HomeMy WebLinkAboutR-2006-032 approving assumption of a Section 108 loan from Jul Mar, LLC to Coyote Canyon Winery, LLCRESOLUTION NO. R-2006- 32
A RESOLUTION Consideration of a resolution approving assumption of a Section 108 loan
from Jul Mar, LLC to Coyote Canyon Winery, LLC, and authorizing the
City Manager to execute documents required for the transaction.
WHEREAS, the city has capitalized an Economic Development Loan Fund with Section
108 loan and Economic Development Initiative Grant funds from the United States Department of
Housing and Urban Development; and
WHEREAS, the City has worked with the National Development Council (NDC) in
developing the guidelines for the program that provide more flexibility and opportunity for
development; and
WHEREAS, the City has provided a loan in the amount of $110,000.00 to Jul Mar, LLC
(dba Yakima Cellars Winery); and
WHEREAS, the loan to Jul Mar, LLC is determined to be in good standing, and has
demonstrated a satisfactory record of repayment; and
WHEREAS, Coyote Canyon Winery, LLC has entered in a purchase agreement with Julmar,
LLC for the Yakima Cellars Winery operation and assets; and
WHEREAS, the sale of Jul Mar, LLC to Coyote Canyon Winery, LLC is contingent upon
several conditions being met, including the assumption of the city's Section 108 loan to Jul Mar,
T .T C; and
WHEREAS, the request by Coyote Canyon Winery, LLC to assume the city's loan was
determined to meet the program eligibility criteria and was ready to proceed; and
WHEREAS, the National Development Council has reviewed the request and application
information, and determined that the transaction meets the criteria for this type of loan,
demonstrates a good plan for expanding the business, and possesses sufficient collateral to back this
loan in case of default; and
WHEREAS, as a condition for assuming the loan, the members of Coyote Canyon, JJ C,
Michael Andrews and Matthew Gray, will deliver unconditional personal guarantees of the debt
repayment to the city; and
WHEREAS, the personal guaranty of Michael Andrews shall be further secured by
granting the City a security interest in certain farm equipment; and
WHEREAS, Michael Andrews will grant a security interest in the distributions from the
farming partnership(s) of which he is a partner; and
WHEREAS, economic development is a priority for the City of Yakima, and the City
intends to approach economic development on an inclusive, comprehensive basis which involves
public, private and community-based efforts to achieve new investment and redevelopment in the
City; now therefore
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF YAKIMA:
The City Manager is authorized and directed to execute a loan assumption and successor
agreement with Jul Mar, LLC and Coyote Canyon Winery, LLC. The City Manager is hereby
designated as the official representative of the City to act in connection with that transaction and is
authorized to take such additional actions as may be necessary and prudent to complete the
transaction.
ADOPTED BY THE CITY COUNCIL this 7th da of March, 2006.
ATTEST:
David Edler, Mayor
Memo
To: File
From: John Finke, Director
Date: 3/2/06
Re: Coyote Canyon Winery, LLC assumption of Jul Mar, LLC (dba Yakima Cellars)
Section 108 loan
Coyote Canyon Winery, LLC has entered into an asset purchase and sale agreement with Jul
Mar, LLC to purchase the assets of Jul Mar, LLC (dba Yakima Cellars). The purchase price
is $300,000 less the balance on the Section 108 loan and certain other credits against the
purchase price. The sale is conditioned upon the City of Yakima approving the assumption,
the buyer obtaining suitable financing for the balance of the purchase price, the buyer
obtaining approval of the assignments of leases from J&J Reality Investments LLC and
Berger/Standfill, and the buyer obtaining all necessary licenses and permits (including liquor
hcenses and permits) to operate the winery and tasting room.
If the conditions of the asset purchase and sale agreement can be met, Coyote Canyon
Winery will continue to operate the Yakima Cellars Winery in downtown Yakima, will
reopen the Yakima Cellars Tasting Room featuring Yakima Cellars Wines and will continue
to develop Coyote Canyon Winery including the opening of a tasting room at the Coyote
Canyon Winery located in Prosser, Washington.
Coyote Canyon Winery LLC was formed in July of 2005 to operate an estate winery. It
anticipates releasing its first wines beginning in April of 2006. These initial releases will
include approximately 150 cases of Syrah, 120 cases of Riesling, 350 cases of Chardonnay,
150 cases of Barberra Rose, 320 cases of Viognier, 240 cases of Late Harvest Chardonnay,
and 350 cases of Red Blend. To date Coyote Canyon has been sustained by limited member
capital, member loans, and a Faun Credit equipment loan. The members of Coyote Canyon
Winery LLC are Michael Andrews and Mathew Gray; they are father and son. Mathew
Gray is the managing member. Michael Andrews has extensive experience in growing
grapes for the wine industry and has supplied grapes for Coyote Canyon's wines. Mathew
Gray has experience in both viticulture and wine production.
In support of its request to assume the Jul Mar Section 108 loan, Coyote Canyon has provide
a copy of its business plan, its Articles of Organization and Operating Agreement, Coyote
Canyon's balance sheet, balance sheets and tax returns for Michael Andrews and Mathew
Gray, a balance sheet and partnership tax returns on Coyote Canyon Vineyard Partnership
1
and the Asset Purchase and Sale Agreement between Coyote Canyon Winery, LLC and Jul
Mar, LLC.
The current outstanding balance on the Section 108 loan is $92,000 with $6,580 held in the
repayment account toward the next principal and interest payment due in August 2006.
Risks:
Its income is insufficient to retire the Section 108 debt. The City of Yakima has adequate
collateral on the existing loan including personal guarantees from strong principals.
If Coyote Canyon Winery, LLC is approved to assume the Yakima Cellars' loan, the new
borrower will be a new business without a significant track record of operations. While the
LLC is a new business its members have extensive experience in viticulture and more limited
experience in wine production. The proposed borrower has different strengths and
weaknesses from the existing borrower.
The Yakima Cellars' loan is secured by the assets of Yakima Cellars and by the personal
guarantees of its principals. Coyote Canyon Winery has proposed buying Yakima Cellars
assets. The risks associated with this potential assumption should be grouped as operating
risks and collateral risks.
Operating Risks:
While Coyote Canyon is a new business without a significant operating track record, it does
have certain strengths compared to the existing borrower. These include having principals
with significant experience in viticulture, a secure supply of grapes and an operating
company willing to continue the operation of the Yakima Cellars tasting room and Yakima
winery. On the negative side, Coyote Canyon has less wine making experience than Yakima
Cellars.
Collateral Risks:
The Yakima Cellars loan is secured by equipment and the personal guarantees of its
principals. In purchasing the assets of Yakima Cellars, Coyote Canyon will not extinguish
the City of Yakima's security interests in Yakima Cellars' existing equipment. A condition
of the assumption would be the release of the existing guarantors and replacement of them
with the guarantees of the new members of the purchasing entity. The existing loan was
guaranteed by six individuals. Several of these borrowers were of significant net worth. The
new purchaser's principals are a father and son. While the son has a limited net worth the
father has a significant net worth. If the assumption is approved the number of guarantors
would be diminished but not necessarily the depth of the guarantee.
• Page 2
Recommendations:
It is my recommendation that the City of Yakima approve the request for an assumption of
the Yakima Cellars' loan by Coyote Canyon Winery, LLC on the following conditions.
