BUSINESS LOAN AGREEMENT
This Agreement dated as of March 28, 1997, is between Bank of America
National Trust and Savings Association (the "Bank") and Xxxxxx Vineyards and
Management Co., a California corporation (the "Borrower").
1. LINE OF CREDIT AMOUNT AND TERMS
1.1. LINE OF CREDIT AMOUNT.
(a) During the availability period described below, the Bank
will provide a line of credit to the Borrower. The amount of the line of
credit (the "Development Loan Commitment") is Seven Million Five Hundred
Thousand Dollars ($7,500,000).
(b) This is a non-revolving line of credit with a term repayment
option. Any amount borrowed, even if repaid before the end of the
availability period, permanently reduces the remaining available line of
credit.
(c) Each advance must be for at least Ten Thousand Dollars
($10,000), or for the amount of the remaining available line of credit, if
less.
(d) The Borrower agrees not to permit the outstanding principal
balance of the line of credit to exceed the Development Loan Commitment.
1.2. AVAILABILITY PERIOD. The line of credit is available between the
date of this Agreement and December 31, 1999 (the "Expiration Date") unless a
default under Section 9 has occurred, whether or not such default has ripened
into an event of default giving the Bank the remedies set forth in Section 9.
1.3. INTEREST RATE.
(a) Unless an optional interest rate is elected as described
below, the interest rate is the Bank's Reference Rate minus 0.50 percentage
points.
(b) The Reference Rate is the rate of interest publicly
announced from time to time by the Bank in San Francisco, California, as
its Reference Rate. The Reference Rate is set by the Bank based on various
factors, including the Bank's costs and desired return, general economic
conditions and other factors, and is used as a reference point for pricing
some loans. The Bank may price loans to its customers at, above, or below
the Reference Rate. Any change in the Reference Rate shall take effect at
the opening of business on the day specified in the public announcement of
a change in the Bank's Reference Rate.
1.4. REPAYMENT TERMS.
(a) The Borrower will pay interest on the fifth day of each
month, commencing on the fifth day of the month after the month in which
the first advance is made, until payment in full of any principal
outstanding under this line of credit.
(b) The Borrower will repay the principal amount outstanding on
the Expiration Date in annual installments starting January 5, 2000. The
first five of such annual installments shall be equal to one-tenth of the
principal amount outstanding on the Expiration Date, and the sixth and last
annual installment shall be payable on January 5, 2005 and shall pay the
remaining principal balance in full.
(c) The Borrower may prepay the loan in full or in part at any
time. The prepayment will be applied to the most remote installment(s) of
principal due under this Agreement.
1.5. OPTIONAL INTEREST RATE. Instead of the interest rate based on
the Bank's Reference Rate, Heublein, Inc.("Heublein") on behalf of the Borrower,
may elect the optional interest rates listed below during interest periods
agreed to by the Bank and the Borrower. The optional interest rates shall be
subject to the terms and conditions described later in this Agreement. Any
principal amount bearing interest at an optional rate under this Agreement is
referred to as a "Portion." The following optional interest rates are
available:
(a) LIBOR Rates.
(b) Short Term Fixed Rates.
2. OPTIONAL INTEREST RATES
2.1. OPTIONAL RATES. Each optional interest rate is a rate per year.
Interest will be paid on the last day of each interest period, and, if the
interest period is longer than one month, then on the fifth day of each month
during the interest period. No Portion will be converted to a different
interest rate during the applicable interest period. Upon the occurrence of a
default under Section 9 of this Agreement whether or not such default has
ripened into an event of default, the Bank may terminate the availability of
optional interest rates for interest periods commencing after the default
occurs.
2.2. LIBOR RATE. Heublein, on behalf of the Borrower, may elect to
have all or Portions of the principal balance bear interest at the LIBOR Rate
plus 0.50 percentage points. Designation of a LIBOR Rate Portion is subject to
the following requirements:
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(a) The interest period during which the LIBOR Rate will be in
effect will be one, two, three, four, five, six, seven, eight, nine, ten,
eleven, or twelve months. The first day of the interest period must be a
day other than a Saturday or a Sunday on which the Bank is open for
business in California, New York and London and dealing in offshore dollars
(a "LIBOR Banking Day"). The last day of the interest period and the
actual number of days during the interest period will be determined by the
Bank using the practices of the London inter-bank market. At the end of
any interest period, the interest rate will revert to the rate based on the
Reference Rate, unless the Borrower has designated another optional
interest rate for the Portion.
(b) Each LIBOR Rate Portion will be for an amount not less than
Five Hundred Thousand Dollars ($500,000).
(c) The "LIBOR Rate" means the interest rate determined by the
following formula, rounded upward to the nearest 1/100 of one percent.
(All amounts in the calculation will be determined by the Bank as of the
first day of the interest period.)
LIBOR Rate = LONDON INTER-BANK OFFERED RATE
(1.00 Reserve Percentage)
Where,
(i) "London Inter-Bank Rate" means the interest rate
at which the Bank's London Branch, London, Great Britain, would offer
U.S. dollar deposits for the applicable interest period to other major
banks in the London inter-bank market at approximately 11:00 a.m.
London time two (2) London Banking Days before the commencement of the
interest period. A "London Banking Day" is a day on which the Bank's
London Branch is open for business and dealing in offshore dollars.
(ii) "Reserve Percentage" means the total of the maximum
reserve percentages for determining the reserves to be maintained by
member banks of the Federal Reserve System for Eurocurrency
Liabilities, as defined in Federal Reserve Board Regulation D,
rounded upward to the nearest 1/100 of one percent. The percentage
will be expressed as a decimal, and will include, but not be limited
to, marginal, emergency, supplemental, special, and other reserve
percentages.
(d) Requests for a LIBOR Rate Portion shall be irrevocable and
shall be made no later than 12:00 noon San Francisco time on the LIBOR
Banking Day preceding the day on which the London Inter-Bank Offered Rate
will be set, as specified above.
