LEASE
THIS LEASE ("Lease") is made as of January 1, 1996, by and between
XXXXXXXXX RANCH, a California general partnership, hereinafter collectively
called Lessor, and XXXXXX VINEYARDS AND MANAGEMENT CO., a California
corporation, hereinafter called Lessee.
Lessor hereby leases to Lessee, and Lessee hereby takes and hires from
Lessor, 145 acres (or such amount of acres determined after survey of the
property and agreed to by Lessor and Lessee) of farming land located on the
Xxxxxxxxx Ranch near the town of San Xxxxx in Monterey County, California, as
more specifically described on "Exhibit A" attached hereto and made a part
hereof. Said leased land is hereinafter referred to as the "Premises."
The terms and conditions of this Lease are as follows:
1. TERM. The term (as extended from time to time, the "Term") of
this Lease is twenty-nine (29) years commencing as of January 1, 1997, and
ending December 31, 2025, subject to the options to extend referred to in
Paragraph 24.
2. USE. The Premises shall be used for the planting, growing and
harvesting of crops, including but not limited to wine grapes, and uses
incidental thereto as set forth in Paragraph 10 below, but for no other
purpose. All farming operations of Lessee shall be conducted in accordance
with the methods practiced in the vicinity, including the taking of necessary
precautions to prevent erosion or other damage to the Premises, so that at
the termination of this Lease said Premises will be returned to Lessor in the
same condition as when received at the beginning of this Lease or as improved
pursuant to the terms of this Lease, reasonable use, wear and damage by the
elements excepted. Lessee shall make diligent effort
to prevent the spread of all noxious weeds and crop-destroying rodents upon
the Premises during the Term.
Lessee shall not xxxx on the Premises and shall use reasonable efforts
to prohibit all others from hunting on the Premises. Notwithstanding the
foregoing, Lessee shall use reasonable efforts to control damage to crops and
grapevines caused by animals, including, without limitation, by from time to
time obtaining and operating under depredation permits; provided, however, that
Lessee shall provide notice to Lessor prior to obtaining any depredation permit.
3. RENT AND DEPOSIT. As and for the rental of the Premises during
the Term, Lessee agrees to pay to Lessor (a) with respect to each of calendar
years 1997, 1998 and 1999, the sum of $165.00 per acre, and (b) with respect to
each calendar year thereafter, the sum of $275.00 per acre, payable in advance
without deduction or offset, except as provided in Paragraph 23 below, in equal
semi-annual installments on the 31st day of January and the 31st day of July of
each year during the Term, commencing January 31, 1997; subject, however to
adjustment as set forth in Paragraph 4 below. A survey of the Premises shall be
obtained by Lessee, at its sole expense. Prior to execution and delivery of
this Lease, Lessee has paid to Lessor the sum of $10,000.00 (the "Deposit").
The Deposit will be credited against the rental installment to be paid on
January 31, 1997.
4. PERIODIC RENT ADJUSTMENT. The annual rental to be paid by
Lessee, as set forth in Paragraph 3 above, shall be adjusted at the end of the
sixth (6th) full calendar year of the Term, at the end of the eleventh (11th)
full calendar year of the Term and, thereafter, at the end of each successive
five (5)-year period during the Term. The rent adjustment shall be made to
reflect the prevailing rental rate at the time of each adjustment for land of
like kind and quality with a comparable water supply and comparable
improvements, located in Monterey
-2-
County, California; provided, that no consideration shall be given to the value
of improvements made by Lessee upon the Premises; provided further, that if at
the time of a particular adjustment the Premises are planted to vineyard, the
lands to be used for comparison purposes shall consist solely of Monterey County
vineyards ("Comparable Vineyards"), but only (i) those Comparable Vineyards
which have had a rent adjustment within the previous three (3) years, and (ii)
there shall be excluded from the rental rates of such Comparable Vineyards any
rental paid for the value of the vineyards thereon and the value of any
improvements thereon comparable to the improvements made by Lessee upon the
Premises. Lessor and Lessee acknowledge and agree that rental rates on
comparable properties may include amounts being paid in consideration of
obligations and liabilities other than the rental of such property (for example,
the performance of services, contracts and other agreements or the payment of
fees, costs or other expenses), and consideration paid for such other
liabilities and obligations shall not be taken into account in the determination
of the prevailing rental rates.
5. RENT ADJUSTMENT FOR OTHER USES. In the event Lessee desires to
use any portion of the Premises for purposes beyond those set forth and referred
to in Paragraph 2 above, such as (by way of example and not by way of
limitation) the operation of a winery, warehousing, administrative offices, or a
wine-tasting room catering to the public, it shall have the right to do so but
in any such event the rental to be paid for the portion of the Premises devoted
to such use shall be redetermined and paid to Lessor upon the basis of its
reasonable rental value for such other purposes, by mutual agreement or by
arbitration as provided in Paragraph 6 below.
