EXHIBIT 10.1
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AGREEMENT
THIS AGREEMENT, made this 20th day of December, 1990, by and between
CANANDAIGUA WINE COMPANY, INC., a corporation organized and existing under the
laws of the State of Delaware (hereinafter called the "Corporation"), and ROBERT
S. SANDS, as Trustee of the Marvin Sands Trust under Agreement dated November
19, 1990 (hereinafter called the "Trustee");
WHEREAS, Marvin Sands (hereinafter called the "Employee") has been a
capable, efficient and valued employee of the Corporation since 1972; and
WHEREAS, the Corporation desires to provide the Employee with added
compensation in recognition of his valued services by providing adequate
protection for the family of the Employee and his spouse in the event of their
deaths;
NOW, THEREFORE, in consideration of covenants contained herein, it is
mutually acknowledged and agreed that:
1. The Trust is the sole and absolute owner of Prudential Mutual Life
Insurance Company Policy No. 79 662 805 and has designated the beneficiary
thereof.
2. The Policy shall be subject to the terms and conditions of this
Agreement.
3. It is the intention of the parties to this Agreement that the Trustee
shall retain all rights which the Policy grants to the owner thereof except as
hereinafter specified. All provisions of this Agreement shall be construed so as
to carry out such intention.
a. Following the collateral assignment of the Policy as hereinafter
provided, the Corporation shall be responsible for the timely payment to the
insurer of any premium, payment, assessment, or other charge necessary to keep
the Policy in force until such time as either the Corporation surrenders or
cancels the Policy or the later death of the Employee and his spouse. The
Trustee shall be responsible for the timely payment to the Corporation or to the
insurer of that portion of any premium payment, assessment or other charge equal
to the "economic benefit" to the Employee and/or his spouse calculated in
accordance with the United States Treasury Department rules then in effect. The
Trustee shall be responsible for the timely notification to the Corporation of
the manner in which the Trustee proposes to pay the portion of the premium
payment as hereinabove provided.
b. The total amount of all premium advances applied to the Policy by
the Corporation shall constitute indebtedness from the Trustee to the
Corporation. To secure the repayment of this indebtedness, as it may exist from
time to time, the Trustee shall execute and deliver to the Corporation, at or
before the time of the first premium advance made by the Corporation hereunder,
a collateral assignment of this Policy. Such collateral assignment shall be in
the form of the collateral assignment attached to this Agreement as Schedule A.
c. Following such collateral assignment, the Corporation may borrow
against the Policy up to the amount permitted under the provisions of the
Policy, provided, however, that the Corporation shall not permit the
indebtedness on the Policy to exceed the Policy's loan value (as the term is
defined under the Policy).
d. Following the assignment of the Policy, the Corporation shall
have the sole right to surrender, cancel, or convert the Policy. Upon the
surrender, cancellation, or conversion of the Policy, the Corporation shall have
the unqualified right to receive directly from the insurer the amount it has
paid for premiums on the Policy which is not reportable as income by the
Employee or his spouse (less any amount which the Corporation has borrowed from
the cash value of the Policy). Following the receipt of said amount, all of
obligations of the Corporation and the Trustee shall be terminated. The
Corporation shall be under no obligation to obtain a new insurance policy if
said Policy is surrendered or cancelled.
e. The Trustee shall have the right to designate the beneficiary of
the portion of the death proceeds to which the Corporation is not entitled, as
hereinafter specified in paragraph "6(b)." The Corporation, as holder of the
Policy as collateral assignee, will make the Policy available to the insurer or
the Trustee in order to effectuate any change in the beneficiary designation
which the Trustee may desire to make, subject to the rights of the Corporation
as defined in this Agreement.
4. The Trustee shall take no action with respect to the Policy which
would in any way compromise or jeopardize the Corporation's right to be repaid
such amounts, without the express written consent of the Corporation.
5. The Corporation shall have the right to keep said Policy in force
during the lifetimes of the Employee and his spouse, including any period
following the Employee's retirement from the service of the Corporation.
