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HomeMy WebLinkAbout07102 - CAPS COLLECTIVE APOTHECARY, INC/ SETTLEMENT AGREEMENT SETTLEMENT AGREEMENT This Settlement Agreement (the "Agreement") is entered into February?, 20l 8, by and between the City of Palm Springs,a California charter city and municipal corporation(the"City") and CAPS Collective Apothecary,Inc.,a California non-profit corporation("CAPS"). The parties hereto agree that it is in their best interest and the City believes that it is in the public interest to voluntarily compromise and settle the following matters: RECITALS A. WHEREAS,CAPS is a medical marijuana collective doing business under a permit issued by the City pursuant to Palm Springs Municipal Code ("PSMC") Chapter 5.35 as CAPS Collective Apothecary Prescription Service at 4050 Airport Center Drive, Suite D,Palm Springs, California. B. WHEREAS, in recent years, the City conducted three (3) cannabis and marijuana tax audits pursuant to Palm Springs Municipal Code Chapter 3.35 and imposed the following assessments against CAPS: 1. The first audit for the examination period of January 1, 2014 through June 30,2014,resulted in an assessment of$141,263.00; 2. The second audit for the examination period of July 1,2014 through June 30, 2015,resulted in an assessment of$10,298.00; and 3. The third audit for the examination period of July 1, 2015 through June 30, 2016,resulted in an assessment of$12,958.00. C. WHEREAS, on September 26, 2017, CAPS made the following payments to the City: l. $10,298.00 toward the second audit;and 2. $12,958.00 toward the third audit. D. WHEREAS, CAPS is planning to relocate its operations to 690 Garnet Avenue, Palm Springs, California (the "Garnet Location") and has filed an application with the City pertaining to that relocation and CAPS' desire to secure a permit,identified and doing business as a new for-profit corporation designated CAPS Apothecary, Inc., and owned by the same natural persons who own CAPS (the "New Entity"), for commercial medical and adult-use cannabis business and activity,pursuant to PSMC Chapters 5.45 and 5.55 at the Garnet Location. E. WHEREAS,the parties wish to settle once and for all and for all times, any and all disputes and claims between them,including,without limitation,the matters alleged in the Reports of Examination for the three audits, any and all claims now existing and arising out of and/or relating to CAPS and any alleged tax deficiency during the three (3) audit periods, as reflected above in Recital B (collectively,the"Settled Claims"). I NOW,THEREFORE,in consideration of the terms,conditions,and promises set forth herein, the Parties agree as follows: AGREEMENT 1. Payment by CAPS: As consideration for promises made by the City herein, CAPS agrees to pay to the City the gross sum of Eighty Thousand Dollars ($80,000.00) pursuant to the following payment schedule: a. One payment of Thirty-Two Thousand Dollars ($32,000.00)at or before the close of business on February 8,2018(the"Lump Sum Payment"),or ten(10) days after the full execution of this Agreement,whichever is later; b. Twelve (12) monthly payments of Four Thousand Dollars ($4,000.00), with the first payment due at or before the close of business on March 1,2018,and each subsequently payment due on the first business day of each consecutive month,with the final payment due on February 1,2019(in the aggregate,the "Tax Payments"). CAPS understands and agrees that for purposes of this Agreement,Friday is not a business day. 2. Good Standing: The City agrees that the terms,conditions and promises set forth in this Agreement shall constitute the entire consideration due to the City in full and complete satisfaction of the Settled Claims and restore CAPS' "good standing" status with respect to permitted operations as a collective at CAPS' existing location on Airport Center Drive("Current Operations"). With the condition precedent that all monthly installment payments under this Agreement be made timely,the City agrees to confirm that CAPS is in good standing with respect to Current Operations upon any inquiry by the State of California in connection with a state license or permit application for CAPS' Current Operations. 3. Sc:oM of Settlement: The parties understand and agree that this Agreement pertains exclusively to Current Operations by CAPS, and has no legal or factual bearing whatsoever with respect to the City's evaluation or processing of any permit or other City approval for the New Entity, at the Garnet Location or in any other location. 4. City Release. Asa material inducement to CAPS entering into this Agreement, and contingent on the full execution and performance of this Agreement,and the Lump Sum Payment and all forthcoming Tax Payments being made timely by CAPS or the New Entity, the City,on behalf of itself and on behalf of each of its past, present, and future officials, employees, and all persons acting under, in concert with and/or for them or any of them (collectively, the "City Releasers"), hereby irrevocably, fully, and unconditionally release, acquit and forever discharge CAPS and each of CAPS' past, present, and future, agents, representatives, predecessors, successors, assignees, transferees,heirs,descendants,dependents,attorneys,and all persons acting by,through,under and/or in concert with them,or any of them (collectively, the " CAPS Releasees"), from any and all claims, charges, complaints, liabilities, obligations, promises, agreements, controversies, damages, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys' fees and costs actually incurred)of any nature whatsoever,known or unknown,suspected or unsuspected, 2 which the City Releasers now have, own or hold, or claim to have, own or hold, or which the City Releasers at any time previously had, owned or held, or claimed to have, own or hold, against the CAPS Releasees,including,without limitation,the Settled Claims. 5. New Entity to Be Bound,No Release of Obligations under This Agreement. CAPS warrants and covenants that the New Entity is owned and operated by the same natural persons as CAPS, and that CAPS' officers and directors, in approving and authorizing the execution of this Agreement,are fully authorized to bind the New Entity to perform as to all terms and conditions of this Agreement, including without limitation the duty to make the Lump Sum Payment and the subsequent Tax Payments.Farther,the parties understand,intend and agree that the New Entity shall be jointly and severally liable as to all CAPS' duties and liabilities hereunder, including without limitation the duty to make payment of the Lump Sum Payment and all Tax Payments. Notwithstanding the provisions set forth in Paragraph 4 above, nothing set forth in this Agreement shall release or be deemed to release the obligations of the parties set forth in this Agreement. 