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(e) A LIBOR Rate may not be elected with respect to any Portion
of the principal balance which is scheduled to be repaid before the last
day of the applicable interest period.
(f) Any Portion of the principal balance already bearing
interest at the LIBOR Rate will not be converted to a different rate during
its interest period.
(g) Each prepayment of a LIBOR Rate Portion, whether voluntary,
by reason of acceleration or otherwise, will be accompanied by the amount
of accrued interest on the amount prepaid and a prepayment fee as described
below. A "prepayment" is a payment of an amount on a date earlier than the
scheduled payment date for such amount as required by this Agreement. The
prepayment fee shall be equal to the amount (if any) by which
(i) the additional interest which would have been payable
during the interest period on the amount prepaid had it not been
prepaid until the last day of the interest period, exceeds
(ii) the interest which would have been recoverable by the
Bank by placing the amount prepaid on deposit in the domestic
certificate of deposit market, the eurodollar deposit market, or other
appropriate money market selected by the Bank, for a period starting
on the date on which it was prepaid and ending on the last day of the
interest period for such portion (or the scheduled payment date for
the amount prepaid, if earlier).
(h) The Bank will have no obligation to accept an election for a
LIBOR Rate Portion if any of the following described events has occurred
and is continuing:
(i) Dollar deposits in the principal amount, and for
periods equal to the interest period, of a LIBOR Rate portion are not
available in the London inter bank market; or
(ii) the LIBOR Rate does not accurately reflect the
cost of a LIBOR Rate portion.
2.3. SHORT TERM FIXED RATE. Heublein, on behalf of the Borrower, may
elect to have all or Portions of the principal balance bear interest at the
Short Term Fixed Rate, subject to the following requirements:
(a) The "Short Term Fixed Rate" means the Short Term Base Rate
plus 0.50 percentage points.
(b) The "Short Term Base Rate" means the fixed
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interest rate per annum, determined solely by the Bank on the first day of
the applicable interest period for the Short Term Fixed Rate Portion, as
the rate at which the Bank would be able to borrow funds in the Money
Market in the amount of the Short Term Fixed Rate Portion and with an
interest and principal payment schedule equal to the Short Term Fixed Rate
Portion and for a term equal to the applicable interest period. The Short
Term Base Rate shall include adjustments for reserve requirements, federal
deposit insurance, and any other similar adjustment which the Bank deems
appropriate. The Short Term Base Rate is the Bank's estimate only and the
Bank is under no obligation to actually purchase or match funds for any
transaction.
(c) "Money Market" means one or more wholesale
funding markets available to the Bank, including domestic negotiable
certificates of deposit, eurodollar deposits, bank deposit notes or other
appropriate money market instruments selected by the Bank.
(d) The interest period during which the Short
Term Fixed Rate will be in effect will be no shorter than 30 days and no
longer than one year.
(e) Each Short Term Fixed Rate Portion will be
for an amount not less than Five Hundred Thousand Dollars ($500,000).
(f) Any Portion of the principal balance already bearing
interest at the Short Term Fixed Rate will not be converted to a different rate
during its interest period.
(g) Each prepayment of a Short Term Fixed Rate portion, whether
voluntary, by reason of acceleration or otherwise, will be accompanied by the
amount of accrued interest on the amount prepaid, and a prepayment fee as
described below. A "prepayment" is a payment of an amount on a date earlier
than the scheduled payment date for such amount as required by this Agreement.
The prepayment fee shall be equal to the amount (if any) by which
(i) the additional interest which would have been payable
during the interest period on the amount prepaid had it not been
prepaid until the last day of the interest period, exceeds
(ii) the interest which would have been recoverable by the
Bank by placing the amount prepaid on deposit in the Money Market
for a period starting on the date on which it was prepaid and ending
on the last day of the interest period for such Portion (or the
scheduled payment date for the amount prepaid, if earlier).
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3. FEES AND EXPENSES
3.1. LOAN FEE. The Borrower agrees to pay a Thirty Seven Thousand
Five Hundred Dollar ($37,500) fee due on the date of this Agreement.
3.2. EXPENSES. The Borrower agrees to immediately repay the Bank for
expenses that include, but are not limited to, filing, recording and search
fees, appraisal fees, and documentation fees.
3.3. REIMBURSEMENT COSTS. The Borrower agrees to reimburse the Bank
for any expenses it incurs in the preparation of this Agreement and any
agreement or instrument required by this Agreement. Expenses include, but are
not limited to, reasonable attorneys' fees, including any allocated costs of the
Bank's in-house counsel.
4. DISBURSEMENTS, PAYMENTS AND COSTS
4.1. REQUESTS FOR CREDIT. Each request for an extension of credit
will be made by delivering a written Request for Credit in substantially the
form attached to this Agreement as Exhibit A (a "Request for Credit"), executed
by the Borrower and approved in writing by Heublein. The Request for Credit may
be delivered to the Bank by telefax, provided that the copy of the Request for
Credit which contains an original signature of Heublein is delivered to the Bank
within 10 days of such telefax.
4.2. DISBURSEMENTS AND PAYMENTS. Each disbursement by the Bank and
each payment by the Borrower will be:
(a) made at the Bank's branch (or other location) selected by
the Bank from time to time;
(b) made for the account of the Bank's branch selected by the
Bank from time to time;
(c) made in immediately available funds, or such other type of
funds selected by the Bank; and
(d) evidenced by records kept by the Bank. In addition, the
Bank may, at its discretion, require the Borrower to sign one or more
promissory notes.
4.3. AUTHORIZATIONS.
(a) The Bank may honor telephone or telefax instructions for
repayments given by any one of the individuals authorized to sign loan
agreements on behalf of the Borrower, or any other individual designated by
any one of such authorized signers. The Borrower will provide written
confirmation to the Bank of any telephone or telefax instructions relating
to repayment within 10 days.
