Agenda Item 8I - Material Available #1 — Torrance City Council, January 27, 2026

8I
Date: January 27, 2026
To: Honorable Mayor and Members of the City Council
From: Aram Chaparyan, City Manager
By: Carlos Huizar, Management Associate | [email protected] Subject: Material Available #1 for Agenda Item 8I

DISCUSSION

The purpose of this memo is to include a copy of the Seventh Amendment to Lease (C-2738) and the Ground Lessor Estoppel Certificate, which was not readily available at the time of agenda posting.

ATTACHMENTS

1. Seventh Amendment to Lease (C-2738)

2. Ground Lessor Estoppel Certificate (C-2738)

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SEVENTH AMENDMENT TO LEASE

THIS SEVENTH AMENDMENT TO LEASE (“Amendment”) is dated as of January 27, 2026 (“Effective Date”), and is entered into by and between the City of Torrance , a municipal corporation (“City”) and KLM Madison, LLC, a Delaware limited liability company (“Lessee”).

RECITALS
A. City and Lessee’s predecessors-in-interest are parties to that certain Lease dated February 20, 1987 (“Original Lease”) as amended by a First Amendment to Lease dated July 12, 1991, a Second Amendment to Lease dated February 6, 1992, a letter dated December 8, 1993, a Third Amendment to Lease dated March 21, 1995, a Fourth Amendment to Lease dated August 24, 1995, a Fifth Amendment to Lease dated March 21, 1996, a Sixth Amendment to Lease dated February 9, 1999, and an Assignment and Assumption of Ground Lease dated July 15, 2005 and recorded as Instrument No. 051695964 in the Official Records of Los Angeles County (collectively “Lease”) pursuant to which City leases to Lessee, and Lessee leases from City, the Leased Premises defined in the Lease.

B. The Lease has been duly assigned to Lessee and Lessee assumed all rights and obligations thereunder pursuant to that certain Assignment and Assumption of Ground Lease dated August 5, 2025 and recorded as Instrument No. 20250577738 in the Official Records of Los Angeles County.

C. City and Lessee desire to amend the Lease to (a) provide for the extension of the Lease, (b) provide Lessee the right to bifurcate the Leased Premises into the Parcel A Premises and the Parcel B Premises (as defined below), and (c) provide for certain modifications to the rent and consideration provisions of the Lease, all as more specifically set forth herein.

AGREEMENT

For valuable consideration, the receipt and sufficiency of which are acknowledged, City and Lessee agree as follows:

1. Definitions and Recitals. Unless otherwise defined in this Amendment, all of the terms used in this Amendment will have the same meaning and definition given to them in the Lease. All of the recitals contained in the preamble to this Amendment constitute statements of fact and/or intention by City and Lessee and are incorporated into and form part of the substance of this Amendment.

2. Bifurcation of Leased Premises. As of the date that Lessee completes either the Parcel A Premises Assignment or Parcel B Premises Assignment, as defined in this Section 2, the Leased Premises will be divided into the Parcel A Premises (“Parcel A Premises”) described on Exhibit A and Parcel B Premises (“Parcel B Premises”) described on Exhibit B both attached hereto and incorporated by reference.

Both the Parcel A Premise and Parcel B Premises are shown on the map attached as Exhibit C attached hereto and incorporated by reference. The intention of this bifurcation is to facilitate Lessee’s assignment of the Lease to a bona fide third-party purchaser as-applied only to either the Parcel A Premises, or Parcel B Premises as applicable, without assigning the other portion (such assignments being a “ Parcel A Premises Assignment” and “Parcel B Premises Assignment” respectively). The Parcel A Premises and Parcel B Premises are each separately subject to all provisions of the Lease, and the Lessee for each of the Parcel A Premises and Parcel B Premises are responsible for compliance with the Lease as to that portion of the Leased Premises. All assignments and encumbrances of the Leased Premises, Parcel A Premises, 2 ATTACHMENT 1

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Parcel B Premises, or any portions thereof are subject to the Lease, and specifically Sections 22 and 23 respectively thereof.

