Document:

Prepared by MERRILL CORPORATION

EXHIBIT 10.4

 

AMENDMENT TO CREDIT AGREEMENT

[L31 - L36]

 

                THIS AMENDMENT TO

CREDIT AGREEMENT (the "Amendment") is made and dated as of the 27th

day of August, 2001 by and between UNITED CALIFORNIA BANK, a California banking

corporation formerly known as Sanwa Bank California ("Bank") and

SCHEID VINEYARDS CALIFORNIA INC., a California corporation (the

"Borrower") and amends that certain Agricultural Credit Agreement

(General Term Loan) dated as of October 6, 1994 (as amended, modified or waived

from time to time, the "Agreement") between Vineyard Investors 1972

(the "Original Borrower") and the Bank.

 

RECITALS

 

                                A.                The Original Borrower and the Bank entered into the

Agreement, pursuant to which the Bank agreed to extend certain credit

accommodations to the Borrower.  The

Original Borrower also executed in favor of the Bank that certain Deed of Trust

(Non-Construction) & Assignment of Rents in favor of the Bank dated as of

October 6, 1994, and recorded in the official records of Monterey County,

California, as Instrument No. 78307, Reel No. 3173, Page No. 1338 (as amended,

modified or waived from time to time, the "Deed of Trust")

encumbering the real property described therein (the

"Property").  All of the

obligations of the Original Borrower under the foregoing documents were assumed

by the Borrower pursuant to that certain Assumption Agreement dated as of

October 15, 1997 among, the Bank, the Borrower, and the Original Borrower and

recorded as Document No. 9767922 in the Official Records of Monterey County, California.  The Agreement and the Deed of Trust were

modified pursuant to (i) an Amendment of Agricultural Credit Agreement and Deed

of Trust dated November 1, 1994 and recorded as Instrument No. 78308 at Reel

3173, Page 1353 on November 17, 1994, (ii) an Amendment of Agricultural Credit

Agreement and Modification of Deed of Trust dated June 22, 1995 and recorded

as  Document No. 9767923 on November 17,

1997, (iii) an Amendment of Agricultural Credit Agreement and Modification of

Deed of Trust dated as of October 15, 1997 and recorded as Document No. 9767924

on November 17, 1997, and (iv) an Amendment of Agricultural Credit Agreement

and Modification of Deed of Trust dated April 24, 1998 and recorded as Document

No. 9831647 on May 21, 1998..  All terms

used herein which are not otherwise defined herein shall have the meanings

given them in the Agreement.

 

                                B.                The Borrower has asked the Bank to extend the

maturity of the indebtedness under the Agreement and to modify the principal

amortization schedule.

 

                                C.                 Bank has agreed to do so on the terms and conditions

contained in this Amendment.

 

                                NOW, THEREFORE, in consideration

of the above Recitals and for other good and valuable consideration, the

receipt and adequacy of which are hereby acknowledged, the parties hereby agree

that, upon the satisfaction of the conditions contained in Paragraph 2 below,

the Agreement shall be amended as set forth below:

 

AGREEMENT

 

                                1.                Amendments.

 

                                                1(a)                Amendments to Definitions.  Section 1.01 of the Credit Agreement is modified

to add or amend and restate, as the case may be, the following definitions:

 

                                "'Advance' shall mean a

portion of the principal amount outstanding hereunder which bears interest at a

specified interest rate as elected or deemed to be elected by Borrower pursuant

to the terms of this Agreement."

 

                                "'Business Day' shall mean

a day, other than a Saturday or Sunday, on which commercial banks are open for

business in California."

 

                                "'Effective Date' shall

have the meaning given such term in that certain Amendment To Credit Agreement

dated as of August 27, 2001 between Bank and Borrower."

 

                                "'Effective Tangible Net

Worth' with respect to any entity shall mean such entity's stated net worth

plus Subordinated Debt but less all intangible assets of such entity (i.e.,

goodwill, trademarks, patents, copyrights, organization expense and similar

intangible items including, but not limited to, investments in and all amounts

due from affiliates, officers or employees)."

 

                                "'Interest Period' shall

mean a LIBOR Interest Period."

 

                                "'LIBOR Advance' shall have

the meaning given such term in Section 2 hereof."

 

                                "'LIBOR Business Day"

shall mean shall mean a Business Day upon which commercial banks in London,

England are open for domestic and international business.

 

                                "'LIBOR Interest Period'

shall have the meaning given such term in Section 2 hereof."

 

                                "'LIBOR Rate' shall have

the meaning given such term in Section 2 hereof."

 

                                "'Working Capital' shall

mean current assets as determined in accordance with generally accepted

accounting principles, less all amounts due from affiliates, officers or

employees less current liabilities as determined in accordance with

generally accepted accounting principles, including any negative cash

balance."

 

                                1(b)                Amendment of Section 2.02.  Section 2.02 of the Agreement is amended to

read in its entirety as follows:

 

                "2.02       Term Loan.  The Bank has loaned the Borrower a term loan (the "Term

Loan"), the current principal amount of which is $4,450,000.00.  Interest on and principal of the Term Loan

will be payable as set forth herein.

 

                                A.                  Purpose.  The Term Loan shall be used to refinance

existing debt and for working capital of the Borrower.

