Exhibit 10.45
BUILDING LOAN AGREEMENT
THIS BUILDING LOAN AGREEMENT ("Agreement") is made as of October 1, 1998,
by and between PROVENA FOODS INC., a California corporation ("Borrower"), and
COMERICA BANK-CALIFORNIA, a California banking corporation ("Lender").
1. DEFINITIONS OF TERMS USED IN THIS AGREEMENT
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1.1 Bonds: California Economic Development Financing
Authority Variable Rate Demand Industrial Development Revenue Bonds, Series 1998
(Provena Foods Inc. Project).
1.2 Borrower's Funds: The funds to be deposited by Borrower
into the Borrower's Funds, Building Loan Account for the purposes herein
described.
1.3 Borrower's Funds, Building Loan Account: A special
non-interest bearing account into which any Borrower's Funds shall be deposited
pending disbursement in the manner and for purposes herein described. Borrowers
Funds shall be disbursed in the manner provided in this Agreement for
disbursement of the Loan proceeds.
1.4 Chino Property: That certain real property legally
described in the Chino Trust Deed given as additional collateral for the
Reimbursement Agreement.
1.5 Chino Trust Deed: The Deed of Trust in favor of lender
of even date herewith encumbering the Chino Property and given to secure the
Reimbursement Agreement.
1.6 Completion Date: The date of required completion of
construction of the Improvements in accordance with the Plans and the
requirements of this Agreement and issuance of all licenses and permits
necessary for the occupancy, use or lease thereof, which is April 1, 2000.
1.7 Cost Breakdown: An itemized schedule on a component,
unit and trade breakdown basis covering all costs of renovation and completing
the Improvements, to be submitted to and approved by Lender prior to any
disbursement.
1.8 Disbursement Schedule: The schedule of disbursement of
the proceeds of the Loan and of any Borrower's Funds, Building Loan Account as
set forth on the Disbursement Schedule attached hereto as Exhibit A and the
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Disbursement Plan attached hereto as Exhibit B.
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1.9 Draw Request: The form, substantially in the form of
Exhibit C attached hereto and made a part hereof, which is submitted to Lender
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by Borrower when a disbursement of Loan proceeds is requested.
1.10 Environmental Indemnity: The unsecured environmental
indemnity agreement executed in favor of Lender of even date herewith.
1.11 Governmental Authority: The authority of the United
States, the State in which the Property is located, any political subdivision
thereof, any city and any governmental or quasi-governmental agency, department,
commission, board, bureau or instrumentality of any of them, or any court,
administrative tribunal, or public utility.
1.12 Governmental Requirements: Any present or future law,
ordinance, order, rule or regulation of a Governmental Authority applicable to
Borrower or the construction, maintenance, use, operation or leasing of the
Property.
1.13 Improvements: The manufacturing project to be constructed
on the Property.
1.14 Indenture: The Indenture of Trust, by and between Issuer
and the Trustee, relating to the Bonds.
1.15 Initial Disbursement: The payment upon Recordation of
costs, charges, expenses and items associated with the issuance of the Bonds and
the Loan as set forth in Paragraph 6.2.
1.16 Issuer: California Economic Development Financing
Authority, a body public and corporate, and a public instrumentality of the
State of California, as issuer of the Bonds.
1.17 Letter of Credit: The direct pay letter credit issued by
Lender in connection with the issuance of the Bonds.
1.18 Letter of Credit Documents: This Agreement, the Security
Agreement, the Trust Deed, the Chino Trust Deed and all documents given to
Lender from time to time to secure the reimbursement obligations of Borrower
under the Reimbursement Agreement, provided, however, that the Environmental
Indemnity is not one of the Letter of Credit Documents. Notwithstanding any
provision of any Letter of Credit Document, Borrower's obligations under the
Environmental Indemnity are not secured by the Trust Deed, the Chino Trust Deed
or the Security Agreement.
1.19 Litigation Amount: Fifty Thousand Dollars ($50,000).
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1.20 Loan: The amount evidenced by the Loan Agreement.
1.21 Loan Agreement: The Loan Agreement by and between the
Issuer and Borrower.
1.22 Plans: The final plans and specifications for the
Improvements.
1.23 Personal Property: That personal property described
in the Trust Deed and Chino Trust Deed and Security Agreement and which is
collateral for the Reimbursement Agreement.
1.24 Project: The Property, the Improvements and the
Personal Property.
1.25 Property: That certain real property legally
described in the Trust Deed where the manufacturing facility financed by the
Bonds is to be constructed and the Improvements to be constructed on a portion
thereof.
1.26 Recordation: The act of recording the Trust Deed in
the official records of the County in which the Property is situated.
1.27 Reimbursement Agreement: The reimbursement agreement
by and between Borrower and Lender related to the Letter of Credit.
1.28 Security Agreement: The Security Agreement from the
Borrower to Lender, securing the Reimbursement Agreement.
1.29 Title Insurer: Collectivel, the issuers of the title
insurance policies required by Paragraph 8.3, i.e., Benefit Land Title Insurance
Company and Chicago Title Company.
1.30 Trust Deeds: The two deeds of trust in favor of
Lender of even date herewith encumbering the Property and the Chino Property
respectively and given to secure the Reimbursement Agreement.
1.31. Trustee: The trustee for the holders of the Bonds
under the Indenture.
2. LOAN.
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2.1 Borrower has applied to the Issuer for the issuance of
the Bonds to fund the Loan to finance acquisition of the Property and renovation
of the Improvements and for other costs related thereto.
2.2 Borrower has requested that Lender issue in favor of
the Trustee for the account of the Borrower, the Letter of Credit, which Letter
of Credit is to be available to be
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drawn upon to provide funds for the payment of principal and interest on the
Bonds when due and payable.
2.3 Borrower agrees that Lender shall have approval
rights over the disbursement of the Loan to the Borrower pursuant to this
Agreement.
3. LOAN PROCEEDS. Upon Recordation, Lender is authorized to:
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3.1 Approve the initial Disbursement in the manner and for
the purpose provided by Paragraph 6.2 directly to the parties to whom the
respective payment is to be made.
