Document:

Exhibit 10.2

                                     FORM OF
                          NOTICE OF STOCK OPTION GRANT

Mr. Gary L. Hess
34 La Cresta Drive
Petaluma, CA  94952-2462

You have been granted an option to purchase Common Stock of SonomaWest Holdings,
Inc., a California corporation (the "Company") as follows:

       Grant Number                              100

       Date of Grant                             May 1, 1996

       Option Price Per Share                    $5.00

       Total Number of Shares Granted            9,474

       Total Price Of Shares Granted             $47,370.00

       Type of Option                            [ ] Incentive Stock Option
                                                 [X] Non-Qualified Stock Option

       Term/Expiration Date                      January 31, 2004

Exercise Schedule
-----------------

This  Option  may be  exercised  in  whole or in part,  in  accordance  with the
following vesting schedule:

Vesting Schedule
----------------

This Option is fully vested.

By your signature and the signature of the Company's  representative  below, you
and the  Company  agree that this  Option is granted  under and  governed by the
terms and conditions of the SonomaWest  Holdings 1996, Stock Option Plan and the
Stock  Option  Agreement,  all of  which  are  attached  and made a part of this
document.

OPTIONEE:                                        SONOMAWEST HOLDINGS, INC.

                                                 By:
--------------------------                          --------------------------
Signature                                           Roger S. Mertz
                                                    Chairman of the Board

--------
1 The 9,474 shares represented by this Notice of Stock Option Grant represent
the unexercised portion of the 89,474 shares which were subject to the Option
Grant dated May 1, 1996.Exhibit 10.5

                                   SONOMAWEST
                                  HOLDINGS INC

                         NOTICE OF GRANT OF STOCK OPTION

     Notice is hereby given of the following  stock option grant (the  "Option")
to purchase shares (the "Option Shares") of Common Stock of SonomaWest Holdings,
Inc., a California corporation (the "Corporation"):

         Option Number:                     2002-4

         Optionee:                          Gary L. Hess

         Grant Date:                        07/31/02

         Number of Option Shares:           5,000

         Date Exercisable:                  Immediately Exercisable

         Expiration Date:                   07/30/12

         Exercise Price:                    $7.20 per share

         Type of Option:                    [  ] Incentive Stock Option
                                            [ x ] Non-Statutory Stock Option

     Vesting  Schedule:  This option may be  exercised  in whole or in part,  in
     accordance with the following vesting schedule:

     Date of Vesting        Number of Shares       Total Vested
     ---------------        ----------------       ------------
         07/31/02                5,000                5,000

     In no event shall the Option become  exercisable for any additional  Option
Shares after Optionee's cessation of Service.

     The Optionee  understands  and agrees that the Option is granted subject to
and in accordance  with the terms of the  SonomaWest  Holdings,  Inc. 2002 Stock
Incentive  Plan (the  "Plan").  The Optionee  further  agrees to be bound by the
terms of the Plan and the terms of the  Option as set forth in the Stock  Option
Agreement attached hereto as Exhibit A (the "Stock Option Agreement").  Optionee
hereby acknowledges receipt of a copy of the official prospectus for the Plan in
the form  attached  hereto as  Exhibit B. A copy of the Plan is  available  upon
request made to the Corporate Secretary at the Corporation's principal offices.

     No  Employment  or  Service  Contract.  Nothing  in this  Notice  or in the
attached  Stock  Option  Agreement or in the Plan shall confer upon the Optionee
any right to  continue  in  Service  for any  period  of  specific  duration  or
interfere  with or otherwise  restrict in any way the rights of the  Corporation
(or any Parent or  Subsidiary  employing  or retaining  the  Optionee) or of the
Optionee,  which  rights are hereby  expressly  reserved by each,  to  terminate
Optionee's Service at any time for any reason whatsoever, with or without cause.

     Definitions.  All capitalized  terms in this Notice shall have the meanings
assigned to them in this Notice or in the attached Stock Option Agreement.

