VINEYARD MANAGEMENT AGREEMENT
This Vineyard Management Agreement (the "Agreement") is made and entered into as
of the 1st day of April, 1995, by and between Xxxxxx Vineyards and Management
Co., a California corporation (hereinafter "XXXXXX") and Xxxxxx Xxxxxx
Vineyards, a California corporation (hereinafter "JPV").
A. Xxxxxx Xxxxxx, an individual, owns a parcel of real property (the
"Property") situated in Monterey County, California, more particularly described
in Exhibit A hereto.
B. Xxxxxx Xxxxxx has authorized JPV to develop and farm the Property as a
winegrape vineyard and to enter into and perform this Agreement.
C. JPV desires to engage XXXXXX to develop, farm and manage such vineyard
(the "Vineyard") hereafter located on the Property 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, JPV hereby engages XXXXXX as an independent contractor to develop,
farm and manage approximately forty (40) acres of Vineyard, as specifically
described in Exhibit A, on an exclusive basis, 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
JPV, whether or not in conflict with the business interests and activities of
JPV.
1.2 DUTIES AND RESPONSIBILITIES OF XXXXXX. In developing, farming and
managing the Vineyard, XXXXXX agrees to perform or
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 winegrape vineyard.
XXXXXX hereby represents and warrants that it has, or will obtain, all necessary
licenses and permits to perform all services and tasks envisioned hereunder. In
performing its duties and obligations hereunder, XXXXXX shall:
A. Follow the viticultural requirements reasonably requested by JPV
to produce fruit of premium quality and fully developed varietal
character;
B. Prepare for planting and plant such winegrape varieties as may
be determined by JPV from time to time;
C. Prune, sucker, thin and leaf pull the Vineyard;
D. Irrigate, fertilize and cultivate the Vineyard;
E. Control weeds, diseases and pests in the Vineyard;
F. Care for and maintain xxxxx, pumps, pipelines, irrigation systems
and other improvements on the Property;
G. Control the use of any JPV irrigation system that is shared with
any third party or parties so that all electrical charges
incurred by such third party or parties are accounted for and
reported to JPV in a timely manner;
H. Harvest the grapes grown on the Vineyard and deliver them to
such point of delivery as JPV shall designate; and,
I. Provide labor, machinery, equipment and materials reasonably
required or useful to manage the Vineyard to accomplish the
foregoing.
1.3 AUTHORITY OF MANAGER. XXXXXX shall have general power and authority
to perform its duties and obligations hereunder, and
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to act in all matters relating to or concerning the care, maintenance and
operation of the Property as a winegrape vineyard.
1.4 XXXXXX TO CONSULT WITH JPV. XXXXXX agrees to keep JPV or JPV's
designated agent fully advised on at least a monthly basis, and in any event at
such time as the circumstances reasonably require, of the progress of the
Vineyard.
XXXXXX specifically agrees to advise JPV or JPV's designated agent of all events
which materially adversely affect or might reasonably be expected to materially
adversely affect the growth or development of the Vineyard and/or the amount or
quality of the winegrapes produced and harvested therefrom. To this end XXXXXX
agrees to consult with JPV or JPV's designated agent as to any major decisions
which are not included in the "Plan", or the "Budget", as described in Section
1.6 below, and which may arise with respect to the Vineyard, and to obtain the
written consent of JPV or of JPV's designated agent prior to making and
implementing any such decision.
1.5 EMERGENCIES. Notwithstanding the fact that XXXXXX may be required to
obtain the consent of JPV or JPV's 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, 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 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 JPV a written plan (the "Plan") and budget (the "Budget") covering
the next growing season. Representatives of XXXXXX and JPV will meet to
discuss, revise (if necessary) and approve the Plan and Budget within ten (10)
days following its submission by XXXXXX to JPV. The parties agree that JPV
shall have the final word on approval of the Budget and the Plan.
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Attached as Exhibit B hereto is the Budget for the period January 1, 1995
through December 31, 1995 (the calendar year which defines the 1995 Vineyard
management year and each calendar year thereafter, hereafter referred to as
"Farm Year") which has been approved by JPV.
Attached as Exhibit C hereto is the Plan, as prepared and submitted by XXXXXX
for the 1995 Farm Year which has been approved by JPV.
1.7 THE PLAN. The Exhibit C Plan does, and future Plans shall, set forth
for the Vineyard the following information with respect to the growing season in
question:
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. Any significant change from pruning and vine training techniques
followed by XXXXXX in the past, and any specific plans for
thinning;
X. XXXXXX'X proposed plan to control weeds, diseases, pests and
animals on the Property, including birds; and,
E. Such other information as JPV reasonably may request concerning
viticultural practices which may be followed by XXXXXX.
