Document:

Exhibit 10.5

SECOND AMENDMENT TO

STANDARD INDUSTRIAL/COMMERCIAL

MULTI-TENANT LEASE - GROSS

 

THIS AMENDMENT MADE
THIS 22TH DAY OF November, 2002 (the “Amendment”) by and between WDI SANTA MONICA LLC, A CALIFORNIA LIMITED LIABILITY
CORPORATION, hereinafter referred to as “Lessor”, and SPECIALTY LABORATORIES, INC., A CALIFORNIA
CORPORATION, Hereinafter referred to as “Lessee”.

 

WITNESSETH:

 

WHEREAS, Lessee
entered into a certain Standard Industrial/Commercial Multi-Tenant Lease-Gross
(“Lease”), dated January 26, 2000, with Lessor leasing certain premises
commonly known as 1756 22nd  Street, Santa Monica, California 90404;
and

 

WHEREAS, said Lease
was amended in certain particulars by First Amendment To Lease, dated July 15,
2000; and

 

WHEREAS, Lessor and
Lessee are desirous of amending said amended Lease by this Second Amendment to
Lease in the manner set forth below.

 

NOW THEREFORE, in
consideration of the mutual promises herein contained, Lessor and Lessee hereby
agree to amend said Lease as follows:

 

1.             TERM

 

The term in
Paragraph 1.3 of the Lease, as amended, shall be extended for one (1) year,
terminating June 30, 2004.

 

2.             BASE RENTAL

 

The Base
Rental set forth in Paragraph 1.6 of the Lease, as amended, shall be increased
as follows:

 

(a)               For the Premises existing as of the date
of this Amendment the Base Rental shall be increased starting on July 1, 2003
through June 30, 2004 to $7,250.00 per month.

 

3.             OPTION TO EXTEND

 

The Option to
Extend in Paragraph 60 of the Lease shall be deleted in its entity and shall be
replaced with the following:

 

Lessor hereby
grants to Lessee the option to extend the term of this Lease for two (2)
additional twelve (12) month period(s) commencing when the prior term expires
upon each and all of the following terms and conditions:

 

(a)               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) but not more than nine (9) 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.

 

(b)              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.

 

(c)               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.

 

1

 

(d)              This Option is personal to the original
Lessee, and cannot be assigned or exercised by anyone other than said original
Lessee (or in the event of a merger, acquisition, sale of all or substantially
all of Lessee’s assets, or similar transaction, Lessee’s successors) and only
while the original Lessee is in full possession of the Premises and without the
intention of thereafter assigning or subletting.

 

(e)               In the event Lessee exercises the option
herein, the monthly Base Rental shall be increased to the following amounts on
the dates set forth below.

 

	
  On:

  	
   

  	
  The new Base
  Rental shall be:

  	
   

  
	
  July 1, 2004

  	
   

  	
  $7,467.50

  	
   

  
	
  April 1, 2005

  	
   

  	
  $7,692.00

  	
   

  

 

 

4.             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.  A copy of any notices sent by
Lessor shall also be sent to the Office of the General Counsel at the same
address as Lessee.

 

5.             BROKER’S FEE

 

The Broker’s
specified in paragraph 1.10 shall be paid a Brokerage Fee for each adjustment
specified above in accordance with paragraph 15 of the Lease.

 

IN WITNESS WHEREOF,
Lessor and Lessee have caused this Second Amendment to Lease to be executed on
the day and year first above written.

 

	
  WDI SANTA MONICA LLC,

  	
  SPECIALTY LABORATORIES, INC.,

  
	
  A CALIFORNIA LIMITED

  	
  A CALIFORNIA CORPORATION

  
	
  LIABILITY CORPORATION

  	
   

  
	
   

  	
   

  
	
  LESSOR:

  	
  LESSEE:

  
	
   

  	
   

  
	
  By:

  	
  /s/  Warren A. Weiss

  	
  By:

  	
  /s/  Frank J. Spina

  
	
   

  	
  Warren A. Weiss, Managing Member

  	
   

  	
  Frank J. Spina CFO

  
	
   

  	
   

  
	
  Date

  	
  12/1/02

  	
  Date:

  	
   11/25/02

  
							

 

2Exhibit 10.6

 

OCTOBER 24, 2002 ADDENDUM #2 TO THE LEASE DATED JUNE,
1996 BY AND BETWEEN OSCAR AND ETHEL SALENGER TRUST “LESSOR” AND SPECIALTY
LABORATORIES, INC “LESSEE” FOR THE PREMISES LOCATED AT  2211 MICHIGAN AVENUE,  SANTA MONICA, CA 90404

 

	
  49.

  	
  LEASE TERM

  EXTENSION:

  	
   

  	
   

  
	
   

  	
   

  	
  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 $45,100.00
  per month triple net for the period of July 1, 2003-June 30, 2004.

  
	
   

  	
   

  	
   

  	
   

  
	
  50.

  	
  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 $46,100.00 per month triple net for the period of
  July 1, 2004 – June 30, 2005 a copy of said option is attached hereto as
  paragraph #52. The base rent for the second one (1) year option to extend is
  the Fair Market Value but not less than the existing rent for the period of
  July 1, 2005 – June 30, 2006 a copy of said option is attached hereto as
  paragraph #53.

  
	
   

  	
   

  	
   

  	
   

  
	
  51.

  	
  ORIGINAL

  LEASE 2ND

  FIVE (5)

  OPTION

  TO EXTEND

  DELETION:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Lessor and Lessee hereby agree that the Five (5)
  Year Option to Extend (July 1, 2003-June 30, 2008) on AIR Form dated November
  20, 1998 attached to the Original Lease dated July 17, 1993 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

  	
  OSCAR AND ETHEL SALENGER TRUST

  
	
   

  	
   

  
	
  BY:

  	
  /s/ Frank J. Spina

  	
   

  	
  BY:

  	
  /s/ Fred Salenger

  
	
   

  	
   

  
	
  ITS:  CFO

  	
  ITS:    
  Trustee

  
	
   

  	
   

  
	
  BY:

  	
   

  	
   

  	
  BY:

  	
   

  
	
   

  	
   

  
	
  ITS:

  	
   

  	
   

  	
  ITS:

  	
   

  
	
   

  	
   

  
	
  EXECUTED AT: 
  Santa Monica

  	
  EXECUTED AT: 
  Santa Monica

  
	
   

  	
   

  
	
  DATE: 
  11/5/02

  	
  DATE: 
  10/31/02

  
	
   

  	
   

  
	
  ADDRESS: 
  1620 N. 26th St.

  	
  ADDRESS:

  
	
   

  	
   

  
	
   

  	
  90404

  	
   

  	
  Encino, CA 
  91435

  
										

 

 

[LOGO]

 

OPTION(S) TO EXTEND

STANDARD LEASE ADDENDUM

 

	
   

  	
  Dated

  	
  October 24, 2002

  
	
   

  
	
   

  	
  By and Between (Lessor)

  	
  Oscar and Ethel Salenger Trust

  
	
   

  
	
   

  	
                              
  (Lessee)

  	
  Specialty Laboratories, Inc.,

  
	
   

  	
  A California Corporation

  
	
   

  
	
   

  	
  Address of Premises: 

  	
  2211 Michigan Avenue

  
	
   

  	
  Santa Monica, CA 90404

  

 

Paragraph 52

 

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: 

  	
   

  	
  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 o
appraiser or o broker (“Consultant” - check one) of their choice
to act as an arbitrator.  The two
arbitrators so appointed shall immediately select 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.

 

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

  	
   

  	
  $46,100.00 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: 

  	
   

  	
   

  	
  Initials:

  	
  [ILLEGIBLE]

  
	
   

  	
   

  	
   

  	
   

  

 

2

 

[LOGO]

 

OPTION(S) TO EXTEND

STANDARD LEASE ADDENDUM

 

	
   

  	
  Dated

  	
  October 24, 2002

  
	
   

  
	
   

  	
  By and Between (Lessor)

  	
  Oscar and Ethel Salenger

  
	
   

  
	
   

  	
                              
  (Lessee)

  	
  Specialty Laboratories, Inc.,

  
	
   

  	
  A California Corporation

  
	
   

  
	
   

  	
  Address of Premises: 

  	
  2211 Michigan Avenue

  
	
   

  	
  Santa Monica, CA 90404

  

 

 

Paragraph 53

 

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): oCPI
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 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: 

  	
   

  	
  Initials:

  	
  [ILLEGIBLE]

  

 

 

1

 

(i)      Within
15 days thereafter Lessor and Lessee shall each select o
appraisor 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 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: 

  	
   

  	
   

  	
  Initials:

  	
  [ILLEGIBLE]

  

 

2

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