LEASE AGREEMENT
THIS LEASE AGREEMENT (this "Lease Agreement") is made and entered into as
of the 21st day of February, 2002, by and between Rubber Technology
International, Inc., a Nevada corporation having an address of 0000 Xxxx
Xxxxxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 (hereinafter called
"Lessor"), and Recovery Technologies Group of California, Inc., a Delaware
corporation having an address of 0000 Xxxxxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx
00000 (hereinafter called "Lessee").
IN CONSIDERATION OF the rents, covenants and agreements hereinafter
contained, the Lessor and the Lessee covenant and agree as follows, intending to
be legally bound hereby:
1. Lease of Equipment, Leased Equipment, Licenses and Permits, Customer and
Vendor Lists:
A. Lease of Equipment: The Lessor hereby leases to the Lessee all of
the equipment of the Lessor (the "Core Business Equipment") used by the Lessor
in connection with its tire recycling business (the "Core Business") located at,
or used or usable in connection with, the Lessor's facility on real estate
commonly known as 0000 Xxxx Xxxxxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000
(the "Los Angeles Facility"). Such Core Business Equipment shall include,
without limitation, machinery, other equipment, vehicles, trailers, forklifts
and other equipment of a similar nature, computers, both hardware and software,
any related licenses to use such software, any related licenses and permits that
may be transferred and any and all tangible and intangible personal property
used in connection with the Core Business. During the Term of this Lease
Agreement (as defined below), the Lessee will have the exclusive right to use
the Core Business Equipment. A list of the Core Business Equipment is attached
hereto as Exhibit A. The failure to list any Core Business Equipment on Exhibit
A will not affect the Lessee's right to use such Core Business Equipment.
B. Equipment leased by the Lessor: The Lessor hereby grants to the
Lessee the right to assume all leases of equipment leased by the Lessor from
third parties in connection with the Core Business, whether operating leases or
capital leases ("Third Party Leases") if assumption is available. The Lessee
hereby is obligated to assume such Third Party Leases so long as: (i) the Lessee
is not obligated to make any payments on such leases for any period of time
prior to February 21, 2002; (ii) the Lessee is not requested to pay any fees or
expenses in connection with the assumption of such Third Party Leases or (iii)
the lessor under Third Party Leases requests a guaranty of the Lessee's parent
as a condition of assumption. If a lessor under a Third Party Lease requests
any payments for any period of time prior to February 21, 2002 or requests any
fees or reimbursement for its expenses, the Lessor may pay such fees or expenses
at its sole discretion. Upon such payment by the Lessor, the Lessee shall be
required to assume such Third Party Leases. A list of the Third Party Leases is
attached hereto as Exhibit B. The failure to list any Third Party Leases on
Exhibit B will not affect the Lessee's right to assume such Third Party Leases.
If this Lease Agreement shall be terminated due to a default of the Lessee, the
Lessee shall make, if requested in writing by the Lessor, commercially
reasonable efforts to cause the Third Party Leases to be reassigned to the
Lessor.
C. Licenses and Permits. To the extent legally permitted, the Lessor
shall assign its Licenses and Permits to the Lessee. If such Licenses and
Permits are not assignable, the Lessor hereby leases such Licenses and Permits
to the Lessee to the extent possible. The Lessee shall apply for the transfer of
any Licenses and Permits that cannot be assigned that are required to operate
the Core Business as it is presently operated. The Lessee shall use commercially
reasonable efforts to obtain such Licenses and Permits, including, without
limitation, providing any required environmental liability insurance (to the
extent available on commercially reasonable terms) and closure bonds. The
Lessor shall assist the Lessee in its efforts in a commercially reasonable
manner to receive Licenses and Permits that may not be assigned. A list of the
Licenses and Permits required to operate Core Business at the Los Angeles
Facility is attached hereto as Exhibit C. If this Lease Agreement shall be
terminated due to a default of the Lessee, the Lessee shall make, if requested
in writing by the Lessor, commercially reasonable efforts to cause the Licenses
and Permits to be reassigned to the Lessor
D. Lease of the Core Business, Customer and Vendor Lists. The Lessor
hereby leases to the Lessee the Core Business and the Lessor's Customer and
Vendor Lists. During the Term of this Lease, the Lessee may do business with
any existing customers and vendors of the Lessor, doing business with the Lessor
as part of its Core Business prior to February 21, 2002. The Lessor presently
has customers or vendors that are served by facilities owned or operated by
Recovery Technologies Group, Inc., its subsidiaries or affiliates (collectively,
"RTG Customers and Vendors"). For more certainty, the Lessor and Lessee hereby
agree that for the purposes of this Lease Agreement, existing customers and
vendors of the Lessor, doing business with the Lessor as part of its Core
Business prior to February 21, 2002 who are not RTG Customers and Vendors are
"RTII Customers and Vendors". Any new customers or vendors that the Lessee
acquire and service from the Los Angeles Facility after February 20, 2002 shall
not be RTII Customers and Vendors. Upon termination of this Lease Agreement,
Recovery Technologies Group, Inc., its subsidiaries or affiliates, including the
Lessee, may not do business with RTII Customers and Vendors thereafter, unless
the Lessee has exercised the option described in Section 10 to purchase the Core
Business Equipment. If such option has been exercised, Recovery Technologies
Group, Inc., its subsidiaries or affiliates, including the Lessee, may continue
to do business with RTII Customers and Vendors after the termination of this
Lease Agreement. A list of the Lessor's customers and vendors at the Los Angeles
Facility is attached hereto as Exhibit D. If this Lease Agreement shall be
terminated due to a default of the Lessee, the Lessee shall make, if requested
in writing by the Lessor, commercially reasonable efforts to cause the Core
Business and the Lessor's Customer and Vendor Lists to be reassigned to the
Lessor.