4. CONDITIONS PRECEDENT TO RECORDATION. Prior to Recordation the
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following conditions shall have been satisfied:
4.1 Lender shall have received:
4.1.1 original insurance policies or certificates
thereof for the insurance required by Paragraph
8.9 hereof;
4.1.2 preliminary title reports issued by Title Insurer
showing the condition of title to the Property
and the Chino Property with the Property's and
Chino Property's legal descriptions and a copy of
all documents listed as exceptions to said
reports;
4.1.3 a "phase one" environmental assessment, in form
and substance satisfactory to Lender
("Environmental Assessment") prepared by a
qualified licensed environmental consultant
acceptable to Lender confirming the absence of
hazardous or toxic materials in, on, under or
around the Property and the Chino Property. The
Environmental Assessment shall, at a minimum,
include a description of current and former uses
of the Property and the Chino Property and the
results of an inspection of the Property and the
Chino Property and adjacent and neighboring
property sufficient to form a basis for a
reasoned opinion concerning the existence of, or
potential for, hazardous material contamination
on or in the vicinity of the Property and the
Chino Property. In the event the Environmental
Assessment indicates that the Property or the
Chino Property may be affected by hazardous or
toxic materials, or is otherwise unsatisfactory
to Lender, in Lender's sole discretion, Lender
may require additional or further environmental
testing,
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inspection and/or assessment of the Property
and/or the Chino Property;
4.1.4 any development agreement related to the
Property with any governmental agency together
with each applicable governmental entities
approved for the Project, with evidence of
subordination of any such development agreement
to the lien of Lender; and
4.1.5 an ALTA survey for each of the Property and the
Chino Property certified to Lender and
satisfactory to Lender.
4.1.6 evidence satisfactory to Lender that the Project
complies with the applicable zoning ordinances;
4. CONDITIONS PRECEDENT TO DISBURSEMENT.
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5.1 Prior to the Initial Disbursement, the following
conditions shall have been satisfied:
5.1.1 Title Insurer shall have issued or agreed to
issue the title policies described in Paragraph 8.3 hereof, naming Lender as
insured in the aggregate amount of $4,060,000.
5.1.2 Lender shall have received a Draw Request, and
all the requirements set forth in Part I of the Disbursement Schedule shall have
been satisfied.
5.1.3 UCC-1 Financing Statements shall have been filed
with the Secretary of State for the state where the Property and Chino Property
is situated describing the Personal Property.
5.1.4 Recordation shall have occurred.
5.2 Prior to Lender approving disbursements after the
Initial Disbursement, except for the last disbursement, the following conditions
shall have been satisfied:
5.2.1 The Initial Disbursement shall have occurred.
5.2.2 No default shall exist under this Agreement, the
Reimbursement Agreement or any other Letter of Credit Document.
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5.2.3 Lender shall have received an appraisal showing an
indicated prospective market value of the Project (the "Appraisal").
5.2.4 Lender shall have received within 30 days of
Recordation a list of the names and addresses of all material dealers, laborers
and subcontractors with whom agreements have been made by the Borrower to
deliver materials to and/or perform work on the Improvements;
5.2.5 Lender shall have received within 30 days of
Recordation the Cost Breakdown;
5.2.6 Lender shall have received within 30 days of
Recordation a Project Construction Cost Schedule which shall include a 10%
contingency reserve and a Construction Disbursement Schedule, each satisfactory
to Lender;
5.2.7 Lender shall have received within 30 days of
Recordation the Plans in form and substance satisfactory to Lender and assigned
to Lender; and
5.2.8 Lender shall have received within 30 days of
Recordation the construction contract and architect's agreement for the
Improvements, each in form and substance satisfactory to Lender and each
assigned to Lender with the contractor's and architect's consent.
5.2.9 Lender shall have received a Draw Request, and all
the requirements set forth in the paragraph(s) indicated under Part II of the
Disbursement Schedule shall have been satisfied.
5.2.10 Concurrently with the Draw Request, Borrower shall
furnish to Lender (i) copies of all "soft-cost" invoices, and (ii) unconditional
partial releases of lien (on forms approved by Lender) from all subcontractors
for the construction of the portion of the Improvements covered by the
immediately preceding Draw Request.
5.2.11 With respect to every Draw Request, the Title Insurer
shall have agreed to issue its continuation endorsement to Lender indicating
that since the last preceding disbursement to Borrower, there has been no change
in the state of title, that there are no intervening liens which may now or
hereafter take priority over the disbursement to be made and that there are no
survey exceptions not theretofore approved by Lender.
5.2.12 The representations and warranties of Borrower made
in Paragraph 7 hereof shall be true and correct on and as of the date of the
disbursement with the same effect as if made on such date.
5.2.13 The Improvements shall not have been materially
injured or damaged by fire or other casualty unless Lender shall have received
insurance proceeds sufficient
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in its judgment to effect the satisfactory restoration of the Improvements and
to permit the completion thereof prior to the Completion Date.
5.2.14 Borrower shall have deposited with Lender cash in
the amount, estimated by Lender, necessary to pay for the costs of completion of
construction of the Improvements to the extent that the aggregate amount
remaining in the construction fund held by the Trustee (the "Program Fund")
under the Indenture (and available pursuant to the limitations of Section 6.5
hereof) and Borrower's Funds, Building Loan Account, designated for the payment
of the remaining costs to be incurred in the completion of renovation of the
Improvements is, in the opinion of Lender, insufficient therefor.
5.2.15 Advice from Lender's inspection department or
inspector designated by Lender to the effect that, to date, the Improvements
have been constructed in accordance with the Plans and that the present state of
construction of the Improvements will, barring then unforeseen and unknown
delays, permit completion of construction of the Improvements on or before the
Completion Date.
5.2.16 Copies of all inspection reports from the United
States Department of Agriculture shall be delivered to Lender and such reports
shall be in form and substance reasonably satisfactory to Lender.
5.3 Prior to Lender's approval of the last disbursement, the
conditions set forth in subparagraph 5.2 of this paragraph shall be satisfied
and in addition the following conditions shall have been satisfied by Lender's
receipt of:
5.3.1 Advice from Lender's inspection department or
inspector designated by Lender to the effect that the Improvements have been
completed in accordance with the Plans.
5.3.2 A final Draw Request, and all the requirements set
forth in the paragraph(s) indicated under Part II of the Disbursement Schedule
shall have been satisfied.
5.3.3 Evidence that Borrower has filed the notice of
completion of the Improvements necessary to establish commencement of the
shortest statutory period for the filing of mechanics' and materialmen's liens.
