Exhibit 10.31
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PLEDGE AGREEMENT
BY
COLORADO GREENHOUSE HOLDINGS, INC.
FOR THE BENEFIT OF
COLORADO SPRINGS PRODUCTION CREDIT ASSOCIATION
DATED
AS OF
JANUARY 24, 1997.
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PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement"), dated as of the 24th day of
January, 1997, is made by Colorado Greenhouse Holdings, Inc. ("Grantor") in
favor of Colorado Springs Production Credit Association ("Secured Party").
BACKGROUND
From time to time, Secured Party may make loans and extend other types of
credit to or for the account of Colorado Greenhouse, Inc. ("CGI"), a wholly-
owned subsidiary of Grantor. In order to induce Secured Party to do so, the
Grantor has furnished to Secured Party or is, simultaneously herewith,
furnishing to Secured Party, a continuing guarantee of payment (such guarantee,
as amended, supplemented or restated from time to time shall hereinafter be
referred to as the "Guarantee"). In order to secure the Grantor's obligations
under the Guarantee, the Grantor is entering into this Agreement.
AGREEMENT
NOW, THEREFORE, in order to induce Secured Party to extend credit to the
Borrower, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledge, Grantor hereby represents,
warrants, covenants, agrees and pledges as follows:
SECTION 1 DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement, the following terms shall have the following meanings:
CERTIFICATES shall mean all certificates, instruments or other documents
now or hereafter representing or evidencing any Pledged Securities.
GUARANTEE shall mean the Secured Continuing Guarantee granted by Guarantor
to Secured Party of even date herewith.
LOAN DOCUMENTS shall have the meaning given to that term in the Guarantee.
OBLIGATIONS shall mean (1) the payment and performance of all obligations
of the Grantor under the Guarantee and this Agreement, whether now existing
or hereafter arising; and (2) the payment of all other indebtedness and the
performance of all other obligations of the Grantor to Secured Party of
every type and description, whether now existing or hereafter arising,
fixed or contingent, as primary obligor or as guarantor or surety, acquired
directly or by assignment or otherwise, or liquidated or unliquidated.
PLEDGED COLLATERAL shall mean the Pledged Securities, the Certificates
representing or evidencing the same, all right, title, interest,
privileges, benefits, and preferences appertaining or incidental to such
Pledged Securities, and any and all proceeds and products of the Pledged
Securities (including, without limitation, all dividends, distributions,
collections, redemption payments, liquidation payments, cash, and
instruments).
PLEDGED SECURITIES shall mean: (1) any and all shares of capital stock of
CGI now owned or hereafter acquired by the Grantor; (2) any and all
warrants, options or other rights to subscribe to or acquire any additional
capital stock or member interests in such entity or entities; and (3) any
and all securities, certificates, agreements, instruments or other
documents now or hereafter issued in substitution, exchange or replacement
of any of the foregoing or with respect thereto.
SECTION 2 CREATION OF SECURITY INTEREST.
(A) PLEDGE OF PLEDGED COLLATERAL. As security for the Obligations,
Grantor hereby pledges and grants to Secured Party a continuing security
interest in and to all of its capital stock in CGI. Grantor shall cause to be
noted in the records of CGI, which records the holders of capital stock of CGI,
the existence of this Agreement and Secured Party's security interest in the CGI
stock.
(B) DELIVERY OF CERTAIN PLEDGED COLLATERAL. Simultaneously with the
execution here of, Grantor shall cause to be pledged and delivered to Secured
Party all Certificates evidencing the capital stock of the Borrower. All such
Certificates (as well as any Certificates delivered to Secured Party pursuant to
the terms of this Agreement after the date hereof) shall be in suitable form for
transfer by delivery, or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to
Secured Party in its reasonable discretion. Secured Party shall hold all
Certificates pursuant to this Agreement unless and until released in accordance
with Section 11 of this Agreement.
(C) NO MERGER. In the event that Secured Party acquires the ownership
of the Pledged Collateral by exercise of the rights granted herein or otherwise,
such ownership interest shall not merge with the Secured Obligations, and
security interests granted in the Loan Documents shall remain in full force,
effectiveness and enforceability at the option of the Secured Party.
