Exhibit 10.27
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MASTER LOAN AGREEMENT
BETWEEN
COLORADO SPRINGS PRODUCTION CREDIT ASSOCIATION
AND
COLORADO GREENHOUSE, INC.
DATED
AS OF
JANUARY 24, 1997
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MASTER LOAN AGREEMENT
THIS MASTER LOAN AGREEMENT is entered into as of this 24th day of January,
1997, by and between COLORADO GREENHOUSE, INC., a Delaware corporation doing
business in Colorado ("CGI"), and COLORADO SPRINGS PRODUCTION CREDIT
ASSOCIATION, a federally chartered association of the Farm Credit System
("Lender").
RECITALS
From time to time CGI may request and Lender may make loans to CGI . In
order to reduce the amount of paperwork associated therewith, Lender, and CGI
would like to enter into a Master Loan Agreement (the "MLA"). For that reason,
and in consideration of Lender's making one or more loans to CGI, Lender, and
CGI agree as follows:
ARTICLE 1
SUPPLEMENTS, DEFINITIONS
SECTION 1.1 SUPPLEMENTS. In the event CGI desires to borrow from Lender
and Lender is willing to lend to CGI , or in the event Lender and CGI desire to
consolidate any existing loans hereunder, the parties will enter into a
Supplement to the MLA (a "Supplement"). Each Supplement will set forth the
amount of the loan, the purpose of the loan, the interest rate or rate options
applicable to that loan, the repayment terms of the loan, and any other terms
and conditions applicable to that particular loan. Each loan will be governed by
the terms and conditions contained in the MLA and in the Supplement relating to
the loan. In the event of any conflict with the terms of the MLA or any new
matter introduced in any Supplement, the terms of the Supplement, for that
Supplement, shall be controlling.
SECTION 1.2 DEFINITIONS. For the purpose of the MLA, and for the purposes
of the MLA and any Supplement (the MLA, Supplements and all other Loan
Documents, together being sometimes referred to as the "Agreement"), except as
otherwise expressly provided or unless the context otherwise requires, the
capitalized terms used shall have the following meanings:
ADVANCE shall mean an advance of funds by Lender to CGI pursuant to any
Supplement.
AFFILIATE shall mean, as to any Person, any other Person (a) that directly
or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, such Person; (b) that
directly or indirectly beneficially owns or holds twenty percent (20%) or
more of any class of voting stock of such Person; or (c) twenty percent
(20%) or more of the voting stock of which is directly or indirectly
beneficially owned or held by the Person in question. The term "control"
means the possession, directly or indirectly, of the power to direct or
cause direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise; provided,
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however, in no event shall Lender, Brush Cogeneration Partners, Colorado
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Power Partners or American Atlas #1, LTD., or any other person or entity
listed on Exhibit "D" hereto, be deemed an Affiliate of CGI, Holdings, or
of LLC.
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AGREEMENT shall have the meaning provided in Section 1.2 of Article 1 of
the MLA.
BUSINESS DAY shall mean any day that Lender and the Federal Reserve Bank of
Kansas City are not authorized or required to be closed.
CGI shall mean the borrower identified as Colorado Greenhouse, Inc. in the
heading hereof, with the federal tax identification number of 00-0000000.
CGI ACCOUNTANT shall have the meaning provided in Section 5.7(a) of Article
5 of the MLA.
CG MEMBER shall mean CG Member, Inc., a Delaware corporation, of which LLC
is a wholly-owned subsidiary, and with the federal tax identification
number of 00-0000000.
CG MEMBER PLEDGE shall have the meaning provided in Section 2.8 of Article
2 of the MLA.
COLLATERAL shall have the meaning provided in the Security Agreement and
the Mortgage, and in any Security Agreement or Mortgage granted to Lender
by CGI pursuant to any Supplement.
COMPLIANCE CERTIFICATE shall have the meaning provided in Section 5.7(i) of
Article 5 of the MLA and shown at Exhibit "A."
DELEGATION AND WIRE TRANSFER AUTHORIZATION shall have the meaning provided
in Section 2.1 of Article 2 of the MLA as shown as Exhibit "E".
DISCLOSURE SCHEDULES shall have the meaning provided in Section 4.1 of
Article 4 of the MLA and shown at Exhibit "B."
EVENT OF DEFAULT shall have the meanings provided in Article 8 of the MLA.
EXISTING LIENS shall have the meaning provided in Section 4.1(h) of Article
4 of the MLA and shown on Exhibit "C".
FCA shall have the meaning provided in Section 2.5 of Article 2 of the MLA.
FCBW shall mean the Farm Credit Bank of Wichita, a federally chartered bank
of the Farm Credit System.
GAAP shall mean generally accepted accounting principles, applied on a
consistent basis, as set forth in opinions of the Accounting Principles
Board of the American Institute of Certified Public Accountants and/or the
Statements of the Financial Accounting Standards Board and/or their
respective successors and which are applicable in the circumstances of the
date in question. Accounting principles are applied on a "consistent
basis" when the accounting principles observed in a current period are
comparable in all material respects to those accounting principles applied
in a preceding period.
GUARANTEE shall have the meaning provided in Section 2.8 of Article 2 of
the MLA and shown at Exhibit F.
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HOLDINGS shall mean Colorado Greenhouse Holdings, Inc., a Delaware
corporation, of which CGI, and CG Member are wholly-owned subsidiaries, and
with the federal tax identification number of 00-0000000.
HOLDINGS PLEDGE shall have the meaning provided in Section 2.8 of Article 2
of the MLA.
LAWS shall have the meaning provided in Section 4.1(e) of Article 4 of the
MLA.
LENDER shall mean the lender identified as Colorado Springs Production
Credit Association in the heading hereof and any participant in any loans
made by Lender, regardless of whether such participant is identified to
CGI.
LIENS shall have the meaning provided in Section 6.2 of Article 6 of the
MLA.
LLC shall mean Colorado Greenhouse, LLC, a Colorado Limited Liability
Company, a wholly-owned subsidiary of CG Member with the federal tax
identification number of 00-0000000.
LOAN DOCUMENTS shall have the meaning provided in Section 4.2(b) of Article
4 of the MLA.
MLA shall have the meaning provided in the Recitals hereto.
PERMITTED ENCUMBRANCES shall have the meaning provided in Section 6.2 of
Article 6 of the MLA.
PERSON shall mean any individual, corporation, business trust, association,
company, partnership, joint venture, limited liability company or other
entity permitted by Law, governmental authority, or other entity.
POTENTIAL DEFAULT shall have the meaning provided in Section 3.4 of Article
3 of the MLA.
SECURITY AGREEMENT shall mean the Security Agreement between CGI and Lender
in which CGI grants to Lender a security interest in its assets, as is more
particularly described therein.
SERVICING ENTITY shall have the meaning provided in Section 10.9 of Article
10 of the MLA.
SUPPLEMENT shall have the meaning provided in Section 1.1 of Article 1 of
the MLA.
UCC shall have the meaning provided in Section 1.3 of Article 1 of the MLA.
SECTION 1.3 OTHER DEFINITIONAL PROVISIONS. All definitions contained in
the MLA are equally applicable to the singular and plural forms of the terms
defined. The words "hereof," herein," and "hereunder" and words of similar
import referring to the MLA refer to the MLA as a whole and not to any
particular provision of the MLA. All accounting terms not specifically defined
herein shall be construed in accordance with GAAP. Terms used herein that are
defined in the Uniform Commercial Code, unless otherwise defined herein, shall
have the meanings specified in the Uniform Commercial Code as adopted by the
State of Colorado ("UCC"). Additional terms may be provided in any
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Supplement and the meaning assigned to such terms in such Supplements shall be
controlling for that Supplement in the event of any conflict with any term
defined or used in the MLA.
ARTICLE 2
GENERAL CONDITIONS
SECTION 2.1 AVAILABILITY. Advances will be made available on any Business
Day upon the telephonic or written request of CGI. Requests for Advances must be
received no later than 12:00 noon Mountain Time on the date the loan is desired.
Advances will be made available by wire transfer of immediately available funds
to such account or accounts as may be authorized by CGI. CGI shall furnish to
Lender a duly completed and executed copy of a Delegation and Wire Transfer
Authorization Form, and Lender shall be entitled to rely on (and shall incur no
liability to CGI in acting on) any request or direction furnished in accordance
with the terms thereof.
SECTION 2.2 REPAYMENT. CGI's obligation to repay each Advance shall be
evidenced by the promissory note set forth in the Supplement relating to that
Advance. Lender shall maintain a record of all Advances, the interest accrued
thereon, and all payments made with respect thereto, and such record shall,
absent proof of manifest error, be conclusive evidence of the outstanding
principal and interest on the Advances. All payments shall be made by wire
transfer of immediately available funds, or by check, without setoff, deduction
or counterclaim. Wire transfers shall be made to ABA No. 000000000 for advice to
and credit of Lender (or to such other account as Lender may direct by notice).
CGI shall give Lender telephonic notice no later than 12:00 noon Mountain Time
of its intent to pay by wire and funds received after 2:00 p.m. Mountain Time
shall be credited on the next business day. Checks shall be mailed to Farm
Credit Bank of Wichita, 000 X. Xxxx, Xxxxxxx, XX 00000-0000 (or to such other
place as Lender may direct by notice). Credit for payment by check will not be
given until the latter of: (a) the day on which Lender receives immediately
available funds; or (b) the next business day after receipt of the check.
SECTION 2.3 CAPITALIZATION. Stock purchase and conversion shall be made
according to the terms, conditions and designations outlined in the Farm Credit
Act of 1971, as amended (12 U.S.C. (S) 2074), regulations and Lender's bylaws,
including without limitation Lender's statutory first Lien on CGI's stock in
Lender, which Lien CGI acknowledges and expressly hereby grants to Lender. CGI
acknowledges that retirement of stock will be in accordance with Law, regulation
and Lender's bylaws. If an Event of Default shall occur and continue after any
applicable grace period, Lender may retire the stock at book value (not to
exceed par value or face amount) and apply the proceeds to the principal amount
of the Advances outstanding at the time, or to interest, in accordance with Law,
regulations and Lender's bylaws in effect at the time of retirement. If book
value of stock is ever less than par value or face amount of if Lender's capital
becomes impaired, Lender may retire stock in an amount equal to book value. Such
a retirement will in no way affect CGI's obligations under the Loan Documents,
including any amounts borrowed to purchase stock.
SECTION 2.4 SECURITY. To secure the payment of the Advances and the
performance of all obligations of Debtor under the Loan Documents, Debtor
hereby grants to Lender a continuing security interest in and to the following
property and interests in property of Debtor, whether now owned or existing or
hereafter acquired or arising and wheresoever located: all Accounts, Inventory,
Equip-
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ment, Fixtures, Farm Products, General Intangibles, Chattel Paper, Instruments,
Documents, Intellectual Property (including specifically without limitation
patents and patent licenses, trademarks, design marks, word marks, tradenames,
logos, and good will connected therewith), and all accessions to, substitutions
for, and all replacements, products and proceeds of the foregoing (including
without limitation, proceeds of insurance policies insuring any of the
foregoing), all books and records (including without limitation customer lists,
credit files, computer programs, printouts, data whether stored electronically
or otherwise, and other computer materials and records) pertaining to any of the
foregoing, and all insurance policies insuring any of the above collateral (the
"Collateral").
