a070927ex_105.htm


    
      

      

    

    Exhibit
      10.5


     

    CONSULTING
      AGREEMENT

     

     

    This
      Agreement ("Agreement") is made and effective as of
      July 1, 2007 ("Effective Date") by and between
      SONOMAWEST HOLDINGS, INC. a Delaware corporation
      ("Client") and BUGATTO INVESTMENT COMPANY
      ("Consultant").

     

    1.    Services
      and Deliverables. Consultant will perform (i) any strategic services
      related to the Client’s current and future portfolio of real estate assets,
      including possible acquisitions of additional real estate, (ii) services that
      Client reasonably requests relating to the Client’s properties, including
      without limitation assisting Client concerning interactions with Sonoma County
      zoning and land use authorities, and (iii) such other services as Client and
      Consultant may agree upon (collectively, the
      "Services"). During the term of this Agreement,
      Consultant will make David J. Bugatto available to perform the Services.
      Consultant will determine the method, details and means of performing the
      Services. 

     

    2.    Fees
      and Payment. 

     

    a.    Hourly
      Fee. In consideration for the Services to be performed
      by Consultant, Client will pay to Consultant an hourly fee of $225.00 per hour
      for all hours rendered on behalf of Client. Client and Consultant agree that
      only the Chief Executive Officer of Client (the “CEO”)
      is authorized to request or authorize Services, and Consultant shall not
      undertake Services at the request of any other employee of Client without the
      prior written approval of the CEO. Client will pay Consultant for its services
      within fifteen (15) days of delivery of a monthly invoice. Any amounts that
      Client may pay to Consultant for time spent in connection with
      litigation-related activities (such as in connection with testimony, depositions
      or expert witness activity) will be subject to a separate arrangement and rates
      mutually agreed upon between Client and Consultant. 

     

    b.    No
      Additional Payments. No additional amounts shall be
      payable in connection with performance of the Services or in connection with
      any
      transaction involving a sale of any of Client’s properties, a sale of Client’s
      business (whether by merger, sale of assets or other transaction) or a
      transaction that results in Client no longer being a public company.


     

    c.    Deductions
      and Withholdings. All amounts payable or which become
      payable under any provision of this Agreement will be subject to any deductions
      and withholdings that Client reasonably determines are necessary or required
      by
      law. 

     

    3.    Independent
      Consultant Status. It is the express intention of the parties that
      Consultant is an independent consultant and not an employee, agent, joint
      venturer or partner of Client. Nothing in this Agreement will be interpreted
      or
      construed as creating or establishing the relationship of employer and employee
      between Client and Consultant, or any employee or agent of Consultant.


     


    
      
        
        

      

      
        -1-

        
          

        

      

      
        
        

      

    


    4.    Additional
      Obligations of Consultant. 

     

    a.    Equipment. Consultant
      will supply all tools and instrumentalities required to perform the Services
      under this Agreement. Consultant is not required to purchase or rent any tools,
      equipment or services from Client.

     

    b.    Costs
      and Expenses. Consultant is responsible for all costs
      and expenses incident to performing services hereunder, including but not
      limited to costs of equipment provided by Consultant, fees, fines, licenses,
      bonds, or taxes required of or imposed against Consultant and its assistants,
      if
      any, as costs of doing business. Client is not responsible for any expenses
      incurred by Consultant in performing services for Client, except for those
      reasonable out-of-pocket travel expenses and miscellaneous expenses incurred
      by
      Consultant in performing the Services under this Agreement.

     

    c.    Assistants;
      Indemnification. Consultant may, at its option and at
      its own expense, employ such assistants as Consultant deems necessary to perform
      the Services. Consultant assumes full and sole responsibility for the payment
      of
      all compensation and expenses of these assistants and for any state and federal
      income tax, unemployment insurance, Social Security, disability insurance and
      other applicable withholdings of such assistants. Consultant will provide
      workers' compensation insurance coverage for its employees and agents, and
      agrees to hold harmless and indemnify Client for any and all claims arising
      out
      of any injury, disability, or death of any of Consultant's employees or agents.
      Consultant will indemnify and hold Client harmless against any and all liability
      imposed or claimed, including attorneys' fees and other legal expenses, arising
      directly or indirectly from any act or failure to act of Consultant or
      Consultant's assistants, employees or agents, including all claims relating
      to
      injury or death of any person or damage to property.