E. Excluded Assets. For more certainty, the following assets owned of
leased by the Lessor are not being leased to the Lessee and are excluded assets
("Excluded Assets"):
Any assets presently used by the Lessor in connection with its construction
grade sand depository located near Las Vegas, Nevada; its construction grade
sand depository located near Las Vegas, Nevada; its business records, other than
business records related to its Core Business; cash on hand; accounts receivable
and inventory and work in progress.
2. Lease of Real Estate. The Lessor leases the Los Angeles Facility from H &
R Sales, Inc., a California corporation on a triple net basis. The Los Angeles
Facility property consists of two parcels, having a base rent of $13,471.83.
Pursuant to this Lease Agreement, the Lessor shall assign its interest in such
leases to the Lessee. The Lessee shall obtain to release of any security
deposits owned by the Lessor held pursuant to such leases or alternately,
reimburse the Lessor for such deposits upon assignment of such security deposits
to the Lessee. The Lessor shall cooperate with the Lessee to complete such
assignment and shall execute any and all documents that are reasonably requested
to complete such assignment. If this Lease Agreement shall be terminated by a
default of the Lessee, the Lessee shall make, if requested in writing by the
Lessor, commercially reasonable efforts to cause the lease with H & R Sales,
Inc. to be reassigned to the Lessor. The Lessee shall provide any insurance
coverage required under such leases if available on commercially reasonable
terms. Copies of said leases are attached hereto as Exhibit E.
3. Term: The term of this Lease Agreement shall begin at 12:01 A.M., local
time on February 21, 2002 (the "Commencement Date") and will end at 11:59 P.M.
on February 28, 2007 (the "Term"). The Lessee shall have one option to extend
the lease term for an additional period of five years at a monthly base rental
of $26,000. No monetary default may exist under this Lease Agreement at the
time of the exercise of such option. Such option to extend may be exercised by
a written notice delivered to the Lessor not earlier than March 1, 2006 and not
later than August 31, 2006. If the Lessor believes that a monetary default
exists at the time of receipt of a written notice from the Lessee, the Lessor
shall advise the Lessee in writing of the basis of the alleged monetary default
within 30 days of the receipt of the written notice (a "Written Response"). If
no Written Response is given, any monetary default that may exist will be
conclusively be deemed waived in connection with the exercise of the option to
extend to the Term of the Lease Agreement, but for no other purpose.
4. Rent: The Lessee will pay rent to the Lessor as follows:
February 21 to 00, 0000 -0-
Xxxxx, 0000 $102,000
April, 0000 -0-
Xxx, 0000 11,000
June, 2002 11,000
July, 2002 11,000
August, 2002 11,000
September, 2002 through and including August, 2007 26,000 per month
Monthly rent shall be due on the first business day of each calendar month
during the Term of this Lease Agreement, except for the month of March, 2002,
which shall be due upon execution of this Lease Agreement. If any monthly rent
provided for herein is not paid by the Lessee on or before the 10th day
following the due date thereof, the Lessor will be entitled to a late charge
equal to five percent (5%) of such rental payment on demand so long as (a) the
Lessor gives the Lessee notice that a monthly rental payment has not been
received by the Lessor and such payment is delinquent and (b) the Lessee fails
to make such monthly rental payment for a period of five (5) days following
receipt of such notice; The Lessee shall have a right of set off against rent
for (a) any amounts due and payable tothe Lessee bythe Lessor as to which there
is no dispute, and (b) any amounts due and payable tothe Lessee by the Lessor
pursuant to an arbitration award entered in favor of the Lessee and against the
Lessor in any arbitration proceeding. If the date upon which the Term of this
Lease Agreement terminates is a day other than the last day of a calendar month,
the Lessee will pay to the Lessor a pro rata portion of the then applicable
monthly Rent, such pro rata portion being based on the number of days in such
partial calendar month during which this Lease Agreement was in effect as
compared to the total number of days in such month.
