & Consent (naming Agent as assignee for the benefit of the
Syndication Parties), together with such consents or estoppels of lessor as
Agent shall specify.
12.12 Inspection. Permit Agent or its agents, during normal business hours
or at such other times as the parties may agree, to examine Borrower's
properties, books, and records, and to discuss Borrower's affairs, finances,
operations, and accounts with its respective officers, directors, employees, and
independent certified public accountants.
12.13 Required Licenses; Permits; Etc. Borrower shall duly and lawfully
obtain and maintain in full force and effect all Required Licenses.
12.14 ERISA. In the event Borrower adopts, maintains, or becomes obligated
to make payments under, any Borrower Benefit Plan in the future (which Borrower
may not do without the prior written consent of Agent), Borrower shall: (a)
cause Borrower's Benefit Plans to comply in all material respects with the Code
and ERISA, including but not limited to preparing and delivering each material
report, statement or other document required by ERISA and the Code within the
period specified therein and conforming in form and substance to the provisions
thereof; (b) cause any Borrower Benefit Plan that is intended to satisfy the
requirements of Section 401(a) of the Code to satisfy such requirements
including, but not limited to obtaining a favorable determination letter with
respect to each such Borrower Benefit Plan; and (c) prepare and deliver and (d)
administer each Borrower Benefit Plan in all material respects in accordance
with the terms of such plan and with ERISA, the Code, and any other applicable
law, except to the extent any failure to comply with the preceding clauses (a),
(b) or (c) would not have a Material Adverse Effect. Borrower shall take any
actions necessary to terminate its status as a participating employer in any
employee benefit plan (within the meaning of Section 3(3) of ERISA) sponsored by
an other entity. Within ten (10) Business Days after receiving such notice,
Borrower shall furnish to
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Agent any notice received by Borrower relating to an assertion of withdrawal
liability imposed by any Multiemployer Plan upon Borrower or Borrower's
controlled group prior to the Closing Date, or relating to any violation of the
provisions of the Code or ERISA asserted by the Department of Labor, the Pension
Benefit Guaranty Corporation or the Department of the Treasury with respect to
any Borrower Benefit Plan that could reasonably be expected to have a Material
Adverse Effect.
12.15 Operations and Members. Borrower shall: (a) duly and lawfully obtain
and maintain its business and operations for the mutual benefit of the members
thereof; (b) furnish services, including financing, to its members; (c) limit
its members to farmers, ranchers, or producers or harvesters of aquatic
products; (d) either (i) allow no member more than 1 vote, or (ii) refrain from
paying dividends on stock or membership capital in excess of 10% per annum or
such lesser amount as is permitted by applicable state statutes; (e) prohibit
any transfer or acquisition of an interest in Borrower if it would result in
less than 80% of the control of Borrower being held by farmers, producers or
harvesters of aquatic products; and (f) conduct its business so that
transactions with or for its members are at least equal in value to its
transactions with nonmembers (other than the United States or agencies thereof).
ARTICLE 13. NEGATIVE COVENANTS
From and after the date of this Agreement until the Bank Debt is
indefeasibly paid in full and the Syndication Parties have no obligation to
disburse Loan Proceeds, Borrower agrees that it will observe and comply with the
following covenants:
13.1 Borrowing. Borrower shall not create, incur, assume or permit to
exist: (a) any indebtedness for borrowed money or for the deferred purchase
price of property or services; (b) any contingent liabilities, such as
guarantees; or (c) any obligations under leases which have or should have been
characterized as capital leases, as determined in accordance with GAAP, except
for: (u) indebtedness owing under the Loan Documents, (v) indebtedness under the
Construction Facility and the Term Facility, (w) leases and purchase money
financing of property used in the ordinary course of Borrower's business the
aggregate amount of which does not exceed $50,000.00 at any one time; (x) the
indebtedness outstanding on the date hereof and which is described on Exhibit
13.1 hereto; ; and (y) indebtedness constituting any refinancing or refunding of
indebtedness described in subparagraphs (u), (v), (w), and (x) of this Section
13.1, provided that the principal amount thereof does not increase as a result
of any such refinancing or refunding from the balance owing on the date hereof
or on the date of such refinancing or refunding, whichever is lower.
13.2 No Other Businesses. Borrower shall not transact or engage in any
business other than the making of loans to its members.
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13.3 Liens. Borrower will not create, incur, assume or suffer to exist any
mortgage, pledge, lien, charge or other encumbrance on, or any security interest
in, any of the Collateral, except:
(a) the security interests, mortgages, pledges, liens, or other charges or
encumbrances resulting from the Loan Documents and arising out of the
Construction Facility and the Term Facility;
(b) liens for taxes or other governmental charges which are not due or
remain payable without penalty, or 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;
(c) deposits or pledges to secure workmen's compensation, unemployment
insurance, old age benefits or other social security obligations or in
connection with or to secure the performance of bids, tenders, trade contracts
or leases or to secure statutory obligations or surety or appeal bonds or other
pledges or deposits of like nature and all in the ordinary course of business;
(d) mechanics', carriers', workmen's, repairmen's or other like liens
arising in the ordinary course of business in respect of obligations not yet due
or which are being contested in good faith and by appropriate proceedings;
(e) easements, rights-of-way, zoning restrictions and other similar matters
incidental to the ownership of property which do not in the aggregate materially
detract from the value of such property or assets or materially impair their use
in the operation of the business of Borrower; and
(f) purchase money security interests in property; provided that: (i) such
property is used in the ordinary course of Borrower's business, provided that
such security interests shall attach only to the property so purchased, (ii) the
amount of the purchase money financing so secured does not exceed the amount
permitted under Section 13.1, and (iii) the purchase occurred subsequent to the
Closing Date.
13.4 Sale of Assets. Borrower will not sell, convey, assign, lease or
otherwise transfer or dispose of, voluntarily, by operation of law or otherwise,
any of the Collateral to any Person, except that: (a) Borrower may dispose of
equipment which is obsolete or no longer used or useful by Borrower in its
business so long as (i) no Event of Default has occurred and is continuing, and
(ii) the transfer is made in an arms length transaction; and (b) Borrower may
dispose of worn-out equipment so long as (i) if an Event of Default has occurred
and is continuing, any proceeds are paid to Agent (for the benefit of the
Syndication Parties) and (ii) such sales do not involve equipment having an
aggregate fair market value in excess of $50,000.00 for all such equipment
disposed of in any calendar year.
32
13.5 Liabilities of Others. Borrower will not assume, guarantee, endorse or
otherwise become directly or contingently liable in connection with any
obligation of any other Person.
13.6 Payments on Indebtedness. Borrower shall not make any principal
payment on any indebtedness except: (a) indebtedness owing hereunder, under the
Credit Agreement (Term Loan Funding), and under the Credit Agreement
(Construction Loan Funding); and (b) so long as no Event of Default or Potential
Default shall exist, other indebtedness permitted by Section 13.1 of this
Agreement.
13.7 Merger; Acquisitions; Etc. Borrower shall not merge or consolidate
with any entity, or acquire all or substantially all of the assets of any person
or entity, or form or create any new subsidiary or affiliate, or commence
operations under any other name, organization, or entity, including any joint
venture.
13.8 Loans, Advances and Investments. Except as provided in Section 13.13
hereof and except for the purchase of CoBank Equity Interests, Borrower will not
make or permit to remain outstanding any loan or advance to, or own, purchase or
acquire any stock, obligations or securities of, or any other interest in, or
make any capital contribution to, any Person, except that Borrower may own,
purchase or acquire:
(a) commercial paper maturing not in excess of one year from the date of
acquisition and rated P1 by ▇▇▇▇▇'▇ Investors Service, Inc. or A1 by Standard &
Poor's Corporation on the date of acquisition;
(b) certificates of deposit in North American commercial banks rated C or
better by ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. or 3 or better by ▇▇▇▇▇ Consulting
Analysts, maturing not in excess of one year from the date of acquisition;
(c) obligations of the United States government or any agency thereof, the
obligations of which are guaranteed by the United States government, maturing,
in each case, not in excess of one year from the date of acquisition; and
(d) repurchase agreements of any bank or trust company incorporated under
the laws of the United States of America or any state thereof and fully secured
by a pledge of obligations issued or fully and unconditionally guaranteed by the
United States government.
