Cudahy City Council
July 16, 2024

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diversion of marijuana from states where it is legal under state law in some form to other states; (4) preventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity; (5) preventing violence and the use of firearms in the cultivation and distribution of marijuana; (6) preventing drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use; (7) preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and (8) preventing marijuana possession or use on federal property;
WHEREAS, in September 2015, the California State Legislature enacted, and Governor Brown signed into law three bills - Assembly Bill 243, Assembly Bill 266, and Senate Bill 643 - which together comprise the Medical Marijuana Regulation and Safety Act (the "MMRSA"). The MMRSA created a comprehensive dual state licensing system for the cultivation, manufacture, retail, sale, transport, distribution, delivery, and testing of medical cannabis;
WHEREAS, on August 22, 2016, the City Council of the City of Cudahy (the "City Council" of the "City") adopted Interim Urgency Ordinance No. 656U to establish a temporary moratorium on medical "commercial cannabis activities," as defined under the MMRSA, for a period of 45 days and extended such moratorium for an additional period of 22 months and 15 days under Interim Urgency Ordinance No. 661, on September 26, 2016;
WHEREAS, the MMRSA was renamed the Medical Cannabis Regulation and Safety Act (the "MCRSA") under Senate Bill 837 in June 2016, which also made substantive changes to the applicable state laws, which affect the various state agencies involved in regulating cannabis businesses as well as potential licensees; WHEREAS, on November 8, 2016, the Control, Regulate, and Tax Adult Use of Marijuana Act ("AUMA") was approved California voters as Proposition 64 and became effective on November 9, 2016, pursuant to the California Constitution (Cal. Const., art.

II, § 10(a).). Proposition 64 legalized the nonmedical use of cannabis by persons 21 years of age and over, and the personal cultivation of up to six (6) cannabis plants. On November 14, 2016, the City Council adopted Urgency Ordinance No. 663 to prohibit outdoor personal marijuana cultivation and establish regulations and a permitting process for indoor personal marijuana cultivation;
WHEREAS, AUMA also created a state regulatory and licensing system j governing the commercial cultivation, testing, and distribution of nonmedical cannabis, and the manufacturing of nonmedical cannabis products. On January 9, 2017, Interim Urgency Ordinance No. 666 was adopted by the City Council to establish a temporary moratorium on nonmedical "commercial cannabis activities" for a period of 45 days and extended such moratorium for an additional period of 22 months and 15 days under Interim Urgency Ordinance No. 667, on February 27, 2017; Page2
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WHEREAS, on June 27, 2017, Governor Brown signed the Legislature-approved Senate Bill 94. SB 94 combined elements of the MCRSA and AUMA to establish a streamlined singular regulatory and licensing structure for both medical and nonmedical cannabis activities given that there were discrepancies between the MCRSA and AUMA. The new consolidated provisions under SB 94 is now known as the Medicinal and Adult-Use Cannabis Regulation and Safety Act ("MAUCRSA") to be governed by the California Bureau of Cannabis Control. MAUCRSA refers to medical cannabis as "medicinal cannabis" and nonmedical/recreational cannabis as "adult-use cannabis"; WHEREAS, on June 27, 2017, the as part of an Economic Development Ad Hoc Committee presentation on revenue-generating opportunities, commercial cannabis regulations and strategies were offered to and discussed by the City Council; WHEREAS, the City seeks to establish an overlay zone in the City in which certain medicinal-only commercial cannabis activities can be conducted in accordance with MAUCRSA and the City's police power under Section 7 of Article XI of the California Constitution;
WHEREAS, it is the purpose and intent of the City to regulate medicinal cannabis in a manner that is consistent with the Cole Memo and promotes the health, safety, and general welfare of the residents and businesses within the City, while limiting any negative impacts;
WHEREAS, the City intends to be on the forefront of groundbreaking research, science, innovation, and development of treatment for symptoms and cures in the field of medicinal cannabis, as scientific research, studies, and data have established that medicinal cannabis can help patients with a vast array of medical conditions; WHEREAS, the City desires to reduce the illegal market for cannabis while minimizing the chances of social harm and creating jobs and revenue for the City; and WHEREAS, nothing in this Ordinance shall be construed to allow persons to engage in conduct that violates the law, endangers others, causes a public nuisance, allows the illegal use or diversion of cannabis, or allows any activity relating to cannabis that is otherwise illegal under California state law, as amended.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CUDAHY DOES ORDAIN AS FOLLOWS:

SECTION 1. The above recitals are true and correct and are incorporated herein.

SECTION 2. Title 20 (Zoning) of the Cudahy Municipal Code is hereby amended by the addition of a new Chapter 20.120 (Commercial Cannabis Overlay Zone), which shall read as follows:

Chapter 20.120 - Commercial Cannabis Overlay Zone.

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20.120.010 Definitions
For purposes of this Chapter 20.120, the following definitions shall apply:
"Commercial cannabis activities" mean the cultivation, possession, manufacture, distribution, processing, storing, laboratory testing, packaging, labeling, transportation, delivery or sale of cannabis and cannabis products. ) "Cannabis" means all parts of the Cannabis sativa Linnaeus, Cannabis indica, or j Cannabis ruderalis, whether growing or not; the seeds thereof; the resin, whether crude or purified, extracted from any part of the plant; and every compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin. "Cannabis" also means the separated resin, whether crude or purified, obtained from cannabis. "Cannabis" also means marijuana as defined by Section 11018 of the California Health and Safety Code as enacted by Chapter 14017 of the Statutes of 1972. Cannabis does not include the mature stalks of the plant, fiber produced from the stalks, oil or cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of the plant which is incapable of germination. For the purpose of this Chapter, cannabis does not mean industrial hemp as that term is defined by Section 81000 of the California Food and Agricultural Code or Section 11018.5 of the California Health and Safety Code.
"Cannabis product" means cannabis that has undergone a process whereby the plant material has been transformed into a concentrate, or other cannabis derivative, including, but not limited to, concentrated cannabis, or an edible or topical product containing cannabis or concentrated cannabis and other ingredients. "Day care center" means any child day care facility other than a family day care home, and includes infant centers, preschools, extended day care facilities, and schoolage child care centers.
"Overlay Zone" means the commercial cannabis overlay zone, whose area and boundaries are attached to City Council Ordinance No. 673 as Exhibit "A" "MAUCRSA" means the Medicinal and Adult-Use Cannabis Regulation and Safety Act, as may hereinafter be amended.
"Youth center" means any public or private facility that is primarily used to host recreational or social activities for minors, including, but not limited to, private youth membership organizations or clubs, social service teenage club facilities, video arcades, or similar amusement park facilities.

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20.120.020 Prohibitions.

Adult-use commercial cannabis activities and medicinal commercial cannabis activities, as both are described in state law, including, but not limited to MAUCRSA, are hereby prohibited unless otherwise allowed in this Chapter.

20.120.030 Overlay zone.

Medicinal commercial cannabis activities, except retail dispensaries that are open to the public for point-of-sale purchases, shall be allowed within the Overlay Zone pursuant to a development agreement adopted in accordance with the Development Agreement Law (Gov. Code, § 65864 et seq.) and Cudahy Municipal Code Chapter

20.28 (Development Agreements). No such activities shall be permitted without a development agreement within or outside of the boundaries of the Overlay Zone.

The City may approve or deny such a development agreement in its sole and absolute discretion.

20.120.040 Particular restrictions for Atlantic Avenue.

Section 20.120.030 notwithstanding, no cannabis-related business shall be located within the Overlay Zone and on Atlantic Avenue with a storefront facing Atlantic Boulevard unless such business employs and effectuates a business model with a primary entertainment purpose.

20.120.050 Indoor Horticulture.

Indoor horticulture, excluding cannabis horticulture shall be permitted by-right within the Overlay Zone.

20.120.060 Prohibition on new schools, day cares, and youth centers in overlay zone.

The establishment of public or private schools providing instruction in kindergarten or any grades 1 through 12, day care center, or youth center is prohibited within the Overlay Zone, or within 600 feet of the boundaries of the Overlay Zone, is hereby prohibited, unless otherwise mandated under state or federal law. An existing public or private school providing instruction in kindergarten or any grades 1 through 12, day care center, or youth center located within the Overlay Zone, or within 600 feet of the boundaries of the Overlay Zone shall be considered legal nonconforming, in accordance with Chapter 20.24 (Legal Nonconforming) of Title 20 (Zoning) of the Cudahy Municipal Code.

20.120.070 Temporary permits for local events - rights reserved.

The City reserves the right to issue temporary permits for onsite cannabis sales to, and consumption by, persons 21 years of age or older at a county fair, district agricultural association event, or other similar event authorized under state law, which is located within the Overlay Zone, pursuant to the provisions of Subdivision (e) of Business and Professions Code Section 26200.

SECTION 3. Subsection (3)(p) of Section 20.64.090 (Uses Permitted in Residential Zones by Conditional Use Permit) of Chapter 20.64 (Residential Districts) of Title 20 (Zoning) of the Cudahy Municipal Code is hereby amended to read as follows:

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(p) Schools, public and private, excluding schools providing instruction in kindergarten or any grades 1 through 12 located within 600 feet of a residential zone located within the Commercial Cannabis Overlay Zone illustrated in Exhibit "A" to City Council Ordinance No. 673, unless otherwise mandated under state or federal law.

SECTION 4. Subsection (24) of Section 20.68.100 (Uses Permitted in Residential Zones by Conditional Use Permit) of Chapter 20.68 (Commercial and Professional Districts) of Title 20 (Zoning) of the Cudahy Municipal Code is hereby amended to read as follows:
(24) Day care centers, excluding those occupying any portion of the CC zone located within 600 feet of the Commercial Cannabis Overlay Zone illustrated in Exhibit "A" to City Council Ordinance No. 673, unless otherwise mandated under state or federal law.

SECTION 5. Subsection (49) of Section 20.68.100 (Uses Permitted in Residential Zones by Conditional Use Permit) of Chapter 20.68 (Commercial and Professional Districts) of Title 20 (Zoning) of the Cudahy Municipal Code is hereby amended to read as follows:
(49) Schools, colleges, and universities, accredited, including appurtenant facilities that offer instruction required to be taught by the Education Code of the state of California and in which no pupil is physically restrained, excluding schools which provide instruction in kindergarten or any grades 1 through 12 that occupy any portion the CC zone located within 600 feet of the Commercial Cannabis Overlay Zone illustrated in Exhibit "A" to City Council Ordinance No. 673, unless otherwise mandated under state or federal law.

SECTION 6. Subsection (50) of Section 20.68.100 (Uses Permitted in Residential Zones by Conditional Use Permit) of Chapter 20.68 (Commercial and Professional Districts) of Title 20 (Zoning) of the Cudahy Municipal Code is hereby amended to read as follows:
(50) Schools, business and professional, including art, barber, beauty, dance, drama, music, and swimming, excluding schools which provide instruction in kindergarten or any grades 1 through 12 that occupy any portion the CC zone located within 600 feet of the Commercial Cannabis Overlay Zone illustrated in Exhibit "A" to City Council Ordinance No. 673, unless otherwise mandated under state or federal law.

SECTION 7. Subsection (46) of Section 20.68.150 (Uses by conditional use permit in C-M Zone) of Chapter 20.68 (Commercial and Professional Districts) of Title 20 (Zoning) of the Cudahy Municipal Code is hereby amended to read as follows:
(46) Schools, colleges, and universities, accredited, including appurtenant facilities which offer instruction required to be taught by the Education Code of the state and in which no pupil is physically restrained, excluding schools which provide instruction in kindergarten or any grades 1 through 12 that occupy any portion the C-M zone located within 600 feet of the Commercial Cannabis Overlay Zone illustrated in Exhibit "A" to City Council Ordinance No. 673, unless otherwise

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mandated under state or federal law.

SECTION 8. Subsection (47) of Section 20.68.150 (Uses by conditional use permit in C-M Zone) of Chapter 20.68 (Commercial and Professional Districts) of Title 20 (Zoning) of the Cudahy Municipal Code is hereby amended to read as follows:
(47) Schools, business and professional, including art, barber, beauty, dance, drama, music, and swimming, excluding schools which provide instruction in kindergarten or any grades 1 through 12 that occupy any portion the C-M zone located within 600 feet of the Commercial Cannabis Overlay Zone illustrated in Exhibit "A" to City Council Ordinance No. 673, unless otherwise mandated under state or federal law.

SECTION 9. Title 5 (Business License and Regulations) of the Cudahy Municipal Code is hereby amended by the addition of a new Chapter 5.20 (Cannabis Permitting and Regulation), which shall read as follows:

Chapter 5.20 - Cannabis Permitting and Regulation.

5.20.010 Section Intent and Purposes.

The intent and purpose of this Chapter is to regulate Commercial Cannabis Activity (as defined below) in accordance with State Law (as defined below) to promote the health, safety, morals, and general welfare of the residents and businesses within the City. The City is authorized to regulate this activity pursuant to State Law, including, but not limited to, MAUCRSA. The goals of this regulation for Commercial Cannabis Activity include:
(a) To comply with the goals and guidance set forth in the Cole Memo. (b) To minimize the size of the illegal market for Cannabis in the City and the surrounding regions.
(c) To create jobs, revenue, and economic growth for the City and its residents. (d) To enable law enforcement and regulators to have sufficient rights to inspect and audit Cannabis Permittees and take expeditious action against Cannabis Permittees who violate the requirements of this Chapter. (e) To minimize social harms which may arise from Cannabis including youth consumption or intoxicated driving.
(f) To regulate the manner of advertising and location of Cannabis Permittees such that public nuisance is minimized.

5.20.020 Definitions.

For purposes of this Chapter, the following definitions shall apply, unless the context clearly indicates otherwise:
(a) "Applicant" means an Owner seeking a Cannabis Permit pursuant to this Chapter.
(b) "Cannabis" means all parts of the Cannabis sativa Linnaeus, Cannabis indica, or Cannabis ruderalis, whether growing or not; the seeds thereof; the resin, whether crude or purified, extracted from any part of the plant; and every

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compound, manufacture, salt, derivative, mixture, or preparation of the plant, its seeds, or resin. Cannabis also means the separated resin, whether crude or purified, obtained from cannabis. Cannabis also means marijuana as defined by Section 11018 of the California Health and Safety Code as enacted by Chapter 14017 of the Statutes of 1972. Cannabis does not include the mature stalks of the plant, fiber produced from the stalks, oil or cake made from the seeds of the plant, any other compound, manufacture, salt, derivative, mixture, or preparation of the mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of the plant which is incapable of germination. For the purpose of this Chapter 5.18, Cannabis does not mean industrial hemp as that term is defined by Section 81000 of the California Food and Agricultural Code or Section 11018.5 of the California Health and Safety Code.
(c) "Cannabis Permit" means a permit issued by the City to conduct a Commercial Cannabis Activity, including, but not limited to a Cultivation Permit, Distribution Permit, Manufacturing Permit, Microbusiness Permit, Retail Delivery Permit, or Testing.
(d) "Cannabis Permittee" means a Person who holds a Cannabis Permit. (e) "Cannabis Product" means cannabis that has undergone a process whereby the plant material has been transformed into a concentrate, or other cannabis derivative, including, but not limited to, concentrated cannabis, or an edible or topical product containing cannabis or concentrated cannabis and other ingredients.
(f) "City" shall mean the City of Cudahy.
(g) "City Coden means the City of Cudahy Municipal Code. (h) "City Manager" means the City Manager of the City of Cudahy. (i) "Cole Memo" means the August 29, 2013 United States Department of Justice memorandum offering guidance on federal enforcement priorities regarding Cannabis.

U) "Commercial Cannabis Activity(ies)" means the cultivation, possession, manufacture, distribution, processing, storing, laboratory testing, packaging, labeling, transportation, delivery or sale of Cannabis and/or Cannabis Products. (k) "Cultivation" means any activity involving the planting, growing, harvesting, drying, curing, grading, or trimming of Cannabis.
(I) "Cultivation Permit" means a Cannabis Permit for the Indoor Cultivation of Cannabis in accordance with the terms and conditions of this Chapter and the Development Agreement for the applicable Cannabis Permit issued to the particular Cultivation Permittee.
(m) "Cultivation Permittee" means an applicant who has applied for and has been issued a Cultivation Permit by the City pursuant to the terms and conditions of this Chapter.

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(n) "Day Care Center" means any child day care facility other than a family day care home, and includes infant centers, preschools, extended day care facilities, and schoolage child care centers.
(o) "Development Agreement" means an agreement adopted pursuant to the Development Agreement Law (Gov. Code, § 65864 et seq.) and Cudahy Municipal Code Chapter 20.28 (Development Agreements), which provides agreed upon community benefits to the City.
(p) "Distribution" means the procurement, sale, and transport of cannabis and cannabis products between persons authorized to engage in permitted commercial cannabis activities pursuant to this Chapter. (q) "Distribution Permit" means, with respect to a Distribution Permittee, a Cannabis Permit for Distribution in accordance with the terms and conditions of this Chapter and the Development Agreement for the applicable Cannabis Permit issued to such Distribution Permittee.
(r) "Distribution Permittee" means a Person that has been issued a Distribution Permit by the City pursuant to the terms and conditions of this Chapter. (s) "Fully Enclosed and Secure Structure" means a space within a building or other structure which has a complete roof enclosure supported by connecting walls extending from the ground to the roof, which is reasonably secure against unauthorized entry, provides complete visual screening or is behind fencing or other features providing complete visual screening, and which is accessible only through one or more lockable doors and is inaccessible to minors. (t) "Good Cause" for purposes of refusing or denying a Cannabis Permit, for revoking a Cannabis Permit, or for refusing or denying a Cannabis Permit renewal or reinstatement means: (i) the Applicant has not obtained approval by the City Council of a Development Agreement setting forth the general terms for the operation of commercial cannabis activity or breaches a term or terms of a Development Agreement approved by the City Council pursuant to this Chapter; (ii) The Applicant or Cannabis Permittee has violated the terms, conditions, or provisions of this Chapter, of state law, of any regulations or rules promulgated pursuant to state law or this Chapter, any applicable local rules, regulations, or conditions placed upon its state license or Cannabis Permit; (iii) the licensed Premises have been operated in a manner that adversely affects the public health, safety, or welfare or the safety of the immediate neighborhood in which the Commercial Cannabis Activity is being conducted; (iv) the Applicant or Cannabis Permittee has knowingly made false statements, misrepresentations, or material omissions on an application form, renewal form, or other document submitted to the City; (v) the Applicant or Cannabis Permittee's criminal history does not indicate that the Applicant or Cannabis Permittee is of Good Moral Character or the Applicant or Cannabis Permittee has been convicted of an offense that is substantially related to the qualifications, functions, or duties of the Applicant or Cannabis Permittee. However, if the City has issued a Cannabis Permit to the Applicant or Cannabis Permittee, the City shall not consider any

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criminal history of the Applicant or Cannabis Permittee that was disclosed to or discovered by the City prior to issuance of the Cannabis Permit and is confirmed by the Applicant or Cannabis Permittee. For any criminal history that was not disclosed to or discovered by the City prior to issuance of a Cannabis Permit, or that arose after the issuance of the Cannabis Permit, the City shall conduct a thorough review of the nature of the crime, conviction, circumstances, and evidence of rehabilitation of the Applicant or Cannabis Permittee, and shall evaluate the suitability of the Applicant or Cannabis Permittee based upon such review. In determining which offenses are substantially related to the qualifications, functions, or duties of the Applicant or Cannabis Permittee, the City shall consider factors set forth in Business and Professions Code Section 26057; (vi) the Applicant or Cannabis Permittee is employing or allowing to volunteer any person whose criminal history indicates that such person is not of Good Moral Character; (vii) the Applicant or Cannabis Permittee fails to allow inspection by City officials of the security recordings, activity logs, business records, or other accessible records pertaining to the activities conducted on the applicable Premises; or (viii) the Applicant or Cannabis Permittee allows for Physician Services to be conducted on the applicable Premises. (u) "Good Moral Character" means having a personal history that demonstrates the propensity to serve the public in a manner that reflects openness, honest, fairness, and respect for the law and rights and well-being of others. In determining Good Moral Character, the following standards shall apply: (i) a judgment of guilt in a criminal prosecution or a judgment in a civil action shall not be used, in and of itself, as proof of an individual's lack of Good Moral Character.

Such judgment, however, may be used as evidence in the determination and when so used, the individual shall be notified and shall be permitted to rebut the evidence by showing that, at the current time, he or she has the ability to, and is likely to serve the public, in a fair, honest, and open matter, that he or she is rehabilitated, and/or that the substance of the former offense is not substantially related to the applicable Commercial Cannabis Activity; and (ii) a prior conviction where the sentence, including any term of probation incarceration, or supervised release is completed for the possession of, possession for sale, sale, manufacture, transportation, or cultivation of a controlled substance, is not considered substantially related, and shall not be the sole ground for denial of a Cannabis Permit, except that any of the convictions set forth in Business and Professions Code Section 26057(b)(4), as may be amended, shall be deemed substantially related to applicable Commercial Cannabis Activity. (v) "Health and Safety Code" means the California Health and Safety Code, as amended from time to time.
(w) "Indoor" means within a Fully Enclosed and Secure Structure. (x) "Manufacture" or "Manufacturing" means to compound, blend, extract, infuse, or otherwise make or prepare a Cannabis Product from such blends, extractions, or infusions.

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(y) uManufacturing Permit" means a Cannabis Permit to Manufacture in accordance with the terms and conditions of this Chapter and the conditions of approval for the applicable Cannabis Permit issued to the particular Manufacturing Permittee.
(z) "Manufacturing Permittee" means a Person that has been issued a Manufacturing Permit by the City pursuant to the terms and conditions of this Chapter.
(aa) "Medicinal Permittee" means a Person who is issued a Cannabis Permit to engage in Commercial Cannabis Activity with respect to medicinal Cannabis in accordance with applicable City law and State Law, including MAUCRSA. (bb) "Microbusiness" means a commercial medicinal cannabis business facility of cultivation of medicinal cannabis on areas less than 10,000 square feet and also acts as a licensed distributor, manufacturer, and Delivery-only retailer, pursuant to State Law, including MAUCRSA. Microbusinesses shall not be open to the public for point-of-sale retail Cannabis sales.
(cc) "Microbusiness Permit" means a Cannabis Permit to establish and conduct a Microbusiness in accordance with the terms and conditions of this Chapter and the conditions of the Development Agreement for the applicable Cannabis Permit issued to the particular Microbusiness Permittee. (dd) "Microbusiness Permittee" means a Person who has been issued a Microbusiness Permit by the City pursuant to the terms and conditions of this Chapter.
(ee) "Outdoors" means any location within the City that is not within a Fully Enclosed and Secure Structure.
(ff) "Owner" means any of the following: (i) a Person with an aggregate ownership interest of 20% or more in the Person applying for a Cannabis Permit, unless the interest is solely a security, lien, or encumbrance; (ii) the chief executive officer of a nonprofit or other entity; a member of the boards of directors of a nonprofit; (iv) an individual who will be participating in the direction, control, or management of the person applying for a Cannabis Permit. (gg) "Permit Zone" means, with respect to a Person holding a Cannabis Permit, the overlay zone described in Cudahy Municipal Code Chapter 20.120 where such Cannabis Permit type is permitted to operate pursuant to a Development Agreement with the City.
(hh) "Person" includes any individual, entity, firm, co-partnership, joint venture, association, corporation, limited liability company, estate, trust, business trust, receiver, syndicate, or any other group or combination acting as a unit, and the plural as well as the singular.
(ii) "Physician Services" means the consultation by a State-licensed physician of a patient with the possible recommendation by such physician of medicinal Cannabis for such patient.

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OD "Premises" means the designated structure or structures and land specified in the application that is owned, leased, or otherwise held under the control of the Cannabis Permittee applicant or Cannabis Permittee where the Commercial Cannabis Activity will be or is conducted. The premises shall be a contiguous area and shall only be occupied by one Cannabis Permittee. (kk) "Retail Delivery" means the commercial transfer or delivery of Cannabis or Cannabis Products to a customer, patient, primary caregiver or Cannabis Permittee.
(II) "Retail Delivery Establishment" means a location where Cannabis or Cannabis Products are, either individually or in any combination, Delivered pursuant to State Law, including MAUCRSA. Retail Delivery Establishments shall not be open to the public for point-of-sale retail sales. (mm) "Retail Delivery Permit" means a Cannabis Permit to Deliver Cannabis and Cannabis Products to customers, patients, and primary caregivers in accordance with the terms and conditions of this Chapter and the conditions of the Development Agreement for the applicable Cannabis Permit issued to the particular Retail Delivery Permittee.
(nn) "Retail Delivery Permittee" means a Person that has been issued a Retail Delivery Permit by the City pursuant to the terms and conditions of this Chapter. (oo) "State" means the State of California.
(pp) "State Law" means all laws of the State of California, including, but not limited to, all rules and regulations adopted by State agencies and State regulatory entities, including subsequent amendments to such laws, rules, and regulations.
(qq) "State Medicinal license" means a State license for medicinal Commercial Cannabis Activities issued pursuant to State Law. (rr) "Testing" means the activities conducted by a Testing Laboratory. (ss) "Testing Laboratory" means an accredited laboratory, facility, or entity in the City that offers or performs tests of medicinal cannabis or medicinal cannabis products in accordance with State Law and City law:
(tt) "Testing Permit" means a Cannabis Permit for Testing the quality and makeup of Cannabis and Cannabis Products pursuant to the terms and conditions of this Chapter and the conditions of the Development Agreement for the applicable Cannabis Permit issued to the particular Testing Permittee. (uu) "Testing Permittee" means a Person who has been issued a Testing Permit by the City pursuant to the terms and conditions of this Chapter. (vv) "Volatile Solvent" means a Class I Flammable liquid as defined by the National Fire Protection Association, including butane and propane. (ww) "Youth Center" means any public or private facility that is primarily used to host recreational or social activities for minors, including, but not limited to,

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private youth membership organizations or clubs, social service teenage club facilities, video arcades, or similar amusement park facilities.