 

                                B.                Term Loan Account. 

The Bank shall maintain on its books a record of account in which the

Bank shall make entries setting forth all payments made, the application of

such payments to interest and principal, accrued but unpaid interest, if any,

and the outstanding principal balance under the Term Loan (the "Term Loan

Account").  Any statement of the

Term Loan Account provided to Borrower shall be considered to be correct and

conclusively binding on the Borrower unless the Bank is notified by the

Borrower to the contrary within thirty (30) days after the Borrower's receipt

of any such statement which is deemed to be incorrect.

 

C.                Repayment.  Unless sooner due in accordance with the

terms of this Agreement, the Borrower hereby promises and agrees to make annual

installments of principal commencing on May 31, 2002 and each anniversary

thereof (up to and including the Expiration Date) in the amount of $178,000.00

for each such installment.  Once any

amount is repaid hereunder, whether voluntarily or by acceleration or

otherwise, such amount may not be reborrowed. 

Borrower shall pay to Bank the principal amount outstanding hereunder,

together with all accrued but unpaid interest thereon, on June 5, 2008 (the

"Expiration Date").

 

                                D.                Interest. 

Interest on the Term Loan shall accrue at one of the following rates, as

quoted by the Bank and as elected by the Borrower pursuant to this Agreement:

 

                                (i)                Variable Rate Advances:  A variable rate per annum equivalent to the

Reference Rate (the "Variable Rate").  Interest shall be adjusted concurrently with any change in the

Reference Rate.  An Advance based upon

the Variable Rate is hereinafter referred to as a "Variable Rate

Advance".

 

                                (ii)                LIBOR Advances:  A fixed rate quoted by the

Bank for 1, 2, 3, 6, or 12 months or for such other period of time that the

Bank may quote and offer (provided that any such period of time does not extend

beyond the Expiration Date) (the "LIBOR Interest Period") for

advances in the minimum amount of $500,000.00. 

Such interest rate shall be the rate per annum determined by the Bank to

be the rate as of approximately 11:00 a.m. (London time) on the date that is

two (2) LIBOR Business Days prior to the beginning of the relevant Interest

Period quoted as the British Bankers Association Interest Settlement Rate for

deposits in dollars (as set forth in any service selected by the Bank which has

been nominated by the British Bankers’ Association as an authorized information

vendor for purpose of displaying such rates) for a period equal to such

Interest Period; provided that, to the extent that an interest rate is not

ascertainable pursuant to the foregoing provisions of this definition, the rate

shall be the interest rate per annum determined by the Bank to be the average

of the rates per annum at which deposits in dollars are offered for such

relevant Interest Period to major banks in the London interbank market in

London, England by any affiliate of the Bank at approximately 11:00 a.m.

(London time) on the date that is two (2) LIBOR Business Days prior to the

beginning of such Interest Period, in either case plus 2.10%, adjusted for any

and all assessments, surcharges and reserve requirements and rounded upward, if

necessary, to the next higher 1/16 of one percent (the "LIBOR

Rate").  An Advance based upon the

LIBOR Rate is hereinafter referred to as a "LIBOR Advance."  There may be no more than four (4) Interest

Periods in effect at any one time for LIBOR Advances.

 

Interest on any Advance shall be

computed on the basis of 360 days per year, but charged on the actual number of

days elapsed.

 

The Borrower hereby promises and

agrees to pay interest quarterly in arrears on all Variable Rate Advances and

LIBOR Advances on the March 31, June 30, September 30, and December 31 of each

year.

 

If interest is not paid as and

when it is due, it shall be added to the principal, become and be treated as a

part thereof, and shall thereafter bear like interest.

 

                                E.  Notice of

Election to Adjust Interest Rate:  The

Borrower may elect:

 

                                (i)                That interest on a Variable Rate Advance shall be

adjusted to accrue at the LIBOR Rate; provided, however, that such notice shall

be received by the Bank no later than two (2) LIBOR Business Days prior to the

day (which shall be a Business Day) on which Borrower requests that interest be

adjusted to accrue at the LIBOR Rate.

 

                                (ii)                That interest on a LIBOR Advance shall continue to

accrue at a newly quoted LIBOR Rate or shall be adjusted to commence to accrue

at the Variable Rate; provided, however, that such notice to continue to accrue

at the LIBOR Rate shall be received by the Bank no later than two (2) LIBOR

Business Days prior to the last day of the LIBOR Interest Period pertaining to

such LIBOR Advance.  If the Bank shall

not have received notice (as prescribed herein) of the Borrower's election that

interest on any LIBOR Advance shall continue to accrue at the newly quoted

LIBOR Rate, Borrower shall be deemed to have elected that interest thereon

shall be adjusted to accrue at the Variable Rate upon the expiration of the

LIBOR Interest Period pertaining to such Advance.

 

                                                F.                Prepayment. 

The Borrower may prepay any Advance in whole or in part, at any time and

without penalty, provided, however, that: 

(i) any partial prepayment shall first be applied, at the Bank's option,

to accrued and unpaid interest and next to the outstanding principal balance; and

(ii) during any period of time in which interest is accruing on any Advance on

the basis of the LIBOR Rate, no prepayment shall be made except on a day which

is the last day of the Interest Period pertaining thereto.  If the whole or any part of any LIBOR

Advance or is prepaid by reason of acceleration or otherwise, the Borrower

shall, upon the Bank's request, promptly pay to and indemnify the Bank for all

costs, expenses and any loss (including loss of future interest income)

actually incurred by the Bank and any loss (including loss of profit resulting

from the re-employment of funds) reasonably deemed sustained by the Bank as a

consequence of such prepayment.  The

Bank shall be entitled to fund all or any portion of its Advances in any manner

it may determine in its sole discretion, but all calculations and transactions

hereunder shall be conducted as though the Bank actually funded all Advances

through the purchase of dollar deposits bearing interest at the same rate as

U.S. Treasury securities in the amount of the relevant Advance and in

maturities corresponding to the applicable Interest Period.

