VINEYARD MANAGEMENT AGREEMENT
This Vineyard Management Agreement (this "Agreement") is made and entered
into as of the 1st day of January, 1997, by and between XXXXXX VINEYARDS AND
MANAGEMENT CO., a California corporation ("Xxxxxx"), CANANDAIGUA WEST, INC., a
New York corporation ("Canandaigua"), and CANANDAIGUA WINE COMPANY, INC., a
Delaware corporation ("CWC").
A. Canandaigua, as lessee, proposes to enter into a lease (the "Lease")
with Xxx Xxxxx and Xxxxxxxx X. Xxxxx as trustees under declaration of trust,
dated August 16, 1989 and Xxxxxxxx X. Xxxxx and Xxxxxxx Xxxxxxxx (also known as
Xxxxxxx Xxxxxxxx) successor co-trustee of the testamentary trust of Xxxxxx
Xxxxxxxx, deceased, and Xxx Xxxxx, also known as Xxxxxx X. Xxxxx, Xx., and
Xxxxxxxx X. Xxxxx, husband and wife, as lessor (the "Lessor"), for four hundred
forty-four and seven-tenths (444.7) acres of real property situated in Monterey
County, California, which property is more particularly described in Exhibit A
attached hereto (the "Property"), with rent commencing at the rate of $200.00
per acre per year as of January 1, 1997.
B. Canandaigua desires to engage Xxxxxx to develop, farm and manage the
Property as a wine grape vineyard (the "Vineyard") and Xxxxxx desires to perform
such services, all on the terms and conditions set forth in this Agreement.
AGREEMENT
In consideration of the mutual covenants contained herein and other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
SECTION 1. MANAGEMENT OF THE VINEYARD
1.1 ENGAGEMENT OF XXXXXX. On the terms and conditions set forth in this
Agreement, Canandaigua hereby engages Xxxxxx as an independent contractor to
develop, farm and manage approximately four hundred forty-four and seven-tenths
(444.7) acres of Vineyard, as specifically described in Exhibit A, on an
exclusive basis during the term of this Agreement, and Xxxxxx hereby accepts
such engagement.
Xxxxxx shall NOT be required to farm and manage the Property as its sole
and exclusive function, and it retains the right to have other business
interests and may engage in other activities, including but not limited to
performance of farm management services for itself and for parties other than
Canandaigua, whether or not in conflict with the business interests and
activities of Canandaigua. Xxxxxx, on behalf of itself and its employees,
agents and independent contractors, agrees to keep confidential, and not to
disclose to any third parties information about Canandaigua ("Confidential
Information"), whether learned in the course of performing its duties hereunder
or otherwise. Confidential Information shall include, without limitation,
information about the Vineyard, varieties planted, yields, costs and any other
data pertaining thereto; provided, however, that Confidential Information shall
not include any information that (a) is generally available to or known by the
public or (b) was available to Xxxxxx prior to
disclosure by Canandaigua or becomes available to Xxxxxx on a non-confidential
basis, provided that the source of any such information was not known by Xxxxxx
to be bound by any confidentiality agreement or obligation to Canandaigua.
1.2 DUTIES AND RESPONSIBILITIES OF XXXXXX. Notwithstanding the engagement
of Xxxxxx in other activities as set forth in Section 1.1 above, in developing,
farming and managing the Vineyard, Xxxxxx agrees to perform or to cause to be
performed in a timely, efficient and economical manner, all acts and services
which reasonably may be necessary or desirable in order to ensure that the
Property is cared for, maintained and operated as a wine grape vineyard. Xxxxxx
hereby represents and warrants that it has, or will obtain, all necessary
licenses and permits to perform all services and tasks required of Xxxxxx
hereunder. In performing its duties and obligations hereunder, Xxxxxx shall
follow the viticultural practices reasonably necessary to produce fruit of
premium quality and fully developed varietal character, and shall do the
following:
A. Prepare for planting and plant such wine grape varieties as may
be determined by Canandaigua as of the date hereof and from time
to time;
B. Prune, sucker and, if necessary, thin the Vineyard;
C. Irrigate, fertilize and cultivate the Vineyard;
D. Control weeds, diseases and pests in the Vineyard;
E. Care for and maintain xxxxx, pumps, pipelines, irrigation systems
and other improvements as reasonably necessary;
F. Use the irrigation system that is shared with other parties so
that all power charges incurred by or on behalf of Canandaigua
are accounted for and reported to Canandaigua in a timely manner;
G. Harvest the grapes grown on the Vineyard and arrange for delivery
of them to such point of delivery as Canandaigua shall designate;
H. Provide labor, machinery, equipment and materials reasonably
required or useful to manage the Vineyard to accomplish the
foregoing;
I. Comply with the terms of the Lease, as such terms relate to
Canandaigua's use of the Property; and
J. Manage the frost protection system.
1.3 AUTHORITY OF MANAGER. Xxxxxx shall have general power and authority
to perform its duties and obligations hereunder, and to act in all matters
relating to or concerning the care, maintenance and operation of the Property as
a wine grape vineyard.
