VINEYARD MANAGEMENT AGREEMENT
This Vineyard Management Agreement, hereinafter referred to as "Agreement",
is made and entered into as of the 1st day of February, 1992, by and between
XXXXXX VINEYARDS AND MANAGEMENT CO., hereinafter referred to as "Xxxxxx", and
XXXX XXXX AND XXXXXXX XXXX, Co-Trustees of the HILL LIVING TRUST, hereinafter
referred to as "Hill".
Hill owns or leases certain parcels of real property, hereinafter referred
to as the "Property", situated in San Xxxxxx County, California, more
particularly described in Exhibit "A" attached hereto and incorporated herein by
reference.
Xxxxxx is a corporation whose primary business is the management of
vineyards throughout the State of California, which are the property of absentee
owners.
Hill desires to engage Xxxxxx to farm and manage the vineyards, hereinafter
referred to as the "Vineyards", now or 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
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MANAGEMENT OF VINEYARDS
1.1 ENGAGEMENT OF XXXXXX. On the terms and conditions set forth in this
Agreement, Hill hereby engages Xxxxxx as an independent contractor to farm and
manage eighty-three (83) acres of Vineyards as specifically described in Exhibit
"A" on an exclusive basis, and Xxxxxx hereby accepts such engagement. Xxxxxx
will 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 clients other than Hill, whether or not
in conflict with the business interest and activities of Hill.
1.2 DUTIES AND RESPONSIBILITIES OF XXXXXX. In farming and managing the
Vineyards, 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 in order to ensure that the Property is cared for, maintained and
operated as a wine grape vineyard. In performing its duties and obligations
hereunder, Xxxxxx shall:
A. prune, thin and cultivate the Vineyards;
B. irrigate the Vineyards;
C. control weeds, diseases and pests in the Vineyards;
D. harvest the grapes grown on the Property by hand or with
permission of Hill by machine and deliver them to such
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point of delivery as Hill shall designate; and
E. provide labor, machinery, equipment and materials reasonably
required to accomplish the foregoing.
F. keep the pump used in connection with the xxxxx serving the
Vineyards property lubricated.
G. Maintain in good condition and repair the irrigation lines,
valves and sprinklers serving the vineyards.
H. keep the vineyards and any improvements thereon in a clean and
neat condition.
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.
1.4 XXXXXX TO CONSULT WITH HILL. Xxxxxx agrees to keep Hill advised on a
monthly basis, and at such time as the circumstances reasonably require, of the
progress of the Vineyards and of all significant actions taken on the vineyard
by Xxxxxx to date during the growing season in question.
Xxxxxx specifically agrees to advise Hill of all events which
materially adversely affect or might reasonably be expected to materially
adversely affect the growth or development of the Vineyards
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and/or the amount or quality of the wine grapes produced. To this end, Xxxxxx
agrees to consult with Hill as to any major decisions which are not included in
the Budget as described in Section 1.6 below, and which may arise with respect
to the Vineyards, and to obtain the written consent of Hill prior to making and
implementing any such decision.
1.5 EMERGENCIES. Notwithstanding the fact that Xxxxxx may be required to
obtain the consent of Hill under this Agreement before taking certain actions,
in the event emergency circumstances arise with respect to the Vineyards 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 such damage.
1.6 BUDGET SUBMITTED BY XXXXXX BEFORE THE GROWING SEASON. On or before
December 15 of each year during the term of this Agreement, Xxxxxx agrees to
submit to Hill a written budget, hereinafter referred to as "Budget", covering
the next growing season. Representatives of Xxxxxx and Xxxx will meet to
discuss, revise, if necessary, and approve the Budget within ten (10) days
following its submission by Xxxxxx to Hill. The parties agree that Hill shall
have the final word in the approval of the Budget. If Xxxxxx does not agree
that the final Budget
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approved by Hill is a reasonable estimate for the next Budget period then,
until, but not after, January 15 of the growing season year to which the Budget
applies, either party hereto may terminate this contract forthwith on written
notice to the other parties specifying the grounds of termination. Such
termination shall not affect obligations in existence at the time of
termination.
Attached as Exhibit "B" is the Budget for the period February 1, 1992
through November 30, 1992, which is the ten (10) month period which defines the
1992 Vineyard Management Year. Commencing December 1, 1992 and ending November
30, 1993, and each such period after November 30, 1993 will be hereinafter
referred to as "Farming Year".
