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Exhibit 10.21
[GRAPHIC OMITTED]
CREDIT AGREEMENT
(LINE OF CREDIT)
This Agreement (the "Agreement") is made and entered into as of
__________________, 2000, by and between SANWA BANK CALIFORNIA (the "Bank")
and GOLDEN STATE VINTNERS (the "Borrower"), on the terms and conditions that
follow and amends and supercedes that certain Credit Agreement by and between
Borrower and Bank dated as of July 5, 2000:
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 "CURRENT ASSETS": shall mean current assets as determined in
accordance with generally accepted accounting principles, less
all amounts due from affiliates, officers or employees.
1.1.7 "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.
1.1.8 "DEBT": shall mean all liabilities of the Borrower less
Subordinated Debt, if any.
1.1.9 "EBITDA": shall mean earnings exclusive of extraordinary gains
and before deductions for interest expense, taxes,
depreciation and amortization expense.
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1.1.10 "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).
1.1.11 "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.
1.1.12 "ENVIRONMENTAL LAWS": shall mean all federal, state or local
laws, statutes, common law duties, rules, regulations,
ordinances and codes, together with all administrative orders,
directed duties, requests, licenses, authorizations and
permits of, and agreements with, any governmental authorities,
in each case relating to environmental, health, safety and
land use matters; including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 ("CERCLA"),
the Clean Air Act, the Federal Water Pollution Control Act of
1972, the Solid Waste Disposal Act, the Federal Resource
Conservation and Recovery Act, the Toxic Substances Control
Act, the Emergency Planning and Community Right-to-Know Act,
the California Hazardous Waste Control Law, the California
Solid Waste Management, Resource, Recovery and Recycling Act,
the California Water Code and the California Health and Safety
Code.
1.1.13 "ENVIRONMENTAL PERMITS": shall have the meaning provided in
Section 5.11 hereof.
1.1.14 "EQUIPMENT": shall mean equipment as defined in the California
Uniform Commercial Code.
1.1.15 "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.
1.1.16 "EVENT OF DEFAULT": shall have the meaning set forth in
Section 7.
1.1.17 "EXPIRATION DATE": shall mean July 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.
1.1.18 "FIXED RATE ADVANCE": shall have the respective meaning as it
is defined for each facility under Section 2, hereof if
applicable.
1.1.19 "FIXED RATE": shall have the respective meaning as it is
defined for each facility under Section 2, hereof if
applicable.
1.1.20 "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,
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hazardous constituent, special waste, hazardous substance,
hazardous material, or toxic substance, or petroleum or
petroleum derived substance or waste.
1.1.21 "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.
1.1.22 "INTEREST PERIOD": shall have the respective meaning as it is
defined for each facility under Section 2, hereof.
1.1.23 "INVENTORY": shall mean the inventory described in Section 3.
1.1.24 "LETTER OF CREDIT SUB-FACILITY": shall mean the credit
facility described as such in Section 2.
1.1.25 "LIBOR ADVANCE": shall have the respective meaning as it is
defined for each facility under Section 2, hereof.
1.1.26 "LIBOR INTEREST PERIOD": shall have the respective meaning as
it is defined for each facility under Section 2, hereof.
1.1.27 "LIBOR RATE": shall have the respective meaning as it is
defined for each facility under Section 2, hereof.
1.1.28 "LINE ACCOUNT": shall have the meaning provided in Section 2.3
hereof.
1.1.29 "LINE OF CREDIT": shall mean the credit facility described as
such in Section 2.
1.1.30 "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.
1.1.31 "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 Borrower's business,
as conducted by the Borrower in accordance with past practice
and undertaken by the Borrower 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.
1.1.32 "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,
producers, laborers 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 herein; (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.
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1.1.33 "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.
1.1.34 "SUBORDINATED DEBT": shall mean such liabilities of the
Borrower which have been subordinated to those owed to the
Bank in a manner acceptable to the Bank.
1.1.35 "VARIABLE RATE ADVANCE": shall have the respective meaning
as it is defined for each facility under Section 2, hereof.
1.1.36 "VARIABLE RATE": shall have the respective meaning as it is
defined for each facility under Section 2, hereof.