1.8 THE BUDGET. The Exhibit B Budget does, and future Budgets shall, set
forth, as to each month, a reasonable estimate for the budget period in question
of the amount of each of the items constituting the "Direct Farming Costs" (as
defined below) with respect to the Vineyard which shall be reimbursed by JPV to
XXXXXX. For purposes of this Agreement, the term "Direct Farming Costs" shall
mean all ordinary and necessary expenses incurred by XXXXXX in providing the
services and performing the duties and obligations required of XXXXXX under this
Agreement, including but not limited to:
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A. Development of the Vineyard (as set forth in Section 2 below);
B. Planting, grafting, training and trellising;
C. Pruning, tying, suckering, thinning and leaf
removal;
D. Pest control including rodents and insects;
E. Spray operations including herbicides and disease
control;
F. Cultivation, fertilization, mowing, hoeing and vine
trimming;
G. Irrigation;
H. General Vineyard maintenance, fence repair and erosion control;
and
I. 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
management personnel.
1.9 PERFORMANCE OF OBLIGATIONS IN ACCORDANCE WITH PLAN AND BUDGET. Upon
adoption of a Plan and a Budget by XXXXXX and JPV 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
JPV 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 for
which the Report is given, the major farming activities relating to fertilizer,
irrigation, pesticides, yields and sugar contents with respect to the Vineyard,
and to make available to JPV or JPV's designated agent, all records for such
Farm Year for which the Report is given concerning the tasks described in
Section 1.8 herein.
The foregoing records also shall contain information concerning other
significant viticultural practices followed by XXXXXX which
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JPV reasonably may 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 1995 and 1996 Farm Years. During the Development
Period, Xxxxxx Vineyards will commit the resources reasonably necessary to carry
out its duties and responsibilities under this Section as listed below:
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
either fall chip budding or spring whip grafting to be decided by
JPV.
H. Oversee the preparation and implementation of chip budding and
the care required into dormancy.
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.
J. Provide the personal supervision of the General Manager of
Vineyard Operations, Xxxx Xxxxxxxx,
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where required or desirable to carry out the above duties and
responsibilities.
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, JPV shall reimburse XXXXXX for all
Direct Farming Costs incurred by XXXXXX as defined in Section 1.8 above.
3.2 MONTHLY REQUIREMENT. On or before the fifth business day of each
month, JPV 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 in accordance with a previously received Budget
Reconciliation (as defined below). On or before the twentieth calendar day of
each month, XXXXXX shall deliver to JPV 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, and it is not always possible to
make expenditures according to the Budget.
SECTION 4. ACCESS TO INFORMATION
4.1 WHAT XXXXXX MUST MAKE AVAILABLE TO JPV. XXXXXX agrees to make
available and supply to JPV, following reasonable notice and during normal
business hours, all information, documents, records and reports which JPV
reasonably may request in order to permit JPV 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;
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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.
SECTION 5. TERM AND TERMINATION
5.1 TERM. This Agreement shall become effective on April 1, 1995 and
shall remain in effect until December 31, 2004. This Agreement shall continue
in effect after December 31, 2004 on a year-to-year basis unless JPV or XXXXXX
gives notice of termination to the other on or before November 1, 2004, or
thereafter on or before the first day of November of any year in which case this
Agreement would terminate on December 31 following the giving of such notice.
5.2 TERMINATION FOR CAUSE. Either party, herinafter referred to as the
"Nonbreaching Party", shall have the right to terminate this Agreement for cause
in the event the other party, hereinafter referred to as the "Breaching Party",
breaches any material provision or condition of this Agreement; and
A. such breach remains uncured for a period of thirty (30) days
following the Nonbreaching Party giving written notice of such
breach to the Breaching Party, or if any such breach shall not
reasonably be susceptible of cure within such thirty (30) day
period; then
B. 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.
5.3 CHANGE OF CONTROL OF XXXXXX. In the event that Xxxxxx X. Xxxxxx and
members of his family, together, cease to beneficially own, directly or
indirectly, at least 51% of the stock of XXXXXX, then (A) XXXXXX shall give
written notice thereof to JPV and (B) JPV shall have the right to terminate this
Agreement by giving written notice of termination to XXXXXX; provided, however,
that any such termination shall be effective on December 31 following the giving
of such termination notice.
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SECTION 6. HAZARDS OF FARMING
6.1 XXXXXX NOT LIABLE FOR CERTAIN DAMAGE OR LOSS. XXXXXX shall not be
liable to JPV 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.