5.20.030 Commercial Cannabis Activity Prohibited.

All Commercial Cannabis Activity within the City is prohibited except as permitted by this Chapter.

5.20.040 Certain Commercial Cannabis Activity Permitted. Medicinal Commercial Cannabis Activities, except retail dispensaries that are open to the public for point-of-sale purchases, shall be allowed within the area set forth in the overlay zone/Permit Area illustrated in Exhibit "A" to City Council Ordinance No. 673 pursuant to a development agreement adopted in accordance with the Development Agreement Law (Gov. Code,§ 65864 et seq.) and Cudahy Municipal Code Chapter

20.28 (Development Agreements). No such activities shall be permitted without a Development Agreement within or outside of the boundaries of such overlay zone.

The City may approve or deny such a Development Agreement in its sole and absolute discretion. The City Manager is authorized to develop and promulgate policies and procedures consistent with the intent and spirit of this Chapter concerning the applications, application process, including, but not limited to, the information required of Applicants, and application review procedures, which shall inform the administration and protocols to be used and followed by the City in the application and hearing processes.

5.20.050 Business standards.

Commercial Cannabis Activity within the City shall be in conformance with the standards set forth in this Section, in addition to those additional standards that may be imposed through negotiated Development Agreement. The City Manager is hereby authorized to formulate and impose additional Business Requirements applicable to Cannabis Permittees in furtherance of the public health, safety, and/or welfare.
(a) Commercial Cannabis Activity shall only be allowed upon application and issuance of a Cannabis Permit and a Development Agreement by the City in accordance with the criteria and process set forth in this Chapter and City Code. (b) Zoning and Land Use.
(1) Operation Near Schools, Day Cares, and Youth Centers. Following the enactment of this Chapter, no new Premises shall be established, developed, or operated within 600 feet of a Day Care Center, Youth Center, or public or private school providing instruction in kindergarten or any grades 1 through 12 that is in existence at the time the Cannabis Permit is issued. All distances shall be measured in a straight line, without regard to intervening structures, from the nearest point of the building or structure in which the Premises are, or will be, located to the nearest property line of those uses describe in this Subsection. The restrictions set forth in this Subsection shall not apply to Premises which operate within 600 feet of any Day Care Center, Youth Center, or public or private school

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providing instruction in kindergarten or any grades 1 through 12, if such Premises existed prior to the establishment of the applicable Day Care Center, Youth Center, or school that is located within 600 feet of such Premises.
(2) Co-Location. All Commercial Cannabis Activity shall fully comply with all l mandates set forth in State Law. To the extent not prohibited under State Law, a Cannabis Permittee may be located within the same unit of the same Premises or building, facility or real property parcel as another Cannabis Permittee.
(3) Development Agreement.
a) Prior to commencing operations, all Cannabis Permittees shall enter into a Development Agreement with the City.
b) All Premises shall be operated in accordance with the terms of the applicable Development Agreement for the specified parcel of real property (or sub-portion thereof) upon which the Premises is located. c) Except as specified, Commercial Cannabis Activities shall not exceed the square footage authorized pursuant to the applicable Development Agreement.
d) All Premises shall be located in the Permit Zone pursuant to the applicable Development Agreement.
(c) Commercial Cannabis Activity is allowed only within Fully Enclosed and Secure Structures that are inaccessible to minors.
(d) Signage for any business must be applied for through the City's Planning Division, which shall require review and approval prior to installation. Business identification signage shall be limited to that needed for identification only, and shall not contain any logos or information that identifies, advertises, or lists the services or the products offered. No Cannabis Permittee shall advertise by having a person holding a sign and advertising the business to passersby, whether such person is on the Premises of the Cannabis Permittee or elsewhere including, but not limited to, the public right-of-way. (e) From any public right-of-way, there shall be no visible evidence of the consumption of any Cannabis Products. Commercial Cannabis Activity shall not adversely affect the health or safety of the nearby residents by creating dust, glare, heat, noise, smoke, traffic, vibration, odor or other impacts, and shall not be hazardous due to use or storage of materials, processes, products, or wastes. (f) Hours of operation limits, if any, shall be specified in terms mutually agreed upon in a Development Agreement.
(g) All Cannabis and Cannabis Products shall be kept in a secured manner during all business and nonbusiness hours.
(h) All Commercial Cannabis Activities shall operate within Premises that are compliant with all applicable State Laws and local laws.

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(i) Cannabis Permittees must pay all applicable taxes pursuant to all federal, State, and local laws, including, but not limited to, fees relating to infrastructure improvements within the Permit Zone.

U) Cannabis Permittees shall provide sufficient odor absorbing ventilation and exhaust systems so that odors outside the applicable Premises are not a nuisance on any adjacent property of public right-of-way. Any violation of this Section shall be remedied within thirty (30) days of the Cannabis Permittee receiving notice of such violation.
(k) Cannabis Permittees shall utilize product and inventory tracking software and accounting software that is consistent with reasonable business practices within the industry and the seed-to-sale tracking software being developed by the State. (I) Except permitted in this Chapter, on-site smoking, ingestion, or consumption of Cannabis or Cannabis Products shall be prohibited on Premises. Except to the extent otherwise permitted pursuant to this Chapter, the entrance of the Premises shall be clearly and legibly posted with a notice indicating that smoking, ingesting, or consuming Cannabis, Cannabis Products or alcohol on such Premises is prohibited.
(m) Signage for all Premises shall be in compliance with the City's sign code and application for all signs must be submitted to the City's Planning Division and comply with its sign permitting protocol.
(n) Alcoholic beverages and tobacco shall not be sold, stored, distributed, or consumed on the Premises. Cannabis Permittees shall not hold or maintain a license from the State Department of Alcohol Beverage Control to sell alcoholic beverages, or operate a business that sells alcoholic beverages or tobacco with respect to the Premises. In addition, alcohol shall not be provided, stored, kept, located, sold, dispensed, or used on the Premises.
(o) Physician Services shall not be provided at any Premises. (p) The Premises shall fully comply with all applicable rules, regulations, and laws including, but not limited to, zoning and building City Codes, the City's business license ordinances, the Revenue and Taxation Code, the Americans with Disabilities Act, and MAUCRSA.
(q) Each Cannabis Permittee shall provide the City Manager, or the City Manager's designee, with the name, phone number, facsimile number, and email address of an on-site representative of such Cannabis Permittee to whom the City and the public can provide notice if there are any operational problems associated with such Cannabis Permittee's Premises. Each Cannabis Permittee shall make reasonable and good faith efforts to encourage residents and the public to call this representative to resolve any operational problems before any calls or complaints are made to the City or law enforcement. (r) All Cannabis Permittees must comply with the following security requirements:
(1) General Security Requirements.

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a) Security cameras shall be installed and maintained in good working condition and used in a format approved by the City Manager. The cameras shall be in use 24 hours per day, 7 days per week. The areas to be covered by the security cameras include areas as determined by the City Manager, including, but not limited to, the area in which the primary Commercial Cannabis Activity occurs, e.g. the Cultivation area for a for a cultivator.
b) The Premises shall be alarmed with a reliable commercial alarm system that is operated and monitored by a security company or alarm business in a manner satisfactory to the City Manager.
c) Entrance to any storage areas shall be locked at all times and under the control of staff of the Cannabis Permittee.
d) The business entrance(s) and all window areas shall be illuminated during evening hours. The Applicant shall comply with the City's lighting standards regarding fixture type, wattage, illumination levels, shielding, etc., and secure the necessary approvals and permits, as necessary. e) All windows on the Premises shall be appropriately secured with all Cannabis and Cannabis Products securely stored.
f) Each Cannabis Permittee shall implement track and trace protocols, as noted above in this Section, in order to prevent diversion of Cannabis or Cannabis Products.
g) All waste and disposal containers shall be locked at all times and stored ins a secure area and, at all times, under the control of the Cannabis Permittee.
(2) Security Alarm Systems - Minimum Requirements.
a) Each Premises shall have a security alarm system installed by a licensed alarm company on all perimeter entry points and perimeter windows.
b) Each Premises must ensure that its location is continuously monitored. Premises may engage the services of outside vendors to fulfill this requirement, such as a private security firm.
c) Each Premises shall maintain up to date and current records and existing contracts on the Premises that describe the location and operation of each security alarm system, a schematic of security zones, the name of the licensed alarm company, and the name of any vendor monitoring the Premises.
(3) Lock Standards. At a minimum, all points of ingress and egress shall be secured with commercial-grade, non-residential door locks. (4) Video Surveillance Requirements.

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a) Prior to exercising the privileges of a Cannabis Permit issued under this Chapter, an Applicant must install fully operational video surveillance and camera recording system. The recording system must record in digital format and meet the requirements outlined herein.
b) All video surveillance records and recording must be stored in a secure area that is only accessible to the management staff of the Cannabis Permittee.
c) Video surveillance records and recordings must be made available upon request to the City Manager or designee for a purpose authorized by this Chapter or for any other State or local law enforcement purpose. d) Video surveillance shall be held in confidence by all employees and representatives of the City Manager, except that the City Manager may provide such records and recordings to any State or local law enforcement agency for any purpose authorized under this Chapter for any State or local law enforcement purpose.
e) A sign shall be posted in a conspicuous place near each point of public access, which shall not be less than 12 inches wide and 12 inches long, composed of letters not less than one inch in height, stating that "All Activities Monitored by Video Camera" or "These Premises Are Being Digitally Recorded" or otherwise advising of all persons entering the Premises that a video surveillance and camera recording system is in operation and recording all activity as provided in this Section. f) The Premises shall utilize video surveillance equipment and a camera system that shall be remotely accessible by the City and Los Angeles County Sheriff's Department.
(5) Video Surveillance Equipment.
a) Video surveillance equipment shall, at a minimum, consist of digital or network video recorders, cameras capable of meeting the recording requirements described in this Section, video monitors, digital archiving devices, and a color printable capable of delivering still photos. b) All video surveillance systems must be equipped with a failure notification system that provides prompt notification to a Cannabis Permittee of any prolonged surveillance equipment interruption and/or the complete failure of the surveillance.
c) Cannabis Permittees are responsible for ensuring that all surveillance equipment is properly functioning and maintained so that the playback quality is suitable for viewing and the surveillance equipment is capturing the identity of all individuals and activities in the monitored Premises.
d) All video surveillance equipment shall have sufficient battery backup to support a minimum of four hours of recording in the event of a power outage.

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(6) Placement of Cameras and Required Camera Coverage.
a) Camera placement shall be capable of identifying activity occurring within 20 feet of all points of ingress and egress and shall allow for the clear and certain identification of any individual and activities on the Premises.
b) All entrances and exits to the Premises shall be recorded from both indoor and outdoor vantage points.
c) The system shall be capable of recording all pre-determined surveillance areas in any lighting conditions. If the Premises has a medicinal cannabis cultivation area, a rotating schedule of lighted conditions and zero-illumination can occur as long as ingress and egress points to those areas remain constantly illuminated for recording purposes.
d) Areas where medicinal cannabis is grown, tested, cured, manufactured, or stored shall have a camera placed in the room facing the primary entry door at a height that will provide a clear unobstructed view of activity without sight blockage from lighting hoods, fixtures, or other equipment.
e) Cameras shall also be placed at each location where weighing, packaging, preparation, tagging activities occur, or other distribution preparation activities occur.
f) At least one camera must be dedicated to record the access points to the secured surveillance recording area.
(7) Location and Maintenance of Surveillance Equipment. a) Surveillance recording equipment must be housed in a designated, locked, and secured room or other enclosure with access limited to authorized employees, the City Manager or designee, Los Angeles County Sheriff's Department, as authorized by this Chapter, other State or local law enforcement purpose, and service personnel or contractors. b) Premises must keep a current list of all authorized employees and service personnel who have access to the surveillance system and/or surveillance system room on the Premises. Premises must keep a surveillance equipment activity log on the Premises to record all service activity, including the identity of all individuals performing services on system service, the service date and time, and the reason for such service to the surveillance system.
c) Off-site monitoring and video recording storage of the Premises by an independent third party may be authorized so long as standards exercised at the remote location meets or exceeds all of the standards applicable to onsite monitoring.

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d) Each Premises located in a common or shred building must have a separate surveillance room/area that is dedicated to that specific Premises. The facility that does not house the central surveillance room is required to have a review station, printer, and map of camera placement on the Premises. All minimum requirements for equipment and security standards as set forth in this Section apply to such review station. (8) Video Recording Retention Requirements.
a) All camera views of all recorded areas must be continuously recorded 24 hours a day.
b) All surveillance recordings must be kept for a minimum of 30 days and be in a format that can be easily accessed for viewing. Video recordings must be archived in a format that ensures authentication of the recording as legitimately-capture video and guarantees that no alteration of the recorded image has taken place.
c) The surveillance system or equipment must have the capabilities to produce a color still photograph form any camera image, live, or recorded, of the Premises.
d) The date and time must be embedded on all surveillance recordings without significantly obscuring the picture. e) Time is to be measured in accordance with the official United States time established by the National Institute of Standards and Technology and the U.S. Naval Observatory at www.time.gov. f) After the 30-day surveillance retention schedule has lapsed, surveillance video recordings must be erased or destroyed prior to being discarded or disposed of for any other purpose. Surveillance video recordings shall not be destroyed if the Cannabis Permittee knows or should have known of a pending criminal, civil, or administrative investigation or any other proceeding sfor which the recording may contain relevant information.
(9) Other Records. All records applicable to the surveillance system and cannabis tracking system shall be maintained on the Premises. At a minimum, Premises shall maintain a map of the camera locations, directions of coverage, camera numbers, surveillance equipment maintenance activity log, user authorization list and operating instructions for the surveillance equipment.
(s) Audit. Each Cannabis Permittee shall maintain accurate books and records in an electronic format, which detail all revenues and expenses of the business, including, but not limited to, all assets and liabilities. On no less than an annual basis, or at any time upon reasonable request of the City, each Cannabis Permittee shall file a sworn statement detailing business activity during the previous 12-month period (or shorter period based upon the timing of the request). The statement shall include gross sales for each month and all

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applicable taxes and fees paid or due to be paid. On an annual basis, each owner and operator shall submit to the City a financial audit of the business's operations conducted by an independent certified public accountant. Each Cannabis Permittee shall be subject to a regulatory compliance review and financial audit as determined by the City Manager or designee. (t) Inspections. The City Manager, or designee, or Los Angeles County Sheriff's Department shall have the right to enter all Premises from time to time unannounced during a Cannabis Permittee's hours of operation for the purpose of making reasonable inspections to observe and enforce compliance with this Chapter, to inspect and copy records required to be maintained under this Chapter, or to inspect, view, and copy recordings made by security cameras, all without requirement for a search warrant, subpoena, or court order, and subject to appropriate fees, as specified in the Development Agreement, or adopted by the City.

5.20.060 Application and fee requirements.
(a) All applicants wishing to obtain a Cannabis Permit from the City shall file an application with the City upon a form approved by the City Manager and shall pay a permit application fee as established by the City. The fee may vary depending on the type of Cannabis Permit. The City Manager or designee may require and conduct background checks, as necessary, to process and evaluate Cannabis Permit applications.
(b) Prior to operating in the City, each Cannabis Permittee shall timely and fully pay all fees associated with the establishment of Commercial Cannabis Activity.

The fees shall be as set forth in the schedule and fees and charges established by the City Council, including, but not limited to, the following:
(1) Application fee for accepting a registration application, due and payable in full at the time an application is submitted;
(2) Processing fee for the cost to the City of processing an application and reviewing, investigating, and scoring each application in accordance with any evaluation system to determine eligibility for issuance of a Cannabis Permit, due and payable in full at the time a registration application is submitted;
(3) Permit issuance fee for the cost to the City of preparing a Development Agreement, Planning Commission and City Council review of the Development Agreement and the Cannabis Permit, and preparation and issuance of the Cannabis Permit, as authorized by the Cannabis Permit; (4) Amended registration fee for the cost to the City of reviewing amendments or changes to the registration form previously filed on behalf of an Applicant, due and payable in full at the time amendments or changes to any Cannabis Permit form is submitted to the City;

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(5) Permit renewal fee for the cost ot the City of processing an application to renew a Cannabis Permit, due and payable in full at the time application is made to renew a Cannabis Permit; and
(6) Any fees set forth in the applicable Development Agreement.

5.20.070 Permit conditions.
(a) A Cannabis Permit application may be denied and not awarded by the City if:
(1) The Applicant or the Applicant's agent(s) has made one or more false or misleading statements or omissions in the application or during the application process.
(2) The proposed Premises or Commercial Cannabis Activity at the Premises is not allowed by State Law or City law.
(3) The Applicant is not a legal representative of the proposed Cannabis Permittee.
(4) The Applicant or any of its officers, directors, owners, managers, or employees is under 21 years of age.
(5) The Applicant's facility or its location is in violation of any building, zoning, health, safety, or other provision of this Chapter or of any State or local law that substantially affects the public health, welfare, safety, or morals, or the facility or its location is not permitted in the proposed area, or the issuing or continuation of a Cannabis Permit would be contrary ro the public health, welfare, safety, or morals.
(6) The Applicant or any of its officers, directors, owners, managers, or employees has been sanctioned by the City, State, or any county for unauthorized cannabis activities or has had a registration revoked under this Chapter in the previous 3 years.
(7) The Applicant or the Applicant's agent(s) have engaged in unlawful, fraudulent, unfair, or deceptive business acts or practices. (8) The Applicant has not been or is not in good standing with the City related to other or previous business activities operated in the City. (9) The Applicant has not satisfied all requirement of this Chapter. (10) For Good Cause, as defined in this Chapter.
(b) A Cannabis Permit shall be awarded by the City to Applicants in accordance with the process established by the City Manager.
(c) Before a Cannabis Permit can be issued to an applicant, a Cannabis Permit fee must be paid to offset all related costs to the City, and the proposed Premises must pass all applicable inspections.

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(d) Each Cannabis Permit is subject to the conditions of approval in the applicable Development Agreement for the parcel of real property upon which the Premises is located.
(e) Each Cannabis Permit is subject to any additional conditions that may be applied by the City at the time of issuance or renewal as necessary to properly regulate the applicable Commercial Cannabis Activities and to protect the public. (f) Each Cannabis Permittee shall execute a Development Agreement with the City to, among other things, fully reimburse the City for all fiscal impacts, costs, expenses, fees, and attorneys' fees incurred by the City related to the Cannabis Permit and the related Commercial Cannabis Activity of such Cannabis Permittee.
(g) Each Cannabis Permittee shall:
(1) Carry liability insurance in the amounts and types set by the City Manager or the City Manager's designee, and name the City as an additional insured on all such insurance policies.
(2) Execute an Indemnification Agreement prepared by the City that fully indemnifies the City for all liabilities associated with the Cannabis Permit, the Cannabis Permittee's Commercial Cannabis Activities, and any action taken by the Cannabis Permittee pursuant to this Chapter. Such indemnification may be set forth in the applicable Development Agreement.
(3) Defend the City, at the Cannabis Permittee's sole expense, in any action against the City or its agents, officers, officials, or employees associated with the Cannabis Permit, the Cannabis Permittee's Commercial Cannabis Activities, or any action taken by the Cannabis Permittee pursuant to this Chapter. The City may, at its sole discretion, participate in the defense of any such action, but such participation shall not relieve the Cannabis Permittee of its indemnification and reimbursement obligations. (4) Reimburse the City for all costs, expenses, fees, and attorney's fees incurred by the City related to any action against the City or its agents, officers, or employees associated with the Cannabis Permit, the Cannabis Permittee's Commercial Cannabis Activity, or any action taken by the Cannabis Permittee pursuant to this Chapter.
(h) A Cannabis Permittee shall keep the City and law enforcement updated with the names, addresses, and relevant criminal histories of the Applicant's Agents.

Relevant criminal histories shall include any drug-related or felony convictions, the nature of such offenses, and the sentences received for such convictions. (i) Transfer.
(1) Any Cannabis Permittee may not sell, transfer, pledge, assign, grant an option, or otherwise dispose of his or her ownership interest in the Commercial Cannabis Business authorized pursuant to the Cannabis Permit.

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(2) In order for a Cannabis Permittee to transfer its Cannabis Permit to any Person, such Cannabis Permittee must submit a transfer application to the City Manager or City Manager's designee. The City Manager or designee may create a transfer application and reasonable transfer application process, including mandatory fee, that Cannabis Permittees and the City must follow and pay for Cannabis Permit transfer requests. Each transfer request of a Cannabis Permit and the related transfer application is subject to the prior approval of the City Manager or designee. (3) Applicants for Cannabis Permits must show proof of lawful possession of the applicable location. Evidence of lawful possession consists of properly executed deeds of trust, leases, and other written instruments, as may be accepted by the City.
(4) The location shall only be the geographical area that is specifically and accurately described in executed documents verifying lawful possession.

No Cannabis Permittee is authorized to relocate to other areas or units within a building structure without first filing a change of location application and obtaining approval form the City regardless of any possessory interest or right to possession to such additional space. No Cannabis Permittee shall add additional contiguous units or areas, thereby altering initially-approved Premises without filing an application to modify the location on forms prepared by the City Manager, including any applicable processing fee.
(5) No Cannabis Permittee is authorized to sublet any portion of any Premises for any purpose unless all necessary forms and applications to modify the existing location to accomplish any subletting have been approved by the City.
(6) The City Manager shall develop and promulgate a process for the renewal of Cannabis Permits and the establish related fees, in accordance with applicable laws.

U) To the fullest extent permitted by law, the City does not assume any liability, and expressly does not waive sovereign immunity, with respect to any Commercial Cannabis Activities, or for the other activities of any Cannabis Permittee or for any other activities taking place at Premises. (k) Changing, Altering, or Modifying Location.
(1) After issuance of a Cannabis Permit, the Cannabis Permittee shall not make any physical change, alteration, or modification to the Premises that materially or substantially alters the location, production estimates, and/or usage of the location form the plans originally approved under the applicable Development Agreement, without the prior written approval of the City Council or designee. The Cannabis Permittee whose Premises are to be materially or substantially changed is responsible for filing an application with the City in order to obtain requisite approval.

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(2) Material or substantial changes, alterations, or modifications requiring approval include, but are not limited to, the following: (i) an increase or decrease in the total physical size or capacity of the location; (ii) the sealing off, creation of or relocation of a common entryway, doorway, passage, or other such means of public ingress and/or egress, when such common entryway, doorway, or passage alters or changes limited access areas; or (iii) the installation or replacement of electric fixtures or equipment, the lowering of a ceiling, or electrical modifications made for the purpose of increasing power usage ..
(3) The City Council or designee may grant approval for the types of changes, alterations, or modifications described herein upon the filing of an application by the Cannabis Permittee and payment of any applicable fee, subject to any requisite amendments to the applicable Development Agreement. The Cannabis Permittee must submit all information requested by the City Council or designee including, but not limited to, documents that verify the following: (i) the Cannabis Permittee will continue to have the exclusive possession of the Premises, as changed, by ownership, lease, rental agreement, or other means, and sole control over all activities; and (ii) the proposed change conforms to any and all City restrictions related to the time, manner, and place of regulation of the applicable Commercial Cannabis Activity.
(I) To the fullest extent permitted by law, the City does not assume any liability, and expressly does not waive sovereign immunity, with respect to any Commercial Cannabis Activities, or for the other activities of any Cannabis Permittee or for any other activities taking place at Premises.

5.20.080 Enforcement and Appeals.
(a) Any Commercial Cannabis Activity within the City in violation of this Chapter is hereby declared to be unlawful and a public nuisance. (b) Any Person who willfully or knowingly (i) engages in a violation of this Chapter or (ii) owns, possesses, controls, or has charge of any parcel of real property in the City upon which a violation of this Chapter is maintained and who has actual knowledge of such violation ( or would have actual knowledge of such violation after a reasonable inquiry), shall be subject to the penalties and remedies provided by this Chapter.
(c) Any violation of this Chapter shall constitute a separate offense for each and every day the violation occurs or persists.
(d) Any Person in violation of any provision of this Chapter or who causes another Person to be in violation of this Chapter shall have committed a misdemeanor. In addition which shall be punishable by a fine of up to one thousand dollars ($1,000) for each violation and for each day the applicable violation continues to persist.

