RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
XXXXXX, XXXXXXXXXX & XXXXXXXXX
Old Federal Reserve Bank Building
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
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INTERCREDITOR AGREEMENT
THIS INTERCREDITOR AGREEMENT dated as of April 21, 1995 (this
"Intercreditor Agreement"), is entered into by and between Golden State
Vintners, a California corporation (the "Company"), Xxxx Xxxxxxx Mutual Life
Insurance Company, a Massachusetts life insurance company ("Xxxx Xxxxxxx"), and
Sanwa Bank California, a California banking corporation ("Sanwa Bank").
RECITALS
WHEREAS, Xxxx Xxxxxxx proposes to purchase from the Company $35,000,000 in
aggregate principal amount of mortgage notes (the "MORTGAGE NOTES") pursuant to
that certain Securities Purchase Agreement dated the date hereof (the "XXXX
XXXXXXX AGREEMENT");
WHEREAS, the Company's obligations under the Mortgage Notes are secured by
each Deed of Trust with Assignment of Rents and Fixture Filing dated as of the
date hereof (collectively, the "MORTGAGES") executed by the Company in favor of
Xxxx Xxxxxxx, which encumbers certain real property more particularly described
on SCHEDULE I hereto (the "REAL PROPERTY"), and which are being recorded
concurrently herewith in the Official Records of the Counties of Fresno, Kern,
Madera, Napa and Tulare, California;
WHEREAS, the Company has granted a security interest in certain collateral
to Xxxx Xxxxxxx to secure the Company's obligations under the Mortgage Notes
pursuant to the Security Agreement dated the date hereof between the Company and
Xxxx Xxxxxxx (the "XXXX XXXXXXX SECURITY AGREEMENT");
WHEREAS, Sanwa Bank proposes to make an $8,000,000 revolving credit
facility (the "REVOLVER") available to the Company pursuant to that certain
Account Receivables Credit Agreement dated the date hereof between the Company
and Sanwa Bank (the "REVOLVER AGREEMENT");
WHEREAS, Sanwa Bank proposes to lend to the Company a term loan in a
principal amount not to exceed the lesser of $4,500,000 or 75% of the appraised
value of a xxxxxx processing facility located in Reedley, California (together
with the Revolver, the "SANWA LOAN"), pursuant to that certain Term Loan Credit
Agreement to be entered into by the Company and Sanwa Bank (together with the
Revolver Agreement, the "SANWA AGREEMENTS");
WHEREAS, the Company has granted a security interest in certain collateral
to Sanwa Bank to secure the Company's obligations under the Sanwa Agreements
pursuant to a Security Agreement dated the date hereof between the Company and
Sanwa Bank (the "SANWA SECURITY AGREEMENT");
WHEREAS, the Company, Xxxx Xxxxxxx and Sanwa Bank desire to enter into this
Intercreditor Agreement with respect to the relative priorities, utilization
and enforcement of remedies with respect to the collateral described herein
pursuant to the Xxxx Xxxxxxx Agreement, the Mortgages, the Xxxx Xxxxxxx Security
Agreement, the Sanwa Agreements and the Sanwa Security Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. DESCRIPTION OF COLLATERAL. The Company, Xxxx Xxxxxxx and Sanwa Bank
agree and acknowledge that, notwithstanding the date, manner or order of
perfection of the security interests granted to Xxxx Xxxxxxx and Sanwa Bank, any
provision of the California Uniform Commercial Code or any other applicable law
or decision, or any provisions in the Xxxx Xxxxxxx Security Agreement, the Sanwa
Security Agreement or any other agreement:
(a) Sanwa Bank has a first priority security interest in the
Company's interests in (i) the collateral described on SCHEDULE II hereto,
except for Permitted Liens as described in the Sanwa Agreements, and
(ii) the wine grape and processing contracts to which the Company is a
party (the "GRAPE CONTRACTS").
