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HomeMy WebLinkAboutE-11 Staff Report - Authorize Water Supply Assignment Agreement IBY to IBY Property OwnerMolson Coors Rate Adjustment July 20, 2020 Page 1 CONSENT ITEM E-11 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL VIA: SERGIO GONZALEZ, CITY MANAGER FROM: MANNY ROBLEDO, DIRECTOR OF UTILITIES DATE: DECEMBER 21, 2020 SUBJECT: CONSENT FOR ASSIGNEMENT OF WATER SUPPLY AGREEMENT TO IBY PROPERTY OWNER LLC BACKGROUND: The City has an agreement with IBY, LLC (“IBY”), a wholly owned subsidiary of Pabst Brewing Company (“Pabst”) to supply water (“Agreement”) to the brewery located in the City of Irwindale (“Brewery”). As part of a corporate reorganization, IBY has requested to assign the Agreement to IBY Property Owner, LLC, which is also a wholly owned subsidiary of Pabst (“IBY Property Owner”). Staff recommends the approval of such assignment as it is in the interest of the City to continue operations at the Brewery, including the associated jobs. RECOMMENDATION: Staff recommends that the Utility Board take the following action: 1)Authorize the assignment of the Molson Coors USA LLC Amended and Restated Water Supply Agreement dated February 23, 2009 from IBY, LLC to IBY Property Owner, LLC, in a form acceptable to the City Attorney; and 2)Authorize the City Manager to execute the assignment agreement. APPROVED CITY COUNCIL 12/21/2020 Molson Coors Rate Adjustment December 21, 2020 Page 2 ANALYSIS: On February 23, 2009, the City of Azusa entered into a restated water supply agreement with MillerCoors USA LLC (“Miller”), which set rates for water services provided to the MillerCoors brewery located in the City of Irwindale. On April 1, 2020, Miller changed its name from MillerCoors USA LLC to Molson Coors USA LLC (“Molson”). On July 20, 2020, the Utility Board approved the assignment of the Agreement from Molson to IBY. Staff recommends the proposed assignment from IBY to IBY Property Owner. FISCAL IMPACT: There is no fiscal impact associated with the recommended action. Prepared by: Reviewed and Approved: Jared Macias Manny Robledo Assistant Director – Water Operations Director of Utilities Reviewed and Approved: Sergio Gonzalez City Manager Attachments: 1. Water Supply Assignment Agreement - 1 - AGREEMENT AND CONSENT ASSIGNMENT AND ASSUMPTION AMENDED AND RESTATED WATER SUPPLY AGREEMENT THIS AGREEMENT AND CONSENT (“Assignment Agreement”) is dated for reference as of this ___ day of _______________, 2020, between the City of Azusa, California, a California municipal corporation (“Azusa”); IBY, LLC, a wholly-owned subsidiary of Pabst Brewing Company (“IBY”); and IBY Property Owner, LLC, a wholly-owned subsidiary of Pabst Brewing Company (“IBY Property Owner”) (collectively “Parties”) to be effective on the “Effective Date” (as defined below). RECITALS A. City, as successor to the Azusa Valley Water Company, entered into a Water Supply Agreement with Miller Brewing Company in 2002, which was later assigned to Miller Breweries West, L.P. in 2004 with City’s consent. In general, the Water Supply Agreement provides, among other things, for the delivery of water from the Canyon Basin to Miller Brewing Company (and subsequently Miller Breweries West LP and MillerCoors LLC) at its brewery facility located at 15801 East First Street in Irwindale, CA (“Facility”). The Water Supply Agreement also provides for the assignment of Miller Brewing Company’s prescriptive pumping rights (which rights were subsequently assigned to Molson Coors USA LLC (“Molson”) to City from time to time in exchange for long term access to a City water supply. The Water Supply Agreement was amended on May 1, 2008 along with an authorized assignment of the Water Supply Agreement to MolsonCoors Beverage Company USA LLC, formerly known as MillerCoors LLC. The term of the Water Supply Agreement was extended on November 26, 2008. B. On February 23, 2009, City and MillerCoors LLC entered into an Amended And Restated Water Supply Agreement, a copy of which is attached hereto as Exhibit “A” and incorporated herein and made an operative part of this Assignment Agreement. The Amended and Restated Water Supply Agreement is referred to herein as the “Agreement.” On January 1, 2018, MillerCoors LLC underwent a corporate reorganization by which the assets of MillerCoors LLC (now known as Molson Coors Beverage Company USA LLC) (“Molson Beverage”) were transferred to Molson (formerly known as MillerCoors USA LLC). Pursuant to Section 7.2 of the Agreement, Molson (formerly known as MillerCoors USA LLC) provided notice to City of its intent to extend the term of the Agreement to May 31, 2023. As of April 1, 2020, the name MillerCoors USA LLC has been changed to Molson Coors USA LLC which is