HomeMy WebLinkAbout08 - Amendment to Office Lease for Use of Suite 650 Located at 1201 Dove StreetQ �EwPpRT
CITY OF
s NEWPORT BEACH
`q44:09 City Council Staff Report
September 26, 2023
Agenda Item No. 8
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Seimone Jurjis, Assistant City Manager/Community Development
Director - 949-644-3232, sjurjis@newportbeachca.gov
PREPARED BY: Lauren Wooding Whitlinger, Real Property Administrator,
Iwooding@newportbeachca.gov
PHONE: 949-644-3236
TITLE: Second Amendment to Office Lease with Peregrine Realty Partners,
Inc. for Use of Suite 650 Located at 1201 Dove Street
/_1 16"t I:7_T91 6
The City of Newport Beach (City) acquired the office building located at 1201 Dove Street,
Newport Beach (Property) in May 2023. The building has 20 existing tenants, is currently
approximately 90% occupied, and has 7,653 square feet being marketed for lease. Given
the uncertainty surrounding the nation's commercial office industry, the Property is
well -positioned with existing long-term tenants. Peregrine Realty Partners, Inc.
(Peregrine) is an existing tenant requesting to modify and extend its lease. For the City
Council's consideration is a Second Amendment to the Office Lease (Amendment)
(Attachment A) with Peregrine, updating the rent to current market rates and extending
the length of the term for five years.
RECOMMENDATIONS:
a) Find this project is exempt from the California Environmental Quality Act (CEQA)
pursuant to Section 15301 (Existing facilities) and Section 15302 (Replacement or
Reconstruction) of the CEQA Guidelines, California Code of Regulations, Title 14,
Chapter 3, because this project has no potential to have a significant effect on the
environment; and
b) Authorize the City Manager and City Clerk to execute the Second Amendment to
Office Lease between the City of Newport Beach and Peregrine Realty Partners, Inc.
for use of City Property, office space Suite 650 located at 1201 Dove Street, in a form
substantially similar to the amendment attached to the staff report.
DISCUSSION:
Under its initial Office Lease Agreement (Attachment B) executed in 2013, Peregrine
leased its existing space (Suite 650) (Premises) at the Property for an initial term of
five years, which expired in 2018. The term of the most recent First Amendment to Office
Lease (Attachment B), which extended the term by five years and reset several key
financial terms, is set to expire September 30, 2023.
8-1
Second Amendment to Office Lease with Peregrine Realty Partners, Inc. for
Use of Suite 650 Located at 1201 Dove Street
September 26, 2023
Page 2
While the existing agreement contains options to extend the term, commercial office
market conditions have changed since it was executed, and the tenant desires to amend
the lease to reflect the current market conditions, which includes a slight reduction in the
rental rate. Additionally, the tenant has fewer staff in the office than in years past and
could reduce the square footage of its 4,445 square foot Premises by 1,000 square feet.
In lieu of reducing the square footage, the proposed negotiated terms contained in the
Amendment allow for rent abatement of the excess space for the first two years of the
new term, and payment of market rate for the excess space thereafter. Additional
abatements and allowances are included and are consistent with market rate deal terms
offered by competitive office properties in the area.
Second Amendment to Office Lease
For comparison, the tenant currently pays a base rent of $3.32 per square foot. The
proposed terms of the Amendment, to continue use of Suite 650 at the Property, are
summarized below:
1. The initial term shall commence October 1, 2023, and will terminate on
December 31, 2028, with no options to extend the term.
2. Monthly base rent during the term shall be set as follows:
Period
10/1 /23 — 9/30/24
111100IfWZE I LOIXTUPR
10/1 /25 — 9/30/26
10/1/26 — 9/30/27
10/1 /27 — 9/30/28
10/1 /28 — 12/31 /28
Monthly Base Rent
$13,779.50
$14,179.55
$14,624.05
$15,068.55
$15,513.05
$15,957.55
Monthly Base Rent Per
Rentable Square Foot
$3.10
$3.19
$3.29
$3.39
$3.49
$3.59
3. Base rent shall be abated in its entirety for the first five months of the term.
4. For the first two years of the term, base rent shall be abated for 1,000 square feet
of the leased Premises.
5. A general use allowance in an amount not to exceed $15.00 per square foot of the
leased Premises (4,445 square feet) may be used towards the payment of
alteration costs for the Premises, to be performed by Peregrine, or as additional
rent abatement. The alterations must be performed and reimbursed no later than
February 29, 2024, or the rent abatement requested by March 1, 2024, or the
allowance will be forfeited.
8-2
Second Amendment to Office Lease with Peregrine Realty Partners, Inc. for
Use of Suite 650 Located at 1201 Dove Street
September 26, 2023
Page 3
6. Peregrine will accept the Premises in its current as -is condition.
7. Peregrine shall continue to provide certificates of insurance to the satisfaction of
the City's property manager, naming the City as additional insured.
The Amendment has been reviewed by the City Attorney's Office and has been approved
as to form. Peregrine has reviewed and approved the terms of the Amendment.
FISCAL IMPACT:
Revenues collected pursuant to the proposed Amendment, $165,354 per year, which
shall be increased annually as prescribed in the Amendment, will be posted to the General
Fund Real Property accounts in the Community Development Department,
010-01050505. The revenues net of any tenant improvement allowance, rent abatement,
or broker fees are included in the budget for fiscal year 2023-2024.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this project is exempt from the California
Environmental Quality Act (CEQA) pursuant to Section 15301 (Existing facilities) and
Section 15302 (Replacement or Reconstruction) of the CEQA Guidelines, California Code
of Regulations, Title 14, Chapter 3, because this project has no potential to have a
significant effect on the environment.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
ATTACHMENTS:
Attachment A — Second Amendment to Office Lease
Attachment B — Office Lease Agreement and First Amendment to Office Lease
8-3
Attachment A
Second Amendment to Office Lease
SECOND AMENDMENT TO OFFICE LEASE
THIS SECOND AMENDMENT TO OFFICE LEASE ("Second Amendment") is
made and entered into as of September 26, 2023, by and between THE CITY OF
NEWPORT BEACH, a California municipal corporation and charter city ("Landlord") and
PEREGRINE REALTY PARTNERS, INC., a California corporation ("Tenant").
RECITALS:
A. Landlord (as successor -in -interest to AG Dove Owner, L.P., a Delaware
limited partnership as successor -in -interest to BRE/OC Property Holdings L.L.C., a
Delaware limited liability company, as successor -in -interest to Western National Life
Insurance Company, a Texas corporation) and Tenant entered into that certain Office
Lease Agreement dated as of January 24, 2013 (the "Original Lease") as amended by
that certain First Amendment to Office Lease dated as of July 5, 2018 ("First
Amendment"), whereby Landlord leases to Tenant and Tenant leases from Landlord
certain office space in that certain building located at 1201 Dove Street, Newport Beach,
California (the "Building"). The Original Lease, as amended by the First Amendment,
may be referred to herein as the "Lease."
B. By this Second Amendment, Landlord and Tenant desire to extend the
Term of the Lease, which is set to expire September 30, 2023, and to otherwise modify
the Lease as provided herein.
C. Unless otherwise defined herein, capitalized terms as used herein shall
have the same meanings as given thereto in the Original Lease.
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 are hereby acknowledged, the parties hereto hereby agree as
follows:
AGREEMENT:
1. The Premises. Landlord and Tenant hereby agree that pursuant to the Lease,
Landlord currently leases to Tenant and Tenant currently leases from Landlord that
certain office space in the Building containing 4,445 rentable square feet located
on the sixth (6th) floor of the Building and known as Suite 650 (the "Premises"), as
more particularly described in the Lease.
2. Extended Lease Term. The term of the Lease is hereby extended through
December 31, 2028 ("Second Extended Expiration Date"). The period from
October 1, 2023 through the Second Extended Expiration Date, shall be referred
to herein as the "Second Extended Term." Tenant shall not have any right to
Second Amendment to Lease (Suite 650 Peregrine)
4871-0644-9003.1
Page 1
extend the Lease beyond the Second Extended Term. Section 10.5 (Extension
Option) of the First Amendment shall hereby be null and void.
3. Monthly Base Rent. Notwithstanding anything to the contrary in the Lease, Tenant
shall pay, subject to abatement pursuant to Section 4 below, monthly Base Rent
for the Premises during the Second Extended Term as follows:
Period Monthly Base Rent Monthly Base Rent Per
Rentable Square Foot
10/1/23 — 9/30/24 $13,779.50 $3.10
10/1 /24 — 9/30/25 $14,179.55 $3.19
10/1/25 — 9/30/26 $14,624.05 $3.29
10/1/26 — 9/30/27 $15,068.55 $3.39
10/1/27 — 9/30/28 $15,513.05 $3.49
10/1/28 — 12/31/28 $15,957.55 $3.59
4. Base Rent Abatement.
4.1. Notwithstanding anything to the contrary contained in the Lease or in this
Second Amendment, and provided that Tenant faithfully performs all of the terms and
conditions of the Lease, as amended by this Second Amendment, Landlord hereby
agrees to abate: (i) Tenant's entire obligation to pay the $13,779.50 monthly Base Rent
for the period commencing October 1, 2023 through February 29, 2024, (ii) $3,100.00 per
month of Tenant's obligation to pay monthly Base Rent for the period commencing
March 1, 2024 through September 30, 2024, and (iii) $3,190.00 per month of Tenant's
obligation to pay monthly Base Rent for the period commencing October 1, 2024 through
September 30, 2025. During such abatement periods, Tenant shall still be responsible for
the payment of all of its other monetary obligations under the Lease, as amended by this
Second Amendment including, without limitation, payment of the unabated portion of its
monthly Base Rent.
4.2. In the event of a default by Tenant under the terms of the Lease, as
amended by this Second Amendment, that results in early termination pursuant to the
provisions of Section 19 of the Original Lease, then as a part of the recovery set forth in
Section 19 of the Original Lease, Landlord shall be entitled to the recovery of the monthly
Base Rent that was abated under the provisions of this Section 4.
5. Base Year. Notwithstanding anything to the contrary in the Lease, during the
Second Extended Term, the Base Year for Taxes and Expenses shall be the
calendar year 2024.
Second Amendment to Lease (Suite 650 Peregrine)
4871-0644-9003.1
Page 2
6. Condition of the Premises. Tenant hereby agrees to accept the Premises in its
"as -is" condition and Tenant hereby acknowledges that Landlord shall not be
obligated to provide or pay for any improvement work or services related to the
improvement of the Premises, except as provided in Section 7 below. Tenant also
acknowledges that Landlord has made no representation or warranty regarding
the condition of the Premises.
7. General Use Allowance. Landlord agrees to provide Tenant an allowance in an
amount up to $66,675.00 (based upon $15.00 per rentable square foot in the
Premises) ("General Use Allowance") to apply toward the payment of the costs
of Alterations to the Premises performed by Tenant in accordance with Section 9
of the Original Lease ("Improvement Costs"). Landlord shall be entitled to deduct
from the General Use Allowance a Landlord coordination fee in the amount of five
percent (5%) of the costs of any Tenant Alterations constructed pursuant to this
Section 7.
7.1. Tenant's reimbursable Improvement Costs for accessibility -related work
required under access laws (including but not limited to the Americans with Disabilities
Act and its related regulations and the California Building Code, Title 24 of the California
Code of Regulations) shall be limited to that portion of the work that is performed to or on
the Premises. Accessibility -related work that is required in the common areas of the
Property will be Landlord's obligation to perform and the General Use Allowance shall be
reduced by an amount equal to the cost of said work.
7.2. Tenant must submit requests for reimbursement of Improvement Costs on
or before February 29, 2024 ("Allowance Deadline"). Upon receipt of Tenant's timely
request, Landlord shall reimburse Tenant for reasonable Improvement Costs actually
incurred by Tenant, up to the amount of the General Use Allowance, within thirty (30)
days after Landlord's receipt of copies of all third -party contracts (including change
orders) pursuant to which such work has been performed, paid invoices and unconditional
lien waivers (if applicable) evidencing Tenant's Improvement Costs.
7.3. Tenant may request that any portion of the General Use Allowance
remaining after Tenant has been credited for reimbursable Improvement Costs be applied
as a credit against Tenant's Base Rent. Tenant shall submit its request in writing ("Rent
Credit Request") to Landlord by no later than the Allowance Deadline. If Tenant timely
and properly delivers the Rent Credit Request to Landlord, the credit against Base Rent
shall commence following the later of (a) the first day of the calendar month following the
delivery of the Rent Credit Request to Landlord or (b) March 1, 2024.
7.4. Any portion of the General Use Allowance that is not so requested for
reimbursement or rent credit by Tenant on or before the Allowance Deadline shall be
forfeited to Landlord.
8. Security Deposit. Tenant has previously deposited with Landlord $16,234.37 as a
Security Deposit under the Lease. Landlord shall continue to hold the Security
Second Amendment to Lease (Suite 650 Peregrine) Page 3
4871-0644-9001 1
RM
Deposit in accordance with the terms and conditions of Section 5 of the Original
Lease.
9. Parking. During the period commencing October 1, 2023 through September 30,
2025, the parking charge for the parking passes that Tenant may purchase from
Landlord pursuant to Section 10.3 of the First Amendment shall be abated. In the
event of a default by Tenant under the terms of the Lease, as amended by this
Second Amendment, that results in early termination pursuant to the provisions of
Section 19 of the Original Lease, then as a part of the recovery set forth in
Section 19 of the Original Lease, Landlord shall be entitled to the recovery of the
parking charges that were abated under the provisions of this Section 9.
10. California Certified Access Specialist Inspection. Pursuant to California Civil Code
§ 1938, Landlord hereby states that the Premises have undergone inspection by
a Certified Access Specialist (CASp) (defined in California Civil Code § 55.52).
Tenant hereby acknowledges that it has been provided a copy of the CASp
inspection report at least 48 hours prior to the execution of this Second
Amendment and Tenant agrees that information in the report shall remain
confidential, except as necessary for Tenant to complete repairs and corrections
of violations of construction -related accessibility standards. The cost of making any
repairs necessary to correct violations of construction -related accessibility
standards indicated by the CASp report will be shared by Tenant and Landlord as
more specifically set forth in Section 7 (General Use Allowance).
11. Defaults. Tenant hereby represents and warrants to Landlord that, as of the date
of this Second Amendment, Tenant is in full compliance with all terms, covenants
and conditions of the Lease and that there are no breaches or defaults under the
Lease by Landlord or Tenant, and that Tenant knows of no events or
circumstances which, given the passage of time, would constitute a default under
the Lease by either Landlord or Tenant.
12. Brokers. Each party represents and warrants to the other that no broker, agent or
finder negotiated or was instrumental in negotiating or consummating this Second
Amendment other than CBRE, Inc. (Matt Didier and Jessie Tichelaar) who
represented Landlord in connection with this Second Amendment. Each party
further agrees to defend, indemnify and hold harmless the other party from and
against any claim for commission or finder's fee by any other person or entity who
claims or alleges that they were retained or engaged by the first party or at the
request of such party in connection with this Second Amendment.
13. Landlord's Notice Addresses. From and after the date of this Second Amendment,
notices to Landlord under the Lease (as amended) shall be sent to the following
addresses:
City of Newport Beach
Attn: City Attorney
Second Amendment to Lease (Suite 650 Peregrine) Page 4
4871-0644-9003.1
100 Civic Center Drive
Newport Beach, CA 92660
City of Newport Beach
Attn: Real Property Administrator
100 Civic Center Drive
Newport Beach, CA 92660
LPC West, Inc.
Attn: Parke Miller
4041 MacArthur Boulevard, Suite 250
Newport Beach, CA 92660
14, Signing Authority. The individual(s) executing this Second Amendment on behalf
of Tenant hereby represents and warrants that Tenant is a duly formed and
existing entity qualified to do business in the State of California and that Tenant
has full right and authority to execute and deliver this Second Amendment and the
person signing on behalf of Tenant is authorized to do so.
15. Counterparts; Electronic Delivery; Electronic Signatures. This Second
Amendment may be executed in one or more counterparts, each of which shall
constitute an original and all of which shall be one and the same agreement. If a
variation or discrepancy among counterparts occurs, the copy of this Second
Amendment in Landlord's possession shall control.
16. No Further Modification. Except as set forth in this Second Amendment, all of the
terms and provisions of the Lease shall apply during the Second Extended Term
and shall remain unmodified and in full force and effect. Effective as of the date
hereof, all references to the "Lease" shall refer to the Lease as amended by this
Second Amendment.
[SIGNATURES ON NEXT PAGE]
Second Amendment to Lease (Suite 650 Peregrine) Page 5
4871-0644-9003.1
IN WITNESS WHEREOF, this Second Amendment has been executed as of the
day and year first above written.
"LANDLORD" THE CITY OF NEWPORT BEACH,
a California municipal corporation and charter
city
Grace K. Leung, City Manager
ATTEST:
Leilani I. Brown, City Clerk
APPROVED AS TO FORM:
By: ➢`'v
ro C. H r",aiAttorney
"TENANT" PEREGRINE REALTY PARTNERS, INC.,
a California corporation
By:
Print Name:
Title:
By:
Print Name:
Title:
This Second Amendment must be signed by two (2) officers of Tenant: one being the chairman of the board,
the president or a vice president, and the other being the secretary, an assistant secretary, the chief
financial officer or an assistant treasurer. If one (1) individual is signing in two (2) of the foregoing
capacities, that individual must sign twice; once as one officer and again as the other officer.
Second Amendment to Lease (Suite 650 Peregrine) Page 6
4971-0644-9003.1
MEN
Attachment B
Office Lease Agreement
and First Amendment to Office Lease Agreement
8-11
OFFICE LEASE AGREEMENT
CALIFORNIA
1201 DOVE STREET
THIS OFFICE LEASE AGREEMENT (the "Lease") is made and entered into as of the 24"' day of January,
2013, by and between WESTERN NATIONAL LIFE INSURANCE COMPANY, a Texas corporation ("Landlord")
and PEREGRINE REALTY PARTNERS, INC., a California corporation ("Tenant"). Pursuant to the terms of this
Lease, Landlord agrees to lease the Premises (hereinafter defined) to Tenant and Tenant agrees to lease the
Premises from Landlord. The Lease includes the following exhibits and attachments which are incorporated herein
by this reference: Exhibit A (Outline and Location of Premises), Exhibit B (Expenses and Taxes), Exhibit C (Work
Letter), Exhibit D (Building Rules and Regulations), Exhibit E (Additional Provisions), Exhibit F (Asbestos
Notification), Rider No. 1 (Extension Option Rider), Rider No. 2 (Fair Market Rental Rate), and Rider No. 3 (Options
in General).
