EXHIBIT 10.33
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LINE OF CREDIT AGREEMENT
BETWEEN
COLORADO GREENHOUSE, INC.
AND
COLORADO GREENHOUSE, LLC
DATED
AS OF
JANUARY 24, 1997
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LINE OF CREDIT AGREEMENT
THIS LINE OF CREDIT AGREEMENT (sometimes referred to herein as this
"Agreement" or in the Loan Documents as defined by the MLA as the "Line of
Credit") is made and entered into as of this 24th day of January, 1997, by and
between COLORADO GREENHOUSE, INC ("CGI") and COLORADO GREENHOUSE, LLC (the
"Borrower").
SECTION 1. THE LINE. On the terms and conditions set forth herein, CGI
agrees to make Advances to Borrower during the period set forth below in any
aggregate principal amount not to exceed, at any one time outstanding, the
lesser of the "LLC Borrowing Base" (as calculated pursuant to the LLC Borrowing
Base Report attached hereto as Exhibit "A") or ONE MILLION FIVE HUNDRED THOUSAND
DOLLARS ($ 1,500,000) (the "Line"). Within the limits of the Line, Borrower may
borrow, repay and reborrow.
SECTION 2. TERM. The term of the Line shall be from January 21, 1997, up
to and including December 31, 1997, or such later date as CGI may, in its sole
discretion, authorize in writing. Notwithstanding the foregoing, the Line shall
be automatically extended for an additional year unless on or before 90 days
prior to end of term in any year (the "Notification Date"), either party
receives written notice from the other to the contrary. If on or before the
Notification Date, CGI grants a short-term extension of the Line, then the
Notification Date shall be extended for a like period, and in the event neither
party receives written notice from the other to the contrary on or before such
extended Notification Date (or any further extension so granted), then the Line
shall be automatically extended for an additional year as provided above. All
annual extensions shall be measured from, and effective as of, the anniversary
date of the first day of the initial term of the Line. Provided that there
shall be no amounts outstanding hereunder with respect to Advances, interest
thereon or other obligations hereunder, Borrower may, at any time, by written
notice to CGI terminate this Agreement and the commitments hereunder.
SECTION 3. PURPOSE. The purpose of the Line is to finance the operating
needs of the Borrower, and the Borrower agrees to use the proceeds of the Line
for that purpose only.
SECTION 4. AVAILABILITY. Advances under the Line may be made available on
any day that funds for such Advances are available to CGI.
SECTION 5. INTEREST.
(A) ADVANCES. Advances on the Line shall bear interest at the Prime
Rate, minus twenty-five (25) basis points (.25%). Prime Rate shall mean, for any
day, the rate defined as the "prime rate," as published from time to time in the
Eastern Edition of The Wall Street Journal as the average prime lending rate for
seventy-five percent (75%) of the United States' thirty (30) largest commercial
banks, or if The Wall Street Journal shall cease publishing the "prime rate" on
a regular basis, such other regularly published average prime rate application
to such commercial banks as is acceptable to CGI in its reasonable discretion.
(B) PAYMENT AND CALCULATION. Interest shall be payable on the 1st
day of each month beginning on the 1st day of the first month following the
first Advance hereon and shall be
calculated on the number of days each Advance will be outstanding on the basis
of a year consisting of 365 days. In calculating interest, the date each Advance
is made shall be included and the date each Advance is repaid shall be excluded.
(C) DEFAULT RATE. If prior to maturity the Borrower fails to make
any payment, at CGI's option in each instance, such payment shall bear interest
at four percent (4%) per annum in excess of the rate set forth in Subsection (A)
above. After maturity, whether by reason of acceleration or otherwise, the
unpaid principal balance hereunder shall automatically bear interest at four
percent (4%) per annum in excess of the rates that would otherwise be in effect
(the "Default Rate"). All interest provided for in this Subsection 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.
SECTION 6. NOTE. The Borrower's obligation to repay the Advances shall be
evidenced by a promissory note in the form of Promissory Note attached hereto as
Exhibit "B" (the "Note").
