HomeMy Public PortalAboutA 2017-12-19 PLANNING COMMISSION (SPECIAL MEETING)California
11330 Bullis Road
Lynwood, CA 90262
(31 0) 603-0220
PLANNING COMMISSION & PARKING & BUSINESS IMPROVEMENT
DISTRICT BOARD (PBIDB) iZt.t _h,~~
SPECIALMEETING R-E C ~I ·V ED
Tuesday, December 19, 2017-5:00P.M.
CITY HALL COUNCIL CHAMBERS
LYNWOOD, CA 90262
DEC 1 ~ 2017
en Y OF LYNWOOD
CiTY ClERKS o/fiCF ~6-(A"
AGENDA ~ ~r;;J
In Compliance with the Americans with Disabilities Act (ADA), if you are a disabled pers~
and need a disability related modification or accommodation to participate in this meeting,
please contact the City Clerk's Department at (310) 603-0220 ext 214. Requests must
be made as early as possible, and at least one full business day before the start of the
meeting. Staff reports or other materials related to an item on this Agenda which are
distributed to the Planning Commission less than 72 hours before this scheduled meeting
shall be available for public inspection in the Development, Compliance and Enforcement
Department/Planning Division office located at 11330 Bullis Road, Lynwood, CA 90262,
during normal business hours.
1. CALL TO ORDER
2. CERTIFICATION OF AGENDA
3. ROLL CALL
1. Elizabeth Battle, Commissioner
2. Juan Enciso, Commissioner
3. Sylvia Ortiz, Commissioner
4. Kenneth West, Vice-Chair
5. Jorge Casanova, Chairperson
4. PLEDGE OF ALLEGIANCE
Planning Commission & Parking & Business Improvement District Board Agenda
December 19, 2017 SPECIAL MEETING
Page 2 of3
5. PRESENTATIONS AND RECOGNITIONS
None.
6. APPROVAL OF MINUTES
A. Minutes of the December 12, 2017 (continued).
7. SWEARING IN OF SPEAKERS
(City Clerk or Designee)
8. NON-AGENDA PUBLIC ORAL COMMUNICATION
(This time is reserved for members of the public to address the Planning
Commission relative to matters that are not on the agenda. No action may be
taken on non-agenda items unless authorized by law)
9. PUBLIC HEARING(S)
(With respect to speakers addressing items listed under the heading of public
hearing, you are asked to wait until the Chair formally opens the public hearing and
the item is called)
A. The proposed project, referenced herein as amended Cannabis Development
Agreement 2017-02 MOD, 2017-04 MOD through 2017-12 MOD, and 2017-19
MOD, represent the ten (10) applicant seeking amended development
agreements for cannabis activities in the City.
I. Staff Report Presentation
II. Open Public Hearing ( M ____ S ____ _f
Ill. Public Testimony
IV. Close Public Hearing
V. Commission Discussion
VI. Call for the question/vote ( M ____ S _____ )
10. OLD BUSINESS
None
2
Planning Commission & Parking & Business Improvement District Board Agenda
December 19,2017 SPECIAL MEETING
Page 3 of3
11. PLANNING COMMISSION/PBIDB ORAL COMMUNICATIONS
1. Elizabeth Battle, Commissioner
2. Sylvia Ortiz, Commissioner
3. Kenneth West, Vice Chair
4. Jorge Casanova, Chairperson
5. Juan Enciso, Commissioner
12. DIRECTOR COMMUNICATIONS
13. ADJOURNMENT
Next Regular Meeting is scheduled for January 9, 2018.
APPROVED BY:
3
DATE:
TO:
APPROVED BY:
PREPARED BY:
SUBJECT:
Recommendation:
AGENDASTAFFREPORT
December 19, 2017
Honorable Chair and Members of the Planning Commission r
of the City of Lynwood
John Yonai, Interim Director of Community Developme
Francisco Leal, Special Counsel
Development Agreements 2017-02 MOD, 2017-04 MOD
through 2017-12 MOD, and 2017-19 MOD
Staff recommends that the Planning Commission of the City of Lynwood adopt Resolution
No. 3388 recommending the approval of Development Agreements 2017-02 MOD, 2017-
04 MOD through 2017-12 MOD, and 2017-19 MOD, and:
FIND that approval of the amended Development Agreements qualifies as exempt
pursuant to CEQA Guidelines, Section 15302(b) -Replacement of a commercial
structure with a new structure of substantially the same size, purpose and capacity; or
Section 15332-In-Fill Development Projects. The In-Fill Development exemption (Class
32) consists of projects characterized as in-fill development meeting the conditions
described in Section 15332 and that it is consistent with the Lynwood General Plan.
Project Description:
The proposed project, referenced herein as the amended Cannabis Development
Agreements 2017-02 MOD, 2017-04 MOD through 2017-12 MOD, and 2017-19 MOD,
represents ten (1 0) applicants seeking amended development agreements for cannabis
activities in the City.
Background:
In 1996, the voters of the State of California approved Proposition 215 (codified In Health
and Safety Code Section 11362.5 and entitled "The Compassionate Use Act of 1996").
The Compassionate Use Act ("CUA'') allows individuals to obtain and use medical
marijuana without the threat of criminal prosecution. Under the CUA, "qualified patients"
with a physician's prescription for medical cannabis and "primary caregivers" are exempt
from prosecution under Health and Safety Code Section 11357 (possession of marijuana)
and 11358 (cultivation of marijuana) for specified amounts. On January 1, 2004, the
California State Legislature enacted Senate Bill 420 (Medical Marijuana Program Act or
"MMPA") to clarify the scope of the CUA. MMPA allows cities and other governing bodies
to adopt and to enforce rules, regulations, and laws consistent with Senate Bill 420.
The California Supreme Court has made clear that neither the CUA nor the MMPA
expressly or impliedly preempt the authority of cities or counties, under their traditional
land use and police powers to allow, restrict, limit or entirely exclude marijuana cultivation
or distribution within their jurisdictions. Therefore, cities and counties may adopt local
ordinances that regulate the location, operation or establishment of medical marijuana
collectives and to enforce such ordinances. Pursuant to the City's police power, the
adopted regulations should include consideration of the safety of all residents and
businesses, both consumers and non-consumers. The proposed development
agreements are designed to address safety and professional management of any
cultivation, manufacturing, or testing cannabis business.
On October 9, 2015, the Governor signed three pieces of state legislation, collectively the
Medical Marijuana Regulation and Safety Act (MMRSA): Assembly Bill (AB) 266, AB 243,
and Senate Bill (SB) 643. AB 266 establishes a dual licensing structure requiring a state
license and a local license or land use permit. The Department of Consumer Affairs will
coordinate the overall regulatory structure establishing minimum health and safety and
testing standards. AB 243 establishes a regulatory and licensing structure for cultivation
sites under the Department of Food and Agriculture. SB 643 establishes criteria for
licensing of medical marijuana businesses, regulates physicians, and recognizes local
authority to levy taxes and fees.
In June 2016, the California State Legislature amended MMRSA and re-titled it the
"Medical Cannabis Regulation and Safety Act (MCRSA)", which provides for the licensure
and regulation of medical cannabis and requires all commercial cannabis activity to be
conducted between licensees. Upon the date of implementation of regulations by the
licensing authority, MCRSA prohibits a person from engaging in commercial cannabis
activity without possessing a state license and a local permit, license, or other
authorization.
Generally, MCRSA governs the licensing and control of all medical marijuana businesses
in the State, including granting criminal immunity for licensees. Nonetheless, the
legislation protects local control in several ways: (1) requires dual licensing; (2) allows
local governments to enforce state law in addition to its own local ordinance (upon request
by the local jurisdiction): and (3) maintains civil and criminal penalties for unlicensed
activity.
On November 8, 2016, the State of California voters approved the Control, Regulate, and
Tax Adult Use Marijuana Act (AUMA) (Proposition 64), which immediate legalized
personal use of marijuana by persons 21 years of age or older, possession of small
amounts of marijuana for personal use (up to an ounce), and the cultivation of up to six
(6) marijuana plants within a single private residence for personal use. The adoption of
AUMA also authorized the issuance of State licenses for commercial nonmedical
marijuana business operations by 2018.
In June 2017 the California State Legislature enacted Senate Bill 94, "Cannabis -
Medicinal and Adult Use," which conformed MCRSA and AUMA into a single regulatory
system and moved many of the laws relating to cannabis into the Business and
Professions Code. It also added certain new provisions, including creating agricultural
cooperatives, a method for collecting taxes, and a process for testing and packaging, and
a system for collecting data on driving under the influence.
On September 18, 2017, California Governor Brown signed AB 133 into law. AB 133
contains many so called "clean-up" provisions to the California Medical and Adult-Use
Cannabis Regulatory and Safety Act ("MAUCRSA"). Like Senate Bill 94, AB 133 moved
many of the laws relating to cannabis into the Business and Professions Code and
expanded on already existing provisions, such as modifying the definition of "premises"
so as to allow multiple cannabis licenses to be issued to the same owner/lessee of one
premises. Other changes include removing the provision from MAUCRSA that requires a
licensed medical manufacturer to only manufacture cannabis products for sale by medical
cannabis retailers; increasing the amount of cannabis concentrates a person may
possess from 4 grams to 8 grams; and removing and/or amending requirements that
regulate how cannabis products are taxed.
Discussion
On December 20, 2016, the City Council adopted Ordinance No. 1688, which added
Chapter 4 Article 34 to the Lynwood Municipal Code, entitled "Medical Cannabis Business
and Activity" ("Cannabis Ordinance"). The Cannabis Ordinance regulates the location and
operation of cannabis cultivation, manufacturing, and testing businesses. The Cannabis
Ordinance provides as follows:
1. Purpose and Intent: Generally, to regulate all commercial cannabis within the City.
2. Legal Authority and Definitions
3. Permit Application and Selection Process, including:
a. Development Agreement requirements;
b. Initial application process;
c. Permittee selection guidelines;
d. Appeal procedure; and
e. Permit revocation and abatement.
4. Security measures, including limited access, storage and transportation plan,
surveillance cameras and alarm systems.
5. Operating requirements, including recordkeeping, limitations on City's liability, City
rights of inspection and testing, and restrictions on ownership and location
changes.
6. Designates distance and other conditions for approval.
The City Council approved 11 development agreements for cannabis-related businesses
in September 2017, including cultivation, manufacturing, distribution, and combinations
thereof.
Staff has reviewed the applications of the following applicants and has drafted
Development Agreements with these applicants:
CULTIVATION, MANUFACTURING, DISTRIBUTION, AND DELIVERY
JB Los Angeles Farmers 2851 Lynwood Rd.
Lacturnus Research Assoc. 11010/20 Santa Fe Ave.
Pure CA 2990 MLK Blvd.
RD Lynwood South 11510 Alameda Ave.
Norton Avenue Ventures 2830 Norton Ave.
Cali Med 2827 Norton Ave.
Cali Premium Produce 11108 Wright Rd.
Broken Arrow Private Organization 2820 Martin Luther King Jr. Blvd .
MANUFACTURING, DISTRIBUTION, AND DELIVERY
Natural Plant Extract of California 11116 Wright Rd.
BECC Holdings LLC 2751 Lynwood Rd.
Magnolia Extracts LLC 11118 Wright Rd.
The only substantive change is that each entity now seeks approval for delivery activities.
Staff considered the following factors when reviewing the applications:
1. Experience in proposed classification;
2. Proposed location (i.e., zoning, General Plan designation, etc.);
3. Site plans, operation plans, safety and security plans, and other application
materials; and
4. Viability of applicants' proposed community benefits plan.
Each applicant has submitted the necessary information for background checks. Results
of background checks are forthcoming.
California Environmental Quality Act:
The proposed projects for which Development Agreements have been negotiated are
Categorically Exempt from California Environmental Quality Act (CEQA) requirements
under provisions of CEQA Guidelines Section 15302 -Replacement or Reconstruction.
This exemption (Class 2) consists of replacement or reconstruction of existing structures
and facilities where the new structure will be located on the same site as the structure
replaced and will have substantially the same purpose and capacity as the structure
replaced. More specifically, Section 15302 (b) applies to the replacement of commercial
structures with a new commercial structure of substantially the same size, purpose, and
capacity. In this case, the proposed cannabis activities occur in areas zoned for
manufacturing. The proposed project sites are currently developed with manufacturing
uses authorized pursuant to the zoning code or are vacant. Most of the sites also qualify
for the In-Fill exception (Class 32) pursuant to CEQA Guidelines Section 15332 -In-Fill
Development Projects. This exemption applies to projects characterized as in-fill
development meeting the conditions described in Section 15332.
Fiscal Impact:
There are no anticipated negative fiscal impacts. Each approved Development
Agreement is expected to generate revenues for the City's General Fund.
Coordinated With:
Not applicable.
Attachments:
Resolution No.3388
CITY OF LYNWOOD
RESOLUTION No. 3388
RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF
LYNWOOD RECOMMENDING THAT THE CITY COUNCIL APPROVE
AMENDED DEVELOPMENT AGREEMENTS FOR THE OPERATION OF
COMMERCIAL CANNABIS CULTIVATION, MANUFACTURING,
DISTRIBUTION, AND DELIVERY FACILITIES
WHEREAS, Section 65865 ofthe State of California Government Code provides
that cities may enter into a development agreement with any person having a legal or
equitable interest in real properties for the development of properties;
WHEREAS, Section 65867.5 of the State of California Government Code provides
that amended development agreements shall be approved by ordinance;
WHEREAS, Chapter 4, Title 34 of the City of Lynwood Municipal Code provides
that development agreements may be entered into as a condition of issuance by the City of
regulatory permits for commercial cannabis cultivation, manufacturing, distribution,
delivery, and testing facilities;
WHEREAS, development agreements with the following entities previously were
approved by the City Council for cultivation, manufacturing, and distribution, in different
combinations:
JB Los Angeles Farmers
Lacturnus Research Assoc.
Pure CA
2851 Lynwood Rd.
11010/20 Santa Fe Ave.
2990 MLK Blvd.
RD Lynwood South 11510 Alameda Ave.
Cali Med 2827 Norton Ave.
Broken Arrow Private Organization 2820 MLK Blvd.
Norton Avenue Ventures 2830 Norton Ave.
Cali Premium Produce 11108 Wright Rd.
BECC Holdings 2751 Lynwood Rd.
Natural Plant Extract of California 11116 Wright Rd.
Magnolia Extracts LLC 11118 Wright Rd.
WHEREAS, each of the entities now seeks a permit to conduct delivery activities,
and some also seek distribution permits;
WHEREAS, it is the desire of the City Council to approve issuance of regulatory
permits to these entities for distribution and delivery activities and to enter into an amended
development with each entity and the owners of said properties for the establishment and
operation of such facilities; and
WHEREAS, the Planning Commission of the City of Lynwood has considered
evidence regarding the proposed amended development agreements and has made the
following findings:
1. FINDING: That the amended development agreements are consistent with the
General Plan objectives, policies, land uses, and implementation programs and any
other applicable specific plans.
a. The proposed distribution and delivery of commercial cannabis are allowed
uses in the Manufacturing (M) zoning district.
b. The proposed projects comply with all commercial development standards
for the Manufacturing (M) zoning district set forth in Chapter 25, Article 10
and Article 30 of the zoning code, including but not limited to requirements
for minimum lot area, maximum lot coverage, buildings setbacks, buildings
height limits, landscaping, resource efficiency, lighting, parking
performance standards, and signage.
c. The General Plan encourages infill and intensification of land uses through
the reuse or redevelopment of vacant or underutilized industrial,
commercial, and residential sites. It also encourages the redevelopment and
reuse of vacant and/or underutilized commercial buildings. The proposed
projects utilize manufacturing zoned properties that are either vacant or
under-utilized.
d. The General Plan encourages development of industrial uses that are
consistent with the scale and character of surrounding land uses. The
proposed project will develop multiple cultivation, manufacturing,
distribution, delivery, and testing facilities that are of the scale and intensity
appropriate for a manufacturing development. The new development will
consist of buildings that are of a size and height similar to adjacent and
nearby industrial buildings.
e. The proposed projects are consistent with Generai Pian poiicies that caii for
the recruitment of businesses, industries, and other employers whose
operations are consistent with long-term economic development goals. The
proposed projects bring a new industry to the City that will provide new
jobs to promote economic development and further the City's jobs to
housing goals. It will also provide a significant source of revenue to the
City that will enable the City to provide services and benefits to the
community that it is not currently able to do because of budget limitations
and insufficient revenues.
2. FINDING: That the proposed amended development agreements are in
conformance with the public convenience and general welfare of persons residing
in the immediate area and will not be detrimental or injurious to properties or
persons in the general neighborhood or to the general welfare of the residents of the
city as a whole.
a. The construction of a steel security fence around the perimeter of all
buildings where commercial cannabis is cultivated, manufactured, stored,
processed, and handled will provide increased security for the site and the
materials and products stored, cultivated, and manufactured in the facility.
b. A video surveillance system will be installed to monitor all exterior areas of
the properties, all site and buildings entrances and exits, and all interior
spaces of the buildings, thereby providing additional security for the entire
properties.
c. The facilities will not be open to the general public and no direct sales or
product distribution will be made to the general public.
d. The development agreements include provisions for public outreach and
education programs to promote the public welfare and operational and
security plans to ensure the facility is operated in a safe and legal manner.
3. FINDING: That the amended development agreements will promote the orderly
development of property and the preservation of property values.
a. The proposed projects included in the development agreements are for infill
development that will intensify land uses through the redevelopment of
vacant and underutilized commercial sites.
b. The proposed commercial distribution and delivery facilities are in a
manufacturing zoned district in proximity to other manufacturing type uses.
4. FINDING: All requirements of the California Environmental Quality Act have
been met.
a. If a project is subject to several discretionary approvals, for purposes of
CEQA the "project" refers to the totality of the development project and not
to each separate governmental approval (CEQA Guidelines section 15378).
For purposes of the required CEQA discussion and analysis, the project
under review includes the issuance of regulatory permits, approval of
development agreements, and tentative map and final map approvals for
subdivision of certain specified property.
b. The proposed projects (development agreements) are Categorically Exempt
from California Environmental Quality Act (CEQA) requirements under
provisions of CEQA Guidelines Section 15302 -Replacement or
Reconstruction. This exemption (Class 2) consists of replacement or
reconstruction of existing structures and facilities where the new structure
will be located on the same site as the structure replaced and will have
substantially the same purpose and capacity as the structure replaced. More
specifically, Section 15302 (b) applies to the replacement of commercial
structures with a new commercial structural of substantially the same size,
purpose, and capacity. In this case, the proposed cannabis activities occur
in areas zoned for manufacturing. The proposed project sites are currently
developed with manufacturing uses authorized pursuant to the zoning code
or are vacant. Most of the sites also qualify for the In-Fill exception (Class
32) pursuant to CEQA Guidelines Section 15332 -In-Fill Development
Projects. This exemption applies to projects characterized as in-fill
development meeting the conditions described in Section 15332.
NOW, THEREFORE, THE PLANNING COMMISSION OF THE CITY OF
LYNWOOD RECOMMENDS THE FOLLOWING:
That the amended development agreements with JB Los Angeles Farmers;
Lacturnus Research Assoc.; Pure CA; RD Lynwood South; Cali Med; Broken Arrow
Private Organization; Norton A venue Ventures; Cali Premium Produce; BECC Holdings;
Natural Plant Extract of California; and Magnolia Extracts LLC be approved and adopted
by the City Council substantially in the form of the agreements attached hereto.
PASSED, APPROVED, AND ADOPTED, at a special meeting of the Planning
Commission ofthe City of Lynwood, California, this 19th day ofDecember 2017.
APPROVED AS TO FORM
AND LEGAL CONTENT:
LEAL & TREJO, A PC
Francisco Leal, Special Counsel
CERTIFICATION
CITY OF LYNWOOD
PLANNING COMMISSION
Chair
ATTEST:
Secretary
I, , Secretary of the Planning Commission of the City of Lynwood, do hereby
certify that Resolution No. __ was duly adopted at a special meeting of the Planning
Commission of the City of Lynwood, held on the 19th day of December 2017 and approved by the
following vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
COMMERCIAL CANNABIS
DEVELOPMENT AGREEMENT
Development Agreement No. 2017-02 MOD
This Agreement is made by and between and among the CITY OF LYNWOOD
("City") and Pure CA, LLC, a California limited liability company ("Owner'') and 2990 MLK
JR, LLC, a California limited liability company ("Landlord") this_ day of January 2018,
as required by Section 4-34-5 of the Lynwood Municipal code setting forth the terms and
conditions under which Owner shall operate a commercial cannabis cultivation,
manufacturing, distribution, nursery, and delivery facility (also, the "Project") pursuant to
its Regulatory Permit that are in addition to the requirements of Article 4-34 of the
Lynwood Municipal Code, including, but not limited to, public outreach and education,
community service, payment of fees and other charges as set forth or referenced herein,
and such other terms and conditions as will protect and promote the public health, safety,
and welfare. The requirements set forth in Article 4-34 of the Lynwood Municipal Code,
and the Administrative Regulations adopted by the City Council of the City of Lynwood
are incorporated herein by reference. All subsequent references to "municipal code"
mean the Lynwood Municipal Code. Capitalized terms not defined herein shall have
assigned to them the definition found in the City of Lynwood Municipal Code.
1. Government Code and Municipal Code Required Elements
a. Description of Property. Land situated in the City of Lynwood, County of
Los Angeles, State of California, described as 2990 Martin Luther King, Jr.
Boulevard; APN Number 6170-015-029; Lynwood, California 90262.
b. Owner and Other Person with Legal or Equitable Interest.
Owner: Pure CA, LLC
Landlord: 2990 MLK Jr, LLC
c. Permitted Uses. The subject property may be used for any commercial
cannabis facility as presently authorized under Article 4-34 of the municipal code,
and for any other use as authorized under applicable provisions of the municipal
code. Although Chapter 25 does not specifically identify commercial cannabis
facilities as allowed uses in any zoning district, such uses are similar to other listed
uses, including, but not limited to, medical services -clinics, offices, laboratories;
garden center/plant nursery; food and beverage manufacturing; and agricultural
products processing; and, therefore, commercial cannabis facilities are allowed
Page 1 of 30 Cultivation, Manufacturing, Distribution,
and Delivery Development Agreement
uses in the same zoning districts in which such similar uses are allowed under
Chapter 25 of the municipal code.
d. Zoning. With the exception of the Temporary Exemptions specifically
described below in § 1 (f), Owner shall guarantee that such activities outlined in
Owner's Commercial Cannabis Business Permit Applications ("Application")
conducted pursuant to this Agreement and under the Regulatory Permit shall
comply with the City's municipal code, including the zoning ordinance and any and
all development and construction requirements contained therein. Owner shall not
conduct any business under this Agreement or under the Regulatory Permit
without having obtained all necessary permits, licenses, and approvals from the
City.
e. Reservation or Dedication of Land for Public Purposes. Sufficient roadway,
sidewalk, and utility easements shall be reserved or dedicated to City for such
purposes.
f.
shall be
Application.
2. Term
Temporary Exemptions. The Parties hereby agree that Owner and Landlord
granted the following Temporary Exemptions from the Municipal Code:
i. the Facility may temporarily utilize modular structures as outlined in the
This Agreement shall start on the date on which all parties have executed it and it
shall end three years from the starting date, and it shall remain in full force and
effect so long as the subject property is used for a commercial cannabis facility as
presently authorized under Article 4-34 of the municipal code; provided, however,
such use is not abandoned for a period of more than six (6) months. The term may
be extended for up to two, three-year extensions by mutual agreement of the
Parties. However, at the request of either Party, the fees required under Article 7
of this Agreement may be subject to re-negotiation for each extension period
provided under this Agreement. In the event a Party wishes to re-negotiate fees,
it shall give notice to the other Party no less than 90 days before the end of the
applicable tern of the agreement, and negotiations shall be concluded before the
end of that term.
3. Owner's Site and Floor Plans
a. Owner's site plan and floor plan for the facility is incorporated into the
Application.
Page 2 of 30 Cultivation, Manufacturing, Distribution,
and Delivery Development Agreement
b. A preliminary landscape plan will be prepared and reviewed and approved
by the Planning Director as part of the design review process, which the City shall
make a good faith effort to complete ten (1 0) business days following submittal by
Owner. A final landscape plan shall be prepared and submitted in conjunction with
building and site improvement plans prior to issuance of building permits for
construction activities.
c. An exterior signage plan will be prepared and reviewed and approved by
the Planning Director in accordance with the procedures and requirements of
Article 70 of Chapter 25 of the municipal code, which City shall make a good faith
effort to complete ten (1 0) business days following submittal by Owner.
4. Facility Operations
a. Standard Operating Procedures. During the term of its Regulatory Permit
and the term of this Agreement, Owner shall lawfully operate in accordance with
all state and local laws. Owner will employ exemplary operating procedures to
comply with state and local laws. Owner's facility will employ safety and security
measures for the safety and security of its employees, visitors, vendors, and
neighboring communities and properties.
b. Security Plan. The issuance of a Regulatory Permit is conditional upon
approval by City after a review of Owner's submitted security plan for the Facility.
The security plan shall include, at a minimum and as appropriate, provisions for
video surveillance, perimeter fencing and security, protection of the building(s)
from vehicle intrusion, cash handling procedures, product handling and storage
procedures, and a professionally monitored alarm system. City shall make a good
faith effort to complete ten (10) business days following submittal by Owner.
Video surveillance shall include, at a minimum, all site and facility entrances and
access points, all spaces accessible by the public, all secured areas of the facility
with restricted access, all interior spaces and rooms where medical marijuana
products are handled and processed, shipping and receiving areas, cash storage
areas, and other areas necessary to protect the safety of employees and the public
and to ensure medical marijuana products are received, handled, stored,
packaged, shipped, and distributed in compliance with applicable state and local
laws and regulations. The video surveillance system shall be web-based with
direct access provided to the Los Angeles County Sheriff upon request.
Page 3 of 30 Cultivation, Manufacturing, Distribution,
and Delivery Development Agreement
The security system will also include sensors to detect entry and exit from all
secure areas, panic buttons in appropriate locations, and a professionally
monitored alarm system with glass breakage sensors and motion detectors.
Owner will employ properly trained and licensed third-party security personnel to
protect the welfare and safety of Owner employees and to ensure public safety to
the neighboring community. Owner shall use security personnel 24 hours, 7 days
a week. Security personnel may be armed so long as proper licensing and
insurance requirements are followed and met by the third-party operator providing
such security services.
c. Fire Department Aooroval. Owner may not operate any facility, and no
permit, license, or other approval issued by City shall be valid unless and until the
Los Angeles County Fire Department has approved Owner's site plan, floor plan,
safety plan, and any other plans that require its approval. City shall make a good
faith to assist Owner with obtaining such approvals within ten (10) business days
following Owner's submission of such plans for purposes of the approval
contemplated by this section.
d. Possession of Firearms. Except for licensed and bonded security personnel
satisfying the requirements of §4(b), no person employed by Owner shall be in
possession of any firearm while on the premises or location without having first
obtained a license from the appropriate state or local agency authorizing the
person to be in possession of such firearm. Every such person in possession of a
firearm while on the premises or location must provide the City Manager, within
ten days before bringing the firearm onto the premises, the following:
1) A copy of the license issued to the person by the appropriate state
or local agency authorizing him or her to possess such firearm;
2) A copy of his or her law enforcement identification (if he or she is
employed by a law enforcement agency);
3) A copy of his or her California driver's license or California
identification card; and
4) Any other information reasonably required by the Los Angeles
County Sheriff to show that the individual is in compliance with the
provisions of all laws regarding the possession and use of a firearm.
Page 4 of30 Cultivation, Manufacturing, Distribution,
and Delivery Development Agreement
e. Procedures for Inventory Control to Prevent Illegal Diversion of Commercial
Cannabis. Only authorized employees will be permitted to enter Owner's facility.
Each employee will have to meet a criminal background investigation conducted
by the Los Angeles County Sheriff, which at minimum shall include a LiveScan
criminal history check, which City shall make a good faith effort to facilitate within
a reasonable time following the issuance of a commercial cannabis permit(s) or
license(s) to Owner.
Owner will seek to prevent the diversion of commercial cannabis by implementing
strict policies and practices, as well as efficient transparency to maintain tight
controls on inventory and donations and/or cost reimbursements received.
Owner will prohibit the use of cannabis by its employees at its facility, within a one
thousand (1 ,000) foot radius from the neighborhood vicinity of its facility, and while
operating motor vehicles.
Owner will take reasonable steps to prevent the distribution of any of its
commercial cannabis products to minors; prevent revenue from the sale or
distribution of its commercial cannabis and/or infused products from going to
criminal enterprises, gangs and cartels; prevent the diversion of cannabis from
California to any other state; prevent state-authorized cannabis activity from being
used as a cover or pretext for the trafficking of other illegal drugs or other illegal
activity; prevent violence and the use of firearms in the licensed and/or permitted
commercial cannabis operations.
f. Quality Control and Testing. Owner will utilize quality control measures and
testing to ensure only the highest quality of commercial cannabis and infused
products will be produced. Owner will inspect the product to insure its identity and
quantity, and will have a testing lab perform testing of random samples prior to
distribution to its patient collective membership affiliates. Inspection and testing
will be conducted by the testing lab off-site. Testing standards and procedures
shall be in accordance with applicable state law and regulations.
All commercial cannabis products will undergo a quality assurance review in
accordance with state law prior to distribution or delivery to individual customers.
Inventory procedures will be utilized for tracking and taxing purposes by the state.
Owner will employ an efficient record-keeping system to make transparent its
financing, testing, and adverse effect recording, as well as recall procedures.
Owner will employ an efficient record-keeping system that will reflect its financing,
testing, and adverse effect recording and product recall procedures.
Page 5 of 30 Cultivation, Manufacturing, Distribution,
and Delivery Development Agreement
g. Packaging of Commercial Cannabis and Infused Products. All commercial
cannabis products will be packaged and labeled as required by Section 26071, et
seq., of the California Business and Professions Code and applicable
requirements and regulations issued by the State of California pursuant thereto.
In addition to those packaging and labeling requirements, and packaging and
labeling requirements set forth in Owner's Regulatory Permit application, as
amended or supplemented, all commercial cannabis products shall be packaged
in an opaque childproof container which shall contain a label or be accompanied
by a leaflet or insert that provides all commercial cannabis product disclosures
required under state law.
Owner intends to produce infused edible products and it will secure any required
approvals necessary from the County of Los Angeles Health Department required
for the production and handling of such products. Owner's infused products will
not be produced, manufactured, stored or packaged in private homes. All
commercial cannabis edible products shall be individually wrapped at the original
point of preparation.
h. Deliverv. If Owner applies for and receives a Delivery permit from City,
Owner may sell and deliver manufactured cannabis products to individual
customers, as long as such activity is consistent with and permitted under state
law, and Owner has a valid state license therefor. As long as such products are
sold and delivered to individual customers, and no in-person sales occur at
Owner's facility, such activity shall not constitute a dispensary under the municipal
code.
i. Point of Sale Tracking System. Owner will maintain an inventory control
and reporting system that accurately documents the location of commercial
cannabis products from inception through distribution, including descriptions,
weight, and quantity. The inventory control and reporting system shall comply with
the track and trace program required by Section 26067 of the California Business
and Professions Code and regulations issued thereunder.
Owner will employ an electronic point of donation/sale system approved by City,
which shall not be unreasonably withheld, such as BioTrack THC, MJ Freeway,
Guardian Data System's ROAR platform, or similar system for all point of
donations/sales tracking from seed or inception to product distribution to other
licensed cannabis dispensary facilities. Such approved system will track all of
Owner's commercial cannabis products, each edible, harvested flower, and/or
manufactured concentrate, as well as gross sales (by weight and sale). BioTrack
THC, MJ Freeway, Guardian Data System's ROAR platform, or similar system will
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have the capacity to produce historical transactional data in accordance with City's
requirements.
j. Record Keeping. Owner will maintain records for all commercial cannabis
products produced at the Facility. Owner will comply with all records-keeping
responsibilities that are set forth in Municipal Code Section 4-34-10, including
complete and up-to-date records regarding the amount of commercial cannabis
cultivated, produced, manufactured, harvested, stored, or packaged at Owner's
facility.
k. Processing. Handling. Storing. and Distribution of Commercial
Cannabis and Related Products. Commercial cannabis cultivation, handling,
storing, and processing shall be concealed from public view at all stages of growth
and processing, and there shall be no exterior evidence of cultivation or processing
occurring at the premises from a public right-of-way or from an adjacent parcel.
Commercial cannabis cultivation, handling, storing, processing, or distribution shall
not create offensive odors; create excessive dust, heat, noise, smoke, traffic, or
other impacts that are disturbing to people of normal sensitivity residing or present
on adjacent or nearby property or areas open to the public; or be hazardous due
to use or storage of materials, processes, products, or wastes.
Owner will store its commercial cannabis products in a locked safe room with card
or fob entry access for management only. The safe room will be constructed of
fire-rate walls with numerous cameras installed to view all entries and exits from
the safe room, as well as all other activities performed within Owner's facility.
Owner will not conduct outdoor operations except as related to lawful delivery and
transportation of commercial cannabis and infused products. Owner will not store
commercial cannabis or related products in its delivery vehicle outside normal
operating hours of the facility.
Commercial cannabis products will be sold or distributed in accordance with
applicable local and State law, except as provided in Section 4(h) above.
Contaminated products will be securely stored on-site until properly disposed of.
Disposal may include composting, incineration, land-fill disposal through the local
waste management hauler, or other disposal methodology in accordance with
state and county health and safety codes and regulations.
I. Odor Control. All structures shall have ventilation and filtration systems
installed that prevent cannabis odors from exiting the interior of the structure. The
ventilation and filtration system contained in Owner's Application must be
approved by the Building Official and City Manager and shall be installed in
accordance therewith prior to commencing commercial cannabis operations within
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the Facility. Facility air intake, exhaust, and recirculating system shall be of
industrial grade. Activated charcoal, recirculating, and closed loop aeration
systems will be utilized as necessary for effective odor control and management.
m. Description of Banking Plan. Owner will seek to open a bank account under
the name of Owner or its associated management company to provide
transparency for funds received, operational costs, including payroll, tax payments
to the state and federal governments, among others. Should a bank account not
be forthcoming, Owner will purchase and install safes to secure all daily funds
received from its collective membership or other lawful cooperative corporations
to implement debit and credit card transactions.
n. Transportation Plan. Owner will comply with all state and local law
regarding transportation, including the rules governing delivery services. Owner
will retain a list of names and cellular contact numbers for all employees engaged
in transportation of commercial cannabis products and provide it to the proper state
or local authority within a reasonable time of request thereof. Owner shall take
reasonable efforts to keep the list current and up to date.
Owner will keep complete and up-to-date records documenting each transfer of
commercial cannabis to licensed and/or permitted persons or entities, including
the amount transferred, the form or product category in which the commercial
cannabis was transferred, the date and time transferred, the name of the employee
making the transfer, the name and address of the licensed and/or permitted person
or entity to whom delivery is made, and the amount of the monetary transaction.
5. Community Relations, Emp loyment. and Wages
a. Public Outreach and Education Program. Owner shall create the position
of public outreach coordinator or community liaison to the City of Lynwood's
community, including but not limited to outreach and interface with public and
private schools, youth organizations, religious organizations, health care
providers, drug abuse treatment providers, and mental health and drug counseling
providers.
Owner will coordinate and cooperate with City and other Owners of commercial
cannabis facilities located within City of Lynwood in the establishment and
implementation of reasonably appropriate public outreach and education
programs. The public outreach and education programs shall be approved by City,
approval of which shall not be unreasonably withheld.
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b. Community Benefits Program. Owner will coordinate and cooperate with
City and other Owners of commercial cannabis facilities located within the City of
Lynwood in the establishment, implementation, and funding of a community
benefits program which could include such items as new community recreation
facilities, expansion and/or improvement to existing facilities or other physical
improvements that provide a benefit to the community, support of holiday and
special community events, and support of local public service and special districts
and organizations. This community benefits program may be implemented by a
foundation or other association of commercial cannabis facility owners issued
regulatory permits by City. City and the public will participate in the decision-
making process for identifying and prioritizing community needs and benefits, and
identifying appropriate projects to be funded by the entity implementing this
community benefits program. All projects under the community benefits program
must be approved by a duly appointed representative of City, the approval of which
shall not be unreasonably withheld.
c. Designation of Persons Responsible for Community Relations. At the time
of this Agreement, Owner's Managing AgenUGeneral Manager will be responsible
for community inquiries and complaints and on-site during normal business hours.
d. Interface with Los Angeles County Sheriff. Owner's general manager will
interface with the Los Angeles County Sheriff to ensure its operation complies with
state and local laws and regulations.
e. Local Recruitment, Hiring, and Training Programs. Owner is committed to
making a good-faith effort to recruit, hire, and train qualified City residents for
employment by Owner. A good-faith effort means Owner will take the following or
similar actions to recruit and employ qualified City residents: 1) Contact local
recruitment sources to identify qualified individuals who are City residents, and 2)
Advertise for qualified City residents in trade papers and newspapers of general
circulation in the area.
Owner will, where appropriate, make a good faith effort to seek to contract with
companies located in the City of Lynwood to serve as its general contractor and
instruct general contractor to seek local subcontractors needed for construction
and build-out improvements of Owner's commercial cannabis facilities. Owner will
make reasonable good faith efforts to employ a local security company to provide
security services to the Facility, providing such a company is adequately licensed
and bonded under state law. Owner will make reasonable efforts to employ local
business owners for all other ancillary services needed for the development and
operation of Facility.
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f. Living Wages. Owner agrees to pay all employees of the Facility a Living
Wage. A "Living Wage" is the higher of whatever Owner currently pays its
employees for similar work elsewhere in the State of California, or the following:
until December 31, 2017: 150% of the prevailing California State minimum wage.
Such wage shall increase on January 1 of each subsequent year in accordance
with the Consumer Price Index for Los Angeles County, for the quarter ending
September 30 of the preceding year.
g. Full-time Work. Owner shall make its best efforts to fill every position with
a full-time employee. However, at no time shall Owner have a labor force that is
composed of less than 50% full-time employees within its labor force, and Owner
shall make a good faith effort to maintain a full-time employee level of 75%. All
full-time employees shall receive standard employee benefits such as health
insurance, vacation pay, and sick pay.
6. Indemnification of City from Liability
a. Pursuant to City's requirement, Owner will indemnify City from any claims,
damages, injuries, or liabilities of any kind associated with the registration or
operation of Owner's commercial cannabis facility or the prosecution of Owner's
facility or its owners, managers, directors, officers, employees, or its qualified
patients or primary caregivers for violation of federal or state laws.
b. Owner agrees to defend, at its sole expense, any action against City, its
agents, officers, and employees related to the approval or issuance of the
Regulatory Permit and this Agreement. Owner shall have the right, upon
reasonable notice from City, to select and engage a capable law firm to defend
said action(s).
c. Owner agrees to reimburse City for any reasonable court costs and attorney
fees that City may be required to pay as a result of any legal challenge related to
City's approval or issuance of a Regulatory Permit or this Agreement. City may,
at its sole discretion, participate at its own expense in the defense of any such
action, but such participation shall not relieve the holder of the Regulatory Permit
or this Agreement, although any expenses subject to Owner's reimbursement
obligations must be submitted for Owner's approval, which shall not be
unreasonably withheld, prior to incurrence to obligate Owner's reimbursement
obligation thereof.
7. Fees. Costs. and Future Taxes
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a. Fees. Owner agrees to pay all permit fees and charges referenced in
Section 4-34-11 of the municipal code, in the amounts adopted by the City Council
by resolution, as well as any fees set forth in this Agreement. Permit application,
processing, and renewal fees shall be due and payable at the time application is
made.
b. Costs. Owner agrees to reimburse City for all reasonable additional costs
of City resulting from the operation of a commercial cannabis facility authorized
under Article 4-34 of the municipal code and the administrative regulations.
Reimbursement to City for such costs shall be due and payable upon demand.
c. Operating Fees. Owner agrees to pay to City, to enable City to promote,
protect, and enhance the healthy, safety, and welfare of the community and its
residents and its quality of life, the following fees:
1) an annual fee of $10.00 per square foot of cultivation area (flowering
canopy);
2) an annual fee of two percent (2.0%) of gross income from manufacturing
activities;
3) an annual fee of one and one-half percent (1.5%). of gross income from
distribution/transportation of product for anyone other than Owner; and
4) an annual fee of two and one-half percent (2.5%) of gross income from
delivery activities.
d. In the event that Owner becomes insolvent, either voluntarily or
involuntarily, by a final decision of a bankruptcy court, City shall waive operating
fees that might accrue during the bankruptcy process, but only if Owner gives City
at least 30 days' notice of its intent to file the bankruptcy petition, and all of its
payments are up to date on the day the petition is filed with the United States
Bankruptcy Court.
e. Owner understands and agrees that the fees set forth above shall be paid
in a manner and in accordance with a payment schedule agreed to by City and
Owner, in intervals of no more than three months. The cultivation and
manufacturing space to which the fee applies is as identified on the attached floor
plan. Payment shall be in equal installments paid quarterly commencing at the
end of the first quarter after the effective date of the Regulatory Permit which shall
be no sooner than the date a certificate of occupancy is issued for the subject
premises.
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f. If Owner makes any changes to the interior layout of the facility that
increases the amount of space allocated to those uses to which the per-square-
foot fee applies, Owner shall notify City of such changes at least fourteen (14)
calendar days prior to making such changes, and the per-square-foot fee shall be
modified accordingly. If Owner fails to give City notice as required herein, Owner
shall be responsible for paying to City a per-square-foot fee based on any increase
in the amount of space allocated to those uses to which the per-square-foot fee
applies retroactive to the date the Regulatory Permit became effective.
Owner understands and agrees the annual per-square-foot fee shall be subject to
review and modification upon each annual renewal of the Regulatory Permit
applying the same standards set forth in paragraph c above.
8. Cost Recovery Fee
City shall assess to Owner fees to recover City's reasonable processing and
monitoring costs relating to Owner's business at the Facility upon issuance of
Owner's commercial cannabis Permits ("CRF"). The City shall submit sufficient
documentation to Owner of City's total number of hours required to process their
Application or monitor their authorizations, as well as applicable invoices where
necessary. CRFs are separate and apart from any fees set forth in Article 7.
a. Processing Fees. Processing fees for the Application are based upon the
reasonable direct and indirect costs that City incurs in reviewing the Application
and implementing the Ordinance. The processing fees for the Application shall be
based only on costs that are necessary for processing the Application and
implementing the Ordinance, including staff time, legal fees, and consultant fees.
"Necessary for'' means that but for the Application, the costs would not have been
incurred. The processing fees shall not include costs for other City objectives,
unless they are necessary for processing the Application. Owner shall be able to
request documentation with respect to this section and receive, upon request, a
justification from City as to why certain Processing Fees are being assessed within
a reasonable time.
b. Monitoring Fees. Monitoring fees for the commercial cannabis Permits and
associated operations to take place at Facility are based upon the direct and
indirect costs City incurs in confirming the use of the Property in accordance with
the municipal code, the Ordinance, this Agreement, and the Application. The
monitoring fees shall be based only on costs that are necessary for conducting
these reviews. "Necessary for'' means that but for the Permits, the costs would not
have been incurred. The monitoring fee shall not include costs for other City
management objectives, unless they are necessary for monitoring the Permits and
their associated activities.
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c. Billing and Payment. City shall bill Owner the CRF on the first day of each
quarter (March, June, September, and December) with an invoice providing an
hourly breakdown of hours expended by City and its representatives, as well as
additional invoices documenting any and all billed amounts. Owner shall pay the
CRF invoice within sixty (60) days of the date the bill for the CRF is received by
Owner. Notwithstanding the foregoing, at no time shall the CRFs exceed Seven
Thousand Dollars ($7,000) during a given year, except that the first year may be
as high as ten thousand dollars ($10,000) because of the costs required to set up
the application process and review the applications. City shall provide
documentation of the CRF upon reasonable request by Owner.
d. Disputes. If Owner disagrees with the dollar amount provided by City on
the CRF invoice, Owner may submit a written request within ten (1 0) business
days of its receipt of the CRF for a substitution of alternative CRF invoice to the
immediate supervisor of the City representative who determined the CRF invoice.
The written request must include supporting documentation. After review of
Owner's written request, Owner and City shall work, in good faith to resolve
Owner's written request. The dispute shall be decided in favor of Owner if City
does not respond to the written request within thirty (30) days of receipt. Failure to
resolve a dispute will trigger mandatory arbitration subject to § 24(h) of this
Agreement, the costs of which shall be shared equally between the Parties. The
decision of the arbitrator shall be binding upon the Parties.
9. Additional Owner Obligations
a. Reporting of Gross Receipts from Operations
1) Quarterly Receipts. No later than December 31, 2017, and the last
day of each subsequent quarter during the Term hereof, Owner shall deliver
to City a report (the "Quarterly Report") showing (i) Gross Receipts from
Operations for the immediate prior quarter received by Owner, and a
cumulative total of all amounts of Gross Receipts from Operations received
by Owner for the calendar year, (ii) a calculation of the quarterly payment
due to City for the prior quarter, and (iii) a calculation of the cumulative total
of all quarterly payments for the calendar year.
2) Statement of Receipts. Owner shall keep complete, accurate and
appropriate books and records of all receipts from operations in accordance
with generally accepted accounting principles. For purposes herein, "books
and records" shall mean all bookkeeping or accounting documents Owner
utilizes in managing its business operations relating to the Project. Such
books and records, as well as all other relevant documents as City shall
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reasonably require, shall, upon reasonable written notice to be given to
Owner no sooner than forty-eight (48) hours in advance, be open for
inspection by City, its auditors or other authorized representatives. If at any
time during the term such books and records prove inadequate in the
reasonable judgment of City to record the Gross Receipts from Operations
as herein required, Owner shall, upon the prior written request of City,
procure and maintain such books and records as shall be of a character
and form adequate for such purposes. City shall have the right to audit and
examine such books, records and documents and other relevant items in
the possession of Owner, but only to the extent necessary for a proper
determination of Gross Receipts from Operations, and all such books,
records, documents and other items shall be held available for such audit
and examination.
Upon prior written request by City, Owner shall make all such books,
records and documents available to City at Owner's primary corporate
office. The cost for any audit shall be shared equally by the Parties. Owner
shall preserve such books, records, documents, and other items in its
corporate office for a period of not less than five (5) years for the purpose
of auditing or re-auditing these accounts upon reasonable notice; except
that, if an audit is made within the five (5) year period and Owner claims
that errors or omissions have occurred, the books and records shall be
retained by Owner and made available until those matters are resolved. City
shall keep strictly confidential all statements of revenue furnished by Owner
and all other information concerning Owner's operation of the Premises
obtained by City as a result of the inspection audit and examination
privileges of City hereunder, except as otherwise required by law. If City
receives a request for such information pursuant to the Public Records Act
(California Government Code Section 6250, et seq.), City shall provide
Owner notice of any such request prior to disclosing any such information.
Within five (5) years after the receipt of any statement of receipts under this
Agreement, City at any time shall be entitled to carry out an audit of such
revenue either by City or agent to be designated by City. If it shall be
determined as a result of such audit that there has been a deficiency in any
payment due under this Agreement made on the basis of such statement,
then such deficiency shall become immediately due and payable. If such
statement of revenue for the relevant year shall be found to have
understated receipts by more than two (2) percent of the amount
understated and City is entitled to any additional payment as a result of said
understatement, then Owner shall, in addition, pay all of City's reasonable
costs and expenses connected with such audit, including the expense
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incurred in retaining such agent; otherwise City shall bear the cost and
expense of such audit.
3) Copies of Tax Filings. Owner shall provide City with copies of any
reports Owner is required to provide to the County of Los Angeles or the
State of California for sales, use, or other tax purposes.
b. Applicability of Future Revenue Mechanisms. During the term of this
Agreement, if City imposes an alternative revenue mechanism specifically related
to cannabis operations (e.g., a cannabis tax), Owner agrees to pay to City the
greater of the payment required under such alternative revenue mechanism or the
payment required by this section, but never more than one revenue mechanism.
As used in this section, "alternative revenue mechanism" does not include taxes,
fees, or assessments levied on or collected from both cannabis and non-cannabis
operations. Payments required by revenue mechanisms that are not limited to
cannabis operations shall be in addition to, and not in lieu of, payments under this
section.
10. Insurance and Indemnity
a. Insurance. Owner shall require all persons doing work on the Project,
including its contractors and subcontractors (collectively, "Owner" for purposes of
this Article 10 only), to obtain and maintain insurance of the types and in the
amounts described in this section and its subsections with carriers reasonably
satisfactory to City, which approval shall not be unreasonably withheld.
b. General Liability Insurance. Owner shall maintain commercial general
liability insurance or equivalent form with a limit of not less than Two Million Dollars
($2,000,000) (or as otherwise approved, in writing, by City) per claim and Two
Million Dollars ($2,000,000) each occurrence. Such insurance shall also:
1) Name City, its elected and appointed councils, boards, commissions,
officers, agents, employees, and representatives as "Additional Insureds"
by endorsement with respect to performance of this Agreement. The
coverage shall contain no special limitations on the scope of its protection
afforded to the above-listed additional insured.
2) Be primary with respect to any insurance or self-insurance programs
covering City, its officials, employees, agents, and representatives.
3) Contain standard separation of insured provisions.
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c. Automotive Liability Insurance. Owner shall maintain business automobile
liability insurance or equivalent form with a limit of not less than One Million Dollars
($1 ,000,000) for each accident. Such insurance shall include coverage for owned,
hired, and non-owned automobiles. Such insurance shall also:
1) Name City, its elected and appointed officials, boards, commissions,
officers, agents, employees, and representatives as "Additional Insureds"
by endorsement with respect to performance of this Agreement. The
coverage shall contain no special limitations on the scope of its protection
afforded to the above-listed additional insureds.
2) Be primary with respect to any insurance or self-insurance programs
covering City, its officials, employees, agents, and representatives.
3) Contain standard separation of insured provisions.
d. Workers' Compensation Insurance. Owner shall take out and maintain
during the term of this Agreement, workers' compensation insurance for all of
Owner's employees employed at or on the Project, and in the event any of the
work is subcontracted, Owner shall require any general contractor or subcontractor
similarly to provide workers' compensation insurance for such contractor's or
subcontractor's employees, unless such employees are covered by the protection
afforded by Owner. In case any class of employee engaged in work on the Project
is not protected under any workers' compensation law, Owner shall provide and
shall cause each contractor and subcontractor to provide adequate insurance for
the protection of employees not otherwise protected. Owner hereby indemnifies
City for any damage resulting from failure of Owner, its agents, employees,
contractors, or subcontractors to take out or maintain such insurance. Workers'
compensation insurance with statutory limits and employer's liability insurance with
limits of not less than One Million Dollars ($1 ,000,000) each accident shall be
maintained.
e. Other Insurance Requirements. Owner shall do all the following:
1) Prior to taking any actions under this Agreement, furnish City with
properly executed certificates of insurance and ensure that such insurance
will not be canceled, allowed to expire, or be materially reduced in coverage
without thirty (30) days prior written notice to City.
2) Provide to City, upon request, and within seven (7) calendar days of
said request, certified copies of endorsements and policies, and properly
executed certificates of insurance evidencing the insurance required herein.
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3) Replace or require the replacement of certificates, policies and
endorsements for any insurance required herein expiring prior the
termination of this Agreement.
4) Maintain all insurance required herein from the Effective Date of this
Agreement to the earlier of the expiration of the term or the mutual written
termination of this Agreement.
5) Place all insurance required herein with insurers licensed to do
business in California with a current Best's Key Rating Guide reasonably
acceptable to City, of which approval shall not be unreasonably withheld.
f. Indem nity. Owner agrees to indemnify, defend, and hold City, and its
elected and appointed council, boards, commissions, officers, agents, employees,
consultants, and representatives, harmless from any and all claims costs and
liability for any personal injury or property damage which may arise as a result of
any negligent actions or omissions by Owner or Owner's contractors,
subcontractors, agents, or employees in connection with the construction,
improvement, or operation of the Project.
11. Termination
a. Termination Upon Completion of Development. This Agreement shall
terminate upon the expiration of the term, unless it is terminated earlier pursuant
to the terms of this Agreement. Upon termination of this Agreement, City shall
record a notice of such termination and this Agreement shall be of no further force
or effect except as otherwise set forth in this Agreement.
b. Effect of Termination on Owner's Obligations. Termination of this
Agreement shall eliminate any further obligation of Owner to comply with this
Agreement, or some portion thereof, if such termination relates to only part of the
Site or Project. Termination of this Agreement, in whole or in part, shall not,
however, eliminate the rights of Owner to seek any applicable and available
remedies or damages based upon acts or omissions occurring before termination.
c. Effect of Termination on City's Obligations. Termination of this Agreement
shall eliminate any further obligation of City to comply with this Agreement, or some
portion thereof. Termination of this Agreement shall not, however, eliminate the
rights of City to seek any applicable and available remedies or damages based
upon acts or omissions occurring before termination.
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d. Survival After Termination. The rights and obligations of the Parties set
forth in Article 14, Article 21, and Section 24(e), Section 24{f), and Section 24(h),
and any right or obligation of the Parties in this Agreement which, by its express
terms or nature and context is intended to survive termination of this Agreement,
will survive any such termination.
12. Resources Efficiency
The design of the facility shall include reasonable water and energy conservation
measures in accordance with applicable State regulations.
13. Standard Conditions for Construction
During any on-site construction activities related to development of the project site and
any buildings thereon, or renovation or remodeling of existing buildings, Owner and
Landlord shall, with the exception of certain Exemptions described in this Agreement,
comply with all applicable terms and conditions of City's Standard Conditions for
Construction, attached hereto and incorporated herein by reference. The Project shall
comply with the applicable parking standards established by the City for cannabis
activities.
14. Defaults and Remedies
a. Remedies in general. It is acknowledged by the parties that City would not
have entered into this Agreement if it were to be liable in damages under this
Agreement, or with respect to this Agreement or the application thereof, except as
hereinafter expressly provided. Subject to extensions of time by mutual consent
in writing, failure or delay by either party to perform any material term or provision
of this Agreement shall constitute a default. In the event of alleged default or
breach of any material terms or conditions of this Agreement, the party alleging
such default or breach shall give the other party not less than thirty (30) day notice
in writing specifying the nature of the alleged default and the manner in which said
default may be satisfactorily cured during any such thirty (30) day period, the party
charged shall not be considered in default for purposes of termination or institution
of legal proceedings. Notwithstanding the foregoing to the contrary, if the alleged
default is not cured within thirty (30) days, the alleged defaulting party shall not be
deemed in default as long as such party commences to cure such default within
such thirty (30) day period and thereafter diligently prosecutes such cure to
completion.
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After notice and expiration of the thirty (30) day period, the other party to this
Agreement, at its option, may institute legal proceedings pursuant to this
Agreement.
In general, each of the parties hereto may pursue any remedy at law or equity
available for the breach of any provision of this Agreement, except that City shall
not be liable in monetary damages, unless expressly provided for this Agreement,
to Owner, any mortgagee or lender, or any successors in interest of Owner or
mortgagee or lender, or to any other person. Owner covenants on behalf of itself
and all successors in interest to the Property or any portion thereof, not to sue for
damages or claim any damages:
1) For any breach of this Agreement or for any cause of action which
arises out of this Agreement; or
2) For the impairment or restriction of any right or interest conveyed or
provided under, with, or pursuant to this Agreement, including, without
limitation, any impairment or restriction which Owner characterizes as a
regulatory taking or inverse condemnation; or
3) Arising out of or connected with any dispute, controversy or issue
regarding the application or interpretation or effect of the provisions of this
Agreement.
Nothing contained herein shall modify or abridge Owner's rights or remedies
(including its rights for damages, if any) resulting from the exercise by City of its
power of eminent domain. Nothing contained herein shall modify or abridge
Owner's rights or remedies (including its rights for damages, if any) resulting from
the grossly negligent or malicious acts of City and its officials, officers, agents and
employees. Nothing herein shall modify or abridge any defenses or immunities
available to City and its employees pursuant to the Government Liability Act and
all other applicable statutes and decisional law.
Except as set forth in the preceding paragraph relating to eminent domain, Owner's
remedies shall be limited to those set forth in this Section 14(a), Section 14(b), and
Section 14(c).
Notwithstanding anything to the contrary contained herein, City covenants as
provided in Civil Code Section 3300 not to sue for or claim any consequential
damages or, in the event all or a portion of the Property is not developed, for lost
profits or revenues which would have accrued to City as a result of the
development of the Property.
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b. Specific Performance. The parties acknowledge that money damages and
remedies at law are inadequate, and specific performance and other non-monetary
relief are particularly appropriate remedies for the enforcement of this Agreement
and should be available to all parties for the following reasons:
1) Except as provided in Sections 14(a) and 14(e), money damages are
unavailable against City as provided in Section 14(a) above.
2) Due to the size, nature and scope of the Project, it may not be
practical or possible to restore the Property to its natural condition once
implementation of this Agreement has begun. After such implementation,
Owner may be foreclosed from other choices it may have had to use the
Property or portions thereof. Owner has invested significant time and
resources and performed extensive planning and processing of the Project
in agreeing to the terms of this Agreement and will be investing even more
significant time and resources in implementing the Project in reliance upon
the terms of this Agreement, and it is not possible to determine the sum of
money which would adequately compensate Owner for such efforts; the
parties acknowledge and agree that any injunctive relief may be ordered on
an expedited, priority basis.
c. Release. Except for those remedies set forth in Sections 14(a), 14(b), and
14(c), Owner, for itself, its successors and assignees, hereby releases City, its
officers, agents and employees from any and all claims, demands, actions, or suits
of any kind or nature arising out of any liability, known or unknown, present or
future, based or asserted, pursuant to Article 1, Section 19 of the California
Constitution, the Fifth Amendment of the United States Constitution, or any other
law or ordinance which seeks to impose any other liability or damage, whatsoever,
upon City because it entered into this Agreement or because of the terms of this
Agreement.
Owner acknowledges that it may have suffered, or may suffer, damages and other
injuries that are unknown to it, or unknowable to it, at the time of its execution of
this Agreement. Such fact notwithstanding, Owner agrees that the release
provided in this Section 14(c) shall apply to such unknown or unknowable claims
and damages. Without limiting the generality of the foregoing, Owner
acknowledges the provisions of California Civil Code Section 1542, which provide:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his or her favor at the time of executing
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the release, which if known by him or her must have materially
affected his or her settlement with the debtor."
Owner hereby waives, to the maximum legal extent, the provisions of California
Civil Code Section 1542 and all other statutes and judicial decisions of similar
effect.
Initials
d. Termination of Agreement for Default of City. Owner may terminate this
Agreement only in the event of a default by City in the performance of a material
term of this Agreement and only after providing written notice to City of default
setting forth the nature of the default and the actions, if any, required by City to
cure such default and, where the default can be cured, City has failed to take such
actions and cure such default within sixty (60) days after the effective date of such
notice or, in the event that such default cannot be cured within such sixty (60) day
period but can be cured within a longer time, has failed to commence the actions
necessary to cure such default within such sixty (60) day period and to diligently
proceed to complete such actions and cure such default.
e. Attorneys' Fees and Costs. In any action or proceeding between City and
Owner brought to interpret or enforce this Agreement, or which in any way arises
out of the existence of this Agreement or is based upon any term or provision
contained herein, the "prevailing party" in such action or proceeding shall be
entitled to recover from the non-prevailing party, in addition to all other relief to
which the prevailing party may be entitled pursuant to this Agreement, the
prevailing party's reasonable attorneys' fees and litigation costs, in an amount to
be determined by the court. The prevailing party shall be determined by the court
in accordance with California Code of Civil Procedure Section 1032. Fees and
costs recoverable pursuant to this Section include those incurred during any
appeal from an underlying judgment and in the enforcement of any judgment
rendered in any such action or proceeding.
f. Owner Default. No building permit shall be issued or building permit
application accepted for any structure on the Property after Owner is
determined by City to be in default of the terms and conditions of this
Agreement until such default thereafter is cured by Owner or is waived by
City. If City terminates this Agreement because of Owner's default, then
City shall retain any and all benefits, including money or land received by
City hereunder. Nothing in this section shall imply that City has claims or
rights of ownership to the real estate, the facility, or any other assets
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associated with this development unless otherwise specified in this
Agreement.
15. Third Party Litigation
a. General Plan Litigation. City has determined that this Agreement is
consistent with its General Plan. Owner has reviewed the General Plan and
concurs with City's determination.
City shall have no liability under this Agreement or otherwise for any failure of City
to perform under this Agreement, or for the inability of Owner to develop the
Property as contemplated by the Development Plan, which failure to perform or
inability to develop is as the result of a judicial determination that the General Plan,
or portions thereof, are invalid or inadequate or not in compliance with law, or that
this Agreement or any of City's actions in adopting it were invalid, inadequate, or
no in compliance with the law.
b. Hold Harmless Agreement. Owner hereby agrees to, and shall hold City,
its elective and appointive boards, commissions, officers, agents, and employees
harmless from any liability for damage or claims for damage for personal injury,
including death, as well as from claims for property damage which may arise from
Owner or Owner's contractors, subcontractors, agents, or employees' operations
under this Agreement, whether such operations be by Owner, or by any of Owner's
contractors, subcontractors, agents, or employees operations under this
Agreement, whether such operations be by Owner, or by any of Owner's
contractors, subcontractors, or by any one or more persons directly or indirectly
employed by, or acting as agent for Owner or any of Owner's contractors or
subcontractors. Owner agrees to and shall defend City and its elective and
appointive boards, commissions, officers, agents and employees from any suits or
actions at law or in equity for damage caused, or alleged to have been caused, by
reason of any of the aforesaid operations.
c. Indemnification. Owner shall defend, indemnify, and hold harmless City and
its agents, officers, and employees against and from any and all liabilities,
demands, claims, actions or proceedings and costs and expenses incidental
thereto (including costs of defense, settlement and reasonable attorneys' fees),
which any or all of them may suffer, incur, be responsible for or pay out as a result
of or in connection with any challenge to the legality, validity or adequacy of any of
the following: (i) this Agreement and the concurrent and subsequent permits,
licenses and entitlements approved for the Project or Property; (ii) the
environmental impact report, mitigated negative declaration or negative
declaration, as the case may be, prepared in connection with the development of
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the Property; (iii) any claims based on or alleging inverse condemnation by any
person or entity with an interest in the Property; and (iv) the proceedings
undertaken in connection with the adoption or approval of any of the above. In the
event of any legal or equitable action or other proceeding instituted by any third
party (including a governmental entity or official) challenging the validity of any
provision of this Agreement or any portion thereof as set forth herein, the parties
shall mutually cooperate with each other in defense of said action or proceeding.
Notwithstanding the above, City, at is sole option, may tender the complete
defense of any third-party challenge as described herein. In the event City elects
to contract with special counsel to provide for such a defense, City shall meet and
confer with Owner regarding the selection of counsel, and Owner shall pay all costs
related to retention of such counsel.
d. Environmental Contamination. Owner shall indemnify and hold City, its
officers, agents, and employees free and harmless from any liability, based or
asserted, upon any act or omission of Owner, its officers, agents, employees,
subcontractors, predecessors in interest, successors, assigns and independent
contractors, excepting and acts or omissions of City as successor to any portions
of the Property dedicated or transferred to City by Owner, for any violation of any
federal, state or local law, ordinance or regulation relating to industrial hygiene or
to environmental conditions on, under or about the Property, including, but not
limited to, soil and groundwater conditions, and Owner shall defend, at its expense,
including attorneys' fees, City, its officers, agents and employees in any action
based or asserted upon any such alleged act or omission. City may in its discretion
participate in the defense of any such claim, action or proceeding.
The provisions of this Section 15(d) do not apply to environmental conditions that
predate Owner's ownership or control of the Property or applicable portion;
provided, however, that the foregoing limitation shall not operate to bar, limit or
modify any of Owner's statutory or equitable obligations as an owner or seller of
the Property.
e. Accept Reasonable Good Faith Settlement. With respect to Article 15, City
shall not reject any reasonable good faith settlement. If City does reject a
reasonable, good faith settlement that is acceptable to Owner, Owner may enter
into a settlement of the action, as it relates to Owner, and City shall thereafter
defend such action (including appeals) at its own cost and be solely responsible
for any judgment rendered in connection with such action. This Section applies
exclusively to settlements pertaining to monetary damages or damages which are
remedial by the payment of monetary compensation. Owner and City expressly
agree that this Section does not apply to any settlement that requires an exercise
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of City's police powers, limits City's exercise of its police powers, or affects the
conduct of City's municipal operations.
f. Survival. The provisions of Sections 15(a) through 15(e) inclusive, shall
survive the termination or expiration of the Agreement.
16. Environmental Findings
The City has found that the proposed Project is Categorically Exempt from California
Environmental Quality Act (CEQA) requirements under provisions of CEQA Guidelines
Section 15332 -In-Fill Development Projects. This exemption applies to projects
characterized as in-fill development meeting the conditions described in Section 15332.
17. Rules. Regulations. and Official Policies
Except as otherwise provided in this Agreement, the rules, regulations, and official
policies of City governing permitted uses of the land, governing density, and governing
the design, improvements, and construction standards and specifications applicable to
the development of the Project subject of this Agreement, shall be those rules,
regulations, and official policies of City in force at the time of the execution of this
Agreement. This Agreement does not prevent City, in subsequent actions applicable to
the property, from applying new rules, regulations, and policies which do not conflict with
those rules, regulations, and policies applicable to the property as set forth herein, nor
does this Agreement prevent City from denying or conditionally approving any
subsequent development project application based on such existing or new rules,
regulations, or policies.
18. Regulatory Permit Conditions of Approva l
Owner shall comply with all conditions of approval of the Regulatory Permit approved by
City Council.
19. Periodic Reviews
This Agreement shall be subject to annual review. Owner and Landlord executing this
Agreement, or successor in interest thereto, shall demonstrate good faith compliance with
the terms of this Agreement. If, as a result of such periodic review, City finds and
determines, based on substantial evidence, that Owner or Landlord executing this
Agreement, or successor in interest thereto, has not complied in good faith with the terms
or conditions of this Agreement, City may terminate or modify this Agreement.
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a. Periodic Review. City Council shall review this Agreement annually, on or
before each anniversary of the Effective Date, in order to ascertain Owner's good
faith compliance with this Agreement. During the periodic review Owner shall be
required to demonstrate good faith compliance with the terms of the Agreement,
through submitting an annual monitoring report, records, or equivalent written
materials to the Planning Department. The Planning Department will schedule a
hearing on the periodic review of the Development Agreement on or following the
anniversary of the Effective Date, but Owner has no obligation to compel such
hearing, and no implication will be made to Owner's detriment if a hearing is not in
fact held. Owner shall document any request for an extension of the term due to
delays beyond the control of Owner (see Section 24U), "Force Majeure"). Owner
shall submit an annual review and administration fee deposit not to exceed City's
estimated internal and third-party costs associated with the review and
administration of this Agreement during the succeeding year, consistent with
Section 24(k) ("Deposit with City") below. City shall provide Owner said estimate
a reasonable time in advance of the annual review and administration fee deposit
being due.
b. Conditional Use Permit. For all intents and purposes other than requiring
additional municipal review, the Regulatory Permit to be issued under this
Agreement shall be treated as if it were a Conditional Use Permit issued to Owner
for the establishment and operation of its business. The operation of the business
at all times shall be required to comply with the terms of this Agreement.
c. Special Review. City Council may order a special review of compliance with
this Agreement at any time. The Planning Director or his or her designee shall
conduct such special review. During a special review, Owner shall be required to
demonstrate good faith compliance with the terms of the Agreement. The burden
of proof on this issue shall be on Owner.
d. Review Hearing. At the time and place set for the review hearing, Owner
shall be given an opportunity to be heard. If City Council finds, based upon
substantial evidence, that Owner has not complied in good faith with the terms or
conditions of this Agreement, City Council may terminate this Agreement
notwithstanding any other provision of this Agreement to the contrary, or modify
this Agreement and impose such conditions as are reasonably necessary to
protect the interests of City. Prior to the decision of City Council being deemed
final, Owner shall have thirty (30) days to cure such a breach pursuant to Article
14 of the Agreement. Upon Owner's failure to cure such a default, City Council's
decision shall be final, subject only to judicial review pursuant to Code of Civil
Procedure Section 1094.5.
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e. Certificate of Agreement Compliance. If, after a periodic or special review,
Owner is found to be in compliance with this Agreement, City shall issue a
Certificate of Agreement Compliance ("Certificate") to Owner stating that after the
most recent periodic or special review, and based upon the information known or
made known to the Planning Director and City Council, that (i) this Agreement
remains in effect and (ii) Owner is not in default.
City shall not be bound by a Certificate if a default existed at the time of the periodic
or special review, but was concealed from or otherwise not known to the Planning
Director and City Council, regardless of whether the Certificate is relied upon by
assignees or other transferees or Owner.
f. Failure to Conduct Review. City's failure to conduct a periodic review of this
Agreement shall not constitute a breach of this Agreement.
g. Cost of Review. The reasonable costs incurred by City in connection with
the periodic reviews shall be borne by Owner, and shall be based upon invoices
and documentation submitted to Owner evidencing City's reasonable expenditures
for reimbursement.
20. Obligations of Landlord
Landlord shall have rights, duties, obligations, and liability only as expressly set forth
herein. Landlord shall have no responsibility or liability for the failure of Owner to perform
as required by this Agreement.
21. Assignment
a. Assignment by Landlord. Landlord shall not transfer, delegate, or assign its
interest, rights, duties, and obligations under this Agreement, without the prior
written consent of City, which shall not be unreasonably withheld.
b. Assignment by Owner. Owner shall not transfer, delegate, or assign its
interest, rights, duties, and obligations under this Agreement without the prior
written consent of City. Any assignment, delegation, or assignment without the
prior written consent of City shall be null and void. Any transfer, delegation, or
assignment by Owner as authorized herein shall be effective only if and upon the
party to whom such transfer, delegation, or assignment is made is issued a
Regulatory Permit as required under Article 4-34 of the municipal code.
22. Operating Commercial Cannabis Facility
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Any party to this Agreement, or successor in interest thereto, shall not operate a
commercial cannabis facility authorized under the municipal code unless:
a. It is the holder of a valid Regulatory Permit issued by City in accordance
with the procedures and requirements of Article 4-34 of the municipal code; and
b. At such time as the State of California requires commercial cannabis
facilities and businesses to hold a valid license or permit issued by the State of
California, it also holds such license or permit, unless, however, such permit or
license is not required by the State of California for the type of commercial
cannabis facility or business operation that is the subject of this Agreement.
23. Notice
Any notice or communication required hereunder between City and Owner must be in
writing, and may be given either personally, by facsimile (with original forwarded by
regular U.S. Mail), by registered or certified mail (return receipt requested), or by Federal
Express, UPS or other similar couriers providing overnight delivery. If personally
delivered, a notice shall be deemed to have been given when delivered to the Party to
whom it is addressed. If given by facsimile transmission, a notice or communication shall
be deemed to have been given and received upon actual physical receipt of the entire
document by the receiving Party's facsimile machine. Notices transmitted by facsimile
after 5:00 p.m. on a normal business day or on a Saturday, Sunday, or holiday shall be
deemed to have been given and received on the next normal business day. If given by
registered or certified mail, such notice or communication shall be deemed to have been
given and received on the first to occur of (i) actual receipt by any of the addressees
designated below as the party to whom notices are to be sent, or (ii) five (5) days after a
registered or certified letter containing such notice, properly addressed, with postage
prepaid, is deposited in the United States mail. If given by Federal Express or similar
courier, a notice or communication shall be deemed to have been given and received on
the date delivered, as shown on a receipt issued by the courier. Any Party hereto may at
any time, by giving ten (1 0) days written notice to the other Party hereto, designate any
other address in substitution of the address to which such notice or communication shall
be given. Such notices or communications shall be given to the Parties at their addresses
set forth below:
If to City: City of Lynwood
11330 Bullis Road
Lynwood, California 90262
Attention: City Manager
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and
If to Owner:
If to Landlord:
With a courtesy copy to:
24. Miscellaneous Provisions
H. Francisco Leal, Esq.
Leal Trejo, -APC
3767 Worsham Avenue
Long Beach, California 90808
Jordan Lams
Pure CA, LLC
5435 Cahuenga Blvd., Ste. B
North Hollywood, CA 91601
n/a
n/a
a. Regulatorv Permit Conditions of Aooroval. Owner shall comply with all
conditions of approval of the Regulatory Permit approved by City Council.
b. Amendment or Cancellation. This Agreement may be amended, or
canceled in whole or in part, only by the written mutual consent of the Parties to
this Agreement or their successors in interest.
c. Waiver. Waiver by City of any one or more of the terms or conditions of this
Agreement shall not be construed as waiver of any other term or condition under
this Agreement.
d. Enforcement. Unless amended or canceled pursuant hereto, this
Agreement shall be enforceable by any party hereto, or successor in interest
thereto, notwithstanding any subsequent change in any applicable general or
specific plan, zoning, subdivision or building regulation, or municipal code
amendment adopted by City that conflicts with the terms of this Agreement.
e. Joint and Several Liability. Owner and Landlord shall be jointly and
severally liable for any amount due under this Agreement, and any breach of this
Agreement or failure to pay by one Party shall also constitute a breach of this
Agreement by the other Party. Owner and Landlord agree that City may impose a
lien and seek foreclosure on any parcel of the Site due to any default by Owner.
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f. Severability. If any part of this Agreement is found to conflict with applicable
state laws or regulations, such part shall be inoperative, null, and void insofar as it
conflicts with said laws or regulations, or modified or suspended as may be
necessary to comply with such state laws or regulations, but the remainder of this
Agreement shall continue to be in full force and effect.
g. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which together
shall constitute one and the same instrument. The execution of this Agreement
may be by actual, facsimile, or electronic signature.
h. Jurisdiction and Arbitration. The law governing this Agreement shall be that
of the State of California. Any suit brought by any party against any other party
arising out of the performance of this Agreement shall be filed and maintained in
the County of Los Angeles Superior Court. Any dispute, claim or controversy
arising out of or relating to this Agreement or the breach, termination, enforcement,
interpretation or validity thereof, including the determination of the scope or
applicability of this Agreement to arbitrate, shall be determined by binding
arbitration at ADR in Los Angeles, California before one arbitrator. Said arbitrator
shall be chosen by mutual agreement of the Parties. If the Parties cannot agree
on an arbitrator within 30 days of the first notice by either Party of the need for
arbitration, each Party shall name one arbitrator, then the two arbitrators shall
choose the arbitrator who shall hear the case.
i. Disclaimer. Despite California's commercial cannabis laws and the terms
and conditions of this Agreement, any Conditional Use Permit, or any Regulatory
Permit issued pertaining to Owner or the property specified herein, California
commercial cannabis operators and possessors acting in accordance with state
law may still be subject to arrest by federal officers and prosecuted under federal
law.
j. Force Majeure. If delays are caused by unforeseen events beyond the
control of Owner, such delays will entitle Owner to an extension of time as provided
in this section. Such unforeseen events ("Force Majeure") shall mean war,
insurrection, acts of God, local, state or national emergencies, strikes and other
labor difficulties beyond the party's control, or any default by City hereunder, which
Force Majeure event substantially interferes with the development or construction
of the Project.
k. Costs and Fees. Owner shall be responsible for all of the reasonable and
fixed costs associated the Project, including but not limited to costs associated with
City's review and processing of the Project, including but not limited to reviewing
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the Project's entitlements, including all environmental clearance documents,
permits, licenses and all documents evidencing compliance with state and local
law, and as such Owner agrees to reimburse City and pay fees whereby Owner
shall deposit money with City for the purpose of reimbursing City for any costs and
fees associated with processing the Project, as detailed in this Agreement. City
shall provide to Owner within 90 days of the effective date of this Agreement a list
of hourly rates chargeable for staff who will be implementing and enforcing this
Agreement.
I. Constructive Notice and Acceptance. Every person who after the Effective
Date and recording of this Agreement owns or acquires any right, title, or interest
to any portion of the Site, is and shall be conclusively deemed to have consented
and agreed to every provision contained herein, whether or not any reference to
this Agreement is contained in the instrument by which such person acquired an
interest in the Site, and all rights and interests of such person in the Site shall be
subject to the terms, requirements, and provisions of this Agreement
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
CITY OF LYNWOOD
Alma K. Martinez
City Manager
APPROVED AS TO FORM:
PURE CA
Jordan Lams
Chief Executive Officer
2990 MLK JR, LLC
Jordan Lams
Chief Executive Officer
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COMMERCIAL CANNABIS
DEVELOPMENT AGREEMENT
Development Agreement No. 2017-04 MOD
This Agreement is made by and between and among the CITY OF LYNWOOD
("City") and Norton Avenue Ventures, Inc. ("Owner'') this _ day of January 2018, as
required by Section 4-34-5 of the Lynwood Municipal code setting forth the terms and
conditions under which Owner shall operate a medicinal and adult cannabis cultivation,
manufacturing, distribution, and delivery facility (also, the "Project") pursuant to its
Regulatory Permit that are in addition to the requirements of Article 4-34 of the Lynwood
Municipal code, including, but not limited to, public outreach and education, community
service, payment of fees and other charges as set forth or referenced herein, and such
other terms and conditions as will protect and promote the public health, safety, and
welfare. The requirements set forth in Article 4-34 of the Lynwood Municipal Code, and
the Administrative Regulations adopted by the City Council of the City of Lynwood are
incorporated herein by reference. All subsequent references to "municipal code" mean
the Lynwood Municipal Code.
1. Government Code and Municipal Code Required Elements
a. Description of Property. Land situated in the City of Lynwood, County of
Los Angeles, State of California, described as APN 6170-016-005 and
6170-016-006; whose street address is 2830 and 2860 Norton Avenue, City
of Lynwood.
b. Owner and Other Person with Legal or Equitable Interest.
Owner: Norton Avenue Ventures, Inc.
c. Permitted Uses. The subject property may be used for any commercial
cannabis facility as presently authorized under Article 4-34 of the municipal code,
and for any other use as authorized under applicable provisions of the municipal
code. Although chapter 25 does not specifically identify commercial cannabis
facilities as allowed uses in any zoning district, such uses are similar to other listed
uses, including, but not limited to, medical services-clinics, offices, laboratories;
garden center/plant nursery; food and beverage manufacturing; and agricultural
products processing; and, therefore, commercial cannabis facilities are allowed
uses in the same zoning districts in which such similar uses are allowed under
Chapter 25 of the municipal code.
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d. Zoning. Owner shall guarantee that all activities conducted under this
Agreement and under the Regulatory Permit shall comply with the City's municipal
code, including the zoning ordinance and any and all development and
construction requirements contained therein. Owner shall not conduct any
business under this Agreement or under the Regulatory Permit without having
obtained all necessary permits, licenses, and approvals from the City, which the
City shall not unreasonably withhold, condition or deny. The City shall make good
faith efforts to facilitate prompt issuance of all applicable permits, authorizations
and approvals to enable Owner to immediately develop, construct, open and
operate for the Permitted Use.
e. Reservation or Dedication of Land for Public Purposes. Sufficient roadway,
sidewalk, and utility easements shall be reserved or dedicated to City for Permitted
Use on the subject property, provided that the City shall make good faith efforts to
reduce any footprint on or use of the subject property, unless absolutely necessary.
2. Term
This Agreement shall start on the date on which all parties have executed it and it
shall end seven years from the starting date, and it shall remain in full force and
effect so long as the subject property is used for a commercial cannabis facility as
presently authorized under Article 4-34 of the municipal code; provided, however,
such use is not abandoned for a period of more than six (6) months (excluding
periods of casualty, remodel, force majeure and other matters outside the control
of Owner). The term shall be extended for up to three (3), five (5)-year extensions
without any action of the Parties, so long as Owner and the Facility are complying
with all applicable laws and the terms of this Agreement. However, the fees
required under Article 7 of this Agreement shall be subject to re-negotiation for
year 4 of this Agreement and at the beginning of each extension of the term. The
Parties shall commence negotiations no less than 90 days before the end of the
third year and the end of the then-current term, and negotiations shall be
concluded before the end of the term.
3. Owner's Site and Floor Plans
a. Owner's site plan and floor plan for the facility are attached hereto and
incorporated by reference. The floor plan identifies the uses of each interior space,
and is the basis for calculating the annual per-square-foot fee specified in Article
7 below.
b. A preliminary landscape plan will be prepared and reviewed and approved
by the Planning Director as part of the design review process. A final landscape
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plan shall be prepared and submitted in conjunction with building and site
improvement plans prior to issuance of building permits for construction activities.
c. An exterior signage plan will be prepared and reviewed and approved by
the Planning Director in accordance with the procedures and requirements of
Article 70 of Chapter 25 of the municipal code.
4. Facility Operations
a. Standard Operating Procedures. Owner is a non-profit mutual benefit
corporation or other lawful entity that will serve medical marijuana qualified patient
and primary caregiver collective members who will comply with all relevant
California State laws and local ordinances, as may be modified. (See California's
Compassionate Use Act (Proposition 215) as codified in Health and Safety Code
§11362.5; Senate Bill 420, the Medical Marijuana Program Act (H&S Code
§§1362.7 to 11362.83); the August 2008 Guidelines for the Security and Non-
Diversion of Marijuana Grown for Medical Use (2008 Attorney General Guidelines);
the newly enacted Medicinal and Adult-Use Cannabis Regulation and Safety
Act("MAUCRSA") set forth in Business and Professions Code Section 26000, et
seq., and Assembly Bill 133, which was enacted in September 2017. Further, and
notwithstanding anything to the contrary, Owner may operate for such cannabis-
related activities as permitted in accordance with California state law, as may be
amended, including without limitation, the Medicinal Adult Use Cannabis
Regulation Safety Act, as may be amended, as long as such activity is not
inconsistent with the Lynwood Municipal Code. For example purposes only, the
foregoing shall be interpreted to mean that so long as the State of California allows
both medical and adult use, then Owner may operate facility(s) that cultivate and
manufacture for both medical and adult uses. Should City amend the Lynwood
Municipal Code or its Administrative Regulations to permit and issue licenses for
any recreational cannabis facility or for other authorized uses other than those now
permitted under 1 c of this Agreement (for example, for medical or recreational
cannabis dispensaries or other cannabis businesses), the City shall give priority
for such licenses to Owner, provided Owner has complied with its obligations under
this Agreement and is otherwise in good standing.
During the term of its Regulatory Permit and the term of this Agreement,
Owner shall lawfully operate in accordance with all state and local laws. Owner
will employ lawful operating procedures to comply with state and local laws.
Owner's facility will employ safety and security measures as set forth herein for the
safety and security of its employees, as well as other individuals in its neighboring
community.
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b. Security Plan. Owner shall secure approval of its proposed security plan by
the Los Angeles County Sheriff or the City prior to operating. The security plan
shall include, at a minimum and as appropriate, provisions for video surveillance,
perimeter fencing and security, protection of the building(s) from vehicle intrusion,
cash handling procedures, product handling and storage procedures, and a
professionally monitored alarm system. Equipment and systems used for video
surveillance and building alarms will be approved by City.
Video surveillance shall include, at a minimum, all site and facility entrances and
access points, all spaces accessible by the public, all interior spaces and rooms
where commercial cannabis products are handled and processed, shipping and
receiving areas, and other areas necessary to protect the safety of employees and
the public and to ensure commercial cannabis products are received, handled,
stored, packaged, shipped, and distributed in compliance with applicable state and
local laws and regulations. The video surveillance system shall be web-based with
direct access provided to the Los Angeles County Sheriff upon request.
The security system will also include sensors to detect entry and exit from all
secure areas, panic buttons in appropriate locations, and a professionally
monitored alarm system with glass breakage sensors and motion detectors.