13.9 Transactions With Related Parties. Borrower shall not purchase,
acquire, or sell any equipment, other personal property, real property or
services from or to any affiliate, except in the ordinary course of Borrower's
business and upon fair and reasonable terms no less favorable than would be
obtained by Borrower in a comparable arm's-length transaction with an unrelated
Person.
13.10 ERISA. Borrower shall not: (a) adopt, maintain, or become obligated
to contribute to any Borrower Benefit Plan without the prior written consent of
Agent; (b) engage in or permit any transaction which could result in a
"prohibited transaction" (as
33
such term is defined in Section 406 of ERISA) or in the imposition of an excise
tax pursuant to Section 4975 of the Code; (c) engage in or permit any
transaction or other event which could result in a "reportable event" as such
term is defined in Section 4043 of ERISA for any Borrower Pension Plan; (d) fail
to make full payment when due of all amounts which, under the provisions of any
Borrower Benefit Plan, Borrower is required to pay as contributions thereto; (e)
permit to exist any "accumulated funding deficiency" (as such term is defined in
Section 302 of ERISA) in excess of $25,000.00, whether or not waived, with
respect to any Borrower Pension Plan; (f) fail to make any payments to any
"multiemployer plan" that Borrower may be required to make under any agreement
relating to such "multiemployer plan" or any law pertaining thereto; or (g)
terminate any Borrower Pension Plan in a manner which could result in the
imposition of a lien on any property of Borrower pursuant to Section 4068 of
ERISA. Borrower shall not terminate any Borrower Pension Plan so as to result in
any liability to the Pension Benefit Guaranty Corporation. As used in this
Section, all terms enclosed in quotation marks shall have the meanings set forth
in ERISA. Borrower's failure to comply with any of the foregoing provisions of
this Section shall not constitute a breach of this Agreement or an Event of
Default unless such failure has a Material Adverse Effect.
13.11 Payment of Dividends. Borrower shall not, directly or indirectly,
declare or pay any dividends on account of any shares of any class of its
capital stock now or hereafter outstanding, or set aside or otherwise deposit or
invest any sums for such purpose, or redeem, retire, defease, purchase or
otherwise acquire any shares of any class of its capital stock (or set aside or
otherwise deposit or invest any sums for such purpose) for any consideration
other than common stock or apply or set apart any sum, or make any other
distribution (by reduction or capital or otherwise) in respect of any such
shares or retire capital equities or other written notices of allocation, or
make any other distribution or allocation of its earnings, surplus or assets to
any holder of stock, allocated equities or other written notices of allocation,
or agree to do any of the foregoing; provided that Borrower may distribute
patronage-sourced earnings annually in the form of cash and qualified written
notices of allocation, so long as the cash portion is the minimum amount
required to qualify the distribution as a deductible patronage distribution for
federal income tax purposes, and such written notices constitute equity and not
debt.
13.12 Change in Fiscal Year. Borrower shall not change its fiscal year from
a year ending on December 31.
13.13 Extension of Credit. Notwithstanding the prohibitions of Section 13.8
hereof, Borrower may make extensions of credit as follows:
(a) Underlying Loans approved by Agent for funding hereunder and which are
included in the Collateral;
34
(b) Loans approved by Agent for funding under the Credit Agreement (Term
Loan Funding); and
(c) Loans approved by Agent for funding under the Credit Agreement
(Construction Loan Funding).
13.14 Amendment/Waiver of Provisions of Underlying Loan Documents. Borrower
shall not, without the prior written consent of Agent, amend, or agree to amend,
or waive any material provision of, or give its consent with respect to any
material matter under, any of the Underlying Loan Documents after originals or
copies thereof have been delivered to Agent.
ARTICLE 14. INDEMNIFICATION
14.1 General; Stamp Taxes; Intangibles Tax. Borrower agrees to indemnify
and hold Agent and each Syndication Party and their directors, officers,
employees, agents, professional advisers and representatives ("Indemnified
Parties") harmless from and against any and all claims, damages, losses,
liabilities, costs or expenses whatsoever which Agent or any other Indemnified
Party may incur (or which may be claimed against any such Indemnified Party by
any Person), including attorneys' fees incurred by any Indemnified Party,
arising out of or resulting from: (a) the material inaccuracy of any
representation or warranty of Borrower or Guarantor in this Agreement or the
other Loan Documents; (b) the material failure of Borrower or Guarantor to
perform or comply with any covenant or obligation of Borrower or Guarantor under
this Agreement or the other Loan Documents; or (c) the exercise by Agent of any
right or remedy set forth in this Agreement or the other Loan Documents,
provided that Borrower shall have no obligation to indemnify any Indemnified
Party against claims, damages, losses, liabilities, costs or expenses to the
extent that a court of competent jurisdiction renders a final non-appealable
determination that the foregoing are solely the result of the willful misconduct
or gross negligence of such Indemnified Party. In addition, Borrower agrees to
indemnify and hold the Indemnified Parties harmless from and against any and all
claims, damages, losses, liabilities, costs or expenses whatsoever which Agent
or any other Indemnified Party may incur (or which may be claimed against any
such Indemnified Party by any Person), including attorneys' fees incurred by any
Indemnified Party, arising out of or resulting from the imposition or nonpayment
by Borrower of any stamp tax, intangibles tax, or similar tax imposed by any
state, including any amounts owing by virtue of the assertion that the property
valuation used to calculate any such tax was understated. Borrower shall have
the right to assume the defense of any claim as would give rise to Borrower's
indemnification obligation under this Section with counsel of Borrower's
choosing so long as such defense is being diligently and properly conducted and
Borrower shall establish to the Indemnified Party's satisfaction that the amount
of such claims are not, and will not be, material in comparison to the liquid
and unrestricted assets of Borrower available to respond to any award which may
be granted on account of such claim. So long as the conditions of the preceding
sentence are met, Indemnified Party shall have no further right to reimbursement
of attorney's fees incurred thereafter. The obligation to
35
indemnify set forth in this Section shall survive the termination of this
Agreement and other covenants.
14.2 Indemnification Relating to Hazardous Substances. Borrower shall not
locate, produce, treat, transport, incorporate, discharge, emit, release,
deposit or dispose of any Hazardous Substance in, upon, under, over or from any
property owned or held by Borrower, except in accordance with all Environmental
Regulations; Borrower shall not permit any Hazardous Substance to be located,
produced, treated, transported, incorporated, discharged, emitted, released,
deposited, disposed of or to escape in, upon, under, over or from any property
owned or held by Borrower, except in accordance with Environmental Regulations;
and Borrower shall comply with all Environmental Regulations which are
applicable to such property. If Agent reasonably believes that an Environmental
Regulation has been violated by Borrower's activities upon property owned or
held by Borrower, and if Agent so requests, Borrower shall have prepared an
environmental review, audit, assessment and/or report relating to the subject
property, at Borrower's sole cost and expense, by an engineer or other
environmental expert acceptable to Agent. If, however, the environmental review,
audit, assessment and/or report reveals that no Environmental Regulation has
been violated, Agent shall reimburse Borrower for the costs and expenses of such
engineer or other environmental expert in completing such audit or report.
Borrower shall indemnify the Indemnified Parties against, and shall reimburse
the Indemnified Parties for, any and all claims, demands, judgments, penalties,
liabilities, costs, damages and expenses, including court costs and attorneys'
fees incurred by the Indemnified Parties (prior to trial, at trial and on
appeal) in any action against or involving the Indemnified Parties, resulting
from any breach of the foregoing covenants, or from the discovery of any
Hazardous Substance in, upon, under or over, or emanating from, such property,
it being the intent of Borrower and the Indemnified Parties that the Indemnified
Parties shall have no liability or responsibility for damage or injury to human
health, the environmental or natural resources caused by, for abatement and/or
clean-up of, or otherwise with respect to, Hazardous Substances by virtue of the
interest of Agent, or any Syndication Party, in the property created by any
documents securing Bank Debt (including without limitation the Loan Documents)
or as the result of Agent or any Syndication Party exercising any of its rights
or remedies with respect thereto, including but not limited to becoming the
owner thereof by foreclosure or conveyance in lieu of foreclosure. The foregoing
covenants of this Section shall be deemed continuing covenants for the benefit
of the Indemnified Parties, and any successors and assigns of the Indemnified
Parties, including but not limited to the holder of any certificate of purchase,
any transferee of the title of Agent or any Syndication Party or any subsequent
owner of the property, and shall survive the satisfaction or release of any
lien, any foreclosure of any lien and/or any acquisition of title to the
property or any part thereof by Agent or any Syndication Party, or anyone
claiming by, through or under Agent or any Syndication Party or Borrower by deed
in lieu of foreclosure or otherwise. Any amounts covered by the foregoing
indemnification shall bear interest from the date incurred at the Default
Interest Rate, shall be payable on demand, and shall be secured by the Security
36
Documents. The indemnification and covenants of this Section shall survive the
termination of this Agreement and other covenants.
