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HomeMy Public PortalAbout20071024 - Resolution - Board of Directors (BOD) Cover Sheet for Scanning by ECS Originating Department General Manager Laserfiche Template Board of Directors Template Fields Document Date: 10/24/2007 Document Type: Resolution Preserve Name: Keywords(no more than 4): Picchetti Winery Lease Project Name: Project Number: Vendor or Other Party: Name(First): Name(Last): Address: APN Number: Document No. 07-24 Additional Field: Additional Field: Additional Field: Additional Field: RESOLUTION NO.-0:7-24 RESOLUTION OF THE BOARD OF DIRECTORS OF THE MIDPENINSULA REGIONAL OPEN SPACE DISTRICT APPROVING THE LEASE AGREEMENT WITH PICCHETTI WINERY, INC., A CALIFORNIA CORPORATION (PICCHETTI RANCH OPEN SPACE PRESERVE) The Board of Directors of the Midpeninsula Regional Open Space District does resolve as follows: Section One. The District may, under the provisions of Sections 5540 and 5563 of the Public Resources Code, lease property owned by the District for a period of up to twenty-five (25) years, and the Board of Directors finds that the premises to be leased for Historic Preservation and Winery Operations is compatible with park and open space purposes and considers the lease of such premises is in the public interest on the terms hereinafter set forth. Section Two. The Board of Directors of the Midpeninsula Regional Open Space District does hereby approve the Lease Agreement between the Midpeninsula Regional Open Space District and Picchetti Winery, Inc., a copy of which is attached hereto and by reference made a part hereof, and does hereby authorize the President of the Board of Directors or other appropriate officer to execute said Lease Agreement on behalf of the District. Section Three. The General Manager and General Counsel are authorized to approve any technical revisions to the attached Lease Agreement and other related documents which do not involve any material change to any term of the Agreement or other related documents, which are necessary and appropriate for the implementation of this Lease Agreement. Section Four. The General Manager of the District shall be authorized to approve any Lease Agreement Extensions and report the Board of Directors at the following Board meeting. The General Manager or the General Manager's designee is authorized to approve expenditures of Improvements to the Historic Structures in accordance with the General Manager's spending authority. The General Manager or the General Manager's designee is further authorized to sign and approve all other documents necessary or appropriate to entering into the Lease Agreement. RESOLUTION NO. 07- 94 PASSED AND ADOPTED by the Board of Directors of the Midpeninsula Regional Open Space District on October 24, 2007 at a Regular and Special Meeting thereof, by the following vote: AYES: Jed Cyr, Mary Davey, Nonette Hanko, Larry Hassett, Curt Riffle, Ken Nitz NOES: None ABSTAIN: None ABSENT: Pete Siemens ATTEST: APPROVED: f l'VLG��c.�y Secretary P ident Board of Directors oard of Directors I, the District Clerk of the Midpeninsula Regional Open Space District, hereby certify that the above is a true and correct copy of a resolution duly adopted by the Board of Directors of the Midpeninsula Regional Open Space District by the above vote at a meeting thereof duly held and called on the above day. District C ` ~ ~ . . ` . ° Regional Open Space MIDPEN|NSULA REGIONAL OPEN SPACE DISTRICT ' LEASE AGREEMENT | Historic Picchetti Winery 1. EXHIBITS .......................................................................................................................... 2 2. PARTIES ............................................................................................................................ 3 3. PREMISES ......................................................................................................................... 3 . 4. TERM .................................................................................................................................4 5. RENT.................................................................................................................................. 5 | � 0. USES................................................................................................................................... 6 7. LIABILITY INSURANCE-----.—.—.—.----_—..--.--,.,-----.--..._.. l1 8. FIRE .—..—.--.—.---.—..------ }l | ~`~~^��'C~ '--^—''—~^'—'—'—'—'''.—.''.' | 9. INDEMNIFICATION--.—.—.---,.—.----._.—...._..—.-----.---.-- l4 � 10. MANAGEMENT SERVICES...................................................................................... l4 � 18. CAPITAL RESERVE FUND....................................................................................... l5 12. IMPROVEMENTS AND ALTERATIONS—.—..—.--.—.—..-----.—.-----. l5 � 12. MAINTENANCE AND REPAIR................................................................................ l8 � 14[ UTILITIES.................................................................................................................... lg 15. OPERATION STANDARDS----.—.----.----------.---.-----.2U 16. HAZARDOUS MATERIALS....—.---..--.—.--..—.—.—.---.--.--.—.—.—.2l 87. TAXES, CHARGES, AND ASSESSMENTS..............................................................Z] 18L ASSIGNMENT AND SUBLETTING ----.—.-------..---.—.--.----24 � 89. EMINENT DOMAIN UC .—.---.—.--.—.---.------.—.25 20. RESTORATION AND SURRENDER QKr PREMISES..............................................25 � 21. DEFAULT....................................................................................................................26 � 22. GENERAL PROVISIONS ........................................................................................... 27 | l � | ' � This Lease(LEASE)is made by and between PICCHETTI WINERY, INC., a California corporation(LESSEE), and the MIDPENINSULA REGIONAL OPEN SPACE District, a special district of the State of California, (District), for the property known as the HISTORIC PICCHETTI WINERY, as identified herein, on the terms, covenants, and conditions hereof. RECITALS WHEREAS District owns that certain real property commonly known as the Historic Picchetti Winery ("PICCHETTI WINERY"), located within District's Picchetti Ranch Open Space Preserve; and WHEREAS, District desires to further its Mission and enhance the value of its open space lands by providing for a visitor serving amenity at the PICCHETTI WINERY; and WHEREAS, several of the historic structures at the PICCHETTI Winery are listed as significant on the National Register of Historic Structures; and WHEREAS the Winery, Stables and Blacksmith shop in particular have been partially rehabilitated at public expense; and WHEREAS LESSEE is in the business of producing, marketing and distributing fine wines; and WHEREAS LESSEE has invested significant resources to promote and brand the Picchetti Winery; and WHEREAS LESSEE has provided these services since 1998 under District ownership of the PICCHETTI WINERY property and such services have been a valuable visitor serving asset to the District and the general public, and have provided enjoyment to the public and revenue to the District; and WHEREAS, LESSEE has operated under a twenty-five(25) year lease that commenced on November 1, 1982 and expires on October 31, 2007; and WHEREAS, District and LESSEE now wish to enter into a new lease agreement for the PICCHETTI WINERY under the terms and conditions set out herein. NOW THEREFORE THE PARTIES AGREE: 1. EXHIBITS (A)Exhibit A: Map I — Location Map 2—Site (B)Exhibit B: Master Improvement and Implementation Site Plan ("Master Site Plan") 2 2. PARTIES District: Midpeninsula Regional Open Space District 330 Distel Circle Los Altos, CA 94022-1404 Attn: General Manager (650) 691-1200 (650) 691-0485 (facsimile) LESSEE: Picchetti Winery, Inc. 13 100 Montebello Road Cupertino, CA 95014 Attn: Ms. Leslie Pantling, President (408) 741-1310 (408) 741-5213 (facsimile) 3. PREMISES (A)Location. The Premises are within District's Picchetti Ranch Open Space Preserve and are generally referred to as the "Historic Picchetti Winery". The general layout and location of the Premises are depicted in Exhibit A, attached hereto and incorporated herein. (B)Historic Elements. The Premises include the historic homestead house and additional significant structures and landscaping of the Picchetti family, early settlers in the Stevens Creek area of the County of Santa Clara and pioneering valley vintners. Important historic elements of the Premises include, as generally depicted and described in Exhibits A and B, the Master Site Improvement and Implementation Plan ("Master Site Plan") attached hereto and incorporated herein, without limitation, the following: (C)Structures (i) "Winery" (also known as the Tasting Room) (ii) "Main House" (residential, also known as the Yellow House) (iii) "Pressing and Fermentation Building" (winery operations) (iv) "Garage" (LESSEE storage) (v) "Wash House" (winery offices) (vi) "Homestead House" (historic visual element) (vii) "Blacksmith Shop" (winery bottling) (viii) "Stables and Paddocks" (future historical display/LESSEE storage uses) (ix) "Aviary" (visual element) (x) "Chicken Coop" (visual element) (xi) "Landscape elements", includes trees, waterways, picnic areas and the preservation of both near and distant scenic vistas (xii) 3 acres of vineyards, more or less("Vineyard") (D)Utilities and Fixtures. Water systems, septic systems and two public restroorn facilities as more fully described herein. (E)Premises"As-Is"And Without Warranty. LESSEE currently occupies the Premises and hereby acknowledges personal inspection of the Premises and the surrounding areas, and accepts the Premises"as-is", without warranty of any kind. LESSEE agrees to make no demands on District for any improvements or alterations to the Premises except as 3 otherwise provided for herein. District offers no warranties for the condition of the Premises, its buildings, soil, water, or utilities. LESSEE acknowledges that District has made no representations, express or implied, about the Premises or its suitability for LESSEE'S purposes. LESSEE accepts all aspects of the Premises, including, without limitation: (i) Any asbestos, PCBs, lead or other hazardous materials, as more fully defined herein, in any structure, in the ground or in any ground water. (ii) Zoning and any use restrictions that may be imposed by Santa Clara County. (iii) Water availability or lack of availability (iv) Existing and future ordinances, statutes, and regulations. 4. TERM (A)Initial Term. The Initial Term of this Lease is ten(10) years, beginning at 12:00:01 A.M. on November 1, 2007 (Commencement). (B)Extension Terms. LESSEE may extend the Initial Term of this Lease for three (3) periods of five (5) years each(Extension Terms) by giving District written notice (Extension Notice)at least six(6)months, but not more than one year, before the end of the then current Term. LESSEE may not exercise an Extension Term if LESSEE: (i) Is in material default on the date the District receives the Extension Notice, or on the date the Extension Term would otherwise begin. (ii) Fails to reasonably satisfy District by meeting all the following performance criteria measures: (a) District's annual review of LESSEE's financial statements for overall creditworthiness. (b) Compliance with the District approved Master Site Plan(Exhibit B). (c) Appropriate and ongoing recognition of District in advertising and signage. (d) On-going satisfactory performance of the Management Services as more particularly set out herein. (e) District's reasonable determination that LESSEE is in sound financial condition and is in compliance with the above identified criteria will be the basis for approval or denial of LESSEE's exercise of each option. District will conduct annual, on-site, inspections and a written report of that inspection shall be provided to LESSEE within thirty days of such inspection. (iii) LESSEE shall have the opportunity to correct any deficiencies in meeting the performance criteria within a reasonable time following written notification. (C)Term. Use of the word"Term" herein shall include the Initial Term and any exercised Extension Terms, or portion thereof, unless otherwise specifically set forth. (D)Termination by LESSEE. LESSEE may terminate this Lease at any time before the expiration date of the Term, or of an Extension Term, by giving District written notice no less than two-hundred-seventy (270) days before the voluntary termination date, accompanied by a lease cancellation fee in the amount of$20,000.00 as liquidated damages,the actual damages being difficult to determine and the parties agree that the lease cancellation fee shall be the full and complete remedy of District for LESSEE's early termination except as to other matters and remedies set forth herein as specifically surviving such early termination. District shall promptly thereafter execute a release of LESSEE from further obligations hereunder. 4 (E)Termination by District. District may terminate this Lease for LESSEE'S default as provided for in Section 21. 