(b) The security interests of Sanwa Bank and Xxxx Xxxxxxx in all of
the Company's interests in (i) the promissory note payable to the Company
for $1,300,000 in initial principal amount executed by Golden State
Acquisition Corporation (the "INTERCOMPANY NOTE") and (ii) general
intangibles (other than the Wine Grape Contracts to the extent they
constitute general intangibles), including, but not limited to, all
goodwill, trademarks, trade styles, trade names, customer lists and
business records, shall rank equally and pari passu. Sanwa Bank agrees
that it has possession of the Intercompany Note on behalf of itself and
Xxxx Xxxxxxx.
(c) Xxxx Xxxxxxx has a first priority security interest in all of the
Company's interests in the Real Property and the fixtures thereto, and in
all other personal property not described in paragraphs (a) and (b) of this
Section 1, except for Permitted Liens (as defined in the Xxxx Xxxxxxx
Agreement), and a second priority security interest in the Sanwa Bank
collateral described in paragraph (a) of this Section 1.
2. XXXX XXXXXXX AS OWNER. In the event that Xxxx Xxxxxxx acquires title
to the Real Property by foreclosure or deed in lieu of foreclosure:
(a) Prior to or within three (3) Business Days after acquiring title
to any Real Property by foreclosure or deed in lieu of foreclosure, Xxxx
Xxxxxxx shall send written notice to Sanwa Bank of such event (the "XXXX
XXXXXXX NOTICE"). Sanwa Bank shall notify Xxxx Xxxxxxx in writing as to
whether it will exercise any of its rights under Section 2(b) and/or
Section 2(c) hereof (the "SANWA BANK NOTICE") (i) within five (5) Business
Days of receipt of the Xxxx Xxxxxxx Notice if the Xxxx Xxxxxxx Notice is
received by Sanwa Bank on or after August 1 but prior to October 31 of any
year or (ii) within fourteen (14) Business Days of receipt of the Xxxx
Xxxxxxx Notice if the Xxxx Xxxxxxx Notice is received by Sanwa Bank at any
other time of the year. If Xxxx Xxxxxxx does not receive the Sanwa Bank
Notice within the period specified above, it shall have no further
obligation to Sanwa Bank with respect to the collateral located on the Real
Property. For purposes of this Intercreditor Agreement, the term "BUSINESS
DAY" shall mean any day on which commercial banks are not authorized or
required to close in San Francisco, California, or Boston, Massachusetts.
(b) Xxxx Xxxxxxx agrees to permit Sanwa Bank, in accordance with
Section 2(e) below, for up to one hundred and twenty (120) days following
the date of the Sanwa Bank Notice (or such longer period as may be agreed
to by Xxxx Xxxxxxx and Sanwa Bank), to enter upon the Real Property for the
purpose of exercising any right Sanwa Bank may have under the Sanwa
Security Agreement with respect to the collateral described in paragraphs
(a) and (b) of SCHEDULE II hereto, together with any proceeds thereof (the
"GOODS"), including without limitation the right to appraise, maintain,
remove, repair, prepare for public or private sale, exhibit and sell the
goods, provided that Sanwa Bank shall reimburse Xxxx Xxxxxxx for the
reasonable cost of repair of, and shall pay Xxxx Xxxxxxx the amount of any
damages resulting from, any physical injury to the Real Property caused by
the removal of the Goods (excluding diminution in value to the Real
Property resulting from the removal of the Goods).
(c) Xxxx Xxxxxxx agrees to permit Sanwa Bank, in accordance with
Section 2(e) below, for the time period specified in Section 2(d), to enter
upon the Real Property for the purpose of exercising any right Sanwa Bank
may have under the Sanwa Security Agreement with respect to the crops (and
the proceeds and products thereof) and the farm products described in
paragraphs (f) and (g) of SCHEDULE II
hereto, together with any proceeds thereof (the "CROPS AND FARM PRODUCTS").