Basic Lease Information.
1.01 "Building" shall mean the building located at 1201 Dove Street, Newport Beach, California. As
used herein, "Rentable Square Footage of the Building" is deemed to be 82,007 square feet. "Property" shall
mean the Building and the parcel(s) of land on which it is located. "Common Areas" shall mean the portion of the
Building and Property that are designated by Landlord for the common use of tenants and others.
1.02 "Premises" shall mean the area shown on Exhibit A to this Lease. The Premises are located on
the sixth (6th) floor of the Building and known as Suite 650. The "Rentable Square Footage of the Premises" is
deemed to be 5,245 square feet.
1.03 "Base Rent":
'
3 Artnual Base
M�irit111y Base
M�irwtk�Iy
tabe
Base Rent, per Rnor
Per�o'rl Monhs of T et•�n
;x
Square Foot of the�Pre:i
1 —12
$113,292.00
$9,441.00
$1.80
13 — 24
$116,690.76
$9,724.23
$1.85
25--36
$120,191.52
$10,015.96
$1.91
37-48
$123,797.28
$10,316.44
$1.97
49 — 60
$127,511.16
$10,625.93
$2.03
61 —65
$131,336.52
$10,944.71
$2.09
1.04 "Tenant's Pro Rata Share": 6.40%. (5,245 square feet within the Premises 1 82,007 square feet
within the Building). Tenant shall pay Tenant's Pro Rata Share of Taxes and Expenses in accordance with
Exhibit B of this Lease.
1.05 "Base Year" for Taxes: 2013; "Base Year" for Expenses: 2013.
1.06 "Term": A period of sixty-five (65) months, commencing on May 1, 2013 (the "Commencement
Date"), and expiring on September 30, 2018 (the "Expiration Date"), subject to earlier termination, if applicable, in
accordance with the terms of this Lease. Prior to the Commencement Date, Tenant shall have the right to beneficial
occupancy of the Premises as set forth in Section 2.03. Tenant shall have one (1) option to extend the Term for an
additional period of sixty (60) months, pursuant to and in accordance with the terms and conditions of Rider No. 1,
Rider No. 2 and Rider No. 3 attached hereto.
1.07 "Security Deposit": $12,039.18.
1.08 "Broker(s)": Jones Lang LaSalle Americas, Inc. (James Estrada) representing Landlord. Travers
Realty (Steve T. Card) representing Tenant.
1.09 "Permitted Use": General office purposes.
1.10 "Notice Addresses":
Landlord:
Tenant:
Western National Life Insurance Company Prior to Lease Commencement:
c/o AIG Asset Management PEREGRINE REALTY PARTNERS, INC.
Mortgage Lending and Real Estate 1000 Quail Street, Suite 290
1 SunAmerica Center, 38th Floor Newport Beach, CA 92660
Los Angeles, California 90067 Attention: G. Ryan Smith
Attention: Maria Campagna, Vice President
[FINAL EXECUTION COPY] _1- 1201 DOVE STREET
SMRH:407771509.5 Peregrine Realty Partners, Inc.
012413 25WR-162219
8-12
with a copy to:
Western National Life Insurance Company
c/o Lincoln Property Company
5 Hutton Centre Drive, Suite 120
Santa Ana, California 92707
Attention: Property Manager
Address for payment of Rent:
Western National Life Insurance Company
c/o Lincoln Property Company
5 Hutton Centre Drive, Suite 120
Santa Ana, California 92707
Attention: Property Manager
After Lease Commencement:
PEREGRINE REALTY PARTNERS, INC.
1201 Dove Street, Suite 650
Newport Beach, California, 92660
Attention: G. Ryan Smith
1.11 "Landlord Work" means the work, if any, that Landlord is obligated to perform in the Premises
pursuant to a separate work letter agreement (the "Work Letter"), if any, attached to this Lease as Exhibit C.
1.12 'Parking": Tenant shall purchase a total of twenty-one (21) parking passes for unreserved parking
spaces (the "Unreserved Parking Passes"), at no cost to Tenant during the initial Term, subject to the payment of
Expenses attributable to the parking areas and to the provisions set forth in Section 28. Subject to availability and
consent of Landlord, in its sole discretion, Tenant may elect to convert some of its Unreserved Parking Passes to
parking passes for reserved parking spaces (the "Reserved Parking Passes") at an initial monthly rate of $75.00
per Reserved Parking Pass. Tenant agrees to pay for such parking passes as Additional Rent (defined in
Section 3) under the Lease. On each anniversary of the Commencement Date, the parking fee shall increase by
3% of the previous year's parking fee. Except as set forth in this Section 1.12 and Section 28 herein, the purchase
of such parking passes shall be subject to the Rules and Regulations as set forth in Exhibit D to the Lease.
1.13 "Guarantor": None.
2. Commencement Date; Beneficial Occupancy; Possession.
2.01 The Term of the Lease shall be as set forth in Section 1.06 above, commencing on the
Commencement Date and expiring on the Expiration Date, subject to earlier termination, if applicable, in
accordance with the terms of this Lease. It is understood and agreed that Tenant shall have the right to access and
use the Premises prior to the Commencement Date, subject to and in accordance with the terms of Section 2.03
(Beneficial Occupancy) below.
2.02 Subject to Landlord performing any required Landlord Work as referenced in the Work Letter, the
Premises are accepted by Tenant in "AS IS" condition and configuration without any representations or warranties
by Landlord.
2.03 Following full execution and delivery of this Lease, Tenant may access and use the Premises for
the period commencing on March 1, 2013 and extending to the Commencement Date, subject to and in accordance
with the terms of this Section 2.03 and such early access and occupancy period may be referred to herein as the
"Beneficial Occupancy Period". Tenant's entry into and use of the Premises during the Beneficial Occupancy
Period shall be subject to (i) Landlord's receipt of the first (1s) monthly installment of Base Rent pursuant to Section
3, and Tenant's Security Deposit (to be maintained pursuant to the terms of Section 5 of this Lease), and (il)
Landlord's receipt of insurance certificates evidencing that Tenant is carrying the insurance required to be carried
by Tenant pursuant to the terms of Section 14 of this Lease, and all of the terms and conditions of the Lease shall
apply, provided that Tenant shall not be obligated to pay Base Rent or Tenant's Pro Rata Share of Expenses and
Taxes for the Premises until the occurrence of the Commencement Date. However, during such Beneficial
Occupancy Period, Tenant shall pay to Landlord all other sums and charges required to be paid by Tenant under
the Lease (such as charges for additional services provided to the Premises so occupied, pursuant to Section 6 of
this Lease), and shall be subject to all applicable laws, regulations and codes then in place governing such
occupancy and use. Subject to the foregoing, during such Beneficial Occupancy Period, Tenant shall be liable to
Landlord for any damage to any portion of the Premises, caused by Tenant or any of Tenant's employees, agents,
contractors, consultants, workmen, mechanics, suppliers and invitees. In addition, Tenant shall hold Landlord
harmless from and indemnify, protect and defend Landlord against any loss or damage to the Building or Premises
and against injury to any persons caused by Tenant's entry or occupancy during the Beneficial Occupancy Period.
3. Rent.
3.01 Base Rent. Upon execution of this Lease, Tenant shall pay to Landlord the sum of $9,441.00
constituting Rent due and payable by Tenant for the first full calendar month of the Term for which Rent is payable
hereunder. Tenant shall pay Landlord, without any setoff or deduction all Base Rent and Additional Rent for the
Term (collectively referred to as "Rent") when due. "Additional Rent" means all sums (exclusive of Base Rent) that
Tenant is required to pay Landlord under this Lease, including, without limitation, payments for insurance, repairs
and parking and Tenant's Pro Rata Share of Taxes and Expenses. Tenant shall pay and be liable for all rental,
sales and use taxes (but excluding income taxes), if any, imposed upon or measured by Rent. Base Rent and
recurring monthly charges of Additional Rent shall be due and payable in advance on the first day of each calendar
month without notice or demand. All other items of Rent shall be due and payable by Tenant on or before 30 days
after billing by Landlord. All Rent payable by Tenant hereunder shall be paid to Landlord in lawful money of the
United States of America, by check or wire transfer made payable to the entity constituting Landlord hereunder and
sent to the address designated in Section 1.10 of the Basic Lease Information, or to such other location or address
[FINAL EXECU-nON COPY] _2_ 1201 DOVE STREET
SMRH:407771509.5 Peregrine Realty Partners, Inc.
012413 25WR-162219
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as Landlord may designate from time to time. Tenant shall pay Landlord an administration fee equal to 5% of all
past due Rent, In addition, past due Rent shall accrue interest at 12% per annum (or the maximum rate legally
permissible, whichever is less). Rent for any partial month during the Term shall be prorated. No endorsement or
statement on a check or letter accompanying payment shall be considered an accord and satisfaction. Tenant's
covenant to pay Rent is independent of every other covenant in this Lease. Further, in the event any check
submitted by Tenant is returned by reason of "non sufficient funds", Tenant shall pay to Landlord an "NSF Fee" at
Landlord's standard rate then in effect.
3.02 Rent Abatement. Notwithstanding anything to the contrary contained herein and provided that no
Default by Tenant occurs hereunder, Landlord hereby agrees that Tenant shall not be required to pay Monthly Base
Rent for the second (2"d), third (3d) fourth (4th), fifth (51h), and sixth (6") full months of the initial Term (the
"Abatement Period"). During the Abatement Period, Tenant shall still be responsible for the payment of all of its
other monetary obligations under this Lease. In the event of a default by Tenant under the terms of this Lease that
results in termination of this Lease in accordance with the provisions of Section 19 hereof, then as a part of the
recovery set forth in Section 19 of this Lease, Landlord shall be entitled to the recovery of the then unamortized
remaining balance of the Monthly Base Rent that was abated under the provisions of this Section 3 (such
amortization being calculated on a straight line basis over the entire Term and such balance being determined as of
the date of Tenant's default).
4. Compliance with Laws; Use. The Premises shall be used for the Permitted Use and for no other use
whatsoever. Tenant shall comply with all statutes, codes, ordinances, orders, rules and regulations of any
municipal or governmental entity (collectively, "Laws"), regarding the operation of Tenant's business and the use,
condition, configuration and occupancy of the Premises. Tenant shall comply with the Rules and Regulations of the
Building attached as Exhibit D and such other reasonable rules and regulations adopted by Landlord from time to
time.
5. Security Deposit. The Security Deposit shall be delivered to Landlord upon the execution of this Lease by
Tenant and held by Landlord without liability for interest (unless required by Laws) as security for the performance
of Tenant's obligations. The Security Deposit is not an advance payment of Rent or a measure of damages.
Landlord may use all or a portion of the Security Deposit to satisfy past due Rent, to cure any Default (defined in
Section 18) by Tenant, or to compensate Landlord for any other loss or damage Landlord may suffer by reason of
Tenant's Default. If Landlord uses any portion of the Security Deposit, Tenant shall on demand restore the Security
Deposit to its original amount, and Tenant's failure to do so shall be a Default under this Lease. Landlord shall
return any unapplied portion of the Security Deposit to Tenant within 30 days after the later to occur of:
(a) payment of the final Rent due from Tenant; or (b) the later to occur of the Expiration Date or the date Tenant
surrenders the Premises to Landlord in compliance with Section 24. Landlord shall not be required to keep the
Security Deposit separate from its other accounts. Tenant hereby waives the provisions of Section 1950.7 of the
California Civil Code, or any successor Laws now or hereafter in effect.
6. Building Services. Landlord shall furnish Tenant with the following services: (a) water service for use in
the base building lavatories; (b) customary heat and air conditioning in season from 8:00 A.M. to 6:00 P.M.,
Monday through Friday, and upon prior written request from tenant, from 9:00 A.M. to 1:00 P.M. on Saturdays for a
minimum of two (2) hours (excepting nationally recognized holidays, which currently include New Year's Day,
President's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day)
(collectively, the "Building Service Hours"), and Tenant shall have the right to receive HVAC service during hours
other than the Building Service Hours by paying Landlord's then standard charge for additional HVAC service with a
two (2) hour minimum and providing such reasonable prior notice as is specified by Landlord; (c) standard janitor
service; (d) passenger elevator service; and (e) Building standard electricity for general office purposes, not to
exceed two (2) watts connected load per usable square foot of the Premises calculated on a monthly basis for
Building Service Hours. Electricity used by Tenant in the Premises shall, at Landlord's option, be paid for by
Tenant through inclusion in Expenses (except as provided for excess usage). Landlord's failure to furnish, or any
interruption, diminishment or termination of, services due to the application of Laws, the failure of any equipment,
the performance of repairs, improvements or alterations, utility interruptions or the occurrence of an event of Force
Majeure (defined in Section 27.02) shall not render Landlord liable to Tenant, constitute a constructive eviction of
Tenant, give rise to an abatement of Rent, nor relieve Tenant from the obligation to fulfill any covenant or
agreement.
If Tenant uses water, electricity, heat or air conditioning in excess of the Building standard level of services supplied
by Landlord pursuant to the terms hereof, or if Tenant's consumption of electricity shall exceed Building standard
electrical consumption as referenced in subsection 6(e) above, Tenant shall pay to Landlord, upon billing, the
reasonable cost of such excess consumption, the reasonable cost of the installation, operation, and maintenance of
equipment which is installed in order to supply such excess consumption, and the reasonable cost of the increased
wear and tear on existing equipment caused by such excess consumption. If Landlord reasonably determines that
Tenant's consumption of electricity is in excess of the Building standard electrical consumption as referenced in
subsection 6(e) above, then in order to measure the amount of electricity provided to the Premises, Landlord may,
at its sole discretion and at Tenant's sole reasonable cost and expense, install devices to separately meter Tenant's
electrical consumption. Further, Tenant shall not install any supplemental or stand alone HVAC or cooling
equipment or systems without Landlord's prior written consent and Landlord may condition such consent upon the
installation of separate meters to measure any related consumption of chilled water or electricity and compliance
with Landlord's design criteria so as not to affect base Building systems or equipment. Tenant's use of electricity
shall never exceed the capacity of the feeders to the Property or the risers or wiring installation, and Tenant shall
not install or use or permit the installation or use of any computer or electronic data processing equipment in the
Premises that will result in excess utilities consumption, without the prior written consent of Landlord. If Tenant
desires to use heat, ventilation or air conditioning during hours other than those for which Landlord is obligated to
supply such utilities pursuant to the terms of this Section 6, Tenant shall give Landlord such prior notice, if any, as
Landlord shall from time to time establish as appropriate, of Tenant's desired use in order to supply such utilities,
and Landlord shall supply such utilities to Tenant at such hourly cost to Tenant (which shall be treated as Additional
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Rent) as Landlord shall from time to time establish. The current hourly cost, which is subject to increase in
Landlord's reasonable discretion, is Sixty -Five Dollars ($65.00) per hour per zone within the Premises.
7. Landlord's Reservation of Rights. Provided Tenant's use of and access to the Premises and parking to
be provided to Tenant under this Lease is not interfered with in an unreasonable manner, Landlord reserves for
itself and for all other owner(s) and operator(s) of the Common Areas and the balance of the Property, the right
from time to time to: (i) install, use, maintain, repair, replace and relocate pipes, ducts, conduits, wires and
appurtenant meters and equipment above the ceiling surfaces, below the floor surfaces, within the walls and in the
central core areas of the Building; (ii) make changes to the design and layout of the Property, including, without
limitation, changes to buildings, driveways, entrances, loading and unloading areas, direction of traffic, landscaped
areas and walkways, and, subject to the parking provisions contained in Section 28 and Exhibit D, parking spaces
and parking areas; and (iii) use or close temporarily the Common Areas and/or other portions of the Property while
engaged in making improvements, repairs or alterations to the Building, the Property, or any portion thereof.
8. Leasehold Improvements. All improvements in and to the Premises, including any Alterations (defined
below) (collectively, "Leasehold Improvements") but excluding Tenant's Property, shall remain upon the Premises
at the end of the Term without compensation to Tenant. Landlord, however, by written notice to Tenant prior to the
Expiration Date, may require Tenant, at its expense, to remove any electronic, phone and data cabling and related
equipment (collectively, "Cable") installed by or for the benefit of Tenant and/or any Landlord Work or Alterations
that, in Landlord's reasonable judgment, are not standard office improvements and are of a nature that would
require material removal and repair costs (collectively referred to as "Required Removables"). Landlord may, in
its sole discretion, require Tenant to provide a letter of credit, bond and/or some alternate form of security
satisfactory to Landlord in an amount sufficient to ensure any required removal of such Required Removables.
9. Repairs and Alterations.
9.01 Tenant shall periodically inspect the Premises to identify any conditions that are dangerous or in
need of maintenance or repair and shall promptly provide Landlord with notice of any such conditions. Tenant
shall, at its sole cost and expense, promptly perform all maintenance and repairs to the Premises that are not
Landlord's express responsibility under this Lease, and shall keep the Premises in good condition and repair,
reasonable wear and tear excepted. If Tenant fails to make any repairs to the Premises for more than 30 days after
notice from Landlord (although notice shall not be required in an emergency), Landlord may make the repairs, and
Tenant shall pay the reasonable cost of the repairs, together with an administrative charge in an amount equal to
5% of the cost of the repairs. Landlord shall perform all maintenance and repairs upon the: (a) structural elements
of the Building; (b) mechanical, electrical, plumbing and fire/life safety systems serving the Building in general;
(c) Common Areas; (d) roof of the Building; (e) exterior windows of the Building; and (f) elevators serving the
Building. Tenant hereby waives any and all rights under and benefits of subsection 1 of Section 1932, and
Sections 1941 and 1942 of the California Civil Code, or any similar or successor Laws now or hereinafter in effect.