SECTION 2.5 CAPITAL ADEQUACY. If after the date hereof Lender shall have
determined that the adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the interpretation or
administration thereof by the Farm Credit Administration ("FCA"), Lender's
regulator, or any successor agency thereto, or compliance by Lender with any
request or directive regarding capital adequacy (whether or not having the force
of law) of FCA, has or would have the effect of reducing the rate of return on
Lender's capital as a consequence of its obligations hereunder or the
transactions contemplated hereby to a level below that which Lender could have
achieved but for such adoption, change or compliance (taking into consideration
Lender's policies with respect to capital adequacy) by an amount deemed by
Lender to be material, then from time to time, within ten (10) Business Days
after demand by Lender, CGI shall pay to Lender such additional amount or
amounts as will compensate Lender for such reduction. A certificate of Lender
claiming compensation under this section and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive, provided that the
determination thereof is made on a reasonable basis. However, to the extent
capital costs relate to Lender's loans in general and not specifically to a loan
hereunder, Lender shall use reasonable averaging and attribution methods. In
addition, Lender agrees that, as promptly as practical after it becomes aware of
the occurrence of an event or the existence of a condition that would entitle it
to exercise its rights under this Section, it will use commercially reasonable
efforts to make, fund or maintain the affected Advances through another
participant if (1) as a result thereof the additional money that would otherwise
be required to be paid in respect of such Advances would be reduced, and (2) the
making, funding or maintaining of such Advances through such other participant
would not adversely affect such Advances or Lender. Finally, if Lender is to
require CGI to make payments under this Section then Lender must make a demand
on CGI to make such payment within ninety (90) days of the later of (1) the date
on which such capital costs are actually incurred by Lender, or (2) the date
on which Lender knows, or should have known, that such capital costs have been
incurred by Lender.
SECTION 2.6 BROKEN FUNDING SURCHARGE. Notwithstanding any provision
contained in any Supplement giving CGI the right to repay any loan prior to the
date it would otherwise be due and payable, CGI agrees that in the event it
repays any fixed rate balance prior to its scheduled due date or prior to the
last day of the fixed rate period applicable thereto (whether such payment is
made voluntarily, as a mandatory prepayment, as a result of an acceleration,
or otherwise), CGI will pay to Lender a surcharge in an amount which would
result in Lender being made whole (on a present value basis) for the actual or
imputed funding losses (including without limitation any loss, cost or expense
incurred by reason of obtaining, liquidating or employing other funds acquired
by Lender to fund or maintain the fixed rate balance being prepaid) incurred by
Lender as a result thereof. Such surcharges will be calculated in accordance
with methodology established by Lender (a copy of which will be made available
to CGI upon request and shall be conclusive absent manifest error).
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SECTION 2.7 COMPUTATION OF INTEREST. Interest on all outstanding balances
on all Supplements shall be computed on the basis of a year consisting of 365
days and the actual number of days elapsed. In computing interest, the day of
Advance shall be included and the day of repayment shall be excluded.
SECTION 2.8 SECURED GUARANTEE. All of the obligations of CGI hereunder,
including without limitation CGI's obligations to repay any and all Advances
hereunder and under any Supplement hereto as and when any repayment is due,
to make payments under Sections 2.3 or 2.5 hereof or to comply with all
non-monetary covenants hereof, shall have the continuing and unlimited Guarantee
(the "Guarantee") of Holdings, secured by a first priority security interest in
all of its property other than the CG Member stock, but including without
limitation a pledge of Holdings' interests in the stock of CGI (the "Holdings
Pledge"). Further, as security for LLC's obligations under any Supplement
hereto, CG Member shall pledge (the "CG Member Pledge") to Lender all of its
right, title and interest in and to 100% of the membership interests in LLC..
ARTICLE 3
CONDITIONS PRECEDENT
SECTION 3.1 THE GUARANTEE. Notwithstanding the insufficiency of the MLA
to cause an Advance without a Supplement hereto relating to a specific loan, it
shall be a condition precedent to the effectiveness of the MLA that Lender
receive: the Guarantee in the form attached hereto as Exhibit "F"; a certified
copy of a resolution of the Board of Directors of Holdings authorizing the
Guarantee; an opinion of counsel to Holdings; and evidence satisfactory to
Lender that Lender has a duly perfected first lien in all security provided
therein; the CG Member Pledge in the form attached hereto as Exhibit G; a
certified copy of a resolution of the Board of Directors of CG Member
authorizing the CG Pledge; an opinion of counsel of CG Member; and evidence
satisfactory to Lender that Lender has a duly perfected first priority Lien in
all security provided therein.
SECTION 3.2 CONDITIONS TO INITIAL SUPPLEMENT. Lender's obligation to
extend credit under the initial Supplement hereto is subject to the conditions
precedent that Lender receive, in form and content satisfactory to Lender and
its counsel in their reasonable determination, each of the following:
(A) THE MLA, ETC. A duly executed copy of the MLA and all Loan
Documents contemplated hereby.
(B) OPINION OF CGI'S COUNSEL. A favorable opinion of legal counsel
to CGI, as to such matters as Lender may reasonably request.
(C) LIEN SEARCHES. The results of a search of the records of the
Secretary of State of the States of Colorado and New Mexico; of such counties in
Colorado and New Mexico as Lender may request; of the records relating to
Effective Financing Statements under the Colorado Central Indexing System in
Colorado and the appropriate statutory provision implementing the Food Security
Act in New Mexico as Lender may request; and the U.S. Patent and Trademark
Office, all relating to the Collateral and all being as of a current date.
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SECTION 3.3 CONDITIONS TO EACH SUPPLEMENT. Lender's obligation to extend
credit under each Supplement, including the initial Supplement, is subject to
the conditions precedent that Lender receive, in form and content satisfactory
to Lender in its reasonable determination, each of the following:
(A) SUPPLEMENT. A duly executed copy of the Supplement and all
Loan Documents contemplated thereby.
(B) EVIDENCE OF AUTHORITY. Such certified board resolutions,
evidence of incumbency, and other evidence that Lender may require that the
Supplement, all Loan Documents executed in connection therewith, and, in the
case of initial Supplement hereto, the MLA and all Loan Documents executed in
connection herewith, have been duly authorized and executed.
(C) RECEIPT OF OFFICER'S CERTIFICATES, TITLE OPINIONS, OPINIONS OF
COUNSEL. All officer's certificates, management letters, legal opinions and the
like relating to compliance with Loan Documents, the absence of default and
other matters called for in the respective Supplement.
(D) FEES AND OTHER CHARGES. All fees and other charges, including
reasonable attorney fees and costs to be paid to Lender or to others on Lender's
behalf, provided for herein or in the Supplement have been paid in full.
(E) EVIDENCE OF PERFECTION. Such evidence as Lender may, in its
reasonable discretion, require that Lender has a duly perfected first priority
lien on all security for CGI's obligations.
SECTION 3.4 CONDITIONS TO EACH ADVANCE. Lender's obligation under each
Supplement to make any Advance to CGI hereunder is subject to the condition that
no Event of Default or event which with the giving of notice and/or the passage
of time would become an Event of Default hereunder (a "Potential Default"),
shall have occurred and is continuing.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 THE MASTER LOAN AGREEMENT. To induce Lender to enter into the
Agreement, CGI represents and warrants to Lender that as of the date of the MLA,
subject to the exceptions set forth on Exhibit B attached hereto (the
"Disclosure Schedule"):
(A) COMPLIANCE. CGI is in compliance with all the terms of the
MLA, and no Event of Default or Potential Default exists hereunder.
(B) ORGANIZATION; POWER; ETC. CGI (i) is duly organized, validly
existing, and in good standing under the laws of its state of incorporation;
(ii) 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; (iii) has all requisite corporate and legal power to own and operate
its assets and to carry on its business and to enter into and perform the Loan
Documents; and (iv) has duly and lawfully obtained
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and maintained all licenses, certificates, permits, authorizations, approvals,
and the like which are material to the conduct of its business or which may
otherwise be required by Law.
(C) DUE AUTHORIZATION; NO VIOLATIONS; ETC. The execution and
delivery by CGI of, and the performance by CGI of its obligations under the Loan
Documents have been duly authorized by all requisite corporate action on the
part of CGI and do not and will not (i) violate any provision of any Law, the
articles of incorporation or bylaws of CGI, or any agreements, indenture,
mortgage, or other instrument to which CGI is a party or by which CGI or any of
its properties is bound or (ii) be in conflict with, result in a breach of, or
constitute with the giving of notice or lapse of time, or both, a default under
any such agreement, indenture, mortgage, or other instrument. No action on the
part of any shareholder of CGI is necessary in connection with the execution and
delivery by CGI of and the performance by CGI of its obligations under the Loan
Documents except such as has been obtained and is in effect.
(D) CONSENTS. No consent, permission, authorization, order, or
license of any governmental authority is necessary in connection with the
execution, delivery, performance, or enforcement of the Loan Documents, except
such as have been obtained and are in full force and effect.
(E) COMPLIANCE WITH LAWS. CGI is in compliance in all material
respects with all federal, state, and local laws, rules, regulations,
ordinances, codes, and orders, any judgment, order or ruling of any court or
governmental organization (collectively, "Laws"), the failure to comply with
which could have a material adverse effect on the condition, financial or
otherwise, operations, properties or business of CGI, or on the ability of CGI
to perform its obligations under the Loan Documents, except as CGI has disclosed
on Exhibit B attached hereto.
(F) ENVIRONMENTAL COMPLIANCE. Without limiting the provisions of
Section 4.1(e) above, all property owned or leased by CGI and all operations
conducted by it are in compliance in all material respects with all Laws
relating to environmental protection, the failure to comply with which could
have a material adverse effect on the condition, financial or otherwise,
operations, properties, or business of CGI, or on the ability of CGI to perform
its obligations under the Loan Documents, except as CGI has disclosed on
Exhibit B attached hereto.
(G) LITIGATION. There are no pending legal, arbitration, or
governmental actions or proceedings to which CGI is a party or to which any of
its property is subject which, if adversely determined, could have a material
adverse effect on the condition, financial or otherwise, operations, properties,
or business of CGI, or on the ability of CGI to perform its obligations under
the Loan Documents, and to the best of CGI's knowledge, no such actions or
proceedings are threatened or contemplated, except as CGI has disclosed on
Exhibit B attached hereto.
(H) TITLE TO PROPERTY. CGI holds good and marketable title to all of
its real property and owns all of its personal property free and clear of any
lien or encumbrance, except the liens and encumbrances specifically identified
on Exhibit C attached hereto ("Existing Liens").
(I) FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE; ETC. All
financial statements submitted to Lender in connection with this MLA fairly and
fully present the financial condition of CGI and the results of CGI's operations
for the periods covered thereby, and are prepared in accordance with GAAP. Since
the dates thereof, there has been no material adverse change in the
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financial condition or operations of CGI. All budgets, projections, feasibility
studies, and other documentation submitted by CGI to Lender are based upon
assumptions that are reasonable and realistic, and as of the date hereof, no
fact has come to light, and no event or transaction has occurred, which would
cause any assumption made therein not to be reasonable or realistic.
