                                 CODE OF VIRGINIA

SALE OF WINERY (§ 4.1-405)

A. Except for discontinuance of a brand or for good cause as provided in &#xA7;
4.1-406, the purchaser of a winery shall become obligated to all of the terms
and conditions of the selling winery&#8217;s agreements with wholesalers in
effect on the date of purchase. The purchaser of a brand from a winery shall
become obligated to all of the terms and conditions of the selling
winery&#8217;s agreements with wholesalers concerning that brand. Whenever such
a purchase of a brand results in the creation of a dual distributorship, the
provisions of subdivisions 1 and 2 of subsection B will determine the
distribution rights to such brand or any extension thereof. For the limited
purpose of making such determination, the winery selling the brand shall be a
nonsurviving winery and the purchaser shall be a surviving winery.

B. For purposes of this section, when a purchase of a winery by or on behalf of
another winery causes the selling winery to cease to exist as an independent
legal entity, the selling winery shall be regarded as a nonsurviving winery, and
the winery on whose behalf the purchase was made shall be regarded as a
surviving winery. In any case in which such a purchase of a winery by or on
behalf of another winery has created or will create a dual distributorship, the
following rules shall apply in order to determine the allocation of any brands
which are first marketed in the Commonwealth by the surviving winery after
February 18, 1989:

   1. If the surviving winery distributes in the Commonwealth brands of the
   nonsurviving winery which that winery marketed anywhere prior to the purchase,
   these brands shall be distributed through any wholesalers who were
   distributors in the Commonwealth for the nonsurviving winery. If the
   nonsurviving winery had no distributors in the Commonwealth, then the
   surviving winery&#8217;s brands, as well as the brands of the surviving winery
   which were marketed anywhere prior to the purchase, shall be distributed
   through those wine wholesalers who were wholesalers of the surviving winery
   prior to the purchase.

   2. If the surviving winery decides to market in the Commonwealth a new brand
   which was not marketed anywhere prior to the purchase, but which is clearly an
   extension of a brand which did exist prior to the purchase, the new brand
   shall be distributed through those wholesalers who distributed the brand of
   which the new brand is an extension.

   3. If the surviving winery decides to introduce in the Commonwealth a new
   brand which was not marketed anywhere prior to the purchase and which is not a
   brand extension, the new brand may be distributed through any distributor.

HISTORY: Code 1950, § 4-118.26; 1985, c. 542, § 4-118.46; 1989, c. 10; 1993,
c. 866.