9.02 Tenant shall not make alterations, repairs, additions or improvements or install any cable
(collectively referred to as "Alterations") without first obtaining the written consent of Landlord in each instance,
which consent Landlord may withhold in its sole and absolute discretion. In order to obtain such approvals, Tenant
shall furnish Landlord with plans and specifications; names of contractors reasonably acceptable to Landlord;
required permits and approvals; evidence of contractor's and subcontractor's insurance in amounts reasonably
required by Landlord and naming Landlord as an additional insured; and any security for performance in amounts
reasonably required by Landlord. Tenant shall reimburse Landlord for any reasonable sums paid by Landlord for
third party examination of Tenant's plans for Alterations. In addition, Tenant shall pay Landlord a fee for Landlord's
oversight and coordination of any Alterations equal to 5% of the cost of the Alterations. Upon completion, Tenant
shall furnish "as -built" plans for Alterations, completion affidavits and full and final waivers of lien. Notwithstanding
the foregoing, so long as Tenant (a) complies with all applicable laws, rules (including the then current construction
rules, guidelines and specifications for the Building), regulations and the terms and conditions of this Lease, and (b)
coordinates construction of the Alterations with Landlord, Tenant shall have the right, without Landlord's consent,
but upon three (3) business days prior written notice to Landlord, to make strictly cosmetic, non-structural additions
and alterations to the Premises that do not (i) involve the expenditure of more than $5,000.00 in the aggregate in
any twelve (12) month period during the Term, (ii) affect the appearance of the Building or any areas outside the
Premises, (iii) affect or impact in any way the systems or structure of the Building, or (iv) require the issuance of a
building permit (collectively, the "Cosmetic Alterations"). Unless otherwise agreed in writing by Landlord, the
construction of the Cosmetic Alterations shall occur during other than the Building Service Hours.
10, Entry by Landlord. Landlord may enter the Premises to inspect or show the Premises, to clean and make
repairs, alterations or additions pursuant to the terms of this Lease and to perform or facilitate maintenance,
repairs, alterations or additions to any portion of the Building pursuant to the terms of this Lease. Except in
emergencies or to provide Building services, Landlord shall provide Tenant with reasonable prior verbal notice of
entry. Entry by Landlord shall not constitute a constructive eviction or entitle Tenant to an abatement or reduction
of Rent.
11. Assignment and Subletting.
11.01 Except as set forth in Section 11.02 below, Tenant shall not assign, sublease, transfer or encumber
any interest in this Lease or allow any third party to use any portion of the Premises (collectively or individually, a
"Transfer") without the prior written consent of Landlord, which consent may be withheld in Landlord's sole and
absolute discretion if Landlord does not exercise its recapture rights. It is further understood that any renewal,
extension or modification of an existing sublease shall also require Landlord's prior written consent, which Landlord
may withhold in its sole and absolute discretion. Any attempted Transfer in violation of this Section shall, at
Landlord's option, be void. Within 15 business days after receipt of executed copies of the transfer documentation
and such other information as Landlord may reasonably request, Landlord shall either: (a) consent to the Transfer
by execution of a consent agreement in a form reasonably designated by Landlord; (b) refuse to consent to the
Transfer; or (c) recapture the portion of the Premises that Tenant is proposing to Transfer. If Landlord exercises its
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right to recapture, the Lease shall automatically be amended to delete the applicable portion of the Premises
effective on the proposed effective date of the Transfer. Tenant hereby waives the provisions of Section 1995.310
of the California Civil Code, or any similar or successor Laws, now or hereinafter in effect, and all other remedies,
including, without limitation, any right at law or equity to terminate this Lease, on its own behalf and, to the extent
permitted under all applicable Laws, on behalf of the proposed transferee. In no event shall any Transfer release or
relieve Tenant from any obligation under this Lease. Tenant shall pay Landlord a review fee of $250.00 for
Landlord's review of any requested Transfer. Additionally, Tenant shall reimburse Landlord for all attorneys' fees
and costs reasonably incurred by Landlord with respect to any Transfer, whether consented to or not. if Tenant is
in Default (as defined below), Landlord may require that all sublease payments be made directly to Landlord, in
which case Tenant shall receive a credit against Rent in the amount of Tenant's share of payments received by
Landlord.
11.02 Affiliate Transfers. Notwithstanding anything to the contrary contained in this Article 11, an
assignment of this Lease or a subletting of all or a portion of the Premises to an entity which is controlled by,
controls, or is under common control with, Tenant or any corporation or other business entity that succeeds to the
business of Tenant as a result of a merger, consolidation, sale of substantially all of the assets, or other business
reorganization ("Affiliate") of Tenant shall not be deemed a Transfer requiring Landlord's consent under this
Article 11, provided that (i) Tenant notifies Landlord of any such assignment or sublease prior to the effective date
thereof and promptly supplies Landlord with any documents or information requested by Landlord regarding such
assignment or sublease or such Affiliate (including, in the event of an assignment, evidence of the assignee's
assumption of Tenant's obligations under this Lease or, in the event of a sublease, evidence of the sublessee's
assumption, in full, of the obligations of Tenant with respect to the portion of the premises so subleased, other than
the payment of rent), (ii) such assignment or sublease is not a subterfuge by Tenant to avoid its obligations under
this Lease, (iii) such assignment or sublease does not cause Landlord to be in default under any lease at the
Property, (iv) the net worth of such Affiliate shall be reasonably sufficient to meet the obligations undertaken by
such Affiliate with respect to this Lease, taking into account all relevant factors, and (v) with respect to a subletting
only, Tenant and such Affiliate execute Landlord's standard consent to sublease form. An assignee of Tenant's
entire interest in this Lease pursuant to the immediately preceding sentence may be referred to herein as an
"Affiliated Assignee". "Control" as used in this Article 11, shall mean the ownership, directly or indirectly, of
greater than fifty-one percent (51%) of the voting securities of, or possession of the right to vote, in the ordinary
direction of its affairs, of greater than fifty-one percent (51%) of the voting interest in, an entity. The provisions of
this Section 11.02 shall not be available to any assignee or sublessee of Tenant's interest in this Lease, unless
such transferee obtained its interest in this Lease pursuant to the provisions of this Section 11.02.
12. Liens. Tenant shall not permit mechanic's or other liens to be placed upon the Property or Premises in
connection with any work purportedly done by or for the benefit of Tenant or its transferees. Tenant shall, within 10
business days of notice from Landlord, fully discharge any lien by settlement, by bonding or by insuring over the
lien in the manner prescribed by Laws. If Tenant fails to do so, Landlord may bond, insure over or otherwise
discharge the lien. Tenant shall reimburse Landlord for any amount paid by Landlord, including, without limitation,
reasonable attorneys' fees.
13. Indemnity and Waiver of Claims. Tenant hereby waives all claims against and releases Landlord and its
trustees, members, principals, beneficiaries, partners, officers, directors, employees, Mortgagees (as defined
herein) and agents (the "Landlord Related Parties") from all claims for any injury to or death of persons, damage
to property or business loss in any manner related to (a) acts of God, (b) acts of third parties, (c) the bursting or
leaking of any tank, water closet, drain or other pipe; (d) the inadequacy or failure of any security services,
personnel or equipment, or (e) any matter outside of the reasonable control of Landlord; provided, that the
foregoing release shall not extend or apply to claims by third parties for personal injuries occurring in the Common
Areas by reason of the negligence or willful misconduct of Landlord or the Landlord Related Parties. Further,
except to the extent caused by the gross negligence or willful misconduct of Landlord or any Landlord Related
Parties, Tenant shall indemnify, defend and hold Landlord and Landlord Related Parties harmless against and from
all liabilities, obligations, damages, penalties, claims, actions, costs, charges and expenses, including, without
limitation, reasonable attorneys' fees and other professional fees (if and to the extent permitted by Laws), which
may be imposed upon, incurred by or asserted against Landlord or any of the Landlord Related Parties by any third
party and arising out of or in connection with any damage or injury occurring in, on or about the Premises or any
acts or omissions (including violations of Laws) of Tenant and its trustees, members, principals, beneficiaries,
partners, officers, directors, employees, mortgagees and agents (the "Tenant Related Parties") or any of Tenant's
transferees, contractors or licensees. Notwithstanding the foregoing, Tenant's indemnity of Landlord and the
Landlord Related Parties shall not apply to: (i) any claims to the extent resulting from the gross negligence or willful
misconduct of the Landlord Parties or any breach by Landlord of its obligations under and with respect to the
Lease, and not insured or required to be insured by Tenant under this Lease (collectively, the "Excluded Claims");
or (ii) any loss of or damage to Landlord's property to the extent Landlord has waived such loss or damage
pursuant to the terms of Section 15 of this Lease. In addition, Landlord shall indemnify, defend, protect and hold
Tenant harmless from all such Excluded Claims, except for (A) any loss or damage to Tenant's property to the
extent Tenant has waived such loss or damage pursuant to Section 15 (Subrogation) of this Lease, and (B) any lost
profits, loss of business or other consequential damages. Further, nothing herein shall be construed to diminish the
repair and maintenance obligations of Landlord as specifically set forth in this Lease.
14. Insurance.
14.01 Tenant shall obtain and maintain throughout the Term the following insurance ("Tenant's
Insurance"):
(a) Commercial General Liability Insurance, on an occurrence basis, insuring bodily injury and
property damage including the following divisions and extensions of coverage: Premises and Operations; Owners
and Contractors protective; blanket contractual liability (including coverage for Tenant's indemnity obligations under
this Lease); liquor liability, if applicable; and products and completed operations. Such insurance must have the
following minimum limits of liability: $2,000,000 Per Occurrence, $2,000,000 General Aggregate, $2,000,000
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Personal and Advertising Injury — Per Occurrence, $2,000,000 Products and Completed Operations Aggregate.
The policy shall be endorsed to ensure the general aggregate limit shall apply separately and in total to this location
only (designated location general aggregate limit);
(b) Property Insurance, written on an "All Risk" or Special Form Perils, with coverage for broad
form water damage including earthquake sprinkler leakage and pollution coverage for damage caused by heat,
smoke or fumes from a hostile fire, at full replacement cost value (without deduction for depreciation) and with a
replacement cost endorsement covering all of Tenant's business and trade fixtures, equipment, movable partitions,
furniture, merchandise and other personal property within the Premises ("Tenant's Property") and any Leasehold
Improvements performed by or for the benefit of Tenant;
(c) Extra Expense, Loss of Income or Property/Business Interruption Insurance, in such
amounts as will reimburse Tenant for direct or indirect loss of earnings attributable to all perils included within "All
Risk" coverage or otherwise commonly insured against by prudent tenants or attributable to prevention of access to
the Premises, Tenant's parking areas or to the Building as a result of such perils, with such coverage to extend to
actual loss sustained subject to a minimum of one year loss of Rental Value, including Extra Expense as needed to
reduce the period of restoration after the loss;
(d) Workers' Compensation Insurance as required by Laws and in amounts as may be
required by applicable statute and Employers Liability Coverage of at least One Million Dollars ($1,000,000.00) per
occurrence, and containing a waiver of subrogation endorsement in favor of Landlord;
(e) Commercial Automobile Liability insuring bodily injury and property damage arising from all
owned, non -owned and hired vehicles, if any, with minimum limits of liability of One Million Dollars ($1,000,000.00)
per accident; and
(f) with respect to improvements or alterations performed by Tenant within the Premises,
Builder's Risk insurance or an Installation Floater.
14.02 Any company writing Tenant's Insurance shall have an A.M. Best rating of not less than A:X and
shall be licensed to issue insurance coverage in the State of California. All Commercial General Liability Insurance
policies shall (i) name Landlord (or its successors and assignees), the managing agent for the Building (or any
successor), and their respective members, principals, beneficiaries, partners, officers, directors, employees, and
agents, and other designees of Landlord and its successors as the interest of such designees shall appear, as
additional insureds (utilizing endorsement ISO Form CG 2011 11185 or equivalent), (li) must contain an
endorsement stating "such insurance as is afforded by this policy for the benefit of Landlord and any other
additional insured(s) designated by Landlord, shall be primary as respects any liability or claims arising out of the
occupancy of the Premises by Tenant or Tenant's operations, and any insurance carried by Landlord or any other
additional insured(s) shall be non-contributory" provision that the insurance afforded by such policy is primary
insurance, (iii) contain an endorsement that the insurer waives its right to subrogation as described in Section 15
below; (iv) contain a cross -liability endorsement or separation of insuredslseverability of interests clause. All
policies of Tenant's Insurance shall contain an unqualified thirty (30) days' advance written notice of any
cancellation, termination, material change or lapse of insurance. No policy required hereunder shall contain a co-
insurance clause and all policy deductibles shall be reasonably acceptable to Landlord. Tenant shall provide
Landlord with a certificate of insurance evidencing all insurance required to be carried by Tenant hereunder
(including evidence of all required endorsements and additional insured coverage as noted above) at least fifteen
(15) days prior to the earlier to occur of the Commencement Date or the date Tenant is provided with possession of
the Premises, and thereafter as reasonably necessary to assure that Landlord always has current certificates
evidencing Tenant's Insurance. If any such initial or replacement policies or certificates are not furnished within the
time(s) specified herein, Tenant shall be deemed to be in material Default under this Lease without the benefit of
any additional notice or cure period provided in Section 18 below, and Landlord shall have the right, but not the
obligation, to procure such policies and certificates at Tenant's expense, and Tenant shall pay the reasonable cost
thereof within ten (10) days following Landlord's submission of an invoice therefor. In no event shall the limits of
any insurance policy obtained by a Tenant be considered to limit the liability of Tenant underthis Lease.
14.03 Landlord shall maintain in effect at all times commercial general liability and property/casualty
insurance coverage consistent with the coverage customarily carried by comparable landlords of buildings
comparable in size, type, quality and location as the Building, or as Landlord may from time to time be required to
carry to satisfy the requirements of its lender.
15. Subrogation. Landlord and Tenant hereby waive and shall cause their respective insurance carriers to
waive any and all rights of recovery, claims, actions or causes of action against the other for any loss or damage to
person with respect to Tenant's Property, Leasehold Improvements, the Building, the Premises, or any contents
thereof, including rights, claims, actions and causes of action based on negligence, which loss, damage or injury is
(or would have been, had the insurance required by this Lease been carried) covered by insurance. As noted
above, Tenant also waives subrogation with respect to losses or claims covered by worker's compensation
insurance.
16. Casualty Damage. Landlord, by notice (the "Casualty Notice") to Tenant as soon as reasonably
practicable but not later than 60 days of the date of the fire or other casualty (a "Casualty"), shall have the right to
terminate this Lease if all or any part of the Premises is damaged to the extent that it cannot reasonably be repaired
within 120 days after the date of the Casualty. If this Lease is not terminated, the Casualty Notice shall set forth the
anticipated period for repairing the casualty damage and Landlord shall promptly and diligently, restore the
Premises. Such restoration shall be to substantially the same condition that existed prior to the Casualty, except
for modifications required by Laws. Upon notice from Landlord, Tenant shall assign to Landlord (or to any party
designated by Landlord) all property insurance proceeds payable to Tenant under Tenant's Insurance with respect
to any Leasehold Improvements performed by or for the benefit of Tenant; provided if the estimated cost to repair
such Leasehold Improvements exceeds the amount of insurance proceeds received by Landlord from Tenant's
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insurance carrier, the excess cost of such repairs shall be paid by Tenant to Landlord prior to Landlord's
commencement of repairs. Within 15 days of demand, Tenant shall also pay Landlord for any additional excess
costs that are determined during the performance of such repairs. Landlord shall not be liable for any
inconvenience to Tenant, or injury to Tenant's business resulting in any way from the Casualty or the repair thereof.
Provided that Tenant is not in Default, during any period of time that all or a material portion of the Premises is
rendered untenantable as a result of a Casualty, the Rent shall abate for the portion of the Premises that is
untenantable and not used by Tenant. Notwithstanding the foregoing, and without limiting Tenant's obligations to
pay to Landlord any cost of restoration (as referenced in this Section 16) in excess of the proceeds of Tenant's
Insurance, in the event that Landlord does not receive sufficient insurance proceeds to complete all required
restoration work, whether due to an uninsured Casualty, requirements of a Mortgagee, or otherwise, then Landlord
shall have the right to terminate this Lease by written notice to Tenant. The provisions of this Lease, including this
Section 16, constitute an express agreement between Landlord and Tenant with respect to any and all damage to,
or destruction of, all or any part of the Premises, the Building, or the Property, and any Laws, including, without
limitation, Sections 1932(2) and 1933(4) of the California Civil Code, with respect to any rights or obligations
concerning damage or destruction in the absence of an express agreement between the parties, and any similar or
successor Laws now or hereinafter in effect, shall have no application to this Lease or any damage or destruction to
all or any part of the Premises, the Building or the Property. Notwithstanding anything to the contrary contained
herein, if (A) Landlord does not elect to terminate this Lease pursuant to Landlord's termination right as provided
above, and (B) the repair of such damage cannot, in the reasonable opinion of Landlord, be completed within two
hundred seventy (270) days after the date of the damage, then Tenant may elect to terminate this Lease by
delivering written notice thereof to Landlord within thirty (30) days after being notified in writing of such damage and
the expected time for repair and restoration of the Premises. Further, Landlord and Tenant shall each have the
right to terminate this Lease if any Casualty affecting the Premises occurs during the last twelve (12) months of the
Term of the Lease and Landlord estimates that such damage cannot be repaired and restored within thirty (30)
days after the date of such Casualty.
