Document:

ex10_11.htm

Exhibt 10.11

 

		

 

 

 

October 2, 2012

 

 

James D. Bielenberg

H.D.D. LLC

5610 Dry Creek Road

Healdsburg, CA 95448

 

 

Dear Mr. Bielenberg:

 

The members of the Direct Equipment Finance Department are pleased that H.D.D. LLC has chosen Bank of the West to provide equipment financing and we look forward to servicing your transaction. Enclosed are the following documents for execution:

 

	
  

	
1.

	
Master Equipment Financing Agreement

	
  

	
2.

	
Schedule No. 100-0022757-001

	
  

	
3.

	
Schedule A - Equipment Description

	
  

	
4.

	
Insurance Authorization

	
  

	
5.

	
Automatic Transfer and Authorization Control Agreement – please complete this form if you would like to establish an automatic debit for the loan payments.

	
  

	
6.

	
Closing Invoice

 

 

A Certificate of Insurance naming Bank of the West, Direct Equipment Finance, 2527 Camino Ramon / NC-B07-3F-V, San Ramon, CA 94583 as sole loss payee with respect to the financed equipment, is required before funds can be disbursed. Please contact your insurance agent to have this equipment added to your policy and request a Certificate of Insurance to be faxed to my attention at 323-837-3042 or sent via email to Lynn.Mifune@bankofthewest.com as soon as possible.

 

	
Please overnight the executed documents and your check to:

	
Bank of the West / DEF 951

	  	
Direct Equipment Finance - Attn: Lynn Mifune

	  	
2527 Camino Ramon, NC-B07-3F-V

	  	
San Ramon, CA 94583

 

Upon receipt of all executed documents and other items noted above (as applicable), Bank of the West will execute the documents and commence your agreement.

 

We would like to thank you for doing business with us. If you have any questions regarding your financing, please feel free to contact me at 925-843-2488 or contact Frank Lee at (650) 344-5193. Thank you for choosing Bank of the West. 

 

Regards,

 

Lynn Mifune

Contract Administration

 

 

IMPORTANT INFORMATION REGARDING OBTAINING AN EXTENSION OF CREDIT

To help the Federal Government fight the funding of terrorism and money laundering activities, Federal Law requires all financial institutions to obtain, verify and record certain information that identifies each person/entity who obtains an extension of credit from the institution.

When you obtain the extension of credit, we will ask for your name, street address, taxpayer identification number or alien identification number as applicable; date of birth (individual applicants and sole proprietors only); and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying document.

 

  

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MASTER EQUIPMENT FINANCING AGREEMENT

 

THIS MASTER EQUIPMENT FINANCING AGREEMENT ("Agreement") is entered into as of October 2, 2012 between Bank of the West ("Creditor") and H.D.D. LLC ("Debtor").

 

Creditor and Debtor agree as follows:

 

	
1.

	
EQUIPMENT; SECURITY INTEREST. Under this agreement Creditor will provide Debtor financing as to each item of machinery, equipment and other property (individually with all accessions, additions and replacements an "Item" and collectively the "Equipment") described in a schedule referencing this Agreement and incorporated herein executed by Creditor and Debtor (individually a "Schedule"). Debtor shall acquire and maintain title or, in the case of software, alternatively a license, to each Item subject only to Creditor's lien described below and the lien of current property taxes not in default. Debtor hereby grants Creditor a security interest in and to all Debtor's right, title and interest in and to the Equipment under the Uniform Commercial Code, such grant with respect to an Item to be as of the later of Debtor's execution of a related proposal or Schedule or Debtor acquiring an interest in the Item. Such security interest is granted to secure performance by Debtor of Debtor's obligations hereunder and under any other agreements under which Debtor now or hereafter has obligations to Creditor.

 

	
2.

	
DEBTOR'S OBLIGATIONS. Debtor's obligations respecting an Item, except the related installment payment obligation which is governed by paragraph 3 below, commence upon the grant to Creditor of a security interest in the Item. Debtor's obligations with respect to an Item and Creditor's security interest will continue until full performance of all related obligations hereunder; provided, however, that if this Agreement is then in default, said obligations and security interest will continue during the continuance of said default. Upon termination of Creditor's security interest in an Item, Creditor will provide such release of interest with respect thereto as Debtor reasonably requests.

 

	
3.

	
INSTALLMENT AND OTHER PAYMENTS. Debtor will repay Creditor's advance as to an Item in installments of principal and interest in the amounts and at the times set forth in the applicable Schedule at the office of Creditor set forth at the foot hereof or as Creditor may from time to time otherwise designate on notice to Debtor. Other amounts required to be paid by Debtor hereunder are due upon Debtor's receipt of an invoice therefor and will be payable as directed in the invoice. Payments under this Agreement may be applied to Debtor's then accrued obligations to Creditor in such order as Creditor may choose.

 

	
4.

	
DEPOSIT. Debtor will have deposited or will deposit with Creditor any "Deposit" amount set forth in a Schedule. Creditor may, at its option, apply a Deposit amount toward any of Debtor's past due obligations to Creditor in which event Debtor will promptly restore the Deposit amount to the full amount originally deposited. Upon termination of Creditor's security interest as to all Items covered by a Schedule, Creditor will return to Debtor the remaining balance of any related Deposit amount without interest.

 

	
5.

	
NO OFFSET; SURVIVAL. Debtor will not be entitled to any abatement of installment or other payments due hereunder or any reduction thereof under any circumstances. Debtor waives any and all existing and future claims, as offsets, against any payments due hereunder and agrees to pay all amounts when due regardless of any claim which may be asserted by Debtor. Debtor has not waived any rights Debtor may have to prosecute any claim against Creditor in an action unrelated to this Agreement. This Agreement is not terminable by Debtor for any reason and will otherwise terminate only as provided herein. In no event will Creditor, if liable to Debtor with respect to this Agreement, be liable for punitive, consequential or similar damages. The obligations and liabilities of Debtor hereunder will survive the termination of Creditor's security interest in the Equipment and Debtor's covenants under any credit agreement with Creditor or an affiliate shall survive payment of all amounts due thereunder until payment of all amounts due hereunder

 

	
6.

	
FINANCING AGREEMENT. THIS AGREEMENT IS SOLELY A FINANCING AGREEMENT. DEBTOR ACKNOWLEDGES THAT THE EQUIPMENT HAS OR WILL HAVE BEEN SELECTED AND ACQUIRED SOLELY BY DEBTOR FOR DEBTOR'S PURPOSES, THAT CREDITOR IS NOT AND WILL NOT BE THE VENDOR OF ANY EQUIPMENT AND THAT CREDITOR HAS NOT MADE AND WILL NOT MAKE ANY AGREEMENT, REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE MERCHANTABILITY, CONDITION, QUALITY OR FITNESS FOR A PARTICULAR PURPOSE OR VALUE OF THE EQUIPMENT OR ANY OTHER MATTER WITH RESPECT THERETO IN ANY RESPECT WHATSOEVER.

 

  

Page 1 of 7

  

 

	
7.

	
NO AGENCY. NO AGENT OF THE MANUFACTURER OR OTHER SUPPLIER OF ANY ITEM OR OF ANY FINANCIAL INTERMEDIARY IS AN AGENT OF CREDITOR. CREDITOR IS NOT BOUND BY A REPRESENTATION OF ANY SUCH PARTY, AND, AS CONTEMPLATED IN PARAGRAPH 28 BELOW, THE PARTIES' ENTIRE AGREEMENT AS TO THE EQUIPMENT IS CONTAINED IN THIS AGREEMENT.

 

	
8.

	
ACCEPTANCE. Upon receipt from Creditor of a Schedule covering the Equipment or any Items, Debtor will either (a) execute and deliver the Schedule or (b) give Creditor notice specifying any objection to the Equipment covered thereby. Debtor's execution of a Schedule will conclusively establish as between Creditor and Debtor that the Equipment covered thereby is acceptable to, and has been accepted by, Debtor for all purposes of this Agreement.

 

	
9.

