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      of report (Date of earliest event reported): June 29, 2006</strong></font></div>
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      Holdings, Inc. </strong></font></div>
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            <td align="left" valign="middle" width="24%">&#160;</td>
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            <td align="left" valign="middle" width="24%">&#160;</td>
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            <td align="left" valign="bottom" width="4%">&#160;</td>
            <td align="left" valign="middle" width="37%">&#160;</td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>2064
                Highway 116 North</strong></font></div>
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                of Principal Executive Offices)</strong></font></div>
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            </td>
            <td valign="top" width="37%">
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions (see General Instruction A.2. below): </font></div>
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                material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
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                communications pursuant to Rule 13e-4(c) under the Exchange Act (17
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          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 54pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
              1.01</strong></font></td>
            <td align="left">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Entry
                into a Material Definitive
                Agreement</strong></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      its
      Quarterly Report on Form 10-Q for the period ended March 31, 2006, filed with
      the Securities and Exchange Commission on May 15, 2006, SonomaWest Holdings,
      Inc. (the &#8220;Company&#8221;) reported that Sonoma County, California recently approved
      modifications to the </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">existing
      land use entitlements on the Company&#8217;s north property, subject to the
      satisfaction of certain conditions. These land use entitlement changes, among
      other things, approved a rezoning of the property from diverse agricultural
      to
      industrial park use and the approval of a master use permit. These land use
      approvals permit the Company to lease the property to a broader range of tenants
      and for a broader range of uses on the property. The approvals also permit
      new
      buildings to be constructed to replace older buildings without having to reapply
      to the city for additional zoning approvals or waivers. In order for the Company
      to maintain the benefits of the land use approvals obtained, the Company is
      required to take a number of actions and satisfy&#160;a number of Sonoma County
      conditions of approval involving the property. The Company has begun making
      the
      expenditures and taking the actions required to satisfy these conditions. Full
      satisfaction of the conditions is anticipated in advance of their respective
      deadlines (generally, six to 12 months). The Sonoma County approvals follow
      several years of activity by the Company in which David J. Bugatto, a director
      of and consultant to the Company, played a significant role. The Company
      believes that these approvals are a positive development for the Company and
      its
      stockholders. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company currently has a consulting agreement (the &#8220;2005 Agreement&#8221;) dated as of
      August 10, 2005, with Bugatto Investment Company (&#8220;BIC&#8221;), which is owned by Mr.
      Bugatto. The basic term of the 2005 Agreement is through June 30, 2006. Under
      the 2005 Agreement, BIC provides real estate consulting services to the Company
      for an hourly fee of $225. In addition, under the 2005 Agreement, if either
      of
      the Company&#8217;s Sonoma County properties is sold during the term of the agreement,
      BIC is entitled to receive a fee equal to 1.5% of the sales prices regardless
      of
      whether or not a broker is involved, and BIC is entitled to receive a fee equal
      to the greater of 1.5% of the gross value of the real estate or $150,000 upon
      any transaction that would result in the Company becoming a private company
      (such a sale of property or transaction referred to as a &#8220;Transaction&#8221;).&#160;
During the fiscal year ended June 30, 2005, the Company has paid Bugatto
      Investment Company $32,943. For the nine months ended March 31, 2006,
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
      Company incurred $25,000 for real estate consulting services from Bugatto
      Investment Company and as of March 31, 2006, had a payable to Bugatto Investment
      Company of $4,353.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June
      29, 2006, following approval by the Board of Directors of the Company, with
      David J. Bugatto not participating or voting, the Company entered into a new
      consulting agreement with Bugatto Investment Company (the &#8220;New Agreement&#8221;). The
      New Agreement will become effective July 1, 2006, immediately after expiration
      of the term of the existing 2005 Agreement. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
      the
      New Agreement, BIC has agreed to provide real estate consulting services, as
      reasonably requested by the Company, for a one-year term, at the same hourly
      rate of $225/hour as is contained in the 2005 Agreement. The New Agreement
      modifies the 2005 Agreement to provide that BIC will not receive any additional
      payments or compensation upon the occurrence of a Transaction.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      consideration for BIC&#8217;s willingness to enter into the New Agreement and in light
      of Mr. Bugatto&#8217;s contributions over the past years to increasing the tenant
      occupancy rate of the Company&#8217;s properties and achieving the land use
      entitlement modification approvals discussed above, upon execution of the New
      Agreement the Company paid BIC the sum of $100,000. In addition, the Company
      will pay BIC an additional $50,000 upon the </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">satisfaction,
      during the term of the agreement (or within one year thereafter) of certain
      conditions and actions specified by Sonoma County in connection with approval
      of
      the land use entitlement changes. If the Company&#8217;s business is sold in a merger,
      consolidation, tender offer or similar transaction, or if the Company&#8217;s north
      property is sold, and the acquiring person or entity does not agree to assume
      the New Agreement, then the $50,000 payment becomes payable in connection with
      the transaction.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
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      <div id="HDR">
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        </div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      approving the New Agreement and the above payment, the Board took into account
      a
      number of factors, including without limitation:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                significant contributions that Mr. Bugatto has made over a period
                of years
                to increasing the tenant occupancy rate of the Company&#8217;s
                properties;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                significant contributions that Mr. Bugatto has made over a period
                of years
                to achieving the recent land use entitlement modification approvals
                from
                Sonoma County, which the Company believes is a positive development
                for
                the Company and its stockholders and potentially increases the value
                of
                the Company&#8217;s north property; </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">management&#8217;s
                belief, in which the Board concurred, that it is in the best interests
                of
                the Company and its stockholders that Mr. Bugatto continue to provide
                real
                estate consulting services to the Company and assist management as
                needed
                on matters relating to the
                properties;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                fact that additional work and interaction will be required with Sonoma
                County over at least the next 12 months in order to achieve the benefits
                and value to the Company and its stockholders from the recent land
                use
                entitlement change approvals and that Mr. Bugatto&#8217;s input into that
                process will be important to the Company&#8217;s ability to successfully
                finalize these land use entitlement changes;
</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                fact that the Board believes that the hourly rate charged by BIC
                under the
                consulting agreements is below the market rate that the Company would
                have
                to pay a third party for comparable consulting
                services;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                benefit to the Company from eliminating the variable nature of the
                amount
                payable to BIC in connection with a Transaction; the fact that if
                a
                Transaction were to occur and an amount was payable to BIC, BIC might,
                depending on the value of the Company&#8217;s properties, be entitled to receive
                a larger sum by virtue of the structure of the provisions in the
                existing
                consulting agreement; and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                outcome of negotiations with Mr. Bugatto concerning the payment structure
                required to induce Mr. Bugatto to continue to provide consulting
                services
                and to eliminate the provisions in the consulting agreement providing
                for
                a payment upon the occurrence of a Transaction based on a percentage
                of
                the value of the properties.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 54pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
              9.01</strong></font></td>
            <td align="left">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Financial
                Statements and Exhibits</strong></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 18pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)</font></td>
            <td align="left">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exhibits</font></div>
              <div align="left">&#160;</div>
              <div align="left"><font size="2">None</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br>&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SIGNATURE
      </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div align="center">
        <table bgcolor="white" cellpadding="0" cellspacing="0" width="100%">

            <tr bgcolor="white">
              <td width="50%">&#160;</td>
              <td width="50%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SONOMAWEST
                  HOLDINGS, INC.</strong></font>&#160;</div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td width="50%">&#160;</td>
              <td width="50%">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td width="50%">
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                  June 29, 2006</font>&#160;</div>
              </td>
              <td width="50%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By:</font>&#160;&#160;&#160;&#160;
                  <font size="2"><u>/s/ Walker R. Stapleton</u></font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td width="50%">&#160;</td>
              <td width="50%">
                <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Walker
                  R. Stapleton</font>&#160;</div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td width="50%">&#160;</td>
              <td width="50%">
                <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                  Executive Officer</font>&#160;</div>
              </td>
            </tr>

        </table>
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{"company-data": {"conformed-name": "SONOMAWEST HOLDINGS INC", "cik": "0000102588", "assigned-sic": "6519", "irs-number": "941069729", "state-of-incorporation": "DE", "fiscal-year-end": "0630"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-01912", "film-number": "06939261"}, "business-address": {"street1": "2064 HIGHWAY 116 NORTH", "city": "SEBASTOPOL", "state": "CA", "zip": "95472", "phone": "707-824-2534"}, "mail-address": {"street1": "2064 HIGHWAY 116 NORTH", "city": "SEBASTOPOL", "state": "CA", "zip": "95472"}, "former-company": {"former-conformed-name": "VACU DRY CO", "date-changed": "19920703"}}
UNITED
      STATES
SECURITIES
      AND EXCHANGE COMMISSION
Washington,
      D.C. 20549
_________________
FORM
      8-K
_________________
CURRENT
      REPORT
PURSUANT
      TO SECTION 13 OR 15(d) OF THE
SECURITIES
      EXCHANGE ACT OF 1934
Date
      of report (Date of earliest event reported): June 29, 2006
_________________
SonomaWest
      Holdings, Inc.
(Exact
      Name of Registrant as Specified in Charter)
_________________
Delaware
000-01912
94-1069729
(State
                or other jurisdiction
of
                incorporation)
(Commission
                File Number)
(IRS
                Employer
Identification
                No.)
2064
                Highway 116 North
Sebastopol,
                California
95472
(Address
                of Principal Executive Offices)
(Zip
                Code)
Registrant's
      telephone number, including area code: (707) 824-2534
Same
(Former
      name or Former Address, if Changed Since Last Report.)
_________________
Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions (see General Instruction A.2. below):
¨
Written
                communications pursuant to Rule 425 under the Securities Act (17
                CFR
                230.425)
¨
Soliciting
                material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
                240.14a-12)
¨
Pre-commencement
                communications pursuant to Rule 14d-2(b) under the Exchange Act (17
                CFR
                240.14d-2(b))
¨
Pre-commencement
                communications pursuant to Rule 13e-4(c) under the Exchange Act (17
                CFR
                240.13e-4(c))
Item
              1.01
Entry
                into a Material Definitive
                Agreement
In
      its
      Quarterly Report on Form 10-Q for the period ended March 31, 2006, filed with
      the Securities and Exchange Commission on May 15, 2006, SonomaWest Holdings,
      Inc. (the "Company") reported that Sonoma County, California recently approved
      modifications to the
existing
      land use entitlements on the Company's north property, subject to the
      satisfaction of certain conditions. These land use entitlement changes, among
      other things, approved a rezoning of the property from diverse agricultural
      to
      industrial park use and the approval of a master use permit. These land use
      approvals permit the Company to lease the property to a broader range of tenants
      and for a broader range of uses on the property. The approvals also permit
      new
      buildings to be constructed to replace older buildings without having to reapply
      to the city for additional zoning approvals or waivers. In order for the Company
      to maintain the benefits of the land use approvals obtained, the Company is
      required to take a number of actions and satisfy a number of Sonoma County
      conditions of approval involving the property. The Company has begun making
      the
      expenditures and taking the actions required to satisfy these conditions. Full
      satisfaction of the conditions is anticipated in advance of their respective
      deadlines (generally, six to 12 months). The Sonoma County approvals follow
      several years of activity by the Company in which David J. Bugatto, a director
      of and consultant to the Company, played a significant role. The Company
      believes that these approvals are a positive development for the Company and
      its
      stockholders.
The
      Company currently has a consulting agreement (the "2005 Agreement") dated as of
      August 10, 2005, with Bugatto Investment Company ("BIC"), which is owned by Mr.
      Bugatto. The basic term of the 2005 Agreement is through June 30, 2006. Under
      the 2005 Agreement, BIC provides real estate consulting services to the Company
      for an hourly fee of $225. In addition, under the 2005 Agreement, if either
      of
      the Company's Sonoma County properties is sold during the term of the agreement,
      BIC is entitled to receive a fee equal to 1.5% of the sales prices regardless
      of
      whether or not a broker is involved, and BIC is entitled to receive a fee equal
      to the greater of 1.5% of the gross value of the real estate or $150,000 upon
      any transaction that would result in the Company becoming a private company
      (such a sale of property or transaction referred to as a "Transaction"). 
During the fiscal year ended June 30, 2005, the Company has paid Bugatto
      Investment Company $32,943. For the nine months ended March 31, 2006,
the
      Company incurred $25,000 for real estate consulting services from Bugatto
      Investment Company and as of March 31, 2006, had a payable to Bugatto Investment
      Company of $4,353.
On
      June
      29, 2006, following approval by the Board of Directors of the Company, with
      David J. Bugatto not participating or voting, the Company entered into a new
      consulting agreement with Bugatto Investment Company (the "New Agreement"). The
      New Agreement will become effective July 1, 2006, immediately after expiration
      of the term of the existing 2005 Agreement.
Under
      the
      New Agreement, BIC has agreed to provide real estate consulting services, as
      reasonably requested by the Company, for a one-year term, at the same hourly
      rate of $225/hour as is contained in the 2005 Agreement. The New Agreement
      modifies the 2005 Agreement to provide that BIC will not receive any additional
      payments or compensation upon the occurrence of a Transaction.
In
      consideration for BIC's willingness to enter into the New Agreement and in light
      of Mr. Bugatto's contributions over the past years to increasing the tenant
      occupancy rate of the Company's properties and achieving the land use
      entitlement modification approvals discussed above, upon execution of the New
      Agreement the Company paid BIC the sum of $100,000. In addition, the Company
      will pay BIC an additional $50,000 upon the
satisfaction,
      during the term of the agreement (or within one year thereafter) of certain
      conditions and actions specified by Sonoma County in connection with approval
      of
      the land use entitlement changes. If the Company's business is sold in a merger,
      consolidation, tender offer or similar transaction, or if the Company's north
      property is sold, and the acquiring person or entity does not agree to assume
      the New Agreement, then the $50,000 payment becomes payable in connection with
      the transaction.
In
      approving the New Agreement and the above payment, the Board took into account
      a
      number of factors, including without limitation:
·
the
                significant contributions that Mr. Bugatto has made over a period
                of years
                to increasing the tenant occupancy rate of the Company's
                properties;
·
the
                significant contributions that Mr. Bugatto has made over a period
                of years
                to achieving the recent land use entitlement modification approvals
                from
                Sonoma County, which the Company believes is a positive development
                for
                the Company and its stockholders and potentially increases the value
                of
                the Company's north property;
·
management's
                belief, in which the Board concurred, that it is in the best interests
                of
                the Company and its stockholders that Mr. Bugatto continue to provide
                real
                estate consulting services to the Company and assist management as
                needed
                on matters relating to the
                properties;
·
the
                fact that additional work and interaction will be required with Sonoma
                County over at least the next 12 months in order to achieve the benefits
                and value to the Company and its stockholders from the recent land
                use
                entitlement change approvals and that Mr. Bugatto's input into that
                process will be important to the Company's ability to successfully
                finalize these land use entitlement changes;
·
the
                fact that the Board believes that the hourly rate charged by BIC
                under the
                consulting agreements is below the market rate that the Company would
                have
                to pay a third party for comparable consulting
                services;
·
the
                benefit to the Company from eliminating the variable nature of the
                amount
                payable to BIC in connection with a Transaction; the fact that if
                a
                Transaction were to occur and an amount was payable to BIC, BIC might,
                depending on the value of the Company's properties, be entitled to receive
                a larger sum by virtue of the structure of the provisions in the
                existing
                consulting agreement; and
·
the
                outcome of negotiations with Mr. Bugatto concerning the payment structure
                required to induce Mr. Bugatto to continue to provide consulting
                services
                and to eliminate the provisions in the consulting agreement providing
                for
                a payment upon the occurrence of a Transaction based on a percentage
                of
                the value of the properties.
Item
              9.01
Financial
                Statements and Exhibits
(c)
Exhibits
None
SIGNATURE
Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized.
SONOMAWEST
                  HOLDINGS, INC.
Date:
                  June 29, 2006
By:
/s/ Walker R. Stapleton
Walker
                  R. Stapleton
Chief
                  Executive Officer