Exhibit 10.8
QUARRY WINERY LEASE AGREEMENT
TABLE OF CONTENTS
1. Premises..................................................................2
2. Winery Use Permit and Other Permits.......................................3
3. Term......................................................................4
4. Uses Allowed By the Lease.................................................4
5. Rent......................................................................5
6. Other Uses of Lessor's Land...............................................9
7. Schedule..................................................................9
8. Possession................................................................9
9. Improvements..............................................................9
10. Lessor's Nominee........................................................11
11. Role of Justin M. Faggioli..............................................12
12. Repairs.................................................................12
13. Taxes...................................................................13
14. Utilities...............................................................15
15. Insurance and Casualty Events...........................................15
16. Liens and Encumbrances..................................................17
17. Access..................................................................18
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18. Water Licenses..........................................................20
19. Condemnation............................................................21
20. Disposal of Crush Residue and Pomace....................................22
21. Assignment or Subletting................................................22
22. Lessor's and JMF's Investment in Ravenswood Winery, Inc.................23
23. Termination in the Event Building Permit is Not Obtained................24
24. Default; Remedies.......................................................24
25. Surrender...............................................................30
26. Dispute Resolution and Arbitration......................................30
27. Right of the First Option to Purchase...................................31
28. Right of the First Option to Rent.......................................33
29. Renewal of the Lease and Buyout of Lessee Improvements..................35
30. Memorandum of Lease.....................................................36
31. Attorney's Fees.........................................................36
32. Notices.................................................................36
33. Toxic and Hazardous Substances..........................................37
34. Compliance with Laws, etc...............................................39
35. Liability and Indemnity.................................................40
36. Miscellaneous...........................................................41
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QUARRY WINERY LEASE AGREEMENT
This lease (the "Lease") is entered into as of January 1, 1999 among and between
Bruce B. Donnell and Sandra D. Donnell, jointly and severally, as tenants in
common, collectively dba as Donnell-El Novillero Ranch ("Lessor") and Ravenswood
Winery, Inc. ("Lessee").
RECITALS
The parties agree the following recitals are true and correct:
WHEREAS, Bruce B. Donnell and Sandra D. Donnell own certain parcels of
land and a use permit, as specified in a resolution adopted by the Sonoma County
Board of Supervisors (Resolution Number 97-0124), to construct and to operate a
250,000 case winery on portions of these parcels, and;
WHEREAS, Lessor has neither the interest nor the expertise to build and
to operate a winery on the Premises (as defined below), and;
WHEREAS, Lessee desires to lease the portions of the parcels which are
included in the use permit and are zoned for agricultural use and intends to
design, to secure financing for, and to build and to operate a winery on the
leased portions under the terms of this agricultural lease as more fully set
forth below, and;
WHEREAS, no rights, interests, licenses or ownership will be created,
however inadvertently, that will extend beyond the term of this Lease unless
specifically agreed to by the parties in this Lease or in a separate writing
signed by the parties, and;
WHEREAS, recognizing the long-term nature of this Lease and the
complexity of the issues involved, both parties have attempted to anticipate
potential problems and issues that may arise in the future. The parties
anticipate that they will be able to resolve
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any future problems and issues that may arise in the future and that are not
resolved or not covered in this Lease in an open and amicable manner, and;
WHEREAS, the Premises as (defined below) are portions of parcels owned
by Lessor, and Lessee shall have no rights of use, or access to, other portions
of the parcels or to other property of Lessor, except as permitted in this
Lease. The remaining portions of Lessor's parcels which are not included in the
leased premises shall remain free for whatever uses Lessor desires, provided any
such uses do not negatively impact Lessee, and;
WHEREAS, Lessor does not have any specific long-term plan for the
unleased portions of the parcels; however, the expectation of the parties is
that such use will not be inconsistent with a winery use.
AGREEMENT
Now, therefore, in consideration of the foregoing and the mutual
promises of the parties and the conditions of this Lease, the parties hereby
agree as follows:
1. Premises
The premises to be leased to Lessee (the "Premises") shall consist of:
(a) a winery site of approximately 11 acres upon which the winery and
the septic system shall be located. Exhibit 1 describes the proposed
location of the winery site and a portion of the Premises referred to
below in Section 1(b) and Section 1(c). Each of the Exhibits referenced
in this Lease is attached to and is hereby incorporated into and made a
part of this Lease. A legal description of the
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winery and septic system site is attached as Exhibit 2. The winery and
septic system sites are located on Sonoma County Assessors Parcel #
142-122-04.
(b) a wastewater pond and discharge area identified on Exhibit 1. A
legal description of this wastewater pond and discharge area is
attached as Exhibit 3. The wastewater ponds are located on Sonoma
County Assessors Parcel # 121-158-077.
(c) access to the winery site and wastewater ponds and discharge area.
These accessroutes are described on Exhibit 4.
(d) access for constructing, using and maintaining utilities, water
systems, wastewater piping and other purposes described on Exhibit 4.
Lessor and Lessee shall use their best efforts to ensure that the Premises are
confined to the areas identified on Exhibits 1 through 4. However, due to the
lack of certainty of the exact location of the areas of the Premises and the
potential need to modify the areas in response to construction conditions,
Lessee and Lessor agree that the actual legal descriptions of the Premises will
be modified, in the event that they differ from Exhibits 2 and 3, when the
winery, including its septic and wastewater systems, is operational and an
occupancy permit has been received from the County of Sonoma. Upon the
commencement of this Lease, Lessor agrees that Lessee shall have access to the
Premises in order to design, build and operate a winery.
2. Winery Use Permit and Other Permits
The use permit from the County of Sonoma pursuant to County Resolution Number
97-0124 is attached as Exhibit 5 (the "Use Permit"). The Use Permit and other
permits or rights obtained by Lessor for the benefit of the winery project are
incorporated into this
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Lease for the benefit of the Lessee until the termination of this Lease, at
which time they shall become the property of Lessor.
3. Term
The term of this Lease shall commence upon the date of execution of this Lease
and shall end on December 31, 2032.
4. Uses Allowed By the Lease
The Premises are leased to Lessee for the purpose of building and operating a
winery facility and for all such other uses as are reasonably incident thereto
and as allowed by and in conformance with the Use Permit and other applicable
laws. Lessee shall not convert the Premises to any other use without the written
consent of the Lessor. Allowed uses shall include, without limitation, all
winery and winemaking related activities, including but not limited to crushing,
fermenting, bulk wine storage, bottling, case goods storage, and maintaining
administrative offices. Both parties understand that it is very likely that
Lessee will take the steps necessary to obtain permits to allow Lessee to build
and to operate a tasting room on the site upon cessation of quarry activities.
If Lessee desires to obtain a use permit to operate a tasting room, Lessor and
Lessee shall attempt to negotiate and to reach agreement on rent and other
business terms based upon this additional use of the Premises. Lessor also
agrees to cooperate in obtaining a new use permit from the County of Sonoma
which will allow such uses on the Premises. If the parties cannot reach
agreement on rental terms for the additional use, the parties agree to enter
into arbitration pursuant to the arbitration procedure described in Section 26
of this Lease. The above notwithstanding, the results of said arbitration shall
not result in an extension of the Lease term. In the event a use permit to
operate a tasting room is
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obtained for the Premises from the County of Sonoma, and Lessee and Lessor have
reached agreement on rent and other business terms, the parties agree that any
such uses by Lessee shall be limited to the following activities: public tours
and tasting, retail sales of wine, food and merchandise, food demonstrations and
teaching, public food service within tasting room hours, promotional dinners and
business related events. Any promotional dinners shall be limited to no more
than 200 people. Other uses may be allowed provided that they are in conformance
with the use permit and Lessee has obtained prior written approval from Lessor,
which approval may or may not be granted at Lessor's sole discretion.
