SUBLEASE
11670 NATIONAL BOULEVARD
WEST LOS ANGELES, CALIFORNIA
THIS SUBLEASE ("SUBLEASE"), is made and entered into as of this
8th day of December, 1999, by and between MRS. GOOCH'S NATURAL
FOOD MARKETS, INC., a California corporation ("SUBLANDLORD"), and
REAL GOODS TRADING CORPORATION, a California corporation
("SUBTENANT").
RECITALS
A. Allaseba H. Gorham and Carol H. Richards (the
"LANDLORD") and Hersh & Ziff Inc., dba Westward Ho Markets, the
predecessor-in-interest to Sublandlord, entered into a Lease
Agreement dated January 1, 1980, as amended by Amendment of Lease
and Agreement dated July 27, 1988, and Assignment and Amendment
to Lease Agreement dated November 10, 1994 (hereinafter
collectively referred to as the "MASTER LEASE") pursuant to which
Sublandlord leased approximately 21,000 square feet of retail
space ("PREMISES") from Landlord located at 11666 National Blvd.,
Los Angeles, CA 90064.
B. Sublandlord now desires to sublet unto Subtenant, and
Subtenant desires to sublease from Sublandlord a portion of the
Premises.
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the
parties agree as follows:
1. SUBLEASED PREMISES. Sublandlord hereby subleases to
Subtenant, and Subtenant hereby subleases from Sublandlord, a
portion of the Premises, consisting of approximately 3,065 square
feet, as indicated on EXIHIBIT A attached hereto and incorporated
herein by this reference (the "SUBLEASED PREMISES"), to have and
to hold, subject to the terms of the Master Lease and upon the
terms and conditions set forth herein. The remaining portion of
the Premises, which is not subleased to Subtenant, shall be
hereinafter referred to as the "MASTER PREMISES". The
obligations of the parties hereunder shall be conditioned on
Sublandlord obtaining and delivering to Subtenant, prior to the
Tender Date, as hereinafter defined, a termination of the
existing sublease, as described in Paragraph 12 hereof (the
"APOCARE TERMINATION"), Landlord's written consent to this
Sublease in the form attached as EXHIBIT D hereto (the "CONSENT
TO SUBLEASE"). If the Apocare Termination or Consent to Sublease
has not been obtained by the Tender Date, the Tender Date, the
Commencement Date and the Expiration Date shall be automatically
extended to the date ten (10) days following the date that the
Apocare Termination and Consent to Sublease are effective, copies
of which will be delivered to Subtenant. If the Apocare
Termination and the Consent to Sublease have not been obtained by
March 1, 2000, Subtenant shall have the right to terminate this
Sublease by delivering written termination notice to Sublandlord
within 30 days after March 1, 2000.
2. TERM AND SUBTENANT IMPROVEMENTS.
(a) The term of this Sublease (the "SUBLEASE TERM")
shall commence on April 1, 2000 (the "COMMENCEMENT DATE") and
shall terminate on March 31, 2010 ("EXPIRATION DATE"), provided
that Subtenant shall have the right, by giving written
termination notice to Sublandlord not later than September 30,
2004, to terminate this Sublease effective as of March 31, 2005
(in which case such date shall be the Expiration Date), and
further provided that the Sublease Term shall be subject to
extension as provided in Paragraph 3. Sublandlord will deliver
the Subleased Premises to Subtenant on or before January 1, 2000
("TENDER DATE"). In the event Sublandlord fails to tender the
Subleased Premises to Subtenant on or before the Tender Date, the
Commencement Date and the Expiration Date shall be extended one
day for each day Sublandlord delays the tender of the Subleased
Premises.
(b) The Subleased Premises are leased and will be
delivered to Subtenant in an "as-is" condition, broom clean.
Sublandlord makes no representation or warranty of title for any
trade fixtures or equipment which may be located at the Subleased
Premises on the date of this Sublease or on the Tender Date, and
Subtenant shall have the right to use or to dispose of any
personal property located within the Subleased Premises on the
Tender Date.