ARTICLE 15. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
15.1 Events of Default. The occurrence of any of the following events (each
an "Event of Default") shall, at the option of Agent, make the entire Bank Debt,
including the Notes, immediately due and payable (provided, that in the case of
an Event of Default under Subsection 15.1(f) all amounts owing under the Notes
and the other Loan Documents shall automatically and immediately become due and
payable without any action by or on behalf of Agent), and Agent may exercise all
rights and remedies for the collection of any amounts outstanding hereunder and
take whatever action it deems necessary to secure itself, all without notice of
default, presentment or demand for payment, protest or notice of nonpayment or
dishonor, or other notices or demands of any kind or character:
(a) Failure of Borrower to pay within five (5) days of the date when due,
whether by acceleration or otherwise, any of the Bank Debt in accordance with
this Agreement or the other Loan Documents.
(b) Any representation or warranty set forth in any Loan Document, any
Advance Request, or in the Guaranty or Guarantor Security Documents, or in
connection with any transaction contemplated by any such document, shall prove
in any material respect to have been false or misleading when made by Borrower
or Guarantor.
(c) Any default by Borrower or Guarantor in the performance or compliance
with the covenants, promises, conditions or provisions of Sections 12.3, 12.8,
12.12, 13.1, 13.3, 13.4, 13.5, 13.7, 13.11, 13.12, or 13.14 of this Agreement,
or Sections 9.1, 9.3, 9.4, 9.5, 9.6, 9.8, 9.9, or 9.13 of the Guaranty.
(d) Any breach of the covenants set forth in Sections 12.2, 12.9, 12.10
(except as provided in Section 15.1(e)), 12.13, 12.14, 12.15, 13.6, 13.8, 13.9,
or 13.10 of this Agreement or Sections 9.2, 9.7, 9.10, or 9.11 of the Guaranty,
and such failure continues for five (5) days after Borrower learns of such
failure to comply, whether by Borrower's own discovery or through notice from
Agent.
(e) The failure of Borrower or Guarantor to pay when due, or failure to
perform or observe any other obligation or condition with respect to any of the
following obligations to any Person, beyond any period of grace under the
instrument creating such obligation: (i) any indebtedness for borrowed money or
for the deferred purchase price of property or services, (ii) any obligations
under leases which have or should have been characterized as capitalized leases,
as determined in accordance with GAAP, or (iii) any contingent liabilities, such
as guaranties, for the obligations of others relating to indebtedness for
borrowed money or for the deferred purchase price of property or services or
relating to obligations under leases which have or should have been
characterized as capitalized leases, as determined in accordance with GAAP;
37
provided that no such failure will be deemed to be an Event of Default hereunder
unless and until the aggregate amount owing under obligations with respect to
which such failures have occurred and are continuing is at least $50,000.00 with
respect to Borrower, or $50,000.00 with respect to Guarantor.
(f) Borrower or Guarantor applies for or consents to the appointment of a
trustee or receiver for any part of its properties; any bankruptcy,
reorganization, debt arrangement, dissolution or liquidation proceeding is
commenced or consented to by Borrower or Guarantor; or any application for
appointment of a receiver or a trustee, or any proceeding for bankruptcy,
reorganization, debt management or liquidation is filed for or commenced against
Borrower or Guarantor, and is not withdrawn or dismissed within sixty (60) days
thereafter.
(g) Failure of Borrower or Guarantor to comply with any other provision of
this Agreement or the other Loan Documents not constituting an Event of Default
under any of the preceding provisions of this Section 15.1, and such failure
continues for thirty (30) days after Borrower or Guarantor learns of such
failure to comply, whether by Borrower's or Guarantor's own discovery or through
notice from Agent.
(h) The Guaranty or the Guarantor Security Documents shall, at any time
after their execution, cease to be in full force and effect, or shall be revoked
or declared null and void, or the validity or enforceability thereof shall be
contested by Guarantor, or Guarantor shall deny any further liability or
obligation thereunder, or shall be in default or fail to perform its obligations
thereunder, or any covenant or agreement set forth therein shall be breached, or
Guarantor should breach or be in default under the terms of any of the Guarantor
Security Documents.
(i) The occurrence of an event of default, unless and until a written
waiver thereof has been granted by the Agent thereunder, under the following
agreements of even date herewith and executed by and between Borrower, as
borrower thereunder, CoBank as agent and (alone, or with any other Person) as a
syndication party thereunder: Credit Agreement (Term Loan Funding), and Credit
Agreement (Construction Loan Funding).
(j) The entry of one or more judgments in an aggregate amount in excess of
$50,000,000.00 against Borrower and/or in excess of $100,000.00 against
Guarantor, in either case not stayed, discharged or paid within thirty (30) days
after entry.
(k) The occurrence of an event of default under an Underlying Loan.
15.2 No Advances. The Syndication Parties shall have no obligation to
disburse Loan Proceeds if a Potential Default or an Event of Default shall occur
and be continuing.
15.3 Rights and Remedies. In addition to the remedies set forth in Section
15.1 and 15.2 of this Agreement, upon the occurrence of an Event of Default,
Agent shall, subject to the provisions of Section 15.4 hereof, be entitled to
exercise all the
38
rights and remedies provided in the Security Documents and other Loan Documents
and by any applicable law, including, without limitation, the Uniform Commercial
Code as enacted in the state of Colorado or the state where the Collateral is
located at such time, whichever provides Agent with greater rights. Each and
every right or remedy granted to Agent pursuant to this Agreement and the other
Loan Documents, or allowed Agent by law or equity, shall be cumulative. Failure
or delay on the part of Agent to exercise any such right or remedy shall not
operate as a waiver thereof. Any single or partial exercise by Agent of any such
right or remedy shall not preclude any future exercise thereof or the exercise
of any other right or remedy.
15.4 Limitation on Rights and Remedies. Notwithstanding the provisions of
Section 15.3 hereof, when the sole Event of Default is an Event of Default
caused by Section 15.1(k) hereof, Agent will, for a period of time designated by
Agent in its sole discretion, refrain from accelerating the Loan if Borrower
promptly (a) proposes, and diligently pursues, a course of action (for example,
for collection, restructuring, or assignment) with respect to such Underlying
Loan to which course of action the Super Majority give Agent their written
approval in their sole discretion, (b) ceases making advances thereunder, and
(c) charges interest on such Underlying Loan at the default rate specified in
the relevant Underlying Loan Documents).
ARTICLE 16. AGENCY AGREEMENT
16.1 Funding of Syndication Interest. (a) Each Syndication Party, severally
but not jointly, hereby irrevocably agrees to fund its Syndication Share of all
Advances from time to time pursuant to the terms and conditions contained
herein; provided that no Syndication Party shall be required to fund an Advance
in an amount such that the aggregate principal balance owing to such Syndication
Party after such funding would be in excess of such Syndication Party's Maximum
Syndication Amount. Each Syndication Party's interest in the Advances
("Syndication Interest") hereunder shall be without recourse to Agent or any
other Syndication Party and shall not be construed as a loan from any
Syndication Party to Agent or any other Syndication Party. Each Syndication
Party acknowledges that the Loan is a revolving credit until the Maturity Date,
and that, as a result, the amount of its Syndication Interest will fluctuate as
Borrower repays and reborrows amounts under the Loan.