5.3.4 Conditional partial releases of lien (on forms
approved by Lender, and conditioned only upon receipt of the funds allocated in
the last disbursement) from each material dealer, laborer and/or subcontractor
who has done work or furnished materials for the construction of the
Improvements.
5.3.5 A CLTA Endorsement Series 101, as Lender may
determine, issued by Title Insurer subsequent to the expiration of the period
during which any lien for labor,
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services or materials may be validly recorded against the Property or the
Improvements or such other endorsements to Lender's title insurance policy as
Lender may require which shall insure that the Improvements have been completed
free of all mechanics' and materialmen's liens or claims thereof.
5.3.6 Evidence satisfactory to Lender that the
Improvements have received approval for operation by the United States
Department of Agriculture.
6. LOAN DISBURSEMENT. The proceeds of the Loan and Borrower's
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Funds deposited in the Borrower's Funds, Building Loan Account shall be used
only for the payment of costs of construction of the Improvements in accordance
with the Plans and other costs related thereto, as set forth on the Disbursement
Schedule, and shall be disbursed to or for the account of Borrower as follows:
6.1 Method of Disbursement: Subject to fulfillment of all
applicable conditions and the terms and procedures set forth in this Agreement
and the Disbursement Schedule, (a) each disbursement shall be made on the basis
of a Draw Request submitted by Borrower to Lender and to the Trustee (as
required by the Loan Agreement), and (b) upon Lender's approval of the Draw
Request, the proceeds of the disbursement shall be deposited into the commercial
account identified in the Disbursement Schedule, except that at Lender's option,
disbursements may otherwise be made by Trustee directly to Borrower, to
subcontractors, laborers or material providers, or jointly to one or more of the
foregoing, or to other persons designated by Borrower, or in such other manner
as the Lender may approve or require.
6.2 Initial Disbursement: Immediately before Recordation,
and upon satisfaction of the conditions of Paragraph 5.1 hereof, Lender shall
approve the disbursement by Trustee to the persons indicated in the Disbursement
Schedule (including Lender), in accordance with the Disbursement Schedule the
amounts necessary to pay all costs, charges and expenses incurred or to be
incurred (as estimated by Lender) in connection with the Loan or payable
pursuant to this Agreement and the other Letter of Credit Documents, excluding
direct costs of labor and materials related to the Improvements, and including
but not limited to letter of credit fees (which are deemed earned at Recordation
and are not refundable in whole or part), service charges, title charges, tax
and lien service charges, recording fees, escrow fees, appraisal fees, legal
fees, real property taxes and assessments, insurance premiums, any amount
required to pay existing encumbrances affecting the Property or Chino Property.
6.3 Subsequent Disbursements: Upon satisfaction of the
conditions of Paragraph 5.2 hereof, Lender shall approve the disbursement by
Trustee directly to Borrower or, at Lender's option, directly to subcontractor
or to such persons as have actually supplied labor, material or services in
connection with or incidental to the construction of the Improvements (or for
payment of the cost of any of Borrower's undertakings hereunder, in the
Reimbursement Agreement, the Trust Deed or the Security Agreement), such sums as
are required for the payment of interest on the Loan, costs and expenses of
construction of the Improvements and costs incidental thereto as set forth on
the Disbursement Schedule. Such disbursements shall be made in accordance with
the applicable
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provisions of the Disbursement Schedule. All funds approved by Lender to be
disbursed hereunder to Borrower shall be received by Borrower in trust and
Borrower agrees that the same shall be used only for the payment of those items
contemplated by the particular disbursement. If at any time Lender is holding
Borrower's Funds in the Borrower's Funds, Building Loan Account, Lender shall
make all disbursements first from the Borrower's Funds, Building Loan Account
until such funds are exhausted.
6.4 Final Disbursement: The final disbursement shall be the
payment of any monies retained from progress payments or draws as set forth in
the Disbursement Schedule. Subject to the provisions of this Agreement, the
final disbursement shall be made only after Borrower has satisfied the
conditions of Paragraph 5.3 hereof and delivered or caused to be delivered to
Lender in addition to those required under Paragraph 8.3 hereof, such additional
endorsements or such additional policies of title insurance with endorsements
thereto as Lender may require, with a liability limit of not less than
$4,060,000 issued by Title Insurer, with coverage and in form satisfactory to
Lender, insuring Lender's interest under the Trust Deed as a first lien on the
Property excepting only such items as shall have been approved in writing by
Lender.
6.5 Disbursement Limits: Lender shall not be required to
approve any disbursement of an aggregate amount of the Loan proceeds for
materials incorporated into the Improvements during any stage of construction
which exceeds the lesser of the value of such labor or materials or the amount
allocated to that stage of construction as set forth in the Disbursement
Schedule, and in any event, Lender shall not be required to approve the
disbursement of any amount which, in Lender's opinion, will reduce that portion
of the Program Fund designated for the cost of completion of construction of the
Improvements below that needed to pay for the labor materials necessary to
complete the Improvements. If Borrower consists of more than one person or is a
partnership or joint venture, Lender is authorized to make disbursements to any
one of such persons or to any partner or joint venturer.
7. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower represents
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and warrants, which representations and warranties shall survive any
investigations, inspections or inquiries made by Lender or any of its
representatives or approval of any disbursements made by Lender hereunder; that:
7.1 Draw Request: Each Draw Request shall be true and accurate
and the submission of same or the receipt of the funds so requested shall
constitute a reaffirmation of the representations, warranties and covenants
contained herein.
7.2 Other Liens: Borrower has made no contract or arrangement
of any kind, the performance which by the other party thereto would give rise to
a lien on the Property, except for its arrangements with major subcontractors if
there is no general contractor.
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7.3 CC&R's, Zoning: It has examined, is familiar with, and
the Improvements will in all respects conform to and comply with, all covenants,
conditions, restrictions, reservations and zoning ordinances affecting the
Property.
7.4 Other Financing: It has not received other financing
for either the acquisition of the Property or the construction and installation
of the Improvements except as has been specifically disclosed to and approved by
Lender prior to Recordation.
7.5 Accuracy: All documents, reports, instruments, papers,
information and forms of evidence delivered to Lender by Borrower with respect
to the Loan are accurate and correct, are complete insofar as completeness may
be necessary to give Lender true and accurate knowledge of the subject matter
thereof, and do not contain any misrepresentations or omissions. Lender may
rely on such documents, reports, instruments, papers, information and forms of
evidence without investigation or inquiry, and any payment made by Lender in
reliance thereon shall be a complete release in its favor of all sums so paid.
7.6 Adequacy of Loan: The amount of available Loan proceeds
(as limited by Section 6.5 above) and Borrower's Funds available for
construction purposes is sufficient to (a) pay all costs to be incurred in
connection with completing the acquisition of the Property and the renovation,
marketing and leasing of the Improvements as contemplated by the Loan Agreement,
(b) pay all sums that may accrue under the Loan Agreement prior to repayment of
the Loan, and (c) enable Borrower to perform and satisfy all the covenants of
Borrower contained in the Loan Agreement and the Letter of Credit Documents.
8. BORROWER'S COVENANTS. Borrower covenants and agrees until
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the full and final payment of the reimbursement obligations of Borrower under
the Reimbursement Agreement, unless Lender waives compliance in writing, that it
will:
8.1 Borrower's Funds: At the time and in amounts required
by Lender, deposit Borrower's Funds in the Borrower's Funds, Building Loan
Account. Borrower's Funds shall be disbursed from such account in the manner
provided in Paragraph 6 above. Should it appear at any time that the total
available funds then held by the Trustee in the Program Fund (as limited by
Section 6.5 above) in Lender's reasonable judgment, to provide the financing for
the completion of the Improvements, Borrower, within fifteen (15) days following
receipt of written demand by Lender for additional funds, shall pay to Lender an
amount equal to such deficiency as expressed in said demand for deposit in the
Borrower's Funds, Building Loan Account, which funds shall first be exhausted
before any further disbursement of the proceeds of the Loan shall be made.
8.2 Improvements Inspection: Permit Lender, or its
representatives (and Lender shall have the right) to enter upon the Property,
inspect the Improvements and all materials to be used in the construction
thereof and to examine all detailed plans and shop drawings which are or may be
kept at the construction site and will cooperate, and cause the general
contractor or, if none, the major subcontractors, to cooperate with Lender. If
Lender in its reasonable judgment
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determines that any work or materials fail to materially conform to any
Governmental Requirement, or sound building practices, or that they otherwise
depart from any of the requirements of this Agreement, Lender may require the
work to be stopped and withhold its approval of disbursements until the matter
is corrected. In the event Lender determines that work must be stopped and
disbursements withheld, Lender shall give Borrower prior telephone notice of its
decision to so act (which telephonic notice shall be confirmed by a written
notice); however, if Lender in good faith determines that an emergency is
occurring or has occurred such that an immediate cessation of work is required,
then Lender need only give notice to Borrower of such action as soon as
reasonably possible under the circumstances. If this occurs, Borrower shall
promptly correct the work to Lender's reasonable satisfaction, and pending
completion of such corrective work shall not allow any other work to proceed. No
such action by Lender shall be deemed to extend the Completion Date and shall
not otherwise affect Borrower's obligation to complete the Improvements within
the time and in the manner required by this Amendment. Inspection by lender of
construction shall be for the purpose of protecting the security of Lender and
preserving Lender's rights under the Letter of Credit Documents. No site
inspection shall be deemed to constitute a waiver of any default of Borrower,
and such inspection is in no way to be construed as a representation that there
is a compliance with the Plans or Governmental Requirements or that the
construction is free from faulty material or workmanship.
8.3 Title Insurance: Deliver or cause to be delivered to
Lender at Recordation or within a reasonable time thereafter two 1970 ALTA
Lender's Policies of Title Insurance or their equivalent with an aggregate
liability limit of not less than the face amount of the Reimbursement
Agreement, issued by Title Insurer, insuring Lender's interest under the Trust
Deed as a valid first lien on the Property and Lender's interest under the Chino
Trust Deed is a valid second lien on the Chino Property, together with such
reinsurance or coinsurance agreements or endorsements to said policy as Lender
may require. Said policies shall contain only such exceptions from their
coverage as shall have been approved in writing by Lender. After Recordation,
Borrower shall, at its own cost and expense, maintain the Trust Deed as a first
lien on the property and the Chino Trust Deed as a second lien on the Chino
Property and deliver or cause to be delivered to Lender from time to time such
endorsements to said policies as Lender deems necessary to insure such priority
of the Trust Deed and Chino Trust Deed. Borrower has requested and Bank has
agreed to waive Bank's standard requirement that Borrower deliver or cause to be
delivered to Lender at Recordation 1970 ALTA LP-10 Policies of Title Insurance,
on the condition that Borrower shall deliver or cause to be delivered to Lender,
upon completion of the Improvements and filing of a valid notice of completion,
an ALTA Lender's Policy of Title Insurance with a liability limit of not less
than the face amount of the Reimbursement Agreement, insuring Lender's interest
under the Trust Deed as a valid first lien on that portion of the Property which
remains subject to the Trust Deed. Borrower shall furnish to Title Insurer
surveys and any other information required to enable it to issue such
endorsements and policies.
8.4 Construction Start: Cause construction of the
Improvements to be commenced not more than 60 days after Recordation and
thereafter diligently prosecute such renovation so that the same will be
completed, in any event, on or before the Completion Date;
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provided, however, that if construction shall have commenced prior to
Recordation, the policy of title insurance shall be issued without
exception for the claims of mechanics or material suppliers or other deletion or
exception based upon the commencement of renovation.
8.5 Personal Property Installation: Not install
materials, personal property, equipment, or fixtures subject to any security
agreement or other agreement or contract wherein the right is reserved to any
person, firm or corporation to remove or repossess any such material, equipment
or fixtures, or whereby title to any of the same is not completely vested in
Borrower at time of installation, without Lender's written consent.
8.6 Insurance: Prior to Recordation, procure and deliver
to Lender and thereafter maintain a policy or policies of insurance in form and
content and by an insurer or insurers satisfactory to Lender, including a clause
giving Lender a minimum of thirty (30) days' notice if such insurance is
canceled, as follows: (i) owner's "all risk" insurance in nonreporting form, in
an amount not less than the face amount of the Reimbursement Agreement or the
full insurable completed value of the Improvements on a replacement cost basis,
whichever amount is lesser, with the normal conditions including fire, extended
coverage, vandalism, malicious mischief, and a lender's loss payable endorsement
naming Lender as loss payee; (ii) comprehensive liability insurance on an
"occurrence" basis, indicating coverage satisfactory to Lender, and naming
Lender as an additional insured; (iii) workers' compensation insurance, issued
to Borrower, as may be required by applicable workers' compensation insurance
laws; (iv) any additional or different coverage as may be specified in Lender's
insurance letter; and (v) any and all additional insurance that Lender in its
reasonable judgment may from time to time require, against insurable hazards
which at the time are commonly insured against in the case of property similarly
situated. At Lender's request, Borrower shall supply Lender with a counterpart
original of any policy.
8.7 Notification of Default: Promptly notify Lender in
writing of the occurrence of any event of default under this Agreement, the
Reimbursement Agreement, the Trust Deed, the Chino Trust Deed, the Security
Agreement or the Environmental Indemnity or of any facts then in existence which
would become an event of default hereunder or thereunder upon the giving of
notice or the lapse of time or both.
8.8 Payment of Costs: Pay all costs and expenses required
to satisfy the conditions of this Agreement. Without limitation of the
generality for the foregoing, Borrower will pay:
8.8.l all taxes and recording expenses, including
stamp taxes if any;
8.8.2 the fees and commissions lawfully due to
brokers in connection with this transaction and hold Lender harmless from all
such claims;
8.8.3 the fees of Lender's inspectors in connection
with the construction of the Improvements; and
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8.8.4 The fees of Lender's attorneys in connection with
the issuance of the Letter of Credit upon the issuance of the Letter of Credit.
8.9 No Conveyance or Encumbrance: Not to sell, convey,
transfer, dispose of or further encumber the Property or the Improvements or any
part thereof or any interest therein or enter into a lease covering all or any
portion thereof (other than residential leases entered into in the ordinary
course of business) or an undivided interest therein, either voluntarily,
involuntarily or otherwise, or enter into an agreement so to do without the
prior written consent of Lender being first had and obtained. All easements,
declarations of covenants, conditions and restrictions, and private or public
dedications affecting the Property shall be submitted to Lender for its approval
and such approval shall be obtained prior to the execution or granting of any
thereof by Borrower, accompanied by a drawing or survey showing the precise
location of each thereof.
8.10 Compliance with Governmental Requirements: Comply promptly
with all Governmental Requirements. Within ten (10) days after Borrower's
receipt of any governmental permits, approvals or disapprovals, Borrower shall
deliver copies of all such matters to Lender.
8.11 Diligent Construction: Cause the construction of the
Improvements to be prosecuted with diligence and continuity and completed in
accordance with the Plans on or before the Completion Date, free and clear of
liens or claims for liens.
8.12 Satisfy Conditions: Cause all conditions hereof to be
satisfied at the time and in the manner herein provided.
8.13 Application of Disbursements: Receive the disbursements to
be made hereunder as a trust fund for the purpose of paying the costs of
construction of the Improvements and apply the same first to such payment
before using any part thereof for any other purpose.
8.14 Paid Vouchers: Deliver to Lender, on demand, any
contracts, bills of sale, statements, receipted vouchers or agreements, under
which Borrower claims title to any materials, fixtures or articles incorporated
in the Improvements.
8.15 Defect Corrections: Upon demand of Lender, correct any
defect in the Improvements or any departure from the Plans not approved by
Lender. The advance of any Loan proceeds shall not constitute a waiver of
Lender's right to require compliance with this covenant with respect to any such
defects or departures from the Plans not theretofore discovered by or called to
the attention of Lender.
8.16 Contract or Plans Changes: Not, without the prior written
consent of Lender, permit any change in the construction plans for the Project
which would (i) change the square foot area of the Improvements, or (ii)
adversely affect the value of the Improvements.
13
8.17 Furnishing Notices: Borrower shall promptly furnish
Lender with copies, or notify Lender in writing, of the following:
8.17.1 any litigation affecting Borrower, or if
Borrower is a partnership, any general partner of Borrower, where the amount
claimed is uninsured and is in excess of the Litigation Amount;
8.17.2 any communication, whether written or oral, that
Borrower may receive from any governmental, judicial or legal authority, giving
notice of any claim or assertion that the Improvements fail in any respect to
comply with any Governmental Requirements, or of any dispute which may exist
between Borrower and any governmental, judicial or legal authority that may
adversely affect Borrower, the Property or the Project;
8.17.3 any material adverse change in Borrower's or any
Guarantor's financial condition or operations or in the physical condition of
the Property;
8.17.4 any strike or labor controversy threatening to
result in a strike affecting, or that may affect, the Project;
8.17.5 any cessation of labor on the Project which
continues for more than ten (10) consecutive Business Days;
8.17.6 any filings (with true copies thereof) with any
Governmental Authority regarding or pursuant to any law related to Hazardous
Materials (as defined in the Trust Deed) or the environment;
8.17.7 any proceeding or inquiry by any Governmental
Authority (including, without limitation, the California State Department of
Health Services) with respect to the presence of any Hazardous Materials on the
Property or the migration thereof from or to other property;
8.17.8 all claims made or threatened by any third party
against Borrower or the Property relating to any loss or injury resulting from
any Hazardous Materials;
8.17.9 Borrower's discovery of any occurrence or
condition on any real property adjoining or in the vicinity of the Property or
any part thereof to be subject to any restriction on the ownership, occupancy,
transferability or use of the Property under any Hazardous Materials Laws; or
8.17.10 any proposed or contemplated change in the
organization or management of Borrower or in the nature of its business.
14
8.18 Organization and Management: Without the prior written
consent of Lender, Borrower shall not permit or suffer any management,
organizational or other material changes in its structure or operations and if
Borrower is a limited liability company, in the structure or operations of its
managers, the replacement of any of its members, or the designation of any
other person to manage and operate the Project in place of its managers.
9. DEFAULT. At the option of Lender, the following shall
constitute events of default hereunder (including, if Borrower consists of more
than one person, the occurrence of any of such events with respect to any one or
more of said persons):
9.1 Any default in the performance of any covenant, condition or
agreement set forth herein, in the Trust Deed, Reimbursement Agreement, the
Security Agreement or any other of the Letter of Credit Documents after any
applicable cure period.
