HomeMy WebLinkAboutResolution No. 19-7888 - Approve Operating Covenant Agreement w-Champion Auto Group, LLC (dba Maserati)A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DOWNEY
APPROVING AN OPERATING COVENANT AGREEMENT WITH CHAMPION
AUTO GROUP, LLC, (DBA DOWNEY MASERATI)
WHEREAS, the City of Downey ("City") is a municipal corporation and chartered city
duly created and existing under the California Constitution; and
WHEREAS, the City wishes to support and encourage economic development and
business development and retention in the community, including the generation of municipal
revenues to provide necessary public services and facilities; and
WHEREAS, Champion Auto Group, LLC, a California Limited Liability Company doing
business as Downey Maserati, ("Maserati") will open a new automotive dealership located at 9715
Firestone Boulevard in the City of Downey, County of Los Angeles, California ("Dealership"); and
WHEREAS, the City seeks to expand economic development opportunities in the City of
Downey in an effort to increase jobs, property tax, sales tax and all of the other benefits
associated with additional economic development activity and new projects. Further, promoting
economic development within the City is a municipal affair and serves the public purposes of
preserving and expanding opportunities for gainful employment and preventing deterioration of
the urban landscape; and
WHEREAS, the development of the new dealership will provide significant public
benefits to the City, as the continued receipt of local sales tax revenues by the City from such
activities represents a significant source of public revenue for the City that may be used for the
funding of necessary public services and facilities, including public safety services and facilities;
and
WHEREAS, the contractual obligations to continuously operate the new dealership
within the City serves the additional public purpose of fostering a business and civic
environment that may attract additional businesses and investment into the community, due to
the availability of increased public and private services and economic activity resulting
therefrom; and
WHEREAS, the City, in consideration of the local sales tax revenues, property taxes,
employment benefits, and other tangible and intangible benefits that are expected to be
received by the City arising from the continued operation of the new dealership within the City,
desires to provide certain payments to Maserati (including a loan payment to be repaid with
increased sales tax revenue), and sales tax rebate payments as an incentive for creating and
operating a new dealership within the City; and
WHEREAS, City staff and Maserati have negotiated an Operating Covenant Agreement,
attached hereto as Exhibit "A" and incorporated herein by reference ("Agreement"), a copy of
which is on file with the City Clerk and available to the public for inspection during regular
business hours of the City, to, among other things, provide for the development and continued
operation of the new dealership within the City; and
WHEREAS, City conducted an analysis in accordance with the requirements of
Government Code section 53083. The results of that analysis are presented in a report entitled
"Maserati Section 53083 Report" (the "Report"), which sets forth the details of the economic
development subsidy contained within the Agreement, as well as the net tax revenue expected
to accrue to the City and the net number of jobs to be created as a result of the economic
RESOLUTION NO. 19-781
P4GE 2
development subsidy. A copy of the Report is available in the Office of the City Clerk of the City
and on the City's website at www.downeyca.org, under the "City News" tab; and
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF DOWNEY DOES
WEREBY RESOLVE AS FOLLOWS:
SECTION 1. Recitals. The City Council finds and determines that the foregoing
recitals of fact are true and correct.
SECTION 2. Findings. The City Council finds and determines that: (a) there are
identifiable public purposes fulfilled by the Agreement, as set forth in the recitals; (b) the public
purposes set forth in the recitals outweigh any private benefit to private persons; (c) the findings
set forth in this Resolution are based upon substantial written and oral evidence presented to
the City Council; and (d) the Agreement is authorized by law and constitutes a valid and binding
agreement between the City and Maserati.
SECTION 3. CEQA Comoliance. City Staff has reviewed the proposed use for
compliance with the 6aii—fornia Environmental Quality Act (CEQA). Upon completion of this
review, it had been determined that the project is categorically exempt from CEQA, pursuant to
Guideline Section No. 15301 (Class 1, Existing Facilities). Categorical Exemptions apply to
projects that have been determined not to have a significant effect on the environment and have
been exempted from the requirements of the CEQA. Class 1 exemptions consists of projects
that involve no or negligible expansion of the existing building or use. Inasmuch as the
applicant is occupying an existing tenant space within the building, staff feels that this reques)
qualifies for this exemption.
SECTION 4. Approval. The City Council hereby approves the Agreement and
authorizes the Mayor to execute the Agreement together with such non -substantive changes
and amendments as may be approved by the City Manager and the City Attorney. The City
Manager is further authorized to take any action and execute any and all necessary documents
to implement the Agreement.
SECTION 5. Effective Date. The Mayor shall sign this Resolution and the City Clerk
shall attest thereto, and this Resolution shall thereafter take effect immediately in accordance
with applicable law.
I 1 t_ 0 , I - 1 0
MARI ALICIA DUAR�T, CMC
City Clerk
UEZ, Mayor
RESOLUTION NO. 19-781
PAGE 3
I HEREBY CERTIFY that the foregoing Resolution was adopted by the City Council of
the City of Downey at a regular meeting held on the 25 th day of June, 2019, by the following
vote to wit:
AYES: Council Members: Ashton, Frometa, Saab, Pacheco, Mayor Rodriguez
NOES: Council Member: None.
ABSENT: Council Member: None.
ABSTAIN: Council Member: None.
mi0 1 K 11 6 � 11
Rw
y Cou uy 1 0 I V 01 114m
CITY OF DOWNEY,
"k Czlifor-tiq. wji.-ticii2al coj.joratio-i,?jd c'tarter
!. z
CHAMPION AUTO GROUP, LLC,
California Limited Liability Company doing business as CFLAMPION
EP
,U'-4LSE kl. IKL X X
[Dated -/4 0 z AG , 2019 for reference purposes only]
LDEFINITIONS ............................ ........ ........ --- ....... .............. ............................................3
1.1 Affiliate.................................................................................................................. 3
1.2 Annual Report ........................................................................................................ 3
1.3 Annual Report Date............................................................................................... 3
1.4 Application.............................................................................................................3
1.5 Approval.................................................................................>.,...,,..,....................3
1.6 City.........................................................................................................................3
1.7 City Manager......................................................................................................... 3
1.8 City Parties............................................................................................................. 3
1.9 City Party............................................................................................................... 3
1.10 Claim......................................................................................................................3
1.11 Control...................................................................................................................4
1.12 Controlling and Controlled.................................................................................... 4
1.13 Default....................................................................................................................4
1.14 Default Interest....................................................................................................... 4
1.15 Effective Date....................................................................................................... 4
1.16 Equity Interest........................................................................................................ 4
1.17 Expanded Facility.................................................................................................. 4
1.18 Federal....................................................................................................................4
1.19 Government............................................................................................................4
1.20 Indemnify............................................................................................................... 4
1.21 Indemnitee.............................................................................................................. 5
1.22 Indemnitor.............................................................................................................. 5
1.23 Laws.......................................................................................................................5
1.24 Legal Costs............................................................................................................. 5
1.25 Negotiation Period................................................................................................. 5
1.26 Notice..................................................................................................................... 5
1.27 Notice of Agreement and Declaration of Covenants ............................................. 5
1.28 Notify.....................................................................................................................5
1.29 Occupancy Date... ................ ...... .................. - .... --- ............. -- ................. -.. 5
65I 86.00009\31989698.5 _i_
2.
3.
TABLE OF CONTENTS
(continued)
1.30 Operating Period.................................................................................................... 5
1.31 Operating Year....................................................................................................... 6
1.32 Operator................................................................................................................. 6
1.33 Operator Business.................................................................................................. 6
1.34 Operator Official Action........................................................................................ 6
1.35 Operator Parties..................................................................................................... 6
1.36 Operator Party... ..... _ ....... .................. ... - ............. ............................... ...... ..... _. 6
1.37 Operator Taxable Sales.......................................................................................... 6
1.38 Outside Effective Date........................................................................................... 6
1.39 Parties.....................................................................................................................6
1.40 Party.......................................................................................................................6
1.41 Person.....................................................................................................................6
1.42 Pre-Development................................................................................................... 6
1.43 Prevailing Wage Action......................................................................................... 6
1.44 Prohibited Financial Assistance............................................................................. 7
1.45 Property..................................................................................................................7
1.46 SBE........................................................................................................................ 7
1.47 State........................................................................................................................7
1.48 Southern California................................................................................................ 7
1.49 Taxable Sale........................................................................................................... 7
1.50 Transaction Point................................................................................................... 7
1.51 Transfer..................................................................................................................7
1.52 Unavoidable Delay................................................................................................ 8
EFFECTIVE DATE........................................................................................................... 8
2.1 Definition............................................................................................................... 8
2.2 Termination on Failure to Occur ........................ ....................„..,.......,,............. ,..... 8
ESTABLISHMENT AND OPERATION COVENANTS ................................................ 9
3.1 Establishment of Operator Business in City.......................................................... 9
3.2 Continuous Operation.......................................................................................... 10
3.3 Sales Tax Reporting Information ..................................... .......,,......,...........,... 10
65186.00009131989698.5 -ii-
3.4
Failure toAuthorize Release ofInformation ... ................................................ .'
ll
3.5
Reasonably Determinable Amounts ................................................ ................ .11
3.6
SBE Determination of Improperly Allocated Sales Tax Revenues ..... .... .......
ll
3.7Operator's
Covenant Not 7o Accept Prohibited Financial Assistance ... .... ...... .11
3.8
—......--.----.--.—.------------.—.—.--.—...
|l
3.9
Dispute Resolution .................................................................................. .... ___
12
4. JOBS
CREAT1[}N._.................... —................................................... ................... ....
13
4.1
New Jobs ............... ............... ............................................ ............. ...... .............
l3
4.2
Certification ...... ......... ............ ........ -.... ...... ........... ........................ ..... ............
l3
4.3
Repayment of Loan for Default ....... ........................ ..... .....
l4
4/4
Records Inspection ................................................... —....... ___ ........... .............
14
4.5
Monitoring ........................ ..................... .___ ... ....... __........... ............. .... ......
l4
4'6
Local Hiring Preference ............................ ..... ...... ................................. -......
l4
5. LOAN ..................... _.................. ........ ....... ...... ....... .........
14
5.1
General Provisions; Promissory Note, and Personal Guaranty ocLetter of
Crcdb.............. ...... .............. .... .... ............. .—............ ...................................
|4
5.2
Term and Interest ---------.—..—...—...—....—...-.._..-....-..
15
5.3
Deemed Payment through Sales Tax Gcoerati/u...... ....... .... .................. —..|5
5'4
Disbursements ................ ...... ..~__............... ~........... ......... .—.............
|5
5.5
Available lumrenucmtal Revoonco --------.....—.---------.—.
15
5.0
Timing ofPayments ofAvailable Incremental Revenue .....................................
|5
5.7
Extension ofTerm ............ ........ ..,............ .......... ....~.......... ........ —........
|6
5.8
Failure toMeet Threshold for Deemed Payments..... ...................
16
5.9
Conclusion nfTax Sharing Provisions ............................... ....... .......... ............
i6
5.10
Periodic Confirmation ofLoan Balance ............... .................. .......... ........... .
16
0. ADEQUATE CONS ............................................. .......... '....................
16
6.1
Exchange of Consideration ................................... ....................... ....... .—........
18
0-2
NnUnstated Consideration ................................... —....... ................ ..................
]6
T NO DISCRIMINATION OR SEGREGATION ...................................... .......... .......... .
|b
e5/8100009\3/989698 5 -iii-
TABLE OF CONTENTS
65186.00009Q/9896985 -iv`
72 Interpretation ............................................................ ............. ...... ............... .....
l7
0.
DEFAULTS .............. ....... ....................... ........ ....... ..... .... .......... ......... .................
l7
#.| Monetary Default .................................................................................................
l7
0.2 Default .........................................................................................
l7
9,
RESTRICTIONS ONCHANGE IN MANAGEMENT ORCONTROL OpTHE
OPERATOR AND ASSIGNMENT (JRTRANSFER ....................................................
l7
10.
INTENTIONALLY OMITTED .... .................................................................................
l0
ll.
INTENTIONALLY OMITTED .... ................ .......... .....................................................
l0
12.
----.—..—...—.--..—.—..—.—.---.--.-----l0
12.1 City Indemnity Obligations --------------------------...l0
12-2 Operator Indemnity Obligations ....—._..----.—__-----.—......--._.l9
12.3 Independent of Insurance Obligations .............................................................. _l9
/2'4 Survival of Indemnification and Defense Obligations —,--.--...--.—.---l4
12.5 Indemnification Procedures .............................................. ................ ............ ~.i9
ll
CITY CONTRACT ADMINISTRATION -----------.,....---------..i9
14.
GOVERNING LAW ............................................................................... ........ ........... ....
20
15.
TRANSFER .....................................................................................................................
2O
16.
NK]EFFECT (}NCITY'S LEGISLATIVE AUTHORITY ........................ ............. ___
20
|?.
NOEFFECT [NN EMINENT DOMAIN AUTHORITY .......................... .—........... ..-20
l@.
NON -LIABILITY OFCITY OFFICIALS AND EMPLOYEES ....................................
20
19.
NOTICES .........................................................................................................................
20
19.1 —.—.---------------------------------..20
19,2 Addresses .............................................................................................................
2l
20.
JURISDICTION AND VENUE ...... .... ............................. .... ....... .......... ._......... ....
2l
21.
TAX CONSEQUENCES .—.-----------------------------..2l
22.
INCORPORATION OFRECITALS .......................................... ..................... ............ .2l
23.
PRINCIPLES OF INTERPRETATION ................................. .............. ._..... —........ .2l
24.
COUNTERPART ORIGINALS; INTEGRATION ........................ ............ —....... ........ .22
25.
SEVERABILITY ..-------------.------.—...._.~—_..—'..._._'22
65186.00009Q/9896985 -iv`
27. TIME }SQfTHE ESSENCE ................................................................................. ..... ...22
20. OFTIME (}F PERFORMANCE ................ 22
20.1 Notice ............................................................................................ ............... ..... ...22
20.2 Assumption ofEconomic Risks ........................................................ .............. .... 22
24. N(JTHIRD PARTY BENEFICIARIES ........—.—..—.—,—.-.--.--~.---..—.23
30. NO OTHER REPRESENTATIONS OR WARRANTIES .................... .......... —.......... 23
31. WARRANTIES AGAINST PAYMENT OFCONSIDERATION FOR
AGREEMENT ......--,------_.--------------.—.......-..—..23
32. RELATIONSHIP OF PARTIES .....................................................................................
��I I Do] w�
EXHIBIT A: Property Description ................................................ ................................... ........ A-1
EXHIBIT B: Operator Official Action ............................................................. '.............. ........ 0-1
EXHIBIT C: Notice of Agreement and Declaration nfCovenants .............. .--- .............. ..... [-1
EXHIBIT D: Secured Promissory Note, ......... ._................ ................................ .................. D-1
65186 000W31989698.5 -v-
(Champion Maserati)
THIS OPERATING COVENANT AGREEN/IENT (Champion Maserati) (this
"Agreement") is dated as of aQc7 , 2019, for reference purposes only, and is
entered into by and between the CITY OF DOWNEY, a California municipal corporation and
charter city ("City"), and CHAMPION AUTO GROUP, LLC, a California Limited Liability
Company doing business as CHAMPION MASERATI ("Operator"). The City and Operator
enter into this Agreement with reference to the following recited facts (each a "Recital"):
A. The Operator currently owns and operates several automobile dealerships ard
service businesses in the CITY OF DOWNEY, and desires to expand its operations on certain
property owned by the Operator, as more particularly described in Ex0ibit "A" attached hereto
f,the "Pro�:� for the loqy-terrn qceration of an ex%anded automobile dealershi% and servic*
business within the City; and
B. The City has determined that this Agreement serves a public purpose because the
development and operation of the Property as a newly expanded automobile sales and service
business by Operator will likely result in public benefits to the City and its residents, including
but not limited to:
I . Increased business development in the area; and
2. Creation of additional job opportunities for City residents, including low
and moderate income residents; and
1 Additional tax revenue to the City that will assist the City in providing
public services to its residents.
C. The State Legislature has declared its intent (SB 470, Wright, 2013) to promote
economic development on a local level so that communities can enact local strategies to increase
jobs, create economic opportunity, and generate tax revenue for all levels of government; give
local governments tools at no cost to the state.. that allow -lo -cal -governments to use their funds in
a manner that promotes economic opportunity; and with the loss of redevelopment funds, cities
need to continue certain powers afforded to redevelopment agencies that were critical to
economic development, yet do not have an impact on schools and the state budget.
-
•- -
11NIM611 WOU I
IN- WIN ---
I
E. City seeks to expand economic development opportunities in the City of Downey
in an effort to increase jobs, property tax, sales tax and all of the other benefits associated with
65186.00009\31989698.5 - I -
additional economic development activity and new projects. Promoting economic development
within the City is a municipal affair and serves the public purposes of preserving and expanding
opportunities for gainful employment and preventing deterioration of the urban landscape.
F. Operator seeks to expand within the City a viable, productive commercial
business that will produce jobs, sales tax revenue and other tangible and intangible economic
benefits contributing to the well-being of the community and spurring further economic growth
and activity in an area of the City that needs such growth and development.
G. The Parties' performance of this Agreement will, among other things: (1) increase
the productive use of land, foster orderly growth and economic development in the City; (2)
strengthen City's economic base by providing a means of expanding sales tax revenues and
existing jobs and providing the opportunity to increase its sales tax base and employment
opportunities; and (3) increase property tax revenues, resulting in fiscal benefits to City.
H. City finds that the public benefits that are to be received by the City through this
Agreement are designed, and have a reasonable likelihood, to promote the general and economic
welfare of the City of Downey, and that such benefits are in accord with the public purposes and
provisions of applicable federal, state and local laws and requirements, and that the imposition of
certain operating covenants and use restrictions upon the Property for use as an expanded
automobile dealership constitutes a valid public purpose.
conducted an analysis in accordance with the requirements of Government
Code section 53083. The results of that analysis are presented in a report entitled "Champion
Maserati Section 53083 Report" (the "Report"), which sets forth the details of the economic
"�11;86U
accrue to the City and the net number of jobs to be created as a result of the economic
development subsidy. A copy of the Report is available in the Office of the City Clerk of the
City and on the City's website at iieyca�oi u, under the "City News" tab.
65186 00009131989698,5 -2-
NOW, THEREFORE, IN CONSIDERATION OF THE PROMISES AND
COVENANTS SET FORTH IN THIS AGREEMENT, THE CITY AND OPERATOR AGREE,
AS
ATS FOLLO — -;
I . Definitions. All initially capitalized terms used in this Agreement shall have the
meanings set forth in this Section I or, if not set forth in this Section 1, where such terms first
appear in this Agreement, unless the context of usage clearly requires another meaning.
1.1 Affiliate. In reference to any Person means any other Person Controlling or
Controlled by or under common Control with the Person. "Affiliated" shall have the correlative
meaning.
1.2 Annual Report. A written report stating the Operator Taxable Sales for a
particular Operating Year.
1.3 Annual Report Date. The date that is sixty it days following the last day of'
the immediately preceding Operating Year.
1.4 Application. Any agreement, application, certificate, document, or submission
(or amendment of any of the foregoing), as applicable: (a) necessary or appropriate for
improvements to the Expanded Facility, including any application for any building permit,
certificate of occupancy, utility service or hookup, easement, covenant, condition, restriction,
subdivision, or such other instrument as Operator may reasonably request for the Expanded
Facility; (b) to enable Operator to seek any Approval or to develop, use or operate the Expanded
Facility.
1.5 Approval. Any license, permit, approval, consent, certificate, ruling, variance,
authorization, conditional use permit, or amendment to any of the foregoing, as shall be
necessary or appropriate under any Law to develop or operate the Expanded Facility.
I i1"I III � 1 � III 1 8 ,
1 1 1 �� �i 11 1 i It ,•I
1.7 City Manager. The City Manager of the City or his or her designee or successor
in function.
1• = �
1.9 City Party. Individually, the City, its elected officials, employees, attorneys or
other agents.
1.10 Claim. Any claim, loss, cost, damage, expense, liability, lien, action, cause of
zction (whether in tort, contract, under statute, at law, in equity or otherwise), charge, award,
;�ssessment, fine or penalty of any kind (including consultant and expert fees and expenses and
investigation costs of whatever kind or nature, challenge to the City's authority to enter into or
65186-00009\31989698 5 -3-
perform this Agreement or approval of this Agreement in any form, if an Indemnitor improperly
fails to provide a defense for an Indemnitee, then Legal Costs of counsel retained by the
Indemnitee), and anyjudgment.
1.11 Control. The possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether by ownership of Equity
Interests, by contract, or otherwise.
MMM_!�t
1.14 Default Interest. Interest at an annual rate equal to the lesser of. (a) eight
percent (8%) per annum; or (b) the Usury Limit.
1.16 Equity Interest. All or any part of any direct or indirect equity or ownership
interest(s (whether stock. nartnershii interest, beneficial interest in a trust., membership interest
= i - UL
r1I I LU�k�VIIIL3 Q11111PL)
�UIIJ', IT•LIICF IIILCI-CNL T1 d=907711OFSHIP 19117 Cf,JALY HULLI-0) III dIIJ CIILILJ�
any tier of ownership, that directly or indirectly owns or holds any ownership or equity interest
i -i -q- Pers-9-yi.
1.17 Expanded Facility. A permanent full-service automobile sales dealership and
S -A- - -- lic• -j%14 f•ir - a;K
in it -,
new and used automobiles, and sales of parts for automobiles. Operator intends to construct
Sales and Office Areas consisting of 3,790 sq. ft. of contiguous showroom for indoor vehicle
display and the continuous display, at a minimum of five (5) new Maserati and five (5) new Alfa
Komeo vehicles. Additionally, Operator will construct facilities for Parts and Service Operations
totaling at least 13,803 sq. ft., to be used as follows: Parts Warehousing and Counter - 3,158 sq.
ft.; Workshop Area - 10,645 sq. ft., including 14 bay lifts; and 3,225 sq. ft. allocated for repair of
complex repairs.
1.19 Government. Each and every governmental agency, authority, bureau,
department, quasi -governmental body, or other entity or instrumentality having or claiming
jurisdiction over the Premises (or any activity this Agreement allows), including the government
of the United States of America, the State of California and County of Los Angeles governments
and their subdivisions and municipalities, including the City, and all other applicable
governmental agencies, authorities, and subdivisions thereof. "Government" shall also include
any planning commission, board of standards and appeals, department of buildings, city council,
zoning board of appeals, design review board or committee or similar body having or claiming
jurisdiction over the Property or any activities on or at the Property.
FQ VA. -UM
65186 00009\31989698 5 -4-
claims, liability, penalties, judgments, damages, and other injury, detriment, or expense
(including reasonable attorney fees, interest and penalties) that the Indemnitee suffers or incurs:
(a) from, as a result of, or on account of the particular matter; or (b) in enforcing the
•- •- indemnity obligation. '
1.21 Indemnitee. Any Person entitled to be indemnified under this Agreement and its
agents, directors, employees, shareholders, officers and elected officials.
1.22 Indemnitor. A Party that agrees to Indemnify any other Person pursuant to this
Agreement.
1.23 Laws. Every law, ordinance, requirement, order, proclamation, directive, rule,
and regulation of any Government applicable to the Property or the Expanded Facility, in any
way, including any development, use, maintenance, taxation, operation, or occupancy of, or
environmental conditions affecting the Property or the Expanded Facility, or relating to any
taxes, or otherwise relating to this Agreement or any Party's rights, obligations or remedies
under this Agreement, or any Transfer of any of the foregoing, whether in force on the Effective
Date or passed, enacted, modified, amended or imposed at some later time, subject in all cases,
however, to any applicable waiver, variance, or exemption.
1.24 Legal Costs. All reasonable costs and expenses incurred in any legal proceeding
(or other matter for which a party is entitled to be reimbursed for its Legal Costs), including
reasonable attorneys' fees, court costs and expenses and consultant and expert witness fees and
expenses.
1.25 Negotiation Period. The forty-five (45) day period commencing on the effective
date of any Notice of dispute given pursuant to Section 3.9(a).
1.26 Notice. Any approval, consent, demand, designation, election, notice, or request
relating to this Agreement, including any Notice of Default or termination of this Agreement.
Notices shall be delivered, and shall become effective, only in accordance with Section 19.
1.27 Notice of Agreement and Declaration of Covenants. The Notice of Agreement
and Declaration of Covenants attached to this Agreement as Exhibit "C', to be recorded against
the Property to provide constructive notice of the existence and application of this Agreement
and the covenants of Operator regarding the Property. Full execution by the Parties and
recordation of the Notice of Agreement and Declaration of Covenants shall be a condition to the
effectiveness of this Agreement.
1.28 Notify. Give a Notice.
1.29 Occupancy Date. The date on which the City issues a final certificate of
occupancy for the Expanded Facility.
1.30 Operating Period. Commencing on the Occupancy Date, and continuing
through the ten (10) year anniversary of the commencement of the Operating Period, or any
extension(s) granted by the City pursuant to Section 5.4 of this Agreement.
65186.00009\31989698.5 -5-
1.31 Operating Year. Each four (4) quarter period during the Operating Period
commencing on the close of the calendar quarter, closest to the date in which Operator received
their Certificate of Occupancy and ending four (4) quarters later. By way of example, if the
Certificate of Occupancy is issued on April 30, 2020, the first Operating Year will end on March
31, 2021. The first Operating Year is sometimes referred to as "Operating Year l," with each
succeeding Operating Year, thereafter, being consecutively numbered, concluding with a
maximum of "Operating Year 10" or any extension Operating Year approved by the City
pursuant to Section 5.4 of this Agreement.
1.32 Operator. Champion Auto Group, LLC, a California Limited Liability Company
doing business as Champion Maserati, and its successors and assigns.
1.33 Operator Business. That certain new and used automobile sales and service
business conducted under the name "Champion Maserati" from the Expanded Facility.
1.34 Operator Official Action. The official action of Operator authorizing Operator's
entry into and performance of this Agreement, in substantially the form attached to this
Agreement as Exhibit "B," signed by the authorized representative(s) of Operator.
1.35 Operator Parties. Collectively, Operator, its Affiliates, shareholders, members,
partners, directors, officers, employees, attorneys or other agents.
1.36 Operator Party. Individually, Operator, its Affiliates, shareholders, members,
partners, directors, officers, employees, attorneys or other agents.
1.37 Operator Taxable Sales. All Taxable Sales generated from the operation of the
Operator Business for which the Transaction Point is within the City.
1.38 Outside Effective Date. April 30, 2020.
1.39 Parties. Collectively, Operator and the City.
1.40 Party. Individually, Operator or the City, as applicable.
1.41 Person. Any association, corporation, governmental entity or agency, individual,
joint venture, joint-stock company, limited liability company, partnership, trust, unincorporated
organization or other entity of any kind.
1.42 Pre -Development Loan As a jobs creation incentive and to be used for pre -
development expenses, a total loan of Five Hundred Thousand Dollars ($500,000.00) to be
disbursed to Operator within 10 days of the Effective Date of this Agreement, and as further
defined in Section 5.1.
1.43 Prevailing Wage Action. Any of the following: (a) any determination by the
State Department of Industrial Relations that prevailing wage rates should have been paid, but
were not, (b) any determination by the State Department of Industrial Relations that higher
prevailing wage rates than those paid should have been paid, (c) any administrative or legal
action or proceeding arising from any failure to comply with any of California Labor Code
65186,00009131989698 5 -6-
Sections 1720 through 1781, as amended from time to time, regarding prevailing wages,
including maintaining certified payroll records pursuant to California Labor Code Section 1776,
or (d) any administrative or legal action or proceeding to recover wage amounts at law or in
equity, including pursuant to California Labor Code Section 178 1.
1.44 Prohibited Financial Assistance. Any direct or indirect payment, subsidy,
rebate or other similar or dissimilar monetary or nonmonetary benefit, including, without implied
limitation, payment of land subsidies, relocation expenses, financial incentives, public financing,
property or sales tax relief or rebates, relief from public improvement obligations, and payment
for public improvements to or for the benefit of Operator by any public or private person or
entity.
1.45 Property. That certain real property specifically described in Exhibit "A"
attached to this Agreement.
1.46 SBE. The California State Board of Equalization or such other governmental
agency as may have the authority from time to time, during the Operating Period, to collect
transaction, sales or use tax revenues and allocate and distribute a portion of such revenues to
cities and counties in the State.
1.48 Southern California. The geographic areas of the County of Los Angeles, the
County of Orange, the County of San Bernardino and the County of Riverside.
1.49 Taxable Sale. Any transaction subject to imposition of transaction, sales or use
tax pursuant to the Bradley -Bums Uniform Sales and Use Tax Law (commencing with Section
7200 of the California Revenue and Taxation Code), the Transactions and Use Tax Law
(commencing with Section 7251 of the California Revenue and Taxation Code), or any successor
law.
1.50 Transaction Point. The physical location that, for the purposes of allocation of
sales or use tax revenues to taxing entities from a Taxable Sale transaction, is the place where the
subject personal property is determined to have been sold or first functionally used, as
applicable, pursuant to the Bradley Bums Uniform Local Sales and Use Tax Law (Revenue and
Taxations Code Sections 7200, et seq.), the Transactions and Use Tax Law (commencing with
Section 7251 of the California Revenue and Taxation Code), and the associated regulations at
Title 18 California Code of Regulations Sections 1800, et seq., as such laws or regulations may
be amended from time to time.
(a) Any total or partial sale, assignment, conveyance, trust, power, or transfer
in any other mode or form, by the Operator of more than a 50% interest in the Operator's interest
in this Agreement, the Site, or the Project or a series of such sales, assignments and the like that,
in the aggregate, result in a disposition of more than a 50% interest in the Operator's interest in
this Agreement, the Site, or the Project; or
65186 00009131989698.5 -7-
(b) Any total or partial sale, assignment, conveyance, or transfer in any other
mode or form, of or with respect to any interest in the Operator or a series of such sales,
assignments and the like that, in the aggregate, result in a disposition of more than a 50% interest
in any interest in the Operator; or
(c) Any merger, consolidation, sale or lease of all or substantially all of the
assets of the Operator or a series of such sales, assignments and the like that, in the aggregate,
result in a disposition of more than a 50% interest of all or substantially all of the assets of the
Operator; or
(e) The recordation of any deed of trust, mortgage, lien or similar
encumbrance against all or any portion of the Site or the Project.
1.52 Unavoidable Delay. A delay in any Party performing any of its obligations
under this Agreement, except payment of money, arising from or on account of any cause
whatsoever beyond the Party's reasonable control, despite such Party's reasonable diligent
efforts, including industry -wide strikes, labor troubles or other union activities (but only to the
extent such actions do not result from the negligence or willful misconduct of the Party),
casualty, war, acts of terrorism or riots. Unavoidable Delay shall not include delay caused by a
Party's financial condition, illiquidity, or insolvency.
2. Effective Date.
2.1 Definition. This Agreement shall not become binding on either Party, unless and
until the first date on which all of the following have occurred, if at all (the "Effective Date"):
(a) Signature and Delivery of Agreement by Operator. Two (2) originals of
this Agreement are signed by authorized representative(s) of Operator and delivered to the City;
and
(b) Official Action. An Original of the Operator Official Action is signed by
the authorized representative(s) of Operator and delivered to City; and
(c) Approval of Agreement by City Council. This Agreement is approved by
the City Council of the City at a public meeting of the City Council, following all legally
required notices and hearings; and
1 '111 '1
Is W • E =1
2.2 Termination on Failure to Occur. If the Effective Date does not occur on or
before the Outside Effective Date, then no part of this Agreement shall become binding on or
enforceable against either Party and any prior signatures or approvals of this Agreement by either
the City or Operator shall be void and of no further force or effect.
65186,00009131989698 5 -8-
3. Establishment and Operation Covenants.
011LILIC1110M. 10 QUIINI Me nT�,all(Jeu 11' 71ELLU UI MIS 1-1j;FUUM
65864, eq.
(c) Operator Payment of the Expanded Facility Costs and Fees. Operator and
the City agree that except as set forth specifically in this Agreement, the City shall not provide
any financial assistance to Operator in connection with any construction required for the
expansion to the Expanded Facility. Operator shall be solely responsible for paying for the costs
of all design work, construction, labor, materials, fees, permits, Applications, Approvals, surety
bonds and other expenses associated with the Expanded Facility. Operator shall pay any and all
fees pertaining to the review and approval of the Expanded Facility by each Government and
utility service providers, including the costs of preparation of all required construction, planning
and other documents reasonably required by each Government or utility service provider
65186.00009131989698 5 -9-
pertinent to the construction, installation or operation of the Expanded Facility including, but not
limited to, specifications, drawings, plans, maps, permit applications, land use Applications,
zoning Applications, environmental review and disclosure documents and design review
docuTice-11s.
(d) Performance Schedule. The Operator's obligations shall be started and
completed in accordance with the Schedule of Performance set forth below:
City Council Approval of Operating Covenant
O�ierator shall submit evidence- satisfactorN to Cit3*
of the commitment by the car manufacturer for the
Expanded Facility in Downey
Operator shall submit evidence of ability to finance
the Project
1i _511��
� tm:ORL a cl-a*ff"
use entitlements
0 or shall have obtained all necess b 'Id' g,
III M
W"MWIT61-7
Improvements
Completion of Tenant Improvements
owl -T TV -
�m J .537
the Expanded Facility
June 11, 2019
May 31, 2019
May 31, 2019
January 31, 2020
February 28, 2020
February 28, 2020
April 30, 2020
On or before April 30, 2020
3.2 Continuous Operation. Operator covenants to the City to continuously operate
(no period of inoperation of more than forty-five (45) consecutive days) the Operator Business
from the Expanded Facility in the City and continuously maintain (at all times) the Transaction
Point for all Taxable Sales by the Operator's Business within the State throughout the entirety of
the Operating Period. Throughout the entirety of the Operating Period, Operator shall, in all
reports to the SBE related to the sale of automobiles and other tangible personal property from
the Operator Business within the State, designate the City or cause the City to be designated as
the Transaction Point, to the extent allowed by applicable Law. Operator shall, for the entirety
of the Operating Period, at Operator's sole cost and expense, obtain and maintain all franchises,
permits, contractual arrangements, licenses, and registrations necessary for the continuous sale
and service of automobiles and sale of other tangible personal property from the Operator's
Business in a manner consistent with other similar automobile dealerships in Southern
California. Operator shall operate the Operator's Business in the City throughout the entirety of
the Operating Period, in accordance with reasonable and customary automobile dealership
practices in Southern California and in a commercially reasonable and prudent manner.
Operator's obligations pursuant to this Section 3.2 shall include, without limitation, the
obligation to advertise, market and promote the Operator's Business in a manner consistent with
other similar automobile dealerships in Southern California.
3.3 Sales Tax Reporting Information. Operator acknowledges and agrees that thst
sales and use tax reporting and payment information related to retail sales or use of tangibl(k
65186.00009131989698 5 -10-
personal property resulting from business activities of the Operator Business may become a
public record, as a result of the obligation of Operator under this Section 3. Operator authorizes
CiU,j to use the sales and use tax re%orti'"WM461WAment information related to business activities
of the Operator's Business to determine Operators compliance with the covenants of this Section
3. Additionally, Operator agrees to make available to City, upon request, for review and
copying, all sales and use tax reporting and payment information that any Person submits to the
SBE regarding any retail sales or use of tangible personal property resulting from business
activities of the Operator's Business.
3.4 Failure to Authorize Release of Information. If for any reason Operator or any
other Person fails to authorize the release to or use of sales or use tax information regarding the
Operator's Business by City in a manner satisfactory to the SBE or City or provide any
information reasonably required by City to determine Operator's compliance with the covenants
of this Section 3, any retail sales or use of tangible personal property by the Operator's Business
during such period shall be disregarded for the purposes of determining Operator's compliance
WiVc Vie cove-ug.,its of 6is Section 3.
3.5 Reasonably Determinable Amounts. Operator acknowledges and agrees that its
compliance with the covenants of this Section 3 shall be based solely upon the amount of
Operator Taxable Sales that City is reasonably able to confirm actually occurred during each
Operating Year.
3.6 SBE Determination of Improperly Allocated Sales Tax Revenues. If, at any
time during or after the Operating Period, the SBE determines that the Transaction Point for all
or any portion of the Operator Taxable Sales was not within the City and the SBE requires
repayment of, offsets against future sales tax payments, or otherwise recaptures from the City
sales tax revenues allocated and/or paid to City related to Operator Taxable Sales is due, such
payment shall accrue Default Interest from the date of the City's Notice, until paid in full,
compounded daily. This Section 3.6 shall survive the expiration or termination of this
Agreement.
3.7 Operator's Covenant Not To Accept Prohibited Financial Assistance.
Operator covenants to the City that during the Operating Period, Operator will not directly or
indirectly solicit, accept or enter into any agreement concerning any Prohibited Financial
Assistance from any other public or private person or entity, to the extent such Prohibited
Financial Assistance is given for the purpose of causing or would result in: (i) the relocation of
the Transaction Point for the Operator's Business outside of the City; (ii) a material (i.e., five
percent (5%) or greater) reduction in the amount of Operator's Taxable Sales that would be
generated from the Operator's Business in the absence of such an agreement; or (iii) any event of
default by Operator under this Agreement.
3.8 Reporting. On or before each Annual Report Date, the City shall deliver the
applicable Annual Report to Operator.
65186.00009\31989698 5 -11-
(a) Negotiation Period. Within fifteen (15) days following Operator's receipt
of the Annual Report for a particular Operating Year, Operator may give Notice of any dispute
reg
rding the amount of Operator Taxable Sales reported by the City in the Annual Report for
the s particular Operating• - of dispute - all bases • i • •
Noticedisagreement with the Annual Report, in detail. Any grounds for disagreement not stated in such
be -• If Operator does not• of dispute regardingthe amount of
Operator's Taxable Sales reported by the City in the Annual Report for the particular Operating
Year, within the fifteen (15) day period specified in the first sentence of • •
Operator shall have waivea any objection t• the amountof Operator Taxablereported by
Reportthe City for the particular Operating Year. If Operator gives Notice of its objection to an Annual
- • • •••• -•• • • - • r •
stated • The Parties shall continue-•• • earlier • s
of the Negotiation Period; or (2) the dispute is resolved by a written agreement between the
Parties. Notwithstanding any other part of this Section (a), the Parties may agree in writing to
extend the duration of any Negotiation Period for any amount of time.
• ' � • i ' ♦ I I ' I '' r r � , i ''
it r♦'; ♦r :, r:.' •`: `♦ • ♦r ' r:
• i.' r' i c`r •: • ♦ • it
r� r i r r i ♦ ♦ ♦�� r♦ i� i
r, i` � rri c r♦ r , i ♦
♦ r� r,♦ r r i ♦ i ► ♦►: �, i
'' : ':, i'.. it : ? '•' •' • : i �':' ♦' i' . r..
: i � ♦' r i ♦ it ♦ ♦ < r
sr, i •• • ' . '� •' it ♦ '' r r
♦ i rii• •• i
•�: ►, i.. ♦r r � i` r ♦r� r, it ♦
:; r i ♦ • � i • it i r' i • r,
: r. a r ♦ r' x � x r.. is .',. i a r : r ♦. r ♦
•�� ■, i �♦r , ♦ r i, r i r
.ri r' r i
MMASILMIEMMIA—mill
r i EMIUMM-01. ME NO♦U 4001,10
r r r
65186.00009131989698.5 -12-
♦ � r i, f �, � r •♦ r it ♦ `,+i +. i+ .,
' i " i ■" ' i i i i r r
EYE IN i • r f• i • r i i . r
(d) ARBITRATION CONSENT. WE HAVE READA ESTAN
THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE
MATTERS INCLUDED IN THE 'ARBITRATION OF DISI'L)"IHS' PROVISION TO
NEUTRAL ARB IT I
INITIALS OF AUTHORIZED CITY INITIALS OF AUTH RI%ED OPERATOR
REPRESENTATIVE(S) P SEN ATIVE(S)
4. Jobs Creation.
4.1 New Jobs. Owner covenants and agrees to create and maintain new employment
jobs at the Expanded Facility ("New Jobs") as follows:
(a) On or before the end of the second Operating Year, the Owner shall create
and maintain a total of not less than fifteen (15) new Full -Time Equivalent Employment
Positions.
• Owner shall maintain not
EmploymentPositions fromand Operating Period.
• • • r- ♦ end of
-
the
4.2 Certification. days following the anniversary of
Occupancy Date and each anniversary thereafter until the tenth (10th) anniversary of the
Occupancy Date,Operator shall file or • be filed a written certification•
signed by irc.•r's chief financial officer,- Operator's
compliance with the New Jobs creation and all the covenants set forth in Section 4 below. The
certifications shall include a suitably detailed written report relating to the employees of
65186.00009\31989698.5 -13-
Operator who are claimed by Operator as holding New Jobs, including appropriately detailed
payroll accounting information relating to the total number of hours worked by such persons and
the total number of persons who were recruited. hired or released from employment for a New
Job and the total number of other employees of Operator employed at the Expanded Facility and
the gross revenues of the Expanded Facility during that year. Each such annual certification need
not identify any employee by name, by specific job description nor by new hire date, and the
payroll accounting information may aggregate the hours worked by all persons claimed by
Operator to hold New Jobs at the Expanded Facility.
4.3 Repayment of Pre -Development Loan for Default. If an Event of Default
occurs, or if Operator otherwise ceases conduct of the business during the Operating Period,
except for Permitted Closures, Operator shall repay City within thirty (30) days after City's
written demand the amount equal to the remaining balance on the Pre -Development Loan.
4.4 Records Inspection. Operator shall keep and maintain all records as may
reasonably be required by City to enable City to evaluate compliance by Operator with the terms
of this Agreement, and to substantiate any Certification of New Jobs provided to City, which
records shall include, without limitation, the payroll, accounting, and employee personnel
records of the Operator. Operator shall allow City and its agents, upon prior notice, at reasonable
times to ich records, Operator acknowledges and agrees that City must have access
to Operator's records to verify that Operator has employed a certain number of employees in
connection with the use of the Covenant Payment. The books and records required to be
maintained under this Agreement shall be retained for a period of five (5) years, provided,
however, in the event any litigation, audit, negotiation, or other action involving the books and
records is commenced prior to the expiration of the five (5) year retention period, Operator shall
retain the books and records until completion of the action and resolution of all issues which
arise from
4.5 Monitoring. Operator shall reasonably cooperate with City and its
representatives, and shall make available to City all information, documents, and records
reasonably requested by City, and shall provide City the reasonable right of access to th-
` ••
Property during normal business hours for the purpose of assuring compliance with this
Agreement.
4.6 Local Hiring Preference. Operator shall use good faith efforts to utilize or cause
to be utilized the services of City for referrals of applicants to fill any such New Jobs. When
applicants are equally qualified, hiring preference will be given to residents of the City, provided
that such hiring preference is in conformance with all applicable laws.
5. Pre-Develooment Loan.
5.1 General Provisions; Promissory Note, and Personal Guaranty or Letter of
Credit. Within ten (10) days following the Effective Date, as consideration for Operator's
performance of its covenants and other obligations under this Agreement, the City shall disburse
the sum of Five Hundred Thousand Dollars ($500,000.00) (the "Loan") to Operator concurrent
with Operator's delivery to City of a Promissory Note in substantially the same form as Exhibit
D to this Agreement, which Promissory Note will be secured by a Personal Guaranty to be
65186 00009\31989698 5 -14-
recorded against Operator's real property at 9715 Firestone Blvd. in the City of Downey,
California). The Personal Guaranty must be in substantially the same form as Exhibit E to this
Agreement. If Operator decides to sell or otherwise encumber the real property at 9715
Firestone Boulevard, Operator shall inform the City of such decision at its earliest opportunity,
and City and Operator shall enter into discussions to amend this Agreement to provide for
alternative security for the Loan and Operator's other obligations under this Agreement, by way
of an Irrevocable Standby Letter of Credit in form and substance acceptable to City in its sole
and absolute discretion ("LOC"). The LOC will at all times be in a sufficient amount to satisfy
the then current unpaid principal balance of the Loan plus interest and the LOC shall remain in
effect through the entire term of the Loan. The LOC shall be issued by a financial institution
reasonably acceptable to City. In no event will the Personal Guaranty be released or otherwise
disturbed until the LOC is in effect.
5.2 Term and Interest. Unless extended pursuant to section 5.4 of this Agreement,
the term of the Loan will be up to a limit of ten (10) years at market rate interest, which is a rate
of 5.5% per annum, simple interest, commencing in Year 1. Annual interest payments will be
added to the unpaid principal amount on the Note (Exhibit D) and the advanced funds/loan of
$500,000.
I t
(a) Commencing on the Occupancy Date ("Commencement Date"), the City
shall retain for payment or credit on Operator's behalf, a prorata percentage of the sales tax
revenues attributable to and received by the City from the Property (referred to herein as the
"Available Incremental Revenues") in accordance with the following schedule:
(b) The Sales tax Base will be based on 100% of Operator's sales projections
and the City retains the first 50% of sales tax collected. The second 50% is shared equally
between Operator and City (25% each) but Operator's 25% will be credited against the City's
$500,000 Loan.
5.4 Disbursements. Upon the Operator's payment or credit of $500,000 for Loan
repayment to the City, City will disburse to Owner 25% of the total sales tax collected by the
City, up to a maximum of $500,000, a combination of sales tax credit for Operator's loan
repayment of the $500,000 note plus interest and the difference to not exceed a total of
$1,000,000
5.5 Available Incremental Revenues. For purposes of this Agreement, Available
Incremental Revenues means that amount of sales tax revenues received by the City that are: (i)
generated by the Operations from and after the date of the issuance of the Certificate of
Occupancy; (ii) attributable to the Property; and (iii) apportioned as provided in the schedule
q.bove.
5.6Timing of Payments of Available Incremental Revenue. Within ninety (90)
days of the end of an Operating Year, each calendar year the City shall pay to the Operator the
amount of the Available Incremental Revenues for the immediately preceding twelve (12)
rnonths. The City shall have no obligation to make such payment in the event there are no
65186.00009131989698 5 -15-
65186 00009131989698.5
7.1 Standards. That there shall be no discrimination against or segregation of any
Person or group of Persons, on account of any basis listed in subdivision (a) or (d) of Section
12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1,
subdivision (in) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of
the Government Code, in the leasing, subleasing, transferring, use, occupancy, tenure, or
enjoyment of the Property nor shall Operator, itself, himself or herself, or any Person claiming
under or through it, him or her, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use, or
occupancy, of tenants, lessees, sublessees, subtenants, or vendees in the Property.
7.2 Interpretation. Notwithstanding Section 7.1, with respect to familial status,
Section 7.1 shall not be construed to apply to housing for older persons, as defined in Section
12955.9 of the Government Code. With respect to familial status, nothing in Section 7.1 shall be
construed to affect Sections 51.2, 51.3, 51.4, 51.10, 5 1.11, and 799.5 of the Civil Code, relating
to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the Civil Code
and subdivisions (n), (o), and (p) of Section 12955 of the Government Code shall apply to
Section 7. L
8. Defaults. Subject to any extensions of time provided for in this Agreement for
Unavoidable Delay, the occurrence of any of the following events shall constitute a "Default":
8.1 Monetary Default. The failure by any Party to perform any obligation of such
Party under this Agreement for the payment of money, if such failure is not cured within fifteen
(15) days after the non-performing Party's receipt of Notice from the injured Party that such
obligation was not performed, as and when due; or
8.2 Non -Monetary Default. The failure by any Party to perform any of its
obligations set forth in this Agreement, other than obligations subject to Section 8.1, if such
failure is not cured within thirty (30) days after the non-performing Party's receipt of Notice
from the injured Party that such obligation was not performed, as and when due, or, if such
failure is of a nature that cannot reasonably be cured within thirty (30) days, the failure by such
Party to commence such cure within thirty (30) days after receipt of such Notice and to,
thereafter, diligently prosecute such cure to completion.
9. Restrictions on Change iii N/lanagement or Control of the Ooerator and Assiviiinent or
Transfer.
9.1 Operator acknowledges that the qualifications and identity of Operator are of
particular importance to the City. Operator further recognizes and acknowledges that the
Agency has relied and is relying on the specific qualifications and identity of Operator in
entering into this Agreement with Operator and, as a consequence, Transfers are permitted only
as expressly provided in this Agreement.
9.2 Operator shall promptly notify City in writing of any and all changes whatsoever
in the identity of the business entities or individuals either comprising or in Control of the
Operator, as well as any and all changes in the interest or the degree of Control of the Operator
by any such person, of which information the Operator or any of its partners, memr-
651 s6
e
65186 00009\31989698.5 -17-
shareholders or officers are notified or may otherwise have knowledge or information. This
Agreement may be terminated by City, without liability to the Operator or any other Person, or
the Occupancy Date, if there is any Transfer, whether voluntary or involuntary (other than such
changes occasioned by the death or incapacity of any individual) that has not been approved in
writing by the City, prior to the time of such Transfer, provided, however, that (i) the City shall
first notify Operator in writing of its intention to terminate this Agreement or to exercise any
other remedy, and (ii) Operator shall have twenty (20) calendar days following its receipt of such
written notice to commence and, thereafter, diligently and continuously proceed to cure the
466-A
to the City, in a form and substance reasonably satisfactory to City.
9.3 Except as permitted in this Section 9 or with respect to a Permitted Encumbrance,
prior to the Occupancy Date, the Operator shall not cause or allow any Transfer, without the
prior written approval of the City. Operator recognizes that the qualifications and identity of
Operator are of particular concern to City and that a Transfer is for all practical purposes a
transfer or disposition of the responsibilities of Operator with respect to this Agreement, the Sit-
• •
d/or the Project and, therefore, Transfers are only allowed in accordance with the provisions of
this Section 9 and as Permitted Encumbrances.
9.4 Except as expressly permitted in this Agreement, Operatory represents to City that
it has not made and agrees that it will not create or suffer to be made or created, any Transfer,
either voluntarily, involuntarily or by operation of law, without the prior written approval of
City, until after the Occupancy Date. Any Transfer made in contravention of this Section 9 shall
be voidable at the election of the City and, if voided, shall be deemed to be an Event of Default
by the Operator, whether or not Operator knew of or participated in such Transfer.
11. Intentionaliv Omitted.
12.1 City Indemnity Obligations. The City shall Indemnify the Operator Parties
against any Claim to the extent such Claim arises from any wrongful intentional act or
negligence of the City Parties, but only to the extent that the City may be held liable under
applicable law for such wrongful intentional act or negligence and exclusive of any violation of
law (including the State Constitution) relating to the City's approval, entry into or performance
of this Agreement. Nothing in this Agreement is intended nor shall be interpreted to waive any
limitation on the City's liability, any exemption from liability in favor of the City, any claim
presentment requirement for bringing an action regarding any liability of the City or any
limitations period applicable to liability of the City, as set forth in Government Code Sections
800, et seq., Sections 900, et seq., or in any other law or require the City to Indemnify any
Person beyond such limitations on the City's liability.
65186.00009131989698,5 -18-
12.2 Operator Indemnity Obligations. Operator shall Indemnify the City Parties
against any Prevailing Wage Action relating to this Agreement and all Claims to the extent such
Claims arise from any wrongful intentional act or negligence of the Operator Parties.
12.3 Independent of Insurance Obligations. Neither Party's indemnification
limited or modified by any insurance coverage carried by such Party.
12.4 Survival of Indemnification and Defense Obligations. The indemnity and
defense obligations of the Parties under this Agreement shall survive the expiration or earlier
termination of this Agreement, until any and all actual or prospective claims regarding any
matter subject to an indemnity obligation under this Agreement are fully, finally, absolutely and
completely barred by applicable statutes of limitations.
12.5 Indemnification Procedures. Wherever this Agreement requires any Indemnitor
to Indemnify any Indemnitee:
(a) Prompt Notice. The Indemnitee shall promptly Notify the Indemnitor of
MIZEM
(b) Selection of Counsel. The Indemnitor shall select counsel reasonably
acceptable to the Indemnitee. Counsel to Indemnitor's insurance carrier that is providing
coverage for a Claim shall be deemed reasonably satisfactory, except in the event of a potential
or actual conflict of interest for such counsel regarding such representation or such counsel
proves to be incompetent regarding such representation. Even though the Indemnitor shall
defend the Claim, Indemnitee may, at its option and its own expense, engage separate counsel to
advise it regarding the Claim and its defense. The Indemnitee's separate counsel may attend all
proceedings and meetings. The Indemnitor's counsel shall actively consult with the
Indemnitee's separate counsel. The Indemnitor and its counsel shall, however, fully control the
defense, except to the extent that the Indemnitee waives its rights to indemnity and defense for
such Claim.
(c) Cooperation. The Indemnitee shall reasonably cooperate with th--i
Indemnitor's defense of the Indemnitee.
(d) Settlement. The Indemnitor may only settle a Claim with the Indemnitee's
consent, not to be unreasonably withheld.
13. Ci1v Contract Administration. The City Manager shall administer this Agreement on
behalf of the City. The City Manager may designate any member or members of the City staff to
carry out such responsibilities. Except as otherwise expressly provided in this Agreement, the
City Manager has the authority to approve or consent to those matters in this Agreement
requiring the City's approval or consent and to make all other decisions on behalf of the City,
subject to the City Manager's retained and reserved sole and absolute discretion to seek City
Council approval of any such matter.
65186 00009131989698 5 -19-
65186.00009\31989698 5 -20
19.2 Addresses. The following are the authorized addresses for the submission of
Notices, demands or communications to the Parties, under this Agreement, as of the Reference
Dzte:
To City: CITY OF D® EY
11111 Brookshire Avenue
Downey, CA 90241
Attention: City Manager
With a copy to: Best Best & Krieger LLP
300 S. Grand Avenue, 25th Floor
Los Angeles, CA 90071
Attention: Ruben Duran
UM
. I•
- - -,
Downey, CA 90241
Attention: City Attorney
To Operator: Champion Maserati
9715 Firestone Blvd.
Downey, CA 90241
Attention: Paul Antepara
20. Jurisdiction and Venue. The Parties each acknowledge and agree that this Agreement is
entered into and is to be fully performed in the CITY OF DOWNEY, County of Los Angeles,
State of California, and that all legal actions arising from this Agreement shall be filed in the
Suierior Court of the State of California in and for the Coun4 of Los Anieles Call ornia or the
- i
Lyj I H me W PIT M I I Lei I W U a I I g d mil q I I I FAIJ a I a 0 1 * I W I I -lj 2 L i �- g ww, I I I Lei I 11 r,
21. Tax ConsecLqLnces. Operator acknowledges that it may experience tax consequences as a
result of its receipt of the Covenant Payment provided for in this Agreement and agrees that it
shall bear any and all responsibility, liability, costs, and expenses connected in any way
therewith.
23. Principles of Interpretation. No inference in favor of or against any Party shall be drawn
from the fact that such Party has drafted any part of this Agreement. The Parties have both
participated substantially in the negotiation, drafting, and revision of this Agreement, with advice
from counsel and other advisers of their own selection. A term defined in the singular in this
Agreement may be used in the plural, and vice versa, all in accordance with ordinary principles
of English grammar, which also govern all other language in this Agreement. The words
"include" and "including" shall be construed to be followed by the words: "without limitation."
65186 00009131989698.5 -21-
Each •' noun shall • interpreted as if followed by the words "(or any •. • it)," except
where the context clearly requires otherwise. Every reference to any document, including this
Agreement, refers to such document as modified from time to time (excepting any modification
that violates this Agreement), and includes all exhibits, schedules, addenda and riders to such
•a The word • includes the word "and."
65186 00009131989698 5 -22-
ANY DEFENSE, CLAIM, OR CAUSE OF ACTION BASED IN WHOLE OR IN PART ON
ECONOMIC NECESSITY, IMPRACTICABILITY,•, ECONOMIC
CIRCUMSTANCES, r .. • OF PURPOSE, OR SIMILAR •>THEORIES. EACH
IrARTY AGREES THAT ADVERSE • iCONDITIONS,•
MARKETSUCH PARTY SPECIFICALLY OR THE ECONOMY GENERALLY, OR CHANGES IN
CONDITIONS OR DEMANDS, NOT OPERATE • EXCUSE OR
DELAY THE STRICT OBSERVANCE OF a • EVERY OF OBLIGATIONS,
CONDITIONS A• REQUIREMENTS OFTHIS AGREEMENT.
PARTIES EXPRESSLY RISK OF r ECONOMICOR
MARKET CHANGES,r • r'.. NOT FORESEEABLE. REFERENCE
DATE.
INITIALS OF AUTHORIZED . OF . OPERATOR
REPRESENTATIVE(S)
29. No Third Partv Beneficiaries. The performance of the Parties' respective obligations
under this Agreement are not intended to benefit any Person other than the City and Operator,
except as may be expressly provided otherwise in this Agreement. No Person not a signatory to
this Agreement shall have any rights or causes of action against any Party to this Agreement as a
expressly provided in this Agreement.
31. Warranties Agains! Payment of Consideration for Aeueement. Operator represents and
warrants that Operator has not employed or retained any Person to solicit or secure this
Agreement upon an agreement or understanding for a commission, percentage, brokerage, or
contingent fee, excepting bona fide employees of Operator. Operator further represents and
warrants that no gratuities, in the formof entertainment,gifts or otherwise have been or will be
given by Operator or of its agents,• • or r to any elected or r•• r;
automaticallyofficial or employee of the City in an attempt to secure this Agreement or favorable terms or
conditions for this Agreement. Breach of the representations or warranties of this Section 29
shall . Agreement, without` • to or • by Party.
joint32. 1�elationship of Patties. The Parties agree and intend that the City and Operator ars
independent contracting entities and do not intend by this Agreement to create any partnership,
- or business arrangement,• • or • • between
33. Survival of A�_,reemcnt. All of the provisions of this Agreement shall be applicable to
any dispute between the Parties arising from this Agreement, whether prior to or following
expiration or • of this Agreement,dispute is finally and completely
resolved between the Parties, by - of • .rr-. .'Irle judgment or
expiration of all applicable limit. • periods an• all terms and conditions of Agreement
relating to dispute resolution and limitations on damages or remedies shall survive any expiration
or termination
65186.00009131989698 5 -23-
[Signatures on following page]
65186.00009\31989698.5 -24-
SIGNATURE PAGE
TO
OPERATING 'AGREEMENT
By:
MO1FDOWNEY
C
By: � M
Clerk
Best Best & Krieger LLP
Ey:
Sped,Counsel
65186 00009\31989698.5 -25-
CHAMPION AUTO GROUP,
ChampionCalifornia Limited Liability Company dba
By:
Name:
Its:
By:
Name;
Its:
SIGNATURE PAGE
TO
��js; 1F.'I o I V Low ELVA KIM oil t"
lkr�-j IMI
By:
Mayor
CITY OF DO EY
Attest:
By:
City Clerk
Approved as to form:
Best Best & Krieger LLP
By:
Special Counsel
65186.00009131989698.5 -25-
CHAMPION AUTO GROUP, LLC., a
California Limited Liability Company dba
Champion Maserati
By:
Name:
Its:
By:
ms
I ►:i 111 1.11
TO
OPERATING COVENANT AGREEMENT
(CHAMPION •
[To be attached behind this cover page]
Exhibit A
&UJwAW5Aw'.A=dh61W
zaumm...
r, r :: r r r r ,
1 1 .11111111111111
All that certain property located in the City of Downey, County of Los Angeles, State of
California, described as follows:
THAT PORTION OF THE RANCHO , . GERTRUDES, IN THE CITY OF
DOWNEY, COUNTY OF i OF i• PER MAP
RECORDED IN BOOK 1, PAGE 156 OF PATENTS, IN THE OFFICE OF THE COUNTY
RECORDER OF . / COUNTY,DESCRIBED • Fri i
i i r r
i' •ii' • '' i X11 I/ i •
• i i•i i `• i '' , • •
• i i i `i i i t ',' •
i r � i i � i • r r r i"� ii
i' �, i i'r r r r i i • 'I i i
LUNDQUIST, ET AL., RECORDED ON JANUARY 7,1959, AS INSTRUMENT NO. 1547 IN
BOOK D-324, PAGE 602, OFFICIAL RECORDS OF SAID COUNTY; THENCE ALONG
iPROLONGATION TO ANiii ALONG SAID NORTHWESTERLYi -
r 44 1* FEET TO THE NORTHERLYLINE OF . i, FIRESTONE
BOULEVARD, :r FEET WIDE;ALONG SAID NORTHERLY SOUTH
9 ii 10 • .' r' 03" EAST 173.25 FEET TO THE
POINT OF
TO
U11000 "All 9
[Attached behind this cover page]
OPERATOR OFFICIAL ACTION
Champion Auto Group, LLC. dba Champion Maserati
By my notarized signature below, 1, a
Company doing btisitiess as Champion Maserati ("the Company"), and holding a position of
e4within the Company, hereby certify that each and every necessary
corporate act for the approval of the Champion Maserati Operating Covenant Agreement has
been completed in accordance with each and every applicable law and regulation, including
corporate bylaws and any other applicable internal control of the Company. I further certify that
I am a duly authorized and designated signatory on behalf of the Company.
M
Executed on June7,2019, at Downey, California -
SIGN "TURE
PRINTED NAME
Title
ExhibitB-I
RldfflaIiII#+' z�r,
� �161-51 J '-f
I"
CALIFORNIA ALL-PURPOSE.,4,CVVOVILE.I—iCgEILF
MT
A notary public or other officer completing this certificate verifies only the -identity of
the individual who signed 'the document to which this certificate is attached, and not the
truthfulness, accuracy, or validity oft document.
STATE OF CALIFORNIA
COUNTY OF
On A-Lbefore me, Meldred
DATE INSERT NAME, TITLE OF OFFICER — E.G.., -JANE DOE, NOTARY III I J I B �, (C
An�"ct-
personally appeared, r-
who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s)
is/are subscribed tothe within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), ort entity upon behalf of which the
person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY it the laws of the State of California that
the foregoing paragraph is true and correct.
WlNESS my hand and official seal.
10TARY PUBLIC SIGNATURE (SEAL)
THIS OPTIONAL INFORMATION SECTION IS NOT REQUIRED BY LAW BUT MAY BE BENEFICIAL TO PERSONS RELYING ON THIS NOTARIZED
DOCUMENT.
13ff X412 �'�
RIGHT THUMBPRINT
To order supplies, please contact McGlone Insurance Services, Inc. at (916) 484 0804.
1 *aa i.
TO
OPERATING COVENANT
(CHAMPION
W111 i 1 i i i
[Attached e i this cover age]
Exhibit C
Notice a Declaration of •
ax ov i j .91 n i m
I I 111 Brookshire Avenue
Downey, CA 90241
Attention: City Attorney
THIS NOTICE OF AGRETMENT AND DECLARATION OF COVENANTS
("Memorandum") is made as of ��G 2
-470 04 ainong CITY OF DOWNEY,
a California municipal corporation and charter city ("City"), CIJAMPION AUTO GROUP,
California Limited Liability Company doing business as Champion Maserati , t&;
("Operator").
I . Agreement. City and Operator have entered into that certain unrecorded
Operating Covenant Agreement ("Agreement") dated as of Q. Zo , 20
establishing certain commitments and requirements regarding certain real property located in Los
Angeles, California, described on Exhibit A attached hereto (the "Property").
2. Covenants of Operator. The parties have executed and recorded this instrument
for the purpose of imparting notice of the existence and application of the Agreement and the
covenants of Operator regarding the Use of the Property for an expanded automobile dealership
purpose for a ten (10) year operating period. The terms are as set forth in the unrecorded
Agreement all of which are incorporated herein by reference as though set forth fully herein. In
the event of an inconsistency between this Memorandum and the Agreement, the Agreement
shall control. This Memorandum and the Agreement shall bind an inure to the benefit of the
parties hereto, and their respective heirs, successors and assigns.
Exhibit C-1
Notice of Agreement and Declaration of Covenants
65186.00009\31989698 5
IN WITNESS WHEREOF, Operator and City have executed this Memorandum on the
dates set forth below.
N 161 1 Eel I �61 , N�
By:
Mayor
ammm
I-ILy: BEST BEST & KRIEGER LLP
Special Counsel
0763-rm mo
CHAMPION AUTO GROUP, LLC dba Champion
Maserati
A
/ V
By:
-3 Narne� opu
Title:
Exhibit C-2
Notice of Agreement and Declaration of Covenanl
65186.00009\31989698.5
IN WITNESS WHEREOF, Operator and City have executed this Memorandum on the
dates set forth below.
ATTEST:
Kity
APPROVED AS TO FORM:
By: B1 ST BEST & KM F iER LLP
Special Counsel
XWd[9)zK*11,TJ1N21
1-2
ma
K• �- •;
CHAMPION AUTO GROUP, LLC dba Champion
Maserati
-0
Exhibit C-2
Notice of Agreement and Declaration of Covenants
1 *114 111 1.
1
[Attached e i this cover page]
Exhibit D
10.14 1 to IRWIN
TO
OPERATING COVENANT AGREEMENT
(CHAMPION MASERATI)
Downey, Californ
JuneAG , 20 ]1
FOR VALUE RECEIVED,the undersigned, CHAMPION MASERATI, a California
Limited Liability Company ("Maker") promises to pay to CITY OF DOWNEY, a California
municipal corporation and charter city ("Holderor order, at I I I I I Brookshire Avenue,
Downey, CA 90241 Attention: City Manager, or such other address as Holder may from time to
time designate, the principal sum of Five Hundred Thousand Dollars 00/100 ($500,000.00),
together with simple market rate interest thereon at the rate of 5.5% per annum, such interest to
accrue from the date of this Note.
I . Payments on this Note will be credited on a quarterly basis in accordance with the
provisions of Section 5 of that cert ill "Operating Covenant Agreement (Champion Maserati)"
between Maker and Holder dateeyumL—� 2019 ("Agreement"). Any remaining unpaid
principal balance and any accrUed interest will be fully due and payable one hundred and twenty
(120) months following the date of this Note ("Maturity Date"), or at a later date if the term of
this Note is extended pursuant to section 5.7 of the Agreement.
2. All payments hereunder not credited pursuant to the Agreement shall be paid in
lawful money of the United States of America to Holder at I I I I I Brookshire Avenue, Downey,
CA 90241 Attention: City Manager or such other place as Holder may designate from time to
time.
3. All payments on account of the indebtedness evidenced by this Note shall be first
applied to the interest on the unpaid principal balance, and the remainder to principal.
4. This Note and Maker's other obligations pursuant to the Agreement are secured
by either (a) a Deed of Trust recorded against the real property at 9715 Firestone Boulevard in
the City of Downey, California in the form attached to the Agreement as Exhibit E; or (b) an
Irrevocable Standby Letter of Credit; provided, however, that if, upon the Maturity Date, the
Letter of Credit is not in effect or is for any reason not collectable or not honored by the issuer,
or is insufficient to satisfy any remaining unpaid principal balance and accrued interest due
hereunder.
5. Should any payment not be made within ten (10) days of when due under this
Note or should any material uncured default exist under the Agreement and remain uncured
beyond the notice and cure period described in the Agreement, the Holder hereof may, at
Exhibit D- I
Z81MIM189119MIM
11. The unenforceability • invalidity • any provision or provisions • this Note as to
any persons •r circumstances shall not render that provision • • provisions unenforceable or
invalid as to any other persons or circumstances, and all provisions hereof, in all other respects,
shall remain
• and enforceable.
Exhibit D-2
12. This Note shall bind Maker and its successors and assigns and the benefits hereof
g,hall inure to Holder and Holder's successors and assigns.
13. The validity, interpretation and performance of this Note shall be governed by and
coTva'Twt in q.ccordq.nce with the laws of the State of California.
CHAMPION AUTO GROUP, LLC, a California
Limited Liability Company doing business as
Champion Maserati
41
By:
Name:
Its: -kt J
Exhibit D-3
65186.00009131989698.5
OPERATINGTO
(CHAMPION MASERATI)
[Attached e i this cover page]
I W14 IN I I 66TV12—A
TO
OPERATING COVENANT AGREEMENT
(CHAMPION MASERATI)
THIS PfRSONAL GLJARANTY ("Guaranty") is made as of Jc",� 'I209
by #459PVVa California corporation ("Guarantor") in favor of the CITY OF
L W �N
OWNE
Pa California municipal corporation and charter city ("City").
r19X4TF.1M-
A. CHAMPION AUTO GROUP, LLC, a California Limited Liability Company
doing business as CHAMPION MASERATI ("Operator") and City intend to enter into an
Operating Covenant Agreement whereby City seeks to expand economic development
opportunities in City and Operator seeks to expand its automobile dealership and service
operations on certain property owned by Operator ("Property").
B. Guarantor and City intend to enter into this Personal Guarantee to provi•-
.a•! •
eadditional security that the Operator will abide by and comply with the obligations of the
Operating Covenant Agreement ("Agreement").
NOW THEREFORE, in consideration of City agreeing to the enter into the Agreement,
Guarantor hereby agrees, warrants and covenants as follows:
I . Guaranteed Obligations. The Guarantor absolutely and unconditionally
guarantees the performance and payment by Operator of the Guaranteed Obligations (as defined
below). "Guaranteed Obligations" shall mean all obligations of Operator to City arising under
the Agreement, whether voluntary or involuntary and however arising, whether absolute or
contingent, liquidated or unliquidated, legal or equitable, whether incurred before, during or after
any bankruptcy, reorganization, insolvency, receivership or similar proceeding involving
Operator ("Insolvency Proceeding"), together with all reasonable expenses of and incidental to
collection, including reasonable attorneys' fees.
2. Nature and Duration of Guaranty. This Guaranty is a guaranty of performance
and payment and applies to all Guaranteed Obligations. This Guaranty shall remain in effect for
the duration of the term of the Agreement and any extension thereof.
3. Obligations Independent. The obligations of the Guarantor under this Guaranty
are independent of the obligations of Operator or the obligations of any other guarantor. City
may bring action against the Guarantor and otherwise enforce this Guaranty without bringing
action against Operator or any other guarantor, and otherwise independently of any other remedy
that may be available to City at any time. The Guarantor waives any right to require City at any
Exhibit E- I
r...... ......
•
65186 00009\31989698 5
time to proceed against Operator, or otherwise enforce, proceed against, join with or exhaust any
other obligations or pursue any other remedy in City's power.
4. Waiver of Defenses. The Guarantor waives any defense to the enforcement of
this Guaranty arising by reason of- (a) any present or future laws or orders affecting the terms
of, or City's remedies with respect to, any Guaranteed Obligation; (b) the failure of any other
person or entity to execute this Guaranty or any other guaranty or agreement; (c) any discharge
or release of Operator or any impairment or suspension of any remedies of City, whether
resulting from any act or omission of City or any other person or entity or by operation of law or
otherwise; (d) any Insolvency Proceeding of Operator; (e) any other action by City or any
omission by City or other failure of City to pursue, or any delay in pursuing, any other remedy in
City's power.
5. Representations and Covenants of the Guarantor. The Guarantor represents and
warrants to City that: (a) the Guarantor has received and approved a copy of the Agreement;
(b) no oral promises, assurances, representations or warranties have been made by or on behalf
of City to induce the Guarantor to execute and deliver this Guaranty; (c) the Guarantor has
#x i n nd delive of this Guarant
001•
Personal Guaranty
65186.00009131989698 .5
applicable laws or under the Agreement. Each remedy may be exercised from time to time as
often as deemed necessary by City, and in such order and manner as City may determine. No
failure or delay on the part of City in exercising any remedy shall operate as a waiver of such
remedy; nor shall any single or partial exercise of any remedy preclude any other or further
exercise of such remedy or of any other remedy.
9. Notices. All notices and other communications provided under this Guaranty
shall be in writing and be given in accordance with the terms of the Agreement.
10. Binding Agreement. This Guaranty shall be binding on and inure to the benefit of
the Guarantor and City and their respective successors and assigns, except that the Guarantor
shall have no right to assign any interest or obligation under this Guaranty without the prior
written consent of City.
11. Governing Law and Venue. This Guaranty shall be governed by, and construed
and enforced in accordance with, the laws of the State of California. The parties hereby agrees
that any action brought to enforce the terms of this Guaranty shall be in the courts of the County
of Los Angeles and the parties hereby submit to the jurisdiction of such courts. The prevailing
party in any such action shall be entitled to an award of its reasonable attorneys' fees and costs.
GUARANTOR:
By:
[Insertt)� ame]
MI I TA M.; .