16.2 Syndication Parties' Obligations to Remit Funds. Each Syndication
Party agrees to remit the amount of each Advance requested by Borrower as set
forth in each Notice of Loan Advance ("Advance Payment") as such Notice of Loan
Advance may be sent, in the manner provided in Section 16.3 hereof, from time to
time for Advances to be made under the Loan on or prior to the Maturity Date, or
draws made or to be made on a Letter of Credit on or prior to July 31, 2000.
16.3 Notice and Timing of Each Advance Payment. On the Business Day on
which Agent approves an Advance Request for funding, Agent shall provide each
Syndication Party with a notice in substantially the form attached hereto as
Exhibit 16.3 ("Notice of Loan Advance"), indicating, among other things, the
amount ("Loan
39
Advance Amount") and Advance Date of the requested Advance and the amount of the
Syndication Party's Advance Payment. Each Syndication Party shall remit its
Advance Payment directly to Agent, on the date specified in the Notice of Loan
Advance which shall not be later than the Advance Date ("Syndication Party
Advance Date").
16.4 LC Notice of Advance. Prior to, or promptly after, honoring a draw
under any Letter of Credit, Agent shall provide each Syndication Party with a
notice in substantially the form attached hereto as Exhibit 16.4 ("LC Notice of
Advance"), indicating, among other things, the amount of the draw, the Letter of
Credit number under which the draw is being made, and the amount of the
Syndication Party's Advance Payment to be made on account of such draw. (The
Notice of Loan Advance and the LC Notice of Advance shall be referred to
collectively as "Notice of Advance," and the Loan Advance Amount and the LC
Advance Amount shall be referred to collectively as the "Advance Amount".) Each
Syndication Party shall remit such payment directly to Agent, on the date
specified in the LC Notice of Advance ("Syndication Party LC Payment Date") (the
Syndication Party Loan Payment Date and the Syndication Party LC Payment Date
shall be referred to collectively as the "Syndication Party Payment Date").
16.5 Syndication Party's Failure to Remit Funds. If a Syndication Party
("Delinquent Syndication Party") fails to remit its Advance Payment in full by
11:00 a.m. Central Time on the Syndication Party Advance Date (the unpaid amount
of any such payment being hereinafter referred to as the "Delinquent Amount"),
in addition to any other remedies available hereunder, any other Syndication
Party or Syndication Parties may, but shall not be obligated to, pay the
Delinquent Amount (the Syndication Party or Syndication Parties which advance
such Delinquent Amount are referred to as the "Contributing Syndication
Parties"), in which case (a) the Delinquent Amount which any Contributing
Syndication Party pays shall not count as an Advance Payment against the Maximum
Syndication Amount of the Contributing Syndication Party, and (b) the Delinquent
Syndication Party shall be obligated to pay to Agent, for the account of the
Contributing Syndication Parties, interest on the Delinquent Amount at a rate of
interest equal to the rate of interest which Borrower is obligated to pay on the
Delinquent Amount ("Delinquency Interest") until the Delinquent Syndication
Party remits the full Delinquent Amount and remits all Delinquency Interest to
Agent, which will distribute such payments to the Contributing Syndication
Parties (pro rata based on the amount of the Delinquent Amount which each of
them (if more than one) paid) on the same Business Day as such payments are
received by Agent if received no later than 11:00 a.m. Central time or the next
Business Day if received by Agent thereafter. In addition, the Contributing
Syndication Parties shall be entitled to share, on the same pro rata basis, and
Agent shall pay over to them, for application against Delinquency Interest and
the Delinquent Amount, the Delinquent Syndication Party's Payment Distribution
and any fee distributions made under Section 16.11 hereof until the Delinquent
Amount and all Delinquency Interest have been paid in full. For voting purposes
the Agent shall readjust the Syndication Shares of such Delinquent Syndication
Party and the Contributing Syndication Parties from time to time first to
reflect the advance of the Delinquent Amount by the Contributing Syndication
Parties,
40
and then to reflect the full or partial reimbursement to the Contributing
Syndication Parties of such Delinquent Amount. In the event no Syndication Party
elects to pay the Delinquent Amount with respect to any Advance Amount but
Borrower elects to receive such Advance Amount (less the Delinquent Amount), the
proportionate share of Payment Distributions to which the Delinquent Syndication
Party is entitled and its proportionate voting rights shall be adjusted to
reflect its failure to pay the Delinquent Amount. As between the Delinquent
Syndication Party and the Contributing Syndication Parties, the Delinquent
Syndication Party's interest in its Note shall be deemed to have been partially
assigned to the Contributing Syndication Parties in the amount of the Delinquent
Amount and Delinquency Interest owing to the Contributing Syndication Parties
from time to time.
16.6 Agency Appointment. Each of the Syndication Parties hereby designates
and appoints Agent to act as agent to service and collect the Loan and its
respective Note and to take such action on behalf of such Syndication Party with
respect to the Loan and such Note, and to execute such powers and to perform
such duties, as specifically delegated or required herein, as well as to
exercise such powers and to perform such duties as are reasonably incident
thereto, and to receive and benefit from such fees and indemnifications as are
provided for or set forth herein, until such time as a successor is appointed
and qualified to act as Agent.
16.7 Power and Authority of Agent. Without limiting the generality of the
power and authority vested in Agent pursuant to Section 16.6 hereof, the power
and authority vested in Agent includes, but is not limited to, the following:
16.7.1 Advice. To solicit the advice and assistance of each of the
Syndication Parties concerning the administration of the Loan and the exercise
by Agent of its various rights, remedies, powers, and discretions with respect
thereto.
16.7.2 Documents. To execute, seal, acknowledge, and deliver as Agent, all
such instruments as may be appropriate in connection with the administration of
the Loan and the exercise by Agent of its various rights with respect thereto.
16.7.3 Proceedings. To initiate, prosecute, defend, and to participate in,
actions and proceedings in its name as Agent for the ratable benefit of the
Syndication Parties.
16.7.4 Retain Professionals. To retain attorneys, accountants, and other
professionals to provide advice and professional services to Agent, with their
fees and expenses reimbursable to Agent by Syndication Parties pursuant to
Section 16.19 hereof.
16.7.5 Incidental Powers. To exercise powers reasonably incident to Agent's
discharge of its duties enumerated in Section 16.7 hereof.
41
16.7.6 Letter of Credit Purposes. To determine the purposes other than
those set forth in Section 2.2 of this Agreement for which a Letter of Credit
may be issued.
16.8 Duties of Agent. The duties of Agent hereunder shall consist of the
following:
16.8.1 Possession of Documents. To safekeep one original of each of the
Loan Documents other than the Notes (which will be in the possession of the
Syndication Party named as payee therein).
16.8.2 Distribute Payments. To receive and distribute to the Syndication
Parties payments made by Borrower pursuant to the Loan Documents.
16.8.3 Collections. Subject to the provisions of Section 16.9 hereof, to,
on behalf of and for the ratable benefit of all Syndication Parties, in
accordance with customary banking practices, exercise all rights, remedies,
powers, privileges, and discretion to which Agent is entitled to collect amounts
owing under the Loan and the Notes.
16.9 Agent's Resignation or Removal. Agent may resign at any time by giving
at least sixty (60) days' prior written notice of its intention to do so to each
of the Syndication Parties. After the receipt of such notice, the Syndication
Parties holding in the aggregate at least 66 2/3% of the Syndication Shares of
the Loan ("Majority Lenders") shall appoint a successor ("Successor Agent"). If
(a) no Successor Agent shall have been so appointed which is either (i) a
Syndication Party, or (ii) if not a Syndication Party, which is a Person
approved by Borrower, or (b) if such Successor Agent has not accepted such
appointment, in either case within forty-five (45) days after the retiring
Agent's giving of such notice of resignation, then the retiring Agent may
appoint a Successor Agent which shall be a bank or a trust company organized
under the laws of the United States of America or any state thereof and having a
combined capital, surplus and undivided profit of at least $250,000,000. Any
Agent may be removed upon the written demand of the Required Lenders, which
demand shall also appoint a Successor Agent. Upon the appointment of a new Agent
hereunder, the term "Agent" shall for all purposes of this Agreement thereafter
mean such successor. After any retiring Agent's resignation hereunder as Agent,
or the removal hereunder of any Agent, the provisions of this Agreement shall
continue to inure to the benefit of such Agent as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement.
