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AGRICULTURAL CREDIT AGREEMENT
(Crops/General Term Loan)
This Agricultural Credit Agreement ("Agreement") is made and entered into this
1st day of April, 1994 by and between SANWA BANK CALIFORNIA (the "Bank") and
XXXXXX VINEYARDS & MANAGEMENT CO, (the "Borrower").
SECTION 1
DEFINITIONS
1.01 CERTAIN DEFINED TERMS. Unless elsewhere defined in this Agreement the
following terms shall have the following meanings (such meanings to be generally
applicable to the singular and plural forms of the terms defined):
A. "ADVANCE" shall mean an advance to the Borrower under any line of credit
facility provided for in Section II of this Agreement which provides draws
by the Borrower against an established credit line.
B. "BUSINESS DAY" shall mean a day, other than a Saturday or Sunday, on
which commercial banks are open for business in California.
C. "COLLATERAL" shall mean the property in which the Bank is granted a
security interest pursuant to provisions of the section herein entitled
"Collateral", together with any other personal or real property in which the
Bank may be granted a lien or security interest to secure payment of the
Obligations.
D. "DEBT" shall mean all liabilities of the Borrower less Subordinated
Debt.
E. "EFFECTIVE TANGIBLE NET WORTH" shall mean the Borrower's stated net worth
plus Subordinated Debt but less all intangible assets of the Borrower
(i.e., goodwill, trademarks, patents, copyrights, organization expense and
similar Intangible items).
F. "ENVIRONMENTAL CLAIMS" shall mean all claims, however asserted, by any
governmental authority or other person alleging potential liability or
responsibility for violation of any Environmental Law or for release or
injury to the environment or threat to public health, personal injury
(including sickness, disease or death), property damage, natural resources
damage, or otherwise alleging liability or responsibility for damages
(punitive or otherwise), cleanup, removal, remedial or response costs,
restitution, civil or criminal penalties, injunctive relief, or other type
of relief, resulting from or based upon (i) the presence, placement,
discharge, emission or release (including intentional and unintentional,
negligent and non-negligent, sudden or non-sudden, accidental or
non-accidental placement, spills, leaks, discharges, emissions or releases)
of any Hazardous Materials at, in, or from property owned, operated or
controlled by the Borrower, or (ii) any other circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law.
G. "ENVIRONMENTAL LAWS" shall mean all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, requests,
licenses, authorizations and permits of, and agreements with, any
governmental authorities, in each case relating to environmental, health,
safety and land use matters: including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"), the Clean Air
Act, the Federal Water Pollution Control Act of 1972, the Solid Waste
Disposal Act, the Federal Resource Conservation and Recovery Act, the Toxic
Substances Control Act, the Emergency Planning and Community Right-to-Know
Act, the California Hazardous Waste Control Law, the California Solid
Waste Management, Resource, Recovery and Recycling Act, the California
Wate Code and the California Health and Safety Code.
H. "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, including (unless the context otherwise
requires) any rules or regulations promulgated thereunder.
I. "EVENT OF DEFAULT" shall have the meaning set forth in the section
herein entitled "Events of Default".
J. "HAZARDOUS MATERIALS" shall mean all those substances which are
regulated by, or which may form the basis of liability under any
Environmental Law, including all substances identified under any
Environmental Law as a pollutant, contaminant, hazardous waste, hazardous
constituent, special waste, hazardous substance, hazardous material, or
toxic substance, or petroleum or petroleum derived substance or waste.
K. "INDEBTEDNESS" shall mean, with respect to the Borrower, (i) all
indebtedness for borrowed money or for the deferred purchase price of
property or services in respect of which the Borrower is liable,
contingently or otherwise, as obligor, guarantor or otherwise, or in respect
of which the Borrower otherwise assures a creditor against loss and (ii)
obligations under leases which shall have been or should be, in accordance
with generally accepted accounting principles, reported as capital leases
in respect of which the Borrower is liable, contingently or otherwise, or
in respect of which the Borrower otherwise assures a creditor against loss.
L. "OBLIGATIONS" shall mean all amounts owing by the Borrower to the Bank
pursuant to this Agreement including, but not limited to, the unpaid
principal amount of Advances.
M. "PERMITTED LIENS" shall mean: (i) liens and security interests securing
indebtedness owed by the Borrower to the Bank; (ii) liens for taxes,
assessments or similar charges either not yet due or being contested in
good faith, provided proper reserves are maintained therefor in accordance
with generally accepted accounting procedure; (iii) liens of materialmen,
mechanics, warehousemen, or carriers or other like liens arising in the
ordinary course of business and securing obligations which are not yet
delinquent; (iv) purchase money liens or purchase money security interests
upon or in any property acquired or held by the Borrower in the ordinary
course of business to secure Indebtedness outstanding on the date hereof or
permitted to be incurred pursuant to this Agreement; (v) liens and security
interests which, as of the date hereof, have been disclosed to and approved
by the Bank in writing; and (vi) those liens and security interests which
in the aggregate constitute an immaterial and Insignificant monetary amount
with respect to the net value of the Borrower's assets.
N. "REFERENCE RATE" shall mean an index for a variable interest rate which
is quoted, published or announced form time to time by the Bank as its
reference rate and as to which loans may be made by the Bank at, below or
above such reference rate.
O. "SUBORDINATED DEBT" shall mean such liabilities of the Borrower which
have been subordinated to those owed to the Bank in a manner acceptable to
the Bank.
1.02 ACCOUNTING TERMS. All references to financial statements, assets,
liabilities, and similar accounting items not specifically defined herein shall
mean such financial statements or such items prepared or determined in
accordance with generally accepted accounting principles consistently applied
and, except where otherwise specified, all financial data submitted pursuant to
this Agreement shall be prepared in accordance with such principles.
(1)
1.03 OTHER TERMS. Other terms not otherwise defined shall have the meanings
attributed to such terms in the California Uniform Commercial Code.
SECTION II
CREDIT FACILITIES
2.01 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.
2.02 CROP LINE OF CREDIT. The Bank agrees to make loans and Advances to the
Borrower, upon the Borrower's request therefor made prior to the Expiration Date
(as defined below in the Section 2.02), up to a total principal amount from time
to time outstanding of not more than $3,500,000.00; provided that Advances under
this Crop Line of Credit shall be made in accordance with the crop budget dated
March 11, 1994 for the crop year commencing on December 1, 1993 and ending on
November 30, 1994, which budget is attached hereto as Exhibit "A" (the "Crop
Budget"). Within the foregoing limits, the Borrower may borrow, partially or
wholly prepay, and borrow under this Crop Line of Credit.
A. PURPOSE. Advances made under this Crop Line of Credit shall be used
for 1994 crop expenses.