SECTION 7. MANNER AND TIME OF PAYMENT. The Borrower promises to repay the
Advances on the first business day following the last day of the term of the
Line ("Maturity Date"), all in accordance with the Note, and to pay interest on
the Advances in accordance with Section 5 above.
SECTION 8. SECURITY. To secure the repayment of all Advances hereunder,
Borrower shall grant a security interest in the property more particularly
described in the Security Agreement of even date herewith, being all of
Borrower's interest in all Accounts, Inventory, Equipment, Fixtures, Farm
Products, General Intangibles, Chattel Paper, Instruments, Documents,
Intellectual Property (including without limitation the Trademarks and Logos
shown on Schedule 3 of the Security Agreement), and all products and proceeds
therefrom (the "Collateral"), subject only to the Trademark License Agreement
between CGI and Borrower.
SECTION 9. CONDITIONS PRECEDENT. CGI's obligation to make the initial
Advance hereunder is subject to satisfaction of each of the following conditions
precedent on or before the date of the initial Advance:
(A) LOAN DOCUMENTS. That CGI receive duly executed originals of the
Agreement, the Note, and all other instruments and documents contemplated hereby
(this Agreement, the Note and such other instruments and documents, if any,
collectively, the "Loan Documents").
(B) AUTHORIZATION. That CGI receive copies of all corporate
documents and proceedings of the Borrower authorizing the execution, delivery,
and performance of the Loan Documents, certified to be true and correct by a
Manager of the Borrower.
(C) APPROVALS. That CGI receive evidence satisfactory to it that
all consents and approvals which are necessary for, or required as a condition
of the validity and enforceability of the Loan Documents have been obtained and
are in full force and effect.
(D) EVENT OF DEFAULT. That no Event of Default (as that term is
defined in Section 13 hereof) exists, and that there has occurred no event which
with the passage of time or the giving of notice, or both, could become an Event
of Default ("Potential Default").
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(E) CONTINUING REPRESENTATIONS AND WARRANTIES. That the
representations and warranties of the Borrower contained in this Agreement be
true and correct on and as of the date of the initial Advance as though made on
and as of such date.
SECTION 10. REPRESENTATIONS AND WARRANTIES. To induce CGI to make
Advances hereunder, and recognizing that CGI is relying hereon, the Borrower
represents and warrants as follows:
(A) ORGANIZATION; POWER; ETC. The Borrower (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 and
maintained all licenses, certificates, permits, authorizations, approvals, and
the like which are material to the conduct of its business or which may be
otherwise required by law.
(B) DUE AUTHORIZATION; NO VIOLATIONS; ETC. The execution and
delivery by the Borrower of, and the performance by the Borrower of its
obligations under, the Loan Documents have been duly authorized by all requisite
limited liability company action on the part of the Borrower and do not and will
not (i) violate any provision of any law, rule or regulation, any judgment,
order or ruling of any court or governmental agency, the articles of
organization or operating agreement of the Borrower, or any agreement,
indenture, mortgage, or other instruments to which the Borrower is a party or by
which the Borrower or any of its properties is bound, including without
limitation any of the operation and management agreements under which it
occupies, operates and manages any of its greenhouse facilities, 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 member of the Borrower is
necessary in connection with the execution and delivery by the Borrower of and
the performance by the Borrower of its obligations under the Loan Documents.
(C) 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.
(D) BINDING AGREEMENT. Each of the Loan Documents is, or when
executed and delivered will be, the legal, valid, and binding obligation of
the Borrower, enforceable in accordance with its terms, subject only to
limitations on enforceability imposed by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting creditors' rights
generally.
(E) COMPLIANCE WITH LAWS. The Borrower is in compliance in all
material respects with all federal, state, and local laws, rules, regulations,
ordinances, codes, and orders (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 the Borrower, or on the
ability of the Borrower to perform its obligations under the Loan Documents,
except as the Borrower has disclosed on Schedule 1 attached hereto.
(F) ENVIRONMENTAL COMPLIANCE. Without limiting the provisions of
Subsection (E) above, all property owned or leased by the Borrower and all
operations conducted by it are in com-
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pliance 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 the Borrower, or on the ability of the Borrower to perform its
obligations under the Loan Documents, except as the Borrower has disclosed on
Schedule 1 attached hereto.
