-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GKn/AC1SRbEUC5V1eyUPmJA8xEbWMYpwreDj4PvWcXByNq3VR35O0b9OxTLiCKVz GKwsYjgm6E4HiyoMk84Z+Q== 0001144204-03-004294.txt : 20030808 0001144204-03-004294.hdr.sgml : 20030808 20030808155850 ACCESSION NUMBER: 0001144204-03-004294 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20030808 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MERTZ ROGER S CENTRAL INDEX KEY: 0001204420 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 2064 HIGHWAY 116 CITY: SEBASTOPOL STATE: CA ZIP: 95472-2662 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SONOMAWEST HOLDINGS INC CENTRAL INDEX KEY: 0000102588 STANDARD INDUSTRIAL CLASSIFICATION: LESSORS OF REAL PROPERTY, NEC [6519] IRS NUMBER: 941069729 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-34214 FILM NUMBER: 03831970 BUSINESS ADDRESS: STREET 1: 1448 INDUSTRIAL AVE CITY: SEBASTOPOL STATE: CA ZIP: 95472-4848 BUSINESS PHONE: 7078242548 MAIL ADDRESS: STREET 1: 2064 HIGHWAY 116 NORTH CITY: SEBASTOPOL STATE: CA ZIP: 95472 FORMER COMPANY: FORMER CONFORMED NAME: VACU DRY CO DATE OF NAME CHANGE: 19920703 SC 13D 1 doc1.txt =============================================================================== SEC 1746 POTENTIAL PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED IN THIS FORM ARE (11-02) NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A CURRENTLY VALID OMB CONTROL NUMBER. =============================================================================== ----------------------------------- OMB APPROVAL ----------------------------------- OMB Number: 3235-0145 ----------------------------------- Expires: December 31, 2005 ----------------------------------- Estimated average burden hours per response. . . 11 ----------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. __)* SONOMAWEST HOLDINGS, INC. =============================================================================== (Name of Issuer) COMMON STOCK, NO PAR VALUE =============================================================================== (Title of Class of Securities) 835637 109 =============================================================================== (CUSIP Number) ROGER S. MERTZ 333 BUSH STREET, SUITE 1700 SAN FRANCISCO, CA 94104 =============================================================================== (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) JULY 30, 2003 =============================================================================== (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. [ ] NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See ss.240.13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).
CUSIP No. 835637 109 =========================================================================================================================== 1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only). ROGER S. MERTZ =========================================================================================================================== 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) (b) =========================================================================================================================== 3. SEC Use Only.........................................................................................[ ] =========================================================================================================================== 4. Source of Funds (See Instructions).................................................................PF =========================================================================================================================== 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)...............................................................................[ ] =========================================================================================================================== 6. Citizenship or Place of Organization.........................................UNITED STATES OF AMERICA ================== ======================================================================================================== Number of Shares 7. Sole Voting Power......................................................................57,110 Beneficially Owned by Each Reporting Person With ======================================================================================================== 8. Shared Voting Power.......................................................................-0- ======================================================================================================== 9. Sole Dispositive Power.................................................................57,110 ======================================================================================================== 10. Shared Dispositive Power..................................................................-0- ======================================================================================================== =========================================================================================================================== 11. Aggregate Amount Beneficially Owned by Each Reporting Person................................57,110(1) =========================================================================================================================== 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)................................................................................... =========================================================================================================================== 13. Percent of Class Represented by Amount in Row (11)...............................................5.1% =========================================================================================================================== 14. Type of Reporting Person (See Instructions)........................................................IN ===========================================================================================================================