SECTION 3 FURTHER ASSURANCES. Grantor agrees that at any time, from time
to time, and at the expense of Grantor, Grantor will promptly execute, deliver,
and file or record such financing statements, instruments and documents, and
will take all further actions, that Secured Party may reasonably require in
order to: (a) perfect and protect any pledge or security interest granted
hereby; (b) enable Secured Party to exercise and enforce Secured Party's rights
and remedies hereunder; and (c) preserve, protect, and maintain the Pledged
Collateral and the value thereof, including, without limitation, paying all
taxes, assessments, and other charges imposed on or relating to the Pledged
Collateral.
SECTION 4 GRANTOR'S VOTING RIGHTS; DIVIDENDS; ETC. So long as no "Event
of Default" (as such term is defined in any Loan Document) occurs and remains
continuing:
(A) VOTING RIGHTS. Grantor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Pledged Securities, or any
part thereof, for any purpose not inconsistent with the terms of this Agreement,
the Guarantee or the Loan Documents.
(B) DIVIDEND AND DISTRIBUTION RIGHTS. Grantor shall be entitled to
receive and to retain and use any and all dividends or distributions and all
cash or other property paid, payable or otherwise paid or distributed in respect
of the Pledged Securities; PROVIDED, HOWEVER, that any and all such dividends or
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distributions received in the form of capital stock, partnership units, and the
like
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shall be delivered to the Secured Party to hold as Pledged Collateral and shall,
if received by Grantor, be received in trust for the benefit of Secured Party,
be segregated from the other property of the Grantor, and be forthwith delivered
to the Secured Party as Pledged Collateral in the same form as so received (with
any necessary endorsements).
SECTION 5 GRANTOR'S RIGHTS DURING EVENT OF DEFAULT. When an Event of
Default has occurred and is continuing:
(A) VOTING, DIVIDEND, AND DISTRIBUTION RIGHTS. At the option of
Secured Party, all rights of Grantor to exercise the voting and other consensual
rights which would otherwise be entitled to exercise pursuant to Section 4(A)
above and to receive the dividends and distributions which it would otherwise be
authorized to receive and retain pursuant to Section 4(B) above, shall cease,
and all such rights shall thereupon become vested in Secured Party who shall
thereupon have the sole right to exercise such voting and other consensual
rights and to receive and to hold as Pledged Collateral such dividends and
distributions. Secured Party shall, after deciding to exercise voting rights
with respect to the Pledged Collateral, give notice thereof to Grantor;
PROVIDED, HOWEVER, that: (1) neither the giving of such notice nor the receipt
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thereof by Grantor shall be a condition to exercise of any rights of Secured
Party hereunder; and (2) Secured Party shall incur no liability for failing to
give such notice.
(B) DIVIDENDS AND DISTRIBUTIONS HELD IN TRUST. All dividends and
other distributions which are received by Grantor contrary to the provisions of
this Agreement shall be received in trust for the benefit of Secured Party,
shall be segregated from other funds of Grantor, and shall be paid over to
Secured Party as Pledged Collateral in the same form as so received (with any
necessary endorsements).
SECTION 6 IRREVOCABLE PROXY. Grantor hereby revokes all previous proxies
with regard to the Pledged Securities and appoints Secured Party as its
proxyholder to attend and vote at any and all meetings of the shareholders,
partners or other owners of the Companies held on or after the date of the
giving of this proxy and prior to the termination of this proxy, and to execute
any and all written consents of shareholders, partners or other owners of the
Companies executed on or after the date of the giving of this proxy and prior to
the termination of this proxy, with the same effect as if Grantor had personally
attended the meetings or had personally voted the Pledged Securities or had
personally signed the written consents; PROVIDED, HOWEVER, that the proxyholder
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shall have rights hereunder only upon the occurrence and during the continuance
of an Event of Default and only in the event the Secured Party, as proxyholder,
has decided to exercise voting rights with respect to the Pledged Securities or
any of them. Grantor hereby authorizes Secured Party to substitute another
person as the proxyholder and, upon the occurrence or during the continuance of
any Event of Default, hereby authorizes and directs the proxyholder to file this
proxy and the substitution instrument with the secretary (or other authorized
official) of the Companies. This proxy is coupled with an interest and is
irrevocable until such time as this Agreement is released in accordance with
Section 11 hereof.