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(e) Any person in violation of any provision of this Chapter shall be punishable by an administrative fine of up to a $1,000 per offense.
(f) Any material violation of this Chapter or any other relevant City law or State Law by a Cannabis Permittee, or a Cannabis Permittee's agent, is grounds for suspending or revoking the relevant Cannabis Permit. In addition, the City Manager or the City Manager's designee may suspend or revoke a Cannabis Permit, disqualify an Applicant from the application process, or elect not to renew a Cannabis Permit if any of the following occur:
(1) The City Manager or the City Manager's designee determines that the Cannabis Permittee has failed to comply with this Chapter, any condition of approval, or any agreement or covenant as required pursuant to this Chapter.
(2) The Cannabis Permittee's Commercial Cannabis Activities cease for more than ninety (90) calendar days.
(3) Ownership of the Cannabis Permittee is changed without approval from the City.
(4) The licensed Commercial Cannabis Activity moves from the licensed Premises to a different, unauthorized location.
(5) The Cannabis Permittee fails to provide remote access to the security cameras to the City Manager, the City Manager's designee, or Los Angeles County Sheriff's Department, or fails to allow inspection of the security recordings, the activity logs, or of the Premises by authorized City officials.
(g) Any decision regarding the suspension or revocation of a Cannabis Permit, disqualification of an Applicant from the application process, or election not to renew a Cannabis Permit may be appealed to an independent neutral third-party administrative hearing officer appointed by the City Manager or the City Manager's designee (the "Hearing Officer"). Said appeal shall be made by a notice of appeal from the Person appealing within thirty (30) days from the date of the City's decision. The appeal shall be accompanied by a written verified declaration setting forth the basis for the claim that the City's decision was improper. The Hearing Officer's decision shall be final and binding upon the City and the appellant Cannabis Permittee or Applicant. Alternatively, the City Manager may provide for the appeal to be made to the City Council, in lieu of a hearing officer. In such case, the City Council's decision shall be final and binding upon the City and the appellant.
(h) These penalties and remedies are cumulative, and in addition to any other penalties and remedies available to the City.

5.20.090 State Medicinal License Requirement.
(a) Cannabis Permittees must obtain a State Medicinal License in accordance with State Law, including, but not limited, to the temporary and permanent State Medicinal Licenses provided for in MAUCRSA.

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(b) Each Cannabis Permittee must expeditiously provide proof of receipt of the applicable State Medicinal License by such Cannabis Permittee to the City Manager or designee.

5.20.100 Medicinal Cannabis Cultivation.
(a) Purpose. The purpose and intent of this Section is to permit and regulate the medicinal Cannabis Cultivation in order to promote the health, safety, morals, and general welfare of the residents and businesses within the City. The City is authorized to regulate this activity pursuant to State Law. (b) Scope; Medicinal Cannabis. This Section permits and regulates the medicinal Cannabis Cultivation pursuant to State Law, including MAUCRSA.

Subject to the terms of this Chapter, Cultivation Permits may be issued by the City for medicinal Cannabis Cultivation pursuant to and in accordance with State Law, including MAUCRSA.
(c) Outdoor Cultivation is prohibited within the City.
(d) Indoor Cultivation is permitted only on properties within the applicable Permit Zone with a valid Cultivation Permit and other requisite permits and entitlements. (e) Indoor Cultivation may include growing Cannabis plants, harvesting Cannabis plants, and drying Cannabis flowers but shall not include the Manufacturing or of Cannabis Products, unless otherwise authorized pursuant to this Chapter. (f) Entrance to the Cultivation area, and all storage areas, of the applicable Premises shall be locked at all times and under the control of the staff of such Premises.

5.20.110 Medicinal Cannabis Products Manufacturing.
(a) Purpose. The purpose and intent of this Section is to permit and regulate the medicinal Cannabis Products Manufacturing to promote the health, safety, morals, and general welfare of the residents and businesses within the City. The City is authorized to regulate this activity pursuant to State Law. (b) Scope; Medicinal Cannabis. This Section permits and regulates medicinal Cannabis Products Manufacturing pursuant to State Law, including MAUCRSA.

Subject to the terms of this Chapter, Manufacturing Permits may be issued by the City for medicinal Cannabis Products Manufacturing, pursuant to and in accordance with State Law, including MAUCRSA.
(c) Medicinal Cannabis Products Manufacturing is a permitted use only on properties within the applicable Permit Zone with a valid Cultivation Permit and other requisite permits and entitlements.
(d) A Manufacturing Permittee must employ at least one (1) member of its personnel dedicated full time to quality control.
(e) The Manufacturing Permittee must establish standard operating procedures and batch records that comply with current good manufacturing practices and applicable State Law, including MAUCRSA.

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(f) All Cannabis Products produced by a Manufacturing Permittee must be labeled in compliance with applicable State Law, including MAUCRSA. (g) All Cannabis Products produced by a Manufacturing Permittee must be packaged in child resistant containers prior to leaving the Premises fOf such Manufacturing Permittee in accordance with applicable State Law, including MAUCRSA.
(h) Manufacturing Permittees may conduct Manufacturing using any type of solvents, including Volatile Solvents, or Manufacturing processes if such Manufacturing complies with the requirements of this Chapter and State or local law, including but not limited to Health and Safety Code Section 11362.775 (or any successive State Law) all applicable fire and building codes in the City and any other laws of the City designed to ensure the safety of such operation. (i) Manufacturing Permittees using Volatile Solvents for Manufacturing Cannabis Products must operate in a manner to reduce the risk of explosion or danger to public health, including through the use of a close-loop · or solvent dispersion system consistent with the requirements of Health and Safety Code Section 11362.775 (or any successive State Law).

U) If hazardous materials, flammable gas, flammable liquefied gas, flammable and combustible liquids, or other flammable material, as those terms are defined in California Fire Code Section 202, are to be used in the processing of medicinal Cannabis, then the provisions of California Fire Code Section 407 shall be applicable where hazardous materials are subject to permits under California Fire Code Section 50 (Hazardous Materials) are located on the Premises or where required by the applicable building or fire official.
(k) Storage, use, and handling of compressed gases in compressed gas containers, cylinders, tanks, and systems shall comply with California Fire Code Chapter 53. Partially full compressed gas containers, cylinders, or tanks containing residual gases shall be considered as full for the purposes of the controls required. Compressed gases classified as hazardous materials shall also comply with California Fire Code Chapter 50 for general requirements and California Fire Code Chapter 53 addressing specific hazards, including California Fire Code Chapter 58 (Flammable Gases), California Fire Code Chapter 60 (Highly Toxic and Toxic Materials), California Fire Code Chapter 63 (Oxidizers, Oxidizing Gases and Oxidizing Cryogenic Fluids, and California Fire Code Chapter 64 (Pyrophoric Materials). Prevention, control, and mitigation of dangerous conditions related to storage, use, dispensing, mixing, and handling of flammable and combustible liquids shall be in accordance with California Fire Code Chapters 50 and 57.
(I) Labeling Requirements - Edibles.
(1) Before a Manufacturing Permittee prepares any edible Cannabis or edible Cannabis Product for retail sale, it shall be labeled and placed in tamperevident packaging which at least meets the requirements of State Law, including, but not limited to, MAUCRSA.

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(2) All items to be sold or distributed shall be individually wrapped at the original point of preparation by the Cannabis Permittee. (3) Labeling must include a warning if nuts or other known allergens are used, and must include the total weight (in ounces or grams) of Cannabis in the package, not to exceed ten (10) milligrams of tetrahydrocannabinol (THC) per serving.
(4) A warning that the item is a medication and not a food must be clearly legible on the front of the package and/or must comply with state packing requirements.
(5) The package must have a label warning that the product is to be kept away from children.
(6) The label must also state that the product contains Cannabis and must specify the date of Manufacture and the Manufacture Permittee's information, including, but not limited to, address, and phone number. (7) Distributions must be in a properly labeled opaque package when distributed.
(8) The City Manager, or designee, may impose additional packaging and labeling requirements on Cannabis or Cannabis Products.

5.20.120 Medicinal Cannabis and Cannabis Products Retail Delivery (Retail Delivery Only, Dispensaries Prohibited).
(a) Purpose. The purpose and intent of this Section is to regulate the Retail Delivery of medicinal Cannabis and Cannabis Products in order to promote the health, safety, and general welfare of the residents and businesses within the City. The City is authorized to regulate this activity pursuant to the State Law. (b) Scope; Medicinal Cannabis Only. This Section permits and regulates the Retail Delivery of medicinal Cannabis and Cannabis Products pursuant to State Law, including MAUCRSA. Subject to the terms of this Chapter, Retail Delivery Permits may be issued by the City for the Retail Delivery of medicinal Cannabis and Cannabis Products pursuant to and in accordance with State Law, including MAUCRSA. The point-of-sale sale of Cannabis or Cannabis Products is strictly prohibited.
(c) Retail Delivery of Cannabis and Cannabis Products is a permitted use only on properties within the applicable Permit Zone with a valid Retail Delivery Permit and other requisite permits and entitlements.
(d) The Retail Delivery of medicinal Cannabis and Cannabis Products may only include the Retail Delivery of Cannabis and Cannabis Products by a Retail Delivery Permittee to a customer, patient or primary caregiver, in accordance with State Law, including MAUCRSA.
(e) Retail Delivery Permittees shall implement sufficient security measures to both deter and prevent unauthorized entrance into areas containing Cannabis

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and Cannabis Products and theft of Cannabis and Cannabis Products from the Retail Delivery Establishment or employees participating in Retail Delivery. (f) All Cannabis and Cannabis Products shall be stored in a secured and locked room, safe, or vault, and in a manner as to prevent diversion, theft, or loss. (g) Individuals shall not be allowed to remain on the Premises comprising of the Retail Delivery Establishment unless they are engaging in activity expressly related to the operations of the Retail Delivery Establishment or are a customer. (h) A Retail Delivery Permittee shall notify the City Manager or the City Manager's designee within 24 hours of discovering any of the following:
(1) Significant discrepancies identified during inventory. The level of significance shall be determined by the City Manager or the City Manager's designee.
(2) Diversion, theft, loss, or any criminal activity involving the Retail Delivery Establishment or any agent or employee of the Retail Delivery Establishment.
(3) The loss or unauthorized alteration of records related to Cannabis, Cannabis Products, registered qualifying patients, primary caregivers, or Retail Delivery Establishment agents or employees.
(4) Any other material breach of security.
(i) The Retail Delivery of medicinal Cannabis and Cannabis Products shall comply with all State and local Law, including all laws requiring presentment of government-issued identification card, physician's recommendation, or medicinal Cannabis identification card at the time of initial purchase.

U) With respect to medicinal Cannabis, physicians' recommendations for medicinal cannabis use shall be verified by a Retail Delivery Permittee prior to the Retail Delivery any medicinal Cannabis to a qualified patient or primary caregiver and at least every six months thereafter.
(k) A Retail Delivery Establishment may not employ or enter into any agreements with any physicians who recommend medicinal Cannabis; Physician Services are prohibited from any and all Retail Delivery Establishments. (I) A Retail Delivery Permittee shall inspect all Cannabis and Cannabis Products received for quality assurance prior to the Retail Delivery to any Person. (m) The Retail Delivery of Cannabis and Cannabis Products shall occur only after such Cannabis and Cannabis Products have been inspected and quality tested in accordance with applicable State Law, including MAUCRSA. (n) Each Retail Delivery Establishment shall do regular monthly inventories and record the total quantity of Cannabis and Cannabis on the Premises. These records shall be maintained for three years from the date created and shall be open to inspection by the City Manager, the City Manager's Designee, and law enforcement.

44 of 1055 ATTACHMENT E Page 717 of 3559
(o) A Retail Delivery Permittee shall register with the City each location where Cannabis or Cannabis Products are stored for purposes of Retail Delivery by such Retail Delivery Permittee within the City.
(p) A Retail Delivery Establishment shall maintain customer and patient and other business records in a secure location (including electronically or cloud-based) j. that is compliant with, as applicable, HIPAA and other federal and state privacy laws.
(q) During the Retail Delivery of Cannabis or Cannabis Products, each vehicle driver shall carry a copy of the Retail Delivery Permit, a copy of the Retail Delivery request, a form of government-issued identification, and all other information required by State and local Law. The driver shall present these documents upon the request of law enforcement, the City Manager, or the City Manager's designee.
(r) Prior to Retail Delivery of Cannabis and Cannabis Products, such Cannabis and Cannabis Products shall be labeled and placed in a tamper-evident package.

Labels and packages of Cannabis and Cannabis Products shall, at minimum, meet the requirements specified under State Law, including MAUCRSA. (s) All Retail Delivery vehicles shall:
(1) Be equipped with, and utilize, a vehicle alarm system. (2) Have and utilize a direct communication system with the related Retail Delivery Establishment.
(3) Keep all Cannabis and Cannabis Products in a secure and locked container.
(4) Have an internal partition between the driver and all passengers from the Cannabis and Cannabis Products storage containers that prevents access by the driver and passengers to all cannabis products from inside the vehicle.
(5) Not carry more Cannabis and Cannabis Products than allowed by State and local Law and required to fulfill all immediate Retail Delivery requests (6) Not display any logo, signage, or other information that identifies, advertises, or lists the services or the products offered.

5.20.130 Medicinal Cannabis and Cannabis Products Distribution. (a) Purpose. The purpose and intent of this Section is to permit and regulate the Distribution of Cannabis and Cannabis Products between Cannabis Permittees in order to promote the health, safety, morals, and general welfare of the residents and businesses within the City. The City is authorized to regulate this activity pursuant to State Law.
(b) Scope; Medicinal Cannabis Only. This Section permits and regulates the Commercial Cannabis Activity of Distribution of medicinal Cannabis and Cannabis Products pursuant to State Law, including MAUCRSA. Subject to the terms of this Chapter, Distribution Permits may be issued by the City for the

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j
45 of 1055 ATTACHMENT E Page 718 of 3559
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Distribution of medicinal Cannabis and Cannabis Products pursuant to and in accordance with State Law, including MAUCRSA. Distribution of Cannabis and Cannabis Products requires a Development Agreement with the City and must be located within the applicable Permit Zone. -,
(c) Distribution activities includes the receiving and releasing of Cannabis and Cannabis Products for inspection, Testing, and quality assurance, as required under applicable State Law and such other activities as are permitted pursuant to State Law.
(d) A Distribution Permittee shall only Distribute Cannabis and Cannabis Products between Cannabis Permittees or to facilities or portions of facilities wholly controlled by such Distribution Permittee to the extent permitted by State Law.
(e) A Distribution Permittee shall inspect all Cannabis and Cannabis Products received by it for quality assurance prior to Distributing to any Cannabis Permittee, as required under applicable State Law.
(f) In addition to the application requirements in Section 0, a Distribution Permittee shall register with the City each location within the City where Cannabis and Cannabis Products are stored for purposes of Distribution activities within the City.
(g) A Distribution Permittee shall Distribute Cannabis and Cannabis Products to Cannabis Permittees only after such Cannabis and Cannabis Products have been inspected and quality tested in accordance with applicable State Law, including MAUCRSA.
(h) A Distribution Permittee may also hold any other Permit type to the extent permitted by State Law. To the extent permitted by State law, a Distribution Permittee that also holds another Permit type may self-distribute its Cannabis Products.

5.20.140 Medicinal Cannabis and Cannabis Products Microbusiness. (a) Purpose. The purpose and intent of this Section is to permit and regulate the medicinal Cannabis and Cannabis Products Microbusiness in order to promote the health, safety, morals, and general welfare of the residents and businesses within the City. The City is authorized to regulate this activity pursuant to State Law, including MAUCRSA.
(b) Scope; Medicinal Cannabis Only. This Section permits and regulates Microbusinesses, pursuant to State Law, including MAUCRSA. Subject to the terms of this Chapter, Microbusiness Permits may be issued by the City pursuant to and in accordance with State Law, including MAUCRSA. (c) All Microrobusinesses shall require a Development Agreement with the City and must be located within the applicable Permit Zone.
(d) All components of a Microbusiness (i.e., Cultivation, Manufacturing, etc.) must be in compliance with the provisions of this Chapter and State Law, including MAUCRSA.

46 of 1055 ATTACHMENT E Page 719 of 3559
(e) The City may authorize the smoking, vaporizing, and ingestion of Cannabis or Cannabis Products on the Premises of a Microbusiness if all of the following are met:
(1) Access to the area where Cannabis consumption is allowed is restricted to persons 21 years of age and older.
(2) Cannabis consumption is not visible from any public place or nonagerestricted area. (3) Sale or consumption of alcohol or tobacco is not allowed on the Premises.

5.20.140 Medicinal Cannabis and Cannabis Products Testing. (a) Purpose. The purpose and intent of this Section is to permit and regulate the Testing of medicinal Cannabis and Cannabis Products in order to promote the health, safety, morals, and general welfare of the residents and businesses within the City. The City intends to be on the forefront of medicinal Cannabis research and Testing. The City is authorized to regulate this activity pursuant to State Law.
(b) Scope; Medicinal Cannabis Only. This Section permits and regulates Cannabis and Cannabis Products Testing, pursuant to State Law, including MAUCRSA. Subject to the terms of this Chapter, Testing Permits may be issued by the City for the Testing of medicinal Cannabis and Cannabis Products pursuant to and in accordance with State Law, including MAUCRSA. (c) Testing of Cannabis and Cannabis Products requires a Development Agreement with the City and must be located within the applicable Permit Zone. (d) Each Testing Permittee must employ at least one (1) full time quality control personnel employee.
(e) Testing Permittees must operate, and all Cannabis and Cannabis Products must be properly tested by Testing Permittees, in accordance with applicable State Law.
(f) All Testing devices used by a Testing Permittee must be "UL listed," and/or otherwise approved for the intended use by the City's Building Official, the Fire Department or other person designated by the City Manager or designee. (g) Each Testing Permittee must notify the State Department of Public Health and the City Manager, or the City Manager's designee, within one business day after the receipt of notice of any kind that its accreditation has been denied, suspended, or revoked.

SECTION 10. Recognizing that there is a potential conflict between federal and State law, it is the City Council's intention that this Ordinance shall be deemed to comply with applicable State Law and shall defer to such applicable State Law through preemption.

SECTION 11. The City Council determines that it is in the best interest of the residents of the City to allow Commercial Cannabis Activities in compliance with applicable State Law, including MAUCRSA, to be established and operated as permitted uses within certain areas of the City subject to the regulations and restrictions provided in this

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47 of 1055 ATTACHMENT E Page 720 of 3559
Ordinance. It is the City Council's intention that nothing in this Ordinance shall be construed to:

1. Allow a Person to engage in conduct that endangers others or causes a public nuisance.

2. Allow any activity relating to Cannabis that is otherwise not permitted under State law.

SECTION 12. The City Council finds that the actions contemplated by this Ordinance are exempt from the California Environmental Quality Act pursuant to Section 15061 (b )(3) and 15305 of the Guidelines, in that the Ordinance alone does not have the potential for causing a significant effect on the environment. Further permits and approvals will be required before any activity that will affect the environment will be permitted. In addition, Business and Professions Code Section 26055 exempts local ordinances from CEQA that authorizes commercial cannabis activity through discretionary review and approval.

SECTION 13. If any section or provision of this Ordinance is for any reason held to be invalid, unconstitutional, illegal, or unenforceable by any court of competent jurisdiction, or contravened by reason of any preemptive legislation, then such section or provision shall be severed and shall be inoperative, and the remainder of this Ordinance shall remain in full force and effect.

SECTION 14. By regulating Commercial Cannabis Activity, the City is only undertaking to preserve the general welfare through implementing the MAUCRSA. The City Council is not assuming, nor is it imposing on its officers and employees, an obligation for which a breach thereof would expose the City to liability in money damages to any Person who claims that such breach proximately caused injury. To the fullest extent permitted by law, the City shall assume no liability whatsoever, and expressly does not waive sovereign immunity, with respect to any provision of this Ordinance or for the activities of any Cannabis Permittee. To the fullest extent permitted by law, any actions taken by a public officer or employee under the provisions of this Ordinance shall not become a personal liability of any public officer or employee of the City. Nothing in this Ordinance shall be deemed or considered in any respects to constitute authorization to violate any law.

SECTION 15. Inconsistent Provisions. Any provision of the Cudahy Municipal Code or appendices thereto inconsistent with the provisions of this Ordinance, to the extent of such inconsistencies and no further, is hereby repealed or modified to the extent necessary to implement the provisions of this Ordinance.

SECTION 16. Severability. If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this Ordinance, or any part thereof is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance or any part thereof. The City Council hereby declares that it would have passed each section, subs,ection, subdivision, paragraph, sentence, clause or phrase thereof,

48 of 1055 ATTACHMENT E Page 721 of 3559
irrespective of the fact that any one or more section, subsection, subdivision, paragraph, sentence, clause or phrase would be subsequently declared invalid or unconstitutional.

SECTION 17. Publication and Effective Date. The Mayor shall sign and the City Clerk shall attest to the passage of this Ordinance. The City Clerk shall cause the same to be published once in a newspaper of general circulation within fifteen (15) days after its adoption. This Ordinance shall become effective thirty (30) days after adoption.

PASSED, APPROVED AND ADOPTED by the City Council of the City of Cudahy at the / ." ,_, regular meeting of this 11th day of September, 2017. ,.,_,,,_ /4. ~VY

STATE OF CALIFORNIA

COUNTY OF LOS ANGELES

CITY OF CUDAHY
)
)
)
SS:

Chris Garcia
Mayor
I, Richard Iglesias, Deputy City Clerk of the City of Cudahy, hereby certify that the foregoing Ordinance No. 673 was introduced for a first reading on the 14th day of August 2017 and approved for a second reading and adopted by said Council at its regular meeting held on the 11th day of September, 2017 by the following vote, to-wit:

AYES: Markovich, Hernandez, Garcia
)
I
l
NOES: Guerrero
ABSTAIN: None
ABSENT: Sanchez
.. --;' ~ j ~~----'~ -

Richard lgles~a~ / 7 · · · ·-:---___ __
Deputy City B r:I<
49 of 1055 ATTACHMENT E Page 722 of 3559
EXHIBIT "A": OVERLAY ZONE
IIABI! NA~ l'!ATIJRl!B
,-.... I._.J Cuclohy Boundary
-Railroad, EXISTING ZONING - Boundaries of Overlay Zone .,r Portion of High Density Residential Zone which shall be available for Medicinal Commercial Cannabis Activity upon rezoning by the City Council by General Plan Amendment, Zoning Map Amendment, or other means.

CUDAHY GENERAL PLAN
50 of 1055 ATTACHMENT E Page 723 of 3559
ATTACHMENT B.

Ordinance No. 698
51 of 1055 ATTACHMENT E Page 724 of 3559
ORDINANCE NO. 698
AN ORDINANCE OF THE CiTY COUNCIL OF THE CITY OF
CUDAHY, CALIFORNIA, APPROVING: (:i) A DEVELOPMENT
AGREEMENT [NO" DAl 8-00lCJ BY AND BET\iVEEN THE CITY OF CUDAHY AND VM EVERGR.EENY LLC, A 'WYOMING LIMITED
LIABILITY COMPANY AND (2) TI-0::: ISSUANCE OF A COMfviERCIAL

CANNABIS PERMIT
WHEREAS, to strengthen the public planning process, encourage private participation in comprehensive planning and reduce the economic risk of development, the Legislature of the State of California adopted Section 65864 et seq. of the California Government Code (the Devdopment Agreement Statute"); and
'WHEREAS, the Development Agreement Statute authorizes the City to enter into a property development agreement with any person having legal or equitable interest in real property for the development of such property in order to establish certain development rights; and WHEREAS, in accordance with California law, the City of Cudahy has adopted Municipal Code Chapter 20.28 (Development Agreements) [Renumbered as Part 9 of the Zoning Code §20.84.530-20.84.640 adopted by the City Council on 7/17/18] establishing the procedures and requirements for the consideration of development agreement with the City; and WHEP.EAS, on September 11, 2017, the City Council for the City of Cudahy passed Ordinance No. 673 establishing regulations and a discretionary review process for the allowance of medicinal-only commercial cannabis activities (cultivation, distribution, manufacturing, deliveries, micro-business and laboratory testing) in a specified Overlay Zone through a development agreement; and
WfIEREAS, all procedures of the California Environmental Quality Act ("CEQA"), California Public Resources Code §21000 et seq., and the CEQA guidelines, title 14 of the Califomia Code of Regulations, chapter 3, §15000 et seq. have been satisfied. The City has found that the proposed Project is Categorically Exempt from California Environmental Quality Act (CEQA) requirements under provisions of CEQA Guidelines Section 1530 I - Existing Facilities.

This exemption applies to projects characterized as alterations to existing facilities meeting the conditions described in Section 15301;
"WHEREAS, the City of Cudahy Planning Commission ("Planning Commission") conducted a properly noticed public hearing to consider approval of a Commercial Cannabis Permit and a Development Agreement (as defined below), at which testimony and evidence, both written and oral, were presented to and considered by the Planning Commission; and WHEREAS, the City Council shall approve a development agreement by ordinance; and WHER"tAS, subsequent to receipt of a report on the Planning Commission's actions, the City Council conducted a properly noticed public hearing to consider the approval of a Commercial Cannabis Permit and Development Agreement, at which testimony and evidence, both written and 52 of 1055

ATTACHMENT E

O,·dinanc;e No. 698
r.>age 2 ot4
oral, were presented to and co~1Sidered by the City CounciL NOW THEREFORFE) THE CITY COUNCIL 0 11' THE CITY OF CUDAHY DOES ORDAIN AS FOLLOWS:

S]~CTION 1. RECITALS
That the above Recitals are true and correct and are incorporated as though fully set forth herem.

