LOMAS SANTA FE CORPORATE CENTER II
ADDENDUM TO LEASE
This Addendum to Lease ("Addendum") is made to the Lease dated as of
October 20, 1997 ("Lease"), by and between PROPCO, LP, a California limited
partnership ("Landlord") and BestWay USA, a Nevada corporation ("Tenant").
Landlord and Tenant hereby agree that notwithstanding anything contained in
the Lease to the contrary, the provisions set forth below shall be deemed to be
a part of the Lease and shall supersede, to the extent appropriate, any contrary
provision in the Lease. All references in the Lease and in this Addendum to
"Lease" shall be construed to mean the Lease as amended and supplemented by this
Addendum. All capitalized terms used in this Addendum unless specifically
defined in this Addendum shall have the same meaning as the terms used in the
Lease.
AGREEMENT
1. Term (Section 1.06). The first and second sentences of Section 1.6 are
deemed replaced with the following:
The Term shall be Sixty (60) full calendar months commencing upon the
earlier of the following ("Commencement Date") (i) ninety (90) days
following the date of this Lease and (ii) the date on which the Tenant
Improvements have been substantially completed as evidenced by
Tenant's receipt of the City of Solana Beach building inspection
department's final approval of the Tenant Improvements to be
constructed by Tenant within the Premises as described on Exhibit C
attached to and made a part of this Lease and Tenant's telephone
system is operational.
Furthermore, the following is deemed added to Section 1.06 of the Lease:
Landlord hereby grants to Tenant one (1) option ("Renewal Option") to
extend the initial Term of this Lease for a period of five (5) years
("Renewal Term"). The Renewal Option must be exercised, if at all, by
written notice ("Option Notice") delivered by Tenant to Landlord not
later than six (6) months prior to the end of the initial Term.
Further, the Renewal Option shall not be deemed to be properly
exercised if, as of the date of the Option Notice or at the end of the
initial Term, Tenant (i) is in default under the Lease, (ii) has
assigned all or any portion of this Lease or its interest therein or
(iii) has sublet all or any portion of the Premises. Provided Tenant
has properly and timely exercised the Renewal Option, the initial Term
shall be extended by the Option Term, and all terms, covenants and
conditions of the Lease shall remain unmodified and in full force and
effect, except that the Minimum Monthly Rent shall be modified as set
forth below.
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The Minimum Monthly Rent payable for the Option Term shall be the fair
market rental value of the Premises, as determined herein. Landlord
shall determine fair market rental value by using its best good faith
judgment in accordance with the criteria set forth below. As used
herein, "fair market rental value" shall mean the projected prevailing
market rental rates and other generally applicable economic terms and
conditions which a willing, comparable, new non-renewal, non-equity
tenant would pay, and which a willing landlord of a comparable office
in the immediate market area of the Building would accept, projected
to be paid as of the commencement of the Option Term for similar
office space (improved with tenant improvements of substantially
similar age, quality then existing in the Premises) situated in office
buildings located in the immediate market area of the Building, taking
into account items that professional real estate brokers customarily
consider, including but not limited to, rental rates, office space
availability, tenant size, tenant improvement allowances over building
standard, free rent and any other concessions projected to be offered
for such similar office space as of such date. Landlord shall use its
best efforts to provide written notice of such amount not later than
three (3) months prior to the expiration of the initial Term. Tenant
shall have ten (10) days ("Tenant's Review Period") after receipt of
Landlord's notice of the fair market rental value within which to
accept such fair market rental value or to reasonably object thereto
in writing. In the event Tenant objects to the fair market rental
value submitted by Landlord, Landlord and Tenant shall attempt in good
faith to agree upon such fair market rental value, using their best
good faith efforts. If Landlord and Tenant fail to reach agreement on
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such fair market rental value within fifteen (15) days following
Tenant's Review Period (the "Outside Agreement Date"), then the Option
Notice shall have no effect and this Lease shall expire at the end of
the initial Term. Neither party shall have the right to have a court,
arbitrator, or other third party set the Minimum Monthly Rent for the
Option Term. Notwithstanding the foregoing, in no event shall the
Minimum Monthly Rent for the Option Term be less than the scheduled
Minimum Monthly Rent payable by Tenant during the calendar month
immediately preceding the commencement of the Option Term.
2. Security Deposit (Section 1.10). The following shall be added to the
Security Deposit Section 1.10 of the Lease:
Upon execution of this Lease, Tenant shall deliver to Landlord an
unconditional and irrevocable letter of credit ("Letter of Credit"),
in favor of Landlord, in a form substantially the same as Exhibit G
which is attached hereto, for the principal sum totaling Fifty
Thousand Dollars ($50,000.00) which Tenant shall maintain and keep in
force until the expiration of the Term of this Lease (including any
extension or renewals thereof), as security for the faithful
performance and observance by Tenant of the terms, provisions and
conditions of this by Tenant to be kept and performed. Within thirty
(30) days prior to the expiration of the Letter of Credit, Tenant
shall provide Landlord with evidence satisfactory to Landlord,
evidencing the renewal of the Letter of Credit for the following year.
Tenant's failure to maintain said Letter of Credit and failure to
provide the assurances set forth herein shall constitute a material
breach of this Lease and entitle Landlord to draw upon the Letter of
Credit as provided for herein.