B. INTEREST RATE. Interest shall accrue on the outstanding principal
balance of Advances under this Crop Line of Credit at a variable rate equal
to the Bank's Reference Rate, as It may change from time to time, plus
0.250% per annum (the "Variable Rate"). The Variable Rate shall be
adjusted concurrently with any change in the Reference Rate. Interest shall
be calculated on the basis of 360 days per year but changed on the actual
number of days elapsed.
C. PAYMENT OF INTEREST. The Borrower hereby promises and agrees to pay
interest monthly on the 5th day of each month, commencing on May 5, 1994.
D. REPAYMENT OF PRINCIPAL. Unless sooner due in accordance with the terms
of this Agreement, on April 5, 1995 the Borrower hereby promises and agrees
to pay to the Bank in full the aggregate unpaid principal balance of all
Advances then outstanding, together with all accrued and unpaid interest
thereon.
Any payment received by the Bank shall, at the Bank's option, first be
applied to pay any late fees or other fees then due and unpaid, and then to
interest then due and unpaid and the remainder thereof (if any) shall be
applied to reduce principal.
E. FIXED RATE ALTERNATIVE PRICING. In addition to Advances based upon the
Variable Rate ("Variable Rate Advances"), at the Borrower's election, the
Bank hereby agrees to make Advances to the Borrower under this Crop Line of
Credit at a fixed rate ("Fixed Rate") to be quoted and offered by the Bank
from time to time upon the request of the Borrower. The Bank shall only
quote and offer such Fixed Rate for Advances in the minimum amount of
$250,000.00 and for such period of time (each an "Interest Period") as the
Bank may quote and offer, provided that the Interest Period shall be for a
minimum of at least 30 days and provided further that any Interest Period
shall not extend beyond the Expiration Date (as defined below) of this
facility. Advances based upon the Fixed Rate are hereinafter referred to as
"Fixed Rate Advances".
Interest on any Fixed Rate Advance shall be computed on the basis of 360
days per year but charged on the actual number of days elapsed.
The Borrower hereby promises and agrees to pay the Bank interest on any
Fixed Rate Advance as per the "Variable Rate". If interest is not paid as
and when it is due, the amount of such unpaid interest shall bear interest,
until paid in full, at a rate of interest equal to the Variable Rate.
(i) REPAYMENT OF FIXED RATE ADVANCES. Unless sooner due in accordance
with other terms of this Agreement, or unless adjusted at the end of
the relevant Interest Period as described below, the Borrower hereby
promises and agrees to pay the Bank the principal amount of each Fixed
Rate Advance, together with accrued and unpaid interest thereon, on
the last day of the Interest Period pertaining to such Fixed Rate
Advance.
(ii) NOTICE OF ELECTION TO ADJUST INTEREST RATE. Upon telephonic
notice which shall be received by the Bank at or before 11:00 am
(California time) on a Business Day, the Borrower may elect:
(a) That interest on a Variable Rate Advance shall be adjusted to
accrue at a quoted and offered Fixed 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 the Borrower requests that interest be adjusted to accrue
at the Fixed Rate.
(b) That interest on a Fixed Rate Advance shall continue to
accrue at a newly quoted Fixed 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
pertaining to such Fixed Rate Advance. If the Bank shall not have
received notice as prescribed herein of the Borrower's election
that interest on any Fixed Rate Advance shall continue to accrue
at the Fixed Rate, the Borrower shall be deemed to have elected
that interest thereon shall be adjusted to accrue at the Variable
Rate upon the expiration of the Interest Period pertaining to
such Advance.
(iii) PROHIBITION AGAINST PREPAYMENT OF FIXED ADVANCES.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE AGREEMENT. NO
PREPAYMENT SHALL BE MADE ON ANY FIXED RATE ADVANCE EXCEPT ON A DAY
WHICH IS THE LAST DAY OF THE INTEREST PERIOD PERTAINING THERETO. IF THE
WHOLE OR ANY PART OF ANY FIXED RATE ADVANCE 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.
(iv) INDEMNIFICATION FOR FIXED RATE COSTS. During any period of time
in which interest on any Advance is accruing on the basis of a Fixed
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.
(v) INVOLUNTARY CONVERSION FROM FIXED 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 (a) is infeasible because the
Bank is unable to determine the Fixed 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 Advance and
for a period of time approximately equal to the relevant Interest
Period; or (b) 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
Advance shall be deemed to be a Variable Rate Advance and interest
shall thereupon immediately accrue at the Variable Rate.
(2)
F. LATE FEE. If any payment of principal or interest, or any portion
thereof, under this Crop Line of Credit 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.
G. MAKING LINE ADVANCES/NOTICE OF BORROWING. Each Advance made hereunder
shall be conclusively deemed to have been made at the request of and
for the benefit of the Borrower (i) when credited to any deposit
account of the Borrower maintained with the Bank or (ii) when paid
in accordance with the Borrower's written instructions. Subject to
any other requirements set forth in this Agreement, Advances shall
be made by the Bank upon telephonic or written notice received from
the Borrower in form acceptable to the Bank, which notice shall be
received by the Bank at or before 11:00 am (California time) on a
business day. The Borrower may borrow under this Crop Line of
Credit by requesting either:
(i) A VARIABLE RATE ADVANCE. A Variable Rate Advance may be
made on the day notice is received by the Bank; provided however,
that if the Bank shall not have received notice at or before
11:00 am (California time) on the day such Advance is requested
to be made, such Variable Rate Advance may be made, at the Bank's
option, on the next business day.
(ii) A FIXED RATE ADVANCE. Notice of any Fixed Rate Advance shall
be received by the Bank no later than two Business Days prior to
the day (which shall be a Business Day) on which the Borrower
requests such Fixed Rate Advance to be made. Any telephonic or
oral quote or offer by the Bank of a Fixed Rate for a given
Interest Period may be confirmed in writing by the Bank upon the
election (as provided herein) of the Borrower to accept such
terms and such confirmation shall be deemed conclusive as to the
terms quoted and offered.
H. FACILITY FEES. The following fees for this security shall be paid in
cash upon execution of this Agreement or prior to funding of this
facility: Loan Fees in the amount of $5,000.00.
In addition to the above fees, the Borrower hereby promises and agrees to
pay the following fees in connection with this facility: Reimbursement for
any out-of-pocket expenses incurred by Bank in connection with this
transaction.
I. EXPIRATION OF THE CROP LINE OF CREDIT. Unless earlier terminated in
accordance with the terms of this Agreement, the Bank's commitment to
make Advances to the Borrower hereunder shall automatically expire on
April 5, 1995 (the "EXPIRATION DATE"), and the Bank shall be under no
further obligation to advance any monies thereafter.
J. LINE ACCOUNT. The Bank shall maintain on its books a record of account
in which the Bank shall make entries for each Advance and such other
debits and credits as shall be appropriate in connection with this
Crop Line of Credit (the "LINE ACCOUNT"). The Bank shall provide the
Borrower with a monthly statement of the Borrower's Line 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
thirty (30) days after the Borrower's receipt of any such statement
which it deems to be incorrect.
