Exhibit 10.5
REVOLVING EQUITY LINE OF CREDIT
PROMISSORY NOTE AND LOAN AGREEMENT
Loan Number 0425985800
April 08, 1998 Petaluma, California
1. PROMISE TO PAY.
FOR VALUE RECEIVED, the undersigned ("Borrower", whether one or more)
jointly and severally Promises to pay to the order of Pacific Coast Farm Credit
Services, ACA ("Lender") a corporation organized and existing under the laws of
the United States of America, at its principal office at Windsor, California or
at such other place as may be designated in writing by Lender, the principal sum
of Eight Hundred Thirty Five Thousand and no/100 dollars ($ 835,000.00) ,
including capital stock or participation certificates ("Maximum Loan Amount"),
or so much of that sum as may be advanced or re-advanced by Lender under this
Revolving Equity Line of Credit Promissory Note and Loan Agreement ("Note"),
with interest on the unpaid principal balance.
2. REVOLVING LINE OF CREDIT.
A. Lender shall make available to Borrower a revolving line of credit in a
principal amount not to exceed at any one time the Maximum Loan Amount.
Subject to the terms and conditions of this Note, as amounts borrowed
hereunder are repaid during the Draw Period as defined below, they may
be reborrowed. Borrower shall purchase capital stock or participation
certificates in the amount required by Lender's bylaws, which are
subject to change.
B. Until December 01, 1999 ("Draw Period"), Borrower may draw amounts
hereunder, subject to the terms and conditions of this Note. The Draw
Period may be terminated by Borrower at any time by written notice to
Lender. Subject to the terms and conditions of this Note, and provided
Borrower is not in default under paragraph 6 of this Note, Lender shall
make advances to Borrower upon request. If such an event of default
occurs, one of Lender's remedies includes Lender's right to terminate
Borrower's right to make draws. Such termination may be with or without
notice to Borrower.
C. Draws must be in increments of not less than One Thousand and no/100
dollars ($1,000.00), or the remaining amount available under the Note,
whichever is less. All draws requested hereunder by Borrower shall be
drawn in accordance with procedures established by Lender.
3. REPAYMENT.
A. Principal And Interest Shall Be Payable To Lender As Follows:
(x) 1. During the Draw Period:
(x) Interest Only: During the Draw Period, Borrower shall pay on
June 01, 1998 and every three months thereafter, all
interest then accrued during the billing period based on the
daily principal balance.
( ) [Loan Matures at End of Draw Period:] on
______________ ("Maturity Date") Borrower shall pay
the entire unpaid principal sum together with all
interest accrued thereon.
( ) Principal Reduction and Interest: Beginning on _____________
and on that date each year thereafter during the Draw
Period, the Maximum Loan Amount shall each be reduced by
-------------------- --------------------------------------
dollars ($_________) ["Adjustment Amount"]. If, after
reducing the Maximum Loan Amount, the outstanding principal
balance
exceeds the reduced Maximum Loan Amount, Borrower shall pay
the difference within thirty days of written request by
Lender. Borrower shall also pay on ___________ and every
____________ thereafter, all interest then accrued during
the billing period based on the daily principal balance.
( ) [Loan Matures at End of Draw Period:] On _________
("Maturity Date") Borrower shall pay the entire
unpaid principal sum together with all interest
accrued thereon.
(x) 2. During the Amortized Balance Period:
a. Provided the Borrower is not then in default and
there is no event which with the passage of time
would become an event of default under the terms of
this Note, then on the first day after the end of the
Draw Period, the outstanding principal balance then
due ("Amortized Balance") shall be fully amortized in
accordance with the terms hereof over the remaining
term of the Note ("Amortized Balance Period").
Provided Borrower is current on all scheduled
payments due under the Draw Period, any interest
accrued and unpaid since the last scheduled payment
under the Draw Period shall be added to the first
installment due under the Amortized Balance Period.
b. Borrower shall make equally amortized payments of
principal and interest based on the Amortized Balance
beginning on March 01, 2000 and every three months
until December 01, 2024 ("Maturity Date") at which
time the entire remaining principal balance, together
with all accrued interest and all other obligations
evidenced by this Note shall be fully due and
payable.
( ) 3. Repayment Per Attached Schedule:
a. Borrower shall make interest and principal
payments during the Draw Period, and the
Amortized Balance Period if applicable, per
the attached Repayment Schedule.
B. Repayment Upon Early Termination.
1. If Borrower terminates the Draw Period, the
obligation evidenced by this Note shall be equally
amortized over the remaining term of the Note based
on the repayment frequency for principal payments
specified in Paragraphs 3(A)(2)(b), or if none, then
based on the interest only payment frequency
specified in Paragraph 3(A)(1).
2. If Lender elects not to accelerate the loan in
conjunction with the termination of the Draw Period
in the event of a default, then if the loan
originally provided for an Amortized Balance Period
under Paragraph 3(A)(2), the outstanding obligation
shall be immediately equally amortized over the
remaining term of the Note based on the repayment
frequency for payments specified in Paragraph
3(A)(2). If the loan originally provided for the loan
to mature at the end of the Draw Period, interest
only payments shall continue until the Maturity Date
specified in Paragraph 3(A).