17. Condemnation. Either party may terminate this Lease if any material part of the Premises is taken or
condemned for any public or quasi -public use under Laws, by eminent domain or private purchase in lieu thereof (a
"Taking"). Landlord shall also have the right to terminate this Lease if there is a Taking of any portion of the
Building or Property which would have a material adverse effect on Landlord's ability to profitably operate the
remainder of the Building. The terminating party shall provide written notice of termination to the other party within
forty-five (45) days after it first receives notice of the Taking. The termination shall be effective on the date the
physical taking occurs. If this Lease is not terminated, Base Rent and Tenant's Pro Rata Share shall be
appropriately adjusted to account for any reduction in the square footage of the Building or Premises. All
compensation awarded for a Taking, or sale proceeds, shall be the property of Landlord, except that Tenant shall
have the right to file any separate claim available to Tenant for any taking of Tenant's personal property and fixtures
belonging to Tenant and removable by Tenant upon expiration of the Term pursuant to the terms of this Lease, and
for moving and relocation expenses, so long as such claim does not diminish the award available to Landlord, its
ground lessor with respect to the Property or its mortgagee, and such claim is payable separately to Tenant.
Tenant hereby waives any and all rights it might otherwise have pursuant to Section 1265.130 of the California
Code of Civil Procedure, or any similar or successor Laws.
18. Events of Default. Each of the following occurrences shall be considered to be a "Default": (a) Tenant's
failure to pay any portion of Rent when due, if the failure continues for three (3) days after written notice to Tenant,
which notice shall be in satisfaction of, and not in addition to, notice required by Laws ("Monetary Default"); or
(b) Tenant's failure (other than a Monetary Default) to comply with any term, provision, condition or covenant of this
Lease, if the failure is not cured within 20 days after written notice to Tenant, which notice shall be in satisfaction of,
and not in addition to, notice required by Laws (including, without limitation, Section 1161 of the California Code of
Civil Procedure), provided, however, if Tenant's failure to comply cannot reasonably be cured within 20 days,
Tenant shall be allowed additional time (not to exceed 60 days) as is reasonably necessary to cure the failure so
long as Tenant commences to cure within 20 days and Tenant diligently pursues the cure to completion.
19. Remedies,
19.01 Upon the occurrence of any Default under this Lease, whether enumerated in Section 18 or not,
Landlord shall have the option to pursue any one or more of the following remedies without any notice (except as
expressly prescribed herein) or demand whatsoever (and without limiting the generality of the foregoing, Tenant
hereby specifically waives notice and demand for payment of Rent or other obligations, except for those notices
specifically required pursuant to the terms of Section 18 or this Section 19, and waives any and all other notices or
demand requirements imposed by applicable law):
(a) Terminate this Lease and Tenant's right to possession of the Premises and recover from
Tenant an award of damages equal to the sum of the following:
(i) The Worth at the Time of Award (as defined below) of the unpaid Rent which had
been earned at the time of termination;
(ii) The Worth at the Time of Award of the amount by which the unpaid Rent which
would have been earned after termination until the time of award exceeds the amount of such Rent loss that Tenant
affirmatively proves could have been reasonably avoided;
(iii) The Worth at the Time of Award of the amount by which the unpaid Rent for the
balance of the Term after the time of award exceeds the amount of such Rent loss that Tenant affirmatively proves
could be reasonably avoided;
(iv) Any other amount necessary to compensate Landlord for all the detriment either
proximately caused by Tenant's failure to perform Tenant's obligations under this Lease or which in the ordinary
course of things would be likely to result therefrom; and
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(v) All such other amounts in addition to or in lieu of the foregoing as may be
permitted from time to time under applicable law,
The "Worth at the Time of Award" of the amounts referred to in parts (i) and (ii) above,
shall be computed by allowing interest at the lesser of a per annum rate equal to: (A) the greatest per annum rate
of interest permitted from time to time under applicable law, or (B) the Prime Rate (defined below) plus 5%. For
purposes hereof, the "Prime Rate" shall be the per annum interest rate publicly announced as its prime or base
rate by a federally insured bank reasonably selected by Landlord in the State of California. The "Worth at the Time
of Award" of the amount referred to in part (111), above, shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award plus 1 %;
(b) Employ the remedy described in California Civil Code §1951.4 (Landlord may continue this
Lease in effect after Tenant's breach and abandonment and recover Rent as it becomes due, if Tenant has the right
to sublet or assign, subject only to reasonable limitations); or
(c) Notwithstanding Landlord's exercise of the remedy described in California Civil Code
§1951.4 in respect of an event or events of Default, at such time thereafter as Landlord may elect in writing, to
terminate this Lease and Tenant's right to possession of the Premises and recover an award of damages as
provided above in Section 19.01(a),
19.02 The subsequent acceptance of Rent hereunder by Landlord shall not be deemed to be a waiver of
any preceding breach by Tenant of any term, covenant or condition of this Lease, other than the failure of Tenant to
pay the particular Rent so accepted, regardless of Landlord's knowledge of such preceding breach at the time of
acceptance of such Rent. No waiver by Landlord of any breach hereof shall be effective unless such waiver is in
writing and signed by Landlord.
19.03 TENANT HEREBY WAIVES ANY AND ALL RIGHTS CONFERRED BY SECTION 3275 OF THE
CIVIL CODE OF CALIFORNIA AND BY SECTIONS 1174 (c) AND 1179 OF THE CODE OF CIVIL PROCEDURE
OF CALIFORNIA AND ANY AND ALL OTHER LAWS AND RULES OF LAW FROM TIME TO TIME IN EFFECT
DURING THE LEASE TERM PROVIDING THAT TENANT SHALL HAVE ANY RIGHT TO REDEEM, REINSTATE
OR RESTORE THIS LEASE FOLLOWING ITS TERMINATION BY REASON OF TENANT'S BREACH. TENANT
ALSO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN
ANY LITIGATION ARISING OUT OF OR RELATING TO THIS LEASE.
19.04 No right or remedy herein conferred upon or reserved to Landlord is intended to be exclusive of
any other right or remedy, and each and every right and remedy shall be cumulative and in addition to any other
right or remedy given hereunder or now or hereafter existing by agreement, applicable law or in equity. In addition
to other remedies provided in this Lease, Landlord shall be entitled, to the extent permitted by applicable law, to
injunctive relief, or to a decree compelling performance of any of the covenants, agreements, conditions or
provisions of this Lease, or to any other remedy allowed to Landlord at law or in equity. Forbearance by Landlord
to enforce one or more of the remedies herein provided upon an event of Default shall not be deemed or construed
to constitute a waiver of such Default.
19,05 If Tenant is in Default of any of its non -monetary obligations under this Lease, Landlord shall have
the right to perform such obligations. Tenant shall reimburse Landlord for the reasonable cost of such performance
upon demand together with an administrative charge equal to 5% of the cost of the work performed by Landlord.
19.06 This Section 19 shall be enforceable to the maximum extent such enforcement is not prohibited by
applicable law, and the unenforceability of any portion thereof shall not thereby render unenforceable any other
portion.
20. Limitation of Liability.
THE LIABILITY OF LANDLORD (AND OF ANY SUCCESSOR LANDLORD) SHALL. BE LIMITED TO THE
LESSER OF (A) THE INTEREST OF LANDLORD 1N THE PROPERTY, OR (B) THE EQUITY INTEREST
LANDLORD WOULD HAVE IN THE PROPERTY IF THE PROPERTY WERE ENCUMBERED BY THIRD PARTY
DEBT IN AN AMOUNT EQUAL TO 70% OF THE VALUE OF THE PROPERTY. TENANT SHALL LOOK SOLELY
TO LANDLORD'S INTEREST IN THE PROPERTY FOR THE RECOVERY OF ANY JUDGMENT OR AWARD
AGAINST LANDLORD OR ANY LANDLORD RELATED PARTY. NEITHER LANDLORD NOR ANY LANDLORD
RELATED PARTY SHALL BE PERSONALLY LIABLE FOR ANY JUDGMENT OR DEFICIENCY AND IN NO
EVENT SHALL LANDLORD OR ANY LANDLORD RELATED PARTY BE LIABLE TO TENANT FOR ANY LOST
PROFIT, DAMAGE TO OR LOSS OF BUSINESS OR ANY FORM OF SPECIAL, INDIRECT OR
CONSEQUENTIAL DAMAGE. BEFORE FILING SUIT FOR AN ALLEGED DEFAULT BY LANDLORD, TENANT
SHALL GIVE LANDLORD AND THE MORTGAGEE(S) (DEFINED IN SECTION 23 BELOW) WHOM TENANT HAS
BEEN NOTIFIED HOLD MORTGAGES (DEFINED IN SECTION 23 BELOW), NOTICE AND REASONABLE TIME
TO CURE THE ALLEGED DEFAULT.
21. (Intentionally Omitted).
22. Holding Over. If Tenant remains in possession of the Premises after expiration or termination of the Term,
or after the date in any notice given by Landlord to Tenant terminating this Lease, such possession by Tenant shall
be deemed to be a month -to -month tenancy terminable on written thirty (30) day notice at any time, by either party.
Tenant's occupancy shall be subject to all the terms and provisions of this Lease and Tenant shall pay an amount
(on a per month basis without reduction for partial months during the holdover) equal to 150% of the fair market
gross rental for the Premises as reasonably determined by Landlord (which in no event shall be less than 150% of
the sum of the Base Rent and Additional Rent due for the period immediately preceding the holdover). No holdover
by Tenant or payment by Tenant after the termination of this Lease shall be construed to extend the Term or
prevent Landlord from immediate recovery of possession of the Premises by summary proceedings or otherwise.
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Further, there shall be no reconciliation or refund of amounts paid by Tenant during any period of holdover. If
Tenant fails to surrender the Premises upon the termination or expiration of this Lease, in addition to any other
liabilities to Landlord accruing therefrom, Tenant shall protect, defend, indemnify and hold Landlord harmless from
all loss, costs (including reasonable attorneys' fees) and liability resulting from such failure, including any claims
made by any succeeding tenant founded upon such failure to surrender, and any lost profits to Landlord resulting
therefrom.
23. Subordination to Mortgages; Estoppel Certificate. Tenant accepts this Lease subject and subordinate
to any mortgage(s), deed(s) of trust, ground lease(s) or other lien(s) now or subsequently arising upon the
Premises, the Building or the Property, and to renewals, modifications, refinancings and extensions thereof
(collectively referred to as a "Mortgage"). This clause shall be self -operative, but upon request from the holder of a
Mortgage (a "Mortgagee"), Tenant shall execute a commercially reasonable subordination, non -disturbance and
attornment agreement. As an alternative, a Mortgagee shall have the right at any time to subordinate its Mortgage
to this Lease. Upon request, Tenant shall, without charge, attorn to any successor to Landlord's interest in this
Lease. Tenant shall, within 10 days after receipt of a written request from Landlord, execute and deliver a
commercially reasonable estoppel certificate to those parties as are reasonably requested by Landlord.
24. Financial Statements. Prior to the execution of this Lease by Landlord and at any time during the Term of
this Lease upon ten (10) business days prior written notice from Landlord, Tenant agrees to provide Landlord with a
current financial statement for Tenant and any guarantors of Tenant and financial statements for the two (2) years
prior to the current financial statement year for Tenant and any guarantors of Tenant. Such statements are to be
prepared in accordance with generally accepted accounting principles and, if such is the normal practice of Tenant,
audited by an independent certified public accountant. Landlord agrees to keep such financial statements
confidential, as more particularly set forth in Section 27.09 (Confidentiality) below.
25. Notice. All demands, approvals, consents or notices shall be in writing and delivered by hand or sent by
registered or certified mail with return receipt requested, or sent by overnight or same day courier service at the
party's respective Notice Address(es) set forth in Section 1. Each notice shall be deemed to have been received on
the earlier to occur of actual delivery or the date on which delivery is refused, or, if Tenant has vacated the
Premises or any other Notice Address without providing a new Notice Address, 3 days after notice is deposited in
the U.S. mail or with a courier service in the manner described above. Either party may, at any time, change its
Notice Address (other than to a post office box address) by giving the other party written notice of the new address.
26. Surrender of Premises. At the termination of this Lease or Tenant's right of possession, Tenant shall
remove Tenant's Property and any designated Required Removables from the Premises, and quit and surrender
the Premises to Landlord, broom clean, and in good order, condition and repair, ordinary wear and tear and
damage which Landlord is obligated to repair hereunder excepted. If Tenant fails to remove any of Tenant's
Property within 2 days after termination, Landlord, at Tenant's sole cost and expense, shall be entitled to remove
and store Tenant's Property. Landlord shall not be responsible for the value, preservation or safekeeping of
Tenant's Property. Tenant shall pay Landlord, upon demand, the reasonable expenses and storage charges
incurred. If Tenant fails to remove Tenant's Property from the Premises or storage within 30 days after notice,
Landlord may deem all or any part of Tenant's Property to be abandoned and title to Tenant's Property shall vest in
Landlord. If Tenant fails to remove any of the designated Required Removables by the Expiration Date or perform
related repairs in a timely manner, Landlord may perform such work at Tenant's expense, and Tenant shall be
deemed to be in holdover of the Premises pursuant to Section 22 above during the reasonable period of time
required for the removal of Tenant's Property.
27. Miscellaneous.
27.01 Costs and Expenses; No Waiver. If either party institutes a suit against the other for violation of or
to enforce any covenant, term or condition of this Lease, the prevailing party shall be entitled to all of its costs and
expenses, including, without limitation, reasonable attorneys' fees. Landlord and Tenant hereby waive any right to
trial by jury in any proceeding based upon a breach of this Lease. Either party's failure to declare a default
immediately upon its occurrence, or delay in taking action for a default shall not constitute a waiver of the default,
nor shall it constitute an estoppel.
27.02 Force Majeure. Whenever a period of time is prescribed for the taking of an action by Landlord or
Tenant (other than the payment of the Security Deposit or Rent), the period of time for the performance of such
action shall be extended by the number of days that the performance is actually delayed due to strikes, acts of God,
shortages of labor or materials, war, terrorist acts, civil disturbances and other causes beyond the reasonable
control of the performing party ("Force Majeure"). Force Majeure shall not include financial difficulties of the party
required to perform.
27.03 Transfer By Landlord, Landlord shall have the right to transfer and assign, in whole or in part, all of
its ownership interest, rights and obligations in the Building, Property or Lease, including the Security Deposit, and
upon transfer and the assumption (by operation of law or otherwise) of Landlord's obligations under this Lease by
any such transferee effective as of the date of transfer, Landlord shall be released from any further obligations
hereunder, and Tenant agrees to look solely to the successor -in -interest of Landlord for the performance of such
obligations and the return of any Security Deposit to the extent so transferred.
27.04 Submission of Lease; Claims By Brokers. Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or an option for lease, and it is not effective as a lease or
otherwise until execution and delivery by both Landlord and Tenant. Each party represents to the other party that it
has dealt directly with and only with the Broker as a broker in connection with this Lease. Tenant shall indemnify
and hold Landlord and the Landlord Related Parties harmless from all claims of any other brokers claiming to have
represented Tenant in connection with this Lease. Notwithstanding the foregoing, Landlord shall pay any
commission or finder's fee due to the Brokers in connection with this Lease, pursuant to a separate written
agreement.
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27.05 Survival of Obligations. The expiration of the Term, whether by lapse of time, termination or
otherwise, shall not relieve either party of any obligations which accrued prior to or which may continue to accrue
after the expiration or termination of this Lease.
27.06 Quiet Enloyment: Binding Covenants. Tenant shall, and may peacefully have, hold and enjoy the
Premises, subject to the terms of this Lease, provided Tenant pays the Rent and fully performs all of its covenants
and agreements. This covenant and all other covenants of Landlord shall be binding upon Landlord and its
successors only during its or their respective periods of ownership of the Building.
27.07 Entire Agreement. This Lease constitutes the entire agreement between the parties and
supersedes all prior agreements and understandings related to the Premises. This Lease may be modified only by
a written agreement signed by Landlord and Tenant. This Lease shall be interpreted and enforced in accordance
with the Laws of the state or commonwealth in which the Building is located.
27.08 Authority: PATRIOT Act. Tenant represents and warrants to Landlord that each individual
executing this Lease on behalf of Tenant is authorized to do so on behalf of Tenant and that Tenant is not, and the
entities or individuals constituting Tenant or which may own or control Tenant or which may be owned or controlled
by Tenant are not, among the individuals or entities identified on any list compiled pursuant to Executive Order
13224 for the purpose of identifying suspected terrorists. Landlord represents and warrants to Tenant that each
individual executing this Lease on behalf of Landlord is authorized to do so on behalf of Landlord and that Landlord
is not, and the entities or individuals constituting Landlord or which may own or control Landlord or which may be
owned or controlled by Landlord are not, among the individuals or entities identified on any list compiled pursuant to
Executive Order 13224 for the purpose of identifying suspected terrorists.
27,09 Confidentiality. Tenant acknowledges that the content of this Lease and any related documents
are confidential information. Tenant shall keep such confidential information strictly confidential and shall not
disclose such confidential information to any person or entity other than Tenant's financial, legal, and space
planning consultants, provided, however, that Tenant may disclose the terms to prospective subtenants or
assignees under this Lease or pursuant to a legal requirement. Landlord agrees to keep confidential any financial
or other proprietary information received from Tenant and identified by Tenant as confidential at the time of delivery
thereof, other than disclosure to Landlord's financial or legal advisors, lenders and investors and shall, prior to or
concurrently with the delivery of such information, direct such financial or legal advisors, lenders and investors to
keep such financial or other proprietary information confidential. The foregoing shall be subject to any obligations
either party may have to make disclosures to comply with laws or rulings of a court or governmental body. The
terms of this Section 27.09 shall survive the expiration or earlier termination of this Lease.
28. Parking.
28.01 Tenant's Parking Passes. During the Term of this Lease, Tenant shall purchase from Landlord, the
number of parking passes specified in the Basic Lease Information hereof (it being acknowledged that the
Unreserved Parking Passes shall be at no cost to Tenant during the initial Term) for use by Tenant's employees in
the common parking areas for the Building within the Property, as designated by Landlord from time to time.
Landlord shall at all times have the right to establish and modify the nature and extent of the parking areas for the
Building and Property (including whether such areas shall be surface, underground and/or other structures) as long
as Tenant is provided the number of parking passes designated in the Basic Lease Information. In addition,
Landlord may, in its sole discretion, assign any unreserved and unassigned parking spaces, and/or make all or a
portion of such spaces reserved as long as Tenant is provided the number of parking passes designated in the
Basic Lease Information.
