Agreement Re Operating Covenant and Restrictive Covenants 2006-0440765
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444'7 DO. 2006-0440765
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\ RECORDING REQUESTED BY AND JUN 22, 2006 8'00 AM
~EN RECORDED MAIL TO:
OFFICI,o.L REI'om,',
\ om mmc -FNCO C,'-",r-J ['IEIjCII-DUI-JT', FIE[DR[IEF:"~, IJFFICE
CiF:EG(lF:'1 ,I SMITH. UJur.n'l RECOF:[rEF:
CITY OF POWAY FEES I),un 'y..'u"I"; :l
oP POBOX 189 F'~J:iES 111
,/ '/ POWAY, CA 92074-0789 11111111111111111111111111111111111111111111111111111111111111111111111111111111
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This document is exempt from the payment,of,a
recording fee pursuant to Government Code Section
6103
AGREEMENT RE OPERATING COVENANT
AND RESTRICTIVE COVENANTS
'ImS INSTRUMENT FILED FOR RECORD BY
FlRSI' AMERICANTlTLE COMPANY AS IN ACCOMODA1TON
ONLY II HAS NOT BEEN EXAMINED AS 1'0 ITS EXECU'llON
OR AS 1'0 rrsEfFECl'UPONTHBFD&
This AGREEMENT RE OPERATING COVENANT AND RESTRICTIVE
COVENANTS (the "Agreement") is entered into this 23 day of June, 2005, by and between the
CITY OF POW A Y, a general law city ("City"), and 8SM PROPERTIES, LLC, a California
limited liability company ("Operator"), with reference to the following facts:
A. Operator has acquired certain real property in the City of Poway, County of San
Diego, State of California, commonly known as 139]4 - ]3950 Poway Road, legally described in
Exhibit A and incorporated herein by reference, referred to herein as the "Property"
B It is of benefit to the redevelopment project area for Operator to operate on the
Property a I-Iyundai automobile dealership of not less than 15,000 square feet (the "Dealership").
The imposition of certain operating covenants and restrictive covenants upon the Property for such
use constitutes a valid public purpose. Such covenants are an interest in real property The City
desires to obtain such operating covenants and restrictive covenants on the Property Subject to the
terms hereof, Operator is willing to enter into and be bound by such operating covenants and
restrictive covenants.
C. In consideration for Operator's agreement to be bound by such operating covenants
and restrictive covenants, the City has agreed to reimburse to Operator the actual costs, subject to a
maximum, of constructing certain public improvements required by the City of Po way ("City") as
conditions of approval of Development Review No. 03.46 (the "Development Review"), all as set
forth in that certain Construction and Reimbursement Agreement dated June 23, 2005, between the
City and Operator (the "Reimbursement Agreement"), The City and Operator agrec that the amount
of payment required to be made by the City under the Reimbursement Agreement is a fair exchange
. for the consideration actually furnished pursuant to this Agreement by Operator
D The purpose and intcntionofthe City in making the reimbursemcnt to Operator is
solely to induce Operator to construct the public improve,?ents and operate the Dealership on the
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Property for an agreed period oftirrie so as'to enhance the well-beingandsafeiy of the citizens at
large,'enhance local employment, and expand the City's tax revenue base,
NQW, THE,REFORE, in consideration of the mutual covenants and conditions hereinafter
set forth, tne'parties hereto agree as follows:
1. Operating Covenant and Restrictive Covenants,
a. Operating Covenant. For a term commencing on the date hereof and ending
five (5) years from the date of the' City's issuance ofa certificate of occupancy for the Dealership
(the "Operating Period"), Operator hereby covenants and agrees to operate a I-1yundai Dealership on
the Property in accordance with the terms hereof. The Dealership shall engage predominantly in the
business of selling arid leasing a fullline of new I-Iyundai automobiles and shall at all times maintain
on site and in storage within the City an inventory of not less than thirty (30) new I-Iyundai
automobiles, Subject to events of force majeure, as provided iri Paragraph 10 hereof, Operator shall
use good faith, commercially reasonable efforts to commence to operaie'the Dealership on the
Property (the "Opening for Business") within twenty-four (24}months of the date hereof.