5. Rent
(a) Schedule of Payments
The schedule for rental payments shall be as follows:
(i) For the period of January 1, 1998 through July 31, 1998,
rent of $1,500 per month shall be paid by Lessee to Lessor.
(ii) For the period of August 1, 1998 through April 30, 1999,
base rent of $1,722.66 per month, which is one-half of the
Initial Base Rent established in Section 5(b) below, shall be
paid by Lessee to Lessor.
(iii) The first inflation adjustment, which shall be
calculated pursuant to Subsection (c) below, shall be
effective and commence on May 1, 1999. This inflation
adjustment shall be applied to the $1722.66 per month rent
amount.
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(iv) August 1, 1999 through April 30, 2000: Base Rent
increases to 100% of the Initial Base Rent to $3,445.31 per
month plus inflation adjustments to date.
(v) May 1, 2000: Inflation adjustment to Base Rent.
(vi) May 1, 2001: Inflation adjustment to Base Rent.
(vii) May 1, 2002: Inflation adjustment to Base Rent.
(viii) May 1, 2003: Inflation adjustment to Base Rent.
(ix) May 1, 2004: Market adjustment to establish a new Base
Rent, if warranted.
(x) May 1, 2005: Inflation adjustment to Base Rent.
(xi) May 1, 2006: Inflation adjustment to Base Rent.
(xii) May 1, 2007: Inflation adjustment to Base Rent.
(xiii) May 1, 2008: Inflation adjustment to Base Rent.
(xiv) May 1, 2009: Market adjustment to establish a new Base
Rent, if warranted.
(xv) May 1, 2010 through December 31, 2032: Continue the five
year cycle of Market Rate adjustment on each fifth year to
establish a new Base Rent, if warranted, with inflation
adjustment each of the four intervening years.
(b) Initial Base Rent
The Initial Base Rent of $3,445.31 per month was established by
utilizing the methodology calculated by North Coast Appraisal Services
(the "Appraiser") in its April 27, 1997 report (the "Appraisal") to
establish the Base Rent and to revise
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it to reflect their consultation report dated July 16, 1998 (the
"Consultation Report"). The Appraisal and the Consultation Report are
attached as Exhibits 6 and 7, respectively.
(c) Inflation Adjustment
The Base Rent shall be adjusted for inflation annually, with the
exception of those years in which Market Rate adjustments are made. The
Inflation Adjustment shall be effective on May 1 of each year. The
Inflation Adjustment shall be the increase or decrease in the Consumer
Price Index (the "Index") for all urban consumers and all items for the
San Francisco-Oakland-San Jose region that occurs in the preceding
calendar year. The initial value of the Index was 162.6 on December 31,
1997 and the base period was 1982-84 (value=100). The Inflation
Adjustment to the Base Rent on May 1 of each year shall be the
percentage increase or decrease in the Index for January 1 through
December 31 of the preceding calendar year. In the event the Index
ceases to exist, Lessee and Lessor shall use any successor to such
Index. Any inflation adjustment shall be limited to a maximum of five
percent (5%) increase or decrease in any one year. Inflation in excess
of this amount shall not cumulate and shall not be taken into account.
(d) Market Adjustment
The Base Rent shall be adjusted, if warranted, by a Market Adjustment
as of May 1 of the following years: 2004, 2009, 2014, 2019, 2024 and
2029. No annual Inflation Adjustment shall take place in these years.
Any qualified appraiser experienced in the valuation of real property
in Sonoma County selected by Lessor shall be engaged by Lessee to
determine a new Base Rent based upon the
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methodology used to determine the initial base rent as described in
Exhibits 6 and 7. Lessee and Appraiser shall provide the revised Market
Rate in a manner such that the base rate shall be adjusted by May 1 of
each year in which a Market Rate Adjustment is to take place. The new
Base Rent may increase or decrease. In the event the revised market
rate has not been determined by May 1 in the years specified, Lessor
may, at Lessee's expense, engage the services of an independent
appraiser to determine the revised Market Rate. The revised Market Rate
determined by this appraiser shall be binding upon Lessor and Lessee
and shall be effective as of May 1 of the appropriate year. In the
event the selected appraiser is not able to provide the revised market
rent rate, Lessor and Lessee shall use their best efforts to select a
replacement appraiser that is acceptable to both parties. In the event
that such an acceptable replacement appraiser cannot be found, each
party, at its own expense, shall engage the services of an appraiser
with an Accredited Rural Appraiser (ARA) Certificate to determine a
market rent rate. The revised Market Rent Rate shall be the average of
the respective market rent rates determined by the two appraisers. The
above notwithstanding, in no event shall any rent adjustment under the
terms of this Agreement be used to reduce the rent to less than the
Initial Base Rent of $3,445.31 per month. Rent shall be paid in advance
on the first day of each month. Rental payments shall be paid one-half
each to Bruce B. Donnell and Sandra D. Donnell. For example, if the
monthly Base Rent is $3,445.30 per month, Bruce B. Donnell and Sandra
D. Donnell will each receive $1,722.65. Uneven amounts shall be rounded
up with
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numbers five (5) and above to the next highest number. Rent shall be
sent to the following address:
Bruce B. Donnell; Sandra D. Donnell
El Novillero-Donnell Ranch
P.O. Box 1003
Tiburon, CA 94920
6. Other Uses of Lessor's Land
The Premises are portions of larger parcels of land which are subject to other
existing and future uses by Lessor and other tenants of Lessor. Such existing
uses currently include but are not limited to aggregate extraction and
processing (quarry), cattle grazing, hunting, recreation and hay farming. Lessee
shall not restrict the present or future activities of or access by these other
tenants and/or uses on other portions of the parcel. Lessor shall take
commercially reasonable efforts to cause other tenants and/or activities to not
unreasonably interfere with Lessee's use of the Premises.
7. Schedule
Lessee shall use its best efforts to design, to build and to begin operating the
winery facility by December 31, 2000. Lessor shall assist Lessee in obtaining
all necessary permits. The cost of the permits shall be borne by Lessee.
8. Possession
Lessor shall deliver possession of the Premises to Lessee upon execution of this
Lease.
9. Improvements
Lessee shall have the right to make any improvements or other alterations to the
Premises as Lessee may deem necessary or desirable in order to design, build and
operate a winery in accordance with Section 4 (Uses) of this Lease. Lessor's
nominee may assist Lessee in coordinating improvements with Lessor and Lessor's
other tenants, agents or
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representatives. All of Lessee's non-removable improvements permanently affixed
to the real property, including but not necessarily limited to, buildings, all
or part of the plumbing, electrical wiring, hot and cold water systems,
utilities, fire suppression systems, septic systems, outdoor work areas,
wastewater systems, and all subsequent additions thereto and alterations therein
and replacements thereof, shall become and remain a part of the Premises,
subject to normal wear and tear and the use and occupancy of Lessee, and Lessee
shall not remove, destroy, or materially alter the same, except as otherwise
provided in this Lease.
Notwithstanding the foregoing, upon the expiration or termination of the Lease
term, all such non-removable improvements shall become the property of Lessor
and Lessee shall have the right to remove all other property of a removable
nature then located on the Premises. Lessee shall provide Lessor with
information concerning the improvements to be made and the schedule of their
installation. Lessee shall make and notify Lessor of such improvements in a
timely manner so as to minimize the impact upon Lessor's other tenants including
the quarry, cattle and retail operations. Any improvements shall be made in a
manner that does not unreasonably restrict Lessor's, their heirs', successors',
assigns', agents' or employees' access to other portions of Lessor's property.
