EXHIBIT 10.16
TERM LOAN AGREEMENT
THIS TERM LOAN AGREEMENT (the "Agreement") is made and entered into
as of this 18th day of December, 1996, by and between SANWA BANK CALIFORNIA
(the "Bank") and GOLDEN STATE VINTNERS (the "Borrower").
SECTION I
AGREEMENT TO LEND
1.01 COMMITMENT TO LEND. Subject to the terms and conditions of
this Agreement and so long as no Event of Default occurs, the Bank agrees to
extend to the Borrower the credit accommodations that follow.
1.02 TERM LOAN. The Bank agrees to lend to the Borrower, upon the
Borrower's request made prior to March 5, 1999, up to the maximum amount of
$5,600,000 (the "Term Loan"), provided, however, that the initial drawing
hereunder may not exceed $3,640,000.
A. PURPOSE. Proceeds from the Term Loan shall be used to
finance the purchase of a winery located in Soledad, California.
B. TERM LOAN ACCOUNT. The Bank shall maintain on its books a
record of account in which the Bank shall make entries setting forth all
payments made, the application of such payments to interest and principal,
accrued and unpaid interest (if any) and the outstanding principal balance
under the Term Loan (the "Term Loan Account). The Bank shall provide the
Borrower with a monthly statement of the Borrower's Term Loan Account, which
statement shall be considered to be correct and conclusively binding on the
Borrower unless the Borrower notifies the Bank to the contrary within 30 days
after the Borrower's receipt of any such statement which it deems to be
incorrect.
C. INTEREST. The Term Loan shall bear interest at the
following rates at the Borrower's election:
(a) VARIABLE RATE BALANCES. The outstanding principal
balance of the Term Loan ("Term Balance") shall bear interest at a rate equal
to Bank's reference rate, as it may change from time to time, plus 1% per
annum ("Variable Rate Balances"). The rate of interest shall be adjusted
concurrently with any change in Bank's Reference Rate.
(b) FIXED RATE BALANCES. The Borrower may from time to
time elect that the entire Term Balance shall accrue interest on the amount
of such Term Balance at a fixed rate for such period of time as the Bank may
quote and offer; provided that any such period of time (i) shall be for at
least 90, 180 or 360 days and (ii) shall not extend beyond the maturity date
of the Term Loan (the "Interest Period"); and provided further that the then
outstanding Term Balance shall not be less than $250,000. Such interest rate
shall be a percentage approximately equivalent to 2.50% per annum in excess
of the rate which the Bank determines in its sole and absolute discretion to
be equal to the Bank's cost of acquiring funds (adjusted for any and all
assessments, surcharges and reserve requirements pertaining to the Bank's
borrowing or purchase of such funds) in an amount approximately equal to the
amount of the Term Balance and for a period of time approximately equal to
the relevant Interest Period (the "Fixed Rate"). The Term Balance bearing
interest at the Fixed Rate is hereinafter referred to as "Fixed Rate Balance".
(c) EURODOLLAR RATE BALANCES. In addition to Variable
Rate Balances, the Bank hereby agrees to make the Term Balance, accrue
interest at a fixed rate quoted by the Bank for 90 days or for such other
period of time that the Bank may quote and offer (provided that any such
period of time does not extend beyond the maturity date of the loan)
[the "Eurodollar Interest Period"]. Such interest rate shall be a percentage
approximately equivalent to 2.50% in excess of the Bank's Eurodollar Rate
which is that rate determined by the Bank's Treasury Desk as being the
approximate rate at which the Bank could purchase offshore U.S. dollar
deposits in an amount approximately equal to the amount of the Term Loan and
for a period of time approximately equal to the relevant Eurodollar Interest
Period (adjusted for any and all assessments, surcharges and reserve
requirements pertaining to the purchase by the Bank of such U.S. dollar
deposits [the "Eurodollar Rate"]. Term Balances based upon the Eurodollar
Rate are hereinafter referred to as "Eurodollar Rate Balances".
(d) INTEREST PAYMENTS. Borrower hereby promises and
agrees to pay interest on any Fixed Rate
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Balances, Eurodollar Rate Balance and any Variable Rate Balance in arrears on
the fifth calendar day of each month. Interest shall be calculated on the
basis of a year of 360 days for actual days elapsed.
(e) NOTICE OF ELECTION TO ADJUST INTEREST RATE. Upon
telephonic notice which shall be received by the Bank at or before 2:00 p.m.
(California time) on a business day, the Borrower may elect:
(1) That interest on a Variable Rate Balance shall
be adjusted to accrued at the Fixed Rate or the Eurodollar Rate; provided,
however, that such notice shall be received by the Bank no later than two
business days prior to the day (which shall be a business day) on which
Borrower requests that interest be adjusted to accrue at the Fixed Rate or
Eurodollar Rate.
(2) That interest on a Fixed Rate Balance or
Eurodollar Rate Balance shall continue to accrue at a newly quoted Fixed Rate
or Eurodollar Rate or shall be adjusted to commence to accrue at the Variable
Rate; provided, however that such notice shall be received by the Bank no
later than two business days prior to the last day of the Interest Period or
Eurodollar Interest Period pertaining to such Fixed Rate Balance or
Eurodollar Rate Balance as the case may. If the Bank shall not have received
notice as prescribed herein of Borrower's election that interest on any Fixed
Rate Balance or Eurodollar Rate Balance shall continue to accrue at the Fixed
Rate or Eurodollar Rate, Borrower shall be deemed to have elected that
interest thereon shall be adjusted to accrue at the Variable Rate upon the
expiration of the relevant Interest Period or Eurodollar Interest Period
pertaining to such Term Balance.
