Tom H. Talebi vs. Adrian Gonzalez

Opposition

Cal. Super. - 4th Dist.March 23, 2017

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 217 28 Arash Shirdel, Esq. (247754) PACIFIC PREMIER LAW GROUP 200 E. Sandpointe Ave, Ste 500 Santa Ana, CA 92707 949-629-3690 949-313-0995 ashirdel @pacificpremierlaw.com Attorney for Adrian Gonzalez and Gonzo Basic Solutions ELECTRONICALLY FILED Superior Court of California, County of Orange 08/01/2017 at 02:58:00 Pi Clerk of the Superior Court By & Clerk, Deputy Clerk ORANGE COUNTY SUPERIOR COURT CENTRAL COURTHOUSE TOM H. TALEBI, an individual and co-trustee) of the TALEBI FAMILY TRUST, dated September 25, 2007, a revocable trust; ELSIE G. TALEBI, an individual and co-trustee of the TALEBI FAMILY TRUST dated September 25, 2007, a revocable trust, Plaintiff, VS. ADRIAN GONZALEZ, an individual; GONZO’S BASIC SOLUTIONS, a California corporation, aka Gonzo Basic Solutions, and DOES 1 through 25 inclusive, Defendant GONZO’S BASIC SOLUTIONS, a California corporation, Cross-Plaintiff, Vs. TOM H. TALEBI, an individual and co-trustee of the TALEBI FAMILY TRUST, dated September 25, 2007, a revocable trust; ELSIE G. TALEBI, an individual and co-trustee of the TALEBI FAMILY TRUST dated Ne N e N e N e N e N e N e N e N e N e N e N e N e N e N e N e N e N e N e N e N e N e N e N e N e N e N e N e N e N N N e Case No.: 30-2017-00910643 Assigned for All purposes to: Hon. Peter Wilson OPPOSITION TO CROSS-DEFENDANT’S SPECIAL MOTION TO STRIKE PURSUANT TO CAL. CIV. PRO. §425.16 OPPOSITION TO CROSS-DEFENDANT'S SPECIAL MOTION TO STRIKE PURSUANT TO CAL. Clv. PRO. §425.16 - 1 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 217 28 September 25, 2007, a revocable trust, the TALEB-TALEBI FAMILY TRUST dated September 25, 2007, DEL MAR CENTER, INC. a California Corporation, and ROES 1- 10, Inclusive Cross-Defendants, N r N e N e N e N e N e N e ~ - CROSS PLAINTIFF GONZO’s submits this opposition brief to Cross-Defendants’ special motion to strike. OPPOSITION TO CROSS-DEFENDANT'S SPECIAL MOTION TO STRIKE PURSUANT TO CAL Clv. PRO. §425.16 - 2 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 217 28 I. INTRODUCTION As an introductory note, on or about June 30, 2017, upon service of the anti-SLAPP motion, Gonzo’s through counsel attempted to meet and confer with Cross-Defendants and amend the cross-complaint in order to more clearly articulate the points raised. However, Cross- Defendants summarily rejected Gonzo’s compromise. See Exhibit 1. Cross-Defendants herein attempt to paint Gonzo’s Basic Solutions, Inc’s (Gonzo’s) cross-complaint as “chilling” their right to free speech. Nothing could be further from the truth. The cross complaint in this matter is based on a pattern of Cross-Defendants’ acts to deprive Gonzo’s of its monies, by entering into a dubious lease agreement, with an entity that did not exist at the time of the lease; and a lease which Cross-Defendants knew was unenforceable because Gonzo’s reliance on statements made by Cross-Defendants caused Gonzo’s to run afoul of the City’s zoning laws. All of which was perpetrated to cause Gonzo’s to be responsible on a lease, to allow Cross-Defendants security until a proper tenant was found for their property. These facts are provable herein and undisputed. II. FACTS The facts here are largely undisputed; however, the implications of the facts are highly contested. This is a landlord-tenant matter, or at least that what appears at first blush. However, the landlord lied to get Gonzo’s Basic Solution, Inc.’s (Gonzo’s) about its ability to do business at its location and then immediately turned on him in order to cheat him out of rents due. On or about 12.11.15, Gonzo’s entered into a lease for the property located at 2590 Newport Blvd, Ste. C, Costa Mesa, California (Property) (Lease) with “Del Mar Center, Inc.”. (Attached as Exhibit 2, herein). However, a mere reading of the Lease shows Cross-Defendants’ intents on interfering with Gonzo’s and its business, in order to improperly obtain rents. For example, the parties specifically negotiated a 3-year term for the Property. See Ex. 3. And in fact, portions of the Lease demonstrate the fact the parties had negotiated a 3-year term. See Ex. 2 P1.3. However, Cross-Defendants in an attempt to “sneak one” past Gonzo’s specify 4- OPPOSITION TO CROSS-DEFENDANT'S SPECIAL MOTION TO STRIKE PURSUANT TO CAL Clv. PRO. §425.16 - 3 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 217 28 years in “terms” part of the Lease. See Id. In fact, when Cross-Defendants filed their complaint, they attempted to enforce a 4-year Lease term, instead of a 3-year lease. Complaint PP6, 11-15. Next, the Lease is counter-executed by a “Del Mar Center, Inc.” as the landlord of the Property. See Ex 2, [PP1.1, signature block. However, it should not come as a surprise that Del Mar Center, Inc. was not registered with the California Secretary of State as an entity until 12.18.15, one week after the Lease was signed. Ex. 4. Two problems: 1. “Del Mar Center, Inc.” was not an entity that could do business in the state of California at the time. See Cal. Corp. Code §§2105, 2203, and Cal. Rev. and Tax Code §23304.1. See also, Neogard Corp. v. Malott & Peterson-Grundy, 106 Cal. App. 3d 213; and 2. Since “Del Mar Center, Inc.” could not do business in the state of California at the time the Lease was signed, “Del Mar Center, Inc.” could not be the landlord. Contracts made with Corporation that do not have the power to contract are voidable. See Cal. Rev. & Tax Code §23304.1. Finally, and this is the critical fact, the parties negotiated a location zoned for medical use. See Ex 2, P1.10. In fact, the Lease specifically designates that the purpose of the Lease is “medical.” Id. Why is the critical fact? Because the Property was not zoned for medical use and Cross-Defendants knew or should have known the Property is not zoned for medical use. See Ex. 5. Gonzo’s specifically informed Cross-Defendants that they needed a unit zoned for medical use; Cross-Defendants repeatedly informed Gonzo’s that the Property was zoned for medical use, when it reality the Property was not zoned for medical use (See RL Decl. 5, 6, Ex. 5); Gonzo’s entered into the Lease, only to have repeated complaints to the various authorities that Gonzo’s is running a business in an area not-zoned for such business (See AG Decl. 7-9, Ex. 5); and the coup-de-grace was when Gonzo’s finally could no longer enjoy the quiet use of the Property, Gonzo’s presented a replacement tenant to Cross-Defendants (Replacement Tenants), who would not even consider the Replacement Tenants and specifically informed Gonzo’s agent, that such Replacement Tenant would not be considered. See RL Decl. 14-16, Ex. 6-7. These are the undisputed facts, and they play exactly into Gonzo’s allegations that Cross- Defendants needed a tenant so badly that they intentionally took Gonzo’s knowing that Gonzo’s OPPOSITION TO CROSS-DEFENDANT'S SPECIAL MOTION TO STRIKE PURSUANT TO CAL Clv. PRO. §425.16 - 4 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 217 28 would not be able to operate its business at the Property, because the Property was not properly zoned such that Gonzo’s could operate its business. Then once Gonzo’s was on-the-proverbial- hook, Cross-Defendants attempted everything within their power to remove Gonzo’s from the Property so that they could collect rent until they found a suitable and properly “zoned” tenant for the Property. Instead of reading the cross-complaint as a whole, Cross Defendants focus on one element of what they did wrong and they focus their entire brief on a few words and ignore the balance of the allegations. Cross-Defendants in their motion claim that they did not personally contact the authorities, and wholly ignore the other claims of interference. The Cross-Complaint alleges Cross-Defendants interfered with Gonzo’s quiet enjoyment of the Property, including inducing him to enter into a worthless lease, because Gonzo’s could not operate its business at a location that was not properly zoned for medical use. The interference with Gonzo’s business goes a lot deeper than merely reporting the issues to the authorities; Cross-Defendants interfered with Gonzo’s business, the day it entered into the Lease knowing that the Property was not zoned for Gonzo’s intended use. III. CROSS-COMPLAINTS ARE SUBJECT TO THE ANTI-SLAPP STATUTES IN LIMITED SITUATIONS “Although a cross-complaint may be subject to a motion to strike under California’s anti- SLAPP suit statute (CCP §425.16), not all cross-complaints qualify as SLAPP suits. Only those cross-complaints alleging a cause of action arising from the plaintiff’s act of filing the complaint against the defendant and the subsequent litigation potentially qualify as SLAPP actions (CCP §425.16, subds. (b) and (d)).” Church of Scientology v. Wollersheim (Cal. App. 2d Dist. Feb. 1, 1996), 42 Cal. App. 4th 628, 651, overruled on other grounds by Equilon Enterprises v. Consumer Cause, Inc., 29 Cal. 4th 53, 124 Cal. Rptr. 2d 507. See California Physicians’ Service v. Superior Court, (1992) 9 Cal. App. 4 1321. Furthermore, “A compulsory cross-complaint on a "related cause of action" against the plaintiff (Code Civ. Proc., § 426.30, subd. (a)) would rarely, if ever, qualify as a SLAPP suit ....” Id. OPPOSITION TO CROSS-DEFENDANT'S SPECIAL MOTION TO STRIKE PURSUANT TO CAL Clv. PRO. §425.16 - 5 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 217 28 IV. SPECIAL MOTION TO STRIKE Cal. Civ. Proc. §426.16 is codified as the “anti-SLAPP” statutes. Cal. Civ. Proc. §425.16(b)(1) states: “A cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.” The purpose of the anti-SLAPP statutes is to prevent the “chilling” of the right to free speech and petition. However, neither of those rights are at issue in this matter and for that reason, the motion should be simply denied. A. IT’S A TWO-STEP ANALYSIS There is a two-step analysis to anti-SLAPP matters. While Cal. Civ. Proc. §425.16(e), establishes the environment in which the speech (act) occurs, it does not by itself define the acts subject to a motion to strike. This is accomplished in Cal. Civ. Proc. §425.16(b). Preliminarily, the court construes Cal. Civ. Proc. §425.16(b), as containing a two-part test for determining whether an action is a SLAPP suit. The first part tests whether the action is a SLAPP suit; the second decides whether, if it is a SLAPP suit, it may nonetheless survive the motion to strike. Ericsson GE Mobile Communications, Inc. v. C.S.1. Telecommunications Engineers (Cal. App. Ist Dist. Oct. 10, 1996), 49 Cal. App. 4th 1591. In light of the legislative history and the declared legislative purpose of the anti-SLAPP statute, the statute must be given a narrow interpretation. The anti-SLAPP statute applies only to lawsuits described by the statement of legislative purpose in CCP §425.16(a), i.e., those brought to chill “participation in matters of public significance.” Linsco/Private Ledger, Inc. v. Investors Arbitration Services, Inc. (Cal. App. 1st Dist. Nov. 25, 1996), 50 Cal. App. 4th 1633. Cal. Civ. Proc. §425.16 does not apply in every case where the defendant may be able to raise a free speech defense to a cause of action. Rather, it is limited to exposing and dismissing SLAPP suits-Ilawsuits brought primarily to chill the valid exercise of the constitutional rights of] OPPOSITION TO CROSS-DEFENDANT'S SPECIAL MOTION TO STRIKE PURSUANT TO CAL Clv. PRO. §425.16 - 6 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 217 28 freedom of speech and petition for the redress of grievances in connection with a public issue. Ericsson GE Mobile Communications, Inc. v. C.S.1. Telecommunications Engineers (Cal. App. Ist Dist. Oct. 10, 1996), 49 Cal. App. 4th 1591 L. THE INITIAL BURDEN IS ON THE MOVING PARTY The party moving to strike a complaint under Cal. Civ. Proc. §425.16 has the burden of making a prima facie showing that the lawsuit arises from an act of defendant in furtherance of defendant’s right of petition or free speech under the United States or California Constitution in connection with a public issue. Dixon v. Superior Court (Cal. App. 4th Dist. Nov. 30, 1994), 30 Cal. App. 4th 733. Cross Defendants simply cannot and do not meet that burden here. 2 NOT ALL SPEECH IS PROTECTED UNDER §425.16 The alleged speech must in the furtherance of a protected right. In other words, illegal or improper speech is not protected under Cal. Civ. Proc. §425.16 Where a defendant brings a motion to strike under Cal. Civ. Proc. §425.16, based on a claim that the plaintiff’s action arises from activity by the defendant in furtherance of the defendant’s exercise of protected speech or petition rights, but either the defendant concedes, or the evidence conclusively establishes, that the assertedly protected speech or petition activity was illegal as a matter of law, the defendant is precluded from using the statute to strike the plaintiff’s action. Flatley v. Mauro (Cal. July 27, 2006), 39 Cal. 4th 299. 3. THE PROBABILITY OF SUCCESS The initial burden is on the moving party to show that a complaint falls under the scope of the anti-SLAPP statutes. If the defendant has met the burden of establishing that section 425.16 applies to the lawsuit, the burden shifts to the plaintiff to establish "that there is a probability that the plaintiff will prevail on the claim." (§ 425.16, subd. (b).) Cf. Robertson v. Rodriguez (1995) 36 Cal. App. 4th 347, 357-358 The plaintiff must demonstrate the merits of its cause of action by showing the defendant’s purported constitutional defenses are not applicable to the case as a matter of law, or by a prima facie showing of facts which, if accepted by the trier of fact, would negate such OPPOSITION TO CROSS-DEFENDANT'S SPECIAL MOTION TO STRIKE PURSUANT TO CAL Clv. PRO. §425.16 - 7 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 217 28 defenses. Wilcox v. Superior Court (Cal. App. 2d Dist. Aug. 16, 1994), 27 Cal. App. 4th 809, modified, (Cal. App. 2d Dist. Sept. 15, 1994), 28 Cal. App. 4th 940c) Under Cal. Civ. Proc. §425.16, subd (b) (procedural remedy allowing prompt exposure and dismissal of SLAPP suits), the requirement that the plaintiff establish a “probability that the plaintiff will prevail on the claim,” means that the plaintiff must demonstrate the complaint is legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited. Id. Causes of action arising out of false allegations of criminal conduct could not be stricken under the anti-SLAPP statute when there had been no filing of charges or other action intended to result in a criminal investigation or prosecution. Weinberg v. Feisel (Cal. App. 3d Dist. July 25,2003), 110 Cal. App. 4th 1122. V. DICUSSION As an initial matter, it is unclear why Cross-Defendants believe that the entire Cross- Complaint is subject to the anti-SLAPP statutes. Cross-Defendants mistakenly claim that each and every cause of action is based on the allegations that Cross-Defendants call the authorities. In fact, none of the causes of action are solely based on the calls, but the calls were an element of] a larger scheme as explained in the Cross-Complaint. The cross-complaint contains 4 causes of action, 1. Nuisance; 2. Fraudulent inducement; 3. Breach of contract; and 4. Declaratory relief. A. THE FRAUDULENT INDUCMENT CAUSE OF ACTION The fraudulent inducement cause of action is based on several separate provable facts: 1. That “Del Mar Center, Inc.” the purported lessor of the Property but was not in existence at the time the Lease was signed, and such could not have been the “lessor” of the Property. (PJP 19, 50- 51). 2. The Lease was to have a term of 3-years, but in reality contained a term of 4-years (PJP 22). And 3. That Gonzo’s was specifically sought a property zoned for medical use (PP 23-25), and this Property was not zoned for medical use. (PP 52-54). OPPOSITION TO CROSS-DEFENDANT'S SPECIAL MOTION TO STRIKE PURSUANT TO CAL Clv. PRO. §425.16 - 8 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 217 28 Gonzo’s can show that three of these falsehoods existed at the time of executing his lease. However, Cross-Defendants knew of these falsehoods, because 1. Cross-Defendants, by definition, must know who the lessor of the Property is, and whether the entity that purports to be the lessor actually exists and able to do business in the state; 2. Cross-Defendants knew the Lease they wrote up for an incorrect term; and 3. Cross-Defendants must know the zoning of their property. Despite knowing these falsehoods, Cross-Defendants presented contrary facts and allowed Gonzo’s to enter into the Lease. And if Gonzo’s had known of any of these falsehoods at the time of the lease, it would not have entered into the same. This is a classic fraudulent inducement claim. 1. NOT BASED ON PROTECTED SPEECH Cross-Defendants claim: “Without the allegation of protected conduct, fraud is not established.” (Mtn: 8:18-20). First this is a conclusory statement, unsupported by fact or analysis. Second, it is simply incorrect and an incomplete analysis of the facts and the law. As discussed supra, the fraudulent inducement cause of action is based upon the fact that Cross-Defendants provided Gonzo’s with at least 3 pieces of material information that were false. First, Cross-Defendants informed Gonzo’s that Del Mar Center, Inc. was the lessor, when in reality, Del Mar Center, Inc. was not even an entity qualified to do business at the time of the Lease; Second, the parties negotiated a 3-year lease, however, Cross-Defendants attempted to “sneak” a 4-year term by Gonzo’s; and 3. Gonzo’s specifically negotiated a property for “medical” purposes, however, the Property was not properly zoned for medical use. These facts, at all material facts, and if known by Gonzo’s would have prevented Gonzo’s from entering into the Lease. It is disengenious at best, and outright false at worst to claim that the Fraudulent Inducement cause of action is related to Cross-Defendants’ calls to the authorities. There are no public speech considerations here. None of the facts raised here are related to free speech or the right to petition, let alone intended to “chill” Cross-Defendants’ right to OPPOSITION TO CROSS-DEFENDANT'S SPECIAL MOTION TO STRIKE PURSUANT TO CAL Clv. PRO. §425.16 - 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 217 28 free-speech or petition. As such, the anti-SLAPP statutes do not apply to the fraudulent inducement cause of action. 2. DESPITE THE FACT THE FRAUDULENT INDUCMENT CAUSE OF ACTION IS NOT RELATED TO A PROTECTED RIGHT, GONZO’S CAN MAKE A PRIMA FACIE SHOWING. The facts are undisputed, the Property was not zoned for medical use. See Ex. 5. The Costa Mesa Code Enforcement department specifically cited that Gonzo’s was allegedly doing business “without a city license and Zoning approval.” The fact the Property is not zoned for medical use, the lease specifically calls for the unit to be used for “medical” purposes (see Ex. 2 [P1.10), and Cross-Defendants knew the zoning requirements for their Property shows a fraudulent statement had been made to Gonzo about the whether the zoning was proper for its business. Gonzo’s would not have entered into a lease on a Property not properly zoned for its use. Furthermore, the parties negotiated a three-year lease. However, the term of the document states 3-years in 1 place, but 4-years in another. In fact, the documents Cross- Defendants have attached to their moving papers show the intent was 3-years. (“The language that will terminate the three year lease will be iron clad, a three year lease is not long term, ....” See Exhibit 3 to the moving papers). In fact, the Lease itself states: “Term: three full years (3).” (See Ex. 2, P1.3); however, the lease in the same paragraph describes the ending date as “12/31/2019” which is a 4-year term’. If Gonzo’s had known that the lease would be changed from the three-year term he requested to a four-year term, he would not have executed the lease. Finally, the Lease specifically indicates that the landlord is “Del Mar Center, Inc.” See Ex. 2, P1.1 and signature block, showing that “Del Mar Center, Inc. is the lessor. However, Del Mar Center, Inc. was not in existence at the time of the Lease. As such, Del Mar Center, Inc. ! Year 1: January 1, 2016-December 31, 2016; Year 2: January 1, 2017-December 31, 2017; Year 3: January 1, 2018-December 31, 2018; Year 4: January 1, 2019- December 31, 2019 OPPOSITION TO CROSS-DEFENDANT'S SPECIAL MOTION TO STRIKE PURSUANT TO CAL Clv. PRO. §425.16 - 10 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 217 28 could not be the lessor of the Property. (Ex. 4). Gonzo’s would not have entered into the Lease, if] he had known that Del Mar Center, Inc. was not the correct lessor of the property. These facts are proven and Cross-Defendants cannot dispute these facts. As such, the Gonzo’s has shown that despite the fact the fraudulent inducement cause of action does not fall within the anti-SLAPP rules, there is a prima facie showing Gonzo’s will succeed on the merits. B. BREACH OF CONTRACT The analysis on the breach of contract claims is virtually identical to fraudulent inducement 1. THE BREACH OF CONTRACT IS NOT INVOLVING PUBLIC SPEECH The moving papers include a whopping 3 lines regarding the public speech requirements with regard to the breach of contract. The moving papers state in conclusory fashion: “without the allegations of protected active, this claim fails.” (Mtn. 8:23-24). Not so fast. The allegations in the cross-complaint are that Cross-Defendants interfered with Gonzo’s quiet enjoyment of the Property by providing Gonzo’s by giving them false information regarding 1. The entity that was the lessor; 2. The term of the lease; and 3. The fact that the Property was not properly zoned for Gonzo’s use. These facts make up the breach of contract cause of action, not the fact that Cross-Defendants repeatedly contacted the authorities. Since this does not involve a public speech consideration, the anti-SLAPP claims fails. 2 EVEN THOUGH THIS CAUSE OF ACTION DOES NOT INVOLVE PUBLIC SPEECH, GONZO’S CAN MAKE A PRIMA FACIA SHOWING THAT IT WILL BE SUCCESSFUL ON THE MERITS With regard to the breach of contract cause of action, Gonzo’s claims that Cross- Defendants interfered with his quiet enjoyment of the property, which is a specific term of the lease. Specifically, paragraph 38 of the lease states: “Subject to the payment by Lessee of the Rent and performance of the covenants and conditions and provision on Lessee’s part to be observed and performed under this Lease, Lessee shall have quiet enjoyment of the Premises during the term hereof.” See Ex. 2. OPPOSITION TO CROSS-DEFENDANT'S SPECIAL MOTION TO STRIKE PURSUANT TO CAL Clv. PRO. §425.16 - 11 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 217 28 The allegations in the cross-complaint are that Cross-Defendants interfered with Gonzo’s quiet enjoyment of the Property by providing Gonzo’s by giving them false information regarding 1. The entity that was the lessor; 2. The term of the lease; and 3. The fact that the Property was not properly zoned for Gonzo’s use. These facts make up the breach of contract cause of action, not solely the fact that Cross-Defendants repeatedly contacted the authorities. As fully discussed supra, these facts are present and undisputed. As such the anti-SLAPP claims wholly fail. C. THE DECLARTORY RELIEF CAUSE OF ACTION I. NONE OF THE FACTS SOUGHT TO BE ASSERTED BY THE COURT ARE RELATED TO PUBLIC SPEECH. Again, Cross-Defendant’s analysis regarding the declaratory relief cause of action is rife with analysis, or lack thereof. Although the breadth of analysis is three-times that of the “breach of contract” claim, Cross-Defendants’ analysis is wholly lacking. Cross-Defendants claim many of the declarations sought by this Court “are improper.” (Mtn: 9:7). However, this is not the proper motion to contest the validity of the facts being asserted, but solely whether they are SLAPP-able. Even according to Cross-Defendants, many of the facts sought to be declared are not subject to the anti-SLAPP rules and procedure. The reality is that none of the facts sought to be asserted are related to public speech. Cross-Defendants continually repeat the same few words, and completely ignore the balance of the cross-complaint. There are 5 facts that Gonzo’s seeks to have declared by this Court: 1) That Del Mar Centers, Inc. did not have authority to enter into the Lease; 2) That Del Mar Centers, Inc. was not the leasor or the landlord of the Property; 3) That the lease is not enforceable and void; 4) That the [Property] is not zoned for medical use; OPPOSITION TO CROSS-DEFENDANT'S SPECIAL MOTION TO STRIKE PURSUANT TO CAL CIV. PRO. §425.16 - 12 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 217 28 5) That Gonzo’s performance under the Lease was impossible. (see Prayer for Relief, Cross- Complaint, 12:15-21) None of the 5 facts sought to be declared by the Court are related to public speech. Cross- Defendants do not discuss these facts or how they are related to public speech, but merely concludes they are. As such the anti-SLAPP considerations fail. 2 GONZO’S CAN MAKE A PRIMA FACIA SHOWING OF SUCCESS The facts Gonzo’s seeks to have this Court declare are paramount to this case. The facts as asserted supra, show that Cross-Defendants were involved in a scheme to defraud Gonzos’s. As discussed ad nauseum, the Property is not zoned for medical use, even though the Lease specifically indicates that the use of the Property is for “medical” purposes. The facts also demonstrate Cross-Defendants knew this fact, and improperly induced Gonzo’s into entering into the Lease, knowing they could at any time have them removed from the Property because the zoning was not correct for Gonzo’s use. By causing the Lease to be signed, knowing the Property was not zoned for “medical” use in turn made performance of the Lease by Gonzo’s impossible (facts No. 4 and 5). Furthermore, Del Mar Center, Inc. was not an entity that was registered to do business in the state of California as of the date of the Lease, as such the Del Mar Center, Inc. could not be the lessor, and Lease, by law, is voidable. (facts No. 1-3). Cross-Defendants cannot dispute these facts, and documentation makes a prima facie showing of success on the merits. As indicated supra, these facts are undisputed. Since the term of the lease was incorrect, and