AGRICULTURAL LAND LEASE

LIMONEIRA COMPANY, a Delaware corporation, Tenant, and Charles H. Sheldon and
Sherraine R. Sheldon as Trustees of the SHELDON FAMILY REVOVABLE TRUST, U/D/T
1-31-01, Owner.

1.  PARTIES:

This lease is entered into on January 6, 2012 and effective January 1, 2012,
between Limoneira Company, a Delaware corporation (“Tenant”), and Sheldon Family
Revocable Trust, U/D/T 1-31-01, (“Owner”).

2.  DESCRIPTION OF PREMISES:

Owner leases to Tenant, and the Tenant hires from Owner, on the terms and
conditions set forth in this lease, the agricultural premises (“Premises”) in
Tulare County, State of California as particularly described in the applicable
column of Schedule 13B, attached hereto and  although ancillary support
structures to the farming activities, e.g., shops, barns and fuel storage
facilities, and similar structures are part of the Premises, they are subject to
special provisions regarding terms and rent., infra.

Also, other structure and surrounding areas are located within the Premises’
legally defined area, these structures and areas are excluded from and not part
of the Premises.  Said structures are, as follows:  The residences and ancillary
structures of Charles H. Sheldon, Paul N. Sheldon, and the rental residences
located at the Sheldon Ranch headquarters.  In addition to the structures the
surrounding yard areas are also excluded.  The occupants and their respective
guests and invitees of said residences shall have the right of ingress to and
excess from the residences owned across existing roadways on the Premises.

Located at the Sheldon Ranch headquarters is the office building of the Owner as
well as other Sheldon family entities.  The Tenant shall have a revocable
license to jointly occupy the said office building with the Owner and the other
occupants.  The Tenant and the Owner shall by separate agreement or usage
establish the shared use, responsibilities, and obligations associated with this
relationship.

3. SUBJECT TO EXISTING RIGHTS OF OTHERS:

This lease is subject to (a) all existing easements, servitudes, licenses,
rights-of-way, ditches, levees, roads, highways, and telegraph, telephone, and
electric power lines, pipelines, and other purposes, whether recorded or not;
(b) the rights of other Occupants under any existing or future oil, gas, and
mineral lease or leases from Owner affecting the entire or any portion of the
premises, whether recorded or not;

 
 

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4.  COVENANT OF TITLE AND QUIET ENJOYMENT:

Owner covenants that Owner has good title to the Premises free and clear of all
liens, encumbrances and customary and ordinary restrictions, except as set forth
on Schedule “4”.  Except as provided in Section 36 below, Owner shall not
mortgage, assign, pledge, hypothecate or otherwise encumber its fee interest in
the Premises during the term of this Lease.  Provided, however Owner shall be
allowed to encumber all, or any part of the Premises if, and only if, the lender
executes a nondisturbance agreement that shall provide, among other customary
terms and provisions, that the Tenant and leasehold mortgage, if any, would not
be disturbed so long as there was no event of default under this Lease.  Owner
warrants and will defend the title thereto, and will indemnify Tenant against
any damage and expense which Tenant may suffer by reason of any lien,
encumbrance, restriction or deficit in the title or description herein of the
Premises.  If, at any time, Owner’s title or right to receive rent hereunder is
disputed, or there is a change of ownership of Owner’s estate by act of the
parties or operation of law, Tenant may withhold rent thereafter accruing until
Tenant is furnished reasonable proof satisfactory to it as to the party entitled
thereto.  Subject to Owner’s prior written consent in each instance (which
consent shall not be unreasonably withheld) Tenant may grant to public entities
and public utilities for the purposes of serving the Premises rights of way and
easements on over or under the Premises for all water, telephone, gas,
electricity, sewer and other utility services.
 
5.  TITLE INSURANCE:

Prior to Tenant exercising its rights from time to time under paragraph 9, Owner
shall apply for leasehold title insurance from Chicago Title Insurance Company
in the amount of not less than an amount equal to the out of pocket costs
anticipated by Tenant in improving the Premises, including cost of labor, trees,
and water delivery systems as agreed by Owner and Tenant

6.  PERSONAL PROPERTY:

In addition to the real property described in Paragraph 2, Owner also leases to
Tenant and Tenant hires from Owner on the terms and conditions set forth in this
Lease the following personal property:  All improvements located thereon and all
rights appurtenant thereto, including, without limitation, wells, pumps, motors,
electrical hookups, water discharge fixtures, pipelines, irrigation systems, and
frost protection systems.

7.  ENTRY BY OWNER:

Tenant shall permit Owner, and Owner’s agents and assigns, at all reasonable
times, to enter the leased Premises, and to use the roads established on the
Premises now or in the future, for the purposes of inspection, compliance with
the terms of this Lease, exercise of all rights under this Lease, posting
notices, and all other lawful purposes.  Tenant shall supply Owner, and his
agents and assigns, with keys and other instruments necessary to effect entry on
the Premises.

 
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Tenant shall make and keep pertinent records of all operations and conduct under
this Lease and shall make them available to Owner and Owner’s agents and assigns
at all reasonable times for inspection.

8.  UTILITIES:

Tenant shall pay for all water, gas, heat, light, power, telephone service, and
for all other services supplied to the Premises except as otherwise provided in
this Lease.

Tenant may make such utility installations of a non-structural nature to the
Premises as are consistent with or required by the management and operation of
the Premises for agricultural purposes in accordance with the permitted uses as
herein provided.  Tenant shall pay for all such utility installations.

9.  USE, ALTERATIONS AND TITLE TO IMPROVEMENTS:

(a)           Tenant may use the Premises for any lawful agricultural purpose;
provided, however, that before changing the use of the Premise or changing the
cropping, Tenant shall first obtain Owner’s written consent in each instance,
which consent shall not be unreasonably withheld or delayed.  In the event Owner
withholds its consent, Tenant may elect to terminate the Lease as it relates to
that proposed Project by giving at least six months written notice to the Owner.

Owner makes no representation that the Premises are suitable for growing said
crops and makes no guarantee that Tenant will be able to reap any specific
number of cropping seasons or any specific crops.  Tenant is solely responsible
for ascertaining the suitability of the Premises for its use.

(b)          Tenant shall have the right from time to time to redevelop one or
more of the orchards on the Premises consistent with customary cultural
practices and make, construct, alter, add to, reconstruct, modify, remove, or
demolish on the Premises such buildings (excluding single family homes),
structures and other improvements (collectively, the “Project”).  Provided
however, before commencing work on a Project, the Tenant shall first obtain
Owner’s written consent in each instance, which consent shall not be
unreasonably withheld or delayed.  The written consent of owner shall expressly
address the removal or demolition of said building, structures, and similar
facilities before any activity occurs.  The Project shall be the property of the
Tenant at all times during the term of this Lease.   Owner may require Tenant to
remove any portion of the Project upon the termination of this Lease.  Any
portion of the Project that Owner has not requested removal shall be deemed to
be an abandonment thereof; whereby the same shall become part of the real estate
with title thereto vesting in the owner of the land.  Tenant shall execute, in
recordable form, and deliver to Owner reasonable conveyance and transfer of
ownership documents that evidence ownership in said real and personal items to
Owner.  Owner shall have the right at all times to enter the Premises to post
any notice of non-responsibility with respect to any construction by Tenant.

 
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(c)           Owner shall cooperate with Tenant in the above-described
development to the extent reasonably necessary and without cost to Owner,
including, without limitation, execution of documents and applications for
governmental approvals of the Project.