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(b) The Borrower irrevocably authorizes the Bank to honor
telephone or telefax instructions for the designation of optional interest
rates given by any one of the individuals authorized to sign agreements
relating to this transaction on behalf of Heublein, or any other individual
designated by any one of such authorized signers. The Borrower agrees that
it shall be bound by such instructions provided by Heublein whether or not
the Borrower receives notice of such instructions or of any confirmation
provided by the Bank pursuant to Section 4.3(c).
(c) The Bank may, but shall not be required to, provide
confirmation of the telephone or telefax instructions for the designations
of optional interest rates received from the Borrower or Heublein. If
there is a discrepancy between the telephone or telefax instructions and
the written confirmation, the written confirmation will prevail.
(d) The Borrower indemnifies and excuses the Bank (including its
officers, employees, and agents) from all liability, loss, and costs in
connection with any act resulting from telephone or telefax instructions it
reasonably believes are made by any individual authorized by the Borrower
to give such instructions, or, in the case of instructions authorized to be
given by Heublein, by an individual authorized by Heublein to give such
instructions. This indemnity and excuse will survive this Agreement's
termination.
(e) Advances will be deposited in and repayments will be
withdrawn from the Borrower's account number 14989-00792.
4.4. DIRECT DEBIT (PRE-BILLING).
(a) The Borrower agrees that the Bank will debit the Borrower's
deposit account number 14989-00792 (the "Designated Account") on the date
each payment of principal and interest from the Borrower becomes due (the
"Due Date"). If the Due Date is not a banking day, the Designated Account
will be debited on the next banking day.
(b) Approximately 10 days prior to each Due Date, the Bank will
mail to the Borrower (with a copy to Heublein) a statement of the amounts
that will be due on that Due Date (the "Billed Amount"). The calculation
will be made on the assumption that no new extensions of credit or payments
will be made between the date of the billing statement and the Due Date,
and that there will be no changes in the applicable interest rate.
(c) The Bank will debit the Designated Account for the Billed
Amount, regardless of the actual amount due
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on that date (the "Accrued Amount"). If the Billed Amount debited to such
Designated Account differs from the Accrued Amount, the discrepancy will be
treated as follows:
(i) If the Billed Amount is less than the Accrued Amount,
the Billed Amount for the following Due Date will be increased by the
amount of the discrepancy. The Borrower will not be in default by
reason of any such discrepancy.
(ii) If the Billed Amount is more than the Accrued Amount,
the Billed Amount for the following Due Date will be decreased by the
amount of the discrepancy.
Regardless of any such discrepancy, interest will continue to accrue based
on the actual amount of principal outstanding without compounding. The
Bank will not pay the Borrower interest on any overpayment.
(d) The Borrower will maintain sufficient funds in the
Designated Account to cover each debit. If there are insufficient funds in
the Designated Account on the date the Bank enters any debit authorized by
this Agreement, the debit will be reversed.
4.5. BANKING DAYS. Unless otherwise provided in this Agreement, a
banking day is a day other than a Saturday or a Sunday on which the Bank is open
for business in California. All payments and disbursements which would be due
on a day which is not a banking day will be due on the next banking day. All
payments received on a day which is not a banking day will be applied to the
credit on the next banking day.
4.6. TAXES.
(a) If any payments to the Bank under this Agreement are made
from outside the United States, the Borrower will not deduct any foreign
taxes from any payments it makes to the Bank. If any such taxes are
imposed on any payments made by the Borrower (including payments under this
paragraph), the Borrower will pay the taxes and will also pay to the Bank,
at the time interest is paid, any additional amount which the Bank
specifies as necessary to preserve the after-tax yield the Bank would have
received if such taxes had not been imposed. The Borrower will confirm
that it has paid the taxes by giving the Bank official tax receipts (or
notarized copies) within 30 days after the due date.
(b) Payments made by the Borrower to the Bank will be made
without deduction of United States withholding or similar taxes. If the
Borrower is required to pay U.S. withholding taxes, the Borrower will pay
such taxes in addition to the amounts due to the Bank under this
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Agreement. If the Borrower fails to make such tax payments when due, the
Borrower indemnifies the Bank against any liability for such taxes, as well
as for any related interest, expenses, additions to tax, or penalties
asserted against or suffered by the Bank with respect to such taxes.
4.7. ADDITIONAL COSTS.
(a) The Borrower will pay the Bank, on demand, for the Bank's
costs or losses arising from any statute or regulation, or any request or
requirement of a regulatory agency which is applicable to all national
banks or a class of all national banks. The costs and losses will be
allocated to the loan in a manner determined by the Bank, using any
reasonable method. The costs include the following:
(i) any reserve or deposit requirements; and
(ii) any capital requirements relating to the Bank's assets
and commitments for credit.
(b) The Borrower's obligations under Section 4.7(a) are limited
to the Bank's costs or losses arising on or after the date which is 60 days
after the date on which the Bank sends written notice to the Borrower
confirming the Borrower's obligations under Section 4.7(a) and describing
in reasonable detail such costs or losses.
4.8. INTEREST CALCULATION. Except as otherwise stated in this
Agreement, all interest and fees, if any, will be computed on the basis of a
360-day year and the actual number of days elapsed. This results in more
interest or a higher fee than if a 365-day year is used.
4.9. DEFAULT RATE. Upon the occurrence and during the continuation of
any default under this Agreement, principal amounts outstanding under this
Agreement will at the option of the Bank bear interest at a rate which is two
percentage point(s) higher than the rate of interest otherwise provided under
this Agreement. This will not constitute a waiver of any default. Installments
of principal which are not paid when due under this Agreement shall continue to
bear interest until paid. Any interest, fees or costs which are not paid when
due will, at the option of the Bank, bear interest at the Bank's Reference Rate
plus two percentage points. This may result in compounding of interest.
