CREDIT AGREEMENT
Exhibit
10.6
RECITALS
Borrower
has requested that Bank extend or continue credit to Borrower as described
below, and Bank has agreed to provide such credit to Borrower on the terms
and
conditions contained herein.
NOW
THEREFORE, for valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, Bank and Borrower hereby agree as follows:
ARTICLE
I
CREDIT
TERMS
SECTION
1.1. TERM
LOAN.
(a) Term
Loan.
Subject
to the terms and conditions of this Agreement, Bank hereby agrees to make
a loan
to Borrower in the principal amount of One Million Six Hundred Ninety Thousand
Dollars ($1,690,000.00) ("Term Loan"), the proceeds of which shall be used
to
refinance Borrower's outstanding credit accommodations from Bank. Borrower's
obligation to repay the Term Loan shall be evidenced by a promissory note
dated
as of March 1, 2004 ("Term Note"), all terms of which are incorporated herein
by
this reference. Bank's commitment to grant the Term Loan shall terminate
on
April 1, 2004.
(b) Repayment.
The
principal amount of the Term Loan shall be repaid in accordance with the
provisions of the Term Note.
(c) Prepayment.
Borrower may prepay principal on the Term Loan solely in accordance with
the
provisions of the Term Note.
SECTION
1.2. INTEREST/FEES.
(a) Interest.
The
outstanding principal balance of the Term Loan shall bear interest at the
rate
of interest set forth in the Term Note.
(b) Computation
and Payment.
Interest shall be computed on the basis of a 360-day year, actual days elapsed.
Interest shall be payable at the times and place set forth in each promissory
note or other instrument or document required hereby.
-1-
(c) Commitment
Fee.
Borrower shall pay to Bank a non-refundable commitment fee for the Term Loan
equal to $5,000.00, which fee shall be due and payable in full upon execution
this Agreement.
SECTION
1.3. COLLECTION
OF PAYMENTS. Borrower authorizes Bank to collect all principal, interest
and
fees due under the Term Loan by charging Borrower's deposit account number
4001175900 with Bank, or any other deposit account maintained by Borrower
with
Bank, for The full amount thereof. Should there be insufficient funds in
any
such deposit account to pay all such sums when due, the full amount of such
deficiency shall be immediately due and payable by Borrower.
SECTION
1.4. COLLATERAL.
As
security for all indebtedness of Borrower to Bank subject hereto, Borrower
hereby grants to Bank a lien of not less than first priority on that certain
real property located at 0000 Xxxxxxxxxxx Xxxxxxx Xxxxx, Xxxxxxxxxx, XX 00000
("Real Property").
All
of
the foregoing shall be evidenced by and subject to the terms of such security
agreements, financing statements, deeds of trust and other documents as Bank
shall reasonably require, all in form and substance satisfactory to Bank.
Borrower shall reimburse Bank immediately upon demand for all costs and expenses
incurred by Bank in connection with any of the foregoing security, including
without limitation, filing and recording fees and costs of appraisals, audits
and title insurance.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES,
Borrower
makes the following representations and warranties to Bank, which
representations and warranties shall survive the execution of this Agreement
and
shall continue in full force and effect until the full and final payment,
and
satisfaction and discharge, of all obligations of Borrower to Bank subject
to
this Agreement.
SECTION
2.1. LEGAL
STATUS. Borrower is a corporation, duly organized and existing and in good
standing under the laws of the State of California, and is qualified or licensed
to do business (and is in good standing as a foreign corporation, if applicable)
in all jurisdictions in which such qualification or licensing is required
or in
which the failure to so qualify or to be so licensed could have a material
adverse effect on Borrower.
SECTION
2.2. AUTHORIZATION
AND VALIDITY. This Agreement and each promissory note, contract, instrument
and
other document required hereby or at any time hereafter delivered to Bank
in
connection herewith (collectively, the "Loan Documents") have been duly
authorized, and upon their execution and delivery in accordance with the
provisions hereof will constitute legal, valid and binding agreements and
obligations of Borrower or the party which executes the same, enforceable
in
accordance with their respective terms.
-2-
SECTION
2.3. NO
VIOLATION. The execution, delivery and performance by Borrower of each of
the
Loan Documents do not violate any provision of any law or regulation, or
contravene any provision of the Articles of Incorporation or By-Laws of
Borrower, or result in any breach of or default under any contract, obligation,
indenture or other instrument to which Borrower is a party or by which Borrower
may be bound.