(J) PRINCIPAL PLACE OF BUSINESS; RECORDS. The principal place of
business and chief executive office of CGI and the place where the records
required by Section 5.6 hereof are kept is at the address of CGI shown in
Section 10.4 hereof. Records may also be located at CGI's offices at 0000 Xxxxx
Xxxx Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000.
(K) SUBSIDIARIES. CGI has no subsidiaries.
SECTION 4.2 EACH SUPPLEMENT. The execution by CGI of each Supplement
hereto shall constitute a representation and warranty to Lender that:
(A) APPLICATIONS. Each representation and warranty and all
information set forth in any application or other document submitted in
connection with, or to induce Lender to enter into such Supplement, is correct
in all material respects as of the date of the Supplement.
(B) CONFLICTING AGREEMENTS, ETC. The MLA, the Supplements, and
all security and other instruments and documents relating hereto and thereto,
including without limitation the Guarantee (collectively, at any time, the "Loan
Documents"), do not conflict with, or require the consent of any party to, any
other agreement to which CGI is a party or by which it or its property may be
bound or affected, and do not conflict with any provision of CGI's bylaws,
articles of incorporation, or other organizational documents.
(C) COMPLIANCE. CGI is in compliance with all of the terms of the
Loan Documents.
SECTION 4.3 BINDING AGREEMENT. Each of the Loan Documents create legal,
valid, and binding obligations of CGI which are enforceable in accordance with
their terms, except to the extent that enforcement may be limited by applicable
bankruptcy, insolvency, or similar Laws affecting creditors' rights generally.
ARTICLE 5
AFFIRMATIVE COVENANTS
Unless agreed to in writing by Lender, while the MLA and any Supplements
thereto are in effect, whether or not any Advances are outstanding, CGI agrees
to:
SECTION 5.1 CORPORATE EXISTENCE, LICENSES, ETC. (i) Preserve and keep in
full force and effect its existence and good standing, in the jurisdiction of
its incorporation or formation; (ii) qualify and remain qualified to transact
business in all jurisdictions where such qualification is required; and (iii)
obtain and maintain all licenses, certificates, permits, authorizations,
approvals, and the like which are material to the conduct of its business or
required by Law.
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SECTION 5.2 COMPLIANCE WITH LAWS. Comply in all material respects with
all applicable Laws, including, without limitation, all Laws relating to
environmental protection. In addition, CGI agrees to cause all Persons occupying
or present on any of its properties to comply in all material respects with all
environmental protection Laws.
SECTION 5.3 INSURANCE. Maintain insurance with insurance companies or
associations acceptable to Lender in such amounts and covering such risks as are
usually carried by companies engaged in the same or similar business and
similarly situated, and make such increases in the type or amount of coverage as
Lender reasonably may request. All such policies insuring any collateral for
CGI's obligations to Lender shall have mortgagee or lender loss payable clauses
or endorsements in form and content acceptable to Lender in its reasonable
discretion. At Lender's request, all policies or certificates of insurance (or
such other proof of compliance with this subsection as may be satisfactory to
Lender) shall be delivered to Lender. If an Event of Default shall have occurred
and is continuing, all insurance payments for all insured losses shall be paid
to Lender to be applied against the outstanding balances of the Advances, first
with respect to the nature of the insured loss (whether the loss insured against
arose with respect to Advances under any particular Supplement), then in the
order otherwise provided is Section 9.4 hereof.
SECTION 5.4 PROPERTY MAINTENANCE. Maintain all of its property that is
necessary to or useful in the proper conduct of its business in good working
condition, ordinary wear and tear excepted.
SECTION 5.5 BOOKS AND RECORDS. Keep adequate records and books of account
in which complete entries will be made in accordance with GAAP.
SECTION 5.6 INSPECTION. Permit Lender or its agents, upon reasonable
notice and during normal business hours or at such other times as the parties
may agree, to examine its properties, books, and records, and to discuss its
affairs, finances, and accounts with its respective officers, directors,
employees, and independent certified public accountants.
SECTION 5.7 REPORTS AND NOTICES. Furnish to Lender:
(A) ANNUAL FINANCIAL STATEMENTS. As soon as available, but in no
event more than 120 days after the end of each fiscal year of CGI occurring
during the term hereof, annual consolidated financial statements of CGI prepared
in accordance with GAAP. Such financial statements shall: (a) be audited by
Xxxxxx Xxxxxxxx & Co. or other independent certified public accountants selected
by CGI and acceptable to Lender in its reasonable discretion (the "CGI
Accountant"); (b) be accompanied by a report of the CGI Accountant containing
its opinion thereon acceptable to Lender; (c) be prepared in reasonable detail
and in comparative form; and (d) include a balance sheet, a statement of income,
a statement of retained earnings, a statement of cash flows, and all notes and
schedules relating thereto.
(B) INTERIM FINANCIAL STATEMENTS. As soon as available, but in no
event more than 30 days after the end of each quarter, a consolidated balance
sheet of CGI as of the end of such quarter, a consolidated statement of income
for CGI for such period and for the period year to date, and such other interim
statements as Lender may specifically request, all prepared in reasonable detail
and in comparative form in accordance with GAAP.
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(C) ANNUAL BUDGET. Not later than thirty (30) days before the end of
each fiscal year of CGI, an annual budget for the ensuing fiscal year providing
in reasonable detail projections of the revenues and expenses, balance sheet and
capital expenditures and such other budgetary information as is appropriate or
as Lender may request.
(D) NOTICE OF DEFAULT. Promptly after becoming aware thereof, notice
of the occurrence of an Event of Default or a Potential Default.
(E) NOTICE OF NON-ENVIRONMENTAL LITIGATION. Promptly after the
commencement thereof, notice of the commencement of all actions, suits, or
proceedings before any court, arbitrator, or governmental department,
commission, board, bureau, agency, or instrumentality affecting CGI which, if
determined adversely to CGI, could have a material adverse effect on the
financial condition, properties, profits, or operations of CGI.
(F) NOTICE OF ENVIRONMENTAL LITIGATION, ETC. Promptly after receipt
thereof, notice of the receipt of all pleadings, orders, complaints,
indictments, or any other communication alleging a condition that may require
CGI to undertake or to contribute to a cleanup or other response under
environmental Laws, or which seek penalties, damages, injunctive relief, or
criminal sanctions related to alleged violations of such Laws, or which claim
personal injury or property damage to any Person as a result of environmental
factors or conditions.
(G) BYLAWS AND ARTICLES. Promptly after any change in CGI's bylaws
or articles of incorporation (or like documents), copies of all such changes,
certified by CGI's Secretary.
(H) REPORTS AND NOTICES TO OR FROM OTHERS. Concurrent with the
filing of reports or notices to any other Person or received from any other
Person, pursuant to the terms of any credit or similar agreement relating to any
debt; or, to or from any shareholder or the Securities & Exchange Commission;
or, required by or sent from the Pension Benefit Guaranty Corporation or the
U.S. Department of Labor under ERISA; or, in accordance with any contract or any
Laws, provide to Lender a copy of such report or notice.
(I) COMPLIANCE CERTIFICATE. Concurrent with the delivery of each of
the financial statements referred to herein, a Compliance Certificate executed
by the chief financial officer of CGI.
(J) MANAGEMENT LETTERS. Promptly upon receipt thereof, a copy of any
management letter or written report submitted to CGI by independent certified
public accountants with respect to the business, condition (financial or
otherwise), operations, prospects, or properties of CGI.
(K) OTHER INFORMATION. Such other information regarding the
condition or operations, financial or otherwise, of CGI as Lender may from
time to time reasonably request.
SECTION 5.8 PERISHABLE AGRICULTURAL COMMODITIES ACT. Comply in all
material respects with the Perishable Agricultural Commodities Act, as amended
(7 U.S.C. (S)(S) 499(c)(e)) and the regulations promulgated thereunder, so that
the trust for the benefit of all unpaid suppliers or sellers of perishable
agricultural commodities (i) shall arise in CGI's favor in its capacity as a
seller of perishable agricultural commodities and (ii) shall not arise in
connection with its purchase of such commodities.
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ARTICLE 6
NEGATIVE COVENANTS
Unless otherwise agreed to in writing by Lender, while this MLA and any
Supplement hereto is in effect, whether or not any Advance is outstanding, CGI
will not:
SECTION 6.1 BORROWINGS. Create, incur, assume, or allow to exist,
directly or indirectly, any indebtedness or liability for borrowed money
(including, trade or bankers' acceptances), letters of credit, or the deferred
purchase price of property or services (including capitalized leases), except
for: (i) debt to Lender; (ii) accounts payable to trade creditors incurred in
the ordinary course of business; and (iii) current operating liabilities (other
than for borrowed money) incurred in the ordinary course of business; and (iv)
the total current operating lease debt with Colorado National Leasing not to
exceed $665,000.
SECTION 6.2 LIENS. Create, incur, assume, or allow to exist any mortgage,
deed of trust, pledge, lien (including the lien of an attachment, judgment, or
execution), security interest, or other encumbrance of any kind upon any of its
property, real or personal (collectively, "Liens"). The foregoing restrictions
shall not apply to: (i) Liens in favor of Lender; (ii) Liens for taxes,
assessments, or governmental charges that are not past due, or if past due, are
being contested in good faith and by appropriate proceedings, the amount secured
(including interest and penalties) does not exceed $100,000.00, the Liens are
stayed and adequate reserves have been established in accordance with GAAP;
(iii) Liens and deposits under workers' compensation, unemployment insurance,
and security Laws; (iv) Liens and deposits to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), and like
obligations arising in the ordinary course of business as conducted on the date
hereof; (v) Liens imposed by Law in favor of mechanics, warehousemen, and like
Persons that secure obligations that are not past due or if past due, are being
contested in good faith and by appropriate proceedings, the Liens are stayed,
and adequate reserves have been established in accordance with GAAP; and (vi)
easements, rights-of-way, restrictions, and other similar encumbrances which,
in the aggregate, do not materially interfere with the occupation, use, and
enjoyment of the property or assets encumbered thereby in the normal course of
its business or materially impair the value of the property subject thereto
("Permitted Encumbrances").
SECTION 6.3 MERGERS, ACQUISITIONS, ETC. Merge or consolidate with any
other entity or acquire all or a material part 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.
SECTION 6.4 TRANSFER OF ASSETS. Sell, transfer, lease, or otherwise
dispose of any of its assets, except in the ordinary course of business.
SECTION 6.5 LOANS AND INVESTMENTS: Make any advance, loan, extension or
credit, or capital contribution to or investment in, or purchase, any stock,
bonds, notes, debentures, or other securities of any Person, except:
(a) short term operating loans to LLC, not to exceed ONE MILLION FIVE
HUNDRED THOUSAND ($1,500,000) at any one time outstanding;
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(b) readily marketable direct obligations of the United States of
America;
(c) fully insured certificates of deposit with maturities of one year
or less from the date of acquisition of any commercial bank operating in the
United States having capital and surplus in excess of $50,000,000.00; and
(d) commercial paper of a domestic issuer if at the time of purchase
such paper is reported in one of the two highest rating categories of Standard
and Poor's Corporation or Xxxxx'x Investors Service.
