WATER SUPPLY AGREEMENT
THIS WATER SUPPLY AGREEMENT ("Agreement") is made as of January 1,
1997, by XXXXXX VINEYARDS AND MANAGEMENT CO., a California corporation
("Xxxxxx"), and CANANDAIGUA WEST, INC., a New York corporation ("Canandaigua").
RECITALS
A. Canandaigua, as lessee, proposes to enter into a Lease dated as of
January 1, 1997 (as amended from time to time, the "Canandaigua 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-trustees 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 lessors (collectively, the "Owners"),
with regard to that certain real property situated in the County of Monterey,
State of California, and more particularly described on Exhibit A attached
hereto and made a part hereof (the "Canandaigua Property"). A condition to
Canandaigua entering into the Canandaigua Lease is the execution and delivery of
this Agreement by Xxxxxx.
B. The Owners, as lessors, and Xxxxxx, as lessee, have entered into a
Lease dated as of January 1, 1997 (as amended from time to time, the "Xxxxxx
Lease"), with regard to that certain real property situated in the County of
Monterey, State of California, and more particularly described on Exhibit B
attached hereto and made a part hereof (the "Xxxxxx Property").
X. Xxxxxx and Canandaigua propose to enter into a Vineyard Management
Agreement dated as of January 1, 1997 (as amended from time to time, the
"Vineyard Management Agreement"), with regard to the Canandaigua Property.
D. Concurrently herewith, the Owners and Xxxxxx are entering into an
Agreement Regarding Water (the "Agreement Regarding Water"), in favor of
Canandaigua, regarding a source of water for the development, maintenance and
operation of the Canandaigua Property.
E. Canandaigua and Xxxxxx desire to enter into an agreement regarding the
development of a water system on the Xxxxxx Property and the supply of water to
the Canandaigua Property from such water system.
AGREEMENT
1. The parties acknowledge and agree that the water system currently in
place on the Xxxxxx Property (the "Water System") requires maintenance and
improvement to provide water for the development of the Xxxxxx Property and the
Canandaigua Property as wine grape vineyards. Xxxxxx hereby agrees to take the
following actions with regard to the Water System to enable the Water System to
produce, store and deliver water to the Canandaigua Property:
a. Clean and repair well #1 and well #2
b. Install valves, meters, pumps and diesel motors for well #1 and
well #2;
c. Install of 18" high pressure mainline from well #1 to reservoir;
d. Install of 15" high pressure mainline from well #2 to well #1;
e. Develop a reservoir with approximately 60 acre feet of water
storage capacity; and
f. Perform miscellaneous grading and slab work.
2. Xxxxxx agrees to provide ongoing repairs and maintenance to the Water
System as necessary for water production, storage and delivery for the
Canandaigua Property pursuant to the terms of this Agreement.
3. Subject to the provisions of Section 6, below, Xxxxxx agrees to
deliver to Canandaigua water sufficient for the development, maintenance and
operation of a wine grape vineyard on the Canandaigua Property.
4. In consideration of the covenants of Xxxxxx hereunder and the delivery
from time to time of water through the Water System to the Canandaigua Property,
Canandaigua agrees to pay Xxxxxx Thirty-Five Dollars ($35.00) per acre foot of
water. Commencing on June 1, 1997 and continuing on each June 1 and December 1
thereafter, Xxxxxx shall submit an invoice to Canandaigua for water delivered
prior to the date of such invoice. Canandaigua shall remit amounts due with
respect to each such invoice within fifteen (15) days after receipt thereof.
5. Notwithstanding the foregoing, if Xxxxxx determines, in its reasonable
business judgment, that the development of a second reservoir, additional xxxxx,
or other improvements to the Water System are necessary or appropriate for the
Water System to service the Canandaigua Property and the Xxxxxx Property,
Canandaigua and Xxxxxx shall negotiate, in good faith, an adjustment to the
payment rate set forth in Section 4, above, based on the reasonable cost of
carrying out the development of such second reservoir, additional well or other
improvement; provided, however, that, for purposes of such adjustment,
development costs shall exclude any amounts for which Xxxxxx is entitled to a
credit against rental payments under the Xxxxxx Lease.
6. Notwithstanding any other terms of this Agreement, Xxxxxx makes no
representation, warranty or covenant to Canandaigua concerning the availability
of water or water quality. Xxxxxx'x obligations hereunder are limited solely to
the performance of Section 1 and 2 above, and to the delivery to Canandaigua
pursuant to Section 3, above, of such water as is produced by the Water System,
as may be allocated in accordance with the Vineyard Management Agreement.
7. This Agreement shall be binding upon, and shall inure to the benefit
of Canandaigua and Xxxxxx, and their respective successors and assigns.
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8. This Agreement, together with the Vineyard Management Agreement and
the Agreement Regarding Water, constitutes the entire agreement of the parties
with regard to the subject matter hereof and may be amended or modified except
by an instrument in writing signed by the parties hereto or their respective
successors or assigns.
9. This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which together shall
constitute one and the same agreement.
IN WITNESS WHEREOF, Xxxxxx and Canandaigua have entered into this Agreement
as of the date first above set forth.
XXXXXX VINEYARDS AND MANAGEMENT CO.
By /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: Vice President
CANANDAIGUA WEST, INC.
By /s/
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Name:
Title:
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