EXHIBIT 10.7
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of December 10, 1998
among
▇▇▇▇▇▇▇▇ WINE ESTATES COMPANY
as Borrower
and
PACIFIC COAST FARM CREDIT SERVICES, ACA
BANK OF AMERICA NT&SA
GENERAL ELECTRIC CAPITAL CORPORATION
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.
RABOBANK NEDERLAND, NEW YORK BRANCH
▇▇▇▇▇▇ TRUST AND SAVINGS BANK
ABN AMRO BANK N.V.
CREDIT AGRICOLE INDOSUEZ
as Lenders
and
PACIFIC COAST FARM CREDIT SERVICES, ACA
as the Agent for the Lenders
TABLE OF CONTENTS
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ARTICLE I. Page
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GENERAL TERMS.................................................................................. 2
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1.1 Certain Defined Terms.......................................................................... 2
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1.2 Accounting Terms............................................................................... 21
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1.3 Certain Matters of Construction................................................................ 21
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ARTICLE II.
AMOUNT AND TERMS OF CREDIT..................................................................... 22
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2.1 Revolving Advances............................................................................. 22
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2.1A Swingline Loan................................................................................. 24
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2.2 Term Loan...................................................................................... 25
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2.3 Mandatory Prepayments; Application Thereof..................................................... 26
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2.4 Other Prepayments.............................................................................. 27
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2.5 Interest on Revolving Advances................................................................. 29
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2.6 Interest on Term Loan.......................................................................... 30
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2.7 Other Interest Provisions...................................................................... 32
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2.8 Fees........................................................................................... 34
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2.9 Purchase of Farm Credit Stock.................................................................. 36
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2.10 Receipt of Payments............................................................................ 36
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2.11 Application and Allocation of Payments Prior to the Occurrence of an Event of Default.......... 36
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2.12 Accounting..................................................................................... 37
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2.13 Taxes.......................................................................................... 37
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2.14 Capital Adequacy............................................................................... 38
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2.15 Eligible Accounts.............................................................................. 38
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2.16 Eligible Inventory............................................................................. 40
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2.17 Valuation of Inventory......................................................................... 42
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2.18 Eligible Wine Barrels.......................................................................... 42
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2.19 Requests to Refinance Revolving Loan........................................................... 42
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2.20 Swap Loss Obligations.......................................................................... 43
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ARTICLE III.
COLLATERAL..................................................................................... 44
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3.1 Borrower's Obligations......................................................................... 44
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3.2 Further Assurances............................................................................. 44
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ARTICLE IV.
CONDITIONS PRECEDENT........................................................................... 44
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4.1 Conditions Precedent to Closing Date........................................................... 44
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4.2 Conditions Precedent to Each Revolving Advance, Letter of Credit Obligation and the Term Loan.. 44
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4.3 Conditions Precedent to Acquisition............................................................ 45
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ARTICLE V.
REPRESENTATIONS AND WARRANTIES................................................................. 45
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5.1 Corporate Existence; Compliance with Law....................................................... 45
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5.2 Executive Offices.............................................................................. 46
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5.3 Subsidiaries................................................................................... 46
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5.4 Corporate Power; Authorization; Enforceable Obligations........................................ 46
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5.5 Original Stock Acquisition; Solvency........................................................... 46
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5.6 Intentionally Omitted.......................................................................... 46
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5.7 Projections.................................................................................... 46
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5.8 Ownership of Property; Liens................................................................... 47
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5.9 No Default..................................................................................... 47
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5.10 Burdensome Restrictions........................................................................ 47
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5.11 Labor Matters.................................................................................. 48
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5.12 Other Ventures................................................................................. 48
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5.13 Investment Company Act......................................................................... 48
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5.14 Margin Regulations............................................................................. 48
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5.15 Taxes.......................................................................................... 48
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5.16 ERISA.......................................................................................... 49
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5.17 No Litigation.................................................................................. 50
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5.18 Brokers........................................................................................ 50
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5.19 Outstanding Stock; Options; Warrants, Etc...................................................... 50
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5.20 Employment and Labor Agreements................................................................ 50
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5.21 Patents, Trademarks, Copyrights, and Licenses.................................................. 50
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5.22 Full Disclosure................................................................................ 50
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5.23 Liens.......................................................................................... 51
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5.24 No Material Adverse Effect..................................................................... 51
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5.25 Hazardous Materials............................................................................ 51
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5.26 Insurance Policies............................................................................. 51
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5.27 Deposit and Disbursement Accounts.............................................................. 52
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5.28 PACA........................................................................................... 52
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5.29 Correctness of Disclosure Schedule............................................................. 52
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ARTICLE VI.
FINANCIAL STATEMENTS AND INFORMATION........................................................... 52
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6.1 Reports and Notices............................................................................ 52
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6.2 Communication with Accountants................................................................. 54
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ARTICLE VII.
AFFIRMATIVE COVENANTS.......................................................................... 54
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7.1 Maintenance of Existence and Conduct of Business............................................... 54
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7.2 Payment of Obligations......................................................................... 55
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7.3 Agent's and Lenders' Bank Fees................................................................. 55
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7.4 Books and Records.............................................................................. 55
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7.5 Litigation..................................................................................... 55
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7.6 Insurance...................................................................................... 55
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7.7 Compliance with Laws........................................................................... 56
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7.8 Agreements..................................................................................... 56
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7.9 Supplemental Disclosure........................................................................ 56
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7.10 Employee Plans................................................................................. 57
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7.11 Environmental Matters.......................................................................... 57
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7.12 Subsidiary..................................................................................... 57
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7.13 Maintenance of Equipment and Fixtures.......................................................... 57
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7.14 Syndication.................................................................................... 57
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7.15 Payment of Grower Payables..................................................................... 57
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7.16 Payment of Leases.............................................................................. 57
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7.17 Interest Rate Protection....................................................................... 57
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7.18 Notification Regarding Subordinated Debt....................................................... 58
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7.19 Year 2000 Compliance........................................................................... 58
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ARTICLE VIII.
NEGATIVE COVENANTS............................................................................. 58
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8.1 Mergers, Etc................................................................................... 58
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8.2 Investments; Loans and Advances................................................................ 58
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8.3 Indebtedness................................................................................... 59
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8.4 Capital Structure.............................................................................. 59
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8.5 Maintenance of Business........................................................................ 59
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8.6 Transactions with Affiliates................................................................... 59
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8.7 Guaranteed Indebtedness........................................................................ 60
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8.8 Liens.......................................................................................... 60
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8.9 Sales of Assets................................................................................ 60
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8.10 Cancellation of Claims......................................................................... 61
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8.11 Events of Default.............................................................................. 61
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8.12 Restricted Payments............................................................................ 61
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8.13 Payment or Modification of Subordinated Debt................................................... 61
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8.14 Acquisition of Wineries, Vineyards, and Beverage Industry Assets............................... 61
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8.15 Termination of Real Property Leases............................................................ 61
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8.16 ERISA.......................................................................................... 61
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8.17 Intentionally Omitted.......................................................................... 62
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8.18 Intentionally Omitted.......................................................................... 62
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8.19 Hazardous Materials............................................................................ 62
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8.20 PACA License................................................................................... 62
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8.21 Financial Covenants............................................................................ 62
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8.22 Compliance With Subordinated Debt Documents.................................................... 63
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ARTICLE IX.
INDEMNITY...................................................................................... 64
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9.1 Indemnification................................................................................ 64
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9.2 No Control..................................................................................... 64
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ARTICLE X.
EVENTS OF DEFAULT; RIGHTS AND REMEDIES......................................................... 64
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10.1 Events of Default.............................................................................. 64
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10.2 Acceleration; Remedies......................................................................... 67
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10.3 Distribution and Application of Amounts Received After an Event of Default..................... 68
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10.4 Waivers by Borrower............................................................................ 69
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ARTICLE XI.
AGENCY......................................................................................... 69
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11.1 Appointment.................................................................................... 69
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11.2 Delegation of Duties........................................................................... 69
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11.3 Limitation of Liability........................................................................ 69
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11.4 Reliance by Agent.............................................................................. 69
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11.5 Notice of Default.............................................................................. 70
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11.6 Non-Reliance on Agent and the Other Lenders.................................................... 70
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11.7 Indemnification................................................................................ 70
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11.8 Payments....................................................................................... 71
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11.9 Agent in Its Individual Capacity............................................................... 71
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11.10 Successor Agent................................................................................ 71
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11.11 Applicability of this Article to Borrower...................................................... 71
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11.12 Agent's Authority To Equalize Percentages of Revolving Lenders................................. 71
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ARTICLE XII.
ASSIGNMENTS AND PARTICIPATIONS................................................................. 72
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12.1 Successors and Assigns......................................................................... 72
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12.2 Assignments.................................................................................... 72
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12.3 Participations................................................................................. 73
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12.4 Disclosure..................................................................................... 73
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ARTICLE XIII.
MISCELLANEOUS.................................................................................. 74
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13.1 Complete Agreement; Modification of Agreement; Consents and Waivers............................ 74
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13.2 Fees and Expenses.............................................................................. 74
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13.3 Access and Annual Audit........................................................................ 75
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13.4 Set-off; Sharing; Limitation on Swap Lender.................................................... 76
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13.5 No Waiver by Agent or Lenders.................................................................. 76
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13.6 Remedies....................................................................................... 77
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13.7 Severability................................................................................... 77
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13.8 Parties........................................................................................ 77
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13.9 Conflict of Terms.............................................................................. 77
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13.10 Authorized Signature........................................................................... 77
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13.11 GOVERNING LAW.................................................................................. 77
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13.12 Notices........................................................................................ 78
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13.13 Survival....................................................................................... 80
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13.14 Section Titles................................................................................. 80
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13.15 Counterparts................................................................................... 80
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13.16 Performance Always Due on Business Day......................................................... 81
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13.17 MUTUAL WAIVER OF JURY TRIAL.................................................................... 81
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13.18 Revival of Obligations......................................................................... 81
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13.19 Time of the Essence............................................................................ 82
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13.20 No Third Party Beneficiaries................................................................... 82
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13.21 Payments in Immediately Available Funds........................................................ 82
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13.22 Waivers of Events of Default................................................................... 82
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13.23 Confidentiality of Financial Projections....................................................... 82
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INDEX OF EXHIBITS
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Exhibit A - Form of Borrowing Base Certificate
Exhibit B - Lenders' Percentages
Exhibit C - Schedule of Special Real Property
Exhibit D - Form of Notice of Revolving Advance
Exhibit E - Form of Notice of Swingline Advance
Exhibit F - Term Loan Tranche A Principal Amortization Schedule
Exhibit G - Term Loan Tranche B Principal Amortization Schedule
Exhibit H-1 - Term Loan Tranche C Principal Amortization Schedule --
Assuming No Meridian Advance
Exhibit H-2 - Term Loan Tranche C Principal Amortization Schedule --
Assuming Meridian Advance
Exhibit I - Form of ▇▇▇▇ of Sale
Exhibit J - Form of Certification Regarding Compliance with
Financial Covenants
THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT ("Agreement"), dated
as of December 10, 1998, is by and among ▇▇▇▇▇▇▇▇ WINE ESTATES COMPANY, a
Delaware corporation ("Borrower"), and PACIFIC COAST FARM CREDIT SERVICES, ACA,
("Pacific Coast"), BANK OF AMERICA NT&SA ("Bank of America"), GENERAL ELECTRIC
CAPITAL CORPORATION ("GE Capital"), COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., RABOBANK NEDERLAND, NEW YORK BRANCH ("Rabobank"), ▇▇▇▇▇▇
TRUST AND SAVINGS BANK ("▇▇▇▇▇▇"), ABN AMRO BANK, N.V. ("ABN"), CREDIT AGRICOLE
INDOSUEZ ("Credit Agricole") (collectively, "Lenders" and individually, a
"Lender") and PACIFIC COAST FARM CREDIT SERVICES, ACA, as agent for Lenders (in
such capacity, "Agent") with respect to the following facts:
RECITALS
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A. Borrower owns and operates several vertically integrated wineries.
Pursuant to that certain Credit Agreement (the "Original Credit Agreement"), by
and among, Borrower, certain of the Lenders and Agent, dated as of January 16,
1996, such Lenders provided Borrower with a senior secured credit facility in
the maximum aggregate principal amount of up to Three Hundred Million Dollars
($300,000,000) consisting of a revolving credit facility in the maximum
aggregate amount of up to One Hundred Forty Million Dollars ($140,000,000) and a
term loan in the maximum aggregate amount of up to One Hundred Sixty Million
Dollars ($160,000,000).
B. The Original Credit Agreement was subsequently amended by three
separate amendments and was superseded by an Amended and Restated Credit
Agreement dated as of June 7, 1996. The Amended and Restated Credit Agreement
was subsequently superseded by a Second Amended and Restated Credit Agreement
dated as of February 28, 1997. The Second Amended and Restated Credit Agreement
was subsequently amended by amendments dated as of October 1, 1997 and October
24, 1997.
C. Borrower, Lenders and Agent desire to amend, restate, and supersede
the Second Amended and Restated Credit Agreement and so are entering into this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto agree as follows:
ARTICLE I.
GENERAL TERMS
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I.1 Certain Defined Terms. As used in this Agreement, all terms defined
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in the preamble to this Agreement shall have the meanings set forth therein, and
the following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
"Account Debtor" shall mean any Person who may become obligated to
Borrower under, with respect to, or on account of, an account.
"Acquisition EBITDA" shall be an amount determined by Agent, in
consultation with Lenders, in Agent's sole and absolute discretion that will be
used in the calculations required by the definitions of Projected EBITDA and
Adjusted EBITDA. The amount shall be Agent's good faith determination of the
annual EBITDA of an entity, a business, or assets that Borrower proposes to
acquire made by Agent prior to Borrower's consummating the acquisition. In
making such determination, Agent shall use the average annual EBITDA of the
entity, business, or assets to be acquired for the immediately preceding two-
year period as determined from the to-be-acquired entity's year-end audited
financial statements, modified to include any adjustments forecasted by Borrower
and approved by Agent, after consultation with Lenders, in Agent's sole and
absolute discretion. When Agent has determined the Acquisition EBITDA for a
proposed acquisition, the amount determined by Agent shall be used in the
calculations required by the definitions of Projected EBITDA and Adjusted
EBITDA.
"Adjusted EBITDA" means, as of the date of determination, the sum of
(a) Consolidated EBITDA for the rolling four-quarter period ending as of such
date of determination, and (b) if Borrower has consummated an acquisition or
acquisitions within the four-quarter period preceding the date of determination,
of an entity, a business, or assets with respect to which Agent determined
Acquisition EBITDA, an amount equal to (i) if any such acquisition was
consummated in the quarter ending on the date of determination, one hundred
percent (100%) of the amount of Acquisition EBITDA with respect to such
acquisition, (ii) if any such acquisition was consummated in the quarter prior
to the quarter ending on the date of determination, seventy-five percent (75%)
of the amount of Acquisition EBITDA with respect to such acquisition, (iii) if
any such acquisition was consummated in the second quarter prior to the quarter
ending on the date of determination, fifty percent (50%) of the amount of
Acquisition EBITDA with respect to such acquisition, and (iv) if any such
acquisition was consummated in the third quarter prior to the quarter ending on
the date of determination, twenty-five percent (25%) of the amount of
Acquisition EBITDA with respect to such acquisition.
"Affiliate" shall mean, with respect to any Person, (i) each Person
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, ten percent (10%) or more of the voting
Stock of such Person, (ii) each Person that controls, is controlled by or is
under common control with such Person or any Affiliate of such Person, (iii)
each of such Person's officers, directors, joint venturers and partners, or (iv)
each officer, director, joint venturer, and partner of any Person referred to in
clause (i) or clause (ii) of this definition.
"Agency Fee" shall have the meaning ascribed to such term in Section
2.8(c).
"Agent" means Pacific Coast, but solely in its capacity as Agent
hereunder and not in any other capacity.
"Agreement" shall mean this Third Amended and Restated Credit
Agreement, including all amendments, modifications, and supplements hereto and
any appendices, exhibits, or schedules to any of the foregoing, and, if the
context shall so require, shall refer to any previous versions of this Agreement
that may from time to time have been in effect.
"Agricultural Real Property" shall mean real property other than
Winery Real Property and Special Real Property.
"Assignment and Acceptance" shall have the meaning ascribed to such
term in Section 12.2(a).
"Authorized Financial Representative" shall mean a person listed on
the Certificate of Financial Representatives delivered by Borrower to Lenders or
any person subsequently designated by Borrower as an Authorized Financial
Representative in a written notice delivered by Borrower to Agent.
"Bankruptcy Code" shall mean 11 U.S.C. (S)(S) 101, et seq., as in
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effect from time to time.
"Base Term Loan Amount" shall mean (a) sixty-nine percent (69%) of the
value of the real property (including leasehold interests for which a deed of
trust and a landlord's agreement in favor of and satisfactory to Agent have been
executed and delivered) securing the Obligations, minus (b) the amount of all
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principal payments made by Borrower on account of the Term Loan pursuant to
Section 2.2(c). The value of such real property shall be determined by the Real
Estate Valuation Schedule previously delivered by Agent to Borrower, unless
Agent decides to require, on or after January 16, 1999, updated appraisals, the
cost of which shall be paid by Borrower, in which case the value shall be
determined by such updated appraisals but only if such updated appraisals show a
decline in value).
"BATF" shall mean the federal Bureau of Alcohol, Tobacco and Firearms
or any successor thereto.
"Beverage Industry Assets" shall mean assets or businesses that have a
business connection with Borrower's primary businesses, the growing of grapes
and the production of wine and the importation of wine, or that involve
production or distribution of other alcoholic beverages. Examples of "Beverage
Industry Assets" might include a cork supplier, a glass supplier, a vineyard
management company, or a wine, beer, or spirits distributor.
"Borrower" shall mean ▇▇▇▇▇▇▇▇ Wine Estates Company, a Delaware
corporation, formerly known as Wine World Estates Company.
"Borrower's Knowledge" means to the actual knowledge of Borrower's
chief executive officer, chief financial officer, treasurer, controller,
assistant controller, vice president of field or vineyard operations, vice
presidents for winery operations, vice president, general counsel, and vice
president for human resources, provided that if any such position shall be
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eliminated, then the equivalent replacement position shall be included in each
case without any implication that such individual has undertaken particular
investigation of the matter in question.
"Borrowing Base" shall mean an amount equal to the following:
(a) eighty percent (80%) of the value of Eligible Accounts, the value
being the amount invoiced by Borrower, less any discount for prompt
payment or other discount available to the Account Debtor; plus
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(b) sixty percent (60%) of the value, net of any temporary price
promotions (historically defined in Borrower's financial records under
the categories of depletion expense, purchase allowance, free goods,
bonus packs, and other), of Eligible Inventory consisting of Cased
Goods Inventory, as determined in accordance with Section 2.16; plus
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(c) fifty-five percent (55%) of the value of Eligible Inventory, other
than Cased Goods Inventory, as determined in accordance with Section
2.16; plus
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(d) eighty-five percent (85%) of Cash Invested in Growing Crops;
provided, that the maximum amount outstanding against Cash Invested in
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Growing Crops at any one time shall not exceed (i) during the crop
year ending November 30, 1998, the lesser of (A) eighty-five percent
(85%) of the maximum amount of Cash Invested in Growing Crops approved
by Lenders in connection with approval of the crop budget for such
crop year, and (B) Seventeen Million Dollars ($17,000,000) and (ii)
during subsequent crop years, the lesser of (A) eighty-five percent
(85%) of the maximum amount of Cash Invested in Growing Crops approved
by Lenders in connection with approval of the crop budget for such
year, or (B) Seventeen Million Dollars ($17,000,000) plus six percent
(6%) per annum for each crop year after the crop year ending November
30, 1998, compounded annually; plus
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(e) seventy percent (70%) of the following: (i) one hundred percent
(100%) of the value of Eligible Wine Barrels that are less than one
(1) year old, (ii) seventy-five percent (75%) of Eligible Wine Barrels
that are one (1) year old or more, but less than two (2) years old,
(iii) fifty percent (50%) of Eligible Wine Barrels that are two (2)
years old or more, but less than three (3) years old, and (iv) twenty-
five (25%) percent of Eligible Wine Barrels that are three (3) years
old or more, but less than four (4) years old, in each case as
determined by Section 2.18; minus
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(f) the aggregate amount of Grower Payables outstanding from time to
time; minus
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(g) such other reserves as Agent may reasonably deem necessary from
time to time.
"Borrowing Base Certificate" shall mean a certificate in the form
attached hereto as Exhibit A.
"Business Day" shall mean any day that is not a Saturday, a Sunday, or
a day on which banks are required or permitted to be closed in the State of
California.
"BWEH" shall mean ▇▇▇▇▇▇▇▇ Wine Estates Holdings, Inc., a Delaware
corporation.
"Capital Expenditures" shall mean, for any period and with respect to
any Person, the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability and including that portion of Capital
Leases that is capitalized on the balance sheet of such Person including in
connection with a sale-leaseback transaction) by such Person and its
Subsidiaries for the acquisition or leasing of fixed or capital assets or
additions to equipment (including replacements, capitalized repairs and
improvements during such period) which are required to be capitalized under GAAP
on a consolidated balance sheet of such Person and its Subsidiaries. Capital
Expenditures shall not include (i) the actual value received for existing
equipment either traded-in at time of purchase of new equipment or sold in the
ordinary course of business (but only to the extent such equipment is replaced),
and (ii) expenditures made from insurance proceeds.
"Capital Lease" shall mean, with respect to any Person, any lease of
any property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, either would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person or otherwise be
disclosed as such in a note to such balance sheet, other than, in the case of
Borrower, any such lease under which Borrower is the lessor.
"Capital Lease Obligation" shall mean, with respect to any Capital
Lease, the amount of the obligation of the lessee thereunder that, in accordance
with GAAP, would appear on a balance sheet of such lessee in respect of such
Capital Lease or otherwise be disclosed in a note to such balance sheet.
"Cash Collateral Account" shall have the meaning assigned to it in
Section 2.1(h).
"Cased Goods Inventory" shall mean finished bottled and labeled wine
that has been placed in cases and is ready for delivery to customers, and as to
which all taxes which are due have been paid.
"Cash Equivalents" shall mean (i) securities issued, guaranteed or
insured by the United States of America or any of its agencies with maturities
of not more than ninety (90) days from the date acquired, (ii) certificates of
deposit with maturities of not more than ninety (90) days from the date acquired
that have been issued by a United States Federal or state chartered commercial
bank of recognized standing, which bank has capital and unimpaired surplus in
excess of $500,000,000, based on its most recent publicly available financial
statements, and which bank or its holding company has a short-term commercial
paper rating of at least A-1 or the equivalent by Standard & Poor's Corporation
or at least P-1 or the equivalent by ▇▇▇▇▇'▇ Investors Services, Inc., (iii)
commercial paper or finance company paper issued by any Person incorporated
under the laws of the United States of America or any state thereof and having a
rating of at least A-1 or the equivalent by Standard & Poor's Corporation or at
least P-1 or the equivalent by ▇▇▇▇▇'▇ Investors Services, Inc., in each case
with maturities of not more than ninety (90) days from the date acquired, and
(iv) investments in any money market funds registered under the Investment
Company Act of 1940 that is approved by Agent, which approval shall not
unreasonably be withheld.
"Cash Invested in Growing Crops" shall mean the actual amount directly
expended by Borrower for production of growing crops but only to the extent that
such expenditures were included in the annual crop operating budget submitted to
Agent pursuant to Section 6.1(g) and were approved by Requisite Lenders, such
approval not to be unreasonably withheld, but shall not include (a) expenditures
for vineyard development or planting, (b) payments on any Indebtedness, and (c)
rental payments under leases for vineyards.
"Charges" shall mean all federal, state, county, city, municipal,
local, foreign, or other governmental taxes (including, without limitation,
taxes owed to either (A) PBGC or (B) BATF or any other federal, state or local
governmental agency in connection with the sale of alcoholic beverages) at the
time due and payable, levies, assessments, charges, liens, claims or
encumbrances upon or relating to (i) the Collateral, (ii) the Obligations (other
than Swap Loss Obligations prior to the Swap Loss Adjustment Date), (iii) the
employees, payroll, income, or gross receipts of Borrower, (iv) Borrower's
ownership or use of any of its assets, or (v) any other aspect of Borrower's
business.
"Closing Date" shall mean the date set forth in the preamble to this
Agreement, or such other date on which this Agreement is closed and the Tranche
C Term Loan is advanced.
"Code" shall mean the Uniform Commercial Code of the jurisdiction with
respect to which such term is used, as in effect from time to time.
"Collateral" shall mean any and all property of Borrower or any
Guarantor in which Agent, for the benefit of Lenders, now or hereafter has a
Lien to secure all or any part of the Obligations or the obligations of such
Guarantor to Agent and Lenders.
"Collection Account" shall mean a bank account in the name of Agent at
a bank chosen by Borrower and reasonably acceptable to Agent which shall be,
unless otherwise consented to by Agent, the same bank at which the Disbursement
Account is maintained.
"Commitment Fee" shall have the meaning assigned to it in Section
2.8(a).
"Compensation" shall mean, with respect to any Person, all payments
and accruals commonly considered to be compensation, including, without
limitation, all wages, salary, deferred payment arrangements, bonus payments and
accruals, profit sharing arrangements, payments in respect of stock option or
phantom stock option or similar arrangements, stock appreciation rights or
similar rights,
incentive payments, pension or employment benefit contributions or similar
payments, made to or accrued for the account of such Person or otherwise for the
direct or indirect benefit of such Person.
"Consolidated Cash Flow" shall mean, for any period, for Borrower and
its Subsidiaries on a consolidated basis, the sum (without duplication) of: (a)
Consolidated Net Income; plus (b) the sum of (i) federal, state, local, and
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foreign income taxes, (ii) extraordinary non-cash losses, (iii) interest expense
(including the interest portion of any capitalized lease obligations), (iv)
lease expenses with respect to the Designated Operating Leases, (v) depletion,
depreciation and amortization, (vi) losses on asset sales, and (vii) any
periodic effect of any non-cash step-ups in the stated value of inventories
resulting from purchase accounting for acquisitions as determined by GAAP; minus
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(c) the sum of (I) extraordinary gains, (II) gains on asset sales, and (III)
cash taxes payable.
"Consolidated Current Assets" shall mean, as at any date of
determination, the current assets of Borrower and its Subsidiaries, determined
on a consolidated basis in conformity with GAAP, adjusted to (i) exclude any
remaining unamortized step-ups in the stated value of inventories resulting from
purchase accounting for acquisitions as determined by GAAP, and (ii) exclude any
current asset consisting of Deferred Taxes resulting from purchase accounting
for acquisitions.
"Consolidated Current Liabilities" shall mean, as at any date of
determination, the current liabilities of Borrower and its Subsidiaries,
determined on a consolidated basis in conformity with GAAP, adjusted to (i)
include all Obligations with respect to the Revolving Loan and the Swingline
Loan, and (ii) exclude any liability for Deferred Taxes associated with the
step-ups in the stated value of inventories resulting from purchase accounting
for acquisitions as determined by GAAP, as long as such deferred tax liability
will not result in a cash tax payment over the next twelve (12) months.
"Consolidated Debt Coverage Ratio" shall mean, as at any date of
determination, the ratio of Consolidated Cash Flow for any period to
Consolidated Debt Service for such period.
"Consolidated Debt Service" shall mean, for any period, for Borrower
and its Subsidiaries on a consolidated basis, the sum (without duplication) of
the following: (i) cash interest expense (including the interest portion of any
capitalized lease obligations); (ii) scheduled principal payments (including the
principal portion of capitalized lease obligations); (iii) scheduled payments on
the Designated Operating Leases; and (iv) cash dividends paid or declared.
"Consolidated EBITDA" shall mean, for any period, for Borrower and its
Subsidiaries on a consolidated basis, the sum (without duplication) of: (a)
Consolidated Net Income; plus (b) the sum of (i) Federal, state, local, and
foreign income taxes, (ii) interest expense (including the interest portion of
any capitalized lease obligations), (iii) depletion, depreciation and
amortization, (iv) any periodic effect of any non-cash step-ups in the stated
value of inventories resulting from purchase accounting for acquisitions as
determined by GAAP, (v) losses on asset sales, and (vi) all other non-cash
expenses; minus (c) the sum of (I) gains on asset sales, and (II) extraordinary
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gains.
"Consolidated Funded Debt" shall mean, as at any date of
determination, for Borrower and its Subsidiaries on a consolidated basis, the
sum (without duplication) of: (a) indebtedness for borrowed money or for the
deferred purchase price of property or services (including reimbursement and all
other obligations with respect to surety bonds, letters of credit and bankers'
acceptances, whether or not matured, but excluding obligations to trade
creditors incurred in the ordinary course of business), (b) all obligations
evidenced by notes, bonds, debentures or similar instruments, (c) all Capital
Lease Obligations, (d) amounts owing under the Obligations (other than Swap Loss
Obligations prior to the Swap Loss Adjustment Date), and (e) amounts owing under
any Subordinated Debt.
"Consolidated Funded Debt to Adjusted EBITDA Ratio" shall mean, as at
any date of determination, the ratio of Consolidated Funded Debt, as of such
date of determination, to Adjusted EBITDA, as of such date of determination.
"Consolidated Net Income" shall mean, for any period, on a
consolidated basis, the net income, if any, of Borrower and its Subsidiaries,
determined in accordance with GAAP.
"Consolidated Net Loss" shall mean, for any period, on a consolidated
basis, the net loss, if any, of Borrower and its Subsidiaries, determined in
accordance with GAAP.
"Consolidated Net Worth" shall mean, as at any date of determination,
the amount, if any, by which Consolidated Total Assets exceeds Consolidated
Total Liabilities.
"Consolidated Total Assets" shall mean, as at any date of
determination, all assets of Borrower and its Subsidiaries, as determined in
accordance with GAAP.
"Consolidated Total Capitalization" shall mean, as of any date of
determination, for Borrower and its Subsidiaries on a consolidated basis, the
sum (without duplication) of (a) Consolidated Total Debt, and (b) Consolidated
Net Worth.
"Consolidated Total Debt" shall mean, as of any date of determination,
for Borrower and its Subsidiaries on a consolidated basis, the sum (without
duplication) of (a) Consolidated Funded Debt, and (b) Grower Payables.
"Consolidated Total Liabilities" shall mean, as at any date, on a
consolidated basis, all liabilities of Borrower and its Subsidiaries, as
determined in accordance with GAAP.
"Cost of Funds Rate" shall mean, at any time, the yield of the
applicable Farm Credit Medium Term Notes, as made available by the Federal Farm
Credit Banks Funding Corporation, most closely matching a one year, two year,
three year, five year, seven year or nine and one-half year Fixed Rate Interest
Period upon the maturity of such Interest Period.
"Current Business Assets" shall mean vineyards and wineries and assets
directly related to the owning and operating of vineyards and wineries or to the
importation of wine; provided that, if at the time in question, Agent has
granted permission to Borrower to acquire Beverage Industry Assets, then Current
Business Assets shall also include assets of a type for which permission has
been so granted.
"Default" shall mean any event or circumstance which, with the passage
of time or the giving of notice or both, would unless remedied or waived, become
an Event of Default.
"Default Rate" shall mean: (a) with respect to Revolving Advances
bearing interest at the Variable Rate, a rate of interest equal to the higher of
(i) the Prime Rate, or (ii) the Reference Rate, in either case plus a margin of
three and three-quarters percent (3.75%) per annum; (b) with respect to
Revolving Advances bearing interest at a Fixed Rate, a rate of interest that is
three percent (3.00%) per annum higher than the otherwise applicable Fixed Rate
(until the expiration of the applicable Interest Period at which time such
Revolving Advances shall be treated the same as Revolving Advances bearing
interest at the Variable Rate); (c) with respect to the Letter of Credit
Maintenance Fee, a fee that is three percent (3.00%) per annum higher than the
otherwise applicable Letter of Credit Maintenance Fee; (d) with respect to any
principal portion of the Term Loan, a rate of interest that is three percent
(3.00%) per annum higher than the rate otherwise applicable to such principal
portion of the Term Loan, provided, that upon the expiration of any Interest
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Period during the continuance of an Event of Default, the relevant portion of
the Term Loan shall thereafter bear interest until cure or waiver of the Event
of Default at the Discount Rate, plus a margin of five and thirty-five one
hundredths percent (5.35%) per annum; and (e) with respect to all other
Obligations (including interest on Revolving Advances not paid when due,
interest on the Term Loan not paid when due, and payment of costs, fees, and
expenses provided for under any Loan Document, but not including any Swap Loss
Obligations prior to the Swap Loss Adjustment Date), a rate of interest equal to
the higher of (I) the Prime Rate, or (II) the Reference Rate, in either case
plus a margin of three and three-quarters percent (3.75%) per annum.
"Deferred Taxes" shall mean, as to any Person, as at any date of
determination, accrued or assessed taxes that would be due and payable in the
year accrued or assessed, but for a statutory or regulatory provision providing
or allowing for payment at a later date, determined in accordance with GAAP.
"Designated Operating Leases" shall mean all operating leases under
which Borrower is the lessee, excluding leases of real property.
"Direct Compensation" shall mean, with respect to any Person, all
payments and accruals commonly considered to be such Person's base salary and
shall not include bonus payments and accruals, profit sharing arrangements,
payments in respect of stock option or phantom stock option or similar
arrangements, stock appreciation rights or similar rights, incentive payments,
pension or employment benefit contributions or similar payments made to or
accrued for the account of such Person or otherwise for the direct or indirect
benefit of such Person.
"Disbursement Account" shall mean a bank account at a bank chosen by
Borrower and reasonably acceptable to Agent, having the following
characteristics: (a) the account will be in the name of Agent, (b) the account
will be an account in which Lenders will wire advances under the Revolving Loan,
and (c) the bank will be instructed by Agent to transfer funds into an account
designated by Borrower.
"Disclosure Schedule" shall mean the Amended Disclosure Schedule
delivered by Borrower to Agent and Lenders, as supplemented by the Second
Amended Disclosure Schedule, and by any additional written disclosure schedules
or supplements delivered by Borrower to Agent.
"Discounted Value" means, with respect to the General Prepayment at
issue, the amount obtained by discounting all Remaining Scheduled Payments with
respect to such General Prepayment from their respective scheduled due dates to
the Settlement Date with respect to such General Prepayment, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest is payable for such General Prepayment)
equal to the Reinvestment Yield with respect to such General Prepayment.
"Discount Rate" shall mean, at any time, the ninety (90) day Farm
Credit Current Discount Note Rate then available from the Federal Farm Credit
Banks Funding Corporation.
"DOL" shall mean the United States Department of Labor or any
successor thereto.
"Draw Amount" shall have the meaning assigned to it in Section 2.1(g).
"Eligible Accounts" shall have the meaning assigned to it in Section
2.15.
"Eligible Inventory" shall have the meaning assigned to it in Section
2.16.
"Eligible Wine Barrels" shall have the meaning assigned to it Section
2.18.
"Environmental Laws" shall mean all federal, state and local laws,
statutes, ordinances and regulations, now or hereafter in effect, and in each
case as amended or supplemented from time to time, and any judicial or
administrative interpretation thereof, including, without limitation, any
applicable judicial or administrative order, consent decree or judgment,
relative to the applicable real estate, relating to the regulation and
protection of human health, safety, the environment and natural resources
(including ambient air, surface water, groundwater, wetlands, land surface or
subsurface strata, wildlife, aquatic species and vegetation). Environmental
Laws include the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. (S)(S) 9601 et seq.) ("CERCLA");
-- ----
the Hazardous Material Transportation Act, as amended (49 U.S.C. (S)(S) 1801 et
--
seq.); the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7
---
U.S.C. (S)(S) 136 et seq.); the Resource Conservation and Recovery Act, as
-- ---
amended (42 U.S.C. (S)(S) 6901 et seq.) ("RCRA"); the Toxic Substance Control
-- ---
Act, as amended (15 U.S.C. (S)(S) 2601 et seq.); the Clean Air Act, as amended
-- ---
(42 U.S.C. (S)(S) 7401 et seq.); the
-- ---
Federal Water Pollution Control Act, as amended (33 U.S.C. (S)(S) 1251
et seq.); the Occupational Safety and Health Act, as amended (29 U.S.C.
