Common use of Section 303 Redemption Clause in Contracts

Section 303 Redemption. (a) In case of the death of R. Michael Mondavi, ▇▇▇▇▇▇▇ ▇. Mondavi or ▇▇▇▇▇▇ Mondavi ▇▇▇▇▇▇ (or their respective spouses or issue while such spouses or issue are Shareholders), the Company shall, at the option of the estate of such deceased Shareholder, redeem, in one or more redemptions, the maximum number of Company shares of such deceased Shareholder which is permissible under Section 303 of the Internal Revenue Code of 1954, as amended (the “Code”), or a similar successor statute, on the terms and conditions set forth below. In case of the death of any other Shareholder, including without limitation ▇▇▇▇▇▇ Mondavi or ▇▇▇▇▇▇▇▇ Mondavi, the Company agrees to redeem and the estate of such other deceased Shareholder shall sell, in one or more redemptions, the maximum number of Company shares of such other deceased Shareholder which is permissible under Section 303 of the Code, or a similar successor statute, on the terms and conditions contained in the remaining subparagraphs of this paragraph 4. (b) In all cases contemplated under the above subparagraph (a), the shares shall be redeemed (i) at the earliest time or times consistent with not accelerating any unpaid death taxes which may be payable over an extended period as provided by Section 6166 of the Code, or a similar successor statute, (ii) upon sixty (60) days’ notice given to the Company by the deceased Shareholder’s executor of the sum of money needed from time to time to pay such death taxes. (c) Notwithstanding the foregoing subparagraph (b), the executor of the deceased Shareholder may, at any time or from time to time, at his option, accelerate the time for redemption of all or part of the deceased Shareholder’s shares by giving ninety (90) days’ notice to the Company. (d) The redemption price for each share redeemed will be the date of death value thereof as finally determined for federal estate tax purposes. Before such value is finally determined, the redemption price will be the value claimed on the federal estate tax return of the deceased, subject to adjustment in cash upon final determination. For shares redeemed after the due date for filing the federal estate tax return, the redemption price will increase by 1½% of the date of death value for every three-month period elapsed after the filing date for such return. (e) For redemptions under subparagraph (b), the full redemption price will, unless otherwise agreed to by the Company and the deceased Shareholder’s executor, be paid in cash against delivery of the appropriate share certificate(s), duly endorsed for transfer, to the Company. For redemptions under subparagraph (c), the redemption price will be paid ten percent (10%) in cash and the balance by a promissory note payable in twenty (20) equal quarterly installments of principal, with interest on the unpaid principal balance at the Bank of America prime rate of interest, calculated from the date thereof. Each such note shall contain the additional provisions of the note(s) provided for in subparagraph 3(f) below. (f) Notwithstanding any other provisions herein contained, the Company at its option may distribute assets of the Company to the estate of the deceased Shareholder in satisfaction of the whole or any part of the Company’s obligations under this paragraph 4, at the fair market value of such assets as agreed to by the Company and the deceased Shareholder’s estate or, failing their agreement, as determined by arbitration had in accordance with the provisions of subparagraph 3(c). (g) As to Company stock of a deceased Shareholder which is not redeemed by the Company pursuant to this paragraph 4, the provisions of paragraph 3 above shall apply.