(1) Includes 29,955 shares owned directly, 25,000 shares issuable upon the exercise of stock options, and 2,155 shares held by Mr. Mertz as trustee and to which Mr. Mertz disclaims any beneficial interest. 2 ITEM 1. SECURITY AND ISSUER This statement relates to the common stock, no par value (the "Common Stock"), of SonomaWest Holdings, Inc. (the "Company"), whose offices are located at 2064 Highway 116 North, Sebastopol, CA 95472. ITEM 2. IDENTITY AND BACKGROUND (a) Roger S. Mertz; (b) 333 Bush Street, Suite 1700 San Francisco, California 94104; (c) Attorney-at-Law Allen Matkins Leck Gamble & Mallory LLP 333 Bush Street, Suite 1700 San Francisco, California 94104 (d) None; (e) None; and (f) United States of America. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION The directly held securities were purchased in the open market with personal funds. ITEM 4. PURPOSE OF TRANSACTION Mr. Mertz' directly held shares were acquired for investment purposes. The stock options were issued to Mr. Mertz by the Company in connection with Mr. Mertz' services as Chairman of the Board. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a) Amount beneficially owned: 57,110 Percent of class: 5.1% (b) Number of shares as to which the person has: (i) Sole power to vote or to direct the vote: 57,110; (ii) Shared power to vote or to direct the vote: -0-; 3 (iii)Sole power to dispose or to direct the disposition of: 57,110; and (iv) Shared power to dispose or to direct the disposition of: -0-. (c) The following transactions took place within the past sixty days. On July 30, 2003, Mr. Mertz was granted a stock option by the Company exercisable for up to 7,500 shares of Common Stock at a price of $5.05 per share on or prior to July 29, 2013. (d) Not applicable. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER On April 24, 2000, Mr. Mertz was granted options to purchase 5,000 shares of Common Stock with an exercise price of $5.00 per share and an expiration date of April 24, 2010. On July 17, 2001, Mr. Mertz was granted options to purchase 5,000 shares of Common Stock with an exercise price of $7.48 per share and an expiration date of July 17, 2011. On July 31, 2002, Mr. Mertz was granted options to purchase 7,500 shares of Common Stock with an exercise price of $7.20 per share and an expiration date of July 30, 2012. On July 30, 2003, Mr. Mertz was granted options to purchase 7,500 shares of Common Stock with an exercise price of $5.05 per share and an expiration date of July 29, 2013. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS Exhibit 10.1 - Form Notice of Stock Option Grant between SonomaWest Holdings, Inc. and Roger S. Mertz, dated April 24, 2000 for 5,000 shares of Common Stock. Exhibit 10.2 - Form Notice of Stock Option Grant between SonomaWest Holdings, Inc. and Roger S. Mertz, dated July 17, 2001 for 5,000 shares of Common Stock. Exhibit 10.3 - Form SonomaWest Holdings, Inc. 1996 Stock Option Plan - Stock Option Agreement, incorporated by reference from the Company's Registration Statement on Form S-8 filed on August 2, 1999. Exhibit 10.4 Form Notice of Stock Option Grant between SonomaWest Holdings, Inc. and Roger S. Mertz, dated July 31, 2002 for 7,500 shares of Common Stock. Exhibit 10.5 Form Notice of Stock Option Grant between SonomaWest Holdings, Inc. and Roger S. Mertz, dated July 30, 2003 for 7,500 shares of Common Stock. Exhibit 10.6 - Form SonomaWest Holdings, Inc. 2002 Stock Incentive Plan - Stock Option Agreement. 4 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. AUGUST 7, 2003 - -------------------------------------------- Date /S/ ROGER S. MERTZ - -------------------------------------------- Signature ROGER S. MERTZ - -------------------------------------------- Name The original statement shall be signed by each person on whose behalf the statement is filed or his authorized representative. If the statement is signed on behalf of a person by his authorized representative (other than an executive officer or general partner of the filing person), evidence of the representative's authority to sign on behalf of such person shall be filed with the statement: provided, however, that a power of attorney for this purpose which is already on file with the Commission may be incorporated by reference. The name and any title of each person who signs the statement shall be typed or printed beneath his signature. ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001) 5 EX-10.1 3 doc2.txt EXHIBIT 10.1 FORM OF NOTICE OF STOCK OPTION GRANT Mr. Roger S. Mertz 100 Stony Point Road, Suite 200 Santa Rosa, CA 95401 You have been granted an option to purchase Common Stock of SonomaWest Holdings, Inc., a California corporation (the "Company") as follows:
Grant Number 178 Date of Grant April 24, 2000 Option Price Per Share $5.00 Total Number of Shares Granted 5,000 Total Price Of Shares Granted $25,000 Type of Option [ ] Incentive Stock Option [X] Non-Qualified Stock Option Term/Expiration Date April 24, 2010
