New Mexico-Santa Fe-St. Francis Drive and Cordova Road Lease Agreement - Marianna Partners Ltd. and Wild Oats Market of Santa Fe Inc.
LEASE AGREEMENT by and between MARIANNA PARTNERS LIMITED, LANDLORD and WILD OATS MARKET OF SANTA FE, INC., TENANT <PAGE> 2 TABLE OF CONTENTS PAGE ARTICLE I. DEMISE OF PREMISES; QUIET ENJOYMENT . . . . . . . . . . . . . . 1 Section 1.01. Demise of Premises . . . . . . . . . . . . . . . . . 1 Section 1.02. Definitions and Use of Terms . . . . . . . . . . . . 1 Section 1.03. Quiet Enjoyment . . . . . . . . . . . . . . . . . . 1 ARTICLE II. USE; TERM; RENEWAL OPTION; AND HOLDING OVER . . . . . . . . . . . . . . . . . . . . . 2 Section 2.01. Use . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 2.02. Term . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 2.03. Renewal Option . . . . . . . . . . . . . . . . . . . 2 Section 2.04. Holding Over . . . . . . . . . . . . . . . . . . . . 2 ARTICLE III. RENT; SECURITY DEPOSIT . . . . . . . . . . . . . . . . . . . . 3 Section 3.01. Minimum Rent . . . . . . . . . . . . . . . . . . . . 3 Section 3.02. Lease Year . . . . . . . . . . . . . . . . . . . . . 3 Section 3.03. Cost of Living Increase; CPI Adjustment . . . . . . . . . . . . . . . . . . 3 Section 3.04. Changes in Index . . . . . . . . . . . . . . . . . . 4 Section 3.05. Percentage Rent . . . . . . . . . . . . . . . . . . 4 Section 3.06. Payment . . . . . . . . . . . . . . . . . . . . . . 6 Section 3.07. Security Deposit . . . . . . . . . . . . . . . . . . 7 ARTICLE IV. CONSTRUCTION OF ADDITIONAL IMPROVEMENTS TO THE EXISTING BUILDING; ACCEPTANCE OF PREMISES; AND COMMENCEMENT DATE . . . . . . . . . . . . 7 Section 4.01. Landlord's Initial Work . . . . . . . . . . . . . . 7 Section 4.02. Tenant's Work . . . . . . . . . . . . . . . . . . . 8 Section 4.03. Landlord's Additional Work . . . . . . . . . . . . . 8 Section 4.04. Commencement Date . . . . . . . . . . . . . . . . . 9 Section 4.05. Unavoidable Delays . . . . . . . . . . . . . . . . . 9 Section 4.06. Asbestos . . . . . . . . . . . . . . . . . . . . . . 9 ARTICLE V. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 ARTICLE VI. JANITORIAL SERVICES AND UTILITIES . . . . . . . . . . . . . . . 10 Section 6.01. Janitorial Services . . . . . . . . . . . . . . . . 10 Section 6.02. Utilities . . . . . . . . . . . . . . . . . . . . . 10 ARTICLE VII. MAINTENANCE . . . . . . . . . . . . . . . . . . . . . . . . . 11 ARTICLE VIII. CASUALTY INSURANCE; LIABILITY INSURANCE; WAIVER OF CLAIMS AND INDEMNITY; WAIVER OF SUBROGATION; POLICY REQUIREMENTS; AND LIFE INSURANCE . . . . . . . . . . . . . . . . . . . . . . 11 Section 8.01. Fire and Extended Casualty . . . . . . . . . . . . . 11 Section 8.02. Liability Insurance . . . . . . . . . . . . . . . . 12 Section 8.03. Waiver of Claims . . . . . . . . . . . . . . . . . . 12 Section 8.04. Indemnity . . . . . . . . . . . . . . . . . . . . . 12 Section 8.05. Waiver of Subrogation . . . . . . . . . . . . . . . 13 Section 8.06. Policy Requirements . . . . . . . . . . . . . . . . 13 Section 8.07. Life Insurance . . . . . . . . . . . . . . . . . . . 13 ARTICLE IX. DESTRUCTION OF IMPROVEMENTS BY FIRE OR OTHER CASUALTY . . . . . . . . . . . . . . . . . . . . . . 14 - i - <PAGE> 3 TABLE OF CONTENTS PAGE ARTICLE X. ACCEPTANCE OF PREMISES; PROHIBITED USE; COMPLIANCE WITH LAWS, RULES AND REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Section 10.01. Acceptance of Premises . . . . . . . . . . . . . . 14 Section 10.02. Prohibited Use . . . . . . . . . . . . . . . . . . 14 Section 10.03. Compliance with Law . . . . . . . . . . . . . . . . 15 ARTICLE XI. ALTERATIONS; SIGNS . . . . . . . . . . . . . . . . . . . . . . 15 Section 11.01. Alterations and Surrender of Premises . . . . . . . . . . . . . . . . . . . 15 Section 11.02. Sign . . . . . . . . . . . . . . . . . . . . . . . 16 ARTICLE XII. ASSIGNMENT AND SUBLETTING . . . . . . . . . . . . . . . . . . 16 ARTICLE XIII. DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 13.01. Events of Default . . . . . . . . . . . . . . . . 16 Section 13.02. Landlord's Remedy . . . . . . . . . . . . . . . . 17 Section 13.03. Landlord's Right to Cure Default . . . . . . . . . 18 Section 13.04. Waiver . . . . . . . . . . . . . . . . . . . . . . 18 ARTICLE XIV. EMINENT DOMAIN. . . . . . . . . . . . . . . . . . . . . . . . 18 ARTICLE XV. RESTRICTIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . 19 ARTICLE XVI. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . 19 Section 16.01. Time of the Essence . . . . . . . . . . . . . . . . 19 Section 16.02. Binding Effect; Successors and Assigns . . . . . . . . . . . . . . . . . . . 20 Section 16.03. Notices . . . . . . . . . . . . . . . . . . . . . . 20 Section 16.04. Subordination or Superiority . . . . . . . . . . . 20 Section 16.05. Estoppel Certificates . . . . . . . . . . . . . . . 20 Section 16.06. Landlord Means Owner . . . . . . . . . . . . . . . 21 Section 16.07. Sale of Premises by Landlord . . . . . . . . . . . 21 Section 16.08. Law Governing . . . . . . . . . . . . . . . . . . . 21 Section 16.09. Gender and Number . . . . . . . . . . . . . . . . . 21 Section 16.10. Entire Agreement . . . . . . . . . . . . . . . . . 21 Section 16.11. Captions; Table of-Contents . . . . . . . . . . . . 21 Section 16.12. Severability . . . . . . . . . . . . . . . . . . . 21 Section 16.13. Attorney's Fees . . . . . . . . . . . . . . . . . . 21 Section 16.14. Counterpart Signatures . . . . . . . . . . . . . . 22 Section 16.15. Equipment Presently Located in the Building . . . . . . . . . . . . . . . . 22 Section 16.16. Financial Statements . . . . . . . . . . . . . . . 22 Section 16.17. Inclusion of Premises in Additional Development. . . . . . . . . . . . . . 22 Section 16.18. Restrictions Applicable to Landlord . . . . . . . . . . . . . . . . . . 22 GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 SCHEDULE OF EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 - ii - <PAGE> 4 LEASE AGREEMENT This Lease Agreement (hereinafter referred to as the "Lease"), is executed this 27th day of August, 1990, by and between MARIANNA PARTNERS LIMITED, a New Mexico limited partnership (hereinafter referred to as the "Landlord") and WILD OATS MARKET OF SANTA FE, INC., a New Mexico corporation, (hereinafter referred to as the "Tenant"). W I T N E S S E T H: In consideration of the mutual covenants and agreements hereinafter set forth, Landlord and Tenant covenant and agree as follows: ARTICLE I DEMISE OF PREMISES; QUIET ENJOYMENT SECTION 1.01. DEMISE OF PREMISES. Subject to the terms, conditions, covenants, and undertakings hereinafter set forth, Landlord does hereby lease to Tenant those certain Premises described as follows (including the existing Building thereon): An approximately 14,850 square foot free-standing building located on that certain parcel of land containing approximately 68,000 square feet located on the northwest corner of St. Francis Drive and Cordova Road in the City of Santa Fe, New Mexico, more particularly described on Exhibit "A" attached hereto and incorporated herein by reference. The parties acknowledge that 14,850 square feet is an approximation of the area of the existing building and that Landlord does not guarantee the area thereof. SECTION 1.02. DEFINITIONS AND USE OF TERMS. When used in this Lease: (a) "Land" means the real property described in section 1.01 above. (b) "Building" means any and all buildings, structures and other improvements located on said Land. (c) "Premises" means collectively the Land and Building leased herein. SECTION 1.03. QUIET ENJOYMENT. Landlord covenants and agrees that, upon Tenant's paying rent and performing all of the covenants and conditions set forth in the Lease, Tenant's quiet and peaceable enjoyment of the Premises shall not be disturbed by Landlord or any person claiming by, through or under Landlord, subject, however, to the terms, conditions and exceptions contained herein and to all reservations and restrictions of record in the Real Property Records of the county where the Land is located and all zoning and land-use regulations of governmental authorities having jurisdiction over the Land. <PAGE> 5 ARTICLE II USE; TERM; RENEWAL OPTION AND HOLDING OVER SECTION 2.01. USE. Tenant shall use the Premises for the retail sale and distribution of food, liquor and general merchandise. Tenant shall keep the Premises reasonably stocked with merchandise, and reasonably staffed to serve the patrons thereof, comparable to stores doing a similar business. Tenant is not required to operate its business on Sundays or legal holidays, nor during any time when such operations must be suspended because of casualty loss to the Building, strikes, insurrection, or other similar cause. SECTION 2.02. TERM. The term of this Lease shall be ten and one-half (10 1/2) years, commencing on the "Commencement Date," as defined in Section 4.04 hereof. In the event that the Commencement Date is any date other than the first day of the month, then the term hereof shall extend for ten and one-half years plus the number of days remaining in the month in which the term hereof commences. SECTION 2.03. RENEWAL OPTION. Provided that Tenant is not in default in respect to any provision of this Lease, Tenant shall have the right to extend the term of this Lease for one (1) additional period of ten (10) years from the expiration of the prior term, provided, however, that written notice is given to Landlord of such intention to extend the Lease six (6) months prior to the applicable expiration date. Such extension term shall be upon the same terms, conditions, and rentals except that (i) Tenant shall have no further right of renewal after exercise of said extension term and (ii) the Minimum Rent will be equal to whatever Minimum Rent (plus CPI adjustments) is then applicable under this Lease. It is further understood and agreed by the parties that Landlord may attempt to acquire additional land adjacent to the Premises, for the purpose of constructing thereon a shopping center and/or other commercial buildings. If Landlord has acquired such additional land adjacent to the Premises at the time that Tenant exercises its option hereunder, then Landlord shall have the right to require that Tenant rent, on the same terms, conditions, and rentals contained in this Lease, as adjusted above, comparable space in the adjacent property in lieu of the Premises. Provided, however, that Tenant shall have no obligation to accept such comparable space unless such substitution will have no adverse economic consequences to Tenant. SECTION 2.04. HOLDING OVER. Should Tenant hold over after the termination of this Lease, by lapse of time or otherwise, Tenant shall become a tenant from month-to-month only upon each and all of the terms herein provided as may be applicable to such month-to-month tenancy and any such holding over shall not constitute an extension of this Lease; provided, however, during such holding over, Tenant shall pay Minimum Rent and Percentage Rent at double the rate payable per Article III below for the month immediately preceding said holding over and in addition, Tenant shall pay Landlord all damages, consequential as well as direct, sustained by reason of Tenant's holding over. The provisions of this paragraph do not exclude the Landlord's rights of reentry or any other right contained in this Lease. - 2 - <PAGE> 6 ARTICLE III RENT; SECURITY DEPOSIT SECTION 3.01. MINIMUM RENT. During the term hereof, Tenant shall pay Landlord minimum rent (hereinafter referred to as "Minimum Rent") on or before the first day of each month during the term hereof as follows: (a) From the Commencement Date through and including the 18th month (the first "Lease Year") ($111,375 per annum, $9.281.25 per month). (b) 19th through 30th month (the second "Lease Year") ($118,800 per annum, $9,900 per month). (c) 31st through 42nd month (3rd "Lease Year") ($126,225 per annum, $10,518.75 per month) (d) 43rd through 66th month (4th and 5th "Lease Years") ($133,650 per annum, $ll,137.50 per month). (e) 67th through 126th month (6th "Lease Year" through 10th "Lease Year") ($141,075 per annum, $11,756.25 per month), increased, however, after the 6th Lease Year for increases in the Consumer Price Index as specified in Section 3.03 below. Notwithstanding anything herein to the contrary, Landlord and Tenant agree in consideration of Tenant's making the leasehold improvements specified herein, that the Minimum Rent for the first full six (6) months of the term hereof shall abate completely. In the event that the Commencement Date of this Lease falls on a day other than the first day of the month, then the Minimum Rent shall be prorated for the said partial month in which the Commencement Date occurs, and thereafter Tenant shall be entitled to a complete abatement of Minimum Rent for the first full six (6) months of the term hereof, provided, however, that the prorated Minimum Rent for the partial month in which the Commencement Date falls shall be due and payable at the end of the rent abatement period. SECTION 3.02. LEASE YEAR. As used herein the term "Lease Year" shall mean the eighteen (18) month period beginning on the first day of the month during which the Commencement Date occurs, and each consecutive twelve (12) calendar month period thereafter. SECTION 3.03. COST OF LIVING INCREASE; CPI ADJUSTMENT. At the end of the 6th Lease Year and every Lease Year thereafter (including any renewal periods) the Minimum Rent provided for in Section 3.01(e) above shall be adjusted to reflect any increase in the consumer price index as hereinafter provided. Each Lease Year following the 6th Lease Year is hereinafter referred to as the "Adjustment Period". The adjusted Minimum Rent shall be obtained by multiplying the Minimum Rent provided in Section 3.01(e) above by a fraction, the numerator of which is the index number for the first month of each Adjustment Period hereunder in the column for "All Items" (unadjusted) in the table entitled "Consumer Price Index for All Urban Consumers," (index base: 1982 - 84 = 100) "U.S. City Average" published monthly by the Bureau of Labor Statistics of the U.S. Department of Labor in the Monthly Labor Review (said table herein referred to as the "CPI-U"), and the denominator of which is the CPI-U for the first month of the 6th Lease Year of - 3 - <PAGE> 7 this Lease. The adjusted rental thus obtained shall be the Minimum Rent. Notwithstanding the foregoing calculation, the yearly percentage adjustment pursuant to this Section 3.03 shall in no event be more than five percent (5%) in any year. Tenant shall continue to pay the Minimum Rent in effect for the expiring Adjustment Period until notified by Landlord of any increase in such Minimum Rent. On the first day of the calendar month immediately following receipt of such notification, Tenant shall commence payment of the new Minimum Rent specified in the notice, and shall also pay to Landlord, with respect to the month(s) already expired, the excess of the required monthly rentals specified in the notice over the monthly amounts theretofore actually paid by Tenant. SECTION 3.04. CHANGES IN INDEX. If the "CPI-U" is discontinued, the "Consumer Price Index for Urban Wage Earners and Clerical Workers" ("CPI-W") for "All Items," unadjusted, (index base: 1982 - 84 = 100), "U.S. City Average," published monthly in the Monthly Labor Review by the Bureau of Labor Statistics of the United States Department of Labor shall be used for making the computation in Section 3.03. If the "CPI-W" is discontinued, comparable statistics on the purchasing power of the consumer dollar published by the Bureau of Labor Statistics of the United States Department of Labor shall be used for making the computation in Section 3.03. If the Bureau of Labor Statistics shall no longer maintain statistics on the purchasing power of the consumer dollar, comparable statistics published by a responsible financial periodical or recognized authority selected by the Landlord and reasonably acceptable to Tenant shall be used for making the computation in Section 3.03. If the base year "(1982 - 84 = 100)" or other base year used in computing the CPI-U (or CPI-W if applicable) is changed, the figures used in making the adjustment in Section 3.03 shall be changed accordingly, so that all increases in the "CPI-U" (or CPI-W if applicable) are taken into account notwithstanding any such change in the base year. SECTION 3.05. PERCENTAGE RENT. (a) In addition to the Minimum Rent, Tenant shall pay to Landlord for each calendar year during the term of this Lease, as percentage rent ("Percentage Rent"), a sum equivalent to the amount, if any, by which two percent (2%) of Tenant's Gross Sales (as hereinafter defined), exceeds the annual Minimum Rent set forth in Section 3.01 hereof, for such calendar year. In the event that the Minimum Rent is adjusted during the calendar year in question, then the annual Minimum Rent shall mean the average annual Minimum Rent payable during such calendar year. On or before the 10th day of each calendar month during the term of this Lease, Tenant shall pay to Landlord, after deducting therefrom the Minimum Rent paid for the preceding calendar month, an amount of money equal to the product of 2% multiplied by the Tenant's Gross Sales made in or from the Premises during such preceding month. In the event that the total of the monthly payments for Percentage Rent for any calendar year is not equal to the annual Percentage Rent computed on the Tenant's Gross Sales for such entire calendar year, then (a) Tenant shall pay to Landlord any deficiency promptly upon demand, or (b) Landlord shall credit Tenant's next payment of Minimum Rent with any excess. If an overpayment occurs during the last year of the term hereof, Landlord shall refund such excess to Tenant within 30 days after the termination hereof. In no event shall the rent to be paid by Tenant and retained by Landlord for any calendar year be less than the annual Minimum Rent herein specified. - 4 - <PAGE> 8 (b) If this Lease (or operation by Tenant of its business on the Premises) should commence on a date other than the first day of a calendar year or terminate on a date other than the last day of a calendar year, Percentage Rent for such fractional part of the calendar year following the Commencement Date (or commencement by Tenant of its business on the Premises) or preceding the termination date, as the case may be, shall be paid at the specified rate or rates for all sales made during such fractional part of a calendar year, after deducting from such Percentage Rent all payments of Minimum Rent for such fractional period, such Percentage Rent to be paid in monthly installments as provided above with respect to full calendar years. (c) As used herein, the term "Tenant's Gross Sales" shall mean the gross proceeds from all sales of merchandise, services and other receipts whatsoever of all business conducted in or from the Premises, whether sold for cash or on credit, including, without limitation, redemption of gift and merchandise certificates, deposits not refunded to purchasers, orders taken at the Premises although such orders may be filled elsewhere, sales through vending machines or other devices, and sales by any subtenant, concessionaire or licensee in the Premises. Tenant's Gross Sales shall not include (i) any sums collected from customers and paid out for a sales or excise or similar tax imposed by any duly constituted governmental authority if the amount of such tax is separately charged to the customer and paid by Tenant directly to or for the benefit of the governmental authority, (ii) the exchange of merchandise with other stores of Tenant, if such exchange is made solely for the convenient operation of the business of Tenant and not for the purpose of consummating a sale which was made in or from the Premises or if such exchange of merchandise is not for the purpose of depriving Landlord of the benefit of a sale which otherwise would be made in or from the Premises, (iii) the amount of returns to suppliers or manufacturers, (iv) sales of Tenant's furniture, fixtures and equipment not in the ordinary course of Tenant's business, (v) amounts charged customers for mailing, delivery, alterations or such other services, (vi) amounts received from sales of distressed, damaged or obsolescent merchandise sold in bulk to persons other than retail customers, (vii) amounts charged to Tenant by credit card companies for processing of credit card charges from the Premises, (viii) sales of gift certificates unless and until such gift certificates are actually redeemed on the Premises, (ix) revenue earned by outside contractors such as health care specialists or cooking instructors that are invited by Tenant to present instructional courses on the Premises. Tenant shall be entitled to a credit against Tenant's Gross Sales for any cash or credit refund made for any returned merchandise accepted by Tenant and previously included in Tenant's Gross Sales. (d) On or before the 10th day of each calendar month during the term of this Lease, Tenant shall send to Landlord at the place designated by Landlord a statement of Tenant's Gross Sales made during the preceding calendar month. In addition, within sixty (60) days after the expiration of each calendar year, Tenant shall prepare and deliver to Landlord at the place designated by Landlord a statement of Tenant's Gross Sales during the preceding calendar year (or partial year), certified to be correct by an independent certified public accountant or by an officer of Tenant. Landlord agrees to keep such statements strictly confidential and agrees to use such statements solely for the purpose of verifying Tenant's Gross Sales, and - 5 - <PAGE> 9 will not divulge the same to any other person or entity except (i) in connection with any sale or financing of the Premises or (ii) if required by any governmental authority. Tenant shall furnish similar statements for its licensees, concessionaires and subtenants, if any. All such statements shall be in such form as Landlord may require. If any such statement discloses an error in the calculation of the Percentage Rent for any period, appropriate adjustment of the Percentage Rent shall be made, subject, however, to Landlord's rights under Section 3.05 (f). Notwithstanding anything herein to the contrary in the event that, at any time during the term hereof, Tenant submits to Landlord more than one (1) incorrect statement of Tenant's Gross Sales, that understates Tenant's Gross Sales for the period in question by more than two percent (2%), then Landlord shall have the right to require that all statements of Tenant's Gross Sales submitted thereafter be certified to be correct by an independent certified public accountant. (e) Tenant shall keep on the Premises or at some other location in the city in which the Premises are located, approved in writing by Landlord, a permanent, accurate set of books and records of all sales of merchandise and revenue derived from business conducted in or from the Premises, and all supporting records such as tax reports, banking records, cash register tapes, sales