(e) Cash Management Investment Bonds offered through the Member
Investment Bond Program of the Farm Credit Bank of Wichita. Such bonds are
uninsured and unsecured general obligations of FCBW and exempt from registration
under Federal Law.
SECTION 6.6 CONTINGENT LIABILITIES. Assume, guarantee, become liable as a
surety, endorse, contingently agree to purchase, or otherwise be or become
liable, directly or indirectly (including, but not limited to, by means of a
maintenance agreement, an asset or stock purchase agreement, or any other
agreement designed to ensure any creditor against loss), for or on account of
the obligation of any Person or entity, except by the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business.
SECTION 6.7 CHANGE IN BUSINESS. Engage in any business activities or
operations substantially different from or unrelated to CGI's present business
activities or operations.
SECTION 6.8 RESTRICTED PAYMENTS: Declare or make any distribution (in
cash, property, or obligations) to its shareholders or return any capital
contribution to its shareholders or set apart any money for a sinking or other
analogous fund for any distribution to its shareholders or for any return of any
capital contribution to its shareholders without prior written consent of
Lender.
SECTION 6.9 TRANSACTIONS WITH AFFILIATES. Enter into any transaction,
including, without limitation, the purchase, sale, or exchange of property or
the rendering of any service, with any Affiliate of CGI except in the ordinary
course of and pursuant to the reasonable requirements of CGI's business and upon
fair and reasonable terms no less favorable to CGI than would be obtained in a
comparable arm's-length transaction with a Person not an Affiliate of CGI.
SECTION 6.10 CAPITAL EXPENDITURE LIMITS. Permit its capital expenditures
(not including Advances under any Supplement hereto and all costs associated
with the construction of CGI's new greenhouses, or costs relating to project
implementations which are required to be capitalized under GAAP) to exceed
$750,000 per year in the aggregate without prior written approval of Lender,
which approval shall not be unreasonably withheld.
ARTICLE 7
FINANCIAL COVENANTS
Unless otherwise agreed to in writing, while this MLA is in effect, CGI
shall:
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SECTION 7.1 CURRENT RATIO. Maintain at all times a Current Ratio (defined
as current assets divided by current liabilities) of not less than 1.5 to 1.
SECTION 7.2 NET WORTH. Maintain at all times a Net Worth (defined in
accordance with GAAP, including the aggregate of all equity and retained
earnings (or losses) greater than $12.5 million plus one-half of net earnings
(losses excluded) on a going-forward basis.
SECTION 7.3 DEBT SERVICE COVERAGE RATIO. Maintain at all times a Debt
Service Coverage Ratio (net cash income divided by debt service (principal and
interest) of greater than 1.25 to 1.
ARTICLE 8
EVENTS OF DEFAULT
Each of the following shall constitute an "Event of Default" under the MLA:
SECTION 8.1 PAYMENT DEFAULT. CGI should fail to make any payment to, or
to purchase any stock in, Lender within five (5) days of the date when due.
SECTION 8.2 REPRESENTATIONS AND WARRANTIES. Any representation or
warranty made or deemed made by CGI herein or in any Supplement, application,
agreement, certificate, or other document related to or furnished in
connection with the MLA or any Supplement, shall prove to have been false or
misleading in any material respect on or as of the date made or deemed made.
SECTION 8.3 CERTAIN AFFIRMATIVE COVENANTS. CGI should fail to perform or
comply with Section 5.8, or any reporting covenant set forth in any Supplement
hereto, and such failure continues for fifteen (15) days after written notice
(if such notice is required) thereof shall have been delivered by Lender to CGI.
SECTION 8.4 OTHER COVENANTS AND AGREEMENTS. CGI or, to the extent
required hereunder, should fail to perform or comply with any other covenant or
agreement contained herein, in any Supplement or in any other Loan Document, or
should use the proceeds of any loan for an unauthorized purpose.
SECTION 8.5 CROSS-DEFAULT. CGI should, after any applicable grace period,
breach or be in default under the terms of any other agreement between CGI and
Lender.
SECTION 8.6 OTHER INDEBTEDNESS. CGI or should fail to pay when due any
indebtedness to any other Person or entity for borrowed money or any long term
obligation for the deferred purchase price of property (including any
capitalized lease), or any other event occurs which, under any agreement or
instrument relating to such indebtedness or obligation, has the effect of
accelerating, or permitting the acceleration of such indebtedness or obligation,
whether or not such indebtedness or obligation is actually accelerated or the
right to accelerate is conditioned on the giving of notice, the passage of time,
or otherwise.
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SECTION 8.7 JUDGMENTS. A judgment decree, or order for the payment of
money, shall be rendered against CGI and either (i) enforcement proceedings
shall have been commenced; (ii) a Lien prohibited under Section 6.2 of the MLA
shall have been obtained; or (iii) such judgment, decree or order shall continue
unsatisfied and in effect for a period of twenty (20) consecutive days without
being vacated, discharged, satisfied, or stayed pending appeal, with adequate
reserves having been established therefor in accordance with GAAP.
SECTION 8.8 INSOLVENCY, ETC. CGI shall: (i) become insolvent or shall
generally not, or shall be unable to, or shall admit in writing its inability
to, pay its debts as they come due; or (ii) suspend its business operations or a
material part thereof or make an assignment for the benefit of creditor; or
(iii) apply for, consent to, or acquiesce in the appointment of a trustee,
receiver, or other custodian for it or any of its property or, in the absence of
such application, consent, or acquiescence, a trustee, receiver, or other
custodian is so appointed; or (iv) commence or have commenced against it any
proceeding under any bankruptcy, reorganization arrangement, readjustment of
debt, dissolution, or liquidation Law of any jurisdiction.
SECTION 8.9 MATERIAL ADVERSE CHANGE. Any material adverse change occurs,
as reasonably determined by Lender, in CGI's financial condition, results of
operations or ability to perform its obligations hereunder or under any Loan
Document.
SECTION 8.10 THE GUARANTEE. Any of the Guarantee, Holdings Pledge or CG
Member Pledge shall, at any time after its execution, cease to be in full force
and effect; or shall be revoked or declared null and void; or the validity or
enforceability of any such agreement shall be contested by Holdings or CG
Member, respectively; or Holdings or CG Member, respectively, shall deny any
further liability or obligation under any such agreement; or any representation
or warranty set forth in any such agreement shall be breached; or Holdings or CG
Member should breach or be in default under the terms of any other agreement
with Lender, or any event of default set forth in Sections 8.7, 8.8 or 8.9
above should occur with respect to Holdings or CG Member, respectively.
ARTICLE 9
REMEDIES
Upon the occurrence and during the continuance of an Event of Default:
SECTION 9.1 TERMINATION, ACCELERATION, ETC. Lender shall have no
obligation to continue to extend credit to CGI and may discontinue doing so at
any time without prior notice. In addition, upon the occurrence and during the
continuance of any Event of Default, Lender may, upon notice to CGI, terminate
any commitment and declare the entire unpaid principal balance of the loans, all
accrued interest thereon, and all other amounts payable under this MLA, all
Supplements, and the other Loan Documents, to be immediately due and payable.
Upon such a declaration, the unpaid principal balance of the loans and all such
other amounts shall become immediately due and payable, without protest,
presentment, demand, or further notice of any kind, all of which are hereby
expressly waived by CGI.
SECTION 9.2 ENFORCEMENT. Lender may proceed to protect, exercise, and
enforce such rights and remedies as may be provided by this MLA, any other Loan
Document or under Law. Each and every one of such rights and remedies shall be
cumulative and may be exercised from time to time,
15
and no failure on the part of Lender to exercise, and no delay in exercising,
any right or remedy shall operate as a waiver thereof, and no single or partial
exercise of any right or remedy shall preclude any other or future exercise
thereof, or the exercise of any other right. Without limiting the foregoing,
Lender may hold and/or set off and apply against CGI's obligations to Lender the
proceeds of any stock in Lender, any cash collateral held by Lender, or any
balances held by Lender for the CGI's account (whether or not such balances are
then due).
SECTION 9.3 APPOINTMENT OF RECEIVER. The Lender shall be entitled to
apply for and obtain, without notice and upon ex parte application, the
appointment of a receiver for the Collateral without regard to CGI's financial
condition or solvency, the adequacy of the Collateral to secure the payment of
the Advances, or the performance of the Loan Documents, or the existence of any
waste to the Collateral. The receiver so appointed shall have all the powers
and authority usually held by receivers and reasonably necessary to accomplish
the purposes herein stated, including without limitation the following: (a) to
take charge of the Collateral and any and all personal property used therewith,
including, but not limited to, rental payments, lease payments, security
deposits, records, contracts, leases, and fixtures used or associated therewith,
if any; (b) maintain and protect the Collateral; (c) pay debts secured by the
Collateral to the extent appropriate, arrange and pay for appropriate insurance
for the receivership property; (d) deposit all sums received in a bank in the
name of the receiver, as receiver, and make payments as required; (e) account to
the court for all sums received, expenditures made and debt service paid; (f)
report to the court from time to time; (g) to the extent Lender advances funds
pursuant to the Loan Documents, if it elects to do so, or from other funds that
may become available, to complete the construction of, repair and maintain
improvements located on the Collateral in the event that the receiver determines
that such completion, repair and maintenance is appropriate and with said
amounts so disbursed to be considered as an additional indebtedness to CGI and
secured by the Mortgage; (h) to borrow funds from Lender or other parties, under
such terms that the receiver determines are reasonable, to the extent that the
receiver determines such funds are necessary for the completion, repair or
maintenance of the Collateral. In case of such borrowing, the receiver may issue
a receivership certificate to the Lender which receivership certificate shall
constitute a lien against the Collateral which is senior and prior to any and
all other liens; (i) to ratify, confirm, renegotiate, and hold all leases,
contracts, or other agreements related to the sale or operation of the
Collateral and to sell said Collateral on such terms and conditions as the
receiver deems appropriate; (j) to use rents and receipts from the Collateral
and from such funds as may be advanced by Lender or other parties for payment of
expenses of the receivership and of the Collateral; (k) to enter into contracts
with third parties to accomplish any of the powers of the receivership,
including hiring; (l) to do any and all acts necessary and convenient or
incidental to the foregoing; (m) to lease or rent the Collateral, if deemed
advisable by the receiver on such terms as are customary; (n) to sell the
Collateral or any portion thereof, in its present condition or upon completion
of construction, upon terms that are customary, and to issue as appropriate any
receiver's certificate and to report to the court as appropriate on the status
of the completion of construction and sale. The receiver shall supply the court
a report detailing the status of any sale of the subject property and
disposition of all sale proceeds; and (o) if the receiver deems appropriate, the
receiver may make changes in the plans and specifications, work, or materials as
it may deem appropriate, and to enter into, modify or terminate any contractual
arrangements as deemed appropriate.
