EXHIBIT 10.32

 

SCHEID VINEYARDSINC.

13470 WashingtonBlvd.

Marina Del Rey, CA90292

 

March 22, 2001

 

 

**PERSONAL DELIVERY**

 

Mr. Scott D.Scheid

3204 Crest Drive

Manhattan Beach,CA  90266

 

 

 

                                    Re:      **ScheidVineyards Inc. (the “Company”) —**

**                                                Termsof Employment**

 

Dear Mr. Scheid:

 

                                This letteragreement (this “Agreement”) will confirm our mutual understanding that theterms and conditions pursuant to which the Company has extended and you haveaccepted its offer to serve as its President and Chief Operating Officer(“COO”) are as follows:

 

1.             Position; Services.  You agree to serve as President and COO ofthe Company. In such capacities, you shall report to the Company’s ChiefExecutive Officer (“CEO”) and Board of Directors.   As President and COO of the Company you shall have such dutiesand responsibilities as are normally associated with such positions and suchother duties and/or responsibilities as may from time to time be assigned toyou by the Company’s CEO or its Board of Directors; including but not limitedto, supervision over all of the operational and administrative aspects of theCompany’s business.  You hereby acceptemployment hereunder and agree to devote your full time, energy and skill tosuch employment.  Notwithstanding theforegoing, you may engage in other personal business so long as the performanceof such activities does not materially interfere with the full, efficient andtimely performance of your duties hereunder. In the event both you and theCompany agree, the Company may appoint a separate COO who shall report to youwithout otherwise affecting the terms and conditions of this Agreement.

 

2.             Term.

 

                The term of this Agreement (the“Term”) shall be four (4) years, unless sooner terminated as provided herein.Your services under this Agreement shall commence as of April 1, 2001 (the“Start Date”), and, unless sooner terminated, shall terminate on March 31,

 

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2005 (the“Expiration Date”). The Company may terminate your services at any time duringthe Term of this Agreement with or without “Cause,” as such term is hereinafterdefined.

 

3.             Compensation.

 

                (a)           As compensation for all services to be rendered by youhereunder, the Company shall pay you, during the Term of this Agreement, a basesalary at the rate of Two Hundred and Thirty Five Thousand Dollars ($235,000)per annum (the “Base Salary”) with such increases and/or bonuses as may bedetermined from time to time by the Board in its sole discretion; providedhowever, nothing herein shall require that the Company pay you any bonus orincrease your Base Salary.  Said BaseSalary shall be payable in equal semi-monthly installments or in such otherinstallments as the Company may from time to time pay other similarly situatedemployees.

 

                (b)           The Term of this Agreement may be terminated prior to theExpiration Date in the event your employment with the Company ends as a resultof (x) your termination by the Company with “Cause” or without “Cause”; (y)your voluntary termination; or (z) your death or “disability,” as hereinafterdefined.  For the purposes hereof theterm “disability” shall mean your absence from the Company’s principal officesor your inability to perform in all material respects your duties pursuant tothis Agreement by reason of mental or physical illness, disability orincapacity for a period of four (4) months or more during any twelve (12) monthperiod during the term hereof. Your compensation in the event the Agreement isterminated prior to the Expiration Date shall be as follows:

 

                                                                (i)the Company may in its sole discretion terminate you at any time without“Cause.”  In the event the terminationis without “Cause,” you hereby agree that you shall only be entitled to receiveyour then current “Base Salary,” as such term is hereinafter defined, andbenefits through the date of termination and as your entire severancecompensation your then Base Salary for the remainder of the term of thisAgreement (the “Severance Compensation”). Such Severance Compensation shall bepayable when it would have otherwise been due to you;

 