6. a. Upon the death of the second to die of the Employee and his
spouse, the Corporation shall promptly take all actions necessary to obtain the
death benefits provided under the Policy.
b. The Corporation shall have the unqualified right to receive from
the death benefits an amount equal to the premiums it has paid which are not
reportable as income by the Employee or his spouse (less any amount which the
Corporation has borrowed from the cash value of the Policy). The balance of the
death benefits provided under the Policy, if any, shall be paid directly to the
beneficiary or beneficiaries designated by the Trustee, in the manner and in the
amount or amounts provided in the beneficiary designation provisions of the
Policy. No amount shall be paid from such death benefits to the beneficiary or
beneficiaries designated by the Trustee until the full amount due the
Corporation hereunder has been paid.
7. Repayment of the amounts of the premiums on the Policy paid by the
Corporation and not reportable as income by the Employee or his spouse shall be
made from the cash surrender value of the Policy (as defined therein) if the
Corporation surrenders or cancels the Policy. Payment of the amount payable to
the Corporation upon the death of the second to die of the Employee and his
spouse shall be made from the death proceeds of the Policy.
8. a. This Agreement shall terminate, without notice, upon the
occurrence of any of the following events: (1) the total cessation of the
business of the Corporation; (2) the bankruptcy, receivership or dissolution of
the Corporation; or (3) the termination of the Employee's employment by the
Corporation other than by reason of his death or retirement.
b. In addition, either the Trustee or the Corporation may terminate
this Agreement, provided that no premiums under the Policy are overdue, by
written notice to the other party. Such termination shall be effective thirty
days from the date of such notice.
9. The Corporation shall release its interests in the Policy, cancel
the collateral assignment, and transfer physical possession of the Policy to the
Trustee upon its receipt of sums in satisfaction of the total indebtedness owed
by the Trustee to the Corporation, as hereinabove provided. Such release,
cancellation, and transfer shall terminate all mutual obligations of the parties
to this Agreement.
10. This Agreement may not be amended, altered or modified, except by a
written instrument signed by the parties hereto, or their respective successors
or assigns, and may not be otherwise terminated except as provided herein.
11. The rights of either party to this Agreement may be assigned; and a
party wishing to make an assignment need not obtain the consent of the other
party to this Agreement to such assignment.
12. This Agreement shall be binding upon and inure to the benefit of the
Corporation and the Trustee and their respective successors and assigns.
13. Any notice, consent or demand required or permitted to be given under
the provisions of this Agreement shall be in writing, and shall be signed by the
party giving or making the same. If such notice, consent or demand is mailed to
a party hereto, it shall be sent by United States certified mail, postage
prepaid, addressed to such party's last known address as shown on the records of
the Corporation. The date of such mailing shall be deemed the date of notice,
consent or demand.
14. Richard E. Sands is hereby designated the "named fiduciary" of this
plan. The named fiduciary, Richard E. Sands, shall be responsible for the
management, control and administration of the plan. The named fiduciary may
allocate to others certain aspects of the management and operation
responsibilities of the plan, including the employment of advisors and the
delegation of any ministerial duties to qualified individuals.
15. CLAIMS PROCEDURE
A. FILING OF BENEFIT CLAIMS
(1) When a participant, beneficiary, or his duly authorized
representative have a claim which may be covered under the provisions of the
insurance policy, he or she should contact the named fiduciary.
(2) Claim forms and claim information can be obtained from the
named fiduciary.
(3) The claim must be in writing on a Benefit Claim Form and
delivered to the named fiduciary either in person or by mail, postage paid. The
name fiduciary will forward the claim form to the authorized representative of
the insurer.
A. INITIAL DISPOSITION OF BENEFIT CLAIMS
(1) Within ninety (90) days after receipt of a claim, the insurer
shall send to the claimant, by mail, postage prepaid, a notice granting or
denying, in whole or in part, a claim for benefits.
(2) If a claim for benefits is denied, the insurer shall provide
the claimant written notice setting forth in a manner calculated to be
understood by the claimant:
(a) The specific reason or reasons for the denial;
(b) Specific reference to pertinent plan provisions on which
the denial is based;
(c) A description of any additional material or information
necessary for the claimant to perfect the claim and an explanation of why such
material or information is necessary; and
(d) Appropriate information as to the steps to be taken if
the participant or beneficiary wishes to submit his or her claim for review.