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 LINE OF CREDIT
2.1.1 THE 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 $28,000,000.00 (the "Line of
Credit"). Within the foregoing limits, the Borrower may
borrow, partially or wholly prepay, and reborrow under this
Section 2.1. Proceeds of the Line of Credit shall be used for
general working capital purposes.
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 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,
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 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) or Subsection
(iii) 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
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referred to as a "Variable Rate Advance".
(ii) FIXED RATE ADVANCES: A fixed rate per annum quoted by
the Bank for 30, 60, 90 or 180 days or for such other
period of time that the Bank may quote and offer
(provided that any such period of time does not
extend beyond the Expiration Date) (the "Interest
Period") for Advances in the minimum amount of
$250,000.00. Such interest rate shall be a percentage
equal to .95% in excess of the rate which the Bank
determines in its sole and absolute discretion to be
equal to the Bank's cost of acquiring funds (adjusted
for any and all assessments, surcharges and reserve
requirements pertaining to the borrowing or purchase
by the Bank of such funds) 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 (the "Fixed Rate"). Advances based
upon the Fixed Rate are hereinafter referred to as
"Fixed Rate Advances".
(iii) LIBOR ADVANCES: A fixed rate quoted by the Bank for
1, 2, 3, or 6 months or for such other period of time
that the Bank may quote and offer (provided that any
such period of time does not extend beyond the
Expiration Date) (the "LIBOR Interest Period") for
Advances in the minimum amount of $250,000.00. Such
interest rate shall be a percentage equal to .95% in
excess of the Bank's LIBOR Rate which is that rate
determined by the Bank's Treasury Desk as being the
arithmetic mean (rounded upwards, if necessary, to
the nearest whole multiple of one-sixteenth of one
percent (1/16%)) of the U. S. dollar London Interbank
Offered Rates for such period appearing on page 3750
(or such other page as may replace page 3750) of the
Telerate screen at or about 11:00 a.m. (London time)
on the second Business Day prior to the first days of
such period (adjusted for any and all assessments,
surcharges and reserve requirements) (the "LIBOR
Rate"). An Advance based upon the LIBOR Rate is
hereinafter referred to as a "LIBOR Advance".
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 all Advances on the 5th
calendar day of each month.
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 thereof, 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 may borrow
under the Line of Credit by requesting:
(i) A VARIABLE RATE ADVANCE OR FIXED RATE ADVANCE: A
Variable Rate Advance or 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.
(ii) A LIBOR ADVANCE: Notice of any LIBOR Advance shall
be received by the Bank no later than two Business
Days prior to the day (which shall be a Business Day)
on which the Borrower requests such LIBOR Advance to
be made.
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2.1.6 NOTICE OF ELECTION TO ADJUST INTEREST RATE: Upon telephonic
notice which shall be received by the Bank at or before 2:00
p.m. (California time) on a Business Day, 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 Variable Rate Advance shall be
adjusted to accrue at the LIBOR Rate; provided,
however, that such notice shall be received by the
Bank no later than two Business Days prior to the
Business Day on which the Borrower requests that
interest be adjusted to accrue at the LIBOR Rate.
(iii) 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 notice
(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 as
the case may be 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 relevant Interest Period pertaining to such
Advance.
(iv) That interest on a Fixed Rate Advance shall accrue at
a newly quoted LIBOR Rate or interest on a LIBOR
Advance shall continue to accrue at a newly quoted
Fixed Rate or LIBOR Rate or shall be adjusted to
commence to accrue at the Variable Rate; provided,
however, that such notice shall be received by the
Bank no later than two Business Days prior to the
last day of the relevant Interest Period or LIBOR
Interest Period, as applicable. If the Bank shall not
have received notice as prescribed herein of the
Borrower's election that interest on any Fixed Rate
Advance shall accrue interest at a newly quoted LIBOR
Rate or at a newly quoted Fixed Rate pursuant to
subparagraph (iii) hereinabove; or any LIBOR Advance
shall continue to accrue at the newly quoted Fixed
Rate or LIBOR Rate as the case may be, 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 relevant Interest Period or
LIBOR 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 LIBOR Rate or Fixed Rate, no prepayment shall be made
except on a day which is the last day of the LIBOR Interest
Period or Interest Period pertaining thereto. If the whole or
any part of any LIBOR Advance or 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 of funds) deemed sustained by the Bank as a
consequence of such prepayment.
