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CREDIT AGREEMENT
(CROP LINE OF CREDIT)
This Agreement (the "Agreement") is made and entered into as of August
8, 2000, by and between SANWA BANK CALIFORNIA (the "Bank") and SCHEID
VINEYARDS CALIFORNIA INC. (the "Borrower"), on the terms and conditions that
follow
SECTION
1
DEFINITIONS
1.1 CERTAIN DEFINED TERMS: Unless elsewhere defined in this Agreement, the
following terms shall have the following meanings (such meanings to be
generally applicable to the singular and plural forms of the terms
defined)
1.1.1 "ADVANCE": shall mean an advance to the Borrower under the
credit facility (ies) described in Section 2.
1.1.2 "BUSINESS DAY": shall mean a day, other than a Saturday or
Sunday, on which commercial banks are open for business in
California.
1.1.3 "CASH FLOW": shall mean the sum of net income after tax and
exclusive of extraordinary gains, plus depreciation and
amortization expense minus dividends and distributions.
1.1.4 "COLLATERAL": shall mean the property described in Section 3,
together with any other personal or real property in which the
Bank may be granted a lien or security interest to secure
payment of the Obligations.
1.1.5 "CROPS": shall mean the crops described in Section 3.
1.1.6 "CROP BUDGET": shall mean the crop budget dated July 15, 2000
for the crop production year commencing on December 31, 1999
and ending on November 30, 2000 (the "Current Crop Year") which
budget is attached hereto as Exhibit "A".
1.1.7 "2001 CROP BUDGET": shall mean the crop budget for the crop
production year commencing on December 31, 2000 and ending on
November 30, 2001 (the "2001 Crop Year").
1.1.8 "CROP LINE OF CREDIT": shall mean the credit facility described
as such in Section 2.
1.1.9 "CURRENT ASSETS": shall mean current assets as determined in
accordance with generally accepted accounting principles, less
all amounts due from affiliates, officers or employees.
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1.1.10 "CURRENT LIABILITIES": shall mean current liabilities as
determined in accordance with generally accepted accounting
principles, including any negative cash balance on the
Borrower's financial statement.
1.1.11 "DEBT": shall mean all liabilities of the Borrower less
Subordinated Debt, if any.
1.1.12 "EFFECTIVE TANGIBLE NET WORTH": shall mean the Borrower's
stated net worth plus Subordinated Debt but less all intangible
assets of the Borrower (i.e., goodwill, trademarks, patents,
copyrights, organization expense, and similar intangible items
including, but not limited to, investments in and all amounts
due from affiliates, officers or employees).
1.1.13 "ENVIRONMENTAL CLAIMS": shall mean all claims, however
asserted, by any governmental authority or other person
alleging potential liability or responsibility for violation of
any Environmental Law or for release or injury to the
environment or threat to public health, personal injury
(including sickness, disease or death), property damage,
natural resources damage, or otherwise alleging liability or
responsibility for damages (punitive or otherwise), cleanup,
removal, remedial or response costs, restitution, civil or
criminal penalties, injunctive relief, or other type of
relief, resulting from or based upon (a) the presence,
placement, discharge, emission or release (including
intentional and unintentional, negligent and non-negligent,
sudden or non-sudden, accidental or non-accidental placement,
spills, leaks, discharges, emissions or releases) of any
Hazardous Material at, in, or from property, whether or not
owned by the Borrower, or (b) any other circumstances forming
the basis of any violation, or alleged violation, of any
Environmental Law.
1.1.14 "ENVIRONMENTAL LAWS": shall mean all federal, state or local
laws, statutes, common law duties, rules, regulations,
ordinances and codes, together with all administrative orders,
directed duties, requests, licenses, authorizations and permits
of, and agreements with, any governmental authorities, in each
case relating to environmental, health, safety and land use
matters; including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Clean
Air Act, the Federal Water Pollution Control Act of 1972, the
Solid Waste Disposal Act, the Federal Resource Conversation and
Recovery Act, the Toxic Substances Control Act, the Emergency
Planning and Community Right-to-Know Act, the California
Hazardous Waste Control Law, the California Solid Waste
Management, Resource, Recovery and Recycling Act, the
California Water Code and the California Health and Safety Code.
1.1.15 "ENVIRONMENTAL PERMITS": shall have the meaning provided in
Section 5.11 hereof.
1.1.16 "EQUIPMENT": shall mean equipment as defined in the California
Uniform Commercial Code.
1.1.17 "ERISA": shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, including (unless the
context otherwise requires) any rules or regulations
promulgated thereunder.
1.1.18 "EVENT OF DEFAULT": shall have the meaning set forth in Section
7.
1.1.19 "EXPIRATION DATE": shall mean June 5, 2002, or the date of
termination of the Bank's commitment to lend under this
Agreement pursuant to Section 8, whichever shall occur first.
1.1.20 "FIXED RATE ADVANCE": shall have the respective meaning as it
is defined for each facility under Section 2, hereof if
applicable.
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1.1.21 "FIXED RATE": shall have the respective meaning as it is
defined for each facility under Section 2, hereof if applicable.
1.1.22 "HAZARDOUS MATERIALS": shall mean all those substances which
are regulated by, or which may form the basis of liability
under, any Environmental Law, including all substances
identified under any Environmental Law as a pollutant,
contaminant, hazardous waste, hazardous constituent, special
waste, hazardous substance, hazardous material, or toxic
substance, or petroleum or petroleum derived substance or waste.
1.1.23 "INDEBTEDNESS": shall mean, with respect to the Borrower, (i)
all indebtedness for borrowed money or for the deferred
purchase price of property or services in respect of which the
Borrower is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which the Borrower
otherwise assures a creditor against loss and (ii) obligations
under leases which shall have been or should be, in accordance
with generally accepted accounting principles, reported as
capital leases in respect of which the Borrower is liable,
contingently or otherwise, or in respect of which the Borrower
otherwise assures a creditor against loss.
1.1.24 "INTEREST PERIOD": shall have the respective meaning as it is
defined for each facility under Section 2, hereof.
1.1.25 "INVENTORY": shall mean the inventory described in Section 3.
1.1.26 "LINE ACCOUNT": shall have the meaning provided in Section 2.2
hereof.
1.1.27 "OBLIGATIONS": shall mean all amounts owing by the Borrower to
the Bank pursuant to this Agreement including, but not limited
to, the unpaid principal amount of Advances.