SECTION 7 TRANSFERS AND OTHER LIENS. Grantor agrees that it will not:
(A) sell, assign, exchange, transfer or otherwise dispose of, or contract to
sell, assign, exchange, transfer or otherwise dispose of, or grant any option
with respect to, any of the Pledged Collateral; (B) create or permit to exist
any lien or right of others upon or with respect to any of the Pledged
Collateral; or (C) take any
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action with respect to the Pledged Collateral which is inconsistent with the
provisions or purposes of this Agreement or any Loan Document.
SECTION 8 SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Grantor hereby
irrevocably appoints the Secured Party as Grantor's attorney-in-fact, with full
authority in the place and stead of Grantor, and in the name of Grantor, or
otherwise, from time to time, in Secured Party's sole and absolute discretion,
to do any of the following acts or things if Grantor fails to do so promptly
after demand by the Secured Party: (A) to do all acts and things (including
without limitation, the execution, filing and/or recording of all financing
statements and other documents) necessary or advisable to perfect and continue
perfected the security interests created by this Agreement and to preserve,
maintain, and protect the Pledged Collateral, including, without limitation, the
authority to pay, purchase, contest, and compromise any lien or right of others
which, in the reasonable judgment of Secured Party, appears to be prior or
superior to Secured Party's security interests; (B) to do any and every act
which Grantor is obligated to do under this Agreement; and (C) to endorse and
transfer the Pledged Collateral upon foreclosure by the Secured Party; PROVIDED,
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HOWEVER, that Secured Party shall be under no obligation whatsoever to take any
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of the foregoing actions, and Secured Party shall have no liability or
responsibility for any act (other than Secured Party's own gross negligence or
willful misconduct) or omission taken with respect thereto. Grantor hereby
agrees to repay immediately upon demand all reasonable costs and expenses
incurred or expended by Secured Party in exercising any right or taking any
action under this Agreement, together with interest at a rate per annum equal at
all times to the Prime Rate as defined in the Loan Documents.
SECTION 9 REASONABLE CARE. Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if the Pledged Collateral is accorded treatment
substantially equal to that which Secured Party accords its own property.
Notwithstanding the foregoing and whether or not an Event of Default has
occurred or is continuing, Secured Party shall be under no duty or obligation
to: (A) exercise any voting or other rights with respect to the Pledged
Collateral; (B) make or give notices of default, presentments, demands for
performance, notices of nonperformance or dishonor, protests, notices of protest
or notices of any other nature whatsoever in connection with the Pledged
Collateral on behalf of Grantor or any other person having any interest therein;
(c) ascertain or take action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Pledged; or (D) take any
necessary steps to preserve rights against the Companies or any other person
with respect to any Pledged Collateral. In addition, Secured Party does not
assume and shall not be obligated to perform the obligations of Grantor, if any,
with respect to the Pledged Collateral.
SECTION 10 EVENTS OF DEFAULT AND REMEDIES.