     

    d.    Compliance
      With Client Policies. Consultant specifically agrees
      to abide by Client's standards and rules of conduct and general operating
      procedures while on Client's premises or otherwise while performing services
      pursuant to this Agreement. 

     

    e.    No
      Assignment By
      Consultants. Consultant may
      not assign any duties or obligations under this Agreement without Client's
      express written consent.

     

    f.    Independent
      Contractor. Consultant
      acknowledges that, as he is an independent consultant and not an employee,
      he is
      responsible for paying all required state and federal taxes. In particular,
      Client will not: (i) withhold FICA (Social Security) from Consultant's payments;
      (ii) make state or federal unemployment insurance contributions on Consultant's
      behalf; (iii) withhold state or federal income tax from payment to Consultant;
      (iv) make disability insurance contributions on behalf of Consultant; (v) obtain
      workers' compensation insurance on behalf of Consultant.

     

    g.    No
      Participation in Employee Benefit Plans. Consultant
      further acknowledges that he is not eligible for participation in any benefit
      plan or program available to Consultant's employees, and that the fee for
      services has been established in recognition of Consultant being responsible
      for
      maintaining such benefit coverage as it deems appropriate.

    
       

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

    

     

    5.    Term
      and Termination.

     

    a.    Terms. This
      Agreement begins on the Effective Date and continues until the earlier to occur
      of (i) the mutual written agreement of Consultant and Client to terminate the
      Agreement; (ii) termination in accordance with the provisions set forth below;
      or (iii) June 30, 2008. 

     

    b.    Bankruptcy,
      Insolvency. Either party may terminate this Agreement
      upon notice to the other party if a court having jurisdiction shall enter a
      decree or order for relief in respect of the other party in an involuntary
      case
      under any applicable bankruptcy, insolvency or other similar law now or
      hereinafter in effect, or appoint a receiver, liquidator, assignee, custodian,
      trustee, sequestrator (or similar official) for that other party or for any
      substantial part of that party’s property, or order the winding up or
      liquidation of its affairs, and such decree or order shall remain unstayed
      and
      in effect for a period of sixty (60) consecutive business days; or if the other
      party shall commence a voluntary case under any applicable bankruptcy,
      insolvency or other similar law now or hereafter in effect, or consent to the
      entry of an order for relief in any involuntary case under any such law, or
      consent to the appointment of or taking possession by a receiver, liquidator,
      assignee, trustee, custodian, sequestrator (or similar official) for any
      substantial part of that other party’s property, or make any general assignment
      for the benefit of creditors, or shall take any action in furtherance of any
      of
      the foregoing. 

     

    c.    Personnel. Client
      may terminate this Agreement upon notice to Consultant if David J. Bugatto
      becomes no longer available to perform the Services. 

     

    d.    Material
      Default. If Consultant materially defaults in the
      performance of the Agreement or materially breaches any of the provisions and
      does not cure the default or breach within ten (10) days of delivery of a notice
      thereof from Client to Consultant, Client at its sole option may terminate
      the
      Agreement by delivering a notice to Consultant. For purposes of this section,
      material default or breach includes, but is not limited to: (i) failure or
      refusal to perform in any material respect the Services when and as
      contemplated; (ii) repeated failure to provide timely invoices with appropriate
      descriptions and approved expenses as provided herein; and (iii) negligence,
      misconduct, an act of dishonesty, or taking an action or conducting itself
      in a
      manner contrary or inimical to Client's best business interests or
      reputation.

     

    e.    Payment
      Defaults. If Client fails to pay Consultant fees or
      payment as provided herein and fails to make any required payment within ten
      (10) days after delivery by Consultant to Client of a late payment notice,
      Consultant at its option may terminate the Agreement by delivering a notice
      to
      Client.

     

    f.    Return
      of Materials. Upon termination of this Agreement for
      any reason, Consultant shall return to Client all materials of any kind in
      Client’s possession relating to the Services or Client.

     

    g.    Survival. The
      provisions of Sections 2(b), 2(c), 3, 4, 5(f), 6 and 7 shall survive expiration
      or termination of the Agreement for any reason.