     Dated:  July 31, 2002

SONOMAWEST HOLDINGS, INC.,
a California corporation

By:
   ------------------------------              ------------------------------
      Roger S. Mertz                           Name: Gary L. Hess
      Chairman of the Board                    Address: 34 LaCresta Drive
                                                        Petaluma, CA 94952-2462Exhibit 10.6

                             SONOMAWEST HOLDINGS INC

                           2002 STOCK OPTION AGREEMENT

                                R E C I T A L S:
                                ---------------

     WHEREAS the Board has adopted  the Plan for the  purpose of  retaining  the
services of selected Employees,  Officers,  members of the Board or of the board
of directors of any Parent or Subsidiary and consultants  and other  independent
advisors who provide services to the Corporation (or any Parent or Subsidiary);

     WHEREAS the Optionee is to render valuable  services to the Corporation (or
a Parent or  Subsidiary),  and this  Agreement  is executed  pursuant to, and is
intended  to  carry  out the  purposes  of,  the  Plan in  connection  with  the
Corporation's grant of an option to Optionee; and

     WHEREAS  all  capitalized  terms in this  Agreement  shall have the meaning
assigned to them in the attached Appendix.

     NOW,  THEREFORE,  it is hereby agreed as follows:

     1. Grant of Option.  The Corporation  hereby grants to Optionee,  as of the
Grant Date, an option to purchase up to the number of Option Shares specified in
the Grant  Notice.  The Option  Shares  shall be  purchasable  from time to time
during the option term specified in Section 2 hereof at the Exercise Price.

     2. Option  Term.  This Option  shall have a maximum  term of ten (10) years
measured  from the  Grant  Date and  shall  accordingly  expire  at the close of
business on the Expiration  Date,  unless sooner  terminated in accordance  with
Sections 5 or 6 hereof.

     3. Limited  Transferability.  This Option shall be neither transferable nor
assignable  by  Optionee  other  than  by will or by the  laws  of  descent  and
distribution following Optionee's death and may be exercised,  during Optionee's
lifetime,  only by  Optionee.  However,  if this  Option  is  designated  a Non-
Statutory  Option in the Grant  Notice,  then this Option may, (i) in connection
with the  Optionee's  estate  plan,  be  assigned  in  whole  or in part  during
Optionee's lifetime to one or more members of the Optionee's Immediate Family or
to a trust  established for the exclusive  benefit of the Optionee and/or one or
more  such  family  members  or  (ii) be  assigned  in  whole  or in part to the
Optionee's  former spouse pursuant to a domestic  relations  order. The assigned
portion  shall be  exercisable  only by the  person  or  persons  who  acquire a
proprietary  interest  in the  Option  pursuant  to such  assignment.  The terms
applicable to the assigned portion shall be the same as those in effect for this
Option immediately prior to such assignment.  Notwithstanding the foregoing, the
Optionee  may  also  designate  one  or  more  persons  as  the  beneficiary  or
beneficiaries  of his or her  outstanding  options  under this  Article Two, and
those options  shall,  in accordance  with such  designation,  automatically  be
transferred to such beneficiary or beneficiaries upon the Optionee's death while
holding  those  options.  Such  beneficiary  or  beneficiaries  shall  take  the
transferred  option subject to all the terms and  conditions of this  Agreement,
including  (without  limitation) the limited time period during which the option
may be exercised following the Optionee's death.

     4. Dates of Exercise.  This Option shall become  exercisable for the Option
Shares in one or more installments as specified in the Grant Notice,  subject to
the  special  vesting  acceleration  provisions  of  Paragraph  6. As the Option
becomes  exercisable for such installments,  those installments shall accumulate
and the Option shall remain  exercisable for the accumulated  installments until
the Expiration Date or sooner termination of the option term under Sections 5 or
6 hereof.

