AMENDMENT NO. 1 TO VINEYARD MANAGEMENT AGREEMENTS
THIS AMENDMENT NO. 1 TO VINEYARD MANAGEMENT AGREEMENTS (this
"Amendment") is made and entered into as of the 7th day of May 1998, by and
among XXXXXX VINEYARDS CALIFORNIA INC., a California corporation and formerly
named Xxxxxx Vineyards and Management Co. ("Scheid"), CANANDAIGUA WINE
COMPANY, INC., a New York corporation and formerly named Canandaigua West,
Inc. ("Canandaigua"), and CANANDAIGUA BRANDS, INC., a Delaware corporation
and formerly named Canandaigua Wine Company, Inc. ("CWC"). This Amendment is
being entered into for the purpose of amending (i) that certain Vineyard
Management Agreement, dated as of January 1, 1997, among the parties (the
"1997 Agreement") and (ii) that certain Vineyard Management Agreement, dated
as of January 1, 1996, among the parties (the "1996 Agreement" and together
with the 1997 Agreement, the "Management Agreements").
WITNESSETH:
WHEREAS, Section 5.3(A) of each of the Management Agreements provides
that Canandaigua may terminate such Management Agreement if certain persons
specified therein fail to beneficially own, directly or indirectly, at least
51% of the capital stock of Xxxxxx;
WHEREAS, at the time each of the Management Agreements was entered into,
Xxxxxx was a privately held company with a single class of capital stock all
outstanding shares of which were owned by Xxxxxx X. Xxxxxx;
WHEREAS, the original mutual intent of the parties in including Section
5.3(A) of each of the Management Agreements was to provide Canandaigua a
right of termination if the persons specified in such section failed to
maintain voting and management control of Xxxxxx, as opposed to owning a
majority of the economic interest in Xxxxxx;
WHEREAS, in July 1997, in connection with the initial public offering of
Xxxxxx Vineyards Inc., a Delaware corporation ("SVI"), (i) Xxxxxx became a
wholly owned subsidiary of SVI, (ii) SVI created a dual class capital
structure comprised of Class A Common Stock and Class B Common Stock, with
the Class B Common Stock possessing greater voting rights than the Class A
Common Stock, (iii) shares of Class B Common Stock of SVI were issued to
Xxxxxx X. Xxxxxx, members of his family, Xxxx Xxxxxxxx (an officer of each of
SVI and Scheid) and members of his family, and (iv) shares of Class A Common
Stock were issued to purchasers in the offering;
WHEREAS, each share of Class A Common Stock of SVI is entitled to one
vote and each share of Class B Common Stock of SVI is entitled to five votes
on all matters submitted to a vote of the stockholders of SVI; and except for
matters where applicable law requires the approval of one or both classes of
the Common Stock of SVI voting as a separate class and except as described
below in connection with the election of directors, the Class A Common
Stock and the Class B Common Stock vote together as a single class on all
matters presented for a vote of the stockholders of SVI;
WHEREAS, the holders of the Class A Common Stock, voting as a separate
class, are entitled to elect 25% of the authorized number of directors of SVI
rounded up to the nearest whole number, and the holders of the Class B Common
Stock, voting as a separate class, are entitled to elect the remaining
directors of SVI; and
WHEREAS, due to the above-described changes in the ownership of Xxxxxx
and the capital structure of SVI, the parties have recognized and agreed that
the provisions of Section 5.3(A) of each of the Management Agreements no
longer operate to give effect to the original mutual intent of the parties,
and the parties desire to amend Section 5.3(A) of each of the Management
Agreements to conform such provisions to the original mutual intent of the
parties.
NOW, THEREFORE, in consideration of the payment of $10.00 and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. AMENDMENT OF CLAUSE (A) OF SECTION 5.3. Clause (A) of Section 5.3
of each of the Management Agreements is hereby amended to read in its
entirety as follows:
"A. (i) (a) Xxxxxx X. Xxxxxx or the members of his family or Xxxx X.
Xxxxxxxx or the members of his family, collectively, shall fail
to beneficially own, directly or indirectly, shares of the
capital stock of SVI: (1) representing a majority of the combined
voting power of the outstanding shares of all classes of Common
Stock of SVI, when voting together as a single class, or
(2) having the power to elect a majority of the total authorized
number of directors of SVI; or (b) SVI shall fail to beneficially
own, directly or indirectly, shares of the capital stock of
Xxxxxx representing a majority of the voting power of Xxxxxx in
the election of directors; Xxxxxx shall give prompt written
notice to Canandaigua of any such failure; or
"(ii) none of Xxxxxx X. Xxxxxx or members of his family or Xxxx X.
Xxxxxxxx or members of his family shall be actively involved in
the business of Scheid, unless Canandaigua shall consent in
writing; such consent shall not be unreasonably withheld;".
2. FULL FORCE AND EFFECT. Except as amended hereby, each of the
Management Agreements remains in full force and effect.
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the
day and year first above written.
XXXXXX VINEYARDS CALIFORNIA INC.
By: /s/ XXXXX X. XXXXXX
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Signature
Vice President Finance
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Name and Title
CANANDAIGUA WINE COMPANY, INC.
By: /s/ XXXXXX X. XXXXXXX
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Signature
President
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Name and Title
CANANDAIGUA BRANDS, INC.
By: /s/ XXXXXX X. XXXXXXX
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Signature
Vice President
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Name and Title
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