6. ARBITRATION. If the parties hereto are unable to reach agreement
as to any rent adjustment to be made pursuant to the provisions of Paragraph 4
or Paragraph 5 above, the matter shall be determined by arbitration. Except as
otherwise specifically provided in this
-3-
lease, the arbitration proceedings shall be conducted according to the rules and
procedures set forth in Title 9 of Part III (commencing with Section 1280) of
the Code of Civil Procedure. A panel of three (3) arbitrators shall be selected
by mutual agreement of the parties, but if the parties cannot agree on such
selection, then each party shall appoint one (l) arbitrator and the third or
"neutral" arbitrator shall be appointed as provided in Section 1281.6 of the
Code of Civil Procedure upon the petition of either party hereto. No person
shall be appointed to serve as an arbitrator unless he or she is qualified by
membership in the American Institute of Appraisers of the National Association
of Realtors ("M.A.I.") and has been regularly engaged in making appraisals of
agricultural property in Monterey County, California, during the previous five
(5) years (a "Certified Appraiser"). The decision of any two (2) of said
arbitrators, made and entered as provided in Sections 1282 and 1282.2 of the
Code of Civil Procedure, shall be conclusive and binding upon the parties
hereto. Costs of said arbitration proceedings shall be borne and paid by the
parties hereto in equal shares, except that attorneys' fees, fees paid to
witnesses, and other expenses incurred by a party for that party's own benefit,
shall be paid by the party incurring the same. Pending completion of said
arbitration proceedings, Lessee shall continue to make all rental payments as
the same become due hereunder, upon the understanding and agreement that when
said proceedings have been completed said rental payments will be adjusted, up
or down, in accordance with the arbitration award and the excess or deficient
portion of said rental payments shall be remitted by Lessor or Lessee, as
applicable.
7. TAXES AND ASSESSMENTS; LAND CONSERVATION AGREEMENTS. Lessee
shall pay, prior to delinquency, all real and personal property taxes and
assessments levied on or assessed against the Premises and against improvements
now or hereafter located on the Premises, prorated for the term of this Lease.
Lessee shall have the right at Lessee's sole expense, to
-4-
protest or contest the validity or amount of any such taxes or assessment. If
Lessee protests or contests any such tax or assessment, Lessee may withhold or
defer payment thereof, but shall protect Lessor and the Premises from any lien
by adequate surety bond or other appropriate security acceptable to Lessor.
Lessor hereby appoints Lessee as Lessor's attorney-in-fact for the purpose of
making all payments to taxing authorities and for the purpose of protesting or
contesting any tax or assessment payable by Lessee. Lessor shall, at Lessee's
expense, cooperate with Lessee in the contest or adjustment of taxes payable by
Lessee. Without Lessee's prior written consent, Lessor shall neither give any
notice of non-renewal of any land conservation agreement (executed under the
California Land Conservation Act of 1965) relating to the Premises, nor agree
with the County of Monterey to a mutual cancellation thereof.
8. REPRESENTATION AND WARRANTIES.
(a) Lessor represents and warrants to Lessee as follows: (i) Lessor
owns good title to the Premises; and (ii) no zoning or other governmental
laws, ordinances, rules or regulations prohibit or restrict the use of the
Premises by Lessee as contemplated by this Lease.
(b) Each party hereto represents and warrants to the other party as
follows: (i) such party has full power and authority to execute and
deliver, and to perform the obligations of such party under, this Lease;
and (ii) the execution, delivery and performance of this Lease by such
party does not and will not constitute a breach or default under any
material agreement, lease or instrument to which such person is a party or
by which such person or the Premises is bound.
(c) Lessee acknowledges that Lessor has not made any express or
implied warranty or representation concerning the availability of water or
water quality or quantity. Notwithstanding the foregoing, if water rights
relating to the Premises are
-5-
challenged, Lessor and Lessee shall jointly pursue the protection and
preservation of said rights, and shall equally bear the reasonable
expenses thereof. Notwithstanding the foregoing, if at any time there
shall not be sufficient water from existing xxxxx to properly irrigate
vineyards which Lessee has placed on the Premises or to otherwise farm
the Premises in a proper manner, Lessee shall give notice thereof to
Lessor and Lessor shall thereafter promptly and diligently make all
reasonable efforts, at Lessor's expense, to restore the water supply,
including at Lessor's option, the drilling of a new well or xxxxx. If
Lessor's efforts are unsuccessful, the Lessee shall have the right to
terminate this Lease by giving thirty (30) days prior written notice of
such termination to Lessor.
9. REPAIRS. Subject to the terms of Paragraph 8(c), Lessee shall,
at Lessee's sole cost and expense, keep and maintain the Premises,
including improvements now or hereafter installed thereon while the same
are reasonably needed for agricultural purposes, in good order and
condition at all times. Except as provided in Paragraph 8(c), Lessor shall
not be called upon to make any repairs, replacements or improvements
whatsoever upon the said Premises, or any part thereof. Notwithstanding
the foregoing, Lessee shall not be responsible for, and Lessor shall
indemnify and hold Lessee harmless from, any environmental or other
condition affecting the Premises which constitutes a violation of any
applicable law, regulation, rule or order; provided, however, that Lessor
shall not be required to indemnify and hold Lessee harmless from any such
condition that (a) is caused by Lessee or its employees, agents or
contractors, or (b) first occurs on the Premises during the Term, in which
case Lessee shall indemnify and hold Lessor harmless from such condition.
10. IMPROVEMENTS. This Lease is executed with the understanding and
agreement that the Lessee is not obligated to make any improvements to the
Premises, but that if Lessee elects to do so, said improvements shall
consist of the planting of a wine grape
-6-
vineyard and the installation of buildings, equipment and facilities which
Lessee may require for the development and operation of said property as a
vineyard. Except as provided in Paragraph 11, the full cost of said
improvements shall be borne and paid by Lessee, without any contribution
whatsoever by Lessor. The construction and installation of these or any
other improvements made to the Premises by the Lessee shall be subject to
the following conditions:
(a) At least ten (10) days but not more than thirty (30) days before
commencement of any construction on or improvement to the Premises which
will cost in excess of $10,000.00, Lessee shall notify Lessor of Lessee's
intention to commence said work. The notice shall specify the
approximate location and nature of the intended improvements and shall
state the approximate date on or after which work is to commence.