9.2 Borrower voluntarily suspends the transaction of business or
there is an attachment, execution or other judicial seizure of any material
portion of Borrower's assets and such seizure is not discharged or bonded
against within thirty (30) days.
9.3 Any representation by Borrower to Lender concerning
Borrower's financial condition or credit standing or any representation or
warranty contained herein proves to be materially false or misleading.
9.4 Default by Borrower on any other debt at Lender or default
by Borrower or Operator of any debt secured by the Property.
9.5 Any person obtains an order or decree in any court of
competent jurisdiction enjoining the construction of the Improvements or
enjoining or prohibiting Borrower or Lender or either of them from performing
this Agreement, and such proceedings are not discontinued and such decree is not
vacated within thirty (30) days after the granting thereof.
9.6 Borrower neglects, fails or refuses to keep in full force
and effect any permit or approval with respect to the construction of the
Improvements.
9.7 If any Notice to Withhold or Bonded Notice to Withhold
(Stop Notice) in connection with the Loan is served on Lender in accordance with
the provisions of the California Civil Code and within five (5) days of the
receipt of such notice the claim set forth therein is not discharged or, if the
amount claimed is disputed in good faith by Borrower or the general contractor
for the Improvements and the Notice to Withhold is bonded, an appropriate
counter bond or equivalent acceptable to Lender is filed with Lender.
9.8 The imposition, voluntary or involuntary, of any lien or
encumbrance upon the Property or the Chino Property without Lender's written
consent or unless an adequate
counter bond is provided and such lien is accordingly released within thirty
(30) days of the imposition of such lien.
10. REMEDIES. If any of the events of default set forth in Paragraph
--------
9 occur, then Lender, in addition to its other rights hereunder, may at its
option, without prior demand or notice:
10.1 Terminate the obligation of Lender to approve
disbursements hereunder, or Lender may waive the event of default or, without
waiving, determine, upon terms and conditions satisfactory to Lender, to approve
further disbursements.
10.2 Notwithstanding the exercise of the remedy described in
Paragraph 10.1 hereof, Lender may approve any disbursements after the happening
of any one or more of said events of default without thereby waiving its right
to demand payment of the amounts due to Lender under the Reimbursement Agreement
and without liability to approve any other or further disbursements.
10.3 Proceed as authorized by law to satisfy the indebtedness
of Borrower to Lender and in that regard, Lender shall be entitled to all of the
rights, privileges and benefits contained in the Trust Deed, the Security
Agreement or other Letter of Credit Documents.
10.4 Either directly or through an agent or court-appointed
receiver, take possession of the Property and enter into such contracts and
perform any and all work and labor necessary to complete the Improvements
substantially in accordance with the Plans, subject to such modifications and
changes as Lender may deem appropriate, in which event expenditures therefor
shall be deemed an additional advance to Borrower, payable on demand, bearing
interest at the Credit Provider Rate (as defined in the Reimbursement Agreement)
and secured by the Letter of Credit Documents.
11. POWER OF ATTORNEY. In the event of default as defined in
-----------------
Paragraph 9 hereof, Borrower hereby constitutes and appoints Lender its true and
lawful attorney in fact with the power and authority, including full power of
substitution, to act, in Lender's sole discretion, but without the obligation to
act, as follows:
11.1 To take possession of the Property and complete the
Improvements.
11.2 To use any of Borrower's Funds and any funds which may
remain undisbursed under the Loan for the purpose of completing the Improvements
and for other costs related thereto.
11.3 To make such additions and changes and corrections in the
Plans as may be necessary or desirable as Lender in its sole discretion deems
proper to complete the Improvements.
16
11.4 To employ such contractors, subcontractors and
agents, architects and inspectors as are required to complete the Improvements.
11.5 To employ watchmen to protect the Property and
Improvements from injury.
11.6 To pay, settle or compromise all existing bills
and claims against Borrower's Funds or any funds which may remain undisbursed
under the Loan or as may be necessary or desirable, as Lender in its sole
discretion deems proper, for the completion of the Improvements or for
protection or clearance of title to the Property and Personal Property or for
the protection of Lender's interest with respect thereto.
11.7 To prosecute and defend all actions and
proceedings in connection with the construction of the Improvements.
11.8 As Lender in its sole discretion deems proper, to
execute, acknowledge, and deliver all instruments and documents in the name of
Borrower which may be necessary or desirable to do and to do any and every act
with respect to the construction of the Improvements which Borrower might do on
his own behalf.
This Power of Attorney is a power coupled with an interest and
cannot be revoked and any costs or expenses incurred by Lender in connection
with any acts by Lender under or pursuant to this Paragraph 11 shall be at the
cost and expense of Borrower, repayable on demand by Borrower to Lender with
interest thereon at the Credit Provider Rate, with any such advances made or
costs or expenses incurred by Lender to be secured by the Trust Deed and the
Security Agreement.
12. DISCLAIMER. WHETHER OR NOT LENDER ELECTS TO EMPLOY ANY OR ALL OF
----------
THE REMEDIES AVAILABLE TO IT IN THE EVENT OF DEFAULT, LENDER SHALL NOT BE LIABLE
FOR THE CONSTRUCTION OF OR FAILURE TO CONSTRUCT OR COMPLETE OR PROTECT THE
IMPROVEMENTS OR FOR PAYMENT OF ANY EXPENSE INCURRED IN CONNECTION WITH THE
EXERCISE OF ANY REMEDY AVAILABLE TO LENDER OR FOR THE CONSTRUCTION OR COMPLETION
OF THE IMPROVEMENTS OR FOR THE PERFORMANCE OR NON-PERFORMANCE OF ANY OTHER
OBLIGATION OR BORROWER.
13. RELEASE AND INDEMNITY. Borrower agrees to release and indemnify,
---------------------
defend and hold Lender harmless from and against all liabilities, claims,
actions, damages, costs and expenses (including all reasonable legal fees and
expenses of Lender's counsel) arising out of or resulting from construction of
the Improvements, including any defective workmanship or materials; any failure
to satisfy any of the Governmental Requirements; Lender's performance of any
act permitted under the Letter of Credit Documents (excluding Lender's gross
negligence or willful misconduct); breach of any representation or warranty made
or given by Borrower to Lender; breach of any obligation of Borrower contained
in any of the Letter of Credit Documents; or any claim or
17
cause of action of any kind by any party that Lender is liable for any act or
omission committed or made by Borrower or any other person or entity in
connection with the ownership, sale, operation or development of the Property,
the Chino Property or the construction of the Improvements, whether on account
of any theory of derivative liability, comparative negligence or otherwise.