EXERCISE SCHEDULE This Option may be exercised in whole or in part, in accordance with the following vesting schedule: VESTING SCHEDULE DATE OF VESTING NUMBER OF SHARES TOTAL VESTED April 24, 2000 5,000 5,000 This option may be exercised for three months after membership on the Company's Board of Directors terminates except as set out in Sections 6, 7 and 8 of the Stock Option Agreement (but in no event later than the Expiration Date). By your signature and the signature of the Company's representative below, you and the Company agree that this Option is granted under and governed by the terms and conditions of the SonomaWest Holdings 1996, Stock Option Plan and the Stock Option Agreement, all of which are attached and made a part of this document. OPTIONEE: SONOMAWEST HOLDINGS, INC. By: - --------------------------- --------------------------------- Signature Names: ---------------------------- Title: ---------------------------- EX-10.2 4 doc3.txt EXHIBIT 10.2 FORM OF NOTICE OF STOCK OPTION GRANT Mr. Roger S. Mertz 1448 Industrial Ave Sebastopol, CA 95472 You have been granted an option to purchase Common Stock of SonomaWest Holdings, Inc., a California corporation (the "Company") as follows:
Grant Number 181 Date of Grant July 17, 2001 Option Price Per Share $7.48 Total Number of Shares Granted 5,000 Total Price Of Shares Granted $37,400 Type of Option [ ] Incentive Stock Option [X] Non-Qualified Stock Option Term/Expiration Date July 17, 2011
EXERCISE SCHEDULE This Option may be exercised in whole or in part, in accordance with the following vesting schedule: VESTING SCHEDULE DATE OF VESTING NUMBER OF SHARES TOTAL VESTED July 17, 2001 5,000 5,000 This option may be exercised for three months after membership on the Company's Board of Directors terminates except as set out in Sections 6, 7 and 8 of the Stock Option Agreement (but in no event later than the Expiration Date). By your signature and the signature of the Company's representative below, you and the Company agree that this Option is granted under and governed by the terms and conditions of the SonomaWest Holdings 1996, Stock Option Plan and the Stock Option Agreement, all of which are attached and made a part of this document. OPTIONEE: SONOMAWEST HOLDINGS, INC. By: - --------------------------- --------------------------------- Signature Names: ---------------------------- Title: ---------------------------- EX-10.4 5 doc4.txt EXHIBIT 10.4 SONOMAWEST HOLDINGS INC NOTICE OF GRANT OF STOCK OPTION Notice is hereby given of the following stock option grant (the "Option") to purchase shares (the "Option Shares") of Common Stock of SonomaWest Holdings, Inc., a California corporation (the "Corporation"):
Option Number: 2002-1 Optionee: Roger S. Mertz Grant Date: 07/31/02 Number of Option Shares: 7,500 Date Exercisable: Immediately Exercisable Expiration Date: 07/30/12 Exercise Price: $7.20 per share Type of Option: [ ] Incentive Stock Option [ x ] Non-Statutory Stock Option Vesting Schedule: This option may be exercised in whole or in part, in accordance with the following vesting schedule: DATE OF VESTING NUMBER OF SHARES TOTAL VESTED --------------- ---------------- ------------ 07/31/02 7,500 7,500
In no event shall the Option become exercisable for any additional Option Shares after Optionee's cessation of Service. The Optionee understands and agrees that the Option is granted subject to and in accordance with the terms of the SonomaWest Holdings, Inc. 2002 Stock Incentive Plan (the "Plan"). The Optionee further agrees to be bound by the terms of the Plan and the terms of the Option as set forth in the Stock Option Agreement attached hereto as Exhibit A (the "Stock Option Agreement"). Optionee hereby acknowledges receipt of a copy of the official prospectus for the Plan in the form attached hereto as Exhibit B. A copy of the Plan is available upon request made to the Corporate Secretary at the Corporation's principal offices. NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Notice or in the attached Stock Option Agreement or in the Plan shall confer upon the Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining the Optionee) or of the Optionee, which rights are hereby expressly reserved by each, to terminate Optionee's Service at any time for any reason whatsoever, with or without cause. DEFINITIONS. All capitalized terms in this Notice shall have the meanings assigned to them in this Notice or in the attached Stock Option Agreement. Dated: July 31, 2002 SONOMAWEST HOLDINGS, INC., a California corporation By: -------------------------------- Roger S. Mertz Chairman of the Board Name: Roger S. Mertz Address: 333 Bush Street, Suite 1700, San Francisco, CA 95472-2662 ATTACHMENTS EXHIBIT A - STOCK OPTION AGREEMENT EXHIBIT B - PLAN SUMMARY AND PROSPECTUS 2 EX-10.5 6 doc5.txt EXHIBIT 10.5 SONOMAWEST HOLDINGS INC NOTICE OF GRANT OF STOCK OPTION Notice is hereby given of the following stock option grant (the "Option") to purchase shares (the "Option Shares") of Common Stock of SonomaWest Holdings, Inc., a California corporation (the "Corporation"):
Option Number: 2003-1 Optionee: Roger S. Mertz Grant Date: 07/30/03 Number of Option Shares: 7,500 Date Exercisable: Immediately Exercisable Expiration Date: 07/29/13 Exercise Price: $5.05 per share Type of Option: [ ] Incentive Stock Option [ x ] Non-Statutory Stock Option Vesting Schedule: This option may be exercised in whole or in part, in accordance with the following vesting schedule: DATE OF VESTING NUMBER OF SHARES TOTAL VESTED --------------- ---------------- ------------ 07/30/03 7,500 7,500