(G) LITIGATION. There are no pending legal, arbitration or
governmental actions or proceedings to which the Borrower 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 Borrower, or on the ability of the Borrower to
perform its obligations under the Loan Documents, and to the best of the
Borrower's knowledge, no such actions or proceedings are threatened or
contemplated, except as the Borrower has disclosed on Schedule 1 attached
hereto.
(H) TITLE TO PROPERTY. The Borrower has good and marketable title
to all of the property reflected in the financial statements referred to in
Subsection (1) below, free and clear of any lien, encumbrance, deed to secure
debt, deed of trust, mortgage, warrant, option, right to purchase, right of
first refusal or other lien or interest of any person or entity except (i) as
specifically disclosed in Schedule 1 attached hereto ("Existing Liens") and (ii)
liens or other interests permitted pursuant to Section 13 hereof.
(I) FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE; ETC. All
financial statements submitted to CGI in connection with the application for
the Line or in connection with this Agreement fairly and fully present the
financial condition of the Borrower and the results of the Borrower's operations
for the periods covered thereby, and are prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied. Since the dates
thereof, there has been no material adverse change in the financial condition or
operations of the Borrower. All budgets, projections, feasibility studies,
and other documentation submitted by the Borrower to CGI 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 the Borrower and the place where the
records required by Section 11(G) hereof are kept is at the address of the
Borrower shown in Section 17 hereof.
(K) SUBSIDIARIES. The Borrower has no subsidiary.
SECTION 11. AFFIRMATIVE COVENANTS. Unless otherwise agreed to in writing
by CGI, while this Agreement is in effect, whether or not any Advance is
outstanding, the Borrower agrees to:
(A) LIMITED LIABILITY COMPANY EXISTENCE. Preserve and keep in full
force and effect its limited liability company existence and good standing in
the jurisdiction of its incorporation, and its qualification to transact
business and good standing in all places required by Law.
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(B) COMPLIANCE WITH LAWS AND AGREEMENTS. Comply in all material
respects with (i) all Laws, the failure to comply with which could have a
material adverse effect on the condition, financial or otherwise, operations,
properties or business of the Borrower or on the ability of the Borrower to
perform its obligations under the Loan Documents; and (ii) all agreements,
indentures, mortgages, and other instruments to which it is a party or by which
it or any of its property is bound, and under which it has the right to occupy,
operate and manage any of its greenhouse facilities.
(C) COMPLIANCE WITH ENVIRONMENTAL LAWS. Without limiting the
provisions of Subsection (B) above, comply in all material respects with, and
cause all persons occupying or present on any properties owned or leased by the
Borrower to so comply 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 the
Borrower, or on the ability of the Borrower to perform its obligations under the
Loan Documents.
(D) LICENSES; PERMITS; ETC. Duly and lawfully obtain and maintain in
full force and effect all licenses, certificates, permits, authorizations,
approvals, and the like which are material to the conduct of the Borrower's
business or which may be otherwise required by Law.
(E) INSURANCE. Maintain insurance with insurance companies or
associations acceptable to CGI 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
CGI may request. All such policies insuring any collateral provided for herein
shall provide for loss payable clauses or endorsements in form and content
acceptable to CGI. At the request of CGI, certificates of insurance for all
policies (or such other proof of compliance with this Section as may be
satisfactory) shall be delivered to CGI.
(F) PROPERTY MAINTENANCE. Maintain and preserve at all times its
property, and each and every part and parcel thereof, in good repair, working
order and condition and in compliance with all applicable Laws, regulations and
orders.
(G) BOOKS AND RECORDS. Keep adequate records and books of account
in accordance with GAAP consistently applied.
(H) INSPECTION. Permit CGI or its agent, during normal business
hours or at such other times as the parties may agree, to examine the Borrower's
property, books, and records, and to discuss the Borrower's affairs, finances,
operations, and accounts with its respective officers, directors, employees, and
independent certified public accountants.