1.1.28 "ORDINARY COURSE OF BUSINESS": shall mean, with respect to any
transaction involving the Borrower or any of its subsidiaries
or affiliates, the ordinary course of the business of the
Borrower or such subsidiary or affiliate, as conducted
generally in accordance with past practice and undertaken in
good faith and not for the purpose of evading any covenant or
restriction in this Agreement or in any other document,
instrument or agreement executed in connection herewith.
1.1.29 "PERMITTED LIENS": shall mean: (i) liens and security interests
securing indebtedness owed by the Borrower to the Bank, (ii)
liens for taxes, assessments or similar charges not yet due;
(iii) liens of materialmen, mechanics, warehousemen, or
carriers or other like liens arising in the Ordinary Course of
Business and securing obligations which are not yet delinquent;
(iv) purchase money liens or purchase money security interests
upon or in any property acquired or held by the Borrower in the
Ordinary Course of Business to secure Indebtedness outstanding
on the date hereof or permitted to be incurred under Section
5.7 and hereof; (v) liens and security interests which, as of
the date hereof, have been disclosed to and approved by the
Bank in writing; and (vi) those liens and security interests
which in the aggregate constitute an immaterial and
insignificant monetary amount with respect to the net value of
the Borrower's assets.
1.1.30 "REFERENCE RATE": shall mean an index for a variable interest
rate which is quoted, published or announced by Bank as its
reference rate and as to which loans may be made by Bank at,
above or below such rate.
1.1.31 "SUBORDINATED DEBT": shall mean such liabilities of the Borrower
which have been subordinated to those owed to the Bank in a
manner reasonably acceptable to the Bank.
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1.1.32 "VARIABLE RATE ADVANCE": shall have the respective meaning as it
is defined for each facility under Section 2, hereof
1.1.33 "VARIABLE RATE": shall have the respective meaning as it is
defined for each facility under Section 2, hereof
1.1.34 "WORKING CAPITAL": shall mean Current Assets minus Current
Liabilities.
1.2 ACCOUNTING TERMS All references to financial statements, assets,
liabilities, and similar accounting items not specifically defined herein
shall mean such financial statements or such items prepared or determined in
accordance with generally accepted accounting principles consistently applied
and, except where otherwise specified, all financial data submitted pursuant
to this Agreement shall be prepared in accordance with such principles.
1.3 OTHER TERMS Other terms not otherwise defined shall have the meanings
attributed to such terms in the California Uniform Commercial Code.
SECTION
2
CREDIT FACILITIES
2.1 THE CROP LINE OF CREDIT
2.1.1 THE CROP LINE OF CREDIT: On terms and conditions as set forth
herein, the Bank agrees to make Advances to the Borrower from
time to time from the date hereof to the Expiration Date,
provided the aggregate amount of such Advances outstanding at any
time does not exceed $19,000,000.00 through December 5, 2000 and
$15,000,000 thereafter. Within the foregoing limits, the Borrower
may borrow, partially or wholly prepay, and reborrow under this
Section 2.1. Advances made under the Crop Line of Credit shall be
used to fund the Borrower's farming operations, which Advances
shall be made in accordance with the relevant Crop Budget or 2001
Crop Budget.
2.1.2 MAKING LINE ADVANCES: Each Advance shall be conclusively deemed
to have been made at the request of and for the benefit of the
Borrower (i) when credited to any deposit account of the Borrower
maintained with the Bank or (ii) when paid in accordance with the
Borrower's written instructions. Subject to the requirements of
Section 4 and provided such request is made in a timely manner as
provided in Section 2.1.5 below, Advances shall be made by the
Bank under the Crop Line of Credit.
2.1.3 REPAYMENT: On the Expiration Date, the Borrower hereby promises
and agrees to pay to the Bank in full the aggregate unpaid
principal amount of all Advances then outstanding under the Crop
Line of Credit together with all accrued and unpaid interest
thereon.
2.1.4 INTEREST ON ADVANCES: Interest shall accrue from the date of each
Advance under the Crop Line of Credit at one of the following
rates, as quoted by the Bank and as elected by the Borrower
pursuant to Subsection (i) or Subsection (ii) below:
(i) VARIABLE RATE ADVANCES: A variable rate per annum
equivalent to the Reference Rate (the "Variable Rate").
Interest shall be adjusted concurrently with any change
in the Reference Rate. An Advance based upon the
Variable Rate is hereinafter referred to as a "Variable
Rate Advance"
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(ii) FIXED RATE ADVANCES. A fixed rate quoted by Bank in its
sole discretion for each Advance (the "Fixed Rate") and
for such period of time that the Bank may quote and
offer, provided that any such period of time shall be
for at least 30 days and provided that any such period
of time does not extend beyond the Expiration Date (the
"Interest Period") for Advances in the minimum amount of
$500,000.00. Advances based upon the Fixed Rate are
hereinafter referred to as "Fixed Rate Advances."
Interest on any Advance shall be computed on the basis of 360
days per year, but charged on the actual number of days elapsed.
The Borrower hereby promises and agrees to pay interest in arrears
on Variable Rate Advances and Fixed Rate Advances on the 5th
calendar day of each March, June, September, and December.
If interest is not paid as and when it is due, it shall be added
to the principal, become and be treated as a part hereof, and
shall thereafter bear like interest.
2.1.5 NOTICE OF BORROWING. Upon written or telephonic notice which
shall be received by the Bank at or before 2:00 p.m. (California
time) on a Business Day, the Borrower nay borrow under the Crop
Line of Credit by requesting a Variable Rate Advance or a Fixed
Rate Advance. A Variable Rate Advance or a Fixed Rate Advance
may be made on the day notice is received by the Bank; provided,
however, that if the Bank shall not have received notice at or
before 2:00 p.m. on the day such Advance is requested to be made,
such Variable Rate Advance or Fixed Rate Advance may, at the
Bank's option, be made on the next Business Day.
2.1.6 NOTICE OF ELECTION TO ADJUST INTEREST RATE: The Borrower may
elect:
(i) That interest on a Variable Rate Advance shall be
adjusted to accrue at the Fixed Rate; provided,
however, that such notice shall be received by the Bank no
later than 2:00 p.m. on the Business Day on which the
Borrower requests that interest be adjusted to accrue at
the Fixed Rate.
(ii) That interest on a Fixed Rate Advance shall continue to
accrue at a newly quoted Fixed Rate or shall be adjusted
to commence to accrue at the Variable Rate; provided,
however, that such notice shall be received by the Bank
no later than 2:00 p.m. on the last day of the Interest
Period pertaining to such Fixed Rate Advance. If the
Bank shall not have received (as prescribed herein) of
the Borrower's election that interest on any Fixed Rate
Advance shall continue to accrue at the newly quoted
Fixed Rate the Borrower shall be deemed to have elected
that interest thereon shall be adjusted to accrue at the
Variable Rate upon the expiration of the Interest Period
pertaining to such Advance.