Lessor shall have the right to post and maintain on the Premises any
notices of nonresponsibility provided for under applicable law.
(b) Lessee shall not suffer or permit to be enforced against the
Premises or any part thereof any mechanic's, materialman's, contractor's,
or subcontractor's lien arising from any work of improvement made by
Lessee, however it may arise. However, Lessee may in good faith and at
Lessee's own expense contest the validity of any such asserted lien,
provided Lessee has furnished the bond required in Civil Code
Section 3143 (or any comparable statute hereafter enacted for
providing a bond or other assurance freeing the Premises from the
effect of such a lien claim.)
(c) Lessee shall indemnify Lessor against all liability and loss of
any type arising out of work performed on the Premises by or for Lessee,
together with reasonable attorneys' fees and all costs and expenses
incurred by Lessor in negotiating, settling, defending, or otherwise
protecting against such claim should Lessee fail to do so.
-7-
(d) If Lessee does not cause to be recorded the bond described in
Civil Code Section 3143 or otherwise protect the property under any
alternative or successor statute, and if a final judgment is rendered
against Lessee by a court of competent jurisdiction for the foreclosure of
a mechanic's, materialman's, contractor's or subcontractor's lien claim,
and if Lessee fails to stay an execution of the judgment by lawful means or
to pay the judgment, Lessor shall have the right, but not the duty, to pay
or otherwise discharge, stay, or prevent the execution of any such judgment
or lien or both. Lessee shall reimburse Lessor for all sums paid by Lessor
under this subparagraph (d), together with all Lessor's reasonable
attorneys' fees and costs, plus interest on those sums, fees, and costs at
the highest legal rate allowed under the laws of California from the date
of payment until the date of reimbursement.
All improvements constructed or installed on the Premises by Lessee shall be
owned by Lessee during the Term. At the conclusion of the Term, or upon any
earlier termination of this Lease however occurring, Lessee shall surrender the
Premises and improvements, if any, to Lessor and as of said date said
improvements shall become part of the real property and shall belong solely to
Lessor.
11. WATER. Lessee shall have the full use of any and all water
rights appurtenant to the Premises and shall have the right to drill for its use
such xxxxx as it may deem necessary to furnish sufficient water for agricultural
use on the Premises; provided, however, that, without the prior written consent
of Lessor, no irrigation water produced by Lessee on the Premises shall be
transported for use off the Premises. Lessor shall be entitled to use a
reasonable amount of water from the Premises for its livestock; provided,
however, that (a) Lessor shall not operate a feed lot or other large livestock
operation, and (b) the use of such
-8-
water by Lessor shall not result in Lessee having insufficient water for its own
use on the Premises.
12. UTILITIES AND SERVICES. Lessee shall pay for all utilities and
services used by Lessee upon the Premises during the Term.
13. INSURANCE. During the Term, Lessee shall, at Lessee's sole cost
and expense, maintain insurance with reputable insurance carriers against such
risks and in such amounts as is customarily carried by companies of established
reputation engaged in the same or similar business and similarly situated,
including public liability, property damage and workers' compensation; provided,
however, that the public liability insurance shall initially be in an amount not
less that $1,000,000 for each occurrence, and, at the time of each rent
adjustment pursuant to Paragraph 4 above, such amount shall be increased to such
greater amount as may be reasonable under the then circumstances, such greater
amount to be mutually agreed upon by Lessor and Lessee. Lessee shall cause such
policy or policies of insurance to show Lessor as an additional insured
thereunder and to provide that such policy or policies may not be cancelled or
amended without at least thirty (30) days prior written notice to Lessor. Upon
the request of Lessor, a certificate of insurance evidencing such coverage shall
be provided to Lessor. Each party to this Lease waives any right of action such
party may later acquire against the other for the recovery of any loss or damage
to any of such party's property which is insured under valid and collectible
insurance policies, to the extent of any recovery collectible under such
insurance.
14. ENTRY, INSPECTION AND USE BY LESSOR. Lessee shall permit Lessor,
and Lessor's agents and assigns, at all reasonable times, to enter the Premises
and to use the roads established on the Premises now or in the future for the
purpose of inspection, reasonable ingress and egress to and from public roads
and to and from other lands owned by the Lessor,
-9-
the posting of notices, the exercise of any right given to or retained by Lessor
under the provisions of this Lease, or any other lawful purpose. To facilitate
such access, Lessee shall supply Lessor, its agents and assigns, with keys to
gates to the Premises.
15. OIL AND GAS LEASES. Notwithstanding anything to the contrary
contained in this Lease, Lessor shall have the right at any time or from time to
time to execute oil, gas or mineral leases with respect to the Premises;
provided, that neither Lessor nor said mineral lessee shall have the right,
without prior written consent of Lessee, to enter upon the surface of the
Premises or the upper 500 feet thereof to explore for, produce, or extract oil,
gas or other minerals. All oil, gas or mineral leases hereafter executed by
Lessor with respect to the Premises shall contain a provision making the lessee
therein primarily liable to Lessor and Lessee, as their respective interests may
appear, for all damages to livestock, crops, vines, trees, fences, roads,
ditches, buildings and other improvements on the Premises, caused by said
lessee's operations thereon. Lessor hereby agrees to indemnify and hold
harmless Lessee from and against all such damages.
