ADMINISTRATIVE SERVICES AGREEMENT
This Agreement is entered into as of January 1, 1998 between Xxxxx Company
("Xxxxx") and Central Coast Wine Company dba The Xxxxx Wine Group ("THWG").
RECITALS: Xxxxx Company is a California corporation with headquarters
located at 0000 Xxxxxxx Xxxxxx, Xxxxxxxxxx Xxxx, Xxxxxxxxxx. Central Coast
Wine Company-dba The Xxxxx Wine Group is a California corporation with
headquarters located at 000 Xxxxx Xx. Xxxx X Xxxxxxx, Xxxxxxxxxx.
The Companies agree that certain administrative services can be provided for
more efficiently when resources are combined rather than performed
independently. Further, it is agreed that Xxxxx Company can provide certain
management expertise not currently available at THWG. Therefore, the
Companies are entering into this Agreement whereby Xxxxx will provide certain
management services to THWG on a fee basis.
It is understood that Xxxxx currently has three operating divisions which
receive similar services to those which will be provided to THWG. These
services are and will be provided by the Corporate Management group of Xxxxx
to the three operating divisions of Xxxxx as well as to THWG on an equal
basis.
SERVICES: Services to be provided on an ongoing basis include but are not
limited to the following:
- 401-K administration and benefits oversight
- Human resource consulting
- Management of workers compensation insurance and claims
- Tax preparation and filing
- General liability and other insurance coverage management
- Communication services
- Travel management services
- Audit coordination and review
- Financial management and consulting
- Trademark and legal assistance
- Accounting services
- MIS consulting services
- Accommodation of Southern California THWG sales office
- Management services provided by Chairman of the Board and Vice Chairman
REIMBURSEMENT FOR SERVICES: In order to equitably allocate the expense for the
1
charges provided by the Xxxxx Corporate Management group, a formula has been
developed with the intention that the three operating divisions of Xxxxx and
THWG would share equally in the cost of the services based on the size of
their respective operations. This formula has two components which are based
on the number of employees in the operating entity and the assets employed by
that entity. This formula takes into account differences that may occur
between asset intensive versus labor intensive operating entities.
The charge for 1998 has been developed based on the submitted budgets of the
four operating entities and is shown for THWG in Attachment 1a & 1b. The
"budgeted" charge for the THWG for 1998 is $1,142M. The labor component of
this charge will not vary throughout the year and will be $46M a month. The
asset component of this charge will vary based on the net operating assets
that are employed in the month by the division. Attachment lb shows the
asset charge based on the "budgeted" net operating assets employed by THWG
for 1998.
The Xxxxx Corporate Management Group will xxxx THWG monthly 30 days after the
month end and payment will be due by the 15thof the following month.
TERM: The provisions of this agreement are effective for the calendar
year 1998. The agreement will automatically renew on the same basis as
outlined above unless terminated by either party, by given written notice no
later than November 1, 1998.
ENTIRE AGREEMENT: This contract constitutes the entire agreement between
Xxxxx and THWG concerning the management services to be provided by Xxxxx to
THWG. Any agreements or representations respecting the services to be
performed and payment thereof not expressly set forth in this contract shall
have no effect, except for a subsequent written modification signed by both
parties.
AMENDMENT OF CONTRACT: This contract may be amended or modified at any time
with respect to any provision by a written instrument executed by Xxxxx and
THWG.
ATTORNEY'S FEES: If Xxxxx or THWG bring any legal action or seek arbitration
regarding any provision of this agreement, the prevailing party in the
litigation or arbitration shall be entitled to recover reasonable attorneys'
fees from the other party, in addition to any other relief that may be
granted. This provision applies to the entire agreement.
NOTICES: Any notice required or permitted to be given under this agreement
shall be written, and may be given by personal delivery or by registered or
certified mail, first class postage pre-paid, return receipt requested.
Notice
2
shall be deemed given upon actual receipt in the case of personal delivery,
or upon mailing. Mailed notices shall be addressed as follows, but each
party may change address by written notice in accordance with this paragraph:
To Xxxxx: Xxxxx Company
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxx
To THWG: The Xxxxx Wine Group
000 Xxxxx Xx., Xxxx X
Xxxxxxx, XX 945 1 0
Attn: Xxxxxx Xxxxxxxxx
ASSIGNMENT PROHIBITED: Neither Xxxxx or THWG shall assign any right or
interest arising under this agreement without the prior written consent of
the other.
GOVERNING LAW: This contract shall be governed by and construed in
accordance with the laws of the State of California.
Executed on March 26, 1998 at Huntington Park, California.
Xxxxx
By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------
Xxxxxxx X. Xxxxxxxxx
President
The Xxxxx Wine Group
By: /s/ Warner X. Xxxxx
----------------------------
Warner X. Xxxxx
Chairman and CEO
3