-- ---
(S)(S) 651 et seq.); and the Safe Drinking Water Act, as amended (42 U.S.C.
-- ---
(S)(S) 300(f) et seq.), and any and all regulations promulgated thereunder, and
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all analogous state and local counterparts or equivalents and any transfer of
ownership notification or approval statutes.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974
(or any successor legislation thereto), as amended from time to time, and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to Borrower, any trade or
business (whether or not incorporated) under common control with Borrower and
which, together with Borrower, are treated as a single employer within the
meaning of Section 4001(a) of ERISA.
"ERISA Event" shall mean, with respect to Borrower or any ERISA
Affiliate, (i) a Reportable Event with respect to a Title IV Plan or a
Multiemployer Plan; (ii) the withdrawal of Borrower or any ERISA Affiliate from
a Title IV Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (iii) the
complete or partial withdrawal of Borrower or any ERISA Affiliate from any
Multiemployer Plan; (iv) the filing of a notice of intent to terminate a Title
IV Plan or the treatment of a plan amendment as a termination under Section 4041
of ERISA; (v) the institution of a proceeding to terminate a Title IV Plan or
Multiemployer Plan by the PBGC; (vi) the failure to make required contributions
to a Qualified Plan; or (vii) any other event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Title IV Plan
or Multiemployer Plan or the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA.
"Eurodollar Business Day" shall mean a business day on which banks
generally in the City of London are open for interbank or foreign exchange
transactions.
"Event of Default" shall have the meaning assigned to it in Section
10.1.
"Fees" shall mean any fees referred to in Section 2.8(a), the Agency
Fee, the amendment fee referred to in Section 2.8(b), the Facility Fee (unless
such fee is waived pursuant to Section 2.8(d)), the Unused Commitment Fee, the
Letter of Credit Fees, any prepayment surcharge, and any other fees due either
to Agent or any Lender pursuant to the Loan Documents.
"Final Swap Loss Amount" shall mean the final amount (other than
continuing accrual of interest) owed by Borrower to the Swap Lender under the
Swap Agreement with respect to Permitted Swap Transactions, after all such
transactions have been terminated and the final amount owed by Borrower to the
Swap Lender can be firmly and finally established.
"Fiscal Month" shall mean any of the monthly accounting periods of
Borrower.
"Fiscal Quarter" shall mean any of the quarterly accounting periods of
Borrower.
"Fiscal Year" shall mean the 12-month period of Borrower ending June
30 of each year. Subsequent changes of the fiscal year of Borrower shall not
change the term "Fiscal Year," unless Agent shall consent in writing to such
change.
"Fixed Asset" shall mean (a) real property, or an interest in real
property (but does not include crops growing or to be grown), (b) equipment, or
an interest in equipment (other than equipment, such as wine barrels of a type
that is eligible for inclusion in the Borrowing Base), and (c) trademarks,
tradenames, and other intellectual property, or any licenses or other interests
therein; provided that, for purposes of allocating proceeds between the
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Revolving Loan and the Term Loan, a disposition of an interest in intellectual
property or any other Fixed Asset shall be deemed to occur under this Agreement
only if the intellectual property or other Fixed Asset itself is the subject of
the disposition, not upon the sale
or other disposition of any assets other than Fixed Assets the value of which
may have been enhanced by the intellectual property or the Fixed Asset.
"Fixed Rate" shall mean: (a) with respect to any portion of the
Revolving Loan that Borrower elects at any time pursuant to Section 2.5(c) to
convert to a fixed rate of interest, the applicable LIBO Rate as of the date of
such election plus a margin equal on the Closing Date to one and one hundred
twenty-five one thousandths percent (1.125%), and thereafter to such lower or
higher margin for which Borrower qualifies under Section 2.5(d); and (b) with
respect to any selection of rates for the Term Loan, the rates and applicable
margins provided in Section 2.6.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time.
"General Prepayment" shall mean (a) a prepayment in full of all of the
Obligations, other than a prepayment in full fulfilling the requirements of
clause (c) of the definition of Special Prepayment, or (b) a partial prepayment
other than a Special Prepayment.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Grower Payables" shall mean (i) amounts payable by Borrower to
growers of agricultural products which have been purchased by Borrower for
processing or which are otherwise used by Borrower in the production of wine or
wine products and shall include "grower payables," as referenced in Borrower's
financial records, and (ii) amounts payable by Borrower to wine processors or
other persons who have delivered notice to Borrower under California Civil Code
Section 3051a of the assertion of a lien under California Civil Code Section
3051.
"Guaranteed Indebtedness" shall mean, as to any Person, any obligation
of such Person guaranteeing any indebtedness, lease, dividend, or other
obligation ("primary obligations") of any other Person (the "primary obligor")
in any manner including, without limitation, any obligation or arrangement of
such Person (i) to purchase or repurchase any such primary obligation, (ii) to
advance or supply funds (a) for the purchase or payment of any such primary
obligation or (b) to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
condition of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation, or (iv) to indemnify the owner of such primary obligation against
loss in respect thereof.
"Guarantor" shall mean any person that has guaranteed to Agent and/or
Lenders all or any portion of the Obligations.
"Hazardous Material" shall mean any substance, material or waste, the
generation, handling, storage, treatment or disposal of which is regulated by
any local or state government authority in any jurisdiction in which Borrower
has owned, leased or operated real property or disposed of hazardous materials,
or by the United States Government, including any material or substance which is
(i) defined as a "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste" or "restricted hazardous waste" or other similar
term of phrase under any such law, (ii) petroleum, (iii) designated as a
"hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C.
(S) 1251 et seq. (33 U.S.C. (S) 1321) or listed pursuant to Section 307 of the
-- ---
Clean Water Act (33 U.S.C. (S) 1317), (iv) defined as a "hazardous waste"
pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42
U.S.C. (S) 6901, et seq. (42 U.S.C. (S) 6903), or (v) defined as a "hazardous
-- ---
substance" pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. (S) 9601, et seq. (42 U.S.C. (S)
-- ---
9601).
"Indebtedness" of any Person shall mean (i) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services (including reimbursement and all other obligations with respect to
surety bonds, letters of credit and bankers' acceptances, whether or not
matured, but excluding obligations to trade creditors incurred in the ordinary
course of business), (ii) all obligations evidenced by notes, bonds, debentures
or similar instruments, (iii) all indebtedness created or arising under any
conditional sale or other title retention agreements with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (iv) all Capital Lease Obligations, (v) all
Guaranteed Indebtedness, (vi) all Indebtedness referred to in clause (i), (ii),
(iii), (iv) or (v) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien upon or in property (including accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness, (vii) the Obligations, and (viii) all liabilities
under Title IV of ERISA, other than PBGC premiums.
"Initial Percentage" shall mean, as to each Revolving Lender with
respect to the Revolving Loan and the Letter of Credit Obligations, the
applicable percentage set forth opposite such Revolving Lender's name on Part 4
of Exhibit B hereto; as the same may be modified, amended, restated or
supplemented from time to time; provided that upon an assignment by any
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Revolving Lender of any portion of the Revolving Loan, the Initial Percentages
shall be amended to reflect such assignment and upon any reduction in the amount
of the Maximum Revolving Loan, the Percentages shall be amended to reflect such
reduction.
"Interest Determination Date" shall mean the date, as designated by
Borrower pursuant to Section 2.5 or Section 2.6, on which a portion of the
Revolving Advances or a portion of the Term Loan shall begin to bear interest at
a Fixed Rate.
"Interest Period" shall mean (a) with respect to any portion of
interest on Revolving Advances that Borrower elects to have bear interest at a
Fixed Rate, a period beginning on the Interest Determination Date and ending, at
Borrower's election, either thirty (30), sixty (60), ninety (90), one hundred
twenty (120), one hundred eighty (180), two hundred seventy (270), or three
hundred sixty (360) days thereafter, (b) with respect to interest on Term Loan
Tranche A and Term Loan Tranche C, a period beginning on the Interest
Determination Date and ending, at Borrower's election, either ninety (90) days,
one (1) year, two (2) years, three (3) years, five (5) years, or seven (7) years
thereafter, and (c) with respect to interest on Term Loan Tranche B, a period
beginning on the Interest Determination Date and ending, at Borrower's election,
either ninety (90) days, one (1) year, two (2) years, three (3) years, five (5)
years, seven (7) years.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and
any successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor
thereto.
"Lenders" shall mean Pacific Coast, Bank of America (in its capacity
as a Revolving Lender and as the Swap Lender), GE Capital, Rabobank, ▇▇▇▇▇▇,
ABN, and Credit Agricole, so long as each shall continue to hold any portion of
the Revolving Loan, the Swingline Loan, or the Term Loan, and if at any time any
of the foregoing Lenders shall decide to assign or syndicate all or any portion
of the Revolving Loan, the Swingline Loan or the Term Loan, such term shall
include such assignee or such other members of the syndicate.
"Letter of Credit Bank" shall have the meaning assigned thereto in
Section 2.1(f).
"Letter of Credit Maintenance Fee" shall mean a fee, calculated and
payable in accordance with Section 2.8(f), equal to three quarters of one
percent (.75%) per annum on the face amount of the applicable Letter of Credit;
provided that, for future Fiscal Quarters commencing with the Fiscal Quarter
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ending on December 31, 1998, such fee shall be based on Borrower's Consolidated
Funded Debt to Adjusted EBITDA Ratio, for the period of such Fiscal Quarter and
the three immediately preceding Fiscal
Quarters, calculated on a rolling basis. If such ratio is equal to or greater
than 4.00:1, then such fee shall be one percent (1.0%) per annum and if such
ratio is less than 4.00:1, then such fee shall be three quarters of one percent
(.75%). Any such adjustment to the Letter of Credit Fee shall become effective
as of the third (3rd) Business Day after Borrower's delivery to Agent of the
financial statements required to be delivered to Agent pursuant to Section
6.1(c) demonstrating to Agent's reasonable satisfaction Borrower's right to such
reduction. Notwithstanding anything to the contrary in the foregoing, if a
Default or Event of Default shall have occurred and be continuing, then the fee
shall be one percent (1.0%), subject to increase to the Default Rate pursuant to
Section 2.7(d).
"Letter of Credit Obligations" shall mean all outstanding obligations
incurred by the Letter of Credit Bank, Agent or any Revolving Lender at the
request of Borrower, whether direct or indirect, contingent or otherwise, due or
not due, in connection with the issuance or guaranty, by the Letter of Credit
Bank, Agent, any Revolving Lender or another Person, of Letters of Credit. The
amount of such Letter of Credit Obligations at any time shall equal the maximum
amount which may be payable by or due to the Letter of Credit Bank, Agent or
Revolving Lenders thereupon or pursuant thereto at such time.
"Letters of Credit" shall mean commercial or standby letters of credit
issued at the request and for the account of Borrower for which Agent, the
Letter of Credit Bank, or any Revolving Lender has incurred Letter of Credit
Obligations.
"LIBO Rate" shall mean, for any Interest Determination Date, the rate
offered from time to time for U.S. Dollar deposits for the Interest Period
selected, as quoted by Telerate News Service on page 3750 recorded as of 11:00
A.M. London setting time (or, if the page 3750 of the Telerate News Service is
unavailable, the comparable reference on the Reuters Screen LIBOR Page or such
other quotation service as may be chosen by Agent) on the second full Eurodollar
Business Day preceding the beginning of the Interest Period; provided, that if
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two or more of such offered rates appear on Telerate (or on the Reuters Screen
LIBOR Page or alternative service, as the case may be), the "LIBO Rate" shall be
highest of the two rates quoted.
"Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement perfecting a security interest under the Code or
comparable law of any jurisdiction).
"Loan Documents" shall mean this Agreement, the Revolving Notes, the
Term Notes, the Security Documents, and all other agreements, instruments,
documents, and certificates identified in any Schedule of Documents listing
documents to be delivered by Borrower to Agent or any Lender and including all
other pledges, powers of attorney, consents, assignments, contracts and
agreements whether heretofore, now, or hereafter executed by or on behalf of
Borrower or any of its Affiliates, or any employee of Borrower or any of its
Affiliates, and delivered to Agent or any Lender in connection with this
Agreement, or any previous versions of this Agreement or the transactions
contemplated thereby or hereby.
"Maintenance Capital Expenditures" shall mean Capital Expenditures of
Borrower and its Subsidiaries for or relating to (i) facility expenditures for
or relating to the replacement, refurbishing, improvement, or repair of
bottling, fermenting, barrel storage, or crushing assets and any hospitality
facility owned by Borrower, (ii) general vineyard planting, replanting and
irrigation capital expenditures for vineyards owned or leased by Borrower,
including Phylloxera Capital Expenditures, and (iii) the acquisition,
replacement, refurbishing, improvement or repair of oak wine barrels used in
connection with wineries owned by Borrower, determined in accordance with GAAP.
"Make-Whole Amount" means an amount equal to the excess, if any, of
the Discounted Value of the Remaining Scheduled Payments with respect to the
General Prepayment over the amount of such General Prepayment, provided, that
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the Make-Whole Amount may in no event be less than zero.
"Material Adverse Effect" shall mean a material adverse effect on (i)
the business, assets, operations, or financial or other condition of Borrower,
(ii) Borrower's ability to pay the Obligations in accordance with the terms
thereof, or (iii) the Collateral or Agent's or Lenders' Liens on the Collateral
or the priority of any such Lien, or (iv) Agent's and Lenders' rights and
remedies under this Agreement and the other Loan Documents.
"Maximum Lawful Rate" shall have the meaning assigned to it in Section
2.7(e).
"Maximum Revolving Indebtedness" shall mean the lesser of (i) an
amount equal to the Maximum Revolving Loan minus the aggregate amount of Grower
Payables then outstanding, and (ii) the Borrowing Base; in each case minus the
amount, if any, of any Section 2.3(c) Deposit and any Section 2.3(d) Credit that
may be in effect at any particular time.
"Maximum Revolving Loan" shall mean Three Hundred Million Dollars
($300,000,000); provided, that such amount shall be permanently reduced (i) by
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any amount paid with respect to the Revolving Loan pursuant to Sections 2.3(b),
2.3(c), 2.3(d) or 2.3(e), and (ii) to any amount requested by Borrower and
approved by Agent and Lenders pursuant to Section 2.1(l).
"Meridian Advance" shall mean a portion of Term Loan Tranche C in the
amount of Twelve Million Dollars ($12,000,000), which shall be advanced by Term
Lenders to Borrower after the Closing Date pursuant to Section 2.2(a).
"Meridian Improvements" shall mean those improvements to the Meridian
winery referred to in the "Updated Appraisal of Meridian Winery" dated October
5, 1998 performed by Pacific Coast Appraisal Services.
"Minimum Payment Amount" shall mean, with respect to any sale of real
property by Borrower an amount equal to (a) if the principal balance of the Term
Loan at the time of sale exceeds the Base Term Loan Amount, one hundred percent
(100%) of the Net Proceeds from such sale, provided, that such Net Proceeds
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shall not be less than ninety-five percent (95%) of the value for such real
property as set forth on the Real Estate Valuation Schedule previously delivered
by Agent to Borrower, and (b) if the principal balance of the Term Loan at the
time of sale is equal to or less than the Base Term Loan Amount, eighty percent
(80%) of the Net Proceeds from such sale, provided, that such Net Proceeds shall
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not be less than eighty percent (80%) of the value for such real property as set
forth on such Real Estate Valuation Schedule.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA, and to which Borrower or any ERISA Affiliate is
making, is obligated to make, has made or been obligated to make, contributions
on behalf of participants who are or were employed by any of them.
"Net Proceeds" shall mean, with respect to any sale of an asset of
Borrower, the proceeds remaining from the sale of such asset after the payment
of Purchase Money Indebtedness permitted by this Agreement that was secured by
the asset sold, after the payment of all escrow and closing fees, title costs,
broker's commissions, and sales or other excise taxes arising directly from such
sale; provided, that such proceeds shall not be reduced by the amount of any
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legal or other professional expenses (other than brokers' commissions) incurred
by Borrower in connection with such sale or any income or capital gains tax
arising from such sale.
"Newly Acquired Capital Assets" shall mean real property and equipment
acquired by Borrower after the Closing Date through Non-Maintenance Capital
Expenditures, excluding equipment or fixtures attached to or used in connection
with the operation of a winery or vineyard property subject to a deed of trust
in favor of Agent.
"Non-Funding Lender" shall have the meaning assigned to it in Section
2.1(b).
"Non-Maintenance Capital Expenditures" shall mean (a) Capital
Expenditures, other than Maintenance Capital Expenditures, (b) expenditures for
current assets purchased in connection with the purchase of fixed assets
consisting of winery or vineyard property, and (c) expenditures for the purchase
of the stock or other ownership interests in enterprises that own and operate
winery property.
"Notice of Revolving Advance" shall have the meaning assigned to it in
Section 2.1(b).
"Notice of Swingline Advance" shall have the meaning ascribed to such
term in Section 2.1A(b).
"Obligations" shall mean (i) all loans, advances, debts, liabilities,
and obligations, for the performance of covenants, tasks or duties or for
payment of monetary amounts (whether or not such performance is then required or
contingent, or amounts are liquidated or determinable and whether or not allowed
as a claim in any proceeding referred to in Section 10.1(i) or 10.1(j)) owing by
Borrower to Agent or to Lenders, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement or other instrument, arising under any of the Loan Documents
and (ii) any Swap Loss Obligations. This term includes the Revolving Loan, the
Swingline Loan, the Letter of Credit Obligations, the Term Loan, all principal,
interest, Fees, charges, expenses, attorneys' fees and any other sum chargeable
to Borrower under this Agreement or any of the Loan Documents.
"Original Closing Date" shall mean January 16, 1996, the date on which
Lenders made the first advance to Borrower under the Original Credit Agreement.
"OSHA" shall mean the Occupational Safety and Health Act, 29 U.S.C.
(S)(S) 651, et seq., as amended from time to time, and the regulations
-- ---
promulgated thereunder.
"Other Lender" shall have the meaning assigned to it in Section
2.1(b).
"PACA" shall mean the Perishable Agricultural Commodities Act, 7
U.S.C. (S) 499e(c) (or any successor legislation thereto), as amended from time
to time, and any regulations promulgated thereunder.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"Pension Plan" shall mean an employee pension benefit plan, as defined
in Section 3(2) of ERISA (other than a Multiemployer Plan), which is not an
individual account plan, as defined in Section 3(34) of ERISA, and which
Borrower or, if a Title IV Plan, any ERISA Affiliate maintains, contributes to
or has an obligation to contribute to on behalf of participants who are or were
employed by any of them.
"Percentage" shall mean, (a) as to each Revolving Lender with respect
to the Revolving Loan and the Letter of Credit Obligations, the applicable
percentage set forth opposite such Revolving Lender's name on Part 1 of Exhibit
B hereto, (b) as to each Term Lender with respect to the Term Loan, the
applicable percentage set forth opposite such Term Lender's name on Part 2 of
Exhibit B hereto, and (c) as to each Lender with respect to the Obligations in
their entirety, the applicable percentage set forth opposite such Lender's name
on Part 3 of Exhibit B hereto; as each may be modified, amended, restated or
supplemented from time to time; provided that upon an assignment by any Lender
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of any portion of the Revolving Loan or the Term Loan, the Percentages shall be
amended to reflect such assignment and upon the payment or prepayment of any
portion of the Term Loan or upon any reduction in the amount of the Maximum
Revolving Loan, the Percentages shall be amended to reflect such prepayment or
reduction.
"Permitted Encumbrances" shall mean the following encumbrances: (i)
Liens for taxes or assessments or other governmental Charges or levies, either
not yet due and payable or to the extent that nonpayment thereof is permitted by
the terms of Section 7.2(b); (ii) pledges or deposits securing obligations under
workmen's compensation, unemployment insurance, social security or public
liability laws or similar legislation; (iii) pledges or deposits securing bids,
tenders, contracts (other than contracts
for the payment of money) or leases to which Borrower is a party as lessee made
in the ordinary course of business; (iv) deposits securing public or statutory
obligations of Borrower; (v) inchoate and unperfected workers', mechanics',
suppliers' or similar Liens arising in the ordinary course of business; (vi)
carriers', warehousemen's, or other similar possessory Liens arising in the
ordinary course of business and securing indebtedness either not yet due and
payable in an outstanding aggregate amount not in excess of One Hundred Thousand
Dollars ($100,000) at any time, or to the extent that nonpayment thereof is
permitted by the terms of Section 7.2(b); (vii) Producers' Liens, so long as
Borrower is not in default under its agreements with the Producer or Producers
benefitted thereby; (viii) the Liens set forth on the schedule of permitted
liens delivered by Borrower, but only to the extent approved by Agent; (ix)
deposits securing, or in lieu of, surety, appeal or customs bonds in proceedings
to which Borrower is a party; (x) an attachment or judgment Lien, but only for a
period of thirty (30) days following attachment of such Lien and such attachment
or judgment lien shall cease to be a Permitted Lien if the obligation that it
secures has not been satisfied or bonded during such thirty (30) day period;
(xi) zoning restrictions, easements, licenses, or other restrictions on the use
of real property or other minor irregularities in title (including leasehold
title) thereto, so long as the same do not materially impair the use, value, or
marketability of such real property, leases or leasehold estates; (xii)
encumbrances listed as exceptions to title in the title policy received by Agent
at the Closing Date, but only to the extent that such encumbrances cover the
particular properties identified in such title policy as being covered by such
encumbrances, and (xiii) security interests securing Purchase Money Indebtedness
in Newly Acquired Capital Assets to the extent permitted by Section 8.3(b).
"Permitted Swap Transactions" shall mean an interest rate swap
transaction between Borrower and the Swap Lender pursuant to which Borrower is
the fixed rate payer and the Swap Lender is the floating rate payer (based on
one month LIBOR) and which has the following characteristics:
Swap Period Ending February 1, 2001
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Fixed Rate: Not to exceed 7.00%
An initial $10,000,000 commencing March 1, 1998
An additional $30,000,000 commencing January 1, 1999
Swap Period Ending October 1, 2001
----------------------------------
Fixed Rate: Not to exceed 7.00%
An initial $ 5,000,000 commencing April 1, 1998
An additional $25,000,000 commencing January 1, 1999
An additional $20,000,000 commencing February 1, 2001
Swap Period Ending January 1, 2002
----------------------------------
Fixed Rate: Not to exceed 7.00%
An initial $10,000,000 commencing April 1, 1998
An additional $10,000,000 commencing January 1, 1999
An additional $20,000,000 commencing February 1, 2001
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Phylloxera Capital Expenditures" shall mean, for any period, the sum
of expenditures required to be capitalized under GAAP for or relating to
vineyard expenditures on phylloxera-infested acreage.
"Plan" shall mean, with respect to Borrower or any ERISA Affiliate, at
any time, an employee benefit plan, as defined in Section 3(3) of ERISA, which
Borrower maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.
"Prime Rate" shall mean the "Prime" rate as published from time to
time in the Eastern Edition of The Wall Street Journal, regardless of whether
-----------------------
such rate is actually charged by any bank, or, in the event that The Wall Street
---------------
Journal ceases publication of such rate, in such other nationally recognized
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financial publication of general circulation as Agent may, from time to time,
designate in writing based on Agent's reasonable determination that the rate so
published is comparable to the "Prime" rate published in the Eastern Edition of
The Wall Street Journal.
-----------------------
"Producer" shall mean any producer of any agricultural product that
sells any product which is grown by him and which is subject to a producer's
lien pursuant to Article 9 (commencing with Section 55631), Chapter 6, Division
20 of the California Food and Agricultural Code, as now in effect or hereafter
amended.
"Producers' Liens" shall mean (i) liens in favor of Producers arising
pursuant to Article 9 (commencing with Section 55631), Chapter 6, Division 20 of
the California Food and Agricultural Code, as now in effect or hereafter
amended, and (ii) liens under California Civil Code Section 3051 of which
Borrower has received notice as provided in California Civil Code Section 3051a.
"Projected EBITDA" shall mean, with respect to an acquisition being
proposed by Borrower, the sum of (i) Consolidated EBITDA for the immediately
preceding four quarters, and (ii) the Acquisition EBITDA ascribed by Agent to
such acquisition.
"Projections" shall mean the projections referred to in Section 5.7.
"Purchase Money Indebtedness" means Indebtedness (other than the
Obligations) incurred solely for the purchase of Newly Acquired Capital Assets;
provided that such Indebtedness is secured by purchase money Liens on such
--------
assets, such Liens do not extend to or cover any assets of Borrower or any
Subsidiary other than such Newly Acquired Capital Asset or a group of related
Newly Acquired Capital Assets, and such Liens secure the obligation to pay the
purchase price and acquisition costs of such Newly Acquired Capital Asset and
interest thereon only, such Indebtedness is incurred at the time of acquisition
of such Newly Acquired Capital Asset, and the fair market value of the Newly
Acquired Capital Assets so secured is at least equal to the amount of the
Indebtedness secured thereby.
"Qualified Plan" shall mean an employee pension benefit plan, as
defined in Section 3(2) of ERISA, which is intended to be tax-qualified under
Section 401(a) of the IRC, and which Borrower or any ERISA Affiliate maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any of them.
"Reference Rate" shall mean the rate of interest publicly announced
from time to time by Bank of America in San Francisco as its Reference Rate, or
such other rate of interest as Bank of America in San Francisco may hereafter
announce as the substitute for its Reference Rate.
"Regulatory Change" shall mean, with respect to any Lender, any change
after the Closing Date in federal, state, or foreign law or regulations
(including Regulation D) or the adoption or making after such date of any
interpretation, directive or request applying to a class of lenders including
such Lender of or under any Federal, state, or foreign law or regulations
(whether or not having the force of law and whether or not failure to comply
therewith would be unlawful) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
"Reinvestment Yield" means, with respect to the General Prepayment at
issue, the yield to maturity implied by (i) the yields reported, as of 10:00
A.M. (New York City time) on the second Business Day preceding the Settlement
Date with respect to such General Prepayment, on the display designated as "Page
PX1" or other applicable "PX" page of the Bloomberg Financial Markets Services
Screen (or such other display as may replace Page PX1 or such other page on the
Bloomberg Financial Markets Services Screen) for actively traded U.S. Treasury
securities having a maturity equal to the Remaining Average Life of such General
Prepayment as of such Settlement Date, or (ii) if such yields are
not reported as of such time or the yields reported as of such time are not
ascertainable, the Treasury Constant Maturity Series Yields reported, for the
latest date for which such yields have been so reported as of the second
Business Day preceding the Settlement Date with respect to such General
Prepayment, in Federal Reserve Statistical Release H.15 (519) (or any comparable
successor publication) for actively traded U.S. Treasury securities having a
constant maturity equal to the Remaining Average Life of such General Prepayment
as of such Settlement Date. Such implied yield will be determined, if necessary,
by (a) converting U.S. Treasury ▇▇▇▇ quotations to bond-equivalent yields in
accordance with accepted financial practice and (b) interpolating linearly
between (1) the actively traded U.S. Treasury security with the maturity closest
to and greater than the Remaining Average Life and (2) the actively traded U.S.
Treasury security with the maturity closest to and less than the Remaining
Average Life.
"Remaining Average Life" means, with respect to any General
Prepayment, the number of years (calculated to the nearest one-twelfth year)
obtained by dividing (i) such General Prepayment into (ii) the sum of the
products obtained by multiplying (a) the principal component of each Remaining
Scheduled Payment with respect to such General Prepayment by (b) the number of
years (calculated to the nearest one-twelfth year) that will elapse between the
Settlement Date with respect to such General Prepayment and the scheduled due
date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the General
Prepayment at issue, all payments of such General Prepayment and interest
thereon that would be due after the Settlement Date with respect to such General
Prepayment if no payment of such General Prepayment were made prior to its
scheduled due date, provided that if such Settlement Date is not a date on which
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interest payments are due to be made under the terms of this Agreement, then the
amount of the next succeeding scheduled interest payment will be reduced by the
amount of interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to this Agreement.
"Reportable Event" shall mean any of the events described in Section
4043(b)(1), (2), (3), (5), (6), or (9) of ERISA.
"Requisite Lenders" shall mean any combination of both (a) Lenders
holding Percentages of the Revolving Loan of fifty-one percent (51%) or more and
(b) Lenders holding Percentages of the Term Loan of fifty-one percent (51%) or
more.
"Restricted Payment" shall mean (i) the declaration of a payment of
any dividend or the occurrence of any liability to make any other payment or
distribution of cash or other property or assets in respect of Borrower's Stock,
(ii) any payment on account of the purchase, redemption or other retirement of
Borrower's Stock or any other payment or distribution made in respect thereof,
either directly or indirectly, or (iii) any payment, loan, contribution, or
other transfer of funds or other property to any Stockholder of Borrower except
for reasonably equivalent value.
"Retiree Welfare Plan" shall refer to any Welfare Plan providing for
continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant's termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the IRC and at the
sole expense of the participant or the beneficiary of the participant.
"Revolving Advance" shall have the meaning ascribed to such term in
Section 2.1(a).
"Revolving Lenders" shall mean Pacific Coast, Bank of America, GE
Capital, Rabobank, ▇▇▇▇▇▇, ABN, and Credit Agricole or any other Lender that
holds a Percentage of the Revolving Loan, but only in its capacity as the holder
of such interest.
"Revolving Loan" shall mean the aggregate amount of Revolving Advances
outstanding at any time.
"Revolving Loan Maturity Date" shall mean January 1, 2003; provided,
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that if the Obligations shall become due and payable in accordance with Section
10.2 or any other provision of this
Agreement, then the Revolving Loan Maturity Date shall be the date on which the
Obligations become due and payable.
"Revolving Note" shall mean any promissory notes or similar instrument
delivered by Borrower to any Revolving Lender evidencing at any time any portion
of the Revolving Loan.
"Schedule of Accounts" shall mean a schedule, containing such
information regarding accounts receivable of Borrower as Agent shall reasonably
request, delivered by Borrower to Lender from time to time pursuant to the terms
of this Agreement or as and when requested by Agent.
"Schedule of Documents" shall mean a schedule, including all
appendices, exhibits or schedules thereto, listing certain documents and
information to be delivered in connection with the Loan Documents and the
transactions contemplated thereunder used by Agent in connection with this
Agreement, including all previous versions of this Agreement and amendments to
this Agreement and to such previous versions.
"Schedule of Inventory" a schedule, containing such information
regarding inventory of Borrower as Agent shall reasonably request, delivered by
Borrower to Lender from time to time pursuant to the terms of this Agreement or
as and when requested by Agent.
"Section 2.3(c) Deposit" shall have the meaning ascribed to it in
Section 2.3(c).
"Section 2.3(d) Credit" shall be an amount, if any, established from
time to time pursuant to Section 2.3(d).
"Security Documents" shall mean (i) all security agreements and other
similar documents delivered by Borrower to Agent pursuant to which Borrower or
any Guarantor grants to Agent a security interest in, assignment of, or Lien
upon any property of Borrower or such Guarantor, (ii) all trademark assignments
and other similar documents delivered by Borrower to Agent pursuant to which
Borrower or any Guarantor grants to Agent a security interest in, assignment of,
or Lien upon any trademark or other intellectual property of Borrower or such
Guarantor, (iii) all deeds of trust in which Borrower is the trustor and Agent
the Beneficiary and which have been delivered by Borrower to Agent, and (iv) any
other document pursuant to which Borrower or any Affiliate of Borrower has
granted or shall grant to Agent or to any Lender a security interest in or Lien
upon any property to secure any of the Obligations, including all amendments,
modifications and supplements thereto.
"Settlement Date" means, with respect to the General Prepayment at
issue, the date on which such General Prepayment is to be paid pursuant to this
Agreement.
"Solvent" shall mean, when used with respect to any Person, that:
(i) the present fair salable value of such Person's assets is in
excess of the total amount of such Person's liabilities;
(ii) such Person is able to pay its debts as they become due; and
(iii) such Person does not have unreasonably small capital to carry on
such Person's business as theretofore operated and all businesses in which
such Person is about to engage.
"Special Prepayment" shall mean: (a) a prepayment of proceeds received
from sale or other disposition of a Fixed Asset, (b) a prepayment of proceeds
received from an equity investment in common or preferred Stock of Borrower, and
(c) if Borrower requests Lenders to approve a proposed transaction which, if
consummated, would create an Event of Default solely under Section 10.1(l) and
Lenders decline to approve such a request, thus rendering it necessary for
Borrower to seek alternative financing in order to consummate such transaction,
then a repayment in full of the Obligations from such
alternative financing shall constitute a Special Prepayment so long as the
repayment occurs within three (3) months of such request.
"Special Real Property" shall mean those parcels of real property
identified in Exhibit C.
"Spill" shall have the meaning ascribed to such term in Section 5.25.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests, participations or other equivalents (regardless of how
designated) of or in a corporation, partnership or equivalent entity whether
voting or nonvoting, including, without limitation, common stock, preferred
stock, or any other "equity security" (as such term is defined in Rule 3a11-1 of
the General Rules and Regulations promulgated by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended).
"Stockholder" shall mean each holder of Stock of Borrower.
"Subject Property" shall have the meaning assigned to it in Section
9.1.
"Subordinated Debt" shall mean any obligation that is subordinated in
right or time of payment to all or any portion of the Obligations, the terms of
which must be reasonably satisfactory to Agent and all Lenders.
"Subsidiary" shall mean, with respect to any Person, (i) any
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person and/or one or more Subsidiaries of
such Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise and (ii) any partnership, trust, limited liability
company, or other entity in which such Person and/or one or more Subsidiaries of
such Person shall have an interest (whether in the form of voting or
participation in profits or capital contribution) of more than 50% or of which
any such Person is a general partner or may exercise the powers of a general
partner, excluding Calcork, a California general partnership.
"Swap Agreement" shall mean the ISDA Master Agreement, with
accompanying schedules, confirmations, instruments, and other documents entered
into between Borrower and the Swap Lender on, about, or after the date of the
Second Amendment.
"Swap Lender" shall mean Bank of America.
"Swap Loss Adjustment Date" shall have the meaning assigned to it in
Section 2.20(b).
"Swap Loss Certificate" shall mean a certificate delivered from the
Swap Lender to Agent setting forth the Final Swap Loss Amount.
"Swap Loss Obligations" shall mean any and all obligations and
liabilities of Borrower to the Swap Lender under the Swap Agreement with respect
to Permitted Swap Transactions, whether voluntary or involuntary, absolute or
contingent, liquidated or unliquidated, determined or undetermined, and whether
or not presently due and owing.
"Swingline Advance" shall have the meaning ascribed to such term in
Section 2.1A(a).
"Swingline Lender" shall mean Pacific Coast, in its capacity as a
Lender, but only in its capacity as the holder of such interest.
"Swingline Loan" shall mean the aggregate amount of all Swingline
Advances outstanding at any time.
"Taxes" shall have the meaning assigned to it in Section 2.13(a).
"Termination Date" shall mean the date on which (i) the Revolving
Loan, the Swingline Loan and the Term Loan and any other Obligations under this
Agreement have been completely discharged and Borrower shall have no further
right to borrow any amounts under this Agreement, and (ii) Borrower shall have
funded the amounts required, if any, under the Loan Documents into the Cash
Collateral Account in respect of the Letter of Credit Obligations, if any, then
outstanding.
"Term Lenders" shall mean Pacific Coast, and any other Lender that
holds a Percentage of the Term Loan, in its capacity as a holder of such
interest.
"Term Loan" shall mean a loan, consisting of Term Loan Tranche A, Term
Loan Tranche B, and Term Loan Tranche C made by Term Lenders to Borrower in the
original principal amount of Two Hundred Twenty-Seven Million Seven Hundred and
Seven Thousand Two Hundred Forty-Three Dollars and 80/100 ($227,707,243.80) as
of the Closing Date, but increasing to Two Hundred Thirty-Nine Million Seven
Hundred and Seven Thousand Two Hundred Forty-Three Dollars and 80/100
($239,707,243.80) upon advance of the Meridian Advance.
"Term Loan Maturity Date" shall mean (a) with respect to Term Loan
Tranche A, July 16, 2005, (b) with respect to Term Loan Tranche B, July 16,
2005, and (c) with respect to Term Loan Tranche C, October 1, 2008; provided,
--------
that if the Obligations shall become due and payable in accordance with Section
10.2 or any other provision of this Agreement, then the Term Loan Maturity Date
shall be the date on which the Obligations become due and payable.