1. UCCs on all machinery and equipment owned and acquired by Coyote Canyon
Winery, LLC.
2. Personal Guarantees from Mathew Aaron Gray and Michael Lee Andrews
3. UCCs on equipment owned by Michael Andrews with a valued of approximately
twice the amount of the loan.
4. A security interest in partnership distributions from Coyote Canyon Vineyard
Partnership and Bob -Lou Farm Partnership
• Page 3
UNCONDITIONAL GUARANTY
PARTIES: City: The City of Yakima, a Washington municipal corporation
Obligor: Coyote Canyon Winery, L.L.C., a Washington limited
liability company
Guarantor: Mathew Gray, a married person, and Michael
Andrews, a married person.
RECITALS: Concurrent with this Guaranty, City and Obligor have entered
into a Assignment and Assumption Agreement ("Agreement").
Pursuant to the terms of the Agreement, Obligor is assuming
the obligations of Julmar, LLC to the City of Yakima under
those certain documents entitled Loan Agreement,
Variable/Fixed Rate Note, Demand Note, Deposit Control
Agreement, Assignment of Rents and Leases For Security
Purposes as to J&J Realty Investment, LLC Lease and
Assignment of Rents and Leases For Security Purposes as to
Arthur Berger and Robert C. Standfill Lease. The purpose of
the Agreement is for Obligor to be able to use the assets of
Julmar, LLC arising in part from the proceeds from the City of
Yakima loan to Julmar, LLC in the amount of $110,000.00 (the
"Loan") for the purchase of equipment, increase of working
capital, and payment of the closing costs for the Loan. The
undersigned has agreed to enter into this Unconditional
Guaranty of all Obligor's obligations under the Agreement.
AGREEMENT:
As an inducement and in consideration of any and all contemporaneous or future
financial accommodations by City to Obligor, the undersigned Guarantors, and each of
them, unconditionally guarantees the prompt payment when due and at all times
thereafter of any and all existing, contemporaneously incurred and future indebtedness
and liability of every kind (including all extensions, renewals, and modifications
thereof), absolute or contingent, however created or evidenced, owing from Obligor to
City plus such interest as may accrue thereon. City may grant credit to Obligor from
time to time without further authorization of or notice to Guarantor.
Guaranty DRAFT 2 — March 6, 2006 Page 1
Guarantor agrees to pay City all expenses of every kind including, without limitation,
any and all fees and expenses incurred by it on account of the services of any attorney
employed or retained by it, including in-house counsel, in protecting or defending City's
interest and in attempting to collect all or any part of such indebtedness and in
enforcing this guaranty, with or without suit. Every immediate and successive
assignee of any part of such indebtedness guaranteed hereby shall have the right to
enforce all agreements and obligations contained in this guaranty for its own benefit as
fully as if named herein, but City shall nevertheless have the right to enforce this
guaranty for its own benefit as to so much of the liability guaranteed as has not been
assigned.
Guarantor waives notice of (a) the acceptance of this guaranty; (b) any and all
indebtedness of any kind covered by the guaranty; and (c) any and all demands,
nonpayments or other defaults in respect of such indebtedness.
If more than one person or legal entity signs this Unconditional Guaranty, all
references to "Guarantor" herein shall bind each of the undersigned jointly and
severally.
The liability of Guarantor under this guaranty shall be continuing and shall remain in
full force and effect as long as Obligor is or may be indebted to City on account of any
indebtedness covered by the guaranty. It shall not be affected in any way by (and the
City is hereby expressly authorized to make without notice to anyone) any sale, pledge,
surrender, compromise, release, acceleration, discharge, renewal, extension,
substitution, exchange, or modification of any kind whatsoever of all or any part of the
indebtedness covered by the guaranty, or of all or any part of the security or collateral
given to secure such indebtedness, including the release or addition of other
guarantors. In addition, such liability of Guarantor shall not be affected in any way by
the failure or invalidity of or any defect in any security or collateral given to secure
such indebtedness. No exercise or non -exercise, waiver, change, impairment, or
suspension by City of any right or remedy given it by this Unconditional Guaranty or
by Obligor and no dealings by City with Obligor or any other person shall in any way
affect any of the obligations of Guarantor hereunder or any security furnished by
Guarantor, now or hereafter, or give Guarantor any recourse against City. The
obligations of Guarantor to City hereunder are independent of Obligor's obligations
and a separate action or actions may be brought and prosecuted by City against
Guarantor, whether or not such action or actions are also brought against Obligor,
other guarantors or any security granted to City.
Guarantor waives and agrees not to assert or otherwise take advantage of (a) any right
which it may have to require City to proceed against Obligor or any other person, firm
or corporation or to proceed against or exhaust any security held by it at any time or to
Guaranty DRAFT 2 — March 6, 2006 Page 2
pursue any other remedy in its power; (b) any defense which it may have in the nature
of statute of limitations in any action hereunder or for the collection of any
indebtedness or the performance of any obligation guaranteed hereby; (c) any defense
which it may have by reason of incapacity, lack of authority, or lack of shareholder or
other approvals relating either to Obligor or Guarantor or the failure of City to file or
enforce a claim against the estate (either in administration, bankruptcy, or other
proceeding) of Obligor or of any other or others; (d) any lack of demand, protest and
notice of any kind including, without limitation, notice of the existence, creation or
incurring of new or additional indebtedness or of any action or non -action on the part of
Obligor, City, any endorser, creditor of Obligor or Guarantor under this or any other
agreement, or any person whomsoever, in connection with any obligation or evidence of
indebtedness held by City as collateral or in connection with any indebtedness
guaranteed hereby; (e) any defense which is may have based upon an election of
remedies by City; and (f) any duty which City may have to disclose to Guarantor any
facts which it may now or hereafter know about Obligor, it being understood and
agreed that Guarantor is fully responsible for being and keeping informed of the
financial condition of Obligor and of all circumstances bearing on the risk of non-
payment of any indebtedness guaranteed hereby.
Until all indebtedness of Obligor to City is paid in full, Guarantor shall have no right
of subrogation and waives any right which it may otherwise have to enforce any
remedy whatsoever which City may have against Obligor and any benefit of or right to
participate in realization or any security now or hereafter granted to City.
With or without notice to Guarantor, City may, in its sole discretion and at any time
and from time to time and in such manner and upon such terms as it considers fit,
apply any or all payments or recoveries from Obligor, Guarantor, any other guarantor
or source, or from any security granted to City, under this or any other agreement, in
such manner and order or priority as City may determine, to any indebtedness of
Obligor to City, whether or not such indebtedness is guaranteed hereby or is otherwise
secured or is due at the time of such application.
For consideration as recited above, Guarantor subordinates any and all indebtedness of
Obligor to Guarantor to any and all indebtedness of Obligor to City. If City so
requests, any such indebtedness of Obligor to Guarantor shall be collected and received
by Guarantor as trustee for City and paid to City on account of Obligor's indebtedness
to it, without reducing or affecting Guarantor's liability under any of the provisions of
this guaranty.
This guaranty is in addition to and independent of any other guaranties at any time in
effect with respect to all or any part of Obligor's indebtedness to City and may be
enforced regardless of the existence of any such other guaranties which shall continue
to remain in full force and effect.