	
LOCATION; INSPECTION; USE. Except as otherwise consented to in writing by Creditor, Debtor will keep, or permanently garage and not remove from the United States, as appropriate, each Item in Debtor's possession and control at the Equipment Location designated in the applicable Schedule, or at such other location to which such Item may have been moved or at which such Item is permanently garaged with the prior written consent of Creditor. Upon request by Creditor, Debtor will advise Creditor as to the exact location of an Item. Creditor may inspect an Item and observe its use during normal business hours, and Debtor will ensure Creditor's ability to enter into and upon the premises where the Item may be located for such purpose. The Equipment will at all times be used solely for commercial or business purposes and operated in a careful and proper manner and in compliance with all applicable laws, ordinances, rules and regulations, all requirements of the required insurance and all manufacturer's instructions and warranty requirements. Any modifications or additions to an Item required by any such governmental edict or insurance policy, will be promptly made by Debtor at its own expense.

 

	
10.

	
ALTERATIONS. Without the prior written consent of Creditor, Debtor will not make any alterations, additions or improvements to an Item which detract from its economic value or functional utility, except as may be required under paragraph 9 above. All additions and improvements made to an Item which cannot be removed without detracting from its economic value or functional utility will be deemed accessions thereto and thus subject to the security interest of Creditor.

 

	
11.

	
MAINTENANCE. Debtor will maintain the Equipment in good repair, condition and working order, will furnish all parts, mechanisms, devices and labor required to keep the Equipment in such condition and will pay all costs of the Equipment's operation. Debtor will cause each Item for which a service contract is generally available to be covered by such a contract which provides coverages typical as to property of the type involved and is issued by a competent servicing entity or alternatively maintain such Equipment to the same standards.

 

	
12.

	
LOSS AND DAMAGE; CASUALTY VALUE. Upon the occurrence of the loss of, theft of, requisition of, damage to or destruction of an Item from any cause ("Casualty Occurrence") Debtor will give Creditor notice thereof within 24 hours and will thereafter place the affected Item in good repair, condition and working order; provided, however, that if the Item is determined by Creditor to be lost, stolen, destroyed or damaged beyond repair or is requisitioned or suffers a constructive total loss as defined in any insurance policy carried hereunder, Debtor, at Creditor's option, will (a) replace the Item with like, new equipment in good repair, condition and working order and obtain clear title to such replacement equipment whereupon such replacement equipment will be deemed such Item for all purposes hereof, including Creditor's security interest therein, or (b) pay Creditor the "Stipulated Loss Value" of such Item which will equal the total of (A) all installment payments and other amounts, if any, due from Debtor to Creditor hereunder at the time of such payment, plus (B) the remaining balance of the advance made as to the Item calculated by applying payments received as to the Item as of receipt first to accrued interest at the rate implicit in this agreement assuming timely payments and a year of twelve (12) months of thirty (30) days each and then to reduce the outstanding advance as to the Item. For these purposes each installment will be allocated to an individual Item based on the relationship that the advance as to the Item has to the total advance for the Equipment. Upon such replacement or payment, as appropriate, this Agreement will terminate with, and only with, respect to the Item so replaced or paid for, and Debtor will become entitled thereto "AS-IS, WHERE-IS."

 

	
13.

	
TITLING; REGISTRATION. Each Item subject to title registration laws will at all times be titled and/or registered by Debtor at its own expense in such manner and in such jurisdiction or jurisdictions as Creditor directs. Debtor will promptly notify Creditor of any necessary or advisable retitling and/or re-registration of an Item. Whenever a title document is issuable to Creditor, Debtor will use reasonable efforts to cause any and all documents of title to be issued by the applicable state authority to Creditor within 60 days of the date of filing the titling application.

 

  

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14.

	
TAXES. Debtor will make all filings as to and pay when due all personal property and other ad valorem taxes and all other taxes, fees, charges and assessments based on the ownership or use of the Equipment and will pay as directed by Creditor or reimburse Creditor for all other taxes, including, but not limited to, gross receipts taxes (exclusive of federal and state taxes based on Creditor's net income, unless such taxes are in substitution for or relieve Debtor from any taxes which Debtor would otherwise be obligated to pay under the terms of this paragraph 14), fees, charges and assessments whatsoever, however designated, whether based on the installment payments or other amounts due hereunder, levied, assessed or imposed upon the Equipment or otherwise related hereto or to the Equipment, now or hereafter levied, assessed or imposed under the authority of a federal, state or local taxing jurisdiction, regardless of when and by whom payable. Filings with respect to such other assessments will, at Creditor's option, be made by Creditor or by Debtor as directed by Creditor.

  

	
15.

	
INSURANCE. Debtor will continuously maintain and pay for all risk insurance against loss of or damage to the Equipment from any cause whatsoever for not less than the full replacement value thereof naming Creditor as Loss Payee. If requested by Creditor, Debtor will similarly carry related combined public liability and property damage insurance with a single limit of not less than $1,000,000 per occurrence, or such greater or lesser amount as Creditor may from time to time require on notice to Debtor, naming Creditor as an Additional Insured. All such insurance must be in a form and with companies approved by Creditor, must designate Debtor as a Named Insured, must provide at least 30 days advance written notice to Debtor of cancellation, change or modification in any term, condition or amount of protection provided therein, must provide breach of warranty protection to Creditor, if applicable, and must provide that the coverage does not require contribution from Creditor's or any other applicable coverage. Debtor will keep Creditor provided with a current policy or certificate evidencing such insurance. Debtor will promptly notify any appropriate insurer and Creditor of any occurrence which may become the basis of a claim or cause of action against the insureds and provide Creditor with all data pertinent to such occurrence. The proceeds of such insurance, at the option of Creditor, will be applied toward (a) the repair or replacement of the appropriate Item or Items, (b) payment of the Stipulated Loss Value thereof or (c) payment of, or as a provision for, satisfaction of any other accrued obligations of Debtor hereunder. Any excess of such proceeds remaining will belong to Debtor. Debtor appoints Creditor as Debtor's attorney-in-fact to do all things, including, but not limited to, making claims, receiving payments and endorsing documents, checks or drafts, necessary or advisable to secure payments due on account of a Casualty Occurrence under any such policy.

 

	
16.

	
CREDITOR'S PAYMENT. If Debtor fails to pay an amount hereunder or to perform any of its other obligations, Creditor may, at its option, pay such amount or perform such obligation, and Debtor will reimburse Creditor the payment amount or cost of performance.

 

	
17.

	
INDEMNITY. Debtor will indemnify, defend, protect and keep harmless Creditor from any and all liabilities, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements, including court costs and legal expenses, of whatsoever nature and whenever arising or asserted, imposed on, incurred by or asserted against Creditor (whether or not also indemnified against by any other person) in any way relating to or arising out of this Agreement or the Equipment, including Creditor's lawful acts in the administration and enforcement hereof, including, without limitation, any claim alleging latent and other defects, whether or not discoverable by Creditor or Debtor, any other claim arising out of strict or vicarious liability in tort and any claim for environmental remediation or patent, trademark or copyright infringement. Each party shall give the other notice of any claim or liability hereby indemnified against promptly following learning thereof.

 

	
18.