slips and other sales records. All such books and records shall be retained and preserved for at least 36 months after the end of the calendar year to which they relate, and shall be subject to inspection and audit by Landlord and its agents at all reasonable times. (f) In the event Landlord is not satisfied with any monthly statement or certified annual statement of gross sales submitted by Tenant, Landlord shall have the right to have its auditors make a special audit of all books and records, wherever located, pertaining to sales made in or from the Premises during the period in question. If such statements are found to understate Tenant's Gross Sales by more than two percent (2%) from the figures submitted by Tenant, Tenant shall pay for the entire cost of such audit. Tenant shall promptly pay to Landlord any deficiency. SECTION 3.06. PAYMENT. All rental provided herein shall be paid to Landlord in monthly installments as specified herein at the address specified in Article XVI hereof, or such other place. as Landlord shall designate in writing pursuant to the notice provisions contained in Article XVI hereof, without deduction or offset, in lawful money of the United States of America. Tenant shall pay Landlord a late charge of $250 if any payment of rent due hereunder is not received by Landlord within ten (10) days of the due date. Any rental or other amount due from Tenant under this Lease not paid within fifteen (15) days of the date when due shall bear interest from the date due until the date paid at the lower of (i) the highest lawful rate of interest per annum or (ii) the prime rate of interest charged by Chemical Bank, plus six percent (6%) per annum, but the payment of such interest shall not excuse or cure any default by Tenant under this Lease. The covenants herein to pay rent shall be independent of any other covenants set forth in this Lease. In the event that Tenant should default in the payment of all or any portion of any payment of rent provided for herein and should remain in default for a period of 10 days after receipt of written notice thereof, all installments of Minimum Rent for the entire term of this Lease then unpaid shall, at the option of the Landlord, be accelerated and become immediately due and payable. - 6 - <PAGE> 10 SECTION 3.07. SECURITY DEPOSIT. Concurrently with Tenant's execution of this Lease, Tenant shall deposit with Landlord the sum of $25,000. On or before the Commencement Date (as defined in Section 4.04 hereof), Tenant shall deposit with Landlord the additional sum of $25,000, all of which (the balance of said amounts being hereinafter referred to as the "Security Deposit") shall be held by Landlord, as security for performance of Tenant's covenants and obligations under this Lease, it being expressly understood and agreed that such deposit is not an advance rental deposit or a measure of Landlord's damages in case of Tenant's default. Tenant may elect to direct that such sums be placed in an interest bearing account, or to substitute for such funds at any time a letter of credit, in form acceptable to Landlord. If Tenant provides a letter of credit meeting the requirements hereof, then Landlord shall return the Security Deposit funds, with interest, within three (3) days of delivery of such letter of credit. Any interest accruing on such account shall be held by Landlord but shall accrue for the benefit of Tenant. At Tenant's option, following the calculation of annual Percentage Rent for any calendar year during the term hereof, any Percentage Rent owing from Tenant to Landlord under Section 3.05 hereof may be paid as a reduction against the Security Deposit, or, if already paid, shall entitle Tenant to a reduction of the Security Deposit equal to the amount of Percentage Rent actually paid during such calendar year. If Tenant has elected to substitute a letter of credit, following the annual calculation of Percentage Rent, the stated amount of the letter of credit may be reduced by the amount of Percentage Rent actually paid to Landlord during such calendar year. Upon the occurrence of any default by Tenant, Landlord may, without prejudice to any other available remedy, use the Security Deposit to make good any rent arrearage or any other damage, injury, expense or liability caused by such event of default. If Tenant has not defaulted hereunder, any remaining balance of such Security Deposit shall be returned by Landlord to Tenant on July 30, 1993. ARTICLE IV CONSTRUCTION OF ADDITIONAL IMPROVEMENTS TO THE EXISTING BUILDING; ACCEPTANCE OF PREMISES; COMMENCEMENT DATE Section 4.01. LANDLORD'S INITIAL WORK. Landlord shall proceed to repair and/or construct the additional improvements upon the Building presently situated on the Land (the "Landlord's Initial Work") in compliance with the requirements set forth on Exhibit "B" attached hereto and incorporated herein by reference, with such minor variations as Landlord may deem advisable and which are not objected to by Tenant, and tender the Premises to the Tenant. Landlord shall be responsible for any permits necessary for Landlord's Initial Work. Landlord shall complete Landlord's Initial Work on or before November 1, 1990. The Premises shall be deemed "ready for occupancy" when Landlord has substantially completed Landlord's Initial Work and certifies in writing to Tenant that Landlord has substantially completed Landlord's Initial Work, as specified in Exhibit If "B". Landlord shall have substantially completed Landlord's construction obligations under this Lease when such construction has been completed such that the Premises can be occupied and used for the purposes stated herein, subject only to minor "punch-list" items that do not impair Tenant's ability to conduct its business on the Premises. If the Premises are not ready for occupancy prior to November 1, 1990, Landlord -7- <PAGE> 11 shall neither be deemed in default hereunder or otherwise liable in damages to Tenant, nor shall the term of this Lease be affected, except that if for any reason the Premises are not ready for occupancy prior to November 1, 1990, then Landlord shall be liable to Tenant for damages in the amount of $1,000 per day for each day following November 1, 1990 that the Premises are not ready for occupancy. Landlord and Tenant acknowledge and agree that it will be difficult to ascertain the damages incurred by Tenant if the Premises are not ready for occupancy by November 1, 1990 and that such liquidated damages will fully compensate Tenant for the injuries suffered. Furthermore, if for any reason the Premises are not ready for occupancy within 30 days following November 1, 1990, Tenant may at its option cancel and terminate this Lease by written notice to Landlord delivered within 5 days following the expiration of such 30-day period, in which event neither party shall have any further liabilities or obligations hereunder, except that Landlord shall return to Tenant any prepaid rent or Security Deposit. SECTION 4.02. TENANT'S WORK. When the Premises are deemed ready for occupancy, Tenant agrees to accept possession thereof and to proceed with due diligence to perform Tenant's construction obligations (hereinafter "Tenant's Work") as specified in Exhibit "C" attached hereto and incorporated herein by reference, all of such work to be performed in compliance with Exhibit "C", and to install its fixtures, furniture and equipment necessary for Tenant to conduct on the Premises its business. Notwithstanding any other provisions of this Lease to the contrary, Landlord agrees to allow Tenant access to the Premises for the purpose of beginning Tenant's Work prior to the date the Premises are deemed ready for occupancy, provided that Tenant does not interfere with Landlord's ability to complete Landlord's construction obligations hereunder. Tenant shall be responsible for any permits necessary for Tenant's Work. Tenant agrees that, if requested by Landlord, Tenant will furnish Landlord with a written statement that Tenant has accepted the Premises and that Landlord has fully complied with Landlord's covenants and obligations hereunder. Tenant agrees to furnish Landlord a certificate of occupancy from applicable local authorities upon commencement of its business at the Premises. Tenant shall have until the later of February 1, 1991 or 90 days after the Premises are deemed ready for occupancy in which to complete the Tenant's Work. In the event that the Tenant fails to complete the Tenant's Work within such time period, then the Security Deposit shall be forfeited to Landlord, Tenant shall be in default hereunder, and Landlord may pursue any and all remedies. Landlord shall pay Tenant $20,000.00 as an allowance for the completion of Tenant's Work, such amount to be paid by Landlord to Tenant within thirty (30) days of receipt by Landlord of appropriate invoices showing that Tenant has paid for such portion of Tenant's Work represented by such invoices. SECTION 4.03. LANDLORD'S ADDITIONAL WORK. Landlord shall have until August 1, 1991 to complete the additional improvements consisting of the exterior facade and roof work ("Landlord's Additional Work") in accordance with the specifications set forth on Exhibit "D" attached hereto and incorporated herein by reference; provided, however, that Landlord shall have no obligation to commence or continue Landlord's Additional Work if Tenant has defaulted hereunder. In performing Landlord's Additional Work Landlord shall take reasonable measures to minimize disruption of Tenant's normal - 8 - <PAGE> 12 business operations. In the event that Landlord has not substantially completed Landlord's Additional Work on or before August 1, 1991, then subject to Section 4.05 hereof and provided that Tenant has not substantially interfered with Landlord's ability to complete Landlord's Additional Work, Landlord shall be liable to Tenant for $300 per day for each day following August 1, 1991 that Landlord has not substantially completed Landlord's Additional Work. SECTION 4.04. COMMENCEMENT DATE. The "Commencement Date" of this Lease shall be the later of (i) November 1, 1990 or (ii) the date that the Landlord substantially completes Landlord's Initial Work and the Premises are deemed ready for occupancy as specified in Section 4.01 above. SECTION 4.05. UNAVOIDABLE DELAYS. With respect to the construction obligations of either Landlord or Tenant under this Article IV, any prevention, delay, nonperformance or stoppage due to any of the following causes shall excuse nonperformance for a period equal to any such prevention, delay, nonperformance or stoppage. The causes referred to above are strikes, lockouts, labor disputes, failure of power, acts of God, acts of public enemies of the State of New Mexico or of the United States, riots, insurrections, civil commotions, inability to obtain labor or materials or reasonable substitutes for either, governmental restrictions or regulations or control, casualties, or other causes beyond the reasonable control of the party obligated to perform. SECTION 4.06. ASBESTOS. Tenant acknowledges receipt of that certain Final Report -- Survey For Asbestos Containing Materials dated October 2, 1989 pertaining to the Premises and prepared by CERL, Inc. Environmental Consultants (the "Environmental Report"). Landlord agrees to complete Landlord's initial work so as not to disturb the floor tiles, floor tile mastics, sheet rock joint compounds and/or pipes located beneath the compressor room in the central west area of the stockroom, which materials have been identified as asbestos containing materials in the Environmental Report. The listed materials are hereinafter referred to as "ACM's." Additionally, Landlord will paint the stockroom area to prevent inadvertent fiber release should the sheet rock joint compound therein be subjected to scrapes or collisions. Tenant agrees to perform Tenant's work in such a manner as not to disturb the ACM's and agrees to indemnify and hold harmless Landlord from and against any and all claims, judgments, damages, penalties, fines, costs, liabilities or losses which arise during or after the term hereof as a result of any breach by Tenant of its covenants under this Section 4.04 or as a result of any disturbance to the ACM's during Tenant's occupancy of the Premises caused by Tenant, its agents, employees, contractors and invitees. ARTICLE V TAXES Tenant shall pay, prior to delinquency, all personal property taxes and assessments on the furniture, fixtures, equipment and other property of Tenant at any time situated on or installed in the Premises. Landlord has the sole right to render the Premises to any appropriate taxing authorities. Tenant, as additional rent, agrees to pay to Landlord as hereinafter set forth all valorem taxes (both general and special), - 9 - <PAGE> 13 assessments, or governmental charges (hereinafter "taxes") lawfully levied or assessed against the Premises including, without limitation, taxes assessed by the City, County, School Districts, and/or Water Districts in which the Land is located. Tenant's obligation hereunder shall be payable as additional rent, as determined by the following method: As soon as practicable after the beginning of each calendar year during the term hereof, Landlord shall furnish Tenant a written statement estimating the total taxes due for said calendar year (the "Estimate"). Beginning with the first month following receipt of said statement, Tenant shall pay Landlord monthly, as additional rent, one-twelfth (1/12) of the Estimate. In addition, Tenant shall pay with the rental payment for the first month following receipt of the Estimate an amount equal to the number of months elapsed in the calendar year prior to receipt of the Estimate times one-twelfth (1/12) of the Estimate, so as to bring said monthly payments current for the year. As soon as practicable after the end of each calendar year during the term hereof, Landlord shall furnish Tenant a written statement showing the total taxes actually due for the calendar year ended (the "Actual Taxes"). If the Actual Taxes exceed the Estimate, then Tenant agrees to pay within ten (10) days of receipt of said statement, as additional rent, the difference between the Actual Taxes and the Estimate. If the Estimate exceeds the Actual Taxes, then Landlord agrees to refund the difference at the time that such statement is furnished. Tenant shall have the right to inspect, at Landlord's business office during regular business hours and upon reasonable notice to Landlord, the tax bills which Landlord receives from the applicable taxing authorities. Landlord shall furnish Tenant a copy of such tax bills upon request. The provisions of this Article V shall apply for any partial calendar year during which this Lease is effective, subject to a pro rata adjustment based upon the number of calendar months or portions thereof that Tenant occupied the Premises. Tenant shall not, however, be obligated to pay ad valorem taxes on the Premises during the rent abatement period. ARTICLE VI JANITORIAL SERVICES AND UTILITIES SECTION 6.01. JANITORIAL SERVICES. Landlord shall not furnish any janitorial or cleaning services. Tenant shall at Tenant's expense be responsible for any such janitorial services. SECTION 6.02. UTILITIES. Tenant shall: (i) pay all charges incurred for any utility services used on or from the Premises, including, without limitation, electricity, water, gas, telephone and any other services; (ii) pay any maintenance charges for utilities; and (iii) furnish, at Tenant's expense, all electric light bulbs and tubes. Landlord shall not be liable for any interruption or failure of utility services to the Premises, and this Lease shall continue in full force and effect despite such interruptions, unless caused by Landlord's actionable conduct. - 10 - <PAGE> 14 ARTICLE VII MAINTENANCE Landlord shall keep the foundation, the exterior walls (except store fronts, plate glass windows, doors, door closure devices, window and door frames, moulding, locks and hardware and painting or other treatment of interior and exterior walls) and roof (excepting any leaks caused by Tenant, its contractors, employees, or agents) of the Premises in good repair, except that Landlord shall not be required to make any repairs occasioned by any act of negligence of Tenant, its agents, employees, subtenants, licensees and concessionaires, which repairs shall be made by Tenant. In the event that the Premises should become in need of repairs required to be made by Landlord hereunder, Tenant shall give immediate written notice thereof to Landlord and Landlord shall not be responsible in any way for failure to make any such repairs until a reasonable time shall have elapsed after delivery of such written notice. Landlord's obligation hereunder is limited to repairs specified in this Article VII only, and Landlord shall have no liability for any damages or injury arising out of any condition or occurrence causing a need for such repairs. Tenant shall keep the Premises in good, clean condition and shall, at its sole cost and expense, make all needed repairs and replacements to the Premises, except for repairs and replacements required to be made by Landlord under the provisions of Article VII hereof and Article IX including, without limitation, replacement of cracked or broken glass and any necessary maintenance and repair of the driveways, sidewalks, surface areas and parking areas, and shall keep all plumbing units, pipes and connections free from obstruction and protected against ice and freezing. If any repairs required to be made by Tenant hereunder are not made within 20 days after written notice delivered to Tenant by Landlord, Landlord may, at its option, make such repairs without liability to Tenant for any loss or damage which may result in Tenant's stock or business by reason of such repairs, and Tenant shall pay to Landlord immediately upon demand as additional rental hereunder the cost of such repairs plus 10% of the amount thereof and failure to do so shall constitute a default hereunder. At the expiration of this Lease, Tenant shall surrender Premises in good condition, reasonable wear and tear excepted. Notwithstanding anything herein to the contrary, Landlord warrants that the heating and air conditioning equipment will be in proper working order as of the Commencement Date. Landlord shall be responsible for the replacement of all heating and air conditioning equipment which becomes out of repair during the term hereof provided that the Tenant has maintained a preventative maintenance contract with a qualified company covering such equipment throughout the term of this Lease. In the event Tenant fails to maintain in force the said preventative maintenance contract, Tenant shall be fully responsible for all replacements of said equipment that becomes out of repair during the term hereof. ARTICLE VIII CASUALTY INSURANCE; LIABILITY INSURANCE; WAIVER OF CLAIMS AND INDEMNITY; WAIVER OF SUBROGATION; POLICY REQUIREMENTS; LIFE INSURANCE SECTION 8.01. FIRE AND EXTENDED CASUALTY. Tenant shall at its expense insure the Building under all risk property insurance in such amounts as may be required by Landlord's - 11 - <PAGE> 15 mortgagee, or in such greater amounts as Landlord, in its reasonable discretion, may deem appropriate. Such insurance shall be for the sole benefit of Landlord and, if required, Landlord's mortgagee. SECTION 8.02. LIABILITY INSURANCE. Tenant shall maintain public liability insurance on the Premises during the term hereof, covering the Tenant and naming the Landlord as an additional "named" insured with terms and companies satisfactory to Landlord for limits of not less than $1,000,000 for bodily injury, including death, and personal injury for any one occurrence, $500,000 property damage insurance or a combined single limit of $1,000,000. Tenant's insurance will include contractual liability coverage recognizing this Lease, products and/or completed operations liability and will provide that Landlord shall be given a minimum of thirty (30) days written notice by the insurance company prior to cancellation, termination or change in such insurance. The required limits of the general liability policy of insurance required to be provided by Tenant hereunder shall be subject to increase at any time, and from time to time, after the commencement of this Lease if Landlord in the exercise of its reasonable judgment shall deem same necessary for its adequate protection. Within thirty (30) days after demand therefor by Landlord, Tenant shall furnish Landlord with evidence that such demand for increased limits has been complied with. In no event, however, shall such excess amounts exceed those limits carried by prudent operators of similar businesses. SECTION 8.03. WAIVER OF CLAIMS. Tenant, as a material part of the consideration to be rendered to Landlord under this Lease, to the extent permitted by law, hereby waives all claims Tenant or Tenant's successor or assigns may have against Landlord, its agents, servants or employees for loss, theft or damage to property and for injuries to persons in, upon or about the Premises, from any cause whatsoever (except for Landlord's gross negligence), including, but not limited to, claims for damage resulting from: (a) any damage done or caused by wind, water or other natural element; (b) injury to persons or property resulting from fire, explosion, gas, or electricity; (c) any defect in or failure of plumbing, heating or air conditioning equipment, electric wiring or installation thereof, gas, water, steam pipes, stairs, porches, railings or walks; (d) broken glass; (e) the backing up of any sewer pipe or downspout; (f) the bursting, leaking or running of any tank, tub, washstand, water closet, wastepipe, drain or any other pipe or tank in, upon, or about such Premises; (g) the escape of steam or hot water; (h) water, snow or ice upon the Premises; (i) the falling of any fixture, plaster or stucco; (j) damage to or loss by theft or otherwise of property of Tenant or others; (k) acts or omission of persons in the Premises, occupants of nearby properties, or any other persons; and (l) any act or omission of owners of adjacent or contiguous property. All property of Tenant kept in the Premises shall be so kept at Tenant's risk only and Tenant shall save Landlord harmless from claims arising out of damage to the same, including subrogation claims by Tenant's insurance carrier. SECTION 8.04. INDEMNITY. Tenant shall indemnify and save harmless Landlord from and against any and all liability, liens, claims, demands, damages, expenses, fees, costs, fines, penalties, suits, proceedings, actions and causes of action of any and every kind and nature arising or growing out of or in any way connected with Tenant's use, occupancy, management or control of the Premises or Tenant's operations, conduct or activities on the Premises. - 12 - <PAGE> 16 SECTION 8.05. WAIVER OF SUBROGATION. Each party hereto waives any and every claim which arises or may arise in its favor and against the other party hereto during the term of this Lease or any renewal or extension thereof for any and all loss of, or