IN CONNECTION WITHYOUR TERMINATION WITHOUT CAUSE, THE SEVERANCE COMPENSATION PROVIDED IN THISSECTION 3(b) SHALL BE PAID TO YOU AS LIQUIDATED DAMAGES FOR ALL CLAIMS YOUWOULD HAVE WITH RESPECT TO (i) THE TERMINATION OF THIS AGREEMENT,(ii) ANYCOMPENSATION DUE YOU FROM THE COMPANY PURSUANT TO THIS AGREEMENT AND (iii) THEINJURY TO YOUR REPUTATION AS A RESULT OF SUCH TERMINATION.  IN CONNECTION THEREWITH, THE PARTIES AGREETHAT IT WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO FIX THE ACTUAL AMOUNTOF SUCH DAMAGES AND CLAIMS DUE YOU WITH RESPECT THERETO AND THAT SUCH SEVERANCE

 

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BENEFITS SHALLCONSTITUTE A REALISTIC AND REASONABLE VALUATION OF THE DAMAGES WITH RESPECT TOYOUR CLAIMS.

 

| /s/ AGS |   | /s/ SS  |
|---------|--------|---------|
| Initial |   | Initial |

 

                                                                (ii)            in the event the Agreement terminates as aresult of your death or “disability,” you or your estate shall be entitled toreceive your Base Salary through the date of termination and for ninety (90)days thereafter, plus all benefits hereunder through the date of termination.

 

                                                                (iii)         in the event you terminate youremployment voluntarily or are terminated with “Cause,”  you shall be entitled to receive solely yourthen current “Base Salary,” plus any accrued and unpaid  benefits due you, through the date oftermination.  For the purposes hereof“cause” shall be as defined in Exhibit “A” attached hereto and made apart hereof.

                                                                (iv)          under no circumstances shall theCompany be obligated to pay you any undeclared or declared but unpaid bonusesin the event of your termination  priorto the payment thereof.  The payment ofany such bonus shall be at the sole discretion of the Company’s Board ofDirectors.

 

                (c)             As considerationfor and a condition precedent to the Company’s obligation to provide thepayments required pursuant to Section 3(b)(i) above, on or before such paymentis made to you pursuant to such Section, you shall simultaneously execute anddeliver to the Company a release, in a form acceptable to the Company and itscounsel, of all claims against the Company arising out of or pursuant to thisAgreement or your employment with the Company pursuant hereto, including anyclaims for Severance Benefits or compensation hereunder.

 

4.             Relocation Package.  In connection with the performance of yourservices as contemplated in this Agreement, you agree that your office shall belocated at the Company’s principal offices which will be relocated to 305Hilltown Road, Salinas, CA; the purpose of such relocation being to place theCompany’s headquarters in greater proximity to the Company’s vineyards.  In connection therewith, you intend torelocate and purchase a new principal residence near such offices and inconnection with your relocation, the Company shall provide you the following(the “Relocation Package”):

 

                (a)           the compensation and benefits described in that certaindocument attached hereto as Exhibit “B” (the “Relocation Package”);

 

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                (b)           a “Settling-In Allowance,” in the sum of (i)  Thirty Thousand Dollars ($30,000)(the“Affected Payment”)  payable in a lumpsum to you upon your physically relocating your principal place of residence toMonterey County, CA or a neighboring county (the “Relocation”), plus (ii) the“Additional Payments” which shall be equal to the sum  of any federal, stateand local income taxes and penalties and interest thereon attributable to boththe Affected Payment and the Additional Payments.   You shall receive the Additional Payments concurrently withAffected Payments.

 

                (c)           The Company agrees to make available to you an interestfree relocation bridge loan (the “Loan”), secured by a Second Deed of Trust onyour current principal residence which shall be funded prior to the closing ofyour purchase of your new residence, in the principal amount of Two HundredThousand Dollars ($200,000).  The Loanshall mature and be payable upon the first to occur of either: (i) the sale ofyour current residence or (ii) one (1) year from the date of funding.

 

5.             Benefits.

 

                (a)           During the Term, in addition to the compensation and theRelocation Package provided for in Sections 3 and 4 of this Agreementrespectively, you shall have the right to: (x) participate in any profit-sharing,pension, life, health and accident insurance, retirement or other employeebenefit plans presently adopted or which hereafter may be adopted by theCompany under terms no less favorable to those offered or available to othersenior executives of the Company of comparable or lower standing than you; (y)participate in the Company’s 401(k) Plan in accordance with the terms; and (z)receive, in the sole discretion of the Board, stock options, restricted stock,stock appreciation rights or other equity-based compensation (“DiscretionaryCompensation”).  Any DiscretionaryCompensation granted to you shall be subject to such terms and conditions asthe Board, in its sole discretion, may deem appropriate or necessary.

