AMENDMENT NO. 1 TO
VINEYARD DEVELOPMENT AND MANAGEMENT AGREEMENT
THIS AMENDMENT NO. 1 TO VINEYARD DEVELOPMENT AND MANAGEMENT AGREEMENT
(this "Amendment") is entered into to be effective as of March 28,1997 by and
between HEUBLEIN, INC., a Connecticut corporation ("Heublein") and XXXXXX
VINEYARDS AND MANAGEMENT CO., a California corporation ("Xxxxxx").
RECITALS
X. Xxxxxxxx and Xxxxxx are parties to that certain Vineyard
Development and Management Agreement dated as of December 1, 1995 (the
"Original Agreement"), covering certain properties owned or leased by
Heublein and described therein as the "Development Property" and the "Managed
Properties," and collectively as the "Properties." (Defined terms used in
this Amendment and not otherwise defined herein shall have the respective
meanings assigned to them in the Original Agreement.)
X. Xxxxxxxx is also the owner of that certain property consisting of
approximately 147.91 acres more specifically described on EXHIBIT 1 hereto
(which property is referred to herein as the "Additional Property").
Heublein desires to engage Xxxxxx, and Xxxxxx desires to be engaged, to
redevelop, manage and farm the Additional Property as a winegrape vineyard by
including the Additional Property as one of the "Properties," and as a part
of the "Development Property," under the Original Agreement.
C. The parties desire to repay the Development Loan described in the
Original Agreement and obtain a new loan from a new lender, which new loan
will increase the amount of the credit facility by an amount necessary to
develop the Additional Property. In connection therewith, the Letter of
Credit will be replaced with a new letter of credit as provided herein.
D. In connection with the matters described in Recitals B and C
above, the parties wish to amend the Original Agreement in the manner
provided herein.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
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1. REDEVELOPMENT, MANAGEMENT AND FARMING OF ADDITIONAL PROPERTY.
1.1 ADDITIONAL PROPERTY TO BECOME A PART OF THE DEVELOPMENT
PROPERTY. Effective as of March 28, 1997 (the "Effective Date"), the
Additional Property shall become a part of the Development Property under
the Original Agreement and accordingly the Additional Property shall be
redeveloped, farmed and managed by Xxxxxx as an independent contractor in the
same manner as the Development Property and in compliance with all of the
terms and provisions of the Original Agreement, except as otherwise expressly
provided in this Amendment. Without limiting the foregoing, Xxxxxx expressly
acknowledges and agrees that all of the duties, responsibilities and
reporting requirements of Xxxxxx set forth in the Original Agreement with
respect to the Development Property shall apply as of the Effective Date with
respect to the Additional Property, except as otherwise expressly provided in
this Amendment.
1.2 REVISED DEVELOPMENT PLAN. The redevelopment of the Additional
Property as a winegrape vineyard shall be conducted in accordance with, and
Xxxxxx agrees to comply with the requirements and take the actions which are
set forth in, the "Three Year Development Plan" attached hereto as EXHIBIT 2.
As of the Effective Date, the term "Development Plan" as used in the
Original Agreement shall mean the Three Year Development Plan attached hereto
as EXHIBIT 2 together with the original Development Plan attached to the
Original Agreement as Exhibit B.
1.3 PLANS AND BUDGETS. The Plans and Budgets described in the
Original Agreement to be submitted by Xxxxxx to Heublein shall include, as of
the Effective Date, the Additional Property, with information in such Plans
and Budgets to be separately stated for the Additional Property. Attached
hereto as EXHIBIT 3A is the Budget for the Managed Properties for the period
December 1, 1996 through November 30, 1997, which has been approved by
Heublein. The parties agree that this Budget is a maximum Budget for such
period with respect to the Managed Properties and shall not be exceeded by
Xxxxxx unless approved in advance in writing by Heublein. Attached hereto as
EXHIBIT 3B is the Budget for the Development Property for the period
commencing December 1, 1996 and ending November 30, 1997, which has been
approved by Heublein and which shall likewise be a maximum Budget for such
period. All of the requirements and limitations set forth in the Original
Agreement with respect to Plans and Budgets for the Properties (including
without limitation requirements relating to information to be contained in
such Plans and Budgets, Heublein's approval rights, and the obligation of
Xxxxxx to perform in accordance with such Plans and Budgets), shall also
apply as of the Effective Date with respect to that portion of each Plan and
Budget which covers the Additional Property.