K. AMOUNTS PAYABLE ON DEMAND. If the Borrower fails to pay on demand any
amount so payable under this Agreement, the Bank may, at its option and
without any obligation to do so and without waiving any default occasioned
by the Borrower's failure to pay such amount, create an Advance in an
amount equal to the amount so payable, which Advance shall thereafter bear
interest as provided under this Crop Line of Credit.
In addition, the Borrower hereby authorizes the Bank, if and to the extent
payment owed to the Bank under this Crop Line of Credit is not made when
due, to charge, from time to time, against any or all of the Borrower's
deposit accounts with the Bank any amount so due.
2.03. TERM LOAN. The Bank agrees to lend to the Borrower up to the maximum
amount of $725,000.00 (the "TERM LOAN").
A. PURPOSE. This Term Loan shall be used to purchase farm equipment.
Advances not to exceed 80% of purchase price plus tax and license.
B. INTEREST RATE. Interest shall accrue on the outstanding principal
balance under this Term Loan at a variable rate equal to the Bank's
Reference Rate, as it may change from time to time, plus 0.750% per
annum (the "VARIABLE RATE"). The Variable Rate shall be adjusted
concurrently with any change in the Reference Rate. Interest shall
be calculated on the basis of 360 days per year but charged on the
actual number of days elapsed.
C. PAYMENT OF INTEREST. The Borrower hereby promises and agrees to pay
interest quarterly on the last day of each quarter, commencing on June 30,
1994. If interest is not paid as it becomes due, without waiving any
Event of Default occasioned by such non-payment, the Bank may, at its
option but without any obligation to do so, add such unpaid interest to
principal and it shall thereafter become and be treated as part of the
principal and shall thereafter bear like interest.
D. REPAYMENT OF PRINCIPAL. Unless sooner due in accordance with the
terms of this Agreement, the Borrower hereby promises and agrees to pay
principal in 4 annual installments of $145,000.00 per installment,
commencing on December 31, 1994 and continuing each December 31st
thereafter.
On December 31, 1998 the Borrower hereby promises and agrees to pay to the
Bank in full the aggregate unpaid principal balance then outstanding,
together with all accrued and unpaid interest thereon.
Any payment received by the Bank shall, at the Bank's option, first be
applied to pay any late fees or other fees then due and unpaid, and then
to interest then due and unpaid and the remainder thereof (if any) shall
be applied to reduce principal.
E. FIXED RATE ALTERNATIVE PRICING. The Borrower may from time to time
elect (by notice to the Bank as provided below) that the entire amount
of the outstanding principal balance under the Term Loan (the "TERM
BALANCE") shall accrue interest on the amount of such Term Balance at
a fixed rate for such period of time (the "INTEREST PERIOD") as the Bank
may quote and offer, provided that any such Interest Period (i) shall be
for at least 30 days and shall not extend beyond the maturity date of the
Term Loan. Such fixed rate shall be a percentage to be quoted and offered
by the Bank from time to time upon the request of the Borrower (the
"FIXED RATE"). Any telephonic or oral quote or offer by the Bank of a
Fixed Rate for a given Interest Period may be confirmed in writing by
the Bank upon the election (as provided herein) of the Borrower to accept
such terms and such confirmation shall be deemed conclusive as to the
terms quoted and offered.
A Term Balance on which interest is accruing on the basis of the Fixed
Rate is hereinafter referred to as a "Fixed Rate Balance" and a Term
Balance on which the interest is accruing on the basis of the Variable
Rate is hereinafter referred to as a "Variable Rate Balance".
Interest on any Fixed Rate Balance shall be computed on the basis of
360 days per year but charged on the actual number of days elapsed.
The Borrower hereby promises and agrees to pay the Bank interest on any
Fixed Rate Balance on the basis described above with respect to the
Variable Rate. If interest under the Fixed Rate is not paid as and when
it is due, the amount of such unpaid interest shall bear interest,
until paid in full, at the then applicable interest rate.
(i) Notice of Election to Adjust Interest Rate.
(a) The Borrower may elect that interest on a Fixed Rate
Balance shall continue to accrue at a newly quoted and
offered Fixed Rate or commence to accrue at the Variable
Rate by telephonic notice to the Bank, provided that
such notice shall be received at or before 11:00 am
(California time) on a Business Day which is two Business
Days prior to the last day of the relevant Interest Period.
(3)
(b) The Borrower may elect that interest on a Variable
Rate Balance shall continue to accrue at the Variable Rate
or commence to accrue at a quoted and offered Fixed Rate by
telephonic notice to the Bank, provided that such notice
shall be received at or before 11:00 am (California time)
on a Business Day which is two Business Days prior to the
date on which the elected interest rate shall be effective.
If the Bank shall not have received notice as prescribed herein of the
Borrower's election that interest on the Term Balance shall commence to
accrue as the Fixed Rate or continue to accrue at a newly quoted Fixed
Rate, then the Borrower shall be deemed to have elected that interest
shall accrue thereon at the Variable Rate.
In the event the Bank determines that accrual of interest on the basis
of the Fixed Rate is infeasible because the Bank is unable to determine
the Fixed 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 Term Balance and for a period of time approximately
equal to the relevant Interest Period, the Bank shall give the Borrower
prompt notice thereof and the Borrower may select another available
Interest Period (as quoted and offered by the bank), subject to the terms
and conditions herein. If the Borrower does not select another available
Interest Period or if no other Interest Period is available, then the
Term Balance shall be deemed to be a Variable Rate Balance and shall
accrue interest on the basis of the Variable Rate.
(ii) PROHIBITION AGAINST PREPAYMENT OF FIXED RATE BALANCES.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, NO PREPAYMENT
SHALL BE MADE ON ANY FIXED RATE BALANCE EXCEPT ON A DAY WHICH IS THE LAST
DAY OF THE INTEREST PERIOD PERTAINING THERETO. IF THE WHOLE OR ANY PART OF
ANY FIXED 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.
(iii) INDEMNIFICATION FOR FIXED RATE COSTS. During any period of time in
which interest is accruing on the basis of a Fixed 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.
(iv) INVOLUNTARY CONVERSION FROM FIXED 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 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 shall be deemed to be a Variable Rate Balance and interest
shall thereupon immediately accrue at the Variable Rate.
F. LATE FEE. If any payment of principal or interest, or any portion thereof,
under this Term Loan 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.
G. FACILITY FEES. The Borrower hereby promises and agrees to pay the
following fees in connection with this facility: Reimbursement for any
out-of-pocket expenses incurred by Bank in connection with this transaction.
H. 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 thirty (30) days after
the Borrower's receipt of any such statement which it deems to be incorrect.
