Exhibit 2
Domaines Barons de Rothschild (Lafite) SCA
▇▇, ▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
May 16, 2004
Constellation Brands, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Huneeus Vintners LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
This letter will confirm certain transactions proposed to be entered into
among Domaines Barons de Rothschild (Lafite) SCA ("DBR"), Constellation Brands,
Inc., acting through its wholly-owned subsidiary, Franciscan Vineyards, Inc.
("Constellation"), and Huneeus Vintners LLC ("Huneeus").
1. Constellation, Huneeus and DBR (collectively, the "Principals") intend
to enter into certain transactions among themselves and, in connection
therewith and prior thereto, to propose to a special committee of the Board of
Directors of ▇▇▇▇▇▇▇ (the "Special Committee") that ▇▇▇▇▇▇▇ enter into certain
transactions, based on and consistent with the terms set forth herein and other
terms to be agreed upon. The Principals have agreed to establish a joint
venture company (the "Joint Venture" or "JV") to which Constellation will
contribute $54 million in cash and certain assets and Huneeus will contribute
certain assets and liabilities, and to which DBR will, upon the completion of
the merger of Holdco into Chalone described below, cause Chalone to contribute
substantially all of its assets and liabilities.
The Principals propose to effect the proposed transactions as follows: (i)
DBR will form a corporation ("Holdco") and contribute $10 million in cash to
Holdco and contribute its Chalone shares (including any shares obtained upon
conversion of the Chalone convertible debt held by DBR) (the "Shares") to
Holdco in exchange for Holdco shares, (ii) the JV will loan to Holdco an amount
equal to the difference between the aggregate cash amount to be paid in
exchange for the outstanding publicly held shares of Chalone (other than the
shares held by DBR, Holdco and their affiliates) in the merger described in
(iv) below and the $10 million in cash to be contributed by DBR to Holdco;
(iii) the source of funds for the loan by the JV will be $54 million in cash
contributed by Constellation; (iv) DBR will propose to the Special Committee of
the Board of Directors of Chalone that Holdco enter into a merger agreement
with
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Chalone providing for the merger of Holdco with and into Chalone (the
"Merger"), in which merger all of the outstanding publicly held shares of
Chalone (other than the shares held by DBR, Holdco and their affiliates, which
shares shall be cancelled) shall be converted into cash and the stockholders
(other than Holdco) will receive the wine purchase rights described on Annex G
(such transactions, including the Merger, collectively, the "Transactions").
The Principals will jointly and severally guarantee the obligations of Holdco
under the merger agreement between Holdco and Chalone (the "Merger Agreement").
The closing of the Transactions will occur simultaneously. The material terms
of the Merger Agreement setting forth the terms and conditions of the Merger,
including the cash price per share to be paid to holders of Chalone shares
(other than DBR, Holdco or its affiliates) shall require the approval of each
of the Principals.
2. Each of the Principals hereby commits to cause the following
transactions: (i) Constellation will establish the JV as a Delaware limited
liability company and Constellation and Huneeus shall enter into governance and
other agreements relating to the JV on the terms set forth in Annex A hereto,
(ii) Constellation and Huneeus will contribute cash, assets and liabilities to
the JV (including debt amounting to no more than $18.5 million to be
contributed by Huneeus), and DBR will, immediately upon the consummation of the
Merger, cause ▇▇▇▇▇▇▇ to contribute substantially all of its assets and
liabilities to the JV, in each case on the terms and conditions set out in
Annex B in exchange for ownership interests in the JV, (iii) the Principals
will appoint ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as the CEO of the JV and establish a
management incentive plan on the terms set forth in Annex C hereto, (iv) the
Principals will cause the JV to enter into certain other business arrangements
with Constellation on the terms set forth in Annex D hereto, and (v) DBR shall
enter into an arrangement with the JV as set forth in Annex E hereto. The
Principals have valued the assets to be contributed by each of them, including
cash contributions, as $[81.2] million for Constellation, $[68] million for
Huneeus and $[61.372] million for DBR, resulting in equity percentages (the
"Equity Percentages") of [38.6]% for Constellation, [32.3]% for Huneeus and
[29.1]% for DBR.
3. The obligations of the Principals to effect or cause to be effected the
transactions described in (i) through (v) of paragraph 2 above are subject only
to the prior satisfaction of the following conditions: (i) the successful
consummation of the Merger, and (ii) all requisite consents and antitrust law
approvals being obtained. The obligations of the Principals to consummate the
transactions described in paragraph 2 above are not subject to any other
conditions.
4. None of the Principals shall take any action or enter into any
agreement inconsistent with the terms of this Commitment Letter during the
Commitment Period (being a period of 4 months from the date of this letter).
During the Commitment Period, each of the Principals shall act exclusively with
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the others with respect to the Merger and the other Transactions and during the
Commitment Period shall use reasonable efforts to cause the Merger and the
other Transactions to be consummated as herein contemplated.
In furtherance of such agreement, DBR hereby commits that during the
Commitment Period it shall not (i) at any shareholders meeting of ▇▇▇▇▇▇▇, vote
for any transactions proposed by a third party that would result in such third
party owning more than 50% of the voting securities of Chalone or its successor
or a transaction involving a sale of substantially all the assets of Chalone
(each a "Competing Transaction"), (ii) solicit any third party to propose a
Competing Transaction or discuss any such proposal with any third party, or
(iii) sell its Shares to any third party other than an affiliate (which shall
remain subject to the agreements herein). In the event that DBR shall breach
the commitment described in the previous sentence, then DBR shall immediately
reimburse Huneeus its documented reasonable expenses incurred in connection
with the Transactions.
DBR agrees to enter into a Voting Agreement upon the execution of the
Merger Agreement whereby DBR agrees for a period commencing upon the date of
the Merger Agreement and ending on the termination of the Merger Agreement by
its terms, (i) not to sell or otherwise transfer its Shares; (ii) not to
solicit proposals for Competing Transactions or enter into discussions with any
third party with respect to a Competing Transaction, and (iii) to vote its
Shares at a shareholders meeting of ▇▇▇▇▇▇▇ in favor of the transaction
proposed by the Merger Agreement and against any Competing Transaction.
In the event that at any time within a period of six months following the
date of the Merger Agreement ▇▇▇▇▇▇▇ enters into a definitive agreement for a
Competing Transaction at a price per share higher than $7.80 (the "Reference
Share Price") then (whether or not the Competing Transaction is consummated
within such six month period) DBR shall, within seven days of receipt of any
amounts paid to it pursuant to the Competing Transaction, pay each of
Constellation and Huneeus an amount equal to one-third of the difference
between the aggregate consideration received by DBR pursuant to such Competing
Transaction and an amount equal to the Reference Share Price multiplied by the
number of Shares. In addition, DBR agrees that in any circumstance in which
▇▇▇▇▇▇▇ is obligated to pay a break-up fee upon termination of the Merger
Agreement pursuant to the terms of the Merger Agreement as a result of ▇▇▇▇▇▇▇
entering into a Competing Transaction, such fee shall be paid to and shared by
Constellation and Huneeus as to 50% each.
The commitments and understandings of DBR in this paragraph shall not
restrict any actions taken by any director of ▇▇▇▇▇▇▇ who is an employee of or
affiliated with DBR in furtherance of his fiduciary obligations.
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5. Any proposed change to the material terms of the proposals or
transactions set forth in this Commitment Letter and the definitive agreements
contemplated hereunder (including the terms set forth in the Annexes hereto)
will be subject to the unanimous approval of the Principals.
6. Each Principal (each, an "Indemnifying Principal") shall severally, but
not jointly indemnify and hold harmless each other Principal (each, an
"Indemnified Principal") against (x) JV Losses (as defined below) incurred by
the Indemnified Principal (whether or not such JV Losses are occasioned by the
acts or failures to act of the Indemnified Principal), in an amount that is
proportionate to the Indemnifying Principal's prospective Equity Percentage in
the JV, and (y) Other Losses (as defined below) arising out of the conduct,
omission or statement of the Indemnifying Principal.
(a) Promptly after the commencement of any action or proceeding
against an Indemnified Principal which could give rise to a claim for
indemnification under this Section 6, the Indemnified Principal shall give
notice to each Indemnifying Principal if it wishes to assert a claim for
indemnification under this Section 6, provided, however, that the failure so to
notify the Indemnifying Principals (i) will not relieve the Indemnifying
Principals from their indemnification obligations in this Section 6 unless and
then only to the extent the Indemnifying Principals did not otherwise learn of
such action and such failure results in the forfeiture by the Indemnifying
Principals of substantial rights and defenses, and (ii) will not, in any event,
relieve the Indemnifying Principals from any obligations to any Indemnified
Principal other than the indemnification provisions in this Section 6.
(b) Following delivery of such notice, but subject to the provisions
of clause (c) below, each Indemnifying Principal shall be entitled to
participate in such action or proceeding and, to the extent that it shall wish,
to assume the defense thereof with counsel satisfactory to such Indemnified
Principal (but prior to assuming such defense, the Indemnifying Principal shall
have acknowledged in writing its indemnification obligation hereunder if such
claim is determined adversely to the Indemnified Principal). After notice from
the Indemnifying Principal to the Indemnified Principal of its election to
assume the defense of a claim, the Indemnifying Principal shall not be liable
to such Indemnified Principal under this Section 6 for any fees of other
counsel or any other expenses, in each case subsequently incurred by such
Indemnified Principal in connection with the defense thereof, other than
reasonable costs of investigation, or as provided in clause (d) below. If an
Indemnifying Principal assumes the defense of such an action, (i) no compromise
or settlement thereof may be effected by the Indemnifying Principal without the
Indemnified Principal's consent (which shall not be unreasonably withheld)
unless (A) there is no finding or admission of any violation of law or any
violation of the rights of any person and no effect on any other claims that
may be made against the Indemnified Principal and (B) the sole
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relief provided is monetary damages that are paid in full by the Indemnifying
Principal, and (ii) the Indemnifying Principal shall have no liability with
respect to any compromise or settlement thereof effected by the Indemnified
Principal without its consent (which shall not be unreasonably withheld). If
notice is given to an Indemnifying Principal of the commencement of any action
and it does not, within 30 days after the Indemnified Principal's notice is
given, give notice to the Indemnified Principal of its election to assume the
defense thereof (and in connection therewith, acknowledges in writing its
indemnification obligation hereunder), the Indemnifying Principal shall be
bound by any determination made in such action or any compromise or settlement
thereof effected by the Indemnified Principal. Notwithstanding the foregoing,
if an Indemnified Principal determines in good faith that there is a reasonable
probability that an action may materially and adversely affect it or its
affiliates other than as a result of monetary damages, such Indemnified
Principal may, by notice to the Indemnifying Principal, assume the exclusive
right to defend, compromise or settle such action, but the Indemnifying
Principal shall have no liability with respect to a judgment entered in any
action so defended, or a compromise or settlement thereof entered into, without
its consent (which shall not be unreasonably withheld). Should there be more
than one Indemnifying Principal, each Indemnifying Principal shall have the
option to assume the defense of the action or proceeding. If more than one
Indemnifying Principal chooses to assume the defense, such Indemnifying
Principals shall act jointly in the defense, it being understood that no
failure of agreement or cooperation among such Indemnifying Principals shall
prejudice the rights of the Indemnified Principal. Any Indemnifying Principal
which does not choose to assume the defense shall (to the extent it is liable
for Losses as an Indemnifying Principal) be bound by the actions of the
Indemnifying Principal or Principals which do assume the defense.
(c) In the case of JV Losses, the Principals shall select a single
counsel to represent them at their joint expense in the action or proceeding.
The Principals may retain separate counsel to protect their individual
interests, but the fees and expenses of any such counsel shall be for the sole
account of the Principal retaining such counsel.
(d) Notwithstanding the Indemnifying Principal's election to assume
the defense of an action or proceeding, the Indemnified Principal or Principals
in connection with an Other Loss (but not a JV Loss) shall have the right to
employ one separate counsel (including local counsel), and the Indemnifying
Principal shall bear the reasonable fees, costs and expenses of such separate
counsel if (i) the use of counsel chosen by the Indemnifying Principal to
represent the Indemnified Principal or Principals would present such counsel
with a conflict of interest; (ii) the actual or potential defendants in, or
targets of, any such action include both the Indemnified Principal or
Principals and the Indemnifying Principal and either or both of the Indemnified
Principals shall have reasonably concluded that there may be legal defenses
available to it which are
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different from or additional to those available to the Indemnifying Principal;
(iii) the Indemnifying Principal shall not have employed counsel reasonably
satisfactory to the Indemnified Principal or Principals to represent the
Indemnified Principal or Principals within a reasonable time after notice of
the institution of such action; or (iv) the Indemnifying Principal shall
authorize either or both of the Indemnified Principals to employ separate
counsel at the expense of the Indemnifying Principal.
(e) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless any Indemnified Principal, then
each Indemnifying Principal shall contribute to the amount paid or payable by
such Indemnified Principal as a result of the JV Loss or Other Loss, as the
case may be, in such proportion as is appropriate to reflect (i) in the case of
JV Losses, the relative benefits received by the Indemnified Principal on the
one hand and the Indemnifying Principals on the other hand, in each case from
the consummation of the Transactions as contemplated by and pursuant to the
terms of this letter, which relative benefits the parties agree are
proportionate to their prospective Equity Percentages in the JV, and (ii) in
the case of Other Losses, the extent to which such Losses result from actions
or failures to act of the Indemnifying Principal. Notwithstanding the rights of
any Principal to contribution in this Section 6(e), no Principal shall be
required to contribute an amount that is in excess of the amount which would
have been required to be paid by such Principal had such amount been calculated
in accordance with the indemnification provisions of this Section 6.
(f) Definitions. For purposes of this Section 6,
(i) The term "Proceeding" shall mean any action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding and any informal proceeding),
prosecution, contest, hearing, inquiry, inquest, audit, examination or
investigation commenced, brought, conducted or heard by or before, or otherwise
involving, any governmental entity.
(ii) The term "Losses" shall mean any and all actual losses,
liabilities, damages, judgments, settlements and expenses (including interest
and penalties with respect thereto and reasonable attorneys' fees and expenses
and reasonable accountants' fees and expenses incurred in the investigation or
defense of any Proceeding) incurred by any Principal to which such Principal
may become subject as a result of a claim of or Proceeding initiated by a third
party, irrespective of whether such Losses have been incurred or suffered as a
result of Proceedings initiated by a governmental entity or otherwise.
(iii) The term "JV Losses" shall mean any Losses, but only insofar as
such Losses arise out of or are based upon this Commitment Letter or the making
of a proposal with respect to the Merger by the Principals to the Board of
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Directors of ▇▇▇▇▇▇▇, or the consummation of the Transactions (including the
Merger) pursuant to this Commitment Letter; provided, however, that JV Losses
shall not include any Losses arising out of or based upon conduct, omissions or
statements described in any of clauses (A) through (E) of the definition of
"Other Losses".