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1.4 INFORMATION AND REPORTS. All notices, reports, statements,
demands, requests, claims and inquiries to be provided by Xxxxxx to Heublein
under the Original Agreement (including without limitation the Reports
described in Section 4.10 thereof) shall apply to and be provided with
respect to the Additional Property as of the Effective Date.
1.5 INSURANCE. All insurance to be provided under Section 12 of
the Original Agreement shall also be provided with respect to the Additional
Property as of the later of the date of execution hereof and the Effective
Date, and Xxxxxx shall provide to Heublein insurance certificates or policies
under Section 12.2C of the Original Agreement, evidencing compliance with
Section 12 of the Original Agreement and this Section 1.5.
2. DEVELOPMENT FINANCING.
2.1 NEW DEVELOPMENT LOAN. Concurrently with the execution and
delivery of this Amendment, the Development Loan described in the Original
Agreement is being repaid in full and replaced by a $7,500,000 credit
facility (the "New Development Loan") obtained by Xxxxxx from Bank of
America, NT&SA (together with any successor or participant with such lender,
the "New Lender"), pursuant to which the New Lender has (i) advanced to
Xxxxxx the sum of $2,845,342.98, which has been used to repay in full the
Development Loan described in the Original Agreement, and (ii) agreed to lend
Xxxxxx up to an additional $4,654,657.02 for the redevelopment of the
Development Property (including up to $2,000,000 for the Additional
Property). In order to facilitate the making of, and to provide security
for, the New Development Loan, Heublein has provided to the New Lender a
standby letter of credit in the amount of $7,612,500 (together with any
modifications, renewals or replacements thereof, the "New Letter of Credit").
Accordingly, as of the Effective Date, (a) the terms "Development Loan,"
"Lender," and "Letter of Credit" as used in the Original Agreement shall
refer to the New Development Loan, the New Lender and the New Letter of
Credit, respectively, (b) the term "Development Loan Documents" shall refer
to all of the documents and instruments executed and delivered by Xxxxxx
(and/or any of its Affiliates) in connection with the New Development Loan,
(c) the term "Development Loan Advance" shall refer to amounts under the New
Development Loan funded by the New Lender in installments as redevelopment
proceeds, and (d) the term "Development Loan Repayment Schedule" shall refer
to the schedule set forth in said Development Loan Documents for repaying the
New Development Loan. Pursuant to Section 3.7 of the Original Agreement,
Heublein hereby consents to the New Development Loan and the Development Loan
Documents in connection therewith.
2.2 AMENDMENT OF SECTION 3.3. Section 3.3 of the Original
Agreement shall be amended to read in full as follows as of the Effective
Date:
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"3.3 REPAYMENT OF DEVELOPMENT COSTS. In
consideration for Xxxxxx'x redeveloping the Development
Property in the manner provided in this Agreement, and subject
to the provisions of Section 3.4, Heublein shall pay to Xxxxxx
an amount (the "Repayment Amount") equal to the aggregate
principal amount borrowed under the Development Loan (the
"Principal Amount") and all interest accrued thereon (but
excluding the loan fee in the amount of $37,500 payable to the
Lender upon execution of the Development Loan Documents and
interest amounts accrued and payable with respect to the
Principal Amount prior to January 5, 2000, which amounts are
payable from the proceeds of the Development Loan and are or
will be included in applicable Budgets); PROVIDED, HOWEVER, that
in no event will the Principal Amount exceed $6,300,000 plus
accrued interest unless Heublein otherwise expressly agrees
in writing. The Repayment Amount shall be paid to Xxxxxx in
immediately available funds as follows: (a) in monthly
installments commencing January 4, 2000, and continuing on the
fourth day of each month thereafter, with each such installment
to be in an amount equal to the corresponding interest owing for
each such month by Xxxxxx to the Lender under the Development
Loan Documents, and (b) in six yearly installments commencing
January 4, 2000, and continuing on January 4 of each year
thereafter, with each such installment to be in an amount equal
to the corresponding installment of principal owing for each
such year by Xxxxxx to the Lender under the Development Loan
Documents. All Repayment Amount installments (and all other
payments and prepayments of the Repayment Amount) paid by
Heublein shall be applied by Xxxxxx to amounts then owing under
the Development Loan and shall not be used for any other
purpose whatsoever. Xxxxxx hereby irrevocably authorizes
Heublein to pay all Repayment Amount installments (and all
other payments and prepayments of the Repayment Amount) to such
account or accounts as the Lender may specify and Heublein may
approve, to be applied to the Development Loan."