(I) REPORTS AND NOTICES. Furnish to CGI:
(1) ANNUAL FINANCIAL STATEMENTS. As soon as available, but in
event later than one hundred and twenty (120) days after the end of any fiscal
year of the Borrower occurring during the term hereof, annual financial
statements of the Borrower prepared in accordance with GAAP consistently
applied. Such financial statements shall: (i) be audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or
other independent certified public accountants selected by the Borrower and
acceptable to CGI; (ii) be accompanied by a report of such accountants
containing an opinion acceptable to CGI; (iii) be prepared in reasonable detail
and in comparative form; and (iv) include a balance sheet, a statement of
income,
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a statement of retained earnings, a statement of cash flows, and all notes and
schedules relating thereto.
(2) INTERIM FINANCIAL STATEMENTS. As soon as available, but in no
event more than thirty (30) days after the end of each quarter, a balance sheet,
a statement of income for such quarter and for the period year to date, and such
other interim statements as CGI may specifically request, all prepared in
reasonable detail and in comparative form in accordance with GAAP.
(3) NOTICE OF DEFAULT. Promptly after becoming aware thereof, notice
of (i) the occurrence of any Default, and (ii) the occurrence of any breach,
default, event of default, or event which with the giving of notice or lapse of
time, or both, could become a breach, default, or event of default under any
agreement, indenture, mortgage, or other instrument (other than the Loan
Documents) to which it is a party or by which it or any of its property is bound
or affected if the effect of such breach, default, event of default or event is
to accelerate, or to permit the acceleration of, the maturity of any
indebtedness under such agreement, indenture, mortgage, or other instrument;
provided, however, that the failure of the Borrower to give such notice shall
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not affect the right and power of CGI to exercise any and all of the remedies
specified herein.
(4) 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 borrower
which, if adversely determined, could have a material adverse effect on the
condition, financial or otherwise, operations, properties, or business of the
Borrower, or on the ability of the Borrower to perform its obligations under the
Loan Documents.
(5) NOTICE OF ENVIRONMENTAL LITIGATION. Without limiting the
provisions of Clause (4) above, promptly after receipt thereof, notice of the
receipt of all pleadings, orders, complaints, indictments, or other
communication alleging a condition that may require the Borrower to undertake or
to contribute to a cleanup or other response under Laws relating to
environmental protection, or which seeks penalties, damages, injunctive relief,
or criminal sanctions related to alleged violations of such Laws, or which
claims personal injury or property damage to any person as a result of
environmental factors or conditions or which, if adversely determined, could
have a material adverse effect on the condition, financial or otherwise,
operations, properties, or business of the Borrower, or on the ability of the
Borrower to perform its obligations under the Loan Documents.
(6) REGULATORY AND OTHER NOTICES. Promptly after receipt thereof,
copies of any notices or other communications received from any governmental
authority with respect to any matter or proceeding the effect of which could
have a material adverse effect on the condition, financial or otherwise,
operations, properties, or business of the Borrower, or the ability of the
Borrower to perform its obligations under the Loan Documents.
(7) MATERIAL ADVERSE CHANGE. Prompt notice of any matter which has
resulted or may result in a material adverse change in the conditions, financial
or otherwise, operations, properties, or business of the Borrower, or the
ability of the Borrower to perform its obligations under the Loan Documents.
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(8) OTHER INFORMATION. Such other information regarding the
condition, financial or otherwise, or operations of the Borrower as CGI may,
from time to time, reasonably request.
(J) 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.
SECTION 12. NEGATIVE COVENANTS. Unless otherwise agreed to in writing by
CGI, while this Agreement is in effect, whether or not any Advance is
outstanding, the Borrower shall not:
(A) BORROWINGS. Create, incur, assume, or allow to exist, directly
or indirectly, any indebtedness or liability for borrowed money, for the
deferred purchase price of property or services, or for the lease of real or
personal property which lease is required to be capitalized under GAAP or which
is treated as an operating lease under regulations applicable to the Borrower
but which otherwise would be required to be capitalized under GAAP (a "Capital
Lease"), except for (1) indebtedness outstanding on the date hereof and set
forth on Schedule 1 attached hereto, (2) accounts payable to trade creditors and
current operating liabilities (other than for borrowed money) incurred in the
ordinary course of the Borrower's business, and (3) Capital Leases, the
aggregate amount of which does not exceed $700,000 at any one time.
(B) LIENS. Create, incur, assume, or allow to exist any mortgage,
deed of trust, deed to secure debt, 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. The foregoing restrictions
shall not apply to (1) the Existing Liens; (2) liens in favor of CGI; (3) liens
for taxes, assessments, or governmental charges that are not past due; (4)
liens, pledges, and deposits under workers' compensation, unemployment
insurance, and social security laws; (5) liens, deposits, and pledges 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 the
Borrower's business as conducted on the date hereof; and (6) liens imposed by
law in favor of mechanics, materialmen, warehousemen, and like persons that
secure obligations that are not past due, other than liens which individually or
in the aggregate have no material adverse impact on Borrower or its operations.
(C) MERGERS; ACQUISITIONS; ETC. Merge or consolidate with any
other entity, or acquire all or substantially all of the assets of any person or
entity, or form or create any new subsidiary or affiliate, or commence
operations under any other name, organization, or entity, including any joint
venture.
(D) TRANSFER OF ASSETS. Sell, transfer, lease, or otherwise
dispose of any of the Borrower's assets, except in the ordinary course of
business.
(E) LOANS AND INVESTMENTS. Make any loan or Advance to, or make
any investment in, or purchase or make any commitment to purchase any stock,
bonds, notes, or other securities of, or guarantee, assume, or otherwise become
obligated or liable with respect to the obligations of, any person or entity,
exceeding at any one time outstanding an aggregate of $100,000, other than
securities
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or deposits issued, guaranteed or fully insured as to payment by the United
States of America or any agency thereof.
(F) CHANGE IN BUSINESS. Engage in any business activities or
operations substantially different from or unrelated to the Borrower's present
business activities or operations.
SECTION 13. EVENTS OF DEFAULT. Each of the following shall constitute an
"Event of Default" hereunder:
(A) PAYMENT DEFAULT. Failure by the Borrower to make any payment
required to be made hereunder, under the Note, or under any other Loan Document
within five (5) days of the date when due.
(B) REPRESENTATIONS AND WARRANTIES. Any representation or warranty
made by the Borrower herein shall prove to have been false or misleading in any
material respect on or as of the date made.
(C) CERTAIN AFFIRMATIVE COVENANTS. Failure by the Borrower to
perform or comply with any covenant set forth in Section 11 hereof (other than
Section 11(I)(3), (4), (5), (6) and (7)), and such failure continues for fifteen
(15) days after written notice thereof shall have been delivered by CGI to the
Borrower, provided that if any default (except defaults of payment of money) can
be cured but cannot be cured within the respective cure period, it shall not be
deemed a default if actions to cure have been taken by Borrower within such cure
period and are diligently prosecuted to completion within thirty (30) days after
the end of the initial cure period.
(D) OTHER COVENANTS AND AGREEMENTS. The Borrower should fail to
perform or comply with any other covenant or agreement contained herein,
including, without limitation, any covenant excluded under Subsection (C) above.
(E) CROSS-DEFAULT. The Borrower should, after any applicable grace
period, breach or be in default under the terms of any other agreement between
the Borrower and CGI, including, without limitation, any loan agreement,
security agreement, mortgage, deed to secure debt, or deed of trust.
(F) OTHER INDEBTEDNESS. The occurrence of any breach, default,
event of default, or event which with the giving of notice or lapse of time, or
both, could become a default or event of default under any agreement, indenture,
mortgage, or other instrument by which the Borrower or any of its property is
bound or affected if the effect of such breach, default, event of default or
event is to accelerate, or to permit the acceleration of, the maturity of any
indebtedness under such agreement, indenture, mortgage, or other instrument.
(G) JUDGMENTS. Judgments, decrees, or orders for the payment of
money in the aggregate in excess of $100,000 shall be rendered against the
Borrower and either (1) enforcement proceedings shall have been commenced; or
(2) such judgments, decrees, and orders shall continue unsatisfied and in effect
for a period of twenty (20) consecutive days without being vacated,
discharged, satisfied, or stayed pending appeal.