     


    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    6.    Confidentiality,
      Trade Secrets, Work for Hire and Non-Competition.

     

    a.    Nondisclosure. Consultant
      recognizes that during the term of this Agreement, and in preparation therefore,
      he will be privy to Client's trade secrets or proprietary or other confidential
      or privileged information (“Confidential
      Information”). Consultant agrees to keep all Confidential
      Information in strictest confidence and not to disclose it except for legitimate
      purposes of Client and with Client's express written consent, either during
      the
      term of this Agreement or at any time thereafter.

     

    b.    Delivery
      of Materials on
      Termination. On termination of
      this Agreement, Consultant will promptly deliver to Client all equipment
      belonging to Client, all code and computer programs of whatever nature, as
      well
      as all manuals, letters, reports, price lists, customer lists, sales
      information, analyses, recommendations, and all copies thereof, and all other
      materials of a confidential nature regarding Client's business that are in
      its
      possession or control. Consultant agrees that the remedy at law for any breach
      of the foregoing will be inadequate, and that Client is entitled to seek
      appropriate injunctive relief in addition to any remedy at law in case of any
      such breach.

     

    c.    Work
      For Hire; Assignment of Rights. Consultant agrees that
      all work Consultant performs pursuant to this Agreement, and all work which
      relates at the time of conception or reduction to Client's business, and all
      work which results from work Consultant performs for Client, whenever performed
      during the term of this Agreement, and whether or not utilizing Client's
      equipment, supplies, facilities or trade secret information, is considered
      work
      made for hire for Client as such term is defined in section 101 of the Copyright
      Act of 1976 and belongs to Client. Consultant further agrees that in the event
      that this Agreement is determined not to be a work for hire agreement,
      Consultant will assign to Client any and all rights retained by Consultant.
      All
      Inventions (as defined below) conceived of or made by Consultant or Agent,
      either alone or with others, during the term of this Agreement, which (i) are
      developed, in whole or part, in reliance upon or any of the Client equipment,
      supplies, facilities or Confidential Information, or (ii) relate to the business
      of the Client or the Client actual or demonstrably anticipated research or
      development, or (iii) result from any work performed by Consultant for the
      Client pursuant to this Agreement, are and shall be the sole property of the
      Client, whether as “works for hire” or otherwise. Consultant hereby irrevocably
      assigns and transfers to the Client all of its right, title and interest in
      and
      to all such Inventions, and Consultant agrees not to disclose any such
      Inventions to others without the express written consent of Client. Consultant
      agrees to execute such documents as Client may reasonably request reflecting
      such assignment and transfer. For the purpose of this Agreement, an Invention
      is
      deemed to have been made during the term of the Agreement if, during such
      period, the Invention was conceived or first actually reduced to practice.
      Notwithstanding anything to the contrary contained herein, this Section shall
      not apply to any Invention which fully qualifies under Section 2870 of the
      California Labor Code, to the extent that such section applies to the activities
      of Consultant. For the purposes of this Section,
“Invention” means any new formulae, know-how,
      techniques, applications, combinations, machines, methods, processes,
      algorithms, routines, subroutines, apparatuses, compositions of matter,
      compounds, designs, uses, plans or configurations of any kind, discovered,
      conceived, developed, made or produced, or any improvements of them, and shall
      not be limited to the definition of an invention contained in the United States
      patent laws.

    
       


      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

    

     

    7.    General
      Provisions.

     

    a.    Notices. Any
      notices given by either party may be effected by personal delivery in writing
      or
      by mail, registered or certified, postage prepaid, or by facsimile transmission
      or by electronic submission, if receipt is confirmed in a commercially
      acceptable manner. Mailed notices are to be addressed to the parties at the
      addresses below:

     

    
      	
              If
                to Client: 

            	
              SonomaWest
                Holdings, Inc. 