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SECTION 9.4 APPLICATION OF FUNDS. Lender will apply all payments received
by it to CGI's obligations to Lender first to costs (including Lender's
reasonable attorney fees), then to interest, and then to principal, and any
remaining sums to be paid to other Persons as their interests may appear.
SECTION 9.5 DEFAULT INTEREST RATE. In addition to the rights and remedies
set forth above: (i) if CGI fails to purchase any stock in Lender when required,
subject to Sections 2.3 or 2.5 hereof, or fails to make any payment to Lender
when due, then at Lender's option in each instance, such obligation or payment
shall bear interest at four percent (4%) per annum in excess of the applicable
interest rate; and (ii) after the maturity of any loan, whether by reason of
acceleration or otherwise, the unpaid balance of the loan shall automatically
bear interest at four percent (4%) per annum in excess of the rates that would
otherwise be in effect on such loan. All interest provided for herein shall be
payable on demand and shall be calculated from the date such payment was due to
the date paid on the basis of a year consisting of 365 days.
ARTICLE 10
MISCELLANEOUS
SECTION 10.1 COMPLETE AGREEMENT; AMENDMENTS. This MLA, all Supplements,
and all other instruments and documents contemplated hereby and thereby, are
intended by the parties to be a complete and final expression of their
agreement. No amendment, modification or waiver of any provision hereof or
thereof, and no consent to any departure by CGI herefrom or therefrom, shall be
effective against Lender unless approved by Lender and contained in a writing
signed by or on behalf of Lender, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. In the event this MLA is amended or restated, each such amendment or
restatement shall be applicable to all Supplements hereto to the extent there is
no direct conflict with any such Supplement.
SECTION 10.2 OTHER TYPES OF CREDIT. From time to time, Lender and CGI may
wish to make other credit accommodations for the account of CGI. In the event
the parties desire to do so under the terms of this MLA, such extensions of
credit may be set forth in any Supplement hereto and this MLA shall be
applicable thereto.
SECTION 10.3 APPLICABLE LAW. Except to the extent governed by applicable
Federal Law, this MLA and each Supplement shall be governed by and construed in
accordance with the Laws of the State of Colorado, without reference to choice
of law doctrine.
SECTION 10.4 NOTICES. All notices hereunder shall be in writing and shall
be deemed to be duly given upon delivery if personally delivered or sent by
telegram or facsimile transmission, or three (3) days after mailing if sent by
express mail, certified mail, registered mail, or other courier service
providing a proof of service, to the parties at the following addresses (or such
other address for a party as shall be specific by like notice):
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If to Lender, as follows: If to CGI, as follows:
(a) Agribusiness Finance Group Colorado Greenhouse, Inc.
Xxxxxxxx Xxxxxxx Xxxxxxxxxx 0000 Xxxx Xxxxxx Xxxx 31
Credit Association X.X. Xxx 000
3625 Citadel Dr. S. Xxxx Xxxxxx, XX 00000
X.X. Xxx 0000 FAX: 000-000-0000
Xxxxxxxx Xxxxxxx, XX 00000-0000
FAX: 000-000-0000
(b) Copy to: Farm Credit Bank of Wichita
000 X. Xxxx
Xxxxxxx, XX 00000-0000
FAX: 000-000-0000
SECTION 10.5 TAXES AND EXPENSES. CGI agrees to pay all reasonable
out-of-pocket taxes, costs and expenses (including the fees and expenses of
counsel retained by Lender) incurred by Lender in connection with the
origination, administration, collection, and enforcement of this MLA and the
other Loan Documents, including, without limitation, all costs and expenses
incurred in perfecting, maintaining, determining the priority of, and releasing
any security for CGI's obligations to Lender and any stamp, intangible,
transfer, or like tax payable in connection with this MLA or any other Loan
Document.
SECTION 10.6 ATTORNEY FEES AND COSTS. CGI will pay on demand all costs of
collection and all reasonable attorney fees, costs and expenses incurred or paid
by Lender in enforcing the Loan Documents upon default, whether or not a lawsuit
or foreclosure is commenced, and including, but not limited to, all attorney
fees, costs and expenses (1) incurred in any public trustee or judicial action
to foreclose any Mortgage or Deed of Trust; (2) incurred in any bankruptcy
proceeding, voluntary or involuntary, including , but not limited to, efforts to
modify or vacate any automatic stay or an injunction; and (3) incurred in any
appeals and any post-judgment action or proceedings. CGI will also pay on
demand all costs and expenses in any suit or proceedings in which Lender may be
obliged to defend or protect its interests, including, but not limited to,
reasonable attorney fees, costs and expenses. Any Advances made for these
purposes shall become part of the loan under the respective Supplement, shall be
secured by the Collateral, and shall become immediately due and payable in
accordance with the provisions thereof.
SECTION 10.7 EFFECTIVENESS AND SEVERABILITY. This MLA shall continue in
effect until: (i) all indebtedness and obligations of CGI under this MLA, all
Supplements, and all other Loan Documents shall have been paid or satisfied;
(ii) Lender has no commitment to extend credit to or for the account of CGI
under any Supplements; and (iii) either party sends written notice to the other
terminating this MLA. Any provision of this MLA or any other Loan Document
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
thereof.
SECTION 10.8 SUCCESSORS AND ASSIGNS. This MLA, each Supplement, and the
other Loan Documents shall be binding upon and inure to the benefit of CGI and
Lender and their respective successors
18
and assigns, except that CGI may not assign or transfer its rights or
obligations under this MLA, any Supplement or any other Loan Document without
the prior written consent of Lender.
SECTION 10.9 PARTICIPATIONS. From time to time, Lender may sell to one or
more banks, associations or other financial institutions a participation in one
or more of the loans or other extensions of credit made pursuant to this MLA.
However, no such participation shall relieve Lender of any commitment made to
CGI under any Supplement hereto. In connection with the foregoing, Lender may
disclose information concerning CGI, Holdings, CG Member, and LLC to any
participant or prospective participant, providing that the participant or
prospective participant agrees to keep such information confidential.
Notwithstanding the foregoing, Lender will maintain one Person, which shall be a
bank or association of the Farm Credit System, to which CGI may apply for all
consents, waivers, approvals or other matters requiring the meeting of the minds
of the parties, with the authority to bind all participants to such matters (the
"Servicing Entity"). Lender will, by appropriate notice, inform CGI of the name,
address, telephone number and contact person of the Servicing Entity.
SECTION 10.10 INDEMNIFICATION. CGI hereby indemnifies Lender and each
Affiliate thereof and their respective officers, directors, employees,
attorneys, and agents from, and holds each of them harmless against, any and all
losses, liabilities, claims, damages, penalties, judgments, costs, and expenses
(including attorneys' fees) to which any of them may become subject which
directly or indirectly arise from or relate to (a) the negotiation, execution,
delivery, performance, administration, or enforcement of any of the Loan
Documents, (b) any of the transactions contemplated by the Loan Documents, (c)
any breach by CGI of any representation, warranty, covenant, or other agreement
contained in any of the Loan Documents, (d) the presence, release, threatened
release, disposal, removal, or cleanup of any Hazardous Substance located on,
above, within, or affecting any of the properties or assets of CGI or the
Property , or (e) any investigation, litigation, or other proceedings,
including, without limitation, any threatened investigation, litigation, or
other proceeding relating to any of the foregoing. No Person to be indemnified
under this Section shall be indemnified from and held harmless against any
losses, liabilities, claims, damages, penalties, judgments, costs, and expenses
(including attorneys' fees) arising out of or resulting from the gross
negligence or willful misconduct of the Person to be indemnified.
SECTION 10.11 LIMITATION OF LIABILITY. Neither Lender nor any Affiliate,
officer, director, employee, attorney, agent or participant of Lender shall have
any liability with respect to, and CGI hereby waives, releases, and agrees not
to xxx any of them upon, any claim for any special, indirect, incidental, or
consequential damages suffered or incurred by CGI in connection with, arising
out of, or in any way related to, the MLA or any of the other Loan Documents, or
any of the transactions contemplated by the MLA or any of the other Loan
Documents. CGI hereby waives, releases, and agrees not to xxx Lender or any of
Lender's Affiliates, officers, directors, employees, attorneys, agents, or
participants for punitive damages in respect of any claim in connection with,
arising out of, or in way related to, the MLA or any of the other Loan
Documents, or any of the transactions contemplated by the MLA or any of the
other Loan Documents.
SECTION 10.12 NO DUTY. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by Lender shall have the right to
act exclusively in the interest of Lender and shall have no duty of disclosure,
duty of loyalty, duty of care, or other duty or obligation of any type or nature
whatsoever to CGI or any of CGI's shareholders or any other Person.
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SECTION 10.13 LENDER NOT FIDUCIARY. The relationship between CGI and
Lender is solely that of debtor and creditor, and Lender has no fiduciary or
other special relationship with CGI, and no term or condition of any of the Loan
Documents shall be construed so as to deem the relationship between CGI and
Lender to be other than that of debtor and creditor.
SECTION 10.14 EQUITABLE RELIEF. CGI recognizes that in the event CGI
fails to pay, perform, observe, or discharge any or all of the obligations, any
remedy at law may prove to be inadequate relief to Lender. CGI therefore agrees
that Lender, if Lender so requests, shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
SECTION 10.15 COUNTERPARTS. The MLA may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
SECTION 10.16 CONSTRUCTION. CGI and Lender acknowledge that each of them
has had the benefit of legal counsel of its own choice and has been afforded an
opportunity to review the MLA and the other Loan Documents with its legal
counsel and that the MLA and the other Loan Documents shall be construed as if
jointly drafted by CGI and Lender.
SECTION 10.17 PATRONAGE WAIVER. CGI hereby waives and relinquishes any
and all rights and privileges, directly or indirectly, to receive or be awarded
any patronage refunds or dividends from Lender with respect to any loans made
pursuant to the MLA and any Supplement thereto. However, in the event of any
change in Lender's capitalization bylaws (referenced in Section 2.3 hereof) or
capital adequacy law, rule or regulation (referenced in Section 2.5 hereof)
which would require CGI to increase its capitalization of Lender, CGI may be
entitled to participate in Lender's patronage program as it exists at the time,
to the extent any patronage payments are authorized by Lender's Board of
Directors.
SECTION 10.18 USURY PREEMPTION. Pursuant to 12 U.S.C. (S) 2205, interest
rates on loans made by Lender are not subject to any interest rate limitation
imposed by any state constitution or statute or other Laws, such limitations
being specifically preempted by Federal Law.
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MASTER LOAN AGREEMENT
SIGNATURE PAGE
SECTION 10.19 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, CGI AND LENDER HEREBY IRREVOCABLY AND EXPRESSLY WAIVE ALL RIGHT
TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER BASED
UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
IN WITNESS WHEREOF, the parties have caused this MLA to be executed by
their duly authorized officers as of the date shown above.
COLORADO SPRINGS PRODUCTION
CREDIT ASSOCIATION COLORADO GREENHOUSE, INC.
By: [SIGNATURE ILLEGIBLE] By: /s/ Xx Xxxxxxxxx
------------------------ ------------------------
Title: SR. V.P. - CREDIT Title: CEO
--------------------- ---------------------
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EXHIBIT A
TO
MASTER LOAN AGREEMENT
FOR PERIOD ___________
COLORADO GREENHOUSE, INC.