3. Extension of Term. The term of the Lease is presently set to expire on February 8, 2054.

For the purposes of Section 2 of the Lease, City and Lessee hereby agree that (i) the term of the Lease is extended by thirty-two (32) years (“Extended Term”) and (ii) the Extended Term will expire on February 8, 2086 (“New Expiration Date”). As consideration for City entering into this Amendment, Lessee shall pay to City a Lease Extension Payment in an amount of Three Million Dollars and Zero Cents ($3,000,000.00) (“Lease Extension Payment”). The Lease Extension Payment shall be paid to City either in full on or before April 1, 2026, or in installments of One Million Dollars and Zero Cents ($1,000,000.00) paid no later than the date that is twelve (12) months from the Effective Date, and Two Million Dollars and Zero Cents ($2,000,000.00) paid no later than the date that is eighteen (18) months from the Effective Date.

4. Reciprocal Easement and Operating Agreement. Prior to the date that Lessee completes either the Parcel A Premises Assignment or Parcel B Premises Assignment, whichever occurs first, Lessee shall execute and record a reciprocal easement and operating agreement (the “Operating Agreement”) between all Parcel A Premises sublessees, and all Parcel B Premises sublessees which Operating Agreement shall be subject to the prior written approval of the City Manager and City Attorney of City, not to be unreasonably withheld, delayed or conditioned. The Operating Agreement may not be terminated or amended without the prior written approval of the City Manager and each of the parties thereto. The term sublessee for both the Lease and this Amendment means any person from whom rent or other payment is received, including but not limited to a partial assignee, tenant, licensee, concessionaire and/or any either person using or occupying any portion of the Leased Premises from whom rent or other consideration is received.

5. City Profit Participation. In addition to any other payments due under this Amendment, in the event that Lessee sells, transfers, assigns or otherwise conveys the Leased Premises or any portion thereof (including, without limitation, the Parcel A Premises Assignment or Parcel B Premises Assignment) (each, a “Conveyance”), Lessee will pay to City the following concurrently with the closing of such Conveyance.

5.1. Payment During the First Twenty-Four Months. If the Conveyance occurs during the first twenty-four (24) months after the Effective Date, Lessee will pay to City one and one-half percent (1½%) of the amount received by Lessee from the party obtaining interest in the Leased Premises or any portion thereof pursuant to the Conveyance after deducting any marketing expenses, commissions, legal expenses or other inducements (either monetary or improvements) given to said party.

5.2. Payment After the First Twenty-Four Months. If the Conveyance occurs after the first twenty-four (24) months after the Effective Date, Lessee will pay to City three percent (3%) of the amount received by Lessee from the party obtaining interest in the Leased Premises or any portion thereof pursuant to the Conveyance after deducting any marketing expenses, commissions, legal expenses or other inducements (either monetary or improvements) given to said party

5.3. Financing does not Trigger. Financing of any portion of the Leased Premises without any associated Conveyance to a bona fide third party does not trigger the payments required by this paragraph.

6. Minimum Basic Rent Adjustments . The following amendments are made to the Lease related to Minimum Basic Rent.

6.1. Subparagraph 3(B)(1) is amended to replace the words “Monthly Basic Rent” with “Minimum Basic Rent” and to add the following sentence to the end of the subparagraph: “The Minimum 3 - 3 -
Basic Rent beginning on July 1, 2004 shall be adjusted pursuant to Subparagraphs C(2) and (D) of this Paragraph.

6.2. Subparagraph 3(C)(1)(c), erroneously referred to as “Subparagraph 2(C)(1)(c)” in the Fifth Amendment, is amended to read in its entirety as follows: “Comparison Index means the Index for the month of March in the preceding calendar year in which the Adjustment Date occurs.”

6.3. Subparagraph 3(C)(1)(d), erroneously referred to as “Subparagraph 2(C)(1)(d)” in the Fifth Amendment, is amended to read in its entirety as follows: “Adjustment Index means the Index for the month of March in the calendar year in which the Adjustment Date occurs.”

6.4. Subparagraph 3(C)(1)(e) is deleted and replaced with the words “intentionally omitted.”

6.5. Subparagraph 3(C)(1)(f) is amended to read in its entirety as follows: “Adjustment Date means July 1 of each calendar year.”