Guaranty
DRAFT 2 — March 6, 2006 Page 3
No provision of this guaranty or any right or remedy of City hereunder can be waived,
nor can Guarantor be released from its obligations hereunder except in writing duly
executed by an authorized officer of City. Should any one or more provisions of this
guaranty be determined to be illegal or unenforceable, all other provisions shall
nevertheless be effective.
This guaranty shall be construed and performed according to the laws of the State of
Washington. Guarantor irrevocably submits to the jurisdiction of any state or federal
court sitting in Yakima County, Washington, in any action or proceeding brought to
enforce or otherwise arising out of or relating to this guaranty and irrevocably waives
to the fullest extent permitted by law any objection which it may have now or hereafter
to venue or any claim that such forum is an inconvenient forum.
EXECUTED this day of , 2006.
Mathew Gray
Michael Andrews
CONSENT OF SPOUSE
The undersigned, being the spouse of the MATHEW GRAY, and hereby
acknowledges and consents to the personal guaranty set forth above as to any
community property interest in which Mathew Gray and I now have or acquire in the
future.
Dated this day of , 2006.
KAREN ELIZABETH GRAY
Guaranty DRAFT 2 — March 6, 2006 Page 4
CONSENT OF SPOUSE
The undersigned, being the spouse of the MICHAEL ANDREWS, and hereby
acknowledges and consents to the personal guaranty set forth above as to any
community property interest in which Michael Andrews and I now have or acquire in
the future.
Dated this day of , 2006.
DAWN LYNN ANDREWS
X.\CITY OF YAKIMA-20009\Coyote Canyon Winery\Guaranty - FINAL (030606).doc
Guaranty DRAFT 2 — March 6, 2006 Page 5
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement ("Agreement") is made and entered into
this day of , 2006 by and between The City of Yakima, a Washington
municipal corporation ("Yakima"), Julmar, L.L.C. ("Julmar"), and Coyote Canyon Winery,
L.L.C. ("CCW"), Mathew Gray, a married person, and Michael Andrews, a married person.
RECITALS
A. Julmar is a Washington limited liability company and has done business as
"Yakima Cellars Winery". Yakima and Julmar have engaged in certain lending relationships for
several years. On or about June 19, 2003, Yakima and Julmar entered into a secured loan
agreement (the "Loan Agreement"). Julmar 1s currently indebted to Yakima pursuant to the
terms and conditions of the Loan Agreement and related promissory notes, instruments,
agreements, and documents between Julmar and Yakima dated as of June 19, 2003, as amended
and supplemented from time to time, as follows:
1. A variable/fixed rate loan in the principal amount of One Hundred Ten
Thousand Dollars ($110,000.00)(the "Loan") which is evidenced by a promissory note executed
by Julmar in favor of Yakima dated June 19, 2003 (the "Variable/Fixed Rate Note"). The
Variable/Fixed Rate requires installment payments as set forth in said Note. As of March 1,
2006, the outstanding principal balance under the Variable/Fixed Rate Note was $
plus accrued interest in the amount of $ with interest continuing to
accrue on this obligation at a rate of % per annum.
2. As a part of the Loan Agreement Julmar also executed and delivered to
Yakima a Demand Note in the principal amount of $1,100.00 for the cost of fixing the rate of
interest on the Variable/Fixed Rate Note at the election of Julmar.
3. As a part of the Loan Agreement, Julmar also executed and delivered to
Yakima a Deposit Control Agreement dated June 19, 2003.
B. The obligation evidenced by the Variable/Fixed Rate Note is secured by:
1. an assignment of Rents and Leases For Security Purposes executed and
delivered by Julmar to Yakima relating to that certain Lease between Julmar, as tenant, and J&J
Realty Investment, LLC, as lessor, dated July 24, 2002 as to real property commonly known as
10 North 6th Avenue, Yakima, Washington, which Assignment was recorded with the Yakima
County Auditor on July 29, 2003 under Auditor's File No. 7348929;
2. an Assignment of Rents and Leases For Security Purposes executed and
delivered by Julmar to Yakima relating to that certain Lease between Julmar, as tenant, and
Arthur Berger and Robert C. Standfill, as lessor, dated October 1, 2000 as to real property
commonly known as 32 North 2nd Street, Yakima, Washington, which Assignment was recorded
with the Yakima County Auditor on July 29, 2003 under Auditor's File No. 7348930;
105727-0508/790493 VI
3. a security interest in all inventory, accounts receivable, supplies, general
intangibles, trademarks, trade names, copyrights, other personal property, and equipment owned by
Julmar which security interest was perfected by filing a UCC -1 Financing Statement with the
Washington Department of Licensing on July 30, 2003 under File No. 2003-212-4872-7; and
4. an Unconditional Guaranty executed and delivered by Patrick Waber, Kari
Zuetenhorst, Andrew Castrodale, Mark Maiocco, Robert Villbrandt, Palmer Wright and Julia
Robertson ("Original Guarantors") wherein each personally guaranteed to full payment and
performance of all obligations of Julmar to Yakima under the Loan Agreement, Variable/Fixed Rate
Note, Demand Note and related security documents.
The documents listed under B.1 through 4., above are referred to hereinafter as the Security
Documents.
C. Collectively, the Loan Agreement, the Variable/Fixed Rate Note, the Demand
Note, the Deposit Control Agreement and the Security Documents, and all related documents
and instruments, are referred to as the "Yakima Secured Loan."
D. Coyote Canyon Winery, L.L.C. ("CCW") is a Washington limited liability
company with the following persons as members: Mathew Gray, a married person and Michael
Andrews, a married person. Mathew Gray is the managing member of CCW. CCW desires to
purchase the assets and assume the liabilities of Julmar, including the Yakima Secured Loan.
E. The parties desire to resolve repayment of the Yakima Secured Loan in an
amicable manner on the tetiiis and conditions of this Agreement and to provide for payment to
Yakima of the Yakima Secured Loan and Julmar and CCW have agreed to the assignment and
assumption of the Yakima Secured Loan to CCW by Julmar.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, it is agreed as follows:
1. Assignment and Assumption of Yakima Secured Loan. In consideration of the
mutual agreements provided herein, Julmar agrees to assign and transfer to CCW, all of its right
title and interest in, to and under, any and all documents evidencing the Yakima Secured Loan
which are more fully described in the Recitals, above, together with any other related documents
or instruments executed in connection therewith or related thereto, and CCW agrees to assume
all duties, liabilities and obligations owing to Yakima under the Yakima Secured Loan including
all payment and performance duties and obligations under the Loan Agreement, the
Variable/Fixed Rate Note, the Demand Note, the Deposit Control Agreement and the Security
Documents.
LOAN ASSIGNMENT AND
ASSUMPTION AGREEMENT 2 of 15
2. Guaranty By Members of CCW. The members of CCW, Mathew Gray, a
married person and Michael Andrews, a married person ("New Guarantors") each agree to
execute and deliver to Yakima an Unconditional Guaranty of the obligations owed to Yakima
under the Yakima Secured Loan including all payment and performance duties and obligations
under the Loan Agreement, the Variable/Fixed Rate Note, the Demand Note, the Deposit Control
Agreement and the Security Documents as a condition of Yakima consenting to the assignment
and assumption of the Yakima Secured Loan by CCW.
The guaranty of Michael Andrews shall be secured by:
a. a security interest in all farm equipment owned by Michael Andrews; and
b. a first priority security in all partnership interests owned by Michael
Andrews, including but not limited to interests in Coyote Canyon Vineyard Partnership, for
security purposes provided that the City shall not be entitled to assume any control over the
operations of said partnership, but only be entitled to received partnership distributions allocable
to Michael Andrews.