Lessee, upon the expiration or termination of the Lease term, at its option,
shall be able to remove all fixtures and equipment, including without
limitation, winemaking and office equipment, fermenters, crushers, barrels,
tanks, desks, computers, stoves, refrigerators, chillers, pumps, compressors,
bottling equipment and similar property and equipment not permanently affixed to
the real property. The foregoing notwithstanding, it is agreed to by both
parties that upon termination or expiration of this Lease, Lessor shall receive
a
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building in broom clean condition, complete with non-removable equipment, in
good, serviceable condition subject to normal wear and tear. It is not the
intention of either party that Lessor receive a functional winery upon
termination or expiration of this Lease. Rather, it is the intention of both
parties that Lessor receive structures, non-removable equipment, septic systems,
wastewater systems, water sources and utilities in such condition, subject to
normal wear and tear, that the Premises can be used by Lessor or another party
for other purposes. When the building is completed and the winery is
operational, Lessee shall, within thirty (30) days of such date, provide Lessor
with a listing of all property that it considers not permanently affixed to the
real property and thus removable. Thereafter, Lessee shall provide Lessor with
notice of and details concerning any additional purchases/additions of removable
property. The items identified by Lessee in this process shall be then
considered removable property unless contested by Lessor within 30 days of
receipt of any such notice. In the event Lessor contests the inclusion of any
item in any notice, Lessor and Lessee shall use reasonable commercial efforts to
resolve the situation. In the event that an agreement is not reached by the
parties, the matter shall be submitted to arbitration pursuant to the
arbitration procedure in Section 26 of this Lease. In the event that any lender
of Lessee requests, as part of a construction loan or a loan to finance
improvements for the Premises, rights to certain improvements that are
removable, the parties agree to cooperate in good faith to permit the granting
of such rights.
10. Lessor's Nominee
Lessor wishes to appoint a nominee (the "Nominee") for the purpose of
communications between the parties with regard to the terms of this Lease and
operations under it.
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Lessor's Nominee shall be Justin M. Faggioli ("JMF") who shall serve until
replaced by an alternate nominee in a writing signed by both Lessors, or until
at least one of the Lessors, in a signed writing, objects to his further
service. Lessor's alternate Nominee shall be Sandra D. Donnell. Nominee is
hereby authorized to conduct communications with Lessee on behalf of Lessor.
Nominee shall act in conformance with the terms and conditions of this Lease. In
communicating with Lessor, Lessee may, but is not required to, communicate with
anyone in addition to the Nominee.
11. Role of Justin M. Faggioli
Lessor and Lessee acknowledge and agree that JMF has shared interests with both
Lessor and Lessee. JMF is the spouse of Sandra D. Donnell and the brother-in-law
of Bruce B. Donnell. He is Lessor's Nominee and is active in the management of
Lessor's property, including the parcels containing the Premises. He is also an
officer, shareholder and director of the Lessee. JMF has been, and will continue
to be, active in these roles and in all aspects of this Lease and its
implementation. The parties understand that there is a conflict of interest in
his roles as a representative of, a potential beneficiary of, and an affiliate
of both parties. All parties agree that JMF has, to date, kept them fully
informed of all relevant details and decisions with respect to the terms and
conditions of this Lease, and that both parties have had the opportunity to, and
have employed the services of, other professionals to review the terms and
conditions of this Lease on their behalf. In executing this Lease, neither party
is relying upon the representations, warranties, assertions or claims made by
JMF. Both parties, as to JMF as a third party beneficiary, agree to hold JMF
harmless and release him from any and all claims against him that may have
occurred in the past or may occur in the future arising from this Lease, unless
any
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such claim arises from his gross negligence or willful misconduct. The above
notwithstanding, the terms of this Section shall only apply to any claims
arising between the parties and JMF with respect to this Lease and/or the
landlord (Lessor) - tenant (Lessee) relationship.
12. Repairs
At all times during the term hereof, Lessee shall, at its cost and expense, use
reasonable commercial efforts to keep and maintain the Premises and other
facilities in good condition and repair, normal wear and tear excepted. Lessee
shall keep and maintain the Premises, at its expense, in good condition and
repair, subject to normal wear and tear, including but not limited to, the
foundations, exterior walls, structural portions of the interior bearing walls,
the roof of the building, wastewater systems and perimeter appurtenant
structures, slabs and fences, the interior and exterior wall surfaces, the
windows, doors, fire suppression systems, electrical and plumbing systems and
other permanent improvements. In the event of any damage, Lessee shall use
reasonable commercial efforts to repair such damage. In the event major repairs
or maintenance on non-removable improvements are required that Lessee would
normally undertake but which may not be commercially reasonable due to the
remaining term of the Lease, Lessee shall notify Lessor of its intention not to
make such a repair. In such an event, Lessee and Lessor shall make reasonable
efforts to determine if a repair is warranted and to share costs between the
parties. In the event an arrangement is not made between the parties, the
parties may submit the dispute to arbitration pursuant to the terms of Section
26 of this Lease. Alternatively, Lessor may elect, at its sole expense, to make
such repairs. An example of such a situation would be the need to replace a
major portion of
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the roof with only 5 years remaining on the Lease. In such an example, the
parties may elect to prorate the expected life of the roof with Lessee paying
for the prorated portion represented by the remaining term of the Lease and
Lessor paying the balance.
13. Taxes
Lessor shall pay and discharge all taxes on the assessed value of the land and
improvements included in the Premises, existing at the commencement of the
Lease, and on other improvements, if any, made by Lessor during the term of this
Lease, and Lessor shall be responsible for any increase in taxes caused by acts
of Lessor, including but not limited to a transfer of ownership of the Premises.
Lessee shall pay and discharge all other real property and excise taxes, general
and special assessments, and other charges of every description which during the
term of this Lease may be levied upon or assessed against the Premises or any
interests therein attributable to improvements made thereon by Lessee and any of
Lessee's personal property thereon. In this regard, Lessee shall promptly apply
for and use its best reasonable efforts to obtain a subrogation of taxes from
the County Assessor's office for the purposes of receiving a separate billing
for taxes for which Lessee is responsible as described above. The subrogation of
taxes will allow Lessee separately to pay and discharge those taxes that are its
responsibility. In the event a subrogation of the type described above is not
obtained by Lessee, Lessee shall obtain a subrogation for the entire parcel on
which the Premises is located and Lessor shall reimburse Lessee for the amount
of property taxes, any general and special assessments levied against the
Premises for improvements existing on the Premises prior to the commencement of
the Lease, and other improvements made by Lessor on the assessed parcels during
the term of this Lease, and any other taxes for which Lessor is
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responsible. In such event, Lessor shall reimburse Lessee within ten (10) days
after written request by Lessee, which request shall be accompanied by a copy of
the current tax bill. If Lessor shall fail to reimburse Lessee for such taxes,
Lessee may, in addition to any other rights and remedies arising from such
default, offset the unpaid reimbursement against the next rental payment due
under this Lease, together with interest thereon accruing from the date
reimbursement was due, at an annual rate equal to the lesser of ten percent
(10%) per annum or the maximum rate permitted by law.
14. Utilities
Lessee shall, at Lessee's expense, connect to the electric utilities that exist
on the Premises. Lessee shall have its own electric meters and pay for all
electricity and any other utilities consumed by Lessee on the Premises. In the
event that an easement is required by a utility to provide service to the
Premises, Lessor agrees to grant and to otherwise help to create such an
easement, provided that any easement created coincides with the term of this
Lease and does not conflict with other uses of Lessor's property. Lessee shall
pay for any and all costs associated with installing and operating utility
services required, including but not limited to electrical service for the
winery and wastewater system.
15. Insurance and Casualty Events
(a) Lessee shall, at all times during the term of this Lease, maintain
policies of Worker's Compensation insurance as required by law and
commercial general liability policy of insurance with a limit of not
less than two million dollars ($2,000,000) aggregate and not less than
two million dollars ($2,000,000) per occurrence. Lessee shall maintain
all risk property insurance for the buildings
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and related improvements on a replacement cost basis. Lessee agrees to
name Lessor as an additional insured on Lessee's liability insurance
policy, and written proof of said coverage shall be furnished to Lessor
annually. The insurance policies required to be carried by Lessee
hereunder may be carried as part of a blanket policy of insurance. No
policy shall be cancelable or subject to reduction of coverage except
after thirty (30) days written notice to Lessor.