"Term Loan Tranche A" shall mean a portion of the original principal
amount of the Term Loan equal to Thirteen Million Seven Hundred Five Thousand
Eight Hundred Eighty-Two and 73/100 Dollars ($13,705,882.73) as of the Closing
Date.
"Term Loan Tranche B" shall mean a portion of the original principal
amount of the Term Loan equal to One Hundred Fifty-Six Million One Thousand
Three Hundred Sixty One and 07/100 Dollars ($156,001,361.07) as of the Closing
Date.
"Term Loan Tranche C" shall mean a portion of the original principal
amount of the Term Loan equal to Fifty-Eight Million Dollars ($58,000,000) as of
the Closing Date, but increasing to Seventy Million Dollars ($70,000,000) upon
advance of the Meridian Advance.
"Term Note" shall mean any promissory notes or similar instrument
delivered by Borrower to any Term Lender evidencing at any time any portion of
the Term Loan.
"Texas Pacific Group" shall mean TPG Partners, L.P., a Delaware
limited partnership, TPG Parallel I, L.P., a Delaware limited partnership, Wine
World Equity Partners, L.P., a Delaware limited partnership, Wine Partners,
L.P., a Delaware limited partnership, and TPG GenPar, a Delaware general
partnership.
"Thirty-Day Discount Rate" shall mean the thirty (30) day Farm Credit
Current Discount Note Rate then available from the Federal Farm Credit Banks
Funding Corporation.
"Thirty-Day Excess Margin" shall mean, as of any Interest
Determination Date: (i) if the thirty (30) day LIBO Rate exceeds the Thirty-Day
Discount Rate by five (5) basis points (also expressed as .05%) or more, zero;
(ii) if the thirty (30) day LIBO Rate exceeds the Thirty-Day Discount Rate by
less than five (5) basis points (also expressed as .05%), the amount by which
the thirty (30) day LIBO Rate exceeds the Thirty-Day Discount Rate; or (iii) if
the Thirty-Day Discount Rate exceeds the thirty (30) day LIBO Rate, the amount
of such excess plus five (5) basis points (also expressed as .05%).
"Thirty-Day Principal Amount" shall mean a portion of Term Loan
Tranche B in the principal amount of Fifty-Eight Million Dollars ($58,000,000).
"Title IV Plan" shall mean a Pension Plan, other than a Multiemployer
Plan, which is covered by Title IV of ERISA.
"Unfunded Pension Liability" shall mean, at any time, the aggregate
amount, if any, of the sum of (i) the amount by which the present value of all
accrued benefits under each Title IV Plan exceeds the fair market value of all
assets of such Title IV Plan allocable to such benefits in accordance with Title
IV of ERISA, all determined as of the most recent valuation date for each such
Title IV Plan using the actuarial assumptions in effect under such Title IV
Plan, and (ii) for a period of five (5) years following a transaction reasonably
likely to be covered by Section 4069 of ERISA, the liabilities (whether or not
accrued) that could be avoided by Borrower or any ERISA Affiliate as a result of
such transaction.
"Variable Rate" shall mean a floating rate of interest equal to the
higher of (i) Prime Rate, or (ii) the Reference Rate.
"Welfare Plan" shall mean any welfare plan, as defined in Section 3(1)
of ERISA, which is maintained or contributed to by Borrower.
"Winery Real Property" shall mean any real property owned by Borrower
or any Subsidiary on which a winery is located or which is contiguous to or
integrally related to any real property on which a winery is located.
"Withdrawal Liability" shall mean, at any time, the aggregate amount
of the liabilities, if any, pursuant to Section 4201 of ERISA, and any increase
in contributions pursuant to Section 4243 of ERISA with respect to all
Multiemployer Plans.
I.2 Accounting Terms. Any accounting term used in this Agreement shall
----------------
have, unless otherwise specifically provided herein, the meaning customarily
given such term in accordance with GAAP, and all financial computations
hereunder shall be computed, unless otherwise specifically provided herein, in
accordance with GAAP consistently applied. That certain terms or computations
are explicitly modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing.
I.3 Certain Matters of Construction. The words "herein," "hereof,"
-------------------------------
"hereto," "hereunder," and other words of similar import refer to this Agreement
as a whole, including the Exhibits and Schedules hereto, as the same may from
time to time be amended, modified or supplemented, and not to any particular
section, subsection or clause contained in this Agreement. Any reference to a
"Section," "Exhibit," or "Schedule" shall refer to the relevant Section or,
Exhibit, or Schedule to this Agreement, unless specifically indicated to the
contrary. Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine or neuter. The term "including" shall not be limiting or
exclusive, unless specifically indicated to the contrary. The term "real
property" shall include vines and trees affixed to such real property but shall
not include crops, including wine grapes, grown or growing on such property.
ARTICLE II.
AMOUNT AND TERMS OF CREDIT
--------------------------
II.1 Revolving Advances.
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(a) Revolving Lenders Will Make Advances Available. Upon and subject
----------------------------------------------
to the terms and conditions hereof, the Revolving Lenders agree to make
available, from time to time, until the Revolving Loan Maturity Date, for
Borrower's use and upon the request of Borrower therefor, advances (each, a
"Revolving Advance") that shall not exceed, in the aggregate together with all
Letter of Credit Obligations and, all then outstanding advances under the
Swingline Loan, the Maximum Revolving Indebtedness. The amount of any Revolving
Advance shall be not less than One Million Dollars ($1,000,000) and shall be in
integral multiples of One Hundred Thousand Dollars ($100,000).
(b) Requests for Advances. If Borrower desires to receive a Revolving
---------------------
Advance, Borrower shall deliver a notice to Agent substantially in the form of
Exhibit D no later than 2:00 p.m. (California time) on the second Business Day
prior to the date of the proposed Revolving Advance. Each such notice (a
"Notice of Revolving Advance") shall be from an Authorized Financial
Representative. Agent and Revolving Lenders shall be entitled to rely upon and
shall be fully protected under this Agreement in relying upon any Notice of
Revolving Advance reasonably believed by Agent to be genuine. Agent shall
deliver notice of its receipt of the Notice of Revolving Advance to each
Revolving Lender on or before 11:00 a.m. (California time) on the Business Day
prior to the date of the proposed Revolving Advance, and each of the other
Revolving Lenders shall wire its Initial Percentage of such Revolving Advance to
the Disbursement Account (with notice to Agent that such wire has been made) on
or before 11:00 a.m. (California time) on the date of the proposed Revolving
Advance. Upon the close of business on the date of the proposed Revolving
Advance, the funds in the Disbursement Account shall be made available to
Borrower by the bank at which the Disbursement Account is held, unless such bank
shall have been instructed by Agent to withhold such funds, which instructions
Agent may deliver if Agent has determined that Borrower has failed to fulfill
the applicable conditions set forth in Article IV. All notices delivered
pursuant to this Section 2.1(b) shall be delivered by facsimile to the facsimile
number set forth in Section 13.12 or to such other facsimile number as a party
hereto shall designate in writing pursuant to the provisions of Section 13.12.
The failure of any Revolving Lender (such Revolving Lender, a "Non-Funding
Lender") to make any Revolving Advance to be made by it on the date specified
therefor shall not relieve any other Revolving Lender ("Other Lender") of its
obligation to make its Revolving Advance on such date, but neither any Other
Lender nor Agent shall be responsible for the failure of any Non-Funding Lender
to make an Advance to be made by such Non-Funding Lender.
(c) Maturity Date for Revolving Loan. The Revolving Loan shall mature
--------------------------------
and shall become due and payable in full on the Revolving Loan Maturity Date.
(d) Revolving Line of Credit. The Revolving Loan is a revolving line
------------------------
of credit and Borrower may borrow, repay principal, and reborrow in accordance
with the terms of this Agreement; provided that Borrower shall provide Agent
--------
with one (1) day's advance notice of any repayment. Repayments of principal
shall be not less than One Million Dollars ($1,000,000) and shall be in integral
multiples of One Hundred Thousand Dollars ($100,000)).
(e) Reliance on Borrowing Base Certificate. Borrower agrees that in
--------------------------------------
making any Revolving Advance or incurring any Letter of Credit Obligations
hereunder Agent and Revolving Lenders shall be entitled to rely upon the most
recent Borrowing Base Certificate delivered to Agent by Borrower. Borrower
further agrees that Agent and Revolving Lenders shall be under no obligation to
make any Revolving Advance or incur any Letter of Credit Obligations until such
time as Borrower shall have delivered a current Borrowing Base Certificate to
Agent and Revolving Lenders by the time required by Section 6.1(a).
(f) Availability of Letters of Credit. Borrower may from time to time
---------------------------------
request that Revolving Lenders make a Letter of Credit available to Borrower
upon the terms and conditions set
forth in this Agreement; provided that no letter of credit may be issued for
--------
purposes of payment of workers compensation insurance premiums, and provided
--------
that the format of the Letter of Credit and the identity of the beneficiary are
reasonably acceptable to the issuing bank. Upon and subject to the terms and
conditions hereof, Revolving Lenders shall make available to Borrower such
Letter of Credit. Borrower shall request the issuance of a Letter of Credit by
written notice to Agent not less than five (5) Business Days prior to the
requested date of issuance; provided, that Borrower shall not request a Letter
of Credit and Revolving Lenders shall not cause the issuance of a Letter of
Credit if doing so would cause the aggregate amount of all Letter of Credit
Obligations at any one time outstanding (whether or not then due and payable) to
exceed Ten Million Dollars ($10,000,000) or if the issuance of such Letter of
Credit would cause the aggregate of all Letter of Credit Obligations, all
outstanding advances under the Swingline Loan, and the
Revolving Loan to exceed the Maximum Revolving Indebtedness; and provided
--------
further, that no Letter of Credit shall have an expiry date which is later than
-------
(x) three hundred sixty-five (365) days following the date of issuance thereof,
or (y) the Revolving Loan Maturity Date. Bank of America shall be issuer of all
Letters of Credit; provided, that the Revolving Lenders may by unanimous vote at
--------
any time select another Revolving Lender to be such issuer, whereupon such other
Revolving Lender shall be the issuer of all Letters of Credit issued after such
selection (the issuer being the "Letter of Credit Bank"). At the time of each
request by Borrower that a Letter of Credit be issued, the Letter of Credit
Bank, at its option, may require Borrower to execute and deliver to the Letter
of Credit Bank an application for such Letter of Credit in the form customarily
prescribed by the Letter of Credit Bank to issue Letters of Credit (the
"Applications") or such other documents as the Letter of Credit Bank may
reasonably require with respect to the issuance of such Letters of Credit. This
Agreement supersedes any terms of the Applications which are inconsistent with
the terms hereof, including terms relating to the reimbursement of draws,
payment of fees, and defaults.
(g) Draw or Other Payment on Letters of Credit. In the event that the
------------------------------------------
Letter of Credit Bank, Agent or any Revolving Lender shall make any payment on
or pursuant to any Letter of Credit Obligation (the "Draw Amount"), such Draw
Amount shall be deemed to immediately constitute a Revolving Advance. Borrower
shall, within two (2) Business Days of being notified by Agent or such Revolving
Lender of the Draw Amount, pay to Agent for the benefit of the Letter of Credit
Bank an amount equal to the Draw Amount, together with interest on the Draw
Amount at the Variable Rate (or, if applicable, the Default Rate) from the date
of payment by the Letter of Credit Bank to the date of the payment by Borrower.
If Borrower fails to make the required payment to the Letter of Credit Bank,
then each Revolving Lender shall upon the request of Agent make a payment to the
Letter of Credit Bank of its Percentage of the Draw Amount and its Percentage of
interest on the Draw Amount. Such payment shall be considered a purchase by
such Revolving Lenders from the Letter of Credit Bank of their Percentages of
the Draw Amount, and interest thereon, and such payment shall neither increase
nor decrease the amounts owed by Borrower hereunder.
(h) Letters of Credit Outstanding on the Revolving Loan Maturity Date.
-----------------------------------------------------------------
In the event that any Letter of Credit Obligation, whether or not then due or
payable, shall for any reason be outstanding on the Revolving Loan Maturity
Date, Borrower will either (i) cause the underlying Letter of Credit to be
returned and canceled and Letter of Credit Bank's corresponding Letter of Credit
Obligation to be terminated, or (ii) pay to Agent, for the benefit of Revolving
Lenders, cash in an amount equal to the maximum amount then available to be
drawn under the Letter of Credit. Such cash shall be held by Agent in a cash
collateral account (the "Cash Collateral Account") which shall be in the name,
sole dominion and control of Agent (as a cash collateral account) for the
benefit of Revolving Lenders and subject to the terms of this Section 2.1.
Borrower agrees to execute and deliver to Agent such documentation with respect
to the Cash Collateral Account as Agent may request, and Borrower hereby pledges
and grants to Agent a security interest in all such cash held in the Cash
Collateral Account from time to time and all interest thereon and the proceeds
thereof, as additional security for the payment of all amounts due in respect of
the Letter of Credit Obligations, whether or not then due.
(i) Application of Funds in Cash Collateral Account. From time to
-----------------------------------------------
time after cash is deposited in the Cash Collateral Account, Agent may apply
such cash then held in the Cash Collateral Account to the payment of any
amounts, in such order as Agent may elect, as shall be or shall become due and
payable by Borrower to the Letter of Credit Bank or to Revolving Lenders.
(j) Withdrawal of Funds in Cash Collateral Account. Neither Borrower
----------------------------------------------
nor any Person claiming on behalf of or through Borrower shall have any right to
withdraw any of the cash held in the Cash Collateral Account, except that upon
the termination of any Letter of Credit Obligation in accordance with its terms
and the payment of all amounts payable by Borrower to Agent, the Letter of
Credit Bank, and Revolving Lenders in respect thereof, any funds remaining in
the Cash Collateral Account in excess of the then remaining Letter of Credit
Obligations and any other outstanding Obligations to Agent, the Letter of Credit
Bank, or Revolving Lenders shall be returned to Borrower.
(k) No Obligation to Invest Funds in Cash Collateral Account. Neither
--------------------------------------------------------
Agent nor any other Person shall have any obligation to invest any cash
deposited in the Cash Collateral Account or to deposit any such cash in an
interest-bearing account.
(l) Voluntary Reduction of Maximum Revolving Loan. Borrower may, at
---------------------------------------------
any time upon ten (10) days prior notice to Agent and the Lenders, permanently
reduce the Maximum Revolving Loan to an amount determined by Borrower; provided,
--------
that (a) such reduction shall be ineffective if and to the extent that the
Requisite Term Lenders reasonably determine that such reduction would impair the
ability of Borrower to make regularly scheduled payments of interest or
principal under the Term Loan, and (b) in no event may Borrower reduce the
Maximum Revolving Loan below One Hundred Fifteen Million Dollars ($115,000,000).
2.1A Swingline Loan.
--------------
(a) Swingline Lender Will Make Advances Available. Upon and subject
---------------------------------------------
to the terms and conditions hereof, the Swingline Lender agrees to make
available, from time to time, until the eighth (8th) Business Day preceding the
Revolving Loan Maturity Date, for Borrower's use and upon the request of
Borrower therefor, advances (each, a "Swingline Advance") under the Swingline
Loan; provided that a Swingline Advance shall not be available to the extent
that such Swingline Advance would either (i) cause the aggregate amount of all
then outstanding Swingline Advances to exceed Fifteen Million Dollars
($15,000,000), or (ii) cause the aggregate amount of Swingline Advances,
together with all then outstanding advances under the Revolving Loan and all
Letter of Credit Obligations, to exceed the Maximum Revolving Indebtedness. The
amount of any Swingline Advance shall be not less than One Hundred Thousand
Dollars ($100,000) and shall be in integral multiples of One Hundred Thousand
Dollars ($100,000).
(b) Requests for Swingline Advances. If Borrower desires to receive
-------------------------------
a Swingline Advance, Borrower shall deliver a notice to Agent substantially in
the form of Exhibit E no later than 10:00 a.m. (California time) on the Business
Day on which Borrower desires to receive the proposed Swingline Advance. Each
such notice (a "Notice of Swingline Advance") shall be from an Authorized
Financial Representative. Notwithstanding the foregoing, Agent and the
Swingline Lender may, in their sole discretion, decide to permit Borrower to
request a Swingline Advance by telephone subject to such procedures as Agent and
Swingline Lender shall determine. Agent and the Swingline Lender shall be
entitled to rely upon and shall be fully protected under this Agreement in
relying upon any Notice of Swingline Advance, or any telephone request for a
Swingline Advance, reasonably believed by Agent and the Swingline Lender to be
genuine.
(c) Repayment of Swingline Loan. The Swingline Loan is a revolving
---------------------------
line of credit and Borrower may borrow, repay principal, and reborrow in
accordance with the terms of this Agreement; provided that Borrower shall
--------
provide Agent with notice of any repayment prior to 10:00 a.m. on the date of
repayment. Repayments of principal shall be in integral multiples of One
Hundred Thousand Dollars ($100,000). If any Swingline Advance has not been
repaid within seven days after such Swingline Advance was made to Borrower, the
amount of such Swingline Advance may, in the sole discretion of Agent, be
transferred from the Swingline Loan to the Revolving Loan. If the Revolving
Loan Maturity Date shall occur, the then outstanding amount of the Swingline
Loan shall automatically be transferred from the Swingline Loan to the Revolving
Loan. If an Event of Default shall occur, the then outstanding amount of the
Swingline Loan may, in the sole discretion of Agent, be transferred from the
Swingline Loan
to the Revolving Loan. Any amounts transferred from the Swingline Loan to the
Revolving Loan shall thereafter bear interest at the Variable Rate; provided
that Borrower may subsequently elect to convert the interest rate to a Fixed
Rate for a period selected by Borrower in accordance with the provisions of
Section 2.5(c). If any amounts are transferred from the Swingline Loan to the
Revolving Loan, each Revolving Lender shall wire its Initial Percentage of such
amounts to Agent within one (1) Business Day of being notified by Agent of such
transfer and such amounts shall be disbursed by Agent to the Swingline Lender.
(d) Swingline Loan Interest Rate. Swingline Loan advances hereunder
----------------------------
shall bear interest on a daily basis at the "Overnight Rate"; provided that if
an Event of Default shall occur and be continuing, then the Swingline Loan shall
bear interest at a rate of interest that is three percent (3%) per annum higher
than the Overnight Rate. The "Overnight Rate" shall be whatever rate the
Swingline Lender shall from time to time quote to Borrower as being the
Overnight Rate. Such rate shall be set by the Swingline Lender in its sole
discretion. Such rate shall change as of any particular Business Day if the
Swingline Lender notifies Borrower of the rate change by 12:00 noon on such
Business Day and, if not, on the following Business Day. A change in the
Overnight Rate shall apply to amounts then outstanding under the Swingline Loan
as well as to future advances.
II.2 Term Loan.
---------
(a) Advance of Term Loan. Upon and subject to the terms and
--------------------
conditions hereof, each Term Lender advanced to Borrower prior to the Closing
Date such Term Lender's Percentage of Term Loan Tranche A and Term Loan Tranche
B and each Term Lender shall advance to Borrower on the Closing Date such Term
Lender's Percentage of Term Loan Tranche C, other than the Meridian Advance.
Each Term Lender shall advance such Term Lender's Percentage of the Meridian
Advance to Borrower upon Borrower's request provided that Borrower has fulfilled
each of the following conditions to the satisfaction of Agent: (i) Borrower
shall have completed not less than seventy-five percent (75%) (measured by both
project completion and by dollar value of expenditures) of the Meridian
Improvements to the satisfaction of Agent and Agent's appraisers have confirmed
to Agent such percentage completion and the quality of such improvements, (ii)
no Default or Event of Default shall have occurred and be continuing and no
Default or Event of Default would occur upon the making of the Meridian Advance,
(iii) Borrower shall have provided Agent with such documents as Agent shall
require in connection with the making of the Meridian Advance, including a
modification to Agent's trust deeds, (iv) Borrower shall have provided Agent
with such title insurance policies or endorsements as Agent shall require in
connection with the making of the Meridian Advance, and (v) the Meridian Advance
shall be made no later than December 31, 1999.
(b) Term Notes. The Term Loan made by Term Lenders to Borrower shall
----------
be evidenced by the Term Notes to be executed and delivered by Borrower on the
Closing Date. The Term Notes shall represent the obligation of Borrower to pay
the Term Loan.
(c) Term Loan Interest and Principal Payments; Amortization. Borrower
-------------------------------------------------------
shall pay to Agent, for the benefit of Term Lenders, interest on the Term Loan
on a quarterly basis, in arrears, commencing on January 1, 1999, and continuing
on the first Business Day of each Fiscal Quarter thereafter until the
Termination Date. Borrower shall also pay to Agent, for the benefit of Term
Lenders, quarterly installments of principal determined in accordance with
Exhibit F with respect to Term Loan Tranche A, in accordance with Exhibit G with
respect to Term Loan Tranche B, and in accordance with Exhibit H-2 with respect
to Term Loan Tranche C (provided that if the Meridian Advance is not made, then
principal payments with respect to Term Loan Tranche C will be determined in
accordance with Exhibit H-1); provided, that all unpaid principal, accrued
--------
interest and other amounts evidenced by the Term Notes shall be due and payable
in full on the Term Loan Maturity Date.
(d) Application of Prepayments on Term Loan. All mandatory and other
---------------------------------------
prepayments applied to the Term Loan pursuant to Sections 2.3(b), (c), (d), and
(e) and 2.4 or any other provision of this Agreement shall be applied by Agent
pro rata to Term Loan Tranche A, Term Loan Tranche B, and Term Loan Tranche C.
Except as otherwise provided below, all such prepayments applied
to principal under the Term Loan shall be applied in inverse order of maturity,
shall not reduce the amount of any future installment of principal provided for
under Section 2.2(c) (other than the payment due upon maturity of the applicable
tranche of the Term Loan or, if such final installment has already been prepaid,
the most remote remaining scheduled principal payment), and shall constitute a
permanent reduction of the Term Loan. Borrower shall have the right to designate
the various Fixed Rate portions to which prepayments on the Term Loan shall be
applied and, in the absence of such designation, shall be applied to the Fixed
Rate portions maturing soonest.
II.3 Mandatory Prepayments; Application Thereof.
------------------------------------------
(a) Mandatory Prepayment of Revolving Loan and Letter of Credit
-----------------------------------------------------------
Obligations. If at any time, the outstanding balance of the Revolving Loan,
-----------
when aggregated with the amount of outstanding Letter of Credit Obligations and
the then outstanding amount of the Swingline Loan, shall exceed the amount of
the Maximum Revolving Indebtedness, Borrower shall immediately repay to Agent
the outstanding Revolving Loan in the amount of such excess. No prepayment fee
shall be payable with respect to any mandatory prepayment under this Section
2.3(a), other than Borrower shall reimburse Revolving Lenders for any funding
losses incurred by Revolving Lenders as a result of such prepayment, including
any loss or unreimbursed expense arising from the redeployment of funds,
calculated according to any reasonable methodology established by Revolving
Lenders. All mandatory prepayments under this Section 2.3(a) shall be applied
by Agent to the Obligations owing to the Revolving Lenders in accordance with
their respective Initial Percentages.
(b) Mandatory Prepayment from Issuance of Additional Indebtedness. If
-------------------------------------------------------------
at any time after the Closing Date Borrower incurs any additional Indebtedness
for borrowed money, other than Purchase Money Indebtedness, Borrower shall
immediately pay to Agent all proceeds of such incurrence. All mandatory
prepayments under this Section 2.3(b) shall be distributed by Agent to Revolving
Lenders and Term Lenders based on their Initial Percentages of the Obligations.
Amounts received by Term Lenders pursuant to this Section 2.3(b) shall
constitute a permanent reduction of the Term Loan as provided in Section 2.2(d).
Amounts received by Revolving Lenders shall constitute a permanent reduction in
the Maximum Revolving Loan. Nothing in this Section 2.3(b) shall be construed
to imply that any such additional Indebtedness is permitted by this Agreement.
(c) Mandatory Prepayment from Sales of Assets. If at any time
-----------------------------------------
Borrower sells or otherwise disposes of real property in amounts permitted by
Section 8.9(b) of this Agreement, Borrower shall immediately pay to Agent the
Minimum Payment Amount with respect to such sale or disposition and such Minimum
Payment Amount shall constitute a mandatory prepayment with respect to the Term
Loan. Except for such permitted sales of real property and except for the
proceeds of equipment being traded in or replaced in the ordinary course of
business, if at any time Borrower sells or otherwise disposes of any Fixed
Assets, or sells or otherwise disposes of any assets other than Fixed Assets
outside of the ordinary course of Borrower's business, Borrower shall
immediately pay to Agent all of the Net Proceeds of such sale or other
disposition. If the amount paid to Agent arises from sale or disposition of
assets other than Fixed Assets, such amount shall constitute a mandatory
prepayment of the Revolving Loan and shall be applied by Agent to the Revolving
Loan. Such amounts received by Revolving Lenders shall constitute a permanent
reduction in the Maximum Revolving Loan.
If the amount paid to Agent arises from the sale or disposition of
Fixed Assets, then the payment shall be considered a "Section 2.3(c) Deposit".
Agent shall place any Section 2.3(c) Deposit received by Agent into in a
segregated interest-bearing account, the terms of which shall be subject to
Agent's reasonable discretion. Borrower shall execute and deliver to Agent any
such documents as Agent shall request in connection with the establishment and
maintenance of such account, including any documents necessary to establish a
security interest and lien on such account in favor of Agent for the benefit of
Lenders. If during the eighteen (18) month period after Agent receives a
Section 2.3(c) Deposit, Borrower desires to invest any portion of such Section
2.3(c) Deposit in Current Business Assets as permitted by this Agreement,
Borrower shall so notify Agent and provide Agent with sufficient detail about
the proposed investment and the Current Business Assets that will be offered as
substitute security for the Section 2.3(c) Deposit. Agent shall then notify
Borrower of Agent's conditions for release of the
Section 2.3(c) Deposit to Borrower. Upon Borrower's satisfaction of such
conditions, Agent shall release the Section 2.3(c) Deposit for reinvestment by
Borrower.
If any portion of a Section 2.3(c) Deposit, including interest
thereon, remains uninvested at the end of the eighteen (18) month period, then a
mandatory prepayment shall be due equal to the amount of the remaining Section
2.3(c) Deposit. All such mandatory prepayments shall be applied by Agent to the
Term Loan in the manner provided in Section 2.2(d).
Neither the existence of a Section 2.3(c) Deposit nor the release of
such funds to Borrower for reinvestment shall affect the due date of any
interest or principal with respect to the Term Loan; provided that one of the
conditions that Agent may impose upon Borrower's reinvestment of a Section
2.3(c) Deposit is an adjustment of the due date for principal payments with
respect to the Term Loan.
(d) Mandatory Prepayment from Issuance of Additional Equity. Unless
-------------------------------------------------------
otherwise approved by Lenders, which approval shall not be unreasonably
withheld, if at any time after the Closing Date BWEH issues any additional
Stock, Borrower shall immediately pay to Agent all proceeds of such issuance net
of investment banking, legal and accounting fees, and any fees imposed by the
U.S. Securities and Exchange Commission. Agent shall cause such payment to be
applied in reduction of the Revolving Loan and the amount so applied shall be
considered a Section 2.3(d) Credit. If during the twenty-four (24) month period
after Agent receives such payment, Borrower desires to invest any portion of
such Section 2.3(d) Credit in Current Business Assets as permitted by this
Agreement, Borrower shall so notify Agent and Agent shall, upon receipt of such
documentation as Agent may reasonably require, and subject to the terms and
conditions of this Agreement, make available to Borrower the proceeds of an
advance under the Revolving Loan as necessary for such investment, and the
amount of the Section 2.3(d) Credit shall be reduced by the amount so released.
If any portion of a Section 2.3(d) Credit remains uninvested at the end of the
twenty-four (24) month period, then a mandatory prepayment shall be due equal to
the amount of the remaining Section 2.3(d) Credit. The mandatory prepayment
under this Section 2.3(d) shall be applied by Agent to either the Revolving Loan
or the Term Loan, as designated by Borrower or, in the absence of a designation
by Borrower, to the Revolving Loan. Amounts received by Term Lenders pursuant
to this Section 2.3(d) shall constitute a permanent reduction of the Term Loan
as provided in Section 2.2(d). Amounts received by Revolving Lenders shall
constitute a permanent reduction in the Maximum Revolving Loan.
(e) Mandatory Prepayment Upon Payment of Subordinated Debt. If at any
------------------------------------------------------
time Borrower shall make or tender any payment on account of the principal
portion of any Subordinated Debt that is not approved in writing by Agent,
Borrower shall make a mandatory prepayment to Agent, for the benefit of
Revolving Lenders and Term Lenders, in the amount of, and consisting of, such
payment or tendered payment. Such prepayment shall be distributed by Agent to
Revolving Lenders and Term Lenders based on their Percentages of the
Obligations. Amounts received by Term Lenders pursuant to this Section 2.3(e)
shall constitute a permanent reduction of the Term Loan as provided in Section
2.2(d). Amounts received by Revolving Lenders pursuant to this Section 2.3(e)
shall constitute a permanent reduction in the Maximum Revolving Loan.
II.4 Other Prepayments.
-----------------
(a) Prepayment in Full. Borrower shall have the right at any time to
------------------
voluntarily prepay the entire amount of the outstanding Revolving Loan, the
outstanding Swingline Loan and the entire amount of the outstanding Term Loan
and to terminate this Agreement upon at least three (3) Business Days notice to
Agent, without premium or penalty except Borrower shall pay to Agent, for the
benefit of Term Lenders, a prepayment surcharge calculated in accordance with
Section 2.4(c) or Section 2.4(d), and shall pay to Agent for the benefit of
Revolving Lenders a prepayment surcharge calculated in accordance with Section
2.4(d). Prepayment in full shall be accompanied by the payment of all accrued
and unpaid interest and all Fees and other remaining Obligations, including,
Borrower making arrangements, in accordance with the terms and conditions of
Section 2.1(h), for satisfaction with respect to any outstanding Letter of
Credit Obligation.
(b) Partial Prepayment of Term Loan. Borrower shall have the right at
-------------------------------
any time to voluntarily prepay any portion of the Term Loan upon at least three
(3) Business Days notice to Agent, without premium or penalty, except that
Borrower shall pay to Agent, for the benefit of Term Lenders, a prepayment
surcharge calculated in accordance with Section 2.4(c) if the prepayment is a
Special Prepayment, and shall pay to Agent for the benefit of Term Lenders a
prepayment surcharge calculated in accordance with Section 2.4(d) if the
prepayment is a General Prepayment. All voluntary partial prepayments of the
Term Loan shall be applied by Agent in the manner provided in Section 2.2(d).
(c) Prepayment Surcharge for Special Prepayments. At the time that
--------------------------------------------
Borrower makes any Special Prepayment, whether such Special Prepayment is
voluntary on behalf of Borrower or mandatory under the terms of this Agreement,
Borrower shall simultaneously pay to Agent, for the benefit of Term Lenders and
Revolving Lenders, a prepayment surcharge for each Fixed Rate portion so prepaid
calculated as follows:
(i) For each Fixed Rate portion of the Term Loan:
(A) Calculate the difference between (1) the annual rate the Term Lenders
allocated in accordance with their standard methodology on the
Interest Determination Date to fund the amount being prepaid, and (2)
the annual rate the Term Lenders would allocate in accordance with
their then current methodology on the date of such prepayment to fund
a new advance in such amount for the remainder of the Interest Period
for such Fixed Rate portion. If the difference is negative, no
prepayment surcharge is payable.
(B) Divide the result in (A) above by four (4);
(C) For each quarter or portion thereof during which the amount prepaid
was scheduled to have been outstanding, however, in no such instance
beyond the remaining Interest Period for such Fixed Rate portion,
multiply the amount determined in (B) above by the amount prepaid
(such that there is a quarterly calculation for each quarter during
the remaining Interest Period for such Fixed Rate portion);
(D) Determine the present value of each quarterly calculation made under
(C) above discounted to the prepayment date, based upon the scheduled
time that interest on the amount prepaid would have been payable
during the remaining Interest Period for such Fixed Rate portion and a
discount rate equal to the rate set forth in (A)(2) above;
(E) Add all of the calculations made under (D) above. The result is the
prepayment surcharge; and
(ii) For each Fixed Rate portion of the Revolving Loan, the
prepayment surcharge shall be equal to any funding losses incurred by
Revolving Lenders as a result of such prepayment, including any loss or
unreimbursed expense arising from the redeployment of funds, calculated
according to any reasonable methodology established by Revolving Lenders.
(d) Prepayment Surcharge for General Prepayment. At the time that
-------------------------------------------
Borrower makes any General Prepayment, whether such General Prepayment is
voluntary on behalf of Borrower or mandatory under the terms of this Agreement,
Borrower shall simultaneously pay to Agent, for the benefit of Term Lenders
and/or Revolving Lenders, as the case may be, a prepayment surcharge for each
Fixed Rate portion of the Term Loan and the Revolving Loan so prepaid,
calculated as follows:
(i) For each Fixed Rate portion of the Term Loan, the
prepayment surcharge shall equal the Make-Whole Amount; and
(ii) For each Fixed Rate portion of the Revolving Loan, the
prepayment surcharge shall be equal to any funding losses incurred by
Revolving Lenders as a result of such
prepayment, including any loss or unreimbursed expense arising from the
redeployment of funds, calculated according to any reasonable methodology
established by Revolving Lenders.
II.5 Interest on Revolving Advances.
------------------------------
(a) Variable Rate. Revolving Advances hereunder shall bear interest
-------------
at the Variable Rate, unless Borrower elects to convert the interest rate to a
Fixed Rate for the period selected by Borrower in accordance with the provisions
of Section 2.5(c).
(b) Intentionally Omitted.
---------------------
(c) Fixed Rate for Revolving Loan. Borrower may, from time to time,
-----------------------------
elect to convert all or a portion of the outstanding Revolving Advances to a
Fixed Rate; provided, that (i) at least four (4) Business Days prior to the
--------
proposed Interest Determination Date, Borrower has provided Agent with written
notice of such election, the requested Interest Determination Date, the amount
of the Revolving Advances to be converted, and the requested Interest Period for
the amount to be converted, (ii) at the time of delivery of such written notice
and upon the date of conversion, no Default or Event of Default exists under
this Agreement, (iii) at no time shall there be more than twelve (12)
outstanding tranches of the Revolving Loan bearing interest at a Fixed Rate,
(iv) the last day of the Interest Period chosen by Borrower shall not extend
beyond the Revolving Loan Maturity Date, and (v) the amount converted to a Fixed
Rate at any one time shall be not less than One Million Dollars ($1,000,000) and
any amounts in excess thereof shall be in integral multiples of One Hundred
Thousand Dollars ($100,000). Whenever Borrower shall notify Agent of an
election pursuant to this Section 2.5(c), Agent shall so notify each Revolving
Lender at least three (3) Business Days prior to the proposed Interest
Determination Date. Any election by Borrower pursuant to this Section 2.5(c)
shall be irrevocable during the Interest Period selected by Borrower, and that
portion of the Revolving Loan so converted shall bear interest at the applicable
Fixed Rate until the expiration of the applicable Interest Period at which time,
unless another Fixed Rate has been duly elected by Borrower pursuant to this
Section 2.5(c), the interest rate for such portion of the Revolving Loan will
automatically convert to the Variable Rate.
(d) Adjustment in Margin Applicable to Fixed Rate Elections for
-----------------------------------------------------------
Revolving Loan. The margin applicable to the Fixed Rate shall be adjusted on a
--------------
quarterly basis in the manner and to the extent provided in this Section 2.5(d).