In no event shall the Option become exercisable for any additional Option Shares after Optionee's cessation of Service. The Optionee understands and agrees that the Option is granted subject to and in accordance with the terms of the SonomaWest Holdings, Inc. 2002 Stock Incentive Plan (the "Plan"). The Optionee further agrees to be bound by the terms of the Plan and the terms of the Option as set forth in the Stock Option Agreement attached hereto as EXHIBIT A (the "Stock Option Agreement"). Optionee hereby acknowledges receipt of a copy of the official prospectus for the Plan in the form attached hereto as EXHIBIT B. A copy of the Plan is available upon request made to the Corporate Secretary at the Corporation's principal offices. NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Notice or in the attached Stock Option Agreement or in the Plan shall confer upon the Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining the Optionee) or of the Optionee, which rights are hereby expressly reserved by each, to terminate Optionee's Service at any time for any reason whatsoever, with or without cause. DEFINITIONS. All capitalized terms in this Notice shall have the meanings assigned to them in this Notice or in the attached Stock Option Agreement.
Dated: July 30, 2003 SONOMAWEST HOLDINGS, INC., OPTIONEE: a California corporation By: --------------------------------------- ---------------------------------------- Roger S. Mertz Name: Roger S. Mertz Chairman of the Board Address: 333 Bush Street, Suite 1700 San Francisco, CA 94104-2806
ATTACHMENTS EXHIBIT A - STOCK OPTION AGREEMENT EXHIBIT B - PLAN SUMMARY AND PROSPECTUS 2 EX-10.6 7 doc6.txt EXHIBIT 10.6 SONOMAWEST HOLDINGS INC 2002 STOCK OPTION AGREEMENT R E C I T A L S : --------------- WHEREAS the Board has adopted the Plan for the purpose of retaining the services of selected Employees, Officers, members of the Board or of the board of directors of any Parent or Subsidiary and consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary); WHEREAS the Optionee is to render valuable services to the Corporation (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Corporation's grant of an option to Optionee; and WHEREAS all capitalized terms in this Agreement shall have the meaning assigned to them in the attached Appendix. NOW, THEREFORE, it is hereby agreed as follows: 1. GRANT OF OPTION. The Corporation hereby grants to Optionee, as of the Grant Date, an option to purchase up to the number of Option Shares specified in the Grant Notice. The Option Shares shall be purchasable from time to time during the option term specified in Section 2 hereof at the Exercise Price. 2. OPTION TERM. This Option shall have a maximum term of ten (10) years measured from the Grant Date and shall accordingly expire at the close of business on the Expiration Date, unless sooner terminated in accordance with Sections 5 or 6 hereof. 3. LIMITED TRANSFERABILITY. This Option shall be neither transferable nor assignable by Optionee other than by will or by the laws of descent and distribution following Optionee's death and may be exercised, during Optionee's lifetime, only by Optionee. However, if this Option is designated a Non- Statutory Option in the Grant Notice, then this Option may, (i) in connection with the Optionee's estate plan, be assigned in whole or in part during Optionee's lifetime to one or more members of the Optionee's Immediate Family or to a trust established for the exclusive benefit of the Optionee and/or one or more such family members or (ii) be assigned in whole or in part to the Optionee's former spouse pursuant to a domestic relations order. The assigned portion shall be exercisable only by the person or persons who acquire a proprietary interest in the Option pursuant to such assignment. The terms applicable to the assigned portion shall be the same as those in effect for this Option immediately prior to such assignment. Notwithstanding the foregoing, the Optionee may also designate one or more persons as the beneficiary or beneficiaries of his or her outstanding options under this Article Two, and those options shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee's death while holding those options. Such beneficiary or beneficiaries shall take the transferred option subject to all the terms and conditions of this Agreement, including (without limitation) the limited time period during which the option may be exercised following the Optionee's death. 1 4. DATES OF EXERCISE. This Option shall become exercisable for the Option Shares in one or more installments as specified in the Grant Notice, subject to the special vesting acceleration provisions of Paragraph 6. As the Option becomes exercisable for such installments, those installments shall accumulate and the Option shall remain exercisable for the accumulated installments until the Expiration Date or sooner termination of the option term under Sections 5 or 6 hereof. 5. CESSATION OF SERVICE. The option term specified in Section 2 hereof shall terminate (and this Option shall cease to be outstanding) prior to the Expiration Date should any of the following provisions become applicable: (a) Should Optionee cease to remain in Service for any reason (other than death, Permanent Disability or Misconduct) while this Option is outstanding, then the period for exercising this Option shall be reduced to a three (3) month period commencing with the date of such cessation of Service, but in no event shall this Option be exercisable at any time after the Expiration Date. (b) Should Optionee die while this Option is outstanding, then the personal representative of Optionee's estate or the person or persons to whom the Option is transferred pursuant to Optionee's will or in accordance with the laws of descent and distribution, or any