16. NUISANCE; COMPLIANCE WITH LAWS. Lessee shall not knowingly do,
or permit to be done, or knowingly keep, or permit to be kept, in or about the
Premises, anything which shall be a nuisance or which shall be in violation of
any law, ordinance, rule or regulation of any governmental authority.
17. CONDEMNATION. If during the Term all or any portion of the
Premises is condemned, or conveyed under threat of condemnation, for public use,
the parties hereto agree as follows:
(a) The respective rights of the parties shall depend upon whether
there is a "Total Taking," a "Substantial Taking," or a "Partial Taking,"
said terms being defined as follows:
-10-
TOTAL TAKING means the taking of the fee title to all of the
Premises and the improvements on said Premises;
SUBSTANTIAL TAKING means the taking of so much of the Premises or
improvements or both that the conduct of Lessee's business on the
Premises would be prevented or impaired to the extent that
agricultural operations could not be conducted on the Premises at an
economically feasible level of profit;
PARTIAL TAKING means any taking of the fee title that is not
either a total taking or a substantial taking.
(b) In the event of a Total Taking (or a Substantial Taking if Lessee
gives Lessor notice of intent to treat such taking as a Total Taking within
fifteen (15) days after the nature and extent of the taking have been
finally determined), Lessee's interest in the leasehold and Lessee's
obligations under this Lease, including but not limited to the obligation
to pay rent, shall continue until the date on which the condemnor takes
possession, and Lessee's right to apportionment of the award shall accrue
as of that date. Upon delivery of possession to the condemnor, this Lease
shall terminate.
(c) In the event of a Partial Taking (or a Substantial Taking if
Lessee does not elect to treat it as a Total Taking as provided in
subparagraph (b) of this paragraph), this Lease shall remain in full force
and effect with respect to the remaining property and Lessee's obligation
to pay rent shall be reduced at the rate per acre then payable under the
provisions of Paragraphs 3 and 4 above for each acre so taken.
(d) Upon a Total, Substantial, or Partial Taking, all sums, including
damages and interest, awarded for the fee or leasehold or both shall be
deposited with a bank, savings and loan association, or other mutually
agreeable escrow holder, with instructions to distribute the same as
follows:
-11-
(i) If the award separately values the interests of Lessee and
Lessor in the property taken:
TO LESSEE: that portion of the award allocable to the interests
of Lessee; and
TO LESSOR: that portion of the award allocable to the interests
of Lessor.
(ii) If the award values the property taken as a whole, the award
shall be prorated between Lessee and Lessor in accordance with (A) the
value of the interests of the Lessee in the property taken (including,
without limitation, the fair market value of the leasehold estate of the
Lessee therein for the then unexpired Term (including renewal option
periods)) and (B) the value of the interests of the Lessor in the property
taken (including, without limitation, the fair market value of the fee
estate of the Lessor therein).
(e) The party receiving any formal or informal notice of intended
taking under eminent domain from a public agency shall give the other party
prompt notice of the contents of the notice received and the date on which
it was received.
(f) Lessor, Lessee, and all persons and entities holding under Lessee
shall each have the right to represent their respective interests in each
proceeding or negotiation with respect to a taking of all or any part of
the Premises under eminent domain, and to make full proof of their
respective claims. No agreement, settlement, sale, or transfer to the
condemning agency shall be made without the consent of Lessor and Lessee.
Lessor and Lessee each agree to execute and deliver to the other any
instruments that may be required to effectuate or facilitate the provisions
of this Lease relating to condemnation.
-12-
18. DEVELOPMENT FINANCING. If during the Term, Lessee elects to
develop or otherwise to construct improvements on the Premises, as set forth in
Paragraph 10 above, the parties hereto agree as follows:
(a) The total cost of the work shall be paid for by Lessee.
(b) Notwithstanding anything herein to the contrary, Lessee is hereby
given the absolute right without Lessor's consent to mortgage its interest
in this Lease for the purpose of securing any loan to be used by Lessee for
the development, improvement and operation of the Premises, but Lessor
shall not be required to join or participate in said loan, or to accept any
personal responsibility for the repayment of same. No such mortgage shall
extend to or affect the fee title or the reversionary interest of Lessor in
and to the Premises, or the reversionary interest of Lessor in and to any
improvements now or hereafter installed upon the Premises. No such
mortgage or assignment thereof shall be binding upon the Lessor in the
enforcement of its rights under this Lease, but Lessor will provide a copy
of any notice of default by Lessee to the mortgage holder and will accept
performance by the mortgage holder of any term of this Lease to be
performed by Lessee. The mortgage holder shall have thirty (30) days in
which to cure any Event of Default by Lessee after the time for Lessee to
cure it has expired; provided, however, that if the Event of Default cannot
be cured by the payment of money, Lessor will not terminate this Lease if
the mortgage holder commences and thereafter diligently pursues to
completion foreclosure of its mortgage and pays to Lessor all sums then due
and unpaid under the terms of this Lease. The loan documents shall contain
a provision allowing, but not obligating, Lessor to cure any default
thereunder if Lessee fails to do so. Such mortgage shall provide that a
copy of any notice of default served thereunder shall be sent by mail to
Lessor at the address given in this Lease for the service of
-13-
notices hereunder. A duplicate original or certified copy of such
mortgage, showing recording data, shall be given to Lessor within ten (10)
days after the same is returned from the recorder's office.
