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Operating Covenant 2004-0415178 • • ® 7 j o s DOC 4) 2004-0415178 MAY 07 , 2004 8 : 43 AM f RECORDING REQUESTED BY ) OFFICIAL RECORDS AND WHEN RECORDED MAIL TO: ) SAN DIEGO COUNTY RECORDER'S OFFICE 1) GREGORY J. SMITH, COUNTY RECORDER City of Poway .) FEES: 36.00 City Clerk's Office ) P.O. Box 789 ) 11pn Poway, CA 92074 ) ( 111111111111111111 I11111111111111111111111111I1111111101 Il cal a`O� This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383. OPERATING COVENANT July ;l THIS OPERATING COVENANT is made as of-June 11 , 2003, by and between th-i" POWAY REDEVELOPMENT AGENCY, a publicbody corporate and politic (the"Agency"), and AZ POWAY, LLC, a California corporation, (the "Participant"), with reference to the following: A. The Agency and the Participant have executed an Owner Participation Agreement (the "Agreement"), dated as of March 12, 2002, which provides for the development of certain real property located in the City of Poway(the "City"), County of San Diego, State of California, more fully described in Exhibit "A" attached hereto and incorporated herein by this reference (the "Site"). The Agreement is available for public inspection and copying at the office of the City Clerk, Poway City Hall, 13325 Civic Center Drive, Poway, California. All of the terms, conditions, provisions and covenants of the Agreement are incorporated in this Operating Covenant by reference as though written out at length herein and the Agreement and this Operating Covenant shall be deemed to constitute a single instrument or document. Capitalized terms used herein and not otherwise defined shall have the same meaning as set forth in Section 100 of the Agreement. B. The Agreement provides for, among other things, the Participant's conveyance to the Agency of an operating covenant with respect to the improvements on the Site (the"Facility"). NOW, THEREFORE, the Participant hereby conveys to the Agency the following Operating Covenant: _ I. Operation of Automobile Dealership. For a term commencing upon the date that the City issues a certificate of occupancy for the Facility, and ending upon the fifteenth anniversary thereof(which fifteen year period constitutes the "Operating Covenant Period"), the Participant hereby covenants and agrees to operate (or cause its successors or assigns to operate) a Conforming Dealership on the Site on a continuous basis, devoted to the sale of new automobiles and trucks of one or more Authorized Product Lines, with Manufacturer's approval as a factory-authorized new automobile dealer as the principal activity conducted on the Site. The sale of used automobiles and trucks, and the servicing and repair of vehicles may also be conducted on the Site as a secondary use. In addition, the Participant shall conduct all activities for the leasing of automobiles from the Conforming Dealership either on the Site or at an office located within the City of Poway. The Agency hereby approves Nissan as an Authorized Product Line under this Operating Covenant. The Participant may request the written approval of the Agency for the sale of a different Authorized Product Line, other than Nissan, pursuant to Section 603 of the Agreement. After the opening of a Conforming Dealership on the Site devoted to the sale and lease of new Nissan automobiles and trucks, the Participant may add the sale and leasing of an additional new automobile and truck product line on the Site without necessity of obtaining further Agency consent; provided that the 1 DOC SOC\975780v I\22345.0085 off-a(o3 • 7W09 • Participant continues to operate a Conforming Dealership with the sale and lease of new Nissan automobiles and trucks (or such other Authorized Product Line which has been approved by the Agency). No other uses may be made on the Site during the Operating Covenant Period without the prior written approval of the Agency, which approval may be granted, refused, or granted subject to conditions, as provided in Section 603 of the Agreement. The requirements of this Section 1 shall run with the land. Notwithstanding the foregoing, in the event that the Participant repurchases the Operating Covenant pursuant to the provisions of paragraph (b) below, the foregoing obligations shall terminate. a. Except with the prior written consent of the Agency for each instance, which consent may be granted or withheld in the Agency's reasonable discretion, and except in the event that the Operating Covenant has been repurchased by the Participant in accordance with the provisions of paragraph (b) below, the failure of the Participant to operate a Conforming Dealership on the Site for ninety(90)or more consecutive days shall, at the Agency's option, constitute a Default hereunder; provided, however, that the Participant shall for purposes of this Section 1 be deemed to be operating a Conforming Dealership during any period that the Participant is prevented from operating such a Conforming Dealership due to (i) required or necessary rehabilitation of the Facility on the Site (provided that the period during which a Conforming Dealership is not operated as a result of the rehabilitation shall in no event exceed ninety (90) days), or(ii) force majeure events pursuant to Section 602 of the Agreement which are not in any way due to the acts or omissions of the Participant. Participant shall use commercially reasonable efforts to operate the Conforming Dealership on the Site in such a manner as to produce the maximum amount of Sales and Use Tax Revenues to be received by the City. • b. The Participant shall have the option to repurchase and terminate the Operating Covenant, effective at the end of the fifth Sales and Use Tax Period, by payment of the sum of Seventy-Five Thousand Dollars ($75,000) to the Agency. The Participant shall have the further option to repurchase and terminate the Operating Covenant, effective at the end of the tenth Sales and Use Tax Period, by payment of the sum of Fifty Thousand Dollars ($50,000) to the Agency. Such option shall be exercised by the Participant's delivery to the Agency of a written election to repurchase and terminate the Operating Covenant at least thirty(30) days prior to the end of the fifth or tenth Sales and Use Tax Period, as applicable. The Operating Covenant shall not be terminated, and shall remain in full force and effect, until the required payment has been received by the Agency. Upon the effective date of such repurchase and termination, and conditioned upon the payment of the required sum, the parties shall execute and record in the official records of San Diego County a mutually acceptable document terminating the Operating Covenant. Upon the Participant's exercise of such repurchase and termination, the Agency shall continue to be obligated pursuant to Section 201 of the Agreement to pay the installment of the Operating Covenant Purchase Price attributable to the last Sales and Use Tax Period (i.e., the fifth or tenth Sales and Use Tax Period, as applicable), but the Agency's obligation to pay any further installments of the Operating Covenant Purchase Price pursuant to Section 201 of the Agreement shall thereupon terminate. For purposes of this Section 1, the following terms shall be defined as follows: "Authorized Product Line" means Nissan and such other and additional product lines, if any, as may be permitted in this Operating Covenant and as may hereafter be designated by the mutual agreement of the Agency and the Participant. "Conforming Dealership" is a building or buildings conforming to approved City plans, with display areas, all as approved by the Manufacturer which has been approved by the Agency, and 2 DOC S OC\975780v I\22345.0085 • • • 7310 devoted to the sale of new automobiles and/or trucks of an Authorized Product Line as an authorized dealer as designated by a Manufacturer, together with such incidental and accessory uses as are customarily conducted in connection with the operation of such an automotive or truck dealership principally engaged in the sale of new automobiles or trucks, such as vehicle repairs, sales of parts, and the sale and purchase of used vehicles. "Manufacturer" means the manufacturer of an Authorized Product Line. 2. Nondiscrimination. The Participant by and for itself and any successors in interest covenants that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, physical or mental disability or medical condition, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Site, nor shall the Participant itself or any person claiming under or through it 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, subtenants, sublessees or vendees of the Site. The foregoing covenants shall run with the land. All such deeds, leases or contracts shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses: (a) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs,executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of race, color, creed, religion, sex, marital status, physical or mental disability or medical condition, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the land herein conveyed, nor shall the grantee himself or herself or any person claiming under or through 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, subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants shall run with the land." (b) In leases: "The lessee herein covenants by and for himself or herself, . his or her heirs, executors, administrators and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: "There shall be no discrimination against or segregation of any person or group of persons on account of race, color, creed, religion, sex, marital status, physical or mental disability or medical condition, ancestry or national origin in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through 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 premises herein leased." 3 D00500975780v 1122345.0085 7 311 • • (c) In contracts: "There shall be no discrimination against or segregation of, any person, or group of persons on account of race,color, creed, religion, sex, marital status, physical or mental disability or medical condition, ancestry or national origin, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the transferee himself or herself or any person claiming under or through 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, subtenants, sublessees or vendees of the premises." This covenant regarding non-discrimination shall remain in effect in perpetuity. 3. Performance of Maintenance. (a) Participant shall maintain the Site and the Facility in accordance with the Maintenance Standards, as hereinafter defined. Said improvements shall include, but not be limited to, buildings, sidewalks, pedestrian lighting, landscaping, irrigation of landscaping, architectural elements identifying the Site and any and all other improvements on the Site. (b) To accomplish the maintenance, Participant shall either staff or contract with and hire licensed and qualified personnel to perform the maintenance work, including the provision of labor, equipment, materials, support facilities, and any and all other items necessary to comply with the requirements of this Operating Covenant. (c) The following standards ("Maintenance Standards") shall be complied with by Participant and its maintenance staff, contractors or subcontractors: 1. Landscape maintenance shall include, but not be limited to: watering/irrigation; fertilization; mowing; edging; trimming of grass; tree and shrub pruning; trimming and shaping of trees and shrubs to maintain a healthy, natural appearance and safe road conditions and visibility, and irrigation coverage; replacement,as needed, of all plant materials; control of weeds in all planters, shrubs, lawns, ground covers, or other planted areas; and staking for support of trees. 2. Clean-up maintenance shall include, but not be limited to: maintenance of all sidewalks, paths and other paved areas in clean and weed-free condition; maintenance of all such areas clear of dirt, mud, trash, debris or other matter which is unsafe or • unsightly; removal of all trash, litter and other debris from improvements and landscaping prior to mowing; clearance and cleaning of all areas maintained prior to the end of the day on which the maintenance operations are performed to ensure that all cuttings, weeds, leaves and other debris are properly disposed of by maintenance workers. 3. All maintenance work shall conform to all applicable federal and state Occupational Safety and Health Act standards and regulations for the performance of maintenance. 4. Any and all chemicals, unhealthful substances, and pesticides used in and during maintenance shall be applied in strict accordance with all governing regulations. Precautionary measures shall be employed recognizing that all areas are open to public access. 4 DOCSOCl975780v 1\22345.0035 • . . 7312 5. The Site and Facility shall be maintained in conformance and in compliance with the approved Site construction and architectural plans and design scheme, as the same may be amended from time to time with the approval of the City, and reasonable commercial development maintenance standards for similar projects, including but not limited to: painting and cleaning of all exterior surfaces and other exterior facades comprising all private improvements and public improvements to the curbline. 6. The Site and Facility shall be maintained as required by this Section 3 in good condition and in accordance with the custom and practice generally applicable to comparable automobile dealership facilities located in Southern California. 4. Failure to Maintain Site and Facility. In the event Participant does not maintain the Site or the Facility in the manner set forth herein and in accordance with the Maintenance Standards, Agency and/or City shall have the right to maintain such private and/or public improvements, or to contract for the correction of such deficiencies, after written notice to Participant. However, prior to taking any such action, Agency agrees to notify Participant in writing if the condition of said improvements do not meet with the Maintenance Standards and to specify the deficiencies and the actions required to be taken by Participant to cure the deficiencies. Upon notification of any maintenance deficiency, Participant shall have thirty(30) days within which to correct, remedy or cure the deficiency. If the written notification states the problem is urgent relating to the public health and safety of the City or the Agency, then Participant shall have forty-eight (48) hours to rectify the problem. In the event Participant fails to correct, remedy, or cure or has not commenced correcting, remedying or curing such maintenance deficiency after notification and after the period of correction has lapsed, then City and/or Agency shall have the right to maintain such improvements. Participant agrees to pay Agency such charges and costs. Until so paid, the Agency shall have a lien on the Site for the amount of such charges or costs, which lien shall be perfected by the recordation of a "Notice of Claim of Lien" against the Site. Upon recordation of a Notice of a Claim of Lien against the Site, such lien shall constitute a lien on the fee estate in and to the Site prior and superior to all other monetary liens except: (i)all taxes, bonds, assessments, and other levies which, by law, would be superior thereto; (ii) the lien or charge of any mortgage, deed of trust, or other security interest then of record made in good faith and for value, it being understood that the priority of any such lien for costs incurred to comply with this Agreement shall date from the date of the recordation of the Notice of Claim of Lien. Any such lien shall be subject and subordinate to any lease or sublease of the interest of Participant in the Site or any portion thereof and to any easement affecting the Site or any portion thereof entered into at any time (either before or after) the date of recordation of such a Notice. Any lien in favor of the Agency created or claimed hereunder is expressly made subject and subordinate to any mortgage or deed of trust made in good faith and for value, recorded as of the date of the recordation of the Notice of Claim of Lien describing such lien as aforesaid, and no such lien shall in any way defeat, invalidate, or impair the obligation or priority of any such mortgage or deed of trust, unless the mortgage or beneficiary thereunder expressly subordinates his interest, of record, to such lien. No lien in favor of the Agency created or claimed hereunder shall in any way defeat, invalidate, or impair the obligation or priority of any lease, sublease or easement unless such instrument is expressly subordinated to such lien. Upon foreclosure of any mortgage or deed of trust made in good faith and for value and recorded prior to the recordation of any unsatisfied Notice of Claim of Lien, the foreclosure-purchaser shall take title to the Site free of any lien imposed by the Agency that has accrued up to the time of the foreclosure sale, and upon taking title to the Site, such foreclosure-purchaser shall only be obligated to pay costs associated with this Agreement accruing after the foreclosure-purchaser acquires title to the Site. If the Site is ever legally divided with the 5 DOCSOC1975780v I\22345.0085 • ® 0 7313 written approval of the Agency and fee title to various portions of the Site is held under separate ownerships, then the burdens of the maintenance obligations set forth herein and in this Agreement and the charges levied by the Agency id reimburse the Agency for the cost of undertaking such maintenance obligations of Participant and its successors and the lien for such charges shall be apportioned among the fee owners of the various portions of the Site under different ownerships according to the square footage of the land contained in the respective portions of the Site owned by them. Upon apportionment, no separate owner of a portion of the Site shall have any liability for the apportioned liabilities of any other separate owner of another portion of the Site, and the lien shall be similarly apportioned and shall only constitute a lien against the portion of the Site owned in fee by the owner who is liable for the apportioned charges levied by the Agency and secured by the apportioned lien and against no other portion of the Site. Participant acknowledges and agrees City and Agency may also pursue any and all other remedies available in law or equity. Participant shall be liable for any and all attorneys' fees, and other legal costs or fees incurred in collecting said maintenance costs. 5. Compliance with Law. Participant shall comply with all local, state and federal laws relating to the uses of or condition of the Site and the Facility. The operation of the Facility shall be in compliance with the requirements of the Conditional Use Permit issued by the City for the Facility, as such Conditional Use Permit may be modified from time to time, which Conditional Use Permit is hereby incorporated herein by reference. 6. Effect of Violation of the Terms and Provisions of this Operating Covenant. The covenants established in this Operating Covenant and the deeds shall, without regard to technical classification and designation, be binding for the benefit and in favor of the Agency, its successors and assigns, as to those covenants which are for its benefit. The covenants contained in this Operating Covenant shall remain in effect for the periods of time specified therein. The Agency is deemed the beneficiary of the terms and provisions of this Operating Covenant and of the covenants running with the land, for and in its own rights and for the purposes of protecting the interests of the community and other parties, public or private, in whose favor and for whose benefit this Operating Covenant and the covenants running with the land have been provided. The Operating Covenant and the covenants shall run in favor of the Agency, without regard to whether the Agency has been, remains or is an owner of any land or interest therein in the Site or in the Project Area. The Agency shall have the right, if the Operating Covenant or covenants are breached, to exercise all rights and remedies, and to maintain any actions or suits at law or in equity or other proper proceedings to enforce the curing of such breaches to which it or any other beneficiaries of this Operating Covenant and covenants may be entitled. 7. Miscellaneous Provisions. a. If any provision of this Operating Covenant or portion thereof, or the application to any person or circumstances, shall to any extent be held invalid, inoperative or unenforceable, the remainder of this Operating Covenant, or the application of such provision or portion thereof to any other persons or circumstances, shall not be affected thereby; it shall not be deemed that any such invalid provision affects the consideration for this Operating Covenant; and each provision of this Operating Covenant shall be valid and enforceable to the fullest extent permitted by law. b. This Operating Covenant shall be construed in accordance with the laws of the State of California. 6 D00500975780v I\22345.0085 • ® ® 7314 • c. This Operating Covenant shall be binding upon and inure to the benefit of the successors and assigns of the Participant. d. In the event action is instituted to enforce any of the provisions of this Operating Covenant, the prevailing party in such action shall be entitled to recover from the other party thereto as part of the judgment, reasonable attorney's fees and costs. e. The Agency agrees to subordinate this Operating Covenant to financing in accordance with Section 309.1 of the Agreement. 8. Effect of Operating Covenant. The covenants and agreements established in this Operating Covenant shall, without regard to technical classification and designation, run with the land and be binding on each owner of the Site and any successor in interest to the Site, for the benefit of and in favor of the Agency, its successor and assigns, and the City of Poway. IN WITNESS WHEREOF, the parties hereto has executed this instrument the day and year first hereinabove written. AGENCY: POWAY REDEVELOPMENT AGENCY, a public body, corporate and politic By: %,-„,trA,,, I ,t • tive Director , James L. Bowersox ATTEST: Ag ncy Secretary Lori Anne Peoples APPROVED AS TO FORM: _ .w Stradl`1g Yoccalt rlson & Rauth Agenci,, Special ounsel PARTICIPANT: AZ POWAY, LLC • By: fail �!/® By: Philip E. Mossy 7 DOC S OC V 75780v 1122345.00 S 5 i EXHIBIT A 7315 • I;FGAL'.,DEsc RIPTlpN 'PARCELS 1 AND 1 OF.:PARCEL'MAP NO: 5782, IN 'THE COUNTY .OF SAN DIEGO, STATE ;OF CALIFORtIIA, FILED SFP N'THE;OZCfi•to THE COUNTY RECOP.DP.R OF• SAtt.DIEGO COUNTY' APRIL 7., :1977. - • PARCEL :?: (APN:. ,323-190=64'1' PARCEL -2 OF PARCEL' MAP NO. 4081, •IN-THE, CITY OF POWAY, COUNTY OF-SAN' DIEGO; 'STATE'OF CALIFORNIA, ACCORDING'.TO ,MAP THEREOF FILED IN -THE •OFFICE .OF'THE COUNTY. 'RECORDER IOF AN. DIEGO. COUNTY, 'NOVEMBER 2, 1972. PARCEL •B: (APN: :32J-190-SB) THE,SOUTHERLY 200 FEET; OP• THE WESTERLY 110 FEET OF ,THAT PORTION OF'THE: WESTERLY 280' FEET ,0,F THE :'SOUTHEAST QUARTER OF. THE .SOUTHEAST QUARTER''OF' NORTHWEST; QUARTER;OF. SECTION 16,, TOWNSHIP :14 SOUTH'; •RANGE1 WEST; SAN •BERNARDINO BASE ,AND MERIDIAN, IN THE CITY. Oil POWAY, COUNTY _OF SAN DIEGO, ,STATE-OF .CALIFORNIA, ACCORDING; TO THE. OFFICIAL. PLAT THEREOF, ..LYING-NORTHERLY OF THE .CENTER LIt7E:OF THE COUNTY ROAD AS 'DESCRIBED: IN •THE; DEED TO.THE •COUNTY OF SAN DIEGO', RECORDED JUNE 21 1%4'4. AS. FILE`.NO. 45592, IN' BOOK 1686', PAGE' 415. OF OFFICIAL: •RECORDS, AND ;SHOWN ON MAP' OF. ROAD SURVEY NO: 944 (ON. •FILE' IN THE. :OFFICE :OF THE 'COUNTY 'SURVEYOR OF SAID COUNTY. 7316 STATE OF CALIFORNIA ) ) ss. COUNTY OF SAN DIEGO ) On mt [ 3,01004 , before me, Sha2,24., b , \UO/Rp I I , Notary Public, • // (Print Name of Notary Public) personally appeared —Mims L• bt[ue(sax personally known to me -or- r e • .. . , • •. :: : •- ' :: t - : ': - -ee-to be the person whose name fSkWare subscribed to the within instrument and acknowledged to me that /site/they executed the same ii Gheehheir authorized capacity(ies), and that bp:/her/their signatures) on the instrument the person(Es)), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. s t.: Commission o 1421698 2 �q -`:=t.� No1arY HmSe•CaBtatrya Signature of Notary San Dfepo County MYCOtMLBarns jun 30. • OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and coul prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT ❑ Individual ❑ Corporate Officer OPP-Oa 11411-, dellanteAd- Titles) Title Or Type Of Document ❑ Partner(s) 0 Limited 0 General ❑ Attorney-In-Fact ❑ Trustee(s) Number Of Pages ❑ Guardian/Conservator ❑ Other: IzA0 Date Of Document Signer is representing: Name Of Person(s)Or Entity(ies) Phi n�j`���`'��� er(s)OtOtthh'er Than Na(afd Above DOC SOO9757 SOv I\22345.0085 • ® •® 7317 - STATE OF CALIFORNIA ) ) ss. COUNTY OF Ri-v,�re p ) On p .„.or \R) ann , before me, \0.Mq_\g . 7j&tM r , Notary Public, (Print Name of Notary Public) personally appeared ��\� S15-)C1SgV personally known to me /I -or- proved to me on the basis of satisfactory evidence to be the person(s)-whose name( _is/ subscribed to the within instrument and acknowled ed to me tha he/theithep-executed the same i • uthorized capacity(ies), and that b his - signature(s)-on the instrument the • pon behalf of which the person(sj-acted, executed the instrument. PAMELA'S. BOSTON :,'I I.. Commission# I7705S6 z WITNESS my hand and official seal. stay Put&-Cc(Itai a C:;17.1, w% Sat Dlego MyCorrr„t Fa juiet3�D1I - - - �lln �j Signature Of Notary OPTIONAL Though the data below is not required by law, it may prove valuable to persons relying on the document and could prevent fraudulent reattachment of this form. CAPACITY CLAIMED BY SIGNER DESCRIPTION OF ATTACHED DOCUMENT ❑ Individual ❑ Corporate Officer Title(s) Title Or Type Of Document ❑ Partner(s) 0 Limited 0 General ❑ Attorney-In-Fact ❑ Trustee(s) ❑ Guardian/Conservator Number Of Pages ❑ Other: Signer is representing: Name Of Person(s)Or Entity(ies) Date Of Documents Signer(s)Other Than Named Above DOCSOC\975780v l\22345.0085