16.10 Consent Required for Certain Actions. Except as provided in Section
15.4 hereof, Agent may not take any of the following actions (nor may the
Syndication Parties take the action described in Subsection 16.10.1(c)) with
respect to, or under, the Loan Documents without the prior written consent,
given after notification by Agent of its intention to take any such action (or
notification by such Syndication Parties as are
42
proposing the action described in Subsection 16.10.1(c) of their intention to do
so), of Syndication Parties holding in the aggregate, at the time of such
notification:
16.10.1 Unanimous. One hundred percent (100%) of the Syndication Shares
before:
(a) Agreeing to an increase in the Aggregate Commitment Amount, the
Construction Commitment Amount, the LC Commitment Amount or an extension of the
Maturity Date;
(b) Agreeing to a reduction in the amount, or to a delay in the due date,
of any payment by Borrower of interest, principal, or fees; provided, however,
this restriction shall not apply to a delay in payment granted by Agent in the
ordinary course of administration of the Loan and the exercise of reasonable
judgment (so long as such payment delay does not exceed five (5) days); or
(c) Reducing the voting rights percentage set forth in this Subsection
16.10.1; or
(d) Releasing the line on any of the Collateral except in connection with
the full payment of an Underlying Loan.
16.10.2 Super Majority . A sufficient interest to constitute a Super
Majority before:
(a) Consenting to any action, amendment, or granting any waiver, not
covered in Subsection 16.9.1;
(b) Agreeing to amend Article 16 of this Agreement; or
(c) Determining the purposes other than those set forth in Section 2.2 of
this Agreement for which a Letter of Credit may be issued.
If no written consent or denial is received from a Syndication Party within five
(5) Business Days after written notice of any proposed action as described in
this Section is delivered to such Syndication Party by Agent, such Syndication
Party shall be conclusively deemed to have consented thereto for the purposes of
this Section.
16.11 Distribution of Principal and Interest. Agent will receive and accept
all payments (including prepayments) of principal and interest made by Borrower
on the Loan and the Notes and will hold all such payments in trust for the
benefit of all present and future Syndication Parties, and, if requested in
writing by the Majority Lenders, in an account segregated from Agent's other
funds and accounts ("Payment Account"). After the receipt by Agent of any
payment representing interest or principal on the Loan, Agent shall remit to
each Syndication Party an amount equal to such payment, multiplied by the
Syndication Party's Syndication Share ("Payment Distribution") no later than the
same Business Day as such payment is received by Agent if received no
43
later than 11:00 a.m. Central Time or the next Business Day if received by Agent
thereafter. Any Syndication Party's rights to its Payment Distribution shall be
subject to the rights of any Contributing Syndication Parties to such amounts as
set forth in Section 16.5.hereof.
16.12 Distribution of Certain Fees and Amounts. Agent shall (a) receive and
hold in trust for the benefit of all present and future Syndication Parties, in
the Payment Account and segregated from Agent's other funds and accounts and (b)
shall remit to the Syndication Parties, as indicated, the fees and other amounts
described below:
16.12.1 LOC Commitment Fee. The quarterly LOC Commitment Fee paid by
Borrower to Agent in connection with the Loan shall be distributed to
Syndication Parties in accordance with their respective Syndication Shares no
later than the same Business Day that payment of such fee is received by Agent,
if received no later than 11:00 a.m. Central Time, or the next Business Day if
received by Agent thereafter.
16.12.2 Letter of Credit Availability Fee. The Letter of Credit
Availability Fee paid by Borrower to Agent at the time of issuance and renewal
of each Letter of Credit.
16.12.3 Funding Losses. The amount of any Funding Losses paid by Borrower
to Agent in connection with a prepayment of any portion of a Fixed Loan shall be
distributed to the Syndication Parties in accordance with their respective
Syndication Shares no later than the same Business Day that payment of such
Funding Losses is received by Agent, if received no later than 11:00 Central
time, or the next Business Day if received by Agent thereafter.
16.13 Possession of Loan Documents. The Loan Documents (other than the
Notes) shall be held by Agent in its name, for the ratable benefit of itself and
the other Syndication Parties without preference or priority.
16.14 Collateral Application. The Syndication Parties shall have no
interest in any other loans made to Borrower by any other Syndication Party
other than the Loan, or in any property taken as security for any other loan or
loans made to Borrower by any other Syndication Party, or in any property now or
hereinafter in the possession or control of any other Syndication Party, which
may be or become security for the Loan solely by reason of the provisions of a
security instrument that would cause such security instrument and the property
covered thereby to secure generally all indebtedness owing to such other
Syndication Party. Notwithstanding the foregoing, to the extent such other
Syndication Party applies such funds or the proceeds of such property to
reduction of the Loan, such other Syndication Party shall share such funds or
proceeds with all Syndication Parties according to their respective Syndication
Shares. In the event that any Syndication Party shall obtain payment, whether
partial or full, from any source in respect of the Loan, including without
limitation payment by reason of the exercise of a right of offset, banker's
lien, general lien, or counterclaim, reducing
44
such Syndication Party's outstanding balance in the Loan to below its
Syndication Share, such Syndication Party will promptly make such adjustments
(which may include payment in cash or the purchase of further syndications or
participations in the Loan) to the end that such excess payment shall be shared
with all other Syndication Parties in accordance with their respective
Syndication Shares.
16.15 Amounts Required to be Returned. If Agent makes any payment to a
Syndication Party in anticipation of the receipt of final funds from Borrower,
and such funds are not received from Borrower, or if excess funds are paid by
Agent to any Syndication Party as the result of a miscalculation by Agent, then
Syndication Party shall, on demand of Agent, forthwith return to Agent any such
amounts, plus interest thereon (from the day such amounts were transferred by
Agent to the Syndication Party to, but not including, the day such amounts are
returned by Syndication Party) at a rate per annum equal to the Federal Funds
Rate in effect on the date of such demand. If Agent is required at any time to
return to Borrower or a trustee, receiver, liquidator, custodian, or similar
official any portion of the payments made by Borrower to Agent, whether pursuant
to any bankruptcy or insolvency law or otherwise, then Syndication Party shall,
on demand of Agent, forthwith return to Agent any such payments transferred to
Syndication Party by Agent but without interest or penalty (unless Agent is
required to pay interest or penalty on such amounts to the person recovering
such payments).
16.16 Reports and Information to Syndication Parties. Agent shall use
reasonable efforts to provide to Syndication Parties, as soon as practicable
after actual knowledge thereof is acquired by an officer thereof primarily
responsible for Agent's duties as such with respect to the Loan or primarily
responsible for the credit relationship between Agent and Borrower: (a) notice
of the existence of any Event of Default or Potential Default under the Loan
Documents, and (b) any material factual information which has a material adverse
effect on the creditworthiness of Borrower and Borrower hereby authorizes such
disclosure by Agent to the Syndication Parties. Failure of Agent to provide the
information referred to in this Section shall not result in any liability upon,
or right to make a claim against, Agent except where a court of competent
jurisdiction renders a final non-appealable determination that such failure is a
result of the willful misconduct or gross negligence of Agent. Syndication
Parties acknowledge and agree that all information and reports received pursuant
to this Agreement will be received in confidence in connection with their
Syndication Interest, and that such information and reports constitute
confidential information and shall not be disclosed to any third party, except
pursuant to appropriate legal or regulatory process, (or used by the Syndication
Party except in connection with the Loan and its Syndication Interest) without
the prior written consent of Agent or Borrower, as applicable.
16.17 Standard of Care. Agent shall not be liable to Syndication Parties
for any error in judgment or for any action taken or not taken by Agent or its
agents, except for its gross negligence or willful misconduct. Subject to the
preceding sentence, Agent will exercise the same care in administering the Loan
and the Loan Documents as it
45
exercises for similar loans which it holds for its own account and risk, and
Agent shall not have any further responsibility to the Syndication Parties.
Without limiting the foregoing, Agent may rely on the advice of counsel
concerning legal matters and on any written document it believes to be genuine
and correct and to have been signed or sent by the proper Person or Persons.