5. Personal Property Taxes: During the Term of this Lease, the Lessee will
pay personal property taxes assessed against the Core Business Equipment. If
such taxes are assessed for a period that includes any period of time that is
not during the Term of this Lease Agreement, such taxes shall be prorated
between the Lessor and the Lessee, based on the number of days in Term of this
Lease Agreement and the number of days in the tax period. To the extent that
the Lessor owes the Lessee any amount due to such proration, the Lessee may
deduct such sums immediately from rent otherwise payable to the Lessor. (As an
example, if this Lease Agreement were to end on February 28, 2007, and if, in
2007, personal property taxes were assessed on a calendar fiscal year, then the
Lessee would owe the Lessor 2/12 of the real estate taxes that would have been
payable by the Lessee.)
6. Lease of Real Estate. The Lessor leases the Los Angeles Facility from H &
R Sales, Inc., a California corporation on a triple net basis. The Los Angeles
Facility property consists of two parcels, having a base rent of $13,471.83.
Pursuant to this Lease Agreement, the Lessor shall assign its interest in such
leases to the Lessee. The Lessee shall obtain the release of any security
deposits owned by the Lessor held pursuant to such leases or alternately,
reimburse the Lessor for such deposits upon assignment of such security deposits
to the Lessee. The Lessor shall cooperate with the Lessee to complete such
assignment and shall execute any and all documents that are reasonably requested
to complete such assignment. The Lessee shall provide any insurance coverage
required under such leases if available on commercially reasonable terms.
7. Insurance: The Lessee shall be responsible for maintaining insurance on
the Core Business Equipment, consistent with industry standards as they may
exist from time to time, but such insurance may not be less than that which the
Lessee's affiliates carry on such affiliates' equipment at their facilities that
are engaged in the same business. In addition, the Lessee shall maintain such
xxxxxxx'x compensation insurance as may be required by the laws of the State of
California from time to time.
8. Security Deposit: The Lessee shall deposit the sum of Twenty Five
Thousand and no/100 Dollars ($25,000.00) (the "Security Deposit") with Xxxxxxx
X. Xxxxxx as Escrow Agent (the "Escrow Agent") as security for the payment by
the Lessee of any and all present and future debts and liabilities owed by the
Lessee to the Lessor (collectively hereinafter, the "Obligations") upon the
execution of this Lease. The Security Deposit will be placed into an
interest-bearing account held in the name of the Escrow Agent at the Private
Bank and Trust Company, 00 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx (the
"Security Deposit Account"), which account will be separate and apart from all
other funds held by the Escrow Agent for his own account or for the account of
others. Interest accruing on the Security Deposit Account will be paid to the
Lessee not less frequently than quarterly. In the event that the Lessor
properly applies the Deposit in accordance with the provisions of this Section
7, Lessee, upon receipt of a written demand from the Lessor, shall restore any
deficiency in the Security Deposit.
9. Los Angeles Facility: To the extent that the Los Angeles Facility is not
in compliance with any environmental laws, building codes, zoning laws and the
like on the Commencement Date of this Lease Agreement due to any act or failure
to act by the Lessor, the Lessor shall be solely liable for any and all costs of
remediation. If the Lessor shall fail to complete any required work to bring
the Los Angeles Facility into compliance, the Lessee may, at its sole
discretion, elect to do such work by delivery of a written notice to the Lessor.
In such case, the Lessee may deduct any costs that it incurs from rent otherwise
due under this Lease Agreement.
10. Inventory; Commission on Sales. The Lessor and Lessee hereby agree
that the value of the Lessor's inventory and work in progress (collectively, the
"Inventory") is $197,417.50 (the "Inventory Purchase Price"). The Lessee hereby
is purchasing the Inventory for the Inventory Purchase Price. The Lessee shall
pay the proceeds of any of its sales (whether the product produced from the
Inventory or is product produced by the Lessee), net of any transportation and
sales taxes and a one xxxxx per pound sales commission, to the Lessor, promptly
upon receipt until the Inventory Purchase Price is paid in full.
11. Option to purchase Core Business Equipment and the Core Business. The
Lessee shall have an option to purchase the Core Business Equipment and the Core
Business during the month of February, 2007 at a price of Four Hundred Ninety
Thousand and no/100 Dollars ($490,000.00) (the "Core Business Purchase Price").
Such option shall be made by delivery of a written notice to the Lessor,
specifying a Closing Date within 15 business of the date of such notice. The
Lessor shall deliver such instruments of conveyance as may be reasonably
acceptable to counsel for the Lessee. The Core Business Purchase Price shall be
paid by wire transfer of immediately available funds to the Lessee in accordance
with the Lessee's written wire transfer instructions. Such instructions shall
be delivered to the Lessee not less than two business days prior to the
scheduled closing date.