 

                                                G.                Indemnification for LIBOR Costs. 

During any period of time in which interest on any Advance is

accruing on the basis of the LIBOR Rate, the Borrower shall, upon the Bank's

request, promptly pay to and reimburse the Bank for all costs incurred and

payments made by the Bank by reason of any future assessment, reserve, deposit

or similar requirement of any regulatory authority pertaining or relating to funds

used by the Bank in quoting and determining the LIBOR Rate.

 

                                                H.                Conversion from LIBOR Rate to Variable Rate. In the event that the Bank shall at any time

determine that the accrual of interest on the basis of the LIBOR Rate (i) is

infeasible because the Bank is unable to determine the LIBOR Rate due to the

unavailability of U.S. dollar deposits, contracts or certificates of deposit in

an amount approximately equal to the amount of the relevant Advance and for a

period of time approximately equal to the relevant Interest Period or (ii) is

or has become unlawful or infeasible by reason of the Bank's compliance with

any new law, rule, regulation, guideline or order, or any new interpretation of

any present law, rule, regulation, guideline or order, then the Bank shall give

telephonic notice thereof (confirmed in writing) to the Borrower, in which

event any Advance bearing interest at the LIBOR Rate, shall be deemed to be a

Variable Rate Advance and interest shall thereupon immediately accrue at the

Variable Rate.

 

I.               Late

Payment.  If any payment of principal or

interest, or any portion thereof, , under this Agreement is not paid within ten

(10) calendar days after it is due, a late payment charge equal to five percent

(5%) of such past due payment may be assessed and shall be immediately

payable."

 

                                1(c)                Amendment of Section 6.06.  Section 6.06 is amended to read as follows:

 

                                "6.06                Reporting Requirements.  Deliver or cause to be delivered to the Bank

in form and detail satisfactory to the Bank:

 

                                                A.                Annual Statements. 

Not later than 105 days after the end of each of its fiscal years, a

copy of the annual audited consolidated financial report of Scheid Vineyards

Inc., which report shall be prepared by a firm of certified public accountants

reasonably acceptable to Bank.

 

                                                B.                Quarterly Statements.  Not later than 45 days after the end of each fiscal quarter,

Scheid Vineyards Inc.'s consolidated financial statement as of the end of such

period.

 

                                                C.                SEC Filings. 

Promptly upon filing, copies of any 10Q, 10K or other public filing made

by Scheid Vineyards Inc. with the Securities and Exchange Commission.

 

                                                D.                Other Information. 

Promptly upon the Bank's request, such other information pertaining to

the Borrower or any Guarantor as the Bank may reasonably request."

 

                                1(d)                Amendment of Section 6.14.  Section 6.14 is amended to read as follows:

 

                                "6.14                Financial Condition.  Cause Scheid Vineyards Inc. to maintain on a

consolidated basis:

 

                                                A.                Net Worth.  A

minimum Effective Tangible Net Worth of at least $25,000,000.00 plus 100% of

its cumulative net income from and after March 31, 2001, measured as of the end

of each fiscal quarter.

 

                                                B.                Working Capital. 

A minimum Working Capital, measured as of the end of each fiscal year,

of at least $5,000,000.00.

 

                                                C.                Debt Service Coverage Ratio.  A ratio, measured as of the end of each

fiscal year, of (i) the sum of net income after tax and exclusive of

extraordinary gains, plus depreciation, amortization and interest expense minus

dividends and distributions to (ii) current portion of long term debt plus

interest expense of at least 1.25 to 1:00."

 

                                1(e)                Amendment of Section 6.18.  The amount "$50,000.00" in Section

6.18 is replaced with the amount "$100,000.00."

 

1(f)             New

Section 6.09.  The following is added

as Section 6.09 of the Agreement:

 

                                                "6.09                Indebtedness.  The Borrower shall not create, incur or

assume, directly or indirectly, any additional Indebtedness other than (i)

Indebtedness owed or to be owed to the Bank, (ii) Indebtedness to trade creditors

in the ordinary course of business, and (iii)  

other Indebtedness (which may be secured) in an amount created, incurred

or assumed in any fiscal year in an amount which does not exceed

$500,000.00."

 

                                1(g)                Address for Notice.  The address for notice of the Borrower is hereby amended to the

following:  Scheid Vineyards California

Inc., 305 Hilltown Road, Salinas, CA 

93908, Attention:  Heidi M.

Scheid, Senior Vice President, Tel. (831) 455-9990, Fax (831) 455-9998.

 

                                1(h)                Dispute Resolution.  Section 9.03 of the Agreement is hereby deleted from the

Agreement in its entirety, and any provision of like import in the Loan

Documents relating to dispute resolution is similarly deleted in its entirety.