5. CONDITIONS
The Bank must receive the following items, in form and content
acceptable to the Bank, before it is required to extend any credit to the
Borrower under this Agreement:
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5.1. AUTHORIZATIONS. Evidence that the execution, delivery and
performance by the Borrower of this Agreement and any instrument or agreement
required under this Agreement have been duly authorized and evidence that the
execution, delivery and performance by Heublein of any instrument or agreement
required under this Agreement on the part of Heublein have been duly authorized.
5.2. GOVERNING DOCUMENTS. Copies of the articles of incorporation,
bylaws and any necessary authorizing resolutions of both the Borrower and
Heublein.
5.3. STANDBY LETTER OF CREDIT. A Standby Letter of Credit (together
with any substituted letter of credit delivered after the date of this
agreement, the "Letter of Credit") acceptable to the Bank issued by a financial
institution acceptable to the Bank in favor of the Bank for the account of
Heublein in a minimum amount of $7,500,000 plus interest in the amount of not
less than $112,500 with an expiration date of not earlier than July 31, 1997.
5.4. PLANS AND BUDGETS. The Borrower's written plan and budget for
the 1997 Farming Year ("Farming Year" being defined as in the Vineyard
Development and Management Agreement, effective as of December 1, 1995, between
the Borrower and Heublein, as amended by Amendment No.1 thereto (the
"Development Agreement")), delivered to Heublein pursuant to Section 4.6 of the
Development Agreement, and any plans and budgets for Farming Years following
1997 relating to the Development Agreement prepared by the Borrower, all of
which shall be acceptable to the Bank (the "Plan and Budget").
5.5. REPORT. The Borrower's written report for the 1996 Farming Year
delivered to Heublein pursuant to Section 4.10 of the Development Agreement
(each such annual report, a "Report"), which Report shall be acceptable to the
Bank.
5.6. OTHER AGREEMENTS. A copy of the Development Agreement, which
shall be satisfactory to the Bank and which shall be binding obligations of each
party thereto.
5.7. ACKNOWLEDGEMENT AGREEMENT. An Acknowledgement Agreement
acceptable to the Bank and executed by Heublein (the "Heublein Acknowledgement
Agreement").
5.8. PAYMENT OF FEES. Payment of all accrued and unpaid expenses
incurred by the Bank as required by the paragraph entitled "Reimbursement
Costs."
5.9. TERMINATION OF SANWA CREDIT AGREEMENT. Evidence satisfactory to
the Bank that, upon payment to Sanwa Bank California ("Sanwa") of a principal of
$2,800,211 and interest accrued thereon under the Credit Agreement (Crops),
dated March 26, 1996, between Sanwa and Borrower (the "Sanwa Credit Agreement"),
the Sanwa Credit Agreement shall be terminated.
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5.10. FINANCIAL STATEMENTS OF HEUBLEIN. Financial statements of
Heublein as of the end of the most recent fiscal year for which financial
statements are available, which financial statements shall be acceptable to the
Bank.
5.11. CONDITIONS TO EACH ADVANCE. Before each extension of credit,
including the first, the Bank shall be satisfied that each representation of
Heublein set forth in the Heublein Acknowledgement Agreement shall be true and
correct on and as of the date of such extension of credit as if made on and as
of such date and Heublein shall not be in default of any of its obligations
under the Heublein Acknowledgement Agreement.
5.12. OTHER ITEMS. Any other items that the Bank reasonably requires.
6. REPRESENTATIONS AND WARRANTIES
When the Borrower signs this Agreement, and until the Bank is repaid
in full, the Borrower makes the following representations and warranties. Each
request for an extension of credit constitutes a renewed representation:
6.1. ORGANIZATION OF BORROWER. The Borrower is a corporation duly
formed and existing under the laws of the State of California.
6.2. AUTHORIZATION. This Agreement, and any instrument or agreement
required hereunder, are within the Borrower's powers, have been duly authorized,
and do not conflict with the Borrower's articles of incorporation, bylaws, or
any other governing documents of the Borrower.
6.3. ENFORCEABLE AGREEMENT. This Agreement is a legal, valid and
binding agreement of the Borrower, enforceable against the Borrower in
accordance with its terms, and any instrument or agreement required hereunder,
when executed and delivered, will be similarly legal, valid, binding and
enforceable.
6.4. GOOD STANDING. In each state in which the Borrower does
business, it is properly licensed, in good standing, and, where required, in
compliance with fictitious name statutes.
6.5. NO CONFLICTS. This Agreement does not conflict with any law,
agreement, or obligation by which the Borrower is bound.
6.6. FINANCIAL INFORMATION. All financial statements that have been
or will be supplied to the Bank, including the Borrower's financial statement
dated as of December 31, 1996, are complete, have been prepared in accordance
with generally accepted accounting principles and fairly present the financial
condition and results of operations of the Borrower as of such
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date and for the period then ended. Since December 31, 1996, there has been no
material adverse change in the business, condition (financial or otherwise),
operations, properties or prospects of the Borrower.
6.7. LAWSUITS. There is no lawsuit, tax claim or other dispute
pending or threatened against the Borrower which, if lost, would impair the
Borrower's financial condition or ability to repay the loan, except as have been
disclosed in writing to the Bank.
6.8. PERMITS, FRANCHISES. The Borrower possesses all permits,
memberships, franchises, contracts and licenses required and all trademark
rights, trade name rights, patent rights and fictitious name rights necessary to
enable it to conduct the business in which it is now engaged.
6.9. OTHER OBLIGATIONS. The Borrower is not in default on any
obligation for borrowed money, any purchase money obligation or any other
material lease, commitment, contract, instrument or obligation.
6.10. INCOME TAX RETURNS. The Borrower has no knowledge of any
pending assessments or adjustments of its income tax for any year.
