CREDIT AGREEMENT
THIS AGREEMENT is entered into as of the 31st day of July, 1995, by and
between ▇▇▇▇ VALLEY VINEYARD ("Borrower"), a joint venture between THE CHALONE
WINE GROUP, LTD. ("Chalone") and PARAGON VINEYARD CO., INC. ("Paragon"), and
▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION ("Bank").
R E C I T A L
Borrower has requested from Bank the credit accommodations described below
(collectively the "Credits"), and Bank has agreed to provide the Credits to
Borrower on the terms and conditions contained herein. As of the date first
written above, this Agreement shall cancel and supersede that certain Agreement
between Borrower and Bank dated July 15, 1994.
NOW, THEREFORE, Bank and Borrower hereby agree as follows:
ARTICLE I
THE CREDITS
SECTION 1.1. LINE OF CREDIT.
(a) Line of Credit. Subject to the terms and conditions of this Agreement,
Bank hereby agrees to make advances to Borrower from time to time up to and
including June 15, 1996, not to exceed at any time the aggregate principal
amount of FOUR MILLION EIGHT HUNDRED THOUSAND AND NO/1OO DOLLARS ($4,800,000.00)
("Line of Credit"), the proceeds of which shall be used to assist with working
capital requirements. Borrower's obligation to repay advances under the Line of
Credit shall be evidenced by a promissory note substantially in the form of
Exhibit A attached hereto ("Line of Credit Note"), all terms of which are
incorporated herein by this reference.
(b) Borrowing and Repayment. Borrower may from time to time during the term
of the Line of Credit borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all the limitations, terms and conditions
contained herein; provided however, that the total outstanding borrowings under
the Line of Credit shall not at any time exceed the maximum principal amount
available thereunder, as set forth above.
(c) Borrowing Base. Notwithstanding any other provision of this Agreement,
the aggregate amount of all outstanding borrowings under the Line of Credit
shall not at any time exceed a maximum of (i) eighty percent (80%) of Borrower's
assigned eligible accounts receivable, as determined by Bank upon receipt and
review of such collateral reports and other documents as Bank may require; plus
(ii) fifty-five percent (55%) of the value of Borrower's bulk wine inventory;
with value of bulk wine determined in accordance with Bank's crush report; plus
(iii) fifty percent (50%) of the average FOB price of domestic bottled wine (but
not to exceed $50.00 per case); plus (iv) fifty percent (50%) of the lower of
cost or market value of imported wine; less (v) amounts due growers; in all
instances, exclusive of work in process and inventory which is obsolete,
unsalable or damaged, as determined by Bank upon receipt and review of said
collateral reports and other documents.
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Borrower acknowledges that the foregoing advance rate against eligible
accounts receivable was established by Bank with the understanding that, among
other items, the aggregate of all returns, rebates, discounts, credits and
allowances for the immediately preceding three (3) months at any time exceeds
five percent (5%) of Borrower's gross sales for said period, or if there at any
time exists any other matters, events, conditions or contingencies which Bank
reasonable believes may affect payment of any portion of Borrower's accounts,
Bank, in its sole discretion, may reduce said advance rate to a percentage
appropriate to reflect such additional dilution and/or establish additional
reserves against Borrower's eligible accounts receivable.
