EXHIBIT 10.43

 

SCHEID VINEYARDSINC.

13470 WashingtonBlvd.

Marina Del Rey, CA90292

 

March 22, 2001

 

**PERSONAL DELIVERY**

 

Mr. Michael S. Thomsen

518 24th Street

Manhattan Beach, CA 90266

 

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

**                                                         Terms of Employment                             **

 

Dear Mr. Thomsen:

 

                This letteragreement (this “Agreement”) will confirm our mutual u derstanding that theterms and conditions pursuant to which the Company has extended and you haveaccepted its offer to serve as its Chief Financial Officer (“CFO”) are asfollows:

 

                1.             Position;  Services.              You agree to serve as CFO of the Company. In suchcapacity, you shall report to the Company’s President and at the discretion ofthe President to such other officer of the Company as the President maydesignate (the “Supervising Officer”). As CFO for the Company you shall havesuch duties and responsibilities as are normally associated with such positionand such other duties and/or responsibilities as may from time to time beassigned to you by the Company’s Board of Directors, the President, or theSupervising Officer, if any; including, but not limited to, supervision overcertain financial aspects of the Company’s business. You hereby acceptemployment hereunder and agree to devote your full time, energy and skill tosuch employment. Notwithstanding the foregoing, you may engage in otherpersonal business so long as the performance of such activities does notmaterially interfere with the full, efficient and timely performance of your dutieshereunder.

 

                2.             Term.

 

                                (a)           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

 

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Mr. Michael S. Thomsen

March 22, 2001

Page 2

 

terminated, shall terminate on March 31, 2005 (the “Expiration Date”).The Company may terminate your services at any time during the Term of thisAgreement with or without “Cause,” as such term is hereinafter defined;

 

                                (b)           Notwithstanding the foregoing, in theevent: (i) there occurs a “Change of Control,” as hereinafter defined, prior tothe Expiration Date or earlier termination of the Term hereof, and (ii) youremployment is terminated by the Company or the surviving entity or you elect toterminate this Agreement within forty–five (45) days after such “Changeof Control,” you shall be entitled to receive, in lieu of any SeveranceCompensation, as hereinafter defined, or other payment from the Company or thesurviving entity the following: (x) if the Change of Control occurs within thefirst two (2) years of the Term, a lump sum “Change of Control Payment” equalto twenty–four (24) months of your Base Salary in effect upon theconsummation of the Change of Control, or (y) if the Change of Control occursduring the third year of the Term, a lump sum “Change of Control Payment” equalto eighteen (18) months of your Base Salary in effect upon the consummation ofthe Change of Control, or (z) if the Change of Control occurs within the lastyear of the Term, a lump sum “Change of Control Payment” equal to twelve (12)months of your Base Salary in effect upon the consummation of the Change ofControl. For the purposes hereof, “Change of Control” shall be defined as theoccurrence of any one of the following events:

 

                                                (i)            the Company shall merge orconsolidate with any other person or entity other than a subsidiary, and, uponthe consummation of such transaction, holders of the Class A and Class B CommonStock immediately prior to such transaction own less than fifty percent (50%)of the equity securities of the surviving or consolidated entity; or

 

                                                (ii)           all or substantially all of theassets of the Company are sold or transferred to another person or entity in asingle transaction or a series of related transactions.

 

                Notwithstandingthe foregoing, a Change of Control shall not include the filing by or on behalfof, or entering against, the Company or its subsidiaries of (y) a petition,decree or order of bankruptcy or reorganization, or ‘(z) a petition, decree ororder for the appointment of a trustee, receiver, liquidator, supervisor,conservator or other officer or agency having similar powers over the Companyor its subsidiaries, including any such petitions, orders or decrees filed orentered by federal or state regulatory authorities.

 

             3.                Compensation.

 

                                (a)            As compensation for all services tobe rendered by you hereunder, the Company shall pay you, during the Term ofthis Agreement, a base salary at the rate of One Hundred and Sixty ThousandDollars ($160,000) per annum

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Michael S. Thomsen

March 22, 2001

Page 3

 

(the “Base Salary”) with such increases and/or bonuses as may bedetermined from time to time by the Board in its sole discretion; provided however,nothing herein shall require that the Company pay you any bonus or increaseyour Base Salary. Said Base Salary shall be payable in equal semi–monthlyinstallments or in such other installments as the Company may from time to timepay other similarly situated employees.