2.1.7 PREPAYMENT: The Borrower may prepay any Advance in whole or in
part, at any time and without penalty, provided, however, that:
(i) any partial prepayment shall first be applied at the Bank's
option, to accrued and unpaid interest and next to the outstanding
principal balance; and (ii) during any period of time in which
interest is accruing on any Advance on the basis of the Fixed
Rate, no prepayment shall be made except on a day which is the last
day of the Interest Period pertaining thereto. If the whole or
any part of any Fixed Rate Advance is prepaid by reason of
acceleration or otherwise, the Borrower shall, upon the Bank's
request, promptly pay to and indemnify the Bank for all costs,
expenses and any loss (including loss of future interest income)
actually incurred by the Bank and any loss (including loss of
profit resulting from the re-employment if funds) reasonably
deemed sustained by the Bank as a consequence of such prepayment.
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The Bank shall be entitled to fund all or any portion of its
Advances in any manner it may determine in its sole discretion,
but all calculations and transactions hereunder shall be
conducted as though the Bank actually funded all Advances through
the purchase of dollar deposits bearing interest at the same rate
as U.S. Treasury securities in the amount of the relevant Advance
and in maturities corresponding to the date of such purchase to
the Expiration Date hereunder.
2.1.8 CONVERSION FROM FIXED RATE TO VARIABLE RATE In the event that
the Bank shall at any time determine that the accrual of interest
on the basis of the Fixed Rate (i) is infeasible because the Bank
is unable to determine the Fixed Rate due to the unavailability
of U.S. dollar deposits, contracts or certificates of deposit in
an amount approximately equal to the amount of the relevant
Advance and for a period of time approximately equal to the relevant
Interest Period or (ii) is or has become unlawful or infeasible by
reason of the Bank's compliance with any new law, rule, regulation,
guideline or order, or any new interpretation of any present law,
rule, regulation, guideline or order, then the Bank shall give
telephonic notice thereof (confirmed in writing) to the Borrower,
in which event any Advance bearing interest at the Fixed Rate
shall be deemed to be a Variable Rate Advance and interest shall
thereupon immediately accrue at the Variable Rate.
2.1.9 COMMITMENT FEE The Borrower agrees to pay to the Bank a
commitment fee on the unused portion of the Crop Line of Credit
of .10% per annum, payable quarterly in arrears, commencing
October 1, 2000, and computed on a year of 360 days for actual
days elapsed.
2.2 LINE ACCOUNT:
2.2.1 The Bank shall maintain on its books a record of account in which
the Bank shall make entries for each Advance and such other
debits and credits as shall be appropriate in connection with the
credit facilities granted hereunder (the "Line Account"). The
Bank shall provide the Borrower with a statement of the
Borrower's Line Account, which statement shall be considered to
be correct and conclusively binding on the Borrower unless the
Borrower notifies the Bank to the contrary within 30 days after
the Borrower's receipt of any such statement which it deems to be
incorrect.
2.2.2 If any payment required to be made by the Borrower hereunder
becomes due and payable on a day other than a Business Day, the
due date thereof shall be extended to the next succeeding
Business Day and interest thereon shall be payable at the then
applicable rate during such extension. All payments required to
be made hereunder shall be made to the office of the Bank
designated for the receipt of notices herein or such other office
as Bank shall from time to time designate.
2.2.3 The Borrower hereby authorizes the Bank, if and to the extent
payment owed to the Bank under the Crop Line of Credit is not
made when due, to charge, from time to time, against any or all
of the Borrower's deposit accounts with the Bank any amount so
due.
2.3 LATE PAYMENT In addition to any other rights the Bank may have
hereunder, if any payment of principal or interest or any portion
thereof, under this Agreement is not paid within 5 days of when due, a
late payment charge equal to five percent (5%) of such past due payment
may be assessed and shall be immediately payable.
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SECTION
3
COLLATERAL
3.1 THE COLLATERAL: To secure payment and performance of all the Borrower's
Obligations under this Agreement and all other liabilities, loans,
guarantees, covenants and duties owed by the Borrower to the Bank,
whether or not evidenced by this or by any other agreement, absolute or
contingent, due or to become due, now existing or hereafter and howsoever
created, the Borrower hereby grants the Bank a security interest in and
to all of the following property ("Collateral")
(i) INVENTORY. All inventory (excluding crops) now owned or
hereafter acquired by the Borrower, including, but not
limited to, all raw materials, work in process, finished
goods, merchandise, parts and supplies of every kind and
description, including inventory temporarily out of the
Borrower's custody or possession, together with all returns
on accounts (the "Inventory").
(ii) ACCOUNTS. All accounts, contract rights and general
intangibles now owned or hereafter created or acquired by
the Borrower, including, but not limited to, all
receivables, goodwill, trademarks, trademark applications,
trade styles, trade names, patents, patent applications,
copyrights and copyright applications, customer lists,
business records and computer programs, tapes, disks and
related data processing software that at any time evidence
or contain information relating to any of the Collateral.
(iii) DOCUMENTS All documents, instruments and chattel paper now
owned or hereafter acquired by the Borrower, including, but
not limited to, warehouse and other receipts, bills of sale
and bills of lading.
(iv) MONIES. All monies, deposit accounts, certificates of
deposit and securities of the Borrower now or hereafter in
the Bank's or its agents' possession.
(v) CROPS. All crops now growing or hereafter to be grown,
together with all products and proceeds thereof (the
"Crops"), on that certain real property described in the
attached Exihibit "B" (the "Real Property")
(vi) FARM PRODUCTS. All farm products now owned or hereafter
acquired by or for the benefit of the Borrower consisting
of supplies used or produced in the farming operations of
the Borrower.
The Bank's security interest in the Collateral shall be a continuing
lien and shall include the proceeds and products of the Collateral
including, but not limited to, the proceeds of any insurance thereon.
The security interest granted to Bank in the Collateral shall not secure
or be deemed to secure any Indebtedness of the Borrower to the bank
which is, at the time of its creation, subject to the provisions of any
state or federal consumer credit or truth-in-lending disclosure statutes.