6.11. NO EVENT OF DEFAULT. There is no event which is, or with notice
or lapse of time or both would be, a default under this Agreement.
7. COVENANTS
The Borrower agrees, so long as credit is available under this
Agreement and until the Bank is repaid in full:
7.1. USE OF PROCEEDS. To use the proceeds of the Development Loan
Commitment only to pay the obligations of the Borrower under the Sanwa Credit
Agreement as specified in Section 5.9 and for the operations and activities
conducted pursuant to the Development Agreement.
7.2. FINANCIAL INFORMATION. To provide the following financial
information and statements in form and content acceptable to the Bank, and such
additional information as requested by the Bank from time to time:
(a) Within 120 days of the Borrower's fiscal year end, the
Borrower's annual financial statements. These financial statements shall
be audited by a firm of independent accountants reasonably satisfactory to
the Bank and shall be prepared consistently with the financial statements
delivered to the Bank pursuant to Section 6.6.
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(b) On or before March 1 of each year, a Report, satisfactory to
the Bank, for the immediately preceding Farming Year.
(c) On or before March 1 of each year, a Plan and Budget for the
current Farming Year approved by Heublein.
7.3. OTHER LIENS. Not to create, assume, or allow any security
interest or lien (including judicial liens) on all or any portion of the
Development Agreement.
7.4. NOTICES TO BANK. To promptly notify the Bank in writing of:
(a) any lawsuit over $250,000 against the Borrower.
(b) any substantial dispute between the Borrower and any
government authority or between the Borrower and Heublein.
(c) any failure to comply with this Agreement.
(d) any material adverse change in the Borrower's business
condition (financial or otherwise), operations, properties or prospects, or
ability to repay the credit.
(e) any change in the Borrower's name, legal structure, place of
business, or chief executive office if the Borrower has more than one place
of business; or
(f) any material change in any Plan and Budget.
7.5. BOOKS AND RECORDS. To maintain adequate books and records.
7.6. AUDITS. To allow the Bank and its agents to inspect the
Borrower's properties and examine, audit and make copies of books and records at
any reasonable time. If any of the Borrower's properties, books or records are
in the possession of a third party, the Borrower authorizes that third party to
permit the Bank or its agents to have access to perform inspections or audits
and to respond to the Bank's requests for information concerning such
properties, books and records.
7.7. COMPLIANCE WITH LAWS. To comply with the laws (including any
fictitious name statute), regulations, and orders of any government body with
authority over the Borrower's business.
7.8. PRESERVATION OF RIGHTS. To maintain and preserve all rights,
privileges, and franchises the Borrower now has.
7.9. MAINTENANCE OF PROPERTIES. To make repairs, renewals or
replacements to the Managed Properties and the
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Development Properties in accordance with the Development Agreement and the
Plans and Budget.
7.10. COOPERATION. To take any action reasonably requested by the
Bank to carry out the intent of this Agreement.
7.11. INSURANCE. To maintain insurance as is usual for the business
it is in and upon the request of the Bank, to deliver to the Bank a copy of each
insurance policy, or, if permitted by the Bank, a certificate of insurance
listing all insurance in force.
7.12. ADDITIONAL NEGATIVE COVENANTS. Not to, without the Bank's
written consent:
(a) liquidate or dissolve the Borrower's business.
(b) sell, assign, lease, transfer or otherwise dispose of all or
a substantial part of the Borrower's business or the Borrower's assets.
(c) sell, assign, lease, transfer or otherwise dispose of any
material asset or group of assets for less than fair market value, or enter
into any agreement to do so.
(d) sell, assign, lease, transfer or otherwise dispose of any
portion of the Borrower's interest in the Development Agreement.
(e) voluntarily suspend its business for more than ten days in
any year.
(f) change the character of the Borrower's business.
(g) convert to a limited liability company.
(h) amend, modify or waive any provision of Section 3.1, 3.2 or
3.3 of the Development Agreement.
8. HAZARDOUS WASTE INDEMNIFICATION
The Borrower will indemnify and hold harmless the Bank from any loss
or liability directly or indirectly arising out of the use, generation,
manufacture, production, storage, release, threatened release, discharge,
disposal or presence of a hazardous substance. This indemnity will apply
whether the hazardous substance is on, under or about the Borrower's property or
operations or property leased to or operated by the Borrower. The indemnity
includes but is not limited to attorneys' fees (including the reasonable
estimate of the allocated cost of in-house counsel and staff). The indemnity
extends to the Bank, its parent, subsidiaries and all of their directors,
officers, employees, agents, successors, attorneys and assigns.
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"Hazardous substance" means any substance, material or waste that is or becomes
designated or regulated as "toxic," "hazardous," "pollutant," or "contaminant"
or a similar designation or regulation under any federal, state or local law
(whether under common law, statute, regulation or otherwise) or judicial or
administrative interpretation of such, including, without limitation, petroleum
or natural gas. This indemnity will survive repayment of the Borrower's
obligations to the Bank.
9. DEFAULT
If any of the following events occurs, the Bank may do one or more of
the following: declare the Borrower in default, stop making any additional
credit available to the Borrower, cause the entire debt of the Borrower
hereunder to become due immediately and without prior notice, or, subject to the
third sentence of this paragraph of Section 9, draw on the Letter of Credit. If
an event of default occurs under Section 9.3 with respect to the Borrower or
Heublein, then the entire debt outstanding under this Agreement will
automatically be due immediately and the Bank may draw on the Letter of Credit.
