Exhibit 2.4
VINEYARD
PURCHASE AGREEMENT
THIS AGREEMENT is entered into as of the 12th day of May, 1995, by and
between The Grape Group, Inc., a California corporation ("Seller"), and
Golden State Vintners, a California corporation, or its nominee ("Buyer").
RECITALS
Seller owns and is offering for sale the approximately 1,700 acre
vineyard property located in Xxxx County, California which is more completely
described below. Buyer has offered to buy the property, and the parties are
entering into this Agreement to set forth the terms and conditions of the
sale to Buyer.
Beginning in February 1995, Seller commenced a regrafting program
("Regrafting Program") in which the 1500 acres of Chenin Blanc and French
Colombard grapevines are being converted to Chardonnay, Zinfandel and Merlot
grapevines. Pursuant to a promissory note dated , 1995 in the
original principal amount of $1,600,000 ("Regrafting Note"), Buyer has
advanced funds to Seller to pay regrafting costs, water fees and property
taxes, which Regrafting Note will be due August 31, 1995 in the event the
Closing of this sale does not occur.
NOW, THEREFORE, in consideration of the foregoing and the agreements set
forth below, the parties hereto agree as follows:
1. AGREEMENT OF SALE. Seller hereby agrees to sell to Buyer and Buyer
hereby agrees to purchase from Seller that certain real property (the "Land")
located in Xxxx County California and more particularly described in attached
EXHIBIT A, together with:
a. any and all buildings, trellising, any and all fixtures,
parking areas, fuel and water tanks, landscaping, vines, growing crops,
stakes, fencing, posts, vines, wells, irrigation and frost control
facilities, fixtures and other improvements located upon the Land (the
"Improvements");
b. all machinery, equipment, furnishings, tools, motor vehicles,
trailers, pumps, supplies, and other tangible personal property owned or
leased by Seller and used in connection with the maintenance or operation of
the Land and Improvements (the "Personal Property");
c. all easements, rights of way, privileges, water rights, mineral
rights (to the extent owned by Seller), licenses, appurtenances and other
rights and benefits of Seller or belonging to or in any way related to the
Land (the "Appurtenant Rights");
d. all permits, consents, authorizations, variances, waivers,
licenses, permits, certificates and approvals from any governmental or
quasi-governmental authority with respect to Land or Improvements
(collectively, the "Approvals"); and
e. all architectural, mechanical, engineering, as-built and other
plans, specifications and drawings (the "Plans"), all surveys (including any
ALTA survey) and all soil, environmental, engineering, production records or
other reports or studies (the "Reports"), all trademarks, service marks,
trade or business names and other intangible property used in connection with
the operations of the Property, and all transferable or assignable
warranties, representations, guaranties, contract rights and miscellaneous
rights (the "Warranties") relating to the ownership, development, use and
operation of the Land and Improvements.
f. the Land, the Improvements, the Personal Property, the
Appurtenant Rights, the Approvals, the Plans and the Warranties are referred
to collectively herein as the "Property."
2. PURCHASE PRICE. The purchase price for the Property is Four Million
Five Hundred Ninety Thousand Dollars ($4,590,000) ("Purchase Price") and
shall be paid by Buyer as follows:
a. Buyer's assumption of that certain promissory note, dated
September 30, 1986 in the original principal amount of $3,350,000
("Prudential Note") payable to The Prudential Insurance Company of America
("Prudential"), secured by the first deed of trust on the property recorded
on September 30, 1986 at Book 5921, page 2252 as Document No. 041570 in the
Official Records of Xxxx County ("Prudential Deed of Trust"), a Security
Agreement, dated September 30, 1986 between Seller and Prudential
("Prudential Security Agreement"), a UCC-1 Financing Statement recorded on
September 30, 1986 at Book 5921, page 2271 as Document No. 041580 and a UCC-1
Financing Statement recorded on September 30, 1986 at Book 5921, page 2278 as
Document No. 041581 ("Prudential UCCs"), as such documents were modified by
that certain Modification and Extension Agreement, dated April 30, 1992,
between Seller and Prudential, recorded May 22, 1992 at Book 6677, page 1411
as Document No. 072542 ("Modified Agreement"). The Prudential Note,
Prudential Deed of Trust, Prudential Security Agreement, Prudential UCCs and
Modification Agreement are collectively referred to as the "Prudential Loan
Documents." The Prudential Loan Documents shall be revised as of the
"Closing" (as defined in Section 6.1 below) by a First Supplemental
Modification and Extension Agreement ("Supplemental Modification"), and as so
revised shall be collectively referred to as the "Revised Prudential Loan
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Documents." The principal balance of the Prudential loan evidenced by the
Revised Prudential Loan Documents is estimated to be $2,441,000;
b. Buyer's assumption of that certain unsecured promissory note,
dated September 30, 1986, in the original principal amount of $452,791.17
("Cottonwood Note") payable to Cottonwood Vineyard, as such Cottonwood Note
shall be revised as of the Closing ("Revised Cottonwood Note") to be a term
of 8 years payable interest only (which Revised Cottonwood Note shall be
secured by a second deed of trust, subordinate to Prudential and Sanwa and it
shall be non-recourse;
c. Buyer's obligation to make certain payments to Seller of up to
$1,696,209, without interest ("Contingent Obligation"), subject to the term
and conditions of Section 2.1 below.