damage to, any of its property located within or upon, or constituting a part of, the Premises leased to Tenant hereunder, which loss or damage is covered by valid and collectible fire and extended coverage insurance policies, to the extent that such loss or damage is recoverable under said insurance policies. Said mutual waivers shall be in addition to, and not in limitation or derogation of, any other waiver or release contained in this Lease with respect to any loss of, or damage to, property of the parties hereto. Inasmuch as the above mutual waivers will preclude the assignment of any aforesaid claim by way of subrogation (or otherwise) to an insurance company (or any other person), each party hereto hereby agrees immediately to give to each insurance company which has issued to it policies of fire and extended coverage insurance, written notice of the terms of said mutual waivers, and to have said insurance policies properly endorsed, if necessary, to prevent the invalidation of said insurance coverages by reason of said waivers. SECTION 8.06. POLICY REQUIREMENTS. All policies of insurance required hereunder shall be written by insurance companies authorized to do business in the State of New Mexico and shall be written by companies approved by Landlord, such approval not to be unreasonably withheld. Certificates of insurance shall be delivered to Landlord upon request by Landlord. Each such certificate shall contain a statement of the coverage provided by the policy, a statement of the period during which the policy is in effect, a statement that the annual premium or the annual deposit premium for such policy has been paid in advance, and an agreement by the insurance company issuing such policy that the policy will not be canceled or reduced in any amount for any reason whatsoever without at least thirty (30) days prior written notice to Landlord. In the event that Tenant fails or refuses to promptly provide Landlord with a certificate of insurance evidencing any coverage required to be maintained by Tenant hereunder, then Landlord may obtain any such coverage on behalf of Tenant, and Tenant shall be liable to Landlord for any costs incurred by Landlord in obtaining such coverage. SECTION 8.07. LIFE INSURANCE. Tenant agrees that it will deliver on or before the date that Tenant takes possession of the Premises a life insurance policy on the lives of the Guarantors, such life insurance policy to be in a total face amount equal to or greater than the aggregate Minimum Rent obligations of the Tenant under this Lease during the unexpired term of the Lease. Such life insurance policy (the "Life Insurance Policy") shall be a "second to die" policy, providing for the payment of the death benefits thereunder upon the death of the second of the two insureds named thereunder. The Life Insurance Policy shall be collaterally assigned by the Guarantors to secure the performance of all obligations of the Tenant under the Lease and the Guarantors under their guaranty. Tenant and Guarantors shall have the right to reduce the face amount of the Life Insurance Policy periodically, provided that the total face amount thereof at all times equals or exceeds the total Minimum Rent obligation of the Tenant hereunder during the unexpired term of the Lease. The Life Insurance Policy shall be collaterally assigned to Landlord by way of an assignment in the form of Exhibit "F" attached hereto and incorporated herein by reference. - 13 - <PAGE> 17 ARTICLE IX DESTRUCTION OF IMPROVEMENTS BY FIRE OR OTHER CASUALTY If the Premises should be damaged or destroyed by fire, tornado or other casualty, Tenant shall give immediate written notice thereof to Landlord. Following the receipt of such notice, Landlord shall, at Landlord's expense, proceed with reasonable diligence to rebuild and repair the Premises to substantially the condition in which they existed prior to such damage, except that Landlord shall not be required to rebuild, repair or replace any leasehold improvements which may have been placed on the Premises by Tenant. If the Premises are untenantable in whole or in part following such damage, the rent payable hereunder during the period in which they are untenantable shall be reduced to such extent as shall be fair and reasonable under all of the circumstances. If Landlord's rebuilding and repair cannot or will not be completed within one hundred eighty (180) days of the occurrence giving rise to such damage, then either Landlord or Tenant may elect to terminate the Lease effective upon the date of such occurrence by giving written notice of such election to the other party within thirty (30) days of the date of such occurrence, in which event neither party shall have any further rights or obligations hereunder following such termination, except, however, with respect to any claims accruing or arising hereunder prior to the effective date of such termination. ARTICLE X ACCEPTANCE OF PREMISES; PROHIBITED USE; COMPLIANCE WITH LAWS, RULES AND REGULATIONS SECTION 10.01. ACCEPTANCE OF PREMISES. Tenant acknowledges, by taking possession of the Premises and opening its business to the public, that it has fully inspected the Premises and Tenant accepts the Premises as suitable for the purposes for which same are leased in their present condition, subject only to completion by Landlord of Landlord's Additional Work. Except as specifically provided in Article IV hereof, no promise of Landlord to alter, remodel, decorate, clean or improve the Premises and no representation or warranty, expressed or implied, respecting the condition of the Premises has been made by Landlord to Tenant, unless same is contained herein, or made a part hereof. SECTION 10.02. PROHIBITED USE. Tenant shall not use, or permit the Premises or any part thereof to be used, for any purpose or purposes other than as specified in Section 2.01 of this Lease. No use shall be made or permitted to be made of the Premises, nor acts done, which will increase the existing rate of insurance upon the Premises, or cause a cancellation of any insurance policy covering the Premises, or any part thereof, nor shall Tenant sell, or permit to be kept, used, or sold in or about the Premises, any article which may be prohibited by any insurance policies. Tenant shall not commit, or suffer to be committed, any waste upon the Premises, or any public or private nuisance, nor, without limiting the generality of the foregoing, shall Tenant allow the Premises to be used for any improper, immoral, unlawful or objectionable purpose. Tenant warrants that at all times during the term hereof Tenant will conduct its operations on the Premises in compliance with all applicable environmental laws, rules, regulations and ordinances and that at the time that Tenant relinquishes possession, the Premises will be in compliance with all - 14 - <PAGE> 18 applicable environmental laws, rules, regulations and ordinances. Tenant's operations on the Premises shall hot involve the unlawful generation, disposal or storage of hazardous waste or hazardous substances, and the Premises shall not be used for any such purposes. Immediately upon receipt, Tenant agrees to send Landlord copies of any notice(s) received by Tenant of any pending or threatened environmental regulatory action, and to notify Landlord in writing immediately upon becoming aware of the release or discharge of any hazardous waste or hazardous substance on the Premises. Tenant agrees to take, at its sole cost and expense, any and all necessary action to rectify the condition caused by such release or discharge to the satisfaction of all applicable environmental regulatory agencies. SECTION 10.03. COMPLIANCE WITH LAW. Tenant shall not use the Premises or permit anything to be done in or about the Premises which will in any way conflict with any law, statute, ordinance or governmental rule or regulation now in force or which may hereafter be enacted or promulgated. Tenant shall at its sole cost and expense promptly comply with all laws, statutes, ordinances and governmental rules, regulations or requirements now in force or which may hereafter be in force and with the requirements of any board of fire underwriters or other similar body now or hereafter constituted relating to or affecting the condition, use or occupancy of the Premises, excluding structural changes or other capital improvements not related to or affected by Tenant's improvements or acts. ARTICLE XI ALTERATIONS; SIGNS SECTION 11.01. ALTERATIONS AND SURRENDER OF PREMISES. Tenant shall not make any major alterations in or additions, (including construction of additional Buildings on the Land) changes or repairs to the Premises without Landlord's prior written consent, which consent shall not be unreasonably withheld. Landlord has approved Tenant's Work, as reflected on Exhibit "C". Additionally, Tenant may make nonstructural alterations to the interior of the Premises not exceeding $5,000 in cost without Landlord's prior written consent. Tenant may, at its expense, when surrendering the Premises, remove from the Premises all alterations, improvements and changes installed after the date of execution hereof in the Premises by Tenant on the condition that no structural components shall be removed, and all damage resulting from removal of any additions shall be repaired by Tenant. If Tenant does not remove said additions, decorations, fixtures, hardware, nontrade fixtures and improvements after request to do so by Landlord, Landlord may remove the same and Tenant shall pay the cost of such removal to Landlord upon demand. Tenant hereby agrees to hold Landlord, its agents and employees harmless from any and all liabilities of every kind and description which may arise out of or be connected in any way with said alterations or additions. Any mechanic's lien filed against the Premises for work claimed to have been furnished to Tenant shall be discharged of record by Tenant within ten (10) days after the filing thereof, at Tenant's expense or, alternatively, Tenant may elect to provide Landlord with an acceptable bond from a surety company reasonably acceptable to Landlord in the amount of one and one-half times the amount of the lien. All alterations and additions shall comply with all insurance requirements and with all applicable laws, statutes, ordinances and regulations. All alterations and additions shall be constructed in a good and workmanlike manner and only good grades - 15 - <PAGE> 19 of materials shall be used. Tenant shall, at the termination of the Lease, surrender the Premises to Landlord in as good condition and repair as reasonable and proper use thereof will permit, loss by ordinary wear and tear excepted. SECTION 11.02. SIGN. No exterior sign, symbol or identifying mark other than as reflected on Exhibit "C" shall be put upon the Premises, without prior written approval of Landlord which approval shall not be unreasonably withheld. All signs or lettering shall be tastefully and professionally done. Landlord shall pay to Tenant $5,000 to reimburse Tenant for the cost of Tenant's signage, such sum to be credited against the broker's commission payable by Landlord to Phase One Realty, Inc. ARTICLE XII ASSIGNMENT AND SUBLETTING Tenant shall not assign this Lease, or any interest therein, and shall not sublet the Premises or any part thereof, or any right or privilege appurtenant thereto, or suffer any other person to occupy or use the Premises, or any portion thereof, without the written consent of Landlord first had and obtained, such consent not to be unreasonably withheld. Landlord agrees to promptly consider any requests from Tenant to assign this Lease or sublet the Premises. Landlord may, as conditions to the giving of such consent, require that: (i) at the time thereof Tenant is not in default under this Lease, (ii) Landlord, in its sole discretion reasonably exercised, determines that the reputation, business, proposed use of the Premises and financial responsibility of and by the proposed assignee, subtenant or occupant, as the case may be, of the Premises are satisfactory to Landlord, (iii) any assignee shall expressly assume all the obligations of this Lease on Tenant's part to be performed, (iv) such consent if given shall not, unless agreed to in writing by Landlord, release Tenant or any Guarantor of any of its obligations (including, without limitation, its obligation to pay rent) under this Lease, (v) Tenant agrees specifically to pay over to Landlord, as additional rent, all sums received by Tenant under the terms and conditions of such assignment or sublease, which are in excess of the amounts otherwise required to be paid pursuant to this Lease and (vi) a consent to one assignment, subletting, occupation or use by any other person shall not be deemed to be a consent to any subsequent assignment, subletting, occupation or use by another person. Any such assignment or subletting without such consent shall be void and shall, at the option of Landlord, constitute a default under this Lease. Neither this Lease nor any interest therein shall be assignable as to the interest of Tenant by operation of law without the written consent of Landlord. Any transfer of stock in Tenant or the corporate Guarantors (Wild Oats Market, Inc. or Wild Oats Market of Denver, Inc.) which results in Elizabeth Cook or Michael Gilliland not owning in the aggregate at least fifty-one percent (51%) of the voting stock of either Tenant or the corporate Guarantor shall be considered an assignment of this Lease. ARTICLE XIII DEFAULT SECTION 13.01. EVENTS OF DEFAULT. The following shall be considered for all purposes to be events of default under and a breach of this Lease: (a) any failure of Tenant to pay any - 16 - <PAGE> 20 rent or other amount within ten (10) days of the date when due hereunder (provided, however, that Landlord agrees to give Tenant notice of any rent default and ten (10) days from the giving of such notice to cure such rent default no more than once during any eighteen (18) month period during the term hereof); (b) any failure by Tenant to perform or observe any other of the terms, provisions, conditions and covenants of this Lease for more than twenty (20) days after written notice of such failure; (c) Landlord determining that Tenant has knowingly or intentionally submitted any false report required to be furnished under Section 3.05 hereunder; (d) Tenant or any Guarantor shall become bankrupt or insolvent, or file or have filed against it a petition in bankruptcy or for reorganization or arrangement or for the appointment of a receiver or trustee of all or a portion of Tenant's property, or Tenant or any Guarantor makes an assignment for the benefit of creditors; (e) if Tenant abandons, vacates or does not do business in the Premises for ten (10) days (excluding, however, any remodeling done with Landlord's approval); (f) this Lease, Tenant's interest herein or in the Premises, any improvements thereon, or any property of Tenant is executed upon or attached; (g) the Premises come into the hands of any person other than expressly permitted under this Lease; or (h) Tenant shall do or permit to be done anything which creates a lien upon the Premises which is not released within sixty (60) days. SECTION 13.02. LANDLORD'S REMEDIES. Upon the occurrence of any event of default specified in this Lease, Landlord, without grace period, demand or notice (except as specified in Section 13.01 above), and in addition to all other rights or remedies Landlord may have for such default, shall have the right to pursue any one or more of the following remedies: (a) Terminate this Lease in which event Tenant shall immediately surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may, without prejudice to any other remedy which it may have for possession or arrearages in rent, enter upon and take possession of the Premises and expel or remove Tenant and any other person who may be occupying said Premises or any part thereof; and Tenant agrees to pay to Landlord on demand the amount of all loss and damage which Landlord may suffer by reason of such termination, whether through inability to relet the Premises on satisfactory terms or otherwise, including the loss of rental for the remainder of the Lease term; (b) Without terminating this Lease, enter upon and take possession of the Premises, and expel or remove Tenant and any other person who may be occupying said Premises, or any part thereof. Landlord may make such alterations and repairs as it deems advisable to relet the Premises, and relet the Premises or any part thereof for such term or terms (which may extend beyond the term of this Lease) and at such rentals and upon such other terms and conditions as Landlord in its sole discretion deems advisable; upon each such reletting all rentals received by Landlord therefrom shall be applied first, to any indebtedness other than rent due hereunder from Tenant to Landlord; second, to pay any and all reasonable costs and expenses of reletting, including brokers, and attorneys' fees and costs of alterations and repairs; third, to rent due hereunder; and fourth, the residue, if any, shall be held by Landlord and applied in payment of future rent as it becomes due hereunder. If rentals received from such reletting during any month are less than that to be paid during that month by Tenant hereunder, Tenant shall immediately pay any such deficiency to Landlord. - 17 - <PAGE> 21 No re-entry or taking possession of the Premises by Landlord shall be construed as an election to terminate this Lease unless a written notice of such termination is given by Landlord to Tenant. Notwithstanding any such reletting or re-entry or taking possession, without termination, Landlord may at any time thereafter terminate this Lease for any prior breach or default. Pursuit of any of the foregoing remedies shall not preclude pursuit of any of the other remedies herein provided or any other remedies provided by law, nor shall pursuit of any remedy herein provided constitute a forfeiture or waiver of any rent due to Landlord hereunder or of any damages accruing to Landlord. If Landlord terminates this Lease for any breach or default by Tenant, in addition to all other remedies provided by law to which Landlord may be entitled, Landlord may recover from Tenant all damages incurred by reason of such breach or default, including, without limitation, all costs of retaking the Premises and the total rent and charges reserved in this Lease for the remainder of the term of this Lease all of which shall be immediately due and payable by Tenant to Landlord. It is agreed by the parties that the actual damages which will be sustained by Landlord by reason of Tenant's failure to pay when due monthly payments are uncertain and difficult to ascertain, and it is further agreed that the sum of all accelerated and unpaid monthly payments, less the then reasonable reletting value of the Premises, would be reasonable and just compensation for such failure and tenant hereby promises to pay and Landlord hereby agrees to accept such sums as liquidated damages and not as a penalty in the event of such breach. SECTION 13.03. LANDLORD'S RIGHT TO CURE DEFAULT. If Tenant shall be in default hereunder, Landlord shall have the right to make any payment or perform any act required of Tenant under any provision of this Lease, and in exercising such right, to incur necessary or incidental costs and expenses, including reasonable attorney's fees. All payments made and all costs and expenses incurred by Landlord in connection with any exercise of such right, together with interest thereon at the lower of (i) the highest lawful rate per annum or (ii) the prime rate of interest charged by Chemical Bank, plus six percent (6%) per annum from the respective dates of making such payments or the incurring of such costs and expenses, shall be reimbursed by Tenant immediately upon demand. Notwithstanding the foregoing, nothing herein shall imply any obligation on the part of Landlord to make any payment or perform any act required of Tenant. SECTION 13.04. WAIVER. No waiver of any default shall constitute a waiver of any other breach or default, whether of the same or any other covenant or condition. No waiver, benefit, privilege or service voluntarily given or performed by either party shall give the other any contractual right by custom, estoppel or otherwise. The subsequent acceptance of rent pursuant to this Lease shall not constitute a waiver of any preceding default by Tenant, regardless of Landlord's knowledge of the preceding breach at the time of accepting the rent, nor shall acceptance of rent or other payment after termination constitute a reinstatement, extension or renewal of the Lease or revocation of any notice or other act by Landlord. ARTICLE XIV EMINENT DOMAIN If the entire Premises shall be lawfully taken or condemned (or conveyed under threat of such taking or condemnation) for any public or quasi-public use or purpose, the term of this - 18 - <PAGE> 22 Lease shall end upon, and not before, the date of the taking of possession by the condemning authority. Current rent shall be apportioned as of the date of such termination. If any part of the Premises not constituting the entire Premises shall be taken or condemned or conveyed under threat of such taking or condemnation and such taking substantially impairs the use of the Premises for the purpose and in the manner as existed immediately prior to such taking, then either Landlord or Tenant shall have the right to cancel this Lease, such cancellation to take place not later than the date of the taking of possession by the condemning authority. No money or other consideration shall be payable by either party to the other for the right of cancellation but rent shall be apportioned through the date of such taking. Landlord and Tenant shall each be entitled to receive and retain such separate awards and portions of lump sum awards as may be allocated to their respective interests in any condemnation proceeding. Termination of this Lease shall not affect the rights of the respective parties to such awards. ARTICLE XV RESTRICTIVE COVENANTS During the term of this Lease, neither Tenant nor any "affiliate" of Tenant, as such term is hereinafter defined, shall directly or indirectly engage in any business which is similar or which competes with the business of Tenant authorized under Section 2.01 of this Lease, within a radius of ten (10) miles from the outside boundary of the Premises. As used herein, the term "affiliate" shall mean (i) any person or entity which, either alone or acting in concert with one or more other persons or entities, has the power to vote ten (10) percent or more of the voting shares of the Tenant and (ii) any entity of which the Tenant owns more than ten (10) percent of the voting stock or holds more than a ten (10) percent ownership interest. Notwithstanding the foregoing, Landlord's sole remedy in the event of a violation by Tenant of its covenants in this Article XV shall be to collect from Tenant additional rent, which additional rent Tenant hereby agrees to pay to Landlord as follows: (a) In the event that such competing business is a "new store", i.e., a store which has not been previously operated as a natural grocery store within ten miles of the Premises, then Tenant shall pay to Landlord two percent (2%) of all gross sales over $3,000,000 from all such new stores located within said ten mile radius of the Premises. (b) In the event that such competing store is not a "new store" and Tenant purchases an existing business which has been previously operated as a natural grocery store, then Tenant shall pay to Landlord as additional rent two percent (2%) of gross sales over $6,000,000 from all such other store it owns and operates within said ten mile radius of the Premises. ARTICLE XVI MISCELLANEOUS PROVISIONS SECTION 16.01. TIME OF THE ESSENCE. Time is and shall be deemed of the essence in respect to the performance of each provision of this Lease. - 19 - <PAGE> 23 SECTION 16.02. BINDING EFFECT; SUCCESSORS AND ASSIGNS. All of the terms, provisions, covenants and conditions of this Lease shall inure to the benefit of and be binding upon the undersigned parties, their successors, assigns, legal representatives, heirs, executors and administrators. SECTION 16.03. NOTICES. All notices provided to be given under this Lease shall be given by certified or registered mail, return receipt requested, postage fully prepaid, addressed to the proper party, at the following address: LANDLORD: Marianna Partners Limited 600 Sunland Park Drive, Suite 5-600 El Paso, Texas 79912 ATTN: Barry Kobren TENANT: Wild Oats Market of Santa Fe, Inc. 942 Ninth Street Boulder, Colorado 80302 ATTN: Elizabeth Cook The address of either party hereinabove set forth may be changed from time to time by giving written notice to that effect. Any notice deposited as above provided shall be conclusively deemed to have been given for purposes of this Lease on the date reflected on the return receipt. SECTION 16.04. SUBORDINATION OR SUPERIORITY. Tenant accepts this Lease subject and subordinate to any mortgage, deed of trust, or other lien presently existing on the Premises and to any renewals and extensions thereof and to any other liens, encumbrances, restrictions, covenants or conditions of record in the real property records of the county in which the Land is located; but Tenant agrees that any such mortgagee shall have the right at any time to subordinate such mortgage, deed of trust, or other lien to this Lease. Landlord is hereby irrevocably vested with full power and authority to subordinate this Lease to any mortgage, deed of trust, or other lien hereafter placed on the Premises and Tenant agrees on demand to execute such further instruments subordinating this Lease as Landlord may request, provided such subordination shall be on the express condition that this Lease shall be recognized by the mortgagee, and that the rights of Tenant shall remain in full force and effect during the term of this Lease so long as Tenant shall continue to perform all of the covenants and conditions of this Lease. Tenant agrees to attorn to any mortgagee or other party who acquires the Landlord's interest in the Premises and this Lease. Landlord agrees to execute any instruments subordinating any Landlord's lien on the personal property of Tenant located on the Premises if required by any financial institution(s) providing financing to Tenant. SECTION 16.05. ESTOPPEL CERTIFICATES. Tenant shall at any time and from time to time upon not less than fifteen (15) days prior written request from Landlord execute, acknowledge, and deliver to Landlord, a written statement certifying (if true) that Tenant has accepted the Premises, that this Lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as modified and stating the modifications), that the Landlord is not in default hereunder, the date to which the rental and other charges have been paid in advance, if any, and such other - 20 - <PAGE> 24 accurate certification as may reasonably be required by Landlord or Landlord's mortgagee. It is intended that any such statement delivered pursuant to this subsection may be relied upon by any prospective purchaser or mortgagee of the Premises and their respective successors and assigns. SECTION 16.06. LANDLORD MEANS OWNER. The term "Landlord" as used in this Lease, so far as covenants or obligations on the part of Landlord are concerned, shall be limited to mean and include only the owner or owners at the time in question of the fee of the Premises. SECTION 16.07. SALES OF PREMISES BY LANDLORD. In the event of any sale of the Premises by Landlord, Landlord shall be and is hereby entirely freed and relieved of all liability under any and all of its covenants and obligations contained in or derived from this Lease arising out of any act, occurrence or omission occurring after the consummation of such sale; and the purchaser, at such sale or any subsequent sale of the Premises shall be deemed, without any further agreement between the parties of their successors in interest or between the parties and any such purchaser, to have assumed and agreed to carry out any and all of the covenants and obligations of the Landlord under this Lease. Furthermore, in the event of a sale or conveyance by Landlord of the Premises, or the property of which the Premises are a part, this Lease shall not be affected by any such sale, and Tenant agrees to attorn to the purchaser thereof. SECTION 16.08. LAW GOVERNING. The law of the State of New Mexico shall govern the validity, performance and enforcement of this Lease. SECTION 16.09. GENDER AND NUMBER. Words of any gender used in this Lease shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, and vice versa, unless the context otherwise requires. SECTION 16.10. ENTIRE AGREEMENT. This Lease contains all of the agreements and conditions made between the parties hereto and supersedes any and all prior agreements between the parties with respect to the subject matter hereof including, without limitation, that certain Proposal for Lease dated July 20, 1990 and may not be modified orally or in any manner other than by agreement in writing signed by the parties hereto or their respective successors in interest. SECTION 16.11. CAPTIONS: TABLE OF CONTENTS. The Table of Contents of this Lease and the captions of the various articles and the sections of this Lease are for convenience and ease of reference only and do not define, limit, augment or describe the scope, context or intent of this Lease or any part or parts of this Lease. SECTION 16.12. SEVERABILITY. The invalidity or illegality of any provision shall not affect the remainder of this Lease. SECTION 16.13. ATTORNEY'S FEES. If either party brings any action or proceeding to enforce, protect or establish any right or remedy arising under this Lease, the prevailing party shall be entitled to recover reasonable attorney's fees. Moreover, if either party without fault is made a party to any litigation instituted by or against the other, the other party - 21 - <PAGE> 25 shall indemnify the innocent party against and save it harmless from all costs and expenses, including reasonable attorney's fees, incurred by it in connection therewith. SECTION 16.14. COUNTERPART SIGNATURES. This Lease Agreement may be printed in multiple originals, and the parties hereto may sign counterpart originals of the identical document. When all parties have so signed, this Lease Agreement shall be a binding contract, notwithstanding that there is no one original document containing all the parties' signatures. SECTION 16.15. EQUIPMENT PRESENTLY LOCATED IN THE BUILDING. Landlord agrees to give to Tenant possession of certain existing equipment located in the Building, which equipment Tenant will use in its business conducted on the Premises. Tenant agrees to act as Landlord's agent and to use its best efforts (provided that Landlord will bear any expenses) to sell the other equipment located on the Premises, the proceeds of which shall be divided equally between Landlord and Tenant. The equipment to be used by Tenant or sold as provided above is described on Exhibit "E" attached hereto and incorporated herein. If Landlord determines in good faith that Tenant has not used its best efforts to sell the equipment, then Landlord shall be entitled to remove all of such equipment from the Premises, including any equipment on Exhibit "E" then being used by Tenant. Landlord agrees to remove all unusable and unsellable equipment at Landlord's expense or, at Landlord's option, Landlord may credit Tenant for the cost of such removal. SECTION 16.16. FINANCIAL STATEMENTS. Tenant and each Guarantor shall deliver to Landlord, within ninety (90) days after the end of each of Tenant's or such Guarantor's fiscal years, financial statements of Tenant and Guarantor, in reasonable detail and certified as complete and correct by an authorized officer or principal of Tenant or Guarantor or, certified by an independent certified public accountant if Tenant or Guarantor ordinarily has such statements prepared by an independent accountant or accounting firm. Landlord agrees to keep such statements strictly confidential and agrees to use such statements solely for the purpose of verifying Tenant's and Guarantors' financial condition, and will not divulge the same to any other person or entity except (i) in connection with any sale or financing of the Premises or (ii) if required by any governmental authority. SECTION 16.17. INCLUSION OF PREMISES IN ADDITIONAL DEVELOPMENT. Tenant acknowledges that Landlord may acquire additional land immediately adjacent to the Premises for the construction of a shopping center and/or additional commercial buildings (the "Expansion Space"). In the event that at any time during the term hereof, the Landlord constructs the Expansion Space for lease to tenants, Landlord shall have the option to procure (if applicable) and pay the taxes, insurance, maintenance and other common area charges applicable to the total land and buildings constituting the Premises and the Expansion Space (the "Total Development"). In such event, Tenant agrees to pay its proportionate share of such taxes, insurance, maintenance and other common area charges applicable to the Total Development determined by dividing the total square footage of the Building (herein agreed to be 14,850 square feet) by the aggregate rentable space in the Total Development, provided, however, that Tenant's share of such costs' for the year in which such election is made by Landlord shall not exceed Tenant's total costs for such items for the year preceding such - 22 - <PAGE> 26 election, wherein Tenant paid all such costs. Following the acquisition and development of the Expansion Space, Landlord shall designate at least 72 parking spaces for Tenant's exclusive use. SECTION 16.18. RESTRICTIONS APPLICABLE TO LANDLORD. Landlord agrees that Landlord will not during the term hereof or any extension lease space in the area bordered by St. Francis Drive, Cordova Road and Cerrillos Road to another grocery store or health food store or to any business that derives more than fifty percent (50%) of its gross revenues from the sale of produce, meat, or vitamins. EXECUTED the 27TH day of August, 1990. ---- LANDLORD: --------- MARIANNA PARTNERS LIMITED By: Sanders Partners Incorporated, General Partner By: /s/ BARRY KOBREN ------------------------ Title: Vice President ----------------------- TENANT: WILD OATS MARKET OF SANTA FE, INC. By: /s/ MICHAEL GILLILAND --------------------------- Title: President ------------------------ The provisions of Section 11.02 are hereby approved. PHASE ONE REALTY, INC. By: /s/ OFFICER OF PHASE ONE REALTY, INC. -------------------------- Title: President ----------------------- 23 <PAGE> 27 GUARANTY. The undersigned guarantors (individually "Guarantor" and collectively "Guarantors") hereby, jointly and severally, primarily and unconditionally guarantee the timely performance of the Tenant of all the Tenant's obligations pursuant to the above Lease by and between Marianna Partners Limited and Wild Oats of Santa Fe, Inc., including but not limited to, the obligations for payment of money to the Landlord and/or third parties. The undersigned guarantors agree that their guarantees shall remain in full force and effect as to any and all renewals, extensions, amendments, additions, assignments, subleases, transfers or other modifications of the Lease. All obligations and liabilities of the Guarantors hereunder shall be binding on their respective heirs, personal representatives, successors, and assigns. INDIVIDUAL GUARANTORS: ---------------------- /s/ MICHAEL GILLILAND --------------------------- MICHAEL GILLILAND 8/27/90 --------------------------- (Date) /s/ ELIZABETH COOK --------------------------- ELIZABETH COOK 8/27/90 --------------------------- (Date) CORPORATE GUARANTORS: --------------------- WILD OATS MARKET OF DENVER, INC., a Colorado corporation By: /s/ MICHAEL GILLILAND ------------------------ Its: President ----------------------- Date: 8/27/90 ---------------------- WILD OATS MARKET INC., a Colorado corporation By: /s/ MICHAEL GILLILAND ------------------------ Its: President ----------------------- Date: 8/27/90 ---------------------- SCHEDULE OF EXHIBITS: Exhibit A - Legal Description of the Land Exhibit B - Landlord's Initial Work Exhibit C - Tenant's Work Exhibit D - Landlord's Additional Work Exhibit E - Schedule of Equipment Exhibit F - Form of Collateral Assignment of Life Insurance - 24 - <PAGE> 28 EXHIBIT "A" A portion of land lying and being situated within the city and County of Santa Fe, State of New Mexico, more particularly described as follows, to wit: Beginning at a point from whence Sanitary Sewer Manhole No. A9-12 at the intersection of Pen Road and Cordova Road bears N. 78 degrees 45' W., 331.5 feet and thence S. 85 degrees 29' W., 45.5 feet distant; thence said point and place of beginning N. 16 degrees 04' E., 293.05 feet; thence S. 78 degrees 45' E., 211.16 feet; thence along the westerly right-of-way of St. Francis Drive, along a curve to the right, (Radius = 2242 feet; Chord = S. 5 degrees 48' W. 241.3 feet) a distance of 241.42 feet; thence along a curve to the right (Radius = 50.0 feet, Chord = S. 5 degrees 14' W., 71.99 feet) a distance of 80.36 feet; thence along the northerly right-of-way line for Cordova Road N. 78 degrees 45' W., 208.66 feet to the point and place of beginning. All as shown on plat of survey "SAFEWAY #923-SURVEY ST FRANCIS DR. & CORDOVA RD. SANTA FE, NEW MEXICO", by Jack G. Horne, P.E. L.S. No.889, dated September 22, 1989.
FIRST AMENDMENT TO LEASE AGREEMENT DATED JULY 31, 1990 BY AND BETWEEN MARIANNA PARTNERS LIMITED AND WILD OATS MARKET OF SANTA FE, INC. This First Amendment to Lease Agreement (this "Amendment") is made effective as of August 1, 1992. WHEREAS, Marianna Partners Limited, a New Mexico limited partnership, and Wild Oats Market of Santa Fe, Inc., a Colorado corporation, executed that certain Lease Agreement dated July 31, 1990 (the "Lease") pertaining to certain real property and improvements located within the City of Santa Fe, Santa Fe County, New Mexico; and WHEREAS, CAMPR Partners, Ltd. (hereinafter referred to as "CAMPR" or "Landlord") is the successor by merger to Marianna Partners Limited, the original landlord named in the Lease, and Wild Oats Markets, Inc., a Colorado corporation (hereinafter referred to as "Wild Oats" or "Tenant"), is the successor by merger to Wild Oats Market of Santa Fe, Inc., the original tenant named in the Lease; and WHEREAS, the parties desire to amend the Lease to include under the Lease certain additional land owned by CAMPR and located immediately adjacent to the land that is presently the subject of the Lease and further desire to modify certain other terms of the Lease as hereinafter set forth. NOW, THEREFORE, it is agreed as follows: 1. Except as otherwise defined in this Amendment, all capitalized terms used in this Amendment shall have the same meaning as such terms are given in the Lease. 2. Section 1.02 of the Lease is deleted in its entirety and the following provision is substituted therefor: "SECTION 1.02. DEFINITIONS AND USE OF TERMS. When used in this Lease: (a) "Land" means collectively the real property described in Section 1.01 above and the Additional Land described in Section 1.02(c) below. <PAGE> 2 (b) "Building" means any and all buildings, structures and other improvements located or hereafter constructed on the Land or the Additional Land. (c) "Additional Land" means the real property located to the north of and immediately adjacent to the real property described in Section 1.01 and being more particularly described on Exhibit "A-1" attached hereto and incorporated herein. (d) "Original Premises" means the real property described in Section 1.01 and the approximately 14,850 square foot free-standing building located thereon, which real property and free-standing building were the original subject of this Lease. (e) "Premises" means collectively the Land and Building leased herein. 3. The following sentence is added to the end of Section 2.01 of the Lease: "Notwithstanding anything in this Lease to the contrary, in the event that Tenant has elected to construct the Expansion Space as provided in Section 16.17 hereof, but has elected to sublet all or a portion thereof in lieu of operating its business in such space, then the Expansion Space or portion thereof in which Tenant is not operating its business may be used for the operation of any retail or service establishment permitted by the zoning classification applicable to the Premises, other than any of the Prohibited Uses or a Drug Store Operation (as such terms are defined in Section 10.02 hereof)." 4. Section 2.02 of the Lease is deleted in its entirety and the following provision is substituted therefor: "Section 2.02. Term. The term of this Lease as it pertains to the Original Premises shall run for thirteen (13) years from and after the first day of the month following the Site Improvement Completion Date (as defined in Section 16.17 hereof). The term of this Lease as it applies to the Additional Land (and any Building thereon) shall be eight (8) years from and after the first day of the month following the Site Improvement Completion Date." 5. Section 2.03 of the Lease is deleted in its entirety and the following provision is substituted therefor: -2- <PAGE> 3 "Section 2.03. Renewal Option. Provided that Tenant is not in default in respect to any provision of this Lease, Tenant shall have the right to extend the term of this Lease for (i) twelve (12) additional periods of five (5) years each, with respect to the Original Premises and (ii) thirteen (13) additional periods of five (5) years each with respect to the Additional Land, provided, however, that written notice is given to Landlord of such intention to extend the Lease six (6) months prior to the applicable expiration date. Such extension terms shall be upon the same terms, conditions and rentals as contained herein except that the rental applicable during such extended term(s) shall be as provided in Section 3.01 hereof. Notwithstanding anything herein to the contrary, following the exercise of the first five (5) year option by Tenant with respect to the Additional Land, Tenant shall not thereafter have the right to exercise its renewal option with respect to the Additional Land unless Tenant simultaneously exercises its renewal option with respect to the original Premises." 6. The following provision is added to the end of Section 3.01 of the Lease: "Notwithstanding anything in this Section 3.01 to the contrary, from and after the Site Improvement Completion Date, Tenant shall pay rent as provided in Subsections (f) and (g) below. (f) Initial Minimum Rent. During the initial term hereof, as set forth in Section 2.02, Tenant shall pay Landlord Minimum Rent on or before the first day of each month as follows: (i) Minimum Rent for the Original Premises - $172,500.00 per annum ($14,375.00 per month). (ii) Minimum Rent for the Additional Land - $35,000.00 per annum ($2,916.67 per month). (g) Adjustments to Minimum Rent During Renewal Periods. The Minimum Rent payable with respect to the original Premises and the Additional Land shall be increased as follows: (i) Original Premises. The Minimum Rent payable during any renewal term with respect to the Original Premises will be the lesser of (i) the Minimum Rent specified in Subsection (f) -3- <PAGE> 4 (i) immediately above increased to reflect increases in the Consumer Price Index (as defined in Section 3.03) for the period from the effective date of this Amendment through the last day of the immediately preceding expired term or extension or (ii) sixty-five percent (65%) of the annualized average total rent (i.e. Minimum Rent plus Percentage Rent) for the five (5) Lease Years immediately preceding such renewal term, provided, however, that in no event shall the Minimum Rent for any renewal term be less than the Minimum Rent for the immediately preceding expired term. The yearly percentage adjustment for increases in the Consumer Price Index shall not exceed five percent (5%) in any Lease Year, provided that such ceiling shall not apply if Wild Oats has sublet the Premises or assigned the Lease pursuant to Article XII hereof. (ii) Additional Land. In the event that Tenant has not constructed the Expansion Space or is not then operating its business therein, and is thus not paying Percentage Rent with respect to sales made by Tenant on the Additional Land, then the Minimum Rent applicable to the Additional Land during any renewal term shall be the Minimum Rent specified in Subsection (f)(ii) immediately above, increased to reflect increases in the Consumer Price Index for the period from the effective date of this Amendment through the last day of the immediately preceding expired term or extension. The yearly percentage adjustment for increases in the Consumer Price Index shall not exceed five percent (5%) in any Lease Year." 7. Section 3.02 of the Lease is deleted in its entirety and the following provision is substituted therefor: "Section 3.02. Lease Year. As used herein, the term "Lease Year" shall mean the twelve (12) month period beginning on the effective date hereof, and each consecutive twelve (12) calendar month period thereafter." 8. Section 3.03 of the Lease is hereby deleted in its entirety and the following provision is substituted therefor: -4- <PAGE> 5 "Section 3.03. Cost of Living Increases; CPI Adjustment. Except as otherwise provided in Section 3.01 hereof, and subject to the yearly limitation stated therein, at the beginning of every five (5) year renewal term applicable to the Original Premises and/or the Additional Land, the Minimum Rent provided in Section 3.01(f) shall be adjusted to reflect any increase in the consumer price index ("Consumer Price Index") as hereinafter provided. Each renewal period following the initial terms specified in Section 2.02 is hereinafter referred to as an "Adjustment Period". The adjusted Minimum Rent shall be obtained by multiplying the Minimum Rent provided for in Section 3.01(f) by a fraction, the numerator of which is the index number for the first month of each Adjustment Period hereunder in the column for "All Items" (unadjusted) in the table entitled "Consumer Price Index For All Urban Consumers," (Index Base: 1982-1984 = 100) "U.S. City Average" published monthly by the Bureau of Labor Statistics of the U.S. Department of Labor in the Monthly Labor Review (said table herein referred to as the "CPI-U") and the denominator of which is the CPI-U for the effective date of this Amendment. The adjusted rental thus obtained shall be the Minimum Rent applicable during such renewal term. Tenant shall continue to pay the Minimum Rent in effect for the expiring term or Adjustment Period until notified by Landlord of any increase in such Minimum Rent. On the first day of the calendar month immediately following receipt of such notification, Tenant shall commence payment of the new Minimum Rent specified in the notice, and shall also pay the Landlord, with respect to the months already expired during such renewal term, the excess of the required monthly rental specified in the notice over the monthly amounts theretofore actually paid by Tenant." 9. The first sentence of Section 3.05(a) of the Lease is deleted in its entirety and the following sentence is substituted therefor: "In addition to the Minimum Rent, Tenant shall pay to Landlord for each calendar year during the term of this Lease, as percentage rent ("Percentage Rent"), a sum equivalent to the amount, if any, by which the sum of two percent (2%) of Tenant's Gross Sales (as hereinafter defined) up to $15,000,000.00 plus one percent (1%) of Tenant's Gross Sales in excess of $15,000,000.00 for such calendar year exceeds the annual Minimum Rent for the Original Premises set forth in Section 3.01 hereof for such calendar year." -5- <PAGE> 6 10. The first sentence of Section 3.05(c) is deleted and the following sentence is substituted therefor: "As used herein, the term "Tenant's Gross Sales" shall mean the gross proceeds from all sales of merchandise, services and other receipts whatsoever of all business conducted by Tenant in or from the Premises, whether sold for cash or on credit, including, without limitation, redemption of gift and merchandise certificates, deposits not refunded to purchasers, orders taken at the Premises, although such orders may be filled elsewhere, sales through vending machines or other devices, and sales by any subtenant, concessionaire or licensee in the Premises, but not including sales by any subtenant occupying the Expansion Space or any portion thereof in the event that Tenant has elected to construct the Expansion Space as provided in Section 16.17 hereof, but has elected to sublet all or a portion thereof in lieu of operating its business in such space." 11. The following paragraph is added to the end of Section 4.03 of the Lease: "Notwithstanding anything in this Lease to the contrary, including, without limitation, this Section 4.03, CAMPR shall have no obligation to complete the Landlord's Additional Work or any portion thereof unless and until required by applicable governmental authorities. Landlord and Tenant agree that Landlord shall have no liability whatsoever for failing to complete Landlord's Additional Work prior to the date required by applicable governmental authorities and Tenant specifically waives and releases Landlord from any and all liability for the per diem penalty specified in this Section 4.03. At such time that applicable governmental authorities require completion of the Landlord's Additional Work, Landlord agrees to complete such Landlord's Additional Work at Landlord's sole expense and in a good and workmanlike manner." 12. Article IX of the Lease is deleted in its entirety and the following provision is substituted therefor: -6- <PAGE> 7 "ARTICLE IX DESTRUCTION OF IMPROVEMENTS BY FIRE OR OTHER CASUALTY If the Premises should be damaged or destroyed by fire, tornado or other casualty, Tenant shall give immediate written notice thereof to Landlord. Following the receipt of such notice, Landlord shall, at Landlord's expense, proceed with reasonable diligence to rebuild and repair the Premises to substantially the condition in which they existed prior to such casualty, (excluding stock in trade, furniture, fixtures, furnishings, carpeting, floor covering, wall coverings, drapes and equipment and other personal property of Tenant) provided, however, that Landlord shall not be obligated to expend for such repair or restoration an amount in excess of the insurance proceeds recovered by Landlord as a result of such damage, except if due to Landlord's negligence or intentional acts, and provided, further, that if the Premises are damaged, destroyed or rendered untenable for their accustomed use by fire or other casualty to the extent of more than fifty percent (50%) of the cost to replace the Premises during the last two (2) years of the term of this Lease or any extension thereof, then Landlord shall not have the obligation to rebuild the Premises unless Tenant first exercises its option to renew the term for at least another five (5) years. If the Premises are untenable in whole or in part following such damage, the rent payable hereunder during the period in which they are untenable shall be reduced to such extent as shall be fair and reasonable under all of the circumstances. If Landlord's rebuilding and repair cannot or will not be completed within one hundred eighty (180) days of the occurrence giving rise to such damage, then Tenant may elect to terminate the Lease effective upon the date of such occurrence by giving written notice of such election to Landlord within thirty (30) days of the date of such occurrence, in which event neither party shall have any further rights or obligations hereunder following such termination, except, however, with respect to any claims accruing or arising hereunder prior to the effective date of such termination. If said notice is not given and Landlord is required to repair or restore the Premises as herein provided, then Tenant shall promptly repair or replace its trade fixtures, furnishings, furniture, carpeting, wall covering, floor covering, drapes and equipment and other personal property necessary for Tenant to conduct -7- <PAGE> 8 its business and Tenant shall thereafter promptly reopen for business. 13. The following paragraph is added to the end of Section 10.02 of the Lease: "In addition to the foregoing restrictions, Tenant agrees that neither the Premises nor any portion thereof shall be used for (i) purposes of a cocktail lounge (provided, however, that this shall not preclude a cocktail lounge operated in conjunction and as a part of a restaurant), bar, disco, bowling alley, pool hall, billiard parlor, skating rink, roller rink, amusement arcade, adult book store, adult theater, adult amusement facility, or any facility selling or displaying pornographic materials or having such displays, secondhand store, auction house, flea market or any use which creates a nuisance (hereinafter the "Prohibited Uses") or (ii) the operation of a drug store or a so called prescription pharmacy or for any purpose requiring a qualified pharmacist or other person authorized by law to dispense medicinal drugs, directly or indirectly, for a fee or a remuneration of any kind (hereinafter a "Drug Store Operation") provided, however, that this restriction shall not prohibit or restrict in any way the sale of medicinal herbs or vitamins from the Premises. The restrictions against the Prohibited Uses and the restrictions against a Drug Store Operation on the Premises shall continue throughout the term of this Lease, provided, however, that the restrictions against a Drug Store Operation on the Premises shall terminate sooner if at any time following three (3) years from the effective date of this Amendment a Drug Store operation is not conducted on the North Site (as defined in Section 16.17 hereof) for a period of twelve (12) consecutive months." 14. Section 11.01 of the Lease is deleted in its entirety and the following provision is substituted therefor: "Section 11.01. Alterations and Surrender of Premises. Tenant shall not make any major alterations in or additions, including construction of additional buildings on the Land and the Additional Land, changes or repairs to the Premises except in accordance with the provisions of Section 16.17 hereof. Additionally, Tenant may make nonstructural alterations to the interior of the Premises not exceeding $5,000.00 in cost without Landlord's prior written consent provided that such nonstructural, interior alterations are made in accordance with the remainder of this Section 11.01. Tenant may, at its -8- <PAGE> 9 expense, when surrendering the Premises, remove from the Premises all personal property and trade fixtures installed by Tenant but no structural components shall be removed and all damage resulting from removal of any such additions shall be repaired by Tenant. If Tenant does not remove its trade fixtures and personal property after request to do so by Landlord, Landlord may remove the same and Tenant shall pay the cost of such removal to Landlord upon demand. Tenant hereby agrees to hold Landlord, its agents and employees harmless from any and all liabilities of every kind and description which may arise out of or be connected in any way with said alterations or additions. Any mechanic's lien filed against the Premises for work claimed to have been furnished to Tenant shall be discharged of record by Tenant within ten (10) days after the filing thereof, at Tenant's expense or, alternatively, Tenant may elect to provide Landlord with an acceptable bond from a surety company reasonably acceptable to Landlord in the amount of one and one-half times the amount of the lien. All alterations and additions shall comply with all insurance requirements and with all applicable laws, statutes, ordinances and regulations. All alterations and additions shall be constructed in a good and workmanlike manner and only good grades of material shall be used. Tenant shall, at the termination of the Lease, surrender the Premises to Landlord in as good condition and repair as reasonable and proper use thereof will permit, loss by ordinary wear and tear excepted." 15. The following sentences are added to the end of Article XII of the Lease: "Notwithstanding anything in this Article XII to the contrary, in the event that Tenant has elected to construct the Expansion Space as provided in Section 16.17 hereof, but has elected to sublet all or a portion thereof in lieu of operating its business in such space, then Tenant shall have the right to sublet all or any portion of the Expansion Space not being used by Tenant for the operation of its business to other third parties for the purposes specified in Section 2.01 hereof." "Notwithstanding anything in this Article XII to the contrary, Tenant may assign this Lease (i) to Agora Properties, a Colorado general partnership, provided that the present ownership of Agora Properties or its constituent entities is not changed, except by devise or descent and (ii) in connection with an offering of stock, either public or private, in Tenant or any proposed Assignee of this Lease, provided that Michael Gilliland and Elizabeth Cook retain, directly or indirectly, an aggregate thirty percent ownership interest in Tenant or Assignee. 16. The second paragraph of Article XV of the Lease is deleted in its entirety and the following provision is substituted therefor: "Notwithstanding the foregoing, Landlord's sole remedy in the event of a violation by Tenant of its covenants in this Article XV shall be to collect from Tenant <PAGE> 10 additional rent, which additional rent Tenant hereby agrees to pay to Landlord as follows: (a) In the event that such competing business is a "new store", i.e., a store which has not been previously operated as a natural grocery store within ten miles of the Premises, then Tenant shall pay to Landlord one percent (1%) of all gross sales over $3,000,000 from all such new stores located within said ten mile radius of the Premises. (b) In the event that such competing store is not a "new store" and Tenant purchases an existing business which has been previously operated as a natural grocery store, then Tenant shall pay to Landlord as additional rent two percent (2%) of gross sales over $6,000,000 from all such other stores it owns and operates within said ten mile radius of the Premises. Notwithstanding anything in this Article XV to the contrary, Landlord agrees to waive its right to collect such additional rent from the business presently conducted by Tenant or its affiliates in St. Michael's Village, Santa Fe, New Mexico (the "St. Michael's Store") provided that neither Tenant nor its affiliates expand the size of the St. Michael's Store (i.e. increase in any way the sales area of the St. Michael's Store). In the event of such expansion, then Landlord's conditional waiver of its right to receive a percentage of the sales of such competing business shall immediately terminate, and Tenant shall pay thereafter to Landlord one percent (1%) of all gross sales over $3,000,000 from the St. Michael's Store." 17. Section 16.17 of the Lease is deleted in its entirety and the following provision is substituted therefor: "Section 16.17. Approval of Site Plans; Construction of Site Improvements; Expansion Space. (a) Approval of Site Plans. Tenant acknowledges that Landlord owns and plans to develop certain property which is immediately north of the Premises, said Property being more particularly described on Exhibit "B-1" attached hereto and incorporated herein (the "North Site"). Landlord and Tenant further acknowledge that Tenant is leasing the Additional Land from Landlord for the purposes of acquiring additional parking adjacent to the existing Building and for the purpose of allowing -10- <PAGE> 11 Tenant to construct additional retail space abutting the existing Building, should Tenant elect in the future to construct such additional space (the "Expansion Space"). Attached to this Lease as Exhibit C-1 is a site plan (the "Preliminary Site Plan") which illustrates the proposed configuration and site improvements to the North Site and the Premises (collectively the "Entire Tract") prior to construction of the Expansion Space. Attached to this Lease as Exhibit D-1 is a site plan (the "Expansion Plan") which illustrates the modifications to the Preliminary Site Plan reflecting construction of the Expansion Space. Landlord and Tenant hereby approve the Preliminary Site Plan and the Expansion Plan (approval of the Expansion Plan to control in the event that either Tenant or Landlord construct the Expansion Space, as hereafter set forth) and both Landlord and Tenant agree to cooperate fully with each other and applicable governmental authorities in effecting the development shown on the Preliminary Site Plan and the Expansion Plan and agree that the Entire Tract will be developed in accordance with the same. (b) Landlord's Construction of Site Improvements Shown on Preliminary Site Plan. (i) Authority to Proceed; Construction Deadlines. Landlord is hereby authorized to begin construction of the parking, ingress and egress and other construction reflected on the Preliminary Site Plan (hereinafter the "Site Improvements") as such construction pertains to the Premises (and so much of the North Site as is necessary for ingress to and egress from the Premises). It is expressly understood, however, that Landlord shall have no obligation to construct any of the Site Improvements on the North Site (except so much thereof as is necessary for ingress to and egress from the Premises) until buildings are constructed on the North Site. Landlord agrees to submit an application for building permit and/or any other necessary submittals for the construction of the Site Improvements on the Premises to the City of Santa Fe and/or any other applicable governmental authorities on or before October 15, 1992, and agrees to commence construction of the Site Improvements -11- <PAGE> 12 within thirty (30) days of receipt of all necessary governmental approvals and Tenant's alternative quotes or bids referred to in Section 16.17 (b)(ii) (or notice from Tenant that it is waiving such right). Following commencement of construction, Landlord agrees to diligently pursue such construction to completion. Notwithstanding anything herein to the contrary, in the event that Landlord has not commenced construction of the Site Improvements on the Premises on or before July 31, 1993 (the "Outside Completion Date"), then Tenant may terminate this Amendment by giving written notice of such termination to Landlord within fifteen (15) days of the Outside Completion Date, in which event the Lease as in effect prior to the execution of this Amendment shall control and none of the provisions of this Amendment shall be effective, except for Paragraphs 11 and 16 of this Amendment, which shall survive such termination. The Site Improvements on the Premises shall be deemed completed on the date (the "Site Improvement Completion Date") upon which Landlord has completed construction of the Site Improvements on the Premises (and so much of the North Site as is necessary for ingress to and egress from the Premises) in accordance with the plans submitted to and approved by the City of Santa Fe. The parties agree to execute a certificate memorializing the Site Improvement Completion Date. Additionally, in the event that Landlord (i) has not commenced construction of the Site Improvements on the Premises on or before the outside Completion Date, or (ii) fails to commence construction of the Site Improvements within sixty (60) days of receipt of all necessary governmental approvals and Tenant's alternative quotes or bids referred to in Section 16.17(b)(ii) (or notice from Tenant that it is waiving such right), then Tenant may proceed to obtain any necessary approvals and complete construction of the Site Improvements. Following completion thereof, Landlord agrees to promptly reimburse Tenant upon demand for the actual costs in excess of $50,000 incurred by Tenant (one hundred fifteen percent (115%) thereof, in the case of Landlord's failure to commence -12- <PAGE> 13 construction under clause (ii) above) in constructing the Site Improvements. (ii) Conduct of Construction. Landlord agrees to use all reasonable efforts to minimize disruption of Tenant's business as a result of such construction, and agrees that the existing entrance from St. Francis Drive shall not be closed until the new entrance from St. Francis Drive, as reflected on the Preliminary Site Plan, is completed and open. Prior to commencing construction of the Site Improvements, Landlord agrees to provide Tenant with a copy of any bids or quotes received by Landlord with respect to such construction. Tenant shall have twenty-one (21) days following receipt of such information to obtain alternative quotes or bids from reputable contractors/suppliers and the parties agree that such work shall be performed by the lowest responsive, responsible bidder(s). Landlord shall provide reasonable proof to Tenant to substantiate actual costs for the Site Improvements on the Premises. (c) Tenant's Agreement to Reimburse Landlord for Cost of Site Improvements on Premises. Following completion of construction of the Site Improvements on the Premises, Tenant agrees to reimburse Landlord for the actual costs incurred by Landlord in constructing the Site Improvements (consisting of design, topo, survey, dirt work, landscaping, asphalt, concrete, retaining walls, curb-cuts and deceleration lanes) in an amount not to exceed $100,000.00. Tenant shall reimburse Landlord $50,000.00 in cash upon substantial completion of the Site Improvements. Notwithstanding anything in Section 3.05 of this Lease to the contrary, and in addition to the Percentage Rent specified in Section 3.05, Tenant agrees to pay additional Percentage Rent in the amount of one percent (1%) of all of Tenant's Gross Sales in excess of $15,000,000.00 (the "Additional Percentage Rent") until such time as Landlord has been completely reimbursed for the total cost of the Site Improvements on the Premises in excess of such $50,000.00 cash payment, up to such $100,000.00 maximum. Additionally, in the event that Tenant completes construction of the Site Improvements -13- <PAGE> 14 because of Landlord's failure to commence construction and Landlord has reimbursed Tenant for costs in excess of $50,000, as specified in Section 16.17 (b) (i) above, then Tenant shall pay Additional Percentage Rent to Landlord until such time as Landlord has been completely reimbursed for the total cost of the Site Improvements on the Premises in excess of $50,000, up to such $100,000 maximum. (d) Use of Roadways, Parking Areas, Sidewalks and Entrances Shown on Preliminary Site Plan and Expansion Plan. Landlord and Tenant agree that, following completion of construction of the Site Improvements reflected on the Preliminary Site Plan (and the Expansion Plan, in the event that Tenant or Landlord constructs the Expansion Space, as hereinafter set forth) the roadways, parking areas, sidewalks and entrances shown on the Preliminary Site Plan (or the Expansion Plan, as applicable) shall be used in common by Tenant, on the one hand, and Landlord and any tenants on the North Site, on the other hand, and their respective customers, employees, agents and invitees. (e) Tenant's Construction of Expansion Space. Provided that and for so long as Tenant is leasing the Additional Land, Tenant shall have the right to construct the Expansion Space in accordance with the provisions hereof. (i) Approvals. Should Tenant elect to construct the Expansion Space, Tenant shall prepare and submit the construction plans, drawings and related documents to Landlord for written approval. Landlord shall either approve or disapprove in writing any of the items submitted for approval to Landlord by Tenant within seven (7) days of Landlord's receipt thereof. Any disapproval shall be accompanied by a written explanation setting forth in detail the reasons for disapproval. Landlord shall not unreasonably withhold approval of such plans and specifications and the criteria used by Landlord in approving or disapproving any such item shall be compliance with applicable land use regulations, quality of general design and aesthetic compatibility with the remainder of the Building and the other improvements on the Entire Tract. Landlord and Tenant agree to cooperate -14- <PAGE> 15 reasonably with each other in resolving any objections of the other to such item and/or requested modifications by the other. Following approval of the plans and specifications, Tenant will not make any material modification or alteration without the prior written consent of Landlord. Landlord and Tenant agree to communicate and consult informally as frequently as is necessary to ensure that the formal submittal of any item pursuant to this Section 16.17(e) can receive prompt and speedy consideration. If within fourteen (14) days from the date that Tenant first submits the construction plans, drawings and related documents to the Landlord for written approval, Landlord and Tenant have not finally approved the plans and specifications, then either Landlord or Tenant may demand that any disputed matter involving the plans and specifications be decided by arbitration in accordance with the rules of the American Arbitration Association then obtaining. The parties to this Lease acknowledge and agree that the performance of this Lease will substantially involve interstate commerce and that, accordingly, this agreement to arbitrate shall be specifically enforceable under the Federal Arbitration Act. Notice of the demand for arbitration shall be delivered in writing to the other party to this Lease and filed in writing with the American Arbitration Association. The parties hereby agree that Ernest A. Romero shall act as the single arbitrator. In the event that Ernie Romero is unable or unwilling to so serve, then one arbitrator shall be chosen by each of the parties within fifteen (15) days after the demand for arbitration, and the remaining arbitrator shall be chosen as a mutual arbitrator in accordance with the then applicable rules of the American Arbitration Association. Each arbitrator chosen hereunder shall be a disinterested person. The arbitrator(s) shall have no power to change any of the provisions of this Lease in any respect, nor shall the arbitrator(s) have the power to make an award or reformation, and the jurisdiction of the arbitrator(s) is hereby -15- <PAGE> 16 expressly limited accordingly. The arbitration shall be conducted in Santa Fe, New Mexico in accordance with the then prevailing rules of the American Arbitration Association or its successor. Without limitation on the foregoing, the arbitrators shall have the right to retain and consult experts and competent authorities skilled in the matters under arbitration, but all consultation shall be made at a hearing with all parties having full right to cross examine the experts and authorities. All hearings regarding arbitration shall be held within a period of time not to exceed sixty (60) days after the appointment of the arbitrators hereunder. The arbitrators shall render an award not later than thirty (30) days after the conclusion of the last hearing in connection therewith. The decision and award of the arbitrators shall be in writing, and counterpart copies shall be delivered to each of the parties. The award rendered by the arbitrators shall be final, and judgment may be entered upon it in any court of competent jurisdiction in accordance with the Federal Arbitration Act. Unless then otherwise agreed in writing by the parties to this Lease, no party shall interrupt its performance under this Lease, including, but not limited to, the payment of any monies hereunder, pending the determination and rendering of any award under the arbitration proceedings herein provided. (ii) Reports and Information. Copies of all soils reports, surveys, hazardous wastes or toxic reports, feasibility studies and other similar written materials prepared or obtained by Tenant with respect to the construction of the Expansion Space shall be delivered to Landlord within ten (10) days after receipt by Tenant. (iii) Plans and Contracts. The contract between Tenant and any architect or other design professionals or any general contractor for the design or construction of the Expansion Space shall provide, in form and substance reasonably satisfactory to Landlord, for the assignment thereof to Landlord as security to Landlord for Tenant's performance of its obligations under this Lease and Landlord -16- <PAGE> 17 shall be furnished with any such contract, together with the further agreement of the parties thereto, that if this Lease is terminated due to the Tenant's default of a type which allows Landlord to terminate this Lease, Landlord may, at its election, use any plans and specifications to which Tenant is then entitled and/or complete performance called for by Tenant and assert the right of Tenant pursuant to any such contract, upon the payment of any sums due to any party thereto. Upon completion of the Expansion Space, Tenant shall provide Landlord with a complete and legible full-size set of all as-built plans and specifications. (iv) Construction. (A) Conditions to Commencement of Construction. Tenant shall satisfy the following conditions and in no event shall Tenant commence any construction of the Expansion Space until the following conditions have been satisfied or waived by Landlord: [1] Landlord shall have approved the plans and specifications in sufficient detail to permit Landlord to approve the size, configuration, and external appearance of the Expansion Space; [2] Tenant shall have provided reasonable evidence (e.g. letter from bank or other financing source committing funds) to Landlord of Tenant's ability to complete construction of the Expansion Space prior to commencement thereof; [3] Tenant shall have obtained all permits and other governmental approvals necessary to commence such construction; and [4] If Tenant intends to employ a general contractor for the construction of the Expansion space, Tenant shall have entered into -17- <PAGE> 18 complete and binding contracts in form and substance commonly used in the industry with such contractor for the construction of the Expansion Space. (B) Restrictions; Governmental Permits. The Expansion Space shall not be constructed or maintained unless the same conforms to and is consistent with all applicable zoning applicable to the Premises, all other applicable governmental requirements (including without limitation any conditional use permit or other license, permit, or certificate required to be issued by any governmental authorities in connection with the construction of the Expansion Space) and the plans and specifications approved by Landlord. Additionally, the construction of the Expansion Space shall be completely within the building areas reflected on the Expansion Plan and shall in all other manners comply with the Expansion Plan. Before commencement of construction of the Expansion Space, Tenant shall, at Tenant's sole cost and expense, secure any and all applicable permits, licenses and other approvals which may be required by any governmental authorities having jurisdiction over such construction, development or work. Landlord shall have no implied obligation to cause such permits to be issued other than in the ordinary course of governmental business. Tenant shall provide a copy of any such permits, licenses or other approvals to Landlord prior to commencing work. (C) Construction Standards. All construction, alteration or repair work permitted herein shall be accomplished expeditiously, diligently and in accordance with good engineering practices. Tenant shall take all reasonably necessary measures to minimize any damage, disruption or inconvenience caused by such work and make adequate provision for the safety and convenience of all persons affected thereby. Tenant shall pay (or cause to -18- <PAGE> 19 be paid) all costs and expenses associated with such work and shall indemnify and hold Landlord harmless from all damages, lawsuits and claims attributable to the performance of such work. Dust, noise and other effects of such work shall be controlled using commercially accepted methods customarily utilized in order to control deleterious effects associated with construction projects in a populated or developed area. (D) Costs of Construction. The entire cost and expense of constructing the Expansion Space and any site improvements reflected on the Expansion Plan which have to be reconstructed or rebuilt as a result of Tenant's construction of the Expansion Space shall be borne and paid by Tenant. (E) Responsibilities of Landlord. [1] Governmental Approvals. Landlord will assist and cooperate with Tenant in connection with the reasonable request by Tenant for tentative or final parcel, tract or subdivision map approvals, variances and any other permit, license or other approval from any governmental authority which may be reasonably necessary for or which will facilitate the development, operation and use of the Expansion Space. [2] Easements. Landlord agrees to join in granting, dedicating or relocating such public or private utility company easements as may be reasonably required for the construction of the Expansion Space. [3] No Impediments. Landlord agrees that it will not construct any improvements on or take any action with respect to the North Site or otherwise that would impede or prevent Tenant from exercising its -19- <PAGE> 20 rights under the Lease to construct the Expansion Space. [4] Parking. Landlord warrants and represents that the Expansion Plan complies with current City of Santa Fe minimum parking requirements for retail space. (F) Reports. During the construction of the Expansion Space, Tenant shall furnish Landlord with monthly progress reports in a form reasonably satisfactory to Landlord demonstrating compliance with the construction requirements of this Lease. (v) Compliance With Parking Requirements. Tenant may take all reasonable measures to insure that the parking ratio for the Premises does not fall below a ratio of one (1) parking space per two hundred (200) ft.2 of building area and that none of the tenants or occupants of the Entire Tract use more than one (1) parking space per two hundred (200) ft.2 of building area leased or occupied by such user. (vi) Ownership of Improvements. All permanent improvements constructed by Tenant pursuant to this Section 16.17(e) shall be and remain Landlord's property, shall become part of the Premises and shall not be removed by Tenant upon termination of this Lease for any reason. (f) Landlord's Construction of Expansion Space. In the event that Tenant does not construct the Expansion Space and at any time while this Lease is in effect with respect to the Original Premises fails to exercise its option to extend the term of this Lease as it applies to the Additional Land, then Landlord shall have the right to construct the Expansion Space at Landlord's sole cost and expense. In such event, Landlord agrees to use all reasonable efforts to minimize disruption of Tenant's business as a result of Landlord's construction of the Expansion Space. Construction of the Expansion Space by Landlord shall be in strict accordance with and within the building areas reflected on the Expansion Plan. Following completion of construction of the Expansion Space by Landlord, Tenant acknowledges that the Expansion -20- <PAGE> 21 Space shall be under the exclusive control of Landlord and that the definition of Premises hereunder shall be reduced to include only the original Building that was the subject of this Lease and the roadways, parking areas, sidewalks and entrances located on the Original Premises, as reflected on the Expansion Plan, subject to the rights of Landlord and any tenants on the North Site to use such roadways, parking areas, sidewalks and entrances. In leasing the Expansion Space, Landlord shall notify Tenant of Landlord's lease rates, lease terms and the expected tenant credit rating, which rate, terms and credit shall be reasonable in the Santa Fe market. If Tenant desires to lease the Expansion Space, is not in default under this Lease and Tenant is willing to meet the rate and terms and can provide the satisfactory credit rating required by Landlord, Landlord agrees to negotiate with the Tenant for the lease of the Expansion Space. (g) Operation of Entire Tract. Should Landlord construct the Expansion Space, or should Landlord otherwise elect at any time, Landlord and Tenant acknowledge and agree that Landlord shall have the right to treat the Entire Tract as an integrated shopping center and that Landlord shall have the option to procure (if applicable) and pay the taxes, insurance, maintenance and other common area charges applicable to the Entire Tract. In such event, Tenant agrees to pay its proportionate share of such taxes, insurance, maintenance and other common area charges applicable to the Entire Tract, determined by dividing the total square footage of the Building located on the Original Premises (herein agreed to be 14,850 square feet) by the aggregate rentable space in the Entire Tract, provided, however, that Tenant's share of such costs for the year in which such election is made by Landlord shall not exceed Tenant's total costs for such items for the year preceding such election, wherein Tenant paid all such costs. Following completion of construction of the Expansion Space by Landlord, Landlord shall designate at least 72 parking spaces for Tenant's exclusive use. -21- <PAGE> 22 18. The following sentence is added to the end of Section 16.18 of the Lease: "Additionally, Landlord agrees that no portion of the North Site shall be used for any of the Prohibited Uses, as defined in Section 10.02 hereof." 19. A new Section 16.19 is hereby added to the Lease as follows: "Section 16.19. Tenant's Option to Purchase the Premises. (a) Grant of option. For and in consideration of the mutual and reciprocal covenants contained herein, Landlord grants to Tenant the exclusive right and option to purchase the Premises at a total purchase price equal to $3,500,000.00 cash, plus any Site Improvement costs incurred by Landlord as specified in Section 16.17 hereof for which Landlord has not been reimbursed by Tenant as of the closing of such option purchase, and otherwise on the terms and conditions set forth in the real estate contract attached hereto as Exhibit "E-1" and incorporated herein (the "Real Estate Contract"). In the event that Tenant exercises its option to purchase after Landlord has commenced construction of but before completion of the Site Improvements as specified in Section 16.17 hereof, then Landlord shall have the right to complete construction of the Site Improvements and the entire reimbursable portion thereof shall be added to the purchase price. (b) Option Period. Tenant may exercise its option at any time on or before 5:00 o'clock p.m. on April 1, 1993 provided, however, that if Landlord has not sooner placed a mortgage to secure third party financing on the Entire Premises, Tenant shall have until 5:00 o'clock p.m. on September 1, 1993 or until the Walgreen's Store on the North Site is constructed and Walgreen's is in possession and paying rent, whichever is sooner, to exercise such option. Notwithstanding anything herein to the contrary, the April 1, 1993 date and the September 1, 1993 date specified above shall be extended one (1) day for each day after December 31, 1992 that Landlord has not completed the Site Improvements as required in Section 16.17(b) hereof. -22- <PAGE> 23 (c) Exercise of Option. Tenant may exercise its option hereunder only by execution and tender to Landlord of an executed original of the Real Estate Contract, together with an earnest money check for $100,000.00 payable to Landlord. As specified in Section 3.02 of the Real Estate Contract, it shall be a condition to closing under the Real Estate Contract that Landlord and Tenant execute and record a Reciprocal Operating Agreement (With Easements, Covenants and Restrictions) in the form attached as Schedule 2 to the Real Estate Contract." 20. A new Section 16.20 is hereby added to the Lease as follows: "Section 16.20. Tenant's Right of First Refusal to Purchase the Premises. Landlord hereby grants to Tenant a right of first refusal to purchase the Premises. If during the term of this Lease Landlord receives a bona fide offer (the "Offer") for the purchase of its interest in the Premises (or the Entire Tract), Landlord shall give Tenant written notice (the "Notice") of such Offer. The Notice shall set forth the name of the third party offeror, the price and all other terms and conditions of the Offer. Tenant shall have the option for thirty (30) days following the giving of the Notice to elect to purchase the Premises (or the Entire Tract, if the offer pertains to the Entire Tract) for the purchase price presented in the offer and on the same terms and conditions as contained in the Offer. If Tenant does not exercise such right of first refusal within said thirty (30) day period, then Landlord shall be permitted to sell the Premises (or the Entire Tract, if applicable) to such third party offeror in accordance with the terms of the Offer. If Tenant does not exercise such right of first refusal, and the terms of the offer are subsequently revised, then Landlord shall give Tenant written notice of such revised terms, and Tenant shall have three (3) days following receipt of such notice to elect to purchase the Premises (or the Entire Tract, if applicable) on the revised terms." 21. The parties hereby ratify and confirm that the Lease is in full force and effect and is unmodified except as specifically set forth in this Amendment. -23- <PAGE> 24 CAMPR PARTNERS, LTD. By: Sanders Partners Incorporated, Its: General Partner By: /s/ OFFICER OF SANDERS PARTNERS INCORPORATED -------------------------- Title: Vice President ----------------------- Date: 9/14/92 ------------------------ WILD OATS MARKETS, INC., successor by merger to Wild Oats Market of Santa Fe, Inc. By: /s/ MICHAEL GILLILAND -------------------------- Title: President ----------------------- Date: 9/22/92 ----------------------- List of Exhibits: Exhibit A-1 - Legal Description of Additional Land Exhibit B-1 - Legal Description of the North Site Exhibit C-1 - Preliminary Site Plan Exhibit D-1 - Expansion Plan Exhibit E-1 - Real Estate Contract -24- <PAGE> 25 CONSENT OF GUARANTORS The undersigned guarantors hereby acknowledge and consent to this Amendment and agree that their guarantees of the Lease as amended by the First Amendment, shall remain in full force and effect and are hereby ratified and confirmed. /s/ MICHAEL GILLILAND ------------------------ MICHAEL GILLILAND /s/ ELIZABETH C. COOK ------------------------ ELIZABETH COOK -25- <PAGE> 26 Exhibit A-1 Tract B of the Slade-Shubert Subdivision, as shown on plat filed in the Office on plat filed in the Office of the County Clerk, Santa Fe County, New Mexico on August 29, 1988, in Plat Book 190, page 13, as Document No. 658,077, SAVE AND EXCEPT THE FOLLOWING: That certain parcel of land situate within the Santa Fe Grant, Township 17 North, Range 9 East, New Mexico Principal Meridian, City of Santa Fe, Santa Fe County, New Mexico, comprising the Northerly portion of Tract B of the Slade-Shubert Subdivision, as shown on plat filed in the office of the County Clerk of Santa Fe County, New Mexico on August 29, 1988, in Plat Book 190, page 13, as Document No. 658,077, more particularly described as follows: Beginning at the Northwest corner of said Tract B, Slade-Shubert Subdivision and the Northwest corner of the parcel herein described; Thence Easterly along the Northerly line of said Tract B on the following three (3) courses, S 65 degrees 28' 00" E, 104.14 feet to a point; Thence, S 65 degrees 28' 00" E, 77.70 feet to a point; Thence, N 89 degrees 40' 00" E, 62.30 feet to the Northeast corner of said Tract B and the Northeast corner of the parcel herein described, a point on the Westerly right of way line of St. Francis Drive; Thence, Southeasterly , 20.62 feet along said Westerly right of way line of St. Francis Drive on the arc of a curve to the right (said curve having a radius of 2242.00 feet and a chord which bears SE, 20.62 feet) to a point on curve and the Southeast corner of the parcel herein described; Thence, N 89 degrees 33' 02" W, 58.33 feet to a point; Thence, S 25 degrees 07' 59" W, 27.17 feet to a point; Thence, N 66 degrees 14' 38" W, 173.58 feet to a point; Thence, N 60 degrees 04' 00" W, 24.00 feet to the Southwest corner of the parcel herein described, a point on the Westerly line of said Tract B; Thence, N 29 degrees 56' 00" E, 43.85 feet along said Westerly line of Tract B to the Northwest corner and point of beginning of the parcel herein described. Said parcel contains 0.227 acre, more or less. <PAGE> 27 Exhibit B-1 North Site All of Tract A1 as shown in Plat of Survey entitled "Lot Split-Tract A Slade and Shubert Subdivision, St. Francis Drive, Santa Fe, New Mexico", prepared by Jack G. Horne, P.E. & L.S. #889, dated November 4, 1988 and filed for record on November 30, 1989 as Document Number 693,812, appearing in Plat Book 204 at page 030, records of Santa Fe County, New Mexico. AND A certain tract of land, being Tract A-2 of the Slade Shubert Subdivision, lying and being situate at 1096 S. St. Francis Drive, within the Santa Fe Grant, T.17N., R.9E., N.M.P.M., City of Santa Fe, County of Santa Fe, State of New Mexico, being more particularly described as follows, to wit: Beginning at a point for Santa Fe Control Monument No. 58, marked by a Brass Disk in concrete, thence N. 16 deg. 59' 07" W., a distance of 287.76 feet, to the true point and place of beginning, the southeast corner of Tract A-2 described hereon, a capped rebar; thence S. 89 deg. 39' 00" W., a distance of 60.70 feet; thence, N. 65 deg. 28' 00" W., a distance of 181.76 feet; thence N. 29 deg. 46' 00" E., a distance of 16.86 feet; thence N. 65 deg. 57' 00" W., a distance of 55.66 feet, the southwest corner of Tract A-2; thence N. 24 deg. 59' 00" E., a distance of 116.62 feet, the northwest corner of Tract A-2; thence S. 65 deg. 20' 40" E., a distance of 237.39 feet, the northeast corner of Tract A-2, a point on the west Right-of-Way of St. Francis Drive; thence along a curve to the right through a central angle of 3 deg. 02' 47" (R=2242.00 feet; Chord S. 1 deg. 42' 10" E. - 119.19 feet) a Length of 119.20 feet, to the true point and place of beginning. All as shown on plat of survey entitled "PLAT OF A RE-SURVEY OF TRACT A-2 OF THE SLADE & SHUBERT SUBD'N FOR LINDA GEIL", dated May 1991, prepared by Richard A. Morris, Registered Professional Surveyor New Mexico No. 10277, bearing Project No. 91-LS-33. AND That certain parcel of land situate within the Santa Fe Grant, Township 17 North, Range 9 East, New Mexico Principal Meridian, City of Santa Fe, Santa Fe County, New Mexico, comprising the Northerly portion of Tract B of the Slade-Shubert Subdivision, as shown on plat filed in the office of the County Clerk of Santa Fe County, New Mexico on August 29, 1988, in Plat Book 190, page 13, as Document No. 658,077, more particularly described as follows: Beginning at the Northwest corner of said Tract B, Slade-Shubert Subdivision and the Northwest corner of the parcel herein described; Thence Easterly along the Northerly line of said Tract B on the following three (3) courses, S 65 degrees 28' 00" E, 104.14 feet to a point; Thence, S 65 degrees 28' 00" E, 77.70 feet to a point; Thence, N 89 degrees 40' 00" E, 62.30 feet to the Northeast corner of said Tract B and the Northeast corner of the parcel herein described, a point on the Westerly right of way line of St. Francis Drive; Thence, Southeasterly, 20.62 feet along said Westerly right of way line of St. Francis Drive on the arc of a curve to the right (said curve having a radius of 2242.00 feet and a chord which bears SE, 20.62 feet) to a point on curve and the Southeast corner of the parcel herein described; Thence, N 89 degrees 33' 02" W, 58.33 feet to a point; Thence, S 25 degrees 07' 59" W, 27.17 feet to a point; Thence, N 66 degrees 14' 38" W, 173.58 feet to a point; Thence, N 60 degrees 04' 00" W, 24.00 feet to the Southwest corner of the parcel herein described, a point on the Westerly line of said Tract B; Thence, N 29 degrees 56' 00" E, 43.85 feet along said Westerly line of Tract B to the Northwest corner and point of beginning of the parcel herein described. Said parcel contains 0.227 acre, more or less. <PAGE> 28 EXHIBIT C-1 [MAP] <PAGE> 29 EXHIBIT D-1 [MAP] <PAGE> 30 DRAFT DATED 9-14-92 UNCHANGED FROM PREVIOUS DRAFT OF 8-4-92 EXHIBIT E-1 TO FIRST AMENDMENT REAL ESTATE CONTRACT This Contract of Sale is made by and between CAMPR Partners, Ltd., a Texas limited partnership (hereinafter referred to as "Seller") and Wild Oats Markets, Inc. (hereinafter referred to as "Purchaser"), upon the terms and conditions set forth below. ARTICLE I PURCHASE AND SALE Seller hereby sells and agrees to convey, and Purchaser hereby purchases and agrees to pay for, the tract of land containing approximately ________ acres (approximately ______________ gross square feet) located in the City of Santa Fe, Santa Fe County, New Mexico, being more particularly described on Schedule 1 attached hereto and incorporated herein for all purposes (hereinafter called the "Property") together with all and singular the rights and appurtenances pertaining to the Property, for the consideration and subject to the terms, provisions, and conditions hereinafter set forth. ARTICLE II PURCHASE PRICE AMOUNT OF PURCHASE PRICE 2.01. The purchase price for the Property (the "Purchase Price") is $3,500,000.00, subject to adjustment as provided in Section 2.02 below, which purchase price shall be allocated by agreement of Seller and Purchaser as follows: building -- $2,000,000 and land -- $1,500,000. PAYMENT OF PURCHASE PRICE 2.02. The purchase price shall be payable in cash at the Closing (as defined in Article V below). The Property is currently being leased by Purchaser from Seller pursuant to that certain Lease Agreement dated July 31, 1990 by and between Marianna Partners Limited, predecessor in interest to Seller, as Landlord, and Wild Oats Market of Santa Fe, Inc., predecessor in interest to Purchaser, as Tenant, as amended by that certain First Amendment to Lease effective as of August 1, 1992 between Seller and Purchaser (the Lease Agreement and First Amendment to Lease are hereinafter <PAGE> 31 collectively referred to as the "Lease"). The Property is being purchased pursuant to an option granted from Seller to Purchaser in Section 16.19 of the Lease. The parties agree that the Purchase Price shall be increased to include any Site Improvement costs incurred by Seller for which Seller has not been reimbursed by Purchaser as of the Closing Date, as provided in Section 16.19 of the Lease. ARTICLE III CONDITIONS TO SELLER'S AND PURCHASER'S OBLIGATIONS CONDITION TO PURCHASER'S OBLIGATIONS 3.01 The obligations of Purchaser hereunder to consummate the transactions contemplated hereby are subject to the satisfaction of the following condition which may be waived in whole or in part in writing by Purchaser at or prior to the Closing): Within ten (10) days after the date hereof, Seller, at Seller's sole cost and expense, shall furnish to the Purchaser a Commitment For Title Insurance (the "Title Commitment"), dated not earlier than the date of this Contract, issued by Santa Fe Abstract or any other title company in Santa Fe, New Mexico, reasonably acceptable to Purchaser (the "Title Company") showing Seller's title to the Property, together with legible copies of the deed which conveyed the Property to Seller or its predecessor in interest and all items and documents referenced in the Commitment. The Commitment shall commit the Title Company to issue to Purchaser at the Closing an Owner's Policy of Title Insurance (ALTA Owner's Form B, 1984) in the full amount of the Purchase Price. Purchaser shall give Seller written notice on or before the expiration of thirty (30) days after the date hereof that the condition of title as set forth in the Title Commitment is or is not satisfactory, and in the event Purchaser states that the condition is not satisfactory, Seller shall promptly undertake to eliminate or modify all such unacceptable matters to the reasonable satisfaction of Purchaser provided, however, Seller shall be under no obligation to incur any costs in connection with such title cure except that Seller shall be obligated to secure the release prior to the Closing of any liens reflected thereon, and Seller shall be further obligated to remove any exceptions to title that prevent or impair the development of the Property in the manner reflected on the Preliminary Site Plan or the Expansion Plan, as defined in the Lease. In the event that Seller fails to modify or eliminate such unacceptable matters within sixty (60) days of the date hereof, this Contract shall thereupon, at Purchaser's option, upon written notice to Seller within five (5) days following the expiration of Seller's aforesaid cure period, be null and void for all purposes and the Escrow Deposit shall be forthwith returned by the Title Company to Purchaser. Purchaser's failure to give Seller such written notice of such unsatisfactory condition of title and/or election to terminate shall be deemed to be Purchaser's acceptance of the condition of title. -2- <PAGE> 32 CONDITION TO SELLER'S OBLIGATIONS 3.02. The obligations of Seller hereunder to consummate the transactions contemplated hereby are subject to the execution by Seller and Purchaser on or before the Closing Date of a Reciprocal Operating Agreement (With Easements, Covenants and Restrictions) in the form of Schedule 2 attached hereto (the "Reciprocal Operating Agreement") and incorporated herein. In the event that Purchaser fails or refuses to execute the Reciprocal Operating Agreement in the form attached then Seller shall have no obligation to consummate the transactions contemplated herein, and Seller may terminate this Contract upon written notice to Purchaser and thereafter this Contract shall be null and void for all purposes and the Escrow Deposit shall be forthwith returned by the Title Company to Purchaser. ARTICLE IV REPRESENTATIONS AND WARRANTIES REPRESENTATIONS AND WARRANTIES OF SELLER 4.01. Seller makes the following representations and warranties and agrees that Purchaser's obligations under this Contract are conditioned upon the truth and accuracy of such representations and warranties, both as of this date and as of the date of Closing: (a) Seller is the owner of the Property, and there are no outstanding loans with respect to the Property or any part thereof other than any indebtedness which will be released at Closing. (b) Seller has the authority to convey the Property to Purchaser without the joinder of any other person or entity. See Attachment. (c) Purchaser acknowledges that Seller has delivered to Purchaser the following (hereinafter the "Existing Environmental Reports"): i) Letter dated June 25, 1990 from Metric Corporation Environmental Engineering and Science to Marianna Partners, Ltd. ii) Remedial Action Report dated June 15, 1990 from Cerl, Inc. Environmental Consultants. iii) Notice of Remedial Action, Hydrocarbon Contaminated Soil (Non-Spill Related) dated May 2, 1990 prepared by Cerl, Inc. Environmental Consultants. iv) Environmental-Soil Sampling Report dated April 4, 1990 prepared by Cerl, Inc. Environmental Consultants. To the best knowledge and belief of Seller, the Existing Environmental Reports provided to Purchaser constitute the complete reports related to the property in Seller's possession. REPRESENTATIONS AND WARRANTIES OF PURCHASER 4.02. Purchaser makes the following representations and warranties: (a) Purchaser has all requisite power and authority to execute and deliver this Agreement and to carry out its obligations hereunder and the transactions contemplated hereby. (b) Except as specifically set forth in Section 4.01, Purchaser is purchasing the Property, and the Property shall be conveyed and transferred to Purchaser, "as is, where is, and with all faults" and without any warranties, representations, or guarantees, either express or implied, of any kind, nature, or type whatsoever from or on behalf of Seller. Except for the express representation made in Section 4.01, Purchaser acknowledges that it has not relied, and is not relying, on any information, document, sales brochures, or other literature, maps or sketches, -3- <PAGE> 33 projections, proforma, statements, representations, guarantees or warranties (whether express or implied, or oral or written, or material or immaterial), that may have been given by, or made by, or on behalf of, Seller; (ii) except as specifically set forth in Section 4.01, Purchaser is not entitled to, and should not rely on, the Seller or its agents as to (a) the quality, nature, adequacy or physical condition of the Property, including, without limitation, the structural elements, foundation, roof, appurtenances, access, landscaping, parking facilities, or the electrical, mechanical, HVAC, plumbing, sewage or utility systems, facilities or appliances at the Property, if any; (b) the quality, nature, adequacy, or physical condition of soils or the existence of ground water at the Property; (c) the existence, quality, nature, adequacy or physical condition of any utilities serving the Property; (d) the development potential of the Property, its habitability, merchantability or fitness, suitability, or adequacy of the Property for any particular purpose; (e) the zoning or other legal status of the Property; (f) the Property' or its operations', compliance with any applicable codes, laws, regulations, statutes, ordinances, covenants, conditions or restrictions of any governmental or quasi-governmental entity, or any other person or entity; (g) the quality of any labor or materials relating in any way to the Property; or (h) the condition of title to the Property (except for the warranty of title set forth in the deed to be delivered by Seller as described in Article V), or the nature, status and extent of any right-of-way, lease, right of redemption, possession, lien, encumbrance, license, reservations, covenant, condition, restriction, or any other matter affecting title of the Property; (iii) Purchaser has had and will have, pursuant to this Agreement, an adequate opportunity to make such legal, factual and other inquiries and investigations as it deems desirable or appropriate with respect to the Property. Those inquiries or investigations of Purchaser may include, but are not limited to, any leases and contracts pertaining to the Property, the physical components of all portions of the Property, the condition of the Property, the existence of any wood-destroying organisms on the Property, the state of facts that an accurate survey and inspection would show, the present and future zoning ordinances, resolutions, and regulations of the city, county and state where the Property are located, and the value and marketability of the Property. ARTICLE V CLOSING The closing shall be held at the offices of the Title Company on the later of (i) the first business day following the expiration of the title review period specified in Section 3.01 hereof and any applicable cure period or (ii) ten (10) days following Seller's completion of construction of the Site Improvements on the Property, in the event that Purchaser has exercised its option to purchase the Property after Seller has commenced construction but before completion of the Site Improvements on the Property, as -4- <PAGE> 34 provided in Section 16.19 of the Lease (which date is herein referred to as the "Closing Date" or the "Closing"). (1) At the Closing Seller shall: (a) Deliver to Purchaser a duly executed and acknowledged General Warranty Deed conveying title in fee simple to all of the Property, free and clear of any and all liens, encumbrances, conditions, easements, assessments, and restrictions, except for the following: [1] A vendor's lien to be retained in favor of any lender providing financing to Purchaser for this transaction; [2] The lien of any deed of trust or mortgage in favor of any lender providing financing to Purchaser for this transaction; [3] General real estate taxes for the year of Closing which shall be assumed in full by Purchaser, and subsequent years not yet due and payable; [4] Any exceptions approved by Purchaser pursuant to Section 3.02 hereof; and [5] Any exceptions approved by Purchaser in writing. (b) Deliver to Purchaser an Owner's Policy of Title Insurance (ALTA Owner's Form B, 1984) at Seller's sole expense, issued by the Title Company in Purchaser's favor in the full amount of the Purchase Price, insuring Purchaser's fee simple title to the Property subject only to those title exceptions listed in Section 3.02 hereof and such other exceptions as may be approved in writing by Purchaser. (c) Deliver to Purchaser the duly executed Reciprocal Operating Agreement, as required by Section 3.02 hereof. (2) At the Closing, Purchaser shall pay the cash portion of the purchase price and deliver to Seller the duly executed Reciprocal Operating Agreement, as required by Section 3.02 hereof. (3) General real estate taxes for the then current year relating to the Property and all other operating expenses of the Property shall not be prorated, but shall be assumed by Purchaser inasmuch as such operating expenses are the responsibility of Purchaser under the Lease. -5- <PAGE> 35 ARTICLE VI REAL ESTATE COMMISSIONS The parties acknowledge that no brokers have been involved in this transaction. It is agreed that if any claims for real estate brokerage fees or commissions are ever made against Seller or Purchaser by any person, firm or corporation in connection with this transaction, all such claims will be handled and paid by the party whose actions or alleged commitments form the basis of such claim, and the party whose actions or alleged commitments form the basis of such claim will indemnify and hold harmless the other from and against any and all such claims or demands with respect to any brokerage fees or agents, commissions or other compensation asserted by any person, firm or corporation in connection with this transaction. ARTICLE VII ESCROW DEPOSIT For the purposes of securing the performance of Purchaser under the terms and provisions of this Contract, Purchaser has delivered to the Title Company, upon execution hereof, the sum of $ in cash or cash equivalency (the "Escrow Deposit"), which shall be paid by the Title Company to Seller in the event Purchaser breaches this Contract as provided in Article IX hereof. The Escrow Deposit shall be placed in a daily interest-bearing account with all interest payable to the party entitled to such Escrow Deposit pursuant hereto. At the Closing, the Escrow Deposit and accrued interest shall be paid over to Seller and applied to the cash portion of the purchase price, provided, however, that in the event the Purchaser shall have given timely written notice to the Title Company that one or more of the conditions to its obligations set forth in Article III have not been met, or, in the opinion of Purchaser, cannot be satisfied in the manner and as provided for in Article III, then the Escrow Deposit together with all interest shall be forthwith returned by the Title Company to Purchaser. ARTICLE VIII BREACH BY SELLER In the event Seller shall fail to fully and timely perform any of its obligations hereunder or shall fail to consummate the sale of the Property for any reason, except Purchaser's default, Purchaser may receive an immediate return of the Escrow Deposit and then, at its option,: (1) enforce specific performance of this Contract; and/or (2) bring suit for damages against Seller. -6- <PAGE> 36 ARTICLE IX BREACH BY PURCHASER In the event Purchaser should fail to consummate the purchase of the Property, the conditions to Purchaser's obligations set forth in Article III having been satisfied and Purchaser being in default and Seller not being in default hereunder, due to the difficulty of assessing Seller's actual damages as a result of such breach by Purchaser, Seller shall have the right to receive the Escrow Deposit from the Title Company, such sum being agreed on as liquidated damages for the failure of Purchaser to perform the duties, liabilities and obligations imposed upon it by the terms and provisions of this Contract, and Seller agrees to accept and take said cash payment as its total, reasonable damages and relief and as Seller's sole remedy hereunder in such event. ARTICLE X CONDEMNATION In the event that (i) the whole or a material part of the Property is taken by condemnation or right of eminent domain prior to Closing, and (ii) in Purchaser's reasonable determination, the Property is rendered unsuitable for Purchaser's intended use, at Purchaser's option, this Contract shall terminate and Purchaser will receive a full refund of the Escrow Deposit. ARTICLE XI FOREIGN PERSON FEDERAL TAX REQUIREMENT If Seller is not a "foreign person," as defined in the Federal Foreign Investment in Real Property Tax Act of 1980 and the 1984 Tax Reform Act as amended (the "federal tax law"), then at the Closing Seller shall deliver to Purchaser a certificate so stating in a form complying with the federal tax law. If Seller is a "foreign person" or if Seller fails to deliver the required certificate at the Closing, then in either such event the funding to Seller at the Closing shall be adjusted to the extent required to comply with the withholding provisions of the federal tax law; and although the amount withheld shall still be paid at the Closing by Purchaser, it shall be retained by a mutually acceptable escrow agent (the reasonable fees of which shall be paid by Seller at the Closing) for delivery to the Internal Revenue Service together with the appropriate federal tax law forwarding forms, and with copies being provided both to Seller and Purchaser. The Title Company is hereby approved as a mutually acceptable escrow agent in the event that withholding is warranted in accordance with this paragraph. -7- <PAGE> 37 ARTICLE XII MISCELLANEOUS NOTICE 12.01. Any notice required or permitted to be delivered hereunder shall be deemed received when sent by United States mail, postage prepaid, certified mail, return receipt requested, addressed to Seller or Purchaser as follows: Seller: CAMPR Partners, Ltd. c/o Sanders Partners Incorporated 1790 Commerce Park Drive El Paso, Texas 79912 With Copy to: Scott & Hulse, P.C. llth Floor, Texas Commerce Bank Building El Paso, Texas 79901 Attn: W. David Bernard Purchaser: Wild Oats Markets, Inc. 1668 Valtec Lane Boulder, Colorado 80301 Attn: E. Cook ----------------- With Copy to: Bennett Bentoli 6081 S. Kearney Englewood, Co. 80111 NEW MEXICO LAW TO APPLY 12.02. This Contract shall be construed under and in accordance with the laws of the State of New Mexico. PARTIES BOUND 12.03. This Contract shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and assigns where permitted by this Contract. LEGAL CONSTRUCTION 12.04. In case any one or more of the provisions contained in this Contract shall for any reason be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision hereof, and this Contract shall be construed as if such invalid, illegal, or unenforceable provision had never been contained herein. -8- <PAGE> 38 PRIOR AGREEMENTS SUPERSEDED 12.05. This Contract constitutes the sole and only agreement of the parties hereto and supersedes any prior understandings or written or oral agreements between the parties respecting the within subject matter. TIME OF ESSENCE 12.06. Time is of the essence of this Contract. For purposes of determining the time for performance of various obligations under this Contract, the "date" of this Contract shall be the date this Contract is executed by Purchaser. Should the calculation of any of the various time periods provided for herein result in an obligation becoming due on a Saturday, Sunday or legal holiday, then the due date of such obligation shall be delayed until the next succeeding business day. GENDER 12.07. Words of any gender used in this Contract shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, and vice versa, unless the context requires otherwise. ASSIGNMENT 12.08 Purchaser may assign its rights as Purchaser hereunder. EXECUTED by Seller this day of 1992. -------- ----------------- SELLER: CAMPR PARTNERS, LTD. By: Sanders Partners Incorporated Its: General Partner By: ------------------------------- Title: ---------------------------- -9- <PAGE> 39 EXECUTED by Purchaser this day of 1992. --------- ----------------- PURCHASER: WILD OATS MARKETS, INC. By: ------------------------- Title: ---------------------- The Contract, together with the Escrow Deposit described therein, has been received by the Title Company this the day of , 1992, and by execution hereof the Title Company hereby covenants and agrees to be bound by the terms of the Contract. --------------------------------- Name of Title Company By: ------------------------------ Title: --------------------------- SCHEDULE OF EXHIBITS: Schedule 1 - Legal Description of the Property Schedule 2 - Form of Reciprocal Operating Agreement -10- <PAGE> 40 SCHEDULE 1 TO REAL ESTATE CONTRACT <PAGE> 41 SCHEDULE 2 TO REAL ESTATE CONTRACT RECIPROCAL OPERATING AGREEMENT (With Easements, Covenants and Restrictions) This Reciprocal Operating Agreement (the "Agreement") is entered into by and between CAMPR PARTNERS, LTD., a Texas limited partnership (hereinafter referred to as "North Site Owner"); and WILD OATS MARKETS, INC., a Colorado corporation (hereinafter referred to as "South Site Owner"). WHEREAS, North Site Owner is the owner of a certain tract of land located in the City of Santa Fe, Santa Fe County, New Mexico, more fully described on Exhibit "A" attached hereto (the "North Site"); WHEREAS, South Site Owner is the owner of a certain tract of land located in the City of Santa Fe, Santa Fe County, New Mexico, more particularly described on Exhibit "B" attached hereto (the "South Site"); WHEREAS, the North Site and South Site are adjacent to each other and the North Site and South Site Owners desire to grant to each other reciprocal and mutual rights of access for ingress, egress and parking on certain portions of their respective tracts and desire to set out certain terms, conditions and restrictions controlling the development and use of such tracts; NOW, THEREFORE, North Site Owner and South Site Owner hereby adopt and establish the following covenants and easements, which shall be applicable to the North Site and South Site (the North Site and South Site are collectively hereinafter referred to as the "Property"), and such parties hereby agree and declare that the Property shall be held, transferred, improved, sold, conveyed, used and occupied subject to the easements and restrictions described herein which shall be (i) covenants running with and binding the Property and (ii) binding upon and enforceable against the North Site Owner and the South Site Owner and their respective successors and assigns, including, without limitation, any and all subsequent owners of the Property or any portions thereof (all such parties and their respective successors and assigns are hereinafter collectively referred to as the "Owners" and individually referred to as "Owner") and each and all individuals and entities by the acceptance of title to any portion of the Property shall thereby agree and covenant to abide by and perform the provisions and agreements contained herein. 