(A) RIGHTS UPON EVENT OF DEFAULT. Upon the occurrence and during the
continuance of an Event of Default, Secured Party shall have, in any
jurisdiction where enforcement is sought, in addition to all other rights and
remedies that Secured Party may have under this Agreement and under applicable
law or in equity, all rights and remedies of a secured party under the Uniform
Commercial Code as exacted in any such jurisdiction, and in addition to the
following rights and remedies, all of which may be exercised with or without
further notice to Grantor:
(1) (a) to notify any issuer of any Pledged Securities, and any
and all other obligors on, or partners, joint ventures or other interested
parties with respect to, any Pledged Collateral,
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that the same has been pledged, and/or that a security interest in the same has
been granted, to Secured Party, and that all dividends, distributions, and other
payments thereon are to be made directly and exclusively to Secured Party, and
that all dividends, distributions, and other payments thereon are to be made
directly and exclusively to Secured Party; (b) to renew, extend, modify, amend,
accelerate, accept partial payments on, make allowances and adjustments and
issue credits with respect to, release, settle, compromise, compound, collect or
otherwise liquidate, on terms acceptable to Secured Party, in whole or in part,
the Pledged Collateral and any amounts owing thereon or any guaranty or security
therefor; (c) to enter into any other agreement relating to or affecting the
Pledged Collateral; and (d) to give all consents, waivers, and ratifications
with respect to the Pledged Collateral and exercise all other rights (including
voting rights), powers and remedies and otherwise act with respect thereto as if
Secured Party were the owner thereof;
(2) to enforce payment and prosecute any action or proceeding
with respect to any and all of the Pledged Collateral and take or bring, in
Secured Party's name or in the name of Grantor, all steps, actions, suits or
proceedings deemed by Secured Party necessary or desirable to effect collection
of or to realize upon the Pledged Collateral;
(3) in accordance with applicable laws, to take possession of any
Pledged Collateral (with or without judicial process) that has not previously
been delivered to Secured Party;
(4) to endorse, in the name of Grantor, all checks, notes,
drafts, money orders, instruments and other evidences of payment relating to the
Pledged Collateral;
(5) to transfer any or all of the Pledged Collateral into the
name of Secured Party or its nominee or nominees; and
(6) in accordance with applicable laws, to foreclose the liens
and security interests created under this Agreement or under any other agreement
relating to the Pledged Collateral by any available judicial procedure or
without judicial process, and to sell, assign or otherwise dispose of the
Pledged Collateral or any part thereof, either at public or private sale or at
any broker's board or securities exchange, in lots or in bulk, for cash, on
credit or for future delivery, or otherwise, with or without representations or
warranties, and upon such terms as shall be acceptable to Secured Party, all at
the sole option of and in the sole discretion of Secured Party.
(B) NOTICE OF SALE. Secured Party shall give Grantor at least five
(5) days' prior written notice of sale of all or any party of the Pledged
Collateral. Any sale of the Pledged Collateral shall be held at such time or
times and at such place or places as Secured Party may determine in the exercise
of its sole and absolute discretion. Secured Party may bid (which bid may be,
in whole or in part, in the form of cancellation of Obligations) and purchase
for the account of Secured Party or any nominee of Secured Party the whole or
any part of the Pledged Collateral. Secured Party shall not be obligated to
make any sale of the Pledged Collateral if it shall determine not to do so
regardless of the fact that notice of sale of the Pledged Collateral may have
been given. Secured Party may, without notice or publication, adjourn the same
from time to time by announcement at the time and place fixed for sale, and such
sale may, without further notice, be made at the time and place to which the
same was so adjourned.
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(C) PRIVATE SALES. Whether or not any of the Pledged Collateral has
been effectively registered under the Securities Act of 1933 or other applicable
laws, Secured Party may, in its sole and absolute discretion, sell all or any
part of the Pledged Collateral at private sale in such manner and under such
circumstances as Secured Party may deem necessary or advisable in order that the
sale may be lawfully conducted. Without limiting the foregoing, Secured Party
may: (1) approach and negotiate with a limited number of potential purchasers;
and (2) restrict the prospective bidders or purchasers to persons who will
represent and agree that they are purchasing the Pledged Collateral for their
own account for investment and not with a view to the distribution or resale
thereof. In the event that any of the Pledged Collateral is sold at private
sale, Grantor agrees that if the Pledged Collateral is sold for a price which
Secured Party in good faith believes to be reasonable, then: (a) the sale shall
be deemed to be commercially reasonable in all respects; (b) Grantor shall not
be entitled to a credit against the Obligations in an amount in excess of the
purchase price (less all expenses contemplated in Subsection (E) hereof); and
(c) Secured Party shall incur no liability or responsibility to Grantor in
connection therewith; notwithstanding the possibility that a substantially
higher price might have been realized at a public sale. Grantor recognizes that
a ready market may not exist for Pledged Collateral which is not regularly
traded on a recognized securities exchange, and that a sale by Secured Party of
any such Pledged Collateral for an amount substantially less than a pro rata
share of the fair market value of the issuer's assets minus liabilities may be
commercially reasonable in a view of the difficulties that may be encountered in
attempting to sell a large amount of Pledged Collateral that is privately
traded.