 

2.                Conditions

to Effectiveness of Amendment.  This

Amendment shall not be effective until the date (the "Effective

Date") upon which all of the following conditions precedent have been

satisfied:

 

                (i)  the Borrower and Bank shall have duly

executed and delivered this Amendment and such other documents as Bank may

require with respect to the transactions described in this Amendment

(including, without limitation, UCC-1 Financing Statements and supplemental

deeds of trust);

 

                (ii)  Bank shall have received such board

resolutions, incumbency certificates opinions of Borrower's counsel and such

other additional documentation in form and substance satisfactory to Bank as it

may request in connection herewith;

 

                (iii)  all representations and warranties hereunder

and under the Agreement shall be true and correct and no Event of Default or

event, which with the passage of time, giving of notice or both, would

constitute an Event of Default, shall have occurred; and

 

                (iv)  The Bank shall have received such

endorsements to the title policy issued with respect to the Deed of Trust as it

shall require, together with appraisals and flood certifications relating to

the real property encumbered thereby;

 

3.                Representations

and Warranties of the Borrower.  As

an inducement to Bank to enter into this Amendment, the Borrower represents and

warrants to Bank that:

 

3(a)           No

Change.  Since the date of the

financial statements most recently delivered to Bank pursuant to the Agreement,

there has been no material adverse change in the business, operations, assets

or financial or other condition of the Borrower.  Since such date, the Borrower has not entered into, incurred or

assumed any long-term debt, mortgages, material leases or material oral or

written commitments not disclosed to Bank prior to the date of this Amendment.

 

3(b)                Corporate

Existence; Compliance with Law.  The

Borrower (1) is duly organized, validly existing and in good standing as a

corporation under the laws of the state of its incorporation and is qualified

to do business in each jurisdiction where its ownership of property or conduct

of business requires such qualification and where failure to qualify would have

a material adverse effect on it or its property and/or business or on the

ability of the Borrower to pay or perform the Obligations, (2) has the corporate

power and authority and the legal right to own and operate its property and to

conduct business in the manner in which it does and proposes so to do, and

(3) is in compliance in all material respects with applicable laws and

contractual obligations.

 

3(c)                Corporate

Power; Authorization; Enforceable Obligations.  The Borrower has the corporate power and authority and the legal

right to execute, deliver and perform this Amendment, as amended hereby, to

which it is a party and has taken all necessary corporate action to authorize

the execution, delivery and performance of this Amendment and the

Agreement.  This Amendment has been duly

executed and delivered on behalf of the Borrower and constitutes legal, valid

and binding obligations of the Borrower enforceable against the Borrower in

accordance with its terms, subject to the effect of applicable bankruptcy and

other similar laws affecting the rights of creditors generally and the effect

of equitable principles whether applied in an action at law or a suit in equity.

 

3(d)           No

Legal Bar.  The execution, delivery

and performance of this Amendment will not violate any applicable law or any

contractual obligations of the Borrower or create or result in the creation of

any Lien on any assets of the Borrower.

 

4.                Miscellaneous

Provisions.

 

4(a)           Entire

Agreement.  This Amendment and the

documents and agreements referred to herein embody the entire agreement and

understanding between the parties hereto and supersede all prior agreements and

understandings relating to the subject matter hereof and thereof.

 

4(b)           Survival.  All representations, warranties, covenants

and agreements herein contained on the part of the Borrower shall survive the

termination of this Amendment and the Agreement and shall be effective until

the Obligations are paid and performed in full or longer as expressly provided

herein.

 

4(c)                Governing

Law.  This Amendment shall be

governed by and construed in accordance with the laws of the State of

California, without giving effect to choice of law rules.

 

4(d)                Counterparts.  This Amendment may be executed in any number

of counterparts, all of which together shall constitute one agreement.

 

4(e)                Expenses.  The Borrower agrees to pay to Bank, on

demand, all reasonable out-of-pocket expenses (including fees and disbursements

of counsel, including reasonable allocated cost of inside counsel) of Bank

incident to the preparation, negotiation, and closing of this Amendment and the

syndication and participation of the Agreement, as modified hereby.

 

5.                Reaffirmation

of Loan Documents.  The Borrower

affirms and agrees that the execution and delivery by the Borrower of and the

performance of its obligations under this Amendment shall not in any way amend,

impair, invalidate or otherwise affect any of the Obligations of the Borrower

or the rights of the Bank under the Agreement or any other document or

instrument made or given by the Borrower in connection therewith, and

specifically reaffirms and remakes all the covenants, representations,

warranties and reaffirms the security interests granted thereunder.

 

IN WITNESS WHEREOF, the parties hereto have caused

this Amendment to be executed as of the day and year first above written.

 

	

   

  	

  SCHEID VINEYARDS CALIFORNIA INC.,

  
	

   

  	

  a California corporation, as the Borrower

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By

  	

       /s/

  Heidi M. Scheid

  
	

   

  	

   

  	

  Heidi M. Scheid, Senior Vice President

  

 

 

	

   

  	

   

  	

  UNITED CALIFORNIA BANK, a California banking

  corporation formerly known as  Sanwa

  Bank California, as Bank

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

  /s/ John F. King

  	

   

  
	

   

  	

   

  	

  Title:

  	

  John F. King, AVPPrepared by MERRILL CORPORATION

EXHIBIT 10.5

 

AMENDMENT TO CREDIT AGREEMENT

[San Lucas First]

 

                THIS AMENDMENT TO

CREDIT AGREEMENT (the "Amendment") is made and dated as of the 27th

day of August, 2001 by and between UNITED CALIFORNIA BANK, a California banking

corporation formerly known as Sanwa Bank California ("Bank") and

SCHEID VINEYARDS CALIFORNIA INC., a California corporation (the

"Borrower") and amends that certain Line of Credit Agreement

(Reducing Commitment) dated as of July 24, 1995 (as amended, modified or waived

from time to time including, without limitation, pursuant to a First Amendment

to Line of Credit Agreement dated as of April 24, 1998 and a Second Amendment

to Line of Credit Agreement dated as of June 30, 1998, the

"Agreement") between the Borrower and the Bank.