1.7 THE BUDGET. The 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" with respect
to the Vineyards, which shall be reimbursed by Hill 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.
SECTION 2
EXPENSE STATEMENTS AND PAYMENTS
2.1 REIMBURSEMENT OF DIRECT FARMING COSTS. In addition to paying
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Xxxxxx the compensation provided in Section 7 below, Hill shall reimburse Xxxxxx
for all Direct Farming Costs incurred by Xxxxxx as defined in Subsection 1.7
above.
2.2 MONTHLY ADVANCES AND XXXXXXXX. On or before the fifth (5th) business
day of each month, Hill shall advance to Xxxxxx an amount equal to that month's
approved Budget. Xxxxxx shall deliver to Hill a detailed written statement
setting forth, for the month just ended, the Direct Farming Costs paid by
Xxxxxx, and any additional amounts which may be payable by Hill to Xxxxxx. This
statement shall be given to Hill not later than the fifteenth (15th) of the same
month. Any advanced funds not expended in the month for which advanced will be
carried over to the following 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 budgets or time plans.
SECTION 3
ACCESS TO INFORMATION
3.1 WHAT XXXXXX MUST MAKE AVAILABLE TO HILL. Xxxxxx agrees to make
available and supply to Hill, following reasonable notice and during normal
business hours, all information, documents, records and reports which Hill
reasonably may request in order to permit Hill to verify or determine:
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A. any of the amounts, calculations or items set forth in the Budget
or on any of the statements described in Subsection 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.
SECTION 4
TERM AND TERMINATION
4.1 TERM. This Agreement shall become effective on February 1, 1992, and
unless sooner terminated in the manner provided in Subsection 4.2, shall remain
in effect until November 30, 1993. Thereafter, this Agreement shall continue on
a year-to-year basis unless Hill or Xxxxxx gives notice of termination to the
other on or before November 5, 1993, or thereafter on or before the fifth (5th)
day of November of any year, in which case this Agreement would terminate on
November 30 following the giving of such notice.
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4.2 TERMINATION. Either Party, hereinafter referred to as the
"Nonbreaching Party", shall have the right to terminate this Agreement for cause
and subject to Subsection 4.3 below, all of the Nonbreaching Party's obligations
hereunder thereafter shall terminate in the event any of the following occurs:
A. the other party, hereinafter referred to as the "Breaching
Party", breaches any material provision or condition hereof; and
(i) such breach remains uncured for a period of fifteen (15)
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
(ii) 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;
B. the Breaching Party becomes bankrupt or insolvent or a petition
is filed seeking reorganization of the Breaching Party under the
bankruptcy laws or any other applicable debtor's relief laws or
statutes of the United States or
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of any state, or a receiver or assignee in bankruptcy is
appointed for the Breaching Party's assets shall be condemned,
seized, attached or appropriated;
C. the Breaching Party is voluntarily or involuntarily dissolved or
proceedings are commenced therefore;
D. the Breaching Party sells or transfers all or substantially all
of its assets or foreclosure proceedings are instituted by any
creditor of the Breaching Party with respect to a substantial
portion of the Breaching Party's assets.
The provisions of subparagraph C and D of this Section 4.2 shall not apply
to any distribution from the Hill Living Trust, to any transfer at the death of
a party hereto, or to any transfers from or to any living trusts of Hill or
Hill's successors in interest.
4.3 OBLIGATIONS UPON TERMINATION. The termination of this Agreement under
any provisions hereof shall not release either party from liability to the other
for failure to perform its duties or obligations to the other party under this
Agreement which are required to be performed prior to such termination.
X. Xxxx forthwith shall pay Xxxxxx its management fee as provided in
Subsection 7.1 below, prorated through the
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effective date of termination, and further shall pay Xxxxxx any
unreimbursed expenses in accordance with Subsection 2.1 above.
However, Hill shall be entitled to offset against such payments
all damages suffered by Hill if Xxxxxx is a Breaching Party, as a
result of Xxxxxx'x acts or omissions.