As used herein, "eligible accounts receivable" shall consist solely of trade
accounts which have been created in the ordinary course of Borrower's business
and upon which Borrower's right to receive payment is absolute and not
contingent upon the fulfillment of any condition whatsoever, and shall not
include:
(i) any account which is past due more than twice Borrower's standard
selling terms;
(ii) any account for which there exists any right of setoff, defense or
discount (except regular discounts allowed in the ordinary course of business to
promote prompt payment or for which any defense or counterclaim has been
asserted;
(iii) any account which represents an obligation of any state or
municipal government or of the United States government or any political
subdivision thereof (except accounts which represent obligations of the United
States government and for which Bank's forms N-138 and N-139 have been duly
executed and acknowledged);
(iv) any account which represents an obligation of an account debtor
located in a foreign country;
(v) any account which arises from the sale or lease to or performance
of services for, or represents an obligation of, an employee, affiliate,
partner, parent or subsidiary of Borrower, other than Chalone;
(vi) that portion of any account which represents interim or progress
▇▇▇▇▇▇▇▇ or retention rights on the part of the account debtor;
(vii) any account which represents an obligation of any account debtor
when twenty percent (20%) or more of Borrower's accounts from such account
debtor are not eligible pursuant to (i) above;
(viii) that portion of any account from an account debtor, other than
Chalone, which represents the amount by which Borrower's total accounts from
said account debtor except for ▇▇▇▇▇▇▇▇▇ Wine Imports during the months of May
through December exceeds twenty-five percent (25%) of Borrower's total accounts,
and during the month of May through December (inclusive) that portion of the
account from ▇▇▇▇▇▇▇▇▇ Wine Imports which represents the amount by which
Borrower's total accounts from ▇▇▇▇▇▇▇▇▇ Wine Imports exceeds fifty percent
(50*) of Borrower's total accounts;
(ix) any account deemed ineligible by Bank when Bank, in its sole
discretion, deems the creditworthiness or financial condition of the account
debtor, or the industry in which the account debtor is engaged, to be
unsatisfactory.
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SECTION 1.2. TERM LOAN.
(a) Term Loan. Bank has made a loan to Borrower in the original principal
amount of TWO HUNDRED FIFTY FOUR THOUSAND NINE HUNDRED EIGHTY-EIGHT AND N0/100
DOLLARS ($254,988.00) ("Term Loan"), with the outstanding principal balance as
of the date hereof is TWO HUNDRED TWENTY-TWO THOUSAND THREE HUNDRED FIFTY-TWO
AND NO/100 DOLLARS ($222,352.00). Borrower's obligation to repay the Term Loan
is evidenced by a promissory note in the form of Exhibit B attached hereto
("Term Note"), all terms of which are incorporated herein by this reference.
Subject to the terms and conditions of this Agreement, Bank hereby confirms that
the Term Loan remains in full force and effect.
(b) Repayment. The principal amount of the Term Loan shall be repaid in
accordance with the provisions of the Term Note.
(c) Prepayment. Borrower may prepay principal on the Term Loan at any time,
in any amount and without penalty. All prepayments of principal shall be applied
on the most remote principal installment(s) then unpaid.
SECTION 1.3. INTEREST/FEES.
(a) interest. The outstanding principal balance of the Line of Credit and
Term Note shall bear interest at the respective rates of interest set forth in
the Line of Credit Note and Term Note.
(b) Computation and Payment. Interest on the Credits shall be computed on
the basis of a 360-day year, actual days elapsed. Interest shall be payable at
the times and places set forth in the Line of Credit Note and the Term Note
(collectively, the "Notes").
(c) Line of Credit Fees. Borrower shall pay to Bank a fee for the Line of
Credit in the amount of $12,000.00 payable at the time of execution hereof.
Borrower shall additionally pay to Bank on demand all costs for the accounts
receivable and inventory audits.
SECTION 1.4. PAYMENT OF PRINCIPAL/INTEREST/FEES. Bank shall, and Borrower
hereby authorizes Bank to, debit any demand deposit account of Borrower with
Bank for all payments of principal, interest and fees as they become due on any
of the Credits. Should, for any reason whatsoever, the funds in any such demand
deposit account be insufficient to pay all principal, interest and/or fees when
due, Borrower shall immediately upon demand remit to Bank the full amount of any
such deficiency.
SECTION 1.5. COLLATERAL. As security for all indebtedness of Borrower to
Bank, Borrower grants to Bank security interests of first priority in all
Borrower's inventory, accounts receivable, general intangibles, other rights to
payment, equipment, fixtures, all Borrower's right, title and interest in and to
the trade name "▇▇▇▇ Valley Vineyard" and any and all trade name rights and/or
proprietary labels with respect thereto, and all proceeds of the foregoing.