Prior to asserting any rights or remedies against the Borrower as a result of an
event of default under this Section 9, the Bank shall first draw on the Letter
of Credit by presenting to the Letter of Credit Bank the documents required to
draw on the Letter of Credit; provided however, that (i) the Bank shall not be
required to draw on the Letter of Credit prior to asserting any such rights or
remedies against the Borrower if at the time the Bank asserts any such rights or
remedies against the Borrower, the Bank is not legally permitted to draw upon
the Letter of Credit or, as the result of any applicable statutory, regulatory
or judicial restriction, the Letter of Credit is not then available for drawing
or for payment; and (ii) the Bank shall be entitled to assert any or all of its
rights and remedies under Sections 4.6, 4.7, 4.9, 8, 10.7, 10.9 and the first
two sentences of this paragraph of Section 9 (other than drawing under the
Letter of Credit) prior to any such draw under the Letter of Credit. Except
upon payment in full of the indebtedness of the Borrower owed to the Bank
hereunder, the Bank covenants and agrees that by its affirmative act it will not
release or otherwise return to Heublein, or make any changes to (other than
extensions of its expiry date), the Letter of Credit without the prior written
consent of the Borrower. Breach by the Bank of its obligations under this
paragraph of Section 9 shall not affect Borrower's obligations under this
Agreement, provided that the Bank shall be liable to the Borrower for direct
damages incurred by the Borrower as a result of such breach.
9.1. FAILURE TO PAY. The Borrower fails to make a payment under this
Agreement when due and such failure shall continue for seven days after such due
date.
9.2. FALSE INFORMATION. The Borrower (or Heublein) has given the Bank
false or misleading information or representations.
9.3. BANKRUPTCY. The Borrower, Heublein or the financial institution
issuing the Letter of Credit (the "Letter of Credit Bank")
15
files a bankruptcy petition, a bankruptcy petition is filed against the
Borrower, Heublein or the Letter of Credit Bank or the Borrower, Heublein or the
Letter of Credit Bank makes a general assignment for the benefit of creditors.
The default will be deemed cured if any bankruptcy petition filed against the
Borrower or Heublein is dismissed within a period of 45 days after the filing;
provided, however, that the Bank will not be obligated to extend any additional
credit to the Borrower during that period.
9.4. RECEIVERS. A receiver or similar official is appointed for the
business of the Borrower, Heublein or the Letter of Credit Bank or the business
of any of them is terminated.
9.5. GOVERNMENT ACTION. Any government authority takes action that
the Bank reasonably believes, in its good faith business judgment, materially
adversely affects the Borrower's financial condition or ability to repay.
9.6. DEFAULT UNDER RELATED DOCUMENTS. Any provisions of any guaranty,
security agreement, indemnity agreement, acknowledgement or other document
required by this Agreement, including without limitation, the Heublein
Acknowledgement Agreement, is violated (and any notice or cure period provided
in such document has expired) or no longer in effect, or an event described in
Section 10.3 of the Development Agreement has occurred and is continuing and any
cure period provided therein has expired.
9.7. CHANGE OF OWNERSHIP. A direct or indirect change in the
Borrower's capital ownership in excess of 10% shall occur.
9.8. OTHER BANK AGREEMENTS. The Borrower fails to meet the conditions
of, or fails to perform any obligation under, any other agreement the Borrower
has with the Bank or any affiliate of the Bank and such failure continues for 15
days after the date on which the Bank gives written notice of the breach to the
Borrower; provided that in the event such breach is not curable during such
15-day period, such 15-day period shall be extended (but not beyond a total of
45 days) so long as the Borrower has commenced and is diligently pursuing such
cure; and provided further, however, that the Bank will not be obligated to
extend any additional credit to the Borrower during any cure period provided
hereunder.
9.9. OTHER BREACH UNDER AGREEMENT. The Borrower (i) breaches or fails
to perform any obligation under Section 7.3 or 7.12 of this Agreement or
(ii) fails to meet the conditions or breaches, or fails to perform any
obligations under, any term of this Agreement not specifically referred to in
this Article and such failure or breach continues for 15 days after the date on
which the Bank gives written notice of the breach to the Borrower; provided that
in the event such breach is not curable during such 15-day period, such 15-day
period shall be extended (but not beyond a total of 45 days) so long as the
Borrower has commenced and is diligently pursuing such cure; and provided
further, however, that the Bank will not be obligated to extend
16
any additional credit to the Borrower during any cure period provided hereunder.
9.10. LETTER OF CREDIT. The rating of the long-term debt of the
Letter of Credit Bank is reduced below A- or A3 by Standard & Poor's Rating
Services, a division of the XxXxxx-Xxxx Companies, Inc. ("S&P") or Xxxxx'x
Investors Service, Inc. ("Moody's"), respectively, and within 30 days after the
date on which the Bank gives written notice of such reduction to the Borrower,
the Bank has not received a letter of credit (i) with an expiration date not
earlier than the expiration date set forth in the then existing Letter of
Credit, (ii) from a financial institution whose long-term debt rating is not
less than A3 by Moody's and A- by S&P, and (iii) otherwise meeting the
requirements of Section 5.3; or the Bank has received notice from the Letter of
Credit Bank with respect to the Letter of Credit then in effect that the Letter
of Credit Bank will not extend the Letter of Credit and within 60 days of the
expiration date of such Letter of Credit, the Bank has not received a letter of
credit with an expiration date not earlier than one year after the expiration
date set forth in the then existing Letter of Credit and which meets the
requirements set forth in clauses (ii) and (iii) of this Section.
10. ENFORCING THIS AGREEMENT; MISCELLANEOUS
10.1. BORROWER ACKNOWLEDGEMENTS. Borrower acknowledges and agrees as
follows:
(a) Borrower shall send copies of all notices certificates and
other documents delivered to the Bank under or pursuant to this Agreement
or any document or agreement contemplated hereby to Heublein at the same
time that Borrower delivers such notices certificates or documents to the
Bank.
(b) Borrower authorizes the Bank to release to Heublein any
financial or other information or documents provided to the Bank by or on
behalf of the Borrower and authorizes the Bank to provide to Heublein
copies of all notices and other communications delivered by the Bank to the
Borrower hereunder.