SECTION 5
HAZARDS OF FARMING
5.1 XXXXXX NOT LIABLE FOR CERTAIN DAMAGE OR LOSS. Xxxxxx shall not be
liable to Hill 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 (a) any Act of God or any normal
hazard of farming, including, without limitation, rain, hail, heat, frost,
drought or lack of well water, flooding, windstorm or other action of the
elements, or (b) strike, work slow down, worker unavailability, fire, truck,
car, rail, labor, equipment or material shortage or unavailability, embargo,
governmental action or any other cause, provided that such specified or other
cause is beyond Xxxxxx'x reasonable control.
SECTION 6
INSURANCE
6.1 XXXXXX TO PROVIDE INSURANCE. Xxxxxx shall, at its expense,
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maintain throughout the term hereof, the following insurance policies insuring
Xxxxxx:
A. LIABILITY. Public liability and property damage insurance with
endorsements insuring Hill 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 then One
Million Dollars ($1,000,000) for each occurrence. Xxxxxx shall
also direct that its contractors or subcontractors employed in
the operation of the Property carry liability insurance of the
same type and in the same amounts and insuring the same parties
and shall require and maintain in its files, with copies to Hill,
written documentation of such coverage.
B. WORKERS' COMPENSATION. Workers' 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 Property carry
workers' compensation insurance for the benefit of their
employees
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and shall require and maintain in its files written documentation
of such coverage.
6.2 GENERAL REQUIREMENTS. General requirements are as follows:
A. CONDUCT OF XXXXXX. Xxxxxx shall comply with all reasonable
requirements of insurance carriers and shall use its reasonable
efforts to avoid committing any act which would result in
cancellation of coverage or increase in premium.
B. POLICY PROVISIONS. The insurance policies procured by Xxxxxx and
by its contractors and subcontractors shall:
(i) except for workers' compensation insurance, name Hill and
Xxxxxx as insureds as their respective interests may appear
and include as effective waiver by the carrier of all rights
of subrogation against any named insured or such insured's
interest in the Property or any income derived from the
Property:
(ii) provide that no cancellation, reduction in amount or
material change in coverage thereof, shall be effective
until at least thirty (30) days after receipt by Hill and
Xxxxxx of written notice
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thereof; and
(iii) be primary and noncontributing with any insurance that may
be carried by Xxxxxx.
6.3 EXCULPATION AND INDEMNITY. Hill shall not be liable for any loss,
injury or damage to any property upon or used by Xxxxxx in connection with the
vineyards, whether the same be Xxxxxx'x property or any other person's property,
except to the extent directly or indirectly caused by Hill's negligence.
Xxxxxx, as a material part of the consideration to be rendered to Hill, hereby
waives all claims against Hill for damage to equipment, product or any other
property in, upon or about the vineyards, and for injuries to Xxxxxx'x
employees, agents, invitees, independent contractors or other persons in or
about the vineyards, from any cause arising at any time, other than from any
cause arising directly or indirectly from Hill's negligence, and Xxxxxx will
indemnify and hold Hill exempt and harmless from any claims for personal
injuries and for damage or injury to the property of any person or party,
arising from the use of the premises by Xxxxxx or from the failure of Xxxxxx to
properly maintain the vineyards as herein provided, except to the extent
directly or indirectly caused by Hill's negligence.
SECTION 7
MANAGEMENT FEE
7.1 MONTHLY FEE. The monthly fee to be paid in advance each month
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by Hill to Xxxxxx for services rendered hereunder, shall be [ ]* dollars
($[ ]*) for each of the 83 acres of the vineyards covered by this Agreement, or
as modified from time to time by the parties in continuation of this Agreement.
The management fee is included in the Budget and its payment procedure is
described in Subsection 2.2 above.
SECTION 8
MISCELLANEOUS
8.1 ASSIGNMENT. Neither Xxxxxx nor Hill shall assign or transfer this
Agreement or any interest herein or suffer any such assignment by operation of
law to be made 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.
8.2 COMPLIANCE WITH LAW. Xxxxxx shall use reasonable efforts to comply
with all statutes, ordinances, regulations, rules and other enactments by
federal, state, county or other regulatory agencies having
----------------------------
* Confidential Treatment Requested for Redacted Portion.
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jurisdiction over the Property, including, without limitations, zoning
ordinances, building codes and requirements of state and federal environmental
laws and regulations. Xxxxxx and Hill shall cooperate in obtaining all
necessary permits and approvals relating to use of the Property as vineyards.
8.3 RESTRICTIONS ON XXXXXX. Xxxxxx shall not place the Property under any
agricultural program offered by a governmental agency or negotiate or enter into
any labor agreement which may be binding upon Hill or the Property.