 

                (b)           During the Term, you shall also be entitled to twenty (20)days annual vacation time, during which time your compensation will be paid infull.  Unused vacation days at the endof any pay period(s) may be carried over to subsequent pay period(s), providedthat the cumulative number of vacation days accruing from and after the date ofthis Agreement carried over into any subsequent pay period shall not exceedtwenty-five (25) days.  You shall notaccrue additional vacation days during any pay period once the total number ofaccumulated vacation days equals twenty-five (25) days.  You shall under no circumstances be entitledto cash in lieu of vacation days, except in the event of your termination ofemployment with the Company.

 

6.             Expenses.  The Company shall reimburse you for all reasonabletravel, hotel, entertainment and other expenses incurred by you in thedischarge of your duties

 

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hereunder, inaccordance with Company policy regarding same, only after receipt from you ofvouchers, receipts or other reasonable substantiation of such expensesacceptable to the Company.

 

7.             Indemnification.   In connection with your services rendered onbehalf of the Company during the term of this Agreement, the Company agrees toindemnify you to the fullest extent permitted by Delaware law.

 

8.             Confidentiality.  You covenant and agree that you will not atany time during or after the termination of your employment with the Companyreveal, divulge or make known to any person, firm or corporation anyinformation, knowledge or data of a proprietary nature relating to the businessof the Company or any of its affiliates which is not or has not becomegenerally known or public.  You shallhold, in a fiduciary capacity, for the benefit of the Company, all information,knowledge or data of a proprietary nature, relating to or concerned with, theoperations, customers, developments, strategic plans, new or potentialproducts, marketing, sales, business and affairs of the Company and itsaffiliates which is not generally known to the public and which is or wasobtained by you during your employment by the Company.  You recognize and acknowledge that all suchinformation, knowledge or data is a valuable and unique asset of the Company,and accordingly you will not discuss or divulge any such information, knowledgeor data to any person, firm, partnership, corporation or organization otherthan to the Company, its affiliates, designees, assignees or successors orexcept as may otherwise be required by the law, as ordered by a court or othergovernmental body of competent jurisdiction, or in connection with the businessand affairs of the Company.

 

9.             Miscellaneous.

 

                (a)           This Agreement reflects the entire agreement between theparties with respect to the subject matter hereof and shall supersede any prioragreements or understandings whether oral or in writing with respect thereto.This Agreement may not be modified, altered or amended except by an instrumentin writing signed by the parties hereto.

 

                (b)           This Agreement shall be construed in accordance with thelaws of the State of California except to the extent that any provision ofSection 7 hereof may relate to an interpretation of the corporation laws ofDelaware, the state in which the Company is domiciled, in which case suchprovision shall be construed in accordance with the corporation laws of thatstate.

 

                (c)           Nothing in the Agreement is intended to require or shallbe construed as requiring the Company to do or fail to do any act in violationof applicable law.  The Company’sinability pursuant to court order to perform its obligations under thisAgreement shall not constitute a breach of this Agreement.  If any provision of this Agreement isinvalid or unenforceable, the remainder of this Agreement shall neverthelessremain in full force and effect.

 

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If any provisionis held invalid or unenforceable with respect to particular circumstances, itshall, nevertheless, remain in full force and effect in all othercircumstances.

