Loading...
HomeMy WebLinkAboutExhibit 25Material(s) received after the Planning Commission packets were distributed. These material(s) were distributed to staff, Commissioners and made available to the public January 10, 2008 Mr. David Lepo Planning Director City of Newport Beach 3300 Newport Boulevard Newport Beach, CA 92663 Dear Mr. Lepo: Delivered by Hand Thank you for coordinating the meeting with Aaron Harp, Assistant City Attorney and Patrick Alford, Senior Planner. We met on Wednesday, January 9, 2008 at 9:00 am for a half hour. The meeting was informative and productive. We understand that Mr. Harp and Mr. Alford are relieved to know that the tenant, Arthur Stockton, also known as Sejour, at 3400 Via Lido has been evicted from the property and that we now have possession. Mr. Harp requested that we provide a complete copy of the Lease of the tenant. The lease is enclosed with this letter, as well as copies to Mr. Harp and Mr. Alford. Mr. Harp and Mr. Alford advised us that the Planning Department is presenting their report to the Planning Commission regarding 3400 Via Lido on Thursday, January 17, 2008 with recommendations to revoke the Use Permit. We were advised that we are not able to see this report until it has been distributed to the Planning Commissioners. Mr. Harp advised us to prepare a letter to the City to request a delay of action or hearing for the purpose of the opportunity to be present at the Hearing and present a no action taken against the Use Permit. Mr. Harp said that in light of the fact that the tenant was no longer occupying 3400 Via Lido, delaying the Hearing until March or April 2008 would not pose an issue or problem for the City and its officials, especially since the "nuisance" had been removed permanently. We request that the Hearing for the 3400 Via Lido Use Permit be pushed forward to a March or April agenda item for the following reasons. First and foremost, Mr. Stockton, Sejour LLC, Svelte LLC have been evicted from the property for non - payment. We, the owners, now have possession and control of 3400 Via Lido. We guarantee that no occupancy or operation of any kind shall take place until a Hearing occurs with the Planning Commission and the owners being present. Second, we wish to request that we have an opportunity to prepare a response to the Planning Department's report regarding 3400 Via Lido and the past tenant's operations and violations. We understand that the Planning Commission's schedule is extremely busy, but respectfully request a date of no earlier than March 6, 2008, so that we may have an opportunity to respond intelligently and efficiently to the City and the Planning Commission. Third, we have made a substantial investment in developing the property at 3400 Via Lido for the specific use of a retail wine and spirit on -sale and off -sale operation. Page 2 of 3, letter to David Lepo January 10, 2008 A very thorough and debated discussion regarding the Use Permit was approved for the operation. The property was operated successfully without citations for a 3 -year period along with a positive synergy for neighboring business tenants. The following businesses that we met with yesterday; Bruce Blackman Jewelers, Jim Mahoney Gondola, John Connor Charlie's Locker; all told us that they welcome our operation returning and feel it would be a positive development to the businesses of Lido Marina Village. Fourth, prior to leasing the premises to Arthur Stockton, we thoroughly investigated his background. He was (and still is) a homeowner on the waterfront in Newport Beach. He was (still is) married with children. He was formerly a bank officer, and an attorney, duly licensed to practice law in California. We regarded him as a responsible, moral individual who would fully conform to not only the terms of the lease, but would also adhere to each and every provision of the Use Permit. We are sadly and rudely disappointed in the manner in which this tenant conducts his affairs. Fifth, we the owners, were not aware of the of non - compliance to the Use Permit, that our tenant committed during the second year of his tenancy at 3400 Via Lido with one exception: In early June of 2007, Christine Overstreet was informed by John Connor, owner, Charlie's Locker, that the tenant at 3400 Via Lido had some issues with the City. Upon hearing this, Christine contacted the City and after many calls determined that Charles Spence, an Officer for Code Violations for the City of Newport Beach had issued a Violation Complaint to Carolyn Stockton, tenant of 3400 Via Lido. Christine and Charles Spence spoke on the phone and Mr. Spence indicated that he felt the tenant was recoiling his operation to meet the codes and guidelines of the City. However, Christine requested to meet with Mr. Spence and she met with him and requested a copy of the Code Violation Report - that had a fee of $100.00. A copy of this is provided. Christine and Mr. Spence exchanged contact information and she asked that he advise her of any additional problems should they occur with the tenant. Had we been notified as requested, of such further violations, we would have taken appropriate action, even eviction, as the property has very little value without the Use Permit. Christine then contacted Arthur Stockton, the tenant at 3400 Via Lido to determine the status of how the tenant was addressing the Code Violation Notice. Mr. Stockton assured Christine that he was doing his "due diligence" and "working with the City diligently" to correct any problems or issues. Mr. Stockton advised us that he was acquiring the necessary temporary permits and preparing an amendment to the Use Permit to submit to the Planning Department. Mr. Stockton contacted Christine to request "Radius Map" preparers and advised her that he would need our signatures on the Application being submitted to the City. (During our discussion with tenants Bruce Blackman and Jim Mahoney today, January 9, 2008, they both said, that since the City had issued the notice (Code Violation Notice from Charles Spence) the tenant was not causing any more problems or issues within the Lido Marina Village. Between June 2007 and January 2, 2008, we received no telephone calls, no written notices, and no complaints from our business neighbors in the village regarding the tenant and or violations to the Use Permit for 3400 Via Lido. Page 3 of 3, letter to David Lepo January 10, 2008 Sixth, we respectfully submit that the property not be tainted by the irresponsible action of the prior tenant, considering that we previously operated a viable business and in compliance of the Use Permit and its terms. We respectfully request the confidence from the City so we may again operate the business following the codes and Use Permit to the letter. The current condition of the Lido Marina Village is dismal. Numerous businesses have closed due to economic hardship, the prominent presence of the Rehabilitation business operations and the negligence of maintenance and general upkeep by the current majority owner (Wasserman- Vomado) of the Lido Marina property. Revoking the Use Permit will not only cause hardship to the owners of the property, it will have a negative impact on the economy of Lido Marina Village which is spiraling downward as month to month tenants come and go in the Village. According to our business tenant neighbors, Bruce Blackman, Jim Mahoney and John Connor, the public benches and all hanging flower pots have been pulled up and removed from the brick sidewalk area of Lido Marina Village by the present majority ownersidevelopers. In addition to owning our own home in Newport Beach, we own three commercial properties in the City of Newport Beach and in the past we have been responsive to any directives from City agencies. Unfortunately, the tenant at 3400 Via Lido abused his privileges as a business operator, but we have t*en the necessary steps to remove this nuisance. We believe that the City of Newport Beach has evMfhigg to gain and nothing to lose by allowing its owners to return as operators to the property adhering to the terms of the Use Permit. Any action to revoke or further restrict the Use Permit would result in forfeiture. We anticipate your response. Since y, and Christine Overstreet 200 Via San Remo Newport Beach, CA 92663 Home 949- 673 -3953 Dennis work 310 - 278 -7322 Chris work 949 - 378 -7271 Enclosures: Lease - Svelte Body Centers, LLC 3400 Via Lido Newport Beach, CA 92663 (Svelte Body Centers, LLC is affiliated with Sejour LLC, Arthur Stockton and Carolyn Stockton) Copy of Violation Notice to Carolyn Stockton - from City of Newport Beach Code Enforcement, May 1, 2007. cc: Mr. Aaron Harp, Assistant City Attorney Mr. Patrick Alford, Senior Planner Planning Commission, City of Newport Beach City Council, City of Newport Beach OFFICE LEASE SVELTE BODY CENTERS, LLC 3400 VIA LIDO NEWPORT BEACH, CALIFORNIA 92663 THIS LEASE AND ASSIGNMENT AGREEMENT ( "Lease ") is entered into on the date set forth in the Basic Lease Information attached hereto as Exhibit A and incorporated by this reference ( "Execution Date "), by and between Dennis Overstreet, a Married Man, as his Sole and Separate Property ( "Landlord ") and Svelte Body Centers, LLC, a Nevada limited liability company ( "Tenant "), with respect to 3400 Via Lido, Newport Beach ( "City "), California 92663, as hereinafter further described on Exhibit B attached hereto and incorporated by this reference herein (the "Leased Premises "). In addition to the, the Leased Premises in the Lease includes: A. Landlord's two (2) complimentary reserved parking spaces and rights to lease an additional twenty -two (22) spaces in the Lido Village Marina parking garage as set forth in the Parking Agreement dated March 26, 1973, the Off -Site Parking Agreement dated May 29, 1975 and the Assignment of Parking Agreement dated November 17, 1986, collectively the ( "Parking Agreement ") all attached hereto as Exhibit C and incorporated by this reference herein; B. All Landlord's proportionate shares and rights (if any) of all Lido Marina Village non - assigned parking areas, roadways, landscaping, loading areas, hallways, restrooms, lighting facilities, (all hereinafter collectively referred to as "Common Areas "); and C. Certain personal property, fixtures, supplies and equipment (other than inventory) located within the Leased Premises and associated with the operation of the Leased Premises as listed on Exhibit D attached hereto and incorporated herein by this reference. FOR AND IN CONSIDERATION OF THE RENT AND OTHER COVENANTS AND AGREEMENTS SET FORTH BELOW, LANDLORD AND TENANT AGREE AS FOLLOWS: F: UtEALU89404362001\svelte lease (clean ) M .doc 9282005 1. CHARACTER OF LEASED PREMISES: The business conducted on the Leased Premises shall be (i) a bar, restaurant and live entertainment business, (ii) a medical /professional practice initially specializing in, but not limited to, medical, cosmetic, rehabilitative, preventative and therapeutic muscle and connective tissue technologies. Tenant may change said use to any other lawful retail use permitted under the Use Permit and /or by the City, with Landlord's prior written consent, which consent shall not be unreasonably withheld. 2. TERM: The Initial Term of this Lease shall be for a period of 60 months ( "Initial Term ") beginning on the Commencement Date and ending on October 15, 2008, the ( "Expiration Date "), unless said Initial Term shall be extended as hereinafter provided. The Initial Tenn and any extensions or renewals thereof shall hereinafter be collectively referred to as the "Term." a. Commencement Date. The obligation of Tenant to pay Rent (as hereinafter defined) shall begin on October 15, 2005 (the "Commencement Date "). The taking of possession of the Leased Premises by Tenant shall be conclusive evidence that the Leased Premises were in good and satisfactory condition when possession of the Leased Premises was taken. b. Annual Adjustment. Tenant shall have two (2) consecutive options to renew this Lease, ( "Renewal Option(s)"). Each Renewal Option shall be for an additional 60 -month term, ( "Renewal Term ") upon the same terms and conditions set forth herein except that the Rent shall be adjusted (increased or decreased) to reflect the prevailing market rate for similar space in the Lido Marina Village. C. With respect to the Renewal Options, on or before 360 days prior to each Expiration Date, Tenant shall send written notice to Landlord either (i) electing to terminate the Lease at the next ensuing Expiration Date in which case any remaining Renewal Option(s) shall lapse and this Lease shall terminate on the applicable Expiration Date, or (ii) proposing to renew this Lease and setting forth the proposed prevailing market rental rate for the new Renewal Term. Within 30 days receipt of Tenant's written notice to renew this Lease, Landlord shall send Tenant written notice either (i) accepting the Renewal Option to extend the Lease at the prevailing market rate set forth by Tenant in its written notice to Landlord, or (ii) proposing to submit any disagreement about the prevailing market rental rate of the Leased Premises for the applicable Renewal Term to a panel of three MAI appraisers qualified to determine prevailing market rental rates in Lido Marina Village. In such circumstances, Landlord and Tenant shall each immediately appoint an appraiser and the two appraisers shall jointly select a third appraiser to comprise the panel. The prevailing market rate shall then be determined by simple majority vote of the panel of three appraisers. Landlord and Tenant shall each bear their own costs of appointing their respective appraiser and the cost of the third appraiser shall be borne equally by Landlord and Tenant. Upon determination of the prevailing market FAREAU89413436200hsvelm leme (clean) rv4 Ad annnnna rental rate by the panel of appraisers, Tenant shall have 30 days to give written notice either accepting the rate or notifying Landlord of its intention to terminate the Lease at the next ensuing Expiration Date. 3. MONTHLY RENT: In consideration of this Lease, Tenant, without prior notice or demand, agrees to pay to Landlord monthly Rent in the amount of Six Thousand Dollars ($6,000) (referred to herein as .'Rent "). Tenant shall pay Rent to Landlord on a monthly basis, in advance on or before the first day of each calendar month, beginning on the Commencement Date. The Rent due for a period of less than a full month shall be prorated on the basis of a thirty -day month. The Rent shall be paid to Landlord in lawful money of the United States of America at the address designated herein or at such other place as Landlord may, from time to time, designate in writing. Tenant shall also pay to Landlord with the Rent, as additional rent, any privilege, excise, sales, gross proceeds, rent or other tax now or hereafter levied, assessed or imposed, directly or indirectly, by any governmental authority upon any rent or other payments required by this Lease. For the purpose of this Lease, the term "Rent" shall include all amounts owed by Tenant to Landlord, whether it be monthly Rent or any other amounts owed by Tenant to Landlord as provided for in this Lease. 4. LEASED PREMISES OPERATING EXPENSES: It is the intention of the parties that this Lease be a triple net lease such that Tenant shall be responsible for the procurement and payment of Direct Expenses, which are defined as all reasonable expenditures necessary in any given calendar year to maintain and operate the Leased Premises ( "Direct Expenses "). Direct Expenses include, but are not limited to, real property taxes and assessments, personal property taxes levied on equipment, fixture and other property located on the Leased Premises and used in connection with the operation thereof, and any other taxes imposed by any federal, state, county, municipal or other governmental entity, whether assessed against Landlord and/or Tenant (except any income tax or estate, inheritance or succession tax payable by Landlord); water and sewer charges; insurance premiums of any type; utility expenses, including, without limitation, expenses for gas, electricity and water; janitorial expenses, expenses for landscaping and other services required to maintain, repair, and restore the Common Areas; Parking costs (if any) in accordance with the Parking Agreement, Off -Site Parking Agreement and Parking Agreement Assignment included as Exhibit C; air conditioning maintenance and repair; the costs of supplies, materials, equipment and tools used in the operation of the Leased Premises; or assessments of any type, whether or not now customary or within the contemplation of the parties hereto, including expenditures for capital improvements including, subject to Article 7 below, those which are imposed or required by or which result from statutes or regulations, or interpretations thereof, promulgated by any Federal, state, county, municipal or other governmental body or agency of any type performing any governmental or other function (including but not limited to, the Environmental Protection Agency and the authority administering the Occupational Safety and Health Act, or any successor agencies performing the same or similar functions); provided, 3 FAREALN89413436200 Nvelte lease (clean ) rv4.doc 9282005 however, the cost of any capital improvements shall be amortized over the useful life to Landlord of such improvement according to Generally Accepted Accounting Principles, and only the portion of such amortization applicable to any calendar year or, if applicable, any partial calendar year, shall be included as a Direct Expense for such calendar year or partial calendar year. 5. PERSONAL PROPERTY TAXES. During the term hereof, Tenant shall pay prior to delinquency all taxes assessed against and levied upon fixtures, furnishings, equipment and all other personal property of Tenant (or leased to Tenant by Landlord) contained in the Leased Premises, and when possible, Tenant shall cause said fixtures, furnishings, equipment and other personal property to be assessed and billed separately from the real property of Landlord. In the event any or all of the Tenant's fixtures, furnishings, equipment and other personal property shall be assessed and taxed with the Landlord's real property, the Tenant shall pay to Landlord Tenant's share of such taxes within ten (10) days after delivery to Tenant by Landlord of a statement in writing setting forth the amount of such taxes applicable to Tenant's property, as well as copies of the appropriate tax bills. 6. LATE CHARGES. Tenant acknowledges that late payment to Landlord of Rent or other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which would be extremely difficult and impractical to ascertain. Such costs include, but are not limited to, processing and accounting charges, as well as late charges that may be imposed upon Landlord by the terms of any mortgage or trust deed covering the Leased Premises. Therefore, in the event Tenant should fail to pay any installment of Rent or any other sum due hereunder after such amount is due, Tenant shall, upon demand, pay to Landlord as additional Rent, a late charge equal to ten percent (10 %) of each such installment or other sum due and payable, plus any attorneys' fees incurred by Landlord by reason of Tenant's failure to pay such Rent and/or other charges when due or $25.00 per day said installment of Rent or sum due hereunder is past due, whichever is greater. Said late charge shall be assessed on the 10th day of each month but shall accrue from the first day of the month. In addition to any other amounts due hereunder, Tenant shall be assessed a $150.00 charge for each check that is returned due to insufficient funds in Tenant's checking account. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs which Landlord will incur by reason of late payment by Tenant. Acceptance of such late charge by Landlord shall in no event constitute a waiver of Tenant's default with respect to such overdue amount, nor prevent Landlord from exercising any of the other rights and remedies granted hereunder. 7. GOVERNMENT FEES/REGULATIONS. All fees due to the City of Newport Beach, County of Orange or the State of California, as the result of any inspection made on the Leased Premises by any officer thereof, shall be paid by Tenant, excepting any fees for building and planning inspections applicable to Landlord's non- 4 FAREAL89413436200l\svelte lean (clean ) M .doe 9282005 compliance with applicable City rules and regulations. Landlord hereby covenants that the Leased Premises are in compliance with all applicable City, county, state and Federal rules for its current operation. 8. SALE OF LIQUOR LICENSE. Landlord shall use its best efforts in the sale and assignment of the Liquor Licenses necessary for the current operation of the Leased Premises to Sejour LLC, a California limited liability company ( "S6jour ") concurrently and shall establish an escrow for such sale of the Liquor Licenses. Landlord shall promptly execute and deliver any instrument that Sejour may request to affect such sale and assignment. Subject to Article 9 below, Se-Jour covenants, at S6jour's sole cost and expense, to use its best efforts to maintain the same in full force and effect for the first 36 months of the Lease Term. If, during the first 36 months of the Lease Term, Tenant is in Default as set forth in Article 13 of this Lease and as set forth in a written notice to Se-Jour (the "Default Circumstances "), S6jour hereby grants Landlord the option to repurchase such Liquor Licenses for Thirty -Seven Thousand Dollars ($37,000). S6jour shall promptly execute and deliver any instrument that Landlord may request to affect the return of all Liquor Licenses and permits originally transferred by Landlord to Se-Jour. In Default Circumstances, Se-jour hereby irrevocably appoints Landlord as attorney -in -fact of Se-Jour to execute and deliver such instruments on behalf of S6jour to affect the return to Landlord of all Liquor Licenses and permits originally transferred by Se-jour to Landlord should Se-Jour refuse or fail to do so promptly after request. 9. USE PERMIT COMPLIANCE /AMENDMENTS: If, for any reason, the business to be conducted as set forth in Article 1 above, including the placement of the medical /professional practice in the portion of the Leased Premises referenced in the Use Permit as "Unit AI," is determined by the City of Newport Beach to be in violation of the Use Permit, Landlord, Sejour and Tenant hereby agree to jointly apply to the City of Newport Beach for an amendment to the Use Permit which still permits Tenant, in its sole discretion, to operate its core medical /professional practice, while devoting minimum space to maintain the Liquor Licenses for the first 36 months of the Term of the Lease. If, in Tenant's sole discretion, any City of Newport Beach requirements or conditions threaten its core medical /professional practice, Se-Jour's obligation to maintain the Liquor Licenses is hereby released. In such circumstances, Landlord shall have the option (but not the obligation) to repurchase the Liquor Licenses for Thirty -Seven Thousand Dollars ($37,000). 10. BUILDING HOURS / TENANT ACCESS: Landlord and Tenant agree that Tenant shall have access to the Leased Premises twenty -four (24) hours, seven (7) days per week. 11. LANDLORD / TENANT RESPONSIBILITIES: Tenant agrees to comply with all local, state, and Federal government laws, ordinances, regulations, and any other requirements throughout the Term of this Lease. Tenant shall not be required to make repairs or alterations which may be required by governmental rules, orders, or regulations 5 F:aEAL \894134362001 \svehe lease (clean ) M Am 92R/2005 unless resulting from the business operations maintained by Tenant within the Leased Premises. Landlord or Landlord's agents and representatives upon reasonable notice to Tenant shall have the right to enter and inspect the Leased Premises at any time during reasonable business hours upon reasonable notice to Tenant (except in an emergency in which case Tenant hereby waives notice) for the purpose of ascertaining the condition of the Leased Premises or to make such repairs, additions, or alterations as may be required to be made by Landlord under the terms of this Lease. 12. LANDLORD DISCLAIMER. Landlord shall not be responsible for any delay or failure in the observance or performance of any term or condition of this Lease to be observed or performed by Landlord to the extent that such delays result from action or order of governmental authorities; civil commotions; acts of terrorism; strikes, fires, acts of God or the public enemy; act or default of any tenant in the vicinity of the Leased Premises; inability to procure labor, material, fuel, electricity or other forms of energy; or any other cause beyond the reasonable control of Landlord, whether or not similar to the matters herein specifically enumerated. Any delay shall extend by like time any period of performance by Landlord and shall not be deemed a breach of or failure to perform this Lease or any provisions hereof. In the event of any default under this Lease by Landlord, Tenant, before exercising any rights that it may have at law to cancel this Lease, shall have given notice of such default to Landlord and shall have offered Landlord a reasonable opportunity to correct and cure the default. Tenant also agrees to give the holders of any mortgages or deeds of trust ( "mortgagees ") by registered mail a copy of any notice of default served upon Landlord, provided that prior to such notice Tenant has been notified in writing (by way of Notice of Assignment of Rents and Leases, or otherwise) of the addresses of such mortgagees. Tenant further agrees that if Landlord shall have failed to cure or commence to cure such default within the aforesaid time limit, then the mortgagees shall have an additional thirty (30) days within which to cure such default or if such default cannot be cured within that time, then such additional time as may be necessary if within thirty (30) days any mortgagee has commenced and is diligently pursuing the remedies necessary to cure such default (including, but not limited to, commencement of foreclosure proceedings if necessary to effect such cure) in which event this Lease shall not be terminated while such remedies are being so diligently pursued. 13. DEFAULT. In addition to any events defined elsewhere in this Lease as constituting a default of Tenant, any of the following shall be considered an "Event of Default" by Tenant hereunder: a. Tenant fails to pay any installment of Rent or other charges hereby reserved and such failure continues for a period of ten (10) days after receipt of written Notice from Landlord; rl FAREAU894\34362001\svelte lease (clean ) rv4 .dOC 9282005 b. Tenant fails to comply with any term, provision, or covenant of this Lease, other than the payment of Rent or other charges, and does not cure such failure within ten (10) days after receipt of written Notice, or as otherwise prescribed in this Lease; C. Tenant makes a general assignment, or general arrangement for the benefit of creditors; d. The filing by or against Tenant of a petition to have Tenant adjudged bankrupt or a petition for reorganization or arrangement under any law relating to bankruptcy (unless, in the case of a petition filed against Tenant, the same is dismissed within ninety (90) days); e. A receiver or trustee is appointed to take possession of all or substantially all of Tenant's assets or of Tenant's interest in this Lease where possession is not restored to Tenant within sixty (60) days; f. The attachment, execution or judicial seizure of substantially all of Tenant's assets or of Tenant's interest in this Lease, where such seizure is not discharged within thirty (30) days; g. The passage or other devolution of Tenant's interest in this Lease to any person or entity except that named as Tenant herein, by law or otherwise, without the prior written consent of Landlord; h. Tenant fails to occupy, deserts, or vacates any substantial portion of the Leased Premises as herein agreed; i. Tenant fails to comply with the provisions or reporting requirements of either the Subordination Clause, the Attornment Clause, or the Estoppel Clause contained within this Lease and such failure to comply continues for a period of ten (10) days after receipt of written Notice; and/or j. Landlord discovers that any financial statement given to Landlord by Tenant, any assignee of Tenant, any subtenant of Tenant or any successor in interest of Tenant (subject to the assignment and sublease provisions contained in this Lease), or any of them, was materially false. 14. REMEDIES. Upon the occurrence of any such Event of Default, Landlord shall have, in addition to the normal remedies provided by law, the option to pursue any one or more of the following remedies without any notice or demand whatsoever: a. terminate Tenant's right to possession of the Leased Premises by any lawful means, in which case this Lease shall terminate and Tenant shall immediately surrender possession of the Leased Premises to Landlord. In such event Landlord shall be 7 F:aEAL%894\3436200 Nvelte lease (clean ) N4 Am 9282005 entitled to recover from Tenant all damages incurred by Landlord by reason of Tenant's breach or default, including, but not limited to the cost of recovering possession of the Leased Premises; expenses of reletting, including the cost of necessary renovation and alteration of the Leased Premises, reasonable attorneys' fees, and any real estate commissions actually paid; the amount by which the total of the unpaid Rent and other sums due hereunder for the balance of the Term hereof exceeds the total amount of any payments of like character to be received by Landlord from any subsequent tenant or tenants during the same period; b. maintain Tenant's right to possession, in which event this Lease and all obligations of Tenant hereunder shall continue in effect, except that Landlord, at its option, may give notice to Tenant that all of the Rent to become due during the Term hereof is due and payable immediately, in which event Tenant shall pay the sum within ten (10) days receipt of such Notice; C. re -enter the Leased Premises without terminating this Lease and relet the Leased Premises or any part thereof for such term or terms and at such rental or rentals and upon such other terms and conditions as Landlord in its sole discretion may deem advisable, with the right to make alterations and repairs to said Leased Premises. Rentals received by Landlord from such reletting shall be applied as follows: first, to the payment of the cost of such reletting as more specifically set forth in subsection (a) above; second, to the payment of the cost of any alterations and repairs to the Leased Premises; third, to the payment of any indebtedness, other than Rent, due hereunder, and the residue, if any, to be held by Landlord and applied in payment of future Rent as the same may become due and payable hereunder. Should such rentals received from such reletting during any month be less than that agreed to be paid during that month by Tenant hereunder, then Tenant shall pay such deficiency to Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall also pay to Landlord, as soon as ascertained, the costs and expenses incurred by Landlord in such reletting or in making such alterations and repairs. No such re -entry or taking possession of the Leased Premises by Landlord shall be construed as an election on its part to terminate this Lease unless a written Notice of such intention be given to Tenant or unless the termination thereof be decreed by a court of competent jurisdiction. Notwithstanding any such reletting without termination, Landlord may at any time thereafter elect to terminate this Lease for such previous breach; d. exercise its option by written notice to Tenant to repurchase any Liquor Licenses and permits as set forth in Article 8; and e. pursue any other remedy now or hereafter available to Landlord under the laws or judicial decisions of the State of California. 15. GOVERNING LAW. The laws of the State of California govern this Lease and any interpretations or constructions thereof. Further, the place of performance and 13 FAREAU894\34362001\svelle lease (clean ) rv4 AM transaction of business shall be deemed to be in the County of Orange, State of California, and in the event of any litigation, the exclusive venue and place of jurisdiction also shall be the County of Orange, State of California. 16. LANDLORD'S LIEN AND UNIFORM COMMERCIAL CODE. As security for payment of Rent, damages, and all other payments to be made by Tenant as required herein, Tenant hereby grants to Landlord a lien upon all goods, wares, equipment, fixtures, and furniture of Tenant now or subsequently located upon the Leased Premises. If Tenant abandons or vacates any portion of the Leased Premises, or is in default of the payment of any Rent, damage or other payments as required herein, Landlord may enter upon the Leased'Premises, by force (to the extent permitted by applicable law) if necessary, and take possession of all or part of the aforesaid items. Landlord may sell all or part of the aforesaid items at a public or private sale, in one or successive sales, with or without notice, to the highest bidder for cash. In addition, Landlord may, on behalf of Tenant, sell and convey all or part of aforesaid items to the bidder, and deliver to the bidder all of the Tenant's title and interest in said items. The proceeds of the sale shall be applied by the Landlord toward the cost of the sale and then toward the payment of all sums then due by Tenant to Landlord under the terms of this Lease. The statutory lien for Rent is not hereby waived, the express contractual lien herein granted being in addition and supplementary thereto, to the extent, if any, this Lease grants Landlord or recognizes in Landlord any lien or lien rights greater than provided by the laws of the State of California. At Landlord's option, this Lease may be intended as a security agreement within the meaning of the Uniform Commercial Code. Landlord, in addition to the rights prescribed in this Lease, shall have all the rights, titles, liens and interests in and to Tenant's property now or hereafter located upon the Leased Premises which are granted a secured party, as that term is defined under the Uniform Commercial Code, to secure the payment to Landlord of the various amounts provided for in this Lease and in compliance with same. 17. TRANSFER OF LANDLORD'S INTEREST. In the event Landlord transfers its interest in the Leased Premises (other than a transfer for security purposes only), Landlord shall be relieved of all obligations accruing hereunder after the effective date of such transfer, provided that such obligations have been expressly assumed in writing by the transferee. 18. COSTS AND ATTTORNEY'S FEES. If it becomes necessary for either the Landlord or Tenant to employ an attorney due to the default or breach of a provision of this Lease, to gain possession of the Leased Premises, or to further protect its interest as granted per the terms and provisions herein contained, the non - prevailing party shall pay, in addition to its own costs and expenses, a reasonable attorney's fee and all costs and expenses expended or incurred by the prevailing party in connection with such default or action. 9 FAREAB894\3436200 I\svelte lease (clean ) m4 Am 9282005 19. ALTERATIONS. Tenant shall not make any alterations, additions, or improvements to the Leased Premises (hereinafter collectively referred to as "Work ") without the prior written consent of Landlord, which consent shall not be unreasonably withheld. Any such Work shall be at the sole cost and expense of Tenant and shall become the property of Landlord and shall remain in the Leased Premises and shall be surrendered as a part thereof at the termination of this Lease, without disturbance, molestation or injury. All Work shall be accomplished in a good workman -like manner and shall comply with all applicable governmental laws, ordinances and regulations. Tenant shall promptly pay for the costs of all Work performed and shall indemnify and hold Landlord harmless for, from and against all liens, costs, damages, or expenses incurred in connection therewith, including attorney's fees, incurred by Landlord if Landlord shall be joined in any action or proceeding involving such Work. Under no circumstances shall Tenant commence any such Work until Landlord has been provided with evidence that Tenant or the persons or entities performing such Work carry adequate worker's compensation as required by the State of California, that the persons or entities performing such work are adequately bonded, and that the persons or entities performing such work carry public liability and builder's risk insurance in amounts deemed reasonably satisfactory by Landlord. 20. UPON LEASE TERMINATION. Tenant shall remove all alterations, additions, improvements, shelves, bins, equipment, trade fixtures, partitions and other Work erected or installed by Tenant and restore the Leased Premises to its original condition, wear and tear excepted, if so desired by Landlord; otherwise, such Work shall be delivered to Landlord with the Leased Premises. All such removals and restorations shall be accomplished in a workmanlike manner so as not to damage the primary structure or structural qualities of the Leased Premises or any other improvements situated on the Leased Premises. Provided there is no Event of Default as set forth in Article 13 of this Lease, upon Lease termination Landlord shall not rent the Leased Premises to another medical /professional practice in the same business as Tenant for a period of six months from the date of termination. 21. SIGNAGE. For purpose of this Lease, "Signage" shall be defined as signs, placards, pictures, advertisements, names, notices lettering, door signs, window coverings, awning or other projections visible from the exterior of the Leased Premises. The cost of all Signage, including the maintenance, repair and removal thereof, shall be the sole cost and expense of Tenant. Tenant shall remove all Signage at the termination of this Lease and repair any damage or injury to the Leased Premises caused thereby, and if not removed by Tenant at the termination of this Lease, Landlord may have the same removed at Tenant's expense. Contingent upon City of Newport Beach approval and the provisions set forth in the Use Permit, Tenant shall have the right to replace at its sole expense, all existing 10 FAREAM404362001\svelte lease (clean ) m4.doc 928/2005 Signage in any location situated on the Leased Premises. All Signage must at all times comply the City of Newport Beach codes and ordinances. 22. MECHANIC'S LIENS. Tenant shall keep the Leased Premises free from any liens arising out of any Work performed, materials furnished or obligations incurred by Tenant. 23. COMPLIANCE WITH LAWS. Tenant shall at its own cost and expense, obtain any and all licenses and permits necessary for its business operations. Tenant, at its own cost and expense, shall comply with any law, statute, restriction, ordinance or governmental rule or regulation or any requirement of any duly constituted public authority now in force or which may hereafter be enacted or promulgated which is applicable to the peculiar nature of Tenant's use of the Leased Premises. Tenant's obligation to comply with laws, rules, and regulations applicable to the peculiar nature of the Leased Premises shall include the obligation to locate furniture and fixtures in accordance with the Americans With Disabilities Act (A.D.A.) and the rules and regulations adopted thereunder. Tenant shall promptly comply with all Landlord or governmental orders and directives for the correction, prevention, and abatement of nuisances in or upon, or connected with the Leased Premises, all at Tenant's sole expense. Tenant agrees to pay, on demand, costs for any damage or repairs to the Leased Premises caused by the misuse of same by Tenant, its agents, or employees. Tenant shall procure all insurance for the Leased Premises reasonably satisfactory to Landlord as further provided herein. Tenant shall not permit the Leased Premises to be used in any way which would cause the cancellation bf any insurance policy covering the Leased Premises, nor shall Tenant sell or permit to be kept, used, or sold in or about the Leased Premises any articles which may be prohibited by the policy of fire or other hazard insurance in force for the Leased Premises. Any conduct of Tenant which is in violation of recommendations by Tenant's or Landlord's insurance carrier, or failure by Tenant to promptly take any corrective action recommended by such insurance carrier(s) shall be a material Event of Default under this Lease and Landlord shall be entitled to all of the remedies in Article 14 of this Lease. 24. TENANT IMPROVEMENTS 'AS-IS'/ POSSESSION. Tenant has inspected the Leased Premises and accepts the Leased Premises and all tenant improvements contained therein on an AS -IS basis, without warranty except as otherwise provided in Article 11. 25. LEASE ASSIGNMENT OR SUBLETTING. Landlord hereby consents to Tenant's sublease of the bar /restaurant portion of the Leased Premises to Sejour. With respect to any other assignments or subletting, Tenant shall have the right to sublease all or a portion of the Leased Premises but only with the consent of Landlord, which consent shall not be unreasonably withheld. Tenant must remain liable for the performance of this Lease in the event of monetary or non - monetary default by any qualified or approved assignee, sub - lessee or transferee unless such assignee, sub - lessee or transferee provides 11 FAREAL\894\3436200Dsvelte lease (clean ) rv4 .doc 9282005 a financial statement to Landlord at the time of the sublease demonstrating financial resources greater than or equal to Tenant in which case Tenant will have no further obligations pertaining to the portion of the Leased Premises or this Lease that are the subject of the sublease. This Lease shall not be assignable by operation of law. If Landlord should consent to any one or more Transfers by Tenant, Landlord shall not be deemed to have consented to any subsequent Transfer. Tenant shall not change the ownership of its business in order to avoid this provision, and will, at the request of Landlord, provide whatever documentation is necessary to establish that Tenant is in compliance with this provision. 26. INDEMNIFICATION: INSURANCE. Tenant agrees to indemnify Landlord and hold Landlord, the Leased Premises free and harmless for, from, and against any and all penalties, costs expenses (including attorneys' fees), claims, demands and causes of action, including claims based upon imputed negligence due to ownership of the Leased Premises arising out of or in connection with (a) any accident or other occurrence in or on the facilities (including, without limiting the generality of the term "facilities ", stairways, passageways or hallways), the use of which Tenant may have in conjunction with other tenants of the Leased Premises, when such injury or damage shall be caused in part or in whole by the act or omission of Tenant, its agents, contractors, servants, employees, licensees, invitees, permittees, customers, clients or guests (b) the condition of, any defect in, the Leased Premises or any part thereof or any improvements thereof, (c) the condition of, or any defect in Tenant's fixtures or equipment or any part thereof, (d) the use or occupancy of the Leased Premises by Tenant or any tenant of Tenant, or (e) any breach or default in the performance of any obligation on Tenant's part to be performed under the terms of this Lease. If any action or proceeding is brought against Landlord for any of the foregoing reasons, Tenant, upon notice from Landlord, shall defend the same at Tenant's expense by counsel satisfactory to Landlord. Landlord agrees to indemnify Tenant and hold Tenant free and harmless for, from, and against any and all penalties, costs, expenses (including attorneys' fees), claims, demands and causes of action arising out of or in connection with any accident, violation of applicable codes or laws at the Commencement Date or other occurrence in or on the facilities caused in part or in whole by the acts or omissions of Landlord or Landlord's agents or employees. If any action or proceeding is brought against Tenant for any of the foregoing reasons, Landlord, upon notice from Tenant, shall defend the same at Landlord's expense by counsel satisfactory to Tenant. Counsel selected by either Landlord or Tenant's insurer shall be deemed to be satisfactory counsel to either Landlord or Tenant, as the case may be. 12 FAREAL�8949436200 hsvelte lease (clean ) rv4 Am Landlord shall not be liable for any loss or damage to any person or any property sustained by Tenant, or sustained by any other persons, which may be caused by the buildings, the Leased Premises or any appurtenances thereto. In addition, Landlord shall not be liable for any loss or damage caused by the bursting or leakage of any water, gas, sewer, or steam pipe, or by theft or by any act of neglect of any tenant or occupant of any buildings situated on the Leased Premises or on the adjacent property which shares utilities, ingress and egress and other services, or by any other cause whatsoever, unless said damage is caused by the willful neglect of Landlord. All personal property of any kind or description whatsoever in or about the Leased Premises or upon the Leased Premises shall be at Tenant's sole risk, and Landlord shall not be held liable for any damage done to or loss of such personal property or to the business of Tenant. Tenant shall at its own cost and expense procure and maintain during the entire Term, and any extensions thereof, workmen's compensation insurance as required by statute, as well as all risks coverage (Leased Premises, fire, casualty and comprehensive public liability insurance) covering the Leased Premises and their surrounding areas and naming Landlord as an additional insured in such amounts as Landlord may from time to time require. The initial liability coverage under such comprehensive public liability insurance shall not be less than Five Million (5,000,000) combined single limit, together with excess liability coverage of not less than One Million ($1,000,000) including fire damage, together with legal liability coverage and property /casualty insurance in an amount adequate to cover the cost of replacement of the Leased Premises and its contents. Said comprehensive public liability insurance shall be an occurrence type policy and shall also contain cross liability endorsements and insure performance by Tenant of the indemnity provisions provided above. The limits of said insurance shall not, however, limit the liability of Tenant under this Article 26. The originals of all policies shall remain in the possession of Tenant; provided, however, Tenant shall provide Landlord a certificate of insurance confirming the coverage prior to the commencement of this Lease and at each subsequent insurance renewal. All policies of insurance shall name Landlord as an additional insured and shall provide that such insurance will not be canceled or subject to reduction of coverage or other modification except after thirty (30) days written notice to Landlord. Tenant shall furnish policy renewals or binders to Landlord not less than ten (10) days prior to the expiration of any policy required hereunder. All insurance policies procured shall be issued by a responsible company or companies authorized to do business in the State of California with a Best's rating of at least A -NII and reasonably satisfactory to Landlord. 27. DENIAL OF SUBROGATION RIGHT. Neither Landlord nor Tenant shall be liable to the other for any business interruption or any loss or damage to property or injury to or death of persons occurring on the Leased Premises, or in any manner growing out of or connected with Tenant's use and occupation of the Leased Premises or the 13 FAREAL%94134362001hvelte lease (clean) m4.dm 9/28/2005 condition thereof, whether or not caused by the negligence or other fault of Landlord or Tenant, or of their respective agents, employees, subtenants, licensees, or assignees. This release shall apply only to the extent that such business interruption, loss or damage to property, or injury to or death of persons, is covered by insurance, regardless of whether such insurance is payable to or protects Landlord or Tenant or both. Nothing in this Paragraph shall be construed to impose any other or greater liability upon either Landlord or Tenant than would have existed in the absence of this Article. This release shall be in effect only so long as the applicable insurance policies contain a clause to the effect that this release shall not affect the right of the insured to recover under such policies. Such clauses shall be obtained by Landlord and Tenant in the policies of insurance required to be provided by either hereunder. 28. DAMAGE OR DESTRUCTION. Except as otherwise provided in this Lease, in the event the Leased Premises are damaged by fire or other casualty through no fault of Tenant and covered by insurance, such damage shall be repaired by and at the expense of such insurance and this Lease shall remain in full force and effect, except that Tenant shall be entitled to a proportionate reduction of Rent while such repairs are being made, such proportionate reduction to be based upon the extent to which the making of such repairs shall materially interfere with Tenant's business income. In the event such repairs cannot, in the reasonable opinion of Landlord, be substantially completed within sixty (60) days after the occurrence of such damage (without the payment of overtime or other premiums), Landlord may, at its option, exercisable by giving written notice to Tenant within thirty (30) days after the occurrence of such damage, make such repairs within a reasonable time and Landlord shall proceed to make such repairs with reasonable dispatch. In such event, this Lease shall continue in full force and effect and the Rent payable by Tenant hereunder shall be determined as provided in the first paragraph of this Article if Tenant's business income is materially impacted. In the event Landlord does not elect to repair the damage, as provided above, either Landlord or Tenant, by written notice given to the other within ten (10) additional days, may terminate this Lease effective as of the date of the occurrence of such damage. In the event Landlord terminates this Lease pursuant to this Article, all proceeds of insurance applicable to the Leased Premises shall belong to and become the sole property of Landlord. In the event of damage to or destruction of all or any portion of the Leased Premises to the extent of five percent (5 %) or more of the then insurable replacement value of the Leased Premises, as applicable, from any cause not covered by insurance, or in the event of a declaration of any governmental authority that the Leased Premises are unsafe or unfit for occupancy and would require repairs exceeding five percent (5 %) or more of the then insurable replacement value of the Leased Premises, Landlord shall have the right to terminate this Lease by written notice to Tenant given within thirty (30) days after the date of such damage, destruction or declaration. Upon the giving of any such 14 F1REAL %94\34362001\svelte lease (clean ) rv4.doc 928/2005 Notice, this Lease shall terminate. In the event of damage to or destruction of all or any portion of the Leased Premises, as applicable, from any cause not covered by insurance, or in the event Landlord does not elect to terminate this Lease in accordance with this paragraph, the Lease shall remain in full force and effect except that Rent shall be proportionately reduced as provided above and the Leased Premises shall be repaired and rebuilt by Landlord at Landlord's cost with reasonable dispatch; provided, however, Tenant shall bear the cost of all fixtures, equipment, furnishings, draperies and other items within the Leased Premises. Notwithstanding anything to the contrary contained herein, in the event the Leased Premises shall be damaged by fire or other casualty due to the negligent or willful acts of Tenant, its agents, officers, employees, contractors, servants, invitees, licensees or guests and the Lease is not terminated as hereinabove provided, then, without prejudice to any other rights and remedies of Landlord, there shall be no abatement of Rent. Landlord shall not be required under any circumstances to make any repairs to or replacements of any paneling, decoration, office fixtures, railings, ceilings or floor coverings, partitions or any other property installed in the Leased Premises by Tenant. 29. EMINENT DOMAIN. If at any time during the Term of this Lease, the entire Leased Premises or any part thereof shall be taken as a result of the exercise of the power of eminent domain or sold under threat of the exercise of such power (a "Taking "), this Lease shall terminate as to the part so taken as of the date the condemning authority takes possession or title, whichever occurs first. If all or any substantial portion of the Leased Premises shall be Taken, Landlord may terminate this Lease, at its option, by giving Tenant written Notice of such termination within thirty (30) days of such Taking. If all or a portion of the Leased Premises in excess of twenty percent (20 %) of the floor area thereof shall be taken with the result that Tenant's use of the Leased Premises is substantially impaired, Tenant may terminate this Lease at its option by giving Landlord written Notice of such termination within thirty (30) days of such Taking. If neither party terminates this Lease pursuant to this Article, this Lease shall remain in full force and effect except that the Rent payable by Tenant hereunder shall be reduced in the same proportion as the floor area Taken in the Leased Premises bears to the total floor area in the Leased Premises. Landlord shall be entitled to and Tenant hereby assigns to Landlord the entire amount of any award or payment made in connection with a Taking; provided, however, that Tenant shall be entitled to any payment or award attributable to the Taking of removable personal property or trade fixtures belonging to Tenant, or attributable to the good will of Tenant, so long as the amount of any award to Landlord is not decreased or negatively affected thereby. 15 FAREAU894\.3436200 I\svelte lease (clean ) rv4 .doc 928!2005 30. SUBORDINATION. This Lease, and all of the rights of Tenant hereunder. are and shall be subject and subordinate to any lien presently existing on the Leased Premises or to any sale of the Leased Premises and/or any lien of any mortgage hereafter placed on the Leased Premises or any part thereof, and to any and all renewals, modifications, consolidations, replacements, extensions, or substitutions of said sale and/or mortgage. Tenant agrees to execute any documents required to effectuate such subordination or to make this Lease subordinate to the lien of any mortgage, deed of trust, or ground lease, as the case may be. 31. ATTORNMENT. If a successor landlord under a sale or the holder of the mortgage or deed of trust shall succeed to the rights of Landlord under this Lease, whether through possession or foreclosure action or delivery of a new lease or deed, then Tenant, upon the request of such successor landlord, shall attorn to and recognize such successor landlord as Tenant's landlord under this Lease, and shall promptly execute and deliver any instrument that such successor landlord may request to further evidence such attornment. Tenant hereby irrevocably appoints Landlord or the successor landlord as attorney -in -fact of Tenant to execute and deliver such instrument on behalf of Tenant, should Tenant refuse or fail to do so promptly after request. Upon such attornment, this Lease shall continue in full force and effect as if it were a direct lease between the successor landlord and Tenant, upon all of the terms, conditions, and covenants as set forth herein. 32. ESTOPPEL CERTIFICATES. Upon the request of either Landlord or Tenant, at any time, and from time to time, Landlord and Tenant agree to execute and deliver to the other, within ten (10) days after such request, a written instrument, duly executed, certifying, but not limited to, the following: a. this Lease has not been modified and is in full force and effect; or if there has been a modification of this Lease, that this Lease is in full force and effect as modified, stating such modifications; b. the dates to which Rent and other payments due under this Lease have been paid; C. whether, to the knowledge of the party executing such instrument, the other party is in default and, if such party is in default, stating the nature of the default; d. the Commencement Date and the Expiration Date of the Term of this Lease; and e. if options to renew the Term have been exercised. 16 F aEAL %894134362001kvelte lease (clean ) m4.dw 9282005 If Tenant fails to deliver such written statement within such ten day time period, any prospective purchaser or encumbrancer of the Leased Premises may conclusively assume: (i) that this Lease is in full force and effect, without modification, except as may be represented by Landlord, (ii) that there are no uncured defaults in Landlord's performance, (iii) that no Security Deposit has been paid in advance, (iv) that there are no existing defenses against enforcement of any provision of this Lease, and (v) that the Commencement Date and Expiration Date are as stated by Landlord. Such failure by Tenant to deliver such statement shall constitute a material default by Tenant under this Lease. If Landlord desires to finance, refinance or sell the Leased Premises, Tenant hereby agrees to deliver to any prospective lender or purchaser designated by Landlord such financial statement of Tenant as may be reasonably required by such prospective lender or purchaser. Such statement shall include the past three years' financial statements of Tenant. All such financial statements shall be received in confidence, shall be used only for the purposes herein set forth and shall be furnished by Tenant promptly upon request therefor by Landlord. 33. HOLDING OVER. Subject to any provision contained herein pertaining to assignment and/or subletting, should Tenant, or any of its successors -in- interest, with the written consent of Landlord, hold over the Leased Premises, or any part thereof, after the expiration of the Term of this Lease, (unless otherwise agreed to in writing by Landlord), such holding over shall constitute and be construed as a tenancy from month -to -month only, at a base rent equal to 150% of the Monthly Base Rent paid during the last month of the Term prior to the holdover. Said tenancy may be terminated as provided by the laws of the State of California. During such tenancy, Tenant (or, subject to the subletting and assignment provisions contained in this Lease, any successor of Tenant) agrees to be bound by all of the terms, covenants, and conditions as herein specified in this Lease, to the extent applicable. 34. QUIET ENJOYMENT. Landlord warrants that it has full right to execute and to perform this Lease and to grant the estate leased, and, that Tenant, upon payment of the required Rent and performing the terms, conditions, covenants, and agreements contained in this Lease, shall peaceably and quietly have, hold, and enjoy the Leased Premises during the full Term of this Lease, as well as any extension or renewal thereof. 35. MODIFICATION AMENDMENT, ADDENDUM. Any amendments, addenda, exhibits, modifications, and/or other supplements, including Exhibits A, B and C attached hereto (collectively referred to as Addenda), are to be made a part hereof, and shall be binding upon the parties hereto, and if any provision of said Addenda shall conflict in any manner with other provisions contained in this Lease, the Addenda shall prevail. Neither Landlord nor Tenant shall be considered the drafting party of this Lease. Ambiguities (if any) contained in this Lease or any Addenda shall not be construed against Landlord or Tenant. 17 FAREAU89404362001\svelte lease (clean ) rv4.doc 9/28/2005 36. PARKING. For the Term of this Lease, Tenant shall be entitled to the two (2) complimentary reserved as well as the rights to an additional twenty -two (22) reserved spaces (at Tenant's expense) in the Lido Marina Village parking garage as further provided in Exhibit C. 37. SERVICES. Tenant shall obtain, at its option and its own expense, janitorial and other maintenance services of the type customarily furnished to comparable buildings in Lido Marina Village. 38. LEASING BROKERAGE. Landlord and Tenant each warrant to the other that neither has had any dealings with any broker or agent in connection with the negotiation or execution of this Lease. Landlord and Tenant agree to indemnify each other for, from and against all costs, expenses, legal fees or any other liabilities pertaining to commissions or other compensation or charges claimed by any broker or agent in connection with this Lease. 39. LEASE MEMORANDUM / RECORDATION. At Landlord's sole option, Landlord and Tenant shall execute a Lease memorandum. Said memorandum shall be in recordable form and contain those Lease provisions as specified by Landlord. Said memorandum shall be recorded solely at Landlord's option and expense. Tenant shall not record this Lease, or any provision hereof, without Landlord's express, written consent, which consent may be withheld at Landlord's sole and absolute discretion. 40. LEASED PREMISES RULES AND REGULATIONS. Tenant agrees to abide by the rules and regulations of the City of Newport Beach and other applicable regulatory authorities in the operation of the Leased Premises. 41. INTEREST ON PAST DUE OBLIGATIONS. Any amount due Landlord not paid when due shall bear interest at Wells Fargo Bank prime rate plus 5% per annum from the date due or, if said rate is not a lawful one, the highest rate permitted by law. Payment of such interest shall not excuse or cure any default by Tenant under this Lease; provided, however, that interest shall not be payable on late charges assessed against Tenant. 42. PERSONAL PROPERTY TAXES. Tenant shall pay when due all taxes assessed against and levied upon tenant alterations, tenant improvements, and any property of Tenant contained in, on or about the Leased Premises or any part thereof. When possible, Tenant shall cause all such taxes to be levied and assessed separately from taxes upon the Leased Premises. 43. LANDLORD'S RIGHT TO CURE DEFAULTS. All covenants and agreements to be performed by Tenant under any of the terms of this Lease shall be at its sole cost and expense and, except as otherwise specifically provided herein, without any abatement of Rent. If Tenant shall fail to pay any sum of money owing to a party other 18 F:aEAL\894343620011svelte lease (clean ) rv4 .doc 9/282005 than Landlord and required to be paid by it hereunder or shall fail to perform any other act on its part to be performed hereunder; Landlord may, but shall not be obligated to and without waiving any rights of Landlord or releasing Tenant from any obligations of Tenant hereunder, make such payment or perform such other act to be made or performed by Tenant hereunder. Tenant covenants to reimburse Landlord for such sums and Landlord shall have (in addition to any other right or remedy of Landlord) the same rights and remedies in the event of the nonpayment thereof by Tenant as in the case of default by Tenant in the payment of any sums due Landlord hereunder. All sums so paid or expenses incurred by Landlord and all necessary incidental costs together with interest thereon at the lesser of the rate of the Citibank prime rate plus 5% or the highest rate permitted by applicable law from the date of such payment by Landlord until paid shall be considered as Rent owing hereunder and shall be payable to Landlord on demand or, at the option of Landlord, may be added to any Rent then due or thereafter becoming due under this Lease. 44. LIMITATION ON LANDLORD'S LIABILITY. The obligations of Landlord under this Lease do not constitute personal obligations of the partners in Landlord or of the directors, officers or shareholders of any of the partners in Landlord, and Tenant shall look solely to the Landlord's equity interest in the real estate that is the subject of this Lease and to no other assets of Landlord for satisfaction of any liability in respect of this Lease and will not seek recourse against the partners in Landlord or the directors, officers or shareholders of any of the partners in Landlord or any of their personal assets for such satisfaction. 45. LIMITATIONS ON TENANT'S LIABILITY. The obligations of Tenant under this Lease do not constitute personal obligations of the partners in Tenant or of the directors, officers or shareholders of any of the partners in Tenant, and Landlord (except as provided in Paragraph 44 above) shall look solely to the Tenant for satisfaction of any liability in respect of this Lease and will not seek recourse against the partners in Tenant or the directors, officers or shareholders of any of the partners in Tenant or any of their personal assets for such satisfaction. Upon (30) days written notice to Landlord and (i) provided that there is no Default as set forth in Article 13 or any other provision of this Lease, and (ii) the Leased Premises are returned to Landlord in as good repair as when Tenant obtained the same on the Commencement Date, normal wear and tear excepted pursuant to Article 20, then Tenant may terminate this Lease upon payment to Landlord of Fifty Thousand Dollars ($50,000) or by crediting Tenant's Security Deposit of Twelve Thousand Dollars ($12,000) and, at the option of Landlord, by Tenant assigning the Liquor Licenses referenced in Section 8 above for a credit of Thirty -Seven Thousand Dollars ($37,000). 46. SECURITY DEPOSIT /GUARANTEE. As security for the performance of Tenant's obligations under this Lease, Tenant shall pay and Landlord shall hold (Twelve Thousand Dollars ($12,000) as a Security Deposit. Provided there has been no material 19 FAREAL\894\3436200 I\svelte lease (clean ) m4 Acc 9/28!2005 default by Tenant during the first Term of this Lease as noticed in writing by Landlord to Tenant, Landlord shall apply the Security Deposit to the last two months of the first term of this Lease. As further security for Tenant's obligations herein, Takoda Limited Partnership, an Arizona limited partnership shall guarantee the obligations of Tenant pursuant to this Lease. Provided that there has been no material Default as set forth in Article 13 or any other term of this Lease and as noticed in writing by Landlord to Tenant, such guarantee shall expire at the end of the 36th month of the first Term of this Lease. 47. ENVIRONMENTAL PROVISIONS. Tenant represents and warrants to Landlord that Tenant will not generate, store, treat, use release, or dispose of any hazardous materials on or about the Leased Premises except in compliance with all environmental laws and any additional conditions imposed by Landlord. Tenant will not release or dispose of any hazardous materials in or on the Leased Premises without the express written approval of Landlord. Tenant shall obtain, comply with and provide Landlord with copies of all permits required in connection with the generation, storage, treatment, use, release, or disposal of hazardous materials. Tenant shall not install nor permit to be installed on or in the Leased Premises any substance containing asbestos and determined to be hazardous by any governmental authority or any friable asbestos. If any such substance or any friable asbestos is determined to be in or on the Leased Premises as a result of the actions of Tenant, Tenant shall promptly comply with any applicable environmental laws (which may or may not require removal of the material), at Tenant's expense. In the event Tenant fails to perform any of its obligations under this Article 47 within thirty (30) days after the giving to Tenant by Landlord of written notice of such failure, or within a reasonable period of time not to exceed ninety (90) days after the giving to Tenant by Landlord of written notice of such failure if, due to the nature of such failure, such failure cannot be cured within a 30 -day period but is otherwise susceptible to cure within a reasonable period of time not exceeding ninety (90) days, or within a shorter period of time if prescribed by any environmental law, then, after expiration of such applicable period of time, Landlord may enter upon the Leased Premises and remove or cause to be removed such hazardous material or otherwise cause compliance with any applicable environmental law, provided, however, that Landlord may enter upon the Leased Premises and remove or cause to be removed such hazardous material or otherwise cause compliance with any applicable environmental law upon written notice to Tenant but prior to the expiration of the applicable time period, if Landlord determines that such action is necessary prior to the expiration of the applicable time period (i) for the preservation or safety of the Leased Premises or the tenants in the Leased Premises, or other persons, (ii) to avoid suspension of a necessary service in, or with respect to, the Leased Premises, (iii) for the preservation of the lien and grant of any deed of trust granted to any lender with respect to the Leased Premises or the priority of such lien and 20 PREAU894U43620MSvelte lease (clean ) M .doc 9/28!2005 grant, or (iv) to assure the continued operation of the Leased Premises. The cost of any such removal or compliance shall be immediately due to Landlord upon demand as Additional Rent. Tenant shall, at Tenant's own expense, comply with all present and hereinafter enacted environmental laws affecting Tenant's activities on the Leased Premises or the Leased Premises. Tenant shall keep the Leased Premises free of any lien imposed pursuant to any environmental laws, except for any liens being contested by Tenant in good faith and at its own expense by appropriate action or legal proceedings, provided that such actions or proceedings operate to prevent collection thereunder or realization thereon and the sale or forfeiture of the Leased Premises to satisfy the same, and provided further that during such contest Tenant shall, at the option of Landlord, provide security reasonably satisfactory to Landlord assuring the discharge of Tenant's obligations in respect of the lien being contested and any additional interest, charge, penalty, or expense arising from or incurred as a result of such contest. As used herein, the term "hazardous materials" means materials defined as "hazardous waste or substances" under the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601, et. seq., Resource Conservation and Recovery Act, 42 U.S.C. Section 6903 et. seq., including, without limitation asbestos, urea formaldehyde foam insulation, and any fluid containing polychlorinated biphenyls. As used herein, the term "environmental laws" means any one or all of the following, as they may be amended from time to time: the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Sections 9601 et. seq.), the Resource Conservation and Recovery Act (42 U.S.C. Sections 6901 et seq.), the Safe Drinking Water Act (42 U.S.C. Section 300f et. seq.), the Clean Water Act (33 U.S.C. Sections 12151 et seq.), the Clean Air Act (42 U.S.C. Sections 7401 et. seq.), the Toxic Substances Control Act (15 U.S.C. Sections 16 et. seq.), the Solid Waste Disposal Act (42 U.S.C. Sections 3251 et seq.), and regulations thereunder and any other laws and regulations now in effect or hereinafter enacted that deal with the regulation or protection of the environment, including the ambient air, ground water, surface water, and land use, including sub - strata land. Tenant shall be responsible for removing from the Leased Premises any hazardous materials put there by Tenant or its agents which either Tenant or Landlord is required by law to remove. In addition, Tenant shall be responsible for restoring the Leased Premises to their condition immediately prior to the time of such required removal. If Landlord is so required to remove any such hazardous materials put there by Tenant or its agents, Landlord shall promptly give notice thereof to Tenant. Tenant shall immediately notify Landlord, both orally and in writing of any of the following: 21 FAREAV894134362001kvelte lease (clean ) M .doc 9282005 a. Any emission, spill, release, or discharge into the environment of any hazardous material; b. Any correspondence or communication to Tenant or its agents regarding the presence or suspected presence of hazardous materials on the Leased Premises or regarding the application of environmental laws to the Leased Premises or Tenant's activities on the Leased Premises; C. Tenant's knowledge of any circumstances which could give rise to a claim that Tenant, Landlord, the Leased Premises may be in violation of environmental laws; and d. Any change in Tenant's activities on the Leased Premises that will change or has the potential to change Tenant's or Landlord's obligations or liabilities under environmental laws. Tenant shall indemnify and hold harmless Landlord, its employees, and agents for, from and against any of the following which result from or which are related to any activity or operation of Tenant or its agents, contractors, employees, or invitees on the Leased Premises during the Term of this Lease: any and all loss, damage, obligation, penalty, liability, litigation, demand, defense, judgment, suit, proceeding, cost, disbursement, and expense (including, but not limited to, reasonable investigation, remediation, removal, and legal fees and expenses) resulting from or arising from or in connection with, or alleged to have resulted or arisen from or in connection with, contamination of or adverse effects on the environment, the Leased Premises, or violation of any environmental law or other statute, ordinance, rule, regulation, judgment, or order of any government or judicial entity. Tenant's obligations and liabilities under this paragraph shall continue after the expiration of this Lease so long as Landlord bears any liability or responsibility under the environmental laws for any action that occurred on the Leased Premises during the Term of this Lease. Tenant's failure to abide by the terms of this paragraph shall be restrainable by injunction. 48. SEVERABILITY CLAUSE. If any clause or provision of this Lease is illegal, invalid, or unenforceable under present or future laws effective during the Term of this Lease, it is the intention of Landlord and Tenant that the remainder of this Lease shall not be affected thereby. The caption of each article hereof is added as a matter of convenience only and shall be considered to be of no effect in the construction of any provision of this Lease. 49. SURRENDER OF POSSESSION. Tenant agrees to deliver, upon the surrender to Landlord, possession of the Leased Premises, along with all keys thereto, at the expiration or termination of this Lease, by lapse of time or otherwise, in as good repair as when Tenant obtained the same at the commencement of said Term, normal wear and tear excepted, and except damage by the elements (occurring without the fault 22 FAREAD89404362001(svehe lease (clean ) M .doc 92812005 of Tenant or other persons permitted by Tenant to occupy or enter the Leased Premises or any part thereof), or by act of God, or by insurrection, riot, invasion, or of military or usurped power. 50. ENTIRE AGREEMENT. Tenant acknowledges and agrees it has not relied upon any agreements, conditions, representations, statements, or warranties except those expressed and contained herein. Tenant acknowledges and agrees that no amendment or modification of this Lease shall be valid or binding unless expressed in writing and executed by Landlord and Tenant in the same manner as the execution of this Lease. 51. IMPLIED ACCEPTANCE / SURRENDER. No act or thing done by Landlord or Landlord's agents during the Term hereof or any extension thereof, shall be deemed an acceptance or a surrender of the Leased Premises, and no agreement to accept such surrender shall be valid unless in writing and signed by Landlord or its designated representative. The delivery of keys to any employee of Landlord, or to Landlord's agents, shall not operate as a termination of this Lease or a surrender of the Leased Premises. No partial payment of Rent by Tenant shall be deemed to be other than a payment on account, nor shall any endorsement or statement on any check or any letter accompanying any check or payment as Rent be deemed an accord and satisfaction. Landlord may accept any such payment of Rent without prejudice to Landlord's right to recover the balance of any Rent due or pursue any other remedy available to Landlord. 52. SUCCESSORS. Subject to the provisions pertaining to assignment and subletting and except as otherwise expressly provided, the terms, provisions, covenants, and conditions contained in this Lease shall apply to, inure to the benefit of, and be binding upon the parties, hereto and upon their respective successors in interest and legal representatives. 53. GENDER. Words of any gender used in this Lease shall be held and construed to include any other gender, and words in the singular number shall be held to include the plural, unless the context otherwise requires. 54. TIME IS OF THE ESSENCE / CORPORATE AUTHORITY. Time is of the essence of this Lease Agreement and each and every provision contained herein. If Tenant is a corporation or limited liability company, Tenant warrants that it has legal authority to operate and is authorized to do business in the State of California. Tenant also warrants that the person or persons executing this Lease and the Guarantee on behalf of Tenant has authority to do so and Tenant has the authority to fully obligate Tenant to all terms and provisions of this Lease. Tenant shall, upon request from Landlord, furnish Landlord with a certified copy of resolutions of the Board of Directors or other governing authority authorizing this Lease and granting authority to execute it to the person or persons who have executed it on Tenant's behalf. 23 FAREAL%9404362001\svelle lease (clean ) rv4 .doc 9/282005 55. NOTICES. Each provision of this Lease or of any applicable governmental laws, ordinances, regulation, or other requirements with reference to the sending, mailing. or delivery of any payment of Rent by Tenant to Landlord or vice - versa, shall be deemed to be complied with if and when the following steps are taken: a. All Rent and other payments required to be made by Tenant to Landlord hereunder shall be payable to Landlord at the address herein below set forth or at such other address as Landlord may specify from time to time by written notice delivered in accordance herewith. b. All payments required to be made by Landlord to Tenant hereunder shall be payable to Tenant at the address herein below set forth, or at such other address within the United States as Tenant may specify from time to time by written notice delivered in accordance herewith. All Notices required or permitted under this Lease shall be in writing and shall be deemed to be properly served if sent by personal delivery, special delivery, overnight delivery, certified mail, or by facsimile transmission. Notices to the Tenant and to the Landlord shall be to the address as specified below. The effective date of any Notice shall be the date on the shipping invoice for all personal deliveries, special deliveries, or overnight deliveries, the date of the post mark stamped on the envelope by the U.S. Postal Service, or the date a facsimile transmission is sent. The parties hereto shall not refuse to accept delivery of said Notices. As of the effective date of this Lease, Landlord and Tenant's addresses are as follows: Landlord: Tenant: Christine & Dennis Overstreet 2816 La Fayette Avenue Svelte Body Centers Newport Beach, CA 92663 3400 Via Lido Newport Beach, California 92663 Approved Sublessee and Liquor License Purchaser Se-jour LLC 177 Riverside Avenue, #17601 Newport Beach, California 92660 56. RIGHT OF FIRST REFUSAL. Tenant shall have the right of first refusal to purchase the Leased Premises. Tenant shall be given written notification when a prospective purchaser ( "Prospective Purchaser ") has made a written offer ( "Purchase 24 F: UREAL\894134362001\svelte lease (clean ) rv4 .doe nn¢non; Offer ") on the Leased Premises which Landlord would like to accept. Tenant shall have seventy -two (72) hours from the date of receipt of Landlord's notification to give Landlord written notice whether Tenant intends to exercise its right of first refusal to purchase the Leased Premises on the same terms and conditions as the Purchase Offer. In the event Tenant does not exercise its right of first refusal and execute a purchase contract for the Leased Premises on all of the same terms and conditions of the Purchase Offer, then this right of first refusal to purchase is terminated without further notice to Tenant and Landlord is free to make amendments to the Purchase Offer with the Prospective Buyer during escrow so long as the purchase price is not reduced by more than five percent (5 %) of the purchase price contained in the original Purchase Offer. In the event Tenant elects to exercise its right of first refusal to purchase the Leased Premises, then Landlord shall prepare a purchase contract for the Leased Premises, which purchase contract shall be on the same terms and conditions as the Purchase Offer of the Prospective Buyer. If Tenant does not exercise its right of first refusal to purchase the Leased Premises, and the Leased Premises are not conveyed to the prospective buyer, then this right of first refusal shall not terminate. 57. No Proprietary Right. Nothing in this Agreement shall be deemed by implication, or otherwise, to convey to Tenant any proprietary right, business goodwill or interest in any information ( "Business Information ") or other business rights of Landlord's business. The disclosure of Business Information shall not be construed as granting either a license under any right of ownership in said Business Information. 25 FAREAL1894\3436200Msve6e lease (clean ) rv4.doc 9/282005 IN WITNESS WHEREOF, this Lease is to be effective as of the Execution Date specified in the Basic Lease Information attached hereto and made a part hereof. TENANT: SVELTE BODY C RS, INC., a Nevada corpo i n BY: Arthur F. Stockton GUARANTOR: TAKODA LIMITED PARTNERSHIP, an Arizona limited partnership BY: Whitmore Holdings, L.L.C., a Nevada limited liability company ITS:: President DATE: t 2.7 ITS: G al Partner BY: u�ti Lauren B. Stockton ITS: Managing Member DATE: APPROVED SUBLESSEE AND LIQUOR LICENSE PURCHASOR SEJOUR LLC, a Calif a limited liability company By: K1 ILA_ C n Stockton Its: Managing Member Date: enrii —Z8— EXHIBIT A BASIC LEASE INFORMATION 3400 VIA LIDO NEWPORT BEACH, CALIFORNIA 92663 This Lease (hereinafter referred to as the "Lease ") is entered into by Landlord and Tenant as described in the following "Basic Lease Information" on the Date which is set forth in the following Basic Lease Information. Landlord and Tenant agree: Basic Lease Information. In addition to the terms that are defined elsewhere in this Lease, the following defined terms are used in this Lease: Execution Date: Landlord: Tenant: Landlord's Address: Tenant's Address: Leased Premises Address Leased Premises: FAREAU8940436200 I\svelte lease (clean ) rv4.doc 9/282005 September 27, 2005 Dennis and Christine Overstreet Svelte Body Centers, LLC, a Nevada limited liability company. 2816 La Fayette Avenue Newport Beach, 92663 Svelte Body Centers, LLC 3400 Via Lido Newport Beach, California 92663 3400 Via Lido Newport Beach, California 92663 The Leased Premises shown on Exhibit B to this Lease including the parking referenced in 27 Exhibit C and the personal property, fixtures and equipment listed on Exhibit D. Term: 60 months, beginning on the Commencement Date and expiring at midnight on the Expiration Date unless sooner terminated or extended pursuant to the Lease terms. Commencement Date: October 15, 2005. Expiration Date: 60 months, inclusive, from and after the Commencement Date unless sooner terminated or extended pursuant to the Lease terms. Security Deposit: $12,000.00 Monthly Rent: $6,000.00 28 FAREAU894\34362001\svelte lease (clean) rv4 .doe 9282005 EXHIBIT B LEGAL DESCRIPTION Lot 2 of Tract No. 1235, in the City of Newport Beach, County of Orange, State of California, as shown on a map recorded in Book 47, Paee 24 of Miscellaneous Maps, in the Office of the County Recorder of said County. 29 F:aEAL \8941.34362001 svelte lease (clean ) N4 .doc anannnv EXHIBIT C PARKING F: 11iEAD894\34362001\svelte lease (clean ) rv4 .doc 928200+ tiew��cu ac CLI :_er: :Sc or � L�4 f and when recorde 1 -curn to:. RECORD EBiKOFFiCiALRECCRD0 S. R. Willford $ OF ORANGF COUNTY. CALIFORNIA 62 Linda Isle C Newport Beach, CA 92660 '1235 PM FEB 17'87 ASSIGNMENT OF PARKING AGREEMENT a Nw This Agreement affects Lots 1 through S, inclusive, of Tract 1235, all of which are located in the County of Orange, California, and it pertains to that certain Parking Agreement ( "Parking Agreement ") dated March 26, 1973, entered into by and between DONALD M. KOI,L and LIDO SHOPS AUTO PARK #3, INC. ( "Assignor ") , a California nonprofit corporation, a short form of which was recorded in Book 10729, Page 353 of the Official Records of Orange County, California on June 1, 1973. WHEREAS, paragraph V(B) of the Parking Agreement provides that the Assignor shall be entitled '*to the use of twenty -four S(24) permanent parking spaces ( "Permanent Parking ") ; and WHEREAS, paragraph V(C) of the Parking Agreement provides that t'he Assignor shall have the right to validation parking for a minimum of two hundred (200) parking spaces located throughout the structure ( "Validation Parking ") ; and WHEREAS, Assignor now desires to distribute its assets, and.,. in particular, its rights and interests in and to the Parking Agreement, including those specific parking rights provided in paragraphs V(B) and V(C) , respectively, to its members in proportion to their interest in Assignor and in the Parking Agreement; NOW, THEREFORE, Assignor, as to its right to Permanent Parking and Validation Parking.contained in the Parking Agree- ment, does hereby assign, distribute and otherwise transfer; 1. To EDWARD WA.RMINGTON, Trustee Warmington Family Trust, pertaining to and for the benefit of said Lot 2 of Tract 1235, all of its rights to Permanent Parking for four (4) 33 parking zpaces and Validation Parking for a minimum of thi.rty- three (33) parking spaces located throughout the structure; and 2. To EDWARD WAR4INGTON, Trustee Warmington Family Trust, as to a one -half (1) interest as Tenant in Common and to , R.C. WARMINGTON as to a one -half (1) interest in Common,' pertaining to and for the benefit of said Lot 3 of Tract 1235, ,0 2 all its rights to Permanent Parking fer three (3) parking spaces and Validation Parking for a minimum of twenty -eiq`` (2S) parking sracr s locatee throughout the structure: one 3. To WILLIAM W. MCDOWELL, individually and as Trustee under the terms of the Order for Final Dist,ihutiC^ recorded as document no. 19117 in Book 9854 at Pace 60 cf the Official Records of Orange County, California, pertaining to 6. To S.R. WILLFORD and BARBARA A. WILLFORD, as ' Joint Tenants, pertaining to said Lot 7 of Tract 1235, all of its rights to Permanent Parking for three (3) parking spaces and Validation Parking for a minimum of twenty -eight (28) parking spaces located throughout the structure; and 7. To S.R. WILLFORD and BARBARA A. WILLFORD, as Joirii'Tenants, pertaining to said Lot 8 of Tract 1235, all of v its rights to Permanent Parking for two (2) parking spaces and 1 Validation Parking for a minimum of fourteen (14) parking spaces located'throughout the structure; and 8. To GORDON ATKINSON, pertaining to and for the benefit of the West one -half (}) of said Lot 8 of Tract 1235, 2� all.of its rights to Permanent Parking for two (2) parking spaces and Validation Parking for a minimum of fourteen (14) parking spaces located throughout the structure; and (ti AND, FURTHER, as to the rest and residue of said Parking Agreement, Assignor does hereby assign, distribute and other- wise transfer to the above named Assignees, individually, pertaining to and for the benefit of the respective Lots of Tract 1235 set forth above, in the proportion that the area of such Lot or portion of Lot bears to the combined total area cc Lots 2 through 8, all the rest and residue of Assignor's right, title and interest in and to the Parking Agreement. This Assignment. is made for the benefit of Lots 2 through 8 of said Tract 1235, and the owners, their assigns and succes- sors in interest thereof, and the terms of the Parking Agree- ment, and respective parking rights, assigned, distributed and transferred hereby shall run with each of the designated Lots of Tract 1235, and the terms of the Parking Agreement shall be binding upon all parties having or acquiring any right, title BM11:195:2gl21586 and for the benefit of said Lot 4 of Tract 1235, all of its I _rte rights to Permanent Parking for Three(3) parking spaces and Validation Parking for a minimum of twenty -eight (28) parking spaces located throughout the structure; and 4. To DOUGLAS DRYER, pertaining to and for the benefit of said: Lot 5 of Tract 1235, all of its rights to `ice .L Permanent Parking for four (4) parking spaces and Validation Parking for a minimum of ,twenty -seven (27) parking spaces located throughout the structure; and 5. To S.R. WILLFORD and BARBARA A. WILLFORD, as Joint Tenants, pertaining to said Lot 6 of Tract 1235, all of iits rights to Permanent Parking for three (3) parking spaces and Validation Parking for a minimum of twenty -eight (28) parking spaces located throughout the structure; and 6. To S.R. WILLFORD and BARBARA A. WILLFORD, as ' Joint Tenants, pertaining to said Lot 7 of Tract 1235, all of its rights to Permanent Parking for three (3) parking spaces and Validation Parking for a minimum of twenty -eight (28) parking spaces located throughout the structure; and 7. To S.R. WILLFORD and BARBARA A. WILLFORD, as Joirii'Tenants, pertaining to said Lot 8 of Tract 1235, all of v its rights to Permanent Parking for two (2) parking spaces and 1 Validation Parking for a minimum of fourteen (14) parking spaces located'throughout the structure; and 8. To GORDON ATKINSON, pertaining to and for the benefit of the West one -half (}) of said Lot 8 of Tract 1235, 2� all.of its rights to Permanent Parking for two (2) parking spaces and Validation Parking for a minimum of fourteen (14) parking spaces located throughout the structure; and (ti AND, FURTHER, as to the rest and residue of said Parking Agreement, Assignor does hereby assign, distribute and other- wise transfer to the above named Assignees, individually, pertaining to and for the benefit of the respective Lots of Tract 1235 set forth above, in the proportion that the area of such Lot or portion of Lot bears to the combined total area cc Lots 2 through 8, all the rest and residue of Assignor's right, title and interest in and to the Parking Agreement. This Assignment. is made for the benefit of Lots 2 through 8 of said Tract 1235, and the owners, their assigns and succes- sors in interest thereof, and the terms of the Parking Agree- ment, and respective parking rights, assigned, distributed and transferred hereby shall run with each of the designated Lots of Tract 1235, and the terms of the Parking Agreement shall be binding upon all parties having or acquiring any right, title BM11:195:2gl21586 or interest in such designated recipient Lots, or any part thereof, and all rights thereunder shall inure to the benefit of each owner thereof. Each assignment made herein is conditioned upon acceptance thereof by the respective owner. or owners of said Lots 2 . through 8 of Tract 1235, and in the event any owner of any of the said Lots fails to accept its respective assignment, such . assignment, but none other, shall be void and all rights contained in-such failed assignment shall be retained by Assignor. Dated this a-f— day of 44 Vpi14/10h/ , 19 LIDO SHOPS AUTO PARK 0, INC. Assignor o. 4'. R. WIL FORD, esident -;:�G.pRDON ATKINSON, Secretary Consent to Assignment The undersigned TRAWEEK INVESTMENT FUND NO. 12, LTD., as successor in interest to DONALD M. ROLL in the aforementioned Parking Agreement, does hereby consent to the foregoing Assignment. Dated this lD day of TRAWEEK INVESTMENT FUND NO. 12, LTD. By �%-�nD�s �p�cPL 1�rPa5wc/y Title`"JTtz{.wee.1L f�tltl.4�rctt LPi�NiGttrr.. (Accept of Assignment follows...) �d pR2fCLrlG arm i uc=s "ti Scv� vCvtC =' r'rtCTf PT�F_ Fart LrL'oSNars Prm�,i Pn2r,16,,. :.tr. ^ -, 3 BM11:195:2g121585 Of= UOJIIJ Acceptance of Assignment The undersigned, as owner of the Lot County, California, set next to his name, the foregoing Assignment of Parking Agreej AUTO PARK Q3, INC. in accordance with the agrees to abide by its terms and with the Agreement assigned. o'. of Tract 1235, Orange does hereby accept nent by LIDO SHOPS terms thereof and terms of the Parking :2 o Tract 1235 3 of Tra6 1235 4 of Tract 1235 : 5 of Tract 1235 t 6 of Tract 1235 t 7 of Tract 1235 st } of Lot 8 of Tract 123.5 West } of Lot 8 of Tract 1235 4 HM11:195:2g121586 Re Lots 1 through 8, Tr-ct 1235 State of CALIFORNIA lj MONTEREY { ss. County of iiJ Ohlhis the 15th day of JANUARY 1987 before me, JULIE A. HUGHETT otary s ame ypea or printed) the undersigned Notary Public, personally appeared RICHARD C. WARMZ14GTON OFFICIAL SEJIM ]t5D personally known tome JULIE A HUGHE O proved tome on the basis of satisfactory evidence oV NGTARY PUOUC - cALI to l>9 the persons) whose name(s) 29 subscribed to the MOriMW coutm within instrument, and acknowledged that executed it. Mr comm, up s ' WITNESS nl y hand and official seal. (This area for official notarial seal) r - iENEAAL ACANOwLEDGMEN7 FORM 3Ve713 6.02 STATE OF CALIFOEi+YIA COUNTY OF Orangess. On this 8th day of January , in the year 19_A7 before me, the undersigned, a Notary Public in and for said State, personally appeared Edward Warmington personally known to mo (or proved to me on'lhe basis of satisfactory evidence) to be the person_ whose name- 0 FFICIAL !EA L 15 subscribed Id the within instrument, and acknowledged ;o me that fie_ JOAN M. CARROLL executed it. NOTARY PUDUC- CAUFORNIA I'MCIPA; OFRCE W @.n.e ORAN GE county WITNESS m Mrcmmnul,nEmka* aarch11.1' -o' y hand and official se� Notary Public in and for said Stale. mnsl Ea rs Mra�— wo[aaa rwm tWa —P«. Su x/nx7 vAlG0ris. INC. mc. __.._.... _ _._... ...._._ ' (AVERNMENT CODE 27361.7 I un un ify der penalty o£ perjury that the notary4ail "on the document to which this statement is attached reacts as follows: Naze of Notary 70/1 d� /{'�• �A,Q,(�D/ L Date Coawissicn Expires County where bond is filed / Q Place of Executio Date -;2,1171f7 Slf NMIZE STATE OF CALIFORNIA COUNTY OF Orange uW' JTv � AC %NeWLLMENT- G.nil -w IM Porm Z}lU -M. SE3 STATE OF CALIFORNIA COUNTY OF Orange ClA1 SEAL ,1011M We. CJLRROUL IWARY KMUC - cwfOtttllA PRnC3PAL CE IN ORANGE COUNTY < ' MY Cw,,d in c*m March 11. 11187 ACMWLFaGNENr- GawL-WGwns F" 777CA -M. Yez }55: On this 8th day of January in the year 19 87 before me, the undersigned, a Notary Public in and for said State, personally appeared I 1 personally known to me (or proved to me on the basis of satisfactory evidence) to be the person_ whose name- - i e subscribed to the within instrument, and acknowledged to me that- -he-executed it. WITNESS my hand and official scat Notary Public In and lot said State. f }Sti. On this Rth day of Tarn1a ry , in the year 19gZ. before me. Lis undersigned, a Notary Public In and for said State, personally appeared r personally known to me (or proved to me on the basis of satisfactory evidence) to be the person_ whose name_ i a subscribed to the within Instrument, and acknowledged to me that _he_ executed it. WITNESS my hand and official seal. / Notary Public in and for said Stale. STATE OF CALIFORNIA }S5. COUNTY OF Orange On this A i-h day of • - in the year 198-7— before me, the undersigned, a Notary Public in, and for said State, personally appbarec �W'11= ra Aa rh��-a t'411 -FC. ' personally known to' (or proved to me an .he basis at satisfactory avidence) to be the persons_ whose name-- 0FFRCIALSEA1L,L �'"= subscribed to the within instrument, and acknowledged to me ihatt_he__ NOPAW PUBLIC - GL1r -0RN1A executed I. PRINCIPAL OFRCE IN ORANGE COUNTY Mr Camnb.IOn E+ekea tAUCn n.1 " "7_' WITNESS my hand ano oflicfal Sr J. Notary Pubic in and for said Slate. NC%NewLEOGMFNr- Gmaa- WOMa,It rag AGCA -An. 5.87 870851: _ a N � ;hate of N1 STATE OF CALIFORNIA ss. COUNTY OF Orange ' On this Rth day of Sannas Z in the year 19 -2. i. before me, the undersigned, a Notary Public in and for said Stale, personally appeared Countyot ) Gordon Atkincnn personally known to me OFFICIAL SEAL (or proved to me on the basis of satisfactory evidence) to be the person_ whose name_ JOAN AL CARROLL i subscribed to the within instrument, and acknowledged tome that __Ire_ II rJMX L � Inca executed it. owwae couNrr cOf1°"�"'O'rds S 11'r s�' WITNESS my hand and official seal, .P /GLe77E Not Public In and for said State. ary wumrnrucwrnr- c.,wa -w.wns r.�, xau,_p,., s.ax . Q +sex wmcons. ixe. ❑ proved to mean the basis of satisfactory evidence m NOTARY PVBLIC • CALIFORNIA a N � ;hate of N1 On tRis the day of �CGC�W. 79 before me, t• ' � (!i% SS.t'fJrJVE �• �Ecr�JG7 Countyot ) I•� 1 }; the undersigned Notary Public, personally appeared .P /GLe77E OFFICIAL SEAL fit' personally known tome /""' ROXANNE E DE LONG ❑ proved to mean the basis of satisfactory evidence m NOTARY PVBLIC • CALIFORNIA to be the perscn(s)whose name(s) subscribed to the - 7 LO+ ANGELES COUNir r!y Comm. GELEs OU ti, 17as within instrument, and acknowledged that executed it. WITNr=S9 my hand a . official seal 'i Not ' atur .�"" .. , v ?.:iE;•i::1C1'T I.y PARTI�5 (the "Agreement") The parti -s to tai° Parking AgrCeM-r-t T ( "i:OL•L ") arc -;C:;.•..,D ._. ;:or_- SHOPS NC. �;_ LtL O A� TO PPR:: , • a California cornozatior. ( "Li00 "). II . RECITALS y, A. LIDO is-Lessee of a Parking Lease executed -with the -' Cotupany as Lesser dated aazcb 29,..1954. �. YOLL is ,the successor in interest to the Griffith Cpt^pa:y pursuant to the Parking Lease and intends to.const *uct a_ .parvinej str cture L'DOn' the property subject to the Parking Lease as tell as 3CGdltional preuerty located adjacent thereto.. C. LIDO trill surrender the Marcia. 29, 1954 Parking. Lease aw.c VOLT., will accept ne surrender upon the; terms and condi dons ., SL :. Forth' in this Agreemant. ?II. COIST UC:'.IUEi Oi PA'KI_dG STRUCTURE KOLL agrees to cor..mence construction of a parking structure containing approximately three hundred sixty -seven (367) • p_t3:znc spices in conform:. ^.c^_ 1. ith-the plan_, atLaehed hereto as ,,1ich plans arc hereby approved by LIDO. The entire :-cosc ok/ construction shall be borne 1.)y KOLL, and i(OLL hereby N l alci, LIDO harri:Less from any liability of sllatever nature on C` ac_o;is;t of such construction. In addition, ROLL agrees. to diligently_ prfsccuce construction of the parking structure'so that the ground fl „r of the structure efill be completed with a min.:Zaum of eighty - si == �;;} spaces mailable for use by customers of LIDO by June 1, 1973. I;f C:_':CF:I,L:tii'_O;'d OF PARNING LEASE Upon e-Ccution of this Agreement by the parties, that CCrtuin par! :ing Lease dated 'March 29, 1954 between the Griffith+ r as Lessor and LIDO as Lesseeishall be cancelled,and of no force and effect -and the park'Ing rights of LIDO she•II be as.sat forth below. , N. PARXING AGREEMENT A. Temporary Parking From the date of this ?agreement and during construction of..' the _ar;:ing structure KOLL agrees to diligently pursue and to the best of- his ability provide LIDO :��ith temporary par], areas for their customers. SucY: temporary parking is described in B. Permanent Parking Ul'on completion of the •parY:ing. structure LIDO, at no cost of any hind, shall be entitled to the use of twenty -four (24) parking spaces located on the top floor Of the parking ctrccturc unti Dc' c=Tber 31, 200 0 . -2- tiz t:i�:g so :cc„ Lau:. all have the right to vz_ida:tior. par ?sing for- a r.;inicun of i::o hundred (200) parking spaces located throughout the structure. The validation parking charge to be paid'by LIDO to SOLL on a monthly basis shall be based on a Twenty -Four Cent ($.24) hourly rate, i;hich sur„ shall be payaule mort:ly u ?o+ receiut of a written billing by BOLL. Any increase in the hourly validation, par;;iny rate to be charged to LIDO shall he subject• .to .the prior written agreement of JML and LIDO. The factors to be considered by the partics in aetermining any such hourly validation narking rate increase shall'be the following: Increases in. the Consumer Price Ind-e:;; increases 'in real property taxes and assessments applicable to the parking structure; increases in .utility rates for the parking structure; increases in insurance rates and wages directly applicable to the operation of the parking structure. Each party covenants to use good faith in an att_mpt to reach agreements regarding any future increase in the validation parking rates. In the event the parties are unable to agree on -an increase in the validation parking rates.ther. any such increase shall be determined by arbitration based upon the same factors outlined above. in the event it becomes necessary to arbitrate the foregoing, an arbitration board consisting of three (3) members shall be selected in the following mahr.er. LIDO'shall have the right to select one (1) member of the board, a,1 i :OLL s:.all hs - . e right to -,select one. m=ber of the board. Each party shall give the other party notice in writing .. the member it selects. Within ter. (10) days after either party leas received said notice, the party receiving skid notice mug•`_ select a s.._mber and notify the other party in writing of its s_1_ection. Within ton '(10) days after the first two (2) members o_ _n'_ board of•arbitrato-ss have ben selected, the v sti . a__ select . a third rember. in the event the taro (2) members selected by KOLL and LIDO cannot agree upon a third member, then, in that event, tl:•a entire arbitration sha11 be aV4mitted to an independent board of arbitrators, such as the American Arbitration Association. 'Any`. ' decision of the arbitrators regarding an increase in the validation paring rates shall be binding upon both )parties. The cost of any such arbitration proceeding shall be divided equally bet;., n the parties. VI. COVEN ?•.NTS. .y _ The sole responsibility of LIDO shall be to pay for validation parking. KOLL shall be required to pay all taxes, general 'and special assessments, and all other charges of every description which may be levied upon or assessed against the parking structure. t%t all times during the term of this Agreement, KOLL shall • a At his.sole cost and expense keep and maintain the parking structure and all improvements the-eon and all facilities apnurteaant thereto in good order and repair and in a safe condition. i LIDO saall•noE be reuuircd or obligated to maintain'or iopair the parking structure or any part thereof during the term of this Agreement. KOLL agrces,'at his expense, to procure and maintain during the term o` this Agreem_nt, comnrchonsive.public liability cc,.rc!=:_ng l?::uiliticz related to th,a condition and. use. . of t::c parking structure r:ith limits of not less than one I•ii•llion Dollars ($1,000,000.00) for bodily injury to or death of one (1) or_more persons, and Five'SHundred Thousand Dollars ($500,000.00) for damige'to property, ho:aever occurring, related to the parking•structure. Such insurance coverage shall' include KOLL, LIDO and the individuals who m-ake.up.LIDO. Furthermore, KOLL agrees to indemnify LIDO and hold it 'harmless from any and all liability, loss, cost or obligation on account of, or arising out of any injury or loss, however occu_ring, related to the parking structure: It is also agreed that each of the terms, conditions . and covenants contained in this Agreement shall, extend to and bind, and inure to. the benefit of the heirs, assigns and successors of the respective parties. VII. ASSIGN:1Eiv^ LIDO agrees that it will not, without the prior written conrenL- of KOLL, �.,hich consent shall not be unreasonably with =, hele,. either assign this agreement or any of its rights or duties. hereunder. VIII. SALL, , ° In the event KOLL wishes to offer for sale all his'' right, interest and title to this parking structure at •some fut::re 21tte, BOLL Agrees LIDO shall have first right ;'ithin thi --ty (30) d--Ys t0 Purchase r p a..e said structure at such offering ?r =c . as E:OLL has' _. -11 L'Ii7O does not exercise said first right within thirty (30 ) days, Y.OLL may then sell the ' Par'':ing structure according to his best business judg -ment. o . rT ATTO°idcYS' FEES S A In the event that either party hereto fails to comply with all the `terms of this Agreement -and tries other "party coa ences le ° -al Proceedings to enforce any of the terms of this Agreement, tne'prcvaili'g party in such suit shall. receive from the other a reasonable sum as attorneys, fees and costs as may be allowed.. by the court or jury trying the case. Y.: P,ECO^ RD117G A short form of this Agreement shall be recorded in the County of Orange; State of California. = • GE \ER \L A• The Paragraph headings used in this Agreement are for the Purpose of convenience 'only_ They .1cy shall not be construed to lirld t or to extanra ' r •lry. < < ^.:a�n'.1:.. tlts or jeLditions• to -,his Ayreenitnt shall ..ritirq by the parties and neither party shall be �1 !j .2 _c: cerhal or iriolicd agrcemcnts. tLe eonscnt or approval of a par.tV is r ^c]1L CCt] :p� =r this X7, eS- aCn'�:, such Consent or approval shall not ...._.. ^ -:i o:13D�•_ .:1 ttl`l�l�.. - . �.4 Y �� � ibis P.gree::ient is e::ecuted _4 i day of Gr- z. 1c",7 in ;te+:=ort Beach; California r LIDO SHOPS'AUTO PAR Q3, IrC. ,?C ty- vonald L.". boll � _ >;Y d EXHIBIT D PERSONAL PROPERTY, FIXTURES AND EQUIPMENT DENNIS WILL BE GETTING ME THIS LIST - THIS LIST MUST INCLUDE THE FURNISHINGS AND EQUIPMENT IN THE BAR AREA SO THAT WE CAN KEEP OPERATING (ALBEIT ON A SMALLER SCALE) UNTIL THE LIQUOR LICENSES ARE APPROVED 31 FAREAL \894\34362001\svelte lease (clean ) rv4.doc 9/28/2005 W v".. 65(116 3Wi E. Cemal3aek • Phvannc, 7Ll asI I b❑ a DATE Z6 QS I $ Zfed .Oa nni i_ARS 8 - AGREEMENT OF PURCHASE AND SALE OF LIQUOR LICENSES THIS AGREEMENT OF PURCHASE AND SALE OF LIQUOR LICENSES ( "Agreement ") is made by and between OVERSTREET, LLC, a California limited liability company (hereinafter "Seller ") and SDOUR, LLC, a California limited liability company(hereinafter 'Buyer ") as of the date set forth at the end of this Agreement. RECITALS Seller is the owner of a certain'restaurant known as "Overstreet Wine and Bar" ('Business ") located at 3400 Via Lido, Newport Beach, California ( "Property"). Seller desires to sell certain Liquor Licenses to Buyer, and Buyer desires to purchase such Liquor Licenses, as defined below, from Seller. NOW, THEREFORE, Buyer and Seller agree as follows: 1. Purchase and Sale of Liquor Licenses. Seller hereby agrees to sell and Buyer hereby agrees to purchase certain assets owned by Seller as follows: 1.1. The On -Sale General Eating Place License No. 47- 373978 and the Wine Distributor License No. 21- 373978 ( "Liquor Licenses ") issued to Seller for the operation of the Business. 2. Appointment of Escrow Holder. Central Escrow, 20 Corporate Plaza Drive, Newport Beach, California is hereby appointed Escrow Holder ( "Escrow Holder ") to conduct the purchase and sale of the Liquor Licenses. 3. Escrow. The Closing of the purchase and sale of the Liquor Licenses will occur through an Escrow (the "Escrow "). Seller shall execute and deliver to the Escrow Holder appropriate Escrow Instructions to pay from the Purchase Price due Seller through the Escrow all claims by creditors received by the Escrow Holder prior to the Closing, as defined below. This Agreement constitutes joint Escrow instructions to Escrow Holder. 4. Closing. The Closing shall take place on or before January 10, 2006 at the hour of 5:00 p.m. (hereinafter "Closing Date ") at: Central Escrow 20 Corporate Plaza Drive Newport Beach, California 92660 Attention: Darlene Sweet F:\REAL1894\34362001 \AGREEMENT OF PURCHASE AND SALE OF ASSETS Nldoc 9/2312005 The terms "Closing" or "Closing Date" shall mean the transfer of the Liquor Licenses listed in Paragraph 1 from Seller to Buyer and shall take place in the office of the Escrow Holder. 4.1. Delay of Escrow. If the Purchase Price, as defined below, is insufficient to pay in full all claims timely filed with Escrow Holder in accordance with the Bulk Sale Notice set forth in Paragraph 9, Closing may be delayed for a period of not less than 25 days nor more than 45 days after the Bulk Sale Notice is sent to creditors. 5. Purchase Price. The total purchase price to be paid by Buyer to Seller is the sum of THIRTY SEVEN THOUSAND AND NO / 100 DOLLARS ($37,000.00) which shall be paid by Buyer to Seller through Escrow as follows ( "Purchase Price "): 5.1. Deposit. Buyer shall deposit the sum of FIVE THOUSAND DOLLARS ($5,000.00) into Escrow at the opening of Escrow (the "Deposit "). Escrow Holder shall place the Deposit and any other funds deposited by Buyer into Escrow in a money market account having no penalty for early withdrawal at a financial institution acceptable to Buyer. 5.2. Payment. The Deposit, together with all interest accrued thereon in Escrow, shall be released to Seller and credited against the Purchase Price at the Closing. Buyer shall deposit the balance of the Purchase Price (less the Deposit) into Escrow, in cash or immediately available funds one (I) business day before the scheduled Closing Date. 6. Conditions to Close of Escrow. 6.1. Liquor Licenses. The Escrow will close upon Buyer or Buyer's assignee obtaining Liquor Licenses issued by the State of California Department of Alcoholic Beverage Control (the "Department "). Buyer and Seller shall immediately make application for the transfer of the Liquor License at the proper office of the Department. Buyer and Seller shall each pay one half of the costs of the appropriate transfer fee. This Escrow shall in all regards comply with the rules and regulations of the Department. Buyer shall pay the renewal fee which shall become due on or before May 31, 2006. 6.2. Lease. The purchase and sale contemplated in this Agreement is contingent on the execution by Buyer and Seller of that certain real property lease for the fixtures and the Property described in the Recitals ( "Lease "). 7. Continuation of Operation. From and after the date of the Lease, Buyer shall take control of the Property and conduct operations under a temporary Liquor License as issued by the Department and in accordance with the terms of the Lease. Buyer shall assume all liability and responsibility with respect to the operations at the 2 F:\REAL\894U4362001\AGREEMENT OF PURCHASE AND SALE OF ASSETS rv2.doc 9/23/2005 Property, complying with the requirements of any conditional use permit issued to Seller and in compliance with all Federal, State and local laws, ordinances regulations and orders applicable to Buyer's operations. 8. No Proprietary Right. Nothing in this Agreement shall be deemed by implication, or otherwise convey to Buyer any proprietary right, license, title, or interest in any information, business name, customer lists, business goodwill ( "Property Information ") or other rights of the Business. The disclosure of Proprietary Information shall not be construed as granting either a license or ownership under any purchase or sale agreement, or interest in such Proprietary Information. 9. Bulk Sale Notice. 9.1. Buyer and Seller instruct Escrow Holder (i) to cause the notice required by Section 6105 of the California Commercial Code to be prepared ( "Bulk Sale Notice ") (ii) to record and publish the Bulk Sale Notice, and (iii) in accordance with California Commercial Code Section 6106.2 and 6106.4 (to the extent those Sections are applicable), to distribute the Purchase Price to the persons who file claims in response to the Bulk Sale Notice. Upon Escrow Holder's request, Buyer and Seller shall provide Escrow Holder with the information necessary to prepare the Bulk Sale Notice. Prior to closing of this transaction Buyer shall receive the following: Department. Division. a. A tax release from the State Board of Equalization. b. A tax release from the Employment Development C. A tax release from the County Tax Collector Business Tax d. A tax release from the Franchise Tax Board. 10. Seller's Warranties Regarding Liquor Licenses for the Property. Seller hereby warrants and represents to Buyer that: 10.1. Seller has paid or shall pay all taxes owed by Seller on account of the Liquor Licenses. 10.2. To the best of Seller's knowledge the purchase and sale will not conflict with or violate any Agreement or law to which Seller or the Business is subject and there are no pending or threatened lawsuits, other judicial proceedings or administrative proceedings involving Seller or the Liquor Licenses. 3 F:\REAL\8940436200MGREEMENT OF PURCHASE AND SALE OF ASSETS rv2.doc 9/23/2005 11. Non - Assumption of Obligations. Buyer does not assume any obligations or liabilities of the Seller and the Seller hereby agrees that the Liquor License transferred herein are free from any obligations or security interests. 12. Indemnity Agreement. 12.1. Buyer hereby agrees to indemnify, defend and hold Seller harmless and in respect of any and all claims, losses, costs, expenses, obligations, liabilities and damages including interest and reasonable attorney's fees that Seller shall incur or suffer which arise or result from the use of the Liquor Licenses by Buyer subsequent to the Closing Date. 12.2. Seller hereby agrees to indemnify, defend and hold Buyer harmless against and in respect of any and all claims, losses, costs, expenses, obligations, liabilities and damages including interest and reasonably attorney's fees that Buyer shall incur or suffer which arise or result from the use of the Liquor Licenses being sold hereunder by Seller prior to the Closing Date. 13. Risk of Loss. During Escrow, Buyer may enter and use the Property under the terms of such Lease. Buyer hereby agrees to indemnify project, defend and hold seller and the Property harmless from and against any and all loss, cost, liability or expenses (including reasonable attorney's fees) to the extent caused by Buyer and its representatives, whether such entry occurred prior to ordering the continuance of this Escrow. 14. Entire Agreement. This contract constitutes the entire Agreement between Buyer and Seller concerning their rights and obligations with respect to the sale and purchase of the Liquor Licenses. Any Agreements or representations respecting the Liquor Licenses or its sale to Buyer not expressly set forth in this contract shall have no effect for a subsequent written modification signed by the party to be charged. 15. Amendment of Contract. This contract may be amended or modified at any time with respect to any provision by a written instrument executed by Buyer and Seller. 16. Arbitration. Any dispute arising under this contract shall be settled by arbitration in accordance with the California Arbitration Act. 17. Notices. Any notice required or permitted to be given under this contract shall be written and may be given by personal delivery or by registered or certified mail, first -class postage prepaid, return receipt requested. Notice shall be deemed given upon actual receipt in the case of personal delivery or upon mailing. Mailed notices shall be addressed as follows, but each party may change address by written notice in accordance 4 F:\REAL%94134362001\AGREEMENT OF PURCHASE AND SALE OF ASSETS nldoc 9/232005 with this paragraph: To Seller: OVERSTREET, LLC ATTN: DENNIS AND CHRISTINE OVERSTREET Newport Beach, CA 92663 To Buyer: SEJOUR, LLC, a California limited liability company 177 Riverside Avenue #F 601 Newport Beach, CA 92663 18. Costs and Expenses. Buyer and Seller shall bear the costs and expenses incurred in conducting the purchase and sale in the manner prescribed by this contract as follows: The parties shall each pay the fees and charges of the party's own attorney and shall pay one half of Escrow Holder's fee and all filing, recording, publication and other costs and expenses that Escrow Holder incurs on the parties' behalf, unless the cost or expense is otherwise allocated under this Agreement. 19. Attorney's Fees. Should any party hereto retain counsel for the purpose of enforcing or preventing the breach of any provision herein including but not limited to instituting an action for a declaration of such party's rights or obligations hereunder or for any other judicial remedy, then the prevailing party shall be entitled in addition to such other relief as may be granted to be reimbursed by the other party for all costs and expenses incurred thereby including, but not limited to, reasonable attorney's fees and costs. 20. Waiver. No breach of any provision hereof can be waived unless in writing. Waiver of any one breach of any provision hereof shall not be deemed to be a waiver or any other breach of the same or any other provision hereof. 21. Governing Law. This Agreement has been negotiated and entered into the State of California and shall be governed by and enforced in accordance with the laws of the State of California. 22. Heirs, Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, representatives, successors and permissible assigns. 23. Time of the Essence. Time is expressly declared to be of the essence of this Agreement and of every provision hereof in which time is an element. 24. Brokers. The parties warrant that no broker or other officers have been employed in connection with this purchase and there are no fees or commissions die anyone. 5 F :IREAL1894\3436200MGREEMENT OF PURCHASE AND SALE OF ASSETS rv2.doc 9232005 IN WITNESS WHEREOF the parties execute this Agreement this Ntlo4. , 2005. at Newport Beach, California. "fieller" By: CHRISTINE OVERSTREET "Buyer" SEJOM LLC, a California limited liability company By Q UN St64ffKTON MANAGING MEMBER L) " day of