EXHIBIT 10.18
SUBLEASE
by and between
BURKE RUBBER COMPANY, INC.,
a California corporation
as Sublessor,
and
WESTLAND TECHNOLOGIES, INC.,
a California corporation
as Sublessee,
at
107 South Riverside Drive, Modesto, California.
SUBLEASE
THIS SUBLEASE ("Sublease") is made effective as of this 27th day of June, 1996
by and between BURKE RUBBER COMPANY, INC., a California corporation (the
"Sublessor"), and WESTLAND TECHNOLOGIES, INC., a California corporation (the
"Sublessee") with regard to the following facts:
RECITALS
A. Sublessor entered into that certain Industrial Lease dated July 1,
1991 by and between Arthur D. Bridges Family Revocable Trust ("Master
Lessor"), as "Lessor," and Sublessor, as "Lessee," for the lease of a portion
of that real property commonly known as 107 South Riverside Drive, Modesto,
California, consisting of approximately 112,986 square feet (the "Premises")
and more particularly described in the Master Lease. Such Lease was amended
by that certain Addendum to Industrial Lease dated as of July 1, 1991
(collectively, as amended, the "Master Lease"). A copy of the Master Lease is
attached hereto as EXHIBIT "A" and incorporated herein by this reference.
B. Substantially concurrently herewith, pursuant to that certain Asset
Sale Agreement ("Asset Sale Agreement") dated March 15, 1996 by and between
Sublessor, as "Seller," and Sublessee, as "Purchaser," Sublessor is
transferring to Sublessee all of Sublessor's right, title and interest in and
to those certain "Assets" (as defined in the Asset Sale Agreement), which
Assets are utilized for the business of manufacturing and selling rubber and
rubber-like custom-molded products at the Premises.
C. In connection with Sublessor's transfer of the Assets to Sublessee,
Sublessor desires to sublease to Sublessee, and Sublessee desires to sublease
from Sublessor, the Premises, upon the terms, covenants and conditions set
forth in this Sublease.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. CAPITALIZED TERMS. All capitalized terms when used herein shall have
the same meaning as is given such terms in the Master Lease, unless expressly
superseded by the terms of this Sublease.
2. SUBLEASE. Sublessor hereby subleases to Sublessee and Sublessee
hereby subleases from Sublessor, the Premises on an "as-is," "where-is"
basis, subject to the terms, covenants and conditions set forth in this
Sublease.
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3. TERM. The term ("Term") of this Sublease shall commence on the date
upon which the "Closing" occurs under the Asset Sale Agreement (the
"Commencement Date") and shall expire on October 31, 2001, unless sooner
terminated pursuant to any provision of this Sublease or the Master Lease
(the "Termination Date").
4. RENT.
(a) BASE RENT. Effective as of the Commencement Date, Sublessee shall
pay to Sublessor, or its designee, as rent for the Premises, monthly payments
of base rent ("Base Rent"), in advance, on the first day of each month of the
Term of this Sublease in the amounts set forth under Column C of EXHIBIT
"A-1". Base Rent and all other payments of rent and other sums under this
Sublease (collectively, "Rent") shall be payable by Sublessee without notice,
demand, reduction or set-off in lawful money of the United States of America
to Sublessor or its agent at the address set forth in this Sublease, or to
such other person or such other places as Sublessor may from time to time
designate in writing. If the Term begins or ends on a day other than the
first or last day of a month, the Base Rent for the partial month shall be
prorated on the basis of a thirty (30) day month, and if the Commencement
Date occurs on any day other than the first (1st) day of a calendar month,
the Base Rent for the first partial month of the Term shall be paid on the
Commencement Date.
(b) OPERATING EXPENSES. In addition to the Base Rent and any other
amounts constituting additional rent hereunder, Sublessee shall pay to
Sublessor, as additional rent, the portion of the Operating Expenses,
including but not limited to taxes, utilities, and insurance, which are
attributable to the Premises during the term of this Sublease. Such
additional rent shall be payable as and when Operating Expenses are payable
by Sublessor to Master Lessor. Since the Master Lease gives the Master Lessor
the option of requiring payment by Sublessor of Operating Expenses on the
basis of an estimate thereof, as and when adjustments between estimated and
actual Operating Expenses are made under the Master Lease, the obligations of
Sublessor and Sublessee hereunder shall be adjusted in a like manner; and if
any such adjustment shall occur after the expiration or earlier termination
of the Term, then the obligations of Sublessor and Sublessee under this
Paragraph 4(b) shall survive such expiration or termination. For purposes of
this Sublease, the parties acknowledge and agree that, as of the date hereof,
"Lessee's Share" of Operating Expenses payable by Sublessor under the Master
Lease is sixty-three point eight percent (63.8%).
(c) EXISTING TENANT IMPROVEMENTS. In addition to the Base Rent and
any other amounts constituting additional rent hereunder, Sublessee shall pay
to Sublessor, as additional rent on account of the tenant improvements
heretofore installed by Sublessor in, on and about the Premises, including
without limitation the Manufacturing Improvements and sprinkler system
("Existing Tenant Improvements"), monthly payments of $8,600.29, payable on
the first (1st) day of each and every month commencing on the first (1st) day
of the first full calendar month following the Commencement Date and
continuing thereafter on the first (1st) day of each succeeding calendar
month until the Termination Date, as specified on the payment schedule
attached hereto as EXHIBIT "B". If the Commencement Date occurs on any day
other
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than the first (1st) day of a calendar month, an amount equal to the amount
of such monthly installment prorated on the basis of a thirty (30) day month,
shall be paid on the Commencement Date. If this Sublease or the Master Lease
is terminated earlier than October 31, 2001, (i) as a result of Sublessee's
default hereunder or under applicable provisions of the Master Lease (a
"Sublessee Default"), then, upon said termination, Sublessee shall pay to
Sublessor an amount equal to the entire balance then outstanding on account
of the Existing Tenant Improvements, as specified on EXHIBIT "B"; or (ii) for
any reason other than a Sublessee Default, then Sublessee shall remain
obligated to Sublessor from and after said termination to make monthly
payments of $8,600.29 until all payments required on Exhibit B have been
paid. This paragraph shall survive the Termination Date or any earlier
termination of this Sublease.
5. SECURITY DEPOSIT. Concurrent with Sublessee's execution of this
Sublease, Sublessee shall deposit with Sublessor a security deposit (the
"Security Deposit") in the amount of Twenty One Thousand Three Hundred
Eighty-One Dollars ($21,381.00) as security for the faithful performance by
Sublessee of all of its obligations under this Sublease. If Sublessee fails
to pay rent or other charges due hereunder, or otherwise defaults with
respect to any provisions of this Sublease, Sublessor may, but shall not be
required to, apply 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 that
Sublessor may spend or become obligated to spend by reason of Sublessee's
default (including without limitation any amounts payable to Master Lessor
under the Master Lease), or to compensate Sublessor for any other loss or
damage that Sublessor may suffer by reason of Sublessee's default. If any
portion of the Security Deposit is so used or applied, Sublessee shall,
within five (5) days after written demand therefor restore the Security
Deposit to its original amount. If Sublessee is not in default upon
termination of this Sublease, said deposit, or so much thereof as has not
theretofore been applied by Sublessor, shall be returned, without payment of
interest or other increment for its use, to Sublessee at the expiration of
the Term, and after Sublessee has vacated the Premises. No trust relationship
is created herein between Sublessor and Sublessee with respect to the
Security Deposit. Sublessor shall not be required to keep the Security
Deposit separate from its general accounts. Sublessee shall not be entitled
to any interest on the Security Deposit. Sublessee hereby waives the
provisions of Section 1950.7 of the California Civil Code, and all other
provisions of law, now or hereafter enforced, which provide that Sublessor
may claim from a Security Deposit only those sums reasonably necessary to
remedy defaults in the payment of rent, to repair damage caused by Sublessee
or to clean the Premises, it being agreed that Sublessor may, in addition,
claim those sums reasonably necessary to compensate Sublessor from any other
loss or damage, foreseeable or unforeseeable, caused by the act or omission
of Sublessee or any officer, employee, agent or invitee of Sublessee.
6. USE. The Premises shall be used and occupied only for general office
purposes, sales, manufacturing, warehousing, shipping and support or any
other use which is reasonably comparable and for no other purposes. All
provisions of the Master Lease regarding use of the Premises (including
without limitation Paragraph 6 of the Master Lease) shall apply to the
Sublessee.
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7. MASTER LEASE.
(a) Sublessee acknowledges that it has read the attached copy of the
Master Lease and agrees that this Sublease shall be subject and subordinate
to the provisions thereof. Except as otherwise expressly provided to the
contrary in this Sublease or except to the extent the provisions of the
Master Lease are inconsistent herewith or otherwise inapplicable (i) all of
the rights and obligations conferred or imposed by the Master Lease on the
"Lessee" thereunder (to the extent the same relate to the Premises) are
hereby conferred and imposed upon Sublessee and all of the rights conferred
by the Master Lease upon the "Lessor" thereunder (to the extent the same
relate to the Premises) are hereby conferred on Sublessor and (ii) the
provisions of the Master Lease applicable to the Premises are hereby
incorporated herein by reference as if Sublessor were the "Lessor" and
Sublessee were the "Lessee" thereunder; provided, however that the time
limits contained in the Master Lease for the giving of notices, making of
demands, or performing of any act, condition or covenant on the part of
Sublessee as "Lessee" under the Master Lease are shortened for the purposes
of incorporation herein so that in each instance Sublessee shall have two (2)
business days less time to observe or perform under this Sublease than
Sublessor has as tenant under the Master Lease, and for the exercise by
Sublessor as "Lessor" under the Master Lease of any right, remedy or option
are lengthened so that in each instance Sublessor shall have two (2) business
days more time to observe or perform under this Sublease than the Master
Lessor has as landlord under the Master Lease.
(b) Except as otherwise expressly provided herein, during the Term
and for all subsequent periods with respect to obligations arising prior to
the termination of this Sublease, Sublessee shall comply with and perform,
for the benefit of Master Lessor and Sublessor, all of the terms, covenants,
conditions and obligations of the "Lessee" under the Master Lease allocable
or applicable to the Premises. Sublessee shall not do, permit or suffer any
act, occurrence or omission which if done, permitted or suffered by Sublessor
would be (with notice, the passage of time or both) in violation of or a
default by the Lessee under the Master Lease, or could lead in any respect to
the termination of the Master Lease. If Sublessee shall default or fail to
perform any of its obligations under this Sublease, other than its obligation
to pay Base Rent and additional rent and all other charges provided for
herein to Sublessor, Sublessor, without being under any obligation to do so
and without thereby waiving such default, may remedy such default or failure
for the account, and at the expense, of Sublessee, without notice in the case
of emergency and, in all other cases, after such default or failure continues
for five (5) days following the date Sublessor delivers written notice to
Sublessee of its intention to remedy such default or failure, and all costs
and expenses expended or incurred by Sublessor in connection with the same
shall be payable by Sublessee to Sublessor within ten (10) days of
Sublessor's delivery of written demand therefor to Sublessee.
(c) Sublessee acknowledges that Sublessor is entering into this
Sublease for the purpose of facilitating the transition from Sublessor to
Sublessee of the ownership of the "Assets" (as defined in the Asset Sale
Agreement) and of the operation of the "Business" (as defined in the Asset
Sale Agreement) as a going concern at the Premises, and agrees that (i) if
the Master Lease is terminated for any reason whatsoever, this Sublease shall
immediately be
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terminated and the parties' rights and obligations hereunder shall cease,
except as otherwise provided in this Paragraph 7(c); and (ii) in the event,
at any time after the Commencement Date, Sublessor obtains Master Lessor's
consent to terminate the Master Lease upon economic and other terms and
conditions acceptable to Sublessor in its sole discretion, and to enter into
a new lease ("New Lease") directly with Sublessee for the Premises upon
economic and other terms and conditions substantially similar to the terms
and conditions of this Sublease, then Sublessee shall enter into such New
Lease directly with Master Lessor in which event this Sublease shall be
terminated and the parties' rights and obligations hereunder shall cease,
except as otherwise provided in this Paragraph 7(c). Notwithstanding any
provision of this Sublease to the contrary, if this Sublease is terminated
for any reason whatsoever earlier than the Termination Date, the parties'
rights and obligations hereunder shall cease, save and except, (a)
Sublessor's obligation to return the Security Deposit to the extent provided
under Paragraph 5, above, (b) Sublessee's obligation to pay all additional
rent payable on account of the Existing Tenant Improvements to the extent
provided under Paragraph 4(c), above, and (c) any other obligations of the
parties hereunder that expressly survive the expiration or earlier
termination of this Sublease.
8. EXCLUDED PROVISIONS. Notwithstanding any provision of this Sublease
to the contrary, the provisions of Paragraphs 3.2, 4.1, 4.2, 5, 15, 17, 39,
47, 47.1, 47.2, 47.3, 47.4, 48, 49, 50, 51 and 53 and Exhibits A-1 and C of
the Master Lease are not incorporated into this Sublease and shall not apply
to this Sublease.
9. MASTER LESSOR'S PERFORMANCE UNDER MASTER LEASE. Sublessee recognizes
that Sublessor is not in a position to render any of the services or to
perform any of the obligations required by Sublessor by the terms of this
Sublease. Therefore, notwithstanding anything to the contrary contained in
this Sublease, Sublessee agrees that performance by Sublessor of its
obligations hereunder are conditional upon due performance by the Master
Lessor of its corresponding obligations under the Master Lease and Sublessor
shall not be liable to Sublessee for any default of the Master Lessor under
the Master Lease. Sublessee shall not have any claim against Sublessor by
reason of the Master Lessor's failure or refusal to comply with any of the
provisions of the Master Lease, unless such failure or refusal is a result of
Sublessor's act or failure to act, and Sublessee shall pay Base Rent and
additional rent and all other charges provided for herein without any
abatement, deduction or set-off whatsoever (except to the extent provided for
in Paragraph 9.5 of the Master Lease). Whenever Master Lessor shall fail to
perform its obligations under the Master Lease, Sublessor agrees to use
commercially reasonable efforts to obtain such performance on behalf of
Sublessee. If Sublessor fails, after using reasonable efforts, to cause the
Master Lessor under the Master Lease to observe and/or perform its
obligations under the Master Lease, Sublessee shall have the right, upon
prior written notice to Sublessor, to bring an action in Sublessor's name to
accomplish such purpose and Sublessor, upon Sublessee's reasonable request
and at Sublessee's sole cost and expense, shall reasonably cooperate with
Sublessee in this regard. Sublessee shall defend, indemnify and hold
Sublessor harmless from all claims, costs and liabilities, including
attorneys' fees and costs, arising out of or in connection with any such
action by Sublessee, unless such actions are required as a result of
Sublessor's breach of any of its covenants set forth above.
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10. MASTER LESSOR CONSENTS. In any case where any event, transaction,
action or omission contemplated to be taken or omitted by Sublessee requires
the consent or approval of Sublessor under this Sublease and/or of Master
Lessor under the Master Lease, it shall be a condition precedent to such
event, transaction, action or omission that the prior consent or approval of
Master Lessor shall have been obtained. Sublessee agrees that Sublessor shall
not have any duty or responsibility with respect to obtaining the consent or
approval of Master Lessor when the same is required or desired by Sublessee
other than (i) the transmission in a timely fashion by Sublessor to Master
Lessor of Sublessee's request for such consent or approval and (ii)
Sublessor's cooperation with Sublessee to obtain such approval or consent,
provided that such cooperation does not require Sublessor to pay any sum or
incur any out-of-pocket expense or to make any material performance or
undertaking.
11. NOTICES. Any and all notices, approvals or demands required or
permitted under this Sublease shall be in writing, shall be served either
personally, by United States certified mail, postage prepaid, return receipt
requested or by reputable overnight carrier and, shall be deemed to have been
given or made on the day on which it was received and shall be addressed to
the parties at the addresses set forth below. Any party may, from time to
time, by like notice, give notice of any change of address, and in such
event, the address of such party shall be deemed to have been changed
accordingly. The address for each party is:
If to Sublessor: Burke Rubber Company, Inc. c/o Burke Industries, Inc.
2250 South Tenth Street San Jose, California 95112
Attention: Rocco Genovese
If to Sublessee: Westland Technologies, Inc.
107 South Riverside Drive
Modesto, California 95354
Attention: Thomas Halyburton
12. BROKERS. Sublessor and Sublessee warrant to each other and to Master
Lessor that each has had no dealings with any real estate broker or agent in
connection with the negotiation of this Sublease (the "Broker"), and that
neither Sublessor nor Sublessee knows of any real estate broker or agent who
is or might be entitled to a commission in connection with this Sublease.
Sublessor and Sublessee each hereby agree to indemnify, defend and hold
harmless the other and Master Lessor from and against any losses, causes of
action, liabilities, damages, claims, demands, costs and expenses (including
reasonable attorneys' fees and costs) incurred, or to be incurred, by reason
of any breach of the foregoing warranty by either party hereto with respect
to any such dealings with any and all real estate broker(s) or agent(s).
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13. SUBLESSOR'S WARRANTIES. Sublessor represents and warrants to
Sublessee that:
(a) The Master Lease attached to the Sublease as Exhibit "A"
constitutes the entire agreement between the Master Lessor and Sublessor
regarding the Premises, and there are no written or oral amendments or
modifications thereto;
(b) Sublessor has not assigned any of its rights under the Master
Lease to the Premises to any third parties;
(c) The Master Lease is in full force and effect and, to Sublessor's
knowledge, neither Sublessor nor the Master Lessor is in default under the
Master Lease; and
(d) All rents and monetary or other obligations required of Sublessor
to be paid to Master Lessor or required to be performed by Sublessor pursuant
to the Master Lease have been paid by or performed by Sublessor through the
date of execution of this Sublease.
14. SUBLESSOR'S COVENANTS. Sublessor covenants to Sublessee that:
(a) As long as Sublessee is not in default under the Sublease,
Sublessor shall make all monetary payments to the Master Lessor which
Sublessor is obligated to make pursuant to the Master Lease, subject to any
and all cure periods, defenses, offsets and/or other good faith claims which
Sublessor may have, whether at law or equity, or under the terms and
provisions of the Master Lease; and
(b) Sublessor shall, using its best efforts and diligence given the
time constraints involved, send copies to Sublessee of all material notices
or other correspondence applicable to the Premises either sent or received by
Sublessor in connection with the Master Lease.
15. ALTERATIONS AND ADDITIONS. Sublessee shall comply with the
provisions of the Master Lease incorporated herein that relate to alterations
and additions, including without limitation the obligation to remove and
restore any and all alterations, improvements, additions or Utility
Installations at the expiration of the term and to restore the Premises to
its prior condition (as of the commencement of the Master Lease); provided,
however, that Sublessee shall not make any alterations, improvements,
additions or Utility Installations in, on or about the Premises, whether
interior or exterior, structural or nonstructural, where the total cost
thereof is more than Twenty Thousand Dollars ($20,000.00) or the aggregate
cost over any twelve (12) month period is more than Fifty Thousand Dollars
($50,000.00), unless approved in advance in writing by Sublessor, which
approval shall not be unreasonably withheld.
16. INSURANCE PROCEEDS AND AWARDS. Notwithstanding anything contained in
the Master Lease to the contrary, as between Sublessor and Sublessee only,
all insurance proceeds or condemnation awards received by Sublessor under the
Master Lease shall be deemed to be the property of Sublessor.
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17. INDEMNITY. Sublessee hereby agrees to indemnify, protect, defend and
hold Sublessor harmless from and against any and all claims, losses and
damages, including without limitation, reasonable attorneys' fees and
disbursements, (A) which may at any time be asserted against Sublessor by (i)
the Master Lessor for failure of Sublessee to perform any of the covenants,
agreements, terms, provisions or conditions contained in the Master Lease
which by reason of the provisions of this Sublease Sublessee is obligated to
perform, or (ii) any person by reason of Sublessee's use and/or occupancy of
the Premises and (B) resulting from any failure by Sublessee to comply with
the terms of this Sublease and the Master Lease, except to the extent any of
the foregoing is caused by the negligence or willful misconduct of Sublessor.
The provisions of this Paragraph 16 shall survive the expiration or earlier
termination of the Master Lease and/or this Sublease, or the failure of
Sublessor to perform its obligations hereunder.
18. INSURANCE. Sublessee shall comply with all of the insurance
requirements and obligations of Sublessor (applicable to the Premises), as
Lessee under the Master Lease, and shall, whether required by the Master
Lease or not, name Master Lessor and Sublessor as additional insureds, as
their interests may appear, on all policies of insurance required to be
carried by Sublessee hereunder or thereunder. No later than the Commencement
Date hereunder, Sublessee shall provide Sublessor with certificates or other
evidence of insurance acceptable to Sublessor certifying to the existence of
all such policies of insurance.
19. TAXES AND UTILITIES. Sublessee shall pay all taxes, including
without limitation all Real Property Taxes and all personal property taxes on
all trade fixtures, furnishings, equipment and all other personal property of
Sublessee, as and when required to be paid by Sublessor under the Master
Lease. Sublessee shall pay for all water, gas, heat, light, power, telephone
and other utilities and services supplied to the Premises, as and when
required to be paid by Sublessor under the Master Lease.
20. ASSIGNMENT AND SUBLETTING. Subject to all of the rights of Master
Lessor under the Master Lease and the restrictions contained in the Master
Lease, Sublessee shall be entitled to assign this Sublease or to sublet all
or any portion of the Premises subject to obtaining the prior written consent
of Sublessor, which consent shall not be unreasonably withheld or delayed by
Sublessor; provided, however, it shall be deemed reasonable for Sublessor to
deny its consent with respect to any sublease or assignment of this Sublease
if the Master Lessor does not consent to the same.
21. DEFAULT. In addition to the events of default described under the
Master Lease, the occurrence of any one or more of the following events shall
additionally constitute a material default of this Sublease by Sublessee, in
which event, immediately and without notice or demand, Sublessor shall be
entitled to terminate this Sublease and/or to exercise all remedies otherwise
available to it as the "Lessor" under the Master Lease:
(a) The failure of Sublessee to observe or perform any of the
covenants, conditions or provisions to be observed or performed by Sublessee
under any one or more the
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following: (i) the Asset Sale Agreement; and/or (ii) that certain "Service
Agreement" dated no later than the Commencement Date hereunder by and among
Sublessee, Sublessor and Burke Industries, Inc., a California corporation
("Burke Industries").
(b) The failure of Sublessee to make any payment when due under that
certain Promissory Note made no later than the Commencement Date hereunder by
Sublessee for the benefit of Burke Industries in the original principal
amount of Four Hundred Thousand Dollars ($400,000.00).
22. HOLDOVER. Notwithstanding anything to the contrary contained in the
Master Lease, if Sublessee fails to surrender the Premises upon the
termination or expiration of this Sublease, with or without the express or
implied consent of Sublessor, Sublessee shall pay rent during such tenancy at
a monthly rate equal to the greater of (i) the amount which Master Lessor
requires Sublessor to pay with respect to the Master Premises during such
tenancy pursuant to the Master Lease and (ii) one hundred fifty percent
(150%) of the Rent applicable under this Sublease during the last period of
the Term and, in addition to any and all other liabilities of Sublessee to
Sublessor accruing therefrom and any and all other rights and remedies of
Sublessor provided herein, at law, or in equity, Sublessee shall protect,
defend, indemnify and hold Sublessor harmless from all loss, cost (including
reasonable attorneys' fees) and liability resulting from such failure to
surrender the Premises, including, without limiting the generality of the
foregoing, any claims made by any succeeding tenant founded upon such failure
to surrender, and any losses suffered by Sublessor, including loss profits
and/or any liability to Master Lessor resulting from such failure to
surrender.
23. TENANT IMPROVEMENTS. Sublessor agrees to lease to Sublessee and
Sublessee agrees to lease from Sublessor on an "as is" basis the
Manufacturing Improvements, the Utility Installations and other trade
fixtures or improvements pertaining to the production or to mechanical or
electrical systems ("Tenant Improvements"), including without limitation
those improvements listed on EXHIBIT "C" attached hereto. During the term of
the Sublease, Sublessee shall bear the risk of loss with respect to the
Tenant Improvements and shall obtain and maintain insurance which insures
such Tenant Improvements, and all of Lessee's personal property, fixtures,
equipment and tenant improvements, if any, for "all risks" for the full new
replacement cost value thereof without deduction for depreciation of the
covered items and which policies shall name Sublessor as an additional
insured and loss payee thereof. Sublessee shall, at its sole expense, keep
the Tenant Improvements in good repair, condition and working order, ordinary
wear and tear excepted, and shall indemnify, defend and hold harmless
Sublessor, its assignees, transferees and successors and their respective
employees, officers and/or agents, from and against any losses (including tax
liability), costs, expenses, liabilities, damages, penalties and
disbursements at law or in equity, including attorneys' fees, imposed on or
incurred by or asserted against the indemnified parties arising out of the
leasing, ownership, use, possession, control, maintenance or operation of the
Tenant Improvements and claims for property damage, personal injury or
wrongful death arising in strict liability or negligence. All indemnities
contained in this Paragraph 23 shall survive the expiration or other
termination of this Sublease
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and are expressly made for the benefit of, and shall be enforceable by, any or
all of the indemnified parties.
24. SUCCESSORS AND ASSIGNS. The covenants and conditions contained in
this Sublease shall, subject to the provisions of Paragraph 20, above, apply
to and bind the successors and assigns of Sublessor and Sublessee.
25. SEVERABILITY. If any term or provision of this Sublease or the
application thereof to any person or circumstances shall, to any extent, be
invalid and unenforceable, the remainder of this Sublease or the application
of such term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby and
each term or provision of this Sublease shall be valid and be enforced to the
fullest extent permitted by law.
26. ENTIRE AGREEMENT; WAIVER. This Sublease contains the entire
agreement between the parties hereto and shall be binding upon and inure to
the benefit of their respective heirs, representatives, successors and
permitted assigns. Any agreement hereinafter made shall be ineffective to
change, modify, waive, release, discharge, terminate or effect an abandonment
hereof, in whole or in part, unless such agreement is in writing and signed
by the parties hereto.
27. FURTHER ASSURANCES. The parties hereto agree that each of them, upon
the request of the other party, shall execute and deliver, in recordable form
if necessary, such further documents, instruments or agreements and shall
take such further action that may be necessary or appropriate to effectuate
the purposes of this Sublease.
28. ATTORNEYS' FEES. In the event of the bringing of any action or suit
by any part or parties hereto against another party or parties hereunder
alleging a breach of any of the covenants, conditions, agreements or
provisions of this Sublease, the prevailing party or parties shall recover
all reasonable costs and expenses of suit, including without limitation,
reasonable attorneys' fees, consultants fees and fees of expert witnesses.
29. DEFINED TERMS. All capitalized, defined terms used in this Sublease
shall have the same meanings and effect given to them in the Master Lease
unless otherwise defined herein.
30. CHOICE OF LAW. This Sublease shall be governed by and construed in
accordance with the laws of the State of California.
31. POWER AND AUTHORITY. Each of the persons executing this Sublease on
behalf of Sublessee and Sublessor respectively warrant and represent to the
other that they have full power and authority to execute this Sublease and
bind their respective parties hereto.
32. COUNTERPARTS. This Sublease may be executed in one or more
counterparts, each of which shall be deemed original, and all of which
together shall constitute one and the same instrument.
10
33. CONSENT OF MASTER LESSOR. The obligations of each of Sublessor and
Sublessee hereunder shall be conditional upon the parties obtaining the
written unconditional consent of Master Lessor to this Sublease ("Master
Lessor Consent"). In the event, for any reason whatsoever, the Master Lessor
Consent is not obtained on or before twenty (20) days after the date hereof,
either party hereto may, in their respective sole discretion, cancel this
Sublease upon delivery of ten (10) days' prior written notice to the other
party; provided, however, that if such Master Lessor Consent is obtained
within such ten (10) day period, such notice of cancellation shall be deemed
revoked and this Sublease shall continue in full force and effect.
34. CONSENT OF GUARANTOR. The obligations of each of Sublessor and
Sublessee hereunder shall additionally be conditional upon the parties
obtaining the written unconditional consent of Burke Industries, in its
capacity as the "Guarantor" of Sublessor's performance under the Master Lease.
IN WITNESS WHEREOF, the parties hereto have executed this Sublease to be
effective as of the day and year first above written.
"SUBLESSEE"
WESTLAND TECHNOLOGIES, INC.,
a California corporation
By: [ILLEGIBLE]
---------------------------------
Its: President
--------------------------
By: [ILLEGIBLE]
---------------------------------
Its: Secretary
--------------------------
"SUBLESSOR"
BURKE RUBBER COMPANY, INC.,
a California corporation
By: [ILLEGIBLE]
---------------------------------
Its: President
--------------------------
11
GUARANTOR ACKNOWLEDGEMENT AND CONSENT:
The undersigned, Burke Industries, Inc., a California corporation,
guarantor of Sublessor's performance under the Master Lease, hereby
acknowledges and consents to this Sublease upon and only upon the terms and
conditions set forth in this Sublease, and further acknowledges that Master
Lessor's consent to this Sublease shall have no effect on Guarantor's
preexisting obligations as Guarantor.
DATED: June , 1996
-----
BURKE INDUSTRIES, INC.,
a California corporation
By: [ILLEGIBLE]
---------------------------------
Its: President
--------------------------
MASTER LESSOR ACKNOWLEDGEMENT AND CONSENT:
Each of the undersigned, co-trustees of the Arthur D. Bridges Family
Revocable Trust, the Master Lessor under the Master Lease, hereby
acknowledges and consents to this Sublease upon the terms and conditions set
forth in this Sublease and the Master Lease.
DATED: June 21 , 1996
----
/s/ [ILLEGIBLE]
-----------------------------------------------
Dennis L. Garrison, Co-Trustee of the Arthur D.
Bridges Family Revocable Trust
/s/ [ILLEGIBLE]
-----------------------------------------------
Beverly Bridges, Co-Trustee of Arthur D.
Bridges Family Revocable Trust
12
- --------------------------------------------------------------------------------
EXHIBIT "A"
MASTER LEASE
[ATTACHED]
INDUSTRIAL LEASE (TRIPLE NET)
1. PARTIES. This lease, dated July 1, 1991, is made by and between
ARTHUR D. BRIDGES FAMILY REVOCABLE TRUST (herein called "Lessor") and BURKE
RUBBER COMPANY, a California corporation (herein called "Lessee").
2. Premises, Parking and Common Areas.
2.1 PREMISES. Lessor hereby leases to Lessee and Lessee leases from
Lessor for the term, at the rental, and upon all of the conditions set forth
herein, a portion of that real property situated in the County of Stanislaus,
State of California, commonly known as 107 S. Riverside Drive, Modesto, more
particularly described on Exhibit A, and described as approximately 106,906
square feet (including approximately 10,390 square feet of office area) of
the building occupying the Property (the "Building") as outlined on Exhibit
A, herein referred to as the "Premises", including rights to the Common Areas
as hereinafter specified.
2.2 VEHICLE PARKING. Lessor hereby grants to Lessee the exclusive
right to park in all parking spaces located on the north side of the Building
and all parking spaces located on the south side of the Building; except for
the sixty (60) spaces in the south parking lot marked on Exhibit A and access
to the two (2) grade level loading doors located on the south side of the
Building. Lessee shall have nonexclusive use of such sixty (60) spaces until
such time as Lessor rents a portion of the Building to a tenant other than
Lessee, and Lessor gives Lessee notice that the new tenant will have
exclusive use of some or all of the sixty (60) spaces. Lessor hereby grants
to Lessee a nonexclusive easement over the Property between the east side of
the Building and the eastern boundary of the Property for purposes of
constructing and maintaining a walkway and for ingress and egress on and over
a walkway between the south parking lot and the Premises.
2.3 COMMON AREAS - DEFINITION. The term "Common Areas" is defined
as all areas and facilities outside the Building and within the boundary line
of the Property, except for the north parking lot.
2.4 COMMON AREAS - LESSEE'S RIGHTS. Lessor hereby grants to Lessee,
for the benefit of Lessee and its employees, suppliers, shippers, customers
and invitees, during the term of this Lease, the non-exclusive right to use,
in common with others entitled to such use, the Common Areas. Lessee shall
have
-1-
the right to temporarily store personal property in the north parking lot of
the Property from time to time as it deems necessary or desirable; provided
that such property as stored is not in violation of any law, rule or
regulation of a governmental authority having jurisdiction over the Property.
Lessor shall not make changes to the Common Areas or the north parking lot
without Lessee's prior written consent, which consent shall not be
unreasonably withheld.
3. TERM.
3.1 TERM. The term of this Lease shall be for ten (10) years and
four (4) months commencing on July 1, 1991 and ending on October 31, 2001
unless otherwise changed pursuant to any provision hereof. This Lease term
includes four (4) months free rent.
3.2 EARLY POSSESSION. Lessee may occupy the Premises prior to said
commencement date; such occupancy shall be subject to all provisions of this
Lease, such occupancy shall not advance the termination date.
4. RENT.
4.1 RENT COMMENCEMENT DATE. Lessee shall pay no rent through and
until November 1, 1991. If either Lessor or Lessee has obtained financing for
the Improvement Loan set forth in paragraph 48 of this Lease (hereinafter
"Improvement Loan") by September 1, 1991, Lessee shall commence paying Base
Rent to Lessor on November 1, 1991 ("Rent Commencement Date). If neither
Lessor nor Lessee has obtained financing for the Improvement Loan by
September 1, 1991, the Rent Commencement Date shall be delayed on a
day-by-day basis from November 1, 1991 by the number of days past September
1, 1991 until the date that the Improvement Loan is obtained by either Lessor
or Lessee. For example, if the financing for the Improvement Loan is obtained
on September 15, 1991 (by either Lessor or Lessee), the Rent Commencement
Date shall be November 15, 1991. If the Rent Commencement Date is other than
the first day of a calendar month, then the Base Rent for such month in each
year of the lease shall be equitably prorated based on the number of days
that rent or a particular rental rate is in effect during the month. Lessee
shall be responsible, however, for any payments to be applied to the
Improvement Loan prior to the Rent Commencement Date if said Improvement Loan
proceeds have been provided by Lessor to Lessee.
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4.2 BASE RENT. The amount of Lessee's monthly base rental payments
shall be dependent upon whether Lessor obtains the funding for the
Improvement Loan. In the event that Lessor provides to Lessee the funding for
the Improvement Loan prior to the Rent Commencement Date, Lessee shall pay to
Lessor, beginning on the Rent Commencement Date, the amounts set forth under
Column A of Exhibit A-1, "Schedule of Monthly Base Rental Payments", as its
Base Rent. In the event that Lessor does not provide the funding for the
Improvement Loan, Lessee shall pay to Lessor, beginning on the Rent
Commencement Date, the amounts set forth under Column B of Exhibit A-1,
"Schedule of Monthly Base Rental Payments", as its Base Rent. In the event
that Lessor provides the funding for the Improvement Loan subsequent to the
Rent Commencement Date, the amount of the Improvement Loan proceeds payable
by Lessor to Lessee shall be reduced by Twenty Thousand Dollars ($20,0000)
for each month after the Rent Commencement Date. Upon the providing of the
Improvement Loan proceeds by Lessor to Lessee, Lessee shall, in the
succeeding month and every month thereafter, pay the amounts set forth under
Column A of Exhibit A-l, "Schedule of Monthly Base Rental Payments" as its
Base Rent. For example, if the Rent Commencement Date is November 1, 1991 and
if on December 30, 1991 Lessor provides to Lessee funding for the Improvement
Loan, the amount of the Improvement Loan proceeds would be $535,000.00 and,
beginning January 1, 1992 (Month 3), Lessee's Monthly Base Rent would be
$21,381.00. Upon execution of this Lease, Lessee shall pay Lessor Twenty-One
Thousand Three Hundred Eighty-One no/100 dollars ($21,381.00) as Base Rent
for the first month in which rent is due. Rent shall be payable in lawful
money of the United States to Lessor at the address stated herein or to such
other persons or at such other places as Lessor may designate in writing.
4.3 OPERATING EXPENSES. Lessee shall pay to Lessor during the term
hereof, in addition to the Base Rent, Lessee's Share, as hereinafter defined,
of all Operating Expenses, as hereinafter defined, during each calendar year
of the term of this Lease.
(a) "Lessee's Share" is defined, for purposes of this Lease,
as sixty (60) percent.
(b) "Operating Expenses" is defined, for purposes of this
Lease, as all costs incurred by Lessor, if any, for:
-3-
(i) The operation, repair and maintenance, in neat,
clean, good order and condition, such portions of the Building as Lessor is
responsible for maintaining under the terms of this Lease.
(ii) The cost of the premiums for the liability and
property insurance policies required to be maintained by Lessor under
paragraph 8 hereof (but not to the extent that such policy limits exceed
those required by paragraph 8).
(iii) The amount of the real property tax to be paid by
Lessor under paragraph 10.1 hereof.
Notwithstanding the foregoing, the following shall be explicitly excluded
from Operating Expenses:
(1) Expenditures required by Lessor's failure to
comply with laws enacted on or before the date of this Lease;
(2) Costs incurred by Lessor for repair of damage to
the Building and costs attributable solely to tenants of the Building other
than Lessee;
(3) Costs, including permits, license and inspection
costs, incurred with respect to the installation of tenant improvements made
for tenants in the Building or incurred in renovating or otherwise improving,
decorating, painting or redecorating vacant space for other occupants of the
Building;
(4) Costs incurred by Lessor for maintenance,
repairs or alterations which are considered capital improvements and
replacements under generally accepted accounting principles, consistently
applied;
(5) Costs incurred by Lessor due to the violation by
Lessor or any other tenants of the terms and conditions of any other tenants
leasing of space in the Building.
(c) The inclusion of the improvements, facilities and services
set forth in paragraph 4.2(b)(i) of the definition of Operating Expenses
shall not be deemed to impose an obligation upon Lessor to either have said
improvements or facilities or to provide those services unless the Industrial
Center already has the
-4-
same, Lessor already provides the services, or Lessor has agreed elsewhere in
this Lease to provide the same or some of them.
(d) Lessee's Share of Operating Expenses shall be payable by
Lessee within ten (10) days after a reasonably detailed statement of actual
expenses is presented to Lessee by Lessor. At Lessor's option, however, an
amount may be estimated by Lessor from time to time of Lessee's Share of
annual Operating Expenses and the same shall be payable monthly or quarterly,
as Lessor shall designate, during each twelve-month period of the Lease term,
on the same day as the Base Rent is due hereunder. In the event that Lessee
pays Lessor's estimate of Lessee's Share of Operating Expenses as aforesaid,
Lessor shall deliver to Lessee within sixty (60) days after the expiration of
each calendar year a reasonably detailed statement showing Lessee's Share of
the actual Operating Expenses incurred during the preceding year. If Lessee's
payments under this paragraph 4.2(d) during said preceding year exceed
Lessee's Share as indicated on said statement, Lessee shall be entitled to a
refund of the amount of such overpayment. if Lessee's payments under this
paragraph during said preceding year were less than Lessee's share as
indicated on said statement, Lessee shall pay to Lessor the amount of the
deficiency within ten (10) days after delivery by Lessor to Lessee of said
statement.
(e) Lessor shall provide to Lessee documents substantiating
all of Lessor's Operating Expenses which Lessee is obligated to pay under
this Lease. Should there be a discrepancy between Lessee's share of Operating
Expenses set forth in the statement and Lessee's share of Operating Expenses
actually incurred then the party who was benefited by such discrepancy shall
pay the other party the amount of the discrepancy within thirty (30) days
after receiving notice of the discrepancy.
5. SECURITY DEPOSIT. Lessee shall deposit with Lessor upon execution
hereof $21,381.00 as security for Lessee's faithful performance of Lessee's
obligations hereunder. If Lessee fails to pay rent or other charges due
hereunder, or otherwise defaults with respect to any provision of this Lease,
Lessor may use, apply or retain all or any portion of said deposit for the
payment of any rent or other charge in default or for the payment of any
other sum to which Lessor may become obligated by reason of Lessee's default,
or to compensate Lessor for any loss or damage which Lessor may suffer
thereby. If Lessor so uses or applies all or any portion of said deposit,
Lessee shall within ten (10) days after written demand therefor deposit cash
with Lessor in an amount sufficient to restore said deposit to the full
amount then required of Lessee. Lessor shall not be required
-5-
to keep said security deposit separate from its general accounts. If Lessee
is not in default upon termination of the Lease, said deposit, or so much
thereof as has not theretofore been applied by Lessor, shall be returned,
without payment of interest or other increment for its use, to Lessee at the
expiration of the term hereof, and after Lessee has vacated the Premises. No
trust relationship is created herein between Lessor and Lessee with respect
to said Security Deposit.
6. USE.
6.1 USE. The Premises shall be used and occupied only for general
office purposes, sales, manufacturing, warehousing, shipping and support or
any other use which is reasonably comparable and for no other purpose.
6.2 COMPLIANCE WITH LAW.
(a) Lessor warrants to Lessee that the Premises, in the state
existing on the date that the Lease term commences, but without regard to the
use for which Lessee will occupy the Premises, does not violate any covenants
or restrictions of record, or any applicable building code, regulation or
ordinance in effect on such Lease term commencement date. In the event it is
determined that this warranty has been violated, then it shall be the
obligation of the Lessor, after written notice from Lessee, to promptly, at
Lessor's sole cost and expense, rectify any such violation. In the event
Lessee does not give to Lessor written notice of the violation of this
warranty within six months from the date that the lease term commences, the
correction of same shall be the obligation of the Lessee at Lessee's sole
cost.
(b) Except as provided in paragraph 6.2(a) Lessee shall, at
Lessee's expense, promptly comply with all applicable statutes, ordinances,
rules, regulations, orders, covenants and restrictions of record now in
effect or which may hereafter come into effect, whether or not they reflect a
change in policy from that now existing, during the term or any part of the
term hereof, relating in any manner to the Premises and the occupation and
use by Lessee of the Premises and of the Common Areas. Lessee shall not use
nor permit the use of the Premises or the Common Areas in any manner that
will create waste or a nuisance or shall unreasonably disturb other occupants
of the Property.
-6-
6.3 CONDITION OF PREMISES.
(a) Lessor shall deliver the Premises to Lessee clean and free
of debris on the Lease commencement date {unless Lessee is already in
possession) and Lessor warrants to Lessee that, subject to the qualifications
set forth in this paragraph 6.3(a), the plumbing, lighting, air conditioning
(if any), heating and loading doors, shall be in good operating condition on
the Rent Commencement Date. In the event that it is determined that this
warranty has been violated, then it shall be the obligation of Lessor, after
receipt of written notice from Lessee setting forth with specificity the
nature of the violation, to promptly, at Lessor's sole cost, rectify such
violation. With respect to the warranty as to the condition of the Premises,
but not the warranty of legal compliance, Lessee's failure to give such
written notice to Lessor within thirty (30) days after the Lease Commencement
Date shall cause the conclusive presumption that Lessor has complied with all
of Lessor's obligations hereunder.
(b) The parties acknowledge that the fire sprinkler system in
the Building presently is not capable of performing at the standard for
Lessee's specific use of the premises. Conditioned upon the terms set forth
below, Lessor agrees to install a fire sprinkler system so that it meets or
exceeds the standards necessary for Lessee's specific use of the Premises and
to add fire sprinklers to the paint booths and acid etch room to be
constructed within the Premises. The costs of such sprinkler installation and
repair shall be borne by Lessee and Lessor as follows: The first Seventy-five
Thousand Dollars ($75,000.00) shall be the obligation of Lessee. Any costs in
excess of Seventy-five Thousand Dollars ($75,000.00) shall be the obligation
of Lessor. In no event shall Lessee's portion of such costs exceed
Seventy-Five Thousand Dollars ($75,000.00). Such sprinkler installation and
repair shall be immediately begun upon either Lessor or Lessee obtaining the
financing for the Improvement Loan set forth in paragraph 48.
(c) Except as otherwise provided in this Lease, Lessee hereby
accepts the Premises in their condition existing as of the Lease commencement
date or the date that Lessee takes possession of the Premises, whichever is
earlier, subject to all applicable zoning, municipal, county and state laws,
ordinances and regulations governing and regulating the use of the Premises,
and any covenants or restrictions of record, and accepts this Lease subject
thereto and to all matters disclosed thereby and by any exhibits attached
hereto. Lessee acknowledges that neither Lessor nor Lessor's agent has made
any representation or warranty as to the present or future suitability of the
Premises for the conduct of Lessee's business.
-7-
7. MAINTENANCE, REPAIRS, ALTERATIONS AND COMMON AREA SERVICES.
7.1 LESSOR'S OBLIGATIONS. Subject to the provisions of paragraphs
4.2 (Operating Expenses), 6 (Use), 7.2 (Lessee's Obligations) and 9 (Damage
or Destruction) and except for damage caused by any negligent or intentional
act or omission of Lessee, Lessee's employees, suppliers, shippers,
customers, or invitees, in which event Lessee shall repair the damage (to the
extent uninsured by Lessor). Lessor, at Lessor's expense, subject to
reimbursement pursuant to paragraph 4.2, shall keep in good condition and
repair the foundations, exterior walls, the Common Areas (except as otherwise
provided herein) and roof of the Premises, as well as providing the services
for which there is an Operating Expense pursuant to paragraph 4.2. Lessor
shall have no obligation to make repairs under this paragraph 7.1 until a
reasonable time after receipt of written notice from Lessee of the need for
such repairs. Lessor shall not, however, be obligated to paint the exterior
or interior surface of exterior walls, nor shall Lessor be required to
maintain, repair or replace windows, doors or plate glass of the Premises.
Lessor shall not be liable for damages or loss of any kind or nature by
reason of Lessor's failure to furnish any Common Area Services when such
failure is caused by accident, breakage, repairs, strikes, lockout, or other
labor disturbances or disputes of any character, or by any other cause beyond
the reasonable control of Lessor.
7.2 LESSEE'S OBLIGATIONS.
(a) Subject to the provisions of paragraphs 6 (Use, 7.1
(Lessor's Obligations), and 9 (Damage or Destruction), Lessee, at Lessee's
expense, shall keep in good order, condition and repair the Premises and
every part thereof (whether or not the damaged portion of the Premises or
the means of repairing the same are reasonably or readily accessible to
Lessee) including, without limiting the generality of the foregoing, all
rplumbing, heating, ventilating and air conditioning systems, electrical and
lighting facilities and equipment within the Premises, fixtures, interior
walls and interior surfaces of exterior walls, ceilings, windows, doors,
plate glass, and skylights located within the Premises, the structural
condition of interior load bearing walls and roof membrane. Lessee shall
maintain the landscaping on the Property, all parking lots on the Property
and the walkway, if any, constructed pursuant to paragraph 2.2, at its cost
and expense subject to reimbursement as set forth below. Lessee shall bill
Lessor for: (i) a percentage of the costs incurred in maintaining the south
parking lot equal to the percentage obtained by dividing the number of spaces
Lessee does not have the exclusive use of in such south parking lot by the
total number of spaces in such south parking lot; and (ii) the costs incurred
in maintaining the landscaping on the Property that lies south of the east-
-8-
west line running through the most southerly point of the Premises (excluding
the boiler room).
(b) If Lessee fails to perform Lessee's obligations under this
paragraph 7.2 or under any other paragraph of this Lease, Lessor may enter
upon the Premises after ten (10) days' prior written notice to Lessee (except
in the case of emergency, in which no notice shall be required), perform such
obligations on Lessee's behalf and put the Premises in good order, condition
and repair, and the cost thereof together with interest thereon at the
maximum rate then allowable by law shall be due and payable as additional
rent to Lessor together with Lessee's next Base Rent installment.
(c) On the last date of the term hereof, or on any sooner
termination, Lessee shall surrender the Premises to Lessor in the same
condition as received, ordinary wear and tear excepted, clean and free of
debris. Any damage or deterioration of the Premises shall not be deemed
ordinary wear and tear if the same could have been prevented by good
maintenance practices. Lessee shall repair any damage to the Premises
occasioned by the installation or removal of Lessee's trade fixtures,
alterations, furnishings and equipment. Notwithstanding anything to the
contrary otherwise stated in this Lease, Lessee shall leave all components of
the Premises that existed prior to the execution of this Lease and all tenant
improvements (other than those pertaining to production or to mechanical ' or
electrical systems). Lessor may require the removal or Lessee may elect to
remove any or all of the Manufacturing Improvements and/or improvements
pertaining to production or to mechanical or electrical systems. Lessee shall
repair any damage caused by such removal and restore the effected portion of
the Premises to its pre-lease condition, reasonable wear and tear excepted.
7.3 ALTERATIONS AND ADDITIONS.
(a) Lessee may, without Lessor's prior written consent make
any alterations, improvements, additions, or Utility Installations in, on or
about the Premises that it desires; provided that Lessee shall make no change
or alteration to the exterior of the Premises nor the exterior of the
building nor the Property without Lessor's prior written consent; and
provided further that such alteration is and is carried out in compliance
with all applicable laws. As used in this paragraph 7.3 the term "Utility
Installation" shall mean carpeting, window coverings, air lines, power
panels, electrical distribution systems, lighting fixtures, space heaters,
air conditioning, plumbing, and fencing. Unless Lessee has obtained Lessor's
written consent to its leaving the alterations, Lessor may require that
Lessee remove (or
-9-
Lessee may voluntarily remove) any or all of said alterations, improvements,
additions or Utility Installations at the expiration of the term, and restore
the Premises and the Property to their prior condition. Lessor may require
Lessee to provide Lessor, at Lessee's sole cost and expense, a lien and
completion bond in an amount equal to the estimated cost of such
improvements, to insure Lessor against any liability for mechanic's and
materialmen's liens and to insure completion of the work.
(b) Any alterations, improvements, additions or Utility
Installations in or about the Premises or the Property that Lessee shall
desire to make and which requires the consent of the Lessor shall be
presented to Lessor in written form, with proposed detailed plans. If Lessor
shall give its consent, the consent shall be deemed conditioned upon Lessee
acquiring a permit to do so from appropriate governmental agencies, the
furnishing of a copy thereof to Lessor prior to the commencement of the work
and the compliance by Lessee of all conditions of said permit in a prompt and
expeditious manner.
(c) Lessee shall pay, when due, all claims for labor or
materials furnished or alleged to have been furnished to or for Lessee at or
for use in the Premises, which claims are or may be secured by any mechanic's
or materialmen's lien against the Premises, or the Property, or any interest
therein. Lessee shall give Lessor not less than ten (10) days' notice prior
to the commencement of any work in the Premises, and Lessor shall have the
right to post notices of non-responsibility in or on the Premises or the
Building as provided by law. If Lessee shall, in good faith, contest the
validity of any such lien, claim or demand, then Lessee shall, at its sole
expense defend itself and Lessor against the same and shall pay and satisfy
any such adverse judgment that may be rendered thereon before the enforcement
thereof against the Lessor or the Premises or the Property, upon the
condition that if Lessor shall require, Lessee shall furnish to Lessor a
surety bond satisfactory to Lessor in an amount equal to such contested lien
claim or demand indemnifying Lessor against liability for the same and
holding the Premises and the Property free from the effect of such lien or
claim. In addition, Lessor may require Lessee to pay Lessor's attorney's fees
and costs in participating in such action if Lessor shall decide it is to
Lessor's best interest to do so.
7.4 UTILITY ADDITIONS. Lessor reserves the right to install new or
additional utility facilities throughout the Building and the Common Areas
for the benefit of Lessor or Lessee, or any other Lessee of the Property,
including, but not by way of limitation, such utilities as plumbing,
electrical systems, security systems,
-10-
communication systems, and fire protection and detection systems, so long as
such installations do not unreasonably interfere with Lessee's use of the
Premises. Notwithstanding any provision of this Lease to the contrary, Lessor
shall take no action that would violate Lessee's security clearance or
obligations as a government contractor; provided that this sentence shall not be
construed to prevent Lessor from exercising its remedies under paragraph 13.
8. INSURANCE; INDEMNITY.
8.1 LIABILITY INSURANCE -- LESSEE. Lessee shall, at Lessee's
expense, obtain and keep in force during the term of this Lease a policy of
Combined Single Limit Bodily Injury and Property Damage Insurance insuring
Lessee and Lessor against any liability arising out of the use, occupancy or
maintenance of the Premises and the Property. Such insurance shall be in an
amount not less than $1,000,000.00 per occurrence. The policy shall insure
performance by Lessee of the indemnity provisions of this paragraph 8. The
limits of said insurance shall not, however, limit the liability of Lessee
hereunder. The insurance required by this paragraph may be maintained by a
rider to Lessee's existing blanket liability coverage. Each party shall
require its insurer to provide notice of cancellation to the additional
insured.
8.2 LIABILITY INSURANCE -- LESSOR. Lessor shall obtain and keep in
force during the term of this lease a policy of Combined Single Limit Bodily
Injury and Property Damage Insurance, insuring Lessor, but not Lessee,
against any liability arising out of the ownership, use, occupancy or
maintenance of the Property in an amount not less than $500,000.00 per
occurrence. The policy shall insure the performance by Lessor of the
indemnity provisions of paragraph 8.7. The limits of said insurance shall
not, however, limit the liability of Lessor hereunder.
8.3 PROPERTY INSURANCE. Lessor shall obtain and keep in force
during the term of this Lease a policy or policies of insurance covering loss
or damage to the Property improvements, but not Lessee's personal property,
fixtures, equipment or tenant improvements, in an amount not to exceed the
full replacement value thereof, as the same may exist from time to time,
providing protection against all perils included within the classification of
fire, extended coverage, vandalism, malicious mischief, flood (in the event
same is required by a lender having a lien on the Premises) special extended
perils ("all risk", as such term is used in the insurance industry). In
addition, Lessor shall obtain and keep , in force, during the term of this
Lease, a policy of rental value insurance covering a period of one year, with
loss payable to Lessor, which insurance shall also cover
-11-
all Operating Expenses for said period. In the event that the Premises shall
suffer an insured loss as defined in paragraph 9.1(g) hereof, the deductible
amounts under the casualty insurance policies relating to the Premises shall be
paid by Lessee: provided such deductible amount does not exceed $5,000.00.
8.4 PAYMENT OF PREMIUM INCREASE.
(a) After the term of this Lease has commenced, Lessee shall
not be responsible for paying Lessee's Share of any increase in the Property
insurance premium for the Property specified by Lessor's insurance carrier as
being caused by the use, acts or omissions of any other Lessee of the
Property, or by the nature of such other Lessee's occupancy which create an
extraordinary or unusual risk.
(b) Lessee, however, shall pay the entirety of any increase in
the property insurance premium for the Property over what it was immediately
prior to the commencement of the term of this Lease if the increase is caused
by the nature of Lessee's occupancy, but not by the fact that the Building is
now occupied (as opposed to unoccupied), or any act or omission of Lessee.
8.5 INSURANCE POLICIES. Insurance required hereunder shall be in
companies holding a "General Policyholders Rating" of at least B plus, or
such other rating as may be required by a lender having a lien on the
Premises, as set forth in the most current issue of "Best's Insurance Guide."
Each party shall not do or permit to be done anything which shall invalidate
the insurance policies carried by the other party. Each party shall deliver
to the other party copies of liability insurance policies required under
paragraph 8.1 or certificates evidencing the existence and amounts of such
insurance within seven (7) days after the commencement date of this Lease. No
such policy shall be cancellable or subject to reduction of coverage or other
modification except after thirty (30) days prior written notice to the other
party. Each party shall name the other party as an additional insured. Each
party shall, at least thirty (30) days prior to the expiration of such
policies, furnish the other party with renewals or "binders" thereof. Each
policy shall contain a cross-liability provision.
8.6 WAIVER OF SUBROGATION. Lessee and Lessor each hereby release
and relieve the other, and waive their entire right of recovery against the
other for loss or damage arising out of or incident to the perils insured
against which perils occur in, on or about the Premises, whether due to the
negligence of Lessor or Lessee or their agents, employees, contractors
and/or invitees. Lessee and Lessor
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shall, upon obtaining the policies of insurance required give notice to the
insurance carrier or carriers that the foregoing mutual waiver of subrogation is
contained in this Lease.
8.7 INDEMNITY.
(a) Except for Lessor's negligence or willful misconduct,
Lessee hall indemnify and hold harmless Lessor from and against any and all
claims arising from Lessee's use of the Property, or from the conduct of
Lessee's business or from any activity, work or things done by Lessee on the
property and shall further indemnify and hold harmless Lessor from and
against any and all claims arising from any breach or default in the
performance of any obligation on Lessee's part to be performed under the
terms of this Lease, or arising from any act or omission of Lessee, or any of
Lessee's agents, contractors, or employees.
(b) Lessor shall indemnify and hold harmless Lessee from and
against any and all claims arising from any breach or default in the
performance of any obligation on Lessor's part to be performed under the
terms of this Lease.
(c) The indemnities set forth in this paragraph 8.7 shall
survive the termination of this Agreement.
8.8 EXEMPTION OF LESSOR FROM LIABILITY. Lessee hereby agrees that
Lessor shall not be liable for injury to Lessee's business or any loss of
income therefrom. Except for Lessor's negligence or willful misconduct,
Lessor shall not be liable for any damages arising from any act or neglect of
any other lessee, occupant or user of the Property, nor from the failure of
Lessor to enforce the provisions of any other lease of the Property.
9. DAMAGE OR DESTRUCTION.
9.1 DEFINITIONS.
(a) "Premises Partial Damage" shall mean if the Premises are
damaged or destroyed to the extent that the cost of repair is less than fifty
percent of the then replacement cost of the Premises.
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(b) "Premises Total Destruction" shall mean if the Premises
are damaged or destroyed to the extent that the cost of repair is fifty
percent or more of the then replacement cost of the Premises.
(c) "Premises Building Partial Damage" shall mean if the
Building of which the Premises are a part is damaged or destroyed to the
extent that the cost to repair is less than fifty percent of the then
replacement cost of the Building.
(d) "Premises Building Total Destruction" shall mean if the
Building of which the Premises are a part is damaged or destroyed to the
extent that the cost to repair is fifty percent or more of the then
replacement cost of the Building.
(e) There is no paragraph 9.1(e) to this Lease.
(f) There is no paragraph 9.1(f) to this Lease.
(g) "Insured Loss" shall mean damage or destruction which was
covered by an event required to be covered by the insurance described in
paragraph 8. The fact that an insured Loss has a deductible amount shall not
make the loss an uninsured loss.
(h) "Replacement Cost" shall mean the amount of money
necessary to be spent in order to repair or rebuild the damaged area to the
condition that existed immediately prior to the damage occurring excluding
all improvements made by Lessees.
9.2 PREMISES PARTIAL DAMAGE; PREMISES BUILDING PARTIAL DAMAGE.
(a) Insured Loss: Subject to the provisions of paragraphs 9.4
and 9.5. if at any time during the term of this Lease there is damage which
is an insured Loss and which falls into the classification of either Premises
Partial Damage or Premises Building Partial Damage, then Lessor shall, at
Lessor's expense, repair such damage to the Premises, but not Lessee's
fixtures, equipment or tenant improvements, as soon as reasonably possible
and this Lease shall continue in full force and effect.
(b) Uninsured Loss: Subject to the provisions of paragraphs
9.4 and 9.5, if at any time during the term of this lease there is damage
which is
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not an Insured Loss and which falls within the classification of Premises
partial Damage or Premises Building Partial Damage, unless caused by a
negligent or willful act of Lessee (in which event Lessee shall make the
repairs at Lessee's expense), Lessor may at Lessor's option either (i) repair
such damage as soon as reasonably possible at Lessor's expense, in which
event this Lease shall continue in full force and effect, or (ii) give
written notice to Lessee within thirty (30) days after the date of the
occurrence of such damage of Lessor's intention to cancel and terminate this
Lease as of the date of the occurrence of such damage. In the event Lessor
elects to give such notice of Lessor's intention to cancel and terminate this
Lease, Lessee shall have the right within ten (10) days after the receipt of
such notice to give written notice to Lessor of Lessee's intention to repair
such damage at Lessee's expense, without reimbursement from Lessor, in which
event this Lease shall continue in full force and effect, and Lessee shall
proceed to make such repairs as soon as reasonably possible. If Lessee does
not give such notice within such 10-day period this Lease shall be cancelled
and terminated as of the date of the occurrence of such damage.
9.3 PREMISES TOTAL DESTRUCTION; PREMISES BUILDING TOTAL
DESTRUCTION; THE PROPERTY TOTAL DESTRUCTION.
(a) Subject to the provisions of paragraphs 9.4 and 9.5, if at
any time during the term of this Lease there is damage, whether or not it is
an Insured Loss, and which falls into the classifications of either (i)
Premises Total Destruction, or (ii) Premises Building Total Destruction, then
Lessor may at Lessor's option either (i) repair such damage or destruction,
but not Lessee's fixtures, equipment or tenant improvements, as soon as
reasonably possible at Lessor's expense, and this Lease shall continue in
full force and effect, or (ii) give written notice to Lessee within thirty
(30) days after the date of occurrence of such damage of Lessor's intention
to cancel and terminate this lease, in which case this lease shall be
cancelled and terminated as of the date of the occurrence of such damage.
Lessee shall have the same option to terminate the Lease on the same terms
and conditions applicable to Lessor under this paragraph 9.3. If Lessee
chooses to terminate under this paragraph, it shall pay to Lessor the
Improvement Loan Balance.
9.4 DAMAGE NEAR END OF TERM.
(a) Subject to paragraph 9.4(b), if at any time during the
last six months of the term of this lease there is substantial damage,
whether or not an Insured Loss, which falls within the classification of
Premises Partial Damage,
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Lessor may at Lessor's option cancel and terminate this Lease as of the date of
occurrence of such damage by giving written notice to Lessee of Lessor's
election to do so within 30 days after the date of occurrence of such damage.
(b) Notwithstanding paragraph 9.4(a), in the event that Lessee
has an option to extend or renew this Lease, and the time within which said
option may be exercised has not yet expired, Lessee shall exercise such
option, if it is to be exercised at all, no later than twenty (20) days after
the occurrence of an Insured Loss falling within the classification of
Premises Partial Damage during the last six months of the term of this Lease.
If Lessee duly exercises such option during said twenty (20) day period,
Lessor shall, at Lessor's expense, repair such damage, but not Lessee's
fixtures, equipment or tenant improvements, as soon as reasonably possible
and this lease shall continue in full force and effect. If Lessee fails to
exercise such option during said twenty (20) day period, then Lessor.may at
Lessor's option terminate and cancel this Lease as of the expiration of said
twenty (20) day period by giving written notice to Lessee of Lessor's
election to do so within ten (10) days after the expiration of said twenty
(20) day period, notwithstanding any term or provision in the grant of option
to the contrary.
9.5 ABATEMENT OF RENT; LESSEE'S REMEDIES.
(a) In the event Lessor repairs or restores the Premises
pursuant to the provisions of this paragraph 9. the rent payable hereunder
for the period during which such damage, repair or restoration continues
shall be abated in proportion to the degree to which Lessee's use of the
Premises is impaired.
(b) If Lessor shall be obligated to repair or restore the
Premises under the provisions of this paragraph 9 and shall not commence such
repair or restoration within ninety (90) days after such obligation shall
accrue, Lessee may at Lessee's option cancel and terminate this Lease by
giving Lessor written notice of Lessee's election to do so at any time prior
to the commencement of such repair or restoration. In such event this Lease
shall terminate as of the date of such notice.
9.6 TERMINATION--ADVANCE PAYMENTS. Upon termination of this Lease
pursuant to this paragraph 9, an equitable adjustment shall be made
concerning advance rent and any advance payments made by Lessee to Lessor.
Lessor shall, in addition, return to Lessee so much of Lessee's security
deposit as has not theretofore been applied by Lessor.
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9.7 WAIVER. Lessor and Lessee waive the provisions of any statute
which relate to termination of leases when leased property is destroyed and
agree that such event shall be governed by the terms of this Lease.
10. REAL PROPERTY TAXES.
10.1 PAYMENT OF TAXES. Lessor shall pay the real property tax, as
defined in paragraph 10.3 applicable to the Property subject to reimbursement
by Lessee of Lessee's Share of such taxes in accordance with the provisions
of paragraph 4.2. except as otherwise provided in paragraph 10.2.
10.2 ADDITIONAL IMPROVEMENTS. Lessee shall not be responsible for
paying Lessee's Share of any increase in real property tax caused by any sale
or other transfer of the Property or by additional improvements placed upon
the Property by other Lessees or by Lessor for the exclusive enjoyment of
such other Lessees. Lessee shall, however, pay to Lessor at the time that
Operating Expenses are payable under paragraph 4.2(c) the entirety of any
increase in real property tax if assessed solely by reason of additional
improvements placed upon the Premises by Lessee or at Lessee's request.
10.3 DEFINITION OF "REAL PROPERTY TAX." As used herein, the term
"real property tax" shall include any form of real estate tax or assessment,
general, special, ordinary or extraordinary, and any license fee, commercial
rental tax, improvement bond or bonds, levy or tax (other than inheritance,
personal income or estate taxes) imposed on the Property or any portion
thereof by any authority having the direct or indirect power to tax,
including any city, county, state or federal government, or any school,
agricultural, sanitary, fire, street, drainage or other improvement district
thereof, as against any legal or equitable interest of Lessor in the Property
or in any portion thereof, as against Lessor's right to rent or other income
therefrom, and as against Lessor's business of leasing the Property.
10.4 There is no paragraph 10.4 to this Lease.
10.5 PERSONAL PROPERTY TAXES.
(a) Lessee shall pay prior to delinquency all taxes assessed
against and levied upon trade fixtures, furnishings, equipment and all other
personal property of Lessee contained in the Premises or elsewhere. When
possible, Lessee shall cause said trade fixtures, furnishings, equipment and
all other personal property to be assessed and billed separately from the
real property of Lessor.
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(b) If any of Lessee's said personal property shall be
assessed with Lessor's real property, Lessee shall pay to Lessor the taxes
attributable to Lessee within ten (10) days after receipt of a written
statement setting forth the taxes applicable to Lessee's property.
11. UTILITIES. Lessee shall pay for all water, gas, heat, light, power,
telephone and other utilities and services supplied to the Premises, together
with any taxes thereon. If any such services are not separately metered to
the Premises, Lessee shall pay Lessee's Share of all charges jointly metered
with other premises in the Building.
12. ASSIGNMENT AND SUBLETTING.
12.1 LESSOR'S CONSENT REQUIRED. Lessee shall not voluntarily or by
operation of law assign, transfer, mortgage, sublet, or otherwise transfer or
encumber all or any part of Lessee's interest in the lease or in the
Premises, without Lessor's prior written consent, which Lessor shall not
unreasonably withhold. Lessor shall respond to Lessee's request for consent
hereunder in a timely manner and any attempted assignment, transfer,
mortgage, encumbrance or subletting without such consent shall be void, and
shall constitute a breach of this Lease without the need for notice to Lessee
under paragraph 13.1.
12.2 LESSEE AFFILIATE. Notwithstanding the provisions of paragraph
12.1 hereof, Lessee may assign or sublet the Premises, or any portion
thereof, without Lessor's consent, to any corporation which controls, is
controlled by or is under common control with Lessee, or to any corporation
resulting from the merger or consolidation with Lessee, or to any person or
entity which acquires all the assets of Lessee as a going concern of the
business that is being conducted on the Premises, all of which are referred
to as "Lessee Affiliate," provided that before such assignment shall be
effective said assignee shall assume, in full, the obligations of Lessee
under this Lease. Any such assignment shall not, in any way, affect or limit
the liability of Lessee under the terms of this Lease.
12.3 TERMS AND CONDITIONS OF ASSIGNMENT. Regardless of Lessor's
consent, no assignment shall release Lessee of Lessee's obligations hereunder
or alter the primary liability of Lessee to pay the Base Rent and Lessee's
Share of Operating Expenses, and to perform all other obligations to be
performed by Lessee hereunder. Lessor may accept rent from any person other
than Lessee
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pending approval or disapproval of such assignment. Neither a delay in the
approval or disapproval of such assignment nor the acceptance of rent shall
constitute a waiver or estoppel of Lessor's right to exercise its remedies
for the breach of any of the terms or conditions of this paragraph 12 or this
Lease. Consent to one assignment shall not be deemed consent to any
subsequent assignment. In the event of default by any assignee of Lessee or
any successor of Lessee, in the performance of any of the terms hereof,
Lessor may proceed directly against Lessee without the necessity of
exhausting remedies against said assignee.
12.4 TERMS AND CONDITIONS APPLICABLE TO SUBLETTING. Regardless of
Lessor's consent, the following terms and conditions shall apply to any
subletting by Lessee of all or any part of the Premises and shall be included
in subleases:
(a) There is no paragraph 12.4(a) to this Lease.
(b) No sublease entered into by Lessee shall be effective
unless and until it has been approved in writing by Lessor. In entering into
any sublease, Lessee shall use only such form of sublease as is satisfactory
to Lessor, and once approved by Lessor, such sublease shall not be changed or
modified without Lessor's prior written consent. Any sublessee shall, by
reason of entering into a sublease under this Lease, be deemed, for the
benefit of Lessor, to have assumed and agreed to conform and comply with each
and every obligation herein to be performed by Lessee other than such
obligations as are contrary to or inconsistent with provisions contained in a
sublease to which Lessor has expressly consented in writing.
(c) If Lessee's obligations under this Lease have been
guaranteed by third parties, then a sublease, and Lessor's consent thereto,
shall not be effective unless said guarantors give their written consent to
such sublease and the terms thereof.
(d) The consent by Lessor to any subletting shall not release
Lessee from its obligations or alter the primary liability of Lessee to pay
the rent and perform and comply with all of the obligations of Lessee to be
performed under this lease.
(e) The consent by Lessor to any subletting shall not
constitute a consent to any subsequent subletting by Lessee or to any
assignment or subletting by the sublessee.
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(f) In the event of any default under this Lease, Lessor may
proceed directly against Lessee, any guarantors or any one else responsible
for the performance of this Lease, including the sublessee, without first
exhausting Lessor's remedies against any other person or entity responsible
therefor to Lessor, or any security held by Lessor or Lessee.
(g) In the event Lessee shall default in the performance of
its obligations under this Lease, Lessor, at its option and without any
obligation to do so, may require any sublessee to attorn to Lessor, in which
event Lessor shall undertake the obligations of Lessee under such sublease
from the time of the exercise of said option to the termination of such
sublease; provided, however, Lessor shall not be liable for any prepaid rents
or security deposit paid by such sublessee to Lessee or for any other prior
defaults of Lessee under such sublease.
(h) Each and every consent required of Lessee under a sublease
shall also require the consent of Lessor.
(i) No sublessee shall further assign or sublet all or any
part of the Premises without Lessor's prior written consent.
(j) Lessor's written consent to any subletting of the Premises
by Lessee shall not constitute an acknowledgement that no default then exists
under this Lease of the obligations to be performed by Lessee nor shall such
consent be deemed a waiver of any then existing default, except as may be
otherwise stated by Lessor at the time.
(k) With respect to any subletting to which Lessor has
consented, Lessor agrees to deliver a copy of any notice of default by Lessee
to the sublessee. Such sublessee shall have the right to cure a default of
Lessee within ten (10) days after service of said notice of default upon such
sublessee, and the sublessee shall have a right of reimbursement and offset
from and against Lessee for any such defaults cured by the sublessee.
12.5 ATTORNEY'S FEES. In the event Lessee shall assign or sublet
the Premises or request the consent of Lessor to any assignment or subletting
or if Lessee shall request the consent of Lessor for any act Lessee proposes
to do then Lessee shall pay Lessor's reasonable attorneys fees incurred in
connection therewith, such attorneys fees not to exceed $350.00 for each such
request.
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13. DEFAULT; REMEDIES.
13.1 DEFAULT. The occurrence of any one or more of the following
events shall constitute a material default of this Lease by Lessee:
(a) The failure by Lessee to make any payment of rent or any
other payment required to be made by Lessee hereunder, as and when due, where
such failure shall continue for a period of three (3) days after written
notice thereof from Lessor to Lessee. In the event that Lessor serves Lessee
with a Notice to Pay Rent or Quit pursuant to applicable Unlawful Detainer
statutes such Notice to Pay Rent or Quit shall also constitute the notice
required by this subparagraph.
(b) Except as otherwise provided in this Lease, the failure by
Lessee to observe or perform any of the covenants, conditions or provisions
of' this Lease to be observed or performed by Lessee where such failure shall
continue for a period of thirty (30) days after written notice thereof from
Lessor to Lessee; provided, however, that if the nature of Lessee's
noncompliance is such that more than thirty (30) days are reasonably required
for its cure, then Lessee shall not be deemed to be in default if Lessee
commenced such cure within said thirty (30) day period and thereafter
diligently prosecutes such cure to completion. To the extent permitted by
law, such thirty (30) day notice shall constitute the sole and exclusive
notice required to be given to Lessee under applicable Unlawful Detainer
statutes.
(c) (i) The making by Lessee of any general arrangement or
general assignment for the benefit of creditors; (ii) Lessee becomes a
"debtor" as defined in 11 U.S.C. Section 101 or any successor statute thereto
(unless, in the case of a petition filed against Lessee, the same is
dismissed within ninety (90) days; (iii) the appointment of a trustee or
receiver to take possession of substantially all of Lessee's assets located
at the premises or of Lessee's interest in this Lease, where possession is
not restored to Lessee within sixty (60) days; or (iv) the attachment,
execution or other judicial seizure of substantially all of Lessee's assets
located at the Premises or of Lessee's interest in this Lease, where such
seizure is not discharged within sixty (60) days. In the event that any
provision of this paragraph 13.1(d) is contrary to any applicable law, such
provision shall be of no force or effect.
(d) The discovery by Lessor that any financial statement given
to Lessor by Lessee, any assignee of Lessee, any subtenant of Lessee, any
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successor in interest of Lessee or any guarantor of Lessee's obligation
hereunder, was materially false.
13.2 REMEDIES. In the event of any such material default by Lessee,
Lessor may at any time thereafter, with or without notice or demand and
without limiting Lessor in the exercise of any right or remedy which Lessor
may have by reason of such default:
(a) Terminate Lessee's right to possession of the Premises by
any lawful means, in which case this Lease and the term hereof shall
terminate and Lessee shall immediately surrender possession of the Premises
to Lessor. In such event Lessor shall be entitled to recover from Lessee all
damages incurred by Lessor by reason of Lessee's default including, but not
limited to, the cost of recovering possession of the Premises; Improvement
Loan Balance; expenses of reletting, including necessary renovation and
alteration of the Premises, reasonable attorney's fees, and any real estate
commission actually paid; the worth at the time of award by the court having
jurisdiction thereof of the amount by which the unpaid rent for the balance
of the term after the time of such award exceeds the amount of such rental
loss for the same period that Lessee proves could be reasonably avoided; that
portion of the leasing commission paid by Lessor pursuant to paragraph 15
applicable to the unexpired term of this Lease.
(b) Maintain Lessee's right to possession in which case this
Lease shall continue in effect whether or not Lessee shall have vacated or
abandoned the Premises. In such event Lessor shall be entitled to enforce all
of Lessor's rights and remedies under this Lease, including the right to
recover the rent as it becomes due hereunder and the Improvement Loan Balance.
(c) Pursue any other remedy now or hereafter available to
Lessor under the laws or judicial decisions of the state wherein the Premises
are located. Unpaid installments of rent and other unpaid monetary
obligations of Lessee under the terms of this Lease shall bear interest from
the date due at the maximum rate then allowable by law.
13.3 DEFAULT BY LESSOR. Lessor shall not be in default unless
Lessor fails to perform obligations required of Lessor within a reasonable
time, but in no event later than thirty (30) days after written notice by
Lessee to Lessor and to the holder of any first mortgage or deed of trust
covering the Premises whose name and address shall have theretofore been
furnished to Lessee in writing, specifying wherein Lessor has failed to
perform such obligation; provided, however, that if the
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nature of Lessor's obligation is such that more than thirty (30) days are
required for performance then Lessor shall not be in default if Lessor
commences performance within such thirty (30) day period and thereafter
diligently prosecutes the same to completion.
13.4 LATE CHARGES. Lessee hereby acknowledges that late payment by
Lessee to Lessor of Base Rent, Lessee's Share of Operating Expenses or other
sums due hereunder will cause Lessor to incur costs not contemplated by this
Lease, the exact amount of which will be extremely difficult to ascertain.
Suck costs include, but are not limited to, processing and accounting
charges, and late charges which may be imposed on Lessor by the terms of any
mortgage or trust deed covering the Property. Accordingly, if any installment
of Base Rent, Operating Expenses, or any other sum due from Lessee shall not
be received by Lessor or Lessor's designee within ten (10) days after such
amount shall be due, then, without any requirement for notice to Lessee,
Lessee shall pay to Lessor a late charge equal to 3% of such overdue amount.
The parties hereby agree that such late charge represents a fair and
reasonable estimate of the costs Lessor will incur by reason of late payment
by Lessee. Acceptance of such late charge by Lessor shall in no event
constitute a waiver of Lessee's default with respect to such overdue amount,
nor prevent Lessor from exercising any of the other rights and remedies
granted hereunder. In the event that a late charge is payable hereunder,
whether or not collected, for three (3) consecutive installments of any of
the aforesaid monetary obligations of Lessee, then Base Rent shall
automatically become due and payable quarterly in advance, rather than
monthly, notwithstanding paragraph 4.1 or any other provision of this Lease
to the contrary.
14. CONDEMNATION. If the Premises or any portion thereof or the
Property are taken under the power of eminent domain, or sold under the
threat of the exercise of said power (all of which are herein called
"condemnation"), this Lease shall terminate as to the part so taken as of the
date the condemning authority takes title or possession, whichever first
occurs. If more than ten percent of the floor area of the Premises, or more
than twenty-five percent of that portion of the Common Areas designated as
parking for the Property is taken by condemnation, Lessee may, at Lessee's
option, to be exercised in writing only within ten (10) days after Lessor
shall have given Lessee written notice of such taking (or in the absence of
such notice, within ten (10) days after the condemning authority shall have
taken possession) terminate this Lease as of the date the condemning
authority takes such possession. If Lessee does not terminate this Lease in
accordance with the foregoing, this Lease shall remain in full force and
effect as to the portion of the premises remaining, except that the rent
shall be reduced in the proportion that the
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floor area of the Premises taken bears to the total floor area of the
Premises. No reduction of rent shall occur if the only area taken is that
which does not have the Premises located thereon. Any award for the taking of
all or any part of the Premises under the power of eminent domain or any
payment made under threat of the exercise of such power shall be the property
of Lessor, whether such award shall be made as compensation for diminution in
value of the leasehold or for the taking of the fee, or as severance damages,
provided, however, that Lessee shall be entitled to any award for loss or
damage to Lessee's trade fixtures and removable personal property. In the
event that this Lease is not terminated by reason of such condemnation,
Lessor shall to the extent of severance damages received by Lessor in
connection with such condemnation, repair any damage to the Premises caused
by such condemnation except to the extent that Lessee has been reimbursed
therefor by the condemning authority. Lessee shall pay any amount in excess
of such severance damages required to complete such repair.
15. BROKER'S FEE. Lessor shall pay all brokerage commissions arising out
of this transaction in accordance with the terms of a separate brokerage
agreement. Such commissions shall include, without limitation, those due to
McMasters & Westland/TRI, Coldwell Banker and Tom Bridges.
16. ESTOPPEL CERTIFICATE.
(a) Each party (as "responding party") shall at any time upon not
less than ten (10) days prior written notice from the other party
("requesting party") execute, acknowledge and deliver to the requesting party
a statement in writing (i) certifying that this Lease is unmodified and in
full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is in full force
and effect) and the date to which the rent and other charges are paid in
advance, if any, and (ii) acknowledging that there are not, to the responding
party's knowledge, any uncured defaults on the part of the requesting party,
or specifying such defaults if any are claimed. Any such statement may be
conclusively relied upon by any prospective purchaser or encumbrancer of the
Premises or of the business of the requesting party.
(b) At the requesting party's option, the failure to deliver such
statement within such time shall be a material default of this Lease by the
party who is to respond, without any further notice to such party, or it
shall be conclusive upon such party that (i) this Lease is in full force and
effect, without modification except as may be represented by the requesting
party, (ii) there are no uncured
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defaults in the requesting party's performance, and (iii) if Lessor is the
requesting party, not more than one month's rent has been paid in advance.
(c) If Lessor desires to finance, refinance, or sell the Property,
or any part thereof, Lessee hereby agrees to deliver to any lender or
purchaser designated by Lessor such financial statements of Lessee as may be
reasonably required by such lender or purchaser. Such statements shall
include the past three (3) years' financial statements of Lessee. All such
financial statements shall be received by Lessor and such lender or purchaser
in confidence and shall be used only for the purposes herein set forth.
17. LESSOR'S LIABILITY. The term "Lessor" as used herein shall mean
only the owner or owners, at the time in question, of the fee title or a
Lessee's interest in a ground lease of the Property, and except as expressly
provided in paragraph 15, in the event of any transfer of such title or
interest, Lessor herein named (and in case of any subsequent transfers then
the grantor) shall be relieved from and after the date of such transfer of
all liability as respects Lessor's obligations thereafter to be performed,
provided that any funds in the hands of Lessor or the then grantor at the
time of such transfer, in which Lessee has an interest, shall be delivered to
the grantee. The obligations contained in this Lease to be performed by
Lessor shall, subject as aforesaid, be binding on Lessor's successors and
assigns, only during their respective periods of ownership.
18. 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.
19. INTEREST ON PAST-DUE OBLIGATIONS. Except as expressly herein
provided, any amount due to Lessor not paid when due shall bear interest at
the maximum rate then allowable by law from the date due. Payment of such
interest shall not excuse or cure any default by Lessee under this Lease;
provided, however, that interest shall not be payable on late charges
incurred by Lessee nor on any amounts upon which late charges are paid by
Lessee.
20. TIME OF ESSENCE. Time is of the essence with respect to the
obligations to be performed under this Lease.
21. ADDITIONAL RENT. All monetary obligations of Lessee to Lessor
under the terms of this Lease, including but not limited to Lessee's share of
Operating
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Expenses, insurance and tax expenses payable, and payments under Paragraph 48 of
this Lease shall be deemed to be rent.
22. INCORPORATION OF PRIOR AGREEMENTS; AMENDMENTS. This Lease
contains all agreements of the parties with respect to any matter mentioned
herein. No prior or contemporaneous agreement or understanding pertaining to
any such matters shall be effective. This Lease may be modified in writing
only, signed by the parties in interest at the time of the modification.
Except as otherwise stated in this Lease, Lessee hereby acknowledges that
neither the real estate broker listed in paragraph 15 hereof nor any
cooperating broker on this transaction nor the Lessor or any employee or
agents of any of said persons has made any oral or written warranties or
representations to Lessee relative to the condition or use by Lessee of the
Premises or the Property and Lessee acknowledges that Lessee assumes all
responsibility regarding the Occupational Safety Health Act, the legal use
and adaptability of the Premises and the compliance thereof with all
applicable laws and regulations in effect during the term of this Lease
except as otherwise specifically stated in this Lease.
23. NOTICES. Any notice required or permitted by the terms of this
Lease shall be given in writing and may be given by personal delivery or by
certified mail. Such notice shall be deemed sufficiently given if addressed
to Lessee or to Lessor at the address noted below the signature of the
respective parties, as the case may be. Notices shall be deemed delivered
upon delivery, if delivered personally, or five (5) days after deposit in the
United States Mail with proper postage and address. either party may by
notice to the other specify a different address for notice purposes. Upon
Lessee's taking possession of the Premises, the Premises shall automatically
become Lessee's address for notice purposes unless otherwise specified.
24. WAIVERS. No waiver by either party of any provision hereof
shall be deemed a waiver of any other provision hereof or of any subsequent
breach by the other party of the same or any other provision. A party's
consent to, or approval of, any act shall not be deemed to render unnecessary
the obtaining of that party's consent to or approval of any subsequent act.
The acceptance of rent hereunder by Lessor shall not be a waiver of any
preceding breach by Lessee of any provisions hereof other than the failure of
Lessee to pay the particular rent so accepted, regardless of Lessor's
knowledge of such preceding breach at the time of acceptance of such rent.
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25. RECORDING. Either Lessor or Lessee shall, upon request of the
other, execute, acknowledge and deliver to the other a "short form"
memorandum of this Lease for recording purposes.
26. HOLDING OVER. If Lessee, with Lessor's consent, remains in
possession of the Premises or any part thereof after the expiration of the
term hereof, such occupancy shall be a tenency from month to month upon all
the provisions of this Lease pertaining to the obligations of Lessee, but all
Options, if any, granted under the terms of this Lease shall be deemed
terminated and be of no further effect during said month to month tenancy.
27. CUMULATIVE REMEDIES. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
28. COVENANTS AND CONDITIONS. Each provision of this Lease shall be
deemed both a covenant and a condition.
29. BINDING EFFECT; CHOICE OF LAW. Subject to any provisions hereof
restricting assignment or subletting by Lessee and subject to the provisions
of paragraph 17, this Lease shall bind the parties, their personal
representatives, successors and assigns. This Lease shall be governed by the
laws of the State where the Property is located and any litigation concerning
this Lease between the parties hereto shall be initiated in the county in
which the Property is located.
30. SUBORDINATION.
(a) This Lease, and any Option granted hereby, at Lessor's
option, shall be subordinate to any ground lease, mortgage, deed of trust, or
any other hypothecation or security now or hereafter placed upon the Property
and to any and all advances made on the security thereof and to all renewals,
modifications, consolidations, replacements and extensions thereof.
Notwithstanding such subordination, Lessee's right to quiet possession of the
Premises shall not be disturbed if Lessee is not in default and so long as
Lessee shall pay the rent and observe and perform all of the provisions of
this lease, unless this Lease is otherwise terminated pursuant to its terms.
If any mortgagee, trustee or ground Lessor shall elect to have this Lease and
any Options granted hereby prior to the lien of its mortgage, deed of trust
or ground lease, and shall give written notice thereof to Lessee, this Lease
and such Options shall be deemed prior to such
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mortgage, deed of trust or ground lease, whether this Lease or such Options
are dated prior or subsequent to the date of said mortgage, deed of trust or
ground lease or the date of recording thereof.
(b) Lessee agrees to execute any documents required to
effectuate an attornment, a subordination or to make this Lease or any Option
granted herein prior to the lien of any mortgage, deed of trust or ground
lease, as the case may be. Lessee's failure to execute such documents within
ten (10) days after written demand shall constitute material default by
Lessee hereunder without further notice to Lessee or, at Lessor's option,
Lessor shall execute the document attached as Exhibit B on behalf of Lessee
as Lessee's attorney-in-fact. Lessee does hereby make, constitute and
irrevocably appoint Lessor as Lessee's attorney-in-fact and in Lessee's name,
place and stead, to execute such document in accordance with this paragraph
30(b).
31. ATTORNEY'S FEES. If either party named herein bring an action
to enforce the terms hereof or declare rights hereunder, the prevailing party
in any such action, on trial or appeal, shall be entitled to his reasonable
attorney's fees to be paid by the losing party as fixed by the court.
32. LESSOR'S ACCESS. Lessor and Lessor's agents shall have the
right to enter the Premises at reasonable times upon one day's advance
written notice (except in emergencies) for the purpose of inspecting the
same, showing the same to prospective purchasers, lenders, or Lessees, and
making such alterations, repairs, improvements or additions to the Premises
or to the building of which they are part as Lessor may deem necessary or
desirable. Lessor may at any time during the last 180 days of the term hereof
place on or about the Premises any ordinary "For Lease" signs. All activities
of Lessor pursuant to this paragraph shall be without abatement of rent, nor
shall Lessor have any liability to Lessee for the same. Notwithstanding any
provision of this Lease to the contrary, Lessee may absolutely exclude Lessor
from any portion of the Premises that Lessee must keep secure in order to
maintain its security clearance or its status as a government contractor;
provided that this sentence shall not be construed to prevent Lessor from
exercising remedies under paragraph 13.
33. AUCTIONS. Lessee shall not conduct, nor permit to be conducted,
either voluntarily or involuntarily, any auction upon the Premises or the
Common Areas without first having obtained Lessor's prior written consent.
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34. SIGNS. Lessee may place any signage it desires upon the outside
of the exterior walls of the Premises, within the Premises, or upon the roof
of the Premises without Lessor's consent; provided that such signage conforms
with any signage ordinances or programs in effect within the industrial park
in which the Leased Premises are located. Lessor may require that Lessee
remove any signage at the end of the Lease term, as extended, and Lessee
shall repair any damage to the Property occasioned by its installation,
maintenance, or removal of its signage.
35. MERGER. The voluntary or other surrender of this Lease by
Lessee, or a mutual cancellation thereof, or a termination by Lessor, shall
not work a merger.
36. CONSENTS. Wherever in this Lease the consent of one party is
required to an act of the other party such consent shall not be unreasonably
withheld or delayed.
37. GUARANTOR. In the event that there is a guarantor of this
Lease, said guarantor shall have the same obligations as Lessee under this
Lease.
38. QUIET POSSESSION. Upon Lessee paying the rent for the Premises
and observing and performing all of the covenants, conditions and provisions
on Lessee's part to be observed and performed hereunder, Lessee shall have
quiet possession of the Premises for the entire term hereof subject to all of
the provisions of this Lease. The individuals executing this Lease on behalf
of Lessor represent and warrant to Lessee that they are fully authorized and
legally capable of executing this Lease on behalf of Lessor and that such
execution is binding upon all parties holding an ownership interest in the
Property.
39. OPTION TO EXTEND TERM.
39.1 OPTION. Provided Lessee is not in default in the
performance of any of its obligations under this Lease, Lessee shall have the
right, at its option, to extend the term of this Lease for five (5) years
(the "Extended Term"). The lease of the Premises during the Extended Term
shall be upon the same terms, covenants and conditions as are set forth in
this Lease other than "rent", "term of the leasehold" and "this Option." If
Lessor does not receive from Lessee written notice of Lessee's exercise of
this option the "Option Notice") before the date one hundred eighty (180)
days prior to the termination of the initial ten (10) year lease term, this
option shall terminate.
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39.2 RENT.
(a) The monthly rent for the first year of the Extended Term
shall be determined as follows: The Consumer Price Index ("CPI") figure shall
be established the month of March, 1991, and the month of March, 2001. The
Base Rent for the first month of the Extended Term shall be equal to the
greater of (i) the preceding month's rent or (ii) $21,381.00 increased by the
same percentage, if any, by which the March, 2001, CPI figure shall have
increased over the March, 1991, CPI figure. As used herein, the term
"Consumer Price Index" shall refer to the "Consumer Price Index For All Urban
Consumers San Francisco-Oakland Metropolitan Area (All Items)" compiled by
the U.S. Department of Labor, Bureau of Labor Statistics (1982-84 equals
100). If the CPI should hereafter be changed, then the new base shall be
converted to the 1982-84 base and the base as so converted shall be used. In
the event that the Bureau shall cease to publish the Consumer Price Index,
then the successor or most nearly comparable index thereto shall by used. The
monthly rent for years two through five of the Extended term shall be
determined by a three (3) percent increase from the immediately preceding
year's monthly rent.
(b) After the initial monthly rent for the Extended Term has
been set, Lessee shall have the option to let this Lease expire at the end of
the initial term. Lessee's election to allow this Lease to expire at the end
of the initial term must be exercised within ten (10) days after receipt of
notice from the Lessor of the initial monthly rent for the Extended Term. If
Lessee does not exercise its election within the ten (10) day period, the
term of the Lease shall be extended as provided in this paragraph.
39.3 EFFECT OF DEFAULT. Notwithstanding the timely giving of the
Option Notice, if Lessee is in default of any provision of the Lease on the
date of commencement of the Extended Term at Lessor's option, all rights of
Lessee under this option shall terminate and be of no force and effect.
40. SECURITY MEASURES. Lessee hereby acknowledges that Lessor shall have
no obligation whatsoever to provide guard service or other security measures
for the benefit of the premises or the Property. Lessee assumes all
responsibility for the protection of Lessee, its agents, and invitees and the
property of Lessee and of Lessee's agents and invitees from acts of third
parties. Nothing herein contained shall prevent Lessor, at Lessor's sole
option, from providing security protection for the Property or any part
thereof.
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41. EASEMENTS. Lessor reserves to itself the right, from time to time,
to grant such easements, rights and dedications that Lessor deems necessary
or desirable, and to cause the recordation of Parcel Maps and restrictions,
so long as such easements, rights, dedications, Maps and restrictions do not
interfere with the use of the Premises and parking lots by Lessee. Lessee
shall sign any of the aforementioned documents upon request of Lessor and
failure to do so shall constitute a material default of this Lease by Lessee
without the need for further notice to Lessee.
42. PERFORMANCE UNDER PROTEST. If at any time a dispute shall arise as
to any amount or sum of money to be paid by one party to the other under the
provisions hereof, the party against whom the obligation to pay the money is
asserted shall have the right to make payment "under protest" and such
payment shall not be regarded as a voluntary payment, and there shall survive
the right on the part of said party to institute suit for recovery of such
sum. If it shall be adjudged that there was no legal obligation on the part
of said party to pay such sum or any part thereof, said party shall be
entitled to recover such sum or so much thereof as it was not legally
required to pay under the provisions of this Lease.
43. AUTHORITY. If a party 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 behalf of said entity. If a party is a corporation,
trust or partnership, it shall, within thirty (30) days after execution of
this Lease, deliver to the other party evidence of such authority
satisfactory to such party.
44. CONFLICT. Any conflict between the printed provisions of this Lease
and the typewritten or handwritten provisions, if any, shall be controlled by
the typewritten or handwritten provisions.
45. There is no paragraph 45 to this Lease.
46. There is no paragraph 46 to this Lease.
47. PREMISES IMPROVEMENTS, ALTERATIONS AND REPAIRS. At Lessor's sole
cost and expense, thirty (30) days prior to the Rent Commencement Date,
Lessor shall make the improvements to the Premises set forth on Exhibit C,
Schedule of Financial Obligations, which is incorporated herein. Those
improvements set forth
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on Exhibit C are the only improvements for which Lessor is obligated to pay.
Upon Lessor or Lessee obtaining financing for the Improvement Loan specified
in paragraph 48, Lessor shall deposit Two Hundred Thousand Dollars
($200,000.00), less any amounts previously expended by Lessor on its
financial obligations under this Lease, into an escrow account of its
choosing to be used in payment of Lessors financial obligations under this
Lease.
47.1 OFFICE SPACE. Lessor shall "spruce-up" the Office Space, as
identified on Exhibit A. Such may include (a) the replacement of existing
carpets with new standard grade carpets or, at the option of Lessee,
"BurkeBase," (b) the repainting of the entire area and the painting or
replacement of all other types of wall treatments and ceiling tiles, (c)
where necessary, the repair or replacement of window treatments, (d) where
necessary, the repair or replacement of electrical and plumbing fixtures and
(e) the repair or replacement of all HVAC, electrical, and plumbing such that
all systems are in good operating condition. Burke Industries' products shall
be used in the refurbishment when and where possible.
47.2 WAREHOUSE AREA. Where necessary, Lessor shall repair or
replace, all existing systems within the warehouse portion of the Premises to
assure that they are in good working order. Such systems include all HVAC,
electrical, plumbing and loading doors. Lessor shall assure that all doors,
windows, lights and restrooms are in proper working order. Lessor shall
install lighting such that an illumination of 70 Lumens is maintained
throughout the warehouse area.
47.3 RAILROAD SIDING. The parties acknowledge that a below
floor-level railroad siding (the "Siding") is located within the Premises.
Prior to Lessee's occupancy of the Premises, Lessor shall either (i)
construct a framework over the Siding and cover such framework with a
flooring material reasonably satisfactory to Lessee in such a manner that the
flooring material is flush with the existing floor. or (ii) surround the
Siding with a safety barrier and decrease the monthly Base Rent for the
Premises throughout the term of this Lease and any extension hereof
proportionately to the decrease in the rentable square footage of the
Premises occasioned by the loss of use of the area within such safety barrier.
47.4 SEPARATE CLARIFIER. When another tenant occupies the Building,
Lessor shall install, at its sole cost and expense, a clarifier which will
enable a governmental agent to test the sewage generated by tenants in the
Building other than Lessee.
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48. IMPROVEMENT LOAN. Lessor and Lessee shall each use its best
efforts to obtain financing to pay for Lessee's installation of Manufacturing
Improvements($500,000.00) and Lessee's portion of the installation of the new
sprinkler system ($75,000.00), a total of Five Hundred Seventy-Five Thousand
Dollars ($575,000.00) (hereinafter, the "Improvement Loan"). Lessor shall use
its best efforts to obtain the best rates and conditions available for the
financing. If the financing for the Improvement Loan is obtained by the
Lessor, Lessee shall pay Lessor, in addition to the Base Rent as set forth in
paragraph 4, the Improvement Loan, amortized over a ten-year term at the same
interest rate being paid by Lessor for the financing of the Improvement Loan.
However, if this Lease is terminated earlier than ten years, the Improvement
Loan Balance, as defined below, shall be paid by Lessee to Lessor upon said
earlier termination. Lessee shall also be responsible for the payment of its
proportionate percentage of costs associated with Lessor's obtaining the
financing for the Improvement Loan, and Lessee shall immediately reimburse
Lessor for such costs paid by Lessor. For example, if Lessor finances a total
of Eight Hundred Fifty Thousand Dollars ($850,000), Lessee's proportionate
percentage of financing costs shall be 68% (575,000.00 DIVIDED BY 850,000.00).
Wherever used in this Lease, the term "Improvement Loan Balance" shall mean
the amount of the initial Improvement Loan plus interest accrued thereon
minus all payments made by Lessee to Lessor towards the Improvement Loan. The
proceeds of the Improvement Loan shall be used by Lessee for the acquisition
and installation of certain processing and manufacturing improvements to be
installed by Lessee (the "Manufacturing Improvements") ($500,000.00) and for
Lessee's portion of the costs of the sprinkler system as described in
paragraph 6.3(b) ($75,000.00). If the cost of the Manufacturing Improvements
exceeds Five Hundred Thousand Dollars ($500,000.00), then Lessee shall pay
the amount of such excess (together with all other costs and expenses which
are not the responsibility of Lessor under paragraphs 6(b), 47 and 52). If
the financing for the Improvement Loan is obtained by Lessee, the costs of
obtaining such shall be exclusively the responsibility of Lessee. In the
event financing for the Improvement Loan is obtained by the Lessee, Lessor
shall have the right to continue to seek financing for the Improvement Loan,
and if Lessor subsequently obtains financing for the Improvement Loan, Lessor
may pay such to Lessee pursuant to the terms of paragraph 4 of this Lease. In
the event that neither Lessor nor Lessee has obtained financing for the
Improvement Loan by November 1, 1991, either party may terminate this Lease
by providing written notice to the other party. In the event this Lease is
terminated pursuant to this provision, neither party shall be obligated to
reimburse the other party for any funds expended in connection with any
aspect of this Lease; however, Lessor shall return the amount of the Security
Deposit to Lessee.
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49. LEASE TERMINATION. Beginning six (6) years after the Rent
Commencement Date, Lessee shall have the right to terminate this Lease at
any time upon six (6) months advance written notice to Lessor, upon full
payment of the Improvement Loan Balance and payment of Additional Rent. Upon
such termination all terms set forth in paragraph 7.2(c) shall apply. The
amount of Additional Rent to be paid shall be determined by the date Lessee
provides Lessor with Notice of Termination as set forth below:
DATE NOTICE OF TERMINATION GIVEN ADDITIONAL RENT
Months 67 through 78 6 months of base rent
Months 79 through 90 5 months of base rent
Months 91 through 102 4 months of base rent
Months 103 through 120 3 months of base rent
50. EXPANSION RIGHT. If during the term of this Lease, or any
extension thereof, there is unoccupied (available) space in the Building,
Lessee may lease all or a portion of said available space for a period as
long as the remainder of the term plus any Extended Term or as short as one
year at the then prevailing rental rate per square foot to be paid by Lessee
for the Premises under Column A of Exhibit A-1, "Schedule of Monthly Base
Rental Payments". For example, if beginning with Month 30 of the Lease,
Lessee choses to lease an additional 10,000 square feet of the Premises for
one year, Lessee's additional Base Monthly Rent would be $2,122
[$22,682 DIVIDED BY 106,906 x 10,000] for months 30 through 36 and $2,185
[$23,362 DIVIDED BY 106,906 x 10,000] for months 37 through 41.
51. OPTION TO PURCHASE. Lessor hereby grants Lessee an option to
purchase the Property during the term of the Lease, including any Extended
Term. The price shall be Four Million Three Hundred Thousand Dollars
($4,300,000) until the end of the fifth (5th) year of the Lease and shall
increase by five percent (5%) for each year thereafter of the Lease and, if
exercised, its Extension. The option shall be exercised by sending written
notice to Lessor electing to purchase the Property. Lessee may not exercise
its option to purchase the Property if Lessee is in default of this Lease as
defined in paragraph 13.1.
52. HAZARDOUS MATERIALS.
52.1 LESSEE'S OBLIGATIONS. Subject to the remaining provisions
of this paragraph, Lessee shall be entitled to use and store only those
Hazardous Materials (defined below), that are necessary for Lessee's
business, provided that
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such usage and storage is in full compliance with all applicable local, state
and federal statutes, orders, ordinances, rules and regulations (as
interpreted by judicial and administrative decisions). Lessor, at its sole
cost and expense, shall have the right upon one day's advance written notice
to (i) inspect the Premises, (ii) conduct test and investigations to
determine whether Lessee is in compliance with the provisions of this
paragraph, and (iii) request lists of all Hazardous Materials used, stored or
located on the Premises. Lessee shall give to Lessor immediate verbal and
follow-up written notice of any spills, releases or discharges of Hazardous
Materials (in amounts exceeding the applicable reportable quantities (if any)
for such Hazardous Materials in 40 C.F.R. Section 302.4) on the Premises, or
in any common areas or parking lots, caused by the acts or omissions of
Lessee, or its agents, employees, representatives, invitees, licensees,
subtenants, customers or contractors. Lessee covenants to comply with all
applicable governmental requirements with respect to any spill, release or
discharge of Hazardous Materials caused by the acts or omissions of Lessee,
or its agents, employees, representatives, invitees, licensees, subtenants,
customers, or contractors at Lessee's cost and expense; any required
remediation shall be performed after Lessee has obtained Lessor's written
consent, which shall not be unreasonably withheld; provided, however, that
Lessee shall be entitled to respond immediately to an emergency without first
obtaining Lessor's written consent. Lessee shall indemnify, defend and hold
Lessor harmless from and against any and all claims, judgments, damages,
penalties, fines, liabilities, losses, suits, administrative proceedings and
costs (including, but not limited to, attorneys, and consultant fees) arising
from or related to the use presence, transportation, storage, disposal,
spill, release or discharge of Hazardous Materials on or about the Premises
caused by the acts or omissions of Lessee, its agents, employees,
representatives, invitees, licensees, subtenants customers or contractors,
Lessee shall not be entitled to install any tanks under, on, or about the
Premises for the storage of Hazardous Materials without the express written
consent of Lessor, which may be given or withheld in Lessor's sole
discretion. As used in this Agreement, the term Hazardous Materials shall
mean (i) any wastes, materials or substances which are or become designated,
classified or regulated as "hazardous", "toxic" or a "pollutant" under any
local, state or federal laws; (ii) petroleum, petroleum products or any
petroleum contaminated soils or sludges; (iii) asbestos; (iv) polychlorinated
biphenyls ("PCBs"); and (v) radioactive materials. The provisions of this
paragraph shall survive the termination of this Lease.
52.2 LESSOR'S OBLIGATIONS. Lessor warrants that the Property (which
for purposes of this paragraph 52 shall include, without limitation, the
Building and the Premises) complies with all local, state and federal laws
and regulations pertaining to Hazardous Materials as of the completion of the
Remediation Period
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(as defined below). Lessor covenants to promptly remove or otherwise remediate,
as required by all applicable laws, any Hazardous Materials existing on, under
or around the Property at any time during the term of the Lease, except for
those that Lessor can reasonably prove were introduced by Lessee. Lessor shall
indemnify, defend and hold Lessee harmless from and against any and all claims,
judgments, damages, penalties, fines, liabilities, losses, suits, administrative
proceedings and costs (including, but not limited to, attorneys and consultant
fees) arising from or related to the presence and/or threatened release of
Hazardous Materials on or under the Property or the presence of Hazardous
Materials on other properties that have transmigrated from the Property other
than those that Lessor reasonably proves were introduced on, under or around the
Property by Lessee. Throughout the term of this Lease, Lessor shall cause all
other tenants of the Building to execute leases containing the provisions set
forth in paragraph 52.1 and shall use its best efforts to enforce such lease
clauses. Lessor shall promptly inform Lessee of any spill, release, threatened
release or discharge of Hazardous Materials on the Property. The provisions of
this paragraph shall survive the termination of this Lease.
52.3 UNDERGROUND TANKS, REMEDIATION. The parties acknowledge that
there are currently three underground fuel tanks on the Property. Within
ninety (90) days after the date of this Lease (the "Remediation Period")
Lessor shall conduct soils and other tests around the' tanks in a manner
acceptable to all governmental agencies having jurisdiction over the tanks
("Enforcement Agencies") and either (i) remove the three tanks and remediate
any leakage in accordance with all applicable laws and to the satisfaction of
all Enforcement Agencies and receive written acknowledgement of such
compliance and satisfaction from each Enforcement Agency or (ii) if no
remediation is necessary or required by any Enforcement Agency, legally
abandon such tanks (and receive a certificate of such abandonment) in
accordance with all applicable laws concerning abandonment in place. Prior to
the expiration of the Remediation Period, Lessor shall also remove, where
required by any local, state and Federal law, all Hazardous Materials from
the Property and take all steps necessary to comply with the warranties set
forth in paragraph 52.2. Lessor's cost of completing any actions required
under the paragraph shall not be an Operating Expense. If Lessor does not
complete all work required under this paragraph within the Remediation
Period, then Lessee may, at its option, either terminate this Lease or
conduct all, none or a portion of such work and deduct any cost incurred
therein from future rent. Prior to the expiration of the Remediation Period,
Lessor shall also confirm the presence or absence of PCBs in any electrical
transformers or other equipment located on the Property at the commencement
of the Lease and shall remove any PCB containing materials from the Property
in accordance with applicable requirements of law.
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53. TERMINATION AND REPLACEMENT OF PRIOR LEASE. This Lease
supersedes that certain Lease dated May 24, 1991 between the parties herein.
LESSOR LESSEE
ARTHUR D. BRIDGES FAMILY BURKE RUBBER COMPANY
REVOCABLE TRUST a California corporation
By /s/ Arthur D. Bridges By /s/ Rocco C. Genovese
--------------------------------- ---------------------------------
ARTHUR D. BRIDGES, Trustee ROCCO C. GENOVESE
Chairman
By /s/ Beverly Bridges By /s/ Reed C. Wolthausen
--------------------------------- ---------------------------------
BEVERLY BRIDGES, Trustee REED C. WOLTHAUSEN
Director
Executed on July 1, 1991 Executed on July 1, 1991
ADDRESS FOR NOTICES
AND RENT: ADDRESS:
3223 Crow Canyon Road, Suite 270 2250 South 10th Street
P. O. Box 157 San Jose, CA 95112
San Ramon, CA 9458
Executed on July 1, 1991 Executed on July 1, 1991
ADDRESS FOR NOTICES
AND RENT: ADDRESS:
3223 Crow Canyon Road, Suite 270 2250 South 10th Street
P. O. Box 157 San Jose, CA 95112
San Ramon, CA 94583
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DESCRIPTION:
EXHIBIT "A"
PARCEL NO. 1:
All that certain piece or parcel of land situated in and being a portion of
the Northwest one-quarter of Section 35, Township 3 South, Range 9 East,
Mount Diablo Base and Meridian, in the County of Stanislaus, State of
California, being more particularly described as follows:
COMMENCING at the Northeast corner of the Northwest one-quarter of Section
35, Township 3 South, Range 9 East, Mount Diablo Base and Meridian, thence
South 89 degrees 54' 30" East along the North line of said Section 35, a
distance of 27.13 feet to its intersection with the Centerline of a County
Road known as Riverside Drive as conveyed by Deed recorded April l, 1932 in
Book 467 page 206 of official records; thence South 0 degrees 30' 48" East
along said center-line a distance of 153.00 feet; thence North 89 degrees 54'
30" West, along the South line of a 60 foot street known as Lapham Drive
and the easterly extension thereof a distance of 50.00 feet to the true point
of beginning of this description, said point being on the westerly line of a
50 foot strip described in Parcel No. 1 in the deed to County of Stanislaus,
recorded December 4, 1964 in Book 1996 page 18 of Official Records, as
Instrument No. 47494 (being the additional width for Riverside Drive);
thence continuing North 89 degrees 54' 30" West along said South line a
distance of 143.47 feet; thence along the arc of a non tangent curve concave
to the Southeast a distance of 318.38 feet, said curve having a central
angle of 30 degrees 43' 12" and a radius of 593.81 feet (Chord bearing and
distance South 42 degrees 58' 14" 314.58 feet); thence South 0 degrees 29'
00" East a distance of 1037.71 feet; thence North 89 degrees 29' 12" East a
distance of 360.48 feet to a point on the Westerly line of said Parcel No. 1
described in the Deed recorded in book 1996 page 18 (Riverside Drive); thence
North 0 degrees 30' 48" West along said westerly line a distance of 1264.44
feet to the point of beginning.
EXHIBIT A - Page 1 of 3
EXHIBIT "A" (CONT'D)
PARCEL NO. 2:
All of that certain piece or parcel of land situated in and being a portion
of the Northwest one-quarter of Section 35, Township 3 South, Range 9 East,
Mount Diablo Base and Meridian, in the County of Stanislaus, State of
California, being more particularly described as follows:
COMMENCING at the Northeast corner of the Northwest one-quarter of Section
35, Township 3 South, Range 9 East, Mount Diablo Base and Meridian, thence
South 89 degrees 54' 30" East along the North line of said Section 35 a
distance of 27.13 feet to its intersection with the centerline of a County
Road known as Riverside Drive as conveyed by deed recorded April 1, 1932 in
book 467 page 206 of Official Records; thence South 0 degrees 30' 48" East
along said center-line a distance of 153.00 feet; thence North 89 degrees 54'
30" West along the south line of a 60 foot street known as Lapham Drive, and
the Easterly extension thereof, a distance of 50.00 feet to a point on the
Westerly line of a 50 foot strip described in Parcel No. 1 in the Deed to
County of Stanislaus recorded December 4, 1964 in Book 19996 page 18 of
Official Records, as Instrument No. 47494 (being the additional width for
Riverside Drive, thence South 0 degrees 30' 48" East and along the Westerly
line of said Parcel No. 1 as described in the Deed recorded in Book 1996 page
18 (Riverside Drive), a distance of 1264.44 feet to the true point of
beginning of this description; thence continuing South 0 degrees 30' 48" East
along said Westerly line a distance of 553.49 feet; thence South 89 degrees
29' 12" West a distance of 360.77 feet; thence North 0 degrees 29' 00" West a
distance of 553.49 feet; thence North 89 degrees 29' 12" East a distance of
360.48 feet to the point of beginning.
EXCEPTING THEREFROM that portion conveyed to Beard Land Improvement Company,
a California Corporation by Deed recorded December 9, 1977 in book 2k996 page
281, Official Records, as Instrument No. 37186, described as follows:
COMMENCING at the interior one-quarter corner of Section 35, Township 3
South, Range 9 East, Mount Diablo Meridian; thence North 89 degrees 52' 56"
West, a distance of 20.40 feet to the westerly line of a road known as
Riverside Drive; thence North 0 degrees 30' 48" West along the westerly line
of said Riverside Drive, a distance of 672.64 feet to the true POINT OF
BEGINNING of this description; thence continue North 0 degrees 30' 48" West
along said westerly line, a distance of 80.00 feet; thence South 89 degrees
29' 12" West, a distance of 360.73 feet to the easterly right of way of the
Modesto & Empire Traction Company; thence South 0 degrees 29' 00" East along
said easterly line, a distance of 80.00 feet; thence North 89 degrees 29'
12" East a distance of 360.77 feet to the point of beginning.
EXHIBIT A - Page 2 of 3
Exhibit 'A'
[SITE PLAN]
EXHIBIT A - Page 3 of 3
SCHEDULE OF MONTHLY BASE RENTAL PAYMENTS
Monthly Base Rent
A B
Month
-----
1 $ 21,381 $ 7,106
2 21,381 7,106
3 21,381 7,106
4 21,381 7,106
5 21,381 7,106
6 21,381 7,106
7 21,381 7,106
8 21,381 7,106
9 21,381 7,106
10 21,381 7,106
11 21,381 7,106
12 21,381 7,106
13 22,022 7,747
14 22,022 7,747
15 22,022 7,747
16 22,022 7,747
17 22,022 7,747
18 22,022 7,747
19 22,022 7,747
20 22,022 7,747
21 22,022 7,747
22 22,022 7,747
23 22,022 7,747
24 22,022 7,747
25 22,682 8,407
26 22,682 8,407
27 22,682 8,407
28 22,682 8,407
29 22,682 8,407
30 22,682 8,407
31 22,682 8,407
32 22,682 8,407
33 22,682 8,407
34 22,682 8,407
35 22,682 21,442
36 22,682 28,407
37 23,362 29,087
38 23,362 29,087
39 23,362 29,087
40 23,362 29,087
41 23,362 29,087
EXHIBIT A-1 - Page 1 of 3
SCHEDULE OF MONTHLY BASE RENTAL PAYMENTS
Monthly Base Rent
A B
Month
-----
42 $ 23,362 $ 29,087
43 23,362 29,087
44 23,362 29,087
45 23,362 29,087
46 23,362 29,087
47 23,362 29,087
48 23,362 29,087
49 24,063 29,788
50 24,063 29,788
51 24,063 29,788
52 24,063 29,788
53 24,063 29,788
54 24,063 29,788
55 24,063 29,788
56 24,063 29,788
57 24,063 29,788
58 24,063 29,788
59 24,063 29,788
60 24,063 29,788
61 24,785 30,510
62 24,785 30,510
63 24,785 30,510
64 24,785 30,510
65 24,785 30,510
66 24,785 30,510
67 24,785 30,510
68 24,785 30,510
69 24,785 30,510
70 24,785 30,510
71 24,785 30,510
72 24,785 30,510
73 25,528 31,253
74 25,528 31,253
75 25,528 31,253
76 25,528 31,253
77 25,528 31,253
78 25,528 31,253
79 25,528 31,253
80 25,528 31,253
81 25,528 31,253
82 25,528 31,253
EXHIBIT A-1 - Page 2 of 3
SCHEDULE OF MONTHLY BASE RENTAL PAYMENTS
Monthly Base Rent
A B
Month
-----
83 $ 25,528 $ 31,253
84 25,528 31,253
85 26,294 32,019
86 26,294 32,019
87 26,294 32,019
88 26,294 32,019
89 26,294 32,019
90 26,294 32,019
91 26,294 32,019
92 26,294 32,019
93 26,294 32,019
94 26,294 32,019
95 26,294 32,019
96 26,294 32,019
97 27,083 32,808
98 27,083 32,808
99 27,083 32,808
100 27,083 32,808
101 27,083 32,808
102 27,083 32,808
103 27,083 32,808
104 27,083 32,808
105 27,083 32,808
106 27,083 32,808
107 27,083 32,808
108 27,083 32,808
109 27,895 33,620
110 27,895 33,620
111 27,895 33,620
112 27,895 33,620
113 27,895 33,620
114 27,895 33,620
115 27,895 33,620
116 27,895 33,620
117 27,895 33,620
118 27,895 33,620
119 27,895 33,620
120 27,895 33,620
------------ ------------
TOTAL $ 2,941,140 $ 2,941,175
EXHIBIT A-1 - Page 3 of 3
Recording Requested by And
When Recorded Mail TO:
- ------------------------
- ------------------------
- ------------------------
Attn:
------------------------------
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(Space above this line for Recorder's Use)
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS AGREEMENT, made as of the day of 19 , between Burke
----- -------- ---
Rubber Company, a California corporation ("Tenant"),
--------------------
, a ("Lender"), and the
- ------------------- -----------------------------
Arthur D. Bridges Family Revocable Trust, organized and existing under the
laws of the State of California ("Landlord").
WITNESSETH
WHEREAS, Tenant has entered into a certain lease with Landlord
(said lease, together with any extensions, renewals, replacements or
modifications thereof, referred to hereinafter as the "Lease") dated May 24,
1991, covering premises (the "Premises") within a certain building known as
107 South Riverside Drive, Modesto, California and situated on land more
particularly described in EXHIBIT A attached hereto and incorporated herein;
and
WHEREAS, Lender has agreed to make a loan ( the "Loan") to
Landlord secured by a certain Deed of Trust, (the "Deed of Trust"); and
WHEREAS, it is a condition precedent to obtaining the Loan that
the Deed of Trust be a lien or charge upon the Premises unconditionally prior
and superior to the Lease and the leasehold interest of Tenant; and
EXHIBIT B - Page 1 of 4
WHEREAS, Tenant acknowledges that when recorded the Deed of Trust
constitutes, or will constitute, a lien or charge upon the Premises which
is, or shall be, unconditionally prior and superior to the Lease and
leasehold interest of Tenant; and
WHEREAS, Lender has been requested by Tenant and by Landlord to
enter into a non-disturbance agreement with Tenant;
NOW THEREFORE, in consideration of the premises and mutual
covenants hereinafter contained, the parties hereto mutually covenant and
agree as follows:
1. The Lease and all of the right, title and interest of Tenant in
and to the Premises are and shall be subject and subordinate to the Deed of
Trust and to all of the terms and conditions contained therein, and to any
renewals, modifications, replacements, consolidations and extensions thereof.
2. Lender consents to the Lease and, in the event of foreclosure
of the Deed of Trust, or in the event Lender comes into possession or
acquires title to the Premises as a result of the enforcement or foreclosure
of the Deed of Trust or the note secured thereby, or as a result of any other
means, Lender agrees to recognize Tenant, and further agrees that Tenant
shall not be disturbed in its possession of the Premises for any reason other
than one which would entitle the Landlord to terminate the Lease under its
terms or would cause, without any further action by such Landlord, the
termination of the Lease or would entitle such Landlord to dispossess Tenant
from the Premises.
3. In addition, it is agreed that any options to extend the term
of the Lease, purchase options, rights of first refusal and similar rights or
interests of Tenant under the Lease, although subordinated herein to the Deed
of Trust, shall be recognized by Lender or such other purchaser upon any such
foreclosure or deed in lieu of foreclosure, or succession by Lender or such
other purchaser to the interest of Landlord in the Property, to the same
extent and on the same terms and conditions set forth above with respect to
Tenant's leasehold estate.
4. Tenant agrees with Lender that if the interests of Landlord in
the Premises shall be transferred to and owned by Lender by reason of
foreclosure or other proceedings brought by it, or any other manner, or shall
be conveyed thereafter by Lender or shall be conveyed pursuant to a
foreclosure sale of the Premises (and for the purposes
EXHIBIT B - Page 2 of 4
of this paragraph, the term "Lender" shall be deemed to include any grantee
of Lender or purchaser at foreclosure sale), Tenant shall be bound to Lender
under all of the terms, covenants and conditions of the Lease for the balance
of the term thereof; remaining and any extensions or renewals thereof which
may be effected in accordance with any option therefor in the Lease, with the
same force and effect as if Lender were the landlord under the Lease, and
Tenant does hereby attorn to Lender as its landlord, said attornment to be
effective and self-operative without the execution of any further instruments
on the part of any of the parties hereto immediately upon Lender succeeding
to the interest of the Landlord in the Premises.
5. This Agreement shall bind and inure to the benefit of the
parties hereto and their successors and assigns. As used herein the terms
"foreclosure" and "foreclosure sale" shall be deemed to include the
acquisition of Landlord's estate in the Premises by voluntary deed (or
assignment) in lieu of foreclosure, and the word "Lender" shall include the
Lender herein specifically named and any of its successors and assigns,
including anyone who shall have succeeded to Landlord's interest in the
Premises by, through or under foreclosure of the Deed of Trust.
6. This Agreement shall be the whole and only agreement between
the parties hereto with regard to the subordination of the Lease and
leasehold interest of Tenant to the lien or charge of the Deed of Trust, and
shall supersede and cancel any prior agreements as to such, or any;
subordination, including, but not limited to, those provisions, if any,
contained in the Lease, which provide for the subordination of the Lease and
leasehold interest of Tenant to a deed or deeds of trust, or to a mortgage or
mortgages to be thereafter executed, and shall not be modified or amended
except in writing signed by all parties hereto.
IN WITNESS WHEREOF the parties hereto have executed this Agreement
as of the day and year first above written.
TENANT: BURKE RUBBER COMPANY,
a California corporation,
By
------------------------------------
Its
------------------------------------
[signatures continue]
EXHIBIT B - Page 3 of 4
LANDLORD: ARTHUR D. BRIDGES FAMILY REVOCABLE TRUST,
By
------------------------------------
Its
------------------------------------
LENDER:
--------------------------------------
a
-------------------------------------
By
--------------------------
Its
-------------------------
EXHIBIT B - Page 4 of 4
SCHEDULE OF FINANCIAL OBLIGATIONS OF LESSOR
This Schedule is to that certain Lease dated July 1, 1991 between ARTHUR
D. BRIDGES FAMILY REVOCABLE TRUST (herein called "Lessor") and BURKE RUBBER
COMPANY, a California corporation (herein called "Lessee"), hereinafter "the
Lease."
The purpose of this Schedule is to set forth the financial obligations
of Lessor under the Lease to make repairs, alterations and improvements to
the Property. Any financial obligations pertaining to repairs, alterations
and improvements to the Property not specifically set forth on this Schedule
shall be the responsibility and obligation of Lessee.
FINANCIAL OBLIGATIONS OF LESSOR
1. OFFICE SPACE.
a. Replacement of existing carpets with new standard grade or better
carpets.
b. Repainting of the entire area and painting or replacement of all
other wall treatments.
c. Repair or replacement of window treatments where necessary.
d. Existing electrical and plumbing fixtures to be in good operating
condition.
e. Existing HVAC, electrical and plumbing systems to be in good
operating condition.
EXHIBIT C - Page 1 of 3
2. WAREHOUSE SPACE.
a. Existing HVAC to be in good operating condition and in compliance
with Code.
b. Existing electrical to be in good operating condition and in
compliance with Code.
c. Existing plumbing to be in good operating condition and in
compliance with Code.
d. All existing doors windows, lights and restrooms to be in proper
working order.
e. Installation of lighting to provide 70 Lumens (or foot candle
equivalent) throughout warehouse area.
f. Railroad siding area is to be made flush with the existing floor.
Area must be capable of supporting weight necessary for Lessee's
operations.
g. If and when another tenant occupies the Building, Lessor to install
a separate clarifier which will permit a governmental agent to test
sewage generated by tenant the Building other than Lessee.
3. SPRINKLER SYSTEM. Lessor to install fire sprinkler system in order
that it meets or exceeds the standards necessary for Lessor's specific use of
the Premises, including the installation of fire sprinklers to the paint
booth room and acid etch room to be constructed within the Premises. Lessee
to be responsible for first $75,000.00 of cost (materials and installation);
thereafter, Lessor to be responsible for the balance.
4. LANDSCAPING. Prior to Lessee's occupancy, Lessor to prune and assure
that landscaping on the Property is in good condition.
5. UNDERGROUND TANKS, REMEDIATION. Removal or abandonment of the three
underground storage tanks on the Property. Removal of all hazardous materials
on the Property as required by any local, State or Federal law.
EXHIBIT C - Page 2 of 3
In the event of any inconsistency or conflict between the Lease and this
Schedule as to the financial obligations of Lessor to make repairs,
alterations and improvements to the Property, this Schedule shall control.
LESSOR LESSEE
ARTHUR D. BRIDGES FAMILY REVOCABLE BURKE RUBBER COMPANY a California
TRUST corporation
By /s/ ARTHUR D. BRIDGES, TRUSTEE By /s/ ROCCO C. GENOVESE
-------------------------------- --------------------------------
ARTHUR D. BRIDGES, Trustee ROCCO C. GENOVESE
Chairman
By /s/ BEVERLY BRIDGES, TRUSTEE By /s/ REED C. WOLTHAUSEN
-------------------------------- --------------------------------
BEVERLY BRIDGES, Trustee REED C. WOLTHAUSEN
Director
Executed on July 1, 1991 Executed on July 1, 1991
ADDRESS FOR NOTICES AND RENT: ADDRESS:
3223 Crow Canyon Road, Suite 270 2250 South 10th Street
P. O. Box 157 San Jose, CA 95112
San Ramon, CA 94583
EXHIBIT C - Page 3 of 3
GUARANTY OF LEASE
WHEREAS, ARTHUR D. BRIDGES FAMILY REVOCABLE TRUST, hereinafter referred
to as "Lessor", and BURKE RUBBER COMPANY, a California corporation,
hereinafter referred to as "Lessee", are about to execute a document entitled
"Lease" dated July 1, 1991 concerning the premises commonly known as 107 S.
Riverside Drive, Modesto, California, wherein Lessor will lease a portion of
the premises to Lessee, and
WHEREAS, BURKE INDUSTRIES, INC., a California corporation, hereinafter
referred to as "Guarantor" have a financial interest in Lessee, and
WHEREAS, Lessor would not execute the Lease if Guarantor did not execute
and deliver to Lessor this Guarantee of Lease,
NOW THEREFORE, for and in consideration of the execution of the
foregoing Lease by Lessor and as a material inducement to Lessor to execute
said Lease, Guarantor hereby unconditionally and irrevocably guarantee the
prompt payment by Lessee of all rentals and all other sums payable by Lessee
under said Lease and the faithful and prompt performance by Lessee of each
and every one of the terms, conditions and covenants of said Lease to be kept
and performed by Lessee.
It is specifically agreed and understood that the terms of the foregoing
Lease may be altered, affected, modified or changed by agreement between
Lessor and Lessee, said Lease may be assigned by Lessor or any assignee of
Lessor without consent or notice to Guarantor and that this Guaranty shall
thereupon and thereafter guarantee the performance of said Lease as so
changed, modified, altered or assigned.
This Guaranty shall not be released, modified or affected by failure or
delay on the part of Lessor to enforce any of the rights or remedies of the
Lessor under said Lease, whether pursuant to the terms thereof or at law or
in equity.
All notices of default shall be given to Guarantor.
Guarantor hereby waive notice of acceptance of this Guaranty.
Guarantor do hereby subrogate all existing or future indebtedness of
Lessee to Guarantor to the obligations owed to Lessor under the Lease and
this Guaranty.
The obligations of Lessee under the Lease to execute and deliver
estoppel statements and financial statements, as therein provided, shall be
deemed to also require the Guarantor hereunder to do and provide the same
relative to Guarantor.
-1-
The term "Lessor" whenever hereinabove used refers to and means the
Lessor in the foregoing Lease specifically named and also any assignee of
said Lessor, whether by outright assignment or by assignment for security and
also any successor to the interest of said Lessor or of any assignee in such
Lease or any part thereof, whether by assignment or otherwise. So long as the
Lessor's interest in or to the leased premises of the rents, issues and
profits therefrom, or in, to or under said Lease, are subject to any mortgage
or deed of trust or assignment for security, no acquisition by Guarantor of
the Lessor's interest in the leased premises or under said Lease shall affect
the continuing obligation of Guarantor under this Guaranty which shall
nevertheless continue in full force and effect for the benefit of the
mortgagee, beneficiary, trustee or assignee under such mortgage, deed of
trust or assignment, of any purchase at sale by judicial foreclosure or under
private power of sale, and of the successors and assigns of any such
mortgagee, beneficiary, trustee, assignee or purchaser.
The term "Lessee" whenever hereinabove used refers to and means the
Lessee in the foregoing Lease specifically named and also any assignee or
sublessee of said Lease and also any successor to the interests of said
Lessee, assignee or sublessee of such Lease or any part thereof, whether by
assignment, sublease or otherwise.
In the event any action be brought by said Lessor against Guarantor
hereunder to enforce the obligation of Guarantor hereunder, the unsuccessful
party in such action shall pay to the prevailing party therein a reasonable
attorney's fee which shall be fixed by the court.
Executed at San Jose, California, on July 1, 1991
"GUARANTOR"
BURKE INDUSTRIES, INC.
a California corporation
Address: 2250 S. 10th Street By /s/ ROCCO C. GENOVESE
San Jose, CA 95112 ------------------------------
ROCCO C. GENOVESE
President
By /s/ REED C. WOLTHAUSEN
-------------------------------
REED C. WOLTHAUSEN
Vice-President, CFO
-2-
[LETTERHEAD]
March 3, 1992
Mr. & Mrs. Art Bridges
ADBRIDGE, Inc.
P.O. Box 157
San Ramon, CA 94583
Dear Art & Bev:
Attached is one copy of the lease addendum as signed by Rocky and me,
executed as of February 20, 1992. We retained the other copy for our files.
Sincerely,
/s/ Reed
Reed C. Wolthausen
Senior Vice President, CFO
RCW/d
enclosure
ADDENDUM TO INDUSTRIAL LEASE (TRIPLE NET)
This addendum to the Industrial Lease dated July 1, 1991 between
ARTHUR D. BRIDGES FAMILY REVOCABLE TRUST (herein called "Lessor") and BURKE
RUBBER COMPANY, a California corporation (herein called "Lessee").
Under paragraph 2. Premises, Parking and Common Areas.
2.1 Premises. This paragraph is amended to
read Lessor hereby leases to Lessee and Lessee leases from Lessor for the
term, at the rental, and upon all of the conditions set forth herein, a
portion of that real property situated in the County of Stanislaus, State
of California, commonly known as 107 S. Riverside Drive, Modesto, more
particularly described on Exhibit A, and Exhibit A-1, and described
as approximately 112,986 square feet (including approximately 10,390 square
feet of office area) of the building occupying the Property (the "Building")
as outlined on Exhibit A, and Exhibit A-1, herein referred to "Premises",
including rights to the common areas as hereinafter specified.
Under paragraph 4. RENT.
4.2 Base Bent.
add 4.2 (a) The adjusted Base Rent is amended to
read under the Schedule of Monthly Base Rental Payments, Exhibit A-1 Page 1
of 3, Page 2 of 3 and Page 3 or 3, under column "C".
4.3 (a) This paragraph is amended to read
"Lessee's Share" is defined, for purposes of this Lease, as sixty three
point eight (63.8%) percent.
Under paragraph 39.2 RENT.
(a) This paragraph is amended to read The
monthly rent for the first year of the extended term shall be determined as
follows: The Consumer Price Index ("CPI") figure shall be established the
month of March, 1991, and the month of March, 2001. The base rent for the
first month of the extended term shall be equal to the greater of (i) the
preceding month's rent or (ii) the base rent increased by the same percentage,
if any, by which the March 2001, CPI figure shall have increased over the
March,, 1991, CPI figure. As used herein, the term "Consumer Price Index"
shall refer to the "Consumer Price Index For All Urban Consumers
San Francisco-Oakland Metropolitan Area (All Items)" compiled by the U.S.
Department of Labor, Bureau of Labor Statistics (1982-84 equals 100). If the
CPI should hereafter be changed, then the new base shall be converted to the
1982-84 base and the base as so converted shall be used. In the event that the
bureau shall cease to publish the Consumer Price Index, then the successor or
most nearly comparable index thereto shall be used. The monthly rent for years
two through five of the extended term shall be determined by a three (3)
percent increase from the immediately preceding year's monthly rent.
All other terms and conditions as written in the
PAGE 1 OF 2
Industrial Lease (Triple Net) remain as written without change.
LESSOR LESSEE
ARTHUR D. BRIDGES FAMILY BURKE RUBBER COMPANY
REVOCABLE TRUST a California corporation
By /s/ ARTHUR D. BRIDGES By /s/ ROCCO C. GENOVESE
----------------------------- --------------------------------
ARTHUR D. BRIDGES, Trustee ROCCO C. GENOVESE, Chairman
By /s/ BEVERLY BRIDGES By /s/ REED WOLTHAUSEN
----------------------------- --------------------------------
BEVERLY BRIDGES, Trustee REED C. WOLTHAUSEN, Director
Executed on Dec 18, 1991 Executed on Feb 20, 1992
PAGE 2 OF 2
(SITE PLAN)
EXHIBIT A
(FLOOR PLAN)
EXHIBIT A-1
SCHEDULE OF MONTHLY BASE RENTAL PAYMENTS
Monthly Base Rent
A B C
Month
-----
11/92 1 $ 21,381 $ 7,106 $ 22,597
2 21,381 7,106 22,597
3 21,381 7,106 22,597
4 21,381 7,106 22,597
5 21,381 7,106 22,597
6 21,381 7,106 22,597
7 21,381 7,106 22,597
8 21,381 7,106 22,597
9 21,381 7,106 22,597
10 21,381 7,106 22,597
11 21,381 7,106 22,597
12 21,381 7,106 22,597
11/92 13 22,022 7,747 23,275
14 22,022 7,747 23,275
15 22,022 7,747 23,275
16 22,022 7,747 23,275
17 22,022 7,747 23,275
18 22,022 7,747 23,275
19 22,022 7,747 23,275
20 22,022 7,747 23,275
21 22,022 7,747 23,275
22 22,022 7,747 23,275
23 22,022 7,747 23,275
24 22,022 7,747 23,275
11/93 25 22,682 8,407 23,972
26 22,682 8,407 23,972
27 22,682 8,407 23,972
28 22,682 8,407 23,972
29 22,682 8,407 23,972
30 22,682 8,407 23,972
31 22,682 8,407 23,972
32 22,682 8,407 23,972
33 22,682 8,407 23,972
34 22,682 8,407 23,972
35 22,682 21,442 23,972
36 22,682 28,407 23,972
11/94 37 23,362 29,087 24,691
38 23,362 29,087 24,691
39 23,362 29,087 24,691
40 23,362 29,087 24,691
41 23,362 29,087 24,691
EXHIBIT A-1 - Page 1 of 3
SCHEDULE OF MONTHLY BASE RENTAL PAYMENTS
Monthly Base Rent
A B C
Month
-----
42 $ 23,362 $ 29,087 $ 24,691
43 23,362 29,087 24,691
44 23,362 29,087 24,691
45 23,362 29,087 24,691
46 23,362 29,087 24,691
47 23,362 29,087 24,691
48 23,362 29,087 24,691
11/95 49 24,063 29,788 25,432
50 24,063 29,788 25,432
51 24,063 29,788 25,432
52 24,063 29,788 25,432
53 24,063 29,788 25,432
54 24,063 29,788 25,432
May/96 55 24,063 29,788 25,432
56 24,063 29,788 25,432
57 24,063 29,788 25,432
58 24,063 29,788 25,432
59 24,063 29,788 25,432
60 24,063 29,788 25,432
61 24,785 30,510 26,195
62 24,785 30,510 26,195
63 24,785 30,510 26,195
64 24,785 30,510 26,195
65 24,785 30,510 26,195
66 24,785 30,510 26,195
May/97 67 24,785 30,510 26,195
68 24,785 30,510 26,195
69 24,785 30,510 26,195
70 24,785 30,510 26,195
71 24,785 30,510 26,195
72 24,785 30,510 26,195
73 25,528 31,253 26,980
74 25,528 31,253 26,980
75 25,528 31,253 26,980
76 25,528 31,253 26,980
77 25,528 31,253 26,980
78 25,528 31,253 26,980
79 25,528 31,253 26,980
80 25,528 31,253 26,980
81 25,528 31,253 26,980
82 25,528 31,253 26,980
EXHIBIT A-1 - Page 2 of 3
SCHEDULE OF MONTHLY BASE RENTAL PAYMENTS
Monthly Base Rent
A B C
Month
-----
83 $ 25,528 $ 31,253 $ 26,980
84 25,528 31,253 26,980
85 26,294 32,019 27,789
86 26,294 32,019 27,789
87 26,294 32,019 27,789
88 26,294 32,019 27,789
89 26,294 32,019 27,789
90 26,294 32,019 27,789
91 26,294 32,019 27,789
92 26,294 32,019 27,789
93 26,294 32,019 27,789
94 26,294 32,019 27,789
95 26,294 32,019 27,789
96 26,294 32,019 27,789
97 27,083 32,808 28,623
98 27,083 32,808 28,623
99 27,083 32,808 28,623
100 27,083 32,808 28,623
101 27,083 32,808 28,623
102 27,083 32,808 28,623
103 27,083 32,808 28,623
104 27,083 32,808 28,623
105 27,083 32,808 28,623
106 27,083 32,808 28,623
107 27,083 32,808 28,623
108 27,083 32,808 28,623
109 27,895 33,620 29,481
110 27,895 33,620 29,481
111 27,895 33,620 29,481
112 27,895 33,620 29,481
113 27,895 33,620 29,481
114 27,895 33,620 29,481
115 27,895 33,620 29,481
116 27,895 33,620 29,481
117 27,895 33,620 29,481
118 27,895 33,620 29,481
119 27,895 33,620 29,481
10/01 120 27,895 33,620 29,481
---------- ----------
TOTAL $2,941,140 $2,941,175
EXHIBIT A-1 - Page 3 of 3
EXHIBIT "A-1"
SCHEDULE OF MONTHLY BASE RENTAL PAYMENTS
[Attached]
SCHEDULE OF MONTHLY BASE RENTAL PAYMENTS
Monthly Base Rent
A B
Month
-----
1 $ 21,381 $ 7,106
2 21,381 7,106
3 21,381 7,106
4 21,381 7,106
5 21,381 7,106
6 21,381 7,106
7 21,381 7,106
8 21,381 7,106
9 21,381 7,106
10 21,381 7,106
11 21,381 7,106
12 21,381 7,106
13 22,022 7,747
14 22,022 7,747
15 22,022 7,747
16 22,022 7,747
17 22,022 7,747
18 22,022 7,747
19 22,022 7,747
20 22,022 7,747
21 22,022 7,747
22 22,022 7,747
23 22,022 7,747
24 22,022 7,747
25 22,682 8,407
26 22,682 8,407
27 22,682 8,407
28 22,682 8,407
29 22,682 8,407
30 22,682 8,407
31 22,682 8,407
32 22,682 8,407
33 22,682 8,407
34 22,682 8,407
35 22,682 21,442
36 22,682 28,407
37 23,362 29,087
38 23,362 29,087
39 23,362 29,087
40 23,362 29,087
41 23,362 29,087
EXHIBIT A-1 - Page 1 of 3
SCHEDULE OF MONTHLY BASE RENTAL PAYMENTS
Monthly Base Rent
A B
Month
-----
42 $ 23,362 $ 29,087
43 23,362 29,087
44 23,362 29,087
45 23,362 29,087
46 23,362 29,087
47 23,362 29,087
48 23,362 29,087
49 24,063 29,788
50 24,063 29,788
51 24,063 29,788
52 24,063 29,788
53 24,063 29,788
54 24,063 29,788
55 24,063 29,788
56 24,063 29,788
57 24,063 29,788
58 24,063 29,788
59 24,063 29,788
60 24,063 29,788
61 24,785 30,510
62 24,785 30,510
63 24,785 30,510
64 24,785 30,510
65 24,785 30,510
66 24,785 30,510
67 24,785 30,510
68 24,785 30,510
69 24,785 30,510
70 24,785 30,510
71 24,785 30,510
72 24,785 30,510
73 25,528 31,253
74 25,528 31,253
75 25,528 31,253
76 25,528 31,253
77 25,528 31,253
78 25,528 31,253
79 25,528 31,253
80 25,528 31,253
81 25,528 31,253
82 25,528 31,253
EXHIBIT A-1 - Page 2 of 3
SCHEDULE OF MONTHLY BASE RENTAL PAYMENTS
Monthly Base Rent
A B
Month
-----
83 $ 25,528 $ 31,253
84 25,528 31,253
85 26,294 32,019
86 26,294 32,019
87 26,294 32,019
88 26,294 32,019
89 26,294 32,019
90 26,294 32,019
91 26,294 32,019
92 26,294 32,019
93 26,294 32,019
94 26,294 32,019
95 26,294 32,019
96 26,294 32,019
97 27,083 32,808
98 27,083 32,808
99 27,083 32,808
100 27,083 32,808
101 27,083 32,808
102 27,083 32,808
103 27,083 32,808
104 27,083 32,808
105 27,083 32,808
106 27,083 32,808
107 27,083 32,808
108 27,083 32,808
109 27,895 33,620
110 27,895 33,620
111 27,895 33,620
112 27,895 33,620
113 27,895 33,620
114 27,895 33,620
115 27,895 33,620
116 27,895 33,620
117 27,895 33,620
118 27,895 33,620
119 27,895 33,620
120 27,895 33,620
------------ ------------
TOTAL $ 2,941,140 $ 2,941,175
EXHIBIT A-1 - Page 3 of 3
EXHIBIT "B"
ADDITIONAL RENT FOR EXISTING TENANT IMPROVEMENTS
[Attached]
EXHIBIT B
ADDITIONAL RENT FOR EXISTING TENANT IMPROVEMENTS
13.04%
PMT INT BAL
-----------------------------------------
After 5/96 payment (pmt # 53 of 120) 407,634.69
6/01/96 8,600.29 4,429.63 403,464.03
7/01/96 8,600.29 4,384.31 399,248.05
8/01/96 8,600.29 4,338.50 394,986.26
9/01/96 8,600.29 4,292.18 390,678.15
10/01/96 8,600.29 4,245.37 386,323.23
11/01/96 8,600.29 4,198.05 381,920.99
12/01/96 8,600.29 4,150.21 377,470.91
1/01/97 8,600.29 4,101.85 372,972.47
2/01/97 8,600.29 4,052.97 368,425.15
3/01/97 8,600.29 4,003.55 363,828.41
4/01/97 8,600.29 3,953.60 359,181.72
5/01/97 8,600.29 3,903.11 354,484.54
6/01/97 8,600.29 3,852.07 349,736.32
7/01/97 8,600.29 3,800.47 344,936.50
8/01/97 8,600.29 3,748.31 340,084.52
9/01/97 8,600.29 3,695.59 335,179.82
10/01/97 8,600.29 3,642.29 330,221.82
11/01/97 8,600.29 3,588.41 325,209.94
12/01/97 8,600.29 3,533.95 320,143.60
1/01/98 8,600.29 3,478.89 315,022.20
2/01/98 8,600.29 3,423.24 309,845.15
3/01/98 8,600.29 3,366.98 304,611.84
4/01/98 8,600.29 3,310.12 299,321.67
5/01/98 8,600.29 3,252.63 293,974.01
6/01/98 8,600.29 3,194.52 288,568.24
7/01/98 8,600.29 3,135.77 283,103.72
8/01/98 8,600.29 3,076.39 277,579.82
9/01/98 8,600.29 3,016.37 271,995.90
10/01/98 8,600.29 2,955.69 266,351.30
11/01/98 8,600.29 2,894.35 260,645.36
12/01/98 8,600.29 2,832.35 254,877.42
1/01/99 8,600.29 2,769.67 249,046.80
2/01/99 8,600.29 2,706.31 243,152.82
3/01/99 8,600.29 2,642.26 237,194.79
4/01/99 8,600.29 2,577.52 231,172.02
5/01/99 8,600.29 2,512.07 225,083.80
6/01/99 8,600.29 2,445.91 218,929.42
7/01/99 8,600.29 2,379.03 212,708.16
8/01/99 8,600.29 2,311.43 206,419.30
9/01/99 8,600.29 2,243.09 200,062.10
10/01/99 8,600.29 2,174.01 193,635.82
11/01/99 8,600.29 2,104.18 187,139.71
12/01/99 8,600.29 2,033.58 180,573.00
EXHIBIT B
ADDITIONAL RENT FOR EXISTING TENANT IMPROVEMENTS
13.04%
PMT INT BAL
-------------------------------------------
1/01/00 8,600.29 1,962.23 173,934.94
2/01/00 8,600.29 1,890.09 167,224.74
3/01/00 8,600.29 1,817.18 160,441.63
4/01/00 8,600.29 1,743.47 153,584.81
5/01/00 8,600.29 1,668.95 146,653.47
6/01/00 8,600.29 1,593.63 139,646.81
7/01/00 8,600.29 1,517.50 132,564.02
8/01/00 8,600.29 1,440.53 125,404.26
9/01/00 8,600.29 1,362.73 118,166.70
10/01/00 8,600.29 1,284.08 110,850.49
11/01/00 8,600.29 1,204.58 103,454.78
12/01/00 8,600.29 1,124.21 95,978.70
1/01/01 8,600.29 1,042.97 88,421.38
2/01/01 8,600.29 960.85 80,781.94
3/01/01 8,600.29 877.83 73,059.48
4/01/01 8,600.29 793.91 65,253.10
5/01/01 8,600.29 709.08 57,361.89
6/01/01 8,600.29 623.33 49,384.93
7/01/01 8,600.29 536.65 41,321.29
8/01/01 8,600.29 449.02 33,170.02
9/01/01 8,600.29 360.45 24,930.18
10/01/01 8,600.29 270.91 16,600.80
11/01/01 8,600.29 180.40 8,180.91
12/01/01 8,269.81 88.90 0.00
EXHIBIT "C"
TENANT IMPROVEMENTS
Office improvements
Process piping (and insulation)
Sprinkler system
Press bases and pits
Draft curtains
Smoke vents
Electrical system (upgrade)
Building ventilation
Concrete slab for liquid nitrogen tank
Walls for boiler/hydraulics room
Cold box refrigeration system (upgrade)