As security for all indebtedness of Borrower to Bank, Borrower shall cause
Paragon Vineyard Co., Inc. ("Paragon") to consent to the granting to Bank by
Borrower of a security interest of first priority in Borrower's rights to the
▇▇▇▇ Valley Vineyard tradename and trademark.
All of the foregoing shall be evidenced by and subject to the terms of such
documents as Bank shall reasonably require, all in form and substance
satisfactory to Bank. Borrower shall reimburse Bank, immediately upon demand,
for all costs and expenses incurred by Bank in connection with any of the
foregoing security, including without limitation filing and recording fees and
costs of audits.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
Borrower makes the following representations and warranties to Bank, which
representations and warranties shall survive the execution of this Agreement and
shall continue in full force and effect until the full and final payment, and
satisfaction and discharge, of all obligations of Borrower to Bank subject to
this Agreement.
SECTION 2.1. LEGAL STATUS. Borrower is a joint venture duly organized and
existing and in good standing under the laws of the State of California, and is
qualified or licensed to do business, and is in good standing as a foreign
corporation, if applicable, in all jurisdictions in which such qualification or
licensing is required or in which the failure to so qualify or to be so licensed
could have a material adverse effect on Borrower.
SECTION 2.2. AUTHORIZATION AND VALIDITY. This Agreement, the Notes, and each
other document, contract and instrument required by or at any time delivered to
Bank in connection with this Agreement (with all of the foregoing referred to
herein collectively as the "Loan Documents") have been duly authorized, and upon
their execution and delivery in accordance with the provisions hereof will
constitute legal, valid and binding agreements and obligations of Borrower or
the party which executes the same, enforceable in accordance with their
respective terms.
SECTION 2.3. NO VIOLATION. The execution, delivery and performance by
Borrower of each of the Loan Documents do not violate any provision of any law
or regulation, or contravene any provision of its joint venture agreement, or
result in a breach of or constitute a default under any contract, obligation,
indenture or other instrument to which Borrower is a party or by which Borrower
may be bound.
SECTION 2.4. LITIGATION. There are no pending or threatened actions, claims,
investigations, suits or proceedings before any governmental authority, court or
administrative agency which may adversely affect the financial condition or
operation of Borrower other than those heretofore disclosed by Borrower to Bank
in writing.
SECTION 2.5. CORRECTNESS OF FINANCIAL STATEMENT. The financial statement of
Borrower dated March 31, 1995, heretofore delivered by Borrower to Bank is
complete and correct and presents fairly the financial condition of Borrower;
discloses all liabilities of Borrower that are required to be reflected or
reserved against under generally accepted accounting principles, whether
liquidated or unliquidated, fixed or contingent; and has been prepared in
accordance with generally accepted accounting principles consistently applied.
Since the date of such financial statement there has been no material adverse
change in the financial condition of Borrower, nor has Borrower mortgaged,
pledged or granted a security interest or encumbered any of its assets or
properties except as permitted by this Agreement.
SECTION 2.6. INCOME TAX RETURNS. Borrower has no knowledge of any pending
assessments or adjustments of its income tax payable with respect to any year.
SECTION 2.7. NO SUBORDINATION. There is no agreement, indenture, contract or
instrument to which Borrower is a party or by which Borrower may be bound that
requires the subordination in right of payment of any of Borrower's obligations
subject to this Agreement to any other obligation of Borrower.
SECTION 2.8. PERMITS, FRANCHISES. Borrower possesses, and will hereafter
possess, all permits, memberships, franchises, contracts and licenses required
and all trademark rights, trade names, trade name rights, patents, patent rights
and fictitious name rights necessary to enable it to conduct the business in
which it is now engaged without conflict with the rights of others.