(d)           Tenant shall give Owner not less than ten (10) days prior written
notice of Tenant intended commencement of any Project and Tenant shall pay or
cause to be paid the total cost and expense of all works of improvement and
Tenant shall not allow the enforcement against the Premises of any mechanics
liens; Tenant may contest any mechanics lien, claim or demand by furnishing a
mechanic lien release bond to Owner in compliance with applicable California
law.  If Tenant does not discharge any mechanics lien for works of improvement
performed for Tenant, Owner shall have the right to discharge same and Tenant
shall reimburse Owner for the cost of discharging such mechanics lien including
interest at the rate of 8½ % and reasonable attorneys fees.

(e)           Tenant intends to amortize the capital improvements of the Project
in accordance with U.S. generally accepted accounting principles commencing with
the respective dates of installation of equipment and/or of planting of citrus
or other, as the case may be.  Owner shall reimburse Tenant for 120% of the
unamortized cost of such capital improvements.  Such reimbursement shall be made
within 30 days following the expiration of the Lease term, or any extension
thereof.  Such reimbursement shall be paid by Owner by cashiers check or other
immediately available funds.  Should Owner find that immediate repayment within
thirty days is not feasible, Owner, with Tenant approval,  may elect to defer
payment for up to one year.  The amount owed shall accrue interest at the rate
of 8½ percent per annum.  The amortized costs of the Project shall not exceed
industry standards.  Upon initial completion of the Project Tenant shall
forthwith provide to Owner a written report detailing the Project costs and
intended amortization by component.  As the Project grows and develops during
the non-bearing years, the Tenant shall also provide Owner at least annually
with updated reports of cultural costs incurred and related amortization
schedules. The details shall be sufficient to reasonably satisfy Owner.  Within
a reasonable period of time after reviewing the said report, Owner shall in
writing either approve the report and amortization or object to report or
amortization, or both, providing details of the objection.  The parties may
delay the resolution of the said objections until such time as the Owner shall
likely be financially impacted, if ever.

10.  WATER:

Water necessary for the irrigation of lemons, oranges, and other crops to be
grown on the premises during the term of this Lease shall be provided by Tenant
at Tenant’s expenses subject to the following terms and conditions:

During the term of this Lease all regular maintenance of and repairs to the
pumps, wells, and pipelines shall be at the Tenant’s cost and expense.  If
replacement of wells, pumps, and pipelines become necessary, such costs will be
borne by the Tenant but such costs will be amortized in accordance with U.S.
generally accepted accounting principles.  At such time Limoneira exercises its
“Option to Purchase” a property where capital costs by Tenant have occurred, or
the term of this Lease or any extension thereof has expired,  the procedure
under paragraph 9(e) shall apply.  Owner shall not transfer any water rights
appurtenant to the Premises during the term of this Lease.

 
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Owner assumes no responsibility to Tenant for any water shortage from such water
facilities and assumes no responsibility for, and does not warrant, the quality
or quantity of water supplied from such facilities.  No provision of this Lease
shall be construed as requiring Owner to furnish or guarantee any amount of
water to Tenant, it being understood that Owner makes no representations or
warranties of any kind as to the adequacy, quality or quantity of any present or
future source of water.  Owner shall not be responsible to Tenant for any
damages incurred by Tenant, or for damage to the Premises or for damages to
Tenant’s crops caused by water or lack of water at the Premises, or by reason of
any salt intrusion into the irrigation water or by reason of the intrusion of
any other substances, minerals, bacteria or materials into said water from any
cause whatsoever which may render such water unfit for irrigation.

Tenant shall limit and control the flow of excess irrigation water, runoff or
tail water so that it does not cause erosion or cause overflow upon or damage to
or contamination of the neighboring lands and waters. Tenant shall preserve and
maintain existing drainage ditches and drainage patterns on and from the leased
Premises in good condition. Tenant shall not perform any grading, leveling,
earthwork, drainage and erosion control work without first obtaining all
necessary governmental permits. Tenant shall so conduct Tenant’s farming
operations to so as to prevent any discharge of water or silt from the Premises,
and shall not over water and cause runoff from or on the Premises. Tenant shall
at all times take all reasonable actions necessary to prevent all erosion at, on
and from the Premises.

11.  THE TERM:

The term of this Lease is for ten (10) years starting on January 1, 2012 and
ending on December 31, 2021 , with Tenant having the option to extend for four
(4) consecutive 5 year terms provided it is not in default under this Lease at
the time when notice of the extension is given or when the extended term
begins.  The Tenant shall give to Owner a written notice to exercise each 5-year
option and that written notice shall be delivered to Owner not less than six
months prior to the end of the term or extended term, as the case may be.  At
the expiration of the Lease, Tenant shall return the Premises to Owner in no
worse condition than when received, cleaned of all pipe, tape, plastic debris
and weeds, with all erosion and other damage repaired.

Provided, however, the term for the said shops, barns, fuel storage facilities,
and similar structures, shall be from year to year and shall renew annually each
year until one of the parties terminates such year to year lease.  Such
termination shall require three months written notice to the other party.  Each
of said structures shall be deemed separate and apart from each other for the
purposes of this provision.  For the avoidance of doubt, this means that the
lease of one such structure can be terminated as provided herein without
terminating the lease of the other structures.
 
 
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12.  HOLDING OVER:

If Tenant continues to occupy the Premises after the last day of the Lease Term
or any extension thereof, and Owner elects to accept rent, thereafter a tenancy
from month to month shall be created and not a tenancy for a longer period.

13.  RENT:

Tenant shall pay to the Owner rent in accordance with Schedule 13A attached
hereto.  Excess Rents for 2012 will be calculated from the 2012-13 crop year,
initiated by the bloom of the Spring of 2012.   Subsequent to the end of each
crop year, which is November 1 to October 31, Tenant will pay calculated “Excess
Rent” for all computation units that exceed the $500/acre Minimum Rent.  Minimum
and Excess Rents shall be paid each year after December 31 but before January
15th.  Interest at the rate of 8½% per annum shall accrue on rents paid more
than five days late.

The Minimum Rents and Excess Rents shall be calculated by computational units in
accordance with Schedule 13B attached hereto.

On the 5th anniversary and on each lease extension, if any, the parties shall
review the per acre Minimum Rent and adjust it upward if industry cash rent
standards in Tulare County so indicate.  If such data is lacking for Tulare
County, indexing the change in comparable bare land values in Tulare County
shall be used instead.  In no event will the ratio of Owner’s taxes, irrigation
assessments, and irrigation standbys to Minimum Rent be allowed to change to the
Owner’s detriment.

The rent for the said shops, barns, fuel storage facilities, and similar
structures and use of the office building shall be at the rate of $1,500 per
month, payable monthly on the first day of each month, accruing interest at the
rate of 8½ % per annum for payments paid more than five days late.  In the event
the term of one or more but not all of said structures is terminated as provided
under paragraph 11, the rent shall be reduced as the parties agree.  In the
event of a disagreement, the arbitrator under paragraph 35 shall determine the
fair rental value of all of said structures and then reduce the monthly rental
pro rata.

14.  TAXES:

All real property taxes and irrigation district assessments and standby charges
shall be paid by Owner.  All taxes on personal property belonging to Tenant, and
used by Tenant on the Premises, shall be paid by Tenant.  Provided, however, in
the event a Tenant Project causes said taxes and assessments to increase the
Tenant shall reimburse the Owner for such increase upon demand.

 
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15.  EXPENSES:

Except as otherwise specifically provided herein Tenant shall bear all expenses
reasonably necessary to grow citrus, and other crops on the Premises, and to
keep the Premises, and the trees thereon, in the best course of husbandry
practiced in the vicinity.