19. PERMANENT FINANCING; SUBORDINATION OF FEE. In the event Lessee
desires to obtain long-term financing of its improvements and operations on the
Premises, it shall have the right to do so pursuant to this Paragraph 19 at any
time after substantially all of the cultivable portion of the Premises is
planted to vineyard and an irrigation system has been installed and is operating
on the Premises. Lessee shall be entitled to obtain two financings of the
Premises: the first financing (the "First Loan") shall be undertaken, if at
all, on or before December 31, 2005; and the second financing (the "Second
Loan") shall be undertaken before December 31, 2015.
Each of the First Loan and the Second Loan (each, a "Loan" and
together the "Loans") shall be in the form of a long-term loan from a bank,
savings and loan association, insurance company or other lending institution
authorized to do business in the State of California. With respect to each
Loan, Lessor agrees that if requested to do so by Lessee it will execute and
deliver to such lender a deed of trust sufficient to subordinate or encumber
Lessor's fee title to the Premises to the lien securing such Loan, together with
such other loan documents in the standard form then in use by the lender as the
lender may reasonably require as a condition of making the Loan. Lessor and
Lessee shall negotiate in good faith with respect to such amendments to this
Lease as the lender of each Loan requires as a condition to providing the
financing, and neither Lessee nor Lessor shall unreasonably withhold its consent
to such amendments. Each encumbrance shall constitute a first lien against the
fee title to the Premises.
The foregoing provisions of this Paragraph 19 are subject, however, to
the following terms, conditions and agreements:
-14-
(a) No Event of Default shall have occurred and be continuing at the
time any Loan is to be made.
(b) The term of each Loan must not extend beyond the Term.
(c) The principal amount of the First Loan shall not exceed the sum
of $5,000.00 per acre for the acreage subject to this Lease. The principal
amount of the Second Loan shall not exceed fifty percent (50%) of the
appraised value of the Premises, as determined at the expense of Lessee by
a Certified Appraiser (as defined in Paragraph 6 above) mutually acceptable
to Lessor and Lessee.
(d) Lessor's obligation to subordinate their fee title to the
Premises to any financing is limited to the First Loan and the Second Loan
and the respective deed of trust and other loan documents for each Loan.
(e) The loan documents for each Loan shall contain provisions that
(i) Lessor has joined in the execution of the same solely for the purpose
of creating a lien against the fee title to the Premises in favor of the
lender, and that no personal judgment will be sought or obtained against
Lessor, or any of its partners, by reason of its having joined in the
execution of said documents; and (ii) require all notices of default to be
served on both Lessor and Lessee and provide that Lessor shall have the
right to cure any default if Lessee fails to do so.
(f) The proceeds of each Loan shall be applied by the lender: first,
to the full payment of any outstanding loan taken out by the Lessee
pursuant to the provisions of Paragraph 18 above, and, in the case of the
Second Loan, to the full payment of any First Loan then outstanding (the
payment in full of the First Loan on or before the closing of the Second
Loan shall be a condition to the Second Loan); second to the
-15-
payment of any and all obligations then due and owing by Lessee to Lessor
under the terms of this Lease; and third, the remaining proceeds, if any,
shall be paid to Lessee.
20. EVENTS OF DEFAULT. Any of the following events shall
constitute a default (an "Event of Default") under the terms of this Lease:
(a) The nonpayment of rent or any other sum to be paid by Lessee to
Lessor under the terms of this Lease, and the failure of Lessee to make
such payment within ten (10) days after receipt of written notice to do so
is given to Lessee and to any lender then holding a security interest in
the leased land or in the leasehold estate of Lessee pursuant to the
provisions of Paragraph 18 or Paragraph 19 above.
(b) Default by Lessee in the performance of or compliance with any
other covenant, condition or restriction contained in this Lease and the
failure of Lessee to perform or comply with the same within thirty (30)
days after receipt of written notice to do so is given to the Lessee and to
any lender then holding a security interest in the Premises or in the
leasehold estate of Lessee pursuant to the provision of Paragraph 18 or
Paragraph 19 above; provided, however, that if the nature of Lessee's
default is such that more than thirty (30) days are reasonably required for
its cure, then no Event of Default shall be deemed to have occurred if
Lessee commences the cure within that thirty (30)-day period and thereafter
diligently prosecutes the cure to completion.
(c) Abandonment or surrender of the Premises or of the leasehold
estate by Lessee.
(d) The subjection of any material right or interest of Lessee
hereunder to attachment, execution or other levy, or to seizure under legal
process (except a foreclosure of security given by Lessee to a lender
pursuant to the provisions of
-16-
Paragraph 18 or Paragraph 19 above), if not released within thirty (30)
days after receipt of written notice thereof.
(e) The filing by Lessee of a petition in bankruptcy or insolvency,
or for an arrangement or reorganization, or the making of an assignment for
the benefit of creditors.
(f) The filing against Lessee of a petition in bankruptcy or
insolvency, or for reorganization, or for the appointment of a receiver to
take possession of the Premises or improvements thereon or of Lessee's
interest in the leasehold or of Lessee's operations on the Premises for any
reason (other than a receivership pursuant to any security given by Lessee
to any lender referred to in Paragraph 18 or Paragraph 19 above), if not
dismissed within ninety (90) days.
