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August 13, 1997
Xxxx Xxxxxxx Mutual Life Insurance Company
c/x Xxxxxxx Agricultural Investments Group
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxx XX 00000
Attention: Managing Director
Re: Real Estate Purchase Contract.
Ladies and Gentlemen:
We refer to the Real Estate Purchase Contract, dated January
24, 1997 (the "Contract") between X.X. Xxxxxxxx, Inc. ("Seller") and
Farmland Management Services and its assignee, Xxxx Xxxxxxx
Mutual Life Insurance Company ("Buyer"). We would like to clarify
our understanding of Section 23 of the Contract, which deals with the
arrangement pursuant to which Xxxxx advanced to Seller the sum of
$1,175,000 for the purpose of vineyard development in June, 1997.
To the extent that Section 23 is inconsistent with the terms set forth
in this letter, this letter shall control and shall be deemed to constitute
Section 23 of the Contract.
X.X. Xxxxxxxx has planted vineyards and will continue to
perform additional vineyard development work on certain real
property Seller sold to Buyer pursuant to the Contract (the
"Property"). Specifically, approximately 80 acres of new vineyards
were planted in the spring of 1997 on ground previously deep ripped
in the northwest portion of the block commonly called the North
Xxxxx Vineyard, and additional vineyard development work has been
and will be performed on that portion of the Property and elsewhere
on the Property. The planting and development work is to be
completed by Seller in accordance with Buyer's standards and
specifications. The planting and development work has included and
will include, but is not limited to: installation of the below and
above-ground irrigation system in the form of a drip system, stakes,
wire, clips and end posts and a complete multi-wire trellis system;
planting of varietal vines on hybrid stock and the development of
those vines until they reach maturity (the "Improvements"). Subject
to the limitations set forth in this letter, Buyer shall bear the costs and
expenses Seller incurs after June 2, 1997 in making the
Improvements (the "Future Vineyard Development Costs").
On June 2, 1997, Buyer paid to Seller $1,175,000 as an
advance of the Future Vineyard Development Costs (the "Advance").
Seller shall provide Buyer with periodic reports setting forth its
charges and the expenses it incurs in connection with the
Improvements. If at such time as the vineyards reach maturity, the
Future Vineyard Development Costs are less than the amount of the
Advance, Seller shall refund to Buyer the amount by which the
Advance exceeded these costs. In addition, if Seller does not
complete the Improvements or commits a material breach of that
certain
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Agricultural Sublease between Seller and Farmland
Management Services which results in the termination of that
Agricultural Sublease prior to the completion of the Improvements,
Seller shall refund to Buyer the amount by which the Advance
exceeds the actual Future Vineyard Development Costs to that date.
If the actual Future Vineyard Development Costs exceed the
amount of the Advance, Buyer shall not be obligated to make any
additional payment of the Future Vineyard Development Costs.
For the purposes of this letter, vineyards will be deemed to
reach maturity at such time as those vineyards produce quantities of
grapes commensurate with production levels of other mature
vineyards owned or managed by Seller.
The obligations contained in Section 23, including but not
limited to those described in this letter, survived the Close of Escrow
and the recordation of the grant deed for the Property.
Please sign below to indicate your agreement to the terms and
conditions set forth in this letter.
Sincerely,
X.X. XXXXXXXX, INC.
//s// Xxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxx, President
We agree to the terms set forth in this letter.
XXXX XXXXXXX
MUTUAL LIFE
INSURANCE COMPANY
By: Xxxxxxx Natural
Resource Group, Inc.
By: //s// Xxxxx X. Xxxxxxxxx, CFA
Xxxxx X. Xxxxxxxxx, CFA
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