 

                                (b)           The Term of this Agreement may beterminated prior to the Expiration Date in the event your employment with theCompany ends as a result of (x) your termination by the Company with “Cause” orwithout “Cause”; (y) your voluntary termination; or (z) your death or“disability,” as hereinafter defined. For the purposes hereof the term“disability” shall mean your absence from the Company’s principal offices oryour inability to perform in all material respects your duties pursuant to thisAgreement by reason of mental or physical illness, disability or incapacity fora period of four (4) months or more during any twelve (12) month period duringthe term hereof. Your compensation in the event the Agreement is terminatedprior to the Expiration Date shall be as follows:

 

                                                (i)            the Company may in its solediscretion terminate you at any time without “Cause.” In the event thetermination is without “Cause,” you hereby agree that you shall only beentitled to receive (y) your then current “Base Salary,” as such term ishereinafter defined, and benefits through the date of termination and (z) asyour entire severance compensation, the lesser of either: (A) an additionaltwelve (12) months of your Base Salary in effect at the date of termination, or(B) your then Base Salary for the remainder of the term of this Agreement (the“Severance Compensation”). Such Severance Compensation shall be payable when itwould have otherwise been due to you;

 

IN CONNECTION WITH YOUR TERMINATION WITHOUT CAUSE, THE SEVERANCECOMPENSATION PROVIDED IN THIS SECTION 3(b) SHALL BE PAID TO YOU AS LIQUIDATEDDAMAGES FOR ALL CLAIMS YOU WOULD HAVE WITH RESPECT TO (i) THE TERMINATION OFTHIS AGREEMENT,(ii) ANY COMPENSATION DUE YOU FROM THE COMPANY PURSUANT TO THISAGREEMENT AND (iii) THE INJURY TO YOUR REPUTATION AS A RESULT OF SUCHTERMINATION. IN CONNECTION THEREWITH, THE PARTIES AGREE THAT IT WOULD BEIMPRACTICAL AND EXTREMELY DIFFICULT TO FIX THE ACTUAL AMOUNT OF SUCH DAMAGESAND CLAIMS DUE YOU****WITHRESPECT THERETO AND THAT SUCH SEVERANCEBENEFITS SHALL CONSTITUTE A REALISTICAND REASONABLE****VALUATION OF THE DAMAGES WITH RESPECT TOYOUR CLAIMS.

 

 
|   | /s/ AGS |    | /s/ MT |   |   |
|--------|---------|---------|--------|--------|--------|
|   | Initial | Initial |   |

 

                                                (ii)           in the event the Agreement terminatesas a result of

 

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Mr. Michael S. Thomsen

March 22, 2001

Page 4

 

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 toreceive solely your then current “Base Salary,” plus any accrued and unpaidbenefits due you, through the date of termination. 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 prior to the payment thereof. The payment ofany such bonus shall be at the sole discretion of the Company’s Board ofDirectors.

 

                                (c)           As consideration for and a conditionprecedent to the Company’s obligation to provide the payments required pursuantto Section 3(b)(i) above, on or before such payment is made to you pursuant tosuch Section, you shall simultaneously execute and deliver to the Company arelease, in a form acceptable to the Company and its counsel, of all claimsagainst the Company arising out of or pursuant to this Agreement or youremployment with the Company pursuant hereto, including any claims for SeveranceBenefits or compensation hereunder.

 

                4.             Relocation Package.            In connection with the performanceof your services as contemplated in this Agreement, you agree that your officeshall be located at the Company’s principal offices which will be relocated to305 Hilltown Road, Salinas, CA; the purpose of such relocation being to placethe Company’s headquarters in greater proximity to the Company’s vineyards. Inconnection therewith, you intend to relocate and purchase a new principalresidence near such offices and in connection with your relocation, the Companyshall provide you the following (the “Relocation Package”):

 

                                (a)           thecompensation and benefits described in that certain document attached hereto asExhibit “B” (the “Relocation Package”);

 

                                (b)           a “Settling–In Allowance,” inthe sum of (i) Thirty Thousand Dollars ($30,000)(the “Affected Payment”)payable in a lump sum to you upon your .physically relocating your principalplace of residence to Monterey County, CA or a neighboring county (the“Relocation”), plus (ii) the “Additional Payments” which shall be equal to thesum of any federal, state and local income taxes and penalties and interestthereon attributable to both the Affected Payment and the Additional Payments.You shall receive the Additional Payments concurrently with Affected Payments.