SECTION 7. INSURANCE
7.1 XXXXXX TO PROVIDE INSURANCE. XXXXXX shall, at its expense, maintain
throughout the term hereof the following insurance policies:
A. LIABILITY. XXXXXX shall provide public liability and property
damage insurance insuring JPV and XXXXXX, their respective officers,
directors, shareholders, employees, agents, and representatives,
against any liability for accidents occurring on the Property or for
any injury or damage of any nature claimed to have resulted from or in
any way connected with the activities of the person or entity insured
in connection with the operation of the Property in amounts not less
than $1,000,000 for each occurrence. XXXXXX shall also direct that
its contractors or subcontractors employed in the operations of the
Property carry liability insurance and shall require and maintain in
its files written documentation of such coverage.
B. WORKER'S COMPENSATION. XXXXXX shall provide Worker's Compensation
insurance insuring XXXXXX'X employees engaged in the operation of the
Property under this Agreement. XXXXXX shall also direct that its
contractors or subcontractors employed in the operations of the
Properties carry Worker's Compensation insurance for the benefit of
their employees, and shall require and
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maintain in its files written documentation of such coverage.
SECTION 8 MANAGEMENT FEE
8.1 MONTHLY FEE. The monthly management fee to be paid in advance each
month by JPV to XXXXXX for services rendered hereunder, shall be [ ]*
dollars ($[ ]*) for each vineyard acre of the Property, or as modified from
time to time by mutual agreement of JPV and XXXXXX. This management fee is
included in the Budget and its payment procedure is described in Section 3.2
above.
SECTION 9 DEVELOPMENT FEE
9.1 DEVELOPMENT FEE. It is agreed that JPV will pay to XXXXXX a fixed
development fee (the "Development Fee") for the services described in Section
2.1 rendered during the Development Period in accordance with the payment
procedure in Section 9.2 below. The Development Fee for the 1995 Farm Year will
be $[ ]*. The Development Fee for the 1996 Farm Year will be $[ ]*.
9.2 PAYMENT PROCEDURE. The Development Fee shall be paid as follows:
A. The Development Fee for the 1995 Farm Year will be paid in [ ]*
equal installments of $[ ]* on the following dates:
[ ]*
B. The Development Fee for the 1996 Farm Year will be paid in [ ]*
equal installments of $[ ]* on the following dates:
[ ]*
SECTION 10 MISCELLANEOUS
------------------------
* Confidential Treatment Requested for Redacted Portion.
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10.1 ASSIGNMENT. Neither XXXXXX nor JPV 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 that party if:
A. such subsidiary 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
performance hereunder in a writing reasonably satisfactory to the
other party.
10.2 INTERPRETATION. Each of the parties agrees that it has reviewed and
revised 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.
10.3 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 furnishing,
during the entire period of this Agreement, Worker's Compensation insurance
coverage; for paying wages and social security; for paying unemployment
insurance and disability insurance contributions; and for withholding taxes with
respect to such employees.
10.4 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.
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10.5 EMPLOYMENT OF OTHERS. XXXXXX may contract with other entities to
furnish portions of the services required of XXXXXX under this Agreement.
XXXXXX shall remain fully liable and responsible to JPV for the adequacy of any
such services.
10.6 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 to the recipient party at the address
shown below. Notices are effective upon receipt. Two (2) copies of any notice
must be sent to both parties as follows:
JPV
One copy to: Second copy to:
Xxxxxx Xxxxxx Xxxxx Xxxxxxxx
Xxxxxx Xxxxxx Vineyards Xxxxxx Xxxxxx Vineyards
000 Xxxxxx Xxxx 200 Xxxxxx Road
X.X. Xxx 0000 X.X. Xxx 0000
Xx. Xxxxxx, XX 00000 Xx. Xxxxxx, XX 00000
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 0000 Xxxxxx Xxxxxx
Xxxxxx xxx Xxx, XX 00000 Xxxxxxxxxx, XX 00000
10.7 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 successful or 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.
10.8 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
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partnership or of joint venture or of any association between JPV 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 JPV and XXXXXX,
other than the relationship of XXXXXX as an independent contractor of JPV.
10.9 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.
10.10 GOVERNING LAW. This Agreement shall be governed by, construed and
enforced in accordance with and subject to the laws of the State of California.
10.11 SURVIVAL OF COVENANTS. The covenants set forth in this Agreement
are intended to, and shall survive termination of, this Agreement.
10.12 ACCESS BY JPV. JPV employees shall, at all times, have right to
access to the Property.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
Xxxxxx Xxxxxx Vineyards
By: /s/ Xxxxx Xxxxxxxx
-------------------------------
Its: V.P. Production
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Xxxxxx Vineyards and Management Co.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Its: Vice President
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