Document:

Exhibit 10(ao)  

June 26,
2001

(Revised June 28, 2001) 

Gerald
A. Koris

2717 Bottlebrush Drive

Los Angeles, CA 90077 

Dear
Jerry: 

        I
am pleased to offer you an employment opportunity with International Rectifier. Your position will be General Counsel (acting) & Secretary, effective July 1, 2001,
reporting to Alex Lidow, Chief Executive Officer, at an annual rate of $275,000. As we have discussed, this employment opportunity is limited; it is understood you will assume regular employee status
only for the period beginning July 1, 2001 and ending one year from the start date of the new General Counsel. The "Consulting Services" provision contained in this letter summarizes the
part-time employment arrangement that will govern your relationship with International Rectifier when your full-time employee status ends. This offer of employment includes: 

	•
	Stock Options: Subject to the approval of the Compensation and Stock Option Committee of the Board of
Directors and normal vesting requirements, you will receive an option to purchase 25,000 shares of IR common stock at an exercise price equal to the fair market value on the date of grant
(July 2, 2001). You will be eligible for consideration for future stock option grants on the same basis as other officers of IR. Stock options shall be exercisable for the full term of the Plan
under which they are granted, irrespective of your employment or consulting status with IR. In the event of your death, options shall be exercisable by your estate, legal representative, or heirs, as
the case may be.

	•
	Incentive Plan: You will be eligible for a one-time cash bonus for your performance as General
Counsel, in an amount consistent with cash bonuses paid to other officers, payable within 30 days of the start date of the new General Counsel, but no later than August 31, 2002.

	•
	Car Allowance: Upon employment you will receive $560.00 a month car allowance. Employees receiving a car
allowance must purchase insurance coverage and provide evidence of such insurance to the Corporate Treasury on the first day of employment and annually thereafter. Insurance maintained by the employee
on
the vehicle should be no less than $100,000.00 bodily injury, each person $300,000.00 each accident and $50,000.00 property damage each accident.

	•
	International Rectifier Benefits: This offer includes paid time off, medical, dental, life insurance, 401(k)
plan, stock purchase plan, and all other benefits in accordance with standard company plans and any revisions thereof.

	•
	Consulting Services: Upon completion of your regular employment with IR (one year from the start date of the
new General Counsel), you will transition to a regular, part-time employment status, including benefits provided to active, part-time employees. Your part-time
employment with IR will have a term of 4 years, at an annual rate of $137,500 for 500 hours of consulting services, plus $275 per hour for services provided in excess of 500 hours
annually, rendering the same general services as you are currently providing IR. 

        You
may terminate your employment with the Company at any time, for any reason, with or without legal cause. The Company retains the right to terminate your employment for legal cause at
any time. 

        Attached
is an offer summary agreement for your use in formally responding to this offer. Should the terms of this offer be acceptable, your start date will be Monday, July 2,
2001. This offer will expire if not accepted by Friday, June 29, 2001. 

        Please
let me know if you have any questions, Jerry. 

	Sincerely,	 	 
	

Alex Lidow
 Chief Executive Officer	
 	

 
	 	 	 

EMPLOYMENT OFFER SUMMARY  

Title:
General Counsel (acting) & Secretary

Annual Salary: $275,000

Department/Shift: 8240 / 1st

Supervisor: Alex Lidow 

	Stock Options:	 	Subject to the approval of the Compensation and Stock Option Committee of the Board of Directors and normal vesting requirements, you will receive an option to purchase 25,000 shares of IR common stock at an exercise
price equal to the fair market value on the date of grant (July 2, 2001). You will be eligible for consideration for future stock option grants on the same basis as other officers of IR. Stock options shall be exercisable for the full term of
the Plan under which they are granted, irrespective of your employment or consulting status with IR. In the event of your death, options shall be exercisable by your estate, legal representative, or heirs, as the case may be.
	

Incentive Plan:	
 	

You will be eligible for a one-time cash bonus for your performance as General Counsel, in an amount consistent with cash bonuses paid to other officers, payable within 30 days of the start date of the new General Counsel, but no later than
August 31, 2002.
	

Car Allowance:	
 	

Upon employment you will receive $560.00 a month car allowance. Employees receiving a car allowance must purchase insurance coverage and provide evidence of such insurance to the Corporate Treasury on the first day of employment and annually
thereafter. Insurance maintained by the employee on the vehicle should be no less than $100,000.00 bodily injury, each person $300,000.00 each accident and $50,000.00 property damage each accident.
	

Benefits:	
 	

This offer includes paid time off, medical, dental, life insurance, 401(k) plan, stock purchase plan, and all other benefits in accordance with standard company plans and any revisions thereof.
	

Consulting Services:	
 	

Upon completion of your regular employment with IR (one year from the start date of the new General Counsel), you will transition to a regular, part-time employment status, including benefits provided to active, part-time employees. Your part-time
employment with IR will have a term of 4 years, at an annual rate of $137,500 for 500 hours of consulting services, plus $275 per hour for services provided in excess of 500 hours annually, rendering the same general services as you
are currently providing IR.
	

Start Date:	
 	

Monday, July 2, 2001

        You may terminate your employment with the Company at any time, for any reason, with or without legal cause. The Company retains the right to terminate your
employment for legal cause at any time. 

        Your
acceptance of this offer and the conditions upon which it is made will be confirmed by your signing and returning this agreement. 

	

 Gerald A. Koris	
 	

 Date	
 	

 
	

 Alex Lidow
 Chief Executive Officer	
 	

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Exhibit 10.23  

  
 

    CREDIT AGREEMENT
  (LINE OF CREDIT)    
  

        This Agreement (the "Agreement") is made and entered into as of July 19, 2002, by and between BANK OF THE WEST (the "Bank") and GOLDEN STATE VINTNERS (the
"Borrower"), on the terms and conditions that follow: 

 
 

SECTION
  1
  DEFINITIONS    
  

	1.1	 	Certain Defined Terms: Unless elsewhere defined in this Agreement, the following terms shall have the following meanings (such meanings to be generally applicable to the singular and plural forms
of the terms defined):
	

 	
 	

1.1.1	
 	
"Advance": shall mean an advance to the Borrower under the credit facility (ies) described in Section 2.
	

 	
 	

1.1.2	
 	
"Business Day": shall mean a day, other than a Saturday or Sunday, on which commercial banks are open for business in California.
	

 	
 	

1.1.3	
 	
"Cash Flow": shall mean the sum of net income after tax and exclusive of extraordinary gains, plus depreciation and amortization expense minus dividends and distributions.
	

 	
 	

1.1.4	
 	
"Collateral": shall mean the property described in Section 3, together with any other personal or real property in which the Bank may be granted a lien or security interest to secure
payment of the Obligations.
	

 	
 	

1.1.5	
 	
"Crops": shall mean the crops described in Section 3.
	

 	
 	

1.1.6	
 	
"Current Assets": shall mean current assets as determined in accordance with generally accepted accounting principles, less all amounts due from affiliates, officers or
employees.
	

 	
 	

1.1.7	
 	
"Current Liabilities": shall mean current liabilities as determined in accordance with generally accepted accounting principles, including any negative cash balance on the Borrower's
financial statement.
	

 	
 	

1.1.8	
 	
"Debt": shall mean all liabilities of the Borrower less Subordinated Debt, if any.
	

 	
 	

1.1.9	
 	
"EBITDA": shall mean earnings exclusive of extraordinary gains and before deductions for interest expense, taxes, depreciation and amortization expense.
	

 	
 	

1.1.10	
 	
"Effective Tangible Net Worth": shall mean the Borrower's stated net worth plus Subordinated Debt but less all intangible assets of the Borrower (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).
	
 	
 	

 	
 	

 

1

 

	

 	
 	

1.1.11	
 	
"Environmental Claims": shall mean all claims, however asserted, by any governmental authority or other person alleging potential liability or responsibility for violation of any
Environmental Law or for Discharge or injury to the environment or threat to public health, personal injury (including sickness, disease or death), property damage, natural resources damage, or otherwise alleging liability or responsibility for
damages (punitive or otherwise), cleanup, removal, remedial or response costs, restitution, civil or criminal penalties, injunctive relief, or other type of relief, resulting from or based upon (a) the presence, placement, discharge, emission or
release (including intentional and unintentional, negligent and non-negligent, sudden or non-sudden, accidental or non-accidental placement, spills, leaks, Discharges, emissions or releases) of any Hazardous Material at, in, or from property, whether
or not owned by the Borrower, or (b) any other circumstances forming the basis of any violation, or alleged violation, of any Environmental Law.
	

 	
 	

1.1.12	
 	
"Environmental Laws": shall mean all federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed
duties, requests, licenses, authorizations and permits of, and agreements with, any governmental authorities, in each case relating to environmental, health, safety and land use matters; including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), the Clean Air Act, the Federal Water Pollution Control Act of 1972, the Solid Waste Disposal Act, the Federal Resource Conservation and Recovery Act, the Toxic Substances Control Act, the Emergency
Planning and Community Right-to-Know Act, the California Hazardous Waste Control Law, the California Solid Waste Management, Resource, Recovery and Recycling Act, the California Water Code and the California Health and Safety Code.
	

 	
 	

1.1.13	
 	
"Environmental Permits": shall have the meaning provided in Section 5.11 hereof.
	

 	
 	

1.1.14	
 	
"ERISA": shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, including (unless the context otherwise requires) any rules or regulations promulgated
thereunder.
	

 	
 	

1.1.15	
 	
"Event of Default": shall have the meaning set forth in Section 7.
	

 	
 	

1.1.16	
 	
"Expiration Date": shall mean July 5, 2003, or the date of termination of the Bank's commitment to lend under this Agreement pursuant to Section 8, whichever shall occur
first.
	

 	
 	

1.1.17	
 	
"Fixed Rate Advance": shall have the respective meaning as it is defined for each facility under Section 2, hereof if applicable.
	

 	
 	

1.1.18	
 	
"Fixed Rate": shall have the respective meaning as it is defined for each facility under Section 2, hereof if applicable.
	

 	
 	

1.1.19	
 	
"Hazardous Materials": shall mean all those substances which are regulated by, or which may form the basis of liability under, any Environmental Law, including all substances identified
under any Environmental Law as a pollutant, contaminant, hazardous waste, hazardous constituent, special waste, hazardous substance, hazardous material, or toxic substance, or petroleum or petroleum derived substance or waste.
	
 	
 	

 	
 	

 

2

 

	

 	
 	

1.1.20	
 	
"Indebtedness": shall mean, with respect to the Borrower, (i) all indebtedness for borrowed money or for the deferred purchase price of property or services in respect of which the
Borrower is liable, contingently or otherwise, as obligor, guarantor or otherwise, or in respect of which the Borrower otherwise assures a creditor against loss and (ii) obligations under leases which shall have been or should be, in accordance
with generally accepted accounting principles, reported as capital leases in respect of which the Borrower is liable, contingently or otherwise, or in respect of which the Borrower otherwise assures a creditor against loss.
	

 	
 	

1.1.21	
 	
"Interest Period": shall have the respective meaning as it is defined for each facility under Section 2, hereof.
	

 	
 	

1.1.22	
 	
"Inventory": shall mean the inventory described in Section 3.
	

 	
 	

1.1.23	
 	
"LIBOR Advance": shall have the respective meaning as it is defined for each facility under Section 2, hereof.
	

 	
 	

1.1.24	
 	
"LIBOR Interest Period": shall have the respective meaning as it is defined for each facility under Section 2, hereof.
	

 	
 	

1.1.25	
 	
"LIBOR Rate": shall have the respective meaning as it is defined for each facility under Section 2, hereof.
	

 	
 	

1.1.26	
 	
"Line Account": shall have the meaning provided in Section 2.2 hereof.
	

 	
 	

1.1.27	
 	
"Line of Credit": shall mean the credit facility described as such in Section 2.
	

 	
 	

1.1.28	
 	
"Obligations": shall mean all amounts owing by the Borrower to the Bank pursuant to this Agreement including, but not limited to, the unpaid principal amount of any loans or
advances.
	

 	
 	

1.1.29	
 	
"Ordinary Course of Business": shall mean, with respect to any transaction involving the Borrower or any of its subsidiaries or affiliates, the ordinary course of the Borrower's business, as
conducted by the Borrower in accordance with past practice and undertaken by the Borrower in good faith and not for the purpose of evading any covenant or restriction in this Agreement or in any other document, instrument or agreement executed in
connection herewith.
	

 	
 	

1.1.30	
 	
"Permitted Liens": shall mean: (i) liens and security interests securing indebtedness owed by the Borrower to the Bank; (ii) liens for taxes, assessments or similar charges not yet
due; (iii) liens of materialmen, mechanics, warehousemen, or carriers or other like liens arising in the Ordinary Course of Business and securing obligations which are not yet delinquent; (iv) purchase money liens or purchase money security
interests upon or in any property acquired or held by the Borrower in the Ordinary Course of Business to secure Indebtedness outstanding on the date hereof or permitted to be incurred herein; (v) liens and security interests which, as of the
date hereof, have been disclosed to and approved by the Bank in writing; and (vi) those liens and security interests which in the aggregate constitute an immaterial and insignificant monetary amount with respect to the net value of the
Borrower's assets.
	

 	
 	

1.1.31	
 	
"Prime Rate": shall mean an index for a variable interest rate which is quoted, published or announced by Bank as its prime rate and as to which loans may be made by Bank at, above or below
such rate.
	

 	
 	

1.1.32	
 	
"Subordinated Debt": shall mean such liabilities of the Borrower which have been subordinated to those owed to the Bank in a manner acceptable to the Bank.
	
 	
 	

 	
 	

 

3

 

	

 	
 	

1.1.33	
 	
"Variable Rate Advance": shall have the respective meaning as it is defined for each facility under Section 2, hereof.
	

 	
 	

1.1.34	
 	
"Variable Rate": shall have the respective meaning as it is defined for each facility under Section 2, hereof.
	

1.2	
 	
Accounting Terms: All references to financial statements, assets, liabilities, and similar accounting items not specifically defined herein shall mean such financial statements or such items
prepared or determined in accordance with generally accepted accounting principles consistently applied and, except where otherwise specified, all financial data submitted pursuant to this Agreement shall be prepared in accordance with such
principles.
	

1.3	
 	
Other Terms: Other terms not otherwise defined shall have the meanings attributed to such terms in the California Uniform Commercial Code as in effect on July 1, 2001 and from time to
time thereafter.

 
 

SECTION
  2
  CREDIT FACILITIES    
  

	2.1	 	THE LINE OF CREDIT
	

 	
 	

2.1.1	
 	
The Line of Credit: On terms and conditions as set forth herein, the Bank agrees to make Advances to the Borrower from time to time from the date hereof to the Expiration Date, provided the
aggregate amount of such Advances outstanding at any time does not exceed $22,000,000.00 through February 5, 2003 and $18,000,000.00 thereafter (the "Line of Credit"). Within the foregoing limits, the Borrower may borrow, partially or wholly
prepay, and reborrow under this Section 2.1. Proceeds of the Line of Credit shall be used for general working capital purposes.
	

 	
 	

2.1.2	
 	
M aking Line Advances: Each Advance shall be conclusively deemed to have been made at the request of and for the benefit of the Borrower (i) when credited to any deposit account of the
Borrower maintained with the Bank or (ii) when paid in accordance with the Borrower's written instructions. Subject to the requirements of Section 4 and provided such request is made in a timely manner as provided in Section 2.1.5
below, Advances shall be made by the Bank under the Line of Credit.
	

 	
 	

2.1.3	
 	
Repayment:
	

 	
 	

 	
 	

(i)	
 	

If at any time the aggregate principal amount of the outstanding Advances shall exceed the Line of Credit, the Borrower hereby promises and agrees, immediately upon written or telephonic notice from the Bank, to pay to the Bank an amount equal to the
difference between the outstanding principal balance of the Advances and the Line of Credit.
	

 	
 	

 	
 	

(ii)	
 	

On the Expiration Date, the Borrower hereby promises and agrees to pay to the Bank in full the aggregate unpaid principal amount of all Advances then outstanding, together with all accrued and unpaid interest thereon.
	