              2064
                Highway 116, North 

              Sebastopol,
                CA 95472-2662 

            	
               

            	
               

            
	
               

            	
              Attn:
                Chief Executive Officer 

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            
	
              If
                to Consultant: 

            	
              Bugatto
                Investment Company 

            	
               

            	
               

            
	
               

            	
              c/o
                David J. Bugatto 

            	
               

            	
               

            
	
               

            	
              4425
                I Street 

            	
               

            	
               

            
	
               

            	
              Sacramento,
                CA 95819 

            	
               

            	
               

            


    

     

    Notices
      will be deemed delivered: (a) upon receipt if hand delivered; (b) three (3)
      days
      after mailing if sent by mail; and (c) one (l) business day after transmission
      if sent by telecopier (with electronic acknowledgment of successful
      transmission) or express courier, to the addresses set forth above, or such
      other addresses as any party may notify the other parties in accordance with
      this Section.

     

    b.    Entire
      Agreement. This Agreement supersedes any and all
      agreements, oral or written, between the parties with respect to rendering
      services by Consultant for Client, and contains all agreements between the
      parties. This Agreement supersedes the consulting agreements dated August 10,
      2005 and July 1, 2006, between Client and Consultant, and is intended by the
      parties to govern all services provided and to be provided by Consultant to
      Client on and after July 1, 2007. Without limiting the foregoing, Consultant
      agrees that neither Consultant nor any of its officers, directors or owners
      shall have any claim for payment of any amounts described in the Consulting
      Agreements dated as of August 10, 2005 and July 1, 2006, by and between
      Consultant and the Company for payment of any amounts contemplated therein,
      including upon the occurrence of a transaction involving the sale of any of
      the
      Company’s properties or as a result of which the Company is no longer a public
      company. Any modification of this Agreement is effective only if in writing
      signed by the party to be charged.

     

    c.    Governing
      Law; Consent to Jurisdiction. The provision of this
      Agreement shall be governed by and interpreted in accordance with the laws
      of
      the State of California, notwithstanding any application of any doctrine of
      conflicts of laws. Each party irrevocably consents to the exclusive jurisdiction
      and venue of the state and federal courts located in Sacramento, California,
      in
      connection with any action to enforce the provisions of this Agreement, to
      recover damages or other relief for breach or default of this Agreement, or
      otherwise arising under or by reason of this Agreement, and agrees that service
      of process in any such action may be effected by the means provided in this
      Agreement for delivery of notices. 

     


    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    


     

    d.    Counterparts. This
      Agreement may be executed in one or more counterparts, each of which shall
      constitute an original but all of which taken together shall constitute one
      and
      the same agreement.

     

    e.    Successors
      and Assigns. This Agreement shall be binding upon the
      heirs, successors and assigns of the parties. 

     

    f.    Severability. If
      any provision contained in this Agreement is determined to be void, invalid
      or
      unenforceable in whole or in part for any reason whatsoever, it shall be
      enforced and given effect to the extent possible, such determination shall
      not
      affect or impair the validity of any other provision herein, nor the validity
      of
      this Agreement as a whole, and the remaining provisions will continue in full
      force provided that the essential purposes of the Agreement can be achieved
      without the invalid provision

     

    g.    Amendment. The
      provisions of this Agreement may be modified at any time by agreement of the
      parties. Any such agreement hereafter made shall be ineffective to modify this
      Agreement in any respect unless in writing and signed by the parties against
      whom enforcement of the modification or discharge is sought. Any of the terms
      or
      conditions of this Agreement may be waived in writing at any time by the party
      entitled to the benefit thereof, but no such waiver shall affect or impair
      the
      right of the waiving party to require observance, performance or satisfaction
      either of that term or condition as it applies on a subsequent occasion or
      of
      any other term or condition.

     

    IN
      WITNESS WHEREOF, this Consulting Agreement has been entered into as of the
      date
      and year first above written.

     

    
      	
               

            	
               

            	
               

            
	
               

            	
              Consultant:

            
	
               

            	
                

            	
              BUGATTO
                INVESTMENT COMPANY

            
	
               

            	 
	
               

            	
              By:
                /s/ David J.
                Bugatto                
                

            
	
               

            	
              David
                J. Bugatto, President 

            


    

    


     

    
      	
               

            	
               

            	
               

            
	
               

            	
              Client:

            
	
              Date: 

            	
               

            	
              SONOMAWEST
                HOLDINGS, INC.

            
	
               

            	 
	
               

            	
              By:
                /s/ Walker R.
                Stapleton         
                

            
	
               

            	
              Walker
                R Stapleton, CEO 

            


    

    


     

    


     

    -6-