SECTION
2.4. LITIGATION.
There are no pending, or to the best of Borrower's knowledge threatened,
actions, claims, investigations, suits or proceedings by or before any
governmental authority, arbitrator, court or administrative agency which
could
have a material adverse effect on the financial condition or operation of
Borrower other than those disclosed by Borrower to Bank in writing prior
to the
date hereof.
SECTION
2.5. CORRECTNESS
OF FINANCIAL STATEMENT. The financial statement of Borrower dated June 30,
2003,
a true copy of which has been delivered by Borrower to Bank prior to the
date
hereof, (a) is complete and correct and presents fairly the financial condition
of Borrower, (b) discloses all liabilities of Borrower that are required
to be
reflected or reserved against under generally accepted accounting principles,
whether liquidated or unliquidated, fixed or contingent, and (c) has been
prepared in accordance with generally accepted accounting principles
consistently applied. Since the date of such financial statement there has
been
no material adverse change in the financial condition of Borrower, nor has
Borrower mortgaged, pledged, granted a security interest in or otherwise
encumbered any of its assets or properties except in favor of Bank or as
otherwise permitted by Bank in writing.
SECTION
2.6. INCOME
TAX RETURNS. Borrower has no knowledge of any pending assessments or adjustments
of its income tax payable with respect to any year.
SECTION
2.7. NO
SUBORDINATION. There is no agreement, indenture, contract or instrument to
which
Borrower is a party or by which Borrower may be bound that requires the
subordination in right of payment of any of Borrower's obligations subject
to
this Agreement to any other obligation of Borrower.
SECTION
2.8. PERMITS,
FRANCHISES. Borrower possesses, and will hereafter possess, all permits,
consents, approvals, franchises and licenses required and rights to all
trademarks, trade names, patents, and fictitious names, if any, necessary
to
enable it to conduct the business in which it is now engaged in compliance
with
applicable law.
SECTION
2.9. ERISA.
Borrower is in compliance in all material respects with all applicable
provisions of the Employee Retirement Income Security Act of 1974, as amended
or
recodified from time to time ("ERISA"); Borrower has not violated any provision
of any defined employee pension benefit plan (as defined in ERISA) maintained
or
contributed to by Borrower (each, a "Plan"); no Reportable Event as defined
in
ERISA has occurred and is continuing with respect to any Plan initiated by
Borrower; Borrower has met its minimum funding requirements under ERISA with
respect to each Plan; and each Plan will be able to fulfill its benefit
obligations as they come due in accordance with the Plan documents and under
generally accepted accounting principles.
-3-
SECTION
2.10. OTHER
OBLIGATIONS. Borrower is not in default on any obligation for borrowed money,
any purchase money obligation or any other material lease, commitment, contract,
instrument or obligation.
SECTION
2.11. ENVIRONMENTAL
MATTERS. Except as disclosed by Borrower to Bank in writing prior to the
date
hereof, Borrower is in compliance in all material respects with all applicable
federal or state environmental, hazardous waste, health and safety statutes,
and
any rules or regulations adopted pursuant thereto, which govern or affect
any of
Borrower's operations and/or properties, including without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Superfund Amendments and Reauthorization Act of 1986, the Federal Resource
Conservation and Recovery Act of 1976, and the Federal Toxic Substances Control
Act, as any of the same may be amended, modified or supplemented from time
to
time. None of the operations of Borrower is the subject of any federal or
state
investigation evaluating whether any remedial action involving a material
expenditure is needed to respond to a release of any toxic or hazardous waste
or
substance into the environment. Borrower has no material contingent liability
in
connection with any release of any toxic or hazardous waste or substance
into
the environment.
SECTION
2.12. REAL
PROPERTY COLLATERAL. Except as disclosed by Borrower to Bank in writing prior
to
the date hereof, with respect to any real property collateral required
hereby:
(a) All
taxes, governmental assessments, insurance premiums, and water, sewer and
municipal charges, and rents (if any) which previously became due and owing
in
respect thereof have been paid as of the date hereof.
(b) There
are
no mechanics' or similar liens or claims which have been filed for work,
labor
or material (and no rights are outstanding that under law could give rise
to any
such lien) which affect all or any interest in any such real property and
which
are or may be prior to or equal to the lien thereon in favor of
Bank.