     5.  Cessation  of Service.  The option term  specified  in Section 2 hereof
shall  terminate  (and this Option shall cease to be  outstanding)  prior to the
Expiration Date should any of the following provisions become applicable:

          (a) Should  Optionee  cease to remain in Service for any reason (other
than  death,   Permanent   Disability  or  Misconduct)   while  this  Option  is
outstanding,  then the period for  exercising  this Option shall be reduced to a
three (3) month period  commencing  with the date of such  cessation of Service,
but in no  event  shall  this  Option  be  exercisable  at any  time  after  the
Expiration Date.

          (b) Should  Optionee  die while this Option is  outstanding,  then the
personal  representative  of Optionee's  estate or the person or persons to whom
the Option is transferred  pursuant to Optionee's will or in accordance with the
laws of  descent  and  distribution,  or any  person  or  trust to whom all or a
portion of this Option was previously  transferred in accordance  with Section 3
hereof or the designated  beneficiary or beneficiaries of this option shall have
the right to exercise this Option. Such right shall lapse, and this Option shall
cease to be  outstanding,  upon the earlier of: (i) the expiration of the twelve
(12)  month  period  measured  from the date of  Optionee's  death;  or (ii) the
Expiration Date.

          (c) Should  Optionee  cease Service by reason of Permanent  Disability
while this Option is  outstanding,  then the period for  exercising  this Option
shall be reduced to a twelve (12) month period  commencing with the date of such
cessation of Service,  but in no event shall this Option be  exercisable  at any
time after the Expiration Date.

          (d) During the limited  period of  post-Service  exercisability,  this
Option may not be exercised in the  aggregate for more than the number of vested
Option  Shares for which the  Option is  exercisable  at the time of  Optionee's
cessation of Service. Upon the expiration of such limited exercise period or (if
earlier) upon the Expiration  Date,  this Option shall terminate and cease to be
outstanding for any otherwise exercisable Option Shares for which the Option has
not been  exercised.  However,  this Option shall,  immediately  upon Optionee's
cessation of Service for any reason,  terminate and cease to be outstanding with
respect to any Option Shares for which this Option is not otherwise at that time
exercisable.

          (e)  Except as  otherwise  determined  in the  discretion  of the Plan
Administrator,  either  at the time the  option  is  granted  or at any time the
option  remains  outstanding,   should  Optionee's  Service  be  terminated  for
Misconduct or should Optionee  otherwise  engage in Misconduct while this option
is outstanding, then this Option shall terminate immediately and cease to remain
outstanding.

     6. Special Acceleration of Option.

          (a) The Option,  to the extent  outstanding at the time of a Change in
Control  transaction but not otherwise fully  exercisable,  shall  automatically
accelerate so that this Option shall, immediately prior to the effective date of
such Change in Control,  become  exercisable for all of the Option Shares at the
time subject to this option and may be exercised  for any or all of those Option
Shares as fully vested shares of Common Stock.  Notwithstanding  the  foregoing,
this Option shall not become  exercisable on such an accelerated basis if and to
the extent: (i) this Option is, in connection with the Change in Control,  to be
assumed by the successor  corporation (or Parent thereof) or otherwise continued
in full force and effect pursuant to the terms of the Change in Control; or (ii)
this Option is to be replaced  with a cash  incentive  program of the  successor
corporation  which  preserves  the spread  existing at the time of the Change in
Control on the Option Shares for which this Option is not otherwise at that time
exercisable (the excess of the Fair Market Value of those Option Shares over the
aggregate  Exercise  Price payable for such shares) and provides for  subsequent
payout in accordance with the same option exercise/vesting schedule set forth in
the Grant Notice.

          (b)  Immediately  following  the Change in Control,  this Option shall
terminate  and cease to be  outstanding,  except to the  extent  assumed  by the
successor  corporation (or Parent thereof) or otherwise  continued in full force
and effect pursuant to the terms of the Change in Control transaction.