SECTION III
COLLATERAL
3.01. GRANT OF SECURITY INTEREST. To secure payment and performance of all
of the Borrower's Obligations under this Agreement and the performance of all
the terms, covenants and agreements contained in this Agreement (and any and
all modifications, extensions and renewals of the Agreement) and in any other
document, instrument or agreement evidencing or related to the Obligations or
the Collateral, the Borrower hereby grants to the Bank a security interest in
and to all of the following property:
A. EQUIPMENT. All goods and equipment ("EQUIPMENT") 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, furniture, furnishings, tools, supplies and
motor vehicles of every kind and description and all additions,
accessories, improvements, replacements and substitutions
thereto and thereof.
B. INVENTORY. All inventory ("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. ACCOUNTS AND CONTRACT RIGHTS. All accounts and contract rights
now owned or hereafter created or acquired by the Borrower,
including but not limited to, all receivables and all rights and
benefits due to the Borrower under any contract or agreement.
D. GENERAL INTANGIBLES. All general intangibles now owned or hereafter
created or acquired by the Borrower, including but not limited to,
goodwill, trademarks, trade styles, trade names, patents, patent
applications, software, customer lists and business records.
E. CHATTEL PAPER AND DOCUMENTS. All documents, instruments and chattel
paper now owned or hereafter acquired by the Borrower.
F. CROPS. All crops now growing or hereafter to be grown, together with
all products and proceeds thereof, on that certain real property
described in the attached Exhibit "B" (the "CROPS").
G. FARM PRODUCTS. All farm products now owned or hereafter acquired
by or for the benefit of the Borrower consisting of supplies used
or produced in the operations of the Borrower including, but not
limited to, all hay, grain, forage, fodder and other feed
commodities and all feed additives, feed supplements, veterinary
supplies, medicines and related products now owned or hereafter
acquired by or for the benefit of the Borrower.
H. MONIES AND OTHER PROPERTY IN POSSESSION. All monies, and property
of the Borrower now or hereafter in the possession of the Bank or
the Bank's agents, or any one of them, including, but not limited
to, all deposit accounts, certificates of deposit, stocks, bonds,
indentures, warrants, options and other negotiable and non-negotiable
securities and instruments, together with all stock rights, rights
to subscribe, liquidating dividends, cash dividends, payments,
dividends paid in stock, new securities or other property to which
the Borrower may become entitled to receive on account of such
property.
(4)
3.02. CONTINUING LIEN & PROCEEDS. The Bank's security interest in the
Collateral shall be a continuing lien and shall include all proceeds and
products of the Collateral including, but not limited to, the proceeds of any
insurance thereon as well as all accounts, contract rights, documents,
instruments and chattel paper resulting from the sale or disposition of any
Equipment.
3.03. EXCLUSION OF CONSUMER DEBT. The Obligations and performance secured
hereby shall not include any indebtedness of the Borrower incurred for
personal, family or household purposes except to the extent any disclosure
required under any consumer protection law (including but not limited to the
Truth in Lending Act) or any regulation thereto, as now existing or hereafter
amended, is or has been given.
SECTION IV
CONDITIONS PRECEDENT
4.01. CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT AND/OR FIRST
ADVANCE. The obligation of the Bank to make the initial extension of credit
and/or the first Advance hereunder is subject to the conditions precedent
that the Bank shall have received before the date of such extension of credit
and/or the first Advance all of the following, 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 and agreements required
under this Agreement and all other actions to be taken by the Borrower
hereunder or thereunder.
B. GUARANTOR. A continuing guaranty in favor of the Bank, in form and
substance satisfactory to the Bank, executed by Xxxxxx X. Xxxxxx (the
"Guarantor"), together with evidence that the execution, delivery and
performance of the Guaranty by the Guarantor has been duly authorized.
C. SUBORDINATIONS. The subordination to all indebtedness from time to
time owed by the Borrower to the Bank of certain indebtedness now or
hereafter owing by the Borrower to the following creditors, each such
subordination to be in form and substance satisfactory to the Bank:
Xxxxxx X. Xxxxxx (each a "Creditor"). Each Creditor shall also provide
evidence that the execution, delivery and performance of the
subordinations by each Creditor has been duly authorized.
D. LOAN FEES. Evidence that any required loan fees and expenses as set
forth above with respect to each credit facility have been paid or
provided for by the Borrower.
E. AUDIT. The opportunity to conduct an audit of the Borrower's books,
records and operations and the Bank shall be satisfied as to the
condition thereof.
F. MISCELLANEOUS DOCUMENTS. Such other documents, instruments,
agreements and opinions as are necessary, or as the Bank may reasonably
require, to consummate the transactions contemplated under this
Agreement, all fully executed.
4.02. CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT AND/OR ADVANCES. The
obligation of the Bank to make any extensions of credit and/or each Advance
to or on account of the Borrower (including the initial extension of credit
and/or the first Advance) shall be subject to the further conditions
precedent that, as of the date of each extension of credit or Advance and
after the making of such extension of credit or Advance:
A. REPRESENTATIONS AND WARRANTIES. The representations and warranties
set forth in the Section entitled "Representations and Warranties" herein
and in any other document, instrument, agreement or certificate delivered
to the Bank hereunder are true and correct.
B. COLLATERAL. The security interest in the Collateral has been duly
authorized, created and perfected with first priority and is in full
force and effect and the Bank has been provided with satisfactory
evidence of all filings necessary to establish such perfection and
priority.
C. EVENT OF DEFAULT. No event has occurred and is continuing which
constitutes, or, with the lapse of time or giving of notice or both,
would constitute an Event of Default.
D. SUBSEQUENT APPROVALS, ETC. The Bank shall have received such
supplemental approvals, opinions or documents as the Bank may reasonably
request.
4.03. REAFFIRMATION OF STATEMENTS. For the purposes hereof, the Borrower's
acceptance of the proceeds of any extension of credit and the Borrower's
execution of any document or instrument evidencing or creating any Obligation
hereunder shall each be deemed to constitute the Borrower's representation
and warranty that the statements set forth above in this Section are true
and correct.
SECTION V
REPRESENTATIONS AND WARRANTIES
The Borrower hereby makes the following representations and warranties to the
Bank, which representations and warranties are continuing:
5.01. STATUS. The Borrower is a corporation duly organized and validly
existing under the laws of the State of California and is properly licensed,
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.
5.02. 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, writ, judgment or injunction presently in
effect affecting the Borrower; (ii) result in a breach of or constitute a
default under any material agreement 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.
5.03. LEGAL EFFECT. This Agreement constitutes, and any document, instrument
or agreement required hereunder when delivered will constitute, legal, valid
and binding obligations of the Borrower enforceable against the Borrower in
accordance with their respective terms.
5.04. FICTITIOUS TRADE STYLES. The Borrower currently uses no fictitious
trade styles in connection with its business operations. The Borrower shall
notify the Bank within thirty (30) days of the use of any fictitious trade
style at any future date, indicating the trade style and state(s) of its use.