1. SITE PLAN. Attached to this Agreement as Exhibit "C" is a site plan (herein the "Site Plan") which illustrates the proposed future improvements to the North Site and the existing and proposed improvements to the South Site. <PAGE> 42 2. NORTH SITE CONSTRUCTION. North Site Owner Agrees that the North Site will be developed in substantial accordance with the Site Plan. 3. SOUTH SITE CONSTRUCTION. South Site Owner agrees that the South Site will be developed in substantial accordance with the Site Plan. 4. CONSTRUCTION OF SITE IMPROVEMENTS. [RESERVED]. 5. GRANTS BY NORTH SITE OWNER. To be effective following completion of the Site Improvements for the North Site, North Site owner hereby grants, sells and conveys to the South Site Owner the free, continuous, uninterrupted, nonexclusive use, right, liberty, privilege, license and easement appurtenant to the South Site for ingress and egress of vehicular and pedestrian traffic and parking (subject to the limitations of Paragraph 7.3) in and on the roadways, parking areas, sidewalks, and entrances of the North Site Shown on the Site Plan (herein the "North Site Easement"). 6. GRANT BY SOUTH SITE OWNER. To be effective following completion of the Site Improvements for the South Site, the South Site Owner does hereby grant, sell and convey to the North Site owner the free, continuous, uninterrupted, nonexclusive use, right, liberty, privilege, license and easement appurtenant to the North Site for ingress and egress of vehicular and pedestrian traffic and parking (subject to the limitations of Paragraph 7.3) in and on the roadways, parking areas, sidewalks and entrances of the South Site shown on the Site Plan (herein the "South Site Easement"). 7. FURTHER AGREEMENTS WITH RESPECT TO EASEMENTS. Each Owner, on behalf of itself and its successors and assigns, agrees as follows: 7.1 NO BARRIERS OR INTERFERENCE. No owner shall construct or place any fences, barriers or other obstacles which would prevent or obstruct the passage of pedestrian or vehicular travel for the purposes herein permitted within or across the North Site or South Site Easements (collectively the "Easements") provided, however, the foregoing provisions shall not prohibit a barricade erected and reasonably necessary in connection with the construction, reconstruction, repair or maintenance of the Easements or any buildings or other improvements (all such work to be conducted in the most expeditious manner reasonably possible to minimize the interference with use of the Easements and with all such work to be diligently prosecuted to completion). 7.2 USE OF EASEMENTS. Subject to the parking limitations of Paragraph 7.3, any Owner of the Property or any 2 <PAGE> 43 portion thereof may authorize its tenants and invitees (including, without limitation, employees, customers, agents and invitees of such tenants) to use the Easements herein granted to such Owner, and neither such Owner nor said tenants and invitees shall be charged any fee for the use of such Easements. The Easements and rights herein conveyed are private easements and are not for the use or benefit of the general public. Nothing herein contained shall be construed or deemed to be a dedication of any easements to, or for the use of, the general public. 7.3. Limitations on Parking, Notwithstanding anything herein to the contrary, no Owner shall be entitled to rely upon the parking area located upon the other Owner(s) property for the purpose of meeting any minimum parking requirements of applicable governmental authorities. Owners mutually agree to use their best efforts to ensure that their respective employees and employees of their tenants do not park on the Property. 7.4 Maintenance of Easements. All Owners shall maintain the Easements on their respective tracts in good condition and repair, to include, without limiting the generality of the foregoing, the following: (i) Maintaining the surface in a level, smooth, evenly-covered condition with the type of surfacing material originally installed or such substitute as shall in all respects be equal in quality, use and durability, it being agreed that any and all paved area must be constructed of hard surface material of an asphaltic concrete or concrete-wearing surface in accordance with good engineering practices and in a good and workmanlike manner; (ii) Removing all papers, debris, filth and refuse and thoroughly sweeping the area to the extent reasonably necessary to keep the Easements in a clean and orderly condition; (iii) Placing, keeping in repair, and replacing any necessary and appropriate directional signs, markers and lines as required by any governmental entity or agency having jurisdiction over the Easements or any portion thereof; and, (iv) Operating, keeping in repair and replacing, when necessary, such artificial lighting facilities as shall be reasonably required by any governmental entity or agency having jurisdiction over the Easements or any portion thereof. 7.5 Condemnation. Nothing contained herein shall be construed to give any owner any interest in any award or payment made to any other owner in connection with any exercise of eminent domain or transfer in lieu thereof affecting said other Owner's portion of an Easement or the Property or give the public (including any tenants or invitees of any Owner) or any governmental entity any rights in the Easements or any portion 3 <PAGE> 44 thereof, it being agreed that in the event of any such exercise of eminent domain or transfer in lieu thereof by any Owner of the Easement with respect to the portion of the Property owned by such Owner, that the award attributable to the land and improvements of such affected portion shall be payable only to the fee owner thereof and no claim thereon shall be made by any other owner of any other portion of the Property; provided further, however, that all such other Owners may file collateral claims with the condemning authority over and above the value of the land area and improvements so taken. It is further agreed that the fee Owner of each portion of the Property so condemned shall promptly repair and restore (if such repair and restoration shall be reasonable under the circumstances) the remaining portion of the Easement so owned by said Owner as nearly as practicable to the same condition immediately prior to such condemnation or transfer. 8. LIMITATIONS ON USE. During the term of this Agreement the uses permitted on the North Site and the South Site shall be limited as follows: 8.1 RESTRICTIONS ON SOUTH SITE. No portion of the South Site shall be used for (a) purposes of a cocktail lounge (provided, however, that this shall not preclude a cocktail lounge operated in conjunction and as a part of a restaurant), bar, disco, bowling alley, pool hall, billiard parlor, skating rink, roller rink, amusement arcade, adult book store, adult theater, adult amusement facility, or any facility selling or displaying pornographic materials or having such displays, secondhand store, auction house, flea market or any use which creates a nuisance (hereinafter the "Prohibited Uses") or (b) the operation of a drug store or a socalled prescription pharmacy or for any purpose requiring a qualified pharmacist or other person authorized by law to dispense medicinal drugs, directly or indirectly, for a fee or a remuneration of any kind (hereinafter a "Drug Store Operation") (provided, however, that this restriction shall not prohibit or restrict in any way the sale of medicinal herbs or vitamins). 8.2 RESTRICTIONS OF NORTH SITE. No portion of the North Site shall be used for (a) any of the Prohibited Uses or (b) the operation of a grocery store or health food store or any other business that derives more than fifty percent (50%) of its gross revenues from the sale of produce, meat, or vitamins (hereinafter a "Food Store Operation"). 9. ENFORCEMENT. The hereinabove stated covenants and easements shall inure to the benefit of, be binding upon and be enforceable (specifically including, but not limited to, the remedy of injunctive relief in the event of breach of said covenants) by all Owners of the Property or any part thereof and their respective successors and assigns (including specifically mortgagee's and purchasers at any foreclosure sale or by deed in lieu thereof), except as otherwise provided. If during the existence of this 4 <PAGE> 45 Agreement any Owner shall sell or transfer or otherwise terminate its interest as owner of such Property, then from and after the effective date of such sale, transfer, or termination of interest, such party shall be released and discharged from any and all obligations, responsibilities and liabilities under this Agreement as to the parts sold or transferred, except those obligations, responsibilities and liabilities (if any) which have already accrued as of such date, and any such transferee by the acceptance of the transfer of such interest shall thereupon become subject to the covenants contained herein to the same extent as if such transferee were originally a party hereto. No breach of this Agreement shall entitle any Owner to cancel, rescind or otherwise terminate this Agreement; provided, however, such limitation shall not affect in any manner any of the rights or remedies which any owner may have hereunder by reason of such breach. 10. ARBITRATION. Any controversy or claim between or among the Owners relating to this Agreement, shall be determined by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association ("AAA"). All statutes of limitations or any waivers contained herein which would otherwise be applicable shall apply to any arbitration proceeding. Judgment upon the award rendered may be entered in any court having jurisdiction. If such controversy or claim is not submitted to arbitration as provided above, but becomes the subject of a judicial action, any party may elect to have all decisions of fact and law determined by a referee in accordance with applicable state law. If such an election is made, the parties shall designate to the court a referee or referees selected under the auspices of the AAA in the same manner as arbitrators are selected in AAA-sponsored proceedings. The referee, or presiding referee of the panel, shall be an active attorney or retired judge. Judgment upon the award rendered shall be entered in the court in which such proceeding was commenced. Notwithstanding anything in this Paragraph 10 to the contrary, no provision of, or the exercise of any rights hereunder shall limit the right of any Owner to exercise any ancillary remedies such as injunctive relief before, during or after the pendency of any arbitration. The institution and maintenance of an action for judicial relief or pursuit of any ancillary remedies shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration. 11. MODIFICATION. The provisions of this Agreement may be modified from time to time or terminated at any time by the written agreement of all of the Owners of the Property. No consent to the modification, from time to time, or termination of any or all of the provisions of this Agreement shall ever be required from any persons other than the Owners of said Property, and their respective mortgagees then holding a mortgage or deed of trust lien on such Owner's portion of the Property. No consent shall be required of any tenant as to any portion of the Property, nor from any customer, employee, agent or invitee of any such tenants nor 5 <PAGE> 46 shall any such tenant, customer, employee, agent or invitee have any right to enforce any provision of this Agreement or any modification thereof. 12. TERM. The easements, restrictions, rights, terms and provisions of this Agreement shall run with the land and bind the Owners for a period of fifty (50) years from the date hereof. Notwithstanding the foregoing, the restrictions against a Drug Store Operation on South Site as provided in Paragraph 8.1 hereof shall terminate sooner if at any time following three (3) years after the date hereof, a Drug Store Operation is not conducted on the North Site for a period of twelve (12) consecutive months, and provided further that the restrictions against a Food Store Operation on the North Site shall terminate sooner if at any time following three (3) years from the date hereof, a Food Store Operation is not conducted on the South Site for a period of twelve (12) consecutive months. 13. TAXES. Each of the Owners shall, with regard to their respective interest in the Property, pay or cause to be paid, prior to delinquency, all real property taxes and assessments which are levied against that part of the Property owned by it. 14. ESTOPPEL CERTIFICATE. Each Owner agrees to furnish a written statement to the other or the other's prospective or existing mortgagee, purchaser or tenant, within fifteen (15) days of any written request therefor stating that: (a) this Agreement is then in effect (if true); (b) this Agreement has not been modified except as specifically stated; (c) the other Owners are not in default (or specifically state any defaults); and (d) such other information reasonably requested relating to the status of this Agreement. Failure to provide such a statement within said period shall be deemed to establish the items referenced in subparagraphs (a)-(c) above. 15. GENERAL PROVISIONS. 15.1 ENTIRE UNDERSTANDING. This Agreement embodies the entire understanding and agreement between the parties concerning the subject matter hereof, and supersedes any and all prior negotiations, understandings, or agreements in regard thereto. Any amendments, variations, or changes may be effective only if approved in the manner set forth herein. 15.2 COUNTERPARTS. This Agreement may be executed in multiple counterpart copies, each of which will be considered an original and all of which constitute one and the same instrument. 15.3 CAPTIONS. The headings in this Agreement are solely for convenience and will not be relied upon in construing any 6 <PAGE> 47 provisions hereof, nor are they in any way intended to describe, interpret, define, or limit the scope, extent, or intent of this Agreement or any provision hereof. 15.4 GENDER AND INTERPRETATION. Use of any gender in this Agreement will be deemed to include all genders when appropriate, and use of the singular will be deemed to include the plural when appropriate, and vice versa in each instance. 15.5 NO PARTNERSHIP. None of the terms or provisions of this Agreement shall be deemed to create a partnership between or among the parties in their respective businesses or otherwise, nor shall it cause them to be considered as joint venturers or members of joint enterprises. This Agreement is not intended nor shall it be construed to create any third-party beneficiary rights to, or in favor of, any person or entity who is not a party hereto unless otherwise expressly provided herein. 15.6 APPLICABLE LAW. This Agreement has been executed and delivered in the State of New Mexico and will be construed and interpreted according to the laws of New Mexico. Venue for all purposes shall be proper in Santa Fe County, New Mexico. 15.7 NOTICES. Any notice, request, or demand required or permitted under this Agreement shall be deemed to have been duly given or made if delivered in person or by registered or certified mail, return receipt requested, postage prepaid, to the addresses below set forth, or such other address as the parties may designate to each other in the foregoing manner. All notices shall be deemed effective upon receipt, provided, any notice given by registered or certified mail, return receipt requested, shall be deemed received on the day first presented by the postal authorities for receipt. 15.8 SEVERABILITY. The provisions of this Agreement are intended to be severable. If any provision hereof shall be invalid, illegal, or unenforceable, the other provisions hereof shall in no way be impaired thereby. 15.9 EXHIBITS. The following exhibits are attached hereto and are incorporated in this Agreement and made a part hereof by reference: Exhibit A -- Legal Description of North Site Exhibit B -- Legal Description of South Site Exhibit C -- Site Plans 15.10 WAIVER. Any past waiver as to any of the terms or conditions of this Agreement shall not operate as a future waiver of the same terms and conditions or prevent the future enforcement of any of the terms and conditions hereof. 7 <PAGE> 48 15.11 ATTORNEY'S FEES. Should any litigation or arbitration be commenced between the Owners arising out of this Agreement or the transactions contemplated hereby, the party prevailing in such litigation or arbitration shall be entitled, in addition to such other relief as may be granted, to a reasonable sum for its attorney's fees in such litigation or arbitration. 15.12 TIME OF ESSENCE. Time is of the essence in this Agreement. In the event the date for performance of any obligation hereunder shall fall on a weekend or any legal holiday, then that obligation shall be performable on the next following regular business day. NORTH SITE OWNER: CAMPR PARTNERS, LTD. By: SANDERS PARTNERS INCORPORATED, Its: General Partner By: ------------------------------ Its: ----------------------------- Address: 1790 Commerce Park Drive El Paso, Texas 79912 Attn: Barry Kobren SOUTH SITE OWNER: WILD OATS MARKETS, INC. By: ------------------------------ Its: ----------------------------- Address: 1668 Valtec Lane Boulder, Colorado 80307 Attn: Michael Gilliland 8 <PAGE> 49 STATE OF ) --------------- COUNTY OF ) ------------- ) This instrument was acknowledged before me on this ______ day of _________________, 1992, by ________________, President of Sanders Partners, Incorporated, General Partner of CAMPR PARTNERS, LTD., a Texas limited partnership on behalf of said limited partnership. Notary's Official Seal: ---------------------------- NOTARY PUBLIC IN AND FOR THE STATE OF ----------- STATE OF ) --------------- COUNTY OF ) ------------- ) This instrument was acknowledged before me on this ____ day of ______________, 1992, by _________________, President of Wild Oats Markets, Inc., a Colorado Corportion, on behalf of said corporation. Notary's Official Seal: ---------------------------- NOTARY PUBLIC IN AND FOR THE STATE OF ----------- 9
SECOND AMENDMENT TO LEASE AGREEMENT DATED JULY 31, 1990, BY AND BETWEEN MARIANNA PARTNERS LIMITED AND WILD OATS MARKET OF SANTA FE, INC. This Second Amendment to Lease Agreement (this "Amendment") is made effective as of February 2, 1995 WHEREAS, Marianna Partners Limited, a New Mexico limited partnership, and Wild Oats Market of Santa Fe, Inc., a Colorado corporation, executed that certain Lease Agreement dated July 31, 1990 (the "Lease" pertaining to certain real property and improvements located within the City of Santa Fe, Santa Fe County, New Mexico; and WHEREAS, CAMPR Partners, Ltd. (hereinafter referred to as "CAMPR" or "Landlord") the successor by merger to Marianna Partners Limited (hereinafter referred to as "Landlord") and Wild Oats Markets, Inc., a Colorado corporation (hereinafter referred to as "Wild Oats" or "Tenant"), is the successor by merger to Wild Oats Market of Santa Fe, Inc., executed that certain first Amendment to Lease Agreement dated August 1, 1992; and WHEREAS, Tenant hereby desires to construct, at Tenant's sole cost and expense, an addition to the front of the Building in the Original Premises (hereinafter "Expansion Space"), all as more particularly described on Exhibit E-1, a copy of which is attached hereto and incorporated herein; and WHEREAS, in conjunction with said proposed expansion by Tenant and as consideration for Landlord's approval of such proposed expansion, the parties agree to amend the Lease as hereinafter set forth. NOW THEREFORE, it is agreed as follows: 1. The following sentence is added to the end of Section 1.02 of the Lease: "(f)"Expansion Space" means that space described on Exhibit E-1 attached hereto and incorporated herein." 2. Section 2.02 of the Lease is deleted in its entirety and the following provision is substituted therefor: "Section 2.02. Term. The term of this Lease as it pertains to the Original Premises, the Additional Land and the Expansion Space shall run for thirteen (13) years from and after the first day of the month following the Site Improvement Completion Date (as defined in Section 16.17 hereof)." <PAGE> 2 3. The parties agree that the Site Improvement Completion Date occured on April 1, 1993. 4. Section 16.19 of the Lease is deleted in its entirety. 5. Section 16.20 of the Lease is deleted in its entirety. 6. Section 2.03 of the Lease is hereby amended by deleting the first sentence thereof and substituting the following: "Provided that Tenant is not in default in respect to any provision of this lease, Tenant shall have the right to extend the term of this Lease for twelve (12) additional periods of five (5) years each, provided, however, that written notice is given to Landlord of such intention to extend the Lease six (6) months prior to the applicable expiration date." 7. Section 4.03 of the Lease is deleted in its entirety. 8. The parties acknowledge that Subsection 16.17(b) of the Lease has been fully performed and that both parties have complied with their obligations thereunder. 9. Pursuant to Subsection 16.17(e)(i), Landlord hereby grants approval of the plans, drawings and related documents related to the Expansion Space indentified as pages 1 through 13 of drawings prepared by De la torre Rainhart P.A. Architects dated November 10, 1994. Pursuant to Subsection 16.17(e)(ii), Landlord recognizes that Tenant has not obtained any of the reports listed in the subsection. 10. The parties hereby ratify and confirm that the Lease and First Amendment are in full force and effect and are modified only as specifically set forth in this Second Amendment. CAMPR PARTNERS, LTD, By: Sanders Partners Incorporated, Its: General Partner By: /s/ OFFICER OF SANDERS PARTNERS INCORPORATED ------------------------------- Title: Vice President ---------------------------- Date: 02/02/95 ----------------------------- <PAGE> 3 WILD OATS MARKETS, INC, SUCCESSOR BY MERGER TO WILD OATS MARKET OF SANTA FE, INC. By: MICHAEL C. GILLILAND ------------------------------- Title: VICE PRESIDENT ---------------------------- Date: 02/02/95 ----------------------------- Consent of Guarantors - The undersigned Guarantors hereby acknowledge and consent to this Amendment and agree that the guarantee of the Lease, as amended by the First Amendment and this Amendment shall remain in full force and effect and are hereby ratified and confirmed. /s/ MICHAEL GILLILAND ---------------------------------- Michael Gilliland /s/ ELIZABETH COOK ---------------------------------- Elizabeth Cook