If, as of the end of any Fiscal Quarter, Borrower's Consolidated Funded Debt to
Adjusted EBITDA Ratio, for the period of such Fiscal Quarter and the three
immediately preceding Fiscal Quarters, calculated on a rolling basis, falls
within any of the levels listed below, then the margin applicable to the Fixed
Rate for the next Fiscal Quarter shall be adjusted, in the manner set forth
below, to the applicable margin for such level listed below:
Consolidated Funded Debt Applicable
to Adjusted EBITDA Ratio Level Margin
------------------------------ ----------
4.50:1 or greater 1.500%
4.00:1 or greater, but less than 4.50:1 1.375%
3.75:1 or greater, but less than 4.00:1 1.250%
3.25:1 or greater, but less than 3.75:1 1.125%
2.75:1 or greater, but less than 3.25:1 0.875%
2.25:1 or greater, but less than 2.75:1 0.625%
Less than 2.25:1 0.500%
Any change to the applicable margin shall become effective as of the third (3rd)
Business Day after Borrower's delivery to Agent of the financial statements
required to be delivered to Agent pursuant to Section 6.1(c) demonstrating to
Agent's reasonable satisfaction Borrower's right to such changed applicable
margin; provided that a change in the margin shall not change the Fixed Rate
applicable to an Interest Period that commenced prior to the date on which the
margin changes. Notwithstanding anything to the contrary in the foregoing, if a
Default or Event of Default shall have occurred and be continuing on either the
date that Borrower elects to convert a portion of the Revolving Loan to a Fixed
Rate or upon the
Interest Determination Date, then Borrower shall have no right to elect a Fixed
Rate. If Borrower is nonetheless permitted to elect a Fixed Rate, the applicable
margin shall be 1.500%.
II.6 Interest on Term Loan.
---------------------
(a) Fixed Rates for Term Loan. The Term Loan shall bear interest at a
-------------------------
Fixed Rate, as elected by Borrower in accordance with the terms of this
Agreement. Prior to the Closing Date, Borrower provided Agent with written
notice of the Interest Periods elected by Borrower for Term Loan Tranche A, Term
Loan Tranche B, and Term Loan Tranche C. The designations made by Borrower are
irrevocable and portions of the Term Loan so designated shall continue to bear
interest at the applicable Fixed Rate selected by Borrower until the expiration
of the applicable Interest Period.
(b) Designation of Fixed Rates. At least five (5) Business Days prior
--------------------------
to the expiration of any Interest Period chosen by Borrower with respect to a
portion of the Term Loan, Borrower shall provide Agent with written notice of
the subsequent Interest Period elected by Borrower for that portion of the Term
Loan. Subsequent elections shall be subject to the following conditions: (i)
Borrower may designate no more than four (4) separate Interest Periods for Term
Loan Tranche A, no more than six (6) separate Interest Periods for Term Loan
Tranche B, and no more than three (3) separate Interest Periods for Term Loan
Tranche C, (ii) the last day of an Interest Period chosen by Borrower shall not
extend beyond the applicable Term Loan Maturity Date, and (iii) the amount of
each portion of the Term Loan designated for an Interest Period shall be in
amounts reasonably acceptable to Agent. The designations made by Borrower
pursuant to this Section 2.6(b) shall be irrevocable during the Interest Period
selected by Borrower and any portion of the Term Loan so designated shall bear
interest at the applicable Fixed Rate until the expiration of the applicable
Interest Period. If Borrower shall not have designated an Interest Period by
the fifth (5th) Business Day required by the first sentence of this Section
2.6(b), then, subject to Section 2.6(c), Borrower shall be deemed to have
designated an Interest Period of ninety (90) days for the applicable portion of
the Term Loan; provided; that if the Term Loan Maturity Date is less than ninety
--------
days (90) after such date, then Agent shall select a shorter Interest Period.
The Fixed Rates for Interest Periods shall be as follows: (i) as to any ninety
(90) day Interest Period, the Discount Rate as of the date of such election plus
----
the applicable margin set forth in Section 2.6(c), and (ii) as to any one year,
two year, three year, five year, or seven year Interest Period, the Cost of
Funds Rate applicable to such Interest Period plus the applicable margin set
----
forth in Section 2.6(c).
(c) Adjustment in Margin Applicable to Fixed Rate Elections for Term
----------------------------------------------------------------
Loan. The margin applicable to each Fixed Rate for the Term Loan shall be
----
adjusted on a quarterly basis in the manner and to the extent provided in this
Section 2.6(c). With respect to Term Loan Tranche A and Term Loan Tranche B,
the margin applicable to each of the available Fixed Rates selected pursuant to
Section 2.6(b) for the next Fiscal Quarter shall be determined in the manner set
forth below to be the applicable margin for such Fixed Rate for such level
listed below based on, as of the end of any Fiscal Quarter, Borrower's
Consolidated Funded Debt to Adjusted EBITDA Ratio, for the period of such Fiscal
Quarter and the three immediately preceding Fiscal Quarters, calculated on a
rolling basis:
Consolidated Funded
Debt to Adjusted Interest Periods &
EBITDA Ratio Levels Applicable Margins
------------------- ------------------
==================================================================================================================================
5 or 7
90 Day 1 Year 2 Year 3 Year Year
----------------------------------------------------------------------------------------------------------------------------------
4.50 and greater 1.625% 1.70% 1.675% 1.70% 1.75%
----------------------------------------------------------------------------------------------------------------------------------
3.75 or greater, but less than 1.50% 1.575% 1.55% 1.575% 1.625%
4.50
----------------------------------------------------------------------------------------------------------------------------------
3.50 or greater, but less than 1.375% 1.45% 1.425% 1.45% 1.50%
3.75:1
----------------------------------------------------------------------------------------------------------------------------------
3.25:1 or greater, but less than 1.25% 1.325% 1.30% 1.325% 1.375%
3.50:1
----------------------------------------------------------------------------------------------------------------------------------
2.75:1 or greater, but less than 1.00% 1.075% 1.05% 1.075% 1.125%
3.25:1
----------------------------------------------------------------------------------------------------------------------------------
2.25:1 or greater, but less than .75% .95% .925% .95% 1.005%
2.75:1
----------------------------------------------------------------------------------------------------------------------------------
Less than 2.25:1 .625% .825% .80% .825% .875%
==================================================================================================================================
The margin applicable to Term Loan Tranche C shall be the same as for Term Loan
Tranche A and Term Loan Tranche B except that such margin shall always be twelve
and one-half (12.5) basis points higher. For example if the margin applicable
to Term Loan Tranche A and Term Loan Tranche B were to be .75% using the above
formula, the margin applicable to Term Loan Tranche C would be .875%.
The ratio shall change as of the third (3rd) Business Day after
Borrower's delivery to Agent of the financial statements required to be
delivered to Agent pursuant to Section 6.1(c); provided that a change in the
margin shall not change the Fixed Rate applicable to an Interest Period that
commenced prior to the date on which the margin changes and provided further
that, if at any Interest Determination Date Borrower has failed to deliver to
Agent the financial statements required to be delivered to Agent pursuant to
Section 6.1(c) and such failure has not been waived, then the applicable margin
with respect to the relevant Interest Period shall be that set forth in the
column entitled "4.50 and greater." Notwithstanding anything to the contrary in
the foregoing, changes in the ratios and applicable margins described above
during any Interest Period shall not affect the Fixed Rate for such Interest
Period during such Interest Period.
(d) Special Interest Provisions Applicable to Thirty-Day Principal
--------------------------------------------------------------
Amount.
------
(i) Fixed Rate Determined Under this Section; Automatic
---------------------------------------------------
Thirty-Day Interest Periods. Commencing with the Interest Period beginning on or
---------------------------
about January 16, 1999 and continuing until terminated as provided in Section
2.6(d)(ii), the Thirty-Day Principal Amount shall bear interest at the Fixed
Rate determined under this Section 2.6(d) and the Interest Period applicable to
the Thirty-Day Principal Amount shall automatically be thirty (30) days. So long
as this Section 2.6(d)
remains in effect, at the conclusion of each thirty-day Interest Period, a new
thirty-day Interest Period shall automatically commence and no notice from
Borrower to Agent designating an Interest Period shall be required or effective.
(ii) Termination of this Section 2.6(d). Borrower may at any
----------------------------------
time deliver written notice to Agent that Borrower desires to terminate the
thirty-day Interest Periods called for by this Section 2.6(d). If such notice is
delivered by the fifth (5th) Business Day prior to the expiration of the then-
current thirty-day Interest Period, such termination shall become effective upon
the expiration of such Interest Period. If not, such termination shall become
effective upon the expiration of the following thirty-day Interest Period unless
Agent, in its sole discretion, permits an earlier termination. If no notice of
termination is delivered by Borrower to Agent, then the provisions of this
Section 2.6(d) shall automatically terminate upon expiration of the thirty-day
Interest Period that is in effect on March 1, 2002. Upon termination of the
thirty-day Interest Periods called for by this Section 2.6(d), whether by notice
from Borrower or by the passage of time, the Interest Period or Interest Periods
applicable to the Thirty-Day Principal Amount and the Fixed Rate with respect to
the Thirty-Day Principal Amount shall be determined by the other provisions of
this Section 2.6.
(iii) Applicable Fixed Rate. The Fixed Rate applicable to the
---------------------
Thirty-Day Principal Amount for each thirty-day Interest Period subject to this
Section 2.6(d) shall be the sum of (I) the thirty-day LIBO Rate, plus (II) the
----
applicable margin as set forth in the 90-Day column in Section 2.6(c) for which
Borrower qualifies, plus (III) twelve and one-half (12.5) basis points (also
----
expressed as .125%), plus the Thirty-Day Excess Margin.
----
(e) No Designation Upon Occurrence of a Default or Event of Default.
---------------------------------------------------------------
If a Default or Event of Default shall have occurred, then during the
continuance of such Default or Event of Default Borrower shall have no right to
designate an Interest Period. Any portion of a Term Loan covered by an Interest
Period that expires during the continuance of a Default or an Event of Default
shall bear interest after such expiration at the Default Rate until such time,
if any, as such Default shall cease to exist or such Event of Default shall be
waived or cured and Borrower shall make a subsequent designation of an Interest
Period in accordance with the terms of this Agreement.
II.7 Other Interest Provisions.
-------------------------
(a) Interest Payment Dates. Interest shall be due and payable on the
----------------------
first day of each calendar quarter with respect to all interest accrued on the
Revolving Loan, the Swingline Loan and the Term Loan during the preceding
calendar quarter; provided, that if any Interest Period shall mature prior to
--------
the first day of a calendar quarter, then interest accrued at a Fixed Rate
during the particular Interest Period shall be due and payable upon expiration
of the Interest Period. Interest accrued on the Revolving Loan and the
Swingline Loan but not otherwise due and payable on the Revolving Loan Maturity
Date shall become due and payable on the Revolving Loan Maturity Date. Interest
accrued on the Term Loan but not otherwise due and payable on the Term Loan
Maturity Date shall become due and payable on the Term Loan Maturity Date.
(b) Payments Due on Business Days. If any installment of interest or
-----------------------------
any other amount payable under any Loan Document becomes due and payable on a
day other than a Business Day, the payment date for such payment shall be
extended to the next succeeding Business Day and, with respect to payments of
principal or other payments that bear interest (other than interest first due on
such date), interest thereon shall be payable at the then applicable rate during
such extension; provided, however, if any installment of interest relating to
-------- -------
(i) Revolving Advances that have been converted to a Fixed Rate or (ii) the Term
Loan, shall become due and payable on a Saturday, the payment date for such
payment shall be the preceding Business Day.
(c) Computation of Interest. All computations of interest on the Term
-----------------------
Loan shall be made by Agent on the basis of a three hundred sixty (360) day
year, based on four (4) equal quarterly periods. All computations of interest
on the Revolving Loan accruing at the Fixed Rate shall be made by Agent on the
basis of a three hundred sixty (360) day year, based on the actual number of
days
occurring in the period for which such interest is payable. All computations of
interest on the Revolving Loan accruing at the Variable Rate or on the Swingline
Loan shall be made by Agent on the basis of a three hundred sixty five (365) day
year, in each case for the actual number of days occurring in the period for
which such interest is payable. Interest determined by reference to a floating
rate (i.e., the Variable Rate, the Overnight Rate applicable to the Swingline
Loan, or such portions of the Default Rate bearing interest at a floating rate)
shall be determined on a daily basis for use in calculating the interest that is
payable for such day, and any change in the applicable rate shall become
effective on the day such change occurs. Each determination by Agent of an
interest rate hereunder, or by the Swingline Lender with respect to the
Swingline Loan, shall be conclusive and binding for all purposes, absent
manifest error or bad faith.
(d) Default Rate. Any overdue principal of or interest with respect
------------
to any Revolving Advance, or the Term Loan, and the amount of any fees, costs,
or expenses that Borrower is obligated to pay to Agent or any Lender under this
Agreement or any Loan Document not paid when due, shall bear interest, payable
on demand, for each day until paid at a rate per annum equal to the Default
Rate. In addition, upon and after the occurrence of an Event of Default and
continuing until such Event of Default has been cured or waived in writing by
Agent in accordance with the terms of this Agreement, interest shall accrue on
the Obligations (other than Swap Loan Obligations prior to the Swap Loss
Adjustment Date) at the Default Rate. The interest rate increase to the Default
Rate shall take effect immediately upon the occurrence of an Event of Default,
without prior notice to Borrower.
(e) Interest Not to Exceed Maximum Lawful Rate. Notwithstanding
------------------------------------------
anything to the contrary set forth in this Agreement, if at any time until
payment in full of all of the Obligations, the rate of interest payable
hereunder exceeds the highest rate of interest permissible under any law which a
court of competent jurisdiction shall, in a final determination, deem applicable
hereto (the "Maximum Lawful Rate"), then in such event and so long as the
Maximum Lawful Rate would be so exceeded, the rate of interest payable hereunder
shall be equal to the Maximum Lawful Rate; provided, that if at any time
--------
thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by (i) Revolving
Lenders from the making of the Revolving Loan or incurring the Letter of Credit
Obligations hereunder, (ii) the Swingline Lender from the making of the
Swingline Loan hereunder, and (iii) Term Lenders from making the Term Loan
hereunder, is equal to the total interest which such Lenders would have received
had the interest rate payable hereunder been (but for the operation of this
Section 2.7(e)) the interest rate payable since the Closing Date. Thereafter,
the interest rate payable hereunder shall be the rate of interest set forth
herein, unless and until the rate of interest again exceeds the Maximum Lawful
Rate, in which event this paragraph shall again apply. In no event shall the
total interest received by Lenders pursuant to the terms hereof exceed the
amount which Lenders could lawfully have received had the interest due hereunder
been calculated for the full term hereof at the Maximum Lawful Rate. In the
event the Maximum Lawful Rate is calculated pursuant to this Section 2.7(e),
such interest shall be calculated at a daily rate equal to the Maximum Lawful
Rate divided by the number of days in the year in which such calculation is
made. In the event that a court of competent jurisdiction, notwithstanding the
provisions of this Section 2.7(e), shall make a final determination that Lenders
have received interest hereunder or under any of the Loan Documents in excess of
the Maximum Lawful Rate, Revolving Lenders, the Swingline Lender, and Term
Lenders shall, respectively, to the extent permitted by applicable law, promptly
apply such excess first to any interest due and not yet paid under the Revolving
Loan and Letter of Credit Obligations, the Swingline Loan, and the Term Loan,
then to the outstanding principal of the Revolving Loan, the Swingline Loan, and
the Term Loan (without premium or penalty), and then to Fees and any other
unpaid Obligations and thereafter shall refund any excess to Borrower or as a
court of competent jurisdiction may otherwise order.
(f) Additional Fixed Rate Provisions. If at any time Agent reasonably
--------------------------------
determines that for any reason adequate and reasonable means do not exist for
ascertaining the LIBO Rate or the LIBO Rate generally becomes unavailable to
Agent or to any Lender, Agent shall promptly give notice thereof to Borrower,
and upon the giving of such notice, no new Fixed Rate may be selected by
Borrower, until Agent is reasonably able to ascertain the LIBO Rate and Agent
shall promptly notify Borrower at such time; provided, that Agent's
--------
determination under this Section 2.7(f) as to Borrower shall be in accordance
with its treatment of other borrowers under commercial loans generally. In the
event that
any law, treaty, rule, regulation, or determination of a court or governmental
authority or any change therein or in the interpretation or application thereof
or compliance by Agent with any request or directive (whether or not having the
force of law) from any central bank or governmental authority:
(i) shall subject Agent or any Lender to any tax of any kind
whatsoever with respect to any LIBO Rate, or change the basis of taxation of
payments to any Lender of principal, interest or any other amount payable under
any Loan Document (except for changes in the rate of tax on the overall net
income of a Lender); or
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan, or similar requirement against assets held by,
or deposits or other liabilities in or for the account of, advances or loans by,
or other credit extended by, or any other acquisition of funds by, any office of
any Lender; or
(iii) shall impose on any Lender any other condition; and the
result of any of the foregoing is to increase the cost to such Lender of making,
renewing, or maintaining any portion of the Revolving Loan or Term Loan with
interest rates tied to the LIBO Rate and/or to reduce any amount receivable by
any Lender in connection therewith;
then in any such case, Borrower shall pay to such Lender, immediately upon
demand, such amount or amounts as may be necessary to compensate such Lender for
any additional costs incurred by such Lender and/or reductions in amounts
received by such Lender which are attributable to LIBO Rates made available to
Borrower hereunder. In determining which costs incurred by a Lender and/or
reductions in amounts received by a Lender are attributable to such LIBO Rates,
any reasonable allocation made by such Lender among its operations shall be
conclusive and binding upon Borrower; provided, that such Lender's determination
--------
under this Section 2.7(f) as to Borrower is in accordance with its treatment of
other borrowers under commercial loans generally.
(g) Adjustment of Interest Rate Margins Upon Receipt of Annual Audited
------------------------------------------------------------------
Statement. Notwithstanding any other provision of this Agreement, if any margin
---------
applicable to the determination of any interest under this Agreement was reduced
based on a quarterly financial statement for a quarter ending on the last day of
Borrower's fiscal year end, and the audited financial statement when delivered
shows that Borrower did not qualify for such adjusted margin, then the margin
shall immediately be increased retroactively back to the date of adjustment to
the level for which Borrower qualifies based on such audited financial statement
and Borrower shall be assessed by Agent for interest accrued at the difference
between the rates and Borrower shall pay such difference to Agent upon demand.
II.8 Fees. In addition to the other Fees listed in this Agreement,
----
Borrower shall pay to Agent the following Fees:
(a) Commitment Fee. Upon the Closing Date, Borrower shall pay to
--------------
Agent for the benefit of Lenders a commitment fee in an amount determined by
Agent. The foregoing fee shall be distributed among Agent and Lenders as they
shall agree. Borrower shall have no part in determining how such fees are
distributed among Lenders and Agent.
(b) Amendment Fee. Upon the Closing Date, Borrower shall pay to
-------------
Agent for the benefit of Lenders an amendment fee in an amount determined by
Agent. The foregoing fee shall be distributed among Agent and Lenders as they
shall agree. Borrower shall have no part in determining how such fees are
distributed among Lenders and Agent.
(c) Agency Fee. To compensate Agent for serving as Agent under this
----------
Agreement and under the Security Documents, Borrower shall pay to Agent for its
own account (i) a periodic fee in an amount and at the times set forth in a
letter from Agent to Borrower or in such other subsequent letters as may be
entered into between Agent and Borrower and (ii) such fees as were or may be
negotiated between Agent and Borrower and set forth in separate agreements and
which were paid to or
will be paid to Agent in connection with the original closing of the Loan
Documents and subsequent amendments (collectively, the "Agency Fee").
(d) Facility Fee. Upon the Original Closing Date, Borrower was
------------
obligated to pay to Agent for the benefit of Lenders a loan application fee (the
"Facility Fee") in the amount of One Million Five Hundred Thousand Dollars
($1,500,000). The Facility Fee was to be paid directly to Agent from the
initial Revolving Advance made on the Original Closing Date. Agent and Lenders
agreed to waive the full amount of the Facility Fee due to delivery by Borrower
and the Guarantors to Agent and Lenders on the Original Closing Date a waiver,
in form and substance satisfactory to Agent and Lenders, of the "borrower's
rights" provisions of the Farm Credit Act of 1971, as amended.
(e) Unused Commitment Fee. In consideration of the commitment made by
---------------------
Revolving Lenders and the Swingline Lender under this Agreement, until the
Revolving Loan Maturity Date, Borrower shall pay to Agent, for the benefit of
Revolving Lenders and the Swingline Lender, a quarterly unused commitment fee
(the "Unused Commitment Fee") equal to one-quarter of one percent (.25%) per
annum of the average daily amount by which the Maximum Revolving Loan exceeds
the outstanding balance of the Revolving Loan plus the outstanding Letter of
----
Credit Obligations plus the Swingline Loan; provided, that the Unused Commitment
---- --------
Fee shall be subject to adjustment as provided below. If, as of the end of any
Fiscal Quarter, commencing with the Fiscal Quarter ending December 31, 1998,
Borrower's Consolidated Funded Debt to Adjusted EBITDA Ratio, for the period of
such Fiscal Quarter and the three immediately preceding Fiscal Quarters,
calculated on a rolling basis, falls within any of the levels listed below, then
the Unused Commitment Fee for the next Fiscal Quarter shall be adjusted in the
manner set forth below to the percentage for such level listed below:
Consolidated Funded Debt to Unused
Adjusted EBITDA Ratio Level Commitment Fee
--------------------------- --------------
4.00:1 or greater .300%
3.75:1 or greater, but less than 4.00:1 .275%
3.25:1 or greater, but less than 3.75:1 .250%
2.75:1 or greater, but less than 3.25:1 .200%
2.25:1 or greater, but less than 2.75:1 .175%
Less than 2.25:1 .150%
Any change to the Unused Commitment Fee shall become effective as of the third
(3rd) Business Day after Borrower's delivery to Agent of the financial
statements required to be delivered to Agent pursuant to Section 6.1(c)
demonstrating to Agent's reasonable satisfaction Borrower's right to such
changed applicable margin. Notwithstanding anything to the contrary in the
foregoing, if a Default or Event of Default shall have occurred and be
continuing on the date that Borrower would otherwise be entitled to an
adjustment in the Unused Commitment Fee, then the Unused Commitment Fee shall
remain or become three-tenths of one percent (.30%) per annum. The Unused
Commitment Fee shall be paid to Agent on (i) the fifth day of each calendar
quarter with respect to the previous calendar quarter, and (ii) the Revolving
Loan Maturity Date, with respect to the period from the last full calendar
quarter through the Revolving Loan Maturity Date. Notwithstanding the
foregoing, if an adjustment to the amount of the Unused Commitment Fee is made
based on a quarterly financial statement for a quarter ending on the last day of
any Fiscal Year, and the audited financial statement when delivered shows that
Borrower did not qualify for such adjustment, then the Unused Commitment Fee
shall immediately be adjusted retroactively back to the date of adjustment to
the level for which Borrower qualifies based on such audited financial statement
and Borrower shall be assessed by Agent for the difference between the rates and
Borrower shall pay such
difference to Agent upon demand. The Swingline Lender shall be entitled to
receive the "Swingline Portion" (as defined later in this Section 2.8(d)) of the
Unused Commitment Fee and the Revolving Lenders shall be entitled to receive the
balance. The "Swingline Portion" of the Unused Commitment Fee is equal to the
applicable per annum percentage of the average daily amount by which Ten Million
Dollars ($10,000,000) exceeds the outstanding balance of the Swingline Loan.
(f) Letter of Credit Fee. Borrower shall pay to Agent, for the
--------------------
account of Revolving Lenders, the Letter of Credit Maintenance Fee (calculated
on the basis of a 360 day year and actual days elapsed), on the face amount of
all outstanding Letter of Credit Obligations, payable in arrears (i) for the
preceding calendar quarter, on first Business Day of the succeeding calendar
quarter, and (ii) on the Revolving Loan Maturity Date. Upon the occurrence and
during the continuance of an Event of Default, the Letter of Credit Maintenance
Fee shall be increased to the Default Rate, and shall be payable upon demand by
Agent. The Letter of Credit Maintenance Fee shall be allocated as follows:
one-quarter percent (.25%) per annum shall be due to the Letter of Credit Bank
and the balance of the Letter of Credit Maintenance Fee shall be allocated to
each Revolving Lender (including the Letter of Credit Bank) in accordance with
each Revolving Lender's Percentage of the Revolving Loans.) In addition to the
above, Borrower shall pay to the Letter of Credit Bank, or shall reimburse Agent
and Revolving Lenders for, all customary fees and charges of the Letter of
Credit Bank or like party in connection with the issuance, administration,
amendment, negotiation or payment of any Letter of Credit.
(g) Fees Cumulative and Non-Refundable. All Fees payable under any
----------------------------------
Loan Document shall be cumulative and all Fees shall be considered fully earned
on the date of payment and shall not be refundable under any circumstances.
II.9 Purchase of Farm Credit Stock. On the Original Closing Date,
-----------------------------
Borrower purchased One Thousand Dollars ($1,000) of stock in Pacific Coast Farm
Credit Services, ACA and executed and delivered to Pacific Coast Farm Credit
Services, ACA certain documents reasonably necessary to consummate such
purchase.
II.10 Receipt of Payments. Borrower shall make each payment under this
-------------------
Agreement not later than 10:30 A.M. (California time) on the day when due in
lawful money of the United States of America by wire transfer of immediately
available funds to the Collection Account. Borrower shall have advised Agent in
writing of each payment being made by Borrower no later than 2:00 p.m.
(California time) on the Business Day prior to the date of making of such
payment. For purposes of computing interest and fees and determining the amount
of funds available for borrowing by Borrower pursuant to Article II, payments of
immediately available funds by wire transfer deposited in the Collection Account
not later than 10:30 a.m. (California time) (and for which Agent has received
notice prior to the making of such payment) shall be deemed received by Agent
upon that Business Day. If payment shall be deposited later than 10:30 a.m.
(California time) on any particular Business Day (or if Agent was not given
prior notice of the payment by 2:00 p.m. (California time) on the Business Day
preceding the date of payment), such payment shall be deemed received on the
following Business Day. If Agent, in its sole discretion, determines to accept
from Borrower payment by checks, drafts, or similar non-cash items, payment
shall be deemed received by Agent two (2) Business Days after notice to Agent
and deposit of such payment in the Collection Account.
II.11 Application and Allocation of Payments Prior to the Occurrence of an
--------------------------------------------------------------------
Event of Default.
----------------
(a) Application of Payments. Borrower irrevocably waives the right
-----------------------
to direct the application of any and all payments at any time or times hereafter
received by Agent or Lenders from or on behalf of Borrower, and Borrower
irrevocably agrees that Agent and Lenders shall have the continuing exclusive
right to apply any and all such payments against the then due and payable
Obligations of Borrower as Agent and Lenders may deem advisable.
(b) Allocation of Payments. Agent shall allocate among the Lenders
----------------------
payments received from Borrower in the following manner:
(i) payments of Obligations that are owed to Agent shall be
retained by Agent;
(ii) payments of Obligations other than principal and interest
payments that are owed to Lenders shall be allocated to the Lenders in
accordance with each Lender's respective Percentage; and
(iii) payments of principal and interest on account of the
Swingline Loan shall be allocated to the Swingline Lender; payments of
principal and interest on account of the Term Loan shall be allocated in
accordance with each Term Lender's respective Percentage of the Term Loan;
provided, that if any Term Lender's pro rata share of the aggregate
--------
outstanding principal amount of the Term Loan is greater than such Term
Lender's Percentage, then principal payments shall be allocated to such
Lender until its pro rata share of the aggregate outstanding principal
amount is equal to such Lender's Percentage; payments of principal and
interest on account of the Revolving Loan shall be allocated in accordance
with each Revolving Lender's respective Initial Percentage, with respect to
payments received prior to Agent's taking action pursuant to Section 11.12,
or Percentage, with respect to payments received after Agent's taking
action pursuant to Section 11.12; provided, that if any Revolving Lender's
--------
pro rata share of the aggregate outstanding principal amount of the
Revolving Advances is greater than such Lender's Initial Percentage or
Percentage, whichever is then appropriate, then principal payments shall be
allocated to such Lender until its pro rata share of the aggregate
outstanding principal amount is equal to such Lender's Initial Percentage
or Percentage, as the case may be.
II.12 Accounting. Agent will provide a monthly accounting of (i)
----------
transactions under the Revolving Loan and (ii) the Letter of Credit Obligations,
and a quarterly accounting of transactions under the Term Loan to Borrower and
to Lenders. Each and every such accounting shall (absent manifest error) be
deemed final, binding, and conclusive upon Borrower and Lenders in all respects
as to all matters reflected therein, unless Borrower or a Lender, within one
hundred twenty (120) days after the date any such accounting is rendered, shall
notify Agent in writing of any objection which Borrower or such Lender may have
to any such accounting, describing the basis for such objection with
specificity. In that event, only those items expressly objected to in such
notice shall be deemed to be disputed by Borrower or such Lender. Agent's
determination, based upon the facts available, of any item objected to by
Borrower or a Lender in such notice shall (absent manifest error) be final,
binding, and conclusive on Borrower and Lenders, unless Borrower or such Lender
shall commence a judicial proceeding to resolve such objection within sixty (60)
days following Agent's notifying Borrower and Lenders of such determination.
II.13 Taxes.
-----
(a) Any and all payments by Borrower hereunder or under the
Revolving Notes or Term Notes shall be made, in accordance with this Section
2.13, free and clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, Charges, or withholdings, and all
liabilities with respect thereto, excluding taxes imposed on or measured by the
net income of any Lender by the jurisdiction under the laws of which such Lender
is organized or any political subdivision thereof (all such non-excluded taxes,
levies, imposts, deductions, Charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under any
Revolving Note or Term Note to any Lender, (i) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.13) such Lender receives an amount equal to the sum it would have received had
no such deductions been made, (ii) Borrower shall make such deductions, and
(iii) Borrower shall pay the full amount deducted to the relevant taxing or
other authority in accordance with applicable law.
(b) In addition, Borrower agrees to pay any present or future stamp
or documentary taxes or any other sales, transfer, excise, mortgage recording,
or property taxes, Charges or similar levies that arise from any payment made
hereunder or under the Revolving Notes, Term Notes, or from the execution, sale,
transfer, delivery or registration of, or otherwise with respect to, this
Agreement
or the Revolving Notes, Term Notes, the Loan Documents and any other agreements
and instruments contemplated thereby (hereinafter referred to as "Other Taxes").
(c) Borrower shall indemnify each Lender for the full amount of
Taxes or Other Taxes (including any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.13) paid by such Lender and
any liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. This indemnification shall be made within thirty (30) days
from the date such Lender makes written demand therefor.
(d) Within thirty (30) days after the date of any payment of Taxes,
Borrower shall furnish to each Lender the original or a certified copy of a
receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in this
Section 2.13 shall survive the payment in full of all Obligations and the
Termination Date.
II.14 Capital Adequacy.
----------------
(a) Borrower shall pay to Agent for the benefit of any Lender from
time to time on written request such amounts as such Lender may reasonably
determine to be necessary to compensate such Lender for any increased costs to
such Lender that it reasonably determines are attributable to any law or
regulation, or any interpretation, directive, or request (whether or not having
the force of law and whether or not failure to comply therewith would be
unlawful) of any court or governmental or monetary authority (i) following any
Regulatory Change or (ii) implementing after the Closing Date any risk-based
capital guideline or other capital requirement (whether or not having the force
of law and whether or not the failure to comply therewith would be unlawful)
heretofore or hereafter issued by any Governmental Authority in respect of such
Lender's Percentage of the Revolving Loan, the Letter of Credit Obligations or
Term Loan (such compensation to include an amount equal to any reduction of the
rate of return on assets or equity of such Lender to a level below that which
such Lender could have achieved but for such law, regulation, interpretation,
directive or request); provided that with respect to this Section 2.14, each
--------
Lender shall treat Borrower as such Lender generally treats its other similarly
situated borrowers.
(b) Each Lender will furnish to Agent and Borrower a certificate
setting forth the basis and amount of each request by such Lender for
compensation under this Section 2.14. Determinations and allocations by any
Lender for purposes of this Section 2.14 of the effect of any Regulatory Change
pursuant to or of capital maintained pursuant to this Section 2.14, on its costs
or rate of return of maintaining Revolving Advances, Letter of Credit
Obligations or the Term Loan and or its commitment to make Revolving Advances or
the Term Loan or incur Letter of Credit Obligations, and of the amounts required
to compensate such Lender under this Section 2.14, shall be conclusive absent
manifest error or bad faith.
II.15 Eligible Accounts. To be an "Eligible Account," an account must
-----------------
be set forth on the most recent Schedule of Accounts and must meet each and
every one of the following criteria:
(a) The account must arise from the sale of goods or the performance
of services by Borrower in the ordinary course of Borrower's business and come
within the definition of "account" as that term is used in Section 9106 of the
California Commercial Code.
(b) Borrower's right to receive payment on the account is absolute
and not contingent upon the fulfillment of any condition whatever and Borrower
is able to bring suit or otherwise enforce its remedies against the Account
Debtor through judicial process.
(c) The account is subject to no defense, counterclaim or setoff,
whether well-founded or otherwise. (Agent reserves the right to establish
appropriate reserves for the dilutive effect of
promotional programs based on the method which Borrower uses to accrue and
account for such programs on its financial statements).
(d) The account is a true and correct statement of a bona fide
indebtedness incurred in the amount of the account for merchandise sold and
accepted by the Account Debtor obligated upon such account.
(e) An invoice, substantially in the form of one of the invoices
attached to the Certificate of Invoices identified in the Schedule of Documents,
or such other form of invoice as has been approved by Agent in writing, has been
sent to the Account Debtor.
(f) The account is owned by Borrower, is subject to a perfected
first priority security interest in favor of Agent for the benefit of Lenders,
and is not subject to any right, claim, or interest of any other Person except
Producers' Liens, if any.
(g) The account does not arise from a sale to or performance of
services for an employee, Affiliate (other than sales to Affiliates permitted
under Section 8.6), parent, or Subsidiary of Borrower, or an entity which has
common officers or directors with Borrower.
(h) The account is not the obligation of an Account Debtor that is
the federal government or a political subdivision thereof unless Agent has
agreed to the contrary in writing and Borrower has complied with the Federal
Assignment of Claims Acts of 1940, and any amendments thereto, with respect to
such obligation.
(i) The account is not the obligation of an Account Debtor located
in a foreign country.
(j) The account is not the obligation of an Account Debtor to whom
Borrower is or may become liable for goods sold or services rendered by the
Account Debtor to Borrower.
(k) The account does not arise with respect to goods which are
delivered on a cash-on-delivery basis or placed on consignment, guaranteed sale,
sale or return, or other terms by reason of which the payment by the Account
Debtor may be conditional.
(l) The account is not in default; provided, that an Account shall
--------
be deemed in default upon the occurrence of any of the following:
(i) The account is not paid within the earlier of (A) sixty
(60) days from its due date and (B) ninety (90) days from its original
invoice date;
(ii) For accounts from a state liquor board, the account is not
paid within the earlier of (A) ninety (90) days from its due date and (B)
one hundred twenty (120) days from its original invoice date; provided that
--------
the aggregate amount of all accounts that are not eligible under clause (i)
of this Section 2.15(l) and that are eligible only under this clause (ii)
of this Section 2.15(l) shall not exceed Two Million Five Hundred Thousand
Dollars ($2,500,000) outstanding at any one time;
(iii) Any Account Debtor obligated upon such Account suspends
business, makes a general assignment for the benefit of creditors, or fails
to pay its debts generally as they come due; or
(iv) Any petition is filed by or against any Account Debtor
obligated upon such Account under the Bankruptcy Code or any other
national, state or provincial receivership, insolvency relief or other law
or laws for the relief of debtors.
(m) The account does not, when added to all other Eligible Accounts
that are obligations of the Account Debtor, at any time result in a total sum
that exceeds twenty percent (20%) of the total balance then due on all accounts
that are Eligible Accounts (but only such accounts or portions of accounts that
exceed the twenty percent (20%) concentration limit shall be excluded from
Eligible Accounts); provided, that, when so requested by Borrower, Agent will
--------
consider increasing such twenty percent (20%) maximum for one or more particular
Account Debtors based on Agent's annual review of the respective credit
histories and creditworthiness of such Account Debtors.
(n) The account is not the obligation of an Account Debtor that is
in default (as defined in subparagraph (l)(i) above) on twenty percent (20%) or
more of accounts owed to Borrower.
(o) The account does not arise from any ▇▇▇▇-and-hold or other sale
of goods which remain in Borrower's possession or under Borrower's control.
(p) The account is not the obligation of a distributor to whom
Borrower has discontinued sales of inventory for reasons related to the
creditworthiness of such distributor.