person or trust to whom all or a portion of this Option was previously transferred in accordance with Section 3 hereof or the designated beneficiary or beneficiaries of this option shall have the right to exercise this Option. Such right shall lapse, and this Option shall cease to be outstanding, upon the earlier of: (i) the expiration of the twelve (12) month period measured from the date of Optionee's death; or (ii) the Expiration Date. (c) Should Optionee cease Service by reason of Permanent Disability while this Option is outstanding, then the period for exercising this Option shall be reduced to a twelve (12) month period commencing with the date of such cessation of Service, but in no event shall this Option be exercisable at any time after the Expiration Date. (d) During the limited period of post-Service exercisability, this Option may not be exercised in the aggregate for more than the number of vested Option Shares for which the Option is exercisable at the time of Optionee's cessation of Service. Upon the expiration of such limited exercise period or (if earlier) upon the Expiration Date, this Option shall terminate and cease to be outstanding for any otherwise exercisable Option Shares for which the Option has not been exercised. However, this Option shall, immediately upon Optionee's cessation of Service for any reason, terminate and cease to be outstanding with respect to any Option Shares for which this Option is not otherwise at that time exercisable. 2 (e) Except as otherwise determined in the discretion of the Plan Administrator, either at the time the option is granted or at any time the option remains outstanding, should Optionee's Service be terminated for Misconduct or should Optionee otherwise engage in Misconduct while this option is outstanding, then this Option shall terminate immediately and cease to remain outstanding. 6. SPECIAL ACCELERATION OF OPTION. (a) The Option, to the extent outstanding at the time of a Change in Control transaction but not otherwise fully exercisable, shall automatically accelerate so that this Option shall, immediately prior to the effective date of such Change in Control, become exercisable for all of the Option Shares at the time subject to this option and may be exercised for any or all of those Option Shares as fully vested shares of Common Stock. Notwithstanding the foregoing, this Option shall not become exercisable on such an accelerated basis if and to the extent: (i) this Option is, in connection with the Change in Control, to be assumed by the successor corporation (or Parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change in Control; or (ii) this Option is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing at the time of the Change in Control on the Option Shares for which this Option is not otherwise at that time exercisable (the excess of the Fair Market Value of those Option Shares over the aggregate Exercise Price payable for such shares) and provides for subsequent payout in accordance with the same option exercise/vesting schedule set forth in the Grant Notice. (b) Immediately following the Change in Control, this Option shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or Parent thereof) or otherwise continued in full force and effect pursuant to the terms of the Change in Control transaction. (c) If this Option is assumed in connection with a Change in Control (or otherwise continued in full force and effect), then this Option shall be appropriately adjusted, immediately after such Change in Control, to apply to the number and class of securities or other property which would have been issuable to Optionee in consummation of such Change in Control had the Option been exercised immediately prior to such Change in Control, and appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the same. (d) Notwithstanding the foregoing, immediately upon an Involuntary Termination of Optionee's Service within eighteen (18) months following a Change in Control transaction, the Option, to the extent outstanding at the time but not otherwise fully exercisable, shall automatically accelerate so that the Option shall become immediately exercisable for all the Option Shares at the time subject to the Option and may be exercised for any or all of those Option Shares as fully vested shares. The Option as accelerated shall remain so exercisable until the earlier of: (i) the Expiration Date; or (ii) the expiration of the one (1) year period measured from the date of the Optionee's Involuntary Termination. 3 (e) This Option may also be subject to acceleration in accordance with the terms of any special Addendum attached to this Agreement. 7. ADJUSTMENT IN OPTION SHARES. Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation's receipt of consideration, appropriate adjustments shall be made to: (i) the total number and/or class of securities subject to this Option; and (ii) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder. 8. STOCKHOLDER RIGHTS. The holder of this Option shall not have any stockholder rights with respect to the Option Shares until such person shall have exercised the Option, paid the Exercise Price and become a holder of record of the purchased shares. 