(b) Notwithstanding anything herein to the contrary, to the extent of
insurance proceeds received with respect to a loss, each party hereto,
respectively, hereby waives any right of recovery against the other
party for any loss or damage caused by such other party with respect to
the Premises, any improvements thereon, or any other land or
improvements used by Lessee pursuant to the terms of this Lease,
whether or not such loss is caused by the fault or negligence of the
other party. Lessor and Lessee shall each obtain from their respective
insurers a waiver of rights of subrogation, which is consistent with
this Subsection 15(b), which the insurer of one party might have
against the other.
(c) In the event that the Premises become commercially unfit for the
purposes for which Lessee intended by entering this Lease and insurance
proceeds are inadequate to restore the Premises to a reasonably fit
condition, due to events, including but not limited to, fire, flood,
earthquake, acts of God or nature, explosion, casualty of war, labor
dispute, permanent failure of supplies of electrical power, violence,
any governmental law, order, regulation or ordinance, or any other act
or condition beyond the reasonable control of Lessor or Lessee, Lessee
may elect, in its sole discretion, to terminate this Lease by providing
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written notice to Lessor within ninety (90) days of the occurrence of
such condition or event. The notice shall set a termination date that
shall give Lessee a reasonable time to vacate the Premises. Lessee
shall pay rent until it vacates the Premises. As of the date of
termination of all or a portion of this Lease, the rent hereunder shall
be appropriately prorated or adjusted. If Lessee elects to terminate
this Lease, Lessee shall forfeit the appraised value of Lessee's
non-removable improvements and the $1,700,000, in each case as referred
to in Section 29 below. Lessor shall have the option (a) to require
Lessee to clear the site of debris and to restore the site to a graded,
buildable surface, similar to that existing prior to the construction,
or (b) to receive the estimated cost of such restoration in lieu of
Lessee's completing the work required under this Section 15(c). Lessor
shall inform Lessee of its decision within ninety (90) days of the
receipt of the notice of termination. The work shall be completed, or
the cash for the estimated cost shall be paid to Lessee, no later than
365 days after Lessor's notification of Lessee regarding its decision.
16. Liens and Encumbrances
(a) Lessee shall keep the Premises and its improvements free from any
liens arising out of any work performed, material furnished, or
obligations incurred by or for Lessee. If any such lien is
involuntarily placed upon the Premises, Lessee shall, within thirty
(30) days after the filing of such lien, cause such lien to be removed
of record. Notwithstanding anything herein to the contrary, Lessee
shall be entitled without the consent of Lessor, at any time, or from
time to time, to finance its operations on the Premises by pledging the
inventories, improvements
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and equipment on the Premises as collateral, or by encumbering,
pledging or mortgaging the leasehold interest, providing that any such
pledging shall not extend beyond the term of this Lease and shall not
place any encumbrance or obligation on the Lessor, its heirs,
successors or assigns. Lessor agrees to cooperate as reasonably
requested by Lessee.
(b) Lessor hereby represents and warrants to Lessee to the best of
their knowledge that they have good and lawful title to the Premises,
free and clear of all claims, liens, and encumbrances, easements,
conditions, rights of way, or covenants other than as shown on the
preliminary title insurance report issued by First American Title
Company Report #172472BCF dated April 1, 1998. Lessor has not assigned,
nor do they have knowledge of any assignment of, water rights to
others.
17. Access
(a) During the term of this Lease, Lessor grants to Lessee a
non-exclusive easement for all reasonable and necessary access to the
Premises for all lawful uses associated with the purposes of this
Lease, including but not limited to, a non-exclusive assignment of the
easement from Highway 121 onto the Premises. The access roads included
in the easement are identified on Exhibit 1 and shall consist of access
to the winery, septic leach-field, existing water source, wastewater
ponds and wastewater disposal area. Such access shall include access
for the installation, maintenance and repair of utility, water,
wastewater and septic systems. As shown on Exhibit 1, winery access
shall be limited to the north entrance from Highway 121 to the quarry.
No access to the winery is permitted
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through the south entrance from Highway 121 to the quarry. This
restriction is necessary in order to maintain separation between winery
and quarry activities. Lessee shall have the right, at Lessee's
expense, to make any improvements to the roadways used for such access
that Lessee deems necessary or desirable in connection with Lessee's
use thereof. Any changes made to the roadways shall be in keeping with
Lessor's other uses of the roadway. Lessee shall indemnify and hold
Lessor harmless from any liability, loss, cost or expense arising from
Lessee's use of the roadways, except to the extent arising from the
negligence or misconduct of Lessor, its agents, employees, contractors,
or invitees.
(b) Throughout the term of this Lease, Lessor shall have the right to
use the roadways located on the Premises if required for the purposes
of access to the property owned by Lessor adjacent to the Premises.
Lessor shall indemnify, defend and hold Lessee harmless from any
liability, loss, cost or expense arising from Lessor's use of such
roads, except to the extent arising from the negligence or misconduct
of Lessee, its agents, employees, contractors, or invitees.
(c) Lessor, its agents, employees, contractors, heirs, successors and
assigns shall have the right of access to and through the Premises at
all times so long as such access does not interfere with Lessee's use
of the Premises. Lessor may lease the wastewater discharge area to
other tenants for agriculturally related uses (e.g., cattle grazing)
provided that any such lessee's use does not materially interfere with
Lessee's use of this portion of the Premises.
(d) The quarry operator, C.R. Fedrick Inc. or its successor, shall have
the right to reasonably enter into and pass through roadways on the
Premises if required in
19.
order to obtain access to other areas of the parcel for purposes
related to the quarry operations, including but not limited to,
maintenance of buried electrical conduit, access to areas for
maintenance, access to roads for maintenance, access to preexisting
water systems and water use requirements and maintenance of pumping
equipment and electrical utilities used in conjunction with quarrying
operations. Any such access to the Premises by the quarry operator
shall not unreasonably interfere with winery operations or with
Lessee's use of the Premises.
(e) This Lease shall not create any rights of use, licenses, access or
easements on or to the Premises except as explicitly stated in this
Lease. No rights of use, access or easements shall be created, even
inadvertently, beyond the term of this Lease or the date of termination
of this Lease, whichever is earlier.
18. Water Licenses
(a) Lessor grants to Lessee a non-exclusive license and access to the
well identified on Exhibit 1, providing that such license and use does
not restrict or interfere with preexisting use of the well and its
water by the operator of the quarry for its operations. The quarry
operation shall have priority access to water supplies from the
existing well. Lessee shall have the license to drill wells and/or
create reservoirs on the Premises and to otherwise develop the water
supply available to the Premises in such manner as Lessee shall deem
appropriate or desirable for the operation of a winery.
(b) Lessee shall have the non-exclusive license to drill a well or
wells on the Premises and to use exclusively the water from such wells.
Lessee shall
20.
indemnify and hold Lessor harmless from any liability, loss, cost, or
expense arising from Lessee's development and use of the water sources
described in Subsections 18(a) and 18(b), except to the extent arising
from the negligence or misconduct of Lessor, its agents, employees,
contractors, or invitees.
(c) Lessee agrees that any changes made by Lessee to the existing water
system shall be made in a manner so as not to cause any unreasonable
disruption to the existing water service to the quarry. So long as
Lessee utilizes the existing well presently being used by the quarry,
Lessee shall share proportionately in the use and the operating
expenses of the existing well with the quarry operator, including the
costs of electricity, maintenance and repair.