	
DEFAULT. Any of the following will constitute an event of default hereunder: (a) Debtor's failure to pay when due any installment payment or other amount due hereunder, which failure continues for 10 days; (b) Debtor's default in performing any other obligation, term or condition of this Agreement or any other agreement between Creditor and Debtor or default under any other agreement providing security for the performance by Debtor of its obligations hereunder, provided such default will have continued for more than 20 days after notice of default, except as provided in (c) and (d) below, or default under any lease or any mortgage or other instrument contemplating the provision of financial accommodation applicable to the real estate where an Item is located; (c) a writ or order of attachment or execution or other legal process being levied on or charged against any Item and not released or satisfied within 10 days; (d) Debtor's failure to comply with its obligations under paragraph 15 above or any attempted assignment of Debtor's interest in an Item in violation of paragraph 22 below; (e) a final judgment for the payment of money in excess of $250,000 is rendered by a court against Debtor which Debtor does not discharge or make provision for discharge in accordance with the terms thereof within 90 days from the date of entry thereof; (f) death or incompetency of Debtor, if an individual; (g) the filing by Debtor of a petition under the Bankruptcy Act or under any other insolvency law or law providing for the relief of debtors, including, without limitation, a petition for reorganization, arrangement or extension, or commission by Debtor of an act of bankruptcy;(h) the filing against Debtor of any such petition not dismissed or permanently stayed within 30 days of the filing thereof; (i) the voluntary or involuntary making of an assignment of a substantial portion of its assets by Debtor for the benefit of creditors, appointment of a receiver or trustee for Debtor or for any of Debtor's assets, institution by or against Debtor of any other type of insolvency proceeding (under the Bankruptcy Act or otherwise) or of any formal or informal proceeding for dissolution, liquidation, settlement of claims against or winding up of the affairs of Debtor, Debtor's cessation of business activities, Debtor's failure to pay its debts generally as due or the making by Debtor of a transfer of all or a material portion of Debtor's assets or inventory not in the ordinary course of business; (j) the occurrence of any event described in parts (e), (f), (g), (h) or (i) hereinabove with respect to a guarantor or other party liable respecting this Agreement; or (k) any certificate, statement, representation, warranty or audit heretofore or hereafter furnished with respect thereto by or on behalf of Debtor or any guarantor or other party liable respecting this Agreement proving to have been false in any material respect at the time as of which the facts therein set forth were stated or certified or having omitted any substantial contingent or unliquidated liability or claim against Debtor or any such guarantor or other party, (l) a change in control of Debtor not consented to by Creditor; (m) an event of default occurs under any other agreement providing leasing services or financial accommodation to Debtor where the maximum commitment amount or aggregate rentals exceed $250,000, without regard to any waiver thereof or decision not to pursue remedies on account thereof by the lessor or creditor, or (n) Debtor's lending relationship with Creditor unrelated to this Agreement ceases.

 

  

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19.

	
REMEDIES. Upon the occurrence of an event of default, Creditor will have the rights, options, duties and remedies of a secured party, and Debtor will have the rights and duties of a debtor, under the Uniform Commercial Code (regardless of whether such Code or a law similar thereto has been enacted in a jurisdiction wherein the rights or remedies are asserted) and, without limiting the foregoing, Creditor may exercise any one or more of the following remedies: (a) declare the Stipulated Loss Value or such lesser amount as may be set by law immediately due and payable with respect to any or all Items without notice or demand to Debtor; (b) sue from time to time for and recover all installment payments and other amounts then accrued and which accrue during the pendency of such action with respect to any or all Items; (c) take possession of and, if deemed appropriate, render unusable any or all Items, without demand or notice, wherever same may be located, without any court order or other process of law and without liability for any damages occasioned by such taking of possession and remove, keep and store the same or use and operate or lease the same until sold; (d) require Debtor to assemble any or all Items at the Equipment Location therefor, such location to which such Equipment may have been moved with the written consent of Creditor or such other location in reasonable proximity to either of the foregoing as Creditor designates; (e) upon 10 days notice to Debtor or such other notice as may be required by law, sell or otherwise dispose of any Item, whether or not in Creditor's possession, in a commercially reasonable manner at public or private sale at any place deemed appropriate and apply the net proceeds of such sale, after deducting all costs of such sale, including, but not limited to, costs of transportation, repossession, storage, refurbishing, advertising and broker's fees, to the obligations of Debtor to Creditor hereunder or otherwise, with Debtor remaining liable for any deficiency and with any excess being returned to Debtor; or (f) utilize any other remedy available to Creditor under the Uniform Commercial Code or similar provision of law or otherwise at law or in equity. Amounts past due under this paragraph 19 will bear interest at 18% per annum or at such lesser maximum rate as may be set by law until paid. No right or remedy conferred herein is exclusive of any other right or remedy conferred herein or by law; but all such remedies are cumulative of every other right or remedy conferred hereunder or at law or in equity, by statute or otherwise, and may be exercised concurrently or separately from time to time. Any sale contemplated by subparagraph (e) of this paragraph 19 may be adjourned from time to time by announcement at the time and place appointed for such sale, or for any such adjourned sale, without further published notice, and Creditor may bid and become the purchaser at any such sale. Any sale of an Item, whether under said subparagraph or by virtue of judicial proceedings, will operate to divest all right, title, interest, claim and demand whatsoever, either at law or in equity, of Debtor in and to said Item and will be a perpetual bar to any claim against such Item, both at law and in equity, against Debtor and all persons claiming by, through or under Debtor.

 

	
20.

	
DISCONTINUANCE OF REMEDIES. If Creditor proceeds to enforce any right under this Agreement and such proceedings are discontinued or abandoned for any reason or are determined adversely, then and in every such case Debtor and Creditor will be restored to their former positions and rights thereunder.

 

	
21.

	
CREDITOR'S EXPENSES. Debtor will pay Creditor all costs and expenses, including repossession, Equipment disposition and court costs and attorney's fees (including a reasonable fee for services of salaried counsel employed by Creditor), not offset against sales proceeds under paragraph 19 above, incurred by Creditor in exercising any remedies hereunder. This obligation includes the payment or reimbursement of all such amounts, including those incurred on appeal or in a bankruptcy proceeding, whether an action is ultimately filed or concluded.

 

	
22.

	
ASSIGNMENT. Without the prior written consent of Creditor, Debtor will not sell, lease, pledge or hypothecate, except as provided in this Agreement, an Item or any interest therein or assign, transfer, pledge or hypothecate this Agreement or any interest in this Agreement or permit the Equipment to be subject to any lien, charge or encumbrance of any nature except the security interest of Creditor contemplated hereby and property tax liens contemplated in paragraph 1. Debtor's interest herein is not assignable and will not be assigned or transferred by operation of law. Consent to any of the foregoing prohibited acts applies only in the given instance and is not a consent to any subsequent like act by Debtor or any other person. Debtor further acknowledges the Creditor's consent to any lease will be on the basis, among other considerations, that the lessee's rights are subordinate to the rights of Creditor under this Agreement. All rights of Creditor hereunder may be assigned, pledged, mortgaged, transferred or otherwise disposed of, either in whole or in part, without notice to Debtor but always, however, subject to the rights of Debtor under this Agreement. If Debtor is given notice of any such assignment, Debtor will acknowledge receipt thereof in writing and will thereafter pay any amounts due hereunder specified in said notice as directed therein. If Creditor assigns this Agreement or the installment payments due or to become due hereunder or any other interest herein, no breach or default by Creditor hereunder or pursuant to any other agreement between Creditor and Debtor will excuse performance by Debtor of any provision hereof, it being understood that in the event of default or breach by Creditor that Debtor will pursue any rights on account thereof solely against Creditor No such assignee, unless such assignee agrees in writing, will be obligated to perform any duty, covenant or condition required to be performed by Creditor in connection with this Agreement.

  

  

Page 4 of 7

  

 

	
23.

	
MARKINGS; PERSONAL PROPERTY. If Creditor supplies Debtor with labels, plates, decals or other markings stating that the Equipment is subject to Creditor's lien, Debtor will affix and keep the same prominently displayed on the Equipment or will otherwise mark the Equipment, any Equipment Location or any other location where an Item may be located with the prior written consent of Creditor, at Creditor's request, to indicate Creditor's security interest in the applicable Equipment. As between the parties, the Equipment is, and at all times will remain, personal property notwithstanding that the Equipment or any Item may now be, or hereafter become, affixed to realty. If requested by Creditor, Debtor will obtain and deliver to Creditor waivers of interest or liens in recordable form satisfactory to Creditor from all persons claiming any interest in the real property on which an Item is or is to be installed or located.

 

	
24.

	
LATE CHARGE. If Debtor fails to pay any installment or any other payment to be paid by Debtor hereunder within 10 days after the due date thereof, Debtor will pay Creditor (a) a late charge of 5% of the amount, (b) Creditor's collection costs paid third parties relevant to the collection thereof and (c) Creditor's standard returned check charge, if relevant.

 

	
25.

	
NON-WAIVER. No covenant or condition of this Agreement can be waived except by the written consent of Creditor. Forbearance or indulgence by Creditor in regarding to any breach will not constitute a waiver of the related covenant or condition.

 

	
26.

	
ADDITIONAL DOCUMENTS. Debtor will procure and/or execute, have executed, acknowledge, have acknowledged, deliver to Creditor, record and file such requested documents and showings as Creditor may deem necessary or desirable to protect its interest in this Agreement and the Equipment. Debtor will pay as directed by Creditor or reimburse Creditor for all search, filing, attorney's services and other charges incurred by Creditor in connection with such documents and showings, any similar documents and showings Creditor may procure and any real property waivers provided under paragraph 23 above. Debtor acknowledges that Creditor will file financing statements with respect to the Equipment under the Uniform Commercial Code, authorizes Creditor to make such filings and ratifies Creditor's authority to make any such filings previously made. Debtor will furnish Creditor (a) an audited fiscal year end financial statement including balance sheet and profit and loss statement within 120 days of the close of each fiscal year prepared in accordance with Generally Accepted Accounting Principles ("GAAP") or if not audited, in a form acceptable to Creditor, (b) quarterly Debtor-prepared financial statements complying with GAAP, (c) any other information normally provided by Debtor to the public, (d) upon request of Creditor, a compliance certificate respecting Debtor's covenants to Creditor in form and substance satisfactory to Creditor and (e) such other data or financial information relative to this Agreement and the Equipment as Creditor may reasonably request. Subject to the foregoing, this Agreement inures to the benefit of, and is binding upon, the heirs, legatees, personal representatives, successors and assigns of the parties hereto.

 

	
27.

	
DEBTOR'S WARRANTIES. Debtor warrants that the financial data and other information Debtor has submitted, or will submit, to Creditor in connection with this Agreement is, or will be, as appropriate, a true and complete statement of the matters therein contained. Debtor further warrants that (a) this Agreement has been duly authorized, executed and delivered by Debtor and constitutes the legal, valid and binding obligation, contract and agreement of Debtor enforceable against Debtor in accordance with its terms except as enforcement may be affected by bankruptcy and similar laws affecting creditors' rights generally and (b) this Agreement and each and every showing provided by or on behalf of Debtor in connection herewith may be relied upon by Creditor in accordance with the terms thereof. The person executing this Agreement on behalf of Debtor warrants that he or she has been fully authorized to do so.

 

	
28.

	
ENTIRE AGREEMENT; FACSIMILE SIGNATURES. This Agreement constitutes the entire agreement between Creditor and Debtor relative to the Equipment and may be amended only by a writing signed by the party to be charged. If any provision hereof is declared invalid, such provision will be deemed severable from the remaining provisions of this Agreement which will remain in full force and effect. If a signed copy of this Agreement or a Schedule is delivered to Creditor by facsimile transmission, a copy of the transmitted copy shall, notwithstanding any rule of evidence to the contrary, be deemed an original signed document.

 

  

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29.

	
NOTICES. Notices under this Agreement must be in writing and must be sent via courier or sent certified or registered mail with return receipt requested, duly addressed, with postage prepaid, or delivered to the party involved at its respective address set forth at the foot hereof or at such other address as such party may provide on notice to the other from time to time. Notices will be effective upon the earlier of three (3) business days after deposited or delivery. Each party will promptly notify the other of any change in the first party's address. Notices may also be emailed provided that each party will follow up with a written notice as outlined above.

  

	
30.

	
GENDER; NUMBER; JOINT AND SEVERAL LIABILITY. Where the context of this Agreement requires, the neuter gender includes the masculine or feminine and the singular number includes the plural; and whenever the word "Creditor" is used herein, it will include all assignees of Creditor. If there is more than one Debtor named in this Agreement, the liability of each will be joint and several.

 

	
31.

	
TITLES. The Agreement paragraph titles are for convenience only and are not an aid in the interpretation of the Agreement.

 

	
32.

	
GOVERNING LAW; VENUE. This Agreement will be governed by the law of the State of California. Venue for any action related to this Agreement will be in an appropriate court in Los Angeles County, California selected by Creditor, to which Debtor consents, or in another court selected by Creditor which has jurisdiction over the matter. If a provision hereof is declared invalid, such provision will be deemed severable from the remaining provisions of this Agreement which will remain in full force and effect.

 

	
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above appearing.

 

 

	
Bank of the West Creditor

Creditor

	 	
H.D.D. LLC

Debtor

	  	 	  
	
By:

	  	 	
By:

	/s/ Philip L. Hurst
	
Name:

	  	 	
Name

	
Philip L. Hurst

	
Title:

	  	 	
Title:

	
Manager

	  	  	 	  	  
	
Address:

	  	 	
By:

	/s/ William R. Hambrecht
	
Bank of the West / DEF 951

	 	
Name:

	
William R. Hambrecht

	
2527 Camino Ramon, NC-B07-3F-V

	 	
Title:

	
Manager

	San Ramon, CA 94583	 	  	  
	  	  	 	
By:

	/s/ Paul E. Dolan, III
	  	  	 	
Name:

	
Paul E. Dolan, III

	  	  	 	
Title:

	
Manager

	  	  	 	  	  
	  	  	 	
By:

	/s/ Heath E. Dolan
	  	  	 	
Name:

	
Heath E. Dolan

	  	  	 	
Title:

	
Manager

	  	  	 	  	  
	  	  	 	
By:

	/s/ J. Barrie Graham
	  	  	 	
Name:

	
J. Barrie Graham

	  	  	 	
Title:

	
Manager

	  	  	 	  	  
	  	  	 	
By:

	/s/ Daniel A. Carroll
	  	  	 	
Name:

	
Daniel A. Carroll

	  	  	 	
Title:

	
Manager

	  	  	 	  	  
	  	  	 	
Address:

	  	  	 	
5610 Dry Creek Road

	  	 	
Healdsburg, CA 95448

 

  

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IMPORTANT INFORMATION REGARDING OBTAINING AN EXTENSION OF CREDIT

To help the Federal Government fight the funding of terrorism and money laundering activities, Federal Law requires all financial institutions to obtain, verify and record certain information that identifies each person/entity who obtains an extension of credit from the institution.

When you obtain the extension of credit, we will ask for your name, street address, taxpayer identification number or alien identification number as applicable; date of birth (individual applicants and sole proprietors only); and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying document.

 

 

 

 

 

  

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Schedule No. 100-0022757-001 

to Master Equipment Financing Agreement 

between Bank of the West as Creditor,

and H.D.D. LLC dba Truett-Hurst Winery as Debtor, 

dated as of October 2, 2012 (the "Agreement")

 

Creditor and Debtor acknowledge that the Items of Equipment described in this Schedule are subject to the terms and conditions of the Agreement and that following such description are the advance respecting said Items, the installment payments with respect thereto, any deposit provided or to be provided in connection therewith, the Equipment Location thereof, and certain other provisions applicable thereto. Debtor represents to Creditor that this Equipment has been delivered to, is now in the possession of and has been accepted by Debtor for all purposes of the Agreement and is correctly described herein. DEBTOR UNDERSTANDS THAT UPON CREDITOR'S ACCEPTANCE OF THIS SCHEDULE CREDITOR WILL FUND THE ADVANCE RESPECTING THIS EQUIPMENT AND FURTHER THAT SUCH ACCEPTANCE WILL COMMENCE DEBTOR'S INSTALLMENT PAYMENT OBLIGATION UNDER THE AGREEMENT AS TO THIS EQUIPMENT. DEBTOR REAFFIRMS THAT THE AGREEMENT INVOLVES SOLELY A FINANCING UNDER WHICH CREDITOR IS A LENDER WHICH MAKES NO WARRANTIES OR REPRESENTATIONS AS TO THIS EQUIPMENT.

 

	
1.

	
Equipment Description:     See Schedule A attached hereto and made a part hereof

 

	
 

	
Together with all replacements, parts, repairs, additions, accessions and accessories incorporated therein or affixed or attached thereto and any and all proceeds of the foregoing, including, without limitation, insurance recoveries.

 

	
2.

	
Equipment Advance:           $ 143,684.40

 

	
3.

	
Installment Payments: Creditor's advance shall be repayable as follows: 36 payments in the amount of $4,226.18 each, with the first payment due November 1, 2012 and subsequent payments payable on the 1st day of each succeeding month, together with an interim interest payment of $14.97 per day from the funding date to the commencement of the initial payment period.  These payments may be adjusted based on any difference between the "Index" as of the date of this Schedule and the Index as of the date Creditor makes the Equipment Advance.  For these purposes the Index is Creditor's internally prepared "Daily Fixed Price Indication Rate" for the Agreement term and structure applicable to this Schedule.

 

	
4.

	Deposit:  	
Not Applicable

 

	
5.

	Equipment Location:  	
5610 Dry Creek Road

Healdsburg, CA  95448

 

	
6.

	 	
Intentionally left blank.

 

	
7.

	Equipment Advance:	
Debtor acknowledges that Creditor will advance the Equipment Advance as follows:

 

	
$143,434.40

	 	
H.D.D. LLC

	
$250.00

	 	
Bank of the West – Documentation Fee

	
$143,684.40

	 	
TOTAL DISBURSEMENT

 

 

  

Page 1 of 2

  

 

	
8.

	
Other Provisions:                Intentionally left blank.

 

 

	
9.

	
Documentation Fee:            $250.00

 

ACCEPTED AND APPROVED AS OF October 2, 2012 as a Schedule to and made a part of the Agreement.

 

	
Bank of the West 

Creditor

	 	
H.D.D. LLC dba Truett-Hurst Winery

Debtor

	  	 	  
	
By:

	  	 	
By:

	/s/ Philip L. Hurst
	
Name:

	  	 	
Name

	
Philip L. Hurst

	
Title:

	  	 	
Title:

	
Manager

	  	  	 	  	  
	  	  	 	
By:

	/s/ William R. Hambrecht
	  	 	
Name:

	
William R. Hambrecht

	  	 	
Title:

	
Manager

	  	 	  	  
	  	  	 	
By:

	/s/ Paul E. Dolan, III
	  	  	 	
Name:

	
Paul E. Dolan, III

	  	  	 	
Title:

	
Manager

	  	  	 	  	  
	  	  	 	
By:

	/s/ Heath E. Dolan
	  	  	 	
Name:

	
Heath E. Dolan

	  	  	 	
Title:

	
Manager

	  	  	 	  	  
	  	  	 	
By:

	/s/ J. Barrie Graham
	  	  	 	
Name:

	
J. Barrie Graham

	  	  	 	
Title:

	
Manager

	  	  	 	  	  
	  	  	 	
By:

	/s/ Daniel A. Carroll
	  	  	 	
Name:

	
Daniel A. Carroll

	  	  	 	
Title:

	
Manager

 

NOTICE TO THE DEBTOR:  DO NOT SIGN UNLESS ALL ITEMS OF EQUIPMENT ARE ACCEPTABLE FOR ALL PURPOSES OF THE AGREEMENT. IF ANY ITEMS ARE UNACCEPTABLE, NOTIFY CREDITOR PROMPTLY. CREDITOR'S OBLIGATIONS TO ACCEPT THIS SCHEDULE, NOTWITHSTANDING ITS PRIOR DATING, ARE TERMINABLE AS OF ANY COMMITMENT EXPIRATION WHICH MAY APPLY.

 

 

IMPORTANT INFORMATION REGARDING OBTAINING AN EXTENSION OF CREDIT

To help the Federal Government fight the funding of terrorism and money laundering activities, Federal Law requires all financial institutions to obtain, verify and record certain information that identifies each person/entity who obtains an extension of credit from the institution.

When you obtain the extension of credit, we will ask for your name, street address, taxpayer identification number or alien identification number as applicable; date of birth (individual applicants and sole proprietors only); and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying document.

 

  

Page 2 of 2

  

		

 

 

SCHEDULE A

 

EQUIPMENT DESCRIPTION

 

 This Schedule A is incorporated into Schedule No. 100-0022757-001 to Master Equipment Financing Agreement between Bank of the West (“Creditor”) and H.D.D. LLC(“Debtor”), dated as of October 2, 2012 (the “Agreement”). 

 

	
 Vendor 

	
 Description 

	
 Santa Rosa Stainless Steel 

	
 (4) Stainless Steel Fermenting Tanks, 2405 Gallons each, 8’-0” x 6’-6”, Open Top and Sloping Bottom 

	
 Francois Freres USA, Inc. 

	
 (1) BG Tight Grain – 3 Year 

 (1) BG Very Special Grain – 3 Year 

	
 Billet Transportation 

	
 Shipping 

	
 Gamba USA 

	
 Delivery/Transportation 

	
 Northwest Cooperage 

	
 (18) 228 Liter Burgundy COF M+TH 

 (6) 228 Liter Burgundy A/J M+TH 

 (4) 228 Liter Burgundy COF Cru 

 (4) 228 Liter Burgundy A/J Cru 

 (20) 225 Liter Bordeaux COF M+TH 

	
 Generazioni 

	
 Delivery 

	
 Acrolon Technologies, Inc. 

	
 (4) TankNet PL-1 Thermostat, 120VAC, w/TP-1 Probe 

	
 C-Line Express 

	
 Shipping 

	
 Tonnellerie de Jarnac 

	
 (8) 228L Bourgogne Transport MT+S 

 (2) 228L Bougogne Transport MT+N 

	
 Saury France 

	
 (2) Burgundy Export Barrel - 228 Liters 

	
 Tonnellerie Sirugue 

	
 (7) Burgundy Export Barrel - 228 Liters, Split Oak French 

	
 Saury France 

	
 (10) Bourdeaux Export Barrel US Oak - 228 Liters 

	
 Les Tonnelleries de Bourgogne 

	
 (1) 228L Burgundy Export Damy Allier Oak Medium+Toast 

 (1) 228L Burgundy Export Damy Vosges Oak Medium+Toast 

 (6) 228L Burgundy Export Billon Troncais Oak Heavy Toast 

	
 Gamba USA 

	
 (5) 228 Liter Burgundy Export Allier/Jupilles Slow M+ w/Head Toasted 

 (3) 228 Liter Burgundy Export Jupilles Slow M+ w/Head Toasted 

	
 Generazioni 

	
 (4) Burgundy Export 228L Center of France Slow M+ w/Head Toasted 

 Together with all replacements, parts, repairs, additions, accessions and accessories incorporated therein or affixed or attached thereto and any and all proceeds of the foregoing, including, without limitation, insurance recoveries. 

 

 Equipment Location: 

 5610 Dry Creek Road 

 Healdsburg, CA 95448 

 Equipment Cost:  $143,684.40 

 

	
 Debtor Initials (Philip L. Hurst): 

	    
	
 Debtor Initials (William R. Hambrecht): 

	    
	
 Debtor Initials (Paul E. Dolan, III): 

	    
	
 Debtor Initials (Heath E. Dolan): 

	    
	
 Debtor Initials (J. Barrie Graham): 

	    
	
 Debtor Initials (Daniel A. Carroll): 

	    

 

 Page 1 of 1 

    

    

    

		

 

 INSURANCE AUTHORIZATION 

 

 October 2, 2012 

 To:          Bob Durler                                                                                                            

 Gondola-Kinne Insurance Agency 

 414 Healdsburg Avenue 

 Healdsburg, CA 95448 

 Phone (707) 433-3344                                  Email:    bdurler@gondola-kinne.com 

 In connection with a transaction between Bank of the West (“Creditor”) and us, you are hereby authorized and instructed to provide to Creditor evidence of insurance for the coverage and endorsements indicated below. Evidence of insurance in the form of a certificate is acceptable until formal endorsements can be issued. 

 

 Please provide the evidence of insurance to Creditor:                  Bank of the West / DEF 951 

 Direct Equipment Finance 

 2527 Camino Ramon, NC-B07-3F-V 

 San Ramon, CA  94583 

 

 The insurance requirements listed below are required to cover the equipment described on the attached schedule: 

 

 PROPERTY DAMAGE REQUIREMENTS 

 

	
 a. 

	
 All risk extended coverage, malicious mischief and vandalism, for not less than $143,684.40 (greater of full replacement value or Stipulated Loss Value), with a maximum deductible of $5,000.00. 

	
 b.  

	
 For vehicles, comprehensive and collision coverage with deductibles not exceeding $5,000.00. 

	
 c.  

	
 Endorsement naming Creditor as theloss payee with respect to this equipment. 

 

 GENERAL REQUIREMENTS 

 

	
 a. 

	
 Endorsement giving Creditor thirty (30) days prior written notice of the effective date of any material alteration or cancellation of such coverage. 

	
 b. 

	
 Endorsement confirming that the interest of Creditor shall not be invalidated by any actions, inactions, breach of warranty or conditions or negligence of the undersigned party or any person other than Creditor 

 The Endorsement language should read: 

 “Bank of the West and all its subsidiaries, affiliated companies, its successors and or assigns and interests as may now or hereafter be constituted.” 

 

	
 H.D.D. LLC 

 Debtor 

	   	 H.D.D. LLC Debtor 
	   	   	   	   
	 By: 	
                                                                             

	   	 By: 	
                                                                  

	   	   	   	   	   
	 Name: 	
 Philip L. Hurst  

	   	 Name: 	
 Heath E. Dolan  

	   	   	   	   	   
	 Title:  	
 Manager  

	   	 Title: 	
 Manager  

	   	   	   	   	   
	 By: 	
                                                                             

	   	 By:    	
                                                               

	   	   	   	   	   
	 Name:  	
 William R. Hambrecht  

	   	 Name: 	
 J. Barrie Graham                                                                 

	   	   	   	   	 
	 Title: 	
 Manager  

	   	 Title: 	
 Manager  

	   	   	   	   	 
	 By:   	
                                                                           

	   	 By: 	
                                                                  

	   	   	   	   	   
	 Name: 	
 Paul E. Dolan, III                                                                            

	   	 Name: 	
 Daniel A. Carroll                                                                 

	   	   	   	   	 
	 Title: 	
 Manager  

	   	 Title:  	
 Manager  

 Reference: Schedule No. 100-0022757-001 

 

 

 Page 1 of 1ex10_12.htm

EXHIBIT 10.12

AGREEMENT

This Agreement is dated for reference purposes the 24th day of August, 2012, and is entered into by and among H.D.D. LLC, a California limited liability company ("HDD") and West Coast Paper Company, dba WCP Solutions, a Washington corporation ("WCP").

RECITALS

A.           HDD produces wines either directly or through affiliated entities. For purposes of this Agreement, HDD shall be deemed to include all of HDD's affiliated entities.

B.           WCP manufactures and sells paper, packaging and related materials either directly or through its affiliated entities. For purposes of this Agreement, WCP shall be deemed to include all of WCP's affiliated entities.

C.           HDD and WCP jointly developed and jointly invented a product now known as a "Wine Wrap", a photograph of which is attached hereto as Exhibit A and incorporated herein by this reference.

D.           HDD desires to: (i) own all intellectual property related to the Wine Wrap and to apply for one or more patents and one or more trademarks and associated trade dress registrations to strengthen its rights in the Wine Wrap; and (ii) market and sell its wines packaged in the Wine Wrap as well as offer others the opportunity to sell their wines or other beverage products packaged in the Wine Wrap pursuant to a license.

E.           WCP is willing to transfer all of its intellectual property rights in the Wine Wrap to HDD provided that WCP has certain exclusive manufacturing rights with respect to the Wine Wrap as further described in this Agreement.

Now, therefore, in consideration of the mutual terms, conditions and covenants set forth herein, the parties agree as follows:

1. RECITALS CONTRACTUAL. The above recitals shall be deemed contractual and part of this agreement.

2. INTELLECTUAL PROPERTY RIGHTS. WCP agrees to, and hereby does, assign to HDD 100% of its right, title and interest in any and all intellectual property rights associated with the Wine Wrap invention worldwide to HDD, including but not limited to any patents, copyrights, trademarks and/or trade dress, including all associated goodwill, existing now or in the future, relating to the Wine Wrap invention, for the entire term(s) of any such intellectual property rights, including reissues or extensions that may issue from foreign applications, divisions, continuations in whole or part or substitute applications filed claiming the benefit of the intellectual property. The right, title and interest conveyed in this Assignment is to be held and enjoyed by HDD and HDD's successors as fully and exclusively as it would have been held and enjoyed by WCP had this assignment not been made.

  

AGREEMENT - 1

  

At HDD's reasonable expense, WCP further agrees to: (a) cooperate with HDD in the protection of the intellectual property rights and prosecution and protection of foreign counterparts; (b) execute, verify, acknowledge and deliver all such further papers, including patent applications and instruments of transfer; and (c) perform such other acts as HDD lawfully may request to obtain or maintain the patent, trademark, copyright and/or trade dress and any and all applications and registrations for the invention in any and all countries. This assignment includes all intellectual property that WCP possesses in and to the Wine Wrap including, without limitation, its drawings, designs, specifications, developments, prototypes, and all other information in any form of media concerning the Wine Wrap jointly developed by WCP.  HDD will exercise reasonable due diligence to file one or more patent applications and one or more trademark applications to further protect its intellectual property rights in the Wine Wrap, all at the expense of HDD.  WCP shall reasonably cooperate with HDD at HDD's expense in executing such forms of assignment, affidavits or other documents as may be reasonably helpful to HDD in filing for patent and/or trademark registrations for the Wine Wrap. If, during the term of this Agreement, the Wine Wrap is modified or substantially altered, then: (i) such modifications or alterations shall be deemed the intellectual property of HDD; (ii) HDD may in its sole discretion, and at its expense, file, if reasonably necessary, with the appropriate governmental agencies, applications to protect the intellectual property of the Wine Wrap as so modified or altered, at HDD's expense; (iii) WCP shall cooperate reasonably with HDD at HDD's expense in executing such forms of assignment, affidavits or other documents reasonably necessary to support such applications; and (iv) any such modified or altered Wine Wraps shall be deemed within the scope of this Agreement.

3. MANUFACTURING AND SUPPLY RIGHTS. For a period of not less than three (3) years, HDD shall grant to WCP the exclusive right to manufacture and supply HDD with all Wine Wraps which are used by HDD, or any third parties licensed by HDD, in the packaging, marketing and/or sale of wine or other beverage products. During the term of this Agreement and extension or renewal thereof, HDD shall not contract with any person, firm or entity to manufacture the Wine Wrap, or to modify or alter the same, other than WCP, except only that HDD may subcontract out artwork to be printed or integrated into the Wine Wrap by WCP. The exclusive rights granted under this Section are worldwide.

4. TERM.  Subject to the provisions of this Section, the term of this Agreement shall be not less than three (3) years from the date the Wine Wrap goes into mass or bulk production (the "Commencement Date"), which date is noted on Exhibit B (the "Initial Term"). Notwithstanding the foregoing, however, at least forty-five (45) days prior to the expiration of eighteen (18) months from the Commencement Date, HDD and WCP shall negotiate in good faith to attempt to agree on the terms and conditions applicable to an extension of the Initial Term of this Agreement for a two (2) year period beyond the Initial Term amending the term of this Agreement from three (3) years to five (5) years (the "Subsequent Term").  In any event, at the end of the Initial Term or Subsequent Term, this Agreement shall continue to extend for an indefinite number of one year terms (the "Extension Terms") provided that one party has not given written notice to the other party at least ninety (90) days prior to the end of the Initial Term, Subsequent Term or Extension Term, of intent not to renew or extend.  Any Subsequent Term or Extension Terms shall be considered part of the term of this Agreement for all purposes (the Initial Term, Subsequent Term and Extension Terms being referred to collectively as "The Agreement Term").

  

AGREEMENT - 2

  

 

5. BUSINESS TERMS.  During The Agreement Term, WCP shall supply all of HDD's needs of the Wine Wrap.  Ordering, shipment, delivery, payment and all other similar processes and procedures which are part and parcel of a manufacturing agreement shall be conducted in accordance with commercially reasonable industry standards.