(iv) The term "Other Losses" shall mean any Losses incurred by a
Principal which at any time arise out of or are based upon:
(A) actions or discussions by another Principal inconsistent
with the course of conduct or direction approved or consented to by the
Principals;
(B) the failure of another Principal to file, or timely file, any
forms, reports, statements or other documents required to be filed with
the Securities and Exchange Commission (as applicable, an "SEC Report");
(C) any untrue statement or alleged untrue statement or omission
or alleged omission contained in the SEC Report of another Principal, which
such statement or omission originated from such Principal;
(D) any act or omission by such Principal which would constitute
fraud, negligence or willful misconduct by another Principal; or
(E) the violation of any obligation of such Principal under any
agreement relating to the Transactions.
7. All legal expenses of the JV and each of the Principals incurred in
connection with the Transactions and the other transactions contemplated in
this Commitment Letter (including the transactions described in the Annexes
hereto) (the "Transaction Costs") will (i) be borne individually by each of the
Principals (with respect to the legal fees incurred by such Principal) except
as provided as follows; (ii) (a) Transaction Costs solely in organizing the JV
will be borne by Constellation; (b) Transaction Costs for services described on
Annex F in connection with work required to consummate such transactions will
be borne by the JV; and (c) Transaction Costs for services performed for each
of Principals in the event that the transactions described herein (including
the Annexes hereto) are not consummated will be borne by each of the
Principals. The expenses of other outside advisors retained by or for the
account of the JV will be borne by the JV.
8. The Principals' commitments in this Commitment Letter, other than those
in paragraphs 6 and 7, shall expire on September 15, 2004 if no Merger
Agreement shall have been entered into prior to that date.
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9. Except for the provisions of paragraphs 4, 6 and 7, which shall be
binding on the parties from the date hereof, (i) the transactions contemplated
hereby are subject to the performance of due diligence and the preparation,
execution and delivery of definitive agreements, in each case satisfactory to
each of the Principals, and (ii) any liability among the Principals shall
attach only upon execution and delivery of the Merger Agreement (in a form
acceptable to the Principals) with ▇▇▇▇▇▇▇.
10. This letter and the interpretation thereof will be governed by New
York law applicable to agreements made and to be performed therein.
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Please confirm that the foregoing conforms to your understanding by
executing and returning a copy of this letter to the undersigned, whereupon
this letter shall, to the extent set forth in paragraph 10, constitute a
binding agreement among ourselves.
Very truly yours,
DOMAINES BARONS DE ROTHSCHILD
(LAFITE) SCA
By: /s/ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, Managing Director
Confirmed and Agreed:
CONSTELLATION BRANDS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇, Chairman of the Board
and Chief Executive Officer
HUNEEUS VINTNERS LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Manager
ANNEX A
LLC OPERATING AGREEMENT
TERM SHEET
Parties Franciscan Vineyards, Inc. ("F"), Domaines
Barons de Rothschild (Lafite) SCA ("D") and
Huneeus Vintners LLC ("H") (the "Members")
Entity _________, LLC
Delaware limited liability company, manager
managed
Percentage Interests F = [38.6]%, to be classified as Class A
Membership Interests
H = [32.3]%, to be classified as Class B
Membership Interests
D = [29.1]%, to be classified as Class C
Membership Interests
All such interests (the "Membership
Interests") will have identical rights,
regardless of class, except for class voting
rights of Members and their designated
Managers, as described herein.
Capital Contributions As per Contribution Agreement. No further
capital calls without unanimous consent of
the Members.
Scope and Purpose of Joint To serve as a platform for the luxury wine
Venture business in the United States.
Management At least two managers to be designated by
each Class of Membership Interests (i.e. by
each Member) (the "Managers"); provided that
any Member may designate additional Managers
if it so chooses.
The Joint Venture shall have a Chief
Executive Officer and those officers,
holding those titles and duties, as
determined by the Board of Directors.
Board of Directors The Board of Directors (the "Board") will be
comprised of the Managers appointed by each
Class of Membership Interests as described
above.
The management of the Joint Venture shall be
vested in the Board of Directors. Except for
the appointment of Managers, or as otherwise
provided herein or by
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nonwaivable provisions of applicable law,
the Members shall not have any right to vote
or to take part in the management or control
of the Joint Venture business or have any
right or authority to act for or bind the
Joint Venture.
Each Manager on the Board of Directors shall
be a "manager" for purposes of the Delaware
Limited Liability Company Act (the "Act").
Except for situations in which the approval
of the Members is expressly required by the
provisions hereof or by nonwaivable
provisions of applicable law, the Board
shall have complete discretion, power and
authority in the management and control of
the business of the Joint Venture, shall
make all decisions affecting the business of
the Joint Venture and shall manage and
control the affairs of the Joint Venture to
carry out the business and purposes of the
Joint Venture.
In all votes of the Board, the Managers
designated by each class of Membership
Interests (each of which, a "Class" of
Managers) shall have a single vote. If there
is more than one Manager of a Class present
at a meeting, they shall determine among
themselves the vote to be cast by the Class.
Telephonic meetings will be authorized. At
least one Manager of each Class shall be
required to constitute a quorum, provided
that on votes requiring only a majority of
the Board, (i) if a quorum is not present
the meeting may be continued on at least 72
hours notice to all Directors, (ii) if a
quorum is not present at the continued
meeting, the meeting may again be continued
on at least 72 hours notice to all, and
(iii) at the second continued meeting, a
quorum shall consist of Managers of only two
Classes.
Provision shall be made for written minutes
of all meetings of the Board, to be
circulated and approved by the Managers of
each Class.
Unless otherwise specifically set forth in
the Operating Agreement or required by
applicable law, approval of any vote or
action of the Board shall require the
affirmative vote of at least the Managers of
two Classes. However, the following votes
and action shall require the affirmative
approval of the Managers of all three
Classes ("Unanimous Approval"), except as
otherwise provided under "Business
Opportunities"
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below:
(a) the assumption of the representation of
any third-party brands, or the purchase,
licensing, sale or other acquisition or
disposition of brands;
(b) any amendments to the Certificate of
Formation of the Joint Venture or the
Operating Agreement;
(c) any issuance of additional membership
interests or rights therein, except for
AFH incentive compensation, as described
in Annex __ to the Commitment Letter;
(d) any incurrence of indebtedness in excess
of that contemplated by the indebtedness
reduction schedule provided for in the
current 5-year business plan, as
increased by 0.25x EBITDA for the
trailing 12 months;
(e) any capital expenditures in excess of $1
million in the aggregate not provided
for in the current 5-year business plan;
(f) any program to build up inventory above
the level provided for in the current
5-year business plan;
(g) any merger, consolidation or other
business combination;
(h) any acquisition of assets, equity or
debt of another business or person
outside the ordinary course of business
in excess of $1 million;
(i) any disposition, directly or indirectly
of all or substantially all of the
assets of the Joint Venture;
(j) any disposition of an asset with either
a book or fair market value in excess of
$3 million;
(k) any (i) voluntary or involuntary
dissolution or liquidation, (ii) filing
of a petition in bankruptcy, (iii)
appointment of a receiver, or (iv)
assignment for the benefit of creditors;
(l) any change in dividend or distribution
policies;
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(m) any change in accounting or tax
policies;
(n) appointment of a new CEO;
(o) appointment or termination of a CFO;
(p) any action, transaction or series of
transactions with a single unaffiliated
third party during any fiscal year of
the Joint Venture (1) in the ordinary
course of business of the Joint Venture,
involving in the aggregate an amount in
excess of $5 million, or (2) outside the
ordinary course of business of the Joint
Venture, involving in the aggregate an
amount in excess of $1 million;
(q) any material departure from the
strategic direction developed by the
parties for the business of the Joint
Venture;
(r) if [70% Test failure] has occurred, then
thereafter any action not in accordance
with the annual business plan (the
"Business Plan"; and
(s) material transactions between the Joint
Venture and any Member or a Member's
affiliate.
Other matters which require Board action
shall require the affirmative approval
of two of the three Classes ("Majority
Approval"). These include without
limitation:
(a) adoption of and adjustment or amendment
of any annual Business Plan;
(b) termination of the CEO for "cause" (as
defined in the CEO's employment
agreement);
(c) during any fiscal year of the Joint
Venture, any action, transaction or
series of transactions, or any capital
expenditure or like transaction
(including but not limited to capital
leases) not (as to any of the foregoing)
authorized by other Board action (such
as specific authorization in the
Business Plan or any continuing written
authorization) (1) in the ordinary
course of business of the Joint Venture,
involving in the aggregate an amount in
excess of $1 million, or (2) outside the
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ordinary course of business of the Joint
Venture, involving in the aggregate an
amount in excess of $100,000;
(d) determination of terms of employment
offers to senior management (direct
reports to the CEO);
(e) approval of all long-term and short-term
incentive plans offered to the employees
of the Joint Venture; and
(f) transactions involving an aggregate
amount in excess of $60,000 between the
Joint Venture and any Member or a
Member's affiliate.
Chief Executive Officer ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ will be appointed
as the Chief Executive Officer.
Subject to the direction of the Board, the
Chief Executive Officer shall have general
and active control of the Joint Venture's
general day-to-day business and shall see
that all orders and resolutions of the Board
are put into effect.
Entity Classification Election The Joint Venture shall elect to be taxed as
a partnership for both state and federal tax
purposes.
Allocation of Profits and Losses The Joint Venture's profits and losses shall
be allocated to the Members in accordance
with each Member's Percentage Interest,
subject to possible special allocations
agreed to by all Members.
Mandatory Distributions 1 - Tax distributions, in an amount equal to
the highest marginal combined federal, state
and local tax rates of any Member (currently
estimated at [47%]) multiplied by the Joint
Venture's taxable income for the applicable
period.
2 - An additional amount such that H's pro
rata share will be $500,000, if requested by
any Member.
3 - Beginning in the eighth year of the
existence of the Joint Venture, an
additional amount which, together with the
distributions in 1 and 2 above, constitutes
75% of the available cash (net of reserves)
for the year.
The foregoing shall be subject to any
external constraints, such as loan covenants
and prudent reserve
-6-
policies, provided that no voluntary
external restrictions on distributions will
be agreed to without Unanimous Approval. All
distributions shall be made to the Members
in accordance with their Percentage
Interests.
Any other distributions will be made only
with the Unanimous Approval of the Board.
Business Opportunities Any opportunity presented to a Member to
acquire an interest in any of a list of
brands to be attached to the LLC Agreement
must first be offered to the Joint Venture
prior to such Member acquiring the same. If
the Joint Venture determines not to acquire
such interest, then the Member presenting
the opportunity may acquire that interest.
The determination of whether such business
opportunity should be acquired by the Joint
Venture will, notwithstanding any contrary
provision above requiring Unanimous
Approval, be made by a Majority Approval of
the Board. Other than as noted above, any
Member may engage in, or possess an interest
in, other business ventures of any nature
and description, whether or not such other
enterprises shall be in competition with or
operating the same or similar businesses as
the Joint Venture, and no Member shall have
any obligation or duty to bring business
opportunities to the attention of the Joint
Venture or any other Member.
Voluntary Transfer of Interests No transfers to third parties (including, as
to any Member, any other Member), except to
a Permitted Transferee, except as provided
below.
If one Member sells its interest to another
Member, all matters previously requiring
Majority Approval shall require Unanimous
Approval.
"Permitted Transferee" shall be defined,
with respect to any Member, as any
individual, corporation, partnership, joint
venture, association, trust or
unincorporated organization directly or
indirectly controlling, controlled by, or
under common control with such Member,
provided that (x) the entire interest of the
original Member must be transferred to such
Permitted Transferee and (y) such Member
shall unconditionally and irrevocably at all
times be liable for the payment and
performance obligations of such person
hereunder and under the Commitment Letter
and all other arrangements described
therein.
-7-
Right of First Offer
--------------------
If after the sixth anniversary of the
formation of the Joint Venture a Member
desires to sell all or any portion of its
Membership Interest, then that Member shall
first offer such Membership Interest to the
other Members by giving written notice of
such offer to the Board of Directors and the
other Members, stating the portion of its
Membership Interest it proposes to sell, the
offer price, the consideration it will
accept and, in reasonable detail, all other
material matters relating to the offer. If a
second Member does not, within 15 days of
receipt of the Notice, give notice that it
will join the offer to sell, then the
following procedures will apply and, until
they are completed, neither other Member may
initiate a sale of its Membership Interest.
The other Members shall have the option
to accept such offer, exercisable by
giving written notice of acceptance to
the initiating Member, with a copy to
each of the other Members, within 120
days after its receipt of the offer.
The closing of the transfer of the
Membership Interest shall take place on
a date selected by the responding
Member or Members not less than 30 days
or more than 60 days after the giving
of the acceptance notice. If the other
Members do not elect to purchase all of
the offered Membership Interest, then
the initiating Member shall have 180
days within which to sell such
Membership Interest to a third party on
terms and conditions no more favorable
to the third party than as set forth in
the original offer to the other
Members.
If, within 15 days of receipt of the notice
from the initiating Member, a second Member
gives notice that it will join the
initiating Member's offer to sell, then the
following procedures will apply.
The remaining Member shall have the
option to accept the offer of the two
other Members, on the same basis and
within the same time periods as set
forth above. If the remaining Member
does not elect to purchase all of the
Offered Membership Interests, then the
offering Members shall have 180 days
within which to sell such Membership
Interests to a third party or to cause
the Joint Venture or its
-8-
assets to be sold, in which case
(i) the offering Members shall have the
right (in the case of a sale of
Membership Interests) to cause the
remaining Member to sell its Membership
Interest on the same terms and
conditions, (ii) the remaining Member
shall be required to grant any
necessary approvals to such sale, and
(iii) should the other Members not
require the remaining Member to join in
the sale, the remaining Member shall
have the right to sell its Membership
Interest in the sale on the same terms
and conditions as the other Members.
Time shall be of the essence with respect to
exercise of rights to buy or sell under the
provisions of this section.
Change of Control If a change of control [to be defined] of
any Member, or of a person or entity
controlling such Member, occurs, the other
Members will have the right to determine
whether to sell their Membership Interests
to or purchase the Membership Interest held
by the Member as to which the change of
control has occurred at the fair market
value thereof. If the other Members choose
to purchase the Membership Interest held by
the Member as to which the change of control
has occurred, each such Member will have the
right to purchase such Membership Interest
pro rata according to their ownership
interests in the Joint Venture. The decision
to purchase or sell must be made jointly by
the other Members. In the absence of
agreement, there will be no purchase or
sale, provided that the other Members may
agree that one of them will purchase the
Membership Interests of the other two
Members, at the fair market value thereof,
which agreement will also be binding upon
the Member as to which the change of control
has occurred.
Appropriate adjustments in the governance
provisions will be agreed to reflect the
changed economic interest of the acquiring
Member(s).
Unless it is determined by agreement among
the Members, fair market value will be
determined by the following process.
The Members as to which the change of
control has occurred, on the one hand,
and the other Members (by agreement
between them),
-9-
on the other hand, will prepare a
proposal as to the fair market value of
the Joint Venture, including such
supporting information as they may
select, and each will submit its
proposal to an arbitrator, who shall be
experienced in the valuation of
businesses similar to the Joint
Venture's business. The arbitrator, in
its discretion, may conduct a
proceeding to receive additional
information about the basis of and
support for the two proposals. The
arbitrator will then determine the fair
market value of the Joint Venture by
choosing one or the other of the two
proposals; provided that the arbitrator
shall not have the discretion or
authority to choose any other value.