(g) Any default by Lessee in the payment of any loan or other
monetary obligation secured by a mortgage or other security instrument
given to secure an obligation to any lender referred to in Paragraph 18 or
Paragraph 19 above provided that Lessee's default shall have continued
beyond any grace or cure period allowed by the applicable loan document.
21. REMEDIES OF LESSOR ON DEFAULT. Upon the occurrence and during
the continuance of any Event of Default, Lessor shall have the following
remedies in addition to all other rights and remedies, provided by law or
equity, to which Lessor may resort cumulatively or in the alternative:
(a) Lessor may at Lessor's election terminate this Lease by giving
written notice of termination. On the giving of the notice, all Lessee's
rights in the Premises shall terminate. Promptly after notice of
termination, Lessee shall surrender and vacate the Premises and all
improvements thereon, and Lessor may reenter and take possession
-17-
of the Premises and improvements and eject all parties in possession.
Termination under this subparagraph shall not relieve Lessee from any claim
for damages previously accrued or then accruing against Lessee. Said
damages shall include the worth at the time of award of the amount by which
the unpaid rent for the balance of the term after the award exceeds the
amount of such rental loss for the same period that Lessee proves could be
reasonably avoided.
(b) Lessor may at Lessor's election reenter the Premises and, without
terminating this Lease, at any time and from time to time relet said
Premises and improvements or any part or parts of them for the account and
in the name of Lessee or otherwise. Any reletting may be for the remainder
of the Term or for a longer or shorter period. Lessor may execute any
leases made under this provision either in Lessor's name or in Lessee's
name and shall be entitled to all rents from the use, operation, or
occupancy of the Premises and improvements. Lessee shall nevertheless pay
to Lessor on the due dates specified in this Lease the equivalent of all
sums required of Lessee under the terms of this Lease, plus Lessor's
expenses, less the net amount realized by Lessor upon any such reletting.
No act by or on behalf of Lessor under this provision shall constitute a
termination of this Lease unless Lessor gives Lessee written notice of
termination.
(c) Lessor shall be entitled at Lessor's election to each installment
of rent or to any combination of installments for any period before
termination, plus interest on delinquent installments at the highest
interest rate then allowable under the laws of the State of California.
(d) Upon any reentry of the Premises by Lessor pursuant to the
provisions of subparagraphs (a) or (b) above, Lessor may at Lessor's
election take possession of all
-18-
crops on the Premises, harvested and unharvested, and shall thereupon
become the owner of the same, without any obligation to compensate Lessee
or any other person therefor, except that Lessor shall pay to Lessee all
moneys received from the sale of said crops, less all reasonable costs and
expenses incurred or expended by Lessor in cultivating, harvesting,
processing, handling and selling said crops, less amounts owed to the
holder of a security interest given to secure crop financing, and less all
sums which may then be due to Lessor from Lessee under the terms of this
Lease. Lessor may at Lessor's election use any of Lessee's machinery,
equipment, trade fixtures or other personal property left upon the
Premises, without compensation and without liability for the use or damage
of the same, or store said property for the account of and at the cost of
Lessee.
The waiver by Lessor of any Event of Default shall not be deemed or held to be a
waiver of any subsequent or other Event of Default.
22. SURRENDER AND REMOVAL BY LESSEE; QUITCLAIM. Upon the expiration
of the Term or any earlier termination thereof, Lessee shall surrender to Lessor
the possession of the Premises and all improvements located thereon. If no
Event of Default shall have occurred and be continuing at the time of such
termination, Lessee may remove or cause to be removed all of its machinery,
equipment, trade fixtures and other personal property located upon the Premises
and then owned by Lessee; any of said property not so removed within thirty (30)
days after the date of termination shall be considered to have been abandoned
and thereafter shall belong to Lessor without the payment of any consideration.
Upon such expiration or earlier termination of this Lease, the Lessee agrees to
execute, acknowledge and deliver to Lessor in recordable form a proper
instrument releasing and quitclaiming to Lessor all right, title and interest of
Lessee in and to the Premises and all improvements located thereon. No holding
over
-19-
of the possession of the Premises by Lessee beyond the Term shall be deemed
an extension of the Term or create the right to an additional term in the
absence of a written agreement executed by Lessor.
23. LESSOR'S ENCUMBRANCES. Lessor shall not encumber the Premises or
any part thereof during the Term without Lessee's prior written consent. In the
event of a default by Lessor under an encumbrance of Lessor's interest in the
Premises, or in the event Lessor's interest in the Premises becomes subject to
any lien for which Lessee is not responsible under the terms of this Lease and
which jeopardizes Lessee's interest in the Premises, Lessee shall have the right
to cure the default or discharge the lien and to deduct the funds expended in
connection with such cure or discharge from subsequent rental payments becoming
due under the terms of this Lease. Lessor shall use its best efforts to cause
holders of encumbrances on Lessor's interest in the Premises to agree to accept
performance thereunder by Lessee.
24. OPTION TO EXTEND. So long as no Event of Default shall have
occurred and is then continuing, Lessee shall be entitled to extend the term
of this lease for four (4) successive five (5)-year terms upon giving to
Lessor written notice of Lessee's election to exercise the option to extend
the term at least ninety (90) days prior to the expiration of the then
existing term hereof. Such renewal shall be upon the same terms and
conditions as are herein stated. References in this Lease to the Term shall,
to the extent exercised, include the four (4) successive five (5)-year
options provided for above.