6. PRICE. As of the Commencement Date, the prices for the various Wine Wraps shall be as set forth in Exhibit B attached hereto and incorporated herein by this reference. As new Wine Wraps are designed or developed, the parties shall agree upon the initial price of the same, which shall be determined in a manner consistent with the determination of the prices on Exhibit B, and such additional Wine Wraps and relevant prices shall be added to Exhibit B as amendments to the same. WCP may increase the prices of the Wine Wraps from time to time consistent with published mill price increases.

7. INDEMNITY.

7.1.           HDD shall defend, indemnify and hold WCP, its members, officers, directors, shareholders, agents, employees and representatives (the "WCP Indemnified Parties") harmless from any and all damages, claims, actions, suits, proceedings, liabilities, obligations, arbitrations, including, without limitation, reasonable attorneys fees and expenses of litigation or any legal proceeding (collectively "Losses") arising out of or related to HDD's creation, development, production, sales and marketing of wine including the bottle containing the same, or arising out of any infringement claims related to the Wine Wrap. The indemnification provisions set forth in this Subsection shall not extend to any claims, actions, suits or proceedings or Losses arising out of or related to the Wine Wraps manufactured by WCP, as all obligations and liabilities associated with defending the  manufacturing with respect to the Wine Wraps and defending, indemnifying and holding the HDD Indemnified Parties harmless from any Losses arising out of or relating to manufacturing claims related to one or more Wine Wraps, shall be the sole and exclusive liability of WCP, and be the subject of indemnity under Section 7.2 herein.

7.2.           WCP shall defend, indemnify and hold HDD, its members, officers, directors, shareholders, agents, employees and representatives (the "HDD Indemnified Parties") harmless from any and all damages, claims, actions, suits, proceedings, liabilities, obligations, arbitrations, including, without limitation, reasonable attorneys fees and expenses of litigation or any legal proceeding (collectively "Losses") arising out of or related to the Wine Wraps manufactured by WCP except as provided in this Section. The indemnification provisions set forth in this Subsection shall not extend to any claims, actions, suits or proceedings or Losses arising out of or related to the assertion that one or more Wine Wraps infringe upon the rights of third parties, as all obligations and liabilities associated with defending intellectual property rights with respect to the Wine Wraps and defending, indemnifying and holding the WCP Indemnified Parties harmless from any Losses arising out of or relating to claims that one or more Wine Wraps infringe the rights of any third party, shall be the sole and exclusive liability of HDD, and be the subject of indemnity under Section 7.1 herein.

  

AGREEMENT - 3

  

 

8. COMPLIANCE WITH LAWS. Each of the parties, in their performance under this Agreement, shall comply with all applicable laws, rules and regulations which apply to their particular performance.

9. CONFIDENTIAL INFORMATION.

9.1.           A party which has disclosed Confidential Information to the other party either before or after the Commencement Date is sometimes referred to herein as the "Disclosing Party". A party which has received Confidential Information before or after the Commencement Date is sometimes referred to herein as the "Receiving Party".

9.2.           Confidential Information shall include, but not be limited to:

9.2.1.           the conceptualization, design, development, and manufacturing of the Wine Wrap;

9.2.2.           all information pertaining to the respective businesses of WCP or HDD, their finances and operations which has been or is provided orally or in writing by the Disclosing Party to the Receiving Party, all of which information the Parties regard as highly confidential provided it is not generally and publically known;

9.2.3.           information transmitted, displayed or evidenced in any form or manner, whether in writing or orally, or through electronic, digital, audio or video media, prototype, drawings,  specifications,  engineering,  software  assisted  presentations, specifications or in any other form of media.

9.3.           Non-Protected Information. The parties agree that their mutual covenant not to disclose Confidential Information shall not apply to any information or data or other materials imparted to the extent that any of the following conditions exist or come into existence:

9.3.1           Information, which at the time access is gained, is already in the recipient's possession or available to it or its employees from any other source having no obligation to the party which is the source of said information, however, this exception does not apply to information which the parties have provided or do provide to each other before or after the Commencement Date;

  

AGREEMENT - 4

  

9.3.2           Such information which is, or any time hereafter becomes, available to the public;

9.3.3           Such information which, after access is gained to the disclosure, is at any time obtained by the recipient from any other person, firm or company having no obligation to or relationship with the source of said information.

9.4.           Limitations on Use and Disclosure of Confidential Information.  The parties acknowledge that disclosure or use of Confidential Information or any portion thereof except as expressly authorized herein would cause the Disclosing Party significant and irrevocable damage. Except for such use and/or disclosure of the Confidential Information which is reasonably necessary to facilitate a party's performance of its respective obligations under this Agreement, neither party shall use or disclose Confidential Information of the other. The Parties agree to exercise the highest standard of care with respect to safeguarding the Confidential Information and preventing its unauthorized disclosure or use. The Parties agree that damages would be an inadequate remedy for any harm caused to a Party by the breach of this Agreement by the other Party and that the harmed Party shall be entitled to equitable relief, including injunctive relief in addition to damages resulting from the other party's breach of this Agreement.

10. DEFAULT AND TERMINATION.

10.1.           Events of Default. Any one or more of the following shall constitute an event of default ("Event of Default") under this Agreement:

10.1.1.             If either party fails to perform its material obligations under this Agreement, including failure to pay by HDD to WCP and failure of WCP to perform for HDD in a commercially reasonable manner, and if such failure shall continue for more than thirty (30) days after written notice has been given by the non-breaching party to the breaching party specifying such failure.

10.1.2.             A party becomes the subject of insolvency or bankruptcy proceedings, ceases doing business, makes a general assignment of its assets for the benefit of creditors, dissolves, or has a trustee appointed for all or a substantial portion of such party's assets.

10.2.           Termination.  Upon the occurrence of an Event of Default, the non-breaching party may elect to terminate or may not elect to terminate this Agreement, upon written notice of breach and failure of the breaching party to perform or cure its breach within thirty (30) days of written notice thereof by the non-breaching party. If the non-breaching party is HDD, and it elects to terminate this Agreement, then WCP shall have no claim of right to, or right of use of, the Wine Wrap going forward. If the non-breaching party is WCP, and it elects to terminate this Agreement, then HDD shall be deemed to have granted to WCP a royalty free license to use the Wine Wrap and related intellectual property rights for the longer of (i) the remainder of The Agreement Term at the time WCP terminates the agreement; or (ii) that period of time until HDD has paid WCP in full all sums due and owing or a court had determined that HDD no longer owes any sums to WCP. Such royalty free license may be sublicensed by WCP provided that WCP is the exclusive manufacturer of the Wine Wrap for such sublicensee, provided, however, that in order for such license to remain valid during the remainder of The Agreement Term, the quality of the Wine Wrap produced by WCP under such license must be equal to or better than the quality of the Wine Wrap produced by WCP at the time WCP terminates the Agreement.

  

AGREEMENT - 5

  

 

10.3.           Remedies. Upon the occurrence of an Event of Default, the non-breaching party may assert any and all rights and avail itself of any and all remedies which apply in the event of breach of contract under Washington or California law, including, without limitation, specific performance, and the non-breaching party shall not be required to elect among its remedies except as required by applicable law.

10.4.           Survival of Rights and Obligations.  Termination of this Agreement shall not prejudice any rights of either party hereto against the other which may have accrued up to the date of termination.  In addition, all covenants regarding indemnification, governing laws, attorneys fees, confidentiality, termination, rights upon breach and other provisions of this Agreement relative to the enforcement hereof, shall survive the termination of this Agreement.

11. MISCELLANEOUS.

11.1.           Assignment. Except as set forth herein, during The Agreement Term neither party shall have the right to assign, sublicense, subcontract, or otherwise transfer its rights and obligations under this Agreement except with the prior written consent of the other party.  The terms of this Agreement shall be binding upon and inure to the benefit of the parties, their respective successors, permitted assignees, sublicensees, and subcontractors.

11.2.           Modification/Waiver. No modification or waiver of any of the terms of this Agreement shall be valid unless in writing and executed with the same formality as this Agreement. No waiver by either party of any breach or default hereunder shall be deemed a waiver of any subsequent breach or default of the same or similar nature.