(c) None
of
the improvements which were included for purpose of determining the appraised
value of any such real property lies outside of the boundaries and/or building
restriction lines thereof, and no improvements on adjoining properties
materially encroach upon any such real property.
(d) There
is
no pending, or to the best of Borrower's knowledge threatened, proceeding
for
the total or partial condemnation of all or any portion of any such real
property, and all such real property is in good repair and free and clear
of any
damage that would materially and adversely affect the value thereof as security
and/or the intended use, thereof.
-4-
ARTICLE
III
CONDITIONS
SECTION
3.1. CONDITIONS
OF INITIAL EXTENSION OF CREDIT. The obligation of Bank to extend any credit
contemplated by this Agreement is subject to the fulfillment to Bank's
satisfaction of all of the following conditions:
(a) Approval
of Bank Counsel.
All
legal matters incidental to the extension of credit by Bank shall be
satisfactory to Bank's counsel.
(b) Documentation.
Bank
shall have received, in form and substance satisfactory to Bank, each of
the
following, duly executed:
(i) This
Agreement and each promissory note or other instrument or document required
hereby.
(ii) Corporate
Resolution: Borrowing.
(iii) Certificate
of Incumbency.
(iv) Deed
of
Trust and Assignment of Rents and Leases and any modifications.
(v) Such
other documents as Bank may require under any other Section of this
Agreement.
(c) Financial
Condition.
There
shall have been no material adverse change, as determined by Bank, in the
financial condition or business of Borrower, nor any material decline, as
determined by Bank, in the market value of any collateral required hereunder
or
a substantial or material portion of the assets of Borrower.
(d) Insurance.
Borrower shall have delivered to Bank evidence of insurance coverage on all
Borrower's property, in form, substance, amounts, covering risks and issued
by
companies satisfactory to Bank, and where required by Bank, with loss payable
endorsements in favor of Bank, including without limitation, policies of
fire
and extended coverage insurance covering all real property collateral required
hereby, with replacement cost and mortgagee loss payable endorsements, and
such
policies of insurance against specific hazards affecting any such real property
as may be required by governmental regulation or Bank.
(e) Appraisals.
Bank
shall have obtained, at Borrower's cost, an appraisal of all real property
collateral required hereby, and all improvements thereon, issued by an appraiser
acceptable to Bank and in form, substance and reflecting values satisfactory
to
Bank, in its discretion.
(f) Title
Insurance.
Bank
shall have received an ALTA Policy of Title Insurance, with such endorsements
as
Bank may require, issued by a company and in form and substance satisfactory
to
Bank, in such amount as Bank shall require, insuring Bank's lien on the real
property collateral required hereby to be of first priority, subject only
to
such exceptions as Bank shall approve in its discretion, with all costs thereof
to be paid by Borrower.
-5-
(g) Tax
Service Contract.
Borrower shall have procured and delivered to Bank, at Borrower's cost, such
tax
service contract as Bank shall require for any real property collateral required
hereby, to remain in effect as long as such real property secures any
obligations of Borrower to Bank as required hereby.
SECTION
3.2. CONDITIONS
OF EACH EXTENSION OF CREDIT. The obligation of Bank to make each extension
of
credit requested by Borrower hereunder shall be subject to the fulfillment
to
Bank's satisfaction of each of the following conditions:
(a) Compliance.
The
representations and warranties contained herein and in each of the other
Loan
Documents shall be true on and as of the date of the signing of this Agreement
and on the date of each extension of credit by Bank pursuant hereto, with
the
same effect as though such representations and warranties had been made on
and
as of each such date, and on each such date, no Event of Default as defined
herein, and no condition, event or act which with the giving of notice or
the
passage of time or both would constitute such an Event of Default, shall
have
occurred and be continuing or shall exist.
(b) Documentation.
Bank
shall have received all additional documents which may be required in connection
with such extension of credit.
ARTICLE
IV
AFFIRMATIVE
COVENANTS
Borrower
covenants that so long as Bank remains committed to extend credit to Borrower
pursuant hereto, or any liabilities (whether direct or contingent, liquidated
or
unliquidated) of Borrower to Bank under any of the Loan Documents remain
outstanding, and until payment in full of all obligations of Borrower subject
hereto, Borrower shall, unless Bank otherwise consents in writing:
SECTION
4.1. PUNCTUAL
PAYMENTS. Punctually pay all principal, interest, fees or other liabilities
due
under any of the Loan Documents at the times and place and in the manner
specified therein.