25. FIRST RIGHT TO PURCHASE. During the Term and so long as no Event
of Default shall have occurred and is then continuing, Lessee shall have the
first right to purchase the Premises if Lessor receives a bona fide offer to
purchase the same from a third party which it desires to accept, or if Lessor
offers to sell the same. In either such case Lessor shall give Lessee written
notice of such offer and of all of the terms and conditions thereof, and
thereafter
-20-
Lessee shall have twenty (20) days in which to exercise this first right to
purchase by giving to Lessor written notice of Lessee's election to do so. If
this first right to purchase is so exercised by Lessee within said twenty
(20)-day period, such purchase shall be consummated upon the terms and
conditions specified in such offer; provided, however, that the date for closing
of such purchase shall be not less than sixty (60) days after the date of
Lessee's notice of election. If this first right to purchase is not so
exercised by Lessee within said twenty (20)-day period, it shall lapse and shall
be of no further force or effect and Lessor thereafter shall be free to sell the
Premises to a third party within one hundred and eighty (180) days after
Lessee's first right to purchase lapses, but not for a lesser price or on terms
more favorable in any material respect to the purchaser. Any such sale to a
third party shall be subject to this Lease, it being expressly understood and
agreed that this Lease shall continue in full force and effect notwithstanding
said sale.
26. ASSIGNMENT AND SUBLETTING. Lessee shall not assign this lease or
any interest herein, or underlet the Premises or any part thereof, without the
prior written consent of Lessor, except to an affiliate or affiliates of Lessee
(I.E., a partnership in which Lessee is a general partner, a joint venture in
which Lessee is a joint venturer, or a limited liability company in which Lessee
is a member), and neither this Lease, nor any interest herein of Lessee, shall
be assignable in proceedings by or against Lessee in bankruptcy, or in
insolvency, or in any other manner by operation of law; provided, that Lessor's
consent shall not be unreasonably withheld; provided further, that Lessor's
consent shall not be required in connection with the transfer of this Lease to
any lender who has provided financing under the provisions of Paragraph 18 or
Paragraph 19 above and who holds a security interest in the leasehold estate of
Lessee, in a foreclosure or other like proceedings instituted by the lender
under the terms of any such security instrument, or by an assignment or other
conveyance given
-21-
in lieu of foreclosure. No assignment under the provisions of this paragraph
shall be effective, however, until the assignee has given written notice of such
assignment to Lessor, stating the name and address of the assignee and the date
of transfer, accompanied by a copy of the assignment and the written agreement
of the assignee expressly assuming and agreeing to keep and perform all of the
obligations of Lessee under this Lease.
27. TIME OF THE ESSENCE. Time and specific performance are of the
essence of this agreement and of every provision hereof.
28. SUCCESSORS AND ASSIGNS. Subject to the restriction on assignment
hereinabove set forth, this Lease and all of the provisions hereof shall inure
to the benefit of and shall be binding upon the heirs, legal representatives,
successors and assigns of the respective parties hereto.
29. ATTORNEYS' FEES. In case either party shall bring suit against
the other party to compel the performance of, or to recover for the breach of,
any covenant, agreement or condition herein written, or, in the case of Lessor,
to recover possession of the Premises or to remove from the record this Lease or
any lien or encumbrance thereon created by Lessee, the prevailing party shall be
entitled to a reasonable attorneys' fee, to be fixed by the court and made a
part of any judgment entered therein.
30. NOTICES. Any notice to be given hereunder will be deemed to have
been given if (a) personally served upon the person to whom it is directed, or
(b) deposited in the United States mail, registered or certified, addressed to
the party to whom it is directed at the address shown below its signature
hereto, or at such other address as said party hereafter may designate for
notices hereunder.
31. MEMORANDUM OF LEASE. The parties agree to execute and have
acknowledged a memorandum of lease for purposes of recording in Monterey
County,
-22-
California, which said memorandum shall describe the Premises as being subject
to the rights, covenants and restrictions herein contained.
32. ESTOPPEL CERTIFICATE.
(a) Lessor shall at any time upon not less than fifteen (15) days
prior written notice from Lessee execute, acknowledge and deliver to Lessee a
statement in writing (i) certifying that this Lease is unmodified and in full
force and effect or, if modified, stating the nature of the modification and
certifying that this Lease, as modified, is in full force and effect, and (ii)
acknowledging that there are not, to Lessor's knowledge, any uncured defaults on
the part of Lessee hereunder, or specifying the defaults if any are claimed.
Any such statement may be conclusively relied upon by any prospective
encumbrancer of the Premises or Lessee's interest therein.
(b) Lessor's failure to deliver such statement within the time
specified shall be conclusive upon Lessor (i) that this Lease is in full force
and effect, without modification except as may be represented by Lessee, (ii)
that there are no uncured defaults in Lessee's performance, and (iii) that not
more than one semi-annual installment of rent has been paid in advance.
33. SEVERABILITY. If any term, covenant, condition or provision of
this Lease or the application thereof to any person or circumstances shall, at
any time or to any extent, be invalid or unenforceable, the remainder of this
Lease, or the application of such term or provision to persons or circumstances
other than those as to which such term or provision is held invalid or
unenforceable, shall not be affected thereby, and shall continue to be valid and
to be enforced to the fullest extent permitted by law.