9. MANNER OF EXERCISING OPTION. (a) In order to exercise this Option with respect to all or any part of the Option Shares for which this Option is at the time exercisable, Optionee (or any other person or persons exercising the Option) must take the following actions: (i) To the extent the Option is exercised for vested Option Shares, execute and deliver to the Corporation a Notice of Exercise for the Option Shares for which the Option is exercised. To the extent the Option is exercised for unvested Option Shares, execute and deliver to the Corporation a Purchase Agreement for those unvested Option Shares. In connection with the Purchase Agreement, any certificate issued upon the exercise of the Option shall bear legends as set forth in the Purchase Agreement. (ii) Pay the aggregate Exercise Price for the purchased shares in one or more of the following forms: (A) cash or check made payable to the Corporation; or (B) a promissory note payable to the Corporation, but only to the extent authorized by the Plan Administrator in accordance with Section 14 hereof; or (C) shares of Common Stock held by Optionee (or any other person or persons exercising the option) for the requisite period necessary to avoid a charge to the Corporation's earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date; or (D) through a special sale and remittance procedure pursuant to which Optionee (or any other person or persons exercising the option) shall concurrently provide irrevocable instructions to a Corporation-designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate Exercise Price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the Corporation by reason of such exercise and to the Corporation to deliver the certificates for the purchased shares directly to such brokerage firm in order to complete the sale. 4 Except to the extent the sale and remittance procedure is utilized in connection with the Option exercise, payment of the Exercise Price must accompany the Notice of Exercise or Purchase Agreement, as applicable, delivered to the Corporation in connection with the Option exercise. (iii) Furnish to the Corporation appropriate documentation that the person or persons exercising the Option (if other than Optionee) have the right to exercise this Option. (iv) Make appropriate arrangements with the Corporation (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all Federal, state and local income and employment tax withholding requirements applicable to the option exercise. (b) As soon as practical after the Exercise Date, the Corporation shall issue to or on behalf of Optionee (or any other person or persons exercising this Option) a certificate for the purchased Option Shares, with the appropriate legends affixed thereto. (c) In no event may this Option be exercised for any fractional shares. 10. NO IMPAIRMENT OF RIGHTS. This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise make changes in its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets. In addition, this Agreement shall not in any way be construed or interpreted so as to affect adversely or otherwise impair the rights of the Corporation (or any Parent or Subsidiary employing or retaining Optionee) or of Optionee, which rights are hereby expressly reserved by each, to terminate Optionee's Service at any time for any reason, with or without cause. 11. COMPLIANCE WITH LAWS AND REGULATIONS. (a) The exercise of this Option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Corporation and Optionee with all applicable requirements of law relating thereto and with all applicable regulations of the Nasdaq SmallCap Market (or any Stock Exchange, if applicable) on which the Common Stock may be listed for trading at the time of such exercise and issuance. (b) The inability of the Corporation to obtain approval from any regulatory body having authority deemed by the Corporation to be necessary to the lawful issuance and sale of any Common Stock pursuant to this Option shall relieve the Corporation of any liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall not have been obtained. The Corporation, however, shall use its best efforts to obtain all such approvals. 12. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided in Sections 3 and 6 hereof, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and Optionee, Optionee's assigns and the legal representatives, heirs and legatees of Optionee's estate. 5 13. NOTICES. Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated below Optionee's signature line on the Grant Notice. All notices shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified. 14. FINANCING. The Plan Administrator may, in its absolute discretion and without any obligation to do so, permit Optionee to pay the Exercise Price for the purchased Option Shares by delivering a full-recourse promissory note payable to the Corporation. The terms of any such promissory note (including the interest rate, the requirements for collateral and the terms of repayment) shall be established by the Plan Administrator in its sole discretion. 15. CONSTRUCTION. This Agreement and the Option evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. All decisions of the Plan Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in this Option. 16. GOVERNING LAW. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of California without resort to that State's conflict-of-laws rules. 17. EXCESS SHARES. If the Option Shares covered by this Agreement exceed, as of the Grant Date, the number of shares of Common Stock which may without stockholder approval be issued under the Plan, then this Option shall be void with respect to those excess shares, unless stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock issuable under the Plan is obtained in accordance with the provisions of the Plan. 18. OPTIONEE UNDERTAKING. Optionee hereby agrees to take whatever additional action and execute whatever additional documents the Corporation may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on either Optionee or the Option Shares pursuant to the provisions of this Agreement. 