16.  AGRICULTURAL PRACTICES:

The Premises are leased to Tenant for the planting, growing, and harvesting of
lemons, citrus and other tree crops.  Tenant shall not use, or permit to be
used, any part of the Premises for any purpose other than the purposes for which
the Premises are leased.  All operations incident to this use of the Premises
shall be carried out according to the best course of husbandry practiced in the
vicinity; and on default of Tenant to do so, Owner reserves the right, after
having given thirty (30) days’ notice, to take necessary remedial measures at
the expense of Tenant, for which Tenant agrees to reimburse Owner on demand plus
interest at the rate of 8 ½% per annum.  Any such determination shall be made by
an agricultural expert mutually agreed upon by Owner and Tenant.

Tenant agrees that it will perform sufficient leveling and maintenance of the
surface of the irrigable land to properly maintain the Premises for
irrigation.  It agrees to make diligent efforts to prevent the spread of all
noxious weeds, and rodents and other vertebrate pests on the leased Premises
during the term of the Lease; and to take reasonable measures to protect the
Premises from infestations of organisms that may produce disease in plants, and
that come onto or develop on the Premises during the term of this Lease and that
might damage crops or trees, or both,  grown or maintained on the Premises after
the term.  It agrees to properly prune all trees as may be reasonably necessary
to protect fruit production and to protect the trees and fruit from infestation
and disease.  On default of Tenant to do so, Owner reserves the right, after
having given 30 days’ notice, to take necessary remedial measures at Tenant’s
expense, for which Tenant agrees to reimburse Owner on demand plus interest at
the rate of 8 ½% per annum.

17.  CONDEMNATION:

If the whole or any part of the Premises or any improvements thereon shall be
taken or condemned by any competent authority for any public use or purpose
during the term of this Lease, Tenant shall receive any portion of any award
allocable to crops on trees, its capital improvements, including orchards, to
the cost or loss that Tenant may sustain in the removal and relocation of
Tenant’s trade fixtures and other personal property, to Tenant’s anticipated or
lost profits or damages because of detriment to Tenant’s business and to the
value of Tenant’s leasehold interest.  Tenant reserves the right to claim and
prosecute its claim in all appropriate courts and agencies for an award or
damages based upon the foregoing without impairing any rights of Owner for the
taking of or injury to its interest in the Premises.  The entire award for the
fair market value of the land taken shall be paid to Owner.  No compromise or
settlement shall be made of any condemnation award without the consent of,
Owner, Tenant and any Mortgagee.

 
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If a part of the Premises is taken or condemned which, in the sole judgment of
Tenant, is sufficient to render the remaining portion unsuitable for continued
use or occupancy, then Tenant may within sixty (60) days after the date when
possession of the Premises or portion thereof shall be required by the
condemning authority, elect to terminate this Lease.  In the event that Tenant
shall fail to exercise its option to terminate this Lease, then this Lease shall
continue in effect with respect to the portion the Premises not so taken, except
that the rent otherwise payable shall be reduced in proportion to the percentage
of planted acreage in the Premises taken by the condemning authority.  If no
planted acreage is taken then the rent shall not be reduced by reason of such
taking.

18.  MAINTENANCE:

Tenant shall care for both the Premises and the approaches to and appurtenances
of the leased Premises, including, but not limited to, all fences, wells,
ditches, and roadways, and maintain them in the same order and condition in
which received, ordinary wear and tear excepted.  Maintenance shall include
incidental repair of pipelines and occasional replacement of trees damaged by
disease, vandalism, or weather.

Tenant expressly waives the benefit of any statute which now or hereafter would
afford Tenant the right to make repairs at Owner’s expense or to terminate this
Lease because of Owner’s failure to keep the Premises in good order, condition
and repair, including the provision of Civil Code Section 1942.

19.  COMPLIANCE OF LAW:

Tenant shall comply with all requirements of all governmental authorities, in
force either now or in the future, affecting the Premises, and shall faithfully
observe in its use of the Premises all laws, rules, and regulations of these
authorities, in force either now or in the future.  The judgment of a court of
competent jurisdiction, or Tenant’s admission in an action or a proceeding
against it, whether Owner be a party to it or not, that Tenant has violated any
law, rule, or regulation in its use of the Premises shall be considered
conclusive evidence of that fact as between Owner and Tenant.

Provided, however, that if during the term of this Lease a change in, or
addition of, law, regulation, or rule by these authorities requires correction
or alleviation of naturally occurring conditions, including, but not limited to,
weed and pest infestations, and disease conditions, that exist wholly or in part
at the start of this Lease, the correction or alleviation shall be performed by
Tenant, but its cost shall be borne by both Owner and Tenant a proportion based
on the extent to which the conditions required to be corrected exist at the time
this Lease starts.  If Tenant fails to comply with any such law, regulation, or
rule, Owner reserves the right to take necessary remedial measures at Tenant’s
expense, for which Tenant agrees to reimburse Owner on demand plus interest at
the rate of 8 ½% per annum.

Provided, further, that if during the term of this Lease any alteration of or
addition to an artificial structure, including, but not limited to, buildings,
fences, roads, dikes and ditches, is required to be made to the Premises, or any
portion of the Premises, by law, regulation, or rule of one of these
authorities, then the following paragraph applies:

 
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If the alterations or additions are required as a result of the lack of care or
maintenance of those portions of the Premises that Tenant is required by the
terms of this Lease to care for and maintain, or as a result of the manner or
mode of use of the Premises by Tenant, the alterations or additions shall be
made and paid for by Tenant, otherwise by Owner.  If Tenant fails to comply with
any such law, regulation, or rule, Owner reserves the right to take necessary
remedial measures at Tenant’s expense, for which Tenant agrees to reimburse
Owner on demand plus interest at the rate of 8 ½% per annum.

Tenant shall be responsible for the cost of all fertilizers, herbicides,
insecticides, and other required sprays and chemicals necessary for crop
production on the Premises during the Lease Term.  The application of such
fertilizers, herbicides, insecticides, sprays and chemicals shall be in
accordance with applicable laws, statutes, ordinances and regulations of all
federal, state, county, and city bodies having jurisdiction in such matters.
Tenant shall not spray, spread, irrigate, inject, deposit, dispose or otherwise
apply under, on or upon the Premises any fertilizers, chemicals, waste products
or other substances which are toxic, illegal or otherwise inappropriate for
application upon agricultural or horticultural real property.  No fertilizer,
herbicide, pesticide, poison chemical or similar substance, except those
approved by the United States Department of Agriculture, shall be applied by
Tenant to the Premises or crops growing thereon.  The use of any such substance
by Tenant shall be in strict conformity with the manufacturer’s instructions and
all governmental regulations respecting the manner and timing of the
application.  No experimental fertilizer, herbicide, pesticide, poison or other
foreign substance shall be applied to the Premises or to the crops growing
thereon, except with Owner’s written consent.  Tenant shall not use any
agricultural chemical or similar substance with a residual effective life longer
than the remaining term of this Lease at the time of its application, or of such
nature as to prevent the use of the soil for other crops of any type following
the term of this Lease unless Owner’s written consent is first obtained.  Tenant
shall maintain complete and accurate records respecting the time, place,
quantity, kind and method of application of all such substances as may be
utilized by the Tenant and shall furnish to Owner, upon request, true and
correct copies thereof.
 
 
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20.  INSURANCE AND INDEMNITY:

Indemnification by Owner.  Tenant shall indemnify, defend, protect and hold
harmless Owner, the partnership, the partnership’s partners, employees,
contractors, agents, representatives, heirs, executors, administrators, assigns
and legal successors (each an “Indemnified Party”, all jointly “Indemnified
Parties”) from and against any and all claims, demands, causes of action (of
every kind and nature, in law and at equity) liabilities, obligations, losses,
attorney’s fees, costs, damages, recoveries or expenses (jointly “Claims”)
arising from or related to: the occupancy and use of Premises by Tenant or any
other person and/or entity with the knowledge and/or consent of Tenant (“Third
Party(ies)”); the conduct of Tenant’s or any Third Party’s(ies)”) business; any
activity, work or things done, permitted or suffered by Tenant and/or any Third
Party(ies) in or about Premises or elsewhere; all Claims arising from any breach
or default in the performance of any obligation of Tenant; any Claims arising
from any negligence or intentional misconduct of any Third Party(ies), Tenant or
Tenant’s employees, contractors, agents, representatives, invitees, related
entities (and officers, directors and principals of any related entity), assigns
and legal successors occurring on or about the Premises; and from any Claims
paid, including but not limited to claims incurred or suffered by, or asserted
against, Owner, the Premises or the Premises arising from or attributable to any
repair, cleanup or detoxification, or preparation and implementation of any
removal, remediation, response, closure or other plan (jointly “Response”)
concerning any “Hazardous Substance” as contemplated and defined above on, under
or about the Premises caused by Tenant and/or any of Tenant’s former or existing
employees, contractors, agents, representatives, invitees, related entities (and
officers, directors and principals of any related entity), assigns and legal
successors from and after Tenant’s occupancy of Premises; and all costs,
attorney’s fees, expenses and liabilities incurred in the defense of any
Claim(s) or action brought on any such claims.  Tenant shall provide Owner 30
days prior written notice of the particulars of any required or proposed
Response concerning any “Hazardous Substance” and Tenant’s right to effect any
such required or proposed Response shall be conditioned on Owner’s reasonable
written approval thereof and of the contractors, persons or entity(ies) proposed
by Tenant to effect same.  The provision of this paragraph shall survive any
surrender, termination of, and the expiration of this Lease.  In case any action
is brought against Indemnified Party(ies) by reason of any Claim, Tenant, upon
notice from the Indemnified Party(ies), shall defend Owner at Tenant’s sole cost
and expense through counsel chosen by Owner.

Tenant, at his sole cost and expense, shall procure and keep in force public
liability insurance of not less than $1,000,000.00.  Tenant shall not use or
permit others to use the Premises in any manner that will increase existing
insurance rates on the Premises, the Premises or its improvements.  Tenant shall
also maintain such other insurance as required by law including, without
limitation, workers’ compensation insurance.   Tenant shall provide Owner with a
full copy of its liability insurance policy and declarations pages related to
the Premises.

Owner shall indemnify Tenant against and hold it harmless from any and all loss
liability damage or claim arising out of the action of Owner, its members,
agents or employees.

21.  INSURANCE POLICIES:

Insurance required hereunder shall be in companies duly licensed to transact
business in the state where the Premises are located, and maintaining during the
policy term a “General Policyholders Rating” of at least B+, V, or such other
rating as may be required by a lender having a lien on the Premises, as set
forth in the most current issue of “Best’s Insurance Guide.”  Tenant shall not
do or permit to be done anything which shall invalidate the insurance policies
referred to in the Lease.  Tenant shall cause to be delivered to Owner certified
copies of, or certificates evidencing the existence and amounts of, the
insurance, and with the additional insured’s, required under the insurance.  No
such policy shall be cancelable or subject to modification except after thirty
(30) days prior written notice to Owner.  Tenant shall at least thirty (30) days
prior to the expiration of such policies, furnish Owner with evidence of
renewals or “insurance binders” evidencing renewal thereof, or Owner may order
such insurance and charge the cost thereof to Tenant, which amount shall be
payable by Tenant to Owner upon demand.

 
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22.  WAIVER OF SUBROGATION:

Without affecting any other rights or remedies, Tenant and Owner (“Waiving
Party”) each hereby release and relieve the other, and waive their entire right
to recover damages against the other for loss or damage to the Waiving Party’s
property arising out of or incident to the perils required to be insured against
under the Lease.  The effect of such releases and waivers of the right to
recover damages shall not be limited by the amount of insurance carried or
required, or by any deductibles applicable thereto.

23.  TAXES:

(a)      All real property tax and irrigation district assessments and standby
charges shall be paid by Owner.  All taxes on personal property belonging to
Tenant, and used by Tenant on the Premises, shall be paid by Tenant.  Owner
shall not be required to pay any franchise, gross receipts, income, or other tax
assessed against the Tenant. Owner shall provide Tenant with evidence of payment
promptly upon payment of any taxes.  If Owner fails to pay any such taxes within
the time set forth above, Tenant may pay the taxes and Owner shall reimburse
Tenant with the next due rental payment, plus interest at 8 ½% per
annum.  Provided, however, in the event a Tenant Project causes said taxes and
assessments to increase the Tenant shall reimburse the Owner for such increase
upon demand.

(b)      Tenant may at its cost pursue any legal remedy to contest, obtain an
abatement or reduction of any taxes, assessments, or other impositions, and
Owner shall cooperate to the extent reasonably necessary.  Such action may be
taken in Owner’s name if required by law.  In such case, Tenant shall indemnify
Owner against any and all loss, cost, expense or damage of liability arising
from such action, and provide assurance reasonably satisfactory to Owner that no
tax lien will affect Owner’s interest in the Premises.

(c)      Neither Owner nor Tenant shall consent to or approve any bonds or other
assessments, for any purpose, without the joint approval of the other party.

(d)      Owner shall pay all property taxes and assessments owing on the
Premises or which may become a lien on the Premises prior to the commencement
date, i.e., such taxes and assessments shall be pro-rated to the commencement
date (and to the termination date).
 
 
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24.  HAZARDOUS AND TOXIC MATERIALS:

Tenant shall, throughout the term hereof, without cost to Owner, fully comply
with all environmental, pollution and “Hazardous Substance” rules and
regulations relating to the storage, use and disposal of Hazardous
Substances.  “Hazardous Substance” means any product, substance, chemical,
material or waste whose presence, nature, quantity and/or intensity of
existence, use, manufacture, disposal, transportation, spill, release or effect
renders it subject to federal, state or local regulation, investigation,
remediation or removal as potentially injurious to either public health or
welfare, the environment, or the Premises.  Without limiting the generality of
the foregoing, Hazardous Substance shall include hydrocarbons, petroleum oil and
any fractions thereof, including gasoline and diesel, any additives used in the
refining of such products and includes all substances defined as hazardous
substances,” “hazardous materials” or “toxic substances” in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C., Section 1801 et seq.; and the Resource Conservation and Recovery Acts 42
U.S.C. Section 6901, et seq.; and those substances defined as “hazardous
substances” in Section 25316 of the California Health & Safety Code, and in the
regulations adopted and publications promulgated pursuant to said laws.  Any
Hazardous Substance located on the Premises as a result of Tenant’s possession,
use or occupancy of the Premises shall be the sole responsibility of Tenant and
Tenant shall be liable and responsible therefore, including, without limitation,
the removal from the Premises of such materials and wastes, the remediation and
cleanup of any such substance, and any damages to any person, property or
Premises resulting therefrom.  Except for pesticides, insecticides, fungicides,
herbicides, gasoline, diesel, propane and related chemicals and fuels normally
used in Tulare County farming operations, Tenant shall not use and Tenant shall
prevent all person and entities from using, generating, manufacturing, storing
or disposing of, on, under or about the Premises or transporting to or from the
Premises, any Hazardous Substance and any flammable explosives, radioactive
materials, hazardous wastes, toxic substances, or related materials.  Tenant
shall cause all pesticides, insecticides, fungicides, herbicides, gasoline,
diesel, propane and related chemicals and fuels stored or used on the Premises,
to be stored or used, in each case, in accordance with the recommendations of
the manufacturer of said substance and in accordance with all governmental
regulations and requirements.  Tenant shall defend, indemnify and hold harmless
Owner, the Partnership and its Partners, heirs, and successors, Owner’s
employees, and agents, and any other persons acting on behalf of Owner, from and
against any and all claims, damages, liabilities, expenses, costs and attorney’s
fees arising out of or in any way connected with: (a) Tenant’s failure to comply
with the above described environmental laws, rules, regulations and agency
directives, or (b) the presence  of Hazardous Substances or contamination in, on
or below the Premises resulting from Tenant’s possession, use or occupancy of
the Premises.  The provisions of this Section shall survive the expiration or
earlier termination of this Lease.

Owner shall remain liable for any and all costs associated with Hazardous
Substances present on the Premises at the commencement of this Lease.

 
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Tenant shall have the right to conduct an environmental assessment within ninety
(90) days of the commencement date of the lease, at its expense, which
assessment shall serve as a baseline for the condition of the Premises upon
lease commencement.  Tenant shall provide Owner, at no cost, a copy of the
complete assessment promptly upon receipt by the Tenant.

25.  TERMS AND CONDITIONS APPLICABLE TO ASSIGNMENT AND/OR SUBLETTING:

(a)      Regardless of Owner’s consent, any assignment or subletting shall not
(i) be effective without the express written assumption by such assignee or
sublessee of the obligations of Tenant under this Lease, (ii) release Tenant of
any obligations hereunder, or (iii) alter the primary liability of Tenant for
the payment of base rent and other sums due Owner under this Lease or for the
performance of any other obligations to be performed by Tenant under this Lease.

(b)      The consent of Owner to one assignment or subletting shall not
constitute a consent to any subsequent assignment or subletting by Tenant or to
any subsequent or successive assignment or subletting the subtenant.  Neither a
delay in the approval or disapproval of such assignment, nor the acceptance of
any rent or performance, shall constitute a waiver of or estoppel as to Owner’s
right to exercise its remedies for the default or breach by Tenant of any of the
terms, covenants or conditions of this Lease.

(c)      Each request for consent to an assignment or subletting shall be in
writing, accompanied by information relevant to Owner’s determination as to the
financial and operational responsibility of or the appropriateness of the
proposed assignee or subtenant, including but not limited the intended use
and/or required modification of the Premises, if any.  Tenant agrees to provide
Owner with such other or additional information and/or documentation as maybe
reasonably requested by Owner.

(d)      No sublessee shall further assign or sublet all or any part of the
Premises without Owner’s prior written consent.

26.  DEFAULT/OWNER’S RIGHT OF RE-ENTRY:

Each of the provisions in this Lease is a material term of this Lease.  In
addition to other events of default described in this Lease, any of the
following events or occurrences shall constitute a material breach of this Lease
by Tenant and, after the expiration of any applicable grace period, shall
constitute an event of default (each an “Event of Default”):

(a)      Failure to Pay.  The failure by Tenant to pay the rent, taxes,
utilities, or any other an amount due, in full, after the amount is due under
the Lease;

(b)      Failure to Perform.  The failure by Tenant to perform any obligation
under this Lease, which by its nature Tenant has no capacity to cure;

 
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(c)      Failure to Perform Other Obligation.  The failure by Tenant to perform
any other obligation under this Lease, if the failure has continued for a period
of thirty (30) days after Tenant has received a written demand that Tenant cure
the failure; or  a reasonable period based upon the nature of any repair
obligation.

(d)      Bankruptcy.  Any of the following:  A general assignment by Tenant for
the benefit of Tenant’s creditors; and voluntary filing, petition, or
application by Tenant under any law relating to insolvency/bankruptcy, whether
for a declaration of bankruptcy, a reorganization, an arrangement, or otherwise;
the abandonment of the Premises by Tenant without Owner’s prior written consent;
or the dispossession of Tenant from the Premises (other than by Owner) by
process of law or otherwise; or

(e)      Appointment of Trustee.  The appointment of a trustee or receiver to
take possession of all or substantially all of Tenant’s assets; or the
attachment, execution, or other judicial seizure of all or substantially all of
Tenant’s assets located on the Premises or of Tenant’s interest in this Lease,
unless the appointment or attachment, execution, or seizure is discharged within
thirty (30) days; or  the involuntary filing against Tenant of: (i) a petition
to have Tenant declared bankrupt, or (ii) a petition for reorganization or
arrangement of Tenant under any law relating to insolvency or bankruptcy,
unless, in the case of any involuntary filing, it is dismissed within sixty (60)
days.

Owner’s Remedies on Default.  Upon the Occurrence of an Event of Default, Owner,
in addition to any other rights or remedies available to Owner at law or in
equity, shall have the right to:

(a)      Termination.

(1)           Declare the Term hereof ended, reenter Premises, take possession
thereof and of all harvested and unharvested crops and remove all persons
therefrom provided, Owner agrees to not take any action that would unreasonably
diminish the value of Tenant’s crop.

(2)           Terminate this Lease and all rights of Tenant in or to Premises at
any time, with or without reentry under Provision (1) next above.

(3)           Without terminating this Lease, Owner may for the duration of the
then current lease term, re-let the entire or any part of the Premises for such
terms (which may extend beyond the term of this Lease) and at such rental and
other conditions as are commercially reasonable under the then current market
conditions. Upon any re-letting of all or any part of the Premises, rents
received by Owner shall be applied first to the payment of any indebtedness,
other than rent due hereunder; second, to the payment of any costs and expenses
of re-letting; third, to the accumulated interest due and unpaid hereunder,
fourth, to past due Rent, and the residue, if any shall be held by Owner and
applied in payment of future rent as the same may become due and payable
hereunder.  Upon the expiration if the term of this Lease, any excess funds that
remain unapplied to amounts due under the Lease shall be returned to
Tenant.  Owner also has the right, at Tenant’s expense, to clean and disc the
Premises to prepare it for re-letting, and to make any reasonably necessary
alterations and repairs to the Premises, which would have been required under
Section 42 at the expiration of the term.    Tenant shall have the right to
conduct an environmental assessment as set forth in Section 42 to establish a
baseline for the condition of the Premises at the  re-letting.  Tenant shall
provide Owner, at no cost, a copy of the complete assessment promptly upon
receipt by the Tenant.  No such re-entry or taking possession of the Premises by
Owner shall be construed as an election to terminate this Lease unless written
notice of intention to so terminate is given by Owner.

 
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Notwithstanding any such re-letting without termination, Owner may at any time
thereafter elect to terminate this Lease for the previous abandonment, breach,
or failure to pay rent. In the alternative, in Owner’s sole discretion, Owner,
or Owner’s agents or assigns, or a receiver appointed at Owner’s instance may:

(1)           perform Tenant’s duties under this Lease in such things as
maintaining the Premises and grow, harvest, and market any crops thereon,
(2)           charge the proceeds of the crops with all reasonable costs of
maintenance and husbandry, and

(3)           apply the remainder of the proceeds to any sums due under this
Lease.

(b)      Continuation.  Continue this Lease without waiver of Owner’s right to
terminate this Lease for this Event of Default or any subsequent Event of
Default; Any act that Owner is entitled to do in exercise of Owner’s rights upon
any Event of Default may be done, in Owner’s sole and exclusive discretion, at a
time and in any manner deemed reasonable by Owner, and Tenant irrevocably
authorizes Owner to act in all things done on Tenant’s account.
 
27.  CROP MORTGAGES:

All crop mortgages, encumbrances, or liens given or suffered by Tenant on the
crops grown on the Premises shall be for terms or periods not extending beyond
the term of the Lease.  All liens created by Tenant must be satisfied of record
by Tenant before the end of the term.  If a mortgage or lien creates a cloud on
Owner’s title, Tenant must pay all reasonable costs and expenses, including
attorney’s fees, required for the removal of the cloud, either before or after
termination of the Lease.

28.  CROP INSURANCE:

There is currently in effect crop insurance with respect to crops on the
Premises.  Tenant shall maintain such crop insurance in effect and shall
maintain at all times crop insurance for crops on the Premises.  Upon Tenant’s
termination of this Lease it shall keep in place crop insurance for the
following crop year.
 
 
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29.  PREMISES CONDITION:

Tenant enters into this Lease and accepts the Premises with full knowledge of,
and accepts the condition of the Premises, “as how and where is.”  This “AS IS”
acceptance includes but is not limited to the condition of the land, soil,
water, ditches, silt ponds, culverts, pumps, wells, and the water system.  No
patent or latent physical condition of the Premises, whether known or not known
to or discovered by Tenant shall affect the rights of Owner and Tenant under
this Lease.

Tenant acknowledges that:

(a)      neither Owner nor any of Owner’s employees, representatives or agents
have made any express or implied written or verbal representations or warranties
respecting the physical condition of the Premises or any other aspect or
condition of the Premises, including, without limit, zoning, entitlements,
existence of environmentally prohibited substances, land, soil, ditches, silt
ponds, drainage, culverts, water system(s) (including the quantity, quality or
suitability of water for particular crops), irrigation systems and or any and
all other improvements now on the Premises and or the Property;

(b)      Tenant has fully and thoroughly inspected the Premises and has
conducted any and all inspections relevant to a determination by Tenant of the
Premises’ condition and suitability for Tenant’s intended use;

(c)      Owner shall have no obligation or liability whatsoever for any clean
up, discing, weeding, preparation, improvements, alterations or repairs of any
nature to the Premises, or to payor reimburse Tenant for any part of the cost
thereof.

30.  PRIOR EVENTS:

Tenant shall have no liability for any matter of any sort with respect to the
Premises arising prior to the effective date of this Agreement.  Owner shall
indemnify Tenant against and hold it harmless from any and all loss, liability
damage or claims, including attorney’s fees and costs with respect to any matter
arising out of events occurring prior to the effective date of this Lease.

31.  MULTIPLE LEASES/CROSS DEFAULTS:

This Lease is one of several between Tenant and various Sheldon family
entities.  Each Lease shall stand on its own and a default by Owner, Tenant or
the Owner under any of such leases shall have no effect on the continuing legal
force and effect of any of the others.

32.  THIS SECTION NOT USED

33.  PACKING, SELLING AND HARVEST COSTS:

Packing, selling and harvesting costs shall be not more than determined by
industry standards.

 
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34.  PURCHASE OPTION:

Should Owner desire to sell the Premises, or any part of the Premises, it shall
so notify Tenant in writing.  The Tenant shall have 30 days after notice to
declare in writing to Owner an interest in purchasing the Subject Premises.  For
a period of sixty days thereafter Tenant shall have the option to purchase the
subject Premises for cash or such alternative as Tenant and Owner agrees.  The
purchase price shall be determined through appraisal by a Tulare County
appraiser acceptable to both Owner and Tenant without adjustment for the
existence of this Lease.  If the sale is consummated  to the Tenant at the
appraised value, the parties shall share equally the cost of the
appraisal.  However, if the Tenant will not pay the appraised value or the
property is sold to the Tenant for a price lower than the appraised value, then,
in that event the Tenant shall pay the entire cost of the appraisal.  If sold to
Tenant, Tenant shall receive credit against the purchase price for all
unamortized Project improvements situated upon the subject Premises.  Should
Tenant not purchase the Premises and a sale takes place to a third party, this
Lease shall terminate as of December 31 of the year of sale; provided, however,
that Tenant shall have unimpeded access to harvest any fruit not yet harvested
following termination.  In the event of a third party sale, Owner shall
compensate Tenant for all unamortized Project (paragraph 9) improvements at the
rate of 120% of the amount of the unamortized balance of the Project.  This
option to purchase shall not be transferable by Tenant.  If Tenant purchases the
portion of the Premises being sold, an escrow shall be opened for that purpose
and Owner shall provide a policy of title insurance to the Tenant.  All
customary costs and charges of escrow shall be allocated according to Tulare
County standard.  Owner shall pay no sales commission if sold to Tenant.  If
Tenant desires to purchase the Premises, independent of a third party offer, it
shall submit a written offer to Owner which it shall accept or reject within 60
days. In the event that the Option Property is not sold to a third party within
180 days of notice to Tenant of the intent to sell or the notice is for less
than the entire Premises, then the option to purchase set forth herein shall
remain in full force and effect for that portion of the Premises which is not
sold and Owner shall give notice as required herein of any subsequent intent to
sell.

35.  ARBITRATION OF DISPUTES:

Any dispute or claim in law or equity arising out of this Lease and/or the
transaction described therein shall be decided by neutral binding arbitration to
be held in the County of Tulare in accordance with California Arbitration Act
and not by Court action except as provided by California Law or judicial review
of arbitration proceedings.  Judgment upon the award rendered by the arbitrator
maybe entered in any court having jurisdiction thereof.  The parties shall have
the right to discover in accordance with Code of Civil Procedure Section
1283.05.  The following matters are excluded from arbitration hereunder:

(a)      A judicial or non-judicial foreclosure or other action or proceeding to
enforce a deed of trust, mortgage, or real property sales contract as defined in
Civil Code Section 2985,

(b)      an unlawful detainer action,

(c)      the filing or enforcement of a mechanic’s lien,

 
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(d)      any matter which is within the jurisdiction of a probate or small
claims court, or

(e)      an action for bodily injury or wrongful death, or for talent or patent
defects in which Code of Civil Procedure Section 337.1 or 337.15 applies.  The
filing of a judicial action to enable the recording of a Notice of Pending
Action, for Order of Attachment, Receivership, injunction or other provisional
remedies, shall not constitute a waiver of the right to arbitrate under this
provision.

36.  SUBORDINATION; ATTORNMENT; NON-DISTURBANCE:

This Lease is subject and subordinate to all present and future ground or
underlying leases of the Premises and to the lien of any mortgages or trust
deeds, now or hereinafter in force against the Premises and any other Premises
attached to the Premises, if any, and to all renewals, extensions,
modifications, consolidations and replacements thereof, and to all advances made
or hereafter to be made upon the security of such mortgages or trust deeds,
unless the holders of such mortgages or trust deeds, or the lessors under such
ground lease or underlying leases, require in writing that this Lease be
superior thereto.  Tenant covenants and agrees in the event any proceedings are
brought for the foreclosure of any such mortgage, to attorn, without any
deductions or set-offs whatsoever, to the purchaser upon any such foreclosure
sale if so requested to do so by such purchaser, and to recognize such purchaser
as the Owner under this Lease.  Tenant shall within five (5) days of request by
Owner execute such further instruments or assurances as Owner may reasonably
deem necessary to evidence or confirm the subordination or superiority of this
Lease to any such mortgages, deeds of trusts, ground leases or underlying
leases.  Tenant waives the provisions of any current or future rule or law which
may give or purport to give Tenant any right or election to terminate or
otherwise adversely affect this Lease and the obligations of the Tenant
hereunder in the event of any foreclosure proceeding or sale.