16.18 No Trust Relationship. Neither the execution of this Agreement, nor
the sharing in the Loan, nor the holding of the Loan Documents in its name by
Agent, nor the management and administration of the Loan and Loan Documents by
Agent (including the obligation to hold certain payments and proceeds in the
Payment Account in trust for the Syndication Parties), nor any other right, duty
or obligation of Agent under or pursuant to this Agreement is intended to be or
create, and none of the foregoing shall be construed to be or create, any
express, implied or constructive trust relationship between Agent and any
Syndication Party. Each Syndication Party hereby agrees and stipulates that
Agent is not acting as trustee for such Syndication Party with respect to the
Loan, this Agreement, or any aspect of either, or in any other respect.
16.19 Sharing of Costs and Expenses. To the extent not paid by Borrower,
each Syndication Party will promptly upon demand reimburse Agent, ratably
according to their respective Syndication Shares, for all reasonable costs,
disbursements, and expenses incurred by Agent on or after the date of this
Agreement for legal, accounting, consulting, and other services rendered to
Agent in its role as Agent in the administration of the Loan, interpreting the
Loan Documents, and protecting, enforcing, or otherwise exercising any rights,
both before and after default by Borrower under the Loan Documents, and
including, without limitation, all costs and expenses incurred in connection
with any bankruptcy proceedings; provided, however, that the costs and expenses
to be shared in accordance with this Section shall not include any costs or
expenses incurred by CoBank solely as a Syndication Party in connection with the
Loan, nor to Agent's internal costs and expenses.
16.20 Syndication Parties' Indemnification of Agent. Each of the
Syndication Parties agree to indemnify Agent, including any Successor Agent, and
its directors, officers, employees, agents, professional advisers and
representatives ("Indemnified Agency Parties"), (to the extent not reimbursed by
Borrower, and without in any way limiting the obligation of Borrower to do so),
ratably according to their respective Syndication Shares, from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind whatsoever which
may at any time (including, without limitation, at any time following the
payment of the Loan and/or the expiration or termination of the Syndication
Interests or this Agreement) be imposed on, incurred by or asserted against
Agent (or any of the Indemnified Agency Parties while acting for Agent or for
any Successor Agent) in any way relating to or arising out of this Agreement or
the Loan Documents, or the performance of the duties of Agent hereunder or
thereunder or any action taken or omitted while acting in the capacity of Agent
under or in connection with any of the foregoing; provided that the Syndication
Parties shall not be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties,
46
actions, judgments, suits, costs, expenses or disbursements of an Indemnified
Agency Party to the extent that any of the forgoing result from the gross
negligence or willful misconduct of that Indemnified Agency Party as determined
by a court of competent jurisdiction. The agreements and obligations in this
Section shall survive the payment of the Loan, the Syndication Interests, and
the expiration or termination of this Agreement.
16.21 Books and Records. Agent shall maintain such books of account and
records relating to the Loan as it maintains with respect to other loans of
similar type and amount, and which shall clearly and accurately reflect the
Syndication Interest of each Syndication Party. Syndication Parties, or their
agents, may inspect such books of account and records at all reasonable times
during Agent's regular business hours.
16.22 Administrative Agent Fee. CoBank shall not be entitled to any fee or
compensation, other than the Administrative Agent Fee for acting as Agent. In
the event the Successor Agent is contractually entitled to an additional fee,
each Syndication Party will be responsible for the amount thereof multiplied by
their Syndication Share.
16.23 Representations and Warranties of All Parties. Agent and each
Syndication Party represents and warrants that (a) the making and performance of
this Agreement is within its power and has been duly authorized by all necessary
corporate and other action by it, (b) this Agreement is in compliance with all
applicable laws and regulations promulgated under such laws and does not
conflict with nor constitute a breach of its charter or by-laws nor any
agreements by which it is bound, and does not violate any judgment, decree or
governmental or administrative order, rule or regulation applicable to it, (c)
no approval, authorization or other action by, or declaration to or filing with,
any governmental or administrative authority or any other Person is required to
be obtained or made by it in connection with the execution, delivery and
performance of its duties under this Agreement, and (d) this Agreement has been
duly executed by it, and constitutes the legal, valid, and binding obligation of
such Person, enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the rights of
creditors generally and general equitable principles (regardless of whether such
enforceability is considered in a proceeding at law or in equity). Each
Syndication Party that is a state or national bank represents and warrants that
the act of entering into and performing its obligations under this Agreement has
been approved by its board of directors or its loan committee and such action
was duly noted in the written minutes of the meeting of such board or committee,
and that it will furnish Agent with a certified copy of such minutes or an
excerpt therefrom reflecting such approval.
16.24 Representations and Warranties of CoBank. CoBank, in its role as
Syndication Party and as Agent, makes no express or implied representation or
warranty and assumes no responsibilities with respect to the due authorization,
execution, or delivery of the Loan Documents; the accuracy of any information,
statements, or certificates provided by Borrower, the legality, validity, or
enforceability of the Loan
47
Documents; the filing or recording of any document;
the collectibility of the Loan; the performance by any Borrower of any of its
obligations under the Loan Documents; or the financial condition or solvency of
any Borrower or any other party obligated with respect to the Loan.
16.25 Syndication Parties' Independent Credit Analysis. Each Syndication
Party acknowledges receipt of true and correct copies of all Loan Documents
(other than any Note payable to another Syndication Party) from Agent. Each
Syndication Party agrees and represents that it has relied upon its independent
review (a) of the Loan Documents, and (b) any information independently acquired
by such Syndication Party from Borrower or otherwise in making its decision to
acquire an interest in the Loan independently and without reliance on CoBank or
Agent. Each Syndication Party represents and warrants that it has obtained such
information as it deems necessary (including any information such Syndication
Party independently obtained from Borrower or others) prior to making its
decision to acquire an interest in the Loan. Each Syndication Party further
agrees and represents that it has made its own independent analysis and
appraisal of and investigation into each Borrower's authority, business,
operations, financial and other condition, creditworthiness, and ability to
perform its obligations under the Loan Documents and has relied on such review
in making its decision to acquire an interest in the Loan. Each Syndication
Party agrees that it will continue to rely solely upon its independent review of
the facts and circumstances related to Borrower, and without reliance upon
CoBank or Agent, in making future decisions with respect to all matters under or
in connection with the Loan Documents and its participation in the Loan. CoBank
and Agent assume no responsibility for the financial condition of Borrower, APD,
or any APD Loan Borrower, or for the performance of Borrower's obligations under
the Loan Documents, APD's performance of its obligations under the Underlying
Loan Documents, or the performance by any APD Loan Borrower of its obligations
under the APD Loan Documents. Except as otherwise expressly provided herein,
neither CoBank nor any other Syndication Party shall have any duty or
responsibility to furnish to any other Syndication Parties any credit or other
information concerning Borrower which may come into its possession.
16.26 No Joint Venture or Partnership. Neither the execution of this
Agreement, the sharing in the Loan, nor any agreement to share in payments or
losses arising as a result of this transaction is intended to be or to create,
and the foregoing shall not be construed to be, any partnership, joint venture
or other joint enterprise between Agent and any Syndication Party, nor between
any of the Syndication Parties.
16.27 Purchase for Own Account/Restrictions on Transfer. Each Syndication
Party represents that it has acquired and is retaining its Syndication Interest
in the Loan for its own account in the ordinary course of its banking or
financing business and not with a view toward the sale, distribution, further
participation, or transfer thereof. Each Syndication Party other than CoBank
agrees that it will not sell, assign, convey or otherwise dispose of
("Transfer"), or create or permit to exist any lien or security interest on all
or any part of its Syndication Interest in the Loan, without the prior written
consent of Agent and Borrower (which consent will not be
48
unreasonably withheld); provided that (a) any such Transfer (except a Transfer
to another Syndication Party or a Transfer by CoBank) must be in a minimum
amount of the lesser of (i) $5,000,000.00 or (ii) the full amount of the
Syndication Interest, (b) the transferee must execute an agreement substantially
in the form of Exhibit 16.27 hereto ("Syndication Acquisition Agreement") and
assume all of the transferor's obligations hereunder and execute such documents
as Agent may reasonably require, and (c) the Syndication Party making such
Transfer must pay Agent an assignment fee of $2,500.00. Any Syndication Party
may participate any part of its Syndication Interest in the Loan to any Person
with the prior written consent of Agent and Borrower (which consent will not be
unreasonably withheld), and each Syndication Party understands and agrees that
in the event of any such participation, (x) its Syndication Share and Maximum
Syndication Amount will not change on account of such participation, (y) except
as provided in Section 16.28 hereof, the participant will have no rights under
this Agreement, including, without limitation, voting rights or the right to
receive payments or distributions, and (z) Agent shall continue to deal directly
with the Syndication Party with respect to the Loan and the Syndication Party's
Syndication Interest as though no participation had been granted and will not be
obligated to deal directly with any participant. Notwithstanding any provision
contained herein to the contrary, any Syndication Party may at any time pledge
or assign all or any portion of its Syndication Interest to any Federal Reserve
Bank in accordance with applicable law.