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(H) INSOLVENCY, ETC. The Borrower: (1) shall 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 (2) shall suspend its business
operations or a material part thereof or make an assignment for the benefit of
creditors; or (3) shall 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 (4) shall commence with respect
to it or have commenced against it any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution, or liquidation
law or statute of any jurisdiction.
(I) BREACH OF OPERATION AND MANAGEMENT AGREEMENTS. The Borrower
shall breach or be in default under any material term of any operations and
management agreements under which it occupies, operates and manages any
greenhouse facilities.
(J) MATERIAL ADVERSE CHANGE. Any material adverse change occurs,
as reasonably determined by CGI, in the Borrower's condition, financial or
otherwise, operations, properties, or business, or the Borrower's ability to
perform its obligations under the Loan Documents.
SECTION 14. REMEDIES.
(A) NO OBLIGATION TO MAKE ADVANCES. During the continuation of any
Default or upon the occurrence of and during the continuation of an Event of
Default, CGI shall have no obligation to make Advances hereunder.
(B) TERMINATION; ETC. Upon the occurrence and during the
continuation of any Event of Default, and upon notice to the Borrower, CGI may
terminate the Line and declare the entire unpaid principal balance of the Note,
all accrued interest thereon and all other amounts payable under this Agreement
and all other agreements between CGI and the Borrower, to be immediately due and
payable. Upon such a declaration, the unpaid principal balance of the Note and
all such other amounts shall become immediately due and payable, without
protest, presentation, demand, or further notice of any kind, all of which are
hereby expressly waived by the Borrower.
(C) ENFORCEMENT. Upon the occurrence and during the continuation
of any Event of Default, CGI may proceed to protect, exercise, and enforce such
rights and remedies as may be provided by agreement or under law, including
without limitation the right to apply for and obtain, without notice and upon ex
parte application, the appointment of a receiver for the Collateral without
regard to Borrower's financial condition or solvency, the adequacy of the
Collateral to secure the payment of Advances and the performance of the Loan
Documents, or the existence of any waste to the Collateral. Each and every one
of such rights and remedies shall be cumulative and may be exercised from time
to time, and no failure on the part of CGI to exercise, and no delay in
exercising, any right or remedy shall operate as a waiver thereof, nor shall any
single or partial exercise of any right or remedy preclude any other or future
exercise thereof, or the exercise of any other right.
(D) APPLICATION OF PAYMENTS. After termination and acceleration of
the Line, all amounts received by CGI shall be applied first to costs (including
CGI'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.
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SECTION 15. COMPLETE AGREEMENT; AMENDMENT. This Agreement, the Note and
the other Loan Documents 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, nor any consent to any departure of the Borrower
herefrom or therefrom, shall be effective unless approved by CGI and contained
in a writing signed by or on behalf of CGI, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
SECTION 16. APPLICABLE 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, without reference to choice of law
doctrine.
SECTION 17. NOTICES. All notices hereunder shall be in writing and shall
be deemed to be duly given upon delivery, if delivered by "Express Mail,"
overnight courier, messenger or other form of hand delivery providing a proof of
delivery, or sent by telegram or facsimile transmission, or three (3) days after
mailing if sent by certified or registered mail, to the parties at the following
addresses (or to such other address for a party as shall be specified by like
notice):
If to CGI, as follows: If to Borrower, as follows:
Colorado Greenhouse, Inc. Colorado Greenhouse, LLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Road 31
P. O. ▇▇▇ ▇▇▇ ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX: ▇▇▇-▇▇▇-▇▇▇▇ FAX: ▇▇▇-▇▇▇-▇▇▇▇
SECTION 18. COSTS AND EXPENSES. To the extent allowed by law, the
Borrower agrees to pay to CGI on demand, all out-of-pocket costs and expenses
incurred by CGI (including, without limitation, the reasonable fees and
expenses of counsel retained by CGI) in connection with the enforcement of CGI's
rights under the Loan Documents.