 	
 	

 	
 	

 	
 	

 

4

 

	

 	
 	

2.1.4	
 	
Interest on Advances: Interest shall accrue from the date of each Advance under the Line of Credit at one of the following rates, as quoted by the Bank and as elected by the Borrower
below:
	

 	
 	

 	
 	

(i)	
 	
Variable Rate Advances: A variable rate per annum equivalent to the Prime Rate (the "Variable Rate"). Interest shall be adjusted concurrently with any change in the Prime Rate. An Advance
based upon the Variable Rate is hereinafter referred to as a "Variable Rate Advance".
	

 	
 	

 	
 	

(ii)	
 	
Fixed Rate Advances: A fixed rate per annum quoted by the Bank for 30, 60, 90 or 180 days 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 "Interest Period") for Advances in the minimum amount of $250,000.00. Such interest rate shall be a percentage approximately equivalent to 1.15% in excess of the rate which the Bank determines in
its sole and absolute discretion to be equal to the Bank's cost of acquiring funds (adjusted for any and all assessments, surcharges and reserve requirements pertaining to the borrowing or purchase by the Bank of such funds) 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 (the "Fixed Rate"). Advances based upon the Fixed Rate are hereinafter referred to as "Fixed Rate
Advances".
	

 	
 	

 	
 	

(iii)	
 	
LIBOR Advances: A fixed rate quoted by the Bank for 1, 2, 3, or 6 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 $250,000.00. Such interest rate shall be a percentage approximately equivalent to 1.15% in excess of the Bank's LIBOR Rate which is that rate
determined by the Bank's Treasury Desk as being the arithmetic mean (rounded upwards, if necessary, to the nearest whole multiple of one-sixteenth of one percent (1/16%)) of the U. S. dollar London Interbank Offered Rates
for such period appearing on page 3750 (or such other page as may replace page 3750) of the Telerate screen at or about 11:00 a.m. (London time) on the second Business Day prior to the first days of such period (adjusted for any and all
assessments, surcharges and reserve requirements) (the "LIBOR Rate"). An Advance based upon the LIBOR Rate is hereinafter referred to as a "LIBOR Advance".
	

 	
 	

 	
 	

 	
 	

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 in arrears on all Advances on the 5th calendar day of each month.
	

 	
 	

 	
 	

 	
 	

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.
	

 	
 	

2.1.5	
 	
Notice of Borrowing: Upon written or telephonic notice which shall be received by the Bank at or before 2:00 p.m. (California time) on a Business Day, the Borrower may borrow under the
Line of Credit by requesting:
	

 	
 	

 	
 	

(i)	
 	
A Variable Rate Advance or Fixed Rate Advance: A Variable Rate Advance or Fixed Rate Advance may be made on the day notice is received by the Bank; provided, however, that if the Bank shall
not have received notice at or before 2:00 p.m. on the day such Advance is requested to be made, such Variable Rate Advance or Fixed Rate Advance may, at the Bank's option, be made on the next Business Day.
	
 	
 	

 	
 	

 	
 	

 

5

 

	

 	
 	

 	
 	

(ii)	
 	
A LIBOR Advance: Notice of any LIBOR Advance shall be received by the Bank no later than two Business Days prior to the day (which shall be a Business Day) on which the Borrower requests
such LIBOR Advance to be made.
	

 	
 	

2.1.6	
 	
Notice of Election to Adjust Interest Rate: Upon telephonic notice which shall be received by the Bank at or before 2:00 p.m. (California time) on a Business Day, the Borrower may
elect:
	

 	
 	

 	
 	

(i)	
 	

That interest on a Variable Rate Advance shall be adjusted to accrue at the Fixed Rate; provided, however, that such notice shall be received by the Bank no later than 2:00 p.m. on the Business Day on which the Borrower requests that interest be
adjusted to accrue at the Fixed Rate.
	

 	
 	

 	
 	

(ii)	
 	

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 Business Days prior to the Business Day on which the Borrower requests that
interest be adjusted to accrue at the LIBOR Rate.
	

 	
 	

 	
 	

(iii)	
 	

That interest on a Fixed Rate Advance shall continue to accrue at a newly quoted Fixed 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
2:00 p.m. on the last day of the Interest Period pertaining to such Fixed Rate Advance. If the Bank shall not have received notice (as prescribed herein) of the Borrower's election that interest on any Fixed Rate Advance shall continue to accrue
at the newly quoted Fixed Rate as the case may be the Borrower shall be deemed to have elected that interest thereon shall be adjusted to accrue at the Variable Rate upon the expiration of the relevant Interest Period pertaining to such
Advance.
	

 	
 	

 	
 	

(iv)	
 	

That interest on a Fixed Rate Advance shall accrue at a newly quoted LIBOR Rate or interest on a LIBOR Advance shall continue to accrue at a newly quoted Fixed Rate or 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 Business Days prior to the last day of the relevant Interest Period or LIBOR Interest Period, as applicable. If the Bank shall not have received notice as prescribed
herein of the Borrower's election that interest on any Fixed Rate Advance shall accrue interest at a newly quoted LIBOR Rate or at a newly quoted Fixed Rate pursuant to subparagraph (iii) hereinabove; or any LIBOR Advance shall continue to
accrue at the newly quoted Fixed Rate or LIBOR Rate as the case may be, the Borrower shall be deemed to have elected that interest thereon shall be adjusted to accrue at the Variable Rate upon the expiration of the relevant Interest Period or LIBOR
Interest Period pertaining to such Advance.
	
 	
 	

 	
 	

 	
 	

 

6

 

	

 	
 	

2.1.7	
 	
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 or Fixed Rate, no prepayment shall be
made except on a day which is the last day of the LIBOR Interest Period or Interest Period pertaining thereto. If the whole or any part of any LIBOR Advance or Fixed Rate 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) 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 date of such purchase to the Expiration Date hereunder.
	

 	
 	

2.1.8	
 	
Indemnification for LIBOR Rate or Fixed Rate Costs: During any period of time in which interest on any Advance is accruing on the basis of the LIBOR Rate or Fixed 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 or any surcharge, tax or fee imposed upon the Bank or as
a result of the Bank's compliance with any directive or requirement of any regulatory authority pertaining or relating to funds used by the Bank in quoting and determining the LIBOR Rate or Fixed Rate.
	

 	
 	

2.1.9	
 	
Conversion from LIBOR Rate or Fixed 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 or Fixed Rate
(i) has become infeasible because the Bank is unable to determine the LIBOR Rate or Fixed 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 LIBOR Interest Period or Interest Period as the case may be or (ii) is or has become unlawful 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 promptly give telephonic notice thereof (confirmed in writing) to the Borrower, in which event any Advance bearing interest at either the
LIBOR Rate or Fixed Rate as the case may be shall be deemed to be a Variable Rate Advance and interest shall thereupon immediately accrue at the Variable Rate and shall continue at such rate until the Bank determines that the LIBOR Rate or Fixed Rate
is no longer infeasible or unlawful.
	

2.2	
 	
Line Account: The Bank shall maintain on its books a record of account in which the Bank shall make entries for each Advance and such other debits and credits as shall be appropriate in
connection with the credit facilities granted hereunder (the "Line Account"). The Bank shall provide the Borrower with a statement of the Borrower's Line Account, which statement shall be considered to be correct and conclusively binding on the
Borrower unless the Borrower notifies the Bank to the contrary within 30 days after the Borrower's receipt of any such statement which it deems to be incorrect.
	
 	
 	

 	
 	

 	
 	

 

7

 

	

2.3	
 	
Authorization to Charge Account(s): The Borrower hereby authorizes the Bank, if and to the extent payment owed to the Bank under this Agreement is not made when due, to charge, from time to
time, against any or all of the Borrower's deposit accounts with the Bank any amount so due.
	

2.4	
 	
Payments: If any payment required to be made by the Borrower hereunder becomes due and payable on a day other than a Business Day, the due date thereof shall be extended to the next succeeding
Business Day and interest thereon shall be payable at the then applicable rate during such extension. All payments required to be made hereunder shall be made to the office of the Bank designated for the receipt of notices herein or such other office
as Bank shall from time to time designate.
	

2.5	
 	
Late Payment: In addition to any other rights the Bank may have hereunder, if any payment of principal or interest or any portion thereof, under this Agreement is not paid within 5 days
of when due, a late payment charge equal to five percent (5%) of such past due payment may be assessed and shall be immediately payable.

8

  

 
 

SECTION
  3
  COLLATERAL    
  

	3.1	 	The Collateral: To secure payment and performance of all the Borrower's Obligations under this Agreement and all other liabilities, loans, guarantees, covenants and duties owed by the Borrower to
the Bank, whether or not evidenced by this or by any other agreement, absolute or contingent, due or to become due, now existing or hereafter and howsoever created, the Borrower hereby grants the Bank a security interest in and to all of the
following property ("Collateral"):
	

 	
 	

 	
 	

(i)	
 	
Inventory. All inventory now owned or hereafter acquired by the Borrower, including, but not limited to, all raw materials, work in process, finished goods, inventory leased to others or
held for lease, merchandise, parts and supplies of every kind and description, including inventory temporarily out of the Borrower's custody or possession, together with all returns on accounts (the "Inventory").
	

 	
 	

 	
 	

(ii)	
 	
Accounts. All accounts, letter of credit rights, commercial tort claims, contract rights and general intangibles, including software and payment intangibles, now owned or hereafter created
or acquired by the Borrower, including, but not limited to, all receivables, including as-extracted receivables, credit card receivables, health care receivables, insurance receivables, software receivables and license fees, goodwill, trademarks,
trademark applications, trade styles, trade names, patents, patent applications, copyrights and copyright applications, customer lists, business records and computer programs, tapes, disks and related data processing software that at any time
evidence or contain information relating to any of the Collateral.
	

 	
 	

 	
 	

(iii)	
 	
Documents. All documents, instruments and chattel paper, whether electronic or tangible, now owned or hereafter acquired by the Borrower, including, but not limited to, warehouse and other
receipts, bills of sale, promissory notes and bills of lading.
	

 	
 	

 	
 	

(iv)	
 	
Monies. All monies, deposit accounts, certificates of deposit, investment property and securities of the Borrower now or hereafter in the Bank's or its agents' possession.
	

 	
 	

 	
 	

(v)	
 	
Farm Products. All farm products, other than standing timber, now owned or hereafter acquired by or for the benefit of the Borrower in connection with the farming operations of the Borrower,
including all crops grown, growing or to be grown, whether produced on trees, vines or bushes, or aquatic goods produced by aquacultural operations (the "Crops"); all supplies used or produced in the farming operations of the Borrower; products of
crops in their unmanufactured state; and the products and proceeds of the foregoing, and any additions to, substitutions for or replacements thereof.
	

 	
 	

 	
 	

(vi)	
 	
Water Rights. All of Borrower's now existing or hereafter acquired water rights of every kind and description, whether appurtenant, riparian or prescriptive or arising by virtue of any
contract or other agreement.
	

The Bank's security interest in the Collateral shall be a continuing lien and shall include the proceeds and products of the Collateral including, but not limited to, the proceeds of any insurance thereon.
	

Borrower hereby consents to and instructs Bank to file financing statements in all locations deemed appropriate by the Bank from time to time.
	
 	
 	

 	
 	

 	
 	

 

9

 

	

The security interest granted to Bank in the Collateral shall not secure or be deemed to secure any Indebtedness of the Borrower to the Bank which is, at the time of its creation, subject to the provisions of any state or federal consumer credit or
truth-in-lending disclosure statutes.

 
 

SECTION
  4
  CONDITIONS PRECEDENT    
  

	4.1	 	Conditions Precedent to the Initial Extension of Credit: The obligation of the Bank to make the initial Advance or the first extension of credit to or on account of the Borrower hereunder is
subject to the conditions precedent that the Bank shall have received before the date of such initial Advance or such first extension of credit all of the following, in form and substance satisfactory to the Bank:
	

 	
 	

 	
 	

(i)	
 	
Authority to Borrow. Evidence that the execution, delivery and performance by the Borrower of this Agreement and any document, instrument or agreement required hereunder have been duly
authorized.
	

 	
 	

 	
 	

(ii)	
 	
Guarantors. Continuing guaranty in favor of the Bank executed by the following, together with evidence that the execution, delivery and performance by any guarantor has been duly authorized:
Golden State Vintners, Inc..
	

 	
 	

 	
 	

(iii)	
 	
Fees. A fee of $25,000.00 and payment of all of the Bank's out-of-pocket expenses in connection with the preparation and negotiation of this Agreement.
	

 	
 	

 	
 	

(iv)	
 	
Financing Statements. UCC-1 financing statement(s) describing the Collateral, which have been filed with the Secretary of State or the county recorder as a lien of first
priority.
	

 	
 	

 	
 	

(v)	
 	
Miscellaneous. Such other evidence as the Bank may request to establish the consummation of the transaction contemplated hereunder and compliance with the conditions of this
Agreement.
	

4.2	
 	
Conditions Precedent to All Extensions of Credit: The obligation of the Bank to make each Advance or each other extension of credit, as the case may be, to or on account of the Borrower
(including the initial Advance or the first extension of credit) shall be subject to the further conditions precedent that, on the date of each Advance or each extension of credit and after the making of such Advance or extension of
credit:
	

 	
 	

 	
 	

(i)	
 	
Reporting Requirements. The Bank shall have received the documents set forth in Section 6.1.
	

 	
 	

 	
 	

(ii)	
 	
Subsequent Approvals. The Bank shall have received such supplemental approvals, opinions or documents as the Bank may reasonably request.
	

 	
 	

 	
 	

(iii)	
 	
Representations and Warranties. The representations contained in Section 5 and in any other document, instrument or certificate delivered to the Bank hereunder are true, correct and
complete.
	

 	
 	

 	
 	

(iv)	
 	
Event of Default. No event has occurred and is continuing which constitutes, or with the lapse of time or giving of notice or both, would constitute an Event of Default.
	

 	
 	

 	
 	

(v)	
 	
Collateral. The security interest in the Collateral has been duly authorized, created and perfected with first priority and is in full force and effect.
	
 	
 	

 	
 	

 	
 	

 

10

 

	

The Borrower's acceptance of the proceeds of any loan, Advance or extension of credit or the Borrower's execution of any document or instrument evidencing or creating any Obligation hereunder shall be deemed to constitute the Borrower's
representation and warranty that all of the above statements are true and correct.

 
 

SECTION
  5
  REPRESENTATIONS AND WARRANTIES    
  

	The Borrower hereby makes the following representations and warranties to the Bank, which representations and warranties are continuing:
	

5.1	
 	
Status: The Borrower's correct legal name is as stated in this Agreement and the Borrower is a corporation duly organized and validly existing under the laws of the state of California and
with its chief executive office in the state of California and is properly licensed and is qualified to do business and in good standing in, and, where necessary to maintain the Borrower's rights and privileges, has complied with the fictitious name
statute of every jurisdiction in which the Borrower is doing business.
	

5.2	
 	
Authority: The execution, delivery and performance by the Borrower of this Agreement and any instrument, document or agreement required hereunder have been duly authorized and do not and will
not: (i) violate any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award presently in effect having application to the Borrower; (ii) result in a breach of or constitute a default under
any material indenture or loan or credit agreement or other material agreement, lease or instrument to which the Borrower is a party or by which it or its properties may be bound or affected; or (iii) require any consent or approval of its
stockholders or violate any provision of its articles of incorporation or by-laws.
	

5.3	
 	
Legal Effect: This Agreement constitutes, and any instrument, document or agreement required hereunder when delivered hereunder will constitute, legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with their respective terms.
	

5.4	
 	
Fictitious Trade Styles: All fictitious trade styles used by the Borrower in connection with its business operations and each state in which each such fictitious trade style is used are listed
below. The Borrower shall notify the Bank not less than 30 days prior to effecting any change in the matters described below or prior to using any other fictitious trade style at any future date, indicating the trade style and state(s) of its
use.
	

 	
 	
Trade Style	
 	
State of Use
	 	 	See attached Exhibit "A"	 	All
	

5.5	
 	
Financial Statements: All financial statements, information and other data which may have been or which may hereafter be submitted by the Borrower to the Bank are true, accurate and correct
and have been or will be prepared in accordance with generally accepted accounting principles consistently applied and accurately represent the financial condition or, as applicable, the other information disclosed therein. Since the most recent
submission of such financial information or data to the Bank, the Borrower represents and warrants that no material adverse change in the Borrower's financial condition or operations has occurred which has not been fully disclosed to the Bank in
writing.
	

5.6	
 	
Litigation: Except as have been disclosed to the Bank in writing, there are no actions, suits or proceedings pending or, to the knowledge of the Borrower, threatened against or affecting the
Borrower or the Borrower's properties before any court or administrative agency which, if determined adversely to the Borrower, would have a material adverse effect on the Borrower's financial condition or operations or on the Collateral.
	
 	
 	

 	
 	

 	
 	

 	
 	

 

11

 

	

5.7	
 	
Title to Assets: The Borrower has good and marketable title to all of its assets (including, but not limited to, the Collateral) and the same are not subject to any security interest,
encumbrance, lien or claim of any third person except for Permitted Liens.
	

5.8	
 	
ERISA: If the Borrower has a pension, profit sharing or retirement plan subject to ERISA, such plan has been and will continue to be funded in accordance with its terms and otherwise complies
with and continues to comply with the requirements of ERISA.
	

5.9	
 	
Taxes: The Borrower has filed all tax returns required to be filed and paid all taxes shown thereon to be due, including interest and penalties, other than such taxes which are currently
payable without penalty or interest or those which are being duly contested in good faith.
	

5.10	
 	
Margin Stock. The proceeds of any loan or advance hereunder will not be used to purchase or carry margin stock as such term is defined under Regulation U of the Board of Governors of the
Federal Reserve System.
	

5.11	
 	
Environmental Compliance. The operations of the Borrower comply, and during the term of this Agreement will at all times comply, in all respects with all Environmental Laws; the Borrower has
obtained all licenses, permits, authorizations and registrations required under any Environmental Law ("Environmental Permits") and necessary for its ordinary course operations, all such Environmental
Permits are in good standing, and the Borrower is in compliance with all material terms and conditions of such Environmental Permits; neither the Borrower nor any of its present property or operations is subject to any outstanding written order from
or agreement with any governmental authority nor subject to any judicial or docketed administrative proceeding, respecting any Environmental Law, Environmental Claim or Hazardous Material; there are no Hazardous Materials or other conditions or
circumstances existing, or arising from operations prior to the date of this Agreement, with respect to any property of the Borrower that would reasonably be expected to give rise to Environmental Claims; provided, however, that with respect to property leased from an unrelated third party, the foregoing representation is made to the best knowledge of the Borrower. In addition, (i) the Borrower does not have any
underground storage tanks that are not properly registered or permitted under applicable Environmental Laws, or that are leaking or disposing of Hazardous Materials off-site, and (ii) the Borrower has notified all of their employees of the
existence, if any, of any health hazard arising from the conditions of their employment and have met all notification requirements under Title III of CERCLA and all other Environmental Laws.
	

5.12	
 	
Inventory:
	

 	
 	

 	
 	

(i)	
 	

The Borrower keeps correct and accurate records. (itemizing and describing the kind, type, quality and quantity of inventory, the Borrower's cost therefor and selling price thereof, and the daily withdrawals therefrom and additions
thereto).
	

 	
 	

 	
 	

(ii)	
 	

All inventory is of good and merchantable quality, free from defects.
	

 	
 	

 	
 	

(iii)	
 	

The inventory is not stored with a bailee, warehouseman or similar party.
	

5.13	
 	
Water. As of the date of this Agreement, sufficient water is available and is projected to be available, from verifiable surface and ground water sources, or to conduct operations materially
similar to prior years' operations as evidenced by information provided by any Borrower to the Bank. Borrower has filed with all governmental agencies, all notices and other documents required under Federal, state and local laws and regulations in
connection with the supply of water to and use of water upon its real property.

12

 
 
 

SECTION
  6
  COVENANTS    
  

	The Borrower covenants and agrees that, during the term of this Agreement, and so long thereafter as the Borrower is indebted to the Bank under this Agreement, the Borrower will, unless the Bank shall otherwise
consent in writing:
	

6.1	
 	
Reporting and Certification Requirements: Deliver or cause to be delivered to the Bank in form and detail satisfactory to the Bank:
	

 	
 	

 	
 	

(i)	
 	

Not later than 120 days after the end of each of the Borrower's fiscal years, a copy of the annual audited financial report of the Borrower for such year, prepared by a firm of certified public accountants acceptable to Bank and accompanied by
an unqualified opinion of such firm.
	

 	
 	

 	
 	

(ii)	
 	

Not later than 60 days after the end of each fiscal quarter, a copy of the Borrower's financial statement as of the end of such period and a copy of Golden State Vintners, Inc.'s Form 10Q filed with the Securities and Exchange
Commission.
	

 	
 	

 	
 	

(iii)	
 	

Promptly upon the Bank's request, such other information pertaining to the Borrower, the Collateral or any guarantor hereunder as the Bank may reasonably request.
	

6.2	
 	
Financial Condition: The Borrower promises and agrees, during the term of this Agreement and until payment in full of all of the Borrower's Obligations, the Borrower will maintain as of the
relevant times set forth below:
	

 	
 	

 	
 	

(i)	
 	

A minimum Effective Tangible Net Worth of at least $55,000,000.00 at each fiscal year end.
	

 	
 	

 	
 	

(ii)	
 	

A ratio of Debt to Effective Tangible Net Worth of not more than 2 to 1 at each fiscal year end.
	

 	
 	

 	
 	

(iii)	
 	

A ratio of Current Assets to Current Liabilities of not less than 1.50 to 1 at each fiscal year end.
	

 	
 	

 	
 	

(iv)	
 	

A ratio of Cash Flow to the current portion of long term Debt of not less than 1.25 to 1at each fiscal year end.
	

 	
 	

 	
 	

(v)	
 	

A minimum EBITDA of at least $1.00 at the end of each fiscal year with EBITDA based upon the immediately preceding three fiscal quarters and the current quarter just ended.
	

6.3	
 	
Preservation of Existence; Compliance with Applicable Laws: Maintain and preserve its existence and all rights and privileges now enjoyed; and conduct its business and operations in accordance
with all applicable laws, rules and regulations.
	

6.4	
 	
Merge or Consolidate: Not liquidate or dissolve, merge or consolidate with or into, or acquire any other business organization.
	

6.5	
 	
Maintenance of Insurance: Keep and maintain the Collateral insured for not less than its full replacement value against all risks of loss and damage and maintain insurance in such amounts and
covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which the Borrower operates and maintain such other insurance and coverages as may be required by the
Bank. All such insurance shall be in form and amount and with companies satisfactory to the Bank.
	
 	
 	

 	
 	

 	
 	

 

13

 

	

 	
 	

With respect to insurance covering properties in which the Bank maintains a security interest or lien, such insurance shall name the Bank as loss payee pursuant to a loss payable endorsement satisfactory to the Bank and shall not be altered or
canceled except upon 10 days' prior written notice to the Bank. Upon the Bank's request, the Borrower shall furnish the Bank with the original policy or binder of all such insurance.
	

6.6	
 	
Maintenance of Collateral and Other Properties: Except for Permitted Liens, keep and maintain the Collateral free and clear of all levies, liens, encumbrances and security interests (including,
 but not limited to, any lien of attachment, judgment or execution) and defend the Collateral against any such levy, lien, encumbrance or security interest; comply with all laws, statutes and regulations pertaining to the Collateral and its use and
operation; execute, file and record such statements, notices and agreements, take such actions and obtain such certificates and other documents as necessary to perfect, evidence and continue the Bank's security interest in the Collateral and the
priority thereof; maintain accurate and complete records of the Collateral which show all sales, claims and allowances; and properly care for, house, store and maintain the Collateral in good condition, free of misuse, abuse and deterioration, other
than normal wear and tear. The Borrower shall also maintain and preserve all its properties in good working order and condition in accordance with the general practice of other businesses of similar character and size, ordinary wear and tear
excepted.
	

6.7	
 	
Payment of Obligations and Taxes: Make timely payment of all assessments and taxes and all of its liabilities and obligations including, but not limited to, trade payables, unless the same are
being contested in good faith by appropriate proceedings with the appropriate court or regulatory agency. For purposes hereof, the Borrower's issuance of a check, draft or similar instrument without delivery to the intended payee shall not constitute
payment.
	

6.8	
 	
Inspection Rights and Accounting Records: The Borrower will maintain adequate books and records in accordance with generally accepted accounting principles consistently applied and in a manner
otherwise acceptable to Bank, and, at any reasonable time and from time to time, permit the Bank or any representative thereof to examine and make copies of the records and visit the properties of the Borrower and discuss the business and operations
of the Borrower with any employee or representative thereof. If the Borrower shall maintain any records (including, but not limited to, computer generated records or computer programs for the generation of such records) in the possession of a third
party, the Borrower hereby agrees to notify such third party to permit the Bank free access to such records at all reasonable times and to provide the Bank with copies of any records which it may request, all at the Borrower's expense, the amount of
which shall be payable immediately upon demand.
	

6.9	
 	
Liens and Encumbrances: Not create, assume or permit to exist any security interest, encumbrance, mortgage, deed of trust, or other lien (including, but not limited to, a lien of attachment,
judgment or execution) affecting any of the Borrower's properties, or execute or allow to be filed any financing statement or continuation thereof affecting any of such properties, except for Permitted Liens or as otherwise provided in this Agreement,
 and except liens and security interests associated with Indebtedness of up to $1,000,000.00 in any one fiscal year.
	

6.10	
 	
Transfer Assets: Not, after the date hereof, sell, contract for sale, convey, transfer, assign, lease or sublet, any of its assets (including, but not limited to, the Collateral) except in the
Ordinary Course of Business and, then, only for full, fair and reasonable consideration.
	

6.11	
 	
Change in Nature of Business: Not make any material change in its financial structure or the nature of its business as existing or conducted as of the date hereof.
	
 	
 	

 	
 	

 	
 	

 

14

 

	

6.12	
 	
Maintenance of Jurisdiction: Borrower shall maintain the jurisdiction of its organization and chief executive office, or if applicable, principal residence, as set forth herein and not change
such jurisdiction name or form of organization without 30 days prior written notice to Bank.
	

6.13	
 	
Compensation of Employees: Compensate its employees for services rendered at an hourly rate at least equal to the minimum hourly rate prescribed by any applicable federal or state law or
regulation.
	

6.14	
 	
Capital Expense: Not make any fixed capital expenditure or any commitment therefor, including, but not limited to, incurring liability for leases which would be, in accordance with generally
accepted accounting principles, reported as capital leases, or purchase any real or personal property in an aggregate amount exceeding $14,000,000.00 in any one fiscal year.
	

6.15	
 	
Notice: Give the Bank prompt written notice of any and all (i) Events of Default; (ii) litigation, arbitration or administrative proceedings to which the Borrower is a party and in
which the claim or liability exceeds $250,000.00 or which affects the Collateral; (iii) other matters which have resulted in, or might result in a material adverse change in the Collateral or the financial condition or business operations of the
Borrower, and (iv) any enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against the Borrower or any of its properties.
	

6.16	
 	
Environmental Compliance: The Borrower shall conduct its operations and keep and maintain all of its property in compliance with all Environmental Laws and, upon the written request of the
Bank, the Borrower shall submit to the Bank, at the Borrower's sole cost and expense, at reasonable intervals, a report providing the status of any environmental, health or safety compliance, hazard or liability.
	

6.17	
 	
Inventory:
	

 	
 	

 	
 	

(i)	
 	

Except as provided herein below, the Borrower's inventory shall, at all times, be in the Borrower's physical possession, shall not be held by others on consignment, sale on approval, or sale or return and shall be kept only at: 607 Airport Road, Napa,
 CA 94558, 38558 Rd. 128, Cutler, CA 93615; 8418 South Lac Jac Ave., Parlier, CA 93648; 7409 W. Central Ave., Fresno, CA 93706; 401 S. St. Helena Hwy., St. Helena, CA 94574; 1777 Metz Road, Soledad, CA 93960; 1175 Commerce Blvd., Suite D, American
Canyon, CA 94503; and 1075 Golden Gate Drive, Napa, CA 94559.
	

 	
 	

 	
 	

(ii)	
 	

The Borrower shall keep correct and accurate records.
	

 	
 	

 	
 	

(iii)	
 	

All inventory shall be of good and merchantable quality, free from defects.
	

 	
 	

 	
 	

(iv)	
 	

The inventory shall not at any time or times hereafter be stored with a bailee, warehouseman or similar party without the Bank's prior written consent and, in such event, the Borrower will concurrently therewith cause any such bailee, warehouseman or
similar party to issue and deliver to the Bank, in form acceptable to the Bank, warehouse receipts in the Bank's name evidencing the storage of inventory.
	

 	
 	

 	
 	

(v)	
 	

At any reasonable time and from time to time, allow Bank to have the right, upon demand, to inspect and examine inventory and to check and test the same as to quality, quantity, value and condition and the Borrower agrees to reimburse the Bank for
the Bank's reasonable costs and expenses in so doing.
	
 	
 	

 	
 	

 	
 	

 

15

 

	

6.18	
 	
Location of the Harvested Crops: Any Crops now or hereafter harvested or removed shall not be stored with a bailee, warehouseman or similar party without the Bank's prior written consent and
shall be kept only at the following location(s): 38558 Rd. 128, Cutler, CA 93615; 8418 South Lac Jac Ave., Parlier, CA 93648; 7409 W. Central Ave., Fresno, CA 93706; 401 S. St. Helena Hwy., St. Helena, CA 94574; 1777 Metz Road, Soledad, CA 93960;
1175 Commerce Blvd., Suite D, American Canyon, CA 94503; and 1075 Golden Gate Drive, Napa, CA 94559.
	

6.19	
 	
Care and Preservation of the Crops:
	

 	
 	

 	
 	

(i)	
 	

Attend to and care for the Crops and do or cause to be done any and all acts that may at any time be appropriate or necessary to grow, farm, cultivate, irrigate, fertilize, fumigate, prune, harvest, pick, clean, preserve and protect the
Crops.
	

 	
 	

 	
 	

(ii)	
 	

Not commit or suffer to be committed any waste of or damage to the Crops
	

 	
 	

 	
 	

(iii)	
 	

Permit the Bank and any of its agents, employees or representatives to enter upon the Borrower's premises at any reasonable time and from time to time for the purpose of examining and inspecting the Crops.
	

 	
 	

 	
 	

(iv)	
 	

Harvest and prepare the Crops for market and promptly notify the Bank when any of the Crops are ready for market.
	

 	
 	

 	
 	

(v)	
 	

Keep the Crops separate and always capable of identification.
	

 	
 	

 	
 	

(vi)	
 	

Comply with any requirements or instructions of the Bank with respect to hauling, shipping, storing, marketing and otherwise preparing, handling and disposing of the Crops.
	

6.20	
 	
Evidence of Water Availability: At such times as the Bank may request, to deliver to the Bank a certificate stating that the amount of water available and projected to be available is
sufficient to conduct operations materially similar to prior years' operations, as evidenced by information provided by the Borrower to the Bank. Such certificate shall be signed, at the Bank's option, either by the Borrower or by an independent
third party, such as an officer of the Borrower's water district or other supplier of water.

 
 

SECTION
  7
  EVENTS OF DEFAULT    
  

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

7.1	
 	
Non-Payment: Any Borrower shall fail to pay the principal amount of any Obligations when due or interest on the Obligations within 5 days of when due.
	

7.2	
 	
Performance Under This Agreement: The Borrowers or any Guarantor shall fail in any material respect to perform or observe any term, covenant or agreement contained in this Agreement or in any
document, instrument or agreement relating to this Agreement or any other document or agreement executed by the Borrowers or any Guarantor with or in favor of Bank and any such failure shall continue unremedied for more than 30 days after the
occurrence thereof.
	

7.3	
 	
Representations and Warranties; Financial Statements: Any representation or warranty made by the Borrower under or in connection with this Agreement or any financial statement given by the
Borrower or any guarantor shall prove to have been incorrect in any material respect when made or given or when deemed to have been made or given.
	