SECTION
4.2. ACCOUNTING
RECORDS. Maintain adequate books and records in accordance with generally
accepted accounting principles consistently applied, and permit any
representative of Bank, at any reasonable time, to inspect, audit and examine
such books and records, to make copies of the same, and to inspect the
properties of Borrower.
SECTION
4.3. FINANCIAL STATEMENTS. Provide to Bank all of the following, in form
and
detail satisfactory to Bank:
(a) not
later
than 120 days after and as of the end of each fiscal year, an audited financial
statement of Borrower, prepared by a certified public accountant acceptable
to
Bank, to include balance sheet and income statement;
-6-
(b) not
later
than 45 days after and as of each June 30 and December 31, an operating
statement and rent roll for the Real Property;
(c) not
later
than September 1, 2004, an Operations and Maintenance Plan which addresses
the
implementation plan for the "in place" management of asbestos containing
materials with respect to the Real Property, with such implementation plan
to be
acceptable to Bank;
(d) not
later
than September 1, 2004, copy of the official closure notice from the State
of
California with respect to soil and groundwater contamination issues in
connection with the underground storage tank previously at the Real Property;
and
(e) from
time
to time such other information as Bank may reasonably request.
SECTION
4.4. COMPLIANCE.
Preserve and maintain all licenses, permits, governmental approvals, rights,
privileges and franchises necessary for the conduct of its business; and
comply
with the provisions of all documents pursuant to which Borrower is organized
and/or which govern Borrower's continued existence and with the requirements
of
all laws, rules, regulations and orders of any governmental authority applicable
to Borrower and/or its business.
SECTION
4.5. INSURANCE.
Maintain and keep in force insurance of the types and in amounts customarily
carried in lines of business similar to that of Borrower, including but not
limited to fire, extended coverage, public liability, flood, property damage
and
workers' compensation, with all such insurance carried with companies and
in
amounts satisfactory to Bank, and deliver to Bank from time to time at Bank's
request schedules setting forth all insurance then in effect.
SECTION
4.6. FACILITIES.
Keep all properties useful or necessary to Borrower's business in good repair
and condition, and from time to time make necessary repairs, renewals and
replacements thereto so that such properties shall be fully and efficiently
preserved and maintained.
SECTION
4.7. TAXES
AND
OTHER LIABILITIES. Pay and discharge when due any and all indebtedness,
obligations, assessments and taxes, both real or personal, including without
limitation federal and state income taxes and state and local property taxes
and
assessments, except such (a) as Borrower may in good faith contest or as
to
which a bona fide dispute may arise, and (b) for which Borrower has made
provision, to Bank's satisfaction, for eventual payment thereof in the event
Borrower is obligated to make such payment.
SECTION
4.8. LITIGATION.
Promptly give notice in writing to Bank of any litigation pending or threatened
against Borrower.
-7-
SECTION
4.9. FINANCIAL
CONDITION. Maintain Borrower's financial condition as follows using generally
accepted accounting principles consistently applied and used consistently
with
prior practices (except to the extent modified by the definitions
herein):
(a) Debt
Service Coverage Ratio not less than 1.25 to 1.0 on an annual basis, determined
as of each fiscal year end, with "Debt Service Coverage Ratio" defined as
the
aggregate of gross income received by Borrower from the Real Property in
each
fiscal year less all expenses (excluding depreciation and interest expense)
paid
by Borrower in connection with the Real Property in such fiscal year divided
by
principal and interest payments on debt secured by the Real Property during
such
fiscal year.
SECTION
4.10. NOTICE
TO
BANK. Promptly (but in no event more than five (5) days after the occurrence
of
each such event or matter) give written notice to Bank in reasonable detail
of:
(a) the occurrence of any Event of Default, or any condition, event or act
which
with the giving of notice or the passage of time or both would constitute
an
Event of Default; (b) any change in the name or the organizational structure
of
Borrower; (c) the occurrence and nature of any Reportable Event or Prohibited
Transaction, each as defined in ERISA, or any funding deficiency with respect
to
any Plan; or (d) any termination or cancellation of any insurance policy
which
Borrower is required to maintain, or any uninsured or partially uninsured
loss
through liability or property damage, or through fire, theft or any other
cause
affecting Borrower's property.