12. Capitalization; Purchases of Additional Equipment. The Lessee has
represented to the Lessor that it will receive initial capitalization of Three
Hundred Thousand and no/100 Dollars ($300,000.00) from its parent, Recovery
Technologies Group, Inc. The Lessor has entered into this Lease Agreement,
relying on said representation. The Lessee has advised the Lessor that it
expects to purchase up to Six Hundred Thousand and no/100 Dollars ($600,000.00)
in value of additional equipment to permit expansion of the Core Business at the
Los Angeles Facility.
13. Existing Obligations of the Lessor. The Lessee is only assuming those
obligations expressly assumed by it in this Lease Agreement. The Lessor shall
continue to be solely liable for all of its obligations not expressly assumed by
the Lessee in this Lease Agreement. Neither the Lessor nor the Lessee intends
to create any third party beneficiaries by entering into this Lease Agreement.
14. Employees. Employment of former employees of the Lessor at the Los
Angeles Facility, other than Messrs. Xxxx and Xxxxxxxx, shall be at the sole
discretion of the Lessee. The Lessee shall have no liability for any
pre-acquisition or termination obligations to such employees. It shall be a
condition precedent to this Lease Agreement that the Lessee, or its affiliate,
RTG Management Corporation, shall have entered into employment agreements with
Messrs. Xxxx and Xxxxxxxx.
15. Covenant not to compete: The Lessor hereby agrees that it will not
enter into the Core Business in the States of California and Nevada prior to the
date of termination of this Lease Agreement, unless the Lessee has purchased the
Core Business Equipment. In such event, the non-compete period shall be until
the later of (a) the date of termination of this Lease Agreement and (b) the end
of a one year period beginning on the date of purchase of the Core Business
Equipment by the Lessee (if made pursuant to Section 10 of the Lease Agreement).
16. Responsibilities of the Parties: the Lessor and the Lessee covenant and
agree as follows:
A. Use: During the Termand any renewal thereof, the Lessee may use the
Core Business Equipment for any lawful purpose including, but not limited to,
the processing of used tires and may install such Core Business Equipment at any
site that the Lessee may desire so long as such site is located within the State
of California. The Lessee shall advise the Lessor in writing prior to moving
any Core Business Equipment, other than vehicles and trailers, to any site other
than the Los Angeles Facility.
B. Utilities: During the Termand any renewal thereof, the Lessee will
contract for all utilities used in the Los Angeles Facility in the Lessee's name
and will pay for such services rendered to or furnished to the Los Angeles
Facility. The Lessee shall obtain the return of all security deposits or, if
such deposits are retained, shall reimburse the Lessor for such deposits upon
assignment of such deposits to the Lessee.
C. Core Business Equipment: The Lessee will be responsible, at the
Lessee's sole cost and expense, for repair, maintenance and replacement of any
and all Core Business Equipment during the Term of the Lease Agreement;
provided, however, that the Lessor will reimburse the Lessee for any costs,
expenses and liabilities incurred by the Lessee for repair, maintenance and
replacement of any and all Core Business Equipment that is damaged due to the
negligence or willful misconduct of the Lessor or those for whom Lessor is
responsible.
D. Indemnities:
(i) The Lessor by the Lessee: To the extent not covered by insurance that
Lessor is obligated to obtain and maintain under this Lease Agreement (whether
or not such insurance has been actually obtained and maintained), the Lessee
hereby agrees to indemnify, hold harmless, and defend the Lessor from and
against all claims, actions, losses, costs, and expenses (including reasonable
attorney's fees and costs of appeal and other professional fees), judgments,
settlement payments, and, whether or not reduced to final judgment, all
liabilities, damages or fines paid, incurred or suffered by the Lessor arising
directly out of the Lessee's use of Core Business Equipment, except for any
claims, actions, losses, costs, and expenses arising by reason of the negligence
or willful misconduct of the Lessor or those for whom the Lessor is responsible.
(ii) The Lessee by The Lessor: To the extent not covered by the insurance
that Lessee is obligated to obtain and maintain under this Lease Agreement
(whether or not such insurance are actually obtained and maintained), the Lessor
hereby agrees to indemnify, hold harmless, and defend the Lessee from and
against all claims, actions, losses, costs, and expenses (including reasonable
attorney's fees and costs of appeal and other professional fees), judgments,
settlement payments, and, whether or not reduced to final judgment, all
liabilities, damages or fines paid, incurred or suffered by the Lessee arising
directly out of Lessor's acts or omissions (including, but not limited to, any
failure of Lessor to meet its obligations under this Lease Agreement), except
for any claims, actions, losses, costs, and expenses arising by reason of the
negligence or willful misconduct of the Lessee or those for whom the Lessee is
responsible.
E. Waste: Lessee will use and maintain the Core Business Equipment in
a careful, safe, lawful and proper manner, and shallnot commit waste thereto,
and will return the Core Business Equipment to the Lessor upon the termination
of the Term or any renewal period or surrender of possession, in as good a
condition as received, reasonable wear and tear excepted.