(c) Borrower has decided to enter into this Agreement and the
other agreements contemplated hereby based solely on its own evaluation of
the merits and risks of such transactions and on such information and
documents as the Borrower deems appropriate and without reliance on any
information provided by the Bank or on the Bank's decision to enter into
this Agreement. The Borrower is fully aware of the merits and risks of
such transactions, and the Bank's decision to enter into this Agreement
does not constitute any evaluation of the merits or risks of the
transactions to the Borrower.
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(d) The Bank has made no commitment to extend any additional
credit to the Borrower or to continue the credit provided hereunder after
this Agreement expires or is terminated as provided herein.
(e) The Bank shall have no duty to review or investigate the
purpose of any advances made hereunder or the compliance by the Borrower or
Heublein with the Development Agreement or any term thereof prior to making
any advance hereunder.
10.2. CALIFORNIA LAW. This Agreement is governed by California law.
10.3. SUCCESSORS AND ASSIGNS. This Agreement is binding on the
Borrower's and the Bank's successors and assignees. The Borrower agrees that it
may not assign this Agreement without the Bank's prior consent. The Bank may
sell participations in or assign this loan, and may exchange financial
information about the Borrower with actual or potential participants or
assignees. If a participation is sold or the loan is assigned, the purchaser
will have the right of set-off against the Borrower.
10.4. ARBITRATION.
(a) This paragraph concerns the resolution of any controversies
or claims between the Borrower and the Bank, including but not limited to
those that arise from:
(i) This Agreement (including any renewals, extensions or
modifications of this Agreement);
(ii) Any document, agreement or procedure related to or
delivered in connection with this Agreement;
(iii) Any violation of this Agreement; or
(iv) Any claims for damages resulting from any business
conducted between the Borrower and the Bank, including claims for
injury to persons, property or business interests (torts).
(b) At the request of the Borrower or the Bank, any such
controversies or claims will be settled by arbitration in accordance with
the United States Arbitration Act. The United States Arbitration Act will
apply even though this Agreement provides that it is governed by California
law.
(c) Arbitration proceedings will be administered by the American
Arbitration Association and will be subject to its commercial rules of
arbitration.
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(d) For purposes of the application of the statute of
limitations, the filing of an arbitration pursuant to this paragraph is the
equivalent of the filing of a lawsuit, and any claim or controversy which
may be arbitrated under this paragraph is subject to any applicable statute
of limitations. The arbitrators will have the authority to decide whether
any such claim or controversy is barred by the statute of limitations and,
if so, to dismiss the arbitration on that basis.
(e) If there is a dispute as to whether an issue is arbitrable,
the arbitrators will have the authority to resolve any such dispute.
(f) The decision that results from an arbitration proceeding may
be submitted to any authorized court of law to be confirmed and enforced.
(g) The procedure described above will not apply if the
controversy or claim, at the time of the proposed submission to
arbitration, arises from or relates to an obligation to the Bank secured by
real property located in California. In this case, both the Borrower and
the Bank must consent to submission of the claim or controversy to
arbitration. If both parties do not consent to arbitration, the
controversy or claim will be settled as follows:
(i) The Borrower and the Bank will designate a referee (or
a panel of referees) selected under the auspices of the American
Arbitration Association in the same manner as arbitrators are selected
in Association-sponsored proceedings;
(ii) The designated referee (or the panel of referees) will
be appointed by a court as provided in California Code of Civil
Procedure Section 638 and the following related sections;
(iii) The referee (or the presiding referee of the panel)
will be an active attorney or a retired judge; and
(iv) The award that results from the decision of the referee
(or the panel) will be entered as a judgment in the court that
appointed the referee, in accordance with the provisions of California
Code of Civil Procedure Sections 644 and 645.
(h) This provision does not limit the right of the Borrower or
the Bank to:
(i) exercise self-help remedies such as setoff;
19
(ii) foreclose against or sell any real or personal property
collateral; or
(iii) act in a court of law, before, during or after the
arbitration proceeding to obtain:
(A) an interim remedy; and/or
(B) additional or supplementary remedies.
(i) The pursuit of or a successful action for interim,
additional or supplementary remedies, or the filing of a court action, does
not constitute a waiver of the right of the Borrower or the Bank, including
the suing party, to submit the controversy or claim to arbitration if the
other party contests the lawsuit. However, if the controversy or claim
arises from or relates to an obligation to the Bank which is secured by
real property located in California at the time of the proposed submission
to arbitration, this right is limited according to the provision above
requiring the consent of both the Borrower and the Bank to seek resolution
through arbitration.
(j) If the Bank forecloses against any real property securing
this Agreement, the Bank has the option to exercise the power of sale under
the deed of trust or mortgage, or to proceed by judicial foreclosure.
10.5. SEVERABILITY; WAIVERS. If any part of this Agreement is not
enforceable, the rest of the Agreement may be enforced. The Bank retains all
rights, even if it makes a loan after default. If the Bank waives a default, it
may enforce a later default. Any consent or waiver under this Agreement must be
in writing.
10.6. ADMINISTRATION COSTS. The Borrower shall pay the Bank for all
reasonable costs incurred by the Bank in connection with administering this
Agreement.
10.7. ATTORNEYS' FEES. The Borrower shall reimburse the Bank for any
reasonable costs and attorneys' fees incurred by the Bank in connection with the
enforcement or preservation of any rights or remedies under this Agreement, the
Letter of Credit and any other documents executed in connection with this
Agreement, and including any amendment, waiver, "workout" or restructuring under
this Agreement. In the event of a lawsuit or arbitration proceeding, the
prevailing party is entitled to recover costs and reasonable attorneys' fees
incurred in connection with the lawsuit or arbitration proceeding, as determined
by the court or arbitrator. In the event that any case is commenced by or
against the Borrower under the Bankruptcy Code (Title 11, United States Code) or
any similar or successor statute, the Bank is entitled to recover costs and
reasonable attorneys' fees incurred by the Bank related to the preservation,
20
protection, or enforcement of any rights of the Bank in such a case. As used in
this paragraph, "attorneys' fees" includes the allocated costs of the Bank's
in-house counsel.