referred to herein as “Molson.” C. Molson, Molson Coors Beverage Company USA LLC and IBY entered into an Option Agreement dated January 6, 2020 for the sale by Molson and Molson Beverage to IBY of certain assets at the Facility, including water rights, (the “Purchased Assets”) held by Molson under the Agreement (“Transaction”). Molson and IBY completed the Transaction for the purchase and the sale of the Purchased Assets (“Closing”) on November 4, 2020 (“Closing Date”). Pursuant to the assignment agreement attached hereto as Exhibit “B,” on the Closing Date Molson assigned and transferred to IBY, and IBY assumed and accepted the transfer of, the Agreement and all of its Prescriptive Pumping Rights conferred to it under the terms of the Judgment (as that term is Attachment 1 - 2 - defined in the Agreement), dated January 4, 1973 and most recently amended on June 21, 2012, to IBY. D. IBY now desires to assign and transfer to IBY Property Owner, and IBY Property Owner desires to assume and accept the transfer of, the Agreement and all of the Prescriptive Pumping Rights under the Judgment. E. Pursuant to Section 14.1 of the Agreement, the Agreement may not be assigned by either party without the prior written consent of the other party. City is willing to consent to the assignment of the Agreement pursuant to the provisions of this Assignment Agreement. AGREEMENT NOW, THEREFORE, FOR GOOD AND VALUABLE CONSIDERATION AND THE COVENANTS AND AGREEMENTS CONTAINED HEREIN, THE RECEIPT AND SUFFICIENCY OF WHICH ARE HEREBY ACKNOWLEDGED, THE PARTIES AGREE AS FOLLOWS: 1. Incorporation of Recitals. The Recitals set forth above are true and correct and are incorporated into this Assignment Agreement in their entirety by this reference as a material part hereof. 2. Effective Date. This Assignment Agreement shall be effective as of the date (“Effective Date”) of full execution of this Assignment Agreement by all Parties. 3. Assignment as of the Effective Date. IBY hereby assigns and transfers all of its right, title, interest, duties, liabilities and obligations as provided in the Agreement to IBY Property Owner as of the Effective Date. 4. Assumption as of the Effective Date. As of the Effective Date, IBY Property Owner assumes from IBY all of IBY’s rights and obligations as provided in the Agreement and agrees to assume and fully perform the entirety of the applicable obligations and duties of IBY under the Agreement, including, without limitation, the obligation to make any payments to City required under the Agreement. IBY Property Owner hereby represents and warrants to City that it is able to fully perform any and all duties, obligations and liabilities assumed under the Agreement and as contained in this Assignment Agreement. 5. Consent as of the Effective Date. City consents to the assignment and assumption set forth herein subject to the following. As a condition precedent to City consenting to the assignment and all rights and interest associated therewith, any and all outstanding fees, payments, costs and expenses, if applicable, will be paid in full by IBY and/or IBY Property Owner (as applicable) on or before the Effective Date. 6. Release. From and after the Effective Date, and except as otherwise provided herein, City and IBY agree that IBY is released from any and all obligations under the Agreement and shall have no further duties, liabilities or obligations thereunder, and City shall look solely to IBY Property Owner for the performance of all such duties, liabilities and obligations thereunder that - 3 - apply to the Agreement. Notwithstanding the foregoing, this assignment and assumption shall not relieve IBY of any obligation or liability caused by a breach of the applicable provisions of the Agreement prior to the Effective Date. 7. Representations and Warranties by IBY and IBY Property Owner. IBY and IBY Property Owner each hereby individually represents, covenants and warrants to City, and individually acknowledges that City executed this Assignment Agreement in material reliance thereon, each of the following representations, covenants and warranties: (a) That it has not made any prior conditional or unconditional assignment or conveyance of all or any part of its rights or obligations under the Agreement; (b) That this Assignment Agreement is a valid and binding obligation of it and enforceable against it in accordance with its terms. The individuals executing this Assignment Agreement represent and warrant that they have the requisite right, power, legal capacity and authority to execute and deliver this Assignment Agreement on behalf of their respective parties; (c) That the entering into and performance of this Assignment Agreement will not constitute a violation of any court order or decree or result in the default under any other contract by which it is bound; and (d) That it has the financial resources immediately available to perform the entirety of its obligations under this Assignment Agreement. 