The fair market value of the Membership
Interest or Interests to be purchased
and sold hereunder will then be deemed
to be the amount that would be
distributed to the holder of such
Membership Interest(s) if the Joint
Venture were sold at the amount
determined by the arbitrator and then
liquidated.
Material Breach No special provisions. Members retain their
contractual remedies.
Business Plan Deadlock If the Board fails to approve the Business
Plan on two successive years, the second of
which is no earlier than the fourth year of
the Joint Venture, then:
FIRST: The Members shall negotiate in good
faith to resolve the issue or to agree on an
exit. If necessary, the dispute will be
referred to the chief executive officers of
each of the Members.
SECOND: If no agreement is reached, then the
following blind auction process shall be
used:
(1) Each Member may submit a sealed
offer to an independent person. An offer is
a proposed all cash price for the entire
Joint Venture.
(2) Subject to (3) below, the Member
submitting the highest offer must buy out
the other Members at the lower submitted
offers. If more than one Member submits the
same highest offer, they will resubmit bids,
which may be higher, lower or the same as
before. If, after resubmission, there
remains more than one offer at the same
highest amount, the buyer
-10-
will be selected by random process.
(A) Each selling Member shall
receive what it would receive if the
Joint Venture were sold for that
Member's submitted offer and then
liquidated.
(B) In determining liquidation
amounts, all outstanding incentive
equity will be treated as fully vested
immediately before the liquidation.
(C) A Member who does not submit
an offer will become a seller who is
deemed, for these purposes, to have
submitted an offer at the same amount
as the buyer.
(3) To give the buying Member adequate
time to arrange purchase financing, the
closing will be a date selected by the buyer
no later than 180 days after being selected
as buyer.
(A) The purchase will be on an
all-cash basis;
(B) If the buyer fails to timely
close, the buyer will promptly
reimburse the other Members for all
reasonable costs they incurred in
connection with the buy-sell process.
If there is at least one other Member
who submitted an offer, then the Member
who submitted the next highest offer
becomes the buyer and the initial buyer
becomes a seller and is deemed to have
submitted an offer at the same amount
as the new buyer (and, if a Member had
not submitted an offer, its deemed
offer price is also adjusted to the
price of the new buyer). (The process
will be the same if the new buyer fails
to close: that is, if all three Members
submitted offers, the Member who
submitted the lowest offer will become
the buyer, and the other two Members
will become sellers and will be deemed
to have submitted offers at the same
amount as the new buyer.)
(4) If the process in paragraphs
(1)-(3) above does not result in a
purchase-sale transaction (including if no
offers are submitted), the Members will
appoint an investment banker to solicit bids
from
-11-
third parties to buy the entire Joint
Venture, and the Joint Venture will be sold
to the highest and best third-party bidder.
Termination, Dissolution, The property and proceeds from liquidation
Liquidation by Vote of the of Joint Venture assets shall be applied as
Board follows:
(a) first, to the payment of creditors of
the Joint Venture, including Members who
are creditors, to the extent permitted
by law;
(b) and then, to pay the expenses of winding
up the Joint Venture; and
(c) and finally, to each Member in
accordance with its Percentage Interest.
ANNEX B
CONTRIBUTION AGREEMENT
TERM SHEET
Parties C, H, D and Holdco (a 100%-owned subsidiary
of D)1
Creation of JV The parties will form a Delaware limited
liability company (the "JV") to which they
will contribute cash and certain assets and
in which they will receive the following
ownership interests: C - [38.6]%; H -
[32.3]% and Holdco - [29.1]%.
Contributed Assets Pursuant to the terms of a Contribution
Agreement (the "Contribution Agreement"),
each of the following parties shall
contribute to the JV the following assets
(the "Contributed Assets") in consideration
of the ownership interests received in the
JV:
C o Cash in the amount of $54 million; and
o all assets set forth on Schedule C,
including the Oakville Estates vineyard
and certain equipment pertaining to the
vineyard (the "Non-cash C Assets"), but
not including the 2004 crop from the
Oakville Estates vineyard.
H o all Contracts set forth on a schedule to
the Contribution Agreement, all assets
set forth on Schedule H, including the
assets of the ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and
winery and the business operated with
such assets.
o The contributed assets shall not include:
o four parcels of land shown on
Schedule H hereto;
o building rights with respect to the
parcels of land which are being
contributed;
o accounts receivable with respect to
sales of wines of the 2001 vintage;
---------
1 Holdco shall act through CH following the consummation of the
Merger (as defined in the Commitment Letter).
-2-
o personal antique furniture of AH and
vineyard equipment and office equipment
associated with H's retained business.
Holdco o all right, title and interest of CH in
the assets used in the business of CH,
wherever located, but excluding CH's
right to appoint a director to D's board,
which right shall be terminated, and
excluding the rights and obligations
related to a certain joint venture,
provided that subject to obtaining the
requisite consents these rights will be
transferred and if they are not the
parties will agree on other arrangements
as described in the "Non-Transferable
Assets and Liabilities" section, below.
Transferred Liabilities Each of the following parties shall transfer
or cause to be transferred to the JV the
following liabilities (the "Transferred
Liabilities"), which the JV will assume:
C o all liabilities associated with the
ownership, use and operation of the
Non-cash C Assets, arising on or after
the date of the closing of the
Contribution Agreement of such assets to
the JV
H o up to $18.5 million in debt; and
o except for liabilities related to
employees, which liabilities are being
dealt with in the "Employee Benefits
Matters" section below, all liabilities
associated with the ownership, use and
operation of the assets contributed by H,
arising on or after the date of the
closing of the Contribution Agreement of
such assets to the JV.
Holdco o all liabilities of any kind, character or
description (whether known or unknown,
accrued, absolute, contingent or
otherwise) of CH or otherwise related to
any of the assets or the business of CH.
For the avoidance of doubt, with respect to
the Transferred Liabilities of C and H only,
the JV will not assume the following (the
"Retained Liabilities"):
o any liabilities arising out of the real
estate, equipment or rights retained or
transferred to a third party by H (as
shown on Schedule H hereto) or any other
assets specifically retained by H or C;
and
-3-
o any tax liabilities, except as otherwise
provided in the "Taxes" section of this
Annex, with respect to pre-Closing tax
periods or resulting from any transfers
required by the Contribution Agreement.
Non-Transferable Assets If any assets, contracts, rights, benefits
and Liabilities or liabilities of CH intended to be
contributed or transferred hereunder require
any third party or governmental consent to
be so contributed or transferred to the JV,
each of Holdco and the JV will use their
best efforts to obtain all such consents
necessary to cause the contribution or
transfer of all such assets, contracts,
rights, benefits or liabilities to the JV.
If such consents are not obtained, the
parties will, at the JV's expense, cooperate
in a mutually agreeable arrangement under
which the JV would obtain the rights and
benefits and assume the obligations and
liabilities thereunder in accordance with
the Contribution Agreement. The JV will
indemnify and otherwise make whole each of
the parties for any claims, obligations and
liabilities (including all costs and
expenses incurred in connection therewith)
arising under any such assets, contracts,
rights, benefits or liabilities.
Employee Benefits Matters The JV will assume all liabilities
associated with the current and former
employees of CH.
The JV will assume only the accrued but
unused vacation and sick leave obligations
of the current employees of ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ and winery who are employed by the
JV after the closing of the Contribution
Agreement.
Representations and Warranties Holdco will cause the assets and liabilities
of CH to be transferred to the JV on an "as
is, where is" basis.
Holdco will make the following
representations and warranties for the
benefit of the JV:
o corporate existence, power and due
authorization of Holdco to enter into
Contribution Agreement.
C and H will make the following
representations and warranties for the
benefit of the JV, as of the date hereof and
as of the closing of the Contribution
Agreement (knowledge and materiality
qualifiers to be reviewed by the parties):
o corporate existence, power and due
authorization
-4-
of such party;
o non-contravention of all material
agreements relating to the Contributed
Assets of such party;
o no consents required from third parties
with respect to the transfer of
Contributed Assets to the JV or the
assumption of the Transferred Liabilities
by the JV (with exception of H's
transferred debt);
o each such party has good title to, and
upon closing of the Contribution
Agreement, the JV will have good title
to, or in the case of any leased real
property or personal property has valid
leasehold interests in, and upon
contribution the JV will have valid
leasehold interests in, all Contributed
Assets. Each of the Contributed Assets
shall be free of any mortgage, lien,
pledge, charge, security interest or
encumbrance (collectively, "Liens"), with
the exception of:
o Liens disclosed in the financial
statements of such party or as a
matter of public record set forth
specifically in the Contribution
Agreement;
o Liens for taxes, assessments and
similar charges that are not yet
due; and
o mechanic's, materialman's,
▇▇▇▇▇▇▇'s, repairer's and other
similar Liens arising or incurred in
the ordinary course of business or
that are not yet due and payable.
o each such party has contributed to the JV
all such rights, privileges, property and
assets as are required to operate the
business or activities related to such
party's Contributed Assets in the
ordinary course of business consistent
with past practices of such party;
o all of such party's inventories arising
from or otherwise relating to the
Contributed Assets are owned free and
clear of all Liens. All such inventories
consist of items of a quality usable or
saleable in the normal course of business
consistent with past practices of such
party and are and will be in quantities
sufficient for the normal
-4-
operation of the business of the JV;
o all accounts receivable contributed by a
party will, at the closing of the
Contribution Agreement, be valid, genuine
and fully collectible in the aggregate
amount thereof, subject to reasonable and
customary reserves for doubtful accounts;
o the intellectual property contributed by
a party is not, and upon contribution
shall not be, subject to any outstanding
judgment, injunction, order, decree or
agreement restricting the use thereof by
the JV or restricting the licensing
thereof by the JV to any person;
o all intercompany arrangements and
accounts relating to such party's
Contributed Assets (other than as
specifically disclosed in the
Contribution Agreement) have been
terminated prior to the Closing of the
Contribution Agreement;
o none of such party's Contributed Assets
are bound by any material contracts
(other than as specifically disclosed in
the Contribution Agreement);
o no material litigation affecting such
party's Contributed Assets;
o compliance with laws, regulations and
court orders;
o no undisclosed material liabilities with
respect to such party's Contributed
Assets;
o employee and employee benefit matters
with respect to such party's Contributed
Assets; and
o environmental and tax matters.
Covenants The following parties will make the
following covenants:
o From the date of the Contribution
Agreement until the closing of the
Contribution Agreement, C and H shall
conduct all business in connection with
their Contributed Assets in the ordinary
course and shall use their reasonable
best efforts to preserve intact the
relationships with third parties and, in
the case of H, to keep available the
services of the
-6-
present employees. C and H will not commit
or agree to commit any action that would
make any representation or warranty of
such party under the Contribution
Agreement untrue, or omit or agree to
omit to take any action necessary to
prevent any such representation or
warranty from being inaccurate in any
respect at any such time; and
o H and C will continue to maintain
insurance coverage through the closing of
the Contribution Agreement, at levels
consistent with past practices, with
respect to such party's Contributed
Assets.
Closing Conditions The obligations of each party to consummate
the contribution contemplated hereby are
subject only to the following conditions:
o receipt of all requisite antitrust
approvals in the U.S.;
o the consummation of the merger of Holdco
into CH;
o the execution of all agreements described
in the Commitment Letter (including the
Annexes thereto) and the satisfaction of
all conditions to all such agreements set
forth in the agreements or the Commitment
Letter by all requisite parties; and
o the absence of any injunctions preventing
the consummation of the transactions
contemplated hereby.
Termination The Contribution Agreement may be
terminated:
o by any party if any closing condition is
incapable of being satisfied, provided
that the party seeking to terminate is
not responsible for such condition not
being satisfied.
Indemnification The parties and the JV shall indemnify one
another as follows:
JV The JV will indemnify each of C, H and
▇▇▇▇▇▇ against any damages arising out of
the Transferred Liabilities and will
indemnify CH for any other liabilities
arising from the business of CH whether
prior to or after the closing of the
Contribution Agreement.
-7-
C and H Each of C and H will indemnify the JV
against any damages arising out of
liabilities not expressly assumed by the JV
and any material misrepresentations by such
party.
D will indemnify the JV with respect to 49%
of any damages suffered by the JV as a
result of the existence of any liability of
CH in existence as of the closing of the
Contribution Agreement not either publicly
disclosed, provided for in the financial
statements of CH, arising out of any
agreements or arrangements which are
publicly disclosed or available, or which
have otherwise been disclosed to C, H or the
JV in writing.
D's obligations under the indemnity will be
subject to a deductible of $2,000,000 and a
cap of $10,000,000 and will expire 12 months
from the closing of the Contribution
Agreement.
Limitations regarding The indemnity for material
Misrepresentations misrepresentations shall survive for 12
months from the Closing and be subject to an
individual deductible of $1,000,000 in
connection with H's indemnity and $500,000
in connection with C's indemnity.
Neither C nor H shall be required to
indemnify the JV in an amount greater than
$10,000,000.
Prepaid Expenses So as to provide the benefits and burdens of
the 2004 harvests from the contributed H and
C vineyards, all vineyard expenses shall be
apportioned between the respective
contributing parties and the JV, based on
the number of days included in the period up
to and including the last day of the month
succeeding the 2004 harvest on the one hand,
and the number of days following such date
during such growing period on the other
hand. Similarly expenses related to the
production of the 2004 vintage wines being
contributed by H will be apportioned as of
the same date.
Taxes All real property taxes, personal property
taxes and similar ad valorem obligations
levied with respect to the Contributed
Assets of C and H for a taxable period which
includes (but does not end on) the date of
the Contribution Agreement shall be
apportioned, based on the number of days
included in the period up to and including
the last day of the month succeeding the
2004 harvest on the one hand, and the number
of days
-8-
following such date during such taxable
period on the other hand, between the
respective party contributing such assets
and the JV.
All excise, sales, use, value added,
registration, stamp, recording, documentary,
conveyancing, franchise, property, transfer,
gains and similar taxes, levies, charges and
fees incurred in connection with the
transactions contemplated by the
Contribution Agreement shall be borne by the
JV.
Debt The JV shall use its best efforts to
negotiate, and shall bear all costs and
expenses in connection with any
negotiations, with CH's creditors to assign
all of CH's debt instruments (including all
private placement notes and bank credit
agreements) to the JV. In the event that
such debt instruments cannot be assigned,
the JV shall, at its own cost and expense
and for its own account, cause all necessary
actions to be taken to discharge all of CH's
obligations, including principal, interest,
penalties and all costs and expenses in
connection therewith, under such debt
instruments.
All costs and expenses in connection with
the negotiation or refinancing of H's debt
in connection with this Contribution
Agreement shall be borne pro rata by the JV
and H according to the following formula:
o the JV will pay the percentage of such
costs that corresponds to the
percentage of the value of all debt
that is to be contributed by H to the
JV; and
o H will pay the percentage of such
costs that corresponds to the
percentage of the value of all debt
that is retained by H,
except that all costs and expenses incurred
in connection with the division of the debt
collateral between the Contributed Assets
and the assets to be retained by H shall be
borne by H.