37.  WAIVER:

The waiver by Owner of a breach of any term, covenant, or condition contained in
this Lease shall not be treated as a waiver of such term, covenant, or
condition, or as a waiver of a future breach of the same or any other term,
covenant, or condition contained in this Lease.  The acceptance of rent by Owner
shall not be treated as a waiver of a previous breach by Tenant of any term,
covenant, or condition of this Lease, other than the failure of Tenant to pay
the particular rental so accepted, regardless of Owner’s knowledge of a previous
breach at the time of acceptance of rent.

38.  ATTORNEY’S FEES:

In any action or proceeding including arbitration by either party to enforce
this Lease or any provision thereof, the prevailing party shall be entitled to
all costs incurred and to reasonable attorney’s fees.

 
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39.  MISCELLANEOUS PROVISIONS:

(a)      If any provision of this Lease or the application thereof to any person
or circumstance shall, to any extent, be invalid or unenforceable, the remainder
of this Lease, shall not be affected.
(b)      The terms, conditions and covenants of this Lease shall be binding upon
and shall inure to the benefit of each of the parties hereto, their heirs,
personal representatives, successors, or assigns, and shall run with the land.

(c)      This Lease contains the entire, integrated agreement between Owner and
Tenant with respect to the matters herein contained and supersedes all prior
agreements and understanding between Owner and Tenant with respect to such
matters.  No waivers, alterations or modifications of this Lease or any
agreements in connection therewith shall be valid unless in writing duly
executed by both Owner and Tenant, as the case may be, through duly authorized
agents, officers, or partners.

(d)      The captions appearing in this Lease are inserted only as a matter of
convenience and shall not be used in construing this Lease.  The use of singular
herein shall be deemed to include the plural and vice versa.

(e)      If the Owner or the Tenant institutes any legal action or arbitration
proceeding against the other relating to the provisions of this Lease, or any
default hereunder, the unsuccessful Party in such action or proceeding agrees to
reimburse the successful party for the reasonable expenses of attorneys’ fees
and disbursements incurred therein by the successful Party.

(f)      Each party represents and warrants to the other that the execution of
this Lease has been duly authorized according to any applicable corporate
by-laws, trust agreement or partnership agreement, and the individuals executing
this Lease are duly authorized pursuant thereto.

(g)      At any time and from time to time, within ten (10) days after notice of
request by either party, the other party shall execute, acknowledge, and deliver
to the requesting party, or to such other recipient as the notice shall direct,
a statement certifying that this Lease is unmodified and in full force and
effect as modified in the manner specified in the statement.  The statement
shall also state the dates to which the rent and any other charges have been
paid in advance.  The statement shall be such that it can be relied on by any
auditor, creditor, commercial banker, and investment banker of either party and
by any prospective purchaser or encumbrancer of the Premises or improvements or
both or of all or any part or parts of Tenant’s or Owner’s interests under this
Lease.

(h)      This Lease shall be governed by the laws of the State of California.

(i)      There are no brokers involved in this transaction and each party
warrants to the other that no brokers commissions, finders fees or other
compensation shall be payable by reason of this Lease or the Option or the
exercise of the Option.

 
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(j)      This Lease shall immediately and automatically terminate in the event
of Tenant’s dissolution or insolvency or the filing of any bankruptcy or
receivership petition by or against Tenant under the bankruptcy laws.
(k)      It is expressly understood and agreed that the relationship of Owner
and Tenant is one of owner and tenant and not one of partnership or joint
venture, and that Owner shall not be responsible for any debt or obligations
contracted or incurred by Tenant nor shall Tenant become responsible for any
debt or obligation contracted or incurred by Owner.

(l)      Time is of the essence of every provision of this Lease.

(m)      If any word, phrase clause, sentence or paragraph of this Lease is or
shall be, invalid for any reason, the same shall be deemed severable from the
remainder and shall in no way affect or impair the validity of this Lease or any
portion hereof.

40.  NOTICES:

Any notice to be given to either party by the other shall be in writing and
shall be served either personally or by registered or certified mail addressed
as follows:

Owner:
Charles H. Sheldon, Trustee
 
Sherraine R. Sheldon, Trustee
 
Sheldon Family Revocable Trust, U/D/T 1-31-01
 
P.O. Box 5001
 
Lindsay, CA  93247
   
Tenant:
Limoneira Company
 
1141 Cummings Road
 
Santa Paula, CA  93060

41.  LEGAL EFFECT:

All covenants of Tenant contained in this Lease are expressly made
conditions.  The provisions of this Lease shall apply to and bind the heirs,
successors, executors, administrators, and assigns of all parties to this Lease;
and all parties to this Lease shall be jointly and severally liable under it.

 
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42.  SURRENDER, CLEAN-UP AND REMOVAL OF PREMISES:

In conjunction with and subject to paragraph 9, Tenant agrees, on the last day
of the Term or upon the sooner termination of this Lease, to surrender the
Premises and all appurtenances thereto to Owner in the same or better condition
as when received.  All roads on the Premises shall be returned to their original
grade, or such grade as is consistent with any re-grading that occurred during
the Lease term at Owner’s instruction or with Owner’s written consent.  All
arable land on the Premises shall be returned twice disced, cleaned of all
plastic and otherwise in good order and condition.  Tenant agrees to remove all
of Tenant’s personal property and trade fixtures from the Premises upon any
termination of this Lease; provided, however, that all water system
improvements, including, by way of example and not imitation, all underground
and above ground pipelines, drain lines, irrigation pipe and tape, well or pump
improvements, filter stations, flood control measures and any other Premises
attached to the Premises shall belong to Owner upon termination of the
Lease.  Tenant shall repair any damage to Premises caused by the removal of
Tenant’s trade fixtures, crops and equipment.  If Tenant fails to remove
Tenant’s personal property and restore the Premises to the conditions and within
the time limits set forth in this Lease, Owner may:

(a)      do such removal and restoration at risk of Tenant and all costs and
expenses thereof, together with interest thereon, shall be paid to Owner by
Tenant upon demand, or

(b)      claim all of such personal property, other than movable equipment, as
its own, and Tenant shall execute and deliver to Owner, within fifteen (15) days
after written demand therefore, a bill of sale conveying all of Tenant’s
interest therein to Owner, or

(c)      claim all movable equipment as its own, if Tenant fails to remove such
equipment within fifteen (15) days of the delivery to Tenant of Owner’s written
demand to do so, and Tenant shall execute and deliver to Owner, within fifteen
(15) days of the delivery of Owner’s written demand therefore, a bill of sale
conveying all of Tenant’s interest therein to Owner.

(d)   Tenant shall have the right to conduct an environmental assessment within
ninety (90) days of the surrender of the Premises, at its expense, which
assessment shall serve as a baseline for the condition of the Premises upon the
termination or expiration of this Lease and the subsequent use of the Premises
by Owner or any successor tenant.  Said assessment shall not release Tenant from
its indemnity obligations pursuant to Section 20 with respect to any Response
required due to a release of Hazardous Materials which is the responsibility of
Tenant.