Upon demand by Lender, Borrower shall defend any action or proceeding brought
against Lender arising out of or alleging any claim of action covered by this
indemnity, all at Borrower's own cost alternative, Lender may elect to conduct
its own defense at the expense of Borrower. Notwithstanding the provisions of
the two preceding sentences, Borrower shall have the right to provide the
defense of Lender (which this paragraph requires) by counsel of Borrower's
choosing, whom Lender shall have the right to approve in its reasonable
judgment. Borrower's right to so provide Lender's defense shall apply so long as
there is no conflict or divergence of interest between the interest of Lender
and the interest of Borrower in the provision of the defense. Lender shall have
the right, in its sole discretion, to determine whether a conflict or divergence
of interest exists; if Lender determines that a conflict or divergence of
interest exists, Borrower shall retain separate counsel to conduct the defense
of Lender, which separate counsel shall be acceptable to Lender in its
reasonable judgment. The provisions of this paragraph shall survive the
termination of this Agreement, the repayment of the amounts due to Lender under
the Reimbursement Agreement, and the release of the Property or any portion of
it from the Trust Deed and the release of the Chino Property or any portion of
it from the Chino Trust Deed.
14. SIGNS. Borrower hereby grants Lender the right to erect or cause
-----
to be erected Lender's sign or signs in size and loaction desired by Lender on
the Property so long as such sign or signs do not interfere with the reasonable
construction of the Improvements.
15. GENERAL CONDITIONS.
------------------
15.1 No Waiver: No delay or omission of Lender in exercising
any right or power arising from any default by Borrower shall be construed as a
waiver of such default or as an acquiescence therein, nor shall any single or
partial exercise thereof preclude any further exercise thereof. Lender may, at
its option, waive any of the conditions herein and any such waiver shall not be
deemed a waiver of Lender's rights hereunder but shall be deemed to have been
made in pursuance of this Agreement and not in modification thereof. No waiver
of any event of default shall be construed to be a waiver of or acquiescence in
or consent to any preceding or subsequent event of default.
15.2 No Third Party Benefits: This Agreement is made for the
sole benefit of Borrower and Lender, their successors and assigns and no other
person or persons shall have any rights or remedies under or by reason of this
Agreement nor shall Lender owe any duty whatsoever to any claimant for labor
performed or material furnished in connection with the construction of the
Improvements, to approve the disbursement of any undisbursed portion of the Loan
to the payment of any such claim or to exercise any right or power of Lender
hereunder or arising from any default by Borrower.
18
15.3 Notice: All notices or demands of any kind which
either party may be required or desire to serve upon the other under the terms
of this Agreement shall be in writing and shall be given by personal delivery,
national overnight courier, or by certified or registered United States mail,
postage prepaid, to the address for the party to be served set forth below its
signature. Notices shall be effective upon receipt or when proper delivery is
refused. In case of service by mail, notices shall be deemed complete at the
expiration of the second day after the date of mailing. If Borrower consists of
more than one person, service of any notice or demand of any kind by Lender upon
any one of said persons in the manner hereinabove provided shall be complete
service upon all. Either party may change its address for purposes of notice by
giving notice of such change of address to the other party in accordance with
the provisions of this paragraph.
15.4 Entire Agreement: This Agreement, the other Letter of
Credit Documents and the Environmental Indemnity constitute the entire
understanding between the parties regarding the matters mentioned in or
incidental to this Agreement. The Letter of Credit Documents and the
Environmental Indemnity supersede all oral negotiations and prior writings
concerning the subject matter of the Letter of Credit Documents and the
Environmental Indemnity. If there is any conflict between the terms, conditions
and provisions of this Agreement and those of any other agreement or instrument,
including any of the Letter of Credit Documents or the Environmental Indemnity,
the terms, conditions and provisions of this Agreement shall prevail. This
Agreement may not be modified, amended or terminated except by a written
agreement signed by each of the parties hereto.
15.5 Documentation: In addition to the instruments and
documents mentioned or referred to herein, Borrower will, at its own cost and
expense, supply Lender with such other instruments, documents, information and
data as may, in Lender's opinion, be reasonably necessary for the purposes
hereof, all of which shall be in form and content acceptable to Lender.
15.6 Borrower Information: Borrower agrees that Lender may
provide any financial or other information, data or material in Lender's
possession relating to Borrower, the Loan, this Agreement, the Property or the
Improvements, to Lender's parent, affiliate, subsidiaries, participants or
service providers, without further notice to Borrower.
15.7 Not Assignable: Neither this Agreement nor any right
of Borrower to receive any sums, proceeds or disbursements hereunder, may be
assigned, pledged, hypothecated, anticipated or otherwise encumbered by Borrower
without the prior written consent of Lender. Subject to the foregoing
restrictions, this Agreement shall inure to the benefit of Lender, its
successors and assigns and bind Borrower, its heirs, executors, administrators,
successors and assigns.
15.8 Time is of the Essence: Time is hereby declared to be
of the essence of this Agreement and of every part hereof.
15.9 Supplement to Security Agreements: The provisions
of this Agreement are not intended to supersede the provisions of the Trust Deed
or any other Letter of Credit Document or the Environmental Indemnity but shall
be construed as supplemental thereto.
15.10 Joint and Several Obligations: If Borrower
consists of more than one person, the obligations of Borrower shall be the joint
and several obligations of all such persons, and any married person who executes
this Agreement agrees that recourse may be had against his or her separate
property for satisfaction of his or her obligations hereunder. When the context
and construction so require, all words used in the singular herein shall be
deemed to have been used in the plural and the masculine shall include the
feminine and neuter and vice versa.
15.11 Governing Law: This Agreement (and any and all
disputes between the parties arising directly or indirectly from the
transaction or from the lending relationship contemplated hereunder) shall be
governed by and construed in accordance with the laws of the State of
California.