ARTICLE
V
NEGATIVE
COVENANTS
Borrower
further covenants that so long as Bank remains committed to extend credit
to
Borrower pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations of Borrower
subject hereto, Borrower will not without Bank's prior written
consent:
SECTION
5.1. USE
OF
FUNDS. Use any of the proceeds of any credit extended hereunder except for
the
purposes stated in Article I hereof.
SECTION
5.2. OTHER
INDEBTEDNESS. Create, incur, assume or permit to exist any indebtedness or
liabilities resulting from borrowings, loans or advances, whether secured
or
unsecured, matured or unmatured, liquidated or unliquidated, joint or several,
except (a) the liabilities of Borrower to Bank, and (b) any other liabilities
of
Borrower existing as of, and disclosed to Bank prior to, the date
hereof.
SECTION
5.3. MERGER,
CONSOLIDATION, TRANSFER OF ASSETS. Merge into or consolidate with any other
entity; make any substantial change in the nature of Borrower's business
as
conducted as of the date hereof; acquire all or substantially all of the
assets
of any other entity; nor sell, lease, transfer or otherwise dispose of all
or a
substantial or material portion of Borrower's assets except in the ordinary
course of its business.
-8-
SECTION
5.4. PLEDGE
OF
ASSETS. Mortgage, pledge, grant or permit to exist a security interest in,
or
lien upon, all or any portion of Borrower's assets now owned or hereafter
acquired, except any of the foregoing in favor of Bank or which is existing
as
of, and disclosed to Bank in writing prior to, the date hereof.
ARTICLE
VI
EVENTS
OF DEFAULT
SECTION
6.1. The
occurrence of any of the following shall constitute an "Event of Default"
under
this Agreement:
(a) Borrower
shall fail to pay when due any principal, interest, fees or other amounts
payable under any of the Loan Documents.
(b) Any
financial statement or certificate furnished to Bank in connection with,
or any
representation or warranty made by Borrower or any other party under this
Agreement or any other Loan Document shall prove to be incorrect, false or
misleading in any material respect when furnished or made.
(c) Any
default in the performance of or compliance with any obligation, agreement
or
other provision contained herein or in any other Loan Document (other than
those
referred to in subsections (a) and (b) above), and with respect to any such
default which by its nature can be cured, such default shall continue for
a
period of twenty (20) days from its occurrence.
(d) Any
default in the payment or performance of any obligation, or any defined event
of
default, under the terms of any contract or instrument (other than any of
the
Loan Documents) pursuant to which Borrower, any guarantor hereunder or any
general partner or joint venturer in any Borrower which is a partnership
or
joint venture (with each such guarantor, general partner and/or joint venturer
referred to herein as a "Third Party Obligor") has incurred any debt or other
liability to any person or entity, including Bank.
(e) The
filing of a notice of judgment lien against Borrower or any Third Party Obligor;
or the recording of any abstract of judgment against Borrower or any Third
Party
Obligor in any county in which Borrower or such Third Party Obligor has an
interest in real property; or the service of a notice of levy and/or of a
writ
of attachment or execution, or other like process, against the assets of
Borrower or any Third Party Obligor; or the entry of a judgment against Borrower
or any Third Party Obligor.
(f) Borrower
or any Third Party Obligor shall become insolvent, or shall suffer or consent
to
or apply for the appointment of a receiver, trustee, custodian or liquidator
of
itself or any of its property, or shall generally fail to pay its debts as
they
become due, or shall make a general assignment for the benefit of creditors;
Borrower or any Third Party Obligor shall file a voluntary petition in
bankruptcy, or seeking reorganization, in order to effect a plan or other
arrangement with creditors or any other relief under the Bankruptcy Reform
Act,.Title 11 of the United States Code, as amended or recodified from time
to
time ("Bankruptcy Code"), or under any state or federal law granting relief
to
debtors, whether now or hereafter in effect; or any involuntary petition
or
proceeding pursuant to the Bankruptcy Code or any other applicable state
or
federal law relating to bankruptcy, reorganization or other relief for debtors
is filed or commenced against Borrower or any Third Party Obligor, or Borrower
or any Third Party Obligor shall file an answer admitting the jurisdiction
of
the court and the material allegations of any involuntary petition; or Borrower
or any Third Party Obligor shall be adjudicated a bankrupt, or an order for
relief shall be entered against Borrower or any Third Party Obligor by any
court
of competent jurisdiction under the Bankruptcy Code or any other applicable
state or federal law relating to bankruptcy, reorganization or other relief
for
debtors.
-9-
(g) There
shall exist or occur any event or condition which Bank in good faith believes
impairs, or is substantially likely to impair, the prospect of payment or
performance by Borrower of its obligations under any of the Loan
Documents.
(h) The
death
or incapacity of any individual Borrower or Third Party Obligor. The dissolution
or liquidation of any Borrower or Third Party Obligor which is a corporation,
partnership, joint venture or other type of entity; or Borrower or any such
Third Party Obligor, or any of its directors, stockholders or members, shall
take action seeking to effect the dissolution or liquidation of such Borrower
or
Third Party Obligor.
(i) The
sale,
transfer, hypothecation, assignment or encumbrance, whether voluntary,
involuntary or by operation of law, without Bank's prior written consent,
of all
or any part of or interest in any real property collateral required
hereby.
SECTION
6.2. REMEDIES.
Upon the occurrence of any Event of Default: (a) all indebtedness of Borrower
under each of the Loan Documents, any term thereof to the contrary
notwithstanding, shall at Bank's option and without notice become immediately
due and payable without presentment, demand, protest or notice of dishonor,
all
of which are hereby expressly waived by each Borrower; (b) the obligation,
if
any, of Bank to extend any further credit under any of the Loan Documents
shall
immediately cease and terminate; and (c) Bank shall have all rights, powers
and
remedies available under each of the Loan Documents, or accorded by law,
including without limitation the right to resort to any or all security for
any
credit subject hereto and to exercise any or all of the rights of a beneficiary
or secured party pursuant to applicable law. All rights, powers and remedies
of
Bank may be exercised at any time by Bank and from time to time after the
occurrence of an Event of Default, are cumulative and not exclusive, and
shall
be in addition to any other rights, powers or remedies provided by law or
equity.
ARTICLE
VII
MISCELLANEOUS
SECTION
7.1. NO
WAIVER. No delay, failure or discontinuance of Bank in exercising any right,
power or remedy under any of the Loan Documents shall affect or operate as
a
waiver of such right, power or remedy; nor shall any single or partial exercise
of any such right, power or remedy preclude, waive or otherwise affect any
other
or further exercise thereof or the exercise of any other right, power or
remedy.
Any wavier, permit, consent or approval of any kind by Bank of any breach
of or
default under any of the Loan Documents must be in writing and shall be
effective only to the extent set forth in such writing.
-10-
SECTION
7.2. NOTICES. All notices, requests and demands which any party is required
or
may desire to give to any other party under any provision of this Agreement
must
be in writing delivered to each party at the following address:
| BORROWER: |
SONOMAWEST
HOLDINGS, INC.
|
0000
Xxxxxxx 000 X.
Xxxxxxxxxx,
XX 00000
| BANK: |
XXXXX
FARGO BANK, NATIONAL ASSOCIATION
|
North
Coast Regional Commercial Banking Xxxxxx
000
X
Xxxxxx, 0xx
Xxxxx
Xxxxx
Xxxx, XX 00000
or
to
such other address as any party may designate by written notice to all other
parties. Each such notice, request and demand shall be deemed given or made
as
follows: (a) if sent by hand delivery, upon delivery; (b) if sent by mail,
upon
the earlier of the date of receipt or three (3) days after deposit in the
U.S.
mail, first class and postage prepaid; and (c) if sent by telecopy, upon
receipt.
SECTION
7.3. COSTS,
EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to Bank immediately upon
demand
the full amount of all payments, advances, charges, costs and expenses,
including reasonable attorneys' fees (to include outside counsel fees and
all
allocated costs of Bank's in-house counsel), expended or incurred by Bank
in
connection with (a) the negotiation and preparation of this Agreement and
the
other Loan Documents, Bank's continued administration hereof and thereof,
and
the preparation of any amendments and waivers hereto and thereto, (b) the
enforcement of Bank's rights and/pr the collection of any amounts which become
due to Bank under any of the Loan Documents, and (c) the prosecution or defense
of any action in any way related to any of the Loan Documents, including
without
limitation, any action for declaratory relief, whether incurred at the trial
or
appellate level, in an arbitration proceeding or otherwise, and including
any of
the foregoing incurred in connection with any bankruptcy proceeding (including
without limitation, any adversary proceeding, contested matter or motion
brought
by Bank or any other person) relating to any Borrower or any other person
or
entity.