(d) Lessor shall use reasonable efforts to assist Lessee to obtain any
permits necessary to develop water sources and/or reservoirs at
Lessee's expense. This Lease shall not create any rights of Lessee to
water on the Premises except as explicitly stated in this Lease. No
rights to water use shall be created, even inadvertently, beyond the
term of this Lease. No water shall be transferred off the Premises
except with the written consent of Lessor.
(e) Any such licenses created under this Section 18, shall be
terminated at the end of the Lease term or date of termination,
whichever is earlier.
19. Condemnation
If all or any portion of the Premises shall be taken as a result of the exercise
of the power to eminent domain, this Lease shall terminate as to the part so
taken. In the case of a partial taking, Lessee shall have the right to terminate
this Lease as to the balance of the Premises by written notice to Lessor within
ninety (90) days after such date, if Lessee
21.
shall otherwise reasonably determine that the partial taking shall materially
handicap, impede, impair, or render infeasible Lessee's use of the balance of
the Premises. Such termination by Lessee shall be effective as of the date of
Lessee's notice or such later date as may be specified in Lessee's notice. As of
the date of termination of all or a portion of this Lease, the rent hereunder
shall be appropriately prorated or adjusted. All expenses necessary to restore
fences and to replace access roads lost by the condemnation shall be borne by
Lessor. Lessee shall be entitled to all of that portion of the award
attributable to the value of its Leasehold, the use of its Leasehold and its
Leasehold improvements taken by the condemning authority (other than the fences
and access roads which Lessor shall be obligated to replace pursuant to this
Section 19), all as pro-rated over the length of the remainder of the Lease
term.
20. Disposal of Crush Residue and Pomace
Lessor shall allow Lessee to have access to other portions of Lessor's property
not included in the Premises for the disposal of organic, non-toxic,
non-hazardous wastes consisting of the by-products of the crushing and
fermenting activities of a winery. Lessee and Lessor shall develop a system, and
identify sites, for disposal that are mutually agreeable. In the event such
winery wastes are judged by any regulatory agency to constitute a toxic or
hazardous waste, Lessee shall immediately discontinue disposal of such by
products on Lessor's property or on the Premises.
21. Assignment or Subletting
Except as may be otherwise expressly permitted herein, Lessee shall not assign
or sublet any of its interests under this Lease or otherwise transfer or
encumber all or any part of Lessee's interest in this Lease without Lessor's
prior written consent, which consent shall
22.
not unreasonably be withheld or delayed for all or any of the uses described in
Section 4. Any subletting without Lessor's prior written consent shall be void
and shall, at the option of Lessor, terminate this Lease. This Lease shall not,
nor shall any interest therein, be assignable as to the interest of Lessee, by
operation of law, without the prior written consent of Lessor, which consent
shall not be unreasonably withheld or delayed. Notwithstanding the above, any
business combination, merger, sale of all or substantially all of the assets of
Lessee, whether or not Lessee is the surviving party, shall be permitted;
provided that any successor, assignee, or sublessee of any interest in this
Lease agrees in writing to be bound by the terms of this Lease.
22. Lessor's and JMF's Investment in Ravenswood Winery, Inc.
Lessor and JMF have paid for many expenditures on behalf of the winery project
in advance of the execution of this Lease. The parties agree that it is to their
mutual advantage to make these expenditures an investment in Ravenswood Winery,
Inc. In addition, Sandra D. Donnell and Justin M. Faggioli, separately or
jointly, may wish to make additional investments in Ravenswood Winery, Inc.
Exhibit 8 contains the following information with respect to the investment by
Lessor, Sandra D. Donnell and Justin M. Faggioli in Ravenswood Winery, Inc.:
o Expenditures paid by Bruce B. Donnell and Sandra D. Donnell.
o Expenditures paid jointly by Sandra D. Donnell and Justin M. Faggioli.
o Additional separate capital investment by Justin M Faggioli and/or Sandra D.
Donnell.
Lessee shall deliver to Lessor and/or Justin M. Faggioli, subordinated
convertible debentures and common stock in Ravenswood Winery, Inc. in the names
and amounts
23.
defined in Exhibit 8. The terms and conditions of the common stock and
convertible debentures issued under the terms of this Lease are contained in the
Ravenswood Winery, Inc. Offering Memorandum dated August 3, 1998.
23. Termination in the Event Building Permit is Not Obtained
In the event a building permit has not been obtained by Lessee within five years
from the date of execution of this Lease, this Lease shall terminate, unless
both parties agree in writing to continue the Lease.
24. Default; Remedies
(a) Events of Lessee's Default. Lessee shall be in default of its
obligations under this Lease if any of the following events occur:
(i) Lessee fails to pay any rent when due or any other sum
within thirty (30) days following written demand by Lessor; or
(ii) Lessee fails to perform or breaches any term, covenant,
or condition of this Lease except those requiring the payment
of rent, and Lessee fails to cure such default within thirty
(30) days after delivery of written notice from Lessor
specifying the nature of such default; or
(iii) Lessee makes an assignment, sublease, or other transfer
in violation of this Lease; or
(iv) Lessee makes a general assignment of its assets for the
benefit of its creditors; or
(v) There occurs an appointment of a custodian or receiver
with respect to, or other judicial seizure of: (a)
substantially all of Lessee's assets; (b) any property of
Lessee essential to the conduct of Lessee's
24.
business in the Premises; or (c) the leasehold interest
created by this Lease; and Lessee fails to obtain a return or
release of such property within thirty (30) days thereafter or
prior to sale or other disposition, whichever is earlier; or
(vi) Lessee vacates or abandons the Premises; or
(vii) A court makes or enters any decree or order with respect
to Lessee or Lessee submits to or seeks a decree or order (or
a petition or pleading is filed in connection therewith)
which: (a) grants or constitutes (or seeks) an order for
relief, appointment of a trustee, or confirmation of a
reorganization plan under the bankruptcy laws of the United
States; (b) approves as properly filed a petition seeking
liquidation or reorganization under said bankruptcy laws or
any other debtor's relief law or statute of the United States
or any state thereof; or (c) otherwise directs (or seeks) the
winding up or liquidation of Lessee; provided, however, that
if any such petition, decree or order, is not voluntarily
filed or made by Lessee, that Lessee shall not be in default
until such petition, decree or order remains undischarged for
a period of thirty (30) days.
(b) Lessor's Remedies. In the event of any default by Lessee, Lessor
shall have the following remedies, in addition to all other rights and
remedies provided by any law or otherwise provided in this Lease, to
which Lessor may resort cumulatively, or in the alternative:
(i) Lessor may keep this Lease in effect and enforce, by an
action at law or in equity, all of its rights and remedies
under the Lease, including
25.
(a) the right to recover the rent and other sums as they
become due by appropriate legal action, (b) the remedies of
injunctive relief and special performance to compel Lessee to
perform its obligations under this Lease, and (c) the right to
cause a receiver to be appointed to administer the Premises.
(ii) Lessor may make any payment or perform any obligation of
Lessee. All sums paid by Lessor and all necessary costs of
such performance by Lessor, together with interest at the
highest rate permitted by law from the date the sum is paid by
Lessor until Lessor is reimbursed by Lessee, shall be
reimbursed to Lessor on demand by Lessor. Lessor shall have
the same rights and remedies in the event of nonpayment of
such amounts by Lessee as in the case of failure by Lessee in
the payment of rent.
(iii) Lessor may, at Lessor's election, enter the Premises and
re-lease them, or any part of them, to third parties for
Lessee's account. Lessee shall be liable immediately to Lessor
for all costs Lessor incurs in re-leasing the Premises,
including broker's commissions, expenses of altering and
preparing the Premises required by the re-leasing, and like
costs. Re-letting can be for a period shorter or longer than
the remaining term of this Lease. Lessee shall pay to Lessor
the rent and other sums due under this Lease on the date the
rent is due, less the rent and other sums Lessor received from
any re-leasing. No act by Lessor allowed by this Subsection
24(b) shall terminate this Lease unless Lessor notifies Lessee
26.
in writing that Lessor elects to terminate this Lease.