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SECTION
4
CONDITIONS PRECEDENT
4.1 CONDITIONS PRECEDENT TO THE INITIAL ADVANCE: The obligation of the Bank
to make the initial Advance and the first extension of credit to or on
account of the Borrower hereunder is subject to the conditions precedent
that the Bank shall have received before the date of such initial
Advance and such first extension of credit all of the following, in
form and substance satisfactory to the Bank:
(i) AUTHORITY TO BORROW. Evidence that the execution, delivery
and performance by the Borrower of this Agreement and any
document, instrument or agreement required hereunder have
been duly authorized.
(ii) GUARANTY. Continuing guaranty(ies) in favor of the Bank
executed by Scheid Vineyards, Inc. together with evidence
that the execution, delivery and performance by an
guarantor has been duly authorized.
(iii) FEES. Payment of all the Bank's reasonable out-of-pocket
expenses in connection with the preparation and negotiation
of this Agreement.
(iv) FINANCING STATEMENTS. Executed UCC-1 financing statment(s)
describing the Collateral, together with evidence of the
recordation of such statement(s) as a lien of first
priority.
(v) MISCELLANEOUS. Such other evidence as the Bank may request
to establish the consummation of the transaction
contemplated hereunder and compliance with the conditions
of this Agreement.
4.2 CONDITIONS PRECEDENT TO ALL ADVANCES: The obligation of the Bank to
make each Advance and each other extension of credit to or on account of
the Borrower (including the inital Advance and the first extension of
credit) shall be subject to the futher conditions precedent that, on the
date of each Advance or each extension of credit and after the making of
such Advance or extension of credit:
(i) SUBSEQUENT APPROVALS. The Bank shall have received such
supplemental approvals, opinions or documents as the Bank
may reasonably request.
(ii) REPRESENTATIONS AND WARRANTIES. The representations
contained in Section 5 and in any other document,
instrument or certificate delivered to the Bank hereunder
are true, correct and complete.
(iii) EVENT OF DEFAULT. No event has occured and is continuing
which constitutes, or with the lapse of time or giving of
notice or both, would constitute an Event of Default.
(iv) COLLATERAL. The security interest in the Collateral has
been duly authorized, created and perfected with first
priority and is in full force and effect.
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SECTION
5
REPRESENTATIONS AND WARRANTIES
The Borrower hereby makes the following representations and warranties
to the Bank, which representations and warranties are continuing:
5.1 STATUS: The Borrower is a corporation duly organized and validly
existing under the laws of the state of California and is properly
licensed and is qualified to do business and in good standing in, and,
where necessary to maintain the Borrower's rights and privileges, has
complied with the fictitious name statute of every jurisdiction in which
the Borrower is doing business.
5.2 AUTHORITY: The execution, delivery and performance by the Borrower of
this Agreement and any instrument, document or agreement required
hereunder have been duly authorized and do not and will not: (i) violate
any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
application to the Borrower; (ii) result in a breach of or constitute a
default under any material indenture or loan or credit agreement or
other material agreement, lease or instrument to which the Borrower is
a party or by which it or its properties may be bound or affected, or
(iii) require any consent or approval of its stockholders or violate any
provision of its articles of incorporation or by-laws.
5.3 LEGAL EFFECT This Agreement constitutes, and any instrument, document
or agreement required hereunder when delivered hereunder will
constitute, legal, valid and binding obligations of the Borrower
enforceable against the Borrower in accordance with their respective
terms.
5.4 FICTITOUS TRADE STYLES: There are fictitious trade styles used by the
Borrower in connection with its business operations as disclosed in the
attached list. The Borrower shall notify the Bank not less than 30 days
prior to effecting any change in the matters described herein or prior
to using any other fictitious trade style at any future date, indicating
the trade style and state(s) of its use.
5.5 FINANCIAL STATEMENTS: All financial statements, information and other
data which may have been or which may hereafter be submitted by the
Borrower to the Bank are true, accurate and correct in all material
respects and have been or will be prepared in accordance with generally
accepted accounting priniciples consistently applied and accurately
represent the financial condition or, as applicable, the other
information disclosed therein. Since the most recent submission of such
financial information or data to the Bank, the Borrower represents and
warrants that no material adverse change in the Borrower's financial
condition or operations has occured which has not been fully disclosed
to the Bank in writing.
5.6 LITIGATION: Except as have been disclosed to the Bank in writing, there
are no actions, suits or proceedings pending or, to the knowledge of the
Borrower, theatened against or affecting the Borrower or the Borrower's
properties before any court or administrative agency which, if
determined adversely to the Borrower, would have a material adverse
effect on the Borrower's finanacial condition or operations or on the
Collateral.
5.7 TITLE TO ASSETS. The Borrower has good and marketable title to all of
its assets (including, but not limited to, the Collateral) and the same
are not subject to any security interest, encumbrance, lien or claim of
any third person except for Permitted Liens.
5.8 ERISA. If the Borrower has a pension, profit sharing or retirement plan
subject to ERISA, such plan has been and will continue to be funded in
accordance with its terms and otherwise complies with and continues to
comply with the requirements of ERISA.
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5.9 TAXES: The Borrower has filed all tax returns required to be filed and
paid all taxes shown thereon to be due, including interest and
penalties, other than such taxes which are currently payable without
penalty or interest or those which are being duly contested in good faith.
5.10 MARGIN STOCK. The proceeds of any loan or advance hereunder will not be
used to purchase or carry margin stock as such term is defined under
Regulation U of the Board of Governors of the Federal Reserve System.
5.11 ENVIRONMENTAL COMPLIANCE. Except for such failures as do not and are
not reasonably likely to have a material adverse effect on the
financial condition of operations of the Borrower or the Collateral,
the operations of the Borrower comply, and during the term of this
Agreement will at all times comply, in all respects with all
Environmental Laws; the Borrower has obtained all licenses, permits,
authorizations and registrations required under any Environmental Law
("ENVIRONMENTAL PERMITS") and necessary for its ordinary course
operations, all such Environmental Permits are in good standing, and
the Borrower is in compliance with all material terms and conditions
of such Environmental Permits; neither the Borrower nor any of its
present property or operations is subject to any outstanding written
order from or agreement with any governmental authority nor subject to
any judicial or docketed administrative proceeding, respecting any
Environmental Law, Environmental Claim or Hazardous Material, there
are no Hazardous Materials or other conditions or circumstances
existing, or arising from operations prior to the date of this
Agreement, with respect to any property of he Borrower that would
reasonably be expected to give rise to Environmental Claims, PROVIDED,
however, that with respect to property leased or purchased from an
unrelated third party, the foregoing representation is made to the best
knowledge of the Borrower. In addition, (i) the Borrower does not have
any underground storage tanks that are not properly registered or
permitted under applicable Environmental Laws, or that are leaking or
disposing of Hazardous Materials off-site, and (ii) the Borrower has
notified all of their employees of the existence, if any, of any health
hazard arising from the conditions of their employment and have met all
notification requirements under Title III of CERCLA and all other
Environmental Laws.
