EXHIBIT - 10.7.2

 

 

MOSSIMO,INC.

 

SECONDAMENDMENT TO OFFICE LEASE DATED JANUARY 1, 2004

 

THIS SECOND AMENDMENT TOLEASE (this “AMENDMENT”) is entered into between CF SANTA MONICA OFFICE II,L.P., a Delaware limited partnership (“LANDLORD”), and MOSSIMO, INC., aDelaware corporation (“TENANT”), with reference to the following:

 

A. Lexington-Broadway Place,L.L.C. (predecessor-in-interest to Landlord) and Tenant entered into thatcertain Lease dated June 29, 2000 and that certain First Amendment to Office Leasedated as of June 26, 2002 (as amended, the “LEASE”) currently coveringapproximately 5,994 rentable square feet consisting of 2016 Broadway Boulevardand 2018 Broadway Boulevard (the “CURRENT PREMISES”) of Broadway Place, SantaMonica, California (the “PROJECT”).

 

B. Tenant desires, interalia, to expand the Premises to include 2032A Broadway Boulevard, and to extendthe Lease Term.

 

C. Landlord and Tenant nowdesire to further amend the Lease as set forth below. Unless otherwiseexpressly provided in this Amendment, capitalized terms used in this Amendmentshall have the same meanings as in the Lease.

 

FOR GOOD AND VALUABLECONSIDERATION, the receipt and sufficiency of which are acknowledged, theparties agree as follows:

 

1. FIRST EXTENSION PERIOD.Although the Lease Term (until this Amendment) expires on July 31, 2005, theparties have agreed that, as part of the business terms of the transactionmemorialized in this Amendment, the current Lease Term (i.e., as to the CurrentPremises) will expire on March 31, 2004. Thereafter, Lease Term as to theentire Premises (i.e., the Current Premises and the SecondExpansion Space, as defined below) isextended for a period of four (4) years (the “FIRST EXTENSION PERIOD”)commencing on April 1, 2004 and expiring on March 31, 2008.

 

2. SECOND EXPANSION SPACE.Landlord leases to Tenant and Tenant leases from Landlord 2032A BroadwayBoulevard, consisting of approximately 3,406 additional rentable square feet(the “SECOND EXPANSION SPACE”) in the Project as shown on the attached EXHIBITA, which is incorporated into this Amendment for all purposes. The outline ofthe Premises attached to the Lease as EXHIBIT A-X is deleted and replaced withEXHIBIT A attached to this Amendment, and the term “PREMISES” as used in the Leasemeans and includes approximately 9,400 rentable square feet, being the sum ofthe rentable square footage of the Current Premises (5,994 rentable squarefeet) and the Second Expansion Space. The lease of the Second Expansion Spaceis subject to all of the terms and conditions of the Lease currently in effect,except as modified in this Amendment. Landlord shall tender the SecondExpansion Space to Tenant on April 1, 2004, at which time Tenant’s obligationto pay Rent pursuant to the Lease (as amended) for the Second Expansion Spaceshall commence. Possession of space to commence on Jan. 5, 04.

 

3. MINIMUM RENT. Commencingon April 1, 2004 and continuing through the First Extension Period, Tenantshall, at the time and place and in the manner provided in the Lease, pay toLandlord as Minimum Rent for the entire Premises the amounts set forth in thefollowing rent schedule, plus any applicable tax thereon:

 

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| **PERIOD**                        | ** ** | **MINIMUM  RENT** | ** ** | **RATE** | ** ** |
|-----------------------------------|------------|-------------------|------------|----------|------------|
|                              |       |              |       |     |       |
| April 1, 2004 thru March 31, 2005 |       | $                 | 24,910.00  |     | $          | 2.65 |   |
| April 1, 2005 thru March 31, 2006 |       | $                 | 25,662.00  |     | $          | 2.73 |   |
| April 1, 2006 thru March 31, 2007 |       | $                 | 26,414.00  |     | $          | 2.81 |   |
| April 1, 2007 thru March 31, 2008 |       | $                 | 27,166.00  |     | $          | 2.89 |   |
| April 1, 2008 thru July 31, 2009  |       | $                 | 28,012.00  |     | $          | 2.98 |   |

 

4. ADDITIONAL RENT.Commencing on April 1, 2004, Tenant’s Share of Direct Expenses payable inaccordance with Section 4 of the Lease shall increase to 12.47% to take theSecond Expansion Space into consideration.

 

5. CONDITION OF PREMISES.

 

(a) Tenant accepts theCurrent Premises and the Second Expansion Space in their “as-is” condition “withall faults” without any agreements, representations, undertakings orobligations on the part of Landlord to perform any alterations, repairs orimprovements.

 

(b) Tenant shall, at Tenant’sexpense, cause to be constructed and installed in the Second Expansion Space ina good and workmanlike manner and in strict compliance with applicable laws,codes, regulations and ordinances the permanent leasehold improvements desiredby Tenant and approved by Landlord (the “IMPROVEMENTS”). Tenant acknowledgesthat Landlord is not an architect orengineer. Accordingly, Landlord’s approval of the proposed Improvementsis not a representation by Landlord that the Improvements will comply withapplicable laws, codes, regulations and ordinances or be free from errors,omissions, or defects, and Landlord will have no liability therefor, it beingexpressly understood and agreed by Tenant that such matters are Tenant’sresponsibility.

 

(c) Landlord shall reimburseTenant for costs and expenses of the Improvements up to a maximum of$150,000.00 (the “IMPROVEMENT ALLOWANCE”) upon delivery by Tenant to Landlordof (i) Tenant’s written request for the Improvement Allowance made no earlierthan April 1, 2004 nor later than June 30, 2004, and (ii) evidence satisfactoryto Landlord, which evidence must include(but is not limited to) original invoices marked “paid” by the issuerand final lien releases from all contractors, subcontractors and materialssuppliers involved in the Improvements, that Tenant paid no less than$150,000.00 for the Improvements. In the event Tenant fails to comply with theimmediately preceding sentence, Tenant shall, for itself and its successors andassigns, forfeit and renounceany right to the Improvement Allowance, and Landlord shall have no furtherobligation to provide the Improvement Allowance to Tenant. If Tenant does socomply, Landlord shall reimburse Tenant as set forth above within thirty (30)days following Landlord’s receipt of the items enumerated in (i) and (ii).

 

(d) LIABILITIES ARISING FROMCONSTRUCTION; INDEMNITY. LANDLORD SHALL NOT BE LIABLE IN ANY WAY FOR ANYINJURY, LOSS OR DAMAGE WHICH MAY OCCUR TO ANY OF TENANT’S INSTALLATIONS DURINGCONSTRUCTION OF THE IMPROVEMENTS, THE SAME BEING SOLELY AT TENANT’S RISK, EVENIF CAUSED BY THE SOLE OR CONCURRENT NEGLIGENCE OF LANDLORD. TENANT HEREBYINDEMNIFIES AND FOREVER HOLDS HARMLESS LANDLORD AND LANDLORD’S PROPERTY MANAGERFOR THE PROJECT, TOGETHER WITH THEIR RESPECTIVE OFFICERS, SHAREHOLDERS,SUCCESSORS AND ASSIGNS, AGAINST ANY AND ALL CLAIMS, DAMAGES, LOSSES, INJURIES,PENALTIES, COSTS, EXPENSES (INCLUDING ATTORNEYS’ FEES AND EXPERT AND CONSULTINGFEES), DEMANDS, LITIGATION, SETTLEMENT PAYMENTS, CAUSES OF ACTION OR JUDGMENTS,LOSSES, LIABILITIES, AND EXPENSES ARISING OUT OF THE PERFORMANCE OF ANY WORK BYTENANT’S CONTRACTORS AND TENANT’S SUBCONTRACTORS, EVEN IF CAUSED BY THECONCURRENT NEGLIGENCE, BUT NOT THE GROSS NEGLIGENCE OR RECKLESSNESS, OFLANDLORD. While in or upon the Premises and the Project for the purposes ofperforming the Improvements, Tenant and Tenant’s

 

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contractors andsubcontractors shall comply with all terms and provisions of the Lease andLandlord’s Rules and Regulations, which shall govern the relationship of theparties.

 

(e) Landlord and Tenant eachagrees that this PARAGRAPH 5 constitutes the entire agreement of the partiesregarding the Improvements and the Improvement Allowance, and that there wereno verbal representations, warranties or understandings pertaining to theImprovements, the Improvement Allowance, or this Amendment. TENANT FURTHERACKNOWLEDGES AND AGREES THAT LANDLORD DOES HEREBY DISCLAIM ANY AND ALL WARRANTIES,EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THOSE OF FITNESS FOR APARTICULAR PURPOSE, WITH RESPECT TO THE LEASED PREMISES AND/OR THE IMPROVEMENTSLOCATED OR TO BE CONSTRUCTED THEREIN.

 

6. ADA COMPLIANCE.

 

(a) Please be advised thatan owner or lessee of real property may be subject to the Americans WithDisabilities Act (the “ADA”), a Federal law codified at 42 USC Section 12101 etseq. Among other requirements of the ADA that could apply to the Premises,Title III of the ADA requires lessors and lessees of “public accommodations” toremove barriers to access by disabled persons and provide auxiliary aids andservices for hearing, vision or speech impaired persons by January 26, 1992.The regulations under Title III of the ADA are codified at 28 CFR Part 36.Lessor is not and shall not be responsible for determining whether Lessee is apublic accommodation under ADA or whether any construction documents or plansprepared by or for Lessee comply with ADA requirements, including submission ofsuch documents or plans for review by appropriate state agencies. Suchdeterminations, if desired by Lessee, shall be the sole responsibility ofLessee.

 

(b) Tenant shall, at itsexpense, be responsible for ADA compliance in the Premises, including restroomswithin space now or hereafter leased or occupied in its entirety by Tenant, itsaffiliates or Transferees, as well as any modifications to the Premises or theProject required by the ADA by reason of Tenant’s lease of the Premises, or theuse or occupancy of the Premises by Tenant and/or its Transferees and theirrespective employees, agents, contractors, invitees, licensees, successors andassigns.

 

7. PARKING. Commencing onJanuary 5, 2004, the provisions of the Lease pertaining to parking no longerapply. However, commencing on April 1, 2004, Landlord shall provide parkingpermits in connection with the Premises on the following terms and conditions:

 

(a) Within thirty (30) daysfollowing April 1, 2004, Tenant may elect to take, by giving Landlord writtennotice within such thirty (30) day period, and Landlord shall then provide, upto eighteen (18) reserved and/or tandem/reserved parking spaces in the Projectat the monthly rate(s) applicable from time to time for monthly parking as setby Landlord and/or its licensee, plus any applicable taxes thereon. Monthlyparking fees shall be payable one month in advance prior to the first day ofeach calendar month. As of the Effective Date (as defined below), the monthlyparking rate per reserved and/or tandem/reserved parking space is $0.00,subject to change upon five (5) days’ prior written notice to Tenant. Tenant’sfailure to elect to take any parking spaces within the time allotted and asotherwise required by the immediately preceding sentence shall be deemed Tenant’selection to take no parking spaces.

 

(b) Tenant’s right to useany parking spaces duly and timely taken by Tenant in accordance with PARAGRAPH7(a) (“TENANT’S PARKING SPACES”) shall be contingent on Tenant’s compliancewith all applicable rules, regulations (as may be modified by Landlord fromtime to time), applicable laws, and this PARAGRAPH 7, and shall continue unlessand until a material default of the Lease byTenant. If Tenant commits, permits or allowsany of the prohibited activities described in the Lease or the rules then ineffect, then Landlord shall have the right, without notice, in addition to suchother rights and remedies that it may have, to remove or tow away the vehicleinvolved and charge the cost to Tenant,

 

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which cost shall beimmediately payable upon demand by Landlord. Tenant’s repeated noncomplianceshall empower landlord to discontinue Tenant’s access to one or more of Tenant’sParking Spaces, and Tenant shall thereafter be excused for paying from suchparking space(s).

 

(c) Tenant may permanentlyreturn all or any of Tenant’s Parking Spaces by giving Landlord thirty (30)days’ written notice of the effective date of the return. Upon such effectivedate, Landlord’s obligation to provide, and Tenant’s obligation to pay for,such returned parking spaces shall terminate. Prior to such effective date,Tenant shall return any key-card, sticker, or otheridentification or entrance enabling deviceprovided by Landlord. Landlord shall have no obligation to provide Tenant, andTenant shall have no right to, any parking spaces that are returned or thatTenant does not timely elect to take.

 

(d) Landlord shall provideTenant’s Parking Spaces, which shall allow “in-and-out” privileges to thedesignated parking facilities area or areas using parking access cards orpermits, as applicable. No deductions from the monthly charge shall be made fordays on which the parking facilities are not used by Tenant. Landlord shallhave the continuing right to change the designation ofsuch parking facilities or areas. Tenant, itsemployees, contractors and invitees, shall at all times comply with theapplicable parking rules issued from time to time. Neither Tenant nor itsemployees shall use any parking spaces designated for visitors or otheroccupants of the Project. Tenant shall, within fifteen (15) days of Landlord’swritten request, furnish Landlord a complete list of license plate numbers forall vehicles to be parked in the Project by an employee, licensee, invitee orcontractor of Tenant. If there is a change in employees, Tenant shall provideLandlord with the revised information within five (5) days. Tenant’s soleremedy for any period during which Tenant’s use of any of Tenant’s Parking Spacesis precluded for any reason shall be abatement of parking charges for suchprecluded spaces. Landlord shall not be obligated to control any unauthorizedparking in any of Tenant’s Parking Spaces. Landlord shall not be liable for anydamage of any nature whatsoever to, or any theft of, vehicles, or contentstherein, or injury (fatal or non-fatal) to persons, in or about such parkinggarage, INCLUDING, WITHOUT LIMITATION, THAT CAUSED BY LANDLORD’S SOLE ORCONCURRENT NEGLIGENCE, BUT NOT TO THE EXTENT CAUSED BY LANDLORD’S GROSSNEGLIGENCE OR WILLFUL MISCONDUCT.

 

(e) Notwithstanding anythingto the contrary contained in this PARAGRAPH 7, upon thirty (30) days’ priorwritten notice from Tenant and subject to availability, Landlord shall provideTenant, and Tenant shall have the right to take, any parking permits thatTenant did not take in accordance with Paragraph 7(a) or that Tenant previouslyreturned pursuant to Paragraph 7(e), subject to the limitation that the totalnumber of Tenant’s Parking Spaces, including the parking permits Tenant desiresto take pursuant to this PARAGRAPH 7(e), does not exceed eighteen (18).

 

8. JANITORIAL SERVICES.Tenant acknowledges and agrees that Landlord does not provide janitorialservices to the Premises. Tenant shall contract for janitorial servicesnecessary to comply with the requirements of the Lease with a reputable thirdparty provider (“TENANT’S PROVIDER”) for Tenant’s own account, subject toLandlord’s approval of Tenant’s Provider, which approval shall not be unreasonablywithheld, conditioned or delayed. Tenant shall not permit entry to the Projectto a third party provider unless and until Tenant has received Landlord’sconsent in accordance with the immediately preceding sentence, and shallrequire Tenant’s Provider (once so approved) to comply with the Rules andRegulations, applicable laws, codes and ordinances, and Landlord’s reasonablepolicies and practices for the Project.

 

9. PERMITTED USE. ThePermitted Use of the Premises is production and design studios. Tenantacknowledges that the Permitted Use must comply with Part 9.04.08.35 of theCode of Ordinances of Santa Monica, CA as it may be amended or modified orrenumbered. Tenant hereby, represents and warrants that it has read andunderstands Part 9.04.08.35 of the Code of Ordinances and Covenants that Tenantwill at all times during the Lease Term (as it may be hereafter modified,extended or renewed) comply with it.

 

10. ASSIGNMENT ANDSUBLETTING. ARTICLE 14 of the Lease is amended as follows:

 

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(a) The second sentence ofSECTION 14.3 is modified to read as follows:

 

“TRANSFER PREMIUM” shallmean fifty percent (50%) of all rent, additional rent or other considerationpayable by such Transferee in excess of the Rent (as defined in Section 4.1)payable by Tenant under this Lease on a per rentable square foot basis (afterdeducting therefrom reasonable leasing commissions, marketing expenses andlegal fees, and reasonable costs of tenant improvements paid to unaffiliatedthird parties in connection with the Transfer, with proof of same provided toLandlord).

 

(b) A new SECTION 14.7 isadded as follows:

 

14.7 TENANT AFFILIATE.Notwithstanding the provisions of SECTIONS 14.1 and 14.6, Tenant may sublet aportion of the Premises without Landlord’s consent to any corporation whichcontrols, is controlled by or is under common control with Tenant (any suchcorporation, a “TENANT AFFILIATE”) provided that before such sublease shall beeffective, a fully executed counterpart of such sublease shall be delivered toLandlord prior to the commencement of the term of such Transfer. Any suchsublease shall not, in any way, affect or limit the liability of Tenant underthe terms of the Lease even if after such subletting the terms of this Leaseare materially changed or altered.

 

11. CONSENT. This Amendmentis subject to, and conditioned upon, any required consent or approval beingunconditionally granted by Landlord’s mortgagee(s). If any such consent shallbe denied, or granted subject to an unacceptable condition, this Amendmentshall be null and void and the Lease shall remain unchanged and in full forceand effect.

 

12. BROKER. Tenantrepresents and warrants that it has not been represented by any broker or agentin connection with the execution of this Amendment other than Lee &Associates - Los Angeles West, Inc., which is acting as agent for both Landlordand Tenant. Tenant shall indemnify and hold harmless Landlord and itsdesignated property management, construction and marketing firms, and theirrespective partners, members, affiliates and subsidiaries, and all of theirrespective officers, directors, shareholders, employees, servants, partners,members, representatives, insurers and agents from and against all claims (includingcosts of defense and investigation) of any other broker or agent or similarparty claiming by, through or under Tenant in connection with this Amendment.

 

13. TIME OF THE ESSENCE.Time is of the essence with respect to Tenant’s execution and delivery toLandlord of this Amendment. If Tenant fails to execute and deliver a signedcopy of this Amendment to Landlord by 5:00 p.m. (in the city in which thePremises is located) on January 1, 2004, this Amendment shall be deemed nulland void and shall have no force or effect, unless otherwise agreed in writingby Landlord. Landlord’s acceptance, execution and return of this Amendmentshall constitute Landlord’s agreement to waive Tenant’s failure to meet suchdeadline.

 

14. MISCELLANEOUS. ThisAmendment shall become effective only upon full execution and delivery of thisAmendment by Landlord and Tenant. This Amendment contains the parties’ entireagreement regarding the subject matter covered by this Amendment, andsupersedes all prior correspondence, negotiations, and agreements, if any,whether oral or written, between the parties concerning such subject matter.There are no contemporaneous oral agreements, and there are no representationsor warranties between the parties not contained in this Amendment. Except asmodified by this Amendment, the terms and provisions of the Lease shall remainin full force and effect, and the Lease, as modified by this Amendment, shallbe binding upon and shall inure to the benefit of the partieshereto, their successors and permittedassigns.

 

LANDLORD AND TENANT HAVECAREFULLY READ AND REVIEWED THIS AMENDMENT AND EACH TERM AND PROVISIONCONTAINED HEREIN AND, BY EXECUTION OF THIS AMENDMENT, SHOW THEIR INFORMED ANDVOLUNTARYCONSENTTHERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS AMENDMENT IS EXECUTED,THE TERMS OF THIS AMENDMENT AND OF THE LEASE (AS MODIFIED BY THIS AMENDMENT)ARE COMMERCIALLY REASONABLE

 

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AND EFFECTUATE THE INTENTAND PURPOSE OF LANDLORD AND TENANT WITH RESPECT TO THE PREMISES.

 

LANDLORD AND TENANT enterinto this Amendment as of JANUARY 1, 2004 (the “EFFECTIVE DATE”).

 

LANDLORD: CF SANTA MONICAOFFICE II, L.P., a Delaware limited partnership

 
|   | By:    | CFO SM II, LLC, a Delaware  limited  liability company, its General Partner |
|--------|--------|-----------------------------------------------------------------------------|
|   |   |                                                                        |
|   | By:    | /s/ Kathleen Damilobick                                                     |   |
|   |   | Name: Kathleen Damilobick                                                   |   |
|   | Title: | Vice President                                                              |   |

 

TENANT: MOSSIMO, INC., aDelaware corporation

 
|   | By:    | /s/ Edwin Lewis      |   |
|--------|--------|----------------------|--------|
|   |   | Name: Edwin  Lewis   |   |
|   | Title: | V-Chair -  President |   |

 

1 MONTH SECURITY DEPOSIT

 

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