15.12 Agency: In the event of a default in Paragraph 9
hereof, Borrower hereby appoints and authorizes Lender, as its agent, to record
any notices of completion, cessation of labor and other notices that Lender
deems necessary to record to protect any interest of Lender under the provisions
of this Agreement, the Reimbursement Agreement, the Trust Deed, the Chino Trust
Deed or the Security Agreement. This agency is a power coupled with an interest
an is not revocable.
15.13 Governmental Regulations: If payment of the
indebtedness secured by the Trust Deed and the Chino Trust Deed is to be insured
or guaranteed by any governmental agency, Borrower shall comply with all rules,
regulations, requirements and statutes relating thereto or provided in any
commitment issued by any such agency to insure or guarantee payment of such
indebtedness.
15.14 Collection Costs: Borrower shall pay promptly to
Lender without demand, with interest thereon from date of expenditure at the
Default Interest rate, reasonable attorneys' fees and all costs and other
expenses paid or incurred by Lender in enforcing or exercising its rights or
remedies created by, connected with or provided in this Agreement, and payment
thereof shall be secured by the Trust Deed, the Chino Trust Deed and the
Security Agreement.
15.15 Survival: The representations, warranties and
covenants herein shall survive the disbursement of the Loan and shall remain in
force and effect until the obligations of Borrower under the Reimbursement
Agreement are paid in full.
15.16 Waiver of Jury Trial: LENDER AND BORROWER EACH
ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT
OR THE LENDING RELATIONSHIP ESTABLISHED HEREBY WOULD BE BASED UPON DIFFICULT AND
COMPLEX ISSUES, AND THEREFORE, BORROWER
20
AND LENDER EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING (INCLUDING ACTIONS SOUNDING IN TORT) TO ENFORCE OR DEFEND ANY RIGHTS
UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT RELATING HERETO OR ARISING FROM
THE TRANSACTION CONTEMPLATED HEREUNDER OR THE LENDING RELATIONSHIP ESTABLISHED
HEREBY AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED IN A COURT OF
COMPETENT JURISDICTION BY A JUDGE AND NOT BY A JURY.
16. SEVERABILITY. Invalidation of any one or more of the provisions of
------------
this Agreement, the Trust Deed, the other Letter of Credit Documents or the
Environmental Indemnity by judgment or court order shall in no way affect any of
the other provisions thereof which shall remain in force and effect.
17. SPECIAL CONDITIONS. The special conditions, if any, are set forth
------------------
in Exhibit E attached hereto and made a part hereof and are, by this reference,
---------
incorporated herein.
18. COUNTERPARTS. This Agreement may be executed simultaneously in two
------------
or more counterparts, each of which shall be deemed an original, and it shall
not be necessary in making proof of this Agreement to produce or account for
more than one such counterpart.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
COMERICA BANK-CALIFORNIA,
a California banking corporation
By: /s/ Illegible Signature
-----------------------------------
Its:
----------------------------------
Address:
βββ β. βββββ βββββ ββββββ
βββ ββββ, ββββββββββ βββββ
BORROWER:
PROVENA FOODS INC.,
a California corporation
By: /s/ Illegible Signature
-----------------------------------
Its: CFO
----------------------------------
21
DISBURSEMENT SCHEDULE
(Exhibit A)
THE LOAN PROCEEDS IN THE AMOUNT OF $4,000,000 SHALL BE DISBURSED AS FOLLOWS:
I. INITIAL DISBURSEMENT.
Lender is hereby authorized and directed to make Initial Disbursements
for the purposes, in the amounts, and to the persons indicated in the
attached Exhibit 1:
II. SUBSEQUENT DISBURSEMENTS.
The remainder of the Loan available for disbursement under the Building
Loan Agreement and Borrower's Funds in the sum aggregate of $ [TO BE
DETERMINED AFTER BORROWER DELIVERS ITS PROJECT CONSTRUCTION COST
SCHEDULE PRIOR TO ANY DISBURSEMENTS SUBSEQUENT TO INITIAL DISBURSEMENT]
shall be disbursed in conformity with (i) the Building Loan Agreement,
and in particular the requirements of Articles 5 and 6 thereof, and (ii)
the Disbursement Plan, attached hereto as Exhibit B.
III. AUTHORIZED SIGNERS.
Borrower authorizes either _______________ or _________________ to
sign all Draw Request and other documents in connection with the
administration of the Loan. Borrower represents and warrants to
Lender that the following signatures are specimen signatures of the
persons named in the preceding sentence:
____________________________________
____________________________________
THIS DISBURSEMENT SCHEDULE IS EXECUTED BY BORROWER AS OF THIS _____ DAY OF
OCTOBER 1998.
BORROWER:
--------
Provena Foods Inc.,
a California corporation
By: βββββββ ββββββββ
-------------------------
Its: CEO
-------------------------
FOR ACCOUNTING PURPOSES ONLY:
[_] MAKE DISBURSEMENTS UNDER II HEREOF TO
________________________________
By: [_] CREDITING COMMERCIAL ACCOUNT #_____________
AT OFFICE SAN ββββ HEADQUARTERS
[_] CASHIER'S CHECK
INITIAL DISBURSEMENTS
(Exhibit 1)
---------
[Land Purchase] $_____________________ ____________________
[Costs of Issuance] $_____________________ ____________________
____________________
____________________
____________________
DISBURSEMENT PLAN
(Exhibit B)
---------
[TO BE DETERMINED WITH LENDER'S APPROVAL PRIOR TO ANY DISBURSEMENTS SUBSEQUENT
TO THE INITIAL DISBURSEMENT]
DRAW REQUEST
(Exhibit C)
---------
APPLICATION AND CERTIFICATE FOR PAYMENT
DATE: APPLICATION NO.:
----------------------------- ---------------------------
BORROWER: Provena Foods Inc., a California corporation
PROJECT: Provena Foods Inc., a California corporation
Lathrop, California
================================================================================
Total Work Completed to Date.................................................... $ ______________________
Less Payments to Date........................................................... $ ______________________
Total Deductions................................................................ $ ______________________
AMOUNT NOW DUE.................................................................. $ ______________________
This is to certify that work reported herein has been completed in
accordance with the contract documents and also that there are no change orders
to date which have not been checked and approved by Comerica Bank-California.
Also, this is to certify that all amounts have been paid by Borrower for work
for which previous Certificates for Payment were issued and payment received
from Borrower and the current payment shown herein is now due.
___________________________________
Owner Date