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1.4 XXXXXX TO CONSULT WITH CANANDAIGUA. Xxxxxx agrees to keep Canandaigua
or its designated agent fully advised on a monthly basis, and at such other
times as the circumstances reasonably require, of the progress of the Vineyard.
Xxxxxx specifically agrees to advise Canandaigua or its designated agent of
all events which materially affect or might reasonably be expected to materially
affect the growth or development of the Vineyard and/or the amount or quality of
the wine grapes produced and harvested therefrom. To this end, Xxxxxx agrees to
consult with Canandaigua or its designated agent as to any material decisions
which are NOT included in the Plan or the Budget (as those terms are defined in
Section 1.6 below), and which may arise with respect to the Vineyard, and to
obtain the written consent of Canandaigua or of its designated agent prior to
making and implementing any such decision.
Canandaigua may, from time to time, provide reasonable instructions to
Xxxxxx with respect to specific aspects of the development, care and maintenance
of the Vineyard, and Xxxxxx shall follow such instructions. If such
instructions are outside of the scope of the then current Plan and Budget and
require additional expenditures, Canandaigua and Xxxxxx shall negotiate, in good
faith, an adjustment, based on the reasonable cost to Xxxxxx of carrying out
such instructions, to the Budget.
The parties acknowledge and agree that the amounts (the "Yield Amounts") of
the yields per net vine acre set forth in Sections 5.3C and 8.3 are based upon
the assumption that certain viticultural practices (including, without
limitation, rootstock and clonal selection, trellis system design, irrigation
and pruning) will be followed with respect to the Vineyard. In the event that
Canandaigua shall instruct Xxxxxx to utilize viticultural practices different
from those upon which the Yield Amounts set forth in those Sections were
determined, the net vine acres that are the subject of such instructions shall
be excluded from the computation of any Yield Amounts under Sections 5.3C and
8.3. Upon receipt by Xxxxxx of any such differing instructions, Xxxxxx shall
provide written notice to Canandaigua confirming the net vine acres affected by
such instruction and that such net vine acres will be excluded from the
computation of Yield Amounts under Sections 5.3C and 8.3.
1.5 EMERGENCIES. Notwithstanding the fact that Xxxxxx may be required to
obtain the consent of Canandaigua or its designated agent under this Agreement
before taking certain actions, in the event emergency circumstances arise with
respect to the Vineyard which would require prompt action on the part of a
reasonably prudent vineyard xxxxxx in Monterey County, and in the event time
does not reasonably permit the obtaining of any required consent hereunder or
such consents otherwise are not reasonably obtainable, Xxxxxx may take all
actions which under the circumstances would be taken by a reasonably prudent
vineyard xxxxxx in Monterey County to prevent or mitigate damage, and any such
actions shall be taken in accordance with the standards set forth herein.
1.6 PLAN AND BUDGET SUBMITTED BY XXXXXX BEFORE THE GROWING SEASON. On or
before December 31 of each year during the term of this Agreement, Xxxxxx agrees
to submit to Canandaigua a written plan (the "Plan") and budget (the "Budget")
covering the next growing season. Representatives of Xxxxxx and Canandaigua
will meet to discuss, revise (if necessary) and approve the Plan and Budget
within ten (10) days following its submission by Xxxxxx to
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Canandaigua. The parties agree that Canandaigua shall have final approval of
the Budget and the Plan. Notwithstanding that Canandaigua may not have approved
the Plan and Budget for any season, Xxxxxx may commence pruning in December if,
in Xxxxxx'x judgment, such commencement is reasonably necessary to complete
pruning for the next growing season in a timely manner.
Attached as Exhibit B hereto and made a part hereof is the Budget for the
period January 1, 1997 through December 31, 1997 (the calendar year which
defines the 1997 Vineyard management year and each calendar year thereafter,
hereinafter referred to as "Farm Year") which has been approved by Canandaigua.
Such Exhibit B shall be modified annually to reflect any agreed changes to the
Budget for the next following growing season.