the zoning was incorrect, it made Gonzo’s performance of the lease impossible. Next, there is clear evidence that Cross-Defendants were in fact involved in a scheme to defraud Gonzo’s. These facts are fully discussed infra. Since Gonzo’s has made a prima facie showing of success, the anti-SLAPP fails. OPPOSITION TO CROSS-DEFENDANT'S SPECIAL MOTION TO STRIKE PURSUANT TO CAL Clv. PRO. §425.16 - 13 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 217 28 D. THE NUISANCE CAUSE OF ACTION I. ENTERING INTO A CONTRACT, KNOWING IT TO BE ILLEGAL, THEN CAUSING THE BREACH OF THE SAME CONTRACT IS AGAINST PUBLIC POLICY For the anti-SLAPP statute to apply, there must be a “chilling” of free speech. The anti- SLAPP statutes do not apply here, because there is no “chilling” of free speech rights alleged. Cross-Defendants allege that the nuisance cause of action is based on their repeated calls to the authorities, but it is not. The nuisance cause of action, like all others, is based on a much larger enterprise. Cross-Defendants’ calls to the authorities is merely an element in a much scheme. Here, Gonzo’s is the victim of Cross-Defendants’ scheme to defraud. Gonzo’s entered into the Lease believing it had secured a location for its medical business. Unbeknownst to Gonzo’s, the Property was not properly zoned for “medical” use, despite the Lease containing specific language regarding the use of the Property for “medical” purposes. As a property owner, or agent of a property owner, Cross-Defendants are charged with knowing the zoning of the property they rent. Cross-Defendants should not be rewarded for their fraud. Cross-Defendants induced Gonzo’s into entering into the Lease, knowing that the Property was not zoned for its intended use. Then once Gonzo’s was on the proverbial “hook” for the Lease, Cross-Defendants did everything within their power to make Gonzo’s leave the Property, knowing that they can always sue Gonzo’s for the unpaid rent. It is against public policy to reward a party for this trickery. However, the “evidence” used to support Cross-Defendants’ claims that they were not involved in a scheme is dubious at best. The only evidence Cross-Defendants present is their own self-serving 1-sentence declaration that they never contacted the authorities, nothing more. However, Cross-Defendants again ignore the balance of the cross-complaint, the nuisance cause of action is not solely based on Cross-Defendants’ contact with the authorities, but it is the much bigger. Cross-Defendants’ contact with the authorities is merely a part of the bigger scheme to defraud. OPPOSITION TO CROSS-DEFENDANT'S SPECIAL MOTION TO STRIKE PURSUANT TO CAL Clv. PRO. §425.16 - 14 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 217 28 The party moving to strike a complaint under Cal. Civ. Proc. §425.16 has the burden of making a prima facie showing that the lawsuit arises from an act of defendant in furtherance of defendant’s right of petition or free speech under the United States or California Constitution in connection with a public issue. Dixon v. Superior Court (Cal. App. 4th Dist. Nov. 30, 1994), 30 Cal. App. 4th 733. Cross-Defendants have not here. A few self-serving words are insufficient to make a prima facie showing and to cause a burden-shifting of the statute. Next, Cross-Defendants, claim that their contacting the authorities is protected speech (which is required for an anti-SLAPP motion), but in the same breadth say they did not contact the authorities. Which is it? However, the nuisance cause of action is not based on or related to protected speech. Despite the fact Cross-Defendants repeat the same few words throughout their motion, the complaint is much, much more. As discussed supra, the cross-complaint is based on the shown facts shown, that Cross- Defendants induced Gonzo’s to enter into a dubious lease, then made sure the lease was breached, and then sued under the same for breach of contract. However, Cross-Defendants merely repeat the same few words regarding contacting the authorities. However, Cross Defendants do not discuss the other issues raised in the Cross- Complaint evidencing the scheme hatched by these Cross-Defendants. For example, Cross- Defendants disclaimed any knowledge of zoning issues related to Gonzo’s business, but instead of producing admissible evidence to support a disclaimed knowledge of zoning issues related to Gonzo’s business, Cross-Defendants produce an email by Roman Libonao saying that the Lease will be set up in a manner to protect the parties. (See Exhibit 3 to the moving papers). Not only is this hearsay and not admissible, but does not evidence what Cross-Defendants purport. Cross-Defendants are very careful to dance around the fact they informed Gonzo’s that the Property was zoned for their “medical” use, when it was not. Cross-Defendants dance around this fact, and instead claim that zoning is “the province of the municipal authorities, beyond the landlords’s control.” (Mtn.: 10:14-16). In fact, Cross-Defendants are very careful in what they OPPOSITION TO CROSS-DEFENDANT'S SPECIAL MOTION TO STRIKE PURSUANT TO CAL Clv. PRO. §425.16 - 15 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 217 28 say and what they do not say; Cross-Defendants do not dispute the Property is not zoned for medical use, but (falsely) state that they never told Gonzo’s about the zoning of the Property, despite the Lease specifically citing the purpose of the lease as being “medical.” Cross-Defendants attempt to color Gonzo’s complaint in an interesting manner. Gonzo’s in the cross-complaint repeatedly states that the Property was mis-zoned for his use (see [P[P23-25, 28-31, 52-54), and thus his performance was impossible. Cross-Defendants, through their misstatement of the Cross-Complaint portray the Cross-Complaint as saying something it is not. For example, on page 10:27-11:1, Cross-Defendants claim that Gonzo’s states that the repeated calls to the authorities made it impossible for it do business, and they cite to paragraph 34. Except that is not what the Cross-Complaint or paragraph 34 of the Cross-Complaint actually allege. Paragraph 34 of the cross-complaint states: “The repeated interference with Gonzo’s use of the [Property] was so intrusive that on or about September 2016, Gonzo was forced to vacate the premises, because it was unable to actually conduct any business.” Paragraph 34 does not mention calls to the authorities, as Cross-Defendants portray. However, one cannot read paragraph 34 in a vacuum, one has to read all of the paragraphs of the cross-complaint together to get a full picture of what happened. Cross-Defendants do not even attempt to cover the other issues raised in the cross- complaint and cited in this brief, that for example, the Lease is signed by an unknown entity named Del Mar Center, Inc., as the purported landlord; however, Del Mar Center, Inc. did not even come into existence until 1 week after the Lease was signed. Finally, the facts show that even upon attempting to move out of the Property, Gonzo’s was attempting to help Cross-Defendants by finding a replacement tenant. However, Cross- Defendants had no interest in even talking to the replacement tenants. See Ex. 6-7, RL Decl. 14- 16. 2. GONZO’S HAS MADE A PRIMA FACIE SHOWING OF SUCCESS Without repeating each and every fact that is outlined above, Gonzo’s has made a clear prima facie showing of success on the merits. Gonzo’s has shown that 1. It entered into a lease OPPOSITION TO CROSS-DEFENDANT'S SPECIAL MOTION TO STRIKE PURSUANT TO CAL Clv. PRO. §425.16 - 16 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 217 28 with a non-existent entity; 2. It has shown that the lease terms are wholly internally inconsistent; 3. It has shown that the purpose of the lease, to use the Property for medical purposes was impossible, because the Property was not zoned for medical purposes; 4. It has shown that despite the fact that Cross-Defendants knew the property was not zoned for medical purposes, they portrayed as such; and 5. It has shown that even upon vacating the Property, Gonzo’s attempted to provide Cross-Defendants with a replacement tenant, which was summarily rejected without notice. These facts are shown here. These facts taken together show make a prima facie showing Cross-Defendants were involved in a scheme to defraud Gonzo’s. Most of these facts are either ignored or merely denied in conclusory fashion. When the picture is zoomed out and the whole Cross-Complaint can be looked at, the Court can understand the facts and what occurred here and can see that Gonzo’s has demonstrated a probability of success on the merits. VI. CONCLUSION For these forgoing reasons, Gonzo’s respectfully requests that the Court deny the anti- SLAPP motion and allow the parties to litigate the facts herein. Dated: August 1, 2017 PACIFIC PREMIER LAW GROUP /s/ Arash Shirdel, Esq. Arash Shirdel, Esq. attorney for Gonzo’s OPPOSITION TO CROSS-DEFENDANT'S SPECIAL MOTION TO STRIKE PURSUANT TO CAL Clv. PRO. §425.16 - 17 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 217 28 DECLARATION OF ARASH SHIRDEL, ESQ. I, Arash Shirdel, Esq. declare as follows. I. I am an attorney duly licensed to practice law before all of the Courts within this jurisdiction. I am a principal of Pacific Premier Law Group, attorney of record for Gonzo’s. All of the information contained in this declaration is within my personal knowledge and if required, I could and I would competently testify thereto. 2. On June 30, 2017, I contacted Tim Kowal, counsel for opposing party and offered to amend the complaint in return for withdrawal of the anti-SLAPP motion. Attached as Exhibit 1 is a true and correct copy of said correspondence. 3. On the same day, Tim Kowal responded that they had no intention of withdrawing the anti-SLAPP motion. Id. 4. On or about June 1, 2017, I received from the Secretary of State of the state of California a copy of Del Mal Centers, Inc.’s articles of incorporation. Attached as Exhibit 4 herein. I declare under penalty of perjury of the laws of the state of California that the forgoing is true and correct. Executed on August 1, 2017 in Santa Ana, California. /s/ Arash Shirdel, Esq. Arash Shirdel, Esq. OPPOSITION TO CROSS-DEFENDANT'S SPECIAL MOTION TO STRIKE PURSUANT TO CAL Clv. PRO. §425.16 - 18 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 217 28 PROOF OF SERVICE STATE OF CALIFORNIA, COUNTY OF ORANGE I am employed in the county aforesaid; I am over the age of eighteen years and not a party to the within entitled action; my business address is: 200 E. Sandpointe Ave, Ste 500, Santa Ana, CA 92707. On August 1, 2017, I served within: Opp to Anti-SLAPP to release deposit on the interested Party(ies) in this action. [] (By Mail) 1 caused a true copy of each document, placed in a sealed envelope with postage fully prepaid, to be placed in the United States Mail at Santa Ana, California. Iam “readily familiar” with this firm’s business practice for collection and processing of mail, that in the ordinary course of business said document(s) would be deposited with the US Postal Service on the same day. I understand that the service shall be presumed invalid if the postal cancellation date or postage meter date on the envelope is more than one day after the date of deposit for mailing contained on this affidavit. [1] (By Personal Service) 1 delivered each such document by hand to each addressee above. [] (By Overnight Delivery) 1 caused a true copy of each document, placed in a sealed envelope with delivery fees provided for, to be deposited in a box regularly maintained by Federal Express or Overnight Express. I am readily familiar with this firm’s practice for collection and processing of documents for overnight delivery and know that in the ordinary course of business practice the document(s) described above will be deposited in a box or other facility regularly maintained by Federal Express or Overnight Express or delivered to a courier or driver authorized by Federal Express or Overnight Express to receive documents on the same date it is placed for collection. [x] (By Email) - Tim Kowal - tkowal @tvalaw.com Executed on August 1, 2017, at Santa Ana, California. [] (Federal) 1 declare that I am employed in the office of a member of bar of this court at whose direction the service was made. [X] (State) 1 declare under penalty of perjury under the laws of the State of California that the above is true and correct. /s/ Arash Shirdel Arash Shirdel OPPOSITION TO CROSS-DEFENDANT'S SPECIAL MOTION TO STRIKE PURSUANT TO CAL Clv. PRO. §425.16 - 19 EXHIBIT 1 From: Tim Kowal To: Arash Shirdel, Esq. Subject: RE: Talebi v. Gonzo: Meet and Confer re Demurrer Date: Friday, June 30, 2017 10:52:40 AM We’re not going to withdraw the anti-SLAPP. Timothy M. Kowal ') Shareholder THomAs VogeLE & Associates, APC 3199 Airport Loop Drive, Suite A3 Costa Mesa, California 92626 (714) 641-1232 | tkowal@tvalaw.com [ Recent Articles | Subscribe to Our Newsletter ] This e-mail contains privileged and confidential information, which may be subject to the attorney-client privilege and/or attorney work product protection. If you received this message in error, please notify the sender and delete it immediately. From: Arash Shirdel, Esq. [mailto:ashirdel@pacificpremierlaw.com] Sent: Friday, June 30, 2017 10:50 AM To: Tim Kowal Subject: RE: Talebi v. Gonzo: Meet and Confer re Demurrer Well | can tell you that if we lose on the Anti-SLAPP that we'll end up appealing which would stay everything. I'm confident that we'll prevail on the anti-SLAPP, but nevertheless, if you agree to withdraw the anti-SLAPP, we'll agree to extend time and amend and hopefully resolve the issues you have with the complaint. You'll always be free to refile an anti-SLAPP if you wish and we'll be able to move the case along quicker. | think procedurally, it will be a lot cleaner that way too. Let me know your thoughts. Arash Shirdel, Esq. Partner Pacific Premier Law Group 200 Sandpointe Ave, Ste 500 Santa Ana, CA 92707 949-629-3690 Fax: (949) 313-0995 mailto:ashirdel@pacificpremierlaw.com http://www .pacificpremierlaw.com This message may contain confidential and/or restricted information. If you are not the addressee or authorized to receive this for the addressee, you must not use, copy, disclose, or take any action based on this message or any information herein. This information should only be forwarded or distributed on a "need to know basis”. If you have received this message in error, please advise the sender immediately by reply e-mail and delete this message. Law Offices of Arash Shirdel, Inc. nor any of its subsidiaries, including Pacific Premier Law Group and Home Loan Relief Law Center give any tax advice. You should consult a licensed CPA or tax attorney with any tax issues. Thank you for your cooperation. IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax related penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein. From: Tim Kowal [mailto:tkowal@tvalaw.com] Sent: Friday, June 30, 2017 10:46 AM To: Arash Shirdel, Esq. Subject: RE: Talebi v. Gonzo: Meet and Confer re Demurrer The anti-SL APP motion attaches to the pleadings at the time the motion is filed. So amending will not address the issues in the anti-SLAPP. But there are some issues beyond the scope of that motion that need to be addressed in a demurrer. If you agree to extend the time to file a responsive pleading, that would put the deadline after the hearing and hopefully ruling on the motion, which would give us a better sense of whether and what issues are left for a demurrer. Timothy M. Kowal ) Shareholder THomas VoaeLe & Associates, APC 3199 Airport Loop Drive, Suite A3 Costa Mesa, California 92626 (714) 641-1232 | tkowal@tvalaw.com [ Recent Articles | Subscribe to Our Newsletter ] This e-mail contains privileged and confidential information, which may be subject to the attorney-client privilege and/or attorney work product protection. If you received this message in error, please notify the sender and delete it immediately. From: Arash Shirdel, Esq. [mailto:ashirdel@pacificpremierlaw.com] Sent: Friday, June 30, 2017 10:41 AM To: Tim Kowal Subject: RE: Talebi v. Gonzo: Meet and Confer re Demurrer So I'm a little bit confused here. If | amend, will that resolve the anti-SLAPP motion as well? Or if | amend, will you withdraw the anti-SLAPP? I'd like to take a crack at amending. But, | don't want to be stuck in a procedural quagmire here, if | amend, but still subject to the anti-SLAPP. Make sense? Call me if you'd like to discuss. Arash Shirdel, Esq. Partner Pacific Premier Law Group 200 Sandpointe Ave, Ste 500 Santa Ana, CA 92707 949-629-3690 Fax: (949) 313-0995 mailto:ashirdel@pacificpremierlaw.com http://www .pacificpremierlaw.com This message may contain confidential and/or restricted information. If you are not the addressee or authorized to receive this for the addressee, you must not use, copy, disclose, or take any action based on this message or any information herein. This information should only be forwarded or distributed on a "need to know basis”. If you have received this message in error, please advise the sender immediately by reply e-mail and delete this message. Law Offices of Arash Shirdel, Inc. nor any of its subsidiaries, including Pacific Premier Law Group and Home Loan Relief Law Center give any tax advice. You should consulta licensed CPA or tax attorney with any tax issues. Thank you for your cooperation. IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax related penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein. From: Tim Kowal [mailto:tkowal@tvalaw.com] Sent: Friday, June 30, 2017 10:08 AM To: Arash Shirdel, Esq. Subject: RE: Talebi v. Gonzo: Meet and Confer re Demurrer Arash, I believe our deadline to file our demurrer to your cross-complaint filed June 7 is next Friday, July 7. That makes today our deadline to fulfill our meet and confer obligation. Please let me know your response to the points I raised in my June 21 email. Thanks, Tim Timothy M. Kowal ) Shareholder THomas VoaeLe & Associates, APC 3199 Airport Loop Drive, Suite A3 Costa Mesa, California 92626 (714) 641-1232 | tkowal@tvalaw.com [ Recent Articles | Subscribe to Our Newsletter ] This e-mail contains privileged and confidential information, which may be subject to the attorney-client privilege and/or attorney work product protection. If you received this message in error, please notify the sender and delete it immediately. From: Arash Shirdel, Esq. [mailto:ashirdel@ pacificpremierlaw.com] Sent: Wednesday, June 21, 2017 4:10 PM To: Tim Kowal Subject: RE: Talebi v. Gonzo: Meet and Confer re Demurrer Thanks Tim. Let's talk either Friday or early next week. Arash Shirdel, Esq. Partner Pacific Premier Law Group 200 Sandpointe Ave, Ste 500 Santa Ana, CA 92707 949-629-3690 Fax: (949) 313-0995 mailto:ashirdel@pacificpremierlaw.com http://www .pacificpremierlaw.com This message may contain confidential and/or restricted information. If you are not the addressee or authorized to receive this for the addressee, you must not use, copy, disclose, or take any action based on this message or any information herein. This information should only be forwarded or distributed on a "need to know basis”. If you have received this message in error, please advise the sender immediately by reply e-mail and delete this message. Law Offices of Arash Shirdel, Inc. nor any of its subsidiaries, including Pacific Premier Law Group and Home Loan Relief Law Center give any tax advice. You should consulta licensed CPA or tax attorney with any tax issues. Thank you for your cooperation. IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax related penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein. From: Tim Kowal [mailto:tkowal@tvalaw.com] Sent: Wednesday, June 21, 2017 4:02 PM To: Arash Shirdel, Esq. Subject: RE: Talebi v. Gonzo: Meet and Confer re Demurrer See attached. Timothy M. Kowal ) Shareholder THomAs VogeLE & Associates, APC 3199 Airport Loop Drive, Suite A3 Costa Mesa, California 92626 (714) 641-1232 | tkowal@tvalaw.com [ Recent Articles | Subscribe to Our Newsletter ] This e-mail contains privileged and confidential information, which may be subject to the attorney-client privilege and/or attorney work product protection. If you received this message in error, please notify the sender and delete it immediately. From: Arash Shirdel, Esq. [mailto:ashirdel@pacificpremierlaw.com] Sent: Wednesday, June 21, 2017 4:01 PM To: Tim Kowal Subject: RE: Talebi v. Gonzo: Meet and Confer re Demurrer I'll review this. What is the anti-SLAPP based on? Can you email the anti-SLAPP motion? Arash Shirdel, Esq. Partner Pacific Premier Law Group 200 Sandpointe Ave, Ste 500 Santa Ana, CA 92707 949-629-3690 Fax: (949) 313-0995 mailto:ashirdel@pacificpremierlaw.com http://www .pacificpremierlaw.com This message may contain confidential and/or restricted information. If you are not the addressee or authorized to receive this for the addressee, you must not use, copy, disclose, or take any action based on this message or any information herein. This information should only be forwarded or distributed on a "need to know basis”. If you have received this message in error, please advise the sender immediately by reply e-mail and delete this message. Law Offices of Arash Shirdel, Inc. nor any of its subsidiaries, including Pacific Premier Law Group and Home Loan Relief Law Center give any tax advice. You should consult a licensed CPA or tax attorney with any tax issues. Thank you for your cooperation. IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax related penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein. From: Tim Kowal [mailto:tkowal@tvalaw.com] Sent: Wednesday, June 21, 2017 3:58 PM To: Arash Shirdel, Esq. Subject: Talebi v. Gonzo: Meet and Confer re Demurrer Arash, I am writing to meet and confer with you about a demurrer cross-defendants intend to file. Preliminarily, you should have received our anti-SLAPP motion on Friday. Please note the Court changed the hearing date from July 17 to August 14. A copy of the confirmed cover page is attached for your reference. We intend to demur on three grounds: First, nuisance based on zoning-enforcement cannot be established as a matter of law, as such enforcement is the province of the municipal authorities and beyond landlord’s control. (See Nativi v. Deutsche Bank National Trust Company (2014) 223 Cal. App.4th 261, 305 [rejecting landlord duty to address interference of third parties not under landlord’s direction].) Second, the fraud claim is not alleged with particularity. The cross-complaint does not allege who made the statements, when they were made, or to whom. Third, two of the three requested declarations sought in the declaration-relief claim are improper, as they seek retrospective relief - i.e., the property’s zoning status as of December 2015, and Del Mar Centers, Inc.’s authority as of December 2015. There is a “unanimity of authority to the effect that the declaratory procedure operates prospectively, and not merely for redress of past wrongs. It serves to set controversies at rest before they lead to repudiation of o obligations...in short, the remedy is to be used in the interests of preventive justice . ... (Osseous Technologies of America, Inc. v. DiscoveryOrtho Partners LLC (2010) 191 Cal.App.4th 357, 367 (citing Travers v. Loudon (1967) 254 Cal.App.2d 926, 931); see also Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909.) Thus, the relief sought is legally untenable. The final requested declaration - that the lease is unenforceable - is duplicative of Gonzo’s third, twenty-third, and twenty-fourth affirmative defenses. California case law holds that when “an issue can be raised by means of an affirmative defense, a trial court may therefore dismiss a declaratory relief claim raising the same questions in the cross- complaint.” (C.J.L. Construction, Inc. v. Universal Plumbing (1993) 18 Cal. App.4th 376, 391; see also Welfare Inv. Co. v. Stowell (1933) 132 Cal. App. 275.) Please let me know whether you will dismiss or amend the cross-complaint to resolve these issues. Thanks, Tim Timothy M. Kowal T Shareholder THomas VoaeLe & Associates, APC 3199 Airport Loop Drive, Suite A3 Costa Mesa, California 92626 (714) 641-1232 | tkowal@tvalaw.com [ Recent Articles | Subscribe to Our Newsletter | This e-mail contains privileged and confidential information, which may be subject to the attorney-client privilege and/or attorney work product protection. If you received this message in error, please notify the sender and delete it immediately. EXHIBIT 2 Jan 1817, 05:56p pA bd ae LINN Py ail AIR COMMERCIAL REAL ESTATE ASSOCIATION STANDARD MULTI-TENANT SHOPPING CENTER LEASE - NET 1. Basic Provisions ("Basic Provisions"). 11 Parties: This Lease ("Lease"), dated for reference purposes only December 11, 2015 , is made by and between Del Mar Center, Inc. - ("Lessor") and Adrian Gonzalez ("Lessee") (collectively the “Parties”, or individually a "Party"). 1.2 Premises: That certain portion of the Shopping Center (as defined below), including all improvements therein of Ww be provided by Lessor under the terms of this Leasg, commonly known by the street address of 2590 Newport Boulevard Suite C i kicated in the City of Costa Mesa , County af Orange , State of California , with zip code 92627 , as outlined on Exhibit attached hereto ("Premises") and generally described as (describe briefly the nature of the Premises): In addition to Lessee’s rights te use and occupy the Premises as hereinafter specified, Lessee shall have non-exclusive rights to the Common Areas (as defined in Paragraph 2.7 below) as hereinafter specified, but shall not have any rights to the roof, exterior walls or utility raceways of the building containing the Premises ("Building") or to any other buildings in the Shopping Center. The Premises and the Building are situated within the Shopping Center known as The Premises, the Building, the Common Areas and all other buildings and improvements within satd Shopping Center, together with the land upon which they are located, are herein collectively referred to as the "Shopping Center,” (See also Paragraph 2) 1.3 Term: Three full years (3) years and months ("Original Term") commencing 1/2/2016 ("Commencement Date”) and ending 12/31/202¢ ("Expiration Date"). (See also Paragraph 3) 1.4 Early Possession: If the Premises are available Lessee may have non-exclusive possession of the Premises commencing Ag soon as possible (‘Early Possession Date"). (See also Paragraphs 3.2 and 3.3) 1.5 Base Rent: $4,338.00 per month ("Base Rent"), payahle on the First (1) day of gach month commencing 1/1/2016 . (See mlso Paragraph 4) © If this box is checked, there are provisions in this Lease for the Base Rent to be adjusted. See Paragraph 52 oo 1.6 Percentage Rent Rate: N/A percent ( %) of Grass Sales, Percentage Rent shall be due and payable in accordance with the provisions of the Percentage Rent Addendum, if any, attached hereto and made a part hereof, and Paragraph 4 hereof. 