5.05. FINANCIAL STATEMENTS. All financial statements, information and other
data which may have been and which may hereafter be submitted by the Borrower
to the Bank are true, accurate and correct and have been and will be prepared
in accordance with generally accepted accounting principles consistently
applied and accurately represent the Borrower's financial condition and, as
applicable, the other information disclosed therein. Since the most recent
submission of any such financial statement, information or other 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.
5.06. 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, operations or the Collateral.
(5)
5.07. 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.
5.08. 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.
5.09. 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 taxes which are currently payable without penalty, or interest or
those which are being duly contested in good faith.
5.10. ENVIRONMENTAL COMPLIANCE. The operations of the Borrower comply, and
during the term of this Agreement will at all times comply, in all respects
with all Environmental Laws; the Borrower has obtained licenses, permits,
authorizations and registrations required under any Environmental Law
("Environmental Permits") and necessary for its ordinary operations, all such
Environmental Permits are in good standing, and the Borrower is in compliance
with all material terms and conditions of such Environmental Permits; neither
the Borrower nor any of its present properties or operations are subject to
any outstanding written order from or agreement with any governmental
authority nor subject to any judicial or docketed administrative proceeding,
respecting any Environmental Law, Environmental Claim or Hazardous Material;
there are no Hazardous Materials or other conditions or circumstances
existing, or arising from operations prior to the date of this Agreement,
with respect to any property of the Borrower that would reasonably be
expected to give rise to Environmental Claims; provided however, that with
respect to property leased from an unrelated third party, the foregoing
representation is made to the best knowledge of the Borrower. In addition,
(i) the Borrower does not have or maintain any underground storage tanks
which are not properly registered or permitted under applicable Environmental
Laws or which are leaking or disposing of Hazardous Materials off-site, and
(ii) the Borrower has notified all of its employees of the existence, if any,
of any health hazard arising from the conditions of their employment and have
met all notification requirements under Title III of CERCLA and all other
Environmental Laws.
SECTION VI
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:
6.01. 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; and conduct its business in accordance with all
applicable laws, rules and regulations.
6.02. 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. With respect to insurance covering
properties in which the Bank maintains a security interest or lien, such
insurance shall be in an amount not less than the full replacement value
thereof, at the Bank's request, shall name the Bank as loss payee pursuant to
a loss payable endorsement satisfactory to the Bank and shall not be altered
or canceled except upon ten (10) days' prior written notice to the Bank. Upon
the Bank's request, the Borrower shall furnish the Bank with the original
policy or binder of all such insurance.
6.03. MAINTENANCE OF COLLATERAL AND OTHER PROPERTIES. Except for Permitted
Liens, the Borrower shall keep and maintain the Collateral free and clear of
all levies, liens, encumbrances and security interests (including but not
limited to, any lien of attachment, judgement or execution) and defend the
Collateral against any such levy, lien, encumbrance or security interest;
comply with all laws, statutes and regulations pertaining to the Collateral
and its use and operation; execute, file and record such statements, notices
and agreements, take such actions and obtain such certificates and other
documents as necessary to perfect, evidence and continue the Bank's security
interest in the Collateral and the priority thereof; maintain accurate and
complete records of the Collateral which show all sales, claims and
allowances, and properly care for, house, store and maintain the Collateral
in good condition, free of misuse, abuse and deterioration, other than normal
wear and tear. The Borrower shall also maintain and preserve all its
properties in good working order and condition in accordance with the general
practice of other businesses of similar character and size, ordinary wear and
tear excepted.
6.04. LOCATION AND MAINTENANCE OF EQUIPMENT.
A. LOCATION. The Equipment shall at all times be in the Borrower's
physical possession, shall not be held for sale or lease and shall be
kept only at the following location(s); 0000 0xx Xxxxxx, Xxxxx 000, Xxxxx
Xxxxxx, XX 00000.
The Borrower shall not secrete, abandon or remove, or permit the
removal of, the Equipment, or any part thereof, from the location(s)
shown above or remove or permit to be removed any accessories now or
hereafter placed upon the Equipment.
B. EQUIPMENT SCHEDULES. Upon the Bank's demand, the Borrower shall
immediately provide the Bank with a complete and accurate description of
the Equipment including, as applicable, the make, model, identification
number and serial number of each item of Equipment. In addition, the
Borrower shall immediately notify the Bank of the acquisition of any new
or additional Equipment or the replacement of any existing Equipment and
shall supply the Bank with a complete description of any such additional
or replacement Equipment.
C. MAINTENANCE OF EQUIPMENT. The Borrower shall, at the Borrower's
sole cost and expense, keep and maintain the Equipment in a good state of
repair and shall not destroy, misuse, abuse, illegally use or be
negligent in the care of the Equipment or any part thereof. The Borrower
shall not remove, destroy, obliterate, change, cover, paint, deface or
alter the name plates, serial numbers, labels or other distinguishing
numbers or identification marks placed upon the Equipment or any part
thereof by or on behalf of the manufacturer, any dealer or rebuilder
thereof, or the Bank. The Borrower shall allow the Bank and its
representatives free access to and the right to inspect the Equipment at
all times and shall comply with the terms and conditions of any leases
covering the real property on which the Equipment is located and any
orders, ordinances, laws, regulations or rules of any federal, state or
municipal agency or authority having jurisdiction of such real property
or the conduct of business of the persons having control or possession of
the Equipment.
D. FIXTURES. The Equipment is not now and shall not at any time
hereafter be so affixed to the real property on which it is located as to
become a fixture or a part thereof. The Equipment is now and shall at all
times hereafter be and remain personal property of the Borrower.
6.05. LOCATION OF INVENTORY. The Inventory (i) is now and shall at all times
hereafter be of good and merchantable quality and free from defects; (ii) is
not now and shall not at any time hereafter be stored with a bailee,
warehouseman or similar party without the Bank's prior written consent and,
in such event, the Borrower will concurrently therewith cause any such
bailee, warehouseman or similar party to issue and deliver to the Bank, in
form acceptable to the Bank, warehouse receipts in the Bank's name evidencing
the storage of inventory; (iii) shall at all times be in the Borrower's
physical possession; (iv) shall not be held by others on consignment, sale on
approval, or sale or return; and (v) shall be kept only at the following
location(s): 0000 0xx Xxxxxx, Xxxxx 000, Xxxxx Xxxxxx, XX 00000.
6.06. LOCATION OF HARVESTED CROPS. Any Crops now or hereafter harvested or
removed from the real property on which they are grown shall not be stored
with a bailee, warehouseman or similar party without the Bank's prior written
consent and shall be kept only at the following location(s): 0000 0xx Xxxxxx,
Xxxxx 000, Xxxxx Xxxxxx, XX 00000.