Owner will employ properly trained and licensed third-party security personnel to
protect the welfare and safety of Owner employees and to ensure public safety to
the neighboring community. Owner shall use security personnel 24 hours, 7 days
a week. Security personnel may be armed so long as proper licensing and
insurance requirements are followed and met by the third-party operator providing
such security services.
c. Fire Department Approval. Owner may not operate any facility, and no
permit, license, or other approval issued by City shall be valid unless and until the
Los Angeles County Fire Department has approved Owner's site plan, floor plan,
safety plan, and any other plans that require its approval.
d. Possession of Firearms. Except for licensed security personnel approved
by the Los Angeles County Sheriff, no person employed by Owner shall be in
possession of any firearm while on the premises or location without having first
obtained a license from the appropriate state or local agency authorizing the
person to be in possession of such firearm. Every such person in possession of a
firearm while on the premises or location must provide the City Manager and the
Los Angeles County Sheriff, ten days before bringing the firearm onto the
premises, with the following:
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1) A copy of the license issued to the person by the appropriate state
or local agency authorizing him or her to possess such firearm;
2) A copy of his or her law enforcement identification (if he or she is
employed by a law enforcement agency);
3) A copy of his or her California driver's license or California
identification card; and
4) Any other information reasonably required by the Los Angeles
County Sheriff to show that the individual is in compliance with the
provisions of all laws regarding the possession and use of a firearm.
e. Identification Display. Each owner, manager, employee, and individual
member engaged in the cultivation, processing, manufacturing, distribution, or
transporting of cannabis shall at all times while engaged in the duties of his or her
position wear in plain sight, on his or her person and at chest level, a valid
identification badge, issued by Owner.
f. Employee Background Checks/Procedures for Inventory Control to Prevent
Non-Medical Diversion of Medical Cannabis Only employees who receive
clearance from the proper oversight authority will be permitted to enter Owner's
facility. Each employee will have to meet a criminal background investigation
conducted by the Los Angeles County Sheriff, which at minimum shall include a
LiveScan criminal history check, which City shall make a good faith effort to
facilitate within a reasonable time following the issuance of a commercial cannabis
permit(s) or license(s) to Owner. However, Owner may simultaneously hire and
submit such employee for background check in instances where a delay in hiring
would inhibit Owner from timely operating prior to January 1, 2018 and thereafter
if a delay in hiring would inhibit Owner's operation(s).
Owner membership rules will seek to prevent the diversion of cannabis by
implementing strict policies and practices, as well as efficient transparency to
maintain tight controls on inventory and donations and/or cost reimbursements
received.
Owner's collective agreement will prohibit the use of cannabis and cannabis
products by its employees at its facility, in the neighborhood vicinity of its facility,
and while driving.
Owner will take all necessary and reasonable steps to prevent the distribution of
any of its medical cannabis products to minors; prevent revenue from the sale or
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distribution of its medical cannabis and/or infused products from going to criminal
enterprises, gangs and cartels; prevent the diversion of cannabis from California
to any other state; prevent state-authorized cannabis activity from being used as
a cover or pretext for the trafficking of other illegal drugs or other illegal activity;
prevent violence and the use of firearms in the cultivation, manufacture and
distribution of cannabis; discourage and educate against drugged driving and the
exacerbation of other adverse public health consequences associated with
cannabis use; disavow growing cannabis on public lands that creates attendant
public safety and environmental dangers posed by such illegal uses; and
discourage and educate against cannabis possession or use on federal property.
g. Quality Control and Testing. Owner will utilize quality control measures and
testing to ensure only the highest quality of commercial cannabis and infused
products will be produced. Owner will inspect the product to insure its identity and
quantity, and will have a testing lab perform testing of random samples prior to
distribution to its patient collective membership affiliates. Inspection and testing
will be conducted by the testing lab off-site. Testing standards and procedures
shall be in accordance with applicable state law and regulations.
All commercial cannabis products will undergo a quality assurance review prior to
distribution or delivery in order to ascertain its quantity and content. Inventory
procedures will be utilized for tracking and taxing purposes by the state. Owner
will employ an efficient record-keeping system to make transparent its financing,
testing, and adverse effect recording, as well as recall procedures. Owner will
employ an efficient record-keeping system that will reflect its financing, testing, and
adverse effect recording and product recall procedures.
h. Packing of Commercial cannabis and Infused Products. All Owner
commercial cannabis products will be packaged and labeled as required by
Section 26071, et seq., of the California Business and Professions Code and
applicable requirements and regulations issued by the State of California pursuant
thereto. In addition to those packaging and labeling requirements, and packaging
and labeling requirements set forth in Owner's Regulatory Permit application, as
amended or supplemented, all commercial cannabis products shall be packaged
in an opaque childproof container which shall contain a label or be accompanied
by a leaflet or inset that states, at a minimum:
1) The name, address and telephone number of the licensed
commercial cannabis facility to which the commercial cannabis product is
distributed, sold, or transferred;
2) The amount of commercial cannabis in the container; and
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3) The date the commercial cannabis was transferred to a licensed
commercial cannabis facility.
Owner intends to produce infused products and will secure any approval from the
County of Los Angeles Health Department required for manufacturing and
handling such products. Owner infused products will not be produced,
manufactured, stored or packaged in private homes. All Owner commercial
cannabis infused products shall be individually wrapped at the original point of
preparation.
i. Delivery. If Owner applies for and receives a Delivery permit from City,
Owner may sell and deliver manufactured cannabis products to individual
customers, as long as such activity is consistent with and permitted under state
law, and Owner has a valid state license therefor. As long as such products are
sold and delivered to individual customers, and no in-person sales occur at
Owner's facility, such activity shall not constitute a dispensary under the municipal
code.
j. Point of Sale Tracking System. Owner will maintain an inventory control
and reporting system that accurately documents the location of medicinal cannabis
products from inception through distribution or delivery, including descriptions,
weight, and quantity. The inventory control and reporting system shall comply with
the track and trace program required by Section 26071, et seq., of the California
Business and Professions Code and regulations issued thereunder.
Owner will employ a reputable electronic point of donation/sale system, such as
Leaf Logix, BioTrack THC, MJ Freeway, or similar system for all point of
donations/sales tracking from seed or inception to product distribution to other
licensed commercial cannabis facilities or delivery to individual customers. Such
approved system will track all Owner commercial cannabis products, each edible,
harvested flower, and/or manufactured concentrate, as well as gross sales (by
weight and sale). BioTrack THC, MJ Freeway, or similar system will have the
capacity to produce historical transactional data in accordance with City's
requirements.
k. Record Keeoino. Owner will maintain records for all commercial cannabis
and/or infused products. Owner will comply with all records-keeping
responsibilities that are set forth in Municipal Code Section 4-34-10, including
complete and up-to-date records regarding the amount of commercial cannabis
cultivated, produced, manufactured, harvested, stored, or packaged at Owner's
facility.
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I. Processing, Handling, Storing, and Distribution of Commercial
cannabis and Related Products. Commercial cannabis cultivation, handling,
storing, and processing shall be concealed from public view at all stages of growth
and processing, and there shall be no exterior evidence of cultivation or processing
occurring at the premises from a public right-of-way or from an adjacent parcel.
Commercial cannabis cultivation, handling, storing, processing, or distribution shall
not create offensive odors; create excessive dust, heat, noise, smoke, traffic, or
other impacts that are disturbing to people of normal sensitivity residing or present
on adjacent or nearby property or areas open to the public; or be hazardous due
to use or storage of materials, processes, products, or wastes.
Owner will store its commercial cannabis and/or commercial cannabis products in
a locked safe room with T-card identification access for management only. The
safe room will be constructed of fire-rate walls with numerous cameras installed to
view all entries and exits from the safe room, as well as all other activities
performed within Owner's facility. Owner will not conduct outdoor operations
except as related to lawful delivery and transportation of commercial cannabis and
infused products. Owner will not store commercial cannabis or related products in
its delivery vehicle outside normal operating hours of the facility.
Commercial cannabis products will be sold or distributed only to licensed
dispensaries in California, except as provided in Section 4(i) above. Excess or
contaminated product will be securely stored on-site until it is properly disposed.
Disposal may include composting, incineration, land-fill disposal through the local
waste management hauler, or other disposal methodology in accordance with
state and county health and safety codes and regulations.
m. Odor Control. All structures shall have ventilation and filtration systems
installed that prevent commercial cannabis plant odors from exiting the interior of
the structure. The ventilation and filtration system shall be approved by the
Building Official and installed prior to commencing cultivation or manufacturing
within the allowable structure. Facility air intake, exhaust, and recirculating system
shall be of industrial grade. Activated charcoal, recirculating, and closed loop
aeration systems will be utilized as necessary for effective odor control and
management.
n. Description of Banking Plan. Owner will seek to open a bank account under
the name of Owner or its associated management company to provide
transparency for funds received, operational costs, including payroll, tax payments
to the state and federal governments. Should a bank account not be forthcoming,
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Owner will implement other industry standard banking and/or other industry
standard transactional mechanisms.
o. Transportation Plan. Owner will comply with all state and local law
regarding transportation, including the rules governing delivery service. Owner will
retain a list of names and cellular contact numbers for all employees engaged in
transportation of commercial cannabis products and provide it to the applicable
oversight authority, keeping the list current and up to date.
Owner will keep complete and up-to-date records documenting each transfer of
commercial cannabis to other lawful cooperative corporations, including the
amount provided, the form or product category in which the commercial cannabis
was provided, the date and time provided, the name of the employee making the
transfer, the name and address of the other lawful cooperative corporation to
whom delivery is made, and the amount of any related donation or other monetary
transaction.
5. Community Relations, Employment, and Wages
a. Public Outreach and Education Program. Owner shall create a public
outreach to City of Lynwood's community, including but not limited to outreach and
interface with public and private schools, youth organizations, religious
organizations, health care providers, drug abuse treatment providers, and mental
health and drug counseling providers.
Owner will coordinate and cooperate with City and other Owners of commercial
cannabis facilities located within City of Lynwood in the establishment and
implementation of appropriate public outreach and education programs. The
public outreach and education programs shall be approved by City.
The public outreach and education program shall provide a detailed description of
Owner's intentions with regard to public outreach and education, including but not
limited to the following: what schools or programs Owner will work with; what types
of materials and information will be provided; how much time Owner's personnel
expect to spend on these activities; and how much money Owner expects to spend
on an annual basis.
b. Community Benefits Program. Owner will coordinate and cooperate with
City and other Owners of commercial cannabis facilities located within the City of
Lynwood in the establishment, implementation, and funding of a community
benefits program which could include such items as new community recreation
facilities, expansion and/or improvement to existing facilities or other physical
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improvements that provide a benefit to the community, support of holiday and
special community events, and support of local public service and special districts
and organizations. This community benefits program may be implemented by a
foundation or other association of commercial cannabis facility Owners issued
regulatory permits by City. City and the public will participate in the decision-
making process for identifying and prioritizing community needs and benefits, and
identifying appropriate projects to be funded by the entity implementing this
community benefits program. All projects under the community benefits program
must be approved by City.
c. Designation of Persons Responsible for Community Relations. At the time
of this Agreement, Owner's day-to-day operations manager, Meyer Akhavan, will
be responsible for community inquiries and complaints and on-site during normal
business hours.
d. Interface with Los Angeles County Sheriff. Owner's day-to-day operations
manager, Meyer Akhavan, will interface with the Los Angeles County Sheriff to
ensure its operation complies with state and local laws and regulations.
e. Local Recruitment. Hiring , and Training Programs. Owner is committed to
making a good-faith effort to recruit, hire, and train City residents for employment
by Owner. A good-faith effort means Owner will take the following or similar
actions to recruit and employ City residents: 1) Contact local recruitment sources
to identify qualified individuals who are City residents, 2) Advertise for qualified
City residents in trade papers and newspapers of general circulation in the area,
and 3) Develop a written plan to recruit and employ City residents as a part of the
its workforce.
f. Living Wages. Owner agrees to pay all employees of the Facility a Living
Wage. A "Living Wage" is the higher of whatever Owner currently pays its
employees for similar work elsewhere in the State of California, or the following:
until December 31, 2017: 150% of the California State minimum wage. Such
wage shall increase on January 1 of each subsequent year at the same rate as the
California State minimum wage increases, or according to the Consumer Price
Index for Los Angeles County, for the quarter ending September 30 of the
preceding year, whichever is higher.
g. Full-time Work/Benefits. Owner shall make its best efforts to fill every
position with a full-time employee. However, at no time shall Owner have a labor
force that is composed of less than 50% full-time employees within its labor force,
and Owner shall make a good faith effort to maintain a full-time employee level of
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75%. Owner agrees to provide to its eligible employees leave benefits, health and
wellness benefits and other employee benefits to the extent such benefits are
required to be paid for by Owner under applicable state and federal employment
laws.
6. Indemnification of City from Liability
a. Pursuant to City's requirement, Owner will indemnify City from any claims,
damages, injuries, or liabilities of any kind associated with the registration or
operation of Owner's commercial cannabis facility or the prosecution of Owner's
facility or its owners, managers, directors, officers, employees, or its qualified
patients or primary caregivers for violation of federal or state laws, except to the
extent that such claims arise directly from City's or its employees' negligence or
fraud.
b. Owner agrees to defend, at its sole expense, any action against City, its
agents, officers, and employees related to the approval or issuance of the
Regulatory Permit and this Agreement.
c. Owner agrees to reimburse City for any court costs and attorney fees that
City may be required to pay as a result of any legal challenge related to City's
approval or issuance of a Regulatory Permit or this Agreement. City may, at its
sole discretion, participate at its own expense in the defense of any such action,
but such participation shall not relieve the holder of the Regulatory Permit or this
Agreement.
7. Fees. Costs. and Future Taxes
a. Fees. Owner agrees to pay all permit fees and charges referenced in
Section 4-34-11 of the municipal code, in the amounts adopted by the City Council
by resolution, as well as any fees set forth in this Agreement. Permit application,
processing, and renewal fees shall be due and payable at the time application is
made.
b. Costs. Subject to the cap set forth elsewhere with respect to the CRF, as
defined in Article 8, Owner agrees to reimburse City for all additional costs of City
resulting from the operation of a commercial cannabis facility authorized under
Article 4-34 of the municipal code and the administrative regulations.
Reimbursement to City for such costs shall be due and payable upon demand.
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c. Operating Fees. Owner agrees to pay to City, to enable City to promote,
protect, and enhance the healthy, safety, and welfare of the community and its
residents and its quality of life, the following fees:
1) an annual fee of $12.50 per square foot of cultivation area (canopy);
2) an annual fee of two-and-one-half percent (2.5%) of gross income
from manufacturing activities;
3) an annual fee of one and one-half percent (1.5%) of gross income
from distribution/transportation of product for anyone other than Owner; and
4) an annual fee of two and one-half percent (2.5%) of gross income
from delivery activities.
d. Owner understands and agrees that the fees set forth above shall be paid
in a manner and in accordance with a payment schedule agreed to by City and
Owner, in intervals of no more than three months. The cultivation and
manufacturing space to which the fee applies is as identified on the attached floor
plan. Payment shall be in equal installments paid quarterly commencing at the
end of the first quarter after the effective date of the Regulatory Permit which shall
be no sooner than the date a certificate of occupancy is issued for the subject
premises.
e. If Owner makes any changes to the interior layout of the facility that
increases the amount of space allocated to those uses to which the per-square-
foot fee applies, Owner shall notify City of such changes at least fourteen (14)
calendar days prior to making such changes, and the per-square-foot fee shall be
modified accordingly. If Owner fails to give City notice as required herein, Owner
shall be responsible for paying to City a per-square-foot fee based on any increase
in the amount of space allocated to those uses to which the per-square-foot fee
applies retroactive to the date the Regulatory Permit became effective.
8. Cost Recovery Fee
City shall assess to Owner fees to recover City's reasonable processing and
monitoring costs relating to Owner's business upon issuance of Owner's
Manufacturing, Cultivation, Distribution, and Delivery Permits or any Additional
Permits ("CRF"). The City shall submit sufficient information to Owner of City's
total number of hours required to process their Application or monitor their
authorizations. CRFs are separate and apart from any fees set forth in Article 7.
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a. Processing Fees. Processing fees for the Application are based upon the
direct and indirect costs that City incurs in reviewing the Application. The
processing fees for the Application shall be based only on costs that are necessary
for processing the Application and implementing the Ordinance, including staff
time, legal fees, and consultant fees. "Necessary for" means that but for the
Application, the costs would not have been incurred. The processing fee shall not
include costs for other City management objectives, unless they are necessary for
processing the Application.
b. Monitoring Fees. Monitoring fees for the Manufacturing, Cultivation,
Distribution, and Delivery Permits are based upon the direct and indirect costs City
incurs in confirming the use of the Property in accordance with the municipal code,
the Ordinance, this Agreement, and the Application. The monitoring fees shall be
based only on costs that are necessary for conducting these reviews. "Necessary
for'' means that but for the Manufacturing, Distribution, Cultivation, and Delivery
Permits, or any Additional Permits, the costs would not have been incurred. The
monitoring fee shall not include costs for other City management objectives, unless
they are necessary for monitoring the Manufacturing, Distribution, Cultivation, and
Delivery Permits, or any Additional Permits. Monitoring Fees shall be subject to
the CRF maximum described below.
c. Billing and Payment. City shall bill Owner the CRF on the first day of each
quarter (March, June, September, and December) with an invoice providing an
hourly breakdown of hours expended by City and its representatives. Owner shall
pay the CRF invoice within sixty (60) days of the date the bill for the CRF is
received by Owner. Notwithstanding the foregoing, at no time shall the CRFs
exceed Seven Thousand Dollars ($7,000} during a given year, except that the first
year may be as high as Twenty Thousand dollars ($20,000) because of the costs
required to set up the application process and review the applications.
d. Disputes. If Owner disagrees with the dollar amount provided by City on
the CRF invoice, Owner may submit a written request before the disputed fee is
due for a substitution of alternative CRF invoice to the immediate supervisor of the
City representative who determined the CRF invoice. The written request must
include supporting documentation. After review of Owner's written request, Owner
and City shall work, in good faith to resolve Owner's written request. The dispute
shall be decided in favor of Owner if City does not respond to the written request
within thirty (30) days of receipt.
9. Additional Owner Obligations
a. Reporting of Gross Receipts from Operations
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1) Quarterly Receipts. No later than January 15, 2018, and every three
months thereafter (i.e., April 15, July 15, October, and January 15 of each
subsequent year), Owner shall deliver to City a report (the "Quarterly
Report") showing (i) Gross Receipts from manufacturing operations for the
immediate prior three months received by Owner, and a cumulative total of
all amounts of Gross Receipts from Operations received by Owner for the
calendar year, (ii) a calculation of the quarterly payment due to City for the
prior three months, and (iii) a calculation of the cumulative total of all
quarterly payments for the calendar year.
2) Statement of Receipts. Owner shall keep complete, accurate and
appropriate books and records of all receipts from operations in accordance
with generally accepted accounting principles. For purposes herein, "books
and records" shall mean all bookkeeping or accounting documents Owner
utilizes in managing its business operations relating to the Project. Such
books and records, as well as all other relevant documents as City shall
reasonably require, shall, upon reasonable written notice, be open for
inspection by City, its auditors or other authorized representatives. If at any
time during the term such books and records prove inadequate in the
reasonable judgment of City to record the Gross Receipts from Operations
as herein required, Owner shall, upon the written request of City, procure
and maintain such books and records as shall be of a character and from
adequate for such purpose. City shall have the right to audit and examine
such books, records and documents and other relevant items in the
possession of Owner, but only to the extent necessary for a proper
determination of Gross Receipts from Operations, and all such books,
records, documents and other items shall be held available for such audit
and examination. The City's audit shall be performed by a non-contingency
fee independent auditor. Upon request by City, Owner shall make all such
books, records and documents available to City, and provide removable
copies thereof, within thirty (30) of the date of City's request. If the City's
audit shall reveal Owner's gross receipts were actually within 5% of Owner's
reports, City shall pay the cost of such audit. If the City's audit shall reveal
Owner's gross receipts were actually within a differential of 5% greater than
Owner's reports, Owner shall pay the cost of such audit. Owner shall
preserve such books, records, documents, and other items in Lynwood for
a period of not less than one (1) years for the purpose of auditing or re-
auditing these accounts upon reasonable notice; except that, if an audit is
made within the seven-year period and Owner claims that errors or
omissions have occurred, the books and records shall be retained and
made available until those matters are resolved. City shall keep strictly
confidential all statements of revenue furnished by Owner and all other
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information concerning Owner's operation of the Premises obtained by City
as a result of the inspection audit and examination privileges of City
hereunder, except as otherwise required by law. If City receives a request
for such information pursuant to the Public Records Act (California
Government Code Section 6250, et seq.}, City shall provide Owner notice
of any such request prior to disclosing any such information. Within seven
(7) years after the receipt of any statement of receipts under this
Agreement, City at any time shall be entitled to carry out an audit of such
revenue either by City or agent to be designated by City. If it shall be
determined as a result of such audit that there has been a deficiency in any
payment due under this Agreement made on the basis of such statement,
then such deficiency shall become immediately due and payable. If such
statement of revenue for the relevant year shall be found to have
understated receipts by more than two percent and City is entitled to any
additional payment as a result of said understatement, then Owner shall, in
addition, pay all of City's reasonable costs and expenses connected with
such audit, including the expense incurred in retaining such agent;
otherwise City shall bear the cost and expense of such audit.
3) Copies of Tax Filings. Owner shall provide City with copies of any
reports Owner is required to provide to the County of Los Angeles or the
State of California for sales, use, or other tax purposes.
10. Insurance and Indemnity
a. Insurance. Owner shall require all persons doing work on the Project,
including its contractors and subcontractors (collectively, "Owner'' for purposes of
this Article 6 only), to obtain and maintain insurance of the types and in the
amounts described in this section and its subsections with carriers reasonably
satisfactory to City.
b. General Liability Insurance. Owner shall maintain commercial general
liability insurance or equivalent form with a limit of not less than Two Million Dollars
($2,000,000) (or as otherwise approved, in writing, by City) per claim and Two
Million Dollars ($2,000,000) each occurrence. Such insurance shall also:
1) Name City, its elected and appointed councils, boards, commissions,
officers, agents, employees, and representatives as "Additional Insureds"
by endorsement with respect to performance of this Agreement. The
coverage shall contain no special limitations on the scope of its protection
afforded to the above-listed additional insured.
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2) Be primary with respect to any insurance of self-insurance programs
covering City, its officials, employees, agents, and representatives.
3) Contain standard separation of insured provisions.
c. Automotive Liability Insurance. Owner shall maintain business automobile
liability insurance or equivalent form with a limit of not less than Two Million Dollars
($2,000,000) for each accident. Such insurance shall include coverage for owned,
hired, and non-owned automobiles. Such insurance shall also:
1) Name City, its elected and appointed officials, boards, commissions,
officers, agents, employees, and representatives as "Additional Insureds"
by endorsement with respect to performance of this Agreement. The
coverage shall contain no special limitations on the scope of its protection
afforded to the above-listed additional insureds.
2) Be primary with respect to any insurance or self-insurance programs
covering City, its officials, employees, agents, and representatives.
3) Contain standard separation of insured provisions.
d. Workers' Compensation Insurance. Owner shall take out and maintain
during the term of this Agreement, workers' compensation insurance for all of
Owner's employees employed at or on the Project, and in the event any of the
work is subcontracted, Owner shall require any general contractor or subcontractor
similarly to provide workers' compensation insurance for such contractor's or
subcontractor's employees, unless such employees are covered by the protection
afforded by Owner. In case any class of employee engaged in work on the Project
is not protected under any workers' compensation law, Owner shall provide and
shall cause each contractor and subcontractor to provide adequate insurance for
the protection of employees not otherwise protected. Owner hereby indemnifies
City for any damage resulting from failure of Owner, its agents, employees,
contractors, or subcontractors to take out or maintain such insurance. Workers'
compensation insurance with statutory limits and employer's liability insurance with
limits of not less than One Million Dollars ($1,000,000) each accident shall be
maintained.
e. Other Insurance Requirements. Owner shall do all the following:
1) Prior to taking any actions under this Agreement, furnish City with
properly executed certificates of insurance that clearly evidenced all
insurance required in this Article, including evidenced that such insurance
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will not be canceled, allowed to expire, or be materially reduced in coverage
without thirty (30) days prior written notice to City.
2) Provide to City, upon request, and within seven (7) calendar days of
said request, certified copies of endorsements and policies, and properly
executed certificates of insurance evidencing the insurance required herein.
3) Replace or require the replacement of certificates, policies and
endorsements for any insurance required herein expiring prior the
termination of this Agreement.
4) Maintain all insurance required herein from the Effective Date of this
Agreement to the earlier of the expiration of the term or the mutual written
termination of this Agreement.
5) Place all insurance required herein with insurers licensed to do
business in California with a current Best's Key Rating Guide reasonably
acceptable to City.
f. Indemnity. Owner agrees to indemnify, defend, and hold City, and its
elected and appointed council, boards, commissions, officers, agents, employees,
consultants, and representatives, harmless from any and all claims costs and
liability for any personal injury or property damage which may arise as a result of
any actions or negligent omissions by Owner or Owner's contractors,
subcontractors, agents, or employees in connection with the construction,
improvement, or operation of the Project.
11. Termination
a. Termination Upon Completion of Development. This Agreement shall
terminate upon the expiration of the term, as extended, unless it is terminated
earlier pursuant to the terms of this Agreement. Upon termination of this
Agreement, City shall record a notice of such termination, and this Agreement shall
be of no further force or effect except as otherwise set forth in this Agreement.
b. Effect of Termination on Owner's Obligations. Termination of this
Agreement shall eliminate any further obligation of Owner to comply with this
Agreement, or some portion thereof, if such termination relates to only part of the
Site or Project. Termination of this Agreement, in whole or in part, shall not,
however, eliminate the rights of Owner to seek any applicable and available
remedies or damages based upon acts or omissions occurring before termination.
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c. Effect of Termination on City's Obligations. Termination of this Agreement
shall eliminate any further obligation of City to comply with this Agreement, or some
portion thereof. Termination of this Agreement shall not, however, eliminate the
rights of City to seek any applicable and available remedies or damages based
upon acts or omissions occurring before termination.
d. Survival After Termination. The rights and obligations of the Parties set
forth in Article 15, Article 21, and Section 23(e), Section 23(f), and Section 23(h),
and any right or obligation of the Parties in this Agreement which, by its express
terms or nature and context is intended to survive termination of this Agreement,
will survive any such termination.
12. Resources Efficiency
Owner shall endeavor to reduce its environmental impact when possible. The
design of the facility shall include reasonable water and energy conservation
measures in accordance with applicable State regulations.
13. Standard Conditions for Construction
During any on-site construction activities related to development of the project site and
any buildings thereon, or renovation or remodeling of existing buildings, Owner shall
comply with all applicable terms and conditions of City's Standard Conditions for
Construction, attached hereto and incorporated herein by reference. The Project shall
comply with the applicable parking standards established by the City for cannabis
activities.
14. Defaults and Remedies
a. Remedies in general. It is acknowledged by the parties that City would not
have entered into this Agreement if it were to be liable in damages under this
Agreement, or with respect to this Agreement or the application thereof, except as
hereinafter expressly provided. Subject to extensions of time by mutual consent
in writing, failure to delay by either party to perform any term or provision of this
Agreement beyond a reasonable notice and cure period shall constitute a default.
In the event of alleged default or breach of any terms or conditions of this
Agreement, the party alleging such default or breach shall give the other party not
less than thirty (30) day notice in writing specifying the nature of the alleged default
and the manner in which said default may be satisfactorily cured during any such
thirty (30) day period, the party charged shall not be considered in default for
purposes of termination or institution of legal proceedings. Notwithstanding the
foregoing to the contrary, if the alleged default is of such a nature that it cannot be
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and Delivery Development Agreement
cured within thirty (30) days, the alleged defaulting party shall not be deemed in
default as long as such party commences to cure such default within such thirty
(30) day period and thereafter diligently prosecutes such cure to completion.
After notice and expiration of the thirty (30) day period, the other party to this
Agreement, at its option, may institute legal proceedings pursuant to this
Agreement.
In general, each of the parties hereto may pursue any remedy at law or equity
available for the breach of any provision of this Agreement, except that City shall
not be liable in monetary damages, unless expressly provided for this Agreement,
to Owner, to any mortgagee or lender, or to any successors in interest of Owner
or mortgagee or lender, or to any other person, and Owner covenants on behalf of
itself and all successors in interest to the Property or any portion thereof, not to
sue for damages or claim any damages.
1) For any breach of this Agreement or for any cause of action which
arises out of this Agreement; or
2) For the impairment or restriction of any right or interest conveyed or
provided under, with, or pursuant to this Agreement, including, without
limitation, any impairment or restriction which Owner characterizes as a
regulatory taking or inverse condemnation; or
3) Arising out of or connected with any dispute, controversy or issue
regarding the application or interpretation or effect of the provisions of this
Agreement.
Nothing contained herein shall modify or abridge Owner's rights or remedies
(including its rights for damages, if any) resulting from the exercise by City of its
power of eminent domain. Nothing contained herein shall modify or abridge
Owner's rights or remedies (including its rights for damages, if any) resulting from
the grossly negligent or malicious acts of City and its officials, officers, agents and
employees. Nothing herein shall modify or abridge any defenses or immunities
available to City and its employees pursuant to the Government Liability Act and
all other applicable statutes and decisional law.
Except as set forth in the preceding paragraph relating to eminent domain, Owner's
remedies shall be limited to those set forth in this Section 14(a}, Section 14(b}, and
Section 14(c).
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and Delivery Development Agreement
Notwithstanding anything to the contrary contained herein, City covenants as
provided in Civil Code Section 3300 not to sue for or claim any consequential
damages or, in the event all or a portion of the Property is not developed, for lost
profits or revenues which would have accrued to City as a result of the
development of the Property.
b. Specific Performance. The parties acknowledge that money damages and
remedies at law are inadequate, and specific performance and other non-monetary
relief are particularly appropriate remedies for the enforcement of this Agreement
and should be available to all parties for the following reasons:
1) Except as provided in Sections 14(a) and 14(e), money damages are
unavailable against City as provided in Section 14(a) above.
2) Due to the size, nature and scope of the Project, it may not be
practical or possible to restore the Property to its natural condition once
implementation of this Agreement has begun. After such implementation,
Owner may be foreclosed from other choices it may have had to use the
Property or portions thereof. Owner has invested significant time and
resources and performed extensive planning and processing of the Project
in agreeing to the terms of this Agreement and will be investing even more
significant time and resources in implementing the Project in reliance upon
the terms of this Agreement, and it is not possible to determine the sum of
money which would adequately compensate Owner for such efforts; the
parties acknowledge and agree that any injunctive relief may be ordered on
an expedited, priority basis.
c. Release. Except for those remedies set forth in Sections 14(a), 14(b), and
14(c), Owner, for itself, its successors and assignees, hereby releases City, its
officers, agents and employees from any and all claims, demands, actions, or suits
of any kind or nature arising out of any liability, known or unknown, present or
future, based or asserted, pursuant to Article 1, Section 19 of the California
Constitution, the Fifth Amendment of the United States Constitution, or any other
law or ordinance which seeks to impose any other liability or damage, whatsoever,
upon City because it entered into this Agreement or because of the terms of this
Agreement.
Owner acknowledges that it may have suffered, or may suffer, damages and other
injuries that are unknown to it, or unknowable to it, at the time of its execution of
this Agreement. Such fact notwithstanding, Owner agrees that the release
provided in this Section 14(c) shall apply to such unknown or unknowable claims
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and Delivery Development Agreement
and damages. Without limiting the generality of the foregoing, Owner
acknowledges the provisions of California Civil Code Section 1542, which provide:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his or her favor at the time of executing
the release, which if known by him or her must have materially
affected his or her settlement with the debtor."
Owner hereby waives, to the maximum legal extent, the provisions of California
Civil Code Section 1542 and all other statutes and judicial decisions of similar
effect.
Initials
d. Termination of Agreement for Default of Citv. Owner may terminate this
Agreement in the event of a default by City in the performance of a material term
of this Agreement and only after providing written notice to City of default setting
forth the nature of the default and the actions, if any, required by City to cure such
default and, where the default can be cured, City has failed to take such actions
and cure such default within sixty (60) days after the effective date of such notice
or, in the event that such default cannot be cured within such sixty (60) day period
but can be cured within a longer time, has failed to commence the actions
necessary to cure such default within such sixty (60) day period and to diligently
proceed to complete such actions and cure such default. Notwithstanding anything
to the contrary, in the event that Owner deem it is necessary and/or advisable to
cease operations in Lynwood, then Owner may terminate this Agreement, and
such termination shall be effective upon the date of written notice to the City.
e. Attorneys' Fees and Costs. In any action or proceeding between City and
Owner brought to interpret or enforce this Agreement, or which in any way arises
out of the existence of this Agreement or is based upon any term or provision
contained herein, the "prevailing party" in such action or proceeding shall be
entitled to recover from the non-prevailing party, in addition to all other relief to
which the prevailing party may be entitled pursuant to this Agreement, the
prevailing party's reasonable attorneys' fees and litigation costs, in an amount to
be determined by the court. The prevailing party shall be determined by the court
in accordance with California Code of Civil Procedure Section 1032. Fees and
costs recoverable pursuant to this Section 14(e) include those incurred during any
appeal from an underlying judgment and in the enforcement of any judgment
rendered in any such action or proceeding.
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f. Owner Default. No building permit shall be issued or building permit
application accepted for any structure on the Property after Owner is determined
by City to be in default of the terms and conditions of this Agreement until such
default thereafter is cured by Owner or is waived by City. If City terminates this
Agreement because of Owner's default, then City shall retain any and all benefits,
including money or land received by City hereunder.
15. Third Party Litigation
a. General Plan Litigation. City has determined that this Agreement is
consistent with its General Plan . Owner has reviewed the General Plan and
concurs with City's determination .
City shall have no liability under this Agreement or otherwise for any failure of City
to perform under this Agreement, or for the inability of Owner to develop the
Property as contemplated by the Development Plan, which failure to perform or
inability to develop is as the result of a judicial determination that the General Plan,
or portions thereof, are invalid or inadequate or not in compliance with law, or that
this Agreement or any of City's actions in adopting it were invalid, inadequate, or
no in compliance with the law.
b. Hold Harmless Agreement. Owner hereby agrees to, and shall hold City,
its elective and appointive boards, commissions, officers, agents, and
employees harmless from any liability for damage or claims for damage for
personal injury, including death, as well as from claims for property damage
which may arise from Owner or Owner's contractors, subcontractors,
agents, or employees' operations under this Agreement, whether such
operations be by Owner, or by any of Owner's contractors, subcontractors,
agents, or employees operations under this Agreement, whether such
operations be by Owner, or by any of Owner's contractors, subcontractors,
or by any one or more persons directly or indirectly employed by, or acting
as agent for Owner or any of Owner's contractors or subcontractors. Owner
agrees to and shall defend City and its elective and appointive boards,
commissions, officers, agents and employees from any suits or actions at
law or in equity for damage caused, or alleged to have been caused, by
reason of any of the aforesaid operations.
c. Indemnification. Owner shall defend, indemnify, and hold harmless City and
its agents, officers, and employees against and from any and all liabilities,
demands, claims, actions or proceedings and costs and expenses
incidental thereto (including costs of defense, settlement and reasonable
attorneys' fees}, which any or all of them may suffer, incur, be responsible
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and Delivery Development Agreement
for or pay out as a result of or in connection with any challenge to the
legality, validity or adequacy of any of the following: (i) this Agreement and
the concurrent and subsequent permits, licenses and entitlements
approved for the Project or Property; (ii) the environmental impact report,
mitigated negative declaration or negative declaration, as the case may be,
prepared in connection with the development of the Property; (iii) any claims
based on or alleging inverse condemnation by any person or entity with an
interest in the Property; and (iv) the proceedings undertaken in connection
with the adoption or approval of any of the above. In the event of any legal
or equitable action or other proceeding instituted by any third party
(including a governmental entity or official) challenging the validity of any
provision of this Agreement or any portion thereof as set forth herein, the
parties shall mutually cooperate with each other in defense of said action or
proceeding. Notwithstanding the above, City, at is sole option, may tender
the complete defense of any third-party challenge as described herein. In
the event City elects to contract with special counsel to provide for such a
defense, City shall meet and confer with Owner regarding the selection of
counsel, and Owner shall pay all costs related to retention of such counsel.
d. Environmental Contamination. Owner shall indemnify and hold City, its
officers, agents, and employees free and harmless from any liability, based
or asserted, upon any act or omission of Owner, its officers, agents,
employees, subcontractors, predecessors in interest, successors, assigns
and independent contractors, excepting and acts or omissions of City as
successor to any portions of the Property dedicated or transferred to City
by Owner, for any violation of any federal, state or local law, ordinance or
regulation relating to industrial hygiene or to environmental conditions on,
under or about the Property, including, but not limited to, soil and
groundwater conditions, and Owner shall defend, at its expense, including
attorneys' fees, City, its officers, agents and employees in any action based
or asserted upon any such alleged act or omission. City may in its discretion
participate in the defense of any such claim, action or proceeding.
The provisions of this Section 15(d) do not apply to environmental
conditions that predate Owner's ownership or control of the Property or
applicable portion; provided, however, that the foregoing limitation shall not
operate to bar, limit or modify any of Owner's statutory or equitable
obligations as an owner or seller of the Property.
e. City to Approve Counsel. With respect to Sections 15(a) through 15(d), City
reserves the right to approve the attorney(s) which Owner selects, hires or
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otherwise engages to defend City hereunder, which approval shall not be
unreasonably withheld.
f. Accept Reasonable Good Faith Settlement. With respect to Article 15, City
shall not reject any reasonable good faith settlement. If City does reject a
reasonable, good faith settlement that is acceptable to Owner, Owner may
enter into a settlement of the action, as it relates to Owner, and City shall
thereafter defend such action (including appeals) at its own cost and be
solely responsible for any judgment rendered in connection with such
action. This Section 15(f) applies exclusively to settlements pertaining to
monetary damages or damages which are remedial by the payment of
monetary compensation. Owner and City expressly agree that this Section
15(f) does not apply to any settlement that requires an exercise of City's
police powers, limits City's exercise of its police powers, or affects the
conduct of City's municipal operations.
g. Survival. The provisions of Sections 15(a) through 15(f) inclusive, shall
survive the termination or expiration of the Agreement.
16. California Environmental Quality Act
Owner shall reimburse City for any and all costs incurred by City related to project review
under the California Environmental Quality Act (CEQA), Public Resources Code,
§§21 000-21189.3, and the Guidelines for California Environmental Quality Act, California
Code of Regulations, Title 14, §§15000-15387. If reasonably requested by City, Owner
shall conduct and pay for any required CEQA reviews and analyses. The City has found
that the proposed Project is Categorically Exempt from California Environmental Quality
Act (CEQA) requirements under provisions of CEQA Guidelines Section 15332 -In-Fill
Development Projects. This exemption applies to projects characterized as in-fill
development meeting the conditions described in Section 15332.
17. Rules . Regulations. and Official Policies
Except as otherwise provided in this Agreement, the rules, regulations, and official
policies of City governing permitted uses of the land, governing density, and governing
the design, improvements, and construction standards and specifications applicable to
the development of the Project subject of this Agreement, shall be those rules,
regulations, and official policies of City in force at the time of the execution of this
Agreement. This Agreement does not prevent City, in subsequent actions applicable to
the property, from applying new rules, regulations, and policies which do not conflict with
those rules, regulations, and policies applicable to the property as set forth herein, nor
does this Agreement prevent City from denying or conditionally approving any
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subsequent development project application based on such existing or new rules,
regulations, or policies.
18. Regulatory Permit Conditions of Approval
Owner shall comply with all conditions of approval of the Regulatory Permit approved by
City Council.
19. Periodic Reviews
This Agreement shall be subject to annual review. Owner and Landlord executing this
Agreement, or successor in interest thereto, shall demonstrate good faith compliance with
the terms of this Agreement. If, as a result of such periodic review, City finds and
determines, based on substantial evidence, that Owner or Landlord executing this
Agreement, or successor in interest thereto, has not complied in good faith with the terms
or conditions of this Agreement, City may terminate or modify this Agreement (except no
modification shall increase Owner's liability nor reduce Owner's rights), provided that City
shall first provide Owner notice of its intent to terminate, with a detailed explanation as to
why, and provide Owner the reasonable right to cure the same.
a. Periodic Review. City Council shall review this Agreement annually, on or
before each anniversary of the Effective Date, in order to ascertain Owner's good
faith compliance with this Agreement. During the periodic review Owner shall be
required to demonstrate good faith compliance with the terms of the Agreement,
through submitting an annual monitoring report, records, or equivalent written
materials to the Planning Department. The Planning Department will schedule a
hearing on the periodic review of the Development Agreement on or following the
anniversary of the Effective Date, but Owner has no obligation to compel such
hearing, and no implication will be made to Owner's detriment if a hearing is not in
fact held. Owner shall document any request for an extension of the term due to
delays beyond the control of Owner (see Section 23U), "Force Majeure").
b. Conditional Use Permit. For all intents and purposes, the Regulatory Permit
to be issued under this Agreement shall be treated as if it were a Conditional Use
Permit issued to Owner for the establishment and operation of its business. The
operation of the business at all times shall be required to comply with the terms of
this Agreement.
c. Special Review. City Council may order a special review of compliance with
this Agreement at any time. The Planning Director or his or her designee shall
conduct such special review. During a special review, Owner shall be required to
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demonstrate good faith compliance with the terms of the Agreement. The burden
of proof on this issue shall be on Owner.
d. Review Hearing. At the time and place set for the review hearing, Owner
shall be given an opportunity to be heard. If City Council finds, based upon
substantial evidence, that Owner has not complied in good faith with the terms or
conditions of this Agreement, City Council may terminate this Agreement
notwithstanding any other provision of this Agreement to the contrary, or modify
this Agreement and impose such conditions as are reasonably necessary to
protect the interests of City. The decision of City Council shall be final, subject
only to judicial review pursuant to Code of Civil Procedure Section 1094.5.
e. Certificate of Agreement Compliance. If, after a periodic or special review,
Owner is found to be in compliance with this Agreement, and if Owner requests it,
City shall issue a Certificate of Agreement Compliance ("Certificate") to Owner
stating that after the most recent periodic or special review, and based upon the
information known or made known to the Planning Director and City Council, that
(i) this Agreement remains in effect and (ii) Owner is not in default.
City shall not be bound by a Certificate if a default existed at the time of the periodic
or special review, but was concealed from or otherwise not known to the Planning
Director and City Council, regardless of whether the Certificate is relied upon by
assignees or other transferees or Owner.
f. Failure to Conduct Review. City's failure to conduct a periodic review of this
Agreement shall not constitute a breach of this Agreement.
g. Cost of Review. The costs incurred by City in connection with the periodic
reviews shall be borne by Owner.
20 . Assignment
Assignment by Owner. Owner shall not transfer, delegate, or assign its interest, rights,
duties, and obligations under this Agreement without the prior written consent of City,
which consent shall not be unreasonably withheld. Any assignment, delegation, or
assignment without the prior written consent of City shall be null and void. Any transfer,
delegation, or assignment by Owner as authorized herein shall be effective only if and
upon the party to whom such transfer, delegation, or assignment is made is issued a
Regulatory Permit as required under Article 4-34 of the municipal code.
21. Operating Commercial Cannabis Facility
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Any party to this Agreement, or successor in interest thereto, shall not operate a
commercial cannabis facility authorized under the municipal code unless:
a. It is the holder of a valid Regulatory Permit issued by City in accordance
with the procedures and requirements of Article 4-34 of the municipal code; and
b. At such time as the State of California requires commercial cannabis
facilities and businesses to hold a valid license or permit issued by the State of
California, it also holds such license or permit, unless, however, such permit or
license is not required by the State of California for the type of commercial
cannabis facility or business operation that is the subject of this Agreement.
22. Notice
Any notice or communication required hereunder between City and Owner must be in
writing, and may be given either personally, by registered or certified mail (return receipt
requested), or by Federal Express, UPS or other similar couriers providing overnight
delivery. If personally delivered, a notice shall be deemed to have been given when
delivered to the Party to whom it is addressed. If given by registered or certified mail, such
notice or communication shall be deemed to have been given and received on the first to
occur of (i) actual receipt by any of the addressees designated below as the party to whom
notices are to be sent, or (ii) five (5) days after a registered or certified letter containing
such notice, properly addressed, with postage prepaid, is deposited in the United States
mail. If given by Federal Express or similar courier, a notice or communication shall be
deemed to have been given and received on the date delivered, as shown on a receipt
issued by the courier. Any Party hereto may at any time, by giving ten (10) days written
notice to the other Party hereto, designate any other address in substitution of the address
to which such notice or communication shall be given. Such notices or communications
shall be given to the Parties at their addresses set forth below:
If to City:
and
If to Owner:
City of Lynwood
11330 Bullis Road
Lynwood, California 90262
Attention: City Manager
H. Francisco Leal, Esq.
Leal Trejo, APC
3767 Worsham Avenue
Long Beach, California 90808
Norton Avenue Ventures, Inc.
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and Delivery Development Agreement
8383 Wilshire Blvd, Suite 630
Beverly Hills, CA 90210
And Judith Manouchehri, Esq.
23. Miscellaneous Provisions
Judith Manouchehri, APLC
847 E. 31st Street
Los Angeles, CA 90011
a. Regulatorv Permit Conditions of Aooroval. Owner shall comply with all
conditions of approval of the Regulatory Permit approved by City Council.
b. Amendment or Cancellation. This Agreement may be amended, or
canceled in whole or in part, only by the written mutual consent of the parties to
this Agreement or their successors in interest, except that minor amendments that
do not affect a substantive provision of this Agreement may be approved by the
City Manager on behalf of the City. The decision whether a proposed amendment
is "minor" shall be in the exclusive discretion of the City Manager.
c. Waiver. Waiver by City of any one or more of the terms or conditions of this
Agreement shall not be construed as waiver of any other term or condition under
this Agreement.
d. Enforcement. Unless amended or canceled pursuant hereto, this
Agreement shall be enforceable by any party hereto, or successor in interest
thereto, notwithstanding any subsequent change in any applicable general or
specific plan, zoning, subdivision or building regulation, or municipal code
amendment adopted by City that conflicts with the terms of this Agreement.
e. Joint and Several Liability. Owner shall be jointly and severally liable for
any amount due under this Agreement, and any breach of this Agreement or failure
to pay by one Party shall also constitute a breach of this Agreement by the other
Party.
f. Severability. If any part of this Agreement is found to conflict with applicable
state laws or regulations, such part shall be inoperative, null, and void insofar as it
conflicts with said laws or regulations, or modified or suspended as may be
necessary to comply with such state laws or regulations, but the remainder of this
Agreement shall continue to be in full force and effect.
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g. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which together
shall constitute one and the same instrument. The execution of this Agreement
may be by actual, facsimile, or electronic signature.
h. Jurisdiction and Arbitration. The law governing this Agreement shall be that
of the State of California. Any suit brought by any party against any other party
arising out of the performance of this Agreement shall be filed and maintained in
the County of Los Angeles Superior Court. Any dispute, claim or controversy
arising out of or relating to this Agreement or the breach, termination, enforcement,
interpretation or validity thereof, including the determination of the scope or
applicability of this Agreement to arbitrate, shall be determined by binding
arbitration in Los Angeles, California before one arbitrator. Said arbitrator shall be
chosen by mutual agreement of the Parties. If the Parties cannot agree on an
arbitrator within 30 days of the first notice by either Party of the need for arbitration,
each Party shall name one arbitrator, then the two arbitrators shall choose the
arbitrator who shall hear the case.
i. Disclaimer. Despite California's commercial cannabis laws and the terms
and conditions of this Agreement, any Conditional Use Permit, or any Regulatory
Permit issued pertaining to Owner or the property specified herein, California
commercial cannabis cultivators, transporters, distributors, or possessors may still
be subject to arrest by state or federal officers and prosecuted under state or
federal law. The Federal Controlled Substances Act, 21 USC § 801, prohibits the
manufacture, distribution, and possession of cannabis without any exemptions for
medical use.
j. Force Maieure. If delays are caused by unforeseen events beyond the
control of Owner, such delays will entitle Owner to an extension of time as provided
in this section. Such unforeseen events ("Force Majeure") shall mean war,
insurrection, acts of God, local, state or national emergencies, strikes and other
labor difficulties beyond the party's control, or any default by City hereunder, which
Force Majeure event substantially interferes with the development, construction or
operation of the Project.
k. Costs and Fees. Owner shall be responsible for all of the reasonable and
fixed costs associated the Project, including but not limited to costs associated with
City's review and processing of the Project, including but not limited to reviewing
the Project's entitlements, including all environmental clearance documents,
permits, licenses and all documents evidencing compliance with state and local
law, and as such Owner agrees to reimburse City for any costs and fees associated
with processing the Project, as detailed in this Agreement.
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I. Constructive Notice and Acceptance. Every person who after the Effective
Date and recording of this Agreement owns or acquires any right, title, or interest
to any portion of the Site, is and shall be conclusively deemed to have consented
and agreed to every provision contained herein, whether or not any reference to
this Agreement is contained in the instrument by which such person acquired an
interest in the Site, and all rights and interests of such person in the Site shall be
subject to the terms, requirements, and provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
CITY OF LYNWOOD
City Manager
OWNER
NORTON AVENUE VENTURES, INC.
Name:
Title:
Page 30 of 31 Cultivation, Manufacturing, Distribution,
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APPROVED AS TO FORM:
Page 31 of 31 Cultivation, Manufacturing, Distribution,
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COMMERCIAL CANNABIS
DEVELOPMENT AGREEMENT
Development Agreement No. 2017-05 MOD
This Agreement is made by and between and among the CITY OF LYNWOOD
("City") and BROKEN ARROW PRIVATE ORGANIZATION, a California Non-Profit
Mutual Benefit Corporation ("Owner") and MML, INC., a California corporation
("Landlord") this_ day of January 2018, as required by Section 4-34-5 of the Lynwood
Municipal code setting forth the terms and conditions under which Owner shall operate a
commercial cannabis cultivation, manufacturing, distribution, and delivery facility (also,
the "Project") pursuant to its Regulatory Permit that are in addition to the requirements of
Article 4-34 of the Lynwood Municipal Code, including, but not limited to, public outreach
and education, community service, payment of fees and other charges as set forth or
referenced herein, and such other terms and conditions as will protect and promote the
public health, safety, and welfare. The requirements set forth in Article 4-34 of the
Lynwood Municipal Code, and the Administrative Regulations adopted by the City Council
of the City of Lynwood are incorporated herein by reference. All subsequent references
to "municipal code" mean the Lynwood Municipal Code.
1. Government Code and Municipal Code Required Elements
a. Description of Property. Land situated in the City of Lynwood, County of
Los Angeles, State of California, described as Los Angeles County APN: 6170-
015-034, whose street address is 2820 Martin Luther King Jr. Blvd., City of
Lynwood.
b. Owner and Other Person with Legal or Equitable Interest.
Owner: Broken Arrow Private Organization
Alex Shvartsman, Chief Executive Officer
Landlord: MML, Inc.
Regina Livshetz, Chief Executive Officer
c. Permitted Uses. The subject property may be used for any commercial
cannabis facility as presently authorized under Article 4-34 of the municipal code,
and for any other use as authorized under applicable provisions of the municipal
code. Although chapter 25 does not specifically identify commercial cannabis
facilities as allowed uses in any zoning district, such uses are similar to other listed
uses, including, but not limited to, medical services -clinics, offices, laboratories;
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garden center/plant nursery; food and beverage manufacturing; and agricultural
products processing; and, therefore, commercial cannabis facilities are allowed
uses in the same zoning districts in which such similar uses are allowed under
Chapter 25 of the municipal code.
d. Zoning. Owner shall guarantee that all activities conducted under this
Agreement and under the Regulatory Permit shall comply with the City's municipal
code, including the zoning ordinance and any and all development and
construction requirements contained therein. Owner shall not conduct any
business under this Agreement or under the Regulatory Permit without having
obtained all necessary permits, licenses, and approvals from the City.
e. Reservation or Dedication of Land for Public Purposes. Sufficient roadway,
sidewalk, and utility easements shall be reserved or dedicated to City for such
purposes.
2. Term
This Agreement shall start on the date on which all parties have executed it and it shall
end five years from the starting date, and it shall remain in full force and effect so long as
the subject property is used for a commercial cannabis facility as presently authorized
under Article 4-34 of the municipal code; provided, however, such use is not abandoned
for a period of more than six (6) months. The term may be extended for up to two, five-
year extensions by mutual agreement of the Parties. However, at the request of either
Party, the fees required under Article 7 of this Agreement may be subject to re-negotiation
for year 4 of this Agreement. In the event a Party wishes to re-negotiate fees, it shall give
notice to the other Party no less than 90 days before the four-year anniversary of the
agreement, and negotiations shall be concluded before the anniversary date.
3. Owner's Site and Floor Plans
a. Owner's preliminary site plan and floor plan for the facility shall be provided
in advance of the signing of this Agreement and incorporated by reference. The
floor plan identifies the uses of each interior space, and is the basis for calculating
the annual per-square-foot fee specified in Article 7 below.
b. A preliminary landscape plan will be prepared and reviewed and approved
by the Planning Director as part of the design review process. A final landscape
plan shall be prepared and submitted in conjunction with building and site
improvement plans prior to issuance of building permits for construction activities.
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c. An exterior signage plan will be prepared and reviewed and approved by
the Planning Director in accordance with the procedures and requirements of
Article 70 of Chapter 25 of the municipal code.
4. Facility Operations
a. Standard Operating Procedures. Owner is a non-profit mutual benefit
corporation that will serve medical cannabis qualified patient and primary caregiver
collective members who will comply with all relevant California State laws and local
ordinances. (See California's Compassionate Use Act (Proposition 215) as codified
in Health and Safety Code §11362.5; Senate Bill 420, the Medical Cannabis
Program Act (H&S Code §§1362.7 to 11362.83); the August 2008 Guidelines for
the Security and Non-Diversion of Cannabis Grown for Medical Use (2008 Attorney
General Guidelines); the newly enacted Medicinal and Adult-Use Cannabis
Regulation and Safety Act ("MAUCRSA") set forth in Business and Professions
Code Section 26000, et seq., and Assembly Bill 133, which was enacted in
September 2017.
During the term of its Regulatory Permit and the term of this Agreement, Owner shall
lawfully operate in accordance with all state and local laws. Owner will employ
exemplary operating procedures to comply with state and local laws. Owner's
facility will employ safety and security measures as set forth herein for the safety
and security of its employees, as well as other individuals in its neighboring
community.
b. Securitv Plan. The issuance of a Regulatory Permit is conditional upon
approval of the proposed security plan by the Los Angeles County Sheriff. The
security plan shall include, at a minimum and as appropriate, provisions for video
surveillance, perimeter fencing and security, protection of the building(s) from
vehicle intrusion, cash handling procedures, product handling and storage
procedures, and a professionally monitored alarm system. Equipment and
systems used for video surveillance and building alarms will be approved by City.
Video surveillance shall include, at a minimum, all site and facility entrances and
access points, all spaces accessible by the public, all secured areas of the facility
with restricted access, all interior spaces and rooms where commercial cannabis
products are handled and processed, shipping and receiving areas, cash storage
areas, and other areas necessary to protect the safety of employees and the public
and to ensure commercial cannabis products are received, handled, stored,
packaged, shipped, and distributed in compliance with applicable state and local
laws and regulations. The video surveillance system shall be web-based with
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direct access provided to the Los Angeles County Sheriff for real-time monitoring
from the Los Angeles County Sheriff upon request.
The security system will also include sensors to detect entry and exit from all
secure areas, panic buttons in appropriate locations, and a professionally
monitored alarm system with glass breakage sensors and motion detectors.
Owner will employ properly trained and licensed third-party security personnel to
protect the welfare and safety of Owner's employees and to ensure public safety
to the neighboring community. Owner shall use security personnel 24 hours, 7
days a week. Security personnel may be armed so long as proper licensing and
insurance requirements are followed and met by the third-party operator providing
such security services.
c. Fire Department Aooroval. Owner may not operate any facility, and no
permit, license, or other approval issued by City shall be valid unless and until the
Los Angeles County Fire Department has approved Owner's site plan, floor plan,
safety plan, and any other plans that require its approval.
d. Possession of Firearms. Except for licensed security personnel approved
by the Los Angeles County Sheriff, no person employed by Owner shall be in
possession of any firearm while on the premises or location without having first
obtained a license from the appropriate state or local agency authorizing the
person to be in possession of such firearm. Every such person in possession of a
firearm while on the premises or location must provide the City Manager and the
Los Angeles County Sheriff, ten days before bringing the firearm onto the
premises, with the following:
1) A copy of the license issued to the person by the appropriate state
or local agency authorizing him or her to possess such firearm;
2) A copy of his or her law enforcement identification (if he or she is
employed by a law enforcement agency);
3) A copy of his or her California driver's license or California
identification card; and
4) Any other information reasonably required by the Los Angeles
County Sheriff to show that the individual is in compliance with the
provisions of all laws regarding the possession and use of a firearm.
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e. Procedures for Inventory Control to Prevent Diversion of Cannabis. Only
authorized employees will be permitted to enter Owner's facility. Each employee
will have to meet a criminal background investigation conducted by the Los
Angeles County Sheriff, which at minimum shall include a LiveScan criminal history
check.
Owner membership rules will seek to prevent the diversion of cannabis by
implementing strict policies and practices, as well as efficient transparency to
maintain tight controls on inventory and donations and/or cost reimbursements
received.
Owner's collective agreement will prohibit the use of cannabis by its employees at
its facility, in the neighborhood vicinity of its facility, and while driving.
Owner will take all necessary and reasonable steps to prevent the distribution of
any of its commercial cannabis products to minors; prevent revenue from the sale
or distribution of its commercial cannabis and/or infused products from going to
criminal enterprises, gangs and cartels; prevent the diversion of cannabis from
California to any other state; prevent state-authorized cannabis activity from being
used as a cover or pretext for the trafficking of other illegal drugs or other illegal
activity; prevent violence and the use of firearms in the cultivation, manufacture
and distribution of cannabis; discourage and educate against drugged driving and
the exacerbation of other adverse public health consequences associated with
cannabis use; disavow growing cannabis on public lands that creates attendant
public safety and environmental dangers posed by such illegal uses; and
discourage and educate against cannabis possession or use on federal property.
f. Quality Control and Testing. Owner will utilize quality control measures and
testing to ensure only the highest quality of commercial cannabis and infused
products will be produced. Owner will inspect the product to insure its identity and
quantity, and will have a testing lab approved by City, perform testing of random
samples prior to distribution or delivery. . Inspection and testing will be conducted
by the approved testing lab off-site. Testing standards and procedures shall be in
accordance with applicable state law and regulations.
All commercial cannabis products will undergo a quality assurance review prior to
distribution to Owner's patient collective affiliates or delivery to individual
customers in order to ascertain its quantity and content. Inventory procedures will
be utilized for tracking and taxing purposes by the state. Owner will employ an
efficient record-keeping system to make transparent its financing, testing, and
adverse effect recording, as well as recall procedures. Owner will employ an
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efficient record-keeping system that will reflect its financing, testing, and adverse
effect recording and product recall procedures.
g. Packing of Commercial Cannabis and Infused Products. All Owner's
commercial cannabis products will be packaged and labeled as required by
Section 26071, et seq., of the California Business and Professions Code and
applicable requirements and regulations issued by the State of California pursuant
thereto. In addition to those packaging and labeling requirements, and packaging
and labeling requirements set forth in Owner's Regulatory Permit application, as
amended or supplemented, all commercial cannabis products shall be packaged
in an opaque childproof container which shall contain a label or be accompanied
by a leaflet or inset that states, at a minimum:
1) The name, address and telephone number of the licensed
commercial cannabis facility to which the commercial cannabis product is
distributed, sold, or transferred;
2) The amount of commercial cannabis in the container; and
3) The date the commercial cannabis was transferred to a licensed
commercial cannabis facility.
Owner intends to produce infused products and will secure any approval from the
County of Los Angeles Health Department required for manufacturing and
handling such products. Owner infused products will not be produced,
manufactured, stored or packaged in private homes. All Owner commercial
cannabis infused products shall be individually wrapped at the original point of
preparation.
h. Delivery. If Owner applies for and receives a Delivery permit from City,
Owner may sell and deliver manufactured cannabis products to individual
customers, as long as such activity is consistent with· and permitted under state
law, and Owner has a valid state license therefor. As long as such products are
sold and delivered to individual customers, and no in-person sales occur at
Owner's facility, such activity shall not constitute a dispensary under the municipal
code.
i. Point of Sale Tracking System. Owner will maintain an inventory control
and reporting system that accurately documents the location of medicinal cannabis
products from inception through distribution or delivery, including descriptions,
weight, and quantity. The inventory control and reporting system shall comply with
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the track and trace program required by Section 26067, et seq., of the California
Business and Professions Code and regulations issued thereunder.
Owner will employ an electronic point of donation/sale system approved by City,
such as BioTrack THC, MJ Freeway, or similar system for all point of
donations/sales tracking from seed or inception to product distribution to other
licensed commercial cannabis facilities. Such approved system will track all
Owner commercial cannabis products, each edible, harvested flower, and/or
manufactured concentrate, as well as gross sales (by weight and sale). BioTrack
THC, MJ Freeway, or similar system will have the capacity to produce historical
transactional data in accordance with City's requirements.
j. Record Keeping. Owner will maintain records for all commercial cannabis
and/or infused products. Owner will comply with all records-keeping
responsibilities that are set forth in Municipal Code Section 4-34-10, including
complete and up-to-date records regarding the amount of commercial cannabis
cultivated, produced, manufactured, harvested, stored, or packaged at Owner's
facility.
k. Processina. Handling, Storing, and Distribution of Commercial Cannabis
and Related Products. Commercial cannabis cultivation, handling, storing, and
processing shall be concealed from public view at all stages of growth and
processing, and there shall be no exterior evidence of cultivation or processing
occurring at the premises from a public right-of-way or from an adjacent parcel.
Commercial cannabis cultivation, handling, storing, processing, or distribution shall
not create offensive odors; create excessive dust, heat, noise, smoke, traffic, or
other impacts that are disturbing to people of normal sensitivity residing or present
on adjacent or nearby property or areas open to the public; or be hazardous due
to use or storage of materials, processes, products, or wastes.
Owner will store its cannabis and/or cannabis products in a locked safe room with
T-card identification access for management only. The safe room will be
constructed of fire-rate walls with numerous cameras installed to view all entries
and exits from the safe room, as well as all other activities performed within
Owner's facility. Owner will not conduct outdoor operations except as related to
lawful delivery and transportation of commercial cannabis and infused products.
Owner will not store commercial cannabis or related products in its delivery vehicle
outside normal operating hours of the facility.
Commercial cannabis products will be sold or distributed only to licensed
dispensaries in California, except as provided in Section 4(h) above. Excess or
contaminated product will be securely stored on-site until it is properly disposed.
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Disposal may include composting, incineration, land-fill disposal through the local
waste management hauler, or other disposal methodology in accordance with
state and county health and safety codes and regulations.
I. Odor Control. All structures shall have ventilation and filtration systems
installed that prevent cannabis plant odors from exiting the interior of the structure.
The ventilation and filtration system shall be approved by the Building Official and
City Manager and installed prior to commencing cultivation or manufacturing within
the allowable structure. Facility air intake, exhaust, and recirculating system shall
be of industrial grade. Activated charcoal, recirculating, and closed loop aeration
systems will be utilized as necessary for effective odor control and management.
m. Description of Banking Plan. Owner will seek to open a bank account under
the name of Owner or its associated management company to provide
transparency for funds received, operational costs, including payroll, tax payments
to the state and federal governments, among others. Should a bank account not
be forthcoming, Owner will purchase and install safes on-site and at off-site
locations selected by Owner to secure all daily funds received from its collective
membership or other lawful cooperative corporations to implement debit and credit
card transactions.
n. Transportation Plan. Owner will comply with all state and local law
regarding transportation, including the rules governing delivery service. Owner will
retain a list of names and cellular contact numbers for all employees engaged in
transportation of commercial cannabis products and provide it to the applicable
oversight authority, keeping the list current and up to date.
Owner will keep complete and up-to-date records documenting each transfer of
commercial cannabis to other lawful cooperative corporations or individual customers,
including the amount provided, the form or product category in which the commercial
cannabis was provided, the date and time provided, the name of the employee making
the transfer, the name and address of the other lawful cooperative corporation or
individual customers to whom delivery is made, and the amount of any related donation
or other monetary transaction.
5. Community Relations. Employment. and Wages
a. Public Outreach and Education Program. Owner shall create an effective
public outreach to City of Lynwood's community, including but not limited to
outreach and interface with public and private schools, youth organizations,
religious organizations, health care providers, drug abuse treatment providers, and
mental health and drug counseling providers.
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Owner will coordinate and cooperate with City and other Owners of commercial cannabis
facilities located within City of Lynwood in the establishment and implementation of
appropriate public outreach and education programs. The public outreach and education
programs shall be approved by City.
The public outreach and education program shall provide a detailed description of
Owner's intentions with regard to public outreach and education, including but not limited
to the following: what schools or programs Owner will work with; what types of materials
and information will be provided; how much time Owner's personnel expect to spend on
these activities; and how much money Owner expects to spend on an annual basis.
b. Community Benefits Program. Owner will coordinate and cooperate with
City and other Owners of commercial cannabis facilities located within the City of
Lynwood in the establishment, implementation, and funding of a community
benefits program which could include such items as new community recreation
facilities, expansion and/or improvement to existing facilities or other physical
improvements that provide a benefit to the community, support of holiday and
special community events, and support of local public service and special districts
and organizations. This community benefits program may be implemented by a
foundation or other association of commercial cannabis facility Owners issued
regulatory permits by City. City and the public will participate in the decision-
making process for identifying and prioritizing community needs and benefits, and
identifying appropriate projects to be funded by the entity implementing this
community benefits program. All projects under the community benefits program
must be approved by City.
c. Designation of Persons Responsible for Community Relations. At the time
of this Agreement, Owner's Managing Agent/General Manager, Arthur
Shvartsman, or Owner's Community Liaison Manager, Alina Shvartsman, will be
responsible for community inquiries and complaints and on-site during normal
business hours.
d. Interface with Los Angeles County Sheriff. Owner's general manager,
Arthur Shvartsman or Owner's Community Liaison Manager, Alina Shvartsman,
will interface with the Los Angeles County Sheriff to ensure its operation complies
with state and local laws and regulations.
e. Local Recruitment. Hirina. and Training Programs. Owner is committed to
making a good-faith effort to recruit, hire, and train City residents for employment
by Owner. A good-faith effort means Owner will take the following or similar
actions to recruit and employ City residents: 1) Contact local recruitment sources
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to identify qualified individuals who are City residents, 2) Advertise for qualified
City residents in trade papers and newspapers of general circulation in the area,
and 3) Develop a written plan to recruit and employ City residents as a part of
Owner's workforce.
Owner will also seek companies located in the City of Lynwood for ancillary services
needed as Owner's operating protocols reasonably warrant.
f. Living Wages. Owner agrees to pay all employees of the Facility a Living Wage.
A "Living Wage" is the higher of whatever Owner currently pays its employees for similar
work elsewhere in the State of California, or the following: until December 31, 2017:
150% of the California State minimum wage for those employees who have successfully
completed Owner's training program. Such wage shall increase on January 1 of each
subsequent year according to the percent change in the Consumer Price Index (CPI-U
covering all urban consumers) for Los Angeles County, over the preceding year ending
September 30.
g. Emclovee Benefits. Owner agrees to provide to its eligible employees leave
benefits, health and wellness benefits and other employee benefits to the extent such
benefits are required to be paid for by Owner under applicable state and federal
employment laws.
h. Full-time Work. Owner shall make its best efforts to fill every position with a full-
time employee. However, at no time shall Owner have a labor force that is composed of
less than 75% full-time employees.
6. Indemnification of City from Liability
a. Pursuant to City's requirement, Owner will indemnify City from any claims,
damages, injuries, or liabilities of any kind associated with the registration or
operation of Owner's commercial cannabis facility or the prosecution of Owner's
facility or its owners, managers, directors, officers, employees, or its qualified
patients or primary caregivers for violation of federal or state laws.
b. Owner agrees to defend, at its sole expense, any action against City, its
agents, officers, and employees related to the approval or issuance of the
Regulatory Permit and this Agreement.
c. Owner agrees to reimburse City for any court costs and attorney fees that
City may be required to pay as a result of any legal challenge related to City's
approval or issuance of a Regulatory Permit or this Agreement. City may, at its
sole discretion, participate at its own expense in the defense of any such action,
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but such participation shall not relieve the holder of the Regulatory Permit or this
Agreement.
7. Fees. Costs. and Future Taxes
a. Fees. Owner agrees to pay all permit fees and charges referenced in
Section 4-34-11 of the municipal code, in the amounts adopted by the City Council
by resolution, as well as any fees set forth in this Agreement. Permit application,
processing, and renewal fees shall be due and payable at the time application is
made.
b. Costs. Owner agrees to reimburse City for all additional costs of City
resulting from the operation of a commercial cannabis facility authorized under
Article 4-34 of the municipal code and the administrative regulations.
Reimbursement to City for such costs shall be due and payable upon demand.
c. Operating Fees. Owner agrees to pay to City, to enable City to promote,
protect, and enhance the healthy, safety, and welfare of the community and its
residents and its quality of life, the following fees:
1) an annual fee of $12.50 per square foot of cultivation area (canopy);
2) an annual fee of 2% percent (2.5%) of gross income from
manufacturing activities;
3) an annual fee of one and one-half percent (1.5%) of gross income
from distribution activities when Owner is distributing for anyone other than
itself; and
4) an annual fee of two and one-half percent (2.5%) of gross income
from delivery activities.
d. Owner agrees that the operating fees are to compensate City for the
increased demand on City services, infrastructure, and utilities; local traffic
demands; and increased City review and oversight by the Los Angeles County
Sheriff, planning department, and code enforcement of the operations of Owner's
facility. Owner understands and agrees the determination of the required per-
square-foot fee will consider such factors as the size, design, layout, operation,
and security plan for the facility; potential adverse effects on the community; and
the allocation of City services and staff time to oversee the operation of the facility.
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e. Owner understands and agrees that the fees set forth above shall be paid
in a manner and in accordance with a payment schedule agreed to by City and
Owner, in intervals of no more than three months. The cultivation and
manufacturing space to which the fee applies is as identified on the floor plan to
be provided to the City in advance of the signing of this Agreement. Payment shall
be in equal installments paid quarterly commencing at the end of the first quarter
after the effective date of the Regulatory Permit which shall be no sooner than the
date a certificate of occupancy is issued for the subject premises.
f. If Owner makes any changes to the interior layout of the facility that
increases the amount of space allocated to those uses to which the per-square-
foot fee applies, Owner shall notify City of such changes at least fourteen (14)
calendar days prior to making such changes, and the per-square-foot fee shall be
modified accordingly. If Owner fails to give City notice as required herein, Owner
shall be responsible for paying to City a per-square-foot fee based on any increase
in the amount of space allocated to those uses to which the per-square-foot fee
applies retroactive to the date the Regulatory Permit became effective.
Owner understands and agrees the annual per-square-foot fee shall be subject to
review and modification upon each annual renewal of the Regulatory Permit
applying the same standards set forth in paragraph c above.
8. Cost Recovery Fee
City shall assess to Owner fees to recover City's reasonable processing and monitoring
costs relating to Owner's business upon issuance of Owner's Manufacturing, Cultivation,
Distribution, and Delivery Permits or any Additional Permits ("CRF"). The City shall
submit sufficient information to Owner of City's total number of hours required to process
their Application or monitor their authorizations. CRFs are separate and apart from any
fees set forth in Article 7.
a. Processing Fees. Processing fees for the Application are based upon the
direct and indirect costs that City incurs in reviewing the Application. The
processing fees for the Application shall be based only on costs that are necessary
for processing the Application and implementing the Ordinance, including staff
time, legal fees, and consultant fees. "Necessary for'' means that but for the
Application, the costs would not have been incurred. The processing fee shall not
include costs for other City management objectives, unless they are necessary for
processing the Application.
b. Monitoring Fees. Monitoring fees for the Manufacturing, Cultivation,
Distribution, and Delivery Permits are based upon the direct and indirect costs City
incurs in confirming the use of the Property in accordance with the municipal code,
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the Ordinance, this Agreement, and the Application. The monitoring fees shall be
based only on costs that are necessary for conducting these reviews. "Necessary
for'' means that but for the Manufacturing, Distribution, Cultivation, and Delivery
Permits, or any Additional Permits, the costs would not have been incurred. The
monitoring fee shall not include costs for other City management objectives, unless
they are necessary for monitoring the Manufacturing, Distribution, Cultivation, and
Delivery Permits, or any Additional Permits.
c. Billing and Payment. City shall bill Owner the CRF on the first day of each
quarter (March, June, September, and December) with an invoice providing an
hourly breakdown of hours expended by City and its representatives. Owner shall
pay the CRF invoice within sixty (60) days of the date the bill for the CRF is
received by Owner. Notwithstanding the foregoing, at no time shall the CRFs
exceed Seven Thousand Dollars ($7,000) during a given year, except that the first
year may be as high as twenty thousand dollars ($20,000) because of the costs
required to set up the application process and review the applications.
d. Disputes. If Owner disagrees with the dollar amount provided by City on
the CRF invoice, Owner may submit a written request before the disputed fee is
due for a substitution of alternative CRF invoice to the immediate supervisor of the
City representative who determined the CRF invoice. The written request must
include supporting documentation. After review of Owner's written request, Owner
and City shall work, in good faith to resolve Owner's written request. The dispute
shall be decided in favor of Owner if City does not respond to the written request
within thirty (30) days of receipt.
9. Additional Owner Obligations
a. Reporting of Gross Receipts from Operations
1) Quarterly Receipts. No later than January 15, 2018, and 15 days
after the last day of each subsequent quarter during the Term hereof, Owner
shall deliver to City a report (the "Quarterly Report") showing (i) Gross
Receipts from Operations for the immediate prior quarter received by
Owner, and a cumulative total of all amounts of Gross Receipts from
Operations received by Owner for the calendar year, (ii) a calculation of the
quarterly payment due to City for the prior quarter, and (iii) a calculation of
the cumulative total of all quarterly payments for the calendar year.
2) Statement of Receipts. Owner shall keep complete, accurate and
appropriate books and records of all receipts from operations in accordance
with generally accepted accounting principles. For purposes herein, "books
and records" shall mean all bookkeeping or accounting documents Owner
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utilizes in managing its business operations relating to the Project. Such
books and records, as well as all other relevant documents as City shall
reasonably require, shall, upon reasonable written notice, be open for
inspection by City, its auditors or other authorized representatives. If at any
time during the term such books and records prove inadequate in the
reasonable judgment of City to record the Gross Receipts from Operations
as herein required, Owner shall, upon the written request of City, procure
and maintain such books and records as shall be of a character and from
adequate for such purpose. City shall have the right to audit and examine
such books, records and documents and other relevant items in the
possession of Owner, but only to the extent necessary for a proper
determination of Gross Receipts from Operations, and all such books,
records, documents and other items shall be held available for such audit
and examination. Upon request by City, Owner shall make all such books,
records and documents available to City, and provide removable copies
thereof, within thirty (30) of the date of City's request. The cost for any audit
shall be shared equally by the Parties. Owner shall preserve such books,
records, documents, and other items in Lynwood for a period of not less
than seven (7) years for the purpose of auditing or re-auditing these
accounts upon reasonable notice; except that, if an audit is made within the
seven-year period and Owner claims that errors or omissions have
occurred, the books and records shall be retained and made available until
those matters are resolved . City shall keep strictly confidential all
statements of revenue furnished by Owner and all other information
concerning Owner's operation of the Premises obtained by City as a result
of the inspection audit and examination privileges of City hereunder, except
as otherwise required by law. If City receives a request for such information
pursuant to the Public Records Act (California Government Code Section
6250, et seq.), City shall provide Owner notice of any such request prior to
disclosing any such information. Within seven (7) years after the receipt of
any statement of receipts under this Agreement, City at any time shall be
entitled to carry out an audit of such revenue either by City or agent to be
designated by City. If it shall be determined as a result of such audit that
there has been a deficiency in any payment due under this Agreement
made on the basis of such statement, then such deficiency shall become
immediately due and payable. If such statement of revenue for the relevant
year shall be found to have understated receipts by more than two percent
and City is entitled to any additional payment as a result of said
understatement, then Owner shall, in addition, pay all of City's reasonable
costs and expenses connected with such audit, including the expense
incurred in retaining such agent; otherwise City shall bear the cost and
expense of such audit.
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3) Copies of Tax Filings. Owner shall provide City with copies of any
reports Owner is required to provide to the County of Los Angeles or the
State of California for sales, use, or other tax purposes.
b. Applicability of Future Revenue Mechanisms. During the term of this
Agreement, if City imposes an alternative revenue mechanism specifically related
to cannabis operations (e.g., a cannabis tax), Owner agrees to pay to City the
greater of the payment required under such alternative revenue mechanism or the
payment required by this section. As used in this section, "alternative revenue
mechanism" does not include taxes, fees, or assessments levied on or collected
from both cannabis and non-cannabis operations. Payments required by revenue
mechanisms that are not limited to cannabis operations shall be in addition to, and
not in lieu of, payments under this section.
10. Insurance and Indemnity
a. Insurance. Owner shall require all persons doing work on the Project,
including its contractors and subcontractors (collectively, "Owner'' for purposes of
this Article 10 only), to obtain and maintain insurance of the types and in the
amounts described in this section and its subsections with carriers reasonably
satisfactory to City.
b. General Liability Insurance. Owner shall maintain commercial general
liability insurance or equivalent form with a limit of not less than Two Million Dollars
($2,000,000) (or as otherwise approved, in writing, by City) per claim and Two
Million Dollars ($2,000,000) each occurrence. Such insurance shall also:
1) Name City, its elected and appointed councils, boards, commissions,
officers, agents, employees, and representatives as "Additional Insureds"
by endorsement with respect to performance of this Agreement. The
coverage shall contain no special limitations on the scope of its protection
afforded to the above-listed additional insured.
2) Be primary with respect to any insurance of self-insurance programs
covering City, its officials, employees, agents, and representatives.
3) Contain standard separation of insured provisions.
c. Automotive Liability Insurance. Owner shall maintain business automobile
liability insurance or equivalent form with a limit of not less than Two Million Dollars
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($2,000,000) for each accident. Such insurance shall include coverage for owned,
hired, and non-owned automobiles. Such insurance shall also:
1) Name City, its elected and appointed officials, boards, commissions,
officers, agents, employees, and representatives as "Additional Insureds"
by endorsement with respect to performance of this Agreement. The
coverage shall contain no special limitations on the scope of its protection
afforded to the above-listed additional insureds.
2) Be primary with respect to any insurance or self-insurance programs
covering City, its officials, employees, agents, and representatives.
3) Contain standard separation of insured provisions.
d. Workers' Compensation Insurance. Owner shall take out and maintain
during the term of this Agreement, workers' compensation insurance for all of
Owner's employees employed at or on the Project, and in the event any of the
work is subcontracted, Owner shall require any general contractor or subcontractor
similarly to provide workers' compensation insurance for such contractor's or
subcontractor's employees, unless such employees are covered by the protection
afforded by Owner. In case any class of employee engaged in work on the Project
is not protected under any workers' compensation law, Owner shall provide and
shall cause each contractor and subcontractor to provide adequate insurance for
the protection of employees not otherwise protected. Owner hereby indemnifies
City for any damage resulting from failure of Owner, its agents, employees,
contractors, or subcontractors to take out or maintain such insurance. Workers'
compensation insurance with statutory limits and employer's liability insurance with
limits of not less than One Million Dollars ($1,000,000) each accident shall be
maintained.
e. Other Insurance Requirements. Owner shall do all the following:
1) Prior to taking any actions under this Agreement, furnish City with
properly executed certificates of insurance that clearly evidenced all
insurance required in this Article, including evidenced that such insurance
will not be canceled, allowed to expire, or be materially reduced in coverage
without thirty (30) days prior written notice to City.
2) Provide to City, upon request, and within seven (7) calendar days of
said request, certified copies of endorsements and policies, and properly
executed certificates of insurance evidencing the insurance required herein.
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3) Replace or require the replacement of certificates, policies and
endorsements for any insurance required herein expiring prior the
termination of this Agreement.
4) Maintain all insurance required herein from the Effective Date of this
Agreement to the earlier of the expiration of the term or the mutual written
termination of this Agreement.
5) Place all insurance required herein with insurers licensed to do
business in California with a current Best's Key Rating Guide reasonably
acceptable to City.
f. Indemnity. Owner agrees to indemnify, defend, and hold City, and its
elected and appointed council, boards, commissions, officers, agents, employees,
consultants, and representatives, harmless from any and all claims costs and
liability for any personal injury or property damage which may arise as a result of
any actions or negligent omissions by Owner or Owner's contractors,
subcontractors, agents, or employees in connection with the construction,
improvement, or operation of the Project.
11. Termination
a. Termination Upon Completion of Development. This Agreement shall
terminate upon the expiration of the term, unless it is terminated earlier pursuant
to the terms of this Agreement. Upon termination of this Agreement, City shall
record a notice of such termination, and this Agreement shall be of no further force
or effect except as otherwise set forth in this Agreement.
b. Effect of Termination on Owner's Obligations. Termination of this
Agreement shall eliminate any further obligation of Owner to comply with this
Agreement, or some portion thereof, if such termination relates to only part of the
Site or Project. Termination of this Agreement, in whole or in part, shall not,
however, eliminate the rights of Owner to seek any applicable and available
remedies or damages based upon acts or omissions occurring before termination.
c. Effect of Termination on City's Obligations. Termination of this Agreement
shall eliminate any further obligation of City to comply with this Agreement, or some
portion thereof. Termination of this Agreement shall not, however, eliminate the
rights of City to seek any applicable and available remedies or damages based
upon acts or omissions occurring before termination.
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and Delivery Development Agreement
d. Survival After Termination. The rights and obligations of the Parties set
forth in Article 14, Article 21, and Section 25(e), Section 25{f), and Section 25(h),
and any right or obligation of the Parties in this Agreement which, by its express
terms or nature and context is intended to survive termination of this Agreement,
will survive any such termination.
12. Resources Efficiency
The design of the facility shall include significant water and energy conservation
measures to minimize resource consumption. The design shall incorporate to the furthest
extent economically and technologically feasible solar, wind, high efficiency lighting, and
water recycling systems and technology. High efficiency LED lighting systems also shall
be used to the furthest extent economically and technologically feasible. Automated,
digitally controlled watering and fertilization systems shall be used for all plant cultivation.
Cultivation will be a continuous hydroponic grow, in a soil-less grow medium. All water
mixed with nutrients will be recycled. Storm water shall be collected and recycled to the
extent feasible.
13. Standard Conditions for Construction
During any on-site construction activities related to development of the project site and
any buildings thereon, or renovation or remodeling of existing buildings, Owner and
Landlord shall comply with all applicable terms and conditions of City's Standard
Conditions for Construction, attached hereto and incorporated herein by reference. The
Project shall comply with the applicable parking standards established by the City for
cannabis activities.
14. Defaults and Remedies
a. Remedies in general. It is acknowledged by the parties that City would not
have entered into this Agreement if it were to be liable in damages under this
Agreement, or with respect to this Agreement or the application thereof, except as
hereinafter expressly provided. Subject to extensions of time by mutual consent
in writing, failure to delay by either party to perform any term or provision of this
Agreement shall constitute a default. In the event of alleged default or breach of
any terms or conditions of this Agreement, the party alleging such default or breach
shall give the other party not less than thirty (30) day notice in writing specifying
the nature of the alleged default and the manner in which said default may be
satisfactorily cured during any such thirty (30) day period, the party charged shall
not be considered in default for purposes of termination or institution of legal
proceedings. Notwithstanding the foregoing to the contrary, if the alleged default
is of such a nature that it cannot be cured within thirty (30) days, the alleged
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and Delivery Development Agreement
defaulting party shall not be deemed in default as long as such party commences
to cure such default within such thirty (30) day period and thereafter diligently
prosecutes such cure to completion.
After notice and expiration of the thirty (30) day period, the other party to this Agreement,
at its option, may institute legal proceedings pursuant to this Agreement.
In general, each of the parties hereto may pursue any remedy at law or equity available
for the breach of any provision of this Agreement, except that City shall not be liable in
monetary damages, unless expressly provided for this Agreement, to Owner, to any
mortgagee or lender, or to any successors in interest of Owner or mortgagee or lender,
or to any other person, and Owner covenants on behalf of itself and all successors in
interest to the Property or any portion thereof, not to sue for damages or claim any
damages.