          (c) If this Option is assumed in  connection  with a Change in Control
(or  otherwise  continued in full force and  effect),  then this Option shall be
appropriately  adjusted,  immediately after such Change in Control,  to apply to
the number  and class of  securities  or other  property  which  would have been
issuable to Optionee  in  consummation  of such Change in Control had the Option
been  exercised  immediately  prior to such Change in Control,  and  appropriate
adjustments  shall also be made to the Exercise  Price,  provided the  aggregate
Exercise Price shall remain the same.

          (d)  Notwithstanding  the foregoing,  immediately  upon an Involuntary
Termination of Optionee's Service within eighteen (18) months following a Change
in Control  transaction,  the Option, to the extent  outstanding at the time but
not otherwise  fully  exercisable,  shall  automatically  accelerate so that the
Option shall become  immediately  exercisable  for all the Option  Shares at the
time subject to the Option and may be  exercised  for any or all of those Option
Shares as fully  vested  shares.  The  Option  as  accelerated  shall  remain so
exercisable  until  the  earlier  of:  (i) the  Expiration  Date;  or  (ii)  the
expiration of the one (1) year period  measured from the date of the  Optionee's
Involuntary Termination.

          (e) This Option may also be subject to acceleration in accordance with
the terms of any special Addendum attached to this Agreement.

     7.  Adjustment  in Option  Shares.  Should any change be made to the Common
Stock  by  reason  of  any  stock  split,   stock  dividend,   recapitalization,
combination  of  shares,  exchange  of  shares  or other  change  affecting  the
outstanding  Common  Stock  as a class  without  the  Corporation's  receipt  of
consideration,  appropriate  adjustments  shall be made to: (i) the total number
and/or class of securities  subject to this Option;  and (ii) the Exercise Price
in order to reflect such change and thereby  preclude a dilution or  enlargement
of benefits hereunder.

     8.  Stockholder  Rights.  The  holder  of this  Option  shall  not have any
stockholder  rights with  respect to the Option  Shares  until such person shall
have exercised the Option, paid the Exercise Price and become a holder of record
of the purchased shares.

     9. Manner of Exercising Option.

          (a) In order to exercise  this Option with  respect to all or any part
of the Option Shares for which this Option is at the time exercisable,  Optionee
(or any other person or persons  exercising  the Option) must take the following
actions:

               (i) To the  extent  the Option is  exercised  for  vested  Option
Shares,  execute and  deliver to the  Corporation  a Notice of Exercise  for the
Option  Shares  for which the Option is  exercised.  To the extent the Option is
exercised for unvested  Option Shares,  execute and deliver to the Corporation a
Purchase  Agreement for those  unvested  Option Shares.  In connection  with the
Purchase Agreement, any certificate issued upon the exercise of the Option shall
bear legends as set forth in the Purchase Agreement.

               (ii) Pay the aggregate Exercise Price for the purchased shares in
one or more of the following forms:

                    (A) cash or check made payable to the Corporation; or

                    (B) a promissory note payable to the  Corporation,  but only
to the extent authorized by the Plan Administrator in accordance with Section 14
hereof; or

                    (C) shares of Common  Stock held by  Optionee  (or any other
person or persons  exercising the option) for the requisite  period necessary to
avoid a charge to the Corporation's  earnings for financial  reporting  purposes
and valued at Fair Market Value on the Exercise Date; or

                    (D) through a special sale and remittance procedure pursuant
to which  Optionee (or any other person or persons  exercising the option) shall
concurrently  provide  irrevocable   instructions  to  a  Corporation-designated
brokerage firm to effect the immediate sale of the purchased shares and remit to
the  Corporation,  out of the sale proceeds  available on the  settlement  date,
sufficient funds to cover the aggregate Exercise Price payable for the purchased
shares plus all applicable Federal,  state and local income and employment taxes
required to be withheld by the Corporation by reason of such exercise and to the
Corporation to deliver the  certificates  for the purchased  shares  directly to
such brokerage firm in order to complete the sale.

               Except  to the  extent  the  sale  and  remittance  procedure  is
utilized in connection with the Option  exercise,  payment of the Exercise Price
must  accompany  the Notice of Exercise or Purchase  Agreement,  as  applicable,
delivered to the  Corporation  in  connection  with the Option  exercise.