(f) PROHIBITION AGAINST PREPAYMENT OF FIXED RATE BALANCES
OR EURODOLLAR RATE BALANCES. Notwithstanding anything to the contrary in the
Agreement, no prepayment shall be made on any Fixed Rate Balance or
Eurodollar Rate Balance except on a day which is the last day of the relevant
Interest Period or Eurodollar Interest Period pertaining thereto. If the
whole or any part of any Fixed Rate Balance or Eurodollar Rate Balance is
prepaid by reason of acceleration or otherwise, the Borrower shall, upon the
Bank's request, promptly pay to and indemnify the Bank for all costs and any
loss (including interest) actually incurred by the Bank and any loss
(including loss of profit resulting from the re-employment of funds)
sustained by the Bank as a consequence of such prepayment.
(g) INDEMNIFICATION FOR FIXED RATE COSTS AND EURODOLLAR
RATE COSTS. During any period of time in which interest on any Term Balance
is accruing on the basis of the Fixed Rate or the Eurodollar Rate, the
Borrower shall, upon the Bank's request, promptly pay to and reimburse the
Bank for all costs incurred and payments made by the Bank by reason of any
future assessment, reserve, deposit or similar requirements or any surcharge,
tax or fee imposed upon the Bank or as a result of the Bank's compliance with
any directive or requirement of any regulatory authority pertaining or
relating to funds used by the Bank in quoting and determining the Fixed Rate
or the Eurodollar Rate.
(h) CONVERSION FROM FIXED RATE OR EURODOLLAR RATE TO
VARIABLE RATE. In the event that the Bank shall at any time determine that
the accrual of interest on the basis of the Fixed Rate or the Eurodollar Rate
(i) is infeasible because the Bank is unable to determine the Fixed Rate or
Eurodollar Rate due to the unavailability of U.S. dollar deposits, contracts
or certificates of deposit in an amount approximately equal to the amount of
the relevant Balance and for a period of time approximately equal to the
relevant Interest Period or Eurodollar Interest Period; or (ii) is or has
become unlawful or infeasible by reason of the Bank's compliance with any new
law, rule, regulation, guideline or order, or any new interpretation of any
present law, rule, regulation, guideline or order, then the Bank shall give
telephonic notice thereof (confirmed in writing) to the Borrower, in which
event any Fixed Rate Balance or Eurodollar Rate Balance shall be deemed to be
a Variable Rate Balance and interest shall thereupon immediately accrue at
the Variable Rate.
D. PRINCIPAL. The Borrower hereby promises and agrees to pay
principal in 7 equal installments of $560,000.00 per installment commencing
on March 5, 1998 and continuing on the fifth day of each March of each year
thereafter up to and including March 5, 2004. On March 5, 2005, the Borrower
hereby promises and agrees to pay to the Bank the entire unpaid principal
balance, together with accrued and unpaid interest.
Each payment received by the Bank shall, at the Bank's option, be
applied to pay interest then due and unpaid and the remainder thereof (if
any) shall be applied to pay principal.
E. LATE PAYMENT: If any payment of principal or interest, or
any portion thereof, under this Agreement is not paid within ten (10)
calendar days after it is due, a late payment charge equal to five percent
(5%) of such past due payment may be assessed and shall be immediately
payable.
SECTION II
GUARANTORS/COLLATERAL/REAL PROPERTY
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2.01 GUARANTORS. The indebtedness incurred under and pursuant to
this Agreement shall be guaranteed, in form and substance satisfactory to the
Bank (each a "Guaranty"), by Golden State Acquisition Corp. (each a
"Guarantor").
2.02 THE COLLATERAL: To secure payment and performance of all the
Borrower's Obligations under this Agreement and all other liabilities, loans,
guarantees, covenants and duties owed by the Borrower to the Bank, whether or
not evidenced by this or by any other agreement, absolute or contingent, due
or to become due, now existing or hereafter and howsoever created, the
Borrower hereby grants the Bank a security interest in and to all of the
following property (the "Collateral"):
(a) All goods now owned or hereafter acquired by the Borrower
or in which the Borrower now has or may hereafter acquire any interest,
including, but not limited to, all machinery, equipment, furniture,
furnishings, tools, supplies and motor vehicles of every kind and
description, and all additions, accessions, improvements, replacements and
substitutions thereto and thereof.
(b) All inventory now owned or hereafter acquired by the
Borrower, including, but not limited to, all raw materials, work in process,
finished goods, merchandise, parts and supplies of every kind and
description, including inventory temporarily out of the Borrower's custody or
possession, together with all returns on accounts.
(c) All accounts, contract rights and general intangibles now
owned or hereafter created or acquired by the Borrower, including, but not
limited to, all receivables, goodwill, trademarks, trade styles, trade names,
patents, patent applications, software, customer lists and business records.
(d) All documents, instruments and chattel paper now owned or
hereafter acquired by the Borrower.
