California-Norwalk-14910 Carmenita Road Lease - Donald M. Hypes and Burke Industries Inc.
INDUSTRIAL/COMMERCIAL SINGLE TENANT LEASE
for
14910 Carmenita Road
Norwalk, California
1. PARTIES.
THIS INDUSTRIAL/COMMERCIAL SINGLE TENANT LEASE ("Lease") is entered
into this 17th day of November, 1995 (the "Execution Date") by and between
DONALD M. HYPES, Trustee under that certain Declaration of Trust dated
April 25, 1983, as amended ("Landlord") and BURKE INDUSTRIES, INC., a
California corporation ("Tenant").
2. LEASED PREMISES.
2.1. DESCRIPTION OF PREMISES. Landlord is the owner of certain
real property commonly known by the street address of 14910 Carmenita Road,
Norwalk, California, which real property contains a building (the "Building")
and certain exterior real property improved with parking and other
improvements associated with the operation of the Building. As used herein,
"Premises" means and includes, without limitation, the Building and any and
all interior and exterior improvements to the Building, paving, driveways,
entryways and exits and other physical structures and improvements located
in, on or about the real property, all landscaping, excavations, planting on
the Property, and all interior and exterior fixtures and also includes all
trade fixtures of Tenant, and assignees and sublessees that cannot be
removed from the Premises without causing structural damage. The
Premises are more particularly described on Exhibit "A" attached hereto and
incorporated herein by this reference.
2.2. LEASE OF PREMISES. Landlord hereby leases to Tenant and
Tenant hereby hires from Landlord, for the term, at the rental and upon the
conditions in this Lease, the Premises. Tenant accepts the Premises subject
to those existing liens, encumbrances, charges, conditions, covenants,
easements, restrictions and rights-of-way.
2.3. CONDITION OF PREMISES/WARRANTY. Tenant acknowledges that
the Premises need certain repair work (the "Repair Work") described on
Exhibit "B" attached hereto and incorporated herein by this reference and
Tenant agrees to perform at its sole cost and expense the Repair Work on or
prior to June 30, 1996. Tenant acknowledges that it has been in possession
of the Premises prior to the commencement of this Lease, and accepts the
Premises and the improvements that are currently located in, on and about the
Premises in a strictly "AS IS" condition, despite the need to complete the
Repair Work, provided that, Landlord shall repair and maintain the Building's
roof and skylights located thereon (hereinafter "Landlord's Work").
Landlord's contractors shall commence Landlord's Work within thirty (30)
days of the Execution Date and such work shall be performed in a good
workmanlike manner and Tenant shall permit Landlord's contractors with
reasonable access to the Premises to conduct Landlord's Work. Landlord shall
use reasonable efforts to minimize inconvenience to Tenant and shall
reasonably schedule Landlord's Work with Tenant. Exclusive of the Repair
Work and Landlord's Work, Tenant hereby acknowledges that it has conducted an
inspection of the Premises and has found the Premises and all systems on the
Premises to be in good operating condition, including without limitation the
heating, air-conditioning, plumbing and electrical systems. In no event
shall Landlord be obligated to make any repairs to the Premises or
improvements, including the air-conditioning system, and any and all repairs
or replacements shall be at the sole cost and expense of Tenant, provided
that, Landlord shall be responsible for the maintenance and repair of
Landlord's Work. Except for Landlord's Work, Tenant's taking possession of
the Premises constitutes an acceptance of the Premises and constitutes a
waiver of any warranty of any defect
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in regard to workmanship or material of the Premises and other improvements
that are a part of the Premises. Landlord shall have no obligation to
maintain or repair the Premises nor any of the leasehold improvements
currently and/or subsequently located in and about the Premises, provided
that, Landlord shall be responsible for the maintenance and repair of
Landlord's Work.
3. TERM OF LEASE.
3.1. ORIGINAL TERM. The original term of the Lease shall be for
a period of five (5) years.
3.2. OPTION TO EXTEND TERM. Tenant is given the option to extend
the term on all the provisions contained in this Lease for a five (5) year
period ("extended term-1") following expiration of the original term by giving
written notice of exercise of the option ("option notice-1") to Landlord not
less than sixty (60) days prior to the expiration of the original term; provided
that, if Tenant is in default on the date of giving any option notice provided
herein above beyond all applicable notice and cure periods, then such option
notice shall be totally ineffective, or if Tenant is in default beyond all
applicable notice and cure periods on the date any extended term provided herein
above is to commence, then such extended term shall not commence and this Lease
shall expire at the end of such current term; and provided further that, upon
giving any effective option notice provided herein above, Tenant shall be
bound by all the provisions contained in this Lease through the expiration
of such extended term except that monthly rental for the extended term shall be
calculated as provided in Section 4.3 below subject to adjustment as provided in
Section 4.2 below. For purposes of this Lease, "Term" shall be defined
as the original term plus any appropriately exercised extended term
provided under this Lease.
3.3. COMMENCEMENT OF TERM. The term "Commencement Date", as
used in this Lease, shall be July 26, 1995.
3.4. HOLDING OVER. This Lease shall terminate without further
notice at expiration of the original term or at the end of the particular
extended term to the extent the Tenant properly exercised its option to
extend the term of this Lease. Any holding over by Tenant after expiration
shall not constitute a renewal or extension or give Tenant any rights
in or to the Premises. If, after expiration of the Term, Tenant remains in
possession of the Premises with Landlord's permission (express or implied),
Tenant shall become a tenant from month to month only, upon all the
provisions of this Lease (except as to term and rent), but the monthly rent
payable by Tenant shall be increased to one hundred fifty percent (150%)
of the monthly rent payable by Tenant immediately preceding the expiration
of the Term then in effect. Such held over monthly rate shall be payable in
advance on or before the first day of each month. If either party desires to
terminate such month-to-month tenancy, it shall give the other party not less
than thirty (30) days advance written notice of the date of termination.
4. RENT.
4.1. RENT. During the Term of this Lease, Tenant shall pay to
Landlord as monthly rent (sometimes hereinafter referred to as "monthly rent" or
"monthly rental"), without deduction, set off, prior notice, or demand, the sum
of Eight Thousand Dollars ($8,000.00) per month, which sum is subject
to adjustment as provided in Section 4.2 herein. Rent for any period during the
Term of this Lease which is for less than one month shall be a prorated portion
of the monthly rent, based upon a thirty (30) day month. Monthly rent shall be
paid in advance on the first day of each month, during the Term of this Lease,
except that monthly rent for the last six days of July and for the entire month
of August and September, 1995, shall be paid to Landlord on the Execution Date.
4.2. ADJUSTMENT OF MONTHLY RENT. The monthly rent provided for in
Section 4.1 shall be increased two and one-half (2 1/2) years after the
Commencement Date and two and one-half (2 1/2) years after the commencement of
any extension or renewal hereof (the "Increase Date"). The monthly rent shall
increase on each
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Increase Date by the same percentage as the Consumer Price Index (hereafter,
"CPI") for all Urban Consumers in the Los Angeles-Anaheim-Riverside
Areas (1982-1984 = 100) published by the United States Bureau of Labor
Statistics and determined two (2) months prior to the Effective Date or two (2)
months prior to the commencement of the Extended Term as the case may be, has
increased during the thirty (30) month period prior to the date that is two (2)
months before the applicable Increase Date; provided, however, that in no event
shall the amount of the monthly rent as adjusted be less than the monthly rent
immediately preceding the Increase Date plus seven and one-half percent (7 1/2%)
thereof, nor more than the monthly rent immediately preceding the Increase Date
plus fifteen percent (15%) thereof. If the CPI specified herein is discontinued
or revised during the term of this Lease such other government index or
computation with which it is replaced shall be used in order to obtain
substantially the same result as would have been obtained if the CPI had not
been discontinued. Increases to the monthly rent shall be due upon written
notice or demand from Landlord setting forth the new monthly rental
calculation, provided that, any failure on the part of Landlord to demand such
increases shall not result in any waiver of Landlord's right to collect such
increases for the year.
4.3. EXTENDED TERM MONTHLY RENT. The parties shall have ten (10)
days after Landlord receives the option notice in which to agree on monthly rent
at the commencement of the extended term. If the parties agree on the monthly
rent for the extended term then during said ten (10) day period they shall
immediately execute an amendment to this Lease, stating the monthly rent.
If the parties are unable to agree on the monthly rent for the
extended term within that period, then within ten (10) days after expiration
of that period each party, at its cost and by giving notice to the other
party, shall appoint a real estate appraiser with at least five years'
full-time commercial appraisal experience in the area in which the Premises
are located to appraise and set the monthly rent for the extended term. The
appraisers shall base their appraisals on the assumptions that the rental
shall be that amount at which tenants are leasing space comparable in size,
location and quality to the Premises which comparable space is located in
commercial/industrial buildings in the Norwalk area and which are comparable
to the Premises in age and location and shall take into account the following
factors: length of lease term, and all monetary and non-monetary concessions
being quoted such tenants except rental abatement and leasehold improvement
allowance concessions shall only apply if such concessions are being granted
to tenants that are in the position of renewing an existing lease. If a party
does not appoint an appraiser within ten (10) days after the other party has
given notice of the name of its appraiser, the single appraiser appointed
shall be the sole appraiser and shall set the monthly rent for the extended
term. If the two (2) appraisers are appointed by the parties as stated in
this paragraph, they shall meet promptly and attempt to set the monthly rent
for the extended term. If they are unable to agree within twenty (20) days
after the second appraiser has been appointed they shall attempt to select a
third appraiser meeting the qualifications stated in this paragraph within
ten (10) days after the last day the two appraisers are given to set the
monthly rent. If they are unable to agree on the third appraiser, either of
the parties to this lease by giving ten (10) days' prior written notice to
the other party can file a petition with the American Arbitration Association
solely for the purpose of selecting a third appraiser who meets the
qualifications stated in this paragraph. Each party shall bear half the cost
of the American Arbitration Association's appointing the third appraiser and
of paying the third appraiser's fee. The third appraiser, however selected,
shall be a person who has not previously acted in any capacity for either
party.
Within twenty (20) days after the selection of this third appraiser,
a majority of the appraisers shall set the monthly rent for the extended term.
If a majority of the appraisers are unable to set the monthly rent within the
stipulated period of time, the three appraisals shall be added together and
their total divided by three; the resulting quotient shall be the monthly rent
for the Premises during the extended term.
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If, however, the low appraisal and/or the high appraisal are/is more
than ten percent (10%) lower and/or higher than the middle appraisal, the low
appraisal and/or the high appraisal shall be disregarded. If only one appraisal
is disregarded, the remaining two appraisals shall be added together and their
total divided by two; the resulting quotient shall be the monthly rent for the
Premises during the extended term. If both the low appraisal and the high
appraisal are disregarded as stated in this paragraph, the middle appraisal
shall be the monthly rent for the Premises during the extended term.
Notwithstanding anything contained herein to the contrary, in no event shall the
monthly rent for the extended term be less than the monthly rent payable during
the last month of the original term of the Lease. If the monthly rent for the
extended term is not set prior to commencement of the extended term, then Tenant
shall pay monthly rent at the monthly rent rate payable during the last month of
the original term of the Lease with any shortfall to be paid within ten (10)
days of receipt of notice from the appraisers setting forth the determination of
the monthly rent for the extended term. After the monthly rent for the extended
term has been set, the appraisers shall immediately notify the parties in
writing.
4.4. ABATEMENT OF MONTHLY RENT. Notwithstanding anything
contained in this Lease to the contrary, the monthly rent during the original
term shall be abated for a total period of three (3) calendar months
commencing on the first full calendar month (the "Abatement Commencement
Month") after Tenant or its contractor(s) in a good workmanlike manner
completes all of the Repair Work set forth on Exhibit "B" attached hereto,
but in no event shall the Abatement Commencement Month be prior to January
1996. Tenant shall notify Landlord in writing immediately upon completion of
all Repair Work and shall concurrently provide Landlord copies of all
invoices for such repair work and copies of canceled checks for such invoices
except to the extent the repair work is conducted by Tenant in which case
Tenant shall certify to Landlord in writing that such work was completed by
Tenant. The monthly rent shall be abated for a total abatement of three (3)
consecutive calendar months including the Abatement Commencement Month. In
the event Tenant or its contractor(s) fail to complete in a good workmanlike
manner, all of the Repair Work on or before June 30, 1996, then Tenant shall
not be entitled to any abatement of monthly rent under this Section 4.4 and
such event shall be deemed a default by Tenant under this Lease.
4.5. LATE CHARGE. Tenant acknowledges that the late payment of any
monthly rent will cause Landlord to lose the use of that money and incur costs
and expenses not contemplated under this Lease, including, without limitation,
administration and collection costs and processing and accounting expenses, the
exact amount of which is extremely difficult to ascertain. Therefore, if any
such installment is not received by Landlord within ten (10) days from the date
it is due, Tenant shall pay Landlord a late charge equal to six percent (6%) of
the delinquent portion of such installment. Landlord and Tenant agree that this
late charge represents a reasonable estimate of such costs and expenses and is
fair compensation to Landlord for the loss suffered from such nonpayment by
Tenant. Acceptance of any late charge shall neither constitute a waiver of
Tenant's default with respect to such nonpayment by Tenant nor prevent Landlord
from exercising any other rights or remedies available to Landlord under this
Lease.
4.6. NET LEASE/WAIVER. This Lease shall be deemed and construed
to be an absolute net lease. The obligation of Tenant to pay the monthly rent
and all other amounts payable by Tenant to Landlord hereunder when due shall
be without abatement, deduction or set-off except as otherwise provided
herein, and, except as otherwise provided herein, Tenant hereby waives all
rights now and hereafter conferred by law to quit, terminate or surrender
this Lease or the Premises, or any part thereof, and to receive any
abatement, suspension, deferment or reduction of, or relief from, the rent
under section 1932 and subsection 1933(4) of the California Civil Code, and
any amendment thereof or any law of similar import that may hereafter be
enacted.
4.7. WHERE TO PAY RENT. All rent shall be paid to Landlord at 363
Bouquet Canyon Drive, Palm Desert, California 92211, or at such other address as
Landlord may direct in writing from time to time.
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4.8. SECURITY DEPOSIT. Tenant shall, upon execution of this
Lease, deposit with Landlord the sum of Eight Thousand Dollars ($8,000.00) as
a security deposit. This security deposit shall be held by Landlord as
security for the faithful performance by Tenant of all the terms, covenants,
and conditions of this Lease to be kept and performed by Tenant. If Tenant
defaults with respect to any provisions of this Lease, including but not
limited to, the provisions relating to the payment of rent, Landlord may (but
shall not be required to) use, apply or retain all or any part of the
security deposit for the payment of any rent or any other sum in default, or
for the payment of any amount which Landlord may spend or become obligated to
spend by reason of Tenant's default, or to compensate Landlord for any other
loss or damage which Landlord may suffer by reason of Tenant's default. If
any portion of said deposit is so used or applied, Tenant shall, within ten
(10) days after written demand therefor, deposit cash with Landlord in an
amount sufficient to restore the security deposit to its original amount and
Tenant's failure to do so shall be a material breach of this Lease. Landlord
shall not be required to keep this security deposit separate from its general
funds, and Tenant shall not be entitled to interest on such deposit. If
Tenant shall fully and faithfully perform every provision of this Lease to be
performed by it, the security deposit or any balance thereof shall be
returned to Tenant (or, at Landlord's option, to the last assignee of
Tenant's interest hereunder) within ten (10) days after the expiration of the
Lease term. In the event of termination of Landlord's interest in this Lease,
Landlord shall transfer said deposit to Landlord's successor in interest.
4.9. TAXES AND OTHER GOVERNMENTAL CHARGES. Landlord shall furnish
Tenant with all tax bills immediately upon receipt thereof. Tenant shall pay in
addition to monthly rent Impositions, as hereinafter defined, accruing during
the Term of this Lease. Impositions shall be defined as all personal and real
property taxes, assessments, levies and other governmental charges of every
description, whether general, special, ordinary, extraordinary or otherwise
(individually "Imposition" and collectively "Impositions") levied on or assessed
against the Premises, improvements and personal property located on or in, on
and about the Premises or any improvements, the leasehold estate, or any
subleasehold estate, whether belonging to or chargeable against Landlord or
Tenant.
Tenant shall pay the Impositions shown on the real property tax
bill and unsecured property tax and all other Impositions directly to the
taxing or levying authority at least three (3) days before the date upon
which such Impositions become delinquent. Any penalties assessed for failure
to timely pay Impositions that Tenant is required to pay directly to the
taxing or levying authority shall be at Tenant's sole cost and expense.
Tenant shall forward to Landlord a copy of the canceled checks and/or
receipts from the taxing or levying authorities promptly upon written request
of Landlord. In the event Tenant fails to pay any Impositions required to be
paid by Tenant directly to the taxing or levying authority, Landlord shall
have the right to pay such Impositions on behalf of Tenant with the right of
reimbursement as provided hereinafter.
If during the Term of this Lease any governmental subdivision or
agency shall undertake to create an improvement or special assessment
district, the proposed boundaries of which include the Premises, Landlord
shall be entitled to support or oppose the creation of such district or
inclusion of the Premises therein or both, and to appear in any proceeding
relating thereto. There shall be included in the definition of "Impositions"
with respect to any calendar year only the accrued amount currently payable
on any bonds and special assessments, including interest accrued for such tax
calendar year or the accrued portion of the current annual installment for
such calendar year. Tax refunds shall be credited against Impositions and
refunded to Tenant, regardless of when received, based on the year to which
the refund is applicable.
Tenant's obligation to pay Impositions levied or assessed against
the Premises or improvements thereon or personal property on or in the
Premises or such improvements shall not include the following: business,
income or profits taxes levied or assessed against Landlord by federal,
state, county, municipal or other governmental agencies; transfer taxes of
Landlord; franchise or other profits taxes imposed on the corporate owner of
the fee to the Premises; gift
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taxes, capital stock taxes, inheritance and succession taxes, estate taxes, and
other taxes to the extent applicable to Landlord's general or net income (as
opposed to rents or receipts. If, however, Impositions are levied or assessed
on the rents derived from the Premises in lieu of all or any part of real
property taxes, personal property taxes or real and personal property taxes that
Tenant would have been obligated to pay under the provisions hereof, and the
purpose of the new taxes is more closely akin to that of an ad valorem or use
tax than to an income or franchise tax on Landlord's income, Tenant shall pay
such Impositions as provided herein for property taxes and assessments.
After written request (the "Tax Notice") by Tenant, at Landlord's
option, either (i) Landlord shall diligently pursue claims for reduction in the
Impositions of the Premises or any part thereof, in which event Landlord shall
provide Tenant with detailed information as to how Landlord will pursue such
claims, (ii) Tenant may pursue such claims with Landlord's concurrence, in the
name of Landlord, or (iii) Tenant may pursue such claims in the name of Landlord
without Landlord's concurrence. In the event that Landlord does not elect either
item (i) or (ii) above, within thirty (30) days of receipt of the Tax Notice,
Tenant shall thereafter have the right to pursue such claims under item (iii)
above. The cost of any such proceedings shall be at the sole cost and expense
of Tenant. Tenant may give a Tax Notice prior to the issuance of the actual tax
bill by the taxing authority or receipt by Tenant of a billing from Landlord for
Tenant's share thereof, however, in no event shall Tenant be permitted to delay
payment of a contested tax bill if failure to pay would either cause interest
and/or penalties to accrue if Tenant's claims are rejected.
If Tenant fails or refuses to pay the amount of any Impositions when
due, and/or fails to reimburse Landlord for Impositions paid directly by
Landlord within ten (10) days after Landlord provides notice to Tenant of the
amount payable by Tenant, then the Impositions shall be treated as added rent
due from Tenant, with interest at the "Interest Rate" (as defined herein) to be
paid on demand by Landlord.
5. UTILITIES, MAINTENANCE AND REPAIR.
5.1. UTILITIES. Throughout the Term of this Lease Tenant shall
pay the appropriate suppliers for all water, gas, electricity, light, heat,
telephone, power, and other utilities and communications services used by
Tenant on the Premises during the Term, whether or not such services are
billed directly to Tenant. Tenant will also procure, or cause to be procured,
without cost to Landlord, any and all necessary permits, licenses, or other
authorizations required for the lawful and proper installation and
maintenance upon the Premises of wires, pipes, conduits, tubes, and other
equipment and appliances for use in supplying any such service to and upon
the Premises. Landlord, upon request of Tenant, and at the sole expense and
liability of Tenant, will join with Tenant in any application required for
obtaining or continuing any such services.
5.2 MAINTENANCE AND REPAIR. Throughout the Term of this Lease,
Tenant shall provide all interior and exterior maintenance and repair of the
Premises and grounds in the same condition and repair as when received and as
improved by the Repair work, ordinary wear and tear excepted. Tenant shall
further maintain the Premises so that the Premises remain in compliance with all
applicable laws, rules, ordinances, orders and regulations of any federal,
state, county, municipal or other governmental agency or body having or
claiming jurisdiction over the Premises except as otherwise required by Section
13.1.C. of this Lease. Tenant's obligations shall include, without
limitation, maintenance and repair of the parking lot, sidewalks, driveways,
interior and exterior walls, windows and glazing, temperature controlled water
and return, the Utility Systems including heating, air-conditioning, plumbing,
electrical, and other utility systems and all other items on the Premises it
being the intention of the parties that all obligations of repair and
maintenance be made by Tenant which are related to the Premises and/or necessary
for the continued operation of the Premises. Notwithstanding the foregoing,
except as provided hereinbelow, Landlord shall be responsible for the
maintenance and repair of the Building's roof and skylights, provided that,
Tenant shall not allow its
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employees, agents or contractors to walk over, on or across the Building's roof
except to the extent reasonable access thereto is necessary for the repair of
utility or other systems located thereon and Tenant shall not attempt to remove
or adjust the skylights. Tenant shall provide Landlord's contractor's with
reasonable access to the Premises during the Term to conduct any repairs
required by Landlord under this Lease. Furthermore, Tenant shall be responsible
for the repair of the Building's roof and/or skylights to the extent any damage
thereto is caused by Tenant or its agents willful misconduct or negligence, and
any damage resulting from Tenant's being on the roof and/or any damage resulting
from Tenant's attempt to remove or adjust the skylights shall be deemed caused
by Tenant's negligence. Tenant shall also provide gardening service,
trash collection and other services necessary to keep the Premises and grounds
in the same condition and repair as when received and as improved by the Repair
work, ordinary wear and tear excepted, all at the sole cost and expense of
Tenant. All maintenance and repairs shall be made in accordance with all
applicable laws, rules, ordinances, orders and regulations of any
federal, state, county, municipal or other governmental agency or body having
or claiming jurisdiction over the Premises. Tenant shall promptly and
diligently repair, restore, and replace as required to maintain or comply as
above, including the repair, restoration and replacement necessary to maintain
all or any part of the Premises and improvements ordinary wear and tear
excepted. Should Tenant fail to maintain the Premises and improvements or make
any repairs or replacements as required within thirty (30) days following
written request therefor, Landlord shall have the right to enter the Premises
and perform such maintenance or make such repairs or replacements for the
account of Tenant using third party contractors selected by Landlord,
provided that, in no event shall this right be deemed to be an obligation of
Landlord to conduct such maintenance and repairs. The cost of any maintenance,
repairs or replacements paid for by Landlord shall be treated as added rent due
from Tenant, with interest at the Interest Rate (as defined herein), to be paid
on demand by Landlord. Landlord shall give Tenant prompt notice of the
maintenance, repairs and replacements conducted, stating the amounts paid and
the names of the parties paid.
If Tenant provides written notice to Landlord of an event or
circumstance which requires the action of Landlord with respect to the
repairs and/or maintenance as set forth in this Section 5.2, and Landlord
fails to provide such action as required by the terms of this Lease, then
Tenant may proceed to take the required action upon delivery of an additional
ten (10) business days notice to Landlord specifying that Tenant is taking
such required action, and if such action was required under the terms of this
Lease to be taken by Landlord, then Tenant shall be entitled to prompt
reimbursement by Landlord of Tenant's reasonable costs and expenses in taking
such action plus interest at the Interest Rate. If Landlord does not deliver
a detailed written objection to Tenant, within thirty (30) days after receipt
of an invoice by Tenant of its costs of taking action which Tenant claims
should have been taken by Landlord, and if such invoice from Tenant sets
forth a reasonably particularized breakdown of its costs and expenses in
connection with taking such action on behalf of Landlord, then Tenant shall
be entitled to deduct from Rent payable by Tenant under this Lease, the
amount set forth in such invoice together with interest at the Interest Rate.
If, however, Landlord delivers to Tenant within thirty (30) days after
receipt of Tenant's invoice, a written objection to the payment of such
invoice, setting forth with reasonable particularity Landlord's reasons for
its claim that such action did not have to be taken by Landlord pursuant to
the terms of this Lease or that the charges are excessive (in which case
Landlord shall pay the amount it contends would not have been excessive),
then Tenant shall not be entitled to such deduction from Rent, but as
Tenant's sole remedy, Tenant may proceed to institute legal proceedings
against Landlord to collect the amount set forth in the subject invoice.
6. USE OF PREMISES.
Tenant shall use the Premises for the manufacture, warehouse, sales,
administration and distribution of rubber elastomeric products and compounds,
and for purposes reasonably incidental thereto, and shall not use or permit
the Premises to be used for any other purpose without the prior written
consent of
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Landlord. Tenant shall not do or permit anything to be done in or about the
Premises nor bring or keep anything therein which will cause cancellation of
any insurance policy covering said Building or any part thereof or any of its
contents. Tenant shall use the Premises in accordance with applicable zoning
ordinances and regulations, and shall not use or allow the Premises to be
used for any unlawful purpose. Tenant shall not cause, maintain or permit any
nuisance in, on or about the Premises, and shall not commit or suffer to be
committed any waste in or upon the Premises.
7. ASSIGNMENT, SUBLETTING AND ENCUMBRANCE.
7.1. NO TRANSFER. Tenant shall not, without the prior written
consent of Landlord, which consent shall not be unreasonably withheld, assign
or hypothecate this Lease or any interest in it, sublet the Premises or any
part of them, or permit the use of the Premises by anyone other than Tenant
(collectively, referred to herein as "transfer"). Landlord shall consent or
deny consent to a transfer within twenty (20) days from receipt of a (i)
written request therefor, and (ii) copies of audited financial statements, if
available. and if not, copies of financial statements certified by an officer
of the proposed assignee or sublessee for the last fiscal year of the
proposed assignee or sublessee and un-audited quarterly financial statements
for the three (3) immediately preceding calendar quarters (collectively, the
"Transferee Statements"); and the failure of Landlord to consent or deny
consent to any proposed transfer within such twenty (20) day period shall be
deemed to be Landlord's approval thereof. Tenant's interest in this Lease
shall not, nor shall any interest in it, be assignable by operation of law
without the consent of Landlord, which consent shall not be unreasonably
withheld. The change in ownership of fifty percent (50%) or more of the
equity ownership or voting stock of Tenant shall constitute an assignment
requiring the consent of Landlord. Any of the foregoing acts, without the
consent of Landlord, shall be void and shall, at the option of Landlord,
terminate this Lease. Notwithstanding anything to the contrary set forth in
this Lease, upon ten (10) days prior written notice from Tenant to Landlord,
Tenant may assign the Lease at any time, or sublease all or part of the
Premises, without the receipt of Landlord's consent to (i) an entity which is
controlled by, controls, or is under common control with Tenant (an
"Affiliate"), or which owns or is owned by an Affiliate, (ii) an entity with
which Tenant merges or consolidates, provided that, the surviving entity
holds substantially all of Tenants assets prior to the merger or
consolidation, or (ii) a purchaser of all or substantially all of Tenants
stock or assets, so long as such transaction was not entered into as a
subterfuge to avoid the obligations and restrictions of this Lease. The term
"control", as used in this Section 7.1 shall mean the ownership, direct or
indirect, of at least fifty percent (50%) of the voting securities. Tenant
shall immediately notify Landlord in writing of the name of the Affiliate to
which a sublease or assignment is made and provide Landlord with copies of
all agreements reflecting such sublease or assignment.
7.2. WITHHOLDING CONSENT. Without limiting the other instances in
which it may be reasonable for Landlord to withhold its consent to an assignment
or subletting, Landlord and Tenant acknowledge that it will be reasonable for
Landlord to withhold its consent in any of the following instances:
A. if at any time consent is requested or at any time prior
to the granting of consent, Tenant is in default under this Lease or would be in
default under this Lease beyond all applicable grace or cure periods; or
B. if, the financial condition of the proposed assignee or
subtenant as presented by the Transferee Statements does not meet commercially
reasonable credit standards within the reasonable judgment of Landlord.
7.3. SUBLETTING. If at any time, or from time to time during the
Term, Tenant desires to sublet all or any part of the Premises, Tenant shall
give notice to Landlord setting forth the terms of the proposed subletting and
the space so proposed to be sublet. Tenant shall be free to sublet the space to
any third party subject to obtaining Landlord's prior written consent which
consent shall not be unreasonably withheld. In connection with each consent
requested
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by Tenant, Tenant shall submit to Landlord the terms of the proposed
transaction, the identity of the parties to the transaction, the proposed
documentation for the transaction, the proposed assignee's or sublessee's
Transferee Statements and all other information reasonably requested by Landlord
concerning the proposed transaction and the parties involved in it. Landlord's
right to withhold consent shall be permitted under the same criteria set forth
in Section 7.2 of this Lease.
7.4. NO FURTHER SUBLETTING. Further subletting shall be
permitted in accordance with Section 7.3 above if the sublease is for the
entire Premises. No subtenant shall have a right further to sublet less than
the entire Premises without Landlord's prior written consent, which Tenant
acknowledges may be withheld in Landlord's absolute discretion, and any
assignment by a subtenant of its Sublease will be subject to Landlord's prior
written consent in the same manner as if Tenant were entering into a new
sublease. No sublease, once consented to by Landlord, will be modified or
terminated by Tenant without Landlord's prior written consent, which consent
shall not be unreasonably withheld.
7.5. NO RELEASE. Regardless of Landlord's consent, no
subletting or assignment will release Tenant from Tenant's obligation or
alter the primary liability of Tenant to pay the rental and to perform all
other obligations to be performed by Tenant under this Lease. The acceptance
of rental by Landlord from any other person will not be deemed to be a wavier
by Landlord of any provision of this Lease. Consent to one assignment or
subletting will not be deemed consent to any subsequent assignment or
subletting in the event of default by any assignee of Tenant or any successor
of Tenant in the performance of any of the terms of this Lease, Landlord may
proceed directly against Tenant without the necessity of exhausting remedies
against such assignee or successor.
7.6. COSTS. If Tenant assigns this Lease or sublets the
Premises or requests the consent of Landlord to any assignment, subletting,
hypothecation, or other action requiring Landlord's consent, then Tenant will
pay Landlord's reasonable out-of-pocket attorneys' fees incurred in
connection with it not to exceed $2,500.00.
8. INDEMNITY, CASUALTY AND INSURANCE.
8.1. TENANT'S INDEMNIFICATION. Except to the extent caused by
Landlord's gross negligence or willful misconduct, Tenant shall indemnify and
hold Landlord and its "Related Parties" (defined below) harmless against and
from liability and claims of any kind for loss or damage to property of
Tenant and/or its Related Parties, or for any injury to or death of any
person, arising out of (i) use and occupancy of the Premises or any work,
activity or other things allowed or suffered by Tenant and/or its Related
Parties to be done in, on or about the Premises; (ii) any breach or default
by Tenant and/or its Related Parties of any of Tenant's obligations under
this Lease; or (iii) any negligent or otherwise tortious act or omission of
Tenant and/or its Related Parties. Tenant shall, at Tenant's expense and by
counsel reasonably satisfactory to Landlord, defend Landlord in any action or
proceeding arising from any such claim and shall indemnify Landlord against
all costs, attorneys' fees, expert-witness fees and any other expenses
incurred in such action or proceeding. Except to the extent caused by
Landlord's gross negligence or willful misconduct, as a material part of the
consideration for Landlord's execution of this Lease, Tenant hereby assumes
all risk of damage or injury to any person, property in, or about the
Premises from any cause, and Tenant hereby waives all claims in respect
thereof against Landlord. Landlord shall indemnify and hold Tenant and its
Related parties harmless against and from liability and claims of any kind
for loss or damage to property of Tenant and/or its Related parties, or for
any injury to or death of any person, arising out of (i) any breach or
default of Landlord and/or its Related parties of any of Landlord's
obligation under this lease; or (ii) any grossly negligent act of Landlord
and/or its Related Parties. Landlord shall, at Landlord's expense and by
counsel reasonably satisfactory to Tenant, defend Tenant in any action or
proceeding arising from any such claim and shall
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indemnify Tenant against all costs, attorney's fees, expert witness fees and
any other expenses incurred in such action or proceeding.
8.2. LANDLORD'S LIABILITY LIMITATIONS. Except in cases of
Landlord's gross negligence or breach or default by Landlord and/or its
Related Parties, of any of Landlord's obligations under this Lease, Landlord
shall not be liable for injury or damage which may be sustained by the person
or property of Tenant, its Related Parties or any other person in or about
the Premises caused by or resulting from fire, steam, electricity, gas, water
or rain which may leak or flow from or into any part of the Premises or from
the breakage, leakage, obstruction or other defects of pipes, sprinklers,
roof, wires, appliances, plumbing, air conditioning or lighting fixtures,
whether such damage or injury results from conditions arising upon the
Premises or from other sources.
8.3. RELATED PARTIES. The "Related Parties" of an entity or
individual (where appropriate) include, but are not limited to, all past,
present and future employees, officers, directors, shareholders, contractors,
subcontractors, invitees, customers, trust beneficiaries, partners, joint
venturers, agents, successors, assigns, heirs, personal representatives,
administrators, parent entities, subsidiaries and affiliates of that entity
or individual (where appropriate).
8.4. DAMAGE OR DESTRUCTION.
A. DEFINITIONS.
(1) "PREMISES PARTIAL DAMAGE" shall mean damage or
destruction to the improvements on the Premises, the repair cost of which
damage or destruction is less than 50% of the then Replacement Cost of the
Premises immediately prior to such damage or destruction, excluding from such
calculation the value of the land.
(2) "PREMISES TOTAL DESTRUCTION" shall mean damage
or destruction to Premises, the repair cost of which damage or destruction
is 50% or more of the then Replacement Cost of the Premises immediately prior
to such damage or destruction, excluding from such calculation the value of
the land.
(3) "INSURED LOSS" shall mean damage or destruction
to improvements on the Premises which was caused by an event required to be
covered by the insurance described in Section 8.5, irrespective of any
deductible amounts or coverage limits involved.
(4) "REPLACEMENT COST" shall mean the cost to repair
or rebuild the improvements owned by Landlord at the time of the occurrence
to their condition existing immediately prior thereto, including demolition,
debris removal and upgrading required by the operation of applicable building
codes, ordinances or laws, and without deduction for depreciation.
B. PARTIAL DAMAGE - INSURED LOSS. If a Premises Partial
Damage that is an Insured Loss occurs, then Landlord shall, at Landlord's
expense, repair such damage (but not Tenant's trade fixtures or tenant owned
alterations and utility installations) as soon as reasonably possible and this
Lease shall continue in full force and effect; provided, however, that Tenant
shall, at Landlord's election, make the repair of any damage or destruction the
total cost to repair of which is $10,000 or less, and, in such event, Landlord
shall make the insurance proceeds available, to Tenant on a reasonable basis for
that purpose, provided that, Tenant shall only be obligated to repair to the
extent of the insurance proceeds plus any insurance deductible. Notwithstanding
the foregoing, if the required insurance was not in force or the insurance
proceeds are not sufficient to effect such repair, the Tenant shall promptly
contribute the shortage in proceeds as and when required to complete said
repairs.
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C. PARTIAL DAMAGE - UNINSURED LOSS. If a Premises Partial
Damage that is not an Insured Loss occurs, Landlord may at Landlord's option,
either: (i) repair such damage as soon as reasonably possible at Landlord's
expense in which event this Lease shall continue in full force and effect, or
(ii) if the uninsured damage exceeds Twenty Five Thousand Dollars
($25,000.00), give notice to Tenant within thirty (30) days after receipt by
Landlord of knowledge of the occurrence of such damage of Landlord's
intention to terminate this Lease as of the date sixty (60) days following
the giving of such notice. In the event Landlord elects to give such notice
of Landlord's intention to terminate this Lease, Tenant shall have the right
within ten (10) days after the receipt of such notice to give written notice
to Landlord of Tenant's commitment to pay for the repair of such uninsured
damage totally at Tenant's expense and without reimbursement from Landlord.
Tenant shall provide Landlord with the required funds or satisfactory
assurance thereof within thirty (30) days following Tenant's said commitment.
In such event this Lease shall continue in full force and effect, and
Landlord shall proceed to make such repairs as soon as reasonably possible
and the required funds are available. If Tenant does not give such notice and
provide the funds or assurance thereof within the times specified above, this
Lease shall terminate as of the date specified in Landlord's notice of
termination.
D. TOTAL DESTRUCTION. Notwithstanding any other provision
hereof, if Premises Total Destruction occurs (including any destruction required
by any authorized public authority), this Lease shall terminate sixty (60) days
following the date of such Premises Total Destruction, whether or not the damage
or destruction is an Insured Loss.
E. DAMAGE NEAR END OF TERM. If at any time during the last
twelve (12) months of the term of this Lease there is damage for which the
cost to repair exceeds two (2) month's rent, whether or not an Insured Loss,
Landlord and Tenant may, at their option, terminate this Lease effective
sixty (60) days following the date of occurrence of such damage by giving
written notice to the other party of their election to do so within thirty
(30) days after the date of occurrence of such damage. Provided, however, if
Tenant at that time has an exercisable option to extend this Lease then
Tenant may preserve this Lease by, within twenty (20) days following the
receipt of the termination election by Landlord ("Exercise Period"),
(i) exercising such option and (ii) provide Landlord with any shortage in
insurance proceeds (or adequate assurance thereof) needed to make the
repairs. If Tenant duly exercises such option during said Exercise Period and
provides Landlord with funds (or adequate assurance thereof) to cover any
shortage in insurance proceeds, Landlord shall, at Landlord's expense repair
such damage as soon as reasonably possible and this Lease shall continue in
full force and effect. If Tenant fails to exercise such option and provide
such funds or assurance during said Exercise Period, then if Landlord has
exercised its option to terminate this Lease, the Lease shall terminate as of
the expiration of said sixty (60) day period , notwithstanding any term or
provision in the grant of option to the contrary.
F. ABATEMENT OF RENT; TENANT'S REMEDIES.
(1) In the event of damage, whether or not Landlord
or Tenant repairs or restores the Premises, the monthly rent, real property
taxes, insurance premiums, and other charges, if any, payable by Tenant
hereunder for the period during which such damage, its repair or the
restoration continues shall be abated in proportion to the degree to which
Tenant's use of the Premises is impaired. Except for abatement of monthly
rent, real property taxes, insurance premiums, and other charges, if any, as
aforesaid, all other obligations of Tenant hereunder shall be performed by
Tenant, and Tenant shall have no claim against Landlord for any damage
suffered by reason of any such repair or restoration except negligence or
willful misconduct of Landlord or its agents.
(2) If Landlord shall be obligated to repair or
restore the Premises under the provisions of this Section 8.4 and shall not
commence, in a substantial and meaningful way, the repair or restoration of
the Premises within
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ninety (90) days after such obligation shall accrue, Tenant may, at any time
prior to the commencement of such repair or restoration, give written notice
to Landlord and to any lenders of which Tenant has actual notice of Tenant's
election and if such repair or restoration is not commenced within thirty
(30) days after receipt of such notice, this Lease shall terminate as of the
date specified in said notice. If Landlord or a lender commences the repair
or restoration of the Premises within thirty (30) days after receipt of such
notice, this Lease shall continue in full force and effect. "Commence" as
used in this Paragraph shall mean the beginning of the actual work on the
Premises, whichever first occurs. Notwithstanding the terms of Section 8.4 of
this Lease, in the event the Premises are damaged and Landlord is obligated
or has elected to repair the damage under Section 8.4, Landlord shall
reasonably and in good faith cause a mutually acceptable contractor to
estimate the amount of time required to rebuild and/or restore the Premises
within ninety (90) days of the date of such damage. In the event the repairs
cannot be completed within one hundred eighty (180) days after the date of
such damage, Landlord or Tenant may elect to terminate this Lease by written
notice to the other, such notice to include the termination date giving
Tenant thirty (30) days to vacate the Premises. Notwithstanding anything to
the contrary contained in this Lease, in the event that, for any reason, all
of the damage required or elected to be repaired or restored by Landlord is
not repaired or restored on or before the date occurring one hundred eighty
(180) days from the date of the damage, Tenant shall have the right to
terminate this Lease by irrevocable notice to Landlord at any time thereafter
until the repairs or restoration are completed, with thirty (30) days from
the giving of such notice to vacate the Premises.
G. TERMINATION - ADVANCE PAYMENTS. Upon termination of
this Lease pursuant to this Section 8.4, an equitable adjustment shall be
made concerning advance monthly rent and any other advance payments made by
Tenant to Landlord. Landlord shall, in addition, return to Tenant so much of
Tenant's Security Deposit as has not been, or is not then required to be used
by Landlord under the terms of this Lease.
H. WAIVE STATUTES. Landlord and Tenant agree that the
terms of this Lease shall govern the effect of any damage to or destruction
of the Premises with respect to the termination of this Lease and hereby
waive the provisions of any present or future statute to the extent
inconsistent herewith.
8.5. INSURANCE.
A. FIRE AND EXTENDED COVERAGE INSURANCE. Tenant shall at
its sole cost and expense keep or cause to be kept insured during the Term of
this Lease, the Premises and all improvements located on or appurtenant to
the Premises against loss or damage by fire and such other risks as are now
or hereafter included in an extended coverage endorsement in common use for
commercial structures, including vandalism, malicious mischief and special
extended perils (all risk). The amount of the insurance shall be sufficient
to prevent either Landlord or Tenant from becoming a co-insurer under the
provisions of the policies, but in no event shall the amount be less than one
hundred per cent (100%) of the then actual replacement cost, excluding costs
of replacing excavations and foundations, but without deduction for
depreciation (herein called "full insurable value") and in no event shall the
deductible exceed Ten Thousand Dollars ($10,000) per occurrence. If any
dispute whether the amount of insurance complies with the above cannot be
resolved by agreement, Landlord may, not more frequently than every two and
one-half (2 1/2) years during the Term, request the carrier of the insurance
then in force to determine the full insurable value as defined in this
provision and the resulting determination shall be conclusive between the
parties for the purpose of this Section.
B. PUBLIC LIABILITY INSURANCE. Tenant shall at its sole
cost and expense keep or cause to be kept in force during the Term of this
Lease, for the mutual benefit of Landlord and Tenant, comprehensive broad form
general public liability insurance against claims and liability for personal
injury, death or property damage arising from the use, occupancy, disuse or
condition of the Premises and adjoining areas or ways, providing protection of
at least One
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Million Dollars ($1,000,000) for bodily injury or death to any one person, at
least One Million Dollars ($1,000,000) for any one accident or occurrence and
at least Five Hundred Thousand Dollars ($500,000) for property damage. Not
more frequently than every two and one-half (2 1/2) years during the Term,
Landlord shall have the right to notify Tenant that Landlord elects to adjust
the amount of public liability, property damage and products liability
insurance required under this Section, based on the increase in the Consumer
Price Index all items for Urban Consumers in the Los Angeles - Anaheim -
Riverside Areas (1982 - 1984 = 100), published in the United States Bureau of
Labor Statistics. If such an election is made, the amount of insurance
required under this Section shall be increased by multiplying the insurance
amounts under this Section by a fraction, the numerator of which shall be the
Index most recently published preceding the date of notification of the
requested adjustment, and the denominator of which shall be the Index most
recently published preceding the Commencement Date of this Lease, provided
that, in no event shall the amount of insurance required herein be decreased.