19. REPRESENTATION BY COUNSEL. Each party hereby agrees and acknowledges that (i) such party has had the opportunity to consult with independent legal, tax and financial counsel of each party's choice, in order to be advised with respect to the effect of this Agreement, the Notice of Exercise and the Purchase Agreement and (ii) neither the Corporation nor its attorneys have provided legal, tax or financial advice of any nature to Optionee. 20. ADDITIONAL TERMS APPLICABLE TO AN INCENTIVE OPTION. In the event this Option is designated an Incentive Option in the Grant Notice, the following terms and conditions shall also apply to the grant: (a) This option shall cease to qualify for favorable tax treatment as an Incentive Option if (and to the extent) this Option is exercised for one or more Option Shares: (i) more than three (3) months after the date Optionee ceases to be an Employee for any reason other than death or Permanent Disability; or (ii) more than twelve (12) months after the date Optionee ceases to be an Employee by reason of death or Permanent Disability. 6 (b) No installment under this Option shall qualify for favorable tax treatment as an Incentive Option if (and to the extent) the aggregate Fair Market Value (determined at the Grant Date) of the Common Stock for which such installment first becomes exercisable hereunder would, when added to the aggregate value (determined as of the respective date or dates of grant) of the Common Stock or other securities for which this option or any other Incentive Options granted to Optionee prior to the Grant Date (whether under the Plan or any other option plan of the Corporation or any Parent or Subsidiary) first become exercisable during the same calendar year, exceed One Hundred Thousand Dollars ($100,000.00) in the aggregate. Should such One Hundred Thousand Dollar ($100,000.00) limitation be exceeded in any calendar year, this Option shall nevertheless become exercisable for the excess shares in such calendar year as a Non-Statutory Option. (c) Should the exercisability of this Option be accelerated upon a Change in Control transaction, then this Option shall qualify for favorable tax treatment as an Incentive Option only to the extent the aggregate Fair Market Value (determined at the Grant Date) of the Common Stock for which this Option first becomes exercisable in the calendar year in which the Change in Control occurs does not, when added to the aggregate value (determined as of the respective date or dates of grant) of the Common Stock or other securities for which this Option or one or more other Incentive Options granted to Optionee prior to the Grant Date (whether under the Plan or any other option plan of the Corporation or any Parent or Subsidiary) first become exercisable during the same calendar year, exceed One Hundred Thousand Dollars ($100,000.00) in the aggregate. Should the applicable One Hundred Thousand Dollar ($100,000.00) limitation be exceeded in the calendar year of such Change in Control, the Option may nevertheless be exercised for the excess shares in such calendar year as a Non-Statutory Option. (d) Should Optionee hold, in addition to this Option, one or more other options to purchase Common Stock which become exercisable for the first time in the same calendar year as this Option, then the foregoing limitations on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted. 7 APPENDIX The following definitions shall be in effect under the Agreement: A. AGREEMENT shall mean this 2002 Stock Option Agreement. B. BOARD shall mean the Corporation's Board of Directors. C. CHANGE IN CONTROL shall mean a change in ownership or control of the Corporation effected through any of the following transactions: (i) a merger, consolidation or reorganization approved by the Corporation's stockholders, unless securities representing more than fifty percent (50%) of the total combined voting power of the successor corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation's outstanding voting securities immediately prior to such transaction, or (ii) a sale, transfer or other disposition of all or substantially all of the Corporation's assets, or (iii) the acquisition, directly or indirectly, by any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities pursuant to a tender or exchange offer made directly to the Corporation's stockholders which the Board recommends such stockholders accept; PROVIDED, however, the Plan Administrator shall have the discretionary authority to determine that a transaction or series of transactions does not constitute a Change in Control. Such determination by the Plan Administrator shall govern notwithstanding the fact that the determination is contrary to paragraphs (i) through (iii) set forth above. D. CODE shall mean the Internal Revenue Code of 1986, as amended. E. COMMON STOCK shall mean shares of the Corporation's common stock. F. CORPORATION shall mean SonomaWest Holdings, Inc., a California corporation. G. EMPLOYEE shall mean an "employee" of the Corporation (or any Parent or Subsidiary) within the meaning of Section 3401(c) of the Code and the regulations thereunder. H. EXERCISE DATE shall mean the date on which the Option shall have been exercised in accordance with Section 4 of the Agreement. 