(e) All monies, deposit accounts, certificates of deposit and
securities of the Borrower now or hereafter in the Bank's or its agents'
possession.
(f) All crops now growing or hereafter to be grown, together
with all products and proceeds thereof (the "Crops"), on that certain real
property described in the attached Exhibit "A" (the "Real Property").
(g) All farm products now owned or hereafter acquired by or
for the benefit of the Borrower consisting of supplies used or produced in
the farming operations of the Borrower.
(h) All proceeds of the Collateral, including but not limited
to, all accounts, contract rights, documents, instruments and chattel paper
resulting from the sale or disposition of the Collateral.
The Bank's security interest in the Collateral shall be a
continuing lien and shall include the proceeds and products of the Collateral
including, but not limited to, the proceeds of any insurance thereon.
2.03 REAL PROPERTY. The Borrower hereby agrees that all
indebtedness referenced herein to be paid by the Borrower to the Bank and the
Borrower's performance of each and all of the terms, covenants and agreements
contained herein shall be secured by a deed of trust in form and substance
satisfactory to the Bank (the "Deed of Trust") encumbering, as a lien of
first encumbrance, certain real property described in the attached Exhibit
"B" (the "Real Property"), located in the County of Monterey, State of
California, subject only to current taxes and assessments not yet due and
payable and exceptions numbered 1 - 14, all as listed on a certain Commitment
for Title Report No. 1703677 (the "Permitted Title Exceptions") dated June
20, 1996 and issued by Chicago Title Company.
SECTION III
CONDITIONS PRECEDENT
3.01 DELIVERY OF EXECUTED DOCUMENTATION AND OTHER INFORMATION TO
BANK. The Borrower shall, concurrent with its
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execution of this Agreement, deliver or cause to be delivered to the Bank, in
form and substance satisfactory to the Bank:
A. AUTHORITY TO BORROW. Evidence relating to the duly given
approval and authorization of the execution, delivery and performance of this
Agreement, all other documents, instruments or agreements required under this
Agreement and all other actions to be taken by the Borrower hereunder or
thereunder.
B. LOAN DOCUMENTS. The documents described in Section II
hereof, as applicable, and all other documents, instruments or agreements
required or necessary to consummate the transactions contemplated under this
Agreement (collectively the "Loan Documents"), all fully executed.
C. LOAN FEES. Payment of a flat fee of $56,000 and all
out-of-pocket expenses of Bank in connection with the preparation and
negotiation of this Agreement.
D. REAL PROPERTY:
a. An appraisal of the Real Property.
b. A title insurance policy or binder in the amount of
$5,600,000 issued by a title insurance company satisfactory to the Bank and
in such form and substance and with such endorsements as are satisfactory to
the Bank. Such title insurance policy or binder shall indicate to the Bank's
satisfaction that the Deed of Trust shall constitute a lien of first
encumbrance on the Real Property subject only to the Permitted Title
Exceptions.
c. Evidence that the Deed of Trust has been recorded and
constitutes a lien on the Real Property subject only to the Permitted Title
Exceptions.
E. MISCELLANEOUS DOCUMENTS. Such other documents and
opinions as the Bank may require with respect to the transactions described
in this Agreement.
SECTION IV
REPRESENTATIONS AND WARRANTIES
The Borrower hereby makes the following representations and warranties to the
Bank, which representations and warranties are continuing:
4.01 STATUS: The Borrower is a corporation duly organized and
validly existing under the laws of the State of California and is properly
licensed and is qualified to do business and in good standing in, and, where
necessary to maintain the Borrower's rights and privileges, has complied with
the fictitious name statute of every jurisdiction in which the Borrower is
doing business, and where the failure to so qualify or comply would have a
material adverse effect upon the Borrower or its business.
4.02 AUTHORITY: The execution, delivery and performance by the
Borrower of this Agreement and any instrument, document or agreement required
hereunder have been duly authorized and do not and will not: (i) violate any
provision of any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect having application to the
Borrower; (ii) result in a breach of or constitute a default under any
material indenture or loan or credit agreement or other material agreement,
lease or instrument to which the Borrower is a party or by which it or its
properties may be bound or affected; or (iii) require any consent or approval
of its stockholders or violate any provision of its articles of incorporation
or by-laws.
4.03 LEGAL EFFECT. This Agreement constitutes, and any
instrument, document or agreement required hereunder when delivered hereunder
will constitute, legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective terms.
4.04 FICTITIOUS TRADE STYLES: All fictitious trade styles used by
the Borrower in connection with its business operations and each state in
which each such fictitious trade style is used are listed below. The Borrower
shall notify the Bank not less than 30 days prior to effecting any change in
the matters described below or prior to using any other fictitious trade
style at any future date, indicating the trade style and state(s) of its use.
TRADE STYLE STATE OF USE
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See attached Exhibit "C" California
4.05 FINANCIAL STATEMENTS: All financial statements, information
and other data which may have been or which may hereafter be submitted by the
Borrower to the Bank are true, accurate and correct and have been or will be
prepared in accordance with generally accepted accounting principles
consistently applied and accurately represent in accordance with such
principles the financial condition or, as applicable, the other information
disclosed therein. Since the most recent submission of such financial
information or data to the Bank, the Borrower represents and warrants that no
material adverse change in the Borrower's financial condition or operations
has occurred which has not been fully disclosed to the Bank in writing.