6.6. Subparagraph 3(C)(2)(a) of the Lease is amended to read in its entirety as follows:

On or before May 1 of each calendar year of the Lease term (or as soon as practicable thereafter), City shall deliver to Lessee a statement setting forth (1) the Adjustment Index, (2) the Comparison Index, (3) the Percentage Increase, and (4) the amount of the adjusted Minimum Basic Rent, as herein provided. If the Adjustment Index for any Adjustment Date shall exceed the Comparison Index, then the Minimum Basic Rent payable monthly as of the commencement of the Adjustment Year shall be increased by an amount equal to the product of the Percentage Increase multiplied by the monthly Minimum Basic Rent payable during the previous calendar year, but in no event lower than two percent (2%) or greater than five percent (5%). The Minimum Basic Rent shall be deemed adjusted as of the Adjustment Date.

6.7. Paragraph 3(D)(1) of the Lease is amended to read in its entirety as follows:

For each month during the nine-year period commencing on July 1, 2004, and continuing through June 30, 2013, Minimum Basic Rent will be in an amount equal to the greater of (a) the Minimum Basic Rent applicable as of the conclusion of the last nine-year rent period, or (b) an amount, determined once and in advance by the parties, which equals the "Fair Rental Value" (as hereinafter defined) of the Leased Premises. The same method of determining Minimum Basic Rent will be used for each successive nine (9) year period continuing until the termination of the Lease. The Minimum Basic Rent is subject to adjustments and increases on each Adjustment Date consistent with this Lease, provided, that beginning on July 1, 2040 the Monthly Basic Rent will not increase by more than twenty percent (20%) over each nine (9) year period described in this clause.

7. Percentage Rent. References to “Percentage Rent” are reinstated. Paragraph 4 of the Original Lease, as amended by paragraph 3 the Second Amendment to Lease is hereby reinstated and amended as of the Effective Date to read in its entirety as follows:
“4. PERCENTAGE RENT
A. Determination.

For each calendar quarter, or portion thereof during the term of this Lease, Lessee agrees to pay to City as "Percentage Rent" for the Leased Premises the respective amounts set forth in subparagraph B of this paragraph 4. Calendar quarters shall consist of the periods from January 1 through March 31; April 1 through June 30; July 1 through September 30; and October 1 through December 31 of each calendar year. 4 - 4 -
B. Percentage Gross Receipts.

The amount of Percentage Rent shall be the following percentages of the Gross Rents (as defined above):

Date Range Percentage Rent of Gross Receipts
January 27, 2026 – June 30, 2028 10%
July 1, 2028 – June 30, 2031 12%
July 1, 2031 – June 30, 2034 13%
July 1, 2034 – June 30, 2036 14%
July 1, 2036 onwards 15%

C. Report, Payment, and Audit.
(1) Within thirty (30) days following the end of each calendar quarter during the term of this Lease, Lessee shall make a report in writing to the Director of Finance of the City, which report shall be signed and certified to be correct by Lessee or its authorized representatives, and if Lessee is a corporation the report shall be signed and certified to be correct by an officer of Lessee, setting forth the Gross Rents, for such calendar quarter, and the amount of Percentage Rent, if any, due the City hereunder. The report shall include (a) the names and location of each portion of the Leased Premises occupied by each sublessee, (b) the total amount of Gross Rents for the preceding calendar quarter by such sublessee (including Lessee’s affiliates), and (c) the location of any part of the Leased Premises occupied by Lessee or its affiliates and the associated square footage. The Percentage Rent for the quarter will be due to City upon submission of the report.

(2) Within thirty (30) days after the close of each calendar year, Lessee shall furnish to City a report in writing, in triplicate, to the Director of Finance of the City, which report shall be in accordance with and shall provide the information required by the previous subparagraph, setting forth the Gross Rents for such calendar year and the amounts paid to City as Minimum Basic Rent and Percentage Rent for said calendar year. If Lessee shall have paid to City more than the greater of (i) the product obtained by multiplying the monthly Minimum Basic Rent by twelve (12) or, in the case of the first calendar year, by the number of months from the commencement of the term of the Lease to the end of the first calendar year, or (ii) the product obtained by multiplying lessee's total Gross Receipts for such calendar year by the applicable percentages set forth in subparagraph B, than Lessee shall be entitled to a refund of such excess, which refund shall be refunded to Lessee or credited against the Minimum Basic Rent next due hereunder, at City's option. If Lessee shall have paid to City during said calendar year a sum less than the greater of said amounts, then lessee shall forthwith pay such difference to City.