(q) The account is otherwise reasonably acceptable to Agent.
II.16 Eligible Inventory. To constitute "Eligible Inventory," inventory
------------------
must be set forth on the most recent Schedule of Inventory and must meet each
and every one of the following criteria:
(a) The inventory must be owned by Borrower, must be located in the
United States, must be subject to a perfected first priority security interest
in favor of Agent for the benefit of Lenders, and must be free and clear of all
Liens and rights of others, except Producers' Liens, if any.
(b) The inventory must consist of bulk wine or bottled wine in
cases.
(c) If the inventory is bottled wine, it must either be
(i) located on premises owned by Borrower;
(ii) located on premises which are leased by Borrower and for
which Agent has received a landlord notification letter from Borrower in
form and substance reasonably satisfactory to Agent;
(iii) stored in a public warehouse for which Agent has received
a notification letter from Borrower in form and substance reasonably
acceptable to Agent.
(d) If the inventory consists of bulk wine, it must either be:
(i) located on premises owned by Borrower;
(ii) located on premises which are leased by Borrower and for
which Agent has received a notification letter from Borrower in form and
substance reasonably satisfactory to Agent; or
(iii) stored at a facility for which Agent has received a
notification letter from Borrower in form and substance reasonably
acceptable to Agent.
(e) If the inventory consists of bottled wine, the age of such
bottled wine shall not exceed the time periods set forth below for the types of
wine set forth below:
(i) white zinfandel 18 months
(ii) chardonnay 36 months
(iii) other white wines 24 months
(iv) proprietors reserve red 84 months
(v) European imported red 84 months
(vi) other red wines 48 months
In determining the age of bottled wines, Agent may permit Borrower to use such
estimation procedures as Agent, in its discretion, considers appropriate.
(f) If the inventory has been purchased by Borrower from a third
party that was in possession of the inventory at the time it was sold to
Borrower and the purchase by Borrower is not accompanied by an immediate
delivery of possession of the inventory to Borrower followed by an actual and
continued change of possession of the inventory, such inventory shall not be
Eligible Inventory unless:
(i) Borrower's purchase of the bulk wine is evidenced by a
written contract or purchase order;
(ii) With respect to each purchase, a ▇▇▇▇ of sale or other
evidence of the transfer, which shall be substantially in the form of
Exhibit I, must be executed by both Borrower and the seller and such
document must be duly recorded in the book of official records of the
county recorder of all counties in which any portion of the bulk wine is
located prior to the time that title to the bulk wine has passed to
Borrower;
(iii) All conditions to transfer of title from seller to
Borrower must have been fulfilled and Borrower must have delivered written
notice to the seller that the bulk wine has been accepted (or whatever
similar terminology is required by the contract);
(iv) With respect to each entity from whom Borrower purchases
bulk wine, Borrower shall have filed a financing statement fulfilling the
requirements of Section 3440.1(h)(1) of the California Civil Code and shall
have published a notice of intended transfer fulfilling the requirements of
Section 3440.1(h)(2) of the California Civil Code. Borrower shall be
considered having fulfilled those requirements if the financing statement
and the notice contain a general description of the character of the bulk
wine being transferred.
(g) Agent has reviewed and approved (such approval not to be
unreasonably withheld) of Borrower's insurance coverage with respect to such
Inventory.
(h) Agent has received, no less frequently than on a monthly basis,
and approved (such approval not to be unreasonably withheld) all written
inventory reports and reconciliations prepared by Borrower with respect to such
inventory in accordance with the requirements of the BATF.
(i) The inventory is not covered by a negotiable document of title
unless such document has been delivered to Agent.
(j) The inventory, in Agent's reasonable opinion, is not obsolete,
unsalable, damaged, or unfit for further processing.
(k) The inventory is not placed by Borrower on consignment or is not
sold on a "sale or return" basis as defined in California Commercial Code
Section 2-326.
(l) The inventory is of a type held for sale in the ordinary course
of Borrower's business.
(m) The inventory is otherwise reasonably acceptable to Agent.
II.17 Valuation of Inventory. Inventory shall be valued by Agent on a
----------------------
periodic basis, but not less than twice annually, by a comparison of market
industry data and the actual revenue being derived by Borrower from sale of such
inventory. Valuation shall be based on the "market" value rather than
Borrower's "cost." In determining market value, Agent shall be entitled to use
the ▇▇▇▇▇▇▇▇▇▇ Collateral Value Report or such other comparable reports as Agent
shall deem appropriate.
II.18 Eligible Wine Barrels. To constitute "Eligible Wine Barrels,"
---------------------
wine barrels must meet each and every one of the following criteria:
(a) The wine barrels are owned by Borrower (rather than leased) and
have not been leased by Borrower to any third party, must be located in the
United States, must be subject to a perfected first priority security interest
in favor of Agent for the benefit of Lenders, and must be free and clear of all
Liens and rights of others, except Producers' Liens, if any.
(b) The wine barrels are in good condition and are used or capable
of being used in the ordinary course of Borrower's business.
(c) The wine barrels are otherwise reasonably acceptable to Agent.
The value of Eligible Wine Barrels shall be reasonably determined by Agent on a
periodic basis using industry comparative data.
II.19 Requests to Refinance Revolving Loan. At any time after delivery
------------------------------------
to Lenders of Borrower's audited financial statements for the fiscal year ending
June 30, 2000, unless otherwise approved by Lenders, Borrower may, subject to
the prepayment and other provisions set forth in this Agreement, seek to
refinance the Revolving Loan, and, in connection with any such refinancing,
request that the Term Lenders release or subordinate their security interests in
Borrower's accounts, inventory, or other current assets to facilitate such
refinancing. The Term Lenders may accept or reject any such request, in their
sole discretion, for any reason, based on the facts and circumstances then
existing; provided, that the Term Lenders shall accept any such request if, as
of the date of such refinancing, each and every one of the following conditions
is satisfied: (a) no Default or Event of Default has occurred in the payment of
any amount or in any financial covenant contained in Section 8.21 at any time
since the Closing Date; (b) no Default or Event of Default exists at the time of
such request and no material Default or Event of Default of a kind other than
those specified in clause (a) above has occurred within six (6) months prior to
such request; (c) the aggregate outstanding balance of the Term Loan is not more
than sixty-two percent (62%) of the aggregate appraised value of the real
property securing the Term Loan (based, if so requested by the Term Lenders, on
new or updated appraisals obtained at Borrower's expense from appraisers
selected by the Term Lenders); (d) the ratio of Consolidated Total Debt as of
June 30, 2000 to the average of Consolidated EBITDA for the two fiscal years
ending June 30, 1999 and 2000 shall be less than three and one-quarter to one
(3.25:1); (e) the ratio of Consolidated Cash Flow to Consolidated Debt Service
for the year ending June 30, 2000 shall be not less than two and one-half to one
(2.50:1); (f) the ratio of Consolidated Total Debt to Consolidated Total
Capitalization as of June 30, 2000 shall be less than six-tenths to one
(0.60:1.00); (g) Consolidated EBITDA for the year ending June 30, 2000 shall be
at least ninety-five percent (95%) of Consolidated EBITDA for the year ending
June 30, 1999; (h) Borrower's latest quarterly financial statements do not show
or indicate any deterioration in Borrower's compliance with the conditions
described in clauses (d), (e), (f), and (g) above; (i) the Term Lenders
reasonably determine that the proposed revolving facility is adequate to meet
Borrower's future financing
requirements; (j) there has occurred no event or circumstance that might
reasonably be expected to cause a deterioration in the financial condition of
Borrower during the remaining term of the Term Loan, and (k) the lender or
lenders providing the proposed revolving facility are prepared to enter into an
intercreditor or subordination agreement reasonably satisfactory to the Term
Lenders. Nothing in the foregoing is intended to imply that Borrower shall have
any right to repay or prepay the Revolving Loan other than as set forth in this
Agreement. The refinancing referred to in this Section 2.19 shall, if it occurs,
constitute the Revolving Loan Maturity Date.
II.20 Swap Loss Obligations.
---------------------
(a) Establishing Final Swap Loss Amount. Notwithstanding
-----------------------------------
Section 8.3, Borrower may enter into the Permitted Swap Transactions with the
Swap Lender pursuant to the Swap Agreement. If Borrower shall fail to pay the
Final Swap Loss Amount to the Swap Lender within ten (10) days after demand
therefor by the Swap Lender, the Swap Lender may deliver the Swap Loss
Certificate to Agent (a copy of which shall also be delivered by the Swap Lender
to Borrower). Borrower shall have ten (10) days after delivery of the Swap Loss
Certificate in which to deliver notice to Agent of any objections that Borrower
may have to the Final Swap Loss Amount set forth in the Swap Loss Certificate (a
copy of which shall also be delivered to the Swap Lender), which objection shall
set forth reasonable evidence in support of such objection. Borrower's failure
to deliver notice of an objection to Agent during such period shall constitute
Borrower's acknowledgement of the correctness of such amount.
(b) Transfer of Final Swap Loss Amount to Revolving Loan Balance.
------------------------------------------------------------
Within a reasonably prompt period of time following expiration of such ten (10)
day period, Agent shall adjust its records so as to increase the then
outstanding balance of the Revolving Loan by the Final Swap Loss Amount for such
date as set forth in the Swap Loss Certificate (the date on which such
adjustment occurs is the "Swap Loss Adjustment Date"); provided that if Borrower
has raised an objection to such amount (unless Agent believes such objection not
to be bona fide) or if Borrower is at such time the subject of a bankruptcy or
reorganization proceeding, then Agent may, in its discretion, as a condition to
making such adjustment require the Swap Lender to indemnify and hold harmless
Agent and Lenders for any losses incurred by Agent and Lenders as a result of
such disagreement between the Swap Lender and Borrower. If Agent's making such
an adjustment results in Borrower being required to make a mandatory prepayment
pursuant to Section 2.3(a), then Borrower shall immediately make such mandatory
prepayment.
(c) Adjustment of Percentages. On the Swap Loss Adjustment Date,
-------------------------
the Percentages of each Lender shall be recalculated and adjusted by Agent. The
Percentage of each Revolving Lender with respect to the Revolving Loan shall be
recalculated and adjusted as follows: Agent shall add the Final Swap Loss Amount
to the "Commitment" amount shown next to the name of the Swap Lender on Part 1
of Exhibit B. Agent shall calculate the revised Percentage of each Revolving
Lender using such new "Commitment" amount for the Swap Lender, using the
existing "Commitment" amounts for the other Revolving Lenders, and using as the
denominator the $300,000,000 amount that appears on Part 1 of Exhibit B plus the
Final Swap Loss Amount; provided that if the amount of the Maximum Revolving
Loan has been reduced, then Agent shall use the "commitment" amounts and the
total amount as are then applicable. Agent shall also make a similar
recalculation and adjustment with respect to each Revolving Lender's Initial
Percentage as set forth in Part 4 of Exhibit B and with respect to each Lender's
overall Percentage as set forth in Part 3 of Exhibit B.
(d) Supplement to Swap Loss Certificate. If the Swap Lender shall
-----------------------------------
determine that a Swap Loss Certificate set forth an incorrect amount, the Swap
Lender may deliver to Agent a supplement or supplements to the Swap Loss
Certificate correcting such error. If any such supplement increases the amount
of the Swap Loss Obligations, then the procedures set forth in the earlier
portions of this Section 2.20 shall apply to such increased amount. If any such
supplement decreases the amount of the Swap Loss Obligations, then Agent shall
adjust its records so as to decrease the then outstanding balance of the
Revolving Loan, make the appropriate Percentage adjustments, and take such other
steps as Agent considers appropriate. Agent shall be entitled to the same
indemnities with respect to a supplement to a Swap Loss Certificate as it was
with respect to the original Swap Loss Certificate.
ARTICLE III.
COLLATERAL
----------
III.1 Borrower's Obligations. The Obligations of Borrower to pay all
----------------------
sums due to Agent and Lenders and to perform all other covenants and agreements
under this Agreement, including the Swap Loss Obligations, and the other Loan
Documents to which Borrower is a party, shall be secured by all Collateral to
the extent provided in the Security Documents, including all real property
Collateral encumbered by deeds of trust delivered by Borrower to Agent.
III.2 Further Assurances. Borrower shall, at its sole cost and expense,
------------------
execute and deliver to the Agent for the benefit of the Lenders all such further
documents, instruments, and agreements and to perform all such other acts which
may be reasonably required in the opinion of the Agent to enable the Agent and
the Lenders to perfect, protect, exercise, or enforce their respective rights as
the secured parties or beneficiaries under the Security Documents. To the
extent permitted by applicable law, Borrower hereby authorizes the Agent on
behalf of the Lenders to file financing statements and continuation statements
with respect to the security interests granted under the Security Documents in
favor of the Agent for the benefit of the Lenders and to execute such financing
statements and continuation statements on behalf of Borrower and hereby grants
Agent with a limited power-of-attorney to do so. Such power-of-attorney is
coupled with an interest and is irrevocable.
ARTICLE IV.
CONDITIONS PRECEDENT
--------------------
IV.1 Conditions Precedent to Closing Date. Notwithstanding any other
------------------------------------
provision of this Agreement and without affecting in any manner the rights of
Agent or Lenders hereunder, the Closing Date shall not occur until and unless
each and every one of the following conditions has been satisfied or waived, in
Lenders' sole discretion:
(a) Borrower shall have delivered to Agent and Lenders all documents
required to be delivered by Borrower in the "Schedule of Documents -- Third
Amended and Restated Credit Agreement."
(b) Agent shall have received from Borrower all financial statements
and from Borrower and Lenders all agreements, documents, and schedules that
Agent shall consider necessary or appropriate in connection with this Agreement;
(c) Agent shall have received such environmental reports that Agent
shall consider necessary or appropriate in connection with this Agreement;
(d) Agent shall have received such title insurance policies and
endorsements that Agent shall consider necessary or appropriate in connection
with this Agreement; and
(e) No Default or Event of Default shall have occurred and be
continuing.
IV.2 Conditions Precedent to Each Revolving Advance, Letter of Credit
----------------------------------------------------------------
Obligation and the Term Loan. It shall be a condition to the funding of the
----------------------------
initial and each subsequent Revolving Advance and the Term Loan and the
incurrence of the initial and each subsequent Letter of Credit Obligation that
the following statements shall be true on the date of each such funding or
advance:
(a) All of Borrower's representations and warranties contained
herein or in any of the Loan Documents shall be true and correct in all material
respects on and as of the Closing Date and the date of each such Revolving
Advance and the date any Letter of Credit Obligation is incurred as though
made on and as of such date, except to the extent that any such representation
or warranty expressly relates to an earlier date and for changes therein
permitted or contemplated by this Agreement.
(b) No event shall have occurred and be continuing, or would result
from the funding of any Revolving Advance or the Term Loan or the incurrence of
any Letter of Credit Obligation, which (i) constitutes or would constitute a
Default or an Event of Default, or (ii) which has a Material Adverse Effect.
(c) After giving effect to each Revolving Advance, and the Letter of
Credit Obligations, the aggregate principal amount of the Revolving Loan and
Letter of Credit Obligations shall not exceed the lesser of (i) the Maximum
Revolving Loan minus the then outstanding amount of Grower Payables, or (ii) the
-----
Borrowing Base.
The acceptance by Borrower of the proceeds of (i) any Revolving Advance or (ii)
the Term Loan and the request by Borrower for the incurrence by Revolving
Lenders of Letter of Credit Obligations, as the case may be, shall be deemed to
constitute, as of the date of such acceptance, a representation and warranty by
Borrower that the conditions in this Section 4.2 have been satisfied.
IV.3 Conditions Precedent to Acquisition. Notwithstanding any other
-----------------------------------
provision of this Agreement and without affecting in any manner the rights of
Agent or Lenders hereunder, Borrower shall not consummate an acquisition of
vineyards, wineries, or Beverage Industry Assets until and unless each and every
one of the following conditions has been satisfied or waived, in Lenders' sole
discretion:
(a) Borrower shall have received such consents from Agent and
Lenders as are required by this Agreement;
(b) Agent shall have received from Borrower all financial statements
and from Borrower and Lenders all agreements, documents, and schedules that
Agent shall consider necessary or appropriate in connection with Borrower's
consummation of such acquisition, including deeds of trust on all real property
to be obtained by Borrower as part of the acquisition;
(c) Agent shall have received such environmental reports that Agent
shall consider necessary or appropriate in connection with the acquisition;
(d) Agent shall have received such title insurance policies and
endorsements that Agent shall consider necessary or appropriate in connection
with any real property involved in the acquisition; and
(e) No Default or Event of Default shall have occurred and be
continuing.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
------------------------------
To induce Lenders to make the Revolving Loan and Term Loan and to
incur the Letter of Credit Obligations, as herein provided for, Borrower makes
the following representations and warranties to Lenders, each and all of which
shall be true and correct as of the date of execution and delivery of this
Agreement, and shall survive the execution and delivery of this Agreement:
V.1 Corporate Existence; Compliance with Law. Borrower (i) is a
----------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware; (ii) is duly qualified as a foreign corporation and in
good standing under the laws of state of California and of each jurisdiction
where its ownership or lease of property or the conduct of its business requires
such qualification (except for jurisdictions in which such failure to so qualify
or to be in good standing would not have a Material Adverse Effect); (iii) has
the requisite corporate power and authority and the legal right to own, pledge,
mortgage or otherwise encumber and operate all real property that it owns, to
lease the real
property it operates under lease, and to conduct its business as now,
heretofore, and proposed to be conducted; (iv) has all material licenses,
permits, consents, or approvals from or by, and has made all material filings
with, and has given all material notices to, all Governmental Authorities having
jurisdiction, to the extent required for such ownership, operation, and conduct;
(v) is in compliance with its certificate of incorporation and by-laws; and (vi)
is in compliance with all applicable provisions of law where the failure to
comply would have a Material Adverse Effect.
V.2 Executive Offices. The current location of Borrower's chief
-----------------
executive offices and principal place of business is the address set forth for
the giving of notices in Section 13.12.
V.3 Subsidiaries. There currently exist no Subsidiaries of Borrower
------------
except for Cork Processors, Inc., ▇▇▇▇▇▇▇▇ Wine Estates Sales Co., ▇▇▇▇▇▇▇▇
Vineyards (Europe) S.A., North Napa Land Co., Premium Land, Inc., and ▇▇▇▇▇▇▇▇
Wine Estates Foreign Sales Corporation.
V.4 Corporate Power; Authorization; Enforceable Obligations. The
-------------------------------------------------------
execution, delivery, and performance by Borrower of the Loan Documents to which
it is a party, and all instruments and documents required to be delivered by
Borrower under any of the Loan Documents, and the creation of all Liens provided
for in any Loan Documents: (i) are within Borrower's corporate power; (ii) have
been duly authorized by all necessary or proper corporate action; (iii) are not
in contravention of any provision of Borrower's certificate of incorporation or
by-laws; (iv) will not violate any law or regulation, or any order or decree of
any court or governmental instrumentality; (v) will not conflict with or result
in the breach or termination of, constitute a default under or accelerate any
performance required by, any material indenture, mortgage, deed of trust, lease,
agreement or other instrument to which Borrower is a party or by which Borrower
or any of its property is bound; (vi) will not result in the creation or
imposition of any Lien upon any of the property of Borrower other than those in
favor of Lenders, all pursuant to the Loan Documents; and (vii) do not require
the consent or approval of any Governmental Authority or any other Person,
except for consents or approvals which have been duly obtained or specifically
waived in writing by Lenders. At or prior to the Closing Date, each of the Loan
Documents required hereunder to be delivered at or prior to the Closing Date
shall have been duly executed and delivered on behalf of Borrower and each shall
then constitute a legal, valid, and binding obligation of Borrower, to the
extent it is a party thereto, enforceable against it in accordance with its
terms except for general principles of equity and the effect of bankruptcy,
insolvency, and other laws affecting the rights of creditors generally.
V.5 Original Stock Acquisition; Solvency. The transaction evidenced by
------------------------------------
the Stock Purchase Agreement dated November 17, 1995, as amended, was duly
consummated in accordance with its terms, neither Borrower nor any other party
are in default thereunder, and all of the transactions engaged in by Borrower as
part of such agreement were legal and valid and in compliance with all
applicable law. True and correct copies of all documents relating thereto were
delivered to Agent. Borrower was Solvent as of and on the Original Closing Date
and Borrower has been Solvent at all times thereafter.
V.6 Intentionally Omitted.
---------------------
V.7 Projections. The projections of Borrower's annual operating
-----------
budgets, balance sheets, and cash flow statements for the 1999, 2000, 2001,
2002, and 2003 Fiscal Years (the "Projections"), copies of which have been
delivered to Lenders, disclose all material assumptions made with respect to
general economic, financial and market conditions in formulating such
Projections. To Borrower's Knowledge, no facts exist which would result in any
material change in any of such Projections. The Projections are based upon
reasonable estimates and assumptions, all of which are fair in light of current
conditions, have been prepared on the basis of the assumptions stated therein,
and reflect the reasonable estimate of Borrower of the results of operations and
other information projected therein.
V.8 Ownership of Property; Liens.
----------------------------
(a) Borrower owns good and marketable fee simple title to all of its
real estate, valid and marketable leasehold interests in all of its leases and
subleases, and good and marketable title to, or valid leasehold interests in,
all of its other properties and assets, and none of the properties and assets of
Borrower are subject to any Liens, except (i) Permitted Encumbrances and (ii)
from and after the Original Closing Date, the Lien in favor of Lenders pursuant
to the Security Documents; and Borrower has received all deeds, assignments,
waivers, consents, non-disturbance and recognition or similar agreements, bills
of sale and other documents, and duly effected all recordings, filings, and
other actions necessary to establish, protect and perfect Borrower's right,
title, and interest in and to all such property except where the failure to have
received such documents or effected such actions will not, in the aggregate,
have a Material Adverse Effect.
(b) All real property owned or leased by Borrower on the Closing
Date is set forth on Parts (C) and (D) of the Disclosure Schedule. Borrower does
not own any other real property nor is Borrower a lessee or sublessee or lessor
or sublessor under any Leases other than as set forth therein. Neither Borrower
nor, to Borrower's Knowledge, any other party to any such Lease (i) is in
default of its obligations thereunder or (ii) has delivered or received any
notice of default under any such Lease, and no event has occurred which, with
the giving of notice, the passage of time or both, would constitute a default
under any such Lease by Borrower, except in each case for any default which
would not have a Material Adverse Effect.
(c) Borrower does not own or hold, and is not obligated under or a
party to, any option, right of first refusal or any other contractual right to
purchase, acquire, sell, assign or dispose of any real property owned or leased
by Borrower except as set forth in Parts (C) and (D) of the Disclosure Schedule.
(d) All permits required to have been issued to enable the real
property owned or leased by Borrower to be lawfully occupied and used for all of
the purposes for which they are currently occupied and used, have been lawfully
issued and are, as of the date hereof, in full force and effect, except for any
permit for which the failure of such permit to be issued and in full force and
effect would not have a Material Adverse Effect.
(e) Borrower has not received any notice, and to Borrower's
Knowledge does not have, any pending, threatened, or contemplated condemnation
proceeding affecting any real property owned or leased by Borrower or any part
thereof, or of any sale or other disposition of any real property owned or
leased by Borrower or any part thereof in lieu of condemnation.
(f) Except as set forth in the Disclosure Schedule, no portion of
any real property owned or leased by Borrower has suffered any material damage
by fire or other casualty loss or a Spill which has not heretofore been
completely repaired and restored to its original condition or is being remedied.
Except as set forth in Parts (C) and (D) of the Disclosure Schedule, no portion
of any real property owned or leased by Borrower is located in a special flood
hazard area as designated by any federal, or other Governmental Authority.
V.9 No Default. Borrower is not in default, and to Borrower's Knowledge
----------
no third party is in default, under or with respect to any contract, agreement,
lease or other instrument to which it is a party which default in each case or
in the aggregate would have a Material Adverse Effect. No Default or Event of
Default has occurred and is continuing.
V.10 Burdensome Restrictions. No contract, lease, agreement, or other
-----------------------
instrument to which Borrower is a party or is bound and no provision of
applicable law or governmental regulation has a Material Adverse Effect, or
insofar as Borrower can reasonably foresee, may have a Material Adverse Effect.
V.11 Labor Matters. There are no strikes or other labor disputes against
-------------
Borrower that are pending or, to Borrower's Knowledge, threatened which would
have a Material Adverse Effect. Hours worked by and payment made to employees
of Borrower have not been in violation of the Fair Labor Standards Act or any
other applicable law dealing with such matters which would have a Material
Adverse Effect. All payments due from Borrower on account of employee health
and welfare insurance which would have a Material Adverse Effect if not paid
have been paid or accrued as a liability on the books of Borrower. Except as
set forth in Part (V) of the Disclosure Schedule, Borrower does not have any
obligation under any collective bargaining agreement or any employment
agreement. There is no organizing activity involving Borrower pending or, to
Borrower's Knowledge, threatened by any labor union or group of employees.
There are, to Borrower's Knowledge, no representation proceedings pending or, to
Borrower's Knowledge, threatened with the National Labor Relations Board, and no
labor organization or group of employees of Borrower has made a pending demand
for recognition. Except as set forth in Part (G) of the Disclosure Schedule,
there are no complaints or charges against Borrower pending or, to Borrower's
Knowledge, threatened to be filed with any federal, state, local or foreign
court, governmental agency or arbitrator based on, arising out of, in connection
with, or otherwise relating to the employment or termination of employment by
Borrower of any individual. Borrower is not a contractor or subcontractor and
does not have a legal obligation to engage in affirmative action.
V.12 Other Ventures. Except as set forth in Part (Q) of the Disclosure
--------------
Schedule, Borrower is not engaged in any joint venture or partnership with any
other Person.
V.13 Investment Company Act. Borrower is not an "investment company" or
----------------------
an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940, as amended. The making of the Revolving Loan and Term Loan and the
incurrence of the Letter of Credit Obligations by Lenders, the application of
the proceeds and repayment thereof by Borrower and the consummation of the
transactions contemplated by this Agreement and the other Loan Documents will
not violate any provision of such Act or any rule, regulation, or order issued
by the Securities and Exchange Commission thereunder.
V.14 Margin Regulations. Borrower does not own any "margin security", as
------------------
that term is defined in Regulations U of the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board"), and the proceeds of the Revolving
Advances and Term Loan will be used only for the purposes contemplated
hereunder. The Revolving Advances and Term Loan will not be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security, for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose which
might cause any of the loans under this Agreement to be considered a "purpose
credit" within the meaning of Regulation T, U, or X of the Federal Reserve
Board. Borrower will not take or permit any agent acting on its behalf to take
any action which might cause this Agreement or any document or instrument
delivered pursuant hereto to violate any regulation of the Federal Reserve
Board.
V.15 Taxes. All federal, state, local, and foreign tax returns, reports,
-----
and statements, including information returns (Form 1120-S) required to be filed
by Borrower, have been filed with the appropriate Governmental Authority and all
Charges and other impositions shown thereon to be due and payable have been paid
prior to the date on which any fine, penalty, interest, or late charge may be
added thereto for nonpayment thereof, or any such fine, penalty, interest, late
charge, or loss has been paid. Borrower has paid when due and payable all
Charges required to be paid by it. Proper and accurate amounts have been
withheld by Borrower from their respective employees for all periods in full and
complete compliance with the tax, social security, and unemployment withholding
provisions of applicable federal, state, local and foreign law and such
withholdings have been timely paid to the respective governmental agencies.
None of Borrower's tax returns with respect to Borrower's corporate income are
currently being audited by the IRS or any other applicable Governmental
Authority. Borrower has not executed or filed with the IRS or any other
Governmental Authority any agreement or other document extending, or having the
effect of extending, the period for assessment or collection of any Charges or
any taxes owed by such Stockholder with respect to Borrower's corporate income.
Borrower has not filed a consent pursuant to IRC Section 341(f) or agreed to
have IRC Section 341(f)(2) apply to any dispositions of subsection (f) assets
(as such term is defined in IRC Section 341(f)(4)). None of the property owned
by Borrower is property which such
company is required to treat as being owned by any other Person pursuant to the
provisions of IRC Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended, and in effect immediately prior to the enactment of the Tax Reform Act
of 1986 or is "tax-exempt use property" within the meaning of IRC Section
168(h). Borrower has not agreed or been requested to make any adjustment under
IRC Section 481(a) by reason of a change in accounting method or otherwise.
Borrower does not have any obligation under any written tax sharing agreement.
V.16 ERISA.
-----
(a) Part (Y) of the Disclosure Schedule lists all Plans maintained
or contributed to by Borrower and all Qualified Plans maintained or contributed
to by any ERISA Affiliate, and separately identifies the Title IV Plans,
Multiemployer Plans, any multiple employer plans subject to Section 4064 of
ERISA, unfunded Pension Plans, Welfare Plans and Retiree Welfare Plans.
(b) Each Qualified Plan has been determined by the IRS to qualify
under Section 401 of the IRC, and the trusts created thereunder have been
determined to be exempt from tax under the provisions of Section 501 of the IRC,
and to Borrower's Knowledge nothing has occurred which would cause the loss of
such qualification or tax-exempt status.
(c) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA and the IRC, including the filing of reports
required under the IRC or ERISA which are true and correct in all material
respects as of the date filed, and with respect to each Plan, other than a
Qualified Plan, all required contributions and benefits have been paid in
accordance with the provisions of each such Plan to the extent that the failure
to pay any such contribution or benefit would have a Material Adverse Effect.
(d) Neither Borrower nor any ERISA Affiliate, with respect to any
Qualified Plan, has failed to make any contribution or pay any amount due as
required by Section 412 of the IRC or Section 302 of ERISA or the terms of any
such plan to the extent that the failure to make any such contribution or pay
any amount would have a Material Adverse Effect.
(e) No Title IV Plan has any Unfunded Pension Liability.
(f) No ERISA Event or event described in Section 4062(e) of ERISA
with respect to any Title IV Plan has occurred or is reasonably expected to
occur.
(g) There are no pending or, to Borrower's Knowledge, threatened
claims, actions or lawsuits (other than claims for benefits in the normal
course), asserted or instituted against (i) any Plan or its assets, (ii) any
fiduciary with respect to any Plan or (iii) Borrower or any ERISA Affiliate with
respect to any Plan.
(h) Neither Borrower nor any ERISA Affiliate has incurred or
reasonably expects to incur any Withdrawal Liability (and no event has occurred
which, with the giving of notice under Section 4219 of ERISA, would result in
such liability) under Section 4201 of ERISA as a result of a complete or partial
withdrawal from a Multiemployer Plan.
(i) Within the last five (5) years, neither Borrower nor any ERISA
Affiliate has engaged in a transaction which resulted in a Title IV Plan with
Unfunded Liabilities being transferred outside of the "controlled group" (within
the meaning of Section 4001(a)(14) of ERISA) of any such entity.
(j) No plan which is a Retiree Welfare Plan provides for continuing
benefits or coverage for any participant or any beneficiary of a participant
after such participant's termination of employment (except as may be required by
Section 4980B of the IRC and at the sole expense of the participant or the
beneficiary of the participant) which would result in a liability in an amount
which would have a Material Adverse Effect. Borrower and each ERISA Affiliate
have complied with the notice and
continuation coverage requirements of Section 4980B of the IRC and the
regulations thereunder except where the failure to comply would not result in
any Material Adverse Effect.
(k) Borrower has not engaged in a prohibited transaction, as defined
in Section 4975 of the IRC or Section 406 of ERISA, in connection with any Plan,
which would subject Borrower (after giving effect to any exemption) to a
material tax on prohibited transactions imposed by Section 4975 of the IRC or
any other material liability.
(l) No liability under any Plan has been funded, nor has such
obligation been satisfied with, the purchase of a contract from an insurance
company that is not rated AA by Standard & Poor's Corporation and the equivalent
by each other nationally recognized rating agency.
V.17 No Litigation. Except as set forth in Part (G) of the Disclosure
-------------
Schedule, no action, claim or proceeding is now pending or, to Borrower's
Knowledge, threatened against Borrower, at law, in equity or otherwise, before
any court, board, commission, agency, or instrumentality of any federal, state,
or local government or of any agency or subdivision thereof, or before any
arbitrator or panel of arbitrators, which, if determined adversely, could have a
Material Adverse Effect, nor to Borrower's Knowledge does a state of facts exist
which is reasonably likely to give rise to such proceedings. None of the
matters set forth in Part (G) of the Disclosure Schedule questions the validity
of any of the Loan Documents or any action taken or to be taken pursuant
thereto, or would have either individually or in the aggregate a Material
Adverse Effect.
V.18 Brokers. Except as set forth in Part (W) of the Disclosure
-------
Schedule, no broker or finder acting on behalf of Borrower brought about the
obtaining, making, or closing of the loans made pursuant to this Agreement or
the transactions contemplated by the Loan Documents and has no obligation to any
Person in respect of any finder's or brokerage fees in connection therewith.
V.19 Outstanding Stock; Options; Warrants, Etc. The certificate of
------------------------------------------
Borrower's corporate secretary delivered to Agent and Lenders pursuant to Item
1.12(A) of the Disclosure Schedule is complete and accurate. There are no
outstanding rights to purchase, options, warrants, or similar rights or
agreements pursuant to which Borrower may be required to issue or sell any Stock
or other equity security except as noted in such certificate.
V.20 Employment and Labor Agreements. Except as set forth in Part (V) of
-------------------------------
the Disclosure Schedule, there are no (i) employment, consulting or management
agreements covering management of Borrower or (ii) collective bargaining
agreements or other labor agreements covering any employees of Borrower. A true
and complete copy of each such agreement has been furnished to Agent.
V.21 Patents, Trademarks, Copyrights, and Licenses. Borrower owns all
---------------------------------------------
material licenses, patents, patent applications, copyrights, service marks,
trademarks, trademark applications, and trade names necessary to continue to
conduct its business as heretofore, presently, and in the future to be conducted
by Borrower, each of which is listed, together with Patent and Trademark Office
application or registration numbers, where applicable, in Part (R) of the
Disclosure Schedule. Except as set forth in Part (R) of the Disclosure
Schedule, Borrower conducts its business without infringement or claim of
infringement of any license, patent, copyright, service ▇▇▇▇, trademark, trade
name, trade secret or other intellectual property right of others, except where
such infringement or claim of infringement would not have a Material Adverse
Effect. There is no infringement or claim of infringement by others of any
material license, patent, copyright, service ▇▇▇▇, trademark, trade name, trade
secret or other intellectual property right of Borrower.
V.22 Full Disclosure. To Borrower's Knowledge, no information contained
---------------
in this Agreement, the other Loan Documents, the Projections, the financial
statements delivered to Agent, or any written statement furnished by or on
behalf of Borrower pursuant to the terms of this Agreement, which has previously
been delivered to Lenders, contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained herein
or therein not misleading in light of the circumstances under which made.
V.23 Liens. The Liens granted to Lenders pursuant to the Security
-----
Documents will at the Closing Date and at all times thereafter be fully
perfected first priority Liens in and to the Collateral described therein except
for Permitted Encumbrances and as provided in the Security Documents.
V.24 No Material Adverse Effect. No event has occurred since
--------------------------
November 30, 1995 and is continuing which has had or could have a Material
Adverse Effect.
V.25 Hazardous Materials. Except as set forth in Part (X) of the
-------------------
Disclosure Schedule, to Borrower's Knowledge, all real property owned and all
real property leased pursuant to the Leases by Borrower is free of significant
contamination from any Hazardous Material, including, without limitation, any
asbestos, PCB, radioactive substance, methane, volatile hydrocarbons and
industrial solvents. In addition, Part (X) of the Disclosure Schedule discloses
potential environmental liabilities of Borrower, that, to Borrower's Knowledge,
are (i) not related to noncompliance with the Environmental Laws or (ii)
associated with properties not owned, leased, subleased, or operated by
Borrower. Except as set forth in Part (X) of the Disclosure Schedule, to
Borrower's Knowledge, Borrower has not caused or suffered to occur any
significant discharge, spillage, uncontrolled loss, seepage, or filtration of
oil or petroleum or chemical liquids or solids, liquid or gaseous products, or
hazardous waste, or hazardous substance in violation of the Environmental Laws
(a "Spill") at, under, or within any real property which it owns or leases.