SECTION 19. EFFECTIVENESS AND SEVERABILITY. This Agreement shall continue
in effect until all indebtedness and obligations of the Borrower hereunder and
under all other Loan Documents shall have been repaid or the Line shall expire,
whichever is later. Any provision of the Loan Documents 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 20. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the Borrower and CGI and their respective successors
and assigns, except that the Borrower may not assign or transfer its rights or
obligations hereunder without the prior written consent of CGI. Borrower hereby
consents to the assignment of this Agreement, the Note and all other Loan
Documents to CGI's lender, Colorado Springs Production Credit Association, as
security for a loan to CGI, which loan may be used to make Advances hereunder.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the date shown above.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
10
LINE OF CREDIT AGREEMENT
SIGNATURE PAGE
COLORADO GREENHOUSE, INC. COLORADO GREENHOUSE, LLC
By: /s/ [SIGNATURE ILLEGIBLE] By: /s/ [SIGNATURE ILLEGIBLE]
------------------------- -------------------------
Title: CEO Title: MANAGER
---------------------- ---------------------
11
Exhibit A
to
Line of Credit Agreement
BORROWING BASE REPORT FOR
COLORADO GREENHOUSE, LLC
For the month ended __________
AMOUNT FACTOR COLLATERAL VALUE
====== ====== ================
Accounts Receivable - produce sales 80%
(less than 60 days) ______ ________________
Accounts Receivable - other ______ 60% ________________
Inventory - produce ______ 50% ________________
Inventory - materials & supplies ______ 75% ________________
====== ================
Total
______ ________________
Less: claims & allowances ______ 100% ________________
Less: other payables ______ 100% ________________
Less: Operating loan balance ______ 100% ________________
================
Total available Borrowing Base:
________________
I hereby certify the above information is true and correct as of the date
referenced.
______________________________ __________
(Signature) (Date)
Page 1
13
EXHIBIT B
TO
LINE OF CREDIT AGREEMENT
PROMISSORY NOTE
ONE MILLION FIVE HUNDRED THOUSAND DOLLARS January 24, 1997
$1,500,000.00 Loan No.__________
FOR VALUE RECEIVED, the undersigned, Colorado Greenhouse, LLC, a Colorado
limited liability company (Maker"), hereby promises to pay to the order of
Colorado Greenhouse, Inc., a Delaware corporation doing business in Colorado,
("Payee"), at its offices, on the Maturity Date as defined in the Line of Credit
Agreement, in lawful money of the United States of America, the principal amount
of ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000.00) or so much thereof
as may have been Advanced and is outstanding hereunder, together with interest
on the outstanding principal balance from day to day remaining, at the rate
provided in the Line Credit Agreement. All accrued and unpaid interest shall be
due and payable on the first day of each month beginning on the first day of the
first month following the first Advance hereon and on the Maturity Date. All
unpaid principal balance of the Advances on this Promissory Note shall be due
and payable on the Maturity Date. All past due principal shall bear interest at
the Default Rate.
This Promissory Note has been given to Payee pursuant to the Line of Credit
dated as of the 24th day of January, 1997, and all capitalized terms used herein
and not otherwise defined shall have the meaning provided therein. Maker may
borrow, repay and reborrow hereunder and under the terms of the Line of Credit
Agreement.
Upon the occurrence of any Event of Default, the holder hereof may, at its
option, declare the entire unpaid principal of and accrued interest on this
Promissory Note immediately due and payable without notice, demand or
presentment, all of which are hereby waived, and upon such declaration, the same
shall become and shall be immediately due and payable, and the holder hereof
shall have the right to foreclose or otherwise enforce all liens or security
interests securing payment hereof, or any part hereof, and offset against this
Promissory Note any sum or sums owed by the holder hereof to Maker. Failure of
the holder hereof to exercise this option shall not constitute a waiver of the
right to exercise the same upon the occurrence of a subsequent Event of Default.
If the holder hereof expends any effort in any attempt to enforce payment
of all or any part of any sum due the holder hereunder, or if this Promissory
Note is placed in the hands of an attorney for collection, or if it is collected
through any legal proceedings, Maker agrees to pay all costs, expenses and fees
incurred by the holder, including reasonable attorney's fees.