28.02 Visitor Parking _Ch_arges. In addition to such parking passes for use by Tenant's employees,
Landlord shall permit access to the parking areas for Tenant's visitors, subject to availability of spaces and payment
(by validation charges or otherwise) of daily visitor parking charges therefor as may be established and adjusted by
Landlord from time to time. Although there are currently no daily visitor parking charges, Landlord reserves the
right to impose such charges in the future.
28.03 Parking Rules. The use of the parking areas shall be subject to any reasonable, non-discriminatory
rules and regulations adopted by Landlord and/or Landlord's parking operators from time to time, including any
system for controlled ingress and egress and charging visitors and invitees, with appropriate provision for validation
of such charges. Tenant shall not use more parking spaces than its allotment and shall not use any parking spaces
specifically assigned by Landlord to other tenants of the Building or Property or for such other uses as visitor
parking. Tenant's parking passes shall be used only for parking by vehicles no larger than normally sized
passenger automobiles or pick-up trucks. Tenant shall not permit or allow any vehicles that belong to or are
controlled by Tenant or Tenant's employees, suppliers, shippers, customers or invitees to be loaded, unloaded, or
parked in areas other than those designated by Landlord for such activities. If Tenant permits or allows any of the
prohibited activities described herein, including, without limitation, parking in spaces designated as reserved
spaces, illegal parking, and any non-compliance with posted signage, then Landlord shall have the right, without
notice, in addition to such other rights and remedies that it may have, to remove or tow away the vehicle involved
and charge the cost thereof to Tenant, which cost shall be immediately payable by Tenant upon demand by
Landlord.
29. Joint and Several Obligations. if more than 1 person executes this Lease as Tenant, their execution of
this Lease will constitute their covenant and agreement that (i) each of them is jointly and severally liable for the
keeping, observing and performing of all of the terms, covenants, conditions, provisions and agreements of this
Lease to be kept, observed and performed by Tenant, and (ii) the term "Tenant" as used in this Lease means and
includes each of them jointly and severally. The act of or notice from, or notice or refund to, or the signature of any
1 or more of them, with respect to the tenancy of this Lease, including, but not limited to, any renewal, extension,
expiration, termination or modification of this Lease, will be binding upon each and all of the persons executing this
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Lease as Tenant with the same force and effect as if each and all of them had so acted or so given or received
such notice or refund or so signed.
30. Counterparts; Electronic Delivery. This Lease may be executed in one or more counterparts, each of
which shall constitute an original and all of which shall be one and the same agreement. The parties may
exchange counterpart signatures by facsimile or electronic transmission and the same shall constitute delivery of
this Lease with respect to the delivering party. If a variation or discrepancy among counterparts occurs, the copy of
this Lease in Landlord's possession shall control.
31. Hazardous Substance Disclosure. California law requires landlords to disclose to tenants the existence
of certain Hazardous Materials (hereinafter defined), As used herein, "Hazardous Materials" means any chemical,
substance, material, controlled substance, object, condition, waste, living organism or combination thereof, whether
solid, semi -solid, liquid or gaseous, which is or may be hazardous to human health or safety or to the environment
due to its radioactivity, ignitability, corrosivity, reactivity, explosivity, toxicity, carcinogenicity, mutagenicity,
phytotoxicity, infectiousness or other harmful or potentially harmful properties or effects, including, without
limitation, tobacco smoke, petroleum and petroleum products, asbestos, radon, polychlorinated biphenyls (PCBs),
refrigerants (including those substances defined in the Environmental Protection Agency's "Refrigerant Recycling
Rule", as amended from time to time) and all of those chemicals, substances, materials, controlled substances,
objects, conditions, wastes, living organisms or combinations thereof which are now or become in the future listed,
defined or regulated in any manner by any Laws, rules or regulations governing Hazardous Materials based upon,
directly or indirectly, such properties or effects. Accordingly, the existence of gasoline and other automotive fluids,
asbestos containing materials, maintenance fluids, copying fluids and other office supplies and equipment, certain
construction and finish materials, tobacco smoke, cosmetics and other personal items must be disclosed. Gasoline
and other automotive fluids are found in the parking areas of the Property. Cleaning, lubricating and hydraulic
fluids used in the operation and maintenance of the Building are found in the utility areas of the Building not
generally accessible to Building occupants or the public. Many Building occupants use copy machines and printers
with associated fluids and toners, and pens, markers, inks, and office equipment that may contain Hazardous
Materials. Certain adhesives, paints and other construction materials and finishes used in portions of the Building
may contain Hazardous Materials. The Building may from time to time be exposed to tobacco smoke. Building
occupants and other persons entering the Building from time to time may use or carry prescription and non-
prescription drugs, perfumes, cosmetics and other toiletries, and foods and beverages, some of which may contain
Hazardous Materials. By its execution of this Lease, Tenant acknowledges that the notice set forth hereinabove
shall constitute the notice required under California Health and Safety Code Section 25915.5. Tenant further
acknowledges the disclosure by Landlord set forth on Exhibit F attached hereto.
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Landlord and Tenant have executed this Lease as of the day and year first above written.
LANDLORD:
WESTERN NATIONAL LIFE INSURANCE COMPANY,
a Texas corporation
By: AIG Asset Management (U.S.), LLC,
a Delaware limited liability company
Its investment adviser
By: LPC West, LLC
a Delaware limited liability company
its manager
TENANT:
By:
Ke es
It : '"b`enior Vice President —Southern California
DRE # 01414126
BL DRE # 01305666
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EXHIBIT A
OUTLINE AND LOCATION OF PREMISES
SUITE 650 1 5,245 S.F.
TENANT'S INITIALS HERE: W Aff
Exhibit A is intended only to show the general layout of the Premises. It does not in any way supersede any of
Landlord's rights with respect to arrangements and/or locations of public parts of the Building and changes in such
arrangements and/or locations. It is not to scale; any measurements or distances shown should be taken as
approximate.
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EXHIBIT B
EXPENSES AND TAXES
This Exhibit is attached to and made a part of the Lease by and between WESTERN NATIONAL LIFE
INSURANCE COMPANY, a Texas corporation ("Landlord") and PEREGRINE REALTY PARTNERS, INC., a
California corporation ("Tenant") for space in the Building located at 1201 Dove Street, Newport Beach, California
92660.
Payments.
1.01 Tenant shall pay Tenant's Pro Rata Share of the amount, if any, by which Expenses (defined
below) for each calendar year during the Term exceed Expenses for the Base Year (the "Expense Excess") and
also the amount, if any, by which Taxes (defined below) for each calendar year during the Term exceed Taxes for
the Base Year (the "Tax Excess"). If Expenses or Taxes in any calendar year decrease below the amount of
Expenses or Taxes for the Base Year, Tenant's Pro Rata Share of Expenses or Taxes, as the case may be, for that
calendar year shall be $0. Landlord shall provide Tenant with a good faith estimate of the Expense Excess and of
the Tax Excess for each calendar year during the Term. On or before the first day of each month, Tenant shall pay
to Landlord a monthly installment equal to one -twelfth of Tenant's Pro Rata Share of Landlord's estimate of both the
Expense Excess and Tax Excess. After its receipt of the revised estimate, Tenant's monthly payments shall be
based upon the revised estimate. If Landlord does not provide Tenant with an estimate of the Expense Excess or
the Tax Excess by January 1 of a calendar year, Tenant shall continue to pay monthly installments based on the
previous year's estimate(s) until Landlord provides Tenant with the new estimate.
1.02 As soon as is practical following the end of each calendar year, Landlord shall furnish Tenant with
a statement including reasonable line item detail of the actual Expenses and Expense Excess and the actual Taxes
and Tax Excess for the prior calendar year. Landlord shall endeavor to deliver such statement by no later than May
1 of each calendar year. If the estimated Expense Excess or estimated Tax Excess for the prior calendar year is
more than the actual Expense Excess or actual Tax Excess, as the case may be, for the prior calendar year,
Landlord shall either provide Tenant with a refund or apply any overpayment by Tenant against Additional Rent due
or next becoming due, provided if the Term expires before the determination of the overpayment, Landlord shall
refund any overpayment to Tenant after first deducting the amount of Rent due. If the estimated Expense Excess
or estimated Tax Excess for the prior calendar year is less than the actual Expense Excess or actual Tax Excess,
as the case may be, for such prior year, Tenant shall pay Landlord, within 30 days after its receipt of the statement
of Expenses or Taxes, any underpayment for the prior calendar year.
Expenses.
2.01 "Expenses" means all costs and expenses incurred in each calendar year in connection with
operating, maintaining, repairing, and managing the Building and the Property and shall be consistent with
generally accepted commercial office building accounting practices in place at other comparable office buildings
located within the vicinity of the Building. Expenses include, without limitation: (a) all labor and labor related costs,
including wages, salaries, bonuses, taxes, insurance, uniforms, training, retirement plans, pension plans and other
employee benefits; (b) the cost of equipping, staffing and operating an on -site and/or off -site management office for
the Building, provided if the management office services 1 or more other buildings or properties, the shared costs
and expenses of equipping, staffing and operating such management office(s) shall be equitably prorated and
apportioned between the Building and/or the other buildings or properties within or outside the Building, as
applicable; (c) accounting costs; (d) the cost of services; (e) rental and purchase cost of parts, supplies, tools and
equipment; (f) insurance premiums and deductibles; (g) electricity, gas and other utility costs; (h) a commercially
reasonable administration and overhead fee (i) a commercially reasonable property management fee and 0) the
amortized cost of capital improvements (as distinguished from replacement parts or components installed in the
ordinary course of business) made subsequent to the Base Year in order to comply with applicable laws first
becoming effective following the Commencement Date, or to achieve costs savings in the operation of the Building.
The cost of capital improvements shall be amortized by Landlord over the lesser of the Payback Period (defined
below) or the useful life of the capital improvement as reasonably determined by Landlord in a manner consistent
with generally accepted commercial office building accounting practices in place at other comparable office
buildings within the vicinity of the Building. The amortized cost of capital improvements may, at Landlord's option,
include actual or imputed interest at the rate that Landlord would reasonably be required to pay to finance the cost
of the capital improvement. "Payback Period" means the reasonably estimated period of time that it takes for the
cost savings resulting from a capital improvement to equal the total cost of the capital improvement. Landlord, by
itself or through an affiliate, shall have the right to directly perform, provide and be compensated for any services
under this Lease, provided the costs thereof are competitive with the costs charged by third parties in the area. If
Landlord incurs Expenses for the Building or the Property together with 1 or more other buildings or properties,
whether pursuant to a reciprocal easement agreement, common area agreement or otherwise, the shared costs
and expenses shall be equitably prorated and apportioned between the Building, and the Property, and the other
buildings or properties.
2.02 Expenses shall not include: depreciation; ground rent (if applicable) by the Landlord or principal
payments of mortgage and other non -operating debts of Landlord; the cost of repairs or other work to the extent
Landlord is reimbursed by insurance or condemnation proceeds; costs in connection with leasing space in the
Building, including marketing costs, legal fees, design and construction costs for tenant improvements and
brokerage commissions; lease concessions, rental abatements and construction allowances granted to specific
tenants; costs incurred in connection with the sale, financing or refinancing of the Property; fines, interest and
penalties incurred due to the late payment of Taxes or Expenses; organizational expenses associated with the
creation and operation of the entity which constitutes Landlord; the costs of repairs to the Building, if the costs of
such repairs is reimbursed by the insurance carried by Landlord or subject to award under any eminent domain
proceeding; any costs which are paid by any tenant directly to third parties or as to which Landlord is otherwise
reimbursed by any other tenant, third party or insurance proceeds; electric, gas or other power costs for with
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Landlord has been directly reimbursed by another tenant or occupant of the Building, or for which any tenant
directly contracts with the local public service company; any bad debt loss, rent loss, or reserves for bad debts or
rent loss; expenditures which are considered capital expenditures in accordance with generally accepted
commercial office building accounting practices and not included within Expenses permitted under Section 2.01
above; costs, including attorneys' fees and settlement judgments and/or payments in lieu thereof, arising from
actual or potential claims, disputes, litigation or arbitration pertaining to Landlord and/or the Property (and not
arising out of any act or omission of Tenant); any penalties or damages that Landlord pays to Tenant under this
Lease or to other tenants in the Building under their respective leases; or the wages and benefits of any employee
who does not devote substantially all of his or her employed time to the Property unless such wages and benefits
are prorated to reflect time spent on operating and managing the Property vis-a-vis time spent on matters unrelated
to operating and managing the Property, provided that in no event shall Expenses include wages and/or benefits
attributable to personnel above the level of Portfolio Manager.
2.03 If at any time during a calendar year the Building is not at least 95% occupied or Landlord is not
supplying services to at least 95% of the total Rentable Square Footage of the Building, Expenses shall, at
Landlord's option, be determined as if the Building had been 95% occupied and Landlord had been supplying
services to 95% of the Rentable Square Footage of the Building. If Expenses for a calendar year are determined
as provided in the prior sentence, Expenses for the Base Year shall also be determined in such manner.
3. "Taxes" shall mean: (a) all real property taxes and other assessments on the Building, and/or Property,
including, but not limited to, gross receipts taxes, assessments for special improvement districts and building
improvement districts, governmental charges, fees and assessments for police, fire, traffic mitigation or other
governmental service of purported benefit to the Property, taxes and assessments levied in substitution or
supplementation in whole or in part of any such taxes and assessments and the Property's share of any real estate
taxes and assessments under any reciprocal easement agreement, common area agreement or similar agreement
as to the Property; (b) all personal property taxes for property that is owned by Landlord and used in connection
with the operation, maintenance and repair of the Property; and (c) all reasonable costs and fees incurred in
connection with seeking reductions in any tax liabilities described in (a) and (b), including, without limitation, any
costs incurred by Landlord for compliance, review and appeal of tax liabilities. Without limitation, Taxes shall not
include any income, capital levy, capital stock, gift, estate or inheritance tax. If a change in Taxes is obtained for
any year of the Term during which Tenant paid Tenant's Pro Rata Share of any Tax Excess, then Taxes for that
year will be retroactively adjusted and Landlord shall provide Tenant with a credit, if any, based on the adjustment.
Likewise, if a change is obtained for Taxes for the Base Year, Taxes for the Base Year shall be restated and the
Tax Excess for all subsequent years shall be recomputed. Tenant shall pay Landlord the amount of Tenant's Pro
Rata Share of any such increase in the Tax Excess within 30 days after Tenant's receipt of a statement from
Landlord.
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we
EXHIBIT C
WORK LETTER
This Exhibit is attached to and made a part of the Lease by and between WESTERN NATIONAL LIFE
INSURANCE COMPANY, a Texas corporation ("Landlord") and PEREGRINE REALTY PARTNERS, INC., a
California corporation ("Tenant") for space in the Building located at 1201 Dove Street, Newport Beach, California
92660.
Subject to and in accordance with the terms of the Lease and this Work Letter, Landlord shall cause its
contractors to complete improvements in the Premises in accordance with plans and specifications (and an
estimate of the costs to complete such improvements in accordance with such plans and specifications) to
be agreed upon by Landlord and Tenant in writing following the execution and delivery of this Lease
("Approved Plans"). The work to be performed by Landlord pursuant to the Approved Plans shall be
performed using Building standard methods, materials and finishes, and shall be hereinafter referred to as
the "Landlord Work". Notwithstanding anything to the contrary herein, Tenant acknowledges and agrees
that Landlord shall not be obligated to pay more than $78,675.D0 (calculated at a rate of $15.00 per
rentable square foot of the Premises) (the "Allowance") to complete the Landlord Work, and Tenant shall
pay to Landlord (within five (5) business days after invoice therefor) the amount of any actual and
reasonable costs incurred by Landlord to complete the Landlord Work in excess of the Allowance. It is
further understood and agreed that in no event shall the Allowance be used or applied to costs of design
and construction of any server rooms, computer or phone rooms, and/or any other improvements with non -
Building standard improvements, materials and/or quantities (collectively, the "Overstandard
Improvements"), and all costs relating to designing and constructing such Overstandard Improvements will
be at Tenant's sole cost and expense and shall require Landlord's prior approval. Prior to commencement
of construction of the Landlord Work, Tenant shall pay to Landlord all costs related to the Overstandard
Improvements, and the expected costs of the Landlord Work exceeding the Allowance. The costs of the
Landlord Work shall include any and all architectural fees, engineering fees, city permits, a general
contractor's fee, and a construction management fee paid to Landlord's construction manager in the
amount of five percent (5%) of the total cost of the Landlord Work,
2. Following completion of the Landlord Work pursuant to this Work Letter, Landlord shall notify Tenant, upon
Tenant's written request, of the remaining balance of the Allowance (the "Remaining Balance"). Landlord
hereby grants Tenant the right to utilize the Remaining Balance for Tenant's reasonable and actual moving
and relocation expenses from its existing premises to the Premises, costs incurred by Tenant in connection
to the installation of cabling or wiring within the Premises, costs by Tenant to purchase furniture for the
Premises and any costs associated with Tenant's Monument Signage (as referred to in Exhibit E).
Landlord shall disburse to Tenant the Remaining Balance within thirty (30) days following Landlord's receipt
and approval of: (i) Tenant's written request for disbursement of the Remaining Balance; (ii) copies of paid
invoices, and (III) if applicable, lien releases. Further, Tenant must request disbursement of the Remaining
Balance by no later than April 30, 2014 (the "Request Deadline"). If any portion of the Remaining Balance
has not been properly requested by the Request Deadline, such balance shall be deemed forfeited by
Tenant and Tenant shall have no further rights with respect thereto. Tenant confirms and agrees that upon
a default by Tenant under the terms of the Lease, Landlord shall be entitled to retain all or any portion of
furniture purchased by Tenant with the Remaining Balance as referenced herein, such election to be made
by written notice to Tenant at the expiration or earlier termination of the Term of the Lease. In this regard,
Tenant hereby grants to Landlord a security interest in and to such furniture, and confirms that Landlord
may file such documents as may be necessary to perfect such security interest.