1.7 Lessee’s Share of Common Area Operating Expenses: Nineteen point six percent {19.85 %) {"Lessee’s Share"). In the evert that that size of the Premises and/or the Shopping Center are modified during the term of this Lease, Lessor shall recalculate Lessee's Share to reflect such modification, 1.8 Merchants’ Association Annual Dues: $ N/A per year ("Merchants’ Resociation Dues”). Lessee shall pay Merchants’ Association Dues andfor become a member of the Merchants’ Association in accordance with the provisions of the Merchants’ Association Addendum, if any, attached hereto. 1.8 Base Rent and Other Monies Paid Upon Execution: (a) Base Rent: $4,338.00 for the period 1/1/2016 {b) Common Area Operating Expenses: $530.20 forthe perind 1/1/2016 (©) Security Deposit: $ Two Months $8,676.00 ("Security Deposit’). (See also Paragraph 5) {dy Merchants’ Association Dues: $N/A - for the period (&) Other; $4, 338.00 for Last. Months Rent . N Total Due Upon Execution of this Lease: $17,352.00 1.18 Agreed Use: Medical _ {See also Paragraph 6) Agreed Trade Name: AG Ent, ,Inc DBA Orange County Patient Care (Bee also Paragraph 6) . Insuring Party. Lessor is the "Insuring Party”. (See also Paragraph 8) 1.13 Real Estate Brokers: (See also Paragraph 15 and 28) @) Representation: The following real estate brokers {the "Brokers") and brokerage relationships exist im this transaction (check applicable hoxes): represents Lessor exclusively ('Lessor's Broker"); 2 represents Lessee exclusively ("Lessee’s Broker"); or MRL Enterprises/ Brian Testarmata represents both Lessor and Lessee ("Dual Agency). 1) Payment to Brokers: Upon execution and delivery of this Lease by both Parties, Lessor shall pay to the Brokers the brokerage fee agreed to in a separate written agreement (or if there is no such agreement, the sum of separate or agreement % of the iotal Base Rent) for the brokerage services rendered by the Brokers. 1.14 Guarantor. The obligations of the Lessee under this Lease are fo be guaranteed by Adrian Gonzalez and Gonzos Basic Solutions (“Guarantor”). (See alsa Paragraph 37) 118 Attachments. Attached hereto are the following, all of which constitute a part of this Lease: [1 =n addendum consisting of Paragraphs 51 through 52 [1 a site plan marked Exhibit , depicting the Premises; 71 a site plan marked Exhibit , depicting the Shopping Center; [7 a current set of Rules and Regulations for the Shopping Center; OO a current set of the Sign Criteria for the Shopping Center, OO a work letter; 00 other (specify): i 7 x Z PAGE 1 OF 14 5 INITIALS INITIALS ©2003 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM SCLN-12.04/14E Jan 1817,05:57p p.2 2 Premises. 21 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises, for the term, at the rental, and upon al of the terms, covenants and conditions set forth i this Lease. While the approximate square footage of the Premises may have been used in the marketing of the Premises for purposes of comparison, the Base Rent stated herein is NOT tied to square footage and is not subject to adjustment should the actual size be determined to be different. NOTE: Lessee is advised to verify the actual size prior to executing this Lease. ) 2.2 Condition, Lessor shall deliver the Premises to Lessee broom clean and free of debris on the Commencement Date or the Early Possession Date, whichever first occurs ("Start Date"), and, so long as the required sarvice contracts described in Paragraph 7.1 (b) below are obtained by Lessee ang in effect within 30 days following the Start Date, warrants that the existing electrical, plumbing, fire sprinkler, lighting, heating, ventilating and alr conditioning systems ("HVAG"), loading doors, if any, and all other such elements in the Premises, other than those constructed by Lessee, shail be in good operating condition on said date and that the structural elements of the roof, bearing walls and foundation of the Pramises shall be free of material defects, and that the Premises do not contain hazardous levels of any mold or fungi defined as toxic under applicable state or federal law, if a nen-compliance with such warranty exists as of the Start Date, or If one of such systems or elements should malfunction or fail within the appropriate warranty period, [Lessor shall, as Lessors sole obligation with respect to such matter, except as otherwise provided in this Lease, promptly after receipt of written notice from Lessee setting forth with specificity the nature and extent of such non-compliance, malfunction or failure, reclify same et Lessors expense. The warranty periods shall be as follows: (iy 8 months as to the HVAC systems, and (ji) 30 days as to the remaining systems and other elements of the Premises. If Lessee does not give Lessor the required nofice within the appropriate warranty period, correction of any such non-compliance, malfunction or failure shall be the obligation of Lessee at Lessee's sole cost and expense (except for the repairs to the fire sprinkler systems, roof, foundations, and/or bearing walls). Lessor also warrants, that unless otherwise specified in writing, Lessor is unaware of (i) any recorded Notices of Default affecting the Premise; (Ii) any delinquent amounts due under any loan secured by the Premises; and (iii} any bankruptoy proceeding affecting the Premises. ~ FeBrm me GHA PHAA CO 000 fos yes red S n & BOE 2.4 Acknowledgements. Lessee acknowledges that: (2) i has been given an opportunity to inspect and measure the Premises, (b) it has been advised by Lessor and/or Brokers to satisfy itself with respect to the size and condition of the Premises (including but not limited to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance with Applicable Requirements and the Americans with Disabilities Act), and their suitability for Lessee's intended use, (c) Lessee has made such investigation as it deems necessary with reference to such matters and assumes all responsibility therefor as the same refate to its occupancy of the Premises, (d) it is not relying on any representation as to the gize of the Premises made by Brokers or Lessor, (e) the square footage of the Premises was not material to Legsee's decision to lease the Premises and pay the Rent stated herein, and (f) neither Lessor, Lessor's agents, nor Brokers have made any orat or written representations or warranties with respect to said matters other than as set forth in this Lease. In addition, Lessor acknowledges that. (i) Brokers have made no representations, promises ar warranties concerning Lessee’s ability to honor the Lease or suitability to occupy the Premises, and (i) it is Lessors sole responsiblity to investigate the financial capability and/or suitability of afl proposed tenants, ei ote ot-b 25 Lessee as Prior Owner/Occupant. The warranties made by Lessar in Paragraph 2 shall be of no force or affect if immediately priar ta the Start Date Lessee was the owner or occupant of the Premises. In such event, Lassee shall be responsible for any necessary corrective work. 2.6 Vehicle Parking. Lessee shall not use and shall not permit ts employees to use any parking spaces in the Shopping Center except for parking by vehicles that are no larger than full-size passenger automobiles or pick-up trucks, hereln called "Permitted Size Vehicles.” Lessee shall permit its employees to only ocoupy those parking spaces, if any, as depicted as employee parking spaces on the Shopping Center site plan. Lessor may regulate the loading and unioading of vehicles by adopting Rules and Regulations as provided in Paragraph 2.9. No vehicles other than Permitted Size Vehicles may be parked in the Common Area without the prior written permission of Lesser. In addition: (@) Lessee shall not permit or allow any vehicles that belong to or are controlled by Lessee or Lessee's employees, suppliers, shippers, cantraclors or invitees fo be loaded, unloaded, or parked in areas other than those designated by Lessor for such activities. (by Lessee shail not service or store any vehicles in the Common Areas. (&) If Lessee permits or allows any of the prohibited activities described in this Paragraph 2.6, then Lessor shalt have the right, without hotice, in addition to such other rights and remedies that it may have, to remove or tow away the vehicle involved and charge the cost to Lessee, which cost shall be immediately payable upon demand by Lessor. 2.7 Common Areas - Definition. The term “Common Areas” is defined as all areas and facilities outside the Premises and within the extetior boundary line of the Shopping Center and interior utility raceways and Instailations within the Premises that are pravided and designated by the Lessor from time fo time for the general non-exclusive use of Lessor, Lessee and other tenants of the Shopping Center and their respective employees, suppliers, shippers, customers, contractors and invitees, including parking areas, loading and unloading areas, trash areas, roadways, walkways, driveways and landscaped areas. 28 Common Areas - Lessee’s Rights. Lessor grants to Lessee, for the benefit of Lessee and its employees, suppliers, shippers, contractors, customers and invitees, during the term of this Lease, the non-exclusive right to use, in common with others entitled to such use, the Common Areas as they exist from time to time, subject to any rights, powers, and privileges reserved by Lessor under the terms hereof or under the terms of any rules and regulations or restrictions governing the use of the Shopping Center. Under no circumstances shall the right herein granted to use the Common Areas be deemed to include the right to store any property, temporarily of permanently, in the Common Areas, nor the right to display mr or conduct sales in the Common Areas. Any stich storage, display or sales shall be permitted only by the prior written consent ; Lessor PAGE 2 OF 14 INITIALS INITIALS ©2003 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM SCLN-12-04/14E Jan 18 17,05:58p p.3 or Lessors designated agent, as exercised in Lessor's sole discretion, which consent may be revoked at any time. in the event that any unauthorized storage or displays shall occur then Lessar shall have the right, without notice, in addition to such other rights and remedies that it may have, to remove the property and charge the cost to Lessee, which cost shall be Immediately payable upon demand by Lessor. 2.9 Common Areas - Rules and Regulations. Lessor or such ather parson{s) as Lessor may appoint shall have the exclusive control and management of the Common Areas and shall have the right, from time to time, to establish, modify, amend and enforce reasonable niles and regutations (“Rules and Regulations”) for the management, safety, care, and cleaniiness of the grounds, the parking and unfoading of vehicles and the preservation of good order, as well as for the conveniance of other occupants or tenants of the Building and the Shopping Center and their invitees. Lessee agrees to abide by and conform to all such Rules and Regulations, and shall use its best efforts to cause its employees, suppliers, shippers, customers, contractors and invitees to $0 abide and conform. Lessor shall not be responsible to Lessee for the non-compliance with said Rules and Regulations by other tenants of the Shopping Center, 2.10 Common Areas - Changes. Lessor shall have the right, in Lessor's sole discretion, from time to time: (@ To make changes or additions fo the Common Areas, including, without limitation, changes in the location, size, shape and number of driveways, entrances, parking spaces, parking areas, loading and unloading areas, ingress, egress, direction of traffic, elevations, landscaped areas, signage, walkways and utility raceways, (1) To use and close temporarily any of the Common Areas for the purpose of maintaining, repairing and altering the Shopping Center, so long as reasonable access fo the Premises remains available, and to close temporarily any of the Common Areas to whatever extent Is required in the opinfon of Lessor's counsel to prevent a dedication of or the accrual of any rights of any persons or of the public to any of the Common Areas, 5] To designate other fand outside the boundaries of the Shopping Center to be a pat of the Common Areas or to be entitied to use the Common Areas on a reciprocal basis; {dy To add additional buildings and improvements to the Common Areas; and e) To do and perform such other acts and make such other changes in, to or with respect to the Common Areas and Shopping Center as Lessor may, in the exercise of sound business judgment, deem to be appropriate. 2.11 Cammon Areas « Promotional Events; Sidewalk Sales. Lessor reserves the right, from time to time, in Lessor's sole discretion, to utikze portions of the Common Areas for promotional events, which may include but shall not be limited to entertainment. Legsor further reserves the right, in Lessar's sole discretion, to permit any one or more tenants of the Shopping Center to conduct the display and/or sale of merchandise from the sidewalks immediately adjacent to such fenanta’ respective premises. 212 Common Areas - Remodeling. At any time during the Term, Lessor may remodel or expand, in any manner, the existing Shopping Center, which work may include, without limitation, the addition of shops and/or new buildings to the Shopping Center (collectively, "Remodeled Center”). KH Lessor deems it necessary for construction personnel to enter the Premises in order to construct the Remodeled Center, Lessar shalt give Lessee no less than 60 days prior notice and Lessee shall allow such entry. Lessor shall use reasonable efforts to complate any work affecting the Premises in an efficient manner so as not to interfere unreasonably with Lessee's business. lessee shail not be entitled to any damages for any inconvenience or any disruption to Lessee’s business caused by such work; provided, however, the Base Rent paid by Lessee for the period of the inconvenience shall be abated in proportion to the degree that Lessee's use of the Premises is impaired. Lessor shall have the right to use portions of the Premises to accominodate any structures required for the Remodeled Center, provided that If as a result thereof there is a permanent decrease in the floor area of the Premises of 3% or more, there shail be a proportionate downward adjustment of Base Rent and Lessee's Share. 3. Term, 3.1 Term. The Commencement Date, Expiration Date and Original Term of this Lease are as specified in Faragraph 1.3. 3.2 Early Possession. Any provision herein granting Lessee Early Possession of the Premises is subject to and conditioned upon the Premises being available for such possession prior to the Commencement Date. Any grant of Early Possession only conveys a non-exclusive right to occupy the Premises, (f an Early Possession Date has been specified in Paragraph 1.4, the Parties intend that Lessee shall have access to the Premises as of the Early Possession Date for purposes of preparing and fixturizing the Premises for the conduct of Lessee’s business. If Lessee totally ar partially occupies the Premises prior to the Commencement Date for any reason (and for purposes hereof, “occupancy” shall include, without limitation, Lessee's entry onto the Premises for purposes of preparing and fixturizing the Premises for business), the obligation to pay Base Rent and Percentage Rent shall be abated for the period of such early possession. All other terms of this Lease (including but not limited to Lessee's obligations to parry insurance and to maintain the Premises) shall be in effect during such period, except that Lessee’s obligation to pay Lessee's Share of Carmmon Area Operating Expenses, Real Property Taxes and insurance premiums shall only be in effect prior to the Commencement Date if Lessee has opened for business in the Premises prior to the Commencement Date. Any such Early Possession shail not affect the Expiration Date. 3.3 Delay In Possession. Lessor agrees to use its best commercially reasonable efforts to deliver pogsession of the Premises to Lessee by the Commencement Date. If, despite said efforts, Lessor is unable to deliver possession by such date, Lessor shali not be subject to any liability therefor, nor shall such failure affect the validity of this Lease or change the Expiration Date. Lessee shall not, however, be obligated to pay Rent or perform its other obligations until Lessor delivers possession of the Premises and any period of rent abatement that Lessee would otherwise have enjoyed shall run from the date of delivery of possessian and continue for a period equal to what Lessee would otherwise have enjoyed under the terms hereof, but minus any days of delay caused by the acts or omissions of Lessee, If possession is not delivered within 80 days after the Commencement Date, as the same may he extended under the terms of any Work Letter executed by Parties, Lessee may, at its option, by notice in writing within 10 trys after the end of such 60 day period, cancel this Lease, in which event the Parties shall be discharged from ail obtigations hereunder. [If such written; notice is not received by Lessor within said 10 day period, Lessee's right to cancel shall terminate. If passgssion of the Premises is not delivered within 120 days after the Commencement Date, this Lease shall terminate unless other agreements are reached between Lessor and Lessee, in writing. 3.4 Lessee Compliance. Lessor shall not be required to tender possession of the Premises to Lessee until Lessee complies with its obligation to provide evidence of insurance (Paragraph 8.5). Pending delivery of such evidence, Lessee shall be required to perform all of its obligations under this Lease from and after the Start Date, including the payment of Rent, notwithstanding Lessor's election to withhold possession pending receipt of such evidence of insurance. Further, If Lessee is required to perform any other conditions priar to or concurrent with the Star Date, the Start Date shall oceur ut Lessor may efect to withhold possession until such conditions are satisfied, 4. Rent. 4.1 Rent Defined, All monetary obligations of Lessee to Lessor under the terms of this Lease (except for the Security Deposit) are deemed to be rent ("Rent"). 4.2 Common Area Operating Expenses. Lessee shall pay to Lessor during the term hereof, in addition to the Base Rent and, if applicable, Percentage Rent, Lessee's Share (as specified in Paragraph 1.7) of all Common Area Operating Expenses, as hereinafter defined, during gach ¢alendar year of the term of this Lease, in accordance with the following provisions: @) “Common Area Operating Expenses” are defined, far purposes of this Lease, as all costs incurred by Lessor relating to the ownership and operation of the Shopping Center, including, but not limited to, the following: {i The operation, repair and maintenance, in neat, clean, good order and condition, and replacement as reasonably necessary, of the following; (@@) . The Common Areas and Common Area improvements, including parking areas, feading and unloading areas, trash areas, roadways. parkways, walkways, driveways, landscaped areas, parking lot striping, bumpers, inigation systems, Common Area lighting facilities, fences anc gates, elevators, roofs, exterior walls of the buildings, building systems and roof drainage systems. (bh) Exterior signs and any tenant directories. (ce) Any fire detection and/or sprinkler systems. (cid) Common electrical, plumbing and other utilities servicing any bullding in tha Shopping Center andior the Common Areas. (ee) All other argas and improvements that are within the exterior boundaries of the Project but outside of the Premises andior any other apace occupied by a tenant. (ii) The cost of water, gas, electricity and telephone to service the Common Areas and any utilities not separately metered, (tii) The cost of trash disposal, pest control services, property management (including, but not be limited to, a property management fee to Lessor equal to §% of Base Rent and Percentage Rent), security services, and the costs of any environmental inspections. {iv} Reserves set aside for equipment, maintenance, repair and replacement of Common Areas. v) Rea! Propeny Taxes (as defined in Paragraph 10). (vi) The cost of the premiums for the insurance maintained by Lessor pursuant to Paragraph 8. (vii) Any deductible portion of an insured fass concerning the Building or the Common Areas. {viii} Auditors’, accountants’ and aftorrteys’ fees and costs related to the operation of the Shopping Center. (ix) The cost of any capital improvement to the Building or the Shopping Center not covered under the provigions of PAGE 3 OF 14 £ INITIALS INITIALS ®2003 « AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM SCLN-12-04/14E Jan 18 17,05:59p p.4 Paragraph 2.3; provided, however, that Lessor shall allocate the cost of any such capital improvement over a 12 year perind and Lessee shall not be required to pay more than Lessee’s Share of 1/144th of the cost of such capital improvement in any given month. x} The cost of any other services to be provided by Lessor that are stated elsewhere In this Lease to be a Commen Area Operating Expense. [19] If Lessor determines that the method of proration of any item included within Common Area Operating Expenses is inequitable, Lessor may prorate such item on the basis of usage or other equitable considerations. Any Common Area Operating Expenses and Real Property Taxes that are specifically attributable to the Premises, the Building or to any other premises or building in the Shopping Center or fo the operation, repair and maintenance thereof shall be allocated entirely to such premises or building. However, any Common Area Operating Expenses and Real Property Taxes that are not specifically attributable to any premises or building or to the operation, repair and maintenance thereof shall be equitably allocated by Lessor to all buildings in the Shopping Center. ©) The inclusion of the improvements, facilities and services set forth in Subparagraph 4.2(a) shall not be deemed to impose an obligation upon Lessor to either have said improvements or facilities or to provide those services unless the Shopping Center already has the same, Lessor already provides the services, or Lessor has agreed elsewhere in this Lease to provide the same or seme of them. {d) Lessee's Share of Common Atea Operating Expenses is payable monthly on the same day as the Base Rent is due hereunder. The amount of such payments shall be based on Lessor's estimate of the annual Common Area Operating Expenses. Within 80 days after written request (but not more than once each year) Lessor shall deliver fo Lessee a reasonably detailed statement showing Lessee's Share of the actual Common Area Operating Expenses for the preceding year. If Lessee's payments during such year exceed Lessee's Share, Lessor shall credit the amount of such aver-payment against Lessee's future payments. If Lessee's payments during such year were less than Lessee’s Share, Lessee shall pay to Lessor the amount of the deficiency within 10 days after delivery by Lessor to Lessee of the statement. (e) if there are one or more Major Tenants {as hereinafter defined) within the Shopping Center, then at Lessar's sole option, the amount to be reimbursed by such Major Tenants to Lessor for all or a portion of the Common Area Operating Expenses may be determined by alternative equitable methods (e.9., a Major Tenant may pay directly for its own security), and the actual amount paid by such Major Tenants shall be credited against the Common Area Operating Expenses aliocated to other tenants of the Shopping Center; provided, however, that in such event the rentable area of the buildings leased to such Major Tenants shall be excluded from the rentable area of the Shopping Center for purposes uf determining Lessee’s Share of Common Area Operating Expenses for those specific items, notwithstanding the percentage set forth in Paragraph 1.7. As used herein, the term "Major Tenant" shall mean a tenant leasing at least 15,000 square feet of rentable area within the Shopping Center. fH Common Area Operating Expenses shail not include any expenses paid by any tenant directly to third parties, or as to which Lessor is otherwise reimbursed by any third party, other tenant, or insurance proceeds. 4.3 Payment. Lessee shall cause payment of Rent to be received by Lessor in lawhd money of the United States, without offset or deduction (except as specifically permitted in this Lease), on or before the day on which it is dus. All monetary amounts shall be rounded to the neansst whole dollar. in the event that any invoice prepared by Lessor js inaccurate such inaccuracy shall not constitute a waiver and Lessee shall be obligated to pay the amount set forth in this Lease. Rent for any period during the term hereof which is for less than one full calendar month shall be prorated based upon the actual number of days of said month. Payment of Rent shall be made to Lessor at its address stated herein or to such other persons or Hace as Lessor may from time to fime designate in writing. Acceptance of a payment which Is less than the amount then due shall not he a waiver of Lessors rights to the balance of such Rent, regardless of |essor's endorsement of any check so stating. In the event that any check, draft, or other instrument of payment given by Lessee to Lessor is dishonored for any reason, Lessee agrees to pay to Lessor the sum of $25 in addition to any Late Charge and Lessor, at its option, may require all future Rent be paid by cashier's check. Payments will be applied first to accrued late charges and attorney's fees, second to agorued interest, then to Base Remt and Common Area Operating Expenses, and any remaining amount to any other outstanding charges or costs. 