5.12 INVENTORY:
(i) The Borrower keeps materially correct and accurate
records, (itemizing and describing the kind, type, quality
and quantity of inventory, the Borrower's cost therefor and
selling price thereof, and the daily withdrawals therefrom
and additions thereto)
(ii) All inventory is of good and merchantable quality, free
from defects, other than defects as the result of natural
forces beyond reasonable control of the Borrower, and
except for such other defects that do not and are not
reasonably likely to have a material adverse effect on the
financial condition or operations of the Borrower or the
Collateral
(iii) The Borrower is not a "retail merchant" as defined in the
California Uniform Commercial Code.
5.13 WATER. As of the date of this Agreement, sufficient water is available
and is projected to be available, from verifiable surface and ground
water sources, to conduct operations materially similar to prior years'
operations as evidenced by information provided by any Borrower to the
Bank. Borrower has filed with all governmental agencies, all notices
and other documents required under Federal, state and local laws and
regulations in connection with the supply of water to and use of water
upon the Real Property, except for such failures as do not and are not
reasonably likely to have a material adverse effect on the financial
condition or operations of the Borrower or the Collateral.
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SECTION
6
COVENANTS
The Borrower covenants and agrees that, during the term of this Agreement,
and so long thereafter as the Borrower is indebted to the Bank under this
Agreement, the Borrower will, unless the Bank shall otherwise consent in
writing:
6.1 REPORTING AND CERTIFICATION REQUIREMENTS: Deliver or cause to be
delivered to the Bank in form and detail satisfactory to the Bank
(i) Not later than 105 days after the end of each of the
Borrower's fiscal years, a copy of Scheid Vineyard, Inc.'s
annual Form 10-K filed with the Securities and Exchange
Commission and not later than April 30 of each year, the
Borrower's crop budget for the the year then in effect,
including but not limited to the 2001 Crop Budget.
(ii) Not later than 45 days after the end of each fiscal
quarter, Scheid Vineyards Inc.'s consolidated financial
statement as of the end of such period and a copy of
Scheid Vineyard, Inc's Form 10-Q filed with the Securities
and Exchange Commission.
(iii) Promptly upon the Bank's request, such other information
pertaining to the Borrower, the Collateral or any guarantor
hereunder as the Bank may reasonably request.
6.2 FINANCIAL CONDITION: The Borrower promises and agrees, during the term
of this Agreement and until payment in full of all of the Borrower's
Obligations, the Borrower will maintain at all times:
(i) A minimum Effective Tangible Net Worth of at least
$25,000,000.00
(ii) A minimum Working Capital of not less than $2,000,000.
(iii) A ratio of Cash Flow to the current portion of long term
Debt of not less than 1.25 to 1, measured at the end of
each fiscal year.
6.3 PRESERVATION OF EXISTENCE; COMPLIANCE WITH APPLICABLE LAWS Maintain
and preserve its existence and all rights and privileges now enjoyed;
and conduct its business and operations in accordance with all
applicable laws, rules and regulations.
6.4 MERGE OR CONSOLIDATE Not liquidate or dissolve, merge or consolidate
with or into, or acquire any other business organization.
6.5 MAINTENANCE OF INSURANCE Keep and maintain the Collateral insured for
not less than its full replacement value, against all risks of loss and
damage and maintain insurance in such amounts and covering such risks
as is usually earned by companies engaged in similar businesses and
owning similar properties in the same general areas in which the
Borrower operates and maintain such other insurance and coverages as
may be required by the Bank. All such insurance shall be in form and
amount and with companies reasonably satisfactory to the Bank.
With respect to insurance covering properties in which the Bank
maintains a security interest or lien, such insurance shall name the
Bank as loss payee pursuant to a loss payable endorsement satisfactory
to the Bank and shall not be altered or canceled except upon 10 days'
prior written notice to the Bank. Upon the Bank's request, the Borrower
shall furnish the Bank with the original policy or binder of all such
insurance.
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6.6 MAINTENANCE OF COLLATERAL AND OTHER PROPERTIES: Except for Permitted
Liens as permitted by Section 6.11, keep and maintain the Collateral
free and clear of all levies, liens, encumbrances and security interests
(including, but not limited to, any lien of attachment, judgment or
execution) and defend the Collateral against any such levy, lien,
encumbrance or security interest, comply with all laws, statutes and
regulations pertaining to the Collateral and its use and operation,
except for such failures to comply as are not reasonably likely to have
a material adverse effect on the financial condition or operations of
the Borrower or the Collateral; execute, file and record such
statements, notices and agreements; take such actions and obtain
such certificates and other documents as necessary to perfect, evidence
and continue the Bank's security interest in the Collateral and the
priority thereof; maintain accurate and complete records of the
Collateral which show all sales, claims and allowances; and properly
care for, house, store and maintain the Collateral in good condition,
free of misuse, abuse and deterioration, other than normal wear and
tear. The Borrower shall also maintain and preserve all its properties
in good working order and condition in accordance with the general
practice of other businesses of similar character and size, ordinary wear
and tear excepted.
6.7 PAYMENT OF OBLIGATIONS AND TAXES. Make timely payment of all
assessments and taxes and all of its liabilities and obligations
including, but not limited to, trade payables, unless the same are
being contested in good faith by appropriate proceedings with the
appropriate court or regulatory agency. For purposes hereof, the
Borrower's issuance of a check, draft or similar instrument without
delivery to the intended payee shall not constitute payment.
6.8 INSPECTION RIGHTS AND ACCOUNTING RECORDS: The Borrower will maintain
adequate books and records in accordance with generally accepted
accounting principles consistently applied and in a manner otherwise
acceptable to Bank, and, at any reasonable time and from time to time,
permit the Bank or any representative thereof to examine and make
copies of the records and visit the properties of the Borrower and
discuss the business and operations of the Borrower with any employee
or representative thereof. If the Borrower shall maintain any records
(including, but not limited to, computer generated records or computer
programs for the generation of such records) in the possession of a
third party, the Borrower hereby agrees to notify such third party to
permit the Bank free access to such records at all reasonable times
and to provide the Bank with copies of any records which it may
request, all at the Borrower's expense, the amount of which shall be
payable immediately upon demand.
6.9 PAYMENT OF DIVIDENDS. Not declare or pay any dividends on any class of
stock now or hereafter outstanding except dividends payable solely in
the Borrower's capital stock.