 

                (d)           Any arbitrable controversy or claim arising out of orrelating in any way to this Agreement or the breach thereof, or Employee’semployment, and any arbitrable statutory claims including all arbitrable claimsof employment discrimination or harassment shall be subject to private andconfidential arbitration in the County of Monterey in accordance with the lawsof the State of California.  EXCEPT ASOTHERWISE EXPRESSLY PROVIDED HEREIN, THE PARTIES AGREE THAT IF A DISPUTE ORCLAIM OF ANY KIND ARISES BETWEEN THEM, THEY AGREE TO WAIVE ANY RIGHTS EACH MAYHAVE TO A JURY OR COURT TRIAL.  Thearbitration shall be conducted in a procedurally fair manner by a mutuallyagreed upon neutral arbitrator selected in accordance with the National Rulesfor the Resolution of Employment Disputes (“Rules”) of the American ArbitrationAssociation or if none can be mutually agreed upon, then by one arbitratorappointed pursuant to the Rules; the arbitration shall be conductedconfidentially in accordance with the California Rules of Evidence and theRules, except to the extent that the rules are inconsistent herewith; thearbitration fees shall be paid  by theCompany; each party shall have the right to conduct reasonable discoveryincluding three (3) depositions, requests for production of documents and suchother discovery as permitted under the Rules or ordered by the arbitrator; thearbitrator shall have the authority to award any damages or remedies authorizedby law for the claims presented including punitive damages and shall have theauthority to award  reasonable attorneysfees to the prevailing party as provided by law; the decision of the arbitrator shall be final and binding on allparties and shall be the exclusive remedy of the parties; and the award, andthe legal and factual basis for the award, shall be in writing in accordancewith the Rules, and shall be subject to judicial confirmation, enforcement andreview in accordance with California law.

 

                (e)           Any notice to the Company required or permitted hereundershall be given in writing to the Company, either by personal service,telecopier or, if by mail, by registered or certified mail return receiptrequested, postage prepaid, duly addressed to the President of the Company atits then principal place of business attention.  Any such notice to you shall be given in a like manner, and ifmailed shall be addressed to you, as set forth above or in the Company’srecords. For the purpose of determining compliance with any time limit herein,a notice shall be deemed given on the fifth business day following thepostmarked date, if mailed, or the date of delivery if personally delivered ordelivered by telex or telecopier.

 

                (f)            A waiver by either party of any term or condition of thisAgreement or any breach thereof, in any one instance, shall not be deemed orconstrued to be a waiver of such term or condition or of any subsequent breachthereof.

 

                (g)           You acknowledge that you have been advised that Barry L.Burten, Esq. and other attorneys at Jeffer, Mangels, Butler & Marmaro, LLPhave represented only the

 

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Company inconnection with the negotiation of this Agreement and that the Company hasadvised you to seek the advice of separate counsel in connection with thenegotiation of the terms of the Agreement and your rights with respect to theAgreement.  In connection therewith, youhereby acknowledge that you have been represented to your satisfaction inconnection with the negotiation of the terms of this Agreement, your rightswith respect to the Agreement, and the execution thereof by independent legalcounsel of your choosing.

 

                                If theaforementioned terms and conditions accurately reflect your understanding ofour agreement, please date and execute two copies of this Agreement in thespaces provided and return one fully executed copy of this Agreement to theCompany.

 

| Very truly yours,     |
|-----------------------|
|                  |
| SCHEID VINEYARDS INC. |
|                  |
|                  |
|                  |
| By:                   | /s/ Alfred G. Scheid |
|                  | Alfred G. Scheid |
|                  | Chief Executive Officer |

 

Accepted and Agreedto

this 22nd day ofMarch, 2001

 

 
| By:    | /s/ Scott D. Scheid |
|--------|---------------------|
|   | Scott D. Scheid     |

 

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# **EXHIBIT“A”**

 

**To the Letter Agreement (the“Agreement”) Dated March 22, 2001 between**

**Scheid Vineyards Inc. (the “Company”)and Scott D. Scheid**

 

**Definition of “Cause”**

 

 

 

“**Cause**”means, as used with respect to the involuntary termination of Scott D. Scheid(“you”):

 

                                (a)           Your continued failure or refusal tosubstantially perform your duties pursuant to the terms of the Agreement;

 

                                (b)           Your engaging in misconduct orinaction materially injurious to the Company; or

 

                                (c)           Your conviction of a felony or of acrime involving moral turpitude.

 

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**EXHIBIT “B”**

 

                                                **To theLetter Agreement (the “Agreement”) Dated March 22, 2001 between    Scheid Vineyards Inc. (the “Company”) andScott D. Scheid**

 

# **The Relocation Package**

 

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