2.1 CONTINGENT OBLIGATION PAYMENTS
2.1.1 Buyer shall not be required to make any payments with
respect to the Contingent Obligation until such time, if any, that Buyer has
received "Net Cash Flow" (defined below) from the Property in sufficient
amount to have:
(a) paid in full the principal and interest of the Sanwa Bank
California loan (in an estimated amount of $1.8 million) contracted to
finance regrafting costs (the "Sanwa Loan");
(b) reimbursed in full any costs in excess of the Sanwa Loan
required for the total cost of regrafting the Property, plus interest on
such excess amounts at the rate of 10 percent per annum from the date of
advance of such excess costs ("Interest");
(c) reimbursed the amount of $214,611, plus Interest, advanced to
Seller to enable it to pay Prudential an interest payment which was part
of the consideration for Prudential agreeing to the Supplemental
Modification;
(d) reimbursed in full for all farming losses incurred during the
period commencing at the Closing ending with the first distribution of
Net Cash Flow under Section 2.1.2., including without limitation, the
cost of farming, owning and maintaining the Property, plus Interest.
The amounts set forth in Sections 2.1.1(a)-(d) above shall collectively
referred to as the "Regrafting and Carrying Costs."
2.1.2 After Buyer has received Net Cash Flow sufficient to pay
the Regrafting and Carrying Costs, Net Cash Flow thereafter generated by the
Property shall be
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distributed according to this Subsection 2.1.2 until such time as Seller has
received payment in full of the Contingent Obligation. Net Cash Flow shall be
distributed to the Seller and Buyer annually pursuant to this Subsection
2.1.2 in the following order and priority:
(a) First, to Buyer until such time as Buyer shall have
received the sum of $150,000;
(b) Then, to Seller until such time as Seller shall have
received the sum of $50,000;
(c) Then, prorata to Seller and Buyer, with Seller receiving
25% and Buyer receiving 75% of all Net Cash Flow until such time as Seller
has received payment in full of the Contingent Obligation from the payments
made pursuant to this Subsection 2.1.2.
Net Cash Flow shall be calculated at the end of each fiscal year of Buyer
(which fiscal year begins on July 1 and ends on June 30) and payments owing
to Seller pursuant to this Subsection 2.1.2 shall be paid within fifteen (15)
business days after delivery of the audit of Buyer for such fiscal year.
2.1.3 The term "Net Cash Flow" under Sections 2.1.1 and 2.1.2
means the excess of deemed cash receipts for sales of grapes (based on the
actual tonnage of grapes produced from the Property) over the costs of
farming, owning and maintaining the Property (including, without interest,
the cost of capital expenditures and those farming losses that are incurred
after the first distribution under Section 2.1.2), interest payments on the
Prudential and the Revised Cottonwood Note, excluding depreciation or
amortization; cash receipts shall be deemed received within 60 days following
harvest and be calculated in accordance with the following:
(i) for Zinfandel and Chardonnay grapes, the price per ton payable by
Xxxxx to Buyer under its contract with Xxxxx dated ____________,
1995.
(ii) for Merlot grapes, the price per ton payable by Xxxxx to Buyer for
Chardonnay grapes under its contract with Xxxxx dated ____________,
1995.
2.1.4. SALE OF THE PROPERTY OR SHARE TRANSFERS:
(a) If (i) Buyer sells the Property, either as part of the sale of
all or substantially all of the assets of Buyer or Buyer's
parent corporation ("Parent") or a sale of the Property
standing alone ("Property Sale") or (ii) there is a sale of
all or substantially all the outstanding shares of Buyer or
Parent, or Parent is acquired by merger, consolidation or
other reorganization (a "Share Transfer"), then, in either
case, the provisions for Payment under Section 2.1.2 of this
Agreement shall be terminated
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and Buyer shall be entitled to share in the proceeds of the
Property Sale or Share Transfer up to the amount of the
Contingent Obligation (less amounts paid to Seller under
Sections 2.1.1 and 2.1.2) on the terms and conditions set
forth in the following subsections.
(b) The proceeds of a Property Sale shall be either (i) the amount
of consideration received for a sale of the Property
individually, net of all commissions, expenses, attorneys and
other consultant fees and other costs of sale ("Net Proceeds")
or (ii) an allocable portion of the Net Proceeds (as described
below) if the Property Sale includes other assets of Buyer or
Parent or if a Share Transfer occurs.
(c) An allocable portion of the Net Proceeds attributable to the
Property (the "Allocable Consideration") means the total
amount of Net Proceeds in cash or the face value of the other
consideration received and calculating the cash flow multiple
for the Property Sale or Share Transfer by dividing such Net
Proceeds by the total "Net Cash Flow from Operations" ("NCF")
of the assets sold in the Property Sale or, in the case of a
Share Transfer, the total NCF of the Parent or Buyer's (or
that percentage of Parent's or Buyer's NCF equal to the
percentage of shares being transferred) and the product shall
be referred to as the "Multiple". The NCF of the Property
shall then be multiplied by the Multiple to determine the
Allocable Consideration.