Other Tax Matters For tax purposes, (i) the contributions of
assets and liabilities by C and H are
intended to be treated as contributions
described in Section 721 of the Internal
Revenue Code of 1986, as amended (the
"Code"), and (ii) the contribution of assets
and liabilities by Holdco (through CH) are
intended to be treated as (x) in part a
contribution by CH of its assets to JV under
Section
-9-
721 of the Code, and (y) in part a sale by
CH of its assets to JV under Section 707 of
the Code. Notwithstanding the foregoing,
there is no intention for the JV to
indemnify any party other than to indemnify
CH, for tax liabilities arising out of such
party's contribution.
The parties will negotiate in good faith to
agree the fair market values of the specific
categories of assets contributed by C, H and
▇▇▇▇▇▇ as of the closing of the Contribution
Agreement.
Governing Law; Jurisdiction New York
SCHEDULE C
(To Contribution Term Sheet)
Contributed Assets of C
See the following as attached:
1. Deed for Oakville Vineyard
2. Equipment List
1999-0018240
FIRST AMERICAN TITLE Recorded Official REC FEE 16.00
COMPANY OF NAPA Records PCOR FEE 20.00
County of
RECORDING REQUESTED BY NAPA SS
AND WHEN RECORDED MAIL TO ▇▇▇▇ ▇▇▇▇▇▇ Page 1 of 4
Recorder
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ G 02:25PM 04-Jun-
St. Helena, CA 94574 1999
ATTN.: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
117008-F
APN: ▇▇▇-▇▇▇-▇▇▇,▇▇▇-▇▇▇-▇▇▇ See separate declaration for transfer tax.
GRANT DEED
By this instrument dated June 4, 1999, for a valuable consideration,
▇▇▇▇▇ PROPERTY, INC., a California corporation,
By GRANTS to
SCV-EPI VINEYARDS, INC., a New York corporation;
The Real Property in the State of California, County of Napa
described in Exhibit A attached hereto and made a part hereof
▇▇▇▇▇ PROPERTY, INC.,
a California corporation
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Secretary
2
DOCUMENTARY TAX
DECLARATION FILED
Documentary Transfer Tax $_________________
Computed on full value of Property Conveyed, or
Computed on full value less liens & encumbrances
remaining thereon time of sale.
/s/
------------------------------------------------
Signature of declarant or agent determining tax
3
CERTIFICATE OF ACKNOWLEDGMENT
STATE OF CALIFORNIA )
)
COUNTY OF SAN FRANCISCO )
On June 3, 1999 before me, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Notary Public, personally appeared
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
[ ] personally known to me, OR [X] 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 executed the
[SEAL] same in his authorized capacity, and that
by his 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 /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------
4
EXHIBIT A
(Legal Description)
The land referred to herein is situated in the State of California, County of
Napa and is described as follows:
BEING Lots 17, 18, 19 and 20 in Block D and a portion of the lands of ▇.▇.
▇▇▇▇▇▇▇▇ as shown on the map entitled, "Map of the Subdivision of the Caymus
Grant in Napa County, California", recorded January 2, 1874 and filed in Book 1
of Maps at page 81 in the office of the Napa County Recorder, described as
follows:
BEGINNING at a 3/4" iron pipe on the Southeasterly line of the Oakville Cross
Road at the most Northerly corner of Parcel 1, as said parcel is shown on map
No. 2384 entitled, "Parcel Map of the Lands of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇", recorded May
25, 1973 and filed in Book 5 of Parcel Maps at page 28 in said Recorders
Office; thence North 60 degrees 02' 55" East along said Southeasterly line of
said Oakville Cross Road 251.93 feet to a 3/4" iron pipe; thence South 35
degrees East 1799.89 feet to a 3/4" iron pipe on the Northwesterly line of Lot
17 of said Caymus Grant; thence along said Northwesterly line of said Lot 17,
North 59 degrees 50' East 1530.52 feet to a 6" x 6" Redwood stake on the
Westerly line of the County road known as "Middle Valley Road" as shown on said
map of said Caymus Grant, from which the remnants of a large oak ▇▇▇▇▇ bears
South 26" East 44.2 feet; thence along the Westerly line of said "Middle Valley
Road" South 22 degrees 20' 35" East 1885.90 feet to a 3/4" iron pipe at the
most Easterly corner of Lot 20 of said Caymus Grant; thence South 52 degrees
35' 10" West along the Southeasterly line of said Lot 20 and Lot 19 of said
Caymus Grant 3784.03 feet to the center of the Napa River, thence up the center
of the Napa River, North 85 degrees 50" West 13.16 feet, North 81 degrees 29'
West 93.9 feet, North 64 degrees 43' West 88.5 feet, North 41 degrees 42' West
79.9 feet North 56 degrees 38' West 125.9 feet, North 85 degrees 28' West 135.7
feet, North 89 degrees 06' West 100.7 feet, North 71 degrees 42' West 96.4
feet, South 71 degrees 33' West 115.3 feet, South 78 degrees 46' West 158.1
feet, North 50 degrees 12' West 96.1 feet, North 50 degrees 18' West 87.7 feet,
North 29 degrees 44' West 136.1 feet, North 11 degrees 50' West 102.0 feet,
North 15 degrees 20' West 147.0 feet, North 38 degrees 04' East 124.5 feet,
North 5 degrees 13' East 100.4 feet, North 5 degrees 36' West 97.7 feet, North
44 degrees 56' West 94.0 feet, North 39 degrees 32' West 72.0 feet, North 26
degrees 21' West 130.9 feet, North 33 degrees 18' West 112.6 feet, North 60
degrees 13' West 79.6 feet, North 72 degrees 07' West 80.5 feet, North 40
degrees 51' West 149.6 feet, North 19 degrees 41' West 103.2 feet, North 58
degrees 30' West 75.8 feet, North 89 degrees 07' West 99.4 feet and North 74
degrees 03' West 103.87 feet to the Northwesterly line of Lot 18 of said ▇▇▇▇▇▇
▇▇▇▇▇; thence along said Northwesterly line of said Lot 18, North 59 degrees
50' East 894.19 feet to a 1 1/4" iron pipe at the most Easterly corner of the
26.49 acre tract of land shown on map number 426 entitled, "Record of Survey
Map of the Lands of ▇▇▇▇▇ Del ▇▇▇▇▇▇", recorded September 1, 1959 and filed in
Book 5 of Surveys at page 4 in said Recorders Office; thence along the
Northeasterly line of
5
said 26.49 acre tract, North 34 degrees 57' 36" West 1808.92 feet to a 1 1/4"
iron pipe at the most Northerly corner of said 26.49 acre tract on the
Southeasterly line of said Oakville Cross Road; thence along the Southeasterly
line of said road, North 60 degrees 02' 55" East 968.40 feet to a 3/4" iron
pipe that replaces the 1 1/4" iron pipe at the most Westerly corner of Parcel B
shown on map number 1539 entitled, "Record of Survey Map of the lands of ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇ et ux", recorded August 15, 1966 and filed in Book 15 of Surveys at
page 21 in said Recorders Office; thence along the Southwesterly line of said
Parcel B, South 34 degrees 57' 08" East 1805.25 feet to a 3/4" iron pipe on the
Northwesterly line of said Lot 18; thence along the Northwesterly line of said
Lot 18 and said Lot 17, North 59 degrees 50' East 970.82 feet to a 3/4" iron
pipe on the Southwesterly line of the "Remaining Lands of ▇▇▇▇▇▇", as shown on
said map number 2384; thence along said Southwesterly line of ▇▇▇▇▇▇, North 35
degrees West 1566.99 feet to a 3/4" iron pipe at the most Southerly corner of
said Parcel 1 shown on said map number 2384; thence along the Southeasterly and
Northeasterly lines of said Parcel 1, North 60 degrees 02' 55" East 232.87 feet
to a 3/4" iron pipe and North 35 degrees West 234.73 feet to the point of
beginning.
EXCEPTING THEREFROM that certain Parcel conveyed to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ by ▇▇▇▇
recorded November 25, 1980 in Book 1184 at page 479 of Official Records of Napa
County
APNs ▇▇▇-▇▇▇-▇▇▇ and ▇▇▇-▇▇▇-▇▇▇
6
Est Rem
Class AcqDate Asset# Description Life Life Svc Date
------- --------- -------- -------------------------------- ------ ------ ----------
B 7/1/1982 F1-00464 STEEL BLDG FOUNDATION 480 234 7/1/1992
B 5/1/1992 F1-00828 IMPRV - SHOP 120 - 5/1/1992
B 6/1/1992 F1-00827 IMPRV - OFFICE 120 - 6/1/1992
B 6/1/1992 F1-00829 IMPRV - TOWER 120 - 6/1/1992
B 9/1/1992 F1-00826 IMPRV - HOUSE 120 - 9/1/1992
B 10/31/1998 F1-01542 OAKVILLE OFFICE ROOF 480 426 10/31/1998
B 12/1/2001 F1-02181 Oakville Vyd Office Buildout 396 378 12/1/2001
B 3/1/2002 F-02308 Oakville House Remodel 01 396 366 12/31/2000
B 3/1/2002 F-02312 Oakville House Remodel 01 396 366 2/28/2001
B 3/1/2002 F-02314 Oakville House Remodel 02 396 378 5/30/2001
B 3/21/2002 F-02195 Oakville house-professional svcs 480 474 3/21/2002
B 12/31/2002 F-02307 Oakville House Remodel 01 396 366 12/31/2000
B 1/31/2003 F-02300 Oakville House-interior design 480 474 1/31/2003
B 1/31/2003 F-02309 Oakville House Remodel 01 396 366 1/31/2001
B 1/31/2003 F-02310 Oakville House Remodel 01 396 366 1/31/2001
B 1/31/2003 F-02311 Oakville House Remodel 01 396 366 1/31/2001
B TOTAL
FE 3/31/1998 F1-01540 OAKVILLE OFFICE FURN 120 66 3/31/1998
FE 1/31/2003 F-02196 Oakville House Furn 120 114 1/31/2003
FE TOTAL
LI 1/1/1992 F1-00832 514 SOIL PREP 120 - 1/1/1992
LI 1/1/1992 F1-00833 514 OTHER - DEVEL. 120 - 1/1/1992
LI 1/1/1992 F1-00837 515C SOIL PREP 120 - 1/1/1992
LI 1/1/1992 F1-00838 515C OTHER - DEVEL. 120 - 1/1/1992
LI 5/1/1992 F1-00824 REFURBISH WELL BL560 120 - 5/1/1992
LI 1/1/1993 F1-00960 BLK 550 FOIL PREP 120 - 1/1/1993
LI 1/1/1993 F1-00965 BLK 555 SOIL PREP 120 - 1/1/1993
LI 1/1/1994 F1-01076 551 SOIL PREP 120 6 1/1/1994
LI 1/1/1994 F1-01081 565 SOIL PREP 120 6 1/1/1994
LI 1/1/1995 F1-01218 516 SOIL PREP 120 18 1/1/1995
LI 1/1/1995 F1-01222 519 SOIL PREP 120 18 1/1/1995
LI 1/1/1995 F1-01229 531 SOIL PREP 120 18 1/1/1995
LI 1/1/1995 F1-01233 546 SOIL PREP 120 18 1/1/1995
LI 1/1/1996 F1-01387 505 SOIL PREP 120 30 1/1/1996
LI 1/1/1997 F1-01460 526 SOIL PREP 120 42 1/1/1997
LI 1/1/1997 F1-01465 532 SOIL PREP 120 42 1/1/1997
LI 1/1/1998 F1-01602 501 SOIL PREP 120 54 1/1/1998
LI 1/1/1998 F1-01607 510 SOIL PREP 120 54 1/1/1998
LI 1/1/1998 F1-01612 511 SOIL PREP 120 54 1/1/1998
LI 1/1/1998 F1-01614 511 DRAINAGE 120 54 1/1/1998
LI 1/1/1998 F1-01621 517 SOIL PREP 120 54 1/1/1998
LI 1/1/1998 F1-01623 517 DRAINAGE 120 54 1/1/1998
LI 1/1/1998 F1-01627 518 SOIL PREP 120 54 1/1/1998
LI 1/1/1998 F1-01632 519 SOIL PREP 120 54 1/1/1998
LI 1/1/1998 F1-01637 599 DRAINAGE 120 54 1/1/1998
LI 4/30/1998 F1-01543 OAKVILLE RESERVOIR 240 186 4/30/1998
LI TOTAL
ME 7/1/1994 F1-01043 OAKVILLE DECK/TRELIS 60 - 7/1/1994
ME 7/31/1998 F1-01541 AIR CONDITIONER 120 6 7/31/1998
ME 2/28/2002 F1-02155 Well Filter-Oakville 120 102 2/28/2002
ME 2/28/2002 F1-02183 Septic Tank 120 102 2/28/2002
ME TOTAL
T 3/1/1992 F1-00820 KUBOTA TRACTOR 120 - 3/1/1992
T 3/1/1997 F1-01432 FORD 4430 TRACTOR - 1 120 54 3/1/1997
T 5/31/1999 F1-01687 KUBOTA TRACTOR 120 78 5/31/1999
T TOTAL
V 1/1/1990 F1-00698 BLOCK 519 120 - 1/1/1990
V 1/1/1990 F1-00699 BLOCK 517 120 - 1/1/1990
V 1/1/1991 F1-00742 513A VINES 240 90 1/1/1991
V 1/1/1992 F1-00834 514 VINES 240 102 1/1/1992
V 1/1/1992 F1-00839 515C VINES 240 102 1/1/1992
V 1/1/1993 F1-00962 BLK 550 VINES 240 114 1/1/1993