COMPLIANCE CERTIFICATE
To induce Lender to make and/or continue to make Advances to CGI and to
comply with and demonstrate compliance with the terms, covenants and conditions
of the MLA and all supplements thereto, this financial statement is furnished to
Lender. The undersigned certifies that (i) this statement was prepared from the
books and records of CGI, is in agreement with them, and is correct to the best
of the undersigned's knowledge and belief and (ii) no event has occurred which,
with notice or lapse of time, might become an Event of Default under the MLA or
any Supplement.
This certificate is attached to and made a part of CGI's Annual/Quarterly
report for the period above stated.
Required Actual
-------- ------
Current Ratio 1.5 to 1.0 ______
Net Worth $12.5 million, ______
plus one-half net earnings
Debt Service
Coverage Ratio 1.25 to 1.0 ______
Colorado Greenhouse, Inc.
By: _____________________________
(name)
_____________________________
(title)
_____________________________
(date)
EXHIBIT B TO
MASTER LOAN AGREEMENT
---------------------
by and among
COLORADO GREENHOUSE, INC.
and
COLORADO SPRINGS PRODUCTION CREDIT ASSOCIATION
DISCLOSURE SCHEDULE
-------------------
Section 4.1(f) - Environmental Matters
--------------------------------------
1. Phase I Environmental Site Assessment for East 1/2 of Xxxxxxx
00, Xxxxxxxx 0 Xxxxx, Xxxxx 0 Xxxx, Xxxxxxxx Xxxxxx, Xxx Xxxxxx
prepared by Xxxxxx X. Xxxxxxxx & Associates, Inc. for Colorado
Greenhouse LLC, dated November 20, 1996.
2. [Phase I Environmental Site Assessment for Fort Xxxxxx,
Colorado Facility, prepared by ERM-Rocky Mountain, Inc. for
Colorado Greenhouse, Inc., dated January 17, 1997.]
Section 4.1(g) - Litigation
---------------------------
None
Section 4.1(h) - Intellectual Property
--------------------------------------
Colorado Greenhouse LLC has granted a license to the trademarks
described in the Trademark Security Agreement to Colorado Greenhouse, Inc.
pursuant to that certain Trademark License Agreement dated as of January 24,
1997.
EXHIBIT C TO
MASTER LOAN AGREEMENT
---------------------
by and among
COLORADO GREENHOUSE, INC.
and
COLORADO SPRINGS PRODUCTION CREDIT ASSOCIATION
Liens
-----
None
EXHIBIT D TO
MASTER LOAN AGREEMENT
---------------------
by and among
COLORADO GREENHOUSE, INC.,
and
COLORADO SPRINGS PRODUCTION CREDIT ASSOCIATION
Non-Affiliates
--------------
1. CTI Partners I Limited Liability Company
2. CTI Partners II Limited Liability Company
3. Cogen Technology, Inc.
4. Xxxxxxx Partners
5. Brush Phase I Limited
EXHIBIT E
TO THE
MASTER LOAN AGREEMENT
DELEGATION AND WIRE TRANSFER AUTHORIZATION
To: From:
Colorado Springs Production Credit Colorado Greenhouse, Inc.
Association 0000 Xxxx Xxxxxx Xxxx 31
0000 Xxxxxxx Xx. X Xx. Xxxxxx, XX 00000
Xxxxxxxx Xxxxxxx, XX 00000-0000
Attn:
Farm Credit Bank of Wichita
000 X. Xxxx
Xxxxxxx, XX 00000-0000
In accordance with our borrowing resolutions, the following individuals have
been delegated or are hereby delegated the authority to request, either orally
or in writing, advances and other financial accommodations from Lender under all
loan and other agreements entered into between the parties. (If more space is
needed than provided below, please photocopy this side and include the completed
photocopy as an attachment hereto. Be sure to include all employees who are
authorized to borrow.)
Two signatures are required on all written construction draw requests or, if you
requested orally, confirmation by one of the following:
Xxxxxx Xxxxx /s/ Xxx Xxxxx 000-000-0000
_________________ ____________________ ____________
(Name) (Signature) (Telephone)
Xxxxx Xxxxxxxxxx /s/ Xxxxx Xxxxxxxxxx 000-000-0000
_________________ ____________________ ____________
(Name) (Signature) (Telephone)
Xxxxxx Xxxxxxxxx /s/ Xx Xxxxxxxxx 000-000-0000
_________________ ____________________ ____________
(Name) (Signature) (Telephone)
Xxxxxxx Xxxx /s/ M.B. Xxxx 000-000-0000
_________________ ____________________ ____________
(Name) (Signature) (Telephone)
The total number of authorized employees (including those listed on any
attachments) is 4.
---
The total number of accounts shown on the reverse side hereof or on any
attachments is 2.
---
(including Xxxxxx Xxxxx)
The authorized employees are hereby also delegated the authority to fix rates
and negotiate fees (to the extent such options are provided for in applicable
agreements) and to direct Lender to wire transfer funds to one of the accounts
shown on the attachment hereto. Such authority may be exercised either orally or
in writing. In addition to the above, the authorized employees are hereby
delegated the authority to direct Lender to wire transfer funds to accounts not
shown on the reverse side hereof or on any attachments hereto, whether such
accounts are in our name or the name of a third party (e.g. a creditor). In the
event we desire to wire transfer funds to other accounts, we will submit to
Lender a completed copy of a Special Wire transfer Authorization form signed by
one of the authorized employees. To expedite such requests, we hereby authorize
you to act on any such form received by facsimile or similar transmission.
In the event we desire to make changes in the standing authorizations provided
for herein, we will submit to Lender a revised copy of this form (signed by an
officer or employee of CGI who is authorized to delegate authority by board
resolution). Until actual receipt by Lender of such a form, Lender may continue
to rely on these authorizations.
We understand that Lender may assign to us a personal identification number (or
other security code) for use by the authorized employees, and we agree that we
shall be solely responsible for the security and use of such number (or code).
In addition, we understand that Lender may record some or all of the
telephone conversations, between the authorized employees and Lender regarding
the exercise of any authority contemplated herein and we hereby consent thereto.
Finally, we agree that Lender shall not be liable to us for any improper use by
the authorized employees of the authority contained herein or for acting on any
telephonic or written request made by someone identifying himself or herself as
one of the authorized employees.
/s/ Xx Xxxxxxxxx
By: ___________________________________________
(Authorized Signature-See Board Resolution)
Xxxxxx Xxxxxxxxx
___________________________________________
(Print Authorized Name)
CEO of Colorado Greenhouse, Inc.
___________________________________________
___________________________________________
Note: If more space is needed than provided below, please photocopy this side
and include the completed photocopy as an attachment hereto.
Name of Bank: Colorado National Bank If a correspondent bank is used to route
Location of Bank: Denver the designation bank, complete the
ABA Routing No.: 000000000 following:
Account Name: Colorado Greenhouse
Account No.: 194310731014 Name of Bank:
Special Instructions: Location of Bank:
ABA Routing No.:
********************************** ******************************************
Name of Bank: Norwest Bank Colorado If a correspondent bank is used to route
Location of Bank: Denver the designation bank, complete the
ABA Routing No.: 000000000 following:
Account Name:
Account No.: Name of Bank:
Special Instructions: Location of Bank:
Account to be set up during ABA Routing No.:
Feb. `97
********************************** ******************************************
Name of Bank: If a correspondent bank is used to route
Location of Bank: designation bank, complete the
ABA Routing No.: following:
Account Name:
Account No.: Name of Bank:
Special Instructions: Location of Bank:
ABA Routing No.:
********************************** ******************************************
Name of Bank: If a correspondent bank is used to route
Location of Bank: the designation bank, complete the
ABA Routing No.: following:
Account Name:
Account No.: Name of Bank:
Special Instructions: Location of Bank:
ABA Routing No.:
********************************** ******************************************
EXHIBIT F
TO
MASTER LOAN AGREEMENT
--------------------------------------------------------------------------------
SECURED CONTINUING GUARANTEE OF PAYMENT
BY
COLORADO GREENHOUSE HOLDINGS, INC.
FOR THE BENEFIT OF
COLORADO SPRINGS PRODUCTION CREDIT ASSOCIATION
DATED
AS OF
JANUARY 24, 1997.
--------------------------------------------------------------------------------
SECURED CONTINUING GUARANTEE OF PAYMENT
THIS GUARANTEE OF PAYMENT (this "Guarantee") is executed as of the 24th day
of January, 1997 by Colorado Greenhouse Holdings, Inc. (hereinafter referred
to as the "Guarantor") in favor of Colorado Springs Production Credit
Association (hereinafter referred to as "Lender").
BACKGROUND
Colorado Greenhouse, Inc. (the "Borrower") has obtained or may desire at
some point in time and/or from time to time to obtain loans, advances and other
financial accommodations from Lender. Owing to Borrower's financial condition
and/or other factors, Lender is not willing to extend or continue to extend
credit to the Borrower without the guarantee of the Guarantor. The Borrower is a
wholly-owned subsidiary of the Guarantor and the Guarantor has a financial
interest in the Borrower and is expecting to benefit from such credit, and
therefore the Guarantor is willing to furnish that guarantee in order to induce
Lender to extend or to continue to extend credit to the Borrower.
NOW, THEREFORE, in order to induce Lender to extend credit to the Borrower
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Guarantor agrees as follows:
SECTION 1 GUARANTEE. The Guarantor hereby unconditionally and irrevocably
guarantees to Lender the punctual payment when due, whether at stated maturity,
by acceleration or otherwise, of all indebtedness, obligations and liabilities,
including without limitation all non-monetary covenants and other obligations,
of the Borrower to Lender, whether now existing or hereafter incurred, including
but not limited to those under or arising out of or in connection with any
loans, advances, acceptances, letters of credit, indemnities, foreign exchange
contracts or any other kind of contract or agreement under which the Borrower
may be indebted to Lender in any manner, whether for principal, inter est, fees,
surcharges, expenses or otherwise. For ease of reference: (i) all such
indebtedness, obligations and liabilities shall hereinafter be collectively
referred to as the "Guaranteed Obligations"; and (ii) all instruments, documents
and agreements evidencing or relating to the Guaranteed Obligations (including
all loan agreements, promissory notes, reimbursement agreements, security
agreements, mortgages and deeds of trust) shall hereinafter collectively be
referred to as the "Loan Documents."
SECTION 2 SECURITY AGREEMENT. To secure the payment or performance of all
Guaranteed Obligations, the hereby grants to Lender a continuing security
interest in and to the following property and interests in property of the
Guarantor, whether now owned or existing or hereafter acquired or arising and
wheresoever located: all accounts, inventory, equipment, fixtures, farm
products, general intangibles, chattel paper, instruments, documents,
intellectual property, and all accessions to, substitutions for, and all
replacements, products and proceeds of the foregoing, all books and records
(including without limitation customer lists, credit files, computer programs,
printouts, data whether stored electronically or otherwise, and other computer
materials and records) pertaining to the foregoing, and all insurance policies
insuring the above collateral. Without limiting any of the foregoing, Guarantor
also (i) grants to Lender a continuing security interest in and to and a pledge
of all its interests in (as more specifically set forth in the "Pledge
Agreement" of even date herewith) the Guarantor's interests in Borrower, and
(ii) shall cause CG Member, Inc. ("CG Member"), a wholly-owned subsidiary of
Guarantor, also to grant to Lender a pledge and security interest in all its
interest in its subsidiary, Colorado Greenhouse, LLC (the "LLC"). All of the
property and interests of the Guarantor described
in this Section 2 (including, without limitation, the Guarantor's interest in
the Borrower) and CG Member's interest in the LLC shall hereinafter be referred
to as the "Collateral."