C. INSURANCE POLICY FORM, CONTENT AND INSURER.
1. All insurance required by express provisions
hereof shall only be carried with responsible insurance companies licensed to
do business in California, and rated in Best's Insurance Guide, or any
successor thereto (or if there be none, an organization having a national
reputation) as having a "Best's Rating" of "A" and a "Financial Size
Category" of at least "IX" or if such rating or not then in effect the
equivalent thereof, shall name Landlord as insured, and shall be in a policy
reasonably acceptable to Landlord. All such policies shall be nonassessable
and shall contain language, to the extent obtainable, to the effect that (i)
any loss shall be payable notwithstanding any act or negligence of Landlord
that might otherwise result in the forfeiture of the insurance, (ii) the
insurer waives the right of subrogation against Landlord and against
Landlord's agents and representatives, (iii) policies are primary and
noncontributing with any insurance that may be carried by Landlord; and (iv)
they cannot be canceled or materially changed except after fifteen (15) days'
notice by the insurer to Landlord or Landlord's designated representative and
any trust deed holder on the Premises designated by Landlord from time to
time.
2. Tenant shall furnish Landlord with copies of all
such policies promptly on receipt of them, or with certificates evidencing
the insurance. Tenant shall furnish Landlord with binders representing all
insurance required by this Lease prior to the Commencement Date. Tenant may
effect for its own account any insurance not required under this Lease.
3. Landlord shall be named as an additional insured
on such policy. Unless otherwise waived by Landlord, any insurance proceeds
payable by an insurer with respect to Premises shall be payable solely to
Landlord. Any insurance proceeds remaining after compliance with the
provisions of this Lease relating to the maintenance, repair, and
reconstruction of the Premises shall be the Tenant's sole property.
4. Tenant may carry insurance under a so-called
"blanket" policy, provided that such policy otherwise complies with the terms
of this Section 8.5 and the amount of insurance required herein is not
prejudiced by any losses covered by such blanket policy.
D. FAILURE TO MAINTAIN INSURANCE AND PROOF OF COMPLIANCE.
Tenant shall deliver to Landlord, in the manner required for notices, copies
of certificates of all insurance policies required hereunder together with
evidence satisfactory to Landlord of payment required for procurement and
maintenance of the policy. If Tenant fails or refuses to procure or maintain
insurance as required hereby or fails or refuses to furnish Landlord with
required proof that the insurance has been procured and is in force and paid
for, Landlord shall have the right, at Landlord's election and on five (5)
days' prior written notice to Tenant, to procure and maintain such insurance.
The premiums paid by Landlord shall be treated as added rent due from Tenant,
with interest
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at the Interest Rate (defined herein), to be paid on demand by Landlord.
Landlord shall give Tenant prompt notice of the payment of premiums, stating
the amounts paid and the names of the insurer or insurers.
9. CONDEMNATION.
9.1. DEFINITIONS.
A. "Condemnation" means (a) the exercise of any
governmental power, whether by legal proceedings or otherwise, by a condemnor
and (b) a voluntary sale or transfer by Landlord to any condemnor, either
under threat of condemnation or while legal proceedings for condemnation are
pending.
B. "Date of taking" means the date the condemnor has the
right to possession of the property being condemned.
C. "Award" means all compensation, sums, or anything of
value awarded, paid, or received on a total or partial condemnation.
D. "Condemnor" means any public or quasi-public authority,
or private corporation, or individual, having the power of condemnation.
E. "Total taking" means the taking of the entire Premises
under the power of condemnation.
F. "Partial taking" means the taking of only a portion of
the Premises under the power of condemnation which does not constitute a
"total taking" as defined above.
9.2. TOTAL TAKING. If, during the Term hereof, there shall be a
"total taking" under the power of condemnation, then the leasehold estate of
Tenant in the Premises shall cease and terminate as of the date of taking.
9.3. PARTIAL TAKING. If, during the Term hereof, there shall be a
partial taking of the Premises under the power of condemnation, this Lease
shall terminate as to the portion of the Premises taken upon the date of
taking, but this Lease shall continue in force and effect as to the remainder
of the Premises. The rent payable by Tenant for the balance of the Term,
shall be abated in the same ratio as the net leasable space of the Building
taken bears to the total net leasable space of the Building. Tenant may elect
to terminate this Lease if more than ten percent (10%) of the net leasable
space of the Building is taken by condemnation or if there is a partial
taking of a material portion of the Premises and the remaining portion of the
Premises is rendered unsuitable for Tenant's continued use of the Premises as
reasonably determined by Tenant. Tenant may also elect to terminate this
Lease if twenty five percent (25%) or more of the Premises are taken by
condemnation. Any election to terminate this Lease by Tenant under this
Section must be made by written notice to Landlord within thirty (30) days
before or thirty (30) days after the date of the condemnation.
Notwithstanding anything contained herein to the contrary, in the event
twenty five percent (25%) of the Premises are taken by condemnation, then
Landlord in its sole discretion may terminate this Lease by giving notice to
Tenant within thirty (30) days after the extent of the taking is determined.
If Tenant does not elect to terminate this Lease within the time limits
provided herein, then to the extent this Lease is not otherwise terminated by
Landlord, this Lease shall continue in full force and effect except to the
extent of any abatement of rent as provided hereinabove.
9.4. ALLOCATION OF AWARD. The award for the taking of the
Premises or any portion or portions thereof, shall, except as otherwise
herein provided, belong to and be the sole property of Landlord, and Tenant
shall not have any claim or be entitled to any award for diminution in value
of its leasehold hereunder or for the value of any unexpired Term of this
Lease; provided, however, Tenant shall be entitled to any award specifically
allocated by the taking authority that is made for the taking of or injury
to, or on account of
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any cost or loss Tenant may sustain in the removal and moving of Tenant's
merchandise, fixtures, equipment and furnishings.
9.5. EFFECT OF TERMINATION. If this Lease is terminated, in whole
or in part, pursuant to any of the provisions of this Section 9, all rentals
and other charges payable by Tenant to Landlord hereunder and attributable to
the Premises taken, shall be paid up to the date of taking and the parties
shall thereupon be released from all further liability in relation thereto.
10. DEFAULT AND REMEDIES.
10.1. TENANT'S DEFAULT. Each of the following events, subject to
notice and cure periods provided in Section 10.2 below, shall constitute an
event of default by Tenant and a breach of this Lease:
A. Tenant's failure or omission to pay any rent or other
sum payable hereunder on or before the same is due.
B. Tenant's failure or omission to observe, keep or perform
any of the other terms, agreements or conditions contained in this Lease to
be performed by Tenant.
C. Tenant's assignment or subletting contrary to the
provisions hereof.
D. The appointment of a receiver to take possession of the
Premises or of Tenant's operations on the Premises for any reason, including
but not limited to assignment for the benefit of creditors or voluntary or
involuntary bankruptcy proceedings, but not including receivership
(i) pursuant to the administration of the estate of any deceased or incompetent
Tenant or of any deceased or incompetent individual member of any Tenant, or
(ii) instituted by Landlord, the event of default being not the appointment
of a receiver at Landlord's instance but the event justifying the
receivership, if any.
E. An assignment by Tenant for the benefit of creditors or
the filing of a voluntary or involuntary petition by or against Tenant under
any law for the purpose of adjudicating Tenant a bankrupt; or for extending
time for payment, adjustment or satisfaction of Tenant's liabilities; or for
reorganization, dissolution or arrangement on account of or to prevent
bankruptcy or insolvency; unless the assignment or proceeding, and all
consequent orders, adjudications, custodies and supervisions are dismissed,
vacated or otherwise permanently stayed or terminated within 60 days after
the assignment, filing or other initial event.
10.2. NOTICE AND RIGHT TO CURE.
A. If the alleged default is nonpayment of rent, taxes or
other sums to be paid by Tenant to Landlord, Tenant shall have five (5) days
after written notice is given to cure the default. For the cure of any other
default, Tenant shall promptly and diligently after notice commence curing
the default and shall have twenty (20) days after written notice is given to
complete the cure or in the case of a failure or omission that cannot be
cured by the payment of money and cannot be cured within twenty (20) days,
such additional time as is reasonably required for the curing of the default.
B. If Tenant shall have failed to cure after expiration of
the applicable time for curing a particular default or before the expiration
of that time in the event of emergency, Landlord may, at Landlord's election,
but is not obligated to, make any payment required of Tenant under this
Lease, or perform or comply with any term, agreement or condition imposed on
Tenant hereunder or any such note or document, and the amount so paid plus
the reasonable cost of any such performance or compliance, plus interest on
such sum at the Interest Rate (defined below) from the date of payment,
performance or compliance shall be deemed to be additional rent payable by
Tenant on Landlord's demand. No such payment, performance or compliance shall
constitute a waiver of
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default or of any remedy for default or render Landlord liable for any loss
or damage resulting from the same.
10.3. LANDLORD'S REMEDIES. If any default by Tenant continues
uncured following notice of default for the period applicable to the default
under the provisions of this Lease, Landlord shall have the following
remedies in addition to all rights and remedies provided by law or equity to
which Landlord may resort cumulatively or in the alternative:
A. Terminate Tenant's right to possession of the Premises
by any lawful means, in which case this Lease and the term hereof shall
terminate and Tenant shall immediately surrender possession of the Premises
to Landlord. In such event Landlord shall be entitled to recover from Tenant:
(i) the worth at the time of the award of the unpaid rent which had been
earned at the time of termination; (ii) the worth at the time of award of the
amount by which the unpaid rent which would have been earned after
termination until the time of award exceeds the amount of such rental loss
that the Tenant proves could have been reasonably avoided; (iii) the worth at
the time of award of the amount by which the unpaid rent for the balance of
the term after the time of awards exceeds the amount of such rental loss that
the Tenant proves could be reasonably avoided; and (iv) any other amount
necessary to compensate Landlord for all the detriment proximately caused by
the Tenant's failure to perform its obligations under this Lease or which in
the ordinary course of things would be likely to result therefrom, including
but not limited to the cost of recovering possession of the Premises,
expenses of reletting, including necessary renovation and alteration of the
Premises, reasonable attorneys' fees, and that portion of the leasing
commission paid by Landlord applicable to the unexpired term of this Lease.
The worth at the time of award of the amount referred to in provision
(iii) of the prior sentence shall be computed by discounting such amount at
the discount rate of the Federal Reserve Bank of San Francisco at the time of
award plus one percent (1%). Efforts by Landlord to mitigate damages is
obtained through the provisional remedy of unlawful detainer, Landlord shall
have the right to recover in such proceeding the unpaid rent and damages as
are recoverable therein, or Landlord may reserve therein the right to recover
all or any part thereof in a separate suit for such rent and/or damages. If a
notice and grace period are required under Section 10.2.A. or B. was not
previously given, a notice to pay rent or quit, or to perform or quit, as the
case may be, given to Tenant under any statute authorizing the forfeiture of
leases for unlawful detainer shall also constitute the applicable notice for
grace period purposes required by Section 10.2.A. or B. in such case, the
applicable grace period under Section 10.2.A. or B. and under the unlawful
detainer statute shall run concurrently after the one such statutory notice,
and the failure of Tenant to cure the Default within the greater of the two
such grace periods shall constitute both an unlawful detainer and a Breach of
this Lease entitling Landlord to the remedies provided for in this Lease
and/or by said statute.
B. Continue the Lease and Tenant's right to possession in
effect (in California under California Civil Code Section 1951.4) after
Tenant's Breach and abandonment and recover the rent as it becomes due,
provided Tenant has the right to sublet or assign, subject only to reasonable
limitations. See Section 7 for the limitations on assignment and subletting
which limitations Tenant and Landlord agree are reasonable. Acts of
maintenance or preservation, efforts to relet the Premises, or the
appointment of a receiver to protect the Landlord's interest under the Lease,
shall not constitute a termination of the Tenant's right to possession.
C. Pursue any other remedy now or hereafter available to
Landlord under the laws or judicial decisions of the state wherein the
Premises are located.
D. The expiration or termination of this Lease and/or the
termination of Tenant's right to possession shall not relieve Tenant from
liability under any indemnity provisions of this Lease as to matters
occurring or accruing during the term hereof or by reason of Tenant's
occupancy of the Premises.
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10.4. SUBRENTS. The following terms and conditions shall apply to
any subletting by Tenant of all or any part of the Premises and shall be
deemed included in all subleases under this Lease whether or not expressly
incorporated therein:
A. Tenant hereby assigns and transfers to Landlord all of
Tenant's interest in all rentals and income arising from any sublease of all
or a portion of the Premises heretofore or hereafter made by Tenant, and
Landlord may collect such rent and income and apply same toward Tenant's
obligations under this Lease; provided, however, that until a default shall
occur in the performance of Tenant's obligations under this Lease beyond all
notice and cure periods, Tenant may, except as otherwise provided in this
Lease, receive, collect and enjoy the rents accruing under such sublease.
Landlord shall not, by reason of this or any other assignment of such
sublease to Landlord, nor by reason of the collection of the rents from a
sublessee, be deemed liable to the sublessee for any failure of the Tenant to
perform and comply with any of Tenant's obligations to the sublessee under
such sublease. Lessee hereby irrevocably authorizes and directs any such
sublessee, upon receipt of a written notice from Landlord stating that a
default exists in the performance of Tenant's obligations under this Lease,
to pay to Landlord the rents and other charges due and to become due under
the sublease. Sublessee shall rely upon any such statement and request from
Landlord and shall pay such rents and other charges to Landlord without any
obligation or right to inquire as to whether such default exists and
notwithstanding any notice from or claim from Tenant to the contrary, Tenant
shall have no right or claim against said sublessee, or, until the default
has been cured, against Landlord, for any such rents and other charges so
paid by said sublessee to Landlord.
B. In the event of a default by Tenant in the performance
of its obligations under this Lease, Landlord, at its option and without
obligation to do so, may require any sublessee to attorn to Landlord, in
which event Landlord shall undertake the obligation of the sublessor under
such sublease from the time of exercise of said option to the expiration of
such sublease; provided, however, Landlord shall not be liable for any
prepaid rents or security deposit paid by such sublessee to such sublessor or
for any other prior defaults of such sublessor under such sublease.
C. Any matter or thing requiring the consent of the
sublessor under a sublease shall also require the consent of Landlord herein.
D. Landlord shall deliver a copy of any notice of default
by Tenant to the sublessee, who shall have the right to cure the default of
Tenant within the grace period, if any, specified in such notice. The
sublessee shall have a right of reimbursement and offset from and against
Tenant for any such breach cured by sublessee.
10.5. LANDLORD'S DEFAULT. Landlord will be in default under this
Lease if it fails for thirty (30) days following receipt of written notice
from Tenant specifying a default to cure such default, if it is curable, or
to institute and diligently pursue reasonable corrective or ameliorative acts
for incurable defaults. Tenant's remedies shall be limited to an action for
damages, injunction or specific performance and Tenant shall not have the
right to withhold rent or terminate this Lease.
10.6. WAIVER AND VOLUNTARY ACTS. No waiver of any breach or
default shall constitute a waiver of any other breach or default, whether of
the same or any other term, agreement 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 breach or default by Tenant other than default in the
payment of the particular rental payment so accepted regardless of Landlord's
knowledge of the preceding breach at the time of accepting the rent, nor
shall acceptance of rent or any other payment after termination constitute a
reinstatement, extension or renewal of the Lease or revocation of any notice
or other act by Landlord. The
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payment of rent or any other payment by Tenant shall not constitute a waiver
of Tenant's right to protest the payment of such amount.
11. EXPIRATION AND TERMINATION.
11.1. SURRENDER OF PREMISES AND OWNERSHIP OF IMPROVEMENTS. At the
expiration or earlier termination of the Lease, Tenant shall surrender
possession of the Premises to Landlord. Tenant shall leave the surrendered
Premises in the same condition and repair as when received and as improved by
the Repair work, ordinary wear and tear and casualty excepted. Ordinary wear
and tear shall not include any damage or deterioration that would have been
prevented by good maintenance practice or by Tenant performing all of its
obligations under this Lease. All of Tenant's trade fixtures, furnishings,
furniture, signs and other personal property ("Tenant's Property") not
permanently affixed to the Premises shall remain the property of Tenant.
Tenant's Property shall mean Tenant's machinery and equipment that can be
removed without doing material damage to the Premises, provided that, the
Rotocure shall be Tenant's Property and Tenant shall be obligated to remove
the Rotocure and repair any damage to the Premises caused by its removal.
Tenant's Property shall not include carpeting, window coverings, air lines,
power panels, electrical distribution, security, fire protection systems,
lighting fixtures, heating, ventilating, air conditioning equipment,
plumbing, and fencing (collectively, "Utility Property") on the Premises. All
improvements to the Premises made by Tenant, excluding Tenant's Property, but
including all Utility Property and partitions shall become the property of
Landlord upon expiration or earlier termination of this Lease. Not later than
the expiration of the time within which under any provision of this Lease,
Tenant is required to surrender possession of the Premises to Landlord,
Tenant shall remove all of Tenant's Property located in or about the
Premises. All of Tenant's Property not removed within such time shall become
and remain the property of Landlord. The removal of Tenant's Property whether
by Landlord or Tenant shall be effected solely at the expense of Tenant and
in a manner reasonably satisfactory to Landlord and without injury or damage
to the Premises and Tenant covenants to repair immediately, at Tenant's
expense, any injury or damage caused by such removal and leave the Premises
in a neat and clean condition, free of debris.
If Tenant fails to surrender the Premises at the expiration or
sooner termination of this Lease, Tenant indemnifies and shall defend and
hold Landlord harmless from all liability and expense resulting from the
delay or failure to surrender, including, without limitation, claims made by
any succeeding lessee founded on or resulting from Tenant's failure to
surrender.
12. COMPLIANCE WITH ENVIRONMENTAL LAWS.
12.1. TERMINATION, CANCELLATION, SURRENDER. At the end of this
Lease, Tenant will surrender the Premises to Landlord free of any and all
hazardous materials placed on or under the Premises by Tenant and/or Tenant's
agents, assigns, sublessees, contractors, invitees and guests.
12.2. HAZARDOUS MATERIALS. For the purpose of this Section 12,
the term "hazardous materials" includes, without limitation, any flammable
explosives, radioactive materials, hazardous materials, hazardous wastes,
hazardous or toxic substances, oil, gasoline, diesel fuel and other
hydrocarbon products, and related materials defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
(42 U.S.C. Section 9601 ET SEQ.), the Hazardous Materials Transportation Act,
as amended (49 U.S.C. Section 1801 ET SEQ.), the Resource Conservation and
Recovery Act of 1976, as amended (42 U.S.C. Section 6901 ET SEQ.), and in the
regulations adopted and publications promulgated pursuant to them, or any
other federal, state, or local environmental laws, ordinances, rules, or
regulations now enacted or enacted after this date (collectively, the
"environmental laws").
12.3. REMEDIES CUMULATIVE; SURVIVAL. The provisions of this
Section 12 shall be in addition to any and all obligations and liabilities
Tenant may have to Landlord at common law, and will survive this Lease.
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12.4. LANDLORD RESPONSIBILITIES. Landlord hereby agrees to
indemnify, hold harmless and defend (by counsel reasonably satisfactory to
Tenant), Tenant and its Related Parties from and against any and all claims,
lawsuits, damages, liabilities, fines, penalties, charges, administrative and
judicial proceedings and orders, judgments, remedial action requirements and
enforcement actions of any kind, and all costs and expenses in connection
therewith, arising out of (i) the presence on or under the Premises of any
hazardous materials or any releases or discharges of any hazardous materials
on, under or from the Premises and (ii) any activity carried on or undertaken
on or off the Premises in connection with the handling, treatment, removal,
storage, decontamination, clean-up, transport or disposal of any hazardous
materials located on or under the Premises and any such cost shall be at
Landlord's sole cost and expense; provided, however, the foregoing indemnity
shall not, however, apply to any costs and expenses associated with hazardous
materials placed on or under the Premises by Tenant and/or Tenant's agents,
assigns, sublessees, contractors, invitees and guests. Notwithstanding
anything to the contrary set forth in this Lease, the provisions of this
Section 12.4 shall survive the expiration or earlier termination of this
Lease.
12.5. TENANT RESPONSIBILITIES. Tenant hereby agrees to indemnify,
hold harmless and defend (by counsel reasonably satisfactory to Landlord),
Landlord and its Related Parties from and against any and all claims,
lawsuits, damages, liabilities, fines, penalties, charges, administrative and
judicial proceedings and orders, judgments, remedial action requirements and
enforcement actions of any kind, and all costs and expenses in connection
therewith, arising out of (i) the presence on or under the Premises of any
hazardous materials or any releases or discharges of any hazardous materials
on, under or from the Premises and (ii) any activity carried on or undertaken
on or off the Premises in connection with the handling, treatment, removal,
storage, decontamination, clean-up, transport or disposal of any hazardous
materials located on or under the Premises and any such cost shall be at
Tenant's sole cost and expense; provided, however, the foregoing indemnity
shall not, however, apply to any costs and expenses associated with hazardous
materials placed on or under the Premises by a party other than Tenant and/or
Tenant's agents, assigns, sublessees, contractors, invitees and guests.
Notwithstanding anything to the contrary set forth in this Lease, the
provisions of this Section 12.5 shall survive the expiration or earlier
termination of this Lease.
13. ALTERATIONS.
13.1. ALTERATIONS.
A. CONSENT OF LANDLORD TO ALTERATIONS. Tenant may make any
improvements, alterations, additions or changes to the Premises
(collectively, the "Alterations") which do not affect the Utility Property
(other than the carpeting, window coverings, power panels and lighting
fixtures), exterior appearance of the Building, or structural aspects of the
Building, by providing Landlord with notice ("Nonstructural Notice") not less
than twenty (20) days prior to the commencement thereof. Tenant may not make
any Alterations which may affect the Utility Property, exterior appearance of
the Building, or structural aspects of the Building without first procuring
the prior written consent of Landlord to such Alterations, which consent
shall be requested by Tenant's written notice ("Request for Approval")
delivered to Landlord not less than twenty (20) days prior to commencement
thereof, and which consent may be withheld by Landlord in its reasonable
discretion. Any time Tenant proposes to make Alterations whether or not the
consent of Landlord is required pursuant to this Section, Tenant's
Nonstructural Notice and/or Request for Approval regarding proposed
Alterations shall be delivered together with reasonable detailed final plans
and specifications and working drawings (the "Plans") for the Alterations,
and Landlord shall approve or disapprove the Request for Approval and
applicable Plans within twenty (20) days after its receipt of the same.
Tenant shall notify Landlord at least ten (10) business days before the date
it intends to commence the Alterations and the Alterations shall not be
commenced until ten (10) business days after Landlord has received notice
from Tenant stating the date the installation of the Alterations is to
commence so that Landlord can post and
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record an appropriate notice of non-responsibility. The Alterations shall be
approved by all appropriate government agencies, and all applicable permits
and authorizations shall be obtained before commencement of the Alterations.
All Alterations shall be completed with due diligence in substantial
compliance with the Plans.
B. TENANT TO PAY ALTERATION COST. All installations,
additions or improvements, and alterations and changes made, with the consent
of Landlord, after Tenant occupies the Premises, shall be made at the sole
cost and expense of Tenant.
C. ALTERATIONS REQUIRED BY LAW. If, during the Term of this
Lease, any additions, alterations or improvements in or to the Premises, as
distinguished from repairs, are required by governmental regulations because of
the use to which the Premises are put by Tenant and not by reason of the
character or structure of the Premises, they shall be made and paid for by
Tenant, pursuant to the procedure set forth at Section 13.1.A above. Any other
additions, alterations or improvements in or to the Premises required by any
governmental laws, rules or regulations shall be at Landlord's sole cost and
expense, provided that, Tenant shall be obligated at Tenant's sole cost and
expense to make any additions, alterations or improvements required at any time
under the American Disabilities Act.
D. SURRENDER OR REMOVAL OF IMPROVEMENTS. All alterations,
additions or improvements which are made in or to the Premises shall be the
property of Landlord upon the termination of this Lease, unless within twenty
(20) days following Landlord's receipt of the Nonstructural Notice and/or the
Request for Approval and the Plans, Landlord gives Tenant written notice that
the alterations, additions or improvements must be removed upon termination
of the Lease, in which case Tenant shall cause the items so designated to be
removed and the Premises to be restored to their condition at the
commencement of Tenant's business, normal wear and tear excepted, all at the
expense of Tenant.
E. MECHANIC'S LIENS. Tenant agrees to pay promptly for all
labor done or materials furnished for any work of repair, maintenance,
improvements, alterations, or additions done by Tenant, in connection with
the Premises, and to keep and to hold the Premises free, clear, and harmless
of and from all liens that could arise by reason of any such work. If any
such lien shall at any time be filed against the Premises, Tenant shall
either cause the same to be discharged of record within twenty (20) days
after the date of filing the same, or if Tenant in its discretion and in good
faith, determines that such lien should be contested, Tenant shall furnish
such security as may be necessary or required to prevent any foreclosure
proceedings against the Premises during the pendency of such contest. If
Tenant shall fail to discharge such lien within such period or fail to
furnish such security, then, in addition to any other right or remedy,
Landlord may, but shall not be obligated to, discharge the same, either by
paying the amount claimed to be due or by procuring the discharge of such
lien by deposit in court or by giving security or in such other manner as is
or may be prescribed by law. Tenant shall repay to Landlord on demand all
sums disbursed or deposited by Landlord pursuant to the foregoing provisions
hereof, including Landlord's costs, expenses, and reasonable attorney's fees
incurred by Landlord in connection therewith. Nothing contained herein shall
imply any consent or agreement on the part of the Landlord to subject
Landlord's interest in the property of which the Premises are a part to
liability under any mechanic's lien law.
F. NOTICE OF NON-RESPONSIBILITY. Landlord shall at all
times have the right to post and to keep posted on the Premises such notices
provided for under the laws of the State of California for the protection of
the Premises from mechanic's liens or liens of a similar nature.
14. SUBORDINATION, ATTORNMENT AND NON-DISTURBANCE.
14.1. SUBORDINATION. This Lease granted hereby shall be subject
and subordinate to any ground lease, mortgage, deed of trust, or other
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hypothecation or security device (collectively, "Security Device"), now or
hereafter placed by Landlord upon the real property of which the Premises are
a part, to any and all advances made on the security thereof, and to all
renewals, modifications, consolidations, replacements and extensions thereof.
Tenant agrees that the Lenders holding any such Security Device shall have no
duty, liability or obligation to perform any of the obligations of Landlord
under this Lease, but that in the event of Landlord's default with respect to
any such obligation, Tenant will give any Lender whose name and address have
been furnished Tenant in writing for such purpose notice of Landlord's
default and allow such Lender thirty (30) days following receipt of such
notice for the cure of said default before invoking any remedies Tenant may
have by reason thereof. If any Lender shall elect to have this Lease and/or
any Option granted hereby superior to the lien of its Security device and
shall give written notice thereof to Tenant, this Lease and such Options
shall be deemed prior to such Security Device, notwithstanding the relative
dates of the documentation or recordation thereof.
14.2. ATTORNMENT. Subject to the non-disturbance provisions of
Paragraph 14.3, Tenant agrees to attorn to a Lender or any other party who
acquires ownership of the Premises by reason of a foreclosure of a Security
Device, and in the event of such foreclosure, such new owner shall not: (i) be
liable for any act or omission of any prior lessor or with respect to events
occurring prior to acquisition of ownership, (ii) be subject to any offsets or
defenses which Tenant might have against any prior lessor, or (iii) be bound by
prepayment of more than one (1) month's rent.
14.3. NON-DISTURBANCE. With respect to Security Devices entered
into by Landlord after the execution of this Lease, Tenant's subordination of
this Lease shall be subject to receiving assurance (a "non-disturbance
agreement") from the Lender that Tenant's possession and this Lease,
including any options to extend the term hereof, will not be disturbed so
long as Tenant is not in default of the Lease and attorns to the record owner
of the Premises.
14.4 SELF-EXECUTING. The agreements contained in this Paragraph
14 shall be effective without the execution of any further documents;
provided, however, that, upon written request from Landlord, Tenant or a
Lender in connection with a sale, financing or refinancing of the Premises,
Tenant and Landlord shall execute such further writings as may be reasonably
required to separately document any such subordination or non-subordination,
attornment and/or non-disturbance agreement as is provided for herein.
15. GENERAL CONDITIONS AND MISCELLANEOUS PROVISIONS.
15.1. NOTICES.
A. As used in this Lease "notice" includes but is not
limited to the communication of notice, request, demand, approval, statement,
report, acceptance, consent, waiver, appointment and other communication
required or permitted hereunder. No notice of the exercise of any option or
election is required unless the provision giving the election or option
expressly requires notice. Unless the provisions of this Lease regarding rent
direct otherwise, rent shall be sent in the manner provided for giving notice.
B. All notices shall be in writing and shall be considered
given either (i) when delivered in person to the recipient named as below, or
(ii) on the date of delivery shown on the return receipt, after deposit in
the United States mail in a sealed envelope or other container, either
registered or certified mail, return receipt requested, postage and postal
charges prepaid, addressed to the party intended as below, or (iii) on the
date of delivery shown in the records of the telegraph company after
transmission by telegraph to the party intended as follows or (iv) on the
date of delivery by reputable overnight courier, or (v) by facsimile
transmission upon telephone confirmation of receipt of the transmission
thereof, provided a copy is also delivered via delivery or first class United
States mail. If notice is received on a Saturday, Sunday or legal holiday, it
shall be deemed received on the next business day.
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Notice to Landlord:
Donald M. Hypes
363 Bouquet Canyon Drive
Palm Desert, CA 92211
With a copy to:
Best, Best & Krieger
39700 Bob Hope Drive, Suite 312
Rancho Mirage, CA 92270
Attn: Brian M. Lewis, Esq.
Notice to Tenant:
Burke Industries, Inc.
2250 South Tenth Street
San Jose, California 95112
Attn: Mr. Reed C. Wolthausen
With copy to:
Richard L. Miller, Esq.
Stern, Neubauer, Greenwald & Pauly
1299 Ocean Avenue, Tenth Floor
Santa Monica, CA 90401-1007
C. Either party may, by notice given at any time or from
time to time, require subsequent notices to be given to another individual
person, whether a party or an officer or representative, or to a different
address, or both. Notices given before actual receipt of notice of change
shall not be invalidated by the change.
15.2. INTERPRETATION AND CONSTRUCTION OF LEASE.
A. The captions of the various articles and sections of
this Lease are for convenience and ease of reference only and do not define,
limit, augment or describe the scope, content or intent of this Lease or any
part or parts of this Lease.
B. All sections, paragraphs and articles referred to herein
are sections, paragraphs and articles of this Lease unless otherwise
specified and all exhibits referred to herein are exhibits attached to this
Lease unless otherwise specified.
C. Exhibits attached hereto and to which references are
made in this Lease, are incorporated herein by the respective references to
them. References to "this Lease" or "the Lease" include matters incorporated
herein by reference.
D. The neuter gender includes the feminine and masculine,
the masculine includes the feminine and the neuter, and the feminine includes
the neuter, and each includes corporation, partnership or other legal entity
when the context so requires.
E. The singular number includes the plural whenever the
context so requires.
F. Each party has relied on its own examination of this
Lease, the counsel of his own advisors and warranties, representations and
agreements in the Lease itself. The failure or refusal of Tenant to inspect
the Premises or improvements, or the failure of either party to read the
Lease or other documents or to obtain legal or other advice relevant to the
transaction constitutes a waiver of any objection, contention, or claim that
might have been based on such reading, inspection or advice.
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G. The invalidity or illegality of any provision of this
Lease shall not affect the remainder of the Lease.
H. Time is of the essence of each provision of this Lease.
I. All the undertakings of Tenant hereunder shall be deemed
and construed to be "conditions" as well as undertakings as though the words
specifically expressing or imparting conditions and undertakings were used in
each separate instance.
J. This Lease may only be modified in writing, signed by
the parties in interest at the time of the modification.
K. This Lease shall be interpreted, construed and enforced
in accordance with laws of the State of California.
15.3. SUCCESSORS. Subject to the provisions of this Lease on
transfers, each and all the terms, agreements and conditions to this Lease
shall be binding on and shall inure to the benefit of the heirs, successors,
executors, administrators, assigns and personal representatives of the
respective parties.
15.4. LANDLORD'S RIGHT OF INSPECTION AND LANDLORD'S AGENTS.
Landlord and Landlord's agents may, at any reasonable time during business
hours, upon twenty-four (24) hours prior written notice and from time to time
during the Term, enter upon the Premises for the purpose of inspecting any
improvements which may be constructed or placed thereon by Tenant, and making
such alterations, repairs, improvements or additions to the Premises or to
the Building, and otherwise for the purpose of showing the same to
prospective purchasers, lenders, or lessees, and for such other purposes as
may be necessary or proper for the reasonable protection of Landlord's
interest. Landlord may at any time place on or about the Premises and/or to
the Building any ordinary "For Sale" signs and Landlord may at any time
during the last one hundred twenty (120) days of the then applicable Term
place on the or about the Premises and/or to the Building any ordinary "For
Lease" signs. All such activities of Landlord shall be without abatement of
rent or liability to Landlord.