6. No Admission of Liability or Wrongdoing. This Agreement and the negotiations and discussions leading up to this Agreement effect the settlement of claims which are denied and contested,and do not constitute,nor shall they be construed as,an admission of liability by the parties. This Agreement is made solely for the purpose of avoiding the burden and expense of litigation,which would be imposed on the parties if the disputes between them remained unsettled. This Agreement does not constitute an admission by any of the parties hereto that they have engaged in any unlawful act. Each of the parties hereto expressly deny that they have engaged in any unlawful act and deny liability for all claims any other party had,has,or may have against them. 7. Representations and Warranties. Each of the parties hereto represents and warrants as follows: a. Such party has reviewed and revised this Agreement and has had the opportunity to have such party's legal counsel review and revise this Agreement. The rule of construction that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or of any amendments or exhibits to this Agreement. b. Such party has received independent legal advice from its attorneys with respect to the advisability of making the settlement provided for in this Agreement and with respect to the advisability of executing this Agreement. C. No other party (nor any director, officer, employee, agent, representative, insurer or attorney of or for any other party)has made any statement or representation to such party regarding any fact relied upon in entering into this Agreement,and such party does not rely upon any statement, representation or promise of any other party (or of any director, officer,employee,agent, representative,insurer or attorney of or for any other party)in executing this Agreement or in making the settlement provided for in this Agreement,except as expressly set forth in this Agreement. d. Such party has read this Agreement and understands the contents of this Agreement. 3 e. Such party has not heretofore assigned,transferred or granted,or purported to assign,transfer or grant, any of the claims, demands or cause or causes of action disposed of by this Agreement. f. Each term of this Agreement, including those set forth in the section entitled "Recitals," is contractual and not merely a recital. 8. Miscellaneous Provisions. a_ Successors. This Agreement shall be binding on and shall inure to the benefit of the heirs,executors,administrators,successors and assigns of the parties hereto. b. Notices. All notices, demands, consents or requests that may be or are required to be given from any party to another party shall be in writing. Notice may be effected either by personal delivery or by registered or certified mail, postage paid,return receipt requested. Notices shall be given to the parties at the addresses appearing below, and each party may change its address by giving written notice in accordance with the provisions of this Paragraph. Notices shall be deemed given and effective as of the date of delivery. To the City: City of Palm Springs 3200 F. Tahquitz Canyon Way Palm Springs, CA 92262 With a copy to: Edward Z. Kotkin City Attorney's Office 3200 E. Tahquitz Canyon Way Palm Springs, CA 92262 To CAPS: CAPS Collective Apothecary, Inc. 4050 Airport Center Drive, Suite D Palm Springs, CA 92264 With a copy to: Natalie T.Nguyen, Esq. Nguyen Law Corporation 11440 West Bernardo Court, Suite 210 San Diego,CA 92127 C. Invalid Provisions. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, such provision shall be fully severable, and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Agreement. The remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement. d. Amendments. This Agreement may be amended at any time and from time to time,in whole or in part,only by an instrument in writing executed by the parties hereto. Any attempt 4 at oral modification or written modification, except as specifically set forth herein, shall be void ab initio and shall not be construed as, nor shall it be, modification of this Agreement. e. Future Assurances. The parties hereto shall do all things and take all action as may be reasonably necessary to carry out the purposes of this Agreement. f. Venue and Jurisdiction. For purposes of venue and jurisdiction. this Agreement shall be deemed made and to be performed in the City of Palm Springs, California. g. Governing Law. This Agreement shall be construed and interpreted in accordance with, and governed by,the laws of the State of California without regard to principles of conflicts of law. h. Entire Agreement. This Agreement contains the entire agreement between the parties hereto concerning the subject matter of this Agreement. i. 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. Furthennore, signatures delivered via facsimile or electronic transmission shall have the same force,validity and effect as the originals thereof. j. Acknowledgment. The parties hereto acknowledge that they have read and understand this Agreement and have received copies thereof. IN WITNESS WHEREOF,the parties have executed this Agreement effective as of the date first set forth above at San Diego, California. CITY OF PALM SPRINGS By: David H. Ready Its City Manager APPROVED AS TO FORM: CA ECTIVE APOTHECARY. INC. Edward Z. Kotkin By: Jacov Malul Its President City Attomey G jkppRqvTm gy CRY COUNCIL tST. �l 10 '2i1 Clerk S Cindy Berardi From: Tonya Nelson Sent: Wednesday, February 7, 2018 1:16 PM To: Cindy Berardi Subject: RE: Settlement Agr. With CAPS Hi Cindy the date is December 13, 2017. 7hx 7. Nehson E.,t. 8219 From: Cindy Berardi Sent: Wednesday, February 7, 2018 1:10 PM To:Tonya Nelson <Tonya.Nelson @pa lmspringsca.gov> Subject: Settlement Agr. With CAPS Hi Tonya, Eddie will be asking you to locate the date the Council gave direction to settle the above matter. When you have it, can you please reply to this email with it,that way I won't need a memo?Thank you. Cynthia A. Berardi, CIVIC Chief Deputy City Clerk City of Palm Springs P. O. Box 2743 Palm Springs, CA 92263 (760) 323-8204 i