 

                                (c)           Solong as you continue to be employed by the Company for a period of one (1) yearfrom the date of your Relocation, the Company agrees to

 

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Mr. Michael S. Thomsen

March 22, 2001

Page 5

 

make available to you a relocation loan (the “Loan”), secured by aSecond Deed of Trust on your new principal residence which shall be funded inconjunction with the closing of your purchase of such residence, in theprincipal amount of up to One Hundred Thousand Dollars ($100,000), simpleinterest payable annually at the rate of 5.3% (the “Annual Interest Payment”)throughout the Term of the Loan. Except as set forth below, the Loan shallmature in five (5) years from the date of funding, subject to a balloon paymentof the remaining principal at the end of the Term of the Loan–, provided,however, that to the extent you receive from the Company any compensatory bonusabove and beyond your Base Salary during any calendar year, you agree tocontribute no less than twenty–five percent (25%) of such bonus, afterdeducting such year’s Annual Interest Payment, to reducing the principal of theLoan. The maturity date of the Loan shall be accelerated in the event (i) youresign from the Company or are terminated with Cause, in which case the Loanshall mature and all accrued and unpaid interest and the outstanding principalbalance shall be due ninety (90) days from your termination of employment withthe Company, or (ii) if your employment with the Company****ends for any other reason, including butnot limited to termination without Cause, all accrued and unpaid interest andthe outstanding principal balance shall be due one (1) year from yourtermination of employment with the Company.

 

             5.                Benefits.

 

                                (a)           During the Term, in addition to thecompensation and the Relocation Package provided for in Sections 3 and 4 ofthis Agreement respectively, you shall have the right to: (x) participate inany profit–sharing, pension, life, health and accident insurance,retirement or other employee benefit plans presently adopted or which hereaftermay be adopted by the Company under terms no less favorable to those offered oravailable to other senior executives of the Company of comparable or lowerstanding than you; (y) participate in the Company’s 401 (k) Plan in accordancewith the terms; and (z) receive, in the sole discretion of the Board, stockoptions, restricted stock, stock appreciation rights or other equity–basedcompensation (“Discretionary Compensation”). Any Discretionary Compensationgranted to you shall be subject to such terms and conditions as the Board, inits sole discretion, may deem appropriate or necessary.

 

                                (b)           During the Term, you shall also beentitled to fifteen (15) days annual vacation time, during which time yourcompensation will be paid in full. .Unused vacation days at the end of any payperiod(s) may be carried over to subsequent pay parasol(s), provided that thecumulative number of vacation days accruing from and after the date of thisAgreement carried over into any subsequent pay period shall not exceed twentyfive (25) days. You shall not accrue additional vacation days during any pay periodonce the total number of accumulated vacation days equals twenty five (25)days. You shall under no circumstances be entitled to cash in lieu of vacationdays, except in the event of your termination of employment with the Company.

 

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Mr. Michael S. Thomsen

March 22, 2001

Page 6

 

                6.             Expenses.              The Company shall reimburse youfor all reasonable travel, hotel, entertainment and other expenses incurred byyou in the discharge of your duties hereunder, in accordance with Companypolicy regarding same, only after receipt from you of vouchers, receipts orother reasonable substantiation of such expenses acceptable 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 shall hold, in a fiduciary capacity, for thebenefit of the Company, all information, knowledge or data of a proprietarynature, relating to or concerned with, the operations, customers, developments,strategic plans, new or potential products, marketing, sales, business andaffairs of the Company and its affiliates which is not generally known to thepublic and which is or was obtained by you during your employment by theCompany. You recognize and acknowledge that all such information, knowledge ordata is a valuable and unique asset of the Company, and accordingly you willnot discuss or divulge any such information, knowledge or data to any person,firm, partnership, corporation or organization other than to the Company, itsaffiliates, designees, assignees or successors or except as may otherwise berequired by the law, as ordered by a court or other governmental body ofcompetent jurisdiction, or in connection with the business and affairs of theCompany.

 

             9.                Miscellaneous.

 

                                (a)           This Agreement reflects the entireagreement between the parties with respect to the subject matter hereof andshall supersede any prior agreements or understandings whether oral or inwriting with respect thereto. This Agreement may not be modified, altered oramended except by an instrument in writing signed by the parties hereto.

 

                                (b)           This Agreement shall be construed inaccordance with the laws of the State of California except to the extent thatany provision of Section 7 hereof may relate to an interpretation of thecorporation laws of Delaware, the state in which the Company is domiciled, inwhich case such provision shall be construed in accordance with the corporationlaws of that state.

 

                                (c)           Nothingin the Agreement is intended to require or shall be construed as requiring theCompany to do or fail to do any act in violation of applicable

 

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Mr. Michael S. Thomsen

March22, 2001

Page7

 

law. The Company’s inabilitypursuant to court order to perform its obligations under this Agreement shallnot constitute a breach of this Agreement. If any provision of this Agreementis invalid or unenforceable, the remainder of this Agreement shall neverthelessremain in full force and effect. If any provision is held invalid orunenforceable with respect to particular circumstances, it shall, nevertheless,remain in full force and effect in all other circumstances.