3. Landlord's supervision or performance of any work for or on behalf of Tenant shall not be deemed to be a
representation by Landlord that such work complies with applicable insurance requirements, building
codes, ordinances, Laws or regulations or that the improvements constructed will be adequate for Tenant's
use.
5. Notwithstanding anything herein to the contrary, any delay in the completion of the Landlord Work or
inconvenience suffered by Tenant during the performance of the Landlord Work shall not delay the
Commencement Date nor shall it subject Landlord to any liability for any loss or damage resulting
therefrom or entitle Tenant to any credit, abatement or adjustment of Rent or other sums payable under the
Lease.
6. The Landlord Work shall not include any of Tenant's trade fixtures, equipment, furniture, furnishings,
telephone and data equipment, or other personal property. Tenant shall assume full responsibility to
ensure that all items associated with the Landlord Work are adequate to fully meet the requirements of
Tenant's intended use of the Premises.
7. Tenant understands that the Landlord Work may be performed during Tenant's occupancy and use of the
Premises, and may result in inconvenience to Tenant (including noise, vibration and displacement from
portions of the Premises from time to time). Tenant will fully cooperate with Landlord's efforts to efficiently
complete the Landlord Work by, among other things, vacating portions of the Premises from time to time to
permit work to proceed, and by moving any furniture or personal property within the Premises that is
necessary for the completion of the Landlord Work. Landlord will make reasonable efforts to minimize the
inconvenience and disturbance caused by the Landlord Work, but is not responsible for business
interruption or damage to property which results from the Landlord Work. Tenant shall also be responsible
to pay for additional costs incurred by Landlord if Tenant requests or requires that any of the Landlord Work
be done during other than normal business hours or If Tenant request or requires that Landlord delay any
portion(s) of the Landlord Work.
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9. In addition to completing Landlord Work, Landlord shall also cause the following work to completed at
Landlord's sole cost and expense (and not charged against the Allowance): (i) remove and replace all
exterior and interior glass -window tints on the windows of the 61h floor of the Building within 30 days
following full execution and delivery of this Lease; and (ii) provide new common area finishes on the 6th
floor of the Building using Building standard finishes and colors, within twelve (12) months following full
execution and delivery of this Lease. Landlord have no responsibility or for any reason be liable to Tenant
for any direct or indirect injury to or interference with Tenant's business arising from the work set forth in
this Section 9, nor shall Tenant be entitled to any compensation or damages from Landlord for loss of the
use of the whole or any part of the Premises or of Tenant's personal property or improvements resulting
from such work or Landlord's actions in connection with such work, or for any inconvenience or annoyance
occasioned by such work or Landlord's actions in connection with such work.
10. This Exhibit shall not be deemed applicable to any additional space added to the Premises at any time or
from time to time, whether by any options under the Lease or otherwise, or to any portion of the original
Premises or any additions to the Premises in the event of a renewal or extension of the original Term of the
Lease, whether by any options under the Lease or otherwise, unless expressly so provided in the Lease or
any amendment or supplement to the Lease.
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EXHIBIT D
BUILDING RULES AND REGULATIONS
The following rules and regulations shall apply, where applicable, to the Premises, the Building, the parking
areas/garage, the Property and the appurtenances. In the event of a conflict between the following rules and
regulations and the remainder of the terms of the Lease, the remainder of the terms of the Lease shall control.
Capitalized terms have the same meaning as defined in the Lease.
Sidewalks, doorways, vestibules, halls, stairways and other similar areas shall not be obstructed by Tenant
or used by Tenant for any purpose other than ingress and egress to and from the Premises. No rubbish,
litter, trash, or material shall be placed, emptied, or thrown in those areas. At no time shall Tenant permit
Tenant's employees to loiter in Common Areas or elsewhere about the Building or Property.
2. Plumbing fixtures and appliances shall be used only for the purposes for which designed, and no
sweepings, rubbish, rags or other unsuitable material shall be thrown or placed in the fixtures or
appliances. Damage resulting to fixtures or appliances by Tenant, its agents, employees or invitees, shall
be paid for by Tenant, and Landlord shall not be responsible for the damage.
3. No signs, advertisements or notices shall be painted or affixed to windows, doors or other parts of the
Building, except those of such color, size, style and in such places as are first approved in writing by
Landlord. Except as set forth in Section 32 of Exhibit E attached to the Lease, all tenant identification and
suite numbers at the entrance to the Premises shenstalled by Landlord, at Tenant's cost and expense,
using the standard graphics for the Building. Except in connection with the hanging of lightweight pictures
and wall decorations, no nails, hooks or screws shall be inserted into any part of the Premises or Building
except by the Building maintenance personnel without Landlord's prior approval, which approval shall not
be unreasonably withheld.
4. Landlord may provide and maintain in the first floor (main lobby) of the Building an alphabetical directory
board or other directory device listing tenants, and no other directory shall be permitted unless previously
consented to by Landlord in writing.
5. Tenant shall not place any lock(s) on any door, or install any security system (including, without limitation,
card key systems, alarms or security cameras), in the Premises or Building without Landlord's prior written
consent, which consent shall not be unreasonably withheld, and Landlord shall have the right to retain at all
times and to use keys or other access codes or devices to all locks and/or security system within and into
the Premises. A reasonable number of keys to the locks on the entry doors in the Premises shall be
furnished by Landlord to Tenant at Tenant's cost, and Tenant shall not make any duplicate keys. All keys
shall be returned to Landlord at the expiration or early termination of this Lease. Further, if and to the
extent Tenant re -keys, re -programs or otherwise changes any locks at the Building, Tenant shall be
obligated to restore all such locks and key systems to be consistent with the master lock and key system at
the Building, all at Tenant's sole cost and expense.
6. All contractors, contractor's representatives and installation technicians performing work in the Building
shall be subject to Landlord's prior approval, which approval shall not be unreasonably withheld, and shall
be required to comply with Landlord's standard rules, regulations, policies and procedures, which may be
revised from time to time.
7. Movement in or out of the Building of furniture or office equipment, or dispatch or receipt by Tenant of
merchandise or materials requiring the use of elevators, stairways, lobby areas or loading dock areas, shall
be restricted to hours reasonably designated by Landlord. Tenant shall obtain Landlord's prior approval by
providing a detailed listing of the activity. If approved by Landlord, the activity shall be under the
supervision of Landlord and performed in the manner required by Landlord. Tenant shall assume all risk
for damage to articles moved and injury to any persons resulting from the activity. If equipment, property,
or personnel of Landlord or of any other party is damaged or injured as a result of or in connection with the
activity, Tenant shall be solely liable for any resulting damage or loss.
8. Landlord shall have the right to approve the weight, size, or location of heavy equipment or articles in and
about the Premises, which approval shall not be unreasonably withheld. Damage to the Building by the
installation, maintenance, operation, existence or removal of Tenant's Property shall be repaired at
Tenant's sole expense.
9. Corridor doors, when not in use, shall be kept closed.
10, Tenant shall not: (i) make or permit any improper, objectionable or unpleasant noises or odors in the
Building, or otherwise materially interfere in any way with other tenants or persons having business with
them; (ii) solicit business or distribute, or cause to be distributed, in any portion of the Building, handbills,
promotional materials or other advertising; or (iii) conduct or permit other activities in the Building that
might, in Landlord's sole opinion, constitute a nuisance.
11. No animals, except those assisting handicapped persons, shall be brought into the Building or kept in or
about the Premises.
12. No inflammable, explosive or dangerous fluids or substances shall be used or kept by Tenant in the
Premises, Building or about the Property, except for those substances as are typically found in similar
premises used for general office purposes and are being used by Tenant in a safe manner and in
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accordance with all applicable Laws, rules and regulations. Tenant shall not, without Landlord's prior
written consent, use, store, install, spill, remove, release or dispose of, within or about the Premises or any
other portion of the Property, any asbestos -containing materials or any solid, liquid or gaseous material
now or subsequently considered toxic or hazardous under the provisions of 42 U.S.C. Section 9601 et sea.
or any other applicable environmental Laws which may now or later be in effect. Tenant shall comply with
all Laws pertaining to and governing the .use of these materials by Tenant, and shall remain solely liable for
the costs of abatement and removal.
13. Tenant shall not use or occupy the Premises in any manner or for any purpose which might injure the
reputation or impair the present or future value of the Premises or the Building. Tenant shall not use, or
permit any part of the Premises to be used, for lodging, sleeping or for any illegal purpose.
14. Tenant shall not take any action which would violate Landlord's labor contracts or which would cause a
work stoppage, picketing, labor disruption or dispute, or interfere with Landlord's or any other tenant's or
occupant's business or with the rights and privileges of any person lawfully in the Building ("Labor
Disruption"). Tenant shall take the actions necessary to resolve the Labor Disruption, and shall have
pickets removed and, at the request of Landlord, immediately terminate any work in the Premises that gave
rise to the Labor Disruption, until Landlord gives its written consent for the work to resume. Tenant shall
have no claim for damages against Landlord or any of the Landlord Related Parties, nor shall the
Commencement Date of the Term be extended as a result of the above actions.
15. Tenant shall not install, operate or maintain in the Premises or in any other area of the Building, electrical
equipment that would overload the electrical system beyond its capacity for proper, efficient and safe
operation as determined solely by Landlord. Tenant shall not furnish cooling or heating to the Premises,
Including, without limitation, the use of electronic or gas heating devices, portable coolers (such as "move
I cools") or space heaters, without Landlord's prior written consent. Tenant shall not use more than its
proportionate share of telephone lines and other telecommunication facilities available to service the
Building,
16. Tenant shall not operate or permit to be operated a coin or token operated vending machine or similar
device (including, without limitation, telephones, lockers, toilets, scales, amusement devices and machines
for sale of beverages, foods, candy, cigarettes and other goods), except for machines for the exclusive use
of Tenant's employees and invitees.
17. Bicycles and other vehicles are not permitted inside the Building or on the walkways outside the Building,
except in areas designated by Landlord.
18. Landlord may from time to time adopt systems and procedures for the security and safety of the Building,
its occupants, entry, use and contents. Tenant, its agents, employees, contractors, guests and invitees
shall comply with Landlord's systems and procedures.
19. Landlord shall have the right to prohibit the use of the name of the Building or any other publicity by Tenant
that in Landlord's sole opinion may impair the reputation of the Building or its desirability. Upon written
notice from Landlord, Tenant shall refrain from and discontinue such publicity immediately.
20. Neither Tenant nor its agents, employees, contractors, guests or invitees shall smoke or permit smoking in
the Common Areas, unless the Common Areas have been declared a designated smoking area by
Landlord, nor shall the above parties allow smoke from the Premises to emanate into the Common Areas
or any other part of the Building. Landlord shall have the right to designate the Building (including the
Premises) as a non-smoking building.
21. Landlord shall have the right to designate and approve standard window coverings for the Premises and to
establish rules to assure that the Building presents a uniform exterior appearance. Tenant shall ensure, to
the extent reasonably practicable, that window coverings are closed on windows in the Premises while they
are exposed to the direct rays of the sun.
22. Deliveries to and from the Premises shall be made only at the times, in the areas and through the
entrances and exits reasonably designated by Landlord. Tenant shall not make deliveries to or from the
Premises in a manner that might interfere with the use by any other tenant of its premises or of the
Common Areas, any pedestrian use, or any use which is inconsistent with good business practice.
23. The work of cleaning personnel shall not be hindered by Tenant after 5:30 P.M., and cleaning work may be
done at any time when the offices are vacant. Windows, doors and fixtures may be cleaned at any time.
Tenant shall provide adequate waste and rubbish receptacles to prevent unreasonable hardship to the
cleaning service.
PARKING RULES AND REGULATIONS
(I) Landlord reserves the right to establish and reasonably change the hours for the parking areas, on a non-
discriminatory basis, from time to time. Tenant shall not store or permit its employees to store any
automobiles in the parking areas without the prior written consent of the operator. Except for emergency
repairs, Tenant and its employees shall not perform any work on any automobiles while located in the
parking areas, or on the Property. If it is necessary for Tenant or its employees to leave an automobile in
the Parking Facility overnight, Tenant shall provide the operator with prior notice thereof designating the
license plate number and model of such automobile.
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(ii) Cars must be parked entirely within the stall lines painted on the floor, and only small cars may be parked
in areas reserved for small cars.
(iii) All directional signs and arrows must be observed.
(iv) The speed limit shall be 5 miles per hour.
(v) Parking spaces reserved for handicapped persons must be used only by vehicles properly designated.
(vi) Parking is prohibited in all areas not expressly designated for parking, including without limitation:
(a) areas not striped for parking
(b) aisles
(c) where "no parking" signs are posted
(d) ramps
(e) loading zones
(vii) Parking stickers, key cards or any other devices or forms of identification or entry supplied by the operator
shall remain the property of the operator. Such device must be displayed as requested and may not be
mutilated in any manner. The serial number of the parking identification device may not be obliterated.
Parking passes and devices are not transferable and any pass or device in the possession of an
unauthorized holder will be void.
(viii) Parking areas managers or attendants are not authorized to make or allow any exceptions to these Rules.
(ix) Every parker is required to park and lock his/her own car.
(x) Loss or theft of parking pass, identification, key cards or other such devices must be reported to Landlord
and to the parking areas manager immediately. Any parking devices reported lost or stolen found on any
authorized car will be confiscated and the illegal holder will be subject to prosecution. Lost or stolen
passes and devices found by Tenant or its employees must be reported to the office of the parking areas
immediately.
(xi) Washing, waxing, cleaning or servicing of any vehicle by the customer and/or his agents is prohibited.
Parking spaces may be used only for parking automobiles.
(xii) Tenant agrees to acquaint all persons to whom Tenant assigns a parking space with these Rules.
A. TENANT ACKNOWLEDGES AND AGREES THAT, TO THE FULLEST EXTENT PERMITTED BY LAW,
LANDLORD SHALL NOT BE RESPONSIBLE FOR ANY LOSS OR DAMAGE TO TENANT OR TENANT'S
PROPERTY (INCLUDING, WITHOUT LIMITATIONS, ANY LOSS OR DAMAGE TO TENANT'S
AUTOMOBILE OR THE CONTENTS THEREOF DUE TO THEFT, VANDALISM OR ACCIDENT) ARISING
FROM OR RELATED TO TENANT'S USE OF THE PARKING AREAS OR EXERCISE OF ANY RIGHTS
UNDER THIS PARKING AGREEMENT, WHETHER OR NOT SUCH LOSS OR DAMAGE RESULTS
FROM LANDLORD'S ACTIVE NEGLIGENCE OR NEGLIGENT OMISSION. THE LIMITATION ON
LANDLORD'S LIABILITY UNDER THE PRECEDING SENTENCE SHALL NOT APPLY HOWEVER TO
LOSS OR DAMAGE ARISING DIRECTLY FROM LANDLORD'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.
B. Without limiting the provisions of Paragraph A above, excluding claims and causes of action related to
Landlord's gross negligence or willful misconduct, Tenant hereby voluntarily releases, discharges, waives
and relinquishes any and all actions or causes of action for personal injury or property damage occurring to
Tenant arising as a result of parking in the parking areas or any activities incidental thereto, wherever or
however the same may occur, and further agrees that Tenant will not prosecute any claim for personal
injury or property damage against Landlord or any of its officers, agents, servants or employees for any
said causes of action. It is the intention of Tenant by this instrument, to exempt and relieve Landlord from
liability for personal injury or property damage caused by negligence. If Tenant fails to comply with the
parking rules and regulations set forth herein, Landlord shall have the right to take such action as may be
necessary to enforcement thereof, which may include the towing of vehicles, attachment of wheel
immobilizer units (boots) and the like.
C. The provisions of Section 28 of the Lease are hereby incorporated by reference as if fully recited.
By executing the Lease to which this Exhibit D is attached, Tenant acknowledges that it has read and
agreed to be bound by the forgoing Building Rules and Regulations. Tenant further confirms that it has
been fully and completely advised of the potential dangers incidental to parking in the parking areas and
the terms and conditions set forth above.
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EXHIBIT E
ADDITIONAL PROVISIONS
This Exhibit is attached to and made a part of the Lease by and between WESTERN NATIONAL LIFE
INSURANCE COMPANY, a Texas corporation ("Landlord") and PEREGRINE REALTY PARTNERS, INC., a
California corporation ("Tenant") for space in the Building located at 1201 Dove Street, Newport Beach, California.
32. Tenant's Signage; Building Directory. Tenant shall be entitled, at Landlord's sole cost and expense, to
one (1) Building standard suite identification sign on or near the entry doors of the Premises. Such sign shall be
installed by a signage contractor designated by Landlord. Additionally, subject to the approval of all applicable
governmental and quasi -governmental entities (including, without limitation, the City of Newport Beach, California)
and applicable covenants, conditions and restrictions, and subject to all applicable Laws and the terms hereof,
Landlord hereby grants Tenant the right, at Tenant's sole cost and expense, to install and maintain its name on one
(1) position of the existing monument sign for the Building (the "Monument Signage'). Tenant shall pay to
Landlord, within thirty (30) days after demand, from time to time, all other actual, documented and reasonable costs
attributable to the fabrication, request for government approval, installation, insurance, lighting (if applicable),
maintenance and repair of the Monument Signage to the extent not directly paid by Tenant. The location, quality,
design, style, lighting and size of such signs shall be consistent with the Landlord's Building standard signage
program and shall be subject to Landlord's prior written approval, in its reasonable discretion. Upon the expiration
or earlier termination of this Lease, Tenant shall be responsible, at its sole cost and expense, for the removal of
such signage and the repair of all damage to the Building and Property caused by such removal; provided that
should Tenant fail to remove such signage and repair all damage when required, Landlord shall have the right to do
so, and Tenant shall reimburse Landlord for the costs thereof. Except for such identification sign at the entry doors
of the Premises and the Monument Signage, Tenant may not install any signs on the exterior or roof of the Building
or the Common Areas. The signage right granted to Tenant under this Section 32 is personal to the original Tenant
executing this Lease, and may not be exercised or used by or assigned to any other person or entity. Any signs,
window coverings, or blinds (even if the same are located behind the Landlord approved window coverings for the
Building), or other items visible from the exterior of the Premises or Building are subject to the prior approval of
Landlord, in its sole and absolute discretion. Subject to availability, as determined by Landlord from time to time,
Landlord shall include Tenant's name and location in the Building on one (1) line on the Building directory board in
the main lobby of the Building.