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SECTION 2.9. ERISA. Borrower is in compliance in all material respects with
all applicable provisions of the Employee Retirement Income Security Act of
1974, as amended from time to time (ERISA); Borrower has not violated any
provision of any defined employee pension benefit plan (as defined in ERISA)
maintained or contributed to by Borrower (each, a "Plan"); no Reportable Event
as defined in ERISA has occurred and/or is continuing with respect to any Plan
initiated by Borrower; Borrower has met its minimum funding requirements under
ERISA with respect to each Plan; and each Plan will be able to fulfill its
benefit obligations as they come due in accordance with the Plan documents and
under generally accepted accounting principles.
SECTION 2.10. OTHER OBLIGATIONS. Borrower is not in default on any
obligation for borrowed money, any purchase money obligation or any other
material lease, commitment, contract, instrument or obligation.
SECTION 2.11. ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to Bank
in writing prior to the date hereof, Borrower is in compliance in all material
respects with all applicable environmental, hazardous waste, health and safety
statutes and regulations governing its operations and/or properties, including
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (CERCLA), the Superfund Amendments and Reauthorization Act
of 1986 (▇▇▇▇), the Federal Resource Conservation and Recovery Act of 1976, the
Federal Toxic Substances Control Act and the California Health and Safety Code.
None of the operations of Borrower is the subject of any federal or state
investigation evaluating whether any remedial action involving a material
expenditure is needed to respond to a release of any toxic or hazardous waste or
substance into the environment. Borrower has no material contingent liability in
connection with any release of any toxic or hazardous waste or substance into
the environment.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.1. CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of
Bank to grant any of the Credits is subject to the fulfillment to Bank's
satisfaction of all of the following conditions: (a) Approval of Bank Counsel.
All legal matters incidental to the granting of each of the Credits shall be
satisfactory to counsel of Bank. (b) Documentation. Bank shall have received, in
form and substance satisfactory to Bank, each of the following, duly executed:
(i) This Agreement and the Notes; (ii) Such other documents as Bank may require
under any other section of this Agreement.
(c) Financial Condition. There shall have been no material adverse change,
as determined by Bank, in the financial condition or business of Borrower, nor
any material decline, as determined by Bank, in the market value of any
collateral required hereunder or a substantial or material portion of the assets
of Borrower.
SECTION 3.2. CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Bank
to make each extension of credit requested by Borrower hereunder shall be
subject to the fulfillment to Bank's satisfaction of each of the following
conditions:
(a) Compliance. The representations and warranties contained herein shall be
true on and as of the date of the signing of this Agreement and on the date of
each extension of credit by Bank pursuant hereto, with the same effect as though
such representations and warranties had been made on and as of each such date,
and on each such date, no Event of Default as defined herein, and no condition,
event or act which with the giving of notice or the passage of time or both
would constitute such an Event of Default, shall have occurred and be continuing
or shall exist.
(b) Documentation. Bank shall have received all additional documents which
may be required in connection with such extension of credit.
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ARTICLE IV
AFFIRMATIVE COVENANTS
Borrower covenants that so long as any of the Credits remain available or
any liabilities (whether direct or contingent, liquidated or unliquidated) of
Borrower to Bank under any of the Loan Documents remain outstanding, and until
payment in full of all obligations of Borrower subject hereto. Borrower shall:
SECTION 4.1. PUNCTUAL PAYMENTS. Punctually pay the interest and principal on
each of the Loan Documents requiring any such payments at the times and place
and in the manner specified therein, any fees or other liabilities due under any
of the Loan Documents at the times and place and in the manner specified
therein.
SECTION 4.2. ACCOUNTING RECORDS. Maintain adequate books and records in
accordance with generally accepted accounting principles consistently applied,
and permit any representative of Bank, at any reasonable time, to inspect, audit
and examine such books and records, to make copies of the same, and to inspect
the properties of Borrower.