 

RECITALS

 

                                A.                The Borrower and the Bank entered into the Agreement,

pursuant to which the Bank agreed to extend certain credit accommodations to

the Borrower.  The Borrower also

executed in favor of the Bank (i) that certain Deed of Trust (Non-Construction)

& Assignment of Rents in favor of the Bank dated as of July 24, 1995, and

recorded in the official records of Monterey County, California, as Instrument

No. 41823, Reel 3262, Page 65 (as amended, modified or waived from time to

time, the "Deed of Trust") and (ii) that certain Assignment of

Lessor's Interest in Lease(s) dated as of July 24, 1995, and recorded in the

official records of Monterey County, California, as Instrument No. 41824, Reel

3262, Page 83 (as amended, modified or waived from time to time, the

"Assignment of Leases") encumbering the real property described

therein (the "Property"). 

Borrower and Bank also executed that certain Security Agreement dated as

of July 24, 1995, pursuant to which Borrower among other things granted to Bank

a security interest in certain personal property of Borrower (as amended,

modified or waived from time to time, the "Security Agreement").  All terms used herein which are not

otherwise defined herein shall have the meanings given them in the Agreement.

 

                                B.                The Borrower has asked the Bank to convert all

amounts outstanding under the Agreement into a term loan.

 

                                C.                 Bank has agreed to do so on the terms and conditions

contained in this Amendment.

 

                                NOW, THEREFORE, in consideration

of the above Recitals and for other good and valuable consideration, the

receipt and adequacy of which are hereby acknowledged, the parties hereby agree

that, upon the satisfaction of the conditions contained in Paragraph 2 below,

the Agreement shall be amended as set forth below:

 

AGREEMENT

 

                                1.                Amendments.

 

                                                1(a)                Amendments to Definitions.  The following are either new or amended

definitions, as the case may be, of certain defined terms used in the

Agreement:

 

"'Advance' shall mean a portion of the principal

amount outstanding hereunder which bears interest at a specified interest rate

as elected or deemed to be elected by Borrower pursuant to the terms of this

Agreement."

 

                                "'Business Day' shall mean

a day, other than a Saturday or Sunday, on which commercial banks are open for

business in California."

 

                                "Effective Date' shall have

the meaning given such term in that certain Amendment to Credit Agreement dated

as of August 27, 2001 between Bank and Borrower."

 

                                "'Interest Period' shall

mean a LIBOR Interest Period."

 

                                "'LIBOR Advance' shall have

the meaning given such term in Section 2 hereof."

 

                                "'LIBOR Business Day' shall

mean a Business Day upon which commercial banks in London, England are open for

domestic and international business.

 

                                "'LIBOR Interest Period'

shall have the meaning given such term in Section 2 hereof."

 

                                "'LIBOR Rate' shall have

the meaning given such term in Section 2 hereof."

 

                                1(b)                Amendment of Section 1.  Section 1 of the Agreement is amended to

read in its entirety as follows:

 

"SECTION 1

CONVERSION TO TERM

LOAN; INTEREST AND PRINCIPAL PAYMENTS

 

                1.01 

       Term Loan Conversion.  As of the Effective Date, the Line of Credit

under this Agreement will be terminated and all obligations of the Borrower

hereunder shall be converted into a term loan (the "Term Loan") with

a principal balance of $1,714,284.00. 

Interest and principal on the Term Loan will be payable as set forth

herein.

 

                                A.                  Purpose.  The Term Loan shall be used to refinance

existing debt and for working capital of the Borrower.

 

                                B.                Term Loan Account. 

The Bank shall maintain on its books a record of account in which the

Bank shall make entries setting forth all payments made, the application of

such payments to interest and principal, accrued but unpaid interest, if any,

and the outstanding principal balance under the Term Loan (the "Term Loan

Account").  Any statement of the

Term Loan Account provided to Borrower shall be considered to be correct and

conclusively binding on the Borrower unless the Bank is notified by the

Borrower to the contrary within thirty (30) days after the Borrower's receipt

of any such statement which is deemed to be incorrect.

 

                                C.                Repayment.  Unless sooner due in accordance with the

terms of this Agreement, the Borrower hereby promises and agrees to make annual

installments of principal commencing on June 30, 2002 and each anniversary

thereof (up to and including the Expiration Date) in the amount of $214,286.00

for each such installment.  Once any

amount is repaid hereunder, whether voluntarily or by acceleration or

otherwise, such amount may not be reborrowed. 

Borrower shall pay to Bank the principal amount outstanding hereunder,

together with all accrued but unpaid interest thereon, on July 5, 2005 (the

"Expiration Date").