This Promissory Note shall be governed by and construed in accordance with
the Laws of the State of Colorado and the applicable Laws of the United States
of America.
Maker and each surety, guarantor, endorser and other party ever liable for
payment of any sums of money payable on this Promissory Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, grace, and all
other formalities of any kind, and consent to all extensions without notice for
any period or periods of time and partial payments, before or after maturity,
and any impairment of any collateral securing this Promissory Note, all without
prejudice to the holder. The holder shall similarly have the right to deal in
any way, at any time, with one or more of the foregoing parties without notice
to any other party, and to grant any such party any extensions of time for
payment of any of said indebtedness, or to release or substitute any such party
or part or all of the collateral securing this Promissory Note, or to grant any
other indulgences or forbearances whatsoever, without notice to any other party
and without in any way affecting the personal liability of any party hereunder.
Maker hereby authorizes the holder hereof to record in its records all
Advances made to Maker hereunder and all payments made on account of the
principal hereof and interest accruing hereon, which records shall be prima
facie evidence as to the outstanding principal amount of and interest accrued on
this Promissory Note; provided, however, any failure by the holder hereof to
make any records shall not limit or otherwise affect the obligations of Maker
under the Agreement or this Promissory Note.
COLORADO GREENHOUSE, LLC
By:______________________________
Title:___________________________
2
SCHEDULE I
TO
LINE OF CREDIT AGREEMENT
Disclosures:
Section 10(E): None
-------------
Section 10(F) - Environmental Matters
------------- ---------------------
1. Phase I Environmental Site Assessment for the Brush Cogeneration Facility,
Brush, Colorado, prepared by Environmental Engineering & Services
Corporation for Brush Cogeneration Partners, dated June 1992.
2. Phase I Environmental Site Assessment for East 1/2 of ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇
▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ prepared by ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ & Associates, Inc. for Colorado Greenhouse LLC, dated November
20, 1996.
3. Phase I Environmental Site Assessment for American Atlas #1, Rifle,
Colorado, prepared by ▇▇▇▇▇▇▇ Brinckerhoff Energy Services, Inc., for
American Atlas #1, dated March 15, 1995.
4. Phase I Environmental Assessment for Fort ▇▇▇▇▇▇, Colorado Facility,
prepared by ERM-Rocky Mountain, Inc. for Thermo, Inc., dated February 18,
1992.
Section 10(G) - Subsidiary's Litigation
-------------- -----------------------
The Subsidiary is currently a party to two pending litigation matters.
1. EEOC Complaint:
A former employee, ▇▇▇▇▇▇▇ ▇▇▇▇▇, filed a charge of discrimination against
LLC in September 1995, alleging that LLC discriminated against him in violation
of the American With Disabilities Act when it terminated him following his
recovery from a work related injury.
2. Worker's Compensation Claim
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, a former employee, strained his lower back on February 4,
1994. On May 9, 1995, it was ruled that the claimant is permanently and totally
disabled. A petition to review was filed on May 16, 1995, on behalf of BGP, and
on May 22, 1995, Colorado Insurance Compensation Authority ("CCIA"), LLC's
worker's compensation carrier, filed an appeal of the ruling. On February 8,
1996, the Industrial Claim Appeals Office upheld the findings of fact. CCIA
requested a reversal of the final order on February 8, 1996. There has been no
ruling on the final appeal.
Section 10(H) - LLC's Leased Real Property
-------------- --------------------------
1. Ft. ▇▇▇▇▇▇ Greenhouse, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(leased by Rocky Mountain Produce ("RMP"))
2. Brush 1 Greenhouse, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (leased by
Brush Greenhouse Partners)
3. Brush 2 Greenhouse, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (leased by
Brush Greenhouse Partners II LLC)
4. Rifle Greenhouse, ▇▇▇▇-▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (leased by Wolf
Creek Rifle LLC)
5. Ft. ▇▇▇▇▇▇ Administration Building (leased by RMP)
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.
Section 10(K) - None
-------------
2