               (iii) Furnish to the Corporation  appropriate  documentation that
the person or persons  exercising  the Option (if other than  Optionee) have the
right to exercise this Option.

               (iv)  Make  appropriate  arrangements  with the  Corporation  (or
Parent or Subsidiary  employing or retaining  Optionee) for the  satisfaction of
all Federal, state and local income and employment tax withholding  requirements
applicable to the option exercise.

          (b) As soon as practical  after the  Exercise  Date,  the  Corporation
shall  issue to or on  behalf  of  Optionee  (or any  other  person  or  persons
exercising this Option) a certificate for the purchased Option Shares,  with the
appropriate legends affixed thereto.

          (c) In no event  may  this  Option  be  exercised  for any  fractional
shares.

     10. No Impairment of Rights. This Agreement shall not in any way affect the
right of the  Corporation  to adjust,  reclassify,  reorganize or otherwise make
changes in its capital or business structure or to merge, consolidate, dissolve,
liquidate  or sell or transfer  all or any part of its  business  or assets.  In
addition,  this Agreement shall not in any way be construed or interpreted so as
to affect  adversely or otherwise  impair the rights of the  Corporation (or any
Parent or  Subsidiary  employing  or retaining  Optionee) or of Optionee,  which
rights are hereby expressly reserved by each, to terminate Optionee's Service at
any time for any reason, with or without cause.

     11. Compliance with Laws and Regulations.

          (a) The exercise of this Option and the issuance of the Option  Shares
upon such  exercise  shall be  subject  to  compliance  by the  Corporation  and
Optionee with all applicable  requirements of law relating  thereto and with all
applicable  regulations of the Nasdaq SmallCap Market (or any Stock Exchange, if
applicable)  on which the Common  Stock may be listed for trading at the time of
such exercise and issuance.

          (b) The  inability  of the  Corporation  to obtain  approval  from any
regulatory  body having  authority  deemed by the Corporation to be necessary to
the lawful  issuance and sale of any Common Stock  pursuant to this Option shall
relieve the  Corporation  of any liability with respect to the  non-issuance  or
sale of the Common Stock as to which such approval shall not have been obtained.
The  Corporation,  however,  shall  use its  best  efforts  to  obtain  all such
approvals.

     12.  Successors  and Assigns.  Except to the extent  otherwise  provided in
Sections 3 and 6 hereof,  the  provisions of this  Agreement  shall inure to the
benefit of, and be binding upon, the  Corporation and its successors and assigns
and  Optionee,  Optionee's  assigns  and the  legal  representatives,  heirs and
legatees of Optionee's estate.

     13.  Notices.  Any  notice  required  to  be  given  or  delivered  to  the
Corporation  under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee  shall be in writing and addressed to Optionee at
the address indicated below Optionee's  signature line on the Grant Notice.  All
notices shall be deemed effective upon personal  delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.

     14. Financing.  The Plan Administrator may, in its absolute  discretion and
without any  obligation to do so, permit  Optionee to pay the Exercise Price for
the  purchased  Option  Shares by  delivering a  full-recourse  promissory  note
payable to the Corporation. The terms of any such promissory note (including the
interest rate, the requirements for collateral and the terms of repayment) shall
be established by the Plan Administrator in its sole discretion.

     15.  Construction.  This Agreement and the Option evidenced hereby are made
and granted  pursuant to the Plan and are in all respects limited by and subject
to the terms of the Plan. All decisions of the Plan  Administrator  with respect
to any  question  or issue  arising  under the Plan or this  Agreement  shall be
conclusive and binding on all persons having an interest in this Option.

     16. Governing Law. The interpretation,  performance and enforcement of this
Agreement  shall be  governed  by the laws of the  State of  California  without
resort to that State's conflict-of-laws rules.

