ADDENDUM TO LEASE
This ADDENDUM is attached to and forms a part of that certain Standard
Industrial Lease dated for reference purposes September 8, 1995, by and
between Xxxxxxx D & Xxxx X. Xxxxxx dba South Coast Business Park ("Lessor"),
and q.a.d., Inc., a California Corporation ("Lessee"). The said Standard
Industrial Lease is hereby modified/supplemented (and as
modified/supplemented is hereinafter referred to as "this Lease") in the
following particulars only:
A. OPTION TO EXTEND TERM OF LEASE. Lessee is hereby granted the
option to extend the term of this Lease for three (3) additional successive
periods of one (1) years each. The options shall be exercised by the delivery
of written notice to Lessor no earlier than two hundred seventy (270) days
and no later than one hundred eighty (180) days prior to the expiration of
the lease term then in effect. Any extensions granted hereunder shall be on
the same terms and conditions applicable to the initial term except as to
rent, which shall be increased in accordance with Paragraph B(2) below.
Lessee's right to exercise the options granted herein is subject to the terms
and conditions set forth in Paragraph 39 of this Lease.
B. ADJUSTMENTS TO BASE RENT.
(1) COST OF LIVING ADJUSTMENTS TO BASE RENT. The Base Rent payable
pursuant to Paragraph 4.1 shall be subject to further adjustment as of
October 1, 1996, and as of the same date each year thereafter during the
initial lease term and any extension period. Said date is hereinafter
referred to as the "Adjustment Date." The adjustment shall be made as follows:
The Base Rent for the Premises shall be adjusted by the same
percentage as the increase, if any, in the Consumer Price Index (All Items
for All Urban Consumers 1982-84=100 Base), of the United States Department of
Labor, Bureau of Labor Statistics for Los Angeles-Anaheim-Riverside, CA (the
"Index"). The adjustment shall be calculated according to the following
formula:
X = A x B
-
C
X = Adjusted rent
A = Base Rent as of the first month of the term then in effect.
B = The monthly index for the third month immediately preceding
the Adjustment Date.
C = The monthly index for the third month immediately preceding the
first month of the term then in effect.
The monthly rent as so adjusted shall be payable for each month commencing with
the Adjustment Date and continuing until the next Adjustment Date.
-1-
If the Index is discontinued or revised during the term of this
Lease, such other government Index or computation with which it is replaced
shall be used in order to obtain substantially the same result as would be
obtained if the Index had not been discontinued or revised.
(2) DETERMINATION OF BASE RENT DURING EXTENSION PERIODS. In the
event Lessee exercises the option to extend granted in Paragraph (a) above,
the Base Rent payable at the commencement of the applicable Extension Period
shall be the then prevailing market rate for a triple net lease of comparable
lease Premises in the surrounding geographical area. Prevailing market rate
shall be determined by mutual agreement of Lessor and Lessee on the basis of
the value which will be obtained in an arms-length transaction between an
informed and willing tenant (other than a tenant currently in possession of
the demised Premises) and an informed and willing landlord (other than the
then existing landlord of demised Premises) under no compulsion to lease. If
Lessor and Lessee have not agreed upon the prevailing market rental rate by
the date which is thirty (30) days prior to the expiration of the lease term
then in effect, then the option to extend will automatically cease and be
deemed extinguished. The base monthly rent as determined pursuant to this
Paragraph B(2) shall thereafter be subject to further cost of living
adjustments pursuant to the terms of Paragraph B(1) above.
C. CONSTRUCTION OF TENANT IMPROVEMENTS. Lessee understands and
agrees that Lessor is currently in the process of constructing the
improvements which shall comprise the Premises. In the course of such
construction, Lessor hereby agrees to construct the tenant improvements set
forth in the plans and specifications attached hereto as Exhibit "B". Such
plans and specifications are hereby clarified as follows: SEE EXHIBIT. Lessee
has reviewed and approved all such plans and specifications. Any changes or
additions made by Lessee to such plans and specifications shall be at
Lessee's sole cost and expense, including a ten percent (10%) administrative
payment to Lessor. Such additional payments shall be paid by Lessee to Lessor
as follows: (i) fifty percent (50%) upon approval of such change by Lessor;
and (ii) fifty percent (50%) prior to occupancy of the Premises by Lessee.
All tenant improvements shall be deemed substantially completed when the City
of Carpinteria issues a Certificate of Occupancy for the Premises.
Notwithstanding the issuance of such Certificate, Lessee shall be provided
with a punch list of such tenant improvements prior to the commencement of
the lease term, and shall inspect the Premises after their substantial
completion. Lessee shall set forth any manner in which Lessee claims that the
Premises to do not conform to the plans and specifications attached hereto as
Exhibit "B", as reasonably measured by the standards of finished, comparably
priced industrial space in the Santa Xxxxxxx area (hereinafter the
"discrepancy"). Lessor shall cure such discrepancies to the extent Lessor
deems such discrepancies to be reasonably claimed, within thirty (30) days
following commencement of the lease term. Provided however, if any such
discrepancy is incapable of cure within such thirty (30)-day period, and
Lessor has commenced the cure of such discrepancy within such thirty (30)-day
period, this provision shall be satisfied.
-2-
D. USE. Paragraph 6 of this Lease is hereby supplemented as
follows: (1) PROHIBITED USES. Lessee shall not do or permit
anything to be done in or about the Premises nor bring or keep anything
therein which will in any way increase the existing rate of or affect any
fire or other insurance upon the Premises or any of its contents, or cause a
cancellation of any insurance policy covering the Premises or any part
thereof or any of its contents. Lessee shall not commit or suffer to be
committed any nuisance or waste in or upon the Premises. Lessee shall not use
the Premises or permit anything to be done in or about the Premises which
will in any way conflict with any law, statute, ordinance or governmental
rule or regulation now in force or which may hereafter be enacted or
promulgated. Lessee shall not keep any animals or pets on the Premises.
Lessee shall not use or store "hazardous materials or wastes" on the
Premises, as such terms are defined by applicable federal and state law,
without Lessor's prior written consent. If such consent is given, Lessee
shall comply with governmental laws, rules and regulations pertaining to
hazardous materials and wastes. Lessor shall have a right of re-entry upon
the Premises on reasonable notice and at reasonable times for purposes of
inspection, contamination testing and remediation.
(2) INSTALLATION OF SPECIALIZED EQUIPMENT AND USE OF LESSEE'S
POSSESSIONS ON THE PREMISES. Lessee shall not install on the Premises any
specialized equipment requiring the use of a power source (including, but not
limited to, computer hardware or software) without the prior written consent
of Lessor. Lessor shall give its consent to such installation provided the
conditions contained herein are satisfied. Lessor shall not be liable to
Lessee for damage to Lessee or Lessee's possessions, including but not
limited to furniture, fixtures, equipment (specialized or otherwise), and
inventory, from any cause. Lessee waives all claims against Lessor for damage
to Lessee's possessions arising for any reason. Lessee shall comply with all
laws, regulations and ordinances relating to the condition and use of any and
all of Lessee's possessions on the Premises, including laws requiring the
alteration, maintenance and restoration of the Premises as a result of
Lessee's particular use. Provided, however, any required alterations to the
Premises shall be conditioned upon Lessor's prior written consent. The
Premises shall not be electrically overloaded. No equipment, machinery,
apparatus or other appliance shall be used or operated on the Premises in
such a manner that such equipment will in any way injure, vibrate or shake
the Premises, or place an excessive burden on power sources installed on the
Premises.
E. ASSIGNMENT AND SUBLETTING. Lessee hereby understands and
agrees that Lessor may withhold its consent to any requested assignment or
subletting, and such withholding of consent shall be deemed reasonable, in
the event that the proposed assignee or sublessee intends to use or store
hazardous wastes or materials on the Premises. Also, it is a requirement that
Lessor receive seventy-five percent (75%) of any consideration or increase in
rent received or to be --- over
F. INDEMNITY. The indemnification of Lessor by Lessee pursuant
to Paragraph 8.7 of this Lease shall also include and extend to any violation
by Lessee of applicable state, federal and local laws pertaining to the use,
storage and discharge of hazardous materials and wastes.
G. DEFAULT. Paragraph 13.1 of this Lease is supplemented to
provide that the release or discharge by Lessee of any hazardous material or
wastes in or about the Premises, or violation of any law or deviation from
prescribed
-3-
procedures in the use or storage of hazardous materials or wastes, shall
constitute a material default of this Lease by Lessee. Wherever used in this
Lease, the terms hazardous wastes and/or hazardous materials shall include
all definitions of hazardous wastes and materials provided by both federal
and California law.
E. ABOVE STANDARD TENANT IMPROVEMENTS. In addition to the
construction of tenant improvements as set forth in Paragraph C above, Lessor
and Lessee agree that Lessor shall also construct those certain
above-standard tenant improvements set forth in the plans and specifications
attached hereto as Exhibit "C". Lessor and Lessee have estimated to the best
of their ability the total construction costs Lessor shall incur in the
construction of such above-standard improvements and Lessee has approved such
estimate as set forth in Exhibit "C". Provided however, Lessee understands
and agrees that this is an estimate only, and that the total actual
construction costs for such above-standard improvements may exceed the
estimate. Nevertheless, Lessee agrees that the Base Rent payable pursuant to
Paragraph 4 of the Lease shall be adjusted as more particularly set forth
below, based on the total actual construction costs for such above-standard
improvements and not the estimated costs. Lessor shall pay all costs incurred
in connection with the construction of the above-standard improvements
including but not limited to actual material costs, costs of installation,
architectural and/or engineering fees, governmental fees (e.g. building
permit fees), the cost of painting and other finish work, and delivery fees.
Following completion of construction and when such costs are known to Lessor,
Lessor shall provide Lessee with a breakdown of such costs, and a total for
the actual costs of the above-standard improvements. The minimum monthly rent
payable by Lessee over the initial term of this Lease shall then be increased
by the quotient derived by dividing the total actual cost of construction of
the above standard improvements by the number of months in the initial Lease
Term. Solely as an example, assume:
total cost of construction = $50,000
months in the initial Lease Term = 36
quotient = $1,388.89 ($50,000 DIVIDED BY 36)
original Base Rent = $3,500,00
adjusted Base Rent - $4,888.89 ($3,500.00 + $1,388.89).
Lessor shall notify Lessee promptly upon determination of the adjusted Base
Rent. By its execution of this Addendum to Lease, Lessee acknowledges its
liability for payment of such adjusted Base Rent notwithstanding the fact
that such adjusted amount is not capable of determination as of the date of
execution hereof. Lessee shall have the right to request change orders as set
forth in Paragraph C above. Following completion of construction and
installation of the above-standard improvements, Lessee shall also have the
inspection rights set forth in Paragraph C above. Subject to Lessor's duty to
correct defects arising out of improper installation of improvements,
Lessee's sole and exclusive remedy for alleged product defects in such
above-standard improvements shall be a right of action against the
manufacturer guaranteeing the allegedly defective product. Lessor shall
assign to Lessee all warranties and guaranties of the manufacturers of all
above-standard improvements installed in the Premises. Notwithstanding the
adjusted Base Rent as set forth herein, in the event that Lessee is in
-4-
default of any of its obligations under this Lease, then in addition to any
other rights or remedies which Lessor may require that Lessee pay the unpaid
balance of the total actual costs of construction of the above standard
improvements immediately upon written notice. Upon receipt by Lessor from
Lessee of such unpaid balance, the Base Rent payable by Lessee shall be
reduced by the quotient described above.
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Addendum to be executed concurrently with the Lease of which this Addendum
forms a part.
LESSOR:
XXXXXXX D & XXXX X. XXXXXX dba
SOUTH COAST BUSINESS PARK
BY: /s/ Xxxxxx Xxxxxx-Bortolay, Agent Dated: 10/10/95
---------------------------------- -----------------------
LESSEE:
q.a.d., Inc., a California Corporation
BY: Dated:
------------------------------ ----------------------
Xxx Xxxxxx, President
BY: /s/ Xxxxxxx Xxxxx Dated: Sep 28, 1995
------------------------------ ----------------------
Xxxx Xxxxxx, Vice President
-5-
EXHIBIT "A"
[FLOOR PLAN]
SOUTH COAST BUSINESS PARK
