EXHIBIT 10.7
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT is entered into on August 30, 2001, between Xxxxx
X. Xxxxxx (the "Pledgor"), and Eldorado Artesian Springs, Inc. (the "Secured
Party").
Section 1. Pledge of Security Interest. Pledgor hereby pledges to
Secured Party a security interest in, a minimum of 250,000 shares of Common
Stock (Pledged Collateral), all of which are now owned by Pledgor in
Secured Party, and all proceeds of the foregoing. The formula used to
calculate the Pledged Collateral is two times the value of the loan divided
by the closing price as quoted by NASDAQ ($400,000 / $1.60 = 250,000
shares). The Pledged Collateral shall be held by an outside director
(Escrow Agent) and shall have attached thereto a stock power endorsed in
blank by Pledgor, or at Pledgor's election, an escrow may be established at a
local bank. The cost of the escrow shall be paid by the Pledgor if Pledgor
elects to use a bank as the escrow agent. Unless and until an Event of
Default (as defined in Section 3 hereof) has occurred, the Pledged Collateral
shall be held by the Escrow Agent in accordance with the terms of this Pledge
Agreement.
Section 2. Indebtedness Secured. The security interest in the Pledged
Collateral granted under Section 1 hereof is granted as security for the
performance of, and the timely repayment of a loan in the amount of Two
Hundred Thousand and no/100 Dollars ($200,000.00) made by Secured Party to
Pledgor for the purchase of real property currently owned by Secured Party.
Said loan is evidenced by a promissory note dated August 30, 2001, payable to
the Secured Party (the "Note").
Section 3. Events of Default. For purposes of this Pledge Agreement,
an "Event of Default" shall be deemed to have occurred if Pledgor shall fail
to pay any installment of principal or interest on the Note or any portion
thereof when due, or if there is a breach by Pledgor of any representation,
warranty, covenant or other agreement under this Pledge Agreement, and such
event is not cured within ten (10) business days of delivery of written
notice by Secured Party to Pledgor.
Section 4. Remedies Upon Default. At any time after an Event of
Default shall have occurred, Pledgor shall, upon written notice by Secured
Party, (a) register the Pledged Collateral in Secured Party's name and
Secured Party shall (to the extent permitted by law) have the right to vote
the shares which are part of the Pledged Collateral pending disposition
thereof as required by Section 4(c) hereof; (b) apply the cash (if any) then
held as Pledged Collateral hereunder to the payments due on the Note; and (c)
if there shall be no such cash or the cash so applied shall be insufficient
to pay such Note in full, sell the Pledged Collateral, or any part thereof,
on an additional ten (10) business days' written notice to Pledgor, at public
or private sale for cash, upon credit, or for future delivery, as Secured
Party shall deem appropriate; provided, however, that if such sale is a
private sale, Pledgor shall receive written notice thereof at least five (5)
business days prior to the consummation of such sale, which notice shall
describe the material terms and conditions thereof, and Pledgor may, within
such five-day period, tender payment and consummate such purchase on the same
terms and conditions.
Section 5. Dividends. Unless there is an Event of Default under
this Agreement, all dividends paid or payable on the shares shall be the
property of the Pledgor.
Section 6. Further Documentation, etc. The Pledgor promises and
agrees to provide the Secured Party with any further, additional or corrected
documents, instruments or agreements reasonably required by the Secured Party
to secure and perfect the security interest granted hereby in the Pledged
Collateral, or in any proceeds thereof.
Section 7. Amendment to Agreements, Etc. Pledgor agrees and consents
that its obligations, and the rights of Secured Party under this Pledge
Agreement, shall not be impaired if, at any time and from time to time:
a. The time of repayment of the Note shall be extended in whole or
in part and/or shall be renewed in whole or in part;
b. The maturity of the Note shall be accelerated and any collateral
security therefore exchanged, surrendered or otherwise dealt with
in accordance with the terms of any present or future agreement
relating thereto, including this Pledge Agreement;
c. The time for the performance by Pledgor or of compliance with any
term, covenant or agreement on its part to be performed under the
Note and/or any present or future agreement between Pledgor and
Secured Party shall be extended or such performance or compliance
waived;
d. The liability of Pledgor to pay the Note or to perform its
obligations under any present or future agreement between them
and Secured Party shall be settled or compromised.
Any of the foregoing may occur from time to time without affecting this
pledge or the obligations of Pledgor hereunder, which shall continue in full
force and effect until the Note secured hereby and all obligations of Pledgor
hereunder shall have been fully paid and performed.
Section 8. Relation to Other Documents. The provisions of this Pledge
Agreement shall be in addition to those of the Note or any other evidence of
any liability held by the Secured Party.
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement to be executed as of the date first above written.
SECURED PARTY PLEDGOR
ELDORADO ARTESIAN SPRINGS, INC.
By: /s/ /s/
Name: Xxxxxxx X. Xxxxxx Xxxxx X. Xxxxxx
Title: President