(3) If the claim is payable, a benefit check will be issued to the
named fiduciary and forwarded to the claimant.
(4) The ninety- (90) day period may be extended if special
circumstances require an extension of time to process the claim for benefits.
(5) Written notice of the extension shall be furnished to the
claimant prior to the termination of the initial 90-day period.
(6) The extension notice shall indicate the special circumstances
requiring an extension of time and the date by which the insurer expects to
render the final decision.
(7) In no event shall such extension exceed a 90 days from the end
of the initial 90-day period.
(8) If a notice of denial is not received within the claim being
filed, the claim shall be deemed the claimant shall be permitted to proceed to
the period of 90 days of denied and review stage.
C. REVIEW PROCEDURE
(1) Within sixty (60) days of:
(a) the receipt by the claimant of written notification
denying, in whole or in part, his or her claim, or
(b) a deemed denial resulting from the insurer's failure to
provide the claimant with written notice of denial within 90 days of the claim
being filed, the claimant or his duly authorized representative, upon
written application to the insurer, delivered in person or by certified mail,
postage prepaid, may request an opportunity to appeal a denied claim to the
insurer or a person designated by the insurer.
(2) The claimant or his representative may:
(a) Request a review upon written application to the plan;
(b) Review pertinent documents; and
(c) Submit issues and comments in writing.
(3) The decision on review shall be made within sixty (60) days of
the insurer's receipt of a request for review.
(4) The sixty (60) day period may be extended if special
circumstances require an extension of time to process the review.
(5) If an extension is required:
(a) written notice of the extension shall be furnished to the
claimant prior to the commencement of the extension, and
(b) a decision shall be rendered as soon as possible but no
later than 120 days after the insurer received the request for review.
(6) The decision on review shall be in writing and shall include
specific reasons for the decision, written in a manner calculated to be
understood by the claimant, as well as specific references to the pertinent plan
provision on which the decision is based.
(7) If the decision on review is not rendered within sixty (60)
days or within 120 days if an extension is granted, then the claim shall be
deemed denied on review.
D. OTHER REMEDIES
(1) After exhaustion of the claims procedures, nothing shall
prevent any person from pursuing any other legal or equitable remedy otherwise
available.
16. This Agreement, and the rights of the parties hereunder, shall be
governed by and construed in accordance with the laws of the State of Delaware.
17. Notwithstanding the provisions of this Agreement, Prudential is hereby
authorized to act in accordance with the terms of the Policy issued by it as if
this Agreement did not exist. Payment or other performance of its obligations
under such Policy by Prudential in accordance with the terms of such Policy
shall completely discharge Prudential from all claims, suits, and demands of all
persons whatsoever.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in
duplicate, as of the day and year first above written.
ATTEST: CANANDAIGUA WINE COMPANY, INC.
/s/ Martin W. O'Toole By: /s/ Richard Sands
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Martin W. O'Toole As its: President
ATTEST:
/s/ Martin W. O'Toole By: /s/ Robert S. Sands
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Martin W. O'Toole ROBERT S. SANDS, as Trustee of
the Marvin Sands Trust
SCHEDULE A
It is agreed, pursuant to the foregoing Agreement dated that
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the following described policy of life insurance shall be subject to the
provisions of said Agreement. Policy No. issued by The Prudential
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Insurance Company of America on 19 , insuring the lives of
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the Employee and his spouse.
Collateral Assignment
Assignment made , 19 , by Robert S. Sands, as the Trustee of
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Marvin Sands Trust dated , 19 , , assignor, to
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Canandaigua Wine Company, Inc., assignee.
For value received, the assignor hereby assigns to the assignee Insurance
Policy No. issued by the Prudential Insurance Company of
America on the lives of Marvin and Marilyn D. Sands, as collateral security to
the extent of the indebtedness of the assignor to the assignee.
The assignee, without the consent of the assignor, may apply for a policy
loan in an amount not to exceed the permissible policy loan limits, but not in
excess of premium advances by the assignee.
Except as specifically herein granted to the assignee, the assignor shall
retain all other incidents of ownership in the policy.
Dated
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ROBERT S. SANDS,
as Trustee, as Assignor
CANANDAIGUA WINE COMPANY, INC.,
as Assignee
Dated By:
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As its: