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1s I t Lange Twins Winery—Operational Statement June 29, 2005 This is a proposal for the development of a new winery in the Lodi region. Since the late 1800's, the Lange family have been active in agricultural and vineyards in the Lodi region. This represents a span of four generations of farming with a significant perspective of history in Lodi. In this time span, the Lodi appellation has become a significant entity in the California wine industry. The creation of a winery is a natural progression of our vineyard operations to move into the production of wine from our grapes. Additionally, we believe this winery will reflect our commitment to quality and further elevate the reputation of the Lodi appellation in the greater wine community. This is an investment for the future generations of our family. Our company philosophy is to be stewards of the land and to take care of the natural resources we manage. Sustainable farming practices are key to this philosophy. These principles of sustainability will guide the design and development of the winery. The inclusion of a wetlands area for water treatment is an example of this goal. We have set aside significant acreage from this project for a natural wetlands area. Energy and water conservation will be integrated into the facility as well. Solar panels, re-circulating hot water and high pressure cleaning are some of the systems we plan to incorporate. We also plan to minimize chlorine chemicals used for sanitation. Instead, we will utilize ozone generation units,both static and portable, for this purpose. The winery is also unique in its design and function to work with the current landscape and surroundings. To maintain the view shed on the parcel, the winery will have a perimeter of heritage oaks. Along the western border,heritage oaks will dominate the landscape as a planted forest. Winery sound will be abated by locating most of these processes (refrigeration, air compressors, etc.) along Lower Sacramento Road behind the grape truck hill. Winery effluent will be processed by using active aeration ponds, also located by Lower Sacramento Rd. and will include a natural wetlands area. The winery will be primarily a custom contract wine facility. Grapes will be processed into finished wine as a custom contract with other wineries or sold on the bulk wine market. The production of bulk wine provides growth opportunities for wineries that are outside of the Lodi region. Our winery creates a new custom crush site that will draw significant interest in Lodi wines as the outside wineries use more of our local wine to blend with their wine. We are also planning to create wines for bottling under our own label,but we consider this to be secondary in volume to the bulk wine contracts. The first grape deliveries are scheduled for the 2006 vintage. Currently we plan to deliver approximately 5,000 tons of grapes for the first vintage. Each truck will deliver 24 tons of grapes which represent 208 trucks to process at the winery. The total season should be six to eight weeks in length. Using a six week season with a five day work week, we expect an average of 6-8 grape trucks per day. As the winery grows in capacity, these truck delivery numbers will follow the same incremental pattern.