Attached as Exhibit C hereto and made a part hereof is the Plan, as
prepared and submitted by Xxxxxx for the 1997 Farm Year, which has been approved
by Canandaigua. Such Exhibit C shall be modified annually to reflect any agreed
changes to the Plan for the next following growing season.
1.7 THE PLAN. The initial Plan (attached as Exhibit C) does, and future
Plans (to be attached as replacements for Exhibit C) shall, set forth the
following information with respect to the subject growing season:
A. The approximate amount and timing of irrigation which Xxxxxx
expects to undertake under normal conditions;
B. The approximate amount and types of nitrogen-containing
fertilizers and other nutrients which Xxxxxx expects to apply,
and the expected times of application;
C. The pruning and vine training techniques to be followed and any
other specific plans for vine management;
D. A plan to control weeds, diseases, pests and animals on the
Property, including birds; and
E. Such other information as may be reasonably required concerning
viticultural practices to be followed by Xxxxxx.
1.8 THE BUDGET. The initial Budget (attached as Exhibit B) does, and
future Budgets (to be attached as replacements for Exhibit B) shall, set forth,
as to each month, an estimate of expenditures for each of the items constituting
the Direct Farming Costs (as defined below) with respect to the Vineyard which
shall be funded by Canandaigua to Xxxxxx. For purposes of this Agreement, the
term "Direct Farming Costs" shall mean all ordinary and necessary expenses for
the operation of the Vineyard, including but not limited to:
A. Development of the Vineyard (as set forth in Section 2 below);
B. Planting, grafting, training and trellising;
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C. Pruning, tying, suckering and thinning;
D. Pest control including birds, rodents and insects;
E. Spray operations including herbicides, mildew and disease
control;
F. Cultivation, fertilization, mowing, hoeing and vine trimming;
G. Irrigation;
H. General Vineyard maintenance, fence repair and erosion control;
I. Pro rata share of pumps, water lines and reservoir; and
J. Harvest and delivery.
Direct Farming Costs shall NOT include amounts paid by Xxxxxx for salaries,
bonuses, vacation pay, insurance and other fringe benefits to its office and/or
senior management personnel. Xxxxxx undertakes and agrees that the Direct
Farming Costs billed to Canandaigua shall be no greater than the going rate for
such labor, equipment, or services in Monterey County, and Canandaigua may, at
its option, obtain bids for such elements of labor, equipment or services of
equivalent quality as Canandaigua may desire to satisfy itself of the
appropriateness of the amounts of the Direct Farming Costs. If Canandaigua
identifies elements of Direct Farming Costs of lower cost, Canandaigua shall
consult with Xxxxxx regarding the use of such providers of labor, equipment or
services and Xxxxxx shall, in its reasonable business judgment, determine
whether or not to use such providers or whether to reduce its costs to an
equivalent amount.
1.9 PERFORMANCE OF OBLIGATIONS IN ACCORDANCE WITH PLAN AND BUDGET. Upon
adoption of a Plan and a Budget by Xxxxxx and Canandaigua in accordance with
Section 1.6 above, Xxxxxx shall perform its obligations hereunder in accordance
therewith.
1.10 REPORT BY XXXXXX AFTER GROWING SEASON. Xxxxxx agrees to supply to
Canandaigua on or before December 31 of each year during the term hereof a
written report (the "Report") setting forth in reasonable detail for the Farm
Year then completed, the major farming activities relating to fertilizer,
irrigation, pesticides, environmental or legal matters, yields and sugar
contents with respect to the Vineyard, and to make available to Canandaigua or
its designated agent, all records for such Farm Year concerning the tasks
described in Section 1.8 above. The foregoing records shall also contain
information concerning other significant viticultural practices followed by
Xxxxxx which Canandaigua may reasonably request from time to time during the
term hereof.
SECTION 2 DEVELOPMENT OF THE VINEYARD
2.1 DEVELOPMENT DUTIES AND RESPONSIBILITIES. The Property will be in a
"Development Period" for the 1997 and 1998 Farm Years. During the Development
Period, Xxxxxx will commit the resources reasonably necessary to carry out its
duties and responsibilities under this Section as listed below:
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A. Design preliminary vineyard layout;
B. Plan vineyard development and construction costs and prepare
detailed budgets;
C. Secure vineyard material, supply and service bids;
D. Order, receive and install vineyard materials;
E. Coordinate and supervise vineyard service contractors during the
ripping and surveying of the Property and the irrigation system
installation;
F. Supervise the installation of the trellis system, drip system
emitters and planting;
G. Care for the newly planted vines such that they are prepared for
spring whip grafting;
H. Oversee the preparation and implementation of grafting as
required into dormancy; and
I. Exercise reasonable diligence in the continuing demands of a
newly planted vineyard by maintaining replant and regraft
programs, animal control, weed control, timely irrigations and
other action reasonably necessary to the success of a new
vineyard.