(d) The Net Proceeds or Allocable Consideration, as the case may
be, shall be distributed as follows: (i) first to discharge
all amounts due under the Prudential and Cottonwood Notes
(including principal and interest) (ii) NEXT, to discharge all
other unrecovered amounts of Buyer under Sections 2.1.1 and
2.1.3 above, and (iii) out of any excess, 25% shall be payable
to Seller and 75% to Buyer. All consideration payable to
Seller shall be payable in the same form and ratio as received
by Buyer, Parent or Parent's shareholders. If the Property
Sale or Share Transfer calls for reserves or holdbacks for
warranties, indemnities or other deferrals, Seller shall be
subject to its share of proceeds being held back or deferred.
(e) NCF shall be determined for the twelve calendar months
immediately preceding the closing of the Property Sale or
Share Transfer, and shall be determined as net earnings before
interest, taxes, depreciation and amortization, with net
earnings calculated under generally accepted accounting
principles.
5.
3. TITLE.
a. PERMITTED TITLE EXCEPTIONS. Seller shall deliver good and
marketable title to the Property to Buyer subject only to the following
exceptions which hereinafter are referred to as the "Permitted Title
Exceptions":
i. a lien for local real estate taxes and assessments not
yet due or payable;
ii. the lien of the Prudential Deed of Trust, as modified by
the Supplemental Modification; and
iii. such other exceptions as may be approved in writing by
Buyer pursuant to Section 5.1.c. below.
b. OWNER'S POLICY. Evidence of title shall be the issuance at
the Closing by the Title Company of its CLTA Standard Coverage Owner's Policy
of Title Insurance insuring that fee title in the Property is vested in
Buyer, subject only to the Permitted Title Exceptions (the "Title Policy").
Seller shall cause the Title Policy to include such endorsements as Buyer may
reasonably request, including without limitation, a mechanic's lien
endorsement.
4. DOCUMENTS TO BE DELIVERED TO BUYER. Seller shall provide Buyer
with a copy of each of the following documents and items on or before the
earlier of May 12, 1995 or Closing (except as otherwise noted):
i. TITLE REPORT. A current preliminary title report for the
Property, issued by Chicago Title Company (the "Preliminary Title Report"),
together with a copy of each document referred to in the Preliminary Title
Report.
ii. AGREEMENTS. Copies of all existing easements, covenants,
restrictions, agreements, Warranties, and other documents which affect the
Property and are not disclosed by the Preliminary Title Report, or if no
documents exist, a certification of Seller to that effect.
iii. PROPERTY DOCUMENTS. Copies of all of the Plans, Reports and
Approvals and an inventory of the Personal Property.
iv. CONTRACTS. Copies of all service, farming, grape,
maintenance, management and other contracts and agreements related to the
operation and management of the Property. Buyer shall have ten (10) days from
the receipt of each such contract or agreement to notify Seller whether Buyer
will assume each such contract or agreement as of
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the Closing or require that they be terminated. All agreements and contracts
so assumed hereinafter are referred to as the "Assumed Contracts."
v. OPERATING DOCUMENTS. Copies of all real and personal property
tax bills and utility bills and a statement of income and expenses for the
Property for the last two years, and all notices regarding any actual or
potential claim, default, violation or liability with respect to the Property.
vi. REGRAFTING PROGRAM. Copies of all contracts, specifications,
agreements, invoices, work orders and all other documents, and a complete
written description of any oral agreements or understandings, relating to or
concerning the Regrafting Program (collectively, "Regrafting Contracts").
vii. PRUDENTIAL LOAN DOCUMENTS. Copies of the Prudential Loan
Documents, all financing statements relating to the Property recorded in
favor of Prudential, all other documents related thereto and all agreements,
amendments and modifications thereof.
5. CONDITIONS TO CLOSING.
a. BUYER'S CONDITIONS. Buyer's obligation to purchase the
Property is conditioned upon the satisfaction of each of the following
conditions:
i. The performance by Seller of every obligation of Seller
hereunder, and the truth of each representation and warranty made in this
Agreement by Seller at the time the representation or warranty was made and
as of the Closing.
ii. Buyer's review and approval of each document and item
provided to Buyer by Seller in accordance with Sections 4.c. through 4.g.
hereof. Any contracts and agreements provided to Buyer under 4.e and 4.f.
which Buyer does not agree to assume shall be terminated by Seller effective
as of the Closing date.
iii. Buyer's review and approval of the Preliminary Title
Report and all title exceptions. Buyer shall notify Seller in writing of any
objections Buyer has to the Preliminary Title Report and the title exceptions
within fifteen (15) days of Buyer's receipt of the referenced documents.