(6)
6.07. CARE AND PRESERVATION OF THE CROPS.
A. Attend to and care for the Crops and do or cause to be done any and
all acts that may at any time be appropriate or necessary to grow, farm,
cultivate, irrigate, fertilize, fumigate, prune, harvest, pick, clean,
preserve and protect the Crops.
B. Not commit or suffer to be committed any waste or damage to the Crops.
C. Permit the Bank and any of its agents, employees or representatives
to enter upon any real property on which the Crops are being grown at any
reasonable time and from time to time for the purpose of examining and
inspecting the Crops and such real property.
D. Harvest and prepare the Crops for market and promptly notify the Bank
when any of the Crops are ready for market.
E. Keep the Crops separate and always capable of identification.
F. Comply with any requirements or instructions of the Bank with respect
to hauling, shipping, storing, marketing and otherwise preparing, handling
and disposing of the Crops.
6.08. PAYMENT OF OBLIGATIONS AND TAXES. Make timely payment of all
assessments and taxes and all of its liabilities and obligations including,
but not limited to, trade payables, unless the same are being contested in
good faith by appropriate proceedings with the appropriate court or
regulatory agency. For purposes hereof, the Borrower's issuance of a check,
draft or similar instrument without delivery to the intended payee shall not
constitute payment.
6.09. 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 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. In
addition, the Bank may, at any reasonable time and from time to time, conduct
inspections and audits of the Collateral and the Borrower's accounts payable,
the cost and expenses of which shall be paid by the Borrower to the Bank upon
demand.
6.10. REPORTING REQUIREMENTS. Deliver or cause to be delivered to the Bank in
form and detail satisfactory to the Bank:
A. OTHER REPORTING REQUIREMENTS. 1) Borrower to provide CPA prepared
audited financial statements to include balance sheet, income statement
and cash flow on Xxxxxx Vineyards and Management Co., Vineyard Investors
1972 and Vineyard 405 not later than 120 days after calendar year end,
2) Borrower to provide annual crop budget not later than 120 days after
calendar year end, 3) Borrower to provide monthly crop position reports
not later than 25 days after month end.
B. OTHER INFORMATION. Promptly upon the Bank's request such other
information pertaining to the Borrower, the Collateral, or any Guarantor
as the Bank may reasonably request.
6.12. REDEMPTION OR REPURCHASE OF STOCK. The Borrower shall not redeem or
repurchase any class of the corporation's stock now or hereafter outstanding.
6.13. 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 loans up to an aggregate amount not
exceeding $100,000.00 in any one fiscal year.
6.14. 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 such
properties, except for Permitted Liens or as otherwise provided in this
Agreement.
6.15. TRANSFER ASSETS. Not sell, contract for sale, transfer, convey, assign,
lease or sublet any of its assets, including, but not limited to, the
Collateral, except in the ordinary course of business as presently conducted
by the Borrower, and then, only for full, fair and reasonable consideration.
6.16. CHANGE IN THE 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.
6.17. FINANCIAL CONDITION. Maintain at all times:
A. NET WORTH. A minimum Effective Tangible Net Worth of not less than
$5,000,000.00 (cost basis).
B. CURRENT RATIO. A ratio of current assets to current liabilities of
not less than 2.00 to 1.00.
6.18. COMPENSATION OF EMPLOYEES. Compensate its employees for services
rendered at an hourly rate at least equal to the minimum hourly rate
prescribed by any applicable federal or state law or regulation.
6.19. OTHER RESTRICTIONS. 1) The $2,000,000.00 in line availability for
purchase of the limited partnership interests will only be advanced upon
receipt of evidence of the purchase, 2) Borrower to achieve a minimum debt
coverage ratio of 1.25:1 as measured by the annual audited financial
statement. The covenant is to be calculated as follows: Net Profit After Tax
+ Depreciation + Stockholder Salary, Bonus and Dividends divided by Current
Portion Long Term Debt + Stockholder Salary, Bonus and Dividends.
6.20. ENVIRONMENTAL COMPLIANCE. The Borrower shall:
A. Conduct its operations and keep and maintain all of its properties
in compliance with all Environmental Laws.
B. Give prompt written notice to the Bank, but in no event later than
10 days after becoming aware, of the following: (i) any enforcement,
cleanup, removal or other governmental or regulatory actions instituted,
completed or threatened against the Borrower or any of its affiliates or
any of their respective properties pursuant to any applicable
Environmental Laws, (ii) all other Environmental Claims, and (iii) any
environmental or similar condition on any real property adjoining or in
the vicinity of the property of the Borrower or its affiliates that
could reasonably be anticipated to cause such property or any part
thereof to be subject to any restrictions on the ownership, occupancy,
transferability or use of such property under any Environmental Laws.
C. Upon the written request of the Bank, the Borrower shall submit to
the Bank, at the Borrower's sole cost and expense, at reasonable
intervals, a report providing an update of the status of any
environmental, health or safety compliance, hazard or liability issue
identified in any notice required pursuant to this Section.
D. At all times indemnify and hold harmless the Bank from and against
any and all liability arising out of any Environmental Claims.
(7)
6.21. NOTICE. Give the Bank prompt written notice of any and all (i) Events
of Default; (ii) litigation, arbitration or administrative proceedings to
which the Borrower is a party and in which the claim or liability exceeds
$50,000.00 or which affects the Collateral; (iii) any change in its place of
business or the acquisition of more than one place of business; (iv) any
proposed or actual change in its name, identity or business nature; (v) any
change in the location of the Equipment, Inventory or Crops; (vi) any disease
to, any destruction of, any depreciation in the value of or any damage to the
Crops; and (vii) other matters which have resulted in, or might result to a
material adverse change in the Collateral or the financial condition or
business operations of the Borrower.
SECTION VII
EVENTS OF DEFAULT
Any one or more of the following described events shall constitute an event
of default under this Agreement:
7.01. NON-PAYMENT. The Borrower shall fail to pay any Obligations within 10
days of when due.
7.02. PERFORMANCE UNDER THIS AND OTHER AGREEMENTS. The Borrower shall fail in
any material respect to perform or observe any item, 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), and any such failure (exclusive of the payment of
money to the Bank under this Agreement or under any other document,
instrument or agreement, which failure shall constitute and be an immediate
Event of Default if not paid when due or when demanded to be due) 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.
7.03. 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.
7.04. INSOLVENCY. The Borrower of 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
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
businesses and shall not be discharged within 30 days after the date of such
appointment.
7.05. 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 30 days after the issuance or
attachment of such writ or lien.
7.06. REVOCATION OF 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.
7.07. SUSPENSION. The Borrower shall voluntarily suspend the transaction of
business or allow to be suspended, terminated, revoked or expired any permit,
license or approval of any governmental body necessary to conduct the
Borrower's business as now conducted.
7.08. 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 10% of the issued and
outstanding capital stock of the Borrower.