1 I. EXERCISE PRICE shall mean the exercise price per Option Share as specified in the Grant Notice. J. EXPIRATION DATE shall mean the date on which the Option expires as specified in the Grant Notice. K. FAIR MARKET VALUE per share of Common Stock on any relevant date shall be determined in accordance with the following provisions: (i) If the Common Stock is at the time traded on the NASDAQ SmallCap Market, then the Fair Market Value shall be deemed equal to the closing selling price per share of Common Stock on the date in question, as the price is reported by the National Association of Securities Dealers on the NASDAQ SmallCap Market. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. (ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be deemed equal to the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. L. GRANT DATE shall mean the date of grant of the Option as specified in the Grant Notice. M. GRANT NOTICE shall mean the Notice of Grant of Stock Option accompanying the Agreement, pursuant to which Optionee has been informed of the basic terms of the Option evidenced hereby. N. IMMEDIATE FAMILY shall mean any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include adoptive relationships. O. INCENTIVE OPTION shall mean an option which satisfies the requirements of Code Section 422. P. INVOLUNTARY TERMINATION shall mean the termination of Optionee's Service by reason of: (i) Optionee's involuntary dismissal or discharge by the Corporation for reasons other than Misconduct, or (ii) Optionee's voluntary resignation following (A) a change in Optionee's position with the Corporation (or Parent or Subsidiary employing Optionee) which materially reduces Optionee's duties and responsibilities or the level of management to which Optionee reports, (B) a reduction in Optionee's level of compensation (including base salary, fringe benefits and target bonus under any corporate 2 performance based bonus or incentive programs) by more than fifteen percent (15%) or (C) a relocation of Optionee's place of employment by more than fifty (50) miles, provided and only if such change, reduction or relocation is effected by the Corporation without Optionee's consent. Q. MISCONDUCT shall mean the commission of any act of fraud, embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by Optionee of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any intentional wrongdoing by Optionee, whether by omission or commission, which adversely affects the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. This shall not limit the grounds for the dismissal or discharge of Optionee or any other individual in the Service of the Corporation (or any Parent or Subsidiary). R. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended. S. NON-STATUTORY OPTION shall mean an option not intended to satisfy the requirements of Code Section 422. T. NOTICE OF EXERCISE shall mean the notice of exercise in the form attached hereto as Exhibit I. U. OFFICER shall mean any person serving as the president, chief executive officer, chief financial officer, chief operating officer, treasurer, secretary or in any other managerial or administrative capacity for the Corporation or a Parent or Subsidiary of the Corporation, as determined in the Administrator's discretion. V. OPTION shall mean the Option granted pursuant to this Agreement. W. OPTION SHARES shall mean the number of shares of Common Stock subject to the Option as specified in the Grant Notice. X. OPTIONEE shall mean the person to whom the Option is granted as specified in the Grant Notice. Y. PARENT shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. Z. PERMANENT DISABILITY shall mean the inability of Optionee to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or has lasted or can be expected to last for a continuous period of twelve (12) months or more. AA. PLAN shall mean the Corporation's 2002 Stock Incentive Plan. 3 BB. PLAN ADMINISTRATOR shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan. CC. SERVICE shall mean the Optionee's performance of services for the Corporation (or any Parent or Subsidiary) in the capacity of an Employee, an Officer, a member of the board of directors or a consultant or independent advisor. DD. STOCK EXCHANGE shall mean the American Stock Exchange or the New York Stock Exchange. EE. SUBSIDIARY shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 4 EXHIBIT I NOTICE OF EXERCISE I hereby notify SonomaWest Holdings, Inc. (the "Corporation") that I elect to purchase _____________________ shares of the Corporation's Common Stock (the "Purchased Shares") at the option exercise price of _____________ per share (the "Exercise Price") pursuant to that certain option (the "Option") granted to me under the Corporation's 2002 Stock Incentive Plan on _____________________, 200_. Concurrently with the delivery of this Notice of Exercise to the Corporation, I shall hereby pay to the Corporation the Exercise Price for the Purchased Shares in accordance with the provisions of my agreement with the Corporation (or other documents) evidencing the Option and shall deliver whatever additional documents may be required by such agreement as a condition for exercise. Alternatively, I may utilize the special broker-dealer sale and remittance procedure specified in my agreement to effect payment of the Exercise Price. ____________________ , 200_ Date ------------------------------------ Optionee Address: Print name in exact manner it is to appear on the stock certificate: ------------------------------------ Address to which certificate is to be sent, if different from address ------------------------------------ above: ------------------------------------ Social Security Number: ------------------------------------ Employee Number ------------------------------------ EXHIBIT 1 -----END PRIVACY-ENHANCED MESSAGE-----