5. Security Deposit. Lessee shall deposit with Lessor upon execution hereof the Security Deposit as security for Lessee's faithful performance of its obligations under this Lease. If Lessee fails to pay Rent, or otherwise Defaults under this Lease, Lessor may use, apply or retain all or any portion of said Security Deposit for the payment of any amount already due Lessor, for Rents which will be due in the future, and’ or to reimburse or compensate Lessor for any liability, expense, loss or damage which Lessor may suffer or incur by reason thereof. If Lessor uses or applies ail or any poricn of the Security Deposit, Lessee shall within 10 days after written request therefor deposit monies with Lessor sufficient to restore said Security Deposit to the full amount required by this Lease. If the Base Rent increases during the term of this Lease, Lessee shall, upon written request from Lessor, deposit additional monies with Lessor so that the total amount of the Security Deposit shall at aft times bear the same proportion to the increased Base Rent as the inftial Security Deposit bore to the initial Base Rent. Should the Agreed Use be amended to accommodate a material change in the business of Lessee of to accommodate a sublessee or assignee, Lessor shail have the right to increase the Security Deposit to the extent necessary, in Lessors reasonable judgment, to account for any increased wear and tear that the Premises may suffer as a resuit thereof. Ifa change in control of Lessee occurs during this Lease and following such change the financial condition of Lessee is, in Lessors reasonable judgment, significantly reduced, Lessee shall deposit such additional monies with Lessor as shall be sufficient to cause the Security Deposit to be at a commercially reasonable level based on such change in financial condition. Lessor shall not be required to keep the Security Depasit separate from its general accounts. Within 90 days after the expiration or termination of this Lease, Lessor shall return that portion of the Security Deposit not used or applied by Lessor. No part of the Security Deposit shall be considered to be held In trust, fo bear interest or to be prepayment for any monies to be paid by Lessee under this Lease. g. Use, B.1 Use, @) Agreed Use; Agreed Trade Mame. Lessee shall use and occupy the Premises only for the Agreed Use, and for no other purpose, and Lessee shall operate at the Premises only under the Agreed Trade Name and under no other trade name. Lessse shall not use or permit the use of the Premises in a manner that is unlewful, creates damage, waste or a nuisance, or that disturbs occupants of or causes damage to neighboring premises or properties, Other than guide, signal and seeing eye dogs, Lessee shall not keep or allow in the Premises any pets, animals, birds, fish, or reptiles. Lessor shall not unreasonably withhold or delay its consent to any written request for a modification of the Agreed Use, so long as the same will not impair the structural integrity of the improvement on the Premises or the mechanical or electrical systems therein, and/or is not significantly more burdensome to the Premises, and/or is not in conflict with or incompatible with the existing or proposed uses (whether or not exclusive) of other accupants of the Shopping Center. Lessor shall not unreascnably withhold or delay its consent io any written request for a modification of the Agreed Trade Name, so lang as the same is not in conflict with or incompatible with the nature and character of the Shopping Center ar other existing or proposed uses of other occupants of the Shopping Center. If Lessor elects to withhold consent, Lessor shall within 7 days after such request give written notification of same, which notice shall include an explanation of Lessors objections to the change in the Agreed Use andor Agreed Trade Mame. (b) Continuous Operation. Lessee shall continuously (iy operate and conduct the Agreed Use under the Agreed Trade Name within the entire Premises in a reputable manner and in conformity with industry standards of practice prevailing in the field of business among merchants engaged in the same or similar business in the city in which the Premises are located, (ii) staff the Premises with sufficient sales personnel, stock the Premises with adequate merchandise and exercise sound business practices so as lo maximize Gross Sales for the benefit of Lessor. Ata minimum, Lessee shail keep the Premises continuously open for business Monday through Friday from 8:00 a.m. to 6:00 p.m., Saturday from &.00 a.m. to 8:00 p.an., and Sunday from 10:00 a.m. to 6:00 p.m. if Lessee fails to comply with the requirements of this Paragraph 6.1(b), then in addition to any and all other rights and remedies of Lessor, Lessee shall pay to Lessor an amount equal to 1/15th of the Base Rent for each tay or portion thereof that Lessee fails to so comply. Such sum shall be in addition to, and not a part of, the Base Rent otherwise due under this Lease, {¢} Viotations of Exclusive Use Rights. Lessee acknowledges that Lessor may grant, Or may have previously granted, exclusive use rights to ather tenants of the Shopping Center and agrees that a material consideration to Lessor in enteting into this Lease is Lesses's covenant to limit its use of the Premises to the Agreed Use under the Agreed Trade Name as set forth above, Lessee’s violation of exclusive use rights granted to other tenants of the Shopping Center will result in Lessor suffering irreparable harm and, therefare, in addition to all ather rights and remedies available to Lessor, Lessor may seek to enjoin Lessee’s breach of such covenant and Lessee shall be liable for any damages incurmed or sustained by Lessor to such other tenants whose exclusive use rights are breached by Lesses. In no event shall Lessor be liable to Lessee for any failure of any other tenants of the Shopping Center to oparate their businesses, or far any loss or damage that may be occasioned by or through the acts or omissions of other tenants or third parties. (dl) Other Tenancies, Lessar, at its sole discretion, reserves the absolute right to establish procedures to control other tenancies in the Shopping Center. Regardless of whether any specific tenants are shown on any site plan attached hereto, Lessee does not rely on that fact, nor does Lessor represent that any specific tenant or number or type of tenants shall or shall not during the Term occupy any portion of the Shopping Center, nor does Lessee rely an any other tenant operating its business in the Shopping Center at any particular time or times. Further, no conduct by any tenant, subtenant or other ocoupant of, or any customer of, or any supplier to or use of any pottion of the Shopping Genter shall constitute an eviction, constructive or otherwise, of Lessee from tha Premises, and Lessee hereby waives any and all claims that it might otherwise have against Lessor by reason thereof, 6.2 Hazardous Substances. @) Reportable Uses Require Consent. The term "Hazardous Substance” as used in this Lease shall mean any product, PAGE 4 OF 14 INITIALS INITIALS ©2003 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM $CLN-12-04/14E Jan 1817,06:01p p.5 substance, or waste whose presence, use, manufacture, disposal, transportation, or release, efther by itself or in combination with other materials expecied to be on the Premises, is either. (i) potentially injurious to the public health, safely or welfare, the environment or the Premises, (ii) regulated or monitored by any governmental authority, or (iif) a basis for potential liabitity of Lessor to any governmental agency ar third party under any applicable statute or common aw theory. Hazardous Substances shall inciude, but not be limited to, hydrocarbens, petroleum, gasoline, and/or crude ail or any products, by-products or fractions thereof. Lessee shall not engage in any activity in or on the Premises which constitutes a Reportable Use of Hazardous Substances without the express prior written consent of Lessor and timely compliance (at lLessee’s ewpense) with all Applicable Requirements. "Reportable Use" shall mean (i) the installation or use of any abave or below ground storage tank, (ii) the generation, possession, storage, use, transportation, or disposal of 2 Hazardous Substance that requires a pemmit from, or with respect to which a report, notice, registration or business plan is required to be filed with, any governmental authority, and/or (iii) the presence at the Premises of 2 Hazardous Substance with respect to which any Applicable Requirements requires that a notice be given to persons entering or occupying the Premises or neighboring properties. Notwithstanding the foregoing, Lessee may use any ordinary and customary materials reasonably required to be used in the normal course of the Agreed Use, ordinary office supplies (copier toner, liquid paper, glue, etc.) and common household cleaning materials, so ong as such use Is in compliance with all Applicable Requirements, is not a Reportable Use, and does not expose the Premises or neighboring property to any meaningful risk of contamination or damage or expose Lessor to any liability therefor. In addition, Lessor may condition its consent to any Reportable Use upon receiving such additional assurances as Lessor reasonably deems necessary to protect itself, the public, the Premises and/or the environment against damage, contamination, injury andor liability, including, but not limited fo, the Installation {and removal on or before Lease expiration or termination) of protective modifications (such as concrete encasements) andfor increasing the Security Deposit. ) {b) Duty to Inform Lessor. if Lessee knows, or has reasonable cause to believe, that a Hazardous Substance has come to be located in, on, under or about the Premises, other than as previously consented to by Lessor, Lessee shall immediately give written notice of such fact to Lessor, and provide Lessor with a copy of any report, notice, claim or other documentation which it has concerming the presence of such Hazardous Substance. {c) Lessee Remediation. Lessee shall not cause or permit any Hazardous Substance to be spilled or released in, on, under, or about the Premises (Including through the plumbing or sanitary sewer systern) and shall promptly, at Lessee's expense, comply with all Applicable Requirements and take all investigatory and/or remedial action reasonably recommended, whether or not formally ordered or required, for the cleanup of any contamination of, and for the maintenance, security and/or monitoring of the Premises or neighboring properties, that was caused or materially contributed to by Lessee, or pertaining to or involving any Hazardous Substance brought onto the Premises during the term of this Lease, by or for Lesser, or any third party, (d) Lessee indemnification. Lessee shall indemnify, defend and hold Lessor, its agents, employees, lenders and ground lessor, if any, harmless from and against any and all loss of rents and/or damages, liabilities, judgments, claims, expenses, penalties, and attorneys’ and consullants’ fees arising out of or involving any Hazardous Substance brought onto the Premises by of for Lessee, of any third party (provided, however, that Lessee shall have no liability under this Lease with respect to underground migration of any Hazardous Substance under the Premises from areas outside of the Shopping Center not caused or contributed to by Lessee). Lessee's obligations shall include, but not be limited to, the effects of any contamination or injury to person, property or the environment created or suffered by Lessee, and the cost of investigation, removal, remediation, restoration andfor abatement, and shail survive the expiratioh or termination of this Lease. No termination, cancellation or release agreement entered into by Lessor and Lessee shall release Lessee from its obligations under this Lease with respect to Hazardous Substances, unless specifically so agreed by Lessor in writing at the time of such agreement. {e) Lessor Indemnification. Except as otherwise provided in paragraph 8.7, Lessor and its successors and assigns shali indemnify, defend, reimburse and hold Lessee, its employees and lenders, hammless from and against any and all environmental damages, including the cost of remediation, which are suffered as a direct result of Hazardous Substances on the Premises prior to Lessee taking possession or which are caused by the gross negligence or willful misconduct of Lessor, its agents or employees. Lessors obligations, as and when required by the Applicable Requirements, shall include, tut not be limited to, the cost of investigation, removal, remediation, restoration and/or abaternent, and shall survive the expiration ot termination of this Lease. 4) Investigations and Remediations. Lessor shall retain the responsibility and pay for any investigations or remediation measures required by governmental entities having jurisdiction with respect to the existence of Hazardous Substances on the Premises priar fo Lessee taking possession, unless such remediation measure is required as a result of Lessee's use (including “Alterations”, as defined in paragraph 7.3(a) below) of the Premises, in which event Lessee shall be responsible for such payment. Lessee shall cooperate fully in any such activities at the request of Lessor, including allowing Lessor and Lessor's agents to have reasonable actess to the Premises at reasonable times in order to carry out Lessors investigative and remedial responsibilities. Lessor Terrnination Option. If a Hazardous Substance Condition (see Paragraph 9.1(g)) oceurs during the term of this Lease, unless Lessee is legally responsible therefor {in which case lessee shail make the investigation and remediation thereof required by the Applicable Requirements and this Lease shall continue in full force and effect, but subject to Lessor's rights under Paragraph 6.2(d) and Paragraph 13), Lessor may, at Lessor's option, either (i) investigate and remediate such Hazardous Substance Condition, if required, as soon as reasonably possible at Leasor's expense, in which event this Lease shall continue in full force and effect, or (ii) if the estimated cost to remediate such condition excesds 12 times the then monthly Base Rent or $100,000, whichever is greater, give written notice to Lessee, within 30 days after receipt by Lessor of knowledge of the occurrence of such Hazardous Substance Condition, of Lessor's desire to terminate this Lease as of the date 60 days following the date of such rofice. In the event Lessor elects to give a termination notice, Lessee may, within 10 days thereafter, give written notice to Lessor of Lessee's commitment to pay the amount by which the cost of the remediation of such Hazardous Substance Condition exceeds an amount equal to 12 times the thert monthly Base Rent or $100,000, whichever Is greater. Lessee shall provide Lessor with said funds or satisfactory assurarice thereof within 30 days following such commitment. in such event, this Lease shall continue in full forse and effect, and Lessor shall proceed to make such remediation as soon as reasonably possible after the required funds are available. If Lessee does not give such niotice and provide the required funds or assurance thereaf within the time provided, this Lease shall terminate as of the date specified in Lessor's notice of termination. 8.3 Lessee’s Compliance with Applicable Requirements. Except as otherwise provided in this Lease, Lessee shall, at Lessee's sole expense, fully, diligently and in a timely manner, materially comply with all Applicable Requirements, the requirements of any applicable fire insurance underwriter or rating bureau, and the recommendations of Lessors engineers and/or consultants which relate in any manner to such Requirements, without regard to whether said Requirements are now in effect or become effective after the Start Date. Lessee shall, within 10 days after receipt of Lessors written request, provide Lessor with copies of all permits and other documents, and other information evidencing Lessee's compliance with any Applicable Requirements specified by Lessor, and shall immediately upon receipt, notify Lessor in writing (with copies of any documents involved) of any threatened or actual claim, notice, citation, warning, complaint or report pertaining fo or involving the failure of Lessee or the Premises to comply with any Applicable Requirements. Likewise, Lessee shall immediately give written notice to Lessor of: (i) any water damage to the Premises and any suspecled seepage, pooling, dampness or other condition conducive to the production of mold; or (ii) any mustiness or other cders that might indicate the presence of mold in the Premises, 6.4 Inspection; Compliance, Lessor and Lessor's "Lender" (2s defined in Paragraph 30) and consultants shall have the right to enter into Premises at any time, in the case of an emergency, and otherwise at reasonable times after reasonable notice, for the purpose of inspecting the condition of the Premises and for verifying compliance by Lessee with this Lease. The cost of any such inspections shall be paid by Lessor, unless a violation of Applicable Requirements, or @ Hazardous Substance Condition (see Paragraph 9.1) is found to exist or be imminent, or the inspection is requested or ordered by a governmental authority. In such case, Lessee shall upon request reimburse Lessor for the cost of such inspection, so long @s such inspection is reasonably related to the viotation or contamination. In addition, Lessee shall provide copies of all relevant material safety data sheets (MSDS) to Lessor within 10 days of the receipt of written request therefor, 7. Maintenance; Repairs, Utility Installations; Trade Fixtures and Alterations. 71 Lessee’s Obligations. (a) In General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 6.3 (Lessee's Compliance with Applicable Requirements), 7.2 (Lessor's Obligefions), © (Damage or Destruction), and 14 (Condemnation), Lessee shall, at Lessee's sole expense, keep the Premises, Utility Instaliations (intended for Lessee's exclusive use, no matter where located), and Alterations in good order, condition and repair (whether or not the portion of the Premises requiring repairs, or the means of repairing the same, are reasonably or readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of Lessee's use, any prior use, the elements or the age of such portion of the Premises), including, but not limited to, all equipment or facilities, such as plumbing, HVAC equipment, electrical, lighting facilities, boilers, pressure vassels, fixtures, interior walls, interior surfaces of exterior walls, ceilings, floors, windows, doors, plate glass, and skylights but excluding any items which are the responsibility of Lessor pursuant to Paragraph 7.2. Lessee, In keeping the Premises in good order, condition and repair, shall exercise and perform good maintenance practices, specifically including the procurement and maintenance of the service contracts required by Paragraph 7.1{b) balow. Lessee's obligations shall include restorations, replacements or renewals when necessary to keep the Premises and all improvements thereon or a part thereof in good order, condition and state of repair. (0) Service Contracts, Lessee shall, at Lessee’s sole expense, procure and maintain contracts, with copies to Lessor, in customary form and substance for, and with contractors specializing and experienced in the maintenance of the following equipment and imprpvements, if any, If and when installed on the Premises: (i) HVAC equipment, {ii) boiler and pressure vessels, and (iii) clarifiers. However, Lessor "AL PAGE § OF 14 yy. INITIALS INITIALS ©2063 ~ AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM SCLN-12-04/14E Jan 18 17,06:02p p.6 reserves the right, upon notice to Lessee, to procure and maintain any or all of such service contracts, and Lessee shall reimburse Lessor, upon demand, for the cost thereof. (c} Failure fo Perform, If Lessee fails to perform Lessee’s obligations under this Paragraph 7.1, Lessar may enter upon the Premises after 10 days’ prior written notice to Lessee (except in the case of an emergency, in which case no notice shall be required), perform such abiigations on Lessee's behalf, and put the Premises in good order, condition and repair, and Lessee shall promptly pay to Lessor a sum equal to 115% of the cost thereof. i) Replacement. Subject to Lessee's indemnification of Lessor as set forth in Paragraph 8.7 below, and without relieving Leasee of liability resulting from Lessee’s falture to exercise and perform good maintenance practices, if an item described in Paragraph 7.1(b) cannot be repaired other than at a cost which is in excess of 50% of the cost of reptacing such iter, then such item shall be replaced by Lessor, and the cost thereof shall be prorated between the Parties and Lessee shall only be obligated to pay, each month during the remainder of the term of this Lease, on the date on which Base Rent Is due, an amount equal to the product of multiplying the cost of such replacement by a fraction, the numerator of which Is one, and the denominator of which is 144 (.e. 1/144th of the cost per month). Lessee shall pay Interest on the unamortized balance but may prepay its obligation at any time 7.2 Lessor's Obligations. Subject to the provisions of Paragraphs 2.2 (Corudition), 2.3 (Compliance), 4.2 (Common Area Operating Expenses), 6 (Use), 7.1 (Lessee's Qhligations), 8 (Damage or Destruction) and 14 (Condemnation), Lessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition and repair the foundations, exterior walls, structural condition of interior bearing walls, exterior roof, fire sprinkler system, Common Area fire alarm and/or emoke detection systems, fire hydrants, parking lots, walkways, parkways, driveways, landscaping, fences, signs and utility systems serving the Common Areas and all parts thereof, as well as providing the services for which there is a Common Area Operating Expense pursuant to Paragraph 4.2. Lessor shall not be obligated to paint the exterior or Interior surfaces of exterior walls nor shall Lessor be obligated to maintain, repair or replace windows, doors or plate glass of the Premises. Lessee expressly walves the benefit of any statute now or hereafter in effect to the extent it is inconsistent with the terms of this Lease. 7.3 Utility Installations; Trade Fixtures; Alterations. a Definitions. The term “Utility Installations” refers to all floor and window coverings, air and/or vacuum lines, power panels, electrical distribution, security and fire protection systems, communication cabling, lighting fdures, HVAC equipment, plumbing, and fencing in or on the Premises. The term "Trade Fixtures” shall mean Lessee’s machinery and equipment that can be removed without doing material damage to the Premises. The term “Alterations” shall mean any modification of the improvements, other than Utility Installations or Trade Fixtures, whether by adcition or deletion. "Lessee Owned Alterations andlor Utility Installations’ are defined as Alterations and/or Utility Instailations made by Lessee that are not yet owned by Lessor pursuant to Paragraph 7.4(a). (b) Consent. Lessee shall not make any Alterations or Utifity Installations to the Premises without Lessor's prior written consent. Lessee may, however, make non-structural Alterations or Utility Installations to the interior of the Premises (excluding the roof) without such consent but upon notice to Lessor, as long as they are not visible from the outside, do not involve puncturing, relocating or removing the roof or any existing walls, will not affect the electrical, plumbing, HVAC, and/or life safety systems, and the cumulative cost thereof during this Lease as extended does not exceed a sum equal lo 3 month's Base Rent in the aggregate or a sum equal to one month's Base Rent in any one year. Notwithstanding the foregoing, Lessee shalt not make or permit any raof penetrations and/or install anything on the roof without the prior written approval of Lessor. Lessor may, as a precondition to granting such approval, require Lessee to utilize a contractor chosen andlor approved by Lessor. Any Alterations or Utility Installations that Lessee shall desire to make and which require the consent of the Lessor shall be presented to Lessor in written form with delailed plans. Consent shall be deemed conditioned upon Lessee's: (i) acquiring alt applicable governmental permits, (i) furnishing Lessar with copies of both the permits and the plans and specifications prior to commencement of the work, and (ili) compliance with all conditions of said permits and other Applicable Requirements in a prompt and expeditious manner, Any Afterations or Utility Installations shall be performed in @ workmanlike manner with good and sufficient materials. Lessee shall promptly upon completion furnish Lessor with as-built plans and specifications. For work which costs an amount in excess of ane month's Base Rent, Lessor may condition its consent upon Lessee providing a lien and completion bond in an amount equal to 150% of the estimated cost of such Alteration or Utility Installation and/or upon Lassee's posting an additional Security Deposit with Lessor. (c) Liens; Bonds. Lessee shall pay, when due, all claims for labor or materials furnished or alteged to have been fumished to or for Lessee at or for use on the Premises, which claims are or may be secured by any mechanic's or materialman’s lien against the Premises or any interest therein. Lessee shall give Lessor not less than 10 days notice prior to the commencement of any work in, on or about the Premises, and Lessor shall have the right to post notices of non-responsibility. if Lessee shall contest the validity of any such lien, claim or demand, then Lessee shall, ai its sole expense defend and protect itself, Lessor and the Premises against the same and shall pay and satisfy any such adverse judgrnent that may be rendered thereon before the enforcement thereof. If Lessor shall require, Lessee shall fumish a surety bond In an amount equal to 150% of the amount of such contested lien, claim or demand, indemnifying Lessor against liability for the same. |f Lessor elects to participate in any such action, Lessee shall pay Lessors attorneys’ fees and costs. 