(3) Lessee shall keep complete and adequate books and reports sufficient to show all Gross Rents received by or for the account of Lessee from all sublessees of the Leased Premises, as determined under the cash method of accounting in accordance with generally accepted accounting principles, consistently applied.

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(4) The City shall have the right to inspect and audit at its own expense (subject to subparagraph (D) below) the records used as the basis for each such report once each lease year, during normal business hours upon reasonable prior notice to Lessee for the purpose of determining the accuracy of such reports. If, upon any examination by the City of the books and records of Lessee, an error shall be revealed in favor of the City which results in there being due to the City for any quarter additional Percentage Rent in the amount of one percent (1%) or more of that reported by Lessee, then the reasonable cost of such examination shall be paid by Lessee to the City.

D. Additional Rent. In addition to Minimum Basic Rent and Percentage Rent, all other charges and sums payable by lessee hereunder shall be deemed to be additional rent ("Additional Rent") hereunder, whether or not the same be designated as such, and shall be due and payable ( if payable to a third party) not later than the dates on which the same are due and payable, or (if payable to City) on demand or together with the next succeeding installment of Minimum Basic Rent, whichever shall first occur, and City shall have the same rights and remedies upon Lessee's failure to pay the same as for the nonpayment of the Minimum Basic Rent.”

8. Notices. Section 28 of the Lease is hereby amended to read in its entirety as follows:
“28. NOTICES
A. Until changed as hereinafter provided, all notices or demands under the Lease are deemed to have been duly and sufficiently given if and only if a copy thereof in writing has been mailed via United States registered or certified mail, return receipt requested, or via a reputable overnight delivery service, in an envelope properly stamped, postage prepaid and addressed as follows:

CITY
City of Torrance
3031 Torrance Blvd
Torrance, CA 90503
Attn: City Manager
LESSEE
KLM Madison LLC
c/o La Caze Development
2601 Airport Drive, Suite 300
Attention: Norm La Caze

All notices to Lessee shall also be delivered to any Approved Leasehold Mortgagee entitled to notice pursuant to Paragraph 23 above.

B. Each party may change its notice address by giving to the other party at least ten (10) days’ prior written notice thereof at the above address or at the most recently updated address.

C. Notwithstanding the foregoing, all notices required or permitted under the Lease are deemed given upon the earlier to occur of: (a) actual receipt as indicated on the signed return receipt; (b) the date of first attempted delivery; or (c) three (3) days after the date postmarked on said mailing envelope. Notwithstanding anything in the Lease to the contrary, notices may be sent by nationally recognized overnight courier and will be deemed delivered upon the earlier to occur of (i) actual receipt or (ii) the date of first attempted delivery.

9. Brokers. Lessee and City represent and warrant that neither has dealt with any realtor, broker, agent or finder in connection with this Amendment. Lessee and City will indemnify and hold each other harmless from and against any loss, claim, damage, expense (including costs of suit and reasonable attorneys’ fees) or liability for any compensation, commission or charges claimed by any other realtor, broker, agent or finder claiming to have dealt with the other party in connection with this Amendment. 6 - 6 -

10. Reaffirmation of Terms. Except as modified herein, all other terms, covenants and provisions of the Lease are hereby confirmed and ratified and will remain unchanged and in full force and effect. From and after the execution of this Amendment, the term “Lease” will mean the Lease as amended hereby.

11. Counterparts and Electronic Signatures. This Amendment may be executed in counterparts by the parties, which counterparts, each of which will be an original, but all of which will constitute one and the same instrument. Electronic signatures by PDF via email or facsimile will be treated as originals for all purposes.
[signatures on following page]
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IN WITNESS WHEREOF, the parties hereto have signed this Amendment as of the date first written above.

CITY:

City of Torrance,
a municipal corporation

____________________________________________________
George K. Chen
Mayor

ATTEST:

_______________
Rebecca Poirier, City Clerk

APPROVED AS TO FORM:

PATRICK Q. SULLIVAN

CITY ATTORNEY

By:

Tatia Y. Strader
City Attorney

Lessee:

KLM Madison LLC,
a Delaware limited liability company

By:

Norman La Caze, Manager

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EXHIBIT A

Parcel A Premises Legal Description
PARCEL A:

LOT 1 AND A PORTION OF LOT 2, BOTH OF TRACT NO. 46470, IN THE CITY OF

TORRANCE, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 1174, PAGES 17 AND 18 OF MAPS, IN THE OFFICE OF THE

COUNTY RECORDER OF SAID COUNTY, SAID PORTION LYING NORTHWESTERLY OF THE FOLLOWING DESCRIBED LINE:

BEGINNING AT A POINT IN THE NORTHEASTERLY LINE OF PACIFIC COAST HIGHWAY, 100 FEET WIDE AS SHOWN ON SAID MAP, DISTANT SOUTH 45° 49' 56" EAST 42.50 FEET FROM THE MOST WESTERLY CORNER OF SAID LOT 2; THENCE NORTH 44° 10' 04" EAST 52.09 FEET;
THENCE SOUTH 45° 49' 56" EAST 22.00 FEET;
THENCE NORTH 44° 10' 04" EAST 94.50 FEET TO A POINT IN THAT NORTHEASTERLY LINE OF SAID LOT 2 WHICH IS DESCRIBED AS NORTH 45° 49' 56" WEST 157.50 FEET; SAID POINT BEING SOUTHEASTERLY ALONG SAID NORTHEASTERLY LINE 63.00

FEET, MORE OR LESS, FROM THE NORTHWESTERLY TERMINUS OF SAID NORTHEASTERLY LINE.

EXCEPT THEREFROM ALL URANIUM, THORIUM AND ALL OTHER MATERIALS DETERMINED PURSUANT TO SECTION 5(B) (1) OF THE ATOMIC ENERGY ACT OF 1946 (60 STAT. 761) TO BE PECULIARLY ESSENTIAL TO THE PRODUCTION OF

FISSIONABLE MATERIAL, CONTAINED, IN WHATEVER CONCENTRATION IN

DEPOSITS IN SAID LANDS, TOGETHER WITH THE RIGHT AT ANY TIME TO ENTER

UPON SAID LAND AND PROSPECT FOR, IN AND REMOVE THE SAME, AS RESERVED IN THE DEED FROM THE UNITED STATES OF AMERICA, RECORDED MAY 13, 1948 IN BOOK 27145, PAGE 362 OFFICIAL RECORDS.

ALSO EXCEPT THEREFROM ALL MINERALS, OTHER THAN THOSE ABOVE

MENTIONED AND ALL PETROLEUM IN SAID LAND, TOGETHER WITH THE

EXCLUSIVE RIGHT AT ANY AND ALL TIMES TO ENTER UPON THE LANDS AND

PROSPECT FOR, MINE FOR, AND REMOVE SUCH MINERALS OR PETROLEUM, WITH

ALL NECESSARY AND CONVENIENT MEANS OF WORKING AND TRANSPORTING

MATERIALS AND SUPPLIES, AS RESERVED IN THE ABOVE MENTIONED DEED FROM UNITED STATES OF AMERICA, RECORDED MAY 13, 1948 IN BOOK 27145, PAGE 362 OFFICIAL RECORDS.

BY QUITCLAIM DEED DATED MAY 05, 1961, EXECUTED BY THE UNITED STATES OF AMERICA AND RECORDED MAY 31, 1961, AS INSTRUMENT NO. 2843 OFFICIAL

RECORDS, ALL RIGHT, TITLE AND INTEREST IN AND TO ALL MINERALS AND PETROLEUM, TO A DEPTH OF 500 FEET WAS SURRENDERED TO THE CITY OF TORRANCE, A MUNICIPAL CORPORATION.
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EXHIBIT B

Parcel B Premises Legal Description
PARCEL B:

LOT 2 AND THE NORTHWESTERLY 21.00 FEET, MEASURED PERPENDICULAR TO THE NORTHWESTERLY LINE OF LOT 3 BOTH OF TRACT NO. 46470, IN THE CITY OF

TORRANCE, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 1174, PAGES 17 AND 18 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

EXCEPT THEREFROM THAT PORTION OF SAID LOT 2 LYING NORTHWESTERLY OF THE FOLLOWING DESCRIBED LINE:

BEGINNING AT A POINT IN THE NORTHEASTERLY LINE OF PACIFIC COAST HIGHWAY, 100 FEET WIDE AS SHOWN ON SAID MAP, DISTANT SOUTH 45° 49' 56" EAST 42.50 FEET FROM THE MOST WESTERLY CORNER OF SAID LOT 2; THENCE NORTH 44° 10' 04" EAST 52.09 FEET; THENCE SOUTH 45° 49' 56" EAST 22.00 FEET; THENCE NORTH 44° 10' 04" EAST 94.50 FEET TO A POINT IN THAT NORTHEASTERLY LINE OF SAID LOT 2 WHICH IS DESCRIBED AS NORTH 45° 49' 56" WEST 157.50 FEET, SAID POINT BEING SOUTHEASTERLY ALONG SAID NORTHEASTERLY LINE 63.00

FEET, MORE OR LESS, FROM THE NORTHWESTERLY TERMINUS OF SAID NORTHEASTERLY LINE.

EXCEPT THEREFROM ALL URANIUM, THORIUM AND ALL OTHER MATERIALS DETERMINED PURSUANT TO SECTION 5(B) (1) OF THE ATOMIC ENERGY ACT OF 1946 (60 STAT. 761) TO BE PECULIARLY ESSENTIAL TO THE PRODUCTION OF

FISSIONABLE MATERIAL, CONTAINED, IN WHATEVER CONCENTRATION IN

DEPOSITS IN SAID LANDS, TOGETHER WITH THE RIGHT AT ANY TIME TO ENTER

UPON SAID LAND AND PROSPECT FOR, IN AND REMOVE THE SAME, AS RESERVED IN THE DEED FROM THE UNITED STATES OF AMERICA, RECORDED MAY 13, 1948 IN BOOK 27145, PAGE 362 OFFICIAL RECORDS.

ALSO EXCEPT THEREFROM ALL MINERALS, OTHER THAN THOSE ABOVE

MENTIONED AND ALL PETROLEUM IN SAID LAND, TOGETHER WITH THE

EXCLUSIVE RIGHT AT ANY AND ALL TIMES TO ENTER UPON THE LANDS AND

PROSPECT FOR, MINE FOR, AND REMOVE SUCH MINERALS OR PETROLEUM, WITH

ALL NECESSARY AND CONVENIENT MEANS OF WORKING AND TRANSPORTING

MATERIALS AND SUPPLIES, AS RESERVED IN THE ABOVE MENTIONED DEED FROM THE UNITED STATES OF AMERICA, RECORDED MAY 13, 1948 IN BOOK 27145, PAGE 362 OFFICIAL RECORDS.

BY QUITCLAIM DEED DATED MAY 05, 1961, EXECUTED BY THE UNITED STATES OF AMERICA AND RECORDED MAY 31, 1961, AS INSTRUMENT NO. 2843 OFFICIAL

RECORDS, ALL RIGHTS, TITLE AND INTEREST IN AND TO ALL MINERALS AND PETROLEUM TO A DEPTH OF 500 FEET WAS SURRENDERED TO THE CITY OF TORRANCE, A MUNICIPAL CORPORATION.
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EXHIBIT C

Map of Parcel A Premises and Parcel B Premises

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GROUND LEASE ESTOPPEL CERTIFICATE

THIS GROUND LEASE ESTOPPEL (this "Estoppel"), dated as of January 27, 2026, is entered into by CITY OF TORRANCE , a municipal corporation ( "Lessor"), and certified to MidFirst Bank, acting through its 1st Century Bank Division ("Lender").

RECITALS

A. Pursuant to that certain Ground Lease dated February 20, 1987 (“Original Lease”) by and between Lessor and KLM Madison, LLC, a Delaware limited liability company (“Lessee”) as amended by a First Amendment to Lease dated July 12, 1991, a Second Amendment to Lease dated February 6, 1992, a letter dated December 8, 1993, a Third Amendment to Lease dated March 21, 1995, a Fourth Amendment to Lease dated August 24, 1995, a Fifth Amendment to Lease dated March 21, 1996, a Sixth Amendment to Lease dated February 9, 1999, and an Assignment and Assumption of Ground Lease dated July 15, 2005 and a Seventh Amendment to Lease dated as of January 27, 2026 (collectively “Lease”) pursuant to which Lessor leases to Lessee, and Lessee leases from City, the Leased Premises defined in the Lease and as described on Exhibit A attached hereto (together with all rights of way, easements and appurtenances relating thereto, the "Property").