4.06 LITIGATION: Except as have been disclosed to the Bank in
writing, there are no actions, suits or proceedings pending or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or
the Borrower's properties before any court or administrative agency which, if
determined adversely to the Borrower, would have a material adverse effect on
the Borrower's financial condition or operations or on the Collateral.
4.07 TITLE TO ASSETS: The Borrower has good and marketable title
to all of its assets (including, but not limited to, the Collateral) and the
same are not subject to any security interest, encumbrance, lien or claim of
any third person except for Permitted Liens.
4.08 ERISA: If the Borrower has a pension, profit sharing or
retirement plan subject to ERISA, such plan has been and will continue to be
funded in accordance with its terms and otherwise complies with and continues
to comply with the requirements of ERISA.
4.09 TAXES: The Borrower has filed all tax returns required to be
filed and paid all taxes shown thereon to be due, including interest and
penalties, other than such taxes which are currently payable without penalty
or interest or those which are being duly contested in good faith.
4.10 ENVIRONMENTAL COMPLIANCE: The Borrower has implemented and
complied in all material respects with all applicable federal, state and
local laws, ordinances, statutes and regulations with respect to hazardous or
toxic wastes, substances or related materials, industrial hygiene or
environmental conditions. There are no suits, proceedings, claims or disputes
pending or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or its property claiming violations of any federal, state or
local law, ordinance, statute or regulation relating to hazardous or toxic
wastes, substances or related materials.
SECTION V
COVENANTS
The Borrower covenants and agrees that, during the term of this
Agreement, and so long thereafter as the Borrower is indebted to the Bank
under this Agreement, the Borrower shall, unless the Bank otherwise consents
in writing:
5.01 PRESERVATION OF EXISTENCE; COMPLIANCE WITH APPLICABLE LAWS.
Maintain and preserve its existence and all rights and privileges now
enjoyed; not liquidate or dissolve, merge or consolidate with or into, or
acquire any other business organization other than the merger of subsidiaries
of the Borrower or acquisitions which qualify as capital expenditures under
Section 5.14 hereof; and conduct its business in accordance with all
applicable laws, rules and regulations.
5.02 MAINTENANCE OF INSURANCE. Maintain insurance in such amounts
and covering such risks as is usually carried by companies engaged in similar
businesses and owning similar properties in the same general areas in which
the Borrower operates and maintain such other insurance and coverages as may
be required by the Bank. All such insurance shall be in form and amount and
with companies satisfactory to the Bank, including, but not limited to
key-man life insurance in the minimum amount of $8,000,000 on the life of
Xxxxxxx X. X'Xxxxx.
5.03 PAYMENT OF OBLIGATIONS AND TAXES. Make timely payment of all
assessments and taxes and all of its liabilities and obligations unless the
same are being contested in good faith.
5.04 INSPECTION RIGHTS. At any reasonable time and from time to
time, permit the Bank or any representative thereof to examine and make
copies of the records and visit the properties of the Borrower and to discuss
the business and operations of the Borrower with any employee or
representative thereof. If the Borrower now or at any time hereafter
maintains any records (including, but not limited to, computer generated
records and computer programs for the generation of such records) in the
possession of a third party, the Borrower hereby agrees to notify such third
party to permit the Bank free access to such records at all reasonable times
and to
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provide the Bank with copies of any records it may request, all at the
Borrower's expense, the amount of which shall be payable immediately upon
demand.
5.05 REPORTING REQUIREMENTS. Deliver or cause to be delivered to
the Bank in form and detail satisfactory to the Bank:
A. Not later than 90 days after the end of each of the
Borrower's fiscal years, a copy of the annual audited financial report of the
Borrower for such year, prepared by a firm of certified public accountants
acceptable to Bank.
B. Not later than 45 days after the end of each month, the
Borrower's financial statement as of the end of such month.
C. Promptly upon the Bank's request, such other information
pertaining to the Borrower or any Guarantor as the Bank may reasonably
request.
5.06 PAYMENT OF DIVIDENDS: Not declare or pay any dividends on
any class of common stock now or hereafter outstanding except dividends
payable solely in the Borrower's capital stock.
5.07 REDEMPTION OR REPURCHASE OF STOCK: Not redeem or repurchase
any class of the Borrower's stock now or hereafter outstanding.
5.08 ADDITIONAL INDEBTEDNESS. Not, and not permit any subsidiary
of the Borrower to, after the date hereof, create, incur or assume, directly
or indirectly, any additional Indebtedness other than (i) Indebtedness owed
or to be owed to the Bank or (ii) Indebtedness to trade creditors incurred in
the ordinary course of the Borrower's business or (iii) Indebtedness of up to
$45,000,000 owed to Xxxxx Winery, Prudential Life Insurance Company and Xxxx
Xxxxxxx Mutual Life Insurance Company or (iv) Indebtedness secured by a
Permitted Lien or (v) Indebtedness in respect of deferred taxes or (vi)
Indebtedness to growers representing the deferred purchase price for
inventory or (vi) Indebtedness subordinated to Indebtedness owed to the Bank
of up to $1,700,000 or (vii) Indebtedness of up to $500,000 owed to Vintners
International, Inc.