6.10 LIENS AND ENCUMBRANCES. Not create, assume or permit to exist any
security interest, encumbrance, mortgage, deed of trust, or other lien
(including, but not limited to, a lien of attachment, judgment or
execution) affecting any of the Borrower's properties, or execute or
allow to be filed any financing statement or continuation thereof
affecting any of such properties, except for Permitted Liens or as
otherwise provided in this Agreement, and liens on properties that are
not Collateral, and liens and security interests associated with
indebtedness of up to $500,000.00 in any one fiscal year.
6.11 TRANSFER ASSETS. Not, after the date hereof, sell, contract for sale,
convey, transfer, assign, lease or sublet, any of its assets
(including, but not limited to, the Collateral) except in the Ordinary
Course of Business and, then, only for full, fair and reasonable
consideration.
6.12 CHANGE IN NATURE OF BUSINESS: Not make any material change in its
financial structure or the nature of its business as existing or
conducted as of the date hereof.
6.13 COMPENSATION OF EMPLOYEES: Compensate its employees for services
rendered at an hourly rate at least equal to the minimum hourly rate
prescribed by any applicable federal or state law or regulation.
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<PAGE>
6.14 NOTICE: Give the Bank prompt written notice of any and all (i) Events
of Default; (ii) litigation, arbitration or administrative proceedings
to which the Borrower is a party and in which the claim or liability
exceeds $100,000.00 or which affects the Collateral; (iii) other
matters which have resulted in, or might result in a material adverse
change in the Collateral or the financial condition or business
operations of the Borrower, and (iv) any enforcement, cleanup, removal
or other governmental or regulatory actions instituted, completed or
threatened against the Borrower or any of its properties.
6.15 ENVIRONMENTAL COMPLIANCE: The Borrower shall conduct its operations
and keep and maintain all of its property in compliance with all
Environmental Laws, except for such failures to comply as do not and
are not reasonably likely to have a material adverse effect on the
financial condition or operations of the Borrower or the Collateral,
and, upon the written request of the Bank, the Borrower shall submit
to the Bank at the Borrower's sole cost and expense, at reasonable
intervals, a report providing the status of any environmental, health
or safety compliance, hazard or liability.
6.16 INVENTORY
(i) The Borrower shall keep materially correct and accurate
records.
(ii) All inventory shall be good and merchantable quality, free
from defects, other than defects as the result of natural
forces beyond the reasonable control of the Borrower, and
except for such other defects that do not and are not
reasonably likely to have a material adverse effect on the
financial condition or operations of the Borrower or the
Collateral.
(iii) At any reasonable time and from time to time, allow Bank
to have the right, upon demand, to inspect and examine
inventory and to check and test the same as to quality,
quantity, value and condition and the Borrower agrees to
reimburse the Bank for the Bank's reasonable costs and
expenses in so doing.
(iv) LOCATION OF THE HARVESTED CROPS: Any Crops now or
hereafter harvested or removed from the Real Property
shall not be stored with a bailee, warehouseman or similar
party without the Bank's prior written consent and shall
be kept only on the Real Property described on the
attached Exhibit "B". Not withstanding the foregoing,
Borrower may, in the ordinary course of Business, deliver
possession of harvested Crops (i) to the proposed buyer
thereof prior to the buyer's acceptance of such Crops, or
(ii) to a common carrier for delivery to buyer.
6.17 CARE AND PRESERVATION OF THE CROPS:
(i) Attend to and care for the Crops and do or cause to be
done any and all acts that may at any time be appropriate
or necessary to grow, farm, cultivate, irrigate,
fertilize, prune, harvest, pick, clean, preserve and
protect the Crops; provided, however, that Borrower shall
not be required to take any such action that is not in the
ordinary course of business.
(ii) Not commit or suffer to be committed any waste of or
damage to the Crops to the extent within the reasonable
control of the Borrower.
(iii) Permit the Bank and any of its agents, employees or
representatives to enter upon the Real Property at any
reasonable time and from time to time for the purpose of
examining and inspecting the Crops and the Real Property.
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<PAGE>
(iv) Harvest and prepare the Crops for market; provided,
however, that Borrower shall not be required to take any
such action that is not in the ordinary course of
business, and promptly notify the Bank when harvest
commences.
(v) Keep the Crops separate and always capable of
identification.
6.18 EVIDENCE OF WATER AVAILABILITY: At such times as the Bank may
reasonably request, to deliver to the Bank a certificate stating that
the amount of water available and projected to be available is
sufficient to conduct operations materially as described in Borrower's
Crop Budget or operations materially similar to prior years'
operations, as evidenced by information provided by the Borrower to
the Bank. Such certificate shall be signed, at the Bank's option,
either by the Borrower or by an independent third party, such as an
officer of the Borrower's water district or other supplier of water.
SECTION
7
EVENTS OF DEFAULT
Any one or more of the following described events shall constitute
an event of default (an "Event of Default") under this Agreement.
7.1 NON-PAYMENT: Any Borrower shall fail to pay the principal amount of
any Obligations when due or interest on the Obligations within 5 days
of when due.
7.2 PERFORMANCE UNDER THIS AGREEMENT: The Borrower shall fail in any
material respect to perform or observe any term, covenant or agreement
contained in this Agreement or in any document, instrument or
agreement relating to this Agreement or any other document or
agreement executed by Borrower with or in favor of Bank and any such
failure shall continue unremedied for more than 30 days after the
occurrence thereof.
7.3 REPRESENTATIONS AND WARRANTIES; FINANCIAL STATEMENTS: Any
representation or warranty made by the Borrower under or in connection
with this Agreement or any financial statement given by the Borrower
or any guarantor shall prove to have been incorrect in any material
respect when made or given or when deemed to have been made or given.
7.4 OTHER AGREEMENTS: If there is a default under any other agreement
with Bank or under an agreement to which Borrower is a party with Bank
or with a third party or parties resulting in a right by the Bank or
such third party or parties, whether or not exercised, to accelerate
the maturity of any Indebtedness.
7.5 INSOLVENCY: The Borrower or any guarantor shall: (i) become insolvent
or be unable to pay its debts as they mature, (ii) make an assignment
for the benefit of creditors or to an agent authorized to liquidate
any substantial amount of its properties and assets; (iii) file a
voluntary petition in bankruptcy or seeking reorganization or to
effect a plan or other arrangement with creditors; (iv) file an answer
admitting the material allegations of an involuntary petition relating
to bankruptcy or reorganization or join in any such petition, (v)
become or be adjudicated a bankrupt; (vi) apply for or consent to the
appointment of, or consent that an order be made, appointing any
receiver, custodian or trustee, for itself or any of its properties,
assets or businesses; or (vii) in an involuntary proceeding, any
receiver, custodian or trustee shall have been appointed for all or
substantial part of the Borrower's or guarantor's properties, assets
or businesses and shall not be discharged within 30 days after the
date of such appointment.