2.3 PROVISIONS OF ORIGINAL AGREEMENT APPLICABLE TO NEW
DEVELOPMENT LOAN. As of the Effective Date, all of the terms and provisions
of the Original
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Agreement that apply with respect to the Development Loan and the advances
and repayments thereunder shall apply to the New Development Loan and the
advances and repayments thereunder, in the same manner and with the same
effect as set forth in the Original Agreement except as set forth in Section
2.2 above and except that:
(i) Development Loan Advances (other than amounts necessary
to repay the Development Loan described in the Original Agreement,
which loan is being repaid concurrently with the execution and
delivery of this amendment) shall be taken down substantially in
accordance with EXHIBIT 4 attached hereto and shall be used solely
to make the payments under the Development Loan shown thereon and
to pay the Development costs for the redevelopment of the
Development Property in the manner provided in the revised
Development Plan and in amounts consistent with the applicable
approved budgets; it is acknowledged and understood that the
redevelopment is subject to many variables (including weather)
which may cause timing differences from month to month from the
projections set forth in the Budgets; and
(ii) the aggregate of all Development Loan Advances with
respect to the Development Property over the term of the
redevelopment shall not exceed $7,500,000, unless Heublein
otherwise expressly agrees in writing.
2.4 OPTIONAL INTEREST RATES. Without the prior written consent
of Heublein, Xxxxxx shall not select any of the optional interest rates
described in Section 1.5 and Section 2 of the Business Loan Agreement which
comprises a part of the Development Loan Documents. Heublein shall have the
right to select on behalf of Xxxxxx any such optional interest rates and
Xxxxxx will cooperate with Heublein in selecting and implementing the same.
Xxxxxx shall have no responsibility for initiating the selection of any
optional interest rate. At the time Heublein selects any such optional
interest rates on behalf of Xxxxxx, Xxxxxxxx will provide notice to Xxxxxx of
the interest rate selected.
2.5 ADDITIONAL PAYMENT. The parties acknowledge that the amount
available under the New Development Loan is approximately $128,500 less than
the total anticipated Development Loan drawdowns set forth on Exhibit 4.
Accordingly, if during the third development year the total Development Costs
are reasonably likely to exceed the available amount under the New
Development Loan, and if Xxxxxx is not then in breach of the Development Loan
Documents or the Original Agreement as amended hereby, Heublein will pay to
Xxxxxx on an as-needed basis the amount of the anticipated shortfall not to
exceed $128,500. Said payment shall be used by Xxxxxx only for the
development of the Development Property in accordance with the terms of the
Original Agreement as amended hereby.
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3. TERM.
Section 10.1 of the Original Agreement is amended by replacing
each reference to the date "November 30, 2008" with the date "November 30,
2009" and by replacing the reference to the date "May 31, 2008" with the date
"May 31, 2009".
4. FEES.
The following provisions shall apply with respect to fees to be
paid to Xxxxxx under Section 14 of the Original Agreement:
4.1 MANAGEMENT FEE. The Management Fee of $200 for each acre of
Farmed Acreage of the Properties shall commence as of December 1, 1996 with
respect to the Farmed Acreage of the Additional Property.