Such right shall include the right to farm, cultivate, irrigate, fertilize,
fumigate, prune and perform any other act or acts appropriate or necessary
to grow, care for, preserve and protect the Crops and the Farm Products
(using any water located in, on or adjacent to the Real Property); harvest
and remove the Crops and the Farm Products from the Real Property; and
appraise, store, prepare for public or private sale, exhibit, market and
sell the Crops and the Farm Products; provided that Sanwa Bank shall
reimburse Xxxx Xxxxxxx for the reasonable cost of repair of, and shall pay
Xxxx Xxxxxxx the amount of any damages resulting from, any physical injury
to the Real Property caused by the removal of the Crops or the Farm
Products (excluding diminution in value to the Real Property resulting from
the removal of the Crops or the Farm Products).
(d) Sanwa Bank's right to enter the Real Property for the purpose of
exercising its rights under Section 2(c) shall terminate at the end of the
harvest season during which all growing crops have been harvested and
removed from the Real Property immediately following the earliest to occur
of:
(i) The date that Sanwa commences foreclosure proceedings with
respect to its collateral.
(ii) The date that Xxxx Xxxxxxx commences a judicial foreclosure or
files a notice of default under the Xxxx Xxxxxxx Agreement.
(iii) The date that the Company shall: commence a voluntary case under
any chapter of the Federal Bankruptcy Code (11 U.S.C. Section
101, ET SEQ., as amended) as now or hereafter in effect; consent
to (or fail to controvert in a timely manner) the commencement of
an involuntary case against the Company under said Code;
institute proceedings for liquidation, rehabilitation,
readjustment or composition (or for any related or similar
purpose) under any law relating to financially distressed
debtors, their creditors or property; consent to (or fail to
controvert in a timely manner) the institution of any such
proceedings against the Company; make an assignment for the
benefit of creditors or enter into any arrangement for the
adjustment or composition of debts or claims; or apply for or
consent to the appointment of, or the taking possession by, a
receiver, liquidator, assignee, trustee, custodian or
sequestrator (or other similar official) of itself or any of its
property.
(e) Sanwa Bank shall undertake activities described in Sections 2(b)
and 2(c) consisting of horticultural activities relating to the cultivation
and harvesting of
crops and activities relating to the operation of the wineries, such as
storing and processing wine, through a management company mutually agreed
to by Xxxx Xxxxxxx and Sanwa Bank.
(f) Commencing at the time that Sanwa Bank occupies the Real Property
pursuant to Section 3(b) or Section 3(c) hereof until such time as Sanwa
Bank vacates the Real Property, Sanwa Bank shall pay Xxxx Xxxxxxx a daily
license fee equivalent to 1/30th of an amount equivalent to the monthly
payment based upon a 30-year amortization of the original principal amount
of the Mortgage Notes at the then applicable interest rate under the
Mortgage Notes.
(g) In all cases, Xxxx Xxxxxxx shall not be obligated to incur any
expense towards the preservation or maintenance of Sanwa Bank's collateral
unless both parties have agreed in writing as to such reimbursement.
(h) In all cases, the Company, Xxxx Xxxxxxx and Sanwa Bank shall
cooperate at the direction of the management company appointed pursuant to
Section 2(e) to operate the properties in accordance with prudent customary
horticultural practices and to maximize the long-term economic value of the
collateral described herein and the Real Property. To the extent that the
management company determines that certain actions that are consistent with
prudent customary horticultural practices should be taken in connection
with the removal of Sanwa Bank's collateral to enhance the economic value
of the remaining collateral and Real Property, Xxxx Xxxxxxx agrees to pay
its allocable portion of such actions.
(i) Upon the expiration of the period of time that Sanwa Bank is
permitted to enter the Real Property pursuant to Section 2(d), Sanwa Bank
shall release its security interest in the Grape Contracts; provided,
however, that in no event shall such release constitute a release by Sanwa
Bank of its security interest in the right to the payment of money or other
rights under the Grape Contracts relating to deliveries under such Grape
Contracts prior to the expiration of the period of time that Sanwa Bank is
permitted to enter the Real Property under Section 2(d).