5. RENT (A)Rent. Upon execution hereof, and thereafter on or before the first day of each calendar month(Due Date), LESSEE shall pay Rent, as defined below, without demand, offset, abatement, or deduction for any reason, except as may otherwise be specifically permitted herein, in lawful money of the United States of America,to District at the address set forth above. (B)Initial Rent. LESSEE agrees to pay District Rent of$4,250.00 for each month of the first year of the Initial Tenn. (C)Annual Rent Adjustment. At the commencement of each of the second(2nd)through ninth(9th) years of the Initial Term, LESSEE shall pay an adjusted monthly rent equal to the then existing Rent, increased by the percentage increase (calculated to two decimal places)reflected in the Consumer Price Index for All Urban Consumers(CPI-U), as published by the United States Bureau of Labor Statistics, Washington, DC All Items, San Jose-San Francisco-Oakland, 1982-1984=100 ("Index")] for the immediately proceeding twelve month period, as measured by the latest available monthly calculation of the annual rate, but in no event less than two percent(2%), or more than five percent (5%), in any single adjustment. If the Index is discontinued or revised, such other government index or computation with which it is replaced shall be used in order to reach substantially the same result as would have been reached if the Index had not been discontinued or revised. (D)Extension Term Rent. Monthly Rent for any Extension Term shall be set by the annual rental adjustment procedure set out above, with Rent for the first year of any such Extension Term increased from the last year of the proceeding Term, and thereafter adjusted annually in each of years two (2)through five (5)of such Extension Tenn. (E) Liquidated Damages for Late Payments. The parties recognize that as time is of the essence of this Lease, District will suffer financial losses if Rent is not received by the Due Date. The parties further recognize the potential for delays, expense and difficulty involved in proving District's actual losses in a legal proceeding. Accordingly, and instead of requiring such proof of loss or damage, the parties agree, if District does not receive payment within five (5) days of the Due Date, LESSEE shall pay, in addition to the Rent due, liquidated damages in the amount of ten percent(10%) of the amount due, or fifty dollars ($50.00), whichever is greater, together with ten percent(10%) interest annualized commencing thirty(30) days following the Due Date in arrears, for all amounts due for each such calendar day the Rent remains unpaid after Liquidated Damages commence. (F) No Waiver. Acceptance of any late charges shall not constitute a waiver of LESSEE'S default. LESSEE'S obligation to pay the outstanding amounts of the Rent or Liquidated Damages shall survive the end of this Lease regardless of any District right or remedy for such nonpayment. (G)Holdover. With prior written consent of District, exercisable at its sole discretion, LESSEE may holdover, on a month-to-month basis, beyond the expiration of the Lease, and only by tendering the Rent that would be due for the holdover period, calculated as if the Lease Term had been extended. All other terms, conditions,restrictions and 5 obligations of the Lease shall remain in full force and effect during any permitted Holdover period. (H)Security Deposit. During the Term of this Lease, including the Initial Term and Extension Term(s) if applicable, District shall retain a Security Deposit of Five-Thousand Dollars ($5,000.00). (i) Application. District shall hold the Security Deposit without liability for interest as security for LESSEE'S performance of LESSEE'S obligations under this Lease. It is expressly understood that the Security Deposit shall not be considered an advance payment of rent or a measure of District's damages in case of LESSEE'S default. If LESSEE defaults on any obligation under this Lease, at District's option, District shall provide LESSEE with written notice that District has elected to apply the Security Deposit toward: (a) Any Rent then due and owing, including Liquidated Damages due for late payment; or (b) Any other sums due for LESSEE'S damage to the Premises, or injury, expense, or liability to District by such default without prejudice to any other remedy the District may have. (ii) Additions to Deposit. If the Security Deposit is used as cited above, LESSEE shall pay District on demand the amount needed to restore the Security Deposit to its original amount. District may require at any time that the security deposit be increased in proportion to the amount that the Rent has increased during the Term. (iii) Return or Transfer. At the end of this Lease, District shall return the balance of the Security Deposit, if any, to LESSEE. If District transfers District's interest in the Premises during the Lease Term, District may assign the Security Deposit to the transferee and shall have no further liability for the return of the Security Deposit. 6. USES (A)Purpose. District leases the Premises to LESSEE, and LESSEE leases the Premises from District, only for purposes consistent with the uses described below and subject to the provisions of this Lease. LESSEE shall at all times comply with all then current District Regulations(Ordinance 93-1, as amended)unless otherwise specifically permitted herein. (B)Winery Operation Use. (i) LESSEE agrees to conduct operations only as permitted by the County of Santa Clara under Zoning Ordinance Article 2, Wineries (Industrial), Limited, as now enacted and as it may be amended hereafter, or by applicable successor regulations, in a legal, safe and orderly manner. Winery operations permitted hereunder are defined as use of the Premises for the wholesale-oriented annual production of no more than 10,000 cases of wine, including storage, bottling and distribution, related administrative offices and functions, including on-site tasting, limited recreational yards and grounds, and retail sales of wine and related or compatible products. (iii) LESSEE shall use the Premises during the Term for the purpose of growing grapes, making, storing, bottling,packaging, marketing, and distributing wine and related products and providing for small group events of forty-nine (49) or fewer people within the Winery (unless and until an expansion of visitor serving capacity is duly approved by County and District) and the offering of winery related programs to the public consistent with County ordinances and as set out in herein. 6 (iv) LESSEE may reasonably restrict normal public access during the approximately four weeks annually of high volume grape delivery, crushing and processing activities,occurring generally between late August and the first week of November. LESSEE shall be responsible for annually notifying District of the anticipated four(4) week time frame for these high volume activities and the likely restrictions on normal public access no less than two (2)weeks prior to such time period. LESSEE shall post informational signs, subject to District's prior written approval, during any such periods of restricted access to educate the public about the winery activities necessitating the restrictions. (C)Main House Residence Use. LESSEE expressly agrees during the Term of this Lease that LESSEE will maintain as a Caretaker, an employee, who shall reside in the Main House. To the extent permitted by law, LESSEE shall be the residential landlord for all purposes under California law, including, but not limited to,the provisions of the Civil Code. Any sublease or other rental agreement shall be subject to prior written approval of District as set forth in Section 18(B) hereof. LESSEE shall be solely responsible for setting and collecting any residential rents charged or for making such other arrangements as may be appropriate under the circumstances. LESSEE shall be solely responsible for maintaining the Main House in a habitable condition as defined under California law and for making any necessary repairs in a timely and workmanlike manner. LESSEE or Caretaker shall be available to respond to medical or other emergencies on the Premises during regular business hours as part of the obligations of LESSEE hereunder. (D)Vineyard Use. District and LESSEE agree to collaborate on a comprehensive Vineyard Management Plan("Vineyard Plan") for the vineyard area of the Premises during the first five years of the Term. Development of the Vineyard Plan will include study,evaluation and design of site-specific agricultural practices emphasizing sustainability and preservation of historic vines, maintenance of the entirety of the site, including service (access) roads, infrastructure such as fencing and water systems, erosion control practices, water quality and stream protection and disease prevention and control. Additional planting of appropriate vines may be incorporated into the Vineyard Plan. Normal vineyard management practices, including without limitation and except as otherwise set forth herein,pruning, fertilizing, mowing, spraying, mulching, composting, irrigating and removal of dead vines, are permitted activities, subject only to prior notification of District and compliance with all applicable permits and regulations for the burning of clippings in the Vineyard. LESSEE shall notify District whenever sufficient quantities of material are ready for burning and shall coordinate any burning with District. The Vineyard Plan shall also include elements to facilitate public viewing opportunities and the provision of educational signage consistent with LESSEE's operational requirements. (E)Proposed Other Uses. LESSEE shall request prior written approval from District, for any Use of the Premises not specifically allowed herein, no less than thirty (30) days prior to the date desired for implementation of such proposed additional Use of the Premises. District, in District's sole discretion, may authorize additional Uses of the Premises. Any such authorization shall be valid only when in writing, and made prior to LESSEE's beginning such additional Use. (F) Special Use Permits. LESSEE shall submit an application for a District Special Use Permit for any special event or activity that is either conducted on the Preserve outside the Lease Premises, or that impacts general public open space activities, including 7 parking spaces required to be kept available for Preserve visitors, as well as impacts beyond the boundaries of the Premises to other areas of the Preserve. If District issues the requested Permit, LESSEE shall comply with all terms and conditions of the Special Use Permit. (G)Expansion of Permitted Facilities. LESSEE and District agree that some expansion of the capacity of the visitor serving portions of the Historic Picchetti Winery is in their mutual best interest and hereby agree to fully cooperate in the planning, design and permitting of future site improvements provided that such improvements do not negatively impact the historic character of the Premises or surrounding natural resources of the Preserve, are consistent with the Mission of the District, its purposes in providing Picchetti Ranch as a visitor serving public amenity, and are developed with reasonable regard for the needs of LESSEE's business operations. LESSEE shall be responsible for all construction activities and costs, subject to the provisions of this Lease, or as such matters otherwise may be hereafter separately negotiated, mutually agreed to, and memorialized by a written Lease amendment hereto, duly made and executed by the parties. In no event shall any such permitted expansion be designed for or permitted to exceed a capacity of 100 people in the Winery. (H)Public Use and Access. LESSEE and District acknowledge and agree that public access to the historic resources is mutually beneficial and in furtherance of the purposes of this Lease. Unless otherwise specifically restricted by provisions of this Lease, or permitted by prior written approval of District, all historic structures will be made accessible and open to the public to the maximum extent feasible consistent with the provisions of this Lease. In this regard, LESSEE and District will work together to increase the extent of visitor serving destinations on the Premises with particular emphasis on structures rehabilitated by public investment and conducive to displays of appropriate artifacts and interpretive materials. Access consistent with the requirements of the Americans with Disabilities Act(ADA) shall be a guiding principle in developing additional public access areas. (1) District Use. (i) District reserves the use of, and LESSEE agrees to provide, no less than ten (10) parking spaces for use by the general public within the Preserve parking area to be available at all times. (ii) District reserves the right to conduct a maximum of six (6)one-day open houses or docent tours each calendar year as set forth herein. District also reserves the right to utilize the Premises (including the Main House at least once a year) for a maximum of eight(8) calendar days per year(District Use), limited to a maximum of four(4) two-day weekends or eight(8)weekdays, with reserved weekends and weekdays not necessarily consecutive. District shall request dates for such District Uses at least sixty (60)days in advance of the proposed District Use and shall reasonably coordinate any such tours with LESSEE. LESSEE shall approve District's request unless LESSEE can reasonably demonstrate that the Premises have been booked, with a deposit received,prior to the District's request. If District's request is made less than sixty(60)days in advance of the proposed date for District's Use, LESSEE shall provide District with list of available dates and LESSEE shall make the Premises available for District Use any time there is no scheduled activity or booked event. District's Use shall not be subject to LESSEE's customary rental fees or charges, and District has the option of contracting with LESSEE for event services, or may bring in 8 outside vendors. District agrees to indemnify, defend and hold LESSEE harmless from any claim, loss, damage, liability and expense (including reasonable attorney's fees)that LESSEE may incur or suffer to the extent such claim, loss, damage, liability or expense arises out of the District's Use of the Premises as provided above. (iii) Notwithstanding the foregoing, District shall not schedule a use permitted by this section during the periods of high volume winery activities described in Section 6 (B) (iv). (J) Prohibited and Restricted Uses: (i) Natural and Historic Resources. LESSEE shall cut no timber, conduct no mining operations, remove no sand, gravel, or similar substances from the ground, commit no waste of any kind, nor in any manner substantially change the contour or condition of the Premises, except as may be authorized under this Lease. LESSEE shall not import,plant, or install any soil, sand, gravel or other ground cover without District's prior written approval. Except to the extent that it is beyond the reasonable control of Lessee, LESSEE shall not intentionally or negligently permit the import of any invasive species (generally defined as "non-native animal or plant species that take over large areas and reduce biodiversity" and as identified by the California Invasive Plant Council) without prior written approval of District. LESSEE shall not bring straw or hay bales (or similar materials) onto the Premises unless such bales are certified weed-free. LESSEE shall remove fallen or dead timber as required for safety or aesthetic reasons and dispose of it or use it in any legal manner. (ii) Permanent Residences. Except as specifically provided above, LESSEE shall not permit any person to use any structure or facility on the Premises for a permanent, full-time residence, or as a temporary residence without the express written, and sole discretionary consent, of the District. (iii) Water Pollution. There are multiple waterways on or near the Premises, including both ephemeral and intermittent courses that together constitute a significant natural resource of the Premises. LESSEE will, at all times, respect the restrictions on use and access in the buffer areas along waterways as depicted on the Master Site Plan. LESSEE shall at all times exercise due care for the protection of all such water courses, including but not limited to, prohibiting human and domestic animal intrusions. LESSEE shall not intentionally or negligently discharge or permit the discharge of any substances, which will contaminate streams or other bodies of water, or otherwise become a public nuisance. All applicable laws, regulations, conditions, or instructions, now in effect or as and when prescribed by a federal, state or local government with jurisdiction are a condition of this Lease. LESSEE shall comply promptly with any regulations, conditions, or instructions affecting the activity authorized if and when issued by the federal, state, interstate or local government water pollution control agency having jurisdiction to abate or prevent water pollution. (iv) Storage of Discarded Materials. LESSEE shall not store or accumulate discarded equipment or materials for more than thirty (30)days. Pending disposal, such material shall be stored out of the public's view. LESSEE shall not dispose of any historic artifacts without prior written approval of District. (v) Live Entertainment. LESSEE shall not host, market, promote or produce any live music events or concerts on the Premises, provided that LESSEE shall be allowed to have such live music as is incidental to permitted Uses. LESSEE shall not install, use, or permit the installation or use on the Premises of any public address equipment, 9 television equipment,juke-box, radio, loudspeaker, or any other equipment or device producing noises that can be heard outside the Premises except by District Special Permit. (vi) Admission. LESSEE shall not charge or collect an "admission fee" for access to the public areas of the Premises or for use of parking areas. Premises must remain open to general public access during regular winery business hours except as otherwise specified herein. (vii) Smoking. No smoking is allowed on the Premises. (viii) Dogs. Dogs are not permitted on the Premises, whether on leash or off except as otherwise specifically provided for herein. Dogs may be left in vehicles in the approved parking area of the Premises without such constituting a violation of this provision. The Caretaker may keep a dog in and around the Main House subject to the following restrictions: (1)the dog must be either on leash or within range of and obedient to, voice commands at all times that it is not otherwise contained; (2)the dog is not to be permitted in the Vineyard area or on areas of the Preserve outside the Premises; and (3) permission to keep the dog is subject to revocation by District, in its sole discretion, upon confirmation of a reasonable complaint about the dog, or due to any other problem that is a result of the presence of the dog. (ix) Bicycles. No bicycles may be used on the Premises. Any visitors arriving and departing on bicycles shall be directed to at all time walk them while on the Premises and to store them in District-approved designated storage areas. (K)District Reservations for Patrol, Monitoring, Emergency Access and Display. District reserves the right to enter the Premises at all reasonable times and with reasonable notice for any purpose connected with District work, including monitoring Lease compliance and health and safety inspections. District may enter to display the Premises to prospective Lessees no sooner than six (6) months prior to Expiration of the Term or following notice by LESSEE of an earlier termination. District shall have the right to enter the Premises without notice at all times for any emergency. LESSEE shall provide District with keys or combinations to entrances and doors on the Premises. LESSEE shall provide District with new keys or combinations before any re-keying or changes of such locks. (L)Compliance with Laws. LESSEE shall not use the Premises or permit anything to be done on, in or about the Premises which will in any way conflict with any law, statute, ordinance or governmental rule or regulation now in force or hereinafter enacted or promulgated, including without limitation, all building, plumbing, electrical, sanitary, health, safety and similar codes. LESSEE shall, at its sole cost and expense, promptly comply with all laws, statutes, ordinances and governmental rules, regulations and requirements of any board of fire insurance underwriters or similar body now or hereafter constituted relating to or affecting the condition, use or occupancy of the Premises. The judgment of any court of competent jurisdiction or the admission of LESSEE,whether District be a party thereto or not, that LESSEE has violated any law, statute, ordinance or governmental rule, regulation or requirement, shall be conclusive of that fact as between District and LESSEE. 10 7. LIABILITY INSURANCE During and throughout the Term of this Lease, LESSEE shall maintain in full force and effect the following policies and insurance coverage with insurer(s) licensed to do business in California, all at LESSEE'S sole cost and expense: (A)Commercial General Liability Insurance coverage, using Insurance Services Office (ISO) "Commercial General Liability"policy or policies Form CG 00 01, or the exact equivalent, with a carrier acceptable to District, and limits of no less $5,000,000.00 general aggregate and no less than $1,000,000.00 per occurrence for all covered losses. (B)Policies must include specific Liquor Liability coverage for alcohol sales, manufacture and distribution with an aggregate limit of no less than$3,000,000.00 per occurrence. (C)Business Automobile Liability coverage, including owned, non-owned and hired vehicles in an amount of no less than $1,000,000.00 per occurrence. (D)Defense costs must be payable in addition to policy limits. (E)No cross liability exclusion for claims or suits by one insured against another. (F) District must be named as an additional insured on each of the policies and each policy must contain a provision that it may not be cancelled except following sixty (60) days written notice to District as set out herein for notices. An authorized insurance agent or broker must complete, execute and provide District with a Certificate of Insurance (ACORD 25-5, or a successor or comparable form subject to prior approval by District) naming District as an additional insured under such policy or polices before LESSEE may engage in any activities pursuant to this Lease. (G)All insurance coverage shall be endorsed to delete the subrogation condition to the District, or must specifically allow the named insured to apply on a primary, non- contributing basis, in relation to any other insurance or self-insurance available to District and all policies will contain or be endorsed to contain such provisions. (H)At the commencement of each Extension Term,the coverage amounts of insurance required hereunder shall be adjusted by amount agreed upon by the parties which reflects, at minimum an adjustment based on the CPI-U, generally as that calculation is set out in Section 5(C)above, with adjustments for purposes of this paragraph calculated over the number of years passing since either the Lease commencement or the prior adjustment, as may be appropriate. 8. FIRE INSURANCE (A)District shall, at its sole expense,obtain and maintain at all times during the Term, a policy or policies providing adequate extended fire insurance coverage for the Premises. District will pay all premiums when due for such coverage of the Premises and shall submit to LESSEE an invoice for one half(V2) of the premiums paid annually for such coverage. Within thirty (30)days of receipt of such invoice, LESSEE shall remit reimbursement for such premium payments to District. District may, in its reasonable discretion, elect to carry insurance coverage sufficient to "reproduce"historic structures on the Premises rather than a lesser coverage to only"replace" such structures. LESSEE shall pay for coverage as set forth herein whether or not District so elects. (B)LESSEE shall fully cooperate with District and with all requirements of District's Insurer in all aspects necessary to maintenance of such coverage, including without limitation, ready access for scheduled inspections and primary responsibility for required warning devices, such as smoke detectors and for emergency response provisions such as fire extinguishers. If the Premises, or any portions thereof, are damaged or destroyed by fire 11 or other covered casualty, District shall promptly make all claims, perform all acts and provide all materials reasonably required by the Insurer for payment. (C)The parties agree that the Winery,the Main House, the Pressing and Fermentation Barn, and the Blacksmith Shop are essential components of the leasehold. As such, the parties agree that it is their intent to use every reasonable effort to protect, maintain and repair these structures. If the Winery is damaged by a covered event, the parties agree that the Main House may be utilized for wine tasting and related retail during repairs or rebuilding of the Winery. Any significant structural or visual modification of the Main House to serve this purpose is subject to District review and approval as otherwise set forth herein for proposed major and minor improvement projects, and shall be proposed and subject to approval in light of the costs and feasibility of restoration when the temporary commercial uses end. If the Main House is damaged beyond the reasonable possibility of accurate restoration of that structure, the parties agree to confer in good faith regarding the feasibility and appropriateness of constructing any reproduction or replacement structure, taking into account the historic setting, including the structure's size, Victorian-era style and its relationship to other visual elements of both the site and the surrounding open space, the years remaining under the Lease Term (including extensions), the parties' mutual interests in having a resident Caretaker, and the availability and sources of sufficient funding for such purpose. If the Pressing and Fermentation Barn or the Blacksmith Shop are damaged or destroyed, the parties agree that replacement with buildings providing generally equivalent space and function will be pursued subject to availability of insurance proceeds and any proposed contribution of the parties, and to compliance with all applicable approvals,permits, site, and building codes. (D)The parties agree that the Winery, Main House, Homestead House, and the Stables and Paddock structures are important components of the historic setting and visual interest of the Premises. It is therefore mutually agreed that historically accurate reproduction of such structures is to be a material consideration in each parties' election to repair or restore any damage or destruction and that, to the maximum extent feasible, the parties will endeavor to restore or reproduce these structures with historical accuracy. (E)Repair, replacement, reproduction or removal of the Homestead House, the Stables and Paddock, the Garage, the Wash House, the Aviary, and the Chicken Coop, in the event of damage or destruction and whether covered by insurance or not, shall be at the sole discretion of District. (F) Within thirty(30) days of the payment of insurance proceeds, LESSEE shall elect whether or not to repair or replace a damaged or destroyed structure covered by the provisions of Section 8(C). The provisions of this Lease relating to Major Improvements shall apply. If LESSEE shall determine to repair or replace any structures covered by available fire insurance, LESSEE shall submit comprehensive plans and specifications to District for any restoration or repairs prior to commencing work, including application for required County permits, within ninety (90)days of the payment of insurance proceeds. If, in the parties' reasonable judgment, it is appropriate and desirable, in view of the parties' investment in the damaged or destroyed structure(including the length of the remaining Term),to make such restoration and repairs as proposed, and the same can be reasonably completed within two (2)years in accordance with the laws and regulations of the federal, State, County or other authorities with jurisdiction, this Lease shall remain in full force and effect, and LESSEE shall immediately commence the repair or replacement of such damage or loss, such that the Premises are restored or replaced to substantially the 12 same condition as existed prior to such damage or destruction, or equal thereto. All of the proceeds from said insurance policies, and all Assets of the Capital Reserve Fund as hereinafter defined, shall be available to LESSEE for such purposes. If such proceeds and Assets are insufficient, based on reasonable estimates by qualified professionals, to complete the restoration or repairs according to LESSEE's proposal, LESSEE may contribute such additional sums as are necessary to complete the restoration or repairs as appropriate under Section 8(C)above. Should LESSEE elect to not contribute such additional sums,the damage or destruction shall be treated as if it were not covered by insurance under the provisions of Section 8(H) hereof. (G)If LESSEE should determine not to repair and restore, then District shall, within sixty (60) days of notice of such determination by LESSEE as provided for hereinabove, have the right to determine whether to repair or restore the Premises. If the District determines to proceed with repair and restoration of the Premises, all of the proceeds from said insurance policies, and all assets of the Capital Reserve Fund as hereinafter defined, shall be available to District for such'purposes, and, at the option of District, this Lease may be terminated and all of LESSEE's rights in and to the Premises and the Lease shall cease if so terminated. Other than the obligation to restore the Premises to the condition at Lease Commencement, or as altered through permitted modification, LESSEE shall deliver to District the Premises, and such Quitclaims and other documentation as is required by Section 20 hereof. Upon such delivery LESSEE shall be relieved of all further obligations and liabilities under this Lease except as to those matters otherwise expressly surviving termination. (H)If, during the Term,the Winery, Main House, Blacksmith Shop, or Pressing and Fermentation Barn, are totally or partially destroyed by a risk not covered by insurance, thus rendering the Premises totally or partially inaccessible or unusable for Lease purposes, and if Fund Assets are insufficient to complete an appropriate restoration, as generally set out in this Section, District may elect to terminate the Lease. If District elects to terminate the Lease, LESSEE, within thirty (30) days after receiving District's notice to terminate, may then elect to pay the amount by which the cost of restoration exceeds the Assets available in the Fund in which case LESSEE shall restore the Premises to the standards otherwise set out herein. If District elects to terminate this Lease, and LESSEE does not elect to pay the cost of restoration as otherwise provided for in this section, all of LESSEE's rights in and to the Premises and under the Lease shall cease. Other than the obligation to restore the Premises(solely as to any such damaged or destroyed structures) to the condition at Lease commencement, or as altered through permitted modification, LESSEE shall deliver to District the Premises, and such Quitclaims and other documentation as required by Section 20 hereof. Upon such delivery LESSEE shall be relieved of all further obligations and liabilities under this Lease except as to those matters otherwise expressly surviving termination. In the event of termination under this Section, termination shall be the sole and absolute remedy for each party. (1) District and LESSEE hereby, respectively, release the other party, on behalf of themselves and their respective insurers on policies of insurance required to be carried hereunder, to the extent of insurance coverage of the releasing party, from any liability for loss or damage caused by fire or any other of the extended coverage casualties included in the releasing party's insurance policies, irrespective of the cause of such fire or casualty. 13 (J) LESSEE hereby waives the provisions of Sub-section 2 of Section 1932 and Sub-section 4 of Section 1933 of the California Civil Code. 9. INDEMNIFICATION (A)LESSEE agrees to indemnify, hold harmless, defend, and protect District, its officers, directors, agents and employees from any and all claims, losses, damages, demands, liabilities, suits, costs, expenses (including all reasonable attorney's fees),penalties, judgments or obligations whatsoever arising out of or in connection with any injury, death, or damage to any person or property or pecuniary or monetary loss that results from, arises out of, or in any way relates to the activities of LESSEE, including but not limited to claims related to the presence, use or disposal of hazardous materials, except for injury or damage resulting from the sole negligence or willful misconduct of District. District shall indemnify, hold harmless, defend and protect LESSEE from any and all claims, losses, damages, demands, liabilities, suits, costs, expenses(including all reasonable attorney's fees), penalties,judgments or obligations arising from intentional or negligent acts or omissions of District upon the Premises. (B)In the event LESSEE becomes aware that a claim concerning the Lease or Premises has been, or is likely to be, made against District, its officers, directors, agents or employees, or LESSEE is named a co-defendant in any action, LESSEE shall immediately notify District. LESSEE shall reimburse District for all legal expenses, including reasonable attorney's fees, spent in representing District should a judge in a court of competent jurisdiction adjudicate any such claim against LESSEE in favor of a third party and relieving District of any liability therefore. (C)In the event that a judge in a court of competent jurisdiction makes an apportionment of liability between District and LESSEE, neither District nor LESSEE shall request that a jury determine apportionment of liability. LESSEE shall indemnify and hold harmless District as set forth above, unless the court determines that the injury or damage resulted from the negligence or the intentional and willful misconduct of District in which event, liability shall be apportioned as determined by the court or jury. (D)To the maximum extent permitted by law, LESSEE hereby waives all claims and recourse against District, including the right of contribution for loss or damage to property, and hereby releases District from any and all liability related to or in any way connected to LESSEE 's activities under the Lease or otherwise, or from LESSEE's use of the Premises. 10. MANAGEMENT SERVICES (A)LESSEE shall be responsible for unlocking and opening at sunrise, and closing and locking one half hour after sunset,the Picchetti Ranch gates, seven days a week, 365 days a year. Should LESSEE be unable, on an emergency basis, to meet this obligation, LESSEE shall first notify District's Foothill Field Office by telephone at(650) 691-2165, and by facsimile to (650) 988-9347, with a secondary notice to District's Administrative Office at(650) 691-1200 and by facsimile to (650) 691-0485. If no personal contact is made with a District employee at the Foothill Field Office, LESSEE shall notify Mountain View Dispatch at(650) 968-4411 of the need for District response. For other than emergency reasons, LESSEE may request District to cover gate operations only by contacting District's Foothills Field Office no later than 72 hours in advance of the time requested for such coverage. LESSEE may request this service of District no more often 14 than once each calendar quarter. Changes to contact telephone numbers or procedures may be made by providing notice to LESSEE as set forth herein. (B)LESSEE shall be responsible for maintaining the public restrooms in a clean, functional and sanitary condition, regularly stocked with appropriate restroom supplies. (C)LESSEE shall be responsible for arranging for the regular removal of trash from the Premises and shall not allow trash or debris to accumulate on the Premises. (D)As otherwise set forth herein, LESSEE shall be responsible for maintaining and repairing the building and grounds in a reasonably accurate historical condition. (E)LESSEE shall be responsible for monitoring parking to assure safe and efficient use of the authorized parking areas. 11. CAPITAL RESERVE FUND (A)LESSEE shall establish an interest bearing account with a commercial bank, with drawing rights requiring authorized signatures of both District and LESSEE, designated "Historic Picchetti Winery Capital Reserve Fund" (Fund), and shall at all times maintain adequate records for the Fund. Expenditures from the Fund are solely for capital improvements to the historic structures on the Premises, as approved in advance by the District. District shall reasonably approve expenditures from the Fund for all projects that conform to the District's Mission and the "Improvements and Alterations" provisions of this Lease. (B)LESSEE shall contribute the sum of Five-Thousand Dollars ($5,000.00) yearly to the Fund on or before the annual anniversary of the Commencement. District shall contribute the sum of Five-Thousand Dollars ($5,000.00), within sixty(60)days following the most recent anniversary of the Commencement. The Funds so contributed and held shall constitute the"Fund Assets". (C)No Fund projects shall start without District's prior written approval. Any unspent Fund Assets at the end of the Lease or in case of default shall no longer be restricted to use for the Premises and shall be paid to District as Additional Rent. (D)To request approval for reimbursement from the Fund for project costs previously approved and paid for by LESSEE, LESSEE shall submit all the following items: (i) Copies of all invoices, payment records and time cards if reimbursement is for LESSEE'S labor for the project. (ii) Notice of completion for the project. (iii) A summary of all project costs, including labor, materials, and costs for bonds, insurance and overhead and profit, payments and final request for remaining unpaid project costs. 12. IMPROVEMENTS AND ALTERATIONS (A)LESSEE shall not make any capital improvements or alterations to the exterior or interior appearance of any aspect of the Historic Resources, or additions to the Premises (collectively, "LESSEE Improvement")without complying with the provisions of this Section and without first obtaining the prior written approval of District. Should LESSEE desire to propose such work, LESSEE shall notify District,timely and in writing of such proposal, and District and LESSEE shall thereafter meet and confer in good faith to develop an acceptable approach to address the identified purpose(s)to be served by the proposed work. If the proposed LESSEE Improvement is approved by District, as proposed or as modified, District AND LESSEE shall cooperate as co-applicants to the 15 County of Santa Clara for any work that requires County approvals or permits to authorize permanent change(s)to the Premises. LESSEE agrees that all costs in complying with applicable laws, and obtaining any required permits or approvals, are the sole responsibility of LESSEE. All LESSEE improvements to covered historic structures must comply with the Secretary of the Interior's Standards for the Treatment of Historic Structures and any applicable State of California, Santa Clara County or funding mandates. (B)District may, in its sole discretion, identify and apply for, or assist LESSEE in the preparation and submission of applications for, grant opportunities to further repair or rehabilitate portions of the Premises. To the extent such repairs or renovations constitute a '*Minor*' Improvement as defined below, District may undertake all aspects of such project provided that it does not unreasonably or permanently disrupt LESSEE's normal operations. If an available grant is to be utilized for a "Major" Improvement as defined below, LESSEE and District will collaborate to develop the project plans and specifications, a project budget with each party's respective financial commitment, reasonable construction timetables, and to identify permitting requirements and responsibilities. LESSEE agrees to incorporate all reasonable requirements made as a condition for receipt of the grant funding. LESSEE agrees that any grant funds so obtained, unless otherwise restricted, shall be the property of District and shall only be applied to the project as directed by District. (C)Minor Improvements. For any LESSEE proposed Improvement on or to the Premises costing less than $25,000.00 to complete, LESSEE shall submit to District for review and approval under this Lease, not less than thirty (30) days prior to proposed commencement date of the work, a reasonably detailed description of the work to be performed together with documentation of the cost of completion. District shall require compliance with the requirements of a "Major" Improvement, identified below, as District reasonably determines necessary based on applicable regulations and the nature of the LESSEE Improvement. (D)Major Improvements. District and LESSEE have developed the Master Site Plan (Exhibit B) to guide implementation of Major Improvement projects on the Premises. For any proposed LESSEE Improvement on or to the Premises that is reasonably anticipated to cost $25,000.00 or more to complete, or one which affects the exterior appearance of a significant historic structure, LESSEE shall provide to District the following: (E) A specific Capital Improvement Project Plan ("Project Plan"), which shall show the nature, extent, and sequence of the proposed LESSEE Improvements on the Premises. The Project Plan shall include, at minimum, the following information and pages: 0) A scaled plan of the Premises showing the location of the existing site features and including: (ii) Surrounding land uses, ownerships and access to the Premises. (iii) Plotting of existing vegetation, drainage and water features, utilities, and all structures. (iv) Roads, trails, parking, surfacing, and all other pertinent site circulation information. (v) A proposed overall amendment to the Master Site Plan of the Premises, using the then current Master Site Plan as the basis, that depicts the location of existing and proposed site features. The proposed amendment to the Master Site Plan must also 16 include a narrative portion describing the proposed improvements in greater detail including discussion of how such improvements will be of benefit to both LESSEE and District. (F) LESSEE shall be responsible for all costs and expenses incurred by District in order to comply with the requirements of the California Environmental Quality Act(CEQA), including, but not limited to, preparation of all required environmental assessment documentation associated with the proposed LESSEE Improvement. (G)LESSEE shall comply with all District's then current contracting requirements relating specifically to, but not thereby excluding any others that District may reasonably require, insurance,performance bonds, labor and materials bonds, inspections and testing, drawings, plans and specifications, quality of workmanship and materials, and all construction standards, procedures and restrictions. LESSEE shall submit all proposed contracts for LESSEE Improvements to District for prior written approval and shall not execute any such contract until receipt of such District approval. (H)All repairs, restoration or improvements to the covered structures shall comply with all applicable Secretary of the Interior's Standards for the Treatment of Historic Structures, and any State of California, Santa Clara County, or grant-mandated, standards. (1) After District's written approval of the Capital Improvement Plan, LESSEE shall be responsible for preparing detailed construction documents (Plans and Specifications) of the proposed improvements on 24" x 36" plan sheets and provided electronically in both its original format and as a Portable Document Format(".pdf') file(s). LESSEE shall submit these documents to District before submission to the required permitting agencies. LESSEE shall not formally request any regulatory permits until the District has completed its review of the construction documents and provides written approval to LESSEE to proceed with the permitting process (Construction Documents). District's approval of the Construction Documents shall not constitute a waiver of any defect or any condition of the Construction Documents. (J) LESSEE shall be responsible for seeking approvals from, and adherence to, the regulations of any permitting agency having jurisdiction over the Premises for the installation of any improvements. Permits may include, but are not limited to, U. S. Department of the Interior, U.S. Fish& Wildlife Service, U.S. Army Corps of Engineers, California Department of Fish& Game, State Regional Water Quality Control Board, Santa Clara Valley Water District, and Santa Clara County. LESSEE may not construct any improvements until LESSEE obtains all of the necessary permits and provides District with evidence of such approvals. District as landowner shall assist the LESSEE with its applications for permits, if required, including executing documents for this purpose. LESSEE shall pay any costs associated with gaining these agencies' approvals or meeting their regulations. District will provide LESSEE with reasonable technical assistance in the review of proposed permit applications. (K)LESSEE shall be responsible for obtaining and delivering all water quality compliance permits from the appropriate agencies to District before start of any construction. During construction, LESSEE shall ensure that all of the requirements of the water quality permits are met. LESSEE shall construct the improvements to minimize erosion and water runoff into any waterways. LESSEE is responsible for taking any action required by any federal, state, or regulatory agency to ensure water quality compliance. LESSEE'S indemnification of the District shall include this obligation. 17 (L)LESSEE shall use the services of a qualified consultant or knowledgeable resource person to prepare the Capital Improvement Plan, Construction Documents, Permits, and any other documents required for the LESSEE Improvement. For the purposes of this section "qualified" shall include licensure in the applicable profession in the case of architects or engineers, and a minimum of five (5) years experience with historic structures, and, in the case of planners, appropriate planning certification. Architects and engineers shall secure and provide the minimum insurance coverages set forth in this Agreement. LESSEE shall obtain District's prior written approval of the qualifications of the proposed consultant. LESSEE shall be solely responsible for the costs and expenses of said services. (M) No less than twenty (20) days before the Work is to commence, LESSEE shall submit the following to District: (i) County approved Construction Documents. (ii) Name and address of proposed construction contractor(s) and evidence of licensure for the proposed work, the construction contract(s) showing the proposed scope of work, date work is to be commenced and time for completion of the work. (iii) All required approvals and Permits for the construction from applicable jurisdictions. (iv) Evidence of all required insurance coverages and provisions. (v) Labor and Materials Payment Bond and Performance Bonds for the full amount of the work. (vi) Certificates of Insurance naming District as an additional insured. (vii) Evidence of financing sufficient for completion of the work. (N)LESSEE shall allow, and include in any contract for construction, the requirement that the contractor allow District's designated employee or agent to observe or inspect any improvement project at District's expense. (0)LESSEE and District shall establish reasonable restrictions on normal public access and use during periods of construction on the Premises. LESSEE shall erect barricades capable of separating construction areas from Preserve users. (P) LESSEE shall be responsible for protecting District visitors, the Premises and adjacent Preserve lands during construction. (Q)LESSEE shall throughout the Term keep the Premises, and every part of it, free from any liens arising out of any work performed, materials furnished or obligations incurred by LESSEE. LESSEE shall not be in default under this Lease so long as it is contesting any such lien with due diligence. LESSEE shall indemnify District for all expenses and costs incurred by District arising from the lien, whether ultimately perfected or not. (R)LESSEE agrees that all improvements made pursuant to this section shall become District property at the end of the Lease, unless otherwise agreed in writing prior to District approval of any construction. 13. MAINTENANCE AND REPAIR (A)Condition of Premises. LESSEE shall keep and maintain all facilities, including without limitation, the Winery, Main House, Pressing and Fermentation Barn, Garage, Wash House, Homestead House, Blacksmith Shop, Stables, Aviary, and Chicken Coop, in good and functional condition and repair so as to safely and effectively perform under this Lease. All repairs must comply with applicable Secretary of the Interior's Standards for the Treatment of Historic Structures and any State of California, Santa Clara County, or 18 grant-mandated standards. LESSEE shall endeavor to keep all facilities and grounds clean and aesthetically pleasing at all times during the Term. (B)LESSEE shall be solely responsible for maintenance and repair of all structures and the grounds of the Premises consistent with this Lease, and except as otherwise specifically set forth herein. (C)Except as otherwise specifically set forth herein, LESSEE shall be solely responsible for all Minor Improvements, including without limitation, costs, timeliness, completeness and construction management, as herein defined and subject to District approvals as more specifically set forth herein. (D)LESSEE shall be solely responsible for all Major Improvements that are primarily for the benefit of LESSEE's on-going winery operations and are of only incidental or peripheral value to District's Mission, as determined in the District's reasonable discretion. (E)LESSEE shall repaint all buildings and structures, which have painted surfaces, at least once during the Term of the Lease in accordance with Site Plan. (F) LESSEE shall maintain all paved, graveled and/or compacted areas of roadways and parking lots on the following schedule, or more often if needed in the reasonable determination of District: (i) LESSEE shall make necessary or appropriate repairs(in and to areas with potholes, rutting, depressions, root cracks, alligator cracking, etc.)annually before the beginning of each winter season (October 15th). (ii) LESSEE shall maintain all designated parking surfaces to a standard reasonably acceptable to District. (iii) LESSEE shall re-stripe, or otherwise refurbish, whatever parking space marking system is utilized in the designated parking areas, at least once every year, or as necessary to maintain clearly distinguishable parking spaces. (G)Preventive Maintenance. LESSEE shall conduct preventive maintenance on a regular schedule or as recommended by the manufacturer of the specific equipment. (H)Capital Reserve Fund Limitation. Notwithstanding the foregoing, any expenditure for repair or replacement of roofs, structural elements, foundations, exterior walls, or the plumbing or electrical systems of any buildings or structures making up the Winery, Main House, and/or Blacksmith Shop shall be made from, and be limited to, the Assets available in the Fund and such contributions as the parties may voluntarily choose to make. If such Assets and contributions (if any) are not sufficient to complete the necessary repair or replacement, and the failure to perform such repair or replacement would render the Premises unsuitable or inadequate for continued use as contemplated by this Lease, the defective condition shall be deemed to be damage from a risk not covered by insurance and the provisions of Section 8(H) shall apply. 14. UTILITIES (A)Spring and Water Tank. Lease Premises includes a well, a spring, and two water tanks (approximately 1600 gallons and 2500 gallons respectively), with associated pipelines and an underground electrical system providing power for the well. LESSEE shall be solely responsible for the maintenance, service and repair of this entire system. District does not represent or warrant, in any regard, said system for the quantity or quality of the water, including its potability, nor for the integrity or reliability of any of the elements. (B)Septic System. Premises include three (3) septic systems with associated infrastructure including leach fields as generally shown on the Master Site Plan. LESSEE shall be 19 solely responsible for the maintenance, service and repair of these systems and shall at all times be in compliance with applicable health and safety laws, ordinances, regulations and standards. Service shall include pump-out of the holding tanks not less than every second year following Commencement. District does not represent or warrant, in any regard, said systems for functionality or integrity. (C)District shall not be liable for any damages resulting from any failure to furnish, or delay in furnishing any utility service, including water and septic, when such failure or delay is caused by any condition beyond district's reasonable control or occurs from the rationing or other governmental restriction on any utility or resource serving the premises and lessee waives all claims against district for any such failure. The rent obligation shall not be changed because of such a failure. A temporary failure, defined as having a duration of less than one week, to furnish any of the services shall not be considered or interpreted as an eviction of lessee nor relieve lessee of any duty to fulfill any of the provisions of this lease. (D)Lessee shall contract directly with the appropriate utility for all water, gas, electricity, telephone service, internet connection, garbage, and septic services, or other utility furnished to or used by lessee at its sole cost and expense. Lessee shall indemnify and hold harmless district from and against any charge for the installation, connection, maintenance, and furnishing of all necessary utilities, meters and services. Lessee shall provide for the extension of any utility service or distribution lines(water, gas, electricity, telephone, internet, sewage, or otherwise)required to serve the premises at its sole cost and expense, including the cost of under-grounding any of such utilities. (E)Lessee shall comply with all government-mandated water and energy conservation programs in fulfilling the obligations of this lease. 15. OPERATION STANDARDS (A)Maintenance and Operation. LESSEE shall maintain and operate the facilities to ensure public safety and enjoyment to the maximum extent feasible. (B)Compliance with Laws. During the Term of this Lease, LESSEE shall comply with all requirements of all federal, state, and municipal governments, agencies, courts, commissions, boards, or any other body exercising authority over any aspect of the Premises, including without limitation,the State of California Department of Forestry (CalFire), for the operation of equipment to prevent fires. LESSEE acknowledges that the County Fire Marshall has instructed LESSEE on minimum life safety requirements necessary to conduct assemblies and activities in the historic structures. (C)Agricultural Practices. LESSEE shall, to the maximum extent feasible, utilize integrated pest management practices and sustainable agricultural practices in consultation with District. LESSEE shall submit to District, the name of any pesticide and herbicide proposed to be used on the Premises, for District's review and approval before applying such substances on the Premises. (D)Continuous Operation. Except as otherwise herein specifically provided for, LESSEE agrees to continuously market and operate the Premises during the term of this Lease, and hold them open to the public at the times and for the Uses set forth in Section 6 above. If required by an approved LESSEE Improvement, District may provide LESSEE with prior written authorization to temporarily close all or a portion of the Premises. (E)Natural and Historic Resources. At all times LESSEE shall operate to provide, as a priority, for the protection and preservation of the natural and historic resources located 20 on the Premises, including without limitation, structures, waterways, wetlands, native wildlife and trees exceeding four inches diameter at breast height(4" dbh), and topographic relief features, such as drainage swales and natural draws. (F) Public Safety. LESSEE shall maintain and operate the facilities to afford the highest practical degree of health, safety, and security for the public. LESSEE shall adhere to minimum safety requirements as follows: (G)LESSEE shall develop emergency preparedness procedures and post notices for notification of fire, police, and public safety authorities. (H)LESSEE shall provide and use adequate lighting, appropriate to the surrounding open space resources (amber LED, LPS or other longer wavelength light source), and subject to prior written District approval. (1) LESSEE shall comply with the current edition of the Uniform Fire and Building Code and requirements of the County Fire Marshal at its sole cost and expense. (J) LESSEE shall comply with County Fire Prevention Operational Procedure guidelines developed by the County. (K)In the event of any accident or illness requiring emergency medical aid or treatment, LESSEE shall use the "911"telephone system to summon assistance and promptly thereafter notify District's Foothill Field Office by telephone at(650) 691-2165. If no personal contact is made with a District employee at the Foothill Field Office, LESSEE shall notify Mountain View Dispatch at(650) 968-4411 of the need for District response. Changes to contact telephone numbers or procedures may be made by providing notice to LESSEE as set forth herein. (L)Personnel. All personnel of LESSEE on the Premises and acting within the scope of LESSEE'S employment shall be generally clean and neat in appearance and shall be instructed to be courteous at all times. No personnel employed on the Premises shall use improper language, act in a loud, boisterous, or otherwise improper manner or be permitted to solicit business not provided for in this Lease. LESSEE shall take proper steps to prevent the occurrence or reoccurrence of acts of misconduct by any employee on the Premises. (M) Sign Approval. LESSEE shall secure District approval and shall fulfill District sign standards for any signs to be placed on the Premises or anywhere else that refers to the Premises consistent with District standards. (N)Credit in Promotional Materials and Signs. LESSEE shall include the following, or similar, recognition(consistent with District standards and subject to prior written approval of District) in all promotional materials about LESSEE'S operations on the Premises: The "Historic Picchetti Winery" is a facility of the Midpeninsula Regional Open Space District The foregoing shall apply to signage or promotional materials created after the Rent Commencement Date and shall not require LESSEE to change or replace existing signage and promotional materials. 16. HAZARDOUS MATERIALS (A)"Hazardous Materials" shall mean any hazardous or toxic substance, material, or waste, which is or becomes regulated by any governing authority,e.g., local, State of California, or United States governments. "Hazardous Materials" includes petroleum products and 21 byproducts, asbestos, polychlorinated biphenyls (PCB), and any material or substance that is: (i) Listed under Article 9 or defined as hazardous or extremely hazardous according to Article 1, Title 22, California Administrative Code, Division 4, Chapter 20. (ii) Defined as a"hazardous waster" according to Section 14 of the federal Resource Conservation and Recovery Act, 42 U.S.C. §6901, et seq. (42 U.S.C. §6903). (iii) Defined as a"hazardous substance"according to Section 10, Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §9601, et seq. (42 U.S.C. 9601). (iv) "Hazardous Materials Law" shall mean any statute, law,ordinance, or regulation of any governmental body(including without limitation, the United States Environmental Protection Agency,the California Regional Water Quality Control Board, and the California Department of Toxic Substances Control) that regulates the use, storage, release, or disposal of Hazardous Material. (B)Hazardous Materials on Premises. Except as otherwise specifically provided herein, LESSEE shall not permit any Hazardous Material to be generated, brought onto, used, stored, or disposed of on the Premises by LESSEE, it agents, employees, contractors, sub- lessees or invitees. (i) LESSEE may permit limited quantities of standard janitorial, office, and household supplies, which shall be stored in strict compliance with all applicable environmental and safety laws. (ii) LESSEE may bring onto, use in and store on the Premises such quantities of agricultural chemicals or products as are reasonably appropriate for proper vineyard management and are approved for such use by the California Department of Food and Agriculture or successor agency. Such chemicals or other agricultural products shall be applied according to all applicable regulations of the California Department of Pesticide Regulation or successor agency. (C)LESSEE Responsibility. LESSEE shall be solely responsible for all releases of hazardous materials affecting the Premises from the date this Lease is executed except for releases caused solely by District's actions or by a third party not connected to LESSEE or to LESSEE's operations. LESSEE responsibilities include (i) Notifying District in writing of- (a) Any enforcement, cleanup, removal, or other governmental or regulatory actions completed or threatened against LESSEE or the Premises according to any applicable Hazardous Materials Laws. (b) All claims made or threatened by any third party against LESSEE or the Premises about damage, contribution, cost recovery, compensation, remediation, loss or injury resulting from any Hazardous Materials. (c) LESSEE's discovery of any Hazardous Materials on the Premises. (d) LESSEE's discovery of any Hazardous Material on any adjoining property, which LESSEE reasonably believes may affect the Premises. (ii) Obtaining District's written approval to take any remedial action to respond to the presence of any Hazardous Materials on the Premises (except for emergency situations or as required by governmental agencies having jurisdiction), entering into any settlement agreement, consent decree, or other compromise in any Hazardous Materials claims. 22 (iii) After obtaining District's written approval, promptly taking any action necessary at LESSEE's sole cost to investigate and remediate any contamination or deterioration of water or soil resulting from the presence of Hazardous Materials at levels established as greater than acceptable by any government agency having jurisdiction over such contamination when the action would be required of the District as owner of the Premises. (iv) Ensuring that any handling,transportation, storage, treatment, disposal, or use of Hazardous Materials on the Premises shall be carried out in compliance with all applicable Hazardous Materials Laws and the provisions of this Lease. (v) Ensuring that the Premises are in strict compliance with all Hazardous Materials Laws at all times, including notification, record keeping and maintenance requirements. (D)Indemnity. LESSEE shall indemnify, defend upon demand with counsel reasonably acceptable to District, and hold District harmless from any liabilities, losses, claims, damages, lost profits, consequential damages, interest, penalties, fines, monetary sanctions, attorneys' fees, experts' fees, court costs, remediation costs, investigation costs and any other expenses which result in any way from any cause or source of Hazardous Materials that LESSEE generated, brought onto, used, stored, or disposed of on the Premises. (E) Survival of Conditions. LESSEE's obligations under this Section shall survive the expiration or other termination of this Lease. This Section establishes LESSEE's and District's rights and obligations. If any inconsistency between this Section and any other part of this Lease is found, the terms of this Section shall control. (F) Notice. District and LESSEE shall each give written notice to the other as soon as possible after discovery or receipt of knowledge of: Any communication from any governmental authority about Hazardous Materials that relates to the Premises. (ii) Any contamination of the Premises by Hazardous Materials, which constitutes a violation of any Hazardous Materials Law. 17. TAXES, CHARGES, AND ASSESSMENTS (A)Obligation for Taxes. LESSEE agrees to pay any tax or charge which shall be levied, imposed or assessed against LESSEE, LESSEE'S property, LESSEE'S interest in the Premises or assets or for which LESSEE may become liable under the provisions of this Lease before delinquency and without notice or demand. Any such payment made under this Section shall not reduce the amount of the base or percentage rent or any other monetary charge that LESSEE is required to pay to District under the provisions of this Lease. (B)Property or Possessory Interest Taxes. The terms of this Lease may result in the creation of a taxable possessory interest. LESSEE shall be the party responsible for payment of such possessory interest tax and shall timely pay all personal property taxes levied on such interest. LESSEE shall pay, before delinquent, all taxes, assessments and fees levied on LESSEE for the lease of the Premises or any interest in them, on any buildings, structures, machines, appliances or other improvements, or on any interest in them, or by reason of the business or other activities of the business in this Lease connected with the Premises. 23 (C)Contest of Tax. If LESSEE wishes to contest or review, by appropriate legal or administrative proceedings, any tax or other charge specified under the provisions of this Section in good faith, LESSEE shall give District written notice of its intent to do so at least ten(10)days before the delinquency of such tax or charge, or within the applicable time period allowed by law. LESSEE may withhold payment of the tax being contested only if nonpayment is allowed during the pendency of such proceedings without the foreclosure of any tax lien or the imposition of any fine or penalty. The failure to pay any tax or charge within ten (10) days of determination of the amount due and the expiration of any appeal period shall constitute default, and the obligation to pay the same shall survive the end of this Lease. (D)Tax Indemnification. LESSEE agrees to indemnify and hold harmless District, the Premises, and any improvements on the Premises from and against any liability, loss, or damage resulting from such contest or proceeding or from any tax or charge required to be paid by LESSEE, from any other sums imposed thereon, and from any proceedings to enforce the collection of any tax or charge for which LESSEE may be liable. 18. ASSIGNMENT AND SUBLETTING (A)Assignment by Lessee. LESSEE acknowledges that District has entered into this Lease based on the qualifications and experience of Leslie Pantling. LESSEE shall not voluntarily assign its interest in this Lease, without the District's prior written approval, which consent may not be unreasonably withheld. District shall have the right to review and approve any proposed assignment. Any proposed assignee must have an established presence in the wine industry and must furnish copies of their two most recent years of federal tax returns, a current Balance Sheet and a current Income Statement, for review by District to be considered for such proposed assignment. Any dissolution, merger, consolidation, or other reorganization of LESSEE, or the sale or other transfer of more than fifty percent(50%) of the membership interests of LESSEE, or the sale of more than fifty percent(50%) of the value of the assets of LESSEE shall be deemed a voluntary assignment. (B)Sublet by Lessee. LESSEE shall not sublet any part or all of the Premises without the District 's prior written approval, which may not be unreasonably withheld for any proposed subleasing that is consistent with the uses otherwise authorized hereunder. If LESSEE requests subletting, LESSEE shall pay District's reasonable costs incurred in evaluating such request, including, but not limited to, reasonable attorney's fees,whether or not consent is ultimately given. (C)LESSEE shall not voluntarily encumber its interest in this Lease, without District's prior written approval, which may be withheld or given in District's reasonable discretion. (D)Involuntary Assignment. No interest of LESSEE in this lease shall be assignable by operation of law(except that the transfer of this Lease by testacy or intestacy shall be considered a voluntary assignment). Each of the following acts shall be considered an involuntary assignment: (i) Bankruptcy. If LESSEE is or becomes bankrupt or insolvent, makes an assignment for the benefit of creditors, or institutes a proceeding under the Bankruptcy Act in which LESSEE is the bankrupt; (ii) Partner's Bankruptcy. If LESSEE is a partnership or consists of more than one person or entity, if any partner of the partnership or other person or entity is or becomes bankrupt or insolvent, or makes an assignment for the benefit of creditors; 24 (iii) Writ. If a writ of attachment or execution is levied on this Lease; (iv) Receiver. If, in any proceeding or action to which LESSEE is a party, a receiver is appointed with authority to take possession of the Premises. (v) Default and Cure. An involuntary assignment shall constitute a default by LESSEE, and District shall have the right to elect to terminate this Lease, in which case this Lease shall not be treated as an asset of LESSEE unless the involuntary assignment is cured as follows: (vi) Cure of Writ. If a writ of attachment or execution is levied on this Lease, LESSEE shall have ten(10) days in which to cause the attachment or execution to be removed. (vii) Involuntary Proceeding. If any involuntary proceeding in bankruptcy is brought against LESSEE, or if a receiver is appointed, LESSEE shall have sixty(60) days in which to have the involuntary proceeding dismissed or the receiver removed. (viii) Involuntary Assignment. Except as provided in(i) and(ii) above, LESSEE shall have no right to cure any involuntary assignment. 19. EMINENT DOMAIN (CONDEMNATION) (A)Effect of Condemnation on Leasehold. LESSEE shall have the right either to cancel this Lease or to continue operations on the remainder of the Premises under this Lease's terms if any public authority with power of eminent domain takes a sufficient part of the Premises so as to materially interfere with and impair LESSEE'S operations on the Premises. If such public authority takes any part of the Premises, this Lease shall end as to the part taken without any right of recovery by LESSEE for such taking from the day of possession. LESSEE shall pay all Lease Rent and fees due and owing up to that day. (B)Condemnation Award. LESSEE's basis for damages against the condemning authority shall be LESSEE's loss of its improvements, its leasehold estate, and any additional relief, including loss of good will. If only one award is made to District as fee owner, the award shall be divided between District and LESSEE by allocating to LESSEE the present value of the remaining term of the leasehold estate, calculated by dividing the award by three hundred(300) and multiplying that sum by the remaining number of full months under the Lease and allocating such amount to LESSEE. 20. RESTORATION AND SURRENDER OF PREMISES (A)Restoration. When the Lease ends for any reason, LESSEE shall vacate the Premises, remove LESSEE's personal property, and repair any damage or injury to the Premises or facility caused by LESSEE's operation or removal. LESSEE shall restore the Premises to the same condition as when LESSEE took possession or as such may have been properly and lawfully modified, or specifically excused, pursuant to the terms hereof, less reasonable wear and tear. If LESSEE fails to remove said personal property within thirty (30) days from termination, LESSEE shall be deemed to have abandoned the property not so removed, at District's option. Said property shall become District's property without compensation and District may cause it to be removed and sold or otherwise disposed of, or may keep it for its own purposes and use. If LESSEE fails to timely and properly restore the Premises as required herein, District may restore the Premises to the required condition and LESSEE shall reimburse District for all costs related thereto. (B)Surrender of Premises. No act by District, its elected officials, officers, agents, or employees during the term granted shall be deemed an acceptance of a surrender of the 25 Premises, and no agreement to accept a surrender of the Premises shall be valid, unless it is made in writing, addressed to LESSEE, and signed by District. Concurrent with expiration or upon earlier termination, LESSEE shall execute a Quitclaim, in a form reasonably acceptable to District, conveying all right, title and interest in the Lease, in the Premises, including any fixtures the removal of which would cause significant damage or destruction to the Premises unless LESSEE agrees to make repairs of any such damage or destruction of the Premises to the reasonable satisfaction of District. Such conveyance shall also quitclaim all personal property belonging to District and any personal property intended by LESSEE to remain on the Premises, subject to the prior written acceptance of such property by District. Thereafter LESSEE shall be relieved of all further obligations hereunder except as to those matters specifically designated herein as surviving such termination. (C)Surrender of Name and Bonding Number. Upon expiration or any sooner termination of this Lease, LESSEE shall surrender all right, title and interest LESSEE may have in the "Picchetti"name and all "Picchetti"trade variants, and all rights of and to California Bonded Winery Number 148. (D)Waiver of Relocation Assistance. LESSEE, individually and for the business entity, and for all persons and entities claiming any interest under this Lease, hereby waives and forever relinquishes any right to claim or receive relocation assistance of any nature, whether under federal or State law and except as to a condemnation award specifically made to LESSEE. 21. DEFAULT (A)Event of Default. Each of the following shall constitute an "event of default": (i) Failure to pay any monetary obligations of LESSEE, including but not limited to Rent, under this Lease and continuance of such failure for ten (10) days after LESSEESs receipt of written notice specifying the non-payment. (ii) Failure to maintain any insurance coverage as required herein (iii) Use of water systems in violation of any conditions hereof. (iv) Failure to comply with any requirements, procedures or restrictions of Sections 10, 12, and 13. (v) Failure to comply with operational standards set forth in Section 15. (vi) Voluntary or involuntary assignment of the Lease, or sublease without prior written approval of District. (vii) Failure to perform any other obligation under this Lease. (viii) LESSEE's abandonment of the Premises for the time required for abandonment to be legally recognized under California law. (ix) The appointment of a receiver or custodian to take possession of substantially all of LESSEE'S assets or of this Leasehold when this appointment is not withdrawn or dismissed within sixty(60)days following such appointment. (x) LESSEE becoming insolvent or declaring in writing that it is unwilling to pay its debts as they become due, or the entry of any court decree or order directing the winding up or liquidation of LESSEE (or substantially all of its assets), or LESSEE taking any action toward the dissolution or winding up of its affairs of the end or suspension of this use of the Premises. 26 (xi) Attachment, execution, or other judicial seizure of substantially all of LESSEE's assets or this leasehold, which are not dismissed, bonded, or stayed within sixty(60) days. (B)Notice of Default. If LESSEE violates any of the conditions of this Lease, District shall give LESSEE written notice of default, including as statement of the specific violation and demand for correction. If LESSEE does not cure the default within thirty (30)days (Cure Period), or commence to cure with diligent and good faith effort where the cure cannot be completed within the Cure Period, District may terminate this Lease and pursue all available remedies at law. (C)District's Remedies for Default. District has the right to end this Lease and pursue all lawful remedies if LESSEE does not correct a violation of the Lease or show reasonable cause for not doing so within the Cure Period. (D)LESSEE's Remedies for Default. If District defaults under this Lease, LESSEE shall give District written notice requiring that District remedy the default. If District does not remedy the default within sixty(60)days of such written notice, LESSEE may take whatever action necessary to protect its interests. Such action may include LESSEE'S cure of the default and right to reimbursement of such expenditure plus interest(at the then current rate on District investment funds) from District within thirty(30) days after sending District a statement of expenses or LESSEE may reduce Rent payments until fully reimbursed. (E)Liability for Breach. Termination for default shall not excuse LESSEE from any liability for damages for breach of contract. 22. GENERAL PROVISIONS (A)Attorney's Fees. If either party brings any action or proceeding in court to enforce any provision of this Lease or for damages because of an alleged breach of any provision of this Lease (except as may otherwise be specified herein), the prevailing party shall be entitled to receive from the losing party the amount the court determines to be reasonable attomey's fees for the prevailing party. B Time. Time is of the essence to ever provision of this Lease to which time is a factor. every (C)Binding Effect. The terms, conditions and covenants of this Lease shall inure to the benefit of, and bind the respective successors, assigns, heirs, and legal representatives of the parties. (D)Non-discrimination in Employment and Provision of Services. LESSEE shall not intentionally discriminate against any person or persons as prohibited by federal or California law, including in employment or use of facilities on the Premises, and LESSEE shall indemnify and hold District harmless for any failure to so comply. (E)Governing Law and Venue. This Lease shall in all respects be governed by and construed consistent with California law and proper venue for all actions brought in relation hereto shall be in the Superior Court in and for the County of Santa Clara. (F) Entire Agreement. This Lease and any exhibits or addenda set forth all conditions and understandings between District and LESSEE about the Premises. There are no conditions or understandings, oral or written, between the parties other than those set forth in the Lease. (G)Changes. This Lease may be changed, waived, or added to, only by written amendment, duly executed by an authorized person for each party charged with a responsibility, duty or obligation contained therein. 