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
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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 INDEMNIFICATION FOR LIBOR RATE OR FIXED RATE COSTS: During any
period of time in which interest on any Advance is accruing on
the basis of the LIBOR Rate or Fixed Rate, the Borrower shall,
upon the Bank's request, promptly pay to and reimburse the
Bank for all costs incurred and payments made by the Bank by
reason of any future assessment, reserve, deposit or similar
requirement or any surcharge, tax or fee imposed upon the Bank
or as a result of the Bank's compliance with any directive or
requirement of any regulatory authority pertaining or relating
to funds used by the Bank in quoting and determining the LIBOR
Rate or Fixed Rate.
2.1.9 CONVERSION FROM LIBOR RATE OR 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 LIBOR Rate or Fixed
Rate (i) has become infeasible because the Bank is unable to
determine the LIBOR Rate or 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 LIBOR Interest Period or
Interest Period as the case may be or (ii) is or has become
unlawful 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 promptly give telephonic notice
thereof (confirmed in writing) to the Borrower, in which event
any Advance bearing interest at either the LIBOR Rate or Fixed
Rate as the case may be shall be deemed to be a Variable Rate
Advance and interest shall thereupon immediately accrue at the
Variable Rate and shall continue at such rate until the Bank
determines that the LIBOR Rate or Fixed Rate is no longer
infeasible or unlawful.
2.1.10 COMMITMENT FEE: The Borrower agrees to pay to the Bank a
commitment fee on the unused portion of the Line of Credit of
.125% per annum, payable quarterly in arrears, commencing
September 15, 2000, and computed on a year of 360 days for
actual days elapsed.
2.2 LETTER OF CREDIT SUB-FACILITY
2.2.1 LETTER OF CREDIT SUB-FACILITY: The Bank agrees to issue
standby letters of credit (each a "Letter of Credit") on
behalf of the Borrower of up to $3,000,000.00. At no time,
however, shall the total principal amount of all Advances
outstanding under the Line of Credit, together with the total
face amount of all Letters of Credit outstanding, less any
partial draws paid by the Bank, exceed the Line of Credit.
(i) Upon the Bank's request, the Borrower shall promptly
pay to the Bank issuance fees and such other fees,
commissions, costs and any out-of-pocket expenses
charged or incurred by the Bank with respect to any
Letter of Credit.
(ii) The commitment by the Bank to issue Letters of Credit
shall, unless earlier terminated in accordance with
the terms of the Agreement, automatically terminate
on the Expiration Date of the Line of Credit and no
Letter of Credit shall expire on a date which is
after the Expiration Date.
(iii) Each Letter of Credit shall be in form and substance
satisfactory to the Bank and in favor of
beneficiaries satisfactory to the Bank, provided that
the Bank may refuse to issue a Letter of Credit due
to the nature of the transaction or its terms or in
connection with any transaction where the Bank, due
to the beneficiary or the
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nationality or residence of the beneficiary, would
be prohibited by any applicable law, regulation or
order from issuing such Letter of Credit.
(iv) Prior to the issuance of each Letter of Credit, but
in no event later than 10:00 a.m. (California time)
on the day such Letter of Credit is to be issued
(which shall be a Business Day), the Borrower shall
deliver to the Bank a duly executed form of the
Bank's standard form of application for issuance of a
Letter of Credit with proper insertions.
(v) The Borrower shall, upon the Bank's request, promptly
pay to and reimburse the Bank for all costs incurred
and payments made by the Bank by reason of any future
assessment, reserve, deposit or similar requirement
or any surcharge, tax or fee imposed upon the Bank or
as a result of the Bank's compliance with any
directive or requirement of any regulatory authority
pertaining or relating to any Letter of Credit.