(D) TITLE OF PURCHASERS. Upon consummation of any sale of Pledged
Collateral pursuant to this Section, Secured Party shall have the right to
assign, transfer, and deliver to the purchaser or purchasers thereof the
Pledged Collateral so sold. Each such purchaser at any such sale shall hold the
Pledged Collateral sold absolutely free from any claim or right on the part of
Grantor, and Grantor hereby waives (to the extent permitted by applicable laws)
all rights of redemption, stay, and appraisal which it now has or may at any
time in the future have under any rule of law or statute now existing or
hereafter enacted. If the sale of all or any part of the Pledged Collateral is
made on credit or for future delivery, Secured Party shall not be required to
apply any portion of the sale price to the Obligations until such amount
actually is received by Secured Party, and any Pledged Collateral so sold may be
retained by Secured Party until the sale price is paid in full by the purchaser
or purchasers thereof. Secured Party shall not incur any liability in case
any such purchaser or purchasers shall fail to pay for the Pledged Collateral so
sold, and, in case of any such failure, the Pledged Collateral may be sold
again upon like notice.
(E) DISPOSITION OF PROCEEDS OF SALE. The net cash proceeds resulting
from the collection, liquidation, sale or other disposition of the Pledged
Collateral shall be applied: (1) first, to the reasonable costs and expenses
(including reasonable attorneys' fees) of collecting, liquidating, selling or
otherwise disposing of the Pledged Collateral including, without limitation, all
costs and expenses of retaking, holding, storing, and preparing the Pledged
Collateral for sale; (2) second, to the satisfaction of all Obligations in such
order and manner as Secured Party in its sole and absolute discretion may
determine; and (3) to whomever shall be entitled thereto.
SECTION 11 RELEASE OF GRANTOR. This Agreement and all obligations of
Grantor hereunder shall be released when all Obligations have been paid in full
in cash or otherwise performed in full and when all Loan Documents have expired
or have otherwise been terminated. Upon such release, Secured Party shall
return all Certificates representing the Pledged Collateral to the Grantor and
shall
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endorse, execute, deliver, record, and file all instruments and documents and do
all other acts and things, reasonably required for the return of the Pledged
Collateral to Grantor and to evidence or document the release of Secured Party's
interests arising under this Agreement, all as requested by, and/or at the
expense of Grantor.
SECTION 12 EVIDENCE OF AUTHORITIES. Grantor hereby consents and agrees
that the issuers of, or obligors on, or the partners or joint ventures with
respect to, the Pledged Collateral, or any registrar or transfer agent or
trustee for any of the Pledged Collateral, shall be entitled to accept the
provisions of this Agreement as conclusive evidence of the right of Secured
Party to effect any transfer or exercise any right hereunder, notwithstanding
any other notice or direction to the contrary heretofore or hereafter given by
Grantor or any other person to such issuers or such obligors or such partners
or joint venturers or to any such registrar or transfer agent or trustee.
SECTION 13 COVENANT NOT TO ISSUE UNCERTIFICATED SECURITIES. Grantor
represents and warrants to Secured Party that all of the capital stock granted
as security hereunder is in certificated form, and covenants to Secured Party
that it will not cause or permit the Companies to issue any capital stock in
uncertificated form or seek to convert all or any part of its existing capital
stock into uncertificated form.
SECTION 14 GOVERNING LAW. Except to the extent governed by applicable
Federal law, this Agreement shall be governed by and construed in accordance
with the laws of the State of Colorado.
IN WITNESS WHEREOF, Grantor has caused this Agreement to be duly executed
as of the date first above written.
THE REMAINDER OF THIS PAGE INTENTIONALLIY LEFT BLANK.
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HOLDINGS PLEDGE AGREEMENT
SIGNATURE PAGE
GRANTOR:
COLORADO GREENHOUSE HOLDINGS, INC.
By: /s/ Xxxxxx Xxxxxxxxx
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Title: Chief Executive Officer
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