 

D.               Interest.  Interest on the Term Loan shall accrue at

one of the following rates, as quoted by the Bank and as elected by the

Borrower pursuant to this Agreement:

 

                                (i)                Variable Rate Advances:  A variable rate per annum equivalent to the

Reference Rate plus one-quarter percent (.25%) (the "Variable

Rate").  Interest shall be adjusted

concurrently with any change in the Reference Rate.  An Advance based upon the Variable Rate is hereinafter referred

to as a "Variable Rate Advance."

 

                                (ii)                LIBOR Advances:  A fixed rate quoted by the Bank for 1, 2, 3, 6, or 12 months or

for such other period of time that the Bank may quote and offer (provided that

any such period of time does not extend beyond the Expiration Date) (the

"LIBOR Interest Period") for advances in the minimum amount of $500,000.00.  Such interest rate shall be the rate per

annum determined by the Bank to be the rate as of approximately 11:00 a.m.

(London time) on the date that is two (2) LIBOR Business Days prior to the

beginning of the relevant Interest Period quoted as the British Bankers

Association Interest Settlement Rate for deposits in dollars (as set forth in

any service selected by the Bank which has been nominated by the British

Bankers’ Association as an authorized information vendor for purpose of

displaying such rates) for a period equal to such Interest Period; provided

that, to the extent that an interest rate is not ascertainable pursuant to the

foregoing provisions of this definition, the rate shall be the interest rate

per annum determined by the Bank to be the average of the rates per annum at

which deposits in dollars are offered for such relevant Interest Period to

major banks in the London interbank market in London, England by any affiliate

of the Bank at approximately 11:00 a.m. (London time) on the date that is two

(2) LIBOR Business Days prior to the beginning of such Interest Period, in

either case plus 2.25%, adjusted for any and all assessments, surcharges and

reserve requirements and rounded upward, if necessary, to the next higher 1/16

of one percent (the "LIBOR Rate"). 

An Advance based upon the LIBOR Rate is hereinafter referred to as a

"LIBOR Advance."  There may be

no more than four (4) Interest Periods in effect at any one time for LIBOR

Advances.

 

Interest on any Advance shall be

computed on the basis of 360 days per year, but charged on the actual number of

days elapsed.

 

The Borrower hereby promises and

agrees to pay interest quarterly in arrears on all Variable Rate  Advances and LIBOR Advances on March 31,

June 30, September 30, and December 31 of each year.

 

If interest is not paid as and

when it is due, it shall be added to the principal, become and be treated as a

part thereof, and shall thereafter bear like interest.

 

E.               Notice

of Election to Adjust Interest Rate: 

The Borrower may elect:

 

(i)              That

interest on a Variable Rate Advance shall be adjusted to accrue at the LIBOR

Rate; provided, however, that such notice to continue to accrue at the LIBOR

Rate shall be received by the Bank no later than two (2) LIBOR Business Days

prior to the day (which shall be a Business Day) on which Borrower requests

that interest be adjusted to accrue at the LIBOR Rate.

 

(ii)             That

interest on a LIBOR Advance shall continue to accrue at a newly quoted LIBOR

Rate or shall be adjusted to commence to accrue at the Variable Rate; provided,

however, that such notice shall be received by the Bank no later than two (2)

LIBOR Business Days prior to the last day of the LIBOR Interest Period

pertaining to such LIBOR Advance.  If

the Bank shall not have received notice (as prescribed herein) of the

Borrower's election that interest on any LIBOR Advance shall continue to accrue

at the newly quoted LIBOR Rate, Borrower shall be deemed to have elected that

interest thereon shall be adjusted to accrue at the Variable Rate upon the

expiration of the LIBOR Interest Period pertaining to such Advance.

 

                                                F.                Prepayment. 

The Borrower may prepay any Advance in whole or in part, at any time and

without penalty, provided, however, that: 

(i) any partial prepayment shall first be applied, at the Bank's option,

to accrued and unpaid interest and next to the outstanding principal balance;

and (ii) during any period of time in which interest is accruing on any Advance

on the basis of the LIBOR Rate, no prepayment shall be made except on a day which

is the last day of the Interest Period pertaining thereto.  If the whole or any part of any LIBOR

Advance is prepaid by reason of acceleration or otherwise, the Borrower shall,

upon the Bank's request, promptly pay to and indemnify the Bank for all costs,

expenses and any loss (including loss of future interest income) actually

incurred by the Bank and any loss (including loss of profit resulting from the

re-employment of funds) reasonably deemed sustained by the Bank as a

consequence of such prepayment.  The

Bank shall be entitled to fund all or any portion of its Advances in any manner

it may determine in its sole discretion, but all calculations and transactions

hereunder shall be conducted as though the Bank actually funded all Advances

through the purchase of dollar deposits bearing interest at the same rate as

U.S. Treasury securities in the amount of the relevant Advance and in

maturities corresponding to the applicable Interest Period.

 

                                                G.                Indemnification for LIBOR  Costs.  During

any period of time in which interest on any Advance is accruing on the basis of

the LIBOR Rate, the Borrower shall, upon the Bank's request, promptly pay to

and reimburse the Bank for all costs incurred and payments made by the Bank by

reason of any future assessment, reserve, deposit or similar requirement of any

regulatory authority pertaining or relating to funds used by the Bank in

quoting and determining the LIBOR Rate.