 	
 	

 	
 	

 	
 	

 

16

 

	

7.4	
 	
Other Agreements: If there is a default under any agreement to which Borrower is a party with Bank or with a third party or parties resulting in a right by the Bank or by such third party or
parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of $250,000.00.
	

7.5	
 	
Insolvency: The Borrower or any guarantor shall: (i) become insolvent or be unable to pay its debts as they mature; (ii) make an assignment for the benefit of creditors or to an
agent authorized to liquidate any substantial amount of its properties and assets; (iii) file a voluntary petition in bankruptcy or seeking reorganization or to effect a plan or other arrangement with creditors; (iv) file an answer
admitting the material allegations of an involuntary petition relating to bankruptcy or reorganization or join in any such petition; (v) become or be adjudicated a bankrupt; (vi) apply for or consent to the appointment of, or consent that
an order be made, appointing any receiver, custodian or trustee, for itself or any of its properties, assets or businesses; or (vii) in an involuntary proceeding, any receiver, custodian or trustee shall have been appointed for all or
substantial part of the Borrower's or guarantor's properties, assets or businesses and shall not be discharged within 30 days after the date of such appointment.
	

7.6	
 	
Execution: Any writ of execution or attachment or any judgment lien shall be issued against any property of the Borrower and shall not be discharged or bonded against or released within
30 days after the issuance or attachment of such writ or lien.
	

7.7	
 	
Revocation or Limitation of Guaranty: Any guaranty shall be revoked or limited or its enforceability or validity shall be contested by any guarantor, by operation of law, legal proceeding or
otherwise or any guarantor who is a natural person shall die.
	

7.8	
 	
Suspension: The Borrower shall voluntarily suspend the transaction of business or allow to be suspended, terminated, revoked or expired any permit, license or approval of any governmental body
necessary to conduct the Borrower's business as now conducted.
	

7.9	
 	
Material Adverse Change: If there occurs a material adverse change in the Borrower's business or financial condition, or if there is a material impairment of the prospect of repayment of any
portion of the Obligations or there is a material impairment of the value or priority of the Bank's security interest in the Collateral, or if a Borrower who is a natural person shall die.
	

7.10	
 	
Change in Ownership: There shall occur a sale, transfer, disposition or encumbrance (whether voluntary or involuntary to), or an agreement shall be entered into to do so with, any Person or
group of Persons (as such terms are defined pursuant to Federal securities laws) with respect to more than 19% of the issued and outstanding capital stock of the Borrower and, as a result thereof, such Person or group of Persons has the ability to
direct or cause the direction of the management and policies of the Borrower.
	

7.11	
 	
Impairment of Collateral. There shall occur any injury or damage to all or any part of the Collateral or all or any part of the Collateral shall be lost, stolen or destroyed.
	

7.12	
 	
Water Quality/Amount. The Borrower's water is or is projected to be insufficient in amount or unsuitable in quality, as determined by the Bank in either case, to conduct operations as
described in projections or by information provided by Borrower to the Bank.

17

  

 
 

SECTION
  8
  REMEDIES ON DEFAULT    
  

	Upon the occurrence of any Event of Default, the Bank may, at its sole and absolute election, without demand and only upon such notice as may be required by law:
	

8.1	
 	
Acceleration: Declare any or all of the Borrower's indebtedness owing to the Bank, whether under this Agreement or any other document, instrument or agreement, immediately due and payable,
whether or not otherwise due and payable.
	

8.2	
 	
Cease Extending Credit: Cease making Advances or otherwise extending credit to or for the account of the Borrower under this Agreement or under any other agreement now existing or hereafter
entered into between the Borrower and the Bank.
	

8.3	
 	
Termination: Terminate this Agreement as to any future obligation of the Bank without affecting the Borrower's obligations to the Bank or the Bank's rights and remedies under this Agreement or
under any other document, instrument or agreement.
	

8.4	
 	
Protection of Security Interest: Make such payments and do such acts as the Bank, in its sole judgment, considers necessary and reasonable to protect its security interest or lien in the
Collateral. The Borrower hereby irrevocably authorizes the Bank to pay, purchase, contest or compromise any encumbrance, lien or claim which the Bank, in its sole judgment, deems to be prior or superior to its security interest. Further, the Borrower
hereby agrees to pay to the Bank, upon demand therefor, all expenses and expenditures (including attorneys' fees) incurred in connection with the foregoing.
	

8.5	
 	
Foreclosure: Enforce any security interest or lien given or provided for under this Agreement or under any security agreement, mortgage, deed of trust or other document, in such manner and
such order, as to all or any part of the properties subject to such security interest or lien, as the Bank, in its sole judgment, deems to be necessary or appropriate and the Borrower hereby waives any and all rights, obligations or defenses now or
hereafter established by law relating to the foregoing. In the enforcement of its security interest or lien, the Bank is authorized to enter upon the premises where any Collateral is located and take possession of the Collateral or any part thereof,
together with the Borrower's records pertaining thereto, or the Bank may require the Borrower to assemble the Collateral and records pertaining thereto and make such Collateral and records available to the Bank at a place designated by the Bank. The
Bank may sell the Collateral or any portions thereof, together with all additions, accessions and accessories thereto, giving only such notices and following only such procedures as are required by law, at either a public or private sale, or both,
with or without having the Collateral present at the time of the sale, which sale shall be on such terms and conditions and conducted in such manner as the Bank determines in its sole judgment to be commercially reasonable. The Collateral may be
disposed of in its then condition without any preparation or processing. In connection with any disposition of the Collateral, the Bank may disclaim any warranty relating to title, possession or quiet enjoyment. Any deficiency which exists after the
disposition or liquidation of the Collateral shall be a continuing liability of the Borrower to the Bank and shall be immediately paid by the Borrower to the Bank.
	
 	
 	

 	
 	

 	
 	

 

18

 

	

8.6	
 	
Care and Possession of the Crops: Enter upon the Borrower's premises and, using any and all of the Borrower's equipment, machinery, tools, farming implements and supplies, and improvements
located on the Borrower's premises: (i) farm, cultivate, irrigate, fertilize, fumigate, prune and perform any other act of acts appropriate or necessary to grow, care for, maintain, preserve and protect the Crops (using any water located in, on
or adjacent to the Borrower's premises); (ii) harvest, pick, clean and remove the Crops from the Borrower's premises; and (iii) appraise, store, prepare for public or private sale, exhibit, market and sell the Crops and the products
thereof; provided that the Borrower hereby agrees that, if the Borrower is the owner of the real property upon which the farming operations are located, the Bank shall not be responsible or liable for returning the such property to its condition
immediately preceding its use as provided herein or for doing such acts as may be necessary to permit future crops to be grown on such property.
	

8.7	
 	
Non-Exclusivity of Remedies: Exercise one or more of the Bank's rights set forth herein or seek such other rights or pursue such other remedies as may be provided by law, in equity or in any
other agreement now existing or hereafter entered into between the Borrower and the Bank, or otherwise.
	

8.8	
 	
Application of Proceeds: All amounts received by the Bank as proceeds from the disposition or liquidation of the Collateral shall be applied to the Borrower's indebtedness to the Bank as
follows: first, to the costs and expenses of collection, enforcement, protection and preservation of the Bank's lien in the Collateral, including court costs and reasonable attorneys' fees, whether or not suit is commenced by the Bank; next, to those
costs and expenses incurred by the Bank in protecting, preserving, enforcing, collecting, liquidating, selling or disposing of the Collateral; next, to the payment of accrued and unpaid interest on all of the Obligations; next, to the payment of the
outstanding principal balance of the Obligations; and last, to the payment of any other indebtedness owed by the Borrower to the Bank. Any excess Collateral or excess proceeds existing after the disposition or liquidation of the Collateral will be
returned or paid by the Bank to the Borrower.
	

 	
 	

If any non-cash proceeds are received in connection with any sale of Collateral, the Bank shall not apply such non-cash proceeds to the Obligations unless and until such proceeds are converted to such; provided, however, that if such non-cash
proceeds are not expected on the date of receipt thereof to be converted to cash within one year after such date, the Bank shall use commercially reasonable efforts to convert such non-cash proceeds to cash within such one year period.