     17. Excess Shares.  If the Option Shares covered by this Agreement  exceed,
as of the Grant  Date,  the number of shares of Common  Stock  which may without
stockholder  approval be issued  under the Plan,  then this Option shall be void
with respect to those excess shares, unless stockholder approval of an amendment
sufficiently  increasing the number of shares of Common Stock issuable under the
Plan is obtained in accordance with the provisions of the Plan.

     18.  Optionee   Undertaking.   Optionee  hereby  agrees  to  take  whatever
additional action and execute whatever additional  documents the Corporation may
deem  necessary  or advisable in order to carry out or effect one or more of the
obligations  or  restrictions  imposed on either  Optionee or the Option  Shares
pursuant to the provisions of this Agreement.

     19.  Representation  by Counsel.  Each party hereby agrees and acknowledges
that (i) such party has had the opportunity to consult with  independent  legal,
tax and financial  counsel of each party's  choice,  in order to be advised with
respect to the effect of this Agreement, the Notice of Exercise and the Purchase
Agreement  and (ii) neither the  Corporation  nor its  attorneys  have  provided
legal, tax or financial advice of any nature to Optionee.

     20.  Additional Terms Applicable to an Incentive  Option. In the event this
Option is  designated  an Incentive  Option in the Grant  Notice,  the following
terms and conditions shall also apply to the grant:

          (a) This option shall cease to qualify for  favorable tax treatment as
an Incentive  Option if (and to the extent) this Option is exercised  for one or
more  Option  Shares:  (i) more than  three (3) months  after the date  Optionee
ceases  to be  an  Employee  for  any  reason  other  than  death  or  Permanent
Disability;  or (ii) more than twelve (12) months after the date Optionee ceases
to be an Employee by reason of death or Permanent Disability.

          (b) No  installment  under this Option shall qualify for favorable tax
treatment  as an  Incentive  Option if (and to the  extent) the  aggregate  Fair
Market Value  (determined  at the Grant Date) of the Common Stock for which such
installment  first  becomes  exercisable  hereunder  would,  when  added  to the
aggregate value  (determined as of the respective date or dates of grant) of the
Common Stock or other  securities  for which this option or any other  Incentive
Options  granted to Optionee  prior to the Grant Date (whether under the Plan or
any other  option plan of the  Corporation  or any Parent or  Subsidiary)  first
become  exercisable  during the same calendar year,  exceed One Hundred Thousand
Dollars ($100,000.00) in the aggregate.  Should such One Hundred Thousand Dollar
($100,000.00)  limitation  be exceeded in any calendar  year,  this Option shall
nevertheless become exercisable for the excess shares in such calendar year as a
Non-Statutory Option.

          (c) Should the  exercisability  of this Option be  accelerated  upon a
Change in Control transaction,  then this Option shall qualify for favorable tax
treatment as an Incentive  Option only to the extent the  aggregate  Fair Market
Value  (determined  at the Grant Date) of the Common Stock for which this Option
first  becomes  exercisable  in the calendar year in which the Change in Control
occurs  does  not,  when  added to the  aggregate  value  (determined  as of the
respective  date or dates of grant) of the Common Stock or other  securities for
which this  Option or one or more other  Incentive  Options  granted to Optionee
prior to the Grant Date (whether  under the Plan or any other option plan of the
Corporation or any Parent or  Subsidiary)  first become  exercisable  during the
same calendar year,  exceed One Hundred  Thousand  Dollars  ($100,000.00) in the
aggregate.  Should the  applicable  One Hundred  Thousand  Dollar  ($100,000.00)
limitation  be exceeded  in the  calendar  year of such  Change in Control,  the
Option may nevertheless be exercised for the excess shares in such calendar year
as a Non-Statutory Option.

          (d) Should  Optionee  hold,  in addition to this  Option,  one or more
other options to purchase  Common Stock which become  exercisable  for the first
time in the same calendar year as this Option, then the foregoing limitations on
the  exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.