V 1/1/1993 F1-00967 BLK 555 VINES 240 114 1/1/1993
7
Est Rem
Class AcqDate Asset# Description Life Life Svc Date
------- --------- -------- -------------------------------- ------ ------ ----------
V 1/1/1994 F1-01073 555 VINES 240 126 1/1/1994
V 1/1/1994 F1-01078 551 VINES 240 126 1/1/1994
V 1/1/1994 F1-01083 565 VINES 240 126 1/1/1994
V 1/1/1994 F1-01087 535 VINES 240 126 1/1/1994
V 1/1/1995 F1-01236 516 VINES 240 138 1/1/1995
V 1/1/1995 F1-01237 519 VINES 240 138 1/1/1995
V 1/1/1995 F1-01238 546 VINES 240 138 1/1/1995
V 1/1/1995 F1-01239 530 VINES 240 138 1/1/1995
V 1/1/1996 F1-01391 505 VINES 240 150 1/1/1996
V 1/1/1996 F1-01392 516 VINES 240 150 1/1/1996
V 1/1/1997 F1-01463 526 VINES 240 162 1/1/1997
V 1/1/1997 F1-01468 532 VINES 240 162 1/1/1997
V 1/1/1998 F1-01601 501 VINES 240 174 1/1/1998
V 1/1/1998 F1-01606 510 VINES 240 174 1/1/1998
V 1/1/1998 F1-01611 511 VINES 240 174 1/1/1998
V 1/1/1998 F1-01617 516 VINES 240 174 1/1/1998
V 1/1/1998 F1-01620 517 VINES 240 174 1/1/1998
V 1/1/1998 F1-01626 518 VINES 240 174 1/1/1998
V 1/1/1998 F1-01631 519 VINES 240 174 1/1/1998
V 1/1/1998 F1-01636 599 VINES 240 174 1/1/1998
V TOTAL
VE 4/1/1989 F1-00594 BLK 517N EXP TRELLIS 144 - 4/1/1989
VE 4/1/1989 F1-00595 BLK 511 EXP TRELLIS 144 - 4/1/1989
VE 5/1/1990 F1-00688 VALLEY TOWN DUSTER 120 - 5/1/1990
VE 1/1/1991 F1-00743 513A SPRINKLER 120 - 1/1/1991
VE 1/1/1991 F1-00744 513A TRELLIS 120 - 1/1/1991
VE 7/1/1991 F1-00736 CANE CUTTERS 120 - 7/1/1991
VE 1/1/1992 F1-00830 514 TRELLIS 120 - 1/1/1992
VE 1/1/1992 F1-00831 514 SPRINKLER 120 - 1/1/1992
VE 1/1/1992 F1-00835 515C TRELLIS 120 - 1/1/1992
VE 1/1/1992 F1-00836 515C SPRINKLER 120 - 1/1/1992
VE 3/1/1992 F1-00819 DOMRIES WHEEL DISC 120 - 3/1/1992
VE 5/1/1992 F1-00821 300 GAL - SPRAYER 120 - 5/1/1992
VE 1/1/1993 F1-00958 BLK 550 SPRINKLER 120 - 1/1/1993
VE 1/1/1993 F1-00959 BLK 550 TRELLIS 120 - 1/1/1993
VE 1/1/1993 F1-00961 BLK 550 OTHER 120 - 1/1/1993
VE 1/1/1993 F1-00963 BLK 555 SPRINKLER 120 - 1/1/1993
VE 1/1/1993 F1-00964 BLK 555 TRELLIS 120 - 1/1/1993
VE 1/1/1993 F1-00966 BLK 555 OTHER 120 - 1/1/1993
VE 1/1/1994 F1-01071 550 TRELLIS 120 6 1/1/1994
VE 1/1/1994 F1-01072 555 TRELLIS 120 6 1/1/1994
VE 1/1/1994 F1-01074 551 TRELLIS 120 6 1/1/1994
VE 1/1/1994 F1-01075 551 SPRINKLER 120 6 1/1/1994
VE 1/1/1994 F1-01077 551 OTHER DEVEL 120 6 1/1/1994
VE 1/1/1994 F1-01079 565 TRELLIS 120 6 1/1/1994
VE 1/1/1994 F1-01080 565 SPRINKLER 120 6 1/1/1994
VE 1/1/1994 F1-01082 565 OTHER DEVEL 120 6 1/1/1994
VE 1/1/1994 F1-01084 535 TRELLIS 120 6 1/1/1994
VE 1/1/1994 F1-01085 535 SPRINKLER 120 6 1/1/1994
VE 1/1/1994 F1-01086 535 OTHER DEVEL 120 6 1/1/1994
VE 1/1/1995 F1-01219 516 SPRINKLER 120 18 1/1/1995
VE 1/1/1995 F1-01220 516 TRELLIS 120 18 1/1/1995
VE 1/1/1995 F1-01221 516 OTHER 120 18 1/1/1995
VE 1/1/1995 F1-01223 519 OTHER 120 18 1/1/1995
VE 1/1/1995 F1-01227 530 OTHER 120 18 1/1/1995
VE 1/1/1995 F1-01228 531 OTHER 120 18 1/1/1995
VE 1/1/1995 F1-01230 531 SPRINKLER 120 18 1/1/1995
VE 1/1/1995 F1-01231 531 TRELLIS 120 18 1/1/1995
VE 1/1/1995 F1-01232 546 OTHER 120 18 1/1/1995
VE 1/1/1995 F1-01234 546 TRELLIS 120 18 1/1/1995
VE 1/1/1995 F1-01235 546 SPRINKLER 120 18 1/1/1995
VE 1/1/1996 F1-01386 505 OTHER 120 30 1/1/1996
VE 1/1/1996 F1-01388 505 SPRINKLER 120 30 1/1/1996
VE 1/1/1996 F1-01389 505 TRELLIS 120 30 1/1/1996
VE 1/1/1996 F1-01390 516 OTHER 120 30 1/1/1996
8
Est Rem
Class AcqDate Asset# Description Life Life Svc Date
------- --------- -------- -------------------------------- ------ ------ ----------
VE 1/1/1996 F1-01397 546 OTHER 120 30 1/1/1996
VE 1/1/1997 F1-01458 505 OTHER 120 42 1/1/1997
VE 1/1/1997 F1-01459 526 OTHER 120 42 1/1/1997
VE 1/1/1997 F1-01461 526 SPRINKLER 120 42 1/1/1997
VE 1/1/1997 F1-01462 526 TRELLIS 120 42 1/1/1997
VE 1/1/1997 F1-01464 532 OTHER 120 42 1/1/1997
VE 1/1/1997 F1-01466 532 SPRINKLER 120 42 1/1/1997
VE 1/1/1997 F1-01467 532 TRELLIS 120 42 1/1/1997
VE 6/1/1997 F1-01431 GEARMORE SPRAYER 120 54 6/1/1997
VE 1/1/1998 F1-01603 501 SPRINKLER 120 54 1/1/1998
VE 1/1/1998 F1-01604 501 TRELLIS 120 54 1/1/1998
VE 1/1/1998 F1-01605 501 OTHER 120 54 1/1/1998
VE 1/1/1998 F1-01608 510 SPRINKLER 120 54 1/1/1998
VE 1/1/1998 F1-01609 510 TRELLIS 120 54 1/1/1998
VE 1/1/1998 F1-01610 510 OTHER 120 54 1/1/1998
VE 1/1/1998 F1-01613 511 SPRINKLER 120 54 1/1/1998
VE 1/1/1998 F1-01615 511 TRELLIS 120 54 1/1/1998
VE 1/1/1998 F1-01616 511 OTHER 120 54 1/1/1998
VE 1/1/1998 F1-01618 516 TRELLIS 120 54 1/1/1998
VE 1/1/1998 F1-01619 516 OTHER 120 54 1/1/1998
VE 1/1/1998 F1-01622 517 SPRINKLER 120 54 1/1/1998
VE 1/1/1998 F1-01624 517 TRELLIS 120 54 1/1/1998
VE 1/1/1998 F1-01625 517 OTHER 120 54 1/1/1998
VE 1/1/1998 F1-01628 518 SPRINKLER 120 54 1/1/1998
VE 1/1/1998 F1-01629 518 TRELLIS 120 54 1/1/1998
VE 1/1/1998 F1-01630 518 OTHER 120 54 1/1/1998
VE 1/1/1998 F1-01633 519 SPRINKLER 120 54 1/1/1998
VE 1/1/1998 F1-01634 519 TRELLIS 120 54 1/1/1998
VE 1/1/1998 F1-01635 519 OTHER 120 54 1/1/1998
VE 1/1/1998 F1-01638 599 SPRINKLER 120 54 1/1/1998
VE 1/1/1998 F1-01639 599 TRELLIS 120 54 1/1/1998
VE 1/1/1998 F1-01640 599 OTHER 120 54 1/1/1998
VE 4/30/1999 F1-01686 AIR CONDITIONER 60 18 4/30/1999
VE 5/31/1999 F1-01689 WEATHER STATION 84 42 5/31/1999
VE 6/7/2001 F1-02034 2001 Honda ATV TRX 500 60 42 6/7/2001
VE 6/7/2001 F1-02035 2001 Honda ATV TRX 500 50 42 6/7/2001
VE 6/22/2001 F1-02023 Gearmore S420 Sulfer Duster 120 102 6/22/2001
VE TOTAL
L 6/4/1999 E-00004 Oakville land - - 6/4/1999
L TOTAL
GRAND
TOTAL
9
SCHEDULE H
(To Contribution Term Sheet)
Contributed Assets of H
See the following as attached:
1. Site Map
2. List of Retained Parcels
3. Equipment List
4. Schedule of Additional Contributed Assets and Retained Assets
Quintessa Parcel Map
[GRAPHIC OMITTED]
Huneeus Vintners Land Contribution
Parcel # Total Acreage Plantable Acreage
1 030-060-053 7.28 5.175
---------------------------------------------------------------
2 030-060-052 7.36 0 Retained
3 030-060-051 6.42 0 Retained
4 030-060-050 12 0 Retained
---------------------------------------------------------------
5 030-060-054 55.39 46.815
6 030-060-049 46.27 34.427
7 030-060-059 52.1 28.77
8 030-060-055 45.8 34.61
9 030-060-056(060) 8 5.76
---------------------------------------------------------------
▇▇ ▇▇▇-▇▇▇-▇▇▇ 7.46 1.433 Retained
---------------------------------------------------------------
▇▇ ▇▇▇-▇▇▇-▇▇▇(061) 18.1 8.191
Total 266.18 165.181
Total (Less Retained) 232.94 163.748
Rights to build residences on contributed parcels are not being contributed.
Huneeus Vintners LLC
Special Report
Tax In Tax Curr Tax
Sys No Classification Description Ser Date Tax Acq Value Acc Dep Current NBV
------ -------------- ----------- -------- ------------- -------- -----------
66 Barrels 100 Demptos Barrels 10/1/2002 60,000.00 52,222.23 7,777.77
67 Barrels 100 Saury Barrel 10/1/2002 59,100.00 51,438.89 7,661.11
68 Barrels 103 Seguin ▇▇▇▇▇▇ Barrels 10/1/2002 65,718.00 57,198.94 8,519.06
69 Barrels 97 Artisan Barrels 10/1/2002 56,822.00 49,456.06 7,365.94
71 Barrels 60 Nadalie Barrels 10/1/2002 38,450.00 33,465.83 4,984.17
72 Barrels 100 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 10/1/2002 64,007.00 55,709.81 8,297.19
70 Barrels 140 Raddoux Barrels 10/1/2002 97,659.66 84,999.94 12,659.72
197 Barrels 329 Barrels 7/31/2003 223,257.23 161,241.34 62,015.89
198 Barrels 10 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Barrels 8/22/2003 7,292.25 5,266.63 2,025.62
224 Barrels 80 Nadalie Barrels 8/31/2003 54,902.02 39,651.46 15,250.56
225 Barrels 10 Tarasund Barrels 8/31/2003 7,863.57 5,679.25 2,184.32
201 Barrels 100 Tonnellerie ▇▇▇▇▇▇▇ barrels 9/30/2003 71,706.96 51,788.36 19,918.60
202 Barrels 100 Tonnellerie Demptos barrels 9/30/2003 68,737.50 49,643.75 19,093.75
203 Barrels 40 Tonnellerie Randoux barrels 9/30/2003 31,577.46 22,805.94 8,771.52
204 Barrels 4 Tonnellerie ▇▇▇▇▇▇ barrels 9/30/2003 2,881.48 2,081.07 800.41
205 Barrels 10 ▇▇▇▇▇▇▇ barrels 9/30/2003 7,673.08 5,541.67 2,131.41
41 Buildings - Admin Entrance Sign 8/1/2002 18,301.00 7,622.09 10,678.91
226 Buildings - Admin Interior Design 3/1/2003 78,008.06 1,500.15 76,507.91
216 Buildings - Admin Winery Building - Admin Office 3/1/2003 2,905,899.40 77,614.84 2,828,284.56
1 Building - Cellar Winery Building 9/1/2002 14,098,360.00 557,306.51 13,541,053.49
2 Building - Cellar Pump House 9/1/2002 13,009.00 513.96 12,495.04
3 Building - Cellar Caves 9/1/2002 2,116,386.00 1,183,352.36 933,033.64
215 Building - Cellar Caves 7/31/2003 24,128.90 13,934.13 10,194.77
218 Building - Cellar Winery Building 7/31/2003 362,631.24 6,418.01 356,213.23
12 Buildings ▇▇▇▇▇▇▇'▇ House 5/15/1990 30,175.00 16,596.75 13,578.25
13 Buildings Barn 5/15/1990 124,702.00 68,586.10 56,115.90
14 Buildings Machine Storage Shed 5/15/1990 28,932.00 15,911.60 13,020.40
15 Buildings Open Shed 5/15/1990 21,688.00 11,928.40 9,759.60
24 Buildings Fence - Entrance 5/15/1990 1,509.00 1,037.31 471.69
23 Buildings Septic System 9/15/1990 1,373.00 944.81 428.19
26 Buildings Domestic Waterline 1/1/1991 430.00 273.87 156.13
25 Buildings Telephone Lines 8/1/1991 564.00 358.25 205.75
16 Buildings ▇▇▇▇▇▇▇ House - Ins 11/1/1991 853.00 434.65 418.35
17 Buildings Barn Slab 9/1/1992 6,568.00 3,858.50 2,709.50
18 Buildings ▇▇▇▇▇▇▇'▇ House Repairs 9/1/1993 22,183.00 10,002.15 12,180.85
19 Buildings Barn-Repairs 9/1/1993 17,753.00 7,706.65 10,046.35
120 Buildings Garage and Tractor Shed 4/12/1995 2,454.00 563.65 1,890.35
Huneeus Vintners LLC
Special Report
Tax In Tax Curr Tax
Sys No Classification Description Ser Date Tax Acq Value Acc Dep Current NBV
------ -------------- ----------- -------- ------------- -------- -----------
131 Buildings Deck 8/31/1996 6,076.00 1,188.75 4,887.25
136 Buildings Entrance Gate 2/14/1997 6,692.00 6,529.33 162.67
135 Buildings Platform 6/30/1997 9,668.00 1,683.87 7,984.13
147 Buildings Pump Station roof 11/8/1999 24,821.00 9,736.77 15,084.23
143 Buildings Building 11/30/1999 83,271.00 25,694.73 57,576.27
30 Drainage Irrigation/Drainage - Blk 1-5 7/15/1990 50,667.00 50,667.00 0.00
48 Drainage Irrigation/Drainage - Blk 1-5 7/15/1990 61,086.00 61,086.00 0.00
97 Drainage Drainage - Blk 1&5 1/1/1991 681.00 681.00 0.00
33 Drainage Drainage - Blk 1&5 1/1/1991 34.00 34.00 0.00
51 Drainage Drainage - Blk 1&5 1/1/1991 67.00 67.00 0.00
31 Drainage Irrigation/Drainage 6/15/1991 25,431.00 25,431.00 0.00
49 Drainage Irrigation/Drainage 6/15/1991 48,767.00 48,767.00 0.00
37 Equipment Gas Tank 7/15/1990 1,437.00 1,437.00 0.00
46 Equipment Kubota Tractor 7/15/1990 29,219.00 29,219.00 0.00
38 Equipment Diesel Tank 8/15/1990 2,395.00 2,395.00 0.00
41 Equipment Air Compressor 8/15/1990 483.00 483.00 0.00
42 Equipment Bench Grinder 8/15/1990 208.00 208.00 0.00
43 Equipment Tool Box 8/15/1990 418.00 418.00 0.00
44 Equipment Torch & Misc Tools 8/15/1990 518.00 518.00 0.00
40 Equipment Water Tank 9/15/1990 8,107.00 8,107.00 0.00
39 Equipment Fuel Tank Pad 11/15/1990 1,293.00 1,293.00 0.00
45 Equipment Ford 1920 Tractor 11/15/1990 12,763.00 12,763.00 0.00