7.4 Ownership; Removal; Surrender; and Restoration. (a) Ownership. Subject to Lessor’s right to require removal or elect ownership as hereinafter provided, all Alterations and Utility Installations made by Lessee shall be the property of Lessee, but considered a part of the Premises. Lessor may, at any time, elect in writing to be the owner of ali or any specified part of the Lessee Owned Alterations and Utility Installations. Unless otherwise instructed per Paragraph 7.4(b) hereof, all Lessee Owned Alterations and Utifity installations shall, at the expiration or termination of this Lease, become the property of Lessor and be surrendered by Lessee with the Premises. {b) Removal. By delivery to Lessee of written notice from Lessor not eardier than 80 and not later than 3G days prior to the end of the term of this Lease, Lessor may require that any or all Lessee Owned Alterations or Utility Installations be removed by the expiration or termination of this Lease. Lessor may require the removal at any time of all or any part of any Lessee Owned Alterations or Utility Installations made without the required consent. {c) Surrender; Restoration. Lessee shall surrencier the Premises by the Expiration Date or any earlier termination date, with all of the improvements, parts and surfaces thereof broom clean and free of debris, and in good operating order, condition and state of repair, ordinary wear and tear excepted, "Ordinary wear and tear’ shall not include any damage or deterioration that would have been prevented by good maintenance practice. Notwithstanding the foregoing, if this Lease is for 12 months or less, then Lessee shall surrender the Premises in the same condition as delivered to Lessee on the Start Date with NO allowance for ordinary wear and tear. Lesses shall repair any damage occasioned by the instaltation, maintenance or removal of Trade Fixtures, Lessee Owned Alterations and/or Utility Installations, furnishings, and equipment as well as the removal of any storage tank installed by or for Lessee. Lessee shall also remove from the Premises any and all Hazardous Substances brought onto the Premises by or for Lessee, or any third party (except Hazardous Substances which were deposited via underground migration from areas outside of the Premises) fo the level specified in Applicable Requirments. Trade Fixtures shall remain the property of Lessee and shall be removed by Lessee, Any personal property of Lessee nat removed on or before the Expiration Date or any eariier termination date shall be deemed to have been abandoned by Lessee and may be disposed of or retained by Lessor as Lessor may desire. The failure by Lessee to timely vacate the Premises pursuant to this Paragraph 7.4(c) without the express written consent of Lessor shall constitute a holdover under the provisions of Paragraph 26 below, 8 Insurance; indemnity. 8.1 Payment of Premiums. The cost of the premiums for the insurance policies required to be cared by Lessor, pursuant to Paragraphs 8.2(b), 8.3(a) and 8.3(b), shall be a Common Area Operating Expense. Premiums for policy periods commencing prior to, or extending beyond, the term of this Lease shall be prorated to coincide with the corresponding Start Date or Expiration Date. 82 Liability Insurance. (@) Carried by Lessee. Lessee shall obtain and keep in force a Commercial General Liability policy of insurance protecting Lessee and Lessor as an additional insured against claims for bodily injury, personal injury and property damage based upen or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall bg on an occurrence basis providing single limit coverage in an amount not less than $1,000,000 per occurrence with an annual aggregate of net less than $2,000,000. Lessee shall add Lessor as an additional insured by means of an endorsement at least as broad as the Insurance Service Organization's “Additional insured-Marnagers or Lessors of Premises” Endorsement, The policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shall include coverage for ability assumed under this Lease as an “insured contract” for the performance of Lessee's indemnity obligations under this Lease. The limits of said insurance shall not, however, limit the fiability of Lessee nor refieve Lessee of any obligation hereunder. Lessee shall provide an endorsement on its liability policy(jes) which provides that its insurance shall be primary to and not contributory with any similar instirance carried by Lessor, whose insurance shall be considered excess insurance only. : {b) Carried by Lessor. Lessor shall maintain liability insurance as described in Paragraph 8.2(a), in addition to, and not in lieu of, the insurance required fo be maintained by Lessee. Lessee shall not be named as an additional insured thergin. 8.3 Property Insurance - Building, improvements and Rental Value, (@) Building and Improvements. Lessor shall obtain and keep in force a policy or policies of insurance in the name of Lessor, with loss payable ta Lessor, any ground-lessor, and to any Lender insuring loss of damage to the Premises. The amount of such insurance shall be equal to the full insurable replacement cost of the Premises, as the same shall exist from time to time, or the amount required by any Lender, but\i no event mare than the commercially reasonable and available insurable value thereof. Lessee Owned Alterations and Utility Ha Trade PAGE 6 OF 14 INTFIALS INITIALS ©2003 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM SCLN-12-04/14E Jan 18 17,06:04p p.7 Fixtures, and Lesses's personal property shall be insured by Lessee not by Lessor. If the coverage is avallable and commercially appropriate, such policy or policies shall insure against all risks of direct physical loss or damage (except the perils of flood and/or parthquake unless raquired by a Lender), including coverage for debris removal and the enforcement of any Applicable Requirements requiring the upgrading, demelition, reconstruction or replacement of any portion of the Premises as the result of a covered loss. Said policy or policies shall also contain an agreed valuation provision in lieu of any coinsurance clause, waiver of subrogation, and inflation guard protection causing an increase in the annual property insurance coverage amount by a factor of not less than the adjusted U.8. Department of Labor Consumer Price Index for All Urban Consumers for the city nearest to where the Premises are located. If such insurance coverage has a deductible clause, the deductible amount shall not exceed $5,000 per ocourrence. (9) Rental Value. Lessor shall also obtain and keep in force a palicy or policies in the name of Lessor with loss payable to Lessor and any Lender, insuring the loss of the full Rent for one year with an extended period of indemnity for an additional 180 days ("Rental Value Insurance”). Said insurance shall contain an agreed valuation provision in lieu of any coinsurance clause, and the amount of coverage shall be adjusted annually to reflect the projected Rent otherwise payable by Lessee, for the next 12 month period. fc) Adjacent Premises. Lessee shall pay for any increase in the premiums for the property insurance of the Bublding and for ie Common Areas or other buiidings In the Shopping Center if said increase is caused by Lessee's acts, omissions, use or ccoupancy of the remises. {a} Lessee’'s improvements. Since Lessor is the insuring Party, Lessor shall not be required to insure Lessee Owned Alterations and Utility Installations unless the item In question has become the property of Lessor under the terms of this Lease. g.4 Lessee’s Property; Business Interruption Insurance; Worker's Compensation Insurance. (@ Property Damage. Lessee shall obtain and mainkin insurance coverage on all of Lessee’s personal property, Trade Fixtures, and Lessee Owned Alterations and Utility nstallations. Such insurance shall be full replacement cost coverage with a deductible of not to exceed $1,000 per occurrence. The proceeds from any such insurance shall be used by Lessee for the replacement of personal property, Trade Fixtures and Lessee Owned Alterations and Utility Installations. {b) Business Interruption. Lessee shall obtain and maintain loss of income and extra expense insurance in amounts as will reimburse Lessee for direct or indirect (oss of earnings attributable to all perils commonly insured against by prudent lessees in the business of Lesser or attributable to prevention of access to the Premises as a result of such perils. ©) Worker's Compensation insurance. Lessee shall obtain and maintain Worker's Compensation Insurance in such amount as may be required by Applicable Requirements. Such policy shall include a ‘Waiver of Subrogation’ endorsement, Lessee shall provide Lessor with a copy of such endorsement along with the certificate of insurance or copy of the policy required by paragraph 8.5. {d) No Representation of Adequate Coverage, Lessor makes no representation that the limits or forms of coverage of insurance specified herein are adequate to cover Lessee’'s property, business operations or obligations under this Lease. 8.5 insurance Policies. Insurance required herein shall be by companies maintaining during the policy term a "General Puolisyholders Rating” of at least A-, VI, as sat forth in the most current issue of "Best's Insurance Guide”, or such other rating as may be required by a Lender. Lessee shall not do or permit to be done anything which invalidates the required insurance policies. Lessee shall, prior to the Start Date, deliver to Lessor certified copies of policies of such insurance or certificates with copies of the required endorsements evidencing the existence and amounts of the required insurance. No such policy shall be cancelable or subject to modification except after 30 days prior written notice to Lessor. Lessee shall, at least 10 days prior to the expiration of such policies, furnish Lessor with evidence of renewals or “insurance binders” evidencing renewal thereof, or Lessor may order such insurance and charge the cost thereof fo Lessee, which amount shall be payable by Lessee to Lessor upon demand. Such policies shall be for a term of at least one year, or the length of the remaining term of this Lease, whichever is less. If either Party shall fail to procure and maintain the insurance required to be carried by it, the other Party may, but shall not be required to, procurs and maintain the sama. 8.6 Waiver of Subrogation. Without affecting any other rights or remedies, Lessee and Lessor each hereby release and relieve the other, and waive their entire right to recover damages against the other, for loss of or damage to its property arising out of or incident to the perils required to be insured against herein. The effect of such releases and waivers is not limited by the amount of insurance carried of required, or by any deductibles applicable hereto. The Parties agree to have their respective property damage insurance carriers waive any right to subrogation that such companies may have against Lessor or Lessee, as the case may be, so long as the insurance is not invalidated thereby. 8.7 Indemnity. Except for Lessor's gross negligence or willful misconduct, Lessee shall indemnify, protect, defend and hold hannless the Premises, Lessor and its agents, Lessor's master or ground lessor, partners and Lenders, from and against any and all claims, loss of rents ana/or damages, liens, judgments, penalties, attorneys’ and consultants’ fees, expenses and/or liabilities arising out of, involving, or in connection with, the use andfor occupancy of the Premises by Lessee. If any action or proceeding Is brought against Lessor by reason of any of the foregoing matters, Lessee shall upon notice defend the same at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be defended or indemnified. 8.8 Exemption of Lessor and its Agents from Liability. Notwithstanding the negligence or breach of this Lease by Lessor or its agents, neither Lessor nor its agents shall be liable under any cireumstances for: {}) injury or damage to the person or goods, wares, merchandise or other property of Lessee, Lessee's employees, contractors, invitees, customers, or any other person in or about the Premises, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, indoor air quality, the presence of mold or from the breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from any other cause, whether the said injury or damage results from conditions arising upen the Premises ar upon other portions of the building of which the Premises are a part, or from other sources or plages, (ii) any damages arising from any act or neglect of any other tenant of Lessor or from the failure of Lessor or its agenis to enforce the provisions of any other lease in the Shopping Center, or (iil) injury to Lessee’s business or for any 08s of income or profit therefrom. Instead, i is intended that Lessee's sole recourse in the event of such damages or injury be to file a claim on the insurance policy(ies) that Lessee is required to maintain pursuant to the provisions of paragraph 8. 8.9 Failure to Provide Insurance. Lessee acknowledges that say failure on its part to obtain or maintain the insurance required herein will expose Lessor to risks and potentially cause Lessor to incur costs not contemplated by this Lease, the extent of which will be extremely difficult to ascertain. Accerdingly, for any month or portion thereof that Lessee does not maintain the required insurance and/or does not provide Lessor with the required binders or certificates evidencing the existence of the required insurance, the Base Rent shall be automatically increased, without any requirement for natice to Lessee, by an amount equal to 10% of the then existing Base Rent or $100, whichever is greater. The parties agree that such increase in Base Rent represents fair and reasonable compensation for the additional riskicosts that Lessor will incur by reason of Lessse's failure to maintain the required insurance, Such increase in Base Rent shall in no event constitute & waiver of Lessee's Default or Breach with respect to the fallure to maintain such insurance, prevent the exercise of any of the other rights and remedies granted hereunder, nor relieve Lessae of is obtigation to maintain the insurance specified in this Lease, a. Damage or Destruction. 9.1 Definitions. (a) "Premises Partial Damage” shall mean damage or destruction to the improvements on the Premises, other than Lessee Owned Afterations and Utility installations, which can reasonably be repaired in 3 months or less from the date of the damage or destruction, and the cost thereof does not exceed a sum equal te 8 month's Base Rent. Lessor shall notify Lessee in writing within 30 days from the date of the damage or destruction as to whether or not the damage is Partial or Total. (by “Premises Total Destruction” shall mean damage or destruction to the improvements on the Premises, other than Lessee Owned Alterations and Utilidy installations and Trade Fixtures, which cannot reasonably be repaired in 3 months or less from the date of the damage or destruction and/or the cost thereof exceeds a sum equal to 6 month's Base Rent. Lessor shall notify Lessee in writing within 30 days from the date of the damage or destruction as to whether or not the damage is Partial or Tofal, ©) "Insured Loss” shall mean damage or destruction to improvements an the Premises, oiher than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which was caused by an event required to be covered by the insurance described in Paragraph 8.3(a), irrespective of any deductible amounts or coverage limits involved, (d) "Replacement Cost" shall mean the cost to repair or rebuild the improvements owned by Lessor at the time of the sceurrence to their condition existing immediately prior thereto, including demalition, debris removal and upgrading required by the operation of Applicable Requirements, and without deduction for depreciation. (&) "Hazardous Substance Condition" shall mean the occurrence or discovery of a condition invalving the presence of, or a contamination by, @ Hazardous Substance, in, on, or inder the Premises or Common Areas.which requires restoration. 9.2 Partial Damage - Insured Loss. If a Premises Partial Damage that is an Insured Loss occurs, then Lessor shall, at Lessor's expense, repair such damage (but not Lessee's Trade Fixtures or Lessee Owned Alterations and Utility Installations) as soon as reasonably possible and this Lease shall continue in fuli force and effect; provided, however, that Lessee shall, at Lessor's election, make the repair of any damage or destruction the total Replacement Cost of which is $10,000 or less, and, in such event, Lessor shall make any applicable insurance proceeds available to Lessee on a reasonable basis for that purpose. Notwithstanding the foregoing, if the required insurance was not in force or the insurance proceeds are not sufficient to effect such repair, the Insuring Party shall promptly contribute the shortage In proceeds as and when required to complete said repairs, in the event, however, such shortage was due to the fact that, by reason of the unique nature of the fmprovements, full Replacement Cost insutance coverage was not commercially reasonable and available, Lessor shall have no obligation to pay for the shortage in insurance proceegls or to 7 oJ PAGE 7 OF M4 INITIALS INITIALS ©2003 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM SCLN-12-04/14E Jan 1817, 06:05p p.8 a eR the unique aspects of the Premises unless Lessee provides Lessor with the funds to cover same, or adequate assurance thereof, within 10 frye lt ea of written notice of such shortage and request therefor, If Lessor receives said funds or adequate assurance thereof within said y period, the party responsible for making the rapairs shall complete them as spon as reasonably possible and this Lease shall remain in full force lb If such funds or assurance are not received, Lessor may nevertheless elect by written notice to Lessee within 10 days thersafter Yo: ID) make restoration and repair as is commercially reasonable with Lessor paying any shortage in proceeds, in which case this Lease shall remain in full force and effect, or (il) have this Lease terminate 30 days thereafter. Lessee shalf not be entitled to reimbursement of any funds contributed by Lessee to repair any such damage or destruction. Premises Partial Damage due to flood or earthquake shall be subject to Paragraph 9.3, notwithstanding that there may be some insurance coverage, but the net proceeds of any such insurance shall be made available for the repairs if made by either Party. 9.3 Partial Damage - Uninsured Loss. If a Pramises Partial Damage that is not an Insured Loss occurs, unless caused by a negligent or willful act of Lessee (in which event Lessee shall make the repairs at Lessee’s expense), Lessor may either: (i) repair such damage as 500n as reasonably possible at Lessor's expense (subject to reimbursement pursuant to Paragraph 4.2), in which event this Lease shall continue in fuli force and effect, or (ii) terminate this Lease by giving written notice to Lesses within 30 cays after receipt by Lessor of knowledge of the occurrence of such damage. Such termination shall be effective 60 days following the date of such notice. In the event Lessor elects to terminate this Lease, Lessee shalt have the right within 10 days after receipt of the termination notice to give written notice to Lessor of Lessee’s commitment to pay for the repair of such damage without reimbursement from Lessor. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within 30 days after making such commitment. In such event this Lease shall continue in full force and effect, and Lessor shall proceed to make such repairs as soon as reasonably possible after the required funds are available. If Lessee does not make the required commitment, this Lease shall terminate as of the date specified in the termination notice. 9.4 Total Destruction. Notwithstanding any other provision hereof, if g Premises Total Destruction occurs, this Lease shall terminate 60 days following such Destruction. If the damage or destruction was caused by the gross negligence or willful misconduct of Lessee, Lessor shall have the right to recover Lessor's damages from Lessee, except as provided in Paragraph 8.6. 95 Damage Near End of Tern. if at any time during the last 8 months of this Lease there is damage for which the cost to repair exceeds one month's Base Rent, whether or not an Insured Lass, Lessor may terminate this Lease effective 60 days following the date of occurrence of such damage by giving a written termination nafice to Lessee within 30 days after the date of occurrence of such damage. Notwithstanding the foregoing, if Lessee at that time has an exercisable option to extend this Lease or to purchase the Premises, then Lessee may preserve this Lease by, (a) exercising such option and {b) providing Lessar with any shortage in insurance proceeds (or adequate assurance thereof) needed to make the repairs on ar before the earlier of (i) the date which is 10 days after Lessee’s receipt of Lessor's written notice purporting to terminate this Lease, or (ity the day prior to the date upon which such option expires. If Lessee duly exercises such option during stich period and provides Lessor with funds (or adequate assurance thereof) to cover any shortage in insurance proceeds, Lessor shall, at Lessor's commercially reasonable expense, repalr such damage as soon as reasonably possible and this Lease shail continue in full force and effect. If Lessee fails to exercise such aption and provide such funds Foo ad during such pericd, then this Lease shall terminate on the date specified in the termination notice and Lessee’s option shall be extinguished, 9.6 Damage to Shopping Center. In the event of any damage or destruction to other portions of the Building or to any other buildings in the Shopping Genter, whether insured or uninsured (and whether or not there is also damage or destruction to the Premises), which cannot reasonably be repaired in 6 months or less from the date of the damage or destruction, Lessor may either (i) repair such damage or destruction as soon as feasonably possible without expense to Lessee, in which event this Lease shall continue in full force ard effect, or (if) terminate this Lease by giving written notice to Lessee within 30 days after receipt by Lessor of knowledge of the sccurrence of such damage or destruction. Such termination shall be effective 60 days following the date of such notice. 9.7 Abatement of Rent; Lessee’s Remedies. (a) Abatement. In the event of Premises Partial Damage or Premises Total Destruction or a Hazardous Substance Condition for which Lessee is not responsible under this Lease, the Base Rent payable by Lessee for the period required for the repalr, remediation or restoration of such damage shall be abated in proportion to the degree to which Lessee’s use of the Premises is impaired, but not to exceed the proceeds recelved from the Rental Value Insurance. All other obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall have no liability for any such damage, destruction, remediation, repair or restoration except as provided herein. {b) Remedies. If Lessor shall be obligated to repair or restore the Premises and does not commence, in a substantial and meaningful way, such repair or restoration within 90 days after such obligation shall accrue, Legsee may, at any fime prior to the commencement of such repair or restoration, give written notice to Lessor and fo any Lenders of which Lessee has actual notice, of Legsee's election to terminate this Lease on a date not less than 60 days following the giving of such notice. {If Lessee gives such notice and such repalr of restoration is not commenced within 30 days thereafter, this Lease shall terminate ag of the date specified in said notice, If the repair or restoration is commenced within such 30 days, this Lease shall continue in full force and effect. "Commence" shalt mean either the unconditional authorization of the preparation of the required plans, or the beginning of the actual wark on the Premises, whichever first occurs. 9.8 Termination; Advance Payments, Upon termination of this Lease pursuant to Paragraph B.2(g) or Paragraph 9, an equitable adjustment shall be made concerning advance Base Rent and any other advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of Lessea's Security Deposit as has not been, ar is not then required to be, used by Lessor. 10. Real Property Taxes. 10.1 Definition. As used herein, the term "Real Property Taxes" shall include any form of assessment; real estate, general, special, ordinary or extraordinary, or rental levy or tax (other than inheritance, personal income or estate taxes); improvement bond; and/or license fee imposed upon or levied against any legal or equitable interest of Lessor in the Shopping Center, Lessors right to other income therefrom, and/or Lessor's business of leasing, by any authority having the direct or indirect power to tax and where the funds are generated with reference to the Shopping Center address and where the proceeds so generated are to be applied by the city, caunty or other local taxing authority of a Jurisdiction within which the Shapping Center is located. The term "Real Property Taxes" shall alse include any tax, fee, levy, assessment or charge, or any increase therein: (i) imposed by reason of events occurring during the term of this Lease, including but not limited to, a change in the ownership of the Shopping Center, (ii) a change in the improvements thereon, and/or (iii) fevied or assessed on machinary ar equipment provided by Lessor to Lessee pursuant to this Lease. in calculating Real Property Taxes for any calendar year. the Real Property Taxes for any real estate tax year shall be included in the calculation of Real Property Taxes for such calendar year based upon the number of days which such calendar year and tax year have in common, 1¢.2 Payment of Taxes. Except as otherwise provided in Paragraph 10.3, Lessor shall pay the Real Property Taxes applicable to the Shapping Center, and said payments shall be included in the caloulation of Common Area Operating Expenses in accordance with the provisions of Paragraph 4.2, 113 Additional Improvements. Common Area Operating Expenses shall not include Real Property Texes specified in the tax assessor's records and work sheets as being caused by additional improvements placed upon the Shopping Center by other lessees or by Lessor for the exclusive enjoyment of such other lessees. Notwithstanding Paragraph 18.2 hereof, Lessee shall, however, pay in Lessor at the time Common Area Operating Expenses are payable under Paragraph 4.2, the entirety of any increase in Real Property Taxes if assessed solely by reason of Alterations, Trade Fixtures or Utility Installations placed upon the Premises by Lessee or at Lessee’s request, or by reason of any alterations or improvements to the Premises made by Lessor subsequent to the execution of this Lease by the Parties. 