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EXHIBIT F
ASBESTOS NOTIFICATION
This Exhibit is attached to and made a part of the Lease by and between WESTERN NATIONAL LIFE
INSURANCE COMPANY, a Texas corporation ("Landlord") and PEREGRINE REALTY PARTNERS, INC., a
California corporation ("Tenant") for space in the Building located at 1201 Dove Street, Newport Beach, California.
California law requires every owner of a commercial, industrial or multi -tenant building(s) to provide written notice
concerning the presence of asbestos containing construction materials in the building to its tenants, vendors and
contractors. In accordance with that requirement, this notice is to inform you that asbestos containing construction
materials are present in the Building referenced above. The presence of asbestos materials in buildings such as
this is not unusual. Because of its excellent fire retardant and acoustical insulation qualities, asbestos was
commonly used in buildings constructed prior to 1980.
The presence of asbestos materials has been confirmed by that certain Phase 1 Environmental Assessment for the
Building dated May 1, 2007, issued by EMG Corp (the "Phase I"). The Phase I included review of previous
environmental reports and Building records, and a Building inspection. Based on the Phase 1, asbestos -containing
materials ("ACM") were detected in the Drywall and associated finishing compounds (Chrysotile), Exterior Stucco
(Chrysotile), Flooring and mastic consisting of various styles, (Chrysotile), Spray -applied fire -proofing and ceiling
tile, TSI elbows, baseboard/mastic and roofing materials.
The mere presence of ACM does not necessarily present a health hazard. Hazards exist when asbestos materials
are damaged and fibers are released into the air. Exposure to airborne asbestos fibers can cause lung disease,
cancer and other serious illnesses. To prevent damage to asbestos containing materials, moving, drilling, boring,
penetrating ceiling or otherwise disturbing those materials should not be attempted; specifically, the following
precautions must be taken by all Building users at 1201 Dove Street, Newport Beach, California:
All Building and/or tenant vendors (telephone, cable, computer, contractors, etc.) must contact the
Building's property manager prior to commencing work in the Building.
At no time should any person disturb the ACM in the areas indicated above. If you believe there exists any
reason for you to go in these areas fisted above, DO NOT DO SO. Consult your property manager.
California law requires that contractors provide a copy of an asbestos notice to their sub -contractors and
employees working at the Building. You may therefore wish to send a copy of this notice to each of these persons.
California law also requires persons in the course of doing business whose activities may result in exposures to
asbestos and other substances regulated under the Safe Drinking and Toxic Enforcement Act of 1986, commonly
referred to as Proposition 65, to provide a clear and reasonable warning. Accordingly, you are advised as follows:
WARNING: The areas within the Building that are described above contain a substance known to the State
of California to cause cancer.
If you have any questions regarding this notice, you may contact the property manager.
[FINAL EXECUTION COPY] EXHIBIT F 1201 DOVE STREET
SMRH:407771509.5 -1- Peregrine Realty Partners, Inc.
012413 25WR-162219
8-33
RIDER NO. 1 TO OFFICE LEASE
EXTENSION OPTION RIDER
This Rider No. 1 is made and entered into by and between WESTERN NATIONAL LIFE
INSURANCE COMPANY, a Texas corporation ("Landlord"), and PEREGRINE REALTY PARTNERS, INC., a
California corporation ("Tenant"), as of the day and year of the Lease between Landlord and Tenant to which this
Rider is attached. Landlord and Tenant hereby agree that, notwithstanding anything contained in the Lease to the
contrary, the provisions set forth below shall be deemed to be part of the Lease and shall supersede any
inconsistent provisions of the Lease. All references in the Lease and in this Rider to the "Lease" shall be construed
to mean the Lease (and all exhibits and Riders attached thereto), as amended and supplemented by this Rider. All
capitalized terms not defined in this Rider shall have the same meaning as set forth in the Lease.
1. Landlord hereby grants to Tenant (1) option (the "Extension Option") to extend the Term of the
Lease for an additional period of sixty (60) months (the "Option Term"), on the same terms, covenants and
conditions as provided for in the Lease during the initial Term, except for the Monthly Base Rent, which shall equal
the "fair market rental rate" for the Premises for the Option Term as defined and determined in accordance with the
Fair Market Rental Rate Rider attached to the Lease as Rider No. 2 to Office Lease.
2. The Extension Option must be exercised, if at all, by written notice ("Extension Notice") delivered
by Tenant to Landlord no sooner than that date which is twelve (12) months and no later than that date which is
nine (9) months prior to the expiration of the then current term of the Lease. The Extension Option shall, at
Landlord's sole option, not be deemed to be properly exercised if, at the time the Extension Option is exercised or
on the scheduled commencement date for the Option Term, (a) Tenant has committed an uncured event of default
whose cure period has expired pursuant to Section 18 of the Lease, (b) Tenant has assigned all or any portion of
the Lease or its interest therein or sublet all or any portion of the Premises, or (c) Tenant's financial condition is not
sufficient, in Landlord's reasonable judgment, to perform the obligations of Tenant under the Lease during the
Option Term. Provided Tenant has properly and timely exercised the Extension Option, the then current term of the
Lease shall be extended by the Option Term, and all terms, covenants and conditions of the Lease shall remain
unmodified and in full force and effect, except that the Monthly Base Rent shall be as set forth above.
3. Tenant's Extension Option is further subject to the terms and conditions of Rider No. 3 attached
hereto.
[FINAL EXECUTION COPY] RIDER NO. 1 1201 DOVE STREET
SMRH:407771509.5 -1- Peregrine Realty Partners, Inc.
012413 25WR-162219
1
RIDER NO. 2 TO OFFICE LEASE
FAIR MARKET RENTAL RATE
This Rider No. 2 is made and entered into by and between WESTERN NATIONAL LIFE INSURANCE
COMPANY, a Texas corporation ("Landlord"), and PEREGRINE REALTY PARTNERS, INC., a California
corporation ("Tenant"), as of the day and year of the Lease between Landlord and Tenant to which this Rider is
attached. Landlord and Tenant hereby agree that, notwithstanding anything contained in the Lease to the contrary,
the provisions set forth below shall be deemed to be part of the Lease and shall supersede any inconsistent
provisions of the Lease. All references in the Lease and in this Rider to the "Lease" shall be construed to mean the
Lease (and all exhibits and Riders attached thereto), as amended and supplemented by this Rider. All capitalized
terms not defined in this Rider shall have the same meaning as set forth in the Lease.
1. The term "fair market rental rate" as used in the Lease and any Rider attached thereto shall mean
the annual amount per square foot, projected during the Option Term that a willing, non -equity renewal tenant
(excluding sublease and assignment transactions) would pay, and a willing, institutional landlord of a comparable
Class "A" office building located in the West Orange County market area (the "Comparison Area") would accept, in
an arm's length transaction (what Landlord is accepting in then current transactions for premises located in the
Building may be used for purposes of projecting rent for the Option Term), for space of comparable size, quality
and floor height as the Premises, taking into account the age, quality and layout of the existing improvements in the
Premises, and taking into account items that professional real estate brokers or professional real estate appraisers
customarily consider, including, but not limited to, rental rates, space availability, tenant size, tenant improvement
allowances, parking charges and any other lease considerations, if any, then being charged or granted by Landlord
or the lessors of such similar office buildings. All economic terms other than Monthly Base Rent, such as tenant
improvement allowance amounts, if any, operating expense allowances, parking charges, etc., will be established
by Landlord and will be factored into the determination of the fair market rental rate for the Option Term.
Accordingly, the fair market rental rate will be an effective rate, not specifically including, but accounting for, the
appropriate economic considerations described above. The fair market rental rate shall include the periodic rental
increases that would be included for space leased for the period of the Option Term.
2. In the event the determination of fair market rental rate is required under the Lease (as set forth in
Rider No. 1 above), Landlord shall provide written notice of Landlord's reasonable determination of the fair market
rental rate not later than ninety (90) days following Landlord's receipt of Tenant's Extension Notice. Tenant shall
have ten (10) business days after receipt of Landlord's notice of the fair market rental rate within which to accept
such fair market rental rate by delivering written notice ("Exercise Notice") thereof to Landlord. For purposes of
this Rider No. 2, the last day of such 10-day period shall be referred herein as the "Exercise Date". Tenant's
failure to deliver the Exercise Notice on or before the Exercise Date shall be deemed to constitute Tenant's waiver
of its Extension Option. Tenant shall have no right to object to the fair market rental rate provided by Landlord, and
if Tenant disagrees with Landlord's determination of the fair market rental rate but Landlord and Tenant are unable
to resolve such disagreement as to the fair market rental rate prior to the Exercise Date, then either (i) Tenant shall
accept Landlord's determination of the fair market rental rate by exercising its Extension Option by delivering
Tenant's Exercise Notice to Landlord on or before the Exercise Date, or (ii) Tenant shall be deemed to have
relinquished its Extension Option, in which event Tenant's Extension Option shall be null and void as of the
Exercise Date, and Landlord and Tenant shall have no further liability to the other under this Extension Rider.
[FINAL EXECUTION COPY] RIDER NO. 2 1201 DOVE STREET
SMRH:407771509.5 -1- Peregrine Realty Partners, Inc.
012413 25WR-162219
8-35
RIDER NO.3 TO OFFICE LEASE
OPTIONS IN GENERAL
This Rider No. 3 is made and entered into by and between WESTERN NATIONAL LIFE INSURANCE
COMPANY, a Texas corporation ("Landlord"), and PEREGRINE REALTY PARTNERS, INC., a California
corporation ("Tenant"), as of the day and year of the Lease between Landlord and Tenant to which this Rider is
attached. Landlord and Tenant hereby agree that, notwithstanding anything contained in the Lease to the contrary,
the provisions set forth below shall be deemed to be part of the Lease and shall supersede any inconsistent
provisions of the Lease. All references in the Lease and in this Rider to the "Lease" shall be construed to mean the
Lease (and all exhibits and Riders attached thereto), as amended and supplemented by this Rider. All capitalized
terms not defined in this Rider shall have the same meaning as set forth in the Lease.
(a) Definition. As used in this Lease and any Rider or Exhibit attached hereto, the word "Option"
shall mean all options granted to Tenant under the Lease, including the Extension Option pursuant to Rider No. 9
attached hereto.
(b) Option Personal. The Option granted to Tenant is personal to the original Tenant executing this
Lease (the "Original Tenant") and may be exercised only by the Original Tenant while occupying the entire
Premises and without the intent of thereafter assigning this Lease or subletting the Premises and may not be
exercised or be assigned, voluntarily or involuntarily, by any person or entity other than the Original Tenant. The
Option granted to Tenant under this Lease is not assignable separate and apart from this Lease, nor may the
Option be separated from this Lease in any manner, either by reservation or otherwise.
(c) Effect of Default on Options. Tenant will have no right to exercise any Option, notwithstanding
any provision of the grant of option to the contrary, and Tenant's exercise of any Option may be nullified by
Landlord and deemed of no further force or effect, if (i) Tenant is in default of any monetary obligation or material
non -monetary obligation under the terms of this Lease beyond any applicable grace or cure period as of Tenant's
exercise of the Option in question or at any time after the exercise of any such Option and prior to the
commencement of the Option event, or (ii) Landlord has given Tenant two (2) or more notices of Default, whether
or not such Defaults are subsequently cured, during any twelve (12) consecutive month period of this Lease.
(d) Option as Economic Term. The Option is hereby deemed an economic term which Landlord, in
its sole and absolute discretion, may or may not offer in conjunction with any future extensions of the Term.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
[FINAL EXECUMN COPY] RIDER NO. 3 12D1 DOVE STREET
SMRH:407771569.5 -1- Peregrine Realty Premises, Inc.
012413 25WR-162219
1
DocuSign Envelope ID: EAC7DFDA-3282-482E-A39B-779CB4C1E035
FIRST AMENDMENT TO OFFICE LEASE
TTM6WT AMENDMENT TO OFFICE LEASE (this "Amendment") is made and entered
into as of , 2018, by and between BRE/OC PROPERTY HOLDINGS L.L.C., a
Delaware limited liability company ("Landlord"), and PEREGRINE REALTY PARTNERS, INC.,
a California corporation ("Tenant").
RECITALS
A. Landlord (as successor in interest to Western National Life Insurance Company, a Texas
corporation) and Tenant are parties to that certain office lease agreement dated January 24, 2013 (the
"Lease"). Pursuant to the Lease, Landlord has leased to Tenant space (the "Existing Premises")
described as Suite No. 650 on the sixth (6') floor of the building commonly known as 1201 Dove
Street located at 1201 Dove Street, Newport Beach, California (the "Building").
B. The Lease will expire by its terms on September 30, 2018 (the "Existing Expiration Date").
Except as provided in Recital C below, the parties wish to extend the term of the Lease on the
following terms and conditions.
C. With respect to the portion of the Existing Premises containing approximately 1,016 rentable square
on the sixth (6t1i) floor of the Building and shown on Exhibit A attached hereto (the "Reduction
Space"), the parties wish to accelerate the expiration date of the Lease, on the following terms and
conditions.
D. The Lease describes the Existing Premises as containing approximately 5,245 rentable square feet
and the Building as containing approximately 82,007 rentable square feet. Landlord has re -measured
the Premises and the Building and the parties have agreed to amend the Lease to reflect the results of
such re -measurement.
NOW, THEREFORE, in consideration of the above recitals which by this reference are
incorporated herein, the mutual covenants and conditions contained herein and other valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree
as follows:
Re -measurement of Existing Premises and Building. Landlord and Tenant acknowledge and
agree that (a) Landlord has re -measured the Existing Premises and the Building, and, according to
such re -measurement, (i) the rentable area of the Existing Premises is 5,461 rentable square feet, and
(ii) the rentable area of the Building is 82,868 square feet; and (b) from and after the Extension Date
(defined in Section 2 below), the rentable areas of the Existing Premises and the Building shall be
deemed to be the square footages set forth in the preceding clause (a).
2. Extension. Except as provided in Section 3 below, the term of the Lease is hereby extended through
September 30, 2023 (the "Extended Expiration Date"). The portion of the term of the Lease
beginning October 1, 2018 (the "Extension Date") and ending on the Extended Expiration Date
shall be referred to herein as the "Extended Term".
3. Reduction.
3.1 Reduction Space Expiration Date. Subject to the terms hereof, the term of the Lease shall
expire, with respect to the Reduction Space only, on the Existing Expiration Date (i.e.,
September 30, 2018) (the "Reduction Space Expiration Date") with the same force and
effect as if such term were, by the provisions of the Lease, fixed to expire with respect to the
Reduction Space on the Reduction Space Expiration Date (the "Reduction"). Without
limiting the foregoing:
A. From and after the date immediately following the Reduction Space Expiration Date
(the "Reduction Effective Date"), the Premises shall consist solely of the Existing
Premises less the Reduction Space (the "Remaining Premises") and shall be
deemed to contain 4,445 rentable square feet.
B. Tenant shall surrender the Reduction Space to Landlord in accordance with the
terms of the Lease on or before the Reduction Space Expiration Date.
C. Tenant shall remain liable for all Rent (as defined in Section 3.01 of the Lease) and
other amounts payable under the Lease with respect to the Reduction Space for the
period up to and including the Reduction Space Expiration Date, even though
billings for such amounts may occur after the Reduction Space Expiration Date.
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D. Tenant's restoration obligations with respect to the Reduction Space shall be as set
forth in the Lease.
E. If Tenant fails to surrender any portion of the Reduction Space on or before the
Reduction Space Expiration Date, Tenant's tenancy with respect to the Reduction
Space shall be subject to Section 22 of the Lease.
F. Any other rights or obligations of Landlord or Tenant under the Lease relating to the
Reduction Space that, in the absence of the Reduction, would have survived the
Extended Expiration Date shall survive the Reduction Space Expiration Date.
3.2. Demising Work.
A. Landlord, using Building -standard materials and finishes, shall perform such
alterations to the Existing Premises and the Building (including the installation of
any new utility meters, demising walls (including paint, patching carpet and new
baseboards), multi -tenant corridors or entry doors) that, in Landlord's good faith
judgment, are necessary to (i) separate the Reduction Space from the Remaining
Premises, (ii) prevent such separation or the Reduction from causing any portion of
the Reduction Space or the Remaining Premises to (a) lack reasonable access to
multi -tenant corridors or the elevator lobby, (b) violate any Law (as defined in
Section 4 of the Lease), or (c) be unmarketable in any other respect, and (iii) install
a new interior office door in the Remaining Premises as described in Exhibit B
attached hereto (collectively, the "Demising Work").
B. Tenant acknowledges and agrees that the Demising Work may be performed
during Building Service Hours before or after the Extension Date. Landlord and
Tenant shall cooperate with each other in order to enable the Demising Work to be
performed in a timely manner and with as little inconvenience to the operation of
Tenant's business as is reasonably possible. Any delay in the completion of the
Demising Work or inconvenience suffered by Tenant during the performance of
the Demising Work shall not subject Landlord to any liability for any loss or
damage resulting therefrom or entitle Tenant to any credit, abatement or
adjustment of rent or other sums payable under the Lease or this Amendment.
C. The Demising Work shall be performed at Landlord's expense; provided, however,
that Tenant shall reimburse Landlord for 50% of the cost of the Demising Work
(which cost shall include a construction supervision and management fee equal to
5% of the balance of the cost of the Demising Work) within 30 days after receiving
an invoice therefor together with reasonable documentation thereof (which
reimbursement obligation may be satisfied by Tenant's application of the General
Use Allowance pursuant to Section 8.3 below).
D. Tenant waives all claims against Landlord relating to any defects in the Demising
Work; provided, however, that if, within 30 days after substantial completion of the
Demising Work, Tenant provides notice to Landlord of any non -latent defect in the
Demising Works, or if, within 11 months after substantial completion of the
Demising Work, Tenant provides notice to Landlord of any latent defect in the
Demising Works, then Landlord shall promptly cause such defect to be corrected.