In the event that the Borrower fails to pay any drawing under any
Letter of Credit or the balances in the depository account or accounts
maintained by the Borrower with Bank are insufficient to pay such
drawing, without limiting the rights of Bank hereunder or waiving any
Event of Default caused thereby, Bank may, and Borrower hereby
authorizes Bank to create an Advance bearing interest at the rate or
rates provided in Section 9.2 hereof to pay such drawing.
2.3 LINE ACCOUNT: The Bank shall maintain on its books a record of account
in which the Bank shall make entries for each Advance and such other
debits and credits as shall be appropriate in connection with 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.
2.4 AUTHORIZATION TO CHARGE ACCOUNT(S): The Borrower hereby authorizes the
Bank, if and to the extent payment owed to the Bank under this
Agreement 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.
2.5 PAYMENTS: 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.
2.6 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 the Borrower's right, title and interest
in and to the following property ("Collateral"):
(i) INVENTORY. All inventory now owned or hereafter
acquired by the Borrower, including, but not limited
to, all raw materials, work in process, finished
goods, merchandise, parts and supplies of every kind
and description, including inventory temporarily out
of the Borrower's custody or possession, together
with all returns on accounts (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 Exhibit "A" (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.
(vii) WATER RIGHTS. All of Borrower's now existing or
hereafter acquired water rights of every kind and
description, whether appurtenant, riparian or
prescriptive or arising by virtue of any contract or
other agreement.
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) GUARANTORS. Continuing guaranty in favor of the Bank
executed by the following, together with evidence
that the execution, delivery and performance by any
guarantor has been duly authorized: Golden State
Vintners, Inc..
(iii) FEES. Payment of all of the Bank's out-of-pocket
expenses in connection with the preparation and
negotiation of this Agreement.
(iv) FINANCING STATEMENTS. Executed UCC-1 financing
statement(s) describing the Collateral, which have
been filed with the Secretary of State or the county
recorder 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 initial Advance and the first extension
of credit) shall be subject to the further 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 occurred 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.
The Borrower's acceptance of the proceeds of any loan, advance or extension of
credit or the Borrower's execution of any document or instrument evidencing or
creating any Obligation hereunder shall be deemed to constitute the Borrower's
representation and warranty that all of the above statements are true and
correct.
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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., the failure to comply with which
would have a material adverse effoct on the Borrower's 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 FICTITIOUS TRADE STYLES: All fictitious trade styles used by the
Borrower in connection with its business operations and each state in
which each such fictitious trade style is used are listed below. The
Borrower shall notify the Bank not less than 30 days prior to effecting
any change in the matters described below or prior to using any other
fictitious trade style at any future date, indicating the trade style
and state(s) of its use.
TRADE STYLE STATE OF USE
See attached Exhibit "B" All
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 and have been or
will be prepared in accordance with generally accepted accounting
principles 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
occurred 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, threatened against or affecting the Borrower or the
Borrower's properties before any court or administrative agency which,
if determined adversely to the Borrower, would have a material adverse
effect on the Borrower's financial condition or operations or on the
Collateral.
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<PAGE>
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.
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. 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 the Borrower that would
reasonably be expected to give rise to Environmental Claims; PROVIDED,
however, that with respect to property leased from an unrelated third
party, the foregoing representation is made to the best knowledge of
the Borrower. In addition, (i) the Borrower does not have 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 correct and accurate records.
(ii) All inventory is of good and merchantable quality,
free from defects.
(iii) The inventory is not stored with a bailee,
warehouseman or similar party.
(iv) 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, or 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.
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<PAGE>
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 120 days after the end of each of the
Borrower's fiscal years, a copy of the annual audited
financial report of the Borrower for such year,
prepared by a firm of certified public accountants
acceptable to Bank and accompanied by an unqualified
opinion of such firm.
(ii) Not later than 60 days after the end of each fiscal
quarter, the Borrower's financial statement as of the
end of such period and a copy of Golden State
Vintners, Inc.'s Form 10Q filed with the Securities
and Exchange Commission.
(iii) Concurrently with the delivery of the financial
reports required hereunder, a compliance certificate
stating that the Borrower is in compliance with all
covenants contained herein and that no Event of
Default or potential Event of Default has occurred or
is continuing, and certified to by the chief
financial officer of the Borrower.