10.4 Joint Assessment. if the Building is not separately assessed, Real Property Taxes allocated to the Building shall be an equitable proportion of the Real Property Taxes for alf of the fand and improvements included within the tax parcel assessed, such proportion to be determined ky Lessor from the respective valuations assigned in the assessor's work sheets or such other information as may be reasonably available. Lessor's reasonable determination thereof, in geod faith, shall be conclusive. 105 Personal Property Taxes. Lessee shall pay prior to delinquency all taxes assessed against and levied upon Lessee Owned Alterations and Utility Installations, Trade Fddures, furnishings, equipment and all personal property of Lessee contained in the Premises. When possible, Lessee shall cause its Lessee Owhed Alterations and WHility Installations, Trade Fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Lessor. If any of Lesses's said properly shall be assessed with Lessor's real property, Lessee shall pay Lessor the taxes attributable to Lessee's property within 10 days after receipt of a written statement setting forth the taxes applicable ta Lessee’s property. 11. Utilities and Services, Lessee shall pay for all water, gas, heat, light, power, telephone, trash disposal and other utilities and services supplied to the Premises, together with any taxes thereon, To the extent any such utilities and/or services are not separately metered, Lessee shall pay Lessee's Share thereof in accordance with Paragraph 4.2. Notwithstanding the provisions of Paragraph 4.2, if at any time in Lessor's sole judgment, Lessar determines that Lessee is using a disproportionate amount of water, electricity or other commonly meferad utilities, or that Lessee is generaling such a large volume of trash as to require an increase in the size of the trash receptacle and/or an increase in the number of times per month that it is emptied, then Lessor may increase Lessee's Base Rent by an amount equal ta such increased costs. There shall be no abatement of Rent and Lessor shall not be liable in any respect whatsoever for the inadequacy, stoppage, interruption or discontinuance of any utikty or service due to riot, strike, kabar dispuie, breakdown, accident, repair or other catise beyond Lessor's reasonable contral or in copperation with governmental request or directions. 12, Assignment and Subletting. 12.1 Lessor's Consent Required. PAGE 8 OF 14 & INITIALS INITIALS ®2003 ~ AIR COMMERCIAL REAL ESTATE ASSQCIATION FORM SCLN-12-04/14E p.9 Jan 1817,06.07p } (8) Lessee shall not voluntarily or by operation of law assign, transfer, morgage or encumber (collectively, "assign or assignment”) or sublet all or any part of Lessee's interest in this Lease or in the Premises without Lessor's prior written consent. {b) Unless Lessee is a corporation and its stock is publicly traded an a national stock exchange, a change in the control of Lessee shall constitute an assignment requiring consent. The transfer, i j | constitte a change i sorb > i oy gi e transfer, on a cumulative basis, of 25% of more of the voling contro) of Laseee shall (c) The involvement of Lessee or its assets in any transaction, or series of transactions {by way of merger, sale, acquisition, financing, transfer, leveraged buy-out or otherwise), whether or not a formal assignment or hypothecation of this Lease or Lessee’s assets poceurs, which results or will result in a reduction of the Net Worth of Lessee by an amount greater than 25% of such Net Worth as it was represented at the time of the execution of this Lease or at the time of the most recent assignment to which Lessor has consented, or as it exists immediately prior fo said transaction ar transactions constituting such reduction, whichever was or is greater, shall be considered an assignment of this Lease to which Lessor may withhold ts consent. “Net Worth of Lessee” shall mean the net worth of Lessee (sxcluding any guarantors) established undar ganerally accepted accounting principles. d) An assignment or subletting without consent shall, at Lessors option, be a Default curable after notice per Paragraph 13.1(c), or @ noncurable Breach without the necessity of any notice and grace period. If Lessor elects do treat such unapproved assignment ar subletting as a noncurable Breach, Lessor may either: (i) terminate this Lease, or (ii) upon 30 days written notice, increase the monthly Base Rent and Percentage Rent Rate to 170% of the Base Rent and Percentage Rerit Rate then in effect. Further, in the event of such Breach and rental adjustment, (i) the purchase price of any option to purchase the Premises held by Lessee shall be subject to similar adjustment to 110% of the price previously in effect and ® all fixed and non-fixed rental adjustments scheduled during the remainder of the Lease term shall be increased to 110% of the scheduled adjusted rent. of (e) Lessee’s remedy for any breach of Paragraph 12.1 by Lessor shail be limited to compensatory damages and/or injunctive relief, f Lessar may reasonably withhold consent lo a proposed assignment or subletting if Lessee is in Default at the time capsent is requested, {2}] Notwithstanding the foregoing, allowing a de minimis portion of the Premises, ie. 20 square feet or less, ta be used by a third party vendor in connection with the installation of a vending machine or payphone shall not constitute a subletting 12.2 Terms and Conditions Applicable to Assignment and Subletting. (a) Regardless of Lessors consent, no assignment or subletting shall: (j) be effective without the express written assumption by such assignee or sublessee of the obligations of Lessee under this Lease, (ii) release Lessee of any obligations hereunder, or (ji) ater the primary liability of Lessee for the payment of Rent or for the performance of any other obligations ta be performed by Lessee. (bk Lessor may accept Rent or performance of Lessee's obligations from any person other than Lessee pending approval or disapproval of an assignment. Neither a delay in the approval or disapproval of such assignment nor the acceptance of Rent or performance shall constitute a waiver or esteppel of Lessor's right to exercise its remedies for Lessee’s Default or Breach. (c) Lessor's consent to any assignment or subletting shall not constitute a consent to any subsequent assignment or subletting. (d} In the event of any Default or Breach by Lessee, Lessor may proceed directly against Lessee, any Guarantors or anyon else responsible for the performance of Lessee’s obligations under this Lease, including any assignee or sublessee, without first exhausting Lessors remedies against any other person or entity responsible therefore to Lessor, or any security held by Lessor. {© Each request for consent to an assignment or subletting shall be in writing, accompanied by information relevant fo Lessor's determination as to the financial and operational responsibility and appropriateness of the proposed assignee or sublessee, including but not limited to the intended use and/or required modification of the Premises, if any, together with a fee of $500 as consideration for Lessors considering and processing said request. Lessee agrees to provide Lessor with such ather or additional information and/or documentation ds may be reasonably requested. (See alse Paragraph 36) f Any assignee of, or sublessee under, this Lease shall, by reason of accepting such assignment, entering inte such sublease, or entering into possession of the Premises or any portion thereof, be deemed to have assumed and agreed to conform and comply with each and every term, covenant, condition and obligation herein to be observed or performed by Lessee during the term of said assignment or sublease, other than such obligations as are contrary to or inconsistent with provisions of an assighment or sublease to which Lessor has specifically consented to in writing, (8) Lessors consent to any assignment or subletting shail not transfer to the assignes or sublessee any Option granted to the original Lessee by this Lease unless such transfer is specifically consented to by Lessor in writing. (See Paragraph 39.2) 12.3 Additional Terms and Conditions Applicable to Subletting. The following terms and conditions shall apply to any subletting by Lessee of all or any part of the Premises and shall be deemed included in all subleases under this Lease whether or not expressly incorporated therein: (8) Lessee hereby assigns and transfers lo Lessor all of Lessee's Interest in aft Rent payable on any sublease, and Lessor may collect such Rent and apply same toward Lessee’s obligations under this Lease; provided, however, that until a Breach shall occur in the performance of Lessee’s obligations, Lessee may collect sald Rent. In the event that the amount collected by Lessor exceeds Lessee's then outstanding obligations any such excess shall be refunded to Lessee. Lessor shall not, by reason of the foregoing or any assignment of such sublease, nor by reason of the collection of Rent, be deemed liable to the sublessee for any failure of Lessee to perform and comply with any of Lessee's obligations to such sublesses. Lessee hereby irrevocably authorizes and directs any such sublessee, Upon receipt of a written nofice from Lessor stating that a Breach exists in the performance of Lessee's obligations under this Lease, to pay to Lessor ail Rent due and to become due under the sublease. Sublessee shall rely upon any such notice from Lessor and shall pay all Rents to Lessor without any obligation or right to incuire as to whether such Breach exists, notwithstanding any claim from Lessee to the contrary. {b) in the event of a Breach by Lessee, Lessor may, at its option, require sublessee to attorn to Lessor, in which event Lessor shall undertake the obligations of the sublessor under such sublease from the time of the exercise of sald option fo the expiration of such sublease; provided, however, Lessor shall not be liable for any prepaid rents or security deposit paid by such sublesses to such sublessor or for any prior Defaults or Breaches of such sublessor. (c) Any matter requiring the consent of the sublessor under a sublease shall also require the consent of Lessor. (d) No sublessee shall further assign or sublet all or any part of the Premises without Lessor's prior written consent. (e) Lessor shall deliver a copy of any notice of Default or Breach by Lessee to the subiessee, who shall have the right to cure the Default of Lessee within the grace period, if any, specified in such notice. The sublessee shall have a right of reimbursement and offset from and against Lessee for any such Defaults cured by the sublessee, 13. Default; Breach; Remedies. 13.1 Default; Breach. A "Default" is defined as a failure by the Lessee fo comply with or perform any of the terms, covenanis, conditions or Rules and Regulations under this Lease, A “Breach” is defined as the ooctrrence of one or more of the following Defaults, and the faifure of Lessee to cure such Default within any applicable grace period: (a) The vacating or abandonment of the Premises. Lessee shall be deemad to have vacated the Premises if Lessee ceases fo continuously operate its business in the Premises for a petiod of § consecutive days. (b) The failure of Lessee to make any payment of Rent or any Security Deposit required to be made by Lessee hereunder, whether to Lessor or to a third party, when due, to provide reasonable svidence of insurance or surety bond, or to fulfil any obligation under this Lease which endangers or threatens life or property, where such failure continues for a period of 3 business days following written notice to Lessee. THE ACCEPTANCE BY LESSOR OF A PARTIAL PAYMENT OF RENT OR SECURITY DEPQSIT SHALL NOT CONSTITUTE A WAIVER OF ANY QF LESSOR'S RIGHTS, INCLUDING LESSOR'S RIGHT TO RECOVER POSSESSION QF THE PREMISES. (c) The failure of Lessee to allow Lessor and/or its agents access to the Premises or the commission of waste, act or acts constituting public or private nuisance, andlor an illegal activity on the Premises by Lessee, where such actions continue for a period of 3 business days following written notice to Lessee. d) The failure by Lessee to provide (i) reasonable written evidence of compliance with Applicable Requirements, (ji) the service contracts, (iii) the rescission of an unauthorized assignment or subletting, (iv) an Estoppel Certificate or financial statements, (v) a requested subordination, (vi) evidence concerning any guaranty and/or Guarantor, (vii) any document requested under Paragraph 41, (vill) material data safety sheets (MSDS), or (ix) any other documentation or information which Lessor may reasonably require of Lessee under the terms of this Lease, where any such failure continues for a period of 10 days following written notice to Lessee. (e) A Default by Lessee as to the terms, covenants, conditions or provisions of this Lease, or of the jules adopted under Paragraph 2.8 heraof, other than those described in subparagraphs 13.1(a), (b), {tc} or (d). above, where such Default continues for a period of 30 days after written notice; provided, however, that if the nature of Lessee’s Default is such that more than 30 days are reasonably required for its cure, then it shall not be deemed to be a Breach if Lessee commences such cure within said 30 day period and thereafter diligently prosecutes such cure ta completion. (f The oceumence of any of the following events: {f) the making of any general arrangement or assignment for the benefit of PAGE 9 OF 14 INITIALS INITIALS ©2003 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM SCLN-12-04/14E Jan 1817, 06:08p p.10 creditors; (ii) becoming a “debtor as defined in 11 U.8.C. § 101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same is dismissed within 60 days). (ii) the appointment of a trustee or receiver to lake possession of substantially all of Lessee’s assets located at the Premises or of Lessee's interest in this Lease, where possession is not restored to Lessee within 30 days; or (iv) the attachment, execution or other Judicial seizure of substantially all of Lessee’s assets located ai the Premises or of Lessee's interest in this Lease, where such seizure is not Sistharmet within 30 days: provided, however, in the event that any provision of this subparagraph is contrary fo any applicable law, such provision shall be of no féree br effect, and rot affect the validity of the remaining provisions. {s)] The discovery that any financial statement of Lessea or of any Guarantor given to Lessor was materially false. Co (hy i the performance of Lessee's obligations under this Lease is guaranteed: (i) the death of a Guarantor, {ii) the termination of a Guarantors fiability with respect to this Leass other than in accordance with the terms of such guaranty, (iil) a Guarantors becoming solvent or the subject of a bankruptcy filing, (iv) a Guarantor's refusal to honor the guaranty, or (v) a Guarantar's breach of its guaranty obligation on an anticipatory basis, and Lessee’s failure, within 60 days following written notice of any such event, to provide written alternative assurance or security, which, when coupled with the then existing resources of Lessee, equals or excesds the combined financial resources of Lessee and the Guarantors that existed at the time of execution of this Lease. 13.2 Remedies. If Lessee fails te perform any of its affirmative duties or obligations, within 10 days after written notice {or in case of an emergency, without notice), Lessor may, at its oplian, perform such duty or obligation on Leesee’s behalf, including but nat limited to the obtaining of reasonably required bonds, insurance policies, or governmental licenses, permits or approvals. Lessee shall pay to Lessor an amount equal to 115% of the costs and expenses incurred by Lessor in such performance upon receipt of an invoice therefor. in the event of a Breach, Lessor may, with or without further notice or demand, and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such Breach: (a) Terminate Lessee’s right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession to Lessor. In such event Lessor shall be entitled to recover from Lessee: (i) the unpaid Rent which had been eamed at the time of termination; (if) the worth at the time of award of the ammount by which the unpaid Rent which would have been earned after termination until the time of award excaeds the amount of such rental loss that the Lessea proves could have been reasonably avoided; (ji) 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 rental loss that the Lessee proves could be reasonably avoided; and (iv) any other amount necessary to compensate Lessor far all the detriment proximately caused by the Lessee’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including but not limited to the cost of recovering possession of the Premises, expenses of reletting, including necessary renovation and alteration of the Premises, reasonable attorneys’ fees, and that portion of any leasing commission pald by Lessor in connection with this Lease applicable to the unexpired term of this Lease. The worth at the time of award of the amount referred to in provision (iii) of the immediately preceding sentence shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of the District within which the Premises are located at the time of award plus one percent. Efforts by Lessor to mitigate damages caused by Lessee's Breach of this Lease shall not waive Lessors tight to recaver any damages to which Lessor is otherwise entitied. If termination of this Lease is obtained throtigh the provisional remedy of unlawful detainer, Lessor shall have the right to recover in such proceeding any unpaid Rent and damages as are recoverable therein, or Lessor may reserve the right to recover all ar any part thereof in @ separate suit. If a notice and grace period required under Paragraph 13.1 was not previously given, a notice to pay rent or quit, or to perform or quit given to Lessee under the unlawful detainer statute shail also constitute the notice required by Paragraph 13.1, in such case, the applicable grace period required by Paragraph 13.1 and the unlawfil detainer statute shall run concurrently, and the failure of Lessee to cure the Default within the greater of the two such grace periods shall constitute both an unlawful detainer and a Breach af this Lease entitling Lessor to the remedies provided for in this Lease and/or by said statute, {b) Continue the Lease and Lessee's right to possession and recover the Rent as it becomes due, in which event Lessee may sublet or assign, subject only to reasonable limitations. Acts of maintenance, efforts to relet, and/or the appointment of & recsiver to protect the Lessors intergsts, shall not constitute a termination of the Lessee's right fo possession. (©) Pursue any other remedy now or hereafter available under the laws or judicial decisions of the stale whergin the Premises are located. The expiration or termination of this Lease and/or the termination of Lessee's right to possession shall not relieve Lessee from liability under any indemnity provisions of this Lease as to matters ocourring or accming during the term hereof or by reasan of Lessee’s occupancy of the Premises. 13.3 Inducement Recapture. Any agreement for free or abated rent or other charges, or for the giving or paying by Lessor to or for Lessee of any cash or other bonus, inducement or consideration for Lessee’s entering into this Lease, all of which concessions are hereinafter referred to as "inducement Provisions®, shall be deemed conditioned upon Lessea's full and faithful performance of alt of the terms, covenants and conditions of this Lease. Upon Breach of this Lease by Lessee, any such inducement Provision shall automatically be deemed deleted from this Lease and of no further force or effect, and any rent, other charge, bonus, inducement or consideration theretofore abated, given or paid by Lessor under such an Inducement Provision shall be immediately due and payable by Lessee to Lessor, notwithstanding any subsequent cure of said Breach by Lessee. The acceptance by Lessor of rent or the cure of the Breach which initiated the operation of this paragraph shall not be deemed a waiver by Lessor of the provisions of this paragraph unless specifically so stated in writing by Lessor at the time of such acceptance. 13.4 Late Charges. Lessee hereby acknowledges that late payment by Lessee of Rent will cause Lessor lo incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed upor: Lessor by any Lender, Accordingly, if any Rent shall not be received by Lessor within 5 days after such amount shall be due, then, without any requirement for notice to Lessee, Lessee shall immediately pay to Lessor a one-time late charge equal to 10% of each such overdue amount or $100, whichever is greater. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lessor will nour by reason of such late payment. Acceptance of such late change by Lessor shall in ne event constitute a waiver of Lessee’s Default ar Breach with regpect to such overdue amount, nor prevent the exercise of any of the other rights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, for 3 consecutive instalments of Base Rent, then notwithstanding any provision of this Lease to the contrary, Base Rent shall, at Lessor's option, become due and payable quartetly in advance, 13.5 Interest, Any monetary payment due Lessor hereunder, other than fate charges, not teceived by Lessor, when due shall bear interest from the 31st day after it was due. The interest {"inferest") charged shall be computed at the rate of 10% per annum but shall not exceed the maximum rate allowed by law. Interest is payable in addition to the potential late charge provided for in Paragraph 13.4. 13.6 Breach by Lessor. (a) Notice of Breach. Lessor shall not be deemed in breach of this Lease unless Lessor fails within a reasonable time to perform an obligation required to be performed by Lessor. For purposes of this Paragraph, a reasonable time shall in no event be less than 30 days after receipt by Lessor, and any Lender whose name and address shall have been furnished Lessee in writing for such purpose, of written notice specifying wherein such obligation of Lessor has not been performed; provided, however, that if the nature of Lessor's obligation is such that more than 30 days are reasonably required for its performance, then Lessor shall not be in breach if performance is commenced within such 30 day period and thereafter diligently pursued to completion. {b} Performance by Lessee on Behalf of Lessor, In the event that nelther Lessor nor Lender cures said breach within 30 days after receipt of said notice, or if having commenced said cure they do not diligently pursue it to completion, then Lessee may elect to cure said breach at Lessee’s expense and offset irom Rent the actual and reasonable cast to perform such cure, provided however, that such offset shall not exceed alt amount equal to the greater of one month's Base Rent or the Security Deposit, reserving Lessee’s right to reimbursement from Lessor for any such expense in excess of such offset. Lessee shail document the cost of said cure and supply said documentation to Lessor. 14. Condemnation. If the Premises or any portion thereof are taken under the power of eminent domain or sold under the threat of the exercise of said power (collectively “Condemnation”), this Lease shall terminate as to the part taken as of the date the condemning authority takes title or possession, whichever first occurs. If mare than 10% of the floor area of the Premises, or more than 25% of the parking spaces situated within the at mt ramon fe dlr on Be 2m en ed arma mines {| mein masnsr ab | meraanle mmtienry dn Bas asrmimie mal Ir satritirgm atin 1M Havre sfiar 1 acenr ahatl hava Mivan 1 sess Jan 1817,06:10p p.11 Premises, with the consent of Lessor, after the expiration of this Lease, or (d) if Base Rent is increased, whether by agreement or operation of an escalation clause herein, then, Lessor shall pay Brokers a fee in accordance with the fee schedule of the Brokers in effect at the time the Lease was 18.2 Assumption of Obligations. Any buyer or fansteree of Lessor's interest in this Lease shall be deemer to have assumes Lessors obligation hereunder. Brokers shall be third parly beneficiaries of the provisions of Faragraphs 1.13, 15, 22 and 31. if Lessor fails to pay to Brokers amy amounts due as and for brokerage fees pertaining to this Lease when due, then such amounts shall accrue Interast. In addition, if Lessor fails to pay any amounts to Lessee's Broker when due, Lesses's Broker may send written notice to Lessor and Lessee of such failure and if Lessor fails to pay such amounts within 10 days after said notice, Lessee shall pay said monies to its Broker and offset such amounts against Rent. In addition, Lesseg’'s Broker shalf be deemed tu be a third party beneficiary of any commission agreement entered Inte by and/or between Lessor and Lessor's Broker for the limited purpose of collecting any brokerage fee owed. 15.3 Representations and Indemmnities of Broker Relationships. Lessee and Lessor each represent and warrant to the other that it has had no dealings with any person, firm, broker or finder (ather than the Brokers, if any) in connection with this Lease, and that no one other than said named Brokers is entitled to any commission or finder's fee in connection herewith. Lessee and Lessor do each hereby agree to indemnify, protect, defend and hold the other harmless from and against liability for compensation or charges which may be claimed by any such unnamed broker, finder or other similar party by reason of any dealings or actions of the indemnifying Party, including any cosls, expenses, alomeys' fees reasonably incurred with respect thereto. 