8.4 INTERPRETATION. Each of the parties agree 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
thereto hereto. In this Agreement, captions of the sections and subsections are
for convenience and 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.
8.5 LABOR FORCE. Xxxxxx shall be responsible for selecting and hiring its
own employees and for their supervision, direction and control. Moreover,
Xxxxxx shall be solely responsible for setting
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wages, benefits, hours and working conditions for such employees; for
furnishing, during the entire period of this Agreement, workers' 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. It is specifically agreed
that Hill shall not be responsible for any of the undertakings set forth in this
Subsection 9.5 relative to Xxxxxx'x employees.
8.6 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.
8.7 EMPLOYMENT OF OTHERS. Xxxxxx may contract with other entities to
furnish portions of the services required of Xxxxxx under this Agreement.
8.8 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
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party at the address shown below. Notices provided in person are effective on
receipt. Notices sent by U.S. Main are deemed to be effective two (2) days
after the date of mailing. Two (2) copies of any notice must be sent to both
parties as follows:
HILL:
One copy to: Xxxxxxx Xxxx
000 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Second copy to: Xxxx Xxxx
0000 Xxxxxxxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
XXXXXX:
One copy to: Xxxxxx X. Xxxxxx
Xxxxxx Vineyards and
Management Co.
0000 0xx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Second copy to: Xxxx Xxxxxxxx
Xxxxxx Vineyards and
Management Co.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
8.9 ATTORNEYS' 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 attorneys' fees and other costs incurred in that action or
proceeding, in addition to
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any other relief to which such party may be entitled. The proper venue for any
such action shall be San Xxxxxx County, California.
8.10 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 Hill 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 Hill and Xxxxxx other than the relationship of independent
contractor.
8.11 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.
8.12 GOVERNING LAW. This Agreement shall be governed by, construed and
enforced in accordance with and subject to the laws of the State of California.
8.13 SURVIVAL OF COVENANTS. The covenants set forth in this Agreement are
intended to and shall survive termination of this Agreement.
8.14 ACCESS BY HILL. Hill shall at all times have the right of
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access to the Property covered by this Agreement.
8.15 WARRANTY. Hill warrants that by the execution of this Agreement, it
is a binding and valid agreement on the parties, including, but not limited to,
all the beneficiaries of the Hill Living Trust and that the Co-Trustees signing
this Agreement on behalf of said Trust, have full power and authority to execute
the documents and bind the Trust to the terms and conditions of this
Agreement.
8.16 ESTOPPEL CERTIFICATE. Each party hereto shall, upon not less than ten
(10) days' prior written notice from the other party, execute, acknowledge, and
deliver to the other party a statement in writing (i) certifying that this
Agreement is unmodified and in full force and effect, or if modified, stating
the nature of such modification and certifying that this Agreement, as so
modified, is in full force and effect, and the date to which fees and charges
have been paid and (ii) acknowledging that there are not, to the certifying
party's knowledge, any uncured defaults, or breaches on the part of the other
party hereunder, or specifying such defaults or breaches if any are claimed.
Any such statement may be conclusively relied upon by any prospective purchaser
of property or business of Xxxxxx, or any encumbrancer or lender to either of
these parties.
The failure of either party to deliver such statement within such time
shall be conclusive upon the other party that this Agreement is in
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full force and effect, without modification except as may be represented by the
party requesting the certificate and there are no uncured defaults or breaches
in the performance by the other party.
8.17 INTEGRATION. This Agreement contains the complete Agreement between
the parties hereto and shall supersede all other oral agreements and writings of
these parties. No supplement, amendment or other commitment will be binding on
these parties unless in writing and signed by the obligated party.
8.18 SUCCESSORS AND ASSIGNS. This Agreement and all of the rights and
obligations hereunder are binding upon and inure to the benefit of the parties
hereto, and their respective representatives, administrators, executors, heirs,
successors, and assigns.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
HILL LIVING TRUST
By /s/ Xxxx X. Xxxx
-------------------------------
By /s/ Xxxxxxx X. Xxxx
-------------------------------
Its Co-Trustees
XXXXXX VINEYARDS AND MANAGEMENT CO.
By /s/ Xxxxx X. Xxxxxx
--------------------------------
Its Vice President
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