3. The terms of Paragraph 3(C)(1) shall also apply to
any early amortization of the Note.
C. Additional Terms of Repayment. Borrower shall also be subject to the
following terms for repayment:
1. The amount of the installments shall be increased or
decreased to reflect any increase or decrease in the
interest rate described in Paragraph 4 below. Any
payment received by Lender after Lender has closed
its books for the day will be applied on the
subsequent business day.
2. Provided Borrower is not in default under this Note,
Borrower has the right to make payments in advance of
the scheduled payment dates. Such an advance payment
is referred to as "prepayment". If Borrower, in
making a prepayment, intends the prepayment to be
applied to reduce the principal balance of the Note,
Borrower must so inform Lender in writing
accompanying the prepayment. Absent such a writing,
or unless agreed to in writing otherwise, Lender may
apply all payments, including regular installments,
received from or on behalf of Borrower and all
proceeds of real or personal property collateral to
principal, interest or any part of the indebtedness
as defined in the deed of trust, mortgage or security
agreement as Lender, in its sole discretion, may
choose. Borrower may make a full prepayment or
partial prepayment without paying a prepayment fee.
If Borrower makes a partial prepayment, there will be
no delays in the due dates of Borrower's installment
payments unless Lender agrees in writing to those
delays. Unless Borrower and Lender agree otherwise,
Lender at its sole discretion may reamortize the Note
on the basis of the new principal balance; otherwise,
the making of a prepayment will operate only to
discharge the Note at an earlier date.
4. INTEREST.
A. Initial Interest Rate. The rate of interest applicable to the Note is a
variable interest rate and shall change in accordance with Paragraphs
4(B) through (D) below. Interest shall accrue at the variable interest
rate as established by Lender for the interest rate group to which this
Note is assigned. The initial interest rate that will be charged
commencing on the date Lender disburses principal is 7.60% per annum.
Interest will be charged on that part of outstanding principal which
has not been paid and shall be calculated on the basis of a 360-day
year and a 30-day month. During the Draw Period interest shall be
calculated daily on this basis. Interest charged hereunder, including
any accelerated interest rate described in Section 6 below, shall not
be limited by the laws of any state relating to a legal rate or other
rate of interest, but shall be governed solely by applicable federal
laws.
B. Change in Interest Rate and Interest Rate Group. The interest rate
applicable to this Note may be adjusted automatically as of the first
day of any month to the rate then made applicable to the Note's
assigned interest rate group under the provisions of Lender's variable
interest rate plan in effect at that time. In adjusting the rate,
Lender considers certain standard factors set forth in the plan,
including but not limited to, changes in its costs of funds, operating
expenses, earnings requirements to meet certain capital objectives,
credit risk factors, and the competitive environment, which factors may
change during the term of the loan. Upon any adjustment to the rate of
interest, the installments of principal and/or interest due hereunder
shall be increased or decreased so that the indebtedness will be repaid
within the original loan term. Borrower understands and agrees that (1)
the interest rate group to which this Note is assigned may be changed
at any time to any other interest rate group based on Lender's
evaluation of the change in Borrower's credit quality, quality of
collateral, costs of servicing the loan, and other factors which are
set forth in Lender's interest rate plan in effect at that time; and
(2) the interest rate group shall be automatically adjusted to the
highest interest rate group if a default or event of default shall
occur under this Note or under any other note or agreement between
Borrower and Lender.
C. Notice. If Lender changes Borrower's interest rate, Lender will give
Borrower notice of the change in rate as required by the then
applicable law.
D. Conversion Option. Provided Borrower is not in default, Borrower shall
have the option to convert at the end of the Draw Period from the
variable interest rate to any other interest rate program Lender may
offer for loans in amount and terms similar to Borrower's. Such
conversion is subject to approval by Lender and payment of all
applicable fees, charges and accrued interest.
5. LATE CHARGES FOR OVERDUE PAYMENTS.
If Lender has not received the full amount of any installment by the end of the
fifteenth calendar day after the date it is due, a late charge shall be imposed.
The amount of the charge will be 5.00 percent of the overdue installment with a
minimum charge of $25.00. Borrower will pay this late charge promptly but only
once for each overdue installment.