1) For any breach of this Agreement or for any cause of action which
arises out of this Agreement; or
2) For the impairment or restriction of any right or interest conveyed or
provided under, with, or pursuant to this Agreement, including, without
limitation, any impairment or restriction which Owner characterizes as a
regulatory taking or inverse condemnation; or
3) Arising out of or connected with any dispute, controversy or issue
regarding the application or interpretation or effect of the provisions of this
Agreement.
Nothing contained herein shall modify or abridge Owner's rights or remedies (including
its rights for damages, if any) resulting from the exercise by City of its power of eminent
domain. Nothing contained herein shall modify or abridge Owner's rights or remedies
(including its rights for damages, if any) resulting from the grossly negligent or malicious
acts of City and its officials, officers, agents and employees. Nothing herein shall modify
or abridge any defenses or immunities available to City and its employees pursuant to the
Government Liability Act and all other applicable statutes and decisional law.
Except as set forth in the preceding paragraph relating to eminent domain, Owner's
remedies shall be limited to those set forth in this Section 14(a), Section 14(b}, and
Section 14(c).
Notwithstanding anything to the contrary contained herein, City covenants as provided in
Civil Code Section 3300 not to sue for or claim any consequential damages or, in the
Page 19 of 31 Cultivation, Manufacturing, Distribution.
and Delivery Development Agreement
event all or a portion of the Property is not developed, for lost profits or revenues which
would have accrued to City as a result of the development of the Property.
b. Specific Performance. The parties acknowledge that money damages and
remedies at law are inadequate, and specific performance and other non-monetary
relief are particularly appropriate remedies for the enforcement of this Agreement
and should be available to all parties for the following reasons:
1) Except as provided in Sections 14(a) and 14(e), money damages are
unavailable against City as provided in Section 14(a) above.
2) Due to the size, nature and scope of the Project, it may not be
practical or possible to restore the Property to its natural condition once
implementation of this Agreement has begun. After such implementation,
Owner may be foreclosed from other choices it may have had to use the
Property or portions thereof. Owner has invested significant time and
resources and performed extensive planning and processing of the Project
in agreeing to the terms of this Agreement and will be investing even more
significant time and resources in implementing the Project in reliance upon
the terms of this Agreement, and it is not possible to determine the sum of
money which would adequately compensate Owner for such efforts; the
parties acknowledge and agree that any injunctive relief may be ordered on
an expedited, priority basis.
c. Release. Except for those remedies set forth in Sections 14(a), 14(b), and
14(c), Owner, for itself, its successors and assignees, hereby releases City, its
officers, agents and employees from any and all claims, demands, actions, or suits
of any kind or nature arising out of any liability, known or unknown, present or
future, based or asserted, pursuant to Article 1, Section 19 of the California
Constitution, the Fifth Amendment of the United States Constitution, or any other
law or ordinance which seeks to impose any other liability or damage, whatsoever,
upon City because it entered into this Agreement or because of the terms of this
Agreement.
Owner acknowledges that it may have suffered, or may suffer, damages and other injuries
that are unknown to it, or unknowable to it, at the time of its execution of this Agreement.
Such fact notwithstanding, Owner agrees that the release provided in this Section shall
apply to such unknown or unknowable claims and damages. Without limiting the
generality of the foregoing, Owner acknowledges the provisions of California Civil Code
Section 1542, which provide:
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and Delivery Development Agreement
"A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which if
known by him or her must have materially affected his or her settlement with the
debtor."
Owner hereby waives, to the maximum legal extent, the provisions of California Civil Code
Section 1542 and all other statutes and judicial decisions of similar effect.
Initials
d. Termination of Agreement for Default of City. Owner may terminate this
Agreement only in the event of a default by City in the performance of a material
term of this Agreement and only after providing written notice to City of default
setting forth the nature of the default and the actions, if any, required by City to
cure such default and, where the default can be cured, City has failed to take such
actions and cure such default within sixty (60) days after the effective date of such
notice or, in the event that such default cannot be cured within such sixty (60) day
period but can be cured within a longer time, has failed to commence the actions
necessary to cure such default within such sixty (60) day period and to diligently
proceed to complete such actions and cure such default.
e. Attorneys' Fees and Costs. In any action or proceeding between City and
Owner brought to interpret or enforce this Agreement, or which in any way arises
out of the existence of this Agreement or is based upon any term or provision
contained herein, the "prevailing party" in such action or proceeding shall be
entitled to recover from the non-prevailing party, in addition to all other relief to
which the prevailing party may be entitled pursuant to this Agreement, the
prevailing party's reasonable attorneys' fees and litigation costs, in an amount to
be determined by the court. The prevailing party shall be determined by the court
in accordance with California Code of Civil Procedure Section 1032. Fees and
costs recoverable pursuant to this Section include those incurred during any
appeal from an underlying judgment and in the enforcement of any judgment
rendered in any such action or proceeding.
f. Owner Default. No building permit shall be issued or building permit
application accepted for any structure on the Property after Owner is determined
by City to be in default of the terms and conditions of this Agreement until such
default thereafter is cured by Owner or is waived by City. If City terminates this
Agreement because of Owner's default, then City shall retain any and all benefits,
including money or land received by City hereunder.
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and Delivery Development Agreement
15. Third Party Litigation
a. General Plan Litigation. City has determined that this Agreement is
consistent with its General Plan. Owner has reviewed the General Plan and
concurs with City's determination.
City shall have no liability under this Agreement or otherwise for any failure of City to
perform under this Agreement, or for the inability of Owner to develop the Property as
contemplated by the Development Plan, which failure to perform or inability to develop is
as the result of a judicial determination that the General Plan, or portions thereof, are
invalid or inadequate or not in compliance with law, or that this Agreement or any of City's
actions in adopting it were invalid, inadequate, or no in compliance with the law.
b. Hold Harmless Agreement. Owner hereby agrees to, and shall hold City,
its elective and appointive boards, commissions, officers, agents, and employees
harmless from any liability for damage or claims for damage for personal injury,
including death, as well as from claims for property damage which may arise from
Owner or Owner's contractors, subcontractors, agents, or employees' operations
under this Agreement, whether such operations be by Owner, or by any of Owner's
contractors, subcontractors, agents, or employees operations under this
Agreement, whether such operations be by Owner, or by any of Owner's
contractors, subcontractors, or by any one or more persons directly or indirectly
employed by, or acting as agent for Owner or any of Owner's contractors or
subcontractors. Owner agrees to and shall defend City and its elective and
appointive boards, commissions, officers, agents and employees from any suits or
actions at law or in equity for damage caused, or alleged to have been caused, by
reason of any of the aforesaid operations.
c. Indemnification. Owner shall defend, indemnify, and hold harmless City and
its agents, officers, and employees against and from any and all liabilities,
demands, claims, actions or proceedings and costs and expenses incidental
thereto (including costs of defense, settlement and reasonable attorneys' fees),
which any or all of them may suffer, incur, be responsible for or pay out as a result
of or in connection with any challenge to the legality, validity or adequacy of any of
the following: (i) this Agreement and the concurrent and subsequent permits,
licenses and entitlements approved for the Project or Property; (ii) the
environmental impact report, mitigated negative declaration or negative
declaration, as the case may be, prepared in connection with the development of
the Property; (iii) any claims based on or alleging inverse condemnation by any
person or entity with an interest in the Property; and (iv) the proceedings
undertaken in connection with the adoption or approval of any of the above. In the
event of any legal or equitable action or other proceeding instituted by any third
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and Delivery Development Agreement
party (including a governmental entity or official) challenging the validity of any
provision of this Agreement or any portion thereof as set forth herein, the parties
shall mutually cooperate with each other in defense of said action or proceeding.
Notwithstanding the above, City, at is sole option, may tender the complete
defense of any third-party challenge as described herein. In the event City elects
to contract with special counsel to provide for such a defense, City shall meet and
confer with Owner regarding the selection of counsel, and Owner shall pay all costs
related to retention of such counsel.
d. Environmental Contamination. Owner shall indemnify and hold City, its
officers, agents, and employees free and harmless from any liability, based or
asserted, upon any act or omission of Owner, its officers, agents, employees,
subcontractors, predecessors in interest, successors, assigns and independent
contractors, excepting and acts or omissions of City as successor to any portions
of the Property dedicated or transferred to City by Owner, for any violation of any
federal, state or local law, ordinance or regulation relating to industrial hygiene or
to environmental conditions on, under or about the Property, including, but not
limited to, soil and groundwater conditions, and Owner shall defend, at its expense,
including attorneys' fees, City, its officers, agents and employees in any action
based or asserted upon any such alleged act or omission. City may in its discretion
participate in the defense of any such claim, action or proceeding.
The provisions of this Section do not apply to environmental conditions that predate
Owner's ownership or control of the Property or applicable portion; provided, however,
that the foregoing limitation shall not operate to bar, limit or modify any of Owner's
statutory or equitable obligations as an owner or seller of the Property.
e. City to Approve Counsel. With respect to Sections 15(a) through 15(d), City
reserves the right to approve the attorney(s) which Owner selects, hires or
otherwise engages to defend City hereunder, which approval shall not be
unreasonably withheld.
f. Accept Reasonable Good Faith Settlement. With respect to Article 15, City
shall not reject any reasonable good faith settlement. If City does reject a
reasonable, good faith settlement that is acceptable to Owner, Owner may enter
into a settlement of the action, as it relates to Owner, and City shall thereafter
defend such action (including appeals) at its own cost and be solely responsible
for any judgment rendered in connection with such action. This Section applies
exclusively to settlements pertaining to monetary damages or damages which are
remedial by the payment of monetary compensation. Owner and City expressly
agree that this Section does not apply to any settlement that requires an exercise
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and Delivery Development Agreement
of City's police powers, limits City's exercise of its police powers, or affects the
conduct of City's municipal operations.
g. Survival. The provisions of Sections 15(a) through 15(f) inclusive, shall
survive the termination or expiration of the Agreement.
16. California Environmental Quality Act
Owner shall reimburse City for any and all costs incurred by City related to project review
under the California Environmental Quality Act (CEQA), Public Resources Code,
§§21 000-21189.3, and the Guidelines for California Environmental Quality Act, California
Code of Regulations, Title 14, §§15000-15387. If requested by City, Owner shall conduct
and pay for any required CEQA reviews and analyses. The City has found that the
proposed Project is Categorically Exempt from California Environmental Quality Act
(CEQA) requirements under provisions of CEQA Guidelines Section 15332 -In-Fill
Development Projects. This exemption applies to projects characterized as in-fill
development meeting the conditions described in Section 15332.
17. Rules. Regulations, and Official Policies
Except as otherwise provided in this Agreement, the rules, regulations, and official
policies of City governing permitted uses of the land, governing density, and governing
the design, improvements, and construction standards and specifications applicable to
the development of the Project subject of this Agreement, shall be those rules,
regulations, and official policies of City in force at the time of the execution of this
Agreement. This Agreement does not prevent City, in subsequent actions applicable to
the property, from applying new rules, regulations, and policies which do not conflict with
those rules, regulations, and policies applicable to the property as set forth herein, nor
does this Agreement prevent City from denying or conditionally approving any
subsequent development project application based on such existing or new rules,
regulations, or policies.
18. Regulatory Permit Conditions of Approval
Owner shall comply with all conditions of approval of the Regulatory Permit approved by
City Council.
19. Periodic Reviews
This Agreement shall be subject to annual review. Owner and Landlord executing this
Agreement, or successor in interest thereto, shall demonstrate good faith compliance with
the terms of this Agreement. If, as a result of such periodic review, City finds and
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and Delivery Development Agreement
determines, based on substantial evidence, that Owner or Landlord executing this
Agreement, or successor in interest thereto, has not complied in good faith with the terms
or conditions of this Agreement, City may terminate or modify this Agreement.
a. Periodic Review. City Council shall review this Agreement annually, on or
before each anniversary of the Effective Date, in order to ascertain Owner's good
faith compliance with this Agreement. During the periodic review Owner shall be
required to demonstrate good faith compliance with the terms of the Agreement,
through submitting an annual monitoring report, records, or equivalent written
materials to the Planning Department. The Planning Department will schedule a
hearing on the periodic review of the Development Agreement on or following the
anniversary of the Effective Date, but Owner has no obligation to compel such
hearing, and no implication will be made to Owner's detriment if a hearing is not in
fact held. Owner shall document any request for an extension of the term due to
delays beyond the control of Owner (see Section 250), "Force Majeure"). Owner
shall submit an annual review and administration fee deposit not to exceed City's
estimated internal and third-party costs associated with the review and
administration of this Agreement during the succeeding year, consistent with
Section 25(k) ("Deposit with City") below. City shall provide Owner said estimate
a reasonable time in advance of the annual review and administration fee deposit
being due.
b. Conditional Use Permit. For all intents and purposes, the Regulatory Permit
to be issued under this Agreement shall be treated as if it were a Conditional Use
Permit issued to Owner for the establishment and operation of its business. The
operation of the business at all times shall be required to comply with the terms of
this Agreement.
c. Special Review. City Council may order a special review of compliance with
this Agreement at any time. The Planning Director or his or her designee shall
conduct such special review. During a special review, Owner shall be required to
demonstrate good faith compliance with the terms of the Agreement. The burden
of proof on this issue shall be on Owner.
d. Review Hearing. At the time and place set for the review hearing, Owner
shall be given an opportunity to be heard. If City Council finds, based upon
substantial evidence, that Owner has not complied in good faith with the terms or
conditions of this Agreement, City Council may terminate this Agreement
notwithstanding any other provision of this Agreement to the contrary, or modify
this Agreement and impose such conditions as are reasonably necessary to
protect the interests of City. The decision of City Council shall be final, subject
only to judicial review pursuant to Code of Civil Procedure Section 1094.5.
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and Delivery Development Agreement
e. Certificate of Agreement Compliance. If, after a periodic or special review,
Owner is found to be in compliance with this Agreement, and if Owner requests it,
City shall issue a Certificate of Agreement Compliance ("Certificate") to Owner
stating that after the most recent periodic or special review, and based upon the
information known or made known to the Planning Director and City Council, that
(i) this Agreement remains in effect and (ii) Owner is not in default.
City shall not be bound by a Certificate if a default existed at the time of the periodic or
special review, but was concealed from or otherwise not known to the Planning Director
and City Council, regardless of whether the Certificate is relied upon by assignees or
other transferees or Owner.
f. Failure to Conduct Review. City's failure to conduct a periodic review of this
Agreement shall not constitute a breach of this Agreement.
g. Cost of Review. The costs incurred by City in connection with the periodic
reviews shall be borne by Owner.
20. Obligations of Landlord
Landlord shall have rights, duties, obligations, and liability only as expressly set forth
herein. Landlord shall have no responsibility or liability for the failure of Owner to perform
as required by this Agreement.
21. Assignment
a. Assignment by Landlord. Landlord shall not transfer, delegate, or assign its
interest, rights, duties, and obligations under this Agreement, without the prior
written consent of City.
b. Assignment by Owner. Owner shall not transfer, delegate, or assign its
interest, rights, duties, and obligations under this Agreement without the prior
written consent of City. Any assignment, delegation, or assignment without the
prior written consent of City shall be null and void. Any transfer, delegation, or
assignment by Owner as authorized herein shall be effective only if and upon the
party to whom such transfer, delegation, or assignment is made is issued a
Regulatory Permit as required under Article 4-34 of the municipal code.
22. Operating Commercial Cannabis Facility
Page 26 of 31 Cultivation, Manufacturing, Distribution,
and Delivery Development Agreement
Any party to this Agreement, or successor in interest thereto, shall not operate a
commercial cannabis facility authorized under the municipal code unless:
a. It is the holder of a valid Regulatory Permit issued by City in accordance
with the procedures and requirements of Article 4-34 of the municipal code; and
b. At such time as the State of California requires commercial cannabis
facilities and businesses to hold a valid license or permit issued by the State of
California, it also holds such license or permit, unless, however, such permit or
license is not required by the State of California for the type of commercial
cannabis facility or business operation that is the subject of this Agreement.
23. Future Permits
Should City amend the Lynwood Municipal Code or its Administrative Regulations to
permit and issue permits for any recreational cannabis facility or for other authorized uses
other than those now permitted under Section 1 (c) of this Agreement (for example, retail
sales of medical or recreational cannabis or other cannabis businesses), the City shall
give priority for such permits to Owner, provided Owner has complied with its obligations
under this Agreement and is otherwise in good standing.
24. Notice
Any notice or communication required hereunder between City and Owner must be in
writing, and may be given either personally, by facsimile (with original forwarded by
regular U.S. Mail), by registered or certified mail (return receipt requested), or by Federal
Express, UPS or other similar couriers providing overnight delivery. If personally
delivered, a notice shall be deemed to have been given when delivered to the Party to
whom it is addressed. If given by facsimile transmission, a notice or communication shall
be deemed to have been given and received upon actual physical receipt of the entire
document by the receiving Party's facsimile machine. Notices transmitted by facsimile
after 5:00p.m. on a normal business day or on a Saturday, Sunday, or holiday shall be
deemed to have been given and received on the next normal business day. If given by
registered or certified mail, such notice or communication shall be deemed to have been
given and received on the first to occur of (i) actual receipt by any of the addressees
designated below as the party to whom notices are to be sent, or (ii) five (5) days after a
registered or certified letter containing such notice, properly addressed, with postage
prepaid, is deposited in the United States mail. If given by Federal Express or similar
courier, a notice or communication shall be deemed to have been given and received on
the date delivered, as shown on a receipt issued by the courier. Any Party hereto may at
any time, by giving ten (1 0) days written notice to the other Party hereto, designate any
other address in substitution of the address to which such notice or communication shall
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and Delivery Development Agreement
be given. Such notices or communications shall be given to the Parties at their addresses
set forth below:
If to City: City of Lynwood
11330 Bullis Road
Lynwood, California 90262
Attention: City Manager
and H. Francisco Leal, Esq.
Leal Trejo, APC
3767 Worsham Avenue
Long Beach, California 90808
If to Owner: Alex Shvartsman, CEO
If to Landlord:
With a courtesy copy to:
25. Miscellaneous Provisions
Broken Arrow Private Organization
2820 Martin Luther King, Jr. Blvd.
Lynwood,CA 90262
Regina Livshetz, CEO
MML, Inc.
1443 N. Kings Rd.
Los Angeles, CA 90069
The Jade Effect, LLC
4424 Huntington Drive South,
Los Angeles, CA 90032
Attn: Cristeta Summers or
Alina Shvartsman
a. Regulatory Permit Conditions of Approval. Owner shall comply with all
conditions of approval of the Regulatory Permit approved by City Council.
b. Amendment or Cancellation. This Agreement may be amended, or
canceled in whole or in part, only by the written mutual consent of the parties to
this Agreement or their successors in interest, except that minor amendments that
do not affect a substantive provision of this Agreement may be approved by the
City Manager. The decision whether a proposed amendment is "minor'' shall be in
the exclusive discretion of the City Manager.
Page 28 of 31 Cultivation, Manufacturing, Distribution,
and Delivery Development Agreement
c. Waiver. Waiver by City of any one or more of the terms or conditions of this
Agreement shall not be construed as waiver of any other term or condition under
this Agreement.
d. Enforcement. Unless amended or canceled pursuant hereto, this
Agreement shall be enforceable by any party hereto, or successor in interest
thereto, notwithstanding any subsequent change in any applicable general or
specific plan, zoning, subdivision or building regulation, or municipal code
amendment adopted by City that conflicts with the terms of this Agreement.
e. Joint and Several Liability. Owner and Landlord shall be jointly and
severally liable for any amount due under this Agreement, and any breach of this
Agreement or failure to pay by one Party shall also constitute a breach of this
Agreement by the other Party. Owner and Landlord agree that City may impose a
lien and seek foreclosure on any parcel of the Site due to any default by Owner.
f. Severability. If any part of this Agreement is found to conflict with applicable
state laws or regulations, such part shall be inoperative, null, and void insofar as it
conflicts with said laws or regulations, or modified or suspended as may be
necessary to comply with such state laws or regulations, but the remainder of this
Agreement shall continue to be in full force and effect.
g. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which together
shall constitute one and the same instrument. The execution of this Agreement
may be by actual, facsimile, or electronic signature.
h. Jurisdiction and Arbitration. The law governing this Agreement shall be that
of the State of California. Any suit brought by any party against any other party
arising out of the performance of this Agreement shall be filed and maintained in
the County of Los Angeles Superior Court. Any dispute, claim or controversy
arising out of or relating to this Agreement or the breach, termination, enforcement,
interpretation or validity thereof, including the determination of the scope or
applicability of this Agreement to arbitrate, shall be determined by binding
arbitration in Los Angeles, California before one arbitrator. Said arbitrator shall be
chosen by mutual agreement of the Parties. If the Parties cannot agree on an
arbitrator within 30 days of the first notice by either Party of the need for arbitration,
each Party shall name one arbitrator, then the two arbitrators shall choose the
arbitrator who shall hear the case.
i. Disclaimer. Despite California's cannabis laws and the terms and
conditions of this Agreement, any Conditional Use Permit, or any Regulatory
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and Delivery Development Agreement
Permit issued pertaining to Owner or the property specified herein, California
commercial cannabis cultivators, transporters, distributors, or possessors may still
be subject to arrest by state or federal officers and prosecuted under state or
federal law. The Federal Controlled Substances Act, 21 USC§ 801, prohibits the
manufacture, distribution, and possession of cannabis without any exemptions for
medical use.
j. Force Maieure. If delays are caused by unforeseen events beyond the
control of Owner, such delays will entitle Owner to an extension of time as provided
in this section and Article 14. Such unforeseen events ("Force Majeure") shall
mean war, insurrection, acts of God, local, state or national emergencies, strikes
and other labor difficulties beyond the party's control, or any default by City
hereunder, which Force Majeure event substantially interferes with the
development or construction of the Project.
k. Costs and Fees. Owner shall be responsible for all of the reasonable and
fixed costs associated with the Project, including but not limited to costs associated
with City's review and processing of the Project, including but not limited to
reviewing the Project's entitlements, including all environmental clearance
documents, permits, licenses and all documents evidencing compliance with state
and local law, and as such Owner agrees to reimburse City and pay any costs and
fees associated with processing the Project, as detailed in this Agreement.
I. Constructive Notice and Acceptance. Every person who after the Effective
Date and recording of this Agreement owns or acquires any right, title, or interest
to any portion of the Site, is and shall be conclusively deemed to have consented
and agreed to every provision contained herein, whether or not any reference to
this Agreement is contained in the instrument by which such person acquired an
interest in the Site, and all rights and interests of such person in the Site shall be
subject to the terms, requirements, and provisions of this Agreement.
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and Delivery Development Agreement
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
CITY OF LYNWOOD
City Manager
APPROVED AS TO FORM:
OWNER
Broken Arrow Private Organization
Name: Alex Shvartsman
Title: Chief Executive Officer
Date: December_, 2017
LANDLORD
MML, Inc.
Name: Regina Livshetz
Title: Chief Executive Officer
Date: December_, 2017
Page 31 of 31 Cultivation, Manufacturing, Distribution,
and Delivery Development Agreement
COMMERCIAL CANNABIS
DEVELOPMENT AGREEMENT
Development Agreement No. 2017-06 MOD
This Agreement is made by and between and among the CITY OF LYNWOOD
("City") and Cali Med ("Owner'') and Carlos Hernandez ("Landlord") this 5th day of
September, 2017, as required by Section 4-34-5 of the Lynwood Municipal code setting
forth the terms and conditions under which Owner shall operate a commercial cannabis
cultivation, manufacturing, distribution, and delivery facility (also, the "Project") pursuant
to its Regulatory Permit that are in addition to the requirements of Article 4-34 of the
Lynwood Municipal code, including, but not limited to, public outreach and education,
community service, payment of fees and other charges as set forth or referenced herein,
and such other terms and conditions as will protect and promote the public health, safety,
and welfare. The requirements set forth in Article 4-34 of the Lynwood Municipal Code,
and the Administrative Regulations adopted by the City Council of the City of Lynwood
are incorporated herein by reference. All subsequent references to "municipal code"
mean the Lynwood Municipal Code.
1. Government Code and Municipal Code Required Elements
a. Description of Property. Land situated in the City of Lynwood, County of
Los Angeles, State of California, described as APN 6170-015-030, whose street
address is 2827 Norton Avenue, City of Lynwood.
b. Owner and Other Person with Legal or Equitable Interest.
Owner: Cali Med
Landlord: Carlos Hernandez
c. Permitted Uses. The subject property may be used for any commercial
cannabis facility as presently authorized under Article 4-34 of the municipal code,
and for any other use as authorized under applicable provisions of the municipal
code. Although Chapter 25 does not specifically identify commercial cannabis
facilities as allowed uses in any zoning district, such uses are similar to other listed
uses, including, but not limited to, medical services -clinics, offices, laboratories;
garden center/plant nursery; food and beverage manufacturing; and agricultural
products processing; and, therefore, commercial cannabis facilities are allowed
uses in the same zoning districts in which such similar uses are allowed under
Chapter 25 of the municipal code.
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d. Zoning. Owner shall guarantee that all activities conducted under this
Agreement and under the Regulatory Permit shall comply with the City's municipal
code, including the zoning ordinance and any and all development and
construction requirements contained therein. Owner shall not conduct any
business under this Agreement or under the Regulatory Permit without having
obtained all necessary permits, licenses, and approvals from the City.
e. Reservation or Dedication of Land for Public Purposes. Sufficient roadway,
sidewalk, and utility easements shall be reserved or dedicated to City for such
purposes.
2. Term
This Agreement shall start on the date on which all parties have executed it, or 31
days after final approval by the City Council, whichever is later, and it shall end five
years from the starting date, and it shall remain in full force and effect so long as
the subject property is used for a commercial cannabis facility as presently
authorized under Article 4-34 of the municipal code; provided, however, such use
is not abandoned for a period of more than six (6) months. The term may be
extended for up to two, three-year extensions by mutual agreement of the Parties.
However, at the request of either Party, the fees required under Article 7 of this
Agreement may be subject to re-negotiation for year 3 of this Agreement. In the
event either Party wishes to re-negotiate fees, it shall give notice to the other Party
no less than 90 days before the three-year anniversary of the agreement, and
negotiations shall be concluded before the anniversary date.
3. Owner's Site and Floor Plans
a. Owner's site plan and floor plan for the facility are attached hereto and
incorporated by reference. The floor plan identifies the uses of each interior space,
and is the basis for calculating the annual per-square-foot fee specified in Article
7 below.
b. A preliminary landscape plan will be prepared and reviewed and approved
by the Planning Director as part of the design review process. A final landscape
plan shall be prepared and submitted in conjunction with building and site
improvement plans prior to issuance of building permits for construction activities.
c. An exterior signage plan will be prepared and reviewed and approved by
the Planning Director in accordance with the procedures and requirements of
Article 70 of Chapter 25 of the municipal code.
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4. Facility Operations
a. Standard Operating Procedures. Owner is a non-profit mutual benefit
corporation that will serve commercial cannabis qualified patient and primary
caregiver collective members who will comply with all relevant California State laws
and local ordinances. (See California's Compassionate Use Act (Proposition 215)
as codified in Health and Safety Code §11362.5; Senate Bill420, the Commercial
Marijuana Program Act (H&S Code §§1362.7 to 11362.83); the August 2008
Guidelines for the Security and Non-Diversion of Marijuana Grown for Medical Use
(2008 Attorney General Guidelines); the newly enacted Medicinal and Adult-Use
Cannabis Regulation and Safety Act ("MAUCRSA") set forth in Business and
Professions Code Section 26000, et seq., and Assembly Bill 133, which was
enacted in September 2017.
During the term of its Regulatory Permit and the term of this Agreement,
Owner shall lawfully operate in accordance with all state and local laws. Owner
will employ exemplary operating procedures to comply with state and local laws.
Owner's facility will employ safety and security measures as set forth herein for the
safety and security of its employees, as well as other individuals in its neighboring
community.
b. Security Plan. The issuance of a Regulatory Permit is conditional upon
approval of the proposed security plan by the Los Angeles County Sheriff. The
security plan shall include, at a minimum and as appropriate, provisions for video
surveillance, perimeter fencing and security, protection of the building(s) from
vehicle intrusion, cash handling procedures, product handling and storage
procedures, and a professionally monitored alarm system. Equipment and
systems used for video surveillance and building alarms will be approved by City.
Video surveillance shall include, at a minimum, all site and facility entrances and
access points, all spaces accessible by the public, all secured areas of the facility
with restricted access, all interior spaces and rooms where commercial cannabis
products are handled and processed, shipping and receiving areas, cash storage
areas, and other areas necessary to protect the safety of employees and the public
and to ensure commercial cannabis products are received, handled, stored,
packaged, shipped, and distributed in compliance with applicable state and local
laws and regulations. The video surveillance system shall be web-based with
direct access provided to the Los Angeles County Sheriff upon request.
The security system will also include sensors to detect entry and exit from all
secure areas, panic buttons in appropriate locations, and a professionally
monitored alarm system with glass breakage sensors and motion detectors.
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Owner will employ properly trained and licensed third-party security personnel to
protect the welfare and safety of Owner employees and to ensure public safety to
the neighboring community. Owner shall use security personnel 24 hours, 7 days
a week. Security personnel may be armed so long as proper licensing and
insurance requirements are followed and met by the third-party operator providing
such security services.
c. Fire Department Aooroval. Owner may not operate any facility, and no
permit, license, or other approval issued by City shall be valid unless and until the
Los Angeles County Fire Department has approved Owner's site plan, floor plan,
safety plan, and any other plans that require its approval.
d. Possession of Firearms. Except for licensed security personnel approved
by the Los Angeles County Sheriff, no person employed by Owner shall be in
possession of any firearm while on the premises or location without having first
obtained a license from the appropriate state or local agency authorizing the
person to be in possession of such firearm. Every such person in possession of a
firearm while on the premises or location must provide the City Manager and the
Los Angeles County Sheriff, ten days before bringing the firearm onto the
premises, with the following:
1) A copy of the license issued to the person by the appropriate state
or local agency authorizing him or her to possess such firearm;
2) A copy of his or her law enforcement identification (if he or she is
employed by a law enforcement agency);
3) A copy of his or her California driver's license or California
identification card; and
4) Any other information reasonably required by the Los Angeles
County Sheriff to show that the individual is in compliance with the
provisions of all laws regarding the possession and use of a firearm.
e. Procedures for Inventory Control to Prevent Non-Medical Diversion of
Commercial cannabis. Only authorized employees will be permitted to enter
Owner's facility. Each employee will have to meet a criminal background
investigation conducted by the Los Angeles County Sheriff, which at minimum shall
include a LiveScan criminal history check.
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Owner's collective agreement will prohibit the use of cannabis by its employees at
its facility, in the neighborhood vicinity of its facility, and while driving.
Owner will take all necessary and reasonable steps to prevent the distribution of
any of its cannabis products to minors; prevent revenue from the sale or
distribution of its cannabis and/or infused products from going to criminal
enterprises, gangs and cartels; prevent the diversion of cannabis from California
to any other state; prevent state-authorized cannabis activity from being used as
a cover or pretext for the trafficking of other illegal drugs or other illegal activity;
prevent violence and the use of firearms in the cultivation, manufacture and
distribution of cannabis; discourage and educate against drugged driving and the
exacerbation of other adverse public health consequences associated with
cannabis use; disavow growing cannabis on public lands that creates attendant
public safety and environmental dangers posed by such illegal uses; and
discourage and educate against cannabis possession or use on federal property.
f. Quality Control and Testing. Owner will utilize quality control measures and
testing to ensure only the highest quality of commercial cannabis and infused
products will be produced. Owner will inspect the product to insure its identity and
quantity, and will have a testing lab approved by City, perform testing of random
samples prior to distribution or delivery. Inspection and testing will be conducted
by the approved testing lab off-site. Testing standards and procedures shall be in
accordance with applicable state law and regulations.
All commercial cannabis products will undergo a quality assurance review prior to
distribution or delivery in order to ascertain its quantity and content. Inventory
procedures will be utilized for tracking and taxing purposes by the state. Owner
will employ an efficient record-keeping system to make transparent its financing,
testing, and adverse effect recording, as well as recall procedures. Owner will
employ an efficient record-keeping system that will reflect its financing, testing, and
adverse effect recording and product recall procedures.
g. Packing of Commercial Cannabis and Infused Products. All Owner
commercial cannabis products will be packaged and labeled as required by
Section 26071, et seq., of the California Business and Professions Code and
applicable requirements and regulations issued by the State of California pursuant
thereto. In addition to those packaging and labeling requirements, and packaging
and labeling requirements set forth in Owner's Regulatory Permit application, as
amended or supplemented, all commercial cannabis products shall be packaged
in an opaque childproof container which shall contain a label or be accompanied
by a leaflet or inset that states, at a minimum:
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1) The name, address and telephone number 9of the commercial
cannabis dispensary facility to which the commercial cannabis product is
distributed, sold, or transferred;
2) The amount of commercial cannabis in the container; and
3) The date the commercial cannabis was transferred to a commercial
cannabis dispensary facility.
Owner intends to produce infused products and will secure any approval from the
County of Los Angeles Health Department required for manufacturing and
handling such products. Owner infused products will not be produced,
manufactured, stored or packaged in private homes. All Owner commercial
cannabis infused products shall be individually wrapped at the original point of
preparation.
h. Deliverv. If Owner applies for and receives a Delivery permit from City,
Owner may sell and deliver manufactured cannabis products to individual
customers, as long as such activity is consistent with and permitted under state
law, and Owner has a valid state license therefor. As long as such products are
sold and delivered to individual customers, and no in-person sales occur at
Owner's facility, such activity shall not constitute a dispensary under the municipal
code.
i. Point of Sale Tracking System. Owner will maintain an inventory control
and reporting system that accurately documents the location of cannabis products
from inception through distribution or delivery, including descriptions, weight, and
quantity. The inventory control and reporting system shall comply with the track
and trace program required by Section 26067, et seq., of the California Business
and Professions Code and regulations issued thereunder.
Owner will employ an electronic point of donation/sale system approved by City,
such as BioTrack THC, MJ Freeway, or similar system for all point of
donations/sales tracking from seed or inception to product distribution to other
licensed commercial cannabis dispensary facilities or delivery to individual
customers. Such approved system will track all Owner commercial cannabis
products, each edible, harvested flower, and/or manufactured concentrate, as well
as gross sales (by weight and sale). BioTrack THC, MJ Freeway, or similar system
will have the capacity to produce historical transactional data in accordance with
City's requirements.
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j. Record Keeping. Owner will maintain records for all dispensed commercial
cannabis and/or infused products. Owner will comply with all records-keeping
responsibilities that are set forth in Municipal Code Section 4-34-10, including
complete and up-to-date records regarding the amount of commercial cannabis
cultivated, produced, manufactured, harvested, stored, or packaged at Owner's
facility.
k. Processing. Handling. Storing. and Distribution of Commercial Cannabis
and Related Products. Commercial cannabis cultivation, handling, storing, and
processing shall be concealed from public view at all stages of growth and
processing, and there shall be no exterior evidence of cultivation or processing
occurring at the premises from a public right-of-way or from an adjacent parcel.
Commercial cannabis cultivation, handling, storing, manufacturing, processing, or
distribution shall not create offensive odors; create excessive dust, heat, noise,
smoke, traffic, or other impacts that are disturbing to people of normal sensitivity
residing or present on adjacent or nearby property or areas open to the public; or
be hazardous due to use or storage of materials, processes, products, or wastes.
Owner will store its commercial cannabis and/or commercial cannabis products in
a locked safe room with T-card identification access for management only. The
safe room will be constructed of fire-rate walls with numerous cameras installed to
view all entries and exits from the safe room, as well as all other activities
performed within Owner's facility. Owner will not conduct outdoor operations
except as related to lawful delivery and transportation of commercial cannabis and
infused products. Owner will not store commercial cannabis or related products in
its delivery vehicle outside normal operating hours of the facility.
Commercial cannabis products will be sold or distributed only to licensed
dispensaries in California, except as provided in section 4(h) above. Excess or
contaminated product will be securely stored on-site until it is properly disposed.
Disposal may include composting, incineration, land-fill disposal through the local
waste management hauler, or other disposal methodology in accordance with
state and county health and safety codes and regulations.
I. Odor Control. All structures shall have ventilation and filtration systems
installed that prevent commercial cannabis plant odors from exiting the interior of
the structure. The ventilation and filtration system shall be approved by the .
Building Official and City Manager and installed prior to commencing cultivation or
manufacturing within the allowable structure. Facility air intake, exhaust, and
recirculating system shall be of industrial grade. Activated charcoal, recirculating,
and closed loop aeration systems will be utilized as necessary for effective odor
control and management.
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m. Description of Banking Plan. Owner will seek to open a bank account under
the name of Owner or its associated management company to provide
transparency for funds received, operational costs, including payroll, tax payments
to the state and federal governments, among others. Should a bank account not
be forthcoming, Owner will purchase and install safes to secure all daily funds
received from its collective membership or other lawful cooperative corporations
to implement debit and credit card transactions. Owner will not accept personal or
corporate checks.
n. Transportation Plan. Owner will comply with all state and local law
regarding transportation, including the rules governing delivery service. Owner will
retain a list of names and cellular contact numbers for all employees engaged in
transportation of commercial cannabis products and provide it to the applicable
oversight authority, keeping the list current and up to date.
Owner will keep complete and up-to-date records documenting each transfer of
commercial cannabis to other lawful cooperative corporations, including the
amount provided, the form or product category in which the commercial cannabis
was provided, the date and time provided, the name of the employee making the
transfer, the name and address of the other lawful cooperative corporation to
whom delivery is made, and the amount of any related donation or other monetary
transaction.
5. Community Relations, Employment. and Wages
a. Public Outreach and Education Program. Owner shall create an effective
public outreach to City of Lynwood's community, including but not limited to
outreach and interface with public and private schools, youth organizations,
religious organizations, health care providers, drug abuse treatment providers, and
mental health and drug counseling providers.
Owner will coordinate and cooperate with City and other Owners of commercial
cannabis facilities located within City of Lynwood in the establishment and
implementation of appropriate public outreach and education programs. The
public outreach and education programs shall be approved by City.
The public outreach and education program shall provide a detailed description of
Owner's intentions with regard to public outreach and education, including but not
limited to the following: what schools or programs Owner will work with; what types
of materials and information will be provided; how much time Owner's personnel
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expect to spend on these activities; and how much money Owner expects to spend
on an annual basis.
b. Communitv Benefits Program. Owner will coordinate and cooperate with
City and other Owners of commercial cannabis facilities located within the City of
Lynwood in the establishment, implementation, and funding of a community
benefits program which could include such items as new community recreation
facilities, expansion and/or improvement to existing facilities or other physical
improvements that provide a benefit to the community, support of holiday and
special community events, and support of local public service and special districts
and organizations. This community benefits program may be implemented by a
foundation or other association of commercial cannabis facility Owners issued
regulatory permits by City. City and the public will participate in the decision-
making process for identifying and prioritizing community needs and benefits, and
identifying appropriate projects to be funded by the entity implementing this
community benefits program. All projects under the community benefits program
must be approved by City.
c. Designation of Persons Responsible for Communitv Relations. At the time
of this Agreement, Owner's Managing Agent/General Manager will be responsible
for community inquiries and complaints and on-site during normal business hours.
d. Interface with Los Angeles County Sheriff. Owner's general manager will
interface with the Los Angeles County Sheriff to ensure its operation complies with
state and local laws and regulations.
e. Local Recruitment, Hiring, and Training Programs. Owner is committed to
making a good-faith effort to recruit, hire, and train City residents for employment
by Owner. A good-faith effort means Owner will take the following or similar
actions to recruit and employ City residents: 1) Contact local recruitment sources
to identify qualified individuals who are City residents, 2) Advertise for qualified
City residents in trade papers and newspapers of general circulation in the area,
and 3) Develop a written plan to recruit and employ City residents as a part of the
its workforce.
Owner will also seek companies located in the City of Lynwood to serve as its
general contractor and subcontractors needed for construction and build-out
improvements of Owner's commercial cannabis facilities. Additionally, companies
located in the City of Lynwood will be sought to employ as licensed security guards
needed once Owner's facility is opened, as well as for ancillary services needed.
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f. Living Wages. Owner agrees to pay all employees of the Facility a Living
Wage. A "Living Wage" is the higher of whatever Owner currently pays its
employees for similar work elsewhere in the State of California, or the following:
until December 31, 2017: 150% of the California State minimum wage. Such
wage shall increase on January 1 of each subsequent year according to the
Consumer Price Index for Los Angeles County, for the quarter ending September
30 of the preceding year, whichever is higher.
g. Full-time Work. Owner shall make its best efforts to fill every position with
a full-time employee. However, at no time shall Owner have a labor force that is
composed of less than 75% full-time employees. Owner agrees to provide to its
eligible employees leave benefits, health and wellness benefits and other
employee benefits to the extent such benefits are required to be paid for by Owner
under applicable state and federal employment laws.
6. Indemnification of City from Liability
a. Pursuant to City's requirement, Owner will indemnify City from any claims,
damages, injuries, or liabilities of any kind associated with the registration or
operation of Owner's commercial cannabis facility or the prosecution of Owner's
facility or its owners, managers, directors, officers, employees, or its qualified
patients or primary caregivers for violation of federal or state laws.
b. Owner agrees to defend, at its sole expense, any action against City, its
agents, officers, and employees related to the approval or issuance of the
Regulatory Permit and this Agreement.
c. Owner agrees to reimburse City for any court costs and attorney fees that
City may be required to pay as a result of any legal challenge related to City's
approval or issuance of a Regulatory Permit or this Agreement. City may, at its
sole discretion, participate at its own expense in the defense of any such action,
but such participation shall not relieve the holder of the Regulatory Permit or this
Agreement.
7. Fees. Costs. and Future Taxes
a. Fees. Owner agrees to pay all permit fees and charges referenced in
Section 4-34-11 of the municipal code, in the amounts adopted by the City Council
by resolution, as well as any fees set forth in this Agreement. Permit application,
processing, and renewal fees shall be due and payable at the time application is
made.
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b. Costs. Owner agrees to reimburse City for all additional costs of City
resulting from the operation of a commercial cannabis facility authorized under
Article 4-34 of the municipal code and the administrative regulations.
Reimbursement to City for such costs shall be due and payable upon demand.
c. Operating Fees. Owner agrees to pay to City, to enable City to promote,
protect, and enhance the healthy, safety, and welfare of the community and its
residents and its quality of life, the following fees (if applicable):
1) an annual fee of $12.50 per square foot of cultivation area (canopy);
and
2) an annual fee of two and one-half percent (2.5%) of gross income
from manufacturing activities or the sum of one hundred fifty thousand
dollars ($1 00,000.00), whichever is higher;
3) an annual fee of one and one-half percent (1.5%) of gross income
from distribution/transportation of product for anyone other than Owner; and
4) an annual fee of two and one-half percent (2.5%) of gross income
from delivery activities.
d. Owner agrees to compensate City for the increased demand on City
services, infrastructure, and utilities; local traffic demands; and increased City
review and oversight by the Los Angeles County Sheriff, planning department, and
code enforcement of the operations of Owner's facility. Owner understands and
agrees the determination of the required per-square-foot fee will consider such
factors as the size, design, layout, operation, and security plan for the facility;
potential adverse effects on the community; and the allocation of City services and
staff time to oversee the operation of the facility.
e. Owner understands and agrees that the fees set forth above shall be paid
in a manner and in accordance with a payment schedule agreed to by City and
Owner, in intervals of no more than three months. The cultivation and
manufacturing space to which the fee applies is as identified on the attached floor
plan. Payment shall be in equal installments paid quarterly commencing at the
end of the first quarter after the effective date of the Regulatory Permit which shall
be no sooner than the date a certificate of occupancy is issued for the subject
premises.
f. If Owner makes any changes to the interior layout of the facility that
increases the amount of space allocated to those uses to which the per-square-
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foot fee applies, Owner shall notify City of such changes at least fourteen (14)
calendar days prior to making such changes, and the per-square-foot fee shall be
modified accordingly. If Owner fails to give City notice as required herein, Owner
shall be responsible for paying to City a per-square-foot fee based on any increase
in the amount of space allocated to those uses to which the per-square-foot fee
applies retroactive to the date the Regulatory Permit became effective.
8. Cost Recovery Fee
City shall assess to Owner fees to recover City's reasonable processing and
monitoring costs relating to Owner's business upon issuance of Owner's
Manufacturing, Cultivation, Distribution, and Delivery Permits or any Additional
Permits ("CRF"). The City shall submit sufficient information to Owner of City's
total number of hours required to process their Application or monitor their
authorizations. CRFs are separate and apart from any fees set forth in Article 7.
a. Processing Fees. Processing fees for the Application are based upon the
direct and indirect costs that City incurs in reviewing the Application. The
processing fees for the Application shall be based only on costs that are necessary
for processing the Application and implementing the Ordinance, including staff
time, legal fees, and consultant fees. "Necessary for'' means that but for the
Application, the costs would not have been incurred. The processing fee shall not
include costs for other City management objectives, unless they are necessary for
processing the Application.
b. Monitoring Fees. Monitoring fees for the Manufacturing, Cultivation,
Distribution, and Delivery Permits are based upon the direct and indirect costs City
incurs in confirming the use of the Property in accordance with the municipal code,
the Ordinance, this Agreement, and the Application. The monitoring fees shall be
based only on costs that are necessary for conducting these reviews. "Necessary
for'' means that but for the Manufacturing, Distribution, Cultivation, and Delivery
Permits, or any Additional Permits, the costs would not have been incurred. The
monitoring fee shall not include costs for other City management objectives, unless
they are necessary for monitoring the Manufacturing, Distribution, Cultivation, and
Delivery Permits, or any Additional Permits.
c. Billing and Payment. City shall bill Owner the CRF on the first day of each
quarter (March, June, September, and December) with an invoice providing an
hourly breakdown of hours expended by City and its representatives. Owner shall
pay the CRF invoice within sixty (60) days of the date the bill for the CRF is
received by Owner. Notwithstanding the foregoing, at no time shall the CRFs
exceed Seven Thousand Dollars ($7,000) during a given year, except that the first
year may be as high as twenty thousand dollars ($20,000) because of the costs
required to set up the application process and review the applications.
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d. Disputes. If Owner disagrees with the dollar amount provided by City on
the CRF invoice, Owner may submit a written request before the disputed fee is
due for a substitution of alternative CRF invoice to the immediate supervisor of the
City representative who determined the CRF invoice. The written request must
include supporting documentation. After review of Owner's written request, Owner
and City shall work, in good faith to resolve Owner's written request. The dispute
shall be decided in favor of Owner if City does not respond to the written request
within thirty (30) days of receipt.
9. Additional Owner Obligations
a. Reporting of Gross Receipts from Operations
1) Quarterly Receipts. No later than January 15, 2018, and 15 days
after the last day of each subsequent quarter during the Term hereof, Owner
shall deliver to City a report (the "Quarterly Report") showing (i) Gross
Receipts from Operations for the immediate prior quarter received by
Owner, and a cumulative total of all amounts of Gross Receipts from
Operations received by Owner for the calendar year, (ii) a calculation of the
quarterly payment due to City for the prior quarter, and (iii) a calculation of
the cumulative total of all quarterly payments for the calendar year.
2) Statement of Receipts. Owner shall keep complete, accurate and
appropriate books and records of all receipts from operations in accordance
with generally accepted accounting principles. For purposes herein, "books
and records" shall mean all bookkeeping or accounting documents Owner
utilizes in managing its business operations relating to the Project. Such
books and records, as well as all other relevant documents as City shall
reasonably require, shall, upon reasonable written notice, be open for
inspection by City, its auditors or other authorized representatives. If at any
time during the term such books and records prove inadequate in the
reasonable judgment of City to record the Gross Receipts from Operations
as herein required, Owner shall, upon the written request of City, procure
and maintain such books and records as shall be of a character and from
adequate for such purpose. City shall have the right to audit and examine
such books, records and documents and other relevant items in the
possession of Owner, but only to the extent necessary for a proper
determination of Gross Receipts from Operations, and all such books,
records, documents and other items shall be held available for such audit
and examination. Upon request by City, Owner shall make all such books,
records and documents available to City, and provide removable copies
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thereof, within thirty (30) of the date of City's request. The cost for any audit
shall be shared equally by the Parties. Owner shall preserve such books,
records, documents, and other items in Lynwood for a period of not less
than seven (7) years for the purpose of auditing or re-auditing these
accounts upon reasonable notice; except that, if an audit is made within the
seven-year period and Owner claims that errors or omissions have
occurred, the books and records shall be retained and made available until
those matters are resolved. City shall keep strictly confidential all
statements of revenue furnished by Owner and all other information
concerning Owner's operation of the Premises obtained by City as a result
of the inspection audit and examination privileges of City hereunder, except
as otherwise required by law. If City receives a request for such information
pursuant to the Public Records Act (California Government Code Section
6250, et seq.), City shall provide Owner notice of any such request prior to
disclosing any such information. Within seven (7) years after the receipt of
any statement of receipts under this Agreement, City at any time shall be
entitled to carry out an audit of such revenue either by City or agent to be
designated by City. If it shall be determined as a result of such audit that
there has been a deficiency in any payment due under this Agreement
made on the basis of such statement, then such deficiency shall become
immediately due and payable. If such statement of revenue for the relevant
year shall be found to have understated receipts by more than two percent
and City is entitled to any additional payment as a result of said
understatement, then Owner shall, in addition, pay all of City's reasonable
costs and expenses connected with such audit, including the expense
incurred in retaining such agent; otherwise City shall bear the cost and
expense of such audit.
3) Copies of Tax Filings. Owner shall provide City with copies of any
reports Owner is required to provide to the County of Los Angeles or the
State of California for sales, use, or other tax purposes.
b. Applicability of Future Revenue Mechanisms. During the term of this
Agreement, if City imposes an alternative revenue mechanism specifically related
to cannabis operations (e.g., a cannabis tax), Owner agrees to pay to City the
greater of the payment required under such alternative revenue mechanism or the
payment required by this section. As used in this section, "alternative revenue
mechanism" does not include taxes, fees, or assessments levied on or collected
from both cannabis and non-cannabis operations. Payments required by revenue
mechanisms that are not limited to cannabis operations shall be in addition to, and
not in lieu of, payments under this section.
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10. Insurance and Indemnity
a. Insurance. Owner shall require all persons doing work on the Project,
including its contractors and subcontractors (collectively, "Owner'' for purposes of
this Article 10 only), to obtain and maintain insurance of the types and in the
amounts described in this section and its subsections with carriers reasonably
satisfactory to City.
b. General Liability Insurance. Owner shall maintain commercial general
liability insurance or equivalent form with a limit of not less than Two Million Dollars
($2,000,000) (or as otherwise approved, in writing, by City) per claim and Two
Million Dollars ($2,000,000) each occurrence. Such insurance shall also:
1) Name City, its elected and appointed councils, boards, commissions,
officers, agents, employees, and representatives as "Additional Insureds"
by endorsement with respect to performance of this Agreement. The
coverage shall contain no special limitations on the scope of its protection
afforded to the above-listed additional insured.
2) Be primary with respect to any insurance of self-insurance programs
covering City, its officials, employees, agents, and representatives.
3) Contain standard separation of insured provisions.
c. Automotive Liability Insurance. Owner shall maintain business automobile
liability insurance or equivalent form with a limit of not less than Two Million Dollars
($2,000,000) for each accident. Such insurance shall include coverage for owned,
hired, and non-owned automobiles. Such insurance shall also:
1) Name City, its elected and appointed officials, boards, commissions,
officers, agents, employees, and representatives as "Additional Insureds"
by endorsement with respect to performance of this Agreement. The
coverage shall contain no special limitations on the scope of its protection
afforded to the above-listed additional insureds.
2) Be primary with respect to any insurance or self-insurance programs
covering City, its officials, employees, agents, and representatives.
3) Contain standard separation of insured provisions.
d. Workers' Compensation Insurance. Owner shall take out and maintain
during the term of this Agreement, workers' compensation insurance for all of
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and Delivery Development Agreement
Owner's employees employed at or on the Project, and in the event any of the
work is subcontracted, Owner shall require any general contractor or subcontractor
similarly to provide workers' compensation insurance for such contractor's or
subcontractor's employees, unless such employees are covered by the protection
afforded by Owner. In case any class of employee engaged in work on the Project
is not protected under any workers' compensation law, Owner shall provide and
shall cause each contractor and subcontractor to provide adequate insurance for
the protection of employees not otherwise protected. Owner hereby indemnifies
City for any damage resulting from failure of Owner, its agents, employees,
contractors, or subcontractors to take out or maintain such insurance. Workers'
compensation insurance with statutory limits and employer's liability insurance with
limits of not less than One Million Dollars ($1 ,000,000) each accident shall be
maintained.
e. Other Insurance Requirements. Owner shall do all the following:
1) Prior to taking any actions under this Agreement, furnish City with
properly executed certificates of insurance that clearly evidenced all
insurance required in this Article, including evidenced that such insurance
will not be canceled, allowed to expire, or be materially reduced in coverage
without thirty (30) days prior written notice to City.
2) Provide to City, upon request, and within seven (7) calendar days of
said request, certified copies of endorsements and policies, and properly
executed certificates of insurance evidencing the insurance required herein.
3) Replace or require the replacement of certificates, policies and
endorsements for any insurance required herein expiring prior the
termination of this Agreement.
4) Maintain all insurance required herein from the Effective Date of this
Agreement to the earlier of the expiration of the term or the mutual written
termination of this Agreement.
5) Place all insurance required herein with insurers licensed to do
business in California with a current Best's Key Rating Guide reasonably
acceptable to City.
f. Indemnity. Owner agrees to indemnify, defend, and hold City, and its
elected and appointed council, boards, commissions, officers, agents, employees,
consultants, and representatives, harmless from any and all claims costs and
liability for any personal injury or property damage which may arise as a result of
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and Delivery Development Agreement
any actions or negligent omissions by Owner or Owner's contractors,
subcontractors, agents, or employees in connection with the construction,
improvement, or operation of the Project.
11. Termination
a. Termination Upon Completion of Development. This Agreement shall
terminate upon the expiration of the term, unless it is terminated earlier pursuant
to the terms of this Agreement. Upon termination of this Agreement, City shall
record a notice of such termination, and this Agreement shall be of no further force
or effect except as otherwise set forth in this Agreement.
b. Effect of Termination on Owner's Obligations. Termination of this
Agreement shall eliminate any further obligation of Owner to comply with this
Agreement, or some portion thereof, if such termination relates to only part of the
Site or Project. Termination of this Agreement, in whole or in part, shall not,
however, eliminate the rights of Owner to seek any applicable and available
remedies or damages based upon acts or omissions occurring before termination.
c. Effect of Termination on City's Obligations. Termination of this Agreement
shall eliminate any further obligation of City to comply with this Agreement, or some
portion thereof. Termination of this Agreement shall not, however, eliminate the
rights of City to seek any applicable and available remedies or damages based
upon acts or omissions occurring before termination.
d. Survival After Termination. The rights and obligations of the Parties set
forth in Article 15, Article 21, and Section 24(e), Section 24(f), and Section 24(h),
and any right or obligation of the Parties in this Agreement which, by its express
terms or nature and context is intended to survive termination of this Agreement,
will survive any such termination.
12. Resources Efficiency
The design of the facility shall include significant water and energy conservation
measures to minimize resource consumption. The design shall incorporate solar, wind,
high efficiency lighting, and water recycling systems and technology. High efficiency LED
lighting systems for the exterior lighting will be used. If economically and technologically
feasible, grow lights shall be high efficiency LED lighting systems. Automated, digitally
controlled watering and fertilization systems shall be used for all plant cultivation.
Cultivation will be a continuous hydroponic grow, in a soil-less grow medium. All water
mixed with nutrients will be recycled. Storm water shall be collected and recycled to the
extent feasible.
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13. Standard Conditions for Construction
During any on-site construction activities related to development of the project site and
any buildings thereon, or renovation or remodeling of existing buildings, Owner and
Landlord shall comply with all applicable terms and conditions of City's Standard
Conditions for Construction, attached hereto and incorporated herein by reference. The
Project shall comply with the applicable parking standards established by the City for
cannabis activities.
14. Defaults and Remedies
a. Remedies in general. It is acknowledged by the parties that City would not
have entered into this Agreement if it were to be liable in damages under this
Agreement, or with respect to this Agreement or the application thereof, except as
hereinafter expressly provided. Subject to extensions of time by mutual consent
in writing, failure to delay by either party to perform any term or provision of this
Agreement shall constitute a default. In the event of alleged default or breach of
any terms or conditions of this Agreement, the party alleging such default or breach
shall give the other party not less than thirty (30) day notice in writing specifying
the nature of the alleged default and the manner in which said default may be
satisfactorily cured during any such thirty (30) day period, the party charged shall
not be considered in default for purposes of termination or institution of legal
proceedings. Notwithstanding the foregoing to the contrary, if the alleged default
is of such a nature that it cannot be cured within thirty (30) days, the alleged
defaulting party shall not be deemed in default as long as such party commences
to cure such default within such thirty (30) day period and thereafter diligently
prosecutes such cure to completion.
After notice and expiration of the thirty (30) day period, the other party to this
Agreement, at its option, may institute legal proceedings pursuant to this
Agreement.
In general, each of the parties hereto may pursue any remedy at law or equity
available for the breach of any provision of this Agreement, except that City shall
not be liable in monetary damages, unless expressly provided for this Agreement,
to Owner, to any mortgagee or lender, or to any successors in interest of Owner
or mortgagee or lender, or to any other person, and Owner covenants on behalf of
itself and all successors in interest to the Property or any portion thereof, not to
sue for damages or claim any damages.
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1) For any breach of this Agreement or for any cause of action which
arises out of this Agreement; or
2) For the impairment or restriction of any right or interest conveyed or
provided under, with, or pursuant to this Agreement, including, without
limitation, any impairment or restriction which Owner characterizes as a
regulatory taking or inverse condemnation; or
3) Arising out of or connected with any dispute, controversy or issue
regarding the application or interpretation or effect of the provisions of this
Agreement.
Nothing contained herein shall modify or abridge Owner's rights or remedies
(including its rights for damages, if any) resulting from the exercise by City of its
power of eminent domain. Nothing contained herein shall modify or abridge
Owner's rights or remedies (including its rights for damages, if any) resulting from
the grossly negligent or malicious acts of City and its officials, officers, agents and
employees. Nothing herein shall modify or abridge any defenses or immunities
available to City and its employees pursuant to the Government Liability Act and
all other applicable statutes and decisional law.
Except as set forth in the preceding paragraph relating to eminent domain, Owner's
remedies shall be limited to those set forth in this Section 14(a), Section 14(b), and
Section 14(c).
Notwithstanding anything to the contrary contained herein, City covenants as
provided in Civil Code Section 3300 not to sue for or claim any consequential
damages or, in the event all or a portion of the Property is not developed, for lost
profits or revenues which would have accrued to City as a result of the
development of the Property.
b. Specific Performance. The parties acknowledge that money damages and
remedies at law are inadequate, and specific performance and other non-monetary
relief are particularly appropriate remedies for the enforcement of this Agreement
and should be available to all parties for the following reasons:
1) Except as provided in Sections 14(a) and 14(e), money damages are
unavailable against City as provided in Section 14(a) above.
2) Due to the size, nature and scope of the Project, it may not be
practical or possible to restore the Property to its natural condition once
implementation of this Agreement has begun. After such implementation,
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and Delivery Development Agreement
Owner may be foreclosed from other choices it may have had to use the
Property or portions thereof. Owner has invested significant time and
resources and performed extensive planning and processing of the Project
in agreeing to the terms of this Agreement and will be investing even more
significant time and resources in implementing the Project in reliance upon
the terms of this Agreement, and it is not possible to determine the sum of
money which would adequately compensate Owner for such efforts; the
parties acknowledge and agree that any injunctive relief may be ordered on
an expedited, priority basis.
c. Release. Except for those remedies set forth in Sections 14(a), 14(b), and
14(c), Owner, for itself, its successors and assignees, hereby releases City, its
officers, agents and employees from any and all claims, demands, actions, or suits
of any kind or nature arising out of any liability, known or unknown, present or
future, based or asserted, pursuant to Article 1, Section 19 of the California
Constitution, the Fifth Amendment of the United States Constitution, or any other
law or ordinance which seeks to impose any other liability or damage, whatsoever,
upon City because it entered into this Agreement or because of the terms of this
Agreement.
Owner acknowledges that it may have suffered, or may suffer, damages and other
injuries that are unknown to it, or unknowable to it, at the time of its execution of
this Agreement. Such fact notwithstanding, Owner agrees that the release
provided in this Section 14(c) shall apply to such unknown or unknowable claims
and damages. Without limiting the generality of the foregoing, Owner
acknowledges the provisions of California Civil Code Section 1542, which provide:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his or her favor at the time of executing
the release, which if known by him or her must have materially
affected his or her settlement with the debtor."
Owner hereby waives, to the maximum legal extent, the provisions of California
Civil Code Section 1542 and all other statutes and judicial decisions of similar
effect.
Initials
d. Termination of Agreement for Default of City. Owner may terminate this
Agreement only in the event of a default by City in the performance of a material
term of this Agreement and only after providing written notice to City of default
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and Delivery Development Agreement
setting forth the nature of the default and the actions, if any, required by City to
cure such default and, where the default can be cured, City has failed to take such
actions and cure such default within sixty (60) days after the effective date of such
notice or, in the event that such default cannot be cured within such sixty (60) day
period but can be cured within a longer time, has failed to commence the actions
necessary to cure such default within such sixty (60) day period and to diligently
proceed to complete such actions and cure such default.
e. Attorneys' Fees and Costs. In any action or proceeding between City and
Owner brought to interpret or enforce this Agreement, or which in any way arises
out of the existence of this Agreement or is based upon any term or provision
contained herein, the "prevailing party" in such action or proceeding shall be
entitled to recover from the non-prevailing party, in addition to all other relief to
which the prevailing party may be entitled pursuant to this Agreement, the
prevailing party's reasonable attorneys' fees and litigation costs, in an amount to
be determined by the court. The prevailing party shall be determined by the court
in accordance with California Code of Civil Procedure Section 1032. Fees and
costs recoverable pursuant to this Section 14(e) include those incurred during any
appeal from an underlying judgment and in the enforcement of any judgment
rendered in any such action or proceeding.
f. Owner Default. No building permit shall be issued or building permit
application accepted for any structure on the Property after Owner is determined
by City to be in default of the terms and conditions of this Agreement until such
default thereafter is cured by Owner or is waived by City. If City terminates this
Agreement because of Owner's default, then City shall retain any and all benefits,
including money or land received by City hereunder.
15. Third Party Litigation
a. General Plan Litigation. City has determined that this Agreement is
consistent with its General Plan. Owner has reviewed the General Plan and
concurs with City's determination.
City shall have no liability under this Agreement or otherwise for any failure of City
to perform under this Agreement, or for the inability of Owner to develop the
Property as contemplated by the Development Plan, which failure to perform or
inability to develop is as the result of a judicial determination that the General Plan,
or portions thereof, are invalid or inadequate or not in compliance with law, or that
this Agreement or any of City's actions in adopting it were invalid, inadequate, or
no in compliance with the law.
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b. Hold Harmless Agreement. Owner hereby agrees to, and shall hold City,
its elective and appointive boards, commissions, officers, agents, and employees
harmless from any liability for damage or claims for damage for personal injury,
including death, as well as from claims for property damage which may arise from
Owner or Owner's contractors, subcontractors, agents, or employees' operations
under this Agreement, whether such operations be by Owner, or by any of Owner's
contractors, subcontractors, agents, or employees operations under this
Agreement, whether such operations be by Owner, or by any of Owner's
contractors, subcontractors, or by any one or more persons directly or indirectly
employed by, or acting as agent for Owner or any of Owner's contractors or
subcontractors. Owner agrees to and shall defend City and its elective and
appointive boards, commissions, officers, agents and employees from any suits or
actions at law or in equity for damage caused, or alleged to have been caused, by
reason of any of the aforesaid operations.
c. Indemnification. Owner shall defend, indemnify, and hold harmless City and
its agents, officers, and employees against and from any and all liabilities,
demands, claims, actions or proceedings and costs and expenses incidental
thereto (including costs of defense, settlement and reasonable attorneys' fees),
which any or all of them may suffer, incur, be responsible for or pay out as a result
of or in connection with any challenge to the legality, validity or adequacy of any of
the following: (i) this Agreement and the concurrent and subsequent permits,
licenses and entitlements approved for the Project or Property; (ii) the
environmental impact report, mitigated negative declaration or negative
declaration, as the case may be, prepared in connection with the development of
the Property; (iii) any claims based on or alleging inverse condemnation by any
person or entity with an interest in the Property; and (iv) the proceedings
undertaken in connection with the adoption or approval of any of the above. In the
event of any legal or equitable action or other proceeding instituted by any third
party (including a governmental entity or official) challenging the validity of any
provision of this Agreement or any portion thereof as set forth herein, the parties
shall mutually cooperate with each other in defense of said action or proceeding.
Notwithstanding the above, City, at is sole option, may tender the complete
defense of any third-party challenge as described herein. In the event City elects
to contract with special counsel to provide for such a defense, City shall meet and
confer with Owner regarding the selection of counsel, and Owner shall pay all costs
related to retention of such counsel.
d. Environmental Contamination. Owner shall indemnify and hold City, its
officers, agents, and employees free and harmless from any liability, based or
asserted, upon any act or omission of Owner, its officers, agents, employees,
subcontractors, predecessors in interest, successors, assigns and independent
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and Delivery Development Agreement
contractors, excepting and acts or omissions of City as successor to any portions
of the Property dedicated or transferred to City by Owner, for any violation of any
federal, state or local law, ordinance or regulation relating to industrial hygiene or
to environmental conditions on, under or about the Property, including, but not
limited to, soil and groundwater conditions, and Owner shall defend, at its expense,
including attorneys' fees, City, its officers, agents and employees in any action
based or asserted upon any such alleged act or omission. City may in its discretion
participate in the defense of any such claim, action or proceeding.
The provisions of this Section 15(d) do not apply to environmental conditions that
predate Owner's ownership or control of the Property or applicable portion;
provided, however, that the foregoing limitation shall not operate to bar, limit or
modify any of Owner's statutory or equitable obligations as an owner or seller of
the Property.
e. City to Approve Counsel. With respect to Sections 15(a) through 15(d), City
reserves the right to approve the attorney(s) which Owner selects, hires or
otherwise engages to defend City hereunder, which approval shall not be
unreasonably withheld.
f. Accept Reasonable Good Faith Settlement. With respect to Article 15, City
shall not reject any reasonable good faith settlement. If City does reject a
reasonable, good faith settlement that is acceptable to Owner, Owner may enter
into a settlement of the action, as it relates to Owner, and City shall thereafter
defend such action (including appeals) at its own cost and be solely responsible
for any judgment rendered in connection with such action. This Section 15(f)
applies exclusively to settlements pertaining to monetary damages or damages
which are remedial by the payment of monetary compensation. Owner and City
expressly agree that this Section 15(f) does not apply to any settlement that
requires an exercise of City's police powers, limits City's exercise of its police
powers, or affects the conduct of City's municipal operations.
g. Survival. The provisions of Sections 15(a) through 15(f) inclusive, shall
survive the termination or expiration of the Agreement.
16. California Environmental Quality Act
Owner shall reimburse City for any and all costs incurred by City related to project review
under the California Environmental Quality Act (CEQA), Public Resources Code,
§§21 000-21189.3, and the Guidelines for California Environmental Quality Act, California
Code of Regulations, Title 14, §§15000-15387. If requested by City, Owner shall conduct
and pay for any required CEQA reviews and analyses. The City has found that the
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proposed Project is Categorically Exempt from California Environmental Quality Act
(CEQA) requirements under provisions of CEQA Guidelines Section 15332 -In-Fill
Development Projects. This exemption applies to projects characterized as in-fill
development meeting the conditions described in Section 15332.
17. Rules. Regulations, and Official Policies
Except as otherwise provided in this Agreement, the rules, regulations, and official
policies of City governing permitted uses of the land, governing density, and governing
the design, improvements, and construction standards and specifications applicable to
the development of the Project subject of this Agreement, shall be those rules,
regulations, and official policies of City in force at the time of the execution of this
Agreement. This Agreement does not prevent City, in subsequent actions applicable to
the property, from applying new rules, regulations, and policies which do not conflict with
those rules, regulations, and policies applicable to the property as set forth herein, nor
does this Agreement prevent City from denying or conditionally approving any
subsequent development project application based on such existing or new rules,
regulations, or policies.
18. Regulatory Permit Conditions of Approval
Owner shall comply with all conditions of approval of the Regulatory Permit approved by
City Council.
19. Periodic Reviews
This Agreement shall be subject to annual review. Owner and Landlord executing this
Agreement, or successor in interest thereto, shall demonstrate good faith compliance with
the terms of this Agreement. If, as a result of such periodic review, City finds and
determines, based on substantial evidence, that Owner or Landlord executing this
Agreement, or successor in interest thereto, has not complied in good faith with the terms
or conditions of this Agreement, City may terminate or modify this Agreement.
a. Periodic Review. City Council shall review this Agreement annually, on or
before each anniversary of the Effective Date, in order to ascertain Owner's good
faith compliance with this Agreement. During the periodic review Owner shall be
required to demonstrate good faith compliance with the terms of the Agreement,
through submitting an annual monitoring report, records, or equivalent written
materials to the Planning Department. The Planning Department will schedule a
hearing on the periodic review of the Development Agreement on or following the
anniversary of the Effective Date, but Owner has no obligation to compel such
hearing, and no implication will be made to Owner's detriment if a hearing is not in
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and Delivery Development Agreement
fact held. Owner shall document any request for an extension of the term due to
delays beyond the control of Owner (see Section 24U), "Force Majeure"). Owner
shall submit an annual review and administration fee deposit not to exceed City's
estimated internal and third-party costs associated with the review and
administration of this Agreement during the succeeding year, consistent with
Section 24(k) ("Deposit with City") below. City shall provide Owner said estimate
a reasonable time in advance of the annual review and administration fee deposit
being due.
b. Conditional Use Permit. For all intents and purposes, the Regulatory Permit
to be issued under this Agreement shall be treated as if it were a Conditional Use
Permit issued to Owner for the establishment and operation of its business. The
operation of the business at all times shall be required to comply with the terms of
this Agreement.
c. Special Review. City Council may order a special review of compliance with
this Agreement at any time. The Planning Director or his or her designee shall
conduct such special review. During a special review, Owner shall be required to
demonstrate good faith compliance with the terms of the Agreement. The burden
of proof on this issue shall be on Owner.
d. Review Hearing. At the time and place set for the review hearing, Owner
shall be given an opportunity to be heard. If City Council finds, based upon
substantial evidence, that Owner has not complied in good faith with the terms or
conditions of this Agreement, City Council may terminate this Agreement
notwithstanding any other provision of this Agreement to the contrary, or modify
this Agreement and impose such conditions as are reasonably necessary to
protect the interests of City. The decision of City Council shall be final, subject
only to judicial review pursuant to Code of Civil Procedure Section 1094.5.
e. Certificate of Agreement Compliance. If, after a periodic or special review,
Owner is found to be in compliance with this Agreement, and if Owner requests it,
City shall issue a Certificate of Agreement Compliance ("Certificate") to Owner
stating that after the most recent periodic or special review, and based upon the
information known or made known to the Planning Director and City Council, that
(i) this Agreement remains in effect and (ii) Owner is not in default.
City shall not be bound by a Certificate if a default existed at the time of the periodic
or special review, but was concealed from or otherwise not known to the Planning
Director and City Council, regardless of whether the Certificate is relied upon by
assignees or other transferees or Owner.
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f. Failure to Conduct Review. City's failure to conduct a periodic review of this
Agreement shall not constitute a breach of this Agreement.
g. Cost of Review. The costs incurred by City in connection with the periodic
reviews shall be borne by Owner.
20. Obligations of Landlord
Landlord shall have rights, duties, obligations, and liability only as expressly set forth
herein. Landlord shall have no responsibility or liability for the failure of Owner to perform
as required by this Agreement.
21. Assignment
a. Assignment by Landlord. Landlord shall not transfer, delegate, or assign its
interest, rights, duties, and obligations under this Agreement, without the prior
written consent of City.
b. Assignment by Owner. Owner shall not transfer, delegate, or assign its
interest, rights, duties, and obligations under this Agreement without the prior
written consent of City. Any assignment, delegation, or assignment without the
prior written consent of City shall be null and void. Any transfer, delegation, or
assignment by Owner as authorized herein shall be effective only if and upon the
party to whom such transfer, delegation, or assignment is made is issued a
Regulatory Permit as required under Article 4-34 of the municipal code.
22. Operating Commercial Cannabis Facility
Any party to this Agreement, or successor in interest thereto, shall not operate a
commercial cannabis facility authorized under the municipal code unless:
a. It is the holder of a valid Regulatory Permit issued by City in accordance
with the procedures and requirements of Article 4-34 of the municipal code; and
b. At such time as the State of California requires commercial cannabis
facilities and businesses to hold a valid license or permit issued by the State of
California, it also holds such license or permit, unless, however, such permit or
license is not required by the State of California for the type of commercial
cannabis facility or business operation that is the subject of this Agreement.
23. Notice
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Any notice or communication required hereunder between City and Owner must be in
writing, and may be given either personally, by facsimile (with original forwarded by
regular U.S. Mail), by registered or certified mail (return receipt requested), or by Federal
Express, UPS or other similar couriers providing overnight delivery. If personally
delivered, a notice shall be deemed to have been given when delivered to the Party to
whom it is addressed. If given by facsimile transmission, a notice or communication shall
be deemed to have been given and received upon actual physical receipt of the entire
document by the receiving Party's facsimile machine. Notices transmitted by facsimile
after 5:00p.m. on a normal business day or on a Saturday, Sunday, or holiday shall be
deemed to have been given and received on the next normal business day. If given by
registered or certified mail, such notice or communication shall be deemed to have been
given and received on the first to occur of (i) actual receipt by any of the addressees
designated below as the party to whom notices are to be sent, or (ii) five (5) days after a
registered or certified letter containing such notice, properly addressed, with postage
prepaid, is deposited in the United States mail. If given by Federal Express or similar
courier, a notice or communication shall be deemed to have been given and received on
the date delivered, as shown on a receipt issued by the courier. Any Party hereto may at
any time, by giving ten (1 0) days written notice to the other Party hereto, designate any
other address in substitution of the address to which such notice or communication shall
be given. Such notices or communications shall be given to the Parties at their addresses
set forth below:
If to City:
and
If to Owner:
If to Landlord :
City of Lynwood
11330 Bullis Road
Lynwood, California 90262
Attention: City Manager
H. Francisco Leal, Esq.
Leal Trejo, APC
3767 Worsham Avenue
Long Beach, California 90808
Eugene Gonzalez
Cali Med
2827 Norton Avenue
Lynwood, CA 90262
Carlos Hernandez
2827 Norton Avenue
Lynwood, CA 90262
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and Delivery Development Agreement
24. Miscellaneous Provisions
a. Regulatorv Permit Conditions of Aooroval. Owner shall comply with all
conditions of approval of the Regulatory Permit approved by the City Council.
b. Amendment or Cancellation. This Agreement may be amended, or
canceled in whole or in part, only by the written mutual consent of the parties to
this Agreement or their successors in interest, except that minor amendments that
do not affect a substantive provision of this Agreement may be approved by the
City Manager. The decision whether a proposed amendment is "minor'' shall be in
the exclusive discretion of the City Manager.
c. Waiver. Waiver by City of any one or more of the terms or conditions of this
Agreement shall not be construed as waiver of any other term or condition under
this Agreement.
d. Enforcement. Unless amended or canceled pursuant hereto, this
Agreement shall be enforceable by any party hereto, or successor in interest
thereto, notwithstanding any subsequent change in any applicable general or
specific plan, zoning, subdivision or building regulation, or municipal code
amendment adopted by City that conflicts with the terms of this Agreement.
e. Joint and Several Liability. Owner and Landlord shall be jointly and
severally liable for any amount due under this Agreement, and any breach of this
Agreement or failure to pay by one Party shall also constitute a breach of this
Agreement by the other Party. Owner and Landlord agree that City may impose a
lien and seek foreclosure on any parcel of the Site due to any default by Owner.
f. Severability. If any part of this Agreement is found to conflict with applicable
state laws or regulations, such part shall be inoperative, null, and void insofar as it
conflicts with said laws or regulations, or modified or suspended as may be
necessary to comply with such state laws or regulations, but the remainder of this
Agreement shall continue to be in full force and effect.
g. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which together
shall constitute one and the same instrument. The execution of this Agreement
may be by actual, facsimile, or electronic signature.
h. Jurisdiction and Arbitration. The law governing this Agreement shall be that
of the State of California. Any suit brought by any party against any other party
arising out of the performance of this Agreement shall be filed and maintained in
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the County of Los Angeles Superior Court. Any dispute, claim or controversy
arising out of or relating to this Agreement or the breach, termination, enforcement,
interpretation or validity thereof, including the determination of the scope or
applicability of this Agreement to arbitrate, shall be determined by binding
arbitration in Los Angeles, California before one arbitrator. Said arbitrator shall be
chosen by mutual agreement of the Parties. If the Parties cannot agree on an
arbitrator within 30 days of the first notice by either Party of the need for arbitration,
each Party shall name one arbitrator, then the two arbitrators shall choose the
arbitrator who shall hear the case.
i. Disclaimer. Despite California's commercial cannabis laws and the terms
and conditions of this Agreement, any Conditional Use Permit, or any Regulatory
Permit issued pertaining to Owner or the property specified herein, California
commercial cannabis cultivators, transporters, distributors, or possessors may still
be subject to arrest by state or federal officers and prosecuted under state or
federal law. The Federal Controlled Substances Act, 21 USC § 801, prohibits the
manufacture, distribution, and possession of cannabis without any exemptions for
medical use.
j. Force Maieure. If delays are caused by unforeseen events beyond the
control of Owner, such delays will entitle Owner to an extension of time as provided
in this section. Such unforeseen events ("Force Majeure") shall mean war,
insurrection, acts of God, local, state or national emergencies, strikes and other
labor difficulties beyond the party's control, or any default by City hereunder, which
Force Majeure event substantially interferes with the development or construction
of the Project.
k. Costs and Fees. Owner shall be responsible for all of the reasonable and
fixed costs associated the Project, including but not limited to costs associated with
City's review and processing of the Project, including but not limited to reviewing
the Project's entitlements, including all environmental clearance documents,
permits, licenses and all documents evidencing compliance with state and local
law, and as such Owner agrees to reimburse City and pay any costs and fees
associated with processing the Project, as detailed in this Agreement.
I. Constructive Notice and Acceptance. Every person who after the Effective
Date and recording of this Agreement owns or acquires any right, title, or interest
to any portion of the Site, is and shall be conclusively deemed to have consented
and agreed to every provision contained herein, whether or not any reference to
this Agreement is contained in the instrument by which such person acquired an
interest in the Site, and all rights and interests of such person in the Site shall be
subject to the terms, requirements, and provisions of this Agreement.
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and Delivery Development Agreement
Page 30of31 Cultivation, Manufacturing, Distribution,
and Delivery Development Agreement
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
CITY OF LYNWOOD
City Manager
APPROVED AS TO FORM:
OWNER
Name:
Title:
LANDLORD
Name:
Title:
Page 31 of 31 Cultivation, Manufacturing, Distribution,
and Delivery Development Agreement
COMMERCIAL CANNABIS
DEVELOPMENT AGREEMENT
Development Agreement No. 2017-07 MOD
This Agreement is made by and between and among the CITY OF LYNWOOD
("City") and JB Los Angeles Farmers, A Cooperative Corporation ("Owner") and Mario
Bustamante ("Landlord") this_ day of January 2018, as required by Section 4-34-5 of
the Lynwood Municipal code setting forth the terms and conditions under which Owner
shall operate a commercial cannabis cultivation, manufacturing, distribution, and delivery
facility (also, the "Project") pursuant to its Regulatory Permit that are in addition to the
requirements of Article 4-34 of the Lynwood Municipal code, including, but not limited to,
public outreach and education, community service, payment of fees and other charges
as set forth or referenced herein, and such other terms and conditions as will protect and
promote the public health, safety, and welfare. The requirements set forth in Article 4-34
of the Lynwood Municipal Code, and the Administrative Regulations adopted by the City
Council of the City of Lynwood are incorporated herein by reference. All subsequent
references to "municipal code" mean the Lynwood Municipal Code.
1. Government Code and Municipal Code Requ ired Elements
a. Description of Property. Land situated in the City of Lynwood, County of
Los Angeles, State of California, described as APN 6169-010-002, whose street
address is 2851 Lynwood Road, City of Lynwood.
b. Owner and Other Person with Legal or Equitable Interest.
Owner: JB Los Angeles Farmers, A Cooperative Corporation
Landlord: Mario Bustamante
c. Permitted Uses. The subject property may be used as a commercial
cannabis facility as presently authorized under Article 4-34 of the municipal code,
and for any other use as authorized under applicable provisions of the municipal
code. Although Chapter 25 does not specifically identify commercial cannabis
facilities as allowed uses in any zoning district, such uses are similar to other listed
uses, including, but not limited to, medical services-clinics, offices, laboratories;
garden center/plant nursery; food and beverage manufacturing; and agricultural
products processing; and, therefore, commercial cannabis facilities are allowed
uses in the same zoning districts in which such similar uses are allowed under
Chapter 25 of the municipal code.
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Development Agreement
d. Zoning. Owner shall guarantee that all activities conducted under this
Agreement and under the Regulatory Permit shall comply with the City's municipal
code, including the zoning ordinance and any and all development and
construction requirements contained therein. Owner shall not conduct any
business under this Agreement or under the Regulatory Permit without having
obtained all necessary permits, licenses, and approvals from the City.
e. Reservation or Dedication of Land for Public Purposes. Sufficient roadway,
sidewalk, and utility easements shall be reserved or dedicated to City for such
purposes.
2. Term
This Agreement shall start on the date on which all parties have executed it, or 31
days after final approval by the City Council, whichever is later, and it shall end
seven years from the starting date, and it shall remain in full force and effect so
long as the subject property is used for a commercial cannabis facility as presently
authorized under Article 4-34 of the municipal code; provided, however, such use
is not abandoned for a period of more than six (6) months. The term may be
extended for up to two, five-year extensions by mutual agreement of the Parties.
However, at the request of either Party, the fees required under Article 7 of this
Agreement may be subject to re-negotiation following the end of year 3 of this
Agreement. In the event a Party wishes to re-negotiate fees, it shall give notice to
the other Party no less than 90 days before the three-year anniversary of the
agreement, and negotiations shall be concluded before the anniversary date.
3. Owner's Site and Floor Plans
a. Owner's site plan and floor plan for the facility are attached hereto and
incorporated by reference. The floor plan identifies the uses of each interior space,
and is the basis for calculating the annual per-square-foot fee specified in
paragraph 6 below. The parties agree and understand that due to the time required
for the completion of necessary surveys including approvals from the Los Angeles
County Fire Department and Building and Safety, the specific design may change
in which case all revised site and floor plans shall be provided to the City at the
earliest possible time.
b. A preliminary landscape plan will be prepared and reviewed and approved
by the Planning Director as part of the design review process. A final landscape
plan shall be prepared and submitted in conjunction with building and site
improvement plans prior to issuance of building permits for construction activities.
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c. An exterior signage plan will be prepared and reviewed and approved by
the Planning Director in accordance with the procedures and requirements of
Article 70 of Chapter 25 of the municipal code.
4. Facility Operations
a. Standard Operating Procedures. Owner is a Cooperative Corporation who
will comply with all relevant California State laws and local ordinances with regard
to commercial cannabis cultivation, manufacturing, distribution, and delivery. (See
California's Compassionate Use Act (Proposition 215) as codified in Health and
Safety Code §11362.5; Senate Bill420, the Medical Marijuana Program Act (H&S
Code §§11362. 7 to 11362.83); the August 2008 Guidelines for the Security and
Non-Diversion of Marijuana Grown for Medical Use (2008 Attorney General
Guidelines); and the newly enacted Medical Adult Use Cannabis Regulation and
Safety Act ("MAUCRSA") set forth in Business and Professions Code 26000, et
seq., and Assembly Bill 133, which was enacted in September 2017.
During the term of its Regulatory Permit and the term of this Agreement,
Owner shall lawfully operate in accordance with all state and local laws. Owner
will employ exemplary operating procedures to comply with state and local laws.
Owner's facility will employ safety and security measures as set forth herein for the
safety and security of its employees, as well as other individuals in its neighboring
community.
b. Securitv Plan. The issuance of a Regulatory Permit is conditional upon
approval of the proposed security plan by the Los Angeles County Sheriff. The
security plan shall include, at a minimum and as appropriate, provisions for video
surveillance, perimeter fencing and security, protection of the building(s) from
vehicle intrusion, cash handling procedures, product handling and storage
procedures, and a professionally monitored alarm system. Equipment and
systems used for video surveillance and building alarms will be approved by City.
Video surveillance shall include, at a minimum, all site and facility entrances and
access points, all spaces accessible by the public, all secured areas of the facility
with restricted access, all interior spaces and rooms where commercial cannabis
products are handled and processed, shipping and receiving areas, cash storage
areas, and other areas necessary to protect the safety of employees and the public
and to ensure commercial cannabis products are received, handled, stored,
packaged, shipped, and distributed in compliance with applicable state and local
laws and regulations. The video surveillance system shall be web-based with
direct access provided to the Los Angeles County Sheriff upon request.
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The security system will also include sensors to detect entry and exit from all
secure areas, panic buttons in appropriate locations, and a professionally
monitored alarm system with glass breakage sensors and motion detectors.
Owner will employ properly trained and licensed third-party security personnel to
protect the welfare and safety of Owner employees and to ensure public safety to
the neighboring community. Owner shall use security personnel 24 hours, 7 days
a week. Security personnel may be armed so long as proper licensing and
insurance requirements are followed and met by the third-party operator providing
such security services.
c. Fire Department Approval. Owner may not operate any facility, and no
permit, license, or other approval issued by City shall be valid unless and until the
Los Angeles County Fire Department has approved Owner's site plan, floor plan,
safety plan, and any other plans that require its approval.
d. Possession of Firearms. Except for licensed security personnel approved
by the Los Angeles County Sheriff, no person employed by Owner shall be in
possession of any firearm while on the premises or location without having first
obtained a license from the appropriate state or local agency authorizing the
person to be in possession of such firearm. Every such person in possession of a
firearm while on the premises or location must provide the City Manager and the
Los Angeles County Sheriff, ten days before bringing the firearm onto the
premises, with the following:
1) A copy of the license issued to the person by the appropriate state
or local agency authorizing him or her to possess such firearm;
2) A copy of his or her law enforcement identification (if he or she is
employed by a law enforcement agency);
3) A copy of his or her California driver's license or California
identification card; and
4) Any other information reasonably required by the Los Angeles
County Sheriff to show that the individual is in compliance with the
provisions of all laws regarding the possession and use of a firearm.
e. Employees/Procedures for Inventory Control to Prevent Non-Medical
Diversion of Commercial cannabis. Only authorized employees will be permitted
to enter Owner's facility. Each employee will have to meet a criminal background
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Development Agreement
investigation conducted by the Los Angeles County Sheriff, which at minimum shall
include a LiveScan criminal history check.
Owner will prohibit the use of cannabis by its employees at its facility, in the
neighborhood vicinity of its facility, and while driving.
Owner will take all necessary and reasonable steps to prevent the distribution of
any of its cannabis products to minors; prevent revenue from the sale or
distribution of its cannabis and/or infused products from going to criminal
enterprises, gangs and cartels; prevent the diversion of cannabis from California
to any other state; prevent state-authorized cannabis activity from being used as
a cover or pretext for the trafficking of other illegal drugs or other illegal activity;
prevent violence and the use of firearms in the cultivation, manufacture and
distribution of cannabis; discourage and educate against drugged driving and the
exacerbation of other adverse public health consequences associated with
cannabis use; disavow growing cannabis on public lands that creates attendant
public safety and environmental dangers posed by such illegal uses; and
discourage and educate against cannabis possession or use on federal property.
f. Quality Control and Testing. Owner will utilize quality control measures and
testing to ensure only the highest quality of commercial cannabis and infused
products will be produced. Owner will inspect the product to insure its identity and
quantity, and will have a testing lab approved by City, perform testing of random
samples prior to distribution. Inspection and testing will be conducted by the
approved testing lab off-site. Testing standards and procedures shall be in
accordance with applicable state law and regulations.
All commercial cannabis products will undergo a quality assurance review prior to
distribution or delivery in order to ascertain its quantity and content. Inventory
procedures will be utilized for tracking and taxing purposes by the state. Owner
will employ an efficient record-keeping system to make transparent its financing,
testing, and adverse effect recording, as well as recall procedures. Owner will
employ an efficient record-keeping system that will reflect its financing, testing, and
adverse effect recording and product recall procedures.
g. Packing of Commercial Cannabis and Infused Products. All Owner
commercial cannabis products will be packaged and labeled as required by
Section 26071, et seq., of the California Business and Professions Code and
applicable requirements and regulations issued by the State of California pursuant
thereto. In addition to those packaging and labeling requirements, and packaging
and labeling requirements set forth in Owner's Regulatory Permit application, as
amended or supplemented, all commercial cannabis products shall be packaged
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Development Agreement
in an opaque childproof container which shall contain a label or be accompanied
by a leaflet or inset that states, at a minimum:
1) The name, address and telephone number of the commercial
cannabis dispensary facility or licensed distribution company to which the
commercial cannabis product is distributed, sold, or transferred;
2) The amount of commercial cannabis in the container; and
3) The date the commercial cannabis was transferred to a commercial
cannabis dispensary facility or licensed distribution company.
Owner intends to produce infused products and will secure any approval from the
County of Los Angeles Health Department required for manufacturing and
handling such products. Owner infused products will not be produced,
manufactured, stored or packaged in private homes. All Owner commercial
cannabis infused products shall be individually wrapped at the original point of
preparation.
h. Delivery. If Owner applies for and receives a Delivery permit from City,
Owner may sell and deliver manufactured cannabis products to individual
customers, as long as such activity is consistent with and permitted under state
law, and Owner has a valid state license therefor. As long as such products are
sold and delivered to individual customers, and no in-person sales occur at
Owner's facility, such activity shall not constitute a dispensary under the municipal
code.
i. Point of Sale Tracking System. Owner will maintain an inventory control
and reporting system that accurately documents the location of cannabis products
from inception through distribution or delivery, including descriptions, weight, and
quantity. The inventory control and reporting system shall comply with the track
and trace program required by Section 26067, et seq., of the California Business
and Professions Code and regulations issued thereunder.
Owner will employ an electronic point of donation/sale system approved by City,
such as BioTrack THC, MJ Freeway, or similar system for all point of
donations/sales tracking from seed or inception to product distribution to other
licensed commercial cannabis dispensary facilities or licensed distribution
companies. Such approved system will track all Owner commercial cannabis
products, each edible, harvested flower, and/or manufactured concentrate, as well
as gross sales (by weight and sale). BioTrack THC, MJ Freeway, or similar system
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Development Agreement
will have the capacity to produce historical transactional data in accordance with
City's requirements.
j. Record Keeoina. Owner will maintain records for all cultivated or
manufactured commercial cannabis and/or infused products. Owner will comply
with all records-keeping responsibilities that are set forth in Municipal Code Section
4-34-10, including complete and up-to-date records regarding the amount of
commercial cannabis cultivated, produced, manufactured, harvested, stored, or
packaged at Owner's facility.
k. Processing, Handling, Storing, and Distribution of Commercial Cannabis
and Related Products. Commercial cannabis cultivation, handling, storing, and
processing shall be concealed from public view at all stages of growth and
processing, and there shall be no exterior evidence of cultivation or processing
occurring at the premises from a public right-of-way or from an adjacent parcel.
Commercial cannabis cultivation, handling, storing, manufacturing, processing, or
distribution shall not create offensive odors; create excessive dust, heat, noise,
smoke, traffic, or other impacts that are disturbing to people of normal sensitivity
residing or present on adjacent or nearby property or areas open to the public; or
be hazardous due to use or storage of materials, processes, products, or wastes.
Owner will store its commercial cannabis and/or commercial cannabis products in
a locked safe room with T-card identification access for management only. The
safe room will be constructed of fire-rate walls with numerous cameras installed to
view all entries and exits from the safe room, as well as all other activities
performed within Owner's facility. Owner will not conduct outdoor operations
except as related to lawful delivery and transportation of commercial cannabis and
infused products. Owner will not store commercial cannabis or related products in
its delivery vehicle outside normal operating hours of the facility.
Commercial cannabis products will be sold or distributed only to licensed
dispensaries or licensed distribution companies in California, except as provided
in section 4(h) above. Excess or contaminated product will be securely stored on-
site until it is properly disposed. Disposal may include composting, incineration,
land-fill disposal through the local waste management hauler, or other disposal
methodology in accordance with state and county health and safety codes and
regulations.
I. Odor Control. All structures shall have ventilation and filtration systems
installed that prevent commercial cannabis plant odors from exiting the interior of
the structure. The ventilation and filtration system shall be approved by the
Building Official and City Manager and installed prior to commencing cultivation or
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Development Agreement
manufacturing within the allowable structure. Facility air intake, exhaust, and
recirculating system shall be of industrial grade. Activated charcoal, recirculating,
and closed loop aeration systems will be utilized as necessary for effective odor
control and management.
m. Description of Banking Plan. Owner will seek to open a bank account under
the name of Owner or its associated management company to provide
transparency for funds received, operational costs, including payroll, tax payments
to the state and federal governments, among others. Should a bank account not
be forthcoming, Owner will purchase and install safes to secure all daily funds
received from its collective membership or other lawful cooperative corporations
to implement debit and credit card transactions. Owner will not accept personal or
corporate checks.
n. Transportation Plan . Owner will comply with all state and local law
regarding transportation, including the rules governing delivery service. Owner will
retain a list of names and cellular contact numbers for all employees engaged in
transportation of commercial cannabis products and provide it to the applicable
oversight authority, keeping the list current and up to date.
Owner will keep complete and up-to-date records documenting each transfer of
commercial cannabis to other lawful licensed entities, including the amount
provided, the form or product category in which the commercial cannabis was
provided, the date and time provided, the name of the employee making the
transfer, the name and address of the other lawful licensed entities to whom
delivery is made, and the amount of any related donation or other monetary
transaction.
5. Community Relations. Employment. and Wages
a. Public Outreach and Education Program. Owner shall create an effective
public outreach to City of Lynwood's community, including but not limited to
outreach and interface with public and private schools, youth organizations,
religious organizations, health care providers, drug abuse treatment providers, and
mental health and drug counseling providers.
Owner will coordinate and cooperate with City and other Owners of commercial
cannabis facilities located within City of Lynwood in the establishment and
implementation of appropriate public outreach and education programs. The
public outreach and education programs shall be approved by City.
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Development Agreement
The public outreach and education program shall provide a detailed description of
Owner's intentions with regard to public outreach and education, including but not
limited to the following: what schools or programs Owner will work with; what types
of materials and information will be provided; how much time Owner's personnel
expect to spend on these activities; and how much money Owner expects to spend
on an annual basis.
b. Community Benefits Program. Owner will coordinate and cooperate with
City and other Owners of commercial cannabis facilities located within the City of
Lynwood in the establishment, implementation, and funding of a community
benefits program which could include such items as new community recreation
facilities, expansion and/or improvement to existing facilities or other physical
improvements that provide a benefit to the community, support of holiday and
special community events, and support of local public service and special districts
and organizations. This community benefits program may be implemented by a
foundation or other association of commercial cannabis facility Owners issued
regulatory permits by City. City and the public will participate in the decision-
making process for identifying and prioritizing community needs and benefits, and
identifying appropriate projects to be funded by the entity implementing this
community benefits program. All projects under the community benefits program
must be approved by City.
c. Designation of Persons Responsible for Community Relations. At the time
of this Agreement, Owner's Managing Agent/General Manager, Ivan Van Ortwick,
will be responsible for community inquiries and complaints and on-site during
normal business hours.
d. Interface with Los Angeles County Sheriff. Owner's general manager, Ivan
Van Ortwick, will interface with the Los Angeles County Sheriff to ensure its
operation complies with state and local laws and regulations.
e. Local Recruitment, Hiring. and Training Programs. Owner is committed to
making a good-faith effort to recruit, hire, and train City residents for employment
by Owner. A good-faith effort means Owner will take the following or similar
actions to recruit and employ City residents: 1) Contact local recruitment sources
to identify qualified individuals who are City residents, 2) Advertise for qualified
City residents in trade papers and newspapers of general circulation in the area,
and 3) Develop a written plan to recruit and employ City residents as a part of its
workforce.
Owner agrees to include local contractors in its bidding process as a 1st priority.
All local contractors will be given the first right of refusal in competitive bidding
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Development Agreement
process. However, all local contractors will need to stay within 10% of all other
bids that are comparable. In the event there is no local company capable of
proposed construction contract either due to direct licensing, insurance, or
specialty of construction type then Owner maintains the right to hire whoever it
deems fit and meets all legal criteria set forth by the building code.
f. Living Wages. Owner agrees to pay all employees of the Facility a Living
Wage. A "Living Wage" is the higher of whatever Owner currently pays its
employees for similar work elsewhere in the State of California, or the following:
until December 31, 2017: 150% of the California State minimum wage. Such
wage shall increase on January 1 of each subsequent year at the same rate as the
California State minimum wage increases, or according to the Consumer Price
Index for Los Angeles County, for the quarter ending September 30 of the
preceding year, whichever is higher.
g. Full-time Work. Owner shall make its best efforts to fill every position with
a full-time employee. However, at no time shall Owner have a labor force that is
composed of less than 75% full-time employees. Owner agrees to provide to its
eligible employees leave benefits, health and wellness benefits and other
employee benefits to the extent such benefits are required to be paid for by Owner
under applicable state and federal employment laws.
6. Indemnification of City from Liability
a. Pursuant to City's requirement, Owner will indemnify City from any claims,
damages, injuries, or liabilities of any kind associated with the registration or
operation of Owner's commercial cannabis facility or the prosecution of Owner's
facility or its owners, managers, directors, officers, employees, or its qualified
patients or primary caregivers for violation of federal or state laws.
b. Owner agrees to defend, at its sole expense, any action against City, its
agents, officers, and employees related to the approval or issuance of the
Regulatory Permit and this Agreement.
c. Owner agrees to reimburse City for any court costs and attorney fees that
City may be required to pay as a result of any legal challenge related to City's
approval or issuance of a Regulatory Permit or this Agreement. City may, at its
sole discretion, participate at its own expense in the defense of any such action,
but such participation shall not relieve the holder of the Regulatory Permit or this
Agreement.
7. Fees. Costs. and Future Taxes
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a. Fees. Owner agrees to pay all permit fees and charges referenced in
Section 4-34-11 of the municipal code, in the amounts adopted by the City Council
by resolution, as well as any fees set forth in this Agreement. Permit application,
processing, and renewal fees shall be due and payable at the time application is
made.
b. Costs. Owner agrees to reimburse City for all additional costs of City
resulting from the operation of a commercial cannabis facility authorized under
Article 4-34 of the municipal code and the administrative regulations.
Reimbursement to City for such costs shall be due and payable upon demand.
c. Operating Fees. Owner agrees to pay to City, to enable City to promote,
protect, and enhance the healthy, safety, and welfare of the community and its
residents and its quality of life, the following fees (if applicable):
1) an annual fee of $10.00 per square foot of cultivation area (canopy);
and
2) an annual fee of two percent (2.0%) of gross income from
manufacturing activities or the sum of one hundred fifty thousand dollars
($150,000.00), whichever is higher;
3) an annual fee of one and one-half percent (1.5%) of gross income
from distribution/transportation of product for anyone other than Owner; and
4) an annual fee of two and one-half percent (2.5%) of gross income
from delivery activities.
d. Owner agrees to compensate City for the increased demand on City
services, infrastructure, and utilities; local traffic demands; and increased City
review and oversight by the Los Angeles County Sheriff, planning department, and
code enforcement of the operations of Owner's facility. Owner understands and
agrees the determination of the required per-square-foot fee will consider such
factors as the size, design, layout, operation, and security plan for the facility;
potential adverse effects on the community; and the allocation of City services and
staff time to oversee the operation of the facility.
e. Owner understands and agrees that the fees set forth above shall be paid
in a manner and in accordance with a payment schedule agreed to by City and
Owner, in intervals of no more than three months. The cultivation and
manufacturing space to which the fee applies is as identified on the attached floor
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plan, as may be modified. Payment shall be in equal installments paid quarterly
commencing at the end of the first quarter after the effective date of the Regulatory
Permit which shall be no sooner than the date a certificate of occupancy is issued
for the subject premises.
f. If Owner makes any changes to the interior layout of the facility that
increases the amount of space allocated to those uses to which the per-square-
foot fee applies, Owner shall notify City of such changes at least fourteen (14)
calendar days prior to making such changes, and the per-square-foot fee shall be
modified accordingly. If Owner fails to give City notice as required herein, Owner
shall be responsible for paying to City a per-square-foot fee based on any increase
in the amount of space allocated to those uses to which the per-square-foot fee
applies retroactive to the date the Regulatory Permit became effective.
8. Cost Recovery Fee
City shall assess to Owner fees to recover City's reasonable processing and
monitoring costs relating to Owner's business upon issuance of Owner's
Manufacturing, Cultivation, Distribution, and Delivery Permits or any Additional
Permits ("CRF"). The City shall submit sufficient information to Owner of City's
total number of hours required to process their Application or monitor their
authorizations. CRFs are separate and apart from any fees set forth in 1\rticle 7.
a. Processing Fees. Processing fees for the Application are based upon the
direct and indirect costs that City incurs in reviewing the Application. The
processing fees for the Application shall be based only on costs that are necessary
for processing the Application and implementing the Ordinance, including staff
time, legal fees, and consultant fees. "Necessary for" means that but for the
Application, the costs would not have been incurred. The processing fee shall not
include costs for other City management objectives, unless they are necessary for
processing the Application.
b. Monitoring Fees. Monitoring fees for the Manufacturing, Cultivation,
Distribution, and Delivery Permits are based upon the direct and indirect costs City
incurs in confirming the use of the Property in accordance with the municipal code,
the Ordinance, this Agreement, and the Application. The monitoring fees shall be
based only on costs that are necessary for conducting these reviews. "Necessary
for" means that but for the Manufacturing, Distribution, Cultivation, and Delivery
Permits, or any Additional Permits, the costs would not have been incurred. The
monitoring fee shall not include costs for other City management objectives, unless
they are necessary for monitoring the Manufacturing, Distribution, Cultivation, and
Delivery Permits, or any Additional Permits.
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Development Agreement
c. Billing and Payment. City shall bill Owner the CRF on the first day of each
quarter (March, June, September, and December) with an invoice providing an
hourly breakdown of hours expended by City and its representatives. Owner shall
pay the CRF invoice within sixty (60) days of the date the bill for the CRF is
received by Owner. Notwithstanding the foregoing, at no time shall the CRFs
exceed Seven Thousand Dollars ($7,000) during a given year, except that the first
year may be as high as twenty thousand dollars ($20,000) because of the costs
required to set up the application process and review the applications.
d. Disputes. If Owner disagrees with the dollar amount provided by City on
the CRF invoice, Owner may submit a written request before the disputed fee is
due for a substitution of alternative CRF invoice to the immediate supervisor of the
City representative who determined the CRF invoice. The written request must
include supporting documentation. After review of Owner's written request, Owner
and City shall work, in good faith to resolve Owner's written request. The dispute
shall be decided in favor of Owner if City does not respond to the written request
within thirty (30) days of receipt.
9. Additional Owner Obligations
a. Reporting of Gross Receipts from Operations
1) Quarterly Receipts. No later than January 15, 2018, and 15 days
after the last day of each subsequent quarter during the Term hereof, Owner
shall deliver to City a report (the "Quarterly Report") showing (i) Gross
Receipts from Operations for the immediate prior quarter received by
Owner, and a cumulative total of all amounts of Gross Receipts from
Operations received by Owner for the calendar year, (ii) a calculation of the
quarterly payment due to City for the prior quarter, and (iii) a calculation of
the cumulative total of all quarterly payments for the calendar year.
2) Statement of Receipts. Owner shall keep complete, accurate and
appropriate books and records of all receipts from operations in accordance
with generally accepted accounting principles. For purposes herein, "books
and records" shall mean all bookkeeping or accounting documents Owner
utilizes in managing its business operations relating to the Project. Such
books and records, as well as all other relevant documents as City shall
reasonably require, shall, upon reasonable written notice, be open for
inspection by City, its auditors or other authorized representatives. If at any
time during the term such books and records prove inadequate in the
reasonable judgment of City to record the Gross Receipts from Operations
as herein required, Owner shall, upon the written request of City, procure
and maintain such books and records as shall be of a character and form
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adequate for such purpose. City shall have the right to audit and examine
such books, records and documents and other relevant items in the
possession of Owner, but only to the extent necessary for a proper
determination of Gross Receipts from Operations, and all such books,
records, documents and other items shall be held available for such audit
and examination. Upon request by City, Owner shall make all such books,
records and documents available to City, and provide removable copies
thereof, within thirty (30) of the date of City's request. The cost for any audit
shall be shared equally by the Parties. Owner shall preserve such books,
records, documents, and other items in Lynwood for a period of not less
than seven (7) years for the purpose of auditing or re-auditing these
accounts upon reasonable notice; except that, if an audit is made within the
seven-year period and Owner claims that errors or omissions have
occurred, the books and records shall be retained and made available until
those matters are resolved. City shall keep strictly confidential all
statements of revenue and other financial documents furnished by Owner
and all other information concerning Owner's operation of the Premises
obtained by City as a result of the inspection audit and examination
privileges of City hereunder, except as otherwise required by law. If City
receives a request for such information pursuant to the Public Records Act
(California Government Code Section 6250, et seq.), City shall provide
Owner notice of any such request prior to disclosing any such information.
Within seven (7) years after the receipt of any statement of receipts under
this Agreement, City at any time shall be entitled to carry out an audit of
such revenue either by City or agent to be designated by City. If it shall be
determined as a result of such audit that there has been a deficiency in any
payment due under this Agreement made on the basis of such statement,
then such deficiency shall become immediately due and payable. If such
statement of revenue for the relevant year shall be found to have
understated receipts by more than two percent and City is entitled to any
additional payment as a result of said understatement, then Owner shall, in
addition, pay all of City's reasonable costs and expenses connected with
such audit, including the expense incurred in retaining such agent;
otherwise City shall bear the cost and expense of such audit.
3) Copies of Tax Filings. Owner shall provide City with copies of any
reports Owner is required to provide to the County of Los Angeles or the
State of California for sales, use, or other tax purposes.
b. Applicability of Future Revenue Mechanisms. During the term of this
Agreement, if City imposes an alternative revenue mechanism specifically related
to cannabis operations (e.g., a cannabis tax), Owner agrees to pay to City the
Page 14 of 31 Cultivation and Manufacturing
Development Agreement
greater of the payment required under such alternative revenue mechanism or the
payment required by this section. As used in this section, "alternative revenue
mechanism" does not include taxes, fees, or assessments levied on or collected
from both cannabis and non-cannabis operations. Payments required by revenue
mechanisms that are not limited to cannabis operations shall be in addition to, and
not in lieu of, payments under this section.
10. Insurance and Indemnity
a. Insurance. Owner shall require all persons doing work on the Project,
including its contractors and subcontractors (collectively, "Owner'' for purposes of
this Article 10 only), to obtain and maintain insurance of the types and in the
amounts described in this section and its subsections with carriers reasonably
satisfactory to City.
b. General Liability Insurance. Owner shall maintain commercial general
liability insurance or equivalent form with a limit of not less than Two Million Dollars
($2,000,000) (or as otherwise approved, in writing, by City) per claim and Two
Million Dollars ($2,000,000) each occurrence. Such insurance shall also:
1) Name City, its elected and appointed councils, boards, commissions,
officers, agents, employees, and representatives as "Additional Insureds"
by endorsement with respect to performance of this Agreement. The
coverage shall contain no special limitations on the scope of its protection
afforded to the above-listed additional insured.
2) Be primary with respect to any insurance of self-insurance programs
covering City, its officials, employees, agents, and representatives.
3) Contain standard separation of insured provisions.
c. Automotive Liability Insurance. Owner shall maintain business automobile
liability insurance or equivalent form with a limit of not less than Two Million Dollars
($2,000,000) for each accident. Such insurance shall include coverage for owned,
hired, and non-owned automobiles. Such insurance shall also:
1) Name City, its elected and appointed officials, boards, commissions,
officers, agents, employees, and representatives as "Additional Insureds"
by endorsement with respect to performance of this Agreement. The
coverage shall contain no special limitations on the scope of its protection
afforded to the above-listed additional insureds.
Page15of31 Cultivation and Manufacturing
Development Agreement
2) Be primary with respect to any insurance or self-insurance programs
covering City, its officials, employees, agents, and representatives.
3) Contain standard separation of insured provisions.
d. Workers' Compensation Insu rance. Owner shall take out and maintain
during the term of this Agreement, workers' compensation insurance for all of
Owner's employees employed at or on the Project, and in the event any of the
work is subcontracted, Owner shall require any general contractor or subcontractor
similarly to provide workers' compensation insurance for such contractor's or
subcontractor's employees, unless such employees are covered by the protection
afforded by Owner. In case any class of employee engaged in work on the Project
is not protected under any workers' compensation law, Owner shall provide and
shall cause each contractor and subcontractor to provide adequate insurance for
the protection of employees not otherwise protected. Owner hereby indemnifies
City for any damage resulting from failure of Owner, its agents, employees,
contractors, or subcontractors to take out or maintain such insurance. Workers'
compensation insurance with statutory limits and employer's liability insurance with
limits of not less than One Million Dollars ($1 ,000,000) each accident shall be
maintained.
e. Other Insurance Requirements. Owner shall do all the following :
1) Prior to taking any actions under this Agreement, furnish City with
properly executed certificates of insurance that clearly evidenced all
insurance required in this Article, including evidenced that such insurance
will not be canceled, allowed to expire, or be materially reduced in coverage
without thirty (::\0) dRys prior written notice to City
2) Provide to City, upon request, and within seven (7) calendar days of
said request, certified copies of endorsements and policies, and properly
executed certificates of insurance evidencing the insurance required herein.
3) Replace or require the replacement of certificates, policies and
endorsements for any insurance required herein expiring prior the
termination of this Agreement.
4) Maintain al! insurance required herein from the Effective Date of this
Agreement to the earlier of the expiration of the term or the mutual written
termination of this Agreement.
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Development Agreement
5) Place all insurance required herein with insurers licensed to do
business in California with a current Best's Key Rating Guide reasonably
acceptable to City.
f. Indemnity. Owner agrees to indemnify, defend, and hold City, and its
elected and appointed council, boards, commissions, officers, agents, employees,
consultants, and representatives, harmless from any and all claims costs and
liability for any personal injury or property damage which may arise as a result of
any actions or negligent omissions by Owner or Owner's contractors,
subcontractors, agents, or employees in connection with the construction,
improvement, or operation of the Project.
11. Termination
a. Termination Upon Completion of Development. This Agreement shall
terminate upon the expiration of the term, unless it is terminated earlier pursuant
to the terms of this Agreement. Upon termination of this Agreement, City shall
record a notice of such termination, and this Agreement shall be of no further force
or effect except as otherwise set forth in this Agreement.
b. Effect of Termination on Owner's Obligations. Termination of this
Agreement shall eliminate any further obligation of Owner to comply with this
Agreement, or some portion thereof, if such termination relates to only part of the
Site or Project. Termination of this Agreement, in whole or in part, shall not,
however, eliminate the rights of Owner to seek any applicable and available
remedies or damages based upon acts or omissions occurring before termination.
c. Effect of Termination on City's Obligations. Termination of this Agreement
shall eliminate any further obligation of City to comply with this Agreement, or some
portion thereof. Termination of this Agreement shall not, however, eliminate the
rights of City to seek any applicable and available remedies or damages based
upon acts or omissions occurring before termination.
d. Survival After Termination. The rights and obligations of the Parties set
forth in Article 14, Article 23, and Section 24(e), Section 24(f), and Section 24(h),
and any right or obligation of the Parties in this Agreement which, by its express
terms or nature and context is intended to survive termination of this Agreement,
will survive any such termination.
12. Resources Efficiency
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Development Agreement
The design of the facility shall include significant water and energy conservation
measures to minimize resource consumption. The design shall incorporate solar, wind,
high efficiency lighting, and water recycling systems and technology to the extent feasible.
High efficiency LED lighting systems for the exterior lighting will be used. If economically
and technologically feasible, grow lights shall be high efficiency LED lighting systems.
Automated, digitally controlled watering and fertilization systems shall be used for all plant
cultivation. Cultivation will be a continuous hydroponic grow, in a soil-less grow medium.
All water mixed with nutrients will be recycled. Storm water shall be collected and
recycled to the extent feasible.
13. Standard Conditions for Construction
During any on-site construction activities related to development of the project site and
any buildings thereon, or renovation or remodeling of existing buildings, Owner and
Landlord shall comply with all applicable terms and conditions of City's Standard
Conditions for Construction, attached hereto and incorporated herein by reference. The
Project shall comply with the applicable parking standards established by the City for
cannabis activities.
14. Defaults and Remedies
a. Remedies in general. It is acknowledged by the parties that City would not
have entered into this Agreement if it were to be liable in damages under this
Agreement, or with respect to this Agreement or the application thereof, except as
hereinafter expressly provided. Subject to extensions of time by mutual consent
in writing, failure to delay by either party to perform any term or provision of this
Agreement shall constitute a default. In the event of alleged default or breach of
any terms or conditions of this Agreement, the party alleging such default or breach
shall give the other party not less than thirty (30) day notice in writing specifying
the nature of the alleged default and the manner in which said default may be
satisfactorily cured during any such thirty (30) day period, the party charged shall
not be considered in default for purposes of termination or institution of legal
proceedings. Notwithstanding the foregoing to the contrary, if the alleged default
is of such a nature that it cannot be cured within thirty (30) days, the alleged
defaulting party shall not be deemed in default as long as such party commences
to cure such default within such thirty (30) day period and thereafter diligently
prosecutes such cure to completion.
After notice and expiration of the thirty (30) day period, the other party to this
Agreement, at its option, may institute legal proceedings pursuant to this
Agreement.
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Development Agreement
In general, each of the parties hereto may pursue any remedy at law or equity
available for the breach of any provision of this Agreement, except that City shall
not be liable in monetary damages, unless expressly provided for this Agreement,
to Owner, to any mortgagee or lender, or to any successors in interest of Owner
or mortgagee or lender, or to any other person, and Owner covenants on behalf of
itself and all successors in interest to the Property or any portion thereof, not to
sue for damages or claim any damages.
1) For any breach of this Agreement or for any cause of action which
arises out of this Agreement; or
2) For the impairment or restriction of any right or interest conveyed or
provided under, with, or pursuant to this Agreement, including, without
limitation, any impairment or restriction which Owner characterizes as a
regulatory taking or inverse condemnation; or
3) Arising out of or connected with any dispute, controversy or issue
regarding the application or interpretation or effect of the provisions of this
Agreement.
Nothing contained herein shall modify or abridge Owner's rights or remedies
(including its rights for damages, if any) resulting from the exercise by City of its
power of eminent domain. Nothing contained herein shall modify or abridge
Owner's rights or remedies (including its rights for damages, if any) resulting from
the grossly negligent or malicious acts of City and its officials, officers, agents and
employees. Nothing herein shall modify or abridge any defenses or immunities
available to City and its employees pursuant to the Government Liability Act and
all other applicable statutes and decisional law.
Except as set forth in the preceding paragraph relating to eminent domain, Owner's
remedies shall be limited to those set forth in this Section 14(a), Section 14(b), and
Section 14(c).
Notwithstanding anything to the contrary contained herein, City covenants as
provided in Civil Code Section 3300 not to sue for or claim any consequential
damages or, in the event all or a portion of the Property is not developed, for lost
profits or revenues which would have accrued to City as a result of the
development of the Property.
b. Specific Performance. The parties acknowledge that money damages and
remedies at law are inadequate, and specific performance and other non-monetary
Page 19 of 31 Cultivation and Manufacturing
Development Agreement
relief are particularly appropriate remedies for the enforcement of this Agreement
and should be available to all parties for the following reasons:
1) Except as provided in Sections 14(a) and 14(e), money damages are
unavailable against City as provided in Section 14(a) above.
2) Due to the size, nature and scope of the Project, it may not be
practical or possible to restore the Property to its natural condition once
implementation of this Agreement has begun. After such implementation,
Owner may be foreclosed from other choices it may have had to use the
Property or portions thereof. Owner has invested significant time and
resources and performed extensive planning and processing of the Project
in agreeing to the terms of this Agreement and will be investing even more
significant time and resources in implementing the Project in reliance upon
the terms of this Agreement, and it is not possible to determine the sum of
money which would adequately compensate Owner for such efforts; the
parties acknowledge and agree that any injunctive relief may be ordered on
an expedited, priority basis.
c. Release. Except for those remedies set forth in Sections 14(a), 14(b), and
14(c), Owner, for itself, its successors and assignees, hereby releases City, its
officers, agents and employees from any and all claims, demands, actions, or suits
of any kind or nature arising out of any liability, known or unknown, present or
future, based or asserted, pursuant to Article 1, Section 19 of the California
Constitution, the Fifth Amendment of the United States Constitution, or any other
law or ordinance which seeks to impose any other liability or damage, whatsoever,
upon City because it entered into this Agreement or because of the terms of this
Agreement.
Owner acknowledges that it may have suffered, or may suffer, damages and other
injuries that are unknown to it, or unknowable to it, at the time of its execution of
this Agreement. Such fact notwithstanding, Owner agrees that the release
provided in this Section 14(c) shall apply to such unknown or unknowable claims
and damages. Without limiting the generality of the foregoing, Owner
acknowledges the provisions of California Civil Code Section 1542, which provide:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his or her favor at the time of executing
the release, which if known by him or her must have materially
affected his or her settlement with the debtor."
Page 20 of 31 Cultivation and Manufacturing
Development Agreement
Owner hereby waives, to the maximum legal extent, the provisions of California
Civil Code Section 1542 and all other statutes and judicial decisions of similar
effect.
Initials
d. Termination of Agreement for Default of City. Owner may terminate this
Agreement only in the event of a default by City in the performance of a material
term of this Agreement and only after providing written notice to City of default
setting forth the nature of the default and the actions, if any, required by City to
cure such default and, where the default can be cured, City has failed to take such
actions and cure such default within sixty (60) days after the effective date of such
notice or, in the event that such default cannot be cured within such sixty (60) day
period but can be cured within a longer time, has failed to commence the actions
necessary to cure such default within such sixty (60) day period and to diligently
proceed to complete such actions and cure such default.
e. Attorneys' Fees and Costs. In any action or proceeding between City and
Owner brought to interpret or enforce this Agreement, or which in any way arises
out of the existence of this Agreement or is based upon any term or provision
contained herein, the "prevailing party" in such action or proceeding shall be
entitled to recover from the non-prevailing party, in addition to all other relief to
which the prevailing party may be entitled pursuant to this Agreement, the
prevailing party's reasonable attorneys' fees and litigation costs, in an amount to
be determined by the court. The prevailing party shall be determined by the court
in accordance with California Code of Civil Procedure Section 1032. Fees and
costs recoverable pursuant to this Section 14(e) include those incurred during any
appeal from an underlying judgment and in the enforcement of any judgment
rendered in any such action or proceeding.
f. Owner Default. No building permit shall be issued or building permit
application accepted for any structure on the Property after Owner is determined
by City to be in default of the terms and conditions of this Agreement until such
default thereafter is cured by Owner or is waived by City. If City terminates this
Agreement because of Owner's default, then City shall retain any and all benefits,
including money or land received by City hereunder.
15. Third Party Litigation
Page 21 of 31 Cultivation and Manufacturing
Development Agreement
a. General Plan Litigation. City has determined that this Agreement is
consistent with its General Plan. Owner has reviewed the General Plan and
concurs with City's determination.
City shall have no liability under this Agreement or otherwise for any failure of City
to perform under this Agreement, or for the inability of Owner to develop the
Property as contemplated by the Development Plan, which failure to perform or
inability to develop is as the result of a judicial determination that the General Plan,
or portions thereof, are invalid or inadequate or not in compliance with law, or that
this Agreement or any of City's actions in adopting it were invalid, inadequate, or
no in compliance with the law.
b. Hold Harmless Agreement. Owner hereby agrees to, and shall hold City,
its elective and appointive boards, commissions, officers, agents, and employees
harmless from any liability for damage or claims for damage for personal injury,
including death, as well as from claims for property damage which may arise from
Owner or Owner's contractors, subcontractors, agents, or employees' operations
under this Agreement, whether such operations be by Owner, or by any of Owner's
contractors, subcontractors, agents, or employees operations under this
Agreement, whether such operations be by Owner, or by any of Owner's
contractors, subcontractors, or by any one or more persons directly or indirectly
employed by, or acting as agent for Owner or any of Owner's contractors or
subcontractors. Owner agrees to and shall defend City and its elective and
appointive boards, commissions, officers, agents and employees from any suits or
actions at law or in equity for damage caused, or alleged to have been caused, by
reason of any of the aforesaid operations.
c. Indemnification. Owner shall defend, indemnify, and hold harmless City and
its agents, officers, and employees against and from any and all liabilities,
demands, claims, actions or proceedings and costs and expenses incidental
thereto (including costs of defense, settlement and reasonable attorneys' fees),
which any or all of them may suffer, incur, be responsible for or pay out as a result
of or in connection with any challenge to the legality, validity or adequacy of any of
the following: (i) this Agreement and the concurrent and subsequent permits,
licenses and entitlements approved for the Project or Property; (ii) the
environmental impact report, mitigated negative declaration or negative
declaration, as the case may be, prepared in connection with the development of
the Property; (iii) any claims based on or alleging inverse condemnation by any
person or entity with an interest in the Property; and (iv) the proceedings
undertaken in connection with the adoption or approval of any of the above. In the
event of any legal or equitable action or other proceeding instituted by any third
party (including a governmental entity or official) challenging the validity of any
Page 22 of 31 Cultivation and Manufacturing
Development Agreement
provision of this Agreement or any portion thereof as set forth herein, the parties
shall mutually cooperate with each other in defense of said action or proceeding.
Notwithstanding the above, City, at is sole option, may tender the complete
defense of any third-party challenge as described herein. In the event City elects
to contract with special counsel to provide for such a defense, City shall meet and
confer with Owner regarding the selection of counsel, and Owner shall pay all costs
related to retention of such counsel.
d. Environmental Contamination. Owner shall indemnify and hold City, its
officers, agents, and employees free and harmless from any liability, based or
asserted, upon any act or omission of Owner, its officers, agents, employees,
subcontractors, predecessors in interest, successors, assigns and independent
contractors, excepting and acts or omissions of City as successor to any portions
of the Property dedicated or transferred to City by Owner, for any violation of any
federal, state or local law, ordinance or regulation relating to industrial hygiene or
to environmental conditions on, under or about the Property, including, but not
limited to, soil and groundwater conditions, and Owner shall defend, at its expense,
including attorneys' fees, City, its officers, agents and employees in any action
based or asserted upon any such alleged act or omission. City may in its discretion
participate in the defense of any such claim, action or proceeding.
The provisions of this Section 15(d) do not apply to environmental conditions that
predate Owner's ownership or control of the Property or applicable portion;
provided, however, that the foregoing limitation shall not operate to bar, limit or
modify any of Owner's statutory or equitable obligations as an owner or seller of
the Property.
e. City to Approve Counsel. With respect to Sections 15(a) through 15(d), City
reserves the right to approve the attorney(s) which Owner selects, hires or
otherwise engages to defend City hereunder, which approval shall not be
unreasonably withheld.
f. Accept Reasonable Good Faith Settlement. With respect to Article 15, City
shall not reject any reasonable good faith settlement. If City does reject a
reasonable, good faith settlement that is acceptable to Owner, Owner may enter
into a settlement of the action, as it relates to Owner, and City shall thereafter
defend such action (including appeals) at its own cost and be solely responsible
for any judgment rendered in connection with such action. This Section 15(f)
applies exclusively to settlements pertaining to monetary damages or damages
which are remedial by the payment of monetary compensation. Owner and City
expressly agree that this Section 15(f) does not apply to any settlement that
Page 23 of 31 Cultivation and Manufacturing
Development Agreement
requires an exercise of City's police powers, limits City's exercise of its police
powers, or affects the conduct of City's municipal operations.
g. Survival. The provisions of Sections 15(a) through 15(f) inclusive, shall
survive the termination or expiration of the Agreement.
16. California Environmental Quality Act
Owner and the City are of the belief that the Project is exempt from the California
Environmental Quality Act ("CEQA"), however Owner shall reimburse City for any and all
costs incurred by City related to project review under CEQA as required, Public
Resources Code, §§21000-21189.3, and the Guidelines for California Environmental
Quality Act, California Code of Regulations, Title 14, §§15000-15387. If requested by
City, Owner shall conduct and pay for any required CEQA reviews and analyses. The City
has found that the proposed Project is Categorically Exempt from California
Environmental Quality Act (CEQA) requirements under provisions of CEQA Guidelines
Section 15332 -In-Fill Development Projects. This exemption applies to projects
characterized as in-fill development meeting the conditions described in Section 15332.
17. Rules. Regulations. and Official Policies
Except as otherwise provided in this Agreement, the rules, regulations, and official
policies of City governing permitted uses of the land, governing density, and governing
the design, improvements, and construction standards and specifications applicable to
the development of the Project subject of this Agreement, shall be those rules,
regulations, and official policies of City in force at the time of the execution of this
Agreement. This Agreement does not prevent City, in subsequent actions applicable to
the property, from applying new rules, regulations, and policies which do not conflict with
those rules, regulations, and policies applicable to the property as set forth herein, nor
does this Agreement prevent City from denying or conditionally approving any
subsequent development project application based on such existing or new rules,
regulations, or policies.
18. Regulatory Perm it Conditions of Approval
Owner shall comply with all conditions of approval of the Regulatory Permit approved by
City Council.
19. Periodic Reviews
This Agreement shall be subject to annual review. Owner and Landlord executing this
Agreement, or successor in interest thereto, shall demonstrate good faith compliance with
Page 24 of 31 Cultivation and Manufacturing
Development Agreement
the terms of this Agreement. If, as a result of such periodic review, City finds and
determines, based on substantial evidence, that Owner or Landlord executing this
Agreement, or successor in interest thereto, has not complied in good faith with the terms
or conditions of this Agreement, City may terminate or modify this Agreement.
a. Periodic Re.view. City Council shall review this Agreement annually, on or
before each anniversary of the Effective Date, in order to ascertain Owner's good
faith compliance with this Agreement. During the periodic review Owner shall be
required to demonstrate good faith compliance with the terms of the Agreement,
through submitting an annual monitoring report, records, or equivalent written
materials to the Planning Department. The Planning Department will schedule a
hearing on the periodic review of the Development Agreement on or following the
anniversary of the Effective Date, but Owner has no obligation to compel such
hearing, and no implication will be made to Owner's detriment if a hearing is not in
fact held. Owner shall document any request for an extension of the term due to
delays beyond the control of Owner (see Section 24(j}, "Force Majeure"). Owner
shall submit an annual review and administration fee deposit not to exceed City's
estimated internal and third-party costs associated with the review and
administration of this Agreement during the succeeding year, consistent with
Section 24(k) ("Costs and fees") below. City shall provide Owner said estimate a
reasonable time in advance of the annual review and administration fee deposit
being due.
b. Conditional Use Permit. For all intents and purposes, the Regulatory Permit
to be issued under this Agreement shall be treated as if it were a Conditional Use
Permit issued to Owner for the establishment and operation of its business. The
operation of the business at all times shall be required to comply with the terms of
this Agreement.
c. Special Review. City Council may order a special review of compliance with
this Agreement at any time. The Planning Director or his or her designee shall
conduct such special review. During a special review, Owner shall be required to
demonstrate good faith compliance with the terms of the Agreement. The burden
of proof on this issue shall be on Owner.
d. Review Hearing. At the time and place set for the review hearing, Owner
shall be given an opportunity to be heard. If City Council finds, based upon
substantial evidence, that Owner has not complied in good faith with the terms or
conditions of this Agreement, City Council may terminate this Agreement
notwithstanding any other provision of this Agreement to the contrary, or modify
this Agreement and impose such conditions as are reasonably necessary to
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Development Agreement
protect the interests of City. The decision of City Council shall be final, subject
only to judicial review pursuant to Code of Civil Procedure Section 1094.5.
e. Certificate of Agreement Compliance. If, after a periodic or special review,
Owner is found to be in compliance with this Agreement, and if Owner requests it,
City shall issue a Certificate of Agreement Compliance ("Certificate") to Owner
stating that after the most recent periodic or special review, and based upon the
information known or made known to the Planning Director and City Council, that
(i) this Agreement remains in effect and (ii) Owner is not in default.
City shall not be bound by a Certificate if a default existed at the time of the periodic
or special review, but was concealed from or otherwise not known to the Planning
Director and City Council, regardless of whether the Certificate is relied upon by
assignees or other transferees or Owner.
f. Failure to Conduct Review. City's failure to conduct a periodic review of this
Agreement shall not constitute a breach of this Agreement.
g. Cost of Review. The costs incurred by City in connection with the periodic
reviews shall be borne by Owner.
20. Obligations of Landlord
Landlord shall have rights, duties, obligations, and liability only as expressly set forth
herein. Landlord shall have no responsibility or liability for the failure of Owner to perform
as required by this Agreement.
21. Assignment
a. Landlord. Landlord shall not transfer, delegate, or assign its
interest, rights, duties, and obligations under this Agreement, without the prior
written consent of City.
b. Assignment by Owner. Owner shall not transfer, delegate, or assign its
interest, rights, duties, and obligations under this Agreement without the prior
written consent of City. Any assignment, delegation, or assignment without the
prior written consent of City shall be null and void. Any transfer, delegation, or
assignment by Owner as authorized herein shall be effective only if and upon the
party to whom such transfer, delegation, or assignment is made is issued a
Regulatory Permit as required under Article 4-34 of the municipal code.
22. Operating Commercial Cannabis Facility
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Development Agreement
Any party to this Agreement, or successor in interest thereto, shall not operate a
commercial cannabis facility authorized under the municipal code unless:
a. It is the holder of a valid Regulatory Permit issued by City in accordance
with the procedures and requirements of Article 4-34 of the municipal code; and
b. At such time as the State of California requires commercial cannabis
facilities and businesses to hold a valid license or permit issued by the State of
California, it also holds such license or permit, unless, however, such permit or
license is not required by the State of California for the type of commercial
cannabis facility or business operation that is the subject of this Agreement.
23. Notice
Any notice or communication required hereunder between City and Owner must be in
writing, and may be given either personally, by facsimile (with original forwarded by
regular U.S. Mail), by registered or certified mail (return receipt requested), or by Federal
Express, UPS or other similar couriers providing overnight delivery. If personally
delivered, a notice shall be deemed to have been given when delivered to the Party to
whom it is addressed. If given by facsimile transmission, a notice or communication shall
be deemed to have been given and received upon actual physical receipt of the entire
document by the receiving Party's facsimile machine. Notices transmitted by facsimile
after 5:00 p.m. on a normal business day or on a Saturday, Sunday, or holiday shall be
deemed to have been given and received on the next normal business day. If given by
registered or certified mail, such notice or communication shall be deemed to have been
given and received on the first to occur of (i) actual receipt by any of the addressees
designated below as the party to whom notices are to be sent, or (ii) five (5) days after a
registered or certified letter containing such notice, properly addressed, with postage
prepaid, is deposited in the United States mail. If given by Federal Express or similar
courier, a notice or communication shall be deemed to have been given and received on
the date delivered, as shown on a receipt issued by the courier. Any Party hereto may at
any time, by giving ten (1 0) days written notice to the other Party hereto, designate any
other address in substitution of the address to which such notice or communication shall
be given. Such notices or communications shall be given to the Parties at their addresses
set forth below:
If to City: City of Lynwood
11330 Bullis Road
Lynwood, California 90262
Attention: City Manager
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Development Agreement
and
If to Owner:
If to Landlord:
With a courtesy copy to:
24. Miscellaneous Provisions
H. Francisco Leal, Esq.
Leal Trejo, APC
3767 Worsham Avenue
Long Beach, California 90808
JB Los Angeles Farmers, A Cooperative Corporation
2851 Lynwood Road
Lynwood, CA 90262
Mario Bustamante
512 Morris Place
Montebello, CA 90640
Eric Shevin, Esq.
15260 Ventura Boulevard, Suite 1400
Sherman Oaks, CA 91403
a. Regulatory Permit Conditions of Approval. Owner shall comply with all
conditions of approval of the Regulatory Permit approved by City Council.
b. Amendment or Cancellation. This Agreement may be amended, or
canceled in whole or in part, only by the written mutual consent of the parties to
this Agreement or their successors in interest, except that minor amendments that
do not affect a substantive provision of this Agreement may be approved by the
City Manager. The decision whether a proposed amendment is "minor" shall be in
the exclusive discretion of the City Manager.
c. Waiver. Waiver by City of any one or more of the terms or conditions of this
Agreement shall not be construed as waiver of any other term or condition under
this Agreement.
d. Enforcement. Unless amended or canceled pursuant hereto, this
Agreement shall be enforceable by any party hereto, or successor in interest
thereto, notwithstanding any subsequent change in any applicable general or
specific plan, zoning, subdivision or building regulation, or municipal code
amendment adopted by City that conflicts with the terms of this Agreement.
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Development Agreement
e. Joint and Several Liability. Owner and Landlord shall be jointly and
severally liable for any amount due under this Agreement, and any breach of this
Agreement or failure to pay by one Party shall also constitute a breach of this
Agreement by the other Party. Owner and Landlord agree that City may impose a
lien and seek foreclosure on any parcel of the Site due to any default by Owner.
f. Severability. If any part of this Agreement is found to conflict with applicable
state laws or regulations, such part shall be inoperative, null, and void insofar as it
conflicts with said laws or regulations, or modified or suspended as may be
necessary to comply with such state laws or regulations, but the remainder of this
Agreement shall continue to be in full force and effect.
g. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which together
shall constitute one and the same instrument. The execution of this Agreement
may be by actual, facsimile, or electronic signature.
h. Jurisdiction and Arbitration. The law governing this Agreement shall be that
of the State of California. Any suit brought by any party against any other party
arising out of the performance of this Agreement shall be filed and maintained in
the County of Los Angeles Superior Court. Any dispute, claim or controversy
arising out of or relating to this Agreement or the breach, termination, enforcement,
interpretation or validity thereof, including the determination of the scope or
applicability of this Agreement to arbitrate, shall be determined by binding
arbitration in Los Angeles, California before one arbitrator. Said arbitrator shall be
chosen by mutual agreement of the Parties. If the Parties cannot agree on an
arbitrator within 30 days of the first notice by either Party of the need for arbitration,
each Party shall name one arbitrator, then the two arbitrators shall choose the
arbitrator who shall hear the case.
i. Disclaimer. Despite California's commercial cannabis laws and the terms
and conditions of this Agreement, any Conditional Use Permit, or any Regulatory
Permit issued pertaining to Owner or the property specified herein, California
commercial cannabis cultivators, transporters, distributors, or possessors may still
be subject to arrest by state or federal officers and prosecuted under state or
federal law. The Federal Controlled Substances Act, 21 USC§ 801, prohibits the
manufacture, distribution, and possession of cannabis without any exemptions for
medical use.
j. Force Maieure. If delays are caused by unforeseen events beyond the
control of Owner, such delays will entitle Owner to an extension of time as provided
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Development Agreement
in this section. Such unforeseen events ("Force Majeure") shall mean war,
insurrection, acts of God, local, state or national emergencies, strikes and other
labor difficulties beyond the party's control, or any default by City hereunder, which
Force Majeure event substantially interferes with the development or construction
of the Project.
k. Costs and fees. Owner shall be responsible for all of the reasonable and
fixed costs associated the Project, including but not limited to costs associated with
City's review and processing of the Project, including but not limited to reviewing
the Project's entitlements, including all environmental clearance documents,
permits, licenses and all documents evidencing compliance with state and local
law, and as such Owner agrees to reimburse City and pay any costs and fees
associated with processing the Project, as detailed in this Agreement.
I. Constructive Notice and Acceptance. Every person who after the Effective
Date and recording of this Agreement owns or acquires any right, title, or interest
to any portion of the Site, is and shall be conclusively deemed to have consented
and agreed to every provision contained herein, whether or not any reference to
this Agreement is contained in the instrument by which such person acquired an
interest in the Site, and all rights and interests of such person in the Site shall be
subject to the terms, requirements, and provisions of this Agreement.
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Development Agreement
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
CITY OF LYNWOOD
City Manager
APPROVED AS TO FORM:
OWNER
Name:
Title:
LANDLORD
Name:
Title:
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Development Agreement
COMMERCIAL CANNABIS
DEVELOPMENT AGREEMENT
Development Agreement No. 2017-08 MOD
This Agreement is made by and between and among the CITY OF LYNWOOD
("City") and Cali Premium Produce, Inc. ("Owner'') and Daniel Nunez ("Landlord") this_
day of January 2018, as required by Section 4-34-5 of the Lynwood Municipal code setting
forth the terms and conditions under which Owner shall operate a medical cannabis
cultivation, manufacturing, and distribution/transportation facility (also, the "Project")
pursuant to its Regulatory Permit that are in addition to the requirements of Article 4-34
of the Lynwood Municipal code, including, but not limited to, public outreach and
education, community service, payment of fees and other charges as set forth or
referenced herein, and such other terms and conditions as will protect and promote the
public health, safety, and welfare. The requirements set forth in Article 4-34 of the
Lynwood Municipal Code, and the Administrative Regulations adopted by the City Council
of the City of Lynwood are incorporated herein by reference. All subsequent references
to "municipal code" mean the Lynwood Municipal Code.
1. Government Code and Municipal Code Required Elements
a. Description of Property. Land situated in the City of Lynwood, County of
Los Angeles, State of California, described as APN 6194-028-009, whose street
address is 11108 Wright Road, City of Lynwood.
b. Owner and Other Person with Legal or Equitable Interest.
Owner: Cali Premium Produce, LLC
Landlord: Daniel Nunez
c. Permitted Uses. The subject property may be used for any medical
cannabis facility as presently authorized under Article 4-34 of the municipal code,
and for any other use as authorized under applicable provisions of the municipal
code. Although title 25 does not specifically identify medical cannabis facilities as
allowed uses in any zoning district, such uses are similar to other listed uses,
including, but not limited to, medical services-clinics, offices, laboratories; garden
center/plant nursery; food and beverage manufacturing; and agricultural products
processing; and, therefore, medical cannabis facilities are allowed uses in the
same zoning districts in which such similar uses are allowed under Chapter 25 of
the municipal code.
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d. Zoning. Owner shall guarantee that all activities conducted under this
Agreement and under the Regulatory Permit shall comply with the City's municipal
code, including the zoning ordinance and any and all development and
construction requirements contained therein. Owner shall not conduct any
business under this Agreement or under the Regulatory Permit without having
obtained all necessary permits, licenses, and approvals from the City.
e. Reservation or Dedication of Land for Public Purposes. Sufficient roadway,
sidewalk, and utility easements shall be reserved or dedicated to City for such
purposes.
2. Term
This Agreement shall start on the date on which all parties have executed it and it shall
end five years from the starting date, and it shall remain in full force and effect so long as
the subject property is used for a medical cannabis facility as presently authorized under
Article 4-34 of the municipal code; provided, however, such use is not abandoned for a
period of more than six (6) months. The term may be extended for up to two, three-year
extensions by mutual agreement of the Parties. However, at the request of either Party,
the fees required under Article 7 of this Agreement may be subject to re-negotiation for
year 3 of this Agreement. In the event a Party wishes to re-negotiate fees, it shall give
notice to the other Party no less than six months before the three-year anniversary of the
agreement, and negotiations shall be concluded before the anniversary date. If neither
party seeks to re-negotiate the fees as described above, or they do not reach agreement
on a new fee structure, the fees set forth in this Agreement shall remain in force until the
five-year term ends.
3. Owner's Site and Floor Plans
a. Owner's site plan and floor plan for the facility are attached hereto and
incorporated by reference. The floor plan identifies the uses of each interior space,
and is the basis for calculating the annual per-square-foot fee specified in Article
7 below.
b. A preliminary landscape plan will be prepared and reviewed and approved
by the Planning Director as part of the design review process. A final landscape
plan shall be prepared and submitted in conjunction with building and site
improvement plans prior to issuance of building permits for construction activities.
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c. An exterior signage plan will be prepared and reviewed and approved by
the Planning Director in accordance with the procedures and requirements of
Article 70 of Chapter 25 of the municipal code.
4. Facility Operations
a. Standard Operating Procedures. Owner is or will take steps if at the time
Owner is ready to commence operation such is required by California state law to
convert or assign to a non-profit mutual benefit corporation that will serve medical
cannabis qualified patient and primary caregiver collective members who will
comply with all relevant California State laws and local ordinances. (See
California's Compassionate Use Act (Proposition 215) as codified in Health and
Safety Code §11362.5; Senate Bill420, the Medical Marijuana Program Act (H&S
Code §§1362. 7 to 11362.83); the August 2008 Guidelines for the Security and
Non-Diversion of Marijuana Grown for Medical Use (2008 Attorney General
Guidelines); the newly enacted Medicinal and Adult-Use Cannabis Regulation and
Safety Act ("MAUCRSA") set forth in Business and Professions Code Section
26000, et seq., and Assembly Bill 133, which was enacted in September 2017.
During the term of its Regulatory Permit and the term of this Agreement, Owner
shall lawfully operate in accordance with all state and local laws. Owner will
employ operating procedures consistent with those recommended by qualified
consultants and advisors to comply with state and local laws and satisfy
appropriate safety considerations. Owner's facility will employ safety and security
measures as set forth herein for the safety and security of its employees, as well
as other individuals in its neighboring community.
b. Security Plan. The issuance of a Regulatory Permit is conditional upon
approval of the proposed security plan by the Los Angeles County Sheriff. The
security plan shall include, at a minimum and as appropriate, provisions for video
surveillance, perimeter fencing and security, protection of the building(s) from
vehicle intrusion, cash handling procedures, product handling and storage
procedures, and a professionally monitored alarm system. Equipment and
systems used for video surveillance and building alarms will be approved by City.
Video surveillance shall include, at a minimum, all site and facility entrances and
access points, all spaces accessible by the public, all secured areas of the facility
with restricted access, all interior spaces and rooms where medical cannabis
products are handled and processed, shipping and receiving areas, cash storage
areas, and other areas necessary to protect the safety of employees and the public
and to ensure medical cannabis products are received, handled, stored, packaged,
shipped, and distributed in compliance with applicable state and local laws and
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regulations. The video surveillance system shall be web-based with direct access
provided to the Los Angeles County Sheriff upon request.
The security system will also include sensors to detect entry and exit from all
secure areas, panic buttons in appropriate locations, and a professionally
monitored alarm system with glass breakage sensors and motion detectors.
Owner will employ properly trained and licensed third-party security personnel to
protect the welfare and safety of Owner employees and to ensure public safety to
the neighboring community. Owner shall use security personnel 24 hours, 7 days
a week. Security personnel may be armed so long as proper licensing and
insurance requirements are followed and met by the third-party operator providing
such security services.
c. Fire Department Approval. Owner may not operate any facility, and no
permit, license, or other approval issued by City shall be valid unless and until the
Los Angeles County Fire Department has approved Owner's site plan, floor plan,
safety plan, and any other plans that require its approval.
d. Possession of Firearms. Except for licensed security personnel approved
by the Los Angeles County Sheriff, no person employed by Owner shall be in
possession of any firearm while on the premises or location without having first
obtained a license from the appropriate state or local agency authorizing the
person to be in possession of such firearm. Every such person in possession of a
firearm while on the premises or location must provide the City Manager and the
Los Angeles County Sheriff, ten days before bringing the firearm onto the
premises, with the following:
1) A copy of the license issued to the person by the appropriate state
or local agency authorizing him or her to possess such firearm;
2) A copy of his or her law enforcement identification (if he or she is
employed by a law enforcement agency);
3) A copy of his or her California driver's license or California
identification card; and
4) Any other information reasonably required by the Los Angeles
County Sheriff to show that the individual is in compliance with the
provisions of all laws regarding the possession and use of a firearm.
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e. Employees/Procedures for Inventory Control to Prevent Non-Medical
Diversion of Medical Cannabis. Only authorized employees will be permitted to
enter Owner's facility. Each employee will have to meet a criminal background
investigation conducted by the Los Angeles County Sheriff, which at minimum shall
include a LiveScan criminal history check. This requirement applies only to
employees of Owner and does not apply to other persons entering the facility.
Owner membership rules will seek to prevent the diversion of medical cannabis for
non-medical uses by implementing strict policies and practices, as well as efficient
transparency to maintain tight controls on inventory and donations and/or cost
reimbursements received.
Owner's collective agreement will prohibit the use of cannabis by its employees at
its facility, in the neighborhood vicinity of its facility, and while driving.
Owner will take all necessary and reasonable steps to prevent the distribution of
any of its medical cannabis products to minors; prevent revenue from the sale or
distribution of its medical cannabis and/or infused products from going to criminal
enterprises, gangs and cartels; prevent the diversion of cannabis from California
to any other state; prevent state-authorized cannabis activity from being used as
a cover or pretext for the trafficking of other illegal drugs or other illegal activity;
prevent violence and the use of firearms in the cultivation, manufacture and
distribution of cannabis; discourage and educate against drugged driving and the
exacerbation of other adverse public health consequences associated with
cannabis use; disavow growing cannabis on public lands that creates attendant
public safety and environmental dangers posed by such illegal uses; and
discourage and educate against cannabis possession or use on federal property.
f. Quality Control and Testing. Owner will utilize quality control measures and
testing to ensure only the highest quality of medical cannabis and infused products
will be produced. Owner will inspect the product to insure its identity and quantity,
and will have a licensed testing lab perform testing of random samples prior to
distribution to its patient collective membership affiliates. City will consider for
approval testing labs approved by other jurisdictions and recommended to the City
by Owner. Inspection and testing will be conducted by the approved testing lab
off-site. Testing standards and procedures shall be in accordance with applicable
state law and regulations.
All medical cannabis products will undergo a quality assurance review prior to
distribution to Owner's patient collective affiliates or delivery to individual
customers in order to ascertain its quantity and content. Inventory procedures will
be utilized for tracking and taxing purposes by the state. Owner will employ an
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and Delivery Development Agreement
efficient record-keeping system to make transparent its financing, testing, and
adverse effect recording, as well as recall procedures. Owner will employ an
efficient record-keeping system that will reflect its financing, testing, and adverse
effect recording and product recall procedures.
g. Packing of Medical Cannabis and Infused Products. All Owner medical
cannabis products will be packaged and labeled as required by Section 26071, et
seq., of the California Business and Professions Code and applicable
requirements and regulations issued by the State of California pursuant thereto.
In addition to those packaging and labeling requirements, and packaging and
labeling requirements set forth in Owner's Regulatory Permit application, as
amended or supplemented, all medical cannabis products shall be packaged in an
opaque childproof container which shall contain a label or be accompanied by a
leaflet or inset that states, at a minimum:
1) The name, address and telephone number of the licensed medical
cannabis facility to which the medical cannabis product is distributed, sold,
or transferred;
2) The amount of medical cannabis in the container; and
3) The date the medical cannabis was transferred to a licensed medical
cannabis facility.
Owner intends to produce infused products and will secure any approval from the
County of Los Angeles Health Department required for manufacturing and
handling such products. Owner infused products will not be produced,
manufactured, stored or packaged in private homes. All Owner medical cannabis
infused products shall be individually wrapped at the original point of preparation.
h. Delivery. If Owner applies for and receives a Delivery permit from City,
Owner may sell and deliver manufactured cannabis products to individual
customers, as long as such activity is consistent with and permitted under state
law, and Owner has a valid state license therefor. As long as such products are
sold and delivered to individual customers, and no in-person sales occur at
Owner's facility, such activity shall not constitute a dispensary under the municipal
code.
i. Point of Sale Tracking System. Owner will maintain an inventory control
and reporting system that accurately documents the location of medicinal cannabis
products from inception through distribution or delivery, including descriptions,
weight, and quantity. The inventory control and reporting system shall comply with
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the track and trace program required by Section 26067, et seq., of the California
Business and Professions Code and regulations issued thereunder.
Owner will employ an electronic point of donation/sale system approved by City,
such as BioTrack THC, MJ Freeway, or similar system for all point of
donations/sales tracking from seed or inception to product distribution to other
licensed medical cannabis facilities or delivery to individual customers. Such
approved system will track all Owner medical cannabis products, each edible,
harvested flower, and/or manufactured concentrate, as well as gross sales (by
weight and sale). BioTrack THC, MJ Freeway, or similar system will have the
capacity to produce historical transactional data in accordance with City's
requirements.
j. Record Keeoina. Owner will maintain records for all dispensed medical
cannabis and/or infused products. Owner will comply with all records-keeping
responsibilities that are set forth in California statutes relating to Cultivation,
Manufacture and Distribution of Cannabis, including complete and up-to-date
records regarding the amount of medical cannabis cultivated, produced,
manufactured, harvested, stored, or packaged at Owner's facility.
k. Processing. Handling. Storing. and Distribution of Medical Cannabis
and Related Products. Medical cannabis cultivation, handling, storing, and
processing shall be concealed from public view at all stages of growth and
processing, and there shall be no exterior evidence of cultivation or processing
occurring at the premises from a public right-of-way or from an adjacent parcel.
Medical cannabis cultivation, handling, storing, processing, or distribution shall not
create offensive odors; create excessive dust, heat, noise, smoke, traffic, or other
impacts that are disturbing to people of normal sensitivity residing or present on
adjacent or nearby property or areas open to the public; or be hazardous due to
use or storage of materials, processes, products, or wastes.
Owner will store its medical cannabis and/or medical cannabis products in a locked
safe room with T-card identification access for management only. The safe room
will be constructed of fire-rate walls with numerous cameras installed to view all
entries and exits from the safe room, as well as all other activities performed within
Owner's facility. Owner will not conduct outdoor operations except as related to
lawful delivery and transportation of medical cannabis and infused products.
Owner will not store medical cannabis or related products in its delivery vehicle
outside normal operating hours of the facility.
Medical cannabis products will be sold or distributed only to licensed dispensaries
in California, except as provided in section 4(h) above. Excess or contaminated
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product will be securely stored on-site until it is properly disposed. Disposal may
include composting, incineration, land-fill disposal through the local waste
management hauler, or other disposal methodology in accordance with state and
county health and safety codes and regulations.
I. Odor Control. All structures shall have ventilation and filtration systems
installed that prevent medical cannabis plant odors from exiting the interior of the
structure. The ventilation and filtration system shall be approved by the Building
Official and City Manager and installed prior to commencing cultivation or
manufacturing within the allowable structure. Facility air intake, exhaust, and
recirculating system shall be of industrial grade. Activated charcoal, recirculating,
and closed loop aeration systems will be utilized as necessary for effective odor
control and management.
m. Description of Banking Plan. Owner will seek to open a bank account under
the name of Owner or its associated management company to provide
transparency for funds received, operational costs, including payroll, tax payments
to the state and federal governments, among others. Should a bank account not
be forthcoming, Owner will purchase and install safes to secure all daily funds
received from its collective membership or other lawful cooperative corporations
to implement debit and credit card transactions. Owner will not accept personal or
corporate checks.
n. Transportation Plan. Owner will comply with all state and local law
regarding transportation, including the rules governing delivery service. Owner will
retain a list of names and cellular contact numbers for all employees engaged in
transportation of medical cannabis products and provide it to the applicable
oversight authority, keeping the list current and up to date.
Owner will keep complete and up-to-date records documenting each transfer of
medical cannabis to other lawful cooperative corporations, including the amount
provided, the form or product category in which the medical cannabis was
provided, the date and time provided, the name of the employee making the
transfer, the name and address of the other lawful cooperative corporation to
whom delivery is made, and the amount of any related donation or other monetary
transaction.
5. Community Relations, Employment. and Wages
a. Public Outreach and Education Program. Owner shall create an effective
public outreach to City of Lynwood's community, including but not limited to
outreach and interface with public and private schools, youth organizations,
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and Delivery Development Agreement
religious organizations, health care providers, drug abuse treatment providers, and
mental health and drug counseling providers.
Owner will coordinate and cooperate with City and other Owners of medical
cannabis facilities located within City of Lynwood in the establishment and
implementation of appropriate public outreach and education programs. The
public outreach and education programs shall be approved by City.
The public outreach and education program shall provide a detailed description of
Owner's intentions with regard to public outreach and education, including but not
limited to the following: what schools or programs Owner will work with; what types
of materials and information will be provided; how much time Owner's personnel
expect to spend on these activities; and how much money Owner expects to spend
on an annual basis.
b. Comm unity Benefits Program. Owner will coordinate and cooperate with
City and other Owners of medical cannabis facilities located within the City of
Lynwood in the establishment, implementation, and funding of a community
benefits program which could include such items as new community recreation
facilities, expansion and/or improvement to existing facilities or other physical
improvements that provide a benefit to the community, support of holiday and
special community events, and support of local public service and special districts
and organizations. This community benefits program may be implemented by a
foundation or other association of medical cannabis facility Owners issued
regulatory permits by City. City and the public will participate in the decision-
making process for identifying and prioritizing community needs and benefits, and
identifying appropriate projects to be funded by the entity implementing this
community benefits program. All projects under the community benefits program
must be approved by City.
c. Designation of Persons Responsible for Community Relations. At the time
of this Agreement, Owner's Managing AgenUGeneral Manager will be responsible
for community inquiries and complaints and on-site during normal business hours.
d. Interface with Los Angeles County Sheriff. Owner's general manager will
interface with the Los Angeles County Sheriff to ensure its operation complies with
state and local laws and regulations.
e. Local Recruitment. Hiring. and Training Programs. Owner is
committed to making a good-faith effort to recruit, hire, and train City residents for
employment by Owner. A good-faith effort means Owner will take the following or
similar actions to recruit and employ City residents: 1) Contact local recruitment
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sources to identify qualified individuals who are City residents, 2) Advertise for
qualified City residents in trade papers and newspapers of general circulation in
the area, and 3) Develop a written plan to recruit and employ City residents as a
part of the its workforce.
Owner will also seek companies located in the City of Lynwood to serve as its
general contractor and subcontractors needed for construction and build-out
improvements of Owner's medical cannabis facilities. Additionally, companies
located in the City of Lynwood will be sought to employ as licensed security guards
needed once Owner's facility is opened, as well as for ancillary services needed.
The City will use reasonable efforts to assist the Owner with respect to Owner's
obligation pursuant to paragraph e.
f. Living Wages. Owner agrees to pay all employees of the Facility a Living
Wage. A "Living Wage" is the higher of whatever Owner currently pays its
employees for similar work elsewhere in the State of California, or the following:
until December 31, 2017: 150% of the California State minimum wage. Such
wage shall increase on January 1 of each subsequent year at the same rate as the
California State minimum wage increases, or according to the Consumer Price
Index for Los Angeles County, for the quarter ending September 30 of the
preceding year, whichever is higher.
g. Full-time Work. Owner shall make its best efforts to fill every position with
a full-time employee. However, at no time shall Owner have a labor force that is
composed of less than 75% full-time employees. Owner agrees to provide to its
eligible employees leave benefits, health and wellness benefits and other
employee benefits to the extent such benefits are required to be paid for by Owner
under applicable state and federal employment laws.
6. Indemnification of City from Liability
a. Pursuant to City's requirement, Owner will indemnify City from any claims,
damages, injuries, or liabilities of any kind associated with the registration or
operation of Owner's medical cannabis facility or the prosecution of Owner's facility
or its owners, managers, directors, officers, employees, or its qualified patients or
primary caregivers for violation of federal or state laws.
b. Owner agrees to defend, at its sole expense, any action against City, its
agents, officers, and employees related to the approval or issuance of the
Regulatory Permit and this Agreement.
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c. Owner agrees to reimburse City for any court costs and attorney fees that
City may be required to pay as a result of any legal challenge related to City's
approval or issuance of a Regulatory Permit or this Agreement. City may, at its
sole discretion, participate at its own expense in the defense of any such action,
but such participation shall not relieve the holder of the Regulatory Permit or this
Agreement.
7. Fees, Costs. and Future Taxes
a. Fees. Owner agrees to pay all permit fees and charges referenced in
Section 4-34-11 of the municipal code, in the amounts adopted by the City Council
by resolution, as well as any fees set forth in this Agreement. Permit application,
processing, and renewal fees shall be due and payable at the time application is
made.
b. Costs. Owner agrees to reimburse City for all additional costs of City
resulting from the operation of a medical cannabis facility authorized under Article
4-34 of the municipal code and the administrative regulations. Reimbursement to
City for such costs shall be due and payable upon demand.
c. Operating Fees. Owner agrees to pay to City, to enable City to promote,
protect, and enhance the healthy, safety, and welfare of the community and its
residents and its quality of life, the following fees:
1) an annual fee of $12.50 per square foot of cultivation area (canopy);
2) an annual fee of two-and-one-half percent (2.5%) of gross income
from manufacturing activities;
3) an annual fee of one-and-one-half percent (1.5%) of gross income
from distribution activities when Owner is distributing for anyone other than
itself; and
4) an annual fee of two and one-half percent (2.5%) of gross income
from delivery activities.
d. Owner understands and agrees that the fees set forth above shall be paid
in a manner and in accordance with a payment schedule agreed to by City and
Owner, in intervals of no more than three months. The cultivation and
manufacturing space to which the fee applies is as identified on the attached floor
plan. Payment shall be in equal installments paid quarterly commencing at the
end of the first quarter after the effective date of the Regulatory Permit which shall
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be no sooner than the date a certificate of occupancy is issued for the subject
premises.
e. If Owner makes any changes to the interior layout of the facility that
increases the amount of space allocated to those uses to which the per-square-
foot fee applies, Owner shall notify City of such changes at least fourteen (14)
calendar days prior to making such changes, and the per-square-foot fee shall be
modified accordingly. If Owner fails to give City notice as required herein, Owner
shall be responsible for paying to City a per-square-foot fee based on any increase
in the amount of space allocated to those uses to which the per-square-foot fee
applies retroactive to the date the Regulatory Permit became effective.
8. Cost Recovery Fee
City shall assess to Owner fees to recover City's reasonable processing and
monitoring cosfs relating to Owner's business upon issuance of Owner's
Manufacturing, Cultivation, Distribution, and Delivery Permits or any Additional
Permits ("CRF"). The City shall submit sufficient information to Owner of City's
total number of hours required to process their Application or monitor their
authorizations. CRFs are separate and apart from any fees set forth in Article ?of
this Agreement.
a. Processing Fees. Processing fees for the Application are based upon the
direct and indirect costs that City incurs in reviewing the Application. The
processing fees for the Application shall be based only on costs that are necessary
for processing the Application and implementing the Ordinance, including staff
time, legal fees, and consultant fees. "Necessary for" means that but for the
Application, the costs would not have been incurred. The processing fee shall not
include costs for other City management objectives, unless they are necessary for
processing the Application.
b. Monitoring Fees. Monitoring fees for the Manufacturing, Cultivation,
Distribution, and Delivery Permits are based upon the direct and indirect costs City
incurs in confirming the use of the Property in accordance with the municipal code,
the Ordinance, this Agreement, and the Application. The monitoring fees shall be
based only on costs that are necessary for conducting these reviews. "Necessary
for'' means that but for the Manufacturing, Distribution, Cultivation, and Delivery
Permits, or any Additional Permits, the costs would not have been incurred. The
monitoring fee shall not include costs for other City management objectives, unless
they are necessary for monitoring the Manufacturing, Distribution, Cultivation, and
Delivery Permits, or any Additional Permits.
c. Bi lling and Payment. City shall bill Owner the CRF on the first day of each
quarter (March, June, September, and December) with an invoice providing an
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hourly breakdown of hours expended by City and its representatives. Owner shall
pay the CRF invoice within sixty (60) days of the date the bill for the CRF is
received by Owner. Notwithstanding the foregoing, at no time shall the CRFs
exceed Seven Thousand Dollars ($7,000) during a given year, except that the first
year may be as high as twenty thousand dollars ($20,000) because of the costs
required to set up the application process and review the applications.
d. Disputes. If Owner disagrees with the dollar amount provided by City on the
CRF invoice, Owner may submit a written request before the disputed fee is
due for a substitution of alternative CRF invoice to the immediate supervisor of
the City representative who determined the CRF invoice. The written request
must include supporting documentation. After review of Owner's written
request, Owner and City shall work, in good faith to resolve Owner's written
request. The dispute shall be decided in favor of Owner if City does not
respond to the written request within thirty (30) days of receipt.
9. Additional Owner Obligations
a. Reporting of Gross Receipts from Operations
1) Quarterly Receipts. No later than January 15, 2018, for the quarter
ending December 31, 2017, and 15 days after the last day of each
subsequent quarter during the term hereof, Owner shall deliver to City a
report (the "Quarterly Report") showing (i) Gross Receipts from Operations
for the immediate prior quarter received by Owner, and a cumulative total
of all amounts of Gross Receipts from Operations received by Owner for
the calendar year, (ii) a calculation of the quarterly payment due to City for
the prior quarter, and (iii) a calculation of the cumulative total of all quarterly
payments for the calendar year.
2) Statement of Receipts. Owner shall keep complete, accurate and
appropriate books and records of all receipts from operations in accordance
with generally accepted accounting principles. For purposes herein, "books
and records" shall mean all bookkeeping or accounting documents Owner
utilizes in managing its business operations relating to the Project. Such
books and records, as well as all other relevant documents as City shall
reasonably require, shall, upon reasonable written notice, be open for
inspection by City, its auditors or other authorized representatives. If at any
time during the term such books and records prove inadequate in the
reasonable judgment of City to record the Gross Receipts from Operations
as herein required, Owner shall, upon the written request of City, procure
and maintain such books and records as shall be of a character and from
adequate for such purpose. City shall have the right to audit and examine
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such books, records and documents and other relevant items in the
possession of Owner, but only to the extent necessary for a proper
determination of Gross Receipts from Operations, and all such books,
records, documents and other items shall be held available for such audit
and examination. Upon request by City, Owner shall make all such books,
records and documents available to City, and provide removable copies
thereof, within thirty (30) of the date of City's request. The cost for any audit
shall be shared equally by the Parties. Owner shall preserve such books,
records, documents, and other items in Lynwood for a period of not less
than seven (7) years for the purpose of auditing or re-auditing these
accounts upon reasonable notice; except that, if an audit is made within the
seven-year period and Owner claims that errors or omissions have
occurred, the books and records shall be retained and made available until
those matters are resolved. City shall keep strictly confidential all
statements of revenue furnished by Owner and all other information
concerning Owner's operation of the Premises obtained by City as a result
of the inspection audit and examination privileges of City hereunder, except
as otherwise required by law. If City receives a request for such information
pursuant to the Public Records Act (California Government Code Section
6250, et seq.), City shall provide Owner notice of any such request prior to
disclosing any such information. Within seven (7) years after the receipt of
any statement of receipts under this Agreement, City at any time shall be
entitled to carry out an audit of such revenue either by City or agent to be
designated by City. If it shall be determined as a result of such audit that
there has been a deficiency in any payment due under this Agreement
made on the basis of such statement, then such deficiency shall become
immediately due and payable. If such statement of revenue for the relevant
year shall be found to have understated receipts by more than two percent
and City is entitled to any additional payment as a result of said
understatement, then Owner shall, in addition, pay all of City's reasonable
costs and expenses connected with such audit, including the expense
incurred in retaining such agent; otherwise City shall bear the cost and
expense of such audit.
3) Copies of Tax Filings. Owner shall provide City with copies of any
reports Owner is required to provide to the County of Los Angeles or the
State of California for sales, use, or other tax purposes.
b. Applicability of Future Revenue Mechanisms. During the term of this
Agreement, if City imposes an alternative revenue mechanism specifically related
to cannabis operations (e.g., a cannabis tax), Owner agrees to pay to City the
greater of the payment required under such alternative revenue mechanism or the
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and Delivery Development Agreement
payment required by this section. As used in this section, "alternative revenue
mechanism" does not include taxes, fees, or assessments levied on or collected
from both cannabis and non-cannabis operations. Payments required by revenue
mechanisms that are not limited to cannabis operations shall be in addition to, and
not in lieu of, payments under this section.
10. Insurance and Indemnity
a. Insurance. Owner shall require all persons doing work on the Project,
including its contractors and subcontractors (collectively, "Owner'' for purposes of
this Article 6 only}, to obtain and maintain insurance of the types and in the
amounts described in this section and its subsections with carriers reasonably
satisfactory to City.
b. General Liability Insurance. Owner shall maintain commercial general
liability insurance or equivalent form with a limit of not less than Two Million Dollars
($2,000,000) (or as otherwise approved, in writing, by City) per claim and Two
Million Dollars ($2,000,000) each occurrence. Such insurance shall also:
1) Name City, its elected and appointed councils, boards, commissions,
officers, agents, employees, and representatives as "Additional Insureds"
by endorsement with respect to performance of this Agreement. The
coverage shall contain no special limitations on the scope of its protection
afforded to the above-listed additional insured.
2) Be primary with respect to any insurance of self-insurance programs
covering City, its officials, employees, agents, and representatives.
3) Contain standard separation of insured provisions.
c. Automotive Liability Insurance. Owner shall maintain business automobile
liability insurance or equivalent form with a limit of not less than Two Million Dollars
($2,000,000) for each accident. Such insurance shall include coverage for owned,
hired, and non-owned automobiles. Such insurance shall also:
1) Name City, its elected and appointed officials, boards, commissions,
officers, agents, employees, and representatives as "Additional Insureds"
by endorsement with respect to performance of this Agreement. The
coverage shall contain no special limitations on the scope of its protection
afforded to the above-listed additional insureds.
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2) Be primary with respect to any insurance or self-insurance programs
covering City, its officials, employees, agents, and representatives.
3) Contain standard separation of insured provisions.
d. Workers' Compensation Insurance. Owner shall take out and maintain
during the term of this Agreement, workers' compensation insurance for all of
Owner's employees employed at or on the Project, and in the event any of the
work is subcontracted, Owner shall require any general contractor or subcontractor
similarly to provide workers' compensation insurance for such contractor's or
subcontractor's employees, unless such employees are covered by the protection
afforded by Owner. In case any class of employee engaged in work on the Project
is not protected under any workers' compensation law, Owner shall provide and
shall cause each contractor and subcontractor to provide adequate insurance for
the protection of employees not otherwise protected. Owner hereby indemnifies
City for any damage resulting from failure of Owner, its agents, employees,
contractors, or subcontractors to take out or maintain such insurance. Workers'
compensation insurance with statutory limits and employer's liability insurance with
limits of not less than One Million Dollars ($1 ,000,000) each accident shall be
maintained.
e. Other Insurance Requirements. Owner shall do all the following:
1) Prior to taking any actions under this Agreement, furnish City with
properly executed certificates of insurance that clearly evidenced all
insurance required in this Article, including evidenced that such insurance
will not be canceled, allowed to expire, or be materially reduced in coverage
without thirty (30) days prior written notice to City.
2) Provide to City, upon request, and within seven (7) calendar days of
said request, certified copies of endorsements and policies, and properly
executed certificates of insurance evidencing the insurance required herein.
3) Replace or require the replacement of certificates, policies and
endorsements for any insurance required herein expiring prior the
termination of this Agreement.
4) Maintain all insurance required herein from the Eff~ctive Date of this
Agreement to the earlier of the expiration of the term or the mutual written
termination of this Agreement.
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5) Place all insurance required herein with insurers licensed to do
business in California with a current Best's Key Rating Guide reasonably
acceptable to City.
f. Indemnity. Owner agrees to indemnify, defend, and hold City, and its
elected and appointed council, boards, commissions, officers, agents, employees,
consultants, and representatives, harmless from any and all claims costs and
liability for any personal injury or property damage which may arise as a result of
any actions or negligent omissions by Owner or Owner's contractors,
subcontractors, agents, or employees in connection with the construction,
improvement, or operation of the Project.
11. Termination
a. Termination Upon Completion of Development. This Agreement shall
terminate upon the expiration of the term, unless it is terminated earlier pursuant
to the terms of this Agreement. Upon termination of this Agreement, City shall
record a notice of such termination, and this Agreement shall be of no further force
or effect except as otherwise set forth in this Agreement.
b. Effect of Termination on Owner's Obligations. Termination of this
Agreement shall eliminate any further obligation of Owner to comply with this
Agreement, or some portion thereof, if such termination relates to only part of the
Site or Project. Termination of this Agreement, in whole or in part, shall not,
however, eliminate the rights of Owner to seek any applicable and available
remedies or damages based upon acts or omissions occurring before termination.
c. Effect of Termination on City's Obligations. Termination of this Agreement
shall eliminate any further obligation of City to comply with this Agreement, or some
portion thereof. Termination of this Agreement shall not, however, eliminate the
rights of City to seek any applicable and available remedies or damages based
upon acts or omissions occurring before termination.
d. Survival After Termination. The rights and obligations of the Parties set
forth in Article 14, Article 21, and Section 24(e), Section 24{f), and Section 24(h),
and any right or obligation of the Parties in this Agreement which, by its express
terms or nature and context is intended to survive termination of this Agreement,
will survive any such termination.
12. Resources Efficiency
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The design of the facility shall include significant water and energy conservation
measures to minimize resource consumption. The design shall incorporate solar, wind,
high efficiency lighting, and water recycling systems and technology. High efficiency LED
lighting systems for the exterior lighting will be used. If economically and technologically
feasible, grow lights shall be high efficiency LED lighting systems. Automated, digitally
controlled watering and fertilization systems shall be used for all plant cultivation.
Cultivation will be a continuous hydroponic grow, in a soil-less grow medium. All water
mixed with nutrients will be recycled. Storm water shall be collected and recycled to the
extent feasible.
13. Standard Conditions for Construction
During any on-site construction activities related to development of the project site and
any buildings thereon, or renovation or remodeling of existing buildings, Owner and
Landlord shall comply with all applicable terms and conditions of City's Standard
Conditions for Construction, attached hereto and incorporated herein by reference. Upon
commencement of cultivation or manufacturing operations, whichever occurs first, the
Project shall comply with the applicable parking standards established by the City for
cannabis activities.
14. Defaults and Remedies
a. Remedies in general. It is acknowledged by the parties that City would not
have entered into this Agreement if it were to be liable in damages under this
Agreement, or with respect to this Agreement or the application thereof, except as
hereinafter expressly provided. Subject to extensions of time by mutual consent
in writing, failure to delay by either party to perform any term or provision of this
Agreement shall constitute a default. In the event of alleged default or breach of
any terms or conditions of this Agreement, the party alleging such default or breach
shall give the other party not less than thirty (30) day notice in writing specifying
the nature of the alleged default and the manner in which said default may be
satisfactorily cured during any such thirty (30) day period, the party charged shall
not be considered in default for purposes of termination or institution of legal
proceedings. Notwithstanding the foregoing to the contrary, if the alleged default
is of such a nature that it cannot be cured within thirty (30) days, the alleged
defaulting party shall not be deemed in default as long as such party commences
to cure such default within such thirty (30) day period and thereafter diligently
prosecutes such cure to completion.
After notice and expiration of the thirty (30) day period, the other party to this
Agreement, at its option, may institute legal proceedings pursuant to this
Agreement.
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In general, each of the parties hereto may pursue any remedy at law or equity
available for the breach of any provision of this Agreement, except that City shall
not be liable in monetary damages, unless expressly provided for this Agreement,
to Owner, to any mortgagee or lender, or to any successors in interest of Owner
or mortgagee or lender, or to any other person, and Owner covenants on behalf of
itself and all successors in interest to the Property or any portion thereof, not to
sue for damages or claim any damages.
1) For any breach of this Agreement or for any cause of action which
arises out of this Agreement; or
2) For the impairment or restriction of any right or interest conveyed or
provided under, with, or pursuant to this Agreement, including, without
limitation, any impairment or restriction which Owner characterizes as a
regulatory taking or inverse condemnation; or
3) Arising out of or connected with any dispute, controversy or issue
regarding the application or interpretation or effect of the provisions of this
Agreement.
Nothing contained herein shall modify or abridge Owner's rights or remedies
(including its rights for damages, if any) resulting from the exercise by City of its
power of eminent domain. Nothing contained herein shall modify or abridge
Owner's rights or remedies (including its rights for damages, if any) resulting from
the grossly negligent or malicious acts of City and its officials, officers, agents and
employees. Nothing herein shall modify or abridge any defenses or immunities
available to City and its employees pursuant to the Government Liability Act and
all other applicable statutes and decisional law.
Except as set forth in the preceding paragraph relating to eminent domain, Owner's
remedies shall be limited to those set forth in this Section 14(a), Section 14(b), and
Section 14(c).
Notwithstanding anything to the contrary contained herein, City covenants as
provided in Civil Code Section 3300 not to sue for or claim any consequential
damages or, in the event all or a portion of the Property is not developed, for lost
profits or revenues which would have accrued to City as a result of the
development of the Property.
b. Specific Performance. The parties acknowledge that money damages and
remedies at law are inadequate, and specific performance and other non-monetary
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relief are particularly appropriate remedies for the enforcement of this Agreement
and should be available to all parties for the following reasons:
1) Except as provided in Sections 14(a) and 14(e), money damages are
unavailable against City as provided in Section 14(a) above.
2) Due to the size, nature and scope of the Project, it may not be
practical or possible to restore the Property to its natural condition once
implementation of this Agreement has begun. After such implementation,
Owner may be foreclosed from other choices it may have had to use the
Property or portions thereof. Owner has invested significant time and
resources and performed extensive planning and processing of the Project
in agreeing to the terms of this Agreement and will be investing even more
significant time and resources in implementing the Project in reliance upon
the terms of this Agreement, and it is not possible to determine the sum of
money which would adequately compensate Owner for such efforts; the
parties acknowledge and agree that any injunctive relief may be ordered on
an expedited, priority basis.
c. Release. Except for those remedies set forth in Sections 14(a), 14(b), and
14(c), Owner, for itself, its successors and assignees, hereby releases City, its
officers, agents and employees from any and all claims, demands, actions, or suits
of any kind or nature arising out of any liability, known or unknown, present or
future, based or asserted, pursuant to Article 1, Section 19 of the California
Constitution, the Fifth Amendment of the United States Constitution, or any other
law or ordinance which seeks to impose any other liability or damage, whatsoever,
upon City because it entered into this Agreement or because of the terms of this
Agreement.
Owner acknowledges that it may have suffered, or may suffer, damages and other
injuries that are unknown to it, or unknowable to it, at the time of its execution of
this Agreement. Such fact notwithstanding, Owner agrees that the release
provided in this Section 14(c) shall apply to such unknown or unknowable claims
and damages. Without limiting the generality of the foregoing, Owner
acknowledges the provisions of California Civil Code Section 1542, which provide:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his or her favor at the time of executing
the release, which if known by him or her must have materially
affected his or her settlement with the debtor."
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Owner hereby waives, to the maximum legal extent, the provisions of California
Civil Code Section 1542 and all other statutes and judicial decisions of similar
effect.
Initials
d. Termination of Agreement for Default of Citv. Owner may terminate this
Agreement only in the event of a default by City in the performance of a material
term of this Agreement and only after providing written notice to City of default
setting forth the nature of the default and the actions, if any, required by City to
cure such default and, where the default can be cured, City has failed to take such
actions and cure such default within sixty (60) days after the effective date of such
notice or, in the event that such default cannot be cured within such sixty (60) day
period but can be cured within a longer time, has failed to commence the actions
necessary to cure such default within such sixty (60) day period and to diligently
proceed to complete such actions and cure such default.
e. Attorneys' Fees and Costs. In any action or proceeding between City and
Owner brought to interpret or enforce this Agreement, or which in any way arises
out of the existence of this Agreement or is based upon any term or provision
contained herein, the "prevailing party" in such action or proceeding shall be
entitled to recover from the non-prevailing party, in addition to all other relief to
which the prevailing party may be entitled pursuant to this Agreement, the
prevailing party's reasonable attorneys' fees and litigation costs, in an amount to
be determined by the court. The prevailing party shall be determined by the court
in accordance with California Code of Civil Procedure Section 1032. Fees and
costs recoverable pursuant to this Section 14(e) include those incurred during any
appeal from an underlying judgment and in the enforcement of any judgment
rendered in any such action or proceeding.
f. Owner Default. No building permit shall be issued or building permit
application accepted for any structure on the Property after Owner is determined
by City to be in default of the terms and conditions of this Agreement until such
default thereafter is cured by Owner or is waived by City. If City terminates this
Agreement because of Owner's default, then City shall retain any and all benefits,
including money or land received by City hereunder.
15. Third Party Litigation
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a. General Plan Litigation. City has determined that this Agreement is
consistent with its General Plan. Owner has reviewed the General Plan and
concurs with City's determination.
City shall have no liability under this Agreement or otherwise for any failure of City
to perform under this Agreement, or for the inability of Owner to develop the
Property as contemplated by the Development Plan, which failure to perform or
inability to develop is as the result of a judicial determination that the General Plan,
or portions thereof, are invalid or inadequate or not in compliance with law, or that
this Agreement or any of City's actions in adopting it were invalid, inadequate, or
no in compliance with the law.
b. Hold Harmless Agreement. Owner hereby agrees to, and shall hold City,
its elective and appointive boards, commissions, officers, agents, and employees
harmless from any liability for damage or claims for damage for personal injury,
including death, as well as from claims for property damage which may arise from
Owner or Owner's contractors, subcontractors, agents, or employees' operations
under this Agreement, whether such operations be by Owner, or by any of Owner's
contractors, subcontractors, agents, or employees operations under this
Agreement, whether such operations be by Owner, or by any of Owner's
contractors, subcontractors, or by any one or more persons directly or indirectly
employed by, or acting as agent for Owner or any of Owner's contractors or
subcontractors. Owner agrees to and shall defend City and its elective and
appointive boards, commissions, officers, agents and employees from any suits or
actions at law or in equity for damage caused, or alleged to have been caused, by
reason of any of the aforesaid operations.
c. Indemnification. Owner shall defend, indemnify, and hold harmless City and
its agents, officers, and employees against and from any and all liabilities,
demands, claims, actions or proceedings and costs and expenses incidental
thereto (including costs of defense, settlement and reasonable attorneys' fees),
which any or all of them may suffer, incur, be responsible for or pay out as a result
of or in connection with any challenge to the legality, validity or adequacy of any of
the following: (i) this Agreement and the concurrent and subsequent permits,
licenses and entitlements approved for the Project or Property; (ii) the
environmental impact report, mitigated negative declaration or negative
declaration, as the case may be, prepared in connection with the development of
the Property; (iii) any claims based on or alleging inverse condemnation by any
person or entity with an interest in the Property; and (iv) the proceedings
undertaken in connection with the adoption or approval of any of the above. In the
event of any legal or equitable action or other proceeding instituted by any third
party (including a governmental entity or official) challenging the validity of any
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provision of this Agreement or any portion thereof as set forth herein, the parties
shall mutually cooperate with each other in defense of said action or proceeding.
Notwithstanding the above, City, at is sole option, may tender the complete
defense of any third-party challenge as described herein. In the event City elects
to contract with special counsel to provide for such a defense, City shall meet and
confer with Owner regarding the selection of counsel, and Owner shall pay all costs
related to retention of such counsel.
d. Environmental Contamination. Owner shall indemnify and hold City, its
officers, agents, and employees free and harmless from any liability, based or
asserted, upon any act or omission of Owner, its officers, agents, employees,
subcontractors, predecessors in interest, successors, assigns and independent
contractors, excepting and acts or omissions of City as successor to any portions
of the Property dedicated or transferred to City by Owner, for any violation of any
federal, state or local law, ordinance or regulation relating to industrial hygiene or
to environmental conditions on, under or about the Property, including, but not
limited to, soil and groundwater conditions, and Owner shall defend, at its expense,
including attorneys' fees, City, its officers, agents and employees in any action
based or asserted upon any such alleged act or omission. City may in its discretion
participate in the defense of any such claim, action or proceeding.
The provisions of this Section 15(d) do not apply to environmental conditions that
predate Owner's ownership or control of the Property or applicable portion;
provided, however, that the foregoing limitation shall not operate to bar, limit or
modify any of Owner's statutory or equitable obligations as an owner or seller of
the Property.
e. City to Approve Counsel. With respect to Sections 15(a) through 15(d), City
reserves the right to approve the attorney(s) which Owner selects, hires or
otherwise engages to defend City hereunder, which approval shall not be
unreasonably withheld.
f. Accept Reasonable Good Faith Settlement. With respect to Article 15, City
shall not reject any reasonable good faith settlement. If City does reject a
reasonable, good faith settlement that is acceptable to Owner, Owner may enter
into a settlement of the action, as it relates to Owner, and City shall thereafter
defend such action (including appeals) at its own cost and be solely responsible
for any judgment rendered in connection with such action. This Section 15(f)
applies exclusively to settlements pertaining to monetary damages or damages
which are remedial by the payment of monetary compensation. Owner and City
expressly agree that this Section 15(f) does not apply to any settlement that
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requires an exercise of City's police powers, limits City's exercise of its police
powers, or affects the conduct of City's municipal operations.
g. Survival. The provisions of Sections 15(a) through 15(f) inclusive, shall
survive the termination or expiration of the Agreement.
16. California Environmental Quality Act
Owner shall reimburse City for any and all costs incurred by City related to project review
under the California Environmental Quality Act (CEQA}, Public Resources Code,
§§21 000-21189.3, and the Guidelines for California Environmental Quality Act, California
Code of Regulations, Title 14, §§15000-15387. If requested by City, Owner shall conduct
and pay for any required CEQA reviews and analyses. The City has found that the
proposed Project is Categorically Exempt from California Environmental Quality Act
(CEQA) requirements under provisions of CEQA Guidelines Section 15332 -In-Fill
Development Projects. This exemption applies to projects characterized as in-fill
development meeting the conditions described in Section 15332.
17. Rules. Regulations. and Official Policies
Except as otherwise provided in this Agreement, the rules, regulations, and official
policies of City governing permitted uses of the land, governing density, and governing
the design, improvements, and construction standards and specifications applicable to
the development of the Project subject of this Agreement, shall be those rules,
regulations, and official policies of City in force at the time of the execution of this
Agreement. This Agreement does not prevent City, in subsequent actions applicable to
the property, from applying new rules, regulations, and policies which do not conflict with
those rules, regulations, and policies applicable to the property as set forth herein, nor
does this Agreement prevent City from denying or conditionally approving any
subsequent development project application based on such existing or new rules,
regulations, or policies.
18. Regulatory P~r rnil Condilions of Appr oval
Owner shall comply with all conditions of approval of the Regulatory Permit approved by
City Council.
19. Periodic Reviews
This Agreement shall be subject to annual review. Owner and Landlord executing this
Agreement, or successor in interest thereto, shall demonstrate good faith compliance with
the terms of this Agreement. If, as a result of such periodic review, City finds and
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determines, based on substantial evidence, that Owner or Landlord executing this
Agreement, or successor in interest thereto, has not complied in good faith with the terms
or conditions of this Agreement, City may terminate or modify this Agreement.
a. Periodic Review. City Council shall review this Agreement annually, on or
before each anniversary of the Effective Date, in order to ascertain Owner's good
faith compliance with this Agreement. During the periodic review Owner shall be
required to demonstrate good faith compliance with the terms of the Agreement,
through submitting an annual monitoring report, records, or equivalent written
materials to the Planning Department. The Planning Department will schedule a
hearing on the periodic review of the Development Agreement on or following the
anniversary of the Effective Date, but Owner has no obligation to compel such
hearing, and no implication will be made to Owner's detriment if a hearing is not in
fact held. Owner shall document any request for an extension of the term due to
delays beyond the control of Owner (see Section 24U), "Force Majeure"). Owner
shall submit an annual review and administration fee deposit not to exceed City's
estimated internal and third-party costs associated with the review and
administration of this Agreement during the succeeding year, consistent with
Section 24(k) ("Deposit with City") below. City shall provide Owner said estimate
a reasonable time in advance of the annual review and administration fee deposit
being due.
b. Conditional Use Permit. For all intents and purposes, the Regulatory Permit
to be issued under this Agreement shall be treated as if it were a Conditional Use
Permit issued to Owner for the establishment and operation of its business. The
operation of the business at all times shall be required to comply with the terms of
this Agreement.
c. Special Review. City Council may order a special review of compliance with
this Agreement at any time. The Planning Director or his or her designee shall
conduct such special review. During a special review, Owner shall be required to
demonstrate good faith compliance with the terms of the Agreement. The burden
of proof on this issue shall be on Owner.
d. Review Hearing. At the time and place set for the review hearing, Owner
shall be given an opportunity to be heard. If City Council finds, based upon
substantial evidence, that Owner has not complied in good faith with the terms or
conditions of this Agreement, City Council may terminate this Agreement
notwithstanding any other provision of this Agreement to the contrary, or modify
this Agreement and impose such conditions as are reasonably necessary to
protect the interests of City. The decision of City Council shall be final, subject
only to judicial review pursuant to Code of Civil Procedure Section 1094.5.
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e. Certificate of Agreement Compliance. If, after a periodic or special review,
Owner is found to be in compliance with this Agreement, and if Owner requests it,
City shall issue a Certificate of Agreement Compliance ("Certificate") to Owner
stating that after the most recent periodic or special review, and based upon the
information known or made known to the Planning Director and City Council, that
(i) this Agreement remains in effect and (ii) Owner is not in default.
City shall not be bound by a Certificate if a default existed at the time of the periodic
or special review, but was concealed from or otherwise not known to the Planning
Director and City Council, regardless of whether the Certificate is relied upon by
assignees or other transferees or Owner.
f. Failure to Conduct Review. City's failure to conduct a periodic review of this
Agreement shall not constitute a breach of this Agreement.
g. Cost of Review. The costs incurred by City in connection with the periodic
reviews shall be borne by Owner.
20. Obligations of Landlord
Landlord shall have rights, duties, obligations, and liability only as expressly set forth
herein. Landlord shall have no responsibility or liability for the failure of Owner to perform
as required by this Agreement.
21. Assignment
a. Assignment by Landlord. Landlord shall not transfer, delegate, or assign its
interest, rights, duties, and obligations under this Agreement, without the prior
written consent of City.
b. Assignment by Owner. Owner shall not transfer, delegate, or assign its
interest, rights, duties, and obligations under this Agreement without the prior
written consent of City. Any assignment, delegation, or assignment without the
prior written consent of City shall be null and void. Any transfer, delegation, or
assignment by Owner as authorized herein shall be effective only if and upon the
party to whom such transfer, delegation, or assignment is made is issued a
Regulatory Permit as required under Article 4-34 of the municipal code.
22. Operating Med ical Cannabis Facility
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Any party to this Agreement, or successor in interest thereto, shall not operate a medical
cannabis facility authorized under the municipal code unless:
a. It is the holder of a valid Regulatory Permit issued by City in accordance
with the procedures and requirements of Article 4-34 of the municipal code; and
b. At such time as the State of California requires medical cannabis facilities
and businesses to hold a valid license or permit issued by the State of California,
it also holds such license or permit, unless, however, such permit or license is not
required by the State of California for the type of medical cannabis facility or
business operation that is the subject of this Agreement.
23. Notice
Any notice or communication required hereunder between City and Owner must be in
writing, and may be given either personally, by facsimile (with original forwarded by
regular U.S. Mail), by registered or certified mail (return receipt requested), or by Federal
Express, UPS or other similar couriers providing overnight delivery. If personally
delivered, a notice shall be deemed to have been given when delivered to the Party to
whom it is addressed. If given by facsimile transmission, a notice or communication shall
be deemed to have been given and received upon actual physical receipt of the entire
document by the receiving Party's facsimile machine. Notices transmitted by facsimile
after 5:00p.m. on a normal business day or on a Saturday, Sunday, or holiday shall be
deemed to have been given and received on the next normal business day. If given by
registered or certified mail, such notice or communication shall be deemed to have been
given and received on the first to occur of (i) actual receipt by any of the addressees
designated below as the party to whom notices are to be sent, or (ii) five (5) days after a
registered or certified letter containing such notice, properly addressed, with postage
prepaid, is deposited in the United States mail. If given by Federal Express or similar
courier, a notice or communication shall be deemed to have been given and received on
the date delivered, as shown on a receipt issued by the courier. Any Party hereto may at
any time, by giving ten (1 0) days written notice to the other Party hereto, designate any
other address in substitution of the address to which such notice or communication shall
be given. Such notices or communications shall be given to the Parties at their addresses
set forth below:
If to City: City of Lynwood
11330 Bullis Road
Lynwood, California 90262
Attention: City Manager
Page 27 of 31 Cultivation, Manufacturing, Distribution,
and Delivery Development Agreement
and
If to Owner:
With Copy to:
If to Landlord:
24. Miscellaneous Provisions
H. Francisco Leal, Esq.
Leal Trejo, APC
3767 Worsham Avenue
Long Beach, California 90808
Cali Premium Produce
Attention: Priscilla Vilchis CEO
10877 Wilshire Boulevard, Suite 610
Los Angeles, CA 90024
Priscilla.Vilchis@Gmail.com
Stephen A. Silverman
Silverman & Milligan LLP
10877 Wilshire Boulevard, Suite 610
Los Angeles, CA 90024
Silverman@SiiMiiLaw.com
Daniel Nunez
11110 Wright Road
Lynwood,CA 90262
a. Regulatorv Permit Conditions of Approval. Owner shall comply with all
conditions of approval of the Regulatory Permit approved by City Council.
b. Amendment or Cancellation. This Agreement may be amended, or
canceled in whole or in part, only by the written mutual consent of the parties to
this Agreement or their successors in interest, except that minor amendments that
do not affect a substantive provision of this Agreement may be approved by the
City Manager. The decision whether a proposed amendment is "minor'' shall be in
the exclusive discretion of the City Manager.
c. Waiver. Waiver by City of any one or more of the terms or conditions of this
Agreement shall not be construed as waiver of any other term or condition under
this Agreement.
d. Enforcement. Unless amended or canceled pursuant hereto, this
Agreement shall be enforceable by any party hereto, or successor in interest
thereto, notwithstanding any subsequent change in any applicable general or
specific plan, zoning, subdivision or building regulation, or municipal code
amendment adopted by City that conflicts with the terms of this Agreement.
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e. Joint and Several Liability. Owner and Landlord shall be jointly and
severally liable for any amount due under this Agreement, and any breach of this
Agreement or failure to pay by one Party shall also constitute a breach of this
Agreement by the other Party. Owner and Landlord agree that City may impose a
lien and seek foreclosure on any parcel of the Site due to any default by Owner.
f. Severability. If any part of this Agreement is found to conflict with applicable
state laws or regulations, such part shall be inoperative, null, and void insofar as it
conflicts with said laws or regulations, or modified or suspended as may be
necessary to comply with such state laws or regulations, but the remainder of this
Agreement shall continue to be in full force and effect.
g. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which together
shall constitute one and the same instrument. The execution of this Agreement
may be by actual, facsimile, or electronic signature.
h. Jurisdiction and Arbitration. The law governing this Agreement shall be that
of the State of California. Any suit brought by any party against any other party
arising out of the performance of this Agreement shall be filed and maintained in
the County of Los Angeles Superior Court. Any dispute, claim or controversy
arising out of or relating to this Agreement or the breach, termination, enforcement,
interpretation or validity thereof, including the determination of the scope or
applicability of this Agreement to arbitrate, shall be determined by binding
arbitration in Los Angeles, California before one arbitrator. Said arbitrator shall be
chosen by mutual agreement of the Parties. If the Parties cannot agree on an
arbitrator within 30 days of the first notice by either Party of the need for arbitration,
each Party shall name one arbitrator, then the two arbitrators shall choose the
arbitrator who shall hear the case.
i. Disclaimer. Despite California's medical cannabis laws and the terms and
conditions of this Agreement, any Conditional Use Permit, or any Regulatory
Permit issued pertaining to Owner or the property specified herein, California
medical cannabis cultivators, transporters, distributors, or possessors may still be
subject to arrest by state or federal officers and prosecuted under state or federal
law. The Federal Controlled Substances Act, 21 USC § 801, prohibits the
manufacture, distribution, and possession of cannabis without any exemptions for
medical use.
j. Force Majeure. If delays are caused by unforeseen events beyond the
control of Owner, such delays will entitle Owner to an extension of time as provided
in this section. Such unforeseen events ("Force Majeure") shall mean war,
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and Delivery Development Agreement
insurrection, acts of God, local, state or national emergencies, strikes and other
labor difficulties beyond the party's control, or any default by City hereunder, which
Force Majeure event substantially interferes with the development or construction
of the Project.
k. Costs and Fees. Owner shall be responsible for all of the reasonable and
fixed costs associated the Project, including but not limited to costs associated with
City's review and processing of the Project, including but not limited to reviewing
the Project's entitlements, including all environmental clearance documents,
permits, licenses and all documents evidencing compliance with state and local
law, and as such Owner agrees to reimburse City and pay any costs and fees
associated with processing the Project, as detailed in this Agreement.
I. Constructive Notice and Acceptance. Every person who after the Effective
Date and recording of this Agreement owns or acquires any right, title, or interest
to any portion of the Site, is and shall be conclusively deemed to have consented
and agreed to every provision contained herein, whether or not any reference to
this Agreement is contained in the instrument by which such person acquired an
interest in the Site, and all rights and interests of such person in the Site shall be
subject to the terms, requirements, and provisions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
CITY OF LYNWOOD
Alma K. Martinez
City Manager
APPROVED AS TO FORM:
OWNER
Priscilla Vilchis
Chief Executive Officer
LANDLORD
Daniel Nunez
Page 31 of 31 Cultivation, Manufacturing, Distribution,
and Delivery Development Agreement
COMMERCIAL CANNABIS
DEVELOPMENT AGREEMENT
BY AND BETWEEN
THE CITY OF LYNWOOD
AND
Natural Plant Extract of California
AND
Landlord
Development Agreement No. 2017-09 MOD
This Agreement is made by and between and among the CITY OF LYNWOOD
("City") and Natural Plant Extract of California ("Owner'') and ("Landlord")
this _ day of January 2018, as required by Section 4-34-5 of the Lynwood Municipal
code setting forth the terms and conditions under which Owner shall operate a cannabis
manufacturing, distribution, and delivery facility (also, the "Project") pursuant to its
Regulatory Permit that are in addition to the requirements of Article 4-34 of the Lynwood
Municipal code, including, but not limited to, public outreach and education, community
service, payment of fees and other charges as set forth or referenced herein, and such
other terms and conditions as will protect and promote the public health, safety, and
welfare. The requirements set forth in Article 4-34 of the Lynwood Municipal Code, and
the Administrative Regulations adopted by the City Council of the City of Lynwood are
incorporated herein by reference. All subsequent references to "municipal code" mean
the Lynwood Municipal Code.
1. RECITALS.
a. WHEREAS, the City is authorized to enter into binding development
agreements with persons having legal or equitable interests in real property for
the development of such property, pursuant to Government Code
Section 65864, et seq.; and
b. WHEREAS, the City has adopted rules and regulations for consideration of
development agreements pursuant to Government Code Section 65865, and
as further set forth in LMC Chapter 4-34; and
c. WHEREAS, Owner voluntarily enters into this Agreement and after extensive
negotiations and proceedings have been taken in accordance with the rules
and regulations of the City, Owner has elected to execute this Agreement as it
provides Owner with important economic and development benefits; and
d. WHEREAS, this Agreement and the Project are consistent with the City's
General Plan and Zoning Code and applicable provisions of the City's
applicable Zoning Map as of the Effective Date; and
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e. WHEREAS, all actions taken and approvals given by the City have been duly
taken or approved in accordance with all applicable legal requirements for
notice, public hearings, findings, votes, and other procedural matters; and
f. WHEREAS, this Agreement will eliminate uncertainty in planning and provide
for the orderly development of the Property, ensure progressive installation of
necessary improvements, provide for public services appropriate to the
development of the Project, and generally serve the purposes for which
development agreements authorized under Government Code Sections 65864
et seq. are intended; and
g. WHEREAS, in implementation of the promulgated state policy to promote
private participation in comprehensive planning and to strengthen the public
planning process and to reduce the economic risk of development, the City
deems the implementation of this Agreement to be in the public interest and
intends that the adoption of this Agreement be considered an exercise of the
City's police powers to regulate the development of the Property during the
term of this Agreement; and
h. WHEREAS, this Agreement is consistent with the public health, safety and
welfare needs of the residents of the City and the surrounding region and the
City has specifically considered and approved the impact and benefits of the
development of the Property in accordance with this Agreement upon the
welfare of the region; and
i. WHEREAS, Owner intends to develop a Cannabis Manufacturing and
Distribution Facility pursuant to the Lynwood Municipal Code ("LMC") Article 4-
34 and all applicable state laws, rules, and regulations; and
j. WHEREAS, this Agreement, in the future, shall be read consistent with any
statewide regulation that may be passed by voter initiative or the state
legislature, which decriminalizes or legalizes cannabis for Adult Use, also
known as adult-use cannabis. This Agreement shall govern the conduct of this
business to manufacture, sell and distribute cannabis under such statewide
regulation, consistent with any City regulations not preempted by any such
statewide regulations.
2. GENERAL TERMS.
a. Definitions and Exhibits. The following terms when used in this Agreement shall
be defined as follows:
1) "Agreement" means this Development Agreement.
2) "City" means the City of Lynwood, a California municipal corporation .
3) "Days" mean calendar days unless otherwise specified.
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4) "Dedicate" means to offer the subject land for dedication and to post sufficient
bonds or other security if necessary for the improvements to be constructed
including, but not limited to: grading, the construction of infrastructure and
public facilities related to the Project whether located within or outside the
Property, the construction of buildings and structures, and the installation of
landscaping.
5) "Development" includes grading, construction or installation of public and
private facilities and the right to maintain, repair or reconstruct any private
building, structure, improvement or facility after the construction and
completion thereof; provided, however, that such maintenance, repair, or
reconstruction take place within the Term of this Agreement on parcels subject
to it.
6) "Development Plan" means the Existing Development Approvals and the
Existing Land Use Regulations applicable to development of the Property for
the Project, as modified and supplemented by Subsequent Development
Approvals.
7) "LMC" means the City of Lynwood Municipal Code.
8) "Effective Date" means the 31st day after the second reading of the Ordinance
adopting and approving this Development Agreement.
9) "Mortgagee" means a mortgagee of a mortgage, a beneficiary under a deed of
trust or any other security-device lender and its successors-in interest.
1 O)"Processing Fees" means the normal and customary application, filing, plan
check, permit fees for land use approvals, design review, tree removal permits,
building permits, demolition permits, grading permits, and other similar permits
and entitlements, and inspection fees, which fees are charged to reimburse the
City's expenses attributable to such applications, processing, permitting, review
and inspection and which are in force and effect on a general basis at such
time as said approvals, permits, review, inspection or entitlements are granted
or conducted by the City.
11 )"Project" means the Development of the Property contemplated by the
Development Plan, as such Development Plan may be further defined,
enhanced or modified pursuant to the provisions of this Agreement. The
Project shall consist of this Agreement, the Development Plans, and any and
all entitlements, licenses, and permits related to the Project.
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12)"Property" means the real property described on Exhibit A, attached hereto and
incorporated herein by this reference.
13)"Reasonable" means using due diligence to accomplish a stated objective that
the subject party is capable of performing or providing under the circumstances
in a manner that is consistent with the intent and objectives of the Agreement.
14)Exhibits. The following documents are attached to and, by this reference, made
part of this Agreement:
Exhibit A-Map showing Property and its location.
15)Automatic Termination. This Agreement shall automatically terminate upon the
occurrence of any of the following events:
i. Expiration of the Term of this Agreement as set forth herein;
ii. Entry of a final judgment setting aside, voiding or annulling the adoption of
the ordinance approving this Agreement;
iii. The adoption of a referendum measure pursuant to Government Code
Section 65867.5 overriding or repealing the ordinance approving this
Agreement; or
iv. The entry of a final judgment (or a decision on any appeal therefrom) voiding
the City's General Plan or any element thereof, which judgment or decision
would preclude development of the Project, but only if the City is unable to
cure such defect in the General Plan or element within one hundred and
eighty (180) days from the later of entry of final judgment or decision on
appeal.
16)Validity of this Agreement. Owner and the City each acknowledge that neither
party has made any representations to the other concerning the enforceability
or validity of any one or more provisions of this Agreement. The parties
acknowledge and agree that neither party shall allege in any administrative or
judicial proceeding that the entering into or the performance of any obligations
created in this Agreement violates federal or state law, with respect to all
federal, state and local statutes, ordinances or regulations in effect as of the
Effective Date.
3. Government Code and Municipal Code Required Elements
a. Description of Property. Land situated in the City of Lynwood, County of
Los Angeles, State of California, described as APN , whose
street address is 11116 Wright Road, City of Lynwood.
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b. Owner and Other Person with Legal or Equitable Interest.
Owner: Natural Plant Extract of California
Landlord: Landlord
c. Permitted Uses. The subject property may be used for any cannabis facility
as presently authorized under Article 4-34 of the municipal code, and for any other
use as authorized under applicable provisions of the municipal code. Specifically,
Owner shall have the vested right to operate as a licensed volatile cannabis
business and as a cannabis distributor. These uses shall be read to be consistent
with the definitions in California Business and Professions Code section 26001.
Although LMC chapter 25 does not specifically identify cannabis facilities as
allowed uses in any zoning district, such uses are similar to other listed uses,
including, but not limited to, medical services-clinics, offices, laboratories; garden
center/plant nursery; food and beverage manufacturing; and agricultural products
processing; and, therefore, cannabis facilities are allowed uses in the same zoning
districts in which such similar uses are allowed under Chapter 25 of the municipal
code.
d. Zoning. Owner shall guarantee that all activities conducted under this
Agreement and under the Regulatory Permit shall comply with the City's municipal
code, including the zoning ordinance and any and all development and
construction requirements contained therein. Owner shall not conduct any
business under this Agreement or under the Regulatory Permit without having
obtained all necessary permits, licenses, and approvals from the City.
e. Reservation or Dedication of Land for Public Purposes. Sufficient roadway,
sidewalk, and utility easements shall be reserved or dedicated to City for such
purposes.
4. Term
This Agreement shall start on the date on which all parties have executed it and it shall
end ten (1 0) years from the day all building and zoning approvals are provided and a
certificate of occupancy, if necessary, is issued. This agreement shall remain in full
force and effect so long as the subject property is used for a cannabis facility as
presently authorized under Article 4-34 of the municipal code; provided, however,
such use is not abandoned for a period of more than six (6) months. The term shall
be automatically extended for an additional five (5) year term immediately following
the expiration of the initial ten (1 0) year term or extended period. Owner shall have a
minimum of two automatic five (5) year extensions so long as the subject property is
used for a cannabis facility as presently authorized under Article 4-34 of the municipal
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code; provided, however, such use is not abandoned for a period of more than six (6)
months. However, at the request of either Party, the fees required under Article 9 of
this agreement may be subject to re-negotiation for year 3 and all subsequent years
of this Agreement. In the event a party wishes to re-negotiate fees, it shall give notice
to the other Party no less than 90 days before the three-year anniversary of the
agreement, and negotiations shall be concluded before the anniversary date.
5. Owner's Site and Floor Plans
a. Owner's site plan and floor plan for the facility are attached hereto and
incorporated by reference. The floor plan identifies the uses of each interior space,
and is the basis for calculating the annual per-square-foot fee specified in Article
9 below.
b. A preliminary landscape plan will be prepared and reviewed and approved
by the Planning Director as part of the design review process. A final landscape
plan shall be prepared and submitted in conjunction with building and site
improvement plans prior to issuance of building permits for construction activities.
6. Facility Operations
a. Standard Operating Procedures. Owner is a non-profit mutual benefit
corporation that will manufacture cannabis pursuant to California State laws and
local ordinances. (See Senate Bill 94 commonly referred to as "Cannabis: medical
and adult use act.")
1) The Parties acknowledge and agree that if Owner converts its entity to a
Limited Liability Company or for-profit corporation pursuant to state law, Owner
must notify the city manager in writing with the conversion documents as well
as the name of the officers, directors or managers of the newly converted entity,
but the owners/shareholders shall not be different.
2) The Parties acknowledge and agree that if Owner obtains a state license to
produce cannabis for adult use, Owner may choose to manufacture or
distribute cannabis for adult use, so long as it is in compliance with the Lynwood
Municipal Code and the City's administrative regulations.
3) During the term of its Regulatory Permit and the term of this Agreement, Owner
shall lawfully operate in accordance with all state and local laws. Owner will
employ exemplary operating procedures to comply with state and local laws.
Owner's facility will employ safety and security measures as set forth herein for
the safety and security of its employees, as well as other individuals in its
neighboring community.
b. Security Plan. The issuance of a Regulatory Permit is conditional upon
approval of the proposed security plan by the Los Angeles County Sheriff. The
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security plan shall include, at a minimum and as appropriate, provisions for video
surveillance, perimeter fencing and security, protection of the building(s) from
vehicle intrusion, cash handling procedures, product handling and storage
procedures, and a professionally monitored alarm system . Equipment and
systems used for video surveillance and building alarms will be approved by City.
Video surveillance shall include, at a minimum, all site and facility entrances and
access points, all spaces accessible by the public, all secured areas of the facility
with restricted access, all interior spaces and rooms where cannabis products are
handled and processed, shipping and receiving areas, cash storage areas, and
other areas necessary to protect the safety of employees and the public and to
ensure cannabis products are received, handled, stored, packaged, shipped, and
distributed in compliance with applicable state and local laws and regulations. The
video surveillance system shall be web-based with direct access provided to the
Los Angeles County Sheriff upon request.
The security system will also include sensors to detect entry and exit from all
secure areas, panic buttons in appropriate locations, and a professionally
monitored alarm system with sensors and motion detectors.
Owner will employ properly trained and licensed third-party security personnel to
protect the welfare and safety of Owner, employees and to ensure public safety to
the neighboring community. Owner shall use security personnel24 hours, 7 days
a week. Security personnel may be armed so long as proper licensing and
insurance requirements are followed and met by the third-party operator providing
such security services.
c. Fi re Department Approval. Owner may not operate any facility, and no
permit, license, or other approval issued by City shall authorize occupancy of the
project unless and until the Los Angeles County Fire Department has approved
Owner's site plan, floor plan and safety plan. Notwithstanding the above, the city
shall deem the project operational upon a majority approval by the city council of
the development agreement ordinance.
d. Possession of Firearms. Except for licensed security personnel approved
by the Los Angeles County Sheriff, no person employed by Owner shall be in
possession of any firearm while on the premises or location without having first
obtained a license from the appropriate state or local agency authorizing the
person to be in possession of such firearm. Every such person in possession of a
firearm while on the premises or location must provide the City Manager and the
Los Angeles County Sheriff, ten days before bringing the firearm onto the
premises, with the following:
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1) A copy of the license issued to the person by the appropriate state
or local agency authorizing him or her to possess such firearm;
2) A copy of his or her law enforcement identification (if he or she is
employed by a law enforcement agency);
3) A copy of his or her California driver's license or California
identification card; and
4) Any other information reasonably required by the Los Angeles
County Sheriff to show that the individual is in compliance with the
provisions of all laws regarding the possession and use of a firearm.
e. Procedures for Inventory Control to Prevent Non-Medical Diversion of
Cannabis. Only authorized employees will be permitted to enter Owner's facility.
Each employee will have to meet a criminal background investigation conducted
by the Los Angeles County Sheriff, which at minimum shall include a LiveScan
criminal history check.
Owner employment agreements will seek to prevent the diversion of cannabis for
illegal non-regulated uses by implementing strict policies and practices, as well as
efficient transparency to maintain tight controls on inventory sales of the product.
Owner's shall have an employment agreement with each employee. Each
employment agreement shall explicitly prohibit the use of cannabis by its
employees, on shift, at its facility and/or while driving.
Owner will take all necessary and reasonable steps to prevent the distribution of
any of its medical cannabis products to minors; prevent revenue from the sale or
distribution of its medical cannabis and/or infused products from going to criminal
enterprises, gangs and cartels; prevent the diversion of cannabis from California
to any other state; prevent state-authorized cannabis activity from being used as
a cover or pretext for the trafficking of other illegal drugs or other illegal activity;
prevent violence and the use of firearms in the manufacture and distribution of
cannabis; discourage and educate against drugged driving and the exacerbation
of other adverse public health consequences associated with cannabis use;
disavow growing cannabis on public lands that creates attendant public safety and
environmental dangers posed by such illegal uses; and discourage cannabis
possession or use on federal property.
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f. Quality Control and Testing. Owner will utilize quality control measures and
testing to ensure only the highest quality of cannabis and infused products will be
produced. Owner will inspect the product to insure its identity and quantity, and
will have a state approved testing lab perform testing of random samples prior to
distribution or delivery permitted under state law. Testing will be conducted by the
approved testing lab off-site. Testing standards and procedures shall be in
accordance with applicable state law and regulations.
All cannabis products will perform a quality assurance review prior to distribution
or delivery of cannabis, in order to ascertain its quantity and chemical content.
Inventory procedures will be utilized for tracking and taxing purposes by the state.
Owner will employ an efficient record-keeping system to make transparent its
financing, testing, and adverse effect recording, as well as recall procedures.
g. Packing of Cannabis and Infused Products. All Owner cannabis products
will be packaged and labeled as required by Section 26071, et seq., of the
California Business and Professions Code and applicable requirements and
regulations issued by the State of California pursuant thereto. In addition to those
packaging and labeling requirements, and packaging and labeling requirements
set forth in Owner's Regulatory Permit application, as amended or supplemented,
all cannabis products shall be packaged in an opaque childproof container which
shall contain a label or be accompanied by a leaflet or inset that states, at a
minimum:
1) The name, address and telephone number of the local and state
licensed cannabis distribution facility, or dispensary to which the cannabis
product is distributed, sold, or transferred;
2) The amount of cannabis in the container; and
3) The date the cannabis was transferred to a cannabis facility.
Owner intends to produce infused products and will secure any approval from the
County of Los Angeles Health Department required for manufacturing and
handling such products, if necessary. Owner infused products will not be
produced, manufactured, stored or packaged in private homes. All Owner
cannabis infused products shall be individually wrapped at the original point of
preparation.
h. Delivery. If Owner applies for and receives a Delivery permit from City,
Owner may sell and deliver manufactured cannabis products to individual
customers, as long as such activity is consistent with and permitted under state
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and Delivery Development Agreement
law, and Owner has a valid state license therefor. As long as such products are
sold and delivered to individual customers, and no in-person sales occur at
Owner's facility, such activity shall not constitute a dispensary under the municipal
code.
i. Point of Sale Tracking System. Owner will maintain an inventory control
and reporting system that accurately documents the location of medicinal cannabis
products from inception through distribution or delivery, including descriptions,
weight, and quantity. The inventory control and reporting system shall comply with
the track and trace program required by the California Business and Professions
Code section 26067 and regulations issued thereunder.
Owner will employ an electronic point of sale system approved by City, such as
BioTrack THC, MJ Freeway, or similar system for all point of donations/sales
tracking from seed or inception to product distribution to other licensed cannabis
dispensary facilities or delivery to individual customers. Such approved system
will track all Owner cannabis products, each edible, harvested flower, and/or
manufactured concentrate, as well as gross sales (by weight and sale). BioTrack
THC, MJ Freeway, or similar system will have the capacity to produce historical
transactional data in accordance with City's requirements.
j. Record Keeping. Owner will maintain records for all distributed cannabis
and/or infused products. Owner will comply with all records-keeping
responsibilities that are set forth in Municipal Code Section 4-34-10, including
complete and up-to-date records regarding the amount of cannabis manufactured,
stored, or packaged at Owner's facility.
k. Processing, Handling, Storing, and Distribution of Cannabis and
Related Products. Cannabis handling, storing, distribution and manufacturing
shall be concealed from public view at all stages of growth and processing, and
there shall be no exterior evidence of manufacturing occurring at the premises from
a public right-of-way or from an adjacent parcel. Cannabis handling, storing,
manufacturing, or distribution shall not create offensive odors; create excessive
dust, heat, noise, smoke, traffic, or other impacts that are disturbing to people of
normal sensitivity residing or present on adjacent or nearby property or areas open
to the public; or be hazardous due to use or storage of materials, processes,
products, or wastes.
Owner will store its cannabis and/or cannabis products in a locked safe room with
an identification access for management only. The safe room will be constructed
of fire-rate walls with numerous cameras installed to view all entries and exits from
the safe room, as well as all other activities performed within Owner's facility.
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Owner will not conduct outdoor operations except as related to lawful delivery and
transportation of cannabis and infused products. Owner shall not store cannabis
or related products in its delivery vehicle/s off premises or outside normal operating
hours of the facility.
Cannabis products will be sold or distributed only to licensed cannabis businesses
in California, except as provided in section 6(h) above. Excess or contaminated
product will be securely stored on-site until it is properly disposed. Disposal may
include composting, incineration, land-fill disposal through the local waste
management hauler, or other disposal methodology in accordance with state
and/or county health and safety codes and regulations.
I. Odor Control. All structures shall have ventilation and filtration systems
installed that prevent cannabis plant odors from exiting the interior of the structure.
The ventilation and filtration system shall be approved by the Building Official and
City Manager and installed prior to commencing manufacturing within the
allowable structure. Facility air intake, exhaust, and recirculating system shall be
of industrial grade. Activated charcoal, recirculating, and closed loop aeration
systems will be utilized as necessary for effective odor control and management.
m. Description of Banking Plan. Owner will seek to open a bank account to
provide transparency for funds received, operational costs, including payroll, tax
payments to the state and federal governments, among others. Should a bank
account not be forthcoming, Owner will purchase and install safes to secure all
daily funds received .
n. Transportation Plan. Owner will comply with all state and local law
regarding transportation, including the rules governing delivery service. Owner will
retain a list of names and cellular contact numbers for all employees engaged in
transportation of cannabis products and provide it to the applicable oversight
authority, keeping the list current and up to date.
Owner will keep complete and up-to-date records documenting each transfer of
cannabis to other lawful cooperative corporations, including the amount provided,
the form or product category in which the cannabis was provided, the date and
time provided, the name of the employee making the transfer, the name and
address of the other lawful cooperative corporation to whom delivery is made, and
the amount of any related donation or other monetary transaction.
7. Community Relations. Employment. and Wages
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a. Public Outreach and Education Program. Owner shall create an effective
public outreach to City of Lynwood's community, including but not limited to
outreach and interface with public and private schools, youth organizations,
religious organizations, health care providers, drug abuse treatment providers, and
mental health and drug counseling providers.
Owner, along with other licensed operators in the City, shall coordinate and
cooperate with City to establish and implement appropriate public outreach and
education programs. The public outreach and education programs shall be
approved by City.
The public outreach and education program shall provide a detailed description of
Owner's intentions with regard to public outreach and education, including but not
limited to the following: what schools or programs Owner will work with; what types
of materials and information will be provided; how much time Owner's personnel
expect to spend on these activities; and how much money Owner expects to spend
on an annual basis.
b. Communitv Benefits Program. Owner will coordinate and cooperate with
City and other Owners of cannabis facilities located within the City of Lynwood in
the establishment, implementation, and funding of a community benefits program
which could include such items as new community recreation facilities, expansion
and/or improvement to existing facilities or other physical improvements that
provide a benefit to the community, support of holiday and special community
events, and support of local public service and special districts and organizations.
This community benefits program may be implemented by a foundation or other
association of cannabis facility Owners issued regulatory permits by City. City and
the public will participate in the decision-making process for identifying and
prioritizing community needs and benefits, and identifying appropriate projects to
be funded by the entity implementing this community benefits program. All projects
under the community benefits program must be approved by City. Owner shall
pay a community benefit fee of one-half of one percent (.5%) of its gross revenue
each quarter, at the same time and in the same manner as the fees set forth in
Article 9 hereof are paid.
c. Designation of Persons Responsible for Community Relations. At the time
of this Agreement, Owner's Managing Agent/General Manager, Alan Tsai will be
responsible for community inquiries and complaints and on-site during normal
business hours.
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and Delivery Development Agreement
d. Interface with Los Angeles County Sheriff. Owner's general manager, Alan
Tsai, will interface with the Los Angeles County Sheriff to ensure its operation
complies with state and local laws and regulations.
e. Local Recruitment. Hiring, and Training Programs. Owner is committed to
making a good-faith effort to recruit, hire, and train City residents for employment
by Owner. A good-faith effort means Owner will take the following or similar
actions to recruit and employ City residents: 1) Contact local recruitment sources
to identify qualified individuals who are City residents, 2) Advertise for qualified
City residents in trade papers and newspapers of general circulation in the area,
and 3) Develop a written plan to recruit and employ City residents as a part of the
its workforce.
Owner will also seek companies located in the City of Lynwood to serve as its
general contractor and subcontractors needed for construction and build-out
improvements of Owner's cannabis facilities. Additionally, companies located in
the City of Lynwood will be sought to employ as licensed security guards needed
once Owner's facility is opened, as well as for ancillary services needed.
f. Living Wages. Owner agrees to pay all employees of the Facility a Living
Wage. A "Living Wage" is the higher of whatever Owner currently pays its
employees for similar work elsewhere in the State of California, or the following:
until December 31, 2017: 150% of the California State minimum wage. Such
wage shall increase on January 1 of each subsequent year at the same rate as the
California State minimum wage increases, or according to the Consumer Price
Index for Los Angeles County, for the quarter ending September 30 of the
preceding year, whichever is higher.
g. Full-time Work. Owner shall make its best efforts to fill every position with
a full-time employee. However, at no time shall Owner have a labor force that is
composed of less than 75% full-time employees. Owner agrees to provide to its
eligible employees leave benefits, health and wellness benefits and other
employee benefits to the extent such benefits are required to be paid for by Owner
under applicable state and federal employment laws.
8. Indemnification of City from Liability
a. Pursuant to City's requirement, Owner will indemnify City from any claims,
damages, injuries, or liabilities of any kind associated with the registration or
operation of Owner's cannabis facility or the prosecution of Owner's facility or its
owners, managers, directors, officers, employees, or its qualified patients or
primary caregivers for violation of federal or state laws.
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and Delivery Development Agreement
b. Owner agrees to defend, at its sole expense, any action against City, its
agents, officers, and employees related to the approval or issuance of the
Regulatory Permit and this Agreement.
c. Owner agrees to reimburse City for any court costs and attorney fees that
City may be required to pay as a result of any legal challenge related to City's
approval or issuance of a Regulatory Permit or this Agreement. City may, at its
sole discretion, participate at its own expense in the defense of any such action,
but such participation shall not relieve the holder of the Regulatory Permit or this
Agreement.
9. Fees. Costs, and Future Taxes
a. Fees. Owner agrees to pay all permit fees and charges referenced in
Section 4-34-11 of the municipal code, in the amounts adopted by the City Council
by resolution, as well as any fees set forth in this Agreement. Permit application,
processing, and renewal fees shall be due and payable at the time application is
made.
b. Costs. Owner agrees to reimburse City for all additional costs of City
resulting from the operation of a cannabis facility authorized under Article 4-34 of
the municipal code and the administrative regulations. Reimbursement to City for
such costs shall be due and payable upon demand.
c. Operating Fees. Owner agrees to pay to City, to enable City to promote,
protect, and enhance the healthy, safety, and welfare of the community and its
residents and its quality of life, the following fees:
1) an annual fee of two and one-half percent (2 .5%) of gross income
from manufacturing activities;
2) an annual fee of one and one-half percent (1 .5%) of gross income
from distribution activities when Owner is distributing for anyone other than
itself; and
3) an annual fee of two and one-half percent (2 .5%) of gross income
from delivery activities.
d. Owner agrees to compensate City for the increased demand on City
services, infrastructure, and utilities; local traffic demands; and increased City
review and oversight by the Los Angeles County Sheriff, planning department, and
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and Delivery Development Agreement
code enforcement of the operations of Owner's facility. Owner understands and
agrees the determination of the required per-square-foot fee will consider such
factors as the size, design, layout, operation, and security plan for the facility;
potential adverse effects on the community; and the allocation of City services and
staff time to oversee the operation of the facility.
e. Owner understands and agrees that the fees set forth above shall be paid
in a manner and in accordance with a payment schedule agreed to by City and
Owner, in intervals of no less than three months. The distribution and
manufacturing space to which the fee applies is as identified on the attached floor
plan. Payment shall be in equal installments paid quarterly commencing at the
end of the first quarter after the effective date of the Regulatory Permit which shall
be no sooner than the date a certificate of occupancy is issued for the subject
premises.
f. If Owner makes any changes to the interior layout of the facility that
increases or decreases the amount of space allocated to the permitted uses to
which the per-square-foot fee applies, Owner shall notify City of such changes at
least fourteen (14) calendar days prior to making such changes, and the per-
square-foot fee shall be modified accordingly.
10. Cost Recovery Fee "CRF"
City shall assess to Owner fees to recover City's reasonable processing and
monitoring costs relating to Owner's business upon issuance of Owner's
Manufacturing, Distribution, and Delivery Permits or any Additional Permits
("CRF"). The City shall submit sufficient information to Owner of City's total
number of hours required to process their Application or monitor their
authorizations. CRFs are separate and apart from any fees set forth in Article 9 or
Community Benefit Organization Contribution contained in Article 7 of this
Agreement.
a. Processing Fees. Processing fees for the Application are based upon the
direct and indirect costs that City incurs in reviewing the Application. The
processing fees for the Application shall be based only on costs that are necessary
for processing the Application and implementing the Ordinance, including staff
time, legal fees, and consultant fees. "Necessary for" means that but for the
Application, the costs would not have been incurred. The processing fee shall not
include costs for other City management objectives, unless they are necessary for
processing the Application.
b. Monitoring Fees. Monitoring fees for the Manufacturing, Distribution, and
Delivery Permits are based upon the direct and indirect costs City incurs in
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and Delivery Development Agreement
confirming the use of the Property in accordance with the municipal code, the
Ordinance, this Agreement, and the Application. The monitoring fees shall be
based only on costs that are necessary for conducting these reviews. "Necessary
for" means that but for the Manufacturing, Distribution, and Delivery Permits, or
any Additional Permits, the costs would not have been incurred. The monitoring
fee shall not include costs for other City management objectives, unless they are
necessary for monitoring the Manufacturing, Distribution, and Delivery Permits, or
any Additional Permits.
c. Billing and Payment. City shall bill Owner the CRF on the first day of each
quarter (March, June, September, and December) with an invoice providing an
hourly breakdown of hours expended by City and its representatives. Owner shall
pay the CRF invoice within sixty (60) days of the date the bill for the CRF is
received by Owner. Notwithstanding the foregoing, at no time shall the CRFs
exceed Seven Thousand Dollars ($7,000) during a given year, except that the first
year may be as high as twenty thousand dollars ($20,000) because of the costs
required to establish the application process and review the applications.
d. Disputes. If Owner disagrees with the dollar amount provided by City on
the CRF invoice, Owner may submit a written request before the disputed fee is
due for a substitution of alternative CRF invoice to the immediate supervisor of the
City representative who determined the CRF invoice. The written request must
include supporting documentation. After review of Owner's written request, Owner
and City shall work, in good faith to resolve Owner's written request. The dispute
shall be decided in favor of Owner if City does not respond to the written request
within thirty (30) days of receipt.
11. Additional Owner Obligations
a. Reporting of Gross Receipts from Operations
1) Quarterly Receipts. No later than January 15, 2018, and 15 days
after the last day of each subsequent quarter during the Term hereof, Owner
shall deliver to City a report (the "Quarterly Report") showing (i) Gross
Receipts from Operations for the immediate prior quarter received by
Owner, and a cumulative total of all amounts of Gross Receipts from
Operations received by Owner for the calendar year, (ii) a calculation of the
quarterly payment due to City for the prior quarter, and (iii) a calculation of
the cumulative total of all quarterly payments for the calendar year.
2) Statement of Receipts. Owner shall keep complete, accurate and
appropriate books and records of all receipts from operations in accordance
with generally accepted accounting principles. For purposes herein, "books
and records" shall mean all bookkeeping or accounting documents Owner
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and Delivery Development Agreement
utilizes in managing its business operations relating to the Project. Such
books and records, as well as all other relevant documents as City shall
reasonably require, shall, upon reasonable written notice, be open for
inspection by City, its auditors or other authorized representatives. If at any
time during the term such books and records prove inadequate in the
reasonable judgment of City to record the Gross Receipts from Operations
as herein required, Owner shall, upon the written request of City, procure
and maintain such books and records as shall be of a character and from
adequate for such purpose. City shall have the right to audit and examine
such books, records and documents and other relevant items in the
possession of Owner, but only to the extent necessary for a proper
determination of Gross Receipts from Operations, and all such books,
records, documents and other items shall be held available for such audit
and examination. Upon request by City, Owner shall make all such books,
records and documents available to City, and provide removable copies
thereof, within thirty (30) of the date of City's request. The cost for any audit
shall be shared equally by the Parties. Owner shall preserve such books,
records, documents, and other items in Lynwood for a period of not less
than seven (7) years for the purpose of auditing or re-auditing these
accounts upon reasonable notice; except that, if an audit is made within the
seven-year period and Owner claims that errors or omissions have
occurred, the books and records shall be retained and made available until
those matters are resolved. City shall keep strictly confidential all
statements of revenue furnished by Owner and all other information
concerning Owner's operation of the Premises obtained by City as a result
of the inspection audit and examination privileges of City hereunder, except
as otherwise required by law. If City receives a request for such information
pursuant to the Public Records Act (Qalifornia Government Code Section
6250, et seq.), City shall provide Owner notice of any such request prior to
disclosing any such information. Within seven (7) years after the receipt of
any statement of receipts under this Agreement, City at any time shall be
entitled to carry out an audit of such revenue either by City or agent to be
designated by City. If it shall be determined as a result of such audit that
there has been a deficiency in any payment due under this Agreement
made on the basis of such statement, then such deficiency shall become
immediately due and payable. If such statement of revenue for the relevant
year shall be found to have understated receipts by more than two percent
and City is entitled to any additional payment as a result of said
understatement, then Owner shall, in addition, pay all of City's reasonable
costs and expenses connected with such audit, including the expense
incurred in retaining such agent; otherwise City shall bear the cost and
expense of such audit.
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and Delivery Development Agreement
3) Copies of Tax Filings. Owner shall provide City with copies of any
reports Owner is required to provide to the County of Los Angeles or the
State of California for sales, use, or other tax purposes.
b. Applicability of Future Revenue Mechanisms. During the term of this
Agreement, if City imposes an alternative revenue mechanism specifically related
to cannabis operations (e.g., a cannabis tax), Owner agrees to pay to City the
greater of the payment required under such alternative revenue mechanism or the
payment required by this section. As used in this section, "alternative revenue
mechanism" does not include taxes, fees, or assessments levied on or collected
from both cannabis and non-cannabis operations. Payments required by revenue
mechanisms that are not limited to cannabis operations shall be in addition to, and
not in lieu of, payments under this section.
12. Insurance and Indemnity
a. Insurance. Owner shall require all persons doing work on the Project,
including its contractors and subcontractors (collectively, "Owner'' for purposes of
this Article 12 only), to obtain and maintain insurance of the types and in the
amounts described in this section and its subsections with carriers reasonably
satisfactory to City.
b. General Liability Insurance. Owner shall maintain commercial general
liability insurance or equivalent form with a limit of not less than Two Million Dollars
($2,000,000) (or as otherwise approved, in writing, by City) per claim and Two
Million Dollars ($2,000,000) each occurrence. Such insurance shall also:
1) Name City and its representatives as "Additional Insureds" by
endorsement with respect to performance of this Agreement. The coverage
shall contain no special limitations on the scope of its protection afforded to
the above-listed additional insured.
2) Be primary with respect to any insurance of self-insurance programs
covering City, its officials, employees, agents, and representatives.
3) Contain standard separation of insured provisions.
c. Automotive Liability Insurance. Owner shall maintain business automobile
liability insurance or equivalent form with a limit of not less than Two Million Dollars
($2,000,000) for each accident. Such insurance shall include coverage for owned,
hired, and non-owned automobiles. Such insurance shall also:
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and Delivery Development Agreement
1) Name City and its representatives as "Additional Insureds" by
endorsement with respect to performance of this Agreement. The coverage
shall contain no special limitations on the scope of its protection afforded to
the above-listed additional insureds.
2) Be primary with respect to any insurance or self-insurance programs
covering City, its officials, employees, agents, and representatives.
3) Contain standard separation of insured provisions.
d. Workers' Compensation Insurance. Owner shall take out and maintain
during the term of this Agreement, workers' compensation insurance for all of
Owner's employees employed at or on the Project, and in the event any of the
work is subcontracted, Owner shall require any general contractor or subcontractor
similarly to provide workers' compensation insurance for such contractor's or
subcontractor's employees, unless such employees are covered by the protection
afforded by Owner. In case any class of employee engaged in work on the Project
is not protected under any workers' compensation law, Owner shall provide and
shall cause each contractor and subcontractor to provide adequate insurance for
the protection of employees not otherwise protected. Owner hereby indemnifies
City for any damage resulting from failure of Owner, its agents, employees,
contractors, or subcontractors to take out or maintain such insurance. Workers'
compensation insurance with statutory limits and employer's liability insurance with
limits of not less than One Million Dollars ($1,000,000) each accident shall be
maintained.
e. Other Insurance Requirements. Owner shall do all the following:
1) Prior to taking any actions under this Agreement, furnish City with
properly executed certificates of insurance that clearly evidenced all
insurance required in this Article, including evidenced that such insurance
will not be canceled, allowed to expire, or be materially reduced in coverage
without thirty (30) days prior written notice to City.
2) Provide to City, upon request, and within fourteen (14) calendar days
of said request, certified copies of endorsements and policies, and properly
executed certificates of insurance evidencing the insurance required herein.
3) Replace or require the replacement of certificates, policies and
endorsements for any insurance required herein expiring prior the
termination of this Agreement.
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and Delivery Development Agreement
4) Maintain all insurance required herein from the Effective Date of this
Agreement to the earlier of the expiration of the term or the mutual written
termination of this Agreement.
5) Place all insurance required herein with insurers licensed to do
business in California with a current Best's Key Rating Guide reasonably
acceptable to City.
f. Indemnity. Owner agrees to indemnify, defend, and hold City, and its
elected and appointed council, boards, commissions, officers, agents, employees,
consultants, and representatives, harmless from any and all claims costs and
liability for any personal injury or property damage which may arise as a result of
any actions or negligent omissions by Owner or Owner's contractors,
subcontractors, agents, or employees in connection with the construction,
improvement, or operation of the Project.
13. Termination
a. Termination Upon Completion of Development. This Agreement shall
terminate upon the expiration of the term, unless it is terminated earlier pursuant
to the terms of this Agreement. Upon termination of this Agreement, City shall
record a notice of such termination, and this Agreement shall be of no further force
or effect except as otherwise set forth in this Agreement.
b. Effect of Termination on Owner's Obligations. Termination of this
Agreement shall eliminate any further obligation of Owner to comply with this
Agreement, or some portion thereof, if such termination relates to only part of the
Site or Project. Termination of this Agreement, in whole or in part, shall not,
however, eliminate the rights of Owner to seek any applicable and available
remedies or damages based upon acts or omissions occurring before termination.
c. Effect of Termination on City's Obligations. Termination of this Agreement
shall eliminate any further obligation of City to comply with this Agreement, or some
portion thereof. Termination of this Agreement shall not, however, eliminate the
rights of City to seek any applicable and available remedies or damages based
upon acts or omissions occurring before termination.
d. Survival After Termination. The rights and obligations of the Parties set
forth in Article 17, Article 23, and Section 26(e), Section 26(f), and Section 26(h),
and any right or obligation of the Parties in this Agreement which, by its express
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and Delivery Development Agreement
terms or nature and context is intended to survive termination of this Agreement,
will survive any such termination.
14. Resources Efficiency
The design of the facility shall include significant water and energy conservation
measures to minimize resource consumption. The design shall attempt, when Owner
deems feasible, to incorporate solar, wind, high efficiency lighting, and water recycling
systems and technology. High efficiency LED lighting systems for the exterior lighting will
be used. Owner will develop a system to collect and recycle storm water to the extent
feasible.
15. Standard Conditions for Construction
During any on-site construction activities related to development of the project site and
any buildings thereon, or renovation or remodeling of existing buildings, Owner and
Landlord shall comply with all applicable terms and conditions of City's Standard
Conditions for Construction, attached hereto and incorporated herein by reference. The
Project shall comply with the applicable parking standards established by the City for
cannabis activities.
16. Defaults and Remedies
a. Remedies in general. It is acknowledged by the parties that City would not
have entered into this Agreement if it were to be liable in damages under this
Agreement, or with respect to this Agreement or the application thereof, except as
hereinafter expressly provided. Subject to extensions of time by mutual consent
in writing, failure to delay by either party to perform any term or provision of this
Agreement shall constitute a default. In the event of alleged default or breach of
any terms or conditions of this Agreement, the party alleging such default or breach
shall give the other party not less than thirty (30) day notice in writing specifying
the nature of the alleged default and the manner in which said default may be
satisfactorily cured during any such thirty (30) day period, the party charged shall
not be considered in default for purposes of termination or institution of legal
proceedings. Notwithstanding the foregoing to the contrary, if the alleged default
is of such a nature that it cannot be cured within thirty (30) days, the alleged
defaulting party shall not be deemed in default as long as such party commences
to cure such default within such thirty (30) day period and thereafter diligently
prosecutes such cure to completion.
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and Delivery Development Agreement
After notice and expiration of the thirty (30) day period, the other party to this
Agreement, at its option, may institute legal proceedings pursuant to this
Agreement.
In general, each of the parties hereto may pursue any remedy at law or equity
available for the breach of any provision of this Agreement, except that City shall
not be liable in monetary damages, unless expressly provided for this Agreement,
to Owner, to any mortgagee or lender, or to any successors in interest of Owner
or mortgagee or lender, or to any other person, and Owner covenants on behalf of
itself and all successors in interest to the Property or any portion thereof, not to
sue for damages or claim any damages.
i.For any breach of this Agreement or for any cause of action which arises
out of this Agreement; or
ii.For the impairment or restriction of any right or interest conveyed or
provided under, with, or pursuant to this Agreement, including, without
limitation, any impairment or restriction which Owner characterizes as a
regulatory taking or inverse condemnation; or
iii.Arising out of or connected with any dispute, controversy or issue regarding
the application or interpretation or effect of the provisions of this Agreement.
Nothing contained herein shall modify or abridge Owner's rights or remedies
(including its rights for damages, if any) resulting from the exercise by City of its
power of eminent domain. Nothing contained herein shall modify or abridge
Owner's rights or remedies (including its rights for damages, if any) resulting from
the grossly negligent or malicious acts of City and its officials, officers, agents and
employees. Nothing herein shall modify or abridge any defenses or immunities
available to City and its employees pursuant to the Government Liability Act and
all other applicable statutes and decisional law.
Except as set forth in the preceding paragraph relating to eminent domain, Owner's
remedies shall be limited to those set forth in this Section 16(a), Section 16(b), and
Section 16(c).
Notwithstanding anything to the contrary contained herein, City covenants as
provided in Civil Code Section 3300 not to sue for or claim any consequential
damages or, in the event all or a portion of the Property is not developed, for lost
profits or revenues which would have accrued to City as a result of the
development of the Property.
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and Delivery Development Agreement
b. Specific Performance. The parties acknowledge that money damages and
remedies at law are inadequate, and specific performance and other non-monetary
relief are particularly appropriate remedies for the enforcement of this Agreement
and should be available to all parties for the following reasons:
1) Except as provided in Sections 16(a) and 16(e), money damages are
unavailable against City as provided in Section 16(a) above.
2) Due to the size, nature and scope of the Project, it may not be
practical or possible to restore the Property to its natural condition once
implementation of this Agreement has begun. After such implementation,
Owner may be foreclosed from other choices it may have had to use the
Property or portions thereof. Owner has invested significant tir11e and
resources and performed extensive planning and processing of the Project
in agreeing to the terms of this Agreement and will be investing even more
significant time and resources in implementing the Project in reliance upon
the terms of this Agreement, and it is not possible to determine the sum of
money which would adequately compensate Owner for such efforts; the
parties acknowledge and agree that any injunctive relief may be ordered on
an expedited, priority basis.
c. Release. Except for those remedies set forth in Sections 16(a), 16(b), and
16(c), Owner, for itself, its successors and assignees, hereby releases City, its
officers, agents and employees from any and all claims, demands, actions, or suits
of any kind or nature arising out of any liability, known or unknown, present or
future, based or asserted, pursuant to Article 1, Section 19 of the California
Constitution, the Fifth Amendment of the United States Constitution, or any other
law or ordinance which seeks to impose any other liability or damage, whatsoever,
upon City because it entered into this Agreement or because of the terms of this
Agreement.
Owner acknowledges that it may have suffered, or may suffer, damages and other
injuries that are unknown to it, or unknowable to it, at the time of its execution of
this Agreement. Such fact notwithstanding, Owner agrees that the release
provided in this Section 16(c) shall apply to such unknown or unknowable claims
and damages. Without limiting the generality of the foregoing, Owner
acknowledges the provisions of California Civil Code Section 1542, which provide:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his or her favor at the time of executing
the release, which if known by him or her must have materially
affected his or her settlement with the debtor."
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and Delivery Development Agreement
Owner hereby waives, to the maximum legal extent, the provisions of California
Civil Code Section 1542 and all other statutes and judicial decisions of similar
effect.
Initials
d. Termination of Agreement for Default of City. Owner may terminate this
Agreement only in the event of a default by City in the performance of a material
term of this Agreement and only after providing written notice to City of default
setting forth the nature of the default and the actions, if any, required by City to
cure such default and, where the default can be cured, City has failed to take such
actions and cure such default within sixty (60) days after the effective date of such
notice or, in the event that such default cannot be cured within such sixty (60) day
period but can be cured within a longer time, has failed to commence the actions
necessary to cure such default within such sixty (60) day period and to diligently
proceed to complete such actions and cure such default.
e. Attorneys' Fees and Costs. In any action or proceeding between City and
Owner brought to interpret or enforce this Agreement, or which in any way arises
out of the existence of this Agreement or is based upon any term or provision
contained herein, the "prevailing party" in such action or proceeding shall be
entitled to recover from the non-prevailing party, in addition to all other relief to
which the prevailing party may be entitled pursuant to this Agreement, the
prevailing party's reasonable attorneys' fees and litigation costs, in an amount to
be determined by the court. The prevailing party shall be determined by the court
in accordance with California Code of Civil Procedure Section 1032. Fees and
costs recoverable pursuant to this Section 16(e) include those incurred during any
appeal from an underlying judgment and in the enforcement of any judgment
rendered in any such action or proceeding.
f. Owner Default. No building permit shall be issued or building permit
application accepted for any structure on the Property after Owner is determined
by City to be in default of the terms and conditions of this Agreement until such
default thereafter is cured by Owner or is waived by City. If City terminates this
Agreement because of Owner's default, then City shall retain any and all benefits,
including money or land received by City hereunder.
17. Third Party Litigation
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and Delivery Development Agreement
a. General Plan Litigation. City has determined that this Agreement is
consistent with its General Plan. Owner has reviewed the General Plan and
concurs with City's determination.
City shall have no liability under this Agreement or otherwise for any failure of City
to perform under this Agreement, or for the inability of Owner to develop the
Property as contemplated by the Development Plan, which failure to perform or
inability to develop is as the result of a judicial determination that the General Plan,
or portions thereof, are invalid or inadequate or not in compliance with law, or that
this Agreement or any of City's actions in adopting it were invalid, inadequate, or
no in compliance with the law.
b. Hold Harmless Agreement. Owner hereby agrees to, and shall hold City,
its elective and appointive boards, commissions, officers, agents, and employees
harmless from any liability for damage or claims for damage for personal injury,
including death, as well as from claims for property damage which may arise from
Owner or Owner's contractors, subcontractors, agents, or employees' operations
under this Agreement, whether such operations be by Owner, or by any of Owner's
contractors, subcontractors, agents, or employees operations under this
Agreement, whether such operations be by Owner, or by any of Owner's
contractors, subcontractors, or by any one or more persons directly or indirectly
employed by, or acting as agent for Owner or any of Owner's contractors or
subcontractors. Owner agrees to and shall defend City and its elective and
appointive boards, commissions, officers, agents and employees from any suits or
actions at law or in equity for damage caused, or alleged to have been caused, by
reason of any of the aforesaid operations.
c. Indemnification. Owner shall defend, indemnify, and hold harmless City and
its agents, officers, and employees against and from any and all liabilities,
demands, claims, actions or proceedings and costs and expenses incidental
thereto (including costs of defense, settlement and reasonable attorneys' fees),
which any or all of them may suffer, incur, be responsible for or pay out as a result
of or in connection with any challenge to the legality, validity or adequacy of any of
the following: (i) this Agreement and the concurrent and subsequent permits,
licenses and entitlements approved for the Project or Property; (ii) the
environmental impact report, mitigated negative declaration or negative
declaration, as the case may be, prepared in connection with the development of
the Property; (iii) any claims based on or alleging inverse condemnation by any
person or entity with an interest in the Property; and (iv) the proceedings
undertaken in connection with the adoption or approval of any of the above. In the
event of any legal or equitable action or other proceeding instituted by any third
party (including a governmental entity or official) challenging the validity of any
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and Delivery Development Agreement
provision of this Agreement or any portion thereof as set forth herein, the parties
shall mutually cooperate with each other in defense of said action or proceeding.
Notwithstanding the above, City, at is sole option, may tender the complete
defense of any third-party challenge as described herein. In the event City elects
to contract with special counsel to provide for such a defense, City shall meet and
confer with Owner regarding the selection of counsel, and Owner shall pay all costs
related to retention of such counsel.
d. Environmental Contamination. Owner shall indemnify and hold City, its
officers, agents, and employees free and harmless from any liability, based or
asserted, upon any act or omission of Owner, its officers, agents, employees,
subcontractors, predecessors in interest, successors, assigns and independent
contractors, excepting and acts or omissions of City as successor to any portions
of the Property dedicated or transferred to City by Owner, for any violation of any
federal, state or local law, ordinance or regulation relating to industrial hygiene or
to environmental conditions on, under or about the Property, including, but not
limited to, soil and groundwater conditions, and Owner shall defend, at its expense,
including attorneys' fees, City, its officers, agents and employees in any action
based or asserted upon any such alleged act or omission. City may in its discretion
participate in the defense of any such claim, action or proceeding.
The provisions of this Section 17(d) do not apply to environmental conditions that
predate Owner's ownership or control of the Property or applicable portion;
provided, however, that the foregoing limitation shall not operate to bar, limit or
modify any of Owner's statutory or equitable obligations as an owner or seller of
the Property.
e. City to Approve Counsel. With respect to Sections 17(a) through 17(d), City
reserves the right to approve the attorney(s) which Owner selects, hires or
otherwise engages to defend City hereunder, which approval shall not be
unreasonably withheld.
f. Accept Reasonable Good Faith Settlement. With respect to Article 17, City
shall not reject any reasonable good faith settlement. If City does reject a
reasonable, good faith settlement that is acceptable to Owner, Owner may enter
into a settlement of the action, as it relates to Owner, and City shall thereafter
defend such action (including appeals) at its own cost and be solely responsible
for any judgment rendered in connection with such action. This Section 17(f)
applies exclusively to settlements pertaining to monetary damages or damages
which are remedial by the payment of monetary compensation. Owner and City
expressly agree that this Section 17(f) does not apply to any settlement that
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and Delivery Development Agreement
requires an exercise of City's police powers, limits City's exercise of its police
powers, or affects the conduct of City's municipal operations.
g. Survival. The provisions of Sections 17(a) through 17(f) inclusive, shall
survive the termination or expiration of the Agreement.
18. California Environmental Quality Act
Owner shall reimburse City for any and all costs incurred by City related to project review
under the California Environmental Quality Act (CEQA), Public Resources Code,
§§21 000-21189.3, and the Guidelines for California Environmental Quality Act, California
Code of Regulations, Title 14, §§15000-15387. If requested by City, Owner shall conduct
and pay for any required CEQA reviews and analyses. The City has found that the
proposed Project is Categorically Exempt from California Environmental Quality Act
(CEQA) requirements under provisions of CEQA Guidelines Section 15332 -In-Fill
Development Projects. This exemption applies to projects characterized as in-fill
development meeting the conditions described in Section 15332.
19. Rules. Regulations, and Official Policies
Except as otherwise provided in this Agreement, the rules, regulations, and official
policies of City governing permitted uses of the land, governing density, and governing
the design, improvements, and construction standards and specifications applicable to
the development of the Project subject of this Agreement, shall be those rules,
regulations, and official policies of City in force at the time of the execution of this
Agreement. This Agreement does not prevent City, in subsequent actions applicable to
the property, from applying new rules, regulations, and policies which do not conflict with
those rules, regulations, and policies applicable to the property as set forth herein, nor
does this Agreement prevent City from denying or conditionally approving any
subsequent development project application based on such existing or new rules,
regulations, or policies.
20. Regulatory Permit Conditions of Approval
Owner shall comply with all conditions of approval of the Regulatory Permit approved by
City Council.
21. Periodic Reviews
This Agreement shall be subject to annual review. Owner and Landlord executing this
Agreement, or successor in interest thereto, shall demonstrate good faith compliance with
the terms of this Agreement. If, as a result of such periodic review, City finds and
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and Delivery Development Agreement
determines, based on substantial evidence, that Owner or Landlord executing this
Agreement, or successor in interest thereto, has not complied in good faith with the terms
or conditions of this Agreement, City may terminate or modify this Agreement.
a. Periodic Review. City Council shall review this Agreement annually, on or
before each anniversary of the Effective Date, in order to ascertain Owner's good
faith compliance with this Agreement. During the periodic review Owner shall be
required to demonstrate good faith compliance with the terms of the Agreement,
through submitting an annual monitoring report, records, or equivalent written
materials to the Planning Department. The Planning Department will schedule a
hearing on the periodic review of the Development Agreement on or following the
anniversary of the Effective Date, but Owner has no obligation to compel such
hearing, and no implication will be made to Owner's detriment if a hearing is not in
fact held. Owner shall document any request for an extension of the term due to
delays beyond the control of Owner (see Section 26U), "Force Majeure"). Owner
shall submit an annual review and administration fee deposit not to exceed City's
estimated internal and third-party costs associated with the review and
administration of this Agreement during the succeeding year, consistent with
Section 26(k) ("Deposit with City") below. City shall provide Owner said estimate
a reasonable time in advance of the annual review and administration fee deposit
being due.
b. Conditional Use Permit. For all intents and purposes, the Regulatory Permit
to be issued under this Agreement shall be treated as if it were a Conditional Use
Permit issued to Owner for the establishment and operation of its business. The
operation of the business at all times shall be required to comply with the terms of
this Agreement.
c. Special Review. City Council may order a special review of compliance with
this Agreement at any time. The Planning Director or his or her designee shall
conduct such special review. During a special review, Owner shall be required to
demonstrate good faith compliance with the terms of the Agreement. The burden
of proof on this issue shall be on Owner to provide evidence that no violation
occurred or that the violation has been cured.
d. Review Hearing. At the time and place set for the review hearing, Owner
shall be given an opportunity to be heard. If City Council finds, based upon
substantial evidence, that Owner has not complied in good faith with the terms or
conditions of this Agreement, City Council may terminate this Agreement
notwithstanding any other provision of this Agreement to the contrary, or modify
this Agreement and impose such conditions as are reasonabiy necessary to
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and Delivery Development Agreement
protect the interests of City. The decision of City Council shall be final, subject
only to judicial review pursuant to Code of Civil Procedure Section 1094.5.
e. Certificate of Agreement Compliance. If, after a periodic or special review,
Owner is found to be in compliance with this Agreement, and if Owner requests it,
City shall issue a Certificate of Agreement Compliance ("Certificate") to Owner
stating that after the most recent periodic or special review, and based upon the
information known or made known to the Planning Director and City Council, that
(i) this Agreement remains in effect and (ii) Owner is not in default.
City shall not be bound by a Certificate if a default existed at the time of the periodic
or special review, but was concealed from or otherwise not known to the Planning
Director and City Council, regardless of whether the Certificate is relied upon by
assignees or other transferees or Owner.
f. Failure to Conduct Review. City's failure to conduct a periodic review of this
Agreement shall not constitute a breach of this Agreement.
g. Cost of Review. The costs incurred by City in connection with the periodic
reviews shall be borne by Owner.
22. Obligations of Landlord
Landlord shall have rights, duties, obligations, and liability only as expressly set forth
herein. Landlord shall have no responsibility or liability for the failure of Owner to perform
as required by this Agreement.
23. Assignment
a. Assignment by Landlord. Landlord shall not transfer, delegate, or assign its
interest, rights, duties, and obligations under this Agreement, without the prior
written consent of City.
b. Assignment by Owner. Owner shall not transfer, delegate, or assign its
interest, rights, duties, and obligations under this Agreement without the prior
written consent of City. Any assignment, delegation, or assignment without the
prior written consent of City shall be null and void. Any transfer, delegation, or
assignment by Owner as authorized herein shall be effective only if and upon the
party to whom such transfer, delegation, or assignment is made is issued a
Regulatory Permit as required under Article 4-34 of the municipal code.
24. Operating Cannabis Facility
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Any party to this Agreement, or successor in interest thereto, shall not operate a cannabis
facility authorized under the municipal code unless:
a. It is the holder of a valid Regulatory Permit issued by City in accordance
with the procedures and requirements of Article 4-34 of the municipal code; and
b. At such time as the State of California requires cannabis facilities and
businesses to hold a valid license or permit issued by the State of California, it also
holds such license or permit, unless, however, such permit or license is not
required by the State of California for the type of cannabis facility or business
operation that is the subject of this Agreement.
25. Notice
Any notice or communication required hereunder between City and Owner must be in
writing, and may be given either personally, by facsimile (with original forwarded by
regular U.S. Mail), by registered or certified mail (return receipt requested), or by Federal
Express, UPS or other similar couriers providing overnight delivery. If personally
delivered, a notice shall be deemed to have been given when delivered to the Party to
whom it is addressed. If given by facsimile transmission, a notice or communication shall
be deemed to have been given and received upon actual physical receipt of the entire
document by the receiving Party's facsimile machine. Notices transmitted by facsimile
after 5:00 p.m. on a normal business day or on a Saturday, Sunday, or holiday shall be
deemed to have been given and received on the next normal business day. If given by
registered or certified mail, such notice or communication shall be deemed to have been
given and received on the first to occur of (i) actual receipt by any of the addressees
designated below as the party to whom notices are to be sent, or (ii) five (5) days after a
registered or certified letter containing such notice, properly addressed, with postage
prepaid, is deposited in the United States mail. If given by Federal Express or similar
courier, a notice or communication shall be deemed to have been given and received on
the date delivered, as shown on a receipt issued by the courier. Any Party hereto may at
any time, by giving ten (1 0) days written notice to the other Party hereto, designate any
other address in substitution of the address to which such notice or communication shall
be given. Such notices or communications shall be given to the Parties at their addresses
set forth below:
If to C1ty: City of Lynwood
11330 Bullis Road
Lynwood, California 90262
Attention: City Manager
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and Delivery Development Agreement
and
If to Owner:
If to Landlord:
With a courtesy copy to:
H. Francisco Leal, Esq.
Leal Trejo, APC
3767 Worsham Avenue
Long Beach, California 90808
Alan Tsai, Authorized Representative
Natural Plant Extract of California
11116 Wright Road
Lynwood, California 90262
David R. Welch, Esq.
DIR Welch Attorneys at Law, A P.C.
500 South Grand Avenue Suite 1800
Los Angeles, CA 90071
Address Changes. Either party may, by notice given at any time, require subsequent
notices to be given to another person or entity, whether a party or an officer or
representative of a party or to a different address, or both. Notices given before actual
receipt of notice of change shall not be invalidated by the change.
