SECOND AMENDMENT TO OFFICE LEASE
Exhibit 10.5
EXECUTED
ORIGINAL
ORIGINAL
SECOND AMENDMENT TO OFFICE LEASE
This SECOND AMENDMENT TO OFFICE LEASE (this “Second Amendment”) is made and entered into as
of the 8th day of November, 2002, by and between LEXINGTON SAN XXXXXXX ASSOCIATES, LLC,
a California limited liability company (“Landlord”), and EQUITY MARKETING, INC. a Delaware
corporation (“Tenant”).
R E C I T A L S :
A. Miracle Mile, L.L.C., a Delaware limited liability company, predecessor-in-interest to Landlord, and Tenant entered into that certain Office Lease, dated July 17, 1998
(the
“Office Lease”), as amended by that certain First Amendment to Office Lease dated February 9,
1999 (the “First Amendment”) (the Office Lease and the First Amendment are hereafter
collectively referred to herein as the “Lease”), whereby Landlord leased to Tenant and Tenant
leased from Landlord those certain premises consisting of approximately 57,128 rentable
square
feet (the “Premises”) located on the first (1st), third (3rd), fourth
(4th) and fifth (5th) floors of that
certain office building located at 0000 Xxx Xxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx
(“Building”).
B. Landlord and Tenant desire to extend the term of the Lease and make
modifications to the Lease.
A G R E E M E N T :
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereby agree as follows.
1. Capitalized Terms. All capitalized terms when used herein shall have the same
meaning as is given such terms in the Lease unless expressly superseded by the terms of this
Second Amendment.
2. Extension of Term. Landlord and Tenant acknowledge that the Lease Term is
scheduled to expire on December 31, 2005, pursuant to the terms of the Lease. Notwithstanding
anything to the contrary contained in the Lease, the Lease Term is hereby extended to and
shall
expire on December 31, 2009 (the “New Expiration Date”), unless otherwise extended or sooner
terminated as provided in the Lease, as hereby amended. Notwithstanding anything contained in
the Lease to the contrary, Landlord and Tenant hereby acknowledge and agree that (i) for all
purposes under the Lease, the initial Lease Term under the Lease shall be deemed to expire on
December 31, 2002, (ii) the period of time commencing on January 1, 2003 (the “New Term
Commencement Date”) and terminating on the New Expiration Date shall be referred to herein
as the “New Term,” and (iii) notwithstanding anything in Section 2.2 of the Office Lease to
the
contrary, Tenant shall have one (1) remaining Option Term, which shall be applicable following
the expiration of the New Term, subject to and in accordance with the terms of Section 2.2 of
the
Office Lease.
3. Rent.
3.1
Base Rent. Commencing on the New Term Commencement Date and continuing throughout
the New Term, Tenant shall pay to Landlord monthly installments of Base Rent for the Premises as
follows:
| Monthly | ||||||
| Monthly | Rental Rate | |||||
| Period During | Installment | per Rentable | ||||
| Extended Term | Annual Rent | of Base Rent | Square Foot | |||
January 1, 2003 — |
$1,199,688.00 | $99,974.00 | $1.75 | |||
December 31, 2003 |
||||||
January 1, 2004 — |
$1,357,361.28 | $113,113.44 | $1.98 | |||
December 31, 2004 |
||||||
January 1, 2005 — |
$1,384,782.72 | $115,398.56 | $2.02 | |||
December 31, 2005 |
||||||
January 1, 2006 — |
$1,419,059.52 | $118,254.96 | $2.07 | |||
December 31, 2006 |
||||||
January 1, 2007 — |
$1,453,336.32 | $121,111.36 | $2.12 | |||
December 31, 2007 |
||||||
January 1, 2008 — |
$1,487,613.12 | $123,967.76 | $2.17 | |||
December 31, 2008 |
||||||
January 1, 2009 — |
$1,528,745.28 | $127,395.44 | $2.23 | |||
December 31, 2009 |
3.2
Tenant’s Share of Direct Expenses. Throughout the New Term, Tenant shall
continue to pay Tenant’s Share of Direct Expenses in accordance with the terms of the Lease;
provided, however, that effective as of the New Term Commencement Date, the Base Year shall be the
calendar year 2003.
4.
Improvements in the Premises. Landlord and Tenant hereby acknowledge and agree
that Tenant is currently in occupancy of the Premises and, except as set forth in this Section 4,
(i) Tenant shall continue to accept the Premises in its currently existing, “as-is” condition, and
(ii) Landlord shall not be obligated to provide or pay for any improvement work or services
related to the improvement of the Premises. Further, Tenant acknowledges that neither Landlord nor
any agent of Landlord has made any representation or warranty regarding the condition of the
Premises or with respect to the suitability of any of the same for the conduct of Tenant’s
business.
4.1
Improvement Allowance. Tenant shall be entitled to a one-time
allowance for the design, purchase and installation of improvements (the “Improvements”)
which
are affixed to certain portions of the Premises located on the first (1st) and
fifth (5th) floors of the
Building, as set forth on Exhibit A, attached hereto (the “Improvement Space”), in an amount
equal to Two Hundred Thirty-Four Thousand and No/100 Dollars ($234,000.00) (the
“Improvement Allowance”). Tenant’s construction and installation of the Improvements shall be
made in accordance with the terms of Article 8 of the Office Lease. Notwithstanding anything
contained in Section 4.3, below, to the contrary, in no event shall Landlord be obligated to
disburse any portion of the Improvement Allowance before
August 1, 2003; provided, however,
that Tenant may incur costs related to the construction of the Improvements prior to August 1,
2003. In the event that the Improvement Allowance is not fully utilized by Tenant by August 1,
2005, then such unused amounts shall revert to Landlord and Tenant shall have no further
rights
with respect thereto.
4.2
HVAC Work Allowance. In addition to the Improvement Allowance,
Tenant shall be entitled to a one-time allowance for the cost of repairs of and maintenance to
the
Premises’ HVAC system (the “HVAC Work”), in an amount equal to Fifty Thousand and No/100
Dollars ($50,000.00) (the “HVAC Work Allowance”). The HVAC Work shall be completed by
| -2- | 0000 XXX XXXXXXX
XXXXXXXXX [Equity Marketing, Inc.] |
Tenant in accordance with the terms of the Office Lease (including without limitation, Articles 7
and 8 thereof). In the event that the HVAC Work Allowance is not fully utilized by Tenant on or
before December 31, 2003, then such unused amounts shall revert to Landlord and Tenant shall have
no further rights with respect thereto. Notwithstanding Tenant’s right, as set forth herein, to the
HVAC Allowance, Landlord and Tenant hereby acknowledge and agree that Tenant shall be responsible,
at Tenant’s sole cost and expense, for the repair of, and maintenance to, the Premises’ HVAC system
in accordance with the terms of Article 7 of the Lease.
4.3
Disbursement of Improvement Allowance and HVAC Work
Allowance. Subject to the
terms of Sections 4.1 and 4.2, above, following the completion of the Improvements or the HVAC
Work, as the case may be, Landlord shall, within thirty (30) days following receipt of invoices
marked as paid, unconditional mechanics’ lien releases and such other information as Landlord may
reasonably request with respect to the Improvements and/or the HVAC Work, as the case may be,
reimburse Tenant for the cost of the Improvements and/or the HVAC Work, as the case may be;
provided, however, that in no event shall Landlord’s disbursements for the Improvements exceed the
Improvement Allowance nor shall Landlord’s disbursements for the HVAC Work exceed the HVAC Work
Allowance.
5. Parking Charges.
5.1
Unreserved Passes. Effective as of the New Term Commencement Date
and continuing throughout the New Term, notwithstanding anything in the Lease to the contrary,
the Parking Charge payable by Tenant with respect to each unreserved pass leased by Tenant
shall be as follows: (i) during the first (1st) year of the New Term, the Parking
Charge payable
by Tenant shall equal Ninety and No/100 Dollars ($90.00) per month for each pass rented by
Tenant; and (ii) on each anniversary of the New Term Commencement Date, the monthly
Parking Charge payable by Tenant for each unreserved pass rented by Tenant shall be increased
to the product of (a) the Parking Charge applicable to unreserved passes under the Lease, as
amended hereby, immediately prior to such anniversary of the New Term Commencement Date,
and (b) 1.03. Following the expiration of the New Term, if Tenant leases the Premises during
the remaining Option Term, the Parking Charge payable by Tenant for Tenant’s unreserved
parking passes shall be the prevailing rate then charged by Landlord for such passes.
5.2
Reserved Passes. Effective as of the New Term Commencement Date,
notwithstanding anything in the Lease to the contrary, the Parking Charge payable by Tenant
for
each reserved parking pass rented by Tenant shall be as follows: (i) during the first
(1st) year of
the New Term, the Parking Charge payable by Tenant shall equal One Hundred Ten and No/100
Dollars ($110.00) per month for each pass rented by Tenant; and (ii) on each anniversary of
the
New Term Commencement Date, the monthly Parking Charge payable by Tenant for each
reserved pass rented by Tenant shall be increased to the product of (a) the Parking Charge
applicable to reserved passes under the Lease, as amended hereby, immediately prior to such
anniversary of the New Term Commencement Date, and (b) 1.03. Following the expiration of
the New Term, if Tenant leases the Premises during the remaining Option Term, the Parking
Charge payable by Tenant for Tenant’s reserved parking passes shall be the prevailing rate
then
charged by Landlord for such passes.
6. Storage
Space. In addition to Tenant’s rights to lease the Storage Premises in
accordance with the terms of Section 29.30 of the Office Lease, Tenant shall be entitled, at
any
time following the commencement of construction within the Improvement Space, but subject to
availability, to lease up to an additional 3,000 square feet of storage space (which may, at
Landlord’s option, be provided in up to two (2) increments) (the “Additional Storage
Premises”).
In no event shall Landlord be required to perform any demolition or tenant improvement work or
convert any space (whether then comprised of office space, retail space, parking or other non-
storage space) to storage space for purposes of providing the same to Tenant. In the event
that
Landlord shall rent Additional Storage Premises to Tenant in accordance with the terms hereof,
Tenant shall pay to Landlord, monthly storage rent in an amount equal to $0.75 per square foot
per month for the first year of such lease, with three percent (3%) annual increases
thereafter.
All storage rent shall be due on a monthly basis concurrently with Tenant’s payment of the
Base
Rent due with respect to the Premises, and shall constitute Additional Rent under the Lease,
as
amended hereby. Tenant shall give prompt notice to Landlord in case of fire or accidents in or
about the Additional Storage Premises or of defects therein or in the fixtures or equipment
related thereto. Tenant acknowledges and agrees that Landlord shall have no obligation to
provide any security for the Additional Storage Premises. Notwithstanding the foregoing,
| -3- | 0000 XXX XXXXXXX
XXXXXXXXX [Equity Marketing, Inc.] |
Landlord hereby acknowledges and agrees that the access control services provided by Landlord
pursuant to the terms of Section 6.1.7 of the Lease shall apply with respect to Tenant’s lease of
the Additional Storage Premises to the extent the Additional Storage Premises are located in the
Building and not the “6310 Building,” as that term is defined below. The Additional Storage
Premises, if leased by Tenant, shall be leased by Tenant in its then existing, “as-is” condition.
Tenant shall be fully responsible for repairing any damage to the Additional Storage Premises to
the extent such damage results from or relates to Tenant’s use thereof. Tenant’s insurance
obligations under the Lease shall also pertain to Tenant’s use of the Storage Premises. The exact
location of the Additional Storage Premises shall be determined by Landlord in its sole and
absolute discretion and may be located in the Building and/or in the building located at 0000 Xxx
Xxxxxxx Xxxxxxxxx (the “6310 Building”). Tenant hereby acknowledges and agrees, however, that (i)
the 6310 Building is currently owned by an affiliate of Landlord and that any rights to storage
space in the 6310 Building shall terminate to the extent that such affiliate of Landlord shall sell
the 6310 Building, and (ii) to the extent Tenant shall lease storage space pursuant to the terms
hereof in the 6310 Building, Tenant shall execute commercially reasonable documentation consistent
with the terms of this Section 6 which may be provided by Landlord or Landlord’s affiliate in
connection with Tenant’s lease of storage space at the 6310 Building. Tenant hereby acknowledges
that, to the extent Additional Storage Space is not available as set forth herein, Landlord shall
have no liability to Tenant in connection therewith and all of the terms of the Lease, as amended
hereby, shall remain in full force and effect.
7. Deletions. Landlord and Tenant hereby acknowledge and agree that Section 1.3
(Hold Space) (except for the definition of “Original Tenant” and “Permitted Assignee”), and
Section 1.4 (Expansion Space) (except for the definition of “Market Rent Review Period,”
“Comparable Buildings,” “Comparable Deals,” “Market Rent” and “Triggering Default”) of the
Office Lease are hereby deleted in then: entirety and are of no further, force and effect.
8. Brokers. Landlord and Tenant hereby warrant to each other that they have had
no dealings with any real estate broker or agent in connection with the negotiation of mis
Second
Amendment other man Winco Asset Management (the “Broker”) and that they know of no real
estate broker or agent other than the Broker who is entitled to a commission in connection
with
this Second Amendment. Landlord shall pay a brokerage commission to the Broker in
connection with this Second Amendment pursuant to the terms of a separate written agreement.
Each party agrees to indemnify and defend the other party against and hold the other party
harmless from any and all claims, demands, losses, liabilities, lawsuits, judgments, and costs
and
expenses (including, without limitation, reasonable attorneys’ fees) with respect to any
leasing
commission or equivalent compensation alleged to be owing on account of the indemnifying
party’s dealings with any real estate broker or agent other than the Broker. The provisions of
this
Section 8 shall survive the expiration or earlier termination of the Lease, as amended
hereby.
9. No Further Modification. Except as specifically set forth in this Second
Amendment, all of the terms and provisions of the Lease shall remain unmodified and in full
force and effect. In the event of any conflict between the terms and conditions of the Lease
and
the terms and conditions of this Second Amendment, the terms and conditions of this Second
Amendment shall prevail.
| -4- | 0000 XXX XXXXXXX
XXXXXXXXX [Equity Marketing, Inc.] |
IN WITNESS WHEREOF, Landlord and Tenant have caused this Second Amendment to be executed on
the day and date first above written.
| “Landlord”: | ||||
| LEXINGTON SAN XXXXXXX ASSOCIATES, | ||||
| LLC, a California limited liability company | ||||
| By: | Its Manager | |||
| Lexington Commercial Holdings, Inc., | ||||
| a California Corporation | ||||
| /s/ Xxxxx X. Xxxxxxxxxx | ||||
| Xxxxx X. Xxxxxxxxxx | ||||
| Chief Operating Officer | ||||
| “Tenant”: | ||||||||
| EQUITY MARKETING, INC., a Delaware | ||||||||
| corporation | ||||||||
| By: | Xxxxx Xxxxxx | |||||||
| Its: | CFO | |||||||
| By: | /s/ Xxxxx Xxxxxx | |||||||
| Its: | Chief Financial Officer | |||||||
| -5- | 6330 SAN XXXXXXX
BOULEVARD [Equity Marketing, Inc.] |