5.09 LOANS. Not make any loans or advances or extend credit to
any third person, including, but not limited to, directors, officers,
shareholders, partners, employees, affiliated entities or subsidiaries of the
Borrower, except for credit extended in the ordinary course of the Borrower's
business as presently conducted and except up to an aggregate amount of
$3,000,000 may be loaned to the Borrower's subsidiaries in any one fiscal
year.
5.10 LIENS AND ENCUMBRANCES. Not create, assume or permit to exist
any security interest, encumbrance, mortgage, deed of trust or other lien
(including, but not limited to, a lien of attachment, judgment or execution)
affecting any of the Borrower's properties, or execute or allow to be filed
any financing statement or continuation thereof affecting any of such
properties, except for Permitted Liens and as otherwise provided in this
Agreement.
5.11 TRANSFER ASSETS. Not sell, contract for sale, transfer,
convey, assign, lease or sublet any of its assets except in the ordinary
course of business as presently conducted by the Borrower, and then, only for
full, fair and reasonable consideration, and except up to $250,000 of assets
for any reason in any one fiscal year.
5.12 CHANGE IN NATURE OF BUSINESS. Not make any material change
in its financial structure or in the nature of its business as existing or
conducted as of the date of this Agreement.
5.13 FINANCIAL CONDITION. Maintain at all times:
(a) A minimum net profit after tax at each fiscal year-end of
at least $1.00.
(b) A ratio of the sum of net profit after tax plus
depreciation and amortization and other non-cash transaction to the current
portion of long-term Debt plus preferred stock dividends of not less than
1.25 to 1 at each fiscal year-end.
For purposes of the foregoing, the term "effective tangible net
worth" shall mean the Borrower's stated net worth less all its intangible
assets (i.e., goodwill, trademarks, patents, copyrights, organization expense
and similar intangible items) but including leaseholds and leasehold
improvements and plus indebtedness subordinated (by its terms or by written
agreement) to indebtedness owed by the Borrower to the Bank and the term
"debt" shall mean all of the Borrower's liabilities excluding indebtedness
subordinated (by its terms or by written agreement) to indebtedness owed by
the Borrower to the Bank.
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Notwithstanding anything herein to the contrary, the consolidated
financial statements of Golden State Acquisition Corporation shall be used
for purposes of determining compliance with Section 7.14(b) and (e) hereof.
5.14 CAPITAL EXPENSES. Not make any fixed capital expenditure or
any commitment therefor, including, but not limited to, incurring liability
for leases which would be, in accordance with generally accepted accounting
principles, reported as capital leases, or purchase any real or personal
property in an aggregate amount exceeding $2,500,000 in any one fiscal year,
other than capital expenditures in connection with the Borrower's acquisition
of, or capital improvements to, a winery in Soledad, California, provided
that such capital expenditures may not exceed $8,600,000.
5.15 RENTALS. Not incur liability (in addition to that incurred
as of the date of this Agreement) for the payment of, or pay, rentals for the
renting, leasing or use of real or personal property in an aggregate amount
exceeding $1,500,000 in any one fiscal year.
5.16 NOTICES. Give prompt written notice to the Bank of any and
all Events of Default and litigation, arbitration or administrative
proceedings to which the Borrower is a party and in which the claim or
liability exceeds $100,000.
5.17 ENVIRONMENTAL COMPLIANCE. The Borrower shall:
(a) Implement and comply in all material respects with all
applicable federal, state and local laws, ordinances, statutes and
regulations with respect to hazardous or toxic wastes, substances or related
materials, industrial hygiene or to environmental conditions.
(b) Not own, use, generate, manufacture, store, handle, treat,
release or dispose of any hazardous or toxic wastes, substances or related
materials, except in accordance with applicable requirements of law.
(c) Give prompt written notice of any discovery of or suit,
proceeding, claim, dispute, threat, inquiry or filing respecting hazardous or
toxic wastes, substances or related materials.
(d) At all times indemnify and hold harmless Bank from and
against any and all liability arising out of the use, generation,
manufacture, storage, handling, treatment, disposal or presence of hazardous
or toxic wastes, substances or related materials by Borrower.
SECTION VI
EVENTS OF DEFAULT
Any one or more of the following described events shall constitute
an event of default (an "Event of Default") under this Agreement:
6.01 NON-PAYMENT. The Borrower shall fail to pay any payment of
principal or interest or any other sum referred to in this Agreement within
10 days of when due.
6.02 PERFORMANCE UNDER THIS AND OTHER AGREEMENTS. The Borrower
shall fail in any material respect to perform or observe any term, covenant
or agreement contained in this Agreement or in any document, instrument or
agreement evidencing or relating to any indebtedness of the Borrower (whether
owed to the Bank or third persons other than trade creditors), and any such
failure (exclusive of the failure to pay money to the Bank under this
Agreement which results in an event of default or under any other instrument,
document or agreement with the Bank, which failure shall constitute and be an
immediate Event of Default if not paid when due or when demanded to be due
following the expiration of any applicable grace period) shall continue for
more than 30 days after written notice from the Bank to the Borrower of the
existence and character of such Event of Default.
6.03 REPRESENTATIONS AND WARRANTIES; FINANCIAL STATEMENTS. Any
representation or warranty made by the Borrower under or in connection with
this Agreement or any financial statement given by the Borrower or any
Guarantor shall prove to have been incorrect in any material respect when
made or given or when deemed to have been made or given.