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<PAGE>
7.6 EXECUTION: Any writ of execution or attachment or any judgment lien
shall be issued against any property of the Borrower and shall not be
discharged or bonded against or released within 30 days after the
issuance or attachment of such writ or lien.
7.7 SUSPENSION: The Borrower shall voluntarily suspend the transaction of
business or allow to be suspended, terminated, revoked or expired any
material permit, license or approval of any governmental body
necessary to conduct the Borrower's business as now conducted.
7.8 MATERIAL ADVERSE CHANGE: If there occurs a material adverse change in
the Borrower's business or financial condition, or if there is a
material impairment of the prospect of repayment of any portion of the
Obligations or there is a material impairment of the value or priority
of the Bank's security interest in the Collateral.
7.9 CHANGE IN OWNERSHIP: There shall occur a sale, transfer, disposition
or encumbrance (whether voluntary or involuntary to), or an agreement
shall be entered into to do so with, any Person or group of Persons (as
such terms are defined pursuant to Federal securities laws) with
respect to more than 19% of the issued and outstanding capital stock
of the Borrower and, as a result thereof, such Person or group of
Persons has the ability to direct or cause the direction of the
management and policies of the Borrower.
SECTION
8
REMEDIES ON DEFAULT
Upon the occurrence of any Event of Default, the Bank may, at its sole and
absolute election, without demand and only such notice as may be required by
law.
8.1 ACCELERATION: Declare any or all of the Borrower's indebtedness owing
to the Bank, whether under this Agreement or any other document,
instrument or agreement, immediately due and payable, whether or not
otherwise due and payable.
8.2 CEASE EXTENDING CREDIT: Cease making Advances or otherwise extending
credit to or for the account of the Borrower under this Agreement or
under any other agreement now existing or hereafter entered into
between the Borrower and the Bank.
8.3 TERMINATION: Terminate this Agreement as to any future obligation of
the Bank without affecting the Borrower's obligations to the Bank or
the Bank's rights and remedies under this Agreement or under any other
document, instrument or agreement.
8.4 PROTECTION OF SECURITY INTEREST: Make such payments and do such acts
as the Bank, in its sole judgment, considers necessary and reasonable
to protect its security interest or lien in the Collateral. The
Borrower hereby irrevocably authorizes the Bank to pay, purchase,
contest or compromise any encumbrance, lien or claim which the Bank,
in its sole judgment, deems to be prior or superior to its security
interest. Further, the Borrower hereby agrees to pay the Bank, upon
demand therefor, all expenses and expenditures (including attorneys'
fees) incurred in connection with the foregoing.
8.5 FORECLOSURE: Enforce any security interest or lien given or provided
for under this Agreement or under any such agreement, mortgage, deed
of trust or other document, in such manner and such order, as to all
or any part of the properties subject to such security interest or
lien, as the Bank, in its sole judgment, deems to be necessary or
appropriate and, to the extent permitted by applicable law, the
Borrower hereby waives any an all rights, obligations or defenses now
or hereafter established by law relating to the foregoing. In the
enforcement of its security interest or
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<PAGE>
lien, the Bank is authorized to enter upon the premises where any
Collateral is located and take possession of the Collateral or any part
thereof, together with the Borrower's records pertaining thereto, or the
Bank may require the Borrower to assemble the Collateral and records
pertaining thereto and make such Collateral and records available to the
Bank at a place desginated by the Bank. The Bank may sell the Collateral
or any portions thereof, together with all additions, accessions and
accessories thereto, giving only such notes and following only such
procedures as are required by law, at either a public or private sale, or
both, with or without having the Collateral present at the time of the
sale, which sale shall be on such terms and conditions and conducted in
such manner as the Bank determines in its sole judgment to be
commercially reasonable. Any deficiency which exists after the
disposition or liquidation of the Collateral shall be a continuing
liability of the Borrower to the Bank and shall be immediately paid by
the Borrower to the Bank.
8.6 CARE AND POSSESSION OF THE CROPS: Enter upon the Real Property and,
using any and all of the Borrower's equipment, machinery, tools, farming
implements and supplies, and improvements located on the Real Property:
(i) farm, cultivate, irrigate, fertilize, fumigate, prune and perform
any other act of acts appropriate or necessary to grow, care for,
maintain, preserve and protect the Crops (using any water located in, on
or adjacent to the Real Property); (ii) harvest, pick, clean and remove
the Crops from the Real Property; and (iii) appraise, store, prepare for
public or private sale, exhibit, market and sell the Crops and the
products thereof; provided that the Borrower hereby agrees that, if the
Borrower is the owner of the Real Property, the Bank shall not be
responsible or liable for returning the Real Property to its condition
immediately preceding the use of the Real Property as provided herein or
for doing such acts as may be necessary to permit future crops to be
grown on the Real Property.
8.7 NON-EXCLUSIVITY OF REMEDIES: Exercise one or more of the Bank's rights
set forth herein or seek such other rights or pursue such other remedies
as may be provided by law, in equity or in any other agreement now
existing or hereafter entered into between the Borrower and the Bank, or
otherwise.
8.8 APPLICATION OF PROCEEDS: All amounts received by the Bank as proceeds
from the disposition or liquidation of the Collateral shall be applied
to the Borrower's indebtedness to the Bank as follows: first, to the
costs and expenses of collection, enforcement, protection and
preservation of the Bank's lien in the Collateral, including court costs
and reasonable attorneys' fees, whether or not suit is commenced by the
Bank; next, to those costs and expenses incurred by the Bank in
protecting, preserving, enforcing, collecting, liquidating, selling or
disposing of the Collateral; next, to the payment of accrued and unpaid
interest on all of the Obligations; next, to the payment of the
outstanding principal balance of the Obligations; and last, to the
payment of any other indebtedness owed by the Borrower to the Bank.
SECTION
9
MISCELLANEOUS
9.1 AMOUNTS PAYABLE ON DEMAND: If the Borrower shall fail to pay on demand
any amount so payable under this Agreement; the Bank may, at its option
and without any obligation to do so and without waiving any default
occasioned by the Borrower having so failed to pay such amount, create an
Advance under this Agreement in an amount equal to the amount so
payable, which Advance shall thereafter bear interest as provided
hereunder.