6. DEFAULT.
Borrower is in default of this Note under the following circumstances: (a)
Borrower fails to pay principal or interest as set forth in this Note; (b)
Borrower breaches any term, condition or representation in this Note or in any
document in connection with this Note or in connection with any other loan of
this Lender, or any other lender; (c) If any of Borrower's representations to
this, or any other lender in connection with any loan prove to be materially
false or misleading; (d) Lender determines that Borrower is unable to repay the
sums owed Lender under this Note as agreed or Lender in good faith otherwise
deems itself insecure; (e) If, in Lender's reasonable determination, there shall
occur any material adverse change in the financial condition of Borrower or in
the value of the collateral; (f) Borrower's death, dissolution, incapacity or
termination of existence; (g) Borrower's insolvency, business failure,
application for or consent to appointment of a receiver/custodian or trustee for
itself or any of its assets, assignment to an agent authorized to liquidate any
substantial amount of assets, assignment for the benefit of creditors by, or
commencement of any proceeding under any bankruptcy or insolvency law by or
against Borrower, or any guarantor, endorser, or surety for Borrower; (h) Any
judgment, writ, levy, lien, attachment, notice of tax lien, tax lien, or similar
process shall be entered or filed against Borrower or any guarantor or any of
Borrower's or any of guarantor's properties and is not vacated, bonded or stayed
to the satisfaction of Lender; (i) An event of default shall occur under any
guaranty given to Lender as security for this Note, or any guarantor shall
purport to terminate, repudiate or contest any such guaranty; any guarantor who
is a natural person shall die; or any guarantor that is not a natural person
shall be dissolved or terminated; (j) Borrower sells, leases, conveys,
alienates, or transfers, or enters into any agreement for the sale, lease,
conveyance, alienation, transfer or nonuse of any water or water right, or
similar term such as Water Asset, as may be defined in any deed of trust,
mortgage, security agreement or other agreement relating to the pledge of water
or water rights.
A. Remedies. If an event of default shall occur, Lender shall have all
rights, powers and remedies available under this Note or any other loan
document, or agreement, or accorded by law or at equity, including the
right to suspend or terminate the right of Borrower to make draws
hereunder, to foreclose on any and all collateral and to exercise any
or all of the rights of a mortgagee, trust deed beneficiary, or secured
party pursuant to applicable law. All rights, powers, and remedies of
Lender may be exercised at any time by Lender and from time to time
after the occurrence of an event of default. All rights, powers, and
remedies of Lender in connection with this Note and any loan document
are cumulative and not exclusive and shall be in addition to any other
rights, powers, or remedies provided by law or equity. Lender may
enforce any security interest or lien given or provided for under this
Note or any other document in such manner and in such order, as to all
or any part of the collateral as Lender, in its sole judgment, deems to
be necessary or appropriate, and Borrower, to the extent Borrower can,
waives any and all rights, obligations, or defenses now or hereafter
established by law relating to the foregoing. The mortgage, deed of
trust or security agreement provides that advances made by Lender shall
become a part of the principal evidenced by this Note, and also states
additional conditions under which the entire Note may be accelerated
and become immediately due and payable and will be subject to interest
and acceleration interest.
B. Acceleration and Interest Upon Acceleration. On Borrower's default, and
at Lender's option, all unpaid principal, including amounts advanced
for taxes, insurance, and other expenses provided herein, accrued
unpaid interest and amounts charged in Section 5, shall become
immediately due and payable without presentment, demand, notice of
non-payment, or protest. Interest on said accelerated amount shall be
4.00% per annum above the interest rate in effect at the time as stated
in Section 4(A)-(D) above.
C. Waiver. Any delay, failure or discontinuance of Lender in exercising
any right or remedy shall not waive that right or remedy or any other
right or remedy. Any explicit waiver of default by Lender must be in
writing and signed by Lender. No waiver of default by Lender shall
operate as a waiver of any other default or of the same default on a
future occasion.
7. USE OF FUNDS.
Borrower represents and warrants that any funds drawn hereunder will be used
primarily for business or agricultural purposes and not for personal, family, or
household purposes. Borrower understands and acknowledges that Lender has relied
on this representation in establishing this revolving line of credit in favor of
Borrower and will rely on this representation in making any advance under this
Note.
8. APPOINTMENT OF AGENT.
Borrower hereby appoints Callie Konno or Justin Faggioli ("Agent") to draw loan
funds under this Note during the Draw Period. Lender, at its sole option, may
require that all requests for loan funds be in writing, signed by Agent, in a
form acceptable to Lender. If oral requests for loan funds are permitted,
Lender's records shall be conclusive evidence of such requests for loan funds.
Facsimile documents may be accepted by Lender as originals. Any draw by Agent
constitutes an ongoing representation and warranty by Borrower that there is not
at the time of request or payment of any draw, any event of default pending
under the Note or any deed of trust or mortgage securing the Note, and that
title to any such security has not been transferred.
Draws shall be paid according to Agent's instructions, except that checks
representing loan funds shall always be made payable to at least one Borrower
and wire transfers shall only be permitted if Borrower has authorized the
account into which the funds are to be deposited. The appointment of the
above-named Agent pursuant to this paragraph shall remain in full force and
effect until written notice of revocation of appointment signed by any one of
the undersigned has been received by Lender. Upon receipt of such written
revocation, until a new agent is appointed in writing by Borrower, draw requests
submitted with less than all the Borrowers' signatures shall be made payable to
all Borrowers.