27 (H)Notices. Communications relating to this Lease, to any subject, right or obligation arising under it, or any other notice, demand, or request required or permitted hereunder, except as to matters subject to the unlawful detainer statutes of California, shall be given in writing at the addresses set forth in Section 2 hereof by any of the following means: (a) personal service; (b)telephonic facsimile transmission; (c) nationally recognized overnight commercial mail service; or(d) registered or certified, first class U.S. mail, return receipt requested. Such addresses may be changed by notice given in the manner provided herein. Any notice, demand or request sent pursuant to either clause(a) or(b), above, shall be deemed received upon such personal service or upon dispatch by electronic means (provided, however,that a dispatch by facsimile transmission that occurs on any day other than a business day, or after 5:00 p.m. Pacific time, daylight or standard time as the case may be, shall not be deemed received until 9:00 a.m. Pacific time on the next business day). Any notice, demand, or request sent pursuant to clause (c), above, shall be deemed received on the business day immediately following the day of deposit with such commercial mail service prior to their last scheduled time for receipt of mail for next-day delivery and, if sent pursuant to clause (d), above, shall be deemed received ninety-six (96) hours following deposit in the U.S. mail. Any change in address shall be sent by written notice to the other party and delivered according to this Section. (1) Remedies Cumulative. All remedies conferred on District and LESSEE by this Lease and by law shall be deemed cumulative. No one remedy shall be deemed to be exclusive of the other, or of any other remedy conferred by this Lease, or by law. (J) Severability. If any provision of this Lease or any specific application shall be deemed invalid or unenforceable, the remainder of this Lease or the application of the provision in other circumstances shall not be affected. Each provision of this Lease shall be valid and enforceable to the fullest extent permitted by law. (K)Any executed copy of this Agreement shall be deemed an original for all purposes. This Agreement may be executed in counterparts, which counterparts shall together constitute one agreement if signed by both parties. (L)The language of this Agreement shall be construed as a whole according to its fair meaning, and not strictly for or against either party. M The captions used in this Agreement are for convenience only and shall not be considered in the construction or interpretation of any provision hereof. (N)When the context of this Agreement requires, the neuter gender includes the masculine, the feminine, a partnership or corporation, trust or joint venture, the singular includes the plural and the plural includes the singular. (0)The terms"shall," "will" and "agree" are mandatory. The term "may" is permissive. (P) When a party is required to do something by this Agreement, it shall do so at its sole cost and expense without right to reimbursement from the other party unless specific provision is made therefore. Where any party is obligated not to perform any act, such party is also obligated to restrain any others within its control from performing such act, including its agents, invitees, contractors, subcontractors and employees. (Q)Text Prevails Over Headings. The captions and section headings appearing in this Lease are included for convenience only and do not in any way limit or amplify the terms or provisions of this Lease. (R)Waiver. Waiver by District or LESSEE of any breach of any condition of this Lease shall not be deemed to waive the same condition on a future occasion. District's acceptance of Rent shall not be deemed a waiver of any preceding breach by LESSEE of any obligation 28 other than the failure of LESSEE to pay the Rent so accepted. No condition of this Lease shall be waived by District or LESSEE, unless the waiver is in writing and signed by the party making the waiver. LESSEE and District, each by their execution below, agree to the terms of this Lease. PICCHETT WINERY, C. -a By. G�✓ X-� Dated: V Les] antling President MIDPENINS A IONAL OPEN SPACE DISTRICT By:F' Dated: Q 2 T Ke eth C. Nitz esident ATTEST: APPROVED AS TO FORM: �p,� By: — By: ���" '"( Gregory Sam Susan M. Schectman District Clerk General Counsel 29 Winery and Vineyard Lease Area Picchetti Ranch Open Space Preserve ello Ro Picchetti Ranch en S ace Preserve Winery Complex m/Tralf Stevens Creek �i.• "' Reservoir i� s Vineyard Area Approx. 3 acres t•! N X i� 5 c J� L X W_ ? tx WI tr m t Ste ens Creek 8 unty...Park a r Exhibit A.1 0 200 400 800 Produced by Midpeninsula Regional Open Space District, September 2007 Feet Picchetti Winery Lease Area Master Site Improvement and Implementation Plan ("Site Plan") eb o� oda W shhouse I>lul S 31 Oardeh t Im— /� d w c Q` Pea Power role ut c° ea • Gz am yeA - G3 Vegetable Garden 'Du ster �l>; Brick Oven Blacksmith Gi Gs Shop Refuses Ir Refuse d Area Area Chicken Gi Coop Lawn n Culvert 104 yµi Water —P ��/ Restrooms s Bollard to be Well Head _ installed I Paddocks 046 Lawn 1-1 Water Tanks II01'1x es o__ Picnic Area eo. m D E m m , c 3 t x EA Roads and Parking Streams ' Structures ;J Major Trees S Septic Tanks Trails co Leach Fields Fences ■ Utilities H Retaining Walls Disturbed Area Boundary o �* Gates a` Exhibit A.2 0 50 100 200 Prepared by Midpeninsula Regional Open Space District, September 2007 Feet EXHIBIT B - MASTER IMPROVEMENT and IMPLEMENTATION SITE PLAN - Rev. Sept. 28, 2007 Picchetti Winery Premesis i Roads, Parking and Grounds schedule Dh*id Planning P• ri A &E iron. Design Im entatlon NameReview Required I - Install a bollard sleeve and removable bollard on the inboard Driveway side of Gate P104, in the center of the driveway;the intent of Bollard Di the bollard is to prevent visitors and others from Entrance Installation strict unintentionally and illegally driving through the secondary N-A N-A N-A By Mar-08 Gate P104 entrance to access the winery complex when the gate is open. Driveways Access Make necessary repairs to access roads including grading, Even numbered and Access roads Tenant removal of ruts,addition of baserock,etc.,to maintain access Yes2 N-A N-A years or more, if Road Repairs road in good condition necessary,during the spring months Parking Striping Tenant Yearly stripe parking area with chalk to delineate parking No N-A N-A Once a year after spaces the rainy season Construct refuse area enclosure in the southwestern corner of Refuse Dumpster Tenant the parking;design to look rustic and blend with surrounding Yes2 N-A Jan-08- Apr-08-Jan-08 Enclosure historic area; relocate all refuse and recycle bins to this Mar-08 location. Remove debris located within the creek drainage and within a Cleanup and 15-foot buffer from the centerline of the drainage between the Restoration Tenant water tanks and gate G1. Remove baserock,de-compact No N-A N-A Apr-08-Apr-09 ground,and re-vegetate disturbed areas located within 15- Creek foot buffer on the winery complex side of creek.' Demarcate a 15-foot buffer from centerline of drainage; Install Apr-08- Protection District split-rail fencing as buffer line between protected culvert area N-A N-A Jun-08 Jul-08-Dec-08 and chicken coop area. Page 1 of 4 EXHIBIT B - MASTER IMPROVEMENT and IMPLEMENTATION SITE PLAN - Rev. Sept. 28, 2007 Picchetti Winery Premesis Site Cleanup and Storage Setwedule, ReviewPlanning •ftse I," rlp 100 ` &Environ. Design Implernentation PANwinod " Remove and properly store potential physical hazards and Within six months reusable materials out of view and reach of the general Cleanup Tenant N-A N-A N-A following execution public. Dispose of all obsolete and out of service equipment Homestead of new lease House, and debris. Blacksmith Storage All outside machinery and transport/storage containers to be Shop, S Tenant covered with earthtone colored tarps when not in use. N-A N-A N-A Ongoing Stables, Main House Within six months Storage Tenant No storage of damaged or out of service equipment, refuse or N-A N-A N-A following execution junk of any kind permitted in these buildings. of new lease Below All green refuse to be either removed from site or chipped and Blacksmith Cleanup Tenant distributed within 72 hours of accumulation/cutting as directed N-A N-A N-A Quarterly Shop by District field staff. Driveway Temporary storage for damaged,servicable equipment; Garage Storage Tenant longterm storage of supplies,operational equipment and N-A N-A N-A Ongoing vehicles used exclusively for winery operations. Clear brick oven area of stored material and equipment; Within six months Homestead Cleanup Tenant maintain a 1-2 foot buffer clearance around the brick oven House Storage and a Gear view of the brick oven for the public as seen from N-A N-A N-A following execution the Homestead House interpretive sign. of new lease Blacksmith All pallettes to be stored out of view and reach of general Within six months Shop Storage Tenant public. N-A N-A N-A following execution of new lease Maintain lease area premises clean and organized; remove unsightly equipment, supplies, and • . material from public view or screen as appropriate, keep supplies and equipment well organized. Make minor repairs as needed(e.g., repairs leaks, reinstall/tighten loose wood members; reattach Sitewide hinges, repair picnic tables, repair and maintain irrigation lines,replace/repair damaged gates, Ongoing clean ing/iinspecting septic tanks,etc.);All repairs to be aesthetically compatable with the historical integrity of site and structures. Page 2 of 4 EXHIBIT B - MASTER IMPROVEMENT and IMPLEMENTATION SITE PLAN - Rev. Sept. 28, 2007 Picchetti Winery Premesis Site Restoration and Improvement Schedule Prood �Review& Planning At" ' Project Description &Environ. Design Implementation NameApproval Reaulred Review Homestead Tenant House, Reroof District Reroof structures Yes2 N-A N-A Expect need for Blacksmith 50/50 new roof in 2015 Shop, Stables Homestead House, Exterior Tenant Blacksmith Shop, Water District Water seal exterior of all currently clear-coated main buildings Yes2 Stables,Winery, Seal/Clear- 50/ i and decking. N-A N-A 2012 and 2017 Fermentation coat Bldg.,Garage Within six months Repaint Tenant Repaint exterior of structure Yes2 N-A N-A following execution of new lease Wash House Reroof Within six months Gutters Tenant Reroof structure and replace all gutters and downspouts Yes2 N-A N-A following execution of new lease Reroof Paint Tenant Reroof and paint Yes2 N-A N-A 2009 Chicken Coop Replace planks and chicken wire sections that are in poor Repair Tenant No N-A N-A 2009 condition Aviary Reroof Paint Tenant Reroof and paint Yes2 N-A N-A 2012 Repaint Tenant Repaint structure No N-A N-A White Fence Repair Tenant Repairs as necessary including replacement of rails, posts, No N-A N-A 2009 railin s to match existing fence Relocate cleaning supplies into utility closet(some supplies Within six months Restroom Utility Closet Tenant located in rear of restroom) No N-A N-A following execution of new lease Vineyard District During 1 st 5 years Vineyard Management Tenant Develop vineyard management plan Yes Yes N-A Plan of new lease Page 3 of 4 EXHIBIT B - MASTER IMPROVEMENT and IMPLEMENTATION SITE PLAN - Rev. Sept. 28, 2007 Picchetti Winery Premesis Signage Sctwdute DROAd Wing Desadoom &Environ. Design Implementation man A LROQUIred Restroom Restroom Tenant Reinstall restroom sign No N-A N-A N-A Si n District Supply tenant with"Authorized Personnel Only, No Public No N-A N-A By Jan-08 Authorized Entry"signs Winery/ Personnel Post"Authorized Personnel Only, No Public Entry"signs at Fermentation Sign Tenant key locations to keep the public away from closed areas. No N-A N-A As needed Bldg.Area Danger Remove"Danger: Restricted Area"signs posted to the north Signs Tenant of the Homestead House and will replace with one No N-A N-A Jan-08 "Authorized Personnel Only, No Public Entry" Private Work with tenant to place signs at key locations near Main Main House Residence District House to discourage the public from accessing closed areas N-A N-A N-A Feb-08 Si ns and disturbing the caretaker Tasting Add the following language: Wheelchair access to Winery Winery Room sign Tenant available on right side of building,Ask for assistance No N-A N-A By end of 2008 Provide tenant with a"Private Driveway,Authorized Vehicles Entry Private District Only"sign to be posted at the tenant driveway entrance to No N-A N-A by May-08 driveway Driveway discourage the general public from parking near the Main Sign House Tenant Install"Private Driveway,Authorized Vehicles Only" No N-A N-A By end of 2008 Allowable Di Work with tenant to develop an appropriate sign that outlines N-A May-08- Jul-08- Winery Use sign strict accepted behavior within the winery complex Jun-08 Sep-08 Oct-08 1 District operations staff to assist with project at tenant's cost 2 All written District approvals include scope of work and materials Page 4 of 4