Except as set forth in Part (X) of the Disclosure Schedule, to Borrower's
Knowledge, Borrower is not involved in operations that are likely to lead to the
imposition of any liability or Lien on it, or any owner of any premises which it
occupies, under the Environmental Laws, and Borrower has not permitted any
tenant or occupant of such premises to engage in any such activity.
V.26 Insurance Policies. Borrower has disclosed to Agent in writing all
------------------
insurance of any nature maintained for current occurrences by Borrower, as well
as a summary of the terms of such insurance. The insurance policies maintained
by Borrower include the following insurance coverage:
(a) "All Risk" physical damage insurance on all of Borrower's
tangible real and personal property and assets, wherever located, including
without limitation, bulk wine located at premises not owned or leased by
Borrower and covers, without limitation, fire and extended coverage, boiler and
machinery coverage, liquids, theft, burglary, explosion, collapse, and all other
hazards and risks ordinarily insured against by owners or users of such
properties in similar businesses. All policies of insurance on such real and
personal property contain an endorsement, in form and substance acceptable to
Agent, showing loss payable to Lenders (Form 438 BFU or its equivalent) and
extra expense and business interruption endorsements. Such endorsement, or an
independent instrument furnished to Agent, provides that the insurance companies
will give Agent at least thirty (30) days prior written notice before any such
policy or policies of insurance shall be altered or canceled and that no act or
default of Borrower or any other Person shall affect the right of Lenders to
recover under such policy or policies of insurance in case of loss or damage;
(b) Difference in conditions coverage including loss due to
earthquake and flood for all real property, inventory, and equipment to a limit
of Ten Million Dollars ($10,000,000) per occurrence and in the aggregate and
subject to a deductible of ten percent (10%) per location, per occurrence.
(c) comprehensive general liability insurance on an "occurrence
basis" against claims for personal injury, bodily injury and property damage
with a minimum limit of One Million Dollars ($1,000,000) per occurrence and Two
Million Dollars ($2,000,000) in the aggregate. Such coverage includes
premises/operations, broad form contractual liability, underground, explosion
and collapse hazard, independent contractors, broad form property coverage,
products and completed operations liability;
(d) statutory limits of worker's compensation insurance which
includes employee's occupational disease and employer's liability in the amount
of One Million Dollars ($1,000,000) for each accident or occurrence;
(e) automobile liability insurance for all owned, non-owned or hired
automobiles against claims for personal injury, bodily injury, and property
damage with a minimum combined single limit of One Million Dollars ($1,000,000)
per occurrence; and
(f) umbrella insurance with limits of Twenty-Five Million Dollars
($25,000,000) per occurrence and Fifty Million Dollars ($50,000,000) in the
aggregate.
All of such policies are in full force and effect and in form and with insurers
recognized as adequate by Agent, and provide coverage of such risks and for such
amounts as are customarily maintained for businesses of the scope and size of
Borrower's and as otherwise acceptable to Agent. Each insurance policy contains
a clause which provides that Agent's and Lenders' interest under such policy
shall not be invalidated by any act or omission to act of, or any breach of
warranty by, the insured, or by any change in the title, ownership or possession
of the insured property, or by the use of the property for purposes more
hazardous than is permitted in such policy. Borrower has delivered to Agent a
certificate of insurance that evidences the existence of each policy of
insurance, payment of all premiums therefor and compliance with all provisions
of this Agreement.
V.27 Deposit and Disbursement Accounts. Part (O) of the Disclosure
---------------------------------
Schedule lists all banks and other financial institutions at which Borrower
maintains deposits and/or other accounts, and such Schedule correctly identifies
the name, address and telephone number of each depository, the name in which the
account is held, a description of the purpose of the account, and the complete
account number.
V.28 PACA. Borrower is not a "dealer," "commission merchant," or
----
"broker" under PACA, and Borrower's assets are not subject to the trust
provisions provided for under PACA.
V.29 Correctness of Disclosure Schedule. The Disclosure Schedule
----------------------------------
delivered by Borrower to Agent and Lenders is complete and correct in all
material respects.
ARTICLE VI.
FINANCIAL STATEMENTS AND INFORMATION
------------------------------------
VI.1 Reports and Notices. Borrower covenants and agrees that it shall
-------------------
deliver to each Lender:
(a) Within twenty-five (25) days after the end of each calendar
month, the following information certified by an officer of Borrower: (i) a
Borrowing Base Certificate, as of the end of the previous calendar month, (ii)
all inventory reports prepared for the BATF by Borrower or any person storing or
holding juice, must, or wine for Borrower, (iii) an aged receivable trial
balance and an accounts payable aging, (iv) an updated Schedule of Accounts, (v)
an updated Schedule of Inventory, and (vi) the certification of the president,
chief executive officer, chief operating officer, chief financial officer or
corporate secretary of Borrower that all such reports and schedules are complete
and correct. Notwithstanding the foregoing, Agent may require that, prior to
making any Revolving Advance or incurring any Letter of Credit Obligation, it
receives a Borrowing Base Certificate from Borrower in form and detail
satisfactory to Agent;
(b) Within thirty (30) days after the end of each calendar month,
financial and other information certified by an officer of Borrower, including
(i) an internally-prepared statement of income and cash flow, balance sheet,
sales and distributor depletion reports, and management letter, each of which
would provide comparisons to the prior year's equivalent period and to budget,
and (ii) the certification of the president, chief executive officer, chief
operating officer, chief financial officer or corporate secretary of Borrower
that all such financial statements and schedules are complete and correct and
present fairly (subject to normal year-end adjustments), the financial position,
the results of operations and the statements of cash flows of Borrower as at the
end of such month and for the period then ended, and that there was no Default
or Event of Default in existence as of such time;
(c) Within thirty (30) days after the end of each Fiscal Quarter, (i)
a copy of the unaudited balance sheets of Borrower as of the close of such
quarter and the related statements of income and cash flows for that portion of
the Fiscal Year ending as of the close of such quarter, (ii) a copy of the
unaudited statements of income of Borrower for such quarter, all prepared in
accordance with GAAP (subject to normal year-end adjustments) and accompanied by
the certification of the president, chief executive officer, chief operating
officer, chief financial officer or corporate secretary of Borrower that all
such financial statements are complete and correct and present fairly in
accordance with GAAP (subject to normal year-end adjustments), the financial
position, the results of operations and the statements of cash flows of Borrower
as at the end of such quarter and for the period then ended, and that there was
no Default or Event of Default in existence as of such time, and (iii) a
certificate in the form attached hereto as Exhibit J, containing the
certification of Borrower's chief financial officer that Borrower has complied
with all of the covenants set forth in Section 8.21 as of the end of such Fiscal
Quarter;
(d) By the end of each calendar year, a detailed grape purchase
contract report for such calendar year's crush;
(e) Within ninety (90) days after the end of each Fiscal Year,
audited financial statements, consisting of balance sheets and statements of
income and retained earnings and cash flows, setting forth in comparative form
in each case the figures for the previous Fiscal Year, which financial
statements shall be prepared in accordance with GAAP, certified (only with
respect to the financial statements) without qualification by a firm of
independent certified public accountants of recognized national standing
selected by Borrower and acceptable to Agent, and accompanied by (i) a report
from such accountants to the effect that in connection with their audit
examination, nothing has come to their attention to cause them to believe that a
Default or Event of Default had occurred and that, to the best of their
knowledge, Borrower was in compliance with all the covenants set forth in
Section 8.21 as of the end of such Fiscal Year, (ii) the annual letter from
Borrower's chief financial officer to such accountants in connection with their
audit examination detailing Borrower's contingent liabilities and material
litigation matters involving Borrower, (iii) a certification of the president,
chief executive officer, chief operating officer, chief financial officer or
corporate secretary of Borrower that all such financial statements are complete
and correct and present fairly in accordance with GAAP the financial position,
the results of operations and the statements of cash flow of Borrower as at the
end of such year and for the period then ended and that there was no Default or
Event of Default in existence as of such time, and (iv) a certificate in the
form attached hereto as Exhibit J, containing the certification of Borrower's
chief financial officer that Borrower has complied with all of the covenants set
forth in Section 8.21 as of the end of such Fiscal Year;
(f) Before the end of each Fiscal Year, projections, approved by
Borrower's board of directors, of Borrower's income statements, balance sheets,
and cash flow statement, which integrate plans for personnel, Capital
Expenditures and facilities, prepared on a monthly basis for the following
Fiscal Year, which include (i) projected tax payments and reconciliations of tax
payments for the preceding calendar year, and (ii) estimated Grower Payables by
month;
(g) Before November 1 of each year, a crop operating budget for the
forthcoming December 1 through November 30 period, containing such detail as
Agent shall reasonably request;
(h) No later than three (3) Business Days after filing/distribution
thereof, copies of all documents filed by or on behalf of BWEH with the
Securities and Exchange Commission or any other public agency, any disclosures
or other communications provided by BWEH to its shareholders generally, or any
press releases issued by Borrower or BWEH;
(i) As soon as practicable, but in any event within one (1) Business
Day after Borrower becomes aware of the existence of any Default or Event of
Default, or any development or other information which would have a Material
Adverse Effect, telephonic notice specifying the nature of such Default or Event
of Default or development or information, including the anticipated effect
thereof, which notice shall be promptly confirmed in writing within three (3)
Business Days;
(j) Copies of all federal, state, local and foreign tax returns,
information returns and reports in respect of income, franchise or other taxes
on or measured by income (excluding sales, use or like taxes) filed by Borrower;
(k) Within five (5) Business Days after Borrower's receipt thereof,
copies of any notices to Borrower under California Civil Code Section 3051a; and
(l) Such other information respecting Borrower's business, financial
condition or prospects as Agent may, from time to time, reasonably request.
VI.2 Communication with Accountants.
------------------------------
(a) Prior to the occurrence of a Default or Event of Default, upon
the request of Agent and approval of such request by Borrower, which approval
shall not be unreasonably withheld, Borrower may authorize Agent to (i)
communicate directly with Borrower's independent certified public accountants
and tax advisors, and (ii) receive disclosure from such certified public
accountants of any and all financial statements and other supporting financial
documents and schedules including copies of any management letter with respect
to the business, financial condition and other affairs of Borrower.
(b) Following the occurrence of a Default or Event of Default, (i)
Agent shall be authorized to communicate directly with Borrower's independent
certified public accountants and tax advisors, (ii) such accountants and tax
advisors shall be authorized to disclose directly to Agent any and all financial
information requested by Agent.
(c) At any time upon the request of Agent, Borrower shall deliver a
letter addressed to such accountants and tax advisors, which shall be reasonably
satisfactory to Agent and shall be generally similar to the letter delivered on
or about the Original Closing Date, instructing them to comply with the
provisions of this Section 6.2.
ARTICLE VII.
AFFIRMATIVE COVENANTS
---------------------
Borrower covenants and agrees that, unless Agent, with the approval
of Lenders, shall have otherwise consented, from and after the date hereof
Borrower shall comply with and observe each of the following covenants and shall
cause each of its Subsidiaries to comply with and observe each of the following
covenants, all references in this Article VII applying to both Borrower and its
Subsidiaries.
VII.1 Maintenance of Existence and Conduct of Business. Borrower shall:
------------------------------------------------
(a) do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and its rights and franchises; (b)
continue to conduct its business substantially as now conducted or as otherwise
permitted hereunder; (c) at all times maintain, preserve, and protect all of its
trademarks and trade names, and preserve all the remainder of its property, in
use or useful in the conduct of its business and keep the same in good repair,
working order, and condition (taking into consideration ordinary wear and tear)
and from time to time make, or cause to be made, all needful and proper repairs,
renewals, and replacements, betterments and improvements thereto consistent with
industry practices, so that the business carried on in connection therewith may
be properly and advantageously conducted at all times, except where the failure
to do the above would not have a Material Adverse Effect; (d) transact business
only in such names set forth on Part (N) of the Disclosure Schedule, or such
other names as Borrower shall specify to Agent in writing not less than thirty
(30) days prior to the first date such name is used by Borrower; and (e) use
reasonable efforts to obtain and maintain all permits required to have been
issued to enable the real property owned or leased by Borrower to be lawfully
occupied and used for all of the purposes for which they are currently occupied
and used.
VII.2 Payment of Obligations.
----------------------
(a) Borrower shall, subject to Section 7.2(b), pay and discharge or
cause to be paid and discharged promptly all (A) Charges imposed upon it, its
income, and profits, or any of its property (real, personal, or mixed), and (B)
lawful claims for labor, materials, supplies, and services or otherwise before
any thereof shall become in default.
(b) Borrower may in good faith contest, by proper legal actions or
proceedings, the validity or amount of any Charges or claims arising under
Section 7.2(a); provided, that at the time of commencement of any such action or
--------
proceeding, and during the pendency thereof (i) adequate reserves with respect
thereto are maintained on the books of Borrower, in accordance with GAAP, (ii)
such contest operates to suspend collection of the contested Charges or claims
and is maintained and prosecuted continuously with diligence, (iii) none of the
Collateral would be subject to forfeiture or loss or any Lien by reason of the
institution or prosecution of such contest, (iv) no Lien shall exist, be imposed
or be attempted to be imposed for such Charges or claims during such action or
proceeding, (v) Borrower shall promptly pay or discharge such contested Charges
and all additional charges, interest, penalties, and expenses, if any, and shall
deliver to Agent evidence acceptable to Agent of such compliance, payment or
discharge, if such contest is terminated or discontinued adversely to Borrower,
and (vi) Agent has not advised Borrower in writing that Agent reasonably
believes that nonpayment or nondischarge thereof would have a Material Adverse
Effect.
(c) Notwithstanding anything to the contrary contained in Section
7.2(b) above, Borrower shall have the right to pay the Charges or claims
described in Section 7.2(a) and in good faith contest, by proper legal actions
or proceedings, the validity or amount of such Charges or claims.
VII.3 Agent's and Lenders' Bank Fees. Borrower shall pay to Agent, on
------------------------------
demand, any and all reasonable fees, costs, or expenses that Agent or any Lender
shall pay to a bank or other similar institution arising out of or in connection
with (i) the forwarding to Borrower or any other Person on behalf of Borrower by
such Lender of proceeds of the Revolving Loan or Term Loan or (ii) the
incurrence of the Letter of Credit Obligations.
VII.4 Books and Records. Borrower shall keep adequate records and books
-----------------
of account with respect to its business activities, in which proper entries,
reflecting all of its financial transactions, are made in accordance with GAAP
(except during the first year after the Closing Date for monthly statements
other than quarterly statements) and on a basis consistent with the financial
statements delivered to Agent; provided that Borrower shall make reasonable
--------
efforts to modify its accounting systems to enable Borrower to provide monthly
statements in accordance with GAAP and Borrower's monthly statements shall,
starting no later than the month ending January 31, 1997, reflect all financial
transactions in accordance with GAAP. Borrower shall maintain its books and
records and calculate all financial covenants based on the FIFO basis of
accounting.
VII.5 Litigation. Borrower shall notify Agent in writing, promptly upon
----------
learning thereof, of any litigation commenced or threatened against Borrower,
and of the institution against it of any suit or administrative proceeding that
(a) may involve an amount in excess of Five Hundred Thousand Dollars ($500,000)
or (b) may have a Material Adverse Effect if adversely determined.
VII.6 Insurance.
---------
(a) Borrower shall, at its sole cost and expense, maintain the
policies of insurance described in Section 5.26 in form and with insurers
recognized as adequate by Agent, and all such policies shall be in such amounts
as may be reasonably satisfactory to Agent. In addition, Borrower shall notify
Agent promptly of any occurrence causing a material loss or decline in value of
any real or personal property and the estimated (or actual, if available) amount
of such loss or decline. Borrower hereby directs all present and future
insurers under its "All Risk" policies of insurance to pay all proceeds payable
thereunder directly to Agent, subject to the rights, if any, of any holders of
Permitted Encumbrances with respect to such proceeds. Borrower irrevocably
makes, constitutes and appoints Agent
(and all officers, employees, or agents designated by Agent) as Borrower's true
and lawful agent and attorney-in-fact for the purpose of making, settling, and
adjusting claims under the "All Risk" policies of insurance, endorsing the name
of Borrower on any check, draft, instrument or other item of payment for the
proceeds of such "All Risk" policies of insurance, and for making all
determinations and decisions with respect to such "All Risk" policies of
insurance; provided Agent agrees that it shall not exercise its right to
--------
settle or adjust any claim unless an Event of Default has occurred and is
continuing. In the event Borrower at any time or times hereafter shall fail to
obtain or maintain any of the policies of insurance required above or to pay any
premium in whole or in part relating thereto, Agent, without waiving or
releasing any Obligations or Default or Event of Default hereunder, may at any
time or times thereafter (but shall not be obligated to) obtain and maintain
such policies of insurance and pay such premium and take any other action with
respect thereto which Agent deems advisable. All sums so disbursed by Agent,
including reasonable attorneys' fees, court costs, expenses and other charges
relating thereto, shall be payable, on demand, by Borrower to Agent and shall be
additional Obligations hereunder secured by the Collateral.
(b) Agent reserves the right at any time, upon review of Borrower's
risk profile, to require additional forms and limits of insurance to, in Agent's
reasonable judgment, after consultation with Borrower, adequately protect
Lenders' interests.
(c) Borrower shall, if so requested by Agent, deliver to Agent, as
often as Agent may request, a report of a reputable insurance broker, reasonably
satisfactory to Agent with respect to its insurance policies.
VII.7 Compliance with Laws.
--------------------
(a) Borrower shall comply with all federal, state and local laws and
regulations applicable to it, including, those relating to bonded wine making
operations, alcoholic beverage control, licensing, environmental, consumer
credit, truth-in-lending, ERISA, and labor matters, except where such
noncompliance would not have a Material Adverse Effect.
(b) Borrower shall comply with all statutory procedures under
California law necessary to exempt from the provisions of Section 3440 of the
California Civil Code any bulk juice, must, or wine owned by Borrower and stored
at any winery not owned or leased by Borrower, unless otherwise disclosed to
Agent.
VII.8 Agreements. Borrower shall perform, within all required time
----------
periods (after giving effect to any applicable grace periods), all of its
obligations and enforce all of its rights under each agreement to which it is a
party, including any leases and customer contracts to which it is a party where
the failure to so perform and enforce would have a Material Adverse Effect.
Borrower shall not terminate or modify any provision of any agreement to which
it is a party which termination or modification could have a Material Adverse
Effect.
VII.9 Supplemental Disclosure. From time to time as may be necessary
-----------------------
(in the event that such information is not otherwise delivered by Borrower to
any Lender pursuant to this Agreement), so long as there are Obligations
outstanding hereunder, Borrower will supplement each schedule or representation
herein with respect to any matter hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in such schedule or as an exception to such representation or
which is necessary to correct any information in such schedule or representation
which has been rendered inaccurate thereby; provided that such supplement to
--------
such schedule or representation shall not be deemed an amendment thereof unless
otherwise consented to by Agent.
VII.10 Employee Plans.
--------------
(a) Borrower shall notify Agent of any and all claims (other than
claims for benefits in the normal course), actions, or lawsuits asserted or
instituted, and of any threatened litigation or claims, against Borrower, or, to
Borrower's Knowledge, any ERISA Affiliate in connection with any Plan
maintained, at any time, by Borrower, or any ERISA Affiliate, or to which
Borrower, or any ERISA Affiliate has or had at any time any obligation to
contribute, or/and against any such Plan itself, or against any fiduciary of or
service provider to any such Plan (i) in an amount which may reasonably be
expected to be, if adversely determined, in excess of One Hundred Thousand
Dollars ($100,000) or (ii) which, if adversely determined, would have a Material
Adverse Effect.
(b) Borrower shall notify Agent of the occurrence of any "Reportable
Event" with respect to any Pension Plan of Borrower or any ERISA Affiliate.
VII.11 Environmental Matters. Borrower shall (i) comply in all material
---------------------
respects with the Environmental Laws applicable to it, (ii) notify Agent
promptly after knowledge in the event of any Spill which is reportable to any
Governmental Authority upon any premises owned or occupied by it, and (iii)
promptly forward to Agent a copy of any order, notice, permit, application, or
any other communication or report received by Borrower in connection with any
such Spill or any other matter relating to the Environmental Laws that may
materially affect such premises. The provisions of this Section 7.11 shall
apply whether or not the Environmental Protection Agency, any other federal
agency or any state or local environmental agency has taken or threatened any
action in connection with the presence of any Spills or hazardous substances.
VII.12 Subsidiary. Prior to forming any Subsidiary, Borrower shall (a)
----------
provide not less than thirty (30) days prior written notice to Agent, and (b)
receive the prior written consent of Agent consent shall not be unreasonably
withheld. As a condition to providing its consent to the formation of such
Subsidiary, Agent may require that the Subsidiary guarantee the full amount of
the Obligations and grant to Agent, for the benefit of Lenders, a Lien on and
security interest in all of such Subsidiary's property to secure such guaranty.
VII.13 Maintenance of Equipment and Fixtures. Borrower shall keep and
-------------------------------------
maintain its equipment and fixtures (each as defined in the California
Commercial Code) in good operating condition sufficient for the continuation of
Borrower's business conducted on a basis consistent with past practices, and
Borrower shall provide or arrange for all maintenance and service and all
repairs necessary for such purpose.
VII.14 Syndication. Prior to and after the Closing Date, Borrower shall
-----------
use reasonable time and efforts to assist Lenders as necessary or appropriate to
effectuate any sale, assignment, or other syndication of the Revolving Loan or
Term Loan, including (i) the preparation of offering materials to be delivered
to potential lenders, (ii) the preparation of information and projections by
Borrower and its advisors relating to the financing transaction contemplated by
this Agreement, and (iii) the participation of the relevant management in
meetings with potential lenders.
VII.15 Payment of Grower Payables. Borrower shall pay all Grower
--------------------------
Payables as and when due under the terms of Borrower's agreements with
Borrower's account debtors, except to the extent otherwise agreed by such
account debtors and except for Grower Payables being contested by Borrower in
good faith.
VII.16 Payment of Leases. Borrower shall pay as and when due all
-----------------
obligations owed by Borrower under any lease of real or personal property,
except to the extent otherwise agreed by the lessor thereof or to the extent
that Borrower is in good faith contesting its obligation to pay such obligation.
VII.17 Interest Rate Protection. On the Closing Date, Borrower shall
------------------------
have fixed pursuant to the terms of this Agreement, for a period of not less
than five (5) years, not less than Forty Million Six Hundred Thousand Dollars
($40,600,000) of Term Loan Tranche C. On or before the date that the Meridian
Advance is made, Borrower shall have fixed pursuant to the terms of this
Agreement, for a period
of not less than five (5) years, not less than Forty-Nine Million Dollars
($49,000,000) of Term Loan Tranche C.
VII.18 Notification Regarding Subordinated Debt. Borrower shall
----------------------------------------
promptly provide notice to Agent of the existence of any default or event of
default by Borrower under any document governing any Subordinated Debt, or of
any breach by Borrower of, or any failure by Borrower to observe or comply with,
any provision of any document governing any Subordinated Debt. Borrower shall
promptly notify Agent of any notice received by Borrower from any holder of any
Subordinated Debt or any representative acting on behalf of any holder of
Subordinated Debt, and provide Agent with a copy of any notice received, if such
notice concerns or references the existence of a default, an event of default,
or a breach by Borrower with respect to any Subordinated Debt or any remedy with
respect thereto.
VII.19 Year 2000 Compliance. On or before June 30, 1999, Borrower shall
--------------------
eliminate all limitations on its capacity or readiness of its system software,
network software, applications software, data bases, computer files, firmware
and hardware to accurately accept, create, manipulate, sort, sequence,
calculate, compare and output calendar date information with respect to calendar
year 1999 or any subsequent calendar year beginning on or after January 1, 2000.
ARTICLE VIII.
NEGATIVE COVENANTS
------------------
Borrower covenants and agrees that, unless Agent, with the approval of
Lenders, shall have otherwise consented, from and after the date hereof Borrower
shall comply with and observe each of the following covenants and shall cause
each of its Subsidiaries to comply with and observe each of the following
covenants, all references in this Article VIII applying on a consolidated basis
to both Borrower and its Subsidiaries.
VIII.1 Mergers, Etc. Borrower shall not, directly or indirectly, by
------------
operation of law or otherwise, merge with, consolidate with, acquire all or
substantially all of the assets or capital stock of, or otherwise combine with,
any Person or form any Subsidiary; provided, that so long as no Event of Default
--------
shall have occurred and be continuing, nothing in this Section 8.1 shall limit
the ability of Borrower to (a) acquire new wineries, vineyards, or other similar
assets or properties, or (b) subject to the approval of Lenders, not to be
unreasonably withheld, acquire Beverage Industry Assets.
VIII.2 Investments; Loans and Advances. Except as expressly permitted
-------------------------------
by Section 8.6, Borrower shall not make any investment in, or make or accrue
loans or advances of money to any Person, through the direct or indirect holding
of securities or otherwise; provided, that Borrower may: (a) make and maintain
--------
investments in Cash Equivalents, (b) make and maintain loans or advances to, any
of its wholly-owned Subsidiaries in an aggregate amount at any one time not to
exceed Five Million Dollars ($5,000,000) (provided that such wholly-owned
Subsidiaries have guaranteed all Obligations and secured such guarantee by a
first priority security interest in all of such Subsidiary's assets), (c)
maintain (but not increase except within the limitations permitted by clause (d)
of this Section 8.2) existing investments identified in Part Q of the Disclosure
Schedule, and (d) make and maintain investments in any joint venture or non-
wholly-owned Subsidiary engaged in the business of operating wineries,
vineyards, or other related businesses; provided, that such investments shall
--------
only be permissible under this clause (d) if consented to by Lenders, which
approval shall not be unreasonably withheld; and provided, further, that the
--------
aggregate amount invested after the Closing Date in all investments permitted by
this Section 8.2(d) shall not exceed Twenty-Five Million Dollars ($25,000,000).
Upon the occurrence of a Default or Event of Default, Borrower shall liquidate
all investments permitted under this Section 8.2 and the proceeds of such
liquidated investments shall be immediately remitted to Agent on account of the
Obligations.
VIII.3 Indebtedness.
------------
(a) Indebtedness Generally. Except as otherwise expressly permitted
----------------------
by this Agreement, Borrower shall not create, incur, assume, or permit to exist
any Indebtedness, except (i) Indebtedness secured by Liens permitted under
Section 8.8, (ii) the Revolving Loan, (iii) the Term Loan, (iv) all Deferred
Taxes, (v) all unfunded pension fund and other employee benefit plan obligations
and liabilities but only to the extent they are permitted to remain unfunded
under applicable law, (vi) Indebtedness under Capital Leases to the extent
permitted under this Agreement, but not to exceed Five Million Dollars
($5,000,000) at any time outstanding, (vii) Indebtedness in existence on the
Closing Date and identified on Part J of the Disclosure Schedule, (viii)
Purchase Money Indebtedness with respect to the acquisition of Newly Acquired
Capital Assets in an amount not to exceed the maximum set forth in Section
8.3(b), (ix) Indebtedness for surety bonds obtained in the ordinary course of
business, and (x) Indebtedness of a wholly-owned Subsidiary owed to Borrower or
to another wholly-owned Subsidiary of Borrower.
(b) Purchase Money Indebtedness for Acquisition of Newly Acquired
-------------------------------------------------------------
Capital Assets. Borrower may incur Purchase Money Indebtedness with respect to
--------------
the acquisition of Newly Acquired Capital Assets to the extent set forth later
in this Section 8.3(b), provided that (i) such Indebtedness is secured only by
the particular Newly Acquired Capital Asset or related group of Newly Acquired
Capital Assets, and (ii) no Default or Event of Default has occurred and is
continuing or would occur as result of the incurring of such Purchase Money
Indebtedness. When Borrower proposes to incur Purchase Money Indebtedness for
the acquisition of Newly Acquired Capital Assets, Borrower shall so notify Agent
and deliver to Agent Borrower's calculation of the Projected EBITDA with regard
to such acquisition. Agent shall review such calculation and notify Borrower of
the Projected EBITDA that will apply to such acquisition. If the Consolidated
Funded Debt to Adjusted EBITDA Ratio exceeds four and three quarters to one
(4.75:1), Borrower shall not be permitted to incur such Purchase Money
Indebtedness. If the Consolidated Funded Debt to Adjusted EBITDA Ratio is equal
to or less than four and three quarters to one (4.75:1) and more than three to
one (3:1), Borrower shall be permitted to incur such Purchase Money Indebtedness
so long as such Purchase Money Indebtedness will not cause the aggregate amount
of Purchase Money Indebtedness incurred by Borrower after the Closing Date to
exceed Ten Million Dollars ($10,000,000). If the Consolidated Funded Debt to
Adjusted EBITDA Ratio is equal to or less than three to one (3:1), Borrower
shall be permitted to incur such Purchase Money Indebtedness so long as such
Purchase Money Indebtedness will not cause the aggregate amount of Purchase
Money Indebtedness incurred by Borrower after the Closing Date to exceed Twenty-
Five Million Dollars ($25,000,000).
VIII.4 Capital Structure.
-----------------
(a) Borrower shall not issue or agree to issue any of its respective
authorized but not outstanding shares of Stock (including treasury shares)
except for additional shares that may be issued to BWEH in exchange for
additional equity investment in Borrower.
(b) Borrower shall not make any material changes in its capital
structure (including the issuance of any shares of stock, warrants, or other
securities convertible into stock or any revision of the terms of its
outstanding Stock) or amend its certificate of incorporation or by-laws without
the prior written consent of Lenders, which consent will not be unreasonably
withheld.
VIII.5 Maintenance of Business. Borrower shall not engage in any
-----------------------
business other than the production and sale of wine and wine-related products,
which business includes activities related to the acquisition and operation of
vineyards; provided that Borrower may engage in a business consisting of
Beverage Industry Assets, but only if such transaction was expressly approved by
Lenders pursuant to this Agreement.
VIII.6 Transactions with Affiliates. Borrower shall not enter into or
----------------------------
be a party to any transaction with any Affiliate of Borrower, except (a) in
accordance with the terms of the management compensation incentive plan
identified in Part V of the Disclosure Schedule (to the extent such plan
includes recourse loans made by Borrower to senior management of Borrower for
purposes of financing fifty percent (50%) of the purchase price of stock being
acquired by such managers in BWEH, in amounts not to exceed One Million Dollars
($1,000,000); provided that such shall be permitted only if the full
--------
amount received by BWEH for such stock is forwarded by BWEH to Borrower as a
capital contribution, but only to the extent funds for such loan were originally
provided by Borrower), (b) for the payment of fees to be paid to certain
Affiliates to the extent identified in the schedule of fees identified in
Appendix M to the Schedule of Documents delivered in connection with the
Original Closing Date, and (c) in the ordinary course of and pursuant to the
reasonable requirements of Borrower's business and upon fair and reasonable
terms that are fully disclosed to Agent and are no less favorable to Borrower
than would be obtained in a comparable arm's-length transaction with a Person
not an Affiliate of Borrower.
VIII.7 Guaranteed Indebtedness. Borrower shall not incur any Guaranteed
-----------------------
Indebtedness except (a) by endorsement of instruments or items of payment for
deposit to the general account of Borrower, (b) for Guaranteed Indebtedness
incurred for the benefit of Borrower if the primary obligation is permitted by
this Agreement, and (c) those obligations set forth in Part K of the Disclosure
Schedule.
VIII.8 Liens. Borrower shall not create or permit any Lien on any of
-----
its properties or assets except the Lien of Agent under the Loan Documents and
Permitted Encumbrances.
VIII.9 Sales of Assets.
---------------
(a) Sales of Assets Other Than Real Property. Borrower shall not
----------------------------------------
sell, transfer (including any consensual transfer such as the execution of a
deed in lieu of foreclosure), convey, assign, or otherwise dispose of any of its
assets or properties (other than real property, which is governed by Sections
8.9(b), 8.9(c), and 8.9(d)); provided, that the foregoing shall not prohibit (i)
--------
the sale of Inventory in the ordinary course of business, (ii) the replacement
or trade-in of equipment in the ordinary course of business, and (iii) the sale
or other disposal of used equipment, other than replacement or trade-in of
equipment, in the ordinary course of Borrower's business up to a net book value
of Five Million Dollars ($5,000,000) for all such equipment sold after the
Closing Date; and, provided, further, that the Net Proceeds from any such sale
--------
are immediately paid to Agent for application as provided in Section 2.3(c).
(b) Sales of Agricultural Real Property. Borrower shall not sell,
-----------------------------------
transfer (including any consensual transfer such as the execution of a deed in
lieu of foreclosure), convey, assign, or otherwise dispose of any Agricultural
Real Property owned by Borrower; provided, that Borrower may sell or otherwise
--------
dispose of Agricultural Real Property after the Closing Date having a value (as
set forth on the Real Estate Valuation Schedule), when aggregated with all other
Agricultural Real Property sold or disposed of by Borrower after the Closing
Date, as follows:
(i) with respect to Agricultural Real Property that is sold
and immediately leased back by Borrower at a market rate of rent for a
period of not less than fifteen (15) years, not more than Fifteen Million
Dollars ($15,000,000); and
(ii) with respect to any other sales of Agricultural Real
Property, not more than Ten Million Dollars ($10,000,000);
and provided, further, that in each sale described in clauses (i) or (ii) above
--------
Borrower shall receive and immediately pay to Agent from the proceeds of sale
the Minimum Payment Amount with respect to such sale. The Fifteen Million
Dollar ($15,000,000) and Ten Million Dollar ($10,000,000) figures used above are
cumulative. Amounts paid to Agent pursuant to this Section 8.9(b) shall be
distributed to Term Lenders as a permanent reduction of the Term Loan as
provided in Section 2.3(c).
(c) Sales of Winery Real Property. Borrower shall not sell, transfer
-----------------------------
(including any consensual transfer such as the execution of a deed in lieu of
foreclosure), convey, assign, or otherwise dispose of any Winery Real Property.
(d) Sales of Special Real Property. Borrower shall not sell, transfer
------------------------------
(including any consensual transfer such as the execution of a deed in lieu of
foreclosure), convey, assign, or otherwise dispose of any Special Real Property
unless Borrower receives and immediately pays to Agent from the proceeds of sale
the Minimum Payment Amount with respect to such sale. Amounts paid to Agent
pursuant to this Section 8.9(d) shall be distributed to Term Lenders as a
permanent reduction of the Term Loan as provided in Section 2.3(c).
VIII.10 Cancellation of Claims. Borrower shall not cancel any claim or
-----------------------
debt owing to it, except for reasonable consideration or in the ordinary course
of business.
VIII.11 Events of Default. Borrower shall not take or omit to take any
-----------------
action, which act or omission would constitute (a) a Default or an Event of
Default pursuant to, or noncompliance with any of, the terms of any of the Loan
Documents, or (b) a material default or an event of default (i) pursuant to, or
noncompliance with, any contract, lease, mortgage, deed of trust, or instrument
to which it is a party or by which it or any of its property is bound, or any
document creating a Lien, and (ii) which would have a Material Adverse Effect.
VIII.12 Restricted Payments. Borrower shall not make any Restricted
-------------------
Payments; provided, that so long as no Default or Event of Default then exists,
--------
has occurred within the twelve (12) months immediately preceding such proposed
Restricted Payment, or would result from such Restricted Payment, Borrower may
pay dividends on its common stock to BWEH if all of the following requirements
are fulfilled: (a) the dividend is declared and paid no earlier than January 16,
2000; (b) Borrower shall have sufficient net profits pursuant to Section 170 of
the Delaware General Corporation Law with which to pay such dividend; (c)
Borrower's Consolidated Net Worth as of the end of the immediately preceding
fiscal quarter was not less than One Hundred Seventy Million Dollars
($170,000,000) and will not be reduced to less than One Hundred Seventy Million
Dollars ($170,000,000) as a result of such Restricted Payment, and (d) the
aggregate amount of all such Restricted Payments paid to BWEH in any Fiscal Year
shall not exceed (i) fifty percent (50%) of the amount of Consolidated Net
Income for the Fiscal Year ending June 30, 1999 for such dividends paid during
such Fiscal Year, and (ii) fifty percent (50%) of the aggregate amount of
Consolidated Net Income earned after June 30, 1999 for such dividends paid after
such Fiscal Year; and provided further that so long as no Default or Event of
-------- -------
Default then exists, or would result from such Restricted Payment, Borrower may
pay dividends on its common stock to BWEH in an amount sufficient to enable BWEH
to (x) pay the actual amount of BWEH's tax liability as the parent of a
consolidated, combined, or unitary group, including Borrower, and (y) pay its
overhead and operating expenses, not to exceed Two Hundred Fifty Thousand
Dollars ($250,000) per Fiscal Year.