Borrower shall indemnify and hold Lender harmless from loss or liability of any
kind arising from or related to any action or inaction taken by Lender in good
faith in reliance on this appointment or any instructions from the Agent or
Borrower pursuant to this provision.
STANDARD CONDITIONS
While this Note is in effect Borrower will: (1) at Lender's request, furnish
information to Lender relating to Borrower's business and financial affairs and
permit Lender to examine Borrower's books and records; (2) maintain all other
loans with Lender in a current status; (3) allow Lender to inspect and appraise
Lender's collateral; (4) promptly notify Lender of any potential material
adverse change in financial condition or notify Lender in writing of any
possible default under this Note or any other loan agreement with Lender or with
any other lender or of any event which would become an event of default upon the
lapse of time or the giving of notice or both; (5) execute all other documents
as Lender may lawfully require in connection with this Note; and (6) comply with
all terms and conditions of all other documents executed in connection with this
Note.
TRANSFER BY LENDER. Lender may sell, transfer or assign this Note or any portion
thereof, and deliver to the transferee(s) ("Noteholder") all or any portion of
the property then held by it as security hereunder, and the Noteholder shall
thereupon become vested with all the power and rights herein given to Lender
with respect thereto and at such time the term "Lender" as herein used shall be
deemed to mean and include the "Noteholder"; and Lender shall thereafter be
forever relieved and fully discharged from any and all liability or
responsibility to Borrower, but Lender shall retain all rights and powers hereby
given with respect to property not so transferred, sold or assigned.
FINANCIAL REPORTS. Borrower shall furnish Lender as soon as possible, but in no
event later than 120 days after each fiscal year, financial reports for each of
the undersigned, including a balance sheet and a profit and loss statement.
FEES AND CHARGES OF ATTORNEYS AND OTHERS. In the event that Lender employs
attorneys, accountants, appraisers, consultants, or other professional
assistance, including the services of any such person who is a direct employee
of Lender, in connection with any of the following, then, the reasonable amount
of costs, expenses and fees incurred by Lender shall be payable on demand.
Lender may, at its option, add the amount of such costs, expenses and reasonable
fees to the principal amount of the loan and an appropriate amount of capital
stock or participation certificates as required by Lender's bylaws and Farm
Credit Administration ("FCA") regulations. Lender thereafter may charge interest
on such amount at the interest rate then applicable to the principal.
Costs, expenses and reasonable fees of professionals covered by this provision
include such charges for the following:
(A) The preparation, modification, or renewal of this Note, or any security
agreement, deed of trust, or mortgage ("Security Instrument"), or any
other documentation incident to the loan transaction;
(B) Advising Lender subsequent to the initial disbursement of loan proceeds
concerning its legal rights and obligations with regard to the Note or
security given for the Note, including advising Lender with regard to
Borrower's exercise of any rights under the provisions of the Farm
Credit Act, as amended, FCA regulations, any policy or program of
Lender, or any state or federal law or regulation and bankruptcy laws
and rules;
(C) Any litigation, dispute, proceeding or action, whether instituted by
Lender, Borrower, or any other person, relating to the Note, security
given for the Note, or Borrower's affairs, including representation of
Lender in any bankruptcy, insolvency, or reorganization case or
proceeding instituted by or against Borrower, and any attempt by Lender
to enforce any rights against Borrower;
(D) In the event of any controversy, claim or dispute relating to the Note,
security given for the Note, any Security Instrument or other
agreements between Borrower and Lender, including but not limited to
any action to construe or enforce the terms of the loan obligations and
security agreements, the prevailing party shall be entitled to recover
its reasonable costs, expenses, and reasonable attorney fees;
(E) In the event of bankruptcy or insolvency proceedings (whether state or
federal) instituted by or against Borrower or third parties with whom
Borrower has entered contractual relationships, the Lender may recover
all costs, expenses and reasonable attorney fees incurred to protect or
defend Lender's right under the Note, any Security Instrument and other
documents underlying the loan transactions whether such costs,
expenses, and attorney fees be contractual or bankruptcy related,
including costs, expenses, and attorney fees for meetings, sessions,
matters, proceedings and litigation involving issues solely distinct to
federal bankruptcy law, rules and proceedings as well as other federal
and state litigation and proceedings;
(F) The inspection, verification, protection, collection, processing, sale,
liquidation, or disposition of security given for the Note;
(G) The cost of any appraisal or collateral evaluation of all or any part
of the real property security, which Lender may from time to time
obtain as part of Lender's reasonable administration of the Note;
(H) Any of the type of expenses referred to in (A) through (G) above
incurred by Lender in connection with any guaranty of the Note.
TRANSACTION SUMMARY. All disbursements and repayments of indebtedness shall be
posted on Lender's accounting records. Periodically, Lender shall send Borrower
a transaction summary or a similar loan accounting. If Borrower fails to object
to the accounting in writing within 30 days of its mailing by Lender, Borrower
shall have waived any right to object to the accuracy of the accounting and the
accounting may be admitted into evidence by Lender for the purpose of
establishing the balance due Lender in any legal proceeding arising between the
parties.
NOTICES. Borrower shall promptly give written notice to Lender of: (a) any
enforcement action brought against Borrower by any governmental regulatory body
or law enforcement authority or any dispute between Borrower and any such
authority or body; (b) any pending or threatened litigation or court proceeding
brought against Borrower; (c) the death or disability of any Borrower or
guarantor; (d) any material adverse change in Borrower's financial condition;
and (e) the occurrence of any event of default or any event that with a lapse of
time or the giving of notice or both would become an event of default.
LOAN CHARGES. If a law, which applies to this Note and which sets maximum loan
charges, is finally interpreted so that the interest or other loan charges
collected or to be collected in connection with this Note exceed the permitted
limits, then: (a) any such loan charge shall be reduced by the amount necessary
to reduce the charge to the permitted limit; and (b) any sums already collected
which exceeded permitted limits will be refunded to Borrower, without interest
thereon. Lender may choose to make this refund by reducing the principal
Borrower owes under this Note or by making a direct payment to Borrower. If a
refund reduces principal, the reduction will be treated as a partial prepayment.
DISCLOSURE AND INQUIRIES. By signing this Note, Borrower agrees that Lender may
disclose financial information to other Farm Credit System institutions.
Borrower further authorizes Lender from time to time, to make such inquiries and
gather such information as Lender deems necessary and reasonable to administer
the Note. Lender is also authorized from time to time to make credit inquiries,
verify credit, verify employment, and obtain credit agency reports regarding
Borrower or any spouse of Borrower.
BORROWER'S GUARANTEES. By signing this Note, Borrower warrants that Borrower has
legal authority to enter into this transaction, that the terms and conditions of
this contract do not contravene the terms and conditions of any other
contract(s) of Borrower, that Borrower's representations in connection with this
loan are true and accurate, and that Borrower is not involved in, or has any
expectations of involvement in, any legal action that might impair Borrower's
financial condition or ability to continue business.
SEVERABILITY. In the event that one or more of the provisions of this Note or
any other loan documents should be deemed or held to be invalid, illegal,
unenforceable or against public policy in any respect, the validity, legality,
and enforceability of the remaining provisions shall not in anyway be affected
or impaired.
CAPTIONS. Captions used in this Note are inserted only as a matter of
convenience and for reference, and in no way define, limit or describe the scope
or intent of any term or provision.
APPLICABLE LAW. Enforcement of this Note, any Security Instrument, and any other
document executed in connection herewith shall be governed by and construed in
accordance with federal laws to the extent applicable, and shall otherwise be
governed by the laws of the state specified on page one of this Note,
immediately above Section 1.
INTEGRATION CLAUSE; AMENDMENTS MUST BE IN WRITING. This Note, any Security
Instrument and modifications thereof, executed by Lender and Borrower in
connection herewith, or as required by this Note, constitute the entire
agreement between Borrower and Lender and supersedes all prior negotiations,
communications, discussions, oral agreements, and promises concerning this loan.
The Note shall not include any loan application or any written correspondence
submitted by Borrower to Lender that has not been agreed to by Lender in
writing. To the extent that any of the terms or provisions contained in this
Note are inconsistent with those contained in any previous loan agreement or
security agreement or any other agreements executed prior to this Note, the
terms and provisions contained herein shall control. Otherwise, such provisions
shall be considered cumulative. This Note may be amended or modified only by a
written instrument executed by each party hereto.
HAZARDOUS SUBSTANCE INDEMNITY. Borrower indemnifies and agrees to hold Lender
harmless from any losses or damages suffered by Lender that arise from the
release, threatened release, discharge, manufacture, use, storage,
transportation or presence of any hazardous substance in connection with the
business of Borrower or on any real property owned or occupied by Borrower,
whether pledged as security for this Note or not. The indemnity covers the
officers, directors, agents, and attorneys of Lender and extends to attorneys
fees and other costs and expenses incurred by Lender in connection with the
foregoing. The term "hazardous substance" shall mean any material or substance
which is now or hereafter considered "hazardous" or "toxic" or subject to any
other deleterious classification under any federal, state, or local law.
NOTWITHSTANDING ANY OTHER PROVISION OF THIS NOTE OR THE LOAN DOCUMENTS, THIS
INDEMNITY SHALL SURVIVE REPAYMENT OF THE INDEBTEDNESS.
OBLIGATIONS OF PERSONS UNDER THIS NOTE. The liability of each Borrower executing
this Note shall be that of co-maker and not that of an endorser, guarantor or
accommodation party and shall be joint and several. The separate property of any
married person executing this Note shall be liable for the indebtedness
evidenced hereby.
SPECIFIC WAIVERS OF EACH BORROWER. The indebtedness of each Borrower is
independent of the indebtedness of all other Borrowers. Each Borrower expressly
waives any right to require Lender to proceed against any other Borrower, to
proceed against or exhaust any collateral, to pursue any remedy Lender may have
at any time, and the benefit of any statute of limitations affecting its
liability under this Note or any other loan document. Each Borrower waives any
and all defenses by reason of (a) any disability or other defense of any other
Borrower with respect to the indebtedness owed to Lender, (b) the termination
for any reason whatsoever of the liability of any other Borrower, (c) any act or
omission of Lender that directly or indirectly results in or aids the discharge
or release of any other Borrower, any guarantor, or any security provided by any
Borrower or guarantor, (d) the failure by Lender to perfect any security
interest or lien on any collateral, and (e) an election of remedies by the
Lender, even though that election of remedies, such as a nonjudicial foreclosure
with respect to security for this Note, has destroyed the Borrower's rights of
subrogation, contribution, reimbursement, indemnity, set off, or other recourse
against another Borrower by the operation of Section 580d of the California Code
of Civil Procedure or otherwise.
Each Borrower agrees that Lender may at any time, without notice, release all or
any part of the security for this Note (including all or any part of the
premises covered by the referenced mortgage or deed of trust), grant extensions,
change terms of payment, deferments, renewals or reamortizations of any part of
the debt evidenced by this Note, and release from personal liability any one or
more of the parties who are or may become liable for this debt; all without
affecting the personal liability of any other party. The Borrower and endorsers
of this Note also severally waive any and all other defense or right of offset
against the holder hereof. No Borrower shall have any right of subrogation,
contribution, reimbursement, indemnity, set off, or other recourse and waives
the benefit of, or any right to participate in, any collateral until such time
as all of the obligations owed by Borrower to Lender under this Note shall have
been paid in full. Each Borrower, to the extent it may lawfully do so, waives
any defense under California anti-deficiency statutes, or comparable provisions
of the laws of any other state to the recovery of a deficiency after a
foreclosure sale of such property.
Each Borrower represents and warrants to Lender that it has established adequate
means of obtaining from each other Borrower, on a continuing basis, information
pertaining to the businesses, operations and conditions (financial or otherwise)
of each other Borrower and its properties, and each Borrower now is and will be
familiar with the businesses, operations and conditions (financial or otherwise)
of each other Borrower and its properties. Each Borrower waives and relinquishes
any duty on the part of Lender (if such duty exists) to disclose to any Borrower
any matter, fact or thing related to the businesses, operations, or conditions
(financial or otherwise) of any other Borrower or its properties. Without
limiting the generality of the foregoing, each Borrower waives any defenses or
rights arising under or of the kind described in California Civil Code sections
2795, 2808, 2809, 2810, 2815, 2819 through 2825 (inclusive), 2832, 2839, and
2845 through 2850 (inclusive) and similar laws in other jurisdictions.
UNIFORM SECURED NOTE. This Note is a uniform instrument with limited variations
in some jurisdictions. In addition to the protections given to Lender under this
Note, the Security Instrument securing this Note protects Lender from possible
losses which might result if Borrower does not keep the promises made in this
Note. That Security Instrument describes how and under what conditions Borrower
may be required to make immediate payment in full of all amounts owed under this
Note. One of those conditions relates to any transfer of the property covered by
the deed of trust, which provides as follows:
10. (a) In the event the herein-described Property, or any part
thereof, or any interest therein, is sold, agreed to be sold, conveyed,
alienated or further encumbered or transferred, including any water
transfer as defined in subsection (b) below, by Trustor, or by
operation of law or otherwise, without Beneficiary's prior written
consent, all Indebtedness, irrespective of the maturity dates, at the
option of the holder hereof, and without demand or notice, shall
immediately become due and payable. Failure to exercise such option
shall not constitute a waiver of the right to exercise this option in
the event of subsequent sale, agreement to sell, conveyance or
alienation.
(b) A water transfer is any transfer, assignment, sale,
agreement to sell, conveyance, exchange, gift, encumbrance, pledge,
hypothecation, alienation, grant of option to purchase, or other
disposition of, directly, indirectly or in trust, voluntarily or
involuntarily, by operation of law or otherwise, or the entry into a
binding agreement to do any of the foregoing with respect to all or any
part of any existing or hereafter created or acquired Water Assets.
The representatives of Lender are not authorized to make any oral agreements or
assurances. Do not sign this Note if you believe that there are any agreements
or understandings between you and Lender that are not set forth in writing in
this Note or the other loan documents.
BY SIGNING, BORROWER ACKNOWLEDGES THAT BORROWER HAS READ AND AGREES TO THE TERMS
OF THIS NOTE, INCLUDING THE STANDARD CONDITIONS, AND HAS RECEIVED A COMPLETED
COPY OF THIS NOTE AND THE RELATED MORTGAGE, DEED OF TRUST OR OTHER SECURITY
DOCUMENTS WITH ALL APPLICABLE BLANKS FILLED IN PRIOR TO OR AS A PART OF THE
CONSUMMATION OF THIS TRANSACTION.
This Note is secured by personal property liens and by a deed of trust dated
April 8, 1998 to be recorded in the official records of Sonoma County, State of
California.
