[LOGO]
AGRICULTURAL CREDIT AGREEMENT
(General Term Loan)
This Agricultural Credit Agreement ("Agreement") is made and entered into this
6th day of October, 1994 by and between SANWA BANK CALIFORNIA (the "Bank") and
VINEYARD INVESTORS 1972 (the "Borrower").
SECTION I
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. "Business Day" shall mean a day, other than a Saturday or Sunday, on
which commercial banks are open for business in California.
B. "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.
C. "Debt" shall mean all liabilities of the Borrower less Subordinated
Debt.
D. "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).
E. "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.
F. "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 Water Code and the California Health and Safety Code.
G. "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.
H. "Event of Default" shall have the meaning set forth in the section
herein entitled "Events of Default".
I. "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.
J. "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.
K. "Obligations" shall mean all amounts owing by the Borrower to the Bank
pursuant to this Agreement.
L. "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.
M. "Reference Rate" shall mean an index for a variable interest rate
which is quoted, published or announced from 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.
N. "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.
1.03 Other Terms. Other terms not otherwise defined shall have the meanings
attributed to such terms in the California Uniform Commercial Code.
(1)
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.
2.01. Term Loan. The Bank agrees to lend to the Borrower up to the maximum
amount of $5,500,000.00 (the "Term Loan").
A. Purpose. This Term Loan shall be used to refinance and increase
existing real estate loan to replenish working capital.
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.
(Such rate is referred to in this Section as 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. Repayment. Unless sooner due in accordance with the terms of this
Agreement, the Borrower hereby promises and agrees to pay principal and
interest on the following terms:
Interest shall be paid quarterly on the fifth day of each quarter,
commencing on January 5, 1995. Principal shall be paid on the fifth day
of each year, up to and including the maturity date hereof, as follows:
three annual installments of $150,000.00 commencing October 5, 1995; three
annual installments of $200,000.00 commencing October 5, 1998; and three
annual installments of $288,000.00 commencing on October 5, 2001.
On October 5, 2004 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. 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.
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.
D. 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.
(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 at 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 any 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.
(2)
(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.
E. LATE FEE. If any regularly scheduled payment of principal and/or
interest (exclusive of the final payment upon maturity), 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.
F. FACILITY FEES. The following fees for this facility shall be paid in
cash upon execution of this Agreement or prior to funding of this
facility: Loan Fees in the amount of $25,000.00.
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.
G. 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 statement of the Borrower Term Loan Account, which
statement shall be considered to be correct and conclusively binding on
the Borrower unless the Bank is notified by the Borrower to the contrary
within thirty (30) days after the Borrower's receipt of any such
statement which is deemed to be incorrect.
SECTION III
COLLATERAL
3.01. REAL PROPERTY SECURITY. The Borrower hereby agrees that all of the
Obligations referenced in this Agreement and the Borrower's performance of
each and all of the terms, covenants and agreements contained in this
Agreement shall be secured by a deed of trust, in form and substance
satisfactory to the Bank (the "Deed of Trust"), encumbering as a lien of
first encumbrance certain real property described in the attached "Real
Property Schedule" (the "Real Property") located in the County of Monterey,
State of California, subject only to current taxes and assessments not yet
due and payable and those exceptions (the "Permitted Title Exceptions")
listed on a certain Preliminary Title Report.
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.
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. The obligation
of the Bank to make the initial extension of credit hereunder is subject to the
conditions precedent that the Bank shall have received before the date of such
extension of credit 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. GUARANTORS. Continuing guaranties in favor of the Bank, in form and
substance satisfactory to the Bank, executed by Xxxxxx Vineyards &
Management Co. and Xxxxxx X. Xxxxxx (each a "Guarantor"), together with
evidence that the execution, delivery and performance of the Guaranties
by each Guarantor has been duly authorized.
C. 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.
D. 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.
E. REAL PROPERTY DOCUMENTS. The following documents relating to the real
property security provided for in this Agreement:
(i) An appraisal of the Real Property.