F. Alterations: The Lessee, at the Lessee's expense, will have the
right to make such changes, improvements or alterations to the Core Business
Equipment as the Lessee deems necessary or desirable in the conduct of its
business; provided, however, that any such changes, improvements or alterations
shall not have an adverse effect on the Core Business Equipment. The Lessee
shall indemnify the Lessor against all claims, suits and actions as well
asexpenses, liens or damages to persons or the Core Business Equipment resulting
from any such alterations, additions or improvements.
G. Inspection: Upon reasonable prior written notice from the Lessor to
the Lessee, the Lessee agrees to permit Lessor or Lessor's authorized
representatives to inspect the Core Business Equipment during normal business
hours. In the event of any such inspection by the Lessor or the Lessor's
authorized representatives, the Lessor will not enter the Los Angeles Facility
(or any other location where any of the Core Business Equipment may be located)
unless a representative of the Lessee is present. Further, in the event of any
such inspection, the Lessor will take any and all steps as may be reasonable
under the circumstances to minimize to the greatest extent possible any
interference with or disruption of the businesses and operations of the Lessee.
17. Title; Quiet Enjoyment: The Lessor represents and warrants to the
Lessee that it owns the Core Equipment free and clear of any and all liens,
claims, reservations, restriction, covenants, licenses, leases or other
encumbrances. The Lessor further represents, warrants and agrees that, if
Lessee shall promptly pay all rent and discharge all other covenants of this
Lease Agreement, the Lessee shall have quiet and peaceful enjoyment and
possession of the Core Business Equipment during the Term without hindrance from
the Lessor or other persons claiming by, through or under the Lessor.
18. Waiver: No waiver of any covenant or condition or breach of any
covenant or condition of this Lease Agreement will be taken to constitute a
waiver of any subsequent breach of such covenant or condition nor to justify or
authorize the non-observance on any other occasion of the same or of any other
covenant or condition hereof, nor shall the acceptance of rent by the Lessor, at
any time when the Lessee is in default under any covenant or condition hereof,
be construed as a waiver of such default.
19. Estoppel Certificates: Each party shall, at any time and from time to
time, within twenty (20) days following a written request from the other party,
execute, acknowledge and deliver to the other party a written statement
certifying that this Lease Agreement is in full force and effect and unmodified
(or, if modified, stating the nature of such modification), certifying the date
to which the rent reserved hereunder has been paid, certifying that there are
not, to such party's actual knowledge, any uncured defaults under this Lease
Agreement on the part of the other party (or specifying such defaults if any are
claimed), and certifying as to such other matters as the other party may
reasonably specify.
The failure of a party to deliver such statement within the said twenty
(20) day period shall result in such party being estopped to deny that this
Lease Agreement is in full force and effect and unmodified, and thatthere are no
uncured defaults in the other party's performance hereunder.
20. Default by the Lessee: The occurrence of any of the following shall, at
the Lessor's option, constitute a material default and breach of this Lease
Agreement by Lessee:
A. A failure by the Lessee to pay the rent payable hereunder, or to
make any other payment required to be made by the Lessee hereunder, when
due,where such failure continues for more than ten (10) days following written
notice of such non-payment from the Lessor to the Lessee;
B. A failure by the Lessee to observe and perform any other provisions
or covenants of this Lease Agreement to be observed or performed by the Lessee,
where such failure continues for thirty (30) days after written notice thereof
from the Lessor to the Lessee, provided, however, that if the nature of the
default is such that the same cannot reasonably be cured within such thirty (30)
day period, the Lessee shall not be deemed to be in default if the Lessee shall
within such period commence such cure and thereafter diligently prosecute the
same to completion;
C. The making by the Lessee of any assignment for the benefit of
creditors; the adjudication that the Lessee is bankrupt or insolvent; the filing
by or against the Lessee of a petition to have the Lessee adjudged a bankrupt or
a petition for reorganization under any law relating to bankruptcy (unless, in
the case of a petition filed against the Lessee, the same is dismissed within
sixty (60) days after the filing thereof); the appointment of a trustee or
receiver to take possession of substantially all of the Lessee's assets located
at the Los Angeles Facility or of the Lessee's interest in the Core Business
Equipment (unless possession is restored to the Lessee within thirty (30) days
after such appointment); or the attachment, execution or levy against, or other
judicial seizure of, substantially all of the Lessee's interest in the Core
Business Equipment (unless the same is discharged within thirty (30) days after
issuance thereof).
21. Remedies for Lessee's Default: In the event of any default or breach of
this Lease Agreement by the Lessee as set forth in Section 19 hereof, the
Lessor, at its option (x) may terminate this Lease Agreement upon and by giving
written notice of termination to the Lessee; or (y) without terminating this
Lease Agreement, may at any time after such default or breach and without notice
or demand in addition to that provided in Section 19 hereof, and without
limiting the Lessor in the exercise of any other right or remedy which the
Lessor may have by reason of such default or breach (other than the aforesaid
right of termination), exercise any one or more of the remedies hereinafter
provided in this Section or as otherwise proved by law, all of such remedies
(whether provided herein or by law) being cumulative and not exclusive:
A. The Lessor may perform for the account of the Lessee any defaulted
term or covenant that the Lessee failed to observe or perform, and recover as
rent from the Lessee any expenditure made by the Lessor and, if the Lessor does
so, the Lessor shall be entitled to recover from the Lessee as additionalrent
anyreasonable expenditure made and the amount of any reasonableobligations
incurred in connection therewith.
B. The Lessor may take possession of the Core Business Equipment and
the Lessor may (i) collect as additional rent reasonable attorneys' fees, costs
and expenses that the Lessor may havereasonably incurred in connection with such
repossession and (ii) at any time and from time to time relet the Core Business
Equipment or any part thereof for the account of the Lessee, for such terms,
upon such conditions and at such rental as the Lessor may reasonablydeem proper.
In the event of such reletting, the Lessor shall receive and collect the rent
therefrom and shall first apply such rent against such expenses as the Lessor
may have reasonablyincurred in recovering possession of the Core Business
Equipment, placing the same in good order and condition, altering or repairing
the same for reletting, and such other expenses, commissions and charges,
including attorney's fees, costs and expenses that the Lessor may have
reasonably paid or incurred in connection with such repossession and reletting,
and then shall apply the remaining balance of such rent against the accelerated
rent, and the Lessor may execute any lease in connection with such reletting in
the Lessor's name or in the Lessee's name, as the Lessor may see fit.
Notwithstanding the foregoing, in the event of any default or breach of
this Lease Agreement by the Lessee, the Lessor will promptly undertake such
steps as may be reasonable and prudent under the circumstances to minimize and
mitigate damages suffered by the Lessor as a result thereof, including, but not
limited to, undertaking such steps as may be reasonable and prudent under the
circumstances to attempt to relet the Core Business Equipment or portions
thereof as promptly as reasonably possible on market rental terms at market
rental rates then.
22. Default by the Lessor: In the event that the Lessor fails to observe
and perform any obligation of the Lessor under this Lease Agreement and such
failure continues for a period of thirty (30)days following written notice
thereof from the Lessee to the Lessor (or, in the case of an emergency, for a
reasonable period under the circumstances, not to exceed forty-eight (48)
hours), then the Lessee shall have a right to declare the Lessor to be in
default hereunder; provided, however, that if the nature of the default is such
that it is not susceptible of being fully remedied within such thirty (30)day
period (or, if applicable, such forty-eight (48)hour period), then the Lessor
will be afforded such additional time as may be required to fully remedy such
failure so long as the Lessor commences efforts to remedy such failure within
such thirty (30)day period (or, if applicable, such forty-eight (48)hour period)
and, once commenced, diligently pursues such remedy until completion. Upon the
occurrence of any default by the Lessor, the Lessee shall have the option
todeclare the Lessor to be in default hereunder by written notice to the Lessor
and, upon such declaration, to pursue any one or more of the following remedies
without any further notice or demand: (a) termination of this Lease Agreement;
(b) perform the obligation as to which the Lessor is in default on the Lessor 's
behalf and collect the actual costs thereof from the Lessor on demand (together
with interest at a rate of ten percent (10%) per annum thereon from the date of
demand until paid in full), (c) assert a claim for any and all damages and
losses (including incidental and consequential damages and losses) suffered or
incurred by Lessee by reason of such default; (d) injunctive relief; and (e) any
other right or remedy available to Lessee, under the circumstances, under
applicable law.
23. Negotiation, Mediation, and Arbitration: In the event that any claim or
controversy arises between the Lessor and the Lessee with respect to the
interpretation or application of this Lease Agreement or the obligations of the
parties hereunder, such matter will be resolved as follows:
A. Identification of the claim or controversy: Either party may
identify any matter arising under this Lease Agreement as a claim or controversy
between the parties by giving the other party written notice thereof (a "Claim
Notice").
B. Discussion between Chief Executive Officers of the Lessor and the
Lessee: During the ten (10) day period following the giving of a Claim Notice,
the chief executive officers of the Lessor and the Lessee will confer and
attempt to amicably resolve the claim or controversy in question.
C. Mediation: Whether or not the chief executive officers of the
Lessor and the Lessee confer as aforesaid, if the claim or controversy in
question is not resolved during the ten (10) day period following the giving of
a Claim Notice, then, for an additional period of ten (10) days following the
expiration of such initial ten (10) day period, either party may propose a
mediation of the claim or controversy in Los Angeles, California before an
impartial professional mediator by giving written notice thereof to the other
party (a "Call to Mediate"). The Call to Mediate will (i) identify the proposed
mediator, (ii) identify a place for mediation (which will be in Los Angeles
County, California), and (iii) suggest at least three alternative dates and
times for the mediation (none of which will be earlier than five (5) business
days and not later than ten (10) business days following the date the Call to
Mediate is given). The other party will respond to a Call to Mediate in writing
either and will advise which of the alternative dates and times for mediation is
acceptable to such party. Thereupon the parties will engage in the mediation
and attempt to reach agreement resolving the claim or controversy in question.
The parties shall bear equally the expense of any mediation conducted hereunder.
D. Arbitration: Whether or not the chief executive officers of the
Lessor and Lessee confer and/or the mediation provided for above occurs as
aforesaid, if a claim or controversy is not resolved during the thirty (30) day
period following the giving of a Claim Notice, the claim or controversy in
question shall be determined by a common law arbitration between the parties.
Such arbitration may be instituted by either party by delivering a demand for
arbitration to the other party and to the office of the American Arbitration
Association serving Los Angeles, California (the "AAA"). Such arbitration will
be conducted under the auspices of the AAA before three (3) impartial
arbitrators (unless the parties agree to a single arbitrator) selected in
accordance with the practices and procedures of the AAA and in accordance with
the Commercial Arbitration Rules of the AAA then in effect. The arbitrator(s)
will make their award in strict conformity with such rules and this Lease
Agreement and shall have no power to depart from or change any of the provisions
thereof. The parties shall bear equally the expense of the arbitration
proceedings conducted hereunder. All such proceedings shall be conducted in Los
Angeles County, California. Any decision or award entered by the arbitrators(s)
shall be final and binding on the parties and not subject to review or appeal
and may be entered as a judgment in any jurisdiction in which either of the
parties is located or in which either has assets, be they real, personal or
mixed.
24. Hazardous or Toxic Substances:
A. Definitions: For purposes of this Lease Agreement, "Hazardous
Materials" means any explosives, radioactive materials, medical wastes,
hazardous wastes, or hazardous substances, including, without limitation
substances defined as "hazardous substances" in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C.
9601-9657, the Hazardous Materials Transportation Act of 1975, 49 U.S.C.
1801-1812, the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
6901-6987, or any other federal, state, or local statute, law, ordinance, code,
rule, regulation, order, or decree regulating, relating to, or imposing
liability or standards of conduct concerning hazardous materials, waste, or
substances now or at any time hereafter in effect (collectively, "Hazardous
Materials Laws").
B. The Lessor 's Representations and Warranties: The Lessor hereby
represents and warrants to Lessee that no Hazardous Materials are present on the
Los Angeles Facility and that the Los Angeles Facility is not in violation of
any Hazardous Materials Laws.
25. Assignment: The Lessee may assign its rights under this Lease
Agreement, without the consent of the Lessor to:
A. an entity which is a parent or subsidiary of Lessee;
B. an entity that is under substantially the same ownership as Lessee;
C. an entity that has purchased a substantial portion of the business and
assets of Lessee (all of which will be permitted upon written notice thereof to
the Lessor without the Lessor 's consent); or
D. a financial institution as collateral for loans by such financial
institution to the Lessee.
No assignments of this Lease Agreement by the Lessee, other than those
listed in subsection (a) to (d) inclusive, may be made without first obtaining
the written consent of the Lessor, which consent shall not be unreasonably
withheld, conditioned or delayed by the Lessor and will be deemed given unless,
within ten (10) days following written request therefor from the Lessee to the
Lessor, the Lessor notifies the Lessee in writing that it is unwilling to give
its consent and sets forth the specific reason or reasons therefor. It is
agreed that it would be unreasonable for the Lessor to withhold its consent to
assignment of this Lease Agreement to any proposed assignee unless the proposed
assignee's financial standing is such that there is a material issue as to its
ability to meet the obligations of the Lessee under this Lease Agreement during
the remainder of the then current term of this Lease Agreement.
26. Holding Over: If the Lessee shall remain in possession of all or any
part of the Core Business Equipment after expiration of the Term of this Lease
Agreement, or any renewal thereof,then the Lessee shall be deemed to be a Lessee
of the Core Business Equipment from month to month and subject to all of the
terms and provisions hereof, which shall not create any rights in the Lessee to
an extension or renewal of the Lease Agreement.
27. Notices: All notices, requests, demands, and other communications given
under this Agreement will be deemed to have been properly given if hand
delivered or sent by national overnight deliver service for next business day
delivery, with postage prepaid, to the recipient at the following addresses, or
to such other address as may be designated in writing to the other party from
time to time:
If to the Lessee: Recovery Technologies Group of California, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxx, President
With a copy to: Xxxxxx X. Xxxxxx
00 Xxxxxxxx Xxxx
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
If to the Lessor: Rubber Technology International, Inc.