SECTION 2, APPROVAL OF DEVELOPMENT AGREEMENT
That the City Council he::-eby approves the Development Agreement By and Eetv.reen the City of Cudahy and VIVI Evergreen, LLC a Wyoming limited liability company ("Development Agreement11 ) [DA#13-G01C], a copy of which is attached. hereto and incorporated. herein by this reference as Exhibit "A," subject to the terms and conditions stated therein.

SECTION 3. APPROVAL OF COMMERCIAL CANNABIS PERMIT
That the City Council hereby approves Commercial Cannabis Permit No. CC.P 18-0001, subject to th':! terms and conditions stated therein, to allow a Commercial Ca1mabis Facility for the Site located at 8222 Atfantic Avenue, City of Cudahy, CA as set forth in the Development Agreement. A copy of the permit is attached hereto and incorporated herein by this reference as Exhibit "B." The Commercial Cannabis Permit shall be issued upon execution by the City of the Development Agreement.

SECTOI\'! 4. SEVERARILITY
That the City Council declares that, should any provision, section, paragraph, sentence or word of this Ordinance be rendered or declared invalid by any final court action in a court of competent jurisdiction or by reason of any preemptive legislation, the remaining provisions, sections, paragraphs, sentences or words of this Ordinance as hereby adopted shall remain in full force and effect.

SECTION 5. EFFECTIVE DATE OF ORDINANCE
That this Ordinance shall w.ke effect t.'1..irty (30) days after its second reading by the City Council.

SECTION 6. EXECUTION OF DEVELOPMENT AGRE:E~1ENT
The Development Agreement shrJl not be executed by the City until on or after the effective date of the Ordinance.

SECTION 7. RECORDATION OF DEVELOPMENT AGREEEl\/J'.ENT
That the City Clerk is hereby directed to record the fully executed Development 53 of 1055

ATTACHMENT E

()rdin;:1r;ce -~ io. 6~}g
Pa.t/~ 3 of ,t
Agreement ,vi.th the County Recorder for the County of Les A11geles no later than ten (10) days after its execution.

SECTION ft CERTIFICi\. TION
That the City Clerk shall certify to the passage of this Ordina.1ce and shall cause the same to be published, in full or in summary format, according to law.

PASSEU, APPROVED AND ADOPTED by the City Council of the City of Cudahy at the regular meeting of this 18th day of December, 2018.

ATTEST:

Chris Garcia
Mayor
54 of 1055

ATTACHMENT E

Ordinance No. 698

STATE OF CALIFORNIA

COUNTY OF LOS ANGELES
CITY OF CUDAB:Y
) ) )

CERTIFICATION
SS:

I, Richard Iglesias, Deputy City Clerk of i:he City of Cudahy, hereby certify that the foregoing Ordinance No. 698 was introduced for a first reading on the 4th day of December, 2018 and approved for a second reading and adopted by said Council at its regular meeting held on the 18th day of December, 2018 by the following vote, to-wit:

AYES: Gonzalez, Hernandez, and Garcia
NOES: Sanchez
ABSENT: None
ABSTAIN: Markovich
55 of 1055

ATTACHMENT E

ATTACHMENT C.

Development Agreement 18-001C
56 of 1055 ATTACHMENT E Page 729 of 3559
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Recorded/Filed in Official Records
Recorder's Office, Los Angeles County,
California
04/19/19 AT 09:21AM
FEES: 0.00
TAXES: 0. 00
OTHER: 0.00 .

PAID: 0.00
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LEADSHEET
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57 of 1055

ATTACHMENT E

RECORDING REQUESTED BY
City of Cudahy
ANO WHEN RECORDED MA!L TO:

City of Cudahy
5220 Santa Ana Street
Cudahy, CA 90201
Attention: City Manager
==================================================================

SPACE ABOVE THIS LINE FOR RECORDER'S USE
Recording Fee Exempt per Government Code §6103

COMMERCIAL CANNABIS

DEVELOPMENT AGREEMENT

BETWEEN THE CITY OF CUDAHY AND

VM EVERGREEN, LLC
THIS DEVELOPMENT AGREEMENT (this "Agreement") is made and entered into this \l -tJ... day of r,;
-
, 20~ (the "Execution Date"), by and
between the CITY OF CUDAHY, a Califor ia munit(pal corporation ("City") and VM EVERGREEN, LLC a Wyoming limited liability company ("Owner") authorized to do business in the State of California. City and Owner are sometimes referenced together herein as the "Parties." In instances when a provision hereof applies to each of the Parties individually, either may be referenced as a "Party." The Parties hereby jointly render the following statement as to the background facts and circumstances underlying this Agreement.

RECITALS
A. The State of California enacted California Government Code Sections 65864 et seq. ("Development Agreement Statutes") to authorize municipalities to enter into development agreements with those having an interest in real property to strengthen the public planning process, encourage private participation in comprehensive planning, and reduce the economic risk of development in connection with the development of real property within their jurisdiction.

B. The purpose of the Development Agreement Statutes is to authorize municipalities, in their discretion, to establish certain development rights in real property for a period of years regardless of intervening changes in land use regulations, to vest VM Evergreen, LLC
DA# 18-001C

Development Agreement

58 of 1055

ATTACHMENT E

certain rights in the Owner, and to meet certain public purposes of the local government.

C. As authorized by the Development Agreement Statutes, the City has adopted Municipal Code Chapter 20.28 (Development Agreements) establishing the procedures and requirements for the consideration of development agreements with the City.

D. Owner currently holds a legal or equitable interest in real property considered in this Agreement which has a development area approximately 17,500 square feet located at 8222 Atlantic Ave., City of Cudahy, State of California (the "Site"). The Site includes Assessor's Parcel Number: 6224-023-019, and is more fully described in Exhibit A and shown on the map in Exhibit B. Both exhibits being attached hereto and incorporated herein by this reference.

E. Presently, Owner has a leased interest in a portion of the Site for the purpose of medicinal cannabis related activities which shall include, but not be limited to, facilities where cannabis is planted, grown, harvested, dried, cured, graded, trimmed, extracted, manufactured into cannabis products, distributed, or transported sold not as a store-front retail dispensary, or that does all or any combination of those activities ("Medicinal Cannabis"). The Site will include a non-cannabis lounge cafe. Such Medicinal Cannabis facilities shall operate in accordance with all applicable provisions of Business and Professions Code §§26000-26231.2; California Health and Safety Code Safety Code§§ 11357-11362.9 and 11362.7-11362.85; Revenue and Taxation Code §§ 34010-34021.5; Vehicle Code §§ 2429.7 and 23222; Water Code §§ 1831 , 1847, and 13276; and the City of Cudahy Municipal Code as it applies to such facilities (collectively the "California Cannabis Laws"). Prior to operating a medicinal cannabis cultivation facility, Owner shall be required to obtain a Medicinal Commercial Cannabis Permit from the City pursuant to City Ordinance No. 673.

F. Ultimately, Owner intends upon obtaining a state license issued, pursuant to California Cannabis Laws, to operate a medicinal commercial cannabis or adult use facility at the Site. The definition of "Owner" hereunder shall mean and refer to the fee simple owner and/or any authorized tenant of the Site to the extent such party holds or is covered by a Regulatory Permit. In the event the City of Cudahy permits adult use cannabis commercial activity, Owner shall receive priority processing for any corresponding City permits for the same to the extent authorized by law.

G. On December 3, 2017 Owner applied to this City for a Medicinal Cannabis Manufacturing Permit, Cannabis Cultivation Permit, Cannabis Distribution Permit and a Cannabis Retail Delivery Permit (hereinafter "Regulatory Permit") to conduct Medicinal Commercial Cannabis Activities . No such activities are permitted without a VM Evergreen, LLC
DA# 18-001C

Development Agreement

59 of 1055

ATTACHMENT E

Development Agreement within or outside the boundaries set forth in the Overlay Zone/Permit Area illustrated in Exhibit "A" to City Ordinance No. 673.

H. Owner presently intends to develop and open a medicinal marijuana facility on the Site consistent with the California Cannabis Laws and Project Approvals (known as the "Project"). The Project will include taking fresh and dried plant material and selectively extract the plant oils and components to produce a concentrate of products of medicinal cannabis of the same, only to other legally permitted persons and entities under the California Cannabis Laws ("licensed persons"), who operate retail dispensary outlets or other licensed facilities under the California Cannabis Laws, but would not include the dispensing or sale of Cannabis Products at the Project Site without further authorization by the City.

I. The proposed project includes a Commercial Cannabis Permit, which is a type of conditional use permit, to allow for a Commercial Cannabis Facility and a Development Agreement (DA) for commercial cannabis activities including manufacturing, cultivation, distribution, delivery, and a non-cannabis lounge cafe within four (4) currently vacant approximately 17,500 square foot buildings. The site is currently developed with four (4) industrial/commercial buildings. The proposed project will be built in two phases and includes the following commercial cannabis activities:
• Cultivation: Cultivation premises are located within Building C and consists of a 187 square foot check-in and kitchenette area, a 186 square foot administration office, a 54 square foot safe room, a 60 square foot restroom, a 345 square foot storage room with two (2) 2,000 gallon water tanks, a 377 square foot trimming room, a 132 square foot drying room, two (2) cultivation rooms totaling 1,890 square feet, and two (2) 600 water tanks located adjacent to the cultivation rooms. The total production space is 2,744 square feet with 1,376 square feet of total premises space. The total cultivation area is 4,120 square feet. • Manufacturing: Manufacturing premises are located within a 3,900 square foot space in Building A and a 2,150 square foot space in Building B. Building A consists of a 462 square foot packaging room, two (2) utility rooms totaling 163 square feet, a 156 square foot non-volatile CO2 extraction area with two (2) CO2 extractor systems, a 663 square foot post-extraction area with eight (8) vacuum ovens, a 3,127 square foot break room, a 60 square foot restroom, a 83 square foot formulation room, a 100 square foot cryogenic room with four (4) refrigerators, a 24 7 square foot product packaging room, a 169 square foot security office, a 29 square foot fire riser room, a 29 square foot data room, a 183 square foot administration office, and a 394 square foot shipping and receiving area. Building B consists of a 251 square foot product packaging room, a 39 square foot utility room, a 413 square foot non-volatile post-extraction room with eight (8) vacuum ovens, a 127 square foot formulation room with three (3) refrigerators, a 129 square foot cryogenic room with five (5) refrigerators, a 77 VM Evergreen, LLC
DA# 18-001C

Development Agreement

60 of 1055

ATTACHMENT E

square foot storage room, a 133 square foot office, two (2) non-volatile extraction booths totaling 172 square feet, and a 246 square foot mechanical room. The total production space is 3,526 square feet with 2,524 square feet of total premises space. The total manufacturing area is 6,050 square feet. • Distribution: Distribution premises are located within a 2,810 square foot space in Building A and consists of a 420 square foot packaging room, a 254 square foot tested batches room, a 470 square foot pre-testing batches room, a 438 square foot shipping and receiving area, a 156 square foot track and trace administration room, a 34 square foot samples room, a 39 square foot record keeping room, a 33 square foot data room, a 89 square foot security room, a 52 square foot check-in area, two (2) utility rooms totaling 77 square feet, a 135 square foot break room, and two (2) restrooms totaling 112 square feet. The total production space is 1,975 square feet with 835 square feet of total premises space.
• Delivery: Retail delivery premises are located within Building D and consists of a 176 square foot stock product room, a 113 square foot administration office, a 39 square foot kitchenette area, and a 72 square foot restroom. The total production space is 289 square feet with 111 square feet of total premises space. Control Access will be for delivery personnel only. Hours of operation and delivery protocol will be in line with state guidelines. The total delivery area is 400 square feet.
• Non-Cannabis Use: The non-cannabis lounge cafe is located within a 4, 120 square foot space in Building A and consists of a 1,838 square foot seating area, a 444 square foot VIP room, a 280 square foot cafe bar, a 100 square foot walkin cooler, a 145 square foot service room, a 141 square foot office, a 28 square foot data room, a 28 square foot file room, a 137 square foot storage room, and a men's and woman's restroom totaling 344 square feet. The total premises space is 4, 120 square feet.
• General Business Offices: The facilities office, distribution, and the noncannabis lounge cafe hours will be from 8 a.m. to 10 p.m., 5 days a week and facility operations will be 24 hours, with approximately seven (7) employees per shift. The delivery will operate 7 days a week from 8 a.m. to 10 p.m.

Parking/Loading/Access: The proposed project provides 18 parking spaces, including 3 accessible van spaces. Loading will take place on-site. In no event will loading occur within the public right-of-way. Vehicular access to the site will be through an existing driveway on Cecelia Street. Within the site, access to the structure will be through the secured front office entrance. The project complies with the CAL Green Tier 1 by incorporating stormwater pollution prevention measures, installing energy- and waterefficient equipment, and planting native and drought-tolerant landscaping at the front of the property.

VM Evergreen, LLC
DA# 18-001C

Development Agreement

61 of 1055

ATTACHMENT E

Security: The project will secure the facility against unauthorized entry by installing security lights on the exterior of the building to illuminate the side yards and parking area, installing commercial-grade locks, installing an alarm and video surveillance system, establishing procedures for identifying authorized persons, establish inventory controls, and install a secure surveillance vault to maintain the integrity of records. In addition, the applicant will engage a licensed security company to provide an operational security plan in compliance with Ordinance 673.

VM Evergreen, LLC will employ approximately 10 employees. As a term of the Development Agreement with the City, the facility must offer 50% of the employment opportunities to City residents. This will result in at least five (5) jobs in the City.

Currently, the site offers no employment opportunities to residents or otherwise, as the facility is vacant. The existing industrial buildings are located on a 33,835 square foot · lot, which is unmaintained with no landscaping. With the fac;ade and site improvements proposed by the applicant, the site would include a new security fence with lighting, 24- hour security cameras, 1,700 square feet of new landscaping area, various tenant improvements, and parking lot upgrades. All development will be consistent with the City's proposed design and landscaping guidelines.

VM Evergreen, LLC has agreed to provide living wages, full-time employment, and medical benefits to their employees, as a term of their development agreement with the City. In addition to employment and other economic opportunities, VM Evergreen, LLC would further the City's beautification efforts by providing on-site improvements, extensive landscaping, and enhance the security measures to the facility. VM Evergreen, LLC has demonstrated to the City that they are an exemplary corporate partner and would be dedicated to meeting the goals of the City and community. [x] Co-location, check if applicable:

Note MAUCRSA now authorizes a person to apply for and be issued more than one State license at one location provided the licensed premises are separate and distinct. See also, Cudahy Municipal Code Section 5.20.050(b)(2).

Owner has applied for four [4] license(s):
1) Manufacturing,
2) Cultivation,
3) Distribution
4) Delivery
J. On September 11, 2017, the City adopted Ordinance No. 673 permitting Certain Medicinal Commercial Cannabis Activities in strict compliance with the California Cannabis Laws under specified conditions and provisions. A referendum petition was VM Evergreen, LLC
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circulated for signatures; however, on November 1, 2017, the County Clerk for the County of Los Angeles determined that the referendum lacked sufficient signatures to delay the effective date of Ordinance No. 673. The City has recently been presented with a citizen initiative to repeal Ordinance 673 and ban all marijuana uses in all zones.

Applicant is advised to consult with legal counsel on this matter.

K. All procedures of the California Environmental Quality Act ("CEQA"), California Public Resources Code §21000 et seq., and the CEQA guidelines, title 14 of the California Code of Regulations, chapter 3, § 15000 et seq. have been satisfied.

L. The City has given public notice of its intention to adopt this Agreement and has conducted public hearings thereon pursuant to California Government Code §65867.

The City has found that the provisions of this Agreement and its purposes are consistent with the objectives, policies, general land uses and programs specified in City's General Plan, zoning code and municipal ordinances.

M. The City, in entering into this Agreement, acknowledges that certain City obligations hereby assumed shall survive beyond the terms of the present Council members, that this Agreement will serve to bind City and future Councils to the obligations hereby undertaken, and that this Agreement shall limit the future exercise of certain governmental and proprietary powers of City. By approving this Agreement, the Council has elected to exercise certain governmental powers at the time of entering into this Agreement rather than defer its actions to some undetermined future date. The terms and conditions of this Agreement have undergone extensive review by City and the Council and have been found to be fair, just and reasonable. City has concluded that the pursuit of the Project will serve the best interests of its citizens and that the public health, safety and welfare are best served by entering into this obligation. Owner has represented to City that it would not consider or engage in the Project absent City approving this Agreement.

N. The City agrees that Owner's land use entitlements for the Project shall vest for the term of this Agreement as described below.
0 . After conducting a duly noticed hearing on ________ , in conjunction with Section 20.28.030 of the City's Municipal Code, the Planning Commission of the City reviewed, considered and approved environmental clearance and recommended approval of the execution of this Agreement to the City Council. The Planning Commission found the Project: consistent with the objectives, policies, general land uses and programs specified in the general plan; compatible with the uses authorized in the Overlay Zone; in conformity with the public necessity, public convenience, general welfare and good land use practices; will not be detrimental to the health, safety and VM Evergreen, LLC
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general welfare of the city; will not adversely affect the orderly development of property or the preservation of property values; and will have a positive fiscal impact on the City.

P. After conducting a duly noticed hearing on Dace oJ b<' C !..-\, 2018. in conjunction with Section 20.28.060 of the City's Municipal Code, and after independent review and consideration, the City Council approved the execution of this Agreement.

The City Council found the Project: consistent with the objectives, policies, general land uses and programs specified in the general plan; compatible with the uses authorized in the Overlay Zone; in conformity with good land use practices; will not be detrimental to the health, safety and general welfare of the City; and is in the best interest of the City of Cudahy and its residents.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and legal sufficiency of which are hereby acknowledged, the Parties do hereby agree as follows:

1. Government Code and Municipal Code Required Elements a. Description of Property. Land situated in the City of Cudahy, County of Los Angeles, State of California; whose street address is 8222 Atlantic Ave., City of Cudahy.
b. Owner and Other Person with Legal or Equitable Interest.

Owner: VM Evergreen, LLC
Nature of Interest: Lease for a minimum of 10 years with Option to Renew for an additional 10 years.

If Owner is not the fee simple owner of the Site, check box below:
[x] Owner represents and warrants that the property owner has consented in writing to the execution and recordation of this Agreement against the Site. See attached Landlord Consent agreement, incorporated herein by this reference (Exhibit C).
c. Permitted Uses. The subject property may be used for any medicinal commercial cannabis facility as presently authorized under Sections 5.20.100 Medicinal Cannabis Cultivation; 5.20.110 Medicinal Cannabis Products Manufacturing; 5.20.120 Medicinal Cannabis Products Retail Delivery;

5.20.130 Medicinal Cannabis Products Distribution, of the municipal code, and for any other use as authorized under applicable provisions of the municipal code.

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d. Zoning. Owner shall guarantee that such activities outlined in Owner's Medicinal Commercial Cannabis Permit Application ("Application") conducted pursuant to this Agreement and under the Regulatory Permit shall comply with the City's municipal code, including the zoning ordinance and any and all development and construction requirements contained therein. Owner shall not conduct any business under this Agreement or under the Regulatory Permit without having obtained all necessary permits, licenses, and approvals from the City and State of California.
e. Reservation or Dedication of Land for Public Purposes. Sufficient roadway, sidewalk, and utility easements shall be reserved or dedicated to City for such purposes.

2. Term
This Agreement shall commence on the Effective Date and it shall end ten (10) years from the starting date, and it shall remain in full force and effect so long as the subject property is used for a commercial cannabis facility as authorized under sections 5.20.100, 5.20.110, 5.20.120 and 5.20.130 of the municipal code (as amended); provided, however, such use is not abandoned for a period of more than ninety (90) days.

This Agreement SHALL be extended for one (1) additional ten (10) year period following the expiration of the initial ten (10) year term upon the occurrence of all of the following :

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(i) The Owner shall give written notice to the City no later than one hundred twenty (120) days before the expiration of the initial ten (10) year term that the Owner desires to extend this Agreement for an additional ten (10) year period;
(ii) The Owner shows adequate evidence to the City that it has a legal and/or equitable interest in the Property and/or will have such interests for the duration of the extended term of the Agreement; (iii) The Owner shall deposit all fees required by the City necessary for processing the extension request and drafting necessary documentation;
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the Property or of any condition of approval imposed upon any entitlement granted by the City relative to the development of the Property for which Owner has been given a written notice to cure by the City and for which Owner has not cured or commenced to cure such default within thirty (30) days, if and as provided by such agreement or condition of approval.

3. Owner's Site and Floor Plans

4. a. Owner's site plan and floor plan for the facility are attached hereto as Exhibit D and incorporated into the Application.
b. A preliminary landscape plan shall be prepared and reviewed and approved by the City Manager and/or Community Development Manager. A final landscape plan shall be prepared and submitted in conjunction with building and site improvement plans prior to issuance of building permits for construction activities.
c. An exterior signage plan shall be prepared and reviewed and approved by the City Manager and/or Community Development Manager in accordance with the procedures and requirements of Section 5.20.0S0(d) of the municipal code.

Facility Operations
a. Standard Operating Procedures. Owner is a lawful entity that will only sell to other legally permitted persons and entities under the California Cannabis Laws. Prior to operating a medical marijuana cultivation, manufacturing, distribution, or delivery facility, Owner shall be required to obtain a Cannabis Permit from the City pursuant to City Ordinance No. 673. Further, and notwithstanding anything to the contrary, Owner may operate such medicinal cannabis-related activities as permitted in accordance with California state law, as may be amended, including without limitation, as long as such activity is not inconsistent with the Cudahy Municipal Code.

During the term of its regulatory Permit and the term of this Agreement, Owner shall lawfully operate in accordance with all state and local laws. Owner shall employ exemplary operating procedures to comply with state and local laws.

Owner's facility shall employ safety and security measures for the safety and security of its employees, visitors, vendors, and neighboring communities and properties.

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Owner shall fully comply with the minimum Business Standards regulating Medicinal Commercial Cannabis Activity set forth in new Section 5.20.050 of the Cudahy Municipal Code and such more specific operational requirements set forth in Exhibit E, "Business Standards", attached hereto. b. Security Plan. Owner shall secure approval of its proposed security plan by the Los Angeles County Sheriff or the City prior to operating. The security plan shall include, at a minimum and as appropriate, provisions for video surveillance, perimeter fencing and security, protection of the building(s) from vehicle intrusion, cash handling procedures, internal accounting controls, product handling and storage procedures, and a professionally monitored alarm system.

Equipment and systems used for video surveillance and building alarms shall be approved by City. See Cudahy Municipal Code Section 5.20.050(r) for minimum security requirements.

Video surveillance shall include, at a minimum, all site and facility entrances and access points, all spaces accessible by the public, all secured areas of the facility with restricted access, all interior spaces and rooms where medicinal cannabis products are handled and processed, shipping and receiving areas, cash storage areas, and other areas necessary to protect the safety of employees and the public and to ensure medical marijuana products are received, handled, stored, packaged , shipped, and distributed in compliance with applicable state and local laws and regulations. The video surveillance system shall be web-based with direct access provided to the Los Angeles County Sheriff upon request.

The security system shall also include sensors to detect entry and exit from all secure areas, panic buttons in appropriate locations, and a professionally monitored alarm system with glass breakage sensors and motion detectors.

Owner shall employ properly trained and licensed third-party security personnel to protect the welfare and safety of Owner and employees, and to ensure public safety to the neighboring community. Owner shall use security personnel 24 hours, 7 days a week. Security personnel may be armed so long as proper licensing and insurance requirements are followed and met by the third-party operator providing such security services.
c. Fire Department Approval. Owner shall not operate any facility, and no permit, license, or other approval issued by City shall be valid unless and until the Los Angeles County Fire Department has approved Owner's site plan, floor plan, safety plan, and any other plans that require its approval.

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d. Possession of Firearms. Except for licensed and bonded security personnel, no person employed by Owner shall be in possession of any firearm while on the premises or location without having first obtained a license from the appropriate state or local agency authorizing the person to be in possession of such firearm. Every such person in possession of a firearm while on the premises or location must provide the City Manager and the Los Angeles County Sheriff, ten days before bringing the firearm onto the premises, with the following:
1) A copy of the license issued to the person by the appropriate state or local agency authorizing him or her to possess such firearm; 2) A copy of his or her law enforcement identification (if he or she is employed by a law enforcement agency);
3) A copy of his or her California driver's license or California identification card; and
4) Any other information reasonably required by the Los Angeles County Sheriff to show that the individual is in compliance with the provisions of all laws regarding the possession and use of a firearm. e. Identification Display. Each owner, manager, employee, and individual member engaged in the cultivation, processing, manufacturing, distribution, or transporting of cannabis shall at all times while engaged in the duties of his or her position wear in plain sight, on his or her person and at chest level, a valid identification badge, issued by Owner.
f. Employee Background Checks/Procedures for Inventory Control to Prevent Non-Medical Diversion of Medical Cannabis. Only employees who receive clearance from the proper oversight authority shall be permitted to enter Owner's facility. Each employee will have to meet a criminal background investigation conducted by the Los Angeles County Sheriff, which at minimum shall include a LiveScan criminal history check, which City shall make a good faith effort to facilitate within a reasonable time following the issuance of a commercial cannabis permit(s) or license(s) to Owner.