(ii) A title insurance policy or binder in the amount of
$5,500,000.00 issued by a title insurance company satisfactory to the
Bank and in such form and substance and with such endorsements as
are satisfactory to the Bank. Such title insurance policy or binder
shall indicate to the Bank's satisfaction that the Deed of Trust
shall contstitute a lien of first encumbrance on the Real Property
subject only to Permitted Title Exceptions.
(iii) Evidence that the Deed of Trust has been recorded and
constitutes a lien on the Real Property subject only to the Permitted
Title Exceptions.
(iv) Reimbursement to the Bank in the amount of all escrow,
recordation and appraisal fees, title guaranty or insurance premiums,
closing costs and all other out-of-pocket expenses incurred by the
Bank with respect to the Real Property.
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. The obligation of the
Bank to make any extensions of credit to or on accounts of the Borrower
(including the initial extension of credit) shall be subject to the further
conditions precedent that, as of the date of each extension of credit, and after
the making of such extension of credit:
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
(3)
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 partnership 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) violate any provision of the partnership agreement
of the Borrower; or (iii) 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.
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.
5.07. 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 amounts and with companies
satisfactory to the Bank. With respect to insurance covering properties to
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
(4)
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. 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.
6.05. 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.
6.06. REPORTING REQUIREMENTS. Deliver or cause to be delivered to the Bank
in form and detail satisfactory to the Bank:
A. OTHER REPORTING REQUIREMENTS. Borrower to provide a CPA prepared
audited financial statement of Vineyard Investors 1972 and Xxxxxx
Vineyards & Management Co. to include balance sheet, income statement,
reconciliation of net worth and working capital not later than 120
days after calendar year end. Internally prepared consolidating
financial statements to be provided, within same period.
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.
6.08. REPURCHASE OF PARTNERSHIP INTERESTS. The Borrower shall not purchase
or repurchase, in whole or in part, any partnership interest.
6.09. ADDITIONAL INDEBTEDNESS. Not after the date hereof, create, incur or
assume, directly or indirectly, any liability or indebtedness other than (i)
indebtedness owed or to be owed to the Bank or (ii) indebtedness to trade
creditors incurred in the ordinary course of the Borrower's business.
6.10. 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.
6.11. 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.
6.12. TRANSFER ASSETS. Not sell, contract for sale, transfer, convey,
assign, lease or sublet any assets of the Borrower, 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.
6.13. CHANGE IN THE NATURE OF BUSINESS. Not make any material change in the
Borrower's financial structure or in the nature of the Borrower's business as
existing or conducted as of the date of this Agreement.
6.14. FINANCIAL CONDITION. Maintain at all times: On a consolidated basis
with Xxxxxx Vineyards & Management Co.
A. NET WORTH. A minimum Effective Tangible Net Worth of not less than
$5,000,000.00 (cost basis), for Xxxxxx Vineyards & Manager on a
combined basis with Xxxxxx Vineyards & Management.
B. MINIMUM WORKING CAPITAL. A minimum working capital amount of not
less than $2,500,000.00.)
C. CURRENT RATIO. A ratio of current assets to current liabilities of
not less than 2.00 to 1.00.)
6.15. COMPENSATION OF EMPLOYEES. Compensate the employees of the Borrower
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.
6.16. OTHER RESTRICTIONS. Borrower: Minimum annual Net Profit plus
Depreciation to Current Portion Long-Term Debt of at least 1.25 times at each
calendar year end.
6.17. ENVIRONMENTAL COMPLIANCE. The Borrower shall:
A. Conduct the Borrower's 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 its 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 its 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.
6.18. 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
$25,000.00 or which affects the Collateral; (iii) any change in the place of
business of the Borrower or the acquisition of more than one place of
business by the Borrower; (iv) any proposed or actual change in the name,
identity or business nature of the Borrower; and (v) other matters which have
resulted in, or might result in a material adverse change in the Collateral
or the financial condition or business operations of the Borrower.