B. Lender intends to extend a loan (the "Loan") to Lessee to be evidenced by that certain Promissory Note made by Lessee and payable to the order of Lender (the "Note"), and secured by, inter alia, that certain first lien Deed of Trust, Assignment of Leases and Rents, and Security Agreement granted by Lessee in favor of Lender (the "Security Instrument" ) encumbering the Lease and Lessee's leasehold estate in the Property, all improvements thereon, and certain other property owned by Lessee (collectively the "Mortgaged Property"). The Note, the Security Instrument and all other documents executed in connection with the Loan are collectively referred to herein as the "Loan Documents" . Any terms not otherwise defined herein shall have the meanings ascribed to them in the Lease.

NOW, THEREFORE, to induce Lender to make the Loan to Lessee and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:

1. Lessor's Representations and Warranties. Lessor represents and warrants to Lender and Lessee the following:

(a) Lease. A true, correct and complete copy of the Lease is attached hereto as Exhibit B, and the Lease has not been amended except as expressly set forth in Exhibit B. The Lease is in full force and effect and constitutes the entire agreement between Lessor and Lessee with respect to the Property and the Lease. To the best of Lessor's knowledge, all improvements to the Property required under the Lease to have been performed by Lessor or Lessee have been completed. The Lease constitutes the legal, valid and binding obligation of Lessor, enforceable against Lessor in 12 ATTACHMENT 2
2 accordance with its terms.

(b) Fee Ownership. Lessor is the record owner of the fee interest in the Property, subject to the Lease.

(c) Rent. The base rent payable u n d e r the Lease currently is $22,579.24 per month, paid in advance on the first day of each month, and such rent has been paid through the month of January, 2026. There is percentage rent payable under the Lease.

(d) Term. The current term of the Lease pursuant to the Seventh Amendment to Lease expires on February 8, 2086. Lessor did not grant Lessee an option or other right to extend the term of the Lease beyond February 8, 2086.

(e) Defaults; Offsets. To the best of Lessor's knowledge, neither Lessor nor Lessee is in default under the Lease, nor does Lessor have any knowledge of the existence of any event which, with the giving of notice the passage of time, or both, would constitute a default by Lessor or Lessee under the Lease. All monetary obligations due under the Lease to date have been fully and currently paid, except for the Lease Extension Payment under Section 3 o f the Seventh Amendment to the Lease. Lessee has no claim against Lessor for any security, rental, cleaning, or other deposits. To the best of Lessor’s knowledge, no controversy presently exists between Lessor and Lessee, including any Litigation or arbitration, with respect to the Lease or the Property.

(f) No Mortgages on Fee Interest. Lessor has not mortgaged its interest in the Lease, the Property, or any part thereof. No third party has any option or right of refusal to purchase Lessor's underlying fee interest.

No consent or approval of any third party is required in order for Lessor to deliver this Estoppel.

(g) Eminent Domain. Lessor has not received written notice of any pending eminent domain proceedings or other governmental actions or any judicial actions of any kind against Lessee's or Lessor's interest in the Property.

(h) Security Interest. The parties hereto acknowledge that Lender's security interest in the Lease shall extend to Lessee's leasehold estate in the Property, the improvements thereon, and all of Lessee’s personal property located on the Property, subject to terms and conditions of the Lease, as more fully described in the Loan Documents. Lessor hereby acknowledges that the Security Instrument from Lessee to Lender, and its successors and assigns, 13 3
constitutes an "Approved Leasehold Mortgage" , and that Lender, and its successors and assigns, constitute an "Approved Leasehold Mortgagee" as those terms are defined in this Lease, and agrees that no further notice is required under the Lease.

(i) Lessor shall send all notices, statements, information and communications required under the Lease to be sent to an Approved Leasehold Mortgagee to Lender at the following address:

MidFirst Bank, acting through its 1st Century Bank Division 1875 Century Park E, Suite 1400
Los Angeles, CA 90067
Attention: Christopher S Hoshek
Phone: (310) 270- 9534
Email: [email protected]

With a copy to:

MidFirst Bank
Legal Department
501 NW Grand Blvd.

Oklahoma City, OK 73118

with a copy to:

Thompson Coburn LLP
10100 Santa Monica Blvd., Suite 500
Los Angeles, CA 90067
Attention: Joshua Mogin
Phone: (310) 282-2520
Email: [email protected]

14 4
IN WITNESS WHEREOF, the parties hereto have caused this Ground Lease Estoppel to be duly executed and delivered as of the day and year first written above.