Ravenswood Winery, Inc.
By: /s/ W. REED FOSTER
-----------------------------------------------
W. Reed Foster, Chairman Of The Board
By: /s/ JOEL E. PETERSON
-----------------------------------------------
Joel E. Peterson, President
INDORSEMENT - The within Note is hereby indorsed by the payee named in the body
of said Note as if the name of the payee were actually executed under the
indorsement.
PAY TO THE ORDER OF WESTERN FARM CREDIT BANK, Sacramento, California.
INTEREST RATE DISCLOSURE STATEMENT
DATE: April 08, 1998 LOAN/CUSTOMER NO.: 0425985800 LOAN NO.:___________
From LENDER: Pacific Coast Farm Credit Services, ACA
Address: P. 0. Box 949, Petaluma, CA 94952
To BORROWER(s): Ravenswood Winery, Inc.
The following disclosure is made by Pacific Coast Farm Credit Services, ACA
(hereinafter "Lender") in accordance with Section 4.13(a) of the Farm Credit Act
of 1971, as amended, 12 U.S.C. Section 2199. This loan is not subject to the
Truth-in-Lending Act, 15 U.S.C. Sections 1601 et seq.; the effective interest
rate described herein should not be interpreted as the equivalent of the annual
percentage rate under Truth-in-Lending standards.
- ----------------------------------- ------------------------------------------
STATED INTEREST RATE EFFECTIVE INTEREST RATE
The rate of interest currently The stated rate of interest adjusted to
applicable to your loan* take into account the purchase of stock
and loan origination charges, if any
7.60%
7.80%
- ----------------------------------- ------------------------------------------
*Except for the stock portion of your loan which is held in a separate variable
rate account (Loan "9" on your Member Summary) and is at n/a%. (This applies to
certain ACAs/PCAs only.)
REPRESENTATIVE EXAMPLE: The effective interest rate set forth above is based on
stock or participation certificates of $1,000.00 and loan origination charges of
$ 20,000.00. The effective interest rate is the interest rate applicable to a
loan which takes into consideration the amount of any stock or participation
certificates which the borrower must purchase pursuant to bylaw, policy or
regulation in order to obtain the loan, and any loan origination charges. It is
an estimate at a point in time, and over the life of the loan may be affected by
such factors as changes in loan provisions, method of stock retirement, the
amount of stock or participation certificates required, the timing of repayment
or change in the stated rate. For example, if the stated interest rate and the
loan origination charges for this loan were the same as set forth above, but the
amount of stock or participation certificates required to be held is increased
by 1.0%, the effective interest rate would be 7.88%.
LOAN OPTIONS: Lender offers the following types of loans:
( ) Short and Intermediate-term Loans: Loans for production, operational or
harvest needs, with a maturity of one year or less; loans for capital
purposes with a maturity up to seven years; and subject to special
eligibility requirements, Special 10-year IT or 15-year Aquatic loans.
( ) Long-term Loans: Loans with maturities from five to forty years,
secured by a first lien on eligible real property, to an eligible
agricultural borrower, and subject to certain eligibility requirements
and loan purpose restrictions, loans to processing and marketing
facilities, farm-related businesses, or rural residents.
(x) Short, Intermediate and Long-term Loans: Loans for production,
operational or harvest needs or for capital purposes with maturities
not more than ten years (fifteen years for Aquatic loans); loans from
ten to forty years, secured by a first lien on eligible real property,
to an eligible agricultural borrower, and subject to certain
eligibility requirements and loan purpose restrictions, loans to
processing and marketing facilities, farm-related businesses, or rural
residents.
STOCK REQUIREMENT: Applicant was previously provided with information concerning
stock investment with this Farm Credit System institution. Such information
included disclosure of the at-risk nature of the investment, namely, that except
with respect to eligible borrower stock under Section 4.9A of the Farm Credit
Act of 1971, as amended, stock that is purchased in this institution is at-risk.
THE LOAN DOCUMENTS CONTAIN SPECIFIC INFORMATION REGARDING THE TERMS AND
CONDITIONS OF YOUR LOAN. IF YOU HAVE ANY QUESTIONS CONCERNING THE INFORMATION
CONTAINED IN THIS STATEMENT, PLEASE CONTACT YOUR LOAN OFFICER.
TYPE OF RATE:
(x) This is a VARIABLE RATE LOAN. During the term of the loan, the stated
rate of interest is subject to change:
( ) Every 6 months, 1, 3, 5, 7, 10, 15 or 20 year(s) ("Repricing
Periods" which period Borrower selects) and by any amount. You
may change to a different Repricing Period, offered by Lender
under its Repricing Mortgage plan at that time, at any Change
Date (date that the interest rate can change), without
incurring a penalty.
( ) Every [( ) 5 years] or [( ) 10 years] and by any amount. You
will be notified at least 45 days in advance of a change in
the interest rate.
(x) At any time and by any amount. You will be notified of changes
in the interest rate within the then applicable laws.