15.5. ESTOPPEL CERTIFICATES.
A. Tenant shall, at any time and from time to time during
the Term and upon not less than ten (10) days' prior written request by
Landlord, execute, acknowledge and deliver to Landlord and any trust deed
holder on the Premises designated by Landlord from time to time, a statement
in writing certifying that this Lease is unmodified and in full force and
effect (or if there have been any modifications that the same is in full
force and effect as modified and stating the modifications). The statement
shall also state the dates to which the rent and any other charges have been
paid in advance, that, to Tenant's actual knowledge, there are no defaults
existing or that defaults exist and the nature of such defaults. It is
intended that such statement as provided in this Section 15.5.A may be relied
upon by any prospective purchaser, encumbrancer or assignee of the Premises
or all or any part of Landlord's interest under this Lease.
B. Tenant's failure to execute, acknowledge and deliver on
request the certified statement described above within the specified time
shall constitute acknowledgment by Tenant to all persons entitled to rely on
the statement that this Lease is unmodified and in full force and effect and
that the rent and other charges have been duly and fully paid to and
including the respective due dates immediately preceding the date of the
notice of request and shall constitute a waiver, with respect to all persons
entitled to rely on the statement, of any defaults that may exist before the
date of the notice.
C. Landlord hereby agrees to provide to Tenant an estoppel
certificate signed by Landlord, containing the same types of information, and
within the same period of time, as set forth above, with such changes as are
reasonably necessary to reflect that the estoppel certificate is being granted
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and signed by Landlord to Tenant, rather than from Tenant to Landlord or a
lender.
15.6. COVENANTS RUN WITH LAND. The provisions hereof are and shall
be deemed to be covenants running with the land and shall be binding upon and
inure to the benefit of the successors and assigns of the parties hereto and
also the successors and assigns of all subsequent landlords and tenants,
respectively, hereunder.
15.7. COVENANTS AND CONDITIONS. All provisions of this Lease,
whether covenants or conditions, on the part of Tenant shall be deemed to be
both covenants and conditions.
15.8. ATTORNEYS' FEES AND COSTS. If either party brings an action
or proceeding to enforce, protect or establish any right or remedy, the
prevailing party shall be entitled to recover from the other party its costs
of suit and reasonable attorneys' fees which shall be fixed by the court.
Arbitration is not an action or proceeding for the purpose of this provision
unless this Lease otherwise provides for the payment of attorneys' fees in
connection with an arbitration.
15.9. EXECUTION IN COUNTERPARTS. This Lease may be executed in two
or more counterparts, each of which shall be an original, but all of which
shall constitute one and the same instrument.
15.10. ENTIRE AGREEMENT. This Lease contains the entire agreement
of the parties with respect to the matters covered by this Lease, and no
other agreements, statements, or promise made by any party, or to any
employees, officer, or agent of any party, which is not contained in this
Lease shall be binding or valid.
15.11. INTEREST RATE. "Interest Rate" shall mean the rate equal to
the floating commercial loan rate announced from time to time by Bank of
America, a national banking association, or its successor, as its prime rate,
plus two percent (2%) per annum.
15.12. BROKERS. Landlord and Tenant hereby warrant to each other
that they have had no dealings with any real estate broker or agent in
connection with the negotiation of this Lease and that they know of no real
estate broker or agent who is entitled to a commission in connection with
this Lease. Each party agrees to indemnify and defend the other party against
and hold the other party harmless from any and all claims, demands, losses,
liabilities, lawsuits, judgements, and costs and expenses (including, without
limitations, reasonable attorneys' fees) with respect to any leasing
commission or equivalent compensation alleged to be owing on account of the
indemnifying party's dealings with any real estate broker or agent. The terms
of this Section 15.12 shall survive the expiration and termination of the
Lease.
15.13. SIGNAGE. Tenant shall have the right to install, affix and
maintain any signs that are reasonably required to advertise Tenant's
business on the exterior of the Building (but not on the roof) so long as the
same comply with all applicable laws. Except as provided by Section 15.4, no
other signs shall be permitted.
15.14. TERMINATION; MERGER. Unless specifically stated otherwise
in writing by Landlord, the voluntary or other surrender of this Lease by
Tenant, the mutual termination or cancellation hereof, or a termination
hereof by Landlord for default by Tenant, shall automatically terminate any
sublease or lesser estate in the Premises; provided, however, Landlord shall,
in the event of any such surrender, termination or cancellation, have the
option to continue any one or all of any existing subtenancies. Landlord's
failure within ten (10) business days following any such event to make a
written election to the contrary by written notice to the holder of any such
lesser interest, shall constitute Landlord's election to have such event
constitute the termination of such interest.
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15.15. AUTHORITY. If either Party hereto is a corporation,
trust, or general or limited partnership, each individual executing this
Lease on behalf of such entity represents and warrants that he or she is duly
authorized to execute and deliver this Lease on its behalf. If Tenant is a
corporation, trust or partnership, Tenant shall, within thirty (30) days
after request by Landlord, deliver to Landlord evidence satisfactory to
Landlord of such authority.
15.16. WAIVERS. No waiver by Landlord of the default or breach
of any term, covenant or condition hereof by Tenant, shall be deemed a waiver
of any other term, covenant or condition hereof, or of any subsequent default
or breach by Tenant of the same or of any other term, covenant or condition
hereof, Landlord's consent to, or approval of, any act shall not be deemed to
render unnecessary the obtaining of Landlord's consent to, or approval of,
any subsequent or similar act by Tenant, or be construed as the basis of an
estoppel to enforce the provision or provisions of this Lease requiring such
consent. Regardless of Landlord's knowledge of a default or breach at the
time of accepting monthly rent, the acceptance of monthly rent by Landlord
shall not be a waiver of any preceding default or breach by Tenant of any
provisions hereof, other than the failure of Tenant to pay the particular
rent so accepted. Any payment given Landlord by Tenant may be accepted by
Landlord on account of moneys or damages due Landlord, notwithstanding any
qualifying statements or conditions made by Tenant in connection therewith,
which such statements and/or conditions shall be of no force or effect
whatsoever unless specifically agreed to in writing by Landlord at or before
the time of deposit of such payment.
15.17. SEVERABILITY. The invalidity of any provision of this
Lease, as determined by a court of competent jurisdiction, shall in no way
affect the validity of any other provision hereof.
15.18. RIGHT OF FIRST REFUSAL. If during the term of this Lease,
Landlord elects to sell the Premises to an unrelated third party, then
Landlord shall provide Tenant with written notice (the "Sale Notice") which
shall include the exact and complete terms of the proposed sale duly executed
by Landlord and the prospective purchaser. For a period of fifteen (15) days
(the "Notice Period") after receipt by Tenant of the Sale Notice, Tenant
shall have the right (the "right of first refusal") to enter into an
agreement with Landlord on the same terms, price and conditions set forth in
the Sale Notice. To exercise Tenant's right of first refusal, Tenant shall
deliver written notice (the "Exercise Notice") to Landlord of Tenant's
exercise within the Notice Period and shall concurrently deliver to Landlord
funds payable by cashier's check in the same amount of the initial deposit
(the "Deposit") required in the Sales Notice made payable to the escrow
holder provided therein. Tenant's timely delivery to Landlord of the Exercise
Notice and the Deposit shall be deemed to be a binding contract for the
purchase of the Premises in accordance with the terms of the Sale Notice,
provided that, the sales price shall not be reduced whether or not Landlord
is obligated to pay a sales commission upon a sale to Tenant. In the event
Tenant fails to exercise its right of first refusal within the Notice Period
it shall be conclusively presumed that Tenant has elected not to exercise its
right of first refusal and Landlord may enter into the agreement with the
prospective purchase or its nominee on the same terms and conditions set
forth in the Sale Notice. In the event Tenant declines to exercise its right
of first refusal after receipt of the Sale Notice, and, thereafter, Landlord
and the prospective purchaser or its nominee do not enter into the agreement
in strict accordance with the terms set forth in the Sale Notice within
thirty (30) days following the expiration of the Notice Period, or otherwise
fail to close the purchase and sale transaction contemplated thereunder in
strict accordance with the terms and escrow closing period set forth in the
Sale Notice, then Tenant's right of first refusal shall reapply in accordance
with the provisions hereinabove to any sale transaction of the Premises to an
unrelated third party that is entered into by Landlord. Notwithstanding
anything contained herein to the contrary, upon the occurrence of any default
under this Lease by Tenant beyond all applicable grace or cure periods
provided that Landlord in its default notice to Tenant states that a failure
to cure such default will result in a termination of this right of first
refusal, or in the event of termination of this Lease by either party due to
damage or condemnation as provided in Sections
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8.4 and 9, then the right of first refusal provided in this Section 15.18
shall automatically be deemed deleted from this Lease and of no further force
or effect. Furthermore, this right of first refusal shall automatically and
irrevocably terminate without notice immediately upon expiration of the Term
or at any time the Premises are sold by Landlord to an unrelated third party
in accordance with the right of first refusal provisions herein.
This right of first refusal is personal to the original Tenant named
in Section 1 of this Lease and any Affiliate of Tenant and/or TIM HOWARD
and/or DAN FLAMEN, and cannot be voluntarily or involuntarily assigned or
exercised by any person or entity other than said original Tenant and any
Affiliate of Tenant and/or TIM HOWARD and/or DAN FLAMEN. The right of first
refusal is not assignable either as part of an assignment of this Lease or
separately or apart therefrom, and it may not be separated from this Lease in
any manner, by reservation or otherwise.
IN WITNESS WHEREOF, this Lease has been executed as of the day and
year first above written.
LANDLORD:
/s/ Donald M. Hypes
---------------------------------
Donald M. Hypes, Trustee of the
Declaration of Trust dated
April 25, 1983, as amended.
TENANT:
---------------------------------
BURKE INDUSTRIES, INC., a
California Corporation
By: /s/ Reed Wolthausen
----------------------------
Reed C. Wolthausen,
Senior Vice President
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EXHIBIT "A"
DESCRIPTION OF THE PREMISES
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EXHIBIT "B"
REPAIR WORK
TO BE COMPLETED BY TENANT BY JUNE 30, 1996
1. Asphalt: remove and replace approximately seven hundred fifty (750)
square feet of asphalt. Patch all other damaged areas. Apply slurry coat
to all asphalt repaired areas and to driveway and existing parking lot.
Paint and mark parking spaces in front, side and back of Building.
2. Painting: Repaint exterior of front of building. Repaint inside of front
offices. Spot paint inside of Building as required. Paint lunch room
interior.
3. Flooring: Remove existing flooring in entry, secretary work area, lab,
bathrooms, lunch room and main office area and install new flooring. Install
wall to wall carpeting in one existing private office.
4. Plumbing: Repair plumbing in men's bathroom. Replace broken faucets.
Replace or repair inoperative water heater.
5. Doors: Repair front folding door and side roll up door as needed, and paint
same. Replace door on small men's bathroom and paint same.
6. Air conditioning: Replace air conditioner in lab.
7. Landscaping: Remove and cap off sprinkler heads and install decorative pea
gravel in front of Building, and install minimum landscaping on side of
building.
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