16.28 Certain Participants' Voting Rights. All Persons which purchase a
participation interest in CoBank's interest as a Syndication Party hereunder
may, in CoBank's sole discretion (or as required in any agreement under which
such purchase is made and governed), be allowed by CoBank to vote, on a dollar
basis, on any matter requiring or allowing CoBank, in its capacity as a
Syndication Party, to provide or withhold its consent, or to otherwise vote on
any proposed action.
16.29 Method of Making Payments. Payment and transfer of all amounts owing
or to be paid or remitted hereunder, including, without limitation, payment of
the Initial Payment and each Advance Payment by Syndication Parties, and
distribution of principal or interest payments or fees or other amounts by
Agent, shall be by wire transfer in accordance with the instructions contained
on Exhibit 16.29 hereto ("Wire Instructions").
16.30 Events of Syndication Default/Remedies.
16.30.1 Syndication Party Default. Any of the following occurrences,
failures or acts, with respect to any of the Syndication Parties shall
constitute an Event of Syndication Default hereunder by such party: (a) if any
representation or warranty made by such party in this Agreement shall be found
to have been untrue in any material respect, (b) if such party fails to make any
distributions or payments required under this Agreement within five (5) days of
the date required, (c) if such party breaches any other covenant, agreement, or
provision of this Agreement which breach shall have continued uncured for a
period of thirty (30) consecutive days after such breach first occurs, unless a
shorter period is required to avoid prejudicing the rights and position of the
other
49
Syndication Parties, (d) if any agency having supervisory authority over such
party, or any creditors thereof, shall file a petition to reorganize or
liquidate such party pursuant to any applicable federal or state law or
regulation and such petition shall not be discharged or denied within fifteen
(15) days after the date on which it is filed, (e) if by the order of a court of
competent jurisdiction or by any appropriate supervisory agency, a receiver,
trustee or liquidator shall be appointed for such party or for all or any
material part of its property or if such party shall be declared insolvent, or
(f) if such party shall be dissolved, or shall make an assignment for the
benefit of its creditors, or shall file a petition seeking to take advantage of
any debtors' act, including the bankruptcy act, or shall admit in writing its
inability to pay its debts generally as they become due, or shall consent to the
appointment of a receiver or liquidator of all or any material part of its
property.
16.30.2 Remedies. Upon the occurrence of an Event of Syndication Default,
the non-defaulting parties, acting by, or through the direction of, a simple
majority (determined on the basis of Syndication Share) of the non-defaulting
parties, may, in addition to any other remedy specifically set forth in this
Agreement, have and exercise any and all remedies available generally at law or
equity, including the right to damages and to specific performance.
16.31 Withholding Taxes. Each Syndication Party represents that it is
entitled to receive any payments to be made to it hereunder without the
withholding of any tax and will furnish to Agent and to Borrower such forms,
certifications, statements and other documents as Agent or Borrower may request
from time to time to evidence such Syndication Party's exemption from the
withholding of any tax imposed by any jurisdiction or to enable Agent or
Borrower, as the case may be, to comply with any applicable laws or regulations
relating thereto. Without limiting the effect of the foregoing, if any
Syndication Party is not created or organized under the laws of the United
States of America or any state thereof, such Syndication Party will furnish to
Agent and Borrower IRS Form 4224 or Form 1001, or such other forms,
certifications, statements or documents, duly executed and completed by such
Syndication Party, as evidence of such Syndication Party's exemption from the
withholding of United States tax with respect thereto. Notwithstanding anything
herein to the contrary, Borrower shall not be obligated to make any payments
hereunder to such Syndication Party until such Syndication Party shall have
furnished to Agent and Borrower the requested form, certification, statement or
document.
16.32 Further Assurances. Agent and each Syndication Party agree to take
whatever steps and execute such documents may be reasonable and necessary to
implement this Article 16 and to carry out fully the intent thereof.
ARTICLE 17. MISCELLANEOUS
17.1 Costs and Expenses. To the extent permitted by law, Borrower agrees to
pay to Agent and the Syndication Parties, on demand, all out-of-pocket costs and
expenses (a) incurred by Agent (including, without limitation, the reasonable
fees and
50
expenses of counsel retained by Agent, and including fees and expenses incurred
for consulting, appraisal, engineering, inspection, and environmental assessment
services) in connection with the preparation, negotiation, and execution of the
Loan Documents and the transactions contemplated thereby, and processing LC
Requests and Advance Requests; and (b) incurred by Agent or any Syndication
Party (including, without limitation, the reasonable fees and expenses of
counsel retained by Agent and the Syndication Parties) in connection with the
enforcement or protection of the Syndication Parties' rights under the Loan
Documents upon the occurrence of an Event of Default or upon the commencement of
an action by Borrower against Agent or any Syndication Party (except that if the
court makes a specific finding that Borrower has prevailed on all or
substantially all of its claims in such action brought by Borrower, Borrower
shall not be obligated to pay the out-of-pocket costs and expenses of Agent and
the Syndication Parties in connection with such action), including without
limitation collection of the Loan (regardless of whether such enforcement or
collection is by court action or otherwise). Borrower shall not be obligated to
pay the costs or expenses of any Person whose only interest in the Loan is as a
holder of a participation interest.
17.2 Service of Process and Consent to Jurisdiction. Borrower hereby agrees
that any litigation with respect to this Agreement or to enforce any judgment
obtained against Borrower for breach of this Agreement or under the Notes or
other Loan Documents may be brought in the courts of the State of Colorado and
in the United States District Court for the District of Colorado (if applicable
subject matter jurisdictional requirements are present), as Agent may elect;
and, by execution and delivery of this Agreement, Borrower irrevocably submits
to such jurisdiction. With respect to litigation concerning this Agreement or
under the Notes or other Loan Documents within the jurisdiction of the courts of
the State of Colorado or the United States District Court for the District of
Colorado, Borrower hereby irrevocably appoints, until January 15, 2011, The
Corporation Company, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as the agent of
Borrower to receive for and on behalf of Borrower, service of process, which
service may be made by mailing a copy of any summons or other legal process to
Borrower in care of such agent. Borrower agrees that Borrower shall maintain a
duly appointed agent for service of summons and other legal process as long as
Borrower remains obligated under this Agreement and shall keep Agent advised in
writing of the identity and location of such agent. The receipt by such agent
and/or by Borrower of such summons or other legal process in any such litigation
shall be deemed personal service and acceptance by Borrower for all purposes of
such litigation.
17.3 Jury Waiver. IT IS MUTUALLY AGREED BY AND BETWEEN AGENT, EACH
SYNDICATION PARTY, AND BORROWER THAT THEY EACH WAIVE TRIAL BY JURY IN ANY
ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER OF THEM AGAINST THE OTHER
PARTY ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS
AGREEMENT, THE NOTES, OR THE OTHER LOAN DOCUMENTS.
17.4 Notices. All notices, requests and demands required or permitted under
the terms of this Agreement shall be in writing and (a) shall be addressed as
set forth
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below or at such other address as either party shall designate in writing, (b)
shall be deemed to have been given or made: (i) if delivered personally,
immediately upon delivery, (ii) if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt, (iii) if by
nationally recognized overnight courier service with instructions to deliver the
next Business Day, one (1) Business Day after sending, and (iv) if by United
States Mail, certified mail, return receipt requested, five (5) days after
mailing.