Seller shall use its best efforts (including payment of money) to remove the
objectionable exceptions. If the objectionable exceptions cannot be so
removed prior to the Closing, Seller will advise Buyer thereof in writing and
Buyer may either waive its objections or terminate this Agreement.
iv. Buyer's inspection and approval, in Buyer's sole
discretion, of the present physical condition and status of the Property,
including (if applicable) such items as soil, electrical, mechanical,
irrigation, frost control and drainage plans or specifications, the existence
of any Hazardous Materials (defined in Section 7.1.f) on the Property, and
conformance of the Land and Improvements with all applicable laws, codes,
regulations and
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governmental approvals. Buyer shall have the right to conduct or cause to be
conducted soils tests, tests for Hazardous Materials or any other tests Buyer
determines are necessary or desirable to evaluate the condition of the
Property.
v. Buyer's inspection and approval, in Buyer's sole
discretion, of all aspects of the Regrafting Program performed up to the
Closing, including without limitation, inspection of the nursery records
regarding the budwood, planting location of each of the varietals, and
determination of whether the regrafts were successfully performed.
vi. REGRAFTING CONTRACTS. Buyer shall have received an
assignment of all Regrafting Contracts, and all other rights (if any),
including warranties and guaranties, relating to the Regrafting Program, that
Buyer has chosen to assume as of the Closing.
vii. FINANCING. Buyer shall have obtained any and all
necessary financing on terms and conditions satisfactory to Buyer in its sole
and absolute discretion, and all such financing shall have been funded, to
enable Buyer to consummate the transactions contemplated hereby and to
provide adequate working capital to complete the Regrafting Program required
to fulfill Buyer's obligations pursuant to the Grape Agreements and to
finance the operation of the Property until the 1997 crop harvest.
viii. THIRD PARTY CONSENTS. All consents, approvals and
waivers from Prudential, Sanwa Bank, Xxxx Xxxxxxx Life Insurance Company, any
governmental authorities, and other third parties necessary to permit Seller
to transfer the Property to Buyer as contemplated hereby shall have been
obtained.
ix. REVISED PRUDENTIAL LOAN DOCUMENTS. Buyer's review and
approval, in its sole and absolute discretion, of the Supplemental
Modification, and the deposit into escrow prior to Closing of counterpart
pages, duly executed by all parties thereto and notarized (where applicable),
of the Supplemental Modification.
x. SHAREHOLDER CONSENTS. Buyer shall have received
resolutions adopted by its board of directors and ratified by its
shareholders approving this Agreement and the transactions contemplated
hereby, certified by the corporate secretary of Buyer.
xi. NO GOVERNMENTAL PROCEEDING OR LITIGATION. No suit,
action, investigation, inquiry or other proceeding by any governmental
authority or other party shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby.
xii. OPINION OF COUNSEL. Seller shall have delivered to Buyer
an opinion of counsel for Seller acceptable to Buyer, dated the Closing Date,
in a form reasonably acceptable to Buyer opining that: Seller has been duly
incorporated and organized and is validly existing and in good standing under
the laws of the State of California; that Seller has full corporate power and
authority to enter into and perform this transaction; that
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this Agreement has been duly authorized by all necessary corporate action on
the part of Seller and has been duly executed and delivered by Seller; and
that this Agreement is a valid and binding obligation of Seller, enforceable
in accordance with its terms.
xiii. CERTIFICATES. Seller shall furnish Buyer with such
certificates of the respective officers of Seller (without qualification with
respect to knowledge) and others to evidence compliance with the conditions
set forth in this Article 5 as may be reasonably requested by Buyer.
xiv. CORPORATE DOCUMENTS. Buyer shall have received from
Seller resolutions adopted by the board of directors and ratified by the
shareholders of Seller approving this Agreement and the transactions
contemplated hereby, certified by the corporate secretary of Seller.
b. DUE DILIGENCE PERIOD. Buyer's obligation to purchase the
Property is subject to Buyer's satisfaction, in its sole discretion, with the
Property after the review and inspections described in Section 5.1. above.
Buyer shall have a period of twenty (20) days ("Due Diligence Period") from
the last date that Buyer receives the documents required to be provided by
Seller under Section 4 to notify Seller in writing that the Property is
unsatisfactory and that Buyer wishes to terminate this Agreement. Upon
delivery of that notice to Seller within the required period, this Agreement
shall terminate. Buyer shall not be required to state the reasons for the
termination in its notice.
c. ACCESS. Seller shall afford authorized representatives of
Buyer reasonable access to the Property for the purposes of satisfying Buyer
with respect to the representations, warranties and covenants of Seller
contained herein and the conditions precedent to the Closing. In performing
its examinations and inspections of the Property, Buyer shall minimize any
interference with Seller's use of the Property and Buyer shall indemnify
Seller against and hold Seller harmless from all losses, costs, damages,
liabilities and expenses resulting from the gross negligence or willful
misconduct of Buyer or its representatives in connection with Buyer's entry
upon the Property, but excluding claims arising out of the existence of new
information about the condition of the Property.
d. SELLER'S CONDITIONS.
i. The performance by Buyer of every obligation of Buyer
hereunder, and the truth of each representation and warranty made in this
Agreement by Buyer at the time the representation or warranty was made and as
of the Closing.
ii. All consents, approvals and waivers from governmental
authorities, Prudential and other third parties necessary to permit Seller to
transfer the Property to Buyer as contemplated hereby shall have been
obtained.
9.
e. WAIVER. Either party may, at any time or times before the
Closing, waive one or more of the foregoing conditions, without affecting its
rights and remedies with respect to the remaining conditions. Any such waiver
must be in writing and signed by the waiving party.