(iv) 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 as of the relevant times set
forth below:
(i) A minimum Effective Tangible Net Worth of at least
$55,000,000.00 at each fiscal year end.
(ii) A ratio of Debt to Effective Tangible Net Worth of
not more than 2 to 1 at each fiscal year end.
(iii) A ratio of Current Assets to Current Liabilities of
not less than 1.5 to 1 at each fiscal year end.
(iv) A ratio of Cash Flow to the current portion of long
term Debt of not less than 1.25 to 1 at each fiscal
year end.
(v) EBITDA of at least $1.00 at the end of each fiscal
quarter, with EBITDA based upon the immediately
preceding three fiscal quarters and the current
quarter just ended.
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.
-13-
<PAGE>
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 carried by companies engaged in similar businesses and
owning similar properties in the same general areas in which the
Borrower operates and maintain such other insurance and coverages as
may be required by the Bank. All such insurance shall be in form and
amount and with companies satisfactory to the Bank.
With respect to insurance covering properties in which the Bank
maintains a security interest or lien, such insurance shall 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.
6.6 MAINTENANCE OF COLLATERAL AND OTHER PROPERTIES: Except for Permitted
Liens, 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 not discharged,
bonded against or released within 60 days) and defend the Collateral
against any such levy, lien, encumbrance or security interest; comply
with all laws, statutes and regulations pertaining to the Collateral
and its use and operation; execute, file and record such statements,
notices and agreements, take such actions and obtain such certificates
and other documents as necessary to perfect, evidence and continue the
Bank's security interest in the Collateral and the priority thereof;
maintain accurate and complete records of the Collateral which show all
sales, claims and allowances; and properly care for, house, store and
maintain the Collateral in good condition, free of misuse, abuse and
deterioration, other than normal wear and tear. The Borrower shall also
maintain and preserve all its properties in good working order and
condition in accordance with the general practice of other businesses
of similar character and size, ordinary wear and tear excepted.
6.7 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 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 except liens and security
interests associated with Indebtedness of up to $1,000,000.00 in any
one fiscal year.
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<PAGE>
6.10 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.
6.11 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.
6.12 COMPENSATION OF EMPLOYEES: Compensate its employees for services
rendered at an hourly rate at least equal to the minimum hourly rate
prescribed by any applicable federal or state law or regulation.
6.13 CAPITAL EXPENSE: Not make any fixed capital expenditure or any
commitment therefor, including, but not limited to, incurring liability
for leases which would be, in accordance with generally accepted
accounting principles, reported as capital leases, or purchase any real
or personal property in an aggregate amount exceeding $14,000,000.00 in
any one fiscal year.
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 $500,000.00 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 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) Except as provided herein below, the Borrower's
inventory shall, at all times, be in the Borrower's
physical possession, shall not be held by others on
consignment, sale on approval, or sale or return and
shall be kept only at: 607 Airport Road, Napa, CA
94558, 38558 Rd. 128, Cutler, CA 93615; 8418 South
Lac Jac Ave., Parlier, CA 93648; 7409 W. Central
Ave., Fresno, CA 93706; 401 S. St. Helena Hwy., St.
Helena, CA 94574; 1777 Metz Road, Soledad, CA 93960;
and 1075 Golden Gate Drive, Napa, CA 94559.
(ii) The Borrower shall keep correct and accurate records.
(iii) All inventory shall be of good and merchantable
quality, free from defects.
(iv) The inventory shall not at any time or times
hereafter be stored with a bailee, warehouseman or
similar party without the Bank's prior written
consent and, in such event, the Borrower will
concurrently therewith cause any such bailee,
warehouseman or similar party to issue and deliver to
the Bank, in form acceptable to the Bank, warehouse
receipts in the Bank's name evidencing the storage of
inventory.
(v) At any reasonable time and from time to time during
normal business hours and with reasonable notice,
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
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<PAGE>
and condition and the Borrower agrees to reimburse
the Bank for the Bank's reasonable costs and expenses
in so doing.
6.17 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 at the following location(s): 38558 Rd. 128,
Cutler, CA 93615; 8418 South Lac Jac Ave., Parlier, CA 93648; 7409 W.