4.2 FINANCING FEE. The Financing Fee, at the rate and on the
payment schedule as is described in Section 14.2 of the Original Agreement,
shall be paid with respect to the New Development Loan.
4.3 CONSTRUCTION FEE. In addition to the Construction Fee
described in the Original Agreement (which Xxxxxx acknowledges has been paid
in full), Xxxxxx shall receive an additional Construction Fee in the amount
of $88,746. This additional Construction Fee shall not be paid by Heublein
but instead shall be drawn by Xxxxxx under the Development Loan in equal
installments of $44,373 with the first installment to be drawn on or after
the date of execution and delivery of this Amendment, and the second
installment to be drawn on December 1, 1997. The amount of the additional
Construction Fee so drawn by Xxxxxx shall be added to and become a part of
the Repayment Amount to be paid by Heublein in the manner provided in Section
3.3 of the Original Agreement. In the event that the Original Agreement
terminates prior to November 30, 1998, then Xxxxxx shall only be entitled to
retain as an additional Construction Fee an amount equal to the LESSER of (x)
the additional Construction Fee drawn by Xxxxxx prior to such termination or
(y) an amount equal to the product of:
(i) $88,746; and
(ii) a fraction the numerator of which is the number of
days from December 1, 1996 until the date of such termination and
the denominator of which is 730;
and Xxxxxx, in addition to any refunds of the original Construction Fee to be
made pursuant to Section 14.3 of the Original Agreement, shall promptly
refund to Heublein
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the balance of any additional Construction Fee drawn by, but not entitled to
be retained by, Xxxxxx.
4.4 TERMINATION FEE. Section 14.4 of the Original Agreement is
amended by (i) deleting the table of amounts for various termination dates
contained in that Section and replacing it with the following:
Termination Date Amount
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November 30, 1997 $674,964
November 30, 1998 $562,470
November 30, 1999 $449,976
November 30, 2000 $337,482
November 30, 2001 $337,482
November 30, 2002 $337,482
November 30, 2003 $224,988
November 30, 2004 $112,494
November 30, 2005 $29,582
November 30, 2006 or thereafter 0
and (ii) changing the denominator described therein from "612" to "749."
4.5 LOAN FEE. The parties acknowledge that the New Lender is
charging a Loan Fee in the amount of $37,500 which is payable to the New
Lender upon execution of the New Lender's Development Loan Documents. Said
Loan Fee shall be payable from the proceeds of the New Development Loan and
is included in the Budget for the period December 1, 1996 through November
30, 1997.
5. RENT FOR RESIDENCES USED BY XXXXXX.
The last sentence of Section 4.11 of the Original Agreement, as
amended by a letter agreement between the parties, shall be further amended
by increasing the monthly rent for Residence No. 1 to $475. (Rent for
Residence No. 2 shall remain at $150 per month.) Such rent increase shall be
effective as of April 1, 1997, and accordingly as of April 1, 1997, the
"$400" amount set forth in clause (ii) of Section 5.2 of the Original
Agreement shall be changed to "$625."
6. HAZARDOUS WASTE INDEMNIFICATION.
6.1 HEUBLEIN REIMBURSEMENT OBLIGATION. Reference is made to
Section 8 of that certain Business Loan Agreement of even date herewith
between Xxxxxx and the New Lender which comprises a part of the Development
Loan Documents, which Section 8 provides that Xxxxxx, on the terms set forth
therein, will indemnify the New
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Lender from certain losses or liabilities relating to "hazardous substances"
with respect to the Properties (the "Hazardous Waste Indemnification"). In
the event and to the extent that Xxxxxx is required to indemnify and hold
harmless the New Lender under the Hazardous Waste Indemnification, then
Heublein will promptly reimburse Xxxxxx for any costs or expenses incurred by
Xxxxxx in so doing; PROVIDED, HOWEVER, that Heublein shall not be required to
provide reimbursement for, or otherwise have any liability or responsibility
on account of:
(i) any indemnification or other obligation of Xxxxxx under
or relating to the Hazardous Waste Indemnification which arises
directly or indirectly from any use, generation, manufacture,
production, storage, release, threatened release, discharge or
disposal of a "hazardous substance" (as defined in the Hazardous
Waste Indemnification) by Xxxxxx or by any of Xxxxxx'x agents,
employees, contractors, representatives, affiliates, successors or
assigns; or
(ii) any breach by Xxxxxx of the provisions of Section 7 of
the Original Agreement.
6.2 NOTICE AND RIGHT TO DEFEND. In the event Xxxxxx receives
notice of or otherwise becomes aware that the New Lender is seeking to make a
claim or otherwise exercise its rights under the Hazardous Waste
Indemnification (a "Claim"), Xxxxxx shall immediately give notice thereof to
Heublein. Unless Xxxxxx acknowledges and agrees in a writing reasonably
acceptable to Heublein that Heublein has no liability or obligation, under
Section 6.1 or otherwise, with respect to the matter giving rise to the
Claim, then Heublein shall have the right to assume and control the defense
of such Claim and otherwise deal with the New Lender with respect to all
aspects of the Claim, including without limitation the right to settle such
Claim on such terms as Heublein may determine in its sole judgment; provided,
however, that if such settlement does not include an unconditional release of
Xxxxxx with respect to the matter giving rise to the Claim, such settlement
shall require the written consent of Xxxxxx, which consent shall not be
unreasonably delayed or withheld. If Heublein elects to assume the defense
of such Claim, (i) notwithstanding anything to the contrary contained herein,
Heublein shall not be required to pay or otherwise indemnify Xxxxxx against
any attorneys' fees or other expenses incurred on behalf of Xxxxxx in
connection with such Claim following Heublein's election to assume the
defense of such Claim, (ii) Xxxxxx shall fully cooperate as reasonably
requested by Heublein in the defense or settlement of such Claim, (iii)
Heublein shall keep Xxxxxx informed of all material developments and events
relating to such Claim, and (iv) Xxxxxx shall have the right to participate,
at its own expense, in the defense of such Claim. In no event will Heublein
be liable for any settlement or admission of liability with respect to such
Claim without its prior written consent.
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7. TAX WITHHOLDING; ADDITIONAL COSTS. Reference is made to Sections
4.6 and 4.7 of the Business Loan Agreement of even date herewith between
Xxxxxx and the New Lender (the "Business Loan Agreement"). Heublein and
Xxxxxx agree to reasonably cooperate so that (i) payments made the New Lender
are not subject to the foreign taxes, similar taxes or additional amounts
("collectively, "Taxes") referred to in said Section 4.6, and (ii) the Bank
does not charge to Xxxxxx any of the costs or losses referred to in said
Section 4.7 (collectively, "Costs"). If, notwithstanding such cooperation,
such payments are actually subject to any such Taxes or such Costs are
actually incurred by Xxxxxx, then (x) Heublein will promptly reimburse Xxxxxx
for all Taxes and Costs so paid by Xxxxxx, and (y) Heublein and Xxxxxx will
xxxxxx in good faith to renegotiate the Development Loan Documents and/or the
provisions of the Original Agreement as amended hereby so that no further
Taxes or Costs are paid or incurred by Xxxxxx or charged by the New Lender.
In no event will Xxxxxx make any payments to the New Lender under the
Business Loan Agreement from outside the United States.
8. REIMBURSEMENT OF CERTAIN COSTS UNDER BUSINESS LOAN AGREEMENT.
Reference is made to Sections 3.2 and 3.3 of the Business Loan Agreement.
Heublein will promptly reimburse Xxxxxx for all expenses charged by the New
Lender to, and actually paid by, Xxxxxx pursuant to said Sections 3.2 and
3.3. Xxxxxx will cooperate with Heublein in keeping such expenses as low as
reasonably possible and will provide to Heublein promptly after receipt
thereof all notices and information received by Xxxxxx with respect to such
expenses.