26. Miscellaneous Provisions
a. Regulatorv Permit Conditions of Aooroval. Owner shall comply with all
conditions of approval of the Regulatory Permit approved by City Council.
b. Amendment or Cancellation. This Agreement may be amended, or
canceled in whole or in part, only by the written mutual consent of the parties to
this Agreement or their successors in interest, except that minor amendments that
do not affect a substantive provision of this Agreement may be approved by the
City Manager. The decision whether a proposed amendment is "minor" shall be in
the exclusive discretion of the City Manager.
c. Waiver. Waiver by City of any one or more of the terms or conditions of this
Agreement shall not be construed as waiver of any other term or condition under
this Agreement.
d. Enforcement. Unless amended or canceled pursuant hereto, this
Agreement shall be enforceable by any party hereto, or successor in interest
thereto, notwithstanding any subsequent change in any applicable general or
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and Delivery Development Agreement
specific plan, zoning, subdivision or building regulation, or municipal code
amendment adopted by City that conflicts with the terms of this Agreement.
e. Joint and Several Liability. Owner and Landlord shall be jointly and
severally liable for any amount due under this Agreement, and any breach of this
Agreement or failure to pay by one Party shall also constitute a breach of this
Agreement by the other Party. Owner and Landlord agree that City may impose a
lien and seek foreclosure on any parcel of the Site due to any default by Owner.
f. Severability. If any part of this Agreement is found to conflict with applicable
state laws or regulations, such part shall be inoperative, null, and void insofar as it
conflicts with said laws or regulations, or modified or suspended as may be
necessary to comply with such state laws or regulations, but the remainder of this
Agreement shall continue to be in full force and effect.
g. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which together
shall constitute one and the same instrument. The execution of this Agreement
may be by actual, facsimile, or electronic signature.
h. Jurisdiction and Arbitration. The law governing this Agreement shall be that
of the State of California. Any suit brought by any party against any other party
arising out of the performance of this Agreement shall be filed and maintained in
the County of Los Angeles Superior Court. Any dispute, claim or controversy
arising out of or relating to this Agreement or the breach, termination, enforcement,
interpretation or validity thereof, including the determination of the scope or
applicability of this Agreement to arbitrate, shall be determined by binding
arbitration in Los Angeles, California before one arbitrator. Said arbitrator shall be
chosen by mutual agreement of the Parties. If the Parties cannot agree on an
arbitrator within 30 days of the first notice by either Party of the need for arbitration,
each Party shall name one arbitrator, then the two arbitrators shall choose the
arbitrator who shall hear the case.
i. Disclaimer. Despite California's cannabis laws and the terms and
conditions of this Agreement, any Conditional Use Permit, or any Regulatory
Permit issued pertaining to Owner or the property specified herein, California
cannabis cultivators, transporters, distributors, or possessors may still be subject
to arrest by state or federal officers and prosecuted under state or federal law. The
Federal Controlled Substances Act, 21 USC § 801, prohibits the manufacture,
distribution, and possession of cannabis without any exemptions for medical use.
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j. Force Majeure. If delays are caused by unforeseen events beyond the
control of Owner, such delays will entitle Owner to an extension of time as provided
in this section. Such unforeseen events ("Force Majeure") shall mean war,
insurrection, acts of God, local, state or national emergencies, strikes and other
labor difficulties beyond the party's control, any judgment in an action filed by the
federal government which results in the closure of the Facility, or any default by
City hereunder, which Force Majeure event substantially interferes with the
development or construction of the Project.
In the case of a Force Majeure event, any and all time periods referred to in this
Agreement shall be extended for a period equal to any delay to the Project caused
by any such Force Majeure event; provided, however, that no such time period
shall be extended beyond a cumulative total of one (1) year.
Extensions of time, when granted, will be based upon the effect of delays on the
Project. They will not be granted for: (1) delays of seven days or less or (2) for
delays due to Owner's inability to obtain financing with respect to the Development
of the Project.
k. Deposit with City. Owner shall be responsible for all of the costs associated
the Project, including but not limited to costs associated with City's review and
processing of the Project, including but not limited to reviewing the Project's
entitlements, including all environmental clearance documents, permits, licenses
and all documents evidencing compliance with state and local law, and as such
Owner agrees to deposit good and sufficient funds with City whereby Owner shall
deposit money with City for the purpose of reimbursing City for any associated
costs with processing the Project, as detailed in this Agreement.
I. Constructive Notice and Acceptance. Every person who after the Effective
Date and recording of this Agreement owns or acquires any right, title, or interest
to any portion of the Site, is and shall be conclusively deemed to have consented
and agreed to every provision contained herein, whether or not any reference to
this Agreement is contained in the instrument by which such person acquired an
interest in the Site, and all rights and interests of such person in the Site shall be
subject to the terms, requirements, and provisions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
CITY OF LYNWOOD
Alma K. Martinez
City Manager
APPROVED AS TO FORM:
NATURAL PLANT EXTRACT OF CALIFORNIA
Name:
Title:
LANDLORD
Name:
Title:
Page 34 of34 Manufacturing, Distribution,
and Delivery Development Agreement
COMMERCIAL CANNABIS
DEVELOPMENT AGREEMENT
BY AND BETWEEN
THE CITY OF LYNWOOD
AND
LACTURNUS RESEARCH ASSOCIATION, INC.
AND
LYNWOOD SANTA FE, LLC
Development Agreement No. 2017-10 MOD
This Agreement is made by and between and among the CITY OF LYNWOOD
("City") and Lacturnus Research Association, Inc. ("Owner'') and Lynwood Santa Fe. LLC
("Landlord") this_ day of January 2018, as required by Section 4-34-5 of the Lynwood
Municipal Code setting forth the terms and conditions under which Owner shall operate
a cannabis cultivation, manufacturing, and delivery facility (also, the "Project") pursuant
to its Regulatory Permit that are in addition to the requirements of Article 4-34 of the
Lynwood Municipal code, including, but not limited to, public outreach and education,
community service, payment of fees and other charges as set forth or referenced herein,
and such other terms and conditions as will protect and promote the public health, safety,
and welfare, each in so far as it is directly affected by the Project. The requirements set
forth in Article 4-34 of the Lynwood Municipal Code, and the Administrative Regulations
adopted by the City Council of the City of Lynwood are incorporated herein by reference
in such form as they exist as of the date hereof. All subsequent references to "municipal
code" mean the Lynwood Municipal Code.
1. RECITALS.
a. WHEREAS, the City is authorized to enter into binding development
agreements with persons having legal or equitable interests in real property for
the development of such property, pursuant to Government Code
Section 65864, et seq.; and
b. WHEREAS, the City has adopted rules and regulations for consideration of
development agreements pursuant to Government Code Section 65865, and
as further set forth in LMC Title 4-34; and
c. WHEREAS, Owner voluntarily enters into this Agreement and after extensive
negotiations and proceedings have been taken in accordance with the rules
and regulations of the City, Owner has elected to execute this Agreement as it
provides Owner with important economic and development benefits; and
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Development Agreement
d. WHEREAS, this Agreement and the Project are consistent with the City's
General Plan and Zoning Code and applicable provisions of the City's
applicable Zoning Map as of the Effective Date; and
e. WHEREAS, all actions taken and approvals given by the City have been duly
taken or approved in accordance with all applicable legal requirements for
notice, public hearings, findings, votes, and other procedural matters; and
f. WHEREAS, this Agreement will eliminate uncertainty in planning and provide
for the orderly development of the Property, ensure progressive installation of
necessary improvements, provide for public services appropriate to the
development of the Project, and generally serve the purposes for which
development agreements authorized under Government Code Sections 65864
et seq. are intended; and
g. WHEREAS, in implementation of the promulgated state policy to promote
private participation in comprehensive planning and to strengthen the public
planning process and to reduce the economic risk of development, the City
deems the implementation of this Agreement to be in the public interest and
intends that the adoption of this Agreement be considered an exercise of the
City's police powers to regulate the development of the Property during the
term of this Agreement; and
h. WHEREAS, this Agreement is consistent with the public health, safety and
welfare needs of the residents of the City and the surrounding region and the
City has specifically considered and approved the impact and benefits of the
development of the Property in accordance with this Agreement upon the
welfare of the region; and
i. WHEREAS, Owner intends to develop a Cannabis Cultivation, Manufacturing
and Distribution Facility pursuant to the Lynwood Municipal Code ("LMC")
Article 4-34 and all applicable state laws, rules, and regulations; and
j. WHEREAS, this Agreement, in the future, shall be read consistent with any
statewide regulation that may be passed by voter initiative or the state
legislature, which decriminalizes or legalizes cannabis for Adult Use, also
known as adult-use cannabis. This Agreement shall govern the conduct of this
business to cultivate, manufacture, sell and distribute cannabis under such
statewide regulation, consistent with any City regulations not preempted by any
such statewide regulations.
2. GENERAL TERMS.
a. Definitions and Exhibits. The following terms when used in this Agreement shall
be defined as follows:
1) "Agreement" means this Development Agreement.
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Development Agreement
2) "City" means the City of Lynwood, a California municipal corporation .
3) "Days" mean calendar days unless otherwise specified.
4) "Dedicate" means to offer the subject land for dedication and to post sufficient
bonds or other security if necessary for the improvements to be constructed
including, but not limited to: grading, the construction of infrastructure and
public facilities related to the Project whether located within or outside the
Property, the construction of buildings and structures, and the installation of
landscaping.
5) "Development" includes grading, construction or installation of public and
private facilities and the right to maintain, repair or reconstruct any private
building, structure, improvement or facility after the construction and
completion thereof; provided, however, that such maintenance, repair, or
reconstruction take place within the Term of this Agreement on parcels subject
to it.
6) "Development Plan" means the Existing Development Approvals and the
Existing Land Use Regulations applicable to development of the Property for
the Project, as modified and supplemented by Subsequent Development
Approvals.
7) "LMC" means the City of Lynwood Municipal Code.
8) "Effective Date" means the 31st day after the second reading of the Ordinance
adopting and approving this Development Agreement.
9) "Mortgagee" means a mortgagee of a mortgage, a beneficiary under a deed of
trust or any other security-device lender and its successors-in interest.
1 O)"Processing Fees" means the normal and customary application, filing, plan
check, permit fees for land use approvals, design review, tree removal permits,
building permits, demolition permits, grading permits, and other similar permits
and entitlements, and inspection fees in effect on the Effective Date, which fees
are charged to reimburse the City's expenses attributable to such applications,
processing, permitting, review and inspection and which are in force and effect
on a general basis at such time as said approvals, permits, review, inspection
or entitlements are granted or conducted by the City.
11 )"Project" means the Development of the Property contemplated by the
Development Plan. The project may also include any parcel of land that is
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Development Agreement
within 1,000 feet of the Property to which Owner wishes to expand. The
distance of 1,000 feet shall be measured as a straight line, without regard for
intervening structures, from the Property's property line to the selected parcel
for development.
12)"Property" means the real property described on Exhibit A, attached hereto and
incorporated herein by this reference.
13)"Reasonable" means using due diligence to accomplish a stated objective that
the subject party is capable of performing or providing under the circumstances
in a manner that is consistent with the intent and objectives of the Agreement.
14)"Cultivation Space" shall mean any space or ground, floor or other surface area
(whether horizontal or vertical) which is used during the cannabis germination,
seedling, vegetative, pre-flowering, flowering and harvesting phases, including
without limitation any space used for activities such as growing, planting,
seeding, germinating, lighting, warming, cooling, aerating, fertilizing, watering,
irrigating, topping, pinching, cropping, curing or drying cannabis or any such
space used for storing any products, supplies or equipment related to any such
activities, no matter where such storage may take place or such storage space
may be located.
15)
16)Exhibits. The following documents are attached to and, by this reference, made
part of this Agreement: Exhibit A-Map showing Property and its location.
17)Amendment or Cancellation of Agreement. This Agreement may be amended,
modified or canceled in whole or part only by the following means:
i. Pursuant to Government Code Section 65869.5, as necessary to comply
with state or federal laws or regulations enacted after the Effective Date;
provided, however, that this Agreement shall remain in full force and effect
to the extent the remaining provisions are not inconsistent with such laws
or regulations and to the extent such laws or regulations do not render the
remaining provisions of this Agreement impractical to enforce; or
ii. By mutual written consent of both the City and Owner and Landlord
pursuant to Government Code Section 65868, following all required public
notices and hearings and City Council approval.
18) Automatic Termination. This Agreement shall automatically terminate upon
the occurrence of any of the following events:
i. Expiration of the Term of this Agreement as set forth in Section 3;
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Development Agreement
ii. Entry of a final judgment setting aside, voiding or annulling the adoption of
the ordinance approving this Agreement;
iii. The adoption of a referendum measure pursuant to Government Code
Section 65867.5 overriding or repealing the ordinance approving this
Agreement; or
iv. The entry of a final judgment (or a decision on any appeal therefrom) voiding
the City's General Plan or any element thereof, which judgment or decision
would preclude development of the Project, but only if the City is unable to
cure such defect in the General Plan or element within one hundred and
eighty (180) days from the later of entry of final judgment or decision on
appeal.
19)Validity of this Agreement. Owner and the City each acknowledge that neither
party has made any representations to the other concerning the enforceability
or validity of any one or more provisions of this Agreement. The parties
acknowledge and agree that neither party shall allege in any administrative or
judicial proceeding that the entering into or the performance of any obligations
created in this Agreement violates federal or state law, with respect to all
federal, state and local statutes, ordinances or regulations in effect as of the
Effective Date.
3. Government Code and Municipal Code Required Elements
a. Description of Property. Land situated in the City of Lynwood, County of
Los Angeles, State of California, described as The North half of Lot 16 of Tract No.
12089, in the city of Lynwood, as per map recorded in book 332 pages 49 and 50
of Maps, in the office of the county recorder of County of Los Angeles; APN: 6170-
015-022 and 6170-015-023]; whose street address is 11010 Santa Fe Avenue and
11020 Santa Fe Avenue, respectively, in the City of Lynwood.
b. Owner and Other Person with Legal or Equitable Interest.
Owner: Lacturnus Research Association, Inc.
Landlord: Lynwood Santa Fe, LLC
c. Permitted Uses. The subject property may be used for any cannabis facility
as presently authorized under Article 4-34 of the municipal code, and for any other
use as authorized under applicable provisions of the municipal code. Specifically,
Owner shall have the vested right to operate as a volatile manufacturing type 7
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Development Agreement
licensed cannabis business, a large indoor cultivation type 5A licensed cannabis
business, a nursery type 4 licensed cannabis business and as a distributor type 11
licensed cannabis business. These uses shall be read to be consistent with the
definitions in California Business and Professions Code sections 26001 and other
relevant sections of state law. Although LMC Chapter 25 does not specifically
identify cannabis facilities as allowed uses in any zoning district, such uses are
similar to other listed uses, including, but not limited to, medical services-clinics,
offices, laboratories; garden center/plant nursery; food and beverage
manufacturing; and agricultural products processing; and, therefore, cannabis
facilities are allowed uses in the same zoning districts in which such similar uses
are allowed under Chapter 25 of the municipal code.
d. Zoning. Owner shall guarantee that all activities conducted under this
Agreement and under the Regulatory Permit shall comply with the City's municipal
code, including the zoning ordinance and any and all development and
construction requirements contained therein. Owner shall not conduct any
business under this Agreement or under the Regulatory Permit without having
obtained all necessary permits, licenses, and approvals from the City.
e. Reservation or Dedication of Land for Public Purposes. Sufficient roadway,
sidewalk, and utility easements shall be reserved or dedicated to City for such
purposes.
f. Expansion. Under this agreement Owner shall have the right to expand this
facility as well as its cannabis uses to any property within one thousand feet in any
direction of 11010 & 11020 Santa Fe Avenue, Exhibit A. One thousand feet shall
be measured by a straight line from property line to property without regard for
intervening structures.
4. Term
This Agreement shall start on the date on which all parties have executed it and it shall
end ten (1 0) years from the day all building and zoning approvals are provided and a
certificate of occupancy, if necessary, is issued. This agreement shall remain in full force
and effect so long as the subject property is used for a cannabis facility as presently
authorized under Article 4-34 of the municipal code; provided, however, such use is not
abandoned for a period of more than six (6) months. The term shall be automatically
extended for an additional five (5) year term immediately following the expiration of the
initial ten (10) year term or extended period. Owner shall have a minimum of two
automatic five (5) year extensions so long as the subject property is used for a cannabis
facility as presently authorized under Article 4-34 of the municipal code; provided,
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Development Agreement
however, such use is not abandoned for a period of more than six (6) months. However,
at the request of either Party, the fees required under Article 9 of this agreement may be
subject to re-negotiation for year 3 and all subsequent years of this Agreement. In the
event a party wishes to re-negotiate fees, it shall give notice to the other Party no less
than 90 days before the three-year anniversary of the agreement, and negotiations shall
be concluded before the anniversary date.
5. Owner's Site and Floor Plans
a. Owner's site plan and floor plan for the facility are attached hereto and
incorporated by reference. Owner shall have the right to expand its site under the
existing licenses to any property within 1 ,000 square feet of the subject property.
The distance of 1 ,000 feet shall be measured as a straight line, without regard for
intervening structures, from the Property's property line to the selected parcel for
development. The floor plan identifies the uses of each interior space, and is the
basis for calculating the annual per-square-foot fee specified in Article 9 below.
b. A preliminary landscape plan will be prepared and reviewed and approved
by the Planning Director as part of the design review process. A final landscape
plan shall be prepared and submitted in conjunction with building and site
improvement plans prior to issuance of building permits for construction activities.
c. An exterior signage plan will be prepared and reviewed and approved by
the Planning Director in .accordance with the procedures and requirements of
Article 70 of Chapter 25 of the municipal code.
6. Facility Operations
a. Standard Operating Procedures. Owner is a non-profit mutual benefit
corporation that will cultivate, manufacture, distribute, and deliver cannabis
pursuant to California State laws and local ordinances. (See Senate Bill 94
commonly referred to as "Cannabis: medical and adult use act.")
1) The Parties acknowledge and agree that if Owner converts its entity to a
Limited Liability Company or Corporation pursuant to state law, Owner must
notify the city manager in writing with the conversion documents as well as the
name of the officers, directors or managers of the newly converted entity.
2) The Parties acknowledge and agree that if Owner obtains a state license to
produce cannabis for adult use, Owner may choose to cultivate, manufacture
or distribute cannabis for adult use, and such uses shall be compliant with
existing land use regulations and permitted under this Agreement.
3) During the term of its Regulatory Permit and the term of this Agreement, Owner
shall lawfully operate in accordance with all state and local laws. Owner will
employ exemplary operating procedures to comply with state and local laws.
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Development Agreement
Owner's facility will employ safety and security measures as set forth herein for
the safety and security of its employees, as well as other individuals in its
neighboring community.
b. Security Plan. The issuance of a Regulatory Permit is conditional upon
approval of a security plan by the Los Angeles County Sheriff. The security plan
shall include, at a minimum and as appropriate, provisions for video surveillance,
perimeter fencing and security, protection of the building(s) from vehicle intrusion,
cash handling procedures, product handling and storage procedures, and a
professionally monitored alarm system. Equipment and systems used for video
surveillance and building alarms will be approved by City.
Video surveillance shall include, at a minimum, all site and facility entrances and
access points, all spaces accessible by the public, all secured areas of the facility
with restricted access, all interior spaces and rooms where cannabis products are
handled and processed, shipping and receiving areas, cash storage areas, and
other areas necessary to protect the safety of employees and the public and to
ensure cannabis products are received, handled, stored, packaged, shipped, and
distributed in compliance with applicable state and local laws and regulations. The
video surveillance system shall be web-based. The Los Angeles County Sheriff
may gain access to the facilities surveillance equipment only with the explicit
written permission of Owner and in full and strict compliance with all rights granted
or extended to Owner, its members, shareholders, directors, officers, employees,
agents and affiliates under the United States and California constitutions,
including, but not limited to, the rights described in the 1st, 4th and 5th Amendments
to the United States Constitution. Owner shall not be required to provide any
person with access to its surveillance equipment.
The security system will also include sensors to detect entry and exit from all
secure areas, panic buttons in appropriate locations, and a professionally
monitored alarm system with sensors and motion detectors.
Owner will employ properly trained and licensed third-party security personnel to
protect the welfare and safety of Owner, employees and to ensure public safety to
the neighboring community. Owner shall use security personnel 24 hours, 7 days
a week. Security personnel may be armed so long as proper licensing and
insurance requirements are followed and met by the third-party operator providing
such security services.
c. Fire Department Approval. Owner may not operate any facility, and no
peimit, license, Oi othei appiOval issued by City shall authOiize occupancy of the
project unless and until the Los Angeles County Fire Department has approved
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Development Agreement
Owner's site plan, floor plan and safety plan. Notwithstanding the above, the city
shall deem the project operational upon a majority approval by the city council of
the development agreement ordinance.
d. Possession of Firearms. Except for licensed security personnel approved
by the Los Angeles County Sheriff, no person employed by Owner shall be in
possession of any firearm while on the premises or location without having first
obtained a license from the appropriate state or local agency authorizing the
person to be in possession of such firearm. Every such person in possession of a
firearm while on the premises or location must provide the City Manager and the
Los Angeles County Sheriff, ten days before bringing the firearm onto the
premises, with the following:
1) A copy of the license issued to the person by the appropriate state
or local agency authorizing him or her to possess such firearm;
2) A copy of his or her law enforcement identification (if he or she is
employed by a law enforcement agency);
3) A copy of his or her California driver's license or California
identification card; and
4) Any other information reasonably required by the Los Angeles
County Sheriff to show that the individual is in compliance with the
provisions of all laws regarding the possession and use of a firearm.
e. Procedures for Inventory Control to Prevent Non-Medical Diversion of
Cannabis. Only authorized employees will be permitted to enter Owner's facility.
Each employee will have to meet a criminal background investigation conducted
by the Los Angeles County Sheriff, which at minimum shall include a LiveScan
criminal history check.
Owner employment agreements will seek to prevent the diversion of cannabis for
illegal non-regulated uses by implementing strict policies and practices, as well as
efficient transparency to maintain tight controls on inventory sales of the product.
Owner's shall have an employment agreement with each employee. Each
employment agreement shall explicitly prohibit the use of cannabis by its
employees, on shift, at its facility and/or while driving.
Owner will take all necessary and reasonable steps to prevent the distribution of
any of its medical cannabis products to minors; prevent revenue from the sale or
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Development Agreement
distribution of its medical cannabis and/or infused products from going to criminal
enterprises, gangs and cartels; prevent the diversion of cannabis from California
to any other state; prevent state-authorized cannabis activity from being used as
a cover or pretext for the trafficking of other illegal drugs or other illegal activity;
prevent violence and the use of firearms in the cultivation, manufacture and
distribution of cannabis; discourage and educate against drugged driving and the
exacerbation of other adverse public health consequences associated with
cannabis use; disavow growing cannabis on public lands that creates attendant
public safety and environmental dangers posed by such illegal uses; and
discourage cannabis possession or use on federal property.
f. Quality Control and Testing. Owner will utilize quality control measures and
testing to ensure only the highest quality of cannabis and infused products will be
produced. Owner will inspect the product to insure its identity and quantity, and
will have a state approved testing lab perform testing of random samples prior to
distribution permitted under state law. Testing standards and procedures shall be
in accordance with applicable state law and regulations.
All cannabis products will perform a quality assurance review prior to distribution
or delivery of cannabis, in order to ascertain its quantity and chemical content.
Inventory procedures will be utilized for tracking and taxing purposes by the state.
Owner will employ an efficient record-keeping system to make transparent its
financing, testing, and adverse effect recording, as well as recall procedures.
g. Packing of Cannabis and Infused Products. All Owner cannabis products
will be packaged and labeled as required by Section 19347 of the California
Business and Professions Code and applicable requirements and regulations
issued by the State of California pursuant thereto. In addition to those packaging
and labeling requirements, and packaging and labeling requirements set forth in
Owner's Regulatory Permit application, as amended or supplemented, all
cannabis products shall be packaged in an opaque childproof container which shall
contain a label or be accompanied by a leaflet or inset that states, at a minimum:
1) The name, address and telephone number of the local and state
licensed cannabis distribution facility to which the cannabis product is
distributed, sold, or transferred;
2) The amount of cannabis in the container; and
3) The date the cannabis was transferred to a cannabis facility.
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Owner intends to produce infused products and will secure any approval from the
County of Los Angeles Health Department required for manufacturing and
handling such products, if necessary. Owner infused products will not be
produced, manufactured, stored or packaged in private homes. All Owner
cannabis infused products shall be individually wrapped at the original point of
preparation.
h. Deliverv. If Owner applies for and receives a Delivery permit from City,
Owner may sell and deliver manufactured cannabis products to individual
customers, as long as such activity is consistent with and permitted under state
law, and Owner has a valid state license therefor. As long as such products are
sold and delivered to individual customers, and no in-person sales occur at
Owner's facility, such activity shall not constitute a dispensary under the municipal
code.
i. Point of Sale Tracking System . Owner will maintain an inventory control
and reporting system that accurately documents the location of medicinal cannabis
products from inception through distribution or delivery, including descriptions,
weight, and quantity. The inventory control and reporting system shall comply with
the track and trace program required by the California Business and Professions
Code section 26067 and regulations issued thereunder.
Owner will employ an electronic point of sale system approved by City, such as
BioTrack THC, MJ Freeway, or similar system for all point of donations/sales
tracking from seed or inception to product distribution to other licensed cannabis
dispensary facilities . Such approved system will track all Owner cannabis
products, each edible, harvested flower, and/or manufactured concentrate, as well
as gross sales (by weight and sale). BioTrack THC, MJ Freeway, or similar system
will have the capacity to produce historical transactional data in accordance with
City's requirements.
j. Record Keeping. Owner will maintain records for all distributed cannabis
and/or infused products. Owner will comply with all records-keeping
responsibilities that are set forth in Municipal Code Section 4-34-10, including
complete and up-to-date records regarding the amount of cannabis cultivated,
produced, manufactured, harvested, stored, or packaged at Owner's facility.
k. Processing. Handling. Storing. and Distribution of Cannabis and
Related Products. Cannabis cultivation, handling, storing, distribution and
manufacturing shall be concealed from public view at all stages of growth and
processing, and there shall be no exterior evidence of cultivation or manufacturing
occurring at the premises from a public right-of-way or from an adjacent parcel.
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Cannabis cultivation, handling, storing, manufacturing, or distribution shall not
create offensive odors; create excessive dust, heat, noise, smoke, traffic, or other
impacts that are disturbing to people of normal sensitivity residing or present on
adjacent or nearby property or areas open to the public; or be hazardous due to
use or storage of materials, processes, products, or wastes.
Owner will store its cannabis and/or cannabis products in a locked safe room with
an identification access for management only. The safe room will be constructed
of fire-rate walls with numerous cameras installed to view all entries and exits from
the safe room, as well as all other activities performed within Owner's facility.
Owner will not conduct outdoor operations except as related to lawful delivery and
transportation of cannabis and infused products. Owner shall not store cannabis
or related products in its delivery vehicle/s off premises or outside normal operating
hours of the facility.
Cannabis products will be sold or distributed only to licensed cannabis businesses
in California, except as provided in Section 6(h) above. Excess or contaminated
product will be securely stored on-site until it is properly disposed. Disposal may
include composting, incineration, land-fill disposal through the local waste
management hauler, or other disposal methodology in accordance with state
and/or county health and safety codes and regulations.
I. Odor Control. All structures shall have ventilation and filtration systems
installed that prevent cannabis plant odors from exiting the interior of the structure.
The ventilation and filtration system shall be approved by the Building Official and
City Manager and installed prior to commencing cultivation or manufacturing within
the allowable structure. Facility air intake, exhaust, and recirculating system shall
be of industrial grade. Activated charcoal, recirculating, and closed loop aeration
systems will be utilized as necessary for effective odor control and management.
m: Description of Banking Plan. Owner will seek to open a bank account to
provide transparency for funds received, operational costs, including payroll, tax
payments to the state and federal governments, among others. Should a bank
account not be forthcoming, Owner will purchase and install safes to secure all
daily funds received.
n. Transportation Plan. Owner will comply with all state and local law
regarding transportation, including the rules governing delivery service. Owner will
retain a list of names and cellular contact numbers for all employees engaged in
transportation of cannabis products and provide it to the applicable oversight
authority, keeping the list current and up to date.
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Owner will keep complete and up-to-date records documenting each transfer of
cannabis to other lawful cooperative corporations, including the amount provided,
the form or product category in which the cannabis was provided, the date and
time provided, the name of the employee making the transfer, the name and
address of the other lawful cooperative corporation to whom delivery is made, and
the amount of any related donation or other monetary transaction.
7. Community Relations. Employment. and Wages
a. Public Outreach and Education Program. Owner shall make reasonable
efforts to create an effective public outreach to the City of Lynwood's community,
which may include, but not limited to, outreach and interface with public and private
schools, youth organizations, religious organizations, health care providers, drug
abuse treatment providers, and mental health and drug counseling providers.
Owner, along with other licensed operators in the City, shall coordinate and
cooperate with City to establish and implement appropriate public outreach and
education programs. The public outreach and education programs shall be
approved by City.
The public outreach and education program shall provide a detailed description of
Owner's intentions with regard to public outreach and education, including but not
limited to the following: what schools or programs Owner will work with; what types
of materials and information will be provided; how much time Owner's personnel
expect to spend on these activities; and how much money Owner expects to spend
on an annual basis.
b. Communitv Benefits Program. Owner will coordinate and cooperate with
City and other Owners of cannabis facilities located within the City of Lynwood in
the establishment, implementation, and funding of a community benefits program
which could include such items as new community recreation facilities, expansion
and/or improvement to existing facilities or other physical improvements that
provide a benefit to the community, support of holiday and special community
events, and support of local public service and special districts and organizations.
This community benefits program may be implemented by a foundation or other
association of cannabis facility Owners issued regulatory permits by City. City and
the public will participate in the decision-making process for identifying and
prioritizing community needs and benefits, and identifying appropriate projects to
be funded by the entity implementing this community benefits program. All projects
under the community benefits program must be approved by City. Owner shall
pay a community benefit fee of one-half of one percent (.5%) of its gross revenue
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Development Agreement
each quarter, at the same time and in the same manner as the fees set forth in
Article 9 hereof are paid.
c. Designation of Persons Responsible for Community Relations. At the time
of this Agreement, Owner's Managing Agent/General Manager, Wayne Johnson
will be responsible for community inquiries and complaints and on-site during
normal business hours.
d. Interface with Los Angeles County Sheriff. Owner's general manager,
Wayne Johnson, will interface with the Los Angeles County Sheriff to ensure its
operation complies with state and local laws and regulations.
e. Local Recruitment. Hirino. and Training Programs. City and Owner is
committed to making a good-faith effort to recruit, hire, and train City residents for
employment by Owner. A good-faith effort means Owner will take the following or
similar actions to recruit and employ City residents: 1) Contact local recruitment
sources to identify qualified individuals who are City residents, 2) Advertise for
qualified City residents in trade papers and newspapers of general circulation in
the area, and 3) Develop a written plan to recruit and employ City residents as a
part of the its workforce.
Owner will also seek companies located in the City of Lynwood to serve as its
general contractor and subcontractors needed for construction and build-out
improvements of Owner's cannabis facilities. Additionally, companies located in
the City of Lynwood to provide licensed security guards needed once Owner's
facility is opened, as well as other ancillary services needed.
f. Living Wages. Owner agrees to pay all employees of the Facility a Living
Wage. A "Living Wage" is the higher of whatever Owner currently pays its
employees for similar work elsewhere in the State of California, or the following:
until December 31, 2017: 150% of the California State minimum wage. Such
wage shall increase on January 1 of each subsequent year at the same rate as the
California State minimum wage increases, or according to the Consumer Price
Index for Los Angeles County, for the quarter ending September 30 of the
preceding year, whichever is higher.
g. Full-time Work. Owner shall make reasonable efforts to fill every position
with a full-time employee. Owner shall make reasonable efforts to maintain a labor
force that is composed of less than 75% full-time employees. Owner agrees to
provide to its eligible employees leave benefits, health and wellness benefits and
other employee benefits to the extent such benefits are required to be paid for by
Owner under applicable state and federal employment laws.
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8. Indemnification of City from Liability
a. Pursuant to City's requirement, Owner will indemnify City from any claims,
damages, injuries, or liabilities of any kind associated with the registration or
operation of Owner's cannabis facility or the prosecution of Owner's facility or its
owners, managers, directors, officers, employees, or its qualified patients or
primary caregivers for violation of federal or state laws.
b. Owner agrees to defend, at its sole expense, any action against City, its
agents, officers, and employees related to the approval or issuance of the
Regulatory Permit and this Agreement.
c. Owner agrees to reimburse City for any court costs and attorney fees that
City may be required to pay as a result of any legal challenge related to City's
approval or issuance of a Regulatory Permit or this Agreement. City may, at its
sole discretion, participate at its own expense in the defense of any such action,
but such participation shall not relieve the holder of the Regulatory Permit or this
Agreement.
9. Fees, Costs. and Future Taxes
a. Fees. Owner agrees to pay all permit fees and charges referenced in
Section 4-34-11 of the municipal code, in the amounts adopted by the City Council
by resolution on or before the Effective Date, as well as any fees set forth in this
Agreement. Permit application, processing, and renewal fees shall be due and
payable at the time application is made.
b. Costs. Owner agrees to reimburse City for all additional costs of City
resulting from the operation of a cannabis facility authorized under Article 4-34 of
the municipal code and the administrative regulations. Reimbursement to City for
such costs shall be due and payable upon demand.
c. Operating Fees. Subject to reductions for local hire under section 9(g),
Owner agrees to pay to City, to enable City to promote, protect, and enhance the
healthy, safety, and welfare of the community and its residents and its quality of
life, the following fees:
1) an annual fee of $12.50 per square foot of cultivation area (canopy);
2) an annual fee of two-and-one-half percent (2.5%) of gross income
from manufacturing activities;
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Development Agreement
3) an annual fee of one and one-half percent (1.5%) of gross income
from distribution activities when Owner is distributing for anyone other than
itself; and
4) an annual fee of two and one-half percent (2.5%) of gross income
from delivery activities.
d. Owner agrees to compensate City for the increased demand on City
services, infrastructure, and utilities; local traffic demands; and increased City
review and oversight by the Los Angeles County Sheriff, planning department, and
code enforcement of the operations of Owner's facility. Owner understands and
agrees the determination of the required per-square-foot fee will consider such
factors as the size, design, layout, operation, and security plan for the facility;
potential adverse effects on the community; and the allocation of City services and
staff time to oversee the operation of the facility.
e. Pursuant to Section 4-34-11 of the LMC, as applicable, Owner shall pay
City the annual Cultivation fee of 12.50 per square foot. "Cultivation area" of
cannabis, "Canopy" shall not include the walkways, or space adjacent to where the
plants are grown which are not used for growing, planting, seeding, germinating,
lighting, warming, cooling, aerating, fertilizing, watering, irrigating, topping,
pinching, cropping cannabis. The storing of cannabis, whether for drying or curing,
or the area used to store any products, supplies or equipment related to any such
activities shall not be considered "Cultivation area" for purposes of assessing
operating fees.
f. The Parties acknowledge and agree that if Owner obtains a state license to
produce cannabis for adult use, Owner may choose to cultivate, manufacture or
distribute cannabis for adult use, in compliance with city of Lynwood law. In such
a situation, City shall only collect one of the two Cultivation Taxes, depending upon
whether the cannabis is cultivated for medical or adult use.
g. In the event that fifty percent (50%) of Owner's workforce is constituted by
individuals with permanent residences in the city of Lynwood, the City will collect
fees, for the relevant time period (to be determined on a quarterly basis), of $10.00
per square foot of cultivation area; 2% of the gross revenue generated from
manufacturing opportunities, and 1% on third-party distribution. Owner shall
provide quarterly accounting of the residence of each of its employees during the
time Owner files its returns with the City.
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Development Agreement
h. Owner understands and agrees that the fees set forth above shall be paid
in a manner and in accordance with a payment schedule agreed to by City and
Owner, in intervals of no less than three months or such other intervals. The
cultivation, distribution and manufacturing space to which the fee applies is as
identified on the attached floor plan. Payment shall be in equal installments paid
quarterly commencing at the end of the first quarter after the effective date of the
Regulatory Permit which shall be no sooner than the date a certificate of
occupancy is issued for the subject premises.
i. If Owner makes any changes to the interior layout of the facility that
increases or decreases the amount of space allocated to the permitted uses to
which the per-square-foot fee applies, Owner shall notify City of such changes at
least fourteen (14) calendar days prior to making such changes, and the per-
square-foot fee shall be modified accordingly. If Owner fails to give City notice of
an increase in square footage under control, as required herein, Owner shall be
responsible for paying to City a per-square-foot fee based on any increase in the
amount of space allocated to those uses to which the per-square-foot fee applies
retroactive to the date the Regulatory Permit became effective.
10. Cost Recovery Fee "CRF"
City shall assess to Owner fees to recover City's reasonable processing and
monitoring costs relating to Owner's business upon issuance of Owner's
Manufacturing, Cultivation, Distribution and Delivery Permits or any Additional
Permits ("CRF"). The City shall submit sufficient information to Owner of City's
total number of hours required to process their Application or monitor their
authorizations. CRFs are separate and apart from any fees set forth in Article 9 of
this Agreement.
a. Processing Fees. Processing fees for the Application are based upon the
direct and indirect costs that City incurs in reviewing the Application. The
processing fees for the Application shall be based only on costs that are necessary
for processing the Application and implementing the Ordinance, including staff
time, legal fees, and consultant fees. "Necessary for" means that but for the
Application, the costs would not have been incurred. The processing fee shall not
include costs for other City management objectives, unless they are necessary for
processing the Application.
b. Monitoring Fees. Monitoring fees for the Manufacturing, Cultivation,
Distribution, and Delivery Permits are based upon the direct and indirect costs City
incurs in confirming the use of the Property in accordance with the municipal code,
the Ordinance, this Agreement, and the Application. The monitoring fees shall be
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Development Agreement
based only on costs that are necessary for conducting these reviews. "Necessary
for'' means that but for the Manufacturing, Distribution, Cultivation , and Delivery
Permits, or any Additional Permits, the costs would not have been incurred. The
monitoring fee shall not include costs for other City management objectives, unless
they are necessary for monitoring the Manufacturing, Distribution, Cultivation, and
Delivery Permits, or any Additional Permits.
c. Billing and Payment. City shall bill Owner the CRF on the first day of each
quarter (March, June, September, and December) with an invoice providing an
hourly breakdown of hours expended by City and its representatives. Owner shall
pay the CRF invoice within sixty (60) days of the date the bill for the CRF is
received by Owner. Notwithstanding the foregoing, at no time shall the CRFs
exceed Seven Thousand Dollars ($7,000) during a given year, except that the first
year may be as high as twenty thousand dollars ($20,000) because of the costs
required to set up the application process and review the applications.
d. Disputes. If Owner disagrees with the dollar amount provided by City on
the CRF invoice, Owner may submit a written request before the disputed fee is
due for a substitution of alternative CRF invoice to the immediate supervisor of the
City representative who determined the CRF invoice. The written request must
include supporting documentation. After review of Owner's written request, Owner
and City shall work, in good faith to resolve Owner's written request. The dispute
shall be decided in favor of Owner if City does not respond to the written request
within thirty (30) days of receipt.
11. Additional Owner Obligations
a. Reporting of Gross Receipts from Operations
1) Quarterly Receipts. No later than fifteen (15) days after the last day
of each quarter during the Term hereof, Owner shall deliver to City a report
in such form as may presently exist hereafter be adopted or prescribed for
use by the City (the "Quarterly Report") showing (i) Gross Receipts from
Operations for the immediate prior quarter received by Owner, and a
cumulative total of all amounts of Gross Receipts from Operations received
by Owner for the calendar year, (ii) a calculation of the quarterly payment
due to City for the prior quarter, and (iii) a calculation of the cumulative total
of all quarterly payments made by Owner for the calendar year.
2) Statement of Receipts. Owner shall keep complete, accurate and
appropriate books and records of all receipts from operations in accordance
with generally accepted accounting principles. For purposes herein, "books
and records" shall mean all bookkeeping or accounting documents Owner
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Development Agreement
utilizes in managing its business operations relating to the Project. Such
books and records, as well as all other relevant documents as City shall
reasonably require, shall, upon reasonable written notice, be open for
inspection by City, its auditors or other authorized representatives. If at any
time during the term such books and records prove inadequate in the
reasonable judgment of City to record the Gross Receipts from Operations
as herein required, Owner shall, upon the written request of City, procure
and maintain such books and records as shall be of a character and from
adequate for such purpose. City shall have the right upon prior written
notice delivered to Owner to audit and examine such books, records and
documents and other relevant items in the possession of Owner, but only
to the extent necessary for a proper determination of Gross Receipts from
Operations, and all such books, records, documents and other items shall
be held available for such audit and examination. Upon reasonable prior
written request by City, Owner shall make all such books, records and
documents available to City, and provide removable copies thereof, within
thirty (30) of the date of City's request. The cost for any audit shall be
shared equally by the Parties. Owner shall preserve such books, records,
documents, and other items in Lynwood for a period of not less than seven
(7) years for the purpose of auditing or, in those instances when the City
determines there was a material omission of fact or intentional
misrepresentation made during a prior audit, re-auditing these accounts
upon reasonable notice; except that, if an audit is made within the seven-
year period and Owner claims that errors or omissions have occurred, the
books and records shall be retained and made available until those matters
are resolved. City shall keep strictly confidential all statements of revenue
furnished by Owner and all other information concerning Owner's operation
of the Premises obtained by City as a result of the inspection audit and
examination privileges of City hereunder, except as otherwise required by
law. If City receives a request for such information pursuant to the Public
Records Act (California Government Code Section 6250, et seq.), City shall
provide Owner notice of any such request prior to disclosing any such
information. Within seven (7) years after the receipt of any statement of
receipts under this Agreement, but not later except in the case of Owner's
fraud or willful intent to evade tax, City at any time shall be entitled to carry
out an audit of such revenue either by City or agent to be designated by
City. If it shall be determined as a result of such audit that there has been
a deficiency in any payment due under this Agreement made on the basis
of such statement, then such deficiency shall become immediately due and
payable. If such statement of revenue for the relevant year shall be found
to have understated receipts by more than two percent and City is entitled
to any additional payment as a result of said understatement, then Owner
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Development Agreement
shall, in addition, pay all of City's reasonable costs and expenses connected
with such audit, including the expense incurred in retaining such agent;
otherwise City shall bear the cost and expense of such audit.
3) Copies of Tax Filings. Owner shall provide City with copies of any
reports Owner is required to provide to the County of Los Angeles or the
State of California for sales, use, or other tax purposes.
b. Aoolicabilitv of Future Revenue Mechanisms. During the term of this
Agreement, if City imposes an alternative revenue mechanism specifically related
to cannabis operations (e.g., a cannabis tax), Owner agrees to pay to City the
lesser of the payment required under such alternative revenue mechanism or the
payment required by this section. As used in this section, "alternative revenue
mechanism" includes taxes, fees, or assessments levied on or collected from both
cannabis and non-cannabis operations.
12. Insurance and Indemnity
a. Insurance. Owner shall require all persons doing work on the Project,
including its contractors and subcontractors (collectively, "Owner'' for purposes of
this Article 12 only), to obtain and maintain insurance of the types and in the
amounts described in this section and its subsections with carriers reasonably
satisfactory to City.
b. General Liabilitv Insurance. Owner shall maintain commercial general
liability insurance or equivalent form with a limit of not less than Two Million Dollars
($2,000,000) (or as otherwise approved, in writing, by City) per claim and Two
Million Dollars ($2,000,000) each occurrence. Such insurance shall also:
1) Name City and its representatives as "Additional Insureds" by
endorsement with respect to performance of this Agreement. The coverage
shall contain no special limitations on the scope of its protection afforded to
the above-listed additional insured.
2) Be primary with respect to any insurance of self-insurance programs
covering City, its officials, employees, agents, and representatives.
3) Contain standard separation of insured provisions.
c. Automotive Liability Insurance. Owner shall maintain business automobile
liability insurance or equivalent form with a limit of not less than T\rvo ~v1illion Dollars
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Development Agreement
($2,000,000) for each accident. Such insurance shall include coverage for owned,
hired, and non-owned automobiles. Such insurance shall also:
1) Name City and its representatives as "Additional Insureds" by
endorsement with respect to performance of this Agreement. The coverage
shall contain no special limitations on the scope of its protection afforded to
the above-listed additional insureds.
2) Be primary with respect to any insurance or self-insurance programs
covering City, its officials, employees, agents, and representatives.
3) Contain standard separation of insured provisions.
d. Workers' Compensation Insurance. Owner shall take out and maintain
during the term of this Agreement, workers' compensation insurance for all of
Owner's employees employed at or on the Project, and in the event any of the
work is subcontracted, Owner shall require any general contractor or subcontractor
similarly to provide workers' compensation insurance for such contractor's or
subcontractor's employees, unless such employees are covered by the protection
afforded by Owner. In case any class of employee engaged in work on the Project
is not protected under any workers' compensation law, Owner shall provide and
shall cause each contractor and subcontractor to provide adequate insurance for
the protection of employees not otherwise protected. Owner hereby indemnifies
City for any damage resulting from failure of Owner, its agents, employees,
contractors, or subcontractors to take out or maintain such insurance. Workers'
compensation insurance with statutory limits and employer's liability insurance with
limits of not less than One Million Dollars ($1 ,000,000) each accident shall be
maintained.
e. Other Insurance Requirements. Owner shall do all the following :
1) Prior to taking any actions under this Agreement, furnish City with
properly executed certificates of insurance that clearly evidenced all
insurance required in this Article, including evidenced that such insurance
will not be canceled, allowed to expire, or be materially reduced in coverage
without thirty (30) days prior written notice to City.
2) Provide to City, upon request, and within fourteen (14) calendar days
of said request, certified copies of endorsements and policies, and properly
executed certificates of insurance evidencing the insurance required herein.
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Development Agreement
3) Replace or require the replacement of certificates, policies and
endorsements for any insurance required herein expiring prior the
termination of this Agreement.
4) Maintain all insurance required herein from the Effective Date of this
Agreement to the earlier of the expiration of the term or the mutual written
termination of this Agreement.
5) Place all insurance required herein with insurers licensed to do
business in California with a current Best's Key Rating Guide reasonably
acceptable to City.
f. Indemnity. Owner agrees to indemnify, defend, and hold City, and its
elected and appointed council, boards, commissions, officers, agents, employees,
consultants, and representatives, harmless from any and all claims costs and
liability for any personal injury or property damage which may arise as a result of
any actions or negligent omissions by Owner or Owner's contractors,
subcontractors, agents, or employees in connection with the construction,
improvement, or operation of the Project.
13. Termination
a. Termination Upon Completion of Development. This Agreement shall
terminate upon the expiration of the term, unless it is terminated earlier pursuant
to the terms of this Agreement. Upon termination of this Agreement, City shall
recdrd a notice of such termination, and this Agreement shall be of no further force
or effect except as otherwise set forth in this Agreement.
b. Effect of Termination on Owner's Obligations. Termination of this
Agreement shall eliminate any further obligation of Owner to comply with this
Agreement, or some portion thereof, if such termination relates to only part of the
Site or Project. Termination of this Agreement, in whole or in part, shall not,
however, eliminate the rights of Owner to seek any applicable and available
remedies or damages based upon acts or omissions occurring before termination.
c. Effect of Termination on City's Obligations. Termination of this Agreement
shall eliminate any further obligation of City to comply with this Agreement, or some
portion thereof. Termination of this Agreement shall not, however, eliminate the
rights of City to seek any applicable and available remedies or damages based
upon acts or omissions occurring before termination.
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Development Agreement
d. Survival After Termination. The rights and obligations of the Parties set
forth in Article 15, Article 23, and Section 26(e), Section 26(f), and Section 24(h),
and any right or obligation of the Parties in this Agreement which, by its express
terms or nature and context is intended to survive termination of this Agreement,
will survive any such termination.
14. Resources Efficiency
The design of the facility may include significant water and energy conservation measures
to minimize resource consumption. The design shall attempt, when Owner deems
feasible, to incorporate solar, wind, high efficiency lighting, and water recycling systems
and technology. High efficiency LED lighting systems for the exterior lighting will be used.
If Owner determines the technology economically and technologically feasible, grow lights
shall be high efficiency LED lighting systems. Automated, digitally controlled watering
and fertilization systems may be used for all plant cultivation, if Owner deems feasible.
Owner will develop a system to collect and recycle storm water to the extent feasible.
15. Standard Conditions for Construction
During any on-site construction activities related to development of the project site and
any buildings thereon, or renovation or remodeling of existing buildings, Owner and
Landlord shall comply with all applicable terms and conditions of City's Standard
Conditions for Construction, attached hereto and incorporated herein by reference. The
Project shall comply with the applicable parking standards established by the City for
cannabis activities.
16. Defaults and Remedies
a. Remedies in general. It is acknowledged by the parties that City would not
have entered into this Agreement if it were to be liable in damages under this
Agreement, or with respect to this Agreement or the application thereof, except as
hereinafter expressly provided. Subject to extensions of time by mutual consent
in writing , failure to delay by either party to perform any term or provision of this
Agreement shall constitute a default. In the event of alleged default or breach of
any terms or conditions of this Agreement, the party alleging such default or breach
shall give the other party not less than thirty (30) day notice in writing specifying
the nature of the alleged default and the manner in which said default may be
satisfactorily cured during any such thirty (30) day period, the party charged shall
not be considered in default for purposes of termination or institution of legal
proceedings. Notwithstanding the foregoing to the contrary, if the alleged default
is of such a nature that it cannot be cured within thirty (30) days, the alleged
defaulting party shall not be deemed in default as long as such party commences
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Development Agreement
to cure such default within such thirty (30) day period and thereafter diligently
prosecutes such cure to completion.
After notice and expiration of the thirty (30) day period, the other party to this
Agreement, at its option, may institute legal proceedings pursuant to this
Agreement.
In general, each of the parties hereto may pursue any remedy at law or equity
available for the breach of any provision of this Agreement, except that City shall
not be liable in monetary damages, unless expressly provided for this Agreement,
to Owner, to any mortgagee or lender, or to any successors in interest of Owner
or mortgagee or lender, or to any other person, and Owner covenants on behalf of
itself and all successors in interest to the Property or any portion thereof, not to
sue for damages or claim any damages.
i.For any breach of this Agreement or for any cause of action which arises
out of this Agreement; or
ii.For the impairment or restriction of any right or interest conveyed or
provided under, with, or pursuant to this Agreement, including, without
limitation, any impairment or restriction which Owner characterizes as a
regulatory taking or inverse condemnation; or
iii.Arising out of or connected with any dispute, controversy or issue regarding
the application or interpretation or effect of the provisions of this Agreement.
Nothing contained herein shall modify or abridge Owner's rights or remedies
(including its rights for damages, if any) resulting from the exercise by City of its
power of eminent domain. Nothing contained herein shall modify or abridge
Owner's rights or remedies (including its rights for damages, if any) resulting from
the grossly negligent or malicious acts of City and its officials, officers, agents and
employees. Nothing herein shall modify or abridge any defenses or immunities
available to City and its employees pursuant to the Government Liability Act and
all other applicable statutes and decisional law.
Except as set forth in the preceding paragraph relating to eminent domain, Owner's
remedies shall be limited to those set forth in this Section 16(a), Section 16(b), and
Section 16(c).
Notwithstanding anything to the contrary contained herein, City covenants as
provided in Civil Code Section 3300 not to sue for or claim any consequential
damages or, in the event all or a portion of the Property is not developed, for lost
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Development Agreement
profits or revenues which would have accrued to City as a result of the
development of the Property.
b. Specific Performance. The parties acknowledge that money damages and
remedies at law are inadequate, and specific performance and other non-monetary
relief are particularly appropriate remedies for the enforcement of this Agreement
and should be available to all parties for the following reasons:
1) Except as provided in Sections 16(a) and 16(e), money damages are
unavailable against City as provided in Section 16(a) above.
2) Due to the size, nature and scope of the Project, it may not be
practical or possible to restore the Property to its natural condition once
implementation of this Agreement has begun. After such implementation,
Owner may be foreclosed from other choices it may have had to use the
Property or portions thereof. Owner has invested significant time and
resources and performed extensive planning and processing of the Project
in agreeing to the terms of this Agreement and will be investing even more
significant time and resources in implementing the Project in reliance upon
the terms of this Agreement, and it is not possible to determine the sum of
money which would adequately compensate Owner for such efforts; the
parties acknowledge and agree that any injunctive relief may be ordered on
an expedited, priority basis.
c. Release. Except for those remedies set forth in Sections 16(a), 16(b), and
16(c), Owner, for itself, its successors and assignees, hereby releases City, its
officers, agents and employees from any and all claims, demands, actions, or suits
of any kind or nature arising out of any liability, known or unknown, present or
future, based or asserted, pursuant to Article 1, Section 19 of the California
Constitution, the Fifth Amendment of the United States Constitution, or any other
law or ordinance which seeks to impose any other liability or damage, whatsoever,
upon City because it entered into this Agreement or because of the terms of this
Agreement.
Owner acknowledges that it may have suffered, or may suffer, damages and other
injuries that are unknown to it, or unknowable to it, at the time of its execution of
this Agreement. Such fact notwithstanding, Owner agrees that the release
provided in this Section 16(c) shall apply to such unknown or unknowable claims
and damages. Without limiting the generality of the foregoing, Owner
acknowledges the provisions of California Civil Code Section 1542, which provide:
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Development Agreement
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his or her favor at the time of executing
the release, which if known by him or her must have materially
affected his or her settlement with the debtor."
Owner hereby waives, to the maximum legal extent, the provisions of California
Civil Code Section 1542 and all other statutes and judicial decisions of similar
effect.
Initials
d. Termination of Agreement for Default of City. Owner may terminate this
Agreement only in the event of a default by City in the performance of a material
term of this Agreement and only after providing written notice to City of default
setting forth the nature of the default and the actions, if any, required by City to
cure such default and, where the default can be cured, City has failed to take such
actions and cure such default within sixty (60) days after the effective date of such
notice or, in the event that such default cannot be cured within such sixty (60) day
period but can be cured within a longer time, has failed to commence the actions
necessary to cure such default within such sixty (60) day period and to diligently
proceed to complete such actions and cure such default.
e. Attorneys ' Fees and Costs. In any action or proceeding between City and
Owner brought to interpret or enforce this Agreement, or which in any way arises
out of the existence of this Agreement or is based upon any term or provision
contained herein, the "prevailing party" in such action or proceeding shall be
entitled to recover from the non-prevailing party, in addition to all other relief to
which the prevailing party may be entitled pursuant to this Agreement, the
prevailing party's reasonable attorneys' fees and litigation costs, in an amount to
be determined by the court. The prevailing party shall be determined by the court
in accordance with California Code of Civil Procedure Section 1 032. Fees and
costs recoverable pursuant to this Section 16(e) include those incurred during any
appeal from an underlying judgment and in the enforcement of any judgment
rendered in any such action or proceeding.
f. Owner Default. No building permit shall be issued or building permit
application accepted for any structure on the Property after Owner is determined
by City to be in default of the terms and conditions of this Agreement until such
default thereafter is cured by Owner or is waived by City. If City terminates this
Agreement because of Owner's defauit, then City shaii retain any and ail benefits,
including money or land received by City hereunder.
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17. Third Party Litigation
a. General Plan Litigation. City has determined that this Agreement is
consistent with its General Plan. Owner has reviewed the General Plan and
concurs with City's determination.
City shall have no liability under this Agreement or otherwise for any failure of City
to perform under this Agreement, or for the inability of Owner to develop the
Property as contemplated by the Development Plan, which failure to perform or
inability to develop is as the result of a judicial determination that the General Plan,
or portions thereof, are invalid or inadequate or not in compliance with law, or that
this Agreement or any of City's actions in adopting it were invalid, inadequate, or
no in compliance with the law.
b. Hold Harmless Agreement. Owner hereby agrees to, and shall hold City,
its elective and appointive boards, commissions, officers, agents, and employees
harmless from any liability for damage or claims for damage for personal injury,
including death, as well as from claims for property damage which may arise from
Owner or Owner's contractors, subcontractors, agents, or employees' operations
under this Agreement, whether such operations be by Owner, or by any of Owner's
contractors, subcontractors, agents, or employees operations under this
Agreement, whether such operations be by Owner, or by any of Owner's
contractors, subcontractors, or by any one or more persons directly or indirectly
employed by, or acting as agent for Owner or any of Owner's contractors or
subcontractors. Owner agrees to and shall defend City and its elective and
appointive boards, commissions, officers, agents and employees from any suits or
actions at law or in equity for damage caused, or alleged to have been caused, by
reason of any of the aforesaid operations.
c. Indemnification. Owner shall defend, indemnify, and hold harmless City and
its agents, officers, and employees against and from any and all liabilities,
demands, claims, actions or proceedings and costs and expenses incidental
thereto (including costs of defense, settlement and reasonable attorneys' fees},
which any or all of them may suffer, incur, be responsible for or pay out as a result
of or in connection with any challenge to the legality, validity or adequacy of any of
the following: (i) this Agreement and the concurrent and subsequent permits,
licenses and entitlements approved for the Project or Property; (ii) the
environmental impact report, mitigated negative declaration or negative
declaration, as the case may be, prepared in connection with the development of
the Property; (iii) any claims based on or alleging inverse condemnation by any
person or entity with an interest in the Property; and (iv) the proceedings
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Development Agreement
undertaken in connection with the adoption or approval of any of the above. In the
event of any legal or equitable action or other proceeding instituted by any third
party (including a governmental entity or official) challenging the validity of any
provision of this Agreement or any portion thereof as set forth herein, the parties
shall mutually cooperate with each other in defense of said action or proceeding.
Notwithstanding the above, City, at is sole option, may tender the complete
defense of any third-party challenge as described herein. In the event City elects
to contract with special counsel to provide for such a defense, City shall meet and
confer with Owner regarding the selection of counsel, and Owner shall pay all costs
related to retention of such counsel.
d. Environmental Contamination. Owner shall indemnify and hold City, its
officers, agents, and employees free and harmless from any liability, based or
asserted, upon any act or omission of Owner, its officers, agents, employees,
subcontractors, predecessors in interest, successors, assigns and independent
contractors, excepting and acts or omissions of City as successor to any portions
of the Property dedicated or transferred to City by Owner, for any violation of any
federal, state or local law, ordinance or regulation relating to industrial hygiene or
to environmental conditions on, under or about the Property, including, but not
limited to, soil and groundwater conditions, and Owner shall defend, at its expense,
including attorneys' fees, City, its officers, agents and employees in any action
based or asserted upon any such alleged act or omission. City may in its discretion
participate in the defense of any such claim, action or proceeding.
The provisions of this Section 17(d) do not apply to environmental conditions that
predate Owner's ownership or control of the Property or applicable portion;
provided, however, that the foregoing limitation shall not operate to bar, limit or
modify any of Owner's statutory or equitable obligations as an owner or seller of
the Property.
e. City to Approve Counsel. With respect to Sections 17(a) through 17(d), City
reserves the right to approve the attorney(s) which Owner selects, hires or
otherwise engages to defend City hereunder, which approval shall not be
unreasonably withheld.
f. Accept Reasonable Good Faith Settlement. With respect to Article 17, City
shall not reject any reasonable good faith settlement. If City does reject a
reasonable, good faith settlement that is acceptable to Owner, Owner may enter
into a settlement ot the action, as 1t relates to Owner, and City shall thereafter
defend such action (including appeals) at its own cost and be solely responsible
fm any judgment rendered in connection with such action. This Section 17(f)
applies exclusively to settlements pertaining to monetary damages or damages
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Development Agreement
which are remedial by the payment of monetary compensation. Owner and City
expressly agree that this Section 17(f) does not apply to any settlement that
requires an exercise of City's police powers, limits City's exercise of its police
powers, or affects the conduct of City's municipal operations.
g. Survival. The provisions of Sections 17(a) through 17(f) inclusive, shall
survive the termination or expiration of the Agreement.
18. California Environmental Quality Act
Owner shall reimburse City for any and all costs incurred by City related to project review
under the California Environmental Quality Act (CEQA}, Public Resources Code,
§§21 000-21189.3, and the Guidelines for California Environmental Quality Act, California
Code of Regulations, Title 14, §§15000-15387. If requested by City, Owner shall conduct
and pay for any required CEQA reviews and analyses. The City has found that the
proposed Project is Categorically Exempt from California Environmental Quality Act
(CEQA) requirements under provisions of CEQA Guidelines Section 15332 -In-Fill
Development Projects. This exemption applies to projects characterized as in-fill
development meeting the conditions described in Section 15332.
19. Rules. Regulations . and Official Policies
Except as otherwise provided in this Agreement, the rules, regulations, and official
policies of City governing permitted uses of the land, governing density, and governing
the design, improvements, and construction standards and specifications applicable to
the development of the Project subject of this Agreement, shall be those rules,
regulations, and official policies of City in force at the time of the execution of this
Agreement. This Agreement does not prevent City, in subsequent actions applicable to
the property, from applying new rules, regulations, and policies which do not conflict with
those rules, regulations, and policies applicable to the property as set forth herein, nor
does this Agreement prevent City from denying or conditionally approving any
subsequent development project application based on such existing or new rules,
regulations, or policies.
20. Regulatory Permit Conditions of Approval
Owner shall comply with all conditions of approval of the Regulatory Permit approved by
City Council.
21. Periodic Reviews
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This Agreement shall be subject to annual review. Owner and Landlord executing this
Agreement, or successor in interest thereto, shall demonstrate good faith compliance with
the terms of this Agreement. If, as a result of such periodic review, City finds and
determines, based on substantial evidence, that Owner or Landlord executing this
Agreement, or successor in interest thereto, has not complied in good faith with the terms
or conditions of this Agreement, City may terminate or modify this Agreement.
a. Periodic Review. City Council shall review this Agreement annually, on or
before each anniversary of the Effective Date, in order to ascertain Owner's good
faith compliance with this Agreement. During the periodic review Owner shall be
required to demonstrate good faith compliance with the terms of the Agreement,
through submitting an annual monitoring report, records, or equivalent written
materials to the Planning Department. The Planning Department will schedule a
hearing on the periodic review of the Development Agreement on or following the
anniversary of the Effective Date, but Owner has no obligation to compel such
hearing, and no implication will be made to Owner's detriment if a hearing is not in
fact held. Owner shall document any request for an extension of the term due to
delays beyond the control of Owner (see Section 260), "Force Majeure"). Owner
shall submit an annual review and administration fee deposit not to exceed City's
estimated internal and third-party costs associated with the review and
administration of this Agreement during the succeeding year, consistent with
Section 26(k) ("Deposit with City") below. City shall provide Owner said estimate
a reasonable time in advance of the annual review and administration fee deposit
being due.
b. Conditional Use Permit. For all intents and purposes, the Regulatory Permit
to be issued under this Agreement shall be treated as if it were a Conditional Use
Permit issued to Owner for the establishment and operation of its business. The
operation of the business at all times shall be required to comply with the terms of
this Agreement.
c. Special Review. City Council may order a special review of compliance with
this Agreement at any time. City Council shall provide public notice and must state
the reason for the special review and if City or City Council believes any provision
of this agreement has been breached . The special review shall be set no sooner
than forty-five (45) days from the date the City Council provides notice of the
special review. The Planning Director or his or her designee shall conduct such
special review solely on the issues raised by the City Council in its notice of special
review. During a special review, Owner shall be required to demonstrate good
faith compliance with the terms of the Agreement. The burden of proof on this
issue shall be on Owner to provide evidence that no violation occurred or that the
violation has been cured.
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d. Review Hearing. At the time and place set for the review hearing, Owner
shall be given an opportunity to be heard. If City Council finds, based upon
substantial evidence, that Owner has not complied in good faith with the terms or
conditions of this Agreement, City Council may terminate this Agreement
notwithstanding any other provision of this Agreement to the contrary, or modify
this Agreement and impose such conditions as are reasonably necessary to
protect the interests of City. The decision of City Council shall be final, subject
only to judicial review pursuant to Code of Civil Procedure Section 1094.5.
e. Certificate of Agreement Compliance. If, after a periodic or special review,
Owner is found to be in compliance with this Agreement, and if Owner requests it,
City shall issue a Certificate of Agreement Compliance ("Certificate") to Owner
stating that after the most recent periodic or special review, and based upon the
information known or made known to the Planning Director and City Council, that
(i) this Agreement remains in effect and (ii) Owner is not in default.
City shall not be bound by a Certificate if a default existed at the time of the periodic
or special review, but was concealed from or otherwise not known to the Planning
Director and City Council, regardless of whether the Certificate is relied upon by
assignees or other transferees or Owner.
f. Failure to Conduct Review. City's failure to conduct a periodic review of this
Agreement shall not constitute a breach of this Agreement.
g. Cost of Review. The costs incurred by City in connection with the periodic
reviews shall be borne by Owner.
22. Obligations of Landlord
Landlord shall have rights, duties, obligations, and liability only as expressly set forth
herein. Landlord shall have no responsibility or liability for the failure of Owner to perform
as required by this Agreement.
23. Assignment
a. Assignment by Landlord. Landlord shall not transfer, delegate, or assign its
interest, rights, duties, and obligations under this Agreement, without the prior
written consent of City.
b. Assignment by Owner. Owner shall not transfer, delegate, or assign its
interest, rights, duties, and obligations under this Agreement without the prior
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Development Agreement
written consent of City. Any assignment, delegation, or assignment without the
prior written consent of City shall be null and void. Any transfer, delegation, or
assignment by Owner as authorized herein shall be effective only if and upon the
party to whom such transfer, delegation, or assignment is made is issued a
Regulatory Permit as required under Article 4-34 of the municipal code.
· 24. Operating Cannabis Facility
Any party to this Agreement, or successor in interest thereto, shall not operate a cannabis
facility authorized under the municipal code unless:
a. It is the holder of a valid Regulatory Permit issued by City in accordance
with the procedures and requirements of Article 4-34 of the municipal code; and
b. At such time as the State of California requires cannabis facilities and
businesses to hold a valid license or permit issued by the State of California, it also
holds such license or permit, unless, however, such permit or license is not
required by the State of California for the type of cannabis facility or business
operation that is the subject of this Agreement.
25. Notice
Any notice or communication required hereunder between City and Owner must be in
writing, and may be given either personally, by facsimile (with original forwarded by
regular U.S. Mail), by registered or certified mail (return receipt requested), or by Federal
Express, UPS or other similar couriers providing overnight delivery. If personally
delivered, a notice shall be deemed to have been given when delivered to the Party to
whom it is addressed. If given by facsimile transmission, a notice or communication shall
be deemed to have been given and received upon actual physical receipt of the entire
document by the receiving Party's facsimile machine. Notices transmitted by facsimile
after 5:00p.m. on a normal business day or on a Saturday, Sunday, or holiday shall be
deemed to have been given and received on the next normal business day. If given by
registered or certified mail, such notice or communication shall be deemed to have been
given and received on the first to occur of (i) actual receipt by any of the addressees
designated below as the party to whom notices are to be sent, or (ii) five (5) days after a
registered or certified letter containing such notice, properly addressed, with postage
prepaid, is deposited in the United States mail. If given by Federal Express or similar
courier, a notice or communication shall be deemed to have been given and received on
the date delivered, as shown on a receipt issued by the courier. Any Party hereto may at
any time, by giving ten (1 0) days written notice to the other Party hereto, designate any
other address in substitution of the address to which such notice or communication shall
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Development Agreement
be given. Such notices or communications shall be given to the Parties at their addresses
set forth below:
If to City:
and
If to Owner:
If to Landlord:
With a courtesy copy to:
City of Lynwood
11330 Bullis Road
Lynwood, California 90262
Attention: City Manager
H. Francisco Leal, Esq.
Leal Trejo, APC
3767 Worsham Avenue
Long Beach, California 90808
Wayne Johnson
Lacturnus Research Association, Inc.
11010 Santa Fe Avenue
Lynwood, California 90262
Kevin Flynn , Authorized Representative
Lacturnus Research Association, Inc.
11010 Santa Fe Avenue
Lynwood, California 90262
Shaoul Levy
Lynwood Santa Fe, LLC
201 Wilshire Boulevard
Santa Monica, California 90401
David R. Welch, Esq.
DIR Welch Attorneys at Law, A P.C.
500 South Grand Avenue Suite 1800
Los Angeles, CA 90071
John C. Condas, Esq.
Allen Matkins Leek Gamble Mallory & Natsis LLP
1900 Main Street, Fifth Floor
Irvine, CA 92614
Address Changes. Either party may, by notice given at any time, require subsequent
notices to be given to another person or entity, whether a party or an officer or
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Development Agreement
representative of a party or to a different address, or both. Notices given before actual
receipt of notice of change shall not be invalidated by the change.
26. Miscellaneous Provisions
a. Regulatory Permit Conditions of Approval. Owner shall comply with all
conditions of approval of the Regulatory Permit approved by City Council.
b. Amendment or Cancellation. This Agreement may be amended, or
canceled in whole or in part, only by the written mutual consent of the parties to
this Agreement or their successors in interest, except that minor amendments that
do not affect a substantive provision of this Agreement may be approved by the
City Manager. The decision whether a proposed amendment is "minor'' shall be in
the exclusive discretion of the City Manager.
c. Waiver. Waiver by City of any one or more of the terms or conditions of this
Agreement shall not be construed as waiver of any other term or condition under
this Agreement.
d. Enforcement. Unless amended or canceled pursuant hereto, this
Agreement shall be enforceable by any party hereto, or successor in interest
thereto, notwithstanding any subsequent change in any applicable general or
specific plan, zoning, subdivision or building regulation, or municipal code
amendment adopted by City that conflicts with the terms of this Agreement.
e. Joint and Several Liabilitv. Owner and Landlord shall be jointly and
severally liable for any amount due under this Agreement, and any breach of this
Agreement or failure to pay by one Party shall also constitute a breach of this
Agreement by the other Party. Owner and Landlord agree that City may impose a
lien and seek foreclosure on any parcel of the Site due to any default by Owner.
f. Severability. If any part of this Agreement is found to conflict with applicable
state laws or regulations, such part shall be inoperative, null, and void insofar as it
conflicts with said laws or regulations, or modified or suspended as may be
necessary to comply with such state laws or regulations, but the remainder of this
Agreement shall continue to be in full force and effect.
g. Counteroarl~. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which together
shall constitute one and the same instrument. The execution of this Agreement
may be by actual, facsimile, or electronic signature.
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h. Jurisdiction and Arbitration. The law governing this Agreement shall be that
of the State of California. Any suit brought by any party against any other party
arising out of the performance of this Agreement shall be filed and maintained in
the County of Los Angeles Superior Court. Any dispute, claim or controversy
arising out of or relating to this Agreement or the breach, termination, enforcement,
interpretation or validity thereof, including the determination of the scope or
applicability of this Agreement to arbitrate, shall be determined by binding
arbitration in Los Angeles, California before one arbitrator. Said arbitrator shall be
chosen by mutual agreement of the Parties. If the Parties cannot agree on an
arbitrator within 30 days of the first notice by either Party of the need for arbitration,
each Party shall name one arbitrator, then the two arbitrators shall choose the
arbitrator who shall hear the case.
i. Disclaimer. Despite California's cannabis laws and the terms and
conditions of this Agreement, any Conditional Use Permit, or any Regulatory
Permit issued pertaining to Owner or the property specified herein, California
cannabis cultivators, transporters, distributors, or possessors may still be subject
to arrest by state or federal officers and prosecuted under state or federal law. The
Federal Controlled Substances Act, 21 USC § 801, prohibits the manufacture,
distribution, and possession of cannabis without any exemptions for medical use.
j. Force Majeure. If delays are caused by unforeseen events beyond the
control of Owner, such delays will entitle Owner to an extension of time as provided
in this section. Such unforeseen events ("Force Majeure") shall mean war,
insurrection, acts of God, local, state or national emergencies, strikes and other
labor difficulties beyond the party's control, any judgment in an action filed by the
federal government which results in the closure of the Facility, or any default by
City hereunder, which Force Majeure event substantially interferes with the
development or construction of the Project.
In the case of a Force Majeure event, any and all time periods referred to in this
Agreement shall be extended for a period equal to any delay to the Project caused
by any such Force Majeure event; provided, however, that no such time period
shall be extended beyond a cumulative total of one (1) year.
Extensions of time, when granted, will be based upon the effect of delays on the
Project. They will not be granted for: (1) delays of seven days or less or (2) for
delays due to Owner's inability to obtain financing with respect to the Development
of the Project.
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Development Agreement
Owner shall in writing promptly notify City Manager upon learning of any such
Force Majeure event. The City Manager or his or her designee shall ascertain the
facts and the extent of the delay and his findings thereon shall be included in
Owner's annual monitoring report unless Owner disputes the findings and requests
that the period of delay be heard and determined as a part of the annual review
process.
k. Deposit with City. Owner shall be responsible for all of the costs associated
the Project, including but not limited to costs associated with City's review and
processing of the Project, including but not limited to reviewing the Project's
entitlements, including all environmental clearance documents, permits, licenses
and all documents evidencing compliance with state and local law, and as such
Owner agrees to deposit good and sufficient funds with City whereby Owner shall
deposit money with City for the purpose of reimbursing City for any associated
costs with processing the Project, as detailed in this Agreement.
Constructive Notice and Acceptance. Every person who after the Effective Date and
recording of this Agreement owns or acquires any right, title, or interest to any portion of
the Site, is and shall be conclusively deemed to have consented and agreed to every
provision contained herein, whether or not any reference to this Agreement is contained
in the instrument by which such person acquired an interest in the Site, and all rights
and interests of such person in the Site shall be subject to the terms, requirements, and
provisions of this Agreement.
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Development Agreement
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
CITY OF LYNWOOD
City Manager
APPROVED AS TO FORM:
OWNER
Name:
Title:
LANDLORD
Name:
Title:
Page 37 of 37 Cultivation Manufacturing and Distribution
Development Agreement
COMMERCIAL CANNABIS
DEVELOPMENT AGREEMENT
Development Agreement No. 2017-11 MOD
This Agreement is made by and between and among the CITY OF LYNWOOD
("City") and BECC Holdings, formerly known as EEL Holdings, LLC ("Owner'') and Moises
Gomez ("Landlord") this __ day of January 2018, as required by Section 4-34-5 of the
Lynwood Municipal code setting forth the terms and conditions under which Owner shall
operate a commercial cannabis manufacturing, distribution, and delivery facility (also, the
"Project") pursuant to its Regulatory Permit that are in addition to the requirements of
Article 4-34 of the Lynwood Municipal code, including, but not limited to, public outreach
and education, community service, payment of fees and other charges as set forth or
referenced herein, and such other terms and conditions as will protect and promote the
public health, safety, and welfare. The requirements set forth in Article 4-34 of the
Lynwood Municipal Code, and the Administrative Regulations adopted by the City Council
of the City of Lynwood are incorporated herein by reference. All subsequent references
to "municipal code" mean the Lynwood Municipal Code.
1. Government Code and Municipal Code Required Elements
a. Description of Property. Land situated in the City of Lynwood, County of
Los Angeles, State of California, described as APN 6169-012-004, whose street
address is 2751 Lynwood Road in the City of Lynwood.
b. Owner and Other Person with Legal or Equitable Interest.
Owner: BECC Holdings
Landlord: Moises Gomez
c. Permitted Uses. The subject property may be used for any Commercial
Cannabis Business facility as presently authorized under Article 4-34 of the
municipal code, and for any other use as authorized under applicable provisions
of the municipal code. Although chapter 25 does not specifically identify
Commercial Cannabis Businesses such as medical marijuana facilities or other
permitted cannabis facilities as allowed uses in any zoning district, such uses are
similar to other listed uses, including, but not limited to, medical services-clinics,
offices, laboratories; garden center/plant nursery; food and beverage
manufacturing; and agricultural products processing; and, therefore, Commercial
Cannabis Businesses, including medical marijuana facilities, are allowed uses in
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Development Agreement
the same zoning districts in which such similar uses are allowed under Chapter 25
of the municipal code.
Zoning. Owner shall ensure that all Project activities conducted under this
Agreement and under the Regulatory Permit shall comply with the City's municipal
code, including the zoning ordinance and any and all development and
construction requirements contained therein. "Project" means the physical
improvement and use of the Property as a Commercial Cannabis Business. The
"Project" is further defined in Exhibit A to this Agreement, and supplemented by
the provisions of this Agreement and the Public Safety and Security Plan.
d. Reservation or Dedication of Land for Public Purposes. Sufficient roadway,
sidewalk, and utility easements shall be reserved or dedicated to City for such
purposes.
2. Term
This Agreement shall start on the date on which all parties have executed it and it
shall end five years from the starting date, and it shall remain in full force and effect
so long as the subject property is used for a medical marijuana facility as presently
authorized under Article 4-34 of the municipal code; provided, however, such use
is not abandoned for a period of more than six (6) months. The term may be
extended for up to two, three-year extensions by mutual agreement of the Parties.
However, at the request of either Party, the fees required under Article 7 of this
Agreement may be subject to re-negotiation for year 3 of this Agreement. In the
event a Party wishes to re-negotiate fees, it shall give notice to the other Party no
less than 90 days before the three-year anniversary of the agreement, and
negotiations shall be concluded before the anniversary date.
3. Owner's Site and Floor Plans
a. Owner's site plan and floor plan for the facility have been submitted or will
be submitted to the City. The floor plan identifies the uses of each interior space,
and is the basis for calculating the annual per-square-foot fee specified in Article
7 below.
b. A preliminary landscape plan will be prepared and reviewed and approved
by the Planning Director as part of the design review process. A final landscape
plan shall be prepared and submitted in conjunction with building and site
improvement plans prior to issuance of building permits for construction activities.
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Development Agreement
c. An exterior signage plan will be prepared and reviewed and approved by
the Planning Director in accordance with the procedures and requirements of
Article 70 of Chapter 25 of the municipal code.
4. Facility Operations
a. Standard Operating Procedures. Owner will comply with all relevant
California State laws and local ordinances.
During the term of its Regulatory Permit and the term of this Agreement,
Owner shall lawfully operate in accordance with all state and local laws including
state and local commercial cannabis regulations. Owner will employ exemplary
operating procedures to comply with state and local laws. Owner's facility will
employ safety and security measures as set forth herein for the safety and security
of its employees, as well as other individuals in its neighboring community.
b. Security Plan. The issuance of a Regulatory Permit is conditional upon
approval of the proposed security plan by the Los Angeles County Sheriff. The
security plan shall include, at a minimum and as appropriate, provisions for video
surveillance, perimeter fencing and security, protection of the building(s) from
vehicle intrusion, cash handling procedures, product handling and storage
procedures, and a professionally monitored alarm system. Equipment and
systems used for video surveillance and building alarms will be approved by City.
Video surveillance shall include, at a minimum, all site and facility entrances and
access points, all spaces accessible by the public, all secured areas of the facility
with restricted access, all interior spaces and rooms where commercial cannabis
products are handled and processed, shipping and receiving areas, cash storage
areas, and other areas necessary to protect the safety of employees and the public
and to ensure commercial cannabis products are received, handled, stored,
packaged, shipped, and distributed in compliance with applicable state and local
laws and regulations. The video surveillance system shall be web-based with
direct access provided to the Los Angeles County Sheriff upon request.
The security system will also include sensors to detect entry and exit from all
secure areas, panic buttons in appropriate locations, and a professionally
monitored alarm system with glass breakage sensors and motion detectors.
Owner will employ properly trained and licensed third-party security personnel to
protect the welfare and safety of Owner employees and to ensure public safety to
the neighboring community. Owner shall use security personnel 24 hours, 7 days
a week. Security personnel may be armed so long as proper licensing and
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Development Agreement
insurance requirements are followed and met by the third-party operator providing
such security services.
c. Fire Department Approval. Owner may not operate any facility, and no
permit, license, or other approval issued by City shall be valid unless and until the
Los Angeles County Fire Department has approved Owner's site plan, floor plan,
safety plan, and any other plans that require its approval.
d. Possession of Firearms. Except for licensed security personnel approved
by the Los Angeles County Sheriff, no person employed by Owner shall be in
possession of any firearm while on the premises or location without having first
obtained a license from the appropriate state or local agency authorizing the
person to be in possession of such firearm. Every such person in possession of a
firearm while on the premises or location must provide the City Manager and the
Los Angeles County Sheriff, ten days before bringing the firearm onto the
premises, with the following:
1) A copy of the license issued to the person by the appropriate state
or local agency authorizing him or her to possess such firearm;
2) A copy of his or her law enforcement identification (if he or she is
employed by a law enforcement agency);
3) A copy of his or her California driver's license or California
identification card; and
4) Any other information reasonably required by the Los Angeles
County Sheriff to show that the individuai is in compliance with the
provisions of all laws regarding the possession and use of a firearm.
e. Employees/Procedures for Inventory Control to Prevent Diversion of
Commercial Cannabis. Only authorized employees will be permitted to enter
Owner's facility. Each employee will have to meet a criminal background
investigation conducted by the Los Angeles County Sheriff, which at minimum shall
include a LiveScan criminal history check.
Owner's collective agreement will prohibit the use of all cannabis and cannabis
products by its employees at its facility, in the neighborhood vicinity of its facility,
and while driving.
Owner wiii take aii necessary and reasonabie steps to prevent the distribution of
any of its commercial cannabis products to minors; prevent revenue from the sale
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Development Agreement
or distribution of its commercial cannabis and/or infused products from going to
criminal enterprises, gangs and cartels; prevent the diversion of marijuana from
California to any other state; prevent state-authorized marijuana activity from being
used as a cover or pretext for the trafficking of other illegal drugs or other illegal
activity; prevent violence and the use of firearms in the manufacture and
distribution of marijuana; discourage and educate against drugged driving and the
exacerbation of other adverse public health consequences associated with
marijuana use; disavow growing marijuana on public lands that creates attendant
public safety and environmental dangers posed by such illegal uses; and
discourage and educate against marijuana possession or use on federal property.
f. Quality Control and Testing. Owner will utilize quality control measures and
testing to ensure only the highest quality of commercial cannabis and infused
products will be produced. Owner will inspect the product to insure its identity and
quantity, and will have a State-approved testing lab, perform testing of random
samples prior to distribution or delivery. Inspection and testing will be conducted
by the approved testing lab off-site. Testing standards and procedures shall be in
accordance with applicable state law and regulations.
All commercial cannabis products will undergo a quality assurance review prior to
distribution to Owner's patient collective affiliates or delivery to individual
customers in order to ascertain its quantity and content. Inventory procedures will
be utilized for tracking and taxing purposes by the state. Owner will employ an
efficient record-keeping system to make transparent its financing , testing, and
adverse effect recording, as well as recall procedures. Owner will employ an
efficient record-keeping system that will reflect its financing, testing, and adverse
effect recording and product recall procedures.
g. Packing of Commercial Cannabis and Infused Products. All Owner
commercial cannabis products will be packaged and labeled as required by
Section 26071, et seq., of the California Business and Professions Code and
applicable requirements and regulations issued by the State of California pursuant
thereto. In addition to those packaging and labeling requirements, and packaging
and labeling requirements set forth in Owner's Regulatory Permit application, as
amended or supplemented, all commercial cannabis products shall be packaged
in an opaque childproof container which shall contain a label or be accompanied
by a leaflet or inset that states, at a minimum:
1) The name, address and telephone number of the licensed
commercial cannabis facility to which the commercial cannabis product is
distributed, sold, or transferred;
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Development Agreement
2) The amount of commercial cannabis in the container; and
3) The date the commercial cannabis was transferred to a licensed
commercial cannabis facility.
Owner intends to produce infused products and will secure any approval from the
County of Los Angeles Health Department required for manufacturing and
handling such products. Owner infused products will not be produced,
manufactured, stored or packaged in private homes. All Owner commercial
cannabis infused products shall be individually wrapped at the original point of
preparation.
h. Del ivery. If Owner applies for and receives a Delivery permit from City,
Owner may sell and deliver manufactured cannabis products to individual
customers, as long as such activity is consistent with and permitted under state
law, and Owner has a valid state license therefor. As long as such products are
sold and delivered to individual customers, and no in-person sales occur at
Owner's facility, such activity shall not constitute a dispensary under the municipal
code.
i. Point of Sale Tracking System. Owner will maintain an inventory control
and reporting system that accurately documents the location of medicinal
marijuana products from inception through distribution or delivery, including
descriptions, weight, and quantity. The inventory control and reporting system
shall comply with the track and trace program required by Section 26067, et seq.,
of the California Business and Professions Code and regulations issued
thereunder.