<PAGE>

                                    APPENDIX

     The following definitions shall be in effect under the Agreement:

     A. Agreement shall mean this 2002 Stock Option Agreement.

     B. Board shall mean the Corporation's Board of Directors.

     C.  Change in Control  shall mean a change in  ownership  or control of the
Corporation effected through any of the following transactions:

          (i)  a  merger,   consolidation  or  reorganization  approved  by  the
     Corporation's stockholders,  unless securities representing more than fifty
     percent  (50%)  of  the  total  combined  voting  power  of  the  successor
     corporation  are immediately  thereafter  beneficially  owned,  directly or
     indirectly and in  substantially  the same  proportion,  by the persons who
     beneficially   owned  the  Corporation's   outstanding   voting  securities
     immediately prior to such transaction, or

          (ii) a sale, transfer or other disposition of all or substantially all
     of the Corporation's assets, or

          (iii)  the  acquisition,  directly  or  indirectly,  by any  person or
     related  group of persons  (other  than the  Corporation  or a person  that
     directly or  indirectly  controls,  is  controlled  by, or is under  common
     control with, the Corporation) of beneficial  ownership (within the meaning
     of Rule  13d-3 of the 1934 Act) of  securities  possessing  more than fifty
     percent  (50%) of the  total  combined  voting  power of the  Corporation's
     outstanding securities pursuant to a tender or exchange offer made directly
     to  the  Corporation's   stockholders   which  the  Board  recommends  such
     stockholders accept;

          provided, however, the Plan Administrator shall have the discretionary
     authority to determine  that a transaction or series of  transactions  does
     not  constitute  a  Change  in  Control.  Such  determination  by the  Plan
     Administrator shall govern  notwithstanding the fact that the determination
     is contrary to paragraphs (i) through (iii) set forth above.

     D. Code shall mean the Internal Revenue Code of 1986, as amended.

     E. Common Stock shall mean shares of the Corporation's common stock.

     F.  Corporation  shall  mean  SonomaWest   Holdings,   Inc.,  a  California
corporation.

     G. Employee shall mean an "employee" of the  Corporation  (or any Parent or
Subsidiary)  within  the  meaning  of  Section  3401(c)  of  the  Code  and  the
regulations thereunder.

     H.  Exercise  Date shall mean the date on which the Option  shall have been
exercised in accordance with Section 4 of the Agreement.

     I.  Exercise  Price  shall  mean the  exercise  price per  Option  Share as
specified in the Grant Notice.

     J.  Expiration  Date  shall  mean the date on which the  Option  expires as
specified in the Grant Notice.

     K. Fair Market Value per share of Common  Stock on any relevant  date shall
be determined in accordance with the following provisions:

               (i) If the  Common  Stock is at the  time  traded  on the  NASDAQ
          SmallCap  Market,  then the Fair Market Value shall be deemed equal to
          the  closing  selling  price per share of Common  Stock on the date in
          question,  as the price is reported  by the  National  Association  of
          Securities  Dealers  on the  NASDAQ  SmallCap  Market.  If there is no
          closing  selling  price for the Common  Stock on the date in question,
          then the Fair Market Value shall be the closing  selling  price on the
          last preceding date for which such quotation exists.

               (ii) If the  Common  Stock is at the  time  listed  on any  Stock
          Exchange,  then the Fair  Market  Value  shall be deemed  equal to the
          closing  selling  price  per  share  of  Common  Stock  on the date in
          question on the Stock Exchange determined by the Plan Administrator to
          be the  primary  market  for  the  Common  Stock,  as  such  price  is
          officially  quoted  in the  composite  tape  of  transactions  on such
          exchange. If there is no closing selling price for the Common Stock on
          the date in question,  then the Fair Market Value shall be the closing
          selling  price on the last  preceding  date for which  such  quotation
          exists.

     L. Grant Date  shall mean the date of grant of the Option as  specified  in
the Grant Notice.

     M. Grant Notice shall mean the Notice of Grant of Stock Option accompanying
the  Agreement,  pursuant to which Optionee has been informed of the basic terms
of the Option evidenced hereby.