9. INDEMNIFICATION REIMBURSEMENT.
9.1 HEUBLEIN REIMBURSEMENT OBLIGATION. Reference is made to
Section 10.9 of the Business Loan Agreement regarding indemnification of the
New Lender by Xxxxxx (the "Indemnification"). In the event that any
indemnification is required from time to time to be made by Xxxxxx
thereunder, Heublein shall reimburse Xxxxxx upon demand for any payments made
by Xxxxxx pursuant to such Section (the "Indemnification Amounts"); provided,
however, that Heublein shall not be obligated to reimburse Xxxxxx for any
Indemnification Amounts to the extent that such Indemnification Amounts arise
or result from (i) the inaccuracy of any representation or warranty made by
Xxxxxx in the Development Loan Documents or the Original Agreement, as
amended hereby, (ii) any breach or default by Xxxxxx of the obligations under
the Development Loan Documents or the Original Agreement, as amended hereby,
or (iii) the gross negligence or willful misconduct of Xxxxxx or its agents,
representatives or contractors.
9.2 NOTICE AND RIGHT TO DEFEND. In the event Xxxxxx receives
notice of or otherwise becomes aware that the New Lender is seeking to make a
claim or otherwise exercise its rights under the Indemnification (an
"Indemnification Claim"),
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Xxxxxx shall immediately give notice thereof to Heublein. Unless Xxxxxx
acknowledges and agrees in a writing reasonably acceptable to Heublein that
Heublein has no liability or obligation, under Section 9.1 or otherwise, with
respect to the matter giving rise to the Indemnification Claim, then Heublein
shall have the right to assume and control the defense of such
Indemnification Claim and otherwise deal with the New Lender with respect
to all aspects of the Indemnification Claim, including without limitation the
right to settle such Indemnification Claim on such terms as Heublein may
determine in its sole judgment; provided, however, that if such settlement
does not include an unconditional release of Xxxxxx with respect to the
matter giving rise to the Indemnification Claim, such settlement shall
require the written consent of Xxxxxx, which consent shall not be
unreasonably delayed or withheld. If Heublein elects to assume the defense
of such Indemnification Claim, (i) notwithstanding anything to the contrary
contained herein, Heublein shall not be required to pay or otherwise
indemnify Xxxxxx against any attorneys' fees or other expenses incurred on
behalf of Xxxxxx in connection with such Indemnification Claim following
Heublein's election to assume the defense of such Indemnification Claim, (ii)
Xxxxxx shall fully cooperate as reasonably requested by Heublein in the
defense or settlement of such Indemnification Claim, (iii) Heublein shall
keep Xxxxxx informed of all material developments and events relating to such
Indemnification Claim, and (iv) Xxxxxx shall have the right to participate,
at its own expense, in the defense of such Indemnification Claim. In no
event will Heublein be liable for any settlement or admission of liability
with respect to such Indemnification Claim without its prior written consent.
10. MISCELLANEOUS.
10.1 ORIGINAL AGREEMENT TO REMAIN IN FULL FORCE AND EFFECT.
Except as expressly modified in the manner provided in this Amendment, the
Original Agreement shall remain unchanged and shall remain in full force and
effect in accordance with its terms.
10.2 OTHER PROVISIONS. The miscellaneous provisions set forth
in Section 15 of the Original Agreement (including without limitation
provisions dealing with assignment, interpretation, delivery of statements
and notices, arbitration of disputes, severability, governing law and waiver)
shall remain in full force and effect and shall be deemed to apply to the
provisions of this Amendment. The Original Agreement and this Amendment
(together with the exhibits thereto and hereto) supersede all prior
agreements between the parties with respect to the subject matter thereof and
hereof and constitute a complete and exclusive statement of the terms of the
agreements between the parties with respect to the subject matter thereof and
hereof. The Original Agreement, as amended by this Amendment, may not be
amended or terminated (other than in accordance with its terms) except by a
written agreement executed by the parties hereto.
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IN WITNESS WHEREOF, the parties have executed this Amendment to be
effective as of the date first above written.
HEUBLEIN, INC.
By /s/ M.A. Xxxxxx
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M.A. Xxxxxx
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[Printed Name and Title]
XXXXXX VINEYARDS AND MANAGEMENT CO.
By /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Chairman and CEO
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[Printed Name and Title]