Notwithstanding any re-leasing without termination, Lessor may
later elect to terminate this Lease because of the default by
Lessee.
(iv) In the event Lessee breaches this Lease and vacates or
abandons the Premises, this Lease shall not terminate unless
Lessor chooses to terminate the Lease at the time of such
breach or abandonment. Such action by Lessor shall cause this
Lease to terminate, regardless of whether Lessor has
theretofore exercised any other of its remedies. No act by or
on behalf of Lessor intended to mitigate the adverse effect of
such breach shall constitute termination of Lessee's right to
possession unless Lessor gives Lessee written notice of
termination. Should Lessor not terminate this Lease by giving
Lessee written notice, Lessor may enforce all its rights and
remedies under this Lease including the right to recover the
rent as it becomes due under the Lease as provided in
California Civil Code Section 1951.4, as in effect on the
effective date of this Lease.
(v) Lessor may, at Lessor's election, terminate this Lease by
giving Lessee written notice of termination, in which event
this Lease shall terminate on the date set forth for
termination in such notice. No act by or on behalf of Lessor
intended to mitigate the adverse effect of Lessee's default
shall constitute a termination of the Lease or Lessee's right
to possession unless Lessor gives Lessee written notice of
termination. Any such termination shall not relieve Lessee
from payment of any sums then due Lessor or from any claim for
damages resulting from Lessee's default.
27.
Following termination of the Lease, and without prejudice to
any other remedies Lessor may have, Lessor may then or any
time thereafter (a) peaceably reenter the Premises upon
voluntary surrender by Lessee or expel or remove Lessee
therefrom together with any other persons occupying it, using
such legal proceedings as are then available, (b) repossess
and use the Premises or re-lease it or any part thereof for
such term, at such rent, and upon such other terms and
conditions as Lessor in its sole discretion may determine, and
(c) remove all property of Lessee therefrom at Lessee's
expense.
(vi) In the event Lessor terminates this Lease, Lessor shall
be entitled, at Lessor's election, to damages in an amount as
set forth in California Civil Code Section 1951.2 as in effect
on the effective date of this Lease. For purposes of computing
damages pursuant to said Section 1951.2, the highest interest
rate permitted by laws shall be used. Such damages shall
include without limitation:
(1) The amount at the time of award by which the
unpaid rent for the balance of the term after the
time of award exceeds the amount of such rental loss
that Lessee proves could be reasonably avoided,
computed by discounting such amount at the discount
rate of the Federal Reserve Bank of San Francisco at
the time of award plus one percent (1%); and
(2) Any other amount necessary to compensate Lessor
for all detriment proximately caused by Lessee's
failure to perform
28.
Lessee's obligations under this Lease, or which in
the ordinary course of things would be likely to
result therefrom, including, without limitation, the
following: (a) expenses for repairing or restoring
the Premises; (b) expenses for improving the Premises
for the purpose of re-leasing; (c) broker's fees,
advertising costs and other expenses of re-leasing
the Premises; (d) costs of carrying the Premises,
such as taxes, insurance premiums, utilities, and
security precautions; (e) expenses in retaking
possession of the Premises; and (f) attorney's fees
and court costs incurred by Lessor in retaking
possession of the Premises and in releasing the
Premises or otherwise incurred as a result of
Lessee's default.
(c) Lessor's Default and Lessee's Remedies. In the event
Lessor fails toperform any of its obligations under this Lease
and fails to cure such default within thirty (30) days after
written notice from Lessee specifying the nature of such
default where such default could reasonably be cured within
said thirty (30) day period; or where such default could not
reasonably be cured within said thirty (30) day period, Lessor
fails to commence such cure within said thirty (30) day period
and thereafter continuously with due diligence prosecute such
cure to completion, then Lessee shall have the following
remedies only:
(i) Lessee may proceed in equity or at law to compel
Lessor to perform its obligations and/or to recover
damages proximately caused by such failure to perform
(except to the extent Lessee has waived its right to
29.
damages resulting from injury to person or damage to
property as provided herein).
(ii) Lessee may terminate this Lease following notice
and expiration of the cure periods set forth above.
Such termination shall be effective upon the date set
forth in the notice.
Lessee hereby waives the provisions of Section 1932(1), 1941
and 1942 of the California Civil Code and/or any similar or
successor law regarding Lessee's right to terminate this Lease
or to make repairs and deduct the expenses of such repairs
from the rent due under the Lease. Lessee hereby waives any
right of redemption or relief from forfeiture under the laws
of the State of California, or under any other present or
future law, including the provisions of Sections 1174 and 1179
of the California Code of Civil Procedure.
25. Surrender
Except for termination under Section 15(c) or a taking by condemnation under
Section 19, on the last day of the Lease term, or on any sooner lease
termination, Lessee shall surrender to Lessor the Premises and the non-removable
improvements described above in Section 9 in good operating condition, broom
clean, ordinary wear and tear excepted. Lessee shall repair any damage to the
permanent improvements and/or Premises occasioned by the installation or removal
of Lessee's property.
26. Dispute Resolution and Arbitration
To ensure rapid and economical resolution of any and all disputes which may
arise in connection with this Lease, the parties agree that any and all
disputes, claims, causes of action, in law or in equity, arising from or
relating to this Lease or its enforcement,
30.
performance, breach, or interpretation shall be resolved by final and binding
confidential arbitration through Judicial Arbitration & Mediation
Services/Endispute, Inc. ("JAMS") under the then existing JAMS Rules of Practice
and Procedure, with such arbitration to be held in San Francisco, California.
Nothing in this Section is intended to prevent either party from obtaining
injunctive relief in court to prevent irreparable harm pending the conclusion of
such arbitration. The above notwithstanding, the results of said arbitration
shall not result in any extension of the Lease term.
27. Right of the First Option to Purchase
Lessee shall have a right of first option to purchase ("Option to Purchase")
that portion of the Premises consisting of parcel # 142-122-04 (the "Optioned
Premises"). The Optioned Premises shall not include the portions of the Premises
described in Exhibit 3, any wastewater ponds, or any access to such portions of
the Premises or wastewater ponds. This First Option to Purchase shall be
personal to the Lessee, and shall not, under any circumstances be assignable.
If, during the term of this Lease, Lessor desires to make to any party a bona
fide offer to sell the Optioned Premises or any portion thereof, or Lessor
receives an offer to purchase the Optioned Premises or any portion thereof,
which Lessor is willing to accept, Lessor shall notify Lessee in writing of such
offer to sell or such offer to purchase, as applicable, which notice shall
specify the terms and conditions of such offer and, as applicable, the identity
of the proposed offeree if known, or the prospective purchaser for a purchase;
and if such offer shall affect less than all of the Optioned Premises, Lessor
shall identify the portion of the Optioned Premises affected by the offer. Such
notice shall be referred to herein as "Lessor's Option to Purchase Notice." The
Lessor's Option to Purchase Notice shall constitute an offer by Lessor to
31.
sell the property specified in Lessor's Option to Purchase Notice to Lessee on
the terms set forth in Lessor's Option to Purchase Notice. Lessee shall have
forty-five (45) days from receipt of Lessor's Option to Purchase Notice to
accept such offer, by written notice to Lessor. If the offer is so accepted, the
purchase and sale of the property shall be closed within one hundred twenty
(120) days after such acceptance. If Lessee rejects the offer or fails timely to
accept the offer, Lessor may, during the six-month period following expiration
of the forty-five (45) day offer period, enter into an agreement to sell the
property at a price not lower, and on terms not more favorable to the purchaser,
than the price and terms contained in Lessor's Option to Purchase Notice. If no
agreement is entered into within such six-month period, or if an agreement is
entered into with such six-month period but the purchase has not been closed
within sixty (60) days after expiration of such six-month period, neither the
Optioned Premises, nor any portion thereof, shall thereafter be sold without
first being re-offered to Lessee in accordance with the terms of this Section.