17.4.1 Borrower:
Village Farms Finance Cooperative
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Financial Officer
With a copy to:
Agro Power Development, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Attention:
17.4.2 CoBank:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
With a copy to:
FARM CREDIT BANK OF TEXAS
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
Attention:
17.5 Notice to Syndication Parties and Agent. No action shall be commenced
by Borrower for any claim against Agent or any Syndication Party on account of
any act or failure to act by such Person unless a notice specifically setting
forth the claim of Borrower shall have been given to such Person within sixty
(60) calendar days after
52
Borrower has knowledge or should reasonably have acquired knowledge of the act
or omission which Borrower alleges gave rise to such claim, and failure to give
such notice shall constitute a waiver of any such claim.
17.6 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of Borrower, Agent, and Syndication Parties, and their respective
successors and assigns, except that Borrower may not assign or transfer its
rights or obligations hereunder without the prior written consent of the
Syndication Parties.
17.7 Voting Rights Acknowledgment. Borrower and each present and future
Syndication Party acknowledge and agree that any entity which purchases a
participation interest in CoBank's interest as Syndication Party may, in
CoBank's sole discretion (or as required in any agreement under which such
purchase is made and governed), be allowed by CoBank to vote, on a dollar basis,
on any matter requiring or allowing CoBank, in its capacity as a Syndication
Party hereunder (but not in its capacity as Agent hereunder), to provide or
withhold its consent, or to otherwise vote on any proposed action.
17.8 Severability. The invalidity or unenforceability of any provision of
this Agreement or the other Loan Documents shall not affect the remaining
portions of such documents or instruments; in case of such invalidity or
unenforceability, such documents or instruments shall be construed as if such
invalid or unenforceable provisions had not been included therein.
17.9 Entire Agreement. This Agreement (together with all exhibits hereto,
which are incorporated herein by this reference) and the other Loan Documents
represent the entire understanding of Agent, each Syndication Party, and
Borrower with respect to the subject matter hereof and shall replace and
supersede any previous agreements of the parties with respect to the subject
matter hereof.
17.10 Applicable Law. To the extent not governed by federal law, this
Agreement and the other Loan Documents, and the rights and obligations of the
parties hereto and thereto shall be governed by and interpreted in accordance
with the internal laws of the State of Colorado, without giving effect to any
otherwise applicable rules concerning conflicts of law.
17.11 Captions. The captions or headings in this Agreement and any table of
contents hereof are for convenience only and in no way define, limit or describe
the scope or intent of any provision of this Agreement.
17.12 Amendments. This Agreement may not be modified or amended unless such
modification or amendment is in writing and is signed by Borrower, Agent, and
all Syndication Parties (and each Syndication Party hereby agrees to execute any
such amendment approved pursuant to Section 16.10 hereof). Borrower agrees that
it shall reimburse Agent for all fees and expenses incurred by Agent in
retaining outside legal
53
counsel in connection with any amendment or modification to this Agreement
requested by Borrower.
17.13 Additional Costs of Maintaining Loan. Borrower shall pay to Agent
from time to time such amounts as Agent may determine to be necessary to
compensate any Syndication Party for any costs incurred by it which Agent
determines, based on information presented to it by such Syndication Party, are
attributable to such Syndication Party's making or maintaining any Advances
hereunder or its obligation to make any such Advances, or any reduction in any
amount receivable by such Syndication Party under this Agreement or the Note
payable to it in respect to any such Advances or such obligation (such increases
in costs and reductions in amounts receivable being herein called "Additional
Costs"), resulting from any change after the date of this Agreement in United
States federal, state, municipal, or foreign laws or regulations (including
Regulation D), or the adoption or making after such date of any interpretations,
directives, or requirements applying to a class of banks including such
Syndication Party of or under any United States federal, state, municipal, or
foreign laws or regulations (whether or not having the force of law) by any
court or governmental or monetary authority charged with the interpretation or
administration thereof ("Regulatory Change"), which: (a) changes the basis of
taxation of any amounts payable to such Syndication Party under this Agreement
or the Note payable to such Syndication Party in respect of any of such Advances
(other than taxes imposed on the overall net income of such Syndication Party);
or (b) imposes or modifies any reserve, special deposit, or similar requirements
relating to any extensions of credit or other assets of, or any deposits with or
other liabilities of, such Syndication Party; or (c) imposes any other condition
affecting this Agreement or the Note payable to such Syndication Party (or any
of such extensions of credit or liabilities). Agent will notify Borrower of any
event occurring after the date of this Agreement which will entitle such
Syndication Party to compensation pursuant to this Section as promptly as
practicable after it obtains knowledge thereof and determines to request such
compensation. Agent shall include with such notice, a certificate from such
Syndication Party setting forth in reasonable detail the calculation of the
amount of such compensation. Determinations by Agent for purposes of this
Section of the effect of any Regulatory Change on the costs of such Syndication
Party of making or maintaining Advances or on amounts receivable by such
Syndication Party in respect of Advances, and of the additional amounts required
to compensate such Syndication Party in respect of any Additional Costs, shall
be conclusive absent manifest error, provided that such determinations are made
on a reasonable basis.
17.14 Capital Requirements. In the event that the introduction of or any
change in (a) any law or regulation, or (b) the judicial, administrative, or
other governmental interpretation of any law or regulation, or (c) compliance by
any Syndication Party or any corporation controlling any such Syndication Party
with any guideline or request from any governmental authority (whether or not
having the force of law) has the effect of requiring an increase in the amount
of capital required or expected to be maintained by such Syndication Party or
any corporation controlling such Syndication Party, and such Syndication Party
certifies that such increase is based in
54
any part upon such Syndication Party's obligations hereunder, and other similar
obligations, Borrower shall pay to such Syndication Party such additional amount
as shall be certified by such Syndication Party to Agent and to Borrower to be
the net present value (discounted at the Variable Rate) of (a) the amount by
which such increase in capital reduces the rate of return on capital which such
Syndication Party could have achieved over the period remaining until the
Maturity Date but for such introduction or change, (b) multiplied by such
Syndication Party's Syndication Share of the Aggregate Commitment. Agent will
notify Borrower of any event occurring after the date of this Agreement that
will entitle any such Syndication Party to compensation pursuant to this Section
as promptly as practicable after it obtains knowledge thereof and of such
Syndication Party's determination to request such compensation. Agent shall
include with such notice, a certificate from such Syndication Party setting
forth in reasonable detail the calculation of the amount of such compensation.
Determinations by any Syndication Party for purposes of this Section of the
effect of any increase in the amount of capital required to be maintained by any
such Syndication Party and of the amount of compensation owed to any such
Syndication Party under this Section shall be conclusive absent manifest error,
provided that such determinations are made on a reasonable basis.
17.15 Replacement Notes. Upon receipt by Borrower of evidence satisfactory
to it of: (a) the loss, theft, destruction or mutilation of any Note, and (in
case of loss, theft or destruction) of the agreement of the Syndication Party to
which the Note was payable to indemnify Borrower, and upon surrender and
cancellation of such Note, if mutilated; or (b) the assignment of any
Syndication Interest and Note relating thereto, or any portion thereof, pursuant
to this Agreement, then Borrower will pay any unpaid principal and interest (and
Funding Losses, if applicable) then or previously due and payable on such Note
and will deliver in lieu of such Note a new Note or, in the case of an
assignment of a portion of a Syndication Interest new Notes, for any remaining
balance.
17.16 Patronage Payments. Borrower acknowledges and agrees that any
patronage, or similar, payments to which Borrower is entitled on account its
ownership of CoBank Equity Interests will not be based on any portion of its
Syndication Share in which CoBank has at any time granted a participation
interest.
17.17 Mutual Release. Upon full indefeasible payment and satisfaction of
the Bank Debt and Notes and the other obligations contained in this Agreement,
the parties, including Borrower, Agent, and each Syndication Party shall, except
as provided in Article 14 hereof, thereupon automatically each be fully,
finally, and forever released and discharged from any further claim, liability,
or obligation in connection with the Bank Debt.
17.18 Liberal Construction. This Agreement constitutes a fully negotiated
agreement between commercially sophisticated parties, each assisted by legal
counsel, and shall not be construed and interpreted for or against any party
hereto.
55
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
BORROWER:
VILLAGE FARMS INTERNATIONAL
FINANCE ASSOCIATION, a
cooperative corporation
formed under the laws of
the State of Delaware
By:
------------------------
Name: J. ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
COBANK:
COBANK, ACB
By:
------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President