9.2 DEFAULT INTEREST RATE: If an Event of Default, or an event which, with
notice or passage of time could become an Event of Default, has occurred
or is continuing, the Borrower shall pay to the Bank interest on any
indebtedness or amount payable under this Agreement at a rate which is
3% in excess of the rate or rates then in effect under this Agreement.
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<PAGE>
9.3 ASSIGNMENT OF THE BORROWER'S RIGHTS IN THE CROPS:
(i) If the Crops or any portion or portions thereof become
infected by disease or are destroyed by order of any
local, state or federal authority, and, by reason thereof,
the Borrower is entitled to be indemnified by such
authority, the Borrower hereby assigns to the Bank for
security purposes and as part of the Collateral any and
all such sums due from such authority, and the Bank is
hereby authorized to receive, collect and sue for the
same, and the Borrower hereby orders and directs that any
such sums be paid directly to the Bank.
(ii) In addition, the Borrower hereby assigns and transfers to
the Bank for security purposes and as part of the
Collateral all of the Borrower's rights and interests in
and to any monies now or hereafter placed in any funds of
any marketing association, corporation, cooperative,
partnership, firm or individual now heretofore or
hereafter handling or having to do with any of the Crops
now growing or heretofore or hereafter grown on the Real
Property or connected with the growing, marketing, farming
or other handling of such Crops and the Borrower hereby
assigns and transfers to the Bank for security purposes
and as part of the Collateral all stock and all other
interests, benefits and rights of the Borrower in any such
marketing association, corporation, cooperative,
partnership, firm or individual having anything to do with
such Crops and all monies due or becoming due to the
Borrower from any one or more of them.
9.4 RELIANCE AND FURTHER ASSURANCES: Each warranty, representation,
covenant, obligation and agreement contained in this Agreement shall be
conclusively presumed to have been relied upon by the Bank regardless of
any investigation made or information possessed by the Bank and shall be
cumulative and in addition to any other warranties, representations,
covenants and agreements which the Borrower now or hereafter shall give,
or cause to be given, to the Bank. Borrower agrees to execute all
documents and instruments and to perform such acts as the Bank may
reasonably deem necessary to confirm and secure to the Bank all rights
and remedies conferred upon the Bank by this agreement and all other
documents thereto.
9.5 ATTORNEYS' FEES: Borrower shall pay to the Bank all costs and expenses,
including but not limited to reasonable attorneys fees, incurred by Bank
in connection with the administration, enforcement, including any
bankruptcy, appeal or the enforcement of any judgment or any
refinancing or restructuring of this Agreement or any document,
instrument or agreement executed with respect to, evidencing or securing
the indebtedness hereunder.
9.6 NOTICES: All notices, payments, requests, information and demands which
either party hereto may desire, or may be required to give or make to
the other party hereto, shall be given or made to such party by hand
delivery or through deposit in the United States mail, postage prepaid,
or by facsimile delivery, or to such other address as may be specified
from time to time in writing by either party to the other.
TO THE BORROWER: TO THE BANK:
SCHEID VINEYARDS CALIFORNIA INC SANWA BANK CALIFORNIA
13470 Washington Blvd., Ste. 300 Fresno CBC
Marina del Rey, CA 90292 2035 Fresno Street
Attn: Alfred G. Scheid Fresno, CA 93721
FAX: (310) 301-1569 Attn: Keith Krum
FAX: (559) 487-2157
9.7 WAIVER: Neither the failure nor delay by the Bank in exercising any
right hereunder or under any document, instrument or agreement mentioned
herein shall operate as a waiver thereof, nor shall any single or
partial exercise of any right hereunder or under any other document,
instrument or
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agreement mentioned herein preclude other or further exercise thereof or
the exercise of any other right; nor shall any waiver of any right or
default hereunder, or under any other document, instrument or agreement
mentioned herein, constitute a waiver of any other right or default or
constitute a waiver of any other default of the same or any other term or
provision.
9.8 CONFLICTING PROVISIONS: To the extent the provisions contained in this
Agreement are inconsistent with those contained in any other document,
instrument or agreement executed pursuant hereto, the terms and
provisions contained herein shall control. Otherwise, such provisions
shall be considered cumulative.
9.9 BINDING EFFECT; ASSIGNMENT: This Agreement shall be binding upon and
inure to the benefit of the Borrower and the Bank and their respective
successors and assigns, except that the Borrower shall not have the
right to assign its rights hereunder or any interest herein without the
prior written consent of the Bank. The Bank may sell, assign or grant
participation in all or any portion of its rights and benefits
hereunder. The Borrower agrees that, in connection with any such sale,
grant or assignment, the Bank may deliver to the prospective buyer,
participant or assignee financial statements and other relevant
information relating to the Borrower and any guarantor.
9.10 JURISDICTION: This Agreement, any notes issued hereunder, the rights of
the parties hereunder to and concerning the Collateral, and any
documents, instruments or agreements mentioned or referred to herein
shall be governed by and construed according to the laws of the State of
California without regard to conflict of law principles, to the
jurisdiction of whose courts the parties hereby submit.
9.11 WAIVER OF JURY TRIAL: THE BORROWER AND THE BANK EACH WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OR 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 BORROWER AND THE BANK
EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT 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.
9.12 COUNTERPARTS: This Agreement may be executed in any number of
counterparts and all such counterparts taken together shall be deemed
to constitute one and the same instrument.
9.13 HEADINGS: The headings herein set forth are solely for the purpose of
identification and have no legal significance.
9.14 ENTIRE AGREEMENT AND AMENDMENTS. This Agreement and all documents,
instruments and agreements mentioned herein constitute the entire and
complete understanding of the parties with respect to the transactions
contemplated hereunder. All previous conversations, memoranda and
writings between the parties pertaining to the transactions contemplated
hereunder not incorporated or referenced in this Agreement or in such
documents, instruments and agreements are superseded hereby. This
Agreement may be amended only by an instrument in writing signed by the
Borrower and the Bank.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first hereinabove written.
BANK: BORROWER:
SANWA BANK CALIFORNIA SCHEID VINEYARDS CALIFORNIA INC.
BY: /s/ Keith Krum BY: /s/ Heidi M. Scheid
--------------------------------- ---------------------------
NAME: Keith Krum, Senior Vice NAME: Heidi M. Scheid, Secretary
President
BY: /s/ Michael S. Thomsen
---------------------------
NAME: Michael S. Thomsen,
Assistant Secretary
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