Exception: Commercial Fixed Interest Rate Repricing: Should a
qualified borrower be approved to have interest accrue on this
loan at a fixed rate under the Lender's Fixed Rate Pricing
Program, the principal amount and the rate will be fixed as
stated for the duration set forth in your conversion
agreement, confirmation notice, or similar documents which
will also disclose the new interest rate and the effective
date.
Lender has a differential interest rate program. Borrower's assignment
to the rate group for these loans are based upon an evaluation of a
combination of factors including Borrower's credit quality, quality of
the collateral and costs of servicing the loan.
In adjusting variable rate loans, certain standard factors are
considered including changes in costs of funds, operating expenses,
earnings requirements to meet certain capital objectives, credit risk
factors and the competitive environment. These standard factors may
change during the term of the loan.
( ) This is an ADJUSTABLE RATE LOAN. The stated rate of interest is
subject to change during the life of the loan. The interest rate on the
loan may be changed every ____ months (adjustment period).
Periodic Adjustment Cap. The rate may not increase or decrease
more than ____% at each adjustment period. Lifetime Cap/Floor.
Over the life of the loan the rate may not increase or
decrease more than ____% over/under the initial interest rate.
The new rate for this loan will be calculated as follows: 45 days prior
to the loan's Change Date (the day the interest rate can change),
Lender adds the Notes margin to the index and applies the above
Periodic Adjustment and Lifetime Cap/Floor.
( ) This is a FIXED INTEREST RATE LOAN. The stated rate of interest on the
full amount of the loan is not subject to change during the life of the
loan.
( ) This is a PRIME RATE LOAN. The stated rate of interest is subject to
change during the life of the loan at any time the prime rate as
published in the Wall Street Journal is increased or decreased and by
any amount said prime rate increases or decreases ( ) plus ( ) minus
____ percent per annum above/below prime. On any installment promissory
note transaction, the loan's may increase or decrease each year.
( ) This is a LIBOR RATE LOAN. The stated rate of interest is subject to
change during the life of the loan each mouth that the LIBOR rate as
published in the Wall Street Journal is increased or decreased and by
any amount said LIBOR rate increases or decreases ( ) plus ( ) minus
____ percent per annum ("margin") above/below said LIBOR rate. On any
installment promissory note transaction, the loan's margin may increase
or decrease each year.
If you have questions about the interest rate charged for your loan, you have
the right to request a review of the loan to determine that the proper interest
rate has been assigned, and you are entitled to a written explanation of the
basis for the interest rate charged and how the Borrower's status may be
improved to receive a lower rate. 12 U.S.C. Section 2199.
BORROWER RIGHTS: This loan is subject to the borrower rights generally described
below and more fully as set forth in the Farm Credit Act of 1971, as amended, 12
U.S.C. Section 2199, et. seq.:
Access to Documents (Section 2200). At loan closing, Borrower (or
Borrower's agent, if applicable) shall receive copies of loan documents
signed by Borrower. Upon request thereafter, Borrower is entitled to:
(1) copies of all documents signed or delivered to Borrower; and (2)
copies of Lender's charter and bylaws.
Notice of Action on Application (Section 2201). Lender shall provide
prompt written notice of action taken on loan and restructure
applications.
Credit Review Committee/Restructuring Loans (Sections 2202 and
2202a-c). Borrower is entitled to the right to seek restructuring of
certain distressed loans and a right to a review of certain adverse
decisions by a Credit Review Committee all as more fully set forth in
Lender's Distressed Loan Restructuring Policy, which policy is
available upon request.
Miscellaneous (Sections 2202d, e). If Borrower has made all accrued
payments of principal, interest and penalties, Lender may not foreclose
because Borrower has failed to post additional collateral. Lender may
not require a reduction in outstanding principal balance which exceeds
regularly scheduled principal installment except in certain
circumstances. If Borrower pays all accrued payments, including
penalties, Lender may not accelerate loan based solely on Borrower's
untimely payments. Lender may not require a Borrower who has pledged
agricultural property to waive any state mediation rights.
Right of First Refusal (Section 2219a). When the Lender first elects to
sell or lease agricultural real property acquired by Lender which was
previously owned by Borrower, the Lender must first notify the Borrower
of his/her right to purchase or lease the property as set forth in the
Act.
LOAN FUNDING STATEMENT
Billing Name: Ravenswood Winery, Inc.
Loan Number: 0425986600
Escrow No.: 172471CF
Total Amount of Loan .............................................. $835,000.00
Loan Fee $20,000.00
Appraisal Fee $5,000.00
Less: Prepaid Fees $0.00
Total Closing Costs ............................................... ($25,000.00)
Funds for preliminary costs associated with new
production facility ($805,000.00)
------------
Total loan proceeds to be funded ................................... $5,000.00
Ravenswood Winery, Inc.
By: _______________________________________________
W. Reed Foster, Chairman of the Board
By: _______________________________________________
Joel E. Peterson, President