Exhibit
10.3


 


OCTOBER
24, 2002 ADDENDUM #2 TO LEASE DATED JUNE, 1996 BY AND BETWEEN

HOWARD BROTHERS LLC CORPORATION FORMERLY HOWARD REAL PROPERTY TRUST

“LESSOR” AND SPECIALTY LABORATORIES, INC “LESSEE” FOR THE PREMISES LOCATED

AT  1752-1756 CLOVERFIELD BOULEVARD,
SANTA MONICA, CA 90404


 


	
  60.

  	
  LEASE TERM

  EXTENSION:

  	
   

  	
   

  
	
   

  	
   

  	
  Provided that
  concurrently with the execution of this addendum, Lessee delivers to Lessor
  the sum of $4,725.00 which represents the difference between the current
  security deposit of $14,962.50 and $19,687.50, the base rent commencing July
  1, 2003, Lessor and Lessee hereby agree that the term of the lease is
  extended for an additional one (1) year term for the period July 1, 2003 -
  June 30, 2004. The base rent for this extended term is $19,687.50 per month
  triple net for the period of July 1, 2003-June 30, 2004.

  
	
   

  	
   

  	
   

  	
   

  
	
  61.

  	
  OPTION TO

  EXTEND:

  	
   

  	
   

  
	
   

  	
   

  	
  Lessor hereby grants
  Lessee two (2) one (1) year options to extend the term of the lease. The base
  rent for the first one (1) year option to extend is $20,179.68 per month
  triple net notwithstanding any provision in the lease to the contrary for the
  period of July 1, 2004 - June 30, 2005 a copy of said option is attached
  hereto as paragraph #63. The base rent for the second one (1) year option to
  extend is the Fair Market Value but not less than the existing rent
  notwithstanding any provision in the lease to the contrary for the period of
  July 1, 2005 - June 30, 2006 a copy of said option is attached hereto as
  paragraph #64.

  
	
   

  	
   

  	
   

  	
   

  
	
  62.

  	
  ORIGINAL

  LEASE 2ND

  FIVE (5) YEAR

  OPTION TO

  EXTEND

  DELETION:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lessor and Lessee
  hereby agree that the June 1996 Lease’s Addendum paragraph #53 (“2nd
  Five (5) Year Option to Extend July 1, 2003-June 30, 2008) is hereby deleted.

  



 


Unless otherwise specifically
provided in this addendum, all terms defined in the Lease when used herein
shall have the meaning set forth in the Lease. All other terms and conditions
of the lease shall remain in full force and effect.


 


	
  AGREED AND ACCEPTED:

  	
   

  
	
   

  	
   

  
	
  LESSEE:

  	
  LESSOR:

  
	
   

  	
   

  
	
  SPECIALTY LABORATORIES,
  INC.

  A California Corporation

  	
  HOWARD BROTHERS LLC
  CORPORATION

  FORMERLY HOWARD REAL PROPERTY TRUST

  
	
   

  	
   

  
	
  BY:

  	
  /s/ Frank J. Spina

  	
   

  	
  BY:

  	
  Howard Brothers LLC
  Corp

  
	
   

  	
   

  
	
  ITS:  CFO

  	
  ITS:  Mgr, Joseph L. Howard

  
	
   

  	
   

  
	
  BY:

  	
   

  	
   

  	
  BY:

  	
  /s/ Joseph L. Howard

  
	
   

  	
   

  
	
  ITS:

  	
   

  	
   

  	
  ITS:

  	
   

  
	
   

  	
   

  
	
  EXECUTED AT:  Santa Monica, CA

  	
  EXECUTED AT:  Santa Monica, CA

  
	
   

  	
   

  
	
  DATE:  11/5/02

  	
  DATE:  11/1/02

  
	
   

  	
   

  
	
  ADDRESS:

  	
  1620 N. 26th
  St

  	
  ADDRESS:

  	
   

  
	
   

  	
   

  
	
   

  	
  90404

  	
   

  
									



 

















[LOGO]


 


OPTION(S)
TO EXTEND


STANDARD
LEASE ADDENDUM


 




	
  Dated  

  	
  October 24, 2002

  
	
   

  	
   

  
	
  By and Between  

  	
  (Lessor) 

  	
  Howard Brothers
  LLC Corporation

  
	
   

  	
  formerly Howard
  Real Property Trust

  
	
   

  	
   

  
	
   

  	
  (Lessee) 

  	
  Specialty
  Laboratories, Inc.,

  
	
   

  	
  A California
  Corporation

  
	
   

  	
   

  
	
  Address of Premises:

  	
  1752-1756
  Cloverfield Boulevard

  
	
   

  	
  Santa Monica, CA
  90404

  






 


Paragraph 63


 


A.  OPTION(S) TO EXTEND:


Lessor hereby grants to Lessee the option to extend the term of this
Lease for one (1) additional twelve (12) month period(s) commencing when the
prior term expires upon each and all of the following terms and conditions:


 


(i)            In
order to exercise an option to extend, Lessee must give written notice of such
election to Lessor and Lessor must receive the same at least five 5 months
prior to the date that the option period would commence, time being of the
essence.  If proper notification of the
exercise of an option is not given and/or received, such option shall
automatically expire.  Options (if there
are more than one) may only be exercised consecutively.


 


(ii)           The
provisions of paragraph 39, including those relating to Lessee’s Default set
forth in paragraph 39.4 of this Lease, are conditions of this Option.


 


(iii)          Except
for the provisions of this Lease granting an option or options to extend the
term, all of the terms and conditions of this Lease except where specifically
modified by this option shall apply.


 


(iv)          This
Option is personal to the original Lessee, and cannot be assigned or exercised
by anyone other than said original Lessee and only while the original Lessee is
in full possession of the Premises and without the intention of thereafter
assigning or subletting.


 


(v)           The
monthly rent for each month of the option period shall be calculated as
follows, using the method(s) indicated below: 
(Check Method(s) to be Used and Fill in Appropriately)


 


o  I.       Cost
of Living Adjustment(s) (COLA)


 


a.      On (Fill in COLA Dates):


 


the Base Rent shall be adjusted by the change, if any, from the Base
Month specified below, in the Consumer Price Index of the Bureau of Labor
Statistics of the U.S. Department of Labor for (select one): o
CPI W (Urban Wage Earners and Clerical Workers) or o
CPI U (All Urban Consumers), for (Fill in Urban Area):  


 


 


All Items (1982-1984=100), herein referred to as “CPI”.


 


b.      The monthly rent payable in accordance with paragraph A.I.a of
this Addendum shall be calculated as follows: the Base Rent set forth in
paragraph 1.5 of the attached Lease, shall be multiplied by a fraction the
numerator of which shall be the CPI of the calendar month 2 months prior to the
month(s) specified in paragraph A.I.a. above during which the adjustment is to
take effect, and the denominator of which shall be the CPI of the calendar
month which is 2 months prior to (select one): o
the first month of the term of this Lease as set forth in paragraph 1.3 (“Base
Month”) or o (Fill in Other “Base Month”):
                                    .
The sum so calculated shall constitute the new monthly rent hereunder, but in
no event, shall any such new monthly rent be less than the rent payable for the
month immediately preceding the rent adjustment.


 


c.      In the event the compilation and/or publication of the CPI
shall be transferred to any other governmental department or bureau or agency
or shall be discontinued, then the index most nearly the same as the CPI shall
be used to make such calculation.  In
the event that the Parties cannot agree on such alternative index, then the
matter shall be submitted for decision to the American Arbitration Association
in accordance with the then rules of said Association and the decision of the
arbitrators shall be binding upon the parties. 
The cost of said Arbitration shall be paid equally by the Parties.


 


o  II.      Market Rental Value Adjustment(s) (MRV)


 


a.      On (Fill in MRV Adjustment Date
(s))                                          



the Base Rent shall be adjusted to the “Market Rental Value” of the property as
follows:


 


1) Four months prior to each Market Rental Value
Adjustment Date described above, the Parties shall attempt to agree upon what
the new MRV will be on the adjustment date. 
If agreement cannot be reached, within thirty days, then:


 


(a) Lessor and Lessee shall immediately appoint a
mutually acceptable appraiser or broker to establish the new MRV within the
next 30 days.  Any associated costs will
be split equally between the Parties, or


 


(b) Both Lessor and Lessee shall each immediately make
a reasonable determination of the MRV and submit such determination, in
writing, to arbitration in accordance with the following provisions:


 


	
  Initials:

  	
  [ILLEGIBLE]

  	
  Initials:

  	
  [ILLEGIBLE]

  



 




	
  ã2000 - American Industrial Real Estate
  Association

  	
   

  	
  FORM
  OE-3-8/OOE

  






1

















 


(i)      Within
15 days thereafter Lessor and Lessee shall each select an o
appraiser or o broker
(“Consultant” - check one) of their choice to act as an arbitrator.  The two arbitrators so appointed shall
immediately select a third mutually acceptable Consultant to act as a third
arbitrator.


 


(ii)     The 3
arbitrators shall within 30 days of the appointment of the third arbitrator
reach a decision as to what the actual MRV for the Premises is, and whether
Lessor’s or Lessee’s submitted MRV is the closest thereto.  The decision of a majority of the
arbitrators shall be binding on the Parties. 
The submitted MRV which is determined to be the closest to the actual
MRV shall thereafter be used by the Parties.


 


(iii)    If
either of the Parties fails to appoint an arbitrator within the specified 15
days, the arbitrator timely appointed by one of them shall reach a decision of
his or her own, and said decision shall be binding on the Parties.


 


(iv)    The
entire cost of such arbitration shall be paid by the party whose submitted MRV
is not selected, ie. the one that is NOT the closest to the actual MRV.


 


2) Notwithstanding the foregoing, the new MRV shall
not be less than the rent payable for the month immediately preceding the rent
adjustment.


 


b.       Upon the establishment of each New Market Rental Value:


 


1) the new MRV will become the new “Base Rent” for the
purpose of calculating any further Adjustments, and


 


2) the first month of each Market Rental Value term
shall become the new “Base Month” for the purpose of calculating any further
Adjustments.


 


ý  III.     Fixed
Rental Adjustment(s) (FRA)


 


The Base Rent shall be increased to the following amounts on the dates
set forth below:


 


	
  On (Fill in FRA Adjustment Date(s)):

  	
   

  	
  The New Base Rent shall be:

  
	
  July 1, 2004

  	
   

  	
  $

  	
  20,179.68 per mo, NNN

  
	
   

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
  $

  	
   

  



 


B.  NOTICE:


 


Unless specified otherwise herein, notice of any
rental adjustments, other than Fixed Rental Adjustments, shall be made as
specified in paragraph 23 of the Lease.


 


C.  BROKER’S FEE:


 


The Brokers shall be paid a Brokerage Fee for each
adjustment specified above in accordance with paragraph 15 of the Lease.


 


 


 


NOTE:
These
forms are often modified to meet changing requirements of law and needs of the
industry.  Always write or call to make
sure you are utilizing the most current form: AMERICAN INDUSTRIAL REAL ESTATE
ASSOCIATION, 700 S. Flower Street, Suite 600, Los Angeles, Calif. 90017


 


 


	
  Initials

  	
  [ILLEGIBLE]

  	
  Initials:

  	
   [ILLEGIBLE]

  



 


2

















 


[LOGO]


 


OPTION(S) TO EXTEND


STANDARD LEASE ADDENDUM


 




	
  Dated

  	
  October 24, 2002

  
	
   

  
	
  By and Between 

  	
  (Lessor)

  	
  Howard Brothers LLC Corporation

  formerly Howard Real Property Trust

  
	
   

  
	
   

  	
  (Lessee)

  	
  Specialty Laboratories, Inc.,

  
	
   

  	
  A California Corporation

  
	
   

  
	
  Address of Premises: 

  	
  1752-1756 Cloverfield Boulevard

  
	
   

  	
  Santa Monica, CA 90404

  






 


Paragraph 64


 


A.  OPTION(S) TO EXTEND:


 


Lessor hereby grants to Lessee the option to extend the term of this
Lease for one (1) additional twelve (12) month period(s) commencing when the
prior term expires upon each and all of the following terms and conditions:


 


(i)            In
order to exercise an option to extend, Lessee must give written notice of such
election to Lessor and Lessor must receive the same at least five 5 months
prior to the date that the option period would commence, time being of the
essence.  If proper notification of the
exercise of an option is not given and/or received, such option shall
automatically expire.  Options (if there
are more than one) may only be exercised consecutively.


 


(ii)           The
provisions of paragraph 39, including those relating to Lessee’s Default set
forth in paragraph 39.4 of this Lease, are conditions of this Option.


 


(iii)          Except
for the provisions of this Lease granting an option or options to extend the
term, all of the terms and conditions of this Lease except where specifically
modified by this option shall apply.


 


(iv)          This
Option is personal to the original Lessee, and cannot be assigned or exercised
by anyone other than said original Lessee and only while the original Lessee is
in full possession of the Premises and without the intention of thereafter
assigning or subletting.


 


(v)           The
monthly rent for each month of the option period shall be calculated as
follows, using the method(s) indicated below: 
(Check Method(s) to be Used and Fill in Appropriately)


 


o  I.       Cost
of Living Adjustment(s) (COLA)


 


a.      On ( Fill in COLA
Dates):                                             



the Base Rent shall be adjusted by the change, if any, from the Base Month
specified below, in the Consumer Price Index of the Bureau of Labor Statistics
of the U.S. Department of Labor for (select one): o
CPI W (Urban Wage Earners and Clerical Workers) or o
CPI U (All Urban Consumers), for (Fill in Urban Area):


 


                                          


All Items (1982-1984=100), herein referred to as “CPI”.


 


b.      The monthly rent payable in accordance with paragraph A.I.a. of
this Addendum shall be calculated as follows: the Base Rent set forth in
paragraph 1.5 of the attached Lease, shall be multiplied by a fraction the
numerator of which shall be the CPI of the calendar month 2 months prior to the
month(s) specified in paragraph A.I.a. above during which the adjustment is to
take effect, and the denominator of which shall be the CPI of the calendar
month which is 2 months prior to (select one): o
the first month of the term of this Lease as set forth in paragraph 1.3 (“Base
Month”) or o (Fill in Other “Base Month”):                                           .  The sum so calculated shall constitute the
new monthly rent hereunder, but in no event, shall any such new monthly rent be
less than the rent payable for the month immediately preceding the rent
adjustment.


 


c.      In the event the compilation and/or publication of the CPI
shall be transferred to any other governmental department or bureau or agency
or shall be discontinued, then the index most nearly the same as the CPI shall
be used to make such calculation.  In the
event that the Parties cannot agree on such alternative index, then the matter
shall be submitted for decision to the American Arbitration Association in
accordance with the then rules of said Association and the decision of the
arbitrators shall be binding upon the parties. 
The cost of said Arbitration shall be paid equally by the Parties.


 


ý  II.      Market Rental Value Adjustment(s) (MRV)


 


a.      On (Fill in MRV Adjustment Date(s))   July 1, 2005


 


the Base Rent shall be adjusted to the “Market Rental Value” of the
property as follows:


 


1) Four months prior to each Market Rental Value
Adjustment Date described above, the Parties shall attempt to agree upon what
the new MRV will be on the adjustment date. 
If agreement cannot be reached, within thirty days, then:


 


(a) Lessor and Lessee shall immediately appoint a
mutually acceptable nationally recognized broker to establish the new MRV
within the next 30 days.  Any associated
costs will be split equally between the Parties, or


 


(b) Both Lessor and Lessee shall each immediately make
a reasonable determination of the MRV and submit such determination, in
writing, to arbitration in accordance with the following provisions:


 


	
  Initials

  	
  [ILLEGIBLE]

  	
  Initials: 

  	
  [ILLEGIBLE]

  



 


 


1

















 


(i)      Within
15 days thereafter, Lessor and Lessee shall each select an nationally
recognized broker (“Consultant” - check one) of their choice to act as an
arbitrator.  The two arbitrators so
appointed shall immediately select a third mutually acceptable Consultant to
act as a third arbitrator.


 


(ii)     The 3
arbitrators shall within 30 days of the appointment of the third arbitrator
reach a decision as to what the actual MRV for the Premises is, and whether
Lessor’s or Lessee’s submitted MRV is the closest thereto.  The decision of a majority of the
arbitrators shall be binding on the Parties. 
The submitted MRV which is determined to be the closest to the actual
MRV shall thereafter be used by the Parties.


 


(iii)    If
either of the Parties fails to appoint an arbitrator within the specified 15
days, the arbitrator timely appointed by one of them shall reach a decision on
his or her own, and said decision shall be binding on the Parties.


 


(iv)    The
entire cost of such arbitration shall be paid by the party whose submitted MRV
is not selected, ie, the one that is NOT the closest to the actual MRV.


 


2) Notwithstanding the foregoing, the new MRV shall
not be less than the rent payable for the month immediately preceding the rent
adjustment.


 


b.       Upon the establishment of each New Market Rental Value:


 


1) the new MRV will become the new “Base Rent” for the
purpose of calculating any further Adjustments, and


2) the first month of each Market Rental Value term
shall become the new “Base Month” for the purpose of calculating any further
Adjustments.


 


o  III.  Fixed
Rental Adjustment(s) (FRA)


The Base Rent shall be increased to the following amounts on the dates
set forth below:


 


	
  On(Fill in FRA Adjustment Date(s)):

  	
  The New Base Rent shall be:

  
	
   

  	
  $

  	
   

  
	
   

  	
  $

  	
   

  
	
   

  	
  $

  	
   

  
	
   

  	
  $

  	
   

  



 


B.  NOTICE:


 Unless specified otherwise herein, notice of
any rental adjustments, other than Fixed Rental Adjustments, shall be made as
specified in paragraph 23 of the Lease.


 


C. 
BROKER’S FEE:


 The Brokers shall be paid a Brokerage Fee for
each adjustment specified above in accordance with paragraph 15 of the Lease.


 


 


 


 


 


NOTE:  These forms are often modified to meet changing requirements of
law and needs of the Industry.  Always
write or call to make sure you are utilizing the most current form: AMERICAN
INDUSTRIAL REAL ESTATE ASSOCIATION, 700 S. Flower Street, Suite 600, Los
Angeles, Calif. 90017


 


 


	
  Initials:

  	
  [ILLEGIBLE]

  	
  Initials: 

  	
  [ILLEGIBLE]

  



 


2