Owner shall take all necessary and reasonable steps to prevent the distribution of any of its medicinal cannabis products to minors; prevent revenue from the sale or distribution of its medicinal cannabis and/or infused products from going to criminal enterprises, gangs and cartels; prevent the diversion of cannabis from California to any other state; prevent state-authorized cannabis activity from being used as a cover or pretext for the trafficking of other illegal drugs or other VM Evergreen, LLC
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illegal activity; prevent violence and the use of firearms in the cultivation, manufacture, testing, delivery and distribution of cannabis; discourage and educate against drugged driving and the exacerbation of other adverse public health consequences associated with cannabis use; disavow growing cannabis on public lands that creates attendant public safety and environmental dangers posed by such illegal uses; and discourage and educate against cannabis possession or use on federal property.
g. Quality Control and Testing. Owner shall utilize quality control measures and testing to ensure only the highest quality of commercial cannabis and infused products will be produced. Owner shall inspect the product to insure its identity and quantity, and shall have a testing lab perform testing of random samples prior to distribution to its patient collective membership affiliates.

Inspection and testing will be conducted by a testing lab off-site. Testing standards and procedures shall be in accordance with applicable state law and regulations.

All medicinal commercial cannabis products will undergo a quality assurance review in accordance with state law prior to distribution. Inventory procedures will be utilized for tracking and taxing purposes by the state. Owner shall employ an efficient record-keeping system to make transparent its financing, testing, and adverse effect recording, as well as recall procedures. Owner shall employ an efficient record-keeping system that will reflect its financing, testing, and adverse effect recording and product recall procedures.
h. Packaging of Medicinal Commercial Cannabis and Infused Products. All Owner commercial cannabis products shall be packaged and labeled as required by California Cannabis Law and applicable requirements and regulations issued by the State of California pursuant thereto. In addition to those packaging and labeling requirements, and packaging and labeling requirements set forth in Owner's Regulatory Permit application, as amended or supplemented, all medicinal commercial cannabis products shall be packaged in an opaque childproof container which shall contain a label or be accompanied by a leaflet or inset that states, at a minimum:
1) The name, address and telephone number of the licensed medicinal commercial cannabis facility to which the medicinal commercial cannabis product is distributed, sold, or transferred;
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2) The amount of medicinal commercial cannabis in the container; and

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3) The date the medicinal commercial cannabis was transferred to a licensed commercial cannabis facility.

Owner intends to produce infused products and shall secure any approval from the County of Los Angeles Health Department required for manufacturing and handling such products. Owner infused products shall not be produced, manufactured, stored or packaged in private homes. All medicinal commercial cannabis infused products shall be individually wrapped at the original point of preparation.
i. Point of Sale Tracking System. Owner shall maintain an inventory control and reporting system that accurately documents the location of medicinal cannabis products from inception through distribution, including descriptions, weight, and quantity. The inventory control and reporting system shall comply with the track and trace program required by California Cannabis Law and regulations issued thereunder.

Owner shall employ a electronic point of donation/sale system approved by the State of California for all point of donations/sales tracking from seed or inception to product distribution to other licensed commercial cannabis facilities. Such approved system shall track all medicinal commercial cannabis products, each edible, harvested flower, and/or manufactured concentrate, as well as gross sales (by weight and sale). Owner's point of sale system shall have the capacity to produce historical transactional data in accordance with City's requirements. j. Record Keeping. Owner shall maintain records for all medicinal commercial cannabis and/or infused products. Owner shall comply with all record-keeping responsibilities that are set forth in Municipal Code Sections

5.20.0S0(s), 5.20.11 0(e) & 5.20.120(n), including complete and up-to-date records regarding the amount of commercial cannabis cultivated, produced, manufactured, harvested, stored, tested, distributed, delivered or packaged at Owner's facility.
k. Processing, Handling, Storing, and Distribution of Medicinal Commercial Cannabis and Related Products. Medicinal commercial cannabis cultivation, handling, storing, and processing shall be concealed from public view at all stages of growth and processing, and there shall be no exterior evidence of cultivation or processing occurring at the premises from a public right-of-way or from an adjacent parcel. Commercial cannabis cultivation, handling, storing, processing, or distribution shall not create offensive odors; create excessive dust, heat, noise, smoke, traffic, or other impacts that are disturbing to people of normal sensitivity residing or present on adjacent or nearby property or areas VM Evergreen, LLC
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open to the public; or be hazardous due to use or storage of materials, processes, products, or wastes.

Owner shall store its commercial cannabis and/or commercial cannabis products in a locked safe room with T-card identification access for management only. The safe room shall be constructed of fire-rate walls with numerous cameras installed to view all entries and exits from the safe room, as well as all other activities performed within Owner's facility. Owner will not conduct outdoor operations except as related to lawful delivery and transportation of medicinal commercial cannabis and infused products. Owner will not store medicinal commercial cannabis or related products in its delivery vehicle outside normal operating hours of the facility.

Medicinal commercial cannabis products shall be sold or distributed only to licensed dispensaries in California. Excess or contaminated product will be securely stored on-site until it is properly disposed. Disposal may include composting, incineration, land-fill disposal through the local waste management hauler, or other disposal methodology in accordance with state and county health and safety codes and regulations.

I. Odor Control. All structures shall have ventilation and filtration systems installed that prevent commercial cannabis plant odors from exiting the interior of the structure. The ventilation and filtration system shall be approved by the Building Official and installed prior to commencing cultivation or manufacturing within the allowable structure. Facility air intake, exhaust, and recirculating system shall be of industrial grade. Activated charcoal, recirculating, and closed loop aeration systems will be utilized as necessary for effective odor control and management.
m. Description of Banking Plan. Owner shall seek to open a bank account under the name of Owner or its associated management company to provide transparency for funds received, operational costs, including payroll, tax payments to the state and federal governments. Should a bank account not be forthcoming, Owner shall implement other industry standard banking and/or other industry standard transactional mechanisms.
n. Transportation Plan. Owner shall comply with all state and local law regarding transportation, including the rules governing delivery service. Owner shall retain a list of names and cellular contact numbers for all employees engaged in transportation of commercial cannabis products and provide it to the applicable oversight authority, keeping the list current and up to date.

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5. Owner will keep complete and up-to-date records documenting each transfer of commercial cannabis to other lawful cooperative corporations, including the amount provided, the form or product category in which the commercial cannabis was provided, the date and time provided, the name of the employee making the transfer, the name and address of the other lawful cooperative corporation to whom delivery is made, and the amount of any related donation or other monetary transaction.

Community Relations, Employment, and Wages
a. Public Outreach and Education Program. The Owner shall coordinate and cooperate with City and other Owners of medicinal commercial cannabis facilities located within City of Cudahy in the establishment and implementation of appropriate public outreach and education programs, including but not limited to outreach and interface with public and private schools, youth organizations, religious organizations, health care providers, drug abuse treatment providers and mental health and drug counseling providers. The public outreach and education programs shall be approved by City.
b. Community Benefits Program. The Owner shall coordinate and cooperate with the City and other Owners of medicinal commercial cannabis facilities located within the City of Cudahy in the establishment, implementation, and funding of a community benefits program which could include such items as capital improvements, new community recreation facilities, expansion and/or improvement to existing facilities or other physical improvements that provide a benefit to the community, support of holiday and special community events, and support of local public service, public safety, litigation defense and special districts and social and community organizations. This community benefits program may be implemented by the City. The City will invite public participation in the decision-making process for identifying and prioritizing community needs and benefits, and identifying appropriate projects to be funded by the entity implementing this community benefits program. All projects under the community benefits program must be approved by the City.

Owner agrees, as a business expense, to pay the City the yearly sum of $66,667.00. Unless initialed below by the City Manager, this yearly sum shall be deposited in full into a dedicated account set up by the City in order to create, fund and implement a City-approved community benefits program. ~ initialed here by the City Manager, Owner has been approved for the following payment plan: Within thirty days of the Effective Date of this AgreVment, the Owner shall deposit into the City's dedicated account, in good VM Evergreen, LLC
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funds, twenty percent (20%) of the yearly sum of $66,667.00 [initial payment calculated at $13,333.40] and shall pay the balance thereof over a period of ten (10) months payable in equal monthly installments of $5,333.36 per month. Each monthly payment shall be due and payable on the 1st day of each month and shall be deemed late on the 5th day of the month. The amount and schedule of payments may only be modified by the written consent of the City Manager at his sole and complete discretion.

Thereafter, on the anniversary date of the Effective Date of this Agreement, and yearly through-out the entire term of this Agreement and any extension thereof, Owner shall pay to the City, as a business expense, the yearly sum of $66,667.00, payable in the same manner as set forth above. c. Designation of Persons Responsible for Community Relations. At the time of this Agreement, Owner's day-to-day operations manager, Vicki Barajas, will be responsible for community inquiries and complaints and on-site during normal business hours.
d. Interface with Los Angeles County Sheriff/ Inspections. Owner's day-today operations manager, Vicki Barajas, will interface with the Los Angeles County Sheriff Department's assigned designee to ensure its operation complies with state and local laws and regulations. The City Manager, or designee, or the Los Angeles County Sheriff's Department's assigned designee acting at the City Manager's request and per his specific and limiting instructions, shall have the right to enter all Premises from time to time unannounced during hours of operation for the purpose of making reasonable inspections to observe and enforce compliance with this Agreement and state and local laws and regulations, without the requirement of a search warrant, subpoena, or court order, and subject to appropriate cost recovery fees set forth in this Agreement, or adopted by the City. See, Cudahy Municipal Code Section 5.20.0S0(t).

Owner's Initials
e. Local Recruitment, Hiring, and Training Programs. Owner is committed to making a good-faith effort to recruit, hire, and train City residents for employment by Owner. A good-faith effort means Owner shall take the following or similar actions to recruit and employ City residents: 1) Contact local recruitment sources to identify qualified individuals who are City residents, 2) Advertise for qualified City residents in trade papers and newspapers of general circulation in the area, and 3) Develop a written plan to recruit and employ City residents as a part of the its workforce. At a minimum, the Owner commits to a local annual hiring goal of · VM Evergreen, LLC
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6. 30% of total operational jobs for permanent and apprentice employees. This goal shall apply horizontally, across all departments and managerial positions. The Owner shall not be penalized or deemed in default under this Agreement if it is unable to achieve such a goal. "Local" is defined as within a 1-mile radius of the boundaries of the Overlay Zone. The Owner shall contact and work with a job referral agency assigned by the City Manager to implement a local hiring policy for permanent and apprentice employees. The purpose of the hiring policy is to facilitate the training and employment of local and disadvantaged job applicants for jobs with the Overlay Zone. Applicants for jobs shall not be disqualified from hiring solely on the basis of an arrest or conviction for a Cannabis-related crime that occurred prior to November 8, 2016, and could have been prosecuted as a misdemeanor or citation under current California law. The Owner shall report on compliance with the local hiring goals as part of its annual audit report. f. Living Wages. Living Wages. Owner shall pay all employees of the Facility, at a minimum, a Living Wage. A "Living Wage" is the higher of whatever the Owner currently pays its employees for similar work elsewhere or the following: the Full Cash Wage required to be paid by an employer to any individual under the City of Los Angeles Minimum Wage Ordinance [LAMC Sections 187 and 188], as adjusted annually.
g. Full-time Work. Owner shall make its best efforts to fill every position with a full-time employee. However, at no time shall Owner have a labor force that is composed of less than 50% full-time employees within its labor force, and Owner shall make a good faith effort to maintain a full-time employee level of 75%.

Owner agrees to provide to its eligible employees leave benefits, health and wellness benefits and other employee benefits to the extent such benefits are required to be paid for by Owner under applicable state and federal employment laws
Indemnification Agreement by each Cannabis Permittee
Pursuant to Cudahy Municipal Code Section 5.20.070(g), the City Manager may require each Cannabis Permittee to execute a separate Indemnification Agreement prepared by the City that fully indemnifies the City for all liabilities associated with the Cannabis Permit, the Cannabis Permittee's Commercial Cannabis Activities, and any action taken by the Cannabis Permittee. The Indemnification Agreement shall include the defense of the City and reimbursement of all fees, costs and expenses incurred by the City related to any action arising from this Agreement.

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7. Fees, Costs, and Future Taxes
a. Fees. Owner agrees to pay all permit fees and charges referenced in Section 5.20.070(f) of the municipal code, in the amounts adopted by the City Council by resolution, as well as any fees set forth in this Agreement. Permit application, processing, and renewal fees shall be due and payable at the time application is made.
b. Costs. As defined in Article 8, Owner agrees to reimburse City for all additional reasonable costs of City resulting from the operation of a medicinal commercial cannabis facility authorized under applicable provisions of the municipal code, council resolutions and administrative policies and regulations.

Reimbursement to City for such costs shall be due and payable as set forth in Article 8.

C. Operating Fees.

As used herein, "Premises" means the designated structure or structures and land specified in the application that is owned, leased, or otherwise held under the control of the Cannabis Permittee applicant or Cannabis Permittee where the Commercial Cannabis Activity will be or is conducted. The parties stipulate and agree that the square footage for the Premises upon the Effective Date of this Agreement is and shall be during the term of this Agreement: 8,966 square feet.

As used herein, "Commercial Cannabis Activities" means all permitted activities: e.g., cultivation, possession, manufacture, processing, storing, laboratory testing, packaging, labeling, transportation, delivery or distribution of Cannabis and/or Cannabis Products.

As used herein, "Gross receipts" shall mean the total amount actually received or receivable in the course of business in a calendar year or calendar month from sales or the performance of acts or services for which charge is made or credit allowed. "Gross receipts" include, without limitation, all receipts, cash, credit, property received in lieu of cash, and any other valuable consideration taken in exchange for goods, services or other valuable consideration. See, Cudahy Municipal Code Section 5.04.030(9).

As used herein, "Production Space" means the area on or within the Premises intended for Commercial Cannabis Activities excluding non-operational common areas such as restrooms, cafeterias, break rooms, hallways, corridors, VM Evergreen, LLC
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/
vestibules, parking structures or surface street lots. The parties stipulate and agree that the square footage for the Production Space shall be Cultivation: 2,744 square feet.

Manufacturing: 3,526 square feet
Distribution: 1,975 square feet Delivery: 400 square feet Total Production Space: 8,645
The City Manager is specifically authorized to set and adjust the square footage for the Premises Space and Production Space and to determine the corresponding operating fee as the Project is completed.

Owner agrees to pay to City, in order to enable City to promote, protect, and enhance the healthy, safety, and welfare of the community and its residents and its quality of life, the greater of the following monthly fees (1) or (2):
1) a monthly operating fee of [.42 x total square foot of the "Premises"] until Owner is operating on the Premises, and selling product under its City Regulatory Permit and State Regulatory Permit. Once Owner is operational and generating revenue, the monthly operating fee is [.42 x total square foot of "Production Space"];
or,
2) a monthly operating fee(s) of:
2% of Gross Receipts for operations from the Cannabis
Manufacturing Permit on the Premises, and
2% of Gross Receipts for operations from the Cannabis
Cultivation Permit on the Premises, and
1 of Gross Receipts for operations from the Cannabis Delivery Permit on the Premises, and
1 % of Gross Receipts for operations from the Cannabis
Distribution Permit on the Premises. This discounted 1% Cannabis Distribution Permit fee shall apply only to the distribution of cannabis product for anyone other than the Owner.

Facilities with multiple licenses must not commingle respective sales proceeds, and blend percentage rate of Gross Receipts.

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[ If initialed here by the City Manager, Operating Fees shall begin to{jt crue ninety (90) days after the end of month of the Effective Date of this Agreement. Otherwise, Operating fees shall begin to accrue in the month of the Effective Date of this Agreement. The operating fee shall be due and payable on the 10th day of each calendar month through-out the term of this Agreement.

Failure to pay the fee within thirty (30) days after the due date shall result in a penalty for nonpayment in a sum equal to 25% of the total amount due.

Additional penalties will be assessed in the following manner: 10% shall be . added to the first day of each calendar month following the month of the imposition of the 25% penalty if the fees remain unpaid in whole or in part - up to a maximum of 100% of the fee payable on the due date.
d. Owner understands and agrees that the fees set forth above shall be paid in a manner and in accordance with a payment schedule set or modified by City.

The cultivation, manufacturing, testing, distribution, and delivery space to which the fee applies is as identified on the attached floor plan. e. If Owner makes any changes to the interior layout of the facility that increases the amount of space allocated to those uses to which the per-squarefoot fee applies, Owner shall notify City of such changes at least fourteen (14) calendar days prior to making such changes, and the per-square-foot fee shall be modified accordingly. If Owner fails to give City notice as required herein, Owner shall be responsible for paying to City a per-square-foot fee based on any increase in the amount of space allocated to those uses to which the per-squarefoot fee applies retroactive to the date the Regulatory Permit became effective.

8. Cost Recovery Fee
City shall assess to Owner fees to recover City's reasonable processing and monitoring costs relating to Owner's business upon issuance of Owner's Manufacturing, Cultivation, Testing, Delivery, and Distribution Permits or any Additional Permits (hereinafter "CRF"). CRFs are separate and apart from any operating fees set forth in Article 7
a. Processing Fees. Processing fees for the Application are based upon the direct and indirect costs that City incurs in reviewing the Application. The processing fees for the Application shall be based only on costs that are necessary for processing the Application and implementing the Ordinance, including staff time, legal fees, and consultant fees. "Necessary for" means that but for the Application, the costs would not have been incurred. The processing VM Evergreen, LLC
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fee shall not include costs for other City management objectives, unless they are necessary for processing the Application.
b. Monitoring Fees. Monitoring fees for the Manufacturing, Cultivation and Distribution Permits are based upon the direct and indirect costs City incurs in confirming the use of the Property in accordance with the municipal code, the Ordinance, this Agreement, and the Application. The monitoring fees shall be based only on costs that are necessary for conducting these reviews. "Necessary for'' means that but for the Manufacturing, Distribution, Testing, Delivery and Cultivation Permits, or any Additional Permits, the costs would not have been incurred. The monitoring fee shall not include costs for other City management objectives, unless they are necessary for monitoring the permitted activities. c. Billing and Payment. The City may elect to bill the Owner the Initial CRF on the first day of the month following the Effective Date of this Agreement.

Thereafter, City shall bill Owner the CRF on the first day of each Quarter with an invoice providing the time spent by City and its representatives. Owner shall pay the CRF invoice within thirty (30) days of the date the bill for the CRF is received by Owner.
d. Disputes If Owner disagrees with the dollar amount provided by City on the CRF invoice, Owner may submit a written request before the disputed fee is due for a substitution of alternative CRF invoice to the City Manager. The written request must include supporting documentation. After review of Owner's written request, Owner and City shall work, in good faith to resolve Owner's written request. The dispute shall be decided in favor of Owner if City does not respond to the written request within thirty (30) days of actual receipt.

9. Additional Owner Obligations
a.

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Reporting of Gross Receipts from Operations
1) Quarterly Receipts. No later than [For example, January 15, 2018], and every three months thereafter (i.e., April 15, July 15, October, and January 15 of each subsequent year), Owner shall deliver to City a report (the "Quarterly Report") showing (i) Gross Receipts from operations for the immediate prior three months received by Owner, and a cumulative total of all amounts of Gross Receipts from Operations received by Owner for the calendar year, (ii) a calculation of the quarterly payment due to City for the prior three months, and (iii) a calculation of the cumulative total of all quarterly payments for the calendar year.

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2) Statement of Receipts/Annual Audit. The Owner shall keep complete, accurate and appropriate books and records of all receipts from operations in accordance with generally accepted accounting principles.

For purposes herein, "books and records" shall mean all bookkeeping or accounting documents Owner typically utilizes in managing its business operations relating to the Project. Such books and records, as well as all other relevant documents as the City Manager may reasonably require, shall, upon reasonable written notice, be open for inspection by City, its auditors or other authorized representatives. If at any time during the term such books and records prove inadequate in the reasonable judgment of City to record the Gross Receipts from Operations as herein required, Owner shall, upon the written request of the City, procure and maintain such books and records as shall be of a character and from adequate for such purpose. City shall have the right to audit and examine such books, records and documents and other relevant items in the possession of Owner, on no less than an annual basis, or at any time upon reasonable request by the City, to the extent necessary for a proper determination of Gross Receipts from Operations, and all such books, records, documents and other items shall be held available for such audit and examination.

The City's audit shall be performed by a non-contingency fee independent auditor approved in advance by the City. Upon request by City, Owner shall make all such books, records and documents available to the City Manager, his designee, or to the City approved auditor, and provide removable copies thereof, within thirty (30) of the date of City's request.

Owner shall pay all costs of such audits. Owner shall preserve such books, records, documents, and other items in Cudahy for a period of not less than one (1) years for the purpose of auditing or re-auditing these accounts upon reasonable notice; except that, if an audit is made within the seven-year period and Owner claims that errors or omissions have occurred, the books and records shall be retained and made available until those matters are resolved. City shall keep strictly confidential all statements of revenue furnished by Owner and all other information concerning Owner's operation of the Premises obtained by City as a result of the inspection audit and examination privileges of City hereunder, except as otherwise required by law. If City receives a request for such information pursuant to the Public Records Act (California Government Code Section 6250, et seq.), City shall provide Owner notice of any such request prior to disclosing any such information and afford Owner the opportunity to obtain a protective order. Within seven (7) years after the receipt of any statement of receipts under this Agreement, City at any time shall be entitled to carry out an audit of such revenue either by City or agent to be designated by City. If it shall be determined as a result of such

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10. audit that there has been a deficiency in any payment due under this Agreement made on the basis of such statement, then such deficiency shall become immediately due and payable within thirty (30) days of such determination.
1) Copies of Tax Filings. Owner shall provide the City with courtesy copies of each and every report Owner is required to provide to the County of Los Angeles or the State of California for sales, use, or other tax purposes at the time such filings are made.
b. Future Revenue Mechanisms. During the term of this Agreement, if the City imposes (by Citizen Initiative or otherwise) an alternative revenue mechanism specifically related to cannabis operations (e.g., a cannabis tax), Owner agrees to renegotiate in good faith the terms of this Development Agreement with the City so as to comply with an alternative revenue mechanism.

As used in this section, "alternative revenue mechanism" does not include taxes, fees, or assessments levied on or collected from both medicinal cannabis and non-cannabis operations.

Insurance and Indemnity
a. Insurance. Owner shall require all persons doing work on the Project, including its contractors and subcontractors (collectively, "Owner" for purposes of this Article 6 only), to obtain and maintain insurance of the types and in the amounts described in this section and its subsections with carriers reasonably satisfactory to City.
b. General Liability Insurance. Owner shall maintain commercial general liability insurance or equivalent form with a limit of not less than Two Million Dollars ($2,000,000) (or as otherwise approved, in writing, by City) per claim and Two Million Dollars ($2,000,000) each occurrence. Such insurance shall also:
1) Name City, its elected and appointed councils, boards, commissions, officers, agents, employees, and representatives as "Additional Insureds" by endorsement with respect to performance of this Agreement. The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insured.
2) Be primary with respect to any insurance of self-insurance programs covering City, its officials, employees, agents, and representatives . 3) Contain standard separation of insured provisions.

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c. Automotive Liability Insurance. Owner shall maintain business automobile liability insurance or equivalent form with a limit of not less than Two Million Dollars ($2,000,000) for each accident for the vehicles Owner operates in connection with its cannabis business. Such insurance shall include coverage for owned, hired, and non-owned automobiles. Such insurance shall also:
1) Name City, and work in good faith with the City and the insurers to name additional insureds as deemed reasonably necessary. "Additional Insureds" by endorsement with respect to performance of this Agreement.

The coverage shall contain no special limitations on the scope of its protection afforded to the above-listed additional insureds; 2) Be primary with respect to any insurance or self-insurance programs covering City, its officials, employees, agents, and representatives; 3) Contain standard separation of insured provisions.
d. Workers' Compensation Insurance. Owner shall take out and maintain during the term of this Agreement, workers' compensation insurance for all of Owner's employees employed at or on the Project, and in the event any of the work is subcontracted, Owner shall require any general contractor or subcontractor similarly to provide workers' compensation insurance for such contractor's or subcontractor's employees, unless such employees are covered by the protection afforded by Owner. In case any class of employee engaged in work on the Project is not protected under any workers' compensation law, Owner shall provide and shall cause each contractor and subcontractor to provide adequate insurance for the protection of employees not otherwise protected. Owner hereby indemnifies City for any damage resulting from failure of Owner, its agents, employees, contractors, or subcontractors to take out or maintain such insurance. Workers' compensation insurance with statutory limits and employer's liability insurance with limits of not less than One Million Dollars ($1 ,000,000) each accident shall be maintained.
e.

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Other Insurance Requirements. Owner shall do all of the following:
1) Prior to taking any actions under this Agreement, furnish City with properly executed certificates of insurance that clearly evidenced all insurance required in this Article, including evidenced that such insurance will not be canceled, allowed to expire, or be materially reduced in coverage without thirty (30) days prior written notice to City.

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2) Provide to City, upon request, and within seven (7) calendar days of said request, certified copies of endorsements and policies, and properly executed certificates of insurance evidencing the insurance required herein.
3) Replace or require the replacement of certificates, policies and endorsements for any insurance required herein expiring prior the termination of this Agreement.
4) Maintain all insurance required herein from the Effective Date of this Agreement to the earlier of the expiration of the term or the mutual written termination of this Agreement.
5) Place all insurance required herein with insurers licensed to do business in California with a current Best's Key Rating Guide reasonably acceptable to City.
f. Indemnity. Owner agrees to indemnify, defend, and hold City, and its elected and appointed council, boards, commIssIons, officers, agents, employees, contractors, consultants and representatives, harmless from any and all claims costs and liability for any personal injury or property damage which may arise as a result of any actions or negligent omissions by Owner or Owner's contractors, subcontractors, agents, or employees in connection with the construction, improvement, or operation of the Project.

11. Termination
a. Termination Upon End of Term . This Agreement shall terminate upon the expiration of the term, unless it is terminated earlier pursuant to the terms of this Agreement. Upon termination of this Agreement, City shall record a notice of such termination and this Agreement shall be of no further force or effect except as otherwise set forth in this Agreement.
b. Effect of Termination on Owner's Obligations. Termination of this Agreement shall eliminate any further obligation of Owner to comply with this Agreement, or some portion thereof, if such termination relates to only part of the Site or Project. Termination of this Agreement, in whole or in part, shall not, however, eliminate the rights of Owner to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination.

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c. Effect of Termination on City's Obligations. Termination of this Agreement shall eliminate any further obligation of City to comply with this Agreement, or some portion thereof. Termination of this Agreement shall not, however, eliminate the rights of City to seek any applicable and available remedies or damages based upon acts or omissions occurring before termination. d. Survival After Termination. The rights and obligations of the Parties set forth in Article 15, Article 21, and Section 23(e), Section 23(f), and Section 23(h), and any right or obligation of the Parties in this Agreement which, by its express terms or nature and context is intended to survive termination of this Agreement, will survive any such termination.

12. Resources Efficiency
Owner shall endeavor to reduce its environmental impact when possible. The design of the facility shall include reasonable water and energy conservation measures in accordance with applicable State regulations.

13. Standard Conditions for Construction
During any on-site construction activities related to development of the project site and any buildings thereon, or renovation or remodeling of existing buildings, Owner shall comply with all applicable terms and conditions of City's Standard Conditions for Construction, attached hereto and incorporated herein by reference as Exhibit F. The Project shall comply with the applicable parking standards established by the City for cannabis activities.

14. Defaults and Remedies
a. Remedies in general. It is acknowledged by the parties that City would not have entered into this Agreement if it were to be liable in damages under this Agreement, or with respect to this Agreement or the application thereof, except as hereinafter expressly provided. Subject to extensions of time by mutual consent in writing, failure to delay by either party to perform any term or provision of this Agreement beyond a reasonable notice and cure period shall constitute a default. In the event of alleged default or breach of any terms or conditions of this Agreement, the party alleging such default or breach shall give the other party not less than thirty (30) day notice in writing specifying the nature of the alleged default and the manner in which said default may be satisfactorily cured during any such thirty (30) day period, the party charged shall not be considered in default for purposes of termination or institution of legal proceedings.

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nature that it cannot be cured within thirty (30) days, the alleged defaulting party shall not be deemed in default as long as such party commences to cure such default within such thirty (30) day period and thereafter diligently prosecutes such cure to completion.

After notice and expiration of the thirty (30) day period, the other party to this Agreement, at its option, may institute legal proceedings pursuant to this Agreement.

In general, each of the parties hereto may pursue any remedy at law or equity available for the breach of any provision of this Agreement, except that City shall not be liable in monetary damages, unless expressly provided for this Agreement, to Owner, to any mortgagee or lender, or to any successors in interest of Owner or mortgagee or lender, or to any other person, and Owner covenants on behalf of itself and all successors in interest to the Property or any portion thereof, not to sue for damages or claim any damages. 1) For any breach of this Agreement or for any cause of action which arises out of this Agreement; or
2) For the impairment or restriction of any right or interest conveyed or provided under, with, or pursuant to this Agreement, including, without limitation, any impairment or restriction which Owner characterizes as a regulatory taking or inverse condemnation; or
3) Arising out of or connected with any dispute, controversy or issue regarding the application or interpretation or effect of the provisions of this Agreement.

Nothing contained herein shall modify or abridge Owner's rights or remedies (including its rights for damages, if any) resulting from the exercise by City of its power of eminent domain. Nothing contained herein shall modify or abridge Owner's rights or remedies (including its rights for damages, if any) resulting from bad faith intentional acts, the grossly negligent or malicious acts of City and its officials, officers, agents and employees. Nothing herein shall modify or abridge any defenses or immunities available to City and its employees pursuant to the Government Liability Act and all other applicable statutes and decisional law.

Except as set forth in the preceding paragraph relating to eminent domain, Owner's remedies shall be limited to those set forth in this Section 14(a), Section 14(b), and Section 14(c).

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Notwithstanding anything to the contrary contained herein, City covenants as provided in Civil Code Section 3300 not to sue for or claim any consequential damages or, in the event all or a portion of the Property is not developed, for lost profits or revenues which would have accrued to City as a result of the development of the Property.
b. Specific Performance. The parties acknowledge that money damages and remedies at law are inadequate, and specific performance and other nonmonetary relief are particularly appropriate remedies for the enforcement of this Agreement and should be available to all parties for the following reasons:
1) Except as provided in Sections 14(a) and 14(e), money damages are unavailable against City as provided in Section 14(a) above. 2) Due to the size, nature and scope of the Project, it may not be practical or possible to restore the Property to its natural condition once implementation of this Agreement has begun. After such implementation, Owner may be foreclosed from other choices it may have had to use the Property or portions thereof. Owner has invested significant time and resources and performed extensive planning and processing of the Project in agreeing to the terms of this Agreement and will be investing even more significant time and resources in implementing the Project in reliance upon the terms of this Agreement, and it is not possible to determine the sum of money which would adequately compensate Owner for such efforts; the parties acknowledge and agree that any injunctive relief may be ordered on an expedited, priority basis.
c. Release. Except for those remedies set forth in Sections 14(a), 14(b), and 14(c), Owner, for itself, its successors and assignees, hereby releases City, its officers, agents and employees from any and all claims, demands, actions, or suits of any kind or nature arising out of any liability, known or unknown, present or future, based or asserted, pursuant to Article 1, Section 19 of the California Constitution, the Fifth Amendment of the United States Constitution, or any other law or ordinance which seeks to impose any other liability or damage, whatsoever, upon City because it entered into this Agreement or because of the terms of this Agreement.

Owner acknowledges that it may have suffered, or may suffer, damages and other injuries that are unknown to it, or unknowable to it, at the time of its execution of this Agreement. Such fact notwithstanding, Owner agrees that the release provided in this Section 14(c) shall apply to such unknown or unknowable claims and damages. Without limiting the generality of the foregoing , VM Evergreen, LLC
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Owner acknowledges the provisions of California Civil Code Section 1542, which provide:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor."
Owner hereby waives, to the maximum legal extent, the provisions of California Civil Code Section 1542 and all other statutes and judicial decisions of similar effect.

Owners' Initials
d. Termination of Agreement for Default of City. Owner may terminate this Agreement in the event of a default by City in the performance of a material term of this Agreement and only after providing written notice to City of default setting forth the nature of the default and the actions, if any, required by City to cure such default and, where the default can be cured, City has failed to take such actions and cure such default within sixty (60) days after the effective date of such notice or, in the event that such default cannot be cured within such sixty (60) day period but can be cured within a longer time, has failed to commence the actions necessary to cure such default within such sixty (60) day period and to diligently proceed to complete such actions and cure such default.

Notwithstanding anything to the contrary, in the event that Owner deem it is necessary and/or advisable to cease operations in Cudahy, then Owner may terminate this Agreement, and such termination shall be effective upon the date of written notice to the City.
e. Attorneys' Fees and Costs. In any action or proceeding between City and Owner brought to interpret or enforce this Agreement, or which in any way arises out of the existence of this Agreement or is based upon any term or provision contained herein, the "prevailing party" in such action or proceeding shall be entitled to recover from the non-prevailing party, in addition to all other relief to which the prevailing party may be entitled pursuant to this Agreement, the prevailing party's reasonable attorneys' fees and litigation costs, in an amount to be determined by the court. The prevailing party shall be determined by the court in accordance with California Code of Civil Procedure Section 1032. Fees and costs recoverable pursuant to this Section 14(e) include those incurred during any appeal from an underlying judgment and in the enforcement of any judgment rendered in any such action or proceeding.

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f. Owner Default. No building permit shall be issued or building permit application accepted for any structure on the Property after Owner is determined by City to be in default of the terms and conditions of this Agreement until such default thereafter is cured by Owner or is waived by City. If City terminates this Agreement because of Owner's default, then City shall retain any and all benefits, including money or land received by City hereunder.

15. Third Party Litigation
a. General Plan Litigation. City has determined that this Agreement is consistent with its General Plan. Owner has reviewed the General Plan and concurs with City's determination.

City shall have no liability under this Agreement or otherwise for any failure of City to perform under this Agreement, or for the inability of Owner to develop the Property as contemplated by the Agreement, which failure to perform or inability to develop is as the result of a judicial determination that the General Plan, or portions thereof, are invalid or inadequate or not in compliance with law, or that this Agreement or any of City's actions in adopting it were invalid, inadequate, or not in compliance with the law.
b. Hold Harmless Agreement. Owner hereby agrees to, and shall hold City, its elective and appointive boards, commissions, officers, agents, attorney's, contractors, consultants and employees harmless from any liability for damage or claims for damage for personal injury, including death, as well as from claims for property damage which may arise from Owner or Owner's contractors, subcontractors, agents, or employees' operations under this Agreement, whether such operations be by Owner, or by any of Owner's contractors, subcontractors, agents, or employees operations under this Agreement, whether such operations be by Owner, or by any of Owner's contractors, subcontractors, or by any one or more persons directly or indirectly employed by, or acting as agent for Owner or any of Owner's contractors or subcontractors. Owner agrees to and shall defend City and its elective and appointive boards, commissions, officers, agents and employees from any suits or actions at law or in equity for damage caused, or alleged to have been caused, by reason of any of the aforesaid operations. c. Indemnification. Owner shall defend, indemnify, and hold harmless City and its elective and appointive boards, commissions, officers, agents, attorney's, contractors, consultants and employees against and from any and all liabilities, VM Evergreen, LLC
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demands, claims, actions or proceedings and costs and expenses incidental thereto (including costs of defense, settlement and reasonable attorneys' fees), which any or all of them may suffer, incur, be responsible for or pay out as a result of or in connection with any challenge to the legality, validity or adequacy of any of the following: (i) this Agreement and the concurrent and subsequent permits, licenses and entitlements approved for the Project or Property; (ii) the environmental impact report, mitigated negative declaration or negative declaration, as the case may be, prepared in connection with the development of the Property; (iii) any claims based on or alleging inverse condemnation by any person or entity with an interest in the Property; and (iv) the proceedings undertaken in connection with the adoption or approval of any of the above. In the event of any legal or equitable action or other proceeding instituted by any third party (including a governmental entity or official) challenging the validity of any provision of this Agreement or any portion thereof as set forth herein, the parties shall mutually cooperate with each other in defense of said action or proceeding. Notwithstanding the above, City, at is sole option, may tender the complete defense of any third-party challenge as described herein. In the event City elects to contract with special counsel to provide for such a defense, City shall meet and confer with Owner regarding the selection of counsel, and Owner shall pay all costs related to retention of such counsel. d. Environmental Contamination. Owner shall indemnify and hold City, its elective and appointive boards, commissions, officers, agents, attorney's, contractors, consultants and employees free and harmless from any liability, based or asserted, upon any act or omission of Owner, its officers, agents, employees, subcontractors, predecessors in interest, successors, assigns and independent contractors , excepting and acts or omissions of City as successor to any portions of the Property dedicated or transferred to City by Owner, for any violation of any federal, state or local law, ordinance or regulation relating to industrial hygiene or to environmental conditions on, under or about the Property, including, but not limited to, soil and groundwater conditions, and Owner shall defend, at its expense, including attorneys' fees, City, its officers, agents and employees in any action based or asserted upon any such alleged act or omission. City may in its discretion participate in the defense of any such claim, action or proceeding.

The provisions of this Section 15(d) do not apply to environmental conditions that predate Owner's ownership or control of the Property or applicable portion; provided, however, that the foregoing limitation shall not operate to bar, limit or modify any of Owner's statutory or equitable obligations as an owner or seller of the Property.

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e. City to Approve Counsel. With respect to Sections 15(a) through 15(d), City reserves the right to approve the attorney(s) which Owner selects, hires or otherwise engages to defend City hereunder, which approval shall not be unreasonably withheld.
f. Accept Reasonable Good Faith Settlement. With respect to Article 15, City shall not reject any reasonable good faith settlement. If City does reject a reasonable, good faith settlement that is acceptable to Owner, Owner may enter into a settlement of the action, as it relates to Owner, and City shall thereafter defend such action (including appeals) at its own cost and be solely responsible for any judgment rendered in connection with such action. This Section 15(f) applies exclusively to settlements pertaining to monetary damages or damages which are remedial by the payment of monetary compensation. Owner and City expressly agree that this Section 15(f) does not apply to any settlement that requires an exercise of City's police powers, limits City's exercise of its police powers, or affects the conduct of City's municipal operations. g. Survival. The provisions of Sections 15(a) through 15(f) inclusive, shall survive the termination or expiration of the Agreement.

16. California Environmental Quality Act
Owner shall reimburse City for any and all costs incurred by City related to project review under the California Environmental Quality Act (CEQA), Public Resources Code, §§21000-21189.3, and the Guidelines for California Environmental Quality Act, California Code of Regulations, Title 14, §§ 15000-15387. If reasonably requested by City, Owner shall conduct and pay for any required CEQA reviews and analyses. The City has found that the proposed Project is Categorically Exempt from California Environmental Quality Act (CEQA) requirements under provisions of CEQA Guidelines Section 15301 - Existing Facilities. This exemption applies to projects characterized as alterations to existing facilities meeting the conditions described in Section 15301 .

17. Rules, Regulations, and Official Policies
Except as otherwise provided in this Agreement, the rules, regulations, and official policies of City governing permitted uses of the land, governing density, and governing the design, improvements, and construction standards and specifications applicable to the development of the Project subject of this Agreement, shall be those rules, regulations, and official policies of City in force at the time of the execution of this Agreement. This Agreement does not prevent City, in subsequent actions applicable to the property, from applying new rules, regulations, and policies which do not conflict with those rules, regulations , and policies applicable to the property as set forth herein, VM Evergreen, LLC
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nor does this Agreement prevent City from denying or conditionally approving any subsequent development project application based on such existing or new rules, regulations, or policies.

18. Regulatory Permit Conditions of Approval
Owner shall comply with all conditions of approval of the Regulatory Permit approved by City Council.

19. Periodic Reviews
This Agreement shall be subject to annual review. Owner and Landlord executing this Agreement, or successor in interest thereto, shall demonstrate good faith compliance with the terms of this Agreement. If, as a result of such periodic review, City finds and determines, based on substantial evidence, that Owner or Landlord executing this Agreement, or successor in interest thereto, has not complied in good faith with the terms or conditions of this Agreement, City may terminate or modify this Agreement (except no modification shall increase Owner's liability nor reduce Owner's rights), provided that City shall first provide Owner notice of its intent to terminate, with a detailed explanation as to why, and provide Owner the reasonable right to cure the same.
a. Periodic Review. City Council shall review this Agreement annually, on or before each anniversary of the Effective Date, in order to ascertain Owner's good faith compliance with this Agreement. During the periodic review Owner shall be required to demonstrate good faith compliance with the terms of the Agreement, through submitting an annual monitoring report, records, or equivalent written materials to the Planning Department. The Planning Department will schedule a hearing on the periodic review of the Development Agreement on or following the anniversary of the Effective Date, but Owner has no obligation to compel such hearing, and no implication will be made to Owner's detriment if a hearing is not in fact held. Owner shall document any request for an extension of the term due to delays beyond the control of Owner (see Section 23U), "Force Majeure").

Owner shall submit an annual review and administration fee deposit not to exceed City's estimated internal and third-party costs associated with the review and administration of this Agreement during the succeeding year, consistent with Section 23(k) ("Deposit with City") below. City shall provide Owner said estimate a reasonable time in advance of the annual review and administration fee deposit being due.
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Conditional Use Permit issued to Owner for the establishment and operation of its business. The operation of the business at all times shall be required to comply with the terms of this Agreement.
c. Special Review. City Council may order a special review of compliance with this Agreement at any time. The Planning Director or his or her designee shall conduct such special review. During a special review, Owner shall be required to demonstrate good faith compliance with the terms of the Agreement.

The burden of proof on this issue shall be on Owner.
d. Review Hearing. At the time and place set for the review hearing, Owner shall be given an opportunity to be heard. If City Council finds, based upon substantial evidence, that Owner has not complied in good faith with the terms or conditions of this Agreement, City Council may terminate this Agreement notwithstanding any other provision of this Agreement to the contrary, or modify this Agreement and impose such conditions as are reasonably necessary to protect the interests of City. The decision of City Council shall be final, subject only to judicial review pursuant to Code of Civil Procedure Section 1094.5. e. Certificate of Agreement Compliance. If, after a periodic or special review, Owner is found to be in compliance with this Agreement, and if Owner requests it, City shall issue a Certificate of Agreement Compliance ("Certificate") to Owner stating that after the most recent periodic or special review, and based upon the information known or made known to the Planning Director and City Council, that (i) this Agreement remains in effect and (ii) Owner is not in default.

City shall not be bound by a Certificate if a default existed at the time of the periodic or special review, but was concealed from or otherwise not known to the Planning Director and City Council, regardless of whether the Certificate is relied upon by assignees or other transferees or Owner.
f. Failure to Conduct Review. City's failure to conduct a periodic review of this Agreement shall not constitute a breach of this Agreement. g. Cost of Review. The costs incurred by City in connection with the periodic reviews shall be borne by Owner.

20. Assignment
Assignment by Owner. Owner shall not transfer, delegate, sublet or assign its interest, rights , duties, and obligations under this Agreement without the prior written consent of VM Evergreen, LLC
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City, which consent shall not be unreasonably withheld. Owner shall submit a transfer application to the City Manager or City Manager's designee and pay any applicable transfer fee. The proposed transferee must show proof of lawful transfer of possession of the applicable location as may be acceptable to the City. Owner is aware it mayy take the City approximately six (6) months to process a transfer application.

Any assignment, delegation, subletting or assignment without the prior written consent of City shall be null and void. Any transfer, delegation, subletting or assignment by Owner as authorized herein shall be effective only if and upon the party to whom such transfer, delegation, subletting or assignment is made is issued a Regulatory Permit as required under Section 5.20.0?0(i) of the municipal code.

21. Operating Commercial Cannabis Facility
Any party to this Agreement, or successor in interest thereto, shall not operate a commercial cannabis facility authorized under the municipal code unless:
a. It is the holder of a valid Regulatory Permit issued by City in accordance with the procedures and requirement of Sections 5.20.100 [Medicinal Cannabis Cultivation]; 5.20.110 [Medicinal Cannabis Products Manufacturing];

5.20.120 [Medicinal Cannabis Products Retail Delivery]; 5.20.130 [Medicinal Cannabis Products Distribution] of the municipal code; and, b. At such time as the State of California requires commercial cannabis facilities and businesses to hold a valid license or permit issued by the State of California, it also holds such license or permit, unless, however, such permit or license is not required by the State of California for the type of commercial cannabis facility or business operation that is the subject of this Agreement.

22. Notice
Any notice or communication required hereunder between City and Owner must be in writing, and may be given either personally, by registered or certified mail (return receipt requested), or by Federal Express, UPS or other similar couriers providing overnight delivery. If personally delivered, a notice shall be deemed to have been given when delivered to the Party to whom it is addressed. If given by registered or certified mail, such notice or communication shall be deemed to have been given and received on the first to occur of (i) actual receipt by any of the addressees designated below as the party to whom notices are to be sent, or (ii) five (5) days after a registered or certified letter containing such notice, properly addressed, with postage prepaid, is deposited in the United States mail. If given by Federal Express or similar courier, a notice or communication shall be deemed to have been given and received on the date delivered, VM Evergreen, LLC
DA# 18-001C

Development Agreement

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ATTACHMENT E

as shown on a receipt issued by the courier. Any Party hereto may at any time, by giving ten (10) days written notice to the other Party hereto, designate any other address in substitution of the address to which such notice or communication shall be given. Such notices or communications shall be given to the Parties at their addresses set forth below:

If to City:
and
If to Owner:

If to Landlord:

With a courtesy copy to:

23. Miscellaneous Provisions
City of Cudahy
5220 Santa Ana Street
Cudahy, CA 90201
Attention : City Clerk
Special Counsel, Glenn Ward Calsada, Esq.

Law Offices of Glenn Ward Calsada
23283 Ventura Boulevard
Woodland Hills, CA 91364
VM Evergreen, LLC
Attn: Javier Barajas, Manager
8116 Eastern Avenue
Bell Gardens, CA 90201 Leonardo and Rosa Valles
6534 Bequette Avenue
Pico Rivera, CA 90660
VM Evergreen, LLC
c/o Legal Counsel
Tony Soliman
8116 Eastern Avenue
Bell Gardens, CA 90201
a. Amendment or Cancellation. This Agreement may be amended, or canceled in whole or in part, only by the written mutual consent of the parties to this Agreement or their successors in interest, except that minor amendments VM Evergreen, LLC
DA# 18-001C

Development Agreement

93 of 1055

ATTACHMENT E

that do not affect a substantive provision of this Agreement may be approved by the City Manager on behalf of the City. The decision whether a proposed amendment is "minor" shall be in the exclusive discretion of the City Manager. b. Waiver. Waiver by City of any one or more of the terms or conditions of this Agreement shall not be construed as waiver of any other term or condition under this Agreement.
c. Enforcement/Reserved Powers. Unless amended or canceled pursuant hereto, this Agreement shall be enforceable by any party hereto, or successor in interest thereto, notwithstanding any subsequent change in any applicable general or specific plan, zoning, subdivision or building regulation, or municipal code amendment adopted by City that conflicts with the terms of this Agreement.

However, this Agreement is subject to the City's "Reserved Powers." For purposes of this Agreement, "Reserved Powers" means the rights and authority excepted from this Agreement's restrictions on the City's police powers and which are instead reserved to the City. The Reserved Powers include the powers to enact regulations or take future discretionary actions after the Effective Date of this Agreement that: (1) are necessary to protect the public health and safety, and are generally applicable on a City-wide basis (except in the event of natural disasters as found by the City Council such as floods, earthquakes and similar acts of God); (2) are amendments to California Marijuana Laws or California Uniform Codes, as adopted by the City of Cudahy, and/or the Cudahy Municipal Code, as applicable, regarding the construction, engineering and design standards for private and public improvements to be constructed on the Site; (3) are necessary to comply with state or federal laws and regulations; or (4) involve sign and parking ordinances and guidelines, changes to the Overlay Zone, Specific Plan or the City's General Plan, whether adopted previous or subsequent to the Effective Date of this Agreement).

If any City ordinance, rule or regulation or addition to the Cudahy Municipal Code is enacted or imposed by a citizen-sponsored initiative or referendum after the Effective Date that would conflict with this Agreement or an associated Regulatory Permit, business license or other authorizations and City approvals, or reduce development rights or assurances provided to the Owner in this Agreement, then such changes, additions or deletions to the Cudahy Municipal Code shall not be applied to the Site or Project; provided, however, the parties acknowledge that the City's approval of this Agreement is a legislative action subject to referendum. The parties shall cooperate with each other and undertake such reasonable actions as may be appropriate to ensure this Agreement remains in full force and effect and is implemented in accordance with its terms and to the fullest extent permitted by state or federal law.

VM Evergreen, LLC
DA# 18-001C

Development Agreement

94 of 1055

ATTACHMENT E

Notwithstanding anything to the contrary in this Agreement, site improvements contemplated by this Agreement shall be completed pursuant to the development standards and design guidelines to be adopted by the zoning code amendment.
d. Joint and Several Liability. Owner shall be jointly and severally liable for any amount due under this Agreement, and any breach of this Agreement or failure to pay by one Party shall also constitute a breach of this Agreement by the other Party.
e. Severability. If any part of this Agreement is found to conflict with applicable state laws or regulations, such part shall be inoperative, null, and void insofar as it conflicts with said laws or regulations, or modified or suspended as may be necessary to comply with such state laws or regulations, but the remainder of this Agreement shall continue to be in full force and effect. f. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual, facsimile, or electronic signature.
g. Jurisdiction. The law governing this Agreement shall be that of the State of California. Any suit brought by any party against any other party arising out of the performance of this Agreement or the breach, termination, enforcement, interpretation or validity thereof, shall be filed and maintained in the County of Los Angeles Superior Court. h. Disclaimer. Despite California's commercial cannabis laws and the terms and conditions of this Agreement, any Conditional Use Permit, or any Regulatory Permit issued pertaining to Owner or the property specified herein, California commercial cannabis cultivators, transporters, distributors, or possessors may still be subject to arrest by state or federal officers and prosecuted under state or federal law. The Federal Controlled Substances Act, 21 USC§ 801, prohibits the manufacture, distribution, and possession of cannabis without any exemptions for medical use.
i. Force Majeure. If delays are caused by unforeseen events beyond the control of Owner, such delays will entitle Owner to an extension of time as provided in this section. Such unforeseen events ("Force Majeure") shall mean war, insurrection, acts of God, local, state or national emergencies, strikes and other labor difficulties beyond the party's control, or any default by City VM Evergreen, LLC
DA# 18-001C

Development Agreement

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ATTACHMENT E

hereunder, which Force Majeure event substantially interferes with the development, construction or operation of the Project.
j. Costs and Fees. Intentionally omitted.
k. Constructive Notice and Acceptance. Every person who after the Effective Date and recording of this Agreement owns or acquires any right, title, or interest to any portion of the Site, is and shall be conclusively deemed to have consented and agreed to every provision contained herein, whether or not any reference to this Agreement is contained in the instrument by which such person acquired an interest in the Site, and all rights and interests of such person in the Site shall be subject to the terms, requirements, and provisions of this Agreement.

I. Binding Effect of Agreement. The Parties agree that the Recitals above are true and correct and intend to be bound by same. Except as otherwise provided, the burdens of this Agreement are binding upon, and the benefits of this Agreement inure to, all authorized successors-in-interest of the Parties and constitute covenants which run with the Site. In order to provide constructive notice thereof, the City Clerk will record this Agreement with the Los Angeles County Recorder within the period required by Government Code Section 65868.5.
m. Project as a Private Undertaking. It is specifically understood and agreed by and between the parties hereto that the development of the Project is a private development, that neither party is acting as the agent of the other in any respect hereunder, and that each party is an independent contracting entity with respect to the terms, covenants and conditions contained in this Agreement. No partnership, joint venture or other association of any kind is formed by this Agreement. The only relationship between the City and the Owner is that of a government entity regulating the development of private property and the owner of such property.
n. Changes to Project. The parties acknowledge that changes to the Project or Development Plans and related approvals may be appropriate and mutually desirable to carry out the intent and purpose of this Agreement. This Agreement shall not prevent the City from applying, with the consent or at the request of the Owner, Subsequent Land Use Regulations or Subsequent Development Approvals that do not directly conflict with the Project, Site or Development Plan authorized under this Agreement. The granting of one such change or request shall not obligate the City to grant other similar changes or requests. As used herein, "Subsequent Development Approvals" include, without limitation, all VM Evergreen, LLC
DA# 18-001C

Development Agreement
Page128 of691
96 of 1055

ATTACHMENT E

excavation, grading, building, construction, demolition, encroachment or street improvement permits, occupancy certificates, utility connection authorizations, or other non-discretionary permits or approvals necessary, convenient or appropriate for the Project. As used herein, "Subsequent Land Use Regulations" means ordinances, resolutions and codes adopted or approved by the City after the Effective Date of this Agreement governing the development and use of the land, including general plan amendments, zone changes, variances or conditional use permits affecting the permitted use of the land including density or intensity of use, subdivision requirements, the maximum height and size of proposed buildings, the provisions of reservation or Dedication of land for public purposes, and the design, improvement and construction and initial occupancy standards and specifications applicable to the Development of the Property. o. Conflicting Federal or State Rules. In the event that any conflicting federal or state laws or regulations, enacted after the Effective Date, prevent or preclude compliance with one or more provisions of this Agreement or require changes in plans, maps or permits approved by the City, this Agreement shall remain in full force and effect as to those provisions not affected; and (i) Notice of Conflict. Either party, upon learning of any such matter, will provide the other party with written notice thereof and provide a copy of any such law, regulation or policy together with a statement of how any such matter conflicts with the provisions of this Agreement; and (ii) Modification Conferences. The parties shall, within thirty (30) days of the notice referenced to in the preceding subsection, meet and confer in good faith and attempt to modify this Agreement to bring it into compliance with any such federal or state law or regulation.
(iii) City Council Hearings. In the event the City believes that an amendment to this Agreement is necessary due to the effect of any federal or state law or regulation, the proposed amendment shall be scheduled for hearing before the City Council. The City Council shall determine the exact nature of the amendment necessitated by such federal or state law or regulation. Owner shall have the right to offer oral and written testimony at the hearing. Any modification ordered by the City Council pursuant to such hearing is subject to judicial review in accordance with California law. (iv) City Cooperation. The City shall cooperate with Owner in securing any City permits, licenses or other authorizations that may be required as a result of any amendment resulting from actions initiated by the City. As required by this Agreement, Owner shall be responsible to pay all applicable VM Evergreen, LLC
DA# 18-001C

Development Agreement

97 of 1055

ATTACHMENT E

fees in connection with securing of such permits, licenses or other authorizations.
p. Effective Date. "Effective Date" means the date on which all of the following are true: (i) thirty (30) days have elapsed since the second reading of the Ordinance adopting and approving this Development Agreement and (ii) all Exhibits to this Agreement are finalized , executed and notarized by all affected parties (if applicable) and attached hereto; provided, however, that if these conditions have not been fully satisfied by the Owner the Effective Date may not thereafter occur and this Agreement may not thereafter become effective.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first above written.

CITY OF CUDAHY
APPROVED AS TO FORM:

Glenn Ward Calsada, Attorney at Law
Special Counsel for the City of Cudahy
VM Evergreen, LLC
DA# 18-001C

VM EVERGREEN, LLC
OWNER
e: Javier Barajas
itle: Managing Member

Development Agreement

98 of 1055

ATTACHMENT E

CALIFORNIA ALL-F1URPOSIE ACKNOWLEDGMENT CIVIL CODE § 1189 l A notary public or other officer completing this certificate verifies only the identity of the individual who signed the ! document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.

State of California ,1
County of L....·,..£- c.,.,L.0i,1 tr{&",: c..5 )
On ,~8- //, ::it;;; ? before me, L1-t?6 Lk -1 i::.:r dc,7/Jft-;;•6/@.L,r; Date Here Insert Name and Title of the Offt6er ,
,c_;,
personally appeared ~ -!l--'--"i__,/'-'#o='=A--"- ·;;__~--r~:>1t: C--L...-'--/-_, __ 4~--y-;__, . --'~_,_ -=--~-------- __ ____ _
- --- · Name(s) of Signer(s)
who proved to me on the basis of satisfactory evrdence to be the person_{g) whose name~ rs/~ subscribed to the within instrument and acknowledged to me that he/~e/t!J.(1y executed the same in his/h,et/th~r authorized capacity{i,eS), and that by hiS/IJe'r/tt)eir signature(s) on the instrument the person(sr,· or the entity upon behalf of which the person(w acted, executed the instrument.

Place Notary Seal Above
I certify under PENAL lY OF PERJURY under the laws
of the State of California that the foregoing paragraph is true and correct. -;
WITNESS my hand and official seal.
----- /n ·/
Signature _____ """+4-'9'"""'~-;r-c:.:_-'-f/4 ",,..·~c..,,....,.,:,,;-<,=:A=)- '- -
. _..
----------------OPTIONAL---------------
Though this section is optional, compteting this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document.

Description of Attached Document /}
Title or Type of Document: !l@.,4-1, £>J, , c.7'-r:/-f&z~'r- Document Date:

Number of Pages: ,½.2 Signer{s} Other Than Named Above: _ _,p~/c....:4-- =----- ---- C_apa~itv(ies} ~laimed by Sig~r(s)
Signer s Name: --;17,-ea':'?"< h 4,-,,, .e-;Ut?
Corporate Officer - Title(s): ______ _
Signer's Name: ____ ---,.'--- --- - --
Corporate Officer - Ti s): _____ _
D Partner - D Limited D General D Partner - Limit D General OJ..1-ndividual O Attorney in Fact Cl Individual Attorney in Fact D Trustee D Guardian or Conservator 0 Trustee O Guardian or Conservator D Other:
___ _______ _ __ _ D Other:
_ ..,,,__ _ __________ _
Signer Is Representing:--- - ------
©2014 National Notary Association • www.NationalNotary.org • 1-800-US NOTARY (1-800-876-6827) Item #5907 99 of 1055

ATTACHMENT E

ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or
validity of that document.

State of California
County of LOS ANGELES
On 03/07/2019 before me, Maria D. Garcia-Martinez a Notary Public (insert name and title of the officer)
personally appeared _J_o_s_e_R_. _G_o_n_z_a_le_z ____________________ _ who proved to me on the basis of satisfactory evidence to be the person(.;')' whose name~ is/a~ subscribed to the within instrument and acknowledged to me that he/s~ /thJ y executed the sa~ e in his/h~r/tt(eir authorized capacity(i~ ). and that by his/h?'"ltl)eir signature(~ on the instrument the person} s'), or the entity upon beh~lf of which the personY-') acted, execu(ed the instrument.

I certify under PENAL TY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

SignatureAY~~ (Seal)
100 of 1055

ATTACHMENT E

EXHIBITS

A LEGAL DESCRIPTION

B PARCEL MAP

C LANDLORD CONSENT

D SITE AND FLOOR PLANS E ADDITIONAL BUSINESS STANDARDS (IF APPLICABLE)

F STANDARDS AND CONDITIONS FOR CONSTRUCTION (IF APPLICABLE) VM Evergreen, LLC
DA# 18-001C

Development Agreement
101 of 1055

ATTACHMENT E

ATTACHMENT D.

Exhibits A-F
102 of 1055 ATTACHMENT E Page 775 of 3559
EXHIBIT “A”

LEGAL DESCRIPTION

103 of 1055 ATTACHMENT E Page 776 of 3559
11/12/2018 Viewing Property Detail Report for Glenn Calsada https://datastore.netronline.com/viewReport.aspx?reportID=936008&PurchaseItem=1133544 1/2

PROPERTY DETAIL REPORT
Prepared Exclusively for Glenn Calsada
Created: 11/13/2018
Expires: 12/13/2018
8222 ATLANTIC AVE CUDAHY, CA 90201-5806 C008
Owner Information
Owner Name: JUAREZ LEONARDO V SR / JUAREZ ROSA C
Mailing Address: 8226 ATLANTIC AVE CUDAHY CA 90201-5806 C008 Phone Number: Vesting Codes:

Owner Occupied Indicator: N Pending Record Indicator:

Corporate Owner:

Location Information
Legal Description: TRACT NO 180 W 41 FT OF S 160 FT OF LOT 214 County: LOS ANGELES APN: 6224-023-018
Census Tract / Block: 5343.01 Alternate APN:

Township-Range-Sect: Subdivision: 180
Legal Book - Page: 13-198 Map Reference: 59-D2 /
Legal Lot: 214 Tract #: 180
Legal Block: School District: LOS ANGELES
Market Area: T5 Munic / Township:

Neighbor Code:

Owner Transfer Information
Recording / Sale Date: 02/12/2004 Sale Price:

Document #: Deed Type: QUIT CLAIM DEED
Instrument #: 000000419962 1st Mtg Document #: 000000419963 Book - Page:

Last Market Sale Information
Recording / Sale Date: 06/22/1998 / 05/15/1998 1st Mtg Amount / Type: $540,000.00 / CONV Sale Price: $600,000.00 1st Mtg Int. Rate / Type: / FIXED RATE LOAN Sale Type: FULL 1st Mtg Term:

Document #: 1046846 1st Mtg Document #: 000001046847
Instrument #: 000001046846 1st Mtg Instrument #: 000001046847 Book - Page: 1st Mtg Book - Page:

Deed Type: GRANT DEED 2nd Mtg Amount / Type: /
Transfer Document #: 2nd Mtg Int. Rate / Type: /
New Construction: 2nd Mtg Term:

Multi / Split Sale: MULTIPLE Price per SqFt: $107.14
Cash Down Payment: Stamps Amount: $660.00
Title Company: CHICAGO TITLE INS CO
Lender: MISCELLANEOUS FIN
Seller Name: PIONEER PROPERTIES
Prior Sale Information
Prior Rec / Sale Date: / Prior Deed Type:

Prior Sale Price: Prior Lender:

Prior Sale Type: Prior 1stMtg Amount/Type: /
Prior Doc #: Prior 1stMtg Int. Rate/Type: /
Prior Instrument #: Prior Stamps Amount:

Prior Book - Page:

Site Information
Land Use: LIGHT
INDUSTRIAL Acres: .1511 County Use: LIGHT

MANUFACTURING
104 of 1055 ATTACHMENT E Page 777 of 3559
11/12/2018 Viewing Property Detail Report for Glenn Calsada https://datastore.netronline.com/viewReport.aspx?reportID=936008&PurchaseItem=1133544 2/2 Flood Zone: Lot Area: 6582 State Use:

Flood Zone Map: Lot Width / Depth: / Site Influence:

Flood Panel Date: Usable Lot: 6556 Sewer Type:

Res / Comm Units: Lot Shape: Topography: ROLLING/HILLY
# of Buildings: 1 Bldg Width / Depth: / Water Type:

Zoning: CUM2* Building Class: Water District: CENTRAL AND W BASIN
Tax Information
Total Value: $252,586.00 Assessed Year: 2018 Property Tax: $4,127.36 Land Value: $77,175.00 Improve %: Tax Area: 631
Improvement Value: $175,411.00 Dist: Tax Year: 2017
Total Taxable Value: $252,586.00 Fire Dist: CONSOLIDATED CO Tax Exemption:

Market Value: Garbage Dist: Equal Rate:

Delinquent Date: Equal Year:

Property Characteristics
Gross Area: 5600 Parking Type: Construction:

Living Area: 5600 Garage Area: Heat Type:

Tot Adj Area: Garage 2 Area: Heat Fuel:

Above Grade: Garage Capacity: Parcel Fuel:

Ground Floor Area: Parking Spaces: Exterior Wall:

Base / Main Area: / Carport: Interior Wall:

Upper Area: Basement Area: Foundation:
2nd Floor Area: Finish Bsmnt Area: Air Cond:
3rd Floor Area: Basement Type: Roof Type:

Rentable Area: Attic Type: Roof Shape:

Additional Area: Porch Type: Roof Frame:

Total Rooms: Porch 1 Area: Roof Material:

Bedrooms: Porch 2 Area: Floor Type:

Bath (F/H): / Patio Type: Floor Cover:

Total Baths / Fixtures: / Patio 1 Area: Style:

Year Built / Eff: 1956 / 1959 Pool: Quality:

Fireplace: Pool Area: Condition:

Fireplace Description: # of Stories:

Basement Description: Other Rooms:

Other Improvements:

Bldg Comments:

Parcel Comments:

Extra Features
Description: Unit: Size / Qty: Width: Depth: Year Built: Improvement Value:

NETRonline and its data supplier(s) do not guarantee nor include any warranty of any kind whether expressed or implied, about the validity of all information in this report since this information is retrieved as it is recorded from the various agencies that make it available.

Copyright 2007 Nationwide Environmental Title Research, LLC 105 of 1055 ATTACHMENT E Page 778 of 3559
EXHIBIT “B”

PARCEL MAP

106 of 1055 ATTACHMENT E Page 779 of 3559
107 of 1055 ATTACHMENT E Page 780 of 3559
EXHIBIT “C”

LANDLORD CONSENT

108 of 1055 ATTACHMENT E Page 781 of 3559
6224-023-019
109 of 1055 ATTACHMENT E Page 782 of 3559
110 of 1055 ATTACHMENT E Page 783 of 3559
111 of 1055 ATTACHMENT E Page 784 of 3559
112 of 1055 ATTACHMENT E Page 785 of 3559
Vicki Barajas
CEO
113 of 1055 ATTACHMENT E Page 786 of 3559
114 of 1055 ATTACHMENT E Page 787 of 3559
EXHIBIT “A”

LEGAL DESCRIPTION

115 of 1055 ATTACHMENT E Page 788 of 3559
11/12/2018 Viewing Property Detail Report for Glenn Calsada https://datastore.netronline.com/viewReport.aspx?reportID=936008&PurchaseItem=1133544 1/2

PROPERTY DETAIL REPORT
Prepared Exclusively for Glenn Calsada
Created: 11/13/2018
Expires: 12/13/2018
8222 ATLANTIC AVE CUDAHY, CA 90201-5806 C008
Owner Information
Owner Name: JUAREZ LEONARDO V SR / JUAREZ ROSA C
Mailing Address: 8226 ATLANTIC AVE CUDAHY CA 90201-5806 C008 Phone Number: Vesting Codes:

Owner Occupied Indicator: N Pending Record Indicator:

Corporate Owner:

Location Information
Legal Description: TRACT NO 180 W 41 FT OF S 160 FT OF LOT 214 County: LOS ANGELES APN: 6224-023-018
Census Tract / Block: 5343.01 Alternate APN:

Township-Range-Sect: Subdivision: 180
Legal Book - Page: 13-198 Map Reference: 59-D2 /
Legal Lot: 214 Tract #: 180
Legal Block: School District: LOS ANGELES
Market Area: T5 Munic / Township:

Neighbor Code:

Owner Transfer Information
Recording / Sale Date: 02/12/2004 Sale Price:

Document #: Deed Type: QUIT CLAIM DEED
Instrument #: 000000419962 1st Mtg Document #: 000000419963 Book - Page:

Last Market Sale Information
Recording / Sale Date: 06/22/1998 / 05/15/1998 1st Mtg Amount / Type: $540,000.00 / CONV Sale Price: $600,000.00 1st Mtg Int. Rate / Type: / FIXED RATE LOAN Sale Type: FULL 1st Mtg Term:

Document #: 1046846 1st Mtg Document #: 000001046847
Instrument #: 000001046846 1st Mtg Instrument #: 000001046847 Book - Page: 1st Mtg Book - Page:

Deed Type: GRANT DEED 2nd Mtg Amount / Type: /
Transfer Document #: 2nd Mtg Int. Rate / Type: /
New Construction: 2nd Mtg Term:

Multi / Split Sale: MULTIPLE Price per SqFt: $107.14
Cash Down Payment: Stamps Amount: $660.00
Title Company: CHICAGO TITLE INS CO
Lender: MISCELLANEOUS FIN
Seller Name: PIONEER PROPERTIES
Prior Sale Information
Prior Rec / Sale Date: / Prior Deed Type:

Prior Sale Price: Prior Lender:

Prior Sale Type: Prior 1stMtg Amount/Type: /
Prior Doc #: Prior 1stMtg Int. Rate/Type: /
Prior Instrument #: Prior Stamps Amount:

Prior Book - Page:

Site Information
Land Use: LIGHT
INDUSTRIAL Acres: .1511 County Use: LIGHT

MANUFACTURING
116 of 1055 ATTACHMENT E Page 789 of 3559
11/12/2018 Viewing Property Detail Report for Glenn Calsada https://datastore.netronline.com/viewReport.aspx?reportID=936008&PurchaseItem=1133544 2/2 Flood Zone: Lot Area: 6582 State Use:

Flood Zone Map: Lot Width / Depth: / Site Influence:

Flood Panel Date: Usable Lot: 6556 Sewer Type:

Res / Comm Units: Lot Shape: Topography: ROLLING/HILLY
# of Buildings: 1 Bldg Width / Depth: / Water Type:

Zoning: CUM2* Building Class: Water District: CENTRAL AND W BASIN
Tax Information
Total Value: $252,586.00 Assessed Year: 2018 Property Tax: $4,127.36 Land Value: $77,175.00 Improve %: Tax Area: 631
Improvement Value: $175,411.00 Dist: Tax Year: 2017
Total Taxable Value: $252,586.00 Fire Dist: CONSOLIDATED CO Tax Exemption:

Market Value: Garbage Dist: Equal Rate:

Delinquent Date: Equal Year:

Property Characteristics
Gross Area: 5600 Parking Type: Construction:

Living Area: 5600 Garage Area: Heat Type:

Tot Adj Area: Garage 2 Area: Heat Fuel:

Above Grade: Garage Capacity: Parcel Fuel:

Ground Floor Area: Parking Spaces: Exterior Wall:

Base / Main Area: / Carport: Interior Wall:

Upper Area: Basement Area: Foundation:
2nd Floor Area: Finish Bsmnt Area: Air Cond:
3rd Floor Area: Basement Type: Roof Type:

Rentable Area: Attic Type: Roof Shape:

Additional Area: Porch Type: Roof Frame:

Total Rooms: Porch 1 Area: Roof Material:

Bedrooms: Porch 2 Area: Floor Type:

Bath (F/H): / Patio Type: Floor Cover:

Total Baths / Fixtures: / Patio 1 Area: Style:

Year Built / Eff: 1956 / 1959 Pool: Quality:

Fireplace: Pool Area: Condition:

Fireplace Description: # of Stories:

Basement Description: Other Rooms:

Other Improvements:

Bldg Comments:

Parcel Comments:

Extra Features
Description: Unit: Size / Qty: Width: Depth: Year Built: Improvement Value:

NETRonline and its data supplier(s) do not guarantee nor include any warranty of any kind whether expressed or implied, about the validity of all information in this report since this information is retrieved as it is recorded from the various agencies that make it available.

Copyright 2007 Nationwide Environmental Title Research, LLC 117 of 1055 ATTACHMENT E Page 790 of 3559
EXHIBIT “B”

PARCEL MAP

118 of 1055 ATTACHMENT E Page 791 of 3559
119 of 1055 ATTACHMENT E Page 792 of 3559
EXHIBIT “C”
LEASE

120 of 1055 ATTACHMENT E Page 793 of 3559

Commercial Lease

AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

STANDARD INDUSTRIAL/COMMERCIAL LEASE

1. Basic Provisions (“Basic Provisions”).

1.1 Parties: This Lease (“Lease”), dated for reference purposes only July 3, 2018, is made by and between Leonardo Valles and Rosa C Valles, as individuals (“Lessor”) and VM Evergreen, a Wyoming Limited Liability Company (“Lessee”), (collectively the “Parties,” or individually a “Party”).

1.2 Premises: That certain real property, including all improvements therein or to be provided under the terms of this Lease, and commonly known as 8222 Atlantic Ave., Cudahy, CA located in the County of Los Angeles, State of California, and generally described as approximately 19,000 square foot industrial manufacturing buildings (“Premises”) with APN 6224-023-018 & 6224-023-019. (See also Paragraph 2)

1.3 Term: 15 years (“Original Term”) the earlier of July 1, 2018 or as soon as possession is tendered (“Commencement Date”) and ending June 31, 2033 (“Expiration Date”), with the option to renew for an additional 10 years at the same base rent (“Option Term”) (See also Paragraph 3) as well as the right of first refusal to purchase the premises at the same price and terms of any offer accepted by Lessor, applicable only after the exclusive Option to Buy period has expired, as outlined in the separate Option to Buy agreement between the Parties . Should the Lessee choose to exercise its right of first refusal, it will be credited for any capital improvements made to the Premises by the Lessee. Lessee shall have access to the Premises for the purpose of making the improvements necessary for the desired use effective immediately upon the Commencement Date.

1.4 Base Rent: Parties agree the base rent will be per month (“Base Rent”), payable on the first day of each month. A 10-day grace period is granted monthly to Lessee by Lessor for due rent.

1.5 Security Deposit: One month deposit of

1.6 Agreed Use: Property will be used for the Agreed Use (“Agreed Use”) of various possible commercial uses as permitted by California state and local law including any commercial cannabis business activities allowed by the city of Cudahy. (See also Paragraph 6). Lessee to satisfy itself regarding all applicable regulations, licenses, covenants, or other restrictions.

1.7 Insuring Party: Lessee is the “Insuring Party” unless otherwise stated herein. (See also Paragraph 8)

2. Premises.

2.1 Letting. Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the Premises, for the term, at the rental rate, and upon all of the terms, covenants and conditions set forth in this Lease. Unless otherwise provided herein, any statement of size set forth in this Lease, or that may have been used in calculating rental, is an approximation which the Parties agree is reasonable and the rental based thereon is not subject to revision whether or not the actual size is more or less.