34. INTERPRETATION. This Lease shall be construed in accordance with
the internal laws of the State of California without application of the
conflicts of laws provisions
-23-
thereof. Whenever the contents of any provision shall require, the singular
number shall be deemed to include the plural number, and vice versa, and the
reference to any gender shall be deemed to include reference to all other
genders. This Lease has been drafted by both parties and shall not be construed
either for or against Lessor or Lessee. The captions and headings of the
paragraphs of this Lease are solely for convenience and shall not be deemed to
be a part of this Lease for the purpose of construing the meaning hereof or for
any other purpose.
35. ENTIRE AGREEMENT. This Lease contains the entire agreement of
the parties hereto with respect to the letting and hiring of the Premises
described above and this Lease may not be amended, modified, released or
discharged, in whole or in part, except by an instrument in writing signed by
the parties hereto or their respective successors or assigns. This Lease
supersedes that certain Lease dated November 1, 1995, among the partners of
Lessor, individually, and Lessee.
36. COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
-24-
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
date first above set forth.
LESSOR: LESSEE:
------- -------
XXXXXXXXX RANCH, a XXXXXX VINEYARDS AND
California general partnership MANAGEMENT CO., a California
corporation
/s/ Xxxxx X. Xxxxxxxxx
-----------------------------------
XXXXX X. XXXXXXXXX, Partner By /s/ Xxxxxx X. Xxxxxx
----------------------------
Title: President
/s/ Xxxxx X. Xxxxxxxxx
-----------------------------------
XXXXX X. XXXXXXXXX, Partner By /s/ Xxxxx X. Xxxxxx
----------------------------
Title: Vice President
/s/ Xxxxx Xxxxxxxx
----------------------------------- Address:
XXXXX XXXXXXXX, Partner 00000 Xxxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx xxx Xxx, Xxxxxxxxxx 00000
/s/ Xxxx Xxxxxxx
-----------------------------------
XXXX XXXXXXX, Partner
Address:
X.X. Xxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
-00-
XXXXX XX XXXXXXXXXX )
) ss
COUNTY OF MONTEREY )
---------------
On Feb. 15, before me, Xxxx X. Xxxxxxx, Notary Public, personally
appeared Xxxxx X. Xxxxxxxxx, Xxxxx X. Xxxxxxxxx, Xxxxx Xxxxxxxx and Xxxx
Xxxxxxx, personally known to me (or proved to me on the basis of satisfactory
evidence) to be the persons whose names are subscribed to the within
instrument and acknowledged to me that they executed the same in their
authorized capacities, and that by their signatures on the instrument the
persons, or the entity upon behalf of which the persons acted, executed the
instrument.
WITNESS my hand and official seal.
/s/ Xxxx X. Xxxxxxx
----------------------------------
Signature
[SEAL]
STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES )
---------------
On 1-30-96, before me, Xxxxxxx X. Xxxx, Notary Public, personally
appeared Xxxxxx X. Xxxxxx and Xxxxx X. Xxxxxx, personally known to me or
proved to me on the basis of satisfactory evidence to be the persons whose
names are subscribed to the within instrument and acknowledged to me that
they executed the same in their authorized capacities, and that by their
signatures on the instrument the persons, or the entity upon behalf of which
the persons acted, executed the instrument.
WITNESS my hand and official seal.
/s/ Xxxxxxx X. Xxxx
-----------------------------
Signature
[SEAL]
-00-
XXXXX XX XXXXXXXXXX
XXXXXX XX XXX XXXX XXXXXX
---------------
Xx FEB. 14, 1996 before me XXXXX XXXXXX
------------- ------------
a Notary Public in and for said State, personally
appeared XXXXX XXXXXXXX AND
--------------------------
XXXX XXXXXXX
--------------------------
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal, -------------------------------
SEAL XXXXX XXXXXX
Comm. #996126
Notary Public
California
SAN XXXX OBISPO COUNTY
My Comm. Expires May 31, 1997
------------------------------
Signature: /s/ Xxxxx Xxxxxx (This area for notarial seal or stamp)
------------------------
[LETTERHEAD]
March 27, 1996
Partners of Xxxxxxxxx Ranch
X.X. Xxx 000
Xxx Xxxxx, XX 00000
Dear Partners of Xxxxxxxxx Ranch,
As was discussed and agreed to with Xxxxx Xxxxxxxxx and Xxxxx Xxxxxxxx
on the telephone last week, the lease ("Lease"), made as of January 1, 1996 by
and between Xxxxxxxxx Ranch ("Lessors") and Xxxxxx Vineyards and Management Co.
("Lessee") is amended as follows:
1. Lessee will begin planting immediately on 54 acres of the
approximately 145 acres subject to the Lease.
2. Lessee agrees to pay to Lessors (a) with respect to each of calendar
years 1996, 1997 and 1998, the sum of $150.00 per acre for 54 acres
and (b) with respect to each calendar year thereafter, the sum of
$275.00 per acre for 54 acres.
3. Enclosed herewith is a check in the amount of $4,050 which is the
first installment for 1996. The second installment in the amount of
$4,050 will be due on July 31, 1996.
4. The deposit of $10,000 which was previously paid to Lessors will be
credited against the rental installment to be paid on January 31,
1997.
5. All other terms and conditions of the Lease shall continue in full
force and effect.
Thank you for your cooperation in this matter. We are glad to be able
to accelerate the payment of rent beyond what was anticipated in January.
XXXXXX VINEYARDS AND MANAGEMENT CO. XXXXXXXXX RANCH
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx Xxxxxxxxx /partner
-------------------------------- -------------------------------
Xxxxx X. Xxxxxx
Vice President of Planning