6. CLOSING.
a. CLOSING DATE. The consummation of the purchase and sale of the
Property (the "Closing") shall be held at the offices of Chicago Title
Company ("Title Company") on __________, 1995, or earlier as Buyer may elect,
or later if agreed to in writing by Buyer and Seller.
b. SELLER'S DEPOSITS INTO ESCROW. Seller shall deposit the
following documents and items into escrow:
i. a duly executed and acknowledged grant deed conveying
the Land and Improvements to Buyer, subject only to the Permitted Title
Exceptions;
ii. a duly executed xxxx of sale, in the form of attached
EXHIBIT B, transferring the Personal Property to Buyer;
iii. a duly executed assignment, in the form of attached
EXHIBIT C, assigning to Buyer all of Seller's interest in the Plans and
Reports, all Warranties, the Service Contracts, Trademarks and all Approvals;
iv. originals of all Service Contracts, Warranties, and
originals or copies of all Plans, Reports, and Approvals;
v. an affidavit in the form of attached EXHIBIT D stating
that Seller is not a "foreign person" under IRC Section 1445(f)(3).
vi. a certificate from Seller certifying that there has been
no change in or damage to the Property (or specifying such change or damage)
from the date of this Agreement and that the representations and warranties
described in Section 7.a. are complete and accurate as of the Closing date;
vii. Seller's share of the closing costs as described in
Section 6.5 below;
viii. the mortgagee estoppel statement from the lender holding
the Prudential Deed of Trust in the form attached as EXHIBIT E.
ix. the Supplemental Modification, duly executed and
notarized by Prudential and Seller.
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x. such other documents as may reasonably be required to
complete the Closing.
c. BUYER'S DEPOSITS INTO ESCROW. Buyer shall deposit the
following into escrow:
i. the Purchase Note duly executed by Buyer;
ii. The original Regrafting Note.
iii. Buyer's share of the closing costs as described in
Section 6.5. below; and
iv. such other documents as may reasonably be required to
complete the Closing.
d. PRORATIONS. All expenses for the Property will be prorated as
of February 1, 1995 (the "Proration Date") and the Purchase Price will be
adjusted on the following basis:
i. 1995 CROP. The parties acknowledge that due to the
grafting to be conducted pursuant to the Grape Agreements, the Property will
not produce a saleable crop in 1995 or 1996. However, all cultural costs paid
by Seller with respect to the 1995 growing season (for example, water costs
for 1995), not paid from the proceeds of the loan evidenced by the Regrafting
Note, and attributable to the period after the Proration Date and will be
reimbursed to Seller by Buyer.
ii. ACCOUNTS PAYABLE. All sums due for accounts payable which
were owing or accrued by the Property prior to the Proration Date and for all
agreements and contracts not assumed by Buyer will be paid by Seller and
Seller agrees to indemnify and hold Buyer harmless with respect thereto.
Buyer will furnish to Seller for payment any bills received after the Closing
with respect to such accounts, agreements and contracts, and Buyer will have
no further obligation with respect thereto. Payments due under any Service
Contracts shall be prorated as of the Proration Date, and Buyer shall be
liable for all payments accruing thereafter.
iii. PROPERTY TAXES. All real and personal property ad
valoreum taxes and special assessments, if any, will be prorated to the
Proration Date, based on the latest available tax rate and assessed valuation.
iv. UTILITY CHARGES. All utility (including, without
limitation, electricity, gas, water, sewer and telephone) charges will be
prorated to the Proration Date. All utility security deposits, if any, will
be retained by Seller.
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v. POST CLOSING. If the amount of any proration cannot be
determined at the Closing, the adjustments will be made between the parties
as soon after Closing as possible.
e. CLOSING COSTS. The Closing costs for this transaction shall be
paid as follows:
i. Seller shall pay one-half (1/2) of the Title Company's
escrow and recording fees, and all transfer taxes.
ii. Seller shall pay the cost of Buyer's title insurance
policy and Buyer shall pay the additional cost of any lender's policies of
title insurance or endorsements to the existing Prudential lender's title
policy which may be required by Prudential.
iii. Buyer shall pay all remaining escrow fees and recording
fees.
f. CLOSING. Pursuant to Section 6.1 above, Title Company shall
close the escrow for this transaction when it is in a position to issue the
Title Policy and has received from Seller and Buyer the items required of
each in Sections 6.2 and 6.3 above. Title Company shall close escrow by doing
the following:
i. Recording the grant deed and the Supplemental
Modification, in that order, in the Official Records of Xxxx County Recorder;
ii. Delivering to Buyer the Title Policy, the original
documents and items listed in Section 6.2 above, and a closing statement for
the escrow consistent with this Agreement and satisfactory to Buyer and
Seller (the "Closing Statement"), and any refund due Buyer; and
iii. Delivering to Seller the Purchase Note, the Regrafting
Note and Seller's closing statement.
g. POSSESSION. Seller shall deliver possession to the Property to
Buyer on the Closing Date.
12.