VIII.13 Payment or Modification of Subordinated Debt. Borrower shall
--------------------------------------------
not make payments on account of any Subordinated Debt except to the extent
permissible under the agreement by which such Subordinated Debt is subordinated
to the Obligations. Borrower shall not amend, supplement, or otherwise modify
any provisions of the any documents governing any Subordinated Debt, and shall
not refinance any portion of any Subordinated Debt, except on terms no less
favorable to Borrower and Lenders and that have been disclosed in writing to and
approved by Lenders.
VIII.14 Acquisition of Wineries, Vineyards, and Beverage Industry Assets.
----------------------------------------------------------------
Even if permitted by some other provision of this Agreement, Borrower shall not
acquire any wineries, vineyards, or Beverage Industry Assets if (i) the
Consolidated Funded Debt to Adjusted EBITDA Ratio with respect to such
acquisition exceeds four and three quarters to one (4.75:1), or (ii) such
acquisition would cause the aggregate amount of wineries, vineyards, and
Beverage Industry Assets acquired by Borrower after the Closing Date to exceed
One Hundred Million Dollars ($100,000,000). When Borrower proposes to acquire
any winery, vineyard, or Beverage Industry Asset, Borrower shall so notify Agent
and deliver to Agent Borrower's calculation of the Projected EBITDA with regard
to such acquisition. Agent shall review such calculation and notify Borrower of
the Projected EBITDA that will apply to such acquisition.
VIII.15 Termination of Real Property Leases. Borrower shall not agree
-----------------------------------
to terminate any leases of agricultural real property prior to the expiration of
the scheduled term thereof, or to allow or suffer any such leases to be
terminated prior to the expiration of the scheduled term thereof if, as a result
thereof, the total number of producing and developing vineyard acres leased by
Borrower as tenant shall be less than One Thousand Four Hundred Fifty (1,450)
acres, minus the aggregate acreage under such leases terminated upon the
-----
scheduled expiration thereof. The failure by Borrower to exercise a renewal
option, and the exercise by Borrower of a purchase option, shall not be
considered a termination "prior to the expiration of the scheduled term" as such
phrase is used in this Section 8.15.
VIII.16 ERISA. Without Agent's prior written consent, Borrower shall
-----
not acquire any new ERISA Affiliate that maintains or has an obligation to
contribute to a Pension Plan that has either an
"accumulated funding deficiency," as defined in Section 302 of ERISA, or any
"unfunded vested benefits," as defined in Section 4006(a)(3)(E)(iii) of ERISA in
the case of any plan other than a Multiemployer Plan and in Section 4211 of
ERISA in the case of a Multiemployer Plan. Additionally, Borrower shall not,
without Agent's prior written consent:
(a) terminate any Pension Plan that is subject to Title IV of ERISA
where such termination could reasonably be anticipated to result in liability to
Borrower in excess of Five Hundred Thousand Dollars ($500,000);
(b) permit any accumulated funding deficiency, as defined in Section
302(a)(2) of ERISA, to be incurred with respect to any Pension Plan which would
result in a Material Adverse Effect;
(c) fail to make any contributions or fail to pay any amounts due and
owing as required by the terms of any Plan before such contributions or amounts
become delinquent if the consequence of such delinquencies could, in the
aggregate, reasonably be expected to have a Material Adverse Effect;
(d) make a complete or partial withdrawal (within the meaning of
Section 4201 of ERISA) from any Multiemployer Plan that could reasonably be
anticipated to result in liability to Borrower in excess of Five Hundred
Thousand Dollars ($500,000); or
(e) at any time fail to provide Agent with copies of any Plan
documents or governmental reports or filings, if reasonably requested by Agent.
VIII.17 Intentionally Omitted.
---------------------
VIII.18 Intentionally Omitted.
---------------------
VIII.19 Hazardous Materials. Except as set forth in Part (X) of the
-------------------
Disclosure Schedule, Borrower shall not and shall not knowingly permit any other
Person within the control of Borrower to cause or permit the presence, use,
generation, manufacture, installation, release, discharge, storage or disposal
of any Hazardous Materials on, under, in or about any of its real estate or the
transportation of any Hazardous Materials to or from any real estate where such
presence, use, generation, manufacture, installation, release, discharge,
storage or disposal would violate any Environmental Laws, the violation of which
would have a Material Adverse Effect.
VIII.20 PACA License. Borrower shall not obtain or attempt to obtain a
------------
dealer license under the provisions of Section 499c of PACA.
VIII.21 Financial Covenants.
-------------------
(a) Current Ratio. Borrower shall not permit the ratio of (i)
-------------
Consolidated Current Assets to (ii) Consolidated Current Liabilities, as of the
last day of each Fiscal Quarter during the respective measurement periods listed
below, to be less than 1.25:1.
(b) Capitalization Ratio. Borrower shall not permit the ratio of (i)
--------------------
Consolidated Total Debt, to (ii) Consolidated Total Capitalization, as of the
last day of each Fiscal Quarter during the respective measurement periods listed
below, to be greater than the correlative levels for such periods shown below:
Measurement Maximum
Period Ratio
----------- -------
September 30, 1998 through May 31, 2000 .70:1
June 1, 2000 through Termination Date .65:1
(c) Debt Coverage Ratio. Borrower shall not permit the Consolidated
-------------------
Debt Coverage Ratio for the four Fiscal Quarters immediately preceding each
measurement date, as of the last day of each Fiscal Quarter during the
respective measurement periods listed below, to be less than the correlative
levels for such periods shown below:
Measurement Minimum
Period Ratio
----------- -------
September 30, 1998 through June 29, 1999 1.75:1
June 30, 1999 through Termination Date 2.10:1
8.22 Compliance With Subordinated Debt Documents. Borrower shall not
-------------------------------------------
breach, and shall not fail to observe or comply with, any provision of any
document governing any portion of any Subordinated Debt if such breach or
failure would, with the passage of time or the giving of notice or both,
constitute an event of default with respect to such Subordinated Debt, unless
the event of default that could arise from such breach or failure has been
waived in writing by the holders of the Subordinated Debt.
ARTICLE IX.
INDEMNITY
---------
IX.1 Indemnification. Borrower shall indemnify and hold Agent and
---------------
Lenders and Agent and Lenders' respective Affiliates, Subsidiaries, officers,
directors, employees, attorneys, and agents (each, an "Indemnified Person"),
harmless from and against any and all suits, actions, proceedings, claims,
damages, losses, liabilities and expenses (including reasonable attorneys' fees
and disbursements (including allocated costs of internal counsel) and other
costs of investigations or defense, including those incurred upon any appeal)
which may be instituted or asserted against or incurred by such Indemnified
Person as a result of credit having been extended under this Agreement and the
other Loan Documents or in connection with or arising out of the transactions
contemplated hereunder and thereunder, including any claim, demand, fee,
obligation, judgment, recovery, disbursement, action, suit, proceeding, loss,
cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense
(including reasonable attorneys' and consultants' fees, investigation and
laboratory fees, court costs and litigation expenses), directly or indirectly
resulting from, arising out of, or based upon (i) the presence, release, use,
manufacture, installation, generation, discharge, storage, or disposal, at any
time, of any Hazardous Materials on, under, in or about, or the transportation
of any such materials to or from, any real property (the "Subject Property")
owned, leased or operated by Borrower or any Subsidiary of Borrower or any
Guarantor, or (ii) the violation or alleged violation by Borrower or any
Subsidiary of Borrower or any Guarantor of any law, statute, ordinance, order,
rule, regulation, permit, judgment, or license relating to the use, generation,
manufacture, installation, release, discharge, storage, or disposal of Hazardous
Materials to or from the Subject Property; which indemnity shall include, (A)
any damage, liability, fine, penalty, punitive damage, cost, or expense arising
from or out of any claim, action, suit, or proceeding for personal injury
(including sickness, disease, death, pain, or suffering), tangible or intangible
property damage, compensation for lost wages, business income, profits, or other
economic loss, damage to the natural resources or the environment, nuisance,
pollution, contamination, leak, spill, release, or other adverse effect on the
environment, and (B) the cost of any required or necessary repair, cleanup,
treatment, remediation, or detoxification of the Subject Property and the
preparation and implementation of any closure, disposal, remedial, or other
required actions in connection with the Subject Property; provided, that
--------
Borrower shall not be liable for any indemnification to such Indemnified Person
to the extent that any such suit, action, proceeding, claim, damage, loss,
liability or expense was the result of any action by such Indemnified Person or
results from such Indemnified Person's gross negligence or willful misconduct.
NEITHER AGENT NOR ANY LENDER OR ANY OTHER INDEMNIFIED PERSON SHALL BE
RESPONSIBLE OR LIABLE TO ANY OTHER PARTY HERETO, ANY SUCCESSOR, ASSIGNEE, OR
THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS
DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY, OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED UNDER THE LOAN DOCUMENTS.
IX.2 No Control. Borrower hereby acknowledges and agrees that neither
----------
Agent nor any Lender (a) is now nor has ever been in control of the Subject
Property or Borrower's affairs, and (b) has the capacity through the provisions
of the Loan Documents to influence Borrower's conduct with respect to the
ownership, operation, or management of the Subject Property.
ARTICLE X.
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
--------------------------------------
X.1 Events of Default. The occurrence of any one or more of the
-----------------
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:
(a) Failure to Pay Principal.
------------------------
(i) Borrower shall fail to make any payment of principal owing
with respect to the Revolving Loan (including failure to pay any Letter of
Credit Obligations) or any regularly scheduled payment of principal owing with
respect to the Term Loan when due and payable and such failure shall remain
uncured for a period of two (2) Business Days; provided that the failure to make
--------
such payment may only be cured by paying the amount due together with interest
on such amount at the Default Rate.
(ii) Borrower shall fail to make any mandatory prepayment of
principal owing with respect to the Revolving Loan or the Term Loan when due and
payable.
(b) Failure to Pay Interest or Other Amounts Other than Expenses.
------------------------------------------------------------
Borrower shall fail to make any payment of interest on the Revolving Loan, the
Term Loan, or any other amount (other than expenses payable under any Loan
Document) owing with respect to the Revolving Loan, the Term Loan or any of the
other Obligations when due and payable or declared due and payable and such
failure shall remain uncured for a period of two (2) Business Days; provided
--------
that the failure to make such payment may only be cured by paying the amount due
together with interest on such amount at the Default Rate.
(c) Failure to Pay Expenses. Borrower shall fail to make any payment
-----------------------
of any expenses payable under any Loan Document, and such failure shall have
remained uncured for a period of ten (10) days after Borrower has received
notice of such failure from Agent; provided that the failure to make such
--------
payment may only be cured by paying the amount due together with interest on
such amount at the Default Rate.
(d) Failure to Deliver Monthly Borrowing Base Certificate. Borrower
-----------------------------------------------------
shall fail or neglect to deliver any Borrowing Base Certificate when required
pursuant to Section 6.1(a), and such failure shall remain uncured for a period
of ten (10) Business Days; provided, that such failure shall be curable only
--------
four (4) times during any calendar year and there shall be no cure period for a
fifth (5th) or any subsequent failure in any calendar year.
(e) Breach of Covenants or Other Provisions of This Agreement.
---------------------------------------------------------
Borrower shall fail or neglect to perform, keep, or observe any other provision
of this Agreement or of any of the other Loan Documents, and the same is by its
nature incapable of being cured or shall remain unremedied for a period ending
on the first to occur of twenty (20) days after Borrower shall receive written
notice of any such failure from Agent or thirty (30) days after Borrower shall
become aware thereof. A breach by Borrower of the financial covenants set forth
in Section 8.21 are incapable of being cured.
(f) Default Under Other Indebtedness.
--------------------------------
(i) A default shall occur under any other agreement, document,
or instrument to which Borrower is a party or by which Borrower or Borrower's
property is bound and such default involves the failure to make any payment
(whether of principal, interest, or otherwise) due (whether by scheduled
maturity, required prepayment, acceleration, demand, or otherwise, but only
after expiration of any cure periods provided by the underlying agreement,
document, or instrument) in respect of any Indebtedness of Borrower in excess of
One Million Dollars ($1,000,000).
(ii) A default shall occur under or with respect to any
document evidencing any Subordinated Debt, whether or not such default involves
the failure to make any payment, if the occurrence of such default entitles any
holder thereof to demand payment of all or any portion of the principal portion
of such Subordinated Debt.
(g) Breach of Representation or Warranty. Any material representation
------------------------------------
or warranty herein or in any Loan Document or in any written statement pursuant
thereto or hereto, report, financial statement, or certificate made or delivered
to any Lender by Borrower shall be untrue or incorrect, as of the date when made
or deemed made (including those made or deemed made pursuant to Section 4.2) and
the same is by its nature incapable of being cured or shall remain unremedied
for a period ending on
the first to occur of twenty (20) days after Borrower shall receive written
notice of any such failure from Agent or thirty (30) days after Borrower shall
become aware thereof.
(h) Loss of Assets. (i) Any of the assets of Borrower shall be
--------------
attached, seized, levied upon, or subjected to a writ or distress warrant, or
come within the possession of any receiver, trustee, custodian, or assignee for
the benefit of creditors of Borrower and shall remain unstayed or undismissed
for thirty (30) consecutive days, (ii) any Person other than Borrower shall
apply for the appointment of a receiver, trustee or custodian for any of
Borrower's assets and such application shall remain unstayed or undismissed for
thirty (30) consecutive days, or (iii) Borrower shall have concealed, removed,
or permitted to be concealed or removed, any part of its property, with intent
to hinder, delay, or defraud its creditors or any of them or made or suffered a
transfer of any of its property or the incurring of an obligation which may be
fraudulent under any bankruptcy, fraudulent conveyance or other similar law, in
each case only to the extent any of the events set forth in clauses (i), (ii) or
(iii) would, individually or in the aggregate, have a Material Adverse Effect.
(i) Involuntary Insolvency Actions. A case or proceeding shall have
------------------------------
been commenced against Borrower in a court having competent jurisdiction seeking
a decree or order (i) under the Bankruptcy Code, or any other applicable
federal, state, or foreign bankruptcy or other similar law, (ii) appointing a
custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) of Borrower or of any substantial part of its properties, or (iii)
ordering the winding-up or liquidation of the affairs of Borrower and such case
or proceeding shall remain undismissed or unstayed for thirty (30) consecutive
days or such court shall enter a decree or order granting the relief sought in
such case or proceeding.
(j) Voluntary Insolvency Actions. Borrower shall (i) file a petition
----------------------------
seeking relief under the Bankruptcy Code, or any other applicable federal, state
or foreign bankruptcy or other similar law, (ii) consent to the institution of
proceedings thereunder or to the filing of any such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, or sequestrator (or similar official) of Borrower or of any
substantial part of its properties, (iii) fail generally to pay its debts as
such debts become due, or (iv) take any corporate action in furtherance of any
such action.
(k) Judgments. Final judgment or judgments for the payment of money
---------
in excess of Fifty Thousand Dollars ($50,000) in the aggregate shall be rendered
against Borrower and the same shall not be (i) fully covered by insurance in
accordance with Section 7.6, or (ii) vacated, stayed, bonded, paid, or
discharged for a period of thirty (30) days.
(l) Change in Stockholders. BWEH shall fail to be the legal and
----------------------
beneficial owner of all of the issued and outstanding shares of common stock of
Borrower, or Texas Pacific Group shall fail to control at least thirty-five
percent (35%) of the voting shares of BWEH, or any other Person and such
Person's Affiliates shall control more of the voting shares of BWEH than are
controlled by Texas Pacific Group.
(m) Acquisitions by BWEH. BWEH shall acquire (by purchase,
--------------------
consolidation, merger or otherwise) any assets other than the stock of Borrower.
(n) ERISA. (i) With respect to any Plan, a prohibited transaction
-----
within the meaning of Section 4975 of the IRC or Section 406 of ERISA occurs
which in the reasonable determination of Agent could result in direct or
indirect liability to Borrower, (ii) with respect to any Title IV Plan, the
filing of a notice to voluntarily terminate any such plan in a distress
termination, (iii) with respect to any Multiemployer Plan, Borrower or any ERISA
Affiliate shall incur any Withdrawal Liability, (iv) with respect to any
Qualified Plan, Borrower or any ERISA Affiliate shall incur an accumulated
funding deficiency or request a funding waiver from the IRS, or (v) with respect
to any Title IV Plan or Multiemployer Plan which has an ERISA Event not
described in clauses (ii) - (iv) hereof, in the reasonable determination of
Agent there is a reasonable likelihood for termination of any such plan by the
PBGC; provided, that the events listed in clauses (i) - (v) hereof shall
--------
constitute Events of Default only if the liability, deficiency, or waiver
request of Borrower or any ERISA Affiliate, whether or not assessed,
exceeds Fifty Thousand Dollars ($50,000) in any case set forth in (i) - (v)
above, or exceeds One Hundred Thousand Dollars ($100,000) in the aggregate for
all such cases.
(o) Guaranties. There shall occur an "Event of Default" or an "Event
----------
of Guaranty Default" under and as defined in any guaranty of all or any part of
the Obligations by any Person or any such guarantor shall renounce, repudiate,
or terminate such guaranty.
(p) Payment of Principal With Respect to Subordinated Debt. Borrower
------------------------------------------------------
shall make any payment of principal on account of any Subordinated Debt or
tender any payment of principal to any holder of any Subordinated Debt.
X.2 Acceleration; Remedies.
----------------------
(a) Automatic Acceleration; Notice of Acceleration and Exercise of
--------------------------------------------------------------
Remedies. If an Event of Default shall occur and be continuing: (i) all
Obligations and any indebtedness of Borrower under any of the Loan Documents,
any term thereof to the contrary notwithstanding, shall at Lenders' option and
without notice be accelerated and become immediately due and payable without
presentment, demand, protest, or notice of dishonor, all of which are hereby
expressly waived by Borrower; (ii) the obligation, if any, of Lenders to make
further Revolving Advances or incur further Letter of Credit Obligations shall
immediately cease and terminate; (iii) the obligation, if any, of the Swingline
Lender to make further Swingline Advances shall immediately cease and terminate;
and (iv) Agent may require that all Letter of Credit Obligations be fully cash
collateralized in accordance with the terms of Section 2.2. Upon and after an
Event of Default, Agent may send Borrower a notice that all of the Obligations
have been accelerated and are due in full (a "Notice of Acceleration"), which
Notice of Acceleration may be included in any notice from Agent to Borrower that
an Event of Default has occurred. Upon and after sending Borrower the Notice of
Acceleration, Agent and Lenders shall have all rights, powers, and remedies
available under each of the Loan Documents, and including the right to resort to
any or all Collateral for any Obligations and to exercise any or all of the
rights of a beneficiary or secured party with respect to the Collateral pursuant
to applicable law. All rights, powers and remedies of Agent and Lenders in
connection with each of the Loan Documents (x) may be exercised at any time by
them and from time to time after the occurrence and during the continuation of
an Event of Default, and after the sending of the Notice of Acceleration, (y)
are cumulative and not exclusive, and (z) shall be in addition to any other
rights, powers or remedies provided by law or equity.
(b) Payments to Third Parties. At its sole discretion and without any
-------------------------
obligation to do so, Agent may pay any amount to any Person as Agent deems
reasonably necessary to preserve the value of, avoid loss of or damage to, or
prevent foreclosure, sale, or forfeiture of any of the Collateral, including
bidding at or redeeming from any sale of Collateral; provided that Agent may
--------
make such payment no sooner than ten (10) calendar days before the date first
set for the event which could result in such loss, damage, sale, foreclosure, or
forfeiture; and provided further that Agent shall notify Borrower at least two
-------- -------
(2) calendar days in advance of making such payment of its intent to make such
payment, but such notice shall not obligate Agent to make such payment; and
provided further, the failure of Agent to give such advance notice shall not
-------- -------
impair Agent's ability to make such payment and the legal effect thereof with
regard to such Person or the Collateral and Borrower's remedy with respect to
breach of the foregoing proviso shall be limited to monetary damages. Any
amounts paid or expended by Agent in connection herewith shall constitute
Obligations which shall be payable on demand and which shall bear interest at
the Default Rate from the date paid by Agent.
(c) Appointment of Receiver. After the occurrence of an Event of
-----------------------
Default and delivery of a Notice of Acceleration, Agent may (but shall not be
obligated to) seek to obtain the appointment of a receiver who shall be vested
with any and all such powers and rights as Agent may request of the court,
including the right (i) to sell the Collateral at one or more private or public
sales, (ii) to undertake cultivation, harvest, purchasing, processing, sales,
collections, or other work in connection with any Collateral (or any portion
thereof) in accordance with this Agreement and the other Loan Documents (or any
other plan of cultivation, harvest, processing, preservation or maintenance
approved by Agent and the receiver or the court), and (iii) to exercise any or
all such rights, powers or privileges as Borrower or Agent might exercise on its
own behalf.
X.3 Distribution and Application of Amounts Received After an Event of
------------------------------------------------------------------
Default.
-------
(a) Distribution of Amounts Received After an Event of Default. Any
----------------------------------------------------------
amounts received by Agent on account of the Obligations after an Event of
Default, whether from voluntary payment by Borrower, from a foreclosure sale, or
from some other source shall be distributed as follows: First, Agent may, but
shall not be obligated to, retain such amounts as are necessary to cover payment
of any fees, costs, or expenses due to Agent. Second, amounts shall be
distributed to Term Lenders and Revolving Lenders based on their Percentages of
the Obligations until each Lender has received payment of all interest then due
and owing to such Lender. Third, amounts shall be distributed to Term Lenders
and Revolving Lenders as follows: (i) if the source of such amount was the sale
or other disposition of a Fixed Asset, then such amount shall be distributed to
Term Lenders based on their Percentages of the Term Loan until such time as the
Obligations to the Term Lenders have been paid in full and any excess shall be
distributed to Revolving Lenders based on their Percentages of the Revolving
Loan, and (ii) if the source of such amount was from any source other than sale
or other disposition of a Fixed Asset, then such amount shall be distributed to
Revolving Lenders based on their Percentages of the Revolving Loan until such
time as the Revolving Loan has been paid in full and, if any Letter of Credit
Obligations remain outstanding, the Cash Collateral Account shall have been
funded in an amount equal to the Letter of Credit Obligations, and any excess
shall be distributed to Term Lenders based on their Percentages of the Term
Loan. Notwithstanding the foregoing, if a payment made after an Event of
Default is in an amount that would be sufficient to cure such Event of Default
or is believed by Agent to be intended by Borrower to cure such Event of
Default, then Agent may distribute the payment as necessary to permit cure of
such an Event of Default.
(b) Determining the Source of Funds; Resolution of Dispute Over
-----------------------------------------------------------
Source of Funds. In determining the source of funds used to make a payment,
---------------
Agent shall make an initial determination and shall distribute such funds as are
payable to each Lender in accordance with such determination. Within ten (10)
days after making a distribution, Agent shall deliver to each Lender a report
setting forth the basis for Agent's determination as to the source and
allocation of funds. Agent's determination shall be final and conclusive to the
extent described in the report delivered to each Lender unless any Lender shall
deliver written notice to Agent and all other Lenders that it disputes such
determination within thirty (30) days of Agent's delivery of the report referred
to in the previous sentence. Following the delivery of such a notice, Agent and
all Lenders shall negotiate in good faith to try and resolve the dispute. If
the dispute cannot be resolved within thirty (30) days after delivery of the
notice, then the dispute may be submitted by any Lender to arbitration.
Arbitration shall be conducted by one arbitrator appointed in accordance with
the Commercial Arbitration Rules of the American Arbitration Association then in
effect. The arbitrator shall consider the dispute in San Francisco, California.
The parties hereto agree that the decision of the arbitrator shall be final,
conclusive, and binding upon the parties. In such arbitration, the Agent shall
be neutral (although Pacific Coast may participate in its role as a Lender if it
so chooses). The arbitrator shall not be authorized to award the fees, costs,
or expenses incurred by a Lender against another Lender, although such fees,
costs, and expenses may by charged by such Lender to the Borrower.
(c) Application of Payments. Borrower irrevocably waives the right to
-----------------------
direct the application of any and all payments at any time or times hereafter
received by Agent or Lenders from or on behalf of Borrower, and Borrower
irrevocably agrees that Agent and Lenders shall have the continuing exclusive
right to apply any and all such payments against the then due and payable
Obligations of Borrower as Agent and Lenders may deem advisable.
(d) Allocation of Payments among Lenders. Amounts distributed by
------------------------------------
Agent to Term Lenders shall be allocated in accordance with each Term Lender's
respective Percentage of the Term Loan. Amounts distributed by Agent to
Revolving Lenders shall be allocated in accordance with each Revolving Lender's
respective Percentage of the Revolving Loan. Amounts distributed by Agent to
all Lenders shall be allocated in accordance with each Lender's respective
Percentage of the Obligations. Notwithstanding the foregoing, if any Term
Lender's or Revolving Lender's pro rata share of the aggregate outstanding
principal amount of the Term Loan or the Revolving Loan or the Obligations is
greater than such Lender's Percentage, then payments shall be allocated to such
Lender until its pro rata share of the aggregate outstanding Term Loan,
Revolving Loan or Obligations, as the case may be, is equal to such Lender's
Percentage.
X.4 Waivers by Borrower. Except as otherwise provided for in this
-------------------
Agreement, Borrower waives (i) presentment, demand and protest and notice of
presentment, dishonor, notice of intent to accelerate, notice of acceleration,
protest, default, nonpayment, maturity, release, compromise, settlement,
extension, or renewal of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by any
Lender on which Borrower may in any way be liable and hereby ratifies and
confirms whatever any Lender may do in this regard, (ii) all rights to notice
and a hearing prior to any Lender's taking possession or control of, or to any
Lender's replevy, attachment or levy upon, the Collateral or any bond or
security which might be required by any court prior to allowing such Lender to
exercise any of its remedies, and (iii) the benefit of all valuation, appraisal,
and exemption laws.
ARTICLE XI.
AGENCY
------
XI.1 Appointment. Each Lender hereby (a) irrevocably appoints Pacific
-----------
Coast as the agent of such Lender under this Agreement and the other Loan
Documents and as agent for the lending syndicate in the event any portion of the
Revolving Loan or Term Loan is hereafter syndicated, and (b) irrevocably
authorizes Agent to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to Agent by the terms of this Agreement
and the other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding anything to the contrary herein, Agent
shall have no duties, responsibilities, or fiduciary relationships with any
Lender, except those expressly set forth in this Agreement and the other Loan
Documents, and no implied covenants, responsibilities, duties, obligations, or
liabilities shall be read into this Agreement or the other Loan Documents or
otherwise exist against Agent.
XI.2 Delegation of Duties. Agent may exercise any of its powers or
--------------------
execute any of its duties under this Agreement and the other Loan Documents by
or through one or more agents or attorneys-in-fact and shall be entitled to
take, and to rely on, advice of counsel concerning all matters pertaining to
such rights and duties. Agent may utilize the services of such agents and
attorneys-in-fact as Agent in its sole discretion reasonably determines, and all
reasonable fees and expenses of such agents and attorneys-in-fact shall be paid
by Borrower on demand. Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by Agent with reasonable
care.
XI.3 Limitation of Liability. Neither Agent nor its officers, directors,
-----------------------
employees, agents, attorneys, or Affiliates shall be (a) liable for any waiver,
consent, or approval given or any action taken or omitted to be given or taken
by them or by such Person under or in connection with this Agreement or the
other Loan Documents, or (b) responsible for the consequences of any oversight
or error in judgment by them or such Person whatsoever, except for their or such
Person's own gross negligence or willful misconduct. Agent shall not be
responsible for (v) the execution, validity, enforceability, effectiveness, or
genuineness of this Agreement or the other Loan Documents, (w) the
collectibility of any amounts owing under this Agreement or the other Loan
Documents, (x) the value, sufficiency, enforceability, or collectibility of any
collateral security therefor, (y) the failure by Borrower to perform its
obligations hereunder, or (z) the truth, accuracy, and completeness of the
recitals, statements, representations, or warranties made by Borrower or any
officer or agent thereof contained in this Agreement or the other Loan Documents
or in any certificate, report, statement, or other document referred to or
provided for in, or received by the Agent in connection with, this Agreement or
the other Loan Documents.
XI.4 Reliance by Agent. Agent shall not have any obligation (a) to
-----------------
ascertain or to inquire as to the observance or performance of any of the
conditions, covenants, or agreements in this Agreement or the other Loan
Documents or in any document, instrument, or agreement at any time constituting,
or intended to constitute, collateral security therefor, (b) to ascertain or
inquire as to whether any notice, consent, waiver, or request delivered to it
shall have been duly authorized or is genuine, accurate and complete, or (c) to
inspect the properties, books, or records of Borrower. Agent shall be entitled
to rely, and shall be fully protected in relying, (x) upon any note, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex, teletype, or telephonic message, statement, order, or
other document, instrument or conversation believed by it to be genuine and
correct and to have been signed, sent or made
by the proper Person or Persons, or (y) upon advice and statements of legal
counsel (including counsel to Borrower), independent accountants, and other
experts selected by Agent. Agent may deem and treat the Lenders party hereto or
to any Assignment and Acceptance as a Lender for all purposes unless a written
notice of the assignment, negotiation, or transfer thereof, in accordance with
the provisions of this Agreement, shall have been delivered to Agent identifying
the name of any successor or assignee Lender. Agent shall be entitled to fail or
refuse, and shall be fully protected in failing or refusing, to take any action
under this Agreement or the other Loan Documents unless (a) it first shall
receive such advice or concurrence of the Lenders as it deems appropriate, or
(b) it first shall be indemnified to its satisfaction by the Lenders against any
and all liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. In all cases Agent shall be fully protected
in acting, or in refraining from acting, under this Agreement or the other Loan
Documents in accordance with a request of the Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future Lenders.
XI.5 Notice of Default. Agent shall not be deemed to have knowledge or
-----------------
notice of the occurrence of any Default or Event of Default unless Agent has
received notice from a Lender or Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"Notice of Default." If Agent receives such a notice or if the officers of
Agent administering the Revolving Loan and the Term Loan have actual knowledge
of the occurrence of a Default or an Event of Default, Agent promptly shall give
notice thereof to the Lenders. Agent shall take such action with respect to
such Default or Event of Default (unless such Default or Event of Default is
waived in accordance with the provisions of Section 13.1) as shall be directed
by the Requisite Lenders; provided, that if the Requisite Lenders do not provide
--------
directions to Agent within a reasonable period of time after the occurrence of
an Event of Default, then Agent shall notify Borrower that the Obligations have
been accelerated and unless and until Agent shall have received such directions,
Agent may (but shall not be obligated to) take such additional action, or
refrain from taking such additional action, with respect to such Default or
Event of Default as it deems advisable in the best interests of Lenders.
XI.6 Non-Reliance on Agent and the Other Lenders. Each Lender expressly
-------------------------------------------
acknowledges that neither Agent nor any of its officers, directors, employees,
agents, attorneys, or Affiliates has made any representations or warranties to
it. Agent shall have no obligation or liability to any of the Lenders regarding
the creditworthiness or financial condition of Borrower. No act by Agent
hereinafter taken, including any review of Borrower, shall be deemed to
constitute any representation or warranty by Agent to any Lender. Each Lender
represents to Agent that, independently and without reliance upon Agent or any
other Lender and based on such documents and information as it has deemed
appropriate, it has made its own appraisal of and investigation into the
business, operations, property, financial, and other condition and
creditworthiness of Borrower and has made its own decision to make its Revolving
Advances, the Term Loan and to incur Letter of Credit Obligations hereunder and
to enter into this Agreement. Each Lender also represents that, independently
and without reliance upon Agent or any other Lender, and based on such documents
and information as it deems appropriate at the time, it shall continue to make
its own credit analysis, appraisals, and decisions in taking or not taking
action under this Agreement and the other Loan Documents and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition, and creditworthiness of
Borrower. Except for notices, reports and other documents expressly required to
be furnished to Lenders by Agent hereunder, Agent shall have no obligation or
liability to provide any Lender with any credit or other information concerning
the business, operations, property, financial and other condition or
creditworthiness of Borrower which may come into the possession of either of
Agent or any of its officers, directors, employees, agents, attorneys-in-fact,
or Affiliates.
XI.7 Indemnification. Each of the Lenders shall indemnify, defend, and
---------------
hold harmless Agent in its capacity as such (to the extent not reimbursed by
Borrower and without limiting the obligation of Borrower to do so), ratably
according to their respective Percentages, from and against any and all claims,
demands, lawsuits, costs, expenses, fees, liabilities, obligations, losses,
damages, actions, recoveries, judgments, suits, costs, expenses, or
disbursements of any kind whatsoever, including interest, penalties, and
reasonable attorneys' fees and costs, whether direct, indirect, consequential or
incidental, which at any time (including at any time following the payment of
the Revolving Notes and Term Notes and all other amounts payable hereunder or
thereunder) may be imposed on, incurred by, or asserted against Agent in any way
relating to, resulting from or arising out of this Agreement or the other Loan
Documents, the
transactions contemplated hereby or any action taken or omitted by the Agent
under or in connection with any of the foregoing; provided, that no
--------
Lender shall be liable for the payment of any portion of such claims, demands,
lawsuits, costs, expenses, fees, liabilities, obligations, losses, damages,
actions, remedies, judgments, suits, costs, expenses, or disbursements to the
extent such result from Agent's gross negligence or willful misconduct. The
agreements in this Section 11.7 shall survive the payment of the Revolving Notes
and all other amounts payable hereunder and thereunder and shall be in addition
to and not in lieu of any other indemnification agreements set forth in the Loan
Documents.
XI.8 Payments. If, in the opinion of Agent, the distribution of any
--------
amount received by Agent in such capacity under this Agreement or the other Loan
Documents might result in liability for Agent, Agent may refrain from making the
distribution thereof until Agent's right to make such distribution shall have
been adjudicated by a court of competent jurisdiction. If Agent so refrains
from making any distribution, the amount thereof shall be held in an interest
bearing account for the benefit of the Person or Persons ultimately determined
to be entitled to such distribution. If a court of competent jurisdiction shall
adjudge that any amount received from and distributed by Agent in such capacity
as Agent is to be repaid, each Person to whom any such distribution shall have
been made either (a) shall repay to Agent its proportionate share of the amount
so adjudged to be repaid or (b) shall repay the same in such manner and to such
Persons as shall be determined by such court.
XI.9 Agent in Its Individual Capacity. The Agent in its individual
--------------------------------
capacity, and its Affiliates, may make loans and other financial accommodations
to, accept deposits from and generally engage in any kind of business with
Borrower as though Agent was not the Agent hereunder, subject only to such
restrictions as are generally applicable to all Lenders. With respect to the
portion of the Revolving Loan and Term Loan made by it and the Letter of Credit
Obligations incurred by it and its Revolving Note and Term Note, the Agent in
its individual capacity shall have the same benefits, rights, powers, and
privileges under this Agreement and the other Loan Documents as any Lender and
may exercise the same as though it were not Agent, and the terms "Lender,"
"Lenders," "Revolving Lender," "Revolving Lenders," "Term Lender" and "Term
Lenders" shall include the Agent in its individual capacity.
XI.10 Successor Agent. Agent may resign as such upon ten (10) days'
---------------
prior written notice to the Lenders or the Requisite Lenders may terminate Agent
upon ten (10) days' written notice. If Agent shall resign or be terminated as
such under this Agreement, then the Requisite Lenders shall appoint from among
Lenders a successor agent for Lenders. Upon acceptance of its appointment as
successor agent, (a) such successor agent shall succeed to the rights, powers,
privileges, and duties of Agent, (b) the retiring Agent shall be discharged of
all its obligations and liabilities in such capacity under this Agreement and
the other Loan Documents, (c) the term "Agent" shall mean such successor agent
effective upon its appointment, and (d) the retiring Agent's rights, powers, and
duties as Agent shall be terminated, without any other or further act or deed on
the part of such former Agent or any of the parties to this Agreement. After
any retiring Agent's resignation or termination hereunder as Agent, the
provisions of this Article XI shall continue to inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement.
