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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