 

                                (d)           Any arbitrable controversy or claimarising out of or relating in any way to this Agreement or the breach thereof,or Employee’s employment, and any arbitrable statutory claims including allarbitrable claims of employment discrimination or harassment shall be subjectto private and confidential arbitration in the County of Monterey in accordancewith the laws of the State of California. EXCEPT AS OTHERWISE EXPRESSLYPROVIDED HEREIN, THE PARTIES AGREE THAT IF A DISPUTE OR CLAIM OF ANY KINDARISES BETWEEN THEM, THEY AGREE TO WAIVE ANY RIGHTS EACH MAY HAVE TO A JURY ORCOURT TRIAL. The arbitration shall be conducted in a procedurally fair mannerby a mutually agreed upon neutral arbitrator selected in accordance with theNational Rules for the Resolution of Employment Disputes (“Rules”) of theAmerican Arbitration Association or if none can be mutually agreed upon, thenby one arbitrator appointed pursuant to the Rules; the arbitration shall beconducted confidentially in accordance with the California Rules of Evidenceand the Rules, except to the extent that the rules are inconsistent herewith;the arbitration fees shall be paid by the Company; each party shall have theright to conduct reasonable discovery including three (3) depositions, requestsfor production of documents and such other discovery as permitted under theRules or ordered by the arbitrator; the arbitrator shall have the authority toaward any damages or remedies authorized by law for the claims presentedincluding punitive damages and shall have the authority to award reasonableattorneys fees to the prevailing party as provided by law; the decision of thearbitrator shall be final and binding on all parties and shall be the exclusiveremedy of the parties; and the award, and the legal and factual basis for theaward, shall be in writing in accordance with the Rules, and shall be subjectto judicial confirmation, enforcement and review in accordance with Californialaw.

 

                                (e)           Any notice to the Company required orpermitted hereunder shall be given in writing to the Company, either bypersonal service, telecopier or, if by mail, by registered or certified mailreturn receipt requested, postage prepaid, duly addressed to the President of theCompany at its then principal place of business attention. Any such notice toyou shall be given in a like manner, and if mailed shall be addressed to you,as set forth above or in the Company’s records. For the purpose, of determiningcompliance with any time limit herein, a notice shall be deemed given on thefifth business day following the postmarked date, if mailed, or the date ofdelivery if personally delivered or delivered by telex or telecopier.

 

                                (f)            A waiver by either party of any termor condition of this Agreement or any breach thereof, in any one instance,shall not be deemed or

 

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Mr. Michael S. Thomsen

March 22, 2001

Page 8

 

construed to be a waiverof such term or condition or of any subsequent breach thereof.

 

                                (g)           You acknowledge that you have beenadvised that Barry L. Burten, Esq. and other attorneys at Jeffer, Mangels,Butler & Marmaro LLP have represented only the Company in connection withthe negotiation of this Agreement and that the Company has advised you to seekthe advice of separate counsel in connection with the negotiation of the termsof the Agreement and your rights with respect to the Agreement. In connectiontherewith, you hereby acknowledge that you have been represented to yoursatisfaction in connection with the negotiation of the terms of this Agreement,your rights with respect to the Agreement, and the execution thereof byindependent legal counsel 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 below and return one fully executed copy of this Agreement tothe Company.

 

                                                                                                                Verytruly yours,

 

                                                                                                                SCHEIDVINEYARDS INC.

 
|   | By:                      |  /s/ Alfred  G. Scheid |   |
|--------|--------------------------|-----------------------------|--------|
|   | Alfred G. Scheid         |
|   | Chief Executive  Officer |

 

Accepted and Agreed to

this 22day of March, 2001

 
| By:                 |  /s/ Michael  S. Thomsen |
|---------------------|-------------------------------|
| Michael S.  Thomsen |

 

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Mr. Michael S. Thomsen

March 22, 2001

Page 9

 

EXHIBIT “A”

 

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

**Scheid Vineyards Inc. (the “Company”)and Michael S. Thomsen**

 

**Definition of “Cause”**

 

 

 

**“Cause”**means, as used with respect to theinvoluntary termination of Michael S. Thomsen (“you”):

 

                                (a)           yourcontinued failure or refusal to substantially perform your duties pursuant tothe terms of the Agreement;

 

                                (b)           Yourengaging in misconduct or inaction materially injurious to the Company; or

 

                                (c)           Yourconviction of a felony or of a crime involving moral turpitude.

 

 

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Mr. Michael S. Thomsen

March 22, 2001

Page 10

 

**EXHIBIT“B”**

** **

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

**ScheidVineyards Inc. (the “Company”) and Michael S. Thomsen**

** **

**TheRelocation Package**

 

[attached hereto]

 

 

 

 

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