(5)
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 term, covenant or agreement
contained in this Agreement or in any document, instrument or agreement
evidencing or relating to any indebtedness of the Borrower (whether owed to
the Bank or third persons), 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. REPRESENTATION 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 or any Guarantor shall: (i) become insolvent or
be unable to pay its debts as they mature; (ii) make an assignment for the
benefit of creditors or to an agent authorized to liquidate any substantial
amount of its properties or assets; (iii) file a voluntary petition in
bankruptcy or seeking reorganization or to effect a plan or other arrangement
with creditors; (iv) file an answer admitting the material allegations of an
involuntary petition relating to bankruptcy or reorganization or join in any
such petition; (v) become or be adjudicated a bankrupt; (vi) apply for or
consent to the appointment of, or consent that an order be made, appointing
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 OR LIMITATION OF GUARANTY. Any Guaranty shall be revoked or
limited or its enforceability or validity shall be contested by any
Guarantor, by operation of law, legal proceeding or otherwise or any
Guarantor who is a natural person shall die.
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 change in any general partner
or a change affecting the control 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. RECORDS OF COLLATERAL. Require 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 as the Bank, in its sole and absolute discretion,
deems necessary.
8.05. 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.
8.06. 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.
8.07. 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 payment of
accrued and unpaid interest on all of the Obligations; next, to the payment
of the outstanding principal balance of the Obligations; and last, to the
payment of any other indebtedness owed by the Borrower to the Bank. Any
excess Collateral or excess proceeds existing after the disposition or
liquidation of the Collateral will be returned or paid by the Bank to the
(6)
Borrower.
8.08. NON-EXCLUSIVITY OF REMEDIES. Exercise one of more of the Bank's rights
set forth herein or seek such other rights or pursue such other remedies as
may be provided by law, in equity or in any other agreement now existing or
hereafter entered into between the Borrower and the Bank, or otherwise.
SECTION 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. 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 of hereafter give, or cause to be given, to the Bank.
9.03. 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 tort, statuary 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, deposit accounts
(whether demand deposits or time deposits), safe deposit boxes,
safekeeping agreements, guarantees, letters of credit, goods or
services, or other transactions, contracts or agreements of any kind,
(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 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 attorneys' 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 II - 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(1) of the California Code of Civil
Procedure, or any amendment, addition or successor section thereto, to
hear the case and report a statement of decision thereon. The parties
intend this general reference agreement to be specifically enforceable
in accordance with said section. If 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
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 trust or mortgage, or by judicial
foreclosure. The institution and maintenance of an action for
provisional remedies, pursuit of provisional or ancillary remedies or
exercise of self help remedies shall not constitute a waiver of the
right of any party to submit the controversy or claim to arbitration.
9.04. 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.
9.05. 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.
9.06. ATTORNEYS' 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.
9.07. 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.
(7)
9.08. WAIVER. Neither the failure nor delay by the Bank in exercising any
right hereunder or under any document, instrument or agreement mentioned
herein shall operate as a waiver thereof, nor shall any single or partial
exercise of any right hereunder or under any 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.
9.09. 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.
9.10. 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.
9.11. JURISDICTION. This Agreement, any notes issued hereunder, the rights
of the parties hereunder to and 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.
9.12. HEADINGS. The headings set forth herein are solely for the purpose of
identification and have no legal significance.
9.13. 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.
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto as
of the date first hereinabove written.
BANK: BORROWER:
SANWA BANK CALIFORNIA VINEYARD INVESTORS 1972
By: XXXXXX VINEYARDS & MANAGEMENT CO., General
----------------------------- Partner of Vineyard Investors 1972
Name / Title
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Address: Xxxxxx X. Xxxxxx, President of Xxxxxx
Vineyards & Management Co.
Fresno CBC/Agribusiness Office
0000 Xxxxxx Xxxxxx, 0xx Xxxxx By: /s/ Xxxxxx X. Xxxxx
Xxxxxx, XX 00000 -------------------------------------
Xxxxxx X. Xxxxx, Secretary of
Xxxxxx Vineyards & Management Co.
Address:
00000 Xxxxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx Xxx Xxx, XX 00000
(8)