3. Assignment of Amended Leases or Contracts. The members of CCW agree
to execute and deliver to Yakima an Assignment of Amended Leases relating to the leases
described in Recital sections B.1. and B.2., above, or such other leases or contracts entered into
by CCW for the purpose of obtaining real property premises for conducting its business
operations, as a condition of Yakima consenting to the assignment and assumption of the
Yakima Secured Loan.
4. Amendment of Secunty Interest. The members of CCW agree that Yakima
may file an Amendment Statement relating to the UCC -1 Financing Statement described in
Recital section B.3., above, evidencing that CCW is the debtor under the security agreement as a
condition of Yakima consenting to the assignment and assumption of the Yakima Secured Loan.
5. Delivery of Documents. At closing, or as soon as reasonably practical thereafter,
Julmar shall deliver to CCW the original or copies certified by Julmar as true copies of the
originals, of the Yakima Secured Loan documents.
6. Recordation of Closing Documents; Transfer Taxes. CCW shall be responsible
for, and shall pay when due and payable all transfer, filing and recording fees, taxes, stamps,
costs and expenses in any state or county documentary taxes, if any, with respect to the filing or
recording of any document or instrument contemplated hereby.
7. Representations and Warranties of Julmar.
a. Julmar is a Washington limited liability company, duly foiined, validly
existing and in good standing under the laws of Washington.
b. Julmar is the original and current obligor under the Yakima Secured Loan
and has the lawful right to assign and transfer all of its right, title and interest in and to the
documents evidencing the Yakima Secured Loan.
LOAN ASSIGNMENT AND
ASSUMPTION AGREEMENT 3 of 15
8. Representations and Warranties of CCW and the New Guarantors.
a. CCW and the New Guarantors represent that they have the full corporate
and individual power and authority to execute, deliver and perform this Agreement and to enter
into and consummate all of the transactions contemplated by this Agreement. This Agreement
constitutes a legal, valid and binding obligation of CCW and the New Guarantors, enforceable
against them, and each of them individually, in accordance with its terms.
9. Mutual Release of Parties. As a result, and in consideration of the agreements
herein, Yakima agrees to release and waive any and all claims against Julmar and the Original
Guarantors, except for any debts or obligations owing to Yakima, if any, which are unrelated to
the Yakima Secured Loan, and Julmar and the Original Guarantors agree to release and waive
any and all claims against Yakima ("General Release") as follows (for purposes of this release
the releasing parties herein shall be referred to as (the "Parties"):
a. The Parties, for themselves and on behalf of their successors and assigns,
do hereby release, acquit and forever discharge each other, all of their predecessors in interest,
and all of their past and present officers, directors, attorneys, affiliates, employees and agents, of
and from any and all claims, demands, obligations, liabilities, indebtedness, breaches of contract,
breaches of duty or of any relationship, acts, omissions, misfeasance, malfeasance, causes of
action, defenses, offsets, debts, sums of money, accounts, compensation, contracts,
controversies, promises, damages, costs, losses and expenses, of every type, kind, nature,
description or character, whether known or unknown, suspected or unsuspected, liquidated or
unliquidated, each as though fully set forth herein at length (each, a "Released Claim" and
collectively, the "Released Claims"), that the Parties now have or may acquire as of the date the
Parties have executed and delivered this Agreement, EXCEPT for any claims Yakima may have
against Julmar and the Original Guarantors for other debts that may be owing to Yakima which
are unrelated to the Yakima Secured Loan.
b. The Parties hereby acknowledge, represent and warrant that they agree to
assume the risk of any and all unknown, unanticipated or misunderstood defenses and Released
Claims which are released by the provisions hereof in favor of the Parties and they hereby waive
and release all rights and benefits which they may otherwise have under state or local laws or
statutes with regard to the release of such unknown, unanticipated or misunderstood defenses and
Release Claims.
c. The Parties acknowledge that they have read each of the provisions of this
General Release and reviewed them with legal counsel. The Parties fully understand that this
General Release has important legal consequences, and that they are releasing any and all
Released Claims that the Parties may have as of the Release Date. The Parties hereby
acknowledge that they have had an opportunity to obtain a lawyer's advice concerning legal
consequences of each of the provisions of this General Release.
d. The Parties hereby specifically acknowledge and agree that:
LOAN ASSIGNMENT AND
ASSUMPTION AGREEMENT 4 of 15
(i) None of the provisions of this General Release and this Agreement
shall be construed as or constitute an admission of any liability on the part of the Parties;
(ii) The provisions of this General Release shall constitute an absolute
bar to any Released Claim of any kind, whether any such Released Claim is based on
contract, tort, warranty, mistake or any other theory, whether legal, statutory or equitable;
and
(iii) Any attempt to assert a Released Claim barred by the provisions of
this General Release shall subject the Parties to the provisions of applicable law setting
forth the remedies for the bringing of groundless, frivolous or baseless claims or causes
of action.
e. This General Release shall not release any claims relating to a breach any
of the representations and warranties set forth herein, which representations and warranties shall
survive closing.
10. Entire Agreement. This Agreement sets forth the entire agreement of the Parties,
and there are no side agreements, conditions or understandings other than those contained in this
Agreement. This Agreement supersedes all prior discussions, commitments, understandings and
agreements (oral and/or written) and all subjects addressed in this Agreement. Any amendments
to or waivers of any provisions of this Agreement must be in writing and must be signed by an
authorized representative of the Parties.
11. Attorney's Fees. If it becomes necessary for any party hereto or its authorized
representative, successor or assignment to institute suit or other proceedings in connection with
the Agreement or the breach thereof, the prevailing party in such suit or proceeding shall be
entitled to be reimbursed for its reasonable costs, expenses and attorney's fees incurred at the
trial and at all appellate levels or bankruptcy proceedings.
12. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of all the Parties hereto and their respective heirs, representatives, successors and assigns.
13. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington.
14. Contract; Subsequent Writing to Modify; No Waiver. Each and every word and
portion of this Agreement is contractual and not merely a recital. This Agreement may not be
amended or supplemented, canceled or discharged and no provision hereof may be waived,
except by subsequent written between the Parties.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO A LOAN, MONEY,
EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF THE DEBT
ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
LOAN ASSIGNMENT AND
ASSUMPTION AGREEMENT 5 of 15
THE CITY OF YAKIMA, a Washington municipal corporation
By:
Name: R. A. Zais, Jr.
City Manager
Attest:
City of Yakima
129 North Second Street
Yakima, WA 98901
Karen Roberts, City Clerk
JULMAR, L.L.C., a Washington limited liability company
By:
Print Name:
Title:
Patrick Waber
Kari Zeutenhorst
Andrew Castrodale
Mark Maiocco
LOAN ASSIGNMENT AND
ASSUMPTION AGREEMENT 6 of 15
Robert Villbrandt
Palmer Wright
Julia Robertson
COYOTE, CANYON WINERY, L.L.C., a Washington limited liability company
By:
Print Name:
Title:
Mathew Gray
Michael Andrews
STATE OF WASHINGTON )
) ss.