2.2 GRAFTING. During the Development Period, Xxxxxx agrees to retain only
contract grafters who will guarantee that ninety percent (90%) of the grafts of
the varietals designated by Canandaigua will successfully take hold, which
guarantee shall include the regrafting of any shortfall without additional
charge. In the event of such a shortfall, Xxxxxx shall diligently prosecute the
regrafting and enforcement of such guarantee on behalf of Canandaigua.
SECTION 3. EXPENSE STATEMENTS AND PAYMENTS
3.1 REIMBURSEMENT OF DIRECT FARMING COSTS. In addition to paying Xxxxxx
the compensation provided in Section 8 below, Canandaigua shall advance to
Xxxxxx, on a monthly basis, all Direct Farming Costs as set forth in the Budget.
3.2 MONTHLY REQUIREMENT. On or before the fifth business day of each
month, Canandaigua shall advance to Xxxxxx an amount equal to that month's
approved Budget amount plus any out-of-pocket expenses incurred by Xxxxxx or
less any advanced funds not expended by Xxxxxx in accordance with a previously
received Budget Reconciliation (as defined below). Such funds shall be
deposited by Canandaigua in an account of which Xxxxxx shall have unrestricted
withdrawal authority for the purposes set forth in this Agreement. Such account
shall not be used by Xxxxxx for any other purpose, nor shall the assets of such
account constitute assets of Xxxxxx. Regular statements of such account shall
be provided to both Xxxxxx and Canandaigua. Xxxxxx shall have the authority to
transfer funds from such account to its own account for further
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disbursement in accordance with the terms of this Agreement. On or before the
twentieth calendar day of each month, Xxxxxx shall deliver to Canandaigua a
written statement (the "Budget Reconciliation") which shall include in detail,
for the month just ended, the Direct Farming Costs paid by Xxxxxx, any
out-of-pocket expenses incurred by Xxxxxx in excess of that month's advanced
budget amount and any advanced funds not expended in that month. It is
acknowledged and understood that farming is subject to many variables (including
weather) which may cause timing differences from month to month from the
projections set forth in the Budget.
SECTION 4. ACCESS TO INFORMATION
4.1 WHAT XXXXXX MUST MAKE AVAILABLE TO CANANDAIGUA. Xxxxxx agrees to make
available and to supply to Canandaigua, following reasonable notice and during
normal business hours, all information, documents, records and reports which
Canandaigua reasonably may request in order to permit Canandaigua or its
designated agents to verify or determine:
A. Any of the amounts, calculations or items set forth in the Budget
or on any of the statements described in Section 1.6 above;
B. Any of the viticultural practices employed by Xxxxxx with respect
to the Property;
C. Compliance by Xxxxxx with the terms and provisions of this
Agreement;
D. Compliance by Xxxxxx with all federal, state and local laws and
regulations; and
E. That Xxxxxx has in effect all required licenses and permits
reasonably required to perform its duties and obligations
hereunder.
In addition, Xxxxxx agrees that Canandaigua may, from time to time, contact the
regular auditors of Xxxxxx to obtain verification of the financial solvency of
Xxxxxx.
SECTION 5. TERM AND TERMINATION
5.1 TERM. This Agreement shall become effective as of the date first
written above and shall remain in effect until December 31, 2013. This
Agreement shall continue in effect after December 31, 2013 on a rolling two
(2)-year basis, such that, at any time on or after December 31, 2011, either
party may terminate this Agreement by providing two (2) years prior written
notice to the other party.
5.2 TERMINATION FOR CAUSE. Either party (hereinafter, the "Nonbreaching
Party") shall have the right to terminate this Agreement for cause in the event
the other party (hereinafter, the "Breaching Party"):
A. breaches any material provision or condition of this Agreement,
and such breach remains uncured for a period of thirty (30) days
following the
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Nonbreaching Party giving written notice of such breach to the
Breaching Party or, if any such breach is curable, but not
reasonably susceptible of cure within such thirty (30) day
period, the Breaching Party shall fail to take steps reasonably
designed to cure such breach and such breach is not cured as
expeditiously as reasonably possible and within such period of
time as may be mutually agreed upon by the parties at the time of
such breach;
B. files a voluntary petition in bankruptcy; or
C. is the subject of an involuntary petition in bankruptcy or has a
trustee or receiver appointed with respect to all or
substantially all of its assets, provided that such petition or
appointment is not dismissed within ninety (90) days of such
filing or appointment.