Owner will employ an electronic point of donation/sale system approved by City,
such as BioTrack THC, MJ Freeway, or similar system for all point of
donations/sales tracking from seed or inception to product distribution to other
licensed commercial cannabis facilities or delivery to individual customers. Such
approved system will track all Owner commercial cannabis products, each edible,
harvested flower, and/or manufactured concentrate, as well as gross sales (by
weight and sale). BioTrack THC, MJ Freeway, or similar system will have the
capacity to produce historical transactional data in accordance with City's
requirements.
j. Record Keeoina. Owner will maintain records for all dispensed commercial
cannabis and/or infused products. Owner will comply with all records-keeping
responsibilities that are set forth in Municipal Code Section 4-34-10, including
complete and up-to-date records regarding the amount of commercial cannabis
Page 6 of 31 Manufacturing
Development Agreement
cultivated, produced, manufactured, harvested, stored, or packaged at Owner's
facility.
k. Processing, Handling. Storing, and Distribution of Commercial and
Related Products. Commercial cannabis handling, storing, and processing shall
be concealed from public view at all stages of growth and processing, and there
shall be no exterior evidence of processing occurring at the premises from a public
right-of-way or from an adjacent parcel. Commercial cannabis handling, storing,
processing, or distribution shall not create offensive odors; create excessive dust,
heat, noise, smoke, traffic, or other impacts that are disturbing to people of normal
sensitivity residing or present on adjacent or nearby property or areas open to the
public; or be hazardous due to use or storage of materials, processes, products,
or wastes.
Owner will store its commercial cannabis and/or commercial cannabis products in
a locked safe room with T-card identification access for management only. The
safe room will be constructed of fire-rate walls with numerous cameras installed to
view all entries and exits from the safe room, as well as all other activities
performed within Owner's facility. Owner will not conduct outdoor operations
except as related to lawful delivery and transportation of commercial cannabis and
infused products. Owner will not store commercial cannabis or related products in
its delivery vehicle outside normal operating hours of the facility.
Commercial cannabis products will be sold or distributed only to licensed facilities
in California, except as provided in section 4(h) above. Excess or contaminated
product will be securely stored on-site until it is properly disposed. Disposal may
include composting, incineration, land-fill disposal through the local waste
management hauler, or other disposal methodology in accordance with state and
county health and safety codes and regulations.
I. Odor Control. All structures shall have ventilation and filtration systems
installed that prevent commercial cannabis plant odors from exiting the interior of
the structure. The ventilation and filtration system shall be approved by the
Building Official and City Manager and installed prior to commencing
manufacturing within the allowable structure. Facility air intake, exhaust, and
recirculating system shall be of industrial grade. Activated charcoal, recirculating,
and closed loop aeration systems will be utilized as necessary for effective odor
control and management.
m. Description of Banking Plan. Owner will seek to open a bank account under
the name of Owner or its associated management company to provide
transparency for funds received, operational costs, including payroll, tax payments
Page 7 of 31 Manufacturing
Development Agreement
to the state and federal governments, among others. Should a bank account not
be forthcoming, Owner will purchase and install safes to secure all daily funds
received from its collective membership or other lawful cooperative corporations
to implement debit and credit card transactions. Owner will not accept personal or
corporate checks.
n. Transportation Plan. Owner will comply with all state and local law
regarding transportation, including the rules governing delivery service. Owner will
retain a list of names and cellular contact numbers for all employees engaged in
transportation of commercial cannabis products and provide it to the applicable
oversight authority, keeping the list current and up to date.
Owner will keep complete and up-to-date records documenting each transfer of
commercial cannabis to other lawful cooperative corporations, including the
amount provided, the form or product category in which the commercial cannabis
was provided, the date and time provided, the name of the employee making the
transfer, the name and address of the other lawful cooperative corporation to
whom delivery is made, and the amount of any related donation or other monetary
transaction.
5. Community Relations, Employment, and Wages
a. Public Outreach and Education Program. Owner shall create a Public
Outreach and Education Program, subject to approval by the City Manager, that
will extend community benefits to groups and organizations in the City of Lynwood
such as schools, youth organizations, religious organizations, health care
providers, drug abuse treatment providers, and mental health and drug counseling
providers.
Owner will coordinate and cooperate with the City's Commercial Cannabis
Business outreach committee, once formed, and with other participating Owners
of permitted cannabis facilities located within City of Lynwood in the establishment
and implementation of appropriate public outreach and education programs.
Owner's obligation to participate in and fund outreach and education efforts shall
be limited to those specifically identified in Owner's individual Public Outreach and
Education Program, as approved by the City Manager. Owner's contribution to
funding for the Public Outreach and Education Program shall be included in and
limited to the payment of the fees in Article 7 hereof. The Public Outreach and
Education Program shall provide a detailed description of Owner's intentions with
regard to public outreach and education, including which schools or programs
Owner will work with and what types of materials and information will be provided.
Page 8 of 31 Manufacturing
Development Agreement
b. Community Benefits Program. Owner will coordinate and cooperate with
the City's Commercial Cannabis outreach committee, once formed, and with other
participating Owners of permitted commercial cannabis facilities located within the
City of Lynwood in the establishment, implementation, and funding of a community
benefits program which could include such items as new community recreation
facilities, expansion and/or improvement to existing facilities or other physical
improvements that provide a benefit to the community, support of holiday and
special community events, and support of local public service and special districts
and organizations. This community benefits program may be implemented by a
foundation or other association of permitted commercial cannabis facility Owners
issued regulatory permits by City. City and the public will participate in the
decision-making process for identifying and prioritizing community needs and
benefits, and identifying appropriate projects to be funded by the entity
implementing this community benefits program. All projects under the community
benefits program must be approved by City. Owner's commitment to funding the
activities of the community benefits program shall be included in and limited to
payment of the fees set forth in Article 7 hereof.
c. Designation of Persons Responsible for Community Relations. At the time
of this Agreement, Owner's Managing Agent/General Manager will be responsible
for community inquiries and complaints and on-site during normal business hours.
d. Interface with Los Angeles County Sheriff. Owner's general manager will
interface with the Los Angeles County Sheriff to ensure its operation complies with
state and local laws and regulations.
e. Local Recruitment, Hiring. and Training Programs. Owner is committed to
making a commercially reasonable good-faith effort to recruit, hire, and train City
residents for employment by Owner. A commercially reasonable good-faith effort
to recruit, hire, and train City residents for employment means Owner will take the
following or similar actions to recruit and employ City residents: 1) Contact at least
one (1) local recruitment source to identify qualified individuals who are City
residents, 2) Advertise for qualified City residents in at least one (1) trade paper or
newspaper of general circulation in the area, and 3) Develop a written plan to
recruit and employ City residents as a part of the its workforce.
Owner will also make commercially reasonable efforts to seek qualified companies
located in the City of Lynwood to serve as its general contractor and
subcontractors needed for efficient and cost-effective industry standard
construction and build-out improvements of Owner's Commercial Cannabis
Business facilities. Additionally, Owner will make commercially reasonable efforts
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Development Agreement
to identify qualified companies located in the City of Lynwood to employ as
licensed security guards needed once Owner's facility is opened, as well as for
ancillary services needed.
f. Living Wages. Owner agrees to pay all employees of the Facility a Living
Wage. A "Living Wage" is the higher of whatever Owner currently pays its
employees for similar work elsewhere in the State of California, or the following:
until December 31, 2017: 150% of the California State minimum wage. Such
wage shall increase on January 1 of each subsequent year at the same rate as the
California State minimum wage increases, to ensure at all times Owner is paying
employees 150% of the State minimum wage. In no case shall Owner be required
to pay employees greater than 150% of the applicable State minimum wage.
g. Full-time Work. Owner shall make commercially reasonable good-faith
efforts to fill positions with a full-time employee where feasible in light of the
seasonal or periodic character of Commercial Cannabis Business manufacturing
operations and a typically fluctuating labor force. However, at no time shall Owner
have a labor force that is composed of less than 75% full-time employees. Owner
agrees to provide to its eligible employees leave benefits, health and wellness
benefits and other employee benefits to the extent such benefits are required to
be paid for by Owner under applicable state and federal employment laws.
6. Indemnification of City from Liability
a. Pursuant to City's requirement, Owner will indemnify City to the extent
permitted by law from any claims, damages, injuries, or liabilities of any kind
associated with the registration or operation of Owner's Commercial Cannabis
Business facility or the prosecution of Owner's facility or its owners, managers,
directors, officers, employees, or its qualified patients or primary caregivers for
violation of federal or state laws, provided, however, that Owner shall have no
obligations under this section for any claim, loss, damage, injury or other liability
which was caused or incurred by the sole negligence or willful misconduct of the
City.
b. Owner agrees to defend, at its sole expense and represented by counsel of
Owner's choosing, any action against City, its agents, officers, and employees
related to the approval or issuance of the Regulatory Permit and this Agreement.
c. Owner agrees to reimburse City for any court costs and attorney fees that
City may be required to pay as a result of any legal challenge related to City's
approval or issuance of a Regulatory Permit or this Agreement. City may, at its
sole discretion, participate at its own expense in the defense of any such action,
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Development Agreement
but such participation shall not relieve the holder of the Regulatory Permit or this
Agreement.
7. Fees. Costs, and Future Taxes
a. Fees. Owner agrees to pay all permit fees and charges referenced in
Section 4-34-11 of the municipal code, in the amounts adopted by the City Council
by resolution, as well as any fees set forth in this Agreement. Permit application,
processing, and renewal fees shall be due and payable at the time application is
made.
b. Costs. Owner agrees to reimburse City for the additional costs authorized
and specified under Article 4-34 of the municipal code and the administrative
regulations as resulting from the operation of a commercial cannabis facility. Such
costs actually incurred by the City and its representatives shall be billed to Owner
with an itemized invoice and description. Owner shall pay the invoice within sixty
(60) days of the date the bill is received by Owner.
c. Operating Fees. Owner agrees to pay to City, to enable City to promote,
protect, and enhance the healthy, safety, and welfare of the community and its
residents and its quality of life, the following fees:
1) an annual fee of two-and-one-half percent (2.5%) of gross income
from manufacturing activities;
2) an annual fee of one and one-half percent (1 ,5%) of gross income
from distribution/transportation activities for anyone other than Owner; and
3) an annual fee of two and one-half percent (2.5%) of gross income
from delivery activities.
d. Owner understands and agrees that the fees set forth above shall be paid
in a manner and in accordance with a payment schedule agreed to by City and
Owner, in intervals of no more than three months. The manufacturing space to
which the fee applies is as identified on the attached floor plan. Payment shall be
in equal installments paid quarterly commencing at the end of the first quarter after
the effective date of the Regulatory Permit which shall be no sooner than the date
a certificate of occupancy is issued for the subject premises.
8. Cost Recovery Fee
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Development Agreement
City shall assess to Owner fees to recover City's reasonable processing and
monitoring costs relating to Owner's business upon issuance of Owner's
Manufacturing, Distribution, and Delivery Permits or any Additional Permits
("CRF"). The City shall submit sufficient information to Owner of City's total
number of hours required to process their Application or monitor their
authorizations. CRFs are separate and apart from any fees set forth in Article 7.
a. Processing Fees. Processing fees for the Application are based upon the
direct and indirect costs that City incurs in reviewing the Application. The
processing fees for the Application shall be based only on costs that are necessary
for processing the Application and implementing the Ordinance, including staff
time, legal fees, and consultant fees. "Necessary for" means that but for the
Application, the costs would not have beeri incurred. The processing fee shall not
include costs for other City management objectives, unless they are necessary for
processing the Application.
b. Monitoring Fees. Monitoring fees for the Manufacturing, Distribution, and
Delivery Permits are based upon the direct and indirect costs City incurs in
confirming the use of the Property in accordance with the municipal code, the
Ordinance, this Agreement, and the Application. The monitoring fees shall be
based only on costs that are necessary for conducting these reviews. "Necessary
for'' means that but for the Manufacturing, Distribution, and Delivery Permits, or
any Additional Permits, the costs would not have been incurred. The monitoring
fee shall not include costs for other City management objectives, unless they are
necessary for monitoring the Manufacturing, Distribution, and Delivery Permits, or
any Additional Permits.
c. Billing and Payment. City shall bill Owner the CRF on the first day of each
quarter (March, June, September, and December) with an invoice providing an
hourly breakdown of hours expended by City and its representatives. Owner shall
pay the CRF invoice within sixty (60) days of the date the bill for the CRF is
received by Owner. Notwithstanding the foregoing, or any other provision of
this Agreement, at no time shall the CRFs exceed Seven Thousand Dollars
($7,000) during a given year, except that the first year may be as high as
twenty thousand dollars ($20,000) because of the costs required to set up
the application process and review the applications.
d. Disputes. If Owner disagrees with the dollar amount provided by City on
the CRF invoice, Owner may submit a written request before the disputed fee is
due for a substitution of alternative CRF invoice to the immediate supervisor of the
City representative who determined the CRF invoice. The written request must
include supporting documentation. After review of Owner's written request, Owner
and City shall work, in good faith to resolve Owner's written request. The dispute
shall be decided in favoi of Ownei if City does not iespond to the wiitten iequest
within thirty (30) days of receipt.
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Development Agreement
9. Additional Owner Obligations
a. Reporting of Gross Receipts from Operations
1) Quarterly Receipts. No later than January 15, 2018, and 15 days
after the last day of each subsequent quarter during the Term hereof, Owner
shall deliver to City a report (the "Quarterly Report") showing (i) Gross
Receipts from Operations for the immediate prior quarter received by
Owner, and a cumulative total of all amounts of Gross Receipts from
Operations received by Owner for the calendar year, (ii) a calculation of the
quarterly payment due to City for the prior quarter, and (iii) a calculation of
the cumulative total of all quarterly payments for the calendar year.
2) Statement of Receipts. Owner shall keep complete, accurate and
appropriate books and records of all receipts from operations in accordance
with generally accepted accounting principles. For purposes herein, "books
and records" shall mean all bookkeeping or accounting documents Owner
utilizes in managing its business operations relating to the Project. Such
books and records, as well as all other relevant documents as City shall
reasonably require, shall, upon reasonable written notice, be open for
inspection by City, its auditors or other authorized representatives. If at any
time during the term such books and records prove inadequate in the
reasonable judgment of City to record the Gross Receipts from Operations
as herein required, Owner shall, upon the written request of City, procure
and maintain such books and records as shall be of a character and from
adequate for such purpose. City shall have the right to audit and examine
such books, records and documents and other relevant items in the
possession of Owner, but only to the extent necessary for a proper
determination of Gross Receipts from Operations, and all such books,
records, documents and other items shall be held available for such audit
and examination. Upon request by City, Owner shall make all such books,
records and documents available to City, and provide removable copies
thereof, within thirty (30) of the date of City's request. The cost for any audit
shall be shared equally by the Parties. Owner shall preserve such books,
records, documents, and other items in Lynwood for a period of not less
than seven (7) years for the purpose of auditing or re-auditing these
accounts upon reasonable notice; except that, if an audit is made within the
seven-year period and Owner claims that errors or omissions have
occurred, the books and records shall be retained and made available until
those matters are resolved. City shall keep strictly confidential all
statements of revenue furnished by Owner and all other information
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Development Agreement
concerning Owner's operation of the Premises obtained by City as a result
of the inspection audit and examination privileges of City hereunder, except
as otherwise required by law. If City receives a request for such information
pursuant to the Public Records Act (California Government Code Section
6250, et seq.), City shall provide Owner notice of any such request prior to
disclosing any such information. Within seven (7) years after the receipt of
any statement of receipts under this Agreement, City at any time shall be
entitled to carry out an audit of such revenue either by City or agent to be
designated by City. If it shall be determined as a result of such audit that
there has been a deficiency in any payment due under this Agreement
made on the basis of such statement, then such deficiency shall become
immediately due and payable. If such statement of revenue for the relevant
year shall be found to have understated receipts by more than two percent
and City is entitled to any additional payment as a result of said
understatement, then Owner shall, in addition, pay all of City's reasonable
costs and expenses connected with such audit, including the expense
incurred in retaining such agent; otherwise City shall bear the cost and
expense of such audit.
3) Copies of Tax Filings. Owner shall provide City with copies of any
reports Owner is required to provide to the County of Los Angeles or the
State of California for sales, use, or other tax purposes.
b. Applicability of Future Revenue Mechanisms. During the term of this
Agreement, if City imposes an alternative revenue mechanism specifically related
to cannabis operations (e.g., a cannabis tax), Owner agrees to pay to City the
greater of the payment required under such alternative revenue mechanism or the
payment required by this section. As used in this section, "alternative revenue
mechanism" does not include taxes, fees, or assessments levied on or collected
from both cannabis and non-cannabis operations. Payments required by revenue
mechanisms that are not limited to cannabis operations shall be in addition to, and
not in lieu of, payments under this section.
10. Insurance and Indemnity
a. Insurance. Owner shall require all persons doing work on the Project,
including its contractors and subcontractors (collectively, "Owner'' for purposes of
this Article 10 only), to obtain and maintain insurance of the types and in the
amounts described in this section and its subsections with carriers reasonably
satisfactory to City.
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Development Agreement
b. General Liability Insurance. Owner shall maintain commercial general
liability insurance or equivalent form with a limit of not less than Two Million Dollars
($2,000,000) (or as otherwise approved, in writing, by City) per claim and Two
Million Dollars ($2,000,000) each occurrence. Such insurance shall also:
1) Name City, its elected and appointed councils, boards, commissions,
officers, agents, employees, and representatives as "Additional Insureds"
by endorsement with respect to performance of this Agreement. The
coverage shall contain no special limitations on the scope of its protection
afforded to the above-listed additional insured.
2) Be primary with respect to any insurance of self-insurance programs
covering City, its officials, employees, agents, and representatives.
3) Contain standard separation of insured provisions.
c. Automotive Liability Insurance. Owner shall maintain business automobile
liability insurance or equivalent form with a limit of not less than Two Million Dollars
($2,000,000) for each accident. Such insurance shall include coverage for owned,
hired, and non-owned automobiles. Such insurance shall also:
1) Name City, its elected and appointed officials, boards, commissions,
officers, agents, employees, and representatives as "Additional Insureds"
by endorsement with respect to performance of this Agreement. The
coverage shall contain no special limitations on the scope of its protection
afforded to the above-listed additional insureds.
2) Be primary with respect to any insurance or self-insurance programs
covering City, its officials, employees, agents, and representatives.
3) Contain standard separation of insured provisions.
d. Workers' Compensation Insurance. Owner shall take out and maintain
during the term of this Agreement, workers' compensation insurance for all of
Owner's employees employed at or on the Project, and in the event any of the
work is subcontracted, Owner shall require any general contractor or subcontractor
similarly to provide workers' compensation insurance for such contractor's or
subcontractor's employees, unless such employees are covered by the protection
afforded by Owner. In case any class of employee engaged in work on the Project
is not protected under any workers' compensation law, Owner shall provide and
shall cause each contractor and subcontractor to provide adequate insurance for
the protection of employees not otherwise protected. Owner hereby indemnifies
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Development Agreement
City for any damage resulting from failure of Owner, its agents, employees,
contractors, or subcontractors to take out or maintain such insurance. Workers'
compensation insurance with statutory limits and employer's liability insurance with
limits of not less than One Million Dollars ($1 ,000,000) each accident shall be
maintained.
e. Other Insurance Requirements. Owner shall do all the following :
1) Prior to taking any actions under this Agreement, furnish City with
properly executed certificates of insurance that clearly evidenced all
insurance required in this Article, including evidenced that such insurance
will not be canceled, allowed to expire, or be materially reduced in coverage
without thirty (30) days prior written notice to City.
2) Provide to City, upon request, and within seven (7) calendar days of
said request, certified copies of endorsements and policies, and properly
executed certificates of insurance evidencing the insurance required herein.
3) Replace or require the replacement of certificates, policies and
endorsements for any insurance required herein expiring prior the
termination of this Agreement.
4) Maintain all insurance required herein from the Effective Date of this
Agreement to the earlier of the expiration of the term or the mutual written
termination of this Agreement.
5) Place all insurance required herein with insurers licensed to do
business in California with a current Best's Key Rating Guide reasonably
acceptable to City.
f. Indemnity. Owner agrees to indemnify, defend, and hold City, and its
elected and appointed council, boards, commissions, officers, agents, employees,
consultants, and representatives, harmless from any and all claims costs and
liability for any personal injury or property damage which may arise as a result of
any actions or negligent omissions by Owner or Owner's contractors,
subcontractors, agents, or employees in connection with the construction,
improvement, or operation of the Project.
11. Termination
a. Termination Upon Compietion of Deveiopment. 1 ms Agreement snau
terminate upon the expiration of the term, unless it is terminated earlier pursuant
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Development Agreement
to the terms of this Agreement and the Development Agreement Law. Upon
termination of this Agreement, City shall record a notice of such termination, and
this Agreement shall be of no further force or effect except as otherwise set forth
in this Agreement.
b. Effect of Termination on Owner's Obligations. Termination of this
Agreement shall eliminate any further obligation of Owner to comply with this
Agreement, or some portion thereof, if such termination relates to only part of the
Site or Project. Termination of this Agreement, in whole or in part, shall not,
however, eliminate the rights of Owner to seek any applicable and available
remedies or damages based upon acts or omissions occurring before termination.
c. Effect of Termination on City's Obligations. Termination of this Agreement
shall eliminate any further obligation of City to comply with this Agreement, or some
portion thereof. Termination of this Agreement shall not, however, eliminate the
rights of City to seek any applicable and available remedies or damages based
upon acts or omissions occurring before termination.
d. Survival After Termination. The rights and obligations of the Parties set
forth in Article 14, Article 22, and Section 25(e), Section 25(f), and Section 25(h),
and any right or obligation of the Parties in this Agreement which, by its express
terms or nature and context is intended to survive termination of this Agreement,
will survive any such termination.
12. Resources Efficiency
The design of the facility shall include significant water and energy conservation
measures to minimize resource consumption. The design shall incorporate technologies
such as solar, wind, high efficiency lighting, and/or water recycling systems to the extent
feasible. High efficiency LED lighting systems for the exterior lighting will be used. If
economically and technologically feasible, grow lights shall be high efficiency LED lighting
systems.
13. Standard Conditions for Construction
During any on-site construction activities related to development of the project site and
any buildings thereon, or renovation or remodeling of existing buildings, Owner and
Landlord shall comply with all applicable terms and conditions of City's Standard
Conditions for Construction, attached hereto and incorporated herein by reference. The
Project shall comply with the applicable parking standards established by the City for
cannabis activities.
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Development Agreement
14. Defaults and Remedies
a. Remedies in general. It is acknowledged by the parties that City would not
have entered into this Agreement if it were to be liable in damages under this
Agreement, or with respect to this Agreement or the application thereof, except as
hereinafter expressly provided. Subject to extensions of time by mutual consent
in writing, failure to delay by either party to perform any term or provision of this
Agreement shall constitute a default. In the event of alleged default or breach of
any terms or conditions of this Agreement, the party alleging such default or breach
shall give the other party not less than thirty (30) day notice in writing specifying
the nature of the alleged default and the manner in which said default may be
satisfactorily cured during any such thirty (30) day period, the party charged shall
not be considered in default for purposes of termination or institution of legal
proceedings. Notwithstanding the foregoing to the contrary, if the alleged default
is of such a nature that it cannot be cured within thirty (30) days, the alleged
defaulting party shall not be deemed in default as long as such party commences
to cure such default within such thirty (30) day period and thereafter diligently
prosecutes such cure to completion.
After notice and expiration of the thirty (30) day period, the other party to this
Agreement, at its option, may institute legal proceedings pursuant to this
Agreement.
In general, each of the parties hereto may pursue any remedy at law or equity
available for the breach of any provision of this Agreement, except that City shall
not be liable in monetary damages, unless expressly provided for this Agreement,
to Owner, to any mortgagee or lender, or to any successors in interest of Owner
or mortgagee or lender, or to any other person, and Owner covenants on behalf of
itself and all successors in interest to the Property or any portion thereof, not to
sue for damages or claim any damages.
1) For any breach of this Agreement or for any cause of action which
arises out of this Agreement; or
2) For the impairment or restriction of any right or interest conveyed or
provided under, with, or pursuant to this Agreement, including, without
limitation, any impairment or restriction which Owner characterizes as a
regulatory taking or inverse condemnation; or
3) Arising out of or connected with any dispute, controversy or issue
regarding the application or interpretation or effect of the provisions of this
Agreement.
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Development Agreement
Nothing contained herein shall modify or abridge Owner's rights or remedies
(including its rights for damages, if any) resulting from the exercise by City of its
power of eminent domain. Nothing contained herein shall modify or abridge
Owner's rights or remedies (including its rights for damages, if any) resulting from
the grossly negligent or malicious acts of City and its officials, officers, agents and
employees. Nothing herein shall modify or abridge any defenses or immunities
available to City and its employees pursuant to the Government Liability Act and
all other applicable statutes and decisional law.
Except as set forth in the preceding paragraph relating to eminent domain, Owner's
remedies shall be limited to those set forth in this Section 14(a}, Section 14(b}, and
Section 14(c).
Notwithstanding anything to the contrary contained herein, City covenants as
provided in Civil Code Section 3300 not to sue for or claim any consequential
damages or, in the event all or a portion of the Property is not developed, for lost
profits or revenues which would have accrued to City as a result of the
development of the Property.
b. Specific Performance. The parties acknowledge that money damages and
remedies at law are inadequate, and specific performance and other non-monetary
relief are particularly appropriate remedies for the enforcement of this Agreement
and should be available to all parties for the following reasons:
1) Except as provided in Sections 14(a) and 14(e}, money damages are
unavailable against City as provided in Section 14(a) above.
2) Due to the size, nature and scope of the Project, it may not be
practical or possible to restore the Property to its natural condition once
implementation of this Agreement has begun. After such implementation,
Owner may be foreclosed from other choices it may have had to use the
Property or portions thereof. Owner has invested significant time and
resources and performed extensive planning and processing of the Project
in agreeing to the terms of this Agreement and will be investing even more
significant time and resources in implementing the Project in reliance upon
the terms of this Agreement, and it is not possible to determine the sum of
money which would adequately compensate Owner for such efforts; the
parties acknowledge and agree that any injunctive relief may be ordered on
an expedited, priority basis.
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Development Agreement
c. Release. Except for those remedies set forth in Sections 14(a), 14(b), and
14(c), Owner, for itself, its successors and assignees, hereby releases City, its
officers, agents and employees from any and all claims, demands, actions, or suits
of any kind or nature arising out of any liability, known or unknown, present or
future, based or asserted, pursuant to Article 1, Section 19 of the California
Constitution, the Fifth Amendment of the United States Constitution, or any other
law or ordinance which seeks to impose any other liability or damage, whatsoever,
upon City because it entered into this Agreement or because of the terms of this
Agreement.
Owner acknowledges that it may have suffered, or may suffer, damages and other
injuries that are unknown to it, or unknowable to it, at the time of its execution of
this Agreement. Such fact notwithstanding, Owner agrees that the release
provided in this Section 14(c) shall apply to such unknown or unknowable claims
and damages. Without limiting the generality of the foregoing, Owner
acknowledges the provisions of California Civil Code Section 1542, which provide:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his or her favor at the time of executing
the release, which if known by him or her must have materially
affected his or her settlement with the debtor."
Owner hereby waives, to the maximum legal extent, the provisions of California
Civil Code Section 1542 and all other statutes and judicial decisions of similar
effect.
initials
d. Termination of Agreement for Default of City. Owner may terminate this
Agreement only in the event of a default by City in the performance of a material
term of this Agreement and only after providing written notice to City of default
setting forth the nature of the default and the actions, if any, required by City to
cure such default and, where the default can be cured, City has failed to take such
actions and cure such default within sixty (60) days after the effective date of such
notice or, in the event that such default cannot be cured within such sixty (60) day
period but can be cured within a longer time, has failed to commence the actions
necessary to cure such default within such sixty (60) day period and to diligently
proceed to complete such actions and cure such default.
e. Attorneys' Fees and Costs. in any action or proceeding between City and
Owner brought to interpret or enforce this Agreement, or which in any way arises
Page 20 of 31 Manufacturing
Development Agreement
out of the existence of this Agreement or is based upon any term or provision
contained herein, the "prevailing party" in such action or proceeding shall be
entitled to recover from the non-prevailing party, in addition to all other relief to
which the prevailing party may be entitled pursuant to this Agreement, the
prevailing party's reasonable attorneys' fees and litigation costs, in an amount to
be determined by the court. The prevailing party shall be determined by the court
in accordance with California Code of Civil Procedure Section 1032. Fees and
costs recoverable pursuant to this Section 14(e) include those incurred during any
appeal from an underlying judgment and in the enforcement of any judgment
rendered in any such action or proceeding.
f. Owner Default. No building permit shall be issued or building permit
application accepted for any structure on the Property after Owner is determined
by City to be in default of the terms and conditions of this Agreement until such
default thereafter is cured by Owner or is waived by City. If City terminates this
Agreement because of Owner's default, then City shall retain any and all benefits,
including money or land received by City hereunder.
15. Third Party Litigation
a. General Plan Litigation. City has determined that this Agreement is
consistent with its General Plan.
City shall have no liability under this Agreement or otherwise for any failure of City
to perform under this Agreement, or for the inability of Owner to develop the
Property as contemplated by the Development Plan, which failure to perform or
inability to develop is as the result of a judicial determination that the General Plan,
or portions thereof, are invalid or inadequate or not in compliance with law, or that
this Agreement or any of City's actions in adopting it were invalid, inadequate, or
no in compliance with the law.
b. Hold Harmless Agreement. Owner hereby agrees to, and shall hold City,
its elective and appointive boards, commissions, officers, agents, and employees
harmless from any liability for damage or claims for damage for personal injury,
including death, as well as from claims for property damage which may arise from
Owner or Owner's contractors, subcontractors, agents, or employees' operations
under this Agreement, whether such operations be by Owner, or by any of Owner's
contractors, subcontractors, agents, or employees operations under this
Agreement, whether such operations be by Owner, or by any of Owner's
contractors, subcontractors, or by any one or more persons directly or indirectly
employed by, or acting as agent for Owner or any of Owner's contractors or
subcontractors. Owner agrees to and shall defend City and its elective and
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Development Agreement
appointive boards, commissions, officers, agents and employees from any suits or
actions at law or in equity for damage caused, or alleged to have been caused, by
reason of any of the aforesaid operations.
c. Indemnification. Owner shall defend, indemnify, and hold harmless City and
its agents, officers, and employees against and from any and all liabilities,
demands, claims, actions or proceedings and costs and expenses incidental
thereto (including costs of defense, settlement and reasonable attorneys' fees),
which any or all of them may suffer, incur, be responsible for or pay out as a result
of or in connection with any challenge to the legality, validity or adequacy of any of
the following: (i) this Agreement and the concurrent and subsequent permits,
licenses and entitlements approved for the Project or Property; (ii) the
environmental impact report, mitigated negative declaration or negative
declaration, as the case may be, prepared in connection with the development of
the Property; (iii) any claims based on or alleging inverse condemnation by any
person or entity with an interest in the Property; and (iv) the proceedings
undertaken in connection with the adoption or approval of any of the above. In the
event of any legal or equitable action or other proceeding instituted by any third
party (including a governmental entity or official) challenging the validity of any
provision of this Agreement or any portion thereof as set forth herein, the parties
shall mutually cooperate with each other in defense of said action or proceeding.
Notwithstanding the above, City, at is sole option, may tender the complete
defense of any third-party challenge as described herein. In the event City elects
to contract with special counsel to provide for such a defense, City shall meet and
confer with Owner regarding the selection of counsel, and Owner shall pay all costs
related to retention of such counsel.
d. Environmental Contamination. Owner shall indemnify and hold City, its
officers, agents, and employees free and harmless from any liability, based or
asserted, upon any act or omission of Owner, its officers, agents, employees,
subcontractors, predecessors in interest, successors, assigns and independent
contractors, excepting and acts or omissions of City as successor to any portions
of the Property dedicated or transferred to City by Owner, for any violation of any
federal, state or local law, ordinance or regulation relating to industrial hygiene or
to environmental conditions on, under or about the Property, including, but not
limited to, soil and groundwater conditions, and Owner shall defend, at its expense,
including attorneys' fees, City, its officers, agents and employees in any action
based or asserted upon any such alleged act or omission. City may in its discretion
participate in the defense of any such claim, action or proceeding.
The provisions of this Section 15(d) do not appiy to environmentai conditions that
predate Owner's ownership or control of the Property or applicable portion;
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Development Agreement
provided, however, that the foregoing limitation shall not operate to bar, limit or
modify any of Owner's statutory or equitable obligations as an owner or seller of
the Property.
e. City to Approve Counsel. With respect to Sections 15(a) through 15(d), City
reserves the right to approve the attorney(s) which Owner selects, hires or
otherwise engages to defend City hereunder, which approval shall not be
unreasonably withheld.
f. Accept Reasonable Good Faith Settlement. With respect to Article 15, City
shall not reject any reasonable good faith settlement. If City does reject a
reasonable, good faith settlement that is acceptable to Owner, Owner may enter
into a settlement of the action, as it relates to Owner, and City shall thereafter
defend such action (including appeals) at its own cost and be solely responsible
for any judgment rendered in connection with such action. This Section 15(f)
applies exclusively to settlements pertaining to monetary damages or damages
which are remedial by the payment of monetary compensation. Owner and City
expressly agree that this Section 15(f) does not apply to any settlement that
requires an exercise of City's police powers, limits City's exercise of its police
powers, or affects the conduct of City's municipal operations.
g. Survival. The provisions of Sections 15(a) through 15(f) inclusive, shall
survive the termination or expiration of the Agreement.
16. California Environmental Quality Act
Owner shall reimburse City for any and all costs incurred by City related to project review
under the California Environmental Quality Act (CEQA), Public Resources Code,
§§21 000-21189.3, and the Guidelines for California Environmental Quality Act, California
Code of Regulations, Title 14, §§15000-15387. If requested by City, Owner shall conduct
and pay for any required CEQA reviews and analyses. The City has found that the
proposed Project is Categorically Exempt from California Environmental Quality Act
(CEQA) requirements under provisions of CEQA Guidelines Section 15332 -In-Fill
Development Projects. This exemption applies to projects characterized as in-fill
development meeting the conditions described in Section 15332.
17. Rules. Regulations. and Official Policies
Except as otherwise provided in this Agreement, the rules, regulations, and official
policies of City governing permitted uses of the land, governing density, and governing
the design, improvements, and construction standards and specifications applicable to
the development of the Project subject of this Agreement, shall be those rules,
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Development Agreement
regulations, and official policies of City in force at the time of the execution of this
Agreement. This Agreement does not prevent City, in subsequent actions applicable to
the property, from applying new rules, regulations, and policies which do not conflict with
those rules, regulations, and policies applicable to the property as set forth herein, nor
does this Agreement prevent City from denying or conditionally approving any
subsequent development project application based on such existing or new rules,
regulations, or policies.
18. Regulatory Permit Conditions of Approval
Owner shall comply with all conditions of approval of the Regulatory Permit approved by
City Council.
19. Periodic Reviews
This Agreement shall be subject to annual review. Owner and Landlord executing this
Agreement, or successor in interest thereto, shall demonstrate good faith compliance with
the terms of this Agreement. If, as a result of such periodic review, City finds and
determines, based on a preponderance of the evidence, that Owner or Landlord
executing this Agreement, or successor in interest thereto, has not complied in good faith
with the terms or conditions of this Agreement, City may terminate or modify this
Agreement.
a. Periodic Review. City Council shall review this Agreement annually, on or
before each anniversary of the Effective Date, in order to ascertain Owner's good
faith compliance with this Agreement. During the periodic review Owner shall be
required to demonstrate good faith compliance with the terms of the Agreement,
through submitting an annual monitoring report, records, or equivalent written
materials to the Planning Department. The Planning Department will schedule a
hearing on the periodic review of the Development Agreement on or following the
anniversary of the Effective Date, but Owner has no obligation to compel such
hearing, and no implication will be made to Owner's detriment if a hearing is not in
fact held. Owner shall document any request for an extension of the term due to
delays beyond the control of Owner (see Section 250), "Force Majeure"). Owner
shall submit an annual review and administration fee deposit not to exceed City's
estimated internal and third-party costs associated with the review and
administration of this Agreement during the succeeding year, consistent with
Section 25(k) ("Costs and fees") below. City shall provide Owner said estimate a
reasonable time in advance of the annual review and administration fee deposit
being due.
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Development Agreement
b. Conditional Use Permit. For all intents and purposes, the Regulatory Permit to
be issued under this Agreement shall be treated as if it were a Conditional Use
Permit issued to Owner for the establishment and operation of its business.
The operation of the business at all times shall be required to comply with the
terms of this Agreement.
c. Special Review. City Council may order a special review of compliance with
this Agreement at any time. During a special review, Owner shall be required to
demonstrate good faith compliance with the terms of the Agreement. The burden
of proof on this issue shall be on Owner.
d. Review Hearing. At the time and place set for the review hearing, Owner
shall be given an opportunity to be heard. If City Council finds, based upon
substantial evidence, that Owner has not complied in good faith with the terms or
conditions of this Agreement, City Council may terminate this Agreement
notwithstanding any other provision of this Agreement to the contrary, or modify
this Agreement and impose such conditions as are reasonably necessary to
protect the interests of City. The decision of City Council shall be final, subject
only to judicial review pursuant to Code of Civil Procedure Section 1094.5.
e. Certificate of Agreement Compliance. If, after a periodic or special review,
Owner is found to be in compliance with this Agreement, and if Owner requests it,
City shall issue a Certificate of Agreement Compliance ("Certificate") to Owner
stating that after the most recent periodic or special review, and based upon the
information known or made known to the Planning Director and City Council, that
(i) this Agreement remains in effect and (ii) Owner is not in default.
City shall not be bound by a Certificate if a default existed at the time of the periodic
or special review, but was concealed from or otherwise not known to the Planning
Director and City Council, regardless of whether the Certificate is relied upon by
assignees or other transferees or Owner.
f. Failure to Conduct Review. City's failure to conduct a periodic review of this
Agreement shall not constitute a breach of this Agreement.
g. Cost of Review. The costs incurred by City in connection with the periodic
reviews shall be borne by Owner.
20. Obligations of Landlord
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Development Agreement
Landlord shall have rights, duties, obligations, and liability only as expressly set forth
herein. Landlord shall have no responsibility or liability for the failure of Owner to perform
as required by this Agreement.
21. Runs with the Land. Except as otherwise provided in this Agreement, and for so
long as this Agreement remains in effect, all of the provisions, rights, terms,
covenants, and obligations contained in this Agreement shall be binding upon the
Parties and their respective heirs, successors and assignees, representatives,
sub-lessees, and all other persons acquiring the Owner's interest in the Property,
whether by operation of law or in any manner whatsoever; provided that no
successor or assignee of Owner may obtain the benefits hereunder unless the City
has consented to assignment of those rights as set forth in this Article 21. All of
the provisions of this Agreement shall be enforceable as equitable servitudes and
shall constitute covenants running with the land pursuant to applicable laws,
including, but not limited to, Section 1466 of the Civil Code of the State of
California. Each covenant to do, or refrain from doing, some act on the Property
hereunder, or with respect to any leasehold interest in the Property: (a) is for the
benefit of such properties and is a burden upon such properties; (b) runs with such
properties; and (c) is binding upon each Party and each successive owner during
its ownership of such leasehold interest in the Property or any portion thereof, and
shall be a benefit to and a burden upon each Party and its property hereunder and
each other person succeeding to an interest in such properties.
22.Assignment and Transfers of Rights and Interest; Binding Effect on Successors.
a. Assignment by Landlord. Landlord shall not transfer, delegate, or assign its
interest, rights, duties, and obligations under this Agreement, without the prior
written consent of City.
b. Assignment by Owner. Owner shall not transfer, delegate, or assign its
interest, rights, duties, and obligations under this Agreement without the prior
written consent of City. Any assignment, delegation, or assignment without the
prior written consent of City shall be null and void. Any transfer, delegation, or
assignment by Owner as authorized herein shall be effective only if and upon the
party to whom such transfer, delegation, or assignment is made is issued a
Regulatory Permit as required under Article 4-34 of the municipal code.
c. Transferability to New Location. In the event Owner moves operations from
the Property to another location within the City, Owner agrees that the City may
require that the rights and obligations set forth in this Agreement transfer to the
new location. Owner and City agree to work cooperatively and collaborative!y on
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Development Agreement
any amendments to this Agreement that may be necessary in view of the transfer
of Owner's operations to the new location.
23. Operating Commercial Cannabis Business Facility
Any party to this Agreement, or successor in interest thereto, shall not operate a
Commercial Cannabis Business facility authorized under the municipal code unless:
a. It is the holder of a valid Regulatory Permit issued by City in accordance
with the procedures and requirements of Article 4-34 of the municipal code; and
b. At such time as the State of California requires Commercial Cannabis
facilities and businesses to hold a valid license or permit issued by the State of
California, it also holds such license or permit, unless, however, such permit or
license is not required by the State of California for the type of commercial
cannabis facility or business operation that is the subject of this Agreement.
24. Notices. All notices required by this Agreement or the Development Agreement
Law shall be in writing and personally delivered or sent by certified mail, postage
prepaid, return receipt requested.
Such notices or communications shall be given to the Parties at their addresses set forth
below:
If to City:
and
If to Owner:
If to Landlord:
City of Lynwood
11330 Bullis Road
Lynwood, California 90262
Attention: City Manager
H. Francisco Leal, Esq.
Leal Trejo, APC
3767 Worsham Avenue
Long Beach, California 90808
Elliot Lewis
1900 Main Street, #500
Irvine, CA 92614
Moises Gomez
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Development Agreement
25. Miscellaneous Provisions
7629 4th Place
Downey, CA 90241
a. Regulatory Permit Conditions of Approval. Owner shall comply with all
conditions of approval of the Regulatory Permit approved by City Council.
b. Amendment or Cancellation. This Agreement may be amended, or
canceled in whole or in part, only by the written mutual consent of the parties to
this Agreement or their successors in interest, except that minor amendments that
do not affect a substantive provision of this Agreement may be approved by the
City Manager. The decision whether a proposed amendment is "minor'' shall be in
the exclusive discretion of the City Manager.
c. Waiver. Waiver by City of any one or more of the terms or conditions of this
Agreement shall not be construed as waiver of any other term or condition under
this Agreement.
d. Enforcement. Unless amended or canceled pursuant hereto, this
Agreement shall be enforceable by any party hereto, or successor in interest
thereto, notwithstanding any subsequent change in any applicable general or
specific plan, zoning, subdivision or building regulation, or municipal code
amendment adopted by City that conflicts with the terms of this Agreement.
e. Joint and Several Liability. Owner and Landlord shall be jointly and
severally liable for any amount due under this Agreement, and any breach of this
Agreement or failure to pay by one Party shall also constitute a breach of this
Agreement by the other Party. Owner and Landlord agree that City may impose a
lien and seek foreclosure on any parcel of the Site due to any default by Owner.
f. Severability. If any part of this Agreement is found to conflict with applicable
state laws or regulations, such part shall be inoperative, null, and void insofar as it
conflicts with said laws or regulations, or modified or suspended as may be
necessary to comply with such state laws or regulations, but the remainder of this
Agreement shall continue to be in full force and effect.
g. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which together
shall constitute one and the same instrument. The execution of this Agreement
may be by actual, facsimile, or electronic signature.
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Development Agreement
h. Jurisdiction and Arbitration. The law governing this Agreement shall be that
of the State of California. Any suit brought by any party against any other party
arising out of the performance of this Agreement shall be filed and maintained in
the County of Los Angeles Superior Court. Any dispute, claim or controversy
arising out of or relating to this Agreement or the breach, termination, enforcement,
interpretation or validity thereof, including the determination of the scope or
applicability of this Agreement to arbitrate, shall be determined by binding
arbitration in Los Angeles, California before one arbitrator. Said arbitrator shall be
chosen by mutual agreement of the Parties. If the Parties cannot agree on an
arbitrator within 30 days of the first notice by either Party of the need for arbitration,
each Party shall name one arbitrator, then the two arbitrators shall choose the
arbitrator who shall hear the case.
i. Disclaimer. Despite California's commercial cannabis laws and the terms
and conditions of this Agreement, any Conditional Use Permit, or any Regulatory
Permit issued pertaining to Owner or the property specified herein, California
cannabis cultivators, transporters, distributors, or possessors may still be subject
to arrest by state or federal officers and prosecuted under state or federal law. The
Federal Controlled Substances Act, 21 USC § 801, prohibits the manufacture,
distribution, and possession of marijuana without any exemptions for medical or
other use.
j. Force Maieure. If delays are caused by unforeseen events beyond _the
control of Owner, such delays will entitle Owner to an extension of time as provided
in this section. Such unforeseen events ("Force Majeure") shall mean war,
insurrection, acts of God, local, state or national emergencies, strikes and other
labor difficulties beyond the party's control, or any default by City hereunder, which
Force Majeure event substantially interferes with the development or construction
of the Project.
k. Costs and fees. Owner shall be responsible for all of the reasonable and
fixed costs associated the Project, including but not limited to costs associated with
City's review and processing of the Project, including but not limited to reviewing
the Project's entitlements, including all environmental clearance documents,
permits, licenses and all documents evidencing compliance with state and local
law, and as such Owner agrees to reimburse City and pay any costs and fees
associated with processing the Project, as detailed in this Agreement. City shall
provide to Owner within 90 days of the effective date of this Agreement a list of
hourly rates chargeable for staff who will be implementing and enforcing this
Agreement.
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Development Agreement
I. Constructive Notice and Acceptance. Every person who after the Effective
Date and recording of this Agreement owns or acquires any right, title, or interest
to any portion of the Site, is and shall be conclusively deemed to have consented
and agreed to every provision contained herein, whether or not any reference to
this Agreement is contained in the instrument by which such person acquired an
interest in the Site, and all rights and interests of such person in the Site shall be
subject to the terms, requirements, and provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
CITY OF LYNWOOD
City Manager
BECC Holdings, OWNER
Name:
Title:
LANDLORD
Name:
Title:
Page 30 of 31 Manufacturing
Development Agreement
APPROVED AS TO FORM:
Page 31 of 31 Manufacturing
Development Agreement
COMMERCIAL CANNABIS
DEVELOPMENT AGREEMENT
Development Agreement No. 2017-12 MOD
This Agreement is made by and between and among the CITY OF LYNWOOD
("City"); RD Lynwood South, a California Cooperative Corporation ("Owner''); and Spark
Enterprises, LLC, a California limited liability company ("Landlord") this __ day of
January 2018, as required by Section 4-34-5 of the Lynwood Municipal Code setting forth
the terms and conditions under which Owner shall operate a commercial cannabis
cultivation, distribution, manufacturing, and delivery facility (also, the "Project" or
"Licensed Premises") pursuant to its Regulatory Permit and is in addition to the
requirements of Article 4-34 of the Lynwood Municipal Code, including, but not limited to,
public outreach and education, community service, payment of fees and other charges
as set forth or referenced herein, and such other terms and conditions as will protect and
promote the public health, safety, and welfare. The requirements set forth in Article 4-34
of the Lynwood Municipal Code, and the Administrative Regulations adopted by the City
Council of the City of Lynwood are incorporated herein by reference. All subsequent
references to "municipal code" mean the Lynwood Municipal Code .
.1. Definitions
a. Unless otherwise specified herein, the definitions in Article 4-34 of the
Lynwood Municipal Code shall apply to this Agreement.
,b.. "Cultivation Area" shall mean the total surface area of any horizontal plane
(e.g., a tray) used for cannabis planting and/or growing. The Cultivation
Area shall include only the trays utilized for cultivation, and shall include
only flowering cannabis plants. If Owner uses a stacking system for
cultivating cannabis plants, each level of the stacks shall be considered
"surface area" for purposes of calculating the fee set forth in Section 8(a).
c. City, Owner and Landlord may be referred to in this Agreement individually
as a "Party" and collectively as the "Parties."
2. Government Code and Municipal Code Required Elements
a. Description of Property. Land situated in the City of Lynwood, County of
Los Angeles, State of California, more particularly described in Exhibit A whose
street address is 11510 Alameda Street, City of Lynwood (the "Property").
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b. Owner and Other Person with Legal or Equitable Interest.
Owner: RD Lynwood South, a California Cooperative Corporation
Landlord: Spark Enterprises, LLC, a California limited liability company
c. Permitted Uses. The Property may be used for any commercial cannabis
facility as presently authorized under Article 4-34 of the municipal code, and for
any other use as authorized under applicable provisions of the municipal code
("Permitted Use"). Although municipal code Chapter 25 does not specifically
identify commercial cannabis facilities as allowed uses in any zoning district, such
uses are similar to other listed uses, including, but not limited to, medical services
-clinics, offices, laboratories; garden center/plant nursery; food and beverage
manufacturing; and agricultural products processing; and, therefore, commercial
cannabis facilities are allowed uses in the same zoning districts in which such
similar uses are allowed under Chapter 25 of the municipal code. In the event that
the municipal code is amended in the future to allow non-medical Cannabis
Activity, as that term is defined in Article 4-34, this Agreement shall be interpreted
to allow for same as a Permitted Use with no further action by City, Owner, or
Landlord. In the event California or federal law is amended in the future to expand
allowed Commercial Cannabis Activity, this Agreement shall be interpreted to allow
as a Permitted Use any activities that are legal under federal, state, and local law.
Should City amend the Lynwood Municipal Code or its Administrative Regulations
to permit and issue licenses for any recreational cannabis facility or for other
authorized uses other than those now permitted under this Section 2(c) of this
Agreement (for example, for medical or recreational cannabis dispensaries or
other cannabis businesses), the City shall give priority for such licenses to Owner,
provided Owner has complied with its obligations under this Agreement and is
otherwise in good standing.
d. Zoning. Owner shall guarantee that all activities conducted under this
Agreement and under the Regulatory Permit shall comply with the City's municipal
code, including the zoning ordinance and any and all development and
construction requirements contained therein. Owner shall not conduct any
business under this Agreement or under the Regulatory Permit without having
obtained all necessary permits, licenses, and approvals from the City.
e. Reservation or Dedication of Land for Public Purposes. Sufficient roadway,
sidewalk, and utility easements shall be reserved or dedicated to City for such
purposes.
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This Agreement shall start on the last date on which all parties have executed it
("Effective Date") and it shall end three years from the Effective Date, and it shall
remain in full force and effect so long as the Property is used for a Permitted Use;
provided, however, such use is not abandoned for a period of more than six (6)
months. Unless otherwise agreed to in writing by the parties, the term may be
extended for up to two, five-year extensions by mutual agreement of the Parties.
The fees required under Article 8 of this Agreement shall be fixed for the
Agreement's initial three-year term. However, at the request of either Party, the
fees required under Article 8 of this Agreement may be subject to re-negotiation
during either, or both, of the two five-year extension terms. In the event a Party
wishes to re-negotiate fees during one, or both, of the five-year extension terms, it
shall give notice to the other Party no less than 90 days before the end of the then-
current term, and negotiations shall be concluded before the anniversary date.
4. Owner's Site and Floor Plans
a. Owner's site plan and floor plan for the facility are attached hereto and
incorporated by reference. The floor plan identifies the uses of each interior space,
and is the basis for calculating the annual per-square-foot fee specified in Article
8 below. Owner shall proceed in substantial compliance with the site plan and
floor plan for the facility. City will make best efforts to work with Owner to
accommodate tenant improvement requirements reflecting the transitory nature of
particular improvements (e.g. location of fire sprinklers).
b. A preliminary landscape plan will be prepared and reviewed and approved
by the Planning Director as part of the design review process, to the extent required
by the Lynwood Municipal Code. A final landscape plan shall be prepared and
submitted in conjunction with building and site improvement plans prior to issuance
of building permits for construction activities, to ensure final plans are in full
compliance with the Lynwood Municipal Code.
c. An exterior signage plan will be prepared and reviewed and approved by
the Planning Director in accordance with the procedures and requirements of
Article 70 of Chapter 25 of the municipal code.
5. Facility Operations
a. Standard Operating Procedures. Owner is a non-profit mutual
benefit corporation that will serve commercial cannabis qualified patient and
primary caregiver collective members who will comply with all relevant California
State laws and local ordinances, as may be amended from time to time and in
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accordance with Section 2(c) of this Agreement. (See California's Compassionate
Use Act (Proposition 215) as codified in Health and Safety Code §11362.5; Senate
Bill 420, the Medical Marijuana Program Act (H&S Code §§1362.7 to 11362.83);
the August 2008 Guidelines for the Security and Non-Diversion of Marijuana
Grown for Medical Use (2008 Attorney General Guidelines); the newly enacted
Medicinal and Adult-Use Cannabis Regulation and Safety Act("MAUCRSA") set
forth in Business and Professions Code Section 26000, et seq., and Assembly Bill
133, which was enacted in September 2017.
During the term of its Regulatory Permit and the term of this Agreement,
Owner shall operate in accordance with all state and local laws. Owner will employ
exemplary operating procedures to comply with state and local laws. Owner's
facility will employ safety and security measures as set forth herein for the safety
and security of its employees, as well as other individuals in its neighboring
community.
b. Security Plan. The issuance of a Regulatory Permit is conditional upon
approval of the proposed security plan by the Los Angeles County Sheriff. The
security plan shall include, at a minimum and as appropriate, provisions for video
surveillance, perimeter fencing and security, protection of the building(s) from
vehicle intrusion, cash handling procedures, product handling and storage
procedures, and a professionally monitored alarm system. Equipment and
systems used for video surveillance and building alarms will be approved by City.
Video surveillance shall include, at a minimum, all site and facility entrances and
access points, all spaces accessible by the public, all secured areas of the facility
with restricted access, all interior spaces and rooms where commercial cannabis
products are handled and processed, shipping and receiving areas, cash storage
areas, and other areas necessary to protect the safety of employees and the public
and to ensure commercial cannabis products are received, handled, stored,
packaged, shipped, and distributed in compliance with applicable state and local
laws and regulations . The video surveillance system shall be web-based with
direct access provided to the Los Angeles County Sheriff for real-time monitoring
from the Los Angeles County Sheriff upon request.
The security system will also include sensors to detect entry and exit from all
secure areas, panic buttons in appropriate locations, and a professionally
monitored alarm system with glass breakage sensors and motion detectors.
Owner will employ properly trained and licensed third-party security personnel to
protect the welfare and safety of Owner employees and to ensure public safety to
the neighboring community. Owner shall use security personnel 24 hours, 7 days
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Development Agreement
a week. Security personnel may be armed so long as proper licensing and
insurance requirements are followed and met by the third-party operator providing
such security services.
c. Fire Department Approval. Owner may not operate any facility, and no
permit, license, or other approval issued by City shall be valid unless and until the
Los Angeles County Fire Department has approved Owner's site plan, floor plan,
safety plan, and any other plans that require its approval.
d. Possession of Firearms. Except for licensed security personnel approved
by the Los Angeles County Sheriff, no person employed by Owner shall be in
possession of any firearm while on the premises or location without having first
obtained a license from the appropriate state or local agency authorizing the
person to be in possession of such firearm. Every such person in possession of a
firearm while on the premises or location must provide the City Manager and the
Los Angeles County Sheriff, ten days before bringing the firearm onto the
premises, with the following:
1) A copy of the license issued to the person by the appropriate state
or local agency authorizing him or her to possess such firearm;
2) A copy of his or her law enforcement identification (if he or she is
employed by a law enforcement agency);
3) A copy of his or her California driver's license or California
identification card; and
4) Any other information reasonably required by the Los Angeles
County Sheriff to show that the individual is in compliance with the
provisions of all laws regarding the possession and use of a firearm.
e. Procedures for Inventory Control to Prevent Non-Medical Diversion of
Commercial Cannabis. Only authorized employees will be permitted to enter
Owner's facility. Each employee will have to meet a criminal background
investigation conducted by the Los Angeles County Sheriff, which at minimum shall
include a LiveScan criminal history check. Employees may only be denied
clearance if they have a felony conviction for the illegal possession for sale,
manufacture, transportation, or cultivation of a controlled substance within the last
five (5) years, and shall not be disqualified for any conviction which would no longer
be a felony under California law at the time of the LiveScan criminal history check.
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Owner will prohibit the use of cannabis by its employees at its facility, in the
immediate neighborhood vicinity of its facility, and while driving.
Owner will take all necessary and reasonable steps to prevent the distribution of
any of its commercial cannabis products to minors; prevent revenue from the sale
or distribution of its commercial cannabis and/or infused products from going to
criminal enterprises, gangs and cartels; prevent the diversion of marijuana from
California to any other state; prevent state-authorized marijuana activity from being
used as a cover or pretext for the trafficking of other illegal drugs or other illegal
activity; prevent violence and the use of firearms in the cultivation, manufacture
and distribution of marijuana; discourage and educate against drugged driving and
the exacerbation of other adverse public health consequences associated with
marijuana use; disavow growing marijuana on public lands that creates attendant
public safety and environmental dangers posed by such illegal uses; and
discourage and educate against marijuana possession or use on federal property.
f. Quality Control and Testing. Owner will utilize quality control measures and
testing to ensure only the highest quality of commercial cannabis and infused
products will be produced. Owner will inspect the product to insure its identity and
quantity, and will have a testing lab approved by City, perform testing of random
samples prior to distribution or delivery. Inspection and testing will be conducted
by the approved testing lab off-site. Testing standards and procedures shall be in
accordance with applicable state law and regulations.
All commercial cannabis products will undergo a quality assurance review prior to
distribution or delivery in order to ascertain its quantity and content. Inventory
procedures will be utilized for tracking and taxing purposes by the state. Owner
will employ an efficient record-keeping system to make transparent its financing,
testing, and adverse effect recording, as well as recall procedures. Owner will
employ an efficient record-keeping system that will reflect its financing, testing, and
adverse effect recording and product recall procedures.
g. Packing of Commercial cannabis and Infused Products. All Owner
commercial cannabis products will be packaged and labeled as required by
Section 26071, et seq., of the California Business and Professions Code and
applicable requirements and regulations issued by the State of California pursuant
thereto. In addition to those packaging and labeling requirements, and packaging
and labeling requirements set forth in Owner's Regulatory Permit application, as
amended or supplemented, all commercial cannabis products shall be packaged,
when boxed for distribution, in an opaque childproof container which shall contain
a iabei or be accompanied by a leaflet or inset that states, at a minimum:
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1) The name, address and telephone number of the commercial
cannabis facility to which the commercial cannabis product is distributed,
sold, or transferred;
2) The amount of commercial cannabis in the container; and
3) The date the commercial cannabis was transferred to a commercial
cannabis dispensary facility.
Owner intends to produce infused products and will secure any approval from the
County of Los Angeles Health Department required for manufacturing and
handling such products. Owner infused products will not be produced,
manufactured, stored or packaged in private homes. All Owner commercial
cannabis infused products shall be individually wrapped at the original point of
preparation.
h. Delivery. If Owner applies for and receives a Delivery permit from City,
Owner may sell and deliver manufactured cannabis products to individual
customers, as long as such activity is consistent with and permitted under state
law, and Owner has a valid state license therefor. As long as such products are
sold and delivered to individual customers, and no in-person sales occur at
Owner's facility, such activity shall not constitute a dispensary under the municipal
code.
i. Point of Sale Tracking System. Owner will maintain an inventory control
and reporting system that accurately documents the location of medicinal
marijuana products from inception through distribution or delivery, including
descriptions, weight, and quantity. The inventory control and reporting system
shall comply with the track and trace program required by Section 26067, et seq.,
of the California Business and Professions Code and regulations issued
thereunder.
Owner will employ an electronic point of donation/sale system approved by City,
such as BioTrack THC, MJ Freeway, or similar system for all point of
donations/sales tracking from seed or inception to product distribution to other
licensed commercial cannabis facilities or delivery to individual customers, or
otherwise in compliance with state and local law in accordance with Section 2(c)
of this Agreement. Such approved system will track all Owner commercial
cannabis products, each edible, harvested flower, and/or manufactured
concentrate, as well as gross sales (by weight and sale). BioTrack THC, MJ
Freeway, or similar system will have the capacity to produce historical
transactional data in accordance with City's requirements.
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j. Record Keeping. Owner will maintain records for all dispensed commercial
cannabis and/or infused products. Owner will comply with all records-keeping
responsibilities that are set forth in Municipal Code Section 4-34-10, including
complete and up-to-date records regarding the amount of commercial cannabis
cultivated, produced, manufactured, harvested, stored, or packaged at Owner's
facility.
k. Processing. Handling. Storing. and Distribution of Commercial
cannabis and Related Products. Commercial cannabis cultivation, handling,
storing, and processing shall be concealed from public view at all stages of growth
and processing, and there shall be no exterior evidence of cultivation or processing
occurring at the premises from a public right-of-way or from an adjacent parcel.
Commercial cannabis cultivation, handling, storing, processing, or distribution shall
not create offensive odors; create excessive dust, heat, noise, smoke, traffic, or
other impacts that are disturbing to people of normal sensitivity residing or present
on adjacent or nearby property or areas open to the public; or be hazardous due
to use or storage of materials, processes, products, or wastes.
Owner will store its commercial cannabis and/or commercial cannabis products in
a locked safe room with T-card identification access for management only. The
safe room will be constructed of fire-rated walls with numerous cameras installed
to view all entries and exits from the safe room, as well as all other activities
performed within Owner's facility. Owner will not conduct outdoor operations
except as related to lawful delivery and transportation of commercial cannabis and
infused products. Owner will not store commercial cannabis or related products in
its delivery vehicle outside normal operating hours of the facility.
Commercial cannabis products will be sold or distributed only to licensed
dispensaries in California, or delivered to individual customers, or otherwise in
compliance with state and local law in accordance with Section 2(c) of this
Agreement. Excess or contaminated product will be securely stored on-site until
it is properly disposed. Disposal may include composting, incineration, land-fill
disposal through the local waste management hauler, or other disposal
methodology in accordance with state and county health and safety codes and
regulations.
I. Odor Control. Unless an alternative arrangement has been agreed to by
the City Manager, all structures shall have ventilation and filtration systems
installed that prevent commercial cannabis plant odors from exiting the interior of
the structure. The ventilation and filtration system shall be approved by the
Building Official and City Manager and installed prior to commencing cultivation or
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Development Agreement
manufacturing within the allowable structure. Facility air intake, exhaust, and
recirculating system shall be of industrial grade. Activated charcoal, recirculating,
and closed loop aeration systems will be utilized as necessary for effective odor
control and management.
m. Description of Banking Plan . Owner will seek to open a bank account under
the name of Owner or its associated management company to provide
transparency for funds received, operational costs, including payroll, tax payments
to the state and federal governments, among others. Should a bank account not
be forthcoming, Owner will purchase and install safes to secure all daily funds
received from its collective membership or other lawful cooperative corporations
to implement debit and credit card transactions.
n. Transportation Plan. Owner will comply with all state and local law
regarding transportation, including the rules governing delivery service. Owner will
retain a list of names and cellular contact numbers for all employees engaged in
transportation of commercial cannabis products and provide it to the applicabe
oversight authority, keeping the list current and up to date.
Owner will keep complete and up-to-date records documenting each transfer of
commercial cannabis to other lawful cooperative corporations, including the
amount provided, the form or product category in which the commercial cannabis
was provided, the date and time provided, the name of the employee making the
transfer, the name and address of the other lawful cooperative corporation to
whom delivery is made, and the amount of any related donation or other monetary
transaction.
6. Community Relations. Employment. and Wages
a. Public Outreach and Education Program. Owner shall administer an
effective public outreach to City of Lynwood's community, including but not limited
to outreach and interface with public and private schools, youth organizations,
religious organizations, health care providers, drug abuse treatment providers, and
mental health and drug counseling providers, in substantial compliance with the
public outreach and education program proposed in Owner's Regulatory Permit
Application, as attached hereto as Exhibit B.
Owner will coordinate and cooperate with City and other Owners of commercial
cannabis facilities located within City of Lynwood in the establishment and
implementation of appropriate public outreach and education programs. The
public outreach and education programs shall be approved by City.
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The public outreach and education program shall provide a detailed description of
Owner's intentions with regard to public outreach and education, including but not
limited to the following: what schools or programs Owner will work with; what types
of materials and information will be provided; how much time Owner's personnel
expect to spend on these activities; and how much money Owner expects to spend
on an annual basis.
b. Community Benefits Program. Owner will coordinate and cooperate with
City and other Owners of commercial cannabis facilities located within the City of
Lynwood in the establishment, implementation, and funding of a community
benefits program which could include such items as new community recreation
facilities, expansion and/or improvement to existing facilities or other physical
improvements that provide a benefit to the community, support of holiday and
special community events, and support of local public service and special districts
and organizations, in substantial compliance with the community benefits program
proposed in Owner's Regulatory Permit Application, as attached hereto as Exhibit
B. This community benefits program may be implemented by a foundation or other
association of commercial cannabis facility Owners issued regulatory permits by
City. City and the public will participate in the decision-making process for
identifying and prioritizing community needs and benefits, and identifying
appropriate projects to be funded by the entity implementing this community
benefits program. All projects under the community benefits program must be
approved by City. Funding for the community benefits program shall come from,
and be a part of, those fees set forth in Article 8 below.
c. Designation of Persons Responsible for Community Relations. At the time
of this Agreement, Owner's Managing Agent/General Manager will be responsible
for community inquiries and complaints and on-site during normal business hours.
d. Interface with Los Angeles County Sheriff. Owner's general manager will
interface with the Los Angeles County Sheriff to ensure its operation complies with
state and local laws and regulations.
e. Local Recruitment Hiring, and Training Programs. Owner is committed to
making a good-faith effort to recruit, hire, and train City residents for employment
by Owner. A good-faith effort means Owner will take the following or similar
actions to recruit and employ City residents: 1) Contact local recruitment sources
to identify qualified individuals who are City residents, 2) Advertise for qualified
City residents in trade papers and newspapers of general circulation in the area,
and 3) Develop a written plan to recruit and employ City residents as a part of the
its workforce.
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Owner will also seek companies located in the City of Lynwood to serve as its
general contractor and subcontractors needed for construction and build-out
improvements of Owner's commercial cannabis facilities. Additionally, companies
located in the City of Lynwood will be sought to employ as licensed security guards
needed once Owner's facility is opened, as well as for ancillary services needed.
f. Living Wages. Owner agrees to pay all employees of the Facility no less
than a Living Wage. A "Living Wage" is the higher of whatever Owner currently
pays its employees for similar work elsewhere in the State of California, or the
following: until December 31, 2017: 150% of the California State minimum wage.
Such wage shall increase on January 1 of each subsequent year at the same rate
as the California State minimum wage increases, or according to the Consumer
Price Index for Los Angeles County, for the quarter ending September 30 of the
preceding year, whichever is higher.
g. Full-time Work/Benefits. Owner shall make its best efforts to fill every
position with a full-time employee. However, at no time shall Owner have a labor
force that is composed of less than 75% full-time employees. Owner agrees to
provide to its eligible employees leave benefits, health and wellness benefits and
other employee benefits to the extent such benefits are required to be paid for by
Owner under applicable state and federal employment laws.
7. Indemnification of City from Liability
a. Pursuant to City's requirement, Owner will indemnify City from any claims,
damages, injuries, or liabilities of any kind associated with the registration or
operation of Owner's commercial cannabis facility or the prosecution of Owner's
facility or its owners, managers, directors, officers, employees, or its qualified
patients or primary caregivers for violation of federal or state laws.
b. Owner agrees to defend, at its sole expense, any action against City, its
agents, officers, and employees related to the approval or issuance of the
Regulatory Permit and this Agreement.
c. Owner agrees to reimburse City for any court costs and attorney fees that
City may be required to pay as a result of any legal challenge related to City's
approval or issuance of a Regulatory Permit or this Agreement. City may, at its
sole discretion, participate at its own expense in the defense of any such action,
but such participation shall not relieve the holder of the Regulatory Permit or this
Agreement.
a. Fees. Costs, and Future Taxes
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a. Fees. Owner agrees to pay all permit fees and charges referenced in
Section 4-34-11 of the municipal code, in the amounts adopted by the City Council
by resolution, as well as any fees set forth in this Agreement. Permit application,
processing, and renewal fees shall be due and payable at the time application is
made.
b. Costs. Owner agrees to reimburse City for all additional costs of City
resulting from the operation of a commercial cannabis facility authorized under
Article 4-34 of the municipal code and the administrative regulations.
Reimbursement to City for such costs shall be due and payable upon demand.
Owner shall not reimburse City for any costs associated with any condemnation
action taken by City against Landlord, except insofar as City may be entitled to an
award of attorneys' fees and costs pursuant to State law.
c. Operating Fees. Owner agrees to pay to City, to enable City to promote,
protect, and enhance the healthy, safety, and welfare of the community and its
residents and its quality of life, the following fees:
1) an annual fee of $12.50 per square foot of cultivation area (canopy);
2) an annual fee of two and-one-half percent (2 .5%) of gross income
from manufacturing activities or the sum of one hundred fifty thousand
dollars ($150 ,000), whichever is higher;
3) an annual fee of one and one-half percent (1 .5%) of gross income
from distribution/transportation of product for anyone other than Owner; and
4) an annual fee of two and one-half percent (2 .5%) of gross income
from delivery activities.
d. Owner agrees to compensate City for the increased demand on City
services, infrastructure, and utilities; local traffic demands; and increased City
review and oversight by the Los Angeles County Sheriff, planning department, and
code enforcement of the operations of Owner's facility, as a portion of the
assessed Cost Recovery Fee discussed in Article 9 below. Owner understands
and agrees the determination of the required per-square-foot fee set forth in this
Article 8 has considered such factors as the size, design, layout, operation, and
security plan for the facility; potential adverse effects on the community; and the
allocation of City services and staff time to oversee the operation of the facility.
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e. Owner understands and agrees that the fees set forth above shall be paid
in a manner and in accordance with a payment schedule agreed to by City and
Owner, in intervals of no more than three months, as a portion of the assessed
Cost Recovery Fee discussed in Article 9 below. The cultivation and
manufacturing space to which the fee applies is as identified on the attached floor
plan. Unless otherwise agreed to by the Parties or as set forth in this Agreement,
payment shall be in equal installments paid quarterly commencing at the end of
the first quarter after the date a certificate of occupancy is issued for the Licensed
Premises.
f. If Owner makes any material changes to the interior layout of the facility that
increases the amount of space allocated to those uses to which the per-square-
foot fee applies, Owner shall notify City of such changes at least fourteen (14)
calendar days prior to making such changes. If Owner fails to give City notice as
required herein, Owner shall be responsible for paying to City a per-square-foot
fee based on any increase in the amount of space allocated to those uses to which
the per-square-foot fee applies retroactive to the date the Regulatory Permit
became effective.
Owner understands and agrees the annual per-square-foot fee shall be subject to
review and modification pursuant to Article 3 of this Agreement.
9. Cost Recovery Fee
City shall assess to Owner fees to recover City's reasonable processing and
monitoring costs relating to Owner's business upon issuance of Owner's
Manufacturing, Cultivation, Distribution, and Delivery Permits or any Additional
Permits ("CRF"). The City shall submit sufficient information to Owner of City's
total number of hours required to process their Application or monitor their
authorizations. CRFs are separate and apart from any fees set forth in Section
8(a) of this Agreement. CRFs include any fees set forth in Sections 8(c) and 8(d)
of this Agreement.
a. Processing Fees. Processing fees for the Application are based upon the
direct and indirect costs that City incurs in reviewing the Application. The
processing fees for the Application shall be based only on costs that are necessary
for processing the Application and implementing the Ordinance, including staff
time, legal fees, and consultant fees. "Necessary for" means that but for the
Application, the costs would not have been incurred. The processing fee shall not
include costs for other City management objectives.
b. Mon itoring Fees. Monitoring fees for the Manufacturing, Cultivation,
Distribution, and Delivery Permits are based upon the direct and indirect costs City
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Development Agreement
incurs in confirming the use of the Property in accordance with the municipal code,
the Ordinance, this Agreement, and the Application. The monitoring fees shall be
based only on costs that are necessary for conducting these reviews. "Necessary
for'' means that but for the Manufacturing, Distribution, Cultivation, and Delivery
Permits, or any Additional Permits, the costs would not have been incurred. The
monitoring fee shall not include costs for other City management objectives.
c. Billing and Payment. City shall bill Owner the CRF on the first day of each
quarter (March, June, September, and December) with an invoice providing an
hourly breakdown of hours expended by City and its representatives. Owner shall
pay the CRF invoice within sixty (60) days of the date the bill for the CRF is
received by Owner. Notwithstanding the foregoing, at no time shall the CRFs
exceed Seven Thousand Dollars ($7,000) during a given year, except that the first
year may be as high as twenty thousand dollars ($20,000) because of the costs
required to set up the application process and review the applications.
d. Disputes. If Owner disagrees with the dollar amount provided by City on
the CRF invoice, Owner may submit a written request before the disputed fee is
due for a substitution of alternative CRF invoice to the immediate supervisor of the
City representative who determined the CRF invoice. The written request must
include supporting documentation. After review of Owner's written request, Owner
and City shall work, in good faith to resolve Owner's written request. The dispute
shall be decided in favor of Owner if City does not respond to the written request
within thirty (30) days of receipt.
10. Additional Owner Obligations
a. Reporting of Gross Receipts from Operations
1) Quarterly Receipts. No later than January 19, 2018, and within
fifteen (15) business days of the last day of each subsequent quarter during
the Term hereof, Owner shall deliver to City a report (the "Quarterly Report")
showing (i) Gross Receipts from Operations for the immediate prior quarter
received by Owner, and a cumulative total of all amounts of Gross Receipts
from Operations received by Owner for the calendar year, (ii) a calculation
of the quarterly payment due to City for the prior quarter, and (iii) a
calculation of the cumulative total of all quarterly payments for the calendar
year.
2) Statement of Receipts. Owner shall keep complete, accurate and
appropriate books and records of all receipts from operations in accordance
with generally accepted accounting principles. For purposes herein, "books
and records" shall mean all bookkeeping or accounting documents Owner
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Development Agreement
utilizes in managing its business operations relating to the Project. Such
books and records, as well as all other relevant documents as City shall
reasonably require, shall, upon reasonable written notice, be open for
inspection by City, its auditors or other authorized representatives. If at any
time during the term such books and records prove inadequate in the
reasonable judgment of City to record the Gross Receipts from Operations
as herein required, Owner shall, upon the written request of City, procure
and maintain such books and records as shall be of a character and from
adequate for such purpose. City shall have the right to audit and examine
such books, records and documents and other relevant items in the
possession of Owner, but only to the extent necessary for a proper
determination of Gross Receipts from Operations, and all such books,
records, documents and other items shall be held available for such audit
and examination. Upon request by City, Owner shall make all such books,
records and documents available to City, and provide removable copies
thereof, within thirty (30) days of the date of City's request. The cost for any
audit shall be shared equally by the Parties. Owner shall preserve such
books, records, documents, and other items in Lynwood for a period of not
less than seven (7) years for the purpose of auditing or re-auditing these
accounts upon reasonable notice; except that, if an audit is made within the
seven-year period and Owner claims that errors or omissions have
occurred, the books and records shall be retained and made available until
those matters are resolved. City shall keep strictly confidential all
statements of revenue furnished by Owner and all other information
concerning Owner's operation of the Premises obtained by City as a result
of the inspection audit and examination privileges of City hereunder (i.e.,
receipts and tax filings), except as otherwise required by a court order. If
City receives a request for such information pursuant to the Public Records
Act (California Government Code Section 6250, et seq.), City shall provide
Owner notice of any such request and shall refuse to disclose such
information. Within seven (7) years after the receipt of any statement of
receipts under this Agreement, City at any time shall be entitled to carry out
an audit of such revenue either by City or agent to be designated by City.
If it shall be determined as a result of such audit that there has been a
deficiency in any payment due under this Agreement made on the basis of
such statement, then such deficiency shall become immediately due and
payable. If such statement of revenue for the relevant year shall be found
to have understated receipts by more than two percent and City is entitled
to any additional payment as a result of said understatement, then Owner
shall, in addition, pay all of City's reasonable costs and expenses connected
with such audit, including the expense incurred in retaining such agent;
otherwise City shall bear the cost and expense of such audit.
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Development Agreement
3) Copies of Tax Filings. Owner shall provide City with copies of any
reports Owner is required to provide to the County of Los Angeles or the
State of California for sales, use, or other tax purposes.
b. Applicability of Future Revenue Mechanisms. If City imposes an alternative
revenue mechanism specifically related to cannabis operations (e.g., a cannabis
tax), Owner agrees to pay to City the greater of the payment required under such
alternative revenue mechanism or the payment required by this Section during the
immediately following extension term of this Agreement. As used in this Section,
"alternative revenue mechanism" does not include taxes, fees, or assessments
levied on or collected from both cannabis and non-cannabis operations. Payments
required by revenue mechanisms that are not limited to cannabis operations shall
be in addition to, and not in lieu of, payments under this Section.
c. Relocation for Redevelopment Project.
ll Vacation. Owners understand that the City is considering the
creation of a veterans' housing redevelopment project at the
Property ("Redevelopment Project"). In light of this, Owners
agree to vacate the Property and cease business operations
thereon no later than one-hundred and eighty (180) days
following receipt of a written relocation notice from the City
("City Notice"). City agrees that the City Notice shall not be
sent to Owners during the initial term of this Agreement. City
further agrees that the City Notice shall not be sent to Owners
until after the Planning Commission approves the
Redevelopment Project or any similar development at the
Property.
~ Relocation. This Agreement is fully transferable at any time
to another Property within the City meeting the State and City
site standards for marijuana manufacturing, cultivation and/or
distribution. Following issuance of the City Notice, or as
otherwise agreed to by the Parties, City agrees to expedite all
required City permits (e.g., Regulatory Permit and Building
Permits) required for Owner to relocate and begin operating a
marijuana business at said replacement location.
~ Relocation Term. In the event of relocation, whether or not
such relocation is due to issuance of the City Notice, a new
five-year extension term ("Relocation Term") shall commence
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Development Agreement
upon issuance of a certificate of occupancy at the new
Licensed Premises. Owner shall be entitled to a further five-
year extension term at the conclusion of the Relocation Term,
in accordance with Article 3 of this Agreement.
~ Hold Harmless. The City shall not be responsible to the
Landlord or Owner for any costs or expenses arising as a
result of the issuance of the City Notice, including, but not
limited to loss of profits, business revenues, or rents, or costs
associated with vacating the Property. Furthermore, the
owner of the property, EDO Development, Inc., has agreed to
certain terms in a separate agreement with the City that is
attached as Exhibit "C" and is incorporated herein as though
set forth in full.
11. Insurance and Indemnity
a. Insurance. Owner shall require all persons doing work on the Project,
including its contractors and subcontractors (collectively, "Owner'' for purposes of
this Section 11 only}, to obtain and maintain insurance of the types and in the
amounts described in this Section and its subsections with carriers reasonably
satisfactory to City.
b. General Liability Insurance. Owner shall maintain commercial general
liability insurance or equivalent form with a limit of not less than Two Million Dollars
($2,000,000) (or as otherwise approved, in writing, by City) per claim and Two
Million Dollars ($2,000,000) each occurrence. Such insurance shall also:
1) Name City, its elected and appointed councils, boards, commissions,
officers, agents, employees, and representatives as "Additional Insureds"
by endorsement with respect to performance of this Agreement. The
coverage shall contain no special limitations on the scope of its protection
afforded to the above-listed additional insured.
2) Be primary with respect to any insurance or self-insurance programs
covering City, its officials, employees, agents, and representatives.
3) Contain standard separation of insured provisions.
c. Automotive Liability Insurance. Owner shall maintain business automobile
liability insurance or equivalent form with a limit of not less than One Million Dollars
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Development Agreement
($1,000,000) for each accident. Such insurance shall include coverage for owned,
hired, and non-owned automobiles. Such insurance shall also:
1) Name City, its elected and appointed officials, boards, commissions,
officers, agents, employees, and representatives as "Additional Insureds"
by endorsement with respect to performance of this Agreement. The
coverage shall contain no special limitations on the scope of its protection
afforded to the above-listed additional insureds.
2) Be primary with respect to any insurance or self-insurance programs
covering City, its officials, employees, agents, and representatives.
3) Contain standard separation of insured provisions.
d. Workers' Compensation Insurance. Owner shall take out and maintain
during the term of this Agreement, workers' compensation insurance for all of
Owner's employees employed at or on the Project, and in the event any of the
work is subcontracted, Owner shall require any general contractor or subcontractor
similarly to provide workers' compensation insurance for such contractor's or
subcontractor's employees, unless such employees are covered by the protection
afforded by Owner. In case any class of employee engaged in work on the Project
is not protected under any workers' compensation law, Owner shall provide and
shall cause each contractor and subcontractor to provide adequate insurance for
the protection of employees not otherwise protected. Owner hereby indemnifies
City for any damage resulting from failure of Owner, its agents, employees,
contractors, or subcontractors to take out or maintain such insurance. Workers'
compensation insurance with statutory limits and employer's liability insurance with
limits of not less than One Million Dollars ($1,000,000) each accident shaii be
maintained.
e. Other Insurance Requirements. Owner shall do all the following:
1) Prior to taking any actions under this Agreement, furnish City with
properly executed certificates of insurance that clearly evidence all
insurance required in this Section, including evidence that such insurance
will not be canceled, allowed to expire, or be materially reduced in coverage
without thirty (30) days prior written notice to City.
2) Provide to City, upon request, and within seven (7) calendar days of
said request, certified copies of endorsements and policies, and properly
executed certificates of insurance evidencing the insurance required herein.
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Development Agreement
3) Replace or require the replacement of certificates, policies and
endorsements for any insurance required herein expiring prior the
termination of this Agreement.
4) Maintain all insurance required herein from the Effective Date of this
Agreement to the earlier of the expiration of the term or the mutual written
termination of this Agreement.
5) Place all insurance required herein with insurers licensed to do
business in California with a current Best's Key Rating Guide reasonably
acceptable to City.
f. Indemnity. Owner agrees to indemnify, defend, and hold City, and its
elected and appointed council, boards, commissions, officers, agents, employees,
consultants, and representatives, harmless from any and all claims costs and
liability for any personal injury or property damage which may arise as a result of
any actions or negligent omissions by Owner or Owner's contractors,
subcontractors, agents, or employees in connection with the construction,
improvement, or operation of the Project.
12. Termination
a. Termination Upon Completion of Development. This Agreement shall
terminate upon the expiration of the term, unless it is terminated earlier pursuant
to the terms of this Agreement. It is the City's intention to renew this Agreement
with operators who have performed in good faith under the Agreement. Upon
termination of this Agreement, City shall record a notice of such termination and
this Agreement shall be of no further force or effect except as otherwise set forth
in this Agreement.
b. Termination Upon Failure To Obtain State License. This Agreement shall
terminate upon Owner's failure to obtain a State License to operate a Permitted
Use at the Licensed Premises, and Owner shall have no obligation to remit
further fees beyond the quarter in which Owner fails to obtain a State License.
Any fees owed by Owner shall be prorated to reflect the portion of the quarter
during which Owner was legally entitled to operate.
c. Effect of Termination on Owner's Obligations. Termination of this
Agreement shall eliminate any further obligation of Owner to comply with this
Agreement, or some portion thereof, if such termination relates to only part of the
Site or Project. Termination of this Agreement, in whole or in part, shall not,
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Development Agreement
however, eliminate the rights of Owner to seek any applicable and available
remedies or damages based upon acts or omissions occurring before termination.
d. Effect of Termination on City's Obligations. Termination of this Agreement
shall eliminate any further obligation of City to comply with this Agreement, or some
portion thereof. Termination of this Agreement shall not, however, eliminate the
rights of City to seek any applicable and available remedies or damages based
upon acts or omissions occurring before termination.
e. Survival After Termination. The rights and obligations of the Parties set
forth in Section 25(e), Section 25(f), and Section 25(h), and any right or obligation
of the Parties in this Agreement which, by its express terms or nature and context
is intended to survive termination of this Agreement, will survive any such
termination.
13. Resources Efficiency
The design of the facility shall include significant water and energy conservation
measures to minimize resource consumption, to the extent feasible. The design shall
incorporate solar, wind, high efficiency lighting, and water recycling systems and
technology, to the extent feasible. High efficiency LED lighting systems for the exterior
lighting will be used. If economically and technologically feasible, grow lights shall be
high efficiency LED lighting systems. Automated, digitally controlled watering and
fertilization systems shall be used for all plant cultivation. All water mixed with nutrients
will be recycled, to the extent feasible. Storm water shall be collected and recycled to the
extent feasible.
14. Standard Conditions for Construction
During any on-site construction activities related to development of the project site and
any buildings thereon, or renovation or remodeling of existing buildings, Owner and
Landlord shall comply with all applicable terms and conditions of City's Standard
Conditions for Construction, attached hereto and incorporated herein by reference. The
Project shall comply with the applicable parking standards established by the City for
cannabis activities.
15. Defaults and Remedies
a. Remedies in general. It is acknowledged by the parties that City would not
have entered into this Agreement if it were to be liable in damages under this
Agreement, or with respect to this Agreement or the application thereof, except as
hereinafter expressly provided. Subject to extensions of time by mutual consent
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in writing, failure by either party to perform any term or provision of this Agreement
shall constitute a default. In the event of alleged default or breach of any terms or
conditions of this Agreement, the party alleging such default or breach shall give
the other party not less than thirty (30) day notice in writing specifying the nature
of the alleged default and the manner in which said default may be satisfactorily
cured during any such thirty (30) day period, the party charged shall not be
considered in default for purposes of termination or institution of legal proceedings.
Notwithstanding the foregoing to the contrary, if the alleged default is of such a
nature that it cannot be cured within thirty (30) days, the alleged defaulting party
shall not be deemed in default as long as such party commences to cure such
default within such thirty (30) day period and thereafter diligently prosecutes such
cure to completion.
After notice and expiration of the thirty (30) day period, the other party to this
Agreement, at its option, may institute legal proceedings pursuant to this
Agreement.
In general, each of the parties hereto may pursue any remedy at law or equity
available for the breach of any provision of this Agreement, except that City shall
not be liable in monetary damages, unless expressly provided for this Agreement,
to Owner, to any mortgagee or lender, or to any successors in interest of Owner
or mortgagee or lender, or to any other person, and Owner covenants on behalf of
itself and all successors in interest to the Property or any portion thereof, not to
sue for damages or claim any damages:
1) For any breach of this Agreement or for any cause of action which
arises out of this Agreement; or
2) For the impairment or restriction of any right or interest conveyed or
provided under, with, or pursuant to this Agreement; or
3) Arising out of or connected with any dispute, controversy or issue
regarding the application or interpretation or effect of the provisions of this
Agreement.
Nothing contained herein shall modify or abridge Owner's rights or remedies
(including its rights for damages, if any) resulting from the exercise by City of its
power of eminent domain. Nothing contained herein shall modify or abridge
Owner's rights or remedies (including its rights for damages, if any) resulting from
the grossly negligent or malicious acts of City and its officials, officers, agents and
employees. Nothing herein shall modify or abridge any defenses or immunities
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Development Agreement
available to City and its employees pursuant to the Government Liability Act and
all other applicable statutes and decisional law.
Except as set forth in the preceding paragraph relating to eminent domain, Owner's
remedies shall be limited to those set forth in this Section 15(a), Section 15(b), and
Section 15(c).
Notwithstanding anything to the contrary contained herein, City covenants as
provided in Civil Code Section 3300 not to sue for or claim any consequential
damages or, in the event all or a portion of the Property is not developed, for lost
profits or revenues which would have accrued to City as a result of the
development of the Property.
b. Specific Performance. The parties acknowledge that money damages and
remedies at law are inadequate, and specific performance and other non-monetary
relief are particularly appropriate remedies for the enforcement of this Agreement
and should be available to all parties for the following reasons:
1) Except as provided in Sections 15(a) and 15(e), money damages are
unavailable against City as provided in Section 15(a) above.
2) Due to the size, nature and scope of the Project, it may not be
practical or possible to restore the Property to its natural condition once
implementation of this Agreement has begun. After such implementation,
Owner may be foreclosed from other choices it may have had to use the
Property or portions thereof. Owner has invested significant time and
resources and performed extensive planning and processing of the Project
in agreeing to the terms of this Agreement and will be investing even more
significant time and resources in implementing the Project in reliance upon
the terms of this Agreement, and it is not possible to determine the sum of
money which would adequately compensate Owner for such efforts; the
parties acknowledge and agree that any injunctive relief may be ordered on
an expedited, priority basis.
c. Release. Except for those remedies set forth in Sections 15(a), 15(b), and
15(c), Owner, for itself, its successors and assignees, hereby releases City, its
officers, agents and employees from any and all claims, demands, actions, or suits
of any kind or nature arising out of any liability, known or unknown, present or
future, based or asserted, pursuant to Article 1, Section 19 of the California
Constitution, the Fifth Amendment of the United States Constitution, or any other
law or ordinance which seeks to impose any other liability or damage, whatsoever,
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upon City because it entered into this Agreement or because of the terms of this
Agreement.
Owner acknowledges that it may have suffered, or may suffer, damages and other
injuries that are unknown to it, or unknowable to it, at the time of its execution of
this Agreement. Such fact notwithstanding, Owner agrees that the release
provided in this Section 15(c) shall apply to such unknown or unknowable claims
and damages. Without limiting the generality of the foregoing, Owner
acknowledges the provisions of Californ ia Civi l Code Section 1542, which provide:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his or her favor at the time of executing
the release, which if known by him or her must have materially
affected his or her settlement with the debtor."
Owner hereby waives, to the maximum legal extent, the provisions of California
Civil Code Section 1542 and all other statutes and judicial decisions of similar
effect.
Initials
d. Termination of Agreement for Default of Citv. Owner may terminate this
Agreement only in the event of a default by City in the performance of a material
term of this Agreement and only after providing written notice to City of default
setting forth the nature of the default and the actions, if any, required by City to
cure such default and, where the default can be cured, City has failed to take such
actions and cure such default within sixty (60) days after the effective date of such
notice or, in the event that such default cannot be cured within such sixty (60) day
period but can be cured within a longer time, has failed to commence the actions
necessary to cure such default within such sixty (60) day period and to diligently
proceed to complete such actions and cure such default.
e. Attorneys' Fees and Costs. In any action or proceeding between City and
Owner brought to interpret or enforce this Agreement, or which in any way arises
out of the existence of this Agreement or is based upon any term or provision
contained herein, the "prevailing party" in such action or proceeding shall be
entitled to recover from the non-prevailing party, in addition to all other relief to
which the prevailing party may be entitled pursuant to this Agreement, the
prevailing party's reasonable attorneys' fees and litigation costs, in an amount to
be determined by the court. The prevailing party shall be determined by the court
in accordance with California Code of Civil Procedure Section 1 032. Fees and
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costs recoverable pursuant to this Section 15(e) include those incurred during any
appeal from an underlying judgment and in the enforcement of any judgment
rendered in any such action or proceeding.
f. Owner Default. No building permit shall be issued or building permit
application accepted for any structure on the Property after Owner is determined
by City to be in default of the terms and conditions of this Agreement until such
default thereafter is cured by Owner or is waived by City. If City terminates this
Agreement because of Owner's default, then City shall retain any and all benefits,
including money or land received by City hereunder.
16. Third Party Litigation
a. General Plan Litigation. City has determined that this Agreement is
consistent with its General Plan. Owner has reviewed the General Plan and
concurs with City's determination.
City shall have no liability under this Agreement or otherwise for any failure of City
to perform under this Agreement, or for the inability of Owner to develop the
Property as contemplated by the Development Plan, which failure to perform or
inability to develop is as the result of a judicial determination that the General Plan,
or portions thereof, are invalid or inadequate or not in compliance with law, or that
this Agreement or any of City's actions in adopting it were invalid, inadequate, or
no in compliance with the law.
b. Hold Harmless Agreement. Owner hereby agrees to, and shall hold City,
its elective and appointive boards, commissions, officers, agents, and employees
harmless from any liability for damage or claims for damage for personal injury,
including death, as well as from claims for property damage which may arise from
Owner or Owner's contractors, subcontractors, agents, or employees' operations
under this Agreement, whether such operations be by Owner, or by any of Owner's
contractors, subcontractors, agents, or employees operations under this
Agreement, whether such operations be by Owner, or by any of Owner's
contractors, subcontractors, or by any one or more persons directly or indirectly
employed by, or acting as agent for Owner or any of Owner's contractors or
subcontractors. Owner agrees to and shall defend City and its elective and
appointive boards, commissions, officers, agents and employees from any suits or
actions at law or in equity for damage caused, or alleged to have been caused, by
reason of any of the aforesaid operations.
c. Indemnification. Owner shall defend, indemnify, and hold harmless City and
its agents, officers, and employees against and from any and all liabilities,
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Development Agreement
demands, claims, actions or proceedings and costs and expenses incidental
thereto (including costs of defense, settlement and reasonable attorneys' fees),
which any or all of them may suffer, incur, be responsible for or pay out as a result
of or in connection with any challenge to the legality, validity or adequacy of any of
the following: (i) this Agreement and the concurrent and subsequent permits,
licenses and entitlements approved for the Project or Property; (ii) the
environmental impact report, mitigated negative declaration or negative
declaration, as the case may be, prepared in connection with the development of
the Property; and (iii) the proceedings undertaken in connection with the adoption
or approval of any of the above. In the event of any legal or equitable action or
other proceeding instituted by any third party (including a governmental entity or
official) challenging the validity of any provision of this Agreement or any portion
thereof as set forth herein, the parties shall mutually cooperate with each other in
defense of said action or proceeding. Notwithstanding the above, City, at is sole
option, may tender the complete defense of any third-party challenge as described
herein. In the event City elects to contract with special counsel to provide for such
a defense, City shall meet and confer with Owner regarding the selection of
counsel, and Owner shall pay all costs related to retention of such counsel.
d. Environmental Contamination. Owner shall indemnify and hold City, its
officers, agents, and employees free and harmless from any liability, based or
asserted, upon any act or omission of Owner, its officers, agents, employees,
subcontractors, predecessors in interest, successors, assigns and independent
contractors, excepting any acts or omissions of City as successor to any portions
of the Property dedicated or transferred to City by Owner and further excepting
any environmental conditions not within Owner's control nor directly associated
with a Permitted Use, for any violation of any federal, state or local law, ordinance
or regulation relating to industrial hygiene or to environmental conditions on, under
or about the Property, including, but not limited to, soil and groundwater conditions,
and Owner shall defend, at its expense, including attorneys' fees, City, its officers,
agents and employees in any action based or asserted upon any such alleged act
or omission. City may in its discretion participate in the defense of any such claim,
action or proceeding.
The provisions of this Section 16(d) do not apply to environmental conditions that
predate Owner's ownership or control of the Property or applicable portion;
provided, however, that the foregoing limitation shall not operate to bar, limit or
modify any of Owner's statutory or equitable obligations to City as an owner or
seller of the Property.
e. City to Approve Counsel. With respect to Sections 16(a) through 16(d), City
reserves the right to approve the attorney(s) which Owner selects, hires or
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Development Agreement
otherwise engages to defend City hereunder, which approval shall not be
unreasonably withheld.
f. Accept Reasonable Good Faith Settlement. City shall not reject any
reasonable good faith settlement offer regarding the claims contemplated in this
Section 16(f). If City does reject a reasonable, good faith settlement that is
acceptable to Owner, Owner may enter into a settlement of the action, as it relates
to Owner, and City shall thereafter defend such action (including appeals) at its
own cost and be solely responsible for any judgment rendered in connection with
such action. This Section 16(f) applies exclusively to settlements pertaining to
monetary damages or damages which are remedial by the payment of monetary
compensation. Owner and City expressly agree that this Section 16(f) does not
apply to any settlement that requires an exercise of City's police powers, limits
City's exercise of its police powers, or affects the conduct of City's municipal
operations.
g. Survival. The provisions of Sections 16(a) through 16(f) inclusive, shall
survive the termination or expiration of the Agreement.
17. California Environmental Quality Act
Owner shall reimburse City for any and all costs incurred by City related to project review
under the California Environmental Quality Act (CEQA}, Public Resources Code,
§§21 000-21189.3, and the Guidelines for California Environmental Quality Act, California
Code of Regulations, Title 14, §§15000-15387. If requested by City, Owner shall conduct
and pay for any required CEQA reviews and analyses. The City has found that the
proposed Project is Categorically Exempt from California Environmental Quality Act
(CEQA) requirements under provisions of CEQA Guidelines Section 15332 -In-Fill
Development Projects. This exemption applies to projects characterized as in-fill
development meeting the conditions described in Section 15332.
18. Rules. Regulations. and Official Policies
Except as otherwise provided in this Agreement, the rules, regulations, and official
policies of City governing permitted uses of the land, governing density, and governing
the design, improvements, and construction standards and specifications applicable to
the development of the Project subject of this Agreement, shall be those rules,
regulations, and official policies of City in force as of the Effective Date of this Agreement.
This Agreement does not prevent City, in subsequent actions applicable to the property,
from applying new rules, regulations, and policies which do not conflict with those rules,
regulations, and policies applicable to the property as set forth herein, nor does this
Agreement prevent City from denying or conditionally approving any subsequent
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development project application (i.e., not the Project) based on such existing or new rules,
regulations, or policies.
19. Regulatory Permit Conditions of Approval
Owner shall comply with all conditions of approval of the Regulatory Permit approved by
City Council.
20. Periodic Reviews
This Agreement shall be subject to annual review. Owner and Landlord executing this
Agreement, or successor in interest thereto, shall demonstrate good faith compliance with
the terms of this Agreement. If, as a result of such periodic review, City finds and
determines, based on substantial evidence, that Owner or Landlord executing this
Agreement, or successor in interest thereto, has not complied in good faith with the terms
or conditions of this Agreement, City may terminate or modify this Agreement.
a. Period ic Review. City Council shall review this Agreement annually, on or
before each anniversary of the Effective Date, in order to ascertain Owner's
good faith compliance with this Agreement. During the periodic review
Owner shall be required to demonstrate good faith compliance with the
terms of the Agreement, through submitting an annual monitoring report,
records, or equivalent written materials to the Planning Department. The
Planning Department will schedule a hearing on the periodic review of the
Development Agreement on or following the anniversary of the Effective
Date, but Owner has no obligation to compel such hearing, and no
implication will be made to Owner's detriment if a hearing is not in fact held.
Owner shall document any request for an extension of the term due to
delays beyond the control of Owner (see Section 250), "Force Majeure").
Owner shall submit an annual review and administration fee deposit not to
exceed City's estimated internal and third-party costs associated with the
review and administration of this Agreement during the succeeding year,
consistent with Section 25(k) ("Deposit with City") below, as a portion of the
assessed Cost Recovery Fee discussed in Article 9 of this Agreement. City
shall provide Owner said estimate a reasonable time in advance of the
annual review and administration fee deposit being due.
b. Conditional Use Permit. For all intents and purposes, the Regulatory Permit
to be issued under this Agreement shall be treated as if it were a Conditional Use
Permit issued to Owner for the establishment and operation of its business. The
operation of the business at all times shall be required to comply with the terms of
this Agreement.
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Development Agreement
c. Special Review. City Council may order a special review of compliance with
this Agreement at any time. The Planning Director or his or her designee shall
conduct such special review. During a special review, Owner shall be required to
demonstrate good faith compliance with the terms of the Agreement. The burden
of proof on this issue shall be on Owner.
d. Review Hearing. At the time and place set for the special or periodic review
hearing, Owner shall be given an opportunity to be heard. If City Council finds,
based upon substantial evidence, that Owner has not complied in good faith with
the terms or conditions of this Agreement, City Council may terminate this
Agreement notwithstanding any other provision of this Agreement to the contrary,
or modify this Agreement and impose such conditions as are reasonably
necessary to protect the interests of City. The decision of City Council shall be
final, subject only to judicial review pursuant to Code of Civil Procedure Section
1094.5.
e. Certificate of Agreement Compliance. If, after a periodic or special review,
Owner is found to be in compliance with this Agreement, and if Owner requests it,
City shall issue a Certificate of Agreement Compliance ("Certificate") to Owner
stating that after the most recent periodic or special review, and based upon the
information known or made known to the Planning Director and City Council, that
(i) this Agreement remains in effect and (ii) Owner is not in default.
City shall not be bound by a Certificate if a default existed at the time of the periodic
or special review, but was concealed from or otherwise not known to the Planning
Director and City Council, regardless of whether the Certificate is relied upon by
assignees or other transferees or Owner.
f. Failure to Conduct Review. City's failure to conduct a periodic review of this
Agreement shall not constitute a breach of this Agreement.
g. Cost of Review. The costs incurred by City in connection with the periodic
reviews shall be borne by Owner, as a portion of the assessed Cost
Recovery Fee discussed in Article 9 of this Agreement.
21. Obligations of Landlord
Landlord shall have rights, duties, obligations, and liability only as expressly set forth
herein. Landlord shall have no responsibility or liability for the failure of Owner to perform
as required by this Agreement.
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Development Agreement
22. 21.Assignment
a. Assignment by Landlord. Landlord shall not transfer, delegate, or assign its
interest, rights, duties, and obligations under this Agreement, without the
prior written consent of City.
b.Assignment by Owner. Owner shall not transfer, delegate, or assign its interest,
rights, duties, and obligations under this Agreement without the prior written
consent of City. Any assignment, delegation, or assignment without the prior
written consent of City shall be null and void. Any transfer, delegation, or
assignment by Owner as authorized herein shall be effective only if and upon the
party to whom such transfer, delegation, or assignment is made is issued a
Regulatory Permit as required under Article 4-34 of the municipal code.
23. Operating Commercial cannabis Facility
Any Party to this Agreement, or successor in interest thereto, shall not operate a
commercial cannabis facility authorized under the municipal code unless:
a. It is the holder of a valid Regulatory Permit issued by City in accordance
with the procedures and requirements of Article 4-34 of the municipal code; and
b. At such time as the State of California requires commercial cannabis
facilities and businesses to hold a valid license or permit issued by the State of
California, it also holds such license or permit, unless, however, such permit or
license is not required by the State of California for the type of commercial
cannabis facility or business operation that is the subject of this Agreement.
24. Notice
Any notice or communication required hereunder between City and Owner must be in
writing, and may be given either personally, by facsimile (with original forwarded by
regular U.S. Mail), by registered or certified mail (return receipt requested), or by Federal
Express, UPS or other similar couriers providing overnight delivery. If personally
delivered, a notice shall be deemed to have been given when delivered to the Party to
whom it is addressed. If given by facsimile transmission, a notice or communication shall
be deemed to have been given and received upon actual physical receipt of the entire
document by the receiving Party's facsimile machine. Notices transmitted by facsimile
after 5:00p.m. on a normal business day or on a Saturday, Sunday, or holiday shall be
deemed to have been given and received on the next normal business day. If given by
registered or certified mail, such notice or communication shall be deemed to have been
given and received on the first to occur of (i) actual receipt by any of the addressees
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Development Agreement
designated below as the party to whom notices are to be sent, or (ii) five (5) days after a
registered or certified letter containing such notice, properly addressed, with postage
prepaid, is deposited in the United States mail. If given by Federal Express or similar
courier, a notice or communication shall be deemed to have been given and received on
the date delivered, as shown on a receipt issued by the courier. Any Party hereto may at
any time, by giving ten (1 0) days written notice to the other Party hereto, designate any
other address in substitution of the address to which such notice or communication shall
be given. Such notices or communications shall be given to the Parties at their addresses
set forth below:
If to City:
and
If to Owner:
If to Landlord:
With a courtesy copy to:
25. Miscellaneous Provisions
City of Lynwood
11330 Bullis Road
Lynwood, California 90262
Attention: City Manager
H. Francisco Leal, Esq.
Leal Trejo, APC
3767 Worsham Avenue
Long Beach, California 90808
RD Lynwood South
11510 Alameda Street
Lynwood, CA 90262
Ryan Oganesian
P.O. Box 6579
Corona, CA 92878
Sean Matsler, Esq.
Manatt, Phelps & Phillips, LLP
695 Town Center Drive, 14th Floor
Costa Mesa, CA 92626
a. Regulatory Permit Conditions of Approval. Owner shall comply with all
conditions of approval of the Regulatory Permit approved by City Council.
b. Amendment or Cancellation. This Agreement may be amended, or
canceled in whole or in part, only by the written mutual consent of the parties to
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Development Agreement
this Agreement or their successors in interest, except that minor amendments that
do not affect a substantive provision of this Agreement may be approved by the
City Manager. The decision whether a proposed amendment is "minor" shall be in
the exclusive discretion of the City Manager.
c. Waiver. Waiver by City of any one or more of the terms or conditions of this
Agreement shall not be construed as waiver of any other term or condition under
this Agreement.
d. Enforcement. Unless amended or canceled pursuant hereto, this
Agreement shall be enforceable by any Party hereto, or successor in interest
thereto, notwithstanding any subsequent change in any applicable general or
specific plan, zoning, subdivision or building regulation, or municipal code
amendment adopted by City that conflicts with the terms of this Agreement.
e. Joint and Several Liabil ity. Owner and Landlord shall be jointly and
severally liable for any amount due under this Agreement, and any breach of this
Agreement or failure to pay by one Party shall also constitute a breach of this
Agreement by the other Party.
f. Severability. If any part of this Agreement is found to conflict with applicable
state laws or regulations, such part shall be inoperative, null, and void insofar as it
conflicts with said laws or regulations, or modified or suspended as may be
necessary to comply with such state laws or regulations, but the remainder of this
Agreement shall continue to be in full force and effect.
g. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which together
shall constitute one and the same instrument. The execution of this Agreement
may be by actual, facsimile, or electronic signature.
h. Jurisdiction and Arbitration. The law governing this Agreement shall be that
of the State of California. Any suit brought by any party against any other party
arising out of the performance of this Agreement shall be filed and maintained in
the County of Los Angeles Superior Court. Any dispute, claim or controversy
arising out of or relating to this Agreement or the breach, termination, enforcement,
interpretation or validity thereof, including the determination of the scope or
applicability of this Agreement to arbitrate, shall be determined by binding
arbitration in Los Angeles, California before one arbitrator. Said arbitrator shall be
chosen by mutual agreement of the Parties. If the Parties cannot agree on an
arbitrator within 30 days of the first notice by either Party of the need for arbitration,
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Development Agreement
each Party shall name one arbitrator, then the two arbitrators shall choose the
arbitrator who shall hear the case.
i. Disclaimer. Despite California's medical cannabis laws and the terms and
conditions of this Agreement, any Conditional Use Permit, or any Regulatory
Permit issued pertaining to Owner or the property specified herein, California
medical marijuana cultivators, transporters, distributors, or possessors may still be
subject to arrest by state or federal officers and prosecuted under state or federal
law. The Federal Controlled Substances Act, 21 USC § 801, prohibits the
manufacture, distribution, and possession of marijuana without any exemptions for
medical use.
j. Force Maieure. If delays are caused by unforeseen events beyond the
control of Owner, such delays will entitle Owner to an extension of time as provided
in this Section. Such unforeseen events ("Force Majeure") shall mean war,
insurrection, acts of God, local, state or national emergencies, strikes and other
labor difficulties beyond the party's control, or any default by City hereunder, which
Force Majeure event substantially interferes with the development or construction
of the Project.
k. Deposit with City. As set forth in this Agreement, Owner shall be
responsible for all of the costs associated the Project, including but not limited to
costs associated with City's review and processing of the Project, including but not
limited to reviewing the Project's entitlements, including all environmental
clearance documents, permits, licenses and all documents evidencing compliance
with state and local law, and as such Owner agrees to deposit good and sufficient
funds with City whereby Owner shall deposit money with City for the purpose of
reimbursing City for any associated costs with processing the Project, as detailed
in this Agreement.
I. Constructive Notice and Acceptance. Every person who after the Effective
Date and recording of this Agreement owns or acquires any right, title, or interest
to any portion of the Site, is and shall be conclusively deemed to have consented
and agreed to every provision contained herein, whether or not any reference to
this Agreement is contained in the instrument by which such person acquired an
interest in the Site, and all rights and interests of such person in the Site shall be
subject to the terms, requirements, and provisions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
CITY OF LYNWOOD
City Manager
APPROVED AS TO FORM:
OWNER
Name:
Title:
LANDLORD
Name:
Title:
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Development Agreement
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
THE LAND REFERRED TO HEREIN BELOW IS SITUATED AT 11510 ALAM EDA STREET IN THE CITY OF
LYNWOOD, IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
THAT PORTION OF LOT "A" OF TRACT NO. 6066, IN THE CITY OF LYNWOOD, COUNTY OF LOS ANGELES,
STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 64, PAGE 24 OF MAPS, IN THE OFFICE OF THE
COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHWEST CORNER OF SAID LOT; THENCE NORTH Or28'30" WEST ALONG SAID
WESTERLY LINE 179.32 FEET TO THE SOUTHERLY LINE OF THE LAND DESCRIBED IN THE DEED TO SLAYDEN
R. ROBINSON, RECORDED JUNE 19, 1929 AS INSTRUMENT NO. 822, IN BOOK 9215, PAGE 332 OF OFFICIAL
RECORDS; THENCE SOUTH 84"52'10" EAST ALONG SAID SOUTHERLY LINE 597.29 FEET, MORE OR LESS, TO
THE EASTERLY LINE OF SAID LAND OF ROBINSON; THENCE NORTH 16"18'15" EAST ALONG SAID EASTERLY
LINE 65.88 FEET, MORE OR LESS, TO THE NORTHFASTFRI Y liNE OF SAID LOT; THENCE SOUTH 62"24'45"
EAST ALONG SAID NORTHEASTERLY LINE TO THE SOUTHERLY LINE OF SAID LOT; THENCE NORTH 84"52'10"
WEST ALONG SAID SOUTHERLY LINE TO THE TRUE POINT OF BEGINNING.
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EXCEPTING FROM THE ABOVE DESCRIBED LAND, THAT PORTION THEREOF DESCRIBED IN THE DEED FROM
W. THOMAS DAVIS, ET AL., TO HERBERT J. GRILEY AND WIFE, RECORDED APRIL 10, 1952 AS INSTRUMENT
NO. 555, IN BOOK 38675, PAGE 317 OF OFFICIAL RECORDS.
ALSO EXCEPT THEREFROM THAT PORTION OF LOT "A" OF TRACT NO. 6066, DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT IN THE NORTHERLY LINE OF LOT "A" OF SAID TRACT NO. 6066, DISTANT THEREON
795.35 FEET SOUTHEASTERLY FROM THE NORTHWEST CORNER OF SAID LOT "A", SAID POINT LYING IN
THE CENTER LINE OF SANTA FE AVENUE AS SAID CENTERLINE IS SHOWN ON COUNTY SURVEY MAP NO.
8974 SHEET 2; THENCE CONTINUING SOUTHEASTERLY ALONG SAID LINE A DISTANCE OF 50.99 FEET TO A
LINE PARALLEL AND DISTANT 50.00 FEET EASTERLY AT RIGHT ANGLES TO SAID CENTERLINE; THENCE
ALONG SAID PARALLEL LINE SOUTH 16°18'15" WEST 172.62 FEET TO THE BEGINNING OF A TANGENT
CURVE, CONCAVE SOUTHEASTERLY AND HAVING A RADIUS OF 450.00 FEET; THENCE ALONG SAID CURVE,
THROUGH A CENTRAL ANGLE OF 04°02'37" A DISTANCE OF 31.76 FEET TO ITS INTERSECTION WITH THE
SOUTHERLY LINE OF SAID LOT "A", THENCE ALONG SAID SOUTHERLY LINE NORTH 84°52'10" WEST, 1.00
FOOT; THENCE NORTH 00°33'45" EAST, 184.81 FEET TO A POINT IN SAID CENTERLINE OF SANTA FE
AVENUE THAT LIES SOUTH 16°18'15" WEST FROM THE TRUE POINT OF BEGINNING; THENCE NORTH
16°18'15" EAST, 36.64 FEET TO THE TRUE POINT OF BEGINNING, BY DEED RECORDED MAY 20, 1964 AS
INSTRUMENT NO. 887 OFFICIAL RECORDS.
APN: 6169-001-008
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Development Agreement
COMMERCIAL CANNABIS
DEVELOPMENT AGREEMENT
Development Agreement No. 2017-19 MOD
This Agreement is made by and between and among the CITY OF LYNWOOD
("City") and Magnolia Extracts LLC ("Owner") and Anton Goss ("Landlord"), as required
by Section 4-34-5 of the Lynwood Municipal code setting forth the terms and conditions
under which Owner shall operate a commercial cannabis manufacturing, distribution, and
delivery facility (also, the "Project") pursuant to its Regulatory Permit that are in addition
to the requirements of Article 4-34 of the Lynwood Municipal Code, including, but not
limited to, public outreach and education, community service, payment of fees and other
charges as set forth or referenced herein, and such other terms and conditions as will
protect and promote the public health, safety, and welfare. The requirements set forth in
Article 4-34 of the Lynwood Municipal Code, and the Administrative Regulations adopted
by the City Council of the City of Lynwood are incorporated herein by reference. All
subsequent references to "municipal code" mean the Lynwood Municipal Code.
1. Government Code and Mu nicipa l Code Required Elements
a. Description of Property. Land situated in the City of Lynwood, County of
Los Angeles, State of California, described as APN 6194-030-019, whose street
address is 11118 Wright Road in the City of Lynwood.
b. Owner and Other Person with Legal or Eguitable Interest.
Owner: Magnolia Extracts LLC
Landlord: Anton Goss
c. Permitted Uses. The subject property may be used as a commercial
cannabis facility as presently authorized under Article 4-34 of the municipal code,
and for any other use as authorized under applicable provisions of the municipal
code. Although Chapter 25 does not specifically identify commercial cannabis
facilities as permitted uses in any zoning district, such uses are similar to other
listed uses, including, but not limited to, medical services -clinics, offices,
laboratories; garden center/plant nursery; food and beverage manufacturing; and
agricultural products processing; and, therefore, commercial cannabis facilities are
allowed uses in the same zoning districts in which such similar uses are allowed
under Chapter 25 of the municipal code.
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and Delivery Development Agreement
d. Zoning. Owner shall guarantee that all activities conducted under this
Agreement and under the Regulatory Permit shall comply with the City's municipal
code, including the zoning ordinance and any and all development and
construction requirements contained therein. Owner shall not conduct any
business under this Agreement or under the Regulatory Permit without having
obtained all necessary permits, licenses, and approvals from the City.
e. ReseNation or Dedication of Land for Public Purposes. Sufficient roadway,
sidewalk, and utility easements shall be reseNed or dedicated to City for such
purposes.
2. Term
This Agreement shall start on the date on which all parties have executed it, or 30
days after final approval by the City Council, whichever is later, and it shall end five
years from the starting date, and it shall remain in full force and effect so long as
the subject property is used for a commercial cannabis facility as presently
authorized under Article 4-34 of the municipal code; provided, however, such use
is not abandoned for a period of more than six (6) months. The term may be
extended for up to two, five-year extensions by mutual agreement of the Parties.
However, at the request of either Party, the fees required under Article 7 of this
Agreement may be subject to re-negotiation following the end of year 3 of this
Agreement. In the event a Party wishes to re-negotiate fees, it shall give notice to
the other Party no less than 90 days before the three-year anniversary of the
agreement, and negotiations shall be concluded before the anniversary date.
3. Owner's Site and Floor Plans
a. Owner's site plan and floor plan for the facility will be submitted for approval
and must be approved before any building permit is issued and before the
Regulatory Permit shall be valid. The parties agree and understand that due to
the time required for the completion of necessary suNeys including approvals from
the Los Angeles County Fire Department and Building and Safety, the specific
design may change in which case all revised site and floor plans shall be provided
to the City at the earliest possible time.
b. A preliminary landscape plan will be prepared and reviewed and approved
by the Planning Director as part of the design review process. A final landscape
plan shall be prepared and submitted in conjunction with building and site
improvement plans prior to issuance of building permits for construction activities.
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and Delivery Development Agreement
c. An exterior signage plan will be prepared and reviewed and approved by
the Planning Director in accordance with the procedures and requirements of
Article 70 of Chapter 25 of the municipal code.
4. Facility Operations
a. Standard Operating Procedures. Owner is a Cooperative Corporation who
will comply with all relevant California State laws and local ordinances with regard
to commercial cannabis manufacturing and distribution. (See California's
Compassionate Use Act (Proposition 215) as codified in Health and Safety Code
§11362.5; Senate Bill 420, the Medical Marijuana Program Act (H&S Code
§§11362.7 to 11362.83); the August 2008 Guidelines for the Security and Non-
Diversion of Marijuana Grown for Medical Use (2008 Attorney General Guidelines);
and the newly enacted Medical Adult Use Cannabis Regulation and Safety Act
("MAUCRSA") set forth in Business and Professions Code Section 26000, et seq.,
and Assembly Bill 133, which was enacted in September 2017.
During the term of its Regulatory Permit and the term of this Agreement,
Owner shall lawfully operate in accordance with all state and local laws. Owner
will employ exemplary operating procedures to comply with state and local laws.
Owner's facility will employ safety and security measures as set forth herein for the
safety and security of its employees, as well as other individuals in its neighboring
community.
b. Security Plan. The issuance of a Regulatory Permit is conditional upon
approval of the proposed security plan by the Los Angeles County Sheriff. The
security plan shall include, at a minimum and as appropriate, provisions for video
surveillance, perimeter fencing and security, protection of the building(s) from
vehicle intrusion, cash handling procedures, product handling and storage
procedures, and a professionally monitored alarm system. Equipment and
systems used for video surveillance and building alarms will be approved by City.
Video surveillance shall include, at a minimum, all site and facility entrances and
access points, all spaces accessible by the public, all secured areas of the facility
with restricted access, all interior spaces and rooms where commercial cannabis
products are handled and processed, shipping and receiving areas, cash storage
areas, and other areas necessary to protect the safety of employees and the public
and to ensure commercial cannabis products are received, handled, stored,
packaged, shipped, and distributed in compliance with applicable state and local
laws and regulations. The video surveillance system shall be web-based with
direct access provided to the Los Angeles County Sheriff upon request.
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and Delivery Development Agreement
The security system will also include sensors to detect entry and exit from all
secure areas, panic buttons in appropriate locations, and a professionally
monitored alarm system with glass breakage sensors and motion detectors.
Owner will employ properly trained and licensed third-party security personnel to
protect the welfare and safety of Owner employees and to ensure public safety to
the neighboring community. Owner shall use security personnel 24 hours, 7 days
a week. Security personnel may be armed so long as proper licensing and
insurance requirements are followed and met by the third-party operator providing
such security services.
c. Fire Department Approval. Owner may not operate any facility, and no
permit, license, or other approval issued by City shall be valid unless and until the
Los Angeles County Fire Department has approved Owner's site plan, floor plan,
safety plan, and any other plans that require its approval.
d. Possession of Firearms. Except for licensed security personnel approved
by the Los Angeles County Sheriff, no person employed by Owner shall be in
possession of any firearm while on the premises or location without having first
obtained a license from the appropriate state or local agency authorizing the
person to be in possession of such firearm. Every such person in possession of a
firearm while on the premises or location must provide the City Manager and the
Los Angeles County Sheriff, ten days before bringing the firearm onto the
premises, with the following:
1) A copy of the license issued to the person by the appropriate state
or local agency authorizing him or her to possess such firearm;
2) A copy of his or her law enforcement identification (if he or she is
employed by a law enforcement agency);
3) A copy of his or her California driver's license or California
identification card; and
4) Any other information reasonably required by the Los Angeles
County Sheriff to show that the individual is in compliance with the
provisions of all laws regarding the possession and use of a firearm.
e. Employees/Procedures for Inventory Control to Prevent Non-Medical
Diversion of Commercial cannabis. Only authorized employees will be permitted
to enter Owner's facility. Each employee will have to meet a criminal background
investigation conducted by the Los Angeles County Sheriff, which at minimum shall
include a LiveScan criminal history check.
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and Delivery Development Agreement
Owner will prohibit the use of cannabis by its employees at its facility, in the
neighborhood vicinity of its facility, and while driving.
Owner will take all necessary and reasonable steps to prevent the distribution of
any of its cannabis products to minors; prevent revenue from the sale or
distribution of its cannabis and/or infused products from going to criminal
enterprises, gangs and cartels; prevent the diversion of cannabis from California
to any other state; prevent state-authorized cannabis activity from being used as
a cover or pretext for the trafficking of other illegal drugs or other illegal activity;
prevent violence and the use of firearms in the manufacture of cannabis;
discourage and educate against drugged driving and the exacerbation of other
adverse public health consequences associated with cannabis use; disavow
growing cannabis on public lands that creates attendant public safety and
environmental dangers posed by such illegal uses; and discourage and educate
against cannabis possession or use on federal property.
f. Quality Control and Testing. Owner will utilize quality control measures and
testing to ensure only the highest quality of commercial cannabis and infused
products will be produced. Owner will inspect the product to insure its identity and
quantity, and will have a testing lab approved by City, perform testing of random
samples prior to distribution or delivery. Inspection and testing will be conducted
by the approved testing lab off-site. Testing standards and procedures shall be in
accordance with applicable state law and regulations.
All commercial cannabis products will undergo a quality assurance review prior to
distribution to Owner's patient collective affiliates or delivery to individual
customers in order to ascertain its quantity and content. Inventory procedures will
be utilized for tracking and taxing purposes by the state. Owner will employ an
efficient record-keeping system to make transparent its financing, testing, and
adverse effect recording, as well as recall procedures. Owner will employ an
efficient record-keeping system that will reflect its financing, testing, and adverse
effect recording and product recall procedures.
g. Packing of Commercial Cannabis and Infused Products. All Owner
commercial cannabis products will be packaged and labeled as required by
Section 26071, et seq., of the California Business and Professions Code and
applicable requirements and regulations issued by the State of California pursuant
thereto. In addition to those packaging and labeling requirements, and packaging
and labeling requirements set forth in Owner's Regulatory Permit application, as
amended or supplemented, all commercial cannabis products shall be packaged
in an opaque childproof container which shall contain a label or be accompanied
by a leaflet or inset that states, at a minimum:
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and Delivery Development Agreement
1) The name, address and telephone number of the commercial
cannabis dispensary facility or licensed distribution company to which the
commercial cannabis product is distributed, sold, or transferred;
2) The amount of commercial cannabis in the container; and
3) The date the commercial cannabis was transferred to a commercial
cannabis dispensary facility or licensed distribution company.
Owner intends to produce infused products and will secure any approval from the
County of Los Angeles Health Department required for manufacturing, distribution,
and handling such products. Owner infused products will not be produced,
manufactured, stored or packaged in private homes. All Owner commercial
cannabis infused products shall be individually wrapped at the original point of
preparation.
h. Delivery. If Owner applies for and receives a Delivery permit from City,
Owner may sell and deliver manufactured cannabis products to individual
customers, as long as such activity is consistent with and permitted under state
law, and Owner has a valid state license therefor. As long as such products are
sold and delivered to individual customers, and no in-person sales occur at
Owner's facility, such activity shall not constitute a dispensary under the municipal
code.
i. Point of Sale Tracking System. Owner will maintain an inventory control
and reporting system that accurately documents the location of cannabis products
from inception through distribution or delivery, including descriptions, weight, and
quantity. The inventory control and reporting system shall comply with the track
and trace program required by Section 26067, et seq., of the California Business
and Professions Code and regulations issued thereunder.
Owner will employ an electronic point of donation/sale system approved by City,
such as BioTrack THC, MJ Freeway, or similar system for all point of
donations/sales tracking from seed or inception to product distribution to other
licensed commercial cannabis facilities or delivery to individual customers. Such
approved system will track all Owner commercial cannabis products, each edible,
harvested flower, and/or manufactured concentrate, as well as gross sales (by
weight and sale). BioTrack THC, MJ Freeway, or similar system will have the
capacity to produce historical transactional data in accordance with City's
requirements.
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and Delivery Development Agreement
j. Record Keeping. Owner will maintain records for all cultivated or
manufactured commercial cannabis and/or infused products. Owner will comply
with all records-keeping responsibilities that are set forth in Municipal Code Section
4-34-10, including complete and up-to-date records regarding the amount of
commercial cannabis cultivated, produced, manufactured, harvested, stored, or
packaged at Owner's facility.
k. Processing. Handling. Storing , and Distribution of Commercial Cannabis
and Related Products. Commercial cannabis manufacturing, handling, storing,
processing, and distribution shall be concealed from public view at all stages of
growth and processing, and there shall be no exterior evidence of manufacturing,
processing, or distribution occurring at the premises from a public right-of-way or
from an adjacent parcel. Commercial cannabis manufacturing, handling, storing,
processing, or distribution shall not create offensive odors; create excessive dust,
heat, noise, smoke, traffic, or other impacts that are disturbing to people of normal
sensitivity residing or present on adjacent or nearby property or areas open to the
public; or be hazardous due to use or storage of materials, processes, products,
or wastes.
Owner will store its commercial cannabis and/or commercial cannabis products in
a locked safe room with T-card identification access for management only. The
safe room will be constructed of fire-rate walls with numerous cameras installed to
view all entries and exits from the safe room, as well as all other activities
performed within Owner's facility. Owner will not conduct outdoor operations
except as related to lawful delivery and transportation of commercial cannabis and
infused products. Owner will not store commercial cannabis or related products in
its delivery vehicle outside normal operating hours of the facility.
Commercial cannabis products will be sold or distributed only to licensed
commercial cannabis facilities in California, except as provided in section 4(h)
above. Excess or contaminated product will be securely stored on-site until it is
properly disposed. Disposal may include composting, incineration, land-fill
disposal through the local waste management hauler, or other disposal
methodology in accordance with state and county health and safety codes and
regulations.
I. Odor Control. All structures shall have ventilation and filtration systems
installed that prevent commercial cannabis plant odors from exiting the interior of
the structure. The ventilation and filtration system shall be approved by the
Building Official and City Manager and installed prior to commencing
manufacturing or distribution within the allowable structure. Facility air intake,
exhaust, and recirculating system shall be of industrial grade. Activated charcoal,
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and Delivery Development Agreement
recirculating , and closed loop aeration systems will be utilized as necessary for
effective odor control and management.
m. Description of Banking Plan. Owner will seek to open a bank account under
the name of Owner or its associated management company to provide
transparency for funds received, operational costs, including payroll, tax payments
to the state and federal governments, among others. Should a bank account not
be forthcoming, Owner will purchase and install safes to secure all daily funds
received from its collective membership or other lawful cooperative corporations
to implement debit and credit card transactions. Owner will not accept personal or
corporate checks.
n. Transportation Plan. Owner will comply with all state and local law
regarding transportation. Owner will retain a list of names and cellular contact
numbers for all employees engaged in transportation of commercial cannabis
products and provide it to the applicable oversight authority, keeping the list current
and up to date.
Owner will keep complete and up-to-date records documenting each transfer of
commercial cannabis to other lawful licensed entities, including the amount
provided, the form or product category in which the commercial cannabis was
provided, the date and time provided, the name of the employee making the
transfer, the name and address of the other lawful licensed entities to whom
delivery is made, and the amount of any related donation or other monetary
transaction.
5. Community Relations! Employment. and Wages
a. Public Outreach and Education Program. Owner shall create an effective
public outreach to City of Lynwood's community, including but not limited to
outreach and interface with public and private schools, youth organizations,
religious organizations, health care providers, drug abuse treatment providers, and
mental health and drug counseling providers.
Owner will coordinate and cooperate with City and other Owners of commercial
cannabis facilities located within City of Lynwood in the establishment and
implementation of appropriate public outreach and education programs. The
public outreach and education programs shall be approved by City.
The public outreach and education program shall provide a detailed description of
Owner's intentions with regard to public outreach and education, including but not
limited to the following: what schools or programs Owner will work with; what types
of materials and information will be provided; how much time Owner's personnel
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expect to spend on these activities; and how much money Owner expects to spend
on an annual basis.
b. Communitv Benefits Program. Owner will coordinate and cooperate with
City and other Owners of commercial cannabis facilities located within the City of
Lynwood in the establishment, implementation, and funding of a community
benefits program which could include such items as new community recreation
facilities, expansion and/or improvement to existing facilities or other physical
improvements that provide a benefit to the community, support of holiday and
special community events, and support of local public service and special districts
and organizations. This community benefits program may be implemented by a
foundation or other association of commercial cannabis facility Owners issued
regulatory permits by City. City and the public will participate in the decision-
making process for identifying and prioritizing community needs and benefits, and
identifying appropriate projects to be funded by the entity implementing this
community benefits program. All projects under the community benefits program
must be approved by City.
c. Designation of Persons Responsible for Community Relations. At the time
of this Agreement, Owner's Managing Agent/General Manager, will be responsible
for community inquiries and complaints and on-site during normal business hours.
d. Interface with Los Angeles County Sheriff. Owner's general manager will
interface with the Los Angeles County Sheriff to ensure its operation complies with
state and local laws and regulations.
e. Local Recruitment. Hiring. and Training Programs. Owner is committed to
making a good-faith effort to recruit, hire, and train City residents for employment
by Owner. A good-faith effort means Owner will take the following or similar
actions to recruit and employ City residents: 1) Contact local recruitment sources
to identify qualified individuals who are City residents, 2) Advertise for qualified
City residents in trade papers and newspapers of general circulation in the ·area,
and 3) Develop a written plan to recruit and employ City residents as a part of its
workforce.
Owner agrees to include local contractors in its bidding process as a 1st priority. All
local contractors will be given the first right of refusal in competitive bidding
process. However, all local contractors will need to stay within 10% of all other bids
that are comparable. In the event there is no local company capable of proposed
construction contract either due to direct licensing, insurance, or specialty of
construction type then Owner maintains the right to hire whoever it deems fit and
meets all legal criteria set forth by the building code.
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f. Living Wages. Owner agrees to pay all employees of the Facility a Living
Wage. A "Living Wage" is the higher of whatever Owner currently pays its
employees for similar work elsewhere in the State of California, or the following:
until December 31, 2017: 150% of the California State minimum wage. Such
wage shall increase on January 1 of each subsequent year at the same rate as the
California State minimum wage increases, or according to the Consumer Price
Index for Los Angeles County, for the quarter ending September 30 of the
preceding year, whichever is higher.
g. Full-time Work. Owner shall make its best efforts to fill every position with
a full-time employee. However, at no time shall Owner have a labor force that is
composed of less than 75% full-time employees. Owner agrees to provide to its
eligible employees leave benefits, health and wellness benefits and other
employee benefits to the extent such benefits are required to be paid for by Owner
under applicable state and federal employment laws.
6. Indemnification of City from Liability
a. Pursuant to City's requirement, Owner will indemnify City from any claims,
damages, injuries, or liabilities of any kind associated with the registration or
operation of Owner's commercial cannabis facility or the prosecution of Owner's
facility or its owners, managers, directors, officers, employees, or its qualified
patients or primary caregivers for violation of federal or state laws.
b. Owner agrees to defend, at its sole expense, any action against City, its
agents, officers, and employees related to the approval or issuance of the
Regulatory Permit and this Agreement.
c. Owner agrees to reimburse City for any court costs and attorney fees that
City may be required to pay as a result of any legal challenge related to City's
approval or issuance of a Regulatory Permit or this Agreement. City may, at its
sole discretion, participate at its own expense in the defense of any such action,
but such participation shall not relieve the holder of the Regulatory Permit or this
Agreement.
7. Fees, Costs. and Future Taxes
a. Fees. Owner agrees to pay all permit fees and charges referenced in
Section 4-34-11 of the municipal code, in the amounts adopted by the City Council
by resolution, as well as any fees set forth in this Agreement. Permit application,
processing, and ienewal fees shall be due and payable at the time application is
made.
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b. Costs. Owner agrees to reimburse City for all additional costs of City
resulting from the operation of a commercial cannabis facility authorized under
Article 4-34 of the municipal code and the administrative regulations.
Reimbursement to City for such costs shall be due and payable upon demand.
c. Operating Fees. Owner agrees to pay to City, to enable City to promote,
protect, and enhance the healthy, safety, and welfare of the community and its
residents and its quality of life, the following fee:
1) an annual fee of two and one-half percent (2.5%) of gross income
from manufacturing activities or the sum of one hundred fifty thousand
dollars ($150,000.00), whichever is higher;
2) an annual fee of one and one-half percent (1.5%) of gross income
from distribution/transportation of product for anyone other than Owner; and
3) an annual fee of two and one-half percent (2.5%) of gross income
from delivery activities.
d. Owner agrees to compensate City for the increased demand on City
services, infrastructure, and utilities; local traffic demands; and increased City
review and oversight by the Los Angeles County Sheriff, planning department, and
code enforcement of the operations of Owner's facility. Owner understands and
agrees the determination of the required per-square-foot fee will consider such
factors as the size, design, layout, operation, and security plan for the facility;
potential adverse effects on the community; and the allocation of City services and
staff time to oversee the operation of the facility.
e. Owner understands and agrees that the fees set forth above shall be paid
in a manner and in accordance with a payment schedule agreed to by City and
Owner, in intervals of no more than three months. Payment shall be in equal
installments paid quarterly commencing at the end of the first quarter after the
effective date of the Regulatory Permit which shall be no sooner than the date a
certificate of occupancy is issued for the subject premises.
8. Cost Recovery Fee
City shall assess to Owner fees to recover City's reasonable processing and
monitoring costs relating to Owner's business upon issuance of Owner's
Manufacturing, Distribution, and Delivery Permits or any Additional Permits
("CRF"). The City shall submit sufficient information to Owner of City's total
number of hours required to process their Application or monitor their
authorizations. CRFs are separate and apart from any fees set forth in Article 7.
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a. Processing Fees. Processing fees for the Application are based upon the
direct and indirect costs that City incurs in reviewing the Application. The
processing fees for the Application shall be based only on costs that are necessary
for processing the Application and implementing the Ordinance, including staff
time, legal fees, and consultant fees. "Necessary for" means that but for the
Application, the costs would not have been incurred. The processing fee shall not
include costs for other City management objectives, unless they are necessary for
processing the Application.
b. Monitoring Fees. Monitoring fees for the Manufacturing, Distribution, and
Delivery Permits are based upon the direct and indirect costs City incurs in
confirming the use of the Property in accordance with the municipal code, the
Ordinance, this Agreement, and the Application. The monitoring fees shall be
based only on costs that are necessary for conducting these reviews. "Necessary
for'' means that but for the Manufacturing, Distribution, and Delivery Permits, or
any Additional Permits, the costs would not have been incurred. The monitoring
fee shall not include costs for other City management objectives, unless they are
necessary for monitoring the Manufacturing, Distribution, and Delivery Permits, or
any Additional Permits.
c. Billing and Payment. City shall bill Owner the CRF on the first day of each
quarter (March, June, September, and December) with an invoice providing an
hourly breakdown of hours expended by City and its representatives. Owner shall
pay the CRF invoice within sixty (60) days of the date the bill for the CRF is
received by Owner. Notwithstanding the foregoing, at no time shall the CRFs
exceed Seven Thousand Dollars ($7,000) during a given year, except that the first
year may be as high as twenty thousand dollars ($20,000) because of the costs
required to set up the application process and review the applications.
d. Disputes. If Owner disagrees with the dollar amount provided by City on
the CRF invoice, Owner may submit a written request before the disputed fee is
due for a substitution of alternative CRF invoice to the immediate supervisor of the
City representative who determined the CRF invoice. The written request must
include supporting documentation. After review of Owner's written request, Owner
and City shall work, in good faith to resolve Owner's written request. The dispute
shall be decided in favor of Owner if City does not respond to the written request
within thirty (30) days of receipt.
9. Additional Owner Obligations
a. Reporting of Gross Receipts from Operations
1) Quarterly Receipts. No later than January 15, 2018, and 15 days
after the last day of each subsequent quarter during the Term hereof, Owner
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shall deliver to City a report (the "Quarterly Report") showing (i) Gross
Receipts from Operations for the immediate prior quarter received by
Owner, and a cumulative total of all amounts of Gross Receipts from
Operations received by Owner for the calendar year, (ii) a calculation of the
quarterly payment due to City for the prior quarter, and (iii) a calculation of
the cumulative total of all quarterly payments for the calendar year.
2) Statement of Receipts. Owner shall keep complete, accurate and
appropriate books and records of all receipts from operations in accordance
with generally accepted accounting principles. For purposes herein, "books
and records" shall mean all bookkeeping or accounting documents Owner
utilizes in managing its business operations relating to the Project. Such
books and records, as well as all other relevant documents as City shall
reasonably require, shall, upon reasonable written notice, be open for
inspection by City, its auditors or other authorized representatives. If at any
time during the term such books and records prove inadequate in the
reasonable judgment of City to record the Gross Receipts from Operations
as herein required, Owner shall, upon the written request of City, procure
and maintain such books and records as shall be of a character and form
adequate for such purpose. City shall have the right to audit and examine
such books, records and documents and other relevant items in the
possession of Owner, but only to the extent necessary for a proper
determination of Gross Receipts from Operations, and all such books,
records, documents and other items shall be held available for such audit
and examination. Upon request by City, Owner shall make all such books,
records and documents available to City, and provide removable copies
thereof, within thirty (30) of the date of City's request. The cost for any audit
shall be shared equally by the Parties. Owner shall preserve such books,
records, documents, and other items in Lynwood for a period of not less
than seven (7) years for the purpose of auditing or re-auditing these
accounts upon reasonable notice; except that, if an audit is made within the
seven-year period and Owner claims that errors or omissions have
occurred, the books and records shall be retained and made available until
those matters are resolved . City shall keep strictly confidential all
statements of revenue and other financial documents furnished by Owner
and all other information concerning Owner's operation of the Premises
obtained by City as a result of the inspection audit and examination
privileges of City hereunder, except as otherwise required by law. If City
receives a request for such information pursuant to the Public Records Act
(California Government Code Section 6250, et seq.), City shall provide
Owner notice of any such request prior to disclosing any such information.
Within seven (7) years after the receipt of any statement of receipts under
this Agreement, City at any time shall be entitled to carry out an audit of
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such revenue either by City or agent to be designated by City. If it shall be
determined as a result of such audit that there has been a deficiency in any
payment due under this Agreement made on the basis of such statement,
then such deficiency shall become immediately due and payable. If such
statement of revenue for the relevant year shall be found to have
understated receipts by more than two percent and City is entitled to any
additional payment as a result of said understatement, then Owner shall, in
addition, pay all of City's reasonable costs and expenses connected with
such audit, including the expense incurred in retaining such agent;
otherwise City shall bear the cost and expense of such audit.
3) Copies of Tax Filings. Owner shall provide City with copies of any
reports Owner is required to provide to the County of Los Angeles or the
State of California for sales, use, or other tax purposes.
b. Applicability of Future Revenue Mechanisms. During the term of this
Agreement, if City imposes an alternative revenue mechanism specifically related
to cannabis operations (e.g., a cannabis tax), Owner agrees to pay to City the
greater of the payment required under such alternative revenue mechanism or the
payment required by this section. As used in this section, "alternative revenue
mechanism" does not include taxes, fees, or assessments levied on or collected
from both cannabis and non-cannabis operations. Payments required by revenue
mechanisms that are not limited to cannabis operations shall be in addition to, and
not in lieu of, payments under this section.
10. Insurance and Indemnity
a. Insurance. Owner shall require all persons doing work on the Project,
including its contractors and subcontractors (collectively, "Owner'' for purposes of
this Article 10 only), to obtain and maintain insurance of the types and in the
amounts described in this section and its subsections with carriers reasonably
satisfactory to City.
b. General Liability Insurance. Owner shall maintain commercial general
liability insurance or equivalent form with a limit of not less than Two Million Dollars
($2,000,000) (or as otherwise approved, in writing, by City) per claim and Two
Million Dollars ($2,000,000) each occurrence. Such insurance shall also:
1) Name City, its elected and appointed councils, boards, commissions,
officers, agents, employees, and representatives as "Additional Insureds"
by endorsement with respect to performance of this Agreement. The
coverage shall contain no special limitations on the scope of its protection
afforded to the above-listed additional insured.
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2) Be primary with respect to any insurance of self-insurance programs
covering City, its officials, employees, agents, and representatives.
3) Contain standard separation of insured provisions.
c. Automotive Liability Insurance. Owner shall maintain business automobile
liability insurance or equivalent form with a limit of not less than Two Million Dollars
($2,000,000) for each accident. Such insurance shall include coverage for owned,
hired, and non-owned automobiles. Such insurance shall also:
1) Name City, its elected and appointed officials, boards, commissions,
officers, agents, employees, and representatives as "Additional Insureds"
by endorsement with respect to performance of this Agreement. The
coverage shall contain no special limitations on the scope of its protection
afforded to the above-listed additional insureds.
2) Be primary with respect to any insurance or self-insurance programs
covering City, its officials, employees, agents, and representatives.
3) Contain standard separation of insured provisions.
d. Workers' Compensation Insurance. Owner shall take out and maintain
during the term of this Agreement, workers' compensation insurance for all of
Owner's employees employed at or on the Project, and in the event any of the
work is subcontracted, Owner shall require any general contractor or subcontractor
similarly to provide workers' compensation insurance for such contractor's or
subcontractor's employees, unless such employees are covered by the protection
afforded by Owner. In case any class of employee engaged in work on the Project
is not protected under any workers' compensation law, Owner shall provide and
shall cause each contractor and subcontractor to provide adequate insurance for
the protection of employees not otherwise protected. Owner hereby indemnifies
City for any damage resulting from failure of Owner, its agents, employees,
contractors, or subcontractors to take out or maintain such insurance. Workers'
compensation insurance with statutory limits and employer's liability insurance with
limits of not less than One Million Dollars ($1 ,000,000) each accident shall be
maintained.
e. Other Insurance Requirements. Owner shall do all the following:
1) Prior to taking any actions under this Agreement, furnish City with
properly executed certificates of insurance that clearly evidenced all
insurance required in this Article, including evidenced that such insurance
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will not be canceled, allowed to expire, or be materially reduced in coverage
without thirty (30) days prior written notice to City.
2) Provide to City, upon request, and within seven (7) calendar days of
said request, certified copies of endorsements and policies, and properly
executed certificates of insurance evidencing the insurance required herein.
3) Replace or require the replacement of certificates, policies and
endorsements for any insurance required herein expiring prior the
termination of this Agreement.
4) Maintain all insurance required herein from the Effective Date of this
Agreement to the earlier of the expiration of the term or the mutual written
termination of this Agreement.
5) Place all insurance required herein with insurers licensed to do
business in California with a current Best's Key Rating Guide reasonably
acceptable to City.
f. Indemnity. Owner agrees to indemnify, defend, and hold City, and its
elected and appointed council, boards, commissions, officers, agents, employees,
consultants, and representatives, harmless from any and all claims costs and
liability for any personal injury or property damage which may arise as a result of
any actions or negligent omissions by Owner or Owner's contractors,
subcontractors, agents, or employees in connection with the construction,
improvement, or operation of the Project.
11. Termination
a. Termination Upon Completion of Development. This Agreement shall
terminate upon the expiration of the term, unless it is terminated earlier pursuant
to the terms of this Agreement. Upon termination of this Agreement, City shall
record a notice of such termination, and this Agreement shall be of no further force
or effect except as otherwise set forth in this Agreement.
b. Effect of Termination on Owner's Obligations. Termination of this
Agreement shall eliminate any further obligation of Owner to comply with this
Agreement, or some portion thereof, if such termination relates to only part of the
Site or Project. Termination of this Agreement, in whole or in part, shall not,
however, eliminate the rights of Owner to seek any applicable and available
remedies or damages based upon acts or omissions occurring before termination.
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c. Effect of Termination on City's Obligations. Termination of this Agreement
shall eliminate any further obligation of City to comply with this Agreement, or some
portion thereof. Termination of this Agreement shall not, however, eliminate the
rights of City to seek any applicable and available remedies or damages based
upon acts or omissions occurring before termination.
d. Survival After Termination. The rights and obligations of the Parties set
forth in Article 14, Article 21, and Section 24(e), Section 24(f), and Section 24(h),
and any right or obligation of the Parties in this Agreement which, by its express
terms or nature and context is intended to survive termination of this Agreement,
will survive any such termination.
12. Resources Efficiency
The design of the facility shall include significant water and energy conservation
measures to minimize resource consumption. The design shall incorporate solar, wind,
high efficiency lighting, and water recycling systems and technology to the extent feasible.
High efficiency LED lighting systems for the exterior lighting will be used. Storm water
shall be collected and recycled to the extent feasible.
13. Standard Conditions for Construction
During any on-site construction activities related to development of the project site and
any buildings thereon, or renovation or remodeling of existing buildings, Owner and
Landlord shall comply with all applicable terms and conditions of City's Standard
Conditions for Construction. Beginning on the date a Certificate of Occupancy is issued
for the Project, or when operations begin, whichever is earlier, the Project shall comply
with the applicable parking standards established by the City for cannabis activities.
14. Defaults and Remedies
a. Remedies in general. It is acknowledged by the parties that City would not
have entered into this Agreement if it were to be liable in damages under this
Agreement, or with respect to this Agreement or the application thereof, except as
hereinafter expressly provided. Subject to extensions of time by mutual consent
in writing, failure to delay by either party to perform any term or provision of this
Agreement shall constitute a default. In the event of alleged default or breach of
any terms or conditions of this Agreement, the party alleging such default or breach
shall give the other party not less than thirty (30) day notice in writing specifying
the nature of the alleged default and the manner in which said default may be
satisfactorily cured during any such thirty (30) day period, the party charged shall
not be considered in default for purposes of termination or institution of legal
proceedings. Notwithstanding the foregoing to the contrary, if the alleged default
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is of such a nature that it cannot be cured within thirty (30) days, the alleged
defaulting party shall not be deemed in default as long as such party commences
to cure such default within such thirty (30) day period and thereafter diligently
prosecutes such cure to completion.
After notice and expiration of the thirty (30) day period, the other party to this
Agreement, at its option, may institute legal proceedings pursuant to this
Agreement.
In general, each of the parties hereto may pursue any remedy at law or equity
available for the breach of any provision of this Agreement, except that City shall
not be liable in monetary damages, unless expressly provided for this Agreement,
to Owner, to any mortgagee or lender, or to any successors in interest of Owner
or mortgagee or lender, or to any other person, and Owner covenants on behalf of
itself and all successors in interest to the Property or any portion thereof, not to
sue for damages or claim any damages.
1) For any breach of this Agreement or for any cause of action which
arises out of this Agreement; or
2) For the impairment or restriction of any right or interest conveyed or
provided under, with, or pursuant to this Agreement, including, without
limitation, any impairment or restriction which Owner characterizes as a
regulatory taking or inverse condemnation; or
3) Arising out of or connected with any dispute, controversy or issue
regarding the application or interpretation or effect of the provisions of this
Agreement.
Nothing contained herein shall modify or abridge Owner's rights or remedies
(including its rights for damages, if any) resulting from the exercise by City of its
power of eminent domain. Nothing contained herein shall modify or abridge
Owner's rights or remedies (including its rights for damages, if any) resulting from
the grossly negligent or malicious acts of City and its officials, officers, agents and
employees. Nothing herein shall modify or abridge any defenses or immunities
available to City and its employees pursuant to the Government Liability Act and
all other applicable statutes and decisional law.
Except as set forth in the preceding paragraph relating to eminent domain, Owner's
remedies shall be limited to those set forth in this Section 14(a), Section 14(b), and
Section 14( c).
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Notwithstanding anything to the contrary contained herein, City covenants as
provided in Civil Code Section 3300 not to sue for or claim any consequential
damages or, in the event all or a portion of the Property is not developed, for lost
profits or revenues which would have accrued to City as a result of the
development of the Property.
b. Specific Performance. The parties acknowledge that money damages and
remedies at law are inadequate, and specific performance and other non-monetary
relief are particularly appropriate remedies for the enforcement of this Agreement
and should be available to all parties for the following reasons:
1) Except as provided in Sections 14(a) and 14(e), money damages are
unavailable against City as provided in Section 14(a) above.
2) Due to the size , nature and scope of the Project, it may not be
practical or possible to restore the Property to its natural condition once
implementation of this Agreement has begun. After such implementation,
Owner may be foreclosed from other choices it may have had to use the
Property or portions thereof. Owner has invested significant time and
resources and performed extensive planning and processing of the Project
in agreeing to the terms of this Agreement and will be investing even more
significant time and resources in implementing the Project in reliance upon
the terms of this Agreement, and it is not possible to determine the sum of
money which would adequately compensate Owner for such efforts; the
parties acknowledge and agree that any injunctive relief may be ordered on
an expedited, priority basis.
c. Release. Except for those remedies set forth in Sections 14(a), 14(b), and
14(c), Owner, for itself, its successors and assignees, hereby releases City, its
officers, agents and employees from any and all claims, demands, actions, or suits
of any kind or nature arising out of any liability, known or unknown, present or
future, based or asserted, pursuant to Article 1, Section 19 of the California
Constitution, the Fifth Amendment of the United States Constitution, or any other
law or ordinance which seeks to impose any other liability or damage, whatsoever,
upon City because it entered into this Agreement or because of the terms of this
Agreement.
Owner acknowledges that it may have suffered, or may suffer, damages and other
injuries that are unknown to it, or unknowable to it, at the time of its execution of
this Agreement. Such fact notwithstanding, Owner agrees that the release
provided in this Section 14(c) shall apply to such unknown or unknowable claims
and damages. Without limiting the generality of the foregoing, Owner
acknowledges the provisions of Ca lifornia Civil Code Section 1542, which provide:
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"A general release does not extend to claims which the creditor does
not know or suspect to exist in his or her favor at the time of executing
the release, which if known by him or her must have materially
affected his or her settlement with the debtor."
Owner hereby waives, to the maximum legal extent, the provisions of California
Civil Code Section 1542 and all other statutes and judicial decisions of similar
effect.
Initials
d. Termination of Agreement for Default of City. Owner may terminate this
Agreement only in the event of a default by City in the performance of a material
term of this Agreement and only after providing written notice to City of default
setting forth the nature of the default and the actions, if any, required by City to
cure such default and, where the default can be cured, City has failed to take such
actions and cure such default within sixty (60) days after the effective date of such
notice or, in the event that such default cannot be cured within such sixty (60) day
period but can be cured within a longer time, has failed to commence the actions
necessary to cure such default within such sixty (60) day period and to diligently
proceed to complete such actions and cure such default.
e. Attorneys' Fees and Costs. In any action or proceeding between City and
Owner brought to interpret or enforce this Agreement, or which in any way arises
out of the existence of this Agreement or is based upon any term or provision
contained herein, the "prevailing party" in such action or proceeding shall be
entitled to recover from the non-prevailing party, in addition to all other relief to
which the prevailing party may be entitled pursuant to this Agreement, the
prevailing party's reasonable attorneys' fees and litigation costs, in an amount to
be determined by the court. The prevailing party shall be determined by the court
in accordance with California Code of Civil Procedure Section 1032. Fees and
costs recoverable pursuant to this Section 14(e) include those incurred during any
appeal from an underlying judgment and in the enforcement of any judgment
rendered in any such action or proceeding.
f. Owner Default. No building permit shall be issued or building permit
application accepted for any structure on the Property after Owner is determined
by City to be in default of the terms and conditions of this Agreement until such
default thereafter is cured by Owner or is waived by City. If City terminates this
Agreement because of Owner's default, then City shall retain any and all benefits,
including money or land received by City hereunder.
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15. Third Party Litigation
a. General Plan Litigation. City has determined that this Agreement is
consistent with its General Plan. Owner has reviewed the General Plan and
concurs with City's determination.
City shall have no liability under this Agreement or otherwise for any failure of City
to perform under this Agreement, or for the inability of Owner to develop the
Property as contemplated by the Development Plan, which failure to perform or
inability to develop is as the result of a judicial determination that the General Plan,
or portions thereof, are invalid or inadequate or not in compliance with law, or that
this Agreement or any of City's actions in adopting it were invalid, inadequate, or
no in compliance with the law.
b. Hold Harmless Agreement. Owner hereby agrees to, and shall hold City,
its elective and appointive boards, commissions, officers, agents, and employees
harmless from any liability for damage or claims for damage for personal injury,
including death, as well as from claims for property damage which may arise from
Owner or Owner's contractors, subcontractors, agents, or employees' operations
under this Agreement, whether such operations be by Owner, or by any of Owner's
contractors, subcontractors, agents, or employees operations under this
Agreement, whether such operations be by Owner, or by any of Owner's
contractors, subcontractors, or by any one or more persons directly or indirectly
employed by, or acting as agent for Owner or any of Owner's contractors or
subcontractors. Owner agrees to and shall defend City and its elective and
appointive boards, commissions, officers, agents and employees from any suits or
actions at law or in equity for damage caused, or alleged to have been caused, by
reason of any of the aforesaid operations.
c. Indemnification. Owner shall defend, indemnify, and hold harmless City and
its agents, officers, and employees against and from any and all liabilities,
demands, claims, actions or proceedings and costs and expenses incidental
thereto (including costs of defense, settlement and reasonable attorneys' fees),
which any or all of them may suffer, incur, be responsible for or pay out as a result
of or in connection with any challenge to the legality, validity or adequacy of any of
the following: (i) this Agreement and the concurrent and subsequent permits,
licenses and entitlements approved for the Project or Property; (ii) the
environmental impact report, mitigated negative declaration or negative
declaration, as the case may be, prepared in connection with the development of
the Property; (iii) any claims based on or alleging inverse condemnation by any
person or entity with an interest in the Property; and (iv) the proceedings
undertaken in connection with the adoption or approval of any of the above. In the
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event of any legal or equitable action or other proceeding instituted by any third
party (including a governmental entity or official) challenging the validity of any
provision of this Agreement or any portion thereof as set forth herein, the parties
shall mutually cooperate with each other in defense of said action or proceeding.
Notwithstanding the above, City, at is sole option, may tender the complete
defense of any third-party challenge as described herein. In the event City elects
to contract with special counsel to provide for such a defense, City shall meet and
confer with Owner regarding the selection of counsel, and Owner shall pay all costs
related to retention of such counsel.
d. Environmental Contamination. Owner shall indemnify and hold City, its
officers, agents, and employees free and harmless from any liability, based or
asserted, upon any act or omission of Owner, its officers, agents, employees,
subcontractors, predecessors in interest, successors, assigns and independent
contractors, excepting and acts or omissions of City as successor to any portions
of the Property dedicated or transferred to City by Owner, for any violation of any
federal, state or local law, ordinance or regulation relating to industrial hygiene or
to environmental conditions on, under or about the Property, including, but not
limited to, soil and groundwater conditions, and Owner shall defend, at its expense,
including attorneys' fees, City, its officers, agents and employees in any action
based or asserted upon any such alleged act or omission. City may in its discretion
participate in the defense of any such claim, action or proceeding.
The provisions of this Section 15(d) do not apply to environmental conditions that
predate Owner's ownership or control of the Property or applicable portion;
provided, however, that the foregoing limitation shall not operate to bar, limit or
modify any of Owner's statutory or equitable obligations as an owner or seller of
the Property.
e. City to Approve Counsel. With respect to Sections 15(a) through 15(d), City
reserves the right to approve the attorney(s) which Owner selects, hires or
otherwise engages to defend City hereunder, which approval shall not be
unreasonably withheld .
f. Accept Reasonable Good Faith Settlement. With respect to this Article 15,
City shall not reject any reasonable good faith settlement. If City does reject a
reasonable, good faith settlement that is acceptable to Owner, Owner may enter
into a settlement of the action, as it relates to Owner, and City shall thereafter
defend such action (including appeals) at its own cost and be solely responsible
for any judgment rendered in connection with such action. This Section 15(f)
applies exclusively to settlements pertaining to monetary damages Oi damages
which are remedial by the payment of monetary compensation. Owner and City
expressly agree that this Section 15(f) does not apply to any settlement that
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requires an exercise of City's police powers, limits City's exercise of its police
powers, or affects the conduct of City's municipal operations.
g. Survival. The provisions of Sections 15(a) through 15(f) inclusive, shall
survive the termination or expiration of the Agreement.
16. Ca lifornia Environmental Quality Act
Owner and the City are of the belief that the Project is exempt from the California
Environmental Quality Act ("CEQA"), however Owner shall reimburse City for any and all
costs incurred by City related to project review under CEQA as required, Public
Resources Code , §§21000-21189.3, and the Guidelines for California Environmental
Quality Act, California Code of Regulations, Title 14, §§15000-15387. If requested by
City, Owner shall conduct and pay for any required CEQA reviews and analyses. The City
has found that the proposed Project is Categorically Exempt from California
Environmental Quality Act (CEQA) requirements under provisions of CEQA Guidelines
Section 15332 -In-Fill Development Projects. This exemption applies to projects
characterized as in-fill development meeting the conditions described in Section 15332.
17. Rules. Regulations. and Official Policies
Except as otherwise provided in this Agreement, the rules, regulations, and official
policies of City governing permitted uses of the land, governing density, and governing
the design, improvements, and construction standards and specifications applicable to
the development of the Project subject of this Agreement, shall be those rules,
regulations, and official policies of City in force at the time of the execution of this
Agreement. This Agreement does not prevent City, in subsequent actions applicable to
the property, from applying new rules, regulations, and policies which do not conflict with
those rules, regulations, and policies applicable to the property as set forth herein, nor
does this Agreement prevent City from denying or conditionally approving any
subsequent development project application based on such existing or new rules,
regulations, or policies.
18. Regulatory Permit Conditions of Approval
Owner shall comply with all conditions of approval of the Regulatory Permit approved by
City Council.
19. Periodic Reviews
This Agreement shall be subject to annual review. Owner and Landlord executing this
Agreement, or successor in interest thereto, shall demonstrate good faith compliance with
the terms of this Agreement. If, as a result of such periodic review, City finds and
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determines, based on substantial evidence, that Owner or Landlord executing this
Agreement, or successor in interest thereto, has not complied in good faith with the terms
or conditions of this Agreement, City may terminate or modify this Agreement.
a. Periodic Review. City Council shall review this Agreement annually, on or
before each anniversary of the Effective Date, in order to ascertain Owner's good
faith compliance with this Agreement. During the periodic review Owner shall be
required to demonstrate good faith compliance with the terms of the Agreement,
through submitting an annual monitoring report, records, or equivalent written
materials to the Planning Department. The Planning Department will schedule a
hearing on the periodic review of the Development Agreement on or following the
anniversary of the Effective Date, but Owner has no obligation to compel such
hearing, and no implication will be made to Owner's detriment if a hearing is not in
fact held. Owner shall document any request for an extension of the term due to
delays beyond the control of Owner (see Section 24U), "Force Majeure"). Owner
shall submit an annual review and administration fee deposit not to exceed City's
estimated internal and third-party costs associated with the review and
administration of this Agreement during the succeeding year, consistent with
Section 24(k) ("Costs and Fees") below. City shall provide Owner said estimate a
reasonable time in advance of the annual review and administration fee deposit
being due.
b. Conditional Use Permit. For all intents and purposes, the Regulatory Permit
to be issued under this Agreement shall be treated as if it were a Conditional Use
Permit issued to Owner for the establishment and operation of its business. The
operation of the business at all times shall be required to comply with the terms of
this Agreement.
c. Special Review. City Council may order a special review of compliance with
this Agreement at any time. The Planning Director or his or her designee shall
conduct such special review. During a special review, Owner shall be required to
demonstrate good faith compliance with the terms of the Agreement. The burden
of proof on this issue shall be on Owner.
d. Review Hearing. At the time and place set for the review hearing, Owner
shall be given an opportunity to be heard. If City Council finds, based upon
substantial evidence, that Owner has not complied in good faith with the terms or
conditions of this Agreement, City Council may terminate this Agreement
notwithstanding any other provision of this Agreement to the contrary, or modify
this Agreement and impose such conditions as are reasonably necessary to
protect the interests of City. The decision of City Council shall be final, subject
only to judicial review pursuant to Code of Civil Procedure Section 1094.5.
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e. Certificate of Agreement Compliance. If, after a periodic or special review,
Owner is found to be in compliance with this Agreement, and if Owner requests it,
City shall issue a Certificate of Agreement Compliance ("Certificate") to Owner
stating that after the most recent periodic or special review, and based upon the
information known or made known to the Planning Director and City Council, that
(i) this Agreement remains in effect and (ii) Owner is not in default.
City shall not be bound by a Certificate if a default existed at the time of the periodic
or special review, but was concealed from or otherwise not known to the Planning
Director and City Council, regardless of whether the Certificate is relied upon by
assignees or other transferees or Owner.
f. Failure to Conduct Review. City's failure to conduct a periodic review of this
Agreement shall not constitute a breach of this Agreement.
g. Cost of Review. The costs incurred by City in connection with the periodic
reviews shall be borne by Owner.
20. Obligations of Landlord
Landlord shall have rights, duties, obligations, and liability only as expressly set forth
herein. Landlord shall have no responsibility or liability for the failure of Owner to perform
as required by this Agreement.
21. Assignment
a. Assignment by Landlord. Landlord shall not transfer, delegate, or assign its
interest, rights, duties, and obligations under this Agreement, without the prior
written consent of City.
b. Assignment by Owner. Owner shall not transfer, delegate, or assign its
interest, rights, duties, and obligations under this Agreement without the prior
written consent of City. Any assignment, delegation, or assignment without the
prior written consent of City shall be null and void. Any transfer, delegation, or
assignment by Owner as authorized herein shall be effective only if and upon the
party to whom such transfer, delegation, or assignment is made is issued a
Regulatory Permit as required under Article 4-34 of the municipal code.
22. Operating Commercial Cannabis Facility
Any party to this Agreement, or successor in interest thereto, shall not operate a
commercial cannabis facility authorized under the municipal code unless:
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a. It is the holder of a valid Regulatory Permit issued by City in accordance
with the procedures and requirements of Article 4-34 of the municipal code; and
b. At such time as the State of California requires commercial cannabis
facilities and businesses to hold a valid license or permit issued by the State of
California, it also holds such license or permit, unless, however, such permit or
license is not required by the State of California for the type of commercial
cannabis facility or business operation that is the subject of this Agreement.
23. Notice
Any notice or communication required hereunder between City and Owner must be in
writing, and may be given either personally, by facsimile (with original forwarded by
regular U.S. Mail), by registered or certified mail (return receipt requested), or by Federal
Express, UPS or other similar couriers providing overnight delivery. If personally
delivered, a notice shall be deemed to have been given when delivered to the Party to
whom it is addressed. If given by facsimile transmission, a notice or communication shall
be deemed to have been given and received upon actual physical receipt of the entire
document by the receiving Party's facsimile machine. Notices transmitted by facsimile
after 5:00p.m. on a normal business day or on a Saturday, Sunday, or holiday shall be
deemed to have been given and received on the next normal business day. If given by
registered or certified mail, such notice or communication shall be deemed to have been
given and received on the first to occur of (i) actual receipt by any of the addressees
designated below as the party to whom notices are to be sent, or (ii) five (5) days after a
registered or certified letter containing such notice, properly addressed, with postage
prepaid, is deposited in the United States mail. If given by Federal Express or similar
courier, a notice or communication shall be deemed to have been given and received on
the date delivered, as shown on a receipt issued by the courier. Any Party hereto may at
any time, by giving ten (1 0) days written notice to the other Party hereto, designate any
other address in substitution of the address to which such notice or communication shall
be given. Such notices or communications shall be given to the Parties at their addresses
set forth below:
If to City:
and
City of Lynwood
11330 Bullis Road
Lynwood, California 90262
Attention: City Manager
H. Francisco Leal, Esq.
Leal Trejo, APC
3767 Worsham Avenue
Long Beach, California 90808
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If to Owner:
If to Landlord:
24 . Miscellaneous Provisions
Magnolia Extracts LLC
11118 Wright Road
Lynwood, California 90262
Anton Goss
11118 Wright Road
Lynwood, California 90262
a. Regulatory Permit Conditions of Approval. Owner shall comply with all
conditions of approval of the Regulatory Permit approved by the City Council.
b. Amendment or Cancellation. This Agreement may be amended, or
canceled in whole or in part, only by the written mutual consent of the parties to
this Agreement or their successors in interest, except that minor amendments that
do not affect a substantive provision of this Agreement may be approved by the
City Manager. The decision whether a proposed amendment is "minor'' shall be in
the exclusive discretion of the City Manager.
c. Waiver. Waiver by City of any one or more of the terms or conditions of this
Agreement shall not be construed as waiver of any other term or condition under
this Agreement.
d. Enforcement. Unless amended or canceled pursuant hereto, this
Agreement shall be enforceable by any party hereto, or successor in interest
thereto, notwithstanding any subsequent change in any applicable general or
specific plan, zoning, subdivision or building regulation, or municipal code
amendment adopted by City that conflicts with the terms of this Agreement.
e. Joint and Several Liability. Owner and Landlord shall be jointly and
severally liable for any amount due under this Agreement, and any breach of this
Agreement or failure to pay by one Party shall also constitute a breach of this
Agreement by the other Party. Owner and Landlord agree that City may impose a
lien and seek foreclosure on any parcel of the Site due to any default by Owner.
f. Severability. If any part of this Agreement is found to conflict with applicable
state laws or regulations, such part shall be inoperative, null, and void insofar as it
conflicts with said laws or regulations, or modified or suspended as may be
necessary to comply with such state laws or regulations, but the remainder of this
Agreement shall continue to be in full force and effect.
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g. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which together
shall constitute one and the same instrument. The execution of this Agreement
may be by actual, facsimile, or electronic signature.
h. Jurisdiction and Arbitration. The law governing this Agreement shall be that
of the State of California. Any suit brought by any party against any other party
arising out of the performance of this Agreement shall be filed and maintained in
the County of Los Angeles Superior Court. Any dispute, claim or controversy
arising out of or relating to this Agreement or the breach, termination, enforcement,
interpretation or validity thereof, including the determination of the scope or
applicability of this Agreement to arbitrate, shall be determined by binding
arbitration in Los Angeles, California before one arbitrator. Said arbitrator shall be
chosen by mutual agreement of the Parties. If the Parties cannot agree on an
arbitrator within 30 days of the first notice by either Party of the need for arbitration,
each Party shall name one arbitrator, then the two arbitrators shall choose the
arbitrator who shall hear the case.
i. Disclaimer. Despite California's commercial cannabis laws and the terms
and conditions of this Agreement, any Conditional Use Permit, or any Regulatory
Permit issued pertaining to Owner or the property specified herein, California
commercial cannabis cultivators, transporters, distributors, or possessors may still
be subject to arrest by state or federal officers and prosecuted under state or
federal law. The Federal Controlled Substances Act, 21 USC§ 801, prohibits the
manufacture, distribution, and possession of cannabis without any exemptions for
medical use.
j. Force Majeure. If delays are caused by unforeseen events beyond the
control of Owner, such delays will entitle Owner to an extension of time as provided
in this section. Such unforeseen events ("Force Majeure") shall mean war,
insurrection, acts of God, local, state or national emergencies, strikes and other
labor difficulties beyond the party's control, or any default by City hereunder, which
Force Majeure event substantially interferes with the development or construction
of the Project.
k. Costs and Fees. Owner shall be responsible for all of the reasonable and
fixed costs associated the Project, including but not limited to costs associated with
City's review and processing of the Project, including but not limited to reviewing
the Project's entitlements, including all environmental clearance documents,
permits, licenses and all documents evidencing compliance with state and local
iaw, and as such Owner agrees to reimburse City and pay any costs and fees
associated with processing the Project, as detailed in this Agreement.
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I. Constructive Notice and Acceptance. Every person who after the Effective
Date and recording of this Agreement owns or acquires any right, title, or interest
to any portion of the Site, is and shall be conclusively deemed to have consented
and agreed to every provision contained herein, whether or not any reference to
this Agreement is contained in the instrument by which such person acquired an
interest in the Site, and all rights and interests of such person in the Site shall be
subject to the terms, requirements, and provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
CITY OF LYNWOOD
Alma K. Martinez
City Manager
Date: _______ _
APPROVED AS TO FORM:
MAGNOLIA EXTRACTS LLC
Michael Lum
Managing Partner
Date: _______ _
LANDLORD
Anton Goss
Date: _______ _
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