COUNTY OF YAKIMA )
I certify that I know or have satisfactory evidence that R. A. Zais, Jr. is the person who
appeared before me, and said person acknowledged that he signed this instrument, on oath stated
that he is authorized to execute the instrument and acknowledged it as the City Manager for the
City of Yakima to be the free and voluntary act of such party for the uses and purposes
mentioned in this instrument.
DATED:
LOAN ASSIGNMENT AND
ASSUMPTION AGREEMENT 7 of 15
Print Name:
NOTARY PUBLIC for the State of
Washington, residing at
My appointment expires:
STATE OF WASHINGTON )
) ss.
COUNTY OF YAKIMA )
I certify that I know or have satisfactory evidence that is the
person who appeared before me, and said person acknowledged that he signed this instrument,
on oath stated that he is authorized to execute the instrument and acknowledged it as the
managing member of JULMAR, LLC to be the free and voluntary act of such party for the uses
and purposes mentioned in this instrument.
DATED:
STATE OF WASHINGTON )
SS.
COUNTY OFYAKIMA )
Print Name:
NOTARY PUBLIC for the State of
Washington, residing at
My appointment expires:
I certify that I know or have satisfactory evidence that PATRICK WABER is the person
who appeared before me, and said person acknowledged that he signed this instrument, on oath
stated that he executed the instrument and acknowledged it to be the free and voluntary act of
such party for the uses and purposes mentioned in this instrument.
DATED:
LOAN ASSIGNMENT AND
ASSUMPTION AGREEMENT 8 of 15
Print Name:
NOTARY PUBLIC for the State of
Washington, residing at
My appointment expires:
STATE OF WASHINGTON )
) ss.
COUNTY OFYAKIMA )
I certify that I know or have satisfactory evidence that KARI ZEUTENHORST is the
person who appeared before me, and said person acknowledged that she signed this instrument,
on oath stated that she executed the instrument and acknowledged it to be the free and voluntary
act of such party for the uses and purposes mentioned in this instrument.
DATED:
STATE OF WASHINGTON )
) ss.
COUNTY OFYAKIMA )
Print Name:
NOTARY PUBLIC for the State of
Washington, residing at
My appointment expires:
I certify that I know or have satisfactory evidence that ANDREW CASTRODALE is the
person who appeared before me, and said person acknowledged that he signed this instrument,
on oath stated that he executed the instrument and acknowledged it to be the free and voluntary
act of such party for the uses and purposes mentioned in this instrument.
DATED:
LOAN ASSIGNMENT AND
ASSUMPTION AGREEMENT 9 of 15
Print Name:
NOTARY PUBLIC for the State of
Washington, residing at
My appointment expires:
STATE OF WASHINGTON )
) ss.
COUNTY OFYAKIMA )
I certify that I know or have satisfactory evidence that MARK MAIOCCO is the person
who appeared before me, and said person acknowledged that he signed this instrument, on oath
stated that he executed the instrument and acknowledged it to be the free and voluntary act of
such party for the uses and purposes mentioned in this instrument.
DATED:
STATE OF WASHINGTON )
) ss.
COUNTY OFYAKIMA )
Print Name:
NOTARY PUBLIC for the State of
Washington, residing at
My appointment expires:
I certify that I know or have satisfactory evidence that ROBERT VILLBRANDT is the
person who appeared before me, and said person acknowledged that he signed this instrument,
on oath stated that he executed the instrument and acknowledged it to be the free and voluntary
act of such party for the uses and purposes mentioned in this instrument.
DATED:
LOAN ASSIGNMENT AND
ASSUMPTION AGREEMENT 10 of 15
Print Name:
NOTARY PUBLIC for the State of
Washington, residing at
My appointment expires:
STATE OF WASHINGTON )
) ss.
COUNTY OFYAKIMA )
I certify that I know or have satisfactory evidence that PALMER WRIGHT is the person
who appeared before me, and said person acknowledged that he signed this instrument, on oath
stated that he executed the instrument and acknowledged it to be the free and voluntary act of
such party for the uses and purposes mentioned in this instrument.
DATED:
STATE OF WASHINGTON )
) ss.
COUNTY OFYAKIMA )
Print Name:
NOTARY PUBLIC for the State of
Washington, residing at
My appointment expires:
I certify that I know or have satisfactory evidence that JULIA ROBERTSON is the
person who appeared before me, and said person acknowledged that she signed this instrument,
on oath stated that she executed the instrument and acknowledged it to be the free and voluntary
act of such party for the uses and purposes mentioned in this instrument.
DATED:
LOAN ASSIGNMENT AND
ASSUMPTION AGREEMENT 11 of 15
Print Name:
NOTARY PUBLIC for the State of
Washington, residing at
My appointment expires:
STATE OF WASHINGTON )
) ss.
COUNTY OF YAKIMA )
I certify that I know or have satisfactory evidence that MATHEW GRAY is the person
who appeared before me, and said person acknowledged that he signed this instrument, on oath
stated that he is authorized to execute the instrument and acknowledged it as the managing
member of COYOTE CANYON WINERY, LLC to be the free and voluntary act of such party
for the uses and purposes mentioned in this instrument.
DATED:
STATE OF WASHINGTON )
) ss.
COUNTY OFYAKIMA )
Print Name:
NOTARY PUBLIC for the State of
Washington, residing at
My appointment expires:
I certify that I know or have satisfactory evidence that MATHEW GRAY is the person
who appeared before me, and said person acknowledged that he signed this instrument, on oath
stated that he executed the instrument and acknowledged it to be the free and voluntary act of
such party for the uses and purposes mentioned in this instrument.
DATED:
LOAN ASSIGNMENT AND
ASSUMPTION AGREEMENT 12 of 15
Print Name:
NOTARY PUBLIC for the State of
Washington, residing at
My appointment expires:
STATE OF WASHINGTON )
) ss.
COUNTY OFYAKIMA )
I certify that I know or have satisfactory evidence that MICHAEL ANDREWS is the
person who appeared before me, and said person acknowledged that he signed this instrument,
on oath stated that he executed the instrument and acknowledged it to be the free and voluntary
act of such party for the uses and purposes mentioned in this instrument.
DATED:
LOAN ASSIGNMENT AND
ASSUMPTION AGREEMENT 13 of 15
Print Name:
NOTARY PUBLIC for the State of
Washington, residing at
My appointment expires:
CONSENT OF SPOUSE
The undersigned, being the spouse of the MATHEW GRAY, and hereby acknowledges
and consents to the terms and conditions of this Assignment and Assumption Agreement set
forth above as to any community property interest in which Mathew Gray and I now have or
acquire in the future.
Dated this day of , 2006.
KAREN ELIZABETH GRAY
STATE OF WASHINGTON )
) ss.
COUNTY OFYAKIMA )
I certify that I know or have satisfactory evidence that KAREN ELIZABETH GRAY is
the person who appeared before me, and said person acknowledged that she signed this
instrument, on oath stated that she executed the instrument and acknowledged it to be the free
and voluntary act of such party for the uses and purposes mentioned in this instrument.
DATED:
Print Name:
NOTARY PUBLIC for the State of
Washington, residing at
My appointment expires:
LOAN ASSIGNMENT AND
ASSUMPTION AGREEMENT 14 of 15
CONSENT OF SPOUSE
The undersigned, being the spouse of the MICHAEL ANDREWS, and hereby
acknowledges and consents to the tetins and conditions of this Assignment and Assumption
Agreement set forth above as to any community property interest in which Michael Andrews and
I now have or acquire in the future.