5.3 ADDITIONAL TERMINATION EVENTS. Further, Canandaigua may terminate
this Agreement by providing written notice to Xxxxxx after the occurrence of any
of the following:
A. Xxxxxx X. Xxxxxx, members of his family and Xxxx Xxxxxxxx,
together, shall fail to beneficially own, directly or indirectly,
at least 51% of the capital stock of Xxxxxx; Xxxxxx shall provide
prompt written notice to Canandaigua of any such failure;
B. the termination of the Lease, other than as the result of the
intentional, material breach or material default of Canandaigua;
or
C. for any Farm Year ending December 31, 2005 or thereafter, if
(subject to Section 1.4) the average yield of wine grapes from
the Property, as a whole, for the just completed Farm Year and
the immediately preceding two (2) Farm Years is less than six and
one-fourth (6.25) tons per net vine acre per Farm Year.
SECTION 6. HAZARDS OF FARMING
6.1 XXXXXX NOT LIABLE FOR CERTAIN DAMAGE OR LOSS. Except as expressly set
forth in Section 1.6 (with respect to the delivery of annual Plans and Budgets),
Section 1.10 (with respect to the delivery of annual Reports) and Section 3.2
(with respect to the delivery of monthly Budget Reconciliations) hereof, Xxxxxx
shall not be liable to Canandaigua for any failure to perform any of its duties
or obligations hereunder, or for any loss or damage of any kind, so long as such
failure to perform or loss or damage is the result of any act of God or any
normal hazard of farming, including, without limitation, rain, hail, heat,
frost, drought, flooding, windstorm or other action of the elements, strike,
work slow-down, worker unavailability, fire, truck, car, rail, labor, equipment
or material shortage or unavailability, freight embargo, governmental action or
any other cause beyond Xxxxxx'x reasonable control.
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SECTION 7. LIABILITY AND INSURANCE
7.1 LIABILITY. Xxxxxx shall indemnify and hold Canandaigua harmless
against any claim, cause of action, damages or expense of any nature whatsoever
(including reasonable attorneys' fees and expenses) arising in connection with a
breach of this Agreement by Xxxxxx, except to the extent any such claim, cause
of action, damages or expense is proven in a final judgment to have been caused
by the negligence or the intentional act or omission of Canandaigua; provided,
however, that in no event shall Xxxxxx be liable for, or be required to
indemnify and hold Canandaigua harmless from, special, incidental or
consequential damages (including, without limitation, lost profits).
7.2 XXXXXX TO PROVIDE INSURANCE. Xxxxxx shall, at its expense, maintain
throughout the term hereof the following insurance policies:
A. Liability. Xxxxxx shall provide all risk insurance with respect
to its operations on and in connection with the Property, naming
Canandaigua as an additional insured, in amounts not less than
$1,000,000 for each occurrence, and $10,000,000 in the aggregate.
Xxxxxx shall provide Canandaigua with a certificate of insurance
evidencing that such insurance is in effect and providing for at
least thirty (30) days advance notice to Canandaigua of its
cancellation. Xxxxxx shall also require that its contractors or
subcontractors employed in the operations on the Property carry
liability insurance, reasonably acceptable to Xxxxxx, and shall
maintain in its files written documentation of such coverage.
B. Worker's Compensation. Xxxxxx shall provide Worker's
Compensation insurance insuring Xxxxxx'x employees engaged in the
operation of the Property under this Agreement. Xxxxxx shall
also require that its contractors or subcontractors employed in
the operations of the Property carry Worker's Compensation
insurance for the benefit of their employees, and shall maintain
in its files written documentation of such coverage.
7.3 COMPLIANCE WITH LAW.
X. Xxxxxx shall comply in all material respects with all statutes,
ordinances, regulations, rules and other enactments by federal,
state, local or other regulatory agencies having jurisdiction
over the Property including, without limitation, all
Environmental Laws. Xxxxxx and Canandaigua shall cooperate in
obtaining all necessary permits and approvals required for the
development and operation of a Vineyard on the Property.
B. During the term of this Agreement, Xxxxxx shall use only
herbicides, pesticides and other treatments that are approved by
the State of California for use in connection with the
development and operation of a Vineyard on the Property at the
relevant time.