(c) After the Tender Date, Subtenant will perform
certain alterations to the Subleased Premises (the "INITIAL
ALTERATIONS")described in EXHIBIT B. In performing the Initial
Alterations, Subtenant shall comply with all applicable laws or
ordinances pertaining thereto. Sublandlord acknowledges that it
has specifically approved the plans and specifications for the
Initial Alterations, including the installation on the roof of
the building of certain signs, solar panels, and wind generators
described by size, dimension, and location on EXHIBIT B. Any
other signs, solar panels, wind generators or other equipment or
fixtures located outside the Subleased Premises, or any changes
to the specifications on EXHIBIT B or any displays visible from
the Master Premises shall be subject to Sublandlord's consent,
which consent may be withheld for any reason. So long as such
items are of a size and quality consistent with the customary
character of a first class retail shopping center, do not block
the visibility or access to the Master Premises, and comply with
all applicable laws and ordinances, Sublandlord will agree to be
reasonable in its consideration of such items, however,
Sublandlord may still object to their size, placement, or
location for all items that are visible, or impede the visibility
of Sublandlord's Master Premises or signs. Subtenant will
undertake commercially reasonable efforts (but not including an
obligation to perform work outside customary working hours in the
construction trades) to minimize interference with Sublandlord's
occupancy and use of the Master Premises while Subtenant is
performing its Initial Alterations at the Subleased Premises or
in the common areas of the Shopping Center around the Master
Premises.
(d) Following completion of the Initial Alterations,
Subtenant may make subsequent alterations or improvements to the
Subleased Premises from time to time upon compliance with any
applicable provisions of the Master Lease (as incorporated herein
pursuant to Paragraph 10 below), and subject also to Subtenant
obtaining Sublandlord's prior written consent (which may be
withheld for any reason) if such alterations or improvements will
affect the roof, any structural supporting elements of the
building in which the Subleased Premises are located, or are
visible from the Master Premises, or will require work to be
performed on common plumbing, electrical or other utility systems
serving both the Subleased Premises and the Master Premises.
3. OPTION TO EXTEND. Subtenant shall have one option to
extend the Sublease Term for an additional five years, to March
31, 2015 (the "EXTENDED TERM"), upon all the terms and conditions
of this Sublease except that the Fixed Minimum Rent shall be as
follows: On 4/1/10 through 3/31/15, the annual Fixed Minimum Rent
then in effect shall be increased by the lesser of (i) twelve and
one half of one percent (12.5%), or (ii) the cumulative increase
in the CPI (as hereinafter defined) during the timeperiod from
the 4/1/05 to 3/31/10 calculated by (X) dividing (a) the CPI
published on the 4/1/05, by (b) the CPI published on 3/31/10, (Y)
subtracting one (1) from such quotient. Subtenant shall give
Sublandlord written notice of Subtenant's intent to exercise
Subtenant's option to extend the Sublease Term on or before
October 1, 2009. In the event that Subtenant fails to deliver
Sublandlord written notice of Subtenant's exercise of this option
on or before October 1, 2009, the Sublease will expire as of the
Expiration Date. This option to extend will be of no further
force and effect if Subtenant does not timely exercise its
option, or if Subtenant is in default under this Sublease after
notice and the expiration of the applicable cure period at the
time Subtenant exercises this option.
4. USE. The Subleased Premises are to be used and occupied
by Subtenant for the retail sale of environmentally friendly and
renewable energy hardware, dry goods and equipment or products as
are typically sold in other "Real Goods" retail stores as of the
date of this Sublease. In addition, a portion of the Subleased
Premises may be devoted to storage of inventory and supplies and
incidental general office and other uses related to the operation
of Subtenant's business in the Subleased Premises, as approved on
the attached plans and specifications. Subtenant shall not be
permitted to sell any grocery items or products at the Subleased
Premises in competition with the products sold in the Master
Premises or in violation of the Master Lease; provided however
Subtenant shall be entitled to sell products in the Subleased
Premises that are also sold in the Master Premises if such items
are purchased by Sublandlord from Subtenant for such sale in the
Master Premises. In no event is the Subleased Premises to be
used for any other purpose, the specific use granted herein being
material consideration for this Sublease, regardless of whether
or not the change in use is by further sublease, assignment or a
change in Subtenant's nature of its business.
5. RENT. Subtenant agrees to pay Sublandlord as rent for
the Subleased Premises the following amounts:
(a) FIXED MINIMUM RENT. Commencing on the earlier of:
(a)seven(7)calendar dates after the date Subtenant opens for
business to the public or (b) the Commencement Date, Subtenant
shall pay to Sublandlord, in monthly installments in advance,
without any prior demand therefor and (except as may be otherwise
expressly set forth herein) without offset or abatement,
throughout the Sublease Term, the amount set forth in
subparagraph 5(b) hereof ("FIXED MINIMUM RENT"), on or before the
first day of each calendar month, except that Fixed Minimum Rent
for the first full calendar month of the Sublease Term shall be
paid upon execution of this Sublease. If the Commencement Date
is not the first day of a calendar month, on the first day of the
calendar month immediately following the Commencement Date,
Subtenant shall pay Sublandlord, an amount equal to the pro rata
portion of Fixed Minimum Rent for the number of days from the
Commencement Date to the end of such fractional month, based on a
thirty day month. Fixed Minimum Rent for any fractional month at
the end of the Sublease Term shall also be prorated. Prorations
for any fractional month shall be made on the basis of a 30 day
month regardless of the actual number of days in such fractional
month.
(b) MONTHLY FIXED MINIMUM RENT. The Fixed Minimum Rent
during the Sublease Term (excluding the Extended Term, which
Fixed Minimum Rent is specified above) shall be as follows: (1)
On the Commencement Date through 3/31/05, the annual Fixed
Minimum Rent shall be equal to $112,176.00, which is equal to a
monthly Fixed Minimum Rent of $ 9,348.00. (2) On 4/1/05 through
3/31/10, the annual Fixed Minimum Rent then in effect shall be
increased by the lesser of (i) twelve and one half of one percent
(12.5%), or (ii) the cumulative increase in the CPI (as
hereinafter defined) during the timeperiod from the Commencement
Date to 3/31/05 calculated by (X) dividing (a) the CPI published
on the Commencment Date, by (b) the CPI published on 3/31/05, (Y)
subtracting one (1) from such quotient.(3) As used herein, the
term "CPI" shall mean the Consumer Price Index for All Urban
Consumers (1982 - 1984 = 100), Los Angeles, California
Metropolitan Area - All Items published by the United States
Department of Labor, Bureau of Labor Statistics (the "Bureau").
In the event that (i) the Bureau ceases to use the 1982-84,
average of 100 as the basis of calculation and the Bureau does
not recalculate the then applicable CPI number for all years
including 1982-84, or (ii) Landlord and Tenant mutually
agree in writing that the CPI does not accurately reflect the
purchasing power of the dollar, or (iii) the CPI shall be
discontinued for any reason, then the parties shall thereafter
accept and use such other CPI or comparable statistics on the
cost of living for the United States as shall be computed and
published by an agency of the United States or by a responsible
financial periodical of recognized authority selected by Landlord
and Tenant. In the event of the use of comparable statistics of
the CPI as above mentioned, there shall be made in the method of
computation provided for, such revisions as the circumstances may
require to carry out the intent of the parties as set forth
herein.
(c) PERCENTAGE RENT. In addition to Fixed Minimum
Rent, Subtenant shall pay to Sublandlord, without any prior
demand therefor and (except as may be otherwise expressly set
forth herein) without offset or abatement, in accordance with the
following provisions, the amount by which five percent (5%) of
Gross Sales for each calendar year during the term, exceeds Fixed
Minimum Rent for such year ("PERCENTAGE RENT"). Percentage Rent
shall be paid in quarterly installments commencing each calendar
year with the calendar quarter in which Gross Sales for such
calendar year exceed the product of (x) twenty (20), times (y)
Annual Fixed Minimum Rent for such year (such product, the
"BREAKPOINT"). The amount of each such payment shall be five
percent (5%) of Gross Sales for the current calendar year,
computed to the effective date of such statement, less amounts
previously paid by Subtenant for Fixed Minimum Rent or previous
installments of Percentage Rent for such year. For each calendar
quarter, not later than 30 days following the end of such quarter
(or, if applicable, within ten (10) days following the date
Subtenant files its Form 10-Q for such quarter with the
Securities and Exchange Commission), Subtenant shall submit to
Sublandlord a written statement ("QUARTERLY REPORT") setting
forth the Gross Sales (and deductions and exclusions therefrom)
for the calendar quarter and the year to date, together with any
payment of Percentage Rent required to be made at such time.
Such reports may be in the form customarily kept by Subtenant for
such location (e.g. register receipts or unaudited summaries of
sales). In addition, within sixty (60) days after the end of
each calendar year(or, if applicable, within ten (10) days
following the date Subtenant files its Form 10-K for such year
with the Securities and Exchange Commission), Subtenant shall
submit to Sublandlord a written statement setting forth the Gross
Sales and permitted deductions therefrom for the final quarter of
such calendar year and for such calendar year (the "ANNUAL
REPORT"), accompanied by any shortfall in the payment of
Percentage Rent shown on such Annual Report to be due and payable
for such year. Each Annual Report shall contain a certification
by an authorized officer of Subtenant that, to the best of such
officer's knowledge and belief, such report has been prepared in
accordance with generally accepted accounting principles (except
as noted therein) and is complete and accurate. With respect to
any partial calendar year at the beginning or end of the Sublease
Term, Percentage Rent shall equal five percent of Gross Sales for
such partial calendar year, less any amounts paid on account of
Percentage Rent for such partial year, and the Breakpoint shall
equal $2,000,000.00 prorated on the basis of a 365 day year.
(d) STATEMENTS OF AND ACCOUNT FOR GROSS SALES. For
a period of two (2) years after the applicable Annual Report is
submitted to Sublandlord (and thereafter until any audit
conducted under subparagraph 5(e) below has become final),
Subtenant shall keep at the Subleased Premises or at its
principal corporate headquarters, true and accurate records of
Subtenant's Gross Sales for the period covered by such Annual
Report. Subtenant's records shall be sufficient to permit an
audit of Subtenant's Gross Sales to be conducted in accordance
with generally accepted accounting principles and auditing
practices.
(e) AUDIT. During the twelve (12) month period after
an Annual Report is submitted to Sublandlord (except the Annual
Report for the last full calendar year and any partial year at
the end of the term, for which the period shall be six (6) months
following delivery of such Annual Report), Sublandlord may, upon
thirty (30) days' prior written notice to Subtenant, audit
Subtenant's records of Gross Sales on one (1) occasion for the
period covered by such Annual Report. Such audit shall be
conducted during regular business hours at the Subleased
Premises, by a certified public accountant or accounting firm
that has not been employed by either party during the prior year
("AUDITOR"). The Auditor shall be selected by Sublandlord,
subject to Subtenant's reasonable approval. Subtenant and
Sublandlord hereby specifically consent to Sublandlord performing
the audit with Sublandlord's own personnel, if such personnel
are qualified to perform such audit, in Sublandlord's reasonable
discretion. Subtenant may require the Auditor to execute
aconfidentiality agreement satisfactory to Subtenant and its
counsel with respect to nondisclosure of sales and other
proprietary information disclosed to the Auditor in connection
with such audit. The Auditor will be permitted to examine, but
not copy, Subtenant's accounting records relating to Gross Sales.
Sublandlord acknowledges that only the Auditor, will be permitted
to review Subtenant's books and records of Gross Sales (and
claimed exclusions). The Auditor shall be afforded a reasonable
period of time to conduct and complete the audit, and Subtenant
will cooperate with the Auditor in conducting the audit. Within
a reasonable period, not exceeding sixty (60) days, following
completion of the audit, the Auditor shall issue a report of its
conclusions, specifying the amount of additional Percentage Rent
due from Subtenant or the amount of Percentage Rent overpaid by
Subtenant. The report of the audit shall be delivered to both
Sublandlord and Subtenant. If the audit shows that Subtenant
paid less Percentage Rent than was actually due, Subtenant shall
pay the amount of the deficiency to Sublandlord within thirty
(30) days after Subtenant's receipt of such audit. If the audit
shows that Subtenant paid more Percentage Rent than was actually
due, Sublandlord shall, at Subtenant's election, pay said excess
to Subtenant within thirty (30) days after completion of such
audit or Subtenant may deduct such excess from the next due
payment(s) of rent. If such audit shows an understatement of
Gross Sales for the period covered by such Annual Report in
excess of three percent (3%) of Gross Sales, then the reasonable
fees and expenses actually incurred by Sublandlord in conducting
such audit shall be reimbursed by Subtenant; otherwise, such fees
and expenses shall be paid by Sublandlord. If Subtenant protests
the conclusions of such audit, Subtenant may contest
Sublandlord's determination by giving Sublandlord written notice
within thirty (30) days following Subtenant's receipt of the
audit report. If Sublandlord and Subtenant cannot mutually agree
as to the Percentage Rent due within thirty (30) days after
Sublandlord's receipt of Subtenant's notice of protest,
Sublandlord and Subtenant shall jointly choose an independent
Certified Public Accountant, whose determination shall be binding
upon the parties hereto. If Sublandlord and Subtenant fail to
agree upon an independent Certified Public Accountant, the
parties agree to proceed forthwith to arbitrate the issue in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association. The cost of the independent Certified
Public Accountant or the cost of arbitration shall be borne
equally by the parties, but the cost of the audit shall be borne
by either Sublandlord or Subtenant as aforesaid.
(f) PAYMENT OF RENT. All rent shall be payable at the
office of Sublandlord located at 15315 Magnolia Boulevard, Suite
320, Sherman Oaks, California 91403, or at such other address as
Sublandlord may specify by written notice to Subtenant.
(g) ADDITIONAL RENT. In addition to Fixed Minimum Rent
and Percentage Rent, Subtenant shall reimburse Sublandlord
monthly during the Sublease Term, Subtenant's pro rata share of
operating expenses, taxes, insurance and other charges
or additional rent paid pursuant to the terms of the Master Lease
by Sublandlord to Landlord (other than any late fee, penalty or
interest resulting from Sublandlord's delinquent payment of any
amount due Landlord), within fifteen (15) days following receipt
of an invoice for such expenses from Sublandlord.
Subtenant agrees to reimburse Sublandlord for Subtenant's pro
rate share of any adjustments in such additional rent billed
annually or otherwise to Sublandlord by Landlord under the Master
Lease, and Sublandlord agrees to refund Subtenant's proportionate
share of any overpayment when such refund is received by
Sublandlord. Subtenant's pro rata share shall be determined by
multiplying the (i) the amount of such additional rent charged to
Sublandlord under the Master Lease, by (ii) a fraction, the
numerator of which shall be 3,065 (the rentable area in the
Subleased Premises) and the denominator of which shall be 21,000
(the total rentable area of the premises leased under the Master
Lease) ("PRO RATA SHARE"). Subtenant, upon request, shall be
entitled to copies of invoices or other reasonable documentation
received from Landlord to verify the additional rent charged
under the Master Lease.
(h) GROSS SALES. "Gross Sales" as used herein
shall mean the entire amount of Subtenant's actual receipts,
whether cash or otherwise, from all sales of food, beverages,
merchandise, services or sales from mechanical or other vending
devices placed or made in, on or from the Subleased Premises,
subject to the adjustments and exclusions described below).
Notwithstanding the foregoing, Gross Sales shall not include (or
if included there shall be deducted, but only to the extent
previously included) the amount of (i) customer and employee
discounts; (ii) bottle refunds, trading stamps and all trade or
discount coupons; (iii) returns of overstock, defective or
otherwise unsold merchandise for credit to shippers, suppliers,
purveyors, distributors or manufacturers; (iv) any cash or credit
refunds, uncollectible credit card charges, bank charge backs for
counterfeit currency or unnegotiable checks (provided that if
such losses are actually collected in a later year, the amount
recovered shall be included in Gross Sales for such later year),
or any sale made where the merchandise sold or some part thereof
is thereafter returned by the purchaser and accepted by
Subtenant; (v) automated teller machine proceeds and receipts for
the cashing of checks or negotiable instruments; (vi) sale of
incidental services (e.g.shipping or delivery charges) provided
to customers on a non-profit basis by Subtenant or by
unaffiliated licensees or concessionaires of Subtenant but only
to the extent that such licensees or concessionaires retain the
proceeds of such sale; (vii) sales of equipment, furniture or
trade fixtures not in the ordinary course of business; (viii) any
interest, delivery or service charges received with respect to
sales of merchandise or service; (ix) sales taxes, based upon
present or future laws, collected directly from customers by
Subtenant, and any other tax, excise or duty which is levied or
assessed against Subtenant by any governmental authority based on
sales of specific merchandise sold on, or the privilege or
license to sell or distribute specific merchandise from the
Subleased Premises, whether or not the amount thereof is passed
on to or collected by Subtenant from any purchaser thereof; (x)
lottery ticket, admission ticket and other ticket sales, except
to the extent of the amount of commissions received thereon; (xi)
receipts from postage machines and public telephones; (xii)
direct expenses of credit card and debit card sales paid by
Subtenant to the issuers of such cards; (xiii) sales discounts,
sums raised for donations or donations to nonprofit, charitable
or religious organizations; (xiv) wholesale and/or bulk sales of
merchandise or services to other retail stores operated by
Subtenant or an affiliate of Subtenant; (xv) transfers by
Subtenant from the Subleased Premises to another place of
business owned or operated by Subtenant (where such transfers are
made solely for the convenient operation of Subtenant's business
and not for the purpose of consummating a sale which has
theretofore been made in, on or from the Subleased Premises or
for the purpose of depriving Sublandlord of the benefit of a sale
which otherwise would be made in, on or from the Subleased
Premises); and (xvi) any sums or credits received in settlement
of claims for loss or damage to merchandise which is not part of
Subtenant's actual receipts set forth above. Each charge or sale
upon installment or credit shall be treated as a sale for the
full price in the month during which such charge or sale shall be
made (and the direct expenses of such credit card sales shall be
deducted in such month), regardless of the time when Subtenant
shall receive payment (whether full or partial) therefor. As
used in this Paragraph, the term "Subtenant" shall include any
subsidiary, subtenant, concessionaire or licensee of Subtenant
conducting business at the Subleased Premises with Subtenant's
approval.
6. TAXES. In addition to Subtenant's Pro Rata Share under
subparagraph 5(f) of real estate taxes payable by Sublandlord
pursuant to the Master Lease, Subtenant shall pay, but without
duplication of any amount otherwise being paid by Subtenant under
subparagraph 5(f), any taxes or assessments (a) measured by or
reasonably attributable to the cost or value of Subtenant's
equipment, furniture, fixtures and other personal property
located in the Subleased Premises; (b) upon or measured by the
rent payable hereunder; or (c) upon or with respect to the
possession, leasing, operation, management , maintenance,
alteration, repair, use or occupancy by Subtenant of the
Subleased Premises.
7. UTILITIES. Subtenant shall contract for and pay
directly to the utility companies which provide service, in a
timely fashion, the costs for any utilities which are separately
metered or submetered to the Subleased Premises. Subtenant
shall pay to Sublandlord, as additional rent, the reasonably
allocated costs of utility service charges (the "UTILITY
EXPENSE"), based on usage by Subtenant, for electricity, sewage,
and any other utility services furnished to the Subleased
Premises which are not separately metered (but without
duplication of any amount otherwise payable by Subtenant under
subparagraph 5(f) above). Subtenant's payment for its Utility
Expense will be made monthly, within 15 days of receipt of an
invoice for the Utility Expense. Any delay or failure of
Sublandlord to estimate Subtenant's Utility Expense will not
impair the continuing obligation of Subtenant to make the Utility
Expense payment. Sublandlord will not be liable for any reason
for any loss or damage resulting from an interruption of any of
these services.
8. SECURITY DEPOSIT. Simultaneously with the execution of
this Sublease, Subtenant shall deposit the sum of $9,348.00 with
Sublandlord to be held on deposit by Sublandlord as security for
the performance required of Subtenant hereunder. Upon the
expiration or termination of the Sublease Term, Sublandlord shall
refund such deposit (or the balance thereof which has not been
applied to pay any unpaid obligation of Subtenant to Sublandlord
hereunder) promptly following Subtenant's surrender of possession
of the Subleased Premises.
9. SUBLETTING AND ASSIGNMENT. Neither Subtenant nor
Subtenant's legal representative or successors in interest by
operation of law or otherwise shall assign this Sublease or
sublease the Subleased Premises or any part thereof or mortgage,
pledge or hypothecate its leasehold interest or grant
anyconcession or license within the Subleased Premises (any of
the foregoing, a "TRANSFER"), without the prior written consent
of Sublandlord, which consent may be withheld for any reason.
(a) In any case where Sublandlord consents to any
assignment, sublease, grant of a concession or license or
mortgage, pledge or hypothecation of the leasehold, Subtenant
will nevertheless remain directly and primarily liable for the
performance of all of the covenants, duties and obligations of
Subtenant hereunder, and such consent will not be deemed a
consent to any further subletting or assignments.
(b) Notwithstanding the foregoing, however, Subtenant
may Transfer its subleasehold (by mortgage, leasehold deed of
trust or similar instrument) as collateral security, provided
that if the written consent of Landlord would be required by the
Master Lease for a similar Transfer by Sublandlord, then the
written consent of both Landlord and Sublandlord shall be
obtained. Sublandlord agrees in such case not to unreasonably
withhold its consent.
(c) Notwithstanding the foregoing, however,
Sublandlord's consent shall not be required in connection with a
Transfer: (1)to a corporation or other entity with which
Subtenant may merge or consolidate, or (2) in connection with the
sale of all or a substantial portion of Subtenant's assets, or
(4) to any Affiliate (as defined below) of Subtenant, or (5) in
connection with the sale of stock or other securities of
Subtenant in a public offering. The previous sentence shall not
permit Subtenant to make any change in the use of the Subleased
Premises. The term "Affiliate" shall mean any corporation,
limited liability company or other entity which controls, is
controlled by, or is under common control with Subtenant. The
term "control" shall mean ownership of more than fifty percent
(50%) of all of the voting stock of a corporation or more than
fifty percent (50%) of all of the legal and equitable interest of
any other business entity.
10. MASTER LEASE. Subtenant acknowledges that
Subtenant has received a copy of the documents comprising the
Master Lease, which are listed on Exhibit C, attached hereto and
incorporated by this reference. Subtenant also acknowledges that
the Subleased Premises are referred to in the Master Lease as the
"drugstore" portion of the leased premises. To the extent not
otherwise inconsistent with the agreements and understanding
expressed in this Sublease, and except for the provisions
applicable only to the original parties to the Master Lease, the
terms, provisions, covenants, and conditions in the Master Lease,
to the extent applicable to the Subleased Premises are hereby
incorporated herein by reference as a part of this Sublease,
subject to and as modified by the terms, provisions, covenants,
and conditions stated above and the following specific agreements
between Sublandlord and Subtenant:
(a) Subtenant expressly agrees to perform and comply
with all of the terms, provisions, covenants and conditions of
the Master Lease required of "Tenant" under the Master Lease
arising and performable during the term of this Sublease to the
extent the same are applicable to the Subleased Premises and
occupancy thereof and shall indemnify and hold harmless
Sublandlord from and against all claims, loss, liability, cost,
and expense (including, without limitation, reasonable attorneys'
fees) resulting from any default by Subtenant with respect to any
such covenants, provisions or obligations.
(b) In any case where the "Landlord" under the Master
Lease reserves the right to enter the Subleased Premises, said
right shall inure to the benefit of Sublandlord as well as to the
Landlord.
(c) With respect to work, services, maintenance,
repairs, restoration or the performance of other obligations
required of the Landlord under the Master Lease with respect to
the Subleased Premises, Sublandlord's sole obligation, with
respect thereto, shall be to request the same, upon request in
writing by Subtenant, and to use reasonable efforts to obtain the
same from the Landlord under the Master Lease.
(d) Subtenant acknowledges that possession of the
Subleased Premises must be surrendered to Sublandlord at the
expiration of the Sublease. Subtenant agrees to indemnify and
save Sublandlord harmless from and against all claims, loss,
liability, cost and expense (including, without limitation
reasonable attorneys' fees) resulting from delay by Subtenant in
failing to so surrender the Subleased Premises, including,
without limitation, any claims made by Landlord or any succeeding
tenant founded on such delay.
(e) If the Master Lease terminates, this Sublease shall
also terminate.
(f) Subtenant agrees that Sublandlord shall have the
right to enter into amendments of the Master Lease from time to
time without the consent of Subtenant, provided such amendment.
11. INDEMNITIES. Subtenant covenants to defend and save
Sublandlord harmless from any and all losses which may occur with
respect to any person or persons, corporation, property or
chattels on the Subleased Premises, or to the property itself,
resulting from Subtenant's acts or omissions, except (i) when
such loss results from a default by Sublandlord under this
Sublease or the willful conduct or negligent act or omission of
Sublandlord, its respective agents, employees, independent
contractors or invitees, or (ii) to the extent of any insurance
proceeds received (or receivable ) by or credited to Sublandlord,
or payable under Sublandlord's insurance as a result of
Sublandlord's contributory culpability. With respect to any loss
from which Sublandlord claims Subtenant is required to hold
Sublandlord harmless, Sublandlord shall promptly notify
Subtenant of (a) any acts or omissions causing such loss, and (b)
any proceedings initiated in connection with such acts or
omissions. Subtenant's obligations under this Paragraph shall be
reduced to the extent that Subtenant is not promptly notified as
aforesaid and such failure prejudices Subtenant.
12. LEASING COMMISSIONS. Sublandlord and Subtenant
represent to each other that no brokers have been involved in
this transaction and the parties each agree to indemnify the
other for any commission claimed by, through, or under such
party.
13. TERMINATION FO EXISTING SUBLEASE. Sublandlord's
obligations under this Sublease are conditioned upon the
termination of the existing sublease between Sublandlord and
Apocare Pharmacy, Inc., the existing subtenant at the Subleased
Premises. If Apocare Pharmacy, Inc. agrees to terminate its
sublease, but is not able to tender the Subleased Premises on or
before the Tender Date, this Sublease shall be effective;
however, the Tender Date, the Commencement Date and the
Expiration Date shall be extended as provided in Paragraph 2 of
this Sublease. If, however, the Tender Date has not occurred by
March 1, 2000, Subtenant may terminate this Sublease as provided
in Paragraph 2 hereof.
14. LANDLORD'S CONSENT. Sublandlord's and Subtenant's
obligations under this Sublease are conditioned upon Landlord's
consent hereto. If Landlord's consent has not been obtained by
the Tender Date, the Tender Date, the Commencement Date and the
Expiration Date shall be automatically extended as provided in
Paragraph 2 of this Sublease.
15. RESTRICTION ON OTHER RETAIL STORES. Subtenant
covenants and agrees that neither it, nor any franchisor of
Subtenant,franchisee under a franchise agreement with Subtenant,
or any other entity which controls Subtenant, is controlled by
Subtenant, or is under common control with Subtenant, is related
in ownership to Subtenant or is managed or co-managed by
Subtenant or Subtenant's affiliates or parent corporation will
open any other retail store during the Sublease Term within three
(3) miles of the Subleased Premises which sells the same or
similar items to those sold at the Subleased Premises. In the
event a retail store is opened in violation of this clause, in
addition to the other remedies available to Sublandlord under
this Sublease, Sublandlord shall have, the right to collect
Percentage Rent based on the cumulative Gross Sales of the
Subleased Premises and the other store or stores within said
area.
16. NOTICES. Any notices given by one party to the other
pursuant to this Sublease shall be in writing and shall be deemed
to have been properly given when received by the other party, or
on the third day after deposit with the U.S. Postal Service,
certified or registered mail, postage prepaid, addressed to the
other party at the address specified below, or to such other
place as such party may from time to time designate by notice
hereunder:
Sublandlord's address: Mrs. Gooch's Natural Food Markets, Inc.
15315 Magnolia Blvd., Suite 320
Sherman Oaks, CA 91403
Attention: Regional President
With copies to: Mrs. Gooch's Natural Food Markets, Inc.
11666 National Blvd
Los Angeles, CA 90064
Attention: Store Team Leader
Whole Foods Market, Inc.
601 N. Lamar Boulevard, Suite 300
Austin, Texas 78703-5413
Attention: Chief Financial Officer
Slivka Robinson Waters & O'Dorisio, P.C.
1099 - 18th Street, suite 2600
Denver, Colorado 80202
Attention: Karen Samuels Jones
Subtenant's address: Real Goods Trading Corporation
3440 Airway Drive, Suite E
Santa Rosa, CA 95403-2065
Attention: Real Estate Administration
with a copy to: Coblentz, Patch, Duffy & Bass, LLP
222 Kearny Street, Suite 700
San Francisco, CA 94108
Attention: Jeffrey B. Maso, Esq.
17. COUNTERPARTS. This Sublease may be executed in one or
more counterparts, each of which shall have the force and effect
of an original, and all of which shall together constitute one
and the same instrument.
18. QUIET ENJOYMENT. Subtenant covenants and warrants
that, provided Subtenant pays the rent and performs its
other obligations hereunder, subject to the terms of the Master
Lease, Subtenant may peaceably and quietly enjoy the Subleased
Premises throughout the Sublease Term.
19. SUCCESSORS. The terms, covenants and conditions of
this Sublease shall be binding upon and inure to the benefit of
Sublandlord and Subtenant and their respective successors and
assigns.
SUBLANDLORD: MRS. GOOCH'S NATURAL FOOD MARKETS, INC.
By: [S]RICHARD CUNDIFF
Name: Richard Cundiff
Title: President
SUBTENANT: REAL GOODS TRADING CORPORATION, a California
corporation
By: [S]LESLIE B. SEELY
Name: Leslie B. Seely
Title: Chief Financial Officer
By: [S]MARK A. SWEDLUND
Name: Mark A. Swedlund
Title: President
</PAGE>
EXHIBIT A
Floor Plan
EXHIBIT B
Alterations
Sub-Tenant, at its sole cost and expense, will do the following
work:
[and attach detailed plans and specification for all signs, solar
panels, wind generators]
EXHIBIT C
Master Lease Documents
1. Lease Agreement dated as of January 1, 1980, by and between
Allaseba H. Gorham and Carol H. Richards, as landlord and Hersh &
Ziff, Inc. as tenant.
2. Amendment of Lease and Agreement dated July 27, 1989, by and
between Westward Ho Markets, Inc. and Allaseba H. Gorham and
Carol H. Richards.
3. Assignment and Amendment to Lease Agreement dated November
10, 1994, by and among The Howard Company, Westward Ho Markets,
Inc., and Mrs. Gooch's Natural Food Markets, Inc.