SECTION
7.4. SUCCESSORS,
ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit
of the
heirs, executors, administrators, legal representatives, successors and assigns
of the parties; provided however, that Borrower may not assign or transfer
its
interest hereunder without Bank's prior written consent Bank reserves the
right
to sell, assign, transfer, negotiate or grant participations in all or any
part
of, or any interest in, Bank's rights and benefits under each of the Loan
Documents. In connection therewith, Bank may disclose all documents and
information which Bank now has or may hereafter acquire relating to any credit
subject hereto, Borrower or its business, or any collateral required
hereunder.
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SECTION
7.5. ENTIRE
AGREEMENT; AMENDMENT. This Agreement and the other Loan Documents constitute
the
entire agreement between Borrower and Bank with respect to each credit subject
hereto and supersede all prior negotiations, communications, discussions
and
correspondence concerning the subject matter hereof. This Agreement may be
amended or modified only in writing signed by each party hereto.
SECTION
7.6. NO
THIRD
PARTY BENEFICIARIES. This Agreement is made and entered into for the sole
protection and benefit of the parties hereto and their respective permitted
successors and assigns, and no other person or entity shall be a third party
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement or any other of the Loan Documents to which
it
is not a party.
SECTION
7.7. TIME.
Time is of the essence of each and every provision of this Agreement and
each
other of the Loan Documents.
SECTION
7.8. SEVERABILITY
OF PROVISIONS. If any provision of this Agreement shall be prohibited by
or
invalid under applicable law, such provision shall be ineffective only to
the
extent of such prohibition or invalidity without invalidating the remainder
of
such provision or any remaining provisions of this Agreement.
SECTION
7.9. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
when
executed and delivered shall be deemed to be an original, and all of which
when
taken together shall constitute one and the same Agreement.
SECTION
7.10. GOVERNING
LAW. This Agreement shall be governed by and construed in accordance with
the
laws of the State of California.
SECTION
7.11. ARBITRATION.
(a) Arbitration.
The
parties hereto agree, upon demand by any party, to submit to binding arbitration
all claims, disputes and controversies between or among them (and their
respective employees, officers, directors, attorneys, and other agents),
whether
in tort, contract or otherwise arising out of or relating to in any way (i)
the
loan and related Loan Documents which are the subject of this Agreement and
its
negotiation, execution, collateralization, administration, repayment,
modification, extension, substitution, formation, inducement, enforcement,
default or termination; or (ii) requests for additional credit.
(b) Governing
Rules.
Any
arbitration proceeding will (i) proceed in a location in California selected
by
the American Arbitration Association ("AAA"); (ii) be governed by the Federal
Arbitration Act (Title 9 of the United States Code), notwithstanding any
conflicting choice of law provision in any of the documents between the parties;
and (iii) be conducted by the AAA, or such other administrator as the parties
shall mutually agree upon, in accordance with the AAA's commercial dispute
resolution procedures, unless the claim or counterclaim is at least
$1,000,000.00 exclusive of claimed interest, arbitration fees and costs in
which
case the arbitration shall be conducted in accordance with the AAA's optional
procedures for large, complex commercial disputes (the commercial dispute
resolution procedures or the optional procedures for large, complex commercial
disputes to be referred to, as applicable, as the "Rules"). If there is any
inconsistency between the terms hereof and the Rules, the terms and procedures
set forth herein shall control. Any party who fails or refuses to submit
to
arbitration following a demand by any other party shall bear all costs and
expenses incurred by such other party in compelling arbitration of any dispute.
Nothing contained herein shall be deemed to be a waiver by any party that
is a
bank of the protections afforded to it under 12 U.S.C. §91 or any similar
applicable state law.
-12-
(c) No
Waiver of Provisional Remedies, Self-Help and Foreclosure.
The
arbitration requirement does not limit the right of any party to (i) foreclose
against real or personal property collateral; (ii) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after
the
pendency of any arbitration proceeding. This exclusion does not constitute
a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise
of
the actions detailed in sections (i), (ii) and (iii) of this
paragraph.
(d) Arbitrator
Qualifications and Powers.
Any
arbitration proceeding in which the amount in controversy is $5,000,000.00
or
less will be decided by a single arbitrator selected according to the Rules,
and
who shall not render an award of greater than $5,000,000.00. Any dispute
in
which the amount in controversy exceeds $5,000,000.00 shall be decided by
majority vote of a panel of three arbitrators; provided however, that all
three
arbitrators must actively participate in all hearings and deliberations.