47 Equipment Water Truck - 1974 Chevy 4/1/1991 10,108.00 10,108.00 0.00
48 Equipment Rock Trailer 6/1/1991 3,511.00 3,511.00 0.00
20 Equipment Fuel Pump & Tank 9/1/1993 4,950.00 2,660.37 2,289.63
138 Equipment Cultivator 4/15/1998 10,484.00 8,878.50 1,605.50
139 Equipment Mower 4/27/1998 3,771.00 3,193.50 577.50
141 Equipment Fertilizer Stirrer 4/15/1999 7,014.00 5,080.92 1,933.08
142 Equipment Weather Station 4/15/1999 12,651.00 9,164.78 3,486.22
148 Equipment Chemical Container 6/11/1999 1,814.00 1,313.86 500.14
149 Equipment Sprayer 6/25/1999 6,961.00 5,042.71 1,918.29
150 Equipment Domries Disc 6/30/1999 5,991.00 4,340.14 1,650.86
151 Equipment Domries Roller 6/30/1999 1,809.00 1,310.78 498.22
152 Equipment Mower 7/7/1999 6,971.00 5,050.14 1,920.86
153 Equipment Harvest Bins & Trailer 8/26/1999 5,711.00 4,137.28 1,573.72
34 Equipment - Cellar Well 7/1/2002 28,005.00 11,662.88 16,342.12
4 Equipment - Cellar Density Meter 9/1/2002 2,007.00 1,208.50 798.50
5 Equipment - Cellar TOAD Fluid Distribution 9/1/2002 1,634.00 983.47 650.53
8 Equipment - Cellar Winery Software 9/1/2002 10,560.00 5,221.00 5,339.00
9 Equipment - Cellar 6 Jabsco Impeller pumps 9/1/2002 47,518.00 28,607.91 18,910.09
15 Equipment - Cellar Waukesha Pumps 9/1/2002 47,410.00 28,542.76 18,867.24
Huneeus Vintners LLC
Special Report
Tax In Tax Curr Tax
Sys No Classification Description Ser Date Tax Acq Value Acc Dep Current NBV
------ -------------- ----------- -------- ------------- -------- -----------
16 Equipment - Cellar Winery Equipment 9/1/2002 7,804.00 4,698.06 3,105.94
18 Equipment - Cellar Refrigeration 9/1/2002 345,310.00 207,890.72 137,419.28
21 Equipment - Cellar Tank Vents 9/1/2002 4,338.00 2,611.79 1,726.21
23 Equipment - Cellar Hoses 9/1/2002 12,055.00 7,257.28 4,794.72
28 Equipment - Cellar Pumps 9/1/2002 45,106.00 27,155.92 17,950.08
31 Equipment - Cellar Destemmer Crusher 9/1/2002 17,655.00 10,628.71 7,026.29
35 Equipment - Cellar Barrel Washer 9/1/2002 11,096.00 6,680.51 4,415.49
38 Equipment - Cellar 1/2 ton harvest bins 9/1/2002 12,737.00 7,668.39 5,068.61
39 Equipment - Cellar Stainless Steel tanks 9/1/2002 489,549.00 294,728.55 194,820.45
40 Equipment - Cellar Water Filtration System 9/1/2002 18,420.00 11,089.60 7,330.40
42 Equipment - Cellar Sorting Table 9/1/2002 43,046.00 25,915.72 17,130.28
43 Equipment - Cellar Winery Equipment 9/1/2002 62,938.00 37,891.38 25,046.62
45 Equipment - Cellar Oak Tank Storage 9/1/2002 225.00 135.13 89.87
46 Equipment - Cellar Scale 9/1/2002 2,716.00 1,635.41 1,080.59
49 Equipment - Cellar Set Stainless Tanks 9/1/2002 16,017.00 9,643.09 6,373.91
50 Equipment - Cellar Fittings 9/1/2002 3,170.00 1,908.47 1,261.53
51 Equipment - Cellar Tank elbows 9/1/2002 400.00 240.82 159.18
53 Equipment - Cellar Oak Tanks 9/1/2002 236,812.00 142,570.36 94,241.64
55 Equipment - Cellar Tables 9/1/2002 469.00 580.10 383.90
56 Equipment - Cellar Catwalk 9/1/2002 315,475.00 189,928.50 125,546.50
57 Equipment - Cellar Stainless Steel wine Lines 9/1/2002 24,495.00 14,746.66 9,748.34
58 Equipment - Cellar Aluminum Pedistals 9/1/2002 3,434.00 2,067.14 1,366.86
63 Equipment - Cellar Grape Transfer Chutes 9/1/2002 43,100.00 25,947.96 17,152.04
64 Equipment - Cellar Misc Fittings 9/1/2002 6,284.00 3,782.96 2,501.04
10 Equipment - Cellar Pumpover Sprinkler 9/15/2002 2,909.00 1,751.41 1,157.59
11 Equipment - Cellar Sparge Device & Fittings 9/15/2002 2,617.00 1,575.74 1,041.26
12 Equipment - Cellar 20 kegs 9/15/2002 2,815.00 1,694.42 1,120.58
20 Equipment - Cellar Solution Dispensing System 9/15/2002 3,763.00 2,265.28 1,497.72
26 Equipment - Cellar Radios 9/15/2002 4,284.00 2,988.65 1,295.35
30 Equipment - Cellar Lab Equipment 9/15/2002 10,127.00 6,097.07 4,029.93
33 Equipment - Cellar Forklift 9/17/2002 33,272.00 20,030.97 13,241.03
6 Equipment - Cellar Silicon Bungs 10/1/2002 5,334.00 4,642.67 691.33
7 Equipment - Cellar Chemstat Analyzer 10/1/2002 7,512.00 4,522.40 2,989.60
13 Equipment - Cellar SS Tank Conversion 10/1/2002 1,486.88 895.37 591.51
14 Equipment - Cellar Cellar Fittings 10/1/2002 4,264.00 2,566.84 1,697.16
19 Equipment - Cellar Barrel Racks 10/1/2002 8,612.00 5,184.64 3,427.36
22 Equipment - Cellar Sump carts 10/1/2002 14,180.0 8,536.94 5,643.06
24 Equipment - Cellar Fittings 10/1/2002 12,787.00 7,698.50 5,088.50
27 Equipment - Cellar CO2 Instruments 10/1/2002 1,452.00 874.03 577.97
29 Equipment - Cellar Tank signs 10/1/2002 1,626.00 979.19 646.81
37 Equipment - Cellar Basket Press 10/1/2002 52,154.00 31,398.57 20,755.43
Huneeus Vintners LLC
Special Report
Tax In Tax Curr Tax
Sys No Classification Description Ser Date Tax Acq Value Acc Dep Current NBV
------ -------------- ----------- -------- ------------- -------- -----------
44 Equipment - Cellar Set Basket press 10/1/2002 870.00 523.77 346.23
47 Equipment - Cellar CO2 monitors 10/1/2002 3,211.00 1,933.09 1,277.91
52 Equipment - Cellar Computer 10/1/2002 4,115.00 2,870.57 1,244.43
54 Equipment - Cellar Fittings 10/1/2002 23,080.00 13,895.10 9,184.90
59 Equipment - Cellar Tank Top Grates 10/1/2002 6,465.00 3,891.87 2,573.13
65 Equipment - Cellar Racking elbows 10/1/2002 1,603.00 964.88 638.12
17 Equipment - Cellar Computer 10/9/2002 1,354.00 944.79 409.21
48 Equipment - Cellar Tank Thermometer 10/15/2002 964.00 580.10 383.90
60 Equipment - Cellar Aluminum Hose Racks 11/1/2002 6,993.00 4,209.88 2,783.12
61 Equipment - Cellar Bucket Trees 11/1/2002 1,293.00 778.24 514.76
62 Equipment - Cellar Fitting Boards 11/1/2002 2,983.00 1,795.69 1,187.31
36 Equipment - Cellar Floor cleaner 12/1/2002 1,185.00 713.09 471.91
219 Equipment - Cellar Pumpover Lines 3/31/2003 10,675.00 4,727.50 5,947.50
183 Equipment - Cellar Sump Cart 3/31/2003 2,009.54 889.94 1,119.60
184 Equipment - Cellar ▇▇▇▇▇ Labs Mixer Stand 3/31/2003 1,441.70 638.47 803.23
185 Equipment - Cellar Pipe Mixer 3/31/2003 4,223.80 1,870.54 2,353.26
186 Equipment - Cellar Wire Security Cage 5/22/2003 4,968.00 2,990.94 1,977.06
187 Equipment - Cellar Bottling Line Filter 5/30/2003 11,390.27 6,857.41 4,532.86
188 Equipment - Cellar Scale 6/24/2003 1,295.00 779.64 515.36
189 Equipment - Cellar Ozone Machine 8/18/2003 11,313.75 6,811.35 4,502.40
190 Equipment - Cellar Scale Printer 8/18/2003 479.19 306.69 172.50
191 Equipment - Cellar Grape Press 8/22/2003 61,142.74 36,810.43 24,332.31
192 Equipment - Cellar Dump Trailer 9/9/2003 3,600.00 2,167.35 1,432.65
193 Equipment - Cellar Stainless Steel Tank 9/22/2003 16,809.00 10,199.70 6,689.30
194 Equipment - Cellar Bin Dumper 9/24/2003 27,739.50 16,700.31 11,039.19
206 Equipment - Cellar Recirculating Chiller 9/30/2003 3,158.79 1,901.73 1,257.06
195 Equipment - Cellar Tank Piping and controls 10/16/2003 6,451.00 3,883.77 2,567.23
196 Equipment - Cellar Lab Tables 12/31/2003 2,400.00 1,444.90 955.10
94 Equipment - Office Office Furniture 9/30/1999 55,366.00 43,475.71 11,890.29
95 Equipment - Office Vineyard Photos 9/30/1999 8,582.00 6,738.92 1,843.08
96 Equipment - Office Office Furniture 8/1/2000 3,022.00 2,145.82 876.18
97 Equipment - Office Dell Laptop Computer 9/1/2000 4,510.00 3,860.50 649.50
101 Equipment - Office Office Furniture 1/1/2001 5,715.00 3,394.24 2,320.76
98 Equipment - Office AutoCad SureTrak Software 1/4/2001 1,290.00 1,290.00 0.00
99 Equipment - Office Designjet 500 Printer 1/4/2001 3,511.00 2,601.10 909.90
100 Equipment - Office Sony Camcorder 1/4/2001 1,637.00 1,212.56 424.44
102 Equipment - Office Computer Equipment 1/25/2002 4,495.23 3,135.69 1,359.54
103 Equipment - Office Dell Computer 5/30/2002 1,581.78 1,103.21 478.57
104 Equipment - Office Dell Computer 8/23/2002 2,065.00 1,440.49 624.51
106 Equipment - Office Dell Computer 9/15/2002 1,163.72 811.86 351.86
105 Equipment - Office Small Business Server 10/2/2002 1,461.38 1,019.68 441.70
Huneeus Vintners LLC
Special Report
Tax In Tax Curr Tax
Sys No Classification Description Ser Date Tax Acq Value Acc Dep Current NBV
------ -------------- ----------- -------- ------------- -------- -----------
107 Equipment - Office Cisco Router 10/15/2002 1,335.67 931.77 403.90
108 Equipment - Office Computer Equipment 10/25/2002 2,000.37 1,395.43 604.94
207 Equipment - Office Furniture from Chile 1/6/2003 11,972.72 5,302.21 6,670.51
208 Equipment - Office Furniture from Chile 1/6/2003 13,960.00 6,182.29 7,777.71
209 Equipment - Office Office Files & Chairs 1/6/2003 19,718.85 8,732.64 10,986.21
182 Equipment - Office 4 Tasting Room Tables 2/4/2003 4,308.35 1,907.99 2,400.36
168 Equipment - Office Espresso Machine 3/10/2003 3,026.10 1,500.94 1,525.16
169 Equipment - Office Retail Sales System 3/13/2003 6,266.40 3,108.14 3,158.26
170 Equipment - Office Dell Computer 3/24/2003 3,092.05 1,533.67 1,558.38
210 Equipment - Office Office Shades 3/27/2003 10,900.00 4,827.14 6,072.86
171 Equipment - Office Server 3/27/2003 617.69 306.38 311.31
211 Equipment - Office Winery Sculpture 3/31/2003 19,841.25 8,786.85 11,054.40
212 Equipment - Office Retail Room Artwork 3/31/2003 30,000.00 13,285.72 16,714.28
172 Equipment - Office Nextel Cellular phones 3/31/2003 993.99 493.02 500.97
213 Equipment - Office Light for Retail Room 3/31/2003 279.36 123.72 155.64
173 Equipment - Office Retail Register Equipment 4/1/2003 6,958.16 3,451.25 3,506.91
214 Equipment - Office Carpet Retail room 4/22/2003 1,800.00 797.14 1,002.86
174 Equipment - Office Rug - Tasting Room 7/29/2003 4,710.00 3,014.40 1,695.60
180 Equipment - Office Timekeeping Software Web based 7/31/2003 2,520.00 1,575.00 945.00
222 Equipment - Office Furniture & Antiques - Retail Room 7/31/2003 84,844.17 51,079.66 33,764.51
223 Equipment - Office Chairs 7/31/2003 1,664.19 1,001.92 662.27
175 Equipment - Office Office Mini Blinds 8/18/2003 4,250.00 2,558.67 1,691.33
176 Equipment - Office BBQ 8/31/2003 1,494.48 956.47 538.01
177 Equipment - Office VH Computer 8/31/2003 3,880.05 2,483.23 1,396.82
221 Equipment - Office Metal Planters 9/15/2003 5,100.00 3,070.41 2,029.59
178 Equipment - Office G/L Software Upgrade 11/30/2003 6,301.45 3,938.41 2,363.04
179 Equipment - Office Upgrade Winery Software 12/31/2003 2,909.25 1,818.29 1,090.96
232 Equipment - Office AH Laptop Computer 1/30/2004 1,960.44 1,029.23 931.21
29 Land Total Land 5/15/1990 7,448,887.00 0.00 7,448,887.00
54 Land Land - Lot Line Split 5/30/2001 364,637.00 0.00 364,637.00
30 Land Land Not Contributed 33.24 Acre @ $27,984per -930,188.16 -930,188.16
22 Land Improvements Rock Wall 8/15/1990 10,690.00 7,212.12 3,477.88
99 Land Improvements Land - Terracing And Grading 12/31/1990 137,571.00 0.00 137,571.00
35 Land Improvements Land - Terracing And Grading 12/31/1990 31,069.00 0.00 31,069.00
53 Land Improvements Land - Terracing And Grading 12/31/1990 55,160.00 0.00 55,160.00
21 Land Improvements Land Additions 1/1/1991 52,402.00 0.00 52,402.00
98 Land Improvements Land Reservoir/Spillway 1/1/1991 53,257.00 0.00 53,257.00
34 Land Improvements Land Reservoir/Spillway 1/1/1991 23,860.00 0.00 23,860.00