8. Notices, Demands and Communications between the Parties. All notices or other communications required or permitted between the Parties hereunder shall be in writing, and shall be (i) personally delivered, (ii) sent by United States registered or certified mail, postage prepaid, return receipt requested, or (iii) sent by nationally recognized overnight courier service (e.g., Federal Express or United Parcel Service), addressed to the party to whom the notice is given at the addresses provided below, subject to the right of any party to designate a different address for itself by notice similarly given. By this Assignment Agreement, the addresses and parties identified in Section 14.10 of the Agreement are revised to the addresses provided below. Any notice so given by registered or certified United States mail shall be deemed to have been given on the third business day after the same is deposited in the United States mail. Any notice not so given by registered or certified mail, such as notices delivered by personal delivery, or courier service, shall be deemed given upon receipt, rejection or refusal of the same by the party to whom the notice is given. Rejection or other refusal to accept or the inability to deliver because of changed address of which no notice was given shall be deemed to constitute receipt of the notice or other communication sent. To: City of Azusa 729 N. Azusa Avenue Azusa CA 91702 Attn: Manny Robledo, Director of Utilities To: IBY, LLC 110 East Houston Street, 3rd Floor - 4 - San Antonio, TX 78205 Attn: Adam Sher, General Counsel To: IBY Property Owner, LLC 110 East Houston Street, 3rd Floor San Antonio, TX 78205 Attn: Adam Sher, General Counsel From and after the Effective Date, Section 4.3 of the Agreement is amended to provide that all billings by the City under the Agreement shall be addressed and sent to IBY Property Owner at the address provided above. 9. Counterparts. This Assignment Agreement may be executed in one or more counterparts, each of which so executed and delivered shall be deemed to be original and all of which, together, shall constitute one and the same instrument. 10. Severability. If any term or provision or portion of any term or provision of this Assignment Agreement shall be held invalid or unenforceable, the remainder of this Assignment Agreement shall not be affected. 11. Entire Agreement. Except as otherwise expressly provided herein, this Assignment Agreement contains the entire agreement of the parties concerning the subject matter contained in this Assignment Agreement, and supersedes any prior written or oral agreements between them concerning the subject matter of this Assignment Agreement. Except as otherwise expressly provided herein, there are no representations, agreements, arrangements, or understandings, oral or written, between the parties concerning the subject matter of this Assignment Agreement that are not fully expressed in this Assignment Agreement. 12. Amendment. This Assignment Agreement may not be amended or altered except by a written instrument executed by all of the Parties. 13. Legal Costs. In the event of the bringing of any action or proceeding to enforce or construe any of the provisions of this Assignment Agreement, the prevailing party in such action or proceedings, whether by final judgment, dismissal or other dispositive order shall be entitled to have and recover of and from the other party all fees, costs and expenses of suit, including reasonable attorneys’ fees, litigation consulting fees and expert witness fees. 14. Governing Law. This Assignment Agreement shall be governed and construed in accordance with the laws of the State of California. Venue shall lie exclusively in the Los Angeles County Superior Court, in the State of California. IN WITNESS WHEREOF, the parties have executed this Assignment Agreement on the date written above. (Signatures are on the following page.) - 5 - IBY: IBY, LLC By: _______________________ Title: _______________________ IBY PROPERTY OWNER: IBY Property Owner, LLC By: __________________________ Its: __________________________ CITY: City of Azusa By: ______________________________ Sergio Gonzalez City Manager Attest: ______________________________ Jeffrey Lawrence Cornejo, Jr. City Clerk Approved as to Form: Best Best & Krieger LLP ______________________________ Jeffry F. Ferre City Attorney - 6 - Exhibit “A” Amended and Restated Water Supply Agreement, dated February 23, 2009 - 7 - Exhibit “B” Assignment Agreement Between Molson and IBY, dated November 2, 2020