Lessee's Option to Purchase shall not apply to sales or other transfers
affecting the Optioned Premises or any portion thereof, between and among the
members of Lessor's families or any entity under the control of any of the
Lessors or any individual in Lessor's family. Lessor shall be able to conduct
transactions between their families without notifying Lessee. Examples of
transactions between Lessor's families may include, but are not limited to the
following: sale, gift, trade and distribution from an estate; provided, however,
that said family grantees shall then be bound by Lessee's Option to Purchase in
connection with any subsequent proposed transfers to non-family members. Lessee
shall, as promptly as reasonably practical, notify Lessor of any material
transactions affecting
32.
ownership of the Optioned Premises or any portion thereof. This Option to
Purchase shall not be transferable or assignable to any party by Lessee or to
any party who assumes Lessee's interests hereunder due to a default or
foreclosure by any lender.
28. Right of the First Option to Rent
Subject to the termination of this option as set forth below, Lessee shall have
a right of first option to rent the Premises ("Option to Rent") subject to all
of the following conditions: (a) this Option to Rent has not expired; and (b)
the other potential future tenant use is as a winery owned by an independent
third party, i.e., an entity that is not owned by either the Lessors, their
heirs, successors or assigns or by Lessee. If all of the aforementioned
conditions are present, Lessee shall have a right of first option to rent the
Premises, and such option to rent will expire on and shall be of no force or
effect after December 31, 2029. This Option to Rent shall be personal to the
Lessee, and shall not, except as otherwise provided herein, under any
circumstances be assignable. If, prior to the termination of this Option to
Rent, Lessor shall desire to make to any party a bona fide offer to rent or
lease the Premises or any portion thereof, or Lessor shall receive an offer to
rent which Lessor is willing to accept, Lessor shall notify Lessee in writing of
such offer, which notice shall specify the terms and conditions of such offer
and the identity of the prospective purchaser; and if such offer shall affect
less than all of the Premises, Lessor shall identify the portion of the Premises
to be transferred. Such notice shall be referred to herein as "Lessor's Option
to Rent Notice." The Lessor's Option to Rent Notice shall constitute an offer by
Lessor to rent the Premises, or the portion thereof specified in Lessor's Option
to Rent Notice, to Lessee on the terms set forth in Lessor's Option to Rent
Notice, and Lessee shall have forty five (45) days from receipt of Lessor's
33.
Option to Rent Notice to accept such offer, by written notice to Lessor. If the
offer is so accepted, the rent of the Premises (or the portion thereof specified
in Lessor's Option to Rent Notice) shall be consummated within one hundred
twenty (120) days after such acceptance. If Lessee rejects the offer or fails
timely to accept the offer, Lessor may, during the six-month period following
expiration of the 45 day offer, enter into an agreement to rent the Premises at
a price not lower, and on terms not more favorable to the purchaser, than the
price and terms contained in Lessor's Option to Rent Notice. If no agreement is
entered into within such six-month period, or if an agreement is entered into
within such six-month period but the rent has not been consummated within sixty
(60) days after expiration of such six-month period, neither the Premises (nor
any portion thereof) shall thereafter be rented without first being re-offered
to Lessee in accordance with the terms of this Section. Lessee's Option to Rent
shall not apply to rents, leases or similar transactions between or within the
individuals within Lessor's families or any entity under the control of any of
the Lessors or any individual in Lessor's family. Lessor shall be able to
conduct transactions between their families without notifying Lessee. Examples
of transactions between Lessor's families may include, but are not limited to
the following: sale, rental, lease, gift, trade and distribution from an estate;
provided, however, that said family grantees shall then be bound by this Option
to Rent in connection with any subsequent transfers to non-family members. In
the event that the rights under this Lease are assumed by a Lender of Lessee,
then the Option to Rent set forth in this Section 28 shall be exercisable by
such lender.
34.
29. Renewal of the Lease and Buyout of Lessee Improvements
(a) If Lessee shall desire to remain on the Premises beyond the term of
the Lease, Lessee shall so notify Lessor no later than July 1, 2025 and
the parties shall promptly enter into good faith negotiations regarding
the terms of such new tenancy and the parties intentions with respect
to the Premises. If a new lease has not been executed by the parties
prior to January 1, 2027, Lessor shall have the right to initiate
negotiations with other interested parties.
(b) In the event that the parties are unable to negotiate a new lease
by January 1, 2027, Lessor shall pay Lessee for the value of the
non-removable leasehold improvements made by Lessee, in accordance with
the following procedures. The demand by Lessee shall include a
contractually binding notice from Lessee that it will vacate the
Premises at the end of the term. This notice shall not affect Lessor's
Option to Rent under Section 28 of this Lease. The parties agree that
an appraiser selected in accordance with the qualifications set forth
in Section 5(d) shall be acceptable. Such appraiser shall conduct an
appraisal of the non-removable improvements made by Lessee and begin
such appraisal commencing during January 2030. A copy of the results of
such appraisal shall be delivered to Lessee and Lessor no later than
January 1, 2031. The cost of the appraisal shall be shared by Lessee
and Lessor. On or before December 31, 2032, Lessor shall pay to Lessee
the lesser of (a) the dollar value of the appraised value of Lessee's
non-removable improvements made to the Premises or (b) $1,700,000.
35.
30. Memorandum of Lease
Lessor and Lessee shall cause a memorandum of this Lease, in the form attached
hereto as Exhibit 9, to be executed and recorded in the office of the County
Clerk of Sonoma County. Upon termination of this Lease and upon a request by
Lessor, Lessee shall execute a quit claim deed or termination of Lease in
recordable form and shall cooperate with Lessor in recording same.
31. Attorney's Fees
In the event that any dispute arising out of or in any way connected with this
Lease, is arbitrated or otherwise litigated, the party not prevailing in such
dispute shall pay any and all legal costs and expenses incurred by the other
party in enforcing or establishing its rights hereunder, including, without
limitation, court costs and reasonable attorneys' fees. The trier of fact shall
determine the party not prevailing on each issue. This determination may be
proportional and the trier of fact shall have the right to determine and to
allocate who shall pay what amounts of such legal costs.
32. Notices
Any notice required or permitted hereunder shall be given in writing and shall
be deemed effectively given upon personal delivery, including delivery by
express courier, or two (2) days after deposit in the United States Post Office,
by registered or certified mail with postage and fees prepaid, addressed as
follows:
To Lessor: El Novillero-Donnell Ranch
P. O. Box 1003
Tiburon, CA 94920
ATTN: Justin M. Faggioli
To Lessee: Ravenswood Winery, Inc.
18701 Gehricke Road
Sonoma, CA 95476
36.
ATTN: W. Reed Foster
or at such other addresses as may be specified by either party hereto by written
notice given to the other.
33. Toxic and Hazardous Substances
Storage of toxic substances, fuels or other supplies shall be in strict
accordance with local, state and federal regulations. For the purposes of this
Section 33, all uses of the words "Lessee" and "Lessor" shall be expanded to
include their respective employees, agents or contractors.
