Document:

Prepared by MERRILL CORPORATION

EXHIBIT 10.2

 

AMENDMENT TO CREDIT AGREEMENT

[Scheid Ranch]

 

                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 June 25, 1997 (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 July 6, 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 that certain Deed of Trust (Non-Construction)

& Assignment of Rents in favor of the Bank dated as of June 25, 1997, and

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

No. 9737349, Reel 3539, Page 855 (as amended, modified or waived from time to

time, the "Deed of Trust") encumbering the real property described

therein (the "Property").  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 (i) modify the

maturity of the Term Loan and (ii) 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 August 27,

2001."

 

                                "'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 $1,066,000.00.  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 $96,000.00

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 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 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 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 5.19.  The following

is added as Section 5.19 of the Agreement:

 

                                                "5.19                Indebtedness.  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 not to exceed $500,000.00."

 

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

 

                                                "6.03                Performance Under Other

Agreements; Exercise of Lease Option. 

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, or Borrower fails to effectively exercise its option to renew

that certain Land Lease between William McHenry Bland and Monterey Farming

Corporation, Borrower's predecessor in interest, which lease commenced on

November 1, 1973 and terminates on October 31, 2002, for consecutive ten year

periods as provided under such Lease."

 

                                1(i)                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(j)                Dispute Resolution.  Section 8.13 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, AVPPrepared by MERRILL CORPORATION

EXHIBIT 10.3

 

AMENDMENT TO CREDIT AGREEMENT

[Viento/Riverview]

 

                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 June 25, 1997 (as amended, modified or waived

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

to Line of Credit Agreement dated October 15, 1997, a Second Amendment to Line

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

of Credit Agreement dated as of July 7, 1998, the "Agreement")

between Vineyard 405 (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 June 25, 1997, and recorded in the official records of Monterey

County, California, as Document No. 9737350 (as amended, modified or waived

from time to time, the "Viento Deed of Trust") encumbering the real

property described therein (the "Viento 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. 9767927 in

the Official Records of Monterey County, California.  As of the date hereof, the principal amount outstanding under the

Agreement (prior to giving effect to the transactions contemplated hereby) is

$2,585,000.00.  All terms used herein

which are not otherwise defined herein shall have the meanings given them in

the Agreement.

 

                                B.            The Borrower and the Bank also

entered in that certain Line of Credit Agreement (Reducing Commitment) dated as

of June 19, 1998 (as amended, modified or waived from time to time, the

"Riverview Agreement").  The

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

June 19, 1998, and recorded in the official records of Monterey County,

California, as Document No. 9845354 (as amended, modified or waived from time

to time, the "Riverview Deed of Trust") encumbering the real property

described therein (the "Riverview Property").  As of the date hereof, the principal amount

outstanding under the Riverview Agreement (prior to giving effect to the

transactions contemplated hereby) is $3,240,000.00.

 

                                C.            The Borrower has asked the Bank to

(i) consolidate the indebtedness under the Agreement and the Riverview

Agreement, (ii) make an additional advance under the Agreement, and (iii) to

convert all amounts outstanding under the Agreement into a term loan.

 

                                D.

           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."

 

                                "'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

CONSOLIDATION AND

CONVERSION TO TERM LOAN; INTEREST AND PRINCIPAL PAYMENTS

 

                1.01 

Consolidation.  As of the

Effective Date, all amounts outstanding under that certain Line of Credit

Agreement (Reducing Commitment) between Borrower and Bank dated as of June 19,

1998 (as amended, modified or waived from time to time, the "Riverview

Agreement") will be consolidated into the indebtedness evidenced by, and

deemed to have been advanced under, this Agreement (the "Consolidated

Indebtedness").  The Riverview

Agreement will be terminated as of such date (except for obligations of

Borrower which survive such termination pursuant to the terms thereof) and no

additional advances will be available under the line of credit thereunder.

 

                1.02

 Additional Advance:  Subject to the terms of this agreement, the

Bank agrees to make an additional advance to Borrower hereunder in the amount

of $4,725,000.00 (the "Additional Advance") on the Effective Date.

 

1.03         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 (including the Consolidated Indebtedness

and the Additional Advance) shall be converted into a term loan (the "Term

Loan") with a principal balance of $ 10,550,000.00.  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 May 31, 2002 and each anniversary

thereof (up to and including the Expiration Date) in the amount of $422,000.00

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 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 2.03; Amendment

of Exhibit B and Schedule I. 

Exhibit B and Schedule I to the Agreement are hereby amended to include,

in addition to the real property now described therein, the real property

described on Exhibit A attached hereto and incorporated herein by this

reference.  Section 2.03 of the

Amendment is amended to read as follows:

 

                                "2.03       The Borrower hereby agrees that all

Indebtedness referenced in the Agreement to be paid by the Borrower to the Bank

and the Borrower's performance of each and all of the terms, covenants, and

agreements contained in the Agreement shall be secured by a deed of trust or

deeds of trust (and any amendments thereto deemed desirable or necessary by the

Bank) in form and substance satisfactory to the Bank (collectively, the

"Deed of Trust") encumbering, as a lien of first encumbrance, certain

real property described in the attached Exhibit "1" (the "Real

Property"), located in the County of Monterey, State of California,

subject only to such exceptions as may be approved by Bank in its sole

discretion (the "Permitted Title Exceptions")."

 

                                1(d)         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 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(e)         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 5.19.  The following is added as Section 5.19 of

the Agreement:

 

                                                "5.19       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 not to exceed $500,000.00."

 

1(h)         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(i)          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 8.13 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 Borrower shall have paid to the Bank a

loan fee as may be agreed in writing by Bank and Borrower; and

 

                (v)  The Bank shall have received such

endorsements to the title policies issued with respect to the Viento Deed of

Trust and Riverview 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

  	

   

  
						

 

EXHIBIT A

 

ADDITIONAL REAL

PROPERTY LEGAL DESCRIPTION

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"}]]