7.09. IMPAIRMENT OF COLLATERAL. There shall occur any injury or damage to all
or any part of the Collateral or all or any part of the Collateral shall be
lost, stolen or destroyed, which changes cause the Collateral, in the sole
and absolute judgement of the Bank, to become unacceptable as to character
and value.
SECTION VIII
REMEDIES ON DEFAULT
Upon the occurrence of any Event of Default, the Bank may, at its sole
election, without demand and upon only such notice as may be required by law:
8.01. 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.
8.02. 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.
8.03. 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.
8.04. SEGREGATE COLLECTIONS. Require the Borrower to segregate all
collections and proceeds of the Collateral so that they are capable of
identification and to deliver such collections and proceeds to the Bank, in
kind, without commingling, at such times and in such manner as required by
the Bank.
8.05. RECORDS OF COLLATERAL. Required the Borrower to periodically deliver to
the Bank records and schedules showing the status, condition and location of
the Collateral and such contracts or other matters which affect the
Collateral. In connection herewith, the Bank may conduct such audits or other
examination of such records, including, but not limited to, verification of
balances owing by any account debtor of the Borrower, as the Bank, in its
sole and absolute discretion, deems necessary.
8.06. NOTIFICATION OF ACCOUNT DEBTORS.
A. Notify any or all of the Borrower's Account Debtors, or any buyers
or transferees of the Collateral or other persons of the Bank's interest
in the Collateral and the proceeds thereof and instruct such person(s) to
thereafter make any payment due the Borrower directly to the Bank.
B. The Borrower hereby irrevocably and unconditionally appoints the
Bank as its attorney-in-fact to: (i) endorse the Borrower's name on any
notes, acceptances, checks, drafts, money orders or other evidence of
payment that may come into the Bank's possession; (ii) sign the
Borrower's name on any invoice or xxxx of lading relating to any of the
Collateral; (iii) notify post office authorities to change the address for
delivery of mail addressed to the Borrower to such address as the Bank
may designate and take possession of and open mail addressed to the
Borrower and remove therefrom, proceeds of and payments on the
Collateral; and (iv) demand, receive and endorse payment and give
receipts, releases and satisfactions for and xxx for all money payable
to the Borrower. All of the preceding may be done either in the name of
the Bank or in the name of the Borrower with the same force and effect
as the Borrower could have done had this Agreement not been entered into.
C. Require the Borrower to indicate on the face of all invoices (or
such other documentation as may be specified by the Bank relating to the
sale, delivery or
(8)
shipment of goods giving rise to the account) that the account has been
assigned to the Bank and that all payments are to be made directly to the
Bank at such address as the Bank may designate.
8.07. COMPROMISE. Grant extensions, compromise claims and settle any account
for less than the amount owing thereunder, all without notice to the Borrower
or any obligor on or guarantor of the Obligations.
8.08. CARE AND POSSESSION OF THE CROPS. Enter upon the premises where the
Crops are being grown or stored and, using any and all of the Grantor's
equipment, machinery, tools, farming implements and supplies, and improvements
located on such premises: (i) farm, cultivate, irrigate, fertilize, fumigate,
prune and perform any other act or acts appropriate or necessary to grow, care
for, maintain, preserve and protect the Crops (using any water located in, on
or adjacent to the premises); (ii) harvest, pick, clean and remove the Crops
from the premises; and (iii) appraise, store, prepare for public or private
sale, exhibit, market and sell the Crops and the products thereof. With
respect to the above, the Grantor hereby further agrees that, if the Grantor
is the owner of record of the premises upon which the Crops and the products
thereof are located, the Bank shall not be responsible or liable for
returning the premises to their condition immediately preceding the use of
the premises as provided herein or for doing such acts as may be necessary to
permit future crops to be grown on the premises.
8.09. PROTECTION OF SECURITY INTEREST. Make such payments and do such acts as
the Bank, in its sole judgment, considers necessary and reasonable to protect
its security interest or lien in the Collateral. The Borrower hereby
irrevocably authorizes the Bank to pay, purchase, contest or compromise any
encumbrance, lien or claim which the Bank, in its sole judgment, deems to be
prior or superior to its security interest. Further, the Borrower hereby
agrees to pay to the Bank, upon demand therefor, all expenses and expenditures
(including attorneys' fees) incurred in connection with the foregoing.
8.10. FORECLOSURE. Enforce any security interest or lien given or provided for
under this Agreement or under any security agreement, mortgage, deed of trust
or other document relating to the Collateral. In such manner and such order,
as to all or any part of the Collateral, as the Bank, in its sole judgment,
deems to be necessary or appropriate and the Borrower hereby waives any and
all rights, obligations or defenses now or hereafter established by law
relating to the foregoing. In the enforcement of its security interest or
lien, the Bank is authorized to enter upon the premises where any Collateral
is located and take possession of the Collateral or any part thereof,
together with the Borrower's records pertaining thereto, or the Bank may
require the Borrower to assemble the Collateral and records pertaining
thereto and make such Collateral and records available to the Bank at a place
designated by the Bank. The Bank may sell the Collateral or any portions
thereof, together with all additions, accessions and accessories thereto,
giving only such notices and following only such procedures as are required
by law, at either a public or private sale, or both, with or without having
the Collateral present at the time of sale, which sale shall be on such terms
and conditions and conducted in such manner as the Bank determines in its
sole judgment to be commercially reasonable. Any deficiency which exists
after the disposition or liquidation of the Collateral shall be a continuing
liability of any obligor on or any guarantor of the Obligations and shall be
immediately paid to the Bank.
8.11. APPLICATION OF PROCEEDS. All amounts received by the Bank as proceeds
from the disposition or liquidation of the Collateral 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 of the
Bank's lien in the Collateral, 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 protecting, preserving, enforcing,
collecting, selling or disposing of the Collateral; next, to the payments 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 Collateral or excess proceeds existing after the disposition or
liquidation of the Collateral will be returned or paid by the Bank to the
Borrower.
8.12. 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 agreements now existing or
hereafter entered into between the Borrower and the Bank, or otherwise.
SECTION IX
MISCELLANEOUS PROVISIONS
9.01. DEFAULT INTEREST RATE. If an Event of Default has occurred and is
continuing, the Bank, at its option, may require the Borrower to pay to the
Bank interest on any Indebtedness or amount payable under this Agreement at a
rate which is 3% in excess of the rate or rates otherwise then in effect
under this Agreement.
9.02. ASSIGNMENT OF THE BORROWER'S RIGHTS WITH RESPECT TO CROPS.
A. If the Crops or any portion or portions thereof become infected by
disease or are destroyed by order of any local, state or federal
authority, and, by reason thereof, the Borrower is entitled to be
indemnified by such authority, the Borrower hereby assigns to the Bank any
and all such sums due from such authority, and the Bank is hereby
authorized to receive, collect and xxx for the same, and the Borrower
hereby orders and directs that any such sums be paid directly to the Bank.