The
arbitrator will be a neutral attorney licensed in the State of California
or a
neutral retired judge of the state or federal judiciary of California, in
either
case with a minimum of ten years experience in the substantive law applicable
to
the subject matter of the dispute to be arbitrated. The arbitrator will
determine whether or not an issue is arbitratable and will give effect to
the
statutes of limitation in determining any claim. In any arbitration proceeding
the arbitrator will decide (by documents only or with a hearing at the
arbitrator's discretion) any pre-hearing motions which are similar to motions
to
dismiss for failure to state a claim or motions for summary adjudication.
The
arbitrator shall resolve all disputes in accordance with the substantive
law of
California and may grant any remedy or relief that a court of such state
could
order or grant within the scope hereof and such ancillary relief as is necessary
to make effective any award. The arbitrator shall also have the power to
award
recovery of all costs and fees, to impose sanctions and to take such other
action as the arbitrator deems necessary to the same extent 8 judge could
pursuant to the Federal Rules of Civil Procedure, the California Rules of
Civil
Procedure or other applicable law. Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction. The institution
and
maintenance of an action for judicial relief or pursuit provisional or ancillary
remedy shall not constitute a waiver of the right of any party, including
the
plaintiff, to submit the controversy or claim to arbitration if any other
party
contests such action for judicial relief.
(e) Discovery.
In any
arbitration proceeding discovery will be permitted in accordance with the
Rules.
All discovery shall be expressly limited to matters directly relevant to
the
dispute being arbitrated and must be completed no later than 20 days before
the
hearing date and within 180 days of the filing of the dispute with the AAA.
Any
requests for an extension of the discovery periods, or any discovery disputes,
will be subject to final determination by the arbitrator upon a showing that
the
request for discovery is essential for the party's presentation and that
no
alternative means for obtaining information is available.
-13-
(f) Class
Proceedings and Consolidations.
The
resolution of any dispute arising pursuant to the terms of this Agreement
shall
be determined by a separate arbitration proceeding and such dispute shall
not be
consolidated with other disputes or included in any class
proceeding.
(g) Payment
Of Arbitration Costs And Fees.
The
arbitrator shall award all costs and expenses of the arbitration
proceeding.
(h) Real
Property Collateral; Judicial Reference.
Notwithstanding anything herein to the contrary, no dispute shall be submitted
to arbitration if the dispute concerns indebtedness secured directly or
indirectly, in whole or in part, by any real property unless (i) the holder
of
the mortgage, lien or security interest specifically elects in writing to
proceed with the arbitration, or (ii) all parties to the arbitration waive
any
rights or benefits that might accrue to them by virtue of the single action
rule
statute of California, thereby agreeing that all indebtedness and obligations
of
the parties, and all mortgages, liens and security interests securing such
indebtedness and obligations, shall remain fully valid and enforceable. If
any
such dispute is not submitted to arbitration, the dispute shall be referred
to a
referee in accordance with California Code of Civil Procedure Section 638
et
seq., and this general reference agreement is intended to be specifically
enforceable in accordance with said Section 638. A referee with the
qualifications required herein for arbitrators shall be selected pursuant
to the
AAA's selection procedures. Judgment upon the decision rendered by a referee
shall be entered in the court in which such proceeding was commenced in
accordance with California Code of Civil Procedure Sections 644 and
645.
(i) Miscellaneous.
To the
maximum extent practicable, the AAA, the arbitrators and the parties shall
take
all action required to conclude any arbitration proceeding within 180 days
of
the filing of the dispute with the AAA. No arbitrator or other party to an
arbitration proceeding may disclose the existence, content or results thereof,
except for disclosures of information by a party required in the ordinary
course
of its business or by applicable law or regulation. If more than one agreement
for arbitration by or between the parties potentially applies to a dispute,
the
arbitration provision most directly related to the Loan Documents or the
subject
matter of the dispute shall control. This arbitration provision shall survive
termination, amendment or expiration of any of the Loan Documents or any
relationship between the parties.
-14-
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as
of the day and year first written above.
|
SONOMAWEST HOLDINGS, INC.
By: /s/
Xxxxx
Xxxxx
Xxxxx
Xxxxx
Chairman
of the Board
|
XXXXX
FARGO BANK,
NATIONAL
ASSOCIATION
By: /s/
Xxxx
Xxxxxxx
Xxxx
Xxxxxxx
Relationship
Manager
|
-15-