Central Ave., Fresno, CA 93706; 401 S. St. Helena Hwy., St. Helena, CA
94574; 1777 Metz Road, Soledad, CA 93960; and 1075 Golden Gate Drive,
Napa, CA 94559.
6.18 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, fumigate, prune, harvest, pick,
clean, preserve and protect the Crops.
(ii) Not commit or suffer to be committed any waste of or
damage to the Crops
(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.
(iv) Harvest and prepare the Crops for market and promptly
notify the Bank when any of the Crops are ready for
market.
(v) Keep the Crops separate and always capable of
identification.
(vi) Comply with any requirements or instructions of the
Bank with respect to hauling, shipping, storing,
marketing and otherwise preparing, handling and
disposing of the Crops.
6.19 EVIDENCE OF WATER AVAILABILITY: At such times as the Bank may 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 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 Borrowers or any Guarantor 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 the Borrowers or any Guarantor with or in favor
of Bank and any such failure shall continue unremedied for more than 30
days after the occurrence thereof.
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<PAGE>
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 by
such third party or parties, whether or not exercised, to accelerate
the maturity of any Indebtedness in an amount in excess of $250,000.00.
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 60 days after the date of such
appointment.
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 60 days after the
issuance or attachment of such writ or lien.
7.7 REVOCATION OR LIMITATION OF GUARANTY: Any guaranty shall be revoked or
limited or its enforceability or validity shall be contested by any
guarantor, by operation of law, legal proceeding or otherwise or any
guarantor who is a natural person shall die.
7.8 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.
7.9 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.
7.10 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.
7.11 IMPAIRMENT OF COLLATERAL. There shall occur any injury or damage to all
or any part of the Collateral or all or any part of the Collateral
shall be lost, stolen or destroyed.
7.12 WATER QUALITY/AMOUNT. The Borrower's water is or is projected to be
insufficient in amount or unsuitable in quality, as determined by the
Bank in either case, to conduct operations as described in projections
or by information provided by Borrower to the Bank.
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<PAGE>
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 upon 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 LETTERS OF CREDIT: Require the Borrower to pay immediately to the Bank,
for application against drawings under any outstanding Letters of
Credit, the outstanding principal amount of any such Letters of Credit
which have not expired. Any portion of the amount so paid to the Bank
which is not applied to satisfy draws under any such Letters of Credit
or any other obligations of the Borrower to the Bank shall be repaid to
the Borrower without interest.
8.5 PROTECTION OF SECURITY INTEREST: Make such payments and do such acts as
the Bank, in its sole judgment, considers necessary and reasonable to
protect its security interest or lien in the Collateral. The Borrower
hereby irrevocably authorizes the Bank to pay, purchase, contest or
compromise any encumbrance, lien or claim which the Bank, in its sole
judgment, deems to be prior or superior to its security interest.
Further, the Borrower hereby agrees to pay to the Bank, upon demand
therefor, all expenses and expenditures (including attorneys' fees)
incurred in connection with the foregoing.
8.6 FORECLOSURE: Enforce any security interest or lien given or provided
for under this Agreement or under any security agreement, mortgage,
deed of trust or other document, 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 the Borrower hereby waives any and all rights,
obligations or defenses now or hereafter established by law relating to
the foregoing. In the enforcement of its security interest or lien, the
Bank is authorized to enter upon the premises where any Collateral is
located and take possession of the Collateral or any part thereof,
together with the Borrower's records pertaining thereto, or the Bank
may require the Borrower to assemble the Collateral and records
pertaining thereto and make such Collateral and records available to
the Bank at a place designated by the Bank. The Bank may sell the
Collateral or any portions thereof, together with all additions,
accessions and accessories thereto, giving only such notices and
following only such procedures as are required by law, at either a
public or private sale, or both, with or without having the Collateral
present at the time of 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.
8.7 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
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<PAGE>
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.
8.8 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.
8.9 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.