43.  OWNER DISTRIBUTION:

Owner reserves the right to distribute the Premises, or any portion(s) thereof,
to one or more partners of the Owner, subject, however, to the term and
provisions of this Lease.  The distribute partner shall execute reasonable
documents of acknowledgment and nondisturbance provided Tenant is not in default
under this Lease.

44.  EXISTING CROPS:

At the beginning of this Lease, Owner will have on the Premises unharvested
crops of citrus.  Said crops shall remain the property of Owner and Owner shall
have unimpeded access to protect and to harvest said crop.  In addition, Tenant
shall upon  termination of this Lease, have the right to enter and harvest any
unharvested crops.

 
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45.  SIGNAGE:

Owner reserves the right to maintain for sale signage on those portions of the
Premises offered for sale to the public.  The signage shall be placed so that it
will not impede the operations of Tenant.

46.  PARCELIZATION:

The Owner reserves the right to create new legal parcels under the Parcel Map
Act or similar statutes and to them own or sell the newly created parcel or
parcels.  This right shall apply to those portions excluded from the premises
under paragraph 2 as well as other non-arable land otherwise included as part of
the Premises.  Such land may include native pasture or other sites suitable for
the construction of a residence.  Owner shall give written notice to the Tenant
of an intention to create a new legal parcel and to remove said parcel from the
terms of this Lease.  Tenant’s written consent shall be required only as those
sites not otherwise excluded as a part of the Premises.  Tenant shall not be
unreasonably withheld or delayed.  All costs of creating the new legal parcel
shall be the Owner’s.  Tenant shall cooperate with Owner and shall execute such
documents as are necessary for this purpose.

47.  SPECIAL PROVISIONS

APN 142-110-31, 37.7 acres, 26 leased acres, also known as the “Wileman Ranch”,
is expressly omitted from the long-term provisions of this lease.  It will be on
a year-to-year basis, commencing January 1, 2012 to December 31, 2012, and shall
automatically extend for periods of one year each until such time as either
party delivers to the other party a notice of termination which shall be
delivered at least six months before the end of the term, or extended term, as
the case may be.  Rent will be as described in Section 13.  Capital Improvements
will be the responsibility of Owner.  All other terms and provisions of this
lease shall apply to these parcels.

48.  MEMORANDOM OF LEASE:

Tenant shall have the right to record a memorandum of lease memorializing the
existence of this Lease and the rights granted to Tenant hereunder.  Said
memorandum shall be in a form that is reasonably acceptable to Owner and shall
clearly state that the exercise of all options to renew this Lease for
additional terms is discretionary and subject to the terms and conditions in the
Lease.

 
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DATED:  January 6, 2012
LIMONEIRA COMPANY, A
 
Delaware Corporation, Tenant
     
By:
/s/ Harold S. Edwards
   
Harold S. Edwards
   
Chief Executive Officer

DATED:  January 6, 2012
SHELDON FAMILY REVOCABLE
TRUST, U/D/T 1-31-01, Owner
     
By:
/s/ Charles H. Sheldon
   
Charles H. Sheldon, Trustee

 
By:
/s/ Sherraine R. Sheldon
   
Sherraine R. Sheldon, Trustee

 
 
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SCHEDULE 4 is NOT APPLICABLE

 
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Rent - SCHEDULE “13A”

 
$500/ acre minimum rent to owner
 
 
 
Revenue from Packing House
Gross Revenue
Less: Packing costs
Selling Costs
(Costs not to exceed Industry Standards)
 
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Less Harvest Expenses
Includes Hauling
(Expenses not to exceed Industry Standards)
 
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Less Reasonable Direct Growing Expenses,
Direct Management and Administrative Costs
(not including non-Sheldon, e.g. Porterville and Santa Paula)
equipment lease, water, power, fuels, pesticides, weedicides
fertilizers, labor, building M&R, vehicle M&R, irrigation system M&R,
wind machine M&R, pump M&R, insurance related to
Sheldon Properties, and other costs directly related to Premises
 
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Less $500/ acre min rent to owner
 
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Thereafter, the following amount up to $500 per acre shall go to tenant
Fifty (50) % of the remaining balance shall be paid to the Owner as excess rent
defined in the lease.
 
 
Or Restated:
Limoneira will pay minimum rent of $500 per leased acre to Owner plus
50% of the net earnings, if any, after the above expenses including the
$500 per acre minimum rent, have been deducted from gross revenue.
 

 
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Profits Verification
 
Tenant shall furnish or cause to be furnished to Owner a statement of Excess
Rents by Computational Unit no later than December31 following the previously
concluded crop year. The statement shall be in a form mutually acceptable to
Owner and Tenant and shall be certified as an accurate accounting of Excess
Rents by Computational Unit by an authorized representative of Tenant.
 
Any objection to the statement of Excess Rents by Computational Unit, or to any
information reported in it, shall be deemed waived if not raised by written
notice to Tenant within thirty days (30)after delivery of this statement. After
giving such notice, Owner shall have the right, during Tenants regular business
hours and on reasonable prior notice, to inspect, at the location of Tenants
accounting records, at Owners sole expense, Tenants general ledger and books and
records regarding Excess Rents by Computational Unit for the property then
reported to which the statement relates. The inspection of the Tenant’s general
ledger and books and records may be conducted by Owners, employees, or a
reputable certified public accountant. The inspection of the Tenant’s general
ledger and books and records must be completed within a reasonable time after
the general ledger and books and records are made available to Owner, and any
audit report by Owners auditors shall be delivered to Tenant after review by
Owner.
 
If, after inspection of Tenants general ledger and books and records, Owner
disputes the Excess Rents by Computation Unit for the crop year under
inspection, Owner and Tenant shall meet and attempt in good faith to resolve the
dispute. If the parties are unable to resolve the dispute within two (2) months
after completion of Owners inspection, then Owner shall have the right to submit
the dispute to arbitration as provided under paragraph 35. The arbitrator shall
have the right to retain, as an expert to consult regarding the dispute, an
unaffiliated certified public accountant who is a member of a reputable
independent, nationally or regionally recognized certified public accounting
firm and who has experience in reviewing financial operating records of farming
entities having farming operations similar to those farming operations related
to this lease agreement. The arbitration shall be limited to determining the
appropriate amount of the Excess Rents by Computational Unit for the crop year
in review. The arbitrator’s decision shall be delivered simultaneously to Owner
and Tenant and shall be final and binding on Owner and Tenant.
 
If the arbitrator determines that the amount of the Excess Rents by
Computational Unit paid to Owner by Tenant was incorrect, the Tenant shall pay
to the Owner the deficiency within thirty (30) days following delivery of the
arbitrators decision, with interest at the rate of eight and a half percent (8 ½
%) per annum. Additionally, Tenant shall pay to Owner the direct cost incurred
to inspect and audit the books and records of the Tenant together with interest
at the rate of eight and a half percent (8 ½ %) per annum. All costs and
expenses of the arbitration shall be paid by the Owner unless the final
determination and the arbitration is that the Tenant understated the Excess
Rents by Computational Unit or the applicable crop year by more than Ten percent
(10 %) of the originally reported and paid Excess Rent by Computational Unit, in
which case Tenant shall pay all costs and expenses of the arbitration.

 
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Owner shall keep any information from the inspection of Tenants general ledger
and books and records confidential and shall not disclose it to any other party
except as required by law. If requested by Tenant, Owner shall require its
employees or agents inspecting Tenant’s general ledger and books and records to
sign a confidentiality agreement as a condition of Tenant making Tenant’s
general ledger and books and records available to them.
 
 
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