0000 Xxxx Xxxxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxx, President
With a copy to: M. Xxxxxxx Xxxxxx
Xxxxxx Law Group
Xxxxx 000
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
All notices will be considered delivered when they have been received by
any officer of the party to which the notice was sent.
28. Termination: The Lessee agrees that it will surrender the Core Business
and the Core Business Equipment to the Lessor at the end of the Term, or any
renewal thereof,waiving any and all laws now in force or which may be passed
from time to time during the term of this Lease Agreement which may be contrary
to this provision.
29. Broker: The Lessor and the Lessee agree that the only brokers involved
bringing the Lessor and the Lessee together with respect to this Lease Agreement
was Xxxxxx Xxxx Financial Group, LLC (the "Broker"). The Lessor agrees to be
responsible for all commissions payable to the Broker in connection with this
Lease Agreement and to indemnify and hold harmless the Lessee from and against
any liability or claim, whether meritorious or not, arising with respect to any
other broker whose claim arises by, through or on behalf of the Lessor. The
Lessee agrees to indemnify and hold harmless the Lessor from and against any
liability or claim, whether meritorious or not, arising with respect to any
broker whose claim arises by, through or on behalf of the Lessee (except for any
claims which may be asserted by the Broker against the Lessor in connection with
this Lease Agreement).
30. The Lessee's Right to Early Termination: The Lessee will have the right
to terminate this Lease Agreement by giving at least fifteen (15) days prior
written notice to Lessor of its election to do so if:
A. despite its commercially reasonable efforts, Lessee is not able to secure
any Licenses and Permits to necessary conduct the business of collecting and
processing used tires at the Los Angeles Facility; or
B. because of a change in the law or regulations applicable thereto, it
become impossible or economically unfeasible to continue to conduct the business
of collecting and processing used tires at the Los Angeles Facility.
31. Governing Law: It is understood and agreed that this Lease Agreement
shall be interpreted in accordance with the laws of the State of California,
without reference to conflict of law principles, and no presumption shall be
deemed to exist in favor of or against either party hereto by virtue of the
negotiation, drafting and execution of this Lease Agreement.
32. Captions: The captions appearing in this Lease Agreement are inserted
only as a matter of convenience and in no way define, limit, construe or
describe the scope or intent of any Section.
33. Corporate Authority: Each of the persons executing this Lease Agreement
on behalf of the Lessor and the Lessee respectively hereby personally represents
and warrants that the corporation for which such person executed this Lease
Agreement is a duly existing corporation in its place of organization, that such
corporation is qualified to do business in the State of California, that such
corporation has authorized by all necessary action the execution, delivery and
performance of this Lease Agreement and has full right and authority to enter
into this Lease, and that each person signing on behalf of such entity is
authorized to do so.
34. Severability: If any provision of this Lease Agreement or the
application thereof to any person or circumstance shall be invalid or
unenforceable to any extent, the remainder of this Lease Agreement and the
application of such provisions to other persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.
35. Successors and Assigns: All rights, remedies, liabilities, covenants,
conditions and agreements herein imposed upon either of the parties hereto shall
inure to and be binding upon the successors and assigns of the Lessor and the
Lessee insofar as this Lease Agreement, or renewal thereof, and the terms
created are assignable.
36. Entire Agreement: It is expressly agreed by the Lessor and the Lessee,
as a material consideration for the execution of this Lease Agreement, that this
Lease Agreement, including
any specific references to written extrinsic documents, is the entire agreement
of the parties with respect to the subject matter hereof; that there are, and
were, no verbal representations, warranties and understandings, stipulations,
agreements or promises pertaining to this Lease Agreement or to the expressly
mentioned written extrinsic documents not incorporated in writing in this Lease
Agreement unless this Lease Agreement specifically so states.
37. Amendment: This Lease Agreement may not be altered, waived, amended or
extended except by an instrument in writing signed by the Lessor and the Lessee.
38. Exhibits: The following are the Exhibits to this Lease Agreement and
by this reference are incorporated herein and made a part hereof as if fully set
forth herein:
Exhibit
A Core Business Equipment
B Third Party Leases
C Licenses and Permits
D Lessor's customers and vendors at the Los Angeles Facility
E Leases for the Los Angeles Facility between H & R Sales, Inc. and the
Lessor
IN WITNESS WHEREOF, the parties hereto set their hands and seals hereto on
the day and year first above written.
RUBBER TECHNOLOGY INTERNATIONAL. INC.,
a Nevada corporation
ATTEST:/s/ Xxx Xxxxxxxx By: /s/ Xxxxxx Xxxx
Secretary Xxxxxx Xxxx, President
Corporate Seal
RECOVERY TECHNOLOGIES OF CALIFORNIA, INC.,
a Delaware corporation
ATTEST:/s/ Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx, Secretary By: /s/Xxxxxx X. Xxxxx
Corporate Seal Xxxxxx X. Xxxxx, President