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C. Definitions:
"ENVIRONMENTAL LAWS" means all federal, state and local
environmental, land use, zoning, health, chemical use, safety and
sanitation laws, statutes, ordinances and codes relating to the
protection of the environment and/or governing the use, storage,
treatment, generation, transportation, processing, handling,
production or disposal of Hazardous Substances and the rules,
relations, policies, guidelines, interpretations, decisions,
orders and directives of federal, state, and local governmental
agencies and authorities with respect thereto.
"HAZARDOUS SUBSTANCES" means, without limitation, any flammable
explosives, radon, radioactive materials, asbestos, urea
formaldehyde foam insulation, polychlorinated biphenyls,
petroleum and petroleum based products, methane, hazardous
materials, hazardous wastes, hazardous or toxic substances or
related materials, as defined in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. Sections 9601, ET SEQ.), the Hazardous Material
Transportation Act, as amended (49 U.S.C. Sections 1801, ET
SEQ.), the Resource Conservation and Recovery Act, as amended (42
U.S.C. Sections 6901, ET SEQ.), or any other applicable
Environmental Law.
X. Xxxxxx undertakes and agrees to indemnify and hold harmless
Canandaigua against any and all costs, damages, claims, suits,
actions or other liabilities (including reasonable attorneys'
fees) incurred by or threatened against Canandaigua in connection
with a breach by Xxxxxx of Xxxxxx'x undertakings in this
Section 7.3; provided however, that such indemnity does not
include any costs, damages, claims, suits, actions or other
liabilities that may at any time be imposed upon, incurred by or
asserted or awarded against Canandaigua as the result of or
relating to any action or omission of Canandaigua in connection
with the Property.
SECTION 8 MANAGEMENT FEE
8.1 MONTHLY FEE. The monthly management fee (the "Management Fee") to be
paid, in advance, by Canandaigua to Xxxxxx for services rendered hereunder shall
be an amount for each acre of the Property equal to the amount set forth below
for the applicable Farm Year:
FARM YEAR MONTHLY FEE PER ACRE
1997 $[ ]*
1998 $[ ]*
1999 and each
year thereafter $[ ]*
The amounts set forth in the foregoing table are referred to herein as the
"Basic Management Fees." Notwithstanding the foregoing, in the event that
Canandaigua elects to have all or any
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*Confidential Treatment Requested for Redacted Portion.
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part of the Vineyard replanted after Farm Year 1998, the Management Fee for the
ten (10)-month period commencing the month Xxxxxx begins preparation of the
Vineyard for such replanting shall be $[ ]* per acre for those acres being
replanted. The Management Fee is to be included in the Budget and its payment
procedure is described in Section 3.2 above.
8.2 RENEGOTIATION OF MANAGEMENT FEE. The parties acknowledge that the
United States has had a nearly continuous history of monetary inflation in the
past fifty-five years. Therefore, provision should be made for an adjustment in
the Management Fee to provide protection to Xxxxxx against unforeseen
devaluation of the dollar and effects of inflation on Xxxxxx'x costs and
expenses. Thus, notwithstanding the terms of Section 8.1 above, at any time
after December 31, 2005, Xxxxxx may give notice to Canandaigua requesting
renegotiation of the amount of the Management Fee to be paid for Farm Year 2007
and each year thereafter. Following delivery of such a notice, the parties
agree to negotiate, in good faith, the amount of the Management Fee to be
applicable for such next following Farm Years. In the event that the parties
are unable to agree upon such Management Fee within sixty (60) days after the
commencement of such negotiations, Xxxxxx may, upon notice to Canandaigua,
submit the matter to arbitration in accordance with the rules and procedures of
the American Arbitration Association. Any such arbitration shall take place
before a single arbitrator in Monterey County, California. Any such arbitration
shall be governed by and subject to the applicable laws of the State of
California and the then prevailing rules of the American Arbitration
Association. The arbitrator's decision in any such arbitration shall be final
and binding, and a judgment upon such award may be enforced by any court of
competent jurisdiction.
8.3 REDUCTION OF MANAGEMENT FEE. Notwithstanding the foregoing provisions
of this Section 8, for any Farm Year ending December 31, 2003 or thereafter, if
(subject to Section 1.4) the yield of wine grapes from the Property, as a whole,
for such Farm Year is less than three and three-fourths (3.75) tons per net vine
acre, Xxxxxx shall not receive the Basic Management Fees for the following Farm
Year.