     N. Immediate Family shall mean any child,  stepchild,  grandchild,  parent,
stepparent,   grandparent,   spouse,  sibling,   mother-in-law,   father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include
adoptive relationships.

     O. Incentive  Option shall mean an option which satisfies the  requirements
of Code Section 422.

     P. Involuntary Termination shall mean the termination of Optionee's Service
by reason of:

               (i)  Optionee's   involuntary   dismissal  or  discharge  by  the
          Corporation for reasons other than Misconduct, or

               (ii) Optionee's voluntary  resignation  following (A) a change in
          Optionee's  position  with the  Corporation  (or Parent or  Subsidiary
          employing  Optionee) which materially  reduces  Optionee's  duties and
          responsibilities or the level of management to which Optionee reports,
          (B) a reduction in Optionee's  level of  compensation  (including base
          salary,   fringe   benefits  and  target  bonus  under  any  corporate
          performance  based bonus or  incentive  programs) by more than fifteen
          percent (15%) or (C) a relocation of Optionee's place of employment by
          more  than  fifty  (50)  miles,  provided  and  only if  such  change,
          reduction  or  relocation  is  effected  by  the  Corporation  without
          Optionee's consent.

     Q. Misconduct  shall mean the commission of any act of fraud,  embezzlement
or dishonesty  by Optionee,  any  unauthorized  use or disclosure by Optionee of
confidential  information or trade secrets of the  Corporation (or any Parent or
Subsidiary),  or any intentional wrongdoing by Optionee,  whether by omission or
commission,  which adversely  affects the business or affairs of the Corporation
(or any Parent or  Subsidiary)  in a material  manner.  This shall not limit the
grounds for the  dismissal or discharge of Optionee or any other  individual  in
the Service of the Corporation (or any Parent or Subsidiary).

     R. 1934 Act shall mean the Securities Exchange Act of 1934, as amended.

     S.  Non-Statutory  Option  shall mean an option not intended to satisfy the
requirements of Code Section 422.

     T.  Notice  of  Exercise  shall  mean the  notice of  exercise  in the form
attached hereto as Exhibit I.

     U. Officer shall mean any person serving as the president,  chief executive
officer, chief financial officer, chief operating officer, treasurer,  secretary
or in any other managerial or  administrative  capacity for the Corporation or a
Parent or Subsidiary of the  Corporation,  as determined in the  Administrator's
discretion.

     V. Option shall mean the Option granted pursuant to this Agreement.

     W. Option Shares shall mean the number of shares of Common Stock subject to
the Option as specified in the Grant Notice.

     X.  Optionee  shall  mean the  person  to whom the  Option  is  granted  as
specified in the Grant Notice.

     Y. Parent shall mean any  corporation  (other than the  Corporation)  in an
unbroken  chain of  corporations  ending  with the  Corporation,  provided  each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination,  stock possessing fifty percent (50%) or more of the total
combined  voting power of all classes of stock in one of the other  corporations
in such chain.

     Z. Permanent  Disability  shall mean the inability of Optionee to engage in
any  substantial  gainful  activity  by  reason  of any  medically  determinable
physical  or mental  impairment  which can be expected to result in death or has
lasted or can be expected to last for a continuous  period of twelve (12) months
or more.

     AA. Plan shall mean the Corporation's 2002 Stock Incentive Plan.

     BB. Plan  Administrator  shall mean either the Board or a committee  of the
Board acting in its capacity as administrator of the Plan.

     CC.  Service  shall mean the  Optionee's  performance  of services  for the
Corporation  (or any Parent or  Subsidiary)  in the capacity of an Employee,  an
Officer,  a member of the board of  directors  or a  consultant  or  independent
advisor.

     DD. Stock  Exchange  shall mean the American Stock Exchange or the New York
Stock Exchange.

     EE.  Subsidiary shall mean any corporation  (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation,  provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the  determination,  stock possessing fifty percent (50%) or more of the
total  combined  voting  power  of all  classes  of  stock  in one of the  other
corporations in such chain.

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