SECTION 4.3. FINANCIAL STATEMENTS. Provide to Bank all of the following, in
form and detail satisfactory to Bank:
(a) not later than 60 days after and as of the end of each quarter, a
financial statement of Borrower, prepared by Borrower, to include balance sheet
and income statement;
(b) not later than 120 days after and as of the end of each fiscal year, an
audited financial statement of the Chalone Wine Group, Ltd., prepared by a
certified public accountant, to include balance sheet, income statement,
statement of cash flows, and notes to financial statements;
(c) not later than 120 days after and as of the end of each fiscal year, a
reviewed financial statement of Borrower, prepared by a certified public
accountant, to include balance sheet, income statement, statement of cash flow
and all footnotes;
(d) not later than 120 days after and as of the end of each fiscal year, a
reviewed financial statement of Paragon vineyard Co., Inc., prepared by a
certified public accountant to include a balance sheet, income statement,
statement of cash flow and all footnotes;
(e) not later than 30 days after and as of the end of each month, an aged
listing of accounts receivable and accounts payable, and a reconciliation of
accounts (Bank form CMS-505) together with an inventory designation statement;
and
(f) from time to time such other information as Bank may reasonably request.
SECTION 4.4. COMPLIANCE. Maintain all licenses, permits, governmental
approvals, rights, privileges and franchises necessary for the conduct of its
business; conduct its business in an orderly and regular manner; and comply with
the provisions of all documents pursuant to which Borrower is organized and/or
which govern Borrower's continued existence and with the requirements of all
laws, rules, regulations and orders of any governmental authority applicable to
Borrower or its business.
SECTION 4.5. INSURANCE. Maintain and keep in force insurance of the types
and in amounts customarily carried in lines of business similar to Borrower's,
including but not limited to fire, extended coverage, public liability, property
damage and workers' compensation, carried with companies and in amounts
satisfactory to Bank, and deliver to Bank from time to time at Bank's request
schedules setting forth all insurance then in effect.
SECTION 4.6. FACILITIES. Keep all Borrower's properties useful or necessary
to Borrower's business in good repair and condition, and from time to time make
necessary repairs, renewals and replacements thereto so that Borrower's
properties shall be fully and efficiently preserved and maintained.
SECTION 4.7. TAXES AND OTHER LIABILITIES. Pay and discharge when due any and
all indebtedness, obligations, assessments and taxes, both real or personal and
including federal and state income taxes, except such as Borrower may in good
faith contest or as to which a bona fide dispute may arise, provided provision
is made to the satisfaction of Bank for eventual payment thereof in the event
that it is found that the same is an obligation of Borrower.
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SECTION 4.8. LITIGATION. Promptly give notice in writing to Bank of any
litigation pending or threatened against Borrower in excess of $100,000.00.
SECTION 4.9. FINANCIAL CONDITION. Maintain Borrower's financial condition as
follows using generally accepted accounting principles consistently applied and
used consistently with prior practices, except to the extent modified by the
following definitions:
(a) Ratio of Total Debt to Tangible Net Worth (defined as the aggregate of
current liabilities and non-current liabilities less subordinated debt divided
by Tangible Net Worth) not at any time greater than 1.25 to 1.0 Tangible Net
worth shall mean joint venturers, equity in Borrower plus subordinated debt less
the aggregate of any intangible assets and any obligations due from joint
venturers, employees and/or affiliates.
(b) Profitability on a year-to-date basis, determined as of each fiscal
quarter end.
(c) Inventory Turnover Ratio (defined as ending inventory divided by cost of
goods sold for the most recent four (4) fiscal quarters) not greater than 2.0 to
1.0, determined as of each fiscal quarter end. Cost of goods sold to include any
depreciation expense allocated according to generally accepted accounting
principles, consistently applied.
(d) EBITDA Coverage Ratio (defined as EBITDA divided by the aggregate of
interest expense, plus the current portion of long-term debt) not less than 2.20
to 1.0, determined as of each fiscal year end. EBITDA shall mean income from
operations plus depreciation, amortization and any interest expense included in
operating expense.