SECTION 9 MISCELLANEOUS
9.1 ASSIGNMENT. Neither Xxxxxx nor Canandaigua shall assign or transfer
this Agreement or any interest herein or suffer any such assignment by operation
of law without the prior written consent of the other party; provided, however,
that either party may without the other party's consent assign this Agreement to
any wholly-owned subsidiary of, or affiliate under common control with, that
party if:
A. such subsidiary or affiliate shall assume in a writing reasonably
satisfactory to the other party all of the assigning party's
obligations hereunder; and
B. the assigning party shall fully guarantee such subsidiary's or
affiliate's performance hereunder in a writing reasonably
satisfactory to the other party.
Notwithstanding the foregoing, Canandaigua may assign this Agreement to any
third party whose creditworthiness is reasonably acceptable to Xxxxxx.
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*Confident Treatment Requested for Redacted Portion.
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9.2 INTERPRETATION. Each of the parties agrees that it has reviewed and
drafted this Agreement and the normal rule of construction to the effect that
any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement or any revision or addenda
hereto. In this Agreement, captions of sections and paragraphs are for
convenience of reference only, and the words contained therein shall in no way
be held to explain, modify, amplify or aid in the interpretation, construction
or meaning of the provisions hereof.
9.3 LABOR AND EQUIPMENT. Xxxxxx shall be solely responsible for selecting
and hiring its own employees and for their supervision, direction and control.
Moreover, Xxxxxx shall be solely responsible for setting wages, benefits, hours
and working conditions for such employees; for paying wages and social security;
for paying unemployment insurance and disability insurance contributions; and
for withholding taxes with respect to such employees.
9.4 SOLE AGRICULTURAL EMPLOYER. Xxxxxx acknowledges and agrees that
Xxxxxx is the sole agricultural employer of persons engaged to perform
agricultural services pursuant to this Agreement. In performing its duties and
obligations under this Agreement, Xxxxxx shall direct the operation of its labor
and equipment in all respects and shall determine the method, means and manner
of its performance.
9.5 EMPLOYMENT OF OTHERS. Xxxxxx may, with the prior written consent of
Canandaigua (which consent shall not be unreasonably withheld or delayed),
contract with other entities to furnish portions of the services required of
Xxxxxx under this Agreement, and Xxxxxx shall remain fully liable and
responsible to Canandaigua for the adequacy of, and payment for, any such
services; provided, however, that Xxxxxx shall not be liable or responsible for
any adverse effect of any delayed or withheld consent of Canandaigua. Xxxxxx
shall indemnify and hold harmless Canandaigua in the event any of such providers
makes any claim against Canandaigua for any payment for such provider's
services, provided Canandaigua has paid Xxxxxx for such services.
9.6 DELIVERY OF STATEMENTS, NOTICES AND PAYMENTS. All statements,
notices, demands and requests which are required to be sent or permitted to be
given to another party under this Agreement shall be in writing, and shall be
provided in person or sent by U.S. Mail, recognized courier service, or
telefacsimile with proof of transmission (followed by sending by U.S. Mail), to
the recipient party at the address shown below, or to such other address of
which the notifying party has received actual notice from the recipient party.
Notices are effective upon receipt. Two (2) copies of any notice must be sent
to both parties as follows:
If to Canandaigua or CWC:
One copy to: Second copy to:
Xxxx Xxxxxxxxx Xxxxxx Xxxxx, Esq.
Vice President Vice President and General Counsel
Canandaigua West, Inc. Canandaigua West, Inc.
12667 Road 24 000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000 Xxxxxxxxxxx, XX 00000
Telefacsimile: (000) 000-0000 Telefacsimile: (000) 000-0000
12
If to Xxxxxx:
One copy to: Second copy to:
Xxxxx X. Xxxxxx Xxxx Xxxxxxxx
Xxxxxx Vineyards and Xxxxxx Vineyards and
Management Co. Management Co.
00000 Xxxxxxxxxx Xxxx., Xxx. 000 1972 Xxxxxx Avenue
Marina del Rey, CA 90292 Xxxxxxxxxx, XX 00000
Telefacsimile: (000) 000-0000 Telefacsimile: (000) 000-0000
9.7 ATTORNEY FEES AND COSTS. If legal action or other proceeding is
brought for the enforcement of this Agreement or because of any alleged dispute,
breach, default or misrepresentation in connection with the provisions of this
Agreement, the prevailing party shall be entitled to recover reasonable attorney
fees and other costs incurred in that action or proceeding in addition to any
other relief to which such party may be entitled.