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 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 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
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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 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 related 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:
GOLDEN STATE VINTNERS SANWA BANK CALIFORNIA
607 Airport Road Fresno Office (CBC)
Napa, CA 94558 2035 Fresno Street
Attn: Jeffrey B. O'Neill Fresno, CA 93721
FAX: (707) 254-4900 Attn: Robert Griffin
Or FAX: (559) 487-2157
8418 S. Lac Jac Ave.
Parlier, CA 93648
Attn: Brian R. Thompson
FAX: (559) 638-6272
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 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.
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<PAGE>
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 OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN
ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY
OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT
TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE 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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<PAGE>
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 GOLDEN STATE VINTNERS
BY:__________________________________ BY:_____________________________________
NAME: Robert Griffin, Vice President NAME: Brian R. Thompson, CFO
BY:_____________________________________
NAME: Ralph Lenamon, Assistant Treasurer
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EXHIBIT "A"
DESCRIPTION OF REAL PROPERTY
All that real property located in ________________ County, State of California,
legally described as follows:
1
<PAGE>
CERTIFIED CORPORATE RESOLUTION TO BORROW
WHEREAS, GOLDEN STATE VINTNERS (the "Corporation") has made application
to SANWA BANK CALIFORNIA (the "Bank") for credit accommodations which may
consist of but shall in no way be limited to the following: the renewal,
continuation or extension of an existing obligation; the extension of a new
loan, line of credit or commitment; the issuance of letters of credit or
banker's acceptances; or the purchase or sale through Bank of foreign
currencies.
RESOLVED, that: any two, acting together, of the following officers:
JEFFREY B. O'NEIL, as the CHIEF EXECUTIVE OFFICER of the Corporation or BRIAN R.
THOMPSON, as the CHIEF FINANCIAL OFFICER of the Corporation, or RALPH LENAMON,
as the ASSISTANT TREASURER of the Corporation, are authorized, in the name of
and on behalf of the Corporation to:
(a) Borrow money from the Bank in such amounts and upon such terms
and conditions as are agreed upon by the officers of the
Corporation and the Bank; and execute and deliver or endorse
such evidences of indebtedness or renewals thereof or
agreements therefor as may be required by the Bank, all in
such form and content as the officers of the Corporation
executing such documents shall approve (which approval shall
be evidenced by the execution and delivery of such documents);
provided, however, that the maximum amount of such
indebtedness shall not exceed the principal sum of
$28,000,000.00 exclusive of any interest, fees, attorneys'
fees and other costs and expenses related to the indebtedness.
(b) Execute such evidences of indebtedness, agreements, security
instruments and other documents and to take such other actions
as are herein authorized.
(c) Sell to or discount or re-discount with the Bank any and all
negotiable instruments, contracts or instruments or evidences
of indebtedness at any time held by the Corporation; and
endorse, transfer and deliver the same, together with
guaranties of payment or repurchase thereof, to the Bank (for
which the Bank is hereby authorized and directed to pay the
proceeds of such sale, discount or re-discount as directed by
such endorsement without inquiring into the circumstances of
its issue or endorsement or the disposition of such proceeds).
(d) Withdraw, receive and execute receipts for deposits and
withdrawals on accounts of the Corporation maintained with the
Bank.
(e) Grant security interests and liens in any real, personal or
other property belonging to or under the control of the
Corporation as security for any indebtedness of the
Corporation to the Bank; and execute and deliver to the Bank
any and all security agreements, pledges, mortgages, deeds of
trust and other security instruments and any other documents
to effectuate the grant of such security interests and liens,
which security instruments and other documents shall be in
such form and content as the officers of the Corporation
executing such security instruments and other documents shall
approve and which approval shall be evidenced by the execution
and delivery of such security instruments and other documents.
(f) Apply for letters of credit or seek the issuance of banker's
acceptances under which the Corporation shall be liable to the
Bank for repayment.
(g) Purchase and sell foreign currencies, on behalf of the
Corporation, whether for immediate or future delivery, in such
amounts and upon such terms and conditions as the officer(s)
authorized herein may deem appropriate, and give any
instructions for transfers or deposits of monies by check,
drafts, cable, letter or otherwise for any purpose incidental
to the
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<PAGE>
foregoing, and authorize or direct charges to the
depository account or accounts of the Corporation for the
cost of any foreign currencies so purchased through the
Bank.