7. REPRESENTATIONS AND WARRANTIES.
a. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby makes
the following representations and warranties to Buyer, which representations
and warranties shall survive the Closing and all of which (i) are material
and are being relied upon by Buyer, and (ii) are complete and accurate as of
the date hereof and shall be complete and accurate at the Closing date:
i. To the best of Seller's knowledge, there are no material,
physical or mechanical defects of the Property, including, without
limitation, the irrigation, frost control, drainage and wastewater and
stormwater disposal systems, stakes, fencing, posts and trellising and all
such items are in good operating condition and repair and in compliance with
all applicable governmental requirements. There is no evidence of phylloxera
or other diseases and pests on or about the Property, including without
limitation, the existing vines, and vines regrafted as part of the Regrafting
Program.
ii. To the best of Seller's knowledge, the use and operation
of the Property is in full compliance with applicable building codes,
environmental, seismic design, zoning and land use laws, other local, state
and federal laws and regulations, and restrictive easements or covenants
affecting the Property;
iii. The Plans, Reports, Service Contracts, Approvals,
Warranties, Regrafting Contracts, and all other contracts or documents
delivered to Buyer in connection with the purchase and sale of the Property
are all of the documents or agreements affecting the Property, are originals
or complete and accurate copies, and are in full force and effect and, to
Seller's knowledge, without default by any party thereto. No information or
documents given to Buyer pursuant to this Agreement will contain any untrue
statement of a material fact or omit to state a material fact making the
statements contained therein misleading;
iv. Except as disclosed to Buyer in writing, Seller does not
have knowledge of any condemnation proceedings or any land-use or development
regulations or proceedings existing or proposed, which would affect the use
and operation of the Property, nor has Seller received notice of any special
assessment proceedings or other matters affecting the use, occupancy or value
of the Property;
v. To the best of Seller's knowledge, Seller has obtained all
licenses, permits, certificates, approvals, variances, easements and rights
of way required from all governmental authorities having jurisdiction over
the Property or from private parties for the normal use and operation of the
Property and to insure vehicular and pedestrian ingress to and egress from
the Property;
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vi. For purposes of this Agreement, the term "Hazardous
Substances" shall mean materials regulated under any federal, state or local
law or regulation, as amended from time to time, as a toxic, hazardous,
contaminated or similarly harmful or dangerous material or substance. To the
best of Seller's knowledge, there are no Hazardous Materials being stored or
otherwise held on, under or about the Property by Seller or to Seller's
knowledge after due inquiry, by any other party. To the best of Seller's
knowledge, the Property has been maintained in substantial compliance with all
federal, state, local and foreign environmental protection, occupational,
health and safety or similar laws, statutes, ordinances, restrictions,
licenses and local environmental protection, occupational, health and safety
or similar laws, statutes, ordinances, restrictions, licenses and
regulations, including those relating to the presence, use, production,
generation, handling, transport, treatment, storage, disposal, distribution,
labeling, testing, processing, discharge, release, threatened release,
control, or cleanup of any hazardous or otherwise regulated materials,
substances or wastes, chemical substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals, petroleum products or byproducts,
asbestos, polychlorinated biphenyls, noise or radiation, and also including,
but not limited to, the Federal Water Pollution Control Act (33 U.S.C.
Section 1251 ET SEQ.), Resource Conservation & Recovery Act (33 U.S.C.
Section 6901 ET SEQ.), Safe Drinking Water Act (21 U.S.C. Section 349, 42
U.S.C. Sections 201, 300f), Toxic Substances Control Act (15 U.S.C. Section
2601 ET SEQ.), Clean Air Act (42 U.S.C. Section 7401 ET SEQ.), Comprehensive
Environmental Response, Compensation and Liability Act, (42 U.S.C. Section
9601 ET SEQ.), California Health & Safety Code (Section 25100 ET SEQ.,
Section 39000 ET SEQ.), and California Water Code (Section 13000 ET SEQ.);
vii. Seller has not received any written report, notice or
other information, or to its knowledge otherwise been advised under the
California Health and Safety Code or any other applicable local, state or
federal law regarding Hazardous Materials on, under or affecting the Property
or requiring the removal of any Hazardous Materials from the Property;
viii. To Seller's knowledge after due inquiry, no property
within two thousand (2,000) feet of the Property has been the site of a
significant disposal of Hazardous Materials or has been designated a
hazardous waste or border zone property as such terms are defined in Sections
25117.3 or 25117.4 of the California Health and Safety Code;
ix. Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of California; this
Agreement and all documents executed by Seller which are to be delivered to
Buyer at the Closing are, or at the time of Closing will be, duly authorized,
executed, and delivered by Seller, and are, or at the Closing will be, legal,
valid, and binding obligations of Seller, and do not, and at the time of
Closing will not, violate any provision of any agreement to which Seller is a
party or to which it is subject or any law, judgment or order applicable to
Seller;
x. At the time of Closing there will be no outstanding
contracts made by Seller with respect to grapes to be grown on the Property
or for any improvements
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to the Property which have not been fully performed or paid, as the case may
be, and Seller shall cause to be discharged all mechanics' liens arising from
any labor or materials furnished to the Property prior to the time of the
Proration Date;
xi. Seller is the sole owner of the Property in fee simple
free and clear of any right to or claim of possession by any other party
(including, without limitation, tenants or employees, with or without
leases), and has authority to sell it to Buyer;
xii. Seller is not a "foreign person" within the meaning if
IRC Section 1445(f)(d);
xiii. To the best of Seller's knowledge, there is no claim,
litigation, or governmental investigation or proceeding, actual or potential,
that may affect the Property and no unrecorded easements, unrecorded
mechanics' lien claims, unrecorded taxes and assessments, claims of
encroachment or prescriptive easements affecting the Land or Improvements;
xiv. No proceedings under any bankruptcy or insolvency laws
have been commenced by or against Seller which have not been terminated; no
general assignment for the benefit of creditors has been made by Seller; and
no trustee or receiver of Seller's property has been appointed;
xv. Seller knows of no facts nor has Seller failed to
disclose any fact which would prevent Buyer from using and operating the
Property after Closing in the normal manner in which similar properties in
the area are operated;
xvi. The Property does not serve any adjoining property for
any purpose to Seller's knowledge after due inquiry, inconsistent with the
current use of the land by the Seller, and the property is not located within
any flood plain or subject to any similar type of restriction for which any
permits or licenses necessary to the use thereof have not been obtained;
xvii. There are no leases, subleases, licenses, concessions,
or other agreements, written, or, to Seller's knowledge after due inquiry,
oral granting to any person the right to use or occupancy of any portion of
the Property;
xviii. There are no outstanding options or rights of first
refusal to purchase or lease the Property, or any portion thereof or interest
therein;
xix. The Lost Hills Water District, which serves the
Property with water has received its full allocation of water from the Xxxx
County Water District for 1995; however, Seller makes no other representation
concerning whether or not the Property is restricted in any adverse way in
the current and forseeable future use of its water rights,
15.
water supply or mineral rights, or whether such water rights and supply are
sufficient for the current and forseeable future operation of the Property;
xx. The Improvements have received all approvals of
governmental authorities (including permits and licenses) required in
connection with the operation of the Property and have been operated and
maintained in compliance with all applicable legal requirements; and
xxi. The Improvements are supplied with utilities and other
services in such amounts as are reasonably necessary for the current and
forseeable future operation of the Property, including any necessary gas,
electricity, irrigation, drainage facilities, sanitary and storm sewer
service, and such utilities and other services are installed, provided and
connected pursuant to valid permits and otherwise in compliance with all
legal requirements.
xxii. The budget for the Regrafting Program, which has been
previously provided to Buyer, has not been modified or amended and the
Regrafting Program has been or will be completed within such budget.
b. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby makes
the following representations and warranties to Seller, which representations
and warranties shall survive the Closing and all of which (i) are material
and are being relied upon by Seller, and (ii) are complete and accurate in
all respects as of the date hereof and shall be complete and accurate as of
the Closing Date:
i. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of California.
ii. This Agreement and all documents executed by Buyer
which are to be delivered to Seller at the Closing are, or at the time of
Closing will be, duly authorized, executed, and delivered by Buyer, and are,
or at the Closing will be, legal, valid, and binding obligations of Buyer,
and do not, and at the time of Closing will not, violate any provisions of
any agreement to which Buyer is a party or to which it is subject or any law,
judgement or order applicable to Buyer.
iii. No proceedings under any bankruptcy or insolvency laws
have been commenced by or against Buyer which have not been terminated; no
general assignment for the benefit of creditors has been made by Buyer; and
no trustee or receiver of Buyer's property has been appointed.
8. INDEMNIFICATION. Each party hereby agrees to indemnify the other
party and hold it harmless from and against any and all claims, demands,
liabilities, costs and damages, including without limitation, reasonable
attorneys' fees, resulting from any misrepresentations or breach of warranty
or covenant made by such party in this Agreement or in any document,
16.
certificate, or exhibit given or delivered to the other party pursuant to or
in connection with this Agreement. Seller further agrees to indemnify Buyer
and hold Buyer harmless from and against any claims, demands, liabilities,
costs and damages asserted against or suffered by Buyer and resulting from or
arising out of the ownership, use or construction of the Property prior to
the conveyance of the Property to Buyer, including, without limitation,
claims arising from the presence, prior to Closing, of any Hazardous
Materials on the Property and reimbursement of cleanup or remedial action
costs under any law or regulation regarding the generation, use, storage, or
disposal of such Hazardous Materials. All of these indemnifications shall
survive the Closing and conveyance of the Property to Buyer.
9. RISK OF LOSS; INSURANCE PROCEEDS; CONDEMNATION.
a. DAMAGE OR DESTRUCTION.
i. In the event of damage or destruction of the Improvements
prior to the Closing date in an amount less than $100,000, Buyer and Seller
shall consummate this Agreement, and Seller shall promptly proceed to repair
and restore the Improvements and, at Buyer's election, the Closing date and
all other performance dates in this Agreement shall be extended for the
number of days required for such repair and restoration.
ii. In the event of damage or destruction of the Improvements
prior to the Closing date in an amount in excess of $100,000, Buyer may elect
any of the following:
(1) to terminate this Agreement upon written notice to
Seller;
ii. to consummate this Agreement, but to postpone the
Closing date, in which event Seller shall promptly proceed and diligently
pursue efforts to repair and restore the Improvements to their condition
immediately prior to such damage or destruction; and the Closing date and all
other performance dates in this Agreement shall be extended for the number of
days required for such repair and restoration; provided, however, that if
such repair and restoration is not completed within one hundred eighty (180)
days after the damage or destruction, Seller or Buyer may, at either party's
option, terminate this Agreement upon written notice to the other party; or
iii. consummate this Agreement as scheduled, in which
event Seller shall pay to Buyer any and all insurance proceeds payable with
respect to such damage or destruction for costs of repair and restoration of
the Property, plus such additional amount if any as may be required to repair
or restore the Improvements to their condition immediately prior to such
damage or destruction.
b. INSURANCE. Seller represents to Buyer that the Improvements
are presently insured by a fire and extended coverage policy of insurance in
an amount equal to 100% of the replacement cost of the Improvements. Seller
agrees to maintain the policy in
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effect through the Closing date, and upon Buyer's request, to provide Buyer a
certificate of such insurance.
c. EMINENT DOMAIN. If, prior to the Closing, all of the Land and
Improvements are taken by eminent domain, this Agreement shall be deemed
cancelled. If only part of the Land or Improvements are so taken, Buyer shall
have the option of (a) proceeding with the Closing and acquiring the Property
as affected by such taking, together with all compensation and damage awarded
or the right to receive same, or (b) cancelling this Agreement. If Buyer
elects option (a) above, Seller agrees to assign to buyer at the Closing its
rights to such compensation and damages, and will not settle any proceedings
relating to such taking without Buyer's prior written consent. Seller shall
promptly (and in any event prior to the closing) notify Buyer of any actual
or threatened condemnation affecting the Property.
10. SELLER'S COVENANTS DURING CONTRACT PERIOD. Between Seller's
execution of this Agreement and the Closing, or earlier termination of this
Agreement as permitted hereunder, Seller shall (i) maintain the Property in
good order, condition and repair, reasonable wear and tear excepted, (ii) not
make any physical changes to the Improvements, (iii) continue to manage the
Property in manner in which it is being managed, and (iv) not enter into any
lease, amendment of lease or other agreement pertaining to the Property,
without Buyer's prior consent which consent shall not be unreasonably
withheld if such bases are entered into in the ordinary course of business
and are consistent with the type, term and rental of other comparable leases
of the Property.
11. ASSIGNMENT. Buyer shall have the right to assign this Agreement to
a third party or parties who shall then be entitled to acquire the Property
on the terms set forth herein. Except as just provided herein, neither party
may assign its rights or delegate its obligations hereunder without the prior
written consent of the other party. Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their successors and assigns.
12. MISCELLANEOUS.
a. NOTICE. All notices and any other communications permitted or
required under this Agreement must be in writing and will be effective (i)
immediately upon delivery in person, or (ii) 24 hours after deposit with a
commercial courier or delivery service for overnight delivery, (iii) seven
days after deposit with the United States Postal Service, certified mail,
return receipt requested, postage prepaid, or (iv) upon receipt, if
transmitted by facsimile with confirmed receipt between 9:00 a.m. and 5:00
p.m. on a business day, otherwise, on the following business day. All notices
must be properly addressed and delivered to the parties at the addresses set
forth below, or at such other addresses as either party may subsequently
designate by written notice given in the manner provided in this Section:
18.
Seller: The Grape Group, Inc.
c/x Xxxxxxx Farm Company
00000 Xxxxxx 00 0/0
Xxxxxx, Xx 00000
Fax: (000) 000-0000
Attn: Xxxx Xxxxxxx
Buyer: Golden State Vintners
38558 Road 128
X.X. Xxx 00
Xxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attn: Xxx Xxxxxx
With a copy to: Xxxxxxx, Xxxxx & Xxxxxx
000 Xxxxxxxxxx Xxxxxx 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attn: Xxxxx X. Xxxxxxx
b. HEADINGS. The headings used herein are for purposes of
convenience only and should not be used in construing the provisions hereof.
c. COVENANT OF FURTHER ASSURANCES. The parties hereby agree to
execute such other documents and perform such other acts as may be necessary
or desirable to carry out the purposes of this Agreement.
d. ENTIRE AGREEMENT. This document represents the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all other prior agreements. This Agreement may only be modified by
a written instrument signed by both parties.
e. PARTIAL INVALIDITY. If any term, covenant or condition of this
Agreement or its application to any person or circumstances shall be held to
be invalid or unenforceable, the remainder of this Agreement or the
application of such term or provisions to other persons or circumstances
shall not be affected.
f. NO WAIVER. No consent or waiver by either party to or of any
breach of any representation, covenant or warranty shall be construed as a
consent to or waiver of any other breach of the same or any other
representation, covenant, or warranty.
19.
g. ATTORNEYS' FEES. In the event of any controversy, claim or
action being filed between the parties respecting this Agreement or in
connection with the Property, the prevailing party shall be entitled, in
addition to all expenses, costs or damages, to reasonable attorneys' fees,
whether or not such controversy was litigated or prosecuted to judgement.
h. BROKERS AND FINDERS. Neither party has had any contact or
dealings regarding the Property, through any licensed real estate broker or
other persons who can claim a right to a commission or finder's fee in
connection with this transaction. In the event that any other party claims a
commission or finder's fee in this transaction, the party through whom the
party makes his claim shall be responsible for said commission or fee and
shall indemnify the other against all costs and expenses (including
reasonable attorneys' fees) incurred in defending against the same.
i. TIME OF THE ESSENCE. Time is of the essence of this Agreement.
j. GOVERNING LAW. This Agreement is entered into and shall be
governed by and construed in accordance with the laws of the State of
California.
k. INTERPRETATION. All parties have been represented by counsel
in the preparation and negotiation of this Agreement, and this Agreement
shall be construed
20.