Thereafter, Operator shall cause the Dealership on the Property to be continuously operated during
normal business hours (subject to temporary interruptions for casualty losses, repairs, and the like)
during the Operating Period. The Operator shall have the option to replace the I-Iyundai dealership
with another new car dealership, of an equal number of automobiles, or to add a second new car
dealership, on the Property, provided that in either case it is a dealership of a make or line of new
automobiles not already being sold in Poway Operator shall notifY City in writing at least sixty (60)
days prior to exercising the option and shall confer with City regarding the replacement or additional
automobile line.
b. Restrictive Covenants. During the Operating Period, Operator shall keep
and maintain the Property andtheJinprovements thereon and all facilities appurtenant thereto,
consistent with comparable automobiledcalership operations in good order and repair and safe
condition, and thewhole ofthe Property, the Dealership, and landscaping in a clean, sanitary, and
orderly condition free from debris, graffiti and waste materials. In'addition, during such term
Operator shall observe and comply with all Governmental.Requirements, as that term is defined in
Paragraph 4 hereof; provided, however, that Operator does not waive its right to challenge the
validity or applicability of any such Governmental Requirements. Operator further covenants that it
will not close and has not closed any I-Iyundai dealership within.a twenty-five (25) mile radius of the
Property for a period of at least one (I) year prior and one (1) year after Opening of Business.
The foregoing subparagraphs a, and b. ofthis Paragraph I are collectively hereinafter
referred to as the "Covenant." The Covenant shall constitute an interest in real property
2. Conditions Precedent. The obligation of Operator to operate a Dealership in
accordance with the Covenant, and the obligation ofthe City toperform its obligations hereunder, are
each contingent upon Operator's construction and operation' of the Dealership,
3. Defaults and Remedies, Occurrence of any or all of the following shall constitute a
default ("Default") under this Agreement:
a. Operator's material breach of the Covenant or any other material obligation
of Operator hereunder
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b. The filing of a petition in bankruptcy by or against Operator or appointment
of the receiver or trustee of any property of Operator, or an assignment.by Operator for the benefit of
creditors, or adjudication that Operator is insolvent by a court, anda;-failure of Operator to cause such
petition, appointment or assignment to be removed or discharged within sixty (60) days.
]n the event of any default under the terms of this Agreement, the nondefaultingparty shall
give written notice to the defauliing party The defaulting party shall commence and diligently
thereafter pursue the curing of said default within thirty (30) days after receipt of notice of such
default; provided, however, if such,a cure cannotreasonably be completed within such thirty (30) day
period, such failure'shall not be a Default so long as such party promptly commences a cure within
said thirty (30) day period and thereafter'diligently prosecutes,such cure to completion, Failure to
cure, as specitied above, shall be a "Default" hereunder In the event of default of Operator by
material breach of the Covenant, th.e,parties agree that the minirrium measure of darriages' shall be a
sum equal to that paid by City to developer under the Reimbursement Agreement. Nothing herein is
intended to limit or restrict whatever specific performance or other equitable remedies either party
may have in accordance with applicable law
4. Compliance with'Governmental Requirements. Operator shall carry out the
operation of the Dealership,iri substantial conformity with all applicable laws, ordinances, statutes,
codes, rules, regulations, orders and decrees of the United States;,the State of California, the County
of San Die'go,the City or any6ther political subdivision in which the Property is located, and of any
other political subdivision;agency'or instrumentality exercising jurisdiction over the City, Operator,
or the Property, including all applicable federal, state and loca] occupational.safety and health laws;
rules, regulations and standards, applicable state and labor standards, applicable prevailing wage
requirements, building, plumbing, mechanical and electrical codes, as they apply to the Property and
the Dealership, and all other provisions of the City of Po way' and its Municipal Code; (as they apply
to the Property and the Dealership), and all applicable disabled and handicapped access requirements,
including, without the limitation, the Americans With Disability Act, 42 U,S,C 91210] et seq.,
Governme'nt Code S4450 et seq" and the Unruh Civil Rights,Act, Civil Code 951 et seq
("Governmental Requirements"). Nothing in this section or in any other agreement with .the City or
the Poway Redevelopment Agency shall contractually require the payment of prevailing wages by
Operator, exceptfor the construction of public improvements as required by Section 13 of the
Construction arid Reimbursement Agreement of even date herewith.
5. Notices. All notices under this Agreement shall be given in writing by personal
delivery, or.by certified rriail or registered United States mail, return receipt requested, postage
prepaid, or by facsimile'and shall be deemed communicated when received if given by personal
delivery or upon receipt orrejection if mailed as provided above or upon receipt by facsimile on a
business day during business hours in the location where received, and jfnot then on the next
business day, as the case may be. Mailed notices shall be addressed as set forth below, but either
party may change its address by giving written notice thereof to the other in accordance with the
provisions of this article:
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City: City of Pow a)
] 3325 Civic Center Drive
Poway, California 92064
Attn, Deborah Johnson. Director of Redevelopment
Services
OPERATOR: BSM Properties, LLC
.]3864 Poway Road
Poway, Ca. 92064
Attention, Mark Abelkop, President! GeneraI'Manal!er
6. Miscellaneous, This Agreement constitutes the entire agreement between the parties
concerning the subject matter hereof and supersedes all prior agreements and understandings written
and oral. This Agreement may notbe modified or amended except in a writing signed by all parties
hereto. ]n the event any litigation is, necessary to enforce or interpret any provisions of this
Agreement,. the prevailing party in such litigation shall be entitled'to recover its court costs and
attorneys' fees.
7. Indemnity Operator..agrees to and shall indemnify, defend, protect, and hold
harmless the City and its officials; employees, and representatives from and against any and all third
party claims, losses, proceedings, damages, causes of action, liability, costs and expenses (including
reasonable attorneys' fees) arising from or in connection with or caused by (i) any act, omission or
negligence of Operator or anyJessee of.Operator, or their respective' contractors, licensees, invitees,
agents, sublessees, servants or employees, wheresoever on or adjacent to the Property that the same
may occur; and (ii) any use,of.the Property, or any accident, injury, death or damage to any person or
property. occurring in, on or aboutthe Property, or any part of the Property or from the conduct of
Operator's business or from any'activity, work or thing done, permitted or suffered by Operator or its
sublessees, contractors, employees, orinvitees, in or about the' Property (other than to the extent
arising as a result of the City's n'egligence or willful misconduct), but excluding any matter with
respect to which the City has or enjoys,the benefit of sovereign immunity, and (Iii) any action
brought by any third party challenging. the validity of any provision of this Agreement.
8. Construction. The parties agree that each party and its counsel have reviewed and
revised.this Agreement and that any rule of construction toth~effectthatambiguities are to be
resolved against the drafting party shall not apply in the interpretation of this Agreement or any
amendments or exhibits to this Agreement.
9. Police Power Nothing contained in this Agreement shall be deemed to limit,
restrict, amend or modifY, or to c.onstitute a waiver or release of; any ordinances, notices, orders,
rules, regulationsorrequirements (now or hereafter enacted or'adopted and/or as amended from time
to time) of the City, or their departments, commission, agencies and boards and the officers of the
City, including without limitation, any redevelopment or general plan or any zoning ordinances, or
any of the City's duties, obligations, rights or remedies thereunder or pursuant thereto or the general
policy powers,. rights, privileges and discretion of the City in the furtherance of the public health,
welfare and safety of.the,inhabitants of the City, provided, however, that the City shall not take any
action, legislative or otherWise, to frustrate or hinder the intent or effect of this Agreement during the
Operating Period.
10. Force Majeure, Time for performance hereunder'shall be extended by any period of
delay caused by circumstances beyond the reasonable control of the party claiming the delay despite
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the partY's diligent efforts, other than financial ability, provided the. party claiming the delay,
provides written noticeto.the other party within a reasonable period following commencement of any
such circumstances which circumstances shall include, without.limitation, fire/casualty losses;
strikes; litigation, unusually severe weather; inability to secure necessary labor, materials, or tools;
environmental remediation, including governmental review and processing of environmental
remediation; delays of any contractor, subcontractor, or supplier; delay caused by the other party, and
acts of God (collectively, "force majeure").
11. Interpretation, In this Agreement the neuter,gender includes the feminine and
masculine, and singular number includes the plural, and the words "person" and "party" include
corporation, partnership, firm, trust, or association where the context so requires.
12. Time of the Essence. Time is of the essence of this Agreement and all parties'
obligations under this Agreement.
13. Authority to Execute. The person or persolisexecuting this Agreement on behalf of
Operator warrant and represent that they have the authority to execute this Agreement on behal f of
their corporation, partnership or business entity and warrant and represent that they have the
authority to bind Operator to the performance of its obligations hereunder
14. Warranty against Payment of Consideration for Agreement. Operator warrants
that it has not paid or given, and wiIl not payor give, to any third person, any money or other
consideration for obtaining this Agreement, other than normal, costs of conducting business and costs
of professional services such as architects, engineers and attorneys,
15. Headings. The h~adings to the paragraphs of this Agreement have been inserted for
convenience reference only and shall not to any extent have the effect of modifying, amending or
changing the expressed terms and provisions of this Agreement.
16. Venue. ]n the event.ofany litigation under this Agreement, all such actions shall be
instituted in the Superior Court ofth'e County of San Diego, State of California.
17. Applicable Law The laws of the State of California shall govern the interpretation
and en forcement of this Operating'Covenant.
18. Successors and Assigns. The provisions of this Agreement shall be binding upon,
and inure.to the benefit of; the City and Operator and their successors and assigns as the case or
context may require, specifically including the Poway Redevelopment Agency, and the Covenant
shall run with the land,
19. No Joint Venture. Nothing contained in this Agreement shall be construed to render
the City in any way or for any purpose a partner, joint venture, or associated in any relationship with
Operator, nor shall this Agreement be construed to authorize any Party to act as agent for the other
20. Waiver The waiver by the City or Operator of any breach by the other Party of any
term, covenant, or condition in this Agreement contained shall not be deemed to be a waiver of such
term, covenant"orcondition or any subsequent breach of the same or any other term, covenant, or
condition herein contained. Any Party's acceptance of any performance by the other Party after the
due date of such performance shall not be deemed to bea waiver by any Party or any preceding
breach by the other Party of any term, covenant, or condition of this Agreement, regardless of such
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Party's knowledge of such preceding breach at the time of acceptance of such performance.