9.8 RELATIONSHIP OF THE PARTIES. Nothing contained in this Agreement
shall be deemed or construed by the parties or by a third party to create the
relationship of principal and agent or of partnership or of joint venture or of
any association between Canandaigua and Xxxxxx, and neither shall any of the
provisions contained in this Agreement nor any act of the parties be deemed to
create any relationship between Canandaigua and Xxxxxx, other than the
relationship of Xxxxxx as an independent contractor of Canandaigua.
9.9 SEVERABILITY. If any part or parts of this Agreement are found to be
illegal or unenforceable, the remainder shall be considered severable, shall
remain in full force and effect, and shall be enforceable.
9.10 GOVERNING LAW. This Agreement shall be governed by, construed and
enforced in accordance with and subject to the laws of the State of California.
9.11 SURVIVAL OF COVENANTS. The covenants set forth in this Agreement are
intended to, and shall survive termination of, this Agreement.
9.12 ACCESS BY CANANDAIGUA. Canandaigua employees shall, at all times,
have the right of access to the Property.
9.13 CWC GUARANTY. CWC unconditionally and irrevocably guarantees the
payment and performance of the obligations of Canandaigua under this Agreement.
CWC hereby waives all formalities legally required to charge it with liability
hereunder and agrees that its liability will not be affected by (a) any
extension of the time for performance of any of such obligations of Canandaigua,
(b) any forbearance or waiver of performance of any such obligations of
Canandaigua, or (c) any modification of the terms or provisions of this
Agreement or other instruments or agreements delivered by Canandaigua hereunder.
CWC agrees that, with respect to such obligations of Canandaigua, it may be
joined in any action against Canandaigua and that recovery may be had against
CWC either in such action or other actions without exhausting any remedy or
claim against Canandaigua.
13
9.14 WATER ALLOCATION. As of the date hereof, Xxxxxx has entered into a
lease with the Lessor with respect to certain property adjoining the Property
(the "Xxxxxx Property"). In the event that water of sufficient quality and
quantity is not available for the operation of the vineyards on the Xxxxxx
Property and the Property, Xxxxxx and Canandaigua agree to apportion the water
available to all such properties among such properties in proportion to the
respective vineyard acres of each such property; provided, however, that, in any
such apportionment, Canandaigua shall be entitled to receive not less than forty
percent (40%) of the available water.
9.15 CONDITION PRECEDENT. Notwithstanding any other terms of this
Agreement, the obligation of the parties hereunder are conditioned upon the
execution and delivery of the Lease by the Lessor, Canandaigua and CWC. In the
event that the Lease is not so executed and delivered within sixty (60) days
after the date hereof, this Agreement shall be of no further force or effect.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
CANANDAIGUA WEST, INC.
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------------
Its: Vice President
-----------------------------------------
XXXXXX VINEYARDS AND MANAGEMENT CO.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Its: Vice President
-----------------------------------------
AGREED AS TO SECTIONS 9.2, 9.6, 9.7, 9.10,
9.11, 9.13 AND 9.15:
CANANDAIGUA WINE COMPANY, INC.
By: /s/ Xxxxxx Xxxxxxx
-----------------------------------------
Its: Vice President
-----------------------------------------
14
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
On _______________, before me, __________________, Notary Public,
personally appeared __________________, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person whose name is subscribed
to the within instrument and acknowledged to me that he or she executed the same
in his or her authorized capacity, and that by his or her signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
---------------------------------------
Signature
[SEAL]
STATE OF NEW YORK )
-----------------
) ss
COUNTY OF ONTARIO )
----------------
On 3/26/97, before me, Xxxxxx X. Xxxxx, Notary Public,
personally appeared Xxxxxx Xxxxxxx, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person whose name is subscribed
to the within instrument and acknowledged to me that he or she executed the same
in his or her authorized capacity, and that by his or her signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
/s/ Xxxxxx X. Xxxxx
---------------------------------------
Signature
[SEAL]
STATE OF CALIFORNIA )
-----------------
) ss
COUNTY OF LOS ANGELES )
----------------
On 3/28/97, before me, Xxxxxx Xxxxxx, Notary Public,
personally appeared Xxxxx X. Xxxxxx, personally known to me (or proved to me
on the basis of satisfactory evidence) to be the person whose name is subscribed
to the within instrument and acknowledged to me that he or she executed the same
in his or her authorized capacity, and that by his or her signature on the
instrument the person, or the entity upon behalf of which the person acted,
executed the instrument.
WITNESS my hand and official seal.
/s/ Xxxxxx Xxxxxx
---------------------------------------
Signature
[SEAL]