16. Estoppe! Certificates. (a) Each Party (as "Responding Party") shall within 10 days after written notice from the other Party (the "Requesting Party”) execute, acknowledge and deliver to the Requesting Party a statement in writing in form similar to the then most current “Estoppel Certificate” form published by the AIR Commercial Real Estate Association, plus such additional information, confirmation andlor statements as may be reasonably requested by the Requesting Party. {by If the Responding Party shall fail to execute or deliver the Estoppe! Certificate within such 10 day period, the Requesting Party may execute an Estoppel Certificate stating that: (i) the Lease is in full force and effect without modification except as may be represented by the Requesting Party, (if) there are no uncured defaults in the Requesting Party's performance, and (iil) if Lessor is the Requesting Party, nat more than ane month's rent has been paid in advance. Prospective purchasers and encumbrances may rely upon the Requesting Party's Estoppei Certificate, and the Responding Party shail be estopped from denying the truth of the facts contained in said Cerificate. In addition, Lessee acknowledges that any failure on its part to provide such an Estoppel Certificate will expose Lessor to risks and potentially cause Lessor to incur costs not cantenplated by this Lease, the extent of which will be extremely difficult to ascertain. Accordingly, should the Lessee fail to execute and/or deliver a requested Estoppe! Certificate in a timely fashion the monthly Base Rent shall be automatically increased, without any requirement for notice to Lessee, by an amount equal to 10% of the then existing Base Rent or $100, whichever is greater for remainder of the Lease, The Parties agree that such increase in Base Rent represents fair and reasonable compensation for the additional risk/costs that Lessor will incur by reason of Lessee’s failure to provide the Egtoppel Certificate. Such increase in Base Rent shall in no event constitute a waiver of Lessee's Default or Breach with respect to the failure to provide the Estoppel Certificate nor prevent the exercise of any of the other rights and remedies granted hereunder. (c) if Lessor desires to finance, refinance, or seil the Premises, ar any part thereof, Lessee and all Guarantors shall within 10 days after written notice from Lessor deliver to any potential lender or purchaser designated by Lessor such financial statements as may be reasonably required by such lender or purchaser, including but not limited to Lessee’s financial statements for the past 3 years. All such financisl statements shall be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein sat forth. 17. Definition of Lessor, The term "Lessor as used herein shall mean the owner or owners at the time in question of the fee title to the Premises, ar, if this is a sublease, of the Lessee’s interest in the prior lease. In the event of a transfer of Lessor's title or interest in the Premises or this Lease, Lessor shall deliver to the transferee or assignee {in cash or by credit) any unused Security Deposit held by Lessor. Upan such transfer or assignment and delivery of the Security Deposit, as aforesaid, the prior Lessor shall be relieved of all liability with respect to the obligations and/or covenants under this Lease thereafter to be performed by the Lessor. Subject to the faregoing, the obligations andfor covenants in this Lease to be performed by the Lessor shall be binding only upon the Lessor as hereinabove defined. 18. Severability. The invalidity of any provision of this Lease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof. 19. Days. Unless otherwise specifically indicated to the contrary, the word "days" as used in this Lease shall mean and refer to calendar days. 20. Limitation on Liability. The obligations of Lessor under this Lease shall not constitute personal obligations of Lessor, or its partners, members, directors, officers or shareholders, and Lessee shall look to the Premises, and to no other assets of Lessor, for the satisfaction of any liability of Lessor with respect to this Lease, and shall not seek recourse against Lessor's partners, members, directors, officers or shareholders, or any of their personal assets for such satisfaction. 21. Time of Essence. Time is of the essence with respect to the performance of afl obligations to be performed or observed by the Parties under this Lease. 22. No Prior or Other Agreements; Broker Disclaimer. This Lease contains all agreements between the Parties with respect to any matter mentioned herein, and no other prior ar contemporaneous agreement or understanding shail be effective. Lessor and Lessee each represents and warrants to the Brokers that it has made, and is relying solely upon, its own investigation as to the nature, quality, character and financial responsibility of the other Party to this Lease and as to the use, nature, quality and character of the Premises. Brokers have no responsibility with respect thereto or with respect to any default or breach hereof by either Party. 23. Notices, 231 Notice Requirements. All notices required or permitted by this Lease or applicable law shail be in writing and may be delivered in persan (by hand or by pourigr) or may be sent by regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile transmission, or by email, and shall be deemed sufficiently given if served in a manner specified in this Paragraph 23. The addresses noted adjacent to a Party's signature on this Lease shall be that Party's address for delivery or mailing of notices. Either Party may by written notice to the other specify a different address for notice, except that upon Lessee’s taking possession of the Premises, the Premises shall constitute Lessee's address for notice. A copy of all notices to Lessor shall be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter designate in writing, 23.2 Date of Notice. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the date of delivery shown on the receipt card, or if no delivery date is shown, the postmark thereon. If sent by regular mail the notice shalt be deemed given 72 hours after the same is addressed as required herein and mailed with postage prepaid. Notices delivered by United States Express Mail or overnight courier that guarantees next day delivery shall be deemed given 24 hours after delivery of the same to the Postal Service or courier. Notices transmitted by Facsimile transmission or by email shall be deemed delivered upon telephone confirmation of receipt (if by fax, a confirmation report from fax machine is sufficient), provided a copy is also defivered via delivery or mail. If natice is received on a Saturday, Sunday or legal holiday, it shall be deemed received on the next business day. 24. Waivers. (a) No waiver by Lessor of the Default or Breach of any term, covenant or condition hereof by Lessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Lessee of the same or of any other term, covenant or condition hereof. Lessors consent to, or approval of, any act shalt not be deemed to render unnecessary the obtaining of Lessor's consent to, or approval of, any subsequent or similar act by Lesses, or be construed as the basis of an estoppel to enforces the provision or provisions of this Lease requiring such consent. (b) The acceptance of Rent by Lessor shall not be a waiver of any Default or Breach by Lessee. Any payment by Lessee may be accepted by Lessor on account of moneys or damages due Lessor, notwithstanding any qualifying statements or conditions made by Lessee in connection therewith, which such statements andfor conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Lessor at or before the time of deposit of such payment. ©) THE PARTIES AGREE THAT THE TERMS OF THIS LEASE SHALL GOVERN WITH REGARD TO ALL MATTERS RELATED THERETO AND HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE TO THE EXTENT THAT SUCH STATUTE I8 INCONSISTENT WITH THIS LEASE. 25. Risclosures Regarding The Nature of a Real Estate Agency Relationship. (a) When entering into a discussion with a real estate agent regarding a real estate transaction, 2 Lessor or Lesseg should from the outset understand what type of agency relationship or representation it has with the agent or agents in the transaction. Lessor and Lessee acknowledge being advised by the Brokers in this transaction, as follows: (i) Lessors Agent. A Lessor's agent under a listing agreement with the Lessor acts as the agent for the Lessor only. A Lessor's agent or subagent has the following affirmative obligations: Ta the Lessor: A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Lessor, To the Lessee and the Lessor, (a) Diligent exercise of reasonable skills and care in perfarmance of the agent's duties. (b) A duty of honest and fair dealing and good faith. (c) A duty to disclose all facts known to the agent materially affecting the value or desirability of the ee are hot known to, or within the diligent attention and observation of, the Parties. An agent is not obligated fo reveal to either Party any PAGE 11 OF 14 INITIALS INITIALS @2003 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM SCLN-12-04/14E Jan 1817,06:12p p.12 confidential information obtained from the other Party which does not involve the affirmative duties set forth above. (i) Lessee's Agent. An agent can agree to act as agent for tha Lessee only. In these situations, the agent is not the Lessor’s agent, even if by agreement the agent may receive compensation for services rendered, sither in full or in part from the Lessor. An agent acting only for a Lessee has the following affirmative obligations. To the Lessee: A fiduciary duty of utmost care, integrity, honesty, and loyalty in dealings with the Lessee, To the Lessee and the Lessor: (a) Diligent exarcise of reasonable skills and care in performance of the agent's duties. (b) A duty of honest and fair dealing and geod faith. (¢) A duty to disclose all facts known to the agent materially affecting the value or desirability of the property that are not known to, ar within the diligent attention and observation of, the Parties. An agent is not obligated to reveal to either Party any confidential information obtained from the other Party which does not involve the affirmative duties set forth above. (iii) Agent Representing Both Lessor and Lessee, A real estate agent, either acting directly or through one or mare associate licenses, can legally be the apent of both the Lessor and the Lessee in a transaction, but only with the knowledge and consent of both the Lessor and the Lessee. In a dual agency situation, the agent has the following affirmative obligations to both the Lessor and the Lessee: (a) A fiduciary duty of utmost care, integrity, honesty and loyalty in the dealings with either Lessor or the Lessee. (b) Other duties to the Lessor and the Lessee as stated above in subparagraphs (i) or (ji). In representing both Lessor and Lessee, the agent may nat without the express permission of the respective Party, diszlose to the other Party that the Lessor will accept rent in an amount less than that indicated in the listing or that the Lessee is willing to pay a higher rent than that offered. The above duties of the agent in a real estate transaction do not relieve a Lessor or Lessee from the responsibility to protect their own interests. Lessor and Lessee should carefully read all agreements to assure that they adequately express their understanding of the transaction. A rzal estate agent is a person qualified to advise about real estate. If legal or tex advice is desired, consult a competent professional, (bi Brokers have no responsibility with respect to any default or breach hereof by either Party. The Parties agree that no lawsuit or other legal proceeding involving any breach of duty, error or omission relating to this Lease may be brought against Broker more than one year after the Start Date and that the liability (including court costs and attomeys' fees), of any Broker with respect to any such lawsuit and/or legal proceeding shall not exceed the fee received by such Broker pursuant to this Lease; provided, however, that the foregoing limitation on each Brokers liability shall not be applicable to any gross negligence or willful misconduct of such Broker. (€) Lessor and Lesses agree to identify to Brokers as “Confidential” any communication or information given Brokers that is considered by such Party to be confidential, 26. No Right To Holdaver. Lessee has no right to retain possession of the Premises or any part thereof beyond the expiration or termination of this Lease. In the event that Lessee holds over, then the Base Rent and Percentage Rent Rate shall be increased fo 150% of the Base Rent and Percentage Rent Rate applicable immediately preceding the expiration or termination. Heldover Base Rent shall be calculated on monthly basis. Nothing contained herein shall be construed as consent by Lessor to any holtiing over by Lessee, 27. Cumulative Remedies, No remedy or ¢lection hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity. 28. Covenants and Conditions; Construction of Agreement. All provisions of this Lease to be observed or performed by Lessee are both covenants and conditions, In construing this Lease, all headings and titles are for the convenience of the Parties only and shall not he considered a part of this Lease. \Whenever required hy the context, the singular shail include the plurat and vice versa, This Lease shall not be construed as if prepared by one of the Parties, but rather according to #ts fair meaning as a whole, as if both Parties had prepared i. 29. Binding Effect; Choice of Law. This Lease shall be binding upon the parties, their personal representatives, successors and assigns and be governed by the laws of the State in which the Premises are located. Any litigation between the Parties hereto concerning this Lease shall be initiated in the county in which the Premises are located. 30. Subordination; Attornment; Non-Disturbance. an Subordination. This Lease and any Option granted hereby shall be subject and subordinate to any ground lease, marigage, deed of trust, or nther hypothecation or security device (collectively, “Security Device”), now or hereafter placed upon the Premises, to any and ali advances mads on the security thereof, and to ail renewals, modifications, and extensions thereof. Lessee agrees that the holders of any such Security Devices {in this Lease together referred to as "Lender”) shall have na liability or obligation to perform any of the obligations of Lessor under this Lease. Any Lender may elect to have this Lease and/or any Option granted hereby superior to the lien of its Security Device by giving written notice thereof to Lessee, whereupon this Lease and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates of the documentation or recordation thereof. 30.2 Attornment. in the event that Lessor transfers title to the Premises, or the Premises are acquired by another upon the foreclosure or termination of a Security Device to which this Lease is subordinated (f) Lessee shall, subject to the non-disturkance provisions of Paragraph 30.3, attorn to such new owner, and upon request, enter into a new lease, containing all of the terms and provisions of this Lease, with such new owner for the remainder of the term hereof, or, at the election of the new owner, this Lease will automatically become a new lease between Lessee and such new owner, and (ii) Lessor shall thereafter be relieved of any further obligations hereunder and such new owner shall assume all of Lessor's obligations, except that such new owner shall not: (a) be liable for any act or omission of any prior fessor or with respect to events occurring prior to acquisition of awnership; (b) be subject to any offsets or defenses which Lessee might have against any prior lessor, (c) be bound by prepayment of more than one month's rent, or (d) be liable for the return of any security deposit paid to any prior lessor which was hot paid or credited ta such new owner, 30.3 Non-Disturbance, ‘With respect to Security Devices entered into by Lessor after the execution of this Lease, lLessee's subordination of this Lease shall be subject to receiving a commercially reasonable non-disturbance agreement (a "Non-Disturbance Agreement’) from the Lender which Non-Disturbance Agreement provides that Lessee's possession of the Premises, and this Lease, including any options to extend the term hereof, will not be disturbed so long as Lessee is not In Breach hareof and attoms to the record owner of the Premises, Further, within 60 days after the execution of this Lease, Lessor shall, if requested by Lessee, use its commercially reasonable efforts to obtain a Non-Disturbance Agreement from the holder of any pre-existing Security Device which is secured by the Premises. In the event that Lessor is unable to provide the Non-Disturbance Agreement within said 60 days, then Lessee may, at Lessee’s option, directly contact Lender and attempt to negotiate for the execution and delivery of a Non-Disturbance Agreement. 30.4 Self-Executing. The agreements contained in this Paragraph 30 shall be effective without the execution of any further documents; provided, however, that, upon written reguest from Lessor or a Lender In connection with a sale, financing or refinancing of the Premises, Lessee and Lessor shall execute such further writings as may be reasonably required to separately document any subordination, attarnment anafor Non-Disturbance Agreement provided for herein. 31. Attorneys’ Fees. |f any Party or Broker brings an action or proceeding involving the Premises whether founded in fort, contract or equity, or to declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitied to reasonable attorneys’ fees. Such fees may be awarded in the same suit ar recovered in a separate suit, whether or not such action pr proceeding is pursued to decision or judgment. The term, "Prevailing Party” shall include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The attorneys’ fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse aif attomeys’ fees reasonably incurred. In addition, Lessor shall be entitled to attorneys’ fees, costs and expenses incurred in the preparation and service of notices of Default and consultations in connection therewith, whether or not a legal action Is subsequently commenced in connection with such Default or resulting Breach (5200 Is a reasonable minimum per occurrence for such services and consultation). 32. Lessors Access; Showing Premises; Repairs. Lessor and Lessors agents shall have the right to enter the Premises at any time, in the case of an emergency, and otharwise at reasonable times after reasonable prior notice for the purpose of showing the same to prospective purchasers, lenders, or tenants, and making such alterations, repairs, improvements or additions to the Premises as Lessor may deem necessary or desirable and the erecting, using and maintaining of utilities, services, pipes and conduits through the Premises and/or other premises as long as there Is no material adverse effect on Lessee's use of the Premises, All such activities shall be without abatement of rent or liability to Lessee. 33. Auctions. Lessee shall not conduct, nor permit te be conducted, any auction upon the Premises without Lessors prior written consent, which consent shail be granted or denied at Lessor's sole discretion. 34. Signs. Lessor may piace on the Premises ordinary "For Sale” signs at any time and ordinary "For Lease" signs during the last 6 months of the term hereof. All signs must comply with all Applicable Requirements. Lessee shall not place, construct, or maintain on the glass panes or supports of the show windows of the Premises, the doors, exterior walls or the roof of the Building, or anywhere else within the Shopping Center outside of the Premises, or on any interior portions of the Premises that are visible from the exterior of the Premises, any signs, adverlisements, names, insignia, tradernarks, descriptive material or any other items without Lessor's prior written consent, which consent shall be granted or denied at Lessor's sole discretion. Lessor shall designate the size, shape. color, design, and location of all exterior sign(s) to be instalied by Lessee, and Lessee shatl, at Lessee’s sole cost and expense, fabricate, construct and instal all such sign(s) in fuil compliance with Lessor's designation and in accordance with the Sign Criteria for the Shopping Center attached hereto, if any. Lessee agrees to submit plans and specifications for Lessee’s signis} for Lessor's written approval within 30 days after the full execution hereof and to install such sign(s) prior to opening for business at the Premises. Lessor, at Lessee’s cost, may remove any item placed, constructed or maintained in, upon or about the Premises or Shopping Center which does not comply with this paragraph. in the event there is a pole, pylon or monument sign for the Shopping Center, Lessor shall have the right, but not the obligation, to install lettering designating Lessee’s business on such sign, at Lessee’s expense, with Lessor's approval of location, size, style and color. All signs that are pe ho attached to the Premises or Building shall become the property of Lessor at the expiration or earlier termination hereof; provided, however, PAGE 12 OF 14 - INITIALS INITIALS ©2003 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM SCLN-12-04/14E Jan 1817,06:13p p.13 that Lessee shall promptly remove all such signs if Lessor so elects, and Lessee shall promptly repair alt damage caused by such removal. Lessee shall not place, construct or maintain in, upon or about the Premises any search fights, flashing fi dspepkers, phonographs or other visual or audio media ANY AND ALL SIGNAGE MUST BE APPROVED BY LESSOR. 35. Termination; Merger. Unless specifically stated otherwise in writing by Lessor, the volunt her surrender of this Lease by Lessee, the mutual termination or cancellation hereof, or a termination hereof by Lessor for Breach by Lessee, shall automatically terminate any sublease oy lesser estate in the Premises; provided, however, that Lessor may elect to continue any ane or ali existing subtenancies. Lessors faiture within 10 days following any such event to elect to the contrary by writien notice to the holder of any such lesser interest, shall constitute Lessors election to have such event constitute the termination of such interest. 36. Consents. Except as otherwise provided herein, wherever in this Lease the consent of a Party is required to an act by or for the other Party, such consent shall not be unreasonably withheld or delayed. In those express instances where consent is within the sole discretion of a party, the party shzll have no obligation to adhere to a standard of reasonableness. Lessors actual reasonable costs and expenses (including but not limited to architects’, attorneys’, engineers’ and other consultants’ fees) incurred in the consideration of, or response to, a request by Lessee for any Lessor consent, including but not limited to consents to an assignment, a subletting or the presence or use of a Hazardous Substance, shall be paid by Lessee upon receipt of an invoice and supporting documentation therefor, Lessor's consent to any act, assignment or subletting shall not constitute an acknowlstigment that no Default or Breach by Lessee of this Lease exists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as may be otherwise specifically stated in writing by Lessor at the time of such consent. The failure to specify herein any particular condition to Lessor's consent shall not preclude the imposition by Lessor at the ime of consent of such further or other conditions as are then reasonable with reference to the particular matter for which consent is being given. In the event that either Party disagrees with any determination made by the other hereunder and reasonably requests the reasons for such determination, the determining party shall furnish its reasons in writing and in reasonable detail within 10 business days following such request. 3 37. Guarantor. 37.1 Execution. The Guaranturs, if any, shall each execute 2 guaranty in the form most recently published by the AIR Commercial Real Estaie Association. al 37.2 Default, it shall constitute a Default of the Lessee if any Guarantor fait fr refuses, upon request to provide; (a) evidence of the execution of the guaranty, including the authorify of the party signing on Guarantors bet [ ta obligate Guarantor, and in the case of a corporate Guarantor, & certified copy of a resolution of its board of directors authorizing the making »f such guaranty, {b) current financial statements, (c) an Estappel Certificate, or (d) written confirmation that the guaranty is still in effect, 38. Quiet Possession. Subject to payment by Lessee of the Rent and performance of all of the covenants, conditions and provisions on Lessees part to be observed and performed under this Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during the erm hereof. 39. Options, If Lessee is granted any option, as defined below, than the following provisions shall apply. 39.1 Definition. “Cption" shall mean: (@) the right to extend or reduce the term of or renew this Lease or to extend or reduce the term of or renew any lease that Lessee has on other property of Lessor, (b) the right of first refusal or first offer to lease either the Premises or other proparty of Lessor, (c) the right to purchase, the right of first offer to purchase or the night of first refugal to purchase the Premises or other property of Lessor. 39.2 Options Personal To Original Lessee. Any Option granted to Lessee in this Lease is personal to the original Lessee, and cannot be assigned or exercised by anyone other than said original Lessee and only while the ounginal Lessee is in full possession of the Premises and, if requested by Lessor, with Lessee certifying that Lessee has no intention of thereafter assigning or subletting. 39.3 Multiple Options. In the event that Lessee has any multiple Options to extend or renew this Lease, a later Option cannot be exercised unless the prior Options have been validly exercised. 