Dated this day of , 2006.
DAWN LYNN ANDREWS
STATE OF WASHINGTON )
) ss.
COUNTY OFYAKIMA )
I certify that I know or have satisfactory evidence that DAWN LYNN ANDREWS is the
person who appeared before me, and said person acknowledged that she signed this instrument,
on oath stated that she executed the instrument and acknowledged it to be the free and voluntary
act of such party for the uses and purposes mentioned in this instrument.
DATED:
Print Name:
NOTARY PUBLIC for the State of
Washington, residing at
My appointment expires:
X:\CITY OF YAKIMA-20009\Coyote Canyon Winery\Loan Assigment Agreement ( 030606).doc
LOAN ASSIGNMENT AND
ASSUMPTION AGREEMENT 15 of 15
SECURITY AGREEMENT
DEBTOR: MICHAEL ANDREWS
SECURED PARTY: THE CITY OF YAKIMA
As collateral securing all presents and future obligations of Debtor to Secured
Party, Debtor hereby grants to Secured Party a security interest in:
All Debtor's rights, title and interest in and to all farm equipment, including but
not limited to that equipment listed on Exhibit "A" attached hereto and incorporated
herein by reference AND all Debtor's rights, title and interest in and to any
partnership interest in Coyote Canyon Vineyard Partnership, provided that Secured
Party shall not be entitled to exercise any operational control over said partnership,
but shall be entitled only to the partnership distributions to which Debtor is entitled;
NONE OF WHICH THE DEBTOR IS AUTHORIZED TO SELL, LEASE OR
OTHERWISE DISPOSE OF WITHOUT THE WRITTEN CONSENT OF SECURED
PARTY; all cash and non-cash proceeds of any of the foregoing, in whatever form
(including proceeds in the form of inventory, equipment or any other form of personal
property), including proceeds of proceeds; all books and records relating to the any of
the foregoing collateral,
This security agreement is given to secure the payment and performance of all
indebtedness and obligations of Debtor to Secured Party presently existing or hereafter
arising, direct or indirect, all fees and costs expended by Secured Party to enforce its
rights hereunder or to preserve and protect the above-described collateral and interest
thereon.
Debtor hereby represents, covenants and agrees with Secured Party as follows:
1. Additional Documents: Debtor shall execute from time to time, along with
Secured Party, any financing statements, certificates, instruments, assignments, pledge
agreements, powers of attorney, or other documents and do such other acts considered by
Secured Party to be necessary or desirable to perfect or protect the security interest enacted
hereby, and Debtor shall pay all costs and expenses relating to their preparation and filing.
2. Use of Collateral: Debtor agrees to comply with any governmental regulation
affecting the use of the collateral and will not use or permit the use of the collateral in any
unlawful manner. Debtor represents and agrees that the primary use of said collateral is for
use and consumption in his business.
Page 1
3. Debtor and Collateral Location: The property at which the collateral is located is
described as follows (by street address or legal description). (Note: Where collateral is or will
be a fixture, the property description must be a legal description and must identify the record
owner of the property if other than the Debtor):
The address appearing next to Debtor's signature below is the chief executive office of Debtor's
operations.
4. Ownership and Liens: Debtor (if a natural person) is of legal age (if a
corporation), is duly organized and existing under the laws of the state of its incorporation;
owns the collateral ad it is free and clear of all security interests and encumbrances of every
nature. (Except as noted on the reverse). Debtor will not create or permit the existence of any
lien or security interest other than that hereby created on the collateral without the written
consent of Security Party. Any certificate of title now or hereafter existing on any of the
collateral will be delivered to Secured Party and will recite the interest of Secured Party.
5. Taxes and Assessments: Debtor will pay before delinquency all taxes, other
governmental charges or assessments that are or may become a lien or charge on the collateral
and will pay any tax, charge or assessment which may be levied on any obligation secured
hereby.
6. Insurance: Debtor will keep the collateral continuously insured by an insurer
approved by Secured Party against fire, theft, and other hazards designated at any time by
Secured Party, in an amount equal to the full insurable value thereof or to all sums secured
hereby, with such form of loss payable clause as designated by and in favor of Secured Party,
and will deliver the policies and receipts showing payment of premiums to the Secured Party.
In the event of loss, secured party shall have full power to collect any and all insurance upon
the collateral maintained or paid by Debtor and to apply the same at its option to any obligation
secured hereby, whether or not matured, or to the restoration or repair of the collateral.
Secured Party shall have no liability whatsoever for any loss that may occur by reason of the
omission or lack of coverage of any such insurance.
7. Removal, Sale and Accounting: Without the prior written consent of Secured
Party, Debtor will not remove the collateral from the state where Debtor has indicted herein the
collateral is located, nor sell or dispose of any portion of said collateral. Secured Party hereby
consents to sales of crops, livestock and other farm products in the ordinary course of Debtor's
business subject to the following terms and conditions to which Debtor agrees:
(a) All proceeds of any sale of the collateral consented to by Secured Party
shall be obtained on a timely basis and in a form jointly payable to
Debtor and Secured Party. Such proceeds shall be immediately delivered
to Secured Party. All chattel paper, contracts, or other evidence of
obligation, whether issued by a warehouse marketing group or otherwise,
and all accounts receivable and other non-cash proceeds shall
Page 2
immediately be endorsed and assigned and delivered to Secured Party as
security for the indebtedness secured thereby.
(b) All of the proceeds of any such disposition, when and if received by
Secured Party, may at the Secured Party's option be applied to the
indebtedness secured hereby.
(c) The Secured Party may collect the proceeds of any of such accounts or
other non-cash proceeds of sale, and at its discretion sell or dispose of any
or all of the proceeds of said sale without notice to Debtor.
(d) The Secured Party may assign or transfer the whole or any part of the
indebtedness, obligation, or liability of the Debtor, and may transfer
therewith as collateral security the whole or any part of the collateral
herein mentioned, and all obligations, rights, powers, and privileges
herein provided shall inure to the benefit of the assignee and shall bind
the heirs, executors, administrators, successors, or assigns of the parties
hereto, as the case may be.
8. Expenses Incurred by Secured Party: Secured Party is not required to, but may
at its option, pay any tax, other charge, assessment, or expense payable by Debtor and any
filing or recording fees, and any amounts so paid shall be repayable by Debtor upon demand.
Debtor will also repay upon demand all of Secured Party's expenses incurred in collecting,
insuring, conserving or protecting the collateral or in any inventories, audits, inspections, or
other examination by Secured Party in respect of the collateral. All such sums shall bear
interest at the rate of two percent (2%) per month from the date of payment by the Secured
Party until repaid by Debtor and such sums and interest thereon shall be secured hereby. The
rights granted by this paragraph are not a waiver of any other rights of Secured Party arising
from breach of any of Debtor's covenants.
9. Appointment of Agent: The undersigned Debtor does hereby designate and
appoint Secured Party, its successors and assigns, its true and lawful attorney or attorneys with
power irrevocable, for it and in its name, place and stead to ask, demand, receive, receipt and
give acquittance for any and all amounts which may be or become due or payable to Debtor
pursuant to the collateral, or any amendments or supplements thereto, and in its discretion to
file any claim or take any action or proceeding, or either, in its own name or in the name of the
undersigned or otherwise, which to Secured Party or any successor or assignee may seem
necessary or desirable in order to collect or enforce payment of any and all amounts which may
become due or owing pursuant to said collateral, or any amendment or supplement thereto, and
to endorse for collection, payment, receipt, or transfer, any draft, order, check, instrument,
security, or document for or on behalf of Debtor. The acceptance of this appointment by Secured
Party shall not obligate it to perform any duty, covenant, or obligation required to be performed
by Debtor under or by virtue of said collateral or any amendments or supplements thereto.