B. In addition, the Borrower hereby assigns and transfers to the Bank
all of the Borrower's rights and interests in and to any monies now or
hereafter placed in any funds of any marketing association, corporation,
partnership, firm or individual now, heretofore or hereafter handling or
having to do with any of the Crops or connected with the growing,
marketing, farming or other handling of such Crops and the Borrower hereby
assigns and transfers to the Bank all stock and all other interests,
benefits and rights of the Borrower in any such marketing association,
corporation, cooperative, partnership, firm or individual having anything
to do with such Crops and all monies due to the Borrower from any one or
more of them.
9.03. RELIANCE. Each warranty, representation, covenant and agreement
contained in this Agreement shall be conclusively 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.
9.04. DISPUTE RESOLUTION
A. DISPUTES. 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 sort, 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: (i) this Agreement
or any related agreements, documents or instruments, (ii) all past and
present loans, credits, accounts, deposits 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, (iii) any incidents, omissions, acts,
practices, or occurrences causing injury to any party whereby another party
or its agents, employees or representatives may be liable, in whole or in
part, or (iv) any aspect of the past or present relationships of the
parties, shall be resolved through a two-step dispute resolution process
administered by the Judicial Arbitration & Mediation Services, Inc.
("JAMS") as follows:
B. STEP I - MEDIATION. At the request of any party to the dispute, claim
or controversy, the matter shall be referred to the nearest office of JAMS
for mediation, which is an informal, non-binding conference or conferences
between the parties in which a retired judge or justice from the JAMS panel
will seek to guide the parties to a resolution of the case.
C. STEP II - ARBITRATION (CONTRACTS NOT SECURED BY REAL PROPERTY).
Should any dispute, claim or controversy remain unresolved at the
conclusion of the Step I Mediation Phase, then (subject to the restriction
at the end of this subparagraph) all such remaining matters shall be
resolved by final and binding
(9)
arbitration before a different judicial panelist, unless the parties
shall agree to have the mediator panelist act as arbitrator. The
hearing shall be conducted at a location determined by the arbitrator
in Los Angeles, California (or such other city as may be agreed upon
by the parties) and shall be administered by and in accordance with
the then existing Rules of Practice and Procedure of JAMS and
judgement upon any award rendered by the arbitrator may be entered by
any State or Federal Court having jurisdiction thereof. The arbitrator
shall determine which is the prevailing party and shall include in the
award that party's reasonable attorney's fees and costs. This
subparagraph shall apply only if, at the time of the submission of the
matter to JAMS, the dispute or issues involved do not arise out of any
transaction which is secured by real property collateral or, if so
secured, all parties consent to such submission.
As soon as practicable after selection of the arbitrator, the
arbitrator, or the arbitrator's designated representative, shall
determine a reasonable estimate of anticipated fees and costs of the
arbitrator, and render a statement to each party setting forth that
party's pro-rata share of said fees and costs. Thereafter, each party
shall, within 10 days of receipt of said statement, deposit said sum
with the arbitrator. Failure of any party to make such a deposit shall
result in a forfeiture by the non-depositing party of the right to
prosecute or defend the claim which is the subject of the arbitration,
but shall not otherwise serve to xxxxx, stay or suspend the
arbitration proceedings.
D. STEP 11 - TRIAL BY COURT REFERENCE (CONTRACTS SECURED BY REAL
PROPERTY). If the dispute, claim or controversy is not one required or
agreed to be submitted to arbitration, as provided in the above
subparagraph, and has not been resolved by STEP I mediation, then 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 JAMS appointed pursuant to the
provisions of Section 638(l) of the California Code of Civil
Procedure, or any amendments, 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 the parties are unable
to agree upon a member of the JAMS 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 any cause of
action which is the subject of the reference, but shall not otherwise
serve to xxxxx, stay or suspend the reference proceeding.
E. PROVISIONAL REMEDIES, SELF HELP AND FORECLOSURE. No provision of,
or the exercise of any rights under any portion of this Dispute
Resolution provision, shall limit the right of any party to exercise
self help remedies such as set off, foreclosure against any real or
personal property collateral, or the obtaining of 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 arbitration. At the 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 trusts 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 to submit the controversy or claim to arbitration.
9.05. WAIVER OF JURY. The Borrower and the Bank hereby expressly and
voluntarily waive any and all rights, whether arising under the California
constitution, any rules of the California Code of Civil Procedure, common law
or otherwise, to demand a trial by jury in any action, matter, claim or cause
of action whatsoever arising out of or in any way related to this Agreement
or any other agreement, document or transaction contemplated hereby.
9.06. RESTRUCTURING EXPENSES. In the event the Bank and the Borrower
negotiate for, or enter into, any restructuring, modification or
refinancing of the Indebtedness under this Agreement for the purposes of
remedying an Event of Default, The Bank, may require the Borrower to
reimburse all of the Bank's costs and expenses incurred in connection
therewith, including, but not limited to reasonable attorneys' fees and the
costs of any audit or appraisals required by the Bank to be performed in
connection with such restructuring, modification or refinancing.
9.07. ATTORNEY'S FEES. In the event of any suit, mediation, arbitration or
other action in relation to this Agreement or any document, instrument or
agreement executed with respect to, evidencing or securing the indebtedness
hereunder, the prevailing party, in addition to all other sums to which it
may be entitled, shall be entitled to reasonable attorneys' fees.
9.08. 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, 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.
9.09. WAIVER. Neither the failure nor delay by the Bank in exercising any
right hereunder or under any document, instrument or agreements mentioned
herein shall operate as a waiver thereof, nor shall any single or partial
exercise of any rights hereunder or under any 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.
9.10. 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.
9.11. 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. 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 and any guarantor.
9.12. JURISDICTION. This Agreement, any notes issued hereunder, the rights
of the parties hereunder to an concerning the Collateral, 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.
9.13. HEADINGS. The headings set forth herein are solely for the purpose of
identification and have no legal significance.
9.14. ENTIRE AGREEMENT. This Agreement and all documents, instruments and
agreements mentioned herein 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 in such documents,
instruments and agreements are superseded hereby.
(10)
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto as
of the date first hereinabove written.
BANK: BORROWER:
SANWA BANK CALIFORNIA XXXXXX VINEYARDS & MANAGEMENT CO.
By: By: /s/ Xxxxxx X. Xxxxxx
------------------------------- --------------------------------
Name/Title Xxxxxx X. Xxxxxx, President
Xxxxxx X. Xxxxxxxxx, Vice President
Address: By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Xxxxxx X. Xxxxx, Secretary
Fresno CBC/Agribusiness Office
0000 Xxxxxx Xxxxxx, 0xx Xxxxx Address:
Xxxxxx, XX 00000
0000 0xx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000
(11)