 

                                                H.                Conversion from LIBOR Rate to Variable Rate. In the event that the Bank shall at any time

determine that the accrual of interest on the basis of the LIBOR Rate (i) is

infeasible because the Bank is unable to determine the LIBOR Rate due to the

unavailability of U.S. dollar deposits, contracts or certificates of deposit in

an amount approximately equal to the amount of the relevant Advance and for a

period of time approximately equal to the relevant Interest Period or (ii) is

or has become unlawful or infeasible by reason of the Bank's compliance with

any new law, rule, regulation, guideline or order, or any new interpretation of

any present law, rule, regulation, guideline or order, then the Bank shall give

telephonic notice thereof (confirmed in writing) to the Borrower, in which

event any Advance bearing interest at the LIBOR Rate, shall be deemed to be a

Variable Rate Advance and interest shall thereupon immediately accrue at the

Variable Rate.

 

                                                I.                Late Payment. 

If any payment of principal or interest, or any portion thereof, , under

this Agreement is not paid within ten (10) calendar days after it is due, a

late payment charge equal to five percent (5%) of such past due payment may be

assessed and shall be immediately payable."

 

"1.04                Disbursement

of Proceeds of Term Loan.  Any

disbursement of the Term Loan shall be conclusively presumed to have been made

to and for the Borrower's benefit when such disbursement is made in accordance

with the Borrower's instructions or deposited into a checking account of the

Borrower maintained at the Bank."

 

                                1(c)                Amendment of Section 5.05.  Section 5.05 is amended to read as follows:

 

                                "5.05                Reporting Requirements.  Deliver or cause to be delivered to the Bank

in form and detail satisfactory to the Bank:

 

                                                A.                Annual Statements. 

Not later than 105 days after the end of each of its fiscal years, a copy

of the annual audited consolidated financial report of Scheid Vineyards Inc.,

which report shall be prepared by a firm of certified public accountants

reasonably acceptable to Bank, and a copy of the Borrower's annual crop budget

for the succeeding year.

 

                                                B.                Quarterly Statements.  Not later than 45 days after the end of each fiscal quarter,

Scheid Vineyards Inc.'s consolidated financial statement as of the end of such

period.

 

                                                C.                SEC Filings. 

Promptly upon filing, copies of any 10Q, 10K or other public filing made

by Scheid Vineyards Inc. with the Securities and Exchange Commission.

 

                                                D.                Other Information. 

Promptly upon the Bank's request, such other information pertaining to

the Borrower or any Guarantor as the Bank may reasonably request."

 

                                1(d)                Amendment of Section 5.11.  Section 5.11 is amended to read as follows:

 

                                "5.11                Financial Condition.  Cause Scheid Vineyards Inc. to maintain on a

consolidated basis:

 

                                                A.                Net Worth.  A

minimum effective tangible net worth of at least $25,000,000.00 plus 100% of

its cumulative net income from and after March 31, 2001, measured as of the end

of each fiscal quarter.

 

                                                B.                Working Capital. 

A minimum working capital, measured as of the end of each fiscal year,

of at least $5,000,000.00.

 

                                                C.                Debt Service Coverage Ratio.  A ratio, measured as of the end of each

fiscal year, of (i) the sum of net income after tax and exclusive of

extraordinary gains, plus depreciation, amortization and interest expense minus

dividends and distributions to (ii) current portion of long term debt plus

interest expense of at least 1.25 to 1:00.

 

For purposes of the foregoing, the term "effective tangible net

worth" with respect to any entity shall mean such entity's stated net

worth less all its intangible assets (i.e., goodwill, trademarks, patents,

copyrights, organization expense and similar tangible items) plus indebtedness

subordinated pursuant to terms approved by the Bank to indebtedness owed by the

Borrower to Bank and "working capital" shall mean current assets as determined

in accordance with generally accepted accounting principles, less all amounts

due from affiliates, officers or employees less current liabilities as

determined in accordance with generally accepted accounting principles,

including any negative cash balance."

 

1(f)                Amendment

to Section 5.12.  The amount

"$50,000.00" in Section 5.12 is replaced with the amount

"$100,000.00."

 

                                1(g)          New Section 5.14. 

The following is added as Section 5.14 of the Agreement:

 

                                                "5.14                Indebtedness. Not create, incur

or assume, directly or indirectly, any additional Indebtedness other than (i)

indebtedness owed or to be owed to the Bank, (ii) indebtedness to trade

creditors in the ordinary course of business, and (iii)  other indebtedness (which may be secured) in

an amount created, incurred or assumed in any fiscal year in an amount not to

exceed $500,000.00."

 

                                1(h)                New Section 5.15.  The following is added as Section 5.15 of the Agreement:

 

                                                "5.15                Payment of Dividends.  Not declare or pay any dividends on any class

of the Borrower's stock now or hereafter outstanding except dividends payable

solely in the Borrower's capital stock."

 

                                1(i)                Amendment to Section 6.03.  Section 6.03 is amended to read as follows:

 

                                                "6.03                Performance Under Other

Agreements.  If there is a default under

any other agreement to which Borrower is a party with Bank or any third party

or parties resulting in a right by such third party or parties, whether or not

exercised, to accelerate the maturity of any Indebtedness."

 

                                1(j)                Address for Notice.  The address for notice of the Borrower is hereby amended to the

following:  Scheid Vineyards California

Inc., 305 Hilltown Road, Salinas, CA 

93908, Attention:  Heidi M.

Scheid, Senior Vice President, Tel. (831) 455-9990, Fax (831) 455-9998.

 

                                1(k)                Dispute Resolution.  Section 8.11 of the Agreement is hereby deleted from the

Agreement in its entirety, and any provision of like import in the Loan

Documents relating to dispute resolution is similarly deleted in its entirety.