2.2 Condition. Lessor shall deliver the Premises to Lessee “as is” without warranty as to conditions not known to Lessor regarding any portion of the Premises including, but not limited to, the existing electrical, plumbing, fire sprinkler, lighting, heating, ventilating and air conditioning systems (“HVAC”), loading doors, if any, and all other such elements in the Premises, other than those constructed by Lessee. Lessor shall disclose any material defects known to Lessor on the Commencement Date regarding the structural elements of the roof, bearing walls and foundation of any buildings on the Premises (the “Building”) within one (1) month of the Commencement Date. 121 of 1055 ATTACHMENT E Page 794 of 3559

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2.3 Compliance. Lessor makes no warranty regarding the improvements on the Premises or their compliance with any applicable laws, covenants or restrictions of record, building codes, regulations and ordinances (“Applicable Requirements”) in effect on the Start Date. Lessee shall be responsible for maintenance and improvements of the premises required for its use. If the Applicable Requirements are hereafter changed (as opposed to being in existence at the Start Date which is addressed in Paragraph 6.2(a) below) so as to require during the term of this Lease the construction of an addition to or an alteration of the Building, the remediation of any Hazardous Substance, or the reinforcement or other physical modification of the Building (“Capital Expenditure”), Lessor and Lessee shall allocate the cost of such work as follows:
(a) Subject to Paragraph 2.3(c) below, if such Capital Expenditures are required as a result of the specific and unique use of the Premises by Lessee as compared with uses by tenants in general, Lessee shall be fully responsible for the cost thereof, provided, however that if such Capital Expenditure is required during the last two (2) years of this Lease and the cost thereof exceeds six (6) months’ Base Rent, Lessee may instead terminate this Lease unless Lessor notifies Lessee, in writing, within ten (10) days after receipt of Lessee’s termination notice that Lessor has elected to pay the difference between the actual cost thereof and the amount equal to six (6) months’ Base Rent. If Lessee elects termination, Lessee shall immediately cease the use of the Premises which requires such Capital Expenditure and deliver to Lessor written notice specifying a termination date at least ninety (90) days thereafter. Such termination date shall, however, in no event be earlier than the last day that Lessee could legally utilize the Premises without commencing such Capital Expenditure.
(b) If such Capital Expenditure is not the result of the specific and unique use of the Premises by Lessee (such as, governmentally mandated seismic modifications), then Lessor and Lessee shall allocate the obligation to pay for such costs pursuant to the provisions of Paragraph 7.1(b); provided, however, that if such Capital Expenditure is required during the last two years of this Lease or if Lessor reasonably determines that it is not economically feasible to pay its share thereof, Lessor shall have the option to terminate this Lease upon ninety (90) days prior written notice to Lessee unless Lessee notifies Lessor, in writing, within ten (10) days after receipt of Lessor’s termination notice that Lessee will pay for such Capital Expenditure. If Lessor does not elect to terminate, and fails to tender its share of any such Capital Expenditure, Lessee may advance such funds and deduct same, with interest, from Rent until Lessor’s share of such costs have been fully paid. If Lessee is unable to finance Lessor’s share, or if the balance of the Rent due and payable for the remainder of this Lease is not sufficient to fully reimburse Lessee on an offset basis, Lessee shall have the right to terminate this Lease upon thirty (30) days written notice to Lessor.

(c) Notwithstanding the above, the provisions concerning Capital Expenditures are intended to apply only to non-voluntary, unexpected, and new Applicable Requirements. If the Capital Expenditures are instead triggered by Lessee as a result of an actual or proposed change in use, change in intensity of use, or modification to the Premises then, and in that event, Lessee shall be fully responsible for the cost thereof, and Lessee shall not have any right to terminate this Lease.

3. Term.

3.1 Term. The Commencement Date, Expiration Date, Original Term, and Option Term of this Lease are as specified in Paragraph 1.3.

3.2 Option to Renew. Provided that lessee is not then in default under any of the covenants, terms, conditions, and provisions of this Lease Agreement beyond any applicable notice and cure period, then Lessee shall have the one time right to extend the Term of the Lease for the Option Term commencing on the Expiration date of the Original Term, upon the same terms and conditions as set forth in this Lease. Lessee shall give Lessor notice in writing of Lessee’s intention to exercise this option at least 120 calendar days prior to the expiration of the Original Term of this Lease.

3.3 Right of First Refusal. Lessor agrees to provide Lessee the right of first refusal to purchase the premises at the same price and terms of any offer accepted by Lessor, if said offer is made after the expiration of the exclusive purchase option window. Should the Lessee choose to exercise its right of first refusal, it will be credited for any capital improvements made to the Premises by the Lessee. Lessee understands that this Right is separate and distinct from the Option Agreement of even date herewith and incorporated by reference herein. Lessee shall not 122 of 1055 ATTACHMENT E Page 795 of 3559

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receive any credit for those capital improvements made to the Premises by the Lessee, as this privilege is exclusively reserved for exercise of the Right of First Refusal.

3.4 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 as agreed, Lessor shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease.

Lessee shall not, however, be obligated to pay Rent or perform its other obligations regarding the undelivered portions of the Premises until it receives possession of those portions. Specifically, Lessee understands that the Premises are comprised of three commercial units, two of which are occupied by third-parties on a month to month basis, and one of which is operated by Lessor. Lessor requires two (2) months to clear said Premises of tenants and deliver possession.

Lessee shall only be responsible for rent payments for each unit it has actual possession of, prorated at 1/3 rent for each unit, or $5,000 per unit. If possession is not delivered within sixty (60) days after the Commencement Date, Lessee may, at its option, by notice in writing within ten (10) days after the end of such sixty (60) day period, cancel this Lease, in which event the Parties shall be discharged from all obligations hereunder.

4. Rent.

4.1 Rent Defined. All monetary obligations of Lessee to Lessor under the terms of this Lease specifically including all payments under the Option Agreement of even date herewith and incorporated by reference herein are deemed to be rent (“Rent”). Lessee understands that payments of the Option Price are independent and in addition to the Base Rent articulated under this Lease agreement.

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. Rent for any period during the term hereof which is for less than one (1) 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.

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 due Lessor 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 said Security Deposit, Lessee shall within ten (10) days after written request therefor deposit monies with Lessor sufficient to restore said Security Deposit to the full amount required by this Lease. Lessor shall not be required to keep the Security Deposit separate from its general accounts. Within fourteen (14) days after the expiration or termination of this Lease, if Lessor elects to apply the Security Deposit only to unpaid Rent, and otherwise within thirty (30) days after the Premises have been vacated pursuant to Paragraph 7.4(c) below, Lessor shall return that portion of the security Deposit not used or applied by Lessor. No part of the Security Deposit shall be considered to be held in trust, 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. 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 owners and/or occupants of, or causes damage to neighboring properties.1 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, is not significantly more burdensome to the Premises. If Lessor elects to




























































1 For purposes of this Lease, the Parties understand and agree that cannabis-related land uses carried out in compliance with local and state laws and regulations shall not be considered “unlawful.” 123 of 1055 ATTACHMENT E Page 796 of 3559

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withhold consent, Lessor shall within five (5) business days after such request give written notification of same, which notice shall include an explanation of Lessor’s objections to the change in use.

6.2 Manufacturing Substances.
(a) Manufacturing Substances. The term “Manufacturing Substances” as used in this Lease shall mean any product or substance that is commonly used for the purposes of the Agreed Use. Lessor agrees to the use of the Manufacturing Substances on the Premises. Notwithstanding the foregoing, Lessee may use any ordinary and customary materials reasonably required to be used in the normal course of the Agreed Use, so long as such use is in compliance with all Applicable Requirements and does not expose the Premises or neighboring property to any meaningful risk of contamination or damage or expose Lessor to any liability therefor.2 (b) Duty to Inform Lessor. If Lessee knows, or has reasonable cause to believe, that other Hazardous Substances have 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 concerning 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, take all investigatory and/or remedial action reasonably recommended, whether or not formally ordered or required, for the cleanup of any contamination of, and for the maintenance, security and/or monitoring of the Premises or neighboring properties, that was caused or materially contributed to by Lessee, or pertaining to or involving any Hazardous Substance brought onto the Premises during the term of this Lease, by or for 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 (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).
(e) Lessor Indemnification, Investigations, and Remediations. 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 existed as a result of Hazardous Substances, on the Premises prior to the Start Date 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. 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 the Start Date. 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.

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 without regard to whether said requirements are now in effect or become effective after the Start Date.

Specifically, Lessee shall promptly take all steps reasonably necessary to obtain licensure for the Agreed Use from the City of Cudahy and the State of California, including but not limited to the preparation and filing of any application required for such license, and to use its best commercially reasonable efforts to obtain such license. Lessee shall also diligently pursue other permits and licenses, including those necessary for the construction and improvement and




























































2 In accordance with this provision, Lessor acknowledges that Lessee may use and store carbon dioxide or other substances commonly used in cannabis manufacturing and State of California-approved pesticides in connection with cultivation at the Premises. Lessor hereby expressly consents to such use and storage, provided that it is carried out in compliance with the law and all Applicable Requirements.
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construction, to assure the ability of Lessee to engage in the Agreed Use at the Premises. Lessee shall, within fifteen (15) business days after receipt of Lessor’s 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. If a change in local or state law renders the Agreed Use nonconforming and unlawful, the Lessee shall have the option to terminate the Lease effective sixty (60) days following the effective date of such change in law by giving a written termination notice to Lessor within thirty (30) days after the date of said occurrence. Failure to obtain a license to operate the contemplated business shall not constitute a ‘change in law’ and shall not relieve Lessee of any obligations under the instant Lease Agreement.

6.4 Inspection; Compliance. Lessor shall have the right to enter into Premises at reasonable times with a 5-day written notice to Lessee 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.

7. Construction; 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 (Lessor’s Obligations), 9 (Damage or Destruction), and 14 (Condemnation), Lessee shall, at Lessee’s sole expense, keep the Premises, Utility Installations, and Alterations in good order, condition and repair, including, but not limited to, all equipment or facilities, such as plumbing, heating, ventilating, air-conditioning, electrical, lighting facilities, boilers, pressure vessels, fire protection system, fixtures, walls (interior and exterior), foundations, ceilings, roofs, 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’s obligations shall include restorations, replacements or renewals when necessary to keep the Premises and all improvements thereon or a part thereof in good order, condition and state of repair. Lessee shall, during the term of this Lease, keep the exterior appearance of the Building in a first-class condition 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) Construction. Lessee shall engage architects, contractors, and suppliers at the expense of Lessee for the development of the Premises for the Agreed Use. The expense of the construction, equipment, and operation of the Premises shall be at the expense of the Lessee and shall not require any financial contribution by Lessor. (c) 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 Basic Elements installed by Lessor, including but not limited to (i) roof covering and drains, (ii) driveways and parking lots, (iii) water and sewage tanks, and (iv) basic utility feed to the perimeter of the Building, cannot be repaired other than at a cost which is in excess of 50% of the cost of replacing such Basic Elements, then such Basic Elements shall be replaced by Lessor, and the cost thereof shall be Lessor’s responsibility.

7.2 Lessor’s Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance),

7.1(b) (Replacement of Basic Elements), 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; Consent Required. The term “Utility Installations” refers to all power panels, electrical distribution, security and fire protection systems, HVAC equipment, plumbing, and fencing in or on the Premises. The 125 of 1055 ATTACHMENT E Page 798 of 3559

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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 Lesser pursuant to Paragraph 7.4(a). Lessee shall not make any material Alterations resulting in material damage to the Premises or Utility Installations to the Premises without Lessor’s prior written consent. Lessee may, however, make non-structural Alterations and Utility Installations to the interior of the Premises without such consent but upon notice to Lessor, as long as they are not visible from the outside and do not involve puncturing, relocating or removing the roof or any existing walls.
(b) Consent. 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. Consent shall not be unreasonably withheld. (c) Indemnification. 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. Lessees shall give Lessor not less than ten (10) days’ notice prior to the commencement of any such work in, on or about the Premises. 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 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 to all or any specified part of the Lessee Owned Alterations and Utility Installations, unless otherwise agreed upon by the Lessor and Lessee in writing. 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 ninety (90) and not later than thirty (30) 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. (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. Lessee shall repair any damage occasioned by the installation, maintenance or removal of Trade Fixtures, Lessee Owned Alterations and/or Utility Installations, furnishings, and equipment as well as the removal of any storage tank installed by or for Lessee, and the removal, replacement, or remediation of any soil, material or groundwater contaminated by Lessee.

Trade Fixtures shall remain the property of Lessee and shall be removed by Lessee. 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 ten (10) days following receipt of an invoice.

8.2 Liability Insurance.
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(a) Carried by Lessee. Lessee shall obtain and keep in force a Commercial General Liability Policy of insurance protecting Lessee and Lessor 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 $ 1,000,000 per occurrence with an “Additional Insured- Lessors of Premises Endorsement.” All insurance carried by Lessee 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 may 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, insuring loss or damage to the Premises. The amount of such insurance shall be equal to the full replacement cost of the Premises, as the same shall exist from time to time, or the amount required by any Lenders, but in no event more than the commercially reasonable and available insurable value thereof. If Lessor is the insuring Party, however, Lessee Owned Alterations and Utility Installations, Trade Fixtures, and Lessee’s personal property shall be insured by Lessee under Paragraph 8.4 rather than 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, 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. (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, insuring the loss of the full Rent for one (1) year. Lessee shall be liable for any deductible amount in the event of such loss.

8.4 Lessee’s Property/Business Interruption Insurance.
(a) Property Damage. Lessee shall obtain and maintain insurance coverage on all of Lessee’s personal property. 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. Lessee shall provide Lessor with written evidence that such insurance is in force.
(b) Business Interruption. Lessee shall obtain and maintain loss of income insurance in amounts as will reimburse Lessee for direct or indirect loss of earnings attributable to and 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.

8.5 Insurance Policies. Insurance required herein shall be by companies duly licensed or admitted to transact business in the state where the Premises are located, and maintaining during the policy term a “General Policyholders Rating” of at least B+, V, as set forth in the most current issue of “Best’s Insurance Guide.” Lessee shall not do or permit to be done anything which invalidates the required insurance policies. No such policy shall be cancelable or subject to modification except after thirty (30) days prior written notice to Lessor. Lessee shall, at least thirty (30) days prior to the expiration of such policies, furnish Lessor with evidence of renewals or “insurance binders” evidencing renewal thereof. 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.

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. 127 of 1055 ATTACHMENT E Page 800 of 3559

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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 from Liability. Lessor shall not be liable for injury or damage to the person or goods, wares, merchandise or other property of Lessee, Lessee’s employees, contractors, invitees, customers, or any other person in or about the Premises, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, 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 from other sources or places. Lessor shall not be liable for any damages arising from any act or neglect of any other tenant of Lessor. Notwithstanding Lessor’s negligence or breach of this Lease, Lessor shall under no circumstances be liable for injury to Lessee’s business or for any loss of income or profit therefrom.

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 six (6) months or less from the date of the damage or destruction. Lessor shall notify Lessee in writing within thirty (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 six (6) months or less from the date of the damage or destruction. Lessor shall notify Lessee in writing within thirty (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 as defined in Paragraph 6.2(a), in, on, or under the Premises.

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 as soon as reasonably possible and this Lease shall continue in full force and effect. Notwithstanding the foregoing, if the required insurance was not in force or the insurance proceeds are not sufficient to affect such repair, the Insuring Party shall promptly contribute the shortage in proceeds as and when required to complete said repairs. Lessee shall 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. 128 of 1055 ATTACHMENT E Page 801 of 3559

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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 must repair such damage as soon as reasonably possible at Lessor’s expense, in which event this Lease shall continue in full force and effect. Such termination shall be effective sixty (60) days following the date of such notice.

9.4 Total Destruction. Notwithstanding any other provision hereof, if a Premises Total Destruction occurs, this Lease shall terminate sixty (60) days following such Destruction.

9.5 Damage Near End of Term. Deleted.

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. All other obligations of Lessee hereunder shall be performed by Lessee, and Lessor shall have no liability for any such damage, destruction, remediation, repair or restoration except as provided herein.
(b) Remedies. If Lessor shall be obligated to repair or restore the Premises and does not commence, in a substantial and meaningful way, such repair or restoration within ninety (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 sixty (60) days following the giving of such notice. If Lessee gives such notice and such repair or restoration is not commenced within thirty (30) days thereafter, this Lease shall terminate as of the date specified in said notice. If the repair or restoration is commenced within said thirty (30) days, this Lease shall continue in full force and affect. “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, an equitable adjustment shall be made concerning advance Base Rent and any other advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee’s Security Deposit as has not been, or is not then required to be, used by Lessor.

9.8 Waive Statutes. Lessor and Lessee agree that the terms of this Lease shall govern the effect of any damage to or destruction of the Premises with respect to the termination of this Lease and hereby waive the provisions of any present or future statute to the extent inconsistent herewith.

10. Real Property Taxes.

10.1 Definition of “Real Property Taxes.” As used herein, the term “Real Property Taxes” shall include any form of assessment; real estate, general, special, ordinary or extraordinary, or tax (other than inheritance, personal income or estate taxes) imposed upon or levied against any legal or equitable interest of Lessor in the Premises 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. The term “Real Property Taxes” shall also include any tax, fee, levy, assessment or charge, or any increase therein imposed by reason of events occurring during the term of this Lease.

10.2 Payment of Taxes. Lessee shall pay the Real Property Taxes applicable to the Premises during the term of this Lease. If any such taxes shall cover any period of time prior to or after the expiration or termination of this Lease, Lessee’s share of such taxes shall be prorated to cover only that portion of the tax bill applicable to the period that this Lease is in effect, and Lessor shall reimburse Lessee for any overpayment. 129 of 1055 ATTACHMENT E Page 802 of 3559

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10.3 Personal Property Taxes. Lessee shall pay, prior to delinquency, all taxes assessed against and levied upon Lessee Owned Alterations, Utility installations, Trade Fixtures, furnishings, equipment and all personal property of Lessee. When possible, Lessee shall cause such property to be assessed and billed separately from the real property of Lessor.

11. Utilities. 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 to Lessee, Lessee shall pay a reasonable proportion, to be determined by Lessor, of all charges jointly metered.

12. Assignment and Subletting.

12.1 Lessor’s Consent Required. Lessee may voluntarily or by operation of law assign, transfer, mortgage or encumber (collectively, “assign or assignment”) or subject all or any part of Lessee’s interest in this Lease or in the Premises with Lessor’s prior written consent, which consent shall not be unreasonably withheld.

12.2 Terms and Conditions Applicable to Assignment and Subletting. (a) Regardless of Lessor’s consent, any assignment or subletting shall not: (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) 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. Lessee agrees to provide Lessor with such other or additional information and/or documentation as may be reasonably requested.
(e) Any assignee of, or sublessee under, this Lease shall, by reason of accepting such assignment or entering into such sublease, 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.

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. 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 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 130 of 1055 ATTACHMENT E Page 803 of 3559

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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 Parties to comply with or perform any of the material terms, covenants, conditions or rules under this Lease. A “Breach” is defined as the occurrence of one or more of the following Defaults, and the failure of the breaching Party 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,
(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 thirty (30) business days following written notice to Lessee. (c) The failure by Lessee to provide (i) reasonable written evidence of compliance with Applicable Requirements, (ii) the rescission of an unauthorized assignment or subletting, (iii) a Estoppel Certificate, (iv) a requested subordination. (v) evidence concerning any guaranty and/or Guarantor, (vi) any document requested under Paragraph 42 (easements), or (vii) 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 thirty (30) days following written notice to Lessee.
(d) 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) or (c), above, where such Default continues for a period of thirty (30) days after written notice; provided, however, that if the nature of Lessee’s Default is such that more than thirty (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 thirty (30) day period and thereafter diligently prosecutes such cure to completion,

13.2 Remedies. If Lessee falls to perform any of its affirmative duties or obligations, within thirty (30) 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. The costs and expenses of any such performance by Lessor 131 of 1055 ATTACHMENT E Page 804 of 3559

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shall be due and payable by Lessee upon receipt of invoice therefor. If any check given to Lessor by Lessee shall not be honored by the bank upon which it drawn, Lessor at its option, may require all future payments to be made by Lessee to be by cashier’s check. 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; and (ii) 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 commission paid by Lessor in connection with this Lease applicable to the unexpired term of this Lease. 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.

13.3 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 thirty (30) days after receipt by Lessor , 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 thirty (30) days are reasonably required for its performance, then Lessor shall not be in breach if performance is commenced within such thirty (30) day period and thereafter diligently pursued to completion. (b) Performance by Lessee on Behalf of Lessor. In the event that Lessor does not cure said breach within thirty (30) days after receipt of said notice, or if having commenced said cure they do not diligently pursue it to completion, then Lessee may elect to cure said breach at Lessee’s expense and offset from Rent an amount equal to the greater of one month’s Base Rent or the Security Deposit, and to pay an excess of such expense under protest, reserving Lessee’s right to reimbursement from Lessor, 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 ten percent (10%) of any building portion of the Premises, or more than twenty-five percent (25%) of the land area 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 thirty (30) days after Lessor shall have given Lessee written notice of such taking (or in the absence of such notice, within thirty (30) 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 132 of 1055 ATTACHMENT E Page 805 of 3559

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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 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. Estoppel Certificates.
(a) Each Party (as “Responding Party”) shall within ten (10) days after written notice from the other Party (the “Requesting Party”) execute, acknowledge and deliver to the Requesting Party a statement in writing in form similar to the then most current “Estoppel Certificate” form published by the American Industrial Real Estate Association, 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 ten 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. (c) If Lessor desires to finance, refinance, or sell the Premises, or any part thereof, Lessee shall 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 three (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.

16. 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, 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. Except as provided in Paragraph 15, 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. Notwithstanding the above, and subject to the provisions of Paragraph 20 below, the original Lessor under this Lease, and all subsequent holders of the Lessor’s interest in this Lease shall remain liable and responsible with regard to the potential duties and liabilities of Lessor pertaining to Hazardous Substances as outlined in Paragraph 6 above.

17. 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.

18. Days. Unless otherwise specifically indicated to the contrary, the word “days” as used in this Lease shall mean and refer to calendar days.

19. 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.
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20. Notices.

20.1 Notice Requirements. All notices required or permitted by this Lease 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, of by facsimile transmission, or electronic mail (email) and shall be deemed sufficiently given if served in a manner specified in this Paragraph 20. 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.

20.2 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 forty-eight (48) 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 guarantee next day delivery shall be deemed given twenty-four (24) hours after delivery of the same to the Postal Service or courier. Notices transmitted by facsimile transmission or similar means shall be deemed delivered upon telephone confirmation of receipt, 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.

21. Waivers. No waiver by a Party of the Default or Breach of any term, covenant or condition hereof by the other Party, shall be deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by the Party 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. 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 monies 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.

22. Recording. Either Lessor or Lessee shall, upon request of the other, execute, acknowledge and deliver to the other a short form memorandum of this Lease for recording purposes. The Party requesting recordation shall be responsible for payment of any fees applicable thereto.

23. 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 unless agreed to by Lessor.

24. 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.

25. 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.

26. Binding Effect; Choice of Law; Dispute Resolution. This Lease shall be binding upon the parties, their personal representatives, successors and assigns and be governed by the laws of California. Any adjudication of disputes between the Parties hereto concerning this Lease shall be initiated in Los Angeles. 134 of 1055 ATTACHMENT E Page 807 of 3559

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26.1 Dispute Resolution. If a dispute should arise between the Parties, disputes shall be resolved in accordance with the following provisions:
(a) Settlement Discussion: The Parties agree to attempt to resolve any disputes between them by an inperson meeting to be held within thirty (30) days after written notice by either Lessor or Lessee to the other party to this Lease Agreement regarding a dispute or disagreement on any matter arising from the relationship described in this Lease Agreement.
(b) Mandatory Mediation: If informal settlement discussion does not resolve a dispute, the Parties agree to mediate any dispute or claim arising between them based on this Lease Agreement before resorting to arbitration, as provided herein. Mediation fees shall be divided equally among the parties involved. If mediation is unsuccessful, the Parties shall arbitrate their dispute, subject to applicable laws and procedures, as set forth herein.
(c) Mandatory Binding Arbitration: If any dispute between the Parties arises under or relates to this Lease Agreement or otherwise relates to any transaction between the parties hereto, including any tort or contract claims, and if the parties are unable to resolve their dispute by mediation, then their dispute shall be decided by neutral, binding arbitration and not by a court proceeding. Arbitration shall be initiated by a written demand by either party and shall be conducted before Judicate West in Los Angeles, California, under the rules of Judicate West, or such other arbitration rules to which the parties may agree, before a single arbitrator. The Parties shall have the right to conduct discovery pursuant to the California Civil Code, Code of Civil Procedure, and other applicable law. Judgment upon the arbitral award may be entered in any court of competent jurisdiction.

27. Subordination; Attornment; Non-Disturbance.

27.1 Subordination. This Lease and any Option granted hereby shall be subject and subordinate to any 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. 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.

27.2 Attornment. Subject to the non-disturbance provisions of Paragraph 27.3, Lessee agrees to attorn to a Lender or any other party who acquires ownership of the Premises by reason of a foreclosure of a Security Device, and that in the event of such foreclosure, such new owner shall not; (i) be liable for any act or omission of any prior lessor or with respect to events occurring prior to acquisition of ownership; (ii) be subject to any offsets or defenses which Lessee might have against any prior lessor; or (iii) be bound by prepayment of more than one (1) month’s rent.

27.3 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 sixty (60) days after the execution of this Lease, Lessor shall use its commercially reasonable efforts to obtain a NonDisturbance Agreement from the holder of any pre-existing Security Device which be secured by the Premises. In the event that Lessor is unable to provide the Non-Disturbance Agreement within said sixty (60) days, then Lessee may, at Lessee’s option, directly contact Lessor’s lender and attempt to negotiate for the execution and delivery of a NonDisturbance Agreement.

27.4 Self-Executing. The agreements contained in this Paragraph 27 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.
135 of 1055 ATTACHMENT E Page 808 of 3559