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4. Base Rent.
4.1. Remaining Premises During Extended Term. With respect to the Remaining Premises
during the Extended Term, the schedule of Base Rent shall be as follows:
Period of Extended
Annual Rate Per Square
Monthly Base Rent
Term
Foot (rounded to the
nearest 100' of a dollar)
October 1, 2018 through
$35.40
$13,112.75
September 30, 2019
October 1, 2019 through
$36.46
$13,505.39
September 30, 2020
October 1, 2020 through
$37.56
$13,912.85
September 30, 2021
October 1, 2021 through
$38.68
$14,327.72
September 30, 2022
October 1, 2022 through
$39.84
$14,757.40
September 30, 2023
All such Base Rent shall be payable by Tenant in accordance with the terms of the Lease.
Notwithstanding the foregoing, Base Rent for the Remaining Premises shall be abated, in
the amount of $13,112.75 per month, applicable to the months of October 2018,
November 2018, December 2018, January 2019 and February 2019; provided, however,
that if a Default (as defined in Section 18 of the Lease) exists when any such abatement
would otherwise apply, such abatement shall be deferred until the date, if any, on which
such Default is cured
5. Additional Security Deposit. Upon Tenant's execution hereof, Tenant shall pay Landlord the sum
of $4,195.19, which shall be added to and become part of the Security Deposit held by Landlord
pursuant to Section 5 of the Lease. Accordingly, simultaneously with the execution hereof, the
Security Deposit is hereby increased from $12,039.18 to $16,234.37.
6. Tenant's Pro Rata Share. With respect to the Remaining Premises during the Extended Term,
Tenant's Pro Rata Share shall be 5.3640%.
7. Expenses and Taxes. With respect to the Remaining Premises during the Extended Term, Tenant
shall pay for Tenant's Pro Rata Share of Expenses and Taxes in accordance with the terms of the
Lease; provided, however, that, the Base Year for Expenses and Taxes shall be 2019.
8. Improvements to Remaining Premises.
8.1. Configuration and Condition of Remaining Premises. Tenant acknowledges that it is in
possession of the Remaining Premises and agrees to accept them "as is" without any
representation by Landlord regarding their configuration or condition and without any
obligation on the part of Landlord to perform or pay for any alteration or improvement,
except as may be otherwise expressly provided in this Amendment.
8.2. Responsibility for Improvements to Remaining Premises. Subject to Sections 3.2 above
and 8_3 below, any improvements to the Remaining Premises performed by Tenant shall be
paid for by Tenant and performed in accordance with the terms of the Lease.
8.3. General Allowance. Landlord shall provide Tenant with a one-time allowance, in the
amount of $66,675.00 (i.e., $15.00 per rentable square foot of the Remaining Premises)
(the "General Use Allowance"), which Tenant may apply (as determined by Tenant in its
sole discretion) toward payment of any one or more of the following: (a) the reasonable
costs of any improvements to the Remaining Premises performed by Tenant in accordance
with the terms of the Lease; (b) Tenant's 50% share of the cost of the Demising Work
pursuant to Section 3.2.0 above; or (c) in an amount not exceeding $33,337.50 (i.e., $7.50
per rentable square foot of the Remaining Premises), Base Rent next coming due under
this Amendment. Any portion of the General Use Allowance that Tenant is entitled to use
pursuant to clause (a) of the preceding sentence shall be disbursed by Landlord to Tenant
within 30 days after the latest of (i) the completion (in accordance with any applicable
approved plans and specifications) of the work described therein; (ii) Landlord's receipt of
(A) copies of all third -party contracts (including change orders) pursuant to which such work
has been performed, and (B) paid invoices from all parties providing labor or materials in
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connection with such work, together with executed unconditional mechanic's lien releases
satisfying any applicable requirements of Law, as reasonably determined by Landlord;
(iii) to the extent applicable, Tenant's delivery to Landlord of "as built' drawings (in CAD
format, if requested by Landlord); or (iv) Tenant's compliance with Landlord's standard
"close-out" requirements regarding city approvals, closeout tasks, Tenant's contractor,
financial close-out matters, and Tenant's vendors. Any portion of the General Use
Allowance that Tenant is entitled to use pursuant to clause (b) or (c) of the first sentence of
this Section 8.3 shall be disbursed by Landlord within 20 days after Tenant's request.
Notwithstanding the foregoing, (x) Landlord shall not be required to disburse any portion of
the General Use Allowance when a Default exists, and (y) if, for any reason other than a
breach by Landlord of its obligations under this Amendment, Tenant fails to use the entire
General Use Allowance by August 31, 2019, the unused amount shall revert to Landlord and
Tenant shall have no further rights with respect thereto.
9. Representations. Tenant represents and warrants that, as of the date hereof and the Reduction Space
Expiration Date: (a) Tenant is the rightful owner of all of the Tenant's interest in the Lease;
(b) Tenant has not subleased the Reduction Space or made any disposition, assignment or
conveyance of the Lease or Tenant's interest therein; (c) Tenant has no knowledge of any fact or
circumstance which would give rise to any claim, demand, obligation, liability, action or cause of
action arising out of or in connection with Tenant's occupancy of the Reduction Space; and (d) there
are no outstanding contracts for the supply of labor or material and no work has been done or is
being done in, to or about the Reduction Space which has not been fully paid for and for which
appropriate waivers of mechanic's liens have not been obtained.
10. Other Pertinent Provisions. Landlord and Tenant agree that, effective as of the date of this
Amendment (unless different effective date(s) is/are specifically referenced in this Section), the
Lease shall be amended in the following additional respects:
10.1. California Civil Code Section 1938. Pursuant to California Civil Code § 1938(a),
Landlord hereby states that the Existing Premises have not undergone inspection by a
Certified Access Specialist (CASp) (defined in California Civil Code § 55.52).
Accordingly, pursuant to California Civil Code § 1938(e), Landlord hereby further states as
follows:
A Certified Access Specialist (CASp) can inspect the subject premises and
determine whether the subject premises comply with all of the applicable
construction -related accessibility standards under state law. Although state law
does not require a CASp inspection of the subject premises, the commercial
property owner or lessor may not prohibit the lessee or tenant from obtaining a
CASp inspection of the subject premises for the occupancy or potential occupancy
of the lessee or tenant, if requested by the lessee or tenant. The parties shall
mutually agree on the arrangements for the time and manner of the CASp
inspection, the payment of the fee for the CASp inspection, and the cost of making
any repairs necessary to correct violations of construction -related accessibility
standards within the premises.
In accordance with the foregoing, Landlord and Tenant agree that if (and only if) Tenant
requests a CASp inspection of the Remaining Premises, then Tenant shall pay (i) the fee
for such inspection, and (ii) the cost of making any repairs necessary to correct violations
of construction -related accessibility standards within the Remaining Premises revealed by
any such inspections.
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10.2. Notice Addresses: Any notice under the Lease required to be sent to Landlord shall be
sent to the following addresses:
BRE/OC PROPERTY HOLDINGS L.L.C.
c/o Equity Office
19191 South Vermont Avenue, Suite 100
Torrance, CA 90502
Attn: Regional Finance Group - MLA
with copies to:
BRE/OC PROPERTY HOLDINGS L.L.C.
c/o Equity Office
3100 Bristol Street, Suite 200
Costa Mesa, CA 92626
Attn: Managing Counsel
and
BRE/OC PROPERTY HOLDINGS L.L.C.
c/o Equity Office
222 S. Riverside Plaza, Suite 2000
Chicago, IL 60606-6115
Attn: Lease Administration
10.3. Parking. Effective as of the Reduction Effective Date, Section 1.12.1 "Parking" of the
Lease shall be deleted in its entirety and replaced with the following:
"Tenant, subject to Section 28 of the Lease, shall purchase a total of up to twenty
(20) parking passes for unreserved parking spaces (the "Unreserved Parking
Passes"). Notwithstanding the foregoing, Tenant shall have the option to convert
up to two (2) of the Unreserved Parking Passes set forth above into two (2)
reserved parking passes (the "Reserved Parking Passes") on a one for one basis.
Prior to the Extension Date, Tenant shall notify Landlord in writing of the
number of Unreserved Parking Passes and/or Reserved Parking Passes which
Tenant initially elects to lease during the Extension Term, but in no event more
than twenty (20) Unreserved Parking Passes and/or Reserved Parking Passes nor
more than two (2) Reserved Parking Passes. Thereafter, Tenant may increase or
decrease the number of Unreserved Parking Passes and/or Reserved Parking
Passes to be used by Tenant pursuant to this Section 1.12 upon a minimum of 30
days prior written notice to Landlord, provided that in no event may Tenant elect
to lease more than twenty (20) Unreserved Parking Passes and/or Reserved
Parking Passes nor more than two (2) Reserved Parking Passes. Such Unreserved
Parking Passes shall be free of charge during the period beginning on the Extension
Date and ending March 31, 2021. From and after April 1, 2021, the parking rate for
such Unreserved Parking Passes shall be $35.00 per Unreserved Parking Passes
per month. The parking rate for Reserved Parking Passes shall reflect the
prevailing market rate charged in the Building parking area, which, as of May 31,
2018, is $75.00 per month per Reserved Parking Pass."
10.4. Prior Extension Option. The last sentence of Section 1.06 of the Lease, together with
Riders Nos. 1, 2 and 3 to the Lease, are hereby deleted in their entireties from the Lease.
10.5. Extension Option.
A. Grant of Option; Conditions. Tenant shall have the right (the "Extension
Option") to extend the Term for one (1) additional period of five (5) years
beginning on the day immediately following the Extended Expiration Date of the
Lease and ending on the fifth (5t1i) anniversary of such Extended Expiration Date
(the "Extension Term"), if-
(i) not less than 9 and not more than 12 full calendar months before the
Extended Expiration Date of the Lease, Tenant delivers written notice to
Landlord (the "Extension Notice") electing to exercise the Extension
Option;
(ii) no Default exists when Tenant delivers the Extension Notice;
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(iii) no part of the Premises is sublet when Tenant delivers the Extension
Notice; and
(iv) the Lease has not been assigned before Tenant delivers the Extension
Notice.
B. Terms Applicable to Extension Term.
(1) During the Extension Term, (a) the Base Rent rate per rentable square
foot shall be equal to the Prevailing Market (defined in Section E below)
rate per rentable square foot; (b) Base Rent shall increase, if at all, in
accordance with the increases assumed in the determination of Prevailing
Market rate; and (c) Base Rent shall be payable in monthly installments
in accordance with the terms and conditions of the Lease.
(ii) During the Extension Term Tenant shall pay Tenant's Pro Rata Share of
Expenses and Taxes for the Premises in accordance with the Lease.
C. Procedure for Determining Prevailing Market. Within 30 days after receiving
the Extension Notice, Landlord shall give Tenant written notice ("Landlord's
Notice") stating Landlord's estimate of the Prevailing Market rate for the
Extension Term. Tenant, within 15 days thereafter, shall give Landlord either
(i) written notice ("Tenant's Binding Notice") accepting Landlord's estimate of
the Prevailing Market rate for the Extension Term stated in Landlord's Notice, or
(ii) written notice ("Tenant's Rejection Notice") rejecting such estimate. If
Tenant gives Landlord a Tenant's Rejection Notice, Landlord and Tenant shall
work together in good faith to agree in writing upon the Prevailing Market rate
for the Extension Term. If, within 30 days after delivery of a Tenant's Rejection
Notice, the parties fail to agree in writing upon the Prevailing Market rate,
Tenant's Extension Option shall be of no further force or effect.
D. Extension Amendment. If Tenant is entitled to and properly exercises its
Extension Option, and if the Prevailing Market rate for the Extension Term is
determined in accordance with Section 10.5.0 above, Landlord, within a
reasonable time thereafter, shall prepare and deliver to Tenant an amendment (the
"Extension Amendment") reflecting changes in the Base Rent, the Extended
Term, the expiration date of the Lease, and other appropriate terms in accordance
with this Section 10.5, and Tenant shall execute and return (or provide Landlord
with reasonable objections to) the Extension Amendment within 15 days after
receiving it. Notwithstanding the foregoing, upon determination of the
Prevailing Market rate for the Extension Term in accordance with Section 10.5.0
above, an otherwise valid exercise of the Extension Option shall be fully
effective whether or not the Extension Amendment is executed.
E. Definition of Prevailing Market. For purposes of this Extension Option,
"Prevailing Market" shall mean the arms -length, fair -market, annual rental rate
per rentable square foot under extension and renewal leases and amendments
entered into on or about the date on which the Prevailing Market is being
determined hereunder for space comparable to the Premises in the Building. The
determination of Prevailing Market shall take into account (i) any material
economic differences between the terms of the Lease and any comparison lease
or amendment, such as rent abatements, construction costs and other concessions,
and the manner, if any, in which the landlord under any such lease is reimbursed
for operating expenses and taxes; (ii) any material differences in configuration or
condition between the Premises and any comparison space, including any cost
that would have to be incurred in order to make the configuration or condition of
the comparison space similar to that of the Premises; and (iii) any reasonably
anticipated changes in the Prevailing Market rate from the time such Prevailing
Market rate is being determined and the time such Prevailing Market rate will
become effective under the Lease.
F. [Intentionally Omitted.]
10.6. Waiver of Subrogation. The first sentence of Section 15 of the Lease is hereby
amended by replacing the words "the other for" with the words "the other party and its
employees and agents for." For purposes of Section 15 of the Lease, as amended by the
preceding sentence, (a) any deductible with respect to a parry's insurance shall be deemed
covered by, and recoverable by such party under, valid and collectable policies of
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insurance; and (b) any contractor retained by Landlord to install, maintain or monitor a
fire or security alarm for the Building shall be deemed an agent of Landlord.
10.7. Compliance with Law. Without limiting Tenant's obligations under the Lease, if, as a
result of Tenant's performance of any work (including any Alteration, repair or
maintenance), Landlord becomes required under Law to perform any inspection or give
any notice relating to the Premises or such work, or to ensure that such work is performed
in any particular manner, Tenant shall comply with such requirement on Landlord's
behalf and promptly thereafter provide Landlord with reasonable documentation of such
compliance. For the avoidance of doubt, the preceding sentence shall not apply to any
work performed by Landlord for Tenant's benefit, including the Demising Work. If a
change to any Common Area, the Building structure, or any Building system located
outside of and not exclusively serving the Premises becomes required under Law (or if
any such requirement is enforced) as a result of any improvement or alteration of the
Premises, or as a result of any particular use of the Premises (as distinguished from
general office use), then Tenant, upon demand, shall (x) at Landlord's option, either
make such change at Tenant's cost or pay Landlord the cost of making such change, and
(y) pay Landlord a coordination fee equal to 5% of the cost of such change.
10.8. Base Year Expenses. Notwithstanding any contrary provision of the Lease, Expenses
for the Base Year shall exclude (a) any market -wide cost increases resulting from
extraordinary circumstances, including Force Majeure, boycotts, strikes, conservation
surcharges, embargoes or shortages, and (b) at Landlord's option, the cost of any repair
or replacement that Landlord reasonably expects will not recur on an annual or more
frequent basis.
12. Miscellaneous.
12.1. This Amendment and the attached exhibits, which are hereby incorporated into and made
a part of this Amendment, set forth the entire agreement between the parties with respect to
the matters set forth herein. There have been no additional oral or written representations or
agreements. Tenant shall not be entitled, in connection with entering into this Amendment,
to any free rent, allowance, alteration, improvement or similar economic incentive to which
Tenant may have been entitled in connection with entering into the Lease, except as may be
otherwise expressly provided in this Amendment.
12.2. Except as herein modified or amended, the provisions, conditions and terms of the Lease
shall remain unchanged and in full force and effect.
12.3. In the case of any inconsistency between the provisions of the Lease and this Amendment,
the provisions of this Amendment shall govern and control.
12.4. Submission of this Amendment by Landlord is not an offer to enter into this Amendment but
rather is a solicitation for such an offer by Tenant. Landlord shall not be bound by this
Amendment until Landlord has executed and delivered it to Tenant.
12.5. Capitalized terms used but not defined in this Amendment shall have the meanings given in
the Lease.
12.6. Tenant shall indemnify and hold Landlord, its trustees, members, principals, beneficiaries,
partners, officers, directors, employees, mortgagee(s) and agents, and the respective
principals and members of any such agents harmless from all claims of any brokers claiming
to have represented Tenant in connection with this Amendment. Landlord shall indemnify
and hold Tenant, its trustees, members, principals, beneficiaries, partners, officers, directors,
employees, and agents, and the respective principals and members of any such agents
harmless from all claims of any brokers claiming to have represented Landlord in connection
with this Amendment. Tenant acknowledges that any assistance rendered by any agent or
employee of any affiliate of Landlord in connection with this Amendment has been made as
an accommodation to Tenant solely in furtherance of consummating the transaction on
behalf of Landlord, and not as agent for Tenant.
[SIGNATURES ARE ON FOLLOWING PAGE]
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DocuSign Envelope ID: EAC7DFDA-3282-482E-A39B-779CB4C1E035
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Amendment as of the
day and year first above written.
LANDLORD:
BRE/OC PROPERTY HOLDINGS L.L.C., a Delaware
limited liability company
By: �DocuSigned by:
15vti �n daun M.C{,VA&U ,
Name: ccrac en
Title: SVP Portfolio Director
TENANT:
PEREGRINE REALTY PARTNERS, INC., a California
corporation
By:
Signed by:
M.. �btwid'
LL0'.—N
� �—m. zo ovi ch
Title:
Principal
gned by:
LOLU
Na
Name:
Title:
Principal
DocuSign Envelope ID: EAC7DFDA-3282-482E-A39B-779CB4C1 E035
EXHIBIT A
OUTLINE AND LOCATION OF THE REDUCTION SPACE
Cross hatched portion of floor plan
designates the reduction space.
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EXHIBIT B
DESCRIPTION OF NEW INTERIOR OFFICE DOOR
i I•