(a) Lessee agrees to assume and to be solely responsible for all costs
and expenses of every kind relating to toxic and/or hazardous
substances, fuels, or other supplies, stored and/or used by Lessee on
the Premises herein leased, including but not limited to compliance
with all permit and reporting requirements and remediation of all
contamination in accordance with all applicable laws and
investigations, claims, lawsuits, proceedings, citations, cease and
desist orders, abatement orders, or other actions or orders of any kind
against the demised Premises and/or Lessor and/or Lessee, whether by
any private party or any administrative, judicial, or quasi-judicial
boards, court or agency, having jurisdiction over the property, Lessor
and/or Lessee. Lessee hereby further agrees to indemnify, protect, and
hold harmless Lessor, their employees, agents, heirs, and assigns, from
and against any and all response costs, losses, claims, demands, causes
of action, lawsuits, proceedings, enforcement actions, obligations and
liabilities of any kind arising out of the presence of hazardous
substances stored and/or used by Lessee on the Premises or
contamination by hazardous substances
37.
caused by Lessee, including any amounts which Lessor is called upon to
pay in costs, expenses and attorney's fees incurred by Lessor in
defending or protecting their interests. Lessee further agrees, at
Lessee's sole cost and expense, to defend Lessor, either separately or
jointly with Lessee at Lessor's sole election, against any and all
lawsuits, proceedings, or other enforcement actions arising out of any
contamination caused by Lessee, presence of hazardous substances stored
and/or used by Lessee on the Premises and/or legal proceedings arising
from Lessee's use or storage of hazardous substances on the Premises.
The indemnification and covenants to protect, hold harmless and defend
contained in this Section shall survive the termination of the Lease
and shall inure to the benefit of and be binding upon the respective
heirs, successors and assigns of Lessor and Lessee.
(b) Lessor hereby notifies Lessee that no toxic and hazardous
substances exist on the Premises. Lessor agrees to assume and be solely
responsible for all costs and expenses of every kind relating to toxic
and/or hazardous substances, fuels, or other supplies, stored and/or
used by Lessor on the Premises herein leased or which were present on
the Premises at the commencement of this Lease, including but not
limited to compliance with all permit and reporting requirements and
remediation of all contamination in accordance with all applicable laws
and investigations, claims, lawsuits, proceedings, citations, cease and
desist orders, abatement orders, or other actions or orders of any kind
against the demised Premises and/or Lessor and/or Lessee, whether by
any private party or any administrative, judicial, or quasi-judicial
boards, court or agency, having jurisdiction of the property, Lessor
and/or Lessee. Lessor hereby further agrees to
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indemnify, protect, and hold harmless Lessee, their employees, agents,
heirs, and assigns, from and against any and all response costs,
losses, claims demands, causes of action, lawsuits, proceedings,
enforcement actions, obligations and liabilities of any kind arising
out of the presence of hazardous substances stored and/or used by
Lessor on the Premises or contamination by hazardous substances caused
by Lessor or which existed on the Premises at the commencement of this
Lease, including in any amounts which Lessee is called upon to pay in
costs, expenses and attorneys' fees incurred by Lessee in defending or
protecting their interests. Lessor further agrees, at Lessor's sole
cost and expense, to defend Lessee, either separately or jointly with
Lessor at Lessee's sole election, against any and all lawsuits,
proceedings, or other enforcement actions arising out of any
contamination caused by Lessor, presence of hazardous substances stored
and/or used by Lessor on the Premises and/or legal proceedings arising
from Lessor's use or storage of hazardous substances on the Premises.
The indemnification and covenants to protect, hold harmless and defend
contained in this Section shall survive the termination of this Lease
and shall inure to the benefit of and be binding upon the respective
heirs, successors and assigns of Lessor and Lessee.
34. Compliance with Laws, etc.
Any County of Sonoma or other public entity fees occasioned by Lessee's use of
the Premises shall be the sole responsibility of Lessee. Lessee shall not use,
or permit said Premises, or any part thereof, to be used for any purpose or
purposes other than for which the Premises are hereby leased. Any rules or
regulations deemed applicable by any governmental authority to Lessee's
operation shall be promptly complied with by Lessee,
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and Lessee agrees to indemnify and to hold harmless Lessor from any
responsibility therefor. Notwithstanding any of the previous provisions of this
Section, Lessee shall not be required to maintain, correct, restore or bear any
costs with respect to any of the following:
(a) Building and safety code violations, except for such requirements
as are imposed upon the Premises solely because of the specific nature
of Lessee's use of the Premises.
(b) Clean-up or restoration of the environment due to hazardous waste
or other environmental pollutants affecting the Premises, except for
those which result from Lessee's operations on the Premises or actions
taken by Lessee that result in contamination to the Premises.
(c) Any latent defects in the structure of the Premises and any
condition caused by such latent defects.
35. Liability and Indemnity
Lessee agrees to indemnify, defend and hold the Lessor harmless from all claims
in negligence and torts (including costs and expenses of defending against such
claims) arising or alleged to arise from any act or omission of Lessee or
Lessee's agents, employees or contractors occurring during the term of this
Lease in or about the Premises, except to the extent arising from the act or
omission of Lessor, its agents or employees. Lessee agrees to use and to occupy
the Premises at Lessee's own risk and hereby releases Lessor, and Lessor's
agents and employees, from all claims for any damage or injury to person or
property to the full extent permitted by law, other than any damage or injury
caused by any act or omission of Lessor, its agents or employees.
40.
Lessor in turn agrees to indemnify, defend and hold Lessee harmless from all
claims, in negligence and torts (including costs and expenses of defending
against such claims) arising or alleged to arise from any act or omission of
Lessor or Lessor's agents or employees, of Lessor occurring during the term of
this Lease, except to the extent arising from the act or omission of Lessee, its
agents or employees.
36. Miscellaneous
(a) The obligations of each person signing this Lease as Lessor shall
be joint and several. The words "Lessor" and "Lessee" as used herein
shall include the plural, as well as the singular. The captions
preceding the articles of this Lease have been inserted solely as a
matter of convenience, and such captions in no way define or limit the
scope or intent of any provision of this Lease.
(b) The terms, covenants and conditions contained in this Lease shall
bind and inure to the benefit of Lessor and Lessee and their respective
successors and permitted assigns.
(c) This Lease shall be construed and enforced in accordance with the
laws of the State of California. This instrument, including the
Exhibits hereto (which are expressly made a part of this Lease),
contains the entire agreement between the parties (not including,
however, any agreement as to partnership, corporation or other
relationship among the parties constituting the Lessor or Lessee), and
all prior negotiations and agreements are merged herein.
(d) Except as herein otherwise specifically provided, the parties shall
have all rights and remedies provided by law in the event of any
default.
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(e) This Lease may be amended only by a writing executed by the parties
hereto.
(f) The waiving by Lessor or Lessee of any agreement, condition, or
provision herein contained shall not be deemed to be a waiver of any
subsequent breach of the same or any other agreement, condition, or
provision herein contained, nor shall any custom or practice which may
develop between the parties in the administration of the terms hereof
be construed to waive or to lessen the rights of Lessee or Lessor to
insist upon the performance by the other in strict accordance with said
terms.
(g) Time is of the essence of this Lease and each and all of its
provisions.
(h) Lessor represents to Lessee that to the best of Lessor's knowledge:
(i) There exist no substances identified as hazardous or toxic
by any federal, state, or local law or regulation on or under
the Premises or in any water supply or groundwater located on
the Premises or, in any land, water supply or groundwater
adjacent to the Premises, and there are no underground tanks
on the Premises; and
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(ii) There are no actions, suits or proceedings, pending or
threatened, against or affecting Lessor or the Premises, at
law or in equity, in or before any federal, state, municipal,
or other governmental court, department or agency, that
involve or may affect the Premises, this Lease, or Lessee's
contemplated use of the Premises.
IN WITNESS WHEREOF, the parties hereto have executed this Lease on
January 1, 1999.
Lessor: Lessee:
/s/ BRUCE B. DONNELL /s/ W. REED FOSTER
- --------------------------- ------------------------------------
Bruce B. Donnell W. Reed Foster, Chairman
Ravenswood Winery, Inc.
/s/ SANDRA D. DONNELL /s/ JOEL E. PETERSON
- --------------------------- ------------------------------------
Sandra D. Donnell Joel E. Peterson, President
Ravenswood Winery, Inc.
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