Bellflower City Council
June 22, 2026

122

Staff Report — The Medicine Woman Group, LLC's Appeal of Tax Administrator's Final Determination Related to the Audit of Dispensary Operations for Calendar Years 2022-2024
May 11, 2026

FISCAL IMPACT
The total outstanding amount resulting from the audit of the Taxpayer's dispensary operations for calendar years 2022 through 2024 is $57,9557284.0440. This amount consists of $60,985.42 in tax, $12,892.93 in penalties, $13,925253.66-05 in interest, $9,000.00 for the Taxpayer's proportionate share of audit examination costs and is net of the $38,847 payment made in January 2026.

The increase in interest of $2,900228.9 29 reflects additional accrual resulting from the Taxpayer's failure to remit the assessed amount within 10 business days of the tax assessment letter. The original interest calculation included in the Tax Administrator's letter was accrued only through November 2025, when the audit report was finalized; interest is now calculated through May 2026.

BACKGROUND AND DISCUSSION
The City conducts periodic cannabis business tax audits, generally every three years, covering the preceding three calendar years of operations. The purpose of each audit is to assess compliance with the City's cannabis tax pursuant to Bellflower Municipal Code (BMC) § 3.37. The most recent prior audit of this Taxpayer, conducted in 2023 for calendar years 2019 through 2021, identified similar issues, including the exclusion of amounts labeled "City Cannabis Tax" collected from purchasers and delivery fees from taxable gross receipts. The Taxpayer subsequently paid the additional amounts due as a result of those audit findings in 2023.

The current audit covering calendar years 2022 through 2024 was conducted during the second half of 2025. The audit report was finalized in November 2025 and distributed to all active dispensary permittees in December 2025. Permittees were directed to remit any resulting liabilities by January 9, 2026, which coincided with the 2026 cannabis permit renewal deadline, for administrative efficiency.

On January 9, 2026, the Taxpayer submitted a payment which, consistent with City policy and prior notice to the Taxpayer, was applied first to outstanding tax liabilities, penalties, and interest resulting from the audit. As a result, the 2026 cannabis permit fee and other outstanding obligations remained unpaid.

On January 30, 2026, the City Attorney's Office issued a formal demand for payment requiring satisfaction of all outstanding permit fees, audit liabilities, and delinquent taxes by February 9, 2026. The Taxpayer remitted only the permit and other permit -related fees, and an administrative hearing was initially scheduled for February 17, 2026, but was continued to February 24. 2026 at the Taxpayer's request.

The Taxpayer disputed portions of the audit findings, presented evidence at the administrative hearing, and was granted the opportunity to submit supplemental documentation afterward. which was fully considered.
123

Staff Report — The Medicine Woman Group, LLC's Appeal of Tax Administrator's Final Determination Related to the Audit of Dispensary Operations for Calendar Years 2022-2024
May 11, 2026

BACKGROUND AND DISCUSSION - Continued
The Tax Administrator issued a final determination affirming the audit with minor adjustments, primarily related to delivery fee revenue based on supplemental records.

The original audit report included estimated delivery revenues because the Taxpayer did not provide the requested documentation or clarification by the established audit deadline.

The determination addressed three issues: (1) inclusion of amounts labeled "City Cannabis Tax" in gross receipts, (2) reporting of delivery fees, and (3) inclusion of non - cannabis sales in taxable gross receipts. The Taxpayer appeals issues (1) and (3) to the City Council.

With respect to the first issue on appeal, the record shows that the Taxpayer collected amounts from customers identified as "City Cannabis Tax" but excluded those amounts from reported gross receipts. The Taxpayer contends these amounts are excludable under BMC § 3.37.020 as taxes required by law to be included in or added to the purchase price and collected from the consumer, or amounts collected on behalf of others where the business is acting as an agent or trustee.

The determination concludes these amounts are properly included in taxable gross receipts because the City's cannabis business tax is imposed directly on the operator as a tax on the privilege of conducting commercial cannabis activity, not on the consumer.

Unlike state sales tax or the cannabis excise tax, the City Cannabis Tax is not required by law to be passed through to customers or separately stated on receipts. Accordingly, the Taxpayer's decision to itemize and collect a "City Cannabis Tax" charge does not alter its character as a business -level tax obligation or convert it into a pass -through tax.

Instead, amounts collected under this label represent consideration received in the course of business operations and are includable in gross receipts under the BMC.

The "agent or trustee" exclusion also does not apply. The Taxpayer is not collecting funds on behalf of a third party but is recovering its own tax obligation as the licensed permittee.

Because no agency or fiduciary relationship exists under the ordinance, the statutory exclusion is inapplicable.

With respect to non -cannabis items, the second issue on appeal, the determination finds that receipts from these sales are properly included in taxable gross receipts. The cannabis business tax is imposed on the privilege of operating a commercial cannabis business as a whole, rather than on individual product categories.

Under BMC § 3.37.020, "commercial cannabis business" is defined to include any commercial activity relating to cannabis, including without limitation the selling of cannabis and ancillary products and accessories, whether conducted for gain or profit. Section

3.37.020 states in relevant part as follows:
"Cannabis business" or "commercial cannabis business"
means any commercial business activity relating to cannabis including, without limitation, cultivating, transporting. distributing. manufacturing, compounding, converting, processing. preparing, storing, packaging. delivering, and selling (wholesale and/or retail sales) of cannabis and any ancillary products and accessories in the City, whether or not carried on for gain or profit.
124

Staff Report — The Medicine Woman Group, LLC's Appeal of Tax Administrator's Final Determination Related to the Audit of Dispensary Operations for Calendar Years 2022-2024
May 11, 2026

BACKGROUND AND DISCUSSION — Continued
"Gross receipts,"
except as otherwise specifically provided. means the total amount actually received or receivable from all sales; the total amount or compensation actually received or receivable for the performance of any act or service, of whatever nature it may be, for which a charge is made or credit allowed, whether or not such act or service is done as a part of or in connection with the sale of materials, goods. wares or merchandise; discounts, rents, royalties, fees, commissions, dividends, and gains realized from trading in stocks or bonds, however designated. Included in "gross receipts" is all receipts. cash, credits and property of any kind or nature, without any deduction there from on account of the cost of the property sold. the cost of materials used. labor or service costs, interest paid or payable. or losses or other expenses whatsoever, except that the following is excluded:

1. Cash discounts where allowed and taken on sales,

2. Credit allowed on property accepted as part of the purchase price and which property may later be sold, at which time the sales price is included as gross receipts;

3. Any tax required by law to be included in or added to the purchase price and collected from the consumer or purchaser;

4. Such part of the sale price of any property returned by purchasers to the seller as refunded by the seller by way of cash or credit allowances or return of refundable deposits previously included in gross receipts;

5. Receipts from investments where the holder of the investment receives only interest and/or dividends, royalties, annuities and gains from the sale or exchange of stock or securities solely for a person's own account, not derived in the ordinary course of a business;

6. Receipts derived from the occasional sale of used, obsolete or surplus trade fixtures. machinery or other equipment used by the taxpayer in the regular course of the taxpayer's business;
7 Whenever there are included within the gross receipts amounts which reflect sales for which credit is extended and such amount proved uncollectible in a subsequent year. those amounts may be excluded from the gross receipts in the year they prove to be uncollectible; provided, however. if the whole or portion of such amounts excluded as uncollectible are subsequently collected they are included in the amount of _gross receipts for the period when they are recovered;

8. Receipts of refundable deposits, except that such deposits when forfeited and taken into income of the business must not be excluded when in excess of one dollar ($1.00);

9. Amounts collected for others where the business is acting as an agent or trustee and to the extent that such amounts are paid to those for whom collected. These agents or trustees must provide the finance department with the names and the addresses of the others and the amounts paid to them. This exclusion does not apply to any fees, percentages, or other payments retained by the agent or trustees. 125

Staff Report — The Medicine Woman Group, LLC's Appeal of Tax Administrator's Final Determination Related to the Audit of Dispensary Operations for Calendar Years 2022-2024
May 11, 2026

BACKGROUND AND DISCUSSION — Continued
This interpretation is further supported by City policy clarifying the scope of taxable operations. As reflected in the City's Administrative Policy and Procedure No. 3 (as amended and ratified by the City Council in Resolution No. 22-18), businesses engaged in qualifying cannabis -related retail activity are subject to the cannabis tax on their entire gross receipts when their cannabis -related sales exceed 50% of total gross receipts. The policy explicitly recognizes that once a business meets this threshold and is classified as operating within the cannabis sector for tax purposes, the tax applies to all receipts of the business, including non -cannabis merchandise such as apparel or accessories, because those revenues are generated through and in connection with the cannabis business operation.

Accordingly, receipts from non -cannabis items are properly included in taxable gross receipts because they are part of the total revenue derived from the Taxpayer's commercial cannabis business activities and are not subject to any applicable exclusion under BMC § 3.37.020.

Staff concludes that the Tax Administrator's Determination Letter is legally sound, supported by substantial evidence, and consistent with the Bellflower Municipal Code.

ATTACHMENTS
Appeal of Administrative Decision 6
Response to Appeal of Administrative Decision 15
Tax Administrator's Determination Letter 21
The Medicine Woman Group, LLC Audit Report dated April 14, 2026 25 Payment Demand and Notice of Suspension Letter dated January 30, 2026 33 The Medicine Woman Group, LLC Request for Hearing dated February 5, 2026 37 Notice of Tax Assessment Hearing for February 17, 2026 dated February 5, 2026 39 Hearing Extension Request Dated February 13, 2026 52
Notice of Tax Assessment Hearing for February 24, 2026 53 Agenda Item 14-C, Resolution No. 22-18
Ratifying Administrative Policies and Procedures No. 3 — Cannabis Tax Application to Sale of Industrial Hemp -Derived Monies 54
126

The City of Bellflower
`.7amifies. i?usinesses. `, 7ufures.
16600 Civic Center Drive, Bellflower, CA 90706
Tel 562.804.1424 Fax 562.925.8660 www.bellflower.org
June 22, 2026

VIA E-MAIL ONLY
Courtney J. Caron, Esq.

Adamant Law Group, P.C.
4040 Vineland Ave, Ste 204
Studio City, CA 91604-3350
[email protected]
G�C`t pg BELLFLpwER
.,GROWING TOG t•
Re: Response to June 19, 2026 Letter — Resolution No. 26-05 and Cannabis Business Permit Application for 9535 Artesia Boulevard
Dear Ms. Caron:

Thank you for your letter dated June 19, 2026 sent on behalf of 9535 Artesia Ave, Inc. dba Herb's Diner (the "Applicant"). It is unclear why Letter was sent: Resolution No. 26-05 speaks for itself. As you note, it does not require the City Council to award the dispensary Cannabis Business Permit (CBP) to the highest sealed bidder. And nothing in the staff report asserts that as the law. The Council keeps its discretion to review the qualified applicants, weigh the sealed bids alongside everything else before it, and decide which applicant, if any, should receive the permit.

This equation is not arithmetic: the City is not buying the cheapest construction; it is deciding which qualified operator should be trusted with a closely regulated cannabis business in this community. That is why the Resolution measures applicants against more than one criterion. An applicant must meet the minimum qualifications and must show that issuing a CBP "will be in the best interests of the City of Bellflower," judged against objective criteria that include operating experience, managerial capacity, the business plan, location, financing, and public benefit (Resolution No. 26-05, § 9; see BMC tit. 14). The sealed bid is one of those considerations. It is not all of them.

That brings us to the Applicant. The Applicant filed its CBP application for the dispensary at 9535 Artesia Boulevard on March 31, 2026, corrected the items the City Manager flagged, and was found complete and eligible for Council consideration. The draft findings in Resolution No. 26-25 answer the best -interests criteria in the Applicant's favor on experience, managerial capacity, business plan, location, and financing. For dispensaries, the guaranty of twelve months of estimated tax revenue serves as the sealed bid. The Applicant's proposed guaranty is $225,000. The staff report notes that this figure is "lower than the other Applicant's guaranty bid" and, on that basis, recommends that the Council not issue a CBP to the Applicant.

Sonny R. Santa Ines Victor A. Sanchez
Mayor Mayor Pro Tem
Ray Dunton
Council Member
Dan Koops
Council Member
Wendi Morse
Council Member
1 The City of Bellflower
`S7amifies. Businesses. `Iufures.
16600 Civic Center Drive, Bellflower, CA 90706
Tel 562.804.1424 Fax 562.925.8660 www.bellflower.org
G�C`t of BELLFLo,
OWING TOGE'cKR
None of that ties the Council's hands. The staff recommendation is advisory, and — as your Letter and this response agree — it does not turn the process into a mandatory highest -bidder award. Under § 14(E), the Council may weigh the guaranty figures together with the qualification findings and all other evidence presented at the hearing, and may then determine which applicant, if any, should receive a CBP. The guaranty is a real and legitimate factor the Council is entitled to weigh heavily; it is simply not, by itself, the answer.

So the City will do exactly what the Resolution contemplates. The City Manager has forwarded the eligible applicants; the anonymized bids will be presented; the Council will hold its public hearing; and the Council will consider the applicants and the record and determine which applicant, if any, should receive the available retail CBP. Nothing in this letter commits the City to any applicant or outcome, or waives any of the City's rights. The Council's discretion — to grant or to decline — remains its own.

Please direct any further correspondence on this matter to my office.

Very tr:ily,
ours,
ail H.B r
City Attc rn y, City of Bellflower
cc:

Mayor Sonny R. Santa Ines and Members of the City Council Ryan Smoot, City Manager
Sonny R. Santa Ines Victor A. Sanchez
Mayor Mayor Pro Tern
Ray Dunton
Council Member
Dan Koops
Council Member
Wendi Morse
Council Member
2 adamant
law
group
June 19, 2026

VIA EMAIL
Ryan Smoot, City Manager
Mayor Sonny Santa Ines
Members of the Bellflower City Council
City of Bellflower
16600 Civic Center Drive
Bellflower, California 90706
Re: Resolution No. 26-05 — City Council Authority and Obligation to Consider Qualified Cannabis Retail CBP Applicants
Dear City Manager Smoot, Mayor Santa Ines, and Honorable Members of the City Council:

On behalf of 9535 Artesia Ave, Inc., we write regarding the proper interpretation of Resolution No. 26-05 and the City Council's role in evaluating applicants for the available cannabis retail Cannabis Business Permit ("CBP").

In the case that there may be uncertainty regarding whether the City Council is legally required to award the permit to the applicant submitting the highest sealed bid, 9535 Artesia Ave, Inc., wants to be on the record as to our understanding of the resolution. Respectfully, such an interpretation is inconsistent with the language of the Resolution adopted by the City Council, inconsistent with established principles of statutory construction, and inconsistent with the discretionary licensing framework established by the Bellflower Municipal Code and Resolution No. 26-05.

Most importantly, the City Council should understand that the governing law is the Resolution that was actually adopted —not the staff report that preceded it.

The February 9, 2026 staff report recommended implementation of a sealed -bidding process for retail cannabis permits and specifically stated that, unlike a traditional public works bidding process, "the City Council would select the highest bidder rather than the lowest bidder." However, that recommendation was never incorporated into the operative language of Resolution No. 26-05.

This distinction is legally significant.

Under well -established principles of statutory and ordinance interpretation, it is the language enacted by the legislative body that governs. Staff reports may provide background, policy 559 999 1176
adamantlaw.com

recommendations, and legislative history, but they do not themselves create binding law. A city council remains free to adopt, reject, revise, or partially adopt any recommendation made by staff.

Here, staff expressly recommended a process in which the City Council would select the highest bidder. Yet when Resolution No. 26-05 was drafted, presented, debated, and ultimately adopted, no such requirement was included. Instead, the Resolution requires only that qualified applicants submit sealed bids and that those bids be anonymized and presented to the City Council for consideration.

The Resolution contains no provision stating that the highest bidder shall receive the permit.

The omission is presumed intentional.

When a legislative body considers particular language and ultimately declines to enact it, courts routinely recognize that the omission reflects a deliberate legislative choice. Had the City Council intended to establish a mandatory highest -bidder system, it could have adopted the exact language proposed by staff. It did not do so. The City Council instead adopted a Resolution that requires submission and consideration of bids while preserving the Council's role as the final decision - maker.

Accordingly, interpreting Resolution No. 26-05 as requiring automatic issuance of the permit to the highest bidder would improperly insert language into the Resolution that the City Council consciously chose not to enact. Such an interpretation would elevate a staff recommendation above the operative law adopted by the City's legislative body and would be contrary to established principles of legislative construction.

Equally important, the cannabis retail CBP process established by Resolution No. 26-05 is not a public works procurement process.

The staff report noted that the proposed bidding system was modeled after public works bidding procedures. However, the issuance of a cannabis business permit is fundamentally different from the award of a construction contract.

In the public works context, state law often requires award to the lowest responsive and responsible bidder because the governmental objective is procurement of construction or services at the lowest cost consistent with bidder responsibility.

By contrast, issuance of a cannabis business permit is a discretionary licensing determination involving the exercise of municipal police powers. The City is not purchasing a product or procuring construction services. Rather, the City is determining which qualified applicant should be entrusted with the privilege of operating a highly regulated cannabis business within the community.

Nothing in California law creates a default rule requiring a cannabis permit to be awarded to the highest bidder. If the City Council intended to relinquish its discretion and create a purely

ministerial auction process, it was required to do so expressly. Resolution No. 26-05 contains no such language.

To the contrary, the Resolution repeatedly preserves and emphasizes the City Council's role in evaluating applicants and making the final determination.

Section 13 provides that after review of applications; the City Manager will provide the City Council with a list of applicants deemed eligible for City Council consideration. Resolution No. 26-05, Section 13(B). The fact that applicants are presented to the Council for consideration necessarily demonstrates that eligibility alone does not determine the outcome.

Section 14 further confirms the Council's discretionary role. Specifically, Section 14(E) provides:
"The City Council will consider each CBP application on a first -come -first -serve basis during the public hearing and determine which, if any, person will receive a CBP or CBP Renewal, if desirable."
This language is irreconcilable with the notion that the permit must automatically be awarded to the highest bidder.

The phrase "determine which, if any" plainly contemplates deliberation, evaluation, and the exercise of judgment by the City Council. If the Resolution intended a purely ministerial process, there would be no reason for the Council to determine which applicant should receive the permit.

Nor would there be any reason for a public hearing. The Resolution could simply have directed staff to identify the highest qualified bid and issue the permit accordingly.

It does not.

Likewise, Section 14(F) establishes a closed -bidding process for dispensary applications and requires qualified applicants to submit sealed bids that include a guaranteed minimum tax revenue proposal supported by documentation. The Resolution further requires that the bids be anonymized before presentation to the City Council for consideration.

Notably absent from Section 14(F) is any requirement that the City Council award the permit to the highest bidder.

The Resolution requires submission of bids.

The Resolution requires consideration of bids.

The Resolution requires presentation of bids to the Council.

The Resolution does not require automatic selection of the highest bid.

This distinction is critical.

The bids are unquestionably relevant and should be considered by the City Council as part of its evaluation process. However, the Resolution treats the bids as information for Council consideration —not as a mechanism that supplants the Council's decision -making authority.

Indeed, the staff report itself states that the purpose of the proposed process was to promote "objective decision making" while ensuring that the City attracts "the highest quality cannabis businesses." Evaluating the quality of a cannabis operator necessarily involves consideration of factors beyond a single numerical bid amount.

When Resolution No. 26-05 is read as a whole, the process established by the City Council is straightforward:

1. The City Manager reviews applications and determines eligibility.

2. Qualified applicants submit sealed bids.

3. The bids are anonymized and presented to the City Council.

4. The City Council conducts a public hearing.

5. The City Council considers the qualified applicants and the information presented.

6. The City Council determines which applicant, if any, should receive the permit.

Nothing in the Resolution requires the City Council to disregard its independent judgment or automatically award the permit based solely upon the highest bid submitted.

In fact, the structure of the Resolution suggests the opposite. The Resolution repeatedly assigns substantive responsibilities to the City Council, including consideration of applications, conducting a public hearing, and determining which applicant should receive a permit. Those provisions would be rendered largely meaningless if the Council's role were reduced to opening envelopes and identifying the highest number.

Moreover, to the extent any ambiguity exists, established principles of municipal law favor preserving rather than eliminating the discretionary authority of elected decision -makers. A surrender of legislative discretion should not be inferred from silence, particularly where the Resolution expressly contemplates Council review, deliberation, and determination of the successful applicant.

For these reasons, Resolution No. 26-05 should be interpreted as requiring the City Council to review the qualified applicants, consider the sealed bids and other relevant information presented during the public process, deliberate regarding the merits of the applicants, and determine which applicant should receive the available retail CBP.

Accordingly, the City Council is not only permitted to discuss and evaluate the applicants during a public meeting, but such discussion and evaluation appear to be contemplated —and indeed required —by the process established in Resolution No. 26-05. The Council's role under the Resolution is not ministerial. Rather, the Resolution preserves the Council's discretionary authority and responsibility to determine which qualified applicant best satisfies the objectives of the City's cannabis regulatory program and should receive the permit.

We respectfully request that the City Council exercise the authority preserved by Resolution No. 26-05 and conduct a full and meaningful public discussion regarding the qualified applicants before making its final determination.

Thank you for your time and consideration of this important matter.

Respectfully submitted,
Courtney J. Caron, Esq.

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CR°WThJG TGGETNER
stafreport
TO: Honorable Mayor and Members of the City Council
ATTENTION: Ryan Smoot, City Manager
FROM: Wangsu Lee, Assistant to the City Manager
SUBJECT:

Consideration and possible action to conduct a public hearing to consider issuing one Cannabis Business Permit for a dispensary use at 9535 Artesia Boulevard; and consider adopting Resolution No. 26-25 — A Resolution approving a Cannabis Business Permit to operate a cannabis dispensary at 9535 Artesia Boulevard; Applicant: 9535 Artesia Ave, Inc. dba Herb's Diner. [Continued from June 8, 2026]
DATE: June 22, 2026

EXECUTIVE SUMMARY
On March 31, 2026, 9535 Artesia Ave, Inc. dba Herb's Diner ("Applicant") filed a Cannabis Business Permit ("CBP") application for a proposed cannabis dispensary located at 9535 Artesia Boulevard ("Property"). On April 30, 2026, the City Manager requested additional information from the Applicant including the Property owner's role in the cannabis business; corrections to the Applicant's pro forma; and clarifications regarding the security plan. The Applicant addressed and corrected all identified deficiencies within the prescribed timeframe. The proposed dispensary is located on a site previously entitled for cannabis -use pursuant to Resolution No. 17-79-C and was formerly occupied by Deli by Caliva. The application is complete. Accordingly, the City Manager has found the Applicant eligible for City Council consideration of a CBP.

The Applicant's proposed guaranty is $225,000.

RECOMMENDATION TO CITY COUNCIL
1) Open a public hearing and consider issuing one cannabis business permit for dispensary use; and
2) After receiving testimonial and documentary evidence, close the public hearing and consider whether to issue a cannabis business permit to the Applicant by adopting Resolution No. 26-25. Based upon the Applicant's bid guaranty, it is recommended that the City Council NOT issue a CBP to the Applicant; or 2) Alternatively, discuss and take other action related to this item.

1 Staff Report — Resolution No. 26-25
June 22, 2026

FISCAL IMPACT
Cannabis permittees are required to pay the City's 8.5% cannabis business tax on taxable gross receipts generated from dispensary operations pursuant to Resolution No. 21-35, adopted June 14, 2021. This tax is in addition to any other applicable taxes.

Permittees must also pay an annual permit administration fee of $33,589 for Fiscal Year 2025-2026, make an annual contribution of $5,000 to a drug rehabilitation program or homeless prevention program, and pay a business license fee upon permit approval.

These fees and contribution will be prorated to expire on December 31, 2026.

Before a CBP becomes effective, new dispensaries must provide a fully executed guaranty in a form approved by the City Attorney and prepay an amount equal to one quarter (25%) of the guaranty amount. The Applicant's proposed guaranty is $225,000, resulting in a required prepayment of $56,250.

Permittees remain responsible for the timely payment of all quarterly cannabis business taxes, and the prepaid amount will not be credited toward, applied to, or otherwise offset any quarterly tax obligation as it becomes due. However, if a permittee's cumulative cannabis business tax payments equal or exceed the guaranty amount during the 12 - month guaranty period, the prepaid amount may be applied as a credit toward the next quarterly cannabis business tax payment. If, at the end of the 12 -month guaranty period, the permittee's cumulative tax payments are less than the guaranty amount, the prepaid amount will first be applied to any shortfall before the City seeks recovery under the guaranty.

If the CBP is approved, there is also a CEQA categorical exemption filing fee of $278 to the City and $25 to the County.

PUBLIC NOTICE
On May 27, 2026, notice of the public hearing was provided to the Applicant and to all property owners within 300 feet of the Property; on May 29, 2026, a Public Hearing Notice was posted at the Property, City Hall, Brakensiek Library, Bellflower Substation, Thompson Park and Simms Park; and on May 29, 2026, a Public Hearing Notice was published in the Los Cerritos Community News newspaper. The Public Hearing was continued to the June 22, 2026 City Council Meeting. Public Hearing notices were posted again at City Hall, Brakensiek Library, Bellflower Substation, Thompson Park and Simms Park on June 18, 2026.

ENVIRONMENTAL REVIEW
In accordance with the California Environmental Quality Act (Cal. Pub. Res. Code §§ 21000, et seq.; "CEQA") and CEQA regulations (Cal. Code Regs. tit. 14, §§ 15000, et seq.), an environmental review of the application was conducted in accordance with CEQA Guidelines § 15061. Following that review, it was determined that the proposed dispensary is included in the classes of projects exempt from additional environmental review under CEQA Guidelines § 15301 (Existing Facilities) and § 15302 (Replacement or Reconstruction) for the reason that it is an approved land use proposed for existing commercial and industrial buildings.
2 Staff Report — Resolution No. 26-25
June 22, 2026

DISCUSSION
On March 31, 2026, the Applicant filed a CBP application for a proposed cannabis dispensary at the Property. That application was completed on April 30, 2026. The Property was previously utilized for a cannabis dispensary by Deli by Caliva in accordance with the CUP approved by Resolution No. 17-79-C.

Part of the vetting process for the Applicant was clarification regarding Mr. Kamyar Vaghar, the Property's owner. Although Mr. Vaghar was actively involved in the CBP application process, he was not identified in the application as a proprietor or individual with a financial interest in the business. Staff therefore requested clarification regarding the nature and extent of his involvement. In response, Larry Thacker, a proprietor of Herb's Diner, stated that Mr. Vaghar would serve only in a limited capacity as an external advisor to the business. Herb's Diner's majority owner, Frieda Vaghar Farshchian, is Mr. Vaghar's mother. Moreover, the Applicant subsequently submitted a revised financial pro forma correcting the City cannabis tax rate from the originally stated 10 percent to the applicable 8.5 percent rate. The revised pro forma also corrected the balance sheet to ensure it was properly balanced. Lastly, the Applicant provided supplemental materials addressing the requested security -related information.

All identified deficiencies were corrected, and the requested supplemental information was submitted within the prescribed timeframe.

Based on the original application materials and the supplemental information submitted during the review process, the application is complete. If the Applicant were to be approved for a CBP, the Applicant would be required to operate in compliance with the BMC and other applicable law. This includes the conditions of approval imposed by the City Council, including the execution of an offsite parking agreement to meet the parking requirements within 30 days of CBP approval. City Council approval is required before the Applicant may operate the proposed dispensary.

As outlined in Resolution No. 26-05 ("Resolution"), dispensaries are required to submit a guaranty for the first 12 months of estimated tax revenue, which serves as the "sealed -bid" requirement established by the Resolution. The guaranty amount is independent of the pro forma, financial statements, revenue projections, or other financial documentation submitted with the application. The Applicant's proposed guaranty is $225,000. This figure is lower than the other Applicant's guaranty bid.

Consequently, it is recommended that the City Council NOT adopt draft Resolution No. 26-25.

ATTACHMENTS
Resolution No. 26-25 (With Conditions of Approval) 4
Resolution No. 17-79-C 16
9535 Artesia Ave, Inc. dba Herb's Diner Application 34
3 CITY OF BELLFLOWER
RESOLUTION NO. 26-25

A RESOLUTION APPROVING A CANNABIS BUSINESS PERMIT
TO OPERATE A CANNABIS DISPENSARY AT 9535 ARTESIA
BOULEVARD; APPLICANT: 9535 ARTESIA AVE, INC. DBA

HERB'S DINER
THE CITY COUNCIL RESOLVES AS FOLLOWS:

SECTION 1. Recitals. The City Council finds and declares as follows:

A. On March 31, 2026, Larry Thacker, representing 9535 Artesia Ave, Inc. dba Herb's Diner (the "Applicant") filed an application seeking approval for a cannabis business permit ("CBP") to operate a cannabis dispensary at 9535 Artesia Boulevard (the "Project").

B. The application was reviewed by the City for, in part, consistency with the general Plan and conformity with the Bellflower Municipal Code ("BMC") including without limitation, BMC Title 14, BMC Chapter 17.94 and Resolution 26-05 (adopted February 17, 2026) (collectively, the "Cannabis Regulations").

C. Notice of a Public Hearing before the City Council was given and published in the time, form and manner as required by law.

D. Environmental review was conducted of the Project in compliance with the California Environmental Quality Act ( Public Resources Code §§ 21000, et seq., " CEQA"), the regulations promulgated thereunder (14 Cal. Code of Regulations §§15000, et seq., the " CEQA Guidelines"), Environmental Guidelines.

E. On June 22, 2026, the City Council held a public hearing to receive public testimony and other evidence regarding the application including, without limitation, information provided to the City Council by the Applicant.

F. The City Council considered the information provided by City staff, public testimony, and the Applicant. This Resolution, and its findings are made based upon the application submitted to the City and reviewed by City staff.

SECTION 2. Factual Findings. The City Council finds as follows:

A. The Applicant seeks to establish and operate a cannabis dispensary at 9535 Artesia Boulevard (the "Property").

B. The Property is entitled with a cannabis -related Conditional Use Permit No. CU -CAN 17-14 (the "CUP").

4 City of Bellflower
Resolution No. 26-25 — CBP No. CU -CAN 17-14(A)

C. The Property is approximately 7,052 square feet in area and is currently developed with a vacant retail commercial building that will accommodate the proposed dispensary facility.

D. The Applicant submitted a complete application including, without limitation, the following required components: Business Plan; Operations Plan; Fire Prevention and Suppression Plan; Security Plan; Site, Floor and Elevation Plans; and Photographs of the proposed site.

E. A Traffic and Parking Study for the Project was previously prepared and approved in conjunction with the CUP.

F. The Project meets the location restrictions for cannabis -related businesses defined in BMC § 14.08.020 ("Location Restrictions").

SECTION 3. Environmental Review. Based on the facts identified in Section 2 of this Resolution, review was conducted in accordance with CEQA Guidelines § 15061 and it was determined that the Project is included in the classes of projects exempt from additional environmental review under CEQA Guidelines § 15301 (Existing Facilities) and § 15302 (Replacement or Reconstruction).

SECTION 4. Notice of Exemption. The City Manager, or designee, is directed to file a Notice of Exemption in accordance with CEQA Guidelines § 15062 and any other applicable law.

SECTION 5. Cannabis Business Permit Findings. In accordance with the Cannabis Regulations, the City Council finds the following:

A. Has there been an adequate period of performance by the Applicant demonstrating experience for operating a cannabis -related business?
Yes. Proprietors of 9535 Artesia Ave, Inc. dba Herb's Diner demonstrate adequate experience for operating a cannabis -related business.

B. Does the Applicant have sufficient key personnel to operate a cannabis -related business to demonstrate effective managerial capacity and control of operations? Yes. The Applicant has demonstrated the capacity to effectively manage and control the operations of the proposed dispensary facility.

C. Does the Applicant have reasonable and practical business plan for operating a cannabis -related business within the City's jurisdiction? Yes. A business plan was submitted with the application that includes a budget for operation of the proposed businesses, a pro forma for three years of operations demonstrating the business will be viable and operate in a manner that avoids the creation of any nuisance that will impact neighboring uses. 5 City of Bellflower
Resolution No. 26-25 — CBP No. CU -CAN 17-14(A)

D. Notwithstanding the BMC's minimum requirements as to permissible locations, is the cannabis facility proposed by the Applicant in a location acceptable to the City Council; aesthetically pleasing; and adequate in size?
Yes. The dispensary facility is proposed on a site that is entitled with conditional use permit (CU -CAN 17-14) and was previously approved fora cannabis business permit under Resolution No. 17-79-C.

E. Does the Applicant demonstrate adequate financing to satisfy all current obligations and provide sufficient working capital to support the opening and ongoing operation of the cannabis related business?
Yes. The Applicant's financial information submitted with the application demonstrates the adequate financing to meet the City's requirements.

F. The Applicant will comply with all requirements of the Cannabis Regulations.

The Applicant is required to comply with all requirements of the Cannabis Regulations and the Conditions of Approval as provided in attached Exhibit "A," which is incorporated by reference.

SECTION 6. Approval. Based on the foregoing, the City Council approves CBP No. CU -CAN 17-14(A), subject to the conditions of approval listed in attached Exhibit "A," which is incorporated by reference.

SECTION 7. Reliance On Record. Each and every one of the findings and determinations in this Resolution are based on the competent and substantial evidence, both oral and written, contained in the entire record relating to the Project. The findings and determinations constitute the independent findings and determinations of the City Council in all respects and are fully and completely supported by substantial evidence in the record as a whole.

SECTION 8. Limitations. The City Council's analysis and evaluation of the project is based on the best information currently available. It is inevitable that in evaluating a project that absolute and perfect knowledge of all possible aspects of the project will not exist. One of the major limitations on analysis of the project is the City Council's lack of knowledge of future events. In all instances, best efforts were made to form accurate assumptions. Somewhat related to this are the limitations on the City's ability to solve what are in effect regional, state, and national problems and issues. The City must work within the political framework within which it exists and with the limitations inherent in that framework.

SECTION 9. Severability. If any part of this Resolution or its Application is deemed invalid by a court of competent jurisdiction, the City Council intends that such invalidity will not affect the effectiveness of the remaining provisions or applications and, to this end, the provisions of this Resolution are severable. 6 City of Bellflower
Resolution No. 26-25 - CBP No. CU -CAN 17-14(A)

SECTION 10. Preservation. This Resolution does not affect any penalty, forfeiture, or liability incurred before, or preclude prosecution and imposition of penalties for any violation occurring before, this Resolution's effective date. Any such amended part will remain in full force and effect for sustaining action or prosecuting violations occurring before the effective date of this Resolution.

SECTION 11. The City Manager may promulgate administrative policies and procedures to implement this Resolution.

SECTION 12. Summaries of Information. All summaries of information in the findings, which precede this section, are based on the substantial evidence in the record.

The absence of any particular fact from any such summary is not an indication that a particular finding is not based in part on that fact.

SECTION 13. Construction. This Resolution must be broadly construed to achieve the purposes stated in this Resolution . It is the City Council's intent that the provisions of this Resolution be interpreted or implemented by the City and others in a manner that facilitates the purposes set forth in this Resolution.

SECTION 14. Electronic Signatures. This Resolution may be executed with electronic signatures in accordance with Government Code §16.5. Such electronic signatures will be treated in all respects as having the same effect as an original signature.

SECTION 15. The Mayor, or presiding officer, is authorized to affix its signature to this Resolution signifying its adoption by the City Council of the City of Bellflower, and the City Clerk, or its duly appointed deputy, is directed to attest.

SECTION 16. Effective Date. This Resolution will become effective immediately upon adoption and will remain effective unless repealed or superseded.

PASSED, APPROVED, AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF BELLFLOWER THIS 22ND DAY OF JUNE 2026.

Sonny R. Santa Ines, Mayor
ATTEST:

Mayra Ochiqui, City Clerk
APPROVED AS TO FORM:

Karl H. Berger, City Attorney
Attachments: Exhibit A: Conditions of Approval — Resolution No. 26-25

RESOLUTION NO. 26-25 - EXHIBIT A

CONDITIONS OF APPROVAL FOR CANNABIS BUSINESS PERMIT
NO. CU -CAN 17-14 (A)
In addition to all applicable provisions of California law and the Bellflower Municipal Code ("BMC"), 9535 Artesia Ave, Inc. dba Herb's Diner (the "Applicant"), agrees that it will comply with the following conditions for the City of Bellflower's approval of a Cannabis Business Permit ("CBP").

I. Definitions
Unless the contrary is stated or clearly appears from the context, the following definitions will govern the construction of the words and phrases used in these Standard Conditions of Approval ("SCOA"). Words and phrases undefined in this SCOA have the same meaning as set forth in BMC Chapter 14.04.
"Batch" means a specific quantity of cannabis or cannabis product that is intended to have uniform character and quality, within specified limits, and is produced according to a single manufacturing order during the same cycle of manufacture. "Manager" means an individual who is an employee of a cannabis business and who, directly or indirectly, is engaged in the management of the cannabis business as set forth in an approved Operations Plan.
"On -Site Designated Representative" means a Manager who is designated by the cannabis business to be present, and who is present, at all times during the cannabis business' s hours of operation.
"Owner" means any individual member of a Cannabis business having more than a ten percent (10%) interest, legal or equitable, or otherwise, in the Cannabis business. "Security Personnel" means any person(s) who perform(s) security related tasks on behalf of the Cannabis business.

II. General Conditions

1. The cannabis business must be developed and/ or used in the manner requested and must be in substantial conformity with the submitted plans as approved by the City's Building Official, unless revisions and/ or additional conditions are specifically required herein.

2. The Applicant and its successors in interest must indemnify, protect, defend (with legal counsel reasonable acceptable to the City), and hold harmless, the City, and any agency or instrumentality thereof, and its elected and appointed officials, officers, employees, and agents from and against any and all liabilities, claims, actions, causes of action, proceedings, suits, damages, judgments, liens, levies, costs, and expenses of whatever nature, including reasonable attorney's fees and disbursements (collectively " Claims') arising out of or in any way relating to this project, any discretionary approvals granted by the City related to the

8 City of Bellflower
Resolution No. 26-25 — Exhibit A

development of the project or the environmental review conducted under the California Environmental Quality Act, Public Resources Code § 21000, et seq., for the project. If the City Attorney is required to enforce any conditions of approval, all costs, including attorney's fees, must be paid for by the Applicant.

3. The Applicant must reimburse the City for all attorneys' fees expended by the City that are directly related to the processing of this project. The City will not issue a Certificate of Occupancy or other final occupancy approval until all attorneys' fees are paid by the Applicant.

4. The Applicant must submit to the City Manager, or designee, a signed copy of these conditions of approval acknowledging acceptance, and compliance with the conditions herein within 30 days from the date of approval by the City Council. The conditions of approval must be signed, notarized and returned to the City Manager, or designee, before any plan check submittal or construction permit application or implementation of the requested entitlement.

5. This decision is not effective until Applicant acknowledges acceptance of all conditions and any appeal period has lapsed, or a waiver of right to appeal is filed or if there is an appeal, until a final decision has been made on the appeal.

By use of the entitlements granted by a development application, the Applicant acknowledges agreement with conditions of approval.

6. Anything which is not shown on the application/ plans, or which is not specifically approved, or which is not in compliance with this section, is not approved. Any application and/ or plans which are defective as to, without limitation, omission, dimensions, scale, use, colors, materials, encroachments, easements, will render any entitlements null and void.

7. Cannabis dispensaries and retailers must provide a 12 -month guaranty of cannabis taxes as a condition of approval of their CBP. The guaranty must be in a form approved by the City Attorney, without limitation, a surety bond, letter of credit, or other acceptable financial security. All new cannabis operators must prepay an amount equal to one quarter (25%) of their guaranty amount to the Finance Director or designee before a Cannabis Business Permit (CBP) becomes effective. Permittees remain responsible for the timely payment of all quarterly cannabis business taxes, and the prepaid amount shall not be credited toward, applied to, or otherwise offset any quarterly tax obligation as it becomes due. However, if a permittee's cumulative cannabis business tax payments equal or exceed the guaranty amount during the 12 -month guaranty period, the prepaid amount may be applied as a credit toward the next quarterly cannabis business tax payment. If, at the end of the 12 -month guaranty period, the permittee's cumulative tax payments are less than the guaranty amount, the prepaid amount shall first be applied to any shortfall before the City seeks recovery under the guaranty.
9 City of Bellflower
Resolution No. 26-25 — Exhibit A

III. Security

1. Cannabis businesses must be equipped with, and at all times be monitored by, a web -based closed- circuit television for security purposes. The camera and recording system must be of adequate quality, color rendition and resolution to allow the ready identification of any individual committing a crime anywhere on or adjacent to the Cannabis business. The system must be fully functional before processing, cultivating or dispensing of cannabis. The recordings of the monitoring must be maintained for a period of not less than 90 days and must be made available and accessible to the Police Chief and any other City official charged with enforcing the provisions of the BMC immediately upon request for review and copying, without the need for a search warrant, subpoena or court order. The cannabis business must also provide the Police Chief with the URL address of any on -site web -based video surveillance to monitor remotely at any time without a warrant, subpoena or court order.

2. The cannabis business must have a centrally monitored fire and burglar alarm system. This system must be fully functional at all times and before processing, cultivating or dispensing of cannabis at the cannabis business. At a minimum, this alarm must cover the perimeter of the cannabis business and must focus on those areas where cannabis is grown, produced, harvested, stored, packaged or dispensed. A professional alarm company must monitor this alarm at all times.

3. The cannabis business must contain a fireproof safe or a fireproof storage system and all records must be stored in that safe or system.

4. Crime Prevention Through Environmental Design (CPTED). Exterior lighting on the cannabis business and parking area lighting for the cannabis business must be balanced; cannot result in glare on adjoining properties; must complement the security systems required above to ensure that all areas of the cannabis business are visible; and must provide increased lighting at all entrances to the cannabis business. The lighting required in this subsection must be turned on from dusk to dawn.

5. Cannabis must be stored in buildings that are completely enclosed, and in a locked vault or safe, or other secured storage structure, which is bolted to the floor, or structure of the cannabis business.

6. Windows and roof hatches of the cannabis business must be secured from the inside with bars so as to prevent unauthorized entry and must be equipped with latches that may be released quickly from the inside to allow exit in the event of emergency in compliance with all applicable Building Code provisions.

7. Exterior doors to the cannabis business must remain locked from the outside to prevent unauthorized ingress to the cannabis business. Ingress must be allowed by means of a remote release operated from within the cannabis business. In all 10 City of Bellflower
Resolution No. 26-25 — Exhibit A

cases, doors must remain operable from the inside to allow egress without the use of a key or special knowledge. Access -controlled egress doors must comply with the California Building Code provisions.

8. No person can possess any firearm while in the cannabis business without having first obtained a license from the appropriate state or local agency authorizing the person to be in possession of such firearm.

9. Persons possessing a firearm while in the cannabis business must provide the City Manager and Police Chief, 10 days before bringing the firearm onto the Cannabis business, with the following:
a. A copy of the license issued to the person by the appropriate state or local agency authorizing him or her to possess such firearm; b. A copy of his or her law enforcement identification (if he or she is employed by a law enforcement agency); and
c. A copy of his or her California Driver' s license or California Identification Card.

10. There must be at least one Security Personnel on duty in a cannabis business during its hours of operation. If the cannabis has a separate cultivation site, at least one Security Personnel must be present at that Cultivation Site on duty 24 hours a day, seven days a week. The Security Personnel must provide security inside the cannabis business, along the outside perimeter of the cannabis business, a parking sites immediately adjacent to the cannabis business and City of Bellflower used by members of the cannabis business, and at sidewalks adjacent to the cannabis business. The cannabis business must employ Security Personnel subject to the following requirements:
a. All Security Personnel must register and maintain valid registration status with the state of California' s Department of Consumer Affairs.

At no time must any Security Personnel register with the State at any level that is less than that of a proprietary private security officer. Proof of application and registration for all Security Personnel must be maintained by the cannabis business and consist of copies of all relevant documentation including: application forms, receipts for application fees and live scan fees, and actual proof of registration. b. While on duty, all Security Personnel must have a nameplate containing the Security Personnel' s full name and the word "SECURITY" printed in bold, capital letters. The nameplate must be exhibited prominently on the clothing, at chest level, and must be visible and easily read at all times. The nameplate must be a minimum of two inches high and four inches wide, with the required information printed in capital letters, at least three- fourths inches high and in a 11 City of Bellflower
Resolution No. 26-25 — Exhibit A

contrasting color. As an alternative to a nameplate, the Security Personnel' s name and the word "SECURITY" may be embroidered on the Security Personnel' s outermost garment with the required information meeting the above specifications and located at chest level.

IV. Operating

1. Cannabis cannot be visible with the naked eye from any public or other private property.

2. All areas devoted to dispensing cannabis must be secured from public access by means of a locked gate and any other security measures necessary to prevent unauthorized entry.

3. At no time can any cannabis business have any of the following items on the premises:
a. Any controlled substances, other than cannabis;
b. Any paraphernalia used for the ingestion of any type of controlled substance, including cannabis;
c. Alcoholic beverages; or
d. Firearms, except in strict compliance with federal, state and local laws.

4. A sign must be posted in a conspicuous place inside the cannabis business advising, in English, Spanish, Khmer and Tagolog, the following: "The sale and use of cannabis are violations of federal law. The use of cannabis may impair a City of Bellflower person' s ability to operate a motor vehicle or heavy machinery. This facility is registered in accordance with the Bellflower Municipal Code."

5. Each Cannabis business must designate an on- site representative who must be present during all hours of the Cannabis business' s operation. The On - Site Designated Representative must meet the following minimum requirements:
a. Be a Manager for the Cannabis business;
b. Comply with all applicable laws;
c. Carry on his or her person, at all times when he or she is functioning as the on- site representative, a valid government issued photo Identification Card or license;
12 City of Bellflower
Resolution No. 26-25 — Exhibit A

d. Upon request by the Police Chief or any other City official charged with enforcing the provisions of the BMC, produce such photo Identification Card or license for inspection;
e. Be available at the telephone number identified in the registration as the on- site landline telephone number for the cannabis business; f. Cooperate fully with the Police Chief and any other City official charged with enforcing the provisions of the BMC with any inquiry, inspection, request, or investigation necessary or appropriate to implement the requirements of the BMC or to enforce any other State or local law; g.

Immediately report to the Police Chief any violations of State or local law or conditions which the On -Site Designated Representative knows, or reasonably should know, exist on the cannabis business and at the cannabis business and could result or have resulted in harm or an imminent threat of harm to the health, safety or general welfare of any person or member of the public; and
h. Immediately report to the Police Chief, the County Health Department, and members of the cannabis business any information indicating that a member experienced an adverse reaction to, or other difficulty related to, any cannabis procured from the cannabis business.

V. Public Safety and Safety of Cannabis Business

1. Each cannabis business must operate in a manner such that dispensing cannabis does not adversely affect the health or safety of nearby properties through creation of mold, mildew, dust, glare, heat, noise, noxious gasses, odor, smoke, traffic, vibration, or other impacts.

2. Each cannabis business must utilize appropriate air purification systems and air scrubbers wherever cannabis is cultivated, processed, manufactured or dispensed so as to prevent the odor of cannabis from emanating beyond the walls of the cannabis business.

3. Cultivation of cannabis cannot create hazards due to the use or storage of materials, processes, products or wastes.

4. Each and every cannabis business must ensure that it has safe growing facilities, chemicals and fertilizers are properly stored, carbon dioxide levels are tested, areas are properly vented, and mold is tested and controlled for the safety of city personnel and enforcement personnel that may be required to conduct a site visit.
13 City of Bellflower
Resolution No. 26-25 — Exhibit A

VI. Property Maintenance

1. The cannabis business must be kept in a clean and safe condition by, at a minimum, performing all of the following tasks:
a. Properly remove and store all trash, litter, rubbish and debris on the cannabis business at the end of each business day;
b. Properly dispose of all trash, litter, rubbish and debris from the Cannabis business;
c. Remove graffiti placed upon the Cannabis business and Cannabis business within forty-eight hours of its occurrence;
d. Keep driveways, sidewalks, park strips, fire access roads and streets on or adjacent to the cannabis business clear and clean; e. Provide lighting on the cannabis business to ensure the safety of the public and employees; and
f. Otherwise operate in a manner that does not create or result in any significant adverse impacts upon the cannabis business or within 300 feet of the cannabis business.

VII. Specific Conditions of Approval

1. The Permittee must comply with Conditional Use Permit Case No. CUP CU -CAN 17-14 (Resolution No. 17-79-C), including all project conditions, at all times.

2. The Permittee, prior to submitting for the building plan check process, must revise the plans to illustrate compliance with all requirements of this Resolution, Resolution No. 17-79-C, the BMC, policies, and regulations of any State, Federal or local agency with jurisdiction over the Project, and any other applicable law.

3. The Permittee must obtain approval for any proposed exterior sign and wall mural.

4. The Permittee must submit a landscaping plan during the building plan check process for review and approval by the City.

5. The Permittee must submit a photometric plan during the building plan check process for review and approval by the City.

6. The Permittee must maintain the existing parking lot area at the rear of the subject property.
14 City of Bellflower
Resolution No. 26-25 — Exhibit A

7. The Permittee must provide the latest copy of the off -site parking agreement.

8. The Permittee must repair and maintain the exterior of the subject building.

9. The subject property must be maintained free from debris and graffiti at all times.

10. The Permittee must remove any debris or graffiti within 48 hours upon notification by the City. Litter on the subject property and any litter scattered nearby property, streets, and sidewalks must be removed daily.

NOTICE: THE CBP DOES NOT BECOME EFFECTIVE UNTIL THE PERMITTEE

COMPLIES WITH ALL CONDITIONS THAT MUST BE COMPLETED BEFORE OPERATIONS COMMENCE. ANY FACILITY THAT COMMENCES OPERATIONS

WITHOUT AN EFFECTIVE CBP CONSTITUTES AN UNLICENSED CANNABIS

FACILITY IN ACCORDANCE WITH APPLICABLE LAW INCLUDING, WITHOUT LIMITATION, BMC CHAPTER 14.28. VIOLATIONS OF THE BMC MAY RESULT IN CRIMINAL OR CIVIL PENALTIES INCLUDING A PENALTY OF $5,000 PER DAY; ONE YEAR IN JAIL; OR BOTH.

By signing this document, 9535 Artesia Ave, Inc. dba Herb's Diner certifies that it has read, understood, and agrees to the Project Conditions listed in this document.

Frieda Vaghar Farshchian
Chief Executive Officer
Larry Thacker
Chief Financial Officer
15 CITY OF BELLFLOWER
RESOLUTION NO. 17-79-C
A RESOLUTION APPROVING CONDITIONAL USE PERMIT NO. CUP CU - CAN 17-14 AND APPROVING A MEDICAL CANNABIS BUSINESS PERMIT

TO OPERATE A MEDICAL CANNABIS DISPENSARY WITH DELIVERY AT 9535 ARTESIA BOULEVARD; APPLICANT: LARRY THACKER
(REPRESENTING NC3 SYSTEMS INC. DBA CALIVA)
THE CITY COUNCIL RESOLVES AS FOLLOWS:

SECTION 1. Recitals. The City Council finds and declares as follows:

A. On September 27, 2017, Mr. Larry Thacker, representing NC3 Systems Inc. dba Caliva (the "Applicant"), filed an application seeking approval of a Conditional Use Permit at 9535 Artesia Boulevard for medical cannabis operations. Additionally, the Applicant seeks a Medical Cannabis Business Permit to operate a Medical Cannabis Dispensary with delivery (collectively, the "Project").

B. The application was reviewed by the City for, in part, consistency with the General Plan and conformity with the Bellflower Municipal Code ("BMC") including, without limitation, BMC Title 14, BMC Chapter 17.94, Resolution No. 17-44 (adopted August 14, 2017), and Resolution No. 17-65 (adopted October 9, 2017) (collectively, the "Medical Cannabis Regulations").

C. Notice of Public Hearings before the City Council was duly given and published in the time, form, and manner as required by law.

D. Preliminary review was conducted of the Project in compliance with the California Environmental Quality Act (Public Resources Code §§ 21000, et seq., "CEQA"), the regulations promulgated thereunder (14 Cal. Code of Regulations §§15000, et seq., the "CEQA Guidelines"), and the City's Environmental Guidelines.

E. On December 18, 2017, the City Council held a public hearing to receive public testimony and other evidence regarding the application including, without limitation, information provided to the City Council by the Applicant.

F. The City Council considered the information provided by City staff, public testimony, and the Applicant. This Resolution, and its findings, are made based upon the evidence presented to the City Council at its December 18, 2017 hearing including, without limitation, the staff report.

16 City of Bellflower
Resolution No. 17-79-C

SECTION 2. Factual Findings and Conclusions. The City Council finds as follows:

A. The Applicant seeks to establish and operate a Medical Cannabis Dispensary with delivery at 9535 Artesia Boulevard (the "Property").

B. The Applicant submitted a complete application including the following required components: Public Notification Map and Mailing List; Business Plan; Operations Plan; Fire Prevention and Suppression Plan; Security Plan; Traffic and Parking Study; Site, Floor, and Elevation Plans; and Photographs of the proposed site
C. The Property is zoned C -G (General Commercial) with a General Plan Land Use Designation of Commercial.

D. The Property is not located within 600 feet of any parcel containing a school; 300 feet of any parcel containing a religious facility, park (except those designated as primarily a pedestrian walkway rather than for recreational purposes), state- or county -licensed child daycare facility, youth center, or licensed drug or alcohol rehabilitation facility; or 1,000 feet of any parcel upon which a licensed cannabis business is operating.

E. The Property is approximately 7,052 square feet (0.16 acres) in area and is currently developed with a vacant retail commercial building.

F. The Applicant proposes to renovate the existing building to accommodate the proposed Project.

G. The Applicant provided documentation that 75 percent of the applicants and management of the cannabis related business are California residents and have been for at least three years immediately preceding the date of application.

H. The Applicant provided documentation of a 10 -year lease with the owner of the property allowing the Applicant to operate a cannabis dispensary with delivery on the property.

SECTION 3. Environmental Review. Based on the facts identified in Section 2 of this Resolution, review was conducted in accordance with CEQA Guidelines § 15061 and it was determined that the Project is included in the classes of projects exempt from additional environmental review under CEQA Guidelines § 15301 (Existing Facilities) and § 15302 (Replacement or Reconstruction).

SECTION 4. Notice of Exemption. The City Manager, or designee, is directed to file a Notice of Exemption is accordance with CEQA Guidelines § 15062 and any other applicable law.
17 City of Bellflower
Resolution No. 17-79-C

SECTION 5. Conditional Use Permit Findings and Conclusions. The City Council finds as follows:

A. The Project is properly one for which a Conditional Use Permit is authorized by Title 17 of the Bellflower Municipal Code.

The Project is a conditionally permitted use in the C -G (General Commercial) Zone.

B. The Project meets the location restrictions for cannabis -related businesses defined in BMC § 17.90.050.

These uses are allowed in the M-1 (Light Industrial) and C -G (General Commercial) zones and meet the following location restrictions:

1. Beyond 600 feet of any other parcel containing a school, including all public and private preschools, transitional kindergartens, and K-12 schools.

2. Beyond 300 feet of any other parcel containing a religious facility; park (except those designated as primarily a pedestrian walkway rather than for recreational purposes); state- or county -licensed child daycare facility; youth center; or licensed drug or alcohol rehabilitation facility.

3. Beyond 1,000 feet of any other parcel upon which a licensed cannabis business is operating.

C. The Project includes an Operations Plan.

The application includes in Operations Plan containing the content required in chapter 14.12 and 14.16 of the BMC.

D. The Project is necessary or desirable for the development of the community, and is not detrimental to existing uses or to uses specifically permitted in the district in which the site is located.

The Medical Cannabis Regulations allow the City Council to issue a maximum of 12 conditional permits for cannabis -related businesses. The proposed Project would be fully contained within the renovated building. It must be operated in accordance with the Operations and Security Plans submitted with the application and all conditions of approval in this Resolution. The Traffic and Parking Plan submitted with the application and supplemental information provided by the applicant demonstrates that 18 City of Bellflower
Resolution No. 17-79-C

sufficient parking will be available for the proposed use. As a result, the Project will not be detrimental to the existing land uses surrounding the Property.

E. The Property is adequate in size and shape to accommodate said use, and for all the yards, setbacks, walls or fences, landscaping, and other features that may be required in order to adjust said use to those existing or possible future uses of land in the neighborhood.

The Property is approximately 7,052 square feet in size, and contains an existing building that will accommodate the proposed dispensary with delivery.

F. The Property relates to streets and highways properly designed and improved so as to carry the type and quantity of traffic generated or to be generated by the proposed use.

The Traffic and Parking Plan submitted with the application demonstrates the proposed uses will not adversely affect traffic conditions in the area.

SECTION 6: Medical Cannabis Business Permit Findings. In accordance with the Medical Cannabis Regulations, the City Council finds the following:

A. Has there been an adequate period of performance by the applicant demonstrating experience for operating a cannabis -related business? Yes. The Applicant operates a legal, city licensed vertically integrated cannabis business in San Jose, California, since July 2015.

B. Does the applicant have sufficient key personnel to operate a cannabis - related business to demonstrate effective managerial capacity and control of operations?
Yes. The Applicant has provided information on the proposed management team that demonstrates the capacity to effectively manage and control the operations of the proposed dispensary with delivery.

C. Does the applicant have other cannabis -related businesses inside or outside the City's jurisdiction that demonstrate the applicant's competency in operating such businesses?
Yes. The Applicant operates a legal, city licensed vertically integrated cannabis business in San Jose, California, since July 2015.

D. Does the applicant have a reasonable and practical business plan for operating a cannabis -related business within the City's jurisdiction? 19 City of Bellflower
Resolution No. 17-79-C

Yes. A business plan was submitted with the application that includes a schedule for construction, a budget for construction and operation of the proposed business, a pro forma for three years of operation demonstrating the business will be viable and operated in a manner that avoid the creation of any nuisance that will impact neighboring uses.

E. Notwithstanding the BMC's minimum requirements as to permissible locations, is the cannabis facility proposed by the applicant in a location acceptable to the City Council; aesthetically pleasing; and adequate in size? Yes. The dispensary with delivery is proposed on a site currently occupied by a vacant retail commercial building in an area containing a mix of industrial, commercial, and residential uses. The site contains a vacant retail commercial building that will be renovated to accommodate the proposed uses and the proposed renovation of the building and site improvements will improve the aesthetic character of the site.

SECTION 7: Approval. Based on the foregoing, the City Council approves Conditional Use Permit and Medical Cannabis Business Permit Case No. CUP CU -CAN 17-14, subject to the conditions of approval listed in attached Exhibit "A," which is incorporated by reference.

SECTION 8: Reliance On Record. Each and every one of the findings and determinations in this Resolution are based on the competent and substantial evidence, both oral and written, contained in the entire record relating to the project. The findings and determinations constitute the independent findings and determinations of the City Council in all respects and are fully and completely supported by substantial evidence in the record as a whole.

SECTION 9: Limitations. The City Council's analysis and evaluation of the project is based on the best information currently available. It is inevitable that in evaluating a project that absolute and perfect knowledge of all possible aspects of the project will not exist. One of the major limitations on analysis of the project is the City Council's lack of knowledge of future events. In all instances, best efforts have been made to form accurate assumptions. Somewhat related to this are the limitations on the City's ability to solve what are in effect regional, state, and national problems and issues. The City must work within the political framework within which it exists and with the limitations inherent in that framework.

SECTION 10: Severability. If any part of this Resolution or its application is deemed invalid by a court of competent jurisdiction, the City Council intends that such invalidity will not affect the effectiveness of the remaining provision or application and, to this end, the provisions of this Resolution are severable. 20 City of Bellflower
Resolution No. 17-79-C

SECTION 11: Preservation. This Resolution does not affect any penalty, forfeiture, or liability incurred before, or preclude prosecution and imposition of penalties for any violation occurring before, this Resolution's effective date. Any such amended part will remain in full force and effect for sustaining action or prosecuting violations occurring before the effective date of this Resolution.

SECTION 12: This Resolution will remain effective until superseded by a subsequent resolution.

SECTION 13: This Resolution is the City Council's final decision and will become effective immediately upon adoption. Any challenge brought to this Resolution must be filed within 90 days pursuant to Code of Civil Procedure § 1094.6.

SECTION 14: The City Clerk is directed to mail a copy of this Resolution to the Applicant and to any other person requesting a copy.

SECTION 15: The Mayor, or presiding officer, is hereby authorized to affix his signature to this Resolution signifying its adoption by the City Council of the City of Bellflower, and the City Clerk, or her duly appointed deputy, is directed to attest thereto.

PASSED, APPROVED, AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF BELLFLOWER THIS 18th DAY OF DECEMBER 2017.

Ron Schnableg'r, Mayor
Attest:

Mayr O ( iqui, City Clerk
Approve
Karl H. Bergep/ (pity Attorney
Exhibit A (Conditions of Approval)
21 CITY OF BELLFLOWER
RESOLUTION NO. 17-79 - "EXHIBIT A"

CONDITIONS OF APPROVAL FOR CONDITIONAL USE PERMIT CASE AND CANNABIS BUSINESS PERMIT NO. CUP CU -CAN 17-14
In addition to all applicable provisions of California law and the Bellflower Municipal Code ("BMC"), NC3 Systems, Inc dba Caliva/Larry Thacker (the "Applicant"), agrees that it will comply with the following conditions for the City of Bellflower's approval of a Medical Cannabis Business Permit ("MCBP") and Conditional Use Permit ("CUP").

Law Enforcement
I. Definitions
Unless the contrary is stated or clearly appears from the context, the following definitions will govern the construction of the words and phrases used in these Standard Conditions of Approval ("SCOA"). Words and phrases undefined in this SCOA have the same meaning as set forth in BMC Chapter 14.04.
"Batch" means a specific quantity of cannabis or cannabis product that is intended to have uniform character and quality, within specified limits, and is produced according to a single manufacturing order during the same cycle of manufacture. "Manager" means an individual who is an employee of a cannabis business and who, directly or indirectly, is engaged in the management of the cannabis business as set forth in an approved Operations Plan.
"On -Site Designated Representative" means a Manager who is designated by the cannabis business to be present, and who is present, at all times during the cannabis business's hours of operation.
"Owner" means any individual member of a Cannabis business having more than a ten percent (10%) interest, legal or equitable, or otherwise, in the Cannabis business. "Security Personnel" means any person(s) who perform(s) security related tasks on behalf of the Cannabis business.

I I. General Conditions

1. The cannabis business must be developed and/or used in the manner requested and must be in substantial conformity with the plans as approved by the City's Building official, unless revisions and/or additional conditions are specifically required herein.

2. The Applicant and its successors in interest must indemnify, protect, defend (with legal counsel reasonable acceptable to the City), and hold harmless, the City, and any agency or instrumentality thereof, and its elected and appointed officials, officers, employees, and agents from and against any and all liabilities, claims, actions, causes of action, proceedings, suits, damages, judgments, liens, levies, costs, and expenses of whatever nature, including reasonable attorney's fees and disbursements (collectively "Claims") arising out of or in any way relating to this project, any discretionary approvals granted by the City related to the development of the project or the environmental review conducted under the California Environmental Quality Act, Public Resources Code§ 21000, et seq., for the project. If the City Attorney is required to enforce any conditions of approval, all costs, including attorney's fees, must be paid for by the Applicant.
22 City of Bellflower
Resolution No. 17-79 - Exhibit A

3. The Applicant must reimburse the City for all attorney's fees expended by the City that are directly related to the processing of this project. The City will not issue a MCBP until all attorneys' fees are paid by the Applicant.

4. The Applicant must submit to the City Manager, or designee, a signed copy of these conditions of approval acknowledging acceptance, and compliance with the conditions herein within 30 days from the date of approval by the City Council. The conditions of approval must be signed, notarized and returned to the City Manager, or designee, before any plan check submittal or construction permit application or implementation of the requested entitlement.

5. This decision is not effective until Applicant acknowledges acceptance of all conditions and any administrative appeal period has lapsed, or a waiver of right to appeal is filed or if there is an appeal, until a final decision has been made on the appeal. By use of the entitlements granted by a development application, the Applicant acknowledges agreement with conditions of approval.

6. Anything which is not shown on the application/plans, or which is not specifically approved, or which is not incompliance with this section, is not approved. Any application and/or plans which are defective as to, without limitation, omission, dimensions, scale, use, colors, materials, encroachments, easements, will render any entitlements null and void.

III. Security

7. Cannabis businesses must be equipped with, and at all times be monitored by, a web -based closed-circuit television for security purposes. The camera and recording system must be of adequate quality, color rendition and resolution to allow the ready identification of any individual committing a crime anywhere on or adjacent to the Cannabis business. The system must be fully functional before processing, cultivating or dispensing of cannabis. The recordings of the monitoring must be maintained for a period of not less than 90 days and must be made available and accessible to the Police Chief and any other City official charged with enforcing the provisions of the BMC immediately upon request for review and copying, without the need for a search warrant, subpoena or court order. The cannabis business must also provide the Police Chief with the URL address of any on -site web -based video surveillance to monitor remotely at any time without a warrant, subpoena or court order.

8. The cannabis business must have a centrally monitored fire and burglar alarm system. This system must be fully functional at all times and before processing, cultivating or dispensing of cannabis at the cannabis business. At a minimum, this alarm must cover the perimeter of the cannabis business and must focus on those areas where cannabis is grown, produced, harvested, stored, packaged or dispensed. A professional alarm company must monitor this alarm at all times.

9. The cannabis business must contain a fireproof safe or a fireproof storage system and all records must be stored in that safe or system.

10. Crime Prevention Through Environmental Design (CPTED). Exterior lighting on the cannabis business and parking area lighting for the cannabis business must be balanced; cannot result in glare on adjoining properties; must complement the security systems required above to ensure that all areas of the cannabis business are visible; and must provide increased lighting at all entrances to the cannabis business. The lighting required in this subsection must be turned on from dusk to dawn.

11.Cannabis must be stored in buildings that are completely enclosed, and in a locked vault or safe, or other secured storage structure, which is bolted to the floor, or structure of the cannabis business.
23 City of Bellflower
Resolution No. 17-79 - Exhibit A

12.Windows and roof hatches of the cannabis business must be secured from the inside with bars so as to prevent unauthorized entry, and must be equipped with latches that may be released quickly from the inside to allow exit in the event of emergency in compliance with all applicable Building Code provisions.

13.Exterior doors to the cannabis business must remain locked from the outside to prevent unauthorized ingress to the cannabis business. Ingress must be allowed by means of a remote release operated from within the cannabis business. In all cases, doors must remain operable from the inside to allow egress without the use of a key or special knowledge. Access -controlled egress doors must comply with the California Building Code provisions.

14.No person can possess any firearm while in the cannabis business without having first obtained a license from the appropriate state or local agency authorizing the person to be in possession of such firearm.

15.Persons possessing a firearm while in the cannabis business must provide the City Manager and Police Chief, 10 days before bringing the firearm onto the Cannabis business, with the following:
a. A copy of the license issued to the person by the appropriate state or local agency authorizing him or her to possess such firearm;
b. A copy of his or her law enforcement identification (if he or she is employed by a law enforcement agency); and
c. A copy of his or her California Driver's license or California Identification Card.

16. There must be at least one Security Personnel on duty in a cannabis business during its hours of operation. If the cannabis business has a separate cultivation site, at least one Security Personnel must be present at that Cultivation Site on duty 24 hours a day, seven days a week.

The Security Personnel must provide security inside the cannabis business, along the outside perimeter of the cannabis business, at parking sites immediately adjacent to the cannabis business and used by members of the cannabis business, and at sidewalks adjacent to the cannabis business. The cannabis business must employ Security Personnel subject to the following requirements:
a. All Security Personnel must register and maintain valid registration status with the state of California's Department of Consumer Affairs. At no time must any Security Personnel register with the State at any level that is less than that of a proprietary private security officer. Proof of application and registration for all Security Personnel must be maintained by the cannabis business and consist of copies of all relevant documentation including: application forms, receipts for application fees and live scan fees, and actual proof of registration.
b. While on duty, all Security Personnel must have a nameplate containing the Security Personnel's full name and the word "SECURITY" printed in bold, capital letters. The nameplate must be exhibited prominently on the clothing, at chest level, and must be visible and easily read at all times. The nameplate must be a minimum of two inches high and four inches wide, with the required information printed in capital letters, at least three- fourths inches high and in a contrasting color. As an alternative to a nameplate, the Security Personnel's name and the word "SECURITY" may be embroidered on the Security Personnel's outermost garment with the required information meeting the above specifications and located at chest level.

IV. Operating
24 City of Bellflower
Resolution No. 17-79 — Exhibit A

17. The MCBP does not become effective until the permittee pays the annual permit administration fee of $25,000 required by Resolution No. 17-45 (adopted August 28, 2017) as adjusted by Section 3 of that Resolution, or as required by any successor resolution.

Except as otherwise provided for Live Scan results, the MCBP is valid for 12 months pursuant to BMC § 14.08.050. The privilege to operate pursuant to a MCBP must be renewed in accordance with BMC § 14.08.060.

18. Cannabis cannot be visible with the naked eye from any public or other private property.

19. All areas devoted to dispensing cannabis must be secured from public access by means of a locked gate and any other security measures necessary to prevent unauthorized entry.

20. At no time can any cannabis business have any of the following items on the premises:
a. Any controlled substances, other than cannabis;
b. Alcoholic beverages; or
c. Firearms, except in strict compliance with the MCBP along with federal, state and local laws.

21. A sign must be posted in a conspicuous place inside the cannabis business advising, in English, Spanish, Khmer and Tagalog, the following: "The sale and use of cannabis are violations of federal law. The use of cannabis may impair a person's ability to operate a motor vehicle or heavy machinery. This facility is registered in accordance with the Bellflower Municipal Code."

22. Each Cannabis business must designate an on -site representative who must be present during all hours of the Cannabis business's operation. The On -Site Designated Representative must meet the following minimum requirements:
a. Be a Manager for the Cannabis business;
b. Comply with all applicable laws;
c. Carry on his or her person, at all times when he or she is functioning as the on -site representative, a valid government issued photo Identification Card or license; d. Upon request by the Police Chief or any other City official charged with enforcing the provisions of the BMC, produce such photo Identification Card or license for inspection; e. Be available at the telephone number identified in the registration as the on -site landline telephone number for the cannabis business;
f. Cooperate fully with the Police Chief and any other City official charged with enforcing the provisions of the BMC with any inquiry, inspection, request, or investigation necessary or appropriate to implement the requirements of the BMC or to enforce any other State or local law;
g. Immediately report to the Police Chief any violations of State or local law or conditions which the On -Site Designated Representative knows, or reasonably should know, exist on the cannabis business and at the cannabis business and could result or have resulted in harm or an imminent threat of harm to the health, safety or general welfare of any person or member of the public; and
h. Immediately report to the Police Chief, the County Health Department, and members of the cannabis business any information indicating that a member experienced an adverse reaction to, or other difficulty related to, any cannabis procured from the cannabis business.

V. Public Safety and Safety of Cannabis Business
25 City of Bellflower
Resolution No. 17-79 — Exhibit A

23. Each cannabis business must operate in a manner such that dispensing cannabis does not adversely affect the health or safety of nearby properties through creation of mold, mildew, dust, glare, heat, noise, noxious gasses, odor, smoke, traffic, vibration, or other impacts.

24. Each cannabis business must utilize appropriate air purification systems and air scrubbers wherever cannabis is cultivated, processed, manufactured or dispensed so as to prevent the odor of cannabis from emanating beyond the walls of the cannabis business.

25. 26. Each and every cannabis business must ensure that it has safe growing facilities, chemicals and fertilizers are properly stored, carbon dioxide levels are tested, areas are properly vented, and mold is tested and controlled for the safety of city personnel and enforcement personnel that may be required to conduct a site visit.

VI. Property Maintenance

27. The cannabis business must be kept in a clean and safe condition by, at a minimum, performing all of the following tasks:
a. Properly remove and store all trash, litter, rubbish and debris on the cannabis business at the end of each business day;
b. Properly dispose of all trash, litter, rubbish and debris from the Cannabis business; c. Remove graffiti placed upon the Cannabis business and Cannabis business within forty-eight hours of its occurrence;
d. Keep driveways, sidewalks, park strips, fire access roads and streets on or adjacent to the cannabis business clear and clean;
e. Provide lighting on the cannabis business to ensure the safety of the public and employees; and
f. Otherwise operate in a manner that does not create or result in any significant adverse impacts upon the cannabis business or within 300 feet of the cannabis business.

Standard Conditions of Approval

28. All concrete and asphalt demolition debris from the site must be recycled.

29. Exterior construction activities (grading, framing, etc.) is restricted to 7:00 a.m. to 6:00 p.m., Monday through Friday, and 8:00 a.m. to 6:00 p.m. on Saturdays, except that interior building construction activities are not limited in time.

30. All construction equipment must be properly muffled to reduce noise levels. Transportation of equipment and materials and operation of heavy grading equipment must also be limited to the hours of 7:00 a.m. to 6:00 p.m., Monday through Friday, and 8:00 a.m. to 6:00 p.m. on Saturdays. All equipment staging areas must be sited on the subject property.

31. Dust generated by construction activities must be reduced by watering the soil prior to and during grading activities. Reclaimed water must be used whenever possible. Dirt cannot be hosed into the storm drain system.

32. All improvements to the project site must comply with applicable law including, without limitation, the BMC, Fire regulations adopted by the Los Angeles County Consolidated Fire Protection District or the BMC, and all uniform codes including the California Building Code, as adopted by the BMC.

33. The second sheet of the building plans must list these conditions of approval. This information must be incorporated into the plans before the first submittal for plan check. 26 City of Bellflower
Resolution No. 17-79 - Exhibit A

34. All work within the public right-of-way including placing and removal of traffic control devices is restricted to the hours between 8:30 a.m. and 3:30 p.m., Monday through Friday. No work requiring continuous inspection or traffic control can be done on Saturday, Sunday, or Holidays, unless prior arrangements have been made at least one week in advance with the approval of the Public Works Director,

35. The Applicant, at the Applicant's cost, is responsible for the relocation as necessary of any public or private utility or other obstruction to facilitate the construction within the public right- of-way.

36. Permits are required for all work within the public right-of-way.

37. A Low Impact Development (LID) Plan is required for the project. Projects redeveloping more than 50% of the existing site require a General Permit from the State Regional Water Quality Control Board along with an approved WDID number before the City issues a building permit. All storm water best management practices as adopted by the City must be implements and maintained during all demolition and construction activities related to the project. A copy of the City BMP Certification Form must be copied within the building plans and signed by the Applicant before the City issues building permits.

38. At the time of initial plan check submittal, four sets of complete plans and specification along with two sets of structural calculations and any other required supporting documentation must be submitted prior to the commencement of City Plan Check review services.

39. The project site and its immediate surrounding must be maintained neat and clean at all times in compliance with BMC §8.36.030 in order to prevent Public Nuisances. The project site and its immediate surrounding must be maintained free from debris and graffiti at all times in compliance BMC Chapter 9.12. The Property owner must remove any debris or graffiti within 24 -hours upon notification by the City. Litter on the site and any litter scattered nearby the property, the streets, and the sidewalks must be removed daily.

40. Per BMC § 17.80.030(F), Development Review approval, or conditional approval of a Development Review application is valid for 12 months after the date of approval, unless a building permit (plan check) application is submitted to the Building Official, or designee, for the project within that 12 -month period, in which case the approval is valid as long as the plan check or building permits for the project are valid. Upon good cause shown, the Planning Director may grant one extension of an approval of not more than 12 months in the aggregate, from the original expiration date.

41. This Permit will terminate and become void unless:
a. Construction implementing the use authorized by this Permit commences on or before the time limited specified in this permit, and thereafter diligently advanced or if no time is specified, on or before one year after the date of this permit was approved.
b. All uses must be continuously operated for the use permitted. If the use ceases to exist for one hundred eighty (180) days or more it will be deemed expired and void.

Specific Conditions of Approval
Fire Prevention and Suppression Plan

42. The permittee must add 2016 California Fire Code to applicable codes section on title sheet. 27 City of Bellflower
Resolution No. 17-79 - Exhibit A

43. The permittee must provide a Seal and Signature of design professional on each sheet of plans.

44. The permittee must indicate location of fire extinguishers on floor plan.

45. The permittee must submit a Final Fire Prevention and Suppression Plan, prepared by a Fire Protection Engineer, that includes the Statement of Intended Use Information (see, Los Angeles County Consolidated Fire Protection District requirements) and all other information requested by the City's Building Official.

46. The permittee must complete and sign provided Los Angeles County Consolidated Fire Protection District Statement of Intended Use (Form C-30).

Plan Recuirements. The Permittee must:

47. Provide occupancy load calculations based on use of each area of the building. (2014 CBC - 1004).

48. Provide closet door to janitorial closet.

49. Provide door schedule showing type of doors, type of hardware, and door fire rating.

50. Provide complete finish schedule for all building elements (floors, walls, ceilings).

51. Provide "new wall" section detail.

52. Show on site plan dimensions, slopes and cross slopes for accessible path of travel.

53. Provide accessible Van parking place as specified in CBC -11B. Accessible Van parking stall must have an accessible parking isle located on passenger side. Show details for required parking space, isle and accessible parking signage.

54. Provide fully dimensioned detail plan for each restroom to demonstrate compliance with accessibility requirements of California Building Code chapter 11B.

55. Designate at least 50% of total number of single user restrooms accessible. Make one of the two existing restrooms comply with accessibility requirements of California Building Code chapter 11B.

56. Provide typical door thresholds detail.

57. Show types and locations of all required signs through the building (2016 CBC - chapter 11B).

58. Provide dimensioned door landings details, show maximum allowed slopes and changes of level for landings.

59. Provide dimensioned details for sales and check in counters.

60. Refer to recently approved State legislation (AB 1732) regarding required signage for all - gender single user restrooms and revise the accessible restroom signage in accordance with the 2016 CBC and DSA Bulletin 17-01: This image represents the door symbol that is required by CBC 11B-216.8 to identify an all-gender/unisex single -user toilet facility. The symbol must comply with the requirements of CBC 118-703.7.2.6.3. No pictogram, text, or braille is required on the symbol.

Note: Designation signs are not required to be provided by the CBC or the 2010 ADAS. If provided, a designation sign adjacent to the door must comply with the scoping requirements of CBC 118-216.2, and the technical requirements for raised characters (CBC 118-703.2), braille (CBC 118-703.3), visual characters (CBC 118-703.5), and requirements 28 City of Bellflower
Resolution No. 17-79 — Exhibit A

for installation height and location (CBC 11B-703.4). No pictogram is required. Refer to DSA Bulletin 17-01 for further information.
0 Plumbinq/Mechanical/Electrical. The Permittee must:

61. Provide electrical, mechanical and plumbing plans prepared by design professionals.

62. Provide T24 energy compliance documents.

63. Incorporate odor control devices and techniques to ensure that odors from cannabis are not detectable outside of the dispensary, or at adjoining tenant spaces. Show proposed design incorporated into HVAC system, provide cut sheet of devices used. Odor control system must be designed by a registered design professional.

Security Plan. The Permittee must:

64. Property Lighting
a. Provide adequate lighting for all areas of access and exit points, including along the perimeter fence line, parking lot, building and ingress and egress locations. b. Provide active lighting from dusk until dawn.

65. An inspection must be completed before the City issues a certificate of occupancy to verify all equipment and security improvements identified in the security plan are properly installed and operating. All corrective actions identified during the inspections must be completed before the City issues a certificate of occupancy.

Other Requirements

66. Construction Waste Management Plan
a. All projects valued at $50,000 or greater require an approved C&D Waste Management Plan in accordance with BMC Chapter 15.44 before the City issues building permits. Contact Public Works at (562)-804-1424 x 2233 regarding application submission, review, and approval. All construction projects that trigger a C&D Waste Management Plan valued at $150,000 or greater require a performance security deposit before the City issues a building permit Pursuant to BMC § 15.44.050.

67. Local Hiring Preference Plan
a. The Applicant must implement a local preference plan to hire City of Bellflower residents at 200% above the "Living Wage" for the Federal Poverty Level for a family of two.

68. Contribution to Drug Rehabilitation Program
29 City of Bellflower
Resolution No. 17-79 — Exhibit A

a. The Applicant must make an annual contribution of $5,000 to the City for a Drug Rehabilitation Program. Payment must be made to the City's Finance Director, or designee.

69. Cash Management Plan
a. In addition to any other practices demonstrated in the Operations Plan, a cash management plan is required that must include a kiosk based system at the facility to eliminate the cash transfers between employees and customers. The cash management plan must provide for the submission of detailed records of all transactions to the City and comply with all regulations promulgated by the California Bureau of Cannabis Control, when they become effective.

70. Dispensary Operations Plan
a. This conditional use permit incorporates by reference the Operations Plan as approved by the City Manager, which incorporates the operational standards set forth in BMC § 14.24.020, and the additional conditions necessary to implement the purpose of BMC Title 14 when considering the location and size of the proposed dispensary.

71. Dispensary Operational Standards
a. When available, the permittee must secure a valid permit from the California Bureau of Cannabis Control.
b. Hours of operation for access by the public is limited to the hours of 9:00 a.m. and 7:00 p.m. Monday through Saturday. The cannabis dispensary cannot be open on Sundays.
c. Alcohol or tobacco cannot be sold within the cannabis dispensary. Smoking, vaporization, ingestion or consumption of alcohol, tobacco or cannabis in any form is not allowed on the premises of a dispensary.
d. Cannabis products cannot be publicly visible from the exterior of the property.

Cannabis or cannabis products cannot be stored outside of the dispensary at any time.
e. All cannabis and cannabis products sold or otherwise made available at a dispensary must be cultivated, manufactured, and transported by licensed facilities that maintain operations in full conformance with State and local regulations.
f. Each cannabis dispensary must provide the City Manager or designee with the name and telephone number of an on -site employee or owner to whom emergency notice can be provided. The telephone number provided must accept recorded voice messages in the event the contact person does not answer.

No person under 21 years of age is allowed on the premises of a cannabis dispensary unless such person possesses a valid identification card issued by the California Department of Health Services. A sign must be posted at each entrance to a sales/display area of the dispensary informing patrons of these restrictions.
g.
h. No person under the age of 21 may be employed at a cannabis dispensary. i. Each entrance to the cannabis dispensary must be posted with a conspicuous notice stating that smoking, vaping, ingesting, or otherwise consuming cannabis 30 City of Bellflower
Resolution No. 17-79 — Exhibit A

on the premises or in the areas adjacent to the cannabis dispensary is prohibited. j. Entrance into any area of the cannabis dispensary where cannabis products are displayed and/or being offered for sale must be locked at all times with entry strictly controlled. A "buzz -in" electronic/mechanical entry system must be utilized to limit access to such areas and to separate them from the outside and/or any adjacent reception/lobby area. The specifics of such entry system must be defined in the Operations Plan.
k. Uniformed security personnel must be employed to monitor all entrances and exits of the dispensary and to serve as a visual deterrent to unlawful activities during all hours of operation. Every security guard employed by or provided by the dispensary must be currently licensed by the California Bureau of Security & Investigative Services and in possession of a valid "guard card." The number of security personnel must be identified in the Operations Plan.

I. All restroom facilities serving the dispensary must remain locked and under the control of management.
m. All law enforcement personnel seeking admission to the dispensary for the purpose of ascertaining compliance with the standards and regulations of this Code must be given unrestricted access to all areas of the premises at all times during hours of operation. Consent to such unrestricted access must be acknowledged by the permittee and included within the Operations Plan. n. All interior spaces of the dispensary which are open and accessible to the public (except restrooms), and all entrances and exits to and from the premises, must be monitored by 24 -hour video security surveillance of at least HD quality with night vision capability. The video security system must be compatible with software and hardware utilized by the City as determined by the Police Chief and set forth in the Operations Plan. Surveillance video must be recorded to a device that is securely located on the premises and all footage must be maintained for a minimum of 90 days. The video surveillance system specifications must be set forth in the Operations Plan before the City issues a certificate of occupancy for the cannabis dispensary.
o. A professionally installed, maintained, and monitored alarm system must be installed, maintained, and operational as approved through the Operations Plan. p. A valid business license must be obtained as required by the BMC. q. All food products, food storage facilities, food -related utensils, equipment and materials must be approved, used, managed and handled in accordance with the provisions of the California Retail Food Code (Health & Safety Code § 113700, et seq.). All food products must be protected from contamination at all times, and all food handlers must be clean, in good health, and free from communicable diseases. The Los Angeles County Department of Public Health may inspect the dispensary at any time during business hours to ensure compliance with state and local laws.
r. A physician is not allowed in the cannabis dispensary at any time for the purpose of evaluating patients to issue a medical cannabis prescription or card. s. The dispensary must verify that each person possesses a valid identification card before dispensing medical cannabis or medical cannabis products to any person 31 City of Bellflower
Resolution No. 17-79 — Exhibit A

under the age of 21.
t. A valid identification card as defined in Health and Safety Code § 11362.71 and a valid government -issued identification card must be shown by any person 18 years of age or older in order to be allowed on the cannabis dispensary premises.
u. A valid identification card under Health and Safety Code § 11362.71 and a valid government -issued identification card must be shown by any person 18 years of age or older before the sale of any medical cannabis, medical cannabis products, or cannabis accessories.

72. Delivery
v. Delivery of cannabis from a cannabis dispensary permitted pursuant to BMC Title 14 can only be made in a city or county that does not expressly prohibit such deliveries by ordinance.
w. No person under the age of 21 may serve as a delivery driver. No person under the age of 21 may be hired to make mobile deliveries of any cannabis product. x. A delivery driver cannot carry more than $200 in cash while engaged in the service of delivering cannabis or cannabis products.

NOTICE: THE MCBP DOES NOT BECOME EFFECTIVE UNTIL THE PERMITTEE

COMPLIES WITH ALL CONDITIONS THAT MUST BE COMPLETED BEFORE OPERATIONS COMMENCE. ANY FACILITY THAT COMMENCES OPERATIONS WITHOUT AN

EFFECTIVE MCBP CONSTITUTES AN UNLICENSED CANNABIS FACILITY IN

ACCORDANCE WITH APPLICABLE LAW INCLUDING, WITHOUT LIMITATION, BMC CHAPTER 14.28. VIOLATIONS OF THE BMC MAY RESULT IN CRIMINAL OR CIVIL PENALTIES INCLUDING A PENALTY OF $5,000 PER DAY; ONE YEAR IN JAIL; OR BOTH.

By signing this document Larry Thacker, on behalf of NC3 Systems LLC dba Caliva, certifies that he/she has read, understood, and agrees to the Project Conditions listed in this document.

La
("Applicant")
{If Corporation or similar entity, need two officer signatures or evidence that one signature binds the company}
32 STATE OF CALIFORNIA )

COUNTY OF LOS ANGELES )SS

CITY OF BELLFLOWER )
I, Mayra Ochiqui, City Clerk of the City of Bellflower, California, do hereby certify under penalty of perjury that the foregoing Resolution No. 17-79-C was duly passed, approved, and adopted by the City Council of the City of Bellflower at its Special Meeting of December 18, 2017, by the following vote to wit:

AYES:

RECUSED:

Dated: December 20, 2017
Mara
City of
iqui, City Clerk
ellflower, Califo
(SEAL)
Council Members — Koops, Santa Ines,
Dunton, and Mayor Schnablegger
Council Members — Garza
33 03.27.2026
PREPARED FOR:

City of Bellflower
Planning Division
16600 Civic Center Dr.

Bellflower, CA 90706
PREPARED BY:
9535 Artesia Ave, Inc
dba Herb's Diner

CANNABIS -RELATED

BUSINESS PERMIT APPLICATION
FOR:

LRBI
D#ie&
9535 ARTESIA BLVD. I BELLFLOWER, CALIFORNIA 90706

SUBMITTAL CHECKLIST
This checklist is provided to assist you in assembling a complete application. Please submit three hard -copies along with a digital submittal in a flash -drive.

O COMPLETED APPLICATION FORM
Only one complete application is required for multiple applications filed concurrently. Do not submit separate applications for multiple requests.
❑O PUBLIC NOTIFICATION MAP, MAILING LIST AND PUBLIC POSTER State and City law require that property owners near the project site must be notified by mail of public hearings and pending actions on the subject site. To accomplish this, a radius map and mailing labels must be prepared at a 300 - foot radius of the subject site(s). In addition, a notice of public hearing must be posted at the subject site; the content of the public notice poster is subject to City approval.

O COPY OF CANNABIS STATE LICENSE (OR APPLICATION — IF PENDING) It is unlawful for any person to engage in a cannabis -related business activity in the City unless the person: (1) has a valid cannabis business permit from the City; and (2) is in compliance with all applicable State and local laws and regulations pertaining to the cannabis business, including the duty to obtain and maintain any required State license(s). Cannabis business permits that are issued must be activated within 30 days after the public hearing approving the cannabis business permit. Activation occurs when the cannabis related business pays all fees, accepts all conditions, provides evidence that it was issued a valid Conditional Use Permit that follows the regulations of Title 17 of the Bellflower Municipal Code; and provides evidence that it applied with the State of California of all applicable State permits and commences operations as determined by the City Manager.

O BUSINESS PLAN
A Business Plan must be submitted providing, at a minimum, the following information:

1. A schedule for beginning operation, including (a) narrative outlining any proposed construction and improvements, and (b) a timeline for completion;

2. A budget for construction, operation, maintenance, compensation for employees, equipment costs, utility costs, and other operation and maintenance costs;

3. A pro forma for at least 3 years of operation;

4. How the cannabis -related business, including its exterior areas and surrounding public areas, will be managed to avoid becoming a nuisance or having impact on its neighbors and the surrounding community; and

5. Demonstration that the Applicant will implement a local preference plan to hire City of Bellflower residents at 200 percent above the "living wage" for the federal poverty level for a family of two.

O OPERATIONS PLAN
An Operations Plan, including a detailed cash -management plan, must be submitted that includes the operational standards for the type of cannabis -related business proposed as defined in Title 14 of the Bellflower Municipal Code (BMC). These conditions are provided in attachments to this application. The Operations Plan for a cannabis cultivation or manufacturing business must include a detailed water and electrical plan and projections for water use. This plan must be approved by Public Safety Director prior to approval of a Conditional Use Permit. The Operations Plan must also include any additional conditions that the Public Safety Director finds reasonably necessary when considering the location and size of the proposed business.

O FIRE PREVENTION AND SUPPRESSION PLAN
A Fire Prevention and Suppression Plan must be submitted that provides a detailed description of fire prevention, fire suppression, HVAC, and alarm systems and includes an assessment of the fire safety of the cannabis -related business by a currently licensed and active Fire Protection Engineer. An appropriate plan will address all possible fire, hazardous material, and inhalation issues/threats and will define both written standards and physical mechanisms to deal with each specific situation.

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 2 35

SECURITY PLAN
A Security Plan must be submitted that includes a description and detailed schematic drawing of the overall security plan for the cannabis -related business. This plan must detail planned operational security, including, without limitation, general security policies for the facility, employee -specific policies, training, sample written policies, transactional security, visitor security, third -party contractor security, and delivery security. The Security Plan must also address access into and out of the business, permitter security, product security (at all hours), internal security measures for access (area specific), types of security systems (alarms and cameras), and security personnel to be employed. The Security Plan must also include an assessment of site security by a security consultant currently licensed by the California Bureau of Security and Investigation Services and in possession of a valid "guard card." The security Plan may be submitted in confidence. Please see the Law Enforcement Conditions of Approval attached to this application that will be applied to each permit approved.

O TRAFFIC AND PARKING STUDY
A Traffic and Parking Study prepared by a Licensed Traffic Engineer must be submitted, identifying and potential traffic and parking impacts, as well as feasible measures to mitigate these impacts. This study must be prepared in accordance with the latest edition of the Los Angeles County's Traffic Impact Analysis Guidelines and Institute of Transportation Engineers, Parking Generation Manual.

O PLAN REQUIREMENTS (See Attached Guide to Architectural Plan Requirements) Fifteen (15) sets of full-scale plans must be provided at the time of initial submittal, including a site plan, existing and proposed floor plans, and existing and proposed building elevations.

O PHOTOS
Provide a minimum of six (6) color photos illustrating the existing site conditions.

O DIGITAL COPIES
All projects are required to submit, at the time of submittal/resubmittal, a compact disc or flash drive that includes digital copies of all illustrative documents (i.e., plans, maps, color photos, color perspectives, virtual models, etc.) ❑O IDENTIFICATION
Provide government -issued identification demonstrating that each Applicant, manager, and employee of the cannabis -related business is 21 years of age or older.

O EXISTING CONDITIONAL USE PERMIT (IF APPLICABLE)
HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 3 36

CLICK TO JUMP

CLICK TO RETURN TO CONTENTS
Contents

01. Completed Application Form

02. Minimum Qualifications

03. Public Notification Map, Mailing List & Public Poster

04. Copy of Cannabis State License (or Application - if Pending)

05. Business Plan

06. Operations Plan

07. Fire Prevention & Suppression Plan

08. Security Plan

09. Traffic & Parking Study
ir Plan Requirements
Photos

12. Digital Copies
Identification

14. Conditional Use Permit (Copy)
5 20
42 44
46 63
99 123
163
171
179
183
185
187
HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 4 37

01. Completed Application
Form

COMPLETED APPLICATION FORM
Only one complete application is required for multiple
applications filed concurrently. Do not submit
separate applications for multiple requests.

HERB'S

CII Y OF BELLELO` S.
"crowing 'Together"

CITY OF BELLFLOWER

PLANNING DIVISION
16600 CIVIC CENTER DR.

BELLFLOWER, CA 90706
562-804-1424
www.bellflower.org

STAFF USE ONLY
PROJECT CASE NO.:

RECEIVED
BY:

DATE:

ENERGOV CASE NO.:

RECEIPT NO.:

ZONING:

GPLU:

CANNABIS - RELATED BUSINESS PERMIT (CBP) & CONDITIONAL

USE PERMIT (CUP) APPLICATION
Please complete this application thoroughly and attach all required documentation. If you have any questions about this application process, please email [email protected] [email protected] APPLICATION FEE: A non-refundable processing fee of $33,589 and CEQA fees must be submitted with this application. A separate processing fee is required for each type of cannabis -related use (i.e. dispensary, cultivation, etc.) being applied for. If approved, a separate annual permit administration fee and annual drug rehabilitation program or homeless prevention program contribution established by Resolution are required for each type of cannabis -related business permit that is granted.

CBP Category Requested: ❑ Cultivation Dispensary ❑ Manufacturing ❑ Distribution ❑ Testing Applicant Name: 9535 ARTESIA AVE, INC.

Business Address (es): 9535 ARTESIA BLVD. BELLFLOWER, CA 90706 Business Mailing Address (if different): N/A
Business Telephone Number: 714-313-6003
Business/Applicant Federal Identification Number (FEIN): 46-4290987 Assessor's Parcel Nu mber(s): 7161-002-014/7161-002-029 NOTE: If Applicant is corporate entity, the following information is required (1) copy of the Applicant's Articles of Incorporation or Articles of Organization; (2) copy of the applicant's bylaws or operating agreement; (3) copy of the Applicant's Certificate of Status issued by the California Secretary of State (4) copy of the Applicant's Entity Status Letter from the California Franchise Tax Board. In addition, properties under company ownership (i.e., Corporation, LLC) must provide a statement of Information from the California Secretary of State identifying the company officers. Any application lacking this information will be deemed incomplete.

Project Description/Type of Cannabis Business (attach additional pages as needed):

Project Valuation (estimate) $: 1.5M
Property Size (scuare feet & acres): 3,137 SF/.23 ACRES Ap Dlicant/Authorized Agent: LARRY THACKER
Mailinc Address: 9535 ARTESIA BOULEVARD
City: BELLFLOWER State: CA
Telephone (Day/Night): 714-313-6003
Email: [email protected]
Zip: 90706 % of Ownership: 5%
Property Owner: 3351 SCOTT STREET, LLC
Mailinc Address: 1031 SANTA CRUZ AVENUE
City: MENLO PARK State: CA
Telephone (Day/Night): 310-709-5179
Email: [email protected]
Zip: 94025 % of Ownership: 100%
Property Rights: ❑ Owned 2 Leased -Term: 1° * 5 years „10 years required) Evidence of Legal Right to Occupy Property: Attach title deed, or equivalent

VINCENT KAMYAR VAGHAR
, am the property owner for the subject property and have read and understand all statements, including the filing requirements for this application. I hereby authorize 9535ARTESIAAVE, INC. to act as my representative and to bind me in all matters concerning this application. I hereby affirm under penalty of perjury that the foregoing statements, facts, and attachments are true and correct. I understand that this application for entitlement may be denied, modified, or approved with conditions, and that such conditions or modifications must be satisfied before a cannabis business permits is valid. I understand that by filing the application, information on the application including, without limitation, to the name and address will be included on public records that are posted on the internet. A verified signature (e.g., DocuSign) is attached acknowledging and consenting to use of the real property as a cannabis -related business by the Applicant.

P : •e Owner's S ana' re
Date

3.25.26 Applicant's Signature Date
x.25.26
HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 6 39

PROPRIETOR INFORMATION
Provide the following information for each proprietor (defined as any person with a financial interest in the business.) Each proprietor is to receive all notices. If a mailing address is not supplied, notices will be sent to the business address.

Use additional sheets if necessary:

Proprietor Name: LARRY THACKER
Telephone (Day/Nic ht): 714-313-6003
Mailinc Address: 9535 ARTESIA BOULEVARD Email: [email protected] City: BELLFLOWER State: CA
Proprietor Name: FRIEDA VAGHAR FARSHCHIAN
Zip: 90706 % of Ownership: 5%
Telephone (Day/Nicht): 310-709-5179
Mailinc Address: Email: [email protected]
City: MENLO PARK
State: CA
Zip: 94025 % of Ownership:

Proprietor Name: Telephone (Day/Night):

Mailinc Address: Email:

City: State:

Zip: % of Ownership:

Proprietor Name: Telephone (Day/Night):

Mailinc Address: Email:

City: State:

Zip: % of Ownership:

Proprietor Name: Telephone (Day/Night):

Mailinc Address: Email:

City: State:

Zip: % of Ownership:

Proprietor Name: Telephone (Day/Night):

Mailinc Address: Email:

City: State:

ZiD: % of Ownership:
95%
Proprietor Name: Telephone (Day/Night):

Mailino Address: Email:

City: State:

Zip: % of Ownership:

Have any of the proprietors previously been issued a Cannabis -Related Business Permit that has been suspended or revoked? If so, provide the dates of the suspension period or revocation date:

NO.

Provide documentation demonstrating that 75 percent of the proprietors and managers of the cannabis related business are California residents and have been for at least 3 years immediately preceding the date of this application.

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 7 40

I

IIIIIII IIIII III IIIIIII III IIII

ARTICLES OF INCORPORATION

STATE OF CALIFORNIA
Office of the Secretary of State

ARTICLES OF INCORPORATION

CA CLOSE CORPORATION
California Secretary of State
1500 11th Street
Sacramento, California 95814
(916) 657-5448
i
i
i
i
i
i

IIII IIIII IIIII IIIII IIIII IIII IIII
B20250346516 0
w
m
N
For Office Use Only
-FILED-
File No.: B20250346516
Date Filed: 10/17/2025
Corporation Name
Corporation Name 9535 Artesia Ave, Inc.

Initial Street Address of Principal Office of Corporation Principal Address
Initial Mailing Address of Corporation
Mailing Address
Attention
Agent for Service of Process
Agent Name Courtney Caron
Agent Address 4040 VINELAND AVE
SUITE 204
STUDIO CITY, CA 91604
Shares
The total number of shares the corporation is authorized to issue is: 100 Does the corporation have more than one class or series of shares? No Number of Shareholders
This is a Close Corporation. All of the corporation's issued shares of stock, of all classes, will be held of record by not more than 1 persons.

Purpose Statement
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.

Additional information and signatures set forth on attached pages, if any, are incorporated herein by reference and made part of this filing.

Electronic Signature
�I By checking this box, I acknowledge that I am electronically signing this document as the incorporator of the Corporation and that all information is true and correct.
/Courtney Caron/ 10/17/2025
Incorporator Signature Date
tr

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 8 41

BYLAWS
CORPORATE BYLAWS OF 9535 ARTESIA AVENUE, INC.

ARTICLE I - NAME, PURPOSE, AND OFFICES
Section 1.1 Name: The name of this corporation shall be 9535 Artesia Ave, Inc.

Section 1.2 Purpose: The corporation is organized to engage in any lawful business activity permitted under California corporate law.

Section 1.3 Principal Office: The principal office shall be located at 9535 Artesia Boulevard, Bellflower, California 90706, or as may be designated by the Board of Directors.

ARTICLE II - BOARD OF DIRECTORS
Section 2.1 Number: The corporation shall have two directors, adjustable by amendment.

Section 2.2 Powers: The Board shall oversee and manage the corporation's affairs and may exercise all powers except where limited by law or bylaws.

Section 2.3 Election and Term: Directors are elected annually by shareholders and serve until successors qualify.

Section 2.4 Meetings: Regular Board meetings shall occur quarterly either virtually or at 9535 Artesia Boulevard, Bellflower, California 90706.

Section 2.5 Notice: Written notice of special meetings must be given at least 48 hours prior.

Section 2.6 Quorum: A majority of directors present constitutes a quorum.

Section 2.7 Virtual Meetings: Board members may participate via electronic communication.

ARTICLE III - SHAREHOLDERS
Section 3.1 Annual Meeting: The annual shareholders meeting is held on February 1 at either virtually or at 9535 Artesia Boulevard, Bellflower, California 90706.

Section 3.2 Special Meetings: May be called by the Board or shareholders holding 75% of shares.

Section 3.3 Notice: Written notice of meetings shall be provided at least 10 days prior.

Section 3.4 Voting: Each share is entitled to one vote.

Section 3.5 Quorum: A majority of outstanding shares constitutes a quorum.

ARTICLE IV - OFFICERS
Section 4.1 Officers: The corporation shall have a President, Secretary, and Treasurer; one person may hold multiple offices.

Section 4.2 President: Chief executive responsible for corporate affairs and presiding over meetings.

Section 4.3 Secretary: Maintains records, handles correspondence, and keeps minutes.

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 9 42

Section 4.4 Treasurer: Oversees corporate funds and financial reporting.

Section 4.5 Election: Officers are elected annually by the Board.

ARTICLE V - STOCK
Section 5.1 Authorized Shares: The corporation may issue 100 shares of common stock with par value $10,000.

Section 5.2 Certificates: Shares represented by certificates signed by President and Secretary.

Section 5.3 Transfers: Transfers recorded in the stock ledger.

ARTICLE VI —AMENDMENTS
These bylaws may be amended by a majority vote of the Board or shareholders holding a majority of shares.

ARTICLE VII - INDEMNIFICATION
The corporation shall indemnify officers and directors against expenses and liabilities incurred in corporate duties, except in cases of willful misconduct or fraud.

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 10 43

CERTIFICATE OF STATUS
Secretary of State
Certificate of Status
I, SHIRLEY N. WEBER, PH.D., California Secretary of State, hereby certify:

Entity Name: 9535 Artesia Ave, Inc.

Entity No.: B20250346516
Registration Date: 10/17/2025
Entity Type: Stock Corporation - CA - Close
Formed In: CALIFORNIA
Status: Active
The above referenced entity is active on the Secretary of State's records and is authorized to exercise all its powers, rights and privileges in California.

This certificate relates to the status of the entity on the Secretary of State's records as of the date of this certificate and does not reflect documents that are pending review or other events that may impact status.

No information is available from this office regarding the financial condition, status of licenses, if any, business activities or practices of the entity.

IN WITNESS WHEREOF, I execute this certificate and affix the Great Seal of the State of California this day of
November 11, 2025.

SHIRLEY N. WEBER, PH.D.

Secretary of State
Certificate No.: 387415532
To verify the issuance of this Certificate, use the Certificate No. above with the Secretary of State Certification Verification Search available at bizfileOnline.sos.ca.gov.

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary I1 44

ENTITY STATUS

STATE OF CALIFORNIA

FRANCHISE TAX BOARD
PO BOX 942857
SACRAMENTO CA 94257-0540
Entity Status Letter
Date: 11/11/2025
ESL ID: 2051487220
Why You Received This Letter
According to our records, the following entity information is true and accurate as of the date of this letter.

Entity ID: 20250346516
Entity Name: 9535 ARTESIA AVE, INC.
❑� 1. The entity is in good standing with the Franchise Tax Board.

2. The entity is not in good standing with the Franchise Tax Board. ❑ 3. The entity is currently exempt from tax under Revenue and Taxation Code (R&TC) Section 23701 .

4. We do not have current information about the entity.

5. The entity was administratively dissolved/cancelled on through the Franchise Tax Board Administrative Dissolution process.

Important Information
• This information does not necessarily reflect the entity's current legal or administrative status with any other agency of the state of California or other governmental agency or body. • If the entity's powers, rights, and privileges were suspended or forfeited at any time in the past, or if the entity did business in California at a time when it was not qualified or not registered to do business in California, this information does not reflect the status or voidability of contracts made by the entity in California during the period the entity was suspended or forfeited (R&TC Sections 23304.1, 23304.5, 23305a, 23305.1).
• The entity certificate of revivor may have a time limitation or may limit the functions the revived entity can perform, or both (R&TC Section 23305b).

Connect With Us
Web: ftb.ca.gov
Phone: 800-852-5711 from 7 a.m. to 5 p.m. weekdays, except state holidays 916-845-6500 from outside the United States
California
Relay Service: 711 or 800-735-2929 (For persons with hearing or speech impairments) FTB 4263A WEB (REV 12-2019)
HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 12 45

IIIIII11 IIII III IIIIIII III IIII

STATEMENT OF INFORMATION

STATE OF CALIFORNIA
Office of the Secretary of State

STATEMENT OF INFORMATION

CORPORATION
California Secretary of State
1500 11th Street
Sacramento, California 95814
(916) 657-5448
1111111111111111111111111111111111111111111
101101111111111111111 IIII IIII
BA20252209485
For Office Use Only
-FILED-
File No.: BA20252209485
Date Filed: 11/12/2025
Entity Details
Corporation Name
Entity No.

Formed In
9535 Artesia Ave, Inc.

B20250346516

CALIFORNIA
Street Address of Principal Office of Corporation
Principal Address
9535 ARTESIA BLVD
BELLFLOWER, CA 90706
Mailing Address of Corporation
Mailing Address
Attention
9535 ARTESIA BLVD
BELLFLOWER, CA 90706
Street Address of California Office of Corporation
Street Address of California Office
None
Officers
Officer Name
Officer Address
Position(s)
+ Frieda Vaghar Farshcian
Chief Executive Officer
+ Larry Thacker
Secretary, Chief Financial Officer
Additional Officers
Officer Name
Officer Address
Position
Stated Position
None Entered
Directors
Director Name
Director Address
Frieda Vaghar Farshchian
The number of vacancies on Board of Directors is: 0
Agent for Service of Process
Agent Name
Agent Address
Courtney Caron
4040 VINELAND AVE
SUITE 204
STUDIO CITY, CA 91604
Type of Business
Type of Business
Retail Store
Email Notifications
Opt -in Email Notifications Yes, I opt -in to receive entity notifications via email.

Labor Judgment
•
01 1/40
o,
CO
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NJ
N
IV
lP
Received by California Secretary of State

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 13 46

No Officer or Director of this Corporation has an outstanding final judgment issued by the Division of Labor Standards Enforcement or a court of law, for which no appeal therefrom is pending, for the violation of any wage order or provision of the Labor Code.

Electronic Signature
® By signing, I affirm that the information herein is true and correct and that I am authorized by California law to sign. /Courtney J Caron/ 11/12/2025
Signature Date
B4159-9679 11/12/2025 9:40
Received by California Secretary of State

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 14 47

PROOF OF RESIDENCY
California— DRIVER LICENSE
DL
CXP 08/08/2028

LN FARSHCHIAN

PN FRIEDA VAGHAR
00B

RSTR NONE
ICA

CLASS C

END NONE

SEX F HAIR GRY EYES BRN
HOT 5'-07" WGT 160 lb ISS
DD 0810712023548381DDFD128 08/22/2023

FRIEDA VAGHAR FARSHCHIAN (CURRENT)
Applicant, Proprietor, & Owner/Managing Director
California

DRIVER LICENSE
EXP 08/08/2023

LN FARSHCHIAN

FN FRIEDA VAGHAR

CLASS C

FEDERAL
LIMITS
APPLY

END NONE

SEX F HAIR GRY
HGT 5 -or WGT 160 lb
DD 015123/201864432,00M23

EYES BRN
ISS
08/2312018

FRIEDA VAGHAR FARSHCHIAN (EXPIRED)
HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 15 48

i

PROOF OF RESIDENCY
STEVEN F. DEUTSCH, CPA
830 JOOST AVENUE
SAN FRANCISCO, CA 94127
415 239-0775
FRIEDA V FARSIIC!IIAN
Dcar Frieda,
October 5, 2025
Your 2024 Federal Individual Income Tax return will be electronically filed with the Internal Revenue Service upon receipt of a signed Form 8879 - IRS a -file Signature Authorization. There is a balance due of $6,935.VFhe balance due will be directly withdrawn from your bank account once the IRS has processed the return.

Your 2024 California Individual Income Tax Return will be electronically filed with the Franchise Tax Board upon receipt of a signed Form 8879 - California e -file Signature Authorization. There is a balance due of $651. \The balance due will be directly withdrawn from your bank account once the Franchise Tax Board has processed the return.

Your 2025 estimated tax payment schedule is listed below. Your Federal estimated tax payments will be directly withdrawn from your bank account in accordance with the IRS payment schedule.

To cancel the payment, call the U.S. Treasury Financial Agent at 1-888-353-4537 no later than 2 business days prior to the payment (settlement) date. Cancellation of a required estimated tax payment could lead to penalties and interest charges.

Due Date Federal
4/15/25 $ 0
6/16/25 0
10/10/25 - 7,000'
1/15/26 0
$ 7,000
Your 2025 California estimated tax payments will be directly withdrawn from your checking account in accordance with the payment schedule below.

To cancel a scheduled estimated tax payment call the Franchise Tax Board at 916-845-0353 two working days before the date of withdrawal. Cancellatio of a required estimated tax payment may lead to penalties and interest charges. j
Cdl'
r 112
r
HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 16 49

Due Date
Please be sure to call if you have any questions.

Sincxtely,
Steven F Deutsch, CPA
California
900
X10O
HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 17 50

STEVEN F. DEUTSCH, CPA
830 JOOST AVENUE
SAN FRANCISCO, CA 94127
415 239-8775
October 13, 2024
FRIEDA V FARSHCHI.AN
Dear Frieda,
Your 2023 Federal Individual Income Tax return will be electronically filed with the Internal Revenue Service upon receipt of a signed Form 8879 - IRS e -file Signature Authorization. There is a balance due of $18,262. The balance due will be directly withdrawn from your bank account once the IRS has processed the return.

Your 2023 California Individual Income Tax Return will be electronically filed with the Franchise Tax Board upon receipt of a signed Form 8879 - California e -file Signature Authorization. There is a balance due of $4,205. The balance due will be directly withdrawn from your bank account once the Franchise Tax Board has processed the return.

Please be sure to call if you have any questions.

Sincerely,
Steven F Deutsch, CPA
HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 18 51

PROOF OF RESIDENCY
California - DRIVER LICENSE tici

CLASS C
r F 12;23!2025 END NONE

L, THACKER

LARRY NELSON JR
DOS
i RSTR NONE
60O

SEX --M HAIR GRY
HGT 6'-0i" WGT 268 lb
DD C4117?2025648o51CCRY25

EYES HZL
ISS
04/17/2025
LARRY NELSON JR. THACKER
Proprietor & Managing Director

CALIFORNIA DRIVER LICENSE
Owe
air 12/23/2020
td THACKER
H« LARRY NELSON JR
SCs II Ern
.4GT r.or
?0 M1s7•Na4e 1 WalWa.N
LARRY NELSON JR. THACKER (EXPIRED)
HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 19 52

02. Minimum Qualifications

MINIMUM QUALIFICATIONS
Applicants for a Cannabis -Related Business Permit
must meet the following the minimum qualifications
A -F
HERB'S

Minimum Qualifications
Herb's Diner asserts that it has met all of the `Minimum Qualifications' requested. Please find a short reference to where information supporting this assertion can be found throughout the application materials.

A. Unless the application is filed by a Conversion Application or is for a Modified CBP without an ownership change, the Applicant must demonstrate that the Applicant is:

1. Is a person of good character, honesty, and integrity;

2. Is a person whose background, reputation and
associations will not result in adverse publicity for the City of Bellflower or its economic development;

3. Has adequate business competence and practical
experience for operating the cannabis related business; For A. 1-3 Please see "Applicant Qualifications"
under the Business Plan section of this dcument for
confirmation of the Applicant's good character, honesty, integrity, strong reputation, and business competence / practical experience for operating the cannabis -related business."

4. Each person listed in the application will undergo a Fingerprint -Based Criminal History Records Check conducted by the City Police Department (or the Los Angeles County Sheriff's Department) which may include Live Scan and any indicated follow-up investigation;
The Applicant agrees to undergo a Fingerprint -Based
Criminal History Records Check and Live Scan is
requested.

5. Each person listed in the application must disclose
whether it was (or is) a defendant in any current or past civil or criminal enforcement action. If such enforcement action is concluded, the person must disclose the outcome; if such enforcement is pending, the applicant must disclose its status.

None of the listed parties in the application have been a defendant in any current or past civil or criminal
enforcement action, nor are there any pending actions on any applicant.

6. Each person listed in the application must disclose whether it was (or is) a party in any civil lawsuit insider or outside California where the allegations claim the listed person engaged in fraud, dishonesty, misrepresentation, breach of fiduciary duty, or other intentional misconduct reflecting adversely on the individual's integrity or trustworthiness.

The disclosure must include the case name, court, case
number, filing date, parties involved, a brief description of the allegations, and the final disposition or current status of the matter.

None of the listed parties in the application are or ever have been a party in any civil lawsuit inside or outside California for fraud, dishonesty, misrepresentation,
breach of fiduciary duty, or any other intentional
misconduct.

B. If there is a proposed change in ownership that adds persons not previously considered by the City Council on the Origination Date, those persons must meet the requirements in Section (A).

Applicant agrees that if there is a proposed change in
ownership that adds persons not previously considered
by the City Council on the Origination Date, those
persons must meet the requirements in Section (A).

C. The applicant must demonstrate that obtaining a CBP
will be in the best interests of the City of Bellflower. The following objective criteria may be used in making such a determination for issuing a CBP:

1. Has there been an adequate period of performance by the applicant demonstrating experience for operating a cannabis related business? "Adequate period of performance"
means at least three years of continuous cannabis business operations, with demonstrated management experience and financial stability (i.e., no bankruptcies, predatory loans, high debt -to -equity ratios)/.

Please see "Applicant Qualifications" under the Business Plan section of this document for a detailed description of the Applicant's experience operating a cannabis -
related business.

2. Does the Applicant have sufficient key personnel to operate a cannabis -related business and demonstrate effective
managerial capacity and control operations?
The team behind Herb's Diner has years of experience
hiring, training and staffing cannabis retail stores. At present, we have identified several individuals with
retail cannabis industry experience, from other projects, who are excited to work in our Bellflower location. Our ownership team is flush with experience as well.

3. Does the Applicant have other cannabis -related businesses inside or outside the City's jurisdiction that demonstrate the Applicant's competency in operating such businesses?
HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 21 54

Please see "Applicant Qualifications" under the Business Plan section of this document for a detailed description of the Applicant's prior and current interest in cannabis businesses.

4. Does the Applicant have a reasonable and practical
business plan for operating a cannabis -related business within the City's Jurisdiction?
Please see the "Business Plan" section of this document for a description of Herb's Diner's practical business
plans to operate within the City of Bellflower.

5. Notwithstanding the BMC's minimum requirements as to permissible locations, is the cannabis facility proposed by the applicant in a location acceptable to the City Council; aesthetically pleasing; and adequate in size?
Please see the "Proposed Location" section of this
document for a description of the property, its prior uses, and how it will be used for this business.

6. Would the applicant provide a public benefit in the form of removing blight; improving public welfare; or otherwise assisting in advancing the City's public interests?
The building was previously used as a retail cannabis
business. It was extensively remodeled for this purpose.

At present it sits empty. Herb's Diner will provide the benefit of operating a business from this building, which is otherwise empty. It is in the City's best interest to reduce the number of unoccupied buildings and to bring
new business to the area.

D. The Applicant must demonstrate adequate financing
to satisfy all current obligations (including any owed State and Local taxes) and provide sufficient working capital to support the opening and ongoing operation of the cannabis - related business. Such demonstration must include verifiable documentation showing that the applicant has funds
sufficient to pay for at least 12 months of projected operating expenses including, without limitation, payroll, recurring debt payments, rent, utilities, insurance, and one month of inventory costs (which may be shown in a business plan). "Adequate financing" may be demonstrated by a letter of credit or other financial records.

Please see "Proof of Funding" included as part of part of the Business Plan section of this document for proof of adequate financing to support this project.

E. The Applicant must demonstrate that the proposed funding of the cannabis -related business is:

1. Adequate for the nature of the proposed operation; and Please see "Proof of Funding" included as part of part of the Business Plan section of this document for proof of adequate financing to support this project.

2. From a suitable source. The suitability of the source of funds is determined by the criteria set forth in this Resolution.

Please see "Proof of Funding" included as part of part
of the Business Plan section of this document for proof of adequate financing to support this project, and a
description of the source of the funding.

F. For the real property upon which the cannabis -related business is proposed, the Applicant must submit proof of either:

1. Own the real property in fee; or
N/A.

2. Be a long-term lessee with a possessory interest in the real property. A "long term" lessee means the applicant must have a lease with a term of at least 10 years to use the real property for a cannabis related business. In the event the ownership of the property changes at any time during the lease term, the permittee must notify the City in writing within 10 days of such change and must submit a notarized statement from the new property owner acknowledging
and consenting to the cannabis -related use of the property.

Failure to do so may lead to CBP revocation.

Please see the attached lease for the property located
at 9535 Artesia Boulevard, between 3351 Scott Street
LLC and the applicant entity. If ownership of the property changes at any time during the lease term, the applicant agrees to notify the City in writing within 10 days of such change and will submit a notarized statement from the
new property owner acknowledging and consenting
to the cannabis -related use of the property. Applicant understands that failure to do so may lead to CBP
revocation.

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 22 55

LEASE

SINGLE TENANT NET LEASE

1. Basic Provisions ("Basic Provisions").

1.1 Parties: This Lease ("Lease"), dated for reference purposes only November 1, 2025, is made by and between 3351 Scott Street, LLC ("Lessor") and 9535 Artesia Ave, Inc ("Lessee"), (collectively the "Parties," or individually a "Party").

1.2 Premises: That certain real property, including all improvements therein or to be provided by Lessor under the terms of this Lease, and commonly known as 9535 Artesia Blvd, Bellflower located in the County of Los Angeles, State of California, and generally described as ±2,800 square feet of Office/Retail space ("Premises"). (See also Paragraph 2)

1.3 Term: 15 years and 0 months ("Original Term") commencing December 1, 2025 ("Commencement Date") and ending November 30, 2040 ("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 upon lease execution for purposes of their build out ("Early Possession Date"). (See also Paragraphs 3.2 and 3.3)

1.5 Base Rent: $20,000.00 per month ("Base Rent"), payable on the 1st day of each month commencing December 1, 2025. (See also Paragraph 4)
H If this box is checked, there are provisions in this Lease for the Base Rent to be adjusted. See Paragraph 50.

1.6 Base Rent and Other Monies Paid Upon Execution:
(a) Base Rent: $20,000.00 for the period December 1, 2025 — December 31, 2025. (b) Security Deposit: $25,000.00 ("Security Deposit"). (See also Paragraph 5) (c) Operating Expenses: $2,500.00 for the period December 1, 2025 — December 31, 2025. (d) Other: $ N/A.
(e) Total Due Upon Execution of this Lease: $47,500.00.

1.7 Agreed Use: Retail, office, distribution and all other legal uses for cannabis. (See also Paragraph 6)

1.8 Insuring Party: Lessor is the "Insuring Party" unless otherwise stated herein. (See also Paragraph 8)

1.9 Real Estate Brokers: (See also Paragraph 15 and 25) (a) Representation: The following real estate brokers (the "Brokers") and brokerage relationships exist in this transaction (check applicable boxes): N/A. ❑ represents Lessor exclusively ("Lessor's Broker");
❑ represents Lessee exclusively ("Lessee's Broker"); or ❑ represents both Lessor and Lessee ("Dual Agency").
(b) 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 for the brokerage services rendered by the Brokers.

1.10 Guarantor. The obligations of the Lessee under this Lease are to be guaranteed by N/A ("Guarantor"). (See also Paragraph 37)

1.11 Attachments. Attached hereto are the following, all of which constitute a part of this Lease:

H an Addendum consisting of Paragraphs 50 through 57;
H a plot plan depicting the Premises; See Exhibit "B"
H a current set of the Rules and Regulations; See Exhibit "A" ❑ a Work Letter;
❑ a energy disclosure addendum is attached;
H other (specify): California Sale/Lease Americans with Disabilities Act, Hazardous Materials, and Tax Disclosure; Exhibit "C" Additional Insurance Requirements; Exhibit "D" Hazardous Materials Inventory.

2. Premises.

2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises, for the term, at the rental, and upon all of the terms, covenants and conditions set forth in 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. SEE PARAGRAPH 52 OF ADDENDUM
Date"), and, so long ac the required service contracts described in Paragraph 7.1(b) below arc obtained by Leseec months as to the HVAC cyctoms, and (H) 30 days as
o the remaining systems and other elements of the Building. If procooding
affecting the Premises.
or to any Alterations or
V >I l�

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Lexee at Lessee's sole cost and expense. If thc Applicable Requirements arc hereafter changed co as to require cpocific and uniquo uco of tho Promicos by Loccoo as comparod with ucos by tonants in gonoral, Loccoo chall bo years of this Lease and the cot thereof exceeds 9 months' Ba c Rent, Le -roe may inst d terminate this L -e unless Lessor notifics Lexee, in writing, within 10 days after receipt of Lessee's termination noticc that LcGcor ha - sufficient to fully reimburse Lessee on an offset basis, Lc ccc shall have thc right to terminate this Lance upon 30 days written netice to Lessor.
the Premises then, and in tha
even
Lexee shall either: (i) immediately c ace such changed use or intensity of use Lease:

2.4 Acknowledgements. Lessee acknowledges that: (a) it 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 relate to its occupancy of the Premises, (d) it is not relying on any representation as to the size of the Premises made by Brokers or Lessor, (e) the square footage of the Premises was not material to Lessee's decision to lease the Premises and pay the Rent stated herein, and (f) neither Lessor, Lessor's agents, nor Brokers have made any oral 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 or warranties concerning Lessee's ability to honor the Lease or suitability to occupy the Premises, and (ii) it is Lessor's sole responsibility to investigate the financial capability and/or suitability of all proposed tenants.

2.5 Lessee as Prior Owner/Occupant. The warranties made by Lessor in Paragraph 2 shall be of no force or effect if immediately prior to the Start Date Lessee was the owner or occupant of the Premises. In such event, Lessee shall be responsible for any necessary corrective work.

3. Term.

3.1 Term. The Commencement Date, Expiration Date and Original Term of this Lease are as specified in Paragraph 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. If Lessee totally or partially occupies the Premises prior to the Commencement Date, the obligation to pay Base Rent shall be abated for the period of such Early Possession. All other terms of this Lease (including but not limited to the obligations to pay Real Property Taxes and insurance premiums and to maintain the Premises) shall be in effect during such period. Any such Early Possession shall not affect the Expiration Date.

3.3 Delay In Possession. Lessor agrees to use its best commercially reasonable efforts to deliver possession of the Premises to Lessee by the Commencement Date. If, despite said efforts, Lessor is unable to deliver possession by such date, Lessor shall 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 possession 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 90 days after the Commencement Date, as the same may be extended under the terms of any Work Letter executed by Parties, Lessee may, at its option, by notice in writing within 5 days after the end of such 90 day period, cancel this Lease, in which event the Parties shall be discharged from all obligations hereunder. If such written notice is not received by Lessor within said 5 day period, Lessee's right to cancel shall terminate. If possession of the Premises is not delivered within 180 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 deliver 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 prior to or concurrent with the Start Date, the Start Date shall occur but Lessor may elect 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 ki t)

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the Security Deposit) are deemed to be rent ("Rent").

4.2 Payment. Lessee shall cause payment of Rent to be received by Lessor in lawful 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 due. All monetary amounts shall be rounded to the nearest whole dollar. In the event that any invoice prepared by Lessor is 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 place as Lessor may from time to time designate in writing.

Acceptance of a payment which is less than the amount then due shall not be a waiver of Lessor's rights to the balance of such Rent, regardless of Lessor'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 $50 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 attomey's fees, second to accrued interest, then to Base Rent, Insurance and Real Property Taxes, and any remaining amount to any other outstanding charges or costs.

4.3 Association Fees. In addition to the Base Rent, Lessee shall pay to Lessor each month an amount equal to any owner's association or condominium fees levied or assessed against the Premises. Said monies shall be paid at the same time and in the same manner as the Base Rent.

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 all or any portion 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 all times bear the same proportion to the increased Base Rent as the initial Security Deposit bore to the initial Base Rent. Should the Agreed Use be amended to accommodate a material change in the business of Lessee or to accommodate a sublessee or assignee, Lessor shall have the right to increase the Security Deposit to the extent necessary, in Lessor's reasonable judgment, to account for any increased wear and tear that the Premises may suffer as a result thereof. If a change in control of Lessee occurs during this Lease and following such change the financial condition of Lessee is, in Lessor's 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 Deposit separate from its general accounts. Within 90 days after the expiration or termination of this Lease, Lessor shall retum 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, to bear interest or to be prepayment for any monies to be paid by Lessee under this Lease.

6. Use.

6.1 Use. Lessee shall use and occupy the Premises only for the Agreed Use, or any other legal use which is reasonably comparable thereto, and for no other purpose. Lessee shall not use or permit the use of the Premises in a manner that is unlawful, 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 improvements on the Premises or the mechanical or electrical systems therein, and/or is not significantly more burdensome to the Premises. 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 Lessor's objections to the change in the Agreed Use.

6.2 Hazardous Substances.
(a) Reportable Uses Require Consent. The term "Hazardous Substance" as used in this Lease shall mean any product, substance, or waste whose presence, use, manufacture, disposal, transportation, or release, either by itself or in combination with other materials expected to be on the Premises, is either: (i) potentially injurious to the public health, safety or welfare, the environment or the Premises, (ii) regulated or monitored by any governmental authority, or (iii) a basis for potential liability of Lessor to any governmental agency or third party under any applicable statute or common law theory. Hazardous Substances shall include, but not be limited to, hydrocarbons, petroleum, gasoline, and/or crude oil 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 Lessee's expense) with all Applicable Requirements. "Reportable Use" shall mean (i) the installation or use of any above or below ground storage tank, (ii) the generation, possession, storage, use, transportation, or disposal of a Hazardous Substance that requires a permit 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 a 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 long 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 and/or liability, including, but not limited to, the installation (and removal on or before Lease expiration or termination) of protective modifications (such as concrete encasements) and/or 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 conceming 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 system) 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

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Premises during the term of this Lease, by or for Lessee, 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 consultants' fees arising out of or involving any Hazardous Substance brought onto the Premises by or for Lessee, or 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 adjacent properties 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 and/or abatement, and shall survive the expiration 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 shall indemnify, defend, reimburse and hold Lessee, its employees and lenders, harmless from and against any and all environmental damages, including the cost of remediation, which result from Hazardous Substances which existed on the Premises prior to Lessee's occupancy or which are caused by the gross negligence or willful misconduct of Lessor, its agents or employees. Lessor's obligations, as and when required by the Applicable Requirements, shall include, but not be limited to, the cost of investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration or termination of this Lease. (f) 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 prior to Lessee's occupancy, 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 access to the Premises at reasonable times in order to carry out Lessor's investigative and remedial responsibilities. (g) Lessor Termination Option. If a Hazardous Substance Condition (see Paragraph 9.1(e)) occurs during the term of this Lease, unless Lessee is legally responsible therefor (in which case Lessee shall 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 Lessor's expense, in which event this Lease shall continue in full force and effect, or (ii) if the estimated cost to remediate such condition exceeds 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 notice. 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 then monthly Base Rent or $100,000, whichever is greater. Lessee shall provide Lessor with said funds or satisfactory assurance thereof within 30 days following such commitment. In such event, this Lease shall continue in full force 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 notice and provide the required funds or assurance thereof within the time provided, this Lease shall terminate as of the date specified in Lessor's notice of termination.

6.3 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 Lessor's engineers and/or consultants which relate in any manner to the such Requirements, without regard to whether such 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 to 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 suspected seepage, pooling, dampness or other condition conducive to the production of mold; or (ii) any mustiness or other odors that might indicate the presence of mold in the Premises. In addition, Lessee shall provide copies of all relevant material safety data sheets (MSDS) to Lessor within 10 days of the receipt of a written request therefor. In addition, Lessee shall provide Lessor with copies of its business license, certificate of occupancy and/or any similar document within 10 days of the receipt of a written request therefor.

6.4 Inspection; Compliance. Lessor and Lessor's "Lender" (as 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 a 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 as such inspection is reasonably related to the violation 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 a written request therefor.

7. Maintenance; Repairs, Utility Installations; Trade Fixtures and Alterations.

7.1 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 (Lessors Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at Lessee's sole expense, keep the Premises, Utility Installations (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 vessels, fire protection system, fixtures, walls (interior and exterior), foundations, ceilings, roofs, roof drainage systems, floors, windows, doors, plate glass, skylights, landscaping, driveways, parking lots, fences, retaining walls, signs, sidewalks and parkways located in, on, or adjacent to the Premises. 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) below. Lessee's obligations shall include restorations, replacements or renewals when J K tl

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necessary to keep the Premises and all improvements thereon or a part thereof in good order, condition and state of repair. Lessee shall, during the term of this Lease, keep the exterior appearance of the Building in a first-class condition (including, e.g. graffiti removal) consistent with the exterior appearance of other similar facilities of comparable age and size in the vicinity, including, when necessary, the exterior repainting of the Building. (b) 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 improvements, if any, if and when installed on the Premises: (i) HVAC equipment, (ii) boiler, and pressure vessels, (iii) fire extinguishing systems, including fire alarm and/or smoke detection, (iv) landscaping and irrigation systems, (v) roof covering and drains, and (vi) clarifiers. However, Lessor 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 to Perform. If Lessee fails to perform Lessee's obligations under this Paragraph 7.1, Lessor 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 obligations 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 125% of the cost thereof.
(d) Replacement. Subject to Lessee's indemnification of Lessor as set forth in Paragraph 8.7 below, and without relieving Lessee of liability resulting from Lessee's failure 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 replacing such item, 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 60 (ie. 1/60th 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 (Condition), 2.3 (Compliance), 9 (Damage or Destruction) and 14 (Condemnation), it is intended by the Parties hereto that Lessor have no obligation, in any manner whatsoever, to repair and maintain the Premises, or the equipment therein, all of which obligations are intended to be that of the Lessee. It is the intention of the Parties that the terms of this Lease govern the respective obligations of the Parties as to maintenance and repair of the Premises, and they expressly waive 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 fixtures, 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 addition or deletion. "Lessee Owned Alterations and/or Utility Installations" are defined as Alterations and/or Utility Installations 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 Utility 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 to 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 shall not make or permit any roof 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 and/or 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 detailed plans. Consent shall be deemed conditioned upon Lessee's: (i) acquiring all applicable governmental permits, (ii) furnishing Lessor with copies of both the permits and the plans and specifications prior to commencement of the work, and (iii) compliance with all conditions of said permits and other Applicable Requirements in a prompt and expeditious manner. Any Alterations or Utility Installations shall be performed in a 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 one 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 Lessee's posting an additional Security Deposit with Lessor.
(c) Liens; Bonds. Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use on the Premises, which claims are or may be secured by any mechanic's or materialmen'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, at its sole expense defend and protect itself, Lessor and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof. If Lessor shall require, Lessee shall furnish 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. If Lessor elects to participate in any such action, Lessee shall pay Lessor's 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 all 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 Utility 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 earlier than 90 and not later than 20 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 surrender 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 VKV

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same condition as delivered to Lessee on the Start Date with NO allowance for ordinary wear and tear. Lessee shall repair any damage occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee owned Alterations and/or Utility Installations, fumishings, and equipment as well as the removal of any storage tank installed by or for Lessee. Lessee shall 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) to the level specified in Applicable Requirements. Trade Fixtures shall remain the property of Lessee and shall be removed by Lessee. Any personal property of Lessee not removed on or before the Expiration Date or any earlier 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 For Insurance. Lessee shall pay for all insurance required under Paragraph 8 except to the extent of the cost attributable to liability insurance carried by Lessor under Paragraph 8.2(b) in excess of $2,000,000 per occurrence. Premiums for policy periods commencing prior to or extending beyond the Lease term shall be prorated to correspond to the Lease term. Payment shall be made by Lessee to Lessor within 10 days following receipt of an invoice.

8.2 Liability Insurance.
(a) 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 upon or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $2,000,000 per occurrence with an annual aggregate of not less than $4,000,000. 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 -Managers 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 liability 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 liability of Lessee nor relieve Lessee of any obligation hereunder. Lessee shall provide an endorsement on its liability policy(ies) which provides that its insurance shall be primary to and not contributory with any similar insurance 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 to be maintained by Lessee. Lessee shall not be named as an additional insured therein.

8.3 Property Insurance - Building, Improvements and Rental Value. (a) Building and Improvements. The Insuring Party shall obtain and keep in force a policy or policies in the name of Lessor, with loss payable to Lessor, any ground -lessor, and to any Lender insuring loss or 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 in no event more than the commercially reasonable and available insurable value thereof. Lessee Owned Alterations and Utility Installations, Trade Fixtures, and Lessee's personal property shall be insured by Lessee not by Lessor. If the coverage is available 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 earthquake unless required by a Lender), including coverage for debris removal and the enforcement of any Applicable Requirements requiring the upgrading, demolition, 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.S. 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 occurrence, and Lessee shall be liable for such deductible amount in the event of an Insured Loss.
(b) Rental Value. The Insuring Party shall obtain and keep in force a policy 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. Lessee shall be liable for any deductible amount in the event of such loss.
(c) Adjacent Premises. If the Premises are part of a larger building, or of a group of buildings owned by Lessor which are adjacent to the Premises, the Lessee shall pay for any increase in the premiums for the property insurance of such building or buildings if said increase is caused by Lessee's acts, omissions, use or occupancy of the Premises.

8.4 Lessee's Property; Business Interruption Insurance; Worker's Compensation Insurance. (a) Property Damage. Lessee shall obtain and maintain insurance coverage on all of Lessee's personal property, Trade Fixtures, and Lessee Owned Alterations and Utility Installations. 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 loss of earnings attributable to all perils commonly insured against by prudent lessees in the business of Lessee or attributable to prevention of access to the Premises as a result of such perils.
(c) 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 Policyholders Rating" of at least A-, VII, as set 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 J K it

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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 to 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, procure and maintain the same.

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 or 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 harmless 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 and/or damages, liens, judgments, penalties, attorneys' and consultants' fees, expenses and/or liabilities arising out of, involving, or in connection with, the use and/or 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 circumstances for: (i) 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 upon the Premises or upon other portions of the building of which the Premises are a part, or from other sources or places, (ii) any damages arising from any act or neglect of any other tenant of Lessor or from the failure of Lessor or its agents to enforce the provisions of any other lease in the Project, or (iii) injury to Lessee's business or for any loss of income or profit therefrom. Instead, it 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 any 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. Accordingly, 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 notice to Lessee, by an amount equal to 15% 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 risk/costs that Lessor will incur by reason of Lessee's failure to maintain the required insurance. Such increase in Base Rent shall in no event constitute a waiver of Lessee's Default or Breach with respect to the failure to maintain such insurance, prevent the exercise of any of the other rights and remedies granted hereunder, nor relieve Lessee of its obligation to maintain the insurance specified in this Lease.

9. 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 Alterations and Utility Installations, which can reasonably be repaired in 6 months or less from the date of the damage or destruction. 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. (b) "Premises Total Destruction" shall mean damage or destruction to the Premises, other than Lessee Owned Alterations and Utility Installations and Trade Fixtures, which cannot reasonably be repaired in 6 months or less from the date of the damage or destruction. 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. (c) "Insured Loss" shall mean damage or destruction to improvements on the Premises, other 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 occurrence to their condition existing immediately prior thereto, including demolition, debris removal and upgrading required by the operation of Applicable Requirements, and without deduction for depreciation. (e) "Hazardous Substance Condition" shall mean the occurrence or discovery of a condition involving the presence of, or a contamination by, a Hazardous Substance , in, on, or under the Premises which requires remediation.

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 full force and effect; provided, however, that Lessee shall, at Lessor's election, make the repair of any damage or destruction the total cost to repair 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 (except as to the deductible which is Lessee's responsibility) 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 improvements, full replacement cost insurance coverage was not commercially reasonable and available, Lessor shall have no obligation to pay for the shortage in insurance proceeds or to fully restore the unique aspects of the Premises unless Lessee provides Lessor with the funds to cover same, or adequate assurance thereof, within 10 days following receipt of written notice of such shortage and request therefor. If Lessor receives said funds or adequate assurance thereof within said 10 day period, the party responsible for making the repairs shall complete them as soon as reasonably possible and this Lease shall remain in full force and effect. If such funds or assurance are not received, Lessor may nevertheless elect by written notice to Lessee within 10 days thereafter to: (i) make such 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 (ii) have this Lease terminate 30 days thereafter. Lessee

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shall 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 Premises 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 soon as reasonably possible at Lessor's expense, in which event this Lease shall continue in full force and effect, or (ii) terminate this Lease by giving written notice to Lessee within 30 days 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 shall 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 a 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.

9.5 Damage Near End of Term. If at any time during the last 6 months of this Lease there is damage for which the cost to repair exceeds one month's Base Rent, whether or not an Insured Loss, Lessor may terminate this Lease effective 60 days following the date of occurrence of such damage by giving a written termination notice 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 Lessor with any shortage in insurance proceeds (or adequate assurance thereof) needed to make the repairs on or 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 (ii) the day prior to the date upon which such option expires. If Lessee duly exercises such option during such 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, repair such damage as soon as reasonably possible and this Lease shall continue in full force and effect. If Lessee fails to exercise such option and provide such funds or assurance during such period, then this Lease shall terminate on the date specified in the termination notice and Lessee's option shall be extinguished.

9.6 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 Rent payable by Lessee for the period required for the repair, 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 received 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 is 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, Lessee may, at any time prior to the commencement of such repair or restoration, give written notice to Lessor and to any Lenders of which Lessee has actual notice, of Lessee'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 repair or restoration is not commenced within 30 days thereafter, this Lease shall terminate as 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" shall mean either the unconditional authorization of the preparation of the required plans, or the beginning of the actual work on the Premises, whichever first occurs.

9.7 Termination; Advance Payments. Upon termination of this Lease pursuant to Paragraph 6.2(g) or Paragraph 9, an equitable adjustment shall be made conceming advance Base Rent and any other advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee's Security Deposit as has not been, or 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 Premises or the Project, Lessor's 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 Building address and where the proceeds so generated are to be applied by the city, county or other local taxing authority of a jurisdiction within which the Premises are located. Real Property Taxes shall also 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 Premises, and (ii) levied or assessed on machinery or equipment provided by Lessor to Lessee pursuant to this Lease.

10.2 Payment of Taxes. In addition to Base Rent, Lessee shall pay to Lessor an amount equal to the Real Property Tax installment due at least 20 days prior to the applicable delinquency date. If any such installment shall cover any period of time prior to or after the expiration or termination of this Lease, Lessee's share of such installment shall be prorated. In the event Lessee incurs a late charge on any Rent payment, Lessor may estimate the current Real Property Taxes, and require that such taxes be paid in advance to Lessor by Lessee monthly in advance with the payment of the Base Rent. Such monthly payments shall be an amount equal to the amount of the estimated installment of taxes divided by the number of months remaining before the month in which said installment becomes delinquent. When the actual amount of the applicable tax bill is known, the amount of such equal monthly advance payments shall be adjusted as required to provide the funds needed to pay the applicable taxes. If the amount collected by Lessor is insufficient to pay such Real Property Taxes when due, Lessee shall pay Lessor, upon demand, such additional sum as is necessary. Advance payments may be intermingled with other moneys of Lessor and shall not bear interest. In the event of a Breach by Lessee in the performance of its obligations under this Lease, then any such advance payments may be treated by Lessor as an additional Security Deposit.

10.3 Joint Assessment. If the Premises are not separately assessed, Lessee's liability shall be an equitable proportion of the Real Property Taxes for all of the land and improvements included within the tax parcel assessed, such proportion to be conclusively determined by Lessor from the respective valuations assigned in the assessors work sheets or such other information as may be reasonably available.

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property of Lessee. When possible, Lessee shall cause its Lessee Owned Alterations and Utility 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 Lessee's said property 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 to 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. If any such services are not separately metered or billed to Lessee, Lessee shall pay a reasonable proportion, to be determined by Lessor, of all charges jointly metered or billed. 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 utility or service due to riot, strike, labor dispute, breakdown, accident, repair or other cause beyond Lessor's reasonable control or in cooperation with governmental request or directions.

12. Assignment and Subletting.

12.1 Lessor's Consent Required.
(a) Lessee shall not voluntarily or by operation of law assign, transfer, mortgage 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 on a national stock exchange, a change in the control of Lessee shall constitute an assignment requiring consent. The transfer, on a cumulative basis, of 25% or more of the voting control of Lessee shall constitute a change in control for this purpose. (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 occurs, 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 to said transaction or transactions constituting such reduction, whichever was or is greater, shall be considered an assignment of this Lease to which Lessor may withhold its consent. "Net Worth of Lessee" shall mean the net worth of Lessee (excluding any guarantors) established under generally accepted accounting principles. (d) An assignment or subletting without consent shall, at Lessor's option, be a Default curable after notice per Paragraph 13.1(c), or a noncurable Breach without the necessity of any notice and grace period. If Lessor elects to treat such unapproved assignment or subletting as a noncurable Breach, Lessor may either: (i) terminate this Lease, or (ii) upon 30 days written notice, increase the monthly Base Rent to 125% of the Base Rent 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 125% of the price previously in effect, and (ii) all fixed and non fixed rental adjustments scheduled during the remainder of the Lease term shall be increased to 125% of the scheduled adjusted rent.
(e) Lessee's remedy for any breach of Paragraph 12.1 by Lessor shall be limited to compensatory damages and/or injunctive relief.
f) Lessor may reasonably withhold consent to a proposed assignment or subletting if Lessee is in Default at the time consent is requested.
(g) Notwithstanding the foregoing, allowing a de minimis portion of the Premises, ie. 20 square feet or less, to 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 Lessor's consent, no assignment or subletting shall: (i) 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 (iii) alter the primary liability of Lessee for the payment of Rent or for the performance of any other obligations to be performed by Lessee. (b) 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 estoppel 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 anyone else responsible for the performance of Lessee's obligations under this Lease, including any assignee or sublessee, without first exhausting Lessor's remedies against any other person or entity responsible therefor to Lessor, or any security held by Lessor.
(e) Each request for consent to an assignment or subletting shall be in writing, accompanied by information relevant to 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 $1,000 as consideration for Lessor's considering and processing said request.

Lessee agrees to provide Lessor with such other or additional information and/or documentation as may be reasonably requested. (See also Paragraph 36)
(f) Any assignee of, or sublessee under, this Lease shall, by reason of accepting such assignment, entering into 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 assignment or sublease to which Lessor has specifically consented to in writing.
(g) Lessor's consent to any assignment or subletting shall not transfer to the assignee 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:
(a) Lessee hereby assigns and transfers to Lessor all of Lessee's interest in all 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 said 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 sublessee. Lessee hereby irrevocably authorizes and directs any J 1)

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such sublessee, upon receipt of a written notice from Lessor stating that a Breach exists in the performance of Lessee's obligations under this Lease, to pay to Lessor all 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 inquire 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 said option to the expiration of such sublease; provided, however, Lessor shall not be liable for any prepaid rents or security deposit paid by such sublessee 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 sublessee, 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 to comply with or perform any of the terms, covenants, conditions or Rules and Regulations under this Lease. A "Breach" is defined as the occurrence of one or more of the following Defaults, and the failure of Lessee to cure such Default within any applicable grace period:
(a) The abandonment of the Premises; or the vacating of the Premises without providing a commercially reasonable level of security, or where the coverage of the property insurance described in Paragraph

8.3 is jeopardized as a result thereof, or without providing reasonable assurances to minimize potential vandalism. (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 evidence of insurance or surety bond, or to fulfill 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 DEPOSIT SHALL NOT CONSTITUTE A WAIVER

OF ANY OF LESSOR'S RIGHTS, INCLUDING LESSOR'S RIGHT TO RECOVER POSSESSION OF 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, and/or 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, (ii) 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 42, (viii) material safety data 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 rules adopted under Paragraph 40 hereof, other than those described in subparagraphs 13.1(a), (b), (c) 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 to completion.
(f) The occurrence of any of the following events: (i) the making of any general arrangement or assignment for the benefit of creditors; (ii) becoming a "debtor" as defined in 11 U.S.C. §101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same is dismissed within 60 days); (iii) the appointment of a trustee or receiver to take 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 at the Premises or of Lessee's interest in this Lease, where such seizure is not discharged within 30 days; provided, however, in the event that any provision of this subparagraph is contrary to any applicable law, such provision shall be of no force or effect, and not affect the validity of the remaining provisions. (g) The discovery that any financial statement of Lessee or of any Guarantor given to Lessor was materially false.
(h) If the performance of Lessee's obligations under this Lease is guaranteed: (i) the death of a Guarantor, (ii) the termination of a Guarantor's liability with respect to this Lease other than in accordance with the terms of such guaranty, (iii) a Guarantor's becoming insolvent or the subject of a bankruptcy filing, (iv) a Guarantor's refusal to honor the guaranty, or (v) a Guarantor'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 exceeds 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 to 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 option, perform such duty or obligation on Lessee's behalf, including but not 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 125% 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 earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that the Lessee proves could have been reasonably avoided; (iii) the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that the Lessee proves could be reasonably avoided; and (iv) any other amount necessary to compensate Lessor for 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 J K 4l

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commission paid 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 Lessor's right to recover any damages to which Lessor is otherwise entitled. If termination of this Lease is obtained through 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 or any part thereof in a 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 shall also constitute the notice required by Paragraph 13.1. In such case, the applicable grace period required by Paragraph 13.1 and the unlawful 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 of 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 a receiver to protect the Lessor's interests, shall not constitute a termination of the Lessee's right to possession.
(c) Pursue any other remedy now or hereafter available under the laws or judicial decisions of the state wherein 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 occurring or accruing during the term hereof or by reason 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 Lessee's full and faithful performance of all 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 to 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 upon 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 incur by reason of such late payment. Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee's Default or Breach with respect 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 installments of Base Rent, then notwithstanding any provision of this Lease to the contrary, Base Rent shall, at Lessor's option, become due and payable quarterly in advance.

13.5 Interest. Any monetary payment due Lessor hereunder, other than late charges, not received by Lessor, when due shall bear interest from the 20th day after it was due. The interest ("Interest") charged shall be computed at the rate of 18% 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 45 days after receipt by Lessor, and any Lender whose name and address shall have been fumished 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 45 days are reasonably required for its performance, then Lessor shall not be in breach if performance is commenced within such 45 day period and thereafter diligently pursued to completion. (b) Performance by Lessee on Behalf of Lessor. In the event that neither Lessor nor Lender cures said breach within 45 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 from Rent the actual and reasonable cost to perform such cure, provided, however, that such offset shall not exceed an amount equal to the greater of one month's Base Rent or the Security Deposit, reserving Lessee's right to seek reimbursement from Lessor for any such expense in excess of such offset. Lessee shall 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 more than 10% of the Building, or more than 25% of that portion of the Premises not occupied by any building, is taken by Condemnation, Lessee may, at Lessee's option, to be exercised in writing within 10 days after Lessor shall have given Lessee written notice of such taking (or in the absence of such notice, within 10 days after the condemning authority shall have taken possession) terminate this Lease as of the date the condemning authority takes such possession. If Lessee does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the Base Rent shall be reduced in proportion to the reduction in utility of the Premises caused by such Condemnation. Condemnation awards and/or payments shall be the property of Lessor, whether such award shall be made as compensation for diminution in value of the leasehold, the value of the part taken, or for severance damages; provided, however, that Lessee shall be entitled to any compensation paid by the condemnor for Lessee's relocation expenses, loss of business goodwill and/or Trade Fixtures, without regard to whether or not this Lease is terminated pursuant to the provisions of this Paragraph. All Alterations and Utility Installations made to the Premises by Lessee, for purposes of Condemnation only, shall be considered the property of the Lessee and Lessee shall be entitled to any and all compensation which is payable therefor. In the event that this Lease is not terminated by reason of the Condemnation, Lessor shall repair any damage to the Premises caused by such Condemnation.

15. Brokerage Fees.

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unlc Lc cor and the Brokcrs othcrwisc agrcc in writing, Lcxor agrccs that: (a) if Lccsco cxcrcisos any Option, (b)

15.2 Assumption of Obligations. Any buyer or transferee of Lessor's interest in this Lease shall be deemed to have assumed Lessor's obligation hereunder. Brokers shall be third party beneficiaries of the provisions of Paragraphs 1.9, 15, 22 and 31. If Lessor fails to pay to Brokers any amounts due as and for brokerage fees pertaining to this Lease when due, then such amounts shall accrue Interest. In addition, if Lessor fails to pay any amounts to Lessee's Broker when due, Lessee'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, Lessee's Broker shall be deemed to be a third party beneficiary of any commission agreement entered into by and/or between Lessor and Lessor's Broker for the limited purpose of collecting any brokerage fee owed.

15.3 Representations and Indemnities 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 (other 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 costs, expenses, attomeys' fees reasonably incurred with respect thereto.

16. Estoppel 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 available, plus such additional information, confirmation and/or statements as may be reasonably requested by the Requesting Party. (b) If the Responding Party shall fail to execute or deliver the Estoppel 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, (ii) there are no uncured defaults in the Requesting Party's performance, and (iii) if Lessor is the Requesting Party, not more than one month's rent has been paid in advance. Prospective purchasers and encumbrancers may rely upon the Requesting Party's Estoppel Certificate, and the Responding Party shall be estopped from denying the truth of the facts contained in said Certificate. 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 contemplated 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 Estoppel 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 15% 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 Estoppel 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 sell the Premises, or 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 financial statements shall be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set 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, or, 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. Upon 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 foregoing, the obligations and/or 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 all 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 or contemporaneous agreement or understanding shall 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.

23.1 Notice Requirements. All notices required or permitted by this Lease or applicable law shall be in writing and may be delivered in person (by hand or by courier) 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.

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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 shall 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 delivered via delivery or mail. If notice 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. Lessor's consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Lessor's consent to, or approval of, any subsequent or similar act by Lessee, or be construed as the basis of an estoppel to enforce 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 and/or 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.
(c) 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 IS INCONSISTENT WITH THIS LEASE.

25. Disclosures 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, a Lessor or Lessee 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: To 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 performance 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 property that are not known to, or 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.
(ii) Lessee's Agent. An agent can agree to act as agent for the 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, either 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 exercise of reasonable skills and care in performance 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 property that are not known to, or 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 more associate licenses, can legally be the agent 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 (ii). In representing both Lessor and Lessee, the agent may not without the express permission of the respective Party, disclose 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 real estate agent is a person qualified to advise about real estate. If legal or tax advice is desired, consult a competent professional. (b) 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 Broker's liability shall not be applicable to any gross negligence or willful misconduct of such Broker. (c) Lessor and Lessee 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 Holdover. 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 shall be increased to 150% of the Base Rent applicable immediately preceding the expiration or termination. Holdover Base Rent shall be calculated on monthly basis. Nothing contained herein shall be construed as consent by Lessor to any holding over by Lessee.

27. Cumulative Remedies. No remedy or election 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 be considered a part of this Lease. Whenever required by the context, the singular shall include the plural and vice versa. This Lease shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if both Parties had prepared it.

29. Binding Effect; Choice of Law. This Lease shall be binding upon the Parties, their personal representatives, successors and assigns and be govemed 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.

30.1 Subordination. This Lease and any Option granted hereby shall be subject and subordinate to any ‘14.1

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ground lease, mortgage, deed of trust, or other hypothecation or security device (collectively, "Security Device"), now or hereafter placed upon the Premises, to any and all advances made on the security thereof, and to all 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 no 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 Attomment. 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 (i) Lessee shall, subject to the non -disturbance provisions of Paragraph 30.3, attom 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 lessor or with respect to events occurring prior to acquisition of ownership; (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 not paid or credited to such new owner.

30.3 Non -Disturbance. With respect to Security Devices entered into by Lessor after the execution of this Lease, Lessee'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 hereof and attorns 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 request 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, attornment and/or Non - Disturbance Agreement provided for herein.

31. Attorneys' Fees. If any Party or Broker brings an action or proceeding involving the Premises whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or 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 all attorneys' 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 ($1,000 is a reasonable minimum per occurrence for such services and consultation).

32. Lessor's Access; Showing Premises; Repairs. Lessor and Lessor's agents shall have the right to enter the Premises at any time, in the case of an emergency, and otherwise 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 to 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 to be conducted, any auction upon the Premises without Lessor's prior written consent. Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to permit an auction.

34. Signs. Lessor may place on the Premises ordinary "For Sale" signs at any time and ordinary "For Lease" signs during the last year of the term hereof. Except for ordinary "for sublease" signs, Lessee shall not place any sign upon the Premises without Lessor's prior written consent. All signs must comply with all Applicable Requirements.

35. Termination; Merger. Unless specifically stated otherwise in writing by Lessor, the voluntary or other 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 or lesser estate in the Premises; provided, however, that Lessor may elect to continue any one or all existing subtenancies. Lessor's failure within 10 days following any such event to elect to the contrary by written notice to the holder of any such lesser interest, shall constitute Lessor's 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. Lessor's actual reasonable costs and expenses (including but not limited to architects', attomeys', 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 acknowledgment 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 time 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.

37. Guarantor.

37.1 Execution. The Guarantors, if any, shall each execute a guaranty in the form most recently published by an appropriate agency, and each such Guarantor shall have the same obligations as Lessee under this Lease.

37.2 Default. It shall constitute a Default of the Lessee if any Guarantor fails or refuses, upon request to provide: (a) evidence of the execution of the guaranty, including the authority of the party signing on Guarantor's JK1l
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behalf to obligate Guarantor, and in the case of a corporate Guarantor, a certified copy of a resolution of its board of directors authorizing the making of such guaranty, (b) current financial statements, (c) an Estoppel 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 Lessee's part to be observed and performed under this Lease, Lessee shall have quiet possession and quiet enjoyment of the Premises during the term hereof.

39. Options. If Lessee is granted any Option, as defined below, then the following provisions shall apply:

39.1 Definition. "Option" shall mean: (a) 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 property of Lessor; (c) the right to purchase, the right of first offer to purchase or the right of first refusal 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 original 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.

39.4 Effect of Default on Options.
(a) 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), (iii) 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, whether or not the Defaults are cured, during the 12 month period immediately preceding the exercise of the Option. (b) The period of time within which an 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, notwithstanding 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 after such Rent becomes due (without any necessity of Lessor to give notice thereof), or (ii) if Lessee commits a Breach of this Lease.

40. Multiple Buildings. If the Premises are a part of a group of buildings controlled by Lessor, Lessee agrees that it will abide by and conform to all reasonable rules and regulations which Lessor may make from time to time for the management, safety, and care of said properties, including the care and cleanliness of the grounds and including the parking, loading and unloading of vehicles, and to cause its employees, suppliers, shippers, customers, contractors and invitees to so abide and conform. Lessee also agrees to pay its fair share of common expenses incurred in connection with such rules and regulations.

41. Security Measures. Lessee hereby acknowledges that the Rent payable 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 all responsibility for the protection of the Premises, Lessee, its agents and invitees and their property from the acts of third parties.

42. Reservations. Lessor reserves to itself the right, from time to time, to grant, without the consent or joinder of Lessee, such easements, rights and dedications that Lessor deems necessary, and to cause the recordation of parcel maps and restrictions, so long as such easements, rights, dedications, maps and restrictions do not unreasonably interfere with the use of the Premises by Lessee. Lessee agrees to sign any documents reasonably requested by Lessor to effectuate any such easement rights, dedication, map or restrictions.

43. Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of money to 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 to 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 suit for the recovery of sums paid "under protest" with 3 months shall be deemed to have waived its right to protest such payment.

44. Authority; Multiple Parties; Execution.
(a) If either Party hereto 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 to execute and deliver this Lease on its behalf. Each Party shall, within 30 days after request, deliver to 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 one of the named Lessees shall be empowered to execute any amendment to this Lease, or other document ancillary thereto and bind all of the named Lessees, and Lessor may rely on the same as if all of the named Lessees had executed such document. (c) This Lease may be executed by the Parties in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

45. Conflict. Any conflict between the printed provisions of this Lease and typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions.

46. 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. As long as they do not materially change Lessee's obligations hereunder, Lessee agrees to make such reasonable non -monetary modifications to this Lease as may be reasonably required by a Lender in connection with the obtaining of normal 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 and/or Brokers arising out of this Lease ❑ is Hopis not attached to this Lease.

50. Accessibility; Americans with Disabilities Act.
(a) The Premises: H have not undergone an inspection by a Certified Access Specialist (CASp). ❑ have undergone an inspection by a Certified Access Specialist (CASp) and it was determined that the Premises met all applicable construction -related accessibility standards pursuant to California Civil Code §55.51 et seq. ❑ have undergone an inspection by a Certified Access Specialist (CASp) and it was determined that the Premises did not meet all applicable construction -related accessibility standards pursuant to California Civil Code §55.51 et seq. (b) Since compliance with the Americans with Disabilities Act (ADA) is dependent upon Lessee's I V4)

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specific use of the Premises, Lessor makes no warranty or representation as to whether or not the Premises comply with ADA or any similar legislation. In the event that Lessee'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 IS MADE 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. SEEK 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, AND THE SUITABILITY OF THE PREMISES FOR LESSEE'S INTENDED USE.

The parties hereto have executed this Lease at the place and on the dates specified above their respective signatures.

Executed at: Bellflower, CA
On: November 1, 2025
By:

Nam Printee :: VinceJit Ka ar Vaghar
Title: Manager
3351 Scott reet„ LLC
Address:

Telephone: 310.709.5179
Facsimile:

Email: [email protected]
Email:

Executed at: Bellflower, CA
On: November 1, 2025
By LESSEE 95 e5iiAve,
ff�- Dvl 7
By: �_ __ -- —
Na r-Prtritcs-Tir Vaghar Farshchian
Title: Manager
Address:

Telephone: 650.468.5218
Facsimile:

Email: [email protected]
Email:
310.709.5179 650.468.5218
[email protected] [email protected]
HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 38 71

FIRST ADDENDUM TO THAT CERTAIN SINGLE TENANT NET LEASE DATED NOVEMBER 1, 2025 BY AND BETWEEN 3351 Scott Street, LLC, ("LESSOR") AND 9535 Artesia Ave, Inc ("LESSEE") FOR THE PROPERTY LOCATED AT 9535 ARTESIA BLVD, BELLFLOWER, CALIFORNIA ("PREMISES").

50. Base Rent Schedule. Base Rent schedule shall be as follows.

Term: 10 Years Zero Months
December 1, 2025 — November 30, 2026
December 1, 2026 — November 30, 2027
December 1, 2027 — November 30, 2028
December 1, 2028 — November 30, 2029
December 1, 2029 — November 30, 2030
December 1, 2030 — November 30, 2031
December 1, 2031 — November 30, 2032
December 1, 2032 — November 30, 2033
December 1, 2033 — November 30, 2034
December 1, 2034 — November 30, 2035
December 1, 2034 — November 30, 2040
Base Monthly Rent
$20,000.00 NNN
$20,600.00 NNN
$21,218.00 NNN
$21,855.00 NNN
$22,511.00 NNN
$23,186.00 NNN
$23,882.00 NNN
$24,598.00 NNN
$25,336.00 NNN
$26,096.00 NNN
$30,000.00 NNN

51. Building Operating Expenses NNN Charges. In addition to the "Base Rent" in Paragraph 50 above, Lessee shall be responsible for their prorata share of the building operating expenses. Lessor shall establish a monthly budget (subject to change and updates) which will be due with the Base Rent. The following is an attempt to identify some of these costs but is not an exhaustive list.

Current Estimated Operating Budget:

Property Taxes $ 15,000.00
Insurance $ 3,500.00
Maintenance $ 7,200.00
Security and Professional $
Capital Maintenance Reserve $ 3.225.00
TOTAL $ 28,925.00
$ 28,925.00 _ 12 Months = $2,357.92 Per Month

52. Condition — "AS IS": The building was originally constructed in approximately the 1950s the condition of the building, the plumbing, electrical, mechanical and other systems in the building and the Premises is being accepted by Lessee in its condition as exists on the date of execution of this Lease by Lessor subject to all applicable laws.

Lessor has made no representations, written or oral to Lessee regarding the physical condition of the building, the fitness of the Premises for Lessee's intended use or with regard to any applicable laws. Because of the age of the building, it may not conform to current building codes and ordinances. Except for Lessor's work and any obligations of Lessor set out in the Lease, Lessor shall have no obligations to make any improvements, repairs or to do any maintenance work in the Premises. Except for the exterior items and maintenance obligations hereunder, (i) Lessor has made no representations or warranties with regard to the Premises, or the building and (ii) Lessor has no obligation to repair, improve, or maintain any portion of the building or the Premises.

53. Signage. Lessee shall be allowed signage on the subject building at Lessee's expense and subject to the City of Bellflower's approval. Lessee shall submit drawings to Lessor for Lessor's approval prior to submitting to the City.

Lessor's approval shall not be unreasonably withheld.

54. Common Area Operating Expenses: Are defined for the purposes of this Lease, as "additional rent" and include, but are not limited to, the time spent by the Lessor's manager or representative to attend any trial, hearing, mediation, arbitration arising from Lessee's breach of any obligation under this Lease, including any Unlawful Detainer trials or hearings, at a rate of $250/hour.

AGREED AND ACCEPTED:

By LESSOR- 351 Scott Si eet, LC
By:

Nam Prin'! d'Kamyr Va r
Title: Manager
Date: November 1, 2025
By LESSEE: 9535 Artesia Ave, Inc
Na . n Vaghar Farshchian
Title: Manager
Date: November 1, 2025
HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 39 72

CALIFORNIA SALE/LEASE

AMERICANS WITH DISABILITIES ACT,

HAZARDOUS MATERIALS, AND TAX DISCLOSURE
The Americans With Disabilities Act is intended to make many business establishments equally accessible to persons with a variety of disabilities; modifications to real property may be required. State and local laws also may mandate changes. The real estate brokers in this transaction are not qualified to advise you as to what, if any, changes may be required now, or in the future. Owners and tenants should consult the attorneys and qualified design professionals of their choice for information regarding these matters. Real estate brokers cannot determine which attorneys or design professionals have the appropriate expertise in this area.

Various construction materials may contain items that have been or may in the future be determined to be hazardous (toxic) or undesirable and may need to be specifically treated/handled or removed. For example, some transformers and other electrical components contain PCBs, and asbestos has been used in components such as fire -proofing, heating and cooling systems, air duct insulation, spray -on and tile acoustical materials, linoleum, floor tiles, roofing, dry wall and plaster. Due to prior or current uses of the Property or in the area, the Property may have hazardous or undesirable metals (including lead -based paint), minerals, chemicals, hydrocarbons, or biological hazards (including, but not limited to, mold) or radioactive items (including electrical and magnetic fields) in soils, water, building components, above or below -ground containers or elsewhere in areas that may or may not be accessible or noticeable. Such items may leak or otherwise be released. Real estate agents have no expertise in the detection or correction of hazardous or undesirable items. Expert inspections are necessary. Current or future laws may require clean up by past, present and/or future owners and/or operators. It is the responsibility of the Seller/Lessor and Buyer/Tenant to retain qualified experts to detect and correct such matters and to consult with legal counsel of their choice to determine what provisions, if any, they may include in transaction documents regarding the Property.

Sellers/Lessors are required under California Health and Safety Code Section 25915 et seq. to disclose reports and surveys regarding asbestos to certain persons, including their employees, contractors, co -owners, purchasers and tenants. Buyers/Tenants have similar disclosure obligations. Sellers/Lessors and Buyers/Tenants have additional hazardous materials disclosure responsibilities to each other under California Health and Safety Code Section 25359.7 and other California laws. Consult your attorney regarding this matter, and make proper disclosures. 1625 S 7th St LLC is not qualified to assist you in this matter or provide you with other legal or tax advice.

Sale, lease and other transactions can have local, state and federal tax consequences for the seller/lessor and/or buyer/tenant. In the event of a sale, Internal Revenue Code Section 1445 requires that all buyers of an interest in any real property located in the United States must withhold and pay over to the Internal Revenue Service (IRS) an amount equal to ten percent (10%) of the gross sales price within ten (10) days of the date of the sale unless the buyer can adequately establish that the seller was not a foreigner, generally by having the seller sign a Non -Foreign Seller Certificate. Note that depending upon the structure of the transaction, the tax withholding liability could exceed the net cash proceeds to be paid to the seller at closing. California poses an additional withholding requirement equal to three and one-third percent (3-1/3%) of the gross sales price on all individuals (California residents and non- residents alike) and on entities with a last known street address outside of the State of California if the sale price exceeds $100,000. Consult your tax and legal advisor. Real estate brokers are not qualified to give legal or tax advice or to determine whether any other person is properly qualified to provide legal or tax advice.

LESSOR
En a >. 3351 Scott Stfeet. LLC
By:

Nam Pri Kamy • r Va
Title: Manager
Date: Novemebr 1, 2025
LESSEE
Entity N : / ihAve, c
/r
By: —
Na aghar Farshchian
Title: Manager
Date: November 1, 2025
Property Address: 9535 ARTESIA BLVD, BELLFLOWER, CALIFORNIA 90706 •
HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 40 73

EXHIBIT A

RULES AND REGULATIONS

1. No liquids of any type to be spilled or disposed of in paved areas.

2. No roof penetrations of any type are permittted without express writtten permission of Lessor. When permitted, such penetrations shall be Lessee"s expense and hot mopped by a licensed roofing contractor approved by Lessor.

3. No penetration of the concrete floor shall be permitted without express written permission of the Lessor.

4. Parking of vehicles shall be in stri
Jed parking stalls ONLY.

5. Trash Bin Enclosure: No other containers of any type will be permitted on the exterior of the premises except those delegated trash bins, so designated by the Lessor or approved by Lessor.

6. All signs must be located within glass window area . No signs allowed on concrete walls, landscape areas or sidewalk, without express written permission

7. Damage to the black top driveway area and concrete warehouse floors caused by Lessee's trucks shall be the responsibility of Lessee's to repair to Lessor's satisfaction.

8. Lessee agrees to submit plans to the Lessor of any proposed improvements for approval and Lessee shall apply and pay for all the necessary and required permits and fees to the appropiate agency having such jurisdication. All improvement work shall comply with Local, County, State and National codes and ordinances, and shall be installed by licensed contractors approvedby Lessor in a good and safe workman like manner. Lessee agrees to apply and pay for any permits, licenses, fees, etc. required for his occupancy and business use as determined by any respective authority having jurisdiction thereof.

9. Any wallpaper covering installed by Lessee must have vinyl backed and walls painted a flat enamel by the Lessee.

10. Lessee agrees to obtain a Business License and a Cerificate of Occupancy from the City for the unit leased. Upon receipt of the documents from the City, Lessee agrees to provide Lessor with copies.

11. Lessee agrees to promptly complete and return to Lessor a copy of the Hazardous Materials Inventory questionnaire and /or any other form so required by the Lessor.

12. Lesses shall not store any materials or objects outside of the Premises.

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03. Public Notification Map,
Mailing List it Public Poster

PUBLIC NOTIFICATION MAP, MAILING LIST
8 PUBLIC POSTER
State and City law require that property owners near
the project site must be notified by mail of public
hearings and pending actions on the subject site.

To accomplish this, a radius map and mailing labels
must be prepared at a 300 -foot radius of the subject
site(s). In addition, a notice of public hearing must be posted at the subject site; the content of the public
notice poster is subject to City approval.
1 HERB'S

Public Notification Map,
Mailing List & Public Poster
State and City law require that property owners near the project site must be notified by mail of public hearings and pending actions on the subject site. To accomplish this, a radius map and mailing labels must be prepared at a 300 -foot radius of the subject site(s). In addition, a notice of public hearing must be posted at the subject site; the content of the public notice poster is subject to City approval.

Herb's Diner has prepared the required radius map and mailing labels for the 300 -foot notification area surrounding the project site. These materials have been submitted in a separate sealed envelope, in accordance with State and City requirements.

We acknowledge that a public notice poster must also be displayed at the project site and confirm that we will post the notice once the content is approved by the City.

These materials
have been
submitted in a
separate sealed
envelope, in
accordance with
State and City
requirements.

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04. Copy of Cannabis State
License (or Application - if
Pending)

COPY OF CANNABIS STATE LICENSE
(OR APPLICATION — IF PENDING(
It is unlawful for any person to engage in a
cannabis -related business activity in the City unless
the person: (1( has a valid cannabis business permit
from the City; and (2( is in compliance with all
applicable State and local laws and regulations
pertaining to the cannabis business, including the
duty to obtain and maintain any required State
license(s).

Cannabis business permits that are issued must
be activated within 30 days after the public hearing
approving the cannabis business permit. Activation
occurs when the cannabis related business pays all
fees, accepts all conditions, provides evidence that it was issued a valid Conditional Use Permit that follows
the regulations of Title 17 of the Bellflower Municipal Code; and provides evidence that it applied with the
State of California of all applicable State permits and commences operations as determined by the City
Manager.

HERB'S

Copy of Cannabis State License
(or Application - if Pending)
It is unlawful for any person to engage in a cannabis -related business activity in the City unless the person: (1) has a valid cannabis business permit from the City; and (2) is in compliance with all applicable State and local laws and regulations pertaining to the cannabis business, including the duty to obtain and maintain any required State license(s).

Cannabis business permits that are issued must be activated within 30 days after the public hearing approving the cannabis business permit. Activation occurs when the cannabis related business pays all fees, accepts all conditions, provides evidence that it was issued a valid Conditional Use Permit that follows the regulations of Title 17 of the Bellflower Municipal Code; and provides evidence that it applied with the State of California of all applicable State permits and commences operations as determined by the City Manager.

Herb's Diner is prepared to file the state cannabis license with the DCC immediately upon local approval of the City of Bellflower.

Herb's Diner is
prepared to file
the state cannabis
license with the DCC
immediately upon
local approval of the
City of Bellflower,
HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 45 78

05. Business Plan

BUSINESS PLAN
A Business Plan must be submitted providing, at a
minimum, the following information:

1. A schedule for beginning operation, including (a)
narrative outlining any proposed construction and
improvements, and (b) a timeline for completion;

2. A budget for construction, operation, maintenance,
compensation for employees, equipment costs, utility
costs, and other operation and maintenance costs;

3. A pro forma for at least 3 years of operation;

4. How the cannabis -related business, including its
exterior areas and surrounding public areas, will be
managed to avoid becoming a nuisance or having im-
pact on its neighbors and the surrounding community;
and

5. Demonstration that the Applicant will implement
a local preference plan to hire City of Bellflower resi- dents at 200 percent above the "living wage" for the
federal poverty level for a family of two.

HERB'S

Business Plan
A Business Plan must be submitted providing, at a minimum, the following information:

1. A schedule for beginning operation, including (a) narrative outlining any proposed construction and improvements, and (b) a timeline for completion;

2. A budget for construction, operation, maintenance, compensation for employees, equipment costs, utility costs, and other operation and maintenance costs;

3. A pro forma for at least 3 years of operation;

4. How the cannabis -related business, including its exterior areas and surrounding public areas, will be managed to avoid becoming a nuisance or having impact on its neighbors and the surrounding community; and

5. Demonstration that the Applicant will implement a local preference plan to hire City of Bellflower residents at 200 percent above the "living wage" for the federal poverty level for a family of two.

Responses to items 1-5 above and all Minimum Requirements per the Cannabis — Related Business Permit Application are included within this section.

Introduction
This is the written Business Plan for 9535 ARTESIA BLVD, INC (dba Herb's Diner) (hereinafter sometimes referred to as "We", "Us", "Our", "Organization" or "Business"). This plan addresses and meets the requirements of City of Bellflower Municipal Code, Title 14, Chapter 17.94 and Council Resolution 17-44. Herb's Diner plans to comply, as applicable, with all Bellflower laws relative to medical cannabis.

Herb's Diner is a corporation registered with the Secretary of State in the state of California. We are seeking a commercial cannabis business license from the City of Bellflower and the state of California's Department of Cannabis Control.

Our business model
is guided by two key
factors: regulatory
requirements set
by state and local
governments, and
our mission -driven
commitments.

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 47 80

Our business model is guided by two key factors:
regulatory requirements set by state and local
governments, and our mission -driven commitments.

While cannabis retail stores have been in operation in the State of California since 2018, the industry is not without turmoil. Successful cannabis businesses must be run
by well -trained professionals who focus on regulatory
compliance, coupled with a focus on the needs of the
local community. Herb's Diner will operate compliantly, while focusing on the direct needs of its surrounding
community.

Herb's Diner will not only become a best -in -class business, but also a best -in -class employer. Having witnessed the well -documented mistakes of other cannabis businesses, Herb's Diner will remain hyper -focused on compliance,
culture, and operational excellence.

Applicant Qualifications

FRIEDA VAGHAR I OWNER / MANAGING

DIRECTOR
Frieda Vaghar is a highly accomplished professional with a lifelong commitment to health, wellness, and scientific excellence. With more than 25 years of experience in
pharmaceutical research and development at Syntex,
Roche, and Genentech, Ms. Vaghar built her career
on integrity, innovation, and evidence -based practice.

She has managed complex global research portfolios,
vendor relationships, and data systems across multiple
continents, demonstrating exceptional organizational skill and attention to regulatory compliance.

After retiring from the pharmaceutical industry, Ms.

Vaghar continued her mission to promote health and
well-being by entering the California cannabis industry in 2018. Drawing upon her scientific background, she
has consulted for multiple cannabis brands, focusing on public education and awareness of natural, plant -based remedies for common health conditions. Her approach
emphasizes responsibility, safety, and the therapeutic
potential of cannabis when used properly —values that
align directly with the City of Bellflower's goals for its licensed cannabis operators.

At Herb's Diner, Ms. Vaghar serves as a strategic advisor, lending her decades of experience in regulated industries to help guide compliance, quality assurance, and staff
education. She will support the operational team in
maintaining high standards of professionalism, safety,
and community engagement, ensuring the business
operates as a trusted and responsible member of the
Bellflower retail landscape.

Beyond her professional career, Ms. Vaghar has
demonstrated a lifelong dedication to service and
mentorship. She volunteers to help orphaned teenagers
prepare for college, serves as an art docent at Stanford University, and supports patient and family advocacy
programs at Stanford Hospital. These activities
highlight her compassion, integrity, and commitment
to community enrichment. Ms. Vaghar holds a B.S. in
Biology from the University of San Francisco and a B.A. from the Universite Paris-Sorbonne, and she maintains a clear criminal record.

ALIGNMENT WITH THE CITY OF BELLFLOWER'S
CANNABIS BUSINESS OWNER CRITERIA:

GOOD CHARACTER, HONESTY, AND INTEGRITY:

Ms. Vaghar's professional and volunteer record
demonstrates exceptional moral character and ethical
conduct. Her career in medical research and patient
advocacy is defined by honesty, transparency, and a
commitment to improving lives.

BACKGROUND AND REPUTATION:

Ms. Vaghar's reputation within the pharmaceutical and
health sectors reflects her professionalism, compassion, and intellectual rigor. Her work has consistently upheld the highest ethical and scientific standards, ensuring
that her involvement brings credibility and positive
recognition to the City of Bellflower.

BUSINESS COMPETENCE AND PRACTICAL EXPERIENCE:

With over 25 years of leadership in highly regulated
environments and recent experience consulting
within the cannabis industry, Ms. Vaghar possesses
the analytical, operational, and compliance expertise
necessary to support a successful cannabis business.

Her unique combination of corporate discipline
and wellness advocacy strengthens Herb's Diner's
commitment to responsible retail operations.

Ms. Vaghar embodies the professionalism, compassion,
and ethical grounding that define responsible cannabis
ownership in the City of Bellflower. Her contributions
will ensure that Herb's Diner operates not only as a
compliant and efficient business but as a respected
community partner promoting wellness and integrity.

LARRYTHACKER I CO-OWNER / DIRECTOR OF

OPERATIONS
Larry Thacker is a seasoned business operations
expert with more than 40 years of experience in
highly regulated industries. For 28 years, Mr. Thacker
owned and operated A-Med Health Care, a multi -state
pharmaceutical company that provided prescription
medications and medical supplies to individuals with
HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 48 81

disabilities. Under his leadership, A-Med maintained
licensing with the DEA and Boards of Pharmacy in
26 states and served more than 25,000 patients each
month. His commitment to compliance, precision, and
ethical business practices established him as a trusted leader within the pharmaceutical industry.

In 2015, Mr. Thacker brought his operational and
regulatory expertise to the emerging California
cannabis industry. Since then, he has successfully
developed, licensed, and managed a wide range of
cannabis enterprises across the state —including
retail dispensaries, delivery services, cultivation,
manufacturing, and distribution operations. Throughout
his career, he has overseen more than 700 employees
and implemented compliance programs that meet
or exceed local and state regulatory standards.

His understanding of operational logistics, staff
development, and quality control translates seamlessly
to the cannabis sector, where safety, compliance, and
professionalism are paramount.

At Herb's Diner, Mr. Thacker will draw upon his
experience in large-scale, regulated operations to guide the business's continued development and ensure it
meets the highest standards of compliance, community
engagement, and customer service. His focus will be
on building a strong retail presence, mentoring staff,
and ensuring that the business becomes a positive and
integral part of the Bellflower community.

A resident of San Juan Capistrano for more than 30
years, Mr. Thacker is deeply committed to community
service. He has raised six children and is the proud
grandfather of four. His volunteer work includes
mentoring young adults overcoming addiction and
supporting individuals with disabilities —efforts that
demonstrate his compassion, leadership, and integrity in both professional and personal settings.

ALIGNMENT WITH THE CITY OF BELLFLOWER'S

CANNABIS BUSINESS OWNER CRITERIA
GOOD CHARACTER, HONESTY, AND INTEGRITY:

Mr. Thacker's 40 -year record of success in the regulated pharmaceutical and cannabis industries demonstrates
his reliability and ethical approach to business. His
commitment to patient care and community support
reflects his integrity and compassion.

BACKGROUND AND REPUTATION:

As a licensed operator in 26 states with a long-standing DEA registration, Mr. Thacker's professional reputation is built on trust, compliance, and excellence. His leadership within both the pharmaceutical and cannabis sectors has consistently resulted in positive outcomes and stable operations.

BUSINESS COMPETENCE AND PRACTICAL EXPERIENCE:

Mr. Thacker has built and operated complex, multi -state businesses, managing teams of over 700 employees and
maintaining compliance with evolving state and federal
regulations. His deep understanding of supply chain
management, customer service, and retail operations
directly supports the successful management of a
compliant cannabis business in Bellflower.

Mr. Thacker embodies the professionalism, experience,
and community spirit that the City of Bellflower seeks
in its cannabis business owners and representatives.

His proven track record in regulated operations,
combined with his dedication to public health and local engagement, make him an asset to both the business
and the community it serves.

Proposed Location
9535 ARTESIA BOULEVARD, BELLFLOWER, CA
Prime standalone retail opportunity along the highly
trafficked Artesia Boulevard corridor. Originally built in 1948 and extensively renovated in 2018, this
3,137 -square -foot building offers a turnkey -ready
environment with modern infrastructure and a secure,
compliant layout ideal for a cannabis retail operation. The renovation included partial structural reconstruction, a new foundation and roof, updated mechanical systems,
two ADA-compliant restrooms, upgraded lighting,
storefronts, landscaping, and a robust security system — all with zero deferred maintenance.

Sitting on a .23 -acre lot, the property features 10
convenient parking spaces, including one handicap stall, with additional employee parking secured nearby. Its
central location offers excellent visibility, connectivity, and access to major freeways and thoroughfares,
ensuring strong foot traffic and sales potential for any retail business.

Previously operated as a cannabis retail space, the
building's concrete construction and secure systems
provide a controlled, safe environment for regulated
operations. The space is highly adaptable, and cosmetic improvements will allow for a full rebrand and modern
tenant fit -out.

Herb's Diner, the planned tenant, will introduce a
classic 1950s diner aesthetic, creating a distinctive and welcoming atmosphere. Combining historical charm,
modern infrastructure, and a premier location, this
property represents a rare opportunity for a cannabis
retail business to thrive in Bellflower.

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 49 82

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 5° 83

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 51 84

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 52 85

Beginning Operations Schedule
Herb's Diner believes that it can be open for business
within 12 weeks of approval to move forward, so long as the City of Bellflower's permitting process moves swiftly.

LICENSING
There are two licenses required to operate a cannabis
business in the State of California. The first is the local license, and the second is the state license. Applying
for the two licenses can run simultaneously, so long as the City reports to the State its intention to allow the cannabis business to move forward in its municipality.

The current state licensing process takes between 6-12
weeks for approval upon submission of documentation.

Herb's Diner intends to hit the ground running. As such, it is prepared to file for state licensing within 1-2 weeks of city approval to move forward.

TENANT IMPROVEMENTS
The proposed property was previously used as a
cannabis retail store, which means many of the
necessary safety and security features exist, as well as previously implemented tenant improvements, something
no other potential applicant can claim. This greatly
reduces the time necessary between licensing and
opening the doors for business. The entire refresh can
be completed within 12 weeks (pending timely permitting by the City), running simultaneously to the licensing
application timeline. Herb's Diner intends to make some minor changes to the building, as indicated below.

1. Security Camera System Update (6 weeks)

2. Access Controls and Alarm System Integration (4
weeks)

3. Interior and Exterior Paint Refresh (4 weeks)

4. Refresh all Finishes (4 weeks)
Rebrand all Signage and Interior Graphics (8-1 0 week/
permit required)
Budget
As experienced cannabis business operators, we have
drafted a preliminary budget including actual numbers
associated with the start-up and ongoing operations of a cannabis business.

Our budget includes all costs associated with:

1. Construction

2. Operations

3. Maintenance

4. Employee Compensation

5. Equipment Costs

6. Utility Costs

7. Additional Operational and Maintenance Costs

PROFORMA
Please see following page.

ASSUMPTIONS

REVENUE
Herb's Diner built its model using actual historical sales date from the site as well as our experience in opening and running cannabis retail stores in CA. Average
Order Values were also modeled based on actual order
history. Pick-up orders, which are typically placed online, have a higher Average Order Value as customers have
more time to choose their options and typically pay via electronic payment rather than requiring cash.

These assumed growth rates are supported by previous
growth rates seen across other store launches as well
as marketing efforts anticipated for both Herb's Diner
brands and online services. One critical marketing effort is promotions and discounts offered to our customers.

These can be product- or brand -specific, related to first- time purchases, or those offered to senior citizens and the military. Those promotions and discounts are netted from Gross Merchandise Value to arrive at Net Revenue.

COGS AND GROSS PROFIT
Herb's Diner retail stores offer a variety of cannabis
products across all categories and under both first- and third -party brands. Leveraging data from existing service offerings, we were able to determine a proprietary
product mix ideal for this location both by category
(flower, vape, edible, pre -roll, wellness, etc.) and
brand ownership (first vs. third party) based on those
local preferences. These category and brand input
assumptions drive the margins anticipated over years.

Aggregate retail gross margin is driven by sales of Herb's Diner's first party products, which provide a higher gross profit than 3rd party brands,

EXPENSES
Personnel: Herb's Diner's most valuable asset is our
people. Our labor expenses - both direct wages and
additional benefits - represent the largest line item
for our retail stores. These staff costs are anticipated to grow at 3% annually. In addition to those explicit
combined wages and salaries provided to employees,
Herb's Diner has included the necessary amounts to
account for payroll taxes and employee benefits. To
support our staff, we have also included $1,000 per
month in expenses growing at 3% annually for the
HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 53 86

requisite hardware and software to run the business
efficiently, based on expenses in -line with our other
retail operations.

Occupation: Herb's Diner has modeled the cost
of the facility in four pieces: Rent & Maintenance
payments, utilities, and security. The lease
payments have been captured based on its monthly
base rent to use the facility. The utilities expenses
(water, electrical, waste and recycling services)
are based on similar store costs at other facilities.

Security costs have been estimated based on the
hourly costs to staff the store with external security
personnel for 16 hours per day, 7 days a week, 365
days per year.

Marketing: Outside of personnel and security,
Herb's Diner's largest anticipated expense line will
be Marketing. This will drive awareness to the
store, ensuring the customer base and frequency
to drive volumes to cover its fixed costs. Herb's
Diner will use this marketing spend in part to
bring attention to Herb's Diner's convenient online
offering to maintain a high growth rate for pick-up
orders. Herb's Diner has allocated 11% of revenue
in Year 1 for marketing and customer acquisition
and 7.5% of revenue in subsequent years.

Local Support and Taxes: Herb's Diner is
committed to the communities it serves, including
direct financial support. For its Bellflower location,
Herb's Diner will commit the greater of $60,000
(likely for Year 1) or 1% of revenue (likely for
subsequent years) in local donations. Additionally,
4% of gross receipts for all transactions will be paid
in accordance with the RCMC Chapter 32, Article
Xl.

Proof of Funding
Herb's Diner understands the need to have
adequate funds when operating a cannabis
business in the City of Bellflower. We are fortunate
to have detailed operating history for the previous
operating business in the exact location. Please
find the pro forma, projected balance sheet and
proof of funding that shows more than 12 months of
operating expenses including the funds necessary
for city taxes and inventory in the following pages.

City of Bellflower
Applicant submitted revised pro forma and
financial estimates, which are included as Exhibit
C and Exhibit D.

PROFORMA
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HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 54 87

BALANCE SHEET
BALANCE SHEET Opening
ASSETS
Cash
Fixed Assets and Improvements

TOTAL ASSETS

LIABILITIES
Loan Balance

TOTAL LIABILITIES
EQUITY
Initial Investment
Retained Earnings

TOTAL EQUITY
TOTAL LIAB + EQUITY
1,450,000
250,000
1,700,000
Year 1
775,000
250,000
1,025,000
Year 2 Year 3
512,000
250,000
762,000
842,000
250,000
1,092,000
1,700,000 1,700,000 1,700,000 1,700,000
(675,000) (938,000) (608,000)
1,700,000 1,025,000 762,000 1,092,000
1,700,000 1,025,000 762,000 1,092,000
City of Bellflower
Applicant submitted revised balance sheet which is included as Exhibit B: Revised Balance Sheet.

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 55 88

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HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 57 90

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HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 58 91

Nuisance Abatement/
Good Neighbor Policy
Herb's Diner has put considerable thought into the
management experience necessary to avoid becoming a
nuisance or having a negative impact on our neighbors
and surrounding community. We understand that for our
business to thrive, and those around us, there must be
peace and harmony among the neighboring businesses.

Our efforts to ensure safe and effective operations
with minimal impact to the neighborhood include the
following:

LIGHTING PLAN
Herb's Diner will implement a lighting plan focused on
providing the perfect balance of exterior and interior
lighting to maximize security without negatively affecting surrounding properties (CPTED). The interior will be
well lit with as much natural lighting as possible to
support our green practices and provide a comfortable
environment for our customers. Our perimeter lighting
will be turned on from dusk until dawn and designed
to provide safety, security, and visibility for our video surveillance cameras. Our lighting will be increased
at our store entrance and in the parking lot. We will
ensure our exterior lighting balances the need to provide security without causing glare on neighboring properties.

Herb's Diner chooses lighting to match the community
character and surrounding architecture. In Bellflower, we will match the level and style of lighting utilized by our neighbors on our block, as to not disrupt the existing
amount of light on the street.

ODOR
Herb's Diner should not emit an objectionable odor. As
Herb's Diner is a retail facility and all cannabis onsite is prepackaged per DCC regulations, odors are extremely
minimal in nature. Herb's Diner will prohibit consumption of cannabis at our premises. Despite our odor control
measures, should any odor -related complaints arise, we will follow our Complaint Response Plan below. Herb's
Diner will immediately investigate the cause of the odor and implement modifications to our Odor Mitigation Plan.

PRODUCT VISIBILITY
As per the City's request, no cannabis products will
be visible with the naked eye from any public or other
private properties surrounding the Herb's Diner property.

Herb's Diner will use opaque window coverings or utilize a reception area where all products are being closed
doors. This ensures that individuals under the age of 21 who may be patrons of nearby businesses do not have
visibility of any cannabis products sold inside Herb's
Diner.

PROPERLY MAINTAINED PREMISES
Herb's Diner will keep our site and street front clean, tidy, and in good operational order by:
• Properly removing and storing all trash, litter,
rubbish, and debris on and around the premises
(including common areas) throughout and at the end
of each business day. Additional trash pick-ups will
be scheduled if the amount of trash exceeds the
available storage onsite.
• Removing graffiti placed upon the premises within
48 -hours of its occurrence.
• Keeping driveways, sidewalks, park strips, and fire
access roads on or adjacent to our facility clear and
clean.
• Immediately repairing any damaged doors, windows,
signage or lights.

ON -SITE REPRESENTATIVE
Herb's Diner will assign a management -level on -site
representative, who will be available to city officials and will promptly report any legal violations or operational concerns. Our Onsite Representative will be present
during all business hours and will be responsible for
fielding, responding to, addressing, and recording
any inquiries, concerns or complaints. We will provide
contact information for our On -site Representative to the City and make that same contact information available
on the door of our facility and on our website.

Specifically, our Onsite Representative will:
• Address and respond to in-store, telephonic, and
email inquiries, complaints, and concerns;
• Operate an on -site twenty -four-hour landline
telephone number;
• Be available to respond to problems or concerns with
Herb's Diner business or premises 24 -hours a day;
• Be available to meet with any City official as
necessary;
• Maintain a log of all complaints;
• Cooperate fully with local and state officials at all times; and
• Immediately report:
• Any conditions which have harmed or could harm
the health, safety or general welfare of any person
or member of the public to the Chief of Police or
designee.
• Any information indicating that any person
HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 59 92

experienced an adverse reaction to, or other
difficulty related to, any cannabis or cannabis
product procured from the cannabis business to
the Chief of Police, County Health department, or
designee.
■ Within 24 hours any activity occurring at the
business or involving a delivery driver or vehicle
that involves an industrial accident reportable
to OSHA, any activity that constitutes criminal
activity, any vehicle accident that results in a
police report or exchange of information to the
Chief of Police or designee.

ON -SITE SECURITY
As described in depth in our Security Plan, Herb's
Diner will ensure on -site security will be present during business hours, with remote monitoring when Herb's
Diner is closed to respond to suspicious activity. On - site security at our location will ultimately enhance
the security of the surrounding area and businesses
by default. The on -site security will ensure there is no loitering, no onsite consumption, no littering, and provide an additional layer of security.

Hiring & Staffing Plan

WAGES ABOVE LIVING WAGE
It is widely known that one of the most common reasons
for an employee's departure is dissatisfaction related
to their compensation. To prevent this from occurring,
Herb's Diner offers a wage that exceeds the average
wage for similar positions on the market. We understand the high cost associated with living in Southern California and to combat this issue, we strive to provide a living wage which gives our employees the opportunity to live
in the community where they work.

Herb's Diner is committed to hiring Bellflower residents (whenever legally possible) and will pay employees at
least 200% of the federal poverty level for a family of two. The 2025 federal poverty level for a family of two is currently $21,150 annually. This is about $10.17 per hour. 200% results in an average starting wage of $20.34 per hour. Herb's will monitor any changes in the federal poverty level and adjust incomes appropriately.

LOCAL HIRING PLAN
The single best benefit we can bring to any community
is stable employment opportunities. Herb's Diner is
committed to 100% local hiring, including management
positions, whenever legally possible. We will recruit
qualified Bellflower residents to staff our store. Only after we have exhausted all efforts to locate candidates within Bellflower, will we recruit from surrounding areas to fill any positions which remain open.

In order to achieve our local hiring goals, we will
implement the following local recruitment plan.

LOCAL AREA PARTNERSHIP
We do not always look to reinvent the wheel when it
comes to recruitment. We rely on local organizations
with built-in networks to help us spread the word about employment opportunities. Many organizations already
offer workshops to community members seeking
employment, like Southeast Los Angeles County
Workforce Development Board or Chrysalis Enterprises.

Perhaps we can offer to host a cannabis workshop
introducing the wide range of cannabis employment
opportunities.

In addition to the above, we will also reach out to
Cerritos College and post our positions on their job
boards. This is only our preliminary plan. Once selected, our recruitment team will develop a robust plan, including as many local area non -profits organizations as feasible, to ensure that our positions remain local.

DIVERSITY FOCUSED RECRUITMENT PLAN
In an effort to continue increasing opportunities for
women and minorities, Herb's Diner consistently
dedicates resources and effort to ensuring that a large cross-section of the community have an opportunity to
join the Herb's Diner family. To further our goal, we will partner with local organizations within the community, to gain access to underserved talent, particularly those who have been unfairly impacted by non-violent cannabis
convictions and the War on Drugs.

SOCIAL EQUITY PARTNERSHIPS
We have found that the single best way to reach the
largest cross-section of the community when recruiting
new talent, is to partner with organizations and programs focused on reaching the underserved populations and
those that help provide career pathways for individuals facing barriers that limit their access to job opportunities.

Herb's Diner has developed an internal Social Equity
Program to advance this goal.

In Southern California, we hope to form a solid
partnership with Chrysalis https://www.changelives .
org/, a non-profit organization that provides resources to help formerly unhoused and low-income individuals
secure employment and attain self-sufficiency. Through
partnerships like this, we can more easily tap into
some of the most diverse talent pools in the local area HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 60 93

where we operate, with the goal to hire employees
for all operations with a strong mix of backgrounds
and experiences. We hope to develop additional
partnerships with like-minded organizations, so we can
further expand our reach.

OVERALL DIVERSITY, EQUITY AND INCLUSION

POLICIES

PROHIBITION AGAINST DISCRIMINATION AND

HARASSMENT
Herb's Diner is an equal opportunity employer. In
accordance with applicable federal, state, and local
law, we prohibit discrimination and harassment against
employees, applicants, and contractors based on
actual or perceived race, religion, color, national origin, ancestry, physical or mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, sexual orientation, military and veteran status, or any other characteristic protected by federal, state, or local law.

PROHIBITION OF SEXUAL HARASSMENT AND

ABUSIVE CONDUCT
Sexual harassment includes unwanted sexual advances,
requests for sexual favors or visual, verbal or physical conduct of a sexual nature when:
• Submission to such conduct is made a term or
condition of employment; or
• Submission to, or rejection of, such conduct is used
as a basis for employment decisions affecting the
individual; or
• Such conduct has the purpose or effect of
unreasonably interfering with an employee's work
performance or creating an intimidating, hostile or
offensive working environment.

Sexual harassment includes various forms of offensive
behavior based on sex. The following is a non -exhaustive list of the types of conduct prohibited by this policy:
• Unwanted sexual advances or propositions;
• Offers of employment benefits in exchange for sexual
favors;
• Making or threatening reprisals after a negative
response to sexual advances;
• Retaliation for making reports or threatening to report sexual harassment;
• Physical conduct: touching, assault or impeding or
blocking normal movements;
• Visual conduct: leering, making sexual gestures,
displaying of sexually suggestive objects or pictures,
cartoons, posters, websites, emails or text messages;
• Verbal conduct: making or using sexually derogatory
comments, innuendos, epithets, slurs, sexually
explicit jokes, or comments about an individual's
body or dress, whistling or making suggestive or
insulting sounds; or
• Verbal and/or written abuse of a sexual nature,
graphic verbal and/or written sexually degrading
commentary about an individual's body or dress,
sexually suggestive or obscene letters, notes,
invitations, emails, text messages, tweets or social
media postings.

Herb's Diner expects our staff to perform their jobs
productively as assigned, and in a manner that meets
all of managements' expectations, during working
times, and that they refrain from any malicious, patently offensive or abusive conduct including but not limited to conduct that a reasonable person would find offensive
based on any of the protected characteristics described above. Examples of abusive conduct include repeated
infliction of verbal abuse, such as the use of malicious, derogatory remarks, insults, and epithets, verbal or
physical conduct that a reasonable person would
find threatening, intimidating, or humiliating, or the
intentional sabotage or undermining of a person's work
performance.

REPORTING AND PROHIBITION AGAINST

RETALIATION
Herb's Diner encourages any applicant or employee who
believes he or she has been subject to discrimination,
prohibited harassment, or retaliation by a coworker,
supervisor, manager, client, visitor, vendor, customer, or temporary worker of Herb's Diner, or who believes
another individual has been subject to such conduct,
to report it immediately. Applicants and employees are
encouraged to report concerns, even if they relate to
incidents in the past, involve individuals who are no
longer affiliated with Herb's Diner, or concern conduct occurring outside of work if it impacts the individual at work.

When a report is received, Herb's Diner will conduct a
fair, timely, thorough and objective investigation that provides all parties appropriate due process and reaches reasonable conclusions based on the evidence collected.

Herb's Diner expects all employees to fully cooperate
with any investigation conducted by Herb's Diner into a complaint of proscribed harassment, discrimination or
retaliation, or regarding the alleged violation of any other company policies.

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 61 94

After a complaint is received, we will undertake an
objective investigation to authenticate the validity of the complaint. Confidentiality will be maintained to the extent practical and permitted by law. Investigations will be conducted as confidentially as possible and related
information will only be shared with others on a need -to - know basis. If a complaint of prohibited harassment or
discrimination is substantiated, appropriate disciplinary action, up to and including termination of employment,
will be taken. If a complaint cannot be substantiated,
Herb's Diner may take appropriate action to reinforce its commitment to providing a work environment free from
harassment.

Herb's Diner prohibits retaliation against any person
by another employee or by our management for
using our complaint procedure, reporting proscribed
discrimination or harassment or filing, testifying, assisting or participating in any manner in any investigation,
proceeding or hearing conducted by a governmental
enforcement agency. Prohibited retaliation includes, but is not limited to, termination, demotion, suspension,
failure to hire or consider for hire, failure to give equal consideration in making employment decisions, failure
to make employment recommendations impartially,
adversely affecting working conditions or otherwise
denying any employment benefit.

DISABILITY AND ACCOMMODATION
In compliance with all applicable laws, Herb's Diner
will make reasonable accommodations for the known
physical or mental limitations of an otherwise qualified individual with a disability who is an applicant or an
employee unless undue hardship and/or a direct threat to the health and/or safety of the individual or others would result.

RELIGIOUS ACCOMMODATIONS
Herb's Diner will provide reasonable accommodation for
employees' religious beliefs, observances, and practices when a need for such accommodation is identified, and
reasonable accommodation is possible. A reasonable
accommodation is one that eliminates the conflict
between an employee's religious beliefs, observances, or practices and the employee's job requirements, without
causing undue hardship to Herb's Diner.

Herb's Diner has a system of open communication with
our employees to discuss conflicts between religion
and work and to take action to provide reasonable
accommodation for employees' needs. The intent of
this process is to ensure a consistent approach when
addressing religious accommodation requests.

Any employee who perceives a conflict between job
requirements and religious belief, observance, or
practice should bring the conflict and his or her request for accommodation to the attention of the Manager and
the Manager will contact Human Resources to initiate
the accommodation process. Herb's Diner requires that
accommodation requests be made in writing, and in
the case of schedule adjustments, as far in advance as
possible.

ONGOING DIVERSITY TRAINING
As our policies change, or changes in the law arise, our staff is provided with ongoing diversity training.

EMPLOYEE REFERRAL BONUS
Word of Mouth is the most important social media
marketing tool when it comes to advertising our
available positions. Nielsen, a well-known marketing
and advertising data company, published that 92%
of individuals believe recommendations from friends
and family over all other forms of advertising. We love personal referrals. To encourage our staff to reach out to those they know, we offer employees a referral bonus for each full-time employee referred after the new hire completes 90 days of employment.

While we appreciate employee referrals, a referral is
never a guaranteed hire. Herb's Diner hires based on
merit and ensures that our diversity, equity, and inclusion policies are always incorporated into any hiring process.

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 62 95

06. Operations Plan

OPERATIONS PLAN
An Operations Plan, including a detailed cash -
management plan, must be submitted that includes
the operational standards for the type of canna-
bis -related business proposed as defined in Section

14.16.020 of the Bellflower Municipal Code (BMC).

These conditions are provided in attachments to
this application. The Operations Plan for a cannabis
cultivation or manufacturing business must include a
detailed water and electrical plan and projections
for water use. This plan must be approved by Public
Safety Director prior to approval of a Conditional Use
Permit. The Operations Plan must also include any
additional conditions that the Public Safety Director
finds reasonably necessary when considering the
location and size of the proposed business.

HERB'S

Pursuant to Bellflower Municipal Code § 17.94.070 (Operations Plan Required) and Section 3 of Resolution 17-44 (Form and Content of Application), information identified by an applicant as confidential, including operations and/or cash management plans and security plans, is not required to be part of the public record. This information has been reviewed as part of the application and redacted from the public record for confi- dentiality purposes.

Pursuant to Bellflower Municipal Code § 17.94.070 (Operations Plan Required) and Section 8 of Resolution 26-05 (Form and Content of Application), informa- tion identified by an applicant as confidential, including operations and/or cash management plans and security plans, is not required to be part of the public record. This information has been reviewed as part of the application and redacted from the public record for confidentiality purposes.

0.. Fire Prevention it
Suppression Plan

FIRE PREVENTION & SUPPRESSION PLAN
A Fire Prevention and Suppression Plan must be
submitted that provides a detailed description of fire
prevention, fire suppression, HVAC, and alarm sys-
tems and includes an assessment of the fire safety of
the cannabis -related business by a currently licensed
and active Fire Protection Engineer. An appropriate
plan will address all possible fire, hazardous material, and inhalation issues/threats and will define both
written standards and physical mechanisms to deal
with each specific situation.
1 HERB'S

Pursuant to Bellflower Municipal Code § 17.94.070 (Operations Plan Required) and Section 3 of Resolution 17-44 (Form and Content of Application), information identi- fied by an applicant as confidential, including operations and/or cash management plans and security plans, is not required to be part of the public record. This informa- tion has been reviewed as part of the application and redacted from the public record for confidentiality purposes.

Pursuant to Bellflower Municipal Code § 17.94.070 (Operations Plan Required) and Section 8 of Resolution 26-05 (Form and Content of Application), informa- tion identified by an applicant as confidential, including operations and/or cash management plans and security plans, is not required to be part of the public record. This information has been reviewed as part of the application and redacted from the public record for confidentiality purposes.

08. Security Plan

SECURITY PLAN
A Security Plan must be submitted that includes a
description and detailed schematic drawing of
the overall security plan for the cannabis -related
business. This plan must detail planned operational
security, including, without limitation, general security policies for the facility, employee -specific policies, training, sample written policies, transactional
security, visitor security, third -party contractor
security, and delivery security. The Security Plan must also address access into and out of the business,
permitter security, product security (at all hours),
internal security measures for access (area specific),
types of security systems (alarms and cameras), and
security personnel to be employed. The Security Plan
must also include an assessment of site security
by a security consultant currently licensed by the
California Bureau of Security and Investigation
Services and in possession of a valid "guard card:" The security Plan may be submitted in confidence. Please
see the Law Enforcement Conditions of Approval
attached to this application that will be applied to
each permit approved.

HERB'S

Pursuant to Bellflower Municipal Code § 17.94.070 (Operations Plan Required) and Section 3 of Resolution 17-44 (Form and Content of Application), informa- tion identified by an applicant as confidential, including operations and/or cash management plans and security plans, is not required to be part of the public record. This information has been reviewed as part of the application and redacted from the public record for confidentiality purposes.

Pursuant to Bellflower Municipal Code § 17.94.070 (Operations Plan Required) and Section 8 of Resolution 26-05 (Form and Content of Application), information identified by an applicant as confidential, including operations and/or cash man- agement plans and security plans, is not required to be part of the public record.

This information has been reviewed as part of the application and redacted from the public record for confidentiality purposes.

TRAFFIC & PARKING STUDY
ATraffic and Parking Study prepared by a Licensed
Traffic Engineer must be submitted, identifying and
potential traffic and parking impacts, as well as
feasible measures to mitigate these impacts. This
study must be prepared in accordance with the latest
edition of the Los Angeles County's Traffic Impact
Analysis Guidelines and Institute of Transportation
Engineers, Parking Generation Manual.

HERB'S

Traffic Et Parking Study
A Traffic and Parking Study prepared by a Licensed Traffic Engineer must be submitted, identifying and potential traffic and parking impacts, as well as feasible measures to mitigate these impacts. This study must be prepared in accordance with the latest edition of the Los Angeles County's Traffic Impact Analysis Guidelines and Institute of Transportation Engineers, Parking Generation Manual.

PREPARED BY
Crain & Associates
300 Corporate Pointe, Suite 470
Culver City, California 90230
(310) 473-6508
Project Description
Herb's Diner (the "Client") is proposing to operate a retail cannabis facility in an existing building located at 9535 Artesia Boulevard (the "Project") in the City of Bellflower (the "City"). The proposed Project consists of 3,137 square feet of cannabis Retail Storefront. The Project will occupy the existing building at the Project site.

All 10 of the parking spaces in the lot are reserved for customer vehicles patronizing the Project site. Vehicular access to the Project site is currently provided via a driveway which intersects the north side of Artesia Boulevard. This driveway and the on -site parking lot will be maintained to accommodate Project parking. The Project will provide at least ten parking spaces on site. The Project site plan is presented in Appendix A.

Additional parking spaces will be available for employees off -site and along the street.

Project Traffic Analysis
To fulfill the request as outlined in the City's Cannabis Related Business Permit Application, a traffic and parking analysis is required as part of the application package, "identifying any potential traffic and parking impacts, as well as feasible measures to mitigate these impacts. This study must be prepared in accordance with the latest edition of the Los Angeles County's Traffic Impact Analysis Report Guidelines and Institute of Transportation Engineers, Parking Generation Manual."
Based on the County guidelines, the primary method for evaluating Project traffic impacts is by conducting the Intersection Capacity Utilization (ICU) analysis, a nationally recognized and recommended analysis methodology within the traffic engineering profession. The critical Intersection volume -to -capacity (V/C) ratios V/C are selected to determine the ICU values for the study intersections, which allow evaluation of traffic conditions. A V/C ratio compares the critical traffic volumes to the capacity serving those volumes at a particular location. "Capacity" represents the maximum volume of vehicles in the critical lanes that have a reasonable expectation of passing through an intersection in one hour under prevailing roadway and traffic conditions. Based on County guidelines, the capacity of left -turn, through and right -turn lanes is assumed to be 1,600 vehicles per hour (VPH) per lane.

In the discussion of ICU values for signalized intersections, guidelines have been developed for assessing the operational quality of an intersection in terms of the Level of Service (LOS), which describes different traffic flow characteristics. Level of Service grades A to C are indicative of good to reasonably good traffic flow. A Level of Service D grade typically is the level for which a metropolitan area street system is designed. LOS E represents volumes of severe congestion with some longstanding queues on critical approaches and fairly unstable flow. LOS F occurs when a facility is overloaded and is characterized by stop -and -go traffic with stoppages of long duration. Levels E and F typically are considered unsatisfactory. The Level of Service corresponding to a range of ICU values is shown in Table 1.

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 164 103

Pursuant to Bellflower Municipal Code § 17.94.070 (Operations Plan Required) and Section 3 of Resolution 17-44 (Form and Content of Application), information identified by an appli- cant as confidential, including operations and/or cash management plans and security plans, is not required to be part of the public record. This information has been reviewed as part of the application and redacted from the public record for confidentiality purposes.

Pursuant to Bellflower Municipal Code § 17.94.070 (Operations Plan Required) and Section 8 of Resolution 26-05 (Form and Content of Application), information identi- fied by an applicant as confidential, including operations and/or cash management plans and security plans, is not required to be part of the public record. This infor- mation has been reviewed as part of the application and redacted from the public record for confidentiality purposes.

TABLE 1

LEVEL OF SERVICE (LOS)

AS A FUNCTION OF INTERSECTION CAPACITY UTILIZATION (ICU) VALUES FOR SIGNALIZED INTERSECTION

LABEL OF

SERVICE

VOLUME/

CAPACITY RATIO

DEFINITION
A

0.000 0.600
Excellent. No vehicle waits longer than one red light and no approach phase is fully used.

B

0.601 0.700
Very Good. An occasional approach phase is fully utilized; many drivers begin to feel somewhat restricted within groups of vehicles.

C

0.701 0.800
Good. Occasionally, drivers may have to wait through more than one red light, backups may develop behind turning vehicles.

D

0.801 0.900
Fair. Delays may be substantial during portions of the rush hours, but enough lower volume periods occur to permit clearing of developing lines, E

0.901 1.000
Poor. Represents the most vehicles that intersection approaches can accommodate; may be long lines of waiting vehicles through several signal F
Greater than 1.000
Failure. Backups from nearby intersections or on cross streets may restrict or prevent movement of vehicles out of the intersection approaches.

Tremendous delays with continuously increasing queue lengths.

The County defines a significant traffic impact attributable to a Project based on a "stepped scale" with intersections experiencing high volume -to -capacity ratios being more sensitive to additional traffic than those operating with more available capacity. According to the County policy, a significant impact is identified as an increase in the ICU value due to Project -related traffic of 0.010 or more when the final (with Project) Level of Service is LOS E or F, an ICU increase of

0.020 or more when the final Level of Service is LOS D, or an ICU increase of 0.040 or more at LOS C. No significant impacts are deemed to occur at LOS A or B, as these operating conditions exhibit sufficient surplus capacities to accommodate large traffic increases with little effect on traffic delays. These criteria are summarized in Table 2.

TABLE 2

COUNTY CRITERIA FOR SIGNIFICANT TRAFFIC IMPACT
LOS

FINAL ICU VALUE

PROJECT -RELATED INCREASE IN ICU VALUE
C
> 0.700 - 0.800
equal to or greater than 0.040
D
> 0.800 - 0.900
equal to or greater than 0.020
E, F
> 0.900
equal to or greater than 0.010
The following section describes the methodology for determining the Project trip generation, as well as the analysis of the impact of Project trips on the surrounding roadway network based on the ICU methodology detailed previously.

Project Trip Generation
The traffic generating characteristics of numerous land uses are identified in Trip Generation, 9th Edition published in 2012 by the Institute of Transportation Engineers (ITE). This manual is recognized as the industry standard for trip generation documentation by providing information on the trip -making profiles for many land uses, including the drugstore/pharmacy and warehouse uses proposed at the Project site. The site trip generation rates shown in Table 3 were selected in accordance with standard traffic study procedures as specified in the County guidelines.

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 1661055

TABLE 3

PROJECTTRIP GENERATION RATES
LU
USE

DESCRIPTION
1 Weekday Daily:

3.56 Trips per 1,000 sf Gross Floor Area
Weekday AM Peak Hour:

0.30 Trips per 1,000 sf Gross Floor Area
■ Inbound
79%
■ Outbound
21%
Weekday PM Peak Hour:

0.32 Trips per 1,000 sf Gross Floor Area
■ Inbound
25%
■ Outbound
75%
Saturday Peak Hour

0.13 Trips per 1,000 sf Gross Floor Area
■ Inbound
64%
■ Outbound
36%
826
Weekday Daily:

14.32 Trips per 1,000 sf Gross Floor Area
Weekday AM Peak Hour: [1]

0.96 Trips per 1,000 sf Gross Floor Area
■ Inbound
62%
■ Outbound
38%
Weekday PM Peak Hour:

2.71 Trips per 1,000 sf Gross Floor Area
■ Inbound
44%
■ Outbound
56%
Saturday Peak Hour: [1]

4.82 Trips per 1,000 sf Gross Floor Area
■ Inbound
52%
■ Outbound
48%
- 880
Pharmacy/Drugstore without Drive Through Window
Weekday Daily:

30.06 Trips per 1,000 sf Gross Floor Area
Weekday AM Peak Hour:

2.94 Trips per 1,000 sf Gross Floor Area
■ Inbound
65%
■ Outbound
35%
Weekday PM Peak Hour:

8.40 Trips per 1,000 sf Gross Floor Area
■ Inbound
49%
• Outbound
51 %
Saturday Peak Hour

10.68 Trips per 1,000 sf Gross Floor Area
• Inbound
49%
• Outbound
51 %
Source: Trip Generation, 9th Edition, 2012, Institute of Transportation Engineers (ITE). [1] Weekday AM peak hour and Saturday peak hour rate not available, assumed LU 820 -Shopping Center AM peak hour and Saturday peak hour rate.

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 167106

On the basis of the trip generation rates shown in Table 3, estimates of the Project's traffic were determined and are summarized in Table 4. An estimated 13 net daily trips will be generated by the proposed Project, including 3 trips during the AM peak -hour, and 7 trips during the PM peak -hour at the Project site. Additionally, the Project is anticipated to generate 2 net trips during the Saturday peak -hour.

TABLE 4

PROJECT TRIP GENERATION

AM PEAK HOUR PM PEAK HOUR SATURDAY PEAK
LU
USE/

DESCRIPTION
SIZE
UNITS
DAILY
I/B
0/B
TOTAL
I/B
0/B
TOTAL
I/B
0/B
TOTAL
Proposed Uses
i
##
Weekday Daily:
##
SF
180
4 2
6 8
9 17
10 11
21 ##
Weekday AM
##
SF
7 1
0 1
0 1
1 0
0 0
187
5 2
7 8
10 18
10 11
21 Existing Uses
##
Specialty Retail
##
SF
174
2 2
4 5
6 11
10 9
19 Net Trip Generation
13 3
0 3
Nimlil l7
0 2
2 SF = Square Feet
Project Traffic Impact
Based on the assumptions outlined in the County guidelines, each lane is assumed to have a capacity of 1,600 vehicles per hour. Under the assumption that all Project trips would make the same critical turning movement at an intersection with a single -lane approach in each direction, the trips generated by the Project would have to be equal to or greater than 16 trips to result in an intersection V/C ratio increase of at least 0.01 (the threshold of significance, assuming the worst -case LOS E/F scenario). Because the Project will not create more than 7 trips during any peak hour, it is not anticipated that the Project will significantly impact any surrounding intersections, regardless of existing LOS conditions or intersection lane configurations.

According to the guidelines outlined by the County, the preparation of a traffic report is required for all projects generating greater than 500 trips per day. As the trips generated by the Project do not exceed 500 daily trips, a traffic report is not required by the County. Thus, per the guidelines outlined in the Los Angeles County Traffic Impact Analysis Report Guidelines (January 1997), the Project would not generate any significant traffic impacts.

CMP Impact Analysis
The traffic impact guidelines of the current 2010 CMP for Los Angeles County require analysis of all CMP arterial monitoring locations where a project could add a total of 50 or more trips during either peak hour. Additionally, all freeway monitoring locations where a project could add 150 or more trips in either direction during the peak hours are to be analyzed.

The local CMP requires that all CMP monitoring intersections be analyzed where a Project would likely add 50 or more trips during the peak hours. A review of the net Project traffic generation (shown in Table 4) to the study vicinity shows that the Project will not add 50 or more trips to any intersections, including any CMP intersection. Therefore, no further CMP intersection analysis is warranted.

In addition, any CMP freeway monitoring segment where a Project is expected to add 150 or more trips in any direction during the peak hours is to be analyzed. Based on the Project trip generation described above in this report, the Project is not expected to add more trips during any peak period. Therefore, no significant Project impact to any CMP freeway monitoring location is forecast and no additional freeway analysis is necessary.

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 168107

Project Parking Demand Analysis
This section analyzes the future Project site parking demand and compares this to the estimated number of parking spaces currently demanded by the existing land use on the Project site. According to the City's Medical Cannabis - Related Business Permit & Conditional Use Permit Application, the Project is required to provide parking based on parking generation rates published in ITE's Parking Generation, 4th Edition (the "ITE parking generation rates"). To be conservative, existing and future parking demand was calculated in this report using two methodologies. First, the parking demand of the Project was calculated based on the required ITE parking generation rates. Second, the parking demand of the Project was additionally calculated based on rates from the City Municipal Code 17.88.070 (the "City Municipal Code").

PARKING DEMAND PER ITE TRIP GENERATION RATES
Per the 4th edition [EP1] of the ITE parking generation manual, the proposed Project is anticipated to demand a maximum of six spaces during weekday peak -parking periods and seven spaces during Saturday peak -parking periods.

The existing use on the Project site is estimated to require a maximum of 11 spaces during weekday peak -parking periods and 12 spaces during Saturday peak -parking periods. Therefore, the proposed Project is expected to require fewer parking spaces on both weekday and Saturday peak parking periods than the existing use. Thus, the ITE parking generation rates indicate the Project will lower the parking demand at the Project site. Moreover, the maximum parking demand is expected to require seven parking spaces; the Project plans to provide at least seven on -site spaces.

Therefore, the Project is expected to supply sufficient on -site parking to meet the ITE-estimated peak parking demand.

Since the Project will create less parking demand than is currently estimated for the existing use and will supply sufficient parking to meet that demand on -site, the Project is not expected to create a negative parking impact. The parking demand calculations per the ITE parking generation rates are detailed in Table 5.

TABLE 5

PROJECT PARKING DEMAND PER ITE PARKING GENERATION RATES Weekday Parking Demand
Land Use
Proposed Use
1,994 sf 880 Drugstore/Pharmacy
1,933 sf 150 Warehousing
Existing Use

3.927 sf 826 Specialty Retail `1
Land Use
Proposed Use
1,994 sf 880 Drugstore/Pharmacy

1.933 sf 150 Warehousing 131
Existing Use
3,927 sf 826 Specialty Retail
ITE Rate Demand

2.2 Space/1.000 sf

0.51 Space/1.000 sf

2.55 Spacei1 000 sf
5 spaces
1 spaces
6 spaces
1". spaces
11 spaces
Saturday Parking Demand
ITE Rate Demand

2.94 Space/1.000 sf

0.51 Space/1.000 sf
2 87 Space/1.000 sf
6 spaces
1 spaces
7 spaces
12 spaces
12 spaces
Notes:
[11 Specialty Retail parking rate not available, assumed Land Use 820 -Shopping Center rates.
[2J To be conservative, parking rates are for a non -Friday. non -December weekday.
[31 Saturday parking rates not available for LUC 150 Warehousing. weekday rates used.
[4J To be conservative, parking rates are for a non -December Saturday.

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 169108

PARKING DEMAND PER CITY MUNICIPAL CODE
While the ITE parking generation rates constitute the required methodology for calculating the Project parking demand, the parking demand rates under the City Municipal Code were also examined to provide a more conservative parking analysis.

According to the City Municipal Code 17.88.070, minimum parking requirements for uses within the Project's zoning classification, the General Commercial district, are defined as follows:
• In the General Commercial District, there shall be one parking space for each three hundred square feet of floor space or fraction thereof in any building or structure erected or enlarged within the district.

Unlike the ITE parking generation rates, the City Municipal Code does not provide Saturday rates; therefore only weekday parking rates were applicable for analysis. Per the City Municipal Code rates the proposed Project is anticipated to demand a maximum of 14 spaces during the weekday peak -parking periods. The existing use on the Project site is estimated to currently demand a maximum of 14 spaces during weekday peak -parking periods. Therefore, under the City Municipal Code, the proposed Project is expected to require the same number of parking spaces as the existing use.

Thus, the rates provided by the City Municipal Code indicate the parking demanded by the Project will equal the current parking demand at the Project site and will not create a negative parking impact. The total parking spaces supplied by the Project (both on- and off -site) are expected to meet and exceed the parking requirements under the City Municipal Code. The parking demand calculations per the City Municipal Code are detailed in Table 6.

TABLE 6

PROJECT PARKING DEMAND PER CITY MUNICIPAL CODE
Land Use
Weekday Parking Demand
City Municipal Code Rate Demand
Proposed Use
1,994 sf 880 Drugstore/Pharmacy
1,993 sf 150 Warehousing

1.0 Space/300 sf

1.0 Space/300 sf
Existing Use
3,927 sf 826 Specialty Retail 1.0 Space/300 sf

PROJECT PARKING IMPACT
7 spaces
7 spaces
14 spaces
14 spaces
14 spaces
The parking demand by the existing and proposed land uses at the Project site was calculated using both (1) the required ITE parking generation rates and (2) the rates under the City Municipal Code. Under both of these methodologies, the future parking demand at the Project site was determined to be lower than or equal to the estimated existing parking demand. On -site Project parking supply is expected to meet the requirements dictated by the ITE parking generation rates. Furthermore, the total Project parking supply (on- and off -site) is expected to meet and exceed the parking requirements under the City Municipal Code. Therefore, the Project is not expected to create a parking impact.

Findings & Recommendations
As indicated in the preceding traffic analysis, the proposed 9535 Artesia Boulevard Cannabis Retail Project is not expected to significantly impact any arterial intersections, any CMP arterial monitoring locations or any CMP freeway monitoring segments. Both the ITE parking generation rates and the City Municipal Code forecast that the future parking demand at the Project site will be lower than or equal to the estimated existing parking demand and will be adequately accommodated by the Project parking supply. Therefore, the Project is not expected to create any significant traffic or parking impacts. Based on these findings, no transportation -related mitigation measures are required for the Project.

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 17o 109

10. Plan Requirements

PLAN REQUIREMENTS
Full-scale plans must be provided at the time of initial submittal, including a site plan, existing and proposed floor plans, and existing and proposed building
elevations.

HERB'S

Pursuant to Bellflower Municipal Code § 17.94.070 (Operations Plan Required) and Sec- tion 3 of Resolution 17-44 (Form and Content of Application), information identified by an applicant as confidential, including operations and/or cash management plans and security plans, is not required to be part of the public record. This information has been reviewed as part of the application and redacted from the public record for confidentiality purposes.

Pursuant to Bellflower Municipal Code § 17.94.070 (Operations Plan Required) and Section 8 of Resolution 26-05 (Form and Content of Application), information identified by an applicant as confidential, including operations and/or cash man- agement plans and security plans, is not required to be part of the public record.

This information has been reviewed as part of the application and redacted from the public record for confidentiality purposes.

PH
Pro
the
OTOS
vide a minimum of six (6) color photos illustrating
existing site conditions.

HERB'S

Photos
Provide a minimum of six (6) color photos illustrating the existing site conditions.

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 180113

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 181114

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 182115

12. Digital Copies

DIGITIAL COPIES
All projects are required to submit, at the time of
submittal/resubmittal, a compact disc or flash
drive that includes digital copies of all illustrative
documents (i.e., plans, maps, color photos, color
perspectives, virtual models, etc.)
HERB'S

Digitial Copies
All projects are required to submit, at the time of submittal/resubmittal, a compact disc or flash drive that includes digital copies of all illustrative documents (i.e., plans, maps, color photos, color perspectives, virtual models, etc.).

A flash drive containing digital copies of all illustrative documents has been included with this submittal.

A flash drive has
been included with
this submittal.

HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 184117

13. Identification

IDENTIFICATION
Provide government -issued identification demon-
strating that each Applicant, manager, and employee
of the cannabis -related business is 18 years of age
or older.

HERB'S

Identification
Provide government -issued identification demonstrating that each Applicant, manager, and employee of the cannabis -related business is 21 years of age or older.

Government -issued identification for all proprietors and applicants is included below, verifying that each individual is 21 years of age or older. At this time, no manager or additional staff have been assigned to the project.

Identification for those individuals will be provided upon hiring and prior to commencement of operations.

Government -issued
identification for
all proprietors
and applicants is
included below.

Cal
iforn iausA DRIVER LICENSE `
D CLASS C gym
EXP'081� END NONE

LN FARSHCHIAN

FN FRIEDA VAGHAR
DOB

RSTRNONE

SEXI F HAIR GRY
HGT 5'-07" WGT 160 Ib
DD 0810712023548381DDFo128

EYES BRN
ISS
08/22/2023
California DRIVER LICENSE

CLASS C

12.2 3 2025 END NONE

THACKER
=ti LARRY NELSON JR
DOS
7 RSTR NONE

SEX M HAIR GRY
HGT 6'-01" WGT 208 Ib
DD 0411712025648o5&CCFD.'25
LARRY NELSON JR. THACKER

EYES HZL
ISS
04/17/2025

FRIEDA VAGHAR FARSHCHIAN
Applicant, Proprietor, & Owner/Managing Director
Proprietor & Managing Director
HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary
186119

14. Conditional Use Permit
(Copy)
CO

NDITIONAL USE PERMIT (COPY)
HERB'S

The City of Bellflower
7-anu'/;es. %3u.sinesses. .7utue e.s.
16600 Civic Center Drive, Bellflower, CA 90706
Tel 562.804.1424 Fax 562.925.8660 www.bellflower.org
April 10, 2019
NC3 Systems Inc. dba Caliva
Attn: Mr. Larry Thacker
241 Dupont Street Floor 2
San Jose, CA 95126
Dear Mr. Thacker:

G OF BELLFLOk�R
°R
On April 8, 2019, the City Council granted NC3 Systems Inc. dba Caliva a Medical Cannabis Business Permit (MCBP) for Dispensary use at 9535 Artesia Boulevard in the City of Bellflower. The MCBP will expire on December 31, 2019. In order to activate the MCBP, you must sign the finalized conditions of approval and the following fees must be paid to the City of Bellflower Finance Department:
• State Fee — $4 per business license per year
• Prorated Business License Tax — $185 ($177 per year for basic fee and $3 per employee)
• One Month Cannabis Tax Per Permit — $16,667
• Prorated Education Contribution/Drug Rehabilitation Program — $3,671 ($5,000 annual permit)
• Prorated MCBP Fee — $19,090 ($26,000 annual permit)
• Liquidated Damages — $633 per day based on 6 days per week; $100,000 from July 1, 2019 to December 31, 2019. A security deposit of this full amount will be required should your facility fail to be opened by June 30, 2019. If your facility opens before December 31, 2019 and generates tax revenue, you may be entitled to a refund from the security deposit upon request.

Prorated Business License Fees includinc State Fees
$ 189
One Month Cannabis Tax Per Permit
(Based on the guaranteed minimum tax of $100,000 from July 1, 2019 to December 31, 2019)
16,667
Prorated Education Contribution/Druc Rehabilitation Program 3,671
Prorated Medical Cannabis Business Permit Fee
19,090
Total Amount Due
$ 39,617
If you have any questions or concerns, please contact Randi Stover, Assistant to the City Manage;, at (562) 804-1424, ext. 2278.

Since
J ,ff Stewart
ity Manager
1///1(/1
HERB'S DINER I Cannabis -Related Business Permit Application I All Information is Confidential & Proprietary 188121

CITY OF BELLFLOWER
RESOLUTION NO. 19-26-A - "EXHIBIT A"
CONDITIONS OF APPROVAL FOR A MEDICAL CANNABIS BUSINESS PERMIT NO.

CUP CU -CAN 17-14
In addition to all applicable provisions of California law and the Bellflower Municipal Code ("BMC"), NC3 Systems, Inc dba Caliva/Larry Thacker (the "Applicant"), agrees that it will comply with the following conditions for the City of Bellflower's approval of a Medical Cannabis Business Permit ("MCBP") and Conditional Use Permit ("CUP").

Law Enforcement
I. Definitions
Unless the contrary is stated or clearly appears from the context, the following definitions will govern the construction of the words and phrases used in these Standard Conditions of Approval ("SCOA"). Words and phrases undefined in this SCOA have the same meaning as set forth in BMC Chapter 14.04.
"Batch" means a specific quantity of cannabis or cannabis product that is intended to have uniform character and quality, within specified limits, and is produced according to a single manufacturing order during the same cycle of manufacture. "Manager" means an individual who is an employee of a cannabis business and who, directly or indirectly, is engaged in the management of the cannabis business as set forth in an approved Operations Plan.
"On -Site Designated Representative" means a Manager who is designated by the cannabis business to be present, and who is present, at all times during the cannabis business's hours of operation.
"Owner" means any individual member of a Cannabis business having more than a ten percent (10%) interest, legal or equitable, or otherwise, in the Cannabis business. "Security Personnel" means any person(s) who perform(s) security related tasks on behalf of the Cannabis business.

II. General Conditions

1. The cannabis business must be developed and/or used in the manner requested and must be in substantial conformity with the plans as approved by the City's Building official, unless revisions and/or additional conditions are specifically required herein.

2. The Applicant and its successors in interest must indemnify, protect, defend (with legal counsel reasonable acceptable to the City), and hold harmless, the City, and any agency or instrumentality thereof, and its elected and appointed officials, officers, employees, and agents from and against any and all liabilities, claims, actions, causes of action, proceedings, suits, damages, judgments, liens, levies, costs, and expenses of whatever nature, including reasonable attorneys fees and disbursements (collectively "Claims") arising out of or in any way relating to this project, any discretionary approvals granted by the City related to the development of the project or the environmental review conducted under the California Environmental Quality Act, Public Resources Code§ 21000, et seq., for the project. If the City Attorney is required to enforce any conditions of approval, all costs, including attorney's fees, must be paid for by the Applicant.

3. The Applicant must reimburse the City for all attorney's fees expended by the City that are directly related to the processing of this project. The City will not issue a MCBP until all attorneys' fees are paid by the Applicant.