52 Land Improvements Land Reservoir/Spillway 1/1/1991 42,363.00 0.00 42,363.00
27 Land Improvements Roads 1/1/1992 36,026.00 21,164.62 14,861.38
1 Land Improvements Roads 1/1/1992 8,385.00 4,925.06 3,459.94
Huneeus Vintners LLC
Special Report
Tax In Tax Curr Tax
Sys No Classification Description Ser Date Tax Acq Value Acc Dep Current NBV
------ -------------- ----------- -------- ------------- -------- -----------
19 Land Improvements Roads 1/1/1992 13,815.00 8,117.43 5,697.57
28 Land Improvements Roads 7/1/1993 1,475.00 793.18 681.82
2 Land Improvements Roads 7/1/1993 343.00 183.43 159.57
20 Land Improvements Roads 7/1/1993 566.00 303.37 262.63
110 Land Improvements Landscaping - Clarevale 7/31/1994 17,354.00 8,403.62 8,950.38
126 Land Improvements Entrance 8/31/1996 20,537.00 11,744.88 8,792.12
129 Land Improvements Landscaping 8/31/1996 63,563.00 36,350.76 27,212.24
130 Land Improvements Landscaping 8/31/1996 82,747.00 47,323.50 35,423.50
127 Land Improvements Entrance 12/21/1996 2,835.00 1,621.26 1,213.74
137 Land Improvements Roads 3/25/1997 6,608.00 3,389.63 3,218.37
140 Land Improvements Lot Line Engineering Costs 12/31/1998 22,705.00 0.00 22,705.00
154 Land Improvements Rock Wall 6/30/1999 9,662.00 3,790.64 5,871.36
73 Land Improvements Landscape 9/1/2002 883,795.00 117,839.58 765,955.42
181 Land Improvements Landscaping 3/31/2003 158,521.15 53,963.32 104,584.32
220 Land Improvements Gate Work 5/13/2003 11,690.00 6,276.07 5,413.93
70 Trellis / Irrigation Trellis - Blk 1-5 7/15/1990 87,709.00 87,709.00 0.00
94 Trellis / Irrigation Irrigation/Drainage - Blk 1-5 7/15/1990 111,779.00 111,779.00 0.00
6 Trellis / Irrigation Trellis - Blk 1-5 7/15/1990 27,393.00 27,393.00 0.00
24 Trellis / Irrigation Trellis - Blk 1-5 7/15/1990 32,623.00 32,623.00 0.00
96 Trellis / Irrigation Irrigation 6/1/1991 79,938.00 79,938.00 0.00
32 Trellis / Irrigation Irrigation 6/1/1991 13,033.00 13,033.00 0.00
50 Trellis / Irrigation Irrigation 6/1/1991 38,179.00 38,179.00 0.00
71 Trellis / Irrigation Trellis - 6/15/1991 10,620.00 10,620.00 0.00
95 Trellis / Irrigation Irrigation/Drainage 6/15/1991 123,697.00 123,697.00 0.00
7 Trellis / Irrigation Trellis - 6/15/1991 1,232.00 1,232.00 0.00
25 Trellis / Irrigation Trellis - 6/15/1991 4,403.00 4,403.00 0.00
72 Trellis / Irrigation Trellis - 7/1/1991 88,714.00 88,714.00 0.00
8 Trellis / Irrigation Trellis - 7/1/1991 26,702.00 26,702.00 0.00
26 Trellis / Irrigation Trellis - 7/1/1991 66,879.00 66,879.00 0.00
73 Trellis / Irrigation Trellis/Irrigation 12/1/1992 54,704.00 54,704.00 0.00
9 Trellis / Irrigation Trellis/Irrigation 12/1/1992 11,889.00 11,889.00 0.00
27 Trellis / Irrigation Trellis/Irrigation 12/1/1992 26,132.00 26,132.00 0.00
74 Trellis / Irrigation Trellis/Irrigation 12/1/1993 34,385.00 34,385.00 0.00
10 Trellis / Irrigation Trellis/Irrigation 12/1/1993 5,911.00 5,910.55 0.45
28 Trellis / Irrigation Trellis/Irrigation 12/1/1993 13,443.00 13,443.00 0.00
111 Trellis / Irrigation Irrigation Pipe & Sprinklers 3/22/1994 3,224.00 3,176.00 48.00
109 Trellis / Irrigation Trellis - Hillside 8/11/1994 1,521.00 1,475.12 45.88
112 Trellis / Irrigation Trellis - Hillside 8/11/1994 1,601.00 1,552.12 48.88
113 Trellis / Irrigation Trellis - Hillside / Angaston 8/11/1994 1,681.00 1,629.12 51.88
114 Trellis / Irrigation Trellis - Hillside / Clarevale 8/11/1994 1,574.00 1,525.75 48.25
121 Trellis / Irrigation Trellis Wiring 5/31/1995 20,201.00 17,675.12 2,525.88
Huneeus Vintners LLC
Special Report
Tax In Tax Curr Tax
Sys No Classification Description Ser Date Tax Acq Value Acc Dep Current NBV
------ -------------- ----------- -------- ------------- -------- -----------
36 Vehicle 1984 F150 Ford Truck 6/15/1990 2,000.00 2,000.00 0.00
9 Vehicle 1991 Nissan Truck 5/1/1991 15,223.00 15,223.00 0.00
35 Vineyard Vineyard Phase I 1/1/1992 233,319.00 136,555.43 96,763.57
75 Vineyard Vineyard Phase II 1/1/1993 859,556.00 859,555.80 0.20
131 Vineyard Equipment Bege Scraper 6/4/1999 2,107.00 1,497.57 609.43
132 Vineyard Equipment Ford tractor 4430 6/4/1999 21,819.00 15,504.86 6,314.14
133 Vineyard Equipment Tandem Disc 6/4/1999 2,069.00 1,470.50 598.50
74 Vineyard Equipment Flowry pump & gear 1/1/2000 10,586.00 6,371.11 4,214.89
76 Vineyard Equipment Kubota Tractor 8/1/2000 30,165.00 18,156.61 12,008.39
77 Vineyard Equipment Digital Crane 8/1/2000 3,675.00 2,211.77 1,463.23
75 Vineyard Equipment Bio-dynamic Stirring Machine 10/1/2000 16,282.00 98,000.06 6,481.94
78 Vineyard Equipment 72" Loader 11/1/2000 5,075.00 3,054.95 2,020.05
81 Vineyard Equipment Toro Spreader 5/25/2001 7,192.00 3,448.28 3,743.72
82 Vineyard Equipment French Plow 6/19/2001 3,643.00 1,741.74 1,892.26
142 Vineyard Equipment Domeries Disc 1/1/2002 3,518.00 1,182.28 2,335.72
144 Vineyard Equipment Disc 1/1/2002 5,550.00 1,865.35 3,684.65
145 Vineyard Equipment Fuel Tank 1/1/2002 1,393.00 467.93 925.07
146 Vineyard Equipment Harvest Trailer 1/1/2002 1,654.00 555.67 1,098.33
147 Vineyard Equipment Harvest Trailer 1/1/2002 1,654.00 555.67 1,098.33
152 Vineyard Equipment Honda Trailer Tank 1/1/2002 7,180.00 2,412.64 4,767.36
153 Vineyard Equipment Dump Trailer 1/1/2002 3,030.00 1,018.50 2,011.50
154 Vineyard Equipment Lime Spreader 1/1/2002 12,930.00 4,344.88 8,585.12
83 Vineyard Equipment Model 1700 Toro ▇▇▇▇▇▇ 3/13/2002 7,192.00 3,849.12 3,342.88
84 Vineyard Equipment 3 Weedeaters 4/4/2002 1,389.81 743.70 646.11
85 Vineyard Equipment 2 Trimmers 4/11/2002 927.00 496.52 430.48
86 Vineyard Equipment Bin Trailer 6/1/2002 1,968.53 1,053.90 914.63
87 Vineyard Equipment Domries Disc, Ring Roller 6/27/2002 9,442.73 5,053.94 4,388.79
88 Vineyard Equipment Lawn Tractor 8/31/2002 2,833.10 1,516.02 1,317.08
89 Vineyard Equipment 4 Valley bin Trailers 8/31/2002 6,856.85 3,669.84 3,187.01
163 Vineyard Equipment New Holland Tractor 3/27/2003 38,017.50 15,529.47 22,488.03
159 Vineyard Equipment Weed Eaters 3/31/2003 926.54 378.47 548.07
160 Vineyard Equipment Compost Tea ▇▇▇▇▇▇ 3/31/2003 4,392.45 1,794.24 2,598.21
161 Vineyard Equipment Pressure Chamber Inst. 4/16/2003 2,675.00 1,092.70 1,582.30
158 Vineyard Equipment Barn Electrical 7/29/2003 15,670.00 9,049.23 6,620.77
164 Vineyard Equipment 2004 Honda ATV 9/30/2003 5,336.15 3,081.57 2,254.58
234 Vineyard Equipment New Holland Tractor 3/18/2004 23,529.75 11,890.93 11,638.82
5 Vineyards Vineyard Phase I 1/1/1992 133,073.00 78,182.06 54,890.94
23 Vineyards Vineyard Phase I 1/1/1992 134,087.00 78,775.43 55,311.57
11 Vineyards Vineyard Phase II 1/1/1993 162,165.00 115,542.31 46,622.69
29 Vineyards Vineyard Phase II 1/1/1993 410,387.00 410,387.00 0.00
91 Vyd Devel-CIP Quintessa Vyd under Development 12/31/2000 501,694.77 0.00 501,694.77
Huneeus Vintners LLC
Special Report
Tax In Tax Curr Tax
Sys No Classification Description Ser Date Tax Acq Value Acc Dep Current NBV
------ -------------- ----------- -------- ------------- -------- -----------
167 Vyd Devel-CIP 2003 Vineyards Under Development 7/31/2003 120,543.20 0.00 120,543.20
229 Vyd Devel-CIP Vyd Development 12/31/2003 10,282.06 0.00 10,282.06
230 Vyd Devel-CIP Vineyard Development - Cap. Int 12/31/2003 31,389.30 0.00 31,389.30
78 ▇▇▇▇▇ & Pumps Ejector 100 Ppd 5/15/1990 212.00 212.00 0.00
81 ▇▇▇▇▇ & Pumps Vac Regulator C12 5/15/1990 736.00 736.00 0.00
14 ▇▇▇▇▇ & Pumps Ejector 100 Ppd 5/15/1990 50.00 50.00 0.00
17 ▇▇▇▇▇ & Pumps Vac Regulator C12 5/15/1990 171.00 171.00 0.00
32 ▇▇▇▇▇ & Pumps Ejector 100 Ppd 5/15/1990 82.00 82.00 0.00
35 ▇▇▇▇▇ & Pumps Vac Regulator C12 5/15/1990 282.00 282.00 0.00
79 ▇▇▇▇▇ & Pumps Iron Well 6/15/1990 6,800.00 4,676.00 2,124.00
80 ▇▇▇▇▇ & Pumps River Well 6/15/1990 5,394.00 3,709.12 1,684.88
15 ▇▇▇▇▇ & Pumps Iron Well 6/15/1990 1,582.00 1,087.87 494.13
16 ▇▇▇▇▇ & Pumps River Well 6/15/1990 1,256.00 864.50 391.50
33 ▇▇▇▇▇ & Pumps Iron Well 6/15/1990 2,608.00 1,792.00 816.00
34 ▇▇▇▇▇ & Pumps River Well 6/15/1990 2,069.00 1,422.31 646.69
76 ▇▇▇▇▇ & Pumps Cornell Pump 7/15/1990 1,200.00 1,200.00 0.00
77 ▇▇▇▇▇ & Pumps Corner Well 7/15/1990 2,685.00 1,845.81 839.19
12 ▇▇▇▇▇ & Pumps Cornell Pump 7/15/1990 280.00 280.00 0.00
13 ▇▇▇▇▇ & Pumps Corner Well 7/15/1990 625.00 625.00 0.00
30 ▇▇▇▇▇ & Pumps Cornell Pump 7/15/1990 461.00 461.00 0.00
31 ▇▇▇▇▇ & Pumps Corner Well 7/15/1990 1,030.00 708.37 321.63
83 ▇▇▇▇▇ & Pumps Booster Pump 8/15/1990 1,170.00 1,170.00 0.00
85 ▇▇▇▇▇ & Pumps Pump At Lake 8/15/1990 1,363.00 1,363.00 0.00
19 ▇▇▇▇▇ & Pumps Booster Pump 8/15/1990 272.00 272.00 0.00
21 ▇▇▇▇▇ & Pumps Pump At Lake 8/15/1990 317.00 317.00 0.00
37 ▇▇▇▇▇ & Pumps Booster Pump 8/15/1990 448.00 448.00 0.00
39 ▇▇▇▇▇ & Pumps Pump At Lake 8/15/1990 523.00 523.00 0.00
82 ▇▇▇▇▇ & Pumps Domestic Well 9/15/1990 2,489.00 1,710.56 778.44
84 ▇▇▇▇▇ & Pumps Sump Pump 9/15/1990 3,970.00 3,970.00 0.00
18 ▇▇▇▇▇ & Pumps Domestic Well 9/15/1990 579.00 398.18 180.82
20 ▇▇▇▇▇ & Pumps Sump Pump 9/15/1990 924.00 924.00 0.00
36 ▇▇▇▇▇ & Pumps Domestic Well 9/15/1990 954.00 657.62 296.38
38 ▇▇▇▇▇ & Pumps Sump Pump 9/15/1990 1,523.00 1,523.00 0.00
86 ▇▇▇▇▇ & Pumps Pump Station 12/15/1990 43,600.00 43,600.00 0.00
22 ▇▇▇▇▇ & Pumps Pump Station 2/15/1990 10,148.00 10,148.00 0.00
40 ▇▇▇▇▇ & Pumps Pump Station 2/15/1990 16,720.00 16,720.00 0.00
88 ▇▇▇▇▇ & Pumps Domestic Well 2/1/1991 1,112.00 709.50 402.50
24 ▇▇▇▇▇ & Pumps Domestic Well 2/1/1991 259.00 165.18 93.82
42 ▇▇▇▇▇ & Pumps Domestic Well 2/1/1991 427.00 270.68 156.32
89 ▇▇▇▇▇ & Pumps Sump Pump - Blks 5/1/1991 4,190.00 4,190.00 0.00
25 ▇▇▇▇▇ & Pumps Sump Pump - Blks 6/1/1991 975.00 975.00 0.00
Huneeus Vintners LLC
Special Report
Tax In Tax Curr Tax
Sys No Classification Description Ser Date Tax Acq Value Acc Dep Current NBV
------ -------------- ----------- -------- ------------- -------- -----------
43 ▇▇▇▇▇ & Pumps Sump Pump - Blks 6/1/1991 1,607.00 1,607.00 0.00
87 ▇▇▇▇▇ & Pumps Pump Station 7/1/1991 65,792.00 65,792.00 0.00
23 ▇▇▇▇▇ & Pumps Pump Station 7/1/1991 15,314.00 15,314.00 0.00
41 ▇▇▇▇▇ & Pumps Pump Station 7/1/1991 25,230.00 25,230.00 0.00
90 ▇▇▇▇▇ & Pumps Pump Station 2/1/1992 10,971.00 10,971.00 0.00
26 ▇▇▇▇▇ & Pumps Pump Station 2/1/1992 2,553.00 2,553.00 0.00
44 ▇▇▇▇▇ & Pumps Pump Station 2/1/1992 4,207.00 4,207.00 0.00
91 ▇▇▇▇▇ & Pumps Pump Station 3/1/1992 7,528.00 7,528.00 0.00
27 ▇▇▇▇▇ & Pumps Pump Station 3/1/1992 1,753.00 1,753.00 0.00
45 ▇▇▇▇▇ & Pumps Pump Station 3/1/1992 2,887.00 2,887.00 0.00
92 ▇▇▇▇▇ & Pumps Pump Station 4/1/1992 506.00 506.00 0.00
29 ▇▇▇▇▇ & Pumps Pump Station 4/1/1992 119.00 119.00 0.00
47 ▇▇▇▇▇ & Pumps Pump Station 4/1/1992 195.00 195.00 0.00
93 ▇▇▇▇▇ & Pumps Pump Station 6/1/1992 90.00 90.00 0.00
28 ▇▇▇▇▇ & Pumps Pump Station 6/1/1192 21.00 21.00 0.00
46 ▇▇▇▇▇ & Pumps Pump Station 6/1/1192 35.00 35.00 0.00
122 ▇▇▇▇▇ & Pumps Pump Station 4/12/1995 3,573.00 3,573.00 0.00
123 ▇▇▇▇▇ & Pumps Lake Line 7/24/1995 1,124.00 1,124.00 0.00
36,510,079.80 7,928,230.80 28,581,849.00
Additional Contributed Assets
-----------------------------
1. Accounts receivable, other than with respect to wines from the 2001
vintage.