10.8. ONE AGREEMENT. This Agreement, dated the date hereof:
(a) represents the sum of the understandings and agreements
between the Bank and the Borrower concerning this credit;
(b) replaces any prior oral or written agreements between the
Bank and the Borrower concerning this credit; and
(c) is intended by the Bank and the Borrower as the final,
complete and exclusive statement of the terms agreed to by them, and shall
not be affected by any other agreement, including without limitation any
agreement between the Borrower and Heublein.
10.9. INDEMNIFICATION. The Borrower will indemnify and hold the Bank
harmless from any loss, liability, damages, judgments, and costs of any kind
relating to or arising directly or indirectly out of (a) this Agreement, any
document required hereunder or the transactions contemplated hereby or thereby,
(b) any credit extended or committed by the Bank to the Borrower hereunder, and
(c) any litigation or proceeding related to or arising out of this Agreement,
any such document, or any such credit. This indemnity includes but is not
limited to reasonable attorneys' fees (including the allocated cost of in-house
counsel). This indemnity extends to the Bank, its parent, subsidiaries and all
of their directors, officers, employees, agents, successors, attorneys, and
assigns. This indemnity will survive repayment of the Borrower's obligations to
the Bank. All sums due to the Bank hereunder shall be obligations of the
Borrower, due and payable immediately without demand.
10.10. NOTICES. All notices required under this Agreement shall be
personally delivered or sent by first class mail, postage prepaid, to the
addresses on Schedule 1 to this Agreement, or to such other addresses as the
Bank and the Borrower may specify from time to time in writing.
10.11. HEADINGS. Article and paragraph headings are for reference
only and shall not affect the interpretation or meaning of any provisions of
this Agreement.
10.12. COUNTERPARTS. This Agreement may be executed in as many
counterparts as necessary or convenient, and by the different parties on
separate counterparts each of which, when so executed, shall be deemed an
original but all such counterparts shall constitute but one and the same
agreement.
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10.13. COMMITMENT EXPIRATION. The Bank's commitment to extend credit
under this Agreement will expire on March 31, 1997, unless this Agreement and
any documents required by this Agreement have been signed and returned to the
Bank on or before that date.
22
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date stated at the top of the first page.
Bank of America National Xxxxxx Vineyards and
Trust and Savings Association Management Co.
By /s/ Xxxxxx X. Xxxxxxxx By /s/ Xxxxxx X. Xxxxxx
--------------------------- ---------------------------
Xxxxxx X. Xxxxxxxx
Vice President Title Chair & CEO
------------------------
Schedule 1
Addresses for Notices
If to the Bank:
Xxxxxx X. Xxxxxxxx
Bank of America NT & SA
00 Xxxxx Xxxx Xxxxxx
Xxxxx Xxxx, XX 00000
Telephone: 000-000-0000
Fax: 000-000-0000
If to the Borrower:
Xxxxxx Vineyards and Management Co.
00000 Xxxxxxxxxx Xxxx. Xxxxx 000
Xxxxxx xxx Xxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
If to Heublein:
Heublein, Inc.
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
Telephone: 000-000-0000
Fax: 000-000-0000
With a copy to:
Heublein, Inc.
000 Xxxxxxxx Xxxx.
P.O. Box 778
Hartford, Conn. 06142-0778
Attn: General Counsel
Telephone: 000-000-0000
Fax: 000-000-0000
Exhibit A
REQUEST FOR CREDIT
Date: __________, _____
Bank of America
National Trust and Savings Association
Santa Xxxx Commercial Banking Office
1. Reference is made to the Business Loan Agreement, dated as of March
28, 1997 (the "Credit Agreement"), between Xxxxxx Vineyards and Management Co.
("Borrower") and Bank of America National Trust and Savings Association (the
"Bank"). Unless otherwise indicated, all terms defined in the Credit Agreement
have the same respective meanings when used herein.
2. Pursuant to Section 4.1 of the Credit Agreement, Borrower hereby
irrevocably requests an advance in the amount of $_____________________, such
advance to be made on ________________, ____ and to be deposited into account
no. 14989-00792. The Borrower directs the Bank to transfer such amount by wire
transfer to Sanwa Bank California, Fresno Agribusiness Office No. 2480, ABA No.
000000000, for credit to the account of Xxxxxx Vineyards and Management Co.,
account no. 080612311.
3. The Borrower hereby certifies to the Bank that, on the date of this
Request for Credit and after giving effect to the advance: (a) the
representations and warranties of the Borrower set forth in Article 6 of the
Credit Agreement are true and correct in all material respects as if made on
such date; and (b) no default or event of default has occurred and is
continuing.
IN WITNESS WHEREOF, Borrower has executed this Request for Credit on
the date set forth above.
XXXXXX VINEYARDS AND MANAGEMENT CO.
By: __________________________________
HEUBLEIN ACKNOWLEDGEMENT TO REQUEST FOR CREDIT
Heublein, Inc. ("Heublein") hereby acknowledges receipt of and
approves the foregoing Request for Credit and certifies to the Bank that, on the
date of this Request for Credit and after giving effect to the advance: (a) the
representations and warranties of Heublein set forth in Article 2 of the
Acknowledgement Agreement dated as of March 28, 1997 (the "Heublein
Acknowledgement Agreement") between Heublein and the Bank are true and correct
in all material respects as if made on such date; and (b) Heublein is not in
default of any of its obligations under the Heublein Acknowledgement Agreement.
IN WITNESS WHEREOF, Heublein has executed this Heublein
Acknowledgement to Request for Credit on the date set forth above.
HEUBLEIN INC.
By: ___________________________________