 
 

SECTION
  9
  MISCELLANEOUS    
  

	9.1	 	Amounts Payable on Demand: If the Borrower shall fail to pay on demand any amount so payable under this Agreement, the Bank may, at its option and without any obligation to do so and without
waiving any default occasioned by the Borrower having so failed to pay such amount, create an Advance under this Agreement in an amount equal to the amount so payable, which Advance shall thereafter bear interest as provided hereunder.
	

9.2	
 	
Default Interest Rate: If an Event of Default, or an event which, with notice or passage of time could become an Event of Default, has occurred or is continuing, the Borrower shall pay to the
Bank interest on any Indebtedness or amount payable under this Agreement at a rate which is 3% in excess of the rate or rates then in effect under this Agreement.
	
 	
 	

 	
 	

 	
 	

 	
 	

 

19

 

	

9.3	
 	
Assignment of the Borrower's Rights in the Crops:
	

 	
 	

 	
 	

(i)	
 	

If the Crops or any portion or portions thereof become infected by disease or are destroyed by order of any local, state or federal authority, and, by reason thereof, the Borrower is entitled to be indemnified by such authority, the Borrower hereby
assigns to the Bank any and all such sums due from such authority, and the Bank is hereby authorized to receive, collect and sue for the same, and the Borrower hereby orders and directs that any such sums be paid directly to the Bank.
	

 	
 	

 	
 	

(ii)	
 	

In addition, the Borrower hereby assigns and transfers to the Bank all of the Borrower's rights and interests in and to any monies now or hereafter placed in any funds of any marketing association, corporation, cooperative, partnership, firm or
individual now, heretofore or hereafter handling or having to do with any of the Crops now growing or heretofore or hereafter grown in the Borrower's farming operations or connected with the growing, marketing, farming or other handling of such Crops
and the Borrower hereby assigns and transfers to the Bank all stock and all other interests, benefits and rights of the Borrower in any such marketing association, corporation, cooperative, partnership, firm or individual having anything to do with
such Crops and all monies due or becoming due to the Borrower from any one or more of them.
	

9.4	
 	
Reliance and Further Assurances: Each warranty, representation, covenant, obligation and agreement contained in this Agreement shall be conclusively presumed to have been relied upon by the
Bank regardless of any investigation made or information possessed by the Bank and shall be cumulative and in addition to any other warranties, representations, covenants and agreements which the Borrower now or hereafter shall give, or cause to be
given, to the Bank. Borrower agrees to execute all documents and instruments and to perform such acts as the Bank may reasonably deem necessary to confirm and secure to the Bank all rights and remedies conferred upon the Bank by this agreement and
all other documents related thereto.
	

9.5	
 	
Attorneys' Fees: Borrower shall pay to the Bank all costs and expenses, including but not limited to reasonable attorneys fees, incurred by Bank in connection with the administration,
enforcement, including any bankruptcy, appeal or the enforcement of any judgment or any refinancing or restructuring of this Agreement or any document, instrument or agreement executed with respect to, evidencing or securing the indebtedness
hereunder.
	

9.6	
 	
Notices: All notices, payments, requests, information and demands which either party hereto may desire, or may be required to give or make to the other party hereto, shall be given or made to
such party by hand delivery or through deposit in the United States mail, postage prepaid, or by facsimile delivery, or to such other address as may be specified from time to time in writing by either party to the other.
	

 	
 	
To the Borrower:	
 	
To the Bank:
	 	 	GOLDEN STATE VINTNERS

607 Airport Road

Napa, CA 94558

Attn:    Jeffrey B. O'Neill

FAX:    (707) 254-4900	 	BANK OF THE WEST doing business as UNITED CALIFORNIA BANK

Fresno Office (ABC)

2035 Fresno Street

Fresno, CA 93721

Attn:    Jay R. Dibble

FAX:    (559) 487-2157

20

 

	9.7	 	Waiver: Neither the failure nor delay by the Bank in exercising any right hereunder or under any document, instrument or agreement mentioned herein shall operate as a waiver thereof, nor shall any
single or partial exercise of any right hereunder or under any other document, instrument or agreement mentioned herein preclude other or further exercise thereof or the exercise of any other right; nor shall any waiver of any right or default
hereunder, or under any other document, instrument or agreement mentioned herein, constitute a waiver of any other right or default or constitute a waiver of any other default of the same or any other term or provision.
	

9.8	
 	
Conflicting Provisions: To the extent the provisions contained in this Agreement are inconsistent with those contained in any other document, instrument or agreement executed pursuant hereto,
the terms and provisions contained herein shall control. Otherwise, such provisions shall be considered cumulative.
	

9.9	
 	
Binding Effect; Assignment: This Agreement shall be binding upon and inure to the benefit of the Borrower and the Bank and their respective successors and assigns, except that the Borrower
shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Bank. The Bank may sell, assign or grant participation in all or any portion of its rights and benefits hereunder. The Borrower
agrees that, in connection with any such sale, grant or assignment, the Bank may deliver to the prospective buyer, participant or assignee financial statements and other relevant information relating to the Borrower and any guarantor.
	

9.10	
 	
Jurisdiction: This Agreement, any notes issued hereunder, the rights of the parties hereunder to and concerning the Collateral, and any documents, instruments or agreements mentioned or
referred to herein shall be governed by and construed according to the laws of the State of California without regard to conflict of law principles, to the jurisdiction of whose courts the parties hereby submit.
	

9.11	
 	
Waiver of Jury Trial: THE BORROWER AND THE BANK EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT,
THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. THE BORROWER AND THE BANK EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY
IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
	

9.12	
 	
Counterparts: This Agreement may be executed in any number of counterparts and all such counterparts taken together shall be deemed to constitute one and the same instrument.
	

9.13	
 	
Headings: The headings herein set forth are solely for the purpose of identification and have no legal significance.
	
 	
 	

 	
 	

 	
 	

 	
 	

 

21

 

	

9.14	
 	
Entire Agreement and Amendments: This Agreement and all documents, instruments and agreements mentioned herein constitute the entire and complete understanding of the parties with respect to
the transactions contemplated hereunder. All previous conversations, memoranda and writings between the parties pertaining to the transactions contemplated hereunder not incorporated or referenced in this Agreement or in such documents, instruments
and agreements are superseded hereby. This Agreement may be amended only by an instrument in writing signed by the Borrower and the Bank.

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first hereinabove written. 

	BANK:	 	BORROWER:
	
BANK OF THE WEST doing business as UNITED CALIFORNIA BANK	
 	
GOLDEN STATE VINTNERS
	

BY:	

 	

/s/  JAY R. DIBBLE      
	

 	

BY:	

 	

/s/  JOHN KELLEHER      

	NAME: Jay R. Dibble, Vice President	 	NAME: John Kelleher, Chief Financial Officer and Secretary
	

 	
 	

 	
 	

BY:	
 	

/s/  RALPH LENAMON      

	 	 	 	 	NAME: Ralph Lenamon, Assistant Treasurer

22

   EXHIBIT "A"

GOLDEN STATE VINTNERS

CREDIT AGREEMENT DATED JULY 19, 2002  

	Trade Style
 
	 	State of Use
 

	Bounty

Bridge

Cutler Creek

Diamond Grove

Edgewood

Florentina

Gioberti

J. Wile

Le Blanc

GSV Logo

Monthaven

Muirfield

Pique Nique

Stonehenge

Summerfield

Summerfield Cellars

Summerfield Reserve

Weston Estate

Willow Cove	 	All are produced and bottled in California and distributed nationwide

23

QuickLinks

CREDIT AGREEMENT (LINE OF CREDIT)

SECTION 1 DEFINITIONS

SECTION 2 CREDIT FACILITIES

SECTION 3 COLLATERAL

SECTION 4 CONDITIONS PRECEDENT

SECTION 5 REPRESENTATIONS AND WARRANTIES

SECTION 6 COVENANTS

SECTION 7 EVENTS OF DEFAULT

SECTION 8 REMEDIES ON DEFAULT

SECTION 9 MISCELLANEOUS

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00043-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00043-of-00352.parquet"}]]