6.04 INSOLVENCY. The Borrower or any Guarantor shall: (i) become
insolvent or be unable to pay its debts as they mature; (ii) make an
assignment for the benefit of creditors or to an agent authorized to
liquidate any substantial amount of its properties or assets; (iii) file a
voluntary petition in bankruptcy or seeking reorganization or to effect a
plan or other arrangement with creditors; (iv) file an answer admitting the
material allegations of an involuntary petition relating to bankruptcy or
reorganization or join in any such petition; (v) become or be adjudicated a
bankrupt; (vi) apply for or consent to the appointment of, or consent that an
order be made appointing,
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any receiver, custodian or trustee, for itself or any of its properties,
assets or businesses; or (vii) any receiver, custodian or trustee shall have
been appointed for all or a substantial part of its properties, assets or
business and shall not be discharged within 60 days after the date of such
appointment.
6.05 EXECUTION. Any writ of execution or attachment or any
judgment lien shall be issued against any property of the Borrower and shall
not be discharged or bonded against or released within 60 days after the
issuance or attachment of such writ or lien.
6.06 REVOCATION OR LIMITATION OF GUARANTY. Any Guaranty shall be
revoked or limited or its enforceability or validity shall be contested by
any Guarantor, by operation of law, legal proceeding or otherwise or any
Guarantor who is a natural person shall die.
6.07 SUSPENSION. The Borrower shall voluntarily suspend the
transaction of business or allow to be suspended, terminated, revoked or
expired any material permit, license or approval of any governmental body
necessary to conduct the Borrower's business as now conducted.
6.08 CHANGE IN OWNERSHIP. There shall occur a sale, transfer,
disposition or encumbrance (whether voluntary or involuntary), or an
agreement shall be entered into to do so, with respect to more than 20% of
the issued and outstanding capital stock of the Borrower, other than warrants
held by Xxxx Xxxxxxx Mutual Life Insurance Company and/or certain of its
respective affiliates.
SECTION VII
REMEDIES ON DEFAULT
Upon the occurrence of any Event of Default, the Bank may, in its
sole and absolute election, without demand and upon only such notice as may
be required by law:
7.01 ACCELERATION. Declare any or all of the Borrower's
indebtedness owing to the Bank, whether under this Agreement or under any
other document, instrument or agreement, immediately due and payable, whether
or not otherwise due and payable.
7.02 CEASE EXTENDING CREDIT. Cease extending credit to or for the
account of the Borrower under this Agreement or under any other agreement now
existing or hereafter entered into between the Borrower and the Bank.
7.03 TERMINATION. Terminate this Agreement as to any future
obligation of the Bank without affecting the Borrower's obligations to the
Bank or the Bank's rights and remedies under this Agreement or under any
other document, instrument or agreement.
7.04 NON-EXCLUSIVITY OF REMEDIES. Exercise one or more of the
Bank's rights set forth herein or seek such other rights or pursue such other
remedies as may be provided by law, in equity or in any other agreement now
existing or hereafter entered into between the Borrower and the Bank, or
otherwise.
SECTION VIII
MISCELLANEOUS PROVISIONS
8.01 ACCOUNTING AND OTHER TERMS. All references to financial
statements, assets, liabilities and similar accounting terms not specifically
defined in this Agreement shall mean such financial statements prepared and
such terms determined in accordance with generally accepted accounting
principles consistently applied. Except where otherwise specified in this
Agreement, all financial data submitted or to be submitted to the Bank
pursuant to this Agreement shall be prepared in accordance with generally
accepted accounting principles consistently applied. Terms not otherwise
defined in this Agreement shall have the meanings attributed to such terms in
the California Uniform Commercial Code.
8.02 DEFAULT INTEREST RATE. The Borrower shall pay the Bank
interest on any indebtedness or amount payable under this Agreement, if an
Event of Default has occurred or is continuing, at a rate which is 3% in
excess of the rate otherwise provided under this Agreement.
8.03 APPLICATION OF PAYMENTS: All amounts received by the Bank
whether as payments or as proceeds from the disposition or liquidation of
collateral, if any, shall be applied to the Borrower's indebtedness to the
Bank as follows: first, to the costs and expenses of collection,
enforcement, protection and preservation, including but not limited to the
Bank's lien in the collateral and
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including court costs and reasonable attorneys' fees, whether or not suit is
commenced by the Bank; next, to those costs and expenses incurred by the Bank
in enforcing and collecting this Agreement including protecting, preserving,
liquidating, selling or disposing of the collateral, if any; next, to the
payment of accrued and unpaid interest on all of the Obligations; next, to
the payment of the outstanding principal balance of the Obligations; and
last, to the payment of any other indebtedness owed by the Borrower to the
Bank. Any excess existing after the payment of the foregoing will be returned
or paid by the Bank to the Borrower.