SECTION 3 GUARANTY OF PAYMENT; WAIVER OF DEFENSES, ETC. This Guarantee is
a guarantee of payment and not of collection, and of performance of Borrower's
obligations to Lender. The Guarantor acknowledges and agrees that this Guarantee
is an absolute and independent obligation of the Guarantor and therefore waives
any right to require that any action be brought against the Borrower, another
guarantor or any other Person or entity which is liable for all or any part of
the Guaranteed Obligations, or to require that resort be had at any time to any
security for the Guaranteed Obligations or to any right of setoff or similar
right. The Guarantor's obligations hereunder shall be payable on demand and
shall be absolute and unconditional irrespective of (and the Guarantor hereby
expressly waives any defense or claim of discharge based on): (i) the alteration
or modification from time to time (whether material or otherwise); (ii) the
waiver by Lender of the Borrower's compliance with any of the terms and
conditions of the Loan Documents; (iii) the forbearance by Lender from
exercising any right or remedy it may have under the Loan Documents or under
law; (iv) any inability, failure, neglect or omission to obtain, perfect,
maintain, enforce, or realize upon any Collateral for the Guaranteed
Obligations, or to pursue or obtain any deficiency judgment against the Borrower
following any foreclosure of any security interest, mortgage or deed of trust;
(v) the loss or impairment of any Collateral, the subordination or release of
Lender's lien thereon, or the sale, pledge, surrender, exchange or substitution
of any Collateral; (vi) Lender releasing, waiving, discharging, or modifying the
obligations of one or more other guarantors (whether a party hereto or to a
separate agreement with Lender); (vii) the acceptance by Lender of any partial
payment on the Guaranteed Obligations or any Collateral therefor, or Lender
settling, subordinating, compromising, discharging, or releasing the Guaranteed
Obligations or any Collateral therefor; (viii) the unenforceability of the loan
Documents; (ix) any defenses or counterclaims assertable by the Borrower,
including any defense or counterclaim based on failure of consideration, fraud,
statute of frauds, bankruptcy, statute of limitations, lender liability, and
accord and satisfaction; (x) any setoff, counterclaim, recoupment or similar
right assertable by the Borrower, the Guarantor, or other guarantor (whether a
party hereto or to a separate guarantee); or (xi) any other circumstance which
constitutes a legal or equitable discharge of a guarantor or surety. This
Guarantee shall continue in full force and effect until five business days after
written notice of termination shall have been received by Lender.
Notwithstanding the foregoing, such notice of termination shall not be effective
as to any Guaranteed Obligations: (1) existing prior to the effective date of
termination; (2) arising thereafter pursuant to any commitment to extend credit
entered into prior to the effective date of such notice (regardless of whether
Lender has or from time to time acquires a right to suspend or terminate such
commitment owing to the occurrence of a default or otherwise); (3) any
extensions, renewals, or refinancing(s) of any Guaranteed Obligations referred
to in (1) or (2) above made before or after the effective date of termination;
and (4) interest, fees, expenses and other Guaranteed Obligations relating to
any of the foregoing. In addition, no such notice of termination shall in any
manner impair or alter Lender's rights or obligations hereunder with respect to
such Guaranteed Obligations (including under Sections 3 and 6 hereof) or affect
or impair the obligations of any other guarantor (whether a party hereto or to a
separate guarantee).
SECTION 4 SUBORDINATION AND SUBROGATION. The Guarantor hereby agrees that
all indebtedness and other obligations of the Borrower (now existing or
hereafter incurred) to the Guarantor are and shall be subordinated in right of
payment to the prior payment in full by the Borrower of its obligations to
Lender under the Loan Documents. During the existence of a default under the
Loan Documents, no payments by the Borrower shall be accepted by the Guarantor
with respect to such subordinated
2
obligations and, if any such payments are inadvertently received, the same shall
be held in trust and promptly turned over to Lender. The Guarantor hereby waives
all claims, rights or remedies that it may have at law or in equity (including,
without limitation, any law subrogating the Guarantor to the rights of Lender)
to seek contribution, indemnification, or any other form of reimbursement from
the Borrower, any other guarantor, or any other person or entity now or
hereafter primarily or secondarily liable for any obligations of the Guarantor
to Lender for any disbursement made by the Guarantor under or in connection with
this Guarantee. The Guarantor hereby stipulates and agrees that any such
disbursement made by the Guarantor shall be a contribution to the equity capital
of the Borrower.
SECTION 5 RECOVERY OF PAYMENT. If any payment received by Lender and
applied to the Guaranteed Obligations is subsequently set aside, recovered,
rescinded, or required to be returned for any reason (including, without
limitation, the bankruptcy, insolvency or reorganization of the Guarantor),
the Guaranteed Obligations to which such payment was applied shall for the
purposes of this Guarantee and all instruments or documents executed in
connection herewith or securing the Guarantor's obligations hereunder, be deemed
to have continued in existence, and this Guarantee shall be enforceable as to
such Guaranteed Obligations as fully as if such applications had never been
made.
SECTION 6 INFORMATION REGARDING BORROWER; WAIVER OF NOTICES, ETC. The
Guarantor assumes responsibility for keeping fully informed of the financial
condition of the Borrower, its liability hereunder and all other circumstances
affecting the Borrower's ability to pay and perform the Guaranteed Obligations.
The Guarantor agrees that Lender shall have no duty to report to or notify the
Guarantor of: (i) any information which Lender shall receive about the financial
condition of the Borrower (including adverse matters); (ii) the Borrower's
performance under the Loan Documents (including nonpayment or the occurrence of
any other default); (iii) any circumstances bearing on the Borrower's ability
to perform the Guaranteed Obligations; (iv) any increases in the amount of the
Guaranteed Obligations or any renewals, extension or refinancing(s) of any
Guaranteed Obligation; (v) any actions taken by Lender or the Borrower under any
Loan Document; (vi) any matters relating to another guarantor; (vii) any matter
set forth in Section 3 hereof; or (viii) any other matter relating to the
Guaranteed Obligations; and the Guarantor hereby expressly and unconditionally
waives any defense or claim of discharge based on the failure of Lender to
report to notify the Guarantor of any such information. In addition, the
Guarantor hereby acknowledges that it has entered into this Guarantee based
upon its own independent knowledge of or investigation in to the affairs of the
Borrower and any other guarantor (whether a party hereto or to a separate
guarantee) and has not relied in any respect on Lender or any officers,
employees, or agents thereof.
SECTION 7 REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents
and warrants as follows:
(A) ORGANIZATION; POWER; ETC. The Guarantor: (i) is duly organized,
validly existing, and in good standing under the laws of its state of
incorporation or formation; (ii) 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; (iii) has all requisite corporate and legal power
to own and operate its assets and to carry on its business and to enter into and
perform under this Guarantee; and (iv) has duly and lawfully obtained and
maintained all licenses, certificates, permits, authorizations, approvals, and
the like which are material to the conduct of its business or which my be
otherwise required by law, rule, regulation, ordinance, code, order or the like
(collectively, "Laws").
3
(B) DUE AUTHORIZATION; NO VIOLATION; ETC. The execution and delivery
by the Guarantor of, and the performance by the Guarantor of its obligations
under, this Guarantee and all instruments and documents executed in connection
herewith have been duly authorized by all requisite corporate or other action
on the part of the Guarantor and do not and will not: (i) conflict with, or
constitute (with or without the giving of notice and/or the passage of time
and/or the occurrence of any other condition) a default under, any other
agreement to which the Guarantor is a party or by which it or any of its
property may be bound or affected, or with any provision of its certificate of
incorporation, bylaws or other organizational documents; (ii) require the
consent, permission, authorization, order or license of any governmental
authority or of any part to any agreement to which the Guarantor is a party or
by which it or any of its property may be bound or affected, except as has been
obtained and are in full force and effect; (iii) violate any provision of any
law, rule regulation, order, writ judgment, injunction, decree, determination
or aware presently in effect applicable to it; or (iv) result in, or require,
the creation or imposition of any lien, security interest or other charge or
encumbrance upon or with respect to any of its properties now owned or hereafter
acquired, except as created hereunder in favor of Lender).
(C) BINDING AGREEMENT. This Guarantee and each instrument and
document executed in connection herewith is, or when executed and delivered will
be, the legal, valid, and binding obligation of the Guarantor, enforceable in
accordance with its terms, subject only to limitations on enforceability
imposed by applicable bankruptcy, insolvency, reorganization, moratorium, or
similar Laws affecting creditor's rights generally.
(D) LITIGATION. There are no pending legal, arbitration, or
governmental actions or proceedings to which the Guarantor is a party or to
which any of its property is subject which, if adversely determined, could have
a material adverse effect on the condition, financial or otherwise, operations,
properties, or business of the Guarantor, or on the ability of the Guarantor to
perform its obligations hereunder or under any instrument or document executed
in connection herewith, and to the best of the Guarantor's knowledge, no such
actions or proceedings are threatened or contemplated.
(E) TITLE TO PROPERTY. The Guarantor has title to, or valid
leasehold interests in, all of its property, real and personal, (other than any
property disposed of in the ordinary course of business), and none of its
property is subject to any "Lien" (as defined in Section 9(B) hereof), except as
permitted under Section 9(B).
(F) COMPLIANCE WITH LAWS, ENVIRONMENTAL MATTERS, ETC. All of the
properties of the Guarantor and all of its operations are in compliance in all
material respects with all applicable Laws including, without limitation, all
Laws relating to the environment. No property owned or leased by the Guarantor
is being used or, to its knowledge, has been used for the disposal, treatment,
storage, processing or handling of hazardous waste or materials (as defined
under any environment Law) and no investigation, claim, litigation, proceeding,
order, judgment, decree, settlement, lien or the like with respect to any
environmental matter is proposed, threatened, anticipated or in existence with
respect to its properties or operations. In addition, no environmental
contamination or condition currently exists on any property of the Guarantor or,
to its knowledge, any adjoining property, which could delay the sale or other
disposition of, or could have (or already has had) an adverse effect on the
value of, its property.
4
(G) COMPLIANCE WITH GUARANTEE. As of the date hereof, the Guarantor
is operating its business in compliance with all of the covenants set forth in
this Guarantee.
SECTION 8 AFFIRMATIVE COVENANTS. Unless otherwise agreed to in writing by
Lender, while this Guarantee is in effect, whether or not any Guaranteed
Obligations are outstanding hereunder, the Guarantor agrees to:
(A) CORPORATE EXISTENCE, LICENSES, ETC. Preserve and keep in full
force and effect its and its subsidiaries' existence and good standing in the
jurisdiction of their respective incorporation or formation, qualify and remain
qualified to transact business in all jurisdictions where such qualification
is required, and obtain and maintain all licenses, certificates, permits,
authorizations, approvals, and the like which are material to the conduct of its
business or required by Law.