2. Inventory consisting of all Quintessa library wines from previously
released vintages plus the 2002 and 2003 vintages, and for 2004 wines from
193 tons of Quintessa grapes (approximately 12,000 nine liter cases), and
excluding the 2001 vintage apart from ___ cases reserved as library wines.
3. Trademarks
4. Contracts as set forth on a schedule to the Contribution Agreement
Assets Excluded From Contribution
---------------------------------
1. Four parcels of land as described in this Schedule.
2. Home building rights with respect to the parcels of land which are being
contributed
3. Accounts receivable with respect to sales of wines of the 2001 vintage
4. Vineyard and office equipment associated with the business being retained
by Huneeus
5. Antique furniture belonging to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
ANNEX C
AFH Arrangements
----------------
1. Position President and CEO, with all senior management
reporting to him, and authority and discretion
comparable to a CEO of a public company and
reporting directly to the Board.
2. Salary $360,000 per year Base salary. Bonus equal to 55%
of Base at annual plan achievement, 0% bonus at
90% of plan or less, 110%of Base at 110% of plan;
straight line percentages in between.
Base increased annually by CPI, and subject to
increase in Board discretion every two years.
3. Benefits Health, disability and other insurance comparable
to other company executives.
Car or car allowance.
$2m term life insurance.
4. Term 7 years, and automatically extended for three
additional years if not terminated in the
Majority of the Board's discretion within the
first three months after the end of the 7 year
term.
5. Termination Only for Cause, as described below, as determined
by a Majority of the Board.
6. Management Formula for calculation of the Equity Award to be
Incentive described. Cap at 25%.
Vests ratably over 10 years, but accelerates to
full vesting on a sale of the company.
Measurement Date is earlier of ten years or when
there has been an arm's length sale of the
company. In the event of such a sale the
enterprise value implied in that sale will
determine the ending value. In the event there is
no such sale, the ending value will be calculated
based on 10X EBITDA valuation metric (to be
refined) and will be subject to retroactive
adjustment if there is an arm's length sale
within 30 months thereafter.
After Measurement Date, the future sharing
percentage will be fixed as a total percentage of
the company for the Management calculations, and
AFH interest will begin to participate in
-2-
distributions at that fixed percentage. The idea
is that the fixed valuation will not be paid out
at the Measurement Date, but will instead remain
as an interest in the company.
These interests will not carry any voting or
control rights and once vested and measured can
be tagged along as if part of the H interests in
the Company.
All vesting accelerates one additional year on
death.
Incentive interests may be structured to result
in capital gains, provided it does not create
adverse tax effect to any other Principal.
8. Cause Failure over any three year period of the company
to achieve at least 70% of approved annual plan
EBIT.
Conviction of a felony involving intentional
misconduct (not including motor vehicle or
victimless crime offenses).
Fraud or other material conduct not in good faith
where he could not have reasonably believed that
he was acting in the best interest of the company
or not opposed to the interests of the company,
and with respect to criminal matters had
reasonable cause to believe his conduct was
unlawful.
Habitual or recurrent personal conduct which is
not corrected after reasonable notice and
opportunity to cure which has or is likely to
have a serious adverse impact on the financial
results or image of the company.
Disability for more than 180 consecutive days.
9. Indemnity To the fullest extent allowed for a director or
officer of a Delaware corporation.
ANNEX D
CERTAIN BUSINESS ARRANGEMENTS
Subject to the consummation of the Merger, Newco and Constellation (and
its affiliates) will enter into the following agreements upon the Closing:
1. Stonewall Canyon and Pinnacles Grape Contract. Newco and Franciscan
Vineyards, Inc. will enter into an agreement, for the 2004-2008 harvests, for
Newco to purchase Pinot Noir grapes produced at Franciscan's Stonewall Canyon
vineyard and Pinot Noir and Chardonnay grapes produced at its Pinnacles
vineyard, both in Monterey County. Newco will purchase 80 tons of the 2004
Stonewall Canyon Pinot Noir crop at a price of $1,800 per ton, 250 tons of the
2004 Pinnacles Pinot Noir crop at a price of $1,400 per ton, and 200 tons of
the 2004 Pinnacles Chardonnay crop at a price of $1,000 per ton. Tonnage of
subsequent crops will be determined by agreement of the parties prior to March
1 of each harvest year. The actual tonnage of such grapes that will be
available to Newco in any harvest year will not be guaranteed and may be more
or less than the designated amount, since it will be based on the actual
production from specified blocks within the vineyards designated annually by a
selection process set forth in the contract; provided that, in the event of a
shortage, Franciscan will sell additional grapes to Newco from the vineyards on
the same terms, if the grapes can be made available. In the event of excess
grapes being produced on the designated block, Newco will purchase those grapes
on the same terms. The prices per ton for crops after 2004 will be based on the
2004 prices, adjusted annually (but not below the 2004 price) by the lesser of
(i) the percentage change in the average price of the relevant variety in the
immediately proceeding two (2) harvest years in Monterey County, or (ii)
changes in the Consumer Price Index, with a maximum adjustment of 5% per year.
With respect to the Stonewall Canyon vineyard, Newco will have the option to
convert the arrangement to an acreage contract pursuant to which it would
purchase all of the grapes grown on the designated acres at a rate of $6,300
per acre plus Franciscan's actual incremental costs incurred for any special
viticultural services necessary or required by Newco.
2. Oakville Estates Grape Contract. Although Constellation (through
Franciscan) is contributing the Oakville Estate vineyards to Newco, Franciscan
is retaining title to the 2004 crop produced at the vineyards. Newco and
Franciscan will enter into an agreement, pursuant to which Newco will purchase
grapes from the vineyard's 2004 harvest (to be made into wine at the Quintessa
Winery), and Franciscan will purchase grapes from the 2005-2009 harvests.
For the 2004 harvest, Newco will purchase from Franciscan 42 tons of
Cabernet Sauvignon, 102 tons of Merlot and such additional grapes as Newco may
require, up to a combined total of 21 tons of such varieties as are necessary
to enable Newco to create a meritage wine. Newco will pay $4,011 per ton for
the Cabernet Sauvignon grapes and $2,715 per ton for the Merlot grapes. If
Newco is established, it will retain Huneeus to process the grapes. If Newco is
not established and Franciscan therefore retains the wine produced from the
grapes, Franciscan will pay Huneeus for the processing at the same rate it paid
for such services for the 2003 crop. The actual tonnage of such grapes that
will be available to Newco is not guaranteed and may be more or less than the
designated amount, since it will be based on the actual production from
specified blocks within the vineyard designated by a selection process set
forth in the contract; provided that, in the event of a shortage, Franciscan
will sell additional grapes to
-2-
Newco from the vineyard on the same terms, if the grapes are available. In the
event of excess grapes being produced on the designated block, Newco will
purchase those grapes on the same terms.
For the 2005-2009 harvests, Franciscan will purchase the following
percentages of the crop of Bordeaux varietals: 2005 harvest: 66% (estimated to
be 614 tons); 2006 harvest: 58% (estimated to be 587 tons); 2007 harvest: 43%
(estimated to be 553 tons); 2008 harvest: 24% (estimated to be 273 tons); and
2009 harvest: 15% (estimated to be 176 tons). The actual tonnage of such grapes
to be sold to Franciscan will be based on the actual production from specified
blocks within the vineyard designated annually by a selection process set forth
in the contract. The prices per ton for such grapes will be the lesser of (i)
the percentage change in the average price of the relevant variety in the
immediately proceeding two (2) harvest years in Napa County, or (ii) changes in
the Consumer Price Index, with a maximum adjustment of 5% per year.
3. Quintessa Grape Contract. An existing grape contract between Huneeus
and Franciscan for Franciscan's purchase of grapes from the 2004-2006 harvests
from the Quintessa vineyards will be amended and contributed by Huneeus to
Newco. Whether or not Newco is formed, the contract will be modified to provide
for a reduction in the grape purchase prices in exchange for the following
payments to Huneeus: $479,850 on November 1 of each of 2004, 2005 and 2006. As
amended and contributed to Newco, the contract will provide for Franciscan to
purchase all of the grapes produced from the vineyard's 2004-2006 harvests
other than the following amounts, which will be retained by Newco: 2004
harvest: 242 tons; 2005 harvest: 262 tons; and 2006 harvest: 281 tons. For the
2004 harvest, Franciscan will pay $4,011 per ton for the Cabernet Sauvignon
grapes and $2,715 per ton for the Merlot grapes. The prices per ton for crops
after 2004 will be based on the 2004 prices, adjusted annually (but not below
the 2004 price) by the lesser of (i) the percentage change in the average price
of the relevant variety in the immediately proceeding two (2) harvest years in
Napa County, or (ii) changes in the Consumer Price Index, with a maximum
adjustment of 5% per year. In addition, Franciscan and Newco will identify two
blocks at the Quintessa vineyards to be farmed more aggressively for higher
yields for the 2005 and 2006 harvests. If Franciscan is satisfied with the
quality of the grapes produced from these blocks, it will have the right,
during the 2007-2011 harvests, to buy the grapes from these blocks that are not
used by Newco, at market prices.
4. Distribution Agreement. Pursuant to an existing agreement with Huneeus,
Franciscan will continue to be the exclusive distributor for Huneeus wines
through February 28, 2005, thereby entitling it to distribute the 2001 vintage
produced at Quintessa. When Newco takes on distribution of the Quintessa brand
effective March 1, 2005, it will assume the distribution rights and obligations
with respect to any remaining inventory of the 2001 vintage retained by
Huneeus, which is expected to be very little as of March 1, 2005.
5. New Zealand and Australian Wines. Newco will enter into an agreement
with Constellation to develop a brand for, and to distribute in the United
States, a variety of New Zealand and Australian wines produced by
Constellation. Under the agreement, which will begin with the 2004 vintage (for
New Zealand wines) and the 2005 vintage (for Australian wines), Newco
anticipates increasing its sales of such wines from 5,000 cases of one New
Zealand varietal of the 2004 vintage to approximately 150,000 cases of the 2013
vintage
-3-
(including two varietals from New Zealand and four varietals for Australia).
Pricing under the distribution agreement will be on competitive market terms.
6. Understandings Regarding Production. Newco anticipates using production
services, including crushing services, barrel fermentation and possibly
storage, at the Franciscan and Estancia wineries, beginning with the 2004 crop.
The pricing for such services will be on a formula basis that is competitive
with other facilities providing comparable services.
7. General Services. Newco anticipates contracting for a variety of
services that Franciscan may be able to provide or facilitate at prices or on
terms that will be advantageous to Newco, including, for example, access to
market data services, management of information technology resources, joint
warehousing of case goods, accounts receivable management and employee benefit
programs, and joint purchasing of glass, corks and other components.
ANNEX E
WINE PURCHASE, DISTRIBUTION AND TECHNICAL ASSISTANCE AGREEMENT
1. Parties Brandco - 100% owned by DBR (Lafite) ("DBR")
VentureCo (voting interest being 50% Brandco, 25%
FE(C) and 25% H) and economic interests to be
equal to the Newco percentages
2. Relationships Venture Co will create and market a wine under
the auspices of DBR who will provide technical
assistance to Venture Co for which it will
receive a remuneration to be agreed upon.
Marketing in the USA will be done by Newco
Marketing in the rest of the world will be done
by DBR, or by others subject to DBR's consent.
If the quality of the wine is deemed to be
acceptable by DBR, specific Rothschild
intangibles to be agreed upon will be included in
the packaging of the wine.
3. Term The partners of VentureCo will remain together
for a minimum of 10 years from the selling of the
first VentureCo "Brand" vintage (10 year term)
All agreements between the Parties, including
VentureCo distribution and marketing agreements
with Newco, are also for the same minimum 10 year
term
4. "Brand" Owner VentureCo owns all brand, trade dress and other
intangibles (including distinctive features and
logo) and excluding the Rothschild specific
intangibles, H specific intangibles and FE
specific intangibles.
5. Termination Subject to earlier termination for cause (to be
determined), any party can sell their VentureCo
interest after the minimum 10 year term and their
specific intangibles will be allowed to be used
only for a reasonable time thereafter to complete
and sell previously acquired wines and then
removed from all packaging, advertising and
collateral merchandising materials forever.
6. Exclusivity DBR, H and FE agree not to produce/join in
partnership or allow use of their specific
intangibles for any North American produced wine
(other than VentureCo's "brands") except what is
otherwise in use today.
ANNEX F
--------------------------------------------------------------------------------
Activities
----------
--------------------------------------------------------------------------------
Proxy materials/ 13e-3 Filings/ SEC review process
--------------------------------------------------------------------------------
Special Committee process/ Merger Agreement process
--------------------------------------------------------------------------------
Third party consents for asset/liability transfers (other than HVI debt)
--------------------------------------------------------------------------------
HSR and other regulatory consents (on behalf of Chalone, Holdco and DBR)
--------------------------------------------------------------------------------
ANNEX G
Chalone Shareholder Wine Program Continuation
It is the intention of Newco following the merger to maintain and enhance
the existing Chalone wine club program by continuing to make fine wines
available for purchase by shareholders, other than DBR on a non-discriminatory
basis, as eligible members of a founder's wine club.
In addition, subject to applicable rules, all eligible former shareholders
will as members of the founder's club be entitled to an additional 50% discount
on select fine wines purchased over the next two years through the program up
to a maximum discount value of $1.00 per share held on a date to be determined.
These founders club benefits will not be transferable.
In addition, founder's club members who purchase specified levels of wines
in addition to the special discount wines for each of three years will receive
special access and pricing to the company's most exclusive and allocated wines.
Purchase and shipping of founder's club wines would be subject to
compliance with applicable laws.
VIP Tours, dinners and other benefits would also be continued.