 

2.                Conditions

to Effectiveness of Amendment.  This

Amendment shall not be effective until the date (the "Effective

Date") upon which all of the following conditions precedent have been

satisfied:

 

                (i)  the Borrower and Bank shall have duly

executed and delivered this Amendment and such other documents as Bank may

require with respect to the transactions described in this Amendment

(including, without limitation, UCC-1 Financing Statements and supplemental

deeds of trust);

 

                (ii)  Bank shall have received such board

resolutions, incumbency certificates, opinions of Borrower's counsel and such

other additional documentation in form and substance satisfactory to Bank as it

may request in connection herewith;

 

(iii)  all

representations and warranties hereunder and under the Agreement shall be true

and correct and no Event of Default or event, which with the passage of time,

giving of notice or both, would constitute an Event of Default, shall have

occurred;

 

                (iv)  The Bank shall have received such

endorsements to the title policies issued with respect to the Deed of Trust as

it shall require, together with appraisals and flood certifications relating to

the real property encumbered thereby.

 

3.                Representations

and Warranties of the Borrower.  As

an inducement to Bank to enter into this Amendment, the Borrower represents and

warrants to Bank that:

 

3(a)           No

Change.  Since the date of the

financial statements most recently delivered to Bank pursuant to the Agreement,

there has been no material adverse change in the business, operations, assets

or financial or other condition of the Borrower.  Since such date, the Borrower has not entered into, incurred or

assumed any long-term debt, mortgages, material leases or material oral or

written commitments not disclosed to Bank prior to the date of this Amendment.

 

3(b)                Corporate

Existence; Compliance with Law.  The

Borrower (1) is duly organized, validly existing and in good standing as a

corporation under the laws of the state of its incorporation and is qualified

to do business in each jurisdiction where its ownership of property or conduct

of business requires such qualification and where failure to qualify would have

a material adverse effect on it or its property and/or business or on the

ability of the Borrower to pay or perform the Obligations, (2) has the

corporate power and authority and the legal right to own and operate its

property and to conduct business in the manner in which it does and proposes so

to do, and (3) is in compliance in all material respects with applicable

laws and contractual obligations.

 

3(c)                Corporate

Power; Authorization; Enforceable Obligations.  The Borrower has the corporate power and authority and the legal

right to execute, deliver and perform this Amendment, as amended hereby, to

which it is a party and has taken all necessary corporate action to authorize

the execution, delivery and performance of this Amendment and the

Agreement.  This Amendment has been duly

executed and delivered on behalf of the Borrower and constitutes legal, valid

and binding obligations of the Borrower enforceable against the Borrower in

accordance with its terms, subject to the effect of applicable bankruptcy and

other similar laws affecting the rights of creditors generally and the effect

of equitable principles whether applied in an action at law or a suit in

equity.

 

3(d)           No

Legal Bar.  The execution, delivery

and performance of this Amendment will not violate any applicable law or any

contractual obligations of the Borrower or create or result in the creation of

any Lien on any assets of the Borrower.

 

4.                Miscellaneous

Provisions.

 

4(a)           Entire

Agreement.  This Amendment and the

documents and agreements referred to herein embody the entire agreement and

understanding between the parties hereto and supersede all prior agreements and

understandings relating to the subject matter hereof and thereof.

 

4(b)           Survival.  All representations, warranties, covenants

and agreements herein contained on the part of the Borrower shall survive the

termination of this Amendment and the Agreement and shall be effective until

the Obligations are paid and performed in full or longer as expressly provided

herein.

 

4(c)                Governing

Law.  This Amendment shall be

governed by and construed in accordance with the laws of the State of

California, without giving effect to choice of law rules.

 

4(d)                Counterparts.  This Amendment may be executed in any number

of counterparts, all of which together shall constitute one agreement.

 

4(e)                Expenses.  The Borrower agrees to pay to Bank, on

demand, all reasonable out-of-pocket expenses (including fees and disbursements

of counsel, including reasonable allocated cost of inside counsel) of Bank

incident to the preparation, negotiation, and closing of this Amendment and the

syndication and participation of the Agreement, as modified hereby.

 

5.                Reaffirmation

of Loan Documents.  The Borrower

affirms and agrees that the execution and delivery by the Borrower of and the

performance of its obligations under this Amendment shall not in any way amend,

impair, invalidate or otherwise affect any of the Obligations of the Borrower

or the rights of the Bank under the Agreement or any other document or

instrument made or given by the Borrower in connection therewith, and

specifically reaffirms and remakes all the covenants, representations,

warranties and reaffirms the security interests granted thereunder.

 

IN WITNESS WHEREOF, the parties hereto have caused

this Amendment to be executed as of the day and year first above written.

 

	

   

  	

  SCHEID VINEYARDS CALIFORNIA INC.,

  
	

   

  	

  a California corporation, as the Borrower

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

  By

  	

   

  	

  /s/ Heidi M. Scheid

  
	

   

  	

   

  	

  Heidi M. Scheid, Senior Vice President

  

 

 

	

   

  	

  UNITED CALIFORNIA BANK, a California banking

  corporation formerly known as Sanwa Bank California, as Bank

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ John F. King

  	

   

  
	

   

  	

  Title:

  	

  John F. King, AVP

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00031-of-00352.parquet"}]]