In the event Tenant fails to pay any amount due under this Lease when
due ("Monetary Default"), and such Monetary Default continues for a
period of five (5) days after Tenant's receipt of written notice by
Landlord of such Monetary Default, or if Tenant fails to perform any
other covenant or condition of this ("Non-Monetary Default") and
Tenant does not commence to cure, and thereafter diligently prosecute
curing such Non-Monetary Default, within thirty (30) days of receipt
of written notice from Landlord, Landlord shall be entitled to draw
upon the principal amount of said Letter of Credit to cure any default
or to compensate Landlord for any other loss or damage which Landlord
may suffer by reason of such default and Landlord shall have the
right, thereafter, to hold such funds or the balance of the Term of
this Lease (including any extensions or renewals thereof) in
accordance with the provisions of this section.
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Under no circumstances shall Tenant have the right to apply said
Letter of Credit against all or a portion of Tenant's payment
obligations under this Lease, without the prior written consent of
Landlord. Any of the provisions of this section to the contrary
notwithstanding, should Landlord draw upon the Letter of Credit,
Landlord shall thereafter hold such funds for the balance of the Term
of this Lease (including any extensions or renewals thereof), except
as such funds are applied in accordance with the terms hereof, in a
separate interest bearing account with interest accruing to the
benefit of Landlord. Prior to Landlord making a draw of the principal
amount of said Letter of Credit, Tenant shall be entitled to notices
of default and the rights to cure which are provided for in this
Lease.
Should Landlord apply all or part of the Letter of Credit in
accordance with the terms hereof, Tenant shall, upon written demand
from Landlord, immediately pay Landlord, in cash or other form
acceptable to Landlord, an amount sufficient to return the principal
sum of the Letter of Credit to the amount provided for herein. Failure
to do so by Tenant shall constitute a material default hereunder.
Should Tenant fail to replace a Letter of Credit as required
hereunder, Landlord shall have the right to draw down the Letter of
Credit and to hold such funds pursuant this section until such time as
Tenant provides Landlord with a replacement Letter of Credit.
Notwithstanding anything contained to the contrary in this Paragraph
2, if during the initial Thirty-sixth (36) months of the Term of this
Lease no material and uncured event of default by Tenant has occurred
under this Lease, Tenant shall have the right to replace the Letter of
Credit with a cash Security Deposit in the amount of Ten Thousand
Dollars ($10,000.00). The cash Security Deposit shall be governed by
the provisions of Section 3.3 of the Lease.
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3. Minimum Monthly Rent (Section 1.11.2). Subsection 1.11.2 shall be deemed
deleted and the following shall be deemed inserted in place thereof:
MONTH OF TERM MINIMUM MONTHLY RENT
01 - 12 $8,384.00
13 - 24 $8,719.78
25 - 36 $9,068.57
37 - 48 $9,431.31
49 - 60 $9,808.56
Provided Tenant shall not be in default under any term, covenant or condition
under this Lease, Tenant shall be entitled to a credit against Minimum Monthly
Rent ("Rent Credit"), commencing with the Thirty-seventh (37th) month of the
Term, in an amount equal to the actual and verified costs paid by Tenant in
connection with Tenant's construction of the Tenant Improvements in accordance
with Exhibit C attached to this Lease. The Rent Credit shall not exceed
$40,050.00 (i.e., $10.00 per Useable Square Foot of Floor Area within the
Premises) and shall be amortized in equal monthly installments, without
interest, over the 37th - 60th months of the Term. To illustrate the foregoing,
assume that Tenant utilized the entire Rent Credit (i.e., $40,050.00). In such
case, the monthly Rent Credit would be $1,668.75 commencing with the 37th month
of the Term and continuing thereafter until expiration of the 60th month of the
Term.
4. Early Occupancy (Section 2.3). Section 2.3 is deemed deleted and Tenant
shall be permitted access to the Premises for the purpose of constructing the
Tenant Improvements in accordance with Exhibit C attached to this Lease upon (i)
Landlord and Tenant's mutual execution of this Lease, (ii) Landlord's receipt of
Tenant's first installment of Minimum Monthly Rent, (ii) Landlord's receipt of
the Letter of Credit described in Paragraph 2 of this Addendum, and (iii)
Landlord's receipt of the Certificate of Insurance required by Article 14 of
this Lease.
5. Adjustments to Minimum Monthly Rent (Section 3.2). Section 3.2 shall be
deemed deleted.
6. Vehicle Parking (Section 19.3.1). The first and second sentences of
Section 19.3.1 are deemed replaced with the following:
Tenant shall be entitled to the use of the number of vehicle parking
spaces set forth in Section 1.14 of the Fundamental Lease provisions.
7. Building Planning (Article 25). The first paragraph of Article 25 is
deemed deleted.
8. Tenant Improvement Agreement (Exhibit C). Sections 4,5,6,7, 10 and 17
are deemed deleted and Tenant shall construct the Tenant Improvements
substantially in accordance with the Preliminary Floor Plan prepared by Xxxxxxx
X. Xxxxx & Associates dated October 10, 1997, a copy of which is attached to and
made a part of this Lease as Exhibit H. Tenant shall use Burger Construction and
Property Services as Tenant's Contractor.
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9. Effectiveness of Lease. Except as and to the extent modified by this
Addendum, all provisions of the Lease shall remain in full force and effect.
LANDLORD TENANT
PROPCO, LP, BestWay USA,
a California limited partnership A Nevada corporation
By: Lomas Santa Fe Development
Corporation, a California
Corporation (General Partner)
By:___________________________ By:___________________________
Name: Xxxxxx X. Xxxxxxxx Name: Xxxxxx Xxxxxx
Title: President Title: Chief Executive Officer