XI.11 Applicability of this Article to Borrower. Notwithstanding any
-----------------------------------------
other provision contained in this Article XI, the rights and obligations of
Borrower under this Agreement shall not be affected by any provision otherwise
included in this Article XI. The Borrower shall be permitted to rely on
communications from Agent which it reasonably believes are made on behalf of
Agent and, if specified therein, Lenders or the Requisite Lenders, and except as
otherwise set forth specifically herein, all notices and payments to be made by
Borrower hereunder shall be made to Agent. Further, if any Lender shall be in
default hereunder, such default shall not affect the right and obligations of
Borrower hereunder.
XI.12 Agent's Authority To Equalize Percentages of Revolving Lenders.
--------------------------------------------------------------
It is the intent of the Revolving Lenders that the risk exposure of each
Revolving Lender with respect to the Revolving Loan and the Swingline Loan shall
be equal to such Lender's Percentage. If an Event of Default shall occur and
the principal balance of the Revolving Loan held by each Revolving Lender
differs from such Revolving Lender's Percentage of the Revolving Loan (due to
the fact that each Revolving Lender's Initial Percentage is different from each
Revolving Lender's Percentage, due to a Revolving Lender's having failed to
fund, or due to other reasons), Agent shall take such actions as Agent considers
appropriate under the circumstances so that the principal balance of the
Revolving Loan held by each Revolving Lender is equal to such
Lender's Percentage of the Revolving Loan. To accomplish such equality, Agent
may instruct one or more Revolving Lenders to wire transfer funds to one or more
other Revolving Lenders and Revolving Lenders agree to comply with such
instructions. In addition, Agent may take such other actions as are necessary to
accomplish such equality.
ARTICLE XII.
ASSIGNMENTS AND PARTICIPATIONS
------------------------------
XII.1 Successors and Assigns. This Agreement and the other Loan
----------------------
Documents shall be binding on and shall inure to the benefit of Borrower, Agent,
Lenders and their respective successors and assigns, except as otherwise
provided herein or therein. Borrower may not assign, transfer, hypothecate, or
otherwise convey its rights, benefits, obligations, or duties hereunder or
thereunder without the prior express written consent of Lenders. Any purported
assignment, transfer, hypothecation, or other conveyance by Borrower without the
prior express written consent of all of the Lenders shall be void. Neither
Agent nor any of Lender may sell, assign, transfer, grant a participation in, or
otherwise dispose of all or any portion of its interest in this Agreement, the
Revolving Notes, the Term Notes or the other Loan Documents except as expressly
provided herein.
XII.2 Assignments.
-----------
(a) Conditions for Assignment. Each Lender may assign all or a
-------------------------
portion of its right, title, and interest under this Agreement and the other
Loan Documents (including all or a portion of the Revolving Loan or the Term
Loan at the time owing to it) to one or more banks or other financial
institutions; provided, that (a) the assignees shall execute and deliver to the
--------
Agent an "Assignment and Acceptance" in a form reasonably satisfactory to Agent
and pay to Agent a processing fee of Three Thousand Five Hundred Dollars
($3,500), (b) a Lender may not assign any interest without the prior approval of
Agent and Borrower, which approval shall not be unreasonably withheld and, in
the case of Borrower, shall not be required if Agent determines that assignments
are necessary for the successful syndication of the Loans or if an Event of
Default shall have occurred and been continuing for thirty (30) days, (c) the
assignment shall be for an amount not less than the lesser of (i) all of such
Lender's Revolving Advances, (ii) all of such Lender's Term Loan or (iii) unless
otherwise consented to by Agent and Borrower, Ten Million Dollars ($10,000,000),
(d) after giving effect to such assignment, such Lender shall continue to hold
an interest in the Revolving Loan or the Term Loan, as the case may be, of not
less than Ten Million Dollars ($10,000,000) unless such assignment is an
assignment of all of such Lender's interest, (e) Pacific Coast shall not assign
any portion of the Term Loan held by it if as a result of such assignment the
aggregate Percentage held by Pacific Coast (including that portion of the Term
Loan participated by Pacific Coast to other farm credit institutions) shall be
less than the amount necessary to constitute the Requisite Lenders with respect
to the Term Loan, (f) Pacific Coast shall not assign any portion of the
Revolving Loans held by it (except for participations granted by Pacific Coast
to other farm credit institutions) if such assignment would cause the aggregate
Percentage of the Revolving Loan held by Pacific Coast to be less than twenty-
five and one-half percent (25.5%), and (g) Bank of America shall not assign any
portion of the Revolving Loans held by it if such assignment would cause the
aggregate Percentage of the Revolving Loan held by Bank of America to be less
than twenty-five and one-half percent (25.5%).
(b) Replacement of Transferor Lender by Assignee. Upon the sale,
--------------------------------------------
assignment, transfer or other disposition (other than the sale of a
participation) of any of a Lender's right, title, and interest under this
Agreement and the other Loan Documents to any assignee in accordance with this
Section 12.2, then upon the execution, delivery, and acceptance of the
Assignment and Acceptance, from and after the effective date specified therein,
(a) the transferor Lender no longer shall be a party to this Agreement and the
other Loan Documents, or have the rights, benefits, and obligations under this
Agreement or the other Loan Documents to the extent of the interest transferred
(except for such rights, benefits, and obligations that such Lender would retain
under this Agreement or the other Loan Documents upon payment in full of the
Obligations) and (b) the assignee shall become a Lender, shall succeed to the
rights and benefits and assume the obligations of such transferor Lender
hereunder and thereunder to the extent of the interest transferred.
(c) Borrower's Cooperation. Borrower hereby agrees that it shall (i)
----------------------
execute and deliver, at the reasonable request of Agent, any amendment to any
Loan Document to effectuate the provisions of this Section 12.2 and (ii) use
reasonable efforts to assist and cooperate with each Lender in any manner
reasonably requested by such Lender to effect the sale of participations in or
assignments of any of the Loan Documents or of any portion thereof or interest
therein, including assistance in the preparation of appropriate disclosure
documents or placement memoranda and provision of complete and correct
information describing Borrower and its affairs to potential participants and
assignees. Borrower will not be obligated to incur or reimburse Lenders for any
direct out-of-pocket costs or expenses in connection with any such assignment,
resale, syndication, or participation except for expenses incurred by Pacific
Coast in selling participations on or about the Closing Date to CoBank, ACB,
Agribank, FCB, and other entities that are part of the Farm Credit System, all
of which shall be payable on the same terms and in the same manner as other
expenses incurred by Pacific Coast.
(d) Pledge of Rights. Notwithstanding any other provision in this
----------------
Agreement, any Lender may at any time create a security interest in, or pledge,
all or any portion of its rights under and interest in this Agreement in favor
of any entity to which all loans of this type are secured or pledged, including
any Federal Reserve Bank in accordance with Regulation A of the Federal Reserve
Board or U.S. Treasury Regulation 31 CFR (S) 203.14, and such entity or Federal
Reserve Bank may enforce such pledge or security interest in any manner
permitted under applicable law.
XII.3 Participations. Any Lender may grant one or more participations
--------------
in its interest in the Revolving Loan and Term Loan to one or more financial
institutions and without the consent of Borrower; provided, that (a) such Lender
--------
shall remain a "Lender" for all purposes under this Agreement and such Lender
shall not be relieved of any of its duties under this Agreement, (b) any such
grant of a participation will be made in compliance with all applicable state or
federal laws, rules, and regulations, and (c) the participation shall be for an
amount not less than Five Million Dollars ($5,000,000), (d) after giving effect
to such participation, such Lender shall continue to hold an interest in the
Revolving Loan or the Term Loan, as the case may be, of not less than Five
Million Dollars ($5,000,000), and (e) except for the participation being granted
by Pacific Coast to CoBank, ACB, and any subparticipations entered into by
CoBank, ACB, which shall not be subject to any restrictions, no Lender shall
grant any participation under which the participant shall have rights to approve
any amendment to, waiver of, or consent under this Agreement or the Loan
Documents, except for those that require approval of all Lenders as provided in
Section 13.1. (Nothing in the foregoing shall be construed as making CoBank,
ACB or any subparticipant of CoBank, ACB a "Lender" under this Agreement and
none of such entities shall be considered "Lenders.") The participant shall not
have any rights under this Agreement or any of the other Loan Documents entered
into in connection herewith (the participant's right against such Lender in
respect of such participation to be those set forth in the participation or
other agreement executed by such Lender and the participant relating thereto)
and all amounts payable to any Lender hereunder shall be determined as if such
Lender had not sold such participation; provided that each participant shall be
entitled to all of the protections afforded to Lenders under Sections 2.13 and
2.14 (but only to the extent the cost of such protections to Borrower does not
exceed the cost that would apply to the Lender if no participation had been
sold) and all references in such sections to Lenders shall also refer to all
participants. In no event shall any participant grant a participation in its
participation interest in a Revolving Advance or in the Term Loan without the
prior written consent of Agent.
XII.4 Disclosure. In connection with any assignments, participations,
----------
or offers therefor pursuant to this Article XII, each Lender shall be entitled
to provide to any assignee or participant or prospective assignee or participant
such information pertaining to Borrower as such Lender may deem appropriate or
such assignee or participant or prospective assignee or participant may request;
provided, that such assignee or participant or prospective assignee or
--------
participant shall agree (a) to treat in confidence such information, (b) not to
disclose such information to any third party, and (c) not to make use of such
information for purposes of transactions other than contemplated by such
assignment or participation.
ARTICLE XIII.
MISCELLANEOUS
-------------
XIII.1 Complete Agreement; Modification of Agreement; Consents and Waivers.
-------------------------------------------------------------------
The Loan Documents constitute the complete agreement between the parties with
respect to the subject matter hereof and may not be modified, altered, or
amended except by an agreement in writing executed by Borrower and the Requisite
Lenders, except as provided below. No amendment or waiver of any provision of
this Agreement or any Loan Document, nor consent to any departure by Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and executed by the Requisite Lenders. Notwithstanding any other provision of
this Agreement, but subject to the following sentence, whenever this Agreement
requires the approval or consent of "Lenders," such approval or consent shall
only require approval or consent from the Requisite Lenders. Notwithstanding
the foregoing provisions of this Section 13.1, to the extent an amendment,
consent, or waiver would do any of the following, it shall not be effective
unless executed by all of the Lenders: (i) extend the final maturity date for
payment of the Revolving Loan or the Term Loan or the due date for any
installment payment of principal with respect to the Term Loan; (ii) reduce the
interest rate or extend the time of payment of interest (other than interest
payable in connection with mandatory prepayments under Section 2.3) or Fees
payable under this Agreement or reduce the amount of principal or Fees payable
under this Agreement; (iii) change the amount of the Maximum Revolving Loan;
(iv) change the definitions of Borrowing Base or Fixed Assets (or any defined
term used therein) or make any change in Sections 2.3 or 10.3; (v) release all
or a substantial portion of the Collateral or release a material Guarantor; (vi)
change the definition of "Requisite Lenders" or change this Section 13.1; (vii)
subordinate the priority of any lien or security interest covering a material
portion of collateral; (viii) make a material change in any indemnity provided
to any Lender; and (ix) increase the interest rate or fees under, accelerate the
payment of any portion of, or modify or waive the subordination provisions with
respect to, the Subordinated Debt. Notwithstanding the foregoing, (i) any
amendment that would result in a change in the duties, rights, or obligations of
Agent shall not be effective unless signed by Agent, and (ii) any provision of
this Agreement setting forth rights and duties of Lenders vis-a-vis each other
or the rights and duties of Lenders vis-a-vis Agent may be modified by Lenders
and Agent without the consent of Borrower.
XIII.2 Fees and Expenses. Borrower shall reimburse Agent and Lenders
-----------------
(but in the case of Lenders, except for clauses (a) and (b) below, only to the
extent such are incurred after the occurrence of a Default or Event of Default)
for all reasonable fees, costs, and expenses incurred in connection with:
(a) the preparation and negotiation of the Loan Documents (including
the reasonable fees and expenses of internal counsel, and, with respect to Agent
only, appraisers and consultants, retained in connection with the Loan Documents
and the transactions contemplated thereby and advice in connection therewith);
or
(b) any amendment, modification, or waiver of, or consent with respect
to, any of the Loan Documents; or
(c) in the case of Agent only, any advice in connection with the
administration of the Revolving Loan, the Term Loan, this Agreement, any Loan
Document, or the Collateral, or the performance of Agent's duties under the Loan
Documents; or
(d) any litigation, contest, dispute, suit, proceeding, or action
(whether instituted by any Lender, Borrower or any other Person) in any way
relating to the Collateral, any of the Loan Documents or any other agreements to
be executed or delivered in connection therewith or herewith, including any
litigation, contest, dispute, suit, case, proceeding or action, and any appeal
or review thereof, in connection with a case commenced by or against Borrower or
any other Person that may be obligated to any Lender by virtue of this
Agreement, or the other Loan Documents, under the Bankruptcy Code, or any other
applicable federal, state or foreign bankruptcy or other similar law (including
the seeking of relief from the automatic stay or proposal of opposition to a
plan of reorganization); or
(e) any attempt to enforce any rights of Agent or any Lender against
Borrower or any other Person that may be obligated to any Lender by virtue of
any of the Loan Documents; or
(f) any attempt to (i) monitor the Revolving Loan or Term Loan, (ii)
evaluate, observe, assess Borrower or its affairs, and (iii) verify, protect,
evaluate, assess, appraise, collect, sell, liquidate or otherwise dispose of the
Collateral, including environmental and field inspections;
then, in any such event, the reasonable attorneys' and other professional and
service providers' fees (including internally-allocated costs of in-house
counsel) arising from such services, including those of any appellate
proceedings, and all expenses, costs, charges, and other fees incurred by such
counsel and others in any way or respect arising in connection with or relating
to any of the events or actions described in this Section 13.2, shall be
payable, on demand, by Borrower to Agent and shall be additional Obligations
secured under this Agreement and the other Loan Documents by all of the
Collateral. Without limiting the generality of the foregoing, such expenses,
costs, charges and fees may include: paralegal fees, costs and expenses;
accountants', environmental advisors', appraisers' and investment bankers' fees,
costs and expenses; management and other consultants' fees, costs and expenses;
court costs and expenses; photocopying and duplicating expenses; court reporter
fees, costs and expenses; long distance telephone charges; air express charges;
telegram charges; secretarial overtime charges; and expenses for travel, lodging
and food paid or incurred in connection with the performance of such legal or
other advisory services.
XIII.3 Access and Annual Audit.
-----------------------
(a) Access. Borrower shall provide access to Agent (and if requested
------
by Agent, to any Lender as well) and any of its officers, employees, and agents,
or cause to be provided access to Agent and any of its officers, employees
and/or agents, exercisable as frequently as Agent reasonably determines to be
appropriate, upon reasonable advance notice (unless an Event of Default shall
have occurred and be continuing, in which event no notice shall be required and
Agent shall have access at any and all times), during normal business hours (or
at such other times as may reasonably be requested by Agent), to inspect the
properties and facilities of Borrower and to inspect, audit, and make extracts
from all of Borrower's records, files, and books of account. Borrower shall
make available to Agent and its counsel, as quickly as practicable under the
circumstances, originals or copies of all books, records, board minutes,
contracts, insurance policies, environmental audits, business plans, files,
financial statements (actual and pro forma), filings with federal, state and
local regulatory agencies, and other instruments and documents which Agent may
request. Borrower shall deliver any document or instrument reasonably necessary
for Agent, as it may from time to time request, to obtain records from any
service bureau maintaining records for Borrower, and shall maintain duplicate
records or supporting documentation on media, including computer tapes and discs
owned by Borrower. Prior to the occurrence of a Default or Event of Default,
upon the request of Agent and approval of such request by Borrower, which
approval shall not unreasonably be withheld, Borrower shall instruct any banking
or other financial institution to make available to Agent such information and
records as Agent may reasonably request. Following the occurrence of a Default
or Event of Default, Borrower shall instruct all of its banking and other
financial institutions to make available to Agent such information and records
as Agent may reasonably request. Without limiting the generality of the
foregoing, Borrower will permit Agent and/or any industry consultant acceptable
to Agent to inspect, review and evaluate Borrower's wine inventory, at
Borrower's locations and at premises not owned by or leased to Borrower upon
request by Agent.
(b) Annual Audit. If Agent, in its sole discretion, shall decide to
------------
do an annual audit concerning Borrower's business, Borrower shall cooperate with
Agent in Agent's performance of such annual audit. In addition to other Fees
payable to Agent hereunder, Borrower shall reimburse Agent for the cost of
performing such audit (which may include internally-allocated costs of Agent or
any Lender) in an amount not to exceed Twenty Thousand Dollars ($20,000) per
audit. In conducting such audit, Agent may utilize the services of and be
accompanied by one or more Lenders.
XIII.4 Set-off; Sharing; Limitation on Swap Lender.
-------------------------------------------
(a) Setoff. In addition to any rights and remedies of Agent and any
------
Lender provided by law, each Lender shall have a security interest in any and
all deposits of Borrower (general or special, time or demand, provisional or
final) at any time held by any Lender which security interest shall secure the
Obligations. Upon the occurrence and during the continuance of an Event of
Default, provided that it has first received the written consent of Agent,
without prior notice to Borrower (any such notice being specifically waived by
Borrower to the fullest extent permitted by applicable law), each Lender may set
off and apply against any Obligations, whether matured or unmatured, of Borrower
to such Lender, any amount owing from the Lender to Borrower. No Lender shall
exercise any right of set-off it may have against any Borrower or any Guarantor
in connection with the Obligations without the prior written consent of Agent or
as provided in Section 13.4(d). Each Lender promptly shall notify Borrower and
Agent after any such setoff and application made by any such Lender; provided,
--------
that failure to give such notice shall not affect the validity of such setoff
and application.
(b) Sharing. Each Lender agrees that to the extent that it shall
-------
receive or shall have received or collected, in respect of any of the
Obligations (other than the Swap Lender in respect of the Swap Loss Obligations
prior to the Swap Loss Adjustment Date), any payment or distribution of any cash
or other property of Borrower or any Guarantor at any time, including by payment
or distribution from Borrower or any Guarantor, by exercise of any right of set-
off or counterclaim, by liquidation of Collateral, as a distribution in a
bankruptcy, insolvency, or similar proceeding or otherwise, and any such payment
or distribution results in such Lender's receiving or having received more than
it would otherwise be entitled to receive under this Agreement such Lender shall
promptly deliver the same to Agent in cash or the form received (except for the
endorsement or the assignment of or by such Lender where necessary), and Agent
shall promptly distribute the same to all Lenders in the same manner as if it
were a payment to be distributed pursuant to this Agreement, and until so
delivered, the same shall be held in trust by such Lender as property of all
Lenders.
(c) Returned Payments. Each Lender agrees that to the extent that any
-----------------
payment or other transfer made under this Agreement on account of the principal
portion of any Obligations (other than the Swap Lender in respect of the Swap
Loss Obligations prior to the Swap Loss Adjustment Date) shall be recovered (a
"Returned Payment") from any Lender pursuant to any preference, fraudulent
transfer, or similar provision under any bankruptcy, insolvency, or similar law
or otherwise, each other Lender shall purchase from such Lender a participation
in its Percentage of such Returned Payment. To the extent that any Lender is
required by the provisions of this Section 13.4(c) to purchase a participation
from one or more other Lenders, such purchase shall be effected by (i) the
payment to Agent by the Lender making such purchase of the amount required to be
paid, and (ii) Agent's distribution of the amount or amounts required to be paid
to the respective Lender or Lenders from whom such purchase is required to be
made. Borrower agrees, to the fullest extent it may effectively do so under
applicable law, that any holder of a participation in any Obligations, whether
or not acquired pursuant to the foregoing arrangements, may exercise any rights
of set-off or counterclaim and other rights with respect to such participation
as fully as if such holder of a participation were a direct creditor of Borrower
in the amount of such participation.
(d) Special Provisions Regarding Swap Lender's Exercise of Rights
-------------------------------------------------------------
Under Swap Agreement. If Borrower shall default in its obligations to the Swap
--------------------
Lender under the Swap Agreement, the Swap Lender may exercise such rights and
remedies as are available to it under the Swap Agreement; provided that (i) the
Swap Lender shall not obtain a judgment against Borrower with respect to any
Swap Loss Obligations, and (ii) the Swap Lender shall not exercise any rights of
set off against Borrower with respect to any Swap Loss Obligations.
Notwithstanding the foregoing, the Swap Lender may (x) enforce the arbitration
provision, if any, of the Swap Agreement to establish the amount of the Final
Swap Loss Obligations so long as no judgment is entered with respect to such
determination, and (y) exercise rights of set off with respect to Swap Loss
Obligations, but only as permitted under Section 13.4(a) or if the Swap Lender
has provided to Agent and Lenders an indemnity, in form and substance
satisfactory to Agent, from all losses or damages caused to Agent and Lenders
arising out of such exercise of setoff rights.
XIII.5 No Waiver by Agent or Lenders. Agent's or Lenders' failure, at
-----------------------------
any time or times, to require strict performance by Borrower of any provision of
this Agreement and any of the other Loan Documents shall not waive, affect, or
diminish any right of Agent or Lenders thereafter to demand strict
compliance and performance therewith. Any suspension or waiver by Agent or
Lenders of an Event of Default by Borrower under the Loan Documents shall not
suspend, waive, or affect any other Event of Default by Borrower under this
Agreement and any of the other Loan Documents whether the same is prior or
subsequent thereto and whether of the same or of a different type. None of the
undertakings, agreements, warranties, covenants, and representations of Borrower
contained in this Agreement or any of the other Loan Documents and no Default or
Event of Default by Borrower under this Agreement and no defaults by Borrower
under any of the other Loan Documents shall be deemed to have been suspended or
waived by Agent or Lenders, unless such suspension or waiver is by an instrument
in writing signed by an officer of Agent or Lenders, as the case may be, and
directed to Borrower specifying such suspension or waiver.
XIII.6 Remedies. Agents and Lenders' rights and remedies under this
--------
Agreement shall be cumulative and nonexclusive of any other rights and remedies
which Agent or any Lender may have under any other agreement, including the Loan
Documents, by operation of law or otherwise. Recourse to the Collateral shall
not be required.
XIII.7 Severability. Wherever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
XIII.8 Parties. This Agreement and the other Loan Documents shall be
-------
binding upon, and inure to the benefit of, the successors of Borrower, each
Lender and the assigns, transferees and endorsees of each Lender.
XIII.9 Conflict of Terms. Except as otherwise provided in this
-----------------
Agreement or any of the other Loan Documents by specific reference to the
applicable provisions of this Agreement, if any provision contained in this
Agreement is in conflict with, or inconsistent with, any provision in any of the
other Loan Documents, the provision contained in this Agreement shall govern and
control.
XIII.10 Authorized Signature. Unless Agent shall be notified by
--------------------
Borrower the contrary, the signature upon any document or instrument delivered
pursuant hereto by any officer or Authorized Financial Representative of
Borrower shall bind Borrower and be deemed to be the act of Borrower affixed
pursuant to and in accordance with resolutions duly adopted by Borrower's Board
of Directors.
XIII.11 GOVERNING LAW. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY
-------------
OF THE LOAN DOCUMENTS AND EXCEPT FOR MATTERS ARISING UNDER THE SWAP AGREEMENT
BETWEEN BORROWER AND THE SWAP LENDER, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS
ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND
PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES THEREOF REGARDING
CONFLICT OF LAWS, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
BORROWER HEREBY CONSENTS AND AGREES THAT THE SUPERIOR COURTS OF SAN FRANCISCO
COUNTY, CALIFORNIA, OR, AT AGENT'S OPTION, THE UNITED STATES DISTRICT COURT FOR
THE NORTHERN DISTRICT OF CALIFORNIA, SHALL HAVE NON-EXCLUSIVE JURISDICTION TO
HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDERS
PERTAINING TO THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS
AGREEMENT. BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH
JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER
HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL
JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE
----- --- ----------
GRANTING FOR SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH
COURT. BORROWER HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT, AND
OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN SECTION 13.12 OF THIS
AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF
BORROWER'S ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S.
MAILS, PROPER POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO PRECLUDE ANY LENDER OR BORROWER FROM BRINGING SUIT OR TAKING OTHER
LEGAL ACTION IN ANY OTHER JURISDICTION.
XIII.12 Notices. Except as otherwise provided herein, whenever it is
-------
provided herein that any notice, demand, request, consent, approval,
declaration, or other communication shall or may be given or delivered to or
served upon any of the parties by another, or whenever any of the parties
desires to give or deliver or serve upon another any communication with respect
to this Agreement, each such notice, demand, request, consent, approval,
declaration, or other communication shall be in writing, shall be addressed to
the addresses set forth below, or such other or additional address as the
parties may notify each other of in writing, and shall be deemed to have been
sent, delivered, or given and received upon the earlier of: (a) if by
facsimile, upon transmission if transmission occurs between 8:00 a.m. and 5:00
p.m. on any Business Day; (b) if by Federal Express or other overnight or one-
day mail or delivery service, on the next Business Day following deposit with
such delivery service; (c) if by personal delivery, upon completion of delivery;
or (d) if by mail, three (3) Business Days after deposit in the U.S. Mail, first
class, postage prepaid :
(a) If to Pacific Coast, as a Lender or as Agent, at:
Pacific Coast Farm Credit Services
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. O'Day
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Pacific Coast Farm Credit Services
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Pacific Coast Farm Credit Services
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Account Officer/▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Bank of America, at
Bank of America NT&SA
Santa ▇▇▇▇ Commercial Banking Group 1498
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Account Officer for ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to GE Capital, at:
General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Account Officer for ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
General Electric Capital Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Legal Department/▇▇▇▇▇▇▇▇ Loan
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(d) If to Rabobank, at:
Rabobank Nederland
c/o Rabo Support Services, Inc.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Services
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
Rabobank Nederland
▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Account Officer for ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(e) If to ▇▇▇▇▇▇, at:
▇▇▇▇▇▇ Trust and Savings Bank
San Francisco ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Account Officer for ▇▇▇▇▇▇▇▇
Facsimile: 415/397-1888
With copies to:
▇▇▇▇▇▇ Trust and Savings Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Account Officer for Beringer
Facsimile: 312/293-4798
(f) If to ABN, at:
ABN AMRO Bank N.V.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Account Officer for Beringer
Facsimile: 415/362-3524
(g) If to Credit Agricole, at:
Credit Agricole Indosuez
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Account Officer for Beringer
Facsimile: 312/372-3455
(h) If to Borrower, at:
▇▇▇▇▇▇▇▇ Wine Estates Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇ Wine Estates Company
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Legal Department
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copies, but only if the document being delivered is a
notification of the occurrence of an Event of Default or a notice delivered
after the occurrence and during the continuation of an Event of Default,
to:
Texas Pacific Group
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇. ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Texas Pacific Group
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Failure or delay in delivering
copies of any notice, demand, request, consent, approval, declaration, or other
communication to the persons designated above to receive copies shall in no way
adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration, or other communication.
XIII.13 Survival. The representations and warranties of Borrower in
--------
this Agreement shall survive the execution, delivery and acceptance hereof by
the parties hereto and the closing of the transactions described herein or
related hereto.
XIII.14 Section Titles. The Section titles and Table of Contents
--------------
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
XIII.15 Counterparts. This Agreement may be executed in any number of
------------
separate counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute one and the same instrument.
XIII.16 Performance Always Due on Business Day. To the extent that any
--------------------------------------
date under this Agreement is not a Business Day, then the payment or performance
due on such day shall be due on the next Business Day.
XIII.17 MUTUAL WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN
---------------------------
CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY
RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE
STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES
DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS.
THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL
SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
XIII.18 Revival of Obligations.
----------------------
(a) Revival of Obligations. If any payment received by Agent or
----------------------
Lenders from any source on account of the Obligations (other than Swap Loss
Obligations prior to the Swap Loss Adjustment Date), or any portion of Agent's
or any Lender's interest in any Collateral which has been applied by Agent or
Lender in satisfaction of any Obligations (a "Contested Payment"), is (before or
after the Revolving Loan Maturity Date or the Term Loan Maturity Date and
regardless of whether payment has been made hereunder) held to be invalid, set
aside, void or avoidable, or subject to any setoff, recoupment, or counterclaim,
due to any cause of action asserted by Borrower or Borrower's creditors or
trustee in bankruptcy for any reason, including preference, fraudulent
conveyance, breach of contract, or tort, or any portion of such Contested
Payment is rescinded, returned, assigned, or reconveyed by Agent or any Lender
due to any such holding, then the Obligations shall be revived, and continued in
effect without reduction or discharge for the Contested Payment to the extent of
such rescission, return, assignment, or reconveyance by Agent or Lender, until
payment in full of the Obligations.
(b) Contested Payments. The determination whether any Contested
------------------
Payment is or should be rescinded, returned, assigned, or reconveyed shall be
made by Agent and Lenders in their sole discretion, provided, that if Agent and
--------
Lenders choose not to contest any such rescission, return, assignment, or
reconveyance, Agent shall so notify Borrower in writing and any guarantor of the
Obligations (but only such obligors as are not then a debtor under any case
under the Bankruptcy Code) and such obligor may, in its sole discretion, accept
tender of defense of such rescission, return, assignment, or reconveyance, upon
the following terms and conditions:
(i) within thirty (30) days after receipt of such notice from
Agent, the obligor shall notify Agent in writing of acceptance of tender of
defense of such rescission, return, assignment, or reconveyance (upon such
notice to Agent, the obligor shall become a "Contesting Obligor");
(ii) the Contesting Obligor shall, at its own cost, expense,
and risk, institute and diligently prosecute any legal action or proceeding as
may be necessary to contest such rescission, return, assignment, or
reconveyance, and shall pay and or satisfy any money judgment that may be
entered against Agent or Lenders in connection therewith;
(iii) the Contesting Obligor shall indemnify and hold Agent and
Lenders harmless from and against all costs and expenses, including reasonable
fees and expenses of attorneys, accountants, appraisers, and other professionals
which are expended or incurred by Agent in connection with such contest,
including in any litigation with respect thereto; and
(iv) the Contesting Obligor shall provide Agent with adequate
assurance of its financial and legal ability to perform under this Section
13.18(b).
If no obligor timely accepts tender of defense as a Contesting Obligor, or upon
the failure of any of the other terms and conditions set forth above, Agent and
Lenders may, in their sole discretion, rescind, return, assign, or reconvey such
Contested Payment. Any rescission, return, assignment, or reconveyance by
Agent or Lenders whether or not in connection with any action, proceeding,
settlement, or determination pursuant to this Section 13.18(b) shall cause the
Obligations to be revived as provided by Section 13.18(a).
XIII.19 Time of the Essence. Time is of the essence in every provision
-------------------
of this Agreement.
XIII.20 No Third Party Beneficiaries. This Agreement is made and
----------------------------
entered into for the sole protection and benefit of the parties hereto and their
respective permitted successors and assigns, and no other Person shall be a
third party beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any other Loan Document.
XIII.21 Payments in Immediately Available Funds. All payments
---------------------------------------
required to made under this Agreement shall be made in immediately available
funds.
XIII.22 Waivers of Events of Default. If an Event of Default has been
----------------------------
waived by Lenders in accordance with the provisions of this Agreement, then such
Event of Default shall no longer continue as an Event of Default.
XIII.23 Confidentiality of Financial Projections. Agent and Lenders
----------------------------------------
shall use reasonable efforts to preserve the confidentiality of any financial
projections of or business plans of Borrower or any information concerning
proposed acquisitions by Borrower; provided that Agent and Lenders shall not be
restricted from providing copies of or information about such items if necessary
or appropriate to the conduct of Agent or such Lender's business, to any
regulatory authority, to any prospective assignee or participant, or to any
person pursuant to court order or subpoena.and Lenders shall use reasonable
efforts to preserve the confidentiality of any financial projections of or
business plans of Borrower or any information concerning proposed acquisitions
by Borrower; provided that Agent and Lenders shall not be restricted from
providing copies of or information about such items if necessary or appropriate
to the conduct of Agent or such Lender's business, to any regulatory authority,
to any prospective assignee or participant, or to any person pursuant to court
order or subpoena.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
▇▇▇▇▇▇▇▇ WINE ESTATES COMPANY, as Borrower
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
PACIFIC COAST FARM CREDIT SERVICES, ACA,
as a Lender and as Agent
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
BANK OF AMERICA NT&SA,
as a Lender
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
GENERAL ELECTRIC CAPITAL CORPORATION,
as a Lender
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.,
RABOBANK NEDERLAND, NEW YORK BRANCH, as a Lender
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
▇▇▇▇▇▇ TRUST AND SAVINGS BANK,
as a Lender
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
ABN AMRO BANK N.V.,
as a Lender
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
CREDIT AGRICOLE INDOSUEZ,
as a Lender
By:
--------------------------------------------
Name:
------------------------------------------
Title:
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EXHIBIT D
FORM OF NOTICE OF REVOLVING ADVANCE
-----------------------------------
--------------, ---
Pacific Coast Farm Credit Services, ACA
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Account Executive (▇▇▇▇▇▇▇▇ Wine)
---------
Re: Revolving Advance under Third Amended and Restated Credit Agreement
----------------
dated as of December 10, 1998
-----------------------------
Ladies and Gentlemen:
The undersigned, ▇▇▇▇▇▇▇▇ Wine Estates Company, a Delaware
corporation, refers to the Third Amended and Restated Credit Agreement, dated as
of December 10, 1998 (the "Credit Agreement"), among the undersigned, the
"Lenders" as defined in the Credit Agreement, and Pacific Coast Farm Credit
Services, ACA, as Agent for the Lenders (in such capacity, "Agent"), and hereby
notifies Agent, pursuant to Section 2.1 of the Credit Agreement, that the
undersigned hereby requests a "Revolving Advance," under and as defined in the
Credit Agreement and in connection therewith, sets forth the information below,
relating to such Revolving Advance:
(i) The date of the requested Revolving Advance shall be
-----------------,---;
(ii) The aggregate amount of the requested Revolving Advance is
(Dollars) ($ ); and
------------------ -----------
(iii) The requested Revolving Advance should be directed to [Bank,
address, account and wiring instructions].
The undersigned hereby certifies that the conditions contained
in Section 4.2 of the Credit Agreement are satisfied on the date hereof, and
will be satisfied on the date of the requested Revolving Advance, before and
after giving effect thereto and to the application of the proceeds therefrom,
unless waived in writing by Agent.
Very truly yours,
▇▇▇▇▇▇▇▇ WINE ESTATES COMPANY, a
Delaware corporation
By:
Name:
------------------------------------------
Title:
-----------------------------------------
EXHIBIT E
FORM OF NOTICE OF SWINGLINE ADVANCE
-----------------------------------
----------------,-----
Pacific Coast Farm Credit Services, ACA
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Account Executive (▇▇▇▇▇▇▇▇ Wine)
Re: Swingline Advance under Third Amended and Restated
Credit Agreement dated as of December 10, 1998
----------------------------------------------
Ladies and Gentlemen:
The undersigned, ▇▇▇▇▇▇▇▇ Wine Estates Company, a Delaware
corporation, refers to the Third Amended and Restated Credit Agreement, dated as
of December 10, 1998 (the "Credit Agreement"), among the undersigned, the
"Lenders" as defined in the Credit Agreement, and Pacific Coast Farm Credit
Services, ACA, as Agent for the Lenders (in such capacity, "Agent"), and hereby
notifies Agent, pursuant to Section 2.1A of the Credit Agreement, that the
undersigned hereby requests a "Swingline Advance," under and as defined in the
Credit Agreement and in connection therewith, sets forth the information below,
relating to such Swingline Advance:
(i) The date of the requested Swingline Advance shall be
----------------, ----;
(ii) The aggregate amount of the requested Swingline Advance is
(Dollars) ($ ); and
-------------------- -----------
(iii) The requested Swingline Advance should be directed to [Bank,
address, account and wiring instructions].
The undersigned hereby certifies that the conditions contained
in Section 4.2 of the Credit Agreement are satisfied on the date hereof, and
will be satisfied on the date of the requested Swingline Advance, before and
after giving effect thereto and to the application of the proceeds therefrom,
unless waived in writing by Agent.
Very truly yours,
▇▇▇▇▇▇▇▇ WINE ESTATES COMPANY, a
Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President, General Counsel