(B) COMPLIANCE WITH LAWS. Comply in all material respects with all
applicable Laws, including, without limitation, all Laws relating to
environmental protection. In addition, the Guarantor agrees to cause all
persons occupying or present on any of its properties to comply in all material
respects with all Laws relating to such properties.
(C) INSURANCE. Maintain insurance with insurance companies or
associations acceptable to Lender in its reasonable discretion in such amounts
and covering such risks as are usually carried by companies engaged in the same
or similar business and similarly situated, and make such increases in the type
or amount of coverage as Lender may reasonably request. All such policies
insuring any collateral for the Guarantor's obligations to Lender shall have
mortgagee or lender loss payable clauses or endorsements in form and content
acceptable to Lender in its reasonable discretion. At Lender's request,
certificates of insurance for all policies (or such other proof of compliance
with this Subsection as may be satisfactory to Lender) shall be delivered to
Lender.
(D) PROPERTY MAINTENANCE. Maintain all of its property that is
necessary to or useful in the proper conduct of its business in good working
condition, ordinary wear and tear excepted.
(E) BOOKS AND RECORDS. Keep adequate records and books of account in
which complete entries will be made in accordance with generally accepted
accounting principles ("GAAP") consistently applied.
(F) INSPECTION. Permit Lender or its agents, upon reasonable notice
and during normal business hours or at such other times as the parties may
agree, to examine its properties, books, and records, and to discuss its
affairs, finances, and accounts, with its respective officers, directors,
employees, and independent certified public accountants.
(G) REPORTS AND NOTICES. Furnish to Lender:
(I) ANNUAL FINANCIAL STATEMENTS. As soon as available, but in no
event more than 120 days after the end of each fiscal year of the Guarantor
occurring during the term hereof, the consolidated annual financial statements
of the Guarantor and its consolidated subsidiaries prepared in accordance with
GAAP consistently applied. Such financial statements shall: (a) be audited by
Xxxxxx Xxxxxxxx & Co. or such other independent certified public accountant
selected by the Guarantor and acceptable to Lender, in its reasonable
discretion; (b) be accompanied by a report of such
5
accountant containing an opinion thereon acceptable to Lender; (c) be prepared
in reasonable detail and in comparative form; and (d) include a balance sheet, a
statement of income, a statement of retain ed earnings, a statement of cash
flows, and all notes and schedules relating thereto.
(II) INTERIM FINANCIAL STATEMENTS. As soon as available, but in no
event more than 30 days after the end of each quarter, a consolidated balance
sheet of Guarantor as of the end of such quarter, a consolidated statement of
income for Guarantor and its consolidated subsidiaries for such period and for
the period year to date, and such other interim statements as Lender may
specifically request, all prepared in reasonable detail and in comparative
form in accordance with GAAP.
(III) NOTICE OF DEFAULT. Promptly after becoming aware thereof,
notice of the breach of any covenant contained in this Guarantee or any
instrument or document executed in connection herewith.
(IV) NOTICE OF NON-ENVIRONMENTAL LITIGATION. Promptly after the
commencement thereof, notice of the commencement of all actions, suits, or
proceedings before any court, arbitrator, or governmental department,
commission, board, bureau, agency, or instrumentality affecting the Guarantor
which, if determined adversely to the Guarantor, could have a material adverse
effect on the financial condition, properties, profits, or operations of the
Guarantor.
(V) NOTICE OF ENVIRONMENTAL LITIGATION, ETC. Promptly after receipt
thereof, notice of the receipt of all pleadings, orders, complaints,
indictments, or any other communication alleging a condition that may require
the Guarantor to undertake or to contribute to a cleanup or other response under
environmental Laws, or which seek penalties, damages, injunctive relief, or
criminal sanctions related to alleged violations of such Laws, or which claim
personal injury or property damage to any person as a result of environmental
factors or conditions.
(VI) OTHER INFORMATION. Such other information regarding the
condition or operations, financial or otherwise, of the Guarantor as Lender may
from time to time reasonably request.
SECTION 9 NEGATIVE COVENANTS. Unless otherwise agreed to in writing by
Lender, while this Guarantee is in effect, whether or not any Guaranteed
Obligations are outstanding, the Guarantor will not:
(A) BORROWINGS. Create, incur, assume, or allow to exist, directly
or indirectly, any indebtedness or liability for borrowed money (including trade
or bankers' acceptances), letters of credit, or the deferred purchase price of
property or services (including capitalized leases), except for: (i) debt to
Lender; (ii) accounts payable to trade creditors incurred in the ordinary course
of business; and (iii) current operating liabilities (other than for borrowed
money) incurred in the ordinary course of business.
(B) LIENS. Create, incur, assume, or allow to exist any mortgage,
deed of trust, pledge, lien (including the lien of an attachment, judgment,
or execution), security interest, or other encumbrance of any kind upon any of
its property, real or personal (collectively, "Liens"). The foregoing
restrictions shall not apply to: (i) Liens in favor of Lender; (ii) Liens for
taxes, assessments, or governmental charges that are not past due, or if past
due, are being contested in good faith and
6
by appropriate proceedings, the amount secured (including interest and
penalties) does not exceed $100,000.00, the Liens are stayed and adequate
reserves have been established in accordance with GAAP; (iii) pledges and
deposits under workers' compensation, unemployment insurance, and social
security Laws; (iv) pledges and deposits to secure the performance of bids,
tenders, contracts (other than contracts for the payment of money), and like
obligations arising in the ordinary course of business as conducted on the date
hereof; (v) Liens imposed by Law in favor of mechanics, material suppliers,
warehouses, and like persons that secure obligations that are not past due, or
if past due, are being contested in good faith and by appropriate proceedings,
the Liens are stayed, and adequate reserves have been established in accordance
with GAAP; and (vi) easements, rights-of-way, restrictions, and other similar
encumbrances which, in the aggregate, do not materially interfere with the
Company's occupation, use, and enjoyment of the property or assets encumbered
thereby or materially impair the value of the property subject thereto.
(C) MERGERS, ACQUISITIONS, ETC. Without the prior written consent of
Lender, which consent shall not be unreasonably withheld, merge or consolidate
with any other entity or acquire all or a material part 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; provided, however, that no prior consent shall be necessary if
prior to undertaking any of the above actions Guarantor shall have delivered to
Lender and Lender shall not have objected within fifteen (15) days of receipt of
notice to a certificate delivered by notice pursuant to Section 11 hereof from
the chief executive officer or chief financial officer of Guarantor to the
effect that: (i) prior to and immediately after giving effect to such
transaction, no Event of Default shall exist under any Loan Document; and (ii)
immediately after giving effect to such transaction, the tangible net worth and
the ratio of total capitalization to indebtedness (calculated in accordance with
GAAP) of Guarantor, or any successor entity into which Guarantor is merged,
shall not be less than that of the Guarantor immediately prior to such
transaction.
(D) TRANSFER OF ASSETS. Sell, transfer, lease, or otherwise dispose
of any of its assets, except in the ordinary course of business.
(E) LOANS AND INVESTMENTS. Make any loan or advance to, or make any
investment in, or make any capital contribution to, or purchase or make any
commitment to purchase any stocks, bonds, notes or other securities of, any
person or entity, except for: (i) loans to or investments in Colorado
Greenhouse, Inc. or Colorado Greenhouse, LLC, or other subsidiaries of Guarantor
permitted hereunder, (ii) securities or deposits issued or fully insured as to
payment by the United States of America or any agency thereof; and (iii) stock
in, or obligations of, Lender.
(F) CONTINGENT LIABILITIES. Assume, guarantee, become liable as a
surety, endorse, contingently agree to purchase, or otherwise be or become
liable, directly or indirectly (including, but not limited to, by means of a
maintenance agreement, an asset or stock purchase agreement, or any other
agreement designed to ensure any creditor against loss), for or on account of
the obligation of any person or entity, except by the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of the Guarantor's business.
(G) CHANGE IN BUSINESS. Engage in any business activities or
operations substantially different from or unrelated to the Guarantor's present
business activities or operations.
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SECTION 10 EXPENSES. In the event Lender employs counsel to protect or
enforce its rights hereunder against the Guarantor, all reasonable attorneys'
fees arising from such services and all out-of-pocket expenses, costs, and
charges in any way or respect arising in connection therewith or relating
thereto shall be paid by such Guarantor.
SECTION 11 NOTICES. All notices provided for herein shall be writing
(including facsimile) and shall be deemed to be duly given upon delivery if
personally delivered or sent by telegram or facsimile transmission or three days
after mailing if sent by express mail, certified mail, registered mail or other
delivery service providing a return receipt therefor, to the following addresses
or facsimile numbers or to such other address or facsimile number as either
party may specify by notice to the other: (a) If to Lender, to Colorado Springs
Production Credit Association, 0000 Xxxxxxx Xxxxx Xxxxx, X.X. Xxx 0000, Xxxxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000, Facsimile No. (000) 000-0000; and (b) if to the
Guarantor, to Colorado Greenhouse Holdings, Inc., 0000 Xxxx Xxxxxx Xxxx 00,
X.X. Xxx 000, Xxxx Xxxxxx, Xxxxxxxx 00000, Facsimile No. (000) 000-0000.
SECTION 12 TERM OF AGREEMENT. This Agreement and all guarantees,
covenants and agreements of the Guarantor contained herein shall continue in
full force and effect and shall not be discharged until such time as all of
the Guaranteed Obligations shall be paid or otherwise discharged in full.
SECTION 13 AMENDMENTS, ETC. This writing is intended by the parties as a
final expression of their agreement and is also intended as a complete and
exclusive statement of the terms of that agreement. No amendment or waiver of
any provision of this Guarantee nor consent to any departure by the Guarantor
herefrom shall be effective unless the same shall be in writing and signed by
Lender, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 14 NO WAIVER; REMEDIES. No failure on the part of Lender to
exercise, and no delay in exercising, any right hereunder shall operate as
waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right.
SECTION 15 GOVERNING LAW. Except to the extent governed by applicable
Federal law, this Guarantee shall be governed by and construed in accordance
with the laws of the State of Colorado, without reference to choice of Law
doctrine.
SECTION 16 NOTICE OF ACCEPTANCE. The Guarantor hereby waives notice of
acceptance hereof.
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SECURED CONTINUING GUARANTEE OF PAYMENT
SIGNATURE PAGE
SECTION 17 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, GUARANTOR AND LENDER HEREBY IRREVOCABLY AND EXPRESSLY WAIVE ALL
RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTER CLAIM (WHETHER
BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF
THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY.
IN WITNESS WHEREOF, the Guarantor has caused this Secured Continuing
Guarantee of Payment to be executed by its duly authorized officer as of the
date shown above.
COLORADO GREENHOUSE HOLDINGS,
INC.
By: /s/ Xxxxxx Xxxxxxxxx
---------------------------
Title: Chief Executive Officer
------------------------
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