(h) To designate in writing to the Bank in accordance with the
terms of any agreement or other document executed by the
above-named individuals one or more individuals who shall have
the authority to as provided herein, to:
(1) request advances under lines of credit extended by
the Bank to the Corporation;
(2) apply for letters of credit or seek the issuance of
banker's acceptances under which the Corporation
shall be liable to the Bank for repayment;
(3) make deposits and receive and execute receipts for
deposits on accounts of the Corporation maintained
with the Bank;
(4) make withdrawals and receive and execute receipts for
withdrawals on account of the Corporation maintained
with the Bank;
(5) purchase and sell foreign currencies.
(i) Transact any other business with the Bank incidental to the
powers hereinabove stated.
RESOLVED FURTHER, that all such evidences of indebtedness, agreements,
security instruments and other documents executed in the name of and on behalf
of the Corporation and all such actions taken on behalf of the Corporation in
connection with the matters described herein are hereby ratified and approved.
RESOLVED FURTHER, that the Bank is authorized to act upon these
resolutions until written notice of their revocation is delivered to the Bank.
RESOLVED FURTHER, that any resolution set forth herein is in addition
to and does not supersede any resolutions previously given by the Corporation to
the Bank.
RESOLVED FURTHER, that the Secretary of the Corporation be, and hereby
is, authorized and directed to prepare, execute and deliver to the Bank a
certified copy of the foregoing resolutions.
I do hereby certify that I am Brian B. Thompson, the Secretary of
GOLDEN STATE VINTNERS, a California corporation, and I do hereby further certify
that the foregoing is a true copy of the resolutions of the Board of Directors
of the Corporation adopted and approved at a meeting which was duly called and
held in accordance with all applicable provisions of law and the Articles and
By-Laws of the Corporation, on the ________ day of _______________, 2000, at
which meeting a majority of the Board of Directors of the Corporation was
present and voted in favor of the resolutions.
I hereby further certify that such resolutions are presently in full
force and effect and have not been amended or revoked. I do further certify that
the following persons have been duly elected and qualified as and, this day are,
officers of the Corporation, holding their respective offices appearing below
their names, and that the signatures appearing opposite their names are the
genuine signatures of such persons.
NAME OF OFFICER: JEFFREY B. O'NEILL ____________________________________
(SIGNATURE)
TITLE: CHIEF EXECUTIVE OFFICER
NAME OF OFFICER: BRIAN R. THOMPSON ____________________________________
(SIGNATURE)
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<PAGE>
TITLE: CHIEF FINANCIAL OFFICER
NAME OF OFFICER: RALPH LENAMON ____________________________________
(SIGNATURE)
TITLE: ASSISTANT TREASURER
IN WITNESS WHEREOF, this document is executed as of the _____ day of
_____________, 2000.
NAME OF CORPORATION: GOLDEN STATE VINTNERS
BY:____________________________________
NAME: BRIAN B. THOMPSON, SECRETARY
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<PAGE>
[GRAPHIC OMITTED]
LOAN DISBURSEMENT INSTRUCTIONS
LINE OF CREDIT
Date:as of July 5, 2000_____________________________
The undersigned hereby instructs Sanwa Bank California to disburse the proceeds
of this loan as shown below:
DISBURSEMENT AMOUNT
1. CREDITED TO THE FOLLOWING ACCOUNT: All
Advances to be credited to Account Number
0293-36525 upon the request of any officer
of the Borrower or Brad Harrison. $ _______________
TOTAL: $_______________
(Authorizing signatures appear on attached page entitled
"AUTHORIZING SIGNATURES FOR LOAN DISBURSEMENT INSTRUCTIONS")
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<PAGE>
AUTHORIZING SIGNATURES FOR LOAN DISBURSEMENT INSTRUCTIONS
The following signature(s) authorize disbursement of loan proceeds as set forth
in the preceding instructions consisting of 1 page(s).
BORROWER:
GOLDEN STATE VINTNERS
BY:_____________________________________
NAME: Brian R. Thompson, CFO
BY:______________________________________
NAME: Ralph Lenamon, Assistant Treasurer
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