3. NOTICE OF DEFAULT. Xxxx Xxxxxxx and Sanwa Bank shall give to each
other prompt written notice with respect to:
(a) any event which with notice and/or lapse of time would constitute
an Event of Default (as defined in the Xxxx Xxxxxxx Agreement or the Sanwa
Agreements); or
(b) any other occurrence that would give Xxxx Xxxxxxx or Sanwa Bank
the right (whether immediately or with notice or lapse of time or both) to
accelerate the maturity or require prepayment of all or any portion of the
Mortgage Notes or the Sanwa Loan.
Each of Xxxx Xxxxxxx and Sanwa Bank shall use its best efforts to give such
notice before it exercises any right or remedy available to it under any
agreement or at law.
4. EFFECT OF THIS AGREEMENT. The purpose of this Intercreditor Agreement
is solely to set forth the agreement of Xxxx Xxxxxxx and Sanwa Bank with respect
to the relative priorities, utilization, and enforcement of remedies with
respect to, the collateral described herein. Except as expressly set forth
herein, this Intercreditor Agreement shall not affect the exercise by Xxxx
Xxxxxxx or Sanwa Bank of any of its rights and remedies with respect to the
Company or its respective collateral under the Xxxx Xxxxxxx Agreement, the
Mortgage Notes issued pursuant thereto, the Xxxx Xxxxxxx Security Agreement, the
Sanwa Agreements or the Sanwa Security Agreement.
5. NO ADDITIONAL COMPANY RIGHTS. This Intercreditor Agreement shall not
be construed as creating any rights enforceable by the Company. If either Xxxx
Xxxxxxx or Sanwa Bank shall enforce its rights or remedies in violation of this
Intercreditor Agreement, the Company agrees that it shall not use such violation
as a defense of its liabilities to Xxxx Xxxxxxx or Sanwa Bank, nor assert such
violation as a counterclaim or basis for setoff or recoupment against such
person.
6. TERMINATION. This Intercreditor Agreement shall terminate upon the
earliest to occur of:
(a) full payment and performance of all of the Company's obligations
to Xxxx Xxxxxxx under the Mortgage Notes; or
(b) full payment and performance of all of the Company's obligations
to Sanwa Bank under the Sanwa Agreements and termination of Sanwa Bank's
commitment to lend the Revolver.
7. NOTICES. All notices shall be in writing and delivered by hand or
mail, first class postage prepaid, or sent by nationally recognized overnight
courier or by confirmed telecopy transmission (confirmed by hand delivery or
overnight courier copy sent the same day such telecopy is sent), in each case
addressed to the party to which such notice is requested or permitted to be
given or made, at the respective address or telecopy number indicated on
SCHEDULE III below or at such other address or telecopy number of which such
person shall have notified in writing the party giving such notice.
8. GOVERNING LAW. This Intercreditor Agreement shall be governed by and
construed in accordance with the laws of the State of California.
9. SEVERABILITY. If one or more of the provisions contained in this
Intercreditor Agreement shall be invalid, illegal, or unenforceable in any
respect, the remaining provisions shall not in any way be affected or impaired.
10. SUCCESSOR AND ASSIGNS. This Intercreditor Agreement shall be binding
upon and shall inure to the benefit of the respective successors and assigns of
the parties hereto.
11. COUNTERPARTS. This Intercreditor Agreement may be executed in
multiple counterparts each of which shall constitute an original, but all of
which taken together shall constitute one and the same instrument.
12. HEADINGS. Headings herein are for convenience only and shall not be
relied upon in interpreting or enforcing this Intercreditor Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Intercreditor
Agreement as of the date first written above.
GOLDEN STATE VINTNERS
By:
--------------------------------
Name:
Title:
XXXX XXXXXXX MUTUAL LIFE INSURANCE
COMPANY
By:
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Name:
Title:
SANWA BANK
By:
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Name:
Title:
