EXECUTION COPY
________________________________________________________________________________
THE CHALONE WINE GROUP, LTD.
$5,000,000 Adjustable Rate Senior Secured Notes, Series A,
Due September 15, 2010
$10,000,000 Adjustable Rate Senior Secured Notes, Series B,
Due September 15, 2010
$15,000,000 Adjustable Rate Senior Secured Notes, Series C,
Due September 15, 2010
_______________________
AMENDED AND RESTATED
NOTE PURCHASE AGREEMENT
_______________________
Dated as of April 19, 2002
________________________________________________________________________________
TABLE OF CONTENTS
PAGE
1. Amendment and Restatement; Guaranties; Security...........................1
1.1 Amendment and Restated Note Purchase Agreement and Notes..........1
1.2 Guarantee ........................................................2
1.3 Security for the Notes and Subsidiary Guarantee Agreements .......2
1.4 Intercreditor Agreement ..........................................2
2. Issuance and Exchange Of Notes ...........................................3
3. Closing...................................................................3
4. Conditions To Closing ....................................................3
4.1 Representations and Warranties ...................................3
4.2 Performance; No Default...........................................3
4.3 Compliance Certificates ..........................................3
4.4 Opinions of Counsel...............................................4
4.5 Original Subsidiary Guarantee Agreement...........................4
4.6 Purchase Permitted By Applicable Law, etc ........................4
4.7 Exchange of Other Notes ..........................................5
4.8 Payment of Special Counsel Fees ..................................5
4.9 Private Placement Number..........................................5
4.10 Changes in Corporate Structure ..................................5
4.11 Collateral Documents; Related Transactions; Collateral Due
Diligence .....................................................5
4.12 Consent of Other Holders.........................................6
4.13 Pro-Forma Debt to EBITDA Ratio ..................................6
4.14 Proceedings and Documents .......................................7
5. Representations And Warranties Of The Company.............................7
5.1 Organization; Power and Authority.........................................7
5.2 Authorization, etc........................................................7
5.3 Disclosure................................................................8
5.4 Organization and Ownership of Shares of Subsidiaries; Affiliates..........8
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TABLE OF CONTENTS
(CONTINUED)
PAGE
5.5 Financial Statements .............................................9
5.6 Compliance with Laws and Instruments .............................9
5.7 Governmental Authorizations, etc..................................9
5.8 Litigation; Observance of Agreements, Statutes and Orders ........9
5.9 Taxes ...........................................................10
5.10 Title to Property; Leases.......................................10
5.11 Licenses, Permits, etc. ........................................10
5.12 Compliance with ERISA...........................................11
5.13 Intentionally Omitted ..........................................12
5.14 Use of Proceeds; Margin Regulations ............................12
5.15 Existing Debt; Future Liens ....................................12
5.16 Intentionally Omitted ..........................................12
5.17 Status under Certain Statutes...................................12
5.18 Environmental Matters...........................................12
5.19 [Intentionally Omitted].........................................13
5.20 Solvency........................................................13
5.21 Consolidated and Integrated Business of the Company and
its Restricted Subsidiaries...................................14
5.22 No Burdensome Restrictions......................................14
5.23 Matters Relating to the Collateral .............................14
5.24 Credit Agreement Representations................................15
6. Representations Of The Purchasers........................................15
6.1 Purchase for Investment .........................................15
6.2 Source of Funds..................................................15
7. Information As To Company................................................16
7.1 Financial and Business Information ..............................16
7.2 Additional Information...........................................18
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TABLE OF CONTENTS
(CONTINUED)
PAGE
7.3 Inspection ......................................................20
8. Prepayment Of The Notes .................................................20
8.1 Required Prepayments.............................................20
8.2 Optional Prepayments with Make-Whole Amount .....................21
8.3 Allocation of Partial Prepayments................................22
8.4 Maturity; Xxxxxxxxx, etc. .......................................22
8.5 Purchase of Notes................................................22
8.6 Make-Whole Amount................................................22
9. Affirmative Covenants ...................................................24
9.1 Compliance with Law .............................................24
9.2 Insurance .......................................................24
9.3 Maintenance of Properties; Action under Environmental Laws ......25
9.4 Payment of Taxes and Claims .....................................25
9.5 Corporate Existence, etc.........................................26
9.6 [Intentionally Omitted.].........................................26
9.7 Further Assurances and Additional Acts...........................26
9.8 Proceeds of Events of Loss ......................................27
9.9 Post-Closing Matters ............................................27
10. Negative Covenants.......................................................27
10.1 Transactions with Affiliates ...................................27
10.2 Restrictions on Fundamental Changes ............................27
10.3 Liens; Negative Pledges ........................................28
10.4 Financial Covenants ............................................28
10.5 Indebtedness ...................................................30
10.6 Intentionally Omitted ..........................................32
10.7 Distributions...................................................32
10.8 Loans and Investments ..........................................33
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TABLE OF CONTENTS
(CONTINUED)
PAGE
10.9 Sale of Assets .................................................34
10.10 Limitations on Sale-and-Leaseback Transactions ................34
10.11 Subsidiary Guarantors .........................................35
10.12 Line of Business ..............................................36
10.13 Change of Control .............................................36
10.14 Amendments of Certain Documents ...............................36
10.15 Redemption of Subordinated Debt................................37
10.16 Hazardous Substances ..........................................37
10.17 Accounting Changes.............................................37
10.18 Foreign Subsidiaries...........................................37
11. Events Of Default........................................................37
12. Remedies On Default, Etc.................................................40
12.1 Acceleration ...................................................40
12.2 Other Remedies .................................................41
12.3 Rescission......................................................41
12.4 No Waivers or Election of Remedies, Expenses, etc. .............42
13. Registration; Exchange; Substitution Of Notes ...........................42
13.1 Registration of Notes...........................................42
13.2 Transfer and Exchange of Notes .................................42
13.3 Replacement of Notes ...........................................43
14. Payment Of Notes ........................................................43
14.1 Place of Payment ...............................................43
14.2 Home Office Payment ............................................43
15. Expenses, Etc. ..........................................................44
15.1 Transaction Expenses............................................44
15.2 Survival .......................................................44
16. Survival Of Representations And Warranties; Entire Agreement.............44
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TABLE OF CONTENTS
(CONTINUED)
PAGE
17. Amendment And Waiver ....................................................45
17.1 Requirements....................................................45
17.2 Solicitation of Holders of Notes................................45
17.3 Binding Effect, etc.............................................45
17.4 Notes Held by Company, etc......................................46
18. Notices..................................................................46
19. Reproduction Of Documents................................................46
20. Confidential Information.................................................47
21. Substitution Of Purchaser; Participation ................................48
22. Miscellaneous............................................................48
22.1 Successors and Assigns..........................................48
22.2 Payments Due on Non-Business Days ..............................48
22.3 Severability....................................................49
22.4 Construction ...................................................49
22.5 Counterparts ...................................................49
22.6 Governing Law; Jurisdiction and Service of Process..............49
22.7 Agents for Service of Process ..................................50
22.8 Waiver of Jury Trial ...........................................50
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TABLE OF CONTENTS
(CONTINUED)
SCHEDULES
Schedule A Information Relating to Purchasers
Schedule B Defined Terms
Schedule 4.10 Corporate Changes
Schedule 5.4 Subsidiaries
Schedule 5.5 Financial Statements
Schedule 5.8 Litigation
Schedule 5.11 Licenses
Schedule 5.15 Existing Debt; Existing Liens
Schedule 10.9 Specified Assets
EXHIBITS
Exhibit 1-A Form of Series A Note
Exhibit 1-B Form of Series B Note
Exhibit 1-C Form of Series C Note
Exhibit 4.4(a) Form of Opinion of Counsel for the Company
Exhibit 4.4(b) Form of Opinion of Special Washington Counsel for the
Purchasers
Exhibit 4.5 Form of Subsidiary Guarantee Agreement
Exhibit 10.11(a) Representations and Warranties of Original Subsidiary
Guarantors
Exhibit A Form of Deed of Trust
Exhibit B Form of Environmental Indemnity
Exhibit C Form of Patent and Trademark Security Agreement
Exhibit D Form of Security Agreement
Exhibit E Form of Intercreditor Agreement
Exhibit F Form of Compliance Certificate
Exhibit G Form of Update Certificate
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THE CHALONE WINE GROUP, LTD.
000 Xxxxxxx Xxxx
Xxxx, Xxxxxxxxxx 00000
$ 5,000,000 Adjustable Rate Senior Secured Notes, Series A,
Due September 15, 2010
$ 10,000,000 Adjustable Rate Senior Secured Notes, Series B,
Due September 15, 2010
$ 15,000,000 Adjustable Rate Senior Secured Notes, Series C,
Due September 15, 2010
April 19, 2002
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
THE CHALONE WINE GROUP, LTD., a California corporation (the "Company"),
in consideration of the mutual promises herein contained and for other good and
valuable consideration agrees with each of the purchasers named in Schedule A to
this Agreement (the "Purchasers") as follows:
1. AMENDMENT AND RESTATEMENT; GUARANTIES; SECURITY
1.1 Amendment and Restated Note Purchase Agreement and Notes.
The Purchasers and the Company are parties to that certain Note
Purchase Agreement dated as of September 15, 2000 as amended by the First
Amendment, Consent and Waiver dated as of February 9, 2001 (as so amended, the
"Original Note Purchase Agreement"), pursuant to which the Company authorized
the issue and sale of, and the Purchasers purchased, the (i) $5,000,000 8.90%
Senior Guaranteed Notes, Series A, Due September 15, 2010 (the "Original Series
A Notes"); (ii) $10,000,000 8.93% Senior Guaranteed Notes, Series B, Due
September 15, 2010 (the "Original Series B Notes"); and (iii) $15,000,000 9.05%
Senior Guaranteed Notes, Series C, Due September 15, 2010 (the "Original Series
C Notes", and together with the Original Series A Notes and the Original Series
B Notes, the "Original Notes").
On the Closing (as defined below) the company will amend and restate
the Original Notes in the form of Exhibit 1. Reference in this Agreement to the
"Series A Notes" shall be a reference to the Original Series A Notes as amended
and restated in the form of Exhibit 1-A. Reference in this Agreement to the
"Series B Notes" shall be a reference to the Original Series B Notes as amended
and restated in the form of Exhibit 1-B. Reference in this Agreement to the
"Series C Notes" shall be a reference to the Original Series C Notes as amended
and restated in the form of Exhibit 1-C. Reference in this Agreement to the
"Notes" shall be a reference to the Original Notes as so amended and restated in
said Exhibit 1 with such changes therefrom, if any, as may be approved by you
and the Company.
Each of the Notes shall bear interest from the date thereof until such
Note shall become due and payable in accordance with the terms thereof and
hereof (whether at maturity, by
acceleration or otherwise) at the applicable Adjustable Rate. Interest on each
Note shall be computed on the basis of a 360 day year of twelve 30 day months.
Notwithstanding the foregoing, the Company shall pay interest on any overdue
payment (including any overdue prepayment) of principal, any overdue payment of
interest and any overdue payment of any Make-Whole Amount at the applicable
Default Rate in accordance with the Notes. Certain capitalized terms used in
this Agreement are defined in Schedule B; references to a "Schedule" or an
"Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit attached
to this Agreement.
The Company and the Purchasers now desire to amend and restate the
Original Note Purchase Agreement and the Original Notes to, among other things,
(a) amend certain covenants and related definitions, (b) provide for additional
collateral to secure the obligations represented by the Notes and the Guarantee,
(c) waive certain Defaults and Events of Default existing under the Original
Note Purchase Agreement and (d) make certain other changes to the Original Note
Purchase Agreement.
1.2 Guarantee.
The payment and performance obligations of the Company under and
pursuant to this Agreement and the Notes are to be fully and unconditionally
guaranteed by each of the Subsidiary Guarantors pursuant to the Subsidiary
Guarantee Agreements.
1.3 Security for the Notes and Subsidiary Guarantee Agreements.
The Notes and the obligations of the Subsidiary Guarantors under the
Subsidiary Guarantee Agreements shall be secured, equally and ratably, by the
Collateral Documents.
1.4 Intercreditor Agreement.
The collateral described in the Collateral Documents shall be held by
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank International",
New York Branch, as Collateral Agent for the benefit of the Purchasers and the
Bank Lenders (the "Collateral Agent") pursuant to the Intercreditor and
Collateral Agency Agreement dated as of the date hereof and in substantially the
form attached hereto as Exhibit E (the "Intercreditor Agreement") among the
Purchasers, the Collateral Agent and the banks which are parties to the Credit
Agreement (the "Bank Lenders"). The Intercreditor Agreement shall recognize (a)
the first perfected interest and rights of the Purchasers and the Bank Term
Lenders in the Real Estate Collateral, (b) the second perfected interest and
rights of the Bank Revolver Lenders in the Real Estate Collateral, (c) the first
perfected interest and rights of the Bank Revolver Lenders in the Accounts and
Inventory Collateral, (d) the second perfected interest and rights of the
Purchasers and the Bank Term Lenders in the Accounts and Inventory Collateral,
and (e) the pari passu perfected interest and rights of the Purchasers and the
Bank Lenders in the Intellectual Property Collateral.
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2. ISSUANCE AND EXCHANGE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company will
issue the amended and restated Notes to each Purchaser upon surrender by them of
the Original Notes for cancellation by the Company. The obligation of each
Purchaser shall be several and not joint and no Purchaser shall have any
obligation or any liability to any Person for the performance or nonperformance
by any other Purchaser hereunder.
3. CLOSING.
The issue and exchange of the Notes shall occur at the offices of
Xxxxxxx Xxxxx & Xxxxxx LLP, at 10:00 a.m., Central time, at a closing (the
"CLOSING") on April 19, 2002 or on such other Business Day thereafter on or
prior to April 30, 2002 as may be agreed upon by the Company and the Purchasers
(the "CLOSING DATE"). If at the Closing the Company shall fail to tender such
Notes to be purchased by any Purchaser as provided above in this Section 3, or
any of the conditions specified in Section 4 shall not have been fulfilled to
such Purchaser's satisfaction, such Purchaser shall, at its election, be
relieved of all further obligations under this Agreement, without thereby
waiving any rights such Purchaser may have by reason of such failure or such
non-fulfillment.
4. CONDITIONS TO CLOSING.
Each Purchaser's obligation to exchange the Original Notes for the
Notes to be issued to such Purchaser at the Closing is subject to the
fulfillment to such Purchaser's satisfaction, prior to or at the Closing, of the
following conditions:
4.1 Representations and Warranties.
The representations and warranties of the Company in this Agreement,
and the representations and warranties of the Original Subsidiary Guarantors
contained in Exhibit 10.11(a) to this Agreement, shall be correct when made and
at the time of the Closing.
4.2 Performance; No Default.
The Company and each of the Original Subsidiary Guarantors shall have
performed and complied with all agreements and conditions contained in this
Agreement, the Collateral Documents and the Subsidiary Guarantee Agreements
required to be performed or complied with by it prior to or at the Closing and
after giving effect to the issue and exchange of the Notes and no Default or
Event of Default shall have occurred and be continuing.
4.3 Compliance Certificates.
(a) Officer's Certificate of the Company. The Company shall
have delivered to you an Officer's Certificate, dated the date of the Closing,
certifying that the conditions specified in Sections 4.1, 4.2 and 4.10 have been
fulfilled.
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(b) Secretary's Certificate of the Company.The Company shall
have delivered to you a certificate certifying as to the resolutions attached
thereto and other corporate proceedings relating to the authorization, execution
and delivery of the Notes, this Agreement and the Collateral Documents.
(c) Officer's Certificate of the Guarantors. Each Original
Subsidiary Guarantor shall have delivered to you an Officer's Certificate, dated
the date of the Closing, certifying that the conditions specified in Sections
4.1, 4.2 and 4.10 have been fulfilled in respect of such Original Subsidiary
Guarantor.
(d) Secretary's Certificate of the Guarantors. Each Original
Subsidiary Guarantor shall have delivered to you a certificate certifying as to
the resolutions attached thereto and other corporate proceedings relating to the
authorization, execution and delivery of the subject Original Subsidiary
Guarantee Agreement and the subject Collateral Documents.
4.4 Opinions of Counsel.
You shall have received opinions in form and substance satisfactory to
you, dated the date of the Closing (a) from Xxxxxxx Xxxxx & Xxxxxx LLP, counsel
for the Company and the Original Subsidiary Guarantors, covering the matters set
forth in Exhibit 4.4(a) and covering such other matters incident to the
transactions contemplated hereby as you or your counsel may reasonably request
(and the Company hereby instructs its counsel to deliver such opinion to you)
and (b) from Xxxxx Xxxxxx Xxxxxxxx LLP, your special Washington local real
estate counsel in connection with such transactions, substantially in the form
set forth in Exhibit 4.4(b) and covering such other matters incident to such
transactions as each Purchaser may reasonably request.
4.5 Original Subsidiary Guarantee Agreement.
You shall have received a counterpart original of a Subsidiary
Guarantee Agreement, duly executed and delivered by each of the Original
Subsidiary Guarantors, in substantially the form set forth in Exhibit 4.5
(collectively, the "Subsidiary Guarantee Agreements"), together with such other
documents as to each Original Subsidiary Guarantor as are sufficient to comply
with Section 10.11, and each Subsidiary Guarantee Agreement shall be in full
force and effect.
4.6 Purchase Permitted By Applicable Law, etc.
On the Closing Date each Purchaser's exchange of Notes shall (i) be
permitted by the laws and regulations of each jurisdiction to which it is
subject, without recourse to provisions (such as Section 1405(a)(8) of the New
York Insurance Law) permitting limited investments by insurance companies
without restriction as to the character of the particular investment, (ii) not
violate any applicable law or regulation (including, without limitation,
Regulation U, T or X of the Board of Governors of the Federal Reserve System)
and (iii) not subject any Purchaser to any tax, penalty or liability under or
pursuant to any applicable law or regulation, which law or regulation was not in
effect on the date hereof. If requested by any Purchaser, such Purchaser shall
have received an Officer's Certificate certifying as to such matters of fact as
such Purchaser
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may reasonably specify to enable such Purchaser to determine whether such
exchange is so permitted.
4.7 Exchange of Other Notes.
Contemporaneously with the Closing the Company shall issue the Notes to
the Purchasers and the Purchasers shall exchange the Original Notes to be
exchanged by them at the Closing as specified in Schedule A.
4.8 Payment of Special Counsel Fees.
Without limiting the provisions of Section 15.1, the Company shall have
paid on or before the Closing the reasonable fees, charges and disbursements of
XxXxxxxxx, Will & Xxxxx, the Purchasers' special counsel and the Purchasers'
special Washington local real estate counsel referred to in Section 4.4 to the
extent reflected in a statement of each such counsel rendered to the Company at
least one Business Day prior to the Closing.
4.9 Private Placement Number.
A Private Placement number issued by Standard & Poor's CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained for each series
of the Notes, if necessary. 4.10 Changes in Corporate Structure. Except as
specified in Schedule 4.10, neither the Company nor any Original Subsidiary
Guarantor shall have changed its jurisdiction of incorporation or been a party
to any merger or consolidation nor shall it have succeeded to all or any
substantial part of the liabilities of any other entity, at any time following
the date of the most recent financial statements referred to in Schedule 5.5.
4.11 Collateral Documents; Related Transactions; Collateral Due
Diligence.
(a) Each of the Collateral Documents shall have been duly
executed and delivered in the respective forms thereof and shall be in full
force and effect and all of the security interests granted thereunder shall be
duly perfected to the satisfaction of the Purchasers.
(b) The Credit Agreement and the Intercreditor Agreement
shall have been duly executed and delivered by the parties thereto and all of
the transactions contemplated thereby shall have been consummated to the
satisfaction of the Purchasers.
(c) The Purchasers shall have received the following, in
form and substance satisfactory to the Purchasers:
(i) evidence that all filings, registrations and
recordings have been made in the appropriate governmental offices, and all other
action has been taken, which shall be necessary to create, in favor of the
Collateral Agent on behalf of the Purchasers, a
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perfected first or second, as the case may be, priority Lien on the Collateral,
including evidence of recordation of the Deeds of Trust (which may consist of a
written or telephonic confirmation from the title insurance company), and filing
of completed UCC-1 financing statements, in each case in the appropriate
governmental offices;
(ii) the results, dated as of a recent date prior
to the Closing Date, of searches conducted (A) in the UCC filing records in each
of the governmental offices in each jurisdiction in which personal property and
fixture Collateral is located, and (B) of the records maintained by the U.S.
Patent and Trademark Office and Copyright Office with respect to all United
States patents and patent applications and all United States registered
trademarks and United States registered copyrights constituting Collateral,
which shall have revealed no Liens with respect to any of the Collateral except
Permitted Liens;
(iii) a title insurance policy ( or a binding
commitment therefor) for the Deeds of Trust (A) issued by a title insurance
company of recognized standing satisfactory to the Purchasers, (B) on an ALTA
lender's extended coverage policy, in an amount and form satisfactory to the
Purchasers, (C) naming the Collateral Agent, for the ratable benefit of the
Secured Parties, as the insured thereunder, (D) insuring that the Deeds of Trust
insured thereby create a valid first priority Lien on the property covered by
each such Deed of Trust, subject to no other Liens, other than Permitted Liens,
and to no other exceptions, other than those satisfactory to the Purchasers, and
(E) containing such endorsements and affirmative coverage as the Purchasers or
any Lender (through the Purchasers)
may reasonably request; and
(iv) such surveys, appraisals, collateral audits,
consents of landlords, estoppels from landlords, tenant subordination agreements
and other documents and instruments in connection with the Deeds of Trust as
shall reasonably be deemed necessary by the Purchasers.
4.12 Consent of Other Holders.
Any consents or approvals required to be obtained from any Holder or
holder of any outstanding debt of the Company or any Original Subsidiary
Guarantor and any amendments of agreements pursuant to which any debt may have
been incurred by the Company or any Original Subsidiary Guarantor, which shall
be necessary to permit the consummation of the transactions contemplated hereby
shall have been obtained and all such consents, approvals or amendments shall be
satisfactory in form and substance to each Purchaser and special counsel to the
Purchasers.
4.13 Pro-Forma Debt to EBITDA Ratio.
The ratio of (a) Consolidated Indebtedness PLUS six times Consolidated
Rent Expense to (b) Consolidated EBITDA (measured on a trailing 12-month basis)
plus one times Consolidated Rent Expense, in each case, measured on a trailing
12-month basis, shall not be greater than 5.75 to 1.00, measured on a pro forma
basis (after giving effect to the transactions and borrowings
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contemplated hereunder and under the Credit Agreement) as of the last day of the
immediately preceding fiscal month.
4.14 Proceedings and Documents.
All corporate and other proceedings in connection with the transactions
contemplated by this Agreement and all documents and instruments incident to
such transactions shall be satisfactory to each Purchaser and the Purchasers'
special counsel, and each Purchaser and the Purchasers' special counsel shall
have received all such counterpart originals or certified or other copies of
such documents as each Purchaser or special counsel to the Purchasers' may
reasonably request.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Purchasers that:
5.1 Organization; Power and Authority.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation or other legal entity and is in good standing
in each jurisdiction in which such qualification is required by law, other than
those jurisdictions as to which the failure to be so qualified or in good
standing would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. The Company has the corporate or other legal
entity power and authority to own or hold under lease the properties it purports
to own or hold under lease, to transact the business it transacts and proposes
to transact, to execute and deliver this Agreement, the Collateral Documents and
the Notes and to perform the provisions hereof and thereof.
5.2 Authorization, etc.
This Agreement, the Collateral Documents and the Notes have been duly
authorized by all necessary corporate or other legal entity action on the part
of the Company, and this Agreement and the Collateral Documents constitute, the
legal, valid and binding obligations and contracts of the Company enforceable
against the Company in accordance with their respective terms, except as such
enforceability may be limited by (a) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (b) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Upon execution and delivery thereof, each Note will constitute a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by (a)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and (b) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or in law).
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5.3 Disclosure.
This Agreement, the Collateral Documents, the documents, certificates
or other communications made or delivered to each Purchaser by or on behalf of
the Company and the Original Subsidiary Guarantors in connection with the
transactions contemplated hereby and the financial statements listed in Schedule
5.5, taken as a whole, do not contain any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made. Since
December 31, 2001, there has been no change in the financial condition,
operations, business or properties of the Company or any Subsidiary except
changes that individually or in the aggregate could not reasonably be expected
to have a Material Adverse Effect. There is no fact known to the Company that
could reasonably be expected to have a Material Adverse Effect that has not been
set forth herein or in the Memorandum or in the other documents, certificates
and other communications made or delivered to you by or on behalf of the Company
or any Original Subsidiary Guarantor specifically for use in connection with the
transactions contemplated hereby.
5.4 Organization and Ownership of Shares of Subsidiaries;Affiliates.
(a) Schedule 5.4 contains (except as noted therein) complete
and correct lists (i) of the Company's Subsidiaries, showing, as to each
Subsidiary, the correct name thereof, the jurisdiction of its organization, and
the percentage of shares of each class of its Capital Stock or similar equity
interests outstanding owned by the Company and each other Subsidiary, (ii) of
the Company's Restricted Subsidiaries, (iii) of the Company's Affiliates, other
than Subsidiaries, and (iv) of the Company's directors and senior officers.
(b) All of the outstanding shares of Capital Stock or
similar equity interests of each Subsidiary shown in Schedule 5.4 as being owned
by the Company and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or another Subsidiary free and clear
of any Lien (except as otherwise disclosed in Schedule 5.4).
(c) Each Subsidiary identified in Schedule 5.4 is a
corporation or other legal entity duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation or other legal entity and is in good standing
in each jurisdiction in which such qualification is required by law, other than
those jurisdictions as to which the failure to be so qualified or in good
standing could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Each such Subsidiary has the corporate or other
power and authority to own or hold under lease the properties it purports to own
or hold under lease and to transact the business it transacts and proposes to
transact.
(d) No Subsidiary is a party to, or otherwise subject to any
legal restriction or any agreement (other than this Agreement, the agreements
listed on Schedule 5.4 and customary limitations imposed by corporate law
statutes) restricting the ability of such Subsidiary to pay dividends out of
profits or make any other similar distributions of profits to the Company or any
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of its Subsidiaries that owns outstanding shares of Capital Stock or similar
equity interests of such Subsidiary.
5.5 Financial Statements.
The Company has delivered to each Purchaser copies of the financial
statements of the Company and its Subsidiaries listed on Schedule 5.5. All of
said financial statements (including in each case the related schedules and
notes) fairly present in all Material respects the consolidated financial
position of the Company and its Subsidiaries as of the respective dates
specified in such financial statements and the consolidated results of their
operations and cash flows for the respective periods so specified and have been
prepared in accordance with GAAP consistently applied throughout the periods
involved except as set forth in the notes thereto (subject, in the case of any
interim financial statements, to normal year-end adjustments and the absence of
notes).
5.6 Compliance with Laws and Instruments.
The execution, delivery and performance by the Company of this
Agreement, the Collateral Documents and the Notes will not (i) contravene,
result in any breach of, or constitute a default under, or, unless permitted
hereunder, result in the creation of any Lien in respect of any property of the
Company or any Subsidiary under, any indenture, mortgage, deed of trust, loan,
purchase or credit agreement, lease, corporate charter or by-laws, or any other
agreement or instrument to which the Company or any Subsidiary is bound or by
which the Company or any Subsidiary or any of their respective properties may be
bound or affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental Authority applicable to the Company or any
Subsidiary, or (iii) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Company or any
Subsidiary.
5.7 Governmental Authorizations, etc.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Company of this Agreement, the
Collateral Documents or the Notes. 5.8 Litigation; Observance of Agreements,
Statutes and Orders.
(a) Except as disclosed in Schedule 5.8, there are no
actions, suits or proceedings pending or, to the knowledge of the Company,
threatened against or affecting the Company or any Subsidiary or any property of
the Company or any Subsidiary in any court or before any arbitrator of any kind
or before or by any Governmental Authority that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default
under any term of any agreement or instrument to which it is a party or by which
it is bound, or any order, judgment, decree or ruling of any court, arbitrator
or Governmental Authority or is in violation of
-9-
any applicable law, ordinance, rule or regulation (including without limitation
Environmental Laws) of any Governmental Authority, which default or violation,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
5.9 Taxes.
The Company and its Subsidiaries have filed all tax returns that are
required to have been filed in any jurisdiction, and have paid all taxes shown
to be due and payable on such returns and all other taxes and assessments levied
upon them or their properties, assets, income or franchises, to the extent such
taxes and assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (i) the amount of which is not
individually or in the aggregate Material, or (ii) the amount, applicability or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Company or a Subsidiary has
established adequate reserves in accordance with GAAP. The Company knows of no
basis for any other tax or assessment that could reasonably be expected to have
a Material Adverse Effect. The charges, accruals and reserves on the books of
the Company and its Subsidiaries in respect of Federal, state or other taxes for
all fiscal periods are adequate. The Federal income tax liabilities of the
Company and its Subsidiaries have been paid for all fiscal years up to and
including the fiscal year ended March 31, 2000.
5.10 Title to Property; Leases.
The Company and its Subsidiaries have good and sufficient title to
their respective properties that individually or in the aggregate are Material,
including all such properties reflected in the most recent audited balance sheet
referred to in Section 5.5 or purported to have been acquired by the Company or
any Subsidiary after said date (except as sold or otherwise disposed of in the
ordinary course of business), in each case free and clear of Liens prohibited by
this Agreement. All leases that individually or in the aggregate are Material
are valid and subsisting and are in full force and effect in all Material
respects.
5.11 Licenses, Permits, etc.
Except as disclosed in Schedule 5.11,
(a) the Company and its Subsidiaries own, possess or have
the right to use all licenses, permits, franchises, authorizations, patents,
copyrights, service marks, trademarks, technology, know-how, processes and trade
names, or rights thereto (collectively "Intellectual Property"), that
individually or in the aggregate are Material, without known conflict with the
rights of others;
(b) to the best knowledge of the Company, no product of the
Company or any Subsidiary infringes in any Material respect any license, permit,
franchise, authorization, patent, copyright, service mark, trademark, trade name
or other right owned by any other Person;
-10-
(c) to the best knowledge of the Company, there is no
Material violation by any Person of any right of the Company or any of its
Subsidiaries with respect to any Intellectual Property or other right owned or
used by the Company or any of its Subsidiaries; and
(d) the Company and each Subsidiary owns, or has the legal
right to use, (subject to the common law rights of another user) all
Intellectual Property necessary for each of them to conduct its business as
currently conducted except for those which the failure to own or have such legal
right to use could not have a Material Adverse Effect.
5.12 Compliance with ERISA.
(a) The Company and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except for such
instances of noncompliance as have not resulted in and could not reasonably be
expected to result in a Material Adverse Effect. Neither the Company nor any
ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or
the penalty or excise tax provisions of the Code relating to employee benefit
plans (as defined in Section 3 of ERISA), and no event, transaction or condition
has occurred or exists that could reasonably be expected to result in the
incurrence of any such liability by the Company or any ERISA Affiliate, or in
the imposition of any Lien on any of the rights, properties or assets of the
Company or any ERISA Affiliate, in either case pursuant to Title I or IV of
ERISA or to such penalty or excise tax provisions or to Section 401(a)(29) or
412 of the Code, other than such liabilities or Liens as would not be
individually or in the aggregate Material.
(b) The Company does not maintain any Plan that is a defined
benefit pension plan subject to Title IV of ERISA.
(c) The Company and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate are Material.
(d) The expected postretirement benefit obligation
(determined as of the last day of the Company's most recently ended fiscal year
in accordance with Financial Accounting Standards Board Statement No. 106,
without regard to liabilities attributable to continuation coverage mandated by
section 4980B of the Code) of the Company and its Subsidiaries is not Material.
(e) The execution and delivery of this Agreement, the
Collateral Documents and the issuance and sale of the Notes hereunder will not
involve any transaction that is subject to the prohibitions of section 406 of
ERISA or in connection with which a tax could be imposed pursuant to section
4975(c)(1)(A)-(D) of the Code. The representation by the Company in the first
sentence of this Section 5.12(e) is made in reliance upon and subject to (i) the
accuracy of each Purchaser's representation in Section 6.2 as to the sources of
the funds used to pay the purchase price of the Notes to be purchased by such
Purchaser and (ii) the assumption, made solely for the purpose of making such
representation, that Department of Labor Interpretive Bulletin 75-2 with respect
to prohibited transactions remains valid in the circumstances of the
transactions contemplated herein.
-11-
5.13 Intentionally Omitted.
5.14 Use of Proceeds; Margin Regulations.
Margin stock does not constitute more than 5% of the value of the
consolidated assets of the Company and its Subsidiaries and the Company does not
have any present intention that margin stock will constitute more than 5% of the
value of such assets. As used in this Section, the terms "margin stock" and
"purpose of buying or carrying" shall have the meanings assigned to them in said
Regulation U.
5.15 Existing Debt; Future Liens.
(a) Except as described therein, Schedule 5.15 sets forth a
complete and correct list of all outstanding Debt of the Company and its
Subsidiaries as of the Closing Date since which date there has been no Material
change in the amounts, interest rates, sinking funds, installment payments or
maturities of the Debt of the Company or its Subsidiaries. Neither the Company
nor any Subsidiary is in default and no waiver of default is currently in
effect, in the payment of any principal or interest on any Debt of the Company
or any such Subsidiary and no event or condition exists with respect to any Debt
of the Company or any Subsidiary that would permit (or that with notice or the
lapse of time, or both, would permit) one or more Persons to cause such Debt to
become due and payable before its stated maturity or before its regularly
scheduled dates of payment.
(b) Except as described in Schedule 5.15,neither the Company
nor any Subsidiary has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its property, whether
now owned or hereafter acquired, to be subject to a Lien not permitted by
Section 10.3.
(c) The Original Subsidiary Guarantors will derive a
commercial benefit by their execution and delivery of the Subsidiary Guarantee
Agreements generally and, in certain other respects, as more specifically
described in Section 5.21 hereto.
5.16 Intentionally Omitted.
5.17 Status under Certain Statutes.
Neither the Company nor any Subsidiary is subject to regulation under
the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of 1935, as amended, the Interstate Commerce Act, as amended, or the
Federal Power Act, as amended.
5.18 Environmental Matters.
As of the date of the Closing, neither the Company nor any Subsidiary
has knowledge of any claim or has received any notice of any claim, and no
proceeding has been instituted raising any claim against the Company or any of
its Subsidiaries or any of their respective real properties now or formerly
owned, leased or operated by any of them or other assets, alleging any damage to
the environment or violation of any Environmental Laws, except, in each case,
such as could
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not reasonably be expected to result in a Material Adverse Effect. As of the
Closing Date, except as otherwise disclosed to the Purchasers in writing,
(a) neither the Company nor any Subsidiary has knowledge
of any facts which would give rise to any claim, public or private, of violation
of Environmental Laws or damage to the environment emanating from, occurring on
or in any way related to real properties now or formerly owned, leased or
operated by any of them or to other assets or their use, except, in each case,
such as could not reasonably be expected to result in a Material Adverse Effect;
(b) neither the Company nor any Subsidiaries has stored or
has knowledge of any storage of any Hazardous Materials on real properties now
or formerly owned, leased or operated by any of them and has not disposed, nor
has any knowledge of any disposal, of any Hazardous Materials in a manner
contrary to any Environmental Laws in each case in any manner that could
reasonably be expected to result in a Material Adverse Effect; and
(c) neither the Company nor any of its Subsidiaries has
knowledge that any buildings on any real properties now owned, leased or
operated by the Company or any of its Subsidiaries are not in compliance with
applicable Environmental Laws, except where failure to comply could not
reasonably be expected to result in a Material Adverse Effect.
5.19 [Intentionally Omitted].
5.20 Solvency.
Each of the Company and the Original Subsidiary Guarantors is, and upon
giving effect to the exchange of the Notes and the execution of this Agreement
and the Subsidiary Guarantee Agreements will be, a "solvent institution", as
said term is used in section 1405(c) of the New York State Insurance Law, whose
"obligations are not in default as to principal or interest", as said terms are
used in said section 1405(c). Each of the Company and the Original Subsidiary
Guarantors has capital not unreasonably small in relation to its respective
business or any contemplated or undertaken transaction and has assets having a
value both at fair valuation and at present fair salable value greater than the
amount required to pay its debts as they become due and greater than the amount
that will be required to pay its respective probable liability on its existing
debts as they become absolute and matured. Neither the Company nor any Original
Subsidiary Guarantor intends to incur, or believes or should have believed that
it will incur, debts beyond its ability to pay such debts as they become due.
Neither the Company nor any Original Subsidiary Guarantor will be rendered
insolvent by the execution and delivery of, and performance of its respective
obligations under, this Agreement, the Notes and the Subsidiary Guarantee
Agreements.
5.21 Consolidated and Integrated Business of the Company and its
Restricted Subsidiaries.
The Company and its Restricted Subsidiaries share centralized
administration of the winery functions of each entity including finance, sales
and marketing. Such centralized administration is performed at the Company's
Napa office. This facility also includes a central
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distribution center in which substantially all of the Company's and its
Restricted Subsidiaries' wines are stored prior to shipping.
Sales and marketing of all of the Company's and Restricted
Subsidiaries' wines within the State of California are made through the
Company's own sales forces and one or more wholesalers. The Company uses a
single broker for all wholesale California sales of the Company and its
Restricted Subsidiaries. Furthermore, all of the Company's and Restricted
Subsidiaries' wineries are operated under the overall supervision of the
Company's Chief Executive Officer.
The Company and its Restricted Subsidiaries prepare consolidated
financial statements and present their financial reporting on a consolidated
basis.
5.22 No Burdensome Restrictions.
Neither the Company nor any Original Subsidiary Guarantor is a party to
any agreement or instrument or subject to any other obligation or any charter or
corporate restriction or any provision of any applicable law, rule or regulation
which, individually or in the aggregate, could have a Material Adverse Effect.
5.23 Matters Relating to the Collateral.
The Liens granted in favor of the Collateral Agent pursuant to the
Collateral Documents in respect of the collateral described therein constitute
and will constitute first and second, as the case may be, priority (subject to
Permitted Liens) perfected security interests under the Uniform Commercial Code
as in effect in each applicable jurisdiction, entitled to all rights, benefits
and priorities as provided by such Uniform Commercial Code or other applicable
law. Upon the filing of financing statements relating to such security interests
in each office and in each jurisdiction where required in order to perfect the
security interests described above and recordations of the Security Agreements
and/or the Patent and Trademark Security Agreements in the United States Patent
and Trademark Office and the United States Copyright Office, all such action as
is necessary or advisable to establish such rights of the Collateral Agent will
have been taken. There will be upon execution and delivery of the Security
Agreements and Patent and Trademark Security Agreements and such filings no
necessity for any further action in order to preserve, protect and continue such
rights, except the filing of continuation statements with respect to such
financing statements within six months prior to each five year anniversary of
the filing of such financing statements.
5.24 Credit Agreement Representations.
The representations and warranties set forth in Article IX of the
Credit Agreement are hereby incorporated by reference herein as if such
representations and warranties were set forth herein in full. The information
contained in the Schedules to the Credit Agreement are hereby incorporated by
reference herein as if such information were set forth herein in full
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6. REPRESENTATIONS OF THE PURCHASERS.
6.1 Purchase for Investment.
Each Purchaser represents that it purchased the Notes for its own
account or for one or more separate accounts maintained by it for the account of
one or more pension or trust funds and not with a view to the distribution
thereof, PROVIDED THAT the disposition of such Purchaser's property shall at all
times be within its control; PROVIDED FURTHER that such Purchaser shall not be
prohibited from creating security interests, including any pledge or assignment,
to any Federal Reserve Bank in accordance with applicable law or by any
Purchaser which is a Farm Credit System entity, to the Farm Credit Funding Corp.
or other appropriate funding sources and entities within the Farm Credit System
in accordance with applicable law. Each Purchaser understands that the Notes
have not been registered under the Securities Act and may be resold only if
registered pursuant to the provisions of the Securities Act or if an exemption
from registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the Company is
not required to register the Notes.
6.2 Source of Funds.
Each Purchaser represents that at least one of the following statements
is an accurate representation as to each source of funds (a "SOURCE") which was
used by such Purchaser to pay the purchase price of the Notes to be purchased by
such Purchaser hereunder:
(a) the Source is an "insurance company general account"
within the meaning of Department of Labor Prohibited Transaction Exemption
("PTE") 95-60 (issued July 12, 1995) and there is no employee benefit plan,
treating as a single plan, all plans maintained by the same employer or employee
organization, with respect to which the amount of the general account reserves
and liabilities for all contracts held by or on behalf of such plan, exceed ten
percent (10%) of the total reserves and liabilities of such general account
(exclusive of separate account liabilities) plus surplus, as set forth in the
NAIC Annual Statement filed by such Purchaser with such Purchaser's state of
domicile; or
(b) the Source is either (i) an insurance company pooled
separate account, within the meaning of PTE 90-1 (issued January 29, 1990), or
(ii) a bank collective investment fund, within the meaning of the PTE 91-38
(issued July 12, 1991) and, except as such Purchaser has disclosed to the
Company in writing pursuant to this paragraph (b), no employee benefit plan or
group of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled separate
account or collective investment fund; or
(c) the Source constitutes assets of an "investment fund"
(within the meaning of Part V of the "QPAM Exemption") managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of the QPAM
Exemption), no employee benefit plan's assets that are included in such
investment fund, when combined with the assets of all other employee benefit
plans established or maintained by the same employer or by an affiliate (within
the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the
same
-15-
employee organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM
Exemption are satisfied, neither the QPAM nor a person controlling or controlled
by the QPAM (applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (i) the identity of
such QPAM and (ii) the names of all employee benefit plans whose assets are
included in such investment fund have been disclosed to the Company in writing
pursuant to this paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee benefit plans,
each of which has been identified to the Company in writing pursuant to this
paragraph (e); or
(f) the Source does not include assets of any employee
benefit plan, other than a plan exempt from the coverage of ERISA.
If any Purchaser or any subsequent transferee of the Notes indicates
that such Purchaser or such transferee is relying on any representation
contained in paragraph (b), (c) or (e) above, the Company shall deliver on the
Closing Date and on the date of any applicable transfer a certificate, which
shall either state that (i) it is neither a party in interest nor a
"disqualified person" (as defined in Section 4975(e)(2) of the Internal Revenue
Code of 1986, as amended), with respect to any plan identified pursuant to
paragraphs (b) or (e) above, or (ii) with respect to any plan, identified
pursuant to paragraph (c) above, neither it nor any "affiliate" (as defined in
Section V(c) of the QPAM Exemption) has at such time, and during the immediately
preceding one year, exercised the authority to appoint or terminate said QPAM as
manager of any plan identified in writing pursuant to paragraph (c) above or to
negotiate the terms of said XXXX's management agreement on behalf of any such
identified plan. As used in this Section 6.2, the terms "employee benefit plan",
"governmental plan", "party in interest" and "separate account" shall have the
respective meanings assigned to such terms in Section 3 of ERISA.
7. INFORMATION AS TO COMPANY.
7.1 Financial and Business Information.
The Company shall deliver to each Holder:
(a) as soon as available and in any event within 45 days
after the end of the first three fiscal quarters of each fiscal year, a
consolidated and consolidating balance sheet of the Company and its Subsidiaries
as of the end of such quarter, and the related consolidated and, as to
statements of income only, consolidating statements of income, shareholders'
equity and cash flows of the Company and its Subsidiaries for such quarter and
the portion of the fiscal year through the end of such quarter, prepared in
accordance with GAAP consistently applied, subject to changes resulting from
normal, year-end audit adjustments and except for the absence of notes all in
reasonable detail and setting forth in comparative form the figures for the
corresponding period in the preceding fiscal year, together with a certificate
of a Responsible Officer of the
-16-
Company stating that such financial statements fairly present the financial
condition of the Company and its Subsidiaries as at such date and the results of
operations of the Company and its Subsidiaries for the period ended on such date
and have been prepared in accordance with GAAP consistently applied, subject to
changes resulting from normal, year-end audit adjustments and except for the
absence of notes;
(b) as soon as available and in any event within 90 days
after the end of each fiscal year, a consolidated and consolidating balance
sheet of the Company and its Subsidiaries as of the end of such fiscal year, and
the related consolidated and, as to statements of income only, consolidating
statements of income, shareholders' equity and cash flows of the Company and its
Subsidiaries for such fiscal year, prepared in accordance with GAAP consistently
applied, all in reasonable detail and setting forth in comparative form the
figures for the previous fiscal year, and (i) in the case of such consolidated
financial statements, accompanied by a report thereon of Xxxx Xxxxx LLP or
another firm of independent certified public accountants of recognized national
standing acceptable to the Required Holders, which report shall not be qualified
as to (A) going concern, or (B) any limitation in the scope of the audit, and
(ii) in the case of such consolidating financial statements, certified by a
Responsible Officer of the Company;
(c) together with the financial statements required pursuant
to clauses (a) and (b), (i) a Compliance Certificate of a Responsible Officer as
of the end of the applicable accounting period and (ii) an Update Certificate of
a Responsible Officer as of the end of the applicable accounting period;
(d) promptly upon receipt thereof, copies of all reports
submitted to the Company by its independent certified public accountants in
connection with each annual, interim or special audit examination of the Company
and its Subsidiaries made by such accountants, including the "management letter"
submitted by such accountants to the Company in connection with their annual
audit;
(e) as soon as available and in any event not less than 30
days prior to the start of each fiscal year, a consolidated financial forecast
for the Company and its Subsidiaries for the following fiscal year and each
fiscal year thereafter, including forecasted consolidated balance sheets,
consolidated statements of income, shareholders' equity and cash flows of the
Company and its Subsidiaries which forecast shall (i) state the assumptions used
in the preparation thereof, (ii) contain such other information as reasonably
requested by the Required Holders and (iii) be in form reasonably satisfactory
to the Required Holders;
(f) as soon as available and in any event not less than 30
days prior to the start of each fiscal year, budgets of the Company and its
Subsidiaries for each quarter of the following fiscal year, which budgets shall
(i) state the assumptions used in the preparation thereof, (ii) be in form
satisfactory to the Required Holders, and (iii) be accompanied by a statement of
a Responsible Officer of the Company that, to the best of such Responsible
Officer's knowledge, such budgets are a reasonable and good-faith estimate for
the period covered thereby; and
-17-
(g) promptly after the giving, sending or filing thereof,
copies of all reports, if any, which the Company or any of its Subsidiaries
sends to the holders of its respective capital stock or other securities and of
all reports or filings, if any, by the Company or any of its Subsidiaries with
the SEC or any national securities exchange.
As to any information contained in materials furnished pursuant to clause (i),
the Company shall not be separately required to furnish such information under
clause (a) or (b), but the foregoing shall not be in derogation of the
obligation of the Company to furnish the information and materials described in
clauses (a) and (b) at the times specified therein. Additionally, reports
required to be delivered pursuant to clauses (a), (b) or (h) of this Section 7.1
(to the extent any such financial statements, reports or proxy statements are
included in materials otherwise filed with the SEC) may be delivered
electronically and if so, shall be deemed to have been delivered on the date on
which the Company posts such reports, or provides a link thereto, either: (x) on
the Company's website on the Internet at the website address set forth in
Section 18; or (y) when such report is posted electronically on
IntraLinks/IntraAgency or other relevant website to which each Holder has access
(whether a commercial, third-party website or whether sponsored by any Holder),
if any, on the Company's behalf; PROVIDED that: (1) the Company shall deliver
paper copies of such reports to any Holder who requests the Company to deliver
such paper copies until written request to cease delivering paper copies is
given by Xxxxxx; (2) the Company shall notify (which may be by facsimile or
electronic mail) each Holder of the posting of any such reports and provide to
each Holder by email electronic versions (i.e. soft copies) of such reports; and
(3) in every instance the Company shall provide paper copies of the Compliance
Certificates required by clause (c) above to each of the Holders. Except for
such Compliance Certificates, the Holders shall have no obligation to request
the delivery or to maintain copies of the reports referred to above, and in any
event shall have no responsibility to monitor compliance by the Company with any
such request for delivery, and each Holder shall be solely responsible for
requesting delivery to it or maintaining its copies of such reports.
7.2 Additional Information.
The Company will furnish to the Holders:
(a) promptly after the Company has knowledge or becomes
aware thereof, notice of the occurrence of any Event of Loss with respect to its
property or assets aggregating $1,500,000 (or its equivalent in another
currency) or more;
(b) promptly after the Company has knowledge or becomes
aware hereof, notice of the occurrence or existence of any Default and any Event
of Default;
(c) promptly after any Person becomes a Subsidiary of the
Company (whether by acquisition or otherwise), prompt written notice thereof;
(d) prompt written notice of (i) any proposed acquisition
of stock, assets or property by the Company or any of its Subsidiaries that
could reasonably be expected to result in environmental liability under
Environmental Laws, and (ii)(1) any spillage, leakage, discharge, disposal,
leaching, migration or release of any Hazardous Material required to be reported
to any
-18-
Governmental Authority under applicable Environmental Laws, and (2) all actions,
suits, claims, notices of violation, hearings, investigations or proceedings
pending, or to the best of the Company's knowledge, threatened against or
affecting the Company or any of its Subsidiaries or with respect to the
ownership, use, maintenance and operation of the Premises, relating to (x)
Environmental Laws or Hazardous Material, (y) or any other Requirement of Law
that, in the case of this clause (y), may have a Material Adverse Effect;
(e) prompt written notice of all actions, suits and
proceedings before any Governmental Authority or arbitrator pending, or to the
best of the Company's knowledge, threatened against or affecting the Company or
any of its Subsidiaries which (i) if adversely determined would involve an
aggregate uninsured liability of $1,500,000 (or its equivalent in another
currency) or more, or (ii) otherwise may have a Material Adverse Effect;
(f) promptly after the Company has knowledge or becomes
aware thereof, (i) notice of the occurrence of any Termination Event, together
with a copy of any notice of such Termination Event to the PBGC, and (ii) the
details concerning any action taken or proposed to be taken by the IRS, PBGC,
Department of Labor or other Person with respect thereto;
(g) the information regarding insurance maintained by the
Company and its Subsidiaries as required under Section 9.2;
(h) within 30 days of the date thereof, or, if earlier,
on the date of delivery of any financial statements pursuant to Section 7.1,
notice of any material change in accounting policies or financial reporting
practices by the Company or any of its Subsidiaries;
(i) promptly after the occurrence thereof, notice of any
labor controversy resulting in or threatening to result in any strike, work
stoppage, boycott, shutdown or other material labor disruption against or
involving the Company or any of its Subsidiaries which could result in a
Material Adverse Effect;
(j) upon the request from time to time of any Holder, the
Swap Termination Values, together with a description of the method by which such
values were determined, relating to any then-outstanding Rate Contracts to which
the Company or any of its Subsidiaries is party;
(k) prompt written notice of any other condition or event
which has resulted, or that could reasonably be expected to result, in a
Material Adverse Effect; and
(l) such other information respecting the operations,
properties, business or condition (financial or otherwise) of the Company or its
Subsidiaries (including with respect to the Collateral) as any Holder may from
time to time reasonably request.
Each notice pursuant to this Section 7.2 shall be accompanied by a written
statement by a Responsible Officer of the Company setting forth details of the
occurrence referred to therein, and stating what action the Company proposes to
take with respect thereto.
-19-
7.3 Inspection.
The Company shall permit the representatives of each Holder:
(a) No Default -- if no Default or Event of Default then
exists, at the expense of such Holder and upon reasonable prior notice to the
Company during normal business hours, to visit the principal executive office of
the Company to discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Company's officers, and (with the consent of the Company,
which consent will not be unreasonably withheld) its independent public
accountants, and (with the consent of the Company, which consent will not be
unreasonably withheld) to visit the other offices and properties of the Company
and each Subsidiary, all at such reasonable times and as often as may be
reasonably requested in writing; and
(b) Default -- if a Default or Event of Default then exists,
at the expense of the Company, to visit and inspect any of the offices or
properties of the Company or any Subsidiary, to examine all their respective
books of account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective officers and independent public accountants (and by this
provision the Company authorizes said accountants to discuss the affairs,
finances and accounts of the Company and its Subsidiaries), all at such times
and as often as may be requested.
8. PREPAYMENT OF THE NOTES.
8.1 Required Prepayments.
(a) The Company agrees that on September 15 in each year
commencing September 15, 2004 and ending on September 15, 2009, both inclusive,
it will prepay and apply and there shall become due and payable on the principal
debt evidenced by the Series A Notes an amount equal to the lesser of (x)
$714,285.71 or (y) the principal amount of the Series A Notes then outstanding.
The entire remaining principal amount of the Series A Notes shall become due and
payable on September 15, 2010. No premium shall be payable in connection with
any required prepayment made pursuant to this Section 8.1(a). Upon any partial
prepayment of the Series A Notes pursuant to Section 8.2, the principal amount
of each required prepayment of the Series A Notes becoming due under this
Section 8.1(a) on and after the date of such prepayment shall be reduced in the
same proportion as the aggregate unpaid principal amount of the Series A Notes
is reduced as a result of such prepayment.
(b) The Company agrees that on September 15 in each year
commencing September 15, 2004 and ending on September 15, 2009, both inclusive,
it will prepay and apply and there shall become due and payable on the principal
debt evidenced by the Series B Notes an amount equal to the lesser of (x)
$1,428,571.43 or (y) the principal amount of the Series B Notes then
outstanding. The entire remaining principal amount of the Series B Notes shall
become due and payable on September 15, 2010. No premium shall be payable in
connection with any required prepayment made pursuant to this Section 8.1(b).
Upon any partial prepayment of the Series B Notes pursuant to Section 8.2, the
principal amount of each required prepayment of the Series B Notes becoming due
under this Section 8.1(b) on and after the date of such prepayment
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shall be reduced in the same proportion as the aggregate unpaid principal amount
of the Series B Notes is reduced as a result of such prepayment.
(c) The Company agrees that on September 15 in each year
commencing September 15, 2004 and ending on September 15, 2009, both inclusive,
it will prepay and apply and there shall become due and payable on the principal
debt evidenced by the Series C Notes an amount equal to the lesser of (x)
$2,142,857.14 or (y) the principal amount of the Series C Notes then
outstanding. The entire remaining principal amount of the Series C Notes shall
become due and payable on September 15, 2010. No premium shall be payable in
connection with any required prepayment made pursuant to this Section 8.1(c).
Upon any partial prepayment of the Series C Notes pursuant to Section 8.2, the
principal amount of each required prepayment of the Series C Notes becoming due
under this Section 8.1(c) on and after the date of such prepayment shall be
reduced in the same proportion as the aggregate unpaid principal amount of the
Series C Notes is reduced as a result of such prepayment.
8.2 Optional Prepayments with Make-Whole Amount.
The Company may, at its option, upon notice as provided below, prepay
at any time all, or from time to time any part of (but if in part, then such
prepayment shall be applied against the Series A Note, the Series B Note and the
Series C Note, respectively, in proportion to the aggregate amount outstanding
of each Series), the Notes, in an amount not less than 5% of the aggregate
principal amount of all series of the Notes then outstanding in the case of a
partial prepayment, at 100% of the principal amount so prepaid, together with
interest accrued thereon to the date of such prepayment, plus the greater of (i)
zero and (ii) the Make-Whole Amount determined for the prepayment date with
respect to such principal amount. The Company will give each Holder of Notes
written notice of each optional prepayment under this Section 8.2 not less than
30 days and not more than 60 days prior to the date fixed for such prepayment.
Each such notice shall specify such date, the aggregate principal amount of the
Notes to be prepaid on such date, the principal amount of each Note held by such
Holder to be prepaid (determined in accordance with Section 8.3), and the
interest to be paid on the prepayment date with respect to such principal amount
being prepaid, and shall be accompanied by a certificate of a Senior Financial
Officer as to the estimated Make-Whole Amount due in connection with such
prepayment (calculated as if the date of such notice were the date of the
prepayment), setting forth the details of such computation. Two Business Days
prior to such prepayment, the Company shall deliver to each Holder of Notes a
certificate of a Senior Financial Officer specifying the calculation of such
Make-Whole Amount as of the specified prepayment date.
8.3 Allocation of Partial Prepayments.
In the case of each partial prepayment of the Notes pursuant to Section
8.2, the principal amount of the Notes to be prepaid shall be allocated among
all of the Notes at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amounts thereof not theretofore
prepaid.
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8.4 Maturity; Surrender, etc.
In the case of each prepayment or purchase of Notes pursuant to this
Section 8, the principal amount of each Note to be prepaid or purchased shall
mature and become due and payable on the date fixed for such prepayment or
purchase, together with interest on such principal amount accrued to such date
and the applicable Make-Whole Amount, if any. From and after such date, unless
the Company shall fail to pay such principal amount when so due and payable,
together with the interest and Make-Whole Amount, if any, as aforesaid, interest
on such principal amount shall cease to accrue. Any Note paid, purchased or
prepaid in full shall be surrendered to the Company and cancelled and shall not
be reissued, and no Note shall be issued in lieu of any prepaid or purchased
principal amount of any Note.
8.5 Purchase of Notes.
The Company will not and will not permit any Affiliate to purchase,
redeem, prepay or otherwise acquire, directly or indirectly, any of the
outstanding Notes except upon the purchase, payment or prepayment of the Notes
in accordance with the terms of this Agreement and the Notes. The Company will
promptly cancel all Notes acquired by it or any Affiliate pursuant to any
payment, prepayment or purchase of Notes pursuant to any provision of this
Agreement and no Notes may be issued in substitution or exchange for any such
Notes.
8.6 Make-Whole Amount.
"MAKE-WHOLE AMOUNT" means, with respect to any Note of any series, an
amount equal to the excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with respect to the Called Principal of such Note of such
series over the amount of such Called Principal, provided that the Make-Whole
Amount may in no event be less than zero. For the purposes of determining the
Make-Whole Amount, the following terms have the following meanings:
"CALLED PRINCIPAL" means, with respect to any Note of any series, the
principal of the Note of such series that is to be prepaid or purchased pursuant
to Sections 8.2 or 8.7 or has become or is declared to be immediately due and
payable pursuant to Section 12.1, as the context requires.
"DISCOUNTED VALUE" means, with respect to the Called Principal of any
Note of any series, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective scheduled
due dates to the Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount factor (applied on
the same periodic basis as that on which interest on such Notes is payable)
equal to the Reinvestment Yield with respect to such Called Principal.
"REINVESTMENT YIELD" means, with respect to the Called Principal of a
Note of any series, 0.50% over the yield to maturity implied by (i) the yields
reported, as of 10:00 A.M. (New York City time) on the second Business Day
preceding the Settlement Date with respect to such Called Principal, on the
display designated as Screen PX1 on the Bloomberg Financial Markets Services
System (or such other display as may replace Screen PX1 on Bloomberg Financial
Markets
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Services System) for actively traded U.S. Treasury securities having a maturity
equal to the remaining average live of such Called Principal as of such
Settlement Date, or (ii) if such yields are not reported as of such time or the
yields reported as of such time are not ascertainable, the Treasury Constant
Maturity Series Yields reported, for the latest day for which such yields have
been so reported as of the second Business Day preceding the Settlement Date
with respect to such Called Principal, in Federal Reserve Statistical Release
H.15 (519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the remaining average
life of such Called Principal as of such Settlement Date. Such implied yield
will be determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between (1) the actively traded U.S.
Treasury security with the maturity closest to and greater than the remaining
average life of such Called Principal and (2) the actively traded U.S. Treasury
security with the maturity closest to and less than the remaining average life
of such Called Principal.
"REMAINING SCHEDULED PAYMENTS" means, with respect to the Called
Principal of any Note of any series, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with respect to
such Called Principal if no payment or purchase of such Called Principal were
made prior to its scheduled due date (assuming that the Notes will continue to
bear interest at the rates in effect on the Settlement Date), PROVIDED that if
such Settlement Date is not a date on which interest payments are due to be made
under the terms of the Notes of such series, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of interest
accrued to such Settlement Date and required to be paid on such Settlement Date
pursuant to Sections 8.2, 8.7 or 12.1.
"SETTLEMENT DATE" means, with respect to the Called Principal of any
Note of any series, the date on which such Called Principal is to be prepaid or
purchased pursuant to Section 8.2 or has become or is declared to be immediately
due and payable pursuant to Section 12.1, as the context requires.
8.7 Mandatory Prepayments with Make-Whole Amount.
(a) Upon the sale, transfer or other disposition of any
Collateral by the Company or any Subsidiary under Section 10.9(c) (to the extent
the Net Proceeds from the sale, transfer or other disposition of worn out or
obsolete assets are not promptly applied to replace such assets) or 10.9(f), the
Company shall, if either (i) an Event of Default shall have occurred and be
continuing or (ii) a Specified Loan to Value Event would occur after giving
effect to such sale, transfer or other disposition, within one Business Day of
the Company's or such Subsidiary's receipt of the proceeds thereof, prepay the
outstanding principal amount of the Notes, together with the Make-Whole Amount
payable with respect thereto, in an amount equal to (1) in the case of a
prepayment by reason of the circumstances set forth in clause (i) above, 100% of
the Net Proceeds therefrom by depositing such amount with the Collateral Agent
for application by the Collateral Agent under and pursuant to Section 6.10 of
the Intercreditor Agreement to the Secured Obligations, and (2) in the case of a
prepayment be reason of the circumstances set forth in clause (ii) above, that
amount of the Net Proceeds therefrom that would be required to be prepaid on the
Notes so that after giving effect to the application thereof,
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such Specified Loan to Value Event would no longer exist by depositing such
amount with the Collateral Agent for application by the Collateral Agent under
and pursuant to Section 6.10 of the Intercreditor Agreement to the Secured
Obligations.
(b) Upon the incurrence of indebtedness for borrowed money
by the Company or any Subsidiary during the continuance of an Event of Default,
the Company shall, within one Business Day of the Company's or such Subsidiary's
receipt of the proceeds thereof, prepay the outstanding principal amount of the
Notes in an amount equal to 100% of the Net Issuance Proceeds (as defined in the
Credit Agreement) therefrom by depositing such amount with the Collateral Agent
for application by the Collateral Agent under and pursuant to Section 6.10 of
the Intercreditor Agreement to the Secured Obligations.
(c) If any Event of Loss shall occur the Company shall, if
either (i) an Event of Default shall have occurred and be continuing or (ii) if
such Event of Loss is in a amount in excess of $1,500,000 and a Specified Loan
to Value Event would occur after giving effect to such Event of Loss, within one
Business Day of the Company's or such Subsidiary's receipt of the proceeds
therefrom, prepay the outstanding principal amount of the Notes, together with
the Make-Whole Amount payable with respect thereto, in an amount equal to (1) in
the case of a prepayment by reason of the circumstances set forth in clause (i)
above, 100% of the Net Proceeds therefrom by depositing such amount with the
Collateral Agent for application by the Collateral Agent under and pursuant to
Section 6.10 of the Intercreditor Agreement to the Secured Obligations, and (2)
in the case of a prepayment be reason of the circumstances set forth in clause
(ii) above, that amount of the Net Proceeds therefrom that would be required to
be prepaid on the Notes so that after giving effect to the application thereof,
such Specified Loan to Value Event would no longer exist by depositing such
amount with the Collateral Agent for application by the Collateral Agent under
and pursuant to Section 6.10 of the Intercreditor Agreement to the Secured
Obligations.
9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
9.1 Compliance with Law.
The Company will, and will cause each of its Subsidiaries to, comply
with all laws, ordinances or governmental rules or regulations to which each of
them is subject, including, without limitation, Environmental Laws, and will
obtain and maintain in effect all licenses, certificates, permits, franchises
and other governmental authorizations necessary to the ownership of their
respective properties or to the conduct of their respective businesses, in each
case to the extent necessary to ensure that non-compliance with such laws,
ordinances or governmental rules or regulations or failures to obtain or
maintain in effect such licenses, certificates, permits, franchises and other
governmental authorizations could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
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9.2 Insurance.
The Company shall, and shall cause each of its Subsidiaries to, carry
and maintain in full force and effect, at its own expense and with financially
sound and reputable insurance companies, insurance in such amounts, with such
deductibles and covering such risks as is customarily carried by companies
engaged in the same or similar businesses and owning similar properties in the
localities where the Company or such Subsidiary operates, including fire,
extended coverage, business interruption, public liability, property damage and
worker's compensation. Insurance on the Collateral shall name the Holders as
additional insured and shall name the Collateral Agent as loss payee. Upon the
request of the Holders, the Company shall furnish the Holders from time to time
with full information as to the insurance carried by it and, if so requested,
copies of all such insurance policies. The Company shall also furnish to the
Holders from time to time upon the request of any Holder a certificate of the
Company's insurance broker or other insurance specialist stating that all
premiums then due on the policies relating to insurance on the Collateral have
been paid, that such policies are in full force and effect and that such
insurance coverage and such policies comply with all the requirements of this
subsection. All insurance policies required under this section shall provide
that they shall not be terminated or cancelled nor shall any such policy be
materially changed without at least 30 days' prior written notice to the Company
and the Holders. Receipt of notice of termination or cancellation of any such
insurance policies or reduction of coverages or amounts thereunder shall entitle
the Holders to renew any such policies, cause the coverages and amounts thereof
to be maintained at levels required pursuant to the first sentence of this
Section 9.2 or otherwise to obtain similar insurance in place of such policies,
in each case at the expense of the Company.
9.3 Maintenance of Properties; Action under Environmental Laws.
(a) The Company will,and will cause each of its Subsidiaries
to, maintain and keep, or cause to be maintained and kept, their respective
properties in good repair, working order and condition (other than ordinary wear
and tear), so that the business carried on in connection therewith may be
properly conducted at all times, PROVIDED that this Section shall not prevent
the Company or any Subsidiary from discontinuing the operation and the
maintenance of any of its properties if such discontinuance is desirable in the
conduct of its business and the Company has concluded that such discontinuance
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(b) The Company shall, and shall cause each of its
Subsidiaries to, upon becoming aware of the presence of any Hazardous Material
or the existence of any environmental liability under applicable Environmental
Laws with respect to the Premises, take all actions, at their cost and expense,
as shall be necessary or advisable to investigate and clean up the condition of
the Premises, including all removal, containment and remedial actions, and
restore the Premises to a condition in compliance with applicable Environmental
Laws.
9.4 Payment of Taxes and Claims.
The Company will, and will cause each of its Subsidiaries to, file all
tax returns required to be filed in any jurisdiction and to pay and discharge
all taxes shown to be due and payable on
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such returns and all other taxes, assessments, governmental charges, or levies
imposed on them or any of their properties, assets, income or franchises, to the
extent such taxes and assessments have become due and payable and before they
have become delinquent and all claims for which sums have become due and payable
that have or might become a Lien on properties or assets of the Company or any
Subsidiary, PROVIDED that neither the Company nor any Subsidiary need pay any
such tax or assessment or claims if (a) the amount, applicability or validity
thereof is contested by the Company or such Subsidiary on a timely basis in good
faith and in appropriate proceedings, and the Company has established adequate
reserves therefor in accordance with GAAP on the books of the Company or (b) the
nonpayment of all such taxes and assessments in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
9.5 Corporate Existence, etc.
The Company and each Subsidiary will at all times preserve and keep in
full force and effect its corporate existence. Subject to Sections 10.2 and
10.9, the Company will at all times preserve and keep in full force and effect
the corporate existence of each of its Subsidiaries and all rights and
franchises of the Company and its Subsidiaries unless, in the good faith
judgment of the Company, the termination of or failure to preserve and keep in
full force and effect such corporate existence, right or franchise could not,
individually or in the aggregate, have a Material Adverse Effect.
9.6 [Intentionally Omitted.].
9.7 Further Assurances and Additional Acts.
The Company shall execute, acknowledge, deliver, file, notarize and
register at its own expense all such further agreements, instruments,
certificates, documents and assurances and perform such acts as the Holders
shall deem necessary or appropriate to effectuate the purposes of the Loan
Documents, and promptly provide the Holders with evidence of the foregoing
satisfactory in form and substance to the Holders.
9.8 Proceeds of Events of Loss. All proceeds paid to the Company
or any Subsidiary on account of any Event of Loss in excess of $1,500,000 shall
be deposited or otherwise held in a deposit account or securities account in
respect of which the Collateral Agent holds a perfected first priority Lien
(subject only to Permitted Liens), for the ratable benefit of the Secured
Parties as their interests may appear, pending the application of such proceeds
to repay the Notes as provided in Section __ or to repair, replace or
reconstruct the property affected by the Event of Loss.
9.9 Post-Closing Matters. In addition to the terms and provisions of
Section 4.11, the Company shall, and shall cause its Subsidiaries to, within the
time periods set forth below (to the extent such actions have not occurred on or
prior to the Closing), cause the following to occur with respect to each
Property described in any Deed of Trust as set forth below: (a) within thirty
(30) days of the Closing, deliver a Lender's 1970 ALTA form of title insurance
policy (or executed Pro-Forma thereof) in favor of the Collateral Agent in the
amount of the net book value of such Property; (b) within thirty (30) days of
the Closing, deliver the final appraisal with
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respect to the Xxxxxx Property (as defined in the Credit Agreement) and the
property in Napa County leased by the Company bearing APN 000-000-000 and owned
by the Xxxx Xxxxxxxx Trust, in form and substance reasonably satisfactory to the
Purchasers; (c) within thirty (30) days of the Closing, deliver a Phase I
Environmental Assessment addressed to and in form and substance reasonably
satisfactory to the Holders, and prepared by an environmental engineering firm
reasonably acceptable to the Holders, with respect to the Xxxxxx Property (as
defined in the Credit Agreement) and the property located in Walla Walla County,
Washington; (d) within sixty (60) days of the Closing, deliver an ALTA plat of
survey prepared by a surveyor licensed in the state in which each such Property
is located; and (e) within thirty (30) days of delivery of each survey, cause
any necessary amendments, adjustments or modifications to the Deeds of Trust or
the title insurance policy related to each Property as may be reasonably
required to reflect the survey and the facts set forth therein on the title
insurance policy and the Deeds of Trust.
10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
10.1 Transactions with Affiliates.
The Company and each Restricted Subsidiary will not enter into directly
or indirectly any transaction or Material group of related transactions
(including without limitation the purchase, lease, sale or exchange of
properties of any kind or the rendering of any service) with any Affiliate
(other than the Company or another Restricted Subsidiary), except in the
ordinary course and pursuant to the reasonable requirements of the Company's or
such Restricted Subsidiary's business and upon fair and reasonable terms no less
favorable to the Company or such Restricted Subsidiary than would be obtainable
in a comparable arm's-length transaction with a Person not an Affiliate.
10.2 Restrictions on Fundamental Changes
The Company shall not, and shall not permit any of its Subsidiaries to,
merge with or consolidate into, or acquire all or substantially all of the
assets of, any Person, or sell, transfer, lease or otherwise dispose of (whether
in one transaction or in a series of transactions) all or substantially all of
its assets, except that:
(a) any of the Company's wholly owned Subsidiaries may merge
with, consolidate into or transfer all or substantially all of its assets to
another of the Company's wholly owned Subsidiaries that is a Guarantor or to the
Company and in connection therewith such Subsidiary may be liquidated or
dissolved; (b) the Company or any of its Subsidiaries may sell or dispose of
assets in accordance with the provisions of Section 10.9; and (c) the Company or
any of its Subsidiaries may make any investment permitted by Section 10.8.
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10.3 Liens; Negative Pledges.
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any of its properties, revenues or assets, whether now owned or
hereafter acquired, other than Permitted Liens.
(b) The Company shall not, and shall not permit any of its
Subsidiaries to, enter into or suffer to exist any agreement (other than this
Agreement, any other Loan Document and the Credit Agreement) prohibiting or
conditioning the creation or assumption of any Lien upon any of its properties,
revenues or assets, whether now owned or hereafter acquired; PROVIDED, HOWEVER,
that this subsection shall not prohibit any negative pledge incurred or provided
in favor of any holder of Indebtedness permitted under subsection 10.5(j) solely
to the extent any such negative pledge relates to the property financed by or
the subject of such Indebtedness.
10.4 Financial Covenants.
So long as any of the Notes shall remain unpaid, the Company agrees
that:
(a) Leverage Ratio.
The Company shall maintain a ratio of (a) Consolidated Indebtedness
PLUS six times Consolidated Rent Expense (measured on a rolling 4-quarter basis)
to (b) Consolidated EBITDA PLUS one times Consolidated Rent Expense (in each
case, measured on a rolling 4-quarter basis) (such ratio, the "Leverage Ratio")
as of the last day of each fiscal quarter of not more than (i) 5.75 to 1.00 for
the first, second, third and fourth fiscal quarters of 2002, (ii) 5.50 to 1.00
for the first fiscal quarter of 2003, (iii) 5.25 to 1.00 for the second fiscal
quarter of 2003, (iv) 5.00 to 1.00 for the third and fourth fiscal quarters of
2003 and the first and second fiscal quarters of 2004, (v) 4.75 to 1.00 for the
third and fourth fiscal quarters of 2004, (vi) 4.50 to 1.00 for the first and
second fiscal quarters of 2005, (vii) 4.00 to 1.00 for the third and fourth
fiscal quarters of 2005 and the first and second fiscal quarters of 2006 and
(viii) 3.50 to 1.00 for the third fiscal quarter of 2006 and each fiscal quarter
ending thereafter.
(b) Minimum Consolidated Tangible Net Worth.
The Company shall maintain Consolidated Tangible Net Worth at all times of not
less than $76,000,000 PLUS the Net Issuance Proceeds received by the Company or
any Subsidiary from the sale or issuance of equity securities to any Person
other than the Company or any Subsidiary PLUS the Net Issuance Proceeds received
by the Company or any Subsidiary from the sale or issuance of Subordinated Debt
to any Person other than the Company or any Subsidiary plus 75% of positive
Consolidated Net Income, if any, for each fiscal quarter elapsed after December
31, 2001.
(c) Interest Coverage Ratio.
The Company shall maintain a ratio of Consolidated EBIT to Consolidated
Interest Expense, for each period of four consecutive fiscal quarters then
ended, of not less than (i) 1.50
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to 1.00 as of the last day of the first, second, third and fourth fiscal
quarters of 2002, (ii) 1.75 to 1.00 as of the last day of the first, second,
third and fourth fiscal quarters of 2003, (iii) 2.50 to 1.00 as of the last day
of the first, second, third and fourth fiscal quarters of 2004, (iv) 3.00 to
1.00 as of the last day of the first, second, third and fourth fiscal quarters
of 2005 and (v) 3.50 to 1.00 as of the last day of the first fiscal quarter of
2006 and each fiscal quarter ending thereafter.
(d) Fixed Charge Coverage Ratio.
The Company shall maintain a ratio of (i) Consolidated EBITDA to (ii) the sum of
Consolidated Interest Expense plus regularly scheduled principal payments on
Indebtedness (including such payments attributable to Capital Leases) plus cash
income taxes PLUS cash dividends, of the Company and its Subsidiaries on a
consolidated basis, as determined in accordance with GAAP, for each period of
four consecutive fiscal quarters then ended of not less than (1) 1.65 to 1.00 as
of the last day of the first fiscal quarter of 2002 through the last day of the
second fiscal quarter of 2004 and (2) 1.25 to 1.00 as of the last day of the
third fiscal quarter of 2004 and each fiscal quarter ending thereafter.
(e) Capital Expenditures.
(i) The Company shall not, and shall not permit any of its
Subsidiaries to, make or become legally obligated to make any expenditure in
respect of the purchase or other acquisition of any new wine barrels where such
expenditure exceeds, in the aggregate for the Company and its Subsidiaries
during each fiscal year set forth below, the amount set forth opposite such
fiscal year:
Fiscal Year
Ending Amount
------ ------
2002 $4,500,000
2003 $5,000,000
2004 $5,500,000
2005 $6,000,000
2006 $6,500,000
2007 $7,000,000
2008 $7,500,000
2009 $8,000,000
2010 $8,000,000
(ii) The Company shall not, and shall not permit any of its
Subsidiaries to, make or become legally obligated to make any expenditure in
respect of the purchase or other acquisition of any fixed or capital assets
(excluding those assets set out in clause (i) above), where such expenditure
exceeds, in the aggregate for the Company and its Subsidiaries during each
fiscal year set forth below, the amount set forth opposite such fiscal year:
Fiscal Year Amount
------
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Ending
------
2002 $6,000,000
2003 $12,000,000
2004 $12,500,000
2005 $4,500,000
2006 $3,000,000
2007 $3,000,000
2008 $2,500,000
2009 $2,500,000
2010 $2,500,000
PROVIDED, HOWEVER, that in respect of clauses (i) and (ii) above, so long as no
Default or Event of Default has occurred and is continuing or would result from
such expenditure, any portion of any such amount set forth above, if not
expended in the fiscal year for which it is permitted above, may be carried over
for expenditure in the next following fiscal year, but may not be carried over
for expenditure in any fiscal year thereafter.
10.5 Indebtedness.
The Company shall not, and shall not permit any of its Subsidiaries to,
create, incur, assume or otherwise become liable for or suffer to exist any
Indebtedness, other than:
(a) Indebtedness of the Company and its Subsidiaries to the
Holders hereunder;
(b) Indebtedness of the Company and its Subsidiaries
existing on the Closing Date and set forth in Schedule 5.15 or extensions,
renewals and refinancings of such Indebtedness, PROVIDED that the principal
amount of such Indebtedness being extended, renewed or refinanced does not
increase;
(c) accounts payable to trade creditors for goods and
services and current operating liabilities (not the result of the borrowing of
money) incurred in the ordinary course of the Company's or such Subsidiary's
business in accordance with customary terms and paid within the specified time,
unless contested in good faith by appropriate proceedings and reserved for in
accordance with GAAP;
(d) Indebtedness consisting of guarantees resulting from
endorsement of negotiable instruments for collection by the Company or any such
Subsidiary in the ordinary course of business;
(e) Indebtedness under the Credit Agreement and any renewal,
extension or refinancing of the Credit Agreement; PROVIDED that (i) any such
renewal, extension or refinancing shall be on terms substantially similar to the
terms which are set forth in the Credit Agreement on the Closing Date or on
terms which are more favorable to the Company than such terms existing on the
Closing Date; (ii) that the aggregate principal amount of the exposure
thereunder shall not
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exceed $72,500,000, plus accrued interest and other charges thereon; (iii) the
maturity dates of such renewed, extended or refinanced Indebtedness shall not be
shorter than the maturity dates of the existing Indebtedness under the Credit
Agreement and the interest rate of such Indebtedness shall be at then prevailing
interest rates; (iv) the new Indebtedness shall contain a term loan portion
which shall not exceed $17,500,000 aggregate principal amount, and (v) the new
Indebtedness shall contain a revolver facility in such amount and form as shall
be reasonably necessary to provide the Company adequate liquidity thereunder and
which shall not be in an amount in excess of $55,000,000;
(f) Indebtedness under the Credit Agreement Guaranties;
(g) Guaranty Obligations not to exceed $1,000,000 in the
aggregate at any time outstanding;
(h) Rate Contracts entered into in the ordinary course of
business;
(i) unsecured Indebtedness of the Company and its
Subsidiaries in an aggregate principal amount not to exceed $3,000,000 at any
time outstanding;
(j) Indebtedness in respect of Capital Leases, Synthetic
Lease Obligations and purchase money obligations for fixed or capital assets
within the limitations set forth in clause (i) of the definition of Permitted
Liens and other Indebtedness secured by Liens within the limitations set forth
in clause (j) of the definition of Permitted Liens, or, in each case,
extensions, renewals and refinancings of such Indebtedness, PROVIDED that the
principal amount of such Indebtedness being extended, renewed or refinanced does
not increase, and PROVIDED FURTHER that the aggregate principal amount of all
such Indebtedness does not exceed $16,000,000 at any time outstanding;
(k) Indebtedness subordinated on terms satisfactory to the
Required Holders to the Notes in an aggregate principal amount not to exceed
$2,000,000 at any time outstanding; and
(l) Indebtedness of the Company to any of its wholly owned
Subsidiaries or of any of its wholly owned Subsidiaries to another of its wholly
owned Subsidiaries.
10.6 Intentionally Omitted.
10.7 Distributions.
(a) The Company shall not declare or pay any dividends in
respect of the Company's capital stock, or purchase, redeem, retire or otherwise
acquire for value any of its capital stock now or hereafter outstanding, return
any capital to its shareholders as such, or make any distribution of assets to
its shareholders as such, or permit any of its Subsidiaries to purchase, redeem,
retire, or otherwise acquire for value any stock of the Company, except that the
Company may:
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(i) declare and deliver dividends and distributions
payable only in common stock of the Company;
(ii) purchase, redeem, retire, or otherwise acquire
shares of its capital stock with the proceeds received from a substantially
concurrent issue of new shares of its capital stock;
(iii) declare and pay cash dividends to its
stockholders and purchase, redeem, retire or otherwise acquire shares of its own
outstanding capital stock for cash during any fiscal year if (1) after giving
effect thereto the aggregate amount of such dividends, purchases, redemptions,
retirements and acquisitions paid or made during any fiscal year is not in
excess of 25% of Consolidated Net Income of the Company for the fiscal year
immediately preceding the year in which such dividend, purchase, redemption,
retirement or acquisition is paid or made and (2) immediately prior to and after
giving effect thereto, no Default shall have occurred and be continuing; and
(iv) declare and pay the Wine Dividend Credits,
PROVIDED that immediately prior to and after giving effect thereto, no Default
shall have occurred and be continuing.
(b) The Company shall not permit any Subsidiary of the
Company to grant or otherwise agree to or suffer to exist any consensual
restrictions on the ability of such Subsidiary to pay dividends and make other
distributions to the Company, or to pay any Indebtedness owed to the Company or
transfer properties and assets to the Company.
10.8 Loans and Investments.
The Company shall not, and shall not permit any of its Subsidiaries to,
purchase or otherwise acquire the capital stock, assets, obligations or other
securities of or any interest in any Person, or otherwise extend any credit to,
guarantee the obligations of or make any additional investments in any Person,
other than:
(a) extensions of credit in the nature of accounts
receivable or notes receivable arising from the sales of goods or services in
the ordinary course of business;
(b) investments by the Company in the capital stock of
wholly-owned Subsidiaries, and extensions of credit by the Company to any of its
wholly owned Subsidiaries or by any of its wholly owned Subsidiaries to another
of its wholly owned Subsidiaries or the Company, in each case in the ordinary
course of business;
(c) Permitted Investments;
(d) purchases of assets in the ordinary course of business;
(e) additional purchases of or investments in joint ventures
or the capital stock, assets, obligations or other securities of or interest in
other Persons, provided that (i) immediately prior to and after giving effect to
such purchase or investment, no Event of
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Default shall have occurred and be continuing, (ii) the aggregate cash and
non-cash consideration for any such purchase or investment (or series of related
purchases or investments) shall not exceed $5,000,000 without the prior written
consent of the Required Holders and (iii) after giving effect to such purchase
or investment, the Company shall be in full pro forma compliance with each of
the financial covenants set forth in subsections 10.04(a) through (e), measured
as of the last day of the fiscal quarter then most recently ended and (iv) in
the case of any Acquisition, the prior, effective written consent or approval to
such Acquisition of the board of directors or equivalent governing body of the
acquiree is obtained;
(f) employee loans and guarantees in accordance with the
Company's usual and customary practices with respect thereto;
(g) Guaranty Obligations permitted under Section 10.4(a); or
(h) extensions of credit by the Company to its Subsidiary
Canoe Ridge Vineyard L.L.C., its Subsidiary SHW Equity Co. and/or its Subsidiary
Xxxx Valley Vineyard outstanding on or after the Closing Date in an aggregate
amount for all such extensions of credit not to exceed, without the prior
written consent of the Required Holders in their sole discretion, the Maximum
Intercompany Loan Amount at any time outstanding; PROVIDED that all such
extensions of credit by the Company (i) to Canoe Ridge Vineyard L.L.C. shall not
at any time outstanding exceed the Canoe Ridge Intercompany Loan Amount, (ii) to
Xxxx Valley Vineyard shall not at any time outstanding exceed the Xxxx Valley
Intercompany Loan Amount and (iii) to SHW Equity Co. shall not at any time
outstanding exceed the SHW Intercompany Loan Amount; and PROVIDED FURTHER that
no Event of Default shall exist at the time of making any such credit extension
or would result therefrom.
10.9 Sale of Assets.
The Company shall not, and shall not permit any of its Subsidiaries to, sell,
lease, transfer, or otherwise dispose of, or part with control of (whether in
one transaction or a series of transactions) any assets (including any shares of
stock in any Subsidiary or other Person), except sales or other dispositions of
any of the following:
(a) any inventory in the ordinary course of business;
(b) any Permitted Investments;
(c) any assets which have become worn out or obsolete or
which are promptly being replaced, in the ordinary course of business;
(d) any assets by any of its wholly owned Subsidiaries to
another of its wholly owned Subsidiaries or to the Company;
(e) any Specified Assets; PROVIDED that such sale or
disposition is made in a bona fide arm's length transaction; and provided
further that at the time of any such sale or disposition, no Event of Default
shall exist or shall result therefrom; and
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(f) any other assets to the extent not otherwise permitted
under this Section 10.9; provided that such assets do not constitute the Primary
Trademarks or Substantial Assets and such sale or disposition is made for fair
market value; and provided further that (i) at the time of any such sale or
disposition, no Event of Default shall exist or shall result therefrom, (ii) the
aggregate sales price from such sale or disposition shall be paid in cash, and
(iii) no dispositions of accounts or notes receivable shall be permitted
hereunder. For purposes of clause (f) a sale, lease, transfer or other
disposition of assets shall be deemed to be of "Substantial Assets" if such
assets, when added to all other assets sold, leased, transferred or otherwise
disposed of during the same fiscal year (other than assets sold in the ordinary
course of business), shall exceed 5% of the Company's Consolidated Total Assets
determined as of the end of the most recently completed fiscal year.
10.10 Limitations on Sale-and-Leaseback Transactions.
The Company shall not, and shall not permit any of its Subsidiaries to,
become liable, directly or indirectly, with respect to any lease, whether an
Operating Lease or a Capital Lease, of any property (whether real, personal or
mixed), whether now owned or hereafter acquired, (a) which the Company or such
Subsidiary has sold or transferred or is to sell or transfer to any other Person
or (b) which the Company or such Subsidiary intends to use for substantially the
same purposes as any other property which has been or is to be sold or
transferred by the Company or such Subsidiary to any other Person in connection
with such lease, unless such sale or transfer is permitted under Section
10.9(f).
10.11 Subsidiary Guarantors.
(a) The Company shall cause each of the Original Subsidiary
Guarantors to execute and deliver, on or before the Closing, and thereafter
shall cause each Additional Subsidiary Guarantor to execute and deliver, the
Subsidiary Guarantee Agreement pursuant to which each such Subsidiary shall
guarantee the payment of all amounts payable by the Company hereunder and under
the Notes and the performance of all obligations of the Company hereunder and
under the Notes and the Collateral Documents to which it is a party to secure
its obligations under the Subsidiary Guarantee Agreement.
(b) In connection with the delivery of the Subsidiary
Guarantee Agreement and the relevant Collateral Documents, the Company shall
cause each Subsidiary Guarantor to deliver to each Holder of the Notes (i) such
documents and evidence with respect to such Subsidiary Guarantor as any Holder
may reasonably request in order to establish the existence and good standing of
such Subsidiary Guarantor and evidence that the Board of Directors of such
Subsidiary Guarantor has adopted resolutions authorizing the execution and
delivery of the Subsidiary Guarantee Agreement and the Collateral Documents to
which such Subsidiary Guarantor is a party, (ii) evidence that the Subsidiary
Guarantee Agreement and the relevant Collateral Documents do not violate any of
such Subsidiary Guarantor's outstanding debt instruments in the form of (A) a
certificate from such Subsidiary Guarantor to such effect, (B) consents or
approvals of the holder or holders of any Security, and/or (C) amendments of
agreements pursuant to which any Security may have been issued, all as may be
reasonably
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deemed necessary by the Holders to permit the execution and delivery of the
Subsidiary Guarantee Agreement and the Collateral Documents to which such
Subsidiary Guarantor is a party, (iii) a certificate of such Subsidiary as to
the matters described in Exhibit 10.11(a) hereto and such certificates or other
evidence as any Holder may reasonably request to establish that the transactions
contemplated by the Subsidiary Guarantee Agreement and the Collateral Documents
to which such Subsidiary Guarantor is a party shall not subject any such
Subsidiary Guarantor to any tax, penalty, liability or other onerous condition
under or pursuant to any applicable law or governmental regulation, (iv) an
opinion of independent counsel (which opinion, in scope, form and substance, and
counsel, shall be reasonably satisfactory to the Holders) and (v) all other
documents and showings reasonably requested by the Holders in connection with
the execution and delivery of the Subsidiary Guarantee Agreement and the
Collateral Documents to which such Subsidiary Guarantor is a party, which
documents shall be satisfactory in form and substance to the Holders and their
special counsel, and each Holder shall have received a copy (executed or
certified as may be appropriate) of all of the foregoing legal documents.
(c) In addition to the other limitations contained in this
Agreement, the Company will not permit any Subsidiary which is not a Subsidiary
Guarantor at that time to be or become liable in respect of any other Guaranty
after the date hereof; PROVIDED, however, that such Subsidiary may execute and
deliver such subsequent Guaranty so long as the Company shall contemporaneously
therewith cause such Subsidiary to execute and deliver, and such Subsidiary
shall execute and deliver, to the Holders of the Notes, the Subsidiary Guarantee
Agreement and all relevant Collateral Documents together with all other
documents, agreement, certificates and opinions in compliance with the terms and
provisions of this Section 10.11. It being the intent of this Section 10.11(c)
that at all times the Company shall cause all Subsidiaries which have executed
and delivered Guaranties to Holders of Funded Debt of the Company and/or any
other Subsidiary to be Subsidiary Guarantors in accordance with and pursuant to
the provisions of this Section 10.11.
(d) All reasonable out-of-pocket fees and expenses of the
Holders of the Notes, including, without limitation, the reasonable fees and
expenses of special counsel to the Holders of the Notes, incurred in connection
with the execution and delivery of the Subsidiary Guarantee Agreement, the
Collateral Documents and the related agreements and opinions described above
shall be borne by the Company.
10.12 Line of Business.
The Company will not, and will not permit any of the Restricted
Subsidiaries to, engage in any business if, as a result, the general nature of
the business in which the Company and the Restricted Subsidiaries, taken as a
whole, would then be engaged would be substantially changed from the general
nature of the business in which the Company and the Restricted Subsidiaries,
taken as a whole, are engaged on the date of the Closing.
10.13 Change of Control.
The Company will not allow a Change of Control.
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10.14 Amendments of Certain Documents.
The Company shall not, and shall not permit any of its Subsidiaries to,
agree to or permit any amendment, modification or waiver of:
(a) any provision of any agreement related to any
Subordinated Debt (including any amendment, modification or waiver pursuant to
an exchange of other securities or instruments for outstanding Subordinated
Debt) if the effect of such amendment, modification or waiver is to (i) increase
the interest rate on such Subordinated Debt or change (to earlier dates) the
dates upon which principal and interest are due thereon; (ii) alter the
redemption, prepayment or subordination provisions thereof; (iii) alter the
covenants and events of default in a manner which would make such provisions
more onerous or restrictive to the Company or such Subsidiary; or (iv) otherwise
increase the obligations of the Company or such Subsidiary in respect of such
Subordinated Debt or confer additional rights upon the holders thereof which
individually or in the aggregate would be adverse to the Company, its
Subsidiaries or the Holders; and
(b) any provision of any of the Credit Agreement Documents
(including any amendment, modification or waiver pursuant to an exchange of
other securities or instruments for outstanding Revolving Notes or Term) if the
effect of such amendment, modification or waiver would be to (i) change to
earlier dates the dates upon which principal and interest are due thereunder,
(ii) alter the redemption or prepayment provisions thereof, or (iii) alter the
provisions thereof relating to dispositions of collateral.
10.15 Redemption of Subordinated Debt.
The Company shall not, and shall not permit any of its Subsidiaries to,
make any voluntary or optional payment or repayment on, redemption, exchange or
acquisition for value of, or any sinking fund or similar payment with respect
to, any Subordinated Debt. Notwithstanding the foregoing, the Company may from
time to time satisfy all or any portion of the outstanding principal and accrued
and unpaid interest in respect of any Subordinated Debt by exchanging common
stock or Permitted Preferred Stock of the Company in satisfaction of such
outstanding principal and accrued and unpaid interest pursuant to a non-cash
transaction approved in good faith by the Board of Directors of the Company. The
Company shall promptly notify the Holders of any such exchange.
10.16 Hazardous Substances.
The Company shall not, and shall not permit any of its Subsidiaries to,
use, generate, manufacture, install, treat, release, store or dispose of any
Hazardous Material, except in compliance with all applicable Environmental Laws.
10.17 Accounting Changes.
The Company shall not, and shall not suffer or permit any of its
Subsidiaries to, make any significant change in accounting treatment or
reporting practices, except as required or permitted
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by GAAP, or change its fiscal year or that of any of its consolidated
Subsidiaries, except to change the fiscal year of a Subsidiary acquired in
connection with a permitted acquisition to conform its fiscal year to the
Company's.
10.18 Foreign Subsidiaries.
The Company shall not directly or indirectly create or acquire any
Foreign Subsidiary without the prior written consent of the Required Holders.
11. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" shall exist if any of the following conditions or
events shall occur:
(a) the Company defaults in the payment of any principal or
Make-Whole Amount, if any, on any Note when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration or
otherwise; or
(b) the Company defaults in the payment of any interest on
any Note or any other amount payable hereunder or under any other Loan Document
for more than three Business Days after the same becomes due and payable; or
(c) the Company defaults in the performance of or compliance
with any term contained in Sections 7, 9.2, 9.5 and 10 inclusive; or
(d) the Company defaults in the performance of or compliance
with any term contained herein (other than those referred to in paragraphs (a),
(b) and (c) of this Section 11) and such default is not remedied within 30 days
after the occurrence thereof; or
(e) any representation or warranty made in writing by or on
behalf of the Company or any Original Subsidiary Guarantor or by any officer of
the Company or any Original Subsidiary Guarantor in this Agreement, any
Collateral Document or in any writing furnished in connection with the
transactions contemplated hereby proves to have been false or incorrect in any
Material respect on the date as of which made; or
(f) (i)the Company or any Subsidiary Guarantor is in default
(as principal or as guarantor or other surety) in the payment of any principal
of or premium or make-whole amount or interest on any Debt that is outstanding
in an aggregate principal amount exceeding $1,500,000 beyond any period of grace
provided with respect thereto, or (ii) the Company or any Subsidiary Guarantor
is in default in the performance of or compliance with any term of any evidence
of any Debt in an aggregate outstanding principal amount exceeding $1,500,000 or
of any mortgage, indenture or other agreement relating thereto or any other
condition exists, and as a consequence of such default or condition such Debt
has become, or has been declared (or one or more Persons are entitled to declare
such Debt to be), due and payable before its stated maturity or before its
regularly scheduled dates of payment, or (iii) as a consequence of the
occurrence or continuation of any event or condition (other than the passage of
time or the right of the holder of Debt to convert such Debt into equity
interests), (x) the Company or any Subsidiary Guarantor has become obligated to
purchase or repay Debt before its regular maturity
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or before its regularly scheduled dates of payment in an aggregate outstanding
principal amount exceeding $1,500,000, or (y) one or more Persons have the right
to require the Company or any Subsidiary Guarantor so to purchase or repay such
Debt; or
(g) the Company or any Subsidiary (i) is generally not
paying, or admits in writing its inability to pay, its debts as they become due,
(ii) files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing; or
(h) a court or governmental authority of competent
jurisdiction enters an order appointing, without consent by the Company or any
of its Subsidiaries, a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a petition for relief
or reorganization or any other petition in bankruptcy or for liquidation or to
take advantage of any bankruptcy or insolvency law of any jurisdiction, or
ordering the dissolution, winding-up or liquidation of the Company or any of its
Subsidiaries, or any such petition shall be filed against the Company or any of
its Subsidiaries and such petition shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $1,500,000 are rendered against one or more of the
Company and its Subsidiaries and which judgments are not, within 20 days after
entry thereof, bonded, discharged or stayed pending appeal, or are not
discharged within 20 days after the expiration of such stay; or
(j) (i) Default shall occur in the observance or performance
of any covenant or agreement contained in any Subsidiary Guarantee Agreement
which is not remedied within 20 days after the occurrence thereof, (2) any
Subsidiary Guarantee Agreement shall cease to be in full force and effect for
any reason whatsoever, including, without limitation, a determination by any
governmental body or court that such agreement is invalid, void or unenforceable
or (3) the Company or any Subsidiary Guarantor, as the case may be, shall
contest or deny in writing the validity or enforceability of any of its
obligations under any Subsidiary Guarantee Agreement; or
(k) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a waiver of
such standards or extension of any amortization period is sought or granted
under section 412 of the Code, (ii) a notice of intent to terminate any Plan
shall have been or is reasonably expected to be filed with the PBGC or the PBGC
shall have instituted proceedings under ERISA section 4042 to terminate or
appoint a trustee to administer any Plan or the PBGC shall have notified the
Company or any ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) the aggregate "amount of unfunded benefit liabilities"
(within the meaning of section 4001(a)(18) of ERISA) under all Plans, determined
in accordance with Title IV of ERISA, shall exceed $1,500,000, (iv) the
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Company or any ERISA Affiliate shall have incurred or is reasonably expected to
incur any liability pursuant to Title I or IV of ERISA or the penalty or excise
tax provisions of the Code relating to employee benefit plans, (v) the Company
or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the
Company or any Subsidiary establishes or amends any employee welfare benefit
plan that provides post-employment welfare benefits in a manner that would
increase the liability of the Company or any Subsidiary thereunder; and any such
event or events described in clauses (i) through (vi) above, either individually
or together with any other such event or events, could reasonably be expected to
have a Material Adverse Effect; or
(l) a Material Adverse Effect shall occur; or
(m) a Change of Control shall occur; or
(n) [intentionally omitted]; or
(o) the Environmental Indemnity after delivery thereof shall
for any reason be revoked or invalidated, or otherwise cease to be in full force
and effect, or the Company or any other Person shall contest in any manner the
validity or enforceability thereof, or the Company shall deny that it has any
further liability or obligation thereunder; or
(p) the subordination or intercreditor provisions of the
Intercreditor Agreement or of any agreement or instrument governing any
Subordinated Debt shall for any reason be revoked or invalidated, or otherwise
cease to be in full force and effect, any Person shall contest in any manner the
validity or enforceability thereof or deny that it has any further liability or
obligation thereunder, or the Indebtedness hereunder shall for any reason be
subordinated or shall not have the priority contemplated by this Agreement or
such subordination or intercreditor provisions; or
(q) the Company or any other Person shall fail to perform or
observe any term, covenant or agreement contained in the Collateral Documents on
its part to be performed or observed and any such failure shall remain
unremedied for a period of 20 days from the occurrence thereof (unless the
Required Holders determine that such failure is not capable of remedy), or any
"Event of Default" as defined in any Collateral Document shall have occurred; or
any of the Collateral Documents after delivery thereof shall for any reason be
revoked or invalidated, or otherwise cease to be in full force and effect, or
the Company or any other Person shall contest in any manner the validity or
enforceability thereof, or the Company or any other Person shall deny that it
has any further liability or obligation thereunder; or any of the Collateral
Documents for any reason, except to the extent permitted by the terms thereof,
shall cease to create a valid and perfected first priority Lien subject only to
Permitted Liens in any of the Collateral purported to be covered thereby; or any
title insurance coverage in respect of any material portion of the Collateral is
disavowed or becomes ineffective.
As used in Section 11(k), the terms "EMPLOYEE BENEFIT PLAN" and
"EMPLOYEE WELFARE BENEFIT PLAN" shall have the respective meanings assigned to
such terms in Section 3 of ERISA.
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12. REMEDIES ON DEFAULT, ETC.
12.1 Acceleration.
(a) If an Event of Default with respect to the Company
described in paragraph (g) or (h) of Section 11 (other than an Event of Default
described in clause (i) of paragraph (g) or described in clause (vi) of
paragraph (g) by virtue of the fact that such clause encompasses clause (i) of
paragraph (g)) has occurred, all the Notes then outstanding shall automatically
become immediately due and payable.
(b) If any other Event of Default has occurred and is
continuing, any Holder or Holders of more than 25% in principal amount of the
Notes at the time outstanding may at any time at its or their option, by notice
or notices to the Company, declare all the Notes then outstanding to be
immediately due and payable.
(c) If any Event of Default described in paragraph (a) or(b)
of Section 11 has occurred and is continuing, any Holder or Holders of Notes at
the time outstanding affected by such Event of Default may at any time, at its
or their option, by notice or notices to the Company, declare all the Notes held
by it or them to be immediately due and payable. Upon any Notes becoming due and
payable under this Section 12.1, whether automatically or by declaration, such
Notes will forthwith mature and the entire unpaid principal amount of such
Notes, plus (x) all accrued and unpaid interest thereon and (y) the Make-Whole
Amount determined in respect of such principal amount (to the full extent
permitted by applicable law), shall all be immediately due and payable, in each
and every case without presentment, demand, protest or further notice, all of
which are hereby waived. The Company acknowledges, and the parties hereto agree,
that each holder of a Note has the right to maintain its investment in the Notes
free from repayment by the Company (except as herein specifically provided for)
and that the provision for payment of a Make-Whole Amount by the Company in the
event that the Notes are prepaid or are accelerated as a result of an Event of
Default, is intended to provide compensation for the deprivation of such right
under such circumstances.
12.2 Other Remedies.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the Holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such Holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
12.3 Rescission.
At any time after any Notes have been declared due and payable pursuant
to clause (b) or (c) of Section 12.1, the Holders of not less than 66-2/3% in
principal amount of the Notes then
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outstanding, by written notice to the Company, may rescind and annul any such
declaration and its consequences if (a) the Company has paid all overdue
interest on the Notes, all principal of and Make-Whole Amount, if any, on any
Notes that are due and payable and are unpaid other than by reason of such
declaration, and all interest on such overdue principal and Make-Whole Amount,
if any, and (to the extent permitted by applicable law) any overdue interest in
respect of the Notes, at the Default Rate, (b) all Events of Default and
Defaults, other than non-payment of amounts that have become due solely by
reason of such declaration, have been cured or have been waived pursuant to
Section 17, and (c) no judgment or decree has been entered for the payment of
any monies due pursuant hereto or to the Notes. No rescission and annulment
under this Section 12.3 will extend to or affect any subsequent Event of Default
or Default or impair any right consequent thereon.
12.4 No Waivers or Election of Remedies, Expenses, etc.
No course of dealing and no delay on the part of any Holder of any Note
in exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any Holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Company under Section 15, the Company
will pay to the holder of each Note on demand such further amount as shall be
sufficient to cover all costs and expenses of such holder incurred in any
enforcement or collection under this Section 12, including, without limitation,
reasonable attorneys' fees, expenses and disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1 Registration of Notes.
The Company shall keep at its principal executive office a register for the
registration and registration of transfers of Notes. The name and address of
each Holder and the name and address of each transferee of one or more Notes
shall be registered in such register. Prior to due presentment for registration
of transfer, the Person in whose name any Note shall be registered shall be
deemed and treated as the owner and Holder thereof for all purposes hereof, and
the Company shall not be affected by any notice or knowledge to the contrary.
The Company shall give to any Holder promptly upon request therefor, a complete
and correct copy of the names and addresses of all registered Holders.
13.2 Transfer and Exchange of Notes.
Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a surrender
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered Holder or his attorney
duly authorized in writing and accompanied by the address for notices of each
transferee of such Note or part thereof), the Company shall execute and deliver,
at the Company's expense (except as provided below), one or more new Notes (as
requested by the Holder thereof) in such Series in exchange therefor, in an
aggregate principal amount equal to the
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unpaid principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such Holder may request and shall be substantially in
the form of Exhibit 1-A, 1-B or 1-C, as the case may be. Each such new Note
shall be dated and bear interest from the date to which interest shall have been
paid on the surrendered Note or dated the date of the surrendered Note if no
interest shall have been paid thereon. The Company may require payment of a sum
sufficient to cover any stamp tax or governmental charge imposed in respect of
any such transfer of Notes. Notes shall not be transferred in denominations of
less than $100,000, PROVIDED THAT if necessary to enable the registration of
transfer by a Holder of its entire holding of Notes, one Note may be in a
denomination of less than $100,000. Any transferee, by its acceptance of a Note
registered in its name (or the name of its nominee), shall be deemed to have
made the representation set forth in Section 6.2.
13.3 Replacement of Notes.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (PROVIDED THAT if the Holder is, or is a nominee
for, an original Purchaser or another Holder with a minimum net worth of at
least $25,000,000, such Person's own unsecured agreement of indemnity shall be
deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and
cancellation thereof,
the Company at the Holder's sole expense shall execute and deliver, in
lieu thereof, a new Note of such Series, dated and bearing interest from the
date to which interest shall have been paid on such lost, stolen, destroyed or
mutilated Note or dated the date of such lost, stolen, destroyed or mutilated
Note if no interest shall have been paid thereon.
14. PAYMENT OF NOTES.
14.1 Place of Payment.
Subject to Section 14.2, payments of principal, Make-Whole Amount, if
any, and interest becoming due and payable on the Notes shall be made in New
York, New York, at the principal office of Chase Manhattan Bank. The Company may
at any time, by notice to each Holder, change the place of payment of the Notes
so long as such place of payment shall be either the principal office of the
Company in such jurisdiction or the principal office of a bank or trust company
in such jurisdiction.
14.2 Home Office Payment.
So long as any Purchaser or its nominee shall be a Holder, and
notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the
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method and at the address specified for such purpose below such Purchaser's name
in Schedule A, or by such other method or at such other address as such
Purchaser or nominee shall have from time to time specified to the Company in
writing for such purpose, without the presentation or surrender of such Note or
the making of any notation thereon, except that upon written request of the
Company made concurrently with or reasonably promptly after payment or
prepayment in full of any Note, such Purchaser or nominee shall surrender such
Note for cancellation, reasonably promptly after any such request, to the
Company at its principal executive office or at the place of payment most
recently designated by the Company pursuant to Section 14.1. Prior to any sale
or other disposition of any Note, any Purchaser or its nominee will, at its
election, either endorse thereon the amount of principal paid thereon and the
last date to which interest has been paid thereon or surrender such Note to the
Company in exchange for a new Note or Notes pursuant to Section 13.2. The
Company will afford the benefits of this Section 14.2 to any Institutional
Investor that is the direct or indirect transferee of any Note purchased by each
Purchaser under this Agreement and that has made the same agreement relating to
such Note as each Purchaser has made in this Section 14.2.
15. EXPENSES, ETC.
15.1 Transaction Expenses.
Whether or not the transactions contemplated hereby are consummated,
the Company will pay all costs and expenses (including reasonable attorneys'
fees of a special counsel and, if reasonably required, local or other counsel)
incurred by each Purchaser or Holder in connection with such transactions and in
connection with any amendments, waivers or consents under or in respect of this
Agreement or the Notes (whether or not such amendment, waiver or consent becomes
effective), including, without limitation: (a) the costs and expenses incurred
in enforcing or defending (or determining whether or how to enforce or defend)
any rights under this Agreement or the Notes or in responding to any subpoena or
other legal process or informal investigative demand issued in connection with
this Agreement or the Notes, or by reason of being a Holder, and (b) the costs
and expenses, including financial advisors' fees, incurred in connection with
the insolvency or bankruptcy of the Company, any Restricted Subsidiary or any
Subsidiary Guarantor in connection with any work-out or restructuring of the
transactions contemplated hereby and by the Notes. The Company will pay, and
will save each Purchaser or other Holder harmless from, all claims in respect of
any fees, costs or expenses if any, of brokers and finders (other than those
retained by such Purchaser or other Holder).
15.2 Survival.
The obligations of the Company under this Section 15 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement, the Collateral Documents or the Notes, and the
termination of this Agreement and the Collateral Documents.
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16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the execution
and delivery of this Agreement and the Notes, the purchase or transfer by any
Purchaser of any Note or portion thereof or interest therein and the payment of
any Note, and may be relied upon by any subsequent Holder, regardless of any
investigation made at any time by or on behalf of any Purchaser or any other
Holder. All statements contained in any certificate or other instrument
delivered by or on behalf of the Company pursuant to this Agreement or any
Collateral Document shall be deemed representations and warranties of the
Company under this Agreement and such Collateral Document. Subject to the
preceding sentence, this Agreement, the Collateral Documents and the Notes
embody the entire agreement and understanding between the Purchasers and the
Company and supersede all prior agreements and understandings relating to the
subject matter hereof.
17. AMENDMENT AND WAIVER.
17.1 Requirements.
This Agreement and the Notes may be amended, and the observance of any
term hereof or of the Notes may be waived (either retroactively or
prospectively), with (and only with) the written consent of the Company and the
Required Holders, and the Notes may be amended and the observance of any term of
the Notes may be waived (either retroactively or prospectively), with and only
with the written consent of the Company and the Required Holders, except that
(a) no amendment or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6
or 21 hereof, or any defined term (as it is used therein), will be effective as
to each Purchaser unless consented to by each Purchaser in writing, and (b) no
such amendment or waiver may, without the written consent of the Holder of each
Note at the time outstanding affected thereby, (i) subject to the provisions of
Section 12 relating to acceleration or rescission, change the amount or time of
any prepayment or payment of principal of, or reduce the rate or change the time
of payment or method of computation of interest or of the Make-Whole Amount on,
the Notes, (ii) change the percentage of the principal amount of the Notes, the
Holders of which are required to consent to any such amendment or waiver or
(iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or 20.
17.2 Solicitation of Holders of Notes.
(a) Solicitation -- the Company will provide each Holder of
the Notes (irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such Holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes or of the Collateral Documents. The Company will deliver
executed or true and correct copies of each amendment, waiver or consent
effected pursuant to the provisions of this Section 17 to each Holder of
outstanding Notes promptly following the date on which it is executed and
delivered by, or receives the consent or approval of, the requisite Holders of
Notes.
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(b) Payment -- the Company will not directly or indirectly
pay or cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any Holder of
Notes as consideration for or as an inducement to the entering into by any
Holder of Notes of any waiver or amendment of any of the terms and provisions
hereof or of the Notes or of the Collateral Documents unless such remuneration
is concurrently paid, or security is concurrently granted, on the same terms,
ratably to each Holder of Notes then outstanding whether or not such Holder
consented to such waiver or amendment.
17.3 Binding Effect, etc.
Any amendment or waiver consented to as provided in this Section 17
applies equally to all Holders of Notes and is binding upon them and upon each
future Holder of Notes and upon the Company without regard to whether such Note
has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and any Holder nor any delay
in exercising any rights hereunder or under any Note shall operate as a waiver
of any rights of any Holder. As used herein, the term "this Agreement" and
references thereto shall mean this Agreement as it may from time to time be
amended or supplemented.
17.4 Notes Held by Company, etc.
Solely for the purpose of determining whether the Holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the Holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding.
18. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to a Purchaser or its nominee, to such
Purchaser or its nominee at the address specified for such communications in
Schedule A, or at such other address as such Purchaser or its nominee shall have
specified to the Company in writing,
(ii) if to any other Holder, to such Holder at such
address as such other Holder shall have specified to the Company in writing, or
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(iii) if to the Company,to the Company at its address
set forth at the beginning hereof to the attention of the Chief Financial
Officer, or if to the Company's website at xxx.xxxxxxxxxxxxxxxx.xxx, or at such
other address as the Company shall have specified to the Holder of each Note in
writing.
Notices under this Section 18 will be deemed given only when actually received.
19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by each Holder at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to any Holder, may be reproduced by such
Holder by any photographic, photostatic, microfilm, microcard, miniature
photographic or other similar process and such Holder may destroy any original
document so reproduced. The Company agrees and stipulates that, to the extent
permitted by applicable law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by such Holder in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. This Section 19 shall not prohibit the
Company or any Holder from contesting any such reproduction to the same extent
that it could contest the original, or from introducing evidence to demonstrate
the inaccuracy of any such reproduction.
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "CONFIDENTIAL INFORMATION" means
information delivered to each Holder by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by such
Holder as being confidential information of the Company or such Subsidiary,
provided that such term does not include information that (a) was publicly known
or otherwise known to such Holder prior to the time of such disclosure, (b)
subsequently becomes publicly known through no act or omission by such Holder or
any Person acting on such Holder's behalf, (c) otherwise becomes known to such
Holder other than through disclosure by the Company, any Subsidiary or any
Guarantor through disclosure by a Person who was otherwise permitted to make
such disclosure, or (d) constitutes financial statements delivered to such
Holder under Section 7.1 that are otherwise publicly available.
Each Holder will use its best efforts to maintain the confidentiality
of such Confidential Information in accordance with procedures adopted by such
Holder in good faith to protect confidential information of third parties
delivered to such Holder, PROVIDED THAT such Holder may deliver or disclose
Confidential Information to (i) each Holder's directors, trustees, officers,
employees, Purchasers, attorneys and affiliates (to the extent such disclosure
reasonably relates to the administration of the investment represented by each
Holder's Notes), (ii) each Holder's financial advisors and other professional
advisors who agree to hold confidential the Confidential
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Information substantially in accordance with the terms of this Section 20, (iii)
any other Holder, (iv) any Institutional Investor to which any Holder sells or
offers to sell such Note or any part thereof or any participation therein (if
such Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 20), (v) any Person
from whom any Holder offers to purchase any security of the Company (if such
Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 20), (vi) any federal
or state regulatory authority having jurisdiction over any Holder, (vii) the
National Association of Insurance Commissioners or any similar organization, or
any nationally recognized rating agency that requires access to information
about such Holder's investment portfolio or (viii) any other Person to which
such delivery or disclosure may be necessary or appropriate (w) to effect
compliance with any law, rule, regulation or order applicable to any Holder, (x)
in response to any subpoena or other legal process, (y) in connection with any
litigation to which any Holder is a party or (z) if an Event of Default has
occurred and is continuing, to the extent any Holder may reasonably determine
such delivery and disclosure to be necessary or appropriate in the enforcement
or for the protection of the rights and remedies under your Notes and this
Agreement. Each Holder, by its acceptance of a Note, will be deemed to have
agreed to be bound by and to be entitled to the benefits of this Section 20 as
though it were a party to this Agreement.
21. SUBSTITUTION OF PURCHASER; PARTICIPATION.
(a) Each Purchaser shall have the right to substitute any
one of its Affiliates as the purchaser of the Notes that such Purchaser has
agreed to purchase hereunder, by written notice to the Company, which notice
shall be signed by both such Purchaser and such Affiliate, shall contain such
Affiliate's agreement to be bound by this Agreement and shall contain a
confirmation by such Affiliate of the accuracy with respect to it of the
representations set forth in Section 6. Upon receipt of such notice, wherever
the word "Purchaser" is used in this Agreement (other than in this Section 21),
such word shall be deemed to refer to such Affiliate in lieu of the previous
Purchaser. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to any Purchaser all of the
Notes then held by such Affiliate, upon receipt by the Company of notice of such
transfer, wherever the word "Purchaser" is used in this Agreement (other than in
this Section 21), such word shall no longer be deemed to refer to such
Affiliate, but shall refer to the Purchaser, and the Purchaser shall have all
the rights of an original Holder under this Agreement.
(b) Any Holder may at any time sell to one or more Persons
not Affiliates of the Company (a "Participant") participating interests in any
loan evidenced by a Note issued hereunder held by such Xxxxxx (the "Originating
Holder"); provided, however, that (i) the Originating Holder's obligations under
this Agreement shall remain unchanged, (ii) the Originating Holder shall remain
solely responsible for the performance of such obligations, (iii) the Company
and the Subsidiary Guarantors shall deal solely and directly with the
Originating Holder in connection with the Originating Holder's rights and
obligations under this Agreement and the Notes held by it, and (iv) no Holder
shall transfer or grant any participating interest under which the Participant
has rights to approve any amendment to, or any consent or waiver with respect
to, this Agreement or any of the Notes. In the case of any such participation,
the
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Participant shall be entitled to the benefit of Section14.2, as though it were
also a Holder hereunder.
22. MISCELLANEOUS.
22.1 Successors and Assigns.
All covenants and other agreements contained in this Agreement by or on
behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
Holder) whether so expressed or not.
22.2 Payments Due on Non-Business Days.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-Whole Amount or interest on
any Note that is due on a date other than a Business Day shall be made on the
next succeeding Business Day without including the additional days elapsed in
the computation of the interest payable on such next succeeding Business Day.
22.3 Severability.
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
22.4 Construction.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
22.5 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
22.6 Governing Law; Jurisdiction and Service of Process.
This Agreement shall be construed and enforced in accordance with, and
the rights of the parties shall be governed by, the law of the State of New
York, excluding choice-of-law
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principles of the law of such State that would require the application of the
laws of a jurisdiction other than such State. The Company hereby irrevocably and
unconditionally agree that any suit, action or proceeding with respect to this
Agreement, or any proceeding to execute or otherwise enforce any judgment in
respect of any breach thereof, brought by any registered Holder of a Note
against the Company or any of its property, may be brought by such Holder of a
Note in the United States District Court for the Southern District of New York
or any New York State Court sitting in the Borough of Manhattan as such Holder
of a Note may in its sole discretion elect, and by the execution and delivery of
this Agreement, the Company irrevocably submits to the jurisdiction of each such
court; and agrees that process served either personally or by registered mail
shall constitute, to the extent permitted by law, adequate service of process in
any such suit. In addition, the Company hereby irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of venue in any suit, action or proceeding arising out of or
relating to this Agreement or any Note, brought in the said courts, and hereby
irrevocably waives any claim that any such suit, action or proceeding brought in
any such court has been brought in an inconvenient forum. Nothing herein shall
in any way be deemed to limit the ability of any registered Holder of a Note to
serve any such writs, process or summonses, in any manner permitted by
applicable law or to obtain jurisdiction over the Company in such other
jurisdiction, and in such manner, as may be permitted by applicable law.
22.7 Agents for Service of Process.
WITHOUT LIMITING THE FOREGOING, THE COMPANY HEREBY APPOINTS, IN THE
CASE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN THE COURTS OF OR IN THE STATE
OF NEW YORK, CT CORPORATION TO RECEIVE, FOR IT AND ON ITS BEHALF, SERVICE OF
PROCESS IN THE STATE OF NEW YORK WITH RESPECT THERETO, PROVIDED THE COMPANY MAY,
AND IN THE EVENT THAT CT CORPORATION IS AT ANY TIME NO LONGER DOMICILED IN THE
STATE OF NEW YORK, THE COMPANY SHALL, APPOINT CT CORPORATION OR ANY OTHER
PERSON, REASONABLY ACCEPTABLE TO THE REQUIRED HOLDERS, WITH OFFICES IN THE STATE
OF NEW YORK TO REPLACE SUCH PURCHASERS FOR SERVICE OF PROCESS UPON DELIVERY TO
THE HOLDERS OF A REASONABLY ACCEPTABLE AGREEMENT OF SUCH NEW PURCHASERS AGREEING
SO TO ACT. IF SERVICE OF PROCESS IS MADE BY ANY HOLDER OF A NOTE UPON SUCH
APPOINTEE, A COPY THEREOF SHALL ALSO BE PROVIDED TO THE COMPANY, BY REGISTERED
OR CERTIFIED MAIL, OR BY INTERNATIONALLY-RECOGNIZED EXPEDITED DELIVERY SERVICE;
PROVIDED THAT THE FAILURE OF SUCH HOLDER TO PROVIDE SUCH COPY TO THE COMPANY
SHALL NOT IMPAIR OR AFFECT IN ANY WAY THE VALIDITY OF SUCH SERVICE OF PROCESS OR
ANY JUDGMENT RENDERED IN ANY SUCH SUIT, ACTION, OR PROCEEDING. NOTHING HEREIN
SHALL IN ANY WAY BE DEEMED TO LIMIT THE ABILITY OF ANY HOLDER OF A NOTE TO SERVE
ANY SUCH WRITS, PROCESS OR SUMMONSES IN ANY MANNER PERMITTED BY APPLICABLE LAW,
OR TO OBTAIN JURISDICTION OVER THE COMPANY, IN SUCH OTHER JURISDICTION, AND IN
SUCH MANNER, AS MAY BE PERMITTED BY APPLICABLE LAW.
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22.8 Waiver of Jury Trial.
THE COMPANY AND THE HOLDERS XXXXXX AGREE TO WAIVE THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE
COMPANY AND THE HOLDERS XXXXXX AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION
SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT IN ANY WAY LIMITING THE
FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY
JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM, OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION
HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS. A COPY OF THIS SECTION 22.8 MAY BE FILED WITH ANY COURT AS WRITTEN
EVIDENCE OF THE WAIVER OF THE RIGHT TO TRIAL BY JURY AND CONSENT TO TRIAL BY
COURT. THIS SECTION 22.8 MAY NOT BE AMENDED, MODIFIED, TERMINATED OR WAIVED
EXCEPT BY A WRITING WHICH MAKES SPECIFIC REFERENCE TO THIS SECTION 22.8.
* * * * *
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If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.
Very truly yours,
THE CHALONE WINE GROUP, LTD.
By: /s/ XXXXXX X. XXXXXXXXX
_________________________________________
Xxxxxx X. Xxxxxxxxx, President & CEO
AMENDED AND RESTATED
NOTE PURCHASE AGREEMENT
AGSTAR FINANCIAL SERVICES, PCA, D/B/A FARM
CREDIT SERVICES COMMERCIAL FINANCE GROUP
BY: /s/ XXXXX X. XXXXXXX
_________________________________________
NAME: Xxxxx X. Xxxxxxx
_________________________________________
ITS: SVP - Syndicated Finance
_________________________________________
FARM CREDIT SERVICES OF AMERICA, PCA
BY: /s/ XXXXX X. XXXXX
_________________________________________
NAME: XXXXX X. XXXXX
ITS: V.P. - COMMERICAL LENDER
INFORMATION RELATING TO PURCHASERS
Principal Amount and Series
Name and Address of Purchaser of Notes to be Purchased
_____________________________ ___________________________
FARM CREDIT SERVICES OF AMERICA, PCA $ 5,000,000 Series A Notes
000 Xxxxx 00xx Xxxxxx 00,000,000 Series C Notes
Omaha, Nebraska 68102
Attention: Xxxxx X. Xxxxx
Facsimile Number: (000) 000-0000
Confirmation Number: (000) 000-0000
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds at the opening of business on the
due date thereof (identifying each payment as "The Chalone Wine Group, Ltd
Adjustable Rate Senior Secured Notes, Series A, Due September 15, 2010, 157639
B* 5, principal, premium or interest" or "The Chalone Wine Group, Ltd.
Adjustable Rate Senior Secured Notes, Series C, Due September 15, 2010, PPN
157639 B# 1, principal, premium or interest") to:
Bank Name: AgAmerica FCB
Short Name: AGAMER FCB
Routing # (ABA): 000000000
Beneficiary Account Name: Farm Credit Services of America
Beneficiary Account Number: 81100-000 (Commercial Loan)
Further Credit Account Name: The Chalone Wine Group, Ltd.
Further Credit Account #: 00000-000 & 152
Contact: Xxxx Xxxxxxx (000) 000-0000 or Xxx Xxxxxx (000) 000-0000 x0000
Contemporaneous with the above electronic funds transfer, mail or fax the
following information: (1) the full name, private placement number, interest
rate and maturity date of the Notes; (2) the allocation of payment between
principal, interest, premium and any special payment; and (3) the name and
address of the Bank from which such transfer was sent, to:
Farm Credit Services of America, PCA
000 Xxxxx 00xx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: Xxx Xxxxxx
Facsimile Number: (000) 000-0000
Confirmation Number: (000) 000-0000
All other notices and communications to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 00-0000000
SCHEDULE A
(to Note Purchase Agreement)
Principal Amount and Series
Name and Address of Purchaser of Notes to be Purchased
_____________________________ ___________________________
AGSTAR FINANCIAL SERVICES, PCA $10,000,000 Series B Notes
DBA FARM CREDIT SERVICES COMMERCIAL
FINANCE GROUP
0000 Xxxxxxxx Xxxxx
XX Xxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxxx
Facsimile Number: (000) 000-0000
Confirmation Number: (507) 345- 5626
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds at the opening of business on the
due date thereof (identifying each payment as "The Chalone Wine Group, Ltd
Adjustable Rate Senior Secured Notes, Series B, Due September 15, 2010, PPN
157639 B@ 3, principal, premium or interest") to:
Bank Name: AgriBank St Xxxx
Routing Number: 0960 1697 2
Remitter: Purchasers Bank for Chalone Wine Group
Deadline: Wire must be sent to AgriBank by 2 p.m.
Notices
Contemporaneous with the above electronic funds transfer, mail or fax the
following information setting forth: (1) the full name, private placement
number, interest rate and maturity date of the Notes and including also the
identifying information: Chalone Loan # 1068700900, Chalone CIF # 1682954; (2)
the allocation of payment between principal, interest, premium and any special
payment; and (3) the name and address of the Bank from which such transfer was
sent, to the above address, Attention: Xxxxx Xxxxx.
All other notices and communications to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 00-0000000
A-2
DEFINED TERMS
As used herein, the following terms have the respective meanings set
forth below or set forth in the Section hereof following such term:
"ACCOUNTS AND INVENTORY COLLATERAL" means the Collateral described in
the granting clauses of the Security Agreement.
"ACQUISITION" means any transaction or series of related transactions
for the purpose of, or resulting, directly or indirectly, in (a) the acquisition
of all or substantially all of the assets of a Person, or any line or segment of
business or division of a Person, (b) the acquisition of in excess of 50% of the
capital stock, partnership interests, membership interests or equity of any
Person, or otherwise causing any Person to become a Subsidiary, or (c) a merger
or consolidation or any other combination with another Person (other than a
Person that is a Subsidiary) provided that (i) the Company or a Subsidiary is
the surviving entity or (ii) after giving effect to such merger or
consolidation, such other Person has become a Subsidiary of a Company
"ADDITIONAL SUBSIDIARY GUARANTOR" means each Subsidiary of the Company
that, subsequent to the Closing, from time to time guarantees any Funded Debt of
the Company or of another Subsidiary.
"ADJUSTABLE RATE" means, with respect to the Series A Notes, the Series
A Adjustable Rate, with respect to the Series B Notes, the Series B Adjustable
Rate or with respect to the Series C Notes, the Series C Adjustable Rate.
"AFFILIATE" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an "Affiliate"
is a reference to an Affiliate of the Company.
"ATTRIBUTABLE INDEBTEDNESS" means, on any date, (a) in respect of any
Capital Lease of any Person, the capitalized amount thereof that would appear on
a balance sheet of such Person prepared as of such date in accordance with GAAP,
and (b) in respect of any Synthetic Lease Obligation, the capitalized amount of
the remaining lease payments under the relevant lease that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a Capital Lease.
"BANK LENDERS" is defined in Section 1.4.
"BANK REVOLVER LENDERS" means those Bank Lenders which hold Revolving
Notes (as
SCHEDULE B
(to Note Purchase Agreement)
defined in the Credit Agreement) of the Company.
"BANK TERM LENDERS" means those Bank Lenders which hold Term Notes (as
defined in the Credit Agreement) of the Company.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
on which commercial banks in New York, New York are required or authorized to be
closed.
"CANOE RIDGE INTERCOMPANY LOAN AMOUNT" means the sum of (i) $7,000,000
PLUS (ii) on each anniversary of the Closing Date, 10% of the Canoe Ridge
Intercompany Loan Amount in effect immediately prior to such anniversary.
"CAPITAL LEASE" means, for any Person, any lease of property (whether
real, personal or mixed) which, in accordance with GAAP, would, at the time a
determination is made, be required to be recorded as a capital lease in respect
of which such Person is liable as lessee.
"CAPITAL STOCK" means (a) in the case of a corporation, capital stock,
(b) in the case of an association or business entity, any and all shares,
interests, participation, rights or other equivalents (however designated) of
capital stock, (c) in the case of a partnership, partnership interests (whether
general or limited), (d) in the case of a limited liability company, membership
interests and (e) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"CHANGE OF CONTROL" means (a) any "person" (as such term is used in
subsections 13(d) and 14(d) of the Exchange Act) or group of persons on or after
the Closing Date other than members of the Board of Directors of the Company as
of the date hereof and their "Affiliates" (as such term is used in Rule 405 of
the Securities Act), is or becomes the "beneficial owner" (as defined in Rule
13d-3 under said Act), directly or indirectly, of securities of the Company
representing 51% or more of the combined voting power of the Company's
then-outstanding voting securities, or (b) the Existing Directors for any reason
cease to constitute a majority of the Company's board of directors. "Existing
Directors" means (x) individuals constituting the Company's board of directors
on the Closing Date, and (y) any subsequent director whose election by the board
of directors or nomination for election by the Company's shareholders was
approved by a vote of at least a majority of the directors then in office, which
directors either were directors on the Closing Date or whose election or
nomination for election was previously so approved.
"CLOSING" is defined in Section 3.
"CLOSING DATE" is defined in Section 3.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"COLLATERAL" means the property described in the Collateral Documents,
and all other property now existing or hereafter acquired which may at any time
be or become subject to a
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Lien in favor of the Collateral Agent or the Secured Parties pursuant to the
Collateral Documents or otherwise, securing the payment and performance of the
Notes and the other Secured Obligations.
"COLLATERAL DOCUMENTS" means the Deeds of Trust, the Security
Agreement, the Patent and Trademark Security Agreement, any other agreement
pursuant to which the Company, the Guarantors or any other Person provides a
Lien on its assets in favor of the Collateral Agent for the benefit of the
Holders and all financing statements, fixture filings, patent, trademark and
copyright filings, assignments, acknowledgments and other filings, documents and
agreements made or delivered pursuant thereto.
"COMPANY" means The Chalone Wine Group, Ltd., a California corporation.
"COMPLIANCE CERTIFICATE" means a certificate of a Responsible Officer
of the Company, in substantially the form of Exhibit F, with such changes
thereto as the Holders may from time to time reasonably request.
"CONFIDENTIAL INFORMATION" is defined in Section 20.
"CONSOLIDATED EBIT" means, for any period, Consolidated Net Income
(computed without giving effect to any gains or losses from dispositions of
assets and other extraordinary items) PLUS Consolidated Interest Expense PLUS
income tax expense, in each case, which were deducted in determining
Consolidated Net Income of the Company and its Subsidiaries on a consolidated
basis as determined in accordance with GAAP.
"CONSOLIDATED EBITDA" means, for any period, Consolidated Net Income
(computed without giving effect to any gains or losses from dispositions of
assets and other extraordinary items) PLUS Consolidated Interest Expense PLUS
income tax expense plus depreciation expense, amortization expense and other
non-cash expenses, in each case, which were deducted in determining Consolidated
Net Income of the Company and its Subsidiaries on a consolidated basis as
determined in accordance with GAAP.
"CONSOLIDATED EBITDAR" means, for any period, Consolidated EBITDA PLUS
Consolidated Rent Expense which was deducted in determining Consolidated Net
Income of the Company and its Subsidiaries on a consolidated basis as determined
in accordance with GAAP.
"CONSOLIDATED INDEBTEDNESS" means as at any date of determination, the
total Indebtedness of the Company and its Subsidiaries on a consolidated basis
MINUS (1) accounts payable to trade creditors for goods and services on current
operating liabilities (not the result of the borrowing of money) incurred in the
ordinary course of the Company's or the Subsidiaries' business in accordance
with customary terms and paid within the specified time (unless contested in
good faith by appropriate proceedings and reserved for in accordance with GAAP)
and (2) until such time as the Indebtedness owing as of the date hereof by the
Company to the estate of Xxxxxxx Xxxxx is repaid in full, Indebtedness owing by
the Company to the estate of Xxxxxxx Xxxxx in a principal amount not to exceed
$1,000,000.
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"CONSOLIDATED INTEREST EXPENSE" means, for any period, interest expense
(including that attributable to Capital Leases) of the Company and its
Subsidiaries on a consolidated basis, including all commissions, discounts and
other fees and charges owed with respect to standby letters of credit, as
determined in accordance with GAAP.
"CONSOLIDATED NET INCOME" means, for any period, the net income of the
Company and its Subsidiaries on a consolidated basis for such period taken as a
single accounting period, as determined in accordance with GAAP.
"CONSOLIDATED RENT EXPENSE" means, for any period, operating lease
expense of the Company and its Subsidiaries on a consolidated basis, as
determined in accordance with GAAP.
"CONSOLIDATED TANGIBLE NET WORTH" means, as of any date of
determination, Consolidated Total Assets PLUS Subordinated Debt MINUS
Consolidated Total Liabilities; PROVIDED, HOWEVER, that there shall be excluded
from Consolidated Total Assets all assets which would be classified as
intangible assets in accordance with GAAP, including goodwill, organizational
expense, research and development expense, patent applications, patents,
trademarks, trade names, brands, copyrights, trade secrets, customer lists,
licenses, franchises and covenants not to compete.
"CONSOLIDATED TOTAL ASSETS" means, as of any date of determination, the
total assets of the Company and its Subsidiaries on a consolidated basis, as
determined in accordance with GAAP.
"CONSOLIDATED TOTAL LIABILITIES" means, as of any date of
determination, the total liabilities of the Company and its Subsidiaries on a
consolidated basis, as determined in accordance with GAAP.
"CREDIT AGREEMENT" means the Credit Agreement dated as of April 19,
2002, between the Company and Cooperatieve Centrale Raiffeisen-Boerenleenbank,
B.A., "Rabobank Nederland," New York Branch, as such Credit Agreement may be
amended, renewed or extended.
"CREDIT AGREEMENT GUARANTIES" means the Guaranties (as defined in the
Credit Agreement).
"CURRENT DEBT" means, with respect to any Person, all Debt of such
Person which by its terms or by the terms of any instrument or agreement
relating thereto matures on demand or within one year from the date of the
creation thereof and is not directly or indirectly renewable or extendible at
the option of the obligor in respect thereof to a date one year or more from
such date, and which shall include Current Maturities of Funded Debt.
"CURRENT MATURITIES OF FUNDED DEBT" means, at any time and with respect
to any item of Funded Debt, the portion of such Funded Debt outstanding at such
time which by the terms of such Funded Debt is due on demand or within one year
from such time (whether by sinking fund, other required prepayment or final
payment at maturity) and is not directly or indirectly renewable, extendible or
refundable at the option of the obligor under an agreement or firm commitment in
effect at such time to a date one year or more from such date.
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"DEEDS OF TRUST" means each Deed of Trust, Security Agreement,
Assignment of Leases and Rents and Fixture Filing and each Mortgage, Security
Agreement, Assignment of Leases and Rents and Fixture Filing, from the Company
or a Subsidiary Guarantor, as trustor or grantor, as the case may be, to the
trustee named therein and for the Collateral Agent, as beneficiary, in
substantially the form of Exhibit A.
"DEFAULT RATE" means that rate of interest that is the greater of (a)
2% per annum above the rate of interest stated in clause (a) of the first
paragraph of the Notes or (b) 2% over the rate of interest publicly announced by
Chase Manhattan Bank in New York, New York as its "base" or "prime" rate.
"DOLLARS" means lawful currency of the United States of America.
"DOMESTIC SUBSIDIARY" means a Subsidiary which is organized under the
laws of a State of the United States, Canada or Puerto Rico.
"XXXX VALLEY" means Edna Valley Vineyards, a California general
partnership.
"XXXX VALLEY INTERCOMPANY LOAN AMOUNT" means the sum of (i)
$20,000,000, plus (ii) on each anniversary of the Closing Date, 10% of the Xxxx
Valley Intercompany Loan Amount in effect immediately prior to such anniversary.
"ENVIRONMENTAL INDEMNITY" means the Environmental Indemnity of the
Company and the Subsidiary Guarantors, in substantially the form of Exhibit B.
"ENVIRONMENTAL LAWS" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
under section 414 of the Code. "Event of Default" is defined in Section 11.
"EVENT OF LOSS" means with respect to any asset of the Company or its
Subsidiaries any of the following: (a) any loss, destruction or damage of such
asset; (b) any pending or threatened institution of any proceedings for the
condemnation or seizure of such asset or of any right of eminent domain; or (c)
any actual condemnation, seizure or taking, by exercise of the power of eminent
domain or otherwise, of such asset, or confiscation of such asset or requisition
of the use of such asset.
B-5
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FOREIGN SUBSIDIARY" means any Subsidiary other than a Domestic
Subsidiary.
"FUNDED DEBT" of any Person shall mean (a) all Debt of such Person, or
all Debt of such Person which has been incurred in connection with the
acquisition of assets, in each case having a final maturity of one or more than
one year from the date of origin thereof (or which is renewable or extendible at
the option of the obligor for a period or periods more than one year from the
date of origin), including all payments in respect thereof that are required to
be made within one year from the date of any determination of Funded Debt,
whether or not the obligation to make such payments shall constitute a current
liability of the obligor under GAAP, (b) all Capitalized Lease Obligations of
such Person, and (c) all Guaranties by such Person of Funded Debt of others.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"GOVERNMENTAL AUTHORITY" means
(a) the government of
(i) the United States of America or any State or
other political subdivision thereof, or
(ii) any jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business, or which asserts
jurisdiction over any properties of the Company or any Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"GROWERS' LIENS" means statutory Liens securing the payment of amounts
due from the Company or any Subsidiary Guarantor to any other Person on account
of any crops, produce or other farm products supplied by such Person to the
Company or such Subsidiary Guarantor, including but not limited to, Liens in
favor of growers arising pursuant to Article 9 (commencing with Section 55631),
Chapter 6, Division 20 of the California Food and Agricultural Code, as now in
effect or hereafter amended."
"GUARANTOR DOCUMENTS" means each Subsidiary Guarantee Agreement, the
Collateral Documents and all other certificates, documents, agreements and
instruments delivered to the Collateral Agent and the Holders under or in
connection with a Subsidiary Guarantee Agreement.
"GUARANTY" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
Debt, dividend or other obligation of any other Person in any manner, whether
directly or indirectly, including (without limitation) obligations incurred
through an agreement, contingent or otherwise, by such Person:
B-6
(a) to purchase such Debt or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or
payment of such Debt or obligation, or (ii) to maintain any working capital or
other balance sheet condition or any income statement condition of any other
Person or otherwise to advance or make available funds for the purchase or
payment of such Debt or obligation;
(c) to lease properties or to purchase properties or
services primarily for the purpose of assuring the owner of such Debt or
obligation of the ability of any other Person to make payment of the Debt or
obligation; or
(d) otherwise to assure the owner of such Debt or obligation
against loss in respect thereof.
In any computation of the Debt or other liabilities of the obligor under any
Guaranty, the Debt or other obligations that are the subject of such Guaranty
shall be assumed to be direct obligations of such obligor.
"GUARANTY OBLIGATION" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of that Person with respect to any
Indebtedness, lease, dividend, letter of credit or other obligation (the
"primary obligations") of another Person (the "primary obligor"), including any
obligation of that Person (i) to purchase, repurchase or otherwise acquire such
primary obligations or any property constituting direct or indirect security
therefor, or (ii) to advance or provide funds (A) for the payment or discharge
of any such primary obligation, or (B) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, or (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, (iv) in connection with any synthetic lease or other similar off
balance sheet lease transaction, or (v) otherwise to assure or hold harmless the
holder of any such primary obligation against loss in respect thereof.
"HAZARDOUS MATERIAL" means any and all pollutants, toxic or hazardous
wastes or any other substances that pose a hazard to health or safety, the
removal of which may be required or the generation, manufacture, refining,
production, processing, treatment, storage, handling, transportation, transfer,
use, disposal, release, discharge, spillage, seepage, or filtration of which is
restricted, prohibited or penalized by any applicable law (including, without
limitation, asbestos, urea formaldehyde foam insulation and polycholorinated
biphenyls).
"HOLDER" means, with respect to any Note, the Person in whose name such
Note is registered in the register maintained by the Company pursuant to Section
13.1.
"INDEBTEDNESS" means, for any Person: (i) all indebtedness or other
obligations of such Person for borrowed money or for the deferred purchase price
of property or services; (ii) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations
B-7
so evidenced incurred in connection with the acquisition of property, assets or
businesses; (iii) all indebtedness created or arising under any conditional sale
or other title retention agreement with respect to property acquired by such
Person (even though the rights and remedies of the seller or Holder under such
agreement in the event of default are limited to repossession or sale of such
property); (iv) all obligations under Capital Leases and Synthetic Lease
Obligations; (v) all reimbursement or other obligations of such Person under or
in respect of letters of credit and bankers acceptances, and all net obligations
in respect of Rate Contracts in an amount equal to the Swap Termination Values
thereof; (vi) all reimbursement or other obligations of such Person in respect
of any bank guaranties, shipside bonds, surety bonds and similar instruments
issued for the account of such Person or as to which such Person is otherwise
liable for reimbursement of drawings or payments; (vii) all Guaranty
Obligations; and (viii) all indebtedness of another Person secured by any Lien
upon or in property owned by the Person for whom Indebtedness is being
determined, whether or not such Person has assumed or become liable for the
payment of such indebtedness of such other Person. For all purposes hereof, the
Indebtedness of any Person shall include the Indebtedness of any partnership or
joint venture (other than a joint venture that is itself a corporation or
limited liability company) in which such Person is a general partner or a joint
venturer, unless such Indebtedness is expressly made non-recourse to such Person
(subject only to customary recourse exceptions acceptable to the Required
Holders). The amount of any Capital Lease or Synthetic Lease Obligation as of
any date shall be deemed to be the amount of Attributable Indebtedness in
respect thereof as of such date.
"INSTITUTIONAL INVESTOR" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 5% of the aggregate principal amount
of the Notes then outstanding, and (c) any bank, trust company, savings and loan
association, national banking association or Farm Credit System institution,
acting for its own account or in a fiduciary capacity, or other financial
institution, any pension plan, any investment company, any insurance company,
any broker or dealer, or any other similar financial institution or entity,
regardless of legal form.
"INTELLECTUAL PROPERTY COLLATERAL" means the Collateral described in
the granting clauses of the Patent and Trademark Security Agreement.
"INTERCREDITOR AGREEMENT" is defined in Section 1.4.
"INVENTORY" means all "inventory" (as such term is defined in the UCC).
For purposes of this Agreement, bulk wine shall be deemed Inventory regardless
of whether bulk wine is properly classified as "inventory" under the UCC.
"INVESTMENT" means any investment, made in cash or by delivery of
property, by the Company or any of its Restricted Subsidiaries in (a) any
Person, whether by acquisition of Capital Stock, Debt or other obligations or
security, or by loan, guaranty, advance, capital contribution or otherwise, or
(b) any property.
"LEVERAGE RATIO" has the meaning specified in Section 10.4(a).
"LIEN" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, Holder or other
B-8
secured party to or of such Person under any conditional sale or other title
retention agreement or Capital Lease, upon or with respect to any property or
asset of such Person (including in the case of Capital Stock, stockholder
agreements, voting trust agreements and all similar arrangements).
"LOAN DOCUMENTS" means this Agreement, the Notes, the Collateral
Documents, the Intercreditor Agreement, each Guaranty, the Guarantor Documents,
the Environmental Indemnity and all other certificates, documents, agreements
and instruments delivered to the Collateral Agent and the Holders under or in
connection with this Agreement.
"MAKE-WHOLE AMOUNT" is defined in Section 8.6.
"MATERIAL" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the Company
and its Restricted Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means any event, matter, condition or
circumstance which (i) has or would reasonably be expected to have a material
adverse effect on the business, properties, results of operations or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole;
(ii) would materially impair the ability of the Company, or any other Person to
perform or observe its obligations under or in respect of the Loan Documents, or
(iii) affects the legality, validity, binding effect or enforceability of any of
the Loan Documents or the perfection or priority of any Lien granted to the
Collateral Agent for the benefit of the Holders under any of the Collateral
Documents.
"MAXIMUM INTERCOMPANY LOAN AMOUNT" means the sum of (i) $35,000,000
PLUS (ii) on each anniversary of the Closing Date, 10% of the Maximum
Intercompany Loan Amount then in effect immediately prior to such anniversary.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as such term
is defined in section 4001(a)(3) of ERISA).
"NET ISSUANCE PROCEEDS" means, as to any issuance or other incurrence
of debt or any issuance of equity by any Person, cash proceeds received or
receivable by such Person in connection therewith, net of out-of-pocket costs
and expenses paid or incurred in connection therewith in favor of any Person not
an Affiliate of such Person.
"NET PROCEEDS" means, as to any sale, transfer or other disposition of
assets ("Disposition") by a Person, proceeds in cash, checks or other cash
equivalent financial instruments as and when received by such Person, net of:
(a) the direct costs relating to such Disposition excluding amounts payable to
such Person or any Affiliate of such Person, (b) sale, use or other transaction
taxes, and income taxes, paid or reasonably expected to be payable by such
Person as a direct result thereof, and (c) amounts required to be applied to
repay principal, interest and prepayment premiums and penalties on Indebtedness
secured by a Lien on the asset which is the subject of such Disposition. "NET
PROCEEDS" shall also include proceeds paid on account of any Event of Loss, net
of (i) all money actually applied or set aside within six months after the
receipt of such proceeds to repair or reconstruct the damaged property or
property
B-9
affected by the condemnation or taking, (ii) all of the costs and expenses
reasonably incurred in connection with the collection of such proceeds, award or
other payments, and (iii) any amounts retained by or paid to parties having
superior rights to such proceeds, awards or other payments.
"NOTES" is defined in Section 1.
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer or of any other officer of the Company or a Subsidiary as the context
shall require, whose responsibilities extend to the subject matter of such
certificate.
"OPERATING LEASE" means, for any Person, any lease of any property of
any kind by that Person as lessee which is not a Capital Lease.
"ORIGINAL SUBSIDIARY GUARANTEE AGREEMENT" is defined in Section 4.5.
"ORIGINAL SUBSIDIARY GUARANTOR" means a corporation which is a
Restricted Subsidiary listed on Schedule 5.4
"PATENT AND TRADEMARK SECURITY AGREEMENT" means the Patent and
Trademark Security Agreement between the Company and the Collateral Agent, in
substantially the form of Exhibit C.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"PERMITTED INVESTMENTS" means any of the following Dollar denominated
investments, maturing within one year from the date of acquisition, selected by
the Company:
(a) marketable direct obligations issued or unconditionally
guaranteed by the United States government or issued by any agency thereof and
backed by the full faith and credit of the United States;
(b) marketable direct obligations issued by any state of the
United States or any political subdivision of any such state or any public
instrumentality thereof and, at the time of acquisition, having the highest
credit rating obtainable from either S&P or Xxxxx'x;
(c) commercial paper or corporate promissory notes bearing
at the time of acquisition the highest credit rating either of S&P or Xxxxx'x
issued by United States, Australian, Canadian, European or Japanese bank holding
companies or industrial or financial companies (other than an Affiliate of the
Company or any Guarantor);
(d) certificates of deposit issued by and bankers
acceptances of and interest bearing deposits with any Lender, or with any United
States, Australian, Canadian, European or Japanese commercial banks having
capital and surplus of at least $500,000,000 or the equivalent and which issues
(or the parent of which issues) commercial paper or other short term securities
bearing the highest credit rating obtainable from either S&P or Xxxxx'x; and
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(e) money market funds organized under the laws of the
United States or any state thereof that invest solely in any of the foregoing
investments permitted under clauses (a), (b), (c) and (d).
"PERMITTED LIENS" means:
(a) Liens in favor of the Holders or the Collateral Agent
for the benefit of the Holders to secure the Notes;
(b) the existing Liens listed in Schedule 5.15 or incurred
in connection with the extension, renewal or refinancing of the Indebtedness
secured by such existing Liens, PROVIDED that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the Indebtedness being extended, renewed or
refinanced does not increase;
(c) Liens for taxes, fees, assessments or other governmental
charges or levies, either not delinquent or being contested in good faith by
appropriate proceedings and which are adequately reserved for in accordance with
GAAP;
(d) Liens of materialmen, mechanics, warehousemen, artisans,
carriers or employees or other like Liens (including Growers' Liens and
prodution Liens) arising in the ordinary course of business and securing
obligations either not delinquent or being contested in good faith by
appropriate proceedings which are adequately reserved for in accordance with
GAAP;
(e) Liens consisting of deposits or pledges to secure the
payment of worker's compensation, unemployment insurance or other social
security benefits or obligations, or to secure the performance of bids, trade
contracts, leases (other than Capital Leases), public or statutory obligations,
surety or appeal bonds or other obligations of a like nature incurred in the
ordinary course of business (other than for Indebtedness or any Liens arising
under ERISA);
(f) easements, rights of way, servitudes or zoning or
building restrictions and other minor encumbrances on real property and
irregularities in the title to such property which do not in the aggregate
materially impair the use or value of such property or risk the loss or
forfeiture of title thereto;
(g) statutory landlord's Liens under leases to which the
Company or any of its Subsidiaries is a party;
(h) Liens arising solely by virtue of any statutory or
common law provision relating to banker's liens, rights of set-off or similar
rights and remedies as to deposit accounts or other funds maintained with a
creditor depository institution; PROVIDED that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company in excess of those set forth by regulations promulgated by
the FRB, and (ii) such deposit account is not intended by the Company or any
Subsidiary to provide collateral to the depository institution;
B-11
(i) Liens securing Indebtedness incurred by the Company or
any Subsidiary which is permitted under Section 10.5(j); PROVIDED that (i) such
Liens do not at any time encumber any property other than the property financed
by such Indebtedness and (ii) the Indebtedness secured thereby does not exceed
the cost or fair market value, whichever is lower, of the property being
acquired on the date of acquisition;
(j) Liens on specific tangible assets of Persons which
become Subsidiaries after the date of this Agreement; PROVIDED, HOWEVER, that
(i) such Liens existed at the time the respective Persons became Subsidiaries
and were not created in anticipation thereof, (ii) any such Lien does not by its
terms cover any assets after the time such Person becomes a Subsidiary which
were not covered immediately prior thereto, (iii) any such Lien does not by its
terms secure any Indebtedness other than Indebtedness existing immediately prior
to the time such Person becomes a Subsidiary, and (iv) such Indebtedness is
permitted by Section 10.5(j); and
(k) Liens securing the obligations of the Company and its
Subsidiaries under the Credit Agreement, the Credit Agreement Guaranties and
related loan documents, subject to the Intercreditor Agreement.
"PERMITTED PREFERRED STOCK" means preferred stock of the Company,
subject to the following: such preferred stock shall not (a) have mandatory
redemption rights, or redemption at the option of the holder, sinking fund
payments, guaranteed return or exchange ability or conversions into debt
instruments or any other "debt-like" features other than any mandatory rights of
redemption effective not earlier than six months after September 15, 2010, and
(b) require the payment of any dividends thereon while any Event of Default
exists hereunder.
"PERMITTED SUBSIDIARY GUARANTOR GUARANTEES" means the Subsidiary
Guarantee Agreements and the Guaranties of the Debt evidenced by the Credit
Agreement entered into by Xxxx Valley and SHW.
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"PLAN" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"PREFERRED STOCK" means any class of Capital Stock of a corporation
that is preferred over any other class of Capital Stock of such corporation as
to the payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"PREMISES" means any and all real property, including all buildings and
improvements now or hereafter located thereon and all appurtenances thereto, now
or hereafter owned, leased, occupied or used by the Company and its
Subsidiaries.
B-12
"PRIMARY TRADEMARKS" means the following trademarks: ACACIA, CARMENET,
CHALONE VINYARD, GAVILAN, SAGELANDS, XXXXXX HILLS, XXXXX XXXXX and PHOENIX.
"Production Liens" means statutory Liens securing the rights of Persons who have
rendered services for the storage, protection, improvement, safekeeping,
carriage, alteration, repair, harvest or crushing of any grapes or Inventory,
including without limitation, artisans and service liens under California Civil
Code Section 3051, thresher's liens under California Civil Code Section 3061,
and harvestors liens under California Civil Code Section 3061.5.
"PROPERTY" or "PROPERTIES" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, xxxxxx
or inchoate.
"QPAM EXEMPTION" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.
"RATE CONTRACTS" means interest rate swaps, caps, floors and collars,
currency swaps, or other similar financial products designed to provide
protection against fluctuations in interest, currency or exchange rates.
"REAL ESTATE COLLATERAL" means the Collateral described in the granting
clauses of the Deeds of Trust.
"RECEIVABLE DEBTOR" means any Person obligated on a Receivable.
"RECEIVABLES" means all rights to payment arising out of the sale or
lease of goods or the performance of services in the ordinary and usual course
of business, however evidenced.
"REQUIRED HOLDERS" means, at any time, the holders of at least a
majority in principal amount of the Notes at the time outstanding (exclusive of
Notes then owned by the Company or any of its Affiliates).
"REQUIREMENT OF LAW" means, as to any Person, any law (statutory or
common), treaty, code, decree, order, rule or regulation or determination of any
arbitrator or of a Governmental Authority, in each case applicable to or binding
upon the Person or any of its property or to which the Person or any of its
property is subject.
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.
"RESTRICTED PAYMENTS" has the meaning set forth in Section 10.7 hereof.
"RESTRICTED SUBSIDIARY" means any Domestic Subsidiary which has not
been designated as an Unrestricted Subsidiary.
B-13
"SALE AND LEASEBACK TRANSACTION" means a transaction or series of
transactions pursuant to which the Company or any Restricted Subsidiary shall
sell or transfer to any Person (other than the Company or a Wholly-Owned
Subsidiary) any property, whether now owned or hereafter acquired, and, as part
of the same transaction or series of transactions, the Company or any Restricted
Subsidiary shall rent or lease as lessee (other than pursuant to a Capital
Lease), or similarly acquire the right to possession or use of, such property or
one or more properties which it intends to use for the same purpose or purposes
as such property.
"SECURED OBLIGATIONS" has the meaning set forth in the Intercreditor
Agreement.
"SECURED PARTIES" means the Purchasers and the Bank Lenders.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time.
"SECURITY" has the meaning set forth in section 2(a)(1) of the
Securities Act.
"SECURITY AGREEMENT" means the Security Agreement between the Company
and the Collateral Agent, in substantially the form of Exhibit D. "Senior
Financial Officer" means the chief financial officer, principal accounting
officer, treasurer or comptroller of the Company.
"SERIES A ADJUSTABLE RATE" means the rate per annum to be borne by the
Series A Notes during the following time periods:
During the time period when
Consolidated Indebtedness to
Consolidated EBITDAR coverage
shall be between the following Interest Rate
levels: Per Annum
5.25 - 6.00x 9.35%
4.75 - 5.24x 9.20%
4.25 - 4.74x 9.05%
3.75 - 4.24x 8.90%
3.25 - 3.74x 8.75%
<3.25 8.60%
"SERIES B ADJUSTABLE RATE" means the rate per annum to be borne by the
Series B Notes during the following time periods:
During the time period when
Consolidated Indebtedness to
Consolidated EBITDAR coverage
shall be between the following Interest Rate
levels: Per Annum
B-14
5.25 - 6.00x 9.38%
4.75 - 5.24x 9.23%
4.25 - 4.74x 9.08%
3.75 - 4.24x 8.93%
3.25 - 3.74x 8.78%
<3.25 8.63%
"SERIES C ADJUSTABLE RATE" means the rate per annum to be borne by the
Series C Notes during the following time periods:
During the time period when
Consolidated Indebtedness to
Consolidated EBITDAR coverage
shall be between the following Interest Rate
levels: Per Annum
5.25 - 6.00x 9.50%
4.75 - 5.24x 9.35%
4.25 - 4.74x 9.20%
3.75 - 4.24x 9.05%
3.25 - 3.74x 8.90%
<3.25 8.75%
"SHW" means SHW Equity Co., a Washington corporation.
"SHW INTERCOMPANY LOAN AMOUNT" means the sum of (i) $8,000,000 plus
(ii) on each anniversary of the Closing Date, 10% of the SHW Intercompany Loan
Amount in effect immediately prior to such anniversary.
"SOLVENT" means, as to any Person at any time, that (i) the fair value
of the property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(32) of the Bankruptcy Code; (ii) the present fair saleable value of the
property of such Person is not less than the amount that will be required to pay
the probable liability of such Person on its debts as they become absolute and
matured; (iii) such Person is able to realize upon its property and pay its
debts and other liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of business; (iv) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (v) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"SPECIFIED ASSETS" means the assets of the Company and its Subsidiaries
identified on Schedule 10.9 hereto which are being held for sale.
"SPECIFIED LOAN TO VALUE EVENT" means, in connection with a sale,
transfer or other
B-15
disposition of any Term Debt Priority Collateral, any circumstance where the
outstanding principal amount of the Term Debt on the date of determination
thereof equals of exceeds 70% of the fair market value (as determined by an
appraisal reasonably acceptable to the Required Holders performed within three
(3) years of the date of determination thereof) of the Term Debt Priority
Collateral which is to remain subject to the Collateral Documents after giving
effect to such sale, transfer or other disposition.
"SUBORDINATED DEBT" means any Indebtedness of the Company or any
Subsidiary incurred after the date hereof in accordance with Section
10.04(a)(viii).
SUBSIDIARY" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of its
Subsidiaries). The term "Subsidiary" also shall include Xxxx Valley so long as
(i) the financial results of Xxxx Valley are consolidated with those of the
Company in accordance with GAAP, and (ii) the Company continues to act as the
managing partner of Xxxx Valley. Unless the context otherwise clearly requires,
any reference to a "Subsidiary" is a reference to a Subsidiary of the Company.
"SUBSIDIARY GUARANTEE AGREEMENT" means an agreement substantially in
the form of the Subsidiary Guarantee Agreement attached hereto as Exhibit 4.5.
"SUBSIDIARY GUARANTOR" means each of Xxxx Valley Vineyard, Canoe Ridge
Vineyard LLC, SHW Equity Company, Xxxxxx Hills Winery Company Ltd. and each
other Subsidiary that becomes party to a Subsidiary Guarantee Agreement.
"SUBSIDIARY GUARANTOR" means any Original Subsidiary Guarantor or
Additional Subsidiary Guarantor which executes and delivers a Subsidiary
Guarantee Agreement and so long as such Person's obligations under the
Subsidiary Guarantee Agreement remain in full force and effect and to the extent
that the obligations of such Person under the provisions of the Subsidiary
Guarantee Agreement have not, at the time, been terminated pursuant to the terms
hereof.
"SWAP TERMINATION VALUE" means, in respect of any one or more Rate
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Rate Contracts, (i) for any date on or after
the date such Rate Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (ii) for any
date prior to the date referenced in clause (a) the amount(s) determined as the
mark-tomarket value(s) for such Rate Contracts, as determined by the Company
based upon one or more mid-market or other readily available quotations provided
by any recognized dealer in such Rate Contracts (which may include any Holder).
B-16
"SYNTHETIC LEASE OBLIGATION" means the monetary obligation of a Person
under (a) a socalled synthetic, off-balance sheet or tax retention lease, or (b)
an agreement for the use or possession of property creating obligations that do
not appear on the balance sheet of such Person but which, upon the insolvency or
bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).
"TERM DEBT" shall have the meaning assigned thereto in the
Intercreditor Agreement.
"TERM DEBT PRIORITY COLLATERAL" shall have the meaning assigned thereto
in the Intercreditor Agreement.
"UPDATE CERTIFICATE" means a certificate of a Responsible Officer of
the Company in substantially the form of Exhibit G, with such changes thereto as
the Holders may from time to time reasonably request.
"UNRESTRICTED SUBSIDIARY" means each Subsidiary which is designated as
an Unrestricted Subsidiary on Schedule 5.4 and any other Subsidiary which is
hereafter designated as an Unrestricted Subsidiary by the Board of Directors of
the Company. The Board of Directors of the Company may, after 30 days prior
written notice is provided to the Holders designated any Unrestricted Subsidiary
to be a Restricted Subsidiary or designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if, in each case, at the date of such designation and
after giving effect thereto, no Default or Event of Default shall have occurred
and be continuing.
"WHOLLY-OWNED SUBSIDIARY" means, at any time, any Subsidiary one
hundred percent (100%) of all of the equity interests (except directors'
qualifying shares) and voting interests of which are owned by any one or more of
the Company and the Company's other Wholly-Owned Subsidiaries at such time.
"WINE DIVIDEND CREDITS" means annual credits provided by the Company to
shareholders owning 100 or more shares of the Company's common stock, which
credits may be applied by each such shareholder, for a period not to exceed one
year following such shareholder's receipt of such credits, towards up to 50% of
the purchase price of mail-order or other direct purchases of wine from the
Company.
B-17
CORPORATE CHANGES
None.
SCHEDULE 4.10
(to Note Purchase Agreement)
SUBSIDIARIES
SUBSIDIARIES (EACH SUCH SUBSIDIARY BEING ALSO A RESTRICTED SUBSIDIARY):
NAME OWNERSHIP INTEREST
SHW Equity Co., a Washington corporation 100%
Xxxxxx Hills Winery Company Limited, a 100% owned by SHW Equity Co.
Washington corporation
Canoe Ridge Winery, Inc., a Washington 100%
corporation
Canoe Ridge Vineyard, LLC, a Washington 100% (50.5% owned through Canoe
limited liability company Ridge Winery, Inc.)
AFFILIATES: Les Domaines Barons xx Xxxxxxxxxx (Lafite)
Xxxxxxx X. Xxxxx
SCHEDULE 5.4
(to Note Purchase Agreement)
SENIOR OFFICERS: DIRECTORS:
Xxxxxxxxxx Xxxxx, Chairman Xxxxxxxxxx Xxxxx
Xxxxxx X. Xxxxxxxxx, President and Chief Executive Xxxxxx X. Xxxxxxxxx
Officer
Xxxxxx X. Xxxxxx, Vice President, Sales and Xxxxxxxx X. Xxxxx
Distribution
Xxxxx Xxxxxx Xxxx, Chief Financial Officer Xxxx X. Xxxxx
Xxxx Xxxxx, Vice President, Marketing Xxxx-Xxxxx Xxxxx
X. Xxxxxxx Xxxxxxxx
Xxxxxx X. Xxxxx
Xxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
Xxxx Xx Xxxxxxxxxx
X. Xxxxxx Xxxxxxxx
5.4-2
FINANCIAL STATEMENTS
Consolidated Statement of Income, Statement of Cash Flow, Statement of Changes
in Shareholder Equity and Balance Sheet for the nine-month transition period
ended December 31, 2001 and for the years ended March 31, 2001, March 31, 2000,
March 31, 1999, March 31, 1998 and March 31, 1997.
SCHEDULE 5.5
(to Note Purchase Agreement)
LITIGATION
As disclosed in the Company's Form 10-K filed for the nine-month transition
period ended December 31, 2001, the Company received notice dated August 28,
1998 from the California Department of Alcoholic Beverage Control ("ABC") that
it was accused, along with 36 other companies (most of them wineries) of
violations of Section 25502(a)(2) of the California Business and Professions
Code which prohibits wine growers and others from giving "something of value" to
retailers. The accusation arises from the appearance of paid advertisements of
the Company and other wineries in catalogues distributed by a certain retailer.
The notice of violation requested each of the noticed companies who agreed to
the accusation to stipulate to a ten (10) day suspension of its license or,
consent to the payment of a fine not greater than $10,000 in lieu of the
suspension. The matter was tried to an administrative law judge appointed by the
ABC on July 14, 1999. The judge found for the ABC and the ABC adopted the
judge's decision. The Company, together with 16 other wine companies, filed an
appeal with the Alcoholic Beverage Control Appeals Board, an independent body
that hears appeals from ABC decisions. The matter was submitted to the ABC
appeals board for a decision to be rendered within 90 days pursuant to the May
24, 2001 hearing date. The appeals board ruled against the ABC. The ABC does not
agree with the ruling of the ABC appeals board and has submitted the case to the
First District Court of Appeals in San Francisco for review.
SCHEDULE 5.8
(to Note Purchase Agreement)
LICENSES
None.
SCHEDULE 5.11
(to Note Purchase Agreement)
EXISTING DEBT; EXISTING LIENS
Amounts owed pursuant to that Credit Agreement between Chalone Wine Group, Ltd.
and Cooperatieve Centrale Raiffeisen - Boerenleenbank B.A., "Rabobank
Nederland," New York Branch, dated March 31, 1999, as amended.
Amounts owed pursuant to that Secured Purchase Money Promissory Note (Secured by
Deed of Trust) dated July 1, 1996 in favor of Xxxxxxx X. Xxxxx, Trustee, Xxxxx
1993 Trust Dated June 10, 1993 by The Chalone Wine Group, Ltd., in an original
principal amount of $942,503. As of April 15, 2002, the remaining principal
balance due is approximately $890,000.
Amounts owed pursuant to that Promissory Note and Loan Agreement Variable Rate
dated July 17, 1996 in favor of Central Coast Federal Land Bank Association,
FLCA by Xxxx Valley Vineyard, in an original principal amount of $1,839,275.
Amounts owed pursuant to the senior unsecured notes (Series A, B, C) between
Agstar Financial Services, Farm Credit Services of America and The Chalone Wine
Group, Ltd., dated September 15, 2000, as amended.
Other accounts payable, accrued liabilities and general office equipment leases
in the ordinary course of business and barrel leases with De Xxxx Xxxxxx.
SCHEDULE 5.15
(to Note Purchase Agreement)
SPECIFIED ASSETS
SALE OF CARMENET BRAND AND VINTAGE LANE FACILITY: The Company has engaged a
broker to confidentially market the Carmenet brand and Vintage Lane facility.
SALE OF XXXXXXX XXXXX HOME AND SURROUNDING VINEYARD: The Xxxxx home is on a
separate parcel on the backside of the Chalone property site. The home is
surrounded by approximately 10 acres of vineyards. The property is in escrow
with a full cash offer of $1.195 million and is scheduled to close within the
next 90 to 120 days.
SALE OF SUSCOL VINEYARD: The Company has begun to actively market this property.
SCHEDULE 10.9
(to Note Purchase Agreement)
FORM OF SERIES A NOTE
THE CHALONE WINE GROUP, LTD.
ADJUSTABLE RATE SENIOR SECURED NOTE, SERIES A, DUE SEPTEMBER 15, 2010
No. [_____] [Date]
$[_______] PPN 157639 B* 5
FOR VALUE RECEIVED, the undersigned, The Chalone Wine Group, Ltd
(herein called the "Company"), a corporation organized and existing under the
laws of the State of California, hereby promises to pay to
[__________________________], or registered assigns, the principal sum of
[__________________________] DOLLARS on September 15, 2010, with interest
(computed on the basis of a 360-day year of twelve 30-day months) (a) on the
unpaid balance thereof at the Series A Adjustable Rate from the date hereof,
payable monthly in arrears, on the 15th day of each month, commencing with
October 15, until the principal hereof shall have been paid in full, and (b) to
the extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreement
referred to below), payable monthly as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to time
equal to the greater of (i) 2% over the then applicable Series A Adjustable Rate
and (ii) 2% over the rate of interest publicly announced by Chase Manhattan Bank
from time to time in New York, New York as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America in New York, New York at the principal office of Chase Manhattan Bank,
or at such other place as the Company shall have designated by written notice to
the holder of this Note as provided in the Note Purchase Agreement referred to
below.
This Note is one of a series of Senior Secured Notes (herein called the
"Notes") issued pursuant to the Note Purchase Agreement, dated as of April 19,
2002 (as from time to time amended, the "Note Purchase Agreement"), between the
Company and the Purchasers named therein and is entitled to the benefits
thereof. Each holder of this Note will be deemed, by its acceptance hereof, (i)
to have agreed to the confidentiality provisions set forth in Section 20 of the
Note Purchase Agreement and (ii) to have made the representation set forth in
Section 6.2 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such xxxxxx's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the
EXHIBIT 1-A
(to Note Purchase Agreement)
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company will not be affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to
time in part, at the times and on the terms specified in the Note Purchase
Agreement, but not otherwise. This Note is subject to mandatory prepayment at
the times and on the terms specified in the Note Purchase Agreement.
If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.
The payment of all principal of, premium, if any, and interest on this
Note and the other Notes outstanding under the Note Purchase Agreement has been
unconditionally guaranteed by certain Subsidiaries of the Company pursuant to
separate and several Subsidiary Guarantee Agreements (as defined in the Note
Purchase Agreement). Reference is hereby made thereto for a statement of the
rights and benefits accorded thereby.
This Note is equally and ratably secured by the Collateral Documents
(as defined in the Note Purchase Agreement). Reference is hereby made to the
Collateral Documents for a description of the collateral thereby mortgaged,
warranted, bargained, sold, released, conveyed, assigned, transferred, pledged
and hypothecated, the nature and extent of the security for the Notes, the
rights of the holders of the Notes, the Collateral Agent (as defined in the Note
Purchase Agreement) in respect of such security and otherwise.
This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of New York,
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
THE CHALONE WINE GROUP, LTD.
By:___________________________________________
Its:__________________________________________
1-A-2
FORM OF SERIES B NOTE
THE CHALONE WINE GROUP, LTD.
ADJUSTABLE RATE SENIOR SECURED NOTE, SERIES B, DUE SEPTEMBER 15, 2010
No. [_____] [Date]
$[_______] PPN 157639 B@ 3
FOR VALUE RECEIVED, the undersigned, The Chalone Wine Group, Ltd
(herein called the "Company"), a corporation organized and existing under the
laws of the State of California, hereby promises to pay to
[_____________________________], or registered assigns, the principal sum of
[_____________________________] DOLLARS on September 15, 2010, with interest
(computed on the basis of a 360-day year of twelve 30-day months) (a) on the
unpaid balance thereof at the Series B Adjustable Rate from the date hereof,
payable monthly in arrears, on the 15th day of each month, commencing with
October 15, 2000, until the principal hereof shall have been paid in full, and
(b) to the extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreement
referred to below), payable monthly as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to time
equal to the greater of (i) 2% over the then applicable Series B Adjustable Rate
and (ii) 2% over the rate of interest publicly announced by Chase Manhattan Bank
from time to time in New York, New York as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America in New York, New York at the principal office of Chase Manhattan Bank,
or at such other place as the Company shall have designated by written notice to
the holder of this Note as provided in the Note Purchase Agreement referred to
below.
This Note is one of a series of Senior Secured Notes (herein called the
"Notes") issued pursuant to the Note Purchase Agreement, dated as of April 19,
2002 (as from time to time amended, the "Note Purchase Agreement"), between the
Company and the Purchasers named therein and is entitled to the benefits
thereof. Each holder of this Note will be deemed, by its acceptance hereof, (i)
to have agreed to the confidentiality provisions set forth in Section 20 of the
Note Purchase Agreement and (ii) to have made the representation set forth in
Section 6.2 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such xxxxxx's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the
EXHIBIT 1-B
(to Note Purchase Agreement)
purpose of receiving payment and for all other purposes, and the Company will
not be affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to
time in part, at the times and on the terms specified in the Note Purchase
Agreement, but not otherwise. This Note is subject to mandatory prepayment at
the times and on the terms specified in the Note Purchase Agreement.
If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.
The payment of all principal of, premium, if any, and interest on this
Note and the other Notes outstanding under the Note Purchase Agreement has been
unconditionally guaranteed by certain Subsidiaries of the Company pursuant to
separate and several Subsidiary Guarantee Agreements (as defined in the Note
Purchase Agreement). Reference is hereby made thereto for a statement of the
rights and benefits accorded thereby.
This Note is equally and ratably secured by the Collateral Documents
(as defined in the Note Purchase Agreement). Reference is hereby made to the
Collateral Documents for a description of the collateral thereby mortgaged,
warranted, bargained, sold, released, conveyed, assigned, transferred, pledged
and hypothecated, the nature and extent of the security for the Notes, the
rights of the holders of the Notes, the Collateral Agent (as defined in the Note
Purchase Agreement) in respect of such security and otherwise.
This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of New York,
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
THE CHALONE WINE GROUP, LTD.
By:__________________________________________
Its:_________________________________________
1-B-2
FORM OF SERIES C NOTE
THE CHALONE WINE GROUP, LTD.
ADJUSTABLE RATE SENIOR SECURED NOTE, SERIES C, DUE SEPTEMBER 15, 2010
No. [_____] [Date]
$[________] PPN 157639 B# 1
FOR VALUE RECEIVED, the undersigned, The Chalone Wine Group, Ltd
(herein called the "Company"), a corporation organized and existing under the
laws of the State of California, hereby promises to pay to
[__________________________], or registered assigns, the principal sum of
[__________________________] DOLLARS September 15, 2010, with interest (computed
on the basis of a 360-day year of twelve 30-day months) (a) on the unpaid
balance thereof at the Series C Adjustable Rate from the date hereof, payable
monthly in arrears, on the 15th day of each month, commencing with October 15,
2001, until the principal hereof shall have been paid in full, and (b) to the
extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreement
referred to below), payable monthly as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to time
equal to the greater of (i) 2% over the then applicable Series C Adjustable Rate
and (ii) 2% over the rate of interest publicly announced by Chase Manhattan Bank
from time to time in New York, New York as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America in New York, New York at the principal office of Chase Manhattan Bank,
or at such other place as the Company shall have designated by written notice to
the holder of this Note as provided in the Note Purchase Agreement referred to
below.
This Note is one of a series of Senior Secured Notes (herein called the
"Notes") issued pursuant to the Note Purchase Agreement, dated as of April 19,
2002 (as from time to time amended, the "Note Purchase Agreement"), between the
Company and the Purchasers named therein and is entitled to the benefits
thereof. Each holder of this Note will be deemed, by its acceptance hereof, (i)
to have agreed to the confidentiality provisions set forth in Section 20 of the
Note Purchase Agreement and (ii) to have made the representation set forth in
Section 6.2 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such xxxxxx's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the
EXHIBIT 1-C-1
(to Note Purchase Agreement)
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company will not be affected by any notice to the contrary.
This Note is subject to optional prepayment, in whole or from time to
time in part, at the times and on the terms specified in the Note Purchase
Agreement, but not otherwise. This Note is subject to mandatory prepayment at
the times and on the terms specified in the Note Purchase Agreement.
If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.
The payment of all principal of, premium, if any, and interest on this
Note and the other Notes outstanding under the Note Purchase Agreement has been
unconditionally guaranteed by certain Subsidiaries of the Company pursuant to
separate and several Subsidiary Guarantee Agreements (as defined in the Note
Purchase Agreement). Reference is hereby made thereto for a statement of the
rights and benefits accorded thereby.
This Note is equally and ratably secured by the Collateral Documents
(as defined in the Note Purchase Agreements). Reference is hereby made to the
Collateral Documents for a description of the collateral thereby mortgaged,
warranted, bargained, sold, released, conveyed, assigned, transferred, pledged
and hypothecated, the nature and extent of the security for the Notes, the
rights of the holders of the Notes, the Collateral Agent (as defined in the Note
Purchase Agreements) in respect of such security and otherwise.
This Note shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of New York,
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.
THE CHALONE WINE GROUP, LTD.
By:________________________________________
Its:_______________________________________
1-C-2
DESCRIPTION OF CLOSING OPINION OF COUNSEL TO THE COMPANY
The closing opinion of Xxxxxxx Xxxxx & Xxxxxx LLP, counsel to the Company,
called for by Section 4.4(a) of the Note Purchase Agreement, shall be dated the
date of Closing and addressed to the Purchasers, shall be satisfactory in form
and substance to the Purchasers and shall be to the effect that:
1. The Company is a corporation, duly organized, validly existing
and in good standing under the laws of the State of California, has the
corporate power and the corporate authority to execute and perform the Note
Purchase Agreement and to issue the Notes and has the full corporate power and
the corporate authority to conduct the activities in which it is now engaged and
is duly licensed or qualified and is in good standing as a foreign corporation
in each jurisdiction in which the character of the properties owned or leased by
it or the nature of the business transacted by it makes such licensing or
qualification necessary.
2. Each Restricted Subsidiary is a corporation or other legal
entity, duly organized, validly existing and in good standing under the laws of
its jurisdiction of formation and is duly licensed or qualified and is in good
standing in each jurisdiction in which the character of the properties owned or
leased by it or the nature of the business transacted by it makes such licensing
or qualification necessary and all of the issued and outstanding shares of
Capital Stock or equivalent equity interest of each such Restricted Subsidiary
have been duly issued, are fully paid and non-assessable and are owned by the
Company, by one or more Restricted Subsidiaries, or by the Company and one or
more Subsidiaries.
3. The Note Purchase Agreement has been duly authorized by all
necessary corporate or other legal entity action on the part of the Company, has
been duly executed and delivered by the Company and constitute the legal, valid
and binding contract of the Company enforceable in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent conveyance or similar laws
affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered in a
proceeding in equity or at law).
4. The Notes have been duly authorized by all necessary corporate
action on the part of the Company, have been duly executed and delivered by the
Company and constitute the legal, valid and binding obligations of the Company
enforceable in accordance with their terms, subject to bankruptcy, insolvency,
fraudulent conveyance or similar laws affecting creditors' rights generally, and
general principles of equity (regardless of whether the application of such
principles is considered in a proceeding in equity or at law).
5. No approval, consent or withholding of objection on the part of,
or filing, registration or qualification with, any governmental body, Federal,
state or local, is necessary in connection with the execution, delivery and
performance of the Note Purchase Agreement or the Notes.
EXHIBIT 4.4(a)
(to Note Purchase Agreement)
6. The issuance and sale of the Notes and the execution, delivery
and performance by the Company of the Note Purchase Agreement do not conflict
with or result in any breach of any of the provisions of or constitute a default
under or result in the creation or imposition of any Lien upon any of the
property of the Company pursuant to the provisions of the Articles of
Incorporation or By-laws, or equivalent formation documents, of the Company or
any agreement or other instrument to which the Company is a party or by which
the Company may be bound.
7. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Purchase Agreement does not, under
existing law, require the registration of the Notes under the Securities Act of
1933, as amended, or the qualification of an indenture under the Trust Indenture
Act of 1939, as amended.
8. The issuance of the Notes and the use of the proceeds of the
sale of the Notes in accordance with the provisions of and contemplated by the
Note Purchase Agreement do not violate or conflict with Regulation T, U or X of
the Board of Governors of the Federal Reserve System.
9. There is no litigation pending or, to the best knowledge of such
counsel, threatened which in such counsel's opinion could reasonably be expected
to have Material Adverse Effect on the Company's business or assets or which
would impair the ability of the Company to issue and deliver the Notes or to
comply with the provisions of the Note Purchase Agreement.
10. The Company is not an "investment company" or a company
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended.
11. The Company has the power to submit, and pursuant to the
Agreement, has legally, validly, effectively and irrevocably submitted, to the
non-exclusive jurisdiction of the courts of the State of New York and of the
courts of the United States of America having jurisdiction in the State of New
York in respect of any legal action or proceeding arising out of the Agreement
or the Notes.
12. The choice of New York as the governing law of the Agreement and
the Notes is valid and will be recognized and applied by the courts of New York
and of the United States.
13. The Company is not, nor will it become, solely by reason of
entering into or performing its respective obligations under the Agreement or
the carrying out of any of the transactions contemplated thereby, a "public
utility company" or a "holding company" under the Public Utility Holding Company
Act of 1935, as amended.
14. Each Subsidiary Guarantor is a corporation or other legal
entity, duly formed, validly existing and in good standing under the laws of the
United States, has the corporate or other legal entity power and authority to
execute and perform the Subsidiary Guarantee Agreement to which it is a party
and has the full corporate or other legal entity power and authority to conduct
the activities in which it is now engaged and is duly licensed or qualified and
is in good standing as a foreign corporation or other legal entity in each
jurisdiction in which
4.4(a)-2
the character of the properties owned or leased by it or the nature of the
business transacted by it makes such licensing or qualification necessary.
15. To ensure the legality, validity, enforceability or
admissibility into evidence of the Agreement and the Notes, it is not necessary
that said documents or any other documents be registered, notarized, filed or
recorded with any court or other authority or that any stamp or similar tax be
paid with respect thereto.
16. The obligations of the Company under the Agreement and the
Notes, and the obligations of the Original Subsidiary Guarantors under the
Original Subsidiary Guarantee Agreements, rank PARI PASSU in right of payment
with all other Debt (actual or contingent) of the Company which is not secured
or the subject of any statutory trust or preference or which is not expressly
subordinated in right of payment to any other Debt thereof. Collateral Document
opinions to come.
17. The opinion of such counsel shall cover such other matters
relating to the sale of the Notes as the Purchasers may reasonably request. With
respect to matters of fact on which such opinion is based, such counsel shall be
entitled to rely on appropriate certificates of public officials and officers of
the Company.
4.4(a)-3
DESCRIPTION OF SPECIAL COUNSEL'S CLOSING OPINION
The closing opinion of Xxxxx Xxxxxx Xxxxxxxx LLP, special counsel
Washington local real estate to the Purchasers, called for by Section 4.4(b) of
the Agreement, shall be dated the Closing Date and addressed to the Purchasers,
shall be satisfactory in form and substance to the Purchasers.
With respect to matters of fact upon which such opinion is based, Xxxxx
Xxxxxx Xxxxxxxx LLP may rely on appropriate certificates of public officials and
officers of the Company and the Original Subsidiary Guarantors.
EXHIBIT 4.4(b)
(to Note Purchase Agreement)
FORM OF SUBSIDIARY GUARANTEE AGREEMENT
See attached representative form of Guarantee.
EXHIBIT 4.5
(to Note Purchase Agreement)
AMENDED AND RESTATED SUBSIDIARY GUARANTEE AGREEMENT
RE: AMENDED AND RESTATED NOTE PURCHASE AGREEMENT
OF
THE CHALONE WINE GROUP, LTD.
THIS AMENDED AND RESTATED SUBSIDIARY GUARANTEE AGREEMENT dated as of April 19,
2002 (the or this "GUARANTY") is by __________________________ ("SUBSIDIARY
GUARANTOR").
R E C I T A L S:
A. The Chalone Wine Group, Ltd., a California corporation (the
"COMPANY"), is the owner, directly and indirectly, of 100% of the outstanding
membership interest in the Subsidiary Guarantor.
B. Farm Credit Services of America, PCA and AgStar Financial
Services, PCA, dba Farm Credit Services Commercial Finance Group (together with
their permitted successors and assigns, the "PURCHASERS"), and the Company have
entered into a Note Purchase Agreement dated as of September 15, 2000, as
amended by the First Amendment dated as of February 9, 2001(the "ORIGINAL NOTE
AGREEMENT"), pursuant to which the Company has issued to the Purchasers the
Company's $5,000,000 8.90% Senior Guaranteed Notes, Series A, Due September 15,
2010; $10,000,000 8.93% Senior Guaranteed Notes, Series B, Due September 15,
2010; and $15,000,000 9.05% Senior Guaranteed Notes, Series C, Due September 15,
2010 (collectively, the "ORIGINAL NOTES"). The Subsidiary Guarantor has executed
and delivered that certain Subsidiary Guarantee Agreement dated as of February
26, 2001 (the "ORIGINAL SUBSIDIARY GUARANTEE AGREEMENT") under and pursuant to
which the Subsidiary Guarantor guaranteed to the Purchasers the full and prompt
payment of all amounts due under and with respect to, and performance by the
Company of the terms and provisions of, the Original Notes and the Original Note
Agreement.
C. The Subsidiary Guarantor has requested that Purchasers amend
and restate the Original Note Agreement and Original Notes, and the Purchasers
are willing to enter into and execute that certain Amended and Restated Note
Purchase Agreement each dated April 19, 2002 (as the same may hereafter be
amended, modified and/or restated from time to time, the "NOTE AGREEMENT") and
are willing to amend and restate the Original Notes pursuant to the terms
thereof (as so amended and restated, the "NOTES"), on the condition (among
others) that the Subsidiary Guarantor execute and deliver this Amended and
Restated Guarantee Agreement. All capitalized terms used herein without
definition shall have the same meanings herein as such terms have in the Note
Agreement unless otherwise defined herein or the context shall otherwise
require.
D. The Subsidiary Guarantor has agreed to execute and deliver this
Amended and Restated Subsidiary Guarantee Agreement to and for the benefit of
the Purchasers. This Amended and Restated Subsidiary Guarantee Agreement amends
and restates the Original Subsidiary Guarantee Agreement in its entirety.
E. The Subsidiary Guarantor has determined that the execution and
delivery of this Amended and Restated Subsidiary Guarantee Agreement is in
furtherance of its purposes and in the best interests of it and its members, and
that it will derive substantial benefit, whether directly or indirectly, from
the performance by the Company of the obligations under the Note Agreement,
having regard for all relevant facts and circumstances.
NOW, THEREFORE, in consideration of the premises, and for other good
and valuable consideration, the receipt whereof is hereby acknowledged, the
Subsidiary Guarantor does hereby covenant and agree with the Purchasers as
follows:
1. GUARANTY OF NOTES AND NOTE AGREEMENT
(a) Subject to Section 1(b), below, the Subsidiary Guarantor
does hereby irrevocably, absolutely and unconditionally (i) guarantee unto the
Purchasers the prompt payment in full when due, whether by lapse of time,
acceleration or otherwise, of (A) all indebtedness, obligations and liabilities
of the Company under or in connection with or evidenced by (x) the Note
Agreement, or (y) the Notes heretofore or hereafter issued under the Note
Agreement, in each case whether now existing or hereafter arising, due or to
become due, direct or indirect, absolute or contingent, and howsoever evidenced,
held or acquired and (B) all costs, expenses and charges, legal and otherwise,
incurred by the Purchasers in collecting or enforcing any of such indebtedness,
obligations and liabilities or in realizing on or protecting any security
therefor, including, without limitation, the guaranty afforded hereunder (all of
such indebtedness, obligations, liabilities, expenses and charges identified in
the immediately foregoing clauses (A) and (B) being hereinafter referred to as
the "OBLIGATIONS") and (ii) agree to cause the full and prompt performance and
observance of each and all of the Company's obligations under and pursuant to
the Notes, the Note Agreement and each and every agreement, certificate or other
document executed or delivered in connection with the execution of the Note
Agreement.
(b) The obligations of the Subsidiary Guarantor hereunder
shall be limited to the lesser of (i) the Obligations guaranteed hereunder, or
(ii) a maximum aggregate amount equal to the largest amount that would not
render its obligations hereunder subject to avoidance as a fraudulent transfer
or conveyance under Section 548 of Title 11 of the United States Code or any
applicable provisions of comparable state law (collectively, the "FRAUDULENT
TRANSFER LAWS"), if and to the extent the Subsidiary Guarantor (or a trustee on
its behalf) has properly invoked the protections of the Fraudulent Transfer Laws
in each case after giving effect to all other liabilities of the Subsidiary
Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws.
-2-
2. GUARANTY OF PAYMENT AND PERFORMANCE
This is a guaranty of payment and performance, and not of collection,
and the Subsidiary Guarantor hereby waives any right to require that any action
on or in respect of the Obligations or the Note Agreement be brought against the
Company. The Purchasers may, at their option, proceed hereunder against the
Subsidiary Guarantor in the first instance to collect monies when due, the
payment of which is guaranteed hereby, without first proceeding against the
Company or any other Person and without first resorting to any direct or
indirect security for the Obligations or for this Amended and Restated
Subsidiary Guarantee Agreement, if any, or to any other remedy. The liability of
the Subsidiary Guarantor hereunder shall in no way be affected or impaired by
any acceptance by the Purchasers of any direct or indirect security for, or
other guaranties of, any indebtedness, liability or obligation of the Company or
any other Person to the Purchasers or by any failure, delay, neglect or omission
by the Purchasers to realize upon or protect any such indebtedness, liability or
obligation or any notes or other instruments evidencing the same or any direct
or indirect security therefor or by any approval, consent, waiver, or other
action taken, or omitted to be taken by the Purchasers.
3. GENERAL PROVISIONS RELATING TO THE GUARANTY.
(a) The Subsidiary Guarantor hereby consents and agrees that
the Purchasers, with or without any further notice to or assent from the
Subsidiary Guarantor may, without in any manner affecting the liability of the
Subsidiary Guarantor, and upon such terms and conditions as the Purchasers may
deem advisable:
(1) extend in whole or in part ( by renewal or
otherwise), modify, change, compromise, release or extend the duration of the
time for the performance or payment of any indebtedness, liability or obligation
of the Company or of any other Person secondarily or otherwise liable for any
indebtedness, liability or obligations of the Company on the Obligations, or
waive any default with respect thereto, or waive, modify, amend or change any
provision of any other instruments; or
(2) sell, release, surrender, modify, impair, exchange
or substitute any and all property, of any nature and from whomsoever received,
held by, or on behalf of, the Purchasers as direct or indirect security, if any,
for the payment or performance of any indebtedness, liability or obligation of
the Company or of any other Person secondarily or otherwise liable for any
indebtedness, liability or obligation of the Company on the Obligations; or
(3) settle, adjust or compromise any claim of the
Company against any other Person secondarily or otherwise liable for any
indebtedness, liability or obligation of the Company on the Obligations.
The Subsidiary Guarantor hereby ratifies and confirms any such
extension, renewal, change, sale, release, waiver, surrender, exchange,
modification, amendment, impairment, substitution, settlement, adjustment or
compromise and agrees that the same shall be binding upon it, and hereby waives
any and all defenses, counterclaims or offsets which it might or could
-3-
have by reason thereof, it being understood that the Subsidiary Guarantor shall
at all times be bound by this Guaranty and remain liable hereunder.
(b) The Subsidiary Guarantor hereby waives: (1) notice of
acceptance of this Amended and Restated Subsidiary Guarantee Agreement by the
Purchasers or of the creation, renewal or accrual of any liability of the
Company, present or future, or of the reliance of the Purchasers upon this
Amended and Restated Subsidiary Guarantee Agreement (it being understood that
the Obligations shall conclusively be presumed to have been created, contracted
or incurred in reliance upon the execution of this Amended and Restated
Subsidiary Guarantee Agreement); (2) demand of payment by the Purchasers from
the Company or any other Person indebted in any manner on or for any of the
indebtedness, liabilities or obligations hereby guaranteed; and (3) presentment
for the payment by the Purchasers or any other Person of the Notes or any other
instrument, protest thereof and notice of its dishonor to any party thereto and
to the Subsidiary Guarantor. The obligations of the Subsidiary Guarantor under
this Amended and Restated Subsidiary Guarantee Agreement and the rights of the
Purchasers to enforce such obligations by any proceedings, whether by action at
law, suit in equity or otherwise, shall not be subject to any reduction,
limitation, impairment or termination, whether by reason of any claim of any
character whatsoever or otherwise and shall not be subject to any defense,
set-off, counterclaim (other than any compulsory counterclaim), recoupment or
termination whatsoever.
(c) The obligations of the Subsidiary Guarantor hereunder
shall be binding upon the Subsidiary Guarantor and its successors and assigns,
and shall remain in full force and effect irrespective of:
(1) the genuineness, validity, regularity or
enforceability of the Obligations, the Note Agreement or any other instruments
relating thereto or any of the terms of any thereof, the continuance of any
obligation on the part of the Company or any other Person on the Obligations or
under the Note Agreement or the power or authority or the lack of power or
authority of the Company to issue or incur the Obligations or execute and
deliver the Note Agreement or the Notes or to perform any of its obligations
thereunder or the existence or continuance of the Company or any other Person as
a legal entity; or
(2) any default, failure or delay, willful or otherwise,
in the performance by the Company or any other Person of any obligations of any
kind or character whatsoever of the Company or any other Person (including,
without limitation, the obligations and undertakings of the Company or any other
Person under the Obligations, the Note Agreement or the Notes); or
(3) any creditors' rights, bankruptcy, receivership or
other insolvency proceeding of the Company or any other Person or in respect of
the property of the Company or any other Person or any merger, consolidation,
reorganization, dissolution, liquidation or winding up of the Company or any
other Person; or
(4) impossibility or illegality of performance on the
part of the Company or any other Person of its obligations under the
Obligations, the Note Agreement, the Notes or any other instruments; or
-4-
(5) in respect of the Company or any other Person, any
change of circumstances, whether or not foreseen or foreseeable, whether or not
imputable to the Company or any other Person, or other impossibility of
performance through fire, explosion, accident, labor disturbance, floods,
droughts, embargoes, wars (whether or not declared), civil commotions, acts of
God or the public enemy, delays or failure of suppliers or carriers, inability
to obtain materials, action of any Federal or state regulatory body or agency,
change of law or any other causes affecting performance, or any other force
majeure, whether or not beyond the control of the Company or any other Person
and whether or not of the kind hereinbefore specified; or
(6) any attachment, claim, demand, charge, lien, order,
process, encumbrance or any other happening or event or reason, similar or
dissimilar to the foregoing, or any withholding or diminution at the source, by
reason of any taxes, assessments, expenses, indebtedness, obligations or
liabilities of any character, foreseen or unforeseen, and whether or not valid,
incurred by or against any Person, or any claims, demands, charges or liens of
any nature, foreseen or unforeseen, incurred by any Person, or against any sums
payable under this Amended and Restated Subsidiary Guarantee Agreement, so that
such sums would be rendered inadequate or would be unavailable to make the
payments herein provided; or
(7) any order, judgment, decree, ruling or regulation
(whether or not valid) of any court of any nation or of any political
subdivision thereof or any body, agency, department, official or administrative
or regulatory agency of any thereof or any other action, happening, event or
reason whatsoever which shall delay, interfere with, hinder or prevent, or in
any way adversely affect, the performance by any party of its respective
obligations under the Obligations, the Note Agreement or the Notes or any
instrument relating thereto; or
(8) the failure of the Subsidiary Guarantor to receive
any benefit from or as a result of its execution, delivery and performance of
this Amended and Restated Subsidiary Guarantee Agreement; or
(9) any failure or lack of diligence in collection or
protection, failure in presentment or demand for payment, protest, notice of
protest, notice of default and of nonpayment, any failure to give notice to the
Subsidiary Guarantor of failure of the Company or any other Person to keep and
perform any obligation, covenant or agreement under the terms of the Obligations
or the Note Agreement or failure to resort for payment to the Company or to any
other Person or to any other guaranty or to any property, security or liens, if
any, or other rights or remedies; or
(10) the acceptance of any security or other guaranty,
the advance of additional money to the Company or any other Person, the renewal
or extension of the Obligations or amendments, modifications, consents or
waivers with respect to the Obligations or the Note Agreement, or the sale,
release, substitution or exchange of any security, if any, for the Obligations
or for this Amended and Restated Subsidiary Guarantee Agreement including,
without limitation, the release of collateral, if any, or
-5-
(11) any defense whatsoever that the Company or any
other Person might have to the payment of the Obligations, or to the performance
or observance of any of the provisions of the Note Agreement, whether through
the satisfaction or purported satisfaction by the Company or any other Person of
its debts due to any cause such as bankruptcy, insolvency, receivership, merger,
consolidation, reorganization, dissolution, liquidation, winding-up or
otherwise; or
(12) any act or failure to act with regard to the
Obligations or the Note Agreement or anything which might vary the risk of the
Subsidiary Guarantor; or
(13) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the Subsidiary Guarantor
in respect of the obligations of the Subsidiary Guarantor under this Amended and
Restated Subsidiary Guarantee Agreement;
PROVIDED that the specific enumeration of the above-mentioned acts, failures or
omissions shall not be deemed to exclude any other acts, failures or omissions,
though not specifically mentioned above, it being the purpose and intent of this
Amended and Restated Subsidiary Guarantee Agreement that the obligations of the
Subsidiary Guarantor shall be absolute and unconditional and shall not be
discharged, impaired or varied except by the payment in full of the Obligations
in accordance with their respective terms whenever the same shall become due and
payable, at the place specified in and all in the manner and with the effect
provided in the Notes and the Note Agreement. Without limiting the foregoing, it
is understood that repeated and successive demands may be made and recoveries
may be had hereunder as and when, from time to time, the Company shall default
under the terms of the Notes or the Note Agreement and that notwithstanding
recovery hereunder for or in respect of any given default or defaults by the
Company under the Notes or the Note Agreement, this Amended and Restated
Subsidiary Guarantee Agreement shall remain in full force and effect and shall
apply to each and every subsequent default.
(d) To the extent of any payments made under this Amended
and Restated Subsidiary Guarantee Agreement, the Subsidiary Guarantor making
such payment shall be subrogated to the rights of the holders of the Obligations
in respect of whose Obligations such payment was made, but the Subsidiary
Guarantor covenants and agrees that such right of subrogation shall be
subordinate in right of payment to the rights of any holder of the Obligations
for which full payment has not been made or provided for and, to that end, the
Subsidiary Guarantor agrees not to claim or enforce any such right of
subrogation or any right of set-off or any other right which may arise on
account of any payment made by the Subsidiary Guarantor in accordance with the
provisions of this Amended and Restated Subsidiary Guarantee Agreement unless
and until all of the Notes and all other Obligations have been fully paid and
discharged.
(e) The Subsidiary Guarantor agrees that to the extent the
Company or any other Person makes any payment on any Obligation, which payment
or any part thereof is subsequently invalidated, voided, declared to be
fraudulent or preferential, set aside, recovered, rescinded or is required to be
retained by or repaid to a trustee, receiver, or any other Person under any
bankruptcy code, common law, or equitable cause, then and to the extent of such
payment, the obligation or the part thereof intended to be satisfied shall be
revived and continued
-6-
in full force and effect with respect to the Subsidiary Guarantor's obligations
hereunder, as if said payment had not been made. The liability of the Subsidiary
Guarantor hereunder shall not be reduced or discharged, in whole or in part, by
any payment to the Purchasers from any source that is thereafter paid, returned
or refunded in whole or in part by reason of the assertion of a claim of any
kind relating thereto, including, but not limited to, any claim for breach of
contract, breach of warranty, preference, illegality, invalidity, or fraud
asserted by any account debtor or by any other Person.
(f) The Purchasers shall not be under any obligation (1) to
xxxxxxxx any assets in favor of the Subsidiary Guarantor or in payment of any or
all of the liabilities of the Company under or in respect of the Obligations or
the obligations of the Subsidiary Guarantor hereunder or (2) to pursue any other
remedy that the Subsidiary Guarantor may or may not be able to pursue itself and
that may lighten such Subsidiary Guarantor's burden, any right to which the
Subsidiary Guarantor hereby expressly waives.
4. GUARANTOR COVENANTS.
(a) REPORTING COVENANTS. So long as any Obligations shall
remain unsatisfied, the Subsidiary Guarantor agrees that it shall furnish to the
Purchasers: (i) prompt written notice of any condition or event which has
resulted, or that could reasonably be expected to result, in a Material Adverse
Effect; and (ii) such other information respecting the operations, properties,
business or condition (financial or otherwise) of the Subsidiary Guarantor or
its Subsidiaries, if any, as the Purchasers may from time to time reasonably
request.
(b) ADDITIONAL AFFIRMATIVE COVENANTS. So long as any
Obligations shall remain unsatisfied, the Subsidiary Guarantor agrees that:
(i) PRESERVATION OF EXISTENCE, ETC. The Subsidiary
Guarantor shall, and shall cause each of its Subsidiaries, if
any, to, maintain and preserve its legal existence, its rights
to transact business and all other rights, franchises and
privileges necessary or desirable in the normal course of its
business and operations and the ownership of its properties.
(ii) FURTHER ASSURANCES AND ADDITIONAL ACTS. The
Subsidiary Guarantor shall execute, acknowledge, deliver, file,
notarize and register at its own expense all such further
agreements, instruments, certificates, documents and assurances
and perform such acts as the Purchasers shall reasonably deem
necessary or appropriate to effectuate the purposes of this
Amended and Restated Subsidiary Guarantee Agreement and promptly
provide the Purchasers with evidence of the foregoing
satisfactory in form and substance to it.
(c) NEGATIVE COVENANTS. So long as any Obligations shall
remain unsatisfied, the Subsidiary Guarantor agrees that:
(i) RESTRICTIONS ON FUNDAMENTAL CHANGES. The
Subsidiary Guarantor shall not merge with or consolidate into,
or acquire all or
-7-
substantially all of the assets of, any Person, or sell,
transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially
all of its assets, except that any wholly owned Subsidiary of
the Subsidiary Guarantor may merge with, consolidate into or
transfer all or substantially all of its assets to another such
wholly-owned Subsidiary or to the Subsidiary Guarantor and in
connection therewith such Subsidiary may be liquidated or
dissolved.
(ii) DISTRIBUTIONS. The Subsidiary Guarantor shall
not grant or otherwise agree to or suffer to exist any
consensual restrictions on its ability to pay dividends and make
other distributions to the Company, or to pay any Indebtedness
owed to the Company or transfer properties and assets to the
Company, except that any consensual restrictions existing as of
the date hereof and disclosed in writing to the Purchasers shall
be permitted hereunder.
5. NOTICES.
All communications provided for herein shall be in writing, delivered
or mailed prepaid by registered or certified mail or overnight air courier, or
by facsimile communication at the addresses set forth below, or to such other
address as such Person may designate to the other Persons named below by notice
given in accordance with this Section:
If to the Purchasers: To the addresses for notices set
forth on Schedule A of the Note
Agreement
If to the Subsidiary Guarantor: c/o the Company to the address
for notices set forth in Section
18 of the Note Agreement
If to the Company: To the address for notices set
forth in Section 18 of the Note
Agreement
6. AMENDMENTS AND MODIFICATIONS; SOLICITATION OF NOTEHOLDERS.
(a) This Amended and Restated Subsidiary Guarantee Agreement
may only be amended and/or modified by an instrument in writing signed by the
Subsidiary Guarantor and by the holder or holders of at least 51% in aggregate
principal amount of the Notes then outstanding; provided, that without the
written consent of the holders of all of the Notes then outstanding, no such
waiver, modification, alteration or amendment shall be effective which will
reduce the scope of the guaranty set forth in this Amended and Restated
Subsidiary Guarantee Agreement or amend the requirements of Sections 1, 2 or 3
hereof or amend this Section 6. No such amendment or modification shall extend
to or affect any obligation not expressly amended or modified or impair any
right consequent thereon.
(b) The Subsidiary Guarantor will not solicit, request or
negotiate for or with
-8-
respect to any proposed waiver or amendment of any of the provisions of this
Amended and Restated Subsidiary Guarantee Agreement, the Note Agreement unless
each Holder of the Notes (irrespective of the amount of Notes then owned by it)
shall be informed thereof by the Subsidiary Guarantor and shall be afforded the
opportunity of considering the same and shall be supplied by the Subsidiary
Guarantor with a copy of the proposed waiver or amendment and such other
information regarding such amendment or waiver as any Holder of the Notes shall
reasonably request to enable it to make an informed decision with respect
thereto. Executed or true and correct copies of any waiver or amendment effected
pursuant to the provisions of this Section 6 shall be delivered by the
Subsidiary Guarantor to each Holder of outstanding Notes within 30 days
following the date on which the same shall have been executed and delivered by
the Holder or Holders of the requisite percentage of the outstanding Notes. The
Subsidiary Guarantor will not, directly or indirectly, pay or cause to be paid
any remuneration, whether by way of supplemental or additional interest, fee of
otherwise, to any Holder of the Notes as consideration for or as an inducement
to the entering into by any Holder of the Notes of any waiver or amendment of
any of the terms and provisions of this Amended and Restated Subsidiary
Guarantee Agreement or the Note Agreement unless such remuneration is
concurrently paid, on the same terms, ratably to the Holders of all of the Notes
then outstanding.
7. MISCELLANEOUS.
(a) No remedy herein conferred upon or reserved to the
Purchasers is intended to be exclusive of any other available remedy or
remedies, but each and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Amended and Restated Subsidiary
Guarantee Agreement now or hereafter existing at law or in equity. No delay or
omission to exercise any right or power accruing upon any default, omission or
failure of performance hereunder shall impair any such right or power or shall
be construed to be a waiver thereof but any such right or power may be exercised
from time to time and as often as may be deemed expedient. In order to entitle
the Purchasers to exercise any remedy reserved to them under this Amended and
Restated Subsidiary Guarantee Agreement, it shall not be necessary for the
Purchasers to physically produce their Notes in any proceedings instituted by
them or to give any notice, other than such notice as may be herein expressly
required.
(b) This Amended and Restated Subsidiary Guarantee Agreement
shall be binding upon the Subsidiary Guarantor, its successors and assigns and
shall inure, together with the rights and remedies of the Purchasers hereunder,
to the benefit of the Purchasers and their successors and assigns; provided,
however, that the Subsidiary Guarantor may not assign its rights or delegate its
duties hereunder without the Purchasers' prior written consent. Without limiting
the generality of the foregoing, but subject to the terms and conditions of the
Note Agreement, the Purchasers may assign or otherwise transfer any indebtedness
held by them secured by this Amended and Restated Subsidiary Guarantee Agreement
to any other Person or entity, and such other Person or entity shall thereupon
become vested with all the benefits in respect thereof granted to the Purchasers
herein or otherwise, subject, however, to the provisions of the Note Agreement.
The Company hereby releases the Purchasers from any liability for any act or
omission relating to this Amended and Restated Subsidiary Guarantee Agreement,
except the Purchasers' gross negligence or willful misconduct.
(c) In the event that any provision hereof shall be deemed
to be invalid by reason
-9-
of the operation of any law or by reason of the interpretation placed thereon by
any court, this Amended and Restated Subsidiary Guarantee Agreement shall be
construed as not containing such provision, but only as to such jurisdictions
where such law or interpretation is operative, and the invalidity of such
provision shall not affect the validity of any remaining provision hereof, and
any and all other provisions hereof which are otherwise lawful and valid shall
remain in full force and effect.
(d) This Amended and Restated Subsidiary Guarantee Agreement
shall be deemed to have been made in the State of New York and shall be governed
by and construed in accordance with the laws of the State of New York, without
regard to principles of conflicts of law. The headings in this instrument are
for convenience of reference only and shall not limit or otherwise affect the
meaning of any provision hereof.
(e) THE GUARANTORS HEREBY AGREE TO WAIVE, AND THE AGENT AND
THE LENDERS BY THEIR ACCEPTANCE HEREOF XXXXXX AGREE TO WAIVE, THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF OR RELATED TO THIS GUARANTY, THE OTHER GUARANTOR DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE
GUARANTORS HEREBY AGREE, AND THE AGENT AND THE LENDERS BY THEIR ACCEPTANCE
HEREOF XXXXXX AGREE, THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT IN ANY WAY LIMITING THE FOREGOING, THE
GUARANTORS FURTHER AGREE, AND THE AGENT AND THE LENDERS BY THEIR ACCEPTANCE
HEREOF FURTHER AGREE, THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM, OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS GUARANTY OR THE OTHER GUARANTORS DOCUMENTS OR ANY PROVISION HEREOF OR
THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THE GUARANTY AND THE OTHER GUARANTOR DOCUMENTS.
A COPY OF THIS SECTION 7(E) MAY BE FILED WITH ANY COURT AS WRITTEN EVIDENCE OF
THE WAIVER OF THE RIGHT TO TRIAL BY JURY AND CONSENT TO TRIAL BY COURT.
(f) THE GUARANTORS ACKNOWLEDGE THAT THEY AS INDIVIDUAL
ENTITIES HAVE EITHER OBTAINED THE ADVICE OF LEGAL COUNSEL OR HAVE HAD THE
OPPORTUNITY TO OBTAIN SUCH ADVICE IN CONNECTION WITH THE TERMS AND PROVISIONS OF
THIS GUARANTY. THE GUARANTORS ACKNOWLEDGE AND AGREE THAT EACH OF THE WAIVERS AND
CONSENTS SET FORTH HEREIN ARE MADE WITH FULL KNOWLEDGE OF THEIR SIGNIFICANCE AND
CONSEQUENCES. ADDITIONALLY, THE GUARANTORS ACKNOWLEDGE AND AGREE THAT BY
EXECUTING THIS
-10-
GUARANTY, THEY ARE WAIVING CERTAIN RIGHTS, BENEFITS, PROTECTIONS AND DEFENSES TO
WHICH THEY MAY OTHERWISE BE ENTITLED UNDER APPLICABLE LAW, INCLUDING UNDER THE
PROVISIONS OF THE CALIFORNIA CIVIL CODE AND CALIFORNIA CODE OF CIVIL PROCEDURE
REFERRED TO IN THIS AGREEMENT TO THE EXTENT SUCH LAWS ARE APPLICABLE, AND THAT
ALL SUCH WAIVERS HEREIN ARE EXPLICIT, KNOWING WAIVERS. THE GUARANTORS FURTHER
ACKNOWLEDGE AND AGREE THAT THE AGENT AND THE LENDERS ARE RELYING ON SUCH WAIVERS
IN CREATING THE GUARANTEED OBLIGATIONS, AND THAT SUCH WAIVERS ARE A MATERIAL
PART OF THE CONSIDERATION WHICH THE AGENT AND THE LENDERS ARE RECEIVING FOR
CREATING THE GUARANTEED OBLIGATIONS.
(g) The obligations of the Subsidiary Guarantor hereunder
shall remain in full force and effect until all the Obligations have been paid
and satisfied in full.
-11-
IN WITNESS WHEREOF, the Subsidiary Guarantor has caused this Amended
and Restated Subsidiary Guarantee Agreement to be duly executed and attested as
of the date first above written.
[Subsidiary Guarantor]
By: The Chalone Wine Group, Ltd.,
a California corporation
Its Managing Member
By: _____________________________
Xxxxxx X. Xxxxxxxxx,
President and CEO
REPRESENTATION AND WARRANTIES OF ORIGINAL SUBSIDIARY GUARANTORS
Such Subsidiary Guarantor represents and warrants to each Purchaser as
follows:
1. SUBSIDIARIES. Such Subsidiary Guarantor has, directly and
indirectly, good and marketable title to all of the shares it purports to own of
the stock of each of its subsidiaries, free and clear in each case of any Lien.
All such shares have been duly issued and are fully paid and non-assessable.
2. ORGANIZATION AND AUTHORITY. Such Subsidiary Guarantor, and each
of its subsidiaries,
(a) is a corporation or general partnership, duly
incorporated, or duly organized, as the case may be, amalgamated or continued,
validly existing and in good standing and has duly made all registrations and
filings required given the nature of its business under the laws of its
jurisdiction of incorporation or organization and has paid all taxes as are
necessary to maintain its corporate or partnership existence, as the case may
be;
(b) has all requisite power and authority and all necessary
licenses and permits to own and operate its properties and to carry on its
business as now conducted, where failure to do so would materially affect
adversely the business, properties, profits or financial condition of such
Subsidiary Guarantor or any of its subsidiaries; and
(c) is duly licensed or qualified and is in good standing as
a foreign corporation in each jurisdiction wherein the nature of the business
transacted by it or the nature of the property owned or leased by it makes such
licensing or qualification necessary, where failure to do so would materially
affect adversely the business, properties, profits or financial condition of
such Subsidiary Guarantor or any of its subsidiaries.
3. FULL DISCLOSURE. Neither the Subsidiary Guarantee Agreement, the
Collateral Documents to which such Subsidiary Guarantor is a signatory nor any
other written statement furnished by such Subsidiary Guarantor to such Purchaser
in connection with the negotiation of the Subsidiary Guarantee Agreement and the
Collateral Documents to which such Subsidiary Guarantor is a signatory, contains
any untrue statement of a material fact or omits a material fact necessary to
make the statements contained therein or herein not misleading. There is no fact
peculiar to such Subsidiary Guarantor or its subsidiaries which such Subsidiary
Guarantor has not disclosed to such Purchaser in writing which materially
affects adversely nor, so far as such Subsidiary Guarantor can now foresee, will
materially affect adversely the properties, business, profits or financial
condition of such Subsidiary Guarantor and its subsidiaries, taken as a whole.
4. PENDING LITIGATION. There are no proceedings pending or, to the
knowledge of such Subsidiary Guarantor, threatened against or affecting such
Subsidiary Guarantor or any of its subsidiaries in any court or before any
governmental authority or arbitration board or tribunal are reasonably likely to
materially affect adversely the properties, business, profits or financial
condition of such Subsidiary Guarantor and its subsidiaries.
EXHIBIT 10.11(a)
(to the Note Purchase Agreement)
5. TITLE TO PROPERTIES. Such Subsidiary Guarantor and each of its
subsidiaries has good and marketable title in fee simple (or its equivalent
under applicable law) to all material parcels of real property and has good
title to all the other material items of property it purports to own, except as
sold or otherwise disposed of in the ordinary course of business and except for
Liens permitted by this Agreement.
6. PATENTS AND TRADEMARKS. Such Subsidiary Guarantor and each of
its subsidiaries owns, possesses or has the right to use all the patents,
trademarks, trade names, service marks, copyright, licenses and rights with
respect to the foregoing necessary for the present and planned future conduct of
its business, without any known conflict with the rights of others.
7. COMPLIANCE IS LEGAL AND AUTHORIZED.Compliance by such Subsidiary
Guarantor with all of the provisions of the Subsidiary Guarantee Agreement and
the Collateral Documents to which such Subsidiary Guarantor is a signatory--
(a) is within the corporate or partnership powers, as the
case may be, of such Subsidiary Guarantor;
(b) will not violate any provisions of any law or any order
of any court or governmental authority or agency and will not conflict with or
result in any breach of any of the terms, conditions or provisions of, or
constitute a default under the charter or other organizational documents of such
Subsidiary Guarantor or any indenture or other agreement or instrument to which
such Subsidiary Guarantor is a party or by which it may be bound or result in
the imposition of any Liens or encumbrances on any property of such Subsidiary
Guarantor; and
(c) has been duly authorized by proper corporate or
partnership action, as the case may be, on the part of such Subsidiary Guarantor
(no action by the stockholders or partners of such Subsidiary Guarantor being
required by law, by the charter or other organizational documents of such
Subsidiary Guarantor or otherwise), and such Subsidiary Guarantee Agreement and
Collateral Documents have been duly executed and delivered by such Subsidiary
Guarantor and constitute the legal, valid and binding obligations, contracts and
agreements of such Subsidiary Guarantor enforceable in accordance with its
terms.
8. NO DEFAULTS. Neither such Subsidiary Guarantor nor any of its
subsidiaries is in default in the payment of principal or interest on any Debt
or is in default under any instrument or instruments or agreements under and
subject to which any Debt has been issued, and no event has occurred and is
continuing under the provisions of any such instrument or agreement which with
the lapse of time or the giving of notice, or both, would constitute an event of
default thereunder.
9. GOVERNMENTAL CONSENT. No approval, consent or withholding of
objection on the part of, or filing, registration or qualification with, any
governmental department, regulatory authority or court under the laws of the
United States or any agency or authority thereof, state, Federal or local, is
necessary in connection with the lawful execution and delivery by such
Subsidiary Guarantor of its Guaranty or compliance by such Subsidiary Guarantor
with any of the provisions of such Subsidiary Guarantee Agreement and the
Collateral Documents including, without limitation, payments to be made under
such Subsidiary Guarantee Agreement.
10.11(a)-2
10. TAXES. Such Subsidiary Guarantor and its subsidiaries have
filed all tax returns that are required to have been filed in any jurisdiction,
and have paid all taxes shown to be due and payable on such returns and all
other taxes and assessments levied upon them or their properties, assets, income
or franchises, to the extent such taxes and assessments have become due and
payable and before they have become delinquent, except for any taxes and
assessments (i) the amount of which is not individually or in the aggregate
material, or (ii) the amount, applicability or validity of which is currently
being contested in good faith by appropriate proceedings and with respect to
which such Subsidiary Guarantor or a subsidiary has established adequate
reserves in accordance with GAAP. Such Subsidiary Guarantor knows of no basis
for any other tax or assessment that could reasonably be expected to have a
material adverse effect. The charges, accruals and reserves on the books of such
Subsidiary Guarantor and its subsidiaries in respect of Federal, state or other
taxes for all fiscal periods are adequate. The Federal income tax liabilities of
such Subsidiary Guarantor and its subsidiaries have been paid for all fiscal
years up to and including the fiscal year ended March 31, 2000.
11. EMPLOYEE-RELATED MATTERS. (a) Each pension plan maintained by
such Subsidiary Guarantor or any of its subsidiaries complies in all material
respects with all applicable statutes and governmental rules and regulations.
Such Subsidiary Guarantor and each of its subsidiaries has satisfied their
respective funding obligations as required by applicable law for all pension
plans maintained by them. All tax returns and reports required to be filed by or
with respect to such Subsidiary Guarantor's and each of its subsidiaries'
pension plans in all applicable jurisdictions have been filed. Such plans are
(to the extent required under applicable law, rule or regulation) registered
under, and are in compliance with, applicable federal legislation and all
reports, returns and filings required to be made thereunder have been made. Such
plans have been at all times administered in accordance with their terms and the
provisions of applicable law. Neither such Subsidiary Guarantor nor any of its
subsidiaries has incurred a liability in connection with the winding-up of a
pension plan or the withdrawal from a multiemployer plan which would have a
Material adverse effect on the properties, business, profits or condition
(financial or otherwise) of such Subsidiary Guarantor and each of its
subsidiaries taken as a whole or impair the ability of such Subsidiary Guarantor
or any of its subsidiaries to perform its respective obligations contained in
the Subsidiary Guarantee Agreement and the Collateral Documents to which such
Subsidiary Guarantor is a signatory. There are no controversies pending or, to
the knowledge of such Subsidiary Guarantor, threatened or anticipated between
such Subsidiary Guarantor and any of its employees which would have a material
adverse effect on the properties, business, profits or condition (financial or
otherwise) of such Subsidiary Guarantor or any of its subsidiaries or would
materially impair the ability of such Subsidiary Guarantor or any of its
subsidiaries to perform its obligations contained in the Subsidiary Guarantee
Agreement and the Collateral Documents to which such Subsidiary Guarantor is a
signatory and there are no material labor disputes, grievances, arbitration
proceedings or any strikes, work stoppages or slow downs pending or, to such
Subsidiary Guarantor's knowledge, threatened by such Subsidiary Guarantor's
employees and representatives.
(b) The consummation of the transactions provided for in the
Subsidiary Guarantee Agreement and the Collateral Documents to which such
Subsidiary Guarantor is a signatory and compliance by such Subsidiary Guarantor
with the provisions thereof will not involve any
10.11(a)-3
prohibited transaction within the meaning of ERISA or Section 4975 of the
Internal Revenue Code of 1986, as amended. No Reportable Event has occurred and
is continuing with respect to any Plan. Neither such Subsidiary Guarantor nor
any ERISA Affiliate has withdrawn from any Plan or Multiemployer Plan or
instituted steps to do so and no steps have been instituted to terminate any
Plan. No condition exists or event or transaction has occurred in connection
with any Plan which could result in the incurrence by such Subsidiary Guarantor
or any ERISA Affiliate of any material liability, fine or penalty. No Plan
maintained by such Subsidiary Guarantor or any ERISA Affiliate, nor any trust
created thereunder, has incurred any "accumulated funding deficiency" as defined
in Section 302 of ERISA nor does the present value of all benefits vested under
all Plans exceed, as of the last annual valuation date, the value of the assets
of the Plans allocable to such vested benefits. Neither such Subsidiary
Guarantor nor any ERISA Affiliate has any contingent liability with respect to
any post-retirement "welfare benefit plan" (as such term is defined in ERISA)
except as has been disclosed to the Purchasers.
12. COMPLIANCE WITH LAW. Neither such Subsidiary Guarantor nor any
of its subsidiaries (a) is in violation of any law, ordinance, franchise,
governmental rule or regulation to which it is subject; or (b) has failed to
obtain any license, permit, franchise or other governmental authorization
necessary to the ownership of its property or to the conduct of its business,
which violation or failure to obtain would materially adversely affect the
business, prospects, profits, properties or condition (financial or otherwise)
of such Subsidiary Guarantor and its subsidiaries, taken as a whole, or impair
the ability of such Subsidiary Guarantor to perform its obligations contained in
the Subsidiary Guarantee Agreement and the Collateral Documents to which such
Subsidiary Guarantor is a signatory. Neither such Subsidiary Guarantor nor any
of its subsidiaries is in default with respect to any order of any court or
governmental authority or arbitration board or tribunal.
13. COMPLIANCE WITH ENVIRONMENTAL LAWS. Neither such Subsidiary
Guarantor nor any of its subsidiaries is in violation of any applicable United
States Federal, state, or local laws, statutes, rules, regulations or ordinances
relating to public health, safety or the environment, including, without
limitation, relating to releases, discharges, emissions or disposals to air,
water, land or ground water, to the withdrawal or use of ground water, to the
use, handling or disposal of polychlorinated biphenyls (PCBs), asbestos or urea
formaldehyde, to the treatment, storage, disposal or management of hazardous
substances (including, without limitation, petroleum, crude oil or any fraction
thereof, or other hydrocarbons), pollutants or contaminants, to exposure to
toxic, hazardous or other controlled, prohibited or regulated substances which
violation could materially affect adversely the business, profits, properties or
financial condition of such Subsidiary Guarantor and its subsidiaries, taken as
a whole. Such Subsidiary Guarantor does not know of any liability or class of
liability of such Subsidiary Guarantor or any of its subsidiaries under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U.S.C. Section 9601 et seq.), or the Resource Conservation and
Recovery Act of 1976, as amended (42 U.S.C. Section 6901 et seq.).
14. ABSENCE OF FOREIGN OR ENEMY STATUS. (a) No Subsidiary Guarantor
nor any of their subsidiaries on the date hereof, is (i) an "enemy" or an "ally
of enemy" within the meaning of Section 2 of the Trading with the Enemy Act,
(ii) a "national" of a foreign country designated in Executive Order 8389, as
amended or of any "designated enemy country" as defined in
10.11(a)-4
Executive Order No. 9095, as amended, of the President of the United States of
America, in each case within the meaning of said Executive Orders, as amended,
or of any regulation issued thereunder, or (iii) a "national of any designated
foreign country" within the meaning of the Foreign Assets Control Regulations or
of the Cuban Assets Control Regulations of the United States of America.
(b) The execution and delivery of the Subsidiary Guarantee Agreement
and the Collateral Documents by any Subsidiary Guarantor as contemplated hereby
will not violate the Foreign Assets Control Regulations, the Foreign Funds
Control Regulations, the Transaction Control Regulations, the Cuban Assets
Control Regulations, the Iranian Assets Control Regulations, the Libyan
Sanctions Regulations, the South African Transactions Regulations, or the Iraqi
Sanctions Regulations of the United States Treasury Department (each as set
forth in 31 C.F.R., Subtitle B, Chapter V, as amended).
15. CONSOLIDATED AND INTEGRATED BUSINESS. The Company and its
Restricted Subsidiaries share centralized administration of the winery functions
of each entity including finance, sales and marketing. Such centralized
administration is performed at the Company's Napa office. This facility also
includes a central distribution center in which substantially all of the
Company's and its Restricted Subsidiaries' wines are stored prior to shipping.
Sales and marketing of all of the Company's and Restricted
Subsidiaries' wines within the State of California are made through the
Company's own sales forces and one or more wholesalers. The Company uses a
single broker for all wholesale California sales of the Company and its
Restricted Subsidiaries. Furthermore, all of the Company's and Restricted
Subsidiaries' wineries are operated under the overall supervision of the
Company's Chief Executive Officer.
The Company and each Subsidiary Guarantor prepare consolidated
financial statements and do their financial reporting on a consolidated basis.
16. SOLVENCY AND CONSIDERATION. (a) Such Subsidiary Guarantor is
solvent, has capital not unreasonably small in relation to its business or any
contemplated or undertaken transaction and has assets having a value both at
fair valuation and at present fair salable value greater than the amount
required to pay its debts as they become due and greater than the amount that
will be required to pay its probable liability on its existing debts as they
become absolute and matured. Such Subsidiary Guarantor does not intend to incur,
or believes or should have believed that it will incur, debts beyond its ability
to pay such debts as they become due. Such Subsidiary Guarantor will not be
rendered insolvent by the execution and delivery of, and performance of its
obligations under, the Subsidiary Guarantee Agreement and the Collateral
Documents to which such Subsidiary Guarantor is a signatory. such Subsidiary
Guarantor does not intend to hinder, delay or defraud its creditors by or
through the execution and delivery of, or performance of its obligations under,
the Subsidiary Guarantee Agreement and the Collateral Documents to which such
Subsidiary Guarantor is a signatory.
(b) Each Subsidiary Guarantor for itself has determined that the
execution and delivery of the Subsidiary Guarantee Agreement and the Collateral
Documents to which such
10.11(a)-5
Subsidiary Guarantor is a signatory is in furtherance of its corporate purposes
and is in its best interest and that it will derive substantial benefit, whether
directly or indirectly, from the making of such Subsidiary Guarantee Agreement
and the Collateral Documents (i) by, among other things, (1) enabling its direct
or indirect parent company to obtain financing deemed necessary and beneficial
by such parent company for general, consolidated corporate purposes and (2)
enabling it to increase its capitalization on a consolidated basis and (ii) in
accordance with its participation in the consolidated and integrated business
described in paragraph 15 hereof.
17. SUBSIDIARY GUARANTEE AGREEMENT to Rank Pari Passu.The Subsidiary
Guarantee Agreement to which such Subsidiary Guarantor is a party and all other
obligations thereunder are direct and unsecured obligations of such Subsidiary
Guarantor ranking PARI PASSU as against all other present and future Debt
(actual or contingent) of such Subsidiary Guarantor which is not secured or the
subject of any statutory trust or preference or which is not expressed to be
subordinate or junior in rank to any other Debt of such Subsidiary Guarantor.
18. INVESTMENT COMPANY ACT. Such Subsidiary Guarantor is not, and is
not directly or indirectly controlled by or acting on behalf of any Person which
is, required to register as an "investment company" under the Investment Company
Act of 1940, as amended.
19. PUBLIC UTILITY HOLDING COMPANY ACT. Such Subsidiary Guarantor
is not, nor will it become, solely by reason of entering into or performing its
obligations under the Subsidiary Guarantee Agreement to which it is a party or
the carrying out of any of the transactions contemplated thereby, a "public
utility company" or a "holding company" under the Public Utility Holding Company
Act of 1935, as amended.
10.11(a)-6
FORM OF DEED OF TRUST
See attached representative form of Deed of Trust.
EXHIBIT A
(to Note Purchase Agreement)
RECORDING REQUESTED BY: )
NORTH AMERICAN TITLE COMPANY )
AND WHEN RECORDED MAIL TO: )
XxXxxxxxx, Will & Xxxxx )
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000 ' )
Xxxxxxx, Xxxxxxxx 00000 )
Attention: Xxxxxxxxx X. Xxxxxx, Esq. )
________________________________________________________________________________
(Space Above For Recorder's use only)
DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF RENTS
AND FIXTURE FILING
Dated as of April 19, 2002
From
THE CHALONE WINE GROUP, LTD.
(the "Company")
To
North American Title Company, as Trustee
For the Benefit of
C60PERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK INTERNATIONAL", NEW YORK
BRANCH,
as collateral agent (the "Collateral Agent")
THIS DEED OF TRUST CONSTITUTES A FIXTURE FILING UNDER SECTION 9502 OF THE
UNIFORM COMMERCIAL CODE OF THE STATE OF CALIFORNIA ("UCC") AND APPLIES TO ALL
GOODS AND PERSONAL PROPERTY WHICH, UNDER CALIFORNIA LAW, ARE OR ARE TO BECOME
FIXTURES ON THE REAL PROPERTY LOCATED IN THE COUNTY OF MONTEREY, STATE OF
CALIFORNIA, AND MORE PARTICULARLY DESCRIBED ON ANNEX A WHICH IS ATTACHED HERETO
AND INCORPORATED HEREIN BY THIS REFERENCE.
THE NAMES OF THE DEBTOR AND THE SECURED PARTY, THE MAILING ADDRESS OF THE
SECURED PARTY FROM WHICH INFORMATION CONCERNING THE SECURITY INTEREST MAY BE
OBTAINED, THE MAILING ADDRESS OF THE DEBTOR AND A STATEMENT INDICATING THE
TYPES, OR DESCRIBING THE ITEMS, OF COLLATERAL, ARE AS DESCRIBED HEREIN, IN
COMPLIANCE WITH THE REQUIREMENTS OF UCC.
THIS DEED OF TRUST SECURES PROMISSORY NOTES WHICH PROVIDE FOR VARIABLE RATES OF
INTEREST.
THIS DEED OF TRUST IS ENTERED INTO BY THE PARTIES HERETO EXPRESSLY SUBJECT TO
THE TERMS AND CONDITIONS OF THE INTERCREDITOR AND COLLATERAL AGREEMENT (AS
DEFINED HEREIN) AND THE RIGHTS OF COLLATERAL AGENT SET FORTH THEREIN, WHICH MAY
RESULT IN THE SUBORDINATION THERETO OF ANY LIEN OR OTHER CLAIM BY ANY JUNIOR
LIENHOLDER OR JUNIOR DEED OF TRUST BENEFICIARY WITH AN INTEREST SECURED BY THE
COLLATERAL DESCRIBED HEREIN.
Tax statements for the Collateral described herein and situated in the State of
California should be sent to:
The Chalone Wine Group, Ltd. 000 Xxxxxxx Xxxx
Xxxx, Xxxxxxxxxx 00000
TABLE OF CONTENTS
Page
Recitals.......................................................................1
Section 1 Definitions ...................................................7
Section 2. General Covenants and Warranties .............................11
Section 2.1. Agreement and Deed of Trust Covenants ................. .....11
Section 2.2. Ownership of Collateral................................ ......12
Section 2.3 Further Assurances............................................12
Section 2.4. Payment of Principal, Premium and Interest ..................12
Section 2.5. Maintenance of Collateral, Other Liens, Compliance with Laws,
Environmental Matters, Etc . .................................12
Section 2.6. Insurance. .................................................16
Section 2.7. Payment of Taxes and Other Charges; Contests Thereof..........18
Section 2.8. Limitation on Liens ..........................................19
Section 2.9. Advances......................................................19
Section 2.10. Recordation...................................................20
Section 2.11. After-Acquired Property. .....................................20
Section 2.12. Indemnification; Waiver of Offset.............................20
Section 3.1. Possession, Use and Release of Collateral ...................22
Section 3.1. Company's Right of Possession ................................22
Section 3.2. Disposition of Certain Trade Property ........................22
Section 3.3. Release of Trade Property ....................................23
Section 3.4. Release of Collateral - Loss, Damage to or Destruction of the
Collateral and Prepayment of the Notes........................24
Section 3.5. Eminent Domain................................................24
Section 4. Application of Insurance and Certain Other Moneys Received by
the Collateral Agent..........................................24
Section 4.1. Insurance Proceeds and Condemnation Awards....................24
Section 4.2. Title Insurance...............................................25
Section 4.3. Other Proceeds................................................26
Section 4.4. Application if Event of Default Exists .......................26
Section 4.5. Investment of Collateral .....................................26
Section 5. Defaults and Remedies THEREFOR ...............................26
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TABLE OF CONTENTS
(CONTINUED)
Page
Section 5.1. Events of Default ............................................26
Section 5.2. Remedies .....................................................26
Section 5.3. Application of Proceeds ......................................30
Section 5.4. Waiver of Extension, Appraisement and Stay Laws ..............30
Section 5.5. Effect of Discontinuance of Proceedings ......................31
Section 5.6. Delay or Omission Not a Waiver ...............................31
Section 5.7. Costs and Expenses of Foreclosure ............................31
Section 5.8. Notes to Become Due Upon Sale by Collateral Agent ............31
Section 5.9. Remedies Subject to Applicable Law ...........................32
Section 6. Miscellaneous.................................................32
Section 6.1. Successors and Assigns ......................................32
Section 6.3. Addresses for Notices and Demands.............................32
Section 6.4. Headings and Table of Contents ...............................32
Section 6.5. Release.......................................................32
Section 6.6. Counterparts..................................................33
Section 6.7. Agency........................................................33
Section 6.8. Substitute Trustee ...........................................33
Section 6.9. Governing.....................................................33
Section 6.10. Time..........................................................34
Section 6.11. Future Advances ..............................................34
Section 6.12. Waiver of Jury Trial ........................................ 34
Section 6.13. Special California Provisions ................................34
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THIS DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND FIXTURE
FILING dated as of APRIL 19, 2002 (the or this "DEED OF TRUST"), is from THE
CHALONE WINE GROUP, LTD., a California corporation (the "COMPANY"), having its
principal office at 000 Xxxxxxx Xxxx, Xxxx, Xxxxxxxxxx 00000, to North American
Title Company ("TRUSTEE'), for the benefit of C66PERATIEVE CENTRALE
RAIFFEISENBOERENLEENBANK B.A., "RABOBANK INTERNATIONAL, NEW YORK BRANCH, in its
capacity as Collateral Agent for the ratable benefit of the Secured Parties
under and pursuant to that certain Intercreditor and Collateral Agency
Agreement (together with its permitted successors and assigns, the "COLLATERAL
AGENT') whose post office address is 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
RECITALS:
A. Reference is made to those separate and several Note Purchase
Agreements, each dated as of September 15, 2000 (collectively, the "ORIGINAL
NOTE AGREEMENTS"), entered into by the Company with each of the Purchasers
listed on Schedule A thereto (collectively, the "NOTEHOLDERS "), under and
pursuant to which the Noteholders purchased $5,000,000 8.75% Senior Guaranteed
Notes, Series A, due September 15, 2010, $10,000,000 Senior Guaranteed Notes,
Series B, due September 15, 2010 and $15,000,000 Senior Guaranteed Notes, Series
C, due September 15, 2010 (collectively, the "ORIGINAL SENIOR NOTES') of the
Company. The Company has requested that the Noteholders amend and restate the
Original Note Agreements, amend and restate the Original Senior Notes, and the
Noteholders are willing to enter into and execute those certain Amended and
Restated Note Purchase Agreements each dated April 19, 2002 (as the same may
hereafter be amended, modified and/or restated from time to time, collectively,
the "AMENDED AND RESTATED NOTE AGREEMENTS ") and are willing to amend and
restate the Original Senior Notes pursuant to the terms thereof (as so amended,
the "AMENDED AND RESTATED SENIOR SECURED NOTES "), on the condition (among
others) that the Company enter into this Deed of Trust.
B. Reference is hereby made to that certain Credit Agreement dated as
of April 19, 2002 (as the same may hereafter be amended, modified and/or
restated from time to time, the "CREDIT AGREEMENT") by and among the Company,
Cooperatieve Centrale RaiffeisenBoerenleenbank B.A., "Rabobank International,"
New York Branch, as administrative agent (the "AGENT ") and the lenders from
time to time party thereto (the "LENDERS ") under and pursuant to which the
Lenders have extended term loans and revolving loans to the Company and made
available a letter of credit subfacility and swingline loans and which loans are
evidenced by, among other things, certain promissory notes (collectively, the
"CREDIT AGREEMENT NOTES ").
C. Pursuant to the Intercreditor and Collateral Agency Agreement dated
as of April 19, 2002, as the same may be amended, modified or restated from time
to time, (the "INTERCREDITOR AND AGENCY AGREEMENT "), entered into by the
Noteholders, the Company, the Lenders, the Agent and the Collateral Agent, the
Agent was appointed as collateral agent to act on behalf of the Secured Parties
(as hereinafter defined) regarding the Collateral (as hereinafter defined), the
obligations of the Company to the Noteholders under the Amended and Restated
Note Agreements and the Amended and Restated Senior Secured Notes and the
obligations of the Company to the Lenders and the Agent under the Credit
Agreement and the Credit Agreement Term Notes, are to be secured by this Deed of
Trust.
D. All principal, premium and interest and all fees and additional
amounts and other sums at any time due and owing from and all other obligations
of any nature of the Company now or hereafter existing, or required to be paid
by the Company under the terms of the Amended and Restated Senior Secured
Notes, the Amended and Restated Note Agreements, the Credit Agreement, the
Credit Agreement Notes, the Intercreditor and Agency Agreement, this Deed of
Trust, or any other document, mortgage or security agreement executed and
delivered by the Company pursuant to the Amended and Restated Note Agreements,
the Credit Agreement or the Intercreditor and Agency Agreement and any
extensions, renewals or modifications of any of the above are hereinafter
sometimes referred to as the "SECURED OBLIGATIONS ".
E. The Company is duly authorized under all applicable provisions of
law, its charter and bylaws, to issue the Amended and Restated Senior Secured
Notes and the Credit Agreement Notes and to execute and deliver this Deed of
Trust and to mortgage, convey, assign and grant a security interest in the
Collateral (as hereinafter defined) to the Trustee, its successors and assigns,
for the benefit of the Collateral Agent, and its successors and assigns as
security for the Secured Obligations and all corporate action and all consents,
approvals and other authorizations and all other acts and things necessary to
make this Deed of Trust the valid, binding and legal instrument for the security
of the Secured Obligations have been done and performed.
Now, THEREFORE, THIS DEED OF TRUST WITNESSETH that the Company, in
consideration of the premises, the purchase and acceptance of the Amended and
Restated Secured Notes by the Noteholders and of the Credit Agreement Notes by
the Lenders, and of the sum of Ten Dollars received by the Company from the
Trustee and the Collateral Agent and other good and valuable consideration,
receipt whereof is hereby acknowledged, and in order to secure the payment of
all of the Secured Obligations, does hereby warrant, mortgage, pledge, assign,
bargain, hypothecate, convey, grant, transfer, grant a first perfected security
interest in and set over unto the Trustee, and its successors and assigns in
trust, with power of sale and right of entry, for the benefit of and as an agent
for the Collateral Agent, its successors and assigns, all of its estate, right,
title and interest in and to all and singular the following described
properties, rights, interest and privileges and all of the Company's estate,
right, title and interest therein, thereto and thereunder, if any (all of which
properties hereby mortgaged, assigned, pledged and in which a first perfected
security interest has been granted or intended so to be are hereinafter
collectively referred to as the "COLLATERAL"):
GRANTING CLAUSE FIRST
COLLATERAL
The parcels of land in Monterey County in the State of California
described in Annex A attached hereto and made a part hereof ("LAND'), together
with the entire interest of the Company in and to all buildings, structures,
improvements and appurtenances now standing, or at any time hereafter
constructed or placed, upon such land, including all right, title and interest
of the Company, if any, in and to all building material, building equipment and
fixtures of every kind and nature whatsoever on said land or in any building,
structure or improvement now or
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hereafter standing on said land which are classified as fixtures under
applicable law and which are used in connection with the operation, maintenance
or protection of said buildings, structures and improvements as such (including,
without limitation, all boilers, air conditioning, ventilating, plumbing,
heating, lighting and electrical systems and apparatus, all communications
equipment and intercom systems and apparatus, all sprinkler equipment and
apparatus and all elevators and escalators) and the reversion or reversions,
remainder or remainders, in and to said land, and together with the entire
interest of the Company in and to all and singular the tenements, hereditaments,
easements, rights of way, rights, privileges and appurtenances to said land,
belonging or in anywise appertaining thereto, including, without limitation, the
entire right, title and interest of the Company in, to and under any streets,
ways, alleys, gores or strips of land adjoining said land, and all claims or
demands whatsoever of the Company either in law or in equity, in possession or
expectancy, of, in and to said land, it being the intention of the parties
hereto that, so far as may be permitted by law, all property of the character
xxxxxxxxxxx described, which is now owned or is hereafter acquired by the
Company and is affixed or attached or annexed to said land, shall be and remain
or become and constitute a portion of said land and the security covered by and
subject to the Lien of this Deed of Trust, together with all accessions, parts
and appurtenances appertaining or attached thereto and all substitutions,
renewals or replacements of and additions, improvements, accessions and
accumulations to any and all thereof, and together with all rights, powers,
privileges, options and other benefits of the Company, as lessor, under any
leases including the right to collect any and all rents, profits or other income
and the present and continuing right to make claim for, collect, receive and
receipt for any and all of such rents, profits or other income (all of which
properties are hereinafter referred to as the "REAL PROPERTY "). The assignment
of rents set forth in the proceeding sentence is intended by the parties hereto
to be effective to create a present security interest in all existing and future
rents, profits or other income arising from or related to the Land under
California Civil Code Section 2938, as amended from time to time.
GRANTING CLAUSE SECOND
TRADE PROPERTY
All materials, furniture, furnishings, machinery, fixtures and
equipment now or hereafter erected on or affixed to the Collateral and
including, but not limited to, all heating, plumbing, lighting, water heating,
cooking, laundry, refrigerating, incinerating, communications, ventilating and
air conditioning equipment, building signs, disposals, dishwashers, telephone
systems, sprinkler systems, fire extinguishing apparatus and equipment, water
tanks, engines, machines, boilers, dynamos, stokers, elevators, motors,
cabinets, shades, blinds, partitions, window screens, screen doors, storm
windows, awnings, drapes, rugs and other floor coverings, furniture,
furnishings, radios and television sets and wiring and antennae therefor, and
all fixtures, accessions and appurtenances thereto, and all renewals or
replacements of or substitutions for any of the foregoing, together with all
other goods, equipment, furnishings, fixtures, machinery and furniture owned by
the Company now or hereafter attached or affixed to or used in and about the
building or buildings now erected or hereafter to be erected on the Collateral,
or otherwise located on the Collateral, and all fixtures, accessions and
appurtenances thereto, and all renewals or replacements of or substitutions for
any of the foregoing (all of which properties are hereinafter referred to as
"TRADE PROPERTY ").
GRANTING CLAUSE THIRD
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CONDEMNATION AWARDS AND PAYMENTS
All judgments, awards of damages, settlements and other compensation
heretofore or hereafter made resulting from condemnation proceedings or the
taking of the Collateral or any part thereof or any improvements now or at any
time hereafter located thereon or any easement or other appurtenance thereto
under the power of eminent domain, or any similar power or right (including any
award from the United States Government at any time after the allowance of the
claim therefor, the ascertainment of the amount thereof and the issuance of the
warrant for the payment thereof), whether permanent or temporary, or for any
damage (whether caused by such taking or otherwise) to said Collateral or any
part thereof or the improvements thereon or any part thereof, or to any rights
appurtenant thereto, including severance and consequential damage, and any
award for change of grade of streets (collectively, "CONDEMNATION AWARDS ").
GRANTING CLAUSE FOURTH
Subject to the satisfaction in full of all indebtedness outstanding
under the Revolving Credit Agreement Notes, a collateral security interest in
all of the Company's right, title and interest in and to the General
Intangibles related to the Collateral (as defined in the Credit Agreement) of
the Company.
GRANTING CLAUSE FIFTH
PROCEEDS
All proceeds of the conversion, voluntary or involuntary, of any of the
foregoing into cash or other liquidated claims, including, without limitation,
all proceeds and payments of insurance related to the Collateral.
EXCEPTED PROPERTY
There is, however, to the extent included in the Lien and operation of
this Deed of Trust, expressly excepted and excluded from the Lien and operation
of this Deed of Trust, and expressly excepted and excluded from the Collateral,
the Credit Agreement Collateral of the Company, now owned or hereafter acquired
(herein called "EXCEPTED PROPERTY ").
SUBJECT HOWEVER, as to all property or rights in property at any time
subject to the Lien hereof (whether now owned or hereafter acquired), to
Permitted Encumbrances, as DEFINED IN SECTION 1 hereof.
To HAVE AND To HOLD the Collateral unto the Trustee and the successors
and assigns forever, in trust, with power of sale for the purpose of securing
performance of each agreement, covenant and warranty of the Company contained in
the Amended and Restated Note Agreements, the Amended and Restated Senior
Secured Notes, the Credit Agreement, the Credit Agreement Term Notes, the
Intercreditor and Agency Agreement, this Deed of Trust, and the other Security
Documents and payment of the Secured Obligations. It is understood and agreed
-4-
that this Deed of Trust is to secure the obligation of the Company to repay,
without preference or priority, all Secured Obligations.
PROVIDED, NEVERTHELESS, and these presents are upon the express
condition that if the Company performs the covenants herein contained and the
Secured Obligations are paid in full and all other sums due or payable
hereunder, under the Amended and Restated Note Agreements, the Credit Agreement,
the Intercreditor and Agency Agreement or under the other Security Documents,
the estate, right and interest of the Trustee in the property hereby conveyed
and granted a first perfected security interest in shall cease and this Deed of
Trust shall become null and void, but otherwise to remain in full force and
effect.
It is agreed and understood by the parties hereto that:
1. The Secured Obligations are also secured by the other
Security Documents. The other Security Documents are intended to and
shall constitute security for the entire indebtedness represented by
the Amended and Restated Senior Secured Notes, the Credit Agreement
Term Notes and all other Secured Obligations without allocation.
2. Any part of the Collateral, and any other security
described in the other Security Documents or any other mortgage or
other instrument now or hereafter given to secure the Secured
Obligations, may be released pursuant to the terms of the Security
Documents, or by or at the direction of the Secured Parties without
affecting the Lien hereof on the Collateral and any Person acquiring
any direct or indirect interest in the Collateral or in any collateral
described in the other Security Documents or any other mortgage, deed
of trust, or other instrument now or hereafter given to secure the
Secured Obligations shall take the same subject to all of the
provisions hereof.
3. The Company for itself and all who may claim through or
under it waives to the extent permitted by law any and all right to
have the property and estates comprising the Collateral or any other
property of the Company constituting security for the Secured
Obligations marshaled upon any foreclosure of the Lien hereof, or to
have the Collateral hereunder and the property covered by any other
mortgage or deed of trust securing the Secured Obligations marshaled
upon any foreclosure of any of said mortgages or deeds of trust, and
agrees that any court having jurisdiction to foreclose such Lien may
order the Collateral sold as an entirety.
4. Upon the occurrence and during the continuance of an Event
of Default hereunder the Collateral Agent has, among other things, the
right to foreclose on the Collateral and dispose of the same, in
accordance with applicable law. The Trustee's deed (if permitted by
law) or Sheriffs deed or other instrument of conveyance, transfer or
release (which, if permitted by law, may be executed by the Collateral
Agent in its own name or as attorney-in-fact for the Company and the
Collateral Agent is hereby irrevocably appointed attorney-in-fact for
the Company to, in the event that an Event of Default hereunder shall
have occurred and be continuing, so execute such deed or other
instruments of conveyance, transfer or release) shall be effective (if
all prerequisites required by law have been accomplished) to convey and
transfer to the grantee an
-5-
indefeasible title to the property covered thereby, discharged of all rights of
redemption (to the extent permitted by law) by the Company or any Person
claiming under it, and to bar forever all claims by the Company or the Trustee
or the Collateral Agent to the property covered thereby and no grantee from the
Trustee, the Collateral Agent, or Sheriff shall be under any duty to inquire as
to the authority of the Trustee, the Collateral Agent, or Sheriff to execute the
same, or to see to the application of the purchase money.
5. This Deed of Trust constitutes a financing statement filed as a
fixture filing under UCC ss. 9502(4)(c) in the official records of the county in
which the Collateral is located with respect to any and all fixtures included
within the term "Collateral" and with respect to any goods or other personal
property that may now be or hereafter become such a fixture. PARTS OF THE
PERSONAL PROPERTY ARE, OR ARE TO BECOME, FIXTURES ON THE PROPERTY.
(a) Company and Collateral Agent agree that the filing of a
financing statement in the records normally having to do with personal
property shall never be construed as in any way derogating from or
impairing this Deed of Trust and the intention of the parties that
everything used in connection with the production of income from the
Collateral or adapted for use therein or which is described or
reflected in this Deed of Trust is, and at all times and for all
purposes and in all proceedings both legal or equitable shall be
regarded as, part of the real estate subject to the lien hereof,
irrespective of whether (i) any such item is physically attached to
improvements located on such real property or (ii) any such item is
referred to or reflected in any financing statement so filed at any
time. Similarly, the mention in any such financing statement of (A) the
rights in or the proceeds of any fire or hazard insurance policy or (B)
any award in eminent domain proceedings for taking or for loss of value
or for any cause of action or proceeds thereof in connection with any
damage or injury to the Collateral or any part thereof shall never be
construed as in any way altering any of the rights of Collateral Agent
as determined by this instrument or impugning the priority of
Collateral Agent's lien granted hereby or by any other recorded
document, but such mention in such financing statement is declared to
be for the protection of Collateral Agent in the event any court shall
at any time hold with respect to the matters set forth above that
notice of Collateral Agent's priority of interest, to be effective
against a particular class of persons, including, without limitation,
the federal government and any subdivision or entity of the federal
government, must be filed in the personal property records or other
commercial code records.
(b) It is understood and agreed that, in the event that (A)
Company intends to purchase any goods which may become fixtures to the
Collateral, or any part thereof (except as permitted under Section
10.04(e) of the Credit Agreement and Section 10.09 of the Amended and
Restated Note Agreement), and (B) such goods will be subject to a
security interest held by a seller or any other party (other than
Permitted Liens), Company shall, before executing any security
agreement or other document evidencing such security interest, obtain
the prior written approval of Collateral Agent, and all requests for
such written approval shall be in writing and contain the following
information:
-6-
(i) A description of the Collateral to be replaced,
added to, installed or substituted;
(ii) The address at which the Collateral will be
replaced, added to, installed or substituted; and
(iii) The name and address of the proposed holder and
proposed amount of the security interest; and any failure
of Company to obtain such approval shall be a material
breach of Company's covenants under this Deed of Trust,
and shall, at the option of Collateral Agent, entitle
Collateral Agent to all rights and remedies provided for
herein upon default. No consent by Collateral Agent
pursuant to this paragraph shall be deemed to constitute
an agreement to subordinate any right of Collateral Agent
in fixtures or other property covered by this Deed of
Trust.
SECTION 1. DEFINITIONS.
The following terms shall have the following meanings for all purposes
of this Deed of Trust:
"ACCOUNT", "CHATTEL PAPER", "DOCUMENTS"; "EQUIPMENT", "GENERAL
INTANGIBLES", "INSTRUMENTS", "INVENTORY", "PATENTS", "SECURITIES", "TRADEMARKS"
AND "TRADENAMES " SHALL each have the meaning set forth in the Uniform
Commercial Code.
"ADVANCE OVERDUE RATE" shall mean that rate of interest that is the
lesser of (a) the highest amount allowed by law and (b) the sum of (i) the
greatest of (1) the Series A Adjustable Rate, (2) the Series B Adjustable Rate
and (3) the Series C Adjustable Rate, plus (ii) 2%.
"AGENT" shall mean Cooperative Centrale Raiffeisen - Boerenleenbank
B.A. "Rabobank International", New York branch, as agent for the Lenders.
"AMENDED AND RESTATED NOTE AGREEMENTS" shall have the meaning assigned
thereto in the Recitals hereof.
"AMENDED AND RESTATED SENIOR SECURED NOTES " SHALL have the meaning
assigned thereto in the Recitals hereof.
"BUSINESS DAY" means any day other than a Saturday, Sunday, or other
day on which banks in San Francisco, California or New York, New York are
required by law to close or are customarily closed.
"CERCLA " SHALL mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
-7-
"CLOSING DATE" shall have the meaning assigned thereto in the
Intercreditor and Agency Agreement.
"COLLATERAL" shall have the meaning assigned thereto in the paragraph
immediately preceding the Granting Clause First hereof.
"COLLATERAL AGENT " SHALL have the meaning assigned thereto in the
Intercreditor and Agency Agreement.
"COMPANY" shall mean The Chalone Wine Group, Ltd., a California
corporation, and its successors and assigns.
"CONDEMNATION AWARDS" shall have the meaning assigned thereto in
Granting Clause Third hereof.
"CREDIT AGREEMENT " SHALL have the meaning assigned thereto
in the Recitals hereof.
"CREDIT AGREEMENT COLLATERAL" shall mean all "Collateral" as defined
in the Credit Agreement Security Agreement, including without limitation, the
following assets of the Company, as each such capitalized tern is defined in
the Credit Agreement Security Agreement:
(a) all Accounts;
(b) all Inventory;
(c) all Operating Accounts of the Company and all funds
certificates, Documents, Instruments, checks, drafts, wire transfer receipts,
and other earnings, profits or other Proceeds from time to time representing,
evidencing, deposited into, or held in the Operating Accounts;
(d) all Margin Accounts of the Company, the initial and
maintenance margin maintained in any Margin Accounts, the credit balances
therein and all Instruments, securities entitlements, money and other
investment property held therein and all other funds and other earnings,
profits or other Proceeds from time to time representing, evidencing, deposited
into or held in the Margin Accounts;
(e) all Chattel Paper, Instruments, Documents, Payment
Intangibles and other General Intangibles evidencing title to, or the right to
possession of, arising from the sale or other disposition of, necessary for or
used in connection with, the production, manufacture, sale or other disposition
of, or otherwise relating to or arising from or in connection with the property
described in clauses (a) through (d) above; and
(f) all other products and Proceeds,in cash or otherwise,
of any of the property described in the foregoing clauses (a)through (e) above.
"CREDIT AGREEMENT NOTES " SHALL have the meaning assigned thereto in
the Recitals hereof.
-8-
"CREDIT AGREEMENT SECURITY AGREEMENT" shall mean the Security
Agreement dated as of April 19, 2002 by and among the Company, the Agent and
certain lenders as such agreement may be amended or modified in accordance with
its terms.
"DEFAULT" shall mean any event which would constitute an Event of
Default if all requirements in connection therewith for the giving of notice,
the lapse of time and the happening of any further condition, event or act had
been satisfied.
"ENVIRONMENTAL CLAIM "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.
"ENVIRONMENTAL LAW shall have the meaning assigned thereto in the
Amended and Restated Note Agreements.
"EVENT OF DEFAULT" shall have the meaning specified in SECTION
5.1 hereof.
"EXCLUDED TAXES " SHALL have the meaning specified in SECTION
2.1 hereof.
"GAAP" shall have the meaning assigned thereto in the Amended and
Restated Note Agreements.
"GOVERNMENTAL APPROVALS " SHALL mean any written permit, license,
variance, certification, consent, no action letter, clearance, exemption or
other approval granted by a Governmental Authority.
"GOVERNMENTAL AUTHORITY" shall mean any international, foreign,
federal, state, regional, county, local or other governmental authority.
"HAZARDOUS SUBSTANCE shall have the meaning assigned thereto in the
Amended and Restated Note Agreements.
"IMPOSITIONS" shall have the meaning assigned thereto in SECTION 2.7(a)
hereof.
"INDEBTEDNESS shall have the meaning assigned thereto in the Amended
and Restated Note Agreements.
"INTERCREDITOR AND AGENCY AGREEMENT" shall have the meaning assigned
thereto in the Recitals hereof.
"LENDERS" shall have the meaning assigned thereto in the paragraph
immediately preceding the Recitals hereof.
"LIEN " SHALL mean any interest in property securing an obligation owed
to, or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the security interest lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease consignment or bailment for
security purposes. The term "Lien" shall include reservations, exceptions,
-9-
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances (including, with respect to
stock, stockholder agreements, voting trust agreements, buy-back agreements and
all similar arrangements) affecting property.
"MAKE WHOLE PREMIUM " SHALL have the meaning assigned thereto in the
Amended and Restated Note Agreements.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on (a)
the properties, business, prospects, profits or condition (financial or
otherwise) of the Company and their respective Subsidiaries taken as a whole,
or (b) the ability of the Company to perform their respective obligations
contained in the Operative Agreements, or (c) the validity or enforceability of
the Operative Agreements, or (d) the validity or perfection of the security
interests granted under and pursuant to the Security Documents.
"MORTGAGED PROPERTY" shall have the meaning assigned thereto in the
Amended and Restated Note Agreements.
"NOTE DOCUMENTS " SHALL mean the Amended and Restated Note
Agreements, the Amended and Restated Senior Secured Notes, the Intercreditor
and Agency Agreement, this Deed of Trust and all other mortgages, security
agreements, documents, certificates and instruments relating to, arising out
of, or in any way connected therewith or any of the transactions contemplated
thereby.
"NOTES" and "NOTE" shall mean the Amended and Restated Senior Secured
Notes and the Credit Agreement Term Notes, collectively.
"OFFICER'S CERTIFICATE " shall have the meaning assigned thereto in
the Amended and Restated Note Agreements.
"OPERATIVE AGREEMENTS" shall have the meaning assigned thereto in the
Amended and Restated Note Agreements.
"ORIGINAL NOTE AGREEMENTS" shall have the meaning assigned thereto in
the Recitals hereof.
"PERMITTED INVESTMENTS" MEANS any of the following Dollar
denominated investments, maturing within one year from the date of acquisition,
selected by the Company:
(a) marketable direct obligations issued or unconditionally
guaranteed by the United States government or issued by any agency
thereof and backed by the full faith and credit of the United States;
(b) marketable direct obligations issued by any state of the
United States or any political subdivision of any such state or any
public instrumentality thereof and, at the time of acquisition, having
the highest credit rating obtainable from either S&P or Xxxxx'x;
(c) commercial paper or corporate promissory notes bearing at
the time of
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acquisition the highest credit rating either of S&P or Xxxxx'x issued
by United States, Australian, Canadian, European or Japanese bank
holding companies or industrial or financial companies (other than an
Affiliate of the Company or any Guarantor);
(d) certificates of deposit issued by and bankers acceptances
of and interest bearing deposits with any Lender, or with any United
States, Australian, Canadian, European or Japanese commercial banks
having capital and surplus of at least $500,000,000 or the equivalent
and which issues (or the parent of which issues) commercial paper or
other short term securities bearing the highest credit rating
obtainable from either S&P or Xxxxx'x; and
(e) money market funds organized under the laws of the United
States or any state thereof that invest solely in any of the foregoing
investments permitted under clauses (a), (b), (c) and (d).
"PERMITTED LIENS " shall have the meaning assigned thereto in the
Amended and Restated Note Agreements.
"PERSON " shall mean an individual, partnership, limited liability
company, corporation, trust or unincorporated organization, or a government or
agency or political subdivision thereof.
"RCRA " shall mean the Resource Conservation and Recovery Act, as
amended.
"REPLACEMENT ITEMS OF TRADE PROPERTY" shall have the meaning assigned
thereto in SECTION 3.3(A)(I) hereof.
"RESPONSIBLE OFFICER" shall have the meaning assigned thereto in
the Amended and Restated Note Agreements.
"SECURED OBLIGATIONS" shall have the meaning assigned thereto
in Recitals hereof.
"SECURED PARTIES " shall mean the Lenders and the holders from time
to time of the Notes.
"SECURITY DOCUMENTS " shall have the meaning assigned thereto in
the Amended and Restated Note Agreements.
"SUBSIDIARY " shall have the meaning assigned thereto in the Amended
and Restated Note Agreements.
"TRADE PROPERTY" shall have the meaning assigned thereto in Granting
Clause Second of this Deed of Trust.
"TRUSTEE " shall have the meaning assigned thereto in the paragraph
immediately preceding the Recitals hereof.
"UNIFORM COMMERCIAL CODE" shall mean the Uniform Commercial Code as in
effect in the State of California, as amended.
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SECTION 2. GENERAL COVENANTS AND WARRANTIES.
The Company covenants, warrants and agrees as follows:
SECTION 2.1. AGREEMENT AND DEED OF TRUST COVENANTS. Each and
all of the terms, provisions, restrictions, covenants and agreements set forth
in the Amended and Restated Note Agreements, the Credit Agreement and the
Intercreditor and Agency Agreement and in each and every supplement thereto or
amendment thereof which at any time or from time to time may be executed and
delivered by the parties thereto or their successors and assigns, to the extent
then in effect, are incorporated herein by reference to the same extent as
though each and all of said terms, provisions, restrictions, covenants and
agreements were fully set out herein and as though any amendment or supplement
to the Amended and Restated Note Agreements, the Credit Agreement or the
Intercreditor and Agency Agreement was fully set out in an amendment or
supplement to this Deed of Trust; and the Company does hereby covenant and
agree well and truly to abide by, perform and be governed and restricted by
each and all of the matters provided for by the Amended and Restated Note
Agreements, the Credit Agreement and the Intercreditor and Agency Agreement and
so incorporated herein to the same extent and with the same force and effect as
if each and all of said terms, provisions, restrictions, covenants and
agreements so incorporated herein by reference were set out and repeated herein
at length. Without limiting the foregoing, the Company covenants and agrees to
pay all taxes, assessments and governmental charges or levies imposed upon this
Deed of Trust or the Secured Obligations (other than income and franchise taxes
of the Trustee, the Collateral Agent, or of the Secured Parties (the "EXCLUDED
TAXES ")) to the extent provided in the documents set forth above. If any such
sums shall be advanced by the Trustee, the Collateral Agent, or any Secured
Party, they shall bear interest, shall be paid and shall be secured as provided
in SECTION 2.9 hereof.
SECTION 2.2. OWNERSHIP OF COLLATERAL. The Company covenants
and warrants that it has fee simple title to the Collateral and good and
marketable title to the other Collateral hereinbefore conveyed to the Trustee
free and clear of all liens, charges and encumbrances whatever except Permitted
Encumbrances, and the Company has full right, power and authority to convey,
transfer, mortgage and grant a first perfected security interest in the same to
the Trustee for the uses and purposes in this Deed of Trust set forth; and the
Company will warrant and defend the title to the Collateral against all claims
and demands whatsoever except Permitted Encumbrances.
SECTION 2.3. FURTHER ASSURANCES. The Company will, at its own
expense, do, execute, acknowledge and deliver all and every further reasonable
act, deed, conveyance, transfer and assurance necessary or proper for (a) the
better assuring, conveying, assigning and confirming unto the Collateral Agent
all of the Collateral, or property intended so to be, whether now owned or
hereafter acquired and (b) the perfection of the first security interest
(subject to the Permitted Exceptions) provided for in the Collateral whether
now owned or hereafter acquired. The Collateral Agent, as secured party, may
file one or more financing statements disclosing its security interest in any
or all of the Collateral with the Company's signature appearing thereon. The
Company also hereby grants the Collateral Agent, as such secured party, a power
of attorney to execute any such financing statement, or amendments and
supplements to financing statements, on behalf of the Company without notice
thereof to the Company, which
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power of attorney is coupled with an interest and is irrevocable until the
Secured Obligations have been fully satisfied.
SECTION 2.4. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The
Company will duly and punctually pay the principal of, and premium and interest
on all Notes secured hereby according to the terms thereof.
SECTION 2.5. MAINTENANCE OF COLLATERAL, OTHER LIENS,
COMPLIANCE WITH LAWS, ENVIRONMENTAL MATTERS, ETC. Without limiting the
provisions of the Amended and Restated Note Agreements, the Credit Agreement
and the Intercreditor and Agency Agreement,
(a) The Company shall (1) subject to SECTION 3.2, PROMPTLY repair,
restore, replace or rebuild any material buildings, improvements or Trade
Property now or hereafter on the Collateral which may become damaged or be
destroyed, (2) keep the Collateral in good condition and repair, ordinary wear
and tear excepted, without waste, and free from all claims, liens, charges and
encumbrances (except for taxes not yet delinquent and claims, liens, charges
and encumbrances that are being contested under and in compliance with SECTION
2.7(C) hereof) other than Permitted Encumbrances, (3) pay when due any
indebtedness which may be secured by a Lien or charge on the Collateral and
upon request provide satisfactory evidence of the discharge of such Lien to the
Collateral Agent (unless such payment is being contested under and in
compliance with SECTION 2.7(E) hereof), (4) comply with all requirements of law
or municipal ordinances, including without limitation all Environmental Laws,
with respect to the Collateral and the use thereof, failure to comply with
which would be reasonably likely to result in any material interference with
the use or operation of the Collateral by the Company or would materially
adversely affect the assets, business, operations, income or condition
(financial or otherwise) of the Company and its Subsidiaries, taken as a whole,
and (5) make no material alterations in said Collateral except as required by
law or municipal ordinance; PROVIDED that the Company may make such other
material alterations so long as such alterations are completed in compliance
with the requirements of paragraphs (b) and (c) of this SECTION 2.5.
(b) The Company may, at its expense, (1) construct upon the Collateral
additional buildings, structures, drainage systems, irrigation systems,
trellises, and other improvements and (2) install, assemble and place upon the
Collateral any items of Trade Property, signs, furniture, furnishings,
equipment, machinery and other tangible personal property used or useful in the
Company's business, in each case upon compliance with the provisions of
paragraph (a) of this SECTION 2.5. All such buildings, structures and other
improvements shall be and remain part of the realty and shall be subject to
this Deed of Trust with respect thereto.
(c) Any repair, restoration, rebuilding, substitution, replacement,
modification, alteration of or addition to the Collateral pursuant to SECTION
2.5(B) hereof must not materially impair the market value, structural integrity
or usefulness of the Collateral for use in the ordinary course of business;
shall be performed in a good and workmanlike manner and be expeditiously
completed in compliance in all material respects with all laws, ordinances,
orders, rules, regulations and requirements applicable thereto, failure to
comply with which could be reasonably likely to result in any material
interference with the use or operation of the Collateral by the Company or
would materially adversely affect the assets, business, operations, income or
condition (financial or otherwise) of the Company and its Subsidiaries, taken
as a whole,
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including to the extent necessary to maintain in full force and effect the
policies of insurance required by SECTION 2.6 hereof. All costs and expenses of
each such repair, restoration, rebuilding, substitution, replacement, the
discharge of all liens filed against the Collateral arising out of the same,
together with all costs and expenses necessary to obtain any permits or licenses
required in connection therewith shall be promptly paid by the Company (except
to the extent such costs and expenses are being contested under and in
compliance with SECTION 2.7(C) hereof).
(d) The Company:
(1) shall, as soon as reasonably practicable, maintain the
Collateral in compliance in all respects with any applicable
Environmental Law, except such failures to comply as would not
reasonably be likely to result in a Material Adverse Effect;
(2) shall obtain and maintain in full force and effect all
Governmental Approvals required for its operations at or on the
Collateral by any applicable Environmental Law, except for such
Governmental Approvals the failure to obtain or maintain which would
not be reasonably likely to have a Material Adverse Effect;
(3) as soon as reasonably practicable, cure any violation of
applicable Environmental Laws by any Person at the Collateral, except
such failures to cure as would not reasonably be likely to result in a
Material Adverse Effect;
(4) shall not, and shall not permit any other Person to, own
or operate on the Collateral any (i) landfill or dump or (ii) hazardous
waste treatment, storage or disposal facility as defined pursuant to
RCRA or any comparable state law;
(5) shall not use, generate, treat, store, release or dispose
Hazardous Substances at or on the Collateral except in the ordinary
course of its business and in compliance with Environmental Laws,
except such use, generation, treatment, storage, release or disposal of
Hazardous Substances at or on the Collateral as would not reasonably be
likely to result in a Material Adverse Effect;
(6) shall within twenty (20) Business Days notify the
Collateral Agent in writing of and provide any reasonably requested
documents upon learning of any of the following which arise in
connection with the Collateral:
(A) any liability for response or corrective action,
natural resource damage or other harm pursuant to CERCLA, RCRA
or any comparable state law which is reasonably likely to
result in a Material Adverse Effect;
(B) any Environmental Claim which is reasonably likely
to result in a Material Adverse Effect;
(C) any violation of an Environmental Law or release
or disposal of a Hazardous Substance which is reasonably
likely to result in a Material Adverse Effect;
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(D) any restriction on the ownership, occupancy, use
or transferability of the Collateral arising pursuant to any
(i) release, threatened release or disposal of a Hazardous
Substance or (ii) Environmental Law which is reasonably likely
to result in a Material Adverse Effect; or,
(E) any other environmental, natural resource, health
or safety condition, which would reasonably be expected to
have a Material Adverse Effect; and,
(7) at its expense, will conduct any investigation, study,
sampling and testing, and undertake any cleanup, removal, remedial or
other response action necessary to remove, clean up or xxxxx any
material quantity of Hazardous Substance released or disposed at or on
the Collateral as required by any applicable Environmental Law and any
binding order or directive from a Governmental Authority having
jurisdiction, except to the extent the Company is reasonably
contesting any Environmental Law or any order or directive from a
Governmental Authority, so long as (i) such contest is in good faith
and by appropriate proceedings, (ii) adequate reserves are maintained
in accordance with GAAP and (iii) no forfeiture will result from a
failure to comply with the contested requirement.
(e) The Company at its own expense and at the reasonable written
request of the Collateral Agent shall provide reasonably expeditiously an
environmental report of reasonable scope, form and depth by a consultant
reasonably acceptable to the Collateral Agent as to any matter for which notice
is required to be provided pursuant to SECTION 2.5(D)(7) above or which may
reasonably be believed by the Collateral Agent to form the basis of a material
Environmental Claim in connection with the Collateral. If such a requested
environmental report is not delivered within seventy-five (75) days after
receipt of the Collateral Agent's request, then the Collateral Agent may arrange
for same, and the Company hereby grants to the Collateral Agent and its
representatives access to the Collateral and a license to undertake such an
assessment. The reasonable cost of any assessment arranged for by the Collateral
Agent pursuant to this provision will be payable by the Company on demand and
added to the obligations secured by the Security Documents.
(f) The Company may use and operate the Collateral for any lawful
purpose not inconsistent with the provisions of the Amended and Restated Note
Agreements or the Credit Agreement.
(g) In accordance with California Code of Civil Procedure Section
726.5, Collateral Agent may waive its lien against the Collateral or any portion
thereof, to the extent such property is found to be environmentally impaired,
and may exercise any and all rights and remedies of an unsecured creditor
against Company and all of Company's assets and property for the recovery of any
deficiency, including, without limitation, seeking an attachment order under
California Code of Civil Procedure Section 483.010. No such waiver shall be
final or binding on Collateral Agent unless and until a final money judgment is
obtained against Company. As between Collateral Agent and Company, for purposes
of California Code of Civil Procedure Section 726.5, Company shall have the
burden of proving that the release or threatened release was not knowingly or
negligently caused or contributed to, or knowingly or willfully permitted or
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acquiesced to by Company or any related party (or any affiliate or agent of
Company or any related party) and that Company made written disclosure thereof
to Collateral Agent or that Collateral Agent otherwise obtained actual knowledge
thereof prior to the making of the Credit Agreement. Notwithstanding anything to
the contrary contained in the Deed of Trust or any of the Security Documents,
Company shall be fully and personally liable for all judgments and awards
entered against Company pursuant to California Code of Civil Procedure 726.5 and
such liability shall not be limited by the original principal amount of the
obligations secured by this Deed of Trust. Company's obligations hereunder shall
survive the foreclosure, deed in lieu of foreclosure, release, reconveyance or
any other transfer of the Collateral or this Deed of Trust. For the purposes of
any action brought under this Deed of Trust, Company hereby waives the defense
of laches and any applicable statute of limitations. For purposes of California
Code of Civil Procedure 726.5, the acts, knowledge and notice of each "726.5
Party" shall be attributed to and be deemed to have been performed by the party
or parties then obligated on or liable for payment of the Indebtedness. As used
herein, "726.5 Party" shall mean Company, any partner thereof, any successor
owner to Company of all or any portion of the Collateral, any related party of
Company or any such successor and any affiliate or agent of Company, any such
successor or any such related party.
SECTION 2.6. INSURANCE. The Company will maintain, and will cause each
Subsidiary to maintain, insurance coverage with financially sound and reputable
domestic insurers in such forms and amounts and against such risks as are
customary for companies of established reputation engaged in the same or a
similar business and owning and operating similar properties as the Collateral.
Without limiting the foregoing, the Company agree that they will, to the extent
available, continuously maintain the following described policies of insurance:
(i) Property insurance, including business interruption
insurance, against loss and damage by all risks of physical loss or
damage, including fire, windstorm, builders risk (including
construction and repair period coverage) and other risks covered by the
so called "all risks" form of property insurance policy with
replacement cost endorsements (excluding therefrom flood and earthquake
coverage); PROVIDED, HOWEVER, that the amount of such insurance with
respect to the Collateral shall not at any time be less than a blanket
limit of $70,000,000 in the aggregate; and PROVIDED FURTHER that such
insurance POLICY SHALL provide that NOT more than $1,000,000 may be
deductible FROM the LOSS payable with respect to any casualty;
(ii) fiduciary liability insurance with such terms as are
customary for companies of established size and reputation engaged in
substantially the same business as the Company and similarly situated;
PROVIDED, HOWEVER, that the amount of such insurance shall not be less
than $1,000,000; and PROVIDED, FURTHER, that such insurance shall
provide with respect to the Company that not more than $100,000 may be
deductible from any loss payable and that with respect to individuals
that not more than $100,000 may be deductible from any loss payable
with respect to any casualty;
(iii) surety bonds (securing leases, permits franchises,
taxes, notary public, judicial and other bonds) in amounts and with
such terms as are customary for companies of established size and
reputation engaged in substantially the same business as the Company
and similarly situated;
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(iv) workers compensation insurance and employer's liability
insurance, for all employees of the Company engaged on or with respect
to any of the Collateral and with such terms as are customary for
companies of established size and reputation engaged in substantially
the same business as the Company and similarly situated, or if such
limits are established by law, in such amounts;
(v) boiler and machinery insurance covering pressure vessels,
air tanks, boilers, machinery, pressure pipings, heating air
conditioning and elevator equipment and escalator equipment, PROVIDED
the improvements contain equipment of such nature and insurance against
loss or occupancy or use arising from any such breakdown, in such
amounts and with such terms as are customary for companies of
established size and reputation engaged in substantially the same
business as the Company and similarly situated;
(vi) insurance insuring against public liability for loss or
damage (including bodily injury) to the Persons or Property of others
from such risks and in such amounts as are customary for companies of
established size and reputation engaged in substantially the same
business as the Company and similarly situated (including construction
and repair period coverage); PROVIDED, HOWEVER, that in no event shall
the amount of such insurance be less than an aggregate of $15,000,000
under single limit liability for such loss; and provided, further, that
such Insurance policy shall provide that not more than $1,000,000 may
be deductible from any loss payable; and
(vii) other insurance against such risks as is customary to be
carried by companies of established size and reputation engaged in
substantially the same business as the Company and similarly situated
and owning Properties in the state in which the Collateral is located.
(b) Form of Policies. Any insurance policies carried in accordance with
this SECTION 2.6 shall be written by companies of recognized international or
national standing authorized to do business in the State of California and: (i)
shall with respect to the insurance described in clauses (i) and (vi) above,
name the Trustee, the Collateral Agent and each Noteholder and each Bank AS an
additional insured, as their interests may appear, (ii) in the case of policies
covering loss or damage to the Collateral, shall provide that such losses, if
any, shall be payable solely to the Collateral Agent under a standard mortgagee
clause reasonably satisfactory to the Collateral Agent, (iii) shall provide that
the Trustee's and Collateral Agent's interest shall be insured regardless of any
breach or violation by the Company of any warranties, declarations or conditions
contained in such policies, (iv) as to the interest of the Trustee and the
Collateral Agent therein, shall not be invalidated by the use or operation of
the Collateral for purposes which are not permitted by such policies, nor by any
foreclosure or other proceedings relating to the Collateral, (v) except with
respect to the insurance described in clause (iv) of SECTION 2.6(A), the
insurers shall waive any right of subrogation of the insurers to any set-off or
counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of the Company, (VI) if any premium or installment is
not paid when due, or if such insurance would lapse or be cancelled, terminated
or materially changed for any reason whatsoever shall provide that the insurers
WILL promptly notify the Collateral Agent and any such lapse, cancellation,
termination or change shall not be effective as to the Trustees for thirty days
after receipt of such
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notice, and (vii) appropriate certification shall be made to the Collateral
Agent by each insurer with respect thereto. Provided no Default or Event of
Default has occurred or is continuing, the loss, if any, under any policy
pertaining to loss by reason of damage to or destruction of any portion of any
of the Collateral shall be adjusted with the insurance companies by the
Company, subject to the approval of the Collateral Agent if the loss exceeds
$1,500,000; PROVIDED that such approval shall not unreasonably be withheld or
delayed. The loss so adjusted shall be paid to the Collateral Agent pursuant to
said loss payable clause unless said loss is $1,500,000 or less in which case
said loss shall be paid directly to the Company unless a Default or Event of
Default has occurred and is continuing, in which event any such loss shall be
paid to the Collateral Agent.
The Company shall furnish the Collateral Agent with certificates or
other satisfactory evidence of MAINTENANCE OF the insurance required hereunder
and, with respect to any renewal policy or policies, shall furnish certificates
evidencing such renewal not less than 30 days prior to the expiration date of
the original policy or renewal policies or if not so available, immediately
upon the receipt thereof, and shall furnish insurance binders evidencing such
renewal immediately upon receipt thereof. All such policies shall provide that
the same shall not be cancelled without at least 30 days' prior written notice
to the Collateral Agent and the Company.
Upon the request of Trustee, Collateral Agent or any Secured Party,
the Company shall furnish the Collateral Agent from time to time with full
INFORMATION AS to the insurance carried by it and, if so requested, copies of
all such insurance policies. The Company shall also furnish to Collateral Agent
from time to time upon the request of the Trustee, Collateral Agent or any
Secured Party a certificate of the Company's insurance broker or other
insurance specialist stating that all premiums then due on the policies
relating to insurance on the Collateral have been .paid, that such policies are
in full force and effect and that such insurance coverage and such policies
comply with all the requirements of this subsection. Receipt of notice of
termination or cancellation of any such insurance policies or reduction of
coverages or amounts thereunder shall entitle the Collateral Agent to renew any
such policies, cause the coverages and amounts thereof to be maintained at
levels required pursuant to this Section 2.6 or otherwise to obtain similar
insurance in place of such policies, in each case at the expense of the
Company.
SECTION 2.7. PAYMENT OF TAXES AND OTHER CHARGES; CONTESTS THEREOF.
(a) Subject to SECTION 2.7(C) BELOW, and without limiting the
provisions of the Amended and Restated Note Agreements and the Credit
Agreement, the Company will pay and discharge, before the same shall become
delinquent, together with interest and penalties thereon, if any, (1) all
taxes, assessments (INCLUDING ASSESSMENTS for benefits from public works or
improvements whenever begun or completed), levies, fees, water and sewer rents
and charges, and all other governmental charges, general and special, ordinary
and extraordinary, and whether or not within the contemplation of the parties
hereto, which are at any time levied upon or assessed against it or the
Collateral or any part thereof or upon this Deed of Trust or the Secured
Obligations secured hereby, or upon the revenues, rents, issues, income and
profits in respect of the Collateral, or arising in respect of the occupancy,
use or possession thereof, but excluding the Excluded Taxes, which failure to
pay would result in the creation of a Lien upon the Collateral or any part
thereof, or upon the revenues, rents, issues, income and profits of the
Collateral or in the diminution thereof or would result in any material
interference with the use or operation of the
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Collateral by the Company, (2) all corporate franchise, excise and other taxes,
fees and charges assessed, levied or imposed in respect of its corporate
existence or its right to do business in any state, (3) all income, excess
profits, excise, sales, franchise, gross receipts and other taxes, duties or
imposts, whether of alike or different nature, assessed, levied or imposed by
any Governmental Authority on it or the Collateral, or any portion thereof, or
upon the revenues, rents, issues, income and profits of the Collateral whether
or not the failure to pay any such tax, duty or impost might result in the
creation of a Lien upon any asset of the Company or the Collateral or any part
thereof or upon the revenues, rents, issues, income and profits of the
Collateral or in the diminution thereof, and whether or not any such tax, duty
or impost is payable directly by the Company or is subject to withholding at
the source and (4) all lawful claims and demands of mechanics, laborers,
materialmen and others which, if unpaid, might result in the creation of a Lien
on the Collateral or upon the revenues, rents, issues, income and profits of
the Collateral and, in general, will do or cause to be done everything
necessary so that the Lien hereof shall be fully preserved, at the cost of the
Company, without expense to the Trustee or the Collateral Agent (all of which
taxes, assessments, levies, fees and other governmental or non-governmental
charges, claims and demands of like nature are hereinafter referred to as
"IMPOSITIONS"). The Company shall discharge any claim or Lien relating to
Impositions upon the Collateral.
(b) The Company will pay when due all utility charges which are
incurred by the Company for the benefit of the Collateral or which may become a
charge or Lien against the Collateral for gas, electricity, water or sewer
services furnished to the Collateral and all other assessments or charges of a
similar nature, whether public or private, affecting the Collateral or any
portion thereof, whether or not such taxes, assessments or charges are or may
become Liens thereon.
(C) CONTEST. Without limiting the provisions of the Amended and
Restated Note Agreements and the Credit Agreement, and always subject to the
terms and conditions thereof, the Company may, in good faith and with reasonable
diligence and by appropriate proceedings diligently prosecuted, contest or cause
to be contested the validity or amount of any such Impositions, PROVIDED that:
(1) such contest shall have the effect of preventing (i) any
sale, forfeiture OR loss of the Collateral or any part thereof or
interest therein to satisfy the same and (ii) any material
interference with the value, use or occupancy of the Collateral or any
part thereof; and
(2) the Company shall have established with respect to such
Impositions (and any attendant penalties or late fees) reserves deemed
by it to be adequate with respect thereto.
SECTION 2.8. LIMITATION ON LIENS. The Company will not create
or incur or suffer to be incurred or to exist, any mortgage, pledge, security
interest, encumbrance, charge or other Lien of any kind upon the Collateral,
whether now owned or hereafter acquired, or upon any income or proceeds
therefrom, except Permitted Encumbrances and except for those exceptions noted
on the policies of title insurance delivered to the Trustee and the Collateral
Agent on the Closing Date.
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SECTION 2.9. ADVANCES. If the Company shall fail to comply
with the covenants contained herein or contained in the Amended and Restated
Note Agreements, the Credit Agreement, the Intercreditor and Agency Agreement
or the other Note Documents and incorporated herein by reference, the Trustee
or the Collateral Agent, without waiving any Default or Event of Default or
releasing any obligation, may (but shall be under no obligation to) at any time
thereafter after five Business Days' prior written notice to the Company make
such payment or perform such act for the account and at the expense of the
Company, and may enter upon the Collateral or any part thereof for such purpose
and take all such action thereon as, in the opinion of the Trustee, may be
necessary or reasonably appropriate therefore. All sums so paid by the Trustee
or the Collateral Agent, and all costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) so incurred, together with
interest thereon at the Advance Overdue Rate from the date of payment or
incurrence, shall be secured hereby and shall be paid by the Company to the
Collateral Agent on demand. The Collateral Agent in making any payment
authorized under this SECTION 2.9 relating to taxes or assessments may do so
according to any bill, statement or estimate procured from the appropriate
public office without inquiry into the accuracy of such bill, statement or
estimate or into the validity of any tax assessment, sale, forfeiture, tax Lien
or title or claim thereof. The Collateral Agent, in performing any act
hereunder, shall be the sole judge of whether the Company is required to
perform the same under the terms of this Deed of Trust and no such advance
shall be deemed to relieve the Company from any default hereunder.
SECTION 2.10. RECORDATION. The Company will, at its own
expense, cause this Deed of Trust and all supplements hereto and any financing
statements and continuation statements required by the Uniform Commercial Code
or other law in respect thereof at all times to be kept recorded and filed at
its own expense in such manner and in such places as may be required by law in
order to fully preserve and protect the rights of the Trustee and the
Collateral Agent hereunder.
SECTION 2.11. AFTER-ACQUIRED PROPERTY. Any and all property
hereafter acquired which is of the kind or nature described in the Granting
Clauses hereof and is or is intended to become a part thereof, shall IPSO
FACTO, and without any further conveyance, assignment or act on the part of the
Company or the Trustee or the Collateral Agent become and be, subject to the
Lien and first perfected security interest OF this Deed of Trust as fully and
completely as though specifically described herein; but nevertheless the
Company shall from time to time, if requested by the Trustee or the Collateral
Agent, execute and deliver any and all such further assurances, conveyances and
assignments thereof as the Trustee or the Collateral Agent may reasonably
require for the purpose of expressly and specifically subjecting to the Lien
and first perfected security interest of this Deed of Trust any and all such
property, subject to Permitted Encumbrances. In the event the Company acquires
a material leasehold estate in any property which is of the kind or nature
described in the Granting Clauses hereof, such leasehold estate shall be made
subject to a lien and first perfected security interest in favor of the Trustee
by means of the Company's execution and delivery of a leasehold mortgage and
security agreement in form and substance reasonably satisfactory to the Trustee
and the Collateral Agent. The Company agrees that in the event the Company
acquires a leasehold estate as described in this SECTION 2.11, the Company will
use commercially reasonable efforts to promptly obtain from the subject lessor
an agreement for the benefit of the Trustee and the Collateral Agent, INTER
ALIA, providing that the lessor will give the Trustee and the Collateral Agent
written notice of any
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defaults under the subject lease together with the option to cure such defaults
and providing for such other requirements as the Collateral Agent may reasonably
request.
SECTION 2.12. INDEMNIFCATION; WAIVER OF OFFSET
SET
(a) If the Trustee or the Collateral Agent is made a party defendant to
any litigation concerning this Deed of Trust or the Collateral or any part
thereof or interest therein, then the Company shall indemnify, defend and hold
the Trustee or the Collateral Agent harmless from all liability by reason of
said litigation, including reasonable attorneys' fees and expenses incurred by
the Trustee or the Collateral Agent in any such litigation, whether or not any
such litigation is prosecuted to judgment. If the Trustee or the Collateral
Agent commences an action against the Company to enforce any of the terms hereof
or because of the breach by the Company of any of the terms hereof, or for the
recovery of any of the Secured Obligations, the Trustee or the Collateral Agent
shall have its reasonable attorneys' fees and expenses paid by the Company. If
the Trustee or the Collateral Agent is a party to any discussion or negotiations
relating to any amendment, waivers or consents to the Amended and Restated
Senior Secured Notes, the Credit Agreement Term Notes, the Amended and Restated
Note Agreements, the Credit Agreement, the Intercreditor and Agency Agreement,
this Deed of Trust or the other Note Documents, or relating to any loan
modification, recasting, settlement or other agreement relating to the Secured
Obligations, then the Company shall indemnify, defend and hold the Trustee or
the Collateral Agent harmless from all liability, costs and expenses incurred in
connection therewith, including reasonable attorneys' fees and expenses.
(b) All sums payable by the Company hereunder shall be paid without
notice, demand, counterclaim, setoff, deduction or defense and without
abatement, suspension, deferment, diminution or reduction, and the obligations
and liabilities of the Company hereunder shall in no way be released, discharged
or otherwise affected (except as expressly provided herein) by reason of (i) any
damage to or destruction of or any condemnation or similar taking of the
Collateral or any part thereof; (ii) any restriction or prevention of or
interference with any use of the Collateral or any part thereof; (iii) any title
defect or encumbrance on the Collateral or any part thereof by title paramount
or otherwise; (iv) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceeding relating to the
Trustee or the Collateral Agent, or any action taken with RESPECT to this Deed
OF Trust by any trustee OR receiver of the Trustee or the Collateral Agent, or
by any court, in any such proceeding; (v) any claim which the Company has or
might have against the Trustee or the Collateral Agent; (vi) any default or
failure on the part of the Trustee or the Collateral Agent to perform or comply
with any of the terms hereof or of any other agreement with the Company; or
(vii) any other occurrence whatsoever, whether similar or dissimilar to the
foregoing; whether or not the Company shall have notice or knowledge of any of
the foregoing. Except as expressly provided herein, the Company waives to the
extent permitted by law all rights now or hereafter conferred by statute or
otherwise to any abatement, suspension, deferment, diminution or reduction of
any of the Secured Obligations payable by the Company.
(c) The Company shall, at its sole expense, indemnify, defend (with
attorneys, consultants and experts reasonably acceptable to the Collateral
Agent), and hold the Trustee and the Collateral Agent harmless from and against
any and all liens, damages, losses, liabilities, obligations, settlement
payments, penalties, assessments, citations, directives, claims, litigation,
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demands, defenses, judgments, suits, proceedings, costs, disbursements or
expenses of any kind or of any nature whatsoever which may at any time be
imposed upon, incurred by or asserted or awarded against the Trustee and
Collateral Agent or the Collateral, (including, without limitation, those
arising out of or attributed, directly or indirectly, to or resulting from any
and all negligent acts or omissions of Trustee or Collateral Agent, whether
caused by the sole negligence of Trustee or Collateral Agent or by the
concurrent negligence of Trustee or Collateral Agent), and arising prior to the
Collateral Agent's obtaining title to the Collateral through foreclosure or
other like proceedings, directly or indirectly from or out of (i) the presence,
release or threat of release of any Hazardous Substance on, in, under or
affecting all or any portion of the Collateral or any surrounding areas,
regardless of whether or not caused by or within control of the Company; (ii)
the violation of any Environmental Laws relating to or affecting the Collateral,
caused by the Company; (iii) the failure by the Company to comply fully with the
terms and conditions of THIS SECTION 2.12(C); (iv) the breach of any
representation or warranty contained in this Deed of Trust or the Note
Agreements relating to matters covered by this SECTION 2.12(C); or (v) the
enforcement of this SECTION 2.12(C), including, without limitation, the cost of
assessment, containment and/or removal of any and all Hazardous Substances from
all or any portion of the Collateral or any surrounding areas, the cost of any
actions taken in response to the presence, release or threat of release of any
Hazardous Substance on, in, under or affecting any portion of the Collateral or
any surrounding areas to prevent or minimize such release or threat of release
so that it does not migrate or otherwise cause or threaten danger to present or
future public health, safety, welfare or the environment, and costs incurred to
comply with the Environmental Laws in connection with all or any portion of the
Collateral or any surrounding areas; except, in each case, to the extent arising
out of the gross negligence or willful misconduct of the Trustee or Collateral
Agent. The indemnity set forth in this SECTION 2.12(C) shall also include any
diminution in the value of the security afforded by the Collateral or any future
reduction in the sales price of the Collateral by reason of any matter set forth
in this SECTION 2.12(C). The Company's obligations under this SECTION 2.12(C)
shall survive payment in full of the indebtedness secured hereby and shall be in
addition to all other rights of Trustee and the Collateral Agent under this Deed
of Trust, the Amended and Restated Note Agreements, the Credit Agreement, the
Amended and Restated Senior Secured Notes, the Credit Agreement Notes and the
Intercreditor and Agency Agreement.
SECTION 3 POSSESSION, USE AND RELEASE OF COLLATERAL.
SECTION 3.1. COMPANY'S RIGHT OF POSSESSION. Provided no Event
of Default hereunder has occurred and is continuing, the Company shall be
suffered and permitted to remain in full possession, enjoyment and control of
the Collateral subject always to the observance and performance of the terms of
this Deed of Trust, the Amended and Restated Note Agreements, and the Credit
Agreement.
SECTION 3.2. DISPOSITION OF CERTAIN TRADE PROPERTY The
Company, so long as no Event of Default hereunder has occurred and is
continuing and subject to the provisions of SECTION 3.3 hereof in connection
with each replacement, shall have full power, from time to time, in its
discretion, and without any action by or notice to the Trustee or the
Collateral Agent, to sell, exchange, or otherwise dispose of, any item of Trade
Property, at any time subject to the security interest hereof pursuant to the
terns of the Amended and Restated Note Agreements and the Credit Agreement or
which may have become worn out, unserviceable, obsolete or
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unnecessary for use in the conduct of its business; PROVIDED HOWEVER, THAT with
respect to any worn out, unserviceable, obsolete or unnecessary Trade Property
except where such item is, in the ordinary course of business, unnecessary to
the conduct of its business, the Company shall contemporaneously replace the
same with, or substitute for the same, other items of Trade Property having a
value and utility at least equal to that of the items of Trade Property so
replaced, which shall forthwith become, without further action, subject to the
security interest of this Deed of Trust.
SECTION 3.3, RELEASE OF TRADE PROPERTY
(a) The Trustee or the Collateral Agent, so long as no Event of Default
hereunder exists, shall execute a release of its security interest hereunder as
to the items of Trade Property which the Company has replaced or otherwise
disposed of under SECTION 3.2 hereof (1) upon the written notice of the Company
in the event such Trade Property has an estimated fair market value in the good
faith judgment of the Company of less than $1,500,000 which notice shall (i)
reference this SECTION 3.3, (ii) estimate the fair market value of the Trade
Property replaced or otherwise disposed of and (iii) request such release, or
(2) for all other Trade Property, upon:
(i) receipt of an Officer's Certificate (A) stating that no
Event of Default exists, (B) describing in reasonable detail the newly
acquired items of Trade Property (the "REPLACEMENT ITEMS OF TRADE
PROPERTY") replacing the old items of Trade Property, (C) stating
that, except where such item is, in the ordinary course of business,
unnecessary to the conduct of its business, the Replacement Items of
Trade Property are in as good operating condition as, and have a
value, utility and useful life at least equal to that of the items of
Trade Property so replaced, and (D) stating that the Company has good
title to the Replacement Items of Trade Property, free of all Liens
other than Permitted Encumbrances;
(ii) execution and delivery of a Deed of Trust and Security
Agreement Supplement and any necessary financing statements subjecting
the Replacement Items of Trade Property to the lien of this Deed of
Trust, but only such supplement or financing statement as shall be
necessary to subject such Replacement Items of Trade Property to the
lien and first perfected security interest (subject to the Permitted
Encumbrances) of this Deed of Trust;
(iii) receipt of evidence that such Deed of Trust and Security
Agreement Supplement and financing statements have been recorded,
registered and filed as may be deemed reasonably necessary by counsel
for the Trustee and the Collateral Agent in order to preserve and
protect the rights of the Collateral Agent as to all property
comprising the Collateral; and
(iv) if the fair market value of the Replacement Items of
Trade Property equal or exceed $8,000,000, receipt of an opinion of
counsel reasonably satisfactory to the Trustee or Collateral Agent to
the effect that the Company's right, title and interest in and to the
Replacement Items of Trade Property, are either subject to the lien of
this Deed of Trust, or that such Deed of Trust and Security Agreement
Supplement and any necessary financing statements have been recorded,
registered and filed in such manner and in such
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places as may be required by law to preserve and protect the Trustee
and the Collateral Agent as to all property comprising the Collateral
(including, without limitation, the Replacement Items of Trade
Property).
(b) No purchaser in good faith of an item of Trade Property shall be
bound to inquire into the authority of the Company to sell such item of Trade
Property, or the authority of the Trustee or the Collateral Agent to execute a
release of its security interest, under the terms hereof.
SECTION 3.4. RELEASE OF COLLATERAL -- LOSS, DAMAGE TO OR
DESTRUCTION OF THE COLLATERAL AND PREPAYMENT OF THE NOTES. Upon the occurrence
of any material loss, damage to or destruction of the Collateral, the Company
shall give the Trustee and the Collateral Agent, within 30 days after the
occurrence thereof, written notice of such loss, damage or destruction. Such
notice shall generally describe the nature and extent of the loss, damage to or
destruction of the Collateral and shall include a detailed estimate of the cost
of repair or replacement of such damaged or destroyed Collateral. In the case
of any loss, damage to or destruction of the Collateral which results in a
prepayment of the Notes in accordance with the provisions of SECTION 4.1
hereof, the Trustee or the Collateral Agent shall execute a release in respect
of the damaged or destroyed Collateral upon receipt of such prepayment in full.
All determinations of the cost of repair or replacement of the
Collateral hereof shall be made by the Company in good faith and shall be
evidenced by the delivery of an Officer's Certificate or a resolution of the
Board of Directors of the Company certifying the accuracy and reasonableness of
such determination. In making such determinations, the Company shall base such
calculations on engineer's, architect's or other objective criteria, including
insurance estimates of cost of repair, as shall be reasonably consulted in good
faith by the Company.
SECTION 3.5. EMINENT DOMAIN. The Company, immediately upon
obtaining knowledge of the institution of any proceeding for the condemnation
of the Collateral or any portion thereof, shall notify the Collateral Agent of
the pendency of such proceeding. The Collateral Agent may participate in any
such proceeding, and the Company from time to time will deliver or cause to be
delivered to the Collateral Agent all instruments requested by it to permit
such participation. Any award or compensation payable to the Company on account
of such condemnation proceeding, if any, shall be paid to the Collateral Agent,
and such award of compensation shall be retained by the Collateral Agent as
part of the Collateral and applied in accordance with SECTION 4.1(A) OR SECTION
4.1(B) hereof. The Collateral Agent shall be under no obligation to question
the amount of the award of compensation and, without limiting the Company's
right to adjust such award, the Collateral Agent may accept any such award of
compensation. In any such condemnation proceedings the Collateral Agent may be
represented by counsel. The reasonable costs of counsel shall be paid by the
Company.
SECTION 4. APPLICATION OF INSURANCE AND CERTAIN OTHER MONEYS RECEIVED BY THE
COLLATERAL AGENT.
SECTION 4.1. INSURANCE PROCEEDS AND CONDEMNATION AWARDS. The
amounts received by or payable to the Collateral Agent from time to time which
constitute insurance proceeds in respect of any damage to or destruction of the
Collateral or any part thereof or
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Condemnation Awards or compensation covering the Collateral (less the actual
costs, fees and expenses incurred in the collection thereof) shall be held by
the Collateral Agent as part of the Collateral and shall be applied by the
Collateral Agent, subject to the terms of the Intercreditor and Agency
Agreement, as set forth below (Company hereby unconditionally and irrevocably
waives all rights of a property owner under the provisions of California Code of
Civil Procedure ss. 1265.225(a), or any successor statute, providing for the
allocation of condemnation proceeds between a property owner and a lienholder):
(a) In case of any loss, damage to, destruction or condemnation of the
Collateral or any part thereof for which the total cost of repair or replacement
is less than $1,500,000, such proceeds shall be paid over to the Company and the
Company shall have the right and the option, so long as no Event of Default
hereunder has occurred and is continuing, to use the net insurance proceeds,
Condemnation Awards or other compensation from such loss, damage to, destruction
or condemnation of the Collateral for either (i) the repair or replacement of
such Collateral so lost, damaged, destroyed or condemned, so long as such repair
or replacement is commenced within 180 days of the receipt by the Company of
such insurance proceeds or condemnation award and the Collateral Agent has
received written evidence satisfactory to the Collateral Agent demonstrating
that the collateral lost, damaged or destroyed will be replaced or restored to
substantially the same market value and condition immediately prior to the loss,
damage to, destruction or condemnation of or other event giving rise to the
payment of such proceeds; or (ii) the reduction of the Secured Obligations
(whether or not then due) in accordance with and pursuant to the terms and
provisions of the Intercreditor and Agency Agreement including, without
limitation, the payment of the Make Whole Premium, as applicable; and
(b) In case of any loss, damage to or destruction of the Collateral or
any part thereof for which the total cost of repair or replacement is greater
than or equal to $1,500,000, the net insurance proceeds, Condemnation Awards or
other compensation from such loss, damage to, destruction or condemnation of the
Collateral shall be placed in a separate escrow account and 180 days thereafter
shall be applied by the Collateral Agent to the reduction of the Secured
Obligations (whether or not then due) in accordance with and pursuant to the
terns and provisions of the Intercreditor and Agency Agreement including,
without limitation, the payment of the Make Whole Premium, if applicable;
PROVIDED, HOWEVER, that the Collateral Agent agrees, subject to the immediately
following sentence, to release such insurance proceeds to the Company for
replacement or restoration of the portion of the Collateral so lost, damaged or
destroyed if, but only if, (i) no Event of Default hereunder has occurred and is
continuing at the time of release, (ii) written application for such release
signed by the President or any Vice President of the Company is received by the
Collateral Agent within 180 days of the placement of such proceeds in escrow and
(iii) the Collateral Agent has received evidence reasonably satisfactory to the
Collateral Agent demonstrating that the Collateral lost, damaged or destroyed
has been or will be replaced or restored to substantially the same market value
and condition immediately prior to the loss, damage to, destruction or
condemnation of or other event giving rise to the payment of such insurance
proceeds. All insurance proceeds and Condemnation Awards shall be subject to the
lien and security interest of the Collateral Agent hereunder. In the case of any
repair or replacement of the Collateral for which the cost exceeds $8,000,000,
the Collateral Agent shall receive a supplement hereto sufficient, as shown by
an opinion of counsel (which may be counsel for the Company) to grant a valid
first Lien and first perfected security interest (subject to Permitted
Encumbrances) in any additions to or substitutions for the
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Collateral to or for the benefit of the Collateral Agent, which opinion shall
also cover the filing and/or recording of such supplement (and a financing
statement or similar notice thereof if and to the extent permitted or required
by applicable law) so as to perfect the Lien and security interest in such
additions or substitutions, or in the alternative an opinion that no such
supplement is required for such purpose.
SECTION 4.2. TITLE INSURANCE. Any moneys received by the
Trustee or the Collateral Agent as payment for any loss under any policy of
title insurance which was delivered by the Company shall become part of the
Collateral.
SECTION 4.3. OTHER PROCEEDS. Any other moneys received by the
Collateral Agent in connection with the release of the Collateral shall be held
by the Collateral Agent as part of the Collateral and shall be applied by the
Collateral Agent upon the terms and in the manner provided in SECTION 5.3
hereof.
SECTION 4.4. APPLICATION IF EVENT of DEFAULT EXISTS. If an
Event of Default hereunder has occurred and is continuing, all amounts received
by the Collateral Agent under this Deed of Trust, including without limitation,
all amounts held pursuant to SECTION 4.5 hereof, shall be applied in the manner
PROVIDED FOR IN SECTION 5.3 hereof in respect of proceeds and avails of the
Collateral.
SECTION 4.5. INVESTMENT OF COLLATERAL. All monies held by the
Collateral Agent hereunder as Collateral shall be invested and reinvested by
the Collateral Agent at the direction of the Company in one or more Eligible
Investments. The Collateral Agent shall not in any way be held liable by reason
of any insufficiency of such invested Collateral resulting from any loss on any
Eligible Investment included therein. All interest earned on such Eligible
Investments shall be held by the Collateral Agent as Collateral hereunder and
shall be invested and reinvested pursuant to this SECTION 4.5.
SECTION 5. DEFAULTS AND REMEDIES THEREFOR.
SECTION 5.1. EVENTS OF DEFAULT. The Company acknowledges and
agrees, without limitation, that each and all of the terms and provisions of
Section 11 of the Amended and Restated Note Agreements and Article XI of the
Credit Agreement, have been and are incorporated into this Deed of Trust by
reference to the same extent as though fully set out herein and that the term
Event of Default wherever used in this Deed of Trust shall mean either: (a) an
Event of Default as defined in the Amended and Restated Note Agreements or the
Credit Agreement, as the case may be, or (b) the failure of the Company to
comply with any covenant, agreement or warranty contained in this Deed of Trust
within 30 days after the earlier of the date that (1) the Collateral Agent
shall have given written notice thereof to the Company, or (2) such failure
shall first become actually known to a Responsible Officer of the Company;
PROVIDED, HOWEVER, that if the Company shall be diligently proceeding to
correct such failure but shall be unable to correct such failure within 30
days, then such period shall continue for an additional 60 days if at the end
of the initial 30-day period it can be reasonably expected that such failure
can be corrected within such 60 additional days and the Company shall continue
to proceed diligently to correct such failure during such additional 60 day
period.
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SECTION 5.2. REMEDIES. When any Event of Default hereunder has
occurred and is continuing and pursuant to the terms and conditions of the
Amended and Restated Note Agreements or the Credit Agreement, the Collateral
Agent or Trustee may exercise any one or more or all, and in any order, of the
remedies hereinafter set forth, it being expressly understood that no remedy
herein or in the Amended and Restated Note Agreements or the Credit Agreement
conferred is intended to be exclusive of any other remedy or remedies; but each
and every remedy shall be cumulative and shall be in addition to every other
remedy given herein or now or hereafter existing at law or in equity or by
statute:
(a) Subject to compliance with the terms and provisions of the
Intercreditor and Agency Agreement, the Noteholders and the Lenders may, by
notice in writing to the Company, declare the entire unpaid balance of the
Amended and Restated Senior Secured Notes and the Credit Agreement Notes,
respectively, to be immediately due and payable; and thereupon all outstanding
principal, together with all accrued interest thereon and premium, if any, and
all other fees or other amounts payable with respect thereto shall be and
become immediately due and payable.
(b) Subject to the terms and conditions of the Intercreditor and
Agency Agreement, the Collateral Agent, personally or by agents or attorneys
may, to the extent permitted by law, enter into and take possession of all or
any part of the Collateral, and may forthwith use, operate and manage the
Collateral, collect the earnings and income therefrom, pay all charges
including taxes and assessments levied thereon and operating and maintenance
expenses and all disbursements and liabilities of the Company hereunder and
apply the net proceeds arising from any such operation of the Collateral as
provided in SECTION 5.3 hereof in respect of the proceeds of a sale of the
Collateral. The right to enter and take possession of the Collateral and use
any personal property therein, to manage, operate and conserve the same, and to
collect the rents, issues and profits thereof, shall be in addition to all
other rights or remedies of the Collateral Agent hereunder or afforded by law
(including, without limitation the rights of Collateral Agent set forth in
California Civil Code Section 2938), and may be exercised concurrently
therewith or independently thereof. The expenses (including any reasonable
receiver's fees, reasonable counsel fees, costs and agent's compensation)
incurred pursuant to the powers herein contained shall be secured hereby and
the Company promises to pay all such expenses upon demand together with
interest thereon at the Advance Overdue Rate. The Collateral Agent shall not be
liable to account to the Company for any action taken pursuant hereto other
than to account for any rents actually received by the Collateral Agent.
Without taking possession of the Collateral, the Collateral Agent may, in the
event the Collateral becomes vacant or is abandoned, take such reasonable steps
as it deems appropriate to protect and secure the Collateral (including hiring
watchmen therefor) and all costs incurred in so doing shall constitute
additional Secured Obligations payable upon demand with interest thereon at the
Advance Overdue Rate.
(c) Subject to the terms and conditions of the Intercreditor and Agency
Agreement, the Trustee may, if at the time such action may be lawful and always
subject to compliance with any mandatory legal requirements, either with or
without taking possession and either before or after taking possession, and
without instituting any legal proceedings whatsoever, and having first given
notice of such sale to the Company at least 30 days prior to the date of such
sale and having given any other notice which may be required by law, sell and
dispose of said Collateral or any part thereof at public auction or private
sale to the highest bidder, which may be a
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Noteholder, in one lot as an entirety or in separate lots (the Company for
itself and for all who may claim by, through or under it hereby expressly
waiving and releasing all rights to have the Collateral marshaled to the extent
permitted by law), and either for cash or on credit and on such terms as the
Trustee may determine and at the place required by law. Any such sale or sales
may be adjourned from time to time by announcement at the time and place
appointed for such sale or sales or for any such adjourned sale or sales,
without further published notice. Company waives all rights to direct the order
in which any of the Collateral will be sold in the event of any sale under this
Deed of Trust. In the case of a sale under this Deed of Trust, the said
property, real, personal and mixed, may be sold in one parcel or more than one
parcel. Should Collateral Agent desire that more than one such sale or other
disposition be conducted, Collateral Agent may, at its option, cause the same
to be conducted simultaneously, or successively on the same day, or at such
different days or times and in such order as Collateral Agent may deem to be in
its best interest. Any person, including Company, Trustee or Collateral Agent,
may purchase at the sale. Upon any sale, Trustee shall execute and deliver to
the purchaser or purchasers a deed or deeds conveying the property so sold, but
without any covenant or warranty whatsoever, express or implied, whereupon such
purchaser or purchasers shall be let into immediate possession. Collateral
Agent, from time to time before the trustee's sale pursuant to this paragraph,
may rescind any notice of breach or default and of election to cause to be sold
the Collateral by executing and delivering to Trustee a written notice of such
rescission, which notice, shall also constitute a cancellation of any prior
declaration of default and demand for sale. The exercise by Collateral Agent of
such right of rescission shall not constitute a waiver of any breach or default
then existing or subsequently occurring or impair the right of Collateral Agent
to execute and deliver to Trustee, as above provided, other declarations of
default and demand for sale, and notices of breach or default, the obligations
hereof, nor otherwise affect any provision, covenant or condition of the
Operative Agreements and/or this Deed of Trust or any of the rights,
obligations or remedies of the parties thereunder or hereunder.
(d) Subject to the terms and conditions of the Intercreditor and
Agency Agreement, the Collateral Agent may proceed to protect and enforce its
rights by a suit or suits in equity or at law, or for the specific performance
of any covenant or agreement contained herein or in the Amended and Restated
Note Agreements or the Credit Agreement, or in aid of the execution of any
power herein or therein granted, or for the foreclosure of this Deed of Trust,
or for the enforcement of any other appropriate legal or equitable remedy. Upon
the bringing of any suit to foreclose this Deed of Trust or to enforce any
other remedy available hereunder, the plaintiff shall be entitled as a matter
of right, without notice and without giving bond to the Company or anyone
claiming under, by or through it, and without regard to the solvency or
insolvency of the Company or the then value of the premises, to apply to an
appropriate court to have a receiver appointed of all the Collateral and of the
earnings, income, rents, issues, profits and proceeds thereof, with such power
as the court making such appointment shall confer, and the Company does hereby
irrevocably consent to such appointment. It is understood and agreed upon by
the Company and the Collateral Agent that this Deed of Trust may be foreclosed
upon simultaneously in one or more jurisdictions.
(e) Subject to the terms and conditions of the Intercreditor and
Agency Agreement, in case of any sale of the Collateral, or of any part
thereof, pursuant to any judgment or decree of any court or otherwise in
connection with the enforcement of any of the terms of this Deed of Trust, the
Collateral Agent, the Lenders or the Noteholders may bid and become the
purchaser,
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and the purchaser or purchasers, for the purpose of making settlement for or
payment of the purchase price, shall be entitled to TURN IN AND use the Notes
and ANY claims for interest and premium matured and unpaid thereon, in order
that there may be credited as paid on the purchase price the sum apportionable
and applicable to the Notes, including principal and interest and premium
thereof, out of the net proceeds of such sale after allowing for the proportion
of the total purchase price required to be paid in actual cash. If at any
foreclosure proceeding the Collateral shall be sold for a sum less than the
total amount of indebtedness for which judgment is therein given, the
Collateral Agent shall be entitled to the entry of a deficiency decree against
the Company and against the property of the Company for the amount of such
deficiency.
(f) Subject to the terms and conditions of the Intercreditor and
Agency Agreement, the Collateral Agent shall have any and all rights and
remedies (including, without limitation, extra judicial power of sale) provided
to a secured party by the Uniform Commercial Code with respect to any and all
parts of the Collateral which are and which are deemed to be governed by the
Uniform Commercial Code. Without limiting the generality of the foregoing, the
Collateral Agent shall, with respect to any part of the Collateral constituting
property of the type in respect of which realization on a Lien or security
interest granted therein is governed by the Uniform Commercial Code, have all
the rights, options and remedies of a secured party under the Uniform
Commercial Code, including, without limitation, the right to the possession of
any such property, or any part thereof, and the right peaceably to enter
without legal process any premises where any such property may be found. Any
requirement of said Uniform Commercial Code for reasonable notification shall
be met by mailing written notice to the Company at its address set forth in
SECTION 6.3 hereof at least 30 days prior to the sale or other event for which
such notice is required.
(g) Declare all sums secured by this Deed of Trust to be due and
payable without further notice and commence a trustee's sale of the Property,
and if the Collateral Agent shall so elect, the sale shall be conducted as
follows:
(1) The Collateral Agent shall deliver to Trustee a written
declaration of default and demand for sale and a written notice of
default and election to cause the Mortgaged Property to be sold, which
notice Trustee shall cause to be filed for record. Collateral Agent
shall also deposit with Trustee this Deed of Trust, the Credit
Agreement Documents, the Note Documents, and all documents evidencing
expenditures secured hereby.
(2) After a lapse of such time as may then be required by law
following the recordation of said notice of default, and notice of sale
having been given as then required by law, Trustee, without demand on
the Company, shall sell the Mortgaged Property at the time and place
fixed by it in the notice of sale, either as a whole or in separate
parcels, and in such order as it may determine, at public auction to
the highest bidder for cash in lawful money of the United States,
payable at time of sale. Trustee may postpone the sale of all or any
portion of the Mortgaged Property by public announcement at such time
and place of sale, and from time to time thereafter may postpone such
sale by public announcement at the time fixed by the preceding
postponement. Trustee shall deliver to such purchaser its deed
conveying the Mortgaged Property so sold, but without any covenant or
warranty, express or implied. The recitals
-29-
in such deed of any matters or facts shall be conclusive proof of the
truthfulness thereof.
(3) Any person, including the Company, the Trustee, the
Collateral Agent, or any of the Noteholders or the Lenders, may
purchase at any sale of the Property under this Deed of Trust, and if
the Collateral Agent is the highest bidder, may credit the portion of
the purchase price that would be distributed to the Collateral Agent
against the indebtedness in lieu of paying cash. The proceeds of such
sale shall be applied as provided in this Deed of Trust.
(h) The Collateral Agent shall have any and all rights and remedies
provided for in the Intercreditor and Agency Agreement and the Amended and
Restated Note Agreements and the Credit Agreement.
SECTION 5.3. APPLICATION OF PROCEEDS. The purchase money
proceeds and/or avails of any sale of the Collateral, or any part thereof and
the proceeds and the avails of any remedy hereunder shall be paid to and
applied as follows:
(a) FIRST, to the payment PRO RATA of costs and expenses of
foreclosure or suit, if any, and of such sale, and to the extent permitted by
applicable law, the reasonable compensation of the Collateral Agent's agents,
attorneys and counsel, and of all proper expenses, liability and advances
incurred or made hereunder by the Collateral Agent or such agents, attorneys
and counsel, and of all taxes, assessments or liens superior to the Lien of
these presents, except any taxes, assessments or other superior Lien subject to
which said sale may have been made; and
(b) SECOND, in accordance with the terms and conditions of the
Intercreditor and Agency Agreement.
SECTION 5.4. WAIVER OF EXTENSION, APPRAISEMENT AND STAY LAWS.
The Company covenants that, upon the occurrence and the continuance of an Event
of Default hereunder and the acceleration of the Notes pursuant to SECTION
5.2(A) hereof and to the extent that such rights may then be lawfully waived,
it will not at any time thereafter insist upon or plead, or in any manner
whatever claim or take any benefit or advantage of, any stay or extension law
now or at any time hereafter in force, or claim, take or insist upon any
benefit or advantage of or from any law now or hereafter in force providing for
the valuation or appraisement of the Collateral or any part thereof prior to
any sale or sales thereof to be made pursuant to any provision herein
contained, or to the decree, judgment or order of any court of competent
jurisdiction or, after confirmation of any such sale or sales claim or exercise
any right under any statute now or hereafter made or enacted by any state or
otherwise to redeem the property so sold or any part thereof, and hereby
expressly waives for itself and on behalf of each and every Person who may
claim under it, all benefit and advantage of any such law or laws which would
otherwise be available to any such Person in connection with the enforcement of
any of the Collateral Agent's remedies hereunder; and covenants that it will
not in connection with any such enforcement proceedings invoke or utilize any
such law or laws or otherwise hinder, delay or impede the execution of any
power herein granted and delegated to the Collateral Agent but will suffer and
permit the execution of every such power as though no such law or laws had been
made or enacted.
-30-
The Company hereby waives any and all rights of redemption from sale
under any order or decree of foreclosure pursuant to rights herein granted, on
behalf of the Company, and each and every Person acquiring any interest in, or
title to the Collateral described herein subsequent to the date of this Deed of
Trust, and on behalf of all other Persons to the extent permitted by applicable
law.
Any sale, whether under any power of sale hereby given or by virtue of
judicial proceedings, shall operate to divest all right, title, interest, claim
and demand whatsoever, either at law or in equity, of the Company in and to the
property sold and shall be a perpetual bar, both at law and in equity, against
the Company, its successors and assigns, and against any and all Persons
claiming the property sold or any part thereof under, by or through the
Company, its successors or assigns.
SECTION 5.5. EFFECT OF DISCONTINUANCE OF PROCEEDINGS. IN case
the Collateral Agent shall have proceeded to enforce any right under this Deed
of Trust by foreclosure, sale, entry or otherwise, and such proceedings shall
have been discontinued through written notice to the Company by the Collateral
Agent or shall have been determined adversely, then and in every such case the
Company and the Collateral Agent shall each be restored to its position and
rights hereunder, except with respect to any rights specifically denied in a
proceeding which was adversely determined, as they existed immediately prior to
the commencement of such proceedings with respect to the property subject to
the Lien and first perfected security interest of this Deed of Trust.
SECTION 5.6. DELAY OR OMISSION NOT A WAIVER. No delay, failure
or omission of the Collateral Agent to exercise any right or power arising from
any Event of Default on the part of the Company shall exhaust or impair any
such right or power or prevent its exercise during the continuance of such
Event of Default. No waiver by the Collateral Agent of any such Event of
Default, whether such waiver be full or partial, shall extend to or be taken to
affect any subsequent Event of Default, or to impair the rights resulting
therefrom, except as may be otherwise provided herein. No right, power or
remedy hereunder is intended to be exclusive of any other right, power or
remedy but each and every right, power or remedy shall be cumulative and in
addition to any and every other right, power or remedy given hereunder or
otherwise existing. Nor shall the giving, taking or enforcement OF any other or
additional security, collateral or guaranty for the payment of the indebtedness
secured under this Deed of Trust operate to prejudice, waive or affect the
security of this Deed of Trust or any rights, powers or remedies hereunder; nor
shall the Collateral Agent be required to first look to, enforce or exhaust
such other or additional security, collateral or guaranties.
SECTION 5.7. COSTS AND EXPENSES OF FORECLOSURE. In any suit to
foreclose the Lien or first perfected security interest hereon there shall be
allowed and included as additional Secured Obligations in the decree for sale
all expenditures and expenses which may be paid or incurred by or on behalf of
the Collateral Agent and Trustee for reasonable attorney's fees, reasonable
appraiser's fees, outlays for documentary and expert evidence, stenographic
charges, publication costs and costs (which may be estimated as the items to be
expended after the entry of the decree) of procuring all such abstracts of
title, title searches and examination, guarantee policies, and similar data and
assurances with respect to title as the Collateral Agent and Trustee may deem
to be reasonably necessary either to prosecute any foreclosure action or to
evidence to
-31-
the bidder at any sale pursuant thereto the true condition of the title to or
the value of the Collateral, all of which expenditures shall become additional
Secured Obligations which the Company agrees to pay and all of such shall be
immediately due and payable with interest thereon from the date of expenditure
until paid at the Advance Overdue Rate.
SECTION 5.8. NOTES TO BECOME DUE UPON SALE BY COLLATERAL
AGENT. Upon any sale under or by virtue of this Deed of Trust, whether pursuant
to foreclosure, power of sale or otherwise, the entire unpaid principal amount
of the Notes shall, unless the Collateral Agent shall expressly declare
otherwise or if not previously declared due and payable, immediately become due
and payable, together with interest accrued thereon and Make Whole Premium
and/or fees, if any, and all other indebtedness which this Deed of Trust by its
terms secures, anything contrary in this Deed of Trust, the Notes or any other
instrument securing the Notes to the contrary notwithstanding.
SECTION 5.9. REMEDIES SUBJECT TO APPLICABLE LAW. ALL rights,
remedies, and powers provided by this SECTION 5 entitled "Defaults and Remedies
Therefor" may be exercised only to the extent that the exercise thereof does
not violate any applicable provisions of law, and all of the provisions of this
Section are intended to be subject to all applicable mandatory provisions of
law which may be controlling and to be limited to the extent necessary so that
they will not render this Deed of Trust invalid, unenforceable, or not entitled
to be recorded, registered, or filed under the provisions of any applicable
law.
SECTION 6 MISCELLANEOUS.
SECTION 6.1. SUCCESSORS AND ASSIGNS. Whenever any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party; and all the covenants, premises and
agreements in this Deed of Trust contained by or on behalf of the Company, or
by or on behalf of the Trustee or the Collateral Agent, shall bind and inure to
the benefit of the respective successors and assigns of such parties whether so
expressed or not.
SECTION 6.2. SEVERABILITY. The unenforceability or
invalidity of any provision or provisions of this Deed of Trust shall not render
any other provision or provisions herein contained unenforceable or invalid.
SECTION 6.3. ADDRESSES FOR NOTICES AND DEMANDS. Any notice or
report required by any provision of this Deed of Trust shall be deemed to have
been sufficiently given or made if copies thereof are delivered in writing,
telexed, telegraphed or telecopied (with a copy of any such communication
promptly mailed by registered or certified mail or prepaid overnight air
courier), addressed as follows:
If to the Company: The Chalone Wine Group, Ltd,
000 Xxxxxxx Xxxx
Xxxx, XX 00000
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If to the Collateral Agent; "Rabobank International", New York Branch,
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
If to the Trustee North American Title Company
0000 Xxxxxxxxx Xxx, Xxx. 000
Xxxx, XX 00000
or as to either party at such other address as such party may designate by
notice duly given in accordance with this Section to the other party.
SECTION 6.4. HEADINGS AND TABLE OF CONTENTS. The headings of
the sections of this Deed of Trust and the table of contents are inserted for
purposes of convenience only and shall not be construed to affect the meaning
or construction of any of the provisions hereof.
SECTION 6.5. RELEASE. This Deed of Trust shall be a continuing
agreement in every respect and shall remain in full force and effect until all
of the Notes, premium, if any, principal and interest thereon and all other
Secured Obligations, shall have been fully paid and satisfied. Simultaneous with
the occurrence of the preceding sentence, or otherwise pursuant to the terms and
provisions of the Intercreditor and Agency Agreement, the Collateral Agent
shall, upon the request and at the expense of the Company, forthwith release all
its liens and security interests hereunder by, including but not limited to, the
execution of a satisfaction and any other documents or actions required for the
release of the Deed of Trust of record.
SECTION 6.6. COUNTERPARTS. This Deed of Trust may be executed,
acknowledged and delivered in any number of counterparts, each of such
counterparts constituting an original but all together only one Deed of Trust.
SECTION 6.7. AGENCY. Each holder of the Notes, by its
execution and delivery of the Intercreditor and Agency Agreement, appoints and
authorizes the Trustee and Collateral Agent to hold the lien of this Deed of
Trust on the Collateral for the equal and ratable benefit and security of all
holders of the Notes, without preference, priority or distinction of any thereof
or any other by reason of difference in time of issuance, sale or delivery of
the Notes to such holders. The Collateral Agent shall take such actions in
respect of the Collateral (including actions after the occurrence of an Event of
Default) as are delegated to the Collateral Agent by the terms of the
Intercreditor and Agency Agreement.
SECTION 6.8. SUBSTITUTE TRUSTEE. Trustee shall be under no
duty to take any action hereunder except as expressly required or by law, or to
perform any act which would involve Trustee in any expense or liability or to
institute or defend any suit in respect hereof, unless properly indemnified to
Trustee's reasonable satisfaction. Trustee, by acceptance of this Deed of
Trust, covenants to perform and fulfill the trusts herein created, being
liable, however, only for gross negligence or willful misconduct, and hereby
waives any statutory fee and agrees to accept reasonable compensation, in lieu
thereof, for any services rendered by Trustee in accordance with the terms
hereof. Trustee may resign at any time upon giving thirty (30) days' notice to
Company and to Collateral Agent. Collateral Agent may in its sole and absolute
discretion and with or without cause remove Trustee at any time or from time to
time and select a
-33-
successor trustee. In the event of the death, removal, resignation, refusal to
act, or inability to act of Trustee, or in its sole and absolute discretion for
any reason whatsoever Collateral Agent may, without notice and without
specifying any reason therefor and without applying to any court, select and
appoint a successor trustee, by an instrument recorded wherever this Deed of
Trust is recorded and all powers rights, duties and authority of Trustee, as
aforesaid, shall thereupon become vested in such successor and without
conveyance of the Collateral, the successor trustee shall succeed to all the
title, powers, and duties conferred upon Trustee herein and by applicable laws
as if the successor had been named Trustee at the time this Deed of Trust was
recorded. Such substitute trustee shall not be required to give bond for the
faithful performance of the duties of Trustee hereunder unless required to do
so by Collateral Agent. Company shall pay all costs, fees and expenses incurred
by Trustee and Xxxxxxx's agents and counsel in connection with the performance
by Trustee of Trustee's duties hereunder and all such costs, fees and expenses
shall be secured by this Deed of Trust.
SECTION 6.9. GOVERNING LAW. This Deed of Trust shall be
construed in accordance with and governed by the laws and decisions of the
State of California (without regard to any choice of law provisions).
SECTION 6.10. TIME. Time shall be of the essence of this Deed
of Trust.
SECTION 6.11. FUTURE ADVANCES. At all times, this Deed of
Trust secures as part of the Secured Obligations the payment of any and all
loan commissions, service charges, liquidated damages, attorney's fees,
expenses and advances due to or incurred by the Collateral Agent and the
Trustee in connection with the Secured Obligations, all in accordance with the
Notes, this Deed of Trust, the Amended and Restated Note Agreements, the Credit
Agreement the Intercreditor and Agency Agreement and any of the Security
Documents, together with such future or additional advances as may be made by
the Collateral Agent or the holder hereof, at its exclusive option to the
Company or its successors or assigns in title, for any purpose provided
hereunder, PROVIDED that all such advances are made within twenty years of the
date of this Deed of Trust.
SECTION 6.12. WAIVER OF JURY TRIAL. The Company and the
Collateral Agent hereby knowingly, voluntarily and intentionally waive the right
to trial by jury in respect of any litigation based hereon, arising out of,
under or in connection with this Deed of Trust or any other Security Document
contemplated to be executed in connection herewith, or any course of conduct,
course of dealings, statements (whether verbal or written) or acts of either
party, or any exercise of any party of their respective rights under this Deed
of Trust or any such Security Document. The Company hereby acknowledges that
this waiver of jury trial is a material inducement to the Noteholders in
extending credit to the Company, that the Noteholders would not have extended
credit without this waiver of jury trial and that the Company has had an
opportunity to consult with an attorney in connection with this waiver of jury
trial and understands the legal effect of this waiver.
SECTION 6.13. SPECIAL CALIFORNIA PROVISIONS. The terms,
conditions and provisions of this Section 6.13, if any, shall apply solely to
the portion of the security herein described which is located in California and
shall govern, control and take precedence with respect to such portion of the
security:
-34-
(a) The provisions of this Deed of Trust shall remain in full
force and effect notwithstanding (i) any release of Company from any liability
with respect to the Secured Obligations; or (ii) any release or subordination
of any real or personal property now or hereafter held by Collateral Agent as
security for the performance of the Secured Obligations;
(b) Company hereby waives all rights and defenses that Company
may have because any of Company's debt is secured by real property. This means,
among other things: (i) Collateral Agent may collect from Company without first
foreclosing on any real or personal property collateral pledged by Company; and
(ii) if Collateral Agent forecloses on any real property collateral pledged by
Company (A) the amount of debt may be reduced only by the price for which the
collateral is sold at the foreclosure sale, even if the collateral is worth
more than the sale price, and (B) Collateral Agent may COLLECT FROM COMPANY
even if Collateral Agent, by foreclosing on the real property collateral, has
destroyed any right Company may have to collect from any other party. This is
an unconditional and irrevocable waiver of any rights and defenses Company may
have because Company's debt is secured by real property. These rights and
defenses include, but are not limited to, any rights or defenses based upon
Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure.
(c) In the case of a power of sale foreclosure under this Deed
of Trust or any other deed of trust entered into by the parties as security for
the Secured Obligations, the fair market value of the real property collateral
shall be conclusively deemed to be the amount of the successful bid at the
foreclosure sale. Company waives any rights or benefits it may now or hereafter
have to a fair value hearing under Section 580a of the California Code of Civil
Procedure. Collateral Agent shall have absolutely no obligation to make a bid
at any foreclosure sale, but rather may make no bid or bid any amount which
Collateral Agent, in its sole discretion, deems appropriate.
(d) Company warrants and represents to Collateral Agent that
(i) it now has or will continue to have full and complete access to any and all
information concerning the transactions contemplated by the Operative Agreements
referred to therein, the value of the assets owned or to be acquired by any
Subsidiary Guarantor under the Operative Agreements, their financial status and
their respective ability to pay and perform their respective obligations under
the Operative Agreements; and (ii) Company has reviewed and approved copies of
the Operative Agreements and is fully informed of the remedies Collateral Agent
may pursue, with or without notice to Company, in the event of default under the
Operative Agreements. Company shall keep fully informed as to all aspects of the
financial condition of any Subsidiary Guarantor under the Operative Agreements
and the performance of their respective obligations under the Operative
Agreements.
(e) Company agrees that Collateral Agent may exercise any
right or remedy hereunder or under any of the Operative Agreements without the
necessity of resorting to or exhausting any security or collateral conveyed or
assigned by Company or any of the Subsidiary Guarantors under the Operative
Agreements or any guarantor of any of the Secured Obligations. Company hereby
waives any right it may now or hereafter have to require Collateral Agent to
proceed against any Subsidiary Guarantor under the Operative Agreements, to
proceed against any guarantor of any of the Secured Obligations, to foreclose
any lien on any real or personal property collateral conveyed or assigned to
Collateral Agent by Company or any Subsidiary
-35-
Guarantor under the Operative Agreements, to exercise any right or remedy under
the Operative Agreements, to draw upon any letter of credit issued in
connection with any of the Secured Obligations, or to pursue any other remedy
or to enforce any other right under the Operative Agreements.
(f) Company and Collateral Agent intend that the relationship
created hereunder be solely that of "debtor" and "creditor". Nothing herein is
intended to create a joint venture, partnership, tenancy- in-common, or joint
tenancy relationship between Company and Collateral Agent nor to grant
Collateral Agent any interest in the Collateral other than that of beneficiary,
secured party or lender. '
(g) This Deed of Trust may not be modified, amended,
discharged or waived in whole or in part except by an agreement in writing
signed by Company and Collateral Agent. The covenants of this Deed of Trust
shall RUN WITH THE LAND AND SHALL BIND COMPANY and the heirs, distributees,
personal representatives, successors and assigns of Company and all present and
subsequent encumbrancers, lessees and sublessees of any of the Collateral and
shall inure to the benefit of Collateral Agent and its respective successors,
assigns and endorsees.
(h) Whenever possible, each provision of this Deed of Trust
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Deed of Trust shall be prohibited
by or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity, without invalidating the remaining
provisions of this Deed of Trust. Nothing in this Deed of Trust or in any other
Operative Agreements shall require Company to pay, or Collateral Agent to
accept, interest in an amount which would subject Collateral Agent to penalty
under applicable law. In the event that the payment of any interest due
hereunder or under any of the other Operative Agreements or a payment which is
deemed interest, exceeds the maximum amount payable as interest under the
applicable usury laws, such excess amount shall be applied to the reduction of
the Indebtedness, and upon payment in full of the Indebtedness, shall be
applied to the performance of the Obligations, and upon performance in full of
the Obligations, shall be deemed to be a payment made by mistake and shall be
refunded to Company.
(i) Any consent or approval by Collateral Agent in any single
instance shall not be deemed or construed to be Collateral Agent's consent or
approval in any like matter arising at a subsequent date, and the failure of
Collateral Agent to promptly exercise any right, power, remedy, consent or
approval provided herein or at law or in equity shall not constitute or be
construed as a waiver of the same nor shall Collateral Agent be stopped from
exercising such right, power, remedy, consent or approval at a later date. Any
consent or approval requested of and granted by Collateral Agent pursuant hereto
shall be narrowly construed to be applicable only to Company and the matter
identified in such consent or approval and no third party shall claim any
benefit by reason thereof, other than the party to whom such consent or approval
was given or reasonably intended to benefit, and any such consent or approval
shall not be deemed to constitute Collateral Agent a venturer or partner with
Company nor shall privity of contract be presumed to have been established with
any such third party.
It is the desire and intention of the parties hereto that this
Deed of Trust and the lien hereof do not merge in fee simple title to the
Collateral. It is hereby understood and agreed
-36-
that should Collateral Agent acquire any additional or other interests in or to
the Collateral or the ownership thereof, then, unless a contrary intent is
manifested by Collateral Agent as evidenced by an appropriate document duly
recorded, this Deed of Trust and the lien hereof shall not merge in such other
or additional interests in or to the Collateral, toward the end that this Deed
of Trust may be foreclosed as if owned by a stranger to said other or
additional interests.
(j) By accepting delivery of any item required to be observed,
performed or fulfilled or to be given to Collateral Agent pursuant to this Deed
of Trust and the other Operative Agreements, including, but not limited to, any
officer's certificate, balance sheet, statement of profit and loss or other
financial statement, survey, appraisal or insurance policy, Collateral Agent
shall not be deemed to have warranted, consented to, or affirmed the
sufficiency, legality, effectiveness or legal effect of the same, or of any
term, provision or condition thereof, and such acceptance of delivery thereof
shall not be or constitute any warranty, consent or affirmation with respect
thereto by Collateral Agent.
(k) The parties hereto agree that each of them, upon the
request of the other party, shall execute and deliver such further documents,
instruments or agreements and shall take such further action that may be
necessary or appropriate to effectuate the purposes of this Deed of Trust or
that may be necessary or appropriate to comply with the requirements of the
Uniform Commercial Code.
COMPANY PLEASE NOTE: UPON THE OCCURRENCE OF A DEFAULT,
CALIFORNIA PROCEDURE PERMITS THE TRUSTEE TO SELL THE COLLATERAL AT A SALE HELD
WITHOUT SUPERVISION BY ANY COURT AFTER EXPIRATION OF A PERIOD PRESCRIBED BY
LAW. UNLESS YOU PROVIDE AN ADDRESS FOR THE GIVING OF NOTICE, YOU MAY NOT BE
ENTITLED TO NOTICE OF THE COMMENCEMENT OF SALE PROCEEDINGS. BY EXECUTION OF
THIS DEED OF TRUST, YOU CONSENT TO SUCH PROCEDURE. COLLATERAL AGENT URGES YOU
TO GIVE PROMPT NOTICE OF ANY CHANGE IN YOUR ADDRESS SO THAT YOU MAY RECEIVE
PROMPTLY ANY NOTICE GIVEN PURSUANT TO THIS DEED OF TRUST.
-37-
IN WITNESS WHEREOF, the Company has caused this Deed of Trust to be
executed in its behalf by its President as of the day and year first above
written.
THE CHALONE WINE GROUP, LTD.
BY: ________________________
XXXXXX X. XXXXXXXXX,
PRESIDENT AND CEO
Address: 000 Xxxxxxx Xxxx
Xxxx, Xxxxxxxxxx 00000
Taxpayer Identification No.:
00-0000000
Deed of Trust Monterey County
CERTIFICATE OF ACKNOWLEDGMENT
State of California
County of San Francisco
On April 12, 2002, before me, Xxxxxxxx X. Xxxxx, personally appeared
Xxxxxx X. Xxxxxxxxx,
[ ] personally known to me, OR [XX] proved to me on the basis of
satisfactory evidence to be the
XXXXXXXX X. XXXXX person(s) whose name(s) is/are
COMM. #1238162 subscribed to the within instrument and
NOTARY PUBLIC-CALIFORNIA acknowledged to me that he/she/they
City & County of San Francisco executed the same in his/her/their
COMM. EXP. OCT, 16, 2003 authorized capacity(ies), and that by
his/her/their signature(s) on the
instrument the person(s), or the entity
upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal
Signature _____________________________
MONTEREY, CA CHALONE WINE
AMENDED
LEGAL DESCRIPTION
PARCEL I
________
PARCEL "A" IN THE COUNTY OF MONTEREY, STATE OF CALIFORNIA, ACCORDING TO THE MAP
FILED FOR RECORD ON SEPTEMBER 16, 1987 IN VOLUME 15 OF SURVEY, AT PAGE 48, IN
THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPTING THEREFROM A 14 FOOT STRIP OF LAND LEADING TO THE N. 1/2 OF THE N.
1/2 OF SEC. 17, T17, S., R7E MDM, FROM THE STONEWALL CANYON ROAD LOCATED IN
THE SE 1/4 OF THE SE 1/4 OF SECTION 8, TOWNSHIP 17, SOUTH, RANGE 7 EAST MDM,
THENCE SOUTHERLY ACROSS THE SAID SE 1/4 OF
THE SE 1/4 OF SECTION 8 AND ADJACENT TO THE WESTERNMOST BOUNDARY OF THE
SAID SE 1/4 OF THE SE 1/4 OF SECTION 8 FOR APPROXIMATELY ONE QUARTER MILE,
GRANTED TO XXX X. XXXXXXXX AND XXXXX X. XXXXXXXX, HUSBAND AND WIFE, RECORDED
OCTOBER 6, 1978 ON REEL 1280, OFFICIAL RECORDS, PAGE 875.
APN: 000-000-000
PARCEL II
_________
THE SOUTHEAST QUARTER OF SECTION 7 IN TOWNSHIP 17 SOUTH, RANGE 7 EAST, MOUNT
DIABLO MERIDIAN, ACCORDING TO THE OFFICIAL PLAT THEREOF.
EXCEPTING THEREFROM THAT REAL PROPERTY DESCRIBED IN THAT DEED TO MACWOOD
COMPANY OF CALIFORNIA, A GENERAL PARTNERSHIP, RECORDED NOVEMBER 8, 1973 IN REEL
879, PAGE 623, OFFICIAL RECORDS, MONTEREY COUNTY, CALIFORNIA.
ALSO EXCEPTING THEREFROM THAT REAL PROPERTY DESCRIBED IN THAT DEED TO XXXXX
XXXXXX-XXXXX, ET UX, RECORDED APRIL 8, 1975 IN REEL 972, PAGE 169, OFFICIAL
RECORDS, MONTEREY COUNTY, CALIFORNIA.
APN: 000-000-000
PARCEL III
__________
THE NORTHWEST QUARTER OF SECTION 8, TOWNSHIP 17 SOUTH, RANGE 7 EAST, MOUNT
DIABLO BASE AND MERIDIAN IN THE COUNTY OF MONTEREY, STATE OF CALIFORNIA,
ACCORDING TO THE OFFICIAL PLAT THEREOF.
APN: 000-000-000
-1-
MONTEREY,CA
CHALONE WINE
PARCEL IV
_________
THE WEST HALF OF THE EAST HALF OF SECTION 8, TOWNSHIP 17 SOUTH, RANGE 7 EAST,
MOUNT DIABLO BASE AND MERIDIAN, IN THE COUNTY OF MONTEREY, STATE OF CALIFORNIA,
ACCORDING TO THE OFFICIAL PLAT THEREOF.
APN: 000-000-000
000-000-000
PARCEL V
________
THE EAST HALF OF THE SOUTHWEST QUARTER AND THE SOUTH HALF OF THE SOUTHWEST
QUARTER OF THE SOUTHWEST QUARTER AND THE NORTH HALF OF THE NORTHWEST QUARTER OF
THE SOUTHWEST QUARTER OF SECTION 8, TOWNSHIP 17 SOUTH, RANGE 7 EAST, MOUNT
DIABLO BASE AND MERIDIAN, IN THE COUNTY OF MONTEREY, STATE OF CALIFORNIA,
ACCORDING TO THE OFFICIAL PLAT THEREOF.
APN: 000-000-000
PARCEL VI
__________
PARCEL "1", AS SHOWN ON THAT CERTAIN PARCEL MAP FILED SEPTEMBER 29, 1974 IN
VOLUME 7 OF PARCEL MAPS, AT PAGE 54, OFFICIAL RECORDS OF MONTEREY
COUNTY, LOCATED IN THE SOUTHEAST QUARTER OF SECTION 7, TOWNSHIP 17 SOUTH, RANGE
7 EAST, M.D.M.
APN: 000-000-000
PARCEL VII
__________
AN EASEMENT FOR ACCESS TO THE DESCRIBED PREMISES, AND APPURTENANT THERETO,
CONSISTENT WITH THE PRESENT USE, OVER A PRIVATE RIGHT-OF-WAY 30 FEET IN WIDTH
AND 272 FEET IN LENGTH, MORE OR LESS, LYING ALONG THE NORTHEASTERLY BOUNDARY OF
SAID PARCEL IV ABOVE, AND ALSO AS SHOWN ON THE AFORESAID PARCEL MAP.
-2-
FORM OF ENVIRONMENTAL INDEMNITY
This ENVIRONMENTAL INDEMNITY (this "INDEMNITY") is entered into as of
April 19, 2002, by THE CHALONE WINE GROUP, LTD. (the "COMPANY"), XXXX VALLEY
VINEYARD ("XXXX"), CANOE RIDGE VINEYARD, L.L.C. ("CANOE LLC"), SHW EQUITY CO.
("SHW"), XXXXXX HILLS WINERY COMPANY LIMITED ("XXXXXX") and CANOE RIDGE WINERY,
INC. ("CANOE WINERY") (each an "INDEMNITOR" and, collectively, the
"INDEMNITORS") to and for the benefit of each of the Purchasers named in
Schedule A to the Note Purchase Agreement.
The Purchasers and the Company are parties to that certain Amended and Restated
Note Purchase Agreement dated as of April 19, 2002 (as amended, restated,
modified, supplemented, renewed or extended from time to time, the "NOTE
PURCHASE AGREEMENT"). Xxxx, Canoe LLC and SHW, are each parties to separate
Amended and Restated Guaranty Agreements dated as of April 19, 2002 ("AMENDED
AND RESTATED GUARANTEES") and Canoe Winery and Xxxxxx are each parties to
separate Guaranty Agreements dated as of April 19, 2002 ("ORIGINAL GUARANTEES"
and together with the Amended and Restated Guarantees, the "GUARANTEES"), in
favor of the Purchasers pursuant to which they have guaranteed the payment and
performance of the Company's obligations under and in connection with the Note
Purchase Agreement as provided in such Guarantees.
The obligations of the Company and the Guarantors under the Note Purchase
Agreement, the Guarantees and the other Loan Documents are secured by, among
other things, certain deeds of trust and mortgages covering the premises
described on EXHIBIT A hereto and the improvements now or hereafter existing
thereon (such premises and improvements, the "PROPERTY").
It is a condition precedent to the borrowings and issuances of Notes under the
Note Purchase Agreement that the Indemnitors indemnify the Purchasers as set
forth herein. This Indemnity is secured by the personal property Collateral
covered by the Collateral Documents, but not by the Property.
NOW, THEREFORE, in consideration of the foregoing and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
each Indemnitor agrees as follows:
DEFINITIONS.
"ENVIRONMENTAL LAWS" means all federal, state and local environmental, health or
safety laws, regulations, ordinances, standards, policies, requirements,
rulings, judgments, and rules of common law (including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, 42 U.S.C. ss.9601 ET SEQ., the Hazardous Materials Transportation Act,
49 U.S.C.ss.1802, ET SEQ., The
EXHIBIT B
(to the Note Purchase Agreement)
Resource Conservation and Recovery Act, 42 U.S.C.ss.6901 ET SEQ., the Toxic
Substance Control Act of 1976, as amended, 15 U.S.C.ss.2601 ET SEQ., the Clean
Water Act, 33 U.S.C.ss.466 et seq., as amended, and the Clean Air Act, 42
U.S.C.ss.7401 ET SEQ.).
"HAZARDOUS SUBSTANCES" means any toxic or hazardous wastes, pollutants or
substances, including, without limitation, asbestos, PCBs, petroleum products
and by-products, substances defined or listed as "hazardous substances" or
"toxic substances" or similarly identified in or pursuant to any Environmental
Laws and any hazardous or toxic substance or pollutant regulated under any other
applicable federal, state or local laws.
Capitalized terms used herein (including in the preamble and recitals of this
Indemnity) and not otherwise defined herein shall have the meanings ascribed to
such terms in the Note Purchase Agreement.
INDEMNIFICATION. The Indemnitors, jointly and severally, hereby agree to
indemnify and hold the Purchasers harmless from and against, and shall reimburse
the Purchasers for, any and all loss, claim, liability, damage, injunctive
relief, injuries to person, property, collateral or natural resources, cost,
expense (including, without limitation, reasonable fees and allocated costs of
internal and external counsel, expert witnesses and other professionals or
experts advising the Purchasers), action or cause of action, arising in
connection with the release or presence of any Hazardous Substance at or on any
or all of the Property, whether foreseeable or unforeseeable, regardless of the
source of such release or when such release occurred or such presence is
discovered. The foregoing indemnity includes, without limitation, (a) all costs
in law or in equity of removal, remediation of any kind, and disposal of such
Hazardous Substances, (b) all cost of determining whether any or all of the
Property is in compliance, and causing any or all of the Property to be in
compliance, with all applicable Environmental Laws, (c) all costs associated
with claims for damages to persons, property, or natural resources, and (d) each
Purchaser's reasonable attorneys' fees (including the allocated costs of
internal legal counsel) and consultants' fees and court costs.
SECURITY. This Indemnity is secured by the personal property Collateral covered
by the Collateral Documents, but not by the Property. The obligations of the
Indemnitors under this Indemnity shall survive the foreclosure of any Deed of
Trust and satisfaction of the other Obligations, and shall be independent of any
other Obligations. The rights of the Purchasers under this Indemnity shall be in
addition to any other rights and remedies of the Purchasers under any Guaranty,
the Note Purchase Agreement or any other Loan Document or at law or equity.
Notwithstanding any other provision of this Indemnity or any other instrument or
agreement to the contrary, the Purchasers shall at all times have the maximum
rights and remedies available at any time under any applicable law or equitable
principal of any state (including, without limitation, under Chapter 70.105D of
the Revised Code of Washington, or any other similar laws or equitable
principals of any state).
SURVIVAL. If any Purchaser takes title to any or all of the Property through
foreclosure or deed in lieu of foreclosure of any or all of the Deeds of Trust,
this Indemnity shall not apply to any loss or costs incurred by any Purchaser as
a direct result of affirmative actions of any Purchaser as
B-2
owner and operator of any or all such Property after Purchaser has acquired
title to any or all such Property, which actions are the sole and direct cause
of damage resulting from the introduction and initial release of a Hazardous
Substance at any or all such Property; provided, however, this Indemnity shall
otherwise remain in full force and effect, including, without limitation, (a)
with respect to Hazardous Substances which are discovered at any or all of the
Property by any Purchaser or any other Person after the date any Purchaser
acquires title to any or all such Property, but which were not actually
introduced at any or all such Property by any Purchaser, and (b) with respect to
the continuing migration or release of any Hazardous Substance previously
introduced at any or all of the Property. This Indemnity is intended to be
operable under 42 U.S.C. ss.9607(e)(1) and any successor section thereof.
INTEREST. Any amount claimed hereunder by the Purchasers and not paid by the
Indemnitors within thirty (30) days after written demand from any Purchaser with
an explanation of the amounts claimed, shall bear interest at a rate per annum
equal to the highest interest rate set forth in the Note Purchase Agreement.
SUCCESSORS AND ASSIGNS. This Indemnity shall inure to the benefit of each of the
Purchasers and each Purchaser's successors and assigns, and shall be binding
upon each Indemnitor's successors and assigns, provided that no Indemnitor may
assign its obligations under this Indemnity without the prior written consent of
the Purchasers.
NO WAIVER; CONSENTS. Each waiver hereunder by the Purchasers must be in writing
and signed by the Purchasers, and no waiver shall be construed as a continuing
waiver. No waiver shall be implied from any delay or failure by the Purchasers
to take action on account of any default of any Indemnitor. Consent by the
Purchasers to any act or omission by any Indemnitor shall not be construed as a
consent to any other or subsequent act or omission or as a waiver of the
requirement for the Purchasers' consent to be obtained in any future or other
instance.
GOVERNING LAW. This Indemnity shall be governed and construed in accordance with
the laws of the State of New York.
JOINT AND SEVERAL OBLIGATIONS. If this Indemnity is executed by more than one
person or entity, the liability of the undersigned hereunder shall be joint and
several.
COSTS, EXPENSES AND ATTORNEYS' FEES. The Indemnitors agree to reimburse the
Purchasers for all reasonable costs, out-of-pocket expenses and attorneys' fees
(including the allocated costs of internal legal counsel) expended or incurred
by each Purchaser in preparation of or enforcing (or attempted enforcement of)
this Indemnity, in actions for declaratory relief in any way related to this
Indemnity, or in collecting any sum which becomes due from an Indemnitor to the
Purchasers under this Indemnity.
NOTICES. Any notices, requests or responses to be made or to be given pursuant
to the terms of this Indemnity shall be made in accordance with the Note
Purchase Agreement.
B-3
SEVERABILITY. Whenever possible, each provision of this Indemnity shall be
interpreted in such manner as to be effective and valid under all applicable
laws and regulations. If, however, any provision of this Indemnity shall be
prohibited by or invalid under any such law or regulation in any jurisdiction,
it shall, as to such jurisdiction, be deemed modified to conform to the minimum
requirements of such law or regulation, or, if for any reason it is not deemed
so modified, it shall be ineffective and invalid only to the extent of such
prohibition or invalidity without affecting the remaining provisions of this
Indemnity or the validity or effectiveness of such provision in any other
jurisdiction.
COUNTERPARTS. This Indemnity may be executed in two or more counterparts, and by
different parties on separate counterparts, each of which shall constitute an
original, but all of which, when taken together, shall constitute but one
agreement.
[Remainder of this page intentionally left blank.]
B-4
IN WITNESS WHEREOF, this Indemnity is executed as of the day and year
first above written.
THE CHALONE WINE GROUP, LTD.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
XXXX VALLEY VINEYARD
By:_______________________________________
Name:_____________________________________
Title:____________________________________
CANOE RIDGE VINEYARD, L.L.C.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
SHW EQUITY CO.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
CANOE RIDGE WINERY, INC.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
XXXXXX HILLS WINERY COMPANY LIMITED
By:_______________________________________
Name:_____________________________________
Title:____________________________________
FARM CREDIT SERVICES OF AMERICA, PCA
By:_______________________________________
Name:_____________________________________
Title:____________________________________
AgSTAR FINANCIAL SERVICES, PCA
D/B/A FARM CREDIT SERVICES
COMMERCIAL FINANCE GROUP
By:_______________________________________
Name:_____________________________________
Title:____________________________________
FORM OF PATENT AND TRADEMARK SECURITY AGREEMENT
See attached.
EXHIBIT C
(to Note Purchase Agreement)
PATENT AND TRADEMARK SECURITY AGREEMENT
THIS PATENT AND TRADEMARK SECURITY AGREEMENT (this "Agreement"), dated
as of April 19, 2002, is made between The Chalone Wine Group, Ltd., a California
corporation (the "Borrower"), Canoe Ridge Vineyard, L.L.C., a Washington limited
liability company, SHW Equity Co., a Washington corporation, and Xxxxxx Hills
Winery Company Limited, a Washington corporation, Canoe Ridge Winery, Inc., a
Washington corporation (each a "Grantor" and together with the Borrower, the
"Grantors"), and Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank
International", New York Branch ("Rabobank"), as collateral agent for the Agent,
the Lenders and the Noteholders referred to below (in such capacity, the
"Collateral Agent").
The Borrower, certain lenders and Rabobank, as issuer of letters of
credit (in such capacity, the "Issuing Lender"), as swingline lender (in such
capacity, the "Swingline Lender") and as administrative agent (in such capacity,
the "Agent"), are parties to a Credit Agreement dated as of April 19, 2002 (as
amended, restated, modified, supplemented, renewed or extended from time to
time, the "Credit Agreement") pursuant to which the Lenders have made available
to the Borrower a revolving credit facility and term loan facility, as provided
therein.
The Borrower and certain noteholders are parties to an Amended and
Restated Note Purchase Agreement dated as of April 19, 2002 (as amended,
restated, modified, supplemented, renewed or extended from time to time, the
"Note Agreement") pursuant to which the Borrower and such noteholders have
amended and restated the $30,000,000 aggregate principal amount of the
Borrower's Senior Guaranteed Notes, Series A, B and C, Due September 15, 2010
originally issued and sold to such noteholders on September 15, 2000
(collectively, the "Private Placement Notes"), as provided therein.
The Grantors have also entered into a Security Agreement dated as of
April 19, 2002 (as amended, restated, modified, supplemented, renewed or
extended from time to time, the "Security Agreement") pursuant to which each
Grantor has granted a security interest in substantially all of its personal
property in favor of the Collateral Agent, for itself and for the benefit of the
Agent, the Lenders and the Noteholders.
It is a condition precedent to the borrowings and the issuance of
letters of credit under the Credit Agreement and the amendment and restatement
of the Private Placement Notes as provided in the Note Agreement that each
Grantor enter into this Agreement and grant to the Collateral Agent, for itself
and for the ratable benefit of the Agent, the Lenders and the Noteholders, the
security interests hereinafter provided to secure the obligations of the
Grantors as described below.
The Collateral Agent, the Agent, the Lenders, the Noteholders, the
Grantors and certain of their affiliates have entered into an Intercreditor and
Collateral Agency Agreement dated as of April 19, 2002 (as amended, restated,
supplemented or otherwise modified from time to time, the "Intercreditor
Agreement") pursuant to which, among other things, the Lenders and Noteholders
have agreed (i) to the appointment of Rabobank as Collateral Agent and (ii) to
the relative priority of their security interests in the Collateral and the
manner and order in which
certain rights and remedies of the Lenders and Noteholders may be exercised, all
as provided therein.
Accordingly, the parties hereto agree as follows:
SECTION 1 DEFINITIONS; INTERPRETATION.
(a) TERMS DEFINED IN CREDIT AGREEMENT. All capitalized terms used in
this Agreement (including in the preamble and recitals of this Agreement) and
not otherwise defined herein shall have the meanings assigned to them in the
Credit Agreement.
(b) CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings:
"COLLATERAL" has the meaning set forth in Section 2.
"CREDIT FACILITY SECURED OBLIGATIONS" means the indebtedness,
liabilities and other obligations of the Grantors to the Collateral Agent, the
Agent and the Lenders under or in connection with the Credit Agreement, the
Revolving Notes, the Term Notes, the Guaranties, the Letters of Credit and the
other Loan Documents, including all unpaid principal of the Loans, all unpaid
drawings under Letters of Credit, all interest accrued thereon, all fees due
under the Credit Agreement and the other Loan Documents and all other amounts
payable by any Grantor to the Collateral Agent, the Agent and the Lenders
thereunder or in connection therewith, whether now existing or hereafter
arising, and whether due or to become due, absolute or contingent, liquidated or
unliquidated, determined or undetermined.
"LENDERS" means the lenders from time to time party to the Credit
Agreement as "Lenders". References to the Lenders shall include references to
Rabobank in its capacity as the Issuing Lender and the Swingline Lender; for
purposes of clarification only, to the extent that Rabobank may have any rights
or obligations in addition to those of the Lenders due to its status as the
Issuing Lender or the Swingline Lender, its status as such will be specifically
referenced.
"NOTEHOLDERS" means the noteholders from time to time holding one or
more of the Private Placement Notes and in whose name such Private Placement
Note(s) are registered in the register maintained by the Borrower pursuant to
the Note Agreement.
"PRIVATE PLACEMENT SECURED OBLIGATIONS" means the indebtedness,
liabilities and other obligations of the Grantors to the Collateral Agent and
the Noteholders under or in connection with the Note Agreement, the Private
Placement Notes, the Subsidiary Guarantee Agreement (as defined in the Note
Agreement) and the other Loan Documents (as defined in the Note Agreement),
including all unpaid principal of the Private Placement Notes, all interest
accrued thereon, all fees due under the Note Agreement and the other Loan
Documents (as so defined) and all other amounts payable by any Grantor to the
Collateral Agent and the Noteholders thereunder or in connection therewith,
whether now existing or hereafter arising, and whether due or to become due,
absolute or contingent, liquidated or unliquidated, determined or undetermined.
"PTO" means the United States Patent and Trademark Office.
2.
"SECURED OBLIGATIONS" means the Credit Facility Secured Obligations and
the Private Placement Secured Obligations.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York.
(c) TERMS DEFINED IN UCC. Where applicable and except as otherwise
defined herein, terms used in this Agreement shall have the meanings assigned to
them in the UCC.
(d) INTERPRETATION. The rules of interpretation set forth in Section
1.03 of the Credit Agreement shall be applicable to this Agreement and are
incorporated herein by this reference.
SECTION 2 SECURITY INTEREST.
(a) GRANT OF SECURITY INTEREST. As security for the payment and
performance of the Secured Obligations, each Grantor hereby assigns, transfers
and conveys to the Collateral Agent, and grants a security interest in and
mortgage to the Collateral Agent, for itself and on behalf of and for the
ratable benefit of the Agent, the Noteholders and the Lenders, all of the
Grantor's right, title and interest in, to and under the following property, in
each case whether now or hereafter existing or arising or in which such Grantor
now has or hereafter owns, acquires or develops an interest and wherever located
(collectively, the "Collateral"):
(i) all patents and patent applications, domestic or foreign, all
licenses relating to any of the foregoing and all income and royalties with
respect to any licenses (including, without limitation, such patents and patent
applications as described in SCHEDULE A), all rights to sue for past, present or
future infringement thereof, all rights arising therefrom and pertaining thereto
and all reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof;
(ii) all state (including common law),federal and foreign trademarks,
service marks and trade names, and applications for registration of such
trademarks, service marks and trade names, all licenses relating to any of the
foregoing and all income and royalties with respect to any licenses (including,
without limitation, such marks, names and applications as described in SCHEDULE
B), whether registered or unregistered and wherever registered, all rights to
sue for past, present or future infringement or unconsented use thereof, all
rights arising therefrom and pertaining thereto and all reissues, extensions and
renewals thereof;
(iii) the entire goodwill of or associated with the businesses now or
hereafter conducted by each Grantor connected with and symbolized by any of the
aforementioned properties and assets;
(iv) all commercial tort claims associated with or arising out of any
of the aforementioned properties and assets;
(v) all accounts, all intangible intellectual or other similar
property and other general intangibles associated with or arising out of any of
the aforementioned properties and
3.
assets and not otherwise described above, including all license payments and
payments under insurance (whether or not the Collateral Agent is the loss payee
thereof) or any indemnity, warranty or guaranty payable by reason of loss or
damage to or otherwise with respect to the foregoing Collateral; and
(vi) all products, proceeds and supporting obligations of or with
respect to any and all of the foregoing Collateral.
(b) CONTINUING SECURITY INTEREST. Each Grantor agrees that this
Agreement shall create a continuing security interest in the Collateral which
shall remain in effect until terminated in accordance with Section 20.
SECTION 3 SUPPLEMENT TO SECURITY AGREEMENT. The terms and provisions of
this Agreement are intended as a supplement to the terms and provisions of the
Security Agreement. Each Grantor acknowledges that the rights and remedies of
the Collateral Agent with respect to the security interest in the Collateral
granted hereby are more fully set forth in the Security Agreement and the other
Loan Documents and all such rights and remedies are cumulative.
SECTION 4 REPRESENTATIONS AND WARRANTIES. Each Grantor represents and
warrants to the Agent, the Noteholders, each Lender and the Collateral Agent
that:
(a) PATENTS. A true and correct list of all of the existing
Collateral consisting of U.S. patents and patent applications and/or
registrations owned by the Grantor, in whole or in part, is set forth in
SCHEDULE A.
(b) TRADEMARKS. A true and correct list of all of the existing
Collateral consisting of U.S. trademarks, trademark registrations and/or
applications owned by such Grantor, in whole or in part, is set forth in
SCHEDULE B.
SECTION 5 FURTHER ACTS. On a continuing basis, each Grantor shall make,
execute, acknowledge and deliver, and file and record in the proper filing and
recording places, all such instruments and documents, and take all such action
as may be necessary or advisable or may be requested by the Collateral Agent to
carry out the intent and purposes of this Agreement, or for assuring, confirming
or protecting the grant or perfection of the security interest granted or
purported to be granted hereby, to ensure such Grantor's compliance with this
Agreement or to enable the Collateral Agent to exercise and enforce its rights
and remedies hereunder with respect to the Collateral, including any documents
for filing with the PTO and/or any applicable state office. The Collateral Agent
may record this Agreement, an abstract thereof, or any other document describing
the Collateral Agent's interest in the Collateral with the PTO, at the expense
of the Grantors.
SECTION 6 FUTURE RIGHTS. Except as otherwise expressly agreed to in
writing by the Collateral Agent, if and when any Grantor shall obtain rights to
any new patentable inventions or any new trademarks, or become entitled to the
benefit of any of the foregoing, or obtain rights or benefits with respect to
any reissue, division, continuation, renewal, extension or continuation-in-part
of any patents or trademarks, or any improvement of any patent, the provisions
of Section 2 shall automatically apply thereto and such Grantor shall give to
the
4.
Collateral Agent prompt notice thereof. Each Grantor shall do all things deemed
necessary or advisable by the Collateral Agent to ensure the validity,
perfection, priority and enforceability of the security interests of the
Collateral Agent in such future acquired Collateral. Each Grantor hereby
authorizes the Collateral Agent to modify, amend, or supplement the Schedules
hereto and to reexecute this Agreement from time to time on such Grantor's
behalf and as its attorneyin- fact to include any such future Collateral and to
cause such reexecuted Agreement or such modified, amended or supplemented
Schedules to be filed with the PTO.
SECTION 7 COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. The Collateral
Agent shall have the right to, in the name of each Grantor, or in the name of
the Collateral Agent or otherwise, without notice to or assent by any Grantor,
and each Grantor hereby constitutes and appoints the Collateral Agent (and any
of the Collateral Agent's officers or employees or agents designated by the
Collateral Agent) as its true and lawful attorney-in-fact, with full power and
authority, and hereby authorizes the Collateral Agent: (i) to sign and file in
the name of such Grantor any financing statement (with or without such Grantor's
signature) or other instrument and any modification, supplement or amendment to
this Agreement (including any described in Section 6), and to sign the name of
such Grantor on all or any of such documents or instruments and perform all
other acts that the Collateral Agent deems necessary or advisable in order to
perfect or continue perfected, maintain the priority or enforceability of or
provide notice of the Collateral Agent's security interest in, the Collateral;
and (ii) to execute any and all other documents and instruments, and to perform
any and all acts and things for and on behalf of such Grantor, which the
Collateral Agent may deem necessary or advisable to maintain, preserve and
protect the Collateral and to accomplish the purposes of this Agreement,
including (A) to defend, settle, adjust or institute any action, suit or
proceeding with respect to the Collateral, (B) to assert or retain any rights
under any license agreement for any of the Collateral, including any rights of
such Grantor arising under Section 365(n) of the Bankruptcy Code, and, (C) after
the occurrence and during the continuance of any Event of Default, to execute
any and all applications, documents, papers and instruments for the Collateral
Agent to use the Collateral, to grant or issue any exclusive or non-exclusive
license with respect to any Collateral, and to assign, convey or otherwise
transfer title in or dispose of the Collateral; provided, however, that in no
event shall the Collateral Agent have the unilateral power, prior to the
occurrence of an Event of Default, to assign any of the Collateral to any
Person, including itself, without the Grantor's written consent. The foregoing
power of attorney is coupled with an interest and irrevocable so long as the
Lenders have any Commitments or the Secured Obligations have not been paid and
performed in full. Each Grantor hereby ratifies, to the extent permitted by law,
all that the Collateral Agent shall lawfully and in good faith do or cause to be
done by virtue of and in compliance with this Section 7.
SECTION 8 COLLATERAL AGENT PERFORMANCE OF GRANTOR OBLIGATIONS. The
Collateral Agent may perform or pay any obligation which any Grantor has agreed
to perform or pay under or in connection with this Agreement, and the Grantor
shall reimburse the Collateral Agent on demand for any amounts paid by the
Collateral Agent pursuant to this Section 8.
SECTION 9 COLLATERAL AGENT'S DUTIES. Notwithstanding any provision
contained in this Agreement, the Collateral Agent shall have no duty to exercise
any of the rights, privileges or powers afforded to it and shall not be
responsible to any Grantor or any other Person for any failure to do so or delay
in doing so. Except for and the accounting for moneys
5.
actually received by the Collateral Agent hereunder, the Collateral Agent shall
have no duty or liability to exercise or preserve any rights, privileges or
powers pertaining to the Collateral.
SECTION 10 REMEDIES. Upon the occurrence and during the continuance of
any Event of Default, the Collateral Agent shall have, in addition to all other
rights and remedies granted to it in this Agreement, the Credit Agreement or any
other Loan Document, all rights and remedies of a secured party under the UCC
and other applicable laws. Without limiting the generality of the foregoing,
each Grantor agrees that the Collateral Agent shall at all times have such
royalty free licenses, to the extent permitted by law, for any Collateral that
is reasonably necessary to permit the exercise of any of the Agent's or the
Collateral Agent's rights or remedies upon or after the occurrence of an Event
of Default. In addition to and without limiting any of the foregoing, upon the
occurrence and during the continuance of an Event of Default, the Collateral
Agent shall have the right but shall in no way be obligated to bring suit, or to
take such other action as the Collateral Agent deems necessary or advisable, in
the name of any Grantor or the Collateral Agent, to enforce or protect any
Collateral, and any license thereunder, in which event the Grantor shall, at the
request of the Collateral Agent, do any and all lawful acts and execute any and
all documents required by the Collateral Agent in aid of such enforcement.
SECTION 11 NOTICES. All notices and other communications provided for
hereunder shall be given as provided in Section 13.02 of the Credit Agreement.
SECTION 12 NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of
the Collateral Agent to exercise, and no delay in exercising, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, remedy, power or privilege
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights and remedies under this Agreement
are cumulative and not exclusive of any rights, remedies, powers and privileges
that may otherwise be available to the Agent.
SECTION 13 BINDING EFFECT. This Agreement shall be binding upon, and
shall inure to the benefit of and be enforceable by, the Collateral Agent, the
Agent, the Lenders, the Noteholders and the Grantors and their respective
successors and assigns and shall bind any Person who becomes bound as a debtor
to this Agreement.
SECTION 14 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, EXCEPT AS
REQUIRED BY MANDATORY PROVISIONS OF LAW AND TO THE EXTENT THE VALIDITY OR
PERFECTION OF THE SECURITY INTERESTS HEREUNDER, OR THE REMEDIES HEREUNDER, IN
RESPECT OF ANY COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN
NEW YORK.
SECTION 15 ENTIRE AGREEMENT; AMENDMENT. This Agreement contains the
entire agreement of the parties with respect to the subject matter hereof and
shall not be amended except by the written agreement of the parties as provided
in the Credit Agreement.
6.
SECTION 16 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
all applicable laws and regulations. If, however, any provision of this
Agreement shall be prohibited by or invalid under any such law or regulation in
any jurisdiction, it shall, as to such jurisdiction, be deemed modified to
conform to the minimum requirements of such law or regulation, or, if for any
reason it is not deemed so modified, it shall be ineffective and invalid only to
the extent of such prohibition or invalidity without affecting the remaining
provisions of this Agreement, or the validity or effectiveness of such provision
in any other jurisdiction.
SECTION 17 COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute but one and the same agreement.
SECTION 18 INCORPORATION OF PROVISIONS OF THE CREDIT AGREEMENT. To the
extent the Credit Agreement contains provisions of general applicability to the
Loan Documents, including any such provisions contained in Article XIII thereof,
such provisions are incorporated herein by this reference.
SECTION 19 NO INCONSISTENT REQUIREMENTS. Each Grantor acknowledges that
this Agreement and the other Loan Documents may contain covenants and other
terms and provisions variously stated regarding the same or similar matters, and
agrees that all such covenants, terms and provisions are cumulative and all
shall be performed and satisfied in accordance with their respective terms.
SECTION 20 TERMINATION. Upon the termination of the Commitments of the
Lenders, the surrender of the Letters of Credit and payment and performance in
full of all Secured Obligations, the security interests contemplated by this
Agreement shall terminate and the Collateral Agent shall promptly execute and
deliver to each Grantor such documents and instruments reasonably requested by
such Grantor as shall be necessary to evidence termination of all security
interests given by such Grantor to the Collateral Agent hereunder, including
cancellation of this Agreement by written notice from the Collateral Agent to
the PTO.
[SIGNATURE PAGES FOLLOW.]
7.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, as of the date first above written.
THE GRANTORS
THE CHALONE WINE GROUP, LTD.
By:_______________________________________
Name:
Title:
CANOE RIDGE VINEYARD, L.L.C.
By:_______________________________________
Name:
Title:
SHW EQUITY CO.
By:_______________________________________
Name:
Title:
XXXXXX HILLS WINERY COMPANY
LIMITED
By:_______________________________________
Name:
Title:
CANOE RIDGE WINERY, INC.
By:_______________________________________
Name:
Title:
8.
THE COLLATERAL AGENT
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK B.A.,
"RABOBANK INTERNATIONAL", NEW
YORK BRANCH, as Collateral Agent
By:_______________________________________
Name:
Title:
By:_______________________________________
Name:
Title:
9.
SCHEDULE A
to the Patent and Trademark Security Agreement
THE CHALONE WINE GROUP, LTD.
ISSUED U.S. PATENTS OF THE GRANTOR
PATENT NO. ISSUE DATE INVENTOR TITLE
A-1.
PENDING U.S. PATENT APPLICATIONS OF THE GRANTOR
SERIAL NO. FILING DATE INVENTOR TITLE
A-2.
SCHEDULE B
to the Patent and Trademark Security Agreement
THE CHALONE WINE GROUP, LTD.
U.S. TRADEMARKS OF THE GRANTOR
REGISTRATION REGISTRATION REGISTERED
NO. DATE FILING DATE OWNER XXXX
B-1.
PENDING U.S. TRADEMARK APPLICATIONS OF THE GRANTOR
APPLICATION NO. FILING DATE APPLICANT MARK
B-2.
FORM OF SECURITY AGREEMENT
See attached.
EXHIBIT D
(to Note Purchase Agreement)
THIS SECURITY AGREEMENT (this "Agreement"), dated as of April 19, 2002,
is made among The Chalone Wine Group, Ltd., a California corporation (the
"Borrower"), Canoe Ridge Vineyard, L.L.C., a Washington limited liability
company ("Canoe Ridge"), SHW Equity Co., a Washington corporation ("SHW"),
Xxxxxx Hills Winery Company Limited, a Washington corporation ("Xxxxxx Hills"),
Canoe Ridge Winery, Inc. a Washington corporation ("CRW") (the Borrower, Canoe
Ridge, CRW, SHW and Xxxxxx Hills, individually a "Debtor" and collectively, the
"Debtors") and Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank
International", New York Branch ("Rabobank"), as Collateral Agent.
The Borrower, certain lenders and Rabobank, as issuer of letters of
credit (in such capacity, the "Issuing Lender"), as swingline lender (in such
capacity, the "Swingline Lender") and as administrative agent (in such capacity,
the "Agent"), are parties to a Credit Agreement dated as of April 19, 2002 (as
amended, restated, modified, supplemented, renewed or extended from time to
time, the "Credit Agreement") pursuant to which the Lenders have made available
to the Borrower a revolving credit facility and term loan facility, as provided
therein.
The Borrower is also party to those separate and several Note Purchase
Agreements, each dated as of September 15, 2000 (collectively, the "Original
Note Agreements"), entered into by the Borrower with each of the Purchasers
listed on Schedule A thereto, under and pursuant to which the Noteholders
purchased $5,000,000 8.75% Senior Guaranteed Notes, Series A, due September 15,
2010, $10,000,000 Senior Guaranteed Notes, Series B, due September 15, 2010 and
$15,000,000 Senior Guaranteed Notes, Series C, due September 15, 2010
(collectively, the "Original Senior Notes") of the Borrower. The Borrower has
requested that the Noteholders amend and restate the Original Note Agreements,
amend and restate the Original Senior Notes, and the Noteholders are willing to
enter into and execute those certain Amended and Restated Note Purchase
Agreements each dated April 19, 2002 (as the same may hereafter be amended,
modified and/or restated from time to time, collectively, the "Amended and
Restated Note Agreement") and are willing to amend and restate the Original
Senior Notes pursuant to the terms thereof (as so amended, the "Amended and
Restated Senior Secured Notes").
It is a condition precedent to the borrowings and the issuance of
letters of credit under the Credit Agreement and the amendment and restatement
of the Original Senior Notes as provided in the Amended and Restated Note
Agreement and the Amended and Restated Senior Notes that each Debtor enter into
this Agreement and grant to the Collateral Agent, for itself and for the ratable
benefit of the Agent, the Lenders and the Noteholders, the security interests
hereinafter provided to secure the obligations of the Debtors as described
below.
The Collateral Agent, the Agent, the Lenders, the Noteholders and the
Debtors have entered into an Intercreditor and Collateral Agency Agreement dated
as of April 19, 2002 (as amended, restated, supplemented or otherwise modified
from time to time, the "Intercreditor Agreement") pursuant to which, among other
things, the Lenders and Noteholders have agreed (i) to the appointment of
Rabobank as Collateral Agent and (ii) to the relative priority of their security
interests in the Collateral and the manner and order in which certain rights and
remedies of the Lenders and Noteholders may be exercised, all as provided
therein.
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Accordingly, the parties hereto agree as follows:
SECTION 1 DEFINITIONS; INTERPRETATION.
(a) TERMS DEFINED IN CREDIT AGREEMENT. All capitalized terms used in
this Agreement (including in the preamble and recitals hereof) and not otherwise
defined herein shall have the meanings assigned to them in the Credit Agreement.
(b) CERTAIN DEFINED TERMS. As used in this Agreement (including in the
preamble and recitals hereof), the following terms shall have the following
meanings:
"ACCOUNTS" means any and all of any Debtor's accounts, as such term is
defined in Section 9-102 of the UCC.
"APPRAISED WINERY EQUIPMENT" means the equipment (including, without
limitation, all crushing, pressing, processing, bottling and lab equipment,
pumps, stainless steel cooperage and wood barrels) which is identified in the
appraisal reports delivered by or on behalf of the Borrower to the Agent and the
Noteholders prior to the date hereof in respect of the Acacia, Carmenet,
Chalone, Canoe Ridge and Sageland vineyard properties and improvements.
"BOOKS" means all books, records and other written, electronic or other
documentation in whatever form maintained now or hereafter by or for any Debtor
in connection with the ownership of its assets or the conduct of its business or
evidencing or containing information relating to the Collateral, including: (i)
ledgers; (ii) records indicating, summarizing, or evidencing any Debtor's assets
(including Inventory and Rights to Payment), business operations or financial
condition; (iii) computer programs and software; (iv) computer discs, tapes,
files, manuals, spreadsheets; (v) computer printouts and output of whatever
kind; (vi) any other computer prepared or electronically stored, collected or
reported information and equipment of any kind; and (vii) any and all other
rights now or hereafter arising out of any contract or agreement between any
Debtor and any service bureau, computer or data processing company or other
Person charged with preparing or maintaining any of such Debtor's books or
records or with credit reporting, including with regard to such Xxxxxx's
Accounts.
"BULK WINE" means any and all of any Debtor's bulk wine, whether held
for sale in the bulk wine market or otherwise, and whether or not classified as
"inventory" under Section 9-102 of the UCC.
"CHATTEL PAPER" means any and all of any Debtor's chattel paper, as
such term is defined in Section 9-102 of the UCC, including all Electronic
Chattel Paper.
"COLLATERAL" has the meaning set forth in Section 2.
"COMMERCIAL TORT CLAIMS" means any and all of any Debtor's commercial
tort claims, as such term is defined in Section 9-102 of the UCC, including any
described in Schedule 1.
"CONTROL AGREEMENT" means any control agreement or other agreement with
any securities intermediary, bank or other Person establishing the Collateral
Agent's control with
2
respect to any Deposit Accounts, Letter-of-Credit Rights or Investment Property,
for purposes of UCC Sections 9-104, 9-106 and 9-107.
"CREDIT FACILITY SECURED OBLIGATIONS" means the indebtedness,
liabilities and other obligations of the Debtors and Xxxx Valley to the
Collateral Agent, the Agent, the Lenders and the Indemnified Persons under or in
connection with the Credit Agreement, the Revolving Notes, the Term Notes, the
Guaranties, the Letters of Credit and the other Loan Documents, including all
unpaid principal of the Loans, all unpaid drawings under Letters of Credit, all
interest accrued thereon, all fees due under the Credit Agreement and the other
Loan Documents and all other amounts payable by any Debtor or Xxxx Valley to the
Collateral Agent, the Agent and the Lenders thereunder or in connection
therewith, whether now existing or hereafter arising, and whether due or to
become due, absolute or contingent, liquidated or unliquidated, determined or
undetermined.
"DEPOSIT ACCOUNT" means any deposit account, as such term is defined in
Section 9-102 of the UCC, maintained by or for the benefit of any Debtor,
whether or not restricted or designated for a particular purpose.
"DOCUMENTS" means any of any Debtor's documents, as such term is
defined in Section 9-102 of the UCC.
"XXXX VALLEY" means Xxxx Valley Vineyard, a joint venture.
"ELECTRONIC CHATTEL PAPER" means any and all of any Debtor's electronic
chattel paper, as such term is defined in Section 9-102 of the UCC.
"EQUIPMENT" means any and all of any Debtor's equipment, including any
and all fixtures, as such terms are defined in Section 9-102 of the UCC.
"EXCLUDED COLLATERAL" means the personal property listed on Schedule 2,
to the extent such property relates to the Excluded Parcels, if any; PROVIDED,
HOWEVER, that, notwithstanding anything to the contrary herein, the Appraised
Winery Equipment shall not at any time constitute Excluded Collateral; AND
PROVIDED FURTHER that, for the avoidance of doubt, it is agreed and acknowledged
that Bulk Wine and Inventory shall not at any time constitute Excluded
Collateral.
"EXCLUDED PARCEL" means any real property of any Debtor that is not
encumbered by a Deed of Trust.
"FARM PRODUCTS" means any and all of any Debtor's farm products, as
such term is defined in Section 9-102 of the UCC.
"GENERAL INTANGIBLES" means any and all of any Debtor's general
intangibles, as such term is defined in Section 9-102 of the UCC.
"INSTRUMENTS" means any and all of such Debtors' instruments, as such
term is defined in Section 9-102 of the UCC.
3
"INTELLECTUAL PROPERTY COLLATERAL" means the following properties and
assets owned or held by any Debtor or in which any Debtor otherwise has any
interest, now existing or hereafter acquired or arising:
(i) all patents and patent applications, domestic or foreign, all
licenses relating to any of the foregoing and all income and royalties with
respect to any licenses (including such patents, patent applications and patent
licenses as described in Schedule 1), all rights to sue for past, present or
future infringement thereof, all rights arising therefrom and pertaining thereto
and all reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof;
(ii) all copyrights and applications for copyright, domestic or
foreign, together with the underlying works of authorship (including titles),
whether or not the underlying works of authorship have been published and
whether said copyrights are statutory or arise under the common law, and all
other rights and works of authorship (including the copyrights and copyright
applications described in Schedule 1), all computer programs, computer
databases, computer program flow diagrams, source codes, object codes and all
tangible property embodying or incorporating any copyrights, all licenses
relating to any of the foregoing and all income and royalties with respect to
any licenses, and all other rights, claims and demands in any way relating to
any such copyrights or works, including royalties and rights to sue for past,
present or future infringement, and all rights of renewal and extension of
copyright;
(iii) all state (including common law), federal and foreign trademarks,
service marks and trade names, and applications for registration of such
trademarks, service marks and trade names, all licenses relating to any of the
foregoing and all income and royalties with respect to any licenses (including
such marks, names, applications and licenses as described in Schedule 1),
whether registered or unregistered and wherever registered, all rights to sue
for past, present or future infringement or unconsented use thereof, all rights
arising therefrom and pertaining thereto and all reissues, extensions and
renewals thereof;
(iv) all trade secrets, trade dress, trade styles, logos, other source
of business identifiers, mask-works, mask-work registrations, mask-work
applications, software, confidential information, customer lists, license
rights, advertising materials, operating manuals, methods, processes, know-how,
algorithms, formulae, databases, quality control procedures, product, service
and technical specifications, operating, production and quality control manuals,
sales literature, drawings, specifications, blue prints, descriptions,
inventions, name plates and catalogs;
(v) the entire goodwill of or associated with the businesses now or
hereafter conducted by any Debtor connected with and symbolized by any of the
aforementioned properties and assets; and
(vi) all accounts, all intangible intellectual or other similar
property and other general intangibles associated with or arising out of any of
the aforementioned properties and assets and not otherwise described above.
4
"INVENTORY" means any of any Debtor's inventory, as such term is
defined in Section 9-102 of the UCC.
"INVESTMENT PROPERTY" means any of any Debtor's investment property, as
such term is defined in Section 9-102 of the UCC.
"LENDERS" means the lenders from time to time party to the Credit
Agreement as "Lenders". References to the Lenders shall include references to
Rabobank in its capacity as the Issuing Lender and the Swingline Lender; for
purposes of clarification only, to the extent that Rabobank may have any rights
or obligations in addition to those of the Lenders due to its status as the
Issuing Lender or the Swingline Lender, its status as such will be specifically
referenced. Unless the context otherwise clearly requires, the Lenders shall
include any such Person in its capacity as Swap Provider. Unless the context
otherwise clearly requires, references to any such Person as a Lender shall also
include any of such Person's Affiliates that may at any time of determination be
Swap Providers.
"LETTER-OF-CREDIT RIGHTS" means any and all of any Debtor's
letter-of-credit rights, as such term is defined in Section 9-102 of the UCC.
"NOTEHOLDERS" means the noteholders from time to time holding one or
more of the Amended and Restated Senior Secured Notes and in whose name such
Amended and Restated Senior Secured Note(s) are registered in the register
maintained by the Borrower pursuant to the Amended and Restated Note Agreement.
"Private Placement Secured Obligations" means the indebtedness,
liabilities and other obligations of the Debtors and Xxxx Valley to the
Collateral Agent and the Noteholders under or in connection with the Amended and
Restated Note Agreement, the Amended and Restated Senior Secured Notes, the
Subsidiary Guarantee Agreement (as defined in the Amended and Restated Note
Agreement) and the other Loan Documents (as defined in the Amended and Restated
Note Agreement), including all unpaid principal of the Amended and Restated
Senior Secured Notes, all interest accrued thereon, all fees due under the
Amended and Restated Note Agreement and the other Loan Documents (as so defined)
and all other amounts payable by any Debtor or Xxxx Valley to the Collateral
Agent and the Noteholders thereunder or in connection therewith, whether now
existing or hereafter arising, and whether due or to become due, absolute or
contingent, liquidated or unliquidated, determined or undetermined.
"PROCEEDS" means all proceeds, as such term is defined in Section 9-102
of the UCC.
"RIGHTS TO PAYMENT" means any and all of any Debtor's Accounts and any
and all of any Debtor's rights and claims to the payment or receipt of money or
other forms of consideration of any kind in, to and under or with respect to its
Chattel Paper, Documents, General Intangibles, Instruments, Investment Property,
Letter-of-Credit Rights, Proceeds and Supporting Obligations.
"SECURED OBLIGATIONS" means the Credit Facility Secured Obligations and
the Private Placement Secured Obligations.
5
"SUPPORTING OBLIGATIONS" means all supporting obligations, as such term
is defined in Section 9-102 of the UCC.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York.
(c) TERMS DEFINED IN UCC. Where applicable and except as otherwise
defined herein, terms used in this Agreement shall have the meanings assigned to
them in the UCC.
(d) INTERPRETATION. The rules of interpretation set forth in Section
1.03 of the Credit Agreement shall be applicable to this Agreement and are
incorporated herein by this reference.
SECTION 2 SECURITY INTEREST.
(a) GRANT OF SECURITY INTEREST. As security for the payment and
performance of the Secured Obligations, each Debtor hereby grants to the
Collateral Agent, for itself and on behalf of and for the ratable benefit of the
Agent, the Lenders and the Noteholders, a security interest in all of such
Debtor's right, title and interest in, to and under all of its personal
property, wherever located and whether now existing or owned or hereafter
acquired or arising, including the following property (collectively, the
"Collateral"): (i) all Accounts; (ii) all Chattel Paper; (iii) all Commercial
Tort Claims; (iv) all Deposit Accounts; (v) all Documents; (vi) all Equipment;
(vii) all Farm Products, (viii) all General Intangibles; (ix) all Instruments;
(x) all Inventory; (xi) all Investment Property; (xii) all Letter-of-Credit
Rights; and (xii) all money, all products and Proceeds of any and all of the
foregoing, and all Supporting Obligations of any and all of the foregoing.
Notwithstanding the foregoing, except for fixtures (as provided in Section 9-313
of the UCC), such grant of a security interest shall not extend to, and the term
"Collateral" shall not include, any asset which would be real property under the
law of the jurisdiction in which it is located or any Excluded Collateral.
(b) DEBTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (i) each Debtor shall remain liable under any contracts,
agreements and other documents included in the Collateral, to the extent set
forth therein, to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (ii) the exercise by the
Collateral Agent of any of the rights hereunder shall not release such Debtor
from any of its duties or obligations under such contracts, agreements and other
documents included in the Collateral, and (iii) the Collateral Agent shall not
have any obligation or liability under any contracts, agreements and other
documents included in the Collateral by reason of this Agreement, nor shall the
Collateral Agent be obligated to perform any of the obligations or duties of
such Debtor thereunder or to take any action to collect or enforce any such
contract, agreement or other document included in the Collateral hereunder.
(c) CONTINUING SECURITY INTEREST. Each Debtor agrees that this
Agreement shall create a continuing security interest in the Collateral which
shall remain in effect until terminated in accordance with Section 22.
SECTION 3 PERFECTION AND PRIORITY.
6
(a) FINANCING STATEMENTS. Each Debtor shall execute and deliver to the
Collateral Agent concurrently with the execution of this Agreement, and such
Debtor hereby authorizes the Collateral Agent to file (with or without such
Debtor's signature), at any time and from time to time thereafter, all financing
statements, continuation financing statements, termination statements, security
agreements relating to the Intellectual Property Collateral, if any,
assignments, fixture filings, affidavits, reports, notices and other documents
and instruments, in form satisfactory to the Collateral Agent, and take all
other action, as the Collateral Agent may request, to perfect and continue
perfected, maintain the priority of or provide notice of the Collateral Agent's
security interest in the Collateral and to accomplish the purposes of this
Agreement. Without limiting the generality of the foregoing, each Debtor
ratifies and authorizes the filing by the Collateral Agent of any financing
statements filed prior to the date hereof.
(b) BAILEES. Any Person (other than the Collateral Agent) at any time
and from time to time holding all or any portion of the Collateral shall be
deemed to, and shall, hold the Collateral as the agent of, and as pledge holder
for, the Collateral Agent. At any time and from time to time, the Collateral
Agent may give notice to any such Person holding all or any portion of the
Collateral that such Person is holding the Collateral as the agent and bailee
of, and as pledge holder for, the Collateral Agent, and obtain such Person's
written acknowledgment thereof. Without limiting the generality of the
foregoing, such Debtor will join with the Collateral Agent in notifying any
Person who has possession of any Collateral of the Collateral Agent's security
interest therein and obtaining an acknowledgment from such Person that it is
holding the Collateral for the benefit of the Collateral Agent.
(c) CONTROL. Each Debtor will cooperate with the Collateral Agent in
obtaining control (as defined in the UCC) of Collateral consisting of any
Deposit Accounts, Electronic Chattel Paper, Investment Property or
Letter-of-Credit Rights.
SECTION 4 REPRESENTATIONS AND WARRANTIES. In addition to the
representations and warranties of the Debtors set forth in the Credit Agreement,
which are incorporated herein by this reference, each Debtor represents and
warrants to the Agent, each Lender, each Noteholder and the Collateral Agent
that:
(a) LOCATION OF CHIEF EXECUTIVE OFFICE AND COLLATERAL. Its chief
executive office and principal place of business (as of the date of this
Agreement) is located at the address set forth in Schedule 1; and all other
locations (as of the date of this Agreement) where such Debtor conducts business
or Collateral is kept are set forth in Schedule 1.
(b) LOCATIONS OF BOOKS. All locations where Books pertaining to the
Rights to Payment are kept, including all equipment necessary for accessing such
Books and the names and addresses of all service bureaus, computer or data
processing companies and other Persons keeping any Books or collecting Rights to
Payment for such Debtor, are set forth in Schedule 1.
(c) JURISDICTION OF ORGANIZATION AND NAMES. Each Debtor's jurisdiction
of organization is set forth in Schedule 1; and each Debtor's exact legal name
is as set forth in the first paragraph of this Agreement. All trade names and
trade styles under which any Debtor presently conducts its business operations
are set forth in Schedule 1, and, except as set forth in Schedule 1, each Debtor
has not, at any time in the past: (i) been known as or used any other
7
corporate, trade or fictitious name; (ii) changed its name; (iii) been the
surviving or resulting corporation in a merger or consolidation; or (iv)
acquired through asset purchase or otherwise any business of any Person.
(d) COLLATERAL. Each Debtor has rights in or the power to transfer the
Collateral, and such Debtor is, and, except as permitted by Section 5(i), will
continue to be, the sole and complete owner of the Collateral (or, in the case
of after-acquired Collateral, at the time such Debtor acquires rights in such
Collateral, will be the sole and complete owner thereof), free from any Lien
other than Permitted Liens.
(e) ENFORCEABILITY; PRIORITY OF SECURITY INTEREST. (i) This Agreement
creates a security interest which is enforceable against the Collateral in which
any Debtor now has rights and will create a security interest which is
enforceable against the Collateral in which any Debtor hereafter acquires rights
at the time such Debtor acquires any such rights, subject to the Permitted Liens
and the Intercreditor Agreement; and (ii) the Collateral Agent has a perfected
and first priority security interest in the Collateral in which any Debtor now
has rights, and will have a perfected and first priority security interest in
the Collateral in which such Debtor hereafter acquires rights at the time such
Debtor acquires any such rights, in each case securing the payment and
performance of the Secured Obligations and subject to Permitted Liens and the
Intercreditor Agreement.
(f) OTHER FINANCING STATEMENTS. Other than (i) financing statements
disclosed to the Agent, the Noteholders and the Lenders in writing, and (ii)
financing statements in favor of the Collateral Agent on behalf of itself, the
Agent, the Lenders and the Noteholders, no effective financing statement naming
any Debtor as debtor, assignor, grantor, mortgagor, pledgor or the like and
covering all or any part of the Collateral is on file in any filing or recording
office in any jurisdiction.
(g) RIGHTS TO PAYMENT.
(i) The Rights to Payment represent valid, binding and enforceable
obligations of the account debtors or other Persons obligated thereon,
representing undisputed, bona fide transactions completed in accordance with the
terms and provisions contained in any documents related thereto, and are and
will be genuine, free from Liens, and not subject to any adverse claims,
counterclaims, setoffs, defaults, disputes, defenses, discounts, retainages,
holdbacks or conditions precedent of any kind or character, except to the extent
reflected by any Debtor's reserves for uncollectible Rights to Payment or to the
extent, if any, that such account debtors or other Persons may be entitled to
normal and ordinary course trade discounts, returns, adjustments and allowances
in accordance with Section 5(m), or as otherwise disclosed to the Collateral
Agent, the Agent, the Lenders and the Noteholders in writing;
(ii) to the best of each Debtor's knowledge and belief, all account
debtors and other obligors on the Rights to Payment are solvent and generally
paying their debts as they come due;
8
(iii) all Rights to Payment comply with all applicable laws concerning
form, content and manner of preparation and execution, including where
applicable any federal or state consumer credit laws;
(iv) no Debtor has assigned any of its rights under the Rights to
Payment except as provided in this Agreement or as set forth in the other Loan
Documents;
(v) with respect to the Rights to Payment constituting Eligible
Receivables, except as disclosed in writing to the Agent and the Lenders, no
Debtor has any knowledge that any of the criteria for eligibility are not or are
no longer satisfied;
(vi) all statements made, all unpaid balances and all other information
in the Books and other documentation relating to the Rights to Payment are true
and correct and in all respects what they purport to be; and
(vii) no Debtor has any knowledge of any fact or circumstance which
would impair the validity or collectibility of any of the Rights to Payment.
(h) INVENTORY. No Inventory or Farm Products is stored with any bailee
or warehouseman or similar Person or on any premises leased to any Debtor, nor
has any Inventory or Farm Products been consigned to any Debtor or consigned by
any Debtor to any Person or is held by any Debtor for any Person under any "bill
and hold" or other arrangement, except as set forth in Schedule 1; and with
respect to the Inventory constituting Eligible Inventory, except as disclosed in
writing to the Agent and the Lenders, no Debtor has any knowledge that any of
the criteria for eligibility are not or are no longer satisfied.
(i) INTELLECTUAL PROPERTY.
(i) Except as set forth in Schedule 1, no Debtor (directly or through
any Subsidiary) owns, possesses or uses under any licensing arrangement any
patents, copyrights, trademarks, service marks or trade names, nor is there
currently pending before any Governmental Authority any application for
registration of any patent, copyright, trademark, service mark or trade name;
(ii) all patents, copyrights, trademarks, service marks and trade names
are subsisting and have not been adjudged invalid or unenforceable in whole or
in part;
(iii) all maintenance fees required to be paid on account of any
patents have been timely paid for maintaining such patents in force, and, to the
best of each Debtor's knowledge, each of the patents is valid and enforceable
and each Debtor has notified the Agent, the Lenders and the Noteholders in
writing of all prior art (including public uses and sales) of which it is aware;
(iv) to the best of each Debtor's knowledge after due inquiry, no
material infringement or unauthorized use presently is being made of any
Intellectual Property Collateral by any Person;
9
(v) each Debtor is the sole and exclusive owner of its Intellectual
Property Collateral and the past, present and contemplated future use of such
Intellectual Property Collateral by such Debtor has not, does not and will not
infringe or violate any right, privilege or license agreement of or with any
other Person; and
(vi) each Debtor owns, has material rights under, is a party to, or an
assignee of a party to all material licenses, patents, patent applications,
copyrights, service marks, trademarks, trademark applications, trade names and
all other Intellectual Property Collateral necessary to continue to conduct its
business as heretofore conducted.
(j) EQUIPMENT.
(i) None of the Equipment constituting Collateral or other Collateral
is affixed to real property, except Collateral with respect to which each Debtor
has supplied the Collateral Agent, the Agent, the Lenders and the Noteholders
with all information and documentation necessary to make all fixture filings
required to perfect and protect the priority of the Collateral Agent's security
interest in all such Collateral which may be fixtures as against all Persons
having an interest in the premises to which such property may be affixed;
(ii) none of the Equipment constituting Collateral is leased from or to
any Person, except as set forth on Schedule 1 or as otherwise disclosed to the
Collateral Agent, the Agent, the Lenders and the Noteholders in writing;
(iii) the Appraised Winery Equipment has an aggregate appraised value
of not less than $6,590,000, as set forth in the appraisal reports previously
delivered to the Agent and the Noteholders prior to the date hereof; and
(iv) the Appraised
Winery Equipment is owned by one or more of the Debtors free and clear of all
Liens, rights and interests of any other Person.
(k) DEPOSIT ACCOUNTS. The names and addresses of all financial
institutions at which any Debtor maintains its Deposit Accounts, and the account
numbers and account names of such Deposit Accounts, are set forth in Schedule 1.
(l) INVESTMENT PROPERTY; INSTRUMENTS; AND CHATTEL PAPER. All securities
accounts of any Debtor and other Investment Property of any Debtor are set forth
in Schedule 1, and all Instruments and Chattel Paper held by any Debtor are also
set forth in Schedule 1.
(m) CONTROL AGREEMENTS. No Control Agreements exist with respect to any
Collateral other than any Control Agreements in favor of the Collateral Agent.
(n) LETTER-OF-CREDIT RIGHTS. No Debtor has any Letter-of-Credit Rights
except as set forth in Schedule 1.
(o) COMMERCIAL TORT CLAIMS. No Debtor has any Commercial Tort Claims
except as set forth in Schedule 1.
10
(p) LEASES. No Debtor is nor will not become a lessee under any real
property lease or other agreement governing the location of Collateral at the
premises of another Person pursuant to which the lessor or such other Person may
obtain any rights in any of the Collateral, and no such lease or other such
agreement now prohibits, restrains, impairs or will prohibit, restrain or impair
any Debtor's right to remove any Collateral from the premises at which such
Collateral is situated, except for the usual and customary restrictions
contained in leases of real property.
(q) CONSIDERATION. Each Debtor has received at least reasonably
equivalent value and more than sufficient consideration to support the
indebtedness, obligations, liens and security interests created hereunder and
under the other Loan Documents to which such Debtor is a party. Each Debtor
acknowledges that it will derive substantial direct and indirect benefits from
the making of the Loans to the Borrower and the issuances of letters of credit
pursuant to the Credit Agreement and, without limiting the generality of the
foregoing, agrees to the inclusion of such Xxxxxx's assets in the Borrowing Base
as provided in the Credit Agreement.
SECTION 5 COVENANTS. In addition to the covenants of each Debtor set
forth in the Credit Agreement and the other Loan Documents and in the Amended
and Restated Note Agreement and the other Loan Documents (as defined in the
Amended and Restated Note Agreement), so long as any of the Secured Obligations
remain unsatisfied or any Lender shall have any Commitment, each Debtor agrees
that:
(a) DEFENSE OF COLLATERAL. It will appear in and defend any action,
suit or proceeding which may affect to a material extent its title to, or right
or interest in, or the Collateral Agent's right or interest in, the Collateral.
(b) PRESERVATION OF COLLATERAL. It will do and perform all reasonable
acts that may be necessary and appropriate to maintain, preserve and protect the
Collateral.
(c) COMPLIANCE WITH LAWS, ETC. It will comply with all laws,
regulations and ordinances, and all policies of insurance, relating in a
material way to the possession, operation, maintenance and control of the
Collateral.
(d) LOCATION OF BOOKS AND CHIEF EXECUTIVE OFFICE. It will: (i) keep all
Books pertaining to the Rights to Payment at the locations set forth in Schedule
1; and (ii) give at least 30 days' prior written notice to the Collateral Agent,
the Agent and the Noteholders of (a) any changes in any such location where
Books pertaining to the Rights to Payment are kept, including any change of name
or address of any service bureau, computer or data processing company or other
Person preparing or maintaining any Books or collecting Rights to Payment for
the Debtor or (b) any change in the location of its chief executive office or
principal place of business.
(e) LOCATION OF COLLATERAL. It will: (i) keep the Collateral at the
locations set forth in Schedule 1 and not remove the Collateral from such
locations (other than disposals of Collateral permitted by subsection (i) below)
except upon at least 30 days' prior written notice of any removal to the
Collateral Agent, the Agent and the Noteholders; and (ii) give the Collateral
11
Agent, the Agent and the Noteholders at least 30 days' prior written notice of
any change in the locations set forth in Schedule 1.
(f) CHANGE IN NAME, IDENTITY OR STRUCTURE. It will give at least 30
days' prior written notice to the Collateral Agent, the Agent and the
Noteholders of (i) any change in its name, (ii) any change in its jurisdiction
of organization, (iii) any change in its registration as an organization (or any
new such registration); and (iv) any changes in its identity or structure in any
manner which might make any financing statement filed hereunder incorrect or
misleading; provided that it shall not change its jurisdiction of organization
to a jurisdiction outside of the United States.
(g) MAINTENANCE OF RECORDS. It will keep separate, accurate and
complete Books with respect to the Collateral, disclosing the Collateral Agent's
security interest hereunder.
(h) INVOICING OF SALES. It will invoice all of its sales upon forms
customary in the industry and to maintain proof of delivery and customer
acceptance of goods.
(i) DISPOSITION OF COLLATERAL. It will not surrender or lose possession
of (other than to the Collateral Agent), sell, lease, rent, or otherwise dispose
of or transfer any of the Collateral or any right or interest therein, except to
the extent permitted by the Credit Agreement and the Amended and Restated Note
Agreement; provided that no such disposition or transfer of Investment Property
or Instruments shall be permitted while any Event of Default exists.
(j) LIENS. It will keep the Collateral free of all Liens except
Permitted Liens.
(k) EXPENSES. It will pay all expenses of protecting, storing,
warehousing, insuring, handling and shipping the Collateral.
(l) LEASED PREMISES. At the Collateral Agent's, the Agent's or the
Noteholders' request, it will obtain from each Person from whom it leases any
premises at which any Collateral is at any time present such collateral access,
subordination, waiver, consent and estoppel agreements as the Collateral Agent,
the Agent or the Noteholders may require, in form and substance satisfactory to
the Collateral Agent, the Agent and the Noteholders.
(m) RIGHTS TO PAYMENT. It will:
(i) give only normal discounts, allowances and credits as to Accounts
and other Rights to Payment, in the ordinary course of business, according to
normal trade practices utilized by it in the past, and enforce all Accounts and
other Rights to Payment strictly in accordance with their terms, and take all
such action to such end as may from time to time be reasonably requested by the
Collateral Agent, the Agent or the Noteholders, except that it may grant any
extension of the time for payment or enter into any agreement to make a rebate
or otherwise to reduce the amount owing on or with respect to, or compromise or
settle for less than the full amount thereof, any Account or other Right to
Payment, in the ordinary course of business, according to normal trade practices
utilized by it in the past, and where the amount involved does not exceed
$1,500,000 or where the Account or Right to Payment does not exceed $1,500,000
or would not be materially impaired;
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(ii) if any discount, allowance, credit, extension of time for payment,
agreement to make a rebate or otherwise to reduce the amount owing on, or
compromise or settle, an Account or other Right to Payment exists or occurs, or
if, to the knowledge of it, any dispute, setoff, claim, counterclaim or defense
exists or has been asserted or threatened with respect to an Account or other
Right to Payment, disclose such fact fully to the Collateral Agent, the Agent
and the Noteholders in the Books relating to such Account or other Right to
Payment and in connection with any invoice or report furnished by it to the
Collateral Agent, the Agent and the Noteholders relating to such Account or
other Right to Payment;
(iii) if any Accounts arise from contracts with the United States or
any department, agency or instrumentality thereof, immediately notify the
Collateral Agent, the Agent and the Noteholders thereof and, upon the request of
the Collateral Agent, the Agent or the Noteholders, execute any documents and
instruments and take any other steps requested by the Collateral Agent, the
Agent or the Noteholders in order that all monies due and to become due
thereunder shall be assigned to the Collateral Agent and notice thereof given to
the Federal authorities under the Federal Assignment of Claims Act;
(iv) in accordance with its sound business judgment perform and comply
in all material respects with its obligations in respect of the Accounts and
other Rights to Payment;
(v) upon the request of the Collateral Agent, the Agent or the
Noteholders while an Event of Default exists, (a) at any time, notify all or any
designated portion of the account debtors and other obligors on the Rights to
Payment of the security interest hereunder, and (b) notify the account debtors
and other obligors on the Rights to Payment or any designated portion thereof
that payment shall be made directly to the Collateral Agent or to such other
Person or location as the Collateral Agent shall specify; and
(vi) upon the occurrence of any Event of Default, establish such
lockbox or similar arrangements for the payment of the Accounts and other Rights
to Payment as the Collateral Agent, the Agent or the Noteholders shall
reasonably require.
(n) INSTRUMENTS, Investment Property, Etc. Upon the request of the
Collateral Agent, the Agent or the Noteholders it will (i) immediately deliver
to the Collateral Agent, or an agent designated by it, appropriately endorsed or
accompanied by appropriate instruments of transfer or assignment, all
Instruments, Documents, Chattel Paper and certificated securities with respect
to any Investment Property, all letters of credit, and all other Rights to
Payment at any time evidenced by promissory notes, trade acceptances or other
instruments, (ii) cause any securities intermediaries to show on their books
that the Collateral Agent is the entitlement holder with respect to any
Investment Property, and/or obtain Control Agreements in favor of the Collateral
Agent from such securities intermediaries, in form and substance satisfactory to
the Collateral Agent, the Agent and the Noteholders with respect to any
Investment Property, as requested by Collateral Agent, and (iii) provide such
notice, obtain such acknowledgments and take all such other action, with respect
to any Chattel Paper, Documents and Letter-of Credit Rights, as the Collateral
Agent, the Agent or the Noteholders shall reasonably specify.
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(o) DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS. It will give the
Collateral Agent, the Agent and the Noteholders immediate written notice of the
establishment of any new Deposit Account and any new securities account with
respect to any Investment Property.
(p) INVENTORY. It will:
(i) upon the request of the Collateral Agent (which, except upon the
occurrence and during the continuation of an Event of Default, shall not be
given more than once in any 12-month period), take a physical listing of the
Inventory and promptly deliver a copy of such physical listing to the Collateral
Agent; and
(ii) not store any Inventory or Farm Products with a bailee,
warehouseman or similar Person or on premises leased to the Debtor, nor dispose
of any Inventory or Farm Products on a bill-and-hold, guaranteed sale, sale and
return, sale on approval, consignment or similar basis, nor acquire any
Inventory or Farm Products from any Person on any such basis.
(q) EQUIPMENT. It will, upon the Collateral Agent's request (which,
except upon the occurrence and during the continuation of an Event of Default
shall not be given more than once in any 12-month period), deliver to the
Collateral Agent a report of each item of Equipment, in form and substance
satisfactory to the Collateral Agent.
(r) INTELLECTUAL PROPERTY COLLATERAL. It will:
(i) not enter into any agreement (including any license or royalty
agreement) pertaining to any Intellectual Property Collateral, except for
non-exclusive licenses in the ordinary course of business, without in each case
the prior written consent of the Collateral Agent;
(ii) not allow or suffer any Intellectual Property Collateral to become
abandoned, nor any registration thereof to be terminated, forfeited, expired or
dedicated to the public;
(iii) promptly give the Collateral Agent, the Agent and the Noteholders
notice of any rights it may obtain to any new patentable inventions,
copyrightable works or other new Intellectual Property Collateral, prior to the
filing of any application for registration thereof; and
(iv) diligently prosecute all applications for patents, copyrights and
trademarks, and file and prosecute any and all continuations,
continuations-in-part, applications for reissue, applications for certificate of
correction and like matters as shall be reasonable and appropriate in accordance
with prudent business practice, and promptly and timely pay any and all
maintenance, license, registration and other fees, taxes and expenses incurred
in connection with any Intellectual Property Collateral.
(s) NOTICES, REPORTS AND INFORMATION. It will (i) notify the Collateral
Agent, the Agent and the Noteholders of any other modifications of or additions
to the information contained in SCHEDULE 1; (ii) notify the Collateral Agent,
the Agent and the Noteholders of any material claim made or asserted against the
Collateral by any Person and of any change in the composition of the Collateral
(other than in the ordinary course of business) or other event which
14
could materially adversely affect the value of the Collateral or the Collateral
Agent's Lien thereon; (iii) furnish to the Collateral Agent, the Agent and the
Noteholders such statements and schedules further identifying and describing the
Collateral and such other reports and other information in connection with the
Collateral as the Collateral Agent, the Agent or the Noteholders may reasonably
request, all in reasonable detail; and (iv) upon request of the Collateral
Agent, the Agent or the Noteholders make such demands and requests for
information and reports as the Debtor is entitled to make in respect of the
Collateral.
(t) CHATTEL PAPER. It will not create any Chattel Paper without placing
a legend on the Chattel Paper acceptable to the Collateral Agent, the Agent and
the Noteholders indicating that the Collateral Agent has a security interest in
the Chattel Paper. It will give the Collateral Agent, the Agent and the
Noteholders immediate notice if it at any time holds or acquires an interest in
any Chattel Paper, including any Electronic Chattel Paper.
(u) COMMERCIAL TORT CLAIMS. It will give the Collateral Agent, the
Agent and the Noteholders immediate notice if it shall at any time hold or
acquire any Commercial Tort Claim.
(v) LETTER-OF-CREDIT RIGHTS. It will give the Collateral Agent, the
Agent and the Noteholders immediate notice if it shall at any time hold or
acquire any Letter-of-Credit Rights.
SECTION 6 RIGHTS TO PAYMENT.
(a) COLLECTION OF RIGHTS TO PAYMENT. Until the Collateral Agent
exercises its rights hereunder to collect Rights to Payment, each Debtor shall
endeavor in the first instance diligently to collect all amounts due or to
become due on or with respect to the Rights to Payment. At the request of the
Collateral Agent, the Agent or the Noteholders, upon and after the occurrence of
any Event of Default, and while such Event of Default is continuing, all
remittances received by any Debtor shall be held in trust for the Collateral
Agent and, in accordance with the Collateral Agent's instructions, remitted to
the Collateral Agent or deposited to an account with the Collateral Agent in the
form received (with any necessary endorsements or instruments of assignment or
transfer).
(b) INVESTMENT PROPERTY AND INSTRUMENTS. At the request of the
Collateral Agent, the Agent or the Noteholders, upon and after the occurrence of
any Event of Default and while such Event of Default is continuing, the
Collateral Agent shall be entitled to receive all distributions and payments of
any nature with respect to any Investment Property or Instruments, and all such
distributions or payments received by any Debtor shall be held in trust for the
Collateral Agent and, in accordance with the Collateral Agent's instructions,
remitted to the Collateral Agent or deposited to an account with the Collateral
Agent in the form received (with any necessary endorsements or instruments of
assignment or transfer). Following the occurrence of an Event of Default any
such distributions and payments with respect to any Investment Property held in
any securities account shall be held and retained in such securities account, in
each case as part of the Collateral hereunder. Additionally, the Collateral
Agent shall have the right, upon the occurrence of an Event of Default and while
such Event of Default is continuing, following prior written notice to the
Debtors, to vote and to give consents, ratifications and waivers with respect to
any Investment Property and Instruments, and to exercise all rights of
conversion, exchange, subscription or any other rights, privileges or options
pertaining thereto,
15
as if the Collateral Agent were the absolute owner thereof; provided that the
Collateral Agent shall have no duty to exercise any of the foregoing rights
afforded to it and shall not be responsible to any Debtor or any other Person
for any failure to do so or delay in doing so.
SECTION 7 AUTHORIZATION; COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT.
The Collateral Agent shall have the right to, in the name of any Debtor, or in
the name of the Collateral Agent or otherwise, without notice to or assent by
the Debtors, and each Debtor hereby constitutes and appoints the Collateral
Agent (and any of the Collateral Agent's officers or employees or Collateral
Agents designated by the Collateral Agent) as such Debtor's true and lawful
attorney-in-fact, with full power and authority to:
(i) sign and file any of the financing statements which must be
executed or filed to perfect or continue perfected, maintain the priority of or
provide notice of the Collateral Agent's security interest in the Collateral;
(ii) take possession of and endorse any notes, acceptances, checks,
drafts, money orders or other forms of payment or security and collect any
Proceeds of any Collateral;
(iii) sign and endorse any invoice or bill of lading relating to any of
the Collateral, warehouse or storage receipts, drafts against customers or other
obligors, assignments, notices of assignment, verifications and notices to
customers or other obligors;
(iv) send requests for verification of Rights to Payment to the
customers or other obligors of any Debtor;
(v) contact, or direct the Debtors to contact, all account debtors and
other obligors on the Rights to Payment and instruct such account debtors and
other obligors to make all payments directly to the Collateral Agent;
(vi) assert, adjust, sue for, compromise or release any claims under
any policies of insurance;
(vii) exercise dominion and control over, and refuse to permit further
withdrawals from, Deposit Accounts maintained with the Collateral Agent, any
Lender or any other bank, financial institution or other Person;
(viii) notify each Person maintaining lockbox or similar arrangements
for the payment of the Rights to Payment to remit all amounts representing
collections on the Rights to Payment directly to the Collateral Agent;
(ix) ask, demand, collect, receive and give acquittances and receipts
for any and all Rights to Payment, enforce payment or any other rights in
respect of the Rights to Payment and other Collateral, grant consents, agree to
any amendments, modifications or waivers of the agreements and documents
governing the Rights to Payment and other Collateral, and otherwise file any
claims, take any action or institute, defend, settle or adjust any actions,
suits or proceedings with respect to the Collateral, as the Collateral Agent may
deem necessary or desirable to maintain, preserve and protect the Collateral, to
collect the Collateral or to enforce the rights of the Collateral Agent with
respect to the Collateral;
16
(x) execute any and all applications, documents, papers and instruments
necessary for the Collateral Agent to use the Intellectual Property Collateral
and grant or issue any exclusive or non-exclusive license or sublicense with
respect to any Intellectual Property Collateral;
(xi) execute any and all endorsements, assignments or other documents
and instruments necessary to sell, lease, assign, convey or otherwise transfer
title in or dispose of the Collateral;
(xii) execute and deliver to any securities intermediary or other
Person any entitlement order or other notice, document or instrument which the
Collateral Agent may reasonably deem necessary or advisable to maintain,
protect, realize upon and preserve the Deposit Accounts and Investment Property
and the Collateral Agent's security interest therein; and
(xiii) execute any and all such other documents and instruments, and do
any and all acts and things for and on behalf of the Debtors, which the
Collateral Agent may reasonably deem necessary or advisable to maintain,
protect, realize upon and preserve the Collateral and the Collateral Agent's
security interest therein and to accomplish the purposes of this Agreement.
The Collateral Agent agrees that, except upon and during the continuance of an
Event of Default, it shall not exercise the power of attorney, or any rights
granted to the Collateral Agent, pursuant to clauses (ii) through (xiii). The
foregoing power of attorney is coupled with an interest and irrevocable so long
as the Lenders have any Commitments or the Secured Obligations have not been
paid and performed in full. Each Debtor hereby ratifies, to the extent permitted
by law, all that the Collateral Agent shall lawfully and in good faith do or
cause to be done by virtue of and in compliance with this Section 7.
SECTION 8 COLLATERAL AGENT PERFORMANCE OF DEBTOR OBLIGATIONS. The
Collateral Agent, the Agent or the Noteholders may perform or pay any obligation
which the Debtors have agreed to perform or pay under this Agreement upon notice
to the Debtors, if the Debtors have failed to timely perform or pay any such
obligation, and each Debtor shall reimburse the Collateral Agent, the Agent or
the Noteholders, as the case may be, on demand for any amounts paid by the
Collateral Agent, the Agent or the Noteholders, as the case may be, pursuant to
this Section 8.
SECTION 9 [Reserved.]
SECTION 10 REMEDIES.
(a) Remedies. Upon the occurrence of any Event of Default and while
such Event of Default is continuing, the Collateral Agent shall have, in
addition to all other rights and remedies granted to it in this Agreement, all
rights and remedies of a secured party under the UCC and other applicable laws.
Without limiting the generality of the foregoing, each Xxxxxx agrees that:
(i) The Collateral Agent may peaceably and without notice enter any
premises of any Debtor, take possession of any Collateral, remove or dispose of
all or part of the
17
Collateral on any premises of any Debtor or elsewhere, or, in the case of
Equipment, render it nonfunctional, and otherwise collect, receive, appropriate
and realize upon all or any part of the Collateral, and demand, give receipt
for, settle, renew, extend, exchange, compromise, adjust, or sue for all or any
part of the Collateral, as the Collateral Agent may determine.
(ii) The Collateral Agent may require any Debtor to assemble all or any
part of the Collateral and make it available to the Collateral Agent, at any
place and time designated by the Collateral Agent.
(iii) The Collateral Agent may use or transfer any of any Debtor's
rights and interests in any Intellectual Property Collateral, by license, by
sublicense (to the extent permitted by an applicable license) or otherwise, on
such conditions and in such manner as the Collateral Agent may determine.
(iv) The Collateral Agent may secure the appointment of a receiver of
the Collateral or any part thereof (to the extent and in the manner provided by
applicable law).
(v) The Collateral Agent may withdraw (or cause to be withdrawn) any
and all funds from any Deposit Accounts or securities accounts.
(vi) The Collateral Agent may sell, resell, lease, use, assign,
transfer or otherwise dispose of any or all of the Collateral in its then
condition or following any commercially reasonable preparation or processing
(utilizing in connection therewith any of any Debtor's assets, without charge or
liability to the Collateral Agent therefor) at public or private sale, by one or
more contracts, in one or more parcels, at the same or different times, for cash
or credit or for future delivery without assumption of any credit risk, all as
the Collateral Agent deems advisable; PROVIDED, HOWEVER, that such Debtor shall
be credited with the net proceeds of sale only when such proceeds are finally
collected by the Collateral Agent. The Collateral Agent and each of the Lenders
shall have the right upon any such public sale, and, to the extent permitted by
law, upon any such private sale, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption, which right or
equity of redemption each Debtor hereby releases, to the extent permitted by
law. The Collateral Agent shall give the Debtors such notice of any public or
private sale as may be required by the UCC or other applicable law. Each Debtor
recognizes that the Collateral Agent may be unable to make a public sale of any
or all of the Investment Property, by reason of prohibitions contained in
applicable securities laws or otherwise, and expressly agrees that a private
sale to a restricted group of purchasers for investment and not with a view to
any distribution thereof shall be considered a commercially reasonable sale.
(vii) Neither the Collateral Agent, the Agent, any Noteholder nor any
Lender shall have any obligation to clean up or otherwise prepare the Collateral
for sale. The Collateral Agent has no obligation to attempt to satisfy the
Secured Obligations by collecting them from any other Person liable for them and
the Collateral Agent may release, modify or waive any Collateral provided by any
other Person to secure any of the Secured Obligations, all without affecting the
Collateral Agent's, the Agent's, any Noteholder's or any Lender's rights against
any Debtor. Each Debtor waives any right it may have to require the Collateral
Agent, the Agent, any Noteholder or any Lender to pursue any third Person for
any of the Secured Obligations.
18
The Collateral Agent may comply with any applicable state or federal law
requirements in connection with a disposition of the Collateral and compliance
will not be considered adversely to affect the commercial reasonableness of any
sale of the Collateral. The Collateral Agent may sell the Collateral without
giving any warranties as to the Collateral. The Collateral Agent may
specifically disclaim any warranties of title or the like. This procedure will
not be considered adversely to affect the commercial reasonableness of any sale
of the Collateral. If the Collateral Agent sells any of the Collateral upon
credit, the Debtors will be credited only with payments actually made by the
purchaser, received by the Collateral Agent and applied to the indebtedness of
the purchaser. In the event the purchaser fails to pay for the Collateral, the
Collateral Agent may resell the Collateral and the Debtors shall be credited
with the proceeds of the sale.
(b) LICENSE. For the purpose of enabling the Collateral Agent to
exercise its rights and remedies under this Section 10 or otherwise in
connection with this Agreement, each Debtor hereby grants to the Collateral
Agent an irrevocable, non-exclusive and assignable license (exercisable without
payment or royalty or other compensation to the Debtors) to use, license or
sublicense any Intellectual Property Collateral.
(c) PROCEEDS ACCOUNT. To the extent that any of the Secured Obligations
may be contingent, unmatured or unliquidated (including with respect to undrawn
amounts under the Letters of Credit) at such time as there may exist an Event of
Default, the Collateral Agent may, at its election, (i) retain the proceeds of
any sale, collection, disposition or other realization upon the Collateral (or
any portion thereof) in a special purpose non-interest-bearing restricted
deposit account (the "Proceeds Account") created and maintained by the
Collateral Agent for such purpose (which shall constitute a Deposit Account
included within the Collateral hereunder) until such time as the Collateral
Agent may elect to apply such proceeds to the Secured Obligations, and each
Debtor agrees that such retention of such proceeds by the Collateral Agent shall
not be deemed strict foreclosure with respect thereto; (ii) in any manner
elected by the Collateral Agent, estimate the liquidated amount of any such
contingent, unmatured or unliquidated claims and apply the proceeds of the
Collateral against such amount; or (iii) otherwise proceed in any manner
permitted by applicable law. Each Debtor agrees that the Proceeds Account shall
be a blocked account and that upon the irrevocable deposit of funds into the
Proceeds Account, the Debtors shall not have any right of withdrawal with
respect to such funds. Accordingly, each Debtor irrevocably waives until the
termination of this Agreement in accordance with Section 22 the right to make
any withdrawal from the Proceeds Account and the right to instruct the
Collateral Agent to honor drafts against the Proceeds Account.
(d) APPLICATION OF PROCEEDS. Subject to subsection (c), the cash
proceeds actually received from the sale or other disposition or collection of
Collateral, and any other amounts received in respect of the Collateral, shall
be applied as provided in the Intercreditor Agreement. Any surplus thereof which
exists after payment and performance in full of the Secured Obligations shall be
promptly paid over to the Debtors or otherwise disposed of in accordance with
the Intercreditor Agreement, the UCC or other applicable law. The Debtors shall
remain liable to the Collateral Agent, the Agent, the Noteholders and the
Lenders for any deficiency which exists after any sale or other disposition or
collection of Collateral.
SECTION 11 CERTAIN WAIVERS. Each Debtor waives, to the fullest extent
permitted by law, (i) any right of redemption with respect to the Collateral,
whether before or
19
after sale hereunder, and all rights, if any, of marshalling of the Collateral
or other collateral or security for the Secured Obligations; (ii) any right to
require the Collateral Agent, the Agent, the Noteholders or the Lenders (a) to
proceed against any Person, (b) to exhaust any other collateral or security for
any of the Secured Obligations, (c) to pursue any remedy in the Collateral
Agent's, the Agent's, any Noteholder's or any of the Lenders' power, or (d) to
make or give any presentments, demands for performance, notices of
nonperformance, protests, notices of protests or notices of dishonor in
connection with any of the Collateral; and (iii) all claims, damages, and
demands against the Collateral Agent, the Agent, the Noteholders or the Lenders
arising out of the repossession, retention, sale or application of the proceeds
of any sale of the Collateral.
SECTION 12 NOTICES. All notices or other communications hereunder shall
be given in the manner and to the addresses specified in the Intercreditor
Agreement. All such notices and other communications shall be deemed to be
delivered when a record (within the meaning of the UCC) has been (i) delivered
by hand; (ii) sent by mail, upon the earlier of the date of receipt or five
Business Days after deposit in the mail, first class (or air mail, with respect
to communications sent to or from the United States); (iii) sent by facsimile
transmission, or (iv) sent by email.
SECTION 13 NO WAIVER; Cumulative Remedies. No failure on the part of
the Collateral Agent, the Agent, any Noteholder or any Lender to exercise, and
no delay in exercising, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, remedy, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
rights and remedies under this Agreement are cumulative and not exclusive of any
rights, remedies, powers and privileges that may otherwise be available to the
Collateral Agent, the Agent, any Noteholder or any Lender.
SECTION 14 COSTS AND EXPENSES; INDEMNIFICATION; OTHER CHARGES.
(a) COSTS AND EXPENSES. Each Debtor agrees to pay on demand:
(i) the reasonable out-of-pocket costs and expenses of the Collateral
Agent and any of its Affiliates, and the reasonable fees and disbursements of
counsel to the Collateral Agent (including allocated costs of internal counsel),
in connection with the negotiation, preparation, execution, delivery and
administration of this Agreement, and any amendments, modifications or waivers
of the terms thereof, and the custody of the Collateral;
(ii) all title, appraisal (including the allocated costs of internal
appraisal services), survey, audit, consulting, search, recording, filing and
similar fees, costs and expenses incurred or sustained by the Collateral Agent
or any of its Affiliates in connection with this Agreement or the Collateral;
and
(iii) all costs and expenses of the Collateral Agent and its Affiliates
and the fees and disbursements of counsel (including the allocated costs of
internal counsel), in connection with the enforcement or attempted enforcement
of, and preservation of any rights or interests under, this Agreement, any
out-of-court workout or other refinancing or restructuring or in any bankruptcy
case, and the protection, sale or collection of, or other realization upon, any
of
20
the Collateral, including all expenses of taking, collecting, holding, sorting,
handling, preparing for sale, selling, or the like, and other such expenses of
sales and collections of Collateral, and any and all losses, costs and expenses
sustained by the Collateral Agent as a result of any failure by any Debtor to
perform or observe its obligations contained herein.
(b) INDEMNIFICATION. Each Debtor hereby agrees to indemnify the
Collateral Agent, any Affiliate thereof, and their respective directors,
officers, employees, agents, counsel and other advisors (each an "Indemnified
Person") against, and hold each of them harmless from, any and all liabilities,
obligations, losses, claims, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever, including the
reasonable fees and disbursements of counsel to an Indemnified Person (including
allocated costs of internal counsel), which may be imposed on, incurred by, or
asserted against any Indemnified Person, in any way relating to or arising out
of this Agreement or the transactions contemplated hereby or any action taken or
omitted to be taken by it hereunder (the "Indemnified Liabilities"); provided
that the Debtors shall not be liable to any Indemnified Person for any portion
of such Indemnified Liabilities to the extent they are found by a final decision
of a court of competent jurisdiction to have resulted from such Indemnified
Person's gross negligence or willful misconduct. If and to the extent that the
foregoing indemnification is for any reason held unenforceable, each Debtor
agrees to make the maximum contribution to the payment and satisfaction of each
of the Indemnified Liabilities which is permissible under applicable law.
(c) OTHER CHARGES. Each Debtor agrees to indemnify the Collateral
Agent, the Agent, each Noteholder and each Lender against and hold each of them
harmless from any and all present and future stamp, transfer, documentary and
other such taxes, levies, fees, assessments and other charges made by any
jurisdiction by reason of the execution, delivery, performance and enforcement
of this Agreement.
(d) INTEREST. Any amounts payable to the Collateral Agent, the Agent,
any Noteholder or any Lender under this Section 14 or otherwise under this
Agreement if not paid within 10 calendar days after demand shall thereafter bear
interest until paid in full, at the rate of interest set forth in Section 4.02
of the Credit Agreement.
SECTION 15 BINDING EFFECT. This Agreement shall be binding upon, inure
to the benefit of and be enforceable by the Debtors, the Collateral Agent, the
Agent, each Noteholder and each Lender and their respective successors and
assigns and shall bind any Person who becomes bound as a debtor to this
Agreement.
SECTION 16 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, EXCEPT AS
REQUIRED BY MANDATORY PROVISIONS OF LAW AND TO THE EXTENT THE VALIDITY OR
PERFECTION OF THE SECURITY INTERESTS HEREUNDER, OR THE REMEDIES HEREUNDER, IN
RESPECT OF ANY COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN
NEW YORK.
SECTION 17 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the
Intercreditor Agreement contains the entire agreement of the parties with
respect to the subject
21
matter hereof and shall not be amended except by the written agreement of the
parties hereto or as provided in the Intercreditor Agreement.
SECTION 18 SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
all applicable laws and regulations. If, however, any provision of this
Agreement shall be prohibited by or invalid under any such law or regulation in
any jurisdiction, it shall, as to such jurisdiction, be deemed modified to
conform to the minimum requirements of such law or regulation, or, if for any
reason it is not deemed so modified, it shall be ineffective and invalid only to
the extent of such prohibition or invalidity without affecting the remaining
provisions of this Agreement, or the validity or effectiveness of such provision
in any other jurisdiction.
SECTION 19 COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute but one and the same agreement.
SECTION 20 INCORPORATION OF PROVISIONS OF THE CREDIT AGREEMENT. To the
extent the Credit Agreement contains provisions of general applicability to the
Loan Documents, including any such provisions contained in Article XIII thereof,
such provisions are incorporated herein by this reference.
SECTION 21 NO INCONSISTENT REQUIREMENTS. Each Debtor acknowledges that
this Agreement, the Credit Agreement, the other Loan Documents, the Amended and
Restated Note Agreement and the other Loan Documents (as defined in the Amended
and Restated Note Agreement) may contain covenants and other terms and
provisions variously stated regarding the same or similar matters, and agrees
that all such covenants, terms and provisions are cumulative and all shall be
performed and satisfied in accordance with their respective terms.
SECTION 22 FUTURE DEBTORS. At such time following the date hereof as
any Person (an "Acceding Subsidiary") is required to accede hereto pursuant to
the terms of Section 10.03(k) of the Credit Agreement, such Acceding Subsidiary
shall execute and deliver to the Collateral Agent an accession agreement
substantially in the form of Annex 1 (the "Accession Agreement'), signifying its
agreement to be bound by the provisions of this Agreement as a Debtor to the
same extent as if such Acceding Subsidiary had originally executed this
Agreement as of the date hereof.
SECTION 23 TERMINATION. Upon the termination of the Commitments of the
Lenders, the surrender of the Letters of Credit and payment and performance in
full of all Secured Obligations, the security interests created by this
Agreement shall terminate and the Collateral Agent shall promptly execute and
deliver to the Debtors such documents and instruments reasonably requested by
the Debtors as shall be necessary to evidence termination of all security
interests given by the Debtors to the Collateral Agent hereunder.
[SIGNATURES FOLLOW.]
22
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement, as of the date first above written.
THE DEBTORS
The Chalone Wine Group, Ltd., a California
corporation
By:_______________________________________
Name:
Title:
Canoe Ridge Vineyard, L.L.C., a Washington
limited liability company
By:_______________________________________
Name:
Title:
SHW Equity Co., a Washington corporation
By:_______________________________________
Name:
Title:
Canoe Ridge Winery, Inc.
By:_______________________________________
Name:
Title:
23
THE COLLATERAL AGENT
Cooperatieve Centrale Raiffeisen-Boerenleenbank
B.A., "Rabobank International", New York
Branch
By:_______________________________________
Name:
Title:
By:_______________________________________
Name:
Title:
24
ANNEX 1
to the Security Agreement
FORM OF ACCESSION AGREEMENT
To: Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank
International", New York Branch ("Rabobank")
Re: The Chalone Wine Group, Ltd.
Ladies and Gentlemen:
This Accession Agreement is made and delivered pursuant to Section 22
of that certain Security Agreement dated as of April 19, 2002 (as amended,
modified, renewed or extended from time to time, the "Security Agreement"), made
between each Debtor named in the signature pages thereof (each a "Debtor" and
collectively, the "Debtors"), and Rabobank as Collateral Agent (the "Collateral
Agent"). All capitalized terms used in this Accession Agreement and not
otherwise defined herein shall have the meanings assigned to them in either the
Security Agreement.
The Chalone Wine Group, Ltd. (the "Borrower") is party to that certain
Credit Agreement dated as of April 19, 2002 (the "Credit Agreement) by and among
the Borrower, the Lenders from time to time party thereto and the Agent.
The Borrower is also party to that certain Amended and Restated Note
Purchase Agreement dated as of April19, 2002 (the "Note Agreement") by and among
the Borrower and the Noteholders.
The undersigned, ___________________________ [INSERT NAME OF ACCEDING
SUBSIDIARY], a _____________________ [CORPORATION, PARTNERSHIP, LIMITED
LIABILITY COMPANY, ETC.], hereby acknowledges for the benefit of the Collateral
Agent, the Agent, the Lenders and the Noteholders that it shall be a "Debtor"
for all purposes of the Security Agreement effective from the date hereof. The
undersigned confirms that the representations and warranties set forth in
Section 4 of the Security Agreement are true and correct as to the undersigned
as of the date hereof.
Without limiting the foregoing, the undersigned xxxxxx agrees to
perform all of the obligations of a Debtor under, and to be bound in all
respects by the terms of, the Security Agreement, including Section 5 thereof,
to the same extent and with the same force and effect as if the undersigned were
an original signatory thereto. The undersigned hereby grants to the Collateral
Agent, for itself and on behalf of and for the ratable benefit of the Agent, the
Lenders and the Noteholders, a security interest in all of the undersigned's
right, title and interest in, to and under all of its personal property (other
than any Excluded Collateral), wherever located and
A-1
whether now existing or owned or hereafter acquired or arising, including all
Collateral, as security for the payment and performance of the Secured
Obligations.
Schedule 1 to the Security Agreement is hereby amended by adding
Schedule 1 attached hereto to the Security Agreement.
This Accession Agreement shall constitute a Loan Document under the
Credit Agreement and a Loan Document under the Note Agreement.
THIS ACCESSION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the undersigned has executed this Accession
Agreement, as of the date first above written.
[SUBSIDIARY]
By__________________________________
Name _______________________________
Title_______________________________
A-2
SCHEDULE 1
to the Security Agreement
1. Locations of Chief Executive Office and other Locations, including of
Collateral
a. Chief Executive Office and Principal Place of Business:
000 Xxxxxxx Xxxx
Xxxx, Xxxxxxxxxx 00000
b. Other locations where Debtors conducts business or Collateral is
kept:
(i) 0000 Xxxxxx Xxxxx Xxxx,
Xxx Xxxxx Xxxxxx, XX 00000
(ii) 0000 X. Xxxxxx Xx.
Xxxxx Xxxxx, XX 00000
(iii) 71 Xxxxx Xx.
Wapato, WA 98951
(iv) Stonewall Canyon Road & Xxx 000
Xxxxxxx, XX 00000
(v) 0000 Xxxx Xxxxxxxx Xxxxx
Xxxxxx, XX 00000
(vi) 00000 Xxxxxx Xxxxx
Xxxx Xxxxx, XX 00000
(vii) 0000 Xxx Xxxxxx Xxxx
Xxxx, XX 00000
(viii) 000 Xxxxxx Xxxxxx Xxxx
Xxxxxx, XX 00000
(ix) 0000 Xxxx Xxxx
Xxx Xxxx Xxxxxx, XX 00000
(x) 0000 Xxxxxx Xxxxxx
Xxxx, XX 00000
(xi) #0 Xxxxxxx Xxxx
Xxxx Xxxxx, XX 00000
S-1.
2. Locations of Books Pertaining to Rights to Payment
000 Xxxxxxx Xxxx
Xxxx, XX 00000
3. Jurisdiction of Organization.
Chalone Wine Group, Ltd California
Canoe Ridge Vineyard, L.L.C. Washington
Canoe Ridge Winery, Inc. Washington
SHW Equity Co. Washington
Staton Hills Winery Company Limited Washington
4. Trade Names and Trade Styles; Other Corporate, Trade or Fictitious
Names; Etc.
Sageland Vineyards
5. Inventory Stored with Warehousemen or on Leased Premises, Etc.
Xxxxx Wine Group
000 Xxxxx Xxxxx
Xxxxx X
Xxxxxxx, XX 00000
Tiger Mountain Warehouse
00000 00xx Xxxxxx Xxxxx
Xxxx, XX 00000
Biagi Warehouse
000 Xxxxxxx Xxxx
Xxxx, XX 00000
6. Patents, Copyrights, Trademarks, Etc.
Trademarks: ACACIA, CARMENET, CHALONE VINEYARD, GAVILAN,
SAGELANDS, XXXXXX HILLS, XXXXX XXXXX and PHOENIX
S-2.
7. Leased Equipment
General office equipment leases; barrel leases with De Xxxx Xxxxxx.
8. Deposit Accounts
Xxxxx Fargo Bank
9. Investment Property
None.
10. Instruments and Chattel Paper
None
11. Commercial Tort Claims
None
12. Letter-of-Credit Rights
None
S-3.
SCHEDULE 2
to the Security Agreement
Excluded Collateral
All right, title and interest of the Debtor, if any, in and to all
building material, building equipment and fixtures of every kind and nature
whatsoever on said land or in any building, structure or improvement now or
hereafter standing on an Excluded Parcel which are classified as fixtures under
applicable law and which are used in connection with the operation, maintenance
or protection of said buildings, structures and improvements as such (including,
without limitation, all boilers, air conditioning, ventilating, plumbing,
heating, lighting and electrical systems and apparatus, all communications
equipment and intercom systems and apparatus, all sprinkler equipment and
apparatus, all elevators and escalators, all irrigation systems, all wastewater
treatment and disposal facilities, all vines and farm products growing thereon,
and all trellises and the reversion or reversions, remainder or remainders, in
and to said land, and together with the entire interest of the Debtor in and to
all and singular the tenements, hereditaments, easements, rights of way, rights,
privileges and appurtenances to said land, belonging or in anywise appertaining
thereto, including, without limitation, the entire right, title and interest of
the Debtor in, to and under any streets, ways, alleys, gores or strips of land
adjoining said land, and all claims or demands whatsoever of the Debtor either
in law or in equity, in possession or expectancy, of, in and to said land,
together with all accessions, parts and appurtenances appertaining or attached
thereto and all substitutions, renewals or replacements of and additions,
improvements, accessions and accumulations to any and all thereof, and together
with all rights, powers, privileges, options and other benefits of the Debtor,
as lessor, under any leases including the right to collect any and all rents,
profits or other income and the present and continuing right to make claim for,
collect, receive and receipt for any and all of such rents, profits or other
income (all of which properties are hereinafter referred to as the "Excluded
Real Property Collateral").
All materials, furniture, furnishings, machinery, fixtures and
equipment now or hereafter erected on or affixed to the Excluded Real Property
Collateral and including, but not limited to, all heating, plumbing, lighting,
water heating, cooking, laundry, refrigerating, incinerating, communications,
ventilating and air conditioning equipment, building signs, disposals,
dishwashers, telephone systems, sprinkler systems, fire extinguishing apparatus
and equipment, water tanks, engines, machines, boilers, dynamos, stokers,
elevators, motors, cabinets, shades, blinds, partitions, window screens, screen
doors, storm windows, awnings, drapes, rugs and other floor coverings,
furniture, furnishings, radios and television sets and wiring and antennae
therefor, and all fixtures, accessions and appurtenances thereto, and all
renewals or replacements of or substitutions for any of the foregoing, together
with all other equipment, furnishings, fixtures, machinery and furniture owned
by the Debtor now or hereafter attached or affixed to or used in and about the
building or buildings now erected or hereafter to be erected on the Excluded
Real Property Collateral, or otherwise located on the Excluded Real Property
Collateral, and all fixtures, accessions and appurtenances thereto, and all
renewals or replacements of or substitutions for any of the foregoing.
All judgments, awards of damages, settlements and other compensation
heretofore or hereafter made resulting from condemnation proceedings or the
taking of the Excluded Real
S-4.
Property Collateral or any part thereof or any improvements now or at any time
hereafter located thereon or any easement or other appurtenance thereto under
the power of eminent domain, or any similar power or right (including any award
from the United States Government at any time after the allowance of the claim
therefor, the ascertainment of the amount thereof and the issuance of the
warrant for the payment thereof), whether permanent or temporary, or for any
damage (whether caused by such taking or otherwise) to said Excluded Real
Property Collateral or any part thereof or the improvements thereon or any part
thereof, or to any rights appurtenant thereto, including severance and
consequential damage, and any award for change of grade of streets.
All proceeds of the conversion, voluntary or involuntary, of any of the
foregoing into cash or other liquidated claims, including, without limitation,
all proceeds and payments of insurance related to the foregoing.
S-5.
FORM OF INTERCREDITOR AGREEMENT
See attached.
EXHIBIT E
(to Note Purchase Agreement)
AMENDED AND RESTATED INTERCREDITOR AND COLLATERAL
AGENCY AGREEMENT
THIS AMENDED AND RESTATED INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT
dated as of April 19, 2002 (this "AGREEMENT") is among (1) the Noteholders named
in Schedule I hereto (collectively, the "NOTEHOLDERS") (2) the Facility Lenders
named in Schedule II hereto (collectively, the "FACILITY LENDERS", the
Noteholders and the Facility Lenders are collectively referred to as the
"SECURED PARTIES"), (3) Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
"RABOBANK INTERNATIONAL", New York Branch, as administrative agent for the
Facility Lenders (the "AGENT") and (4) Cooperatieve Centrale Raiffeisen-
Boerenleenbank B.A., "RABOBANK INTERNATIONAL", New York Branch, as collateral
agent for the Agent and the Secured Parties (the "COLLATERAL AGENT") and
acknowledged and agreed to by (x) each of Xxxx Valley Vineyard, a California
general partnership ("XXXX VALLEY"), SHW Equity Co., a Washington corporation
("SHW EQUITY"), Canoe Ridge Vineyard, L.L.C., a Washington limited liability
company ("CANOE RIDGE"), Canoe Ridge Winery, Inc., a Washington corporation
("CRW") and Xxxxxx Hills Winery Company Limited, a Washington corporation
("XXXXXX HILLS") (Xxxx Valley, SHW Equity, Canoe Ridge, CRW and Xxxxxx Hills
each a "SUBSIDIARY GUARANTOR" and collectively the "SUBSIDIARY GUARANTORS"),
each of which Subsidiary Guarantors is a subsidiary of The Chalone Wine Group,
Ltd., a California corporation (the "COMPANY"), and (y) the Company. Capitalized
terms used herein and not otherwise defined herein shall have the meanings
assigned thereto in Section 1 below.
R E C I T A L S:
A. Under and pursuant to the Credit Agreement dated as of April 19,
2002, among the Company, the Facility Lenders and the Agent, the Facility
Lenders have made available to the Company Term Loans (as defined therein) in
the aggregate principal amount of $17,500,000 and Revolving Loans (as defined
therein) up to an aggregate principal amount of $55,000,000, together with a
letter of credit subfacility and swingline loan subfacility (collectively, the
"FACILITY DEBT") (such Credit Agreement, as the same may from time to time be
amended, restated, supplemented or otherwise modified, the "CREDIT AGREEMENT").
B. Each of the Subsidiary Guarantors has executed and delivered a
Guaranty (collectively, the "FACILITY GUARANTY") pursuant to which each of the
Subsidiary Guarantors has irrevocably, absolutely and unconditionally guaranteed
to the Facility Lenders the payment of the principal of, premium, if any, and
interest on the Facility Debt and the payment and performance of all other
obligations of the Company under the Credit Agreement and the other Loan
Documents (as defined in the Credit Agreement), subject to certain limitations
contained therein in the case of the guaranty of Xxxx Valley.
C. Under and pursuant to the Amended and Restated Note Purchase
Agreement dated as of April 19, 2002, among the Company and each of the
Noteholders, the Company and the Noteholders have amended and restated the
$30,000,000 aggregate principal amount of the Company's Senior Guaranteed Notes,
Series A, B and C, Due September 15, 2010 originally issued and sold to the
Noteholders on September 15, 2000 (collectively, the "NOTES") (such
1
Amended and Restated Note Purchase Agreement, as the same may from time to time
be further amended, restated, supplemented or otherwise modified, the "NOTE
AGREEMENT").
D. Each of the Subsidiary Guarantors has executed and delivered
an Amended and Restated Subsidiary Guarantee Agreement (collectively, the
"NOTEHOLDER GUARANTY") each dated as of April 19, 2002 pursuant to which the
Subsidiary Guarantors amended and restated the Subsidiary Guarantee Agreement to
which it was heretofore a party under and pursuant to which it has irrevocably,
absolutely and unconditionally guaranteed to the Noteholders the payment of the
principal of, premium, if any, and interest on the Notes and the payment and
performance of all other obligations of the Company under the Note Agreement,
subject to certain limitations contained therein in the case of the guaranty of
Xxxx Valley.
E. The Facility Guaranty and the Noteholder Guaranty are each
referred to as a "SUBSIDIARY GUARANTY" and are collectively referred to as the
"SUBSIDIARY GUARANTIES".
F. The obligations of the Company and the Subsidiary Guarantors
(hereinafter each referred to as a "GRANTOR" and collectively as the "GRANTORS")
under the Note Agreement and the Noteholder Guaranty are secured by the
Collateral Documents described below.
G. The obligations of the Grantors under the Credit Agreement and
the other Loan Documents (as defined in the Credit Agreement) also are secured
by the Collateral Documents described below.
H. Notwithstanding the time or order of attachment or perfection
or any provisions to the contrary in any of the Collateral Documents or the fact
that all Secured Obligations are secured by the same Collateral Documents, the
Secured Parties desire that the interests of the Secured Parties in the
Collateral subject to the Collateral Documents shall have the following
priorities: (i) the Term Debt shall be secured on a senior basis by the Term
Debt Priority Collateral and on a subordinate basis by the Revolving Debt
Priority Collateral, (ii) the Revolving Debt shall be secured on a senior basis
by the Revolving Debt Priority Collateral and on a subordinate basis by the Term
Debt Priority Collateral, and (iii) the Term Debt and the Revolving Debt will be
secured pari passu by a first Lien on the Patent and Trademark Collateral, all
as provided herein.
I. The Secured Parties desire to appoint Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A., "RABOBANK INTERNATIONAL", New York Branch, as
collateral agent to act on behalf of the Secured Parties regarding the
Collateral, all as more fully provided herein.
J. The Secured Parties, the Agent and the Collateral Agent desire
to enter into this Agreement to provide, among other things, for (i) the
appointment, duties and responsibilities of the Collateral Agent, (ii) the
respective priorities, rights and interests of the parties in and to the
Collateral, (iii) the orderly administration of the Collateral, (iv) the
coordination of any enforcement by the parties of their respective rights under
the Note Agreement, the Credit Agreement and the Collateral Documents and (v)
the allocation of payments, if any, made under the Collateral Documents and the
Subsidiary Guaranties, all upon the terms and subject to the conditions set
forth in this Agreement.
2
K. Pursuant to the requirements of the Note Agreement and the
Credit Agreement, the Company has requested and the parties hereto have agreed
to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the sufficiency and receipt of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS.
The following terms shall have the meanings assigned to them below in
this SECTION 1 or in the provisions of this Agreement referred to below:
"AFFILIATE" means any Person which, directly or indirectly, controls,
is controlled by or is under common control with another Person. For purposes of
the foregoing, "CONTROL," "controlled by" and "under common control with" with
respect to any Person shall mean the possession, directly or indirectly, of the
power (i) to vote 10% or more of the securities having ordinary voting power of
the election of directors of such Person, or (ii) to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
"BANKRUPTCY PROCEEDING" shall mean, with respect to any Person, a
general assignment of such Person for the benefit of its creditors, or the
institution by or against such Person of any proceeding seeking relief as
debtor, or seeking to adjudicate such Person as bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment or composition of such Person or
its debts, under any law relating to bankruptcy, insolvency, reorganization or
relief of debtors, or seeking appointment of a receiver, trustee, custodian or
other similar official for such Person or for any substantial part of its
property.
"CASH EQUIVALENT INVESTMENTS" shall mean, (a) direct obligations of the
United States Government or any agencies thereof and obligations guaranteed by
the United States Government, in each case having remaining terms to maturity of
not more than thirty days; and (b) certificates of deposit, time deposits and
acceptances, including Eurodollar deposits, having remaining terms to maturity
of not more than sixty days issued by a United States bank which has a combined
capital and surplus of at least $750,000,000 and whose long-term certificates of
deposit are rated "A" or better by Standard & Poor's Ratings Service or "A2" or
better by Xxxxx'x Investors Service, Inc.
"COLLATERAL" shall mean the Term Debt Priority Collateral, the
Revolving Debt Priority Collateral and the Patent and Trademark Collateral.
"COLLATERAL DOCUMENTS" shall mean the "Collateral Documents" as defined
in the Credit Agreement, which secure the obligations of the Company and the
Subsidiary Guarantors under the Credit Agreement, the Facility Guaranty and the
other Loan Documents (as defined in the Credit Agreement) and the "Collateral
Documents" as defined in the Note Agreement, which secure the obligations of the
Company and the Subsidiary Guarantors under the Note Agreement, the Notes and
the Noteholder Guaranty.
3
"COMPANY" shall have the meaning assigned thereto in the Recitals
hereof.
"CREDIT AGREEMENT" shall have the meaning assigned thereto in the
Recitals hereof.
"DEFAULT" shall mean an Event of Default or an event or condition which
with notice or lapse of time or both would constitute an Event of Default.
"DEED OF TRUST" shall mean each deed of trust or mortgage entered into
by the Company, any other Grantor or any other Person, as trustor or mortgagor,
for the benefit of the Collateral Agent or any other Person, as beneficiary or
mortgagee on behalf of the Secured Parties to secure the Secured Obligations.
"EVENT OF DEFAULT" shall mean any "Event of Default" as defined in the
Note Agreement or the Credit Agreement.
"FACILITY DEBT" shall have the meaning assigned thereto in the Recitals
hereof.
"GRANTORS" shall have the meaning assigned thereto in the Recitals
hereof.
"LIEN" means any mortgage, deed of trust, pledge, security interest,
assignment, deposit arrangement, charge, encumbrance or other lien (statutory or
otherwise).
"MAKE-WHOLE AMOUNT" shall have the meaning assigned thereto in the Note
Agreement.
"NOTE AGREEMENT" shall have the meaning assigned thereto in the
Recitals hereof.
"NOTEHOLDER GUARANTY" shall have the meaning assigned thereto in the
Recitals hereof.
"NOTEHOLDERS" shall have the meaning assigned thereto in the Recitals
hereof.
"NOTES" shall have the meaning assigned thereto in the Recitals hereof.
"PATENT AND TRADEMARK COLLATERAL" shall mean the Collateral described
on Exhibit C hereto.
"PERSON" shall mean an individual, partnership, limited liability
company, corporation, trust, unincorporated organization or any other entity
whatsoever, or any government or agency or political subdivision thereof.
"PRO RATA SHARE" shall mean, in respect of any Secured Party as of any
date of determination, the proportion which the amount of the Secured
Obligations then owing to such Secured Party bears to the aggregate amount of
Secured Obligations then owing to all Secured Parties.
"REQUIRED REVOLVING DEBT SECURED PARTIES" shall have the meaning
assigned thereto in the definition of Required Secured Parties.
4
"REQUIRED SECURED PARTIES" shall mean, (a) with respect to the
Revolving Debt Priority Collateral and the Collateral Documents related thereto,
Revolving Debt Secured Parties holding more than 60% of the sum of (i) the
unused Revolving Commitments (as defined in the Credit Agreement) for so long as
the Revolving Commitments are in effect plus (ii) the unpaid principal amount of
the Revolving Debt (the "Required Revolving Debt Secured Parties"), (b) with
respect to the Term Debt Priority Collateral and the Collateral Documents
related thereto, Term Debt Secured Parties holding more than 70% of the
outstanding principal amount of the Term Debt (the "Required Term Debt Secured
Parties"), and (c) in all other instances, the "Required Secured Parties" set
forth in both clause (a) and (b) hereof in each case, measured on the date of
determination of the "Required Secured Parties".
"REQUIRED TERM DEBT SECURED PARTIES" shall have the meaning assigned
thereto in the definition of Required Secured Parties.
"REVOLVING DEBT" shall mean the Secured Obligations consisting of (i)
all unpaid principal of the Revolving Loans (as defined in the Credit Agreement)
(including therein the unpaid amount of any drawings under any letters of credit
issued under the Credit Agreement and, without duplication, the undrawn portion
of the face amount of any such letters of credit) and the Swingline Loans (as
defined in the Credit Agreement), (ii) all accrued and unpaid interest thereon
and (iii) all fees, commissions, indemnities and other amounts (without
duplication of any Term Debt) owing to the Revolving Debt Secured Parties.
"REVOLVING DEBT PRIORITY COLLATERAL" shall mean the Collateral
described on EXHIBIT A hereto.
"REVOLVING DEBT SECURED PARTIES" shall mean those Secured Parties which
hold Revolving Debt.
"SECURITY AGREEMENT" shall have the meanings assigned thereto in the
Note Agreement and the Credit Agreement.
"SECURED PARTY" shall have the meaning assigned thereto in the Recitals
hereof.
"SPECIFIED AMOUNT" shall mean as to any Secured Party the aggregate
amount of the Secured Obligations owed to such Secured Party.
"SECURED OBLIGATIONS" shall mean all indebtedness, liabilities and
other obligations of the Company and the Subsidiary Guarantors to the Collateral
Agent, the Agent and the Secured Parties under the Note Agreement, the Notes,
the Credit Agreement, the Subsidiary Guaranties and the other Loan Documents (as
defined in the Credit Agreement), including all principal in respect of the
Notes and the Facility Debt, all interest accrued thereon, all fees due under
the Note Agreement, the Notes, the Credit Agreement and the other Loan Documents
(as defined in the Credit Agreement) and all other amounts payable by the
Company or any Subsidiary Guarantor to the Collateral Agent, the Agent or any
Secured Party thereunder or in connection therewith, whether now or hereafter
existing or arising, and whether due or to become due, absolute or contingent,
liquidated or unliquidated, determined or undetermined.
5
"SENIOR PREFERENTIAL PAYMENT" shall mean any payments, or proceeds of
the Collateral, from the Grantors or any other source with respect to the
Secured Obligations (including from the exercise of any set-off), cumulatively,
but without duplication, which are:
(a) received by a Secured Party within 90 days prior to (1) the
commencement of a Bankruptcy Proceeding with respect to any Grantor or (2) the
acceleration of the Notes or the obligations under the Credit Agreement, and
which payment reduces the amount of the Secured Obligations owed to such Secured
Party below the amount owed to such Secured Party as of the 90th day prior to
such commencement or acceleration,
(b) received by a Secured Party (1) within 90 days prior to the
occurrence of any Event of Default which has not been waived or cured within 30
days after the occurrence thereof and which payment reduces the amount of the
Secured Obligations owed to such Secured Party below the amount owed to such
Secured Party as of the 90th day prior to the occurrence of such Event of
Default or (2) within 30 days after the occurrence of such Event of Default, or
received by a Secured Party after the occurrence of a Special Event of
(c) Default except as provided in SS.6.11(B).
"Special Event of Default" shall mean (a) the commencement of a
Bankruptcy Proceeding with respect to any Grantor, (b) any other Event of
Default which has not been waived or cured within 30 days after the occurrence
thereof, or (c) the acceleration of the Notes or the obligations under the
Credit Agreement.
"SPECIAL TRUST ACCOUNT" shall mean that certain restricted account
maintained by the Collateral Agent for the purpose of receiving and holding
Senior Preferential Payments.
"SUBSIDIARY GUARANTORS" shall have the meaning assigned thereto in the
Recitals hereof.
"SUBSIDIARY GUARANTY" shall have the meaning assigned thereto in the
Recitals hereof.
"TERM DEBT" shall mean the Secured Obligations consisting of (a) all
outstanding principal of the Notes and the Term Loans (as defined in the Credit
Agreement), (b) all accrued and unpaid interest and premium (including without
limitation Make-Whole Amount) thereon and (c) all fees, commissions, indemnities
and other amounts (without duplication of any Revolving Debt) owing to the Term
Debt Secured Parties.
"TERM DEBT PRIORITY COLLATERAL" shall mean the Collateral described on
EXHIBIT C hereto.
"TERM DEBT SECURED PARTIES" shall mean those Secured Parties which hold
Term Debt.
SECTION 2. PRIORITY OF LIENS.
Section 2.1. Priority of Liens of Term Debt Secured Parties in respect
of Term Debt Priority Collateral. (a) All Liens now or hereafter existing in
favor of the Collateral Agent, any Secured Party or any other Person on any Term
Debt Priority Collateral to secure the Revolving Debt shall be subject,
subordinate and junior in all respects and at all times to the Liens or
6
interests now or hereafter existing in favor of the Collateral Agent, any
Secured Party or any other Person thereon to secure the Term Debt and (b) all
Liens now or hereafter existing in favor of the Collateral Agent, any Secured
Party or any other Person on any Term Debt Priority Collateral to secure the
Term Debt shall be senior at all times to the Liens or interests now or
hereafter existing in favor of the Collateral Agent, any Secured Party or any
other Person thereon to secure the Revolving Debt, in each case, regardless of
the fact that all Secured Obligations are secured by the same Collateral
Documents, the time or order of attachment or perfection, any provisions to the
contrary in any of the Collateral Documents or any other circumstances
whatsoever.
Section 2.2. Priority of Liens of Revolving Debt Secured Parties in
respect of Revolving Debt Priority Collateral. (a) All Liens now or hereafter
existing in favor of the Collateral Agent, any Secured Party or any other Person
on any Revolving Debt Priority Collateral to secure the Term Debt shall be
subject, subordinate and junior in all respects and at all times to the Liens or
interests now or hereafter existing in favor of the Collateral Agent, any
Secured Party or any other Person thereon to secure the Revolving Debt and (b)
all Liens now or hereafter existing in favor of the Collateral Agent, any
Secured Party or any other Person on any Revolving Debt Priority Collateral to
secure the Revolving Debt shall be senior at all times to the Liens or interests
now or hereafter existing in favor of the Collateral Agent, any Secured Party or
any other Person thereon to secure the Term Debt, in each case, regardless of
the fact that all Secured Obligations are secured by the same Collateral
Documents, the time or order of attachment or perfection, any provisions to the
contrary in any of the Collateral Documents or any other circumstances
whatsoever.
Section 2.3. Liens of Secured Parties in respect of Patent and
Trademark Collateral are Pari Passu. All Liens now or hereafter existing in
favor of the Collateral Agent, any Secured Party or any other Person on any
Patent and Trademark Collateral to secure the Term Debt or the Revolving Debt
shall be PARI PASSU in all respects and at all times, regardless of the fact
that all Secured Obligations are secured by the same Collateral Documents, the
time or order of attachment or perfection, any provisions to the contrary in any
of the Collateral Documents or any other circumstances whatsoever.
Section 2.4. Nonavoidability of Liens. The subordinations and
priorities specified hereinabove are expressly conditioned upon the
nonavoidability and perfection of the Lien to which another Lien is subordinated
or made PARI PASSU and, if the Lien to which another Lien is subordinated or
made PARI PASSU is not perfected or is avoidable, for any reason, then the
subordinations and relative priority agreements provided for herein shall not be
effective as to the particular Collateral which is the subject of the
unperfected or avoidable lien.
SECTION 3. RELATIONSHIPS AMONG SECURED PARTIES.
Section 3.1. Restrictions on Actions. Each Secured Party agrees that,
so long as any Secured Obligations are outstanding or any Secured Party has any
commitment to extend credit in respect thereof pursuant to the terms of the
Credit Agreement, the provisions of this Agreement shall provide the exclusive
method by which any Secured Party may exercise rights and remedies with respect
to the Collateral under the Collateral Documents and under applicable
7
law relating to the rights and remedies of secured creditors. Therefore, each
Secured Party shall, for the mutual benefit of all Secured Parties, except as
permitted under this Agreement:
(a) refrain from taking or filing any action, judicial or
otherwise, to enforce any rights or pursue any remedy under the Collateral
Documents, except for delivering notices hereunder;
(b) refrain from (1) selling any Secured Obligations to the
Company or any Affiliate of the Company and (2) accepting any guaranty of, or
any other security for, the Secured Obligations from the Company or any
Affiliate of the Company or any other Person, except any guaranty or security
granted to the Collateral Agent for the benefit of all Secured Parties in the
relative priorities set forth herein; and
(c) refrain from exercising any rights or remedies with respect
to the Collateral under the Collateral Documents, or under applicable law
relating to the rights and remedies of secured creditors, which have or may have
arisen or which may arise as a result of a Default or Event of Default or
otherwise;
PROVIDED, HOWEVER, that nothing contained in subsections (a) through (c) above
shall prevent the Agent or any Secured Party from exercising or enforcing any
other right or remedy available to the Agent or any Secured Party under the Note
Agreement, the Notes, the Credit Agreement, the Subsidiary Guaranties or the
other Loan Documents (as defined in the Credit Agreement), as the case may be,
including, without limitation, accelerating the maturity of the Term Debt, the
Revolving Debt or the Notes, as the case may be, terminating any commitments to
lend additional money to the Company under the Credit Agreement in accordance
with the terms thereof, imposing a default rate of interest in accordance with
the Credit Agreement or the Note Agreement, as applicable, raising any defenses
in any action in which it has been made a party defendant or has been joined as
a third party, except that the Collateral Agent may, but shall not be obligated
to, direct and control any defense directly relating to the Collateral or any
one or more of the Collateral Documents, which shall be governed by the
provisions of this Agreement. NOTWITHSTANDING THE FOREGOING, NO SECURED PARTY
SHALL EXERCISE, OR ATTEMPT TO EXERCISE, ANY RIGHT OF SET-OFF, BANKER'S LIEN, OR
THE LIKE, AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES HELD OR MAINTAINED BY THE SECURED PARTY WITHOUT THE PRIOR WRITTEN
CONSENT OF THE COLLATERAL AGENT, THE REQUIRED REVOLVING DEBT SECURED PARTIES AND
THE REQUIRED TERM DEBT SECURED PARTIES.
Section 3.2. Representations and Warranties. (a) Each of the Secured
Parties represents and warrants to the other parties hereto that:
(1) It (i) is either (x) a corporation duly organized,
existing and in good standing under the laws of the jurisdiction of its
incorporation or (y) a national banking association duly incorporated and
existing under the laws of the United States of America or a state-licensed
branch of a foreign bank, and (ii) has all requisite power (corporate or
8
otherwise) to own its property and conduct its business as now conducted and as
presently contemplated.
(2) The execution, delivery and performance by such
Secured Party of this Agreement has been authorized by all necessary proceedings
(corporate or otherwise) and does not and will not contravene any provision of
law, its charter or by-laws or any amendment thereof, or of any indenture,
agreement, instrument or undertaking binding upon such Secured Party.
(3) The execution, delivery and performance by such
Secured Party of this Agreement will result in a valid and legally binding
obligation of such Secured Party enforceable in accordance with its terms.
(b) The Collateral Agent hereby represents and warrants that:
(1) Collateral Agent is a New York state-licensed branch
of a Netherlands banking cooperative validly existing and in good standing under
the laws of the State of New York.
(2) Collateral Agent has full power, authority and legal
right under the laws of New York pertaining to its banking powers to execute,
deliver, and perform this Agreement and has taken all necessary action to
authorize the execution, delivery and performance by it of this Agreement.
(3) execution,delivery and performance by the Collateral
Agent of this Agreement will not contravene any law, rule or regulation of the
United States or any United States governmental authority or agency regulating
the Collateral Agent's banking activities or any judgment or order applicable to
or binding on the Collateral Agent and will not contravene or result in any
breach of, or constitute a default under, the Collateral Agent's constitutive
documents or the provision of any indenture, mortgage, contract or other
agreement to which it is a party or by which it or any of its properties is
bound.
(4) execution,delivery and performance by the Collateral
Agent of this Agreement will not require the authorization, consent, or approval
of, the giving of notice to, the filing or registration with, or the taking of
any other action in respect of, any United States governmental authority or
agency regulating the banking activities of the Collateral Agent.
(5) Agreement has been duly executed and delivered
by the Collateral Agent and constitutes the legal, valid, and binding agreement
of the Collateral Agent, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent conveyance and similar laws affecting
creditors' rights generally, and general principles of equity (regardless of
whether the application of such principles is considered in a proceeding in
equity or at law).
Section 3.3. Cooperation; Accountings. Each of the parties hereto will,
upon the reasonable request of another party, from time to time execute and
deliver or cause to be
9
executed and delivered such further instruments, and do and cause to be done
such further acts as may be necessary or proper to carry out more effectively
the provisions of this Agreement. The Secured Parties agree to provide to each
other upon reasonable request a statement of all payments received in respect of
Secured Obligations.
Section 3.4. Termination of Credit Agreement, Note Agreement or
Additional Facilities. Upon final payment in full of all Secured Obligations
owing to any Secured Party, and, in the case of any Facility Lender, after the
termination of such Facility Lender's Revolving Commitment (as defined in the
Credit Agreement), such Secured Party shall cease to be a party to this
Agreement; provided, however, if all or any part of any payments to such Secured
Party are invalidated or set aside or required to be paid or repaid to any
Person in any Bankruptcy Proceeding or otherwise (including, without limitation,
any payment required to be made by such Secured Party to one or more of the
other Secured Parties pursuant to ss.6.15 hereof), then this Agreement shall be
renewed as of such date and shall thereafter continue in full force and effect
to the extent of the Secured Obligations so invalidated, set aside, paid or
repaid.
SECTION 4. APPOINTMENT AND AUTHORIZATION OF COLLATERAL AGENT.
(a)Each Secured Party hereby irrevocably designates and appoints
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank International",
New York Branch as the Collateral Agent of such Secured Party under this
Agreement and the Collateral Documents, and each Secured Party hereby
irrevocably authorizes Cooperatieve Centrale Raiffeisen- Boerenleenbank B.A.,
"Rabobank International", New York Branch as the Collateral Agent for such
Secured Party to execute and enter into each of the Collateral Documents and all
other instruments relating to said Collateral Documents and (i) to take action
on its behalf and exercise such powers and use such discretion as are expressly
permitted hereunder and under the Collateral Documents and all instruments
relating hereto and thereto and (ii) to exercise such powers and perform such
duties as are, in each case, expressly delegated to the Collateral Agent by the
terms hereof and thereof together with such other powers and discretion as are
reasonably incidental hereto and xxxxxxx.
(b) Notwithstanding any provision to the contrary elsewhere in
this Agreement or the Collateral Documents, the Collateral Agent shall not have
any duties or responsibilities except those expressly set forth herein or
therein or any fiduciary relationship with any Secured Party, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any Collateral Document or otherwise exist
against the Collateral Agent.
SECTION 5. AGENCY PROVISIONS.
Section 5.1. Delegation of Duties. The Collateral Agent may exercise
its powers and execute any of its duties under this Agreement and the Collateral
Documents by or through employees, agents or attorneys-in-fact and shall be
entitled to take and to rely on advice of counsel concerning all matters
pertaining to such powers and duties. The Collateral Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care. The Collateral Agent may utilize the
services of such Persons as the
10
Collateral Agent in its sole discretion may determine, and all reasonable fees
and expenses of such Persons shall be borne by the Company.
Section 5.2. Exculpatory Provisions. Neither the Collateral Agent nor
any of the Collateral Agent's officers, directors, employees, agents,
attorneys-in-fact or Affiliates shall be (a) liable for any action taken or
omitted to be taken by it or such Person under or in connection with this
Agreement or any Collateral Document or any Collateral (except for its or such
Person's own gross negligence or willful misconduct), or (b) responsible in any
manner to any of the Secured Parties for any recitals, statements,
representations or warranties made by the Grantors, any officer thereof or any
other Person contained in, or made or deemed made in connection with, the Credit
Agreement, the Note Agreement or any Collateral Document or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Collateral Agent under or in connection with, this Agreement, the Credit
Agreement, the Note Agreement or any Collateral Document, or for the due
execution, legality, value, validity, effectiveness, genuineness, enforceability
or sufficiency of the Credit Agreement, the Note Agreement or any Collateral
Document or any other document or instrument furnished pursuant thereto or of
any of the Collateral or for any failure of any Grantor to perform its
obligations under such documents. The Collateral Agent shall be under no
obligation to the Secured Parties to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, statements made
in, or conditions of the Credit Agreement, the Note Agreement or any Collateral
Document or to inspect the property (including the books and records) of the
Grantors.
Section 5.3. Reliance by Collateral Agent. The Collateral Agent shall be
entitled to rely, and shall be fully protected and shall incur no liability in
acting and relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document or conversation reasonably believed by it to
be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Grantors), independent accountants and other
experts selected by the Collateral Agent. Without limiting the generality of the
foregoing, the Collateral Agent may treat the payee of any Term Debt or
Revolving Debt as the registered holder thereof until it receives notice or
otherwise has actual knowledge that such payee is no longer the registered
holder of such Term Debt or Revolving Debt. Notwithstanding anything to the
contrary contained herein or in any Collateral Document, the Collateral Agent
shall be fully justified in failing or refusing to take action under this
Agreement or the Collateral Documents (including, without limitation, the
exercise of any rights or remedies under, or the entering into of any agreement
amending, modifying, supplementing, waiving any provision of, or the giving of
consent pursuant to, any of the Collateral Documents) unless it shall first
receive instructions of the relevant Required Secured Parties as is contemplated
by ss.6 hereof and it shall first be indemnified to its reasonable satisfaction
by the relevant Secured Parties against any and all liability and expense which
may be incurred by it by reason of taking, continuing to take or refraining from
taking any such action. The Collateral Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the
Collateral Documents in accordance with the provisions of ss.6.5 hereof and in
accordance with written instructions of the relevant Required Secured Parties
pursuant to ss.6.3 hereof, and such instructions and any action taken or failure
to act pursuant thereto shall be binding upon all the relevant Secured Parties.
11
Section 5.4. Knowledge or Notice of Default, Event of Default. The Collateral
Agent shall not be deemed to have actual, constructive, direct or indirect
knowledge or notice of the occurrence of any Default or Event of Default unless
and until the Collateral Agent has received written notice from a Secured Party
or the Company referring to the Credit Agreement, the Note Agreement or the
Collateral Documents, describing such Default or Event of Default, setting forth
in reasonable detail the facts and circumstances thereof and stating that the
Collateral Agent may rely on such notice without further inquiry; provided that
if the Agent is the Collateral Agent hereunder, the Collateral Agent shall be
deemed to have actual knowledge and notice of the occurrence of any Default or
Event of Default (as defined in the Credit Agreement) under the Credit Agreement
if the Agent has actual knowledge of such Default or Event of Default or has
declared an Event of Default under the Credit Agreement. The Collateral Agent
shall have no obligation or duty prior to or after receiving any such notice to
inquire whether a Default or Event of Default has in fact occurred and shall be
entitled to rely, and shall be fully protected in so relying, on any such notice
furnished to it.
Section 5.5. Non-Reliance on Collateral Agent and Other Secured Parties. Each
Secured Party expressly acknowledges that, except as expressly set forth in this
Agreement, neither the Collateral Agent nor any of the Collateral Agent's
officers, directors, employees, agents, attorneys-in-fact or Affiliates has made
any representations or warranties to it and that no act by the Collateral Agent
hereafter taken, including any review of the affairs of the Grantors, shall be
deemed to constitute any representation or warranty by the Collateral Agent to
any Secured Party. Each Secured Party represents that it has, independently and
without reliance upon the Collateral Agent or any other Secured Party, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and credit-worthiness of the Grantors and made its
own decision to enter into this Agreement, the Credit Agreement, the Note
Agreement or any Collateral Document. Each Secured Party also represents that it
will, independently and without reliance upon the Collateral Agent or any other
Secured Party, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under the Credit Agreement, the
Note Agreement or any Collateral Document and this Agreement, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and credit-worthiness of the
Grantors. Except for notices, reports and other documents expressly required to
be furnished to the Secured Parties by the Collateral Agent hereunder, the
Collateral Agent shall not have any duty or responsibility to provide the
Secured Parties with any credit or other information concerning the business,
operations, property, financial and other condition or credit-worthiness of the
Grantors which may come into the possession of the Collateral Agent or any of
its officers, directors, employees, agents, attorneys-in-fact or Affiliates.
Section 5.6. Indemnification. The Secured Parties agree to indemnify the
Collateral Agent in its capacity as such (to the extent not reimbursed by the
Company or the Subsidiary Guarantors, but without limiting any obligation of the
Company and the Subsidiary Guarantors to do so) ratably in accordance with the
Secured Parties' Pro Rata Shares, against, and hold the Collateral Agent
harmless from, any and all liabilities, obligations, losses, claims, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature
12
whatsoever, which may be imposed on, incurred by, or asserted against the
Collateral Agent, in any way relating to or arising out of this Agreement or any
Collateral Document or the transactions contemplated hereby or thereby or any
action taken or omitted by the Collateral Agent in connection with any of the
foregoing; PROVIDED that no Secured Party shall be liable to the Collateral
Agent for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements to the
extent they are found by a final decision of a court of competent jurisdiction
to have resulted from the Collateral Agent's gross negligence or willful
misconduct.. The agreements in
this ss.5.6 shall survive the payment of the Secured Obligations.
Section 5.7. Collateral Agent in Its Individual Capacity. Cooperatieve
Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank International", New York
Branch and its Affiliates may make loans to and generally engage in any kind of
business with the Company or any other Grantor as though such Person was not the
Collateral Agent hereunder and without any duty to account therefor to the
Secured Parties. With respect to any Term Debt or Revolving Debt issued to it
and advances made by it under the Credit Agreement, if any, Cooperatieve
Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank International", New York
Branch shall have the same rights and powers under this Agreement as any Secured
Party and may exercise the same as though it were not the Collateral Agent, and
the terms "Secured Party" and "Secured Parties" shall include Cooperatieve
Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank International", New York
Branch in its individual capacity.
Section 5.8. Successor Collateral Agent.
(a) The Collateral Agent may resign at any time upon sixty
days' notice to the Secured Parties and the Company and may be removed at any
time, with or without cause, by the Required Secured Parties by written notice
delivered to the Company, the Collateral Agent and the Secured Parties. If the
Collateral Agent is also a Facility Lender, then the Noteholders may remove the
Collateral Agent for a continuing breach of its obligations under this Agreement
at any time upon a vote of the holders of 66-2/3% or more of the aggregate
principal amount of outstanding Notes, PROVIDED that the Collateral Agent shall
be given a reasonable opportunity to cure such breach prior to any such removal.
After any resignation or removal hereunder of the Collateral Agent, the
provisions of this ss.5 shall continue to inure to its benefit as to any actions
taken or omitted to be taken by it in connection with its role as Collateral
Agent hereunder while it was the Collateral Agent under this Agreement and it
shall be entitled to be paid promptly when due any amounts owing to it pursuant
to ss.5.6.
(b) Upon receiving notice of any such resignation or removal,
a successor Collateral Agent shall be appointed by the Required Secured Parties;
provided, however, that such successor Collateral Agent shall be (i) a bank or
trust company having a combined capital and surplus of at least $500,000,000,
subject to supervision or examination by a federal or state banking authority;
and (ii) authorized under the laws of the jurisdiction of its incorporation or
organization to assume the functions of the Collateral Agent. If the appointment
of such successor shall not have become effective (as hereafter provided) (x)
within such sixty day period after the Collateral Agent's notice of resignation
or (y) upon removal of the Collateral Agent, then the Collateral Agent may
assign the Liens and its duties hereunder and under the Collateral
13
Documents to the Secured Parties, as their interests may appear, and in such
case all references herein to "Collateral Agent" shall be deemed to refer to the
"Required Secured Parties." Any Secured Party may petition a court of competent
jurisdiction for the appointment of a successor Collateral Agent. Such court
shall, after such notice as it may deem proper, appoint a successor Collateral
Agent meeting the qualifications specified in this ss.5.8(b). The Secured
Parties hereby consent to such petition and appointment so long as such criteria
are met.
(c) The resignation or removal of a Collateral Agent shall
become effective upon the execution and delivery of such documents or
instruments as are necessary to transfer the rights and obligations of the
Collateral Agent under the Collateral Documents, including, without limitation,
the delivery and recordation of all amendments, instruments, Deed of Trusts,
financing statements, continuation statements and other documents necessary to
maintain the perfection of the security interests held by the Collateral Agent
hereunder. Copies of each such document or instrument shall be delivered to all
Secured Parties. Subject to the foregoing provisions of this ss.5.8(c), the
appointment of a successor Collateral Agent pursuant to this ss.5.8 shall become
effective upon the acceptance of the appointment as Collateral Agent hereunder
by a successor Collateral Agent. Upon such effective appointment, the successor
Collateral Agent shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Collateral Agent and the retiring
Collateral Agent shall be discharged from its rights, powers, privileges and
duties under this Agreement and the other Collateral Documents; provided,
however, that the provisions of this ss.5 shall continue to inure to the
retiring Collateral Agent's benefit as to any actions taken or omitted to be
taken by it in connection with its role as Collateral Agent hereunder while it
was the Collateral Agent under this Agreement.
SECTION 6. ACTIONS BY THE COLLATERAL AGENT.
Section 6.1. Duties and Obligations. The duties and obligations of the
Collateral Agent are only those set forth in this Agreement and in the
Collateral Documents.
Section 6.2. Notification of Default. If the Collateral Agent has been
notified in a writing conforming to the requirements of ss.5.4 by any Secured
Party that a Default, an Event of Default or a Special Event of Default has
occurred, the Collateral Agent shall furnish to the Secured Parties a copy of
such written notice and may, but is under no obligation to, furnish to the
Company a copy of the notice received by the Collateral Agent and a copy of the
Collateral Agent's notice to the Secured Parties. The failure of any Secured
Party having knowledge of the occurrence of a Default, an Event of Default or a
Special Event of Default to notify the Collateral Agent or any Secured Party of
such occurrence, however, does not constitute a waiver of such Default, Event of
Default or Special Event of Default by the Secured Parties. Upon receipt of a
notice conforming to the requirements of ss.5.4 from a Secured Party of the
occurrence of an Event of Default or a Special Event of Default, the Collateral
Agent shall (in addition to the action required by the first sentence of this
ss.6.2) promptly (and in any event no later than three Business Days after
receipt of such notice) issue its Notice of Default to all Secured Parties. Such
Notice of Default shall indicate the nature of such Event of Default or Special
Event of Default. The Notice of Default may contain a recommendation of actions
to be taken by the Secured Parties and/or request instructions from the Secured
Parties and shall specify the date on which responses are due in order to be
timely within ss.6.4 hereof.
14
Section 6.3. Exercise of Remedies. Except as otherwise provided in ss.6.5, the
Collateral Agent shall take only such actions and exercise only such remedies
under the Collateral Documents as are approved in written instructions delivered
to the Collateral Agent and signed by the relevant Required Secured Parties
required under ss.6.4. In the event that the Collateral Agent shall determine in
good faith that taking the actions specified in such instructions is contrary to
law, it may refrain (and shall be fully protected in so refraining) from taking
such action and shall immediately give notice of such fact to each of the
Secured Parties. In the event that instructions received by the Collateral Agent
are in its good faith judgment ambiguous or conflict with other instructions
received by the Collateral Agent, the Collateral Agent (a) shall promptly notify
the Secured Parties of such ambiguity or conflict and request clarifying
instructions, and (b) may either (1) delay taking any such action or exercising
any such remedy pending the receipt of such clarifying instructions (and shall
be fully protected in so delaying) or (2) take such actions as it is entitled
under ss.6.5.
Section 6.4. Instructions from Secured Parties.
Notwithstanding anything express or implied to the contrary in any
Collateral Document:
(a) remedies and other actions to be taken under the
Collateral Documents or applicable law with respect to the Revolving Debt
Priority Collateral shall be directed by the Required Revolving Debt Secured
Parties, or by the Required Term Debt Secured Parties with the written consent
of the Required Revolving Debt Secured Parties (such consent not to be
unreasonably withheld or delayed);
(b) remedies and other actions to be taken under the
Collateral Documents or applicable law with respect to the Term Debt Priority
Collateral shall be directed by the Required Term Debt Secured Parties, or by
the Required Revolving Debt Secured Parties with the written consent of the
Required Term Debt Secured Parties (such consent not to be unreasonably withheld
or delayed);
(c) remedies and other actions to be taken under the Collateral
Documents or applicable law with respect to the Patent and Trademark Collateral
shall be directed by both the Required Term Debt Secured Parties and by the
Required Revolving Debt Secured Parties; and
(d) if any Secured Party does not respond in a timely manner to
any notice (including, without limitation, a Notice of Default) from the
Collateral Agent or request for instructions within the time period specified by
the Collateral Agent in such notice or request for instructions (which shall be
a minimum of five Business Days), the Secured Obligations held by such Secured
Party which would otherwise be included in a determination of Required Secured
Parties shall not be included in the determination of Required Secured Parties
for purposes of such notice or request for instructions. Any action taken or not
taken without the vote of such Secured Party or Secured Parties under this
ss.6.4 shall nevertheless be binding on such Secured Party or Secured Parties.
Section 6.5. Emergency Actions. If the Collateral Agent has asked the relevant
Secured Parties for instruction and if the relevant Required Secured Parties
have not yet
15
responded to such request, the Collateral Agent shall be authorized to take, but
shall not be required to take and shall in no event have any liability for the
taking or the failure to take, such actions (other than any action described or
permitted under ss.6.7 hereof) with regard to a Default or Event of Default
which the Collateral Agent, in good faith, believes to be reasonably required to
promote and protect the interests of the Secured Parties and to preserve the
value of the Collateral and shall give the Secured Parties appropriate notice of
such action; PROVIDED that once instructions with respect to such request have
been received by the Collateral Agent from the relevant Required Secured
Parties, the actions of the Collateral Agent shall be governed thereby and the
Collateral Agent shall not take any further action which would be contrary
thereto.
Section 6.6. Changes to Collateral Documents. Any term of the
Collateral Documents may be amended, and the performance or observance by the
parties to a Collateral Document of any term of such Collateral Document may be
waived (either generally or in a particular instance and either retroactively or
prospectively) with the written consent of both the Required Term Debt Secured
Parties and the Required Revolving Debt Secured Parties.
Section 6.7. Release of Collateral. The release of any Collateral by
the Collateral Agent from the Lien of any Collateral Document shall be permitted
with the written consent of all of the Secured Parties; provided, however, that
if the Company or its Subsidiaries disposes of Collateral pursuant to a
disposition that is permitted under both the Credit Agreement and the Note
Agreement, then the written consent of the Secured Parties to the release by the
Collateral Agent of such Collateral shall not be required.
Section 6.8. Other Actions. The Collateral Agent shall have the right
to take such actions, or omit to take such actions, hereunder and under the
Collateral Documents not inconsistent with the written instructions of the
relevant Required Secured Parties delivered pursuant to ss.6.3 hereof or the
terms of this Agreement, including actions the Collateral Agent deems necessary
or appropriate to perfect or continue the perfection of the Liens on the
Collateral for the benefit of the Secured Parties. Except as otherwise provided
by applicable law, the Collateral Agent shall have no duty as to any Collateral,
the collection or protection of the Collateral or any income therefrom
(including any duty to ascertain or take action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not the Collateral Agent has or is deemed to have
knowledge of such matters), nor as to the preservation of rights against prior
parties, nor as to the preservation of rights pertaining to the Collateral
beyond the safe custody of any Collateral in the Collateral Agent's actual
possession.
Section 6.9. Cooperation. To the extent that the exercise of the
rights, powers and remedies of the Collateral Agent in accordance with this
Agreement requires that any action be taken by any Secured Party, such Secured
Party shall take such action and cooperate with the Collateral Agent to ensure
that the rights, powers and remedies of all Secured Parties are exercised in
full.
16
Section 6.10. Distribution of Proceeds of Collateral and Subsidiary
Guaranties.
(a) Upon any realization upon the Term Debt Priority Collateral,
the Secured Parties agree that the proceeds thereof shall be applied (i) first,
to the amounts owing to the Collateral Agent, solely in its capacity as
Collateral Agent (or owing to the Secured Parties in such capacity if the
Collateral Agent has resigned or has been removed), by the Grantors or the
Secured Parties pursuant to this Agreement or the Collateral Documents; (ii)
second, ratably to the payment of the Agent's administrative agency fee (which
fee shall not exceed $30,000 per year) and all professional and other
out-of-pocket fees, costs and expenses owing to the Agent and the Secured
Parties by the Grantors according to the aggregate amounts of such fees, costs
and expenses then owing to the Agent and each Secured Party; (iii) third,
ratably to the payment of all amounts of accrued and unpaid interest (other than
breakage costs or any Make-Whole Amount) which constitute Term Debt according to
the aggregate amounts of such interest then owing to each Term Debt Secured
Party; (iv) fourth, ratably to all amounts of principal outstanding in respect
of the Term Debt according to the aggregate amounts of such principal then owing
to each Term Debt Secured Party; (v) fifth, ratably to all other Secured
Obligations then owing to the Term Debt Secured Parties according to the
aggregate amounts of such Secured Obligations then owing to each Term Debt
Secured Party; (vi) sixth, ratably to all Secured Obligations then owing to the
Revolving Debt Secured Parties (such amounts to be ratably applied to the
Secured Obligations of the Revolving Debt Secured Parties in the same order as
provided in ss.6.10(b) below); and (vii) seventh, the balance, if any, shall be
returned to the Grantors or such other Persons as are entitled thereto.
(b) Upon any realization upon the Revolving Debt Priority
Collateral, the Secured Parties agree that the proceeds thereof shall be applied
(i) first, to the amounts owing to the Collateral Agent, solely in its capacity
as Collateral Agent (or owing to the Secured Parties in such capacity if the
Collateral Agent has resigned or has been removed), by the Grantors or the
Secured Parties pursuant to this Agreement or the Collateral Documents; (ii)
second, ratably to the payment of the Agent's administrative agency fee (which
fee shall not exceed $30,000 per year) and all professional and other
out-of-pocket fees, costs and expenses owing to the Agent and the Secured
Parties by the Grantors according to the aggregate amounts of such fees, costs
and expenses then owing to the Agent and each Secured Party; (iii) third,
ratably to the payment of all amounts of accrued and unpaid interest (other than
any breakage costs) which constitute Revolving Debt according to the aggregate
amounts of such interest then owing to each Revolving Debt Secured Party; (iv)
fourth, ratably to all amounts of principal and obligations owing in respect of
Specified Swap Contracts outstanding in respect of the Revolving Debt according
to the aggregate amounts of such principal or obligations then owing to each
Revolving Debt Secured Party; (v) fifth, ratably to all other Secured
Obligations then owing to the Revolving Debt Secured Parties according to the
aggregate amounts of such Secured Obligations then owing to each Revolving Debt
Secured Party; (vi) sixth, ratably to all Secured Obligations then owing to the
Term Debt Secured Parties (such amounts to be ratably applied to the Secured
Obligations of the Term Debt Secured Parties in the same order as provided in
ss.6.10(a) above); and (vii) seventh, the balance, if any, shall be returned to
the Grantors or such other Persons as are entitled thereto.
17
(c) Upon any realization upon the Patent and Trademark
Collateral, the Secured Parties agree that the proceeds thereof shall be applied
(i) first, to the amounts owing to the Collateral Agent, solely in its capacity
as Collateral Agent (or owing to the Secured Parties in such capacity if the
Collateral Agent has resigned or has been removed), by the Grantors or the
Secured Parties pursuant to this Agreement or the Collateral Documents; (ii)
second, ratably to the payment of the Agent's administrative agency fee (which
fee shall not exceed $30,000 per year) and all professional and other
out-of-pocket fees, costs and expenses owing to the Agent and the Secured
Parties by the Grantors according to the aggregate amounts of such fees, costs
and expenses then owing to the Agent and each Secured Party; (iii) third,
ratably to the payment of all amounts of accrued and unpaid interest (other than
breakage costs or any Make-Whole Amount) which constitute Secured Obligations
according to the aggregate amounts of such interest then owing to each Secured
Party; (iv) fourth, ratably to all amounts of principal outstanding in respect
of the Secured Obligations according to the aggregate amounts of such principal
then owing to each Secured Party; (v) fifth, ratably to all other Secured
Obligations then owing to the Secured Parties according to the aggregate amounts
of such Secured Obligations then owing to each Secured Party; and (vi) sixth,
the balance, if any, shall be returned to the Grantors or such other Persons as
are entitled thereto.
(d) Upon any payment or other recovery under the Subsidiary
Guaranties, the Secured Parties agree that the proceeds thereof shall be applied
(i) first, to the amounts owing to the Collateral Agent, solely in its capacity
as Collateral Agent (or owing to the Secured Parties in such capacity if the
Collateral Agent has resigned or has been removed), by the Grantors or the
Secured Parties pursuant to this Agreement or the Collateral Documents; (ii)
second, ratably to the payment of the Agent's administrative agency fee (which
fee shall not exceed $30,000 per year) and all professional and other
out-of-pocket fees, costs and expenses owing to the Agent and the Secured
Parties by the Grantors according to the aggregate amounts of such fees, costs
and expenses then owing to the Agent and each Secured Party; (iii) third,
ratably to the payment of all amounts of accrued and unpaid interest (other than
breakage costs or any Make-Whole Amount) which constitute Secured Obligations
according to the aggregate amounts of such interest then owing to each Secured
Party; (iv) fourth, ratably to all amounts of principal outstanding in respect
of the Secured Obligations according to the aggregate amounts of such principal
then owing to each Secured Party; and (v) fifth, ratably to all other Secured
Obligations then owing to the Secured Parties according to the aggregate amounts
of such Secured Obligations then owing to each Secured Party.
(e) Upon the request of the Collateral Agent prior to any
distribution under this ss.6.10, each Secured Party shall provide to the
Collateral Agent certificates, in form and substance reasonably satisfactory to
the Collateral Agent, setting forth the respective amounts referred to in
ss.6.10(a), ss.6.10(b), ss.6.10(c) and ss.6.10(d) hereof which each such Secured
Party believes it is entitled to receive.
(f) Notwithstanding the preceding subsections 6.10(a) through
6.10(c), in the event that the Company is required to mandatorily prepay the
Facility Debt under Section 5.03(b)(ii), (b)(iii) or (b)(iv) of the Credit
Agreement, such prepayments shall be made in accordance with the terms thereof;
provided, however, that if either (1) an Event of Default has occurred and is
continuing at the time of such prepayment or (2) after giving effect on a pro
18
forma basis to the application of such prepayment proceeds as provided in the
Credit Agreement a Specified Loan to Value Event (as defined in the Note
Agreement) would occur as a result thereof, then the provisions of this
Agreement shall govern the application of the prepayment proceeds and such
proceeds shall be applied to the Secured Obligations pursuant to the terms of
this Section 6.10; PROVIDED FURTHER that if the terms of this Section 6.10 shall
govern the application of such prepayment proceeds as a result of the facts set
forth only in clause (2) hereof, then the amount of such prepayment proceeds
that shall be applied pursuant to this Section 6.10 shall be that amount of the
proceeds which will be required to prepay the Secured Obligations so that a
Specified Loan to Value Event will not occur and be continuing after giving
effect to the application of such proceeds under this Section 6.10.
Notwithstanding the preceding Sections 6.10(a) through (d) to the
contrary, any payment hereunder of the Agent's administrative agency fee
pursuant to the Sections 6.10(a)(ii), (b)(ii), (c)(ii) and (d)(ii) shall not
exceed $30,000 in the aggregate per year.
Section 6.11. Senior Preferential Payments and Special Trust Account.
(a) After the receipt by each Secured Party of a Notice of
Default pursuant to ss.6.2 stating that a Special Event of Default has occurred,
all Senior Preferential Payments other than those payments received pursuant to
subsection (b) of this ss.6.11 shall be delivered to the Collateral Agent for
deposit into the Special Trust Account.
(b) If (i) such Special Event of Default is waived by the
Facility Lenders and the Noteholders and if no other Event of Default has
occurred and is continuing, (ii) such Special Event of Default is cured by the
Company or by any amendment of the Credit Agreement or the Note Agreement, as
the case may be, and if no other Event of Default has occurred and is continuing
or (iii) any or all of the Secured Obligations have not been accelerated and the
Required Secured Parties have not instructed the Collateral Agent to foreclose
on a substantial portion of the Collateral, seek the appointment of a receiver,
commence litigation against the Company, liquidate the Collateral, commence a
Bankruptcy Proceeding against the Company, seize Collateral, or exercise other
remedies of similar character prior to the 180th day following such Special
Event of Default, the Collateral Agent thereupon shall return all amounts,
together with their pro rata share of any interest earned xxxxxxx, held in the
Special Trust Account representing payment of any Secured Obligations to the
Secured Party initially entitled thereto, and no payments thereafter received by
a Secured Party shall constitute a Senior Preferential Payment by reason of such
cured or waived Special Event of Default. No payment returned to a Secured Party
for which such Secured Party has been obligated to make a deposit into the
Special Trust Account shall thereafter ever be characterized as a Senior
Preferential Payment.
(c) Each Secured Party agrees that upon the occurrence of a
Special Event of Default it shall (i) promptly notify the Collateral Agent of
the receipt of any Senior Preferential Payments, (ii) hold such amounts in trust
for the Secured Parties and act as agent of the Secured Parties during the time
any such amounts are held by it, and (iii) deliver promptly to the Collateral
Agent such amounts for deposit into the Special Trust Account as soon as
practicable.
19
(d) If the Secured Obligations have been accelerated or the
Required Secured Parties have instructed the Collateral Agent to foreclose on a
substantial portion of the Collateral, seek the appointment of a receiver,
commence litigation against the Company, liquidate the Collateral, commence a
Bankruptcy Proceeding against the Company, seize Collateral, or exercise other
remedies of similar character, then all funds, together with interest earned
thereon, held in the Special Trust Account and all subsequent Senior
Preferential Payments shall be applied in accordance with the provisions of
ss.6.10 above.
Section 6.12. Authorized Investments. Any and all funds held by the
Collateral Agent in its capacity as Collateral Agent, whether pursuant to any
provision of this Agreement or any of the Collateral Documents, shall to the
extent feasible within a reasonable time be invested by the Collateral Agent in
Cash Equivalent Investments. Prior to making such investment or to the extent it
is not feasible to invest such funds in Cash Equivalent Investments, the
Collateral Agent shall hold any such funds in an interest bearing account. Any
interest earned on such funds shall be disbursed to the Secured Parties in
accordance with ss.6.10 or ss.6.11, as applicable. The Collateral Agent shall
have no duty to place funds held and invested pursuant to this ss.6.12 in
investments which provide a maximum return. The Collateral Agent shall not be
responsible for any loss of any funds invested in accordance with this ss.6.12.
Section 6.13. Restoration of Obligations. For the purposes of
determining the amount of outstanding Secured Obligations, if any Secured Party
is required to deposit any Senior Preferential Payment in the Special Trust
Account, then the obligations intended to be satisfied by such Senior
Preferential Payment shall be revived, as of the date of the deposit of such
amount with the Collateral Agent, in the amount of such Senior Preferential
Payment and such obligation shall continue in full force and effect (and, if
applicable, bear interest from such deposit date at the non-default rate as
provided in the Notes or in the Credit Agreement, as the case may be) as if such
Secured Party had not received such payment. All such revived obligations shall
be included as Secured Obligations for purposes of allocating any payments under
ss.6.10 and for applying the definition of Required Secured Parties. If any such
revived obligation shall not be allowed as a claim under the Bankruptcy Code due
to the fact that the Senior Preferential Payment has in fact been made by the
Company, the Secured Parties shall make such other equitable arrangements for
the purchase and sale of participations in the Secured Obligations to effectuate
the intent of this ss.6.13.
Section 6.14. Bankruptcy, Preferences, etc. If any payment to a Secured
Party is subsequently invalidated, declared to be fraudulent or preferential or
set aside and is required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or Federal law, common law or equitable cause,
and such Secured Party has previously made a deposit in respect of such payment
into the Special Trust Account pursuant to ss.6.11, then the Collateral Agent
shall distribute to such Secured Party proceeds from the Special Trust Account
in an amount equal to such deposit or so much thereof as is affected by such
events and if, due to previous disbursements to the Secured Parties pursuant to
ss.6.11(d), the proceeds in the Special Trust Account are insufficient for such
purpose, then each other Secured Party shall pay to such Secured Party upon
demand an amount equal to a ratable portion of such disbursements of the deposit
which was distributed to each such Secured Party according to the aggregate
amounts so distributed to each such Secured Party.
20
Section 6.15. Sharing of Proceeds. If, despite the provisions of this
Agreement, any Secured Party shall receive any payment or other recovery in
excess of its portion of payments on account of the Secured Obligations to which
it is then entitled in accordance with this Agreement, such Secured Party shall
hold such payment or other recovery in trust for the benefit of the parties
entitled thereto and promptly pay over or deliver such payment or other recovery
to the Collateral Agent for application by the Collateral Agent in accordance
with this Agreement.
SECTION 7. BANKRUPTCY PROCEEDINGS.
The following provisions shall apply during any Bankruptcy Proceeding
of any Grantor:
(a) The Collateral Agent shall represent all Secured Parties in
connection with all matters directly relating to the Collateral, including
without limitation, use, sale or lease of Collateral, use of cash collateral,
relief from the automatic stay and adequate protection. The Collateral Agent
shall act on the instructions of the Required Secured Parties; provided that
such instructions by the Required Secured Parties shall not treat any Secured
Party differently with respect to rights in the Collateral from any other
Secured Party; and provided further that if action is required prior to the time
such instructions are received or if the Required Secured Parties fail to give
instructions with respect to any matter, the Collateral Agent shall be
authorized to act, or refrain from acting, in accordance with ss.6.5 hereof.
(b) Each Secured Party shall be free to act independently on any
issue not directly relating to the Collateral, including without limitation,
matters relating to appointment of a trustee, conversion of a case, filing of
claims, and plans of reorganization. Each Secured Party shall give prior notice
to the Collateral Agent of any such action to the extent that such notice is
possible. If such prior notice is not given, such Secured Party shall give
prompt notice following any such action.
SECTION 8. ADDITIONAL AGREEMENTS OF SECURED PARTIES.
(a) The Term Debt Secured Parties agree that the Revolving Debt
Secured Parties, through their authorized representatives or agents, may (to the
extent the Term Debt Secured Parties have the right to restrict access to the
Term Debt Priority Collateral) enter upon any real property constituting Term
Debt Priority Collateral from time to time during normal business hours for the
sole purpose of inspecting, repairing, removing, caring for, harvesting,
protecting or conducting a sale or sales of any or all of the Revolving Debt
Priority Collateral if the Agent provides the Term Debt Secured Parties notice
prior to each entry (which shall not be less than two (2) business days except
in the case of emergency). The Term Debt Secured Parties further agree that
neither the Agent nor any Revolving Debt Secured Party shall have any obligation
or liability to any Term Debt Secured Party, except, however, that the Revolving
Debt Secured Parties shall promptly repair any damage to the Term Debt Priority
Collateral caused by the removal, repair, sale or inspection and the Revolving
Debt Secured Parties shall be liable for, and shall indemnify, defend and hold
the Collateral Agent and the Term Debt Secured Parties harmless from the gross
negligence or willful misconduct of their employees or agents in connection with
such removal, repairs, sale or inspection. The Agent and Revolving Debt Secured
Parties agree that neither the Collateral Agent nor the Term Debt Secured
Parties shall
21
have any obligation or liability to preserve, protect, manage, maintain,
safekeep or otherwise have any responsibility for the Revolving Debt Priority
Collateral beyond the safe custody of any Collateral in any such Person's actual
possession; provided, however, that the Term Debt Secured Parties agree that
they will not take or direct the Collateral Agent to take any action to destroy
or damage any crops grown on, attached to, affixed to, or located on any Term
Debt Priority Collateral.
(b) The Collateral Agent agrees to use its best efforts to
give to the Agent, via certified mail, written notice prior to the exercise by
the Collateral Agent of any of its rights or remedies against the Term Debt
Priority Collateral at the address provided for in ss.10.2 below; PROVIDED,
HOWEVER, that any failure to so provide such notice shall have no effect on the
ability of the Collateral Agent to exercise any of its rights or remedies
against the Term Debt Priority Collateral.
(c) The Collateral Agent agrees to use its best efforts to give
to the Term Debt Secured Parties, via certified mail, written notice prior to
the exercise by Collateral Agent of any of its rights or remedies against the
Revolving Debt Priority Collateral at the address provided for in ss.10.2 below;
PROVIDED, HOWEVER, that any failure to so provide such notice shall have no
effect on the ability of the Collateral Agent to exercise any of its rights or
remedies against the Revolving Debt Priority Collateral.
(d) If the Collateral Agent takes possession of the Grantors'
books and records included in the Revolving Debt Priority Collateral, the
Collateral Agent shall provide the Term Debt Secured Parties reasonable access
to inspect and copy such books and records if the Term Debt Secured Parties
provide prior notice (which shall be not less than two (2) business days except
in the case of emergency) and if such access is necessary to exercise its rights
and remedies in the Term Debt Priority Collateral.
(e) If the Collateral Agent or the Revolving Debt Secured
Parties receives any Term Debt Priority Collateral or any proceeds thereof
(other than crops and proceeds of crops which are not included in the Term Debt
Priority Collateral) in which the Term Debt Secured Parties have a prior
perfected security interest or if the Collateral Agent or Term Debt Secured
Parties receives any Revolving Debt Priority Collateral or any proceeds thereof
in which the Revolving Debt Secured Parties have a prior perfected security
interest, such party shall (a) notify the other party in writing of the nature
of such receipt, the date of the receipt and the amount thereof; (b) deduct from
the proceeds received any costs or expenses (including attorneys' fees and
expenses) incurred in connection with the acquisition of such proceeds; (c) hold
the remaining amount of such proceeds in trust for the benefit of the other
party until paid over to the other party; and (d) pay the remaining amount of
such proceeds or deliver the applicable Collateral to the other party hereto
promptly upon receipt thereof. If at any time payment, in whole or in part, of
any Collateral or proceeds of Collateral distributed hereunder is rescinded or
must otherwise be restored or returned as a preference, fraudulent conveyance or
otherwise under any bankruptcy, insolvency or similar law, then each party
receiving any portion of such proceeds agrees, upon demand, to return the
portion of such proceeds it has received to the party responsible for restoring
or returning such proceeds.
22
SECTION 9. PROVISIONS RELATING TO PATENT & TRADEMARK COLLATERAL
For the purpose of enabling the Collateral Agent to exercise its rights
and remedies under the Collateral Documents and under applicable law in respect
of the Revolving Debt Priority Collateral, each Secured Party hereby permits the
Collateral Agent to use, license or sublicense any of the Patent and Trademark
Collateral as reasonably required in connection therewith.
SECTION 10. MISCELLANEOUS.
Section 10.1. Entire Agreement. This Agreement represents the entire
Agreement among the Collateral Agent, the Agent, the Secured Parties and the
Grantors in respect of the subject matter hereof.
Section 10.2. Notices. Notices hereunder shall be given to the Secured
Parties at their addresses as set forth in the Note Agreement or the Credit
Agreement or at such other address as may be designated by each in a written
notice to the other parties hereto.
Section 10.3. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Collateral Agent, the Agent and each of the
Secured Parties and their respective successors and assigns, whether so
expressed or not, and, in particular, shall inure to the benefit of and be
enforceable by and against any future holder or holders of any Secured
Obligations, and the term "Secured Party" shall include any such subsequent
holder of Secured Obligations, wherever the context permits.
Section 10.4. Consents, Amendment, Waivers. All amendments, waivers or
consents of any provision of this Agreement shall be effective only if the same
shall be in writing and signed by the Collateral Agent, the Agent and all of the
Secured Parties.
Section 10.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to any conflicts of law principles.
Section 10.6. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one
Agreement, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
Section 10.7. Sale of Interest. No Secured Party will sell, transfer or
otherwise dispose of any interest in the Secured Obligations unless such
purchaser or transferee shall agree, in writing, to be bound by the terms of
this Agreement.
Section 10.8. Severability. In case any one or more of the provisions
contained in this Agreement shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
of this Agreement shall not in any way be affected or impaired thereby.
23
Section 10.9. Expenses. In the event of any litigation to enforce this
Agreement, the prevailing party shall be entitled to its reasonable attorney's
fees (including the allocated costs of in-house counsel).
Section 10.10. Term of Agreement. This Agreement shall terminate when
all Secured Obligations are paid in full and such payments are not subject to
any possibility of revocation or rescission and no Secured Party has any
commitment to extend any additional credit constituting Secured Obligations
under the terms of the Credit Agreement, or when the Collateral Agent, the Agent
and all of the Secured Parties mutually agree in a writing to terminate this
Agreement, whichever occurs earlier.
Section 10.11. Obligations Several. The obligations of the Secured
Parties, the Agent and the Collateral Agent hereunder are several. The failure
of any Secured Party, the Agent or the Collateral Agent to carry out its
obligations hereunder shall not relieve any other Secured Party, the Agent or
the Collateral Agent of any obligation hereunder, nor shall any Secured Party,
the Agent or the Collateral Agent be responsible for the obligations of, or any
action taken or omitted by, any other Person hereunder. Nothing contained in
this Agreement shall be deemed to cause any Secured Party, the Agent or the
Collateral Agent to be considered a partner of or joint venturer with any other
Secured Party, the Collateral Agent, the Agent, the Subsidiary Guarantors or the
Company.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first above written.
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEEBANK B.A., "RABOBANK
INTERNATIONAL", NEW YORK BRANCH, AS
AGENT
BY:___________________________________
NAME: ________________________________
ITS:__________________________________
BY:___________________________________
NAME: ________________________________
ITS:__________________________________
24
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEEBANK B.A., "RABOBANK
INTERNATIONAL", NEW YORK BRANCH, AS
COLLATERAL AGENT
BY:___________________________________
NAME: ________________________________
ITS:__________________________________
BY:___________________________________
NAME: ________________________________
ITS:__________________________________
FARM CREDIT SERVICES OF AMERICA, PCA
BY:___________________________________
NAME: ________________________________
ITS:__________________________________
AGSTAR FINANCIAL SERVICES, PCA, D/B/A FARM
CREDIT SERVICES COMMERCIAL FINANCE GROUP
BY:___________________________________
NAME: ________________________________
ITS:__________________________________
25
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEEBANK B.A., "RABOBANK
INTERNATIONAL", NEW YORK BRANCH, AS
A FACILITY LENDER
BY:___________________________________
NAME: ________________________________
ITS:__________________________________
BY:___________________________________
NAME: ________________________________
ITS:__________________________________
FARM CREDIT WEST FLCA
BY:___________________________________
NAME: ________________________________
ITS:__________________________________
U.S. BANK NATIONAL ASSOCIATION
BY:___________________________________
NAME: ________________________________
ITS:__________________________________
26
COMERICA BANK - CALIFORNIA
BY:___________________________________
NAME: ________________________________
ITS:__________________________________
THE UNDERSIGNED XXXXXX ACKNOWLEDGE AND AGREE TO THE FOREGOING AGREEMENT.
XXXX VALLEY VINEYARD
BY:___________________________________
NAME: ________________________________
ITS:__________________________________
SHW EQUITY CO.
BY:___________________________________
NAME: ________________________________
ITS:__________________________________
CANOE RIDGE VINEYARD, L.L.C.
BY:___________________________________
NAME: ________________________________
ITS:__________________________________
27
XXXXXX HILLS WINERY COMPANY LIMITED
BY:___________________________________
NAME: ________________________________
ITS:__________________________________
BY:___________________________________
NAME: ________________________________
ITS:__________________________________
CANOE RIDGE WINERY, INC.
BY:___________________________________
NAME: ________________________________
ITS:__________________________________
THE CHALONE WINE GROUP, LTD.
BY:___________________________________
NAME: ________________________________
ITS:__________________________________
28
Exhibit A
to
Intercreditor Agreement
Revolving Debt Priority Collateral
The collateral described in the granting clauses of the Security
Agreements each dated as of April 19, 2002, made by the Grantors in favor of the
Collateral Agent to secure the Facility Debt (as the same may from time to time
be amended, restated, supplemented or otherwise modified, the "SECURITY
AGREEMENT") including, without limitation:
Each Grantor's right, title and interest in, to and under all of its
personal property, wherever located and whether now existing or owned or
hereafter acquired or arising, including the following property: (i) all
Accounts; (ii) all Chattel Paper; (iii) all Commercial Tort Claims; (iv) all
Deposit Accounts; (v) all Documents; (vi) all Equipment; (vii) all Farm
Products, (viii) all General Intangibles; (ix) all Instruments; (x) all
Inventory; (xi) all Investment Property; (xii) all Letter-of-Credit Rights; and
(xii) all money, all products and Proceeds of any and all of the foregoing, and
all Supporting Obligations of any and all of the foregoing. Notwithstanding the
foregoing, except for fixtures (as provided in Section 9-313 of the UCC), such
grant of a security interest shall not extend to any asset which would be real
property under the law of the jurisdiction in which it is located or any
Excluded Collateral.
Capitalized terms used in this Exhibit A and not otherwise defined in
this Agreement or in this Exhibit A shall have the meanings given to such terms
in the Security Agreement.
Exhibit B
to
Intercreditor Agreement
Real Property
Real Property
All of the Mortgaged Property (as defined in the subject Deed of Trust)
described in each Deed of Trust in each of the following locations:
Deeds of Trusts executed by the Company and/or various Subsidiary
Guarantors for real properties bearing the following APN designations in the
States of California and Washington:
APN
000-000-000
000-000-000
000-000-000
000-000-000
000-000-000
000-000-000
000-000-000
000-000-000
000-000-000
000-000-000
000-000-000
000-000-000
000-000-000
000-000-000
36-07-19-51-2701
36-07-19-51-2702
36-07-19-51-2601
36-07-19-51-2602
1-2554-400-0004-001
1-3055-200-0001-001
1-2554-400-0003-000
191221-41002
191211-42001
191221-13001
191221-14001
191221-31013
-2-
Exhibit C
to
Intercreditor Agreement
TERM DEBT PRIORITY COLLATERAL
THE COLLATERAL DESCRIBED IN THE GRANTING CLAUSES OF THE DEEDS OF TRUST
INCLUDING, WITHOUT LIMITATION:
GRANTING CLAUSE FIRST
COLLATERAL
[For leasehold properties: All of the Company's leasehold estate
created under that certain lease dated __________, 19__ between the Company, as
Lessee and ___________, as Lessor (said Lessor, together with their respective
successors and assigns, said Lease as heretofore amended together with any
future modifications, amendments, additions, assignments and supplements
thereto, and substitutions, extensions, renewals or replacements thereof is
hereafter referred to as the "Lease") demising the parcels of land in ______
County in the State of California described in Annex A attached hereto and made
a part hereof ("Land"), together with all options to renew, extend or purchase
(including rights of first refusal) now or hereafter contained in the Lease, and
the benefits of all covenants contained in the Lease whether running with the
Land or otherwise, together with the entire interest of the Company in and to
all buildings, structures, improvements and appurtenances now standing, or at
any time hereafter constructed or placed, upon such land, including all right,
title and interest of the Company, if any, in and to all building material,
building equipment and fixtures of every kind and nature whatsoever on said land
or in any building, structure or improvement now or hereafter standing on said
land which are classified as fixtures under applicable law and which are used in
connection with the operation, maintenance or protection of said buildings,
structures and improvements as such (including, without limitation, all boilers,
air conditioning, ventilating, plumbing, heating, lighting and electrical
systems and apparatus, all communications equipment and intercom systems and
apparatus, all sprinkler equipment and apparatus and all elevators and
escalators) and the reversion or reversions, remainder or remainders, in and to
said land, and together with the entire interest of the Company in and to all
and singular the tenements, hereditaments, easements, rights of way, rights,
privileges and appurtenances to said land, belonging or in anywise appertaining
thereto, including, without limitation, the entire right, title and interest of
the Company in, to and under any streets, ways, alleys, gores or strips of land
adjoining said land, and all claims or demands whatsoever of the Company either
in law or in equity, in possession or expectancy, of, in and to said land, it
being the intention of the parties hereto that, so far as may be permitted by
law, all property of the character xxxxxxxxxxx described, which is now owned or
is hereafter acquired by the Company and is affixed or attached or annexed to
said land, shall be and remain or become and constitute the security
covered by and subject to the Lien of this Deed of Trust, together with all
accessions, parts and appurtenances appertaining or attached thereto and all
substitutions, renewals or replacements of and additions, improvements,
accessions and accumulations to any and all thereof, and together with all
rights, powers, privileges, options and other benefits of the Company, as
sublessor, under any subleases including the right to collect any and all rents,
profits or other income and the present and continuing right to make claim for,
collect, receive and receipt for any and all of such rents, profits or other
income (all of which properties are hereinafter referred to as the "REAL
PROPERTY"). The assignment of rents set forth in the proceeding sentence is
intended by the parties hereto to be effective to create a present security
interest in all existing and future rents, profits or other income arising from
or related to the Land under California Civil Code Section 2938, as amended from
time to time.]
[For fee owned properties: The parcels of land in ______ County in the
State of California described in Annex A attached hereto and made a part hereof
("LAND"), together with the entire interest of the Company in and to all
buildings, structures, improvements and appurtenances now standing, or at any
time hereafter constructed or placed, upon such land, including all right, title
and interest of the Company, if any, in and to all building material, building
equipment and fixtures of every kind and nature whatsoever on said land or in
any building, structure or improvement now or hereafter standing on said land
which are classified as fixtures under applicable law and which are used in
connection with the operation, maintenance or protection of said buildings,
structures and improvements as such (including, without limitation, all boilers,
air conditioning, ventilating, plumbing, heating, lighting and electrical
systems and apparatus, all communications equipment and intercom systems and
apparatus, all sprinkler equipment and apparatus and all elevators and
escalators) and the reversion or reversions, remainder or remainders, in and to
said land, and together with the entire interest of the Company in and to all
and singular the tenements, hereditaments, easements, rights of way, rights,
privileges and appurtenances to said land, belonging or in anywise appertaining
thereto, including, without limitation, the entire right, title and interest of
the Company in, to and under any streets, ways, alleys, gores or strips of land
adjoining said land, and all claims or demands whatsoever of the Company either
in law or in equity, in possession or expectancy, of, in and to said land, it
being the intention of the parties hereto that, so far as may be permitted by
law, all property of the character xxxxxxxxxxx described, which is now owned or
is hereafter acquired by the Company and is affixed or attached or annexed to
said land, shall be and remain or become and constitute a portion of said land
and the security covered by and subject to the Lien of this Deed of Trust,
together with all accessions, parts and appurtenances appertaining or attached
thereto and all substitutions, renewals or replacements of and additions,
improvements, accessions and accumulations to any and all thereof, and together
with all rights, powers, privileges, options and other benefits of the Company,
as lessor, under any leases including the right to collect any and all rents,
profits or other income and the present and continuing right to make claim for,
collect, receive and receipt for any and all of such rents, profits or other
income (all of which properties are hereinafter referred to as the "REAL
PROPERTY"). The assignment of rents set forth in the proceeding sentence is
intended by the parties hereto to be effective to create a present security
interest in all existing and future rents, profits or other income arising from
or related to the Land under California Civil Code Section 2938, as amended from
time to time.]
-2-
GRANTING CLAUSE SECOND
TRADE PROPERTY
All materials, furniture, furnishings, machinery, fixtures and
equipment now or hereafter erected on or affixed to the Collateral and
including, but not limited to, all heating, plumbing, lighting, water heating,
cooking, laundry, refrigerating, incinerating, communications, ventilating and
air conditioning equipment, building signs, disposals, dishwashers, telephone
systems, sprinkler systems, fire extinguishing apparatus and equipment, water
tanks, engines, machines, boilers, dynamos, stokers, elevators, motors,
cabinets, shades, blinds, partitions, window screens, screen doors, storm
windows, awnings, drapes, rugs and other floor coverings, furniture,
furnishings, radios and television sets and wiring and antennae therefor, and
all fixtures, accessions and appurtenances thereto, and all renewals or
replacements of or substitutions for any of the foregoing, together with all
other goods, equipment, furnishings, fixtures, machinery and furniture owned by
the Company now or hereafter attached or affixed to or used in and about the
building or buildings now erected or hereafter to be erected on the Collateral,
or otherwise located on the Collateral, and all fixtures, accessions and
appurtenances thereto, and all renewals or replacements of or substitutions for
any of the foregoing (all of which properties are hereinafter referred to as
"TRADE PROPERTY").
GRANTING CLAUSE THIRD
CONDEMNATION AWARDS AND PAYMENTS
To the extent assignable, all judgments, awards of damages, settlements
and other compensation heretofore or hereafter made resulting from condemnation
proceedings or the taking of the Collateral or any part thereof or any
improvements now or at any time hereafter located thereon or any easement or
other appurtenance thereto under the power of eminent domain, or any similar
power or right (including any award from the United States Government at any
time after the allowance of the claim therefor, the ascertainment of the amount
thereof and the issuance of the warrant for the payment thereof), whether
permanent or temporary, or for any damage (whether caused by such taking or
otherwise) to said Collateral or any part thereof or the improvements thereon or
any part thereof, or to any rights appurtenant thereto, including severance and
consequential damage, and any award for change of grade of streets
(collectively, "CONDEMNATION AWARDS").
GRANTING CLAUSE FOURTH
Subject to the satisfaction in full of all indebtedness outstanding
under the Revolving Credit Agreement Notes, a collateral security interest in
all of the Company's right,
-3-
title and interest in and to the General Intangibles related to the Collateral
(as defined in the Credit Agreement) of the Company.
GRANTING CLAUSE FIFTH
PROCEEDS
All proceeds of the conversion, voluntary or involuntary, of any of the
foregoing into cash or other liquidated claims, including, without limitation,
all proceeds and payments of insurance related to the Collateral.
EXCEPTED PROPERTY
There is, however, expressly excepted and excluded from the Term Debt
Priority Collateral, the Revolving Debt Priority Collateral of the Company and
the other Grantors, now owned or hereafter acquired (herein called the "EXCEPTED
PROPERTY").
-4-
Schedule I to Intercreditor Agreement
List of Noteholders
Farm Credit Services of America, PCA
Agstar Financial Services, PCA, D/B/A Farm Credit Services Commercial
Finance Group
-5-
Schedule II to Intercreditor Agreement
List of Facility Lenders
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank International",
New York Branch
Farm Credit West FLCA
U.S. Bank National Association
Comerica Bank - California
-6-
FORM OF COMPLIANCE CERTIFICATE
To Each Of The Purchasers
Listed In The Attached Schedule 2
Re: The Chalone Wine Group, Ltd.
Ladies and Gentlemen:
This Compliance Certificate is made and delivered pursuant to the
Amended and Restated Note Purchase Agreement dated as of April 19, 2002 (as
amended, modified, supplemented, renewed or extended from time to time, the
"Note Purchase Agreement") among The Chalone Wine Group, Ltd. (the "Company"),
and each of the Purchasers listed in the attached Schedule 2, and reference is
made thereto for full particulars of the matters described therein. All
capitalized terms used in this Compliance Certificate and not otherwise defined
herein shall have the meanings assigned to them in the Note Purchase Agreement.
This Compliance Certificate relates to the accounting period ending __________.
I am the [Chief Financial Officer] of the Company. I have reviewed the
terms of the Note Purchase Agreement and I have made, or caused to be made under
my supervision, a detailed review of the transactions and conditions of the
Company and its Subsidiaries during such accounting period. I hereby certify
that the information set forth on Schedule 1 hereto (and on any additional
schedules hereto setting forth further supporting detail) is true, accurate and
complete as of the end of such accounting period.
I hereby further certify that (i) as of the date hereof, no Default has
occurred and is continuing, and (ii) on and as of the date hereof, there has
occurred no Material Adverse Effect since December 31, 2001 except in each case
as may be set forth in a separate attachment hereto describing in detail the
nature of each condition or event constituting an exception to the foregoing
statements, the period during which it has existed and the action which the
Company is taking or proposes to take with respect to each such condition or
event.
IN WITNESS WHEREOF, the undersigned officer has signed this Compliance
Certificate this ____ day of ______________.
_________________________________
Name:
Title:
EXHIBIT F
(to the Note Purchase Agreement)
SCHEDULE 1
TO COMPLIANCE CERTIFICATE
Worksheet for Financial Covenants
for the accounting period ending ____________________.
Section 10.4(a)-Leverage Ratio Actual Required
______________________________ ______ ________
A. Consolidated Indebtedness
(i) total Indebtedness of the $_____________
Company and its Subsidiaries on a
consolidated basis
(ii) accounts payable to trade $_____________
creditors for goods and services and
current operating liabilities (not the
result of the borrowing of money)
incurred in the ordinary course of the
Company's or the Subsidiaries'
business in accordance with
customary terms and paid within the
specified time (unless contested in
good faith by appropriate
proceedings and reserved for in
accordance with GAAP)
(iii) Indebtedness owing by the $_____________
Company to the estate of Xxxxxxx
Xxxxx in a principal amount not to
exceed $1,000,000
(i) minus (ii) minus (iii) $
==============
B. 600% of Consolidated Rent Expense $______________
(calculated on a rolling 4-quarter basis)
C. A + B $______________
F-2
D. Consolidated EBITDA
(calculated on a rolling 4-quarter basis)
(i) Consolidated Net Income (computed $______________
without giving effect to
any gains or losses from dispositions
of assets and other extraordinary
items)
(ii) Consolidated Interest Expense $______________
(iii) income tax expense $______________
(iv) depreciation expense, $______________
amortization expense, other non-cash
expenses
Sum of (i) + (ii) + (iii) + (iv) $
==============
E. Consolidated Rent Expense $______________
(calculated on a rolling 4-quarter basis)
F. D + E $______________
X. Xxxxx of C to F ______:________ See Section 10.4
(a) of the Note
Purchase
Agreement
Section 10.4(b) - Consolidated Tangible
Net Worth
A. Minimum Consolidated Tangible Net
Worth Calculation
(i) $76,000,000 $______________ $76,000,000
F-3
(ii) Net Issuance Proceeds received
by the Company or any Subsidiary
from the sale or issuance of equity
securities to any Person other than
the Company or any Subsidiary after
December 31,2001 $______________
(iii) Net Issuance Proceeds received
by the Company or any Subsidiary
from the sale or issuance of
Subordinated Debt to any Person
other than the Company or any
Subsidiary after December 31, 2001 $______________
(iv) 75% of positive Consolidated
Net Income, if any, for each fiscal
quarter elapsed after
December 31, 2001 $______________
Sum of (i) + (ii) + (iii) + (iv) $______________
B. Consolidated Tangible Net Worth
(i) Consolidated Total Assets $______________
(ii)Intangible Assets (including $______________
goodwill, organizational expense,
research and development expense,
patent applications, patents,
trademarks, trade names, brands,
copyrights, trade secrets, customer
lists, licenses, franchises and
covenants not to compete)
(iii) Subordinated Debt $______________
(iv) Consolidated Total Liabilities $______________
Sum of (i) - (ii) + (iii) - (iv) $
==============
C. Excess (deficient) for covenant $______________
compliance
(B minus A)
F-4
Section 10.4(c) - Interest Coverage
Ratio
A. Consolidated EBIT (calculated on a $______________
rolling 4-quarter basis)
(i) Consolidated Net Income $______________
(computed without giving effect to
any gains or losses from dispositions
of assets and other extraordinary
items)
(ii) Consolidated Interest Expense $______________
(iii) income tax expense $______________
Sum of (i) + (ii) + (iii) $
==============
B. Consolidated Interest Expense $______________
(calculated on a rolling 4-quarter
basis)
C. Ratio of A to B ______:________ See Section 10.4
(c) of the Note
Purchase
Agreement
Section 10.4(d) - Fixed Charge
Coverage Ratio
A. Consolidated EBITDA (calculated $______________
on a rolling 4-quarter basis)
B. Fixed Charge calculation
(i) Consolidated Interest Expense $______________
(calculated on a rolling 4-quarter
basis)
F-5
(ii) regularly scheduled principal
payments on Indebtedness (including
such payments attributable to Capital
Leases) of the Company and its
Subsidiaries for the four consecutive
fiscal quarters then most recently
ended $______________
(iii) cash income taxes of the
Company and its Subsidiaries for the
four consecutive fiscal quarters then
most recently ended $______________
(iv) Cash dividends of the Company
and its Subsidiaries for the four
consecutive fiscal quarters then most
recently ended $______________
Sum of (i) + (ii) + (iii) + (iv) $______________
C. Ratio of A to B ______:________ See Section 10.4
(d) of the Note
Purchase
Agreement
Section 10.4(e)(i) - Capital Expenditure
on new wine barrels
A. Capital expenditures made on new
wine barrels during fiscal year to
date $______________
B. Capital expenditures on new wine
barrels that could have been made
during prior fiscal year but which
were not made $______________
C. Maximum permitted capital
expenditures on wine barrels
($_________ plus Line B above) $______________
D. Excess (deficient) for covenant
compliance (C minus A) $
==============
F-6
Section 10.4(e)(ii) - Capital Expenditure
on other fixed or capital assets
A. Capital expenditures made on other
assets during fiscal year to date $______________
B. Capital expenditures on other assets
that could have been made during
prior fiscal year but which were not
made $______________
C. Maximum permitted capital
expenditures on other assets
($_________ plus Line B above) $______________
D. Excess (deficient) for covenant
compliance (C minus A) $
==============
Section 10.8(h) - Intercompany Loans
A. Canoe Ridge Intercompany Loan $7,000,000
Amount $______________ (adjusted
annually)
B. Xxxx Valley Intercompany Loan $20,000,000
Amount $______________ (adjusted
annually)
C. SHW Intercompany Loan Amount $______________ $8,000,000
(adjusted
annually)
D. A + B + C $ $35,000,000
============== (adjusted
annually)
F-7
FORM OF UPDATE CERTIFICATE
See attached certificate.
EXHIBIT G
(to the Note Purchase Agreement)
UPDATE CERTIFICATE
for the Reporting Period ended _______________, 20__
Date: [ ], 200[ ]
To: The Parties to the Note Agreement described below.
Ladies and Gentlemen:
Reference is made to that certain Amended and Restated Note Purchase
Agreement dated as of April 19, 2002 (as amended, modified, renewed or extended
from time to time, the "Agreement"), between The Chalone Wine Group, Ltd. (the
"Company") and each of the Purchasers named therein. Capitalized terms used and
not defined herein shall have the meanings assigned to such terms in the
Agreement, as applicable.
This Update Certificate is provided pursuant to the Agreement without
limiting the Company's or any Subsidiary's ongoing reporting obligations under
the Loan Documents with respect to the matters covered by this Update
Certificate.
The undersigned hereby certifies to the Purchasers, that as to the
Company and each Subsidiary (each a "Loan Party" and, collectively, the "Loan
Parties") that, during the period referred to below to the date hereof (the
"Reporting Period"), there has not been (i) any change in its corporate name, in
its registration as an organization (or new registration) or in its jurisdiction
of organization, (ii) any change in the location of its chief executive office,
its principal place of business, any office in which it maintains books or
records relating to Collateral owned by it or any office or facility at which
Collateral owned by it is located (including the establishment of any new such
office or facility), (iii) any securities account, bank account or other deposit
account opened by a Loan Party or any change in the names or locations of any
other persons in possession of Collateral, (iv) any new lease of real property
entered into by a Loan Party, (v) the creation or acquisition of any Subsidiary
by a Loan Party, (vi) any creation or acquisition by a Loan Party of any new
patent or trademark rights, or copyrights, owned or maintained by a Loan Party,
(vii) any acquisition of any right to payment or performance under a letter of
credit, or (viii) any new claims of any Loan Party against any third person for
damages (whether or not suit has been filed), except as follows:
1. Names; Jurisdiction of Organization.
(a) During the Reporting Period, a Loan Party changed its
corporate
(b) During the Reporting Period, a Loan Party changed its
jurisdiction of organization as follows:
(c) During the Reporting Period, a Loan Party changed its registration as an
organization or obtained a new registration as follows:
G-2
2. Locations.
(a) During the Reporting Period, a Loan Party changed the
location of its chief executive office as follows:
(b) During the Reporting Period, a Loan Party changed the
location of its principal place of business as follows:
(c) During the Reporting Period, a Loan Party changed the
location of any office in which it maintains books and records relating to the
Collateral owned by it or any office or facility at which Collateral owned by it
is located (including the establishment of any such new office or facility and
any new co-location of Collateral or other third party site) as follows, and the
value of the Collateral at any such new location is also identified:
3. New Names and Locations of Persons Possessing Collateral
(including New Deposit Accounts). During the Reporting Period, the names and
locations of any persons other than a Loan Party that have possession of any
Collateral of a Loan Party changed as follows (include the location of any new
bank accounts, securities custody accounts, or similar accounts opened by a Loan
Party during the Reporting Period):
4. Real Property Leases. During the Reporting Period, a Loan Party
entered into new real property leases as follows:
5. Subsidiaries. During the Reporting Period, a Loan Party created
or acquired the following direct or indirect Subsidiaries:
6. Intellectual Property. During the Reporting Period, a Loan Party
created or acquired, or otherwise become entitled to the benefit of,
intellectual property consisting of any patents, trademarks, or copyrights (or
any renewals, extensions or applications with regard to the foregoing), as
follows:
7. Letter-of-Credit Rights. During the Reporting Period, a Loan
Party acquired right to payment or performance under a letter of credit as
follows:
8. Commercial Tort Claims. During the Reporting Period, new claims
of a Loan Party against any third person for damages (whether or not suit has
been filed) arose as follows:
Consistent with the provisions of revised Article 9 of the Uniform
Commercial Code of the relevant jurisdiction(s) (as and when adopted), the Loan
Parties hereby authorize the Collateral Agent to file (with or without a Loan
Party's signature), at any time and from time to time thereafter, all financing
statements, assignments, continuation financing statements, financing statement
amendments, termination statements and other documents and instruments, in form
reasonably satisfactory to the Collateral Agent, and take all other action, as
the Collateral Agent may deem reasonable, to perfect and continue perfected,
maintain the priority of or provide notice of any security interest of the
Collateral Agent in the Collateral and to accomplish the purposes of the
Agreement.
G-3
IN WITNESS WHEREOF, the undersigned has executed this Update
Certificate on behalf of the Loan Parties.
_____________________________________________
Name:
Title:
Note Agreement dated: April 19, 2002
Start date of Reporting Period: ______________
G-4