38.4 Effect of Default on Options. fa) Lessee shall have no right to exercise an Option: (i) during the period commencing with the giving of any notice of Default and continuing until said Default is cured, (Ii) during the period of time any Rent Is unpaid (without regard to whether notice thereof is given Lessee), (iil) during the time Lessee is in Breach of this Lease, or (Iv) in the event that Lessee has been given 3 or more notices of separate Default, wheather or not the Defaults are cured, during the 12 month period immediately preceding the exercise of the Opiion. (0) The perod of time within which ah Option may be exercised shall not be extended or enlarged by reason of Lessee's inability to exercise an Option because of the provisions of Paragraph 39.4(a). (c) An Option shall terminate and be of no further force or effect, notwithsianding Lessee's due and timely exercise of the Option, if, after such exercise and prior to the commencement of the extended term or completion of the purchase, (i) Lessee fails to pay Rent for a period of 30 days afier such Rent becomes due (without any necessity of lessor to give notice thereof}, or (ii) if Lessee commits & Breach of this Lease. 40, Security Measures. Lesser hereby acknowledges that the Rent payahle to Lessor hereunder does not include the cost of guard service or other security measures, and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes ail responsibility for the protection of the Premisas, Lessee, its agents and invitees and their property from the acts of third parties. While Lessor does not assume any responsibility to provide any security measures or any liability for failure to provide security measures or for any inadequacy thereof, Lessor shall have the autharity fo institute or continue such security measures as Lessor in its sole discretion deems necessary or appropriate from time to time, the cost and expenses of which shall be considered Common Area Operating £xpenses. To the degree directed by Lessor, Lessee shall coondinate its security measures at the Premises with the security measures instituted by Lessor, if any, 41, Reservations. Lessor reserves the right: (i) to grant, without the consent or joinder of Lessee, such easements, rights and dedications that Lessor deems necessary, (fi) to cause the recordation of parcel maps and restrictions, and (if) to create and/or install new ufility raceways, so tong as such easements, rights, dedications, maps, restrictions, and utility raceways do not unreasonably interfere with the use of the Premises by Lessee. Lessee agrees {o sign any documents reasonably requested by Lessor to effectuate such rights. 42. Building Planning. Lessor shall have the right at any time or times, upon giving Lesseg not less than 60 days prior written notice, to provide and furnish Lessee with space of comparable visibility located elsewhere within any of the buildings within the Shopping Certer and to move Lessee into such new space, provided that the usable area of such new space is not less than the usable area of the Premises and provided that all of Lessee's reasonable out-of-pocket moving expenses (including but not limited to the cost of moving Lessee's personal propery, the cost of reprinting Lessee's stationery or other business materials with the new address, and the cost to relocate and reinstall tenant improvements and Lesses's telecommunications and computer equipment) shall be paid by Lessor, and provided further that Lessor shall construct at Lessors expense such improvements to such new space as shall be necessary to place it in a condition that is substantially comparable to the Premises. Excapt as provided in the immediately preceding sentence, Lessor shall have no obligation to improve such space or pay any other expenses incurred by Lessee as a resuit of such relocation. On such relocation, the terms and conditions of this Lease shall remain In full force and effect, including but not limited to the Base Rent payable hersunder and Lessee's Share (gven if the usable area of such relocated Prernises Is in excess of the usable area of the Premises), except that the Premises shall be in such new location. Upon Lessor's request, the Parties shall execute an amendment to this Lease in form required by Lessor confirming the relocation of the Premises to such new location. If the new space does not meet with Lessee's approval, which approval Lessee shall give or withhold in accordance with Paragraph 36, Lessee shall have the right to cancel this Lease by giving Lessor written notice thereof within 15 days of receipt of Lessor's notification of ils intent to relocate Lessee. Lessee's failure to give such notice within such 15 day period shall be deemed Lessee's approval of the new space, [f timely notice is given by Lessee, then this Lease shall terminate unless Lessor rescinds Lessor's prior notice of its intent to relocate Lessee within 10 days after Lessor's receipt of Lessee’s notice of cancellation. 43. Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of money 10 be paid by one Party to the other under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall have the right to make payment "under protest” and such payment shall not be regarded as a voluntary payment and there shall survive the right on the part of said Party ta institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof as it was not legally required to pay. A Party who does not initiate sult for the recovery of sums paid "under protest" within 6 months shall be deemed to have waived its right to protest such payment, 44, Authority; Multiple Parties; Execution. i (a) If either Party hersto is a corporation, trust, limited liability company, partnership, or similar entity, each Individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized ta execute and deliver this Lease on its behalf. Each Party shall, within 30 days after request, deliver fo the other Party satisfactory evidence of such authority. (b) If this Lease is executed by more than one person or entity as “Lessee”, each such person or entity shall be jointly and severally liable hereunder. It Is agreed that any ona of the named Lessees shall be empowered to execute any amendment fo {his Lease, or other document ancillary thereto and bind all of the named Lesseas, and Lessor may rely on the same as if all of the named Lessess had executed such document, © This Lease may be executed by the Parties in counterparts, each of which shell be deemad an orlgingl and all of which together shall constitute one and the same instrument. 45. Conftict. Any conflict between the printed provisions of this Lease and the typewritten or handwritten provisions shall be controlled Ly the A < PAGE 13 OF 14 9 INITIALS INITIALS ©2003 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM SCLNA204M4E Jan 1817, 06:15p p.14 typewaiften or handwritten provisions. 48, Offer. Preparation of this Lease by either Party or their agent and submission of same to the other Party shall not be deemed an offer to lease to the other Party. This Lease is not intended to be binding until executed and delivered by all Parties hereto. 47. Amendments. This Lease may be modified only in writing, signed by the Parties in interest at the time of the modification. bs jong 3s they do not materially change Lessee's obligations hereunder, Lessee agrees to make such reasonable non-manetary modifications to this Lease as may be reasonably required by a Lender in connection with the obtaining of nermal financing or refinancing of the Premises, 48. Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT. 49, Arbitration of Disputes. An Addendum requiring the Arbitration of all disputes between the Parties andfor Brokers arising out of this Lease [0 is O is not attached to this Lease. 50. Accessibility; Americans with Disabilities Act. (a) The Premises: 0 have not undergone an inspection by a Certified Access Specialist (CASp). [I have undergone an inspection by a Cenified Access Specialist (CASp) and it was determined that the Premises mat ail applicable constiuction-retated accessibility standards pursuant to California Civil Code §56.51 et seq. [J have undergone an inspection by a Certified Access Specialist (CASp) and it was determined that the Premises did net meet alf applicable construction-related accessibility standards pursuant ta California Civil Code §55.51 ot seq. {) Since compliance with the Americans with Disabilities Act (ADA) is dependent upon Lessee's specific use of the Premiges, Lessor makes no warranty of representation as to whether or not the Premises comply with ADA or any similar legistation. In the event that Lessea's use of the Premises requires modifications or additions to the Premises in order to be in ADA compliance, Lessee agrees to make any such necessary modifications and/or additions at Lessee's expense. LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN, AND BY THE EXECUTION OF THIS LEASE SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES, ATTENTION: NO REPRESENTATION OR RECOMMENDATION 1S MADE BY THE AIR COMMERCIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE LEGAL. SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION TO WHICH IT RELATES. THE PARTIES ARE URGED TO: 1. SEE ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE. 2, RETAIN APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE PREMISES. SAID INVESTIGATION SHOULD INCLUDE BUT NOT BE LIMITED TO: THE POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PREMISES, THE STRUCTURAL INTEGRITY, THE CONDITION OF THE ROOF AND OPERATING SYSTEMS, COMPLIANCE WITHH THE AMERICANS WITH DISABILITIES ACT AND THE SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE. WARNING: IF THE PREMISES ARE LOCATED IN A STATE OTHER THAN CALIFORNIA, CERTAIN PROVISIONS OF THE LEASE MAY NEED TO BE REVISED TO COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PREMISES ARE LOCATED. he parties hereto have executed this Lease at the place and on the dates specified above their respective signatures, Executed at: Executed at: On: On: By LESSOR: By LESSEE: Pel Mar Center Inc. Adrian Gonzalez Nn / a pm By By J Jf Cee Name Printed: wn nf Narfe Pripiéd: Adrian Gonzalez Tille: Coca m= / Title= Cone x By: By: Name Printed: Name Printed; Title: Title: Address: 2390 Newport Blvd Costa Mesa CA 92627 Address: 1931 Carnegie Santa Ana CA 92705 Telephone: {94 9) 698~3769 Telaphone: (949) 752-6272 Facsimile: ( ) Facsimile:( ) Email: Email: Email: Email: Federat ID No. Federal Id No. BROKER : BROKER: Attn; Attn; Title: Title: Address; Address: Telephone: ( ) Telephone: ( ) Facsimile: ( ) Facsimile: ( ) Email Email: Federeal 1D No.: Federal ID No. Broker/Agent BRE License #: Broker/Agent BRE License #: NOTICE: These forms are often modified to meet changing requirements of law and industry neads. Always write or calf to make sure you are utilizing the most current form: AIR Commercial Real Estate Association, $00 N Brand Blvd, Suite 900, Glendale, CA 91203. Telephone No. (213) 687-8777. Fax No.: (213) 687-8616. ©Copyright 2003 By AIR Commercial Real Estate Association. All rig hts reserved, No part of these works may be reproduced in any form without permission in writing. he PAGE 14 OF 14 INITIALS INIMALS ©2003 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM SCLN-12-04/M14E Jan 1817,06:15p p.15 CU MRR | AK Soe ili LAE LAT RAL ADDENDUM Date: 12/11/2015 By and Between (Lessor) Del Mar Center, Inc. (Lessee) Adrian Gonzalez Address of Premises: 2590 Newport Boulevard Suite ¢ Costa Mesa CA 92627 Paragraph 57 Lessor and Lessee agree, upon any infusion by any governmental agency, intrusion by ary governmental agency causing disruption to the ehopping center, the breaking of the peace by Lessee, any governmental action levied, guspended or served upon lessee causing disruption to the peace and the safety of the center, the Lessor at ite sole discretion shall have the right to terminate the lease, keep all deposits, prepaid rents, common area charges and vacate Lessee. Lessor and Lessee agree, either party shall not discuss, communicate or infer about Lessee’s use to other tenants of shopping center, any governmental agencies or any other thira parties, Lessee employees, affiliates, vendors and associates shall park off property, only patrons of Lessee shall have the right to park in the shopping center. Tne cooperation of Lesece, regarding parking, shall Insure the shopping center has ample parking for all the patrons of the center. Lessee ab ite own costa and expense shall provide security for the space it is conducting business. In the event of any conflict between the provisions of this Addendum and the printed provisions of the Lease, this Addendum shall control. de dL PAGE 10F 1 5 INITIALS INITIALS Jan 18 17,06.16p p.16 RENT ADJUSTMENT(S) STANDARD LEASE ADDENDUM Dated 12/21/2015 By and Between (Lessor) Del Mar Center Inc. (Lessee) Adrian Gonzalez Address of Premises: 2590 Newport Boulevard Ste. C Costa Mesa CA 92627 Paragraph 52 A. RENT ADJUSTMENTS: The monthly rent for each month of the adjustment period(s) spectfied below shall ba increased using the method(s) indicated helow; {Check Methad(s) to be Used and Fill in Appropriately) [0 1. Cost of Living Adjustment(s) (COLA) a. On (Fill in COLA Dates): A the Base Rent shall be adjusted by the change, if any, from the Base Month specified below, in the Consumer Price Index of the Bureau of Labor Statistics of the U.S. Department of Labor for (select one): [J CPI WW {Urban Wage Earners and Clerical Workers) or [1 CPI U (All Urban Consumers), for (Fill in Ueban Area): ac , All tems (1982-1984 = 100), herein referred to as "CPI", b. The monthly Base Rent payable in accordance with paragraph A.l.a. of this Addendum shall be calculated as follows: the Base Rent set forth in paragraph 1.5 of the attached Lease, shall be multiplied by a fraction the numerator of which shall be the CPI of the calendar month 2 months prior to the month(s) specified in paragraph A.l.a. above during which the adjustment is to take effect, and the denominator of which shall be the CPI af the calendar month which is 2 manths prior to (select one): the [J first month of the term of this Lease as set forth in paragraph 1.3 ("Base Month") or OI (Fill in Other "Base Month"): 0 . The sum so calculated shalt constitute the new monthly Base Rent hereunder, but in no event, shall any such new monthly Base Rent be less than the Base Rent payable for the month immediately preceding the Base Rent adjustment. ¢, In the event the compilation and/or publication of the CPI shall be transferred to any other governmental department or bureay or agency or shall be discontinued, then the index most nearly the same as the CPI shall be used to make such calculation. in the event that the Parties cannat agree on such alternative index, then the matter shall be submitted for decision to the American Arbitration Association in accordance with the then rules of said Association and the decision of the arbitrators shall be binding upon the parties. The cost of said Arbitration shall be paid equally by the Parties. [1 1. Market Rental Vaiue Adjustment(s) (MRV) > a. On (Fill in MRV Adjustment Date(s): the Base Reni shall be adjusted to the "Market Rental Value" of the property as follows: 1) Four months prior to each Market Rental Value Adjustment Date described abave, the Parties shall attempt to agree upon what the new MRYV will be on the adjustment date. If agreement cannot be reached within thirty days, then: (a) Lessor and Lessee shall immediately appoint a mutually acceptable appraiser or broker to establish the new MRV within the next 30 days. Any associated costs will be split equally between the Parties, or {v) Both Lessor and Lessee shall gach immediately make a reasonable determination of the MRV and submit such detesmination, in writing, to arbitration in accordance with the following provisions: {I} Within 15 days thereafter, Lessor and Lessee shall each select an [1 appraiser or [2] broker ("Consultant” - check ane) of their choice to act as an arbitrator. The two arbitrators so appointed shall immediately select a third mutually acceptable Consuitant to act as a third arbitrator. (ii) The 3 arbitrators shall within 30 days of the aippointmant of the third arbitrator reach a decision as ta what the actual MRYV for the Premises is, and whether Lessor's or Lessee's submitted MRV is the closest thereto, The decision of a majority of the arbitrators shall be binding on the Parties. The submitted MRY which is determined to be the closest ty the actual MRV shall thereafter be used by the Parties. Ae PAGE 10F 2 & INITIALS INITIALS ©2000 - AIR COMMERCIAL REAL ESTATE ASSOCIATION FORM RA-5-04/14E EXHIBIT 3 Tim Kowal From: altal6@aol.com Sent: Thursday, December 22, 2016 11:19 AM To: Tim Kowal Subject: Fwd: 2590 Newport Blvd Suite C Costa Mesa CA 92627 - Corporate and Personal Tax Returns with Financial Statement -----Original Message----- From: Roman To: altal6 Sent: Wed, Dec 2, 2015 1:17 pm Subject: Re: 2590 Newport Blvd Suite C Costa Mesa CA 92627 - Corporate and Personal Tax Returns with Financial Statement Daniel, The language that will terminate the three year lease will be iron clad, a three year lease is not long term, a year lease is very short fuse, before you know it, the year will be up, Adrian will be a stable tenant and will comply with the lease language. When we get to the point of doing up the lease, i will submit the language that will protect you and Adrian upon raids, public nuisance and any other issues. Let's go through the lease language before you decide. Anyway, i am trying to set an appointment for you for his locations, i'll let you know, thanks. Roman RL Enterprises 877.580.3330 714.681.5344 714.908.2111 fax License #01110512 -----Original Message----- From: altal6 To: rlenterprise2000 Sent: Wed, Dec 2, 2015 1:08 pm Subject: Re: 2590 Newport Blvd Suite C Costa Mesa CA 92627 - Corporate and Personal Tax Returns with Financial Statement when can we see his santa ana location as that is the closest to us? and landlord wants to start with a year, and 5 year options after that . its new to us, and dont want to be locked in long term, as we dont know how this will influence the type of people at the shopping center. -----Original Message----- From: Roman To: altal6 Sent: Wed, Dec 2, 2015 1:01 pm Subject: 2590 Newport Blvd Suite C Costa Mesa CA 92627 - Corporate and Personal Tax Returns with Financial Statement Daniel, Per your request. EXHIBIT 4 © 3850L 12 Articles of Incorporation FILED ol Of Secretary of State Del Mar Center Inc. State of California DEC 18 2015 Article 1 - Name 1te D The name of the Corporation is Del Mar Center Inc.. Article 2 - Purpose of Corporation The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business, or the practice of a profession permitted to be incorporated by the California Corporations Code. Article 3 - Initial Agent For Service of Process The name and address in the state of California of this corporation’s initial agent for service of process is: Danny Curry 2842 Chios Rd Costa Mesa, CA 92626 Article 4 - Corporate Address The street address in the state of California of this corporation is: 2842 Chios Rd Costa Mesa, CA 92626 The mailing address in the state of California of this corporation is: 2842 Chios Rd Costa Mesa, CA 92626 Article S - Corporate Capitalization This Corporation is authorized to issue only one class of shares, which shall be designated “common” share. The total number of shares authorized to be issued is 100,000 shares. The par value is $0.01 per share. 3850442 Article 6 - Registered Owners The Corporation, to the extent permitted by law, shall be entitled to treat the person in whose name any share or right is registered on the books of the corporation as the owner thereto, for all purposes, and except as may be agreed in writing by the Corporation, the Corporation shall not be bound to recognize any equitable or other claim to, or interest in, such share or right on the part of any other person, whether or not the Corporation shall have notice thereof. Article 7 - Indemnification The corporation is authorized to indemnify the Directors and Officers of the Corporation to the fullest extent permissible under California law. Article 8 - Amendment The Corporation reserves the right to amend, alter, change or repeal any provision contained in these Articles of Incorporation, or in any amendment hereto, or to add any provision in these Articles of Incorporation or to any amendment hereto, in any manner now or hereafter prescribed or permitted by the provisions of any applicable statute of the state of California, and all rights conferred upon shareholders in these Articles of Incorporation or any amendment hereto are granted subject to this reservation. RushFiling, Inc., Incorporator A- "By Stephen Kruidenier, CEO 3850412 Attachment to the Articles of Incorporation of Del Mar Center Inc. Pursuant to California Corporations Code 110, these documents are filed with a future file date of 12/18/2015. EXHIBIT 5 -- LC === VIOLATION NOTICE Costa Mesa | So ENrorcement ovision CALIFORNIA 92628-1200 To: Tom th. Teleb Date: Till 2.1277 Tow S0¢ neat LV Case#: Llb= OSH News. Beuch (A aATLLD Location: 2c G0 Newwpa! 12 hae. As part of our continuing program o preserve and improve our residential and business community, | observed the following violation(s) of the Costa Mesa Municipal Code (CMMC): [0 Conducting business not consistent with terms of Planning approval [1 Use of tarps or temporary canopies in pbs view C.U.P. (CMMC 20-12(ii}) (CMMC 20-6(c)) “NK conducting business without a city license and Zoning approval - [7] - Deteriorated building exterior or roof (MMC 20-6(b)) ~ (CMMC 20-12(hh)) [1 Broken windows and glass doors (CMMC 20-6(g)) C1 lilegal storage in public view (CMMC 20-12(s)) . ) 0 Storage of inoperative vehicle or parts. thereof [1 Deteriorated walls, fences, trash enclosures (CMMC 20-6(j)) © (CMMC 20-8(a)) [0 Deteriorated parking areas and sidewalks (CMMC 20-6(k)) [J Living in garages or commercial/industrial unit [0 Dead or dying landscape, weeds, overgrown vegetation in Ri zone (CMMC 20-12(n)) (CMMC 20-6(n)) [1 Outdoor work, storage or display without a permit (CMMC 13-44) [1 Dead or dying landscape, weeds, overgrown vegetation in ‘parkway [1 Outdoor work/industrial (CMMC 13-53) (CMMC 20-6(0)) [J Violation of home occupation standards (CMMC 13-168) a Dead CR OMe Te overgrown vegetation (all zones [J Use of residential yard areas for parking/storage of vehicles 8 Co (CMMC 20-8(c)(6)) in! Piast Dimers displayed in prominent location [1 Portable signs on private or public property (CMMC 13-112(g)) (cM -6(1) [J Flags, banners and pennants not in compliance with code [1 CBC 105.1 Bullding permits required (CMMC 13-112(d)) o Pushcart/sidewalk vendors (CMMC 9-191 @) [Od Living in trailer or RV (CMMC 20-12(m)) ‘ Garage sale permit EA 13-30(9)) [J Deteriorated or peeling paint (CMMC 20-6(d)) 4 Other: CMMC § " % | (a Description of violation(s): oy, No Coif Pat busieres NZRY Lov Tle o Cupet 1. 7 Unt C &) Med ro! Wit nore Bic ponsayiet Ag prob bo) LJ iv ey o I {oeke Wr ou are hereby requested to: > 1) Ocepet ol ct ory bids o Uni { _ ble ea, cit bE od lose Mose boy neh § Lifans 2, Pro-y Jet) \ ore pede mie conduT Busin25¢ Congist 4 Tl CLP Penni & 000 Failure to correct iis above vielatlon(s) by Lois fio 4 ly may result in the next progressive step in sniareament ih w ich you may be issued an Administrative Citation. If you have any questions regarding this notice, please feel free to contact . me at (714) 754- +1423 orcas. 6 Out $ @COSTAMESACA.GOV. The City appreciates your cooperation and staff looks forward to working witi-you to resolve this matter. Code Enforcement oir I.D.# © Violator's Signature X Print First and Last Name Building Division (714) 754-5273 + Code Enforcement (714) 75435623 * Planning Division (714) 754-5245 FAX (714) 754-4856 - TDD (714) 754-5244 :www.costamesaca.gov EXHIBIT 6 RL Enterprises 877.580.3330 714.681.5344 714.908.2111 fax License #01110512 From: dave To: Roman Cc: altalé ; Tom Talebi Sent Sat, Aug 13, 2016 1:21 pm Subject: Re: 2590 Newport Blvd. Suite C Costa Mesa CA 92627 hi roman we need your contractor or worker that pulled our camera out by mistake, also we have exposed holes from the cameras that were removed? how are you addressing that? also we need to be proactive on showing the location to potential renters so please give us a key or a code to the door and we will give you ample notice prior to showing the location until sept 1st. we have a perspective tenant wanting to view iton tuesday at1 thx dave On Aug 4, 2016, at 2:22 PM, Roman wrote: From: dave To: Roman Cc: altal6 Sent: Wed, Aug 3, 2016 11:30 AM Subject: Re: 2590 Newport Blvd. Suite C Costa Mesa CA 92627 Dave & Daniel, Mr Gonzalez wants to be amicable about the situation, if you have any suggestions on how he can reopen to continue business, 1 will work with him and you to that end. Otherwise, he needs to close, upon further review mr Gonzalez has paid the last months rent up front, therefore he is good thru 10/1/2016. In the interim, | will lease up both units together as a restaurant use, my client has seen the space and will let me know, once | know, you'll know. If subway space is leased already | will concentrate on suite EXHIBIT 7 License #01110512 From: dave To: Roman Cc: altal6 Sent: Mon, Sep 26, 2016 4:14 pm Subject: Re: 2590 Newport Blvd. Suite C Costa Mesa CA 92627 Roman please send over a air commercial real estate form and addendum template we are in process of renting Adrian's unit in the next couple of days thx Dave On Aug 13, 2016, at 5:29 PM, Roman wrote: Dave, Can you please pay for them, kidding. | will discuss with Adrian and get back to you, thanks. Roman RL Enterprises 877.580.3330 714.681.5344 714.908.2111 fax License #01110512 From: Dave@ spirit-aerospace.com To: Roman Cc: altal6 ; tomtalebi Sent: Sat, Aug 13, 2016 5:11 pm Subject: Re: 2590 Newport Blvd. Suite C Costa Mesa CA 92627 Hi Roman Excellent !'just let me know how we address the holes from the removed cameras Dave Sentfrom my iPhone On Aug 13, 2016, at 5:04 PM, Roman wrote: Dave, Please check with Daniel, i have already gave him the code several days ago. He also said you guys would put a key in the lockbox for the subway space thati may show your space to my prospective client too, thanks. Roman