Secured Party, its successors and assigns may also execute, on behalf of Debtor, any financing
statements or other instruments, which in the opinion of Secured Party, its successors or
assigns, may be desirable to perfect or protect its position under the above collateral.
Page 3
10. Waivers: This security agreement shall not be qualified or supplemented by
course of dealing. No waiver or modification by Secured Party of any of the terms or conditions
thereon shall be effective unless in writing signed by Secured Party. No waiver or indulgence
by Secured Party as to any required performance by Debtor shall constitute a waiver as to any
subsequent required performance or other obligations of Debtor hereunder.
11. Default: Time is of the essence in this security agreement, and in any of the
following events, hereinafter called "Events of Default", to -wit:
(a) Any failure to pay when due the full amount of any payment of principal,
interest, taxes, insurance premiums or other charges which are or may be
secured hereby; or
(b) Any failure to perform as required by covenant or agreement herein; or
(c) The falsity of any representation of Debtor herein or in any credit
application or financial statement given by Debtor to Secured Party as a
basis for any extension of credit secured hereby; or
(d) If the collateral should be seized or levied upon under any legal or
governmental process against Debtor or against the collateral; or
(e) If Debtor becomes insolvent or is the subject of a petition in bankruptcy,
either voluntary or involuntary, or in any other proceeding under the
federal bankruptcy laws, or makes an assignment for the benefit of
creditors; or if Debtor is named or in the collateral is subjected to a suit
for the appointment of a receiver; or
(f) Entry of any judgment against Debtor; or
(g) Dissolution or liquidation of Debtor; or
(h) The Secured Party deems itself insecure.
Then and in any of such events of default, the entire amount of indebtedness secured hereby
shall then or at any time thereafter, at the option of Secured Party, become immediately due
and payable without notice of demand, and Secured Party shall have an immediate right to
pursue the remedies provided herein.
12. Remedies: In the event of a default hereunder, Secured Party shall have all
remedies provided by law, and without limiting the generality of the foregoing, shall be entitled
as follows:
(a) Debtor agrees to put Secured Party in possession of the collateral on
demand; and
Page 4
(b) Secured Party is authorized to enter any premises where the collateral is
situated and take possession of said collateral without notice or demand
and without legal proceedings; and
(c) At the request of Secured Party, Debtor will assemble the collateral and
make it available to Secured Party at a place designated by Secured
Party which is reasonably convenient to both parties; and
(d) Debtor agrees that a period of fifteen (15) days from the time notice is
sent by first class mail or otherwise, shall be a reasonable period of
notification of a sale or other disposition of the collateral; and
(e) Debtor agrees that any notice or other communication by Secured Party
to Debtor shall be sent to the mailing address of the Debtor stated herein;
and
(f) Debtor agrees to pay on demand the amount of all expenses reasonably
incurred by Secured Party in protecting or realizing on the collateral. In
the event that this security agreement or any obligation secured by it is
referred to an attorney for protecting or defending the priority of Secured
Party's interest or for collection or realization procedures. Debtor agrees
to pay a reasonable attorney's fees, including fees incurred in both trial
and appellate courts, either state or federal, and including bankruptcy
court, or fees incurred without suit and expenses of title search and all
court costs and costs of public officials. The sums agreed to be paid in
this sub -paragraph shall be secured hereby; and
(g) If Secured Party disposes of the collateral, Debtor agrees to pay any
deficiency remaining after application of the net proceeds to any
indebtedness secured hereby.
13. This security agreement and the indebtedness hereby secured are subject to the
laws of the State of Washington and are to be construed in accordance thereof. Any legal action
instituted with regard to the terms hereof shall have a venue laid in the County of Yakima.
In the event of any collection action or legal action is instituted to determine the rights and
duties of the parties hereunder, the prevailing party in such matter shall be awarded its
reasonable attorney's fees and costs in bringing such action in any state or federal court and
enforcing such rights and duties determined thereby.
DATED this day of , 2006.
Michael Andrews
Address:
Page 5
CONSENT OF SPOUSE
The undersigned, being the spouse of the Debtor named above, hereby
acknowledges and consents to the grant of the security interest set forth above as to
any separate and/or community interest to said property which the undersigned may
now have or acquire in the future.
Dated this day of , 2006.
DAWN LYNN ANDREWS
X. \ CITY OF YAKIMA-20009 \ Coyote Canyon Winery \SEC.AGR- Michael Andrews.doc
Page 6
Mr. Richard Zais
Yakima City Manager
129 North .2"d Street
Yakima, WA 98901
Dear Mr. Zais:
U.S. Department of Housing and Urban Development
Washington State Office
Seattle Federal Office Building
Office of Community Planning & Development
909 First Avenue, Suite 300
Seattle, WA 98104-1000
www.hud.gov/washington.html
March 14, 2006
rRECEIVED
CITY OF YAKIMA
MAR 1 6 2006
OFFICE OF CITY MANAGER
We have reviewed the City of Yakima's request for Section 108 loan guarantee assistance in the
amount of $75,000 for The Sports Center, a restaurant. This letter serves as a written determination from
the HUD Seattle Office that the proposed project meets the requirements of eligibility, national objective
and public benefit standards according to the information provided in the application.
ACTIVITY DESCRIPTION
The city will loan the proceeds of the Section 108 loan guarantee to Sports Center Universe, LLC.
The limited liability company will use the loan for working capital to assist with start up expenses for a
new restaurant. The restaurant will be located in a vacant building at 214 East Yakima Avenue. The
building is located within the HUD -designated Renewal Community.
The first floor of the building is being remodeled with the proceeds from a $320,000 Central
Valley Bank loan. The restaurant will include bar space and a stage for live entertainment. In the future,
the owner intends to include a brewery on the first floor and potentially remodel the basement and second
floor of the building for other uses. The project is expected to create 18 full time jobs.
The Section 108 loan will come from a Section 108 loan fund approved in August 2004, contract
number B -04 -MC -53-0008. This loan will use up the remaining authorized balance in the loan fund. The
Section 108 loan will be supported by a loan loss reserve in the amount of $18,750 from the balance
remaining in the city's Economic Development Initiative (EDI) grant agreement number
B -98 -ED -53-0048. The loan term will be 10 years. The security for the project, in addition to the pledge
of the city's CDBG funds, is a second deed of trust on the real estate. The property was appraised at
$680,000.
FIELD OFFICE DETERMINATION
1. Eligible Activity: The $75,000 loan is an eligible activity according to 24 CFR 570.703(i)(1); as
an economic development activity eligible under §570.203(b). The use of the $18,750 in EDI
funds as a debt service or loan loss reserve is eligible according to 24 CFR 570.703(k).