8.04 DISPUTE RESOLUTION. It is understood and agreed that upon
the request of any party to this agreement any dispute, claim, or controversy
of any kind, whether in contract or in tort, statutory or common law, legal
or equitable now existing or hereinafter arising between the parties in any
way arising out of, pertaining to or in connection with: (1) this Agreement,
or any related agreements, documents, or instruments, (2) all past and
present loans, credits, accounts, deposit accounts (whether demand deposits
or time deposits), safe deposit boxes, safekeeping agreements, guarantees,
letters of credit, goods or services, or other transactions, contracts or
agreements of any kind, (3) any incidents, omissions, acts, practices, or
occurrences causing injury to either party whereby the other party or its
agents, employees or representatives may be liable, in whole or in part, or
(4) any aspect of the past or present relationships of the parties, shall be
resolved through a two-step dispute resolution process administered by
Judicial Arbitration & Mediation Services, Inc. ("J*A*M*S") as follows:
a) STEP I - MEDIATION: At the request of any party to the
dispute, claim or controversy of the matter shall be referred to the
nearest office of J*A*M*S for mediation, that is, an informal,
non-binding conference or conferences between the parties in which a
retired judge or justice for the J*A*M*S panel will seek to guide the
parties to a resolution of the case.
b) STEP II - CONTRACTS SECURED BY REAL ESTATE - TRIAL BY COURT
REFERENCE [SECTION 638(1)] CODE OF CIVIL PROCEDURE): If the dispute,
claim or controversy is not one required or agreed to be submitted to
arbitration as provided by subparagraph (b) and has not been resolved by
Step I mediation, them any remaining dispute, claim or controversy shall
be submitted for determination by a trial on Order of Reference
conducted by a retired judge or justice from the panel of J*A*M*S
appointed pursuant to the provisions of California Code of Civil
Procedure Section 638(1) or any amendment, addition or successor section
thereto to hear the case and report a statement of decision thereon. The
parties intend this general reference agreement to be specifically
enforceable in accordance with said section. If this parties are unable
to agree upon a member of the J*A*M*S panel to act as referee then one
shall be appointed by the Presiding Judge of the county wherein the
hearing is to be held. The parties shall pay in advance, to the referee,
the estimated reasonable fees and costs of the reference, as may be
specified in advance by the referee. The parties shall initially share
equally, by paying their proportionate amount of the estimated fees and
costs of the reference. Failure of any party to make such a fee deposit
shall result in a forfeiture by the non-depositing party of the right to
prosecute or defend the cause(s) of action which is(are) the subject of
the reference, but shall not otherwise serve to xxxxx, stay or suspend
the reference proceeding.
c) PROVISIONAL REMEDIES, SELF HELP AND FORECLOSURE: No
provision of, or the exercise of any right(s) under subparagraph (b),
nor any other provision of this Dispute Resolution Provision, shall
limit the right of any party to exercise self help remedies such as set
off, to foreclose against any real or personal property collateral, or
obtain provisional or ancillary remedies such as injunctive relief or
the appointment of a receiver from any court having jurisdiction before,
during or after the pendency of any MEDIATION OR TRIAL ON ORDER OF
REFERENCE. At Bank's option, foreclosure under a deed of trust or
mortgage may be accomplished either by exercise of power of sale under
the deed of trust or mortgage, or by judicial foreclosure. The
institution and maintenance of an action for provisional remedies pursuit
of provisional or ancillary remedies or exercise of self help remedies
shall not constitute a waiver of the right of any party, including the
plaintiff, to submit the controversy or claim to MEDIATION OR TRIAL ON
ORDER OF REFERENCE.
8.05 WAIVER OF JURY TRIAL. THE BORROWER AND THE BANK EACH WAIVE
THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES
AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS,
TORT CLAIMS, OR OTHERWISE. THE BORROWER AND THE BANK EACH AGREE THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS
TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE
OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
8.06 RELIANCE. Each warranty, representation, covenant and
agreement contained in this Agreement shall be conclusively
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presumed to have been relied upon by the Bank regardless of any investigation
made or information possessed by the Bank and shall be cumulative and in
addition to any other warranties, representations, covenants or agreements
which the Borrower shall now or hereafter give, or cause to be given, to the
Bank.
8.07 ATTORNEY'S FEES. Borrower shall pay to the Bank all costs
and expenses, including but not limited to reasonable attorneys fees,
incurred by Bank in connection with the administration, enforcement, or any
refinancing or restructuring in the nature of a "work-out", of this Agreement
or any document, instrument or agreement executed with respect to, evidencing
or securing the indebtedness hereunder.
8.08 NOTICES. All notices, payments, requests, information and
demands which either party hereto may desire, or may be required to give or
make to the other party, shall be given or made to such party by hand
delivery or through deposit in the United States mail, postage prepaid,
rapifax, Federal Express or by Western Union telegram, addressed to the
address set forth below such party's signature to this Agreement or to such
other address as may be specified from time to time in writing by either
party to the other.
8.09 WAIVER. Neither the failure nor delay by the Bank in
exercising any right hereunder or under any document, instrument or agreement
mentioned herein shall operate as a waiver thereof, nor shall any single or
partial exercise of any right hereunder or under any other document,
instrument or agreement mentioned herein preclude other or further exercise
thereof or the exercise of any other right; nor shall any waiver of any right
or default hereunder or under any other document, instrument or agreement
mentioned herein constitute a waiver of any other right or default or
constitute a waiver of any other default of the same or any other term or
provision.
8.10 CONFLICTING PROVISIONS. To the extent that any of the terms
or provisions contained in this Agreement are inconsistent with those
contained in any other document, instrument or agreement executed pursuant
hereto, the terms and provisions contained herein shall control. Otherwise,
such provisions shall be considered cumulative.