LESSOR:

CITY OF TORRANCE,
a municipal corporation

By:

George K. Chen
Mayor
ATTEST:

Rebecca Poirier, MMC
City Clerk

APPROVED AS TO FORM:

PATRICK Q. SULLIVAN

CITY ATTORNEY

Tatia Y. Strader, Assistant City Attorney

15 EXHIBIT A
1 Exhibit A

Legal description of the Property and Leased Premises

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF TORRANCE, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:

PARCEL A:

LOT 1 AND A PORTION OF LOT 2, BOTH OF TRACT NO. 46470, IN THE CITY OF TORRANCE, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 1174, PAGES 17 AND 18 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, SAID PORTION LYING NORTHWESTERLY OF THE FOLLOWING DESCRIBED LINE:

BEGINNING AT A POINT IN THE NORTHEASTERLY LINE OF PACIFIC COAST HIGHWAY, 100 FEET WIDE AS SHOWN ON SAID MAP, DISTANT SOUTH 45° 49' 56" EAST 42.50 FEET FROM THE MOST WESTERLY CORNER OF SAID LOT 2;
THENCE NORTH 44° 10' 04" EAST 52.09 FEET;
THENCE SOUTH 45° 49' 56" EAST 22.00 FEET;
THENCE NORTH 44° 10' 04" EAST 94.50 FEET TO A POINT IN THAT NORTHEASTERLY LINE OF SAID LOT 2 WHICH IS DESCRIBED AS NORTH 45° 49' 56" WEST 157.50 FEET; SAID POINT BEING SOUTHEASTERLY ALONG SAID NORTHEASTERLY LINE 63.00 FEET, MORE OR LESS, FROM THE NORTHWESTERLY TERMINUS OF SAID NORTHEASTERLY LINE.

EXCEPT THEREFROM ALL URANIUM, THORIUM AND ALL OTHER MATERIALS DETERMINED PURSUANT TO SECTION 5(B) (1) OF THE ATOMIC ENERGY ACT OF 1946 (60 STAT. 761) TO BE

PECULIARLY ESSENTIAL TO THE PRODUCTION OF FISSIONABLE MATERIAL, CONTAINED, IN

WHATEVER CONCENTRATION IN DEPOSITS IN SAID LANDS, TOGETHER WITH THE RIGHT AT

ANY TIME TO ENTER UPON SAID LAND AND PROSPECT FOR, IN AND REMOVE THE SAME, AS RESERVED IN THE DEED FROM THE UNITED STATES OF AMERICA, RECORDED MAY 13, 1948 IN BOOK 27145, PAGE 362 OFFICIAL RECORDS.

ALSO EXCEPT THEREFROM ALL MINERALS, OTHER THAN THOSE ABOVE MENTIONED AND

ALL PETROLEUM IN SAID LAND, TOGETHER WITH THE EXCLUSIVE RIGHT AT ANY AND ALL

TIMES TO ENTER UPON THE LANDS AND PROSPECT FOR, MINE FOR, AND REMOVE SUCH

MINERALS OR PETROLEUM, WITH ALL NECESSARY AND CONVENIENT MEANS OF WORKING

AND TRANSPORTING MATERIALS AND SUPPLIES, AS RESERVED IN THE ABOVE MENTIONED DEED FROM UNITED STATES OF AMERICA, RECORDED MAY 13, 1948 IN BOOK 27145, PAGE 362 OFFICIAL RECORDS.

BY QUITCLAIM DEED DATED MAY 05, 1961, EXECUTED BY THE UNITED STATES OF AMERICA AND RECORDED MAY 31, 1961, AS INSTRUMENT NO. 2843 OFFICIAL RECORDS, ALL RIGHT, TITLE AND INTEREST IN AND TO ALL MINERALS AND PETROLEUM, TO A DEPTH OF 500 FEET WAS SURRENDERED TO THE CITY OF TORRANCE, A MUNICIPAL CORPORATION.

16 EXHIBIT A
2 PARCEL B:

LOT 2 AND THE NORTHWESTERLY 21.00 FEET, MEASURED PERPENDICULAR TO THE NORTHWESTERLY LINE OF LOT 3 BOTH OF TRACT NO. 46470, IN THE CITY OF TORRANCE, COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 1174, PAGES 17 AND 18 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.