SECTION 4.10. NOTICE TO BANK. Promptly (but in no event more than five (5)
days after the occurrence of each such event or matter) give written notice to
Bank in reasonable detail of: (a) the occurrence of any Event of Default, or any
condition, event or act which with the giving of notice or the passage of time
or both would constitute such an Event of Default; (b) any change in the name or
the organizational structure of Borrower; (c) the occurrence and nature of any
Reportable Event or Prohibited Transaction, each as defined in ERISA, or any
funding deficiency with respect to any Plan; or (d) any termination or
cancellation of any insurance policy which Borrower is required to maintain, or
any uninsured or partially uninsured loss through liability or property damage,
or through fire, theft or any other cause affecting Borrower's property in
excess of an aggregate of $100,000.00.
ARTICLE V
NEGATIVE COVENANTS
Borrower further covenants that so long as any of the Credits remains
available or any liabilities (whether direct or contingent, liquidated or
unliquidated) of Borrower to Bank under any of the Loan Documents remain
outstanding, and until payment in full of all obligations of Borrower subject
hereto, Borrower will not without the prior written consent of Bank:
SECTION 5.1. USE OF FUNDS. Use any of the proceeds of any of the Credits
except for the purposes stated in Article I.
SECTION 5.2. CAPITAL EXPENDITURES. Make any additional investment in fixed
assets in excess of an aggregate of $1,450,000.00 in fiscal year ending in 1995,
$575,000-00 in fiscal year ending in 1996 and $460,000.00 for each fiscal year
thereafter.
SECTION 5.3. LEASE EXPENDITURES. Incur new obligations for the lease or hire
of real or personal property requiring payments in any fiscal year in excess of
an aggregate of $75,000.00.
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SECTION 5.4. OTHER INDEBTEDNESS. Create, incur, assume or permit to exist
any indebtedness or liabilities resulting from borrowings, loans or advances,
whether secured or unsecured, matured or unmatured, liquidated or unliquidated,
joint or several, except the liabilities of Borrower to Bank and any other
liabilities of Borrower existing as of the date of this Agreement and disclosed
in the financial statement delivered to Bank pursuant to section 2.5.
SECTION 5.5. MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge into or
consolidate with any corporation or other entity; make any substantial change in
the nature of Borrower's business; acquire all or substantially all of the
assets of any corporation or other entity; nor sell, lease, transfer or
otherwise dispose of all or a substantial or material part of its assets except
in the ordinary course of business.
SECTION 5.6. GUARANTIES. Guarantee or become liable in any way as surety,
endorser (other than as endorser of negotiable instruments for deposit or
collection in the-ordinary course of business), accommodation endorser or
otherwise for, nor pledge or hypothecate any assets of Borrower as security for,
any liabilities or obligations of any other person or entity.
SECTION 5.7. NEGATIVE PLEDGE. Borrower shall not mortgage, pledge, grant or
permit to exist a security interest in, or lien upon, any asset of Borrower, now
owned or hereafter acquired, except any of the foregoing in favor of Bank.
SECTION 5.8. LOANS, ADVANCES, INVESTMENTS. Make any loans or advances to or
investments in any person or entity.
SECTION 5.9. DISTRIBUTIONS. Make any distributions either in cash or other
property to any partner or partners in Borrower; nor redeem, retire, repurchase
or otherwise acquire any partnership interest in Borrower except, so long as no
default under this Agreement exist, distributions to Joint Venturers which shall
be limited to forty percent (40%) of net income up to and including the first
$500,000.00 of net income per year plus an additional amount equal to sixty
percent (60%) of the amount by which net income for the year exceeds
$500,000.00; which distributions shall be determined and paid quarterly within
ninety (90) days after the end of quarter provided the cumulative distributions
determined in any fiscal year do not exceed the maximum limitation hereunder.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.1. The occurrence of any of the following shall constitute an
"Event of Default" under this Agreement:
(a) Borrower shall fail to pay when due any principal, interest, fees or
other amounts payable under any of the Loan Documents.
(b) Any representation or warranty made by Borrower hereunder shall prove to
be incorrect in any material respect when made.
(c) Any default in the performance of or compliance with any obligation,
agreement or other provision contained herein (other than those referred to in
subsections (a) and (b) above), and with respect to any such default which by
its nature can be cured, such default shall continue for a period of twenty (20)
days from its occurrence.
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(d) Any default in the payment or performance of any obligation, or any
defined event of default, under the terms of any contract or instrument (other
than any of the Loan Documents) pursuant to which Borrower or any joint venturer
in Borrower has incurred any debt or other liability to any person or entity,
including Bank.
(e) Any default in the payment or performance of any obligation, or any
defined event of default, under any of the Loan Documents other than this
Agreement.
(f) The filing of a notice of judgment lien against Borrower or any joint
venturer in Borrower; or the recording of any abstract of judgment against
Borrower or any joint venturer in Borrower in any county in which Borrower or
such general partner has an interest in real property; or the service of a
notice of levy and/or of a writ of attachment or execution, or other like
process, against the assets of Borrower or any joint venturer in Borrower; or
the entry of a judgment against Borrower or any joint venturer in Borrower.
(g) Borrower or any joint venturer in Borrower shall become insolvent, or
shall suffer or consent to or apply for the appointment of a receiver, trustee,
custodian or liquidator of itself or any of its property, or shall generally
fail to pay its debts as they become due, or shall make a general assignment for
the benefit of creditors; Borrower or any joint venturer in Borrower shall file
a voluntary petition in bankruptcy, or seeking reorganization, in order to
effect a plan or other arrangement with creditors or any other relief under the
Bankruptcy Reform Act, Title 11 of the United States Code, as amended or
recodified from time to time ("Bankruptcy Code"), or under any state or federal
law granting relief to debtors, whether now or hereafter in effect; or any
involuntary petition or proceeding pursuant to said Bankruptcy Code or any other
applicable state or federal law relating to bankruptcy, reorganization or other
relief for debtors is filed or commenced against Borrower or any joint venturer
in Borrower, or Borrower or any such joint venturer shall file an answer
admitting the jurisdiction of the court and the material allegations of any
involuntary petition; or Borrower or any such joint venturer shall be
adjudicated a bankrupt, or an order for relief shall be entered by any court of
competent jurisdiction under said Bankruptcy Code or any other applicable state
or federal law relating to bankruptcy, reorganization or other relief for
debtors.
(h) There shall exist or occur any event or condition which Bank in good
faith believes impairs, or is substantially likely to impair, the prospect of
payment or performance by Borrower of its obligations under any of the Loan
Documents.
(i) The dissolution or liquidation of Borrower or any joint venturer in
Borrower; or Borrower or any such joint venturer, or any of their directors,
stockholders or members, shall take action seeking to effect the dissolution or
liquidation of Borrower or such joint venturer; or the withdrawal from Borrower
of any joint venturer.
(j) The resignation or expulsion during the term of this Agreement of any
one or more of the joint venturers in Borrower with an aggregate ownership
interest in Borrower of twenty-five percent (25%) or more.
(k) Chalone shall cease to be the managing joint venturer of Borrower.
(1) Paragon Vineyard Company shall sell, transfer or assign, or grant,
suffer or permit to exist, a security interest in or lien upon, the "▇▇▇▇
Valley" tradename or trademark, whether voluntarily or involuntarily.
(m) Borrower's right to use the "▇▇▇▇ Valley" tradename or trademark shall
be lost or impaired for any reason.
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SECTION 6.2. REMEDIES. If an Event of Default shall occur, (a) any
indebtedness of Borrower under any of the Loan Documents, any term thereof to
the contrary notwithstanding, shall at Bank's option and without notice become
immediately due and payable without presentment, demand, protest or notice of
dishonor, all of which are hereby expressly waived by Borrower; (b) the
obligation, if any, of Bank to permit further borrowings hereunder shall
immediately cease and terminate; and (c) Bank shall have all rights, powers and
remedies available under each of the Loan Documents, or accorded by law,
including without limitation the right to resort to any or all security for any
of the Credits and to exercise any or all of the rights of a beneficiary or
secured party pursuant to applicable law. All rights, powers and remedies of
Bank in connection with each of the Loan Documents may be exercised at any time
by Bank and from time to time after the occurrence of an Event of Default, are
cumulative and not exclusive, and shall be in addition to any other rights,
powers or remedies provided by law or equity.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. NO WAIVER. No delay, failure or discontinuance of Bank in
exercising any right, power or remedy under any of the Loan Documents shall
affect or operate as a waiver of such right, power or remedy; nor shall any
single or partial exercise of any such right, power or remedy preclude, waive or
otherwise affect any other or further exercise thereof or the exercise of any
other right, power or remedy. Any waiver, permit, consent or approval of any
kind by Bank, of any breach of or default under any of the Loan Documents must
be in writing and shall be effective only to the extent set forth in such
writing.
SECTION 7.2. NOTICES. All notices, requests and demands which any party is
required or may desire to give to any other party under any provision of this
Agreement must be in writing delivered to each party at the following address:
BORROWERS: c/o The Chalone Wine Group, Ltd.
Managing Joint Venturer
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇▇ VALLEY VINEYARD
c/o Paragon Vineyard Co., Inc.
Joint Venturer
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
BANK: ▇▇▇▇▇ FARGO BANK, NATIONAL ASSOCIATION
San Francisco Commercial Banking ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President
or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or five (5) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent by telecopy,
upon receipt.
SECTION 7.3. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to Bank
immediately upon demand the full amount of all costs and expenses, including
reasonable attorneys' fees (to include outside counsel fees and all allocated
costs of Bank's in-house counsel), incurred by Bank in connection with (a) the
negotiation and preparation of this Agreement and each other of the Loan
Documents, Bank's continued administration hereof and thereof, and the
preparation of amendments and waivers hereto and thereto, (b) the enforcement of
Bank's rights and/or the collection of any amounts which become due to Bank
under any of the Loan Documents, and (c) the prosecution or defense of any
action in any way related to any of the Loan Documents, including without
limitation any action for declaratory relief.
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SECTION 7.4. SUCCESSORS, ASSIGNMENT. This Agreement shall be binding on and
inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties; provided however, that
Borrower may not assign or transfer its interest hereunder without the prior
written consent of Bank. Bank reserves the right to sell, assign, transfer,
negotiate or grant participations in all or any part of, or any interest in,
Bank's rights and benefits under each of the Loan Documents. In connection
therewith, Bank may disclose all documents and information which Bank now has or
may hereafter acquire relating to any of the Credits, Borrower or its business,
or any collateral required hereunder.
SECTION 7.5. ENTIRE AGREEMENT, AMENDMENT. This Agreement and each other of
the Loan Documents constitute the entire agreement between Borrower and Bank
with respect to the Credits and supersede all prior negotiations,
communications, discussions and correspondence concerning the subject matter
hereof. This Agreement may be amended or modified only by a written instrument
executed by each party hereto. As of the date first written above, this letter
shall cancel and supersede that certain Credit Agreement between Borrower and
Bank dated April 15, 1992.
SECTION 7.6. 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 or entity 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 of the Loan Documents
to which it is not a party.
SECTION 7.7. TIME. Time is of the essence of each and every provision of
this Agreement and each other of the Loan Documents.
SECTION 7.8. SEVERABILITY OF PROVISIONS. If any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.
SECTION 7.9. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, except to the
extent that Bank has greater rights or remedies under Federal law, whether as a
national bank or otherwise, in which case such choice of California law shall
not be deemed to deprive Bank of such rights and remedies as may be available
under Federal law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
▇▇▇▇▇ FARGO BANK,
▇▇▇▇ VALLEY VINEYARD NATIONAL ASSOCIATION
By: THE CHALONE WINE GROUP, LTD. By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Managing Joint Venturer -------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Vice President
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chief Financial Officer/
Executive Vice President
11