2. National Objective: The National Objective to be met by the project is 24 CFR 570.208(a)(4)
through job creation of permanent jobs that primarily will benefit low to moderate income
persons. The activity is projected to create 18 FTE jobs. Due to the location of the Sports Center
restaurant in a census tract with a poverty rate of more than 40 percent and within a block group
with poverty greater than 20 percent, the benefit to low to moderate income persons is presumed
according to 570.208(a)(4)(iv)(B).
www.hud.gov/washington.html
3. Public Benefit Standard: The Sports Center restaurant is projected to create 18 FTE jobs. The
combined total of Section 108 loan and EDI grant funds allocated to this project will be $93,750.
One FTE job will be created per $5,208 in combined Section 108 and EDI funds. The project
meets the public benefit standard for individual projects and may be excluded from the aggregate
standard per §570.209(b)(2)(v)(F).
Please be reminded that it is the City's responsibility to enter into an agreement with the borrower
according to the requirements under 24 CFR 570.506(b)(5)(ii). The agreement is required to include a
listing of the permanent jobs to be created, identifying any that are expected to be part time. A listing of
the jobs once they are filled is also required. In lieu of documenting the person's family size and annual
income due to presumed benefit, the poverty rate of the census tract in which the business is located may
be documented in the file instead. We also want to remind the City that all applicable security documents
described in paragraph 15(e) of the HUD Section 108 loan contracts must be delivered to the custodian
institution not later than five (5) business days following disbursement of the funds to the borrower.
Finally, all Section 108 loan projects are conditioned upon compliance with HUD environmental review
procedures pursuant to 24 CFR Part 58.
If we can be of any assistance regarding the Section 108 loan guarantee, please fell free to contact
Donna Batch, Economic Development Specialist at (206) 220-5374.
Sincerely,
John W. Peters, Director
Washington State Office of Community Planning
and Development
BUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. 13
For Meeting Of: March 7, 2006
ITEM TITLE: Consideration of a resolution approving assumption of a Section 108 loan from
Jul Mar, LLC to Coyote Canyon Winery, LLC, and authorizing the City
Manager to execute documents required for the transaction.
SUBMITTED BY: Bill Cook, Director
CONTACT: Michael Morales, Deputy Director 575-3533
SUMMARY EXPLANATION:
Attached are the Resolution approving assumption of the Jul Mar, LLC Section 108 by Coyote Canyon
Winery, LLC. Coyote Canyon Winery, LLC has entered into an asset purchase and sale agreement
with Jul Mar, LLC to purchase the assets of Jul Mar, LLC (dba Yakima Cellars). The purchase price
is $300,000 less the balance on the Section 108 loan and certain other credits against the purchase
pnce. The current outstanding balance on the Section 108 loan is $92,000 with $6,580 held in the
repayment account toward the next principal and interest payment due in August 2006.
The sale is conditioned upon the City of Yakima approving the assumption, the buyer obtaining
suitable financing for the balance of the purchase price, the buyer obtaining approval of the
assignments of leases from J&J Reality Investments LLC and Berger/Standfill, and the buyer obtaining
all necessary licenses and permits to operate the winery and tasting room. If the conditions of the
asset purchase and sale agreement can be met, Coyote Canyon Winery will continue to operate the
Yakima Cellars Winery production facility, and maintain the Yakima Cellars Tasting Room in
downtown Yakima.
The members of Coyote Canyon Winery LLC are Michael Andrews and Matthew Gray; they are father
and stepson. Matthew Gray is the managing member. Michael Andrews has extensive expenence in
growing grapes for the wine industry and has supplied grapes for Coyote Canyon's wines. Mathew
Gray has expenence in both viticulture and wine production.
CONTINUED ON NEXT PAGE
Resolution _X Ordinance _ Contract _ Other: Loan Application
Funding Source: U.S. Department of Housing and Urban Development
Approval for Submittal:
City Manager
STAFF RECOMMENDATION: Staff recommends approval of the resolution.
BOARD RECOMMENDATION: Economic Development Committee recommends approval.
COUNCIL ACTION: Resolution adopted. RESOLUTION NO. R-.2006-32
1
Claar-Tee, Sonya
From: Moore, Mary
Sent: Monday, February 06, 2012 3:46 PM
To: Claar-Tee, Sonya; Thompson, Jeanne
Subject: RE: missing contract
? 2dat4n-11)
Sonya r
Jeanne has information on these loans. She is out of the office until Thur clay. khursday.
Mary
From: Claar-Tee, Sonya
Sent: Monday, February 06, 2012 3:40 PM
To: Moore, Mary
Subject: RE: missing contract
4, WW1 67eMNL 6:)k
le- -3 2_
d�
Hi Mary ---I checked with Debbie and she indicated we still need a copy of the I n agreement with C 'o C ., ..n and
the City. Would you please track that down for us? Thanks.
From: Moore, Mary
Sent: Tuesday, January 17, 2012 12:18 PM
To: Claar-Tee, Sonya
Subject: RE: missing contract
Sonya
I don't have anything on this.
I did some searching Resolution R 2006-32, council meeting 3/7/06, allowed assumption of Section 108 loan made to Jul
Mar LLC, Yakima Winery, by Coyote Canyon Winery. Documents were supposed to be drawn up.
I checked accounts receivable and Coyote Canyon is paying the custodian fee for the loan, annual fee last paid in July
2011
Mary
From: Claar-Tee, Sonya
Sent: Tuesday, January 17, 2012 11:32 AM
To: Moore, Mary; Epperson, Cindy
Subject: FW: missing contract
Hi Mary ---I'm following up on my 12/12/11 email to you below as I have not received a response. Thank you.
From: Claar-Tee, Sonya
Sent: Monday, December 12, 2011 2:12 PM
To: DeBord, Rita; Moore, Mary
Subject: missing contract
Hi,
I am going through a file Linda Watkins had in her drawer labeled "missing contracts" and the attached information is
included in this file. Would you please check your files to see if you have a signed original contract? Or at this point
even a copy? Thanks, Sonya
DEPARTMENT OF FINANCE & BUDGET
129 North Second Street
Yakima, Washington 98901
CERTIFICATION OF SATISFACTION OF LIEN
RE. HUD 108 City of Yakima: trust account #434222
Julmar, L.L.C. dba Yakima Cellars and assigned to Coyote Canyon Winery, LLC
Please consider this memo as notice of our intent to release all interest in the
collateral being held under UCC filing 2003-2124872-7 wherein the debtor (Julmar,
LLC dba Yakima Cellars) granted collateral in all inventory, accounts receivable,
supplies, general intangibles, trademarks, trade names, copyrights, other personal
property and equipment.
The UCC was amended to Coyote Canyon LLC on July 2, 2006. The original UCC
was also continued on April 4, 2008 and April 17, 2013.
Based on evidence presented the original $110,000 loan has been paid in full and
the Bank of New York Mellon Trust Company, N.A. is holding approximately
$2,516.88 in overpayment on the loan that can be returned to Coyote Canyon Winery.
Whereas, on September 27, 2012, the indebtedness secured by said HUD 108 City
of Yakima. trust account #434222 and related lien has been fully paid and satisfied;
Therefore, in consideration of said payment, CITY OF YAKIMA, lienholder, hereby
certifies that said HUD 108 trust account #434222 for Julmar, LLC ada Yakima
Cellars and assigned Coyote Canyon and related lien against this specific business,
are released and discharged.
CITY OF YAKIMA
Cindy Epperson, Director of Finance and Budget
Customer Service (509) 575-6080 ® Finance (509) 575-6070 ® Information Systems (509) 575-6098
Yakima