8.11 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Borrower and the Bank and their
respective successors and assigns, except that the Borrower shall not have
the right to assign its rights hereunder or any interest herein without the
Bank's prior written consent. The Bank may sell, assign or grant
participations in all or any portion of its rights and benefits hereunder,
with the prior written consent of the Borrower, which consent shall not be
unreasonably withheld. The Borrower agrees that, in connection with any such
sale, grant or assignment, the Bank may deliver to the prospective buyer,
participant or assignee financial statements and other relevant information
relating to the Borrower.
8.12 JURISDICTION. This Agreement, any notes issued hereunder,
and any documents, instruments or agreements mentioned or referred to herein
shall be governed by and construed according to the laws of the State of
California, to the jurisdiction of whose courts the parties hereby submit.
8.13 HEADINGS. The headings set forth herein are solely for the
purpose of identification and have no legal significance.
8.14 ENTIRE AGREEMENT. This Agreement and the Loan Documents
shall constitute the entire and complete understanding of the parties with
respect to the transactions contemplated hereunder. All previous
conversations, memoranda and writings between the parties or pertaining to
the transactions contemplated hereunder that are not incorporated or
referenced in this Agreement or the Loan Documents are superseded hereby.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date first hereinabove written.
BANK: BORROWER:
SANWA BANK CALIFORNIA GOLDEN STATE VINTNERS
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. X'Xxxxx
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Xxxxxxx X. Xxxxxxxx, Vice President Xxxxxxx X. X'Xxxxx, C.E.O.
----------------------------------- --------------------------------
(Name/Title)
By: N/A
--------------------------------
N/A
--------------------------------
(Name/Title)
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By:
------------------------------------
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(Name/Title)
By:
------------------------------------
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(Name/Title)
Address:
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RECORDING REQUESTED BY
AND WHEN RECORDED, MAIL TO:
SANWA BANK CALIFORNIA
0000 Xxxxxx Xx.
Xxxxxx, XX 00000
ATTN:Xxxxxx Xxxxxxxx
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APN#
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FIRST AMENDMENT TO TERM LOAN AGREEMENT
This First Amendment to Term Loan Agreement [and Deed of Trust] (the
"Amendment") is made and entered into this 18th day of April, 1997 by and
between SANWA BANK CALIFORNIA (the "Bank") and GOLDEN STATE VINTNERS (the
"Borrower") with respect to the following:
This Amendment shall be deemed to be a part of and subject to that
certain Term Loan Agreement dated as of December 18, 1996, as it may be
amended from time to time, and any and all addenda and riders thereto
(collectively the "Agreement"). Unless otherwise defined herein, all terms
used in this Amendment shall have the same meanings as in the Agreement. To
the extent that any of the terms or provisions of this Amendment conflict
with those contained in the Agreement, the terms and provisions contained
herein shall control.
WHEREAS, the Agreement is secured by a certain deed of trust dated
December 18, 1996, and recorded on December 20, 1996, as Instrument No.
76122, Reel 3459, Page 1226 of the Official Records of the County of
Monterey, State of California (the "Deed of Trust") encumbering certain real
property described in the attached Exhibit A and which Deed of Trust provides
that it secures indebtedness evidenced by the Agreement as the Agreement may
be modified or extended; and
WHEREAS, the Borrower and the Bank mutually desire to extend and/or
modify the Agreement.
NOW THEREFORE, for value received and hereby acknowledged, the Borrower
and the Bank agree as follows:
1. MODIFICATION OF INTEREST RATE. The Variable Rate provided for in
Section 1.02 C of the Agreement is reduced by .50% and the Fixed Rate and
Eurodollar Rate are reduced by .30%.
2. CONDITIONS PRECEDENT. As a condition precedent to the
effectiveness of this Agreement,
(a) Borrower agrees to pay to Bank all of Bank's out-of-pocket
expenses in connection with the preparation and negotiation of this Amendment.
(b) Recordation of this Amendment in the official records of
the County of Monterey
(c) A 110.5 endorsement to the Bank's title policy on the real
property.
3. REPRESENTATIONS AND WARRANTIES. The Borrower hereby reaffirms
the representations and warranties contained in the Agreement and represents
that no event, which with notice or lapse of time, could become an Event of
Default, has occurred or is continuing.
4. CONFIRMATION OF OTHER TERMS AND CONDITIONS OF THE AGREEMENT.
Except as specifically provided in this Amendment, all other terms,
conditions and covenants of the Agreement [and the Deed of Trust] unaffected
by this Amendment shall remain unchanged and shall continue in full force and
effect and the Borrower hereby covenants and agrees to perform and observe
all terms, covenants and agreements provided for in the Agreement, as hereby
amended.
5. GOVERNING LAW. This Amendment shall be governed and construed in
accordance with the laws of the State of California to which jurisdiction the
parties hereto hereby consent and submit.
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5. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Amendment has been executed by the parties
hereto as of the date first hereinabove written.
BANK: BORROWER:
SANWA BANK CALIFORNIA GOLDEN STATE VINTNERS
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx, VP CFO
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Name/Title Name/Title
ATTACH NOTARY ACKNOWLEDGEMENT(S)
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