21. Counterparts. This Agreement maybe'executed and acknowledged in multiple
counterparts, each of which shall be deemed an original, but' all of which shall constitute one (I)
Agreement,bindin'g on the parties hereto
22. Recordation ofthisAgreement This Agreement shall be recorded promptly after
full execution by both parties. Thereafter the parties shall ~cooperate in reasonable requests to remove
of record the Agreement, or portions thereof that have been fully performed.
23; Attorneys' Fees, ]n the event that suit is brought for the enforcement ofihis
Agreement or, as of the result of~nyalleged breach hereof,'theprevailing party or parties in such suit
shall be entitled to recover their reasonable attorneys' fees frO/TIthe losing party or parties, and any
judgment or decree rendered in such proceeding shall include an award thereof.
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Exhibit A
Legal Description of Property
8SM LLC
Operating Covenant and Restrictive Covenant
The Southerly 250 feet ofthe East 50 rods of Lot 2 in Section 18,
Township 14 South, Ramje1 West, San Bernardino Base and Meridian, in the
Courityof San Diego, State of California, according to the Official Plat thereof,
EXCEPTING the Easterly 330 feet and the Northerly 25 feet of the Easterly 340
feet ofthe Westerly 495 feet thereof
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'IN WITNESS WHEREOF, the parties have executed this Agreement as ofthe date and
year first wiitten'above,
CITY:
CITYOFPOWAY
ATTEST:
B4~
, City Clerk
L. Diane Shea, City Cler:-k
APPROVED AS TO FORM:
BY'~~
S-t-erlleR-M" Eeki5;- 0600fa~eHRseJ
Tamara A. Smith, General Counsel
OPERATOR:
BSM PROPERTIES, LLC
By' -- '1~
Mark Abelkop
Its: President / General Manal!:er
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STATE OF CALIFORNIA )
COUNTYOF~ ) ss.
)
on~; 1.J;,UX;; , before me, , Notary Public,
I
)A~JL10t, L \4f
personally appeared
D personally known to me
-or-
Y proved to me on the basis of satisfactor) evidence to be the ~nW whose name0'(@Qre'
subscribed to the wiihin instrument and acknowledged ,to me tha h s~t~ executed the same
in~t~authorized capacity(ie'S), and that by ~hei'f signature~n the instrument the
person(.af, or the entity upon behalf of which the person(M1lcted, executed the instrument.
@ ~caw.. WITNESS my hand and official seal.
_ Ca,~~ tll4463U ~tj~j ~~JVwJ
NalaIY NlIc . CcdIainlci
. &an DIIIgo CculIV
..,Cann\;-,0cl21; 2llD7
OPTIONAL
Though the data below is not required bylaw 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
0 Individual
0 Corporate Officer ~Mi '{t~1~t~c~~~(d-
Titlc(s)
0 Partner(s) 0 Limited
0 General
0 Attorney-In-Fact 0;
0 Trustee(s)
0 Guardian/Conservator Number Of Pages
0 Other'
Signer is. representing:
Name Of Person(s) Or Enlity(ies)
Date Of Documents
Signer(s) Other Than Named. Above
DOCSOC\936909v2\22345,0089
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Exhibit B
Legal Description of p'roperty
BSM LLC
Private Roadway Maintenance Agreernent
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PARCEL 1 13917 Courier Way APN 323-203-19
The Northerly 150 00 reet of the Southerly 400 00 feet of the Westerly 155 00
feet of the Easterly 670 ooreet of the Easterly 50 rOefs ofLot 2 in Section 18,
Township 14 South, Range 1 West, San Bernardino'Meridian, in the City of
Po way, County of San Diego, State of California, according to the official plat
thereof
PARCEL 2. 13956 Poway Boad jl,PN 323-203c18
The Northerly 150 00 feel of the Southerly 400 00 feet of the Westerly 185 00
feet of the Easterly 5,1.5:00 feet of Lot 2 in Section 18; Township 14 South, Range
1 West, San BernardinoBase and Meridian, in the County of San Diego, State of
California, according to official plat thereof
Parcel 3 LEGAL DESCRIPTION OF A PORTION OF BSM PROPERTY
The Northerly 25 feet of thg Southerly 250 feet of the 'East 50 rods of Lot 2 in
Section 18, Township 14 South" Range 1 West, San Bernardino Base and
Meridian, in the County of San Diego, State. of Califofnia,.apcording to the Official
Plat thereof, EXCEPTING the Easterly 330 feet and the. Westerly 155 feet
thereof