Exhibit 10.3
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT ("Pledge Agreement"), dated February 15, 2000, is
made by NEW ALLIED DEVELOPMENT CORPORATION, a Colorado corporation ("Pledgor"),
in favor of PENDLETON, FRIEDBERG, XXXXXX & XXXXXXXXX, P.C., a Colorado
professional corporation ("Pledgee"), and is executed and delivered in
connection with any and all indebtedness of Pledgor to Pledgee for unpaid
professional fees, costs and late charges now owing Pledgor to Pledgee, which as
of January 31, 2000, are in the aggregate amount of $154,624.55, and any fees,
costs and late charges hereafter incurred by Pledgor in connection with services
provided by Pledgee to Pledgor ("Debt").
Pledgor has requested Pledgee to undertake a foreclosure action with
respect to the deed of trust and note which are part of the Pledged Collateral
(as defined below), or other action to collect the Pledged Note and to secure
the payment of fees, costs and late charges due or to become due hereafter with
respect to such action and other services requested of Pledgee by Pledgor, and
to induce Pledgee to undertake such action(s) and representation, Pledgor has
agreed to execute and deliver to Pledgee this Pledge Agreement.
Pledgee has agreed to continue providing legal representation to Pledgor on
the Banks, the Monument foreclosure, and the New York grand jury matters without
current payments on account other than through this Pledge Agreement. During the
eight (8) month period following the execution of this Pledge Agreement Pledgee
agrees on not charge any additional late fees or interest on the Debt. At the
expiration of that term, Pledgee agrees to reduce its late payment charge as
that term is defined in the Memorandum Regarding Fee Arrangements executed on or
about August 24, 1992, to 1 % (simple) per month.
IN CONSIDERATION of the foregoing and other valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Pledgor agrees as
follows:
1. Pledge. Pledgor hereby pledges and assigns to Pledgee, and grants
to Pledgee a security interest in, the following (the "Pledged
Collateral"):
a. the promissory note described in Exhibit "A" attached to this
Pledge Agreement and incorporated in this Pledge Agreement by
reference (the "Pledged Note");
b. the deed of trust described in Exhibit "A" attached to this
Pledge Agreement and incorporated in this Pledge Agreement by
reference (the "Deed of Trust");
c. all principal, interest costs, late charges and other amounts
now or in the future payable under or received, receivable or
otherwise distributed in respect of or in exchange for the Pledged
Note or any other Pledged Collateral, including any such amounts past
due and unpaid;
d. all present and future right, title and interest of Pledgor in
and to any property now or in the future securing or received,
receivable or otherwise distributed in respect of or in exchange for
the Pledged Note or any other Pledged Collateral, including any such
property acquired upon foreclosure of any such security or by deed in
lieu of foreclosure, account, contract rights, general intangibles,
chose in action, document or instrument;
e. all present and future rights and interests, including any
account, contract right or general intangible arising from or related
thereto, of Pledgor under any other document or instrument now or in
the future relating to, evidencing, securing, or guaranteeing the
Pledged Note or any other Pledged Collateral, including hazard and
title insurance policies, together with all other present and future
rights and interests of Pledgor of any nature under or with respect to
any of the Pledged Collateral (including the right to enforce the
terms thereof); and
f. all supplements, modifications, amendments, renewals,
extensions, proceeds, replacements and substitutions for, of or to any
of the foregoing.
2. Obligations Secured. This Pledge Agreement is given for the purpose
of securing payment and performance of the following (the "Secured
Obligations"): (a) all present and future indebtedness of Pledgor to
Pledgee representing the Debt, howsoever documented or incurred and
including principal, costs, late charges and all other amounts payable
under the terms of the Debt; and (b) all present and future obligations of
Pledgor under this Pledge Agreement; in each case as such indebtedness and
other obligations may from time to time be supplemented, modified, amended,
renewed and extended, whether evidenced by new or additional documents or
resulting in a change in the late charge rate on any such indebtedness or
otherwise.
3. Delivery of Pledged Collateral. All documents and instruments
representing or evidencing the Pledged Collateral shall be delivered to and
held by or on behalf of Pledgee (or its designated representative or agent)
pursuant to this Pledge Agreement and shall be endorsed and/or accompanied
by duly executed instruments of transfer or assignment as Pledgee may
require from time to time, including assignments of the pledged Deed of
Trust in recordable form (which may be recorded at the discretion of
Pledgee at any time), all in form and substance reasonably satisfactory to
Pledgee. If at any time, Pledgee shall release possession of any of the
Pledged Collateral to a governmental third-party as required by applicable
law in connection with any legal action undertaken in enforcement of the
provisions of any of such Pledged Collateral, including foreclosure, such
release shall be deemed for the sole benefit and account of Pledgee and
such governmental third-party shall be deemed to hold such Pledged
Collateral for the sole use, benefit and account of Pledgee, and Pledgee's
security interest therein shall not be deemed released, impaired,
subordinated or reduced by reason of such transfer of possession.
4. Collections on Pledged Collateral. Pledgor shall not have the right
to receive and retain amounts paid from time to time in respect of interest
and other amounts accrued and payable under the Pledged Note, until such
time as Pledgor shall have paid and performed all
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Secured Obligations as and when due (including any applicable grace period)
(any such failure being an "Event of Default"), and Pledgee shall have the
sole right to collect and possess all such amounts. If Pledgor should
nevertheless receive any payments contrary to the foregoing provisions,
such payments shall be received in trust for the benefit of Pledgee, shall
be segregated from other funds of Pledgor, and shall be forthwith delivered
to Pledgee as Pledged Collateral in the same form as so received (with any
necessary endorsement). Any such collection by Pledgee shall not cure or
waive any Event of Default or notice of default or invalidate any act done
pursuant to such notice. Failure or discontinuance by Pledgee at any time
or from time to time to collect such amounts shall not in any manner affect
the subsequent enforcement by Pledgee of its right to do so.
5. Maintenance and Administration of Pledged Collateral. Unless
Pledgee otherwise consents in writing, Pledgor shall (a) take all action
reasonably requested by Pledgee to maintain this Pledge Agreement as an
indefeasible first priority pledge and security interest in the Pledged
Collateral, (b) take all action reasonably necessary or appropriate in the
reasonable discretion of Pledgor with the advice of the Pledgee, to
maintain and enforce its rights and interests in respect of the Pledged
Collateral, (c) pay all taxes which are or may become a lien affecting any
of the Pledged Collateral, (d) not permit or agree to any supplement,
modification, amendment, renewal, extension or termination of, or consent
or agree to any waiver of or departure from the terms of, or otherwise
release any interest in or rights under or in connection with any of the
Pledged Collateral, unless, in the discretion of Pledgor, with the advice
of Pledgee, Pledgor believes such action improves the collectability of the
Pledged Collateral to the extent of the Debt, (e) not cause or permit any
interest in any Pledged Collateral to be transferred or further encumbered
(whether voluntarily, by operation of law or otherwise), or cause or permit
the subordination of any Pledged Collateral to any mortgage, deed of trust
or other claim, security interest or encumbrance, unless, in the discretion
of Pledgor, with the advice of Pledgee, Pledgor believes such action
improves the collectability of the Pledged Collateral to the extent of the
Debt, and (f) not take any other action with respect to any Pledged
Collateral which is inconsistent with the purposes of this Pledge Agreement
or which would adversely affect the rights or interests of Pledgee
hereunder; provided that (i) any foreclosure, legal action or other
proceeding instituted by Pledgor in connection with any Pledged Collateral
shall be subject to the prior written consent of Pledgee (which consent
shall not be unreasonably withheld), (ii) Pledgee may require that the
proceeds of any sale or foreclosure (including any property acquired at
such sale or foreclosure) be delivered directly to Pledgee to be held as
payment of or additional collateral for the Secured Obligations, and (iii)
if an Event of Default has occurred and is continuing, Pledgor's right to
enforce the Pledged Collateral shall cease and Pledgee shall have the sole
right to do so.
6. Actions and Further Assurances. Pledgor shall appear in and defend
any claim or any action or other proceeding purporting to affect any of the
Pledged Collateral or the rights or interests of Pledgee under this Pledge
Agreement, and give Pledgee prompt written notice of any such claim, action
or proceeding, and Pledgee may, at Pledgor's expense, appear in and defend
any such claim, action or proceeding and any claim, action or other
proceeding asserted or
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brought against Pledgee in connection with or relating to any of the
Pledged Collateral or this Pledge Agreement. Pledgor shall also take or
cause to be taken such further action and execute and deliver or cause to
be executed and delivered such further documents as Pledgee from time to
time may reasonably request to maintain, perfect, protect, assure and
confirm Pledgee's rights and interests, Pledgor's obligations and the
intention of the parties under this Pledge Agreement.
7. Performance by the Pledgee. If Pledgor fails to perform any of its
obligations under this Pledge agreement, Pledgee may, but without any
obligation to do so, with notice to Pledgor, perform or cause to be
performed any such obligations in such manner and to such extent and take
such other action as Pledgee may deem appropriate.
8. Representations of Pledgor. Pledgor represents and warrants to
Pledgee that:
a. The execution, delivery and performance of this Pledge
Agreement by Pledgor are within Pledgor's power and authority, have
been duly authorized by all necessary action and do not and will not
(i) require any authorization which has not been obtained, (ii)
contravene the organization and governance documents of Pledgor, any
applicable laws or any agreement or restriction binding on or
affecting Pledgor or its property, or (iii) result in or require the
creation or imposition of any lien or right of others upon or with
respect to any property now or in the future owned by Pledgor (other
than liens in favor of Pledgee). No authorization which has not been
obtained is required for the creation of the liens or the enforcement
by Pledgee of its remedies under this Pledge Agreement. This Pledge
Agreement, when executed and delivered, constitutes the legal, valid
and binding obligation of Pledgor enforceable against Pledgor in
accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency or other similar laws affecting the rights of
creditors generally.
b. Pledgor is and will continue to be the legal and beneficial
owner of the Pledged Collateral, free and clear of all liens and
rights of others (other than liens in favor of Pledgee hereunder).
This Pledge Agreement creates a valid and indefeasible first priority
lien in the Pledged Collateral securing the payment and performance of
all Secured Obligations. No financing statements covering any of the
Pledged Collateral are on file in any public office, except financing
statements in favor of Pledgee.
c. Pledgor has not taken any action, and is not aware of any
other event or circumstance, that may or would impair or otherwise
interfere with the rights or interests of Pledgee under this Pledge
Agreement.
9. Duties of Pledgee. The remedies conferred on Pledgee under this
Pledge Agreement are solely to protect its rights and interests in the
Pledged Collateral and shall not impose any duty upon it to exercise any
such remedies. Except for the safe custody of the Pledged Collateral in its
possession and the accounting for monies actually received under this
Pledge Agreement, Pledgee shall be under no duty or obligation to preserve,
maintain or protect the Pledged Collateral or any of Pledgor's rights or
interests in the Pledged Collateral, or make or give any
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presentments, demands for performance, protests, notices of nonperformance,
protest or dishonor or other notices of any kind in connection with the
Pledged Collateral, or take any other action with respect to any other
matters relating to any Pledged Collateral. Pledgee shall be deemed to have
exercised reasonable care in the custody and preservation of any Pledged
Collateral in its possession if such Pledged Collateral is accorded
treatment substantially equal to that which Pledgee accords its own
property. Pledgor does not assume and shall have no liability for, and
shall not be obligated to perform, any of Pledgor's obligations with
respect to any Pledged Collateral or any other matters relating to the
Pledged Collateral, and nothing contained in this Pledge Agreement shall
release Pledgor from any such obligations.
10. Default. Upon the occurrence and during the continuance of any
Event of Default, Pledgee may, without notice to or demand upon Pledgor,
which are expressly waived by Pledgor (except for notices or demands
otherwise required by applicable laws to the extent not effectively waived
by Pledgor), and without releasing Pledgor from any of its obligations with
respect to the Secured Obligations:
a. notify any and all obligors under the Pledged Note (the
"Obligors) that the Pledged Collateral has been assigned to Pledgee
and that all payments and other performance are to be made and
rendered directly and exclusively to Pledgee, and in its own name
supplement, modify, amend, renew, extend, accelerate, accept partial
payments or performance on, make allowances and adjustments and issue
credits with respect to, give approvals, waivers and consents under,
release, settle, compromise, compound, xxx for, collect or otherwise
liquidate, enforce or deal with any of the Pledged Collateral,
including judicial or non-judicial sale or foreclosure of any security
for any Pledged Collateral and collection of all amounts past due and
unpaid (Pledgor agreeing not to take any such action after the
occurrence of any Event of Default without prior written authorization
from Pledgee);
b. take possession of the Pledged Collateral with or without
judicial process; enter any premises where any Pledged Collateral may
be located for the purpose of taking possession of such Pledged
Collateral or removing the same; and require Pledgor, on demand, to
assemble all Pledged Collateral not then in the possession of Pledgee
and make it available to Pledgee at a place selected by Pledgee which
is reasonably convenient for both parties;
c. endorse, in the name of Pledgor, all checks, drafts and other
evidences of payment relating to the Pledged Collateral, and receive,
open and dispose of all mail addressed to Pledgor and notify the
postal authorities to change the address for delivery of such mail to
such address as Pledgee may designate;
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d. foreclose the liens created under this Pledge Agreement or
under any other agreement relating to the Pledged Collateral by any
available judicial procedure or without judicial process; sell,
transfer, assign or otherwise dispose of the Pledged Collateral or any
part thereof in one or more parcels at public or private sale, for
cash, on credit or for future delivery, or otherwise with or without
representations or warranties, and upon such terms as shall be
acceptable to Pledgee; and
e. protect, exercise and enforce any and all other remedies
provided under this Pledge Agreement or by applicable laws, including
all remedies of a secured party under the Uniform Commercial Code as
adopted in Colorado.
If Pledgee determines to sell or foreclose the security for any
Pledged Collateral or to take any other action to enforce any Pledged
Collateral or any security therefor: (i) Pledgee may proceed by judicial or
non-judicial action even though such action may release any Obligor from
further liability thereunder, (ii) Pledgee may credit bid all or any part
of the amount owing under any Pledged Collateral in connection with any
sale or foreclosure of security therefor and become the purchaser at such
sale or foreclosure, and (iii) if Pledgee should acquire any property at
any such sale or foreclosure by credit bid of all or any part of any amount
owing under the Pledged Collateral, such property shall be held by Pledgee
as additional collateral for the Secured Obligations.
Following the occurrence of any Event of Default, any cash held by
Pledgee as Pledged Collateral and any cash proceeds realized by Pledgee
from the collection, sale or other disposal or liquidation of any Pledged
Collateral may in the discretion of Pledgee, be held as additional
collateral for the Secured Obligations and/or then or at any time
thereafter applied against the Secured Obligations in whole or in part in
such order and manner as Pledgee shall elect.
Each of the remedies provided in this Pledge Agreement is cumulative
and not exclusive of, and shall not prejudice, any other remedy provided in
this Pledge Agreement or by applicable laws or under the Note or any other
document securing it. Each remedy may be exercised from time to time as
often as deemed necessary by Pledgee, and in such order and manner as
Pledgee may determine. This Pledge Agreement is independent of any other
security for the Secured Obligations, and upon the occurrence of any event
of Default, Pledgee may proceed in the enforcement of this Pledge Agreement
independently of any other remedy that Pledgee may at any time hold with
respect to the Pledged Collateral or any such other security.
11. Costs and Expenses. Pledgor shall pay, on demand, all costs, fees,
expenses, advances, charges, losses and liabilities of Pledgee under or in
connection with this Pledge Agreement or the enforcement of, or the
exercise of any remedy or any other action taken by Pledgee under, this
Pledge Agreement, in each case including the reasonable fees and
disbursements of Pledgee's legal counsel and other out-of-pocket expenses.
12. Successors and Assigns. This Pledge Agreement applies to and shall
be binding on and inure to the benefit of all parties to this Pledge
Agreement and their respective successors and assigns.
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13. Governing Law. This Pledge Agreement shall be governed by, and
construed and enforced in accordance with, the laws of Colorado.
14. Satisfaction and Release. Upon payment and performance in full of
the Secured Obligations (i) this Pledge Agreement and all liens, security
interests, rights and remedies granted or provided to Pledgee hereunder or
by reason hereof shall automatically terminate and be without further force
or effect; (ii) Pledgee shall take all actions reasonably requested by
Pledgor to confirm) the foregoing, and (iii) Pledgor shall have sole and
exclusive authority to deal with, and instruct Obligors with respect to,
the Pledged Collateral.
"PLEDGOR "
NEW ALLIED DEVELOPMENT
CORPORATION
By: /s/ Xxxxx X. Xxxx
-----------------------------
Name: Xxxxx X. Xxxx
Title: President
"PLEDGEE"
PENDLETON,FRIEDBERG,
XXXXXX & XXXXXXXXX, P .C.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
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"EXHIBIT A"
DESCRIPTION OF PLEDGED NOTE AND DEED OF TRUST
First Replacement Promissory Note dated December 19, 1996, in the face
principal amount of $327,000.00, executed by Drew Incorporated, a Pennsylvania
corporation in favor of New Allied Development Corporation, a Colorado
corporation (unpaid principal balance as of the date of this Pledge Agreement
$327,000).
Deed of Trust dated December 19, 1996, executed by Drew Incorporated,
a Pennsylvania corporation, as borrower and grantor, in favor of the Public
Trustee, El Paso County, State of Colorado, as trustee, for the benefit of New
Allied Development Corporation, a Colorado corporation, as beneficiary, covering
real property located in E1 Paso County, Colorado and recorded on December 20,
1996, at Reception No. 096156783, in the Clerk and Recorder's Office of such
County, as amended by that Amendment to Deed of Trust dated March 13, 1997, by
and among the aforesaid and recorded in said county and records on March 19,
1997, at Reception No. 097030747.
A-1