11.3.           Severability. If any provision of this Agreement is declared void or otherwise unenforceable, such provision shall be deemed to have been severed from this Agreement, which shall otherwise remain in full force and effect.  In the event any provision of this Agreement shall not be enforceable as unreasonable or for any other reason, then said provision shall be enforced to the fullest extent permitted by law.

11.4.           Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.   This Agreement may be executed with signatures transmitted among the parties by facsimile or by signature on a PDF version transmitted by electronic mail, and no party shall deny the validity of a signature or this Agreement signed and transmitted by facsimile or electronic mail on the basis that a signed document is represented by a facsimile, copy or PDF and not an original.

  

AGREEMENT - 6

  

 

11.5.           Mutual Negotiation in Drafting. The parties acknowledge each party and its counsel have materially participated in the drafting of this Agreement. Consequently, the rule of contract interpretation, that ambiguities, if any, in a writing be construed against the drafter, shall not apply.

11.6.           Headings. Headings and subheadings in this Agreement are not intended to and do not have any substantive content whatsoever.

11.7.           Attorneys Fees. In the event the services of an attorney at law are necessary to enforce any of the terms of this Agreement or to resolve any dispute arising under this Agreement, the prevailing party shall be entitled to recover its attorneys fees from the losing party as set by the appropriate trial, appellate or bankruptcy court, or on a petition for review. The appropriate court shall have the right to determine the prevailing party based upon the totality of the results in the particular proceeding.

11.8.           Force Majeure. Neither party shall be liable for any delay or default in performing its obligations if such default or delay is caused by any event beyond the reasonable control of such party, including, but not limited to, acts of nature, terrorism, war, or insurrection, civil commotion, damage or destruction of production facilities or materials by earthquake, fire, storm or flood, labor disturbances or strikes, epidemic, materials shortages, equipment malfunction, unavailability of raw materials, or other similar event.

11.9.           Notices. All notices, requests and other communications hereunder ("Notices") shall be in writing and shall be deemed to have been duly given if directed to the applicable party(ies) at his/its respective addresses set forth below, which Notice shall be effective at the time indicated if given in the following manner:

11.9.1.             When delivered, if personally delivered by hand;

11.9.2.             72 hours after mailing if mailed postage prepaid, by registered or certified mail, return receipt requested, with an additional copy mailed to the addressee by regular mail; or

11.9.3.             At 5:00 p.m. (in the applicable time zone) on the day after the Notice is mailed to the addressee by a nationally recognized overnight mail/courier service which guarantees next day delivery and provides tracking services with respect to such delivery.

The addresses for all Notice purposes under this Agreement shall be as follows:

  

AGREEMENT - 7

  

	
To WCP:  

	
6703 S. 234th Street

	  	
Kent, Washington 98032

	  	
Attention: Teresa Russell, President

	  	  
	  	
2330 SW 1st Street

	  	
Redmond, Oregon 97756

	  	
Attention: Thomas E. Groves, CEO

	  	  
	
To HDD:  

	
4035 Westside Road

	  	
Healdsburg, California 95448

	  	
Attention: Phil Hurst, CEO/Managing Partner

 

However, if any party shall have designated in the manner provided above a different address by Notice to the others, then Notice shall be to the most recent address so designated.

	
West Coast Paper Company

dba WCP Solutions

	  	
H.D.D. LLC

	  	  	  
	
By:

	
/s/ Thomas E. Groves

	  	
By:

	
/s/ Phil Hurst

	
Its:

	
CEO

	  	
Its:

	
CEO

	
Date:

	
9/12/2012

	  	
Date:

	
9/12/12

 

  

AGREEMENT - 8

  

 

 Exhibit A 

 

 

 

 

 

 

 

  

 

  

 

EXHIBIT B

 Wine wrap price list. 

 See Attached Pricing: 

 Quote #                  201209071348 

 201209071352 

 201209071424 

 

 

 

 

 

 Commencement Date:                           8/24/12                       

 

 

 AGREEMENT – 10 

  

  

  

 Price Quote 

 

	
 Quote #                      201209071348 

 

	
 Description                      HDD Wine Wrap - Print 4 CP 

	
 TERESA MENGALI 

 HDD, LLC 

 4035 WESTSIDE RD. BLDG 3 

 HEALDSBURG, CA  95448 

 (707) 431-4400 

	
 MIKE GROVES 

 WCP Solutions 

 4041 EASTSIDE ROAD 

 REDDING, CA  96001 

 (530) 591-3221 

	
 

 Item# 

	
 

 Description 

	
 

 Price 

	
 Prc  

 UOM 

	
 

 Min Qty 

	
 HDD Wine Wraps 

	
 Pricing reflects using 23x29 custom sheet and timeframe associated 

	
 Pricing includes all shipping & handling to Windsor, CA 

	
 Print 4 CP – Qty: 250,00 – $0.253/ea 

	
 Print 4 CP – Qty: 500,000 – $0.243/ea 

	
 Print 4 CP – Qty: 750,000 – $0.232/ea 

	
 Print 4 CP – Oty: 1,000,000 – $0.223/ea 

	
 Print 4 CP – Qty: 1,500,000 – $0.207/ea 

 

 

 

 Quoted prices are effective for 30 days as of 09/07/2012 

  Page 1 

 www.wcpsolutions.com 

  

  

  

 Price Quote 

 

	
 Quote #                      201209071352 

 

	
 Description                      HDD Wine Wrap - Print 4 CP + 1 

	
 TERESA MENGALI 

 HDD, LLC 

 4035 WESTSIDE RD. BLDG 3 

 HEALDSBURG, CA  95448 

 (707) 431-4400 

	
 MIKE GROVES 

 WCP Solutions 

 4041 EASTSIDE ROAD 

 REDDING, CA  96001 

 (530) 226-1455 

	
 

 Item# 

	
 

 Description 

	
 

 Price 

	
 Prc 

 UOM 

	
 

 Min Qty 

	
 HDD Wine Wraps 

	
 Pricing reflects using 23x29 custom sheet and timeframe associated 

	
 Pricing includes all shipping & handling to Windsor, CA 

	
 Print 4 CP + 1 PMS – Qty: 250,000 – $0.255/ea 

	
 Print 4 CP + 1 PMS– Qty: 500,000 – $0.245/ea 

	
 Print 4 CP + 1 PMS – Qty: 750,000 – $0.234/ea 

	
 Print 4 CP + 1 PMS – Oty: 1,000,000 – $0.225/ea 

	
 Print 4 CP + 1 PMS – Qty: 1,500,000 – $0.209/ea 

 

 

 

 Quoted prices are effective for 30 days as of 09/07/2012 

  Page 1 

 www.wcpsolutions.com 

  

  

  

 Price Quote

	
 Quote #                      201209071424 

 

	
 Description                      HDD Wine Wrap - Print 4 CP + 2 

	
 TERESA MENGALI 

 HDD, LLC 

 4035 WESTSIDE RD. BLDG 3 

 HEALDSBURG, CA  95448 

 (707) 431-4400 

	
 MIKE GROVES 

 WCP Solutions 

 4041 EASTSIDE ROAD 

 REDDING, CA  96001 

 (530) 226-1455 

	
 

 Item# 

	
 

 Description 

	
 

 Price 

	
 Prc  

 UOM 

	
 

 Min Qty 

	
 HDD Wine Wraps 

	
 Pricing reflects using 23x29 custom sheet and timeframe associated 

	
 Pricing includes all shipping & handling to Windsor, CA 

	
 Print 4 CP + 2 PMS – Qty: 250,00 – $0.257/ea 

	
 Print 4 CP + 2 PMS– Qty: 500,000 – $0.246/ea 

	
 Print 4 CP + 2 PMS – Qty: 750,000 – $0.236/ea 

	
 Print 4 CP + 2 PMS – Oty: 1,000,000 – $0.227/ea 

	
 Print 4 CP + 2 PMS – Qty: 1,500,000 – $0.